405 ch 6-10

All of the following are benefits of horizontal integration except:

A. Higher cost structure

To be commercially successful, new products must be developed with ____ utmost in mind.

Customer requirements

Which of the following problems is (are) associated with a strategy of vertical integration?

D. All of these

Which of the following is not a benefit of vertical integration?

D. Increasing the cost structure

Companies that base their diversification strategy on transferring competencies tend to acquire new businesses that are ____ to their existing business activities.

D. Related

A technological paradigm shift is most likely to occur in which stage of the industry life cycle?

Maturity

In 1999, Glaxo Wellcome and SmithKline Beecham came together to create a single firm known as GlaxoSmithKline. This is an example of a(n)

Merger

Another name for long-term cooperative relationships between two or more companies who agree to commit resources to develop new products is

Strategic Alliance

Cellular phone service providers often sell the phone itself at very low prices and then charge a relatively high fee for usage. This illustrates

The razor-and-blade strategy.

Which of the following factors increases pressures for local responsiveness? a. Powerful buyers b. Uniformity in distribution channels c. Host government demands d. Similarities in customer tastes and preferences e. Competitors that are based in high-cost locations

c. Host government demands

Which of the following is an advantage of franchising? a. It ensures tight control over quality. b. It enables companies to engage in global strategic coordination. c. It involves low development costs and risks. d. It enables the company to collect all the profits made by the franchisees. e. It frees companies from the task of monitoring and assisting operations at franchisees.

c. It involves low development costs and risks.

Aries Travels is a company that offers holiday and travel packages. The company realizes that customer preferences vary and thus extensively customizes its packages. As there are not many competitors in the market in which Aries Travels operates, there are minimal pressures to reduce costs. Aries Travels is most likely to have adopted a strategy. a. global standardization b. international c. localization d. transnational e. harvest

c. localization

General organizational competencies are found

a. in the skills of a company's top managers and functional experts.

Host government demands generally: a. increase pressures for local responsiveness. b. decrease pressures for cost reductions. c. do not encompass local content rules. d. compel companies to abandon localization strategies. e. impede a company's ability to differentiate its product offering across national borders.

a. increase pressures for local responsiveness.

A company should pursue unrelated diversification instead of related diversification when

a. its core skills are highly specialized and have few applications outside its core business.

When technology in an industry is changing rapidly, a company pursuing a strategy of vertical integration may find itself

a. locked into an old, inefficient technology.

John's surfboard shop has a long-term relationship with two surfboard makers. John is using

a. parallel sourcing.

Companies that pursue a 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. a. transnational b. downsizing c. centralization d. localization e. global standardization

a. transnational

In high-technology industries, the underlying scientific knowledge companies use is

advancing rapidly.

Killer applications are applications or uses of a new technology or product that

are so compelling they persuade customers to adopt or use the new technology in droves.

Franchising is a business-level strategy that allows companies to a. spread overhead and administrative costs over a large number of franchises. b. enjoy the competitive advantages of cost leadership or differentiation. c. hedge the costs of supplies. d. expand beyond their base of support. e. engage in new businesses that were previously beyond reach.

b

John, a computer scientist, is willing to pay premium prices to be one of the first to have new versions of software packages. John is in the ____ customer group. a. laggard b. early majority c. early adopter d. late majority e. innovator

e

Product proliferation occurs in which stage of the product life cycle? a. Embryonic b. Growth c. Shakeout d. Maintenance e. Maturity

e

Which of the following is not a characteristic of a fragmented industry? a. Low barriers to entry b. Diseconomies of scale c. Constant entry of new competitors d. Very specialized customer needs e. High barriers to exit

e

Which of the following shakeout strategies requires a company to limit or decrease its investment in a business and to extract, or milk, the investment as much as it can? a. Market concentration strategy b. Share-increasing strategy c. Cost-leadership strategy d. Hold-and-maintain strategy e. Harvest strategy

e

Which of the following strategies helps companies with high cost structures, allowing them to survive without having to implement strategies to become more productive and efficient? a. Price signaling b. Nonprice competition c. Capacity control d. Market development e. Price leadership

e

Which of the following is not an attribute of a national or country-specific environment that has an impact on global competitiveness of companies located in that nation? a. Factor endowments b. Local demand conditions c. Related and supporting industries d. Strategy, structure, and rivalry of firms within the nation e. Advertising expenses

e. Advertising expenses

Which of the following statements concerning research and development is correct?

e. Companies with a strong record of internal new venturing excel at both types of research.

