Question

Vandelay Industries., a company that manufactures and sells premium apartments, is pursuing an international strategy. FoodFood, a supermarket chain, follows a multidomestic strategy. Which of the following statements is most likely true of this scenario?

Group of answer choices

Vandelay Industries will not be able to use its home-based core competencies in foreign markets as much as FoodFood will.

Vandelay Industries will pursue a differentiation strategy at the business level, whereas FoodFood will pursue a cost-leadership strategy at the business level.

Vandelay Industries will sell the same products in both domestic and foreign markets, whereas FoodFood will customize its product offerings to suit local requirements.

Vandelay Industries will be better protected from exchange rate fluctuations when compared to FoodFood

Answer 1

Solution:

From the case study, Vandelay Industries manufacture and sell premium apartments and is pursuing an international strategy. On the other hand, FoodFood is a supermarket chain that follows a multidomestic strategy, an international marketing approach focusing on advertising and commercial efforts on the needs of a local market rather than taking a more global approach.

---------------------

Analysis of the options is as follows:

1. Vandelay Industries will not be able to use its home-based core competencies in foreign markets as much as FoodFood will.

The statement is not correct. Both companies will be operating in new markets, which will bring in new challenges. Since both are in different industries, the challenges and difficulties will be different. While, Vandelay may face challenges in terms of land availability, skilled labor, and raw materials, FoodFood may face challenges concerning supply chain, warehousing, and logistics.

---------------------

2. Vandelay Industries will pursue a differentiation strategy at the business level whereas, FoodFood will pursue a cost-leadership strategy at the business level.

The statement is not right. Since Vandelay is in the business of manufacturing and selling premium homes, it may or may not adopt a differentiation strategy depending on the market scenario. On the other hand, FoodFood may or may not pursue a cost-leadership strategy depending on the prevailing business scenario.

---------------------

3. Vandelay Industries will sell the same products in domestic and foreign markets, whereas FoodFood will customize its product offerings to suit local requirements.

Since Vandelay is in the business of manufacturing and selling premium homes, they would like to create a unique experience for clients both domestic and overseas. However, FoodFood has a multidomestic approach whereby they try and bring in some degree of localization and customization into their products to suit local tastes and cultural preferences. So, this is the most likely scenario.

---------------------

4. Vandelay Industries will be better protected from exchange rate fluctuations when compared to FoodFood.

This is not correct. Both companies will face currency risks in foreign markets. The quantum of the risk will depend on the volume of business of each.

---------------------

Hence, the correct option is 3 - Vandelay Industries will sell the same products in both domestic and foreign markets, whereas FoodFood will customize its product offerings to suit local requirements.