Ch 10

94) Jeremy is a strategist who wants to decide on the appropriate strategy to help his firm "go global." Which of the following should he consider while choosing his strategy? A) He must be aware of the fact that despite globalization and the emergence of the internet, firm geographic location has actually maintained its importance. B) He should rely on his firm's business-level strategy as a clue to possible strategies pursued globally. C) He should remember that he has only one framework at his disposal to make global strategy decisions. D) He must remember that higher levels of control and a lower likelihood of any loss in

A) He must be aware of the fact that despite globalization and the emergence of the internet, firm geographic location has actually maintained its importance.

67) Stratton Oakmont Inc., a well-established and reputed multinational enterprise (MNE), is headquartered in a highly developed economy. It wants to start its operations in Old Hebrides, considered one of the less-developed nations in the world. How will this strategic move most likely affect Stratton Oakmont Inc.? A) It will benefit from economic arbitrage. B) Stratton Oakmont will use its competitive advantage from economies of standardization. C) Stratton Oakmont will replicate its existing business model easily. D) It will be able to easily sell products for which demand varies by income.

A) It will benefit from economic arbitrage.

96) Los Pollos Hermanos is a company that makes frozen lunch and dinner entrées. Based on what you know about companies like Nestlé, what action should Los Pollos Hermanos take as it strives to become multinational? A) Pursue a multidomestic strategy, customizing product offerings to suit local preferences. B) Attempt an international strategy, controlling costs and taking advantage of economies of scale by selling the same (or very similar) products around the globe. C) Try a global-standardization strategy, which creates standardized products and competes mainly on price. D) Consider a transnational strategy by creating a blue ocean market.

A) Pursue a multidomestic strategy, customizing product offerings to suit local preferences.

Raul is the Chief Operating Officer (COO) of Black Mesa Inc., a firm that produces handcrafted kitchen tables for both the residential and commercial markets. Jose believes that his domestic market is saturated and now wishes to go global. Which of the following below would serve as an advantage for Raul if he chose to pursue international markets? A) Raul could gain access to cheaper raw materials in a foreign country, thus lowering the cost of his input factors. B) Raul could share his intellectual properties with another firm that operates in a foreign country in hopes of achieving collaboration. C) Raul's brand might suffer a loss in reputation if he goes global but could increase his market share. D) Raul may benefit from learning about Hofstede's cultural dimensions that could be leveraged on his current employees in his domestic market.

A) Raul could gain access to cheaper raw materials in a foreign country, thus lowering the cost of his input factors.

40) Which of the following is most likely an accurate statement? A) The multinational enterprise Burns Industries benefited from advances in communications technology. B) The multinational enterprise Axe Capital was hindered by falling investment barriers. C) The multinational enterprise Rearden Steel benefited from rising trade barriers. D) The multinational enterprise Rainholm Industries was hindered by reduced transportation costs.

A) The multinational enterprise Burns Industries benefited from advances in communications technology.

83) Yubaba Inc., a company that manufactures and sells premium perfumes, is pursuing an international strategy. Axe Inc., a supermarket chain, follows a multidomestic strategy. Which of the following statements is most likely true of this scenario? A) Yubaba Inc. will sell the same products in both domestic and foreign markets, whereas Axe Inc. will customize its product offerings to suit local requirements. B) Yubaba Inc. will pursue a differentiation strategy at the business level, whereas Axe Inc. will pursue a cost-leadership strategy at the business level. C) Yubaba Inc. will be better protected from exchange rate fluctuations when compared to Axe Inc. D) Yubaba Inc. will not be able to use its home-based core competencies in foreign markets as much as Axe Inc. will.

A) Yubaba Inc. will sell the same products in both domestic and foreign markets, whereas Axe Inc. will customize its product offerings to suit local requirements.

