MGMT425 Chapter 10
During the period of globalization 1.0, the mode of entry into foreign markets primarily involved: A. exporting goods. B. making foreign direct investments. C. making foreign institutional investments. D. licensing production and distribution.
A. exporting goods.
Toyota is selling its hybrid Prius vehicle, built on global platforms, successfully in 80 countries. This information best supports the assumptions made under the: A. globalization hypothesis. B. upper echelons theory. C. real options perspective. D. global scaling theory.
A. globalization hypothesis.
When a firm pursues a(n) _____, it sells the same products or services in both domestic and foreign markets. A. domestic strategy B. international strategy C. differentiation strategy D. localization strategy
B. international strategy
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) _____. A. international strategy B. multidomestic strategy C. global-standardization strategy D. localization strategy
C. global-standardization strategy
Which of the following is part of Geert Hofstede's cultural dimensions? A. Locus of control B. Self-efficacy C. Span of control D. Power distance
D. Power distance
For a firm pursuing a global-standardization strategy, which of the following bases of competition becomes its primary weapon? A. Product differentiation B. Superior customer service C. Local responsiveness D. Price
D. Price
In which of the following situations is pursuing an international strategy advisable? A. When a firm manufactures products related to national and religious identity B. When a firm operates in an industry where the pressure to keep the costs low is extremely high C. When a firm wants to be perceived as a domestic company by the host country consumers D. When a firm enjoys a large domestic market, strong reputation, and brand name
D. When a firm enjoys a large domestic market, strong reputation, and brand name
As a result of globalization, the: A. economies around the world are becoming more independent. B. cultural distance between countries is increasing. C. cost of doing business around the world is increasing. D. world's market economies are becoming more integrated.
D. world's market economies are becoming more integrated.
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. Access to low-cost raw materials such as lumber and iron ore C. Low levels of economic growth in emerging economies 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 is not included within the types of strategic alliances? A. Joint ventures B. Franchising C. Acquisitions D. Licensing
C. Acquisitions
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 need to tailor product and service offerings to fit native consumer preferences and host-country requirements C. The belief that consumer needs and preferences throughout the world are converging and thus becoming increasingly homogenous D. The additional costs of doing business in an unfamiliar culture and economic environment, and of coordinating across geographic distances
B. The need to tailor product and service offerings to fit native consumer preferences and host-country requirements
Which of the following statements is true of an international strategy? A. It enables firms to leverage their home-based core competencies in foreign markets. B. It is advantageous when firms face high pressures for both local responsiveness and cost reductions. C. It relies on joint ventures to reap economies of scale by accessing a larger market. D. It effectively protects a firm from exchange rate fluctuations.
A. It enables firms to leverage their home-based core competencies in foreign markets.
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 multidomestic strategy B. An international strategy C. A global-standardization strategy D. A one-product strategy
A. A multidomestic strategy
GM entered China in 1997 through a joint venture with Shanghai Automotive Industrial Corp. (SAIC). Which of the following factors best contributes to the fact that the Chinese market already accounts for 25 percent of GM's total revenues? A. Chinese workers cost only a fraction of what U.S. workers do. B. The company operates a larger number of assembly plants in China than the U.S. C. The China operation sells more vehicles while employing twice the number of employees. D. GM's China operation has never been cost-competitive.
A. Chinese workers cost only a fraction of what U.S. workers do.
Which of the following statements is true of a multidomestic strategy? A. Firms frequently use a multidomestic strategy when entering host countries with large and/or idiosyncratic local markets. B. The multidomestic strategy is one of the main strategies companies pursued in the Globalization 1.0 stage. C. Companies pursuing a multidomestic strategy generally follow a cost-leadership strategy at the business level. D. The multidomestic strategy effectively protects firms from the risk of intellectual property appropriation.
A. Firms frequently use a multidomestic strategy when entering host countries with large and/or idiosyncratic local markets.
