MGMT Chapter 6

Strong pressures for local responsiveness emerge when: A. consumer tastes and preferences differ significantly. B. there are competitive pressures to reduce costs. C. there is similarity in traditional practices among countries. D. competitors engage in global strategic coordination. E. there is a uniformity in sales practices.

A. Consumer tastes and preferences differ significantly Managers may need to make sure their companies can adapt to different needs in different locations. Strong pressures for local responsiveness emerge when consumer tastes and preferences differ significantly, there are differences in traditional practices, there are differences in distribution channels and sales practices, or economic and political demands that host-country governments impose necessitate a degree of local responsiveness.

The model in which managers use their organization's existing core capabilities to expand into foreign markets is called the ____ model. A. international B. multinational C. global D. transnational E. contingency

A. International In the international model, managers use their organization's existing core capabilities to expand into foreign markets. It is most appropriate when there are few pressures for economies of scale or local responsiveness.

A threat to China's growing dominance include: A. political instability. B. aging population. C. low birthrates. D. low immigration. E. high labor costs.

A. Political instability Threats to China's growing dominance include political instability as the growing prosperity of its cities and industrial enclaves leaves millions of poor rural residents further behind.

____ create strong pressure for a global strategy. A. Universal needs B. Differences in traditional practices C. Political demands imposed by host countries D. Varied consumer preferences E. Legal demands imposed by host countries

A. Universal needs Managers may have several reasons to want or need a common global strategy, rather than one tailored to individual markets. These factors include the existence of universal needs, pressures to reduce costs, or the presence of competitors with a global strategy.

Which of the following entry modes do most manufacturing companies use to begin global expansion? A. Exporting B. Wholly owned subsidiaries C. Franchising D. Licensing E. Joint ventures

A. exporting Most manufacturing companies begin global expansion as exporters and later switch to one of the other modes for serving an overseas market. The advantages of exporting are that it (1) provides scale economies by avoiding the costs of manufacturing in other countries and (2) is consistent with a pure global strategy.

Which of the following is a consequence of an increasingly integrated global economy? A. World output and trade have decreased to a dramatically low level. B. Many companies find their home markets under attack from foreign competition. C. Companies are making foreign direct investments in home companies. D. Imports are failing to penetrate deeper into the world's largest economies. E. There are reduced opportunities for global trade.

B. Many companies find their home markets under attack from foreign competition. First, even as the world's economic output has grown, the volume of exports has increased much faster. A second consequence of increased global integration is that foreign direct investment (FDI) is playing an ever-increasing role in the global economy as companies of all sizes invest overseas. Finally, the growth of world trade, FDI, and imports implies that companies around the globe are finding their home markets under attack from foreign competitors.

Which of the following existing agreements includes Costa Rica, Nicaragua, and the United States? A. NAFTA B. CAFTA-DR C. FTAA D. APEC E. ASEAN

B. CAFTA-DR In 2005 President George W. Bush signed into law U.S. participation in a Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR). Other nations that have agreed to participate include Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.

Which of the following characteristics is most likely associated with an international executive? A. Ethnocentric B. Flexible C. Overconfident D. Prefers familiarity E. Avoids criticism

B. Flexible International executives have characteristics such as flexibility, openness to criticism, ability to use feedback, and other such dimensions.

Which of the following models of organization structure depends most heavily on communication and coordination between subsidiaries? A. The global model B. The transnational model C. The international model D. The worldwide model E. The multinational model

B. the transnational model The most important distinguishing characteristic of the transnational organization is the fostering of communications among subsidiaries and the ability to integrate the efforts of subsidiaries when doing so makes sense.

Exporting, licensing, franchising, joint ventures, and wholly owned subsidiaries are all methods of: A. identifying lucrative consumers on a global scale. B. operating a transnational business. C. entering overseas markets. D. optimizing global profit. E. reducing costs.

