STRT 4501 - Ch. 10
The process of closer integration and exchange between different countries and peoples worldwide is A) diversification. B) globalization. C) standardization. D) modification.
B
Because keeping cost low is critical to IKEA's value innovation, it switched from a(n) A) transnational strategy to a multidomestic strategy. B) transnational strategy to a global-standardization strategy. C) international strategy to a multidomestic strategy. D) international strategy to a global-standardization strategy.
D
Carpatia and Novenica are neighboring countries with strong economic disparities. However, both the countries share a common national language and the same political ideologies. The relationship between these two countries will most likely affect the trade of A) food processed in Novenica. B) movies and TV shows produced in Carpatia. C) iron ore extracted in Novenica. D) luxury items manufactured in Carpatia.
D
During the period of Globalization 1.0, the mode of entry into foreign markets primarily involved A) exporting goods. B) making foreign direct investments. C) making foreign institutional investments. D) licensing production and distribution.
A
Emirates, Etihad Airlines, and Qatar Airways are a threat to U.S. legacy carriers because they offer A) higher quality for lower costs for international routes. B) higher quality for similar costs for U.S. domestic routes. C) similar quality for lower costs for international routes. D) similar quality for lower costs for U.S. domestic routes.
A
Blush Bashful Cosmetics Inc. operates in 20 countries around the globe. The company clearly understands that the skin and hair type of customers varies from one country to another. Consequently, its products are customized to suit local needs and preferences of customers, even though the costs incurred while producing these products are exceptionally high. This strategy helps the company behave as a local firm in a foreign market. In this scenario, which of the following strategies does Blush Bashful most likely implement? A) a multidomestic strategy B) a local-as-global strategy C) a transnational strategy D) a sole provider strategy
A
Atangadi is a strategist who wants to decide on the appropriate strategy to help his firm "go global." Which of the following should he consider while choosing his strategy? A) He must be aware of the fact that despite globalization and the emergence of the internet, firm geographic location has actually maintained its importance. B) He should rely on his firm's business-level strategy as a clue to possible strategies pursued globally. C) He should remember that he has only one framework at his disposal to make global strategy decisions. D) He must remember that higher levels of control and a lower likelihood of any loss in reputation go along with less investment-intensive foreign entry modes.
A
Bejukistan Laboratories Inc. has a national competitive advantage in the pharmaceutical industry. This means that the country A) is a world leader in the pharmaceutical industry. B) has nationalized the pharmaceutical industry. C) has low levels of competition, providing other multinational companies with an opportunity to take over the pharmaceutical industry. D) is a potential foreign market for multinational pharmaceutical companies to sell their products.
A
Heaven Freezes Over (HFO) is a company that makes frozen lunch and dinner entrées. Based on what you know about companies like Nestlé, what action should HFO take as it strives to become multinational? A) Pursue a multidomestic strategy, customizing product offerings to suit local preferences. B) Attempt an international strategy, controlling costs and taking advantage of economies of scale by selling the same (or very similar) products around the globe. C) Try a global-standardization strategy, which creates standardized products and competes mainly on price. D) Consider a transnational strategy by creating a blue ocean market.
A
Maddox Bauxite Extraction Inc. has decided to enter into a foreign market by setting up its own production facilities and distribution channels from scratch. This will give it strong control over all its business activities. Which of these foreign entry modes will Maddox most likely choose? A) greenfield operation B) export C) joint venture D) acquisition
A
Makes Scents Inc., a company that manufactures and sells premium perfumes, is pursuing an international strategy. PriceSmasher Inc., a supermarket chain, follows a multidomestic strategy. Which of the following statements is most likely true of this scenario? A) Makes Scents Inc. will sell the same products in both domestic and foreign markets, whereas PriceSmasher Inc. will customize its product offerings to suit local requirements. B) Makes Scents Inc. will pursue a differentiation strategy at the business level, whereas PriceSmasher Inc. will pursue a cost-leadership strategy at the business level. C) Makes Scents Inc. will be better protected from exchange rate fluctuations when compared to PriceSmasher Inc. D) Makes Scents Inc. will not be able to use its home-based core competencies in foreign markets as much as PriceSmasher Inc. will.