For which of the following products is an international strategy most suitable? A. For luxury goods that can be shipped across the globe B. For products with low value-to-weight ratios such as steel C. For food products that are specific to certain cultures D. For products with high linguistic content
A. For luxury goods that can be shipped across the globe
Glova Inc., a company that manufactures and sells premium perfumes, is pursuing an international strategy. RightMart Inc., a supermarket chain, follows a multidomestic strategy. Which of the following statements is most likely true of this scenario? A. Glova Inc. will sell the same products and services in both domestic and foreign markets, whereas RightMart Inc. will customize its product offerings to suit local requirements. B. Glova Inc. will pursue a differentiation strategy at the business level, whereas RightMart Inc. will pursue a cost-leadership strategy at the business level. C. Glova Inc. will be better protected from exchange rate fluctuations when compared to RightMart Inc. D. Glova Inc. will not be able to leverage its home-based core competencies in foreign markets as much as RightMart Inc.
A. Glova Inc. will sell the same products and services in both domestic and foreign markets, whereas RightMart Inc. will customize its product offerings to suit local requirements.
Lucar Steels Inc. has decided to enter into a foreign market by setting up its own production facilities and distribution channels from scratch. This will allow it to have strong control over all of its business activities. What is the foreign entry mode most likely opted by Lucar Steels Inc.? A. Greenfield operation B. Export C. Joint venture D. Acquisition
A. Greenfield operation
Charlie is a strategist who wants to decide on the appropriate strategy to help his firm "go global." Which of the following should Charlie consider while choosing his strategy? A. He must be aware of the fact that despite globalization and the emergence of the Internet, firm geographic location has actually maintained its importance. B. He should rely on his firm's business-level strategy as a clue to possible strategies pursued globally. C. He should remember that he has only one framework at his disposal to make global strategy decisions. D. He must remember that higher levels of control and a lower likelihood of any loss in reputation go along with less investment-intensive foreign entry modes.
A. He must be aware of the fact that despite globalization and the emergence of the Internet, firm geographic location has actually maintained its importance.
Which of the following is a benefit of the transnational strategy? A. It facilitates global learning and harnesses economies of location. B. It completely eliminates a firm's risk of intellectual property expropriation. C. It helps to create a matrix global structure, which is cost effective and easy to implement. D. It helps a firm pursue a cost-leadership strategy by minimizing the need for local responsiveness.
A. It facilitates global learning and harnesses economies of location.
Which of the following is one of the features of an international strategy? A. It is characterized by limited local responsiveness. B. It is one of the newest types of global strategies. C. It is characterized by cost-leadership as a preferred business strategy. D. It is often used successfully by firms with relatively small domestic markets.
A. It is characterized by limited local responsiveness.
Zenovia Inc., a well-established and reputed multinational enterprise (MNE), is headquartered in a highly developed economy. It wants to start its operations in United Marva, which has been recognized as one of the less-developed nations in the world. How will this strategic move most likely affect Zenovia Inc.? A. It will be able to benefit from economic arbitrage. B. It will be able to successfully leverage its competitive advantage from economies of standardization. C. It will be able to replicate its existing business model easily. D. It will be able to easily sell products for which demand varies by income.
A. It will be able to benefit from economic arbitrage.
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. Multidomestic strategy B. Focused differentiation strategy C. Global-standardization strategy D. International strategy
A. Multidomestic strategy
Which of the following factors is the most important determinant of economic distance? A. The wealth and per capita income of consumers B. The ethnicity and religion of consumers C. The presence of legal institutions in a country D. The topography of a country
A. The wealth and per capita income of consumers
The _____ states that geographic location alone should not lead to firm-level competitive advantage because firms are now, more than ever, able to source inputs globally. A. death-of-distance hypothesis B. local responsiveness hypothesis C. real option framework D. dynamic capabilities framework
A. death-of-distance hypothesis
The global-standardization strategy arises out of the combination of: A. high pressure for cost reductions and low pressure for local responsiveness. B. high pressure for local responsiveness and low pressure for cost reductions. C. low pressure for both local responsiveness and cost reductions. D. high pressure for both local responsiveness and cost reductions.
A. high pressure for cost reductions and low pressure for local responsiveness.
United Borova Laboratories Inc. has a national competitive advantage in the pharmaceutical industry. This means that the country: A. is a world leader in the pharmaceutical industry. B. has nationalized the pharmaceutical industry. C. has low levels of competition, providing other multinational companies with an opportunity to take over the pharmaceutical industry. D. is a potential foreign market for multinational pharmaceutical companies to sell their products.
