International Business: Module 9

Jenna reported to the management team that their proposed investment in Great Britain could be affected by the Brexit announcement. Which aspect of strategic planning does this demonstrate? A) Analyze the company's external environments. B) Analyze the company's internal environments. C) Define the company's business and mission. D) Set corporate objectives.

A) Analyze the company's external environments.

What is a disadvantage of top-down planning? A) It restricts initiative at lower levels of the organization. B) It is highly sensitive to differences in local conditions. C) It reduces the need for consultation, especially in an international company. D) It has corporate headquarters develop and provide guidelines.

A) It restricts initiative at lower levels of the organization.

What is a characteristic of a traditional strategic planning approach? A) The CEO and the head of planning get together to devise a corporate plan, which is then handed to the operating people for execution. B) Interaction with important customers and suppliers is included. C) Governments and other stakeholder activities are direct participants. D) There is a strong and effective responsiveness to differences that occur in local markets.

A) The CEO and the head of planning get together to devise a corporate plan, which is then handed to the operating people for execution.

When managers are analyzing the corporate controllable variables, the three key questions they must address about their business include A) Who are the company's target customers? B) What will be the costs that the company will incur in delivering value to its target customers? C) How much will the company be able to charge? D) Where should the company's production facilities be located?

A) Who are the company's target customers?

Action plans to enable organizations to reach their objectives are known as A) competitive strategies. B) policies. C) procedures. D) strategic scenarios.

A) competitive strategies.

To create a competitive advantage that is sustainable over time, the international company should try to develop competencies that A) create value for customers and for which they are willing to pay. B) are easy to imitate or substitute for. C) are expensive to develop and maintain. D) imitate those of market leaders.

A) create value for customers and for which they are willing to pay.

Knowledge that is easy for an individual to express clearly in words, pictures, or formulas is known as A) explicit. B) implicit. C) tacit. D) intangible.

A) explicit.

When a company faces strong pressures for reducing costs and limited pressure to adapt products for local markets, it should consider using a A) global strategy. B) multidomestic strategy. C) transnational strategy. D) differentiation strategy.

A) global strategy.

Companies pursuing a global strategy typically have A) low operating costs and high efficiency. B) decentralized decision making and quick response to changes in local competition. C) low levels of transportation and tariff costs. D) high levels of local market customization.

A) low operating costs and high efficiency.

Scenarios allow a business to A) project possible outcomes of business decisions. B) extrapolate from past data to make predictions. C) create a company's vision statement. D) analyze competitor actions and functions.

A) project possible outcomes of business decisions.

What part of the strategic plan provides managers with an estimate of future revenue to be received and the units to be sold, and also serves as the basis for planning in the other functional areas? A) sales forecast B) budget C) marketing plan D) contingency plan

A) sales forecast

In his book, The Art of the Long View, Peter Schwartz identified the process of constructing multiple stories of what could happen next as an important step for companies to take. What was the author referring to? A) scenarios B) a vision statement C) a mission statement D) sales forecasting

A) scenarios

The strategic planning report presented at the meeting included two goals the company wished to achieve: (1) expand into profitable, related businesses and (2) select markets to enter that have not experienced their products. Which part of the strategic planning process does this demonstrate? A) set corporate objectives B) implement strategies. C) analyze external environments D) quantify the objectives

A) set corporate objectives

A company would create procedures in order to A) specify how certain activities will be carried out. B) assure that all scenarios will be the same. C) provide input for strategic plans. D) demonstrate general guidelines for common activities.

A) specify how certain activities will be carried out.

According to the text, what is the primary value of scenario planning efforts? A) the transformation in strategic thinking that results B) the strategic plans that are created C) the ability to control external forces that impact the firm D) the ability to eliminate uncertainty that arises

A) the transformation in strategic thinking that results

Managers of international companies that are attempting to develop a competitive advantage face a formidable challenge because A) time, talent, and money are scarce. B) there are an abundance of resources. C) there are few or no alternative ways to use the company's scarce resources. D) the company's mission is constantly changing.