A
Myriad Inc., a well-established and reputed multinational enterprise (MNE), is headquartered in a highly developed economy. It wants to start its operations in New Denistan, considered one of the less-developed nations in the world. How will this strategic move most likely affect Myriad Inc.? A) It will benefit from economic arbitrage. B) Myriad will use its competitive advantage from economies of standardization. C) Myriad will replicate its existing business model easily. D) It will be able to easily sell products for which demand varies by income.
A
Unilever's new-concept center is situated in downtown Shanghai, China, attracting hundreds of eager volunteers to test the firm's latest product innovations on-site while Unilever researchers monitor consumer reactions. In this example, Unilever is trying to reap the benefits of A) location economies. B) economies of scope. C) learning races. D) network effects.
A
Which of the following factors is the most important determinant of economic distance? A) the wealth and per capita income of consumers B) the ethnicity and religion of consumers C) the presence of legal institutions in a country D) the topography of a country
A
Which of the following has been a key driver for firms to expand globally during the Globalization 3.0 stage? A) benefits from lower labor costs in manufacturing and services B) free use of formerly protected intellectual property C) increasing trade barriers that protect businesses D) exporting newly available raw materials, such as rubber and coal
A
Which of the following is most likely an accurate statement? A) The multinational enterprise Starship benefited from advances in communications technology. B) The multinational enterprise United Allies was hindered by falling investment barriers. C) The multinational enterprise MegaStore benefited from rising trade barriers. D) The multinational enterprise Global Partners was hindered by reduced transportation costs.
A
Worldwide Minerals Inc. wants to expand into the international market. It does not want to spend a very large amount of money for this process. However, Worldwide Minerals wants to maintain some control in the foreign market. Which of the following would be the best entry mode for this firm? A) joint ventures B) acquisitions C) greenfield operations D) exports
A
A greater cultural distance between two trading countries A) increases linguistic similarities between the two countries. B) increases the liability of foreignness. C) reduces the uncertainty of doing business. D) reduces the transaction costs associated with business.
B
A firm is said to be pursuing a polycentric innovation strategy when A) its research facility is situated in the headquarters and all other business activities are located around the world. B) it draws from multiple, equally important research facilities located throughout the world. C) it restricts its innovation to Western economies and production to developing markets. D) its knowledge flow takes a one-way path—from its headquarters to the subsidiaries.
B
A trend observed during the Globalization 3.0 stage involves A) countries around the globe becoming more self-sufficient and independent. B) multinational companies organizing as global-collaboration networks. C) privately owned firms getting nationalized. D) world's market economies becoming less integrated.
B
Badlands Corp., a tool and die maker, is considering where to locate its new factories and offices. According to the CAGE distance model, which of these countries is statistically most attractive to Badlands? A) one that is much poorer than the country where Badlands has its headquarters B) one that is in the same trading bloc as Badlands' home country C) a country that does not share the same currency as Badlands' home country D) the country that is the greatest physical distance from existing Badlands facilities
B
Culinary Solutions Inc. manufactures cooking and baking equipment and has its base in the country of Vandevar. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself in the country of Balalaika, and uses its low-cost strategy to do so. However, due to the additional costs associated with training, coordinating across geographic distances, and other costs associated with doing business in an unfamiliar cultural and economic environment, Culinary Solutions Inc. incurs huge financial losses in Balalaika. In this scenario, Culinary Solutions Inc.'s failure to establish itself successfully in Balalaika occurs most likely because A) it overestimated its need to protect its intellectual property. B) it underestimated its liability of foreignness when entering the Balalaika market. C) it underestimated its dwindling reputation before it enters the Balalaika market. D) it overestimates the geographic and cultural distance between Vandevar and Balalaika.
B
Downshift Autos Inc. has shifted its research and development unit from its home country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advanced automotive industry in Germany. In this scenario, Downshift Autos Inc. is reaping the benefits of A) economies of scope. B) location economies. C) resource immobility. D) resource ambiguity.
