Strategic management exam 3 (8,10,11,13) chapter 8

A fundamental reason for a country's development of advanced and specialized factors of production is often its: a. lack of basic resources. b. monetary wealth. c. small workforce. d. protective tariffs.

A

A global corporate-level strategy differs from a multidomestic corporate-level strategy in that in a global strategy: a. competitive strategy is dictated by the home office. b. competitive strategy is decentralized and controlled by individual strategic business units. c. products are customized to meet the individual needs of each country. d. the firm sells in multiple countries.

A

All of the following complicate the implementation of an international diversification strategy EXCEPT: a. widespread multilingualism. b. increased costs of coordination between business units. c. cultural diversity. d. logistical costs.

A

Arkadelphia Polymers, Inc., earns 60 percent of its revenue from exports to Europe and Asia. The CEO of the company would be: a.concerned if the value of the dollar strengthened. b.pleased if the value of the dollar strengthened. c.unconcerned about the fluctuation in the value of the dollar because the company is widely diversified geographically. d.likely to consider moving to international strategic alliances or acquisitions if the value of the dollar fell and remained low.

A

Firms able to continually improve the processes used to produce, sell, distribute, and service their products across country borders enhance their ability to: a. learn how to continuously reduce costs while increasing the value of their products. b. increase investment in research and development. c. access a low-cost labor force in the host market. d. mitigate cultural differences.

A

Firms with core competencies that can be exploited across international markets are able to: a. achieve synergies and produce high-quality goods at lower costs. b. enter new markets more quickly. c. enhance their market image and brand loyalty among local consumers. d. meet local government requirements more quickly than their international competitors.

A

In China, Starbucks is standardizing its operations while simultaneously decentralizing some decision-making responsibility to local levels to meet customers' tastes. Starbucks is following the __________ international corporate-level strategy. a. transnational b. global c. differentiation d. multidomestic

A

International corporate-level strategy focuses on: a. the scope of a firm's operations through geographic diversification. b. competition within each country. c. economies of scale. d. sophistication of monitoring and controlling systems.

A

Internationally diversified firms: a. earn greater returns on their innovations through larger or more numerous markets. b. are more likely to produce below-average returns for investors in the long run. c. may need to decrease international activities when domestic profits are poor. d. are generally unable to achieve high levels of synergy because of differences in cultures.

A

Japan, which has a lack of undeveloped land, would be an unusual choice of location for a U.S. cattle company to set up local grazing operations. This limiting factor would be identified in what part of Porter's determinants of national advantage? a. Factors of production b. Demand conditions c. Related and supporting industries d. Firm strategy, structure, and rivalry

A

One of the primary reasons for failure of cross-border strategic alliances is: a. the incompatibility of the partners. b. conflict between legal and business systems. c. security concerns and terrorism. d. high debt financing.

A

Terrorism creates an economic risk for firms, which: a.reduces the amount of investment foreign companies will make in a country perceived to be terror prone. b.is created by governmental bans on doing business with terrorist regimes. c.is offset by the above-average returns for firms that have learned how to operate in such an environment. d.is absorbed by firms that are highly geographically diversified and that operate in both secure and insecure locations.

A

U.S. soft drink companies entered the global market because of: a. limited growth opportunities in their domestic market. b. lower labor costs in the emerging markets. c. economies of scale that offset research and development costs. d. an increase in the return on investment from their U.S. bottling plants.

A

Which of the following is NOT a disadvantage associated with exporting? a. Potential loss of proprietary technologies b. High transportation costs c. Loss of control over distribution activities d. Tariffs imposed by local governments

A

A U.S. manufacturer of adaptive devices for persons with disabilities is considering expanding internationally. It is a fairly small company, but it is looking for growth opportunities. This company should primarily consider the option of: a. licensing. b. exporting. c. a strategic alliance. d. a greenfield venture.

B

A global corporate-level strategy emphasizes: a. differentiated products. b. economies of scale. c. sensitivity to local product preferences. d. decentralizing control and limited monitoring.

B

All of the following are international corporate-level strategies EXCEPT the __________ strategy. a. multidomestic b. universal c. global d. transnational

B

An international diversification strategy is one in which a firm: a. expands into nearby markets. b. expands into a potentially large number of geographic locations or markets. c. expands into one or a few markets. d. acquires a firm in a foreign country.

