Chapter 7

Which of the following is NOT an accurate statement as concerns competing in the markets of foreign countries?

A. A multi-country strategy is generally superior to a global strategy.

What of the following is NOT one of the strategy options for competing in the markets of foreign countries?

A. A profit sanctuary strategy

What makes cross-border alliances an attractive strategic means of gaining a foothold in foreign markets?

A. Alliances provide the flexibility to readily disengage when the purpose has been served or the benefits prove elusive and also provide the firm with some degree of autonomy an operating control, as well as independence

Which of the following factors does not determine whether to employ the entry strategy options?

A. Cross-border transfer activities and home country advantages

What is the foremost strategic issue that must be addressed by firms when operating in two or more foreign markets?

A. Deciding on the degree to vary its competitive approach to fit the specific market conditions and buyer preferences in each host country.

Which of the following statements about fluctuating exchange rates and the related effects on companies competing in foreign markets is true?

A. Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets

A weaker U.S. dollar is an economically favorable exchange-rate shift for manufacturing plants based in the United States

A. This is a true statement

Why do companies decide to enter a market?

A. To capture economies of scale in product development, manufacturing, or marketing.

The characteristics of a world market where global competition prevails include:

A. a market situation where competitive conditions across national markets are linked strongly enough to form a true world market and where leading competitors typically compete head to head in many different countries

A multidomestic strategy represents:

A. a think-local, act-local approach to international strategy

Using domestic plants as a production base for exporting goods to selected foreign country markets:

A. can be excellent initial strategy to test the international waters and learn if attractive market positions can be established in foreign markets

The advantages of using an acquisition strategy to pursue opportunities in foreign markets include:

A. having a high level of control and speed as an entry strategy to overcome trade barriers

The advantages of using a franchising strategy to pursue opportunities in foreign markets include:

A. having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchisor to expend only the resources to recruit, train, and support and monitor franchisees

The difference between political risks and economic risks is that:

A. political risks stem from instability or weakness in national governments, while economic risks stem from the stability of a country's monetary system, and its economic and regulatory policies

A Greenfield venture in a foreign market is one:

A. where the company creates a wholly owned subsidiary business by setting up all aspects of the operation upon entering the market from the ground up

What is the framework that comprises a set of major factors (that vary from country to country) that describe the nature of each country's business environment?

B. Porter's Diamond of National Competitive Advantage

Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is NOT accurate?

B. The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates.

Which of the following is NOT a typical reason for companies to expand into the markets of foreign countries?

B. To strengthen its capability to employ vertical integration strategies, especially those that involve partial integration (building positions in selected stages of the industry's value chain).

Which of the following statements regarding multidomestic competition is false?

B. With multidomestic competitiion, the power and strength of a company's strategy and resource capabilities in one country significantly enhance its competitiveness in other country markets

Multidomestic competition refers to situations where:

B. competition in one national market is independent of competition in other national markets, and as a consequence, there is - strictly speaking - no "international or world market."

The diamond framework can be used to reveal the answers to all of the following that are important for competing on an international basis EXCEPT:

B. how to formulate an exit strategy to push foreign competitors out of the market on the basis of competing strength

A U.S. company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to country markets across the world:

B. is competitively advantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported

The big problem a franchisor faces is:

B. maintaining quality control due to a lack of commitment to consistency and standardization

The advantages of using an export strategy to build a customer base in foreign markets include:

B. minimizing its risk and direct investments requirements

A global strategy allows for:

B. the markets in various countries to be part of the world market and competitive conditions across country markets to be strongly linked

Cross-country variations in government policies and economic conditions affect:

B. the opportunities available to foreign entrants and the risks of operating within that country

When a company operates in the markets of two or more different countries, its foremost strategic issue is:

B. whether to vary the company's competitive approach to fit specific market conditions and buyer preferences in each host country or whether to employ essentially the same strategy in all countries

Which of the following is false as concerns use of an export strategy to compete in foreign markets?

C. An export strategy is especially well suited to accommodating the different needs and preferences of buyers in different countries

Which of the following are NOT generic strategy options for competing in foreign markets?

C. Cross-border transfer strategies and home-field advantage strategies

When can companies gain competitive advantage over those rivals with plants in countries where costs are high?

C. When companies can build production facilities in low-cost countries (or source their products from contract manufacturers in these countries)

An export strategy is vulnerable except when an exporter is

C. affected by adverse shifts occurring in currency exchange rates

A European-based company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to country markets in many different parts of the world:

C. becomes less competitive in foreign markets when the Brazilian real gains in value against the currencies of the countries to which the Brazilian-made goods are being exported

A "think local, act local" multidomestic type of strategy:

C. becomes more appealing the bigger the country-to-country differences in buyer tastes, cultural traditions, and market conditions

A European manufacturer that exports goods made at its European plants to the United States:

C. becomes more competitive in the U.S. market when the euro declines in value against the U.S. dollar

Cross-border alliances between domestic and foreign firms are more effective in:

C. helping establish a new beachhead of opportunity rather than in achieving and sustaining global market leadership

One important concern a company has in trying to compete successfully in foreign markets is:

C. how it can gain location-based competitive advantage in locating its various value chain activities

The big issue an acquisition-minded firm must consider is whether strategically:

C. to pay a premium price for a successful local company or to buy a struggling firm at a discount price

Which of the following is NOT a potential benefit of cross-border strategic alliances or other cooperative arrangements between foreign and domestic companies?

