Chapter 10: Global Strategies (Part Dos)

90. Hans is a strategist who wants to decide on the appropriate strategy to help his firm "go global." Which of the following should Hans 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 reputation go along with less investment-intensive foreign entry modes.

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. The strategist must be aware of the fact that despite globalization and the emergence of the Internet, firm geographic location has actually maintained its importance.

62. Food Works Inc. is a multinational fast-food chain that follows a multidomestic strategy. Which of the following statements most likely holds true for the company? A. The company's competitive advantage lies in leveraging its home-based core competencies in foreign markets. B. Each country unit owned by the company will tend to be highly autonomous. C. Majority of the value creation for the company will take place in its home country. D. The company will not face any operational inefficiency as the key business functions do not have to be duplicated.

B. Each country unit owned by the company will tend to be highly autonomous. The statement that most likely holds true for Food Works Inc. is that each country unit owned by the company will tend to be highly autonomous. For firms following a multidomestic strategy, each country unit will tend to be highly autonomous, and the MNE will be unable to reap economies of scale or learning across regions.

72. Marc Works Inc., a reputed brand for fine writing instruments, is implementing an international strategy in its firms. Torque Inc., a laptop brand, is pursuing a global-standardization strategy in its firms. Which of the following statements most likely holds true in this scenario? A. While Marc Works Inc.'s competitive advantage lies in its high local responsiveness, Torque Inc. will lack such capabilities. B. Torque Inc. focuses more on cost-reductions when compared to Marc Works Inc. C. Torque Inc.'s business functions are highly centralized, whereas Marc Works Inc. organizes its activities worldwide. D. Torque Inc. is exposed to greater risks of exchange rate fluctuations.

B. Torque Inc. focuses more on cost-reductions when compared to Marc Works Inc. Torque Inc. most likely focuses more on cost-reductions when compared to Marc Works Inc. The global-standardization strategy arises out of the combination of high pressure for cost- reductions and low pressure for local responsiveness. An international strategy is advantageous when the multinational enterprise MNE faces low pressures for both local responsiveness and cost-reductions.

102. ChocoNuts Inc. produces an inexpensive candy bar 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 ChocoNuts performed poorly in? A. cost-reduction B. local-responsiveness C. global-standardization D. transnational strategy

B. local-responsiveness Local-responsiveness is the need to tailor product and service offerings to fit local consumer preferences and host-country requirements. ChocoNuts has performed poorly in this regard because it has failed to satisfy the consumer preferences of its host country, Japan.

63. Some multinational enterprises (MNEs) attempt to reap significant economies of scale and location economies by pursuing an international division of labor based on wherever best-of- class capabilities reside at the lowest cost. This is known as a(n) _____ strategy. A. international B. multidomestic C. global-standardization D. localization

C. global-standardization MNEs following a global-standardization strategy attempt to reap significant economies of scale and location economies by pursuing

78. Shine Enterprises Inc. is a large financial conglomerate that operates in more than 50 countries and employs over 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 Shine Enterprises Inc. most likely use? A. an international strategy B. a focused-differentiation strategy C. a multidomestic strategy D. a transnational strategy

D. a transnational strategy Shine Enterprises Inc. most likely uses a transnational strategy. Multinational enterprises (MNEs) pursuing a transnational strategy attempt to combine the benefits of a localization strategy (high local-responsiveness) with those of a global-standardization strategy (lowest cost position attainable).

104. The risk of intellectual property appropriation increases when companies follow a multidomestic strategy because products are A. difficult to differentiate. B. complex to produce. C. exported long distances. D. manufactured locally.

D. manufactured locally. The risk of intellectual property appropriation increases when companies follow a multidomestic strategy because products are manufactured locally. Knowledge that is at risk of appropriation may include, for example, the process of how to create consumer products of higher perceived quality.

57. 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? A. 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. B. Fragra Inc. will pursue a differentiation strategy at the business level, whereas SaveMarket Inc. will pursue a cost-leadership strategy at the business level. C. Fragra Inc. will be better protected from exchange rate fluctuations when compared to SaveMarket Inc. D. Fragra Inc. will not be able to leverage its home-based core competencies in foreign markets as much as SaveMarket Inc.