C. entering overseas markets. When considering global expansion, international managers must decide on the best means of entering an overseas market. The five basic ways to expand overseas are exporting, licensing, franchising, entering into a joint venture with a host-country company, and setting up a wholly owned subsidiary in the host country.

Collaborating with other countries in trade: A. leads to increased prices. B. narrows down the market for managers. C. raises the standards of living. D. leads to reduced efficiency. E. causes conspiracy between cultures.

C. raises the standards of living. Because trade allows each country to obtain more efficiently what it cannot as easily produce on its own, it lowers prices overall and makes more goods more widely available. This in turn raises living standards—and may broaden the market for a manager's own products.

When a company sets up its own overseas operations, independent of foreign partners or governments, it has established a(n): A. purely global strategy. B. competitive venture. C. wholly owned subsidiary. D. independent venture. E. multinational contract.

C. wholly owned subsidiary. Establishing a wholly owned subsidiary, which is an independent company owned by the parent corporation, is the most costly method of serving an overseas market. Companies that use this approach must bear the full costs and risks associated with setting up overseas operations.

The disorientation and stress associated with being in a foreign environment is termed: A. international mores. B. nostalgia. C. culture shock. D. expatriation. E. cognitive dissonance.

C. Culture shock People traveling abroad frequently experience culture shock, which is the disorientation and stress associated with being in a foreign environment. Managers are better able to navigate this transition if they are sensitive to their surroundings, including social norms and customs, and readily able to adjust their behavior to such circumstances.

An organizational model that consists of a company's overseas subsidiaries and is characterized by centralized decision making and tight control by the parent company over most aspects of worldwide operations is known as the: A. international model. B. multinational model. C. global model. D. transnational model. E. intranational model.

C. global model The global model is an organizational model consisting of a company's overseas subsidiaries and characterized by centralized decision making and tight control by the parent company over most aspects of worldwide operations. It is typically adopted by organizations that base their global competitive strategy on cost considerations.

A disadvantage of a multinational model is that it: A. is difficult to transfer core skills among international operations. B. does not give any freedom to its subsidiaries to respond to local conditions. C. standardizes its goods and services ignoring customers' preferences. D. is difficult to launch a coordinated global attack against competitors. E. centralizes functions of research and development to the parent company.

D. is difficult to launch a coordinated global attack against competitors. Because a multinational approach tends to decentralize strategy decisions, launching coordinated global attacks against competitors is difficult. This can be a significant disadvantage when competitors have this ability.

_____ are foreign nationals who are brought in to work at the parent company. A. Expatriates B. Third-level nationals C. Second-party nationals D. Inpatriates E. Foreign cohorts

D. Inpatriates Cross-cultural management includes effective management of inpatriates, who are foreign nationals brought in to work at the parent company. These employees provide a valuable service to global companies because they bring extensive knowledge about how to operate effectively in their home countries.

Which of the following companies is an example of a transnational company? A. Sony B. IBM C. Heineken D. Panasonic E. Unilever

D. Panasonic Panasonic's experience in China has made it more of a transnational company. Panasonic, a Japanese company, initially saw China primarily as a low-cost site for manufacturing its home appliances.

Selling the rights to use a company's brand name in return for a lump-sum payment and a share of the buyer's profits is referred to as: A. offshoring. B. a joint venture. C. exporting. D. franchising. E. royalty facilitation.

D. franchising In franchising, the company sells limited rights to use its brand name to franchisees in return for a lump-sum payment and a share of the franchisee's profits. Unlike most licensing agreements, the franchisee has to agree to abide by strict rules regarding how it does business.

In companies that adopt the _____ model of organizational structure, functions are centralized where it makes sense to do so, but a great deal of decision making also takes place at the local level. A. international B. multinational C. global D. transnational E. intranational

D. transnational In companies that adopt the transnational model, functions are centralized where it makes sense to do so, but a great deal of decision making also takes place at the local level.