A) time, talent, and money are scarce.

What is the goal of value chain analysis? A) to enable managers to identify which set of activities it will do itself and which it will outsource B) to enable managers to identify whether to enter foreign markets or remain with domestic markets C) to enable managers to identify the true value of the company's stock D) to enable managers to identify the underlying values and belief of the company and its culture

A) to enable managers to identify which set of activities it will do itself and which it will outsource

How have the new directions in planning affected companies? A) They have made strategic planners dominant in the planning process. B) They have brought operating managers into the planning process. C) They have relieved the firm's chief executive officer of the responsibility for strategic planning. D) They have made strategic planning longer-term in orientation, typically planning 5 to 10 years into the future.

B) They have brought operating managers into the planning process.

During the strategic planning discussion, committee members reviewed the current systems in place in the company's manufacturing plant to determine if it could handle the anticipated increased capacity should the company go through with the foreign investment. Which step in the strategic planning process does this reflect? A) quantify goals B) analyze the company's internal environment C) define the company's business and mission D) set corporate objectives

B) analyze the company's internal environment

Scenarios are used by managers to A) control the critical elements of the external forces. B) brainstorm various plausible stories about the future. C) prepare budgets. D) understand historical events.

B) brainstorm various plausible stories about the future.

An itemized projection of revenues and expenses for a future time period is a A) sales forecast. B) budget. C) marketing plan. D) strategic plan.

B) budget.

A company's ability to achieve and maintain a unique and valuable competitive position both within a nation and globally, generating higher rates of profit than its competitors, is known as A) international strategy. B) competitive advantage. C) resource leverage. D) comparative advantage.

B) competitive advantage.

Jefferson Materials Corporation has developed a fire-resistant fabric that no one else has been able to replicate. It is used throughout the world in firefighting equipment and supplies. Since it is the only company making the product, customers are willing to pay a premium for the fabric. In this scenario, the fire-resistant fabric has helped the company develop a(n) A) economy of scale. B) competitive advantage. C) purchasing power parity. D) comparative advantage.

B) competitive advantage.

To be effective, a company's international strategy must be A) the same as the leaders of the industry. B) consistent among all the functions and activities of the company. C) the same as the company's domestic strategy. D) externally consistent among the company's products and regional units.

B) consistent among all the functions and activities of the company.

The strategic planning process provides a formal structure in which managers will A) establish a corporate level team to prepare the strategic plan. B) define the company's business and mission. C) formulate scenarios. D) implement strategy.

B) define the company's business and mission.

Performance measures are done to assess A) the time the company takes to acculturate new employees. B) if the strategy and its implementation are proceeding successfully. C) assumptions about how the strategic lists affect the business. D) whether the strategic forecasts are precise.

B) if the strategy and its implementation are proceeding successfully.

Compared to the traditional process, in the new strategic planning process A) top management is assigning strategic planning to teams of line and staff managers from the same business. B) interaction with important customers and suppliers is included. C) governments and other stakeholder are direct participants. D) strategic planning is done by the implementers within the local subsidiaries.

B) interaction with important customers and suppliers is included.

Companies pursuing a home replication strategy A) usually have low operating costs and high efficiency. B) limit availability of local customization. C) have loose headquarters control over product strategy. D) have local subsidiaries that develop unique country-level capabilities.

B) limit availability of local customization.

A broad statement that defines the organization's purpose and scope is known as a A) strategic plan. B) mission statement. C) vision statement. D) value chain.

B) mission statement.

When there is strong pressure for a company to adapt its products or services for local markets, it should probably rely on a A) home replication strategy. B) multidomestic strategy. C) transitional strategy. D) global strategy.

B) multidomestic strategy.

Tactical plans are also known as A) strategic plans. B) operational plans. C) global plans. D) contingency plans.

B) operational plans.

Following the merger of Hintz Corporation and Minor Holdings Corporation, the new company issued a list of broad guidelines that managers should use when dealing with problems. These were viewed as general guides that were left to the interpretation of managers. These guidelines are an example of A) procedures. B) policies. C) contingency plans. D) a vision statement.

