The opportunities for sharing or transferring Wuudin’s other resources and capabilities with/to the new businesses: Apart from its brand, which of Armani’s other resources and capabilities can be utilized in the new business?
In-House
In the case of bridal clothing and accessories, Wuudin can probably utilize its existing design, manufacturing, marketing, and distribution capabilities – in which case Armani can develop this business in-house.
Joint Venture
In the case of athletic clothing and equipment, Wuudin may need to access the technical capabilities needed to design products for different sports – hence, a joint venture may be appropriate.
Licensing
In the case of hotel management, it is not apparent that any of Wuudin’s resources and capabilities (other than its brand) relate to the design and operation of luxury hotels – hence, licensing may be the best solution.

International strategy
Explanation
Multinational companies that are confronted with low cost pressures and low pressures for local responsiveness pursue “International Strategy”. An international strategy is based on diffusion and adaptation of the parent company’s knowledge and expertise to foreign markets. Country units are allowed to make some minor adaptations to products and ideas coming from the head office, but they have far less independence and autonomy compared to multidomestic companies. The primary goal of the strategy is worldwide exploitation of the parent firm’s knowledge and capabilities. All sources of core competencies are centralized. This strategy type is ethnocentric since the foreign activities only secure the home-country company. A strong dependence of the foreign subsidiary on the resources of the home country is a consequence.
Risks associated with international strategy
i. Different activities in the value chain typically have different optimal locations. The international strategy, with its tendency to concentrate most of its activities in one location, fails to take advantage of the benefits of an optimally distributed value chain.
ii. The lack of local responsiveness may result in the alienation of local customers.
iii. The firm’s inability to be receptive to new ideas and innovation from its foreign subsidiaries may lead to missed opportunities.

Explanation
The multinational companies facing low pressure for local adaptation and responsiveness but high pressure to lower cost pursue “Global Strategy”. Companies that pursue a global strategy focus on increasing profitability by reaping the cost reductions that come from economies of scale and location economies; that is, their business model is based on pursuing a low-cost strategy on a global scale. A global strategy emphasizes economies of scale due to the standardization of products and services, and the centralization of operations in a few locations. These companies try not to customize their product offerings and marketing strategy to local conditions because customization, which involves shorter production runs and the duplication of functions, can raise costs. Instead, they prefer to market a standardized product worldwide so that they can reap the maximum benefits from economies of scale.
Risks associated with Global strategy
i. A firm can enjoy scale economies only by concentrating scale-sensitive resources and activities in one or few locations. Such concentration, however, becomes a “double-edged sword.” Thus, decisions about locating facilities must weigh the potential benefits from concentrating operations in a single location against the higher transportation and tariff costs that result from such concentration.
ii. The geographic concentration of any activity may also tend to isolate that activity from the targeted markets. Such isolation may be risky since it may hamper the facility’s ability to quickly respond to changes in market conditions and needs.
iii. Concentrating an activity in a single location also makes the rest of the firm dependent on that location. Such dependency implies that, unless the location has world-class competencies, the firm’s competitive position can be eroded if problems arise.

Explanation
Multidomestic strategy is the reverse of global strategy since the company faces high pressure for local responsiveness and adaptation but with low pressure to lower costs. A firm whose emphasis is on differentiating its product and service offerings to adapt to local markets follows a multidomestic strategy. Decisions evolving from a multidomestic strategy tend to be decentralized to permit the firm to tailor its products and respond rapidly to changes in demand. This enables a firm to expand its market and to charge different prices in different markets.
Risks associated with Multidomestic
i. Decreased ability to realize cost savings through scale economies.
ii. Greater difficulty in transferring knowledge across countries as a result of localization of core competences.
iii. May lead to “over adaptation” as conditions change. In many industry segments, a variety of factors, such as the influence of global media, greater international travel, and declining income disparities across countries, may lead to increasing global standardization.

