Strategic Management Final 7-12

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A ____ cooperative strategy helps the firm diversify in terms of products offered, markets served, or both. a. corporate-level b. business-level c. national-level d. industry-level

A strategic alliance in which the partners own different percentages of the new company they have formed is called a(an) a. equity strategic alliance. b. joint venture. c. nonequity strategic alliance. d. cooperative arrangement.

All of the following are business-level cooperative strategic alliances EXCEPT a. synergistic strategic alliances. b. uncertainty reduction strategic alliances. c. complementary strategic alliances. d. competition response strategic alliances.

Which of the following companies ranks among those against whom some of the largest payouts for class-action legal fraud suits ever were judged? A) AOL Time Warner B) Walt Disney C) Starbucks D) Herman Miller E) Edison

A) AOL Time Warner

The percentage of persons age 65 or older exceeds 20 percent in Japan, Italy, and A) Germany. B) the USA. C) France. D) China. E) All of the above

A) Germany.

Walmart encourages its employees to adopt "Personal Sustainability Projects" like weight-loss or smoking-cessation support groups, illustrating that A) employee wellness can be a part of sustainability. B) employee health issues have no business in the workplace. C) firms should crack down on employees' personal interests infringing upon business hours. D) the Global Reporting Initiative requires this of all U.S. companies. E) a company's interest in its employees should be restricted solely to their work duties.

A) employee wellness can be a part of sustainability.

It is ________ for a business to provide a sustainability report annually to the public. A) good business B) irresponsible C) a decreasing trend D) unethical E) poor planning

A) good business

Unethical activities that plague online commerce include all of the following EXCEPT A) inappropriate gifts. B) spreading viruses. C) identity theft. D) Internet fraud. E) hacking into company computers.

A) inappropriate gifts.

It has become ________, since uniform standards defining environmentally responsible company actions are rapidly being incorporated into our legal landscape. A) more and more difficult for firms to make "green" claims when their actions are not substantive or even true B) increasingly easy for firms to get away with placing "green" terminology on their products without any oversight C) customary for firms to use terms like "organic," "green," or "earth-friendly" when their products don't warrant it D) more common for consumers to be cynical about corporate environmental claims E) impossible for firms to omit "green" terminology from their labels

A) more and more difficult for firms to make "green" claims when their actions are not substantive or even true

Social policy can best be defined as A) the responsibilities a firm has to employees, consumers, environmentalists, minorities, communities, shareholders, and other groups. B) a document providing behavioral guidelines that cover daily activities and decisions within a firm. C) an SEC mandate to report any unethical behavior. D) the legal requirement to reveal how a firm's operations impact the natural environment. E) mandatory technical standards that result in an environmental management system.

A) the responsibilities a firm has to employees, consumers, environmentalists, minorities, communities, shareholders, and other groups.

21. Recent trends that might lead managers of multinational corporations (MNCs) to adopt a more decentralized strategy for their operations would include all of the following EXCEPT A. customers; needs, interests, and tastes are becoming increasingly homogenized or similar. B. consumers around the world are increasingly willing to tradeoff idiosyncratic preferences in product features for lower price. C. flexible manufacturing trends have allowed a decline in the minimum volume required to reach acceptable levels of production efficiency. D. fluctuating exchange rates.

A. customers needs, interests, and tastes are becoming increasingly homogenized or similar.

16. Low pressure for local adaptation combined with low pressure for lower costs would suggest what type of strategy? A. international B. global C. multidomestic D. transnational

A. international

26 All of the following are international corporate-level strategies EXCEPT the ____ strategy. a. multidomestic b. universal c. global d. transnational

9. Moving into international markets is a particularly attractive strategy to firms whose domestic markets a. demand a differentiation strategy for success. b. are limited in opportunities for growth. c. have developed unfriendly business attitudes toward the industry. d. have too much regulation.

Firms entering into synergistic strategic alliances expect to attain a. technological complexity. b. economies of scope. c. monopolistic market power. d. learning curve efficiencies.

____ strategic alliances have stronger focus on value creation than do ____ alliances. a. competition reducing, complementary b. complementary, competition reducing c. uncertainty reducing, complementary d. collusive, uncertainty reducing

A document that discloses to shareholders information about a firm's labor practices, product sourcing, energy efficiency, environmental impact, and business ethics practices is known as A) a code of ethics. B) a sustainability report. C) an EMS. D) ISO 14000. E) green terminology.

B) a sustainability report.

A proactive environmental policy is likely to lead to A) higher cleanup costs. B) conservation of energy. C) reduced customer loyalty. D) numerous liability suits. E) higher medical costs.

B) conservation of energy.

Bad ethics can ________ strategic plans. A) derail all but the best B) derail even the best C) derail only poorly-intentioned D) derail only ill-conceived E) never affect

B) derail even the best

The European Parliament in late 2012 voted with an overwhelming 566-47 margin to A) reinstate commercial whaling. B) eradicate the practice of shark finning. C) add polar bears to the list of endangered species. D) outlaw international trade in ivory. E) None of the above

B) eradicate the practice of shark finning.

All of the following business actions are considered to be unethical EXCEPT A) moving jobs overseas. B) preventing environmental harm. C) overpricing. D) sexual harassment. E) insider trading.

B) preventing environmental harm.

39. __________ entail the creation of a third-party legal entity, whereas __________ do not. A. Licensing agreements; joint ventures B. Joint ventures; strategic alliances C. Strategic alliances; joint ventures D. Franchising agreements; strategic alliances

B. Joint ventures; strategic alliances

17. High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy? A. Global B. Multidomestic C. Transnational D. Overall cost leadership

B. Multidomestic

15. Pressures to "reduce costs" require that A. a company should not trade idiosyncratic preferences in product features for higher economic returns. B. a company must pursue what is economically beneficial to the company including maximizing economies of scale and learning curve effects. C. the manager should follow a multidomestic strategy to maximize the economic benefits to the company. D. the company needs to supplement the local foreign economy in a manner specified by the local government.

B. a company must pursue what is economically beneficial to the company including

10. The sale of Boeing's commercial aircraft and Microsoft's operating systems in many countries enable these companies to benefit from A. higher prices in their domestic markets. B. economies of scale. C. optimizing the location for many activities in their value chain. D. reducing their exposure to currency risks.

B. economies of scale.

6. U.S. companies moving into the international market need to be sensitive to the need for local country or regional responsiveness because of a. increasing rejection of American culture across much of the world. b. the sophistication of the international consumer because of the Internet. c. consumer needs, political and legal structures, and social norms vary by country. d. the increasing loss of economies of scale.

Smith Commercial Lighting, Inc., which sells lighting for factories and businesses, has entered into an alliance with Revelation Lighting, Inc., a retailer of home decor lighting, in order to expand into the trend of using industrial-type lighting in non-traditional style homes. Smith has invested 40% and Revelation has invested 60% into the new operation. This is an example of a(an) a. joint venture. b. nonequity alliance. c. horizontal complementary strategic alliance. d. vertical complementary strategic alliance.

Japan's prescription for dealing with problems associated with an aging society includes A) relying on large-scale immigration. B) providing incentives for its elderly to retire at ages 55 to 60. C) reversing the old-fashioned trend of keeping women at home. D) enacting laws against discrimination based on age. E) phasing in a shift from age 60 to age 55 as the date when a person may begin receiving a pension.

C) reversing the old-fashioned trend of keeping women at home.

13. __________ occurs when a firm decides to utilize other firms to perform value- creating activities that were previously performed in-house. A. Offshoring B. A global strategy C. Outsourcing D. A transnational strategy

C. Outsourcing

35. A domestic corporation considering expanding into international markets for the first time will typically A. start off by implementing a wholly owned foreign subsidiary so it can maintain standards identical to those at home. B. consider licensing or franchising its operations. C. consider implementing a low risk/low control strategy such as exporting. D. form a joint venture with a reputable foreign producer.

C. consider implementing a low risk/low control strategy such as exporting.

28. All of the following are limitations of a multidomestic strategy EXCEPT A. less ability to realize cost savings through scale economies. B. greater difficulty in transferring knowledge across countries. C. single locations may lead to higher tariffs and transportation costs. D. may lead to "overadaptation" as conditions change.

C. single locations may lead to higher tariffs and transportation costs.

48. The problems associated with exporting include a. merging corporate cultures. b. a partner's incompatibility. c. difficulty in negotiating relationships. d. high transportation costs and the expense of tariffs.

