MGT 301 CH. 10

Administrative and political distances, such as the presence or absence of colonial ties, are part of the CAGE distance framework.

true

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

Which of the following will most likely harm a multinational enterprise's (MNE's) reputation? A) Principal-agent problems cause an MNE to merge with another MNE. B) Increased competition causes an MNE to close a factory in a developing country. C) Wages for workers in a factory owned by an MNE increase, causing profits to decline. D) A sweatshop owned by an MNE has an explosion that kills hundreds of workers.

D

Black Mesa Minerals Inc. wants to expand into the international market. It does not want to spend a very large amount of money for this process. However, Black Mesa Minerals wants to maintain some control in the foreign market. Which of the following would be the best entry mode for this firm? A) joint ventures B) acquisitions C) greenfield operations D) exports

A

Macmillan Toys Inc. is looking to expand internationally and wishes to develop a new product line that is highly localized while keeping their cost structure below that of their rivals. Macmillan Toys Inc. has been successful with implementing a blue ocean strategy in their main strategic business units and as such wishes to pursue a ________ strategy for their international operations. A) transnational B) international C) global standardization D) multidomestic

A

Blue Cat Inc., a manufacturer of high-technology medical devices, has its product development centers located in the United States and South Korea. The manufacturing units are located in China and the Philippines to benefit from low labor costs and access to original equipment manufacturers. This allows the company to competitively price its devices. 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 Blue Cat most likely pursue? A) international strategy B) multidomestic strategy C) global-standardization strategy D) transnational strategy

C

When a firm is facing high pressure for local responsiveness and low pressure for cost-reductions, the firm is likely to adopt a(n) ________ strategy according to the integration-responsiveness framework. A) transnational B) global standardization C) localization D) international

C

European aircraft maker Airbus invested $600 million in Mobile, Alabama, to build jetliners. Which of the following statements best explains why it used 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

Genco Pura Olive Oil Company has established themselves as a strong differentiator in their respective SBUs but now wishes to explore international strategies. They are prepared to fully customize their product offerings to meet the needs of the foreign country that they are entering; having conducted many surveys on local preferences, tastes, and requirements, the Genco Pura Olive Oil Company will more than likely pursue a ________ strategy. A) global standardization B) cost-leadership C) transnational D) multidomestic

D

Foreign-entry modes such as acquisitions and greenfield projects are usually disadvantageous because they require a high level of capital and resource investment but allow for a low level of control.

false

The cultural distance between Australia and the United States is relatively high because of the physical distance between the two nations.

false

When multinational enterprises enter host countries such as Saudi Arabia and Japan, the most logical option is usually to pursue a multidomestic strategy even though that strategy rarely leads to significant cost-reductions.

true

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

The process of closer integration and exchange between different countries and peoples worldwide is A) diversification. B) globalization. C) standardization. D) modification.

B

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

B

Firms that consider international expansion will often examine absolute metrics on which countries to pursue investments in but also consider relative distance. To help firms decide where to compete, the ________ was developed to help firms make this decision. A) MNE decision making model B) polycentric strategic framework C) CAGE distance framework D) Porter's Diamond framework

C

The administrative and political distance between two trading countries decreases when A) there are Foreign Direct Investment (FDI) restrictions in the host country. B) the host country lacks an independent central bank. C) tariffs and trade quotas exist in the host country. D) there is a well-functioning capital market in the host country.

D

Los Pollos Hermanos is a company that makes frozen lunch and dinner entrées. Based on what you know about companies like Nestlé, what action should Los Pollos Hermanos take as it strives to become multinational? A) Pursue a multidomestic strategy, customizing product offerings to suit local preferences. B) Attempt an international strategy, controlling costs and taking advantage of economies of scale by selling the same (or very similar) products around the globe. C) Try a global-standardization strategy, which creates standardized products and competes mainly on price. D) Consider a transnational strategy by creating a blue ocean market.

