International Business Exam 4 (chapter 13, 15, 17)

A manufacturer of electric stand mixers wants to better compete in this highly competitive market. It decided to offer its mixer in over 50 different colors so customers will be able to match the appliance in their kitchen decor. What type of value-creation strategy does this represent? A) differentiation B) Low-cost C) standardization D) localization

A) differention

Which of the following products will most likely have high value-to-weight ratios? A) pharmaceuticals B) refined sugar C) bulk chemicals D) petroleum products

A) pharmaceuticals

________ include the design, creation, and delivery of a product. A) primary activities B) core competencies C) support activities D) universal needs

A) primary activities

_________ is measured by the percentage increase in net profits over time A) profit growth B) value C) profitability D) operational economy

A) profit growth

___________ can be defined as the rate of return that the firm makes on its invested capital, which is calculated by dividing the nets profits of the firm by the total invested capital A) profitability B) performance C) cash flow D) efficiency

A) profitability

Which statement is true of the country factors that govern international business? A) Relative factor costs should be considered when selecting a country for production B) Centralized production is the most suitable method of doing international business C) Exchange rates are not a significant factor that determines the selection of a country D) Decentralized manufacturing is the most suitable method of doing international business

A) relative factor costs should be considered when selecting a country for production

There are several disadvantages of franchising as an entry mode. Which is one of them? A) there is little incentive for the franchisee to build a profitable operation as quickly as possible B) the form incurs many of the costs and risks of opening a foreign market on its own C) Franchising may inhibit the firm's ability to use the profits obtained to open additional businesses in the same country D) franchising may inhibit the firm's ability to take profits out of one country to support competitive attacks in another

A) there is little incentive for the franchisee to build a profitable operation as quickly as possible

The term __________ refers to skills within the firm that competitors cannot easily match or imitate and may exist in the firm's value-creation activities. A) experience curves B) core competence C) economies of scale D) learning effects

B) core competence

Super Safe Sunscreen products is based in the United States and is looking to distribute its products in South America. Rather than build and maintain a manufacturing facility in Brazil, the company decided to ship its products directly from its location in California. What type of entry mode does this represent? A) Licensing B) Exporting C) Franchising D) A turnkey contract

B) exporting

Which statement is true of licensing? A) Licensing is used when a firm possesses some tangible property but does not want to pursue a potential application itself B) The firm does not have to bear the development costs and risks associated with opening a foreign market C) It is an attractive option when a firm is interested in pursuing a foreign market and is ready to commit substantial resources to a foreign market D) It is an attractive option for firms that have the capital to open overseas markets

B) the firm does not have to bear the development costs and risks associated with opening a foreign market

Which of the following statements is true of turnkey projects? A) turnkey projects are most common in industries that use simple, inexpensive production technologies B) A turnkey strategy can be more risky than conventional FDI, particularly in unstable political environments C) A turnkey strategy is particularly useful where FDI is limited by host-government regulations D) firms that enter into a turnkey deal have a long-term interest in the foreign country

C) a turnkey strategy is a particularly useful where FDI is limited by host-government regulations

_________ agreements enable firms to hold each other "hostage," thereby reducing the risk they will behave in an opportunistic manner toward each other A) Turnkey B) Franchising C) Cross-licensing D) Integrated licensing

C) cross-licensing

Which is an example of a support activity in a firm's value chain? A) research and development B) customer service C) human resources D) marketing and sales

C) human resources

An advantage of __________ with a local partner is the knowledge of the local environment that the local partner contributes to the venture A) turnkey contracts B) licensing contracts C) joint ventures D) wholly owned subsidiary contracts

C) joint ventures

According to the concept of economies of scale, as plant output expands A) productivity declines B) total costs decrease C) unit costs decrease D) utilization of capital declines

C) unit costs decrease

According to the opening case of chapter 15, uber faced intense competition from Didi, a homegrown ride-for-hire operator. Didi was from the country of __________.