Which of the following is an advantage of a wholly owned subsidiary as a global entry strategy? A. It is the least expensive method of serving an overseas market. B. It requires the local partner to share the costs of operating overseas. C. It is not affected by the rules and regulations of the host country. D. It minimizes the risks of overseas operations. E. It gives a company tight control over operations in other countries.

E. It gives a company tight control over operations in other countries. Establishing a wholly owned subsidiary, which is an independent company owned by the parent corporation, gives the parent tight control over operations in other countries, which is necessary if the company chooses to pursue a global strategy.

The organizational model that enables managers to "think globally but act locally" is known as the: A. intranational model. B. international model. C. multinational model. D. global model. E. transnational model.

E. transnational model. The transnational model is designed to help managers to simultaneously pursue local responsiveness, transfer of know-how, and cost economies. It is an approach that enables managers to "think globally but act locally."

Which of the following is true of the transnational model? A. It involves centralized decision making by the parent company. B. All core functions such as marketing and service are based in the parent company. C. The subsidiaries depend on the parent company for new products. D. The manufacturing costs are high. E. It involves fostering communication among subsidiaries to permit transfer of skills.

It involves fostering communication among subsidiaries to permit transfer of skills. The most important distinguishing characteristic of the transnational organization is the fostering of communications among subsidiaries and the ability to integrate the efforts of subsidiaries when doing so makes sense.

A disadvantage of the global model is that: A. it is less responsive to consumer tastes and demands. B. it has high manufacturing costs. C. it involves spending more time and money on product customization. D. its subsidiaries are limited to market and service functions. E. it provides too much freedom to its subsidiaries.

A. it is less responsive to consumer tastes and demands Because a company pursuing a purely global approach tries to standardize its goods and services, it may be less responsive to consumer tastes and demands in different countries.

Which of the following is an advantage of the international model? A. It facilitates the transfer of skills from the parent company to the subsidiaries. B. It provides maximum latitude to research and development functions. C. It provides the opportunity to achieve a low-cost position via scale economies. D. It requires a minimum amount of effort and coordination by the parent company. E. It provides ultimate control to the subsidiaries.

A. It facilitates the transfer of skills from the parent company to the subsidiaries. The advantage of the international model is that it facilitates the transfer of skills and know-how from the parent company to subsidiaries around the globe. The overseas success of Kellogg, Coca-Cola, Heinz, and Procter & Gamble is based more on marketing know-how than on technological expertise.

An advantage of licensing as a method of entering global competition is that the: A. licensee bears most of the costs and risks associated. B. licensing company has control over its technology. C. licensing company has control over quality levels. D. licensing company has lower communication costs. E. licensee has lower production costs.

A. licensee bears most of the costs and risks associated. The advantage of licensing is that the company need not bear the costs and risks of opening up an overseas market. However, a problem arises when a company licenses its technological expertise to overseas companies.

_____ are natives of a country other than the home country or the host country of an overseas subsidiary. A. Third-country nationals B. Host-country nationals C. Immigrants D. Expatriates E. Inpatriates

A. Third-country nationals Third-country nationals are natives of a country other than the home country or the host country of an overseas subsidiary.

Calabria Steel has subsidiaries in each country in which it does business. As the parent company, Calabria has located its core skills in technology and R&D overseas so that each subsidiary remains dependent on it for new products, processes, and ideas. This illustrates the _____ model for global strategy. A. international B. multinational C. global D. transnational E. intranational

A. international The international model uses subsidiaries in each country in which the company does business, with ultimate control exercised by the parent company. In particular, while subsidiaries may have some latitude to adapt products to local conditions, core functions such as research and development tend to be centralized in the parent company.

A disadvantage of licensing is that the licensing company: A. may lose control over its technology. B. takes on greater political risk. C. takes on greater development costs. D. realizes higher profit margins. E. bears most of the risks associated.