A strategy based on diversification may fail to add value because companies

d. incur bureaucratic costs that exceed the value created by the strategy.

Mathematica 1.0 was one of the most distinctive applications for the short-lived NeXT Computer. It still sets the standard for symbolic math and visualization on Windows, Mac, Linux, and Unix. Mathematica 1.0 can be described as a(n) _____ application.

killer

When automobiles first became available to the public, it was difficult for buyers to find products such as tires, gasoline, and light bulbs for their cars. Early automobile owners

lacked complementary products.

If a first mover does not have complementary assets, barriers to imitation are low, and there are many capable competitors, the first mover should

license the innovation to others.

The various strategies that companies should adopt to win format wars revolve around

making network effects work in their favor and against their competitors.

Often, the industry standard is selected competitively by

market demand.

Economies of scope typically involve

sharing resources by business units

Which of the following is not one of the benefits that first movers enjoy?

Lower pioneering costs

A diversification strategy based on resource sharing

c. can help a company to realize economies of scope.

What percentage of the world's PCs adhere to the Wintel standard?

95%

A company pursuing a strategy of vertical integration may expand its operations

A. backward into an industry that produces inputs for the company's products. C. laterally into an industry that competes with the company's products

Companies invest in specialized assets becuase these assets allow them to...

A.Lower their cost structure & C.better differentiate their products

Which of the following is not a disadvantage to being a first mover?

Accumulation of market knowledge

Diversification is sometimes pursued by a company for the wrong reasons. Which of the following is a faulty justification for diversification?

All

Which of the following economic benefits result from the use of standards?

All of these

Which of the following is an example of a technical standard?

All of these

Which of the following reasons can make a diversification strategy an unwise course of action for a company to pursue?

All of these

Leveraging competencies involves taking a distinctive competency developed by a business unit in one industry to create

B. A new business in a DIFFERENT INDUSTRY

The greater the number of business units in a company's portfolio, the ____ it is for corporate managers to remain informed about the complexities of each business.

B. More difficult

Adam's boss tells him that their company is pursuing a strategy of horizontal integration, which means that the company will

B. buy one of its rivals

Horizontal integration in an industry tends to

B. reduce rivalry among firms

Which diversification strategy is based on the idea that the company creates value by applying the distinctive competencies it developed in one line of business to another business activity?

B. related diversification

A company considering entering an industry that is in the mature stage of its life cycle would generally prefer which of the following entry strategies?

C Acquisitions

What advice would you give to a firm that wants to exploit network effects?

Create incentives for other firms to develop complementary products.

When a company has cash in excess of the amount needed to maintain a competitive advantage in its core business, it will most likely pursue

C. Diversification

The price that one division of a company charges another division for its products, which are the inputs the other division requires to manufacture its own products refers to

C. Transferring pricing

Antitrust authorities

C. are concerned with companies' abuse of their market power to raise prices for consumers above the level that would exist in more competitive situations.

Vertical integration can be disadvantageous when

C. industry technology is changing rapidly.

When there is a minimal need for close long-term cooperation between a company and its suppliers, which of the following strategies is the most appropriate?

Competitive bidding

GM typically solicits bids from global suppliers to produce a particular component and awards a 1-year contract to the supplier that submits the lowest bid. At the end of the year, a contract is once again put out for competitive bid, and once again the lowest cost supplier is most likely to win the bid. GM is using which of the following?

Compettive bidding

When a company decides to expand into new industries, it must....

Construct its business models at two levels

At its simplest level, a joint venture may be thought of as a(n

Corporate partner

Which of the following is not a basic strategy for a first mover?

Discourage development of complementary assets

Which of the following will not help an established company in addressing the potential challenge of a disruptive technology?

