Question

1a. LUF (Lucky Union Food) uses the Laos market to gain more experience before investing in other CLMV
countries*.
Examine any THREE (3) strategic considerations that LUF needs to make before
competing in the international market.

1b. Home country advantages and the diamond model
2. Opportunities for location based advantages
3. The impact of Government policies and economic condition in host countries
4. The risk of adverse exchange rate shifts
5. Cross country difference in demographic, cultural and market conditions

Answer 1

Ans

1a) Three strategic considerations that LUF needs to make before competing in the international market are:

- Demand of the specific food category in all the CLMV (Combodia, Laos, Malaysia, Vietnam) countries . Countries should be chosen that have the highest demand for the specific food category.

- Analysis of the competition in the specific countries. Ideally those countries should be chosen that have low competition.

- Sourcing of ingredients : Comparison of ease in sourcing of the ingredients and supply chain costs for the same.

Ans 1b)

Porter Diamond Theory helps understand the competitive advantage that nations can possess due to certain factors available to them.

i) Factor conditions: This refers to the various strategic resources that a country is endowed with and how it leverage them to gain Competitive advantage. For example presence of crude oil can lead to petroleum exploration companies being set up.

ii) Related and supporting industries. For example, the presence of auto component suppliers is crucial for setting up automobile company in a country

iii) Demand Conditions: Higher demand for a product is a natural advantage. Ayurvedic medicines have high demand in India.

iv) Strategy, structure and rivalry amongst firms is a natural advantage. For example presence of many Information Technology (IT) outsourcing companies in Indian has made India a super power in IT outsourcing.

v) Role of government: Governmental may bar some global companies that benefit the host country. For example many IT companies are banned in China which has benefited the local businesses.

vi) Chance: Well luck also plays it part in many things mentioned above coming together.