Chapter 5, MGT 3830 chapter 6, MGMT 3830 Chapter 7

an antitakeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price is called _______. a. greenmail b. a golden parachute c. a poison pill d. scorched earth

c. a poison pill

One of the reasons it is said that only the investment banker wins when a company is acquired is that they a. assure the newly acquired company will be successful b. continue to work with the two companies involved c. collect huge up-front fees regardless of the outcome afterwards d. monitor the progress of both companies for long term growth

c. collect huge up-front fees regardless of the outcome afterwards

portfolio management matrices are applied to what level of strategy a. departmental level b. business level c. corporate level d. international level

c. corporate level

For years O.R.T. Technologies resisted moving any operations outside Israel. However, when faced with a sharp rise in the value of the shekel, the maker of specialized software for managing gas stations froze all local hiring and decided to transfer some developmental work to Eastern Europe. This is an example of _____________ risk. A. political B. economic C. currency D. management

c. currency

To be responsive to local pressures, companies must ____________ their offerings and strategies from country to country to reflect local consumer preferences. A. internationalize B. globalize C. differentiate D. standardize

c. differentiate

If a multinational firm paid too high for a premium for the common stock of the company, this can lead to a. expansion b. cost savings c. divestiture d. acquisition

c. divestiture

The sale of Boeing commercial aircraft and Microsoft operating systems in many countries enables these companies to benefit from A. higher prices in their domestic markets. B. reducing their exposure to currency risks. C. economies of scale. D. optimizing the location for many activities in their value chain.

c. economies of scale

A firm can establish a wholly owned subsidiary by A. acquiring an existing company in the home country. B. keeping all of the activity offshore. C. licensing intellectual property. D. entering into a franchising agreement.

a. acquiring an existing company in the home country.

Transaction costs include all of the following costs except a. agency costs b. negotiating costs c. search costs d. monitoring costs

a. agency costs

Sources of political risk do not include A. availability of the rule of law. B. social unrest. C. military turmoil. D. demonstrations.

a. availability of the rule of law

Countries with demanding consumers, like environmentally-concerned Denmark, drive __________ to meet the demand. A. worldwide innovation B. in-country innovation C. foreign manufacturing D. global exchange

b. in-country innovation

When differentiating products and services to local markets, strategies and tactics are likely to __________ company costs. A. decrease B. increase C. obliterate D. decentralize

b. increase

A domestic corporation considering international expansion for the first time typically will follow which of these paths? A. It will start by implementing a wholly owned foreign subsidiary. B. It will implement a low risk-low control strategy such as exporting. C. It will license or franchise its operations D. It will form a joint venture with a reputable foreign producer.

b. it will implement a low risk-low control strategy such as exporting.

What agreement entails the creation of a third-party legal entity? A. strategic alliance B. joint venture C. licensing D. exporting

b. joint venture

The risks of vertical integration include all of the following except a. costs and expenses associated with increased overhead and capital expenditures b. lack of control over valuable assets c. problems associated with unbalanced capacities along the value chain d. additional administrative costs associated with managing a more complex set of activities

b. lack of control over valuable assets

Which of the factors below has not made the software services industry in India extremely competitive on a global scale? A. large pool of skilled workers B. large, growing market and sophisticated customers C. tax and antitrust legislation that protects the dominant players in the industry D. large network of public and private educational institutions In

b. large, growing market and sophisticated customers

Multinational firms are constantly faced with the dilemma of choosing between _______ and __________. A. local adaptation; local integration B. local adaptation; global integration C. global adaptation; local integration D. global adaptation; global integration

b. local adaptation; global integration

The primary means by which a firm can diversify are _______, _________, and ________. a. mergers and acquisitions; differentiation; and overall cost leadership b. mergers and acquisitions; joint ventures and strategic alliances; internal development c. joint ventures and strategic alliances; integration of value chain activities; acquiring human capital d. mergers and acquisitions; internal development; differentiation

b. mergers and acquisitions; joint ventures and strategic alliances; internal development

the term golden parachute refers to a. a clause requiring that huge dividend payments be made upon takeover b. pay given to executives fired because of a takeover. c. financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it. d. managers of a firm in a hostile takeover approaching a third party about making the acquisition.

b. pay given to executives fired because of a takeover

If the U.S. dollar appreciates relative to foreign currency, what is likely to be the result for the U.S. company that has branches abroad? A. Profits will increase, when measured in U.S. dollars. B. Profits will decrease, when measured in U.S. dollars. C. Foreign exports to the United States will decrease. D. Foreign demand for U.S. goods and services will decrease.

b. profits will decrease, when measured in U.S. dollars

Polaris, a manufacturer of snowmobiles, motorcycles, watercraft, and off-road vehicles, shares manufacturing operations across its business. It also has a corporate research and development facility and staff departments that support all of the Polaris operating divisions. This is an example of using a. related diversification to acquire market value by leveraging core competencies b. related diversification to acquire economies of scope by sharing c. unrelated diversification to acquire financial synergies through portfolio management d. related diversification to acquire parenting, restructuring, and financial synergies through corporate restructuring and parenting

b. related diversification to acquire economies of scope by sharing

Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful, it is important that the a. products use similar distribution channels b. similarity required for sharing core competencies must be in the value chain. c. target market is the same, even if the products are very different. d. methods of production are the same

b. similarity required for sharing core competencies must be in the value chain.

