Analysis of International Business Strategies: Domino's and Microsoft

This report presents a comprehensive analysis of the international business strategies of Domino's Pizza and Microsoft Corporation. The Domino's case study examines the company's global expansion, focusing on its adaptation to local markets, particularly in Japan and India, and its balance between standardization and customization. The report discusses the impact of cultural factors on product offerings and marketing. The Microsoft case study delves into the company's foreign cash holdings, exploring the motivations behind keeping money overseas, the implications of tax avoidance strategies, and the ethical considerations involved. The report analyzes Microsoft's acquisition of Skype and the financial decisions related to repatriating funds. The report highlights the importance of understanding cultural expectations, adapting to local preferences, and navigating the complexities of international finance. The analysis draws from various sources, including academic journals, business publications, and news articles, to provide a well-rounded perspective on the challenges and opportunities of global business.

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International Business Strategy
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University
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Domino’s Global Marketing
Case Summary
Dominion’s build its brand by developing the home delivery service of pizza in the US.
However, due to the saturation of the fast-food market in the United States and due to the
reduced consumer demand, Domino’s has targeted to grow its business overseas. As the
organization expands its business in other markets, there are certain things that it has kept the
same as those in the US, while in other instances, it has adopted a totally different strategy.
Domino's home delivery business model is the same in all its markets (Roberts, 2019). The
common business model across all its markets makes Domino’s unique from its rivals that
changed their basic offering after entering foreign markets. Currently, Domino’s has aimed at
branding itself by ensuring high-quality ingredients as well as efficiency but at a speed that
ensures quality is maintained including retaining a cultural fabric that facilitates a strong
entrepreneurial mindset.
Question 1
I think that Domino's should try the sit-down restaurant experience in at least one foreign
country where it is valued to see how it would affect their sales. Some companies will change
their business model to cater more to the country's culture they are entering in hopes for better
sales. Seeing that Domino's has already proven to be a successful business with a presence in
many foreign countries, I believe they are in a good spot to take a risk in changing their business
model in one country to see what happens (Whitten, 2019). For example, McDonald's is known
as a fast food restaurant with a drive-thru. In Europe, most McDonald's do not have drive-thru
because Europeans have the luxury of walking to most places and they enjoy sitting, eating, and

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talking. Taking away a drive-thru is also taking away the idea that the restaurant is a "fast-food
service". This is an example of how a restaurant will slightly change their business model to
adhere to the culture of a foreign country. Also, if Domino's competitor, Pizza Hut, is starting to
differentiate themselves in international countries, then Domino's should closely examine their
success.
Question 2
I think Domino's does a great job in altering their toppings to the countries which they
market their products to. Because the variables of pizza delivery are well known for the most
part, that leaves understanding the culture of each market it enters as the challenging part.
Market research into each country ties directly to their success. For instance, knowing that the
Japanese value aesthetics is a key difference to understand. While the pizzas typically cost more,
having slices of equal size, with the same amount of toppings, is crucial for success. This is even
more important than pricing (Gajanan and Samuelson, 2019). If it is not aesthetically pleasing, it
would work well within the Japanese culture even if it were priced cheaply. From an
organizational perspective, Domino's knows that it wants to offer pizza. While the ingredients
may vary, the pizza is basically the same. Domino's does an excellent job of knowing its
customers (Gasparro, 2019). My presumption is that since no additional resources are spent
modifying the business model, those resources are allocated to the marketing plan and market
research.
Question 3
Domino's has done a great job in adhering to the pressures from local responsiveness.
They are changing their toppings according to what that target market likes to eat. In the United

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States, the pizza toppings consist more around meats such as pepperoni and sausage whereas in
Japan it is more concentrated around fish as this is the diet of the Japanese. The same goes with
India in the case that Domino's adds more spice to their toppings (Gasparro, 2019). In addition,
as far as India is concerned, Domino's is training its customers to enjoy a different dining
experience instead of catering to what every other restaurant is doing. They have altered their
product to match the tastes of their customers by adding spicy oregano packs.
Question 4
I think there are a few lessons we can learn from Domino in the international market
place. One of those lessons is that it pays to either be a first mover or a strong follower. In either
case, Domino's found a way to be the name in carry-out pizza in that country. Also, it is
important to understand cultural expectations about your product (Beattie, 2019). For instance,
the Japanese have a different expectation about the cost and reason to eat pizza compared to most
of the world. It is very important to make sure you understand how your product will be
perceived when you enter a new market.