B
For which of the following companies will geographic distance be the most relevant factor in deciding whether to trade with a target country? A) a firm that manufactures cell phone batteries B) a firm that extracts and exports iron ore C) a firm that produces movies D) a firm that sells wristwatches
B
Fun Foods Inc. is a snack manufacturer that wants to expand globally. Few people abroad are familiar with Fun Foods snacks. The countries into which the company wants to expand require a high degree of local responsiveness when it comes to food, and the citizens of those countries already spend plenty of money on snacks. Which action should the leaders of Fun Foods take? A) Achieve economies of scale by using the global-standardization approach. B) Pursue a multidomestic strategy that includes new "local" brands. C) Keep costs low with undifferentiated product in the international strategy. D) Appease pressures for cost reductions by following the transnational approach.
B
How will an increase in coordinated economic and political integration between countries affect the world economy? A) The world's market economies will become self-sufficient and independent. B) There will be gains in social welfare and living standards across the globe. C) The cost of labor will further decline in emerging economies. D) There will be a movement away from global collaboration networks among multinational enterprises (MNEs).
B
Janessa Inc., a reputed brand for fine art supplies, is implementing an international strategy. Slalom Corp., a maker of mini computer tablets, is pursuing a global-standardization strategy. Which of the following statements most likely holds true in this scenario? A) While Janessa Inc.'s competitive advantage lies in its high local responsiveness, Slalom Corp. will lack such capabilities. B) Slalom Corp. focuses more on cost-reductions when compared to Janessa Inc. C) Slalom's business functions are highly centralized, whereas Janessa. organizes its activities worldwide. D) Slalom is exposed to greater risks of exchange rate fluctuations.
B
Midas Touch, a venture capital firm, has the opportunity to invest in one of two firms that are in the process of globalizing. Coolco, an air-conditioner manufacturer, faces intense pressure from its home market. Barker, a dog-toy manufacturer, has encountered little competition in its country of origin. In which company should Midas Touch invest? A) Coolco, because air conditioners cost more to ship than dog toys do B) Coolco, because firms that face stiff competition at home tend to do better abroad C) Barker, because firms that face little or no competition at home tend to do better abroad D) Barker, because dog toys cost less to ship than air conditioners do
B
Sky Pioneers Inc. manufactures airplane parts. It wants to globalize and is willing to spend a considerable amount to protect its intellectual property. Which of these business ventures makes the most sense for Sky Pioneers? A) licensing some of its newest designs to overseas competitors B) acquiring an airplane-parts manufacturer in another country C) beginning a brownfield project in its home country D) exporting airplane parts to many other countries
B
Sven is a senior vice president at a textile manufacturer that wants to move from being 20 percent globalized to 70 percent globalized in the next 10 years. What are some possible drawbacks that Sven's company must anticipate? A) None. All political and economic factors point to the rise of globalization. B) Rising wages may cancel out cost savings of access to low-cost input factors. C) Governments may lower barriers to international trade. D) Improved communication technology may lead to longer production cycles.
B
Under the CAGE distance framework, the administrative and political distance between two countries primarily increases with A) differences in climates and time zones. B) the absence of a trading bloc. C) physical remoteness. D) the lack of connective ethnic and social networks.
B
WackyPop Inc. produces an inexpensive microwave popcorn that is well tailored for the tastes of U.S. consumers. However, it has failed to satisfy the consumer preferences of its host country, Japan. Which of the following categories has WackyPop performed poorly in? A) cost reduction B) local responsiveness C) global standardization D) transnational strategy
B
Which of the following modes of entering a foreign market allows for the lowest level of control? A) greenfield ventures B) exporting C) joint ventures D) acquisitions
B
Which of the following statements accurately explains the primary reason behind Walmart's failure in Germany? A) inability to implement its trademark focused-differentiation strategy in the German market B) significant differences between its U.S. personnel policies and Germany's culture C) Germany's unfamiliarity with retail discount powerhouses D) Metro's hostile takeover of Walmart in Germany
B
Which of the following types of organizations comparatively requires the lowest levels of investment and control? A) joint ventures B) franchising C) acquisition D) greenfield operations
B
A firm pursuing a transnational strategy would believe that A) key business functions should be located in its home country headquarters. B) local-responsiveness is more important than cost-reductions for competitive advantage. C) best practices, ideas, and innovations should be diffused throughout the world. D) the majority of the value creation should take place in the home country.
