Policy and Strat 3

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.? A. It will be able to benefit from economic arbitrage. B. It will be able to successfully leverage its competitive advantage from economies of standardization. C. It will be able to replicate its existing business model easily. D. It will be able to easily sell products for which demand varies by income.

A

Toyota is selling its hybrid Prius vehicle, built on global platforms, successfully in 80 countries. This information best supports the assumptions made under the A. globalization hypothesis. B. upper-echelons theory. C. real-options perspective. D. global scaling theory.

A

Which of the following firms is least integrated?

A firm that buys all the required raw materials from multiple external vendors

What does the relational view of competitive advantage purpose?

A strategic alliance has the potential to help a firm gain a competitive advantage when it joins together resources that are common, inexpensive, and easy to imitate.

Companies that pursue related diversification are able to create a diversification premium because they

Are Able to increase value due to economies of scope

Virtue Products Inc., a large conglomerate, procures a few component parts from external suppliers and also manufactures some of the key raw materials in its own subsidiaries. This apart, the company does not solely depend on outside distributors to reach its customers. In fact, it has its own retail stores to distribute its products. In this scenario, which of the following alternatives to vertical integration is Virtue Products applying? A. concentric integration B. taper integration C. horizontal integration D. conglomerate integration

B

When entering a foreign market it is advisable for a new venture that has a core competency only in R&D to form a strategic alliance with a local partner because

Building downstream complementary assets can be expensive and time-consuming

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 A. it overestimates its need to protect its intellectual property. B. it underestimates its liability of foreignness when entering the Zevar market. C. it underestimates its dwindling reputation before it enters the Zevar market. D. it overestimates the geographic and cultural distance between Pelo and Zevar.

B. It underestimates its liability of foreignness when entering the Zevar market

Noen Electronics sourced touch screens required for its tablet computer, cell phones, and televisions from a manufacturer in China. Demand was too high and couldn't meet standards. Neon decided to do it themselves this is?

Backward Vertical Integration

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

C

How does a conglomerate benefit from following an unrelated diversification strategy? A. The conglomerate can solely depend on its primary business activity for a major portion of its revenues. B. The conglomerate can share most of its competencies in products, services, technology, or distribution between all its businesses. C. The conglomerate can overcome institutional weaknesses, such as a lack of capital markets, in emerging economies. D. The conglomerate can limit the learning- and experience-curve effects it faces.

C

Evara Inc. started as a luxury brand for designer apparel. Soon, the company expanded by launching its own line of premium perfumes, watches, bags, and home furnishings. This expansion allowed the businesses under the company to share a few, if not all, of the common competencies in products, services, technology, and distribution. Which of the following corporate strategies is Evara pursuing in this scenario? A. taper integration strategy B. niche marketing strategy C. related-constrained strategy D. related-linked strategy

D

GreenCure Pharma Inc. wanted its research partner, an R&D company, to develop a cancer vaccine. However, the project required huge capital investments, and its research partner was not ready to solely face the risks involved. Thus, to gain its partner's confidence and to prove its involvement, GreenCure Pharma invested $100 million in the project. This investment made by GreenCure Pharma will result in a A. cartel. B. credible commitment. C. corrective action. D. parent-subsidiary relationship.

D

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. A. threat of new entrants B. liability of foreignness C. loss of reputation D. intellectual property exposure

D

Which of the following statements is true of a multi domestic strategy

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

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.? A. Greenfield operation B. Export C. Joint venture D. Acquisition

Greenfield Operation

Which of the following is a disadvantage of a horizontal integration corporate strategy

It increases the potential for legal repercussions.

The managers at Movo Automobile Inc. want to diversify their business by acquiring a consumer electronics company. This acquisition would mean increased job security, higher compensation, and greater decision-making authority for the managers. The managers correlate this acquisition to greater power for them rather than to the appreciation in shareholder value. In this scenario, this acquisition by Movo Automobile is most likely a result of

Principle-Agent Problem

BM Goods Inc is a large conglomerate that operates only in its home country. THe company competes in industries like the consumer electronics, health care, hotel, airlines, education and steel. Which is the best describer?

Product Diversification

The strategy of​ __________ means that the firm attempts to offer the right combination of quality and good service at a fair price.

Related-linked diversification

A drawback involved in using cross border strategic alliances to enter new foreign markets is that

Some of the firm's proprietary know-how may be appropriated by the foreign partner.

In a non-equity alliance, which of the following types of information would firms most likely share?

The documented information about the material composition of a product

It is necessary for government authorities such as the FTC and or the European Commission to approve any large horizontal integration

The horizontal integration activity has the potential to reduce competitive advantage

A drawback of short-term contracting as an alternative to making a component in house is that

The supplying firm has no incentive to make any transaction-specific investments to increase performance or quality

The administrative and political distance between two trading countries reduces when

There is a well-functioning capital market in the host country.

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

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

Which of the following statements is true of joint ventures?

They enable the exchange of both tacit and explicit knowledge

Which of the following statements is true of transaction costs?

Transaction costs are necessary to explain and predict the boundaries of a firm

How do firms benefit from vertical integration?

Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities.

Horizontal integration through mergers and acquisitions can help firms strengthen their competitive positions by increasing

differentiation