82) Entertainment 720 Inc. operates in 20 countries around the globe. The company clearly understands that the skin and hair type of customers varies from one country to another. Consequently, its products are customized to suit local needs and preferences of customers, even though the costs incurred while producing these products are exceptionally high. This strategy helps the company behave as a local firm in a foreign market. In this scenario, which of the following strategies does Entertainment 720 most likely implement? A) a multidomestic strategy B) a local-as-global strategy C) a transnational strategy D) a sole provider strategy

A) a multidomestic strategy

44) Which of the following has been a key driver for firms to expand globally during the Globalization 3.0 stage? A) benefits from lower labor costs in manufacturing and services B) free use of formerly protected intellectual property C) increasing trade barriers that protect businesses D) exporting newly available raw materials, such as rubber and coal

A) benefits from lower labor costs in manufacturing and services

16) Maria wants to pursue an international strategy but is concerned that foreign markets aren't ready for her products and services. You recommend that she engage in ________, which would be contract based and would limit risk and exposure of her investments. A) exporting B) licensing C) equity alliance D) greenfield operations

A) exporting

32) During the period of Globalization 1.0, the mode of entry into foreign markets primarily involved A) exporting goods. B) making foreign direct investments. C) making foreign institutional investments. D) licensing production and distribution.

A) exporting goods.

19) Vinny, the CEO of Rainholm Industries is looking to employ a ________ strategy, which would take advantage of economies of scale and location economies. He wishes to pursue and establish a global division of labor based on wherever best-of-class capabilities reside at the lowest possible cost for Rainholm Industries. A) global standardization B) multidomestic C) international D) transnational

A) global standardization

76) Aperture Science Inc. has decided to enter into a foreign market by setting up its own production facilities and distribution channels from scratch. This will give it strong control over all its business activities. Which of these foreign-entry modes will Maddox most likely choose? A) greenfield operation B) export C) joint venture D) acquisition

A) greenfield operation

22) There are some industries that are more competitive in some countries than others. In order to fully understand why this occurs, we need to examine Porter's Diamond framework. Which of the following below is NOT one of the four factors in this framework? A) industry-specific forces B) factor conditions C) competitive intensity in the focal industry D) demand conditions

A) industry-specific forces

27) When firms sell their products overseas with little or no change to the products, they may increase the expropriation of intellectual property and increase the risk of piracy. This is considered a serious disadvantage when pursuing a(n) ________ strategy. A) international B) differentiation C) cost-leadership D) functional-level

A) international

92) Sirius Cybernetics Inc. has a national competitive advantage in the pharmaceutical industry. This means that the country A) is a world leader in the pharmaceutical industry. B) has nationalized the pharmaceutical industry. C) has low levels of competition, providing other multinational companies with an opportunity to take over the pharmaceutical industry.D) is a potential foreign market for multinational pharmaceutical companies to sell their products.

A) is a world leader in the pharmaceutical industry.

71) Black Mesa Minerals Inc. wants to expand into the international market. It does not want to spend a very large amount of money for this process. However, Black Mesa Minerals wants to maintain some control in the foreign market. Which of the following would be the mode for this firm? A) joint ventures B) acquisitions C) greenfield operations D) exports

A) joint ventures

46) Unilever's new-concept center is situated in downtown Shanghai, China, attracting hundreds of eager volunteers to test the firm's latest product innovations on-site while Unilever researchers monitor consumer reactions. In this example, Unilever is trying to reap the benefits of A) location economies. B) economies of scope. C) learning races. D) network effects.

A) location economies.

64) Which of the following factors is the most important determinant of economic distance? A) the wealth and per capita income of consumers B) the ethnicity and religion of consumers C) the presence of legal institutions in a country D) the topography of a country

A) the wealth and per capita income of consumers

20) Macmillan Toys Inc. is looking to expand internationally and wishes to develop a new product line that is highly localized while keeping their cost structure below that of their rivals. Macmillan Toys Inc. has been successful with implementing a blue ocean strategy in their main strategic business units and as such wishes to pursue a ________ strategy for their international operations. A) transnational B) international C) global standardization D) multidomestic

A) transnational

87) Bayside Inc., a reputed brand for fine art supplies, is implementing an international strategy. Cyberdyne Corp., a maker of mini-computer tablets, is pursuing a global- standardization strategy. Which of the following statements most likely holds true in this scenario? A) While Bayside Inc.'s competitive advantage lies in its high local responsiveness, Slalom Corp. will lack such capabilities. B) Cyberdyne Corp. focuses more on cost-reductions when compared to Bayside Inc. C) Cyberdyne's business functions are highly centralized, whereas Bayside organizes its activities worldwide. D) Cyberdyne is exposed to greater risks of exchange rate fluctuations.

B) Cyberdyne Corp. focuses more on cost-reductions when compared to Bayside Inc.