A. is a world leader in the pharmaceutical industry.
Unilever's new-concept center is situated in downtown Shanghai, China, attracting hundreds of eager volunteers to test the firm's latest product innovations onsite while Unilever researchers monitor consumer reactions. In this example, Unilever is trying to reap the benefits of _____. A. location economies B. economies of scope C. learning races D. network effects
A. location economies
A(n) _____ arises out of the combination of high pressure for local responsiveness and high pressure for cost reductions. A. transnational strategy B. multidomestic strategy C. international strategy D. global-standardization strategy
A. transnational strategy
For which of the following companies will geographic distance be the most relevant factor in deciding whether or not to trade with a target country? A. A firm that manufactures cell phone batteries B. A firm that extracts and exports iron ore C. A firm that produces movies D. A firm that sells wrist watches
B. A firm that extracts and exports iron ore
Which of the following products are generally manufactured by multinational enterprises (MNEs) pursuing a global-standardization strategy? A. Products with a high value-to-weight ratios like luxury goods B. Commodity products like computer hardware C. Consumer products related to national and/or religious identity like food D. Products that carry country-specific quality associations like wine
B. Commodity products like computer hardware
Food Works Inc. is a multinational fast food chain that follows a multidomestic strategy. Which of the following statements most likely holds true for the company? A. The company's competitive advantage lies in leveraging its home-based core competencies in foreign markets. B. Each country unit owned by the company will tend to be highly autonomous. C. Majority of the value creation for the company will take place in its home country. D. The company will not face any operational inefficiency as the key business functions do not have to be duplicated.
B. Each country unit owned by the company will tend to be highly autonomous.
Which of the following modes of entering a foreign market allows for the lowest level of control? A. Greenfield ventures B. Exporting C. Joint ventures D. Acquisitions
B. Exporting
Which of the following types of organizations comparatively requires the lowest levels of investment and control? A. Joint ventures B. Franchising C. Acquisition D. Greenfield operations
B. Franchising
Today, Hollywood movies are banking more on foreign sales for their overall revenues. Hollywood studios have been adapting scripts to appeal to global audiences, and casting foreign actors in leading roles. Which of the following statements most accurately explains the reason for this change? A. The purchasing power of the U.S. audience has reduced drastically. B. Hollywood is now a truly global enterprise with the vast majority of revenues coming from outside the United States. C. Hollywood actors and actresses are no longer willing to participate in domestic productions since there is no money in this industry. D. The movie industries of other countries are not doing so well.
B. Hollywood is now a truly global enterprise with the vast majority of revenues coming from outside the United States.
Which of the following is a feature of a multinational company pursuing a global-standardization strategy? A. Its key business functions are located at the home country headquarters. B. Its business-level strategy tends to be cost leadership. C. Its competitive advantage lies in its high local responsiveness. D. Its core competency lies in its strong product differentiation.
B. Its business-level strategy tends to be cost leadership.
Which of the following statements accurately explains the primary reason behind Walmart's failure in Germany? A. Inability to implement its trademark focused-differentiation strategy in the German market B. Significant differences between its U.S. personnel policies and Germany's culture C. Germany's unfamiliarity with retail discount powerhouses D. Metro's hostile takeover of Walmart in Germany
B. Significant differences between its U.S. personnel policies and Germany's culture
After testing its products in foreign markets by pursuing an international strategy, GR Foods Inc. wants to expand by pursuing a multidomestic strategy. How will this most likely affect the company? A. The company's operations will become more cost efficient. B. The company's exposure to exchange rate fluctuations will reduce. C. The company will be able to reap greater benefits from economies of scale. D. The company will be exposed to a lower risk of intellectual property appropriation.
B. The company's exposure to exchange rate fluctuations will reduce.
Which of the following is a benefit of a multinational enterprise (MNE) pursuing a global-standardization strategy? A. The firm customizes products and services to better suit local requirements. B. The firm reaps significant economies of scale and location economies. C. The firm follows a differentiation strategy at the business level. D. The firm has all its key business functions located in the home country.