Distinctive competencies in the current business model

When Hewlett Packard and Compaq merged, the combined firm was larger and therefore could negotiate lower prices from suppliers. This benefit of horizontal integration is called

E. Market Power

Which of the following is not a reason for the failure of an acquisition to generate the gains originally expected of it?

E. Overestimation of the potential costs of realizig synergies

Vertical integration is based on a company entering industries that add ____ to its core products.

E. Value

What is the process of transferring resources to and creating a new business unit in a new industry called?

E. internal new venting

When McDonald's introduced the McCafe, it began offering a new product that was not available in traditional McDonald's stores. The introduction of the McCafe is an example of which of the

Economies of scope

c. Joint ventures are generally preferable to acquisitions when entry barriers are high.

False

The final part of the strategy formulation process is.....

Formulation of corporate-level stratgy

When an intermediate manufacturer moves into final assembly, it is pursuing

Forward Integration

The razor-and-blade strategy was pioneered by

Gillette.

Companies can maintain market discipline over suppliers by.....

Parallel sourcing

42. Which of the following strategies should a company not adopt if it wants to win a format war?

Price the product high to recover steep upfront costs.

Rachel is a new mom who was shopping for products to use on her baby. She noticed that the company Johnson & Johnson often packaged together baby shampoo, baby lotion, and other similar products such as bottles and baby wipes. Johnson & Johnson is utilizing which of the following?

Product bundling

Consider a cost curve, with production volume on the horizontal axis and marginal costs on the vertical axis. What shape would the marginal cost curve most resemble in a high-tech industry?

Straight and flat

When one or more components of a company's value chain are applicable to a wide variety of industrial and commercial situations, which of the following strategies should a company pursue?

Related Diversification

All of the followingconsidered high-technology industries except:

Retail clothing

What is perhaps the most important reason why acquisitions made by a company fail?

The expense of the acquisition

Miller Brewing was related to Philip Morris's tobacco business because it was possible to create important maketing commonalities: both beer and tobacco are mass market consumer goods in which brand positioning, advertising, and product development skills are crucial to create successful new products. This is an example of which of the following?

Tranfering competencies

A strategy of vertical integration may be a risky strategy for a company to pursue when demand is

Unpredictable

Which of the following strategies facilitates the implementation of a just-in-time inventory system?

Verticle Integration

A telecommunications firm is working on the next generation of switching equipment that allows calls to be digitally transmitted from sender to receiver. If the new product will be sold to existing customers, the firm is pursuing a strategy of a. product development. b. market penetration. c. product proliferation. d. market signaling. e. market development

a

Customers who have a practical interest in using a new technology in the future and who are willing to experiment and envision new uses for the technology are called a. early adopters. b. the early majority. c. innovators. d. laggards. e. the late majority.

a

Firms sometimes pursue a chaining strategy to a. obtain the advantages of cost leadership. b. create product diversity. c. retain current market share. d. spread overhead costs. e. establish a number of unrelated business units.

a

In deciding on a strategy, a company in a declining industry must do all of the following except a. lower prices. b. manage industry capacity. c. evaluate its strengths relative to the remaining pockets of demand. d. evaluate the severity of decline. e. monitor its cash flow.

a

Most embryonic industries arise from a. a technological breakthrough. b. serendipity. c. patents. d. government research. e. university research and development programs.

a

Successful companies in a mature industry are most interested in a. increasing entry barriers. b. reducing the power of suppliers. c. reducing the threat of substitute products. d. reducing entry barriers. e. reducing the power of buyers.

a

There are many real estate offices in most locations. Some of them are small independent firms; some are larger and affiliated with national chains. Thus, the real estate sales industry is a. fragmented. b. vertically integrated. c. homogeneous. d. mature. e. embryonic

a

In which of the following industry environments are new ventures most likely to be favored over acquisitions as a means of entering a new business area?

a. An embryonic industry

A company, Pluto Inc., employs the franchising strategy to enter a new national market. Which of the following statements is more likely to be true of Pluto? a. It is more likely to be a service company. b. It is more likely to have a greater control over the quality the products manufactured in the foreign country. c. It is less likely to impose strict rules regarding how a franchisee does business. d. It is less likely to receive royalty payment from the franchisee. e. It is more likely to bear the development costs associated with opening a foreign market on its own.

a. It is more likely to be a service company.