A. may lose control over its technology A problem arises with international licensing when a company licenses its technological expertise to overseas companies when technological know-how is the basis of the competitive advantage. It may lose control over the technology by licensing it.

An advantage of exporting as a global expansion entry mode is that: A. scale economies are provided. B. low cost sites are available. C. transportation costs are generally lower. D. it is considered responsive to local needs. E. trade barriers may be removed.

A. scale economies are provided The advantages of exporting are that it (1) provides scale economies by avoiding the costs of manufacturing in other countries and (2) is consistent with a pure global strategy

NAFTA combined the economies of _____ into one of the world's largest trading blocs. A. the United States, Canada, and Mexico B. Canada, Mexico, and South America C. South America, the United States, and Central America D. Latin America, the Pacific Rim, and the European Union E. the United States, the European Union, and Canada

A. the United States, Canada, and Mexico The North American Free Trade Agreement (NAFTA) combined the economies of the United States, Canada, and Mexico into one of the world's largest trading blocs with nearly 450 million U.S., Canadian, and Mexican consumers and a total output of $17 trillion.

In the integration-responsiveness grid the: A. vertical axis measures pressures for global integration and the horizontal axis measures pressures for local responsiveness. B. horizontal axis measures pressures for local interaction and the vertical axis measures pressures for global responsiveness. C. horizontal axis measures financial viability and the vertical axis measures employee satisfaction. D. vertical axis measures employee satisfaction and the horizontal axis measures management credibility. E. vertical axis measures pressures for global systems capacity and the horizontal axis measures pressures for local financial success.

A. vertical axis measures pressures for global integration and the horizontal axis measures pressures for local responsiveness. One of the critical tasks an international manager faces is to identify the best strategy for competing in a global marketplace. To approach this issue, managers can plot a company's position on an integration-responsiveness grid. The vertical axis measures pressures for global integration, and the horizontal axis measures pressures for local responsiveness.

Under the ____, member countries of the European Union agreed to adopt a common European currency called the euro. A. NAFTA B. Maastricht Treaty C. GATT Agreement D. APEC Treaty E. European Unification Act

B. Maastricht Treaty Under the Maastricht Treaty, which formally established the European Union (EU), the euro was adopted as a common currency among 13 member countries.

Which of the following is true of the multinational approach to international competition? A. The subsidiaries are completely under the control of the parent company. B. The parent company allows the subsidiaries to respond to local conditions. C. The companies have centralized manufacturing facilities. D. The subsidiaries depend completely on the parent company for new products. E. The tastes and preferences of local consumers are ignored.

B. The parent company allows the subsidiaries to respond to local conditions. The multinational model, sometimes referred to as multidomestic, uses subsidiaries in each country in which the company does business and provides a great deal of discretion to those subsidiaries to respond to local conditions. Each local subsidiary is a selfcontained unit with all the functions required for operating in the host market.

The international model of organizational structure involves: A. large low-cost manufacturing facilities located in selected locations with products exported to various subsidiaries. B. subsidiaries located in countries where the company does business with much of the control exercised by the parent company. C. subsidiaries located in countries where the company does business with much of the control exercised by the subsidiaries. D. manufacturing various components at appropriate sites and assembling the components at national subsidiaries. E. the sharing of the firms experiences worldwide pursuing local responsiveness.

B. subsidiaries located in countries where the company does business with much of the control exercised by the parent company. In the international model, managers use their organization's existing core capabilities to expand into foreign markets. The international model uses subsidiaries in each country in which the company does business, with ultimate control exercised by the parent company.

Which of the following is a reason why some companies prefer to use expatriates at their overseas operations? A. It can cost three to four times as much to use host-country nationals, compared to expatriates. B. Expatriates often tend to transfer the corporate culture and best practices to other countries. C. The personal security of host-country nationals may be an issue in some developing countries. D. Governments may provide incentives to employ expatriates. E. Expatriates tend to be more available than the local employees.