A. 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. 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. An international strategy is essentially a strategy in which a company sells the same products or services in both domestic and foreign markets. Firms pursuing a multidomestic strategy attempt to maximize local responsiveness, hoping that local consumers will perceive them to be domestic companies.

79. Which of the following is a benefit of the transnational strategy? A. It facilitates global learning and harnesses economies of location. B. It completely eliminates a firm's risk of intellectual property expropriation. C. It helps to create a matrix global structure, which is cost-effective and easy to implement. D. It helps a firm pursue a cost-leadership strategy by minimizing the need for local responsiveness.

A. It facilitates global learning and harnesses economies of location. Besides harnessing economies of scale and location, a transnational strategy also aims to benefit from global learning. Firms typically implement a transnational strategy through a global matrix structure. That structure combines economies of scale along specific product divisions with economies of learning attainable in specific geographic regions.

92. Which of the following is most likely an accurate statement? A. The multinational enterprise PanDigital benefited from advances in communications technology. B. The multinational enterprise TransEuropa was hindered by falling investments barriers. C. The multinational enterprise ShopWorld benefited from rising trade barriers. D. The multinational enterprise GeoPlus was hindered by reduced transportation costs.

A. The multinational enterprise PanDigital benefited from advances in communications technology. Multinational enterprises (MNE) are closely involved with the globalization process. This process benefits from advances in communications, falling trade and investment barriers, and reduced transportation costs.

84. The _____ states that geographic location alone should not lead to firm-level competitive advantage because firms are now, more than ever, able to source inputs globally. A. death-of-distance hypothesis B. local-responsiveness hypothesis C. real options framework D. dynamic capabilities framework

A. death-of-distance hypothesis Because firms can now, more than ever, source inputs globally, many believe that location must be diminishing in importance as an explanation of firm-level competitive advantage. This idea is called the death-of-distance hypothesis.

83. For which of the following products is an international strategy most suitable? A. for luxury goods that can be shipped across the globe B. for products with low value-to-weight ratios such as steel C. for food products that are specific to certain cultures D. for products with high linguistic content

A. for luxury goods that can be shipped across the globe An international strategy is well-suited for high-end products with high value-to-weight ratios such as machine tools and luxury goods that can be shipped across the globe.

65. The global-standardization strategy arises out of the combination of A. high pressure for cost reductions and low pressure for local responsiveness. B. high pressure for local responsiveness and low pressure for cost reductions. C. low pressure for both local responsiveness and cost reductions. D. high pressure for both local responsiveness and cost reductions.

A. high pressure for cost reductions and low pressure for local responsiveness. The global-standardization strategy arises out of the combination of high pressure for cost reductions and low pressure for local responsiveness.

86. United Borova Laboratories 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. National competitive advantage refers to world leadership in specific industries. Companies from home countries that are world leaders in specific industries tend to be the strongest competitors globally.

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

A. joint ventures Joint ventures would be the best entry mode for Global Frontier because it is not as expensive as acquisitions or greenfield operations, but it allows for more control than exports.

96. Which of the following will most likely increase geographic distance between two countries? A. lack of adequate transportation between the two countries B. differences in consumer incomes between the two countries C. lack of human resources available in the two countries D. different knowledge base in the two countries

A. lack of adequate transportation between the two countries Geographic distance between two countries increases with lack of common border, waterway access, adequate transportation, or communication links.

61. McDonald's uses mutton instead of beef in India and offers teriyaki burgers in Japan. Which of the following strategies is the fast-food chain pursuing? A. multidomestic strategy B. focused differentiation strategy C. global-standardization strategy D. international strategy

A. multidomestic strategy McDonald's is pursuing a multidomestic strategy. Multinational companies pursuing a multidomestic strategy attempt to maximize local responsiveness, hoping that local consumers will perceive them to be domestic companies. This strategy arises out of the combination of high pressure for local responsiveness and low pressure for cost reductions.