Explanation
Transnational strategy is adopted by company that simultaneously faces both strong cost pressures and strong pressures for local responsiveness. In essence, companies that pursue a transnational strategy are trying to develop a business model that simultaneously achieves low costs, differentiates the product offering across geographic markets, and fosters a flow of skills between different subsidiaries in the company’s global network of operations. As attractive as this may sound, the strategy is not an easy one to pursue because it places conflicting demands on the company.
Risks associated with Transnational strategy
i. The choice of a seemingly optimal location cannot guarantee that the quality and cost of factor inputs (i.e., labor, materials) will be optimal. Managers must ensure that the relative advantage of a location is actually realized, not squandered because of weaknesses in productivity and the quality of internal operations.
ii. Although knowledge transfer can be a key source of competitive advantage, it does not take place “automatically.” For knowledge transfer to take place from one subsidiary to another, it is important for the source of the knowledge, the target units, and the corporate headquarters to recognize the potential value of such unique know-how.

It is important for the management of Starline Fruits to consider many factors before deciding on which mode of entry into the international market would be suitable. The factors are discussed as follow:
i. The firm’s marketing objectives: It is important for management of Starline Fruits to consider its international marketing objectives relating to how much it wants and can sell in overseas markets – i.e. volume – the timescale and coverage of market segments. If Starline Fruits management expects overseas sales to be low in volume, or if the products are only to be on sale for a limited time period, then setting up an overseas production and distribution facility would be inappropriate. In this case, exporting might be an appropriate strategy. On the contrary, if management intends to cover a large segment of overseas markets as well as operate for a long time then establishing an overseas production and distributing outlet would be an appropriate mode of entry.
ii. The firm’s size: A small firm is less likely than a large one to possess sufficient resources to set up and run a production facility overseas. It is important for management of Starline Fruits to consider whether the resources of the company could provide the investment capital and organisational ability to set up an overseas production facility. It would also need to consider whether it can support the costs of continuing operations. If not, then overseas production facility would be precluded as an appropriate entry mode. Management would have to consider a mode of entry that requires a relatively lower investment in terms of cost and human resource ability.
iii. Mode availability: A firm might have to use different methods of entry to enter different markets. Some countries only allow a restricted level of imports, but will welcome a firm if it builds manufacturing facilities which provide jobs and limit the outflow of foreign exchange. It is important for management to consider the policies of different overseas governments through research. This will inform it of what kinds of entry modes are available for it in each oversea market it seeks to enter.
iv. Mode quality: In some cases, all modes may be possible in theory, but some are of questionable quality or practicality. The lack of suitably qualified distributors or agents, for instance, would preclude the export, direct or indirect, of high technology goods needing installation, maintenance and servicing by personnel with specialist technical skills. Whatever mode management are considering, it is important for them to put it to the practicality test.
v. Human resources requirements: Starline management would have to consider the human resource requirements for whichever mode it wants to use. HR requirements vary according to which method of entry is used. For instance, if it would be difficult for Starline Fruits Ltd. to recruit suitable international marketing staff at home or overseas, they may have to resort to indirect exporting or the use of agents based overseas, which in this case would be the only realistic option.
vi. Market feedback information: It is important for management to consider the effectiveness of receiving feedback information on its marketing efforts in overseas markets. In some cases a firm can receive feedback information about the market and its marketing effort from its sales staff or distribution channels. In these circumstances direct export or joint ventures may be preferred to indirect export.
vii. Learning curve requirements: Management of Starline needs to be clear about its future involvement in international business. If it intends a heavy future involvement in overseas markets, then it would be necessary for it to gain the experience that close involvement in an overseas market brings. They would, therefore, have to select mode(s) of entry that would offer them the opportunity to experience international business management for themselves. This argues against the use of indirect exporting as the mode of entry.
viii. Risks: There are risks involved in operating in overseas market such as the risk of expropriation, risk of political instability, etc. Management would have to assess the nature of the risks in particular overseas markets in order to inform them which mode offers the lowest risks. For instance, some firms might prefer the indirect export mode as assets are safer from expropriation.
ix. Control needs: Starline management should assess the level of control it seeks to retain over its overseas operations. For instance, production overseas by a wholly owned subsidiary gives a firm absolute control while indirect exporting offers only limited control over the marketing mix to the exporter.
                                                                                                                                                                                   (Any 4 points)