56. The means of entry into international markets that offers the greatest control is a. licensing. b. acquisitions. c. joint ventures. d. greenfield ventures.

In some countries, the only legal way for foreign firms to invest in the country is through a. acquisitions. b. mergers. c. greenfield ventures. d. strategic alliance with a local firm.

________ are the individuals primarily responsible for ensuring that high ethical principles are espoused and practiced in an organization. A) Non-management employees B) Mid-level managers C) Shareholders D) Strategists such as CEOs and business owners E) Governmental regulatory bodies

D) Strategists such as CEOs and business owners

Responsibility for encouraging ethical decision making and ensuring ethical behavior in a firm lies with A) only a firm's strategists. B) only a firm's managers. C) only a firm's shareholders. D) both a firm's strategists and its managers. E) neither a firm's strategists nor its managers.

D) both a firm's strategists and its managers.

All of the following are reasons that workplace romance can be detrimental to workplace morale and productivity EXCEPT A) favoritism complaints can arise. B) personal arguments can lead to work arguments. C) whispering secrets can lead to tensions and hostilities among coworkers. D) increased quality and quantity of work can occur. E) sexual harassment charges may ensue, either by the involved female or a third party.

D) increased quality and quantity of work can occur.

Firms can align ethical and strategic decision making by A) omitting ethical considerations from long-term planning. B) excluding ethical decision making from the performance appraisal process. C) discouraging whistle-blowing. D) monitoring departmental and corporate performance regarding ethical issues. E) All of the above

D) monitoring departmental and corporate performance regarding ethical issues.

Environmental advocacy groups now have ________ Americans as members. A) approximately 100,000 B) just under a million C) close to 5 million D) over 20 million E) almost a billion

D) over 20 million

Workplace romance A) is defined as unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature. B) is defined as illegal by the Equal Employment Opportunity Commission. C) should be strictly forbidden by organizations. D) simply happens so organizations should determine how to best manage the phenomena. E) is an intimate relationship between two employees, one of whom is not consenting.

D) simply happens so organizations should determine how to best manage the phenomena.

The United Kingdom's new Bribery Law A) is less stringent than the similar U.S. FCPA. B) carries a minimum 10-year prison sentence for those convicted of bribery. C) allows foreign companies doing business in the UK to bribe officials if that is their national convention. D) stipulates that failure to prevent bribery is an offense. E) All of the above

D) stipulates that failure to prevent bribery is an offense.

41. __________ are most appropriate where a firm already has the appropriate knowledge and capabilities that it can leverage rather easily through multiple locations in many countries. A. Joint ventures B. Strategic alliances C. Licensing agreements D. Wholly owned subsidiaries

D. Wholly owned subsidiaries

1. A major trend in international developments includes A. greater international trade and operations. B. a growing recognition of an international managerial perspective. C. a large increase in international investment. D. all of these.

D. all of these.

36. The form of entry strategy into international operations that offers the lowest level of control would be A. franchising. B. licensing. C. joint venture. D. exporting.

D. exporting.

3. Michael Porter's framework all of the following factors affect a nation's competitiveness EXCEPT A. factor conditions. B. demand characteristics. C. related and supported industries. D. policies that protect the nation's domestic competitors.

D. policies that protect the nation's domestic competitors.

11. Many U.S. multinational companies set up maquiladora operations south of the U.S.-Mexico border primarily A. to sell products into the growing Mexican market. B. as part of US government-initiated measures to discourage illegal immigration. C. to take advantage of the lower tax rates in Mexico. D. to take advantage of the low cost of labor.

D. to take advantage of the low cost of labor.

Sustainability refers to the extent that an organization's operations and actions ________ the natural environment. A) protect B) mend C) preserve D) reflect good stewardship of E) All of the above

E) All of the above

The Wall Street Journal article "America Gone Wild" A) reports an astonishing resurgence in wildlife populations in the USA. B) cites that deer-vehicle crashes in the USA cost $1.5 billion a year. C) describes damage done to U.S. infrastructure by the resurgence in wildlife. D) reveals that the total annual cost of wildlife damage in the USA exceeds $28 billion. E) All of the above

E) All of the above

Which is a rule from the Wall Street Journal article "The New Rules of Flirting"? A) Do not flirt within a relationship that you want to strengthen. B) Do flirt with someone you know is looking for a relationship if you are not interested in a new relationship. C) Do flirt to make your partner jealous. D) Flirting between power differences, such as boss and employee, is usually fine. E) Do not make physical contact with the person you are flirting with, unless it is within a desired relationship.

E) Do not make physical contact with the person you are flirting with, unless it is within a desired relationship.

Preserving the environment should be a permanent part of doing business for which of the following reasons? A) Consumer demand for environmentally safe products and packages is low. B) Public opinion demanding that firms conduct business in ways that preserve the natural environment is weak. C) Federal and state environmental regulations are fairly simple and static. D) Many consumers, suppliers, distributors, and investors shun doing business with environmentally strong firms. E) More lenders are examining the environmental liabilities of businesses seeking loans.

E) More lenders are examining the environmental liabilities of businesses seeking loans.

Employee wellness cannot be a part of sustainability.

False

Firms should strive to engage in social activities that have no economic benefits, to avoid their being viewed as public relations ploys.

False

Many people consider it unethical for a firm to be socially irresponsible.

True

A recent Wall Street Journal article reported that 80 percent of all firms sampled had no restrictions on relationships between a supervisor and a subordinate.

false

After decades of debate and struggle, firms have finally definitively determined the appropriate social policies.

false

Bad ethics can derail all but the best strategic plans.

false

Corporate social policy should be reaffirmed or changed during strategy implementation.

false

Good ethics is not a prerequisite for good strategic management.

false

ISO 14001 is a technical standard and as such replaces technical requirements embodied in statutes or regulations.

false

It has gotten easier for firms to get away with placing "green" terminology on their products and labels because there are still no legal or generally accepted definitions of terms like "organic," "green," "safe," or "earth-friendly."

false

Primary responsibility for ensuring ethical behavior rests with middle- and low-level managers, since they are in a position to influence many employees.

false

There is no country that favors or engages in commercial whaling today.

false

A bribe is a gift bestowed to influence a recipient's conduct.

true

A new wave of ethics issues has accentuated the need for strategists to develop a clear code of business ethics.

true

According to the Convention on the International Trade in Endangered Species (CITES), more than 25,000 elephants are killed each year for their ivory—even though international trade in ivory has been outlawed since 1989.

true

Avon Products is being investigated for bribery charges related to their winning the first direct-sales license awarded by China to a foreign company.

true

Corporate social policy should be designed and articulated during strategy formulation.

true

Dumping banned or flawed products in foreign markets is considered to be an unethical business practice.

true

In 2012, Chinese firms dominated Fortune magazine's list of the least admired companies from a social responsibility perspective.

true

In some foreign countries, paying bribes and kickbacks is acceptable.

true

More and more firms believe that ethics training and an ethics culture create strategic advantage.

true

New Jersey's goal is to obtain 3 percent of its electricity from the sun and 12 percent from offshore wind by 2020.

true

Periodic ethics workshops can help sensitize people to workplace circumstances in which ethics issues may arise.

true

Social policy concerns what responsibilities the firm has to employees, consumers, environmentalists, minorities, communities, shareholders, and other groups.

true

Sustainability refers to the extent that an organization's operations and actions protect, mend, and preserve rather than harm or destroy the natural environment.

true

The first social responsibility of any business must be to make enough profit to cover the costs of the future because if this is not achieved, no other social responsibility can be met.

true

The percentage of persons age 65 or older exceeds 20 percent in Japan, Italy, and Germany.

true

11. Firms able to standarize the processes used to produce, sell, distribute, and service their products across country borders enhance their ability to a. learn how to continuously reduce costs while increase the value of their products. b. increase investment in research and development. c. access to a low-cost labor force in the host market. d. mitigate cultural differences.

12. Firms with core competencies that can be exploited across international markets are able to a. achieve synergies and produce high-quality goods at lower costs. b. enter new markets more quickly. c. enhance their market image and brand loyalty among local consumers. d. meet local government requirements more quickly than their international competitors.

17. A fundamental reason for a country's development of advanced and specialized factors of production is often its a. lack of basic resources. b. monetary wealth. c. small workforce. d. protective tariffs.

