BUS 345 ch10

Which of the following is most likely an accurate statement?

The multinational enterprise PanDigital benefited from advances in communications technology.

Which of the following is a drawback of pursuing a multidomestic strategy?

The strategy is costly and inefficient because it requires the duplication of key business functions across several countries

How will an increase in coordinated economic and political integration between countries affect the world economy?

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?

They are highly affected by exchange rate fluctuation

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?

Transnational Strategy

Which of the following is a primary reason why firms pursue a global strategy

enhance their competitive advantage

Factor Condition

, factor conditions describe a country's endowments in terms of natural, human, and other resources.

Intellectual Property Exposure

- protecting intellectual property in foreign markets also looms large. When required to partner with a foreign host firm, companies may find their intellectual property being siphoned off and reverse-engineered.

Globalization

- world's market economies are becoming more integrated. - source supplies at lower costs and to further differentiate products.

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.

Which of the following is an observable feature in the Globalization 3.0 stage?

Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world.

The transnational strategy is similar to a(n) _____ strategy because they both focus on product differentiation and low costs.

Blue Ocean

Which of the following accurately describes what the integration-responsiveness framework does?

By juxtaposing the pressures a multinational company faces for cost-reductions and local-responsiveness, it devises four strategies to gain and sustain competitive advantage

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?

C. Segar, where people speak English and have a low standard of living

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?

D. a global-standardization strategy

Multidomestic Strategy

Firms frequently use a multidomestic strategy when entering host countries with large and/or idiosyncratic local markets - exp Japan and Saudi Arabia

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?

Each Country unit owned by the company will tend to be highly autonomous

Michel porter dimond framework

Factor condition

Which of the following types of organizations comparatively requires the lowest levels of investment and control?

Franchising

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) _____ strategy

Global - Standardization

_____ is a process of closer integration and exchange between different countries and peoples worldwide.

Globalization

In which of the following stages of globalization did firms organize as networks to pursue a global-standardization strategy?

Globalization 3.0

Hans is a strategist who wants to decide on the appropriate strategy to help his firm "go global." Which of the following should Hans consider while choosing his strategy

He must be aware of the fact that despite globalization and the emergence of the Internet, firm geographic location has actually maintained its importance.

Although demand for IKEA's low-cost furnishings has increased, its annual store growth has slowed to fewer than ten new stores a year. Why has this happened?

IKEA global supply chain has become bottlenecked - difficulty finding supplier that are strategic fit

When a firm pursues a(n) _____, it sells the same products or services in both domestic and foreign markets.

International Strategy

Opula 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 Opula Inc. most likely pursue?

International strategy

Because keeping cost low is critical to IKEA's value innovation, it switched from a(n)

International strategy to global strategy

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?

It increases the value of the focal firm's offering from a customer's perspective. -firms that provide a good or service that leads customers to value the focal firm's offering more when the two are combined—further strengthens national competitive advantage.

Plethora Inc., a well-established and reputed multinational enterprise (MNE), is headquartered in a highly developed economy. It wants to start its operations in United Bejukistan, which has been recognized as one of the less-developed nations in the world. How will this strategic move most likely affect Plethora Inc.?

It will be able to benefit from economic arbitrage.

(n) _____ arises out of the combination of high pressure for local responsiveness and low pressure for cost reductions.

Multidomestic Strategy

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?

Multidomestic Strategy

Which of the following is a feature of the Globalization 2.0 stage [20th century]?

Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries. -

Which of the following describes a firm in the Globalization 1.0 stage?

Robinson Inc. has a base office in New York and distributes some of its products overseas

Stop n' Save Inc., a supermarket chain, is implementing a multidomestic strategy. SunLife 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?

Unlike SunLife Inc., Stop n' Save Inc. will be able to pursue a differentiation strategy at the business level.

Which of the following statement is true with regard to international trade between countries

Wealthy countries engage in relatively more cross-border trade than poorer ones.