Shared Arabic language and the Muslim religion is one reason that explains regionalism tendencies in A. South America. B. the Maghreb. C. European Union. D. North America.

b. the Maghreb

Which one of the following is not a limitation of a global strategy? A. limited ability to adapt to local markets B. the ability to locate activities in optimal locations C. the concentration of activities may increase dependence on a single facility D. single locations may lead to higher tariffs and transportation costs

b. the ability to locate activities in optimal locations

HIGH PRESSURE for LOCAL ADAPTATION combined with LOW PRESSURE for LOWER COSTS would suggest what type of international strategy? A. global strategy B. multidomestic strategy C. transnational strategy D. overall cost leadership strategy

.b. multidomestic strategy

Which of the following is a risk (or potential pitfall) of cost leadership? A. Cost cutting may lead to the loss of desirable features. B. Attempts to stay ahead of the competition may lead to gold plating. C. Cost differences increase as the market matures. D. Producers are more able to withstand increases in supplier costs.

A. Cost cutting may lead to the loss of desirable features.

The growth stage of the industry life cycle is characterized by A. in-kind competition (from the same type of product) B. premium pricing C. a growing trend to compete on the basis of price D. retaliation by competitors whose customers are stolen

A. in-kind competition (from the same type of product)

ConAgra, a diversified food producer, increases its power over suppliers by centrally purchasing huge quantities of packaging materials for all of its food division. This is an example of using A. related diversification to acquire economies of scope by leveraging pooled negotiating power. B. related diversification to acquire market power by leveraging pooled negotiating power. C. unrelated diversification to acquire financial synergies through portfolio management. D. unrelated diversification to acquire parenting, restructuring, and financial synergies through restructuring and parenting.

A. related diversification to acquire economies of scope by leveraging pooled negotiating power.

One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by ____________. A. repeating a process until a task becomes easier B. hiring more experienced personnel C. spreading out a given expense or investment over a greater volume D. competing in an industry for a long time

A. repeating a process until a task becomes easier

Which of the following is most often true of mature markets? A. Some competitors enjoy a significant operating advantage due to increasing experience effects. B. Advantages that cannot be duplicated by other competitors are difficult to achieve. C. The market supports premium pricing, which attracts additional competitors. D. The magnitude of pricing differences and product differentiation is larger than in the growth stage.

B. Advantages that cannot be duplicated by other competitors are difficult to achieve.

Which of the following is not a potential pitfall of a differentiation strategy? A. Uniqueness that is not valuable. B. All rivals share a common input or raw material. C. The price premium is too high. D. Perceptions of differentiation may vary between buyers and sellers.

B. All rivals share a common input or raw material.

Which statement regarding competitive advantages is true? A. With an overall cost leadership strategy, firms need not be concerned with parity on differentiation. B. If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer. C. In the long run, a business with one or more competitive advantages is probably destined to earn normal profits. D. Attaining multiple types of competitive advantage is a recipe for failure.

B. If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer.

A narrow market focus is to a differentiation-based strategy as a __________________. A. growth market is to a differentiation-based strategy B. broadly-defined target market is to a cost leadership strategy C. growth market is to a cost-based strategy D. technological innovation is to a cost-based strategy

B. broadly-defined target market is to a cost leadership strategy

Support value chain activities that involve excellent applications engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize what generic strategy? A. overall cost leadership B. differentiation C. differentiation focus D. stuck-in-the middle

B. differentiation

Research shows that which of the following is not a strategy used by firms engaged in successful turnarounds? A. asset and cost surgery B. global expansion C. selective product and market pruning D. piecemeal productivity improvements

B. global expansion

A differentiation strategy enables a business to address the five competitive forces by ______. A. having brand-loyal customers become more sensitive to prices B. lessening competitive rivalry by distinguishing itself C. increasing economies of scale D. serving a broader market segment

B. lessening competitive rivalry by distinguishing itself

Dell Computer has an online ordering system that allows consumers to configure their own computers before Dell builds them. This capability is an example of _____________. A. electronic data interchange B. mass customization C. knowledge management D. collaborative design

B. mass customization

3M leverages its competencies in adhesive technologies to many industries, including automotive, construction, and telecommunications. This is an example of using A. related diversification to acquire economies of scope by leveraging pooled negotiating power. B. related diversification to acquire economies of scope by leveraging core competencies. C. unrelated diversification to financial synergies through portfolio management. D. unrelated diversification to parenting, restructuring, and financial synergies through restructuring and parenting.

B. related diversification to acquire economies of scope by leveraging core competencies.

One of the main reasons the Internet is eroding sustainable competitive advantages is that _______. A. incumbent firms are entering market segments that they previously considered to be too small B. nearly all competitors will have greater access to tools for managing costs C. differentiators have been able to preserve their unique advantages D. firms are ignoring opportunities to offer high-end services in niche markets

B. nearly all competitors will have greater access to tools for managing costs

With experience, unit costs of production decline as _________ increases in most industries. A. costs B. output C. price D. volume

B. output

A __________ can be defined as the total profits in an industry at all points along the industry value chain. A. profit maximizer B. profit pool C. revenue enhancer D. profit outsourcing

B. profit pool

Which of the following is not a potential pitfall of a focus strategy? A. Erosion of cost advantages can arise within the narrow segment. B. Product/service offerings that are highly focused are subject to competition from new entrants. C. All rivals share a common input or raw material. D. Focusers can become too focused to satisfy buyer needs.

