Chapter 8 Quiz

In what way is licensing similar to franchising? a. Franchisees pay a royalty to the parent company. b. Franchisees must abide by strict manufacturing guidelines put in place by the parent company. c. Franchising is primarily pursued by service companies. d. Franchising involves long-term commitments.

a. Franchisees pay a royalty to the parent company.

A U.S. technology company has decided to move some of its manufacturing processes to facilities in Japan, utilizing the nation's expertise in technological manufacturing. Doing so gives the company the ability to price its products at a lower price point locally than its other "Made in America" competitors. By performing this value creation activity in an optimal location, the company has realized: a. location economies. b. its multinational potential. c. cost economies. d. product economies.

a. location economies.

A company has decided to expand globally to take advantage of location economies available in other countries. Which of these strategies might the company pursue? a. Relocate part of its production process to another country to enjoy a competitive advantage by being closer to a large customer base in a particular country and reducing transportation requirements. b. Add manufacturing capabilities at its headquarters in its home country. c. Develop additional products to meet the variety of needs of international customers with their diverse preferences and product requirements. d. Close all manufacturing plants, regardless of location, that are operating at less than 100% production power.

a. Relocate part of its production process to another country to enjoy a competitive advantage by being closer to a large customer base in a particular country and reducing transportation requirements

Coca-Cola, a company that does business in almost every national market, can most accurately be classified as: a. a multinational company. b. a leveraged company. c. a franchisee. d. a wholly owned subsidiary.

a. a multinational company.

Manufactured goods have the ability to gain entry into the global market because: a. barriers to international trade are lowering. b. national and international markets tend to demand the same features and products. c. national markets are influencing international markets. d. marketing of these goods can now encompass international markets.

a. barriers to international trade are lowering.

The competitive position of a company based on the nation-state in which the company is located is referred to as: a. national competitive advantage. b. a strategic alliance. c. the home national marketplace. d. a wholly owned subsidiary.

a. national competitive advantage

A company with more production power than is generally utilized for its current production activity can benefit from entering the global market because: a. the company can utilize its production facilities to produce greater volumes to meet demand from a larger market, leading to higher productivity, lower cost, and greater profitability. b. doing so will lead to a lower sales volume, which enables the company to free up more production power and require fewer employees. c. doing so will lead to a lower sales volume, which will reduce production costs and lead to greater production power. d. doing so will lead to a lower sales volume, which means using less production power, enabling employees to have more time to participate in a learning environment.

a. the company can utilize its production facilities to produce greater volumes to meet demand from a larger market, leading to higher productivity, lower cost, and greater profitability.

A metal fabrication company is considering entering the global market. It is unsure of what steps to take and is looking for a cost-effective method to enter into the market by partnering with a company that is already doing similar business in the host country. Based on the company's preferences, which mode of entry should the company choose? a. Exporting b. Entering into a joint venture c. Setting up a wholly owned subsidiary d. Franchising a location

b. Entering into a joint venture

Which of the following statements about global expansion is true? a. The goal of global expansion is to grow global product awareness. b. Expanding into the global marketplace is a decision based on growing profitability with a company's current product offering. c. Global expansion of a company's products is the purpose of achieving multinational classification. d. The primary goal of manufacturing internationally is to find the least expensive labor for a company's production.

b. Expanding into the global marketplace is a decision based on growing profitability with a company's current product offering.

If a company is experiencing increasing pressures for cost reduction for its products, which of the following courses of action should it consider? a. Sell licenses to produce the products internationally. b. Explore opportunities for exporting or create a wholly owned subsidiary within a country. c. Establish a joint venture with a foreign company. d. Pursue a franchising model for the company.

b. Explore opportunities for exporting or create a wholly owned subsidiary within a country.

A U.S. company that manufactures home appliances is interested in entering the Chinese market. The company has many national appliance competitors in China, all of which have a better understanding of the unique needs of Chinese customers. Based on these facts, the U.S. company should consider which strategy for entering the Chinese market? a. Transnational strategy b. Global strategic alliance c. International strategy d. Localization strategy

b. Global strategic alliance

Why might a company decide that exporting is NOT the best choice for entering the global market? a. If manufacturing abroad is costlier than manufacturing locally b. If there are lower-cost locations for manufacturing the products abroad c. If there are low transportation costs from the manufacturing location to the customer d. If there is a low chance of tariffs being enacted by governments in countries with target customers

b. If there are lower-cost locations for manufacturing the products abroad

Cost-reduction pressures can be particularly intense in which of the following situations? a. When customer tastes and preferences differ significantly between countries b. In industries producing commodity-type products c. When there are differences in infrastructure or traditional practices among countries d. In industries where government agencies are heavily involved

b. In industries producing commodity-type products

A-Line Apparel Company is trying to decide which global strategy to implement as it expands. A low cost structure with a differentiated product specific to each of its geographic markets is important to the company. The top leadership also expects to use many of the company's resources across a global network. Based on these preferences, which strategy should the company practice? a. International strategy b. Transnational strategy c. Localization strategy d. Globalization standardization strategy

b. Transnational strategy

When a company focuses on increasing its profitability by reaping cost reductions that come from economies of scale and location economies, it is using a(n): a. exporting strategy. b. global standardization strategy. c. joint venture strategy. d. localization strategy.

b. global standardization strategy.