B) policies.

A strategic plan is used by a company to A) guarantee how the firm's goals will be met. B) present sales forecasts and budgets. C) create a firm's vision statement. D) analyze a contingency plan.

B) present sales forecasts and budgets.

To develop a strategy for reaching corporate objectives, management must first try to A) select a viable market segment. B) quantify them. C) define the firm's mission. D) develop scenarios.

B) quantify them.

The time horizon of a strategic plan will vary according to A) the size of the company and the size of its industry. B) the age of the firm and the stability of its market. C) the geographic scope of the company. D) the diversity of a company's operations.

B) the age of the firm and the stability of its market.

International firms have found it necessary to institute formal global planning A) to eliminate the practice of informal planning. B) to provide top management with a means to identify threats and opportunities worldwide. C) to promote different courses of action among the firm's managers worldwide. D) to serve as an input for scenario building.

B) to provide top management with a means to identify threats and opportunities worldwide.

In regard to strategic planning, there has recently been a decided move among many firms A) to use advanced statistical techniques to help produce voluminous and detailed strategic plans. B) toward a less-structured format and a shorter plan. C) to concentrate on factors that can be easily quantified. D) to avoid including issues that are vague and uncertain.

B) toward a less-structured format and a shorter plan.

Stanton Construction Corporation was recently acquired by another company. With this merger, the newly formed company created a description of the businesses' desired future position. What type of statement did it create? A) values statement B) vision statement C) strategic statement D) mission statement

B) vision statement

Why is scenario analyses an important tool for managers? A) The objective of the process is to forecast the future. B) The scenario building team identifies the driving forces and "critical certainties" in a decision and prioritizes them. C) By anticipating the future and recognizing the warning signs of turbulence ahead, managers can develop more effective strategies. D) The process extrapolates from past data to build scenarios for guiding decision making.

C) By anticipating the future and recognizing the warning signs of turbulence ahead, managers can develop more effective strategies.

Value chain analysis focuses primarily on what question? A) Who are the company's target customers? B) What does the customer value and how much is the customer willing to pay for this value? C) How will this customer value be created? D) What is the best way for the company to enter a market?

C) How will this customer value be created?

What is a disadvantage of bottom-up planning? A) It restricts initiative at lower levels of the organization. B) It shows some insensitivity to local conditions, particularly when a company's top management team exhibits ethnocentric tendencies. C) There is no guarantee that the sum total of all the affiliates' goals will coincide with those of headquarters. D) Subsidiary directors' hands-on perspective may allow them to recognize potentially innovative opportunities.

C) There is no guarantee that the sum total of all the affiliates' goals will coincide with those of headquarters.

Regarding a sustainable competitive advantage, the company must have skills or competencies that A) reflect the lowest price possible. B) are easily replicated. C) are difficult to imitate or substitute for. D) can be copyrighted or patented.

C) are difficult to imitate or substitute for.

The firm's ultimate manager of strategic planning is the firm's A) vice president for planning. B) chief operating officer. C) chief executive officer. D) board of directors.

C) chief executive officer.

Plans for the best- or worst-case scenarios or for critical events that could have a severe impact on the firm are known as A) scenario plans. B) strategic plans. C) contingency plans. D) tactical plans.

C) contingency plans.

To set corporate objectives, management must first A) select a viable market segment. B) quantify them. C) define the firm's mission. D) research the market.

C) define the firm's mission.

Historically, more aspects of ________ have been standardized and coordinated worldwide by companies than has been the case for other value chain activities such as ________. A) research and development; manufacturing B) marketing; manufacturing C) manufacturing; marketing D) marketing; research and development

C) manufacturing; marketing

A company would rely on triple-bottom-line accounting to A) assess the value of marketing promotions. B) balance imports and exports. C) measure the company's strategic performance. D) examine economies of scale procedures.

C) measure the company's strategic performance.