A

Maria wants to pursue an international strategy but is concerned that foreign markets aren't ready for her products and services. You recommend that she engage in ________, which would be contract based and would limit risk and exposure of her investments. A) exporting B) licensing C) equity alliance D) greenfield operations

A

Vinny, the CEO of Rainholm Industries is looking to employ a ________ strategy, which would take advantage of economies of scale and location economies. He wishes to pursue and establish a global division of labor based on wherever best-of-class capabilities reside at the lowest possible cost for Rainholm Industries. A) global standardization B) multidomestic C) international D) transnational

A

When firms sell their products overseas with little or no change to the products, they may increase the expropriation of intellectual property and increase the risk of piracy. This is considered a serious disadvantage when pursuing a(n) ________ strategy. A) international B) differentiation C) cost-leadership D) functional-level

A

For which of the following companies will geographic distance be the most relevant factor in deciding whether 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 wristwatches

B

Lucy wishes to have more control with her international strategy and is willing to increase her firms' investments in this foreign market. She considers creating a subsidiary but also wishes to build a manufacturing plant from the ground up. Lucy is most likely interested in pursuing a(n) A) franchising agreement. B) greenfield operations strategy .C) exporting and importing strategy. D) equity alliance.

B

PolyCon Corp., a tool and die maker, is considering where to locate its new factories and offices. According to the CAGE distance model, which of these countries is statistically most attractive to PolyCon? A) one that is much poorer than the country where PolyCon has its headquarters B) one that is in the same trading bloc as PolyCon's home country C) a country that does not share the same currency as PolyCon's home country D) the country that is the greatest physical distance from existing PolyCon's facilities

B

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

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

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

Macmillan Toys Inc. is located in the nation of Ruffino near the nation of East Fenwick. Macmillan Toys is considering expanding into Rusalka. Both countries have similar consumer incomes and knowledge bases and share a common language. Also, the transportation networks between the countries are strong. Even so, the two nations have a long-standing dispute concerning the control of an area of land along their common border. Currently, Ruffino rules this land. Which of the following would most likely prevent Macmillan Toys from expanding into Rusalka? A) geographic distance B) economic distance C) political distance D) cultural distance

C

Walmart sells live animals (snakes, eels, toads, etc.) for food preparation in China whereas IKEA sells kimchi refrigerators and metal chopsticks in South Korea. These examples illustrate the need for ________ which often requires the competing firm to tailor their products and services to meet the needs of the market in which they are competing. A) cost-leadership B) international strategy C) local responsiveness D) globalization hypothesis

C

Weyland Yutani Inc., a supermarket chain, is implementing a multidomestic strategy. TelAmeriCorp , 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) Weyland Yutani Inc. will focus more on cost-reduction than TelAmeriCorp. B) Weyland Yutani Inc. will have its business functions spread across the world; TelAmeriCorp's business functions will be highly centralized. C) Unlike TelAmeriCorp, Weyland Yutani Inc. will be able to pursue a differentiation strategy at the business level. D) Unlike TelAmeriCorp, Weyland Yutani Inc. will be able to reap significant economies of scale and location economies.

C

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

Hooper's Store, a luxury motorcycle company, sells the same motorcycles 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 Hooper's Store most likely pursue? A) a multidomestic strategy B) a transnational strategy C) a global-standardization strategy D) an international strategy

D

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

D

The German multimedia conglomerate Bertelsmann operates in more than 60 countries throughout the world and owns many regional leaders in their specific product categories, including Random House Publishing in the United States. Bertelsmann operates its more than 500 regional media divisions as more or less autonomous profit-and-loss centers, but it attempts to share best practices across units. Global learning and human resource strategies for executives are coordinated at the network level. Bertelsmann is following a(n) A) multidomestic strategy. B) international strategy. C) global-standardization strategy. D) transnational strategy.

D

To keep track of the latest developments in computing, Lenovo's research centers are located in China, the United States, and Japan. Also, to benefit from low-cost labor and reduced shipping costs, the company's manufacturing facilities are in Mexico, India, and China. Lenovo's products are the same for its domestic and foreign markets. Which strategy does Lenovo follow? A) a transnational strategy B) a multidomestic strategy C) a localization strategy D) a global-standardization strategy

D

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

D

Delos Inc. sells the same sparkplugs in more than 30 countries. Delos is an example that helps to support the globalization hypothesis.

true

One of the major benefits gained by a firm entering the international market is the ability to achieve a competitive advantage through location.

true