Roy Philip International Business Exam #3

Many American firms that sold oil-refining technology to firms in the Gulf now find themselves competing with these firms in the world oil market. This is an example of

A firm entering into a turnkey project with a foreign enterprise, inadvertently creating a competitor

____________ strategy customizes the product offering to local demands and increases the value of that product in the local market

A localization

A firm that is pursuing ____________________ strategy is simultaneously trying to achieve low costs through location economies, economies of scale, and learning effects; and trying to differentiate its product offering across geographic markets

A transnational

If a firm is trying to enter a market where there are already well-established companies, and where global competitors are also interested in establishing a presence, the firm should choose

An acquisitions

For firms selling a product that serves universal needs but not facing significant competition _______________ strategy makes sense

An international

According to the opening case of chapter 17, Alibaba is headquarted in ____________________-

China

A wholly owned subsidiary limits a firm's control over marketing and sales in different contries

False

Exporting from a firm's home base is most appropriate when lower-cost locations for manufacturing the product can be found abroad

False

If a firm's core competence is proprietary technological knowledge, a joint venture is preferable

False

Logistics includes the buying of raw materials and component parts

False

Managers in a source factory operate in essentially the same way that managers in an offshore factory operate. They have very little say in purchasing or logistics decisions

False

One of the sources of economies of scale is the ability to spread fixed costs over a small volume

False

Products such as electronic components and pharmaceuticals have low value-to-weight ratios

False

Six sigma is a qualitative alternative to total quality management that focuses primarily on managing human resources to improve profitability

False

Support activities are always less important than the primary activities in achieving a competitive advantage

False

The most typical joint venture is a 60-40 venture, in which one party holds most of the ownership stake

False

Unlike joint ventures, strategic alliances require the firm to bear all the costs and risks of foreign expansion

False

When consumer tastes and preferences differ significantly between countries, there is low pressure for local responsiveness

False

Firms pursuing global standardization or transnational strategies tend to prefer _______________ arrangements

Franchising

Firms pursuing a ______________________ ________________________ strategy try not to customize their product offering and marketing strategy to local conditions because customization involves shorter production runs and the duplication of functions, which tend to raise costs

Global Standardization

Which of the following is a disadvantage of licensing?

It does not give a firm the tight control over strategy that is required for realizing experience curve and location economies

What is the primary advantage of licensing

It helps a firm avoid the development costs and risks associated with opening a foreign market

One advantage of ______________________, is that the firm benefits from a local partner's knowledge of the host country's competitive conditions, culture, language, political systems, and business

Joint-ventures

_________________ allows the company to produce a wider variety of end products at a unit cost that at one time could be achieved only through the mass production of a standardized output

Lean Production

__________________ effects refer to cost savings that come from learning by doing.

Learning

What strategy focuses on increasing profitability by customizing the firm's goods or services so they provide a good match to tastes and preferences in different national markets?

Localization strategy

The level of output at which most plant-level scale economies are exhausted is referred to as the

Minimum efficient scale of ouput

Which of the following products will most likely have high value-to-weight ratios?

Pharmaceuticals

A firm's strategy can be defined as the actions that managers take to attain the goals of the firm

True

According to Porter, the way to create superior value is to drive down the cost structure of the business and/or differentiate the product in some way so that consumers value it more

True

Franchising enables a firm to quickly build a global presence

True

Greenfield ventures are less risky than acquisitions in the sense that there is less potential for unpleasant surprises

True

Other things being equal, a firm should locate its various manufacturing activities where the relative factor costs are conductive to the performance of those activities

True

Poor product quality and low productivity are hidden costs associated with basing production in a foreign location

True

Threats of protectionism, economic nationalism, and local content rules dictate that international businesses manufacture locally

True

The most important disadvantage of ___________________________ is that it is generally the most costly method of serving a foreign market from a capital investment standpoint

Wholly owed subsidary

Logistics is the activity that controls the

effective flows of physical materials through the value chain

One advantage of _________________, is that the company avoids the often substantial costs of establishing manufacturing operations in the host country

exporting

Firms entering markets where there are no incumbent competitors to be acquired should choose

greenfield investments

Products such as refined sugar, certain bulk chemicals, paint, and petroleum products

have low value-to-weight ratios

Firms pursing an _______________________ strategy take products first produced for their domestic market and then sell them internationally with only minimal local customization

international

One disadvantage of _________________, is that it does not give a firm the tight control over manufacturing marketing, and strategy that is required for realizing experience curve and location economies

licensing

Economies that arise from performing a value creation activity in the optimal place for that activity are referred to as

location economies

A factory that is viewed as an intelligence-gathering unit is called a ______________ factory

outpost

Apple exports its products to many countries. An advantage of exporting products to another country is that it

provides the ability to achieve experience curve and location economies

An advantage of forming a strategic alliance is that it helps firms

share the risks of developing new products or processes

Production is also sometimes referred to as operations as part of a global supply chain

true

According to the concept of economies of scale, as plant output expands

unit costs decrease

The ____________________ supply chain includes all of the organizations and resources that are involved in the portion of the supply chain from raw materials to the production facility

upstream

Firms entering a market via a ____________________ must bear all the costs and risks associated with the venture

wholly owned subsidiary