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Stmg 543: Global Strategic Management Question Paper
Stmg 543: Global Strategic Management
Course:Business Administration
Institution: Kenya Methodist University question papers
Exam Year:2010
FACULTY : BUSINESS STUDIES AND MANAGEMENT
DEPARTMENT : BUSINESS ADMINISTRATION
TIME : 3 HOURS
INSTRUCTIONS Answer Question ONE and any other THREE questions.
Philips: Evolution of a global organization.
Founded in 1882 in Eindhoven, Holland as a producer of light bulbs, Philips rapidly expanded into Geographical internalization as well as product diversification. As early as 1899 it started to export its products and by 1912 it had established subsidiaries in the United States, Canada and France. Philips product line expanded and electronic vacuum tubes, radios, x-rays and later on electronic components, medical equipment and telephony.
By year 2000, Philips was a $ 30 billion company involved in 150 countries with nine major product lines. Philips global organization design was based on the predominance of national subsidiaries called National Organizations (NOs). Each NO built its own technical and Marketing activities in order to adopt products to local conditions. Countries initiated product development as for instance, in Canada where the first colour TV was created. Although 14 product divisions in Eindhoven were theoretically in charge of product development and global marketing, national subsidiaries had the real power of marketing strategic decisions, since they controlled the assets and reported directly to the Board. Except for a few high flyers, most executive careers at Philips were built with NOs. This organizational design was the “administrative heritage of Philips early expansion in international markets at a time when political economic and technological forces were in favour of strategic adaptation and responsiveness to local country specific conditions. Philips design was representative of a multi-business geographical model.
Starting in the early 1980’s this geographically oriented organization was challenged by the forces of globalization and the emergence of strong Japanese competitors. The ability of Philips to bring products rapidly to market and to produce them at competitive force, forced top management to reconsider the organization. During the 1980’s and 1990’s four different Chairmen embarked on reorganization with the aim of moving away from the Geographical decentralized confederation in favor of a more globally efficient network of operations.
Question 1
a) Based on the above case study. Identify and explain the four phases of a global strategy(8marks)
b) What components of strategy were adopted by Philips Company in the process of globalization? (8marks)
c) Briefly outline some of the benefits and challenges faced by Philips Company in their search and entry into the global arena. (9marks)
Question 2
a) Explain the concept that ‘Companies engaging in global business have to cope with the dual- requirement of globalization and localization’. (10marks)
b) Identify and illustrate any three strategic designs that maybe adopted by such firms giving the merits and demerits of each. (15marks)
Question 3
a) How is country attractiveness measured in regards to foreign investment? (15marks)
b) Explain any five modes of contractual market entry strategies that firms may use to indirectly enter and operate in a foreign Market. (10marks)
Question 4
a) Strategic alliance is one of the fastest forms of international strategic options, explain the five steps involved in alliance formation and development. (15marks)
b) What are the most frequent sources of failure in global mergers and acquisitions? (10marks)
Question 5
a) State the causes of environmental crisis blamed on globalization. (5marks)
b) How can corporate policies be designed to contribute to global environmental protection?(10marks)
c) What management issues arise in regards to the following functional areas due to Globalization;
i) Marketing
ii) Human Resource Management (10marks)
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