B. Expatriates often tend to transfer the corporate culture and best practices to other countries. AT&T and Toyota have used expatriates to transfer their corporate cultures and best practices to other countries, in Toyota's case to its U.S. plants. Although developing a valuable pool of expatriates is important, local employees are more available, tend to be familiar with the culture and language, and usually cost less because they do not have to be relocated.

To be competitive in a global economy, Europeans must: A. reduce their population density. B. increase their level of productivity. C. work for fewer hours. D. increase the average workers' wages. E. tighten immigration rules.

B. Increase their level of productivity Western Europeans on average work fewer hours, earn more pay, take longer vacations, and enjoy far more social entitlements than do their counterparts in North America and Asia. To be competitive in a global economy, Europeans must increase their level of productivity.

The global strategy model that uses subsidiaries in each country and provides each a great deal of discretion to respond to local conditions is the _____ model. A. international B. multinational C. global D. transnational E. domestic

B. Multinational The multinational model, sometimes referred to as multidomestic, uses subsidiaries in each country in which the company does business and provides a great deal of discretion to those subsidiaries to respond to local conditions.

_____ is an arrangement by which an organization in another country buys the rights to manufacture a company's product in its own country for a negotiated fee. A. Offshoring B. International licensing C. Entering a joint venture D. Exporting E. Patenting

B. international licensing International licensing is an arrangement by which a licensee in another country buys the rights to manufacture a company's product in its own country for a negotiated fee (typically royalty payments on the number of units sold). The licensee then puts up most of the capital necessary to get the overseas operation going.

A disadvantage of exporting is that: A. it does not provide scale economies. B. the company may face tariff barriers. C. it is the most expensive method of expanding globally. D. the company risks losing control of its intellectual property. E. it is inconsistent with a pure global strategy.

B. the company may face tarrif barriers Exporting has a number of drawbacks, including higher domestic production costs, high transportation costs, and potential tariff barriers.

A major disadvantage of operating a wholly owned subsidiary is that: A. a loss of control over technology is likely to occur. B. a wholly owned subsidiary offers too much flexibility over operations. C. high costs and risk are associated with this type of operation. D. overseas consumers are often resentful of foreigners. E. host countries can impose higher tariffs on the firm.

C. high costs and risk are associated with this type of operation. Establishing a wholly owned subsidiary, which is an independent company owned by the parent corporation, is the most costly method of serving an overseas market. Companies that use this approach must bear the full costs and risks associated with setting up overseas operations.

A disadvantage of entering global competition through a joint venture is that: A. it often aggravates political issues and incurs protectionist measures. B. the partner's ideas about local tastes and preferences may interfere with standardized operations. C. it involves the risk of losing control over technology to the partner. D. it is the most expensive and risky option for entering a global market. E. the local partner should bear most of the risks and costs involved.

C. it involves the risk of losing control over technology to the partner. The disadvantages of joint ventures include running the risk of losing control over its technology to the venture partner, as well as conflict over who controls what within a joint venture, which causes many joint ventures to fail.

Which of the following pressures for local responsiveness includes threats of protectionism and local rules? A. Differences in distribution channels B. Differences in traditional practices C. Economic and political demands D. Differences in consumer tastes E. Global market integration

C. Economic and political demands. Economic and political demands that host-country governments impose may necessitate a degree of local responsiveness. Most important, threats of protectionism, economic nationalism, and local content rules (rules requiring that a certain percentage of a product be manufactured locally) dictate that international companies manufacture locally.

The _____ organizational model is designed to enable a company to market a standardized product in the worldwide marketplace and to manufacture that product in a limited number of locations where the mix of costs and skills is most favorable. A. international B. multinational C. global D. transnational E. decentralized

C. Global The global model is designed to enable a company to market a standardized product in the global marketplace and to manufacture that product in a limited number of locations where the mix of costs and skills is most favorable.