Multinational Enterprise [MNE]

a firm that deploys resources and capabilities in the procurement, production, and distribution of goods and services in at least two countries

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 firm that extract and export iron ore - particularly relevant when trading products with low value-to-weight ratios such as steel, cement, or other bulk products and fragile and perishable products such as glass or fresh meats and fruits.

global standardization strategy - business strategy is cost leadership

a multidomestic strategy generally pursue a differentiation strategy at the business level.

Under the CAGE distance framework, the administrative and political distance between two countries primarily increases with

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.?

acquisition

multinational enterprise (MNE) is said to be pursuing a multidomestic strategy when it

attempts to maximize local responsiveness, hoping that the host country consumers will perceive it to be a local company.

Which of the following statements best explains why Walmart is finding it difficult to replicate its existing business model in India?

because of the large economic distance between U.S. and India

Which of the following has been a key driver for firms to expand globally during the Globalization 3.0 stage?

benefits from lower labor cost in manufacturing & Service

A firm pursuing a transnational strategy would believe that

best practices, ideas, and innovations should be diffused throughout the world

Which of the following is a feature of a multinational company pursuing a global-standardization strategy?

business level strategy tend to be cost-leadership

Which of the following products are generally manufactured by multinational enterprises (MNEs) pursuing a global-standardization strategy?

commodity product like computer hardware

How has China been affected by its one-child-per-family policy and appreciation of its currency?

country advantage in low-cost manufacturing has reduced

When two neighboring, democratic countries that are part of a trading bloc follow different religions and social norms, they most likely have high ______ distance.

cultural

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?

demand condition

How has the administrative and political distance between Canada, Mexico, and the United States been reduced?

establishing NAFTA - increasing trade in goods and services between the three countries.

Which of the following modes of entering a foreign market allows for the lowest level of control?

exporting - Exporting, licensing, and franchising are vehicles of foreign expansion that require low investments but also allow for a low level of control.

During the period of Globalization 1.0, the mode of entry into foreign markets primarily involved

exporting goods - all the important business functions were located in the home country. export good to other market

A firm following a multidomestic strategy faces

faces a greater risk of intellectual property (IP) appropriation.

For which of the following types of industries is a multidomestic strategy most common?

food industry

For which of the following products is an international strategy most suitable?

for luxury goods that can be shipped across the globe

Unilever's new-concept center is situated in downtown Shanghai, China, attracting hundreds of eager volunteers to test the firm's latest product innovations on-site while Unilever researchers monitor consumer reactions. In this example, Unilever is trying to reap the benefits of

location economies.

Transnational Strategy

generally used by multinational companies that pursue an integration strategy at the business level by attempting to reconcile product and/or service differentiations at low cost.

Toyota is selling its hybrid Prius vehicle, built on global platforms, successfully in 80 countries. This information best supports the assumptions made under the

globalization hypothesis

Globalization Hypothesis

globalization hypothesis states that consumer needs and preferences throughout the world are converging and thus becoming increasingly homogenous.

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.?

greensfield operation

Greenfield operations and acquisitions are foreign entry modes that require

high level of investment in term of capital and other resource, but also allow for a high level of control

Emirates, Etihad Airlines, and Qatar Airways are a threat to U.S. legacy carriers because they offer

higher quality for lower cost for international routes - using a blue ocean strategy to attract new customers and thereby threaten the dominance of U.S. legacy carriers

A greater cultural distance between two trading countries

increase the liability of foreignness - can increase the cost and uncertainty of conducting business abroad.

Japnese 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.

intellectual property exposure

Exporting

involves producing goods in one country to sell in another. It is one of the oldest forms of internationalization. It is often used to test whether a foreign market is ready for a firm's products.