93) Oceanic, a venture capital firm, has the opportunity to invest in one of two firms that are in the process of globalizing. Macmillan, an air-conditioner manufacturer, faces intense pressure from its home market. Rent a Swag, a dog-toy manufacturer, has encountered little competition in its country of origin. In which company should Oceanic invest? A) Macmillan, because air conditioners cost more to ship than dog toys do B) Macmillan, because firms that face stiff competition at home tend to do better abroad C) Rent a Swag, because firms that face little or no competition at home tend to do better abroad D) Rent a Swag, because dog toys cost less to ship than air conditioners do

B) Macmillan, because firms that face stiff competition at home tend to do better abroad

23) Thomás works in a rare metals industry and wants to open a business in a foreign country that is rich with natural resources. He believes that natural resources are the one and only mechanism that can help him achieve an international competitive advantage. After all, countries like Afghanistan, Iran, and Venezuela are home to the world's richest natural recourses, so, in theory they too should be able to leverage those resources in order to create a national competitive advantage. Which of the statements below best represents an appropriate response to Thomás and his theory? A) Natural resources almost always help countries achieve a national competitive advantage. B) Natural resources are often not needed to generate world-leading companies because competitive advantage is often based on other factor endowments such as human capital and know-how. C) Natural resources can help create world-leading companies but only if they pursue a differentiation strategy. D) Having access to natural resources never help firms achieve a national competitive advantage.

B) Natural resources are often not needed to generate world-leading companies because competitive advantage is often based on other factor endowments such as human capital and know-how.

79) Fang and Bone Inc. is a snack manufacturer that wants to expand globally. Few people abroad are familiar with Fang and Bone snacks. The countries into which the company wants to expand require a high degree of local responsiveness when it comes to food, and the citizens of those countries already spend plenty of money on snacks. Which action should the leaders of Fang and Bone take? A) Achieve economies of scale by using the global-standardization approach. B) Pursue a multidomestic strategy that includes new "local" brands. C) Keep costs low with undifferentiated product in the international strategy. D) Appease pressures for cost-reductions by following the transnational approach.

B) Pursue a multidomestic strategy that includes new "local" brands.

36) Peter is a senior vice president at a textile manufacturer that wants to move from being 20 percent globalized to 70 percent globalized in the next 10 years. What are some possible drawbacks that Peter's company must anticipate? A) None. All political and economic factors point to the rise of globalization. B) Rising wages may cancel out cost savings of access to low-cost input factors. C) Governments may lower barriers to international trade. D) Improved communication technology may lead to longer production cycles.

B) Rising wages may cancel out cost savings of access to low-cost input factors.

38) How will an increase in coordinated economic and political integration between countries affect the world economy? A) The world's market economies will become self-sufficient and independent. B) There will be gains in social welfare and living standards across the globe. C) The cost of labor will further decline in emerging economies. D) There will be a movement away from global-collaboration networks among multinational enterprises (MNEs).

B) There will be gains in social welfare and living standards across the globe.

63) For which of the following companies will geographic distance be the most relevant factor in deciding whether to trade with a target country? A) a firm that manufactures cell phone batteries B) a firm that extracts and exports iron ore C) a firm that produces movies

B) a firm that extracts and exports iron ore

101) Fierce domestic competition in Globex makes a tough environment for any motorcycle company. Success requires top-notch engineering of chassis and engines, as well as keeping costs and fuel consumption in check. As a result, Globex's motorcycles have a competitive advantage in the global market. According to Porter's diamond framework, this scenario shows the influence of competitive intensity in A) a peripheral industry. B) a focal industry. C) supportive complementors. D) related complementors.

B) a focal industry.

78) Stark Industries Inc. manufactures airplane parts. It wants to globalize and is willing to spend a considerable amount to protect its intellectual property. Which of these business ventures makes the most sense for Stark Industries? A) licensing some of its newest designs to overseas competitors B) acquiring an airplane parts manufacturer in another country C) beginning a brownfield project in its home country D) exporting airplane parts to many other countries

B) acquiring an airplane parts manufacturer in another country

Jane is the CEO of Aperture Science LLC and wishes to develop additional competencies for her business. She is mostly interested in taking advantage of the ________, which are clustered firms that have unique skill sets located in specific geographic regions. A) local social comparisons B) communities of learning C) Hofstede's cultural dimensions D) transnational strategies

B) communities of learning

24) When Susan, the CEO of Gregarious Simulation Systems, expanded her operations to a different international market, she was surprised to see how little competition she faced. In her home country, the competition for simulation systems is incredibly fierce. As a result of her international expansion, her firm has been able to easily position themselves as a major player. Which of the four categories of Porter's Diamond framework best explains this advantage? A) factor conditions B) competitive intensity in the focal industry C) demand conditions D) related and supporting industries/complementors