B

Increasingly, customers worldwide are demanding emphasis on local requirements and companies require efficiency as global competition increases. This has triggered an increase in the number of firms using the __________ strategy. a. multidomestic b. transnational c. universal d. global

B

International strategy refers to a(n): -action plan pursued by American companies to compete against foreign companies operating in the United States. -strategy through which the firm sells its goods or services outside its domestic market. -political and economic action plan developed by businesses and governments to cope with global competition. -strategy American firms use to dominate international markets.

B

Leeway Corp. wants to pursue a business-level international strategy to export to developed countries. Which of the following strategies would Leeway most likely select? a. Multidomestic b. Cost leadership c. Global d. Transnational

B

Most firms enter international markets sequentially, introducing their __________ first. a. most innovative products b. largest and strongest lines of business c. most generic products, which will be more likely to generate universal product demand, d. products customized to the region

B

Moving into international markets is a particularly attractive strategy to firms whose domestic markets: a. demand a differentiation strategy for success. b. are limited in opportunities for growth. c. have developed unfriendly business attitudes toward the industry. d. have too much regulation.

B

Skaredykat Inc. is considering initial expansion beyond its home market. The firm has decided not to enter markets that differ greatly from its home market, instead expanding within the twelve-nation region that includes its home country. Which of the following statements is true? a. The firm is not engaging in international trade. b. The firm is using a regional approach to international expansion. c. The firm will not be able understand the cultures, legal, and social norms of this market. d. Skaredykat is too afraid to implement an international strategy.

B

The increased pressures for global integration of operations have been driven mostly by: a. new low-cost entrants .b. increasing demand for similar products. c. increased levels of joint ventures. d. the rise of governmental regulation.

B

When a firm becomes internationally diversified, the initial impact on returns is that they: a. remain stable. b. decrease .c. become more variable. 'd. increase.

B

in France, fine dressmaking and tailoring have been a tradition predating Queen Marie Antoinette. Cloth manufacturers, design schools, craft apprenticeship programs, modeling agencies, and so forth, all exist to supply the clothing industry. This is an example of the __________ in Porter's model. a. firm strategy, structure, and rivalry b. related and supporting industries c. demand conditions d. factors of production

B

A firm may narrow its focus to a specific region of the world: a. because that market is most different from its domestic market and so represents an unexploited "greenfield opportunity" for its products. b. in order to obtain greater economies of scale. c. so that it can better understand the cultures, legal and social norms, and other factors that are important for effective competition in those markets. d.to take advantage of limited protections of intellectual property so that it can manufacture innovative products without restrictions.

C

A licensing agreement: a. results in two firms agreeing to share the risks and the resources of a new venture. b. is the best way to protect proprietary technology from future competitors. c. allows a foreign firm to purchase the right to manufacture and sell a firm's products within a host country. d. can be greatly impacted by currency exchange rate fluctuations.

C

A multidomestic corporate-level strategy is one in which: a. a corporation chooses not to compete internationally but where there are a number of international competitors in the firm's local marketplace. b.the firm produces a standardized product, but markets it differently in each country in which it competes. c.the firm customizes the product for each country in which it competes. d.the firm competes in a number of countries, but it is centrally coordinated by the home office.

C

All of the following are correct about what managers should know about firms based in a country with a national competitive advantage EXCEPT: a. continuous adjustments are needed based on the nature of competition encountered. b. the actual strategic choices made are most compelling reasons for success or failure. c. success is guaranteed as the firm implements its chosen international business-level strategy. d. the determinants of national competitive advantage provide a foundation for a firm's competitive advantages.

C

Associations such as the European Union, Organization of American States, and the North American Free Trade Agreement encourage: a. global strategies. b. domestication. c. regional strategies. d. nationalization.

C

Disney suffered lawsuits in France, at Disneyland Paris, because of the lack of fit between its transferred personnel policies and the French employees charged to enact them. This is an example of the: a. effects of regionalization. b. risks of a multidomestic strategy. c. liability of foreignness. d. effect of demand conditions.

C

Operating in multiple international markets can provide firms with __________ perhaps even in terms of __________. a. location advantages; larger markets b. research and development activities; larger markets c. new learning opportunities; research and development activities d. economies of scale and learning; larger markets

C

Raymond Vernon states that the classic rationale for international diversification is to: a. preemptively dominate world markets before foreign companies can establish dominance. b. avoid domestic governmental regulation. c. extend the product's life cycle. d. discover product innovations.

