Deck 2: The Strategy Experience Phase 2

Question 1

If WRSX decides to enter new markets, it will need to consider which entry mode to choose. Which TWO of the following statements about entry modes is correct?
a) A wholly owned subsidiary in a 'greenfield' start up operation would be the lowest risk option.
b) A joint venture with a local partner would enable the company to tap into the partner's cultural know-how, linkages and reputation.
c) A wholly owned subsidiary would be suitable in markets where the agency has broad competitive advantages that can easily be transferred to the new markets.
d) Franchising or licensing of the agency's brand name to a local firm is a high cost/high risk option which should only be used in exceptional circumstances.

Answer 1

b) A joint venture with a local partner would enable the company to tap into the partner's cultural know-how, linkages and reputation.
c) A wholly owned subsidiary would be suitable in markets where the agency has broad competitive advantages that can easily be transferred to the new markets.

Question 2

Which TWO of the following could be considered as 'cost drivers' in Yip's 'Drivers of Internationalisation' model?
a) An international agency gains from economies of scale.
b) An agency has global customers.
c) Advertising regulations are being standardised across different regional markets.
d) An agency is able to exploit cheaper labour in one of its locations e.g. WRSX can employ new media expertise in Singapore at lower wage rates.

Answer 2

a) An international agency gains from economies of scale.
d) An agency is able to exploit cheaper labour in one of its locations e.g. WRSX can employ new media expertise in Singapore at lower wage rates.

Question 3

WRSX has grown primarily through a series of mergers and acquisitions. Which TWO of the following might be advantages of this form of strategic development?
a) It expands the range of capabilities available to the organisation
b) It enables the organisation to spread the cost of new investment over a longer time period.
c) It avoids integration problems and cultural fit difficulties.
d) It expands the market coverage of an organisation by entering new geographical markets.

Answer 3

a) It expands the range of capabilities available to the organisation.
d) It expands the market coverage of an organisation by entering new geographical markets.

Question 4

Currently WRSX adopts a multi-domestic approach to managing its subsidiaries. Which TWO of the following points are advantages of such an approach?
a) It gives the subsidiary businesses a good deal of autonomy and this motivates local managers to perform better.
b) It enables all the subsidiary businesses to co-ordinate their activities and build synergistic linkages between them.
c) It allows the subsidiary to focus on local clients and specifically tailor its services to the needs of these clients.
d) By concentrating activities in one or two locations the business is able to reap economies of scale and cut costs.

Question 5

If WRSX, or one of its competitors, decided to try to increase market share by offering higher quality services whilst simultaneously seeking ways of lowering costs in order to lower prices, this is an example of which kind of competitive strategy according to the 'Strategy Clock'?
a) Differentiation strategy.
b) Non competitive strategy.
c) Low price strategy.
d) Hybrid strategy.

Question 6

Which TWO of the following are sensible reasons for WRSX to avoid diversifying into new activities beyond its core marketing services?
a) There are no possibilities for economies of scope.
b) Research shows that unrelated diversification is negatively co-related with performance.
c) The potential for synergy is limited as the activities are not related.
d) Spreading risk across a wide range of activities reduces dependence on one market.