B) competitive intensity in the focal industry

72) Which of the following modes of entering a foreign market allows for the lowest level of control? A) greenfield ventures B) exporting C) joint ventures D) acquisitions

B) exporting

100) In Michael Porter's diamond framework, ________ conditions describe a country's endowments in terms of natural, human, and other resources. A) market B) factor C) demand D) supply

B) factor

77) Which of the following types of organizations comparatively requires the lowest levels of investment and control? A) joint ventures B) franchising C) acquisition D) greenfield operations

B) franchising

37) The process of closer integration and exchange between different countries and peoples worldwide is A) diversification. B) globalization. C) standardization. D) modification.

B) globalization.

17) Lucy wishes to have more control with her international strategy and is willing to increase her firms' investments in this foreign market. She considers creating a subsidiary but also wishes to build a manufacturing plant from the ground up. Lucy is most likely interested in pursuing a(n) A) franchising agreement. B) greenfield operations strategy. C) exporting and importing strategy. D) equity alliance.

B) greenfield operations strategy.

58) A greater cultural distance between two trading countries A) increases linguistic similarities between the two countries. B) increases the liability of foreignness. C) reduces the uncertainty of doing business. D) reduces the transaction costs associated with business.

B) increases the liability of foreignness.

48) A firm is said to be pursuing a polycentric innovation strategy when A) its research facility is situated in the headquarters and all other business activities are located around the world. B) it draws from multiple, equally important research facilities located throughout the world. C) it restricts its innovation to Western economies and production to developing markets. D) its knowledge flow takes a one-way path—from its headquarters to the subsidiaries.

B) it draws from multiple, equally important research facilities located throughout the world.

50) Cyberdyne Systems Corp. manufactures cooking and baking equipment and has its base in the country of Handled. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself in the country of Balalaika, and uses its low-cost strategy to do so. However, due to the additional costs associated with training, coordinating across geographic distances, and other costs associated with doing business in an unfamiliar cultural and economic environment, Cyberdyne Systems Corp. incurs huge financial losses in Balalaika. In this scenario, Cyberdyne Systems Corp.'s failure to establish itself successfully in Balalaika occurs most likely because A) it overestimated its need to protect its intellectual property. B) it underestimated its liability of foreignness when entering the Balalaika market. C) it underestimated its dwindling reputation before it enters the Balalaika market. D) it overestimates the geographic and cultural distance between Handled and Balalaika

B) it underestimated its liability of foreignness when entering the Balalaika market.

95) Hooper's Corn Inc. produces an inexpensive microwave popcorn that is well tailored for the tastes of U.S. consumers. However, it has failed to satisfy the consumer preferences of its host country, Japan. Which of the following categories has Hooper's Corn performed poorly in? A) cost-reduction B) local responsiveness C) global standardization D) transnational strategy

B) local responsiveness

47) Duke & Duke Autos Inc. has shifted its research and development unit from its home country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advanced automotive industry in Germany. In this scenario, Duke & Duke Autos Inc. is reaping the benefits of A) economies of scope. B) location economies. C) resource immobility. D) resource ambiguity.

B) location economies.

35) A trend observed during the Globalization 3.0 stage involves A) countries around the globe becoming more self-sufficient and independent. B) multinational companies organizing as global-collaboration networks. C) privately owned firms getting nationalized. D) world's market economies becoming less integrated.

B) multinational companies organizing as global-collaboration networks.

54) PolyCon Corp., a tool and die maker, is considering where to locate its new factories and offices. According to the CAGE distance model, which of these countries is statistically most attractive to PolyCon? A) one that is much poorer than the country where PolyCon has its headquarters B) one that is in the same trading bloc as PolyCon's home country C) a country that does not share the same currency as PolyCon's home country D) the country that is the greatest physical distance from existing PolyCon's facilities

B) one that is in the same trading bloc as PolyCon's home country

49) Which of the following statements accurately explains the primary reason behind Walmart's failure in Germany? A) inability to implement its trademark focused-differentiation strategy in the German market B) significant differences between its U.S. personnel policies and Germany's culture C) Germany's unfamiliarity with retail discount powerhouses D) Metro's hostile takeover of Walmart in Germany

B) significant differences between its U.S. personnel policies and Germany's culture

53) Under the CAGE distance framework, the administrative and political distance between two countries primarily increases with A) differences in climates and time zones. B) the absence of a trading bloc. C) physical remoteness. D) the lack of connective ethnic and social networks.

