Tag (SQ): Local responsiveness

(a) Tech Trend IT Limited (TIL) started operations 10 years ago in Zamora providing a wide range of information technology solutions to diverse clientele. Mr. Mensah, the chief executive officer (CEO) of the company, recently has been contemplating venturing into other Central African markets to take advantage of untapped opportunities. This is also to strengthen competitive position of TIL since Zamorean market growth is beginning to slow down and competition is getting keener.

At the 2016 second quarter Board meeting, the CEO tabled his proposal for consideration and board’s input before the document was finalized. During the Board discussions Prof Nkrumah, who lectures Corporate Strategy, suggested to the CEO to use Porter’s Diamond of national advantage to assess competitive advantage of the other Central African countries the company intends to enter. Prof Nkrumah also mentioned to the CEO that companies that compete in the global marketplace typically face two types of competitive pressures: pressures for cost reductions or global integration and pressures to be locally responsive.

The cost reduction-local responsiveness dilemma shapes and results in four basic international strategies – international, global, multidomestic, and transnational – which the CEO should consider in making the choice.

Required:

Discuss how the FOUR factors in the Porter’s Diamond of national advantage determine competitiveness of the other Central African countries on the global stage.

(b) Explain the following internationalization strategies and identify TWO risks associated with each of the strategies:

(i) International strategy

(ii) Global strategy

(iii) Multidomestic/Multinational strategy; and

(iv) Transnational strategy