CH 10
Which of the following is an observable feature in the Globalization 3.0 stage?
Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world.
GreenThings Inc., a company popular for its dairy products, successfully follows a multidomestic strategy. TransGold Inc., a large conglomerate, pursues a transnational strategy. Which of the following statements is most likely true of this scenario?
Both GreenThings Inc. and TransGold Inc. will have to duplicate key business functions in multiple host countries.
Food Works Inc. is a multinational fast-food chain that follows a multidomestic strategy. Which of the following statements most likely holds true for the company?
Each country unit owned by the company will tend to be highly autonomous.
Which of the following statements is true of a multidomestic strategy?
Firms frequently use a multidomestic strategy when entering host countries with large and/or idiosyncratic local markets.
Hans is a strategist who wants to decide on the appropriate strategy to help his firm "go global." Which of the following should Hans consider while choosing his strategy?
He must be aware of the fact that despite globalization and the emergence of the Internet, firm geographic location has actually maintained its importance.
Which of the following statements is true of an international strategy?
It enables firms to leverage their home-based core competencies in foreign markets.
Which of the following is a benefit of the transnational strategy?
It facilitates global learning and harnesses economies of location.
demand conditions
It increases the value of the focal firm's offering from a customer's perspective.
Which of the following is one of the features of an international strategy?
It is characterized by limited local responsiveness.
Which of the following is a drawback of pursuing a transnational strategy?
It requires a global matrix structure, which is difficult to implement.
Which of the following is a feature of the Globalization 2.0 stage?
Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.
After testing its products in foreign markets by pursuing an international strategy, GR Foods Inc. wants to expand by pursuing a multidomestic strategy. How will this most likely affect the company?
The company's exposure to exchange rate fluctuations will reduce.
How has China been affected by its one-child-per-family policy and appreciation of its currency?
The country's advantage in low-cost manufacturing has reduced.
Which of the following is a benefit of a multinational enterprise (MNE) pursuing a global-standardization strategy?
The firm reaps significant economies of scale and location economies.
Which of the following is most likely an accurate statement?
The multinational enterprise PanDigital benefited from advances in communications technology.
Which of the following is a drawback of pursuing a multidomestic strategy?
The strategy is costly and inefficient because it requires the duplication of key business functions across several countries.
How will an increase in coordinated economic and political integration between countries affect the world economy?
There will be gains in social welfare and living standards across the globe.
Which of the following is a drawback faced by multinational enterprises (MNEs) pursuing an international strategy?
They are highly affected by exchange rate fluctuations.
Stop n' Save Inc., a supermarket chain, is implementing a multidomestic strategy. SunLife Inc., a company that manufactures solar panels for commercial and domestic purposes, is pursuing a global-standardization strategy. How will the two companies most likely differ from each other?
Unlike SunLife Inc., Stop n' Save Inc. will be able to pursue a differentiation strategy at the business level.
For which of the following companies will geographic distance be the most relevant factor in deciding whether or not to trade with a target country?
a firm that extracts and exports iron ore
Opula Inc., a luxury car company, sells the same cars and offers the same superior services in both its home country and foreign markets. The market it operates in faces low pressures for both local responsiveness and cost reductions. Which of the following strategies within the integration-responsiveness framework does Opula Inc. most likely pursue?
an international strategy
A multinational enterprise (MNE) is said to be pursuing a multidomestic strategy when it
attempts to maximize local responsiveness, hoping that the host country consumers will perceive it to be a local company.
Which of the following statements best explains why Walmart is finding it difficult to replicate its existing business model in India?
because of the large economic distance between U.S. and India
Which of the following has been a key driver for firms to expand globally during the Globalization 3.0 stage?
benefits from lower labor costs in manufacturing and services
Which of the following products are generally manufactured by multinational enterprises (MNEs) pursuing a global-standardization strategy?
commodity products like computer hardware
The _____ states that geographic location alone should not lead to firm-level competitive advantage because firms are now, more than ever, able to source inputs globally.
death-of-distance hypothesis
During the period of Globalization 1.0, the mode of entry into foreign markets primarily involved
exporting goods.
Which of the following entry modes was used extensively in Globalization 1.0 stage?
exports
A greater cultural distance between two trading countries
increases the liability of foreignness.
Japanese and European engineering companies entered China to participate in building the world's largest network of high-speed trains worth billions of dollars. Companies such as Kawasaki Heavy Industries (Japan), Siemens (Germany), and Alstom (France) were joint-venture partners with domestic Chinese companies. These firms now allege that the Chinese partners built on the Japanese and European partners' advanced technology to create their own, next-generation high-speed trains. This example best highlights the _____ that firms can experience when expanding overseas.
intellectual property exposure
The risk of intellectual property appropriation increases when companies follow a multidomestic strategy because products are
manufactured locally.
A(n) _____ arises out of the combination of high pressure for local responsiveness and low pressure for cost reductions.
multidomestic strategy
Michael Porter's diamond framework is used to explain
national competitive advantage.
India has been able to carve out a competitive advantage in business process outsourcing (BPO) primarily because
of an abundance of well-educated, English-speaking young people.
Allgreva Inc. is located in Movaria near the nation of Clozame. Allgreva is considering expanding into Clozame. 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, Movaria rules this land. Which of the following would most likely prevent Allgreva from expanding into Clozame?
political distance
Which of the following is part of Geert Hofstede's cultural dimensions?
power distance
For a firm pursuing a global-standardization strategy, which of the following bases of competition becomes its primary weapon?
price
SmallWorld Inc. is a global Internet company that offers country-specific variations of its sites, keeping in mind the linguistic and religious differences between the countries. SmallWorld Inc. is most likely doing this to
reduce its cultural distance from the other countries.
Under the CAGE distance framework, the administrative and political distance between two countries primarily increases with
the absence of a trading bloc.
Which of the following factors pertaining to national competitive advantage enabled Nokia, a multinational company from Finland, to become an early leader in cell phones?
the huge demand for high-quality wireless services in Finland
European aircraft maker Airbus is investing $600 million in Mobile, Alabama, to build jetliners. Which of the following statements best explains why it is employing this strategy?
to take advantage of lower taxes in the southern United States
Which of the following globalization strategies requires managers working in multinational enterprises (MNEs) to remember to think globally, but act locally?
transnational strategy
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 attempts to share best practices across units; global learning and human resource strategies for executives are coordinated at the network level. Bertelsmann is an example of following a(n)
transnational strategy.
In which of the following situations is pursuing an international strategy advisable?
when a firm enjoys a large domestic market, strong reputation, and brand name
Which of the following strategies must a multinational enterprise (MNE) use when it wants to pursue an integration strategy at the business level by attempting to reconcile product and/or service differentiations at low cost?
a transnational strategy
A firm following a multidomestic strategy
faces a greater risk of intellectual property (IP) appropriation.
In which of the following stages of globalization did firms organize as networks to pursue a global-standardization strategy?
Globalization 3.0
Which of the following accurately describes what the integration-responsiveness framework does?
By juxtaposing the pressures a multinational company faces for cost-reductions and local-responsiveness, it devises four strategies to gain and sustain competitive advantage.
Fragra Inc., a company that manufactures and sells premium perfumes, is pursuing an international strategy. SaveMart Inc., a supermarket chain, follows a multidomestic strategy. Which of the following statements is most likely true of this scenario?
Fragra Inc. will sell the same products and services in both domestic and foreign markets, whereas SaveMarket Inc. will customize its product offerings to suit local requirements.
Plethora Inc., a well-established and reputed multinational enterprise (MNE), is headquartered in a highly developed economy. It wants to start its operations in United Bejukistan, which has been recognized as one of the less-developed nations in the world. How will this strategic move most likely affect Plethora Inc.?
It will be able to benefit from economic arbitrage.
Which of the following describes a firm in the Globalization 1.0 stage?
Robinson Inc. has a base office in New York and distributes some of its products overseas.
Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode?
They reduce a firm's exposure to loss of reputation.
Marc Works Inc., a reputed brand for fine writing instruments, is implementing an international strategy in its firms. Torque Inc., a laptop brand, is pursuing a global-standardization strategy in its firms. Which of the following statements most likely holds true in this scenario?
Torque Inc. focuses more on cost-reductions when compared to Marc Works Inc.
Fierce domestic competition in Lobekistan makes a tough environment for any motorcycle company. Success requires top-notch engineering of chassis and engines, as well as keeping costs and fuel consumption in check. As a result, Lobekistan's motorcycles have a competitive advantage in the global market. According to Porter's diamond framework, this scenario shows the influence of competitive intensity in
a focal industry.
To keep track of the latest developments in computing, Lenovo's research centers are located in China, U.S.A., and Japan. Also, to benefit from low-cost labor and reduced shipping costs, the company's manufacturing facilities are in Mexico, India, and China. Which of the following strategies would require Lenovo to organize its operations worldwide in order to develop uniform products for its domestic and foreign markets?
a global-standardization strategy
Shine Enterprises Inc. is a large financial conglomerate that operates in more than 50 countries and employs over 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 Shine Enterprises Inc. most likely use?
a transnational strategy
Octa Autos Inc. wants to globally expand its market. It intends to ensure that its mode of foreign entry allows it to have strong control over its operations and protect its intellectual property, though it may mean investing a significant amount of capital and other resources. In this scenario, which of the following foreign entry modes would best suit Octa Autos Inc.?
acquisition
Why did the American MTV network cable channel fail when pursuing a global-standardization strategy?
because cultural distance most affects products with high linguistic content
A firm pursuing a transnational strategy would believe that
best practices, ideas, and innovations should be diffused throughout the world.
Due to dense urban living conditions, hot and humid summers, and high energy costs, it is not surprising that Japanese customers want small, quiet, and energy-efficient air conditioners. Which feature of Porter's diamond framework does this scenario best exemplify?
demand conditions
For which of the following types of industries is a multidomestic strategy most common?
food industries
For which of the following products is an international strategy most suitable?
for luxury goods that can be shipped across the globe
Which of the following types of organizations comparatively requires the lowest levels of investment and control?
franchising
Some multinational enterprises (MNEs) attempt to reap significant economies of scale and location economies by pursuing an international division of labor based on wherever best-of-class capabilities reside at the lowest cost. This is known as a(n) _____ strategy.
global-standardization
Toyota is selling its hybrid Prius vehicle, built on global platforms, successfully in 80 countries. This information best supports the assumptions made under the
globalization hypothesis.
Lucar Steels Inc. has decided to enter into a foreign market by setting up its own production facilities and distribution channels from scratch. This will allow it to have strong control over all of its business activities. What is the foreign entry mode most likely opted by Lucar Steels Inc.?
greenfield operation
The global-standardization strategy arises out of the combination of
high pressure for cost reductions and low pressure for local responsiveness.
United Borova Laboratories Inc. has a national competitive advantage in the pharmaceutical industry. This means that the country
is a world leader in the pharmaceutical industry.
Silca Electronics Inc. is a consumer-electronics company based in the country of Pelo. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself successfully in the country of Zevar, 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, Silca Electronics Inc. incurs huge financial losses in Zevar. In this scenario, Silca Electronics Inc.'s failure to establish itself successfully in Zevar occurs most likely because
it underestimates its liability of foreignness when entering the Zevar market.
Global Frontier Inc. wants to expand into the international market. It does not want to spend a very large amount of money for this process. However, Global Frontier wants to maintain some control in the foreign market. Which of the following would be the best entry mode for this firm?
joint ventures
Ridemore Autos Inc. has shifted its research and development unit from its home country to Germany. This allows the company to be better informed about the latest developments in the automotive industry by tapping into the highly advanced automotive industry in Germany. In this scenario, Ridemore Autos Inc. is reaping the benefits of
location economies.
Unilever's new-concept center is situated in downtown Shanghai, China, attracting hundreds of eager volunteers to test the firm's latest product innovations on-site while Unilever researchers monitor consumer reactions. In this example, Unilever is trying to reap the benefits of
location economies.
United Nerumbia and Fernsland are two 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
luxury items manufactured in United Nerumbia.
For a multinational enterprise (MNE), applying the globalization hypothesis would mean
manufacturing products on international platforms and slightly modifying them to meet local tastes and standards.
McDonald's uses mutton instead of beef in India and offers teriyaki burgers in Japan. Which of the following strategies is the fast-food chain pursuing?
multidomestic strategy
Swiss-based Nestlé, the largest food company in the world, is well-known for customizing its product offerings to suit local preferences, tastes, and requirements. By doing this, Nestlé is pursuing a(n)
multidomestic strategy.
Toyota's global success in the 1990s and early 2000s was based to a large extent on a network of world-class suppliers in Japan. This tightly knit network allowed for fast two-way knowledge sharing—this in turn improved Toyota's quality and lowered its cost, which it leveraged into a successful blue ocean strategy at the business level. This example shows the effectiveness of
related and supporting industries/complementors.
A(n) _____ strategy arises out of the combination of high pressure for local responsiveness and high pressure for cost reductions.
transnational
Which of the following is a feature of a multinational company pursuing a global-standardization strategy?
Its business-level strategy tends to be cost-leadership.
Evara Cosmetics Inc. is a company that operates in 20 countries around the globe. The company clearly understands that the skin and hair type of customers varies from one country to another. Consequently, its products are customized to suit local needs and preferences of customers, even though the costs incurred while producing these products are exceptionally high. This strategy helps the company behave as a local firm in a foreign market. In this scenario, which of the following strategies does Evara Cosmetics Inc. most likely implement?
a multidomestic strategy
In Michael Porter's diamond framework, _____ describe a country's endowments in terms of natural, human, and other resources.
factor conditions
Jade Mobiles Inc., a cell phone manufacturing company, has its product development centers located in the U.S. and South Korea. The manufacturing units are located in China and Philippines to benefit from low-labor costs and access to original equipment manufacturers. This allows the company to competitively price its cell phones. 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 Jade Mobiles Inc. most likely pursue?
global-standardization strategy
A firm is said to be pursuing a polycentric innovation strategy when
it draws from multiple, equally important research facilities located throughout the world.
Some of the best engineering and car companies are in Germany. Thus, it can be concluded that Germany has a _____ in the automobile industry.
national competitive advantage