Which of the following seems to be a major determinant of a new venture's success?

a. Large-scale entry into the target industry designed to build market share, even when such entry involves significant short-term losses

Which of the following statements is not generally true of a diversification strategy based on the realization of economies of scope?

a. The head office evaluates each business unit as a stand-alone operation.

Which of the following is disadvantage of strategic alliances? a. They give competitors a low-cost route to new technology and markets. b. They do not facilitate entry into a foreign market. c. They do not allow for sharing of risks and fixed costs. d. They mandate that the companies do not share complementary skills and assets. e. They cause problems when it comes to establishing technological standards for the industry.

a. They give competitors a low-cost route to new technology and markets.

Despite the globalization of production and markets, many of the most successful companies in certain industries are still clustered in a small number of countries. a. True b. False

a. True

When is vertical integration hazardous?

a. When the Technology involved in different stages of production is changing rapidly

Under a competitive bidding strategy, independent component suppliers compete with each other to be the company that will be chosen to supply

a. a particular part for a particular manufacturer.

Joint ventures

a. are an alternative to new ventures.

Credible commitments

a. are believable promises or pledges to support the development of a long-term relationship between companies.

Cost reduction pressures can be particularly intense in industries producing: a. commodity-type products. b. highly differential products. c. highly customized services. d. goods that have no close substitutes. e. goods that need minimal advertising.

a. commodity-type products.

A company should pursue related diversification

a. core skills are applicable to a wide variety of industrial and commercial situations.

An embryonic industry is one that a. has not yet been thought of. b. is just beginning to develop. c. has sufficiently developed so that early industry leaders have already been identified. d. has initial government backing because of its importance to the general populace. e. none of these choices.

b

In embryonic industries, customer demand is typically a. high. b. low. c. growing rapidly. d. variable. e. slowly declining.

b

One strategy used to consolidate fragmented industries is a. vertical mergers. b. chaining. c. product proliferation. d. price signaling. e. nonprice competition

b

Which of the following customer groups represents the leading wave or edge of the mass market? a. Early adopters b. Early majority c. Innovators d. Late majority e. Laggards

b

Which of the following entry strategies should be used when SPEED is an important consideration?

b. Acquisition

Swedish strength in fabricated steel products (such as ball bearings and cutting tools) has drawn on strengths in Sweden's specialty steel industry. This is an example of which of the following attributes that impact national competitive advantage? a. Local demand conditions b. Competitiveness of related and supporting industries c. Intensity of rivalry in an industry d. Factor endowments e. Differences in distribution channels

b. Competitiveness of related and supporting industries

The globalization of production has been decreasing as companies have been facing lower barriers to international trade and location economies. a. True b. False

b. False

Dietizza is a fast food network that makes low-calorie pizzas. As the firm wishes to expand its operations in different locations, it has licensed a few entrepreneurs to open Dietizza outlets under the company's trademark. The entrepreneurs will take up the responsibility of costs while Dietizza will assist them in running operations. The company will receive royalty payments and a percentage of profits from the entrepreneurs. Which of the following concepts is illustrated here? a. Exporting b. Franchising c. Setting up of a wholly owned subsidiary d. Strategic alliance e. Joint venture

b. Franchising

Which of the following has occurred in international trade over the past half-century? a. There has been a dramatic increase in the barriers to international trade. b. Tariff rates on manufactured goods traded by advanced nations have fallen. c. Regulations prohibiting foreign companies from entering domestic markets and establishing production facilities have increased. d. The volume of world trade has decreased dramatically. e. There has been a decline in the value of foreign direct investment.

b. Tariff rates on manufactured goods traded by advanced nations have fallen.

Product bundling refers to

b. a complete package of related products.

Ownership of retail outlets may be important for a manufacturer if

b. after-sales service is required for complex products.

New ventures

b. are often preferred by technology-based companies.

