Answer these questions - Case Study Example

Answers to the questions Q22. a) Why do you think they chose to do wholly-owned subsidiaries instead of something like simple exporting or licensing? A wholly-owned subsidiary allows the company to maintain indirect or direct operational control. The company is able to initiate management changes easily. b) In comparing Canada and US, why do you think they decided to do a Greenfield expansion and just build their own stores there? The countries have different currencies, and this strategy is likely to help the company to avoid being negatively affected by foreign exchange rate fluctuations.

It will also help in reducing transportation costs, improving corporate image and tax incentive advantages. c) Give two reasons for buying out existing companies when expanding into a new geographic market. Acquisition allows a company to reduce costs as a result of the economies of scale. This helps in increasing efficiency. Secondly, acquisition allows the organization to gain new competencies and resources, thereby enabling the company to build market presence Q23. a) What is the difference between strategic and tactical actions?

Strategic actions are future oriented and they help in identifying clear broader goals enhance the overall organization while tactical actions deal with the here and now. It helps in utilizing specific resources so as to achieve sub-goals that back the defined mission. b) Which type of action is likely to win? Tactical action is likely to win because it is short term and is adjusted according to specific market conditions. c) Explain why price is not enough to generate a sustainable competitive advantage.

A firm cannot compete only on price since the competitors only need to lower their price, for instance established firms can destroy such a firm with the loss leader strategy. Q24. Paying a smaller salary with a significant amount of stock in the company is likely to produce an effective board because it reduces conflicts of interests as the board will work hard to increase shareholders’ welfare. This will give them intrinsic motivation. Q25. A- Which are responsible for determining competitive advantage?

B- Which are responsible for determining the sustainability of the advantage? Your answer A- Valuable and rare are the two determinants of a company‘s competitive? B- difficult to imitate and difficult to substitute determine a company’s competitive sustainability