C
A payroll company in the nation of Antono is seeking to expand beyond its borders while limiting administrative and political distance in the new country. Which potential site is the best one for this type of expansion? A) one that considers payroll companies essential to national security B) one that is outside of any trading blocs that Antono participates in C) one that used to have a colonizer or colonized relationship with Antono D) in a country that has extensive tariffs and trade quotas to protect businesses
C
Calabash Inc. is located in the nation of West Fenwick near the nation of East Fenwick. Calabash is considering expanding into East Fenwick. Both countries have similar consumer incomes and knowledge bases and share a common language. Also, the transportation networks between the countries are strong. Even so, the two nations have a long-standing dispute concerning the control of an area of land along their common border. Currently, West Fenwick rules this land. Which of the following would most likely prevent Calabash from expanding into East Fenwick? A) geographic distance B) economic distance C) political distance D) cultural distance
C
How did Canada, Mexico, and the United States reduce the administrative and political distance between them? A) by adopting similar national cultures B) by lowering the disparities between their per capita incomes C) by establishing the North American Free Trade Agreement (NAFTA) D) by reducing their linguistic differences
C
Milk Benefits Inc., a company popular for its dairy products, successfully follows a multi-domestic strategy. Andrew Products Inc., a large conglomerate, pursues a transnational strategy. Which of the following statements is most likely true of this scenario? A) While Andrew's competitive advantage will lie in its high local responsiveness, Milk Benefits Inc. will lack such competencies. B) Andrew Products Inc. will face greater pressure for cost reductions than Milk Benefits Inc. due to strategy choice. C) Both Milk Benefits Inc. and Andrew Products Inc. will have to duplicate key business functions in multiple host countries. D) While Milk Benefits Inc. will require a global matrix structure, Andrew Products Inc. will require a traditional headquarters model.
C
Multinational enterprises (MNEs) like Harley-Davidson, Rolex, and Starbucks are said to be following an international strategy because A) they pursue a cost leadership strategy in their respective industries. B) they are highly responsive to the local needs and preferences of customers in the host countries. C) they offer the same products or services in all their stores throughout the world. D) they attempt to combine benefits of localization and standardization strategies simultaneously.
C
New Zoya is a country of English-speaking people and has a very profitable economy. Which of the following countries is most likely to be the closest to New Zoya in terms of cultural distance? A) Danver, which has the same wealth and per capita income as New Zoya B) Sulfura, which has a very profitable economy and where people speak Sulfuran C) Valyria, where people speak English and have a low standard of living D) Novalandia, which is located close to New Zoya and is easily accessible by road
C
Save On Everything Inc., a supermarket chain, is implementing a multidomestic strategy. Solar Future Inc., a company that manufactures solar panels for commercial and domestic purposes, is pursuing a global-standardization strategy. How will the two companies most likely differ from each other? A) Save On Everything Inc. will focus more on cost-reduction than Solar Future Inc. B) Save On Everything Inc. will have its business functions spread across the world; Solar Future Inc.'s business functions will be highly centralized. C) Unlike Solar Future Inc., Save On Everything Inc. will be able to pursue a differentiation strategy at the business level. D) Unlike Solar Future Inc., Save On Everything Inc. will be able to reap significant economies of scale and location economies.