17. Japan, due to a lack of undeveloped land, would be an unusual choice of location for a U.S. cattle company to set up local grazing operations. This limiting factor would be identified in what part of Porter's determinants of national advantage? a. factors of production b. demand conditions c. related and supporting industries d. firm strategy, structure, and rivalry

22. A large domestic market can provide the country's industries a chance at dominating the world market because a. they have been able to develop economies of scale at home. b. they have access to abundant and inexpensive factors of production. c. the related and supporting industries will have been developed. d. the nation's culture and educational system will be adapted to producing the labor force needed for the industry.

27. International corporate-level strategy focuses on a. the scope of operations through both product and geographic diversification. b. competition within each country. c. economies of scale. d. sophistication of monitoring and controlling systems.

37. In China, Starbucks is standardizing its operations while simultaneously decentralizing some decision-making responsibility to local levels to meet customers tastes. Starbucks is following the ____ international corporate-level strategy. a. transnational b. global c. differentiation d. multidomestic

49. Which of the following is NOT a disadvantage associated with exporting? a. potential loss of proprietary technologies b. high transportation costs c. loss of control over distribution activities d. tariffs imposed by local governments

53. One of the primary reasons for failure of cross-border strategic alliances is a. the incompatibility of the partners. b. conflict between legal and business systems. c. security concerns and terrorism. d. high debt financing.

63. Internationally diversified firms a. earn greater returns on their innovations through larger or more numerous markets. b. are more likely to produce below-average returns for investors in the long run. c. may need to decrease international activities when domestic profits are poor. d. are generally unable to achieve high levels of synergy because of differences in cultures.

65. Terrorism creates an economic risk for firms, which a. reduces the amount of investment foreign companies will make in a country perceived to be terror-prone. b. is created by governmental bans on doing business with terrorist regimes. c. is offset by the above-average returns for firms that have learned how to operate in such an environment. d. is absorbed by firms that are highly geographically diversified and that operate in both secure and insecure locations.

66. Arkadelphia Polymers, Inc., earns 60 percent of its revenue from exports to Europe and Asia. The CEO of the company would be a. concerned if the value of the dollar strengthened. b. pleased if the value of the dollar strengthened. c. unconcerned about the fluctuation in the value of the dollar because the company is widely diversified geographically. d. likely to consider moving to international strategic alliances or acquisitions if the value of the dollar fell and remained low.

68. All of the following complicate the implementation of an international diversification strategy EXCEPT a. widespread multilingualism. b. increased costs of coordination between business units. c. cultural diversity. d. logistical costs.

8. U.S. cola companies entered the global market because of a. limited growth opportunities in their domestic market. b. lower labor costs in the emerging markets. c. economies of scale that offset research and development costs. d. an increase in the return on investment from their U.S. bottling plants.

A manufacturer of specialty jams and jellies has decided to ally itself with an orchard and vineyard growing rare strains of fruit. This is a(an) ____ strategy. a. vertical complementary b. horizontal complementary c. uncertainty reduction d. network

Dynamic alliance networks work best in industries a. characterized by frequent product innovations and short product life cycles. b. that are mature and stable in nature. c. where the coordination of product and global diversity is critical. d. that are characterized by predictable market cycles and demand.

In a cross-border alliance, the local partner is often a useful source of information about a. sources of capital. b. the strengths of the foreign firm's technology. c. market synergies. d. long-term planning.

In the franchising strategy, the most important competitive advantage for the franchisee is the franchisor's a. brand name. b. capital resources. c. access to a consolidated market. d. geographic locations.

Legitimately, a firm may pursue an international strategic alliance for all of the following reasons EXCEPT a. to enhance the compensation packages of top managers. b. to leverage core competencies in new markets. c. to operate within government restrictions in the local country. d. to escape limited domestic growth opportunities.

Offshore Oil Exploration Partners (OOEP) has entered into a cooperative strategy with Malay Petroleum. The resulting documents are long, formal, and detailed. They specify detailed responsibilities of each partner and include methods of monitoring accounting and technical procedures. OOEP and Malay Petroleum are using the ____ management approach. a. cost minimization b. trust but verify c. opportunity maximization d. pragmatic realism

Reduction of competition can be accomplished through all of the following EXCEPT a. predatory alliances. b. explicit collusion. c. tacit collusion. d. mutual forbearance.

The cooperation between Fiat and Chrysler to produce a Fiat-designed car in Chrysler's Illinois factory is a(n) _________ alliance because it allows the firms to share resources and capabilities across multiple functions. a. synergistic b. opportunistic c. horizontal d. diversifying

The three main luxury hotels in a major tourist destination keep very close track of their competitors' room pricing, restaurant offerings, tour packages, and special services, such as airport transportation and spa privileges. When one hotel makes adjustments in prices or offerings, the other hotels follow suit. It is possible that these hotels are a. engaging in tacit collusion. b. following uncertainty reducing strategies. c. monitoring business competitors for opportunistic behaviors. d. following a competitive response strategy.

The two basic approaches to successfully manage cooperative strategic alliances involve ____ and ____. a. cost minimization, opportunity maximization b. monitoring systems, multiple management approaches c. contractual systems, financial systems d. equity approaches, non-equity approaches

The two types of complementary strategic alliances are a. vertical and horizontal. b. macro and micro. c. outsourcing and insourcing. d. network and complementary.

According to a recent Wall Street Journal article, ________ percent of all firms sampled had no restrictions on boss-subordinate love affairs at work. A) 5 B) 13 C) 24 D) 39 E) 80

A) 5

Which of the following was among the most admired companies for social responsibility in 2012 according to Fortune magazine? A) GDF Suez B) China Railway Group C) China Railway Construction D) China State Construction Engineering E) Kirin Holdings

A) GDF Suez

The ________ is a network of the national standards institutes of 147 countries, one member per country. A) ISO B) EMS C) UN D) EPA E) IMF

A) ISO

________ is a set of standards in fields such as environmental auditing, performance evaluation, and labeling, that is adopted by thousands of firms worldwide to certify to their constituencies that they are conducting business in an environmentally friendly manner. A) ISO 14001 B) EMS 14000 C) UN 5000 D) SEC 100 E) A sustainability report

A) ISO 14001

Which state generates the greatest number of megawatts of wind power? A) Texas B) Iowa C) California D) Minnesota E) New Jersey

A) Texas

________ refers to policies that require employees to report any unethical violations they discover or see in the firm. A) Whistle-blowing B) Bribery C) Adultery D) Sustainability E) Stewardship

A) Whistle-blowing

Bribery involves A) bestowing a gift to influence the recipient's conduct. B) requiring employees to report any unethical violations they discover or see in the firm. C) prohibiting love affairs between bosses and their subordinates. D) encouraging firms to play a role in curing society of its ills. E) forcing companies to take responsibility for the impact their actions have on society.

A) bestowing a gift to influence the recipient's conduct.

Firms should strive to engage in social activities that A) have economic benefits. B) have no economic benefits. C) are detrimental to economic growth. D) drain financial resources. E) garner goodwill only, not profits.

A) have economic benefits.

According to the text, the first social responsibility of any business is to A) make enough profit to cover the costs of the future, because if this is not achieved then no other social responsibility can be met. B) avoid laying off employees so as to protect the employees' livelihood, even if that decision may force the firm to liquidate. C) engage in social activities that have no economic benefits, to avoid the appearance of a public relations gimmick. D) offer courses and training in environmental management. E) None of the above

A) make enough profit to cover the costs of the future, because if this is not achieved then no other social responsibility can be met.

In an effort to manage ecological challenges, many companies are A) moving environmental affairs from the staff side of the organization to the line side. B) moving environmental affairs from the line side of the organization to the staff side. C) making the chief operating officer report directly to the corporate environmental group. D) omitting an environmental representative from their board of directors. E) purging environmental values from their mission statements.

A) moving environmental affairs from the staff side of the organization to the line side.

Business ethics, ________, and sustainability issues are interrelated and impact all areas of the comprehensive strategic-management model. A) social responsibility B) social networking C) fiscal irresponsibility D) cultural indifference E) None of the above

A) social responsibility

A code of business ethics is A) sorely needed in light of a new wave of ethical issues including product safety, employee health, and sexual harassment. B) concerned with what responsibilities the firm has to employees, consumers, environmentalists, minorities, communities, and other groups. C) a report that reveals how the firm's operations impact the natural environment. D) a set of strict regulations requiring firms to conserve energy. E) a series of voluntary standards in the environmental field.