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Microsoft and its Foreign Cash Holdings
The Microsoft Corporation was founded in 1975 and it is one of America’s largest
multinational and global leader in software and internet services and technologies for personal
servers and computers. Microsoft products are sold to over 82 countries. In 2010, the company
made the largest purchase ever in the history of internet phone service Skype which was
developed in 2003. Skype is a software that deals with voice communication. Microsoft wanted
to incorporate skype as a division of Microsoft. Microsoft had prepared to acquire Skype at
$2.25 billion (Sommer, 2019). Due to the acquisition of Skype, Microsoft became one of the
companies holding monetary instruments and foreign cash. It’s approximated that the US
corporations gather over $2 trillion on profits which are not taxed outside the nation. The foreign
cash in Microsoft case represents the assembled net earnings from external sales. According to
the law of US, the company does not pay taxes on the proceeds until they are delivered to the
US. However, Microsoft was the only firm intricate in the acquisitions that ripped tax
conveniences.
Question 1
After the March quarter results, for the first time, Microsoft revealed the giant cash that it
had outside the United States. At the end of the quarter, Microsoft had $ 50 billion cash in
general, with $42 billion of the total amount reserved in foreign countries. However, due to the
harsh tax load the organization would encounter in bringing the money to the united states, the
firms’ choices were tied to either making oversees acquisition, absorb a huge tax hit, develop its
business offshores or believe that the political atmosphere will change. In addition, the

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Conference will declare a boating holiday on repatriated money (Kocieniewski, 2019). The only
use that the cash was limited for was in buying dividends or stock repurchase.
Question 2
Looking at the case, one thing that has not been reported about the Microsoft deal is how
it structured it to maintain low taxes as possible. Microsoft Corporation and Skype horded
billions of dollars in taxes since Microsoft Company utilized foreign profits to acquire Skype.
However, Skype also had beads and its corporate headquarters in a key tax refuge in
Luxembourg. This enabled the company to evade making tax payments to the United States
corporate tax of 35% on the profits it earned. For instance, the 2010 financial report of Microsoft
revealed that the organization has $29.5 billion that is reinvested permanently outside the US.
Microsoft also calculated that the cost of tax that will be involved in repatriating those earnings
to the US would amount to $9.2 billion. This is the same as making a tax payment of 31%. The
4% that is missing would originate from external tax credits. This covers the taxes the firm paid
in foreign countries (Murray-Morris, 2019). Therefore, this means that the effective cooperate
income tax percentage for the company as per its overseas profits is meager 4% which is nine
times lower than the United States corporate income tax.
Question 3
Microsoft continues to hold more cash outside the US because of several motives such as
the transactional motive. The classical model in finance derives the maximum demand for cash
when a company incurs transactional cost linked with converting non-cash financial assets into
cash and utilizes cash for payments (Popa, 2019). Another motive is the agency. Most companies

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prefer to retain cash that raises payouts ton shareholders when the company has poor investment
chances.
I think the opportunity cost of holding billions of dollars in foreign nations is because of
pessimism over the impact of repatriated cash. Companies utilize more money to award
shareholders with stock buybacks and dividends and cash is barely in limited supply for
organizations.
If the money is brought back it may benefit shareholders since the money has been
benefiting the shareholders indirectly. However, the shareholders will benefit from the money
directly through buying of divides and share buybacks (Journal, 2019). Despite this, the cash
repatriated by Microsoft does not affect its security selection.
Question 4
I think it is not ethical for Microsoft and other US companies to hold cash overseas in the
name of tax avoidance. There is much money that companies have held overseas and this has
reduced the economic growth of the US. If the money was brought back to the US, the
government would earn a total of $280 billion tax revenue which could be used to upgrade
infrastructures such as hospitals and highways (Jilani, 2019). Avoiding tax is not the ultimate
solution for companies. The money could also be used to boost domestic businesses and raise the
employment level in the United States.

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Bibliography
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2019].
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JILANI, Z. (2019). Microsoft Structured Acquisition Of Skype To Avoid U.S. Taxes. [online]
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Murray-Morris, S. (2019). Apple and Microsoft have bigger cash holdings than UK. [online]
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ROBERTS, A. (2019). Domino's Pizza delivers rapid growth with new markets, technologies.
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