Assignment 4

Submitted by
Anuj Ghimire
MBA Trimester IV
Uniglobe College

Question 1.
What do you see as the main organizational problems that are likely to be
associated with the implementation of a transnational strategy? What are the
conditions for the appropriateness of using the transnational strategy for
international firms?
A transnational strategy is when an organization or company decides to operate
beyond its national borders, substantially becoming international or multi-national.
Transnational companies are much more complex organizations. They have
invested in foreign operations, have a central corporate facility but give decision-
making, R&D, and marketing powers to each foreign market.
Some of the problems that are likely to be associated with the implementation of
a transnational strategy are:
1. Cultural problems (Problems created due to differences of opinion, beliefs,
values, tastes, and preferences)
2. Political problems (the censorship of a regime, political interference, etc.)
3. Economic problems (capital investment in another country always comes
with risk, changes in economic policy that may affect the company, etc.)
4. Infrastructural problems (capital investment, defiances of transportation,
basic infrastructure, limited resources including a skilled workforce, etc.)
 Adhering to the above-mentioned problems, some other problems would
be:
 High operational cost
 The low absorptive capacity of the host country
 Lack of administrative simplicity, delay in decision making
 Lack of skilled human resources
 Shortage of capital and physical infrastructure

Conditions for the appropriateness of using the transnational strategy for

international firms
Transnational strategy can be relevant to outperform the competitors which use
either the multi-domestic or global-corporate level strategies when there exists
both the pressure of cost reduction and the pressure of high local responsiveness.
Some of the conditions for the appropriateness of using the transnational strategy
for international firms are:
a) High pressure of local responsiveness
b) High pressure of Cost reduction

#a. Why should we adopt local responsiveness?

• Differences in consumer tastes & preferences
• Differences in infrastructure & traditional practices
• Differences in distribution channels
• Host-Government requirements
→ Diversifying product line: design, quality, taste.

#b. Why should we cut the cost?

• Emerging demand for globally standardized products
• Major competitors are based in low-cost locations
• Consumers tend to be sensitive and price elasticity
• Free trade and trade liberalization
→ cutting the whole functional costs or some specific functional costs: marketing,
R&D
 Question 2
The top management of your company, a manufacturer and marketer of wireless
devices, has decided to pursue international expansion opportunities in Nepal.
To achieve some economies of scale, your strategy is aiming for a strategy of
minimum local adaptation. Focusing on a Nepalese context, prepare an executive
summary that features aspects of the product that cannot be standardized and
that must be adapted to local conditions.
Before aligning the strategic move to Nepal, any company should know that Nepal
is a country with low GDP and low Per Capita Income with low Purchasing Power
Parity. If a manufacturer and marketer of wireless devices, has decided to pursue
international expansion opportunities in Nepal, it should be adopting one of the
International Business strategies. To achieve some economies of scale, the strategy
of the company is aiming for a strategy of minimum local adaptation. As the
company is manufacturing and marketing wireless devices, which are the standard
goods products, the company should aim for Global Strategy of International
Business which aims for high pressure of cost reduction and low pressure of local
responsiveness. The product market of electronic goods like wireless devices
demands the uniformity of products across the continents. People in Nepal love to
consume the same product that is consumed in the US. But adopting the strategy
of minimal local adaptation does not imply any local adaptation.
Some of the factors that need to be considered while opting for local adaptation
are:
Main factors favoring adaptation
Factors Factors favoring adaptations
Environment Local environment-induced adaptation: government and
regulatory influencers
Competition Local competition
Consumer Needs Variation in consumer needs
Management Fragmented and decentralized management with
dependent country subsidiaries
Competitors An adapted concept is used by competitors
Below are mentioned the aspects of the Wireless Products that cannot be
standardized and that must be adapted to the local conditions while entering the
market of Nepal:
A. Adaptation of Pricing
For the company specializing in manufacturing and marketing Wireless
products, it's imperative to adapt local prices for success. The pricing strategy
is very sensitive to local adaptation for a country like Nepal. Most Nepali
nationals seek standard products with cheap pricing. If the company can tap on
the market by getting the edge on price differences then it will be easier to
penetrate the market better. Some of the factors driving price differentiation
are customer preferences, competitive situation, cost situation, tariffs, and
duties, etc. For the Wireless Devices opting for lower pricing to meet the needs
of local conditions, they need to be user friendly to the customers, the
competition for the same products should be competitive to adapt for low
pricing. Other than that, the company needs to provide the goods at the price
as quoted in the International Websites. The potential purchasers of the device
are internet friendly population who search for the products on the internet
and tend to convert the prices listed on international e-commerce websites like
Amazon to Nepalese Rupees. And if the company can make available the
Wireless Devices at a reasonable price compared to Internet market, the
products can do goo in the market.

