Mgmt 493 Ch 10

Which of the following is an observable feature in the Globalization 3.0 stage?

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

Which of the following statements is true of a multidomestic strategy?

Firms frequently use a multidomestic strategy when entering host countries with large and/or idiosyncratic local markets

Although demand for IKEA's low-cost furnishings has increased, its annual store growth has slowed to fewer than ten new stores a year. Why has this happened?

IKEA's global supply chain has become bottlenecked

Which of the following statements is true of an international strategy?

It enables firms to leverage their home-based core competencies in foreign markets.

Which of the following is one of the features of an international strategy?

It is characterized by limited local responsiveness

Plethora Inc., a well-established and reputed multinational enterprise (MNE), is headquartered in a highly developed economy. It wants to start its operations in United Bejukistan, which has been recognized as one of the less-developed nations in the world. How will this strategic move most likely affect Plethora Inc.?

It will be able to benefit from economic arbitrage

Which of the following is a feature of the Globalization 2.0 stage?

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

Zeda 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 Zeda in terms of cultural distance?

Segar, where people speak English and have a low standard of living

After testing its products in foreign markets by pursuing an international strategy, GR Foods Inc. wants to expand by pursuing a multidomestic strategy. How will this most likely affect the company?

The company's exposure to exchange rate fluctuations will reduce

How has China been affected by its one-child-per-family policy and appreciation of its currency?

The country's advantage in low-cost manufacturing has reduced

Which of the following is a drawback faced by multinational enterprises (MNEs) pursuing an international strategy?

They are highly affected by exchange rate fluctuations

Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode?

They reduce a firm's exposure to loss of reputation

Which of the following statements is true with regard to international trade between countries?

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

Which of the following is not included within the types of strategic alliances?

acquisitions

Opula Inc., a luxury car company, sells the same cars 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 Opula Inc. most likely pursue?

an international strategy

A multinational enterprise (MNE) is said to be pursuing a multidomestic strategy when it

attempts to maximize local responsiveness, hoping that the host country consumers will perceive it to be a local company

Which of the following statements best explains why Walmart is finding it difficult to replicate its existing business model in India?

because of the large economic distance between U.S. and India

When two neighboring, democratic countries that are part of a trading bloc follow different religions and social norms, they most likely have high ______ distance

cultural

Which of the following foreign entry modes primarily involves producing goods in one country to sell in another?

exporting

Which of the following modes of entering a foreign market allows for the lowest level of control?

exporting

During the period of Globalization 1.0, the mode of entry into foreign markets primarily involved

exporting goods

A firm following a multidomestic strategy

faces a greater risk of intellectual property (IP) appropriation.

Emirates, Etihad Airlines, and Qatar Airways are a threat to U.S. legacy carriers because they offer

higher quality for lower costs for international routes

A greater cultural distance between two trading countries

increases the liability of foreignness

When a firm pursues a(n) _____, it sells the same products or services in both domestic and foreign markets

international strategy

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

location economies

Which of the following is part of Geert Hofstede's cultural dimensions?

power distance

SmallWorld Inc. is a global Internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries. SmallWorld Inc. is most likely doing this to

reduce its cultural distance from the other countries

Which of the following statements accurately explains the primary reason behind Walmart's failure in Germany?

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

Under the CAGE distance framework, the administrative and political distance between two countries primarily increases with

the absence of a trading bloc

Which of the following factors is the most important determinant of economic distance?

the wealth and per capita income of consumers

The administrative and political distance between two trading countries reduces when

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

Multinational enterprises (MNEs) like Harley-Davidson, Rolex, and Starbucks are said to be following an international strategy because

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

European aircraft maker Airbus is investing $600 million in Mobile, Alabama, to build jetliners. Which of the following statements best explains why it is employing this strategy?

to take advantage of lower taxes in the southern United States

In which of the following situations is pursuing an international strategy advisable?

when a firm enjoys a large domestic market, strong reputation, and brand name

As a result of globalization, the

world's market economies are becoming more integrated

Which of the following statements best describes local responsiveness?

the need to tailor product and service offerings to fit native consumer preferences and host-country requirements

A firm is said to be pursuing a polycentric innovation strategy when

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

Fragra Inc., a company that manufactures and sells premium perfumes, is pursuing an international strategy. SaveMart Inc., a supermarket chain, follows a multidomestic strategy. Which of the following statements is most likely true of this scenario?