A) sorely needed in light of a new wave of ethical issues including product safety, employee health, and sexual harassment.

33. According to studies by Rugman and Verbeke, approximately how many of the world's largest 500 firms are global, that is, they have at least 20% of their total revenues each in North America, Asia, and Europe? A. 9 B. 59 C. 79 D. 159

A. 9

38. The difference between a franchise and licensing contract is that A. a franchise contract is more specific and usually longer in duration. B. a franchise contract must include a foreign government. C. a licensing contract covers more aspects of operations. D. a franchise contract involves less control and less risk.

A. a franchise contract is more specific and usually longer in duration.

7. All of the following would be viewed as advantages of global diversification EXCEPT A. fewer social and political risks than domestic operations. B. a firm not being solely dependent on the domestic market. C. a firm with large margins at home helping subsidize its operations in other nations. D. the potential to lower costs of operation even if the primary market is at home.

A. fewer social and political risks than domestic operations.

18. Software Tech, Inc., a company in the computer software industry, invests heavily in R&D and product design. Thus, most of its value is added A. upstream. B. in its infrastructure. C. downstream. D. midstream.

A. upstream.

1. International strategy refers to a(n) a. action plan pursued by American companies to compete against foreign companies operating in the United States. b. strategy through which the firm sells products in markets outside the firm's domestic market. c. political and economic action plan developed by businesses and governments to cope with global competition. d. strategy American firms use to dominate international markets.

21. In France, fine dressmaking and tailoring have been a tradition predating Queen Marie Antoinette. Cloth manufacturers, design schools, craft apprenticeship programs, modeling agencies, and so forth, all exist to supply the clothing industry. This is an example of the ___ in Porter's model. a. strategy, structure, and rivalry among firms b. related and supporting industries c. demand conditions d. factors of production

30. A multi domestic corporate strategy has ___ need for global integration and ___need for local market responsiveness a. low; low b. low; high c. high; low d. high; high

31. A global corporate-level strategy differs from a multidomestic corporate-level strategy in that in a global strategy, a. competitive strategy is dictated by the home office. b. competitive strategy is decentralized and controlled by individual strategic business units. c. products are customized to meet the individual needs of each country. d. the firm sells in multiple countries.

32. A global corporate-level strategy emphasizes a. differentiated products. b. economies of scale. c. sensitivity to local product preferences. d. decentralizing control and limited monitoring.

38. Increasingly, customers worldwide are demanding emphasis on local requirements and companies are needing efficiency as global competition increases. This has triggered an increase in the number of firms _____ using the strategy. a. multi domestic b. transactional c. universal d. global

4. The increased pressures for global integration of operations have been driven mostly by a. new low-cost entrants. b. increasing demand for similar products. c. increased levels of joint ventures. d. the rise of governmental regulation.

44. Skaredykat Inc. is considering initial expansion beyond its home market. The firm has decided not to enter markets that differ greatly from its home market, instead expanding within the twelve-nation region that includes its home country. a. The firm is not engaging in international trade. b. The firm is using a regional approach to international expansion. c. The firm will not be able understand the cultures, legal, and social norms of this market. d. Skaredykat is a scaredy-cat.

45. Most firms enter international markets sequentially, introducing their _____ first. a. most innovative products b. largest and strongest lines of business c. most generic products, which will be more likely to generate universal product demand, d. products customized to the region

46. A U.S. manufacturer of adaptive devices for persons with disabilities is considering expanding internationally. It is a fairly small company, but it is looking for growth opportunities. This company should primarily consider the option of a. licensing. b. exporting. c. a strategic alliance. d. a greenfield venture.

60. When a firm INITIALLY becomes internationally diversified, its returns a. remain stable. b. decrease. c. become more variable. d. increase.

61. An international diversification strategy is one in which a firm a. expands into nearby markets. b. expands into a potentially large number of geographic locations and markets. c. expands into one or a few markets. d. acquires a firm in a foreign country.

67. The positive results associated with increasing international diversification have been shown to a. continue as the level of international diversification increases. b. level off and become negative as diversification increases past some point. c. become negative quickly. d. be centered in only one or two industries.

A ____________ is a strategy in which firms share some of their resources and capabilities to create economies of scope and is similar to the business-level horizontal complementary alliance. a. joint venture b. synergistic strategic alliance c. diversifying strategic alliance d. dynamic alliance network

A businessperson in Atlanta who wishes to develop a luxury pet kennel approaches the owner of the highly successful Pet Resort and Day Spa in Houston to see if the owner is interesting in franchising the Pet Resort brand. The Atlanta businessperson's goal is to a. get venture capital from Pet Resort. b. gain access to Pet Resort's tacit knowledge. c. collude with Pet Resort to diminish competition in the kennel industry in Atlanta. d. join in a vertical complementary alliance with Pet Resort.

A cooperative strategy a. is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage. b. is a strategy in which firms work together to achieve a shared objective. c. is an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets. d. specifies actions a firm takes to gain a competitive advantage by selecting and managing a group of different businesses competing in different product markets.

A non-equity strategic alliance exists when a. two firms join together to create a new company. b. two or more firms have a contractual relationship to share resources and capabilities. c. two partners in an alliance own unequal shares in the combined entity. d. the partners agree to sell bonds instead of stock in order to finance a new venture.

A state-wide alliance of independent hospitals has formed in order to do group purchasing of medical supplies. Group purchasing allows the hospital alliance to negotiate lower prices with suppliers because of the large quantity of materials ordered. This is an example of the advantage of ____ resulting from an alliance. a. explicit collusion b. economies of scale c. opportunistic behavior d. distribution opportunities

Firms in ____ markets cooperate to pool resources and gain market power. a. slow-cycle b. standard-cycle c. fast-cycle d. hyper-cycle

For the purpose of diversification, a corporate-level cooperative strategy may be preferable to a merger or acquisition for all the following reasons EXCEPT a. a host nation may forbid a merger or acquisition. b. opportunistic behaviors are less likely. c. cooperative strategies require fewer resources. d. cooperative strategies allow greater flexibility in diversifying the firm's portfolio .

In free market economies, ____ must decide how rivals can collaborate with their competitors without violating established regulations. a. the invisible hand b. the government c. consumers d. the business community

In general, cross-border alliances are more ____ and ____ than domestic alliances, especially in emerging markets. a. uncertainty reducing, diversifying b. complex, risky c. highly leveraged, tightly monitored d. flexible, trust-based

In the U.S., cooperative strategies to reduce competition may result in ____ if they are explicit. a. increased tax liabilities b. litigation c. government takeover of the firms d. dissolution of the firm

Moon Flower cosmetics company executives are aware that their Asian customer base is interested in advanced skin care treatments beyond Moon Flower's traditional herbal and organic compounds. Moon Flower and a large American chemical company are in discussions to create a 50-50 partnership in a new firm which would create skin care treatments based on innovative chemical formulations which would be marketed both in Asia and in the U.S. Beyond being a cross-border alliance, this partnership can be called a(an) a. non-equity strategic alliance. b. joint venture. c. horizontal complementary alliance. d. equity strategic alliance.

Mutual forbearance is a. illegal in the U.S. b. a type of competition reducing strategy. c. a variety of risk-sharing by firms in highly fragmented industries. d. exercised when alliance partners refrain from opportunistic behaviors.

Of the various business-level strategic alliances, ____ alliances have the most probability of creating sustainable competitive advantage, and ____ have the lowest. a. horizontal complementary, vertical complementary b. vertical complementary, competition reducing c. competition reducing, horizontal complementary d. uncertainty reducing, competition reducing

Stable alliance networks will most often a. be used to enhance a firm's internal operations. b. appear in mature industries where demand is relatively constant and predictable. c. emerge in industries with short product life cycles. d. emerge in declining industries as a way to increase process innovations.

The Renault Nissan alliance discussed in the Opening Case is an example of a ________ in that the firms seek to create economies of scope by sharing their resources and capabilities to develop manufacturing platforms that can be used to produce cars that will be either a Renault or a Nissan. a. joint venture. b. synergistic alliance. c. horizontal complementary alliance. d. dynamic alliance network.