Candace Apparel, a women's clothing manufacturer, assumes that people all over the world will view and use its products in the same way. Therefore it produces standardized versions of its apparel in several countries with attractive labor rates, and offers them to all of its international markets. Candace Apparel uses the _____ model of international competition. A. international B. multinational C. global D. transnational E. intranational

C. Global The global model is designed to enable a company to market a standardized product in the global marketplace and to manufacture that product in a limited number of locations where the mix of costs and skills is most favorable. The global model has been adopted by companies that view the world as one market and assume that no tangible differences exist among countries with regard to consumer tastes and preferences.

When identifying the best strategy for competing in a global marketplace, it is helpful to plot a company's position on a(n): A. Gantt chart. B. force field analysis grid. C. integration-responsiveness grid. D. cost-benefit grid. E. strategy map.

C. INTEGRATION-RESPONSIVENESS GRID One of the critical tasks an international manager faces is to identify the best strategy for competing in a global marketplace. To approach this issue, managers can plot a company's position on an integration-responsiveness grid. The vertical axis measures pressures for global integration, and the horizontal axis measures pressures for local responsiveness.

Which of the following countries has become an important provider of online computer and software support for the United States? A. Egypt B. Great Britain C. India D. Mexico E. Taiwan

C. India India has become an important provider of online support for computer software, software development and other services. In fact, so many companies have set up shop there that the demand for Indian workers with strong technical and English language skills is exceeding the supply.

Which of the following is an advantage of offshoring? A. It increases the wage costs, increasing the benefits of offshoring. B. It increases the energy costs, increasing the benefits of offshoring. C. It helps to find talent which is in short supply in the home country. D. It helps remove wage stagnation of workers and enables a steady increase. E. It is cheaper for managers to offshore.

C. It helps to find talent which is in short supply in the home country Offshoring is a continuing trend because in some cases it delivers advantages other than cost. For some types of work, companies use offshoring as a way to find talent that is in short supply at home.

Which of the following core values do most people embrace despite differences across cultures, and regardless of nationality or religion? A. Individualism B. Competitiveness C. Responsibility D. Persistence E. Sincerity

C. Responsibility Regardless of nationality or religion, most people embrace a set of five core values: compassion, fairness, honesty, responsibility, and respect for others.

Which of the following is an advantage of a multinational model? A. Manufacturing costs are low. B. Launching coordinated global attacks against competitors is easy. C. Subsidiaries can customize products according to local preferences. D. There is no chance of duplication of efforts. E. Realizing scale economies from centralized manufacturing facilities results in standardized production.

C. Subsidiaries can customize products according to local preferences. Each multinational subsidiary can customize its products and strategies according to the tastes and preferences of local consumers. A major disadvantage of the multinational form is higher manufacturing costs and duplication of effort.

Companies that decentralize their operations throughout the globe in order to appeal to the varying tastes and preferences of global consumers are utilizing a _____ model. A. domestic B. international C. multinational D. intranational E. global

C. multinational Because of individual autonomy, each multinational subsidiary can customize its products and strategies according to the tastes and preferences of local consumers; the competitive conditions; and political, legal, and social structures.

Road Rage is a sports goods manufacturing company based and founded in Plutonia. The company operates a subsidiary in Bradford, marketing products that are customized to appeal to the people of Bradford. In this case, Road Rage is following the _____ model. A. domestic B. international C. multinational D. contingency E. global

C. multinational The multinational model, sometimes referred to as multidomestic, uses subsidiaries in each country in which the company does business and provides a great deal of discretion to those subsidiaries to respond to local conditions. Because of this autonomy, each multinational subsidiary can customize its products and strategies according to the tastes and preferences of local consumers.

The two strategic models that have relatively high manufacturing costs are: A. global and transnational. B. international and transnational. C. multinational and international. D. global and international. E. multinational and transnational.