B) the absence of a trading bloc.

69) Which of the following countries has a high geographic distance but a low cultural distance from the United States? A) Canada B) Mexico C) Australia

C) Australia

34) Which of the following is an observable feature in the Globalization 3.0 stage? A) Knowledge flow between the local replicas of the multinational enterprises and their U.S. headquarters is limited. B) Only sales and distribution functions of a multinational enterprise are located in a few key countries. C) Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world. D) The typical firm has reorganized from a global enterprise with different centers of expertise to a multinational company with self-contained operations in a few selected countries.

C) Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world.

91) Globex Inc., a company popular for its dairy products, successfully follows a multidomestic strategy. Omni Consumer Products, a large conglomerate, pursues a transnational strategy. Which of the following statements is most likely true of this scenario? A) While Omni Consumer Products' competitive advantage will lie in its high local responsiveness, Globex Inc. will lack such competencies. B) Omni Consumer Products will face greater pressure for cost-reductions than Globex Inc. due to strategy choice. C) Both Globex Inc. and Omni Consumer Products will have to duplicate key business functions in multiple host countries. D) While Globex Inc. will require a global matrix structure, Omni Consumer Products Inc. will require a traditional headquarters model.

C) Both Globex Inc. and Omni Consumer Products will have to duplicate key business functions in multiple host countries.

15) Firms that consider international expansion will often examine absolute metrics on which countries to pursue investments in but also consider relative distance. To help firms decide where to compete, the ________ was developed to help firms make this decision. A) MNE decision making model B) polycentric strategic framework C) CAGE distance framework

C) CAGE distance framework

90) Which of the following is a drawback of pursuing a transnational strategy? A) It creates bottlenecks for global learning. B) It exposes a firm to diseconomies of scale and location. C) It requires a global matrix structure, which is difficult to implement. D) It involves locating all key business activities in the home country headquarters.

C) It requires a global matrix structure, which is difficult to implement.

59) Dinotopia is a country of English-speaking people and has a very profitable economy. Which of the following countries is most likely to be the closest to Dinotopia in terms of cultural distance? A) Khemed, which has the same wealth and per capita income as Dinotopia B) Luftnarp, which has a very profitable economy and where people speak Luftnarpian C) Maldonia, where people speak English and have a low standard of living D) Moloni Republic, which is located close to Dinotopia and is easily accessible by road

C) Maldonia, where people speak English and have a low standard of living

73) Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign-entry mode? A) They are easy to initiate and terminate. B) They require low amounts of investments in terms of capital. C) They reduce a firm's exposure to loss of reputation. D) They are based on contracts rather than ownership.

C) They reduce a firm's exposure to loss of reputation.

86) Weyland Yutani Inc., a supermarket chain, is implementing a multidomestic strategy. TelAmeriCorp , a company that manufactures solar panels for commercial and domestic purposes, is pursuing a global-standardization strategy. How will the two companies most likely differ from each other? A) Weyland Yutani Inc. will focus more on cost-reduction than TelAmeriCorp. B) Weyland Yutani Inc. will have its business functions spread across the world; TelAmeriCorp's business functions will be highly centralized. C) Unlike TelAmeriCorp, Weyland Yutani Inc. will be able to pursue a differentiation strategy at the business level.

C) Unlike TelAmeriCorp, Weyland Yutani Inc. will be able to pursue a differentiation strategy at the business level.

65) Which of the following statements is true with regard to international trade between countries? A) Greater cultural distance between the home and host countries decreases the liability of foreignness to multinational companies. B) Colony-colonizer relationships have a strong negative effect on bilateral trade between countries. C) Wealthy countries engage in relatively more cross-border trade than poorer ones. D) Political integrations decrease the expected trade intensity between two countries.

C) Wealthy countries engage in relatively more cross-border trade than poorer ones.