To increase the likelihood of success between partners assuming that trust exists, ____ approach(es) should be used to manage cooperative strategies. a. the cost minimization b. the opportunity maximization c. both the cost minimization and opportunity maximization d. none of the these

Which of the following statements is TRUE? a. Most cooperative strategies are successful if the basic agreements are well written and include appropriate monitoring strategies. b. As many as 50% of cooperative strategies fail. c. Opportunistic behaviors are usually focused on gaining the use of the partner's manufacturing and financial resources. d. Problems with international cooperative strategies usually concern financial-system differences between the partners.

Which type of strategic alliance is best at passing tacit knowledge between firms? a. primary cooperative strategic alliances b. joint ventures c. equity strategic alliances d. nonequity strategic alliances

What challenge facing all organizations requires managers to formulate strategies that preserve and conserve natural resources and control pollution? A) Economic B) Ecological C) Compensational D) Benchmarking E) Sociological

B) Ecological

Alaska and oil companies contend that protections for polar bears ________. A) are not aggressive enough and must be strengthened B) are diminishing opportunities for Alaska energy development C) help push Alaskan companies to explore alternative energy sources D) are ineffective and actually have caused populations in Alaska to decrease E) are long overdue and must be enacted immediately

B) are diminishing opportunities for Alaska energy development

34. Which of the following describes the most typical order of entry into foreign markets? A. franchising, licensing, exporting, joint venture, and wholly owned subsidiary B. exporting, licensing, franchising, joint venture, and wholly owned subsidiary C. licensing, exporting, franchising, joint venture, and wholly owned subsidiary D. exporting, franchising, licensing, joint venture, and wholly owned subsidiary

B. exporting, licensing, franchising, joint venture, and wholly owned subsidiary

26. All of the following are limitations of a global strategy EXCEPT A. limited ability to adapt to local markets. B. the ability to locate activities in optimal locations. C. the concentration of activities may increase dependence on a single facility. D. single locations may lead to higher tariffs and transportation costs.

B. the ability to locate activities in optimal locations.

24. As in the case of Siebel Systems (now part of Oracle), elements of a global strategy may facilitate the competitive advantage of differentiation by A. increased freedom of individual business units to adapt to local tastes. B. the creation of a worldwide network to achieve consistent service regardless of location. C. flexibility in applying R&D to meet country-specific needs. D. tailoring products to meet country-specific needs.

B. the creation of a worldwide network to achieve consistent service regardless of location.

9. Microsoft decided to establish a corporate research laboratory in Cambridge, England A. because England is an ally of the United States. B. to access the outstanding technical and professional talent available there so that they can attain world-class excellence in selected value-creating activities. C. because the local language is English. D. because the company views the United States as a risky place to expand due to the actions of the U.S. Department of Justice.

B. to access the outstanding technical and professional talent available there so that they can attain world-class excellence in selected value-creating activities.

30. Units coordinate their activities with headquarters and with one another, units adapt to special circumstances only they face, and the entire organization draws upon relevant corporate resources. These are all attributes of which type of strategy? A. global B. transnational C. international D. multidomestic

B. transnational

10. Working in multiple international markets can provide firms with____ perhaps even in terms of ______. a. location advantages; larger markets. b. research and development activities; larger markets. c. new learning opportunities; research and development activities. d. economies of scale and learning; larger markets.

19. The four aspects of Porter's model of international competitive advantage include all of the following EXCEPT a. factors of production. b. demand conditions. c. political and economic institutions. d. related and supporting industries.

2. Raymond Vernon states that the classic rationale for international diversification is to a. pre-emptively dominate world markets before foreign companies can establish dominance. b. avoid domestic governmental regulation. c. extend the product's life cycle. d. avoid international governmental regulation.

23. In addition to the four basic dimensions of Porter's "diamond" model, ___ may also contribute to the success or failure of firms. a. national work ethic b. educational requirements c. government policy d. national pride

24. All of the following are correct about what managers should know about firms based in a country with a national competitive advantage EXCEPT a. success is not guaranteed as the firm implements its chosen international business-level strategy. b. the actual strategic choices made are most compelling reasons for success or failure. c. success is guaranteed as the firm implements its chosen international business-level strategy. d. the determinants of national competitive advantage provide a foundation for a firm's competitive advantages.

25. Under industry structural analysis (Chapter 2),___rivalry is viewed as detrimental to profitability. Under themodel of national advantage (Chapter 8), ___rivarly is viewed as ___ as it results in competition and surviving firms are able to compete against global rivals. a. low; low; beneficial b. low; low; detrimental c. high; high; beneficial d. high; high; detrimental

29. A multidomestic corporate-level strategy is one in which: a. a corporation chooses not to compete internationally but where there are a number of international competitors in the firm's local marketplace. b. the firm produces a standardized product, but markets it differently in each country in which it competes. c. the firm customizes the product for each country in which it competes. d. the firm competes in a number of countries, but it is centrally coordinated by the home office.

3. Which of the following is NOT an incentive for firms to become multinational? a. to gain access to consumers in emerging markets b. to gain easier access to raw materials c. to avoid high domestic taxation on corporate income d. opportunities to integrate operations on a global scale

35. A transnational corporate-level strategy seeks to achieve a. customization for the local market. b. economies of scale and centralized strategic control. c. global efficiency and local responsiveness. d. standardization of products across countries.

40. Disney suffered lawsuits in France at Disneyland Paris as a result of the lack of fit between its transferred personnel policies and the French employees charged to enact them. This is an example of a. the effects of regionalization. b. the risks of a multidomestic strategy. c. the liability of foreignness. d. the effect of demand conditions.

41. _______ is the set of costs associated with unfamiliar operating environments; economic, administrative and cultural differences; and the challenges of coordination over distances. a. Transnational risk b. Regionalization c. Liability of foreignness d. International risk

42. Associations such as the European Union, Organization of American States, and the North American Free Trade Association, encourage a. global strategies. b. domestication. c. regional strategies. d. nationalization.

43. A firm may narrow its focus to a specific region of the world a. because that market is most different from its domestic market and so represents an unexploited "greenfield opportunity" for its products. b. in order to obtain greater economies of scale. c. so that it can better understand the cultures, legal and social norms, and other factors that are important for effective competition in those markets. d. to take advantage of limited protections of intellectual property so that it can manufacture innovative products without restrictions.

47. The choices that a firm has for entering the international market include all of the following EXCEPT a. exporting. b. licensing. c. leasing. d. acquisition.

50. A licensing agreement a. results in two firms agreeing to share the risks and the resources of a new venture. b. is best way to protect proprietary technology from future competitors. c. allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host country. d. can be greatly impacted by currency exchange rate fluctuations.

54. If conflict in a strategic alliance or joint venture is not manageable, a(n)____ may be a better option. a. licensing strategy b. exporting strategy c. acquisition d. new wholly owned subsidiary

57. Which of the following is an advantage associated with greenfield ventures? a. governmental support and subsidies in the host country b. the lower cost of this type of venture c. the level of control over the firm's operations d. the lower level of risks involved

58. If intellectual property rights in an emerging economy are not well-protected, the number of firms in the industry is rapidly growing, and the need for global integration is high, is the preferred entry mode. a. exporting b. strategic alliance c. a joint venture or wholly owned subsidiary d. licensing

59. The decision of what entry mode to use is primarily based on all of the following factors EXCEPT a. the industry's competitive conditions. b. the country's situation and government policies. c. the worldwide economic situation. d. the firm's unique set of resources, capabilities, and core competencies.

BPM Corp. is a manufacturer of radar systems for regional-sized jet aircraft. The company has announced plans to enter into a joint venture with J3 Composites, a producer of advanced composite materials. The announced venture will produce a new, combined product consisting of the radar unit and protective composite cover. Which of the following ownership arrangements would be most typical for a joint venture? a. BPM will own more than 50 percent of the venture and a new company will be formed. b. J3 will own more than 50 percent of the venture and a new company will be formed. c. BPM and J3 will both own 50 percent of the venture and a new company will be formed. d. BPM and J3 will both own 50 percent of the venture but no new company will be formed.

Burgess Corp. manufactures a line of heavy construction equipment. The company has announced a contractual relationship with FS Electronics whereby FS will supply Burgess with advanced GPS navigation and guidance systems. These systems will be an option on all bulldozers, dump trucks, and road graders Burgess produces. What type of alliance is this? a. Joint venture b. Equity strategic alliance c. Non-equity strategic alliance d. Competition reduction alliance

DDD Partners, a U.S. business consulting firm is considering a cooperative alliance with an Indian business consulting firm that has a wide practice in the Middle East and Asia. DDD has some European clients, but it sees the Middle East and Asia as growth opportunities. It hopes to learn how to navigate the different cultures and business practices in this part of the world from its alliance with the Indian firm. DDD's greatest risk here is that the Indian firm will a. insist on excessively close monitoring of DDD's actions. b. gain access to DDD's core competencies and use them to become a future competitor. c. not fully share its intangible resources. d. not make equivalent investments to the alliance as does DDD.

