Chapter 15, Problem 1CTD

a)

Summary Introduction

To determine: Why the initial international expansion strategy of Company T focuses on developing nation.

Introduction:

Strategic alliances are the contract or settlement between two or more companies who would join to work on the same project and share the necessary resources required to obtain the certain objective or goal. However, the firms remain independent and separate.

Explanation of Solution

Determine why the initial investment expansion strategy of Company T focuses on developing nation:

Company T has the unique strategy in the grocery industry. It does not have head-to-head competition with the established retailers. Instead of that, Company T approached the market with little competition and strong growth potential. The unique strategy of Company T helps in improve the international market share of the firm without incurring the cost.

b)

Summary Introduction

To determine: The way Company T creates value in the international operations.

Introduction:

Strategic alliances are the contract or settlement between two or more companies who would join to work on the same project and share the necessary resources required to obtain the certain objective or goal. However, the firms remain independent and separate.

Explanation of Solution

Determine the way Company T creates value in the international operations:

The ability of Company T to identify the market with the strong growth trends is the major key to the success of Company T. The additional keys that help Company T to create value in the international operation are the understanding of the local market, expertise in the industry, and a joint venture with the existing company. Company T is the third company in the global grocery industry. The strategy of Company T resulted in £22.4 billion revenue.

c)

Summary Introduction

To determine: The risks and benefits of a joint venture with Company T.

Introduction:

Strategic alliances are the contract or settlement between two or more companies who would join to work on the same project and share the necessary resources required to obtain the certain objective or goal. However, the firms remain independent and separate.

Explanation of Solution

Determine the risks and benefits of a joint venture to Company T:

Company T believed that joint venture with one of the leading company would result in enormous business potential and rapid economic growth. It is difficult for a foreign company to operate independently in the country due to the government regulation. Hence, the joint venture would help the firm to gain knowledge about the local market. Local managers can be hired to run the business successfully.

d)

Summary Introduction

To determine: How Country U’s market is different from other markets that Company T entered.

Introduction:

Strategic alliances are the contract or settlement between two or more companies who would join to work on the same project and share the necessary resources required to obtain the certain objective or goal. However, the firms remain independent and separate.

Explanation of Solution

Determine how Country U’s market is different from other markets that Company T entered:

According to Person X, the decision of entering Country U’s market is the costliest mistake that is done by Company T. hence, the initial entry into the crowded market in Country U resulted in the departure of traditional strategy. The traditional strategy of Company T is focusing on developing nation with little competition.