74) Gregarious Simulation Systems Inc. wants to globally expand its market. It intends to ensure that its mode of foreign entry allows it to have strong control over its operations and protect its intellectual property, though that may mean investing a significant amount of capital and other resources. In this scenario, which of the following foreign-entry modes would best suit Gregarious Simulation Systems? A) exporting B) franchise agreement C) acquisition D) licensing

C) acquisition

66) Which of the following statements best explains why Walmart is finding it difficult to replicate its existing business model in India? A) because of the political differences between India and the United States B) because NAFTA prohibits Walmart from investing in countries outside North America C) because of the large economic distance between the United States and India D) because Indian consumers have not accepted Walmart's low-cost strategy

C) because of the large economic distance between the United States and India

89) A firm pursuing a transnational strategy would believe that A) key business functions should be located in its home country headquarters. B) local responsiveness is more important than cost-reductions for competitive advantage. C) best practices, ideas, and innovations should be diffused throughout the world. D) the majority of the value creation should take place in the home country.

C) best practices, ideas, and innovations should be diffused throughout the world.

60) How did Canada, Mexico, and the United States reduce the administrative and political distance between them? A) by adopting similar national cultures B) by lowering the disparities between their per capita incomes C) by establishing the North American Free Trade Agreement (NAFTA) D) by reducing their linguistic differences

C) by establishing the North American Free Trade Agreement (NAFTA)

75) Which of the following foreign-entry modes primarily involves producing goods in one country to sell in another? A) greenfield operations B) brownfield operations C) exporting D) crowdsourcing

C) exporting

84) Blue Cat Inc., a manufacturer of high-technology medical devices, has its product development centers located in the United States and South Korea. The manufacturing units are located in China and the Philippines to benefit from low labor costs and access to original equipment manufacturers. This allows the company to competitively price its devices. Also, the various phone models sold by the company are uniform in all the foreign markets it operates in. In this scenario, which of the following strategies does Blue Cat most likely pursue? A) international strategy B) multidomestic strategy C) global-standardization strategy D) transnational strategy

C) global-standardization strategy

25) Teresa wants to take her firm internationally but is concerned with the ________, which refers to the possibility of higher costs of doing business in an unfamiliar cultural and economic environment. A) geopolitical climate B) foreign direct investment C) liabilities of foreignness D) transactional strategy

C) liabilities of foreignness

18) Walmart sells live animals (snakes, eels, toads, etc.) for food preparation in China whereas IKEA sells kimchi refrigerators and metal chopsticks in South Korea. These examples illustrate the need for ________ which often requires the competing firm to tailor their products and services to meet the needs of the market in which they are competing. A) cost-leadership B) international strategy C) local responsiveness

C) local responsiveness

26) When a firm is facing high pressure for local responsiveness and low pressure for cost- reductions, the firm is likely to adopt a(n) ________ strategy according to the integration- responsiveness framework. A) transnational B) global standardization C) localization D) international

C) localization

99) Michael Porter's diamond framework explains A) national value creation. B) domestic value creation. C) national competitive advantage. D) domestic competitive advantage.

C) national competitive advantage.

61) A payroll company in the nation of Osterlich is seeking to expand beyond its borders while limiting administrative and political distance in the new country. Which potential site is the best one for this type of expansion? A) one that considers payroll companies essential to national security B) one that is outside of any trading blocs that Osterlich participates in C) one that used to have a colonizer or colonized relationship with Osterlich D) in a country that has extensive tariffs and trade quotas to protect businesses

C) one that used to have a colonizer or colonized relationship with Osterlich

68) Macmillan Toys Inc. is located in the nation of Ruffino near the nation of East Fenwick. Macmillan Toys is considering expanding into Rusalka. Both countries have similar consumer incomes and knowledge bases and share a common language. Also, the transportation networks between the countries are strong. Even so, the two nations have a long-standing dispute concerning the control of an area of land along their common border. Currently, Ruffino rules this land. Which of the following would most likely prevent Macmillan Toys from expanding into Rusalka? A) geographic distance B) economic distance C) political distance D) cultural distance

C) political distance

81) Multinational enterprises (MNEs) like Harley-Davidson, Rolex, and Starbucks are said to be following an international strategy because A) they pursue a cost-leadership strategy in their respective industries. B) they are highly responsive to the local needs and preferences of customers in the host countries. C) they offer the same products or services in all their stores throughout the world. D) they attempt to combine benefits of localization and standardization strategies simultaneously.

C) they offer the same products or services in all their stores throughout the world.