Firms in a standard-cycle market may form alliances in order to a. take advantage of opportunities in emerging market countries. b. more quickly distribute new products. c. capture economies of scale. d. share risky R&D investments.

In a(an) ____, two or more firms create a legally independent company to share some of their resources and capabilities to develop a competitive advantage. a. equality-based strategic alliance b. non-equity strategic alliance c. joint venture d. equity strategic alliance

In managing cooperative strategies, research indicates that ____ can be a capability that is valuable, rare, imperfectly imitable, and often non-substitutable giving these firms a competitive advantage. a. extensive capitalization b. stability c. trustworthiness d. Internet competency

Japanese telecom NTT DoCoMo Inc. and Chinese Internet search operator Baidu Inc. established an alliance to distribute games and other mobile-phone content. Baidu will own 80% of this collaboration with DoCoMo holding the remaining 20%. This collaborative arrangement is an example of a(n) a. joint venture. b. network strategy. c. equity strategic alliance. d. non-equity strategic alliance.

One disadvantage of developing effective monitoring systems to manage a strategic alliance is that a. firms will have to accept greater risks. b. trust will be eroded. c. spontaneous opportunities are minimized. d. power coalitions will still develop.

The collaboration between Volvo Aero (a subsidiary of Sweden's AB Volvo) and U.S.-based Pratt & Whitney to produce a new jet engine would be characterized as a(an) a. collusive tactic. b. merger. c. cross-border strategic alliance. d. international acquisition.

The fact that the prices consumers pay for branded breakfast cereals are above the prices that would exist if there were true competition suggests that the cereal manufacturers are engaging in a. excessive cooperation. b. joint ventures. c. tacit collusion. d. horizontal strategic alliances.

The primary responsibility of the franchisor, such as McDonald's or Hilton International is to a. learn about the brand and technology from the franchisee. b. test the franchisee for potential future acquisition. c. transfer to the franchisee knowledge and skills needed to compete at the local level. d. provide feedback to the franchisee regarding how the franchisor could become more effective and efficient.

U.S. Steel and Nucor (the two remaining major players in the U.S. steel industry) have been forming alliances as a means to enter markets in Europe and Asia. The steel industry is an example of a ________ market in which firms typically use alliances to gain market access. a. fast-cycle b. standard-cycle c. slow-cycle d. intermediate-cycle

Which of the following is NOT a risk for firms engaged in cooperative strategies? a. misrepresentation of a partner's competencies b. partner acts opportunistically c. insufficient variation in firms' core competencies d. failure of partners to make complementary resources available to the partnership

All of the following statements are true EXCEPT A) ISO is the world's largest developer of sustainability standards. B) ISO standards are widely accepted all over the world. C) ISO has legal authority to enforce its regulations' implementation. D) ISO standards are voluntary. E) ISO itself does not regulate or legislate.

C) ISO has legal authority to enforce its regulations' implementation.

________ was socially responsible in the wake of the earthquake and tsunami that devastated Japan in 2011; it also was able to get supplies to people who needed them following Hurricane Katrina. A) China Railway Group B) GDF Suez C) Walmart D) RWE E) Marquard & Bahls

C) Walmart

If a firm has a bad sustainability record this will A) help a firm in the market. B) improve a firm's standing in the community. C) cause investors to closely scrutinize the firm. D) deflect the scrutiny of a firm by environmentalists. E) release the firm from governmental reporting obligations.

C) cause investors to closely scrutinize the firm.

The U.S. Foreign Corrupt Practices Act and a new provision in the Dodd-Frank financial regulation-law allows company employees who bring cases of financial fraud, such as bribery, to the government's attention to receive ________ percent of any sum recovered. A) less than 10 B) exactly 20 C) up to 30 D) about 40 E) at least 50

C) up to 30

31. Which of the following is a disadvantage of a transnational strategy? A. Less ability to realize cost savings through scale economies. B. Limited ability to adapt to local markets. C. Unique managerial challenges in fostering knowledge transfer. D. Single locations may lead to higher tariffs and transportation costs.

C. Unique managerial challenges in fostering knowledge transfer.

27. Elements of a multidomestic strategy may facilitate the competitive advantage of cost leadership by A. flexibility in adjusting to local laws and customs. B. decreased duplication of inventories which are often involved in having multiple plants producing similar products. C. decreased shipping and transportation costs inherent in local production. D. economies of scale gained through centralized production of standardized products.

C. decreased shipping and transportation costs inherent in local production.

8. Optimizing the location of every activity in the value chain can yield all of the following strategic advantages EXCEPT A. performance enhancement. B. cost reduction. C. extending the life cycle of the product of service. D. risk reduction.

C. extending the life cycle of the product of service.

2. The reasons that explain why some governments make better use of the inflows from foreign investment and know-how than others include all of the following EXCEPT A. governmental practices that are business-friendly. B. local entrepreneurs that can train workers and invest in modern technology. C. high tariffs and taxes on foreign investors and multinational corporations provide income to improve living conditions. D. sound management of broader economic factors such as interest rates and inflation.

C. high tariffs and taxes on foreign investors and multinational corporations provide income to improve living conditions.

12. Appreciation of the U.S. dollar will have the following impact on McDonald's: A. lower sales abroad because foreign customers cannot afford McDonalds' products. B. more transfer of ingredients from the U.S. to branches abroad to take advantage of the higher dollar. C. lower profits, because foreign profits will be reduced when measured in dollars. D. no impact at all.

C. lower profits, because foreign profits will be reduced when measured in dollars.

5. According to Michael Porter, firms that have experienced intense domestic competition are A. unlikely to have the time or resources to compete abroad. B. most likely to design strategies aimed primarily at the domestic market. C. more likely to design strategies and structures that allow them to successfully compete abroad. D. more likely to demand protection from their governments.

C. more likely to design strategies and structures that allow them to successfully compete abroad.

32. In order to realize the strongest competitive advantage, firms engaged in worldwide competition must A. require that all of their various business units follow the same strategy regardless of location. B. ensure that all business units follow a strategy strictly tailored to their respective locations. C. pursue a strategy that combines the uniformity of a global strategy and the specificity of a multidomestic strategy in order to achieve optimal results. D. attempt to use the strategy that was most successful in their home country.

C. pursue a strategy that combines the uniformity of a global strategy and the specificity of a multidomestic strategy in order to achieve optimal results.

37. Fees that a multinational receives from a foreign licensee in return for its use of intellectual property (trademark, patent, trade secret, technology) are usually called A. transfer prices. B. dividends. C. royalties. D. intra-corporate inflows.

C. royalties.

4. Rivalry is intense in nations with conditions of __________ consumer demand, __________ supplier bases, and __________ new entrant potential from related industries. A. weak; weak; high B. strong; strong; low C. strong; strong; high D. weak; weak; low

C. strong; strong; high

6. All of the factors below have made India's software services industry extremely competitive on a global scale EXCEPT A. large pool of skilled workers. B. large network of public and private educational institutions. C. tax and antitrust legislation that protect the dominant players in the industry. D. large, growing market and sophisticated customers.

C. tax and antitrust legislation that protect the dominant players in the industry.

23. Gillette's worldwide success with its Sensor razor demonstrates A. the importance of merging global and multidomestic strategies. B. the values of establishing joint ventures with several multinational corporations. C. that a global marketing effort can sometimes be successful. D. the usefulness of a multidomestic strategy.

C. that a global marketing effort can sometimes be successful.

29. High pressure for local adaptation combined with high pressure for lower costs would suggest what type of international strategy? A. global B. multidomestic C. transnational D. differentiation

C. transnational

19 Industries in which proportionally more value is added in __________ activities are more likely to benefit from a __________ strategy. A. downstream; global B. upstream; multidomestic C. upstream; global D. manufacturing; multidomestic

C. upstream; global

40. A __________ is a business in which a multinational company owns 100 percent of the stock. A. joint venture B. strategic alliance C. wholly owned subsidiary D. franchising operation

C. wholly owned subsidiary

13. The location advantages associated with locating facilities in other countries can include all of the following EXCEPT a. low-cost labor. b. access to critical supplies. c. access to customers. d. evasion of host country governmental regulations.

