Chapter 12 Questions

To describe individuals in terms of their values, skills, and orientation, the text uses the term

"people".

McDonald's local franchises in France have begun to offer more elegant seating areas and an upscale menu. This was done in response to slow growth rates in the area. Impressed with the increased sales at these stores, McDonald's executives are considering making these changes elsewhere. In this instance, what aspect of creating value is BEST demonstrated?

Leveraging subsidiary skills

Marten Electronics Corp. knows it must customize its products for the different markets it serves to accommodate customer tastes and preferences. What type of strategy is this company using?

Localization

What is the term for the economies that result from a business undertaking a value creation activity in the optimal location?

Location economies

_____ have been criticized based on the idea that they give competitors a low-cost route to new technology and markets.

Strategic alliances

After developing a computer locking system, Caffrey Computer Corp. worked out a licensing deal with Chicago Desktop (a potential competitor) to sell the lock with every computer. This agreement is an example of _____.

a strategic alliance

The totality of a firm's organization is referred to as organization _____.

architecture

Companies that follow a global standardization strategy

avoid customizing their products.

A business ______ is the manner in which decisions are made in a company.

process

Derek told the board that he didn't feel Belleson Corp. would make a good strategic partner because that company had a reputation for confiscating software from partners without giving anything in return. Given this information, which characteristic of a good partner is Alliance Corp. missing?

A good partner is unlikely to try to opportunistically exploit the alliance for its own ends.

What three things should a company take into consideration when choosing a strategic alliance partner? (Check all that apply.)

A good partner shares the firm's vision for the purpose of the alliance. A good partner does not act opportunistically. A good partner helps the firm achieve its strategic goals.

What three activities are examples of processes within a company? (Check all that apply.)

Budgeting Developing a marketing plan Yearly employee review

______ are the metrics used to measure the performance of subunits.

Controls

____ competencies are a company's abilities and skills that competitors cannot easily match or copy.

Core

True or False: Organizational culture has little or no impact on a company's performance.

False

Which two functions are considered primary activities? (Check all that apply.)

Customer service R&D

Organizational structure incorporates what three things? (Check all that apply.)

Integrating mechanisms to coordinate subunit activities Location of decision-making responsibilities within the structure Formal division of organization into subunits

What are two reasons a business should follow an international strategy?

It does not face pressures to customize a product based on local preferences. It does not face cost pressures.

Select two ways a firm can create more value. (Check all that apply.)

Lower production costs Make product more attractive to consumer

Primary activities of the value chain can be divided into four functions, including which two of the following? (Check all that apply.)

Marketing & sales Production

Which statement about customer tastes and preferences in the global marketplace is accurate?

Significant differences in consumer preferences still exist across nations and regions.

Which area of a firm includes production, marketing and sales, materials management, R&D, human resources, information systems, and the firm infrastructure?

Operations

Universal needs exist with which two categories of products? (Check all that apply.)

Personal computers and hand held calculators Bulk chemicals, petroleum and steel

What are three things included in an organization's architecture? (Check all that apply.)

Processes People Structure

What are three examples of information systems used to support the value chain?

Product pricing Inventory management Sales tracking

What are three ways becoming a multinational company can increase a firm's profitability? (Check all that apply.)

Realize location economies Expand the market for their domestic product Realize greater cost economies

Firms engage in strategic alliances for what three reasons? (Check all that apply.)

To bring together complementary skills To share fixed costs of developing new products To facilitate entry into a foreign market

True or false: Companies that operate internationally can increase their profitability and rate of profit growth in ways not available to just domestic businesses.

True

True or false: One way a company might create value is by leveraging the skills of its subsidiaries.

True

True or false: The need to customize a product for a local market could work against a company's strategy of marketing a globally standardized product.

True

True or false: To survive increasing competition, multinational firms may need to shift from an international to a transnational strategy.