C. All rivals share a common input or raw material.

Which of the following is not a potential pitfall of an integrated overall low cost and differentiation strategy? A. Firms that fail to attain both strategies may end up with neither and become stuck-in-the-middle. B. Firms that underestimate the challenges and expenses associated with coordinating value-creating activities in the extended value chain. C. Firms that target too large a market that causes unit costs to increase. D. Firms that miscalculate sources of revenue and profit pools in the company industry.

C. Firms that target too large a market that causes unit costs to increase.

Which of the following is FALSE regarding how a differentiation strategy can help a firm to improve its competitive position relative to the Porter five forces model? A. By increasing firm margins, it avoids the need for a low cost position. B. It reduces buyer power because buyers lack comparable alternatives. C. Supplier power is increased, because suppliers will be able to charge higher prices for their inputs. D. Firms will enjoy high customer loyalty.

C. Supplier power is increased, because suppliers will be able to charge higher prices for their inputs.

A firm following a focus strategy must focus on _____________. A. governmental regulations B. the rising cost of inputs C. a market segment or group of segments D. avoiding entering international markets

C. a market segment or group of segments

Due to the Internet, firms that use a focus strategy have new opportunities to _________. A. respond quickly to customer requests B. provide more services and features C. access niche markets in a highly specialized fashion D. access markets less expensively

C. access niche markets in a highly specialized fashion

In the __________ stage of the industry life cycle, there are few segments, the emphasis on process design is low, and the major functional areas of concern are general management and finance. A. introduction B. growth C. decline D. maturity

C. decline

The most likely time to pursue a harvest strategy is in a situation of _______. A. high growth B. strong competitive advantage C. decline in the market life cycle D. mergers and acquisitions

C. decline in the market life cycle

High product differentiation is generally accompanied by __________. A. higher market share B. higher profit margins and lower costs C. decreased emphasis on competition based on price D. significant economies of scale

C. decreased emphasis on competition based on price

The text discusses three approaches to combining overall cost leadership and differentiation competitive advantages. Which of the following is not one of these three approaches? A. automated and flexible manufacturing systems B. exploiting the profit pool concept for competitive advantage C. deriving benefits from highly focused and high technology markets D. coordinating the extended value chain by way of information technology

C. deriving benefits from highly focused and high technology markets

Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy? A. differentiation B. overall cost leadership C. differentiation focus D. cost leadership focus

C. differentiation focus

Which of the following is NOT one of the ways the Internet is lowering transaction costs? A. eliminating supply chain intermediaries B. minimizing office expenses C. evaluating employee performance D. reducing business travel

C. evaluating employee performance

Piecemeal productivity improvements during a turnaround typically do NOT involve _______. A. business process reengineering B. increased capacity utilization C. expansion of company product market scope D. benchmarking

C. expansion of company product market scope

During the decline stage of the industry life cycle, __________ refers to obtaining as much profit as possible and requires that costs be decreased quickly. A. maintaining B. exiting C. harvesting D. consolidating

C. harvesting

Research has consistently shown that firms that achieve both cost leadership and differentiation advantages tend to perform ______________. A. at about the same level as firms that achieve either cost or differentiation advantages B. about the same as firms that are stuck-in-the-middle C. higher than firms that achieve either a cost or a differentiation advantage D. lower than firms that achieve differentiation advantages but higher than firms that achieve cost advantages

C. higher than firms that achieve either a cost or a differentiation advantage

In the __________ stage of the industry life cycle, the emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low. A. growth B. maturity C. introduction D. decline

C. introduction

Which of the following methods of implementing a differentiation strategy has been greatly enhanced because of Internet technologies? A. celebrity endorsements B. prestige packaging C. mass customization D. exceptional service

C. mass customization

A market that mainly competes on the basis of price and has stagnant growth is characteristic of what life cycle stage? A. introduction B. growth C. maturity D. decline

C. maturity

In a given market, key technology no longer has patent protection, experience is not an advantage, and there is a growing need to compete on price. What stage of its life cycle is the market in? A. introduction B. growth C. maturity D. decline

C. maturity

In the __________ stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high. A. introduction B. growth C. maturity D. decline

C. maturity

The size of pricing and differentiation advantages between competitors decreases in which stage of the market life cycle? A. introduction B. growth C. maturity D. decline

C. maturity

Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy? A. differentiation B. differentiation focus C. overall cost leadership D. stuck-in-the-middle

C. overall cost leadership

A manufacturing business pursuing cost leadership is likely to _______. A. focus on a narrow market segment B. use advertising to build brand image C. rely on experience effects to raise efficiency D. put heavy emphasis on product engineering

C. rely on experience effects to raise efficiency

As markets mature, ___________. A. costs continue to increase B. application for patents increase C. there is increasing emphasis on efficiency D. differentiation opportunities increase

C. there is increasing emphasis on efficiency

Novartis, formerly Ciba-Geigy, uses portfolio management to improve many key activities, including resource allocation and reward and evaluation systems. This is an example of using A. related diversification to achieve value by leveraging pooled negotiating power to attain economies of scope. B. related diversification to acquire market power by leveraging pooled negotiating power. C. unrelated diversification to acquire financial synergies through portfolio management. D. related diversification to acquire parenting, restructuring, and financial synergies through corporate restructuring and parenting.

C. unrelated diversification to acquire financial synergies through portfolio management.

Which of these statements regarding the industry life cycle is correct? A. Part of the power of the market life cycle is its ability to serve as a short-run forecasting device. B. Trends suggested by the market life cycle model are generally not reversible or repeatable. C. It points out the need to maintain a differentiation advantage and a low cost advantage simultaneously. D. It has important implications for company generic strategies, functional areas, value-creating activities, and overall objectives.