Global expansion: a. is feasible only for non-technology based companies. b. can enable companies to increase their profitability and grow their profits more rapidly. c. has significantly decreased in the recent years as the industry barriers are now higher. d. does not involve selling existing products to new markets in different countries. e. is not feasible for service-based firms.

b. can enable companies to increase their profitability and grow their profits more rapidly.

Nutrimax, a sports foods manufacturer, has recently expanded its operations to different countries. The company has realized that customers in different countries have different tastes and preferences. So, the company customizes its products based on the country where it's selling. In this scenario, Nutrimax is most likely to be using strategy. a. global standardization b. localization c. Achilles heel d. centralization e. transnational

b. localization

The globalization of production has caused firms to: a. lower their market share. b. lower their cost structure. c. centralize their production process. d. curb international competition. e. limit the number of market segments.

b. lower their cost structure.

To build trust in a cooperative relationship, both firms can

b. make mutual investments in specialized assets.

A hospital supply company invests in training for a team of sales associates to learn the details of each hospital chain's operations. In return, the hospital chain invests in a computer system that supports supply ordering. The supply company and the hospital chain are working to ensure the success of their long-term relationship by

b. making a credible commitment.

Diversification may dissipate value if it is wrongly based on

b. pooling risks.

Relish is a large fast food chain that operates in many countries. As there are several competitors in the fast food sector, the company has been facing intense pressures for achieving low cost structures. The company also faces the task of customizing its product line as there are significant differences in tastes and preferences among customers in different geographic locations. In order to achieve both low costs and product differentiation, the company should aim to pursue a strategy. a. global standardization b. transnational c. localization d. downsizing e. divestment

b. transnational

Which of the following is a benefit that firms should expect to gain from the use of horizontal integration?

b.Better realization of economies of scale

Recently, the U.S. Food and Drug Administration began to require more descriptive labeling of food products. This is an example of standards developed

by government mandate.

A horizontal merger is a a. consolidation of small firms from disparate industries. b. consolidation of suppliers in an effort to ensure availability of vital components. c. merger of firms within the same industry. d. conglomerate acquisition. e. violation of antitrust regulations.

c

Competitive intensity in a declining industry is greatest when a. the industry is declining slowly instead of rapidly. b. the product is easy to differentiate. c. exit barriers are high. d. entry barriers are high. e. technology is stable.

c

The first group of customers to enter the market for a new product are called a. early adopters. b. first users. c. innovators. d. adventurers. e. initial customers.

c

Which of the following best describes an industry that consists of many small firms? a. Mature b. Growth c. Fragmented d. Declining e. Diverse

c

Which of the following customer groups is not very price sensitive? a. Early adopters b. Early majority c. Innovators d. Early adopters and early majority e. Early adopters, early majority, and innovators

c

Which of the following statements is true in the context of local demand conditions? a. Companies are typically least sensitive to the needs of their closest customers. b. Home demand plays little role in helping companies upgrade their national competitive advantage. c. A nation's companies gain competitive advantage if their domestic customers are sophisticated and demanding. d. The characteristics of international demand alone shape the attributes of a company's products; not local demand. e. Local demand characteristics have little role to play in creating pressure for innovation and quality.

c. A nation's companies gain competitive advantage if their domestic customers are sophisticated and demanding.

The three main types of diversification strategies are

c. Acquisitions, internal new ventures, and joint ventures.

Which of the following is not a necessity for leveraging the skills of global subsidiaries? a. Incentives for local managers to share knowledge and ideas b. Awareness among managers that competencies can develop anywhere c. Assertion of monopoly of the corporate center over subsidiaries d. Transfer of competencies around the company e. Incentives that encourage employees to take necessary risks

c. Assertion of monopoly of the corporate center over subsidiaries

Which of the following is not a guideline for a successful acquisition?

c. Completing the acquisition quickly

Which of the following ideas is a localization strategy is based on? a. There is a convergence in the tastes of consumers in different nations of the world. b. There are substantial economies of scale to be realized from centralizing global production. c. Consumer tastes and preferences differ among national markets. d. There are cost advantages associated with manufacturing a standard product for global consumption. e. Competitive strategy should be centralized at the world head office.

c. Consumer tastes and preferences differ among national markets.