C

Samuelsons entered into a joint venture with a Japanese firm to gain entry into parts of the Asian market. Excessive conflict between the two firms is getting in the way of success. If the conflict remains unmanageable, Samuelsons would probably be better off considering what option to meet its goals? a. Licensing b. Exporting c. Acquisition d. A wholly-owned subsidiary

C

The Zolloffe Co. is exploring options for entering into international markets. Time is of the essence. The key stakeholders have expressed that the primary concern is that Zolloffe gain access to new markets as quickly as possible in order to spur corporate growth. What type of entry would be best for Zolloffe? a. Exporting b. A strategic alliance c. An acquisition d. Licensing

C

The choices that a firm has for entering the international market include all of the following EXCEPT: a. exporting. b. licensing. c. leasing. d. acquisition.

C

The decision of what entry mode to use is primarily based on all of the following factors EXCEPT the: a. industry's competitive conditions. b. country's situation and government policies. c. worldwide economic situation. d. firm's unique set of resources, capabilities, and core competencies.

C

The four determinants in Porter's model of international competitive advantage include all of the following EXCEPT: a. factors of production. b. demand conditions. c. political and economic institutions. d. related and supporting industries.

C

Which of the following is NOT an incentive for firms to become multinational? a. To gain access to consumers in emerging markets b. To gain easier access to raw materials c. To avoid high domestic taxation on corporate income d. Opportunities to integrate operations on a global scale

C

Which of the following is an advantage associated with greenfield ventures? a. Governmental support and subsidies in the host country b. The lower cost of this type of venture c. The level of control over the firm's operations d. The lower level of risks involved

C

Why do U.S. companies moving into the international market need to be sensitive to the need for local country or regional responsiveness? a.There is increasing rejection of American culture across much of the world. b.The international consumer has become more sophisticated because of the Internet. c.Consumer needs and desires, industry conditions, political and legal structures, and social norms vary by country. d.International expansion brings an increasing loss of economies of scale.

C

__________ is the set of costs associated with various issues firms face when entering foreign markets, including unfamiliar operating environments; economic, administrative, and cultural differences; and the challenges of coordination over distances. a. Transnational risk b. Regionalization c. Liability of foreignness d. International risk

C

. Factors of production in Porter's model of international competitive advantage include all of the following EXCEPT: a. labor. b. capital. c. infrastructure. d. supporting industries.

D

A global corporate-level strategy assumes: a. efficiency and customization can be achieved simultaneously. b. a rise in income levels across the world. c. increasing levels of cultural differences among nations. d. more standardization of products across country markets.

D

A global strategy: a. is easy to manage because of common operating decisions across borders .b. achieves efficient operations without sharing resources across country boundaries. c. increases risk because decision making is centralized at the home office. d. lacks responsiveness to local markets.

D

All of the following are reasons why firms use international strategic alliances EXCEPT: a. sharing of risks and resources. b. alliances facilitate the development of new capabilities. c. learning new competencies particularly those related to technology. d. strategic alliances are easy to manage.

D

Bunyan Heavy Equipment, a U.S. firm, is investigating expanding into Russia using a greenfield venture. The committee researching this project has delivered a negative report. The main concern of the committee is probably: a. loss of intellectual property due to Russian piracy. b. the fluctuation in the value of the ruble. c. the numerous and conflicting legal authorities in Russia. d. Russia's recent actions to gain state control of private firms' assets.

D

Effectively implementing the __________ international corporate-level strategy often produces higher performance than does implementing either the __________ or __________ strategies. a. multidomestic; global; transnational b. global; multidomestic; transnational c. cost leadership; differentiation; focus d. transnational; multidomestic; global

D

Spotnick Enterprises is exploring options for entering into international markets. The key stakeholders have expressed that the primary concern is that Spotnick maintain the maximum amount of control possible in order to protect its proprietary technology. What type of entry would be best for Spotnick? a. An acquisition b. Exporting c. Licensing d. A greenfield venture

D

The benefits of expanding into international markets include all of the following opportunities EXCEPT: a. increasing the size of the firm's potential markets. b. economies of scale and learning. c. location advantages. d. favorable tax concessions and economic incentives by home-country governments.

D

The location advantages associated with locating facilities in other countries can include all of the following EXCEPT: a. low-cost labor. b. access to critical supplies. c. access to customers. d. avoidance of host country governmental regulations.

D

The problems associated with exporting include: a. merging corporate cultures. b. a partner's incompatibility. c. difficulty in negotiating relationships. d. high transportation costs and the expense of tariffs.

D

The transnational strategy is becoming increasingly necessary to compete in international markets for all of the following reasons EXCEPT: a.the growing number of competitors heightens the requirements to keep costs down. b. the desire for specialized products to meet consumers' needs. c.differences in culture and institutional environments require firms to adapt their products and approaches to local environments. d.it is easy to use because of its unifying goals.