D. It has important implications for company generic strategies, functional areas, value-creating activities, and overall objectives.

Which of the following statements about the introduction stage of the market life cycle is TRUE? A. It produces relatively large, positive cash flows. B. Strong brand recognition seldom serves as an important switching cost. C. Market share gains by pioneers are usually easily sustained for many years. D. Products or services offered by pioneers may be perceived as differentiated because they are new.

D. Products or services offered by pioneers may be perceived as differentiated because they are new.

Atlas Door created competitive advantage by reducing the time to receive and process and order and through installing a just in time logistics operation. Which of the following is not a reason for their favorable position relative to the five forces of industry competition? A. It exerted power over its customers. B. It created high entry barriers for new entrants. C. The integration of many value-chain activities in the firm provided causal ambiguity and path dependency. D. The product was easily imitable.

D. The product was easily imitable.

The primary aim of strategic management at the business level is __________________. A. maximizing risk-return tradeoffs through diversification B. achieving a low cost position C. maximizing differentiation of products and/or services D. achieving competitive advantage

D. achieving competitive advantage

Which of the following is not a reason for the possible erosion of company competitive advantage? A. rapid change in technology B. globalization C. actions by rivals from within and outside of the industry D. company commitment to innovation

D. company commitment to innovation

Which of the following is not a reason for the successful turnaround that Ford experienced in 2011 under CEO Mulally? A. downsizing through the sale of non-Ford brands B. focus on a narrower range of cars C. tightening of the product design across brands D. increasing its manpower across the company

D. increasing its manpower across the company

A firm can achieve differentiation through all of the following means EXCEPT ________. A. improving brand image B. better customer service C. adding additional product features D. offering lower prices to frequent customers

D. offering lower prices to frequent customers

Shaw industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input to its manufacturing process. This is an example of using A. related diversification to acquire market power by pooling negotiating power. B. related diversification to acquire economies of scope by leveraging core competencies. C. related diversification to acquire economies of scope by integrating vertically in order to acquire market power. D. related diversification to acquire market power by integrating vertically.

D. related diversification to acquire market power by integrating vertically.

At Cooper Industries, there are few similarities in the products it makes or the industries in which it competes. The corporate office adds value through such activities as superb human resource practices and budgeting systems. This is an example of using A. related diversification to acquire economies of scope by leveraging pooled negotiating power. B. related diversification to acquire market power by leveraging core competencies. C. unrelated diversification to acquire financial synergies through portfolio management. D. unrelated diversification to acquire parenting, restructuring, and financial synergies through corporate restructuring and parenting.

D. unrelated diversification to acquire parenting, restructuring, and financial synergies through corporate restructuring and parenting.

Firms have several choices of diversification initiative that can be used to create value. Which of the following is not one of them? A. using related diversification to acquire economies of scope leveraging pooled negotiating power B. using related diversification to acquire market power by leveraging core competencies C. using unrelated diversification to acquire financial synergies through portfolio management D. using related diversification to acquire parenting, restructuring, and financial synergies through corporate restructuring and parenting

D. using related diversification to acquire parenting, restructuring, and financial synergies through corporate restructuring and parenting

Casio, a giant products producer, synthesizes its abilities in miniaturization, microprocessor design, material science, and ultrathin precision castings to produce digital watches. It uses the same skills to produce calculators, digital cameras, and other small electronics. These collective skills are known as a. core competencies b. strategic resources c. shared activities d. economies of scope

a. core competencies

Recent trends that might lead managers of multinational corporations (MNCs) to adopt a more decentralized strategy for their operations would include all of the following except A. customer needs, interests, and tastes becoming increasingly homogenized. B. consumers around the world increasingly willing to tradeoff idiosyncratic preferences in product features for lower price. C. flexible manufacturing trends allowing a decline in the minimum volume required to reach acceptable levels of production efficiency. D. fluctuating exchange rates.

a. customer needs, interests, and tastes becoming increasingly homogenized

Globalization opens the doors for companies to attract new customers. One of the challenges is to determine how to meet the needs of these customers who have A. different income levels. B. low income levels. C. high income levels. D. steady income levels.

a. different income levels

If a multinational company's motive for the acquisition may have been to enhance executives powers and prestige rather than to improve shareholder return, this can lead to a. divestiture b. cost savings c. expansion d. aquisition

a. divestiture

The difference between a franchise contract and a licensing contract is that a A. franchise contract is more specific and usually longer in duration. B. franchise contract must include a foreign government. C. licensing contract covers more aspects of operations. D. franchise contract involves less control and less risk.

a. franchise contract is more specific and usually longer in duration.