Which of the following statements is true about global standardization strategy? a. It emphasizes product customization to specifically meet customer needs. b. It involves the spreading of production, marketing, and research and development activities of companies to all the location it operates in. c. It makes most sense when there are strong pressures for cost reductions. d. It makes most sense when the pressures for local responsiveness are maximum. . It fails to focus on achieving location and scale economies.

c. It makes most sense when there are strong pressures for cost reductions.

Which of the following statements is true about international strategy? a. It is usually adopted by companies that face intense cost pressures due to competition. b. It makes most sense when the pressures for local responsiveness are very intense. c. It often involves the head office retaining tight control over marketing and product strategy. d. It often involves decentralizing product development functions such as R&D to different subsidiaries. e. It involves extensive scope for localization and product differentiation.

c. It often involves the head office retaining tight control over marketing and product strategy.

KL Entertainment Inc. is a service-based firm with very few competitors. The company is looking to sell its services in different nations with substantial differences in consumer preferences and where cost pressures are not too intense. Which of the following strategies should WKL Entertainment lnc. managers pursue? a. Global standardization b. Transnational c. Localization d. International e. Multinational

c. Localization

New ventures are likely to be preferred compared to acquisitions when

c. a company's business model is based on using its technology to innovate new kinds of products for related markets.

The Achilles heel of international strategy is that: a. economies of scale cannot be achieved. b. customization of products makes the company lose its credibility. c. competitors inevitably emerge. d. non-price differences among products hold little importance. e. customer preferences eventually become identical.

c. competitors inevitably emerge.

Most manufacturing companies begin their global expansion by: a. licensing. b. franchising. c. exporting. d. forming a joint venture. e. setting up a wholly owned subsidiary in the host country.

c. exporting.

Differences in tastes and preferences: a. increase pressures for cost reductions. b. do not affect service-based firms. c. increase pressures for local responsiveness. d. reduce pressures from the host government. e. significantly decrease R&D costs of a company.

c. increase pressures for local responsiveness.

An internal new venture is the most appropriate strategic choice when

c. the firm has competencies that can be leveraged.

For a strategic alliance, firms should seek partners that are: a. different in terms of vision and agendas. b. known for being opportunistic. c. willing to share costs and risks of product development. d. radically different when it comes to strategic goals. e. similar when it comes to capabilities.

c. willing to share costs and risks of product development.

Technological disruption

causes firms to adopt a new business model.

In which stage of the industry life cycle do both cost leaders and differentiators adopt a hold-and-maintain strategy to defend their business models and ward off threats from focused companies that might be appearing? a. Late majority b. Growth c. Shakeout d. Mature e. Decline

d

Mature industries are generally characterized by a. low entry barriers. b. few economies of scale. c. high transportation costs. d. a small number of large firms. e. rapidly fluctuating demand.

d

Most market demand and industry profits arise when a. early adopters leave the market. b. innovators become regular users. c. initial users become regular customers. d. early and late majority users enter the market. e. none of these choices.

d

Firms in fragmented industries most often follow which generic strategy? a. Differentiation b. Cost leadership c. Focused low cost d. Stuck in the middle e. Focused differentiation

e

Which of the following is not a characteristic of fragmented industries? a. A large number of small competitors b. Low economies of scale c. Many custom-made or specialty firms d. High barriers to entry e. Low consolidation

d

Which of the following strategies allows interdependent firms indirectly to coordinate their actions? a. Cost cutting b. Vertical integration c. Preemption d. Price signaling e. Horizontal mergers

d

Which of the following strategies for fragmented industries grants the right to use the parent's name, reputation, and business model in a particular location or area in return for a fee and often a percentage of the profits? a. Chaining b. Horizontal merger c. Vertical merger d. Franchising e. B2B

d

In which of the following cases are bureaucratic costs likely to be lowest?

d. A company with five divisions that pursues unrelated diversification based on acquisitions and restructuring

In 2007, Google bought YouTube. This is an example of which of the following?