51) Siobhan, the chief financial officer at an office furniture manufacturer in Canada, wants to build new plants in Canada rather than overseas. Which of these points should she make as she argues her case to the board of directors? A) "As the rest of the world globalizes, we will lead the way in strengthening our home nation." B) "Keeping our factories in Canada means facing up to the liability of foreignness." C) "Canada's wages and benefits are so low compared with the rest of the world that it makes the most sense to build factories here." D) "It will be much more difficult to protect our intellectual property if we build factories overseas."

D) "It will be much more difficult to protect our intellectual property if we build factories overseas."

42) Which of the following will most likely harm a multinational enterprise's (MNE's) reputation? A) Principal-agent problems cause an MNE to merge with another MNE. B) Increased competition causes an MNE to close a factory in a developing country. C) Wages for workers in a factory owned by an MNE increase, causing profits to decline. D) A sweatshop owned by an MNE has an explosion that kills hundreds of workers.

D) A sweatshop owned by an MNE has an explosion that kills hundreds of workers.

41) Which of the following describes a firm in the Globalization 1.0 stage? A) Asha Inc. had a large office in New York, which was one cog in a global network. B) Asha Inc. had a large office in New York, which functioned with other large offices in Europe and Asia. C) Asha Inc. had a base office in New York and a replica office in Amsterdam. D) Asha Inc. had a base office in New York and distributed some of its products overseas.

D) Asha Inc. had a base office in New York and distributed some of its products overseas.

43) One of the disadvantages of GM's focus on its Chinese market is A) the higher cost of Chinese labor due to benefits and health care. B) the Chinese dislike of big cars such as Cadillacs. C) European and Indian GM factories pulling monies from GM's Chinese manufacturing. D) Chinese government-supported domestic car makers are able to initiate a cutthroat price war.

D) Chinese government-supported domestic car makers are able to initiate a cutthroat price war.

33) Which of the following is a feature of the Globalization 2.0 stage? A) Huge investments in fiber-optic cable networks around the world enabled companies to operate as global-collaboration networks. B) Only sales and distribution operations took place overseas, while all the important business functions were located in the home country. C) Two-way knowledge flowed between the local subsidiaries and their U.S. headquarters. D) Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.

D) Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.

39) How has China been affected by its one-child-per-family policy and appreciation of its currency? A) The purchasing power of its workforce has declined. B) The government no longer cares about capturing more of the value added. C) The standard of living within the economy has become lower. D) The country's advantage in low-cost manufacturing is now reduced.

D) The country's advantage in low-cost manufacturing is now reduced.

29) Todd is a strategist for a furniture manufacturer that has a large presence in the United States and Canada. By checking economic and political reports, he knows that trade and investment barriers are falling among wealthy nations. He also knows that the price of oil has dropped 50 percent in the previous two years. Based on this information, what action should Todd and his company take? A) Todd and her employer should wait out this period of uncertainty and take action when market forces are more stable. B) They should anticipate market corrections because investment barriers and the price of oil inevitably rise. C) Todd and his employer need to prepare for the cost of doing business to increase. D) They should seriously consider globalization because of the falling trade and investment barriers.

D) They should seriously consider globalization because of the falling trade and investment barriers.

85) To keep track of the latest developments in computing, Lenovo's research centers are located in China, the United States, and Japan. Also, to benefit from low-cost labor and reduced shipping costs, the company's manufacturing facilities are in Mexico, India, and China. Lenovo's products are the same for its domestic and foreign markets. Which strategy does Lenovo follow? A) a transnational strategy B) a multidomestic strategy C) a localization strategy D) a global-standardization strategy

D) a global-standardization strategy

88) Rainholm Industries is a large snack-food conglomerate that operates in more than 50 countries and employs more than 80,000 people across the world. It operates through multiple regional product divisions, which tend to function as autonomous profit-and-loss centers. This allows the company to reap significant economies of scale. Though each division acts as an autonomous firm with its individual regional leaders, frequent sharing of knowledge between the divisions allows for global learning. These factors help the company reconcile product and service differentiations at low cost. Which of the following strategies does Rainholm Industries most likely use? A) an international strategy B) a focused-differentiation strategy C) a multidomestic strategy D) a transnational strategy

D) a transnational strategy

45) Managers at Umbrella Corporation, a firm in East Asia, want to make their company a global leader in business process outsourcing (BPO). What should the Umbrella managers look for as they decide where to locate their BPO facilities? A) large, undeveloped plots of land for greenfield projects B) plentiful natural resources C) many uneducated workers who are highly trainable D) an abundance of well-educated English speakers