Corporate-level strategy focuses on a. gaining long-term revenue b. gaining short term profits c. decreasing business locations d. managing investment bankers and their interests

a. gaining long-term revenue

When firms expand into global markets, they are faced with the choice of reducing costs and/or adapting to the local market. When high pressures exist to lower costs, companies should choose a(n) __________ or __________ in order to compete in the global marketplace. A. global strategy; transnational strategy B. global strategy: multidomestic strategy C. international strategy; multidomestic strategy D. international strategy; transnational strategy

a. global strategy; transnational strategy

Which of the following is a reason for the rise in regional expansion? A. increase in the number of trading blocs and free trade zones B. decrease in the number of trading blocs and free trade zones C. increasing national trade restrictions D. increasing local taxes and tariffs

a. increase in the number of trading blocs and free trading zones

Which would be the appropriate strategy for companies to use to compete in the global marketplace if the marketplace pressure is for LOWER COSTS with LITTLE PRESSURE for LOCAL ADAPTATION? A. international strategy B. global strategy C. multidomestic strategy D. transnational strategy An

a. international strategy

The downside or limitations of mergers and acquisitions include all of following except: a. it is a slow means to enter new markets and acquire skills and competences b. difficulties exist in integrating the activities and resources of the acquired firm into on-going operations c. there can be many cultural issues that can doom an otherwise promising acquisition. d. premiums that are frequently paid to acquire a business are expensive

a. it is a slow means to enter new markets and acquire skills and competences

A report issued by the World Trade Organization described the production of a particular U.S. car. The study showed that 30 percent of the car value goes to Korea for assembly, 17.5 percent to Japan for components and advanced technology, 7.5 percent to Germany for design, 4 percent to Taiwan and Singapore for minor parts, 2.5 percent to U.K. for advertising and marketing services, and 1.5 percent to Ireland and Barbados for data processing. This is an example of A. outsourcing and offshoring. B. outsourcing and on-shoring. C. insourcing and offshoring. D. insourcing and outsourcing.

a. outsourcing and offshoring

Creating value within business units can happen when the corporate office helps subsidiaries make wise choices in their own acquisitions, divestitures, and new ventures. This is known as a. parenting b. restructuring c. leveraging core competencies d. increasing market power

a. parenting

Similarity of culture, laws, rules, and norms encourages A. regionalization. B. globalization. C. trans-nationalization. D. ethnocentric expansion.

a. religionalization

Creating value within business units can happen when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change. This action is known as a. restructuring b. leveraging core competencies c. parenting d. sharing activities

a. restructuring

When using a BCG matrix, a business that currently holds a large market share in a rapidly growing market and has minimal or negative cash flow would be knows as a a. star b. dog c. cash cow d. question mark

a. star

Canada and Mexico are the same distance from the United States, but trade is higher between the U.S. and Canada than with Mexico because A. true distance is smaller between the U.S. and Canada. B. all three countries share the same legal system. C. there are few immigration problems with Mexico. D. Americans prefer Canadian food to Mexican food.

a. true distance is smaller between the U.S. and Canada

In considering the transnational strategy, Nestle evaluates the limits of decentralization. The closer they are to the consumer in activities such as branding and pricing, the more then tend to decentralize. The more they deal with production and logistics, the more they centralize decision-making. The production and logistics decisions involve _______ activities. A. upstream B. in its infrastructure C. downstream D. midstream

a. upstream

Shaw industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of a. vertical integration b. sharing activities c. pooled negotiated power d. leveraging core competencies

a. vertical integration

A __________ is a business in which a multinational company owns 100 percent of the stock. A. wholly owned subsidiary B. strategic alliance C. joint venture D. franchising operation

a. wholly owned subsidiary

The trade among nations has increased dramatically in recent years, and it is estimated that by 2015 the trade ________ nations will exceed the trade _______ nations. A. within; across B. across; within C. with; outside of D. above; within

b. across; within

Which of the following statements regarding internal development as a means of diversification is false? a. Many companies use internal development to extend their product or service offers b. an advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services c. the firm is able to capture wealth created without having to share the wealth with alliance partners d. firms can often develop products or services at a lower cots, if they rely on their own resources instead of external funding.

b. an advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services

Firms that choose to diversify through internal development must develop _____ that allow them to move ______ from initial opportunity recognition to market introduction. a. strategies; slowly b. capabilities; quickly c. capabilities; slowly d. strategies; quickly

b. capabilities; quickly

according to the text, corporate restructuring includes a. capital restructuring, asset restructuring, and technology restructuring b. capital restructuring, asset restructuring, and management restructuring c. management restructuring, financial restructuring and procurement restructuring d. global diversification, capital restructuring, and asset restructuring.

b. capital restructuring, asset restructuring, and management restructuring.

Statistics indicate that over half of the world output now comes from emerging markets. This is leading to a(n) ___________ of living standards across the globe and is changing the face of business. A. divergence B. convergence C. expansion D. contraction

b. convergence

When the GE wind energy business tapped into world-wide talent, it was able to expand using a(n) _________________ strategy. A. focus B. diversification C. unrelated D. generic

b. diversification

If a multinational firm fails to effectively integrate their acquisition, this can result in a. cost savings b. divestiture c. expansion d. further acquisition

b. divestiture

If a multinational firm is unable to understand how the acquired company's assets would fit with their own lines of business, this can lead to a. expansion b. divestiture c. cost savings d. acquisition

b. divestiture

an acquisition that results in ___________ indicates that expectations were not met. a. expansion b. divestiture c. cost savings d. increased sales

b. divestiture

Which of these points on the Porter diamond of national advantage is the strongest indicator of global competitive success? A. foreign rivalry B. domestic rivalry C. global rivalry D. international rivalry

b. domestic rivalry

In reviewing the Indian Software industry and the diamond of national advantage, which of the following is a growing detractor to the national competitive advantage in this industry? A. large pool of skilled workers B. eroding cost advantage of Indian firms C. rapidly improving communications infrastructure D. large, growing market and sophisticated customers

b. eroding cost advantage of Indian firms

Portfolio management frameworks such as the BCG matrix, share which of the following characteristics? a. businesses are plotted on a 3-dimensional b. grid dimensions are based on external environments and internal capabilities-market positions. c. position in the matrix suggests a need for sharing synergies d. they are most helpful i helping businesses develop types of competitive advantage

b. grid dimensions are based on external environments and internal capabilities-market positions