d. Acquisition

Which of the following is (are) the probable consequence(s) of an inability to integrate two divergent corporate cultures after an acquisition?

d. All of these

Which of the following may be true for a company pursuing a strategy of unrelated diversification rather than a strategy of related diversification?

d. All of these

Which of the following is not a factor of production? a. Land b. Labor c. Raw materials d. Competitive forces e. Managerial sophistication

d. Competitive forces

Stanley's services firm wants to enter an embryonic market, but it doesn't have enough cash to purchase the required assets. Which of the following strategies would you recommend to Stanley?

d. Diversify with a joint venture

Which of the following is not a risk of exporting? a. Tariff barriers b. Transportation costs c. Location diseconomies d. High manufacturing costs e. Delegation of marketing activities to a local agent

d. High manufacturing costs

Which of the following statements is true about transnational strategy? a. It gives little emphasis to cost reduction and achieving scale economies. b. It makes little sense when the pressures for local responsiveness are intense. c. It is an easy one to pursue because it places minimal demands on the company. d. It fosters a flow of skills between different subsidiaries in the company's global network of operations. e. It is adopted by companies that produce standardized goods that do not require product differentiation.

d. It fosters a flow of skills between different subsidiaries in the company's global network of operations.

Which of the following statements is true about localization strategy? a. It focuses on marketing a standardized product worldwide to achieve cost reductions. b. It makes most sense when cost pressures are extremely intense. c. It is most appropriate when there are similarities across nations with regard to consumer tastes and preferences. d. It involves some duplication of functions and smaller production runs. e. It usually relieves companies of the task of closely monitoring their costs.

d. It involves some duplication of functions and smaller production runs.

Which of the following is NOT a general organizational competency?

d. Product bundling

Which of the following entry modes allows a company to engage in global strategic coordination? a. Exporting b. Licensing c. Joint ventures d. Wholly owned subsidiaries e. Franchising

d. Wholly owned subsidiaries

Free cash flow is defined as

d. cash in excess of that required to fund investments in the company's industry and to meet any debt commitments.

Acquisitions often fail because of....

d. differences in corporate culture.

Outsourcing occurs when a firm

d. hires another firm to perform value creation activities.

When a company performs a value creation activity in a region that is optimal for that activity, wherever in the world that might be, it is trying to capitalize on: a. negative feedback loops. b. economies of scope. c. the transnational strategy. d. location economies. e. its localization strategy.

d. location economies.

Outsourcing

d. moves some value chain activities outside the firm.

Black and Decker, Capitol One, Gillette, and Unilever are all companies that conduct business in two or more national markets. These companies are known as a. bi market companies. b. national companies. c. domestic companies. d. multinational companies. e. localized companies.

d. multinational companies.

If a company is to increase the probability of a new product's commercial success, the company must foster close links between

d. research and development (R&D) and marketing.

Horizontal integration may be thought of as

d.staying inside the industry in which the company currently operates.

When an industry's products rely on a common set of features, these features are called a

dominant design.

At the growth stage of an emergency market, a. ongoing technological progress makes a product easier to use. b. key complementary products are developed. c. companies in the industry find ways to reduce costs. d. demand for the product increases. e. all of these choices.

e

In the wireless telecommunications industry, different technical standards are found in different parts of the world. A technical standard known as GSM is common in Europe, and an alternative standard, CDMA, is more common in the United States and parts of Asia. Equipment designed for GSM will not work on a CDMA network and vice versa. Which of the following pressures for local responsiveness does this represent? a. Global environmental demands b. Host government demands c. Differences in distribution channels d. Differences in customer tastes and preferences e. Differences in infrastructure

e. Differences in infrastructure

Which of the following statements is true in the context of globalization of production and markets? a. Globalization of production has significantly increased the costs for many industries. b. The globalization of markets and production has failed to threaten companies' home markets. c. Consolidated oligopolies continue to be dominated by a small number of companies despite globalization. d. The shift from national to global markets has curbed competitive rivalry in many industries. e. Globalization has significantly increased the threat of entry.

e. Globalization has significantly increased the threat of entry.