D

The two important environmental trends that influence a firm's choice and use of international corporate-level strategies are __________ and __________. a. culture; geographic scope b. cost; quality c. regionalization; globalization d. liability of foreignness; regionalization

D

Which of the following is NOT a disadvantage of international acquisitions? a. They are very expensive and often require debt financing. b. The acquiring firm has to deal with the regulatory requirements of a host country. c. Merging the acquired and acquiring firm is difficult. d. It is the slowest way to enter a new market.

D

Which of the following is NOT a factor pressuring companies for local responsiveness? a. Differences in employment laws b. Customization due to cultural differences c. Government pressure for firms to use local sources for procurement d. Availability of low labor costs

D

Which of the following is NOT a typical disadvantage of licensing? a. Little control over the marketing of products b. Licensees may develop a competitive product after the license expires c. Lower potential returns than the use of exporting or strategic alliances d. Incompatibility of the licensing partners

D

Which pair of industries would NOT be considered as "related and supporting" under Porter's diamond model? a. Japanese cameras and copiers b. Italian leather processing and shoes c. U.S. computers and software d. Highway systems and the supply of debt capital

D

A U.S. manufacturer of pigments for household paint that exports about 40 percent of its production to European markets will find its sales will be harmed by a weak dollar.

F

A firm is considering the pursuit of international opportunities. In considering the pros and cons, the analyst likely pointed out that the firm would gain access to labor, resources, and customers, all of which are benefits related to economies of scale, through international strategies.

F

Although licensing is the least costly method to enter a foreign market, its disadvantages include high costs of transportation and low control over the marketing and distribution of goods.

F

Because of the lack of protection of intellectual property in some foreign countries, licensing arrangements are one of the best ways for a firm to protect its technology from being appropriated by potential competitors.

F

Because there are still several industrial and consumer markets in which only domestic firms compete, many firms do not have to be able to compete internationally.

F

Coca-Cola and PepsiCo are examples of firms that have found it unnecessary to aggressively pursue international strategies because of extensive growth opportunities available in the U.S. market.

F

Establishing a wholly owned subsidiary provides the quickest access to a new market.

F

Even if effectively implemented, the transnational strategy often produces lower performance than does the implementation of either the multidomestic or global strategies.

F

Exporting, licensing, and the strategic alliance entry modes are all appropriate for initial entrance into a new market.

F

FanFare United is a global firm with operations in 20 countries. The home office of FanFare United determines the strategies that business units are to use in each country or region. FanFare is applying a multidomestic strategy.

F

Having substantial supplies of critical basic natural resources is a necessary condition for a country to support businesses that can successfully compete in international markets.

F

Lampster Corp. is exploring options for entering into international markets. The key stakeholders have expressed a desire for low cost and low risk, and are willing to give up control and to accept low returns. The best type of entry for Lampster would be a strategic alliance.

F

South Korea's success in international markets is primarily a result of its abundant natural resources.

F

Strategic alliances tend to increase the risk associated with international expansion for the U.S. partner because of the greater dependence on the foreign firm.

F

The chief risks in the international environment are political and cultural.

F

The three corporate-level international strategies are cost leadership, differentiation, and focus.

F

When the country risk is high, firms prefer to enter with a greenfield investment rather than a joint venture.

F

While there are multiple means of entering new international markets, firms should use one method consistently with all of its various products and across its different markets in order to reduce administrative complexity.

F

ocation advantages are influenced by costs of production, access to natural resources and critical supplies, as well as the needs of customers, but not culture.

F

54. Fluctuation in the value of different currencies is a major economic risk associated with international diversification.

T

A company that chooses a truly global corporate-level strategy assumes that the liability of foreignness will be minimal.

T

A firm based in a country with a national competitive advantage is not guaranteed success as it implements its chosen international business-level strategy. Instead, the actual strategic choices managers make may be the most compelling reasons for success or failure.

T

A major advantage of multidomestic strategies is the ability to customize products and services for the specific market, although this sacrifices economies of scale.

T

A transnational strategy is difficult to use because of its conflicting goals.

T

Acquisitions, greenfield ventures, and sometimes joint ventures are appropriate when firms want to establish a strong presence in an international market.

T

After a firm decides to compete internationally, it must select its strategy and choose a mode of entry into international markets.

T

An increase in the value of the U.S. dollar is an example of an economic risk in that it can reduce the value of U.S. multinational firms' international assets and earnings in other countries.

