Strategic Management CH 8

In order to achieve a competitive advantage in certain countries and certain industries using factor endowments, a company needs to have which of the following?

A combination of basic and advanced factors of production

In the wireless telecommunications industry, different technical standards are found in different parts of the world. A technical standard known as GSM is common in Europe, and an alternative standard, CDMA, is more common in the United States and parts of Asia. Equipment designed for GSM will not work on a CDMA network and vice versa. Which of the following pressures for local responsiveness does this represent?

Differences in infrastructure

A transnational strategy makes the most sense when demand for local responsiveness is minimal. (T/F)

False

All nations have similar management ideologies, which enable them to build national competitive advantages. (T/F)

False

Global standardization strategy emphasizes customization and product differentiation. (T/F)

False

Dietizza is a fast-food network that makes low-calorie pizzas. As the firm wishes to expand its operations in different locations, it has licensed a few entrepreneurs to open Dietizza outlets under the company's trademark. The entrepreneurs will take up the responsibility of costs, while Dietizza will assist them in running operations. The company will receive royalty payments and a percentage of profits from the entrepreneurs. Which of the following concepts is illustrated here?

Franchising

Pressures for cost reductions are intense in which of the following industries?

Industrial and consumer products such as handheld calculators and personal computers

A company, Pluto Inc., employs the franchising strategy to enter a new national market. Which of the following statements is MOST likely to be true of Pluto?

It is more likely to be a service company.

Japanese customer's sophisticated knowledge of cameras created pressure for innovation and quality that stimulated the Japanese camera industry to improve product quality and introduce innovative models. This is an example of which of the following attributes?

Local demand conditions

Which entry mode gives a multinational company the tightest control over foreign operations?

Setting up a wholly owned subsidiary

Companies that pursue which of the following strategies are trying to develop a business model that simultaneously achieves low costs, differentiates the product offering across geographic markets, and fosters a flow of skills between different subsidiaries in the company's global network of operations?

Transnational

Companies that pursue a global standardization strategy are often in the business of industrial-goods industries whose products often serve universal needs. (T/F)

True

Company A has established itself in a global market. Company B entered the market with a lower cost structure due to efficient manufacturing and lower priced products and has taken the global market share from Company A. This is an example of a negative aspect of pursuing an international strategy. (T/F)

True

Economies of scale can be achieved by international expansion because a company can lower its average unit cost, better utilize its production facilities, and increase its bargaining power with suppliers. (T/F)

True

Licensing is a good choice for companies that are short the capital funds needed to develop overseas operations or hesitant to risk resources in a questionable political climate in a foreign country. (T/F)

True

Location economies refer to the economic benefits that arise from performing a value creation activity at an optimal location. (T/F)

True

Most manufacturing companies begin their global expansion by exporting. (T/F)

True

One advantage of a joint venture is that a company may benefit from a local partner's knowledge of the many dimensions of a host country. (T/F)

True

Starbucks, Sony, and Coca-Cola conduct business in two or more countries. These companies can be referred to as multinational companies. (T/F)

True

The upside of using a localization strategy is that a company can charge a higher price because the value achieved by local customization and greater local demand allows the company to reduce costs by attaining scale economies in the local market. (T/F)

True

United States electronics companies setting up research and production facilities in Japan to take advantage of Japanese success in consumer electronics is an example of which of the following?

Using the framework

Most manufacturing companies begin their global expansion by:

exporting

When a company performs a value creation activity in a region that is optimal for that activity, wherever in the world that might be, it is trying to capitalize on:

location economies.

Black and Decker, Capitol One, Gillette, and Unilever are all companies that conduct business in two or more national markets. These companies are known as:

multinational companies

Global economies of scale can be realized by:

spreading the fixed costs associated with developing a product.