Chapter 7: Quiz

Which of the following is NOT a risk associated with a global strategy?

A firm with only one manufacturing location must import its product.

A franchise generally expires after a few years; a license is designed to last even longer.

False

A multidomestic strategy is the most appropriate strategy for international operations because it drives economies of scale as far as possible and provides a middle-of-the-road product that appeals to the smallest number of consumers in every market.

False

Exporting is an expensive way to enter domestic markets.

False

Offshoring takes place when a firm decides to shift an activity that they were previously performing in a foreign location to a domestic location.

False

One of the challenges with globalization is determining how to meet the needs of customers at the same income level.

False

The Michael Porter Diamond of National Advantage is a framework that explains why countries foster successful multinational corporations based on factor endowments; demand conditions; related and non-supporting industries; and firm strategy, structure, and rivalry.

False

Within a worldwide market, the most effective strategies are purely multidomestic or purely global.

False

Which of the following is NOT a motivation for a company to purse international expansion?

It wishes to decrease foreign market penetration by developing products for the home market.

Which one of the following is one of the Theodore Levitt assumptions supporting a pure global strategy?

Multinational companies can successfully compete globally by aggressively pricing products and sacrifice features.

Expanding the global presence of a firm automatically increases its scale of operations.

True

Many countries are investing in countries other than their own, causing each country to become less autonomous and more dependent.

True

Trading blocs and free trade zones promote the rise of regional expansion.

True

Typically, joint ventures involve more control and risk than franchising.

True

Recent trends that might lead managers of multinational corporations (MNCs) to adopt a more decentralized strategy for their operations would include all of the following, except

customer needs, interests, and tastes becoming increasingly similar.

Elements of a multi domestic strategy may facilitate the competitive advantage of ______ by decreasing shipping and transportation costs inherent in local production.

decentralization

Which of the following is NOT a reason for the rise in regional expansion?

decrease in the number of trading blocs and free trade zones

Which would be the appropriate strategy for companies to use to compete in the global marketplace if the marketplace pressure is for lower costs with no pressure for local adaptation?

global strategy

Multinational firms are constantly faced with the dilemma of choosing between ________ and ________.

local adaptation; global integration

The form of entry strategy into international operations that offers the ________ level of control for the domestic corporation would be exporting.

lowest

If a company is considering optimizing the physical location for every activity in the value chain, which of the following is not a possible strategic advantage for that decision?

political risk enhancement

Rivalry is intense in nations with conditions of ______ suppliers bases, ______ consumer demand, and _______ new entrant potential from related industries.

strong; strong; high

When firms expand into global markets, they are faced with the choice of reducing costs and/or adapting to the local market. When high pressures exist to lower costs, companies should choose a ________ or ________ in order to compete in the global marketplace.

transnational strategy; global strategy

Industries in which proportionally more value is added in ________ activities, such as logistics, are more likely to benefit from a global strategy.

upstream