C
Vassar Systems Inc. wants to globally expand its market. It intends to ensure that its mode of foreign entry allows it to have strong control over its operations and protect its intellectual property, though that may mean investing a significant amount of capital and other resources. In this scenario, which of the following foreign entry modes would best suit Vassar Systems? A) exporting B) franchise agreement C) acquisition D) licensing
C
Vermilion Inc., a manufacturer of high-technology medical devices, has its product development centers located in the United States and South Korea. The manufacturing units are located in China and the Philippines to benefit from low-labor costs and access to original equipment manufacturers. This allows the company to competitively price its devices. Also, the various phone models sold by the company are uniform in all the foreign markets it operates in. In this scenario, which of the following strategies does Vermilion most likely pursue? A) international strategy B) multidomestic strategy C) global-standardization strategy D) transnational strategy
C
Which of the following countries has a high geographic distance but a low cultural distance from the United States? A) Canada B) Mexico C) Australia D) France
C
Which of the following foreign entry modes primarily involves producing goods in one country to sell in another? A) greenfield operations B) brownfield operations C) exporting D) crowdsourcing
C
Which of the following is a drawback of pursuing a transnational strategy? A) It creates bottlenecks for global learning. B) It exposes a firm to diseconomies of scale and location. C) It requires a global matrix structure, which is difficult to implement. D) It involves locating all key business activities in the home country headquarters
C
Which of the following is an observable feature in the Globalization 3.0 stage? A) Knowledge flow between the local replicas of the multinational enterprises and their U.S. headquarters is limited. B) Only sales and distribution functions of a multinational enterprise are located in a few key countries. C) Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world. D) The typical firm has reorganized from a global enterprise with different centers of expertise to a multinational company with self-contained operations in a few selected countries.
C
Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode? A) They are easy to initiate and terminate. B) They require low amounts of investments in terms of capital. C) They reduce a firm's exposure to loss of reputation. D) They are based on contracts rather than ownership.
C
Which of the following statements best explains why Walmart is finding it difficult to replicate its existing business model in India? A) because of the political differences between India and the United States B) because NAFTA prohibits Walmart from investing in countries outside North America C) because of the large economic distance between the United States and India D) because Indian consumers have not accepted Walmart's low-cost strategy
C
Which of the following statements is true with regard to international trade between countries? A) Greater cultural distance between the home and host countries decreases the liability of foreignness to multinational companies. B) Colony-colonizer relationships have a strong negative effect on bilateral trade between countries. C) Wealthy countries engage in relatively more cross-border trade than poorer ones. D) Political integrations decrease the expected trade intensity between two countries.
C
Amber is a strategist for a furniture manufacturer that has a large presence in the United States and Canada. By checking economic and political reports, she knows that trade and investment barriers are falling among wealthy nations. She also knows that the price of oil has dropped 50 percent in the previous two years. Based on this information, what action should Amber and her company take? A) Amber and her employer should wait out this period of uncertainty and take action when market forces are more stable. B) They should anticipate market corrections because investment barriers and the price of oil inevitably rise. C) Amber and her employer need to prepare for the cost of doing business to increase. D) They should seriously consider globalization because of the falling trade and investment barriers.
D
Devonshire Ventures is a large snack-food conglomerate that operates in more than 50 countries and employs more than 80,000 people across the world. It operates through multiple regional product divisions, which tend to function as autonomous profit-and-loss centers. This allows the company to reap significant economies of scale. Though each division acts as an autonomous firm with its individual regional leaders, frequent sharing of knowledge between the divisions allows for global learning. These factors help the company reconcile product and service differentiations at low cost. Which of the following strategies does Devonshire most likely use? A) an international strategy B) a focused-differentiation strategy C) a multidomestic strategy D) a transnational strategy
D
Esther is the CEO of a line of accessories and cosmetics, Starring Me! Inc., which has retail stores and production units in five countries. In this scenario, Starring Me! Inc. is most likely a A) nonprofit organization. B) nationalized firm. C) sole proprietorship. D) multinational enterprise.
D
European aircraft maker Airbus invested $600 million in Mobile, Alabama, to build jetliners. Which of the following statements best explains why it used this strategy? A) to take advantage of the high labor costs in the southern United States B) to take advantage of the high cost of living in the southern United States C) to take advantage of the low impact of globalization in the United States D) to take advantage of lower taxes in the southern United States
D
Frederica, the chief financial officer at a moped manufacturer in Canada, wants to build new plants in Canada rather than overseas. Which of these points should she make as she argues her case to the board of directors? A) "As the rest of the world globalizes, we will lead the way in strengthening our home nation." B) "Keeping our factories in Canada means facing up to the liability of foreignness." C) "Canada's wages and benefits are so low compared with the rest of the world that it makes the most sense to build factories here." D) "It will be much more difficult to protect our intellectual property if we build factories overseas."
D
How has China been affected by its one-child-per-family policy and appreciation of its currency? A) The purchasing power of its workforce has declined. B) The government no longer cares about capturing more of the value added. C) The standard of living within the economy has become lower. D) The country's advantage in low-cost manufacturing is now reduced.
D
Managers at Durkmunder, a firm in West Feenistan, want to make their company a global leader in business process outsourcing (BPO). What should the Durkmunder managers look for as they decide where to locate their BPO facilities? A) large, undeveloped plots of land for greenfield projects B) plentiful natural resources C) many uneducated workers who are highly trainable D) an abundance of well-educated English speakers
D
Planet Resource Inc. is a global internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries it serves. Planet Resource is most likely doing this to A) reduce its geographical distance from the other countries. B) increase its administrative distance from the other countries. C) increase its economic distance from the other countries. D) reduce its cultural distance from the other countries.
D
Screaming Eagle, a luxury motorcycle company, sells the same motorcycles and offers the same superior services in both its home country and foreign markets. The market it operates in faces low pressures for both local responsiveness and cost reductions. Which of the following strategies within the integration-responsiveness framework does Screaming Eagle most likely pursue? A) a multidomestic strategy B) a transnational strategy C) a global-standardization strategy D) an international strategy
D
The German multimedia conglomerate Bertelsmann operates in more than 60 countries throughout the world and owns many regional leaders in their specific product categories, including Random House Publishing in the United States. Bertelsmann operates its more than 500 regional media divisions as more or less autonomous profit-and-loss centers, but it attempts to share best practices across units. Global learning and human resource strategies for executives are coordinated at the network level. Bertelsmann is following a(n) A) multidomestic strategy. B) international strategy. C) global-standardization strategy. D) transnational strategy.
D
The administrative and political distance between two trading countries decreases when A) there are Foreign Direct Investment (FDI) restrictions in the host country. B) the host country lacks an independent central bank. C) tariffs and trade quotas exist in the host country. D) there is a well-functioning capital market in the host country.
D
To keep track of the latest developments in computing, Lenovo's research centers are located in China, the United States, and Japan. Also, to benefit from low-cost labor and reduced shipping costs, the company's manufacturing facilities are in Mexico, India, and China. Lenovo's products are the same for its domestic and foreign markets. Which strategy does Lenovo follow? A) a transnational strategy B) a multidomestic strategy C) a localization strategy D) a global-standardization strategy
D
When two neighboring, democratic countries that are part of a trading bloc follow different religions and social norms, they most likely have high ________ distance. A) political B) geographic C) administrative D) cultural
D
Which of the following describes a firm in the Globalization 1.0 stage? A) Asha Inc. had a large office in New York, which was one cog in a global network. B) Asha Inc. had a large office in New York, which functioned with other large offices in Europe and Asia. C) Asha Inc. had a base office in New York and a replica office in Amsterdam. D) Asha Inc. had a base office in New York and distributed some of its products overseas.
D
Which of the following entry modes was used extensively in Globalization 1.0 stage? A) strategic alliances B) acquisitions C) greenfield operations D) exports
D
Which of the following is a feature of the Globalization 2.0 stage? A) Huge investments in fiber-optic cable networks around the world enabled companies to operate as global-collaboration networks. B) Only sales and distribution operations took place overseas, while all the important business functions were located in the home country. C) Two-way knowledge flowed between the local subsidiaries and their U.S. headquarters. D) Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.
D
Which of the following is part of Geert Hofstede's cultural dimensions? A) short-term orientation B) groupthink C) embrace of risk taking D) power distance
D
Which of the following will most likely harm a multinational enterprise's (MNE's) reputation? A) Principal-agent problems cause an MNE to merge with another MNE. B) Increased competition causes an MNE to close a factory in a developing country. C) Wages for workers in a factory owned by an MNE increase, causing profits to decline. D) A sweatshop owned by an MNE has an explosion that kills hundreds of workers.
D