True

As the text notes, international strategies fail over time because of the emergence of ______.

competitors

Managers use ______ to analyze data about how the business and its employees are functioning in order to make appropriate administrative decisions.

controls

Chilly Cooler Corp. has developed a technology that allows its coolers to stay cold 25% longer than any of their competitors coolers. While many competitors have tried to match this technology, so far none of them have. This technology is an example of a(n) _____ for Chilly Cooler.

core competence

Organizational ______ encompasses the norms and value systems that are shared among the employees of a business.

culture

The primary activities in the value chain are R&D, production, marketing and sales, and ______.

customer service

The strategic alliance between Boeing and some Japanese companies to build the Boeing 787 aircraft was motivated by Boeing's desire to share the ______ of the new jet.

development cost

Critics of strategic alliances argue that they

effectively "hollow out" firms leaving them without a competitive advantage.

The ______ is the name given to all of the different positions a firm can adopt regarding adding value and lowering the cost of a product.

efficiency frontier

A commodity's production costs tend to decline over time. This is referred to as the ______ curve.

experience

The ______ refers to systematic reductions in production costs that have been observed to occur over the life of a product.

experience curve

Companies that use a transnational strategy are trying to achieve what three things?

fostering a multi-directional flow of skills between subsidiaries differentiation of product offering to account for local differences lowering costs through location economies

Henri works for a company that makes pasta to be sold in grocery stores. The company prefers to market the same product worldwide in order to take advantage of economies of scale and learning effects. It also prices its pasta aggressively. Which strategy is this company using?

global standardization strategy

What two types of competitive pressures do companies typically face when entering global markets which affect their ability to realize location economies and leverage products? (Check all that apply.)

pressure to be locally responsive pressure to reduce costs

Parva receives a quarterly bonus if her store's sales exceed expectations. This bonus is considered a(n) ______.

incentive

To motivate managerial performance, an organization might use

incentives.

A(n) ______ system is any organized electronic system for the collection, organization, storage and communication of information.

information

Tri-Lar Engineerings develops electronic systems for managing inventory and tracking sales. Which type of support activity do these systems provide?

information systems

When a firm faces neither low cost pressures nor pressures for local responsiveness, it should follow the ______ strategy.

international

Pressures for local responsiveness can impact a company's strategy by decreasing or eliminating the full benefits from what three things?

learning effects economies of scale location economies

Companies that enter into the global marketplace typically face two forms of competitive pressure: cost reductions and _____.

local responsiveness

When firms customize their products to meet tastes and preferences for different national markets they are following a(n) ________ strategy.

localization

Niagara Energy builds all of its energy plants near large water sources to take advantage of the lower costs associated with hydro-power. This company is using _____ to determine where to build its plants.

location economies

The text defines ______ as not only individuals, but the ability to recruit, compensate, and keep employees.

people

A company's _____ include(s) the design, creation, delivery of a product, and after-sale support and service.

primary activities

A cooperative agreement between potential or actual competitors is called a _____.

strategic alliance

A company would analyze the efficiency frontier in order to determine its

strategic positioning.

A(n) ______ is a method or plan a company uses to bring about a desired result, such as achievement of a goal or solution to a problem

strategy

Decisions and actions that managers take to meet the company's goals are known as ______.

strategy

The production divisions within a company, the location of a company's decision-making responsibilities, and the establishment of integrating mechanisms all make up the organizational ______ of a company.

structure

Information systems, a(n) ______ activity, can track sales and price products, thereby helping the firm to gain a more competitive advantage.

support

What are the two categories of operations within a company?

support activities primary activities

The worldwide acceptance of McDonald's hamburgers, Coca-Cola, and Apple iPhones ______ claims of increasing homogeneity in the global marketplace.

supports

When a firm tries to achieve low costs, differentiate its product for local needs, and encourage the flow of skills between subsidiaries, it is following a(n) ______.

transnational strategy

Consumers demonstrate ______ needs when the preferences of people in different countries are similar, if not exactly the same.

universal

The difference between a firm's production costs and the value consumers perceive in its products is called ______.

value creation