B. The firm reaps significant economies of scale and location economies.
Which of the following factors pertaining to national competitive advantage enabled Nokia, a multinational company from Finland, to become an early leader in cell phones? A. The competitive intensity in the cell phone industry of Finland B. The huge demand for high-quality wireless services in Finland C. The abundance of natural resources in Finland D. The related and supporting industries present in Finland
B. The huge demand for high-quality wireless services in Finland
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. There will be gains in social welfare and living standards across the globe. C. The cost of labor will further decline in emerging economies. D. There will be a movement away from global-collaboration networks among multinational enterprises (MNEs).
B. There will be gains in social welfare and living standards across the globe.
Which of the following is a drawback faced by multinational enterprises (MNEs) pursuing an international strategy? A. They cannot leverage their home-based core competencies in foreign markets. B. They are highly affected by exchange rate fluctuations. C. They have to be highly responsive to local needs and preferences. D. They cannot reap the benefits of economies of scale due to their highly customized products.
B. They are highly affected by exchange rate fluctuations.
Marc Works Inc., a reputed brand for fine writing instruments, is implementing an international strategy in its firms. Torque Inc., a laptop brand, is pursuing a global-standardization strategy in its firms. Which of the following statements most likely holds true in this scenario? A. While Marc Works Inc.'s competitive advantage lies in its high local responsiveness, Torque Inc. will lack such capabilities. B. Torque Inc. focuses more on cost reductions when compared to Marc Works Inc. C. Torque Inc.'s business functions are highly centralized, whereas Marc Works Inc. organizes its activities worldwide. D. Torque Inc. is exposed to greater risks of exchange rate fluctuations.
B. Torque Inc. focuses more on cost reductions when compared to Marc Works Inc.
A greater cultural distance between two trading countries: A. increases linguistic similarities between the two countries. B. increases the liability of foreignness. C. reduces the uncertainty of doing business. D. reduces the transaction costs associated with business.
B. increases the liability of foreignness.
A firm is said to be pursuing a polycentric innovation strategy when: A. its research facility is situated in the headquarters and all other business activities are located around the world. B. it draws from multiple, equally important research facilities located throughout the world. C. it restricts its innovation to Western economies and production to developing markets. D. its knowledge flow takes a one-way path—from its headquarters to the subsidiaries.
B. it draws from multiple, equally important research facilities located throughout the world.
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 overestimates its need to protect its intellectual property. B. it underestimates its liability of foreignness when entering the Zevar market. C. it underestimates its dwindling reputation before it enters the Zevar market. D. it overestimates the geographic and cultural distance between Pelo and Zevar.
B. it underestimates its liability of foreignness when entering the Zevar market.
A trend observed during the globalization 3.0 stage involves: A. countries around the globe becoming more self-sufficient and independent. B. multinational companies organizing as global-collaboration networks. C. privately-owned firms getting nationalized. D. world's market economies becoming less integrated.
B. multinational companies organizing as global-collaboration networks.
Under the CAGE distance framework, the administrative and political distance between two countries primarily increases with: A. differences in climates and time zones. B. the absence of a trading bloc. C. physical remoteness. D. the lack of connective ethnic and social networks.
B. the absence of a trading bloc.
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. Franchise agreement C. Acquisition D. Licensing
C. Acquisition
Which of the following is an observable feature in the globalization 3.0 stage? A. Knowledge flow between the local replicas of the multinational enterprises and their U.S. headquarters is limited. B. Only sales and distribution functions of a multinational enterprise are located in a few key countries. C. Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world. D. 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.
C. Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world.
Why did the American MTV network cable channel fail when pursuing a global-standardization strategy? A. Because MTV failed to understand that music videos were a commodity product B. Because the globalization hypothesis holds true for the music industry C. Because cultural distance most affects products with high linguistic content D. Because an international strategy was more suitable for the music industry
C. Because cultural distance most affects products with high linguistic content
Which of the following statements best explains why Walmart is finding it difficult to replicate its existing business model in India? A. Because of the political differences between India and U.S. B. Because NAFTA prohibits Walmart from investing in countries outside North America C. Because of the large economic distance between U.S. and India D. Because Walmart's low-cost strategy has not been accepted by Indian consumers
C. Because of the large economic distance between U.S. and India
Gamma Foods Inc., a company popular for its dairy products, successfully follows a multidomestic strategy. RiverGem Inc., a large conglomerate, pursues a transnational strategy. Which of the following statements is most likely true of this scenario? A. While RiverGem Inc.'s competitive advantage will lie in its high local responsiveness, Gamma Foods Inc. will lack such competencies. B. Gamma Foods Inc. will face greater pressure for cost reductions than RiverGem Inc. due to its strategy choice. C. Both Gamma Foods Inc. and RiverGem Inc. will have to duplicate key business functions in multiple host countries. D. While Gamma Foods Inc. will require a global matrix structure, RiverGem Inc. will require a traditional headquarters model.