In terms of quantifying objectives and goals, most top managers A) prefer nonquantifiable, directional goals. B) prefer nonquantifiable, but verifiable goals. C) prefer verifiable objectives. D) have no preference as to quantifiable and nonquantifiable goals.

C) prefer verifiable objectives.

Multiple, plausible stories that managers consider for what might happen in the future are known as A) vision statements. B) contingency plans. C) scenarios. D) strategies.

C) scenarios.

Which aspect of strategic planning helps a company maintain itself within the boundaries of the mission and vision statements? A) analyzing the internal environment B) implementing tactical plans C) setting corporate objectives D) analyzing the external environment

C) setting corporate objectives

According to a survey by Bain & Company, since 1993 the management tool most commonly used among global executives is A) value chain analysis. B) industry and competitor analysis. C) strategic planning. D) environmental analysis.

C) strategic planning.

The process by which an organization determines where it is going in the future, how it will get there, and how it will assess whether and to what extent it has achieved its goals is known as A) value chain analysis. B) scenario analysis. C) strategic planning. D) international strategy.

C) strategic planning.

Knowledge that an individual has but that is difficult to express clearly in words, pictures, or formulae, and therefore difficult to transmit to others is known as A) explicit. B) implicit. C) tacit. D) intangible.

C) tacit.

When the international company's planning committee has completed the internal audit aspect of strategic planning, it is ready to examine A) external variables. B) internal production standards. C) the company's mission and vision. D) the company's international strategy.

C) the company's mission and vision.

Lexon Corporation produces high-nutrition breakfast products. As it enters into foreign markets, it faces strong pressures for both reducing costs and adapting products for local markets. Based on this, the company should use a A) global strategy. B) multidomestic strategy. C) transnational strategy. D) home replication strategy.

C) transnational strategy.

An assessment conducted on the chain of interlinked activities of an organization or set of interconnected organizations, intended to determine where and to what extent value is added to the final product or service is known as A) economic value added. B) internal analysis. C) value chain analysis. D) SWOT analysis.

C) value chain analysis.

A description of the company's desired future position if it can acquire the necessary competencies and successfully implement its strategy is known as a A) strategic plan. B) mission statement. C) vision statement. D) values statement.

C) vision statement.

When developing and assessing strategic alternatives, companies competing in international markets confront which two opposing goals? A) Reduce investment and increase profits. B) Reduce complexity and improve effectiveness. C) Standardize policies and reduce complexity. D) Reduce costs and adapt to local markets.

D) Reduce costs and adapt to local markets.

International strategy can be described as A) a forecast about the company's future and how to achieve it. B) a vision for what the company will become in the future. C) the basis for a company's mission. D) a plan that guides the way firms makes choices about developing and deploying resources.

D) a plan that guides the way firms makes choices about developing and deploying resources.

Timmerman Holding Corporation created a business recovery center 20 miles from its headquarters where employees could work if anything should happen to their main office. This would allow the company to continue doing business without interruption in the wake of a critical event. The business recovery center is an example of a A) scenario. B) mission statement. C) tactical plan. D) contingency plan.

D) contingency plan.

Milo Millworks Incorporated has maintained a sustainable competitive advantage for its framing style. In order to accomplish this, the framing style must be A) priced low. B) easy to obtain. C) easy to imitate. D) difficult to substitute for.

D) difficult to substitute for.

Companies pursuing a transnational strategy usually A) have less decentralized manufacturing operations. B) have simple organizational structures and processes within and across regions. C) locate most of their activities in developing countries. D) have international subsidiaries develop and share knowledge with company operations worldwide.

D) have international subsidiaries develop and share knowledge with company operations worldwide.

Companies pursuing a multidomestic strategy typically have A) low operating costs and high efficiency. B) centralized decision making and quick response to changes in local competition. C) tight headquarters control over product strategy. D) high levels of local market customization.

D) high levels of local market customization.

