International Entry's/Bus Strategies 11/13

Problem Identification
- Students expressed difficulty with quizzes.
- Initially, quiz questions were shared ahead of time, easing preparation.
- Current quizzes presented more articles with extensive reading, leading to overwhelm.
- Resulted in uncertainty about quiz expectations and performance declines.

Textbook Chapter Removal
- Instructor considering eliminating textbook chapter due to excess confusion.
- Focus on streamlining material to strengthen previous learning.
Class Discussion on Group Performance
- Some students performed well on initial quiz questions about entry modes.
- However, confusion persisted regarding concepts of transnational and global standardization strategies, especially relating to McDonald's.

Understanding Entry Modes
- High cost reduction pressures guide entry modes.
- Suggested that exporting is a suitable entry mode for companies like McDonald's, especially with wholly owned subsidiaries.
- Important Evidence Requirements
- Strong evidence required to support claims about companies' strategies.
- Need for rigorous research to back up assumptions surrounding cost reduction pressures.

Introduction of Sequential Approach
- Historical theorists from Sweden proposed a careful approach to internationalization.
Phases of Expansion
- Focus on countries with lower "CAGE" (Cultural, Administrative, Geographic, and Economic) distance first.
- Example: Walmart’s incremental expansion into Mexico and Canada before branching out internationally.
Noteworthy Example: Samsung
- Flew through the sequential expansion strategy, starting with less advanced products in saturated markets (e.g., flip phones) before progressing to more advanced offerings.

H&M
- Originated in Sweden and expanded methodically through neighboring countries, followed by UK and USA.
Sandvik
- A Swedish agriculture tool manufacturer that started with exporting. Progressed over decades into more complex entry modes like wholly owned subsidiaries.

Understanding of Localization vs. Transnational Strategies
- McDonald's opts for localization due to more premium positioning in fast food markets abroad.
- Adaptation of menus to suit local tastes (e.g., Japan and China), although core offerings remain similar.

Pattern Recognition
- Students noted McDonald's initial attempts at wholly owned subsidiaries in complex markets, recognizing the need to switch to franchising for adaptability and sustainability.
- Emotional discussions about the failures encountered when entering markets without adequate understanding (e.g., UK and Russia).
- Empirical Strategy for International Markets
- The distinction between franchising and joint ventures was discussed, illustrating the challenges and successes faced in different regions.
- Students emphasized the need for local partnerships in areas with significant government involvement.

Research and Evidence Gathering
- Participants were tasked with gathering data concerning McDonald's entry modes in different regions (Asia, Europe, Latin America) for further exploration.
- Importance of Learning and Adaptation
- The necessity to learn from the international failures of companies like Walmart was highlighted, thus providing a cautionary tale of overextending without foundational growth.

Comparison with McDonald's
- Subway’s simplistic and customizable nature sparks flexibility in their menu, leading to less adaptation than McDonald's.
- The ease of franchising allows Subway to expand far more rapidly and with fewer resource constraints than McDonald's.

Importance of Adaptation in Different Markets
- The complexity of opening and maintaining McDonald's internationally versus Subway’s relatively low entry barriers.
- Subway's flexible approach and light operational requirements facilitate faster expansion even in tumultuous political climates.

Final Discussion Points
- Students expressed interest in how Coca Cola and Pepsi have traveled the globe in localizations, offering projections for upcoming projects and memos.
- Amid discussions on strategies entered into markets, there was a clear differentiation drawn between adaptive strategies and rigid global approaches.