T

Both the size and the nature of a country's domestic demand for a particular industry's good or service are important in Porter's determinants of national advantage.

T

By choosing a region where markets are more similar, the firm may be able to better understand those markets and cater to their needs, but also achieve economies through sharing of resources.

T

Costco provides the service of buying goods in large quantities and selling them to consumers at lower prices. Economies of scale are a key aspect of Costco's business model.

T

Cultural elements may affect location advantages in that business transactions are easier for a firm to complete when there is a strong cultural match with the institutions with which the firm is involved while implanting its international strategy.

T

EagleCrest Industries, a U.S. based company, is facing a limitation in the amount of minerals needed to manufacture its products that can be mined in North America. It would likely benefit from an international strategy that would enable it to secure needed resources.

T

Evidence suggests that, in general, using an international cost leadership strategy when exporting to developed countries has the most positive effect on firm performance, while using an international differentiation strategy with larger scale when exporting to emerging economies leads to the greatest amount of success.

T

Exporting and licensing are the most appropriate ways for smaller firms to first enter international markets.

T

Four types of distances are associated with the liability of foreignness: cultural, administrative, geographic, and economic.

T

Grassley-Partition Ltd. (GPL) is embarking on an international strategy. The firm wants to be able to take advantage of the economies of scale offered by global efficiency and, at the same time, be responsive to the individual markets into which it enters. GPL needs to pursue a transnational strategy.

T

In place of what historically were relatively stable and predictable domestic markets, firms across the globe find that they are now competing in relatively unstable and unpredictable global markets.

T

In some industries, technology drives globalization because the economies of scale necessary to reduce costs cannot be met by competing in domestic markets alone.

T

International associations such as the European Union, the Organization of American States, and the North American Free Trade Agreement encourage regionalization strategies rather than globalization.

T

International diversification is a strategy through which a firm expands the sale of its goods or services across the borders of global regions and countries into a potentially large number of geographic locations of markets. Instead of entering one or just a few markets, the international diversification means that the firm enters multiple markets.

T

Italy has become the leader in the shoe industry because of related and supporting industries such as a well- established leather-processing industry that provides the leather needed to construct shoes and related products.

T

Michael Porter's determinants of national advantage describe factors associated with the firm's domestic environment that contribute to its dominance in a particular global industry.

T

Multinational firms have many opportunities to learn from their experiences in international markets, but they must have a strong R&D system to absorb the knowledge.

T

Rendell Corp. has just entered international markets. While it has begun to see some benefits, it is also challenged by the high cost of transportation and the expense of tariffs. Rendell most likely used exporting as its mode of entry.

T

Research suggests that the performance of the global strategy is enhanced if it deploys in areas where regional integration among countries is occurring.

T

Rivals Airbus SAS and Boeing have multiple manufacturing facilities and outsource some activities to firms located throughout the world, partly for the purpose of developing economies of scale as a source of being able to create value for customers.

T

RoserOpp Corp. has begun to increase its commitment to international diversification. Stakeholders should expect an initial decrease in returns, followed by a quick increase as RoserOpp learns how to manage its increased geographic diversification.

T

The "regionalization" environmental trend means that firms can focus on a region (customization) but also have some standardization or sharing within the region.

T

The amount of diversification in a firm's international operations that can be managed varies from company to company and is affected by managers' abilities to deal with ambiguity and complexity.

T

The firm using a global strategy seeks to develop economies of scale as it produces the same, or virtually the same, products for distribution to customers throughout the world who are assumed to have similar needs.

T

The global strategy offers greater opportunities to take innovations developed at the corporate level, or in one market, and apply them in other markets.

T

The greenfield venture option is useful when control of proprietary technology is important in an international expansion.

T

The growing number of global competitors heightens the requirements to keep costs down and there is the desire for more specialized products to meet customer needs. These two pressures make transnational strategies increasingly necessary.

T

The stabilization of returns through international diversification helps reduce a firm's overall risk.

T

The three basic benefits of international strategies are increased market size, economies of scale and learning, and location advantages.

T

When a firm initially pursues an international business-level strategy, the resources and capabilities established in the home country frequently allow the firm to pursue the strategy into markets located in other countries.

T

major incentive for the use of international strategy by French-based Carrefour S.A. is the potential for large demand for goods and services from emerging markets such as China and India.

T

In Porter's model, if a country has both __________ and __________ production factors, it is likely to serve an industry well by spawning strong home-country competitors that can also be successful global competitors. a. basic; advanced b. advanced; generalized c. basic; generalized d. advanced; specialized

d