B. Adaptation of Promotion
Promotion is the marketing promoting mix. Promotion consists of the specific
blend of advertising, sales promotion, public relations, personal selling, and
direct marketing tools that a company uses to influentially communicate
customer value and build customer relationships. Advertisements that work in
different countries and cultures or create a different advertisement in different
countries. For the Nepali market too, promotion can be affected by language,
religions, laws, economic differences, and media availability. For the Wireless
Products to be marketed, the device operation language should be either
English or Hindi and the advertisement should be done through such a channel
that the potential consumer base gets the right message. Adapting promotion
is only a little modification rather than a radical design.
C. Adaptation of Distribution
Channels of distribution are organized networks of agencies and institutions,
which in combination, perform all the activities required to link procedures with
users to accomplish the marketing task. The Wireless Device Company cannot
adopt a standardized way as there is a variation of channel distribution
depending on the country. Distribution channels are different in Nepal. The
headquarter cannot predict and standardize the distribution channel rather it
should be determined by subsidiaries at a local level in Nepal. Adaptation of
distribution channels depends on several factors like where the customers are,
culture, and product type. For Wireless Device Company like this, it's easier to
sell the devices through Personal Computer distributors around the nation.
 Question 3
A vital element in a successful international market entry strategy is an
appropriate fit of skills and capabilities between partners. Provide a list of the
top 10 companies that pursue franchising as a mode of international expansion.
Study one of these companies in detail and provide a description of its business
model, its international expansion pattern, desirable qualifications in possible
franchisees, and the support and training typically provided by the franchisor.

List of 10 popular companies that pursue franchising as a mode of

international expansion.
S.No. Name Country Industry
1 McDonald's USA Fast Food Franchises
2 KFC USA Food Franchises
3 Burger King USA Fast Food Franchises
4 Taco Bell USA Fast Food Franchises
5 Pizza Hut USA Food Franchises
6 Wendy's USA Fast Food Franchises
7 Dunkin' USA Food Franchises
8 SUBWAY USA Food Franchises
9 Marriott International USA Travel Franchises
10 Baskin-Robbins USA Food Franchises

Marriott International
Business Model
Marriott International, Inc. is the franchisor. The franchisor is a worldwide operator
and franchisor of hotels and related lodging facilities. Marriott hotels are full-
service hotels that cater to business and leisure travelers. The hotels range in size
from approximately 100 to 2,000 guestrooms. The hotels offer a variety of food and
beverage options, including one or more restaurants and lounges, room service,
catering, and banquet services. The franchisor's brands cater to a broad spectrum
of customers and include luxury and upper-upscale full-service hotels, lifestyle
hotels, extended-stay hotels, and select-service hotels. The company's brands
include Bulgari, The Ritz-Carlton, and The Ritz-Carlton Reserve, W, EDITION, JW
Marriott, The Luxury Collection, Marriott Hotels, Westin, Le Méridien, Renaissance
Hotels, Sheraton, Delta Hotels by Marriott, Marriott Executive Apartments,
Marriott Vacation Club, Autograph Collection Hotels, Tribute Portfolio, Design
Hotels, Gaylord Hotels, Courtyard, Four Points by Sheraton, SpringHill Suites,
Fairfield Inn & Suites, Residence Inn, TownePlace Suites, AC Hotels by Marriott,
Aloft, Element, Moxy Hotels, and Protea Hotels by Marriott.
International Expansion Pattern and desirable qualifications in possible
Franchises
The Franchise Agreement will permit franchisees to operate one hotel of a specific
size at a specific site selected by the franchisee and approved by the franchisor.
Franchisees may not be granted a territory, but if they are, it will be non-exclusive.
Franchisees may face competition from other franchisees, from outlets that the
franchisor owns, leases, manages, licenses, or franchises, or from other channels
of distribution or competitive brands that the franchisor controls. Other than that,
the franchisor requires franchisees to operate the hotel or to hire a management
company consented to by the franchisor. A general manager who has completed
the training program must directly supervise the business on the premises. The
franchisor requires the general manager and other managers to devote full time to
the management and operation of the hotel. If the franchisee is an entity and not
an individual, the franchisor generally requires the principals of the entity to sign a
guaranty of the franchisee's obligations. Franchisees must offer all of the goods and
services that the franchisor designates. Furthermore, franchisees may offer only
those goods and services that the franchisor requires or specifically allows.
Support and Training provided by the franchisor
The franchisor requires that personnel at a franchisee's hotel complete the
required training within a designated time. All training must be completed to the
franchisor's satisfaction and verification of successful completion must be
presented upon the franchisor's request. "Web-based" training is self-paced
training that trainees can access at any time on the Internet. "Market-based"
training is conducted at various locations throughout the country depending on the
need and availability of trainees. Course schedules are communicated in advance
allowing sufficient time for training to be completed within the required timeframe.
The franchisor may provide other training to franchisees at no charge, and not as a
part of the pre-opening team if the franchisor decides that it is necessary. During
years in which the franchisor holds an educational General Managers Conference,
the general manager of the hotel will be required to attend. The franchisor also has
numerous leadership training programs that are held at different locations
throughout the year and are available to franchisees on an optional basis.