C. Both Gamma Foods Inc. and RiverGem Inc. will have to duplicate key business functions in multiple host countries.
How has the administrative and political distance between Canada, Mexico, and the United States been reduced? A. By adopting similar national cultures B. By lowering the disparities between their per capita incomes C. By establishing the North American Free Trade Agreement (NAFTA) D. By reducing their linguistic differences
C. By establishing the North American Free Trade Agreement (NAFTA)
Which of the following foreign entry modes primarily involves producing goods in one country to sell in another? A. Greenfield operations B. Brownfield operations C. Exporting D. Crowdsourcing
C. Exporting
For which of the following types of industries is a multidomestic strategy most common? A. Machine-tool industries B. Genetic industries C. Food industries D. Capital goods industries
C. Food industries
Garnet 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 Garnet Mobiles Inc. most likely pursue? A. International strategy B. Multidomestic strategy C. Global-standardization strategy D. Localization strategy
C. Global-standardization strategy
In which of the following stages of globalization did firms organize as networks to pursue a global-standardization strategy? A. Globalization 1.0 B. Globalization 2.0 C. Globalization 3.0 D. Globalization 4.0
C. Globalization 3.0
Which of the following statements best explains how the presence of top-notch complementors within a firm's industry affects the focal firm's business? A. It weakens the national competitive advantage enjoyed by the focal firm. B. It improves the factor conditions in the focal firm's domestic market. C. It increases the value of the focal firm's offering from a customer's perspective. D. It reduces the economic contribution created by the focal firm.
C. It increases the value of the focal firm's offering from a customer's perspective.
Which of the following is a drawback of pursuing a transnational strategy? A. It creates bottlenecks for global learning. B. It exposes a firm to diseconomies of scale and location. C. It requires a global matrix structure, which is difficult to implement. D. It involves locating all key business activities in the home country headquarters.
C. It requires a global matrix structure, which is difficult to implement.
Zeda is a country of English-speaking people and has a very profitable economy. Which of the following countries is most likely to be the closest to Zeda in terms of cultural distance? A. Olax, which has the same wealth and per capita income as Zeda B. Jordax, which has a very profitable economy and where people speak Jordaxian C. Segar, where people speak English and have a low standard of living D. Terra, which is located close to Zeda and is easily accessible by road
C. Segar, where people speak English and have a low standard of living
Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode? A. They are easy to initiate and terminate. B. They require low amounts of investments in terms of capital. C. They reduce a firm's exposure to loss of reputation. D. They are based on contracts rather than ownership.
C. They reduce a firm's exposure to loss of reputation.
enterprises (MNEs) to remember to think globally, but act locally? A. International strategy B. Global-standardization strategy C. Transnational strategy D. Focused-differentiation strategy
C. Transnational strategy
One Stop Inc., a supermarket chain, is implementing a multidomestic strategy. Solar Com Inc., a company that manufactures solar panels for commercial and domestic purposes, is pursuing a global-standardization strategy. How will the two companies most likely differ from each other? A. One Stop Inc. will focus more on cost-reduction than Solar Com Inc. B. One Stop Inc. will have its business functions spread across the world; Solar Com Inc.'s business functions will be highly centralized. C. Unlike Solar Com Inc., One Stop Inc. will be able to pursue a differentiation strategy at the business level. D. Unlike Solar Com Inc., One Stop Inc. will be able to reap significant economies of scale and location economies.
C. Unlike Solar Com Inc., One Stop Inc. will be able to pursue a differentiation strategy at the business level.
Which of the following statements is true with regard to international trade between countries? A. Greater cultural distance between the home and host countries decreases the liability of foreignness to multinational companies. B. Colony-colonizer relationships have a strong negative effect on bilateral trade between countries. C. Wealthy countries engage in relatively more cross-border trade than poorer ones. D. Political integrations decrease the expected trade intensity between two countries.