C. multinational and international. One disadvantage of the international model is that it frequently does not provide the opportunity to achieve a low-cost position via scale economies. One disadvantage of the multinational form is higher manufacturing costs and duplication of effort.

The main cause of failure of overseas managers is: A. a low salary level. B. lack of adequate housing. C. inadequate access to health benefits. D. personal and social issues. E. lack of proper training.

D. personal and social issues. Typically, the causes for failure overseas extend beyond technical capability and include personal and social issues such as dissatisfaction of the employee's spouse or partner.

Which of the following countries is on its way to becoming the largest producer and consumer of many of the world's goods? A. Japan B. Canada C. Mexico D. China E. Vietnam

D. China With the world's largest population and increasing industrialization, China is on its way to becoming the largest producer and consumer of many of the world's goods. Its large and growing demand for oil is a cost factor that managers everywhere must consider in their long-range planning.

_____ is the tendency to judge others by the standards of one's group or culture, which are seen as superior. A. Individualism B. Centralism C. Uncertainty avoidance D. Ethnocentrism E. Hypocrism

D. ehtnocentrism Without realizing it, some managers may act out of ethnocentrism, a tendency to judge foreign people or groups by the standards of one's own culture or group, and to see one's own standards as superior.

Parent company nationals who are sent to work at a foreign subsidiary are known as ____. A. third-country nationals B. host-country nationals C. immigrants D. expatriates E. inpatriates

D. expatriates When establishing operations overseas, headquarters executives have a choice among sending expatriates (individuals from the parent country), using host-country nationals (natives of the host country), and deploying third-country nationals (natives of a country other than the home country or the host country).

In order to achieve cost economies, Apex Manufacturing bases its production plants in Mexico and gets its engineering services from skilled workers in Germany. In this case, Apex is using the _____ model of organizational structure. A. international B. multinational C. global D. transnational E. intranational

D. transnational To achieve cost economies with a transnational model, companies may base global-scale production plants for labor-intensive products in low-wage countries such as China and production plants that require a skilled workforce in high-skill countries such as Germany and Japan.

Which of the following is a disadvantage of franchising? A. There is a large amount of risk for the franchisor. B. The franchisor has to put in a large amount of capital. C. The cost of development is high. D. There is a high amount of political risk. E. There are chances to lose quality control.

E. There are chances to lose quality control. The most significant disadvantage of franchising concerns quality control. To make matters worse, the geographic distance between the franchisor and its overseas franchisees makes poor quality difficult to detect.

Which of the following is true of the global model? A. It is highly responsive to consumer taste. B. Decision making is done at a local level. C. There is a high level of customer satisfaction. D. Large amount of discretion is given to the subsidiaries. E. The products are standardized.

E. The products are standardized. The global model has been adopted by companies that view the world as one market and assume that no tangible differences exist among countries with regard to consumer tastes and preferences. A company pursuing a purely global approach tries to standardize its goods and services and it may be less responsive to consumer tastes and demands in different countries.

An organization's economic environment includes: A. growth of developing nations. B. anticorruption laws. C. free-trade agreements. D. bribery concerns. E. intensifying demand for resources.

Growth of developing nations. An organization's external environment includes its economic, technological, legal/regulatory, demographic, social, and natural environments. Economic environment includes: foreign investment; growth of developing nations; and rising wages in developing nations.

_____ occurs when companies move jobs to another country, typically where wages are lower. A. Franchising B. Outsourcing C. Offshoring D. Expatriation E. Proscription

Offshoring Offshoring occurs when companies move jobs to another country, typically where wages are lower. This practice does not necessarily require using an outside provider.

_____ occurs when the organization contracts with an external provider to produce one or more of an organization's products or services. A. Proscription B. Outsourcing C. Offshoring D. Expatriation E. Franchising

Outsourcing Outsourcing occurs when an organization contracts with an outside provider to produce one or more of its goods or services. Offshoring occurs when companies move jobs to another country, typically where wages are lower.