Which of the following is an advantage of international licensing? a. It enables the company realize scale economies and location economies through manufacturing products in a centralized location. b. It allows the company to collect profits from one licensee and use it to support others. c. It eliminates the risk of losing control over a technology that the company owns. d. It enables the company to coordinate its strategy efficiently to achieve competitive advantage. e. It takes away the pressure of development costs and risks associated with opening up a foreign market from the company.

e. It takes away the pressure of development costs and risks associated with opening up a foreign market from the company.

In which of the following is a firm most likely to lose direct control over value creation activities?

e. Outsourcing

Which of the following factors increases pressures for cost reductions? a. Meaningful differentiation between products b. Reduced international competition c. Competitors that are based in high-cost locations d. High switching costs e. Persistent excess capacity

e. Persistent excess capacity

Which entry mode gives a multinational the tightest control over foreign operations? a. Exporting from the home country and letting a foreign agent organize local marketing b. Licensing c. Franchising d. Entering into a joint venture with a foreign company to set up overseas operations e. Setting up a wholly owned subsidiary

e. Setting up a wholly owned subsidiary

Which of the following statements is true in the context of attributes of national competitive advantage? a. Factor endowments do not encompass aspects such as managerial sophistication. b. Companies are typically least sensitive to the needs of their closest customers. c. The benefits of investments in advanced factors of production by related and supporting industries are confined to those industries. d. Domestic rivalry creates pressures to increase costs and avoid investing in upgrading advanced factors. e. The nature of home demand shapes the attributes of domestically made products.

e. The nature of home demand shapes the attributes of domestically made products.

Google bought Clever Sense, a mobile app company. This is an example of a(n)

e. acquisition.

When a company expands its sales volume through international expansion, it can realize cost savings from economies of scale through all of the following except: a. spreading fixed costs over its global sales volume. b. utilizing its production facilities more intensely. c. increased bargaining power with its suppliers. d. learning effects associated with higher volume. e. adopting high cost structures.

e. adopting high cost structures.

Long Term Contracts

e. are a low-cost alternative to vertical integration when it is possible to build cooperative relationships with suppliers.

Strategic alliances are

e. long-term agreements between two or more companies to jointly develop products that benefit all companies involved in the alliance.

Global economies of scale can be realized by: a. restricting the expansion of overseas sales. b. limiting the utilization of production facilities. c. curbing bargaining power with suppliers. d. decreasing cost savings through learning effects. e. spreading the fixed costs associated with developing.

e. spreading the fixed costs associated with developing.

General organizational competencies refer to competencies

e. that transcend individual functions or business units.

If a first mover does not have complementary assets, barriers to imitation are high, and there are several capable competitors, the first mover should

enter into a joint venture to protect the product.

When standards are part of the public domain, they can be used

freely by any company.

Aggressive marketing to jump-start demand for a product often involves all of these except:

high introductory prices.

Many industries have experienced increased consolidation over the last decade due to an increase in

horizontal integration

Marginal cost refers to the cost of

producing one extra unit of product.

Technical standards in high-technology industries are

specifications that all producers adhere to when making a product or product component.

Microsoft released its latest operating system, Windows Vista, and intended it to replace earlier versions of Windows. Buyers of Vista had to learn how to use the features of the new software; thus, buyers were facing

switching costs.

In the 1870s, Christopher Sholes invented the layout of keys on a typewriter keyboard, sometimes called the QWERTY layout. This invention is a(n)

technical standard.

There are guidelines for turbine blades for jet engines. These guidelines define the exact material and performance requirements of these engines and can be referred to as

technical standards.

Cell phone technology is replacing traditional wired phone technology. This is an example of a(n)

technological paradigm shift.

Consumers will bear the costs of switching technologies when

the benefits of adopting the new technology outweigh the costs of switching.

An industry is considered to be high technology, or high tech, when

the underlying scientific knowledge that companies in the industry use is advancing rapidly.

An adequate supply of complements to a product helps ensure that consumers

will buy the company's product.

Matsushita licensed its VHS technology to rivals, while Sony kept its Beta technology proprietary. This action allowed Matsushita to

win the format war.