C. Wealthy countries engage in relatively more cross-border trade than poorer ones.
A multinational enterprise (MNE) is said to be pursuing a multidomestic strategy when it: A. is pursued in response to low pressure for local responsiveness and low pressure for cost reduction. B. 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. 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.
A firm pursuing a transnational strategy would believe that: A. key business functions should be located in its home country headquarters. B. local responsiveness is more important than cost reductions for competitive advantage. C. best practices, ideas, and innovations should be diffused throughout the world. D. the majority of the value creation should take place in the home country.
C. best practices, ideas, and innovations should be diffused throughout the world.
A firm following a multidomestic strategy: A. is highly efficient. B. lacks local responsiveness. C. faces a greater risk of intellectual property (IP) appropriation. D. requires exposing explicit knowledge because products are manufactured locally.
C. faces a greater risk of intellectual property (IP) appropriation.
For a multinational enterprise (MNE), applying the globalization hypothesis would mean: A. being highly responsive to the heterogeneous needs and preferences of consumers globally, without focusing on cost reduction. B. customizing each product sold by an enterprise to differentiate it from its competitors. C. manufacturing products on international platforms and slightly modifying them to meet local tastes and standards. D. pursuing a focused differentiation strategy instead of a cost-leadership strategy to gain a competitive advantage.
C. manufacturing products on international platforms and slightly modifying them to meet local tastes and standards.
Some of the best engineering and car companies are in Germany. Thus, it can be concluded that Germany has a _____ in the automobile industry. A. capital gain B. trade surplus C. national competitive advantage D. liability of foreignness
C. national competitive advantage
GearOne Autos Inc. has shifted its research and development unit from its home country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advanced automotive industry in Germany. In this scenario, GearOne Autos Inc. is reaping the benefits of _____. A. economies of scope B. location economies C. resource immobility D. resource ambiguity
C. resource immobility
Multinational enterprises (MNEs) like Harley-Davidson, Rolex, and Starbucks are said to be following an international strategy because: A. they pursue a cost-leadership strategy in their respective industries. B. they are highly responsive to the local needs and preferences of customers in the host countries. C. they offer the same products or services in all their stores throughout the world. D. they attempt to combine benefits of localization and standardization strategies simultaneously.
C. they offer the same products or services in all their stores throughout the world.
To keep track of the latest developments in computing, Lenovo's research centers are located in China, U.S.A., and Japan. Also, to benefit from low-cost labor and reduced shipping costs, the company's manufacturing facilities are in Mexico, India, and China. Which of the following strategies would require Lenovo to organize its operations worldwide in order to develop uniform products for its domestic and foreign markets? A. A transnational strategy B. A multidomestic strategy C. A localization strategy D. A global-standardization strategy
D. A global-standardization strategy
Shine Enterprises Inc. is a large financial conglomerate that operates in more than 50 countries and employs over 80,000 people across the world. It operates through multiple regional product divisions, which tend to function as autonomous profit-and-loss centers. This allows the company to reap significant economies of scale. Though each division acts as an autonomous firm with its individual regional leaders, frequent sharing of knowledge between the divisions allows for global learning. These factors help the company reconcile product and service differentiations at low cost. Which of the following strategies does Shine Enterprises Inc. most likely use? A. An international strategy B. A focused-differentiation strategy C. A multidomestic strategy D. A transnational strategy
D. A transnational strategy
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. A multidomestic strategy B. An international strategy C. A global-standardization strategy D. A transnational strategy
D. A transnational strategy
Onico 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 Onico Inc. most likely pursue? A. A multidomestic strategy B. A transnational strategy C. A global-standardization strategy D. An international strategy
D. An international strategy
Due to dense urban living conditions, hot and humid summers, and high energy costs, it is not surprising that Japanese customers want small, quiet, and energy-efficient air conditioners. Which feature of Porter's diamond framework does this scenario best exemplify? A. Factor conditions B. Complementor availability C. Competitive intensity D. Demand conditions
D. Demand conditions
Which of the following is a feature of the globalization 2.0 stage? A. Huge investments in fiber-optic cable networks around the world enabled companies to operate as global-collaboration networks. B. Only sales and distribution operations took place overseas, while all the important business functions were located in the home country. C. Two-way knowledge flow between the local subsidiaries and their U.S. headquarters was strong. D. Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.
D. Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.
How has China been affected by its one-child-per-family policy and appreciation of its currency? A. The purchasing power of its workforce has reduced. B. The value added to production has reduced. C. The standard of living within the economy has lowered. D. The country's advantage in low-cost manufacturing has reduced.
D. The country's advantage in low-cost manufacturing has reduced.
Which of the following is a drawback of pursuing a multidomestic strategy? A. The strategy allows for the lowest possible local responsiveness. B. The strategy lowers the differentiation of a firm's product and service offerings. C. The strategy exposes a firm to greater exchange rate fluctuation when compared to an international strategy. D. The strategy is costly and inefficient because it requires the duplication of key business functions across several countries.
D. The strategy is costly and inefficient because it requires the duplication of key business functions across several countries.
Disney's "Wedding Banned," a romantic comedy about a divorced couple trying to prevent their daughter from getting married, was axed in the advanced production stage despite several marquee stars (Robin Williams, Anna Faris, and Diane Keaton). Which of the following statements best explains why this happened? A. The purchasing power of the U.S. audience had reduced drastically. B. There was a feeling that the movie was against traditional American values regarding marriage. C. The movie was a copy of an already existing French movie. D. There were perceptions that this movie would not succeed outside of the American market.
D. There were perceptions that this movie would not succeed outside of the American market.
European aircraft maker Airbus is investing $600 million in Mobile, Alabama, to build jetliners. Which of the following statements best explains why it is employing this strategy? A. To take advantage of the high labor costs in the southern United States B. To take advantage of the high cost of living in the southern United States C. To take advantage of the low impact of globalization in the United States D. To take advantage of lower taxes in the southern United States
D. To take advantage of lower taxes in the southern United States
When two neighboring, democratic countries that are part of a trading bloc follow different religions and social norms, they most likely have high _____. A. political distance B. geographic distance C. administrative distance D. cultural distance
D. cultural distance
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. threat of new entrants B. liability of foreignness C. loss of reputation D. intellectual property exposure
D. intellectual property exposure
United Nerumbia and Fernsland are two neighboring countries with strong economic disparities. However, both the countries share a common national language and the same political ideologies. The relationship between these two countries will most likely affect the trade of: A. food processed in Fernsland. B. movies and TV shows produced in United Nerumbia. C. iron ore extracted in Fernsland. D. luxury items manufactured in United Nerumbia.
D. luxury items manufactured in United Nerumbia.
A(n) _____ arises out of the combination of high pressure for local responsiveness and low pressure for cost reductions. A. international strategy B. transnational strategy C. global standardization strategy D. multidomestic strategy
D. multidomestic strategy
Jane is the CEO of a clothing brand, Diva Rule Inc., which has retail stores and production units in five different countries. The firm's shareholders ensure the proper management of Diva Rule Inc. through their appointed board of directors. In this scenario, Diva Rule Inc. is most likely a _____. A. non-profit organization B. nationalized firm C. sole proprietorship D. multinational enterprise
D. multinational enterprise
India has been able to carve out a competitive advantage in business process outsourcing (BPO) primarily because: A. it has emerged as a manufacturing powerhouse. B. of an efficient infrastructure and high labor costs. C. it has an abundance of uneducated workers who are highly trainable. D. of an abundance of well-educated, English-speaking young people.
D. of an abundance of well-educated, English-speaking young people.
Welcome 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. Welcome Inc. is most likely doing this to: A. reduce its geographical distance from the other countries. B. increase its administrative distance from the other countries. C. increase its economic distance from the other countries. D. reduce its cultural distance from the other countries.
D. reduce its cultural distance from the other countries.
The administrative and political distance between two trading countries reduces when: A. there are FDI restrictions in the host country. B. there is no independent central bank in the host country. C. there are tariffs and trade quotas in the host country. D. there is a well-functioning capital market in the host country.
D. there is a well-functioning capital market in the host country.