Japan's domestic customers in the camera industry generated a high home demand, which has helped stimulate the innovation of cameras for the local and global market. In this case, _____ affected Japan's competitive advantage in the industry. a. related and supporting industries b. local demand conditions c. firm strategy, structure, and rivalry d. factor endowments

b. local demand conditions

Due to globalization, the world's economic system is moving from one in which national markets are distinct entities to: a. a few international markets. b. one inclusive global marketplace. c. subdivided regional markets. d. smaller local markets.

b. one inclusive global marketplace.

Based on cultural differences, the U.S. company Starbucks practiced a localization strategy in France by: a. keeping its menu the same in all locations across the globe. b. providing more seating space to meet French preferences to sit and chat while drinking their coffee. c. changing its latte recipes to have a burnt taste that the French like. d. making less seating to accommodate the French preference for on-the-go coffee.

b. providing more seating space to meet French preferences to sit and chat while drinking their coffee.

Today, 40% of Starbucks stores are outside of North America. Its success in foreign countries can be attributed to strategically establishing its café experience in places that lacked competition. To achieve this kind of growth, Starbucks had what motive for globally expanding? a. Localization b. Cheaper labor costs c. Leveraging its product offering d. Sourcing from multiple countries

c. Leveraging its product offering

International licensing enables a foreign licensee to purchase the rights to do which of the following? a. Produce a company's product in the parent company's own country for a negotiated fee. b. Operate under strict guidelines implemented by the parent company concerning manufacturing, marketing, and strategic functions. c. Produce a company's product in the licensee's country for a negotiated fee. d. Exchange technological knowhow to further each company's business.

c. Produce a company's product in the licensee's country for a negotiated fee.

Managers of an American television network have been told they need to employ a localization strategy if they want to break into the European and Australian markets. What specifically should they do to implement this strategy? a. Promote their existing programming to these new markets. b. Develop newly named networks for these new markets. c. Produce new programming tailored to the needs of these new markets. d. Focus exclusively on the American market.

c. Produce new programming tailored to the needs of these new markets.

To adapt to the globalization of manufactured goods, companies must first adapt their strategy to: a. tailor new products to meet the needs of international consumers. b. keep foreign companies from entering into their home markets and appealing to local consumers. c. compete against international companies with the same basic product. d. compete against local companies with the same basic product.

c. compete against international companies with the same basic product.

Attributes of a company's competitive advantage, including land, capital, technological knowhow, and physical infrastructure, are known as: a. local demand conditions. b. framework characteristics. c. factor endowments. d. rivalry intensity

c. factor endowments.

The success of multinational companies ultimately comes from: a. manufacturing products in a number of different countries. b. human resource management and talent recruitment and retention. c. gaining competitive advantage based on distinctive competencies. d. research and development.

c. gaining competitive advantage based on distinctive competencies.

The rationale for selecting foreign suppliers to manage 65% of the building of Boeing Company's 787 jet aircraft is that: a. they offer the cheapest option for manufacturing the aircraft parts. b. it enables Boeing Company to complete production more quickly. c. those particular suppliers are the best in the world at performing their particular activity. d. having more nations involved in the production will make the product more accepted by international customers.

c. those particular suppliers are the best in the world at performing their particular activity.

Of the four attributes of a national or country-specific environment that have an important impact on the global competitiveness of companies located within that nation, which is part of the related and supporting industries? a. A nation's position in factors of production, such as skilled labor or the infrastructure necessary to compete in a given industry b. The nature of home demand for the industry's product or service c. The conditions in the nation governing how companies are created, organized, and managed, and the nature of domestic rivalry d. The presence or absence in a nation of supplier industries that are internationally competitive

d. The presence or absence in a nation of supplier industries that are internationally competitive

A high cost of entry into a foreign market is one of the disadvantages of which of the following international entry modes? a. Joint ventures b. Franchising c. Exporting d. Wholly owned subsidiaries

d. Wholly owned subsidiaries

Physicians in the United States are used to dealing with hard-sell pharmaceutical sales reps. However, British and Japanese doctors respond more favorably to online informational presentations about new drugs that they can review whenever they have a few free minutes to spare. When PharmaGen decided to market their newest cardiovascular medicine in Britain, they spent three months developing the Internet material they would use to present the drug to British doctors. This is an example of pressure for local responsiveness based on: a. cost reductions. b. differences in infrastructure and traditional practices. c. host government demands. d. differences in distribution channels.

d. differences in distribution channels.

As industries become global in scope, competitors and potential future competitors exist not only in a company's home market but also in other national markets and can motivate companies to: a. focus on their home markets exclusively so as not to lose current customers. b. expand nationally. c. become multinational companies. d. expand globally.

d. expand globally.

One of the world's most-recognizable franchisers is McDonald's. Advantages of franchising in global markets include: a. the lack of any long-term commitments in the business arrangement. b. a guarantee of a specific level of quality. c. tight control needed to realize experience curve or location economies. d. forgoing the development costs and risks associated with opening up a foreign market.

d. forgoing the development costs and risks associated with opening up a foreign market.