D. A greater ability to employ a global strategy (as opposed to a multicountry strategy).

Which of the following statements concerning the effects of fluctuating exchanges rates on companies competing in foreign markets is true?

D. Companies that are manufacturing goods in a particular country and are exporting much of what they produce are benefited when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to

Which of the following statements regarding global competition is false?

D. In global competition, there's more cross-country variation in industry conditions and competitive forces than there is in industries where multidomestic competition prevails

Which of the following is NOT one of the problems and risks of cross-border alliances between domestic and foreign firms?

D. Making it harder to pursue a multidomestic strategy as compared to a global strategy.

Which of the following is NOT a typical host government requirement that affects the operations of foreign companies?

D. Requiring foreign companies to use vertical integration to support operations of local companies

Greenfield ventures, like all market entry strategies can pose serious problems to achieving foreign market entry success. What is not deemed a barrier to success?

D. Such ventures require managerial talent experienced in getting new subsidiaries up and running

Which one of the following is NOT a reason why a company decides to enter foreign markets?

D. To gain economic incentives offered by governments of developing countries wishing to expand industry and job creation.

Which of the following is one of the four conditions that make an internal startup strategy appealing over an acquisition?

D. When the internal startup will have the necessary scale and resource strengths to compete with rivals

When is a think-local, act-local approach to strategy making appropriate?

D. When the need for local responsiveness is high due to significant cross-country differences in demographic, cultural, and market conditions and where benefits from standardization is limited

The advantages of manufacturing goods in a particular country and exporting them to foreign markets:

D. are weakened when the country's currency grows stronger relative to the currencies of the countries where the output is being sold.

A U.S. manufacturer that exports goods made at its U.S. plants for shipment to foreign markets:

D. becomes more competitive in foreign markets when the U.S. dollar declines in value against currencies of the countries to which it is exporting

The advantages of using a licensing strategy to participate in foreign markets include:

D. being able to leverage the company's technical know-how, appealing brand, or patents without committing their resources or capabilities to foreign markets

The reason the world economy is globalizing at an accelerated pace is because:

D. growth-minded companies are racing to build stronger competitive positions in the markets of more countries.

A primary disadvantage of a licensing strategy is the need to:

D. lose some degree of control over their competitive offering

One of the biggest strategic challenges to competing in the international arena includes:

D. whether to offer a standardized product worldwide or a customized product offering in each different country market.

Companies operating in an international marketplace have to respond to:

E. All of these

Competing in the markets of foreign countries entails dealing with such factors as:

E. All of these

Strategic alliances, joint ventures, and cooperative agreements between domestic and foreign firms are a potentially fruitful means for the partners to:

E. All of these

The competitiveness of any company's facilities in any country is partly dependent upon:

E. All of these

The diamond framework is an aid in deciding/revealing:

E. All of these

The primary strategic options for entering foreign markets, depends on the firm's wherewithal to:

E. All of these

The risks of strategic alliances often include partners discovering they have:

E. All of these

Which of the following is the role played by local managers within experienced multinational companies?

E. All of these.

Which of the following is not a generic strategy option for entering into foreign markets?

E. An enterprise-wide strategy to take over local competition

Which of the following is NOT a reason why crafting a strategy to compete in one or more foreign markets is inherently complex?

E. Because similarities in buyer tastes and preferences creates challenges in standardizing products and services.

Competing in the markets of foreign countries generally does NOT involve which of the following?

E. Crafting a multidomestic strategy that works just as well in one country as in another and that also has the appeal of turning the world market into a mostly homogeneous market.

Which of the following statements regarding multidomestic and global competition false?

E. In global competition, the size of a firm's worldwide competitive advantage (or disadvantage) equals the sum of the competitive advantages (or disadvantages) it has in each country market where it competes

Which of the following is the most unlikely element of a localized multidomestic strategy?

E. Selling direct to buyers (perhaps via the company's website) to avoid having to establish networks of wholesale/retail dealers in each country market

Which of the following factors is NOT a factor analyzed and relied on by firms when developing competitive strength in a foreign market?

E. The level of industry-related support activities to foster customization of products and services.

For a company to create a home country advantage and become competitively strong in a foreign market, it should base its strategy around which of the following factors?

E. The level of rivalry existing in the foreign market.

The reasons why a company opts to expand outside its home market include all of the following EXCEPT:

E. identifying resources and capabilities in the company's home market.

One of the big risks of competing in foreign markets is:

E. the extent to which the advantages of manufacturing goods in a particular country can be wiped out when fluctuating exchange rates result in that country's currency growing stronger relative to the currencies of the countries where the output is being sold

Multidomestic competition is best characterized as a situation where:

E. there is no international or global market, just a collection of mostly self-contained country markets