China

________ allows the company to produce a wider variety of end products at a unit cost that at one time could be achieved only through the mass production of a standardized output. A) Standardization B) Kaizen C) Six sigma D) Lean Production

D) Lean Production

If a firm is trying to enter a market where there are already well-established companies, and where global competitors are also interested in establishing a presence, the firm should choose A) A franchise B) A greenfield investment C) A joint venture D) an acquisition

D) an acquisition

When a company's product has a low value-to-weight ratio, the company should A) have a centralized manufacturing location. B) produce the product in multiple locations close to major markets. C) ignore transportation costs. D) produce the product in one optimal location and serve the world from there.

D) produce the product in one optimal location and serve the world from there

This type of factory—often with the same standards as the top factories in the global firm's system—is set up to overcome intangible and tangible barriers in the global marketplace A) Contributor factory B) Source factory C) Lead factory D) Server factory

D) server factory

A disadvantage of __________ is that the firm that enters into such an arrangement usually will have no long-term interest in the foreign country A) wholly owned subsidiaries B) exporting C) licensing D) turnkey projects

D) turnkey projects

__________ was the airline company featured in the opening case of chapter 13.

Emirates

A "buy" decision is favored when there is any chance that supply cannot be guaranteed if the firm moves production overseas. T/F

false

A firm's strategy can be defined as the actions that managers take to attain the goals of the firm. T/F

false

A manufacturer of organic pet food is thinking about expanding into a foreign market. By getting into the market early, before competitors, the company can avoid the pioneering costs that come with entering a market late. T/F

false

According to Porter, the way to create superior value is to drive up the cost structure of the business and/or differentiate the product in some way so that consumers value it more. T/F

false

Acquisitions generally take a long time to execute and, for this reason, are not favored by most firms. T/F

false

As competition intensifies, global standardization strategies and transnational strategies tend to become less viable, and managers need to direct their companies toward either an international strategy or a localization strategy. T/F

false

Concentration of production should be avoided when important exchange rates are expected to remain relatively stable. T/F

false

Franchising does not enable a firm to quickly build a global presence. T/F

false

Make-or-buy decisions that concern the components to be used in a production process. T/F

false

Managers of a source factory operate in essentially the same way that managers in an offshore factory operate. They have very little say in purchasing or logistics decisions. T/F

false

Other things being equal, a firm should locate its various manufacturing activities where the relative factor costs are conducive to the performance of the activities. T/F

false

Products such as electronic components and pharmaceuticals have low value-to-weight ratios. T/F

false

Pursuing a global standardization strategy is appropriate when a firm is facing low pressures for cost reduction but high pressure for local responsiveness. T/F

false

The skills within the firm that a competitor cannot easily match or imitate are known as the core knowledge base. T/F

false

Unlike joint ventures, strategic alliances require the firm to bear all the costs risks of foreign expansion. T/F

false

When consumer tastes and preferences differ significantly between countries, there is low pressure for local responsiveness

false

Firms pursuing a ___________ strategy try not to customize their product offering and marketing strategy to local conditions because customization involves shorter production runs and the duplication of functions, which tend to raise costs.

global standardization

Firms pursuing an ____________ strategy take products first produced for their domestic market and then sell them internationally with only minimal local customization.

international

One advantage of ___________ is that the firm benefits from a local partner's knowledge of the host country's competitive conditions, culture, language, political systems, and business.

joint venture

One disadvantage of __________ is that it does not give a firm the tight control over manufacturing marketing, and strategy that is required for realizing experience curve and location economies.

learning

_________ effects refer to cost savings that come from learning by doing

learning

A factory that is viewed as an intelligence-gathering unit is called a ________ factory.

outpost

For a firm, all positions on the efficiency frontier are viable. T/F

true

If a firm's core competence is proprietary technological knowledge, a joint venture is not preferable. T/F

true

Poor product quality and low productivity are hidden costs associated with basing production in a foreign location. T/F

true

When a firm's competitive advantage is based on technological competence, a wholly-owned subsidiary will often be the preferred entry mode because it reduces the risk of losing control over that competence. T/F

true

The __________ supply chain includes all of the organizations (e.g. suppliers) and resources that are involved in the portion of the supply chain from raw materials to the production facility.

upstream

The most important disadvantage of _________________ is that it is generally the most costly method of serving a foreign market from a capital investment standpoint.

wholly owned subsidiaries