14. Factors of production in Porter's model of international competitive advantage include all of the following EXCEPT a. labor. b. capital. c. infrastructure. d. technology.

15. In Porter's model, a specialized factor of production would include a. abundant natural resources. b. a large workforce. c. an extensive highway transportation system. d. workers with advanced engineering skills.

16. In Porter's model, if a country has both _____and_____ production factors, it is likely to serve an industry well by spawning strong home-country competitors that can also be successful global competitors. a. basic; advanced b. advanced; generalized c. basic; generalized d. advanced; specialized

20. Which pair of industries would NOT be considered as "related and supporting" under Porter's diamond model? a. Japanese cameras and copiers b. Italian leather-processing and shoes c. U.S. computers and software d. highway systems and the supply of debt capital

28. Effectively implementing the ____international corporate-level strategy often produces higher performance than does implementing either the _______ or _________ strategies. a. multidomestic; global; transnational b. global; multidomestic; transnational c. cost leadership; differentation; focus d. transnational; multidomestic; global

33. A global strategy a. is easy to manage because of common operating decisions across borders. b. achieves efficient operations without sharing resources across country boundaries. c. increases risk because decision making is centralized at the home office. d. lacks responsiveness to local markets.

34. A global corporate-level strategy assumes a. efficiency and customization can be achieved simultaneously. b. a rise in income levels across the world. c. increasing levels of cultural differences among nations. d. more standardization of products across country markets.

36. The transnational strategy is becoming increasingly necessary to compete in international markets for all the following reasons EXCEPT a. the growing number of competitors heightens the requirements to keep costs down. b. the desire for specialized products to meet consumers' needs. c. differences in culture and institutional environments also require firms to adapt their products and approaches to local environments. d. it is easy to use.

39. The two important environmental trends that influence a firm's choice and use of international corporate-level strategies are _________ and _____ a. culture; geographic scope. b. cost; quality. c. regionalization; globalization. d. liability of foreignness; regionalization.

5. The benefits of expanding into international markets include each of the following opportunities EXCEPT a. increasing the size of the firm's potential markets. b. economies of scale and learning. c. location advantages. d. favorable tax concessions and economic incentives by home-country governments.

51. Which of the following is NOT a typical disadvantage of licensing? a. little control over the marketing of the products b. licensees may develop a competitive product after the license expires c. lower potential returns than the use of exporting or strategic alliances d. incompatibility of the licensing partners

52. All of the following are reasons why firms use international strategic alliances EXCEPT a. sharing of risks and resources. b. alliances facilitate the development of new capabilities. c. learning new competencies particularly those related to technology. d. strategic alliances are easy to manage.

55. Which of the following is NOT a disadvantage of international acquisitions? a. They are very expensive and often require debt financing. b. The acquiring firm has to deal with the regulatory requirements of a host country. c. Merging the acquired and acquiring firm is difficult. d. It is the slowest way to enter a new market.

62. A nation's competitiveness depends on the capacity of its industries to ____ and thereby maintain its competitive advantage. a. diversify internationally b. have access to critical resources c. protect its proprietary capabilities d. innovate

64. Bunyan Heavy Equipment, a U.S. firm, is investigating expanding into Russia using a greenfield venture. The committee researching this project has delivered a negative report. The MAIN concern of the committee is probably a. loss of intellectual property due to Russian piracy. b. the fluctuation in the value of the ruble. c. the numerous and conflicting legal authorities in Russia. d. Russia's recent actions to gain state control of private firms' assets.

7. Which of the following is NOT a factor pressuring companies for local responsiveness? a. differences in employment laws b. customization due to cultural differences c. government pressure for firms to use local sources for procurement d. availability of low labor costs

A competitive advantage that is developed through a cooperative strategy is called a collaborative or a ____ advantage. a. economic b. collusive c. alliance d. relational

A relatively young firm has developed a method of transferring photographic images of surface textures onto any type of hard surface. This potentially has a huge market in the home-decorating field as well as any hard surface that is typically painted, such as car bodies. The type of alliance partner this firm would be searching for would be one with a. low-cost labor production facilities in another country. b. similar products who could help the firm establish economies of scale. c. access to franchises in new markets. d. excess resources for investing.

A strategy in which firms work together to achieve a shared objective is a a. functional-level strategy. b. business-level strategy. c. corporate-level strategy. d. cooperative strategy.

Amylin Pharmaceuticals has an alliance with Eli Lilly & Co. to produce diabetes drugs. Lilly, however, recently signed an alliance agreement with another company to also produce diabetes drugs. As a result, Amylin sued Lilly for breech of the alliance agreement. Which of the following risks of cooperative strategies discussed in the chapter is most likely occurring here? a. Having a true perception of the partner's trustworthiness. b. Failing to make available to its partners the resources and capabilities that it committed to the cooperative strategy. c. The partner misrepresenting competencies it can bring to the partnership. d. Opportunistic behavior.

Firms participate in strategic alliances for all the following reasons EXCEPT to a. create value that they could not develop by acting independently. b. enter competitive markets more quickly. c. gain access to resources. d. retain tight control over intangible core competencies.

FrameCo, a maker of commercial greenhouses, has just extricated itself from a failing cooperative alliance with another firm. The expected synergies never were achieved, and FrameCo lost most of its investment. The top management of FrameCo should a. avoid future cooperative alliances because they lack the skills needed to manage them successfully. b. enter into future cooperative alliances only if the alliance is closely monitored by a third party to prevent opportunistic behavior by the alliance partner. c. realize that most cooperative alliances fail and that it should ally itself only with an experienced alliance partner in the future. d. internalize the knowledge about the successes and failures of this alliance so FrameCo can learn from the experience.

Greentech, Inc., is a bioengineering firm specializing in food crops. It is considering a cooperative alliance with an Asian agribusiness firm, AsiaFoods, to jointly produce improved crops for the Asian market. The risks that Greentech should consider before entering this alliance include all of the following EXCEPT: a. Has AsiaFoods accurately represented its competencies? b. Will AsiaFoods make alliance-specific investments? c. Can Greentech expect opportunistic behavior from AsiaFoods? d. Will Greentech be able to use a cost-minimization management strategy in the AsiaFoods alliance?

Hewlett-Packard licenses some of its intellectual property through strategic alliances. Which of the following is correct about this relationship? a. This is a joint venture because in licensing arrangements, a new company is created. b. This is an equity strategic alliance because licensing does not involve the creation of a new company, but does involve an equity commitment. c. The firms risk charges of collusion because most licensing relationships between competitors involve explicit collusion. d. This is a non-equity strategic alliance with Hewlett-Packard leveraging its unique capabilities.

In practice, the cost minimization strategy can be more expensive than the opportunity maximization strategy. Which of the following is a way in which the cost minimization strategy is less expensive than the opportunity minimization strategy? a. the loss of unexpected opportunities b. the cost of extensive monitoring mechanisms c. the costs of writing detailed contracts d. the prevention of opportunistic behavior by the partner(s)

McDonald's, Hilton International, and Subway all heavily rely on the ____ strategy. a. transnational b. network cooperative c. cross-border alliances d. franchising cooperative

Meredith Inc. is a manufacturer of art supplies. The company has announced plans to enter into an equity strategic alliance with JaZz Paper to develop a line of specialty papers for use with a line of specialty paints Meredith manufactures. Which of the following would be the accurate interpretation of this announcement? a. Meredith will own a majority equity stake in the new venture. b. JaZz will own a majority equity stake in the new venture. c. Meredith or JaZz will own an equal equity stake in the new venture. d. Either Meredith or JaZz will own a majority equity stake, but we do not know which one based on the announcement.

The alliance between Nokia and Microsoft (Chapter 9 Strategic Focus) calls for Nokia to transition its smartphone portfolio to Microsoft's Windows phone platform. This is an example of using an alliance in a ____________ to speed up development of new products and services. a. slow-cycle market b. medium-cycle market c. standard-cycle market d. fast-cycle market

The global airline industry is one in which a. national political interests prevent airlines from making international alliances. b. the fast-cycle nature of the industry mandates heavy use of alliances. c. most alliances tend to be vertical complementary. d. alliance versus alliance competition dominates firm versus firm competition.

