Mgt.247.Final.Chapter 10

Which of the following is a feature of the Globalization 2.0 stage? 2) A) Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries. B) Two-way knowledge flow between the local subsidiaries and their U.S. headquarters was strong. C) Huge investments in fiber-optic cable networks around the world enabled companies to operate as global-collaboration networks. D) Only sales and distribution operations took place overseas, while all the important business functions were located in the home country.

A) Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.

Which of the following has been a key driver for firms to expand globally during the Globalization 3.0 stage? A) benefits from lower labor costs in manufacturing and services B) low levels of economic growth in emerging economies C) access to low-cost raw materials such as lumber and iron ore D) inefficient infrastructure in countries like China, which have brought down setting-up costs

A) benefits from lower labor costs in manufacturing and services

Which of the following foreign entry modes primarily involves producing goods in one country to sell in another? A) exporting B) brownfield operations C) greenfield operations D) crowdsourcing

A) exporting

Which of the following types of organizations comparatively requires the lowest levels of investment and control? A) franchising B) greenfield operations C) acquisition D) joint ventures

A) franchising

Japanese and European engineering companies entered China to participate in building the world's largest network of high-speed trains worth billions of dollars. Companies such as Kawasaki Heavy Industries (Japan), Siemens (Germany), and Alstom (France) were joint-venture partners with domestic Chinese companies. These firms now allege that the Chinese partners built on the Japanese and European partners' advanced technology to create their own, next-generation high-speed trains. This example best highlights the ________ that firms can experience when expanding overseas. A) intellectual property exposure B) liability of foreignness C) threat of new entrants D) loss of reputation

A) intellectual property exposure

SmallWorld Inc. is a global Internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries. SmallWorld Inc. is most likely doing this to A) reduce its cultural distance from the other countries. B) reduce its geographical distance from the other countries. C) increase its economic distance from the other countries. D) increase its administrative distance from the other countries.

A) reduce its cultural distance from the other countries.

Which of the following factors is the most important determinant of economic distance? A) the wealth and per capita income of consumers. B) the presence of legal institutions in a country. C) the ethnicity and religion of consumers D) the topography of a country.

A) the wealth and per capita income of consumers.

Multinational enterprises (MNEs) like Harley-Davidson, Rolex, and Starbucks are said to be following an international strategy because A) they offer the same products or services in all their stores throughout the world. B) they attempt to combine benefits of localization and standardization strategies simultaneously. C) they are highly responsive to the local needs and preferences of customers in the host countries. D) they pursue a cost-leadership strategy in their respective industries.

A) they offer the same products or services in all their stores throughout the world.

Which of the following is an observable feature in the Globalization 3.0 stage? 3) A) Knowledge flow between the local replicas of the multinational enterprises and their U.S. headquarters is limited. B) Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world. C) Firms have reorganized from a global enterprise with different centers of expertise to a multinational company with self-contained operations in a few selected countries. D) Only sales and distribution functions of a multinational enterprise are located in a few key countries.

B) Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world.

Fragra Inc., a company that manufactures and sells premium perfumes, is pursuing an international strategy. SaveMart Inc., a supermarket chain, follows a multidomestic strategy. Which of the following statements is most likely true of this scenario? A) Fragra Inc. will pursue a differentiation strategy at the business level, whereas SaveMarket Inc. will pursue a cost-leadership strategy at the business level. B) Fragra Inc. will sell the same products and services in both domestic and foreign markets, whereas SaveMarket Inc. will customize its product offerings to suit local requirements. C) Fragra Inc. will be better protected from exchange rate fluctuations when compared to SaveMarket Inc. D) Fragra Inc. will not be able to leverage its home-based core competencies in foreign markets as much as SaveMarket Inc.

B) Fragra Inc. will sell the same products and services in both domestic and foreign markets, whereas SaveMarket Inc. will customize its product offerings to suit local requirements.

Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode? A) They are based on contracts rather than ownership. B) They reduce a firm's exposure to loss of reputation. C) They are easy to initiate and terminate. D) They require low amounts of investments in terms of capital

B) They reduce a firm's exposure to loss of reputation.

Which of the following strategies must a multinational enterprise (MNE) use when it wants to pursue an integration strategy at the business level by attempting to reconcile product and/or service differentiations at low cost? A) an international strategy B) a transnational strategy C) a multidomestic strategy D) a global-standardization strategy

B) a transnational strategy

Opula Inc., a luxury car company, sells the same cars and offers the same superior services in both its home country and foreign markets. The market it operates in faces low pressures for both local responsiveness and cost reductions. Which of the following strategies within the integration-responsiveness framework does Opula Inc. most likely pursue? A) a transnational strategy B) an international strategy C) a global-standardization strategy D) a multidomestic strategy

B) an international strategy

A(n) ________ arises out of the combination of high pressure for local responsiveness and low pressure for cost reductions. A) global-standardization strategy B) multidomestic strategy C) international strategy D) transnational strategy

B) multidomestic strategy

McDonald's uses mutton instead of beef in India and offers teriyaki burgers in Japan. Which of the following strategies is the fast-food chain pursuing? A) focused differentiation strategy B) multidomestic strategy C) global-standardization strategy D) international strategy

B) multidomestic strategy

Which of the following is part of Geert Hofstede's cultural dimensions? A) self-efficacy B) power distance C) span of control D) locus of control

B) power distance

A(n) ________ strategy arises out of the combination of high pressure for local responsiveness and high pressure for cost reductions. A) global-standardization B) transnational C) international D) multi-domestic

B) transnational

When a firm pursues a(n) ________, it sells the same products or services in both domestic and foreign markets. A) localization strategy B) differentiation strategy C) domestic strategy D) international strategy

D) international strategy

Evara Cosmetics Inc. is a company that operates in 20 countries around the globe. The company clearly understands that the skin and hair type of customers varies from one country to another. Consequently, its products are customized to suit local needs and preferences of customers, even though the costs incurred while producing these products are exceptionally high. This strategy helps the company behave as a local firm in a foreign market. In this scenario, which of the following strategies does Evara Cosmetics Inc. most likely implement? A) a one-product strategy B) a global-standardization strategy C) a multidomestic strategy D) an international strategy

C) a multidomestic strategy

A multinational enterprise (MNE) is said to be pursuing a multidomestic strategy when it A) attempts to reap significant economies of scale by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost. B) is pursued in response to low pressure for local responsiveness and low pressure for cost reduction. C) attempts to maximize local responsiveness, hoping that the host country consumers will perceive it to be a local company. D) operates on the assumptions made in the globalization hypothesis in order to lower costs.