103. Swiss-based Nestlé, the largest food company in the world, is well-known for customizing its product offerings to suit local preferences, tastes, and requirements. By doing this, Nestlé is pursuing a(n) A. multidomestic strategy. B. international strategy. C. global-standardization strategy. D. transnational strategy.

A. multidomestic strategy. Nestlé is pursuing a multidomestic strategy. This strategy attempts to maximize local- responsiveness, with the intent that local consumers will perceive them to be domestic companies.

75. A(n) _____ strategy arises out of the combination of high pressure for local responsiveness and high pressure for cost reductions. A. transnational B. multidomestic C. international D. global-standardization

A. transnational Multinational companies pursuing a transnational strategy attempt to combine the benefits of a localization strategy (high local-responsiveness) with those of a global-standardization strategy (lowest cost position attainable). This strategy arises out of the combination of high pressure for local-responsiveness and high pressure for cost-reductions.

101. Which of the following accurately describes what the integration-responsiveness framework does? A. By juxtaposing the pressures a multinational company faces for export tariffs and foreign responsiveness, it devises four strategies to gain and sustain competitive advantage. B. By juxtaposing the pressures a multinational company faces for cost-reductions and local- responsiveness, it devises four strategies to gain and sustain competitive advantage. C. By juxtaposing the pressures a multinational company faces for export tariffs and local- responsiveness, it devises two strategies to gain and sustain competitive advantage. D. By juxtaposing the pressures a multinational company faces for cost-reduction and foreign responsiveness, it devises two strategies to gain and sustain competitive advantage.

B. By juxtaposing the pressures a multinational company faces for cost-reductions and local- responsiveness, it devises four strategies to gain and sustain competitive advantage. By juxtaposing the pressures a multinational company faces for cost-reductions and local- responsiveness, the integration-responsiveness framework devises four strategies to gain and sustain competitive advantage.

91. _____ is a process of closer integration and exchange between different countries and peoples worldwide. A. Diversification B. Globalization C. Standardization D. Modification

B. Globalization Globalization is a process of closer integration and exchange between different countries and peoples worldwide.

69. Which of the following is a feature of a multinational company pursuing a global- standardization strategy? A. Its key business functions are located at the home country headquarters. B. Its business-level strategy tends to be cost-leadership. C. Its competitive advantage lies in its high local responsiveness. D. Its core competency lies in its strong product differentiation.

B. Its business-level strategy tends to be cost-leadership. The global-standardization strategy arises out of the combination of high pressure for cost reductions and low pressure for local responsiveness. Multinational companies who use this strategy are often organized as networks. This lets them strive for the lowest cost position possible.

60. 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? A. The company's operations will become more cost-efficient. B. The company's exposure to exchange rate fluctuations will reduce. C. The company will be able to reap greater benefits from economies of scale. D. The company will be exposed to a lower risk of intellectual property appropriation.

B. The company's exposure to exchange rate fluctuations will reduce. The company's exposure to exchange rate fluctuations will reduce. Multinational enterprises (MNEs) following a multidomestic strategy, in contrast with an international strategy, face reduced exchange-rate exposure because the majority of the value creation takes place in the host-country business units, which tend to span all functions.

70. Which of the following is a benefit of a multinational enterprise (MNE) pursuing a global- standardization strategy? A. The firm customizes products and services to better suit local requirements. B. The firm reaps significant economies of scale and location economies. C. The firm follows a differentiation strategy at the business level. D. The firm has all its key business functions located in the home country.

B. The firm reaps significant economies of scale and location economies. MNEs following a global-standardization strategy attempt to reap significant economies of scale and location economies by pursuing a global division of labour based on wherever best of class capabilities reside at the lower cost

109. Fierce domestic competition in Lobekistan 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, Lobekistan'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. In Michael Porter's diamond framework, factor conditions describe a country's endowments in terms of natural, human, and other resources.