The opportunity maximization approach is more difficult to establish in international relationships than in domestic relationships because of differences in all EXCEPT a. laws. b. culture. c. trade policies. d. technology.

The risks of being accused of collusion are MOST likely under what type of alliance? a. equity-based vertical complementary alliance. b. equity-based horizontal complementary alliance c. nonequity-based vertical complementary alliance. d. nonequity-based horizontal complementary alliance.

The use of strategic alliances a. is unlikely to yield success if partnering firms are headquartered in the same country. b. may be too restrictive to facilitate entry into new markets. c. usually increases the investment necessary to introduce new products. d. is more frequent than other types of cooperative strategies.

When using cooperative strategies, a firms most frequently develop strategic alliances that a. enhance the firm's reputation in the marketplace. b. are long-lived. c. will reduce the firm's political risk. d. create a competitive advantage.

Which of the following statements is FALSE? a. Franchising is most appropriate in fragmented industries. b. Franchising provides corporate growth with less risk than do mergers and acquisitions. c. Successful franchising allows transfer of knowledge and skills from the franchisor to the franchisee. d. Franchising agreements require more trust between firms than do other cooperative strategies.

Why are alliances in the airline industry unstable? a. Unstable industries make for unstable alliances. b. The potential for firms to take opportunistic actions is too widespread. c. The industry is declining and profits are not sufficient to divide among alliance partners. d. The alliances require cooperation among firms that must also compete with one another.

____ are LEAST likely to involve potential or current competitors. a. Mutual forbearance strategies b. Tacit collusion strategies c. Horizontal complementary strategic alliances d. Vertical complementary strategic alliances

More and more firms believe that ethics training and an ethics culture A) are socially irresponsible. B) are admirable but damage a firm's competitive positioning. C) are costly and provide no practical benefit to the company. D) create strategic advantage. E) can tarnish the reputation of a firm.

D) create strategic advantage.

Simply having a code of ethics A) will ensure ethical business behavior. B) eliminates the need for periodic ethics workshops. C) is all that is necessary to sensitize people to workplace circumstances in which ethics issues may arise. D) is insufficient to guarantee that employees behave in an ethical manner. E) secures an ethics culture in the workplace.

D) is insufficient to guarantee that employees behave in an ethical manner.

Japan is suffering from a decline in overall economic production A) due to its growing population. B) related to the declining age of its workforce. C) because of a surge in the number of its taxpaying workers. D) since worker productivity increases are not able to offset declines in number of workers. E) because more and more women are working outside the home.

D) since worker productivity increases are not able to offset declines in number of workers.

Special natural environment issues include all of the following EXCEPT A) ozone depletion. B) destruction of animal habitats. C) pollution control. D) spreading computer viruses. E) developing biodegradable products and packages.

D) spreading computer viruses.

20. Which of the following types of international firms are most likely to benefit from a global strategy as opposed to a multidomestic strategy? A. Firms that compete in industries in which consumer preferences vary substantially in each country. B. Firms in industries that are expanding very rapidly. C. Firms in industries that have value added by sales and marketing departments. D. Firms in industries that have much value added in research and design or manufacturing.

D. Firms in industries that have much value added in research and design or manufacturing

14. Which one of the following is one of Theodore Levitt's assumptions supporting a pure global strategy? A. Consumers are willing to pay more for specific product features. B. Customer needs and interests are becoming more dissimilar. C. If the world markets are treated as heterogeneous, substantial economies of scale are easily achieved. D. MNCs can compete with aggressive pricing on low cost products that meet the common needs of global consumers.

D. MNCs can compete with aggressive pricing on low cost products that meet the common needs of global consumers.

22. Firms following a global strategy strive to offer __________ products and services as well as locate manufacturing, R&D, and marketing activities in __________ locations. A. a wide variety of; several B. a wide variety of; few C. standardized; several D. standardized; few

D. standardized; few

25. All of the following are risks associated with a global strategy EXCEPT A. a firm with only one manufacturing location must export its product—some of which may be a great distance from the operation. B. the geographic concentration of any activity may also tend to isolate that activity from the targeted markets. C. concentrating an activity in a single location makes the rest of the firm dependent on that location. D. the pressures for local adaptation may elevate the firm's cost structure.

D. the pressures for local adaptation may elevate the firm's cost structure.

Ethics training programs should contain which of the following? A) Messages from the CEO or business owner emphasizing ethical business practices B) The development and discussion of codes of ethics C) Procedures for discussing unethical behavior D) Procedures for reporting unethical behavior E) All of the above

E) All of the above

Managers and employees today must be careful not to ignore, conceal, or disregard a pollution problem or they could A) be fired. B) be demoted. C) be held indirectly responsible for their firm's pollution. D) have their firm turn on them in a quest for leniency. E) All of the above

E) All of the above

Which of the following is NOT a way that companies can help create an ethical culture in their organization? A) Outlining ethical expectations B) Giving examples of ethical situations that commonly occur in their businesses C) Providing code-of-conduct manuals D) Creating interactive exercises that pose hypothetical ethical dilemmas E) Discouraging whistle-blowing

E) Discouraging whistle-blowing

Which of the following business actions is considered to be unethical? A) Having satisfactory product or service safety B) Selling products in foreign markets C) Providing equal opportunities for women and minorities D) Filing expense accounts E) Misleading labeling

E) Misleading labeling

According to a study by the Institute of Business Ethics, companies that do not display ethical conduct consistently outperform companies that show a clear commitment to ethical conduct.

false

CEOs and business owners should delegate the responsibility for ensuring that high ethical principles are espoused and practiced in an organization.

false

California is the nation's second-largest producer of solar energy.

false

Having a code of ethics ensures ethical business behavior.

false

History has proven that the lower the trust and confidence of people in the ethics of an institution or society, the greater its economic strength.

false

ISO, the world's largest developer of sustainability standards, is legally authorized to enforce their standards.

false

In Europe, romantic relationships at work are frowned upon, and most firms have policies prohibiting the practice.

false

In order to be considered bribery, the gift offered must be either money or a physical item.

false

Like the United States, Japan is eager to rely on large-scale immigration to bolster its workforce.

false

Monitoring departmental and corporate performance regarding ethical issues can cause firms to misalign ethical and strategic decision making.

false

Most firms warn managers and employees that reporting an ethical violation by others, also known as whistle-blowing, could cause them to be discharged.

false

Moving jobs overseas is not considered to be an unethical business practice.

false

Social responsibility refers to actions an organization takes that are legally required to protect or enhance the well-being of living things.

false

Some strategists agree with Ralph Nader, who asserts that organizations have no obligation to do any more for society than is legally required.

false

The percentage of persons age 65 or older will reach 20 percent in the United States in 2018.

false

While it is socially responsible to be a good steward of the natural environment, doing so will not enable a firm to gain competitive advantage.

false

Workplace romance and sexual harassment are synonymous.

false

A rising tide of consciousness about the importance of business ethics is sweeping the United States and the rest of the world.

true

Business ethics can be defined as principles of conduct within organizations that guide decision making and behavior.

true

Companies such as Walmart are now monitoring not only the prices its vendors offer for products, but also how those products are made in terms of environmental practices, as well as safety and infrastructure soundness.

true

European firms are increasingly adopting explicit, American-style sexual harassment laws.

true

In 2012, GDF Suez, Marquard & Bahls, and RWE were the three most admired socially responsible companies according to Fortune magazine.

true

Integrating ethical decision making into the performance appraisal process is one way that firms can align ethical and strategic decision making.

true

Japan is providing incentives for its elderly to work until ages 65-75.

true

Orphan drugs offer pharmaceutical companies no economic incentive for profitable development and distribution.

true

Ralph Nader believes that big firms like ExxonMobil, which has more assets than most countries, have an obligation to help society cure its many ills.

true

Some of the largest payouts for class-action legal fraud suits ever were against Enron ($7.16 billion) and WorldCom ($6.16 billion).

true

Some ways in which firm's are working to be more environmentally responsible include using solar power and selling organic and environmentally friendly products.

true

Sustainability reports reveal how a firm's operations impact the natural environment.

true

The EEOC recovers about $500 million on behalf of office romance victims.

true

The ISO 14000 family of standards concerns the extent to which a firm minimizes harmful effects on the environment caused by its activities and continually monitors and improves its own environmental performance.

true

Unlike the USA, Japan has no law against discrimination based on age.

true

Whistle-blowing refers to policies that require employees to report any unethical violations they discover or see in the firm.

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