United Borova Laboratories Inc. has a national competitive advantage in the pharmaceutical industry. This means that the country

is a world leader in the pharmaceutical industry

Which of the following is a benefit of the transnational strategy?

it facilitate global learning and harnesses economies of location

Which of the following is one of the features of an international strategy?

limited local response

ChocoNuts Inc. produces an inexpensive candy bar that is well tailored for the tastes of U.S. consumers. However, it has failed to satisfy the consumer preferences of its host country, Japan. Which of the following categories has ChocoNuts performed poorly in?

local responsiveness

Ridemore 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, Ridemore Autos Inc. is reaping the benefits of

location economies.

For a multinational enterprise (MNE), applying the globalization hypothesis would mean

manufacturing products on international platforms & slightly modifying them to meet local taste and standards

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?

multidomestic strategy

Swiss-based Nestlé, the largest food company in the world, is well-known for customizing its product offerings to suit local preferences, tastes, and requirements. By doing this, Nestlé is pursuing a(n)

multidomestic strategy

A trend observed during the Globalization 3.0 stage involves

multinational companies organizing as global-collaboration networks. - Multinational companies have reorganized from self-contained operations in a few selected countries to a more seamless global enterprise with centers of expertise.

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

multinational enterprise

Some of the best engineering and car companies are in Germany. Thus, it can be concluded that Germany has a _____ in the automobile industry.

national competitive advantage

Michael Porter's diamond framework is used to explain

national competitive advantage - analyze why some nations are outperforming other in specific industries

Local responsiveness

need to tailor product and service offerings to fit local consumer preferences and host-country requirements.

Which of the following statements best describes local responsiveness?

need to tailor product and service offerings to fit native consumer preferences and host-country requirements

India has been able to carve out a competitive advantage in business process outsourcing (BPO) primarily because

of an abundance of well-educated, English-speaking young people.

SmallWorld 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. SmallWorld Inc. is most likely doing this to

reduce its cultural distance from the other countries

National Competitive advantage

refers to world leadership in specific industries. Companies from home countries that are world leaders in specific industries tend to be the strongest competitors globally.

Toyota's global success in the 1990s and early 2000s was based to a large extent on a network of world-class suppliers in Japan. This tightly knit network allowed for fast two-way knowledge sharing—this in turn improved Toyota's quality and lowered its cost, which it leveraged into a successful blue ocean strategy at the business level. This example shows the effectiveness of

related and supporting industries or complementor

Which of the following is a drawback of pursuing a transnational strategy?

requires global matrix structure, which is difficult to implement

Which of the following statements accurately explains the primary reason behind Walmart's failure in Germany?

significant differences between its U.S. personnel policies and Germany's culture - attempt to force US culture - german employee simply refuse to accept these policies

Which of the following is a benefit of multinational enterprise pursing a global standardization strategy

the firms reap significant economies of scale and location economies by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost.

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?

the huge demand for high-quality wireless services in Finland

Which of the following factors is the most important determinant of economic distance?

the wealth and per capita income of consumers

The administrative and political distance between two trading countries reduces when

there is a well functioning capital market in the host country - Strong legal and ethical pillars as well as well-functioning economic institutions like capital markets and an independent central bank reduce administrative and political distance

Multinational enterprises (MNEs) like Harley-Davidson, Rolex, and Starbucks are said to be following an international strategy because

they offer the same product or service in all their store throughout the wolr

Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode?

they reduce a firms exposure to loss of reputation - Foreign entry modes with a high level of control such as foreign acquisitions or greenfield plants reduce the firm's exposure to two particular downsides of global business: loss of reputation and loss of intellectual property.

Global standardization Strategy

to reap significant economies of scale and location economies by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost.

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?

to take advantage of lower taxes in the southern United States - avoid voluntary import restrictions, to take advantage of business-friendly conditions such as lower taxes, labor cost, and cost of living, as well as other incentives provided

Which of the following globalization strategies requires managers working in multinational enterprises (MNEs) to remember to think globally, but act locally?

transnational strategy

In which of the following situations is pursuing an international strategy advisable?

when a firm enjoys a large domestic market, strong reputation, and brand name - capitalizing on the fact that foreign customers want to buy the original product, tend to use differentiation as their preferred business strategy.