As in the case of Siebel Systems (now part of Oracle), elements of a global strategy may facilitate the competitive advantage of differentiation by A. increased freedom of individual business units to adapt to local tastes. B. the creation of a worldwide network to achieve consistent service regardless of location. C. flexibility in applying Research and Development to meet country-specific needs. D. tailoring products to meet country-specific needs.

b. the creation of a worldwide network to achieve consistent service regardless of location

The Cisco acquisition of Pure Digital Technologies, the parent of the Flip video camera, failed because a. Cisco had valuable competencies b. the Flip division of Cisco was slow and less responsive to market pressures c. consumers continued to purchase the camera.

b. the flip division of Cisco was slow and less responsive to market pressures

Industries in which proportionally more value is added in __________ activities are more likely to benefit from a global strategy. A. downstream B. upstream C. marketing D. sales

b. upstream

Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with a. strategic alliances b. vertical integration c. horizontal integration d. divestiture

b. vertical integration

In considering the decision to offshore, which of the following generally is not one of the hidden costs? A. Total wage costs and indirect costs B. Wage deflation C. Reduction in intellectual property rights D. Increased inventory and coordination costs

b. wage deflation

Which one of the following is not a Western hemisphere trade bloc? A. NAFTA B. MERCOSUR C. ASEAN D. Latin American Integration Association

c. ASEAN

Which one of the following is one of the Theodore Levitt assumptions supporting a pure global strategy? A. Consumers are willing to pay more for specific product features. B. Customer needs and interests are becoming more dissimilar. C. MNCs can successfully compete globally by aggressively pricing products at the sacrifice of product features. D. If the world markets are treated as heterogeneous, substantial economies of scale are easily achieved.

c. MNCs can successfully compete globally by aggressively pricing products at the sacrifice of product features

Ricoh Americas Corporation has significant international operations. Faced with local reticence to adapt changes that come from other global regions, what does Ricoh suggest is the most successful approach? A. Bring in global market representatives to force change locally. B. Obligate local offices to adopt the corporate decision. C. Ensure stakeholder participation early in the change process. D. Ignore the problem because it is only a temporary issue.

c. ensure stakeholder participation early in the change process

the antitakeover tactic, ________ is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it. a. golden parachute b. poison pill c. greenmail d. scorched earth

c. greenmail

Related industries create the probability that new companies will enter the market. This ________ competition and forces existing firms to improve ___________. A. decreases, innovation B. decreases, efficiency C. increases, efficiency D. increases, sales

c. increases, efficiency

The __________ entail the creation of a third-party legal entity, whereas the __________ do not. A. licensing agreements; joint ventures B. strategic alliances; joint ventures C. joint ventures; strategic alliances D. franchising agreements; strategic alliances

c. joint ventures; strategic alliances

In the BCG Growth Share Matrix, the suggested strategy for Stars is to a. milk them to finance other businesses b. invest large sums to gain a good market share c. maintain position and after the market growth slows use the business to provide cash flow. d. not invest in them and to shift cash flow to other businesses.

c. maintain position and after the market growth slows use the business to provide cash flow.

The rise of _________ capitalism around the world creates tremendous business opportunities for multinational corporations. A. social B. multinational C. market D. democratic

c. market

According to Michael Porter, there is a tremendous allure to _________. It is the big play, the drama gesture. With one stroke of the pen you can add billions to size, get a front-page story, and create excitement in markets. a. strategic alliances and joint ventures b. internal development c. mergers and acquisitions d. differentiation strategies

c. mergers and acquisitions

Internal development may be time consuming and therefore, firms may forfeit the benefits of speed that growth through _____ and _______ can provide a. strategic alliances; joint ventures b. strategic alliances; mergers c. mergers; acquisitions d. mergers; joint ventures

c. mergers; acquisitions

According to the textbook, globalization involves international exchange. Included in this exchange is trade in goods and services as well as the exchange of __________, __________, and _________ across countries. A. habits; values; ideas B. traditions; legal systems; history C. money; ideas; information D. statistics; personnel; purchasing power

c. money; ideas; information

__________ occurs when a firm decides to utilize other firms to perform value-creating activities that were previously performed in-house. A. Offshoring B. A global strategy C. Outsourcing D. A transnational strategy

c. outsourcing

Renault paid 1 billion USD to acquire a 25 percent ownership stake in the Russian automaker AvtoVAZ in 2008. Just one year later, Russian Prime Minister Vladimir Putin threatened to dilute the Renault ownership stake unless it contributed more money to prop up AvtoVAZ, which was then experiencing a significant slide in sales. This is an example of _____________ risk. A. currency B. economic C. political D. management

c. political

In the BCG Matrix, a business that has a low market share in a industry characterized by high market growth is termed a a. star b. cash cow c. question mark d. dog

c. question mark

According to the textbook, _______________ economic integration has progressed as a faster pace than _________ economic integration. A. global; international B. international; regional C. regional; global D. regional; inter-regional

c. regional; global

Which of the following is not a part of a good guideline list for managing strategic alliances? a. establishing a clear understanding between partners b. not shortchanging your partner c. relying primarily on a contract to make the joint venture work d. working hard to ensure a collaborative relationship between partners

c. relying primarily on a contract to make the joint venture work

GE Healthcare developed a portable, inexpensive ultrasound device for the emerging Chinese market. It expects to sell the device in the United States at a price cheap enough for every physician, paramedic, and emergency room nurse to purchase. This is an example of A. total wage costs and indirect costs. B. risk reduction. C. reverse innovation. D. optimization of value-chain activity locations.