High-Rise Boots Corporation plans to expand into the European market where it finds weak pressure to respond to local demands and cost reductions are not necessary. Which competitive strategy should the company use based on these factors? A) multidomestic strategy B) transnational strategy C) differentiation strategy D) home replication strategy

D) home replication strategy

Changes in the way corporate planning is done today include A) greater use of structured formats to planning. B) the use of advanced computing techniques to make detailed five-year forecasts. C) heavy emphasis on the use of specialized headquarters staff. D) interaction with important customers, distributors, and suppliers.

D) interaction with important customers, distributors, and suppliers.

The planning method that appears to be becoming more popular is A) top-down. B) bottom-up. C) sequential. D) iterative.

D) iterative.

The practices that organizations and their managers use for identifying, creating, acquiring, developing, dispersing, and exploiting competitively valuable knowledge is known as A) competitive advantage. B) international strategy. C) value analysis. D) knowledge management.

D) knowledge management.

During the meeting, David mentioned two possibilities for the future of the new product line. It could do well initially but then be undercut by competitor challenges or supplier pricing changes. Or, it could fail immediately if marketing promotions aren't effective in the European market. What is David using in his strategy formulation? A) policies B) procedures C) contingencies D) scenarios

D) scenarios

What are two important differentiators of strategic plans? A) the size of the company and the plan's time horizon B) what nation and culture the company is from and the organizational structure of the company C) the company's organizational structure and the company's competitive strategy D) the level of the organization for which it is made and the plan's time horizon

D) the level of the organization for which it is made and the plan's time horizon

Camille is frustrated at work. The company headquarters is based in the UK and she works in the New York office. Headquarters is constantly changing the directives the company is taking and isn't interested in her thoughts on what's happening in the U.S. market. She knows that the new directives won't help in the U.S. market, but no one will listen to her. Which method of planning does her company use? A) bottom-up B) scenario C) iterative D) top-down

D) top-down

A clear, concise description of the fundamental beliefs and priorities expected of the organization's members, reflecting how they are to behave with each other and with the company's customers, suppliers, and other members of the global community is known as a A) strategic plan. B) mission statement. C) vision statement. D) values statement.

D) values statement.

Companies rely on a mission statement to determine where it is going in the future, how it will get there, and whether or not goals are achieved.

FALSE

Companies use a contingency plan as a guideline for marketing media placement.

FALSE

Historically, companies tend to standardize more aspects of marketing than manufacturing.

FALSE

Knowledge that an individual has but that is difficult to express clearly in words, pictures, or formulas, and therefore difficult to transmit to others, is called explicit knowledge.

FALSE

Most managers prefer objectives that are qualified but not quantified.

FALSE

Procedures are broad guidelines issued by upper management for the purpose of assisting lower-level managers in handling nonrecurring problems.

FALSE

Repetition of the bottom-up or top-down planning process until all differences are reconciled is called sequential planning.

FALSE

Scenarios are forecasts that extrapolate from past data to make predictions.

FALSE

The first step in the process of strategic planning is to define the company's business and mission.

FALSE

The ultimate managers of strategic planning and strategy making for a company are the members of the executive board.

FALSE

To create a sustainable competitive advantage, an international company should try to develop competencies that are valuable, common, difficult to imitate, and readily substitutable.

FALSE

A broad statement that defines the purpose for a company's existence is the mission statement.

TRUE

A company would select a global strategy when it faces strong pressures for reducing costs and limited pressure to adapt products for local markets.

TRUE

A multidomestic strategy tends to be used when a company confronts pressures for local adaptation rather than cost-effectiveness.

TRUE

An advantage of bottom-up planning is that the people responsible for attaining the goals are formulating them.

TRUE

Companies pursuing a home replication strategy typically centralize product development functions in their home country and then transfer innovations to foreign markets to capture additional value.

TRUE

Many managers have moved toward less-structured formats when doing strategic planning based on the ineffectiveness of five-year forecasts.

TRUE

Strategic plans promote consistency of action among the firm's managers worldwide and encourage them to consider the ramifications of their actions in the firm's other geographic and functional areas.

TRUE

Tactical plans are more detailed than strategic plans.

TRUE

When making a strategic plan, a company must set corporate objectives before quantifying goals.

TRUE