C) attempts to maximize local responsiveness, hoping that the host country consumers will perceive it to be a local company.

How has the administrative and political distance between Canada, Mexico, and the United States been reduced? A) by reducing their linguistic differences B) by adopting similar national cultures C) by establishing the North American Free Trade Agreement (NAFTA) D) by lowering the disparities between their per capita incomes

C) by establishing the North American Free Trade Agreement (NAFTA)

When two neighboring, democratic countries that are part of a trading bloc follow different religions and social norms, they most likely have high ________ distance. A) political B) geographic C) cultural D) administrative

C) cultural

During the period of Globalization 1.0, the mode of entry into foreign markets 1) primarily involved A) licensing production and distribution. B) making foreign institutional investments. C) exporting goods. D) making foreign direct investments.

C) exporting goods.

Some multinational enterprises (MNEs) attempt to reap significant economies of scale and location economies by pursuing an international division of labor based on wherever best-of-class capabilities reside at the lowest cost. This is known as a(n) ________ strategy. A) multidomestic B) international C) global-standardization D) localization

C) global-standardization

Under the CAGE distance framework, the administrative and political distance between two countries primarily increases with A) physical remoteness. B) differences in climates and time zones. C) the absence of a trading bloc. D) the lack of connective ethnic and social networks.

C) the absence of a trading bloc.

Which of the following statements best describes local responsiveness? A) the process of producing goods in one country and selling them in another B) the additional costs of doing business in an unfamiliar culture and economic environment, and of coordinating across geographic distances C) the need to tailor product and service offerings to fit native consumer preferences and host-country requirements D) the belief that consumer needs and preferences throughout the world are converging and thus becoming increasingly homogenous

C) the need to tailor product and service offerings to fit native consumer preferences and host-country requirements

Which of the following is one of the features of an international strategy? A) It is characterized by cost-leadership as a preferred business strategy. B) It is often used successfully by firms with relatively small domestic markets. C) It is one of the newest types of global strategies. D) It is characterized by limited local responsiveness.

D) It is characterized by limited local responsiveness.

How will an increase in coordinated economic and political integration between countries affect the world economy? A) The world's market economies will become self-sufficient and independent. B) The cost of labor will further decline in emerging economies. C) There will be a movement away from global-collaboration networks among multinational enterprises (MNEs). D) There will be gains in social welfare and living standards across the globe.

D) There will be gains in social welfare and living standards across the globe.

Octa Autos Inc. wants to globally expand its market. It intends to ensure that its mode of foreign entry allows it to have strong control over its operations and protect its intellectual property, though it may mean investing a significant amount of capital and other resources. In this scenario, which of the following foreign entry modes would best suit Octa Autos Inc.? A) exporting B) licensing C) franchise agreement D) acquisition

D) acquisition

Which of the following is not included within the types of strategic alliances? A) franchising B) licensing C) joint ventures D) acquisitions

D) acquisitions

Which of the following modes of entering a foreign market allows for the lowest level of control? A) acquisitions B) greenfield ventures C) joint ventures D) exporting

D) exporting

Jade Mobiles Inc., a cell phone manufacturing company, has its product development centers located in the U.S. and South Korea. The manufacturing units are located in China and Philippines to benefit from low-labor costs and access to original equipment manufacturers. This allows the company to competitively price its cell phones. Also, the various phone models sold by the company are uniform in all the foreign markets it operates in. In this scenario, which of the following strategies does Jade Mobiles Inc. most likely pursue? A) localization strategy B) international strategy C) multidomestic strategy D) global-standardization strategy

D) global-standardization strategy

The global-standardization strategy arises out of the combination of A) high pressure for local responsiveness and low pressure for cost reductions. B) low pressure for both local responsiveness and cost reductions. C) high pressure for both local responsiveness and cost reductions. D) high pressure for cost reductions and low pressure for local responsiveness.

D) high pressure for cost reductions and low pressure for local responsiveness.

A greater cultural distance between two trading countries. A) reduces the uncertainty of doing business. B) reduces the transaction costs associated with business. C) increases linguistic similarities between the two countries. D) increases the liability of foreignness.

D) increases the liability of foreignness.

Silca Electronics Inc. is a consumer-electronics company based in the country of Pelo. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself successfully in the country of Zevar, and uses its low-cost strategy to do so. However, due to the additional costs associated with training, coordinating across geographic distances, and other costs associated with doing business in an unfamiliar cultural and economic environment, Silca Electronics Inc. incurs huge financial losses in Zevar. In this scenario, Silca Electronics Inc.'s failure to establish itself successfully in Zevar occurs most likely because A) it underestimates its dwindling reputation before it enters the Zevar market. B) it overestimates its need to protect its intellectual property. C) it overestimates the geographic and cultural distance between Pelo and Zevar. D) it underestimates its liability of foreignness when entering the Zevar market.

D) it underestimates its liability of foreignness when entering the Zevar market.