68. Which of the following products are generally manufactured by multinational enterprises (MNEs) pursuing a global-standardization strategy? A. products with a high value-to-weight ratios like luxury goods B. commodity products like computer hardware C. consumer products related to national and/or religious identity like food D. products that carry country-specific quality associations like wine

B. commodity products like computer hardware MNEs that manufacture commodity products (such as computer hardware) or offer services (such as business process outsourcing) generally pursue a global-standardization strategy.

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

B. factor conditions In Michael Porter's diamond framework, factor conditions describe a country's endowments in terms of natural, human, and other resources.

95. Which of the following is a primary reason why firms pursue a global strategy? A. to improve their reputation B. to enhance their competitive advantage C. to expand their research capabilities D. to gain more political influence

B. to enhance their competitive advantage The decision to pursue a global strategy clearly comes from the firm's assessment that doing so will enhance its competitive advantage and that the benefits of globalization will exceed the costs.

87. Which of the following factors pertaining to national competitive advantage enabled Nokia, a multinational company from Finland, to become an early leader in cell phones? A. the competitive intensity in the cell phone industry of Finland B. the huge demand for high-quality wireless services in Finland C. the abundance of natural resources in Finland D. the related and supporting industries present in Finland

B. the huge demand for high-quality wireless services in Finland A lack of landlines for telephone service has resulted in the Finnish demand for high-quality wireless services, combined with reliable handsets and long battery life that can be operated in remote areas with often hostile environments. Cell phones have long been a necessity for survival in rural areas of Finland. This situation enabled Nokia to become an early leader in cell phones.

98. 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 D. France

C. Australia Australia has a high geographic distance from the United States. These countries are more than 9,000 miles apart. However, they have a low cultural distance because they both share a common language.

82. 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. Both GreenThings Inc. and TransGold Inc. will have to duplicate key business functions in multiple host countries. A multidomestic strategy is costly and inefficient because it requires the duplication of key business functions across multiple countries. Each country unit tends to be highly autonomous. Similarly for a transnational strategy, high local-responsiveness typically requires that key business functions are frequently duplicated in each host country.

73. In which of the following stages of globalization did firms organize as networks to pursue a global-standardization strategy? A. Globalization 1.0 B. Globalization 2.0 C. Globalization 3.0 D. Globalization 4.0

C. Globalization 3.0 Multinational enterprises (MNEs) who use a global-standardization strategy are often organized as global-collaboration networks. In the Globalization 3.0 stage, the MNE's strategic objective changes. The MNE reorganizes from a multinational company with self-contained operations in a few selected countries to a more seamless global enterprise with centers of expertise.

89. Which of the following statements best explains how the presence of top-notch complementors within a firm's industry affects the focal firm's business? A. It weakens the national competitive advantage enjoyed by the focal firm. B. It improves the factor conditions in the focal firm's domestic market. C. It increases the value of the focal firm's offering from a customer's perspective. D. It reduces the economic contribution created by the focal firm.

C. It increases the value of the focal firm's offering from a customer's perspective. The availability of top-notch complementors—firms that provide a good or service that leads customers to value the focal firm's offering more when the two are combined—further strengthens national competitive advantage.

81. 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. Although a transnational strategy is quite appealing, the required matrix structure is rather difficult to implement because of the organizational complexities involved. High local- responsiveness typically requires that key business functions are frequently duplicated in each host country, leading to higher costs.

71. Stop n' Save Inc., a supermarket chain, is implementing a multidomestic strategy. SunLife Inc., 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. Stop n' Save Inc. will focus more on cost-reduction than SunLife Inc. B. Stop n' Save Inc. will have its business functions spread across the world; SunLife Inc.'s business functions will be highly centralized. C. Unlike SunLife Inc., Stop n' Save Inc. will be able to pursue a differentiation strategy at the business level. D. Unlike SunLife Inc., Stop n' Save Inc. will be able to reap significant economies of scale and location economies.

C. Unlike SunLife Inc., Stop n' Save Inc. will be able to pursue a differentiation strategy at the business level. Unlike SunLife Inc., Stop n' Save Inc. will be able to pursue a differentiation strategy at the business level. For firms following a global-standardization strategy, their business-level strategy tends to be cost leadership. Firms following a multidomestic strategy generally pursue a differentiation strategy at the business level.