c. reverse innovation

Fees that a multinational receives from a foreign licensee in return for its use of intellectual property (trademark, patent, trade secret, technology) are usually called A. transfer prices. B. dividends. C. royalties. D. intra-corporate inflows.

c. royalties

Diversification initiatives include all of the following except- a. mergers and acquisitions d. strategic alliances c. shareholder development d. joint ventures

c. shareholder development

IBM, Memorial Sloan Kettering, and Cedars-Sinai have a _______ whereby IBM receives expert medical knowledge that it uses to leverage its technological skills to develop new medical insights a. joint diversification b. divestment c. strategic alliance d. global integration

c. strategic alliance

Proctor and Gamble is a large multinational organization that has many business sharing distribution resources. Diversification strategies take advantage of the _______ that exist in their organization. a. costs b. employees c. synergies d. discontinuities

c. synergies

In the Porter Diamond of National Advantage framework, which of the following factors does not affect nation competitiveness? A. The position of the nation in factors of production necessary to compete in a given industry. B. The presence or absence in the nation of internationally competitive supplier industries. C. The conditions in the nation governing the nature of foreign rivalry. D. The nature of home-market demand of the products or services of the industry.

c. the conditions in the nation governing the nature of foreign rivalry.

For core competence to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which one of the following is not one of these requirements? a. the competence must help the business gain strength relative to its competition b. the new business must be similar to existing businesses to benefit from a core competence. c. the new business must have an established large market share d. the collection of competencies should be unique, so that they cannot be easily imitated.

c. the new business must have an established large market share

A firm should consider vertical integration when a. the competitive situation is highly volatile b customer needs are evolving c. the suppliers of raw materials to the firm are unable to maintain quality standards d. the suppliers of the firm willingly cooperate with the firm.

c. the suppliers of raw materials to the firm are unable to maintain quality standards

Regionalization is most important because it permits companies to organize their activities based upon A. physical distance between the home country and the foreign country. B. the extrinsic distance between the home country and the foreign country. C. the true distance between the home country offer and the foreign country. D. shareholder expectations.

c. the true distance between the home country offer and the foreign country

Vertical integration is attractive when a. internal administrative costs are higher than transaction costs b. transaction costs and internal administrative costs are equal c. transaction costs are higher than internal administrative costs d. search costs are higher than monitoring costs

c. transaction costs are higher than internal administrative costs

Shared Spanish colonialism is one reason that explains regionalism tendencies in A. Asia. B. South America. C. the United States. D. Africa.

d. Africa

According to the Euromoney magazine 2014 annual Country Risk Rating, which one of the following countries has the highest economic risk? A. South Korea B. China C. Colombia D. Argentina

d. Argentina

Lionsgate (a Canadian-American entertainment company) and Alibaba (a Chinese e-commerce company) created ________to open the Chinese market for the Lionsgate streaming shows and movies. Alibaba profits by getting access to content to increase demand for its own set-top media boxes. a. a joint venture b. a merger c. an acquisition d. a strategic alliance

d. a strategic alliance

In 2012, Microsoft admitted to major _______ mistake when it wrote off essentially the entire 6.2 billion USD it paid for a digital advertising firm, quantive, that it purchased in 2007. a. expansion b. divestiture c. cost savings d. acquisition

d. acquisition

Regions represent the outcomes of centuries of political and cultural history that results in not only _________ but also mutual _____________. A. differences; expectations B. similarities; expectations C. commonalities; losses D. commonalities; affinities

d. commonalities; affinities

Divesting of businesses can accomplish many different objectives, except a. enabling managers to focus their efforts more directly on the core businesses of the firm. b. providing the firm with more resources to spend on more attractive alternatives c. raising cash to help fund existing businesses d. dispersing manager focus

d. dispersing manager focus

In reviewing the Indian Software industry and the diamond of national advantage, which of the following is a relatively weak set of factors in the national competitive advantage in this industry? A. U.S. demand conditions B. Factor endowments C. Domestic rivalry D. Domestic demand conditions

d. domestic demand conditions

The form of entry strategy into international operations that offers the lowest level of control for the domestic corporation would be A. franchising. B. licensing. C. joint venture. D. exporting.

d. exporting

Which of the following describes the most typical order of entry into foreign markets? A. franchising, licensing, exporting, joint venture, and wholly owned subsidiary B. exporting, franchising, licensing, joint venture, and wholly owned subsidiary C. licensing, exporting, franchising, joint venture, and wholly owned subsidiary D. exporting, licensing, franchising, joint venture, and wholly owned subsidiary

d. exporting, licensing, franchising, joint venture, and wholly owned subsidiary

Which of the following types of international firms are most likely to benefit from a global strategy as opposed to a multidomestic strategy? A. firms that compete in industries in which consumer preferences vary substantially in each country B. firms in industries that are expanding very rapidly C. firms in industries that have value added by sales and marketing departments D. firms in industries that have much value added in research and design or manufacturing

d. firms in industries that have much value added in research and design or manufacturing