Fragra Inc. will sell the same products and services in both domestic and foreign markets, whereas SaveMarket Inc. will customize its product offerings to suit local requirements.

Which of the following is a drawback of pursuing a multidomestic strategy?

The strategy is costly and inefficient because it requires the duplication of key business functions across several countries.

How will an increase in coordinated economic and political integration between countries affect the world economy?

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

For which of the following companies will geographic distance be the most relevant factor in deciding whether or not to trade with a target country?

a firm that extracts and exports iron ore

Evara Cosmetics Inc. is a company that 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 Evara Cosmetics Inc. most likely implement?

a multidomestic strategy

Octa Autos 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 it may mean investing a significant amount of capital and other resources. In this scenario, which of the following foreign entry modes would best suit Octa Autos Inc.?

acquisition

Which of the following has been a key driver for firms to expand globally during the Globalization 3.0 stage?

benefits from lower labor costs in manufacturing and services

How has the administrative and political distance between Canada, Mexico, and the United States been reduced?

by establishing the North American Free Trade Agreement (NAFTA)

Lucar Steels Inc. has decided to enter into a foreign market by setting up its own production facilities and distribution channels from scratch. This will allow it to have strong control over all of its business activities. What is the foreign entry mode most likely opted by Lucar Steels Inc.?

greenfield operation

For which of the following types of industries is a multidomestic strategy most common?

food industries

Which of the following types of organizations comparatively requires the lowest levels of investment and control?

franchising

Toyota is selling its hybrid Prius vehicle, built on global platforms, successfully in 80 countries. This information best supports the assumptions made under the

globalization hypothesis

Japanese and European engineering companies entered China to participate in building the world's largest network of high-speed trains worth billions of dollars. Companies such as Kawasaki Heavy Industries (Japan), Siemens (Germany), and Alstom (France) were joint-venture partners with domestic Chinese companies. These firms now allege that the Chinese partners built on the Japanese and European partners' advanced technology to create their own, next-generation high-speed trains. This example best highlights the _____ that firms can experience when expanding overseas

intellectual property exposure

Because keeping cost low is critical to IKEA's value innovation, it switched from a(n)

international strategy to a global-standardization strategy

Silca Electronics Inc. is a consumer-electronics company based in the country of Pelo. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself successfully in the country of Zevar, 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, Silca Electronics Inc. incurs huge financial losses in Zevar. In this scenario, Silca Electronics Inc.'s failure to establish itself successfully in Zevar occurs most likely because

it underestimates its liability of foreignness when entering the Zevar market

Ridemore 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, Ridemore Autos Inc. is reaping the benefits of

location economies

United Nerumbia and Fernsland are two 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

luxury items manufactured in United Nerumbia

For a multinational enterprise (MNE), applying the globalization hypothesis would mean

manufacturing products on international platforms and slightly modifying them to meet local tastes and standards.

A(n) _____ arises out of the combination of high pressure for local responsiveness and low pressure for cost reductions

multidomestic strategy

A trend observed during the Globalization 3.0 stage involves

multinational companies organizing as global-collaboration networks

Jane is the CEO of a clothing brand, Diva Rule Inc., which has retail stores and production units in five different countries. The firm's shareholders ensure the proper management of Diva Rule Inc. through their appointed board of directors. In this scenario, Diva Rule Inc. is most likely a

multinational enterprise

India has been able to carve out a competitive advantage in business process outsourcing (BPO) primarily because

of an abundance of well-educated, English-speaking young people