74. Why did the American MTV network cable channel fail when pursuing a global-standardization strategy? A. because MTV failed to understand that music videos were a commodity product B. because the globalization hypothesis holds true for the music industry C. because cultural distance most affects products with high linguistic content D. because an international strategy was more suitable for the music industry

C. because cultural distance most affects products with high linguistic content MTV reasoned that music videos were a commodity product that would attract worldwide audiences. However, cultural distance most affects products with high linguistic content such as TV. Even in a music video channel, audiences have a distinct preference for at least some local content.

80. 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. Multinational enterprises typically implement a transnational strategy through a global matrix structure. That structure combines economies of scale along specific product divisions with economies of learning attainable in specific geographic regions. The idea is that best practices, ideas, and innovations will be diffused throughout the world, regardless of their origination.

58. A firm following a multidomestic strategy A. is highly efficient. B. lacks local responsiveness. C. faces a greater risk of intellectual property (IP) appropriation. D. requires exposing explicit knowledge because products are manufactured locally.

C. faces a greater risk of intellectual property (IP) appropriation. The risk of IP appropriation increases when companies follow a multidomestic strategy. Besides exposing codified knowledge embedded in products, as is the case with an international strategy, a multidomestic strategy also requires exposing tacit knowledge because products are manufactured locally.

56. For which of the following types of industries is a multidomestic strategy most common? A. machine-tool industries B. genetic industries C. food industries D. capital goods industries

C. food industries A multidomestic strategy is common in the consumer products and food industries. This strategy arises out of the combination of high pressure for local responsiveness and low pressure for cost reductions.

64. Jade Mobiles Inc., a cell phone manufacturing company, has its product development centers located in the U.S. and South Korea. The manufacturing units are located in China and Philippines to benefit from low-labor costs and access to original equipment manufacturers. This allows the company to competitively price its cell phones. 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 Jade Mobiles Inc. most likely pursue? A. international strategy B. multidomestic strategy C. global-standardization strategy D. localization strategy

C. global-standardization strategy In this scenario, Jade Mobiles Inc. most likely pursues a global-standardization strategy. Multinational companies following a global-standardization strategy attempt to reap significant economies of scale and location economies by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost.

85. Some of the best engineering and car companies are in Germany. Thus, it can be concluded that Germany has a _____ in the automobile industry. A. capital gain B. trade surplus C. national competitive advantage D. liability of foreignness

C. national competitive advantage National competitive advantage refers to world leadership in specific industries. Companies from home countries that are world leaders in specific industries tend to be the strongest competitors globally.

107. Michael Porter's diamond framework is used to explain A. national value creation. B. domestic value creation. C. national competitive advantage. D. domestic competitive advantage.

C. national competitive advantage. Michael Porter's diamond framework is used to explain national competitive advantage. It analyzes why some nations are outperforming others in specific industries.

97. Allgreva Inc. is located in Movaria near the nation of Clozame. Allgreva is considering expanding into Clozame. 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, Movaria rules this land. Which of the following would most likely prevent Allgreva from expanding into Clozame? A. geographic distance B. economic distance C. political distance D. cultural distance

C. political distance This scenario shows a situation with extreme political distance between two countries, caused by a dispute over an area of land. Such political distance could prevent Allgreva from expanding into Clozame.

77. Which of the following globalization strategies requires managers working in multinational enterprises (MNEs) to remember to think globally, but act locally? A. international strategy B. global-standardization strategy C. transnational strategy D. focused-differentiation strategy

C. transnational strategy While implementing the transnational strategy, the idea is that best practices, ideas, and innovations will be diffused throughout the world, regardless of their origination. The managers' mantra is to think globally, but act locally.

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

D. A sweatshop owned by a MNE has an explosion that kills hundreds of workers. The explosion in a sweatshop will most likely harm a MNEs reputation because sweatshops are known for having poor working conditions and low wages. Therefore, for an MNE to use a sweatshop lowers their reputation. Having an explosion that kills hundreds of workers in the sweatshop will harm the MNE's reputation even more.

93. Which of the following describes a firm in the Globalization 1.0 stage? A. Robinson Inc. has a large office in New York, which is one cog in a global network. B. Robinson Inc. has a large office in New York, which functions with other large offices in Europe and Asia. C. Robinson Inc. has a base office in New York and a replica office in Amsterdam. D. Robinson Inc. has a base office in New York and distributes some of its products overseas.

D. Robinson Inc. has a base office in New York and distributes some of its products overseas. In Globalization 1.0 stage, basically all the important business functions were located in the home country. Typically, only sales and distribution operations took place overseas—essentially exporting goods to other markets.

59. Which of the following is a drawback of pursuing a multidomestic strategy? A. The strategy allows for the lowest possible local responsiveness. B. The strategy lowers the differentiation of a firm's product and service offerings. C. The strategy exposes a firm to greater exchange rate fluctuation when compared to an international strategy. D. The strategy is costly and inefficient because it requires the duplication of key business functions across several countries.

D. The strategy is costly and inefficient because it requires the duplication of key business functions across several countries. A multidomestic strategy is costly and inefficient because it requires the duplication of key business functions across multiple countries. Each country unit tends to be highly autonomous, and the MNE is unable to reap economies of scale or learning across regions.

67. To keep track of the latest developments in computing, Lenovo's research centers are located in China, U.S.A., and Japan. Also, to benefit from low-cost labor and reduced shipping costs, the company's manufacturing facilities are in Mexico, India, and China. Which of the following strategies would require Lenovo to organize its operations worldwide in order to develop uniform products for its domestic and foreign markets? A. a transnational strategy B. a multidomestic strategy C. a localization strategy D. a global-standardization strategy

D. a global-standardization strategy The global-standardization strategy would require Lenovo to organize its operations worldwide to develop uniform products for its domestic and foreign markets. Firms following a global- standardization strategy attempt to reap significant economies of scale and location economies by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost.

76. Which of the following strategies must a multinational enterprise (MNE) use when it wants to pursue an integration strategy at the business level by attempting to reconcile product and/or service differentiations at low cost? A. a multidomestic strategy B. an international strategy C. a global-standardization strategy D. a transnational strategy

D. a transnational strategy A transnational strategy is generally used by multinational companies that pursue an integration strategy at the business level by attempting to reconcile product and/or service differentiations at low cost.

106. 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 The transnational strategy is similar to a blue ocean strategy because they both focus on product differentiation and low costs.

88. Due to dense urban living conditions, hot and humid summers, and high energy costs, it is not surprising that Japanese customers want small, quiet, and energy-efficient air conditioners. Which feature of Porter's diamond framework does this scenario best exemplify? A. factor conditions B. complementor availability C. competitive intensity D. demand conditions

D. demand conditions This scenario best exemplifies the demand conditions feature of Porter's diamond framework. Demand conditions are the specific characteristics of demand in a firm's domestic market.

99. 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 Exporting is one of the oldest forms of internationalization. It was used extensively in Globalization 1.0 stage.

66. For a firm pursuing a global-standardization strategy, which of the following bases of competition becomes its primary weapon? A. product differentiation B. superior customer service C. local responsiveness D. price

D. price Because there is little or no differentiation or local responsiveness (because products are standardized), price becomes the main competitive weapon for a firm pursuing the global -standardisation strategy

110. 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. This example shows the effectiveness of related and supporting industries/complementors. The availability of top-notch supporting industries, such as the suppliers in Japan, further strengthens a firm's national competitive advantage.

105. 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 attempts to share best practices across units; global learning and human resource strategies for executives are coordinated at the network level. Bertelsmann is an example of following a(n) A. multidomestic strategy. B. international strategy. C. global-standardization strategy. D. transnational strategy.

D. transnational strategy. Bertelsmann follows a transnational strategy. This type of strategy attempts to combine the benefits of localization and standardization strategies by creating a global matrix structure.