D) an abundance of well-educated English speakers

80) Hooper's Store, a luxury motorcycle company, sells the same motorcycles and offers the same superior services in both its home country and foreign markets. The market it operates in faces low pressures for both local responsiveness and cost-reductions. Which of the following strategies within the integration-responsiveness framework does Hooper's Store most likely pursue? A) a multidomestic strategy B) a transnational strategy C) a global-standardization strategy D) an international strategy

D) an international strategy

98) The transnational strategy is similar to a(n) ________ strategy because they both focus on product differentiation and low costs. A) liquidation B) product diversification C) international D) blue ocean

D) blue ocean

56) When two neighboring democratic countries that are part of a trading bloc follow different religions and social norms, they most likely have high ________ distance. A) political B) geographic C) administrative D) cultural

D) cultural

70) Which of the following entry modes was used extensively in Globalization 1.0 stage? A) strategic alliances B) acquisitions C) greenfield operations D) exports

D) exports

28) Because keeping cost low is critical to IKEA's value innovation, it switched from a(n) A) transnational strategy to a multidomestic strategy. B) transnational strategy to a global-standardization strategy. C) international strategy to a multidomestic strategy. D) international strategy to a global-standardization strategy.

D) international strategy to a global-standardization strategy.

55) Aldorria and Estoccia are neighboring countries with strong economic disparities. However, both the countries share a common national language and the same political ideologies. The relationship between these two countries will most likely affect the trade of A) food processed in Estoccia. B) movies and TV shows produced in Aldorria. C) iron ore extracted in Estoccia. D) luxury items manufactured in Aldorria.

D) luxury items manufactured in Aldorria.

21) Genco Pura Olive Oil Company has established themselves as a strong differentiator in their respective SBUs but now wishes to explore international strategies. They are prepared to fully customize their product offerings to meet the needs of the foreign country that they are entering; having conducted many surveys on local preferences, tastes, and requirements, the Genco Pura Olive Oil Company will more than likely pursue a ________ strategy. A) global standardization B) cost-leadership C) transnational D) multidomestic

D) multidomestic

30) Amy is the CEO of a line of accessories and cosmetics, Hooli Inc., which has retail stores and production units in five countries. In this scenario, Hooli Inc. is most likely a A) nonprofit organization. B) nationalized firm. C) sole proprietorship. D) multinational enterprise.

D) multinational enterprise.

52) Which of the following is part of Geert Hofstede's cultural dimensions? A) short-term orientation B) groupthink C) embrace of risk taking D) power distance

D) power distance

57) Pearson Specter Litt is a global internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries it serves. Pearson Specter Litt is most likely doing this to ________ distance from the other countries. A) reduce its geographical B) increase its administrative C) increase its economic D) reduce its cultural

D) reduce its cultural

102) Toyota's global success in the 1990s and early 2000s was based to a large extent on a network of world-class suppliers in Japan. This tightly knit network allowed for fast two-way knowledge sharing—this in turn improved Toyota's quality and lowered its cost, which it leveraged into a successful blue ocean strategy at the business level. This example shows the effectiveness of A) factor conditions. B) competitive intensity in a focal industry. C) demand conditions. D) related and supporting industries/complementors.

D) related and supporting industries/complementors.

62) The administrative and political distance between two trading countries decreases when A) there are Foreign Direct Investment (FDI) restrictions in the host country. B) the host country lacks an independent central bank. C) tariffs and trade quotas exist in the host country. D) there is a well-functioning capital market in the host country.

D) there is a well-functioning capital market in the host country.

31) European aircraft maker Airbus invested $600 million in Mobile, Alabama, to build jetliners. Which of the following statements best explains why it used this strategy? A) to take advantage of the high labor costs in the southern United States B) to take advantage of the high cost of living in the southern United States C) to take advantage of the low impact of globalization in the United States D) to take advantage of lower taxes in the southern United States

D) to take advantage of lower taxes in the southern United States

97) The German multimedia conglomerate Bertelsmann operates in more than 60 countries throughout the world and owns many regional leaders in their specific product categories, including Random House Publishing in the United States. Bertelsmann operates its more than 500 regional media divisions as more or less autonomous profit-and-loss centers, but it attempts to share best practices across units. Global learning and human resource strategies for executives are coordinated at the network level. Bertelsmann is following a(n) A) multidomestic strategy. B) international strategy. C) global-standardization strategy. D) transnational strategy.

D) transnational strategy.