Which one of the following explains why so few firms are global? A. Culture, language, and religion are similar between countries. B. Legal and political systems are similar between countries. C. Governments are increasing trade restrictions in general. D. Geographic distance is multiplied by distance in culture, language, religion, and legal and political system

d. geographic distance is multiplied by distance in culture, language, religion, and legal and political system

antitakeover tactics include all of the following except: a. greenmail b. poison pills c. golden parachutes d. golden handcuffs

d. golden handcuffs

Which of the following is not a motivation for a company to pursue international expansion? A. It wishes to increase the size of the potential markets for its products and services. B. It wishes to take advantage of arbitrage opportunities in order to increase profit. C. It wishes to optimize value-chain activities to enhance performance, reduce costs, and reduce risk. D. It wishes to increase foreign market penetration by developing products for the home market.

d. it wishes to increase foreign market penetration by developing products for the home market

Cooperative relationships such as ______have potential advantages such as entering new markets reducing manufacturing (or other) costs in the value chain, and developing and diffusing new technologies. a. franchises b. mergers c. acquisitions d. joint ventures and strategic alliances

d. joint ventures and strategic alliances

L'Oreal acquired two U.S. firms that developed and sold hair care products to African-American customers. This permitted it to build a new ethnic hair care division in Europe and Africa. This represents an advantage of international expansion using ____________. A. arbitrage B. optimization of the location of value-chain activities C. performance enhancement D. learning opportunities

d. learning opportunities

If a company is considering optimizing the physical location for every activity in the value chain, which of the following is not a possible strategic advantage for that decision? A. Performance enhancement B. Cost reduction C. Political risk reduction D. Life-cycle enhancement

d. life-cycle enhancement

a cash cow, in the BCG framework, refers to a business that has a. high market growth and relatively high market share. b. relatively low market share and low market growth. c. relatively low market share and high market grow d. low market growth and relatively high market share

d. low market growth and relatively high market share.

In the quest to achieve competitive advantage in global markets, competitive pressures require that firms do what they can to _______ unit costs so that consumers will not perceive their product and service offerings as too expensive. A. raise B. decentralize C. define D. lower

d. lower

According to Michael Porter, firms that have experienced intense domestic competition are A. unlikely to have the time or resources to compete abroad. B. more likely to demand protection from their governments. C. most likely to design strategies aimed primarily at the domestic market. D. more likely to design strategies that will allow them to successfully compete abroad.

d. more likely to design strategies that will allow them to successfully compete abroad.

Which of the following is not a risk normally associated with Bottom of the Pyramid strategies? a. a low-end version of a brand may detract from the overall brand attractiveness b. the new low-cost products they develop may cannibalize the sales of their core products c. entrenched competitors can impact the ability of the new firm to enter the market successfully d. new products may be perceived as exploiting the privileged customer with substandard products.

d. new products may be perceived as exploiting the privileged customer with substandard products.

in managing the corporate portfolio, the BCG matrix would suggest that a. dogs should be invested in to increase market share and become cash cows b. stars are in low growth markets and can provide excess cash to fund other opportunities c.cash cows require substantial cash outlays to maintain market share. d. questions marks can represent future stars if their market share is increased

d. question marks can represent future stars if their market share is increased

In reviewing the Indian Software industry and the diamond of national advantage, which of the following is a growing detractor to the national competitive advantage in this industry? A. English-language capability B. growing market and sophisticated, customers C. duty-free access to imported computers and software D. rise of competing low-labor-cost countries

d. rise of competing low-labor-cost countries

When management uses common production facilities or purchasing procedures to distribute different but related products, they are a. building on core competencies b. achieving process gains c. using portfolio analysis d. sharing activities

d. sharing activities

Firms following a global strategy strive to offer __________ products and services as well as locate manufacturing, Research and Development, and marketing activities in a limited number of locations. A. widely differentiated B. more expensive local C. internationally differentiated D. standardized

d. standardized

Rivalry is intense in nations with conditions of __________ consumer demand, __________ supplier bases, and __________ new entrant potential from related industries. A. weak; weak; high B. strong; strong; low C. weak; weak; low D. strong; strong; high

d. strong; strong; high

Which of the following is not a reason for merger and acquisition failures? a. the acquiring company pays a premium for the common stock of the target company b. top executives act in their best interests rather than those of the shareholders c. the acquired company assets are poorly integrated into the acquiring company business lines d. the acquisition leads to value creation

d. the acquisition leads to value creation

Which of the following is not a risk associated with a global strategy? A. A firm with only one manufacturing location must export its product, sometimes at great distance from the operation. B. The geographic concentration of any activity may also tend to isolate that activity from the targeted markets. C. Concentrating an activity in a single location makes the rest of the firm dependent on that location. D. The pressures for local adaptation may elevate the cost structure of the firm.

d. the pressures for local adaptation may elevate the cost structure of the firm.

When firms expand into global markets, they are faced with the choice of reducing costs and/or adapting to the local market. When high pressures exist to adapt locally, companies should choose a(n) __________ or __________ in order to compete in the global marketplace. A. global strategy; transnational strategy B. global strategy: multidomestic strategy C. international strategy; global strategy D. transnational strategy; multidomestic strategy

d. transnational strategy; multidomestic strategy

__________ are most appropriate when a firm already has the appropriate knowledge and capabilities that it can leverage rather easily through multiple locations in many countries. A. Joint ventures B. Strategic alliances C. Licensing agreements D. Wholly owned subsidiaries

d. wholly owned subsidiaries