Chapter 7

Which of the following are limitations of a transnational strategy? (Check all that apply.)

There are unique challenges in determining optimal locations to ensure optimal costs. There are unique challenges in determining optimal locations to ensure quality. There are unique managerial challenges in fostering knowledge transfer.

Which of the following are benefits of wholly owned subsidiaries? (Check all that apply.)

They can yield the highest returns. They provide a high degree of control over all business activities. They can leverage the parent company's knowledge and capabilities.

The strengths of a transnational strategy include the ability to ______. (Check all that apply.)

attain economies of scale locate activities in optimal locations increase knowledge flows and learning adapt to local markets

Many companies expand internationally in order to increase their market size so that they

increase the potential market for its products and services

Which of the following are risks or limitations of exporting? (Check all that apply.)

A firm has limited ability to tailor products to meet a local market's needs. A firm has little control over the product after it leaves the factory.

The strengths of using a multidomestic strategy include the ability to ______. (Check all that apply.)

adapt products and services to local markets enhance revenues by detecting attractive niche markets

Which of the following statements about arbitrage as a motivation for international expansion are correct?

Arbitrage can be applied to any stage of value chain. It involves buying something from where it is cheap and selling it somewhere else for a higher price.

Which of the following are the three key assumptions for internationalizing products and services? (Check all that apply.)

Companies can achieve substantial economies of scale through supplying global markets. Customers' needs and interests are becoming increasingly homogeneous worldwide. Customers around the world are willing to sacrifice preferences in product features for high quality at lower prices.

Which of the following statements about counterfeit goods are correct? (Check all that apply.)

Counterfeit goods include consumer products, chemicals, and pharmaceuticals. Counterfeiting is expected to continue to be a serious international issue. The value of counterfeit goods could exceed $1.9 trillion in 2022.

Which of the following statements regarding reverse innovation to penetrate developing markets are correct? (Check all that apply.)

Developing products specifically for emerging markets can have a substantial pay-off. Selling the same product with minor adaptations in a developing market does not always work. It has become a major motivation for companies wanting to expand internationally.

What can prompt a firm to look outside its national boundaries for new markets and prepare it to compete successfully in global markets?

Experiencing intense domestic rivalry

Which of the following statements about intense domestic rivalry are true? (Check all that apply.)

Firms that experience intense domestic competition are more likely to have strategies and structures to help them be successful in world markets. Firms that experience intense domestic rivalry look outside their national boundaries for new markets.

Which of the following are risks or limitations of wholly owned subsidiaries? (Check all that apply.)

It is easy for companies to run into cultural and language difficulties. The entire risk is assumed by the parent company. They are the most risky and expensive mode of host country entry.

A multinational firm has which of the following characteristics? (Check all that apply.)

It is in a position to benefit from economies of scale. It manages operations in more than one country.

Which of the following are benefits of exporting? (Check all that apply.)

Local intermediaries have valuable expertise and knowledge of local markets. It is a relatively inexpensive way of entering new markets. Risk is minimized.

Which of the following statements regarding learning opportunities that come from overseas expansion are correct? (Check all that apply.)

Managers transfer knowledge from their overseas experience back home. Expanding into new markets exposes managers to differing market demands. Companies can improve their performance through learning abroad.

Which of the following are limitations of using a multidomestic strategy? (Check all that apply.)

May lead to "overadaptation" as conditions change. Greater difficulty in transferring knowledge across countries. Decreased ability to realize cost savings through economies of scale.

Which of the following statements about currency risk are correct? (Check all that apply.)

Small changes in exchange rates can result in significant differences in costs and profits. Currency fluctuations can pose substantial risks to companies conducting business abroad. Companies with operations in several countries must constantly monitor the exchange rate between its own currency and that of the host country.

Which of the following statements about locating some operations in another country as a means for cost reduction are correct? (Check all that apply.)

Some locations can affect multiple aspects of cost structures including manpower, transportation, and logistics costs. Cost-reduction benefits parallel business-level strategies of both differentiation and cost leadership. Governments may offer incentives and tax structures to entice companies to relocate.

Starling Sports decided to expand operations overseas. Unfortunately, Starling encountered rules and regulations that frequently changed, and Starling had no recourse. Which of the following best explains Starling's situation?

Starling encountered the absence of the rule of law.

Which of the following are risks of licensing or franchising? (Check all that apply.)

The licensor forgoes potential revenues and profits. The licensor gives up control of its product. The franchiser only receives a portion of the revenues.

Which of the following describe limitations of using a global strategy? (Check all that apply.)

There are potentially higher tariffs and transportation costs due to single production location. There is limited ability to adapt to local markets. There is increased dependence on a single facility.

Which of the following are strengths of using a global strategy? (Check all that apply.)

There are uniform quality standards across the world. There is strong integration across various business units. There are lowered costs due to standardization and higher economies of scale.

True or false: A hidden cost of offshoring can be the loss of intellectual property, such as trade secrets.

True

Which of the following are "hidden costs" of offshoring? (Check all that apply.)

an increase in wage costs due to less productivity an increase in inventory costs due to longer delivery times indirect costs, such as lower quality, more training, and increased employee supervision

A company that locates some operations in another country to take advantage of that country's close proximity to other regional markets via rail transportation is likely relocating for Blank______.

cost reduction

The selling of trademarked goods without the consent of the trademark holder is called ______.

counterfeiting

Which of the following are examples of potential challenges that managers face while managing in a host country? (Check all that apply.)

cultural differences language differences customer preferences

When formulating international strategies, managers must determine the best ______ strategy and how to attain a competitive advantage.

entry

When companies diversify the countries from which they receive production inputs and supplies, they increase their supply chain

resilience

One of the traditional assumptions for the internationalization of products was that firms should _______ their products for all their markets worldwide in order to achieve economies of scale of production and marketing.

standardize

Which is the most likely result when a company's dependence on one country for production inputs is interrupted by a major global event, such as a natural disaster or pandemic?

supply chain disruption

Benefits of licensing and franchising include ______. (Check all that apply.)

the ability to expand the company's revenue base overseas limited risk to the firm granting the license or franchise

A characteristic of legal systems where behavior is governed by rules that are uniformly enforced is

the rule of law

When groups of countries agree to lower trade barriers to increase trade between them, they are creating ______.

trading blocs