CHAPTER 10 QUIZ

Which of the following statements is true of a multidomestic strategy? a) Firms frequently use a multidomestic strategy when entering host countries with large and/or idiosyncratic local markets. b) The multidomestic strategy is one of the main strategies companies pursued in the Globalization 1.0 stage. c) Companies pursuing a multidomestic strategy generally follow a cost-leadership strategy at the business level. d) The multidomestic strategy effectively protects firms from the risk of intellectual property appropriation.

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

Glova Inc., a company that manufactures and sells premium perfumes, is pursuing an international strategy. RightMart Inc., a supermarket chain, follows a multidomestic strategy. Which of the following statements is most likely true of this scenario? a) Glova Inc. will sell the same products and services in both domestic and foreign markets, whereas RightMart Inc. will customize its product offerings to suit local requirements. b) Glova Inc. will pursue a differentiation strategy at the business level, whereas RightMart Inc. will pursue a cost-leadership strategy at the business level. c) Glova Inc. will be better protected from exchange rate fluctuations when compared to RightMart Inc. d) Glova Inc. will not be able to leverage its home-based core competencies in foreign markets as much as RightMart Inc.

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

Which of the following is one of the features of an international strategy? a) It is characterized by limited local responsiveness. b) It is one of the newest types of global strategies. c) It is characterized by cost-leadership as a preferred business strategy. d) It is often used successfully by firms with relatively small domestic markets.

a) It is characterized by limited local responsiveness.

Which of the following factors is the most important determinant of economic distance? a) The wealth and per capita income of consumers b) The ethnicity and religion of consumers c) The presence of legal institutions in a country d) The topography of a country

a) The wealth and per capita income of consumers

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.

Unilever's new-concept center is situated in downtown Shanghai, China, attracting hundreds of eager volunteers to test the firm's latest product innovations onsite while Unilever researchers monitor consumer reactions. In this example, Unilever is trying to reap the benefits of _____. a) location economies b) economies of scope c) learning races d) network effects

a) location economies

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) A firm that manufactures cell phone batteries b) A firm that extracts and exports iron ore c) A firm that produces movies d) A firm that sells wrist watches

b) A firm that extracts and exports iron ore

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

Which of the following modes of entering a foreign market allows for the lowest level of control? a) Greenfield ventures b) Exporting c) Joint ventures d) Acquisitions

b) Exporting

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

Which of the following statements best describes local responsiveness? a) The process of producing goods in one country and selling them in another b) The need to tailor product and service offerings to fit native consumer preferences and host-country requirements c) The belief that consumer needs and preferences throughout the world are converging and thus becoming increasingly homogenous d) The additional costs of doing business in an unfamiliar culture and economic environment, and of coordinating across geographic distances

b) The need to tailor product and service offerings to fit native consumer preferences and host-country requirements

Which of the following is a drawback faced by multinational enterprises (MNEs) pursuing an international strategy? a) They cannot leverage their home-based core competencies in foreign markets. b) They are highly affected by exchange rate fluctuations. c) They have to be highly responsive to local needs and preferences. d) They cannot reap the benefits of economies of scale due to their highly customized products.

b) They are highly affected by exchange rate fluctuations.

When a firm pursues a(n) _____, it sells the same products or services in both domestic and foreign markets. a) domestic strategy b) international strategy c) differentiation strategy d) localization strategy

b) international 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: 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 overest

b) it underestimates its liability of foreignness when entering the Zevar market.

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

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? a) Olax, which has the same wealth and per capita income as Zeda b) Jordax, which has a very profitable economy and where people speak Jordaxian c) Segar, where people speak English and have a low standard of living d) Terra, which is located close to Zeda and is easily accessible by road

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

Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode? a) They are easy to initiate and terminate. b) They require low amounts of investments in terms of capital. c) They reduce a firm's exposure to loss of reputation. d) They are based on contracts rather than ownership.

c) They reduce a firm's exposure to loss of reputation.

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

Which of the following is part of Geert Hofstede's cultural dimensions? a) Locus of control b) Self-efficacy c) Span of control d) Power distance

d) Power distance

A(n) _____ arises out of the combination of high pressure for local responsiveness and low pressure for cost reductions. a) international strategy b) transnational strategy c) global standardization strategy d) multidomestic strategy

d) multidomestic strategy

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 _____. a) non-profit organization b) nationalized firm c) sole proprietorship d) multinational enterprise

d) multinational enterprise

India has been able to carve out a competitive advantage in business process outsourcing (BPO) primarily because: a) it has emerged as a manufacturing powerhouse. b) of an efficient infrastructure and high labor costs. c) it has an abundance of uneducated workers who are highly trainable. d) of an abundance of well-educated, English-speaking young people.

d) of an abundance of well-educated, English-speaking young people.

Welcome 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. Welcome Inc. is most likely doing this to: a) reduce its geographical distance from the other countries. b) increase its administrative distance from the other countries. c) increase its economic distance from the other countries. d) reduce its cultural distance from the other countries.

d) reduce its cultural distance from the other countries.