Ch.11 INTB

Local Responsiveness

Companies that enter into the global marketplace typically face two forms of competitive pressure: cost reductions and _____.

Avoid customizing their products.

Companies that follow a global standardization strategy...

Fostering a multi-directional flow of skills between subsidiaries Lowering costs through location economies Differentiation of product offering to account for local differences

Companies that use a transnational strategy are trying to achieve what three things?

Entry Modes

Exporting, licensing and joint ventures with a host-country firm are examples of ______ for serving global markets.

To bring together complementary skills To facilitate entry into a foreign market To share fixed costs of developing new products

Firms engage in strategic alliances for what three reasons?

increase utilization of machines improve quality control reduce setup times

Flexible manufacturing involves a range of manufacturing technologies designed to do what three things?

It prevents competitive devaluations and brings stability to global trade. It imposes monetary discipline and curtails price inflation.

Imposing a fixed exchange rate affects countries in which two ways?

The dollar might decline too far

In 1987, the Group of Five met over concerns that ______ and the result was the creation of the Louvre Accord.

Formal division of organization into subunits Location of decision-making responsibilities within the structure Integrating mechanisms to coordinate subunit activities

Organizational structure incorporates what three things?

Location economies Learning effects Economies of scale

Pressures for local responsiveness can impact a company's strategy by decreasing or eliminating the full benefits from what three things?

Reduced warranty costs Lower re-work and scrap costs Increased productivity

Select the three methods by which improved quality control can reduce costs.

Lower production costs Make product more attractive to consumer

Select two ways a firm can create more value.

To support the stability of exchange rates around their current level by intervening when necessary.

The Louvre Accord resulted in an agreement

Efficency Frontier

The ______ is the name given to all of the different positions a firm can adopt regarding adding value and lowering the cost of a product.

International Monetary System

The ______ refers to the institutional arrangements that govern exchange rates.

The income residents earn from exports equals the money its residents pay to other countries for imports.

The balance of trade is the difference between the monetary value of a nation's exports and imports over a certain period. What occurs when a balance-of-trade equilibrium exists?

US government officials "talking down" the dollar Increasing US budget deficits Continued growth in the US trade deficit

The dollar became less attractive to foreign investments in 2002 for what three reasons?

Exchange rates

The international monetary system establishes the rules and regulations that govern ______.

Made international business planning difficult Added risk to exporting and importing

The unpredictability of exchange rate movements in the post-Bretton Woods era has resulted in which two issues?

massive inventories are expensive to maintain. errors in initial machine settings created large numbers of defective items. mass production cannot accommodate customer preferences.

Three of the mass production problems that Ohno identified at Toyota were

False

True or false: A balance-of-trade equilibrium exists when the income residents earn from exports exceeds the money residents pay to other countries for imports.

If the US did not have a balance-of-payments deficit If the US inflation rate remained low

Under what two conditions would the Bretton Woods system work?

Personal computers and hand held calculators Bulk chemicals, petroleum and steel

Universal needs exist with which two categories of products?

Production factors Technological factors Country factors

What are the three broad groups of factors that a company should consider when making decisions on where to produce its products?

Support activities Primary activities

What are the two categories of operations within a company?

Lowers risk of adverse government response Local partner's knowledge of the host country Shared development costs and risks

What are three advantages of a joint venture?

The firm has tight control over foreign operations. The firm may realize location and experience curve economies. The firm can retain competitive advantage based on technology.

What are three advantages of a wholly owned subsidiary?

the work environment be open to employee suggestions mistakes should be eliminated quality of supervision should improve

What are three characteristics of the total quality management philosophy?

Product pricing Inventory management Sales tracking

What are three examples of information systems used to support the value chain?

Product serves universal needs High fixed costs Value-to-weight ratio is high

What are three factors that would lead a company to establish a concentrated production configuration?

Outpost factory Server factory Offshore factory

What are three strategic roles a foreign factory might have?

Expand the market for their domestic product Realize greater cost economies Realize location economies

What are three ways becoming a multinational company can increase a firm's profitability?

It ensures that people are adequately trained, motivated, and compensated. It can boost the competitive position of the firm. It ensures the company has the right mix of skilled people.

What are three ways the human resource function helps create value for a firm?

Gold was abandoned as a reserve asset Floating exchange rates were acceptable

What are two elements of the Jamaica Agreement?

Appropriately skilled labor pool Supporting industries

What are two examples of location externalities that a firm would consider when making a foreign investment decision?

It does not face pressures to customize a product based on local preferences. It does not face cost pressures.

What are two reasons a business should follow an international strategy?

World Bank

What financial institution was tasked with assisting in rebuilding Europe after World War II, but ended up helping third-world countries with public sector projects?

Location Economies

What is the term for the economies that result from a business undertaking a value creation activity in the optimal location?

Budgeting Developing a marketing plan Yearly employee review

What three activities are examples of processes within a company?

A good partner helps the firm achieve its strategic goals. A good partner does not act opportunistically. A good partner shares the firm's vision for the purpose of the alliance.

What three things should a company take into consideration when choosing a strategic alliance partner?

Pressure to be locally responsive Pressure to reduce costs

What two types of competitive pressures do companies typically face when entering global markets which affect their ability to realize location economies and leverage products?

Depression

When Great Britain returned to the gold standard in 1925, it placed the pound at the prewar gold parity level and, as a result, placed the country in a period of

Managed-float

When a country does NOT adopt a formal pegged rate, but tries to keep its currency within some range of a reference currency, a(n) ______ system exists.

Gold Standard

When a country pegs its currency to gold, it is using the _____.

The Scale

When considering the three basic decisions a firm must make when it decides to enter a foreign market, it must determine the market to enter, the timing of entrance, and

A free market system A country's capacity for growth

When determining whether or not to engage in a business in a foreign country, analysts should consider that future economic growth rates within any country are a function of both ______ and ______.

Cost

When the logistics function is carried out efficiently, it can create value because it lowers

Logistics

Which company function controls the transmission of materials from raw goods to the distribution of the finished product?

Low fixed costs High trade barriers Low value-to-weight ratio

Which three factors would lead a company to adopt a decentralized production configuration strategy?

Floating

______ exchange rates are determined by market forces; they vary against each other from one day to another.

Learning Effects

______ refer(s) to the cost savings that result from increased production levels once efficiencies are in place.

Fixed

A ______ exchange rate is a country's exchange rate regime under which the values of a set of currencies are fixed against each other at some mutually agreed-on exchange rate.

Experience

A commodity's production costs tend to decline over time. This is referred to as the ______ curve.

Strategic Positioning

A company would analyze the efficiency frontier in order to determine its

Strategic Alliance

A cooperative agreement between potential or actual competitors is called a _____.

Dirty-float

A currency can be determined by market forces, yet managed in the sense that -- if it depreciates too rapidly -- the government will step in. This is known as a ______ system.

Foreign Exchange Markets

A floating exchange rate exists when the ______ determine(s) the relative value of a currency.

Fixed relative to a reference currency, such as the US dollar.

A pegged exchange rate means the value of a currency is...

A Turnkey Project

A type of entry mode that is common in the chemical, pharmaceutical, and petroleum-refining industries in which a contractor agrees to handle every detail of a project for a foreign client is called ______.

Strategy

A(n) ______ is a method or plan a company uses to bring about a desired result, such as achievement of a goal or solution to a problem

Government intervention Market forces

According to the text, what two things have been key in determining the value of the dollar since 1973?

Demand preemptions Scale economies Switching costs

An early strategic commitment to large scale entry may mean that a firm can benefit from what three things?