Chapter 7

24) Which of the following is not one of the strategy options for expanding into markets of foreign countries?

A profit sanctuary strategy

5) Which one of the following is not a reason a company decides to enter foreign markets?

Building the profit sanctuary necessary to wage guerrilla offensives against global challengers endeavoring to invade its home market

59) Which of the following is not a strategic option companies should consider in tailoring their strategy to fit circumstances of emerging country markets?

Enter only those emerging markets that provide profit sanctuaries by offering opportunities for offensive strategies, such as preemptive strikes.

21) Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true?

Exporters always gain in cost/price competitiveness when the currency of the country in which the goods are manufactured is weak.

12) Which of the following countries had the lowest manufacturing labor wage rates in 2015?

India

3) Which of the following countries had the highest manufacturing labor wage rates in 2015?

Norway

33) Which of the following is an example of a cross-border alliance?

Renault-Nissan sells more than one in ten cars worldwide.

16) Which of the following is not a factor surrounding the decision to enter into the markets of foreign countries?

Repatriation of foreign company assets by governments in countries outside of home market(s)

35) Which of the following is not a potential benefit of strategic alliances or other cooperative arrangements between foreign and domestic companies?

Safeguarding the company's dependence, allowing for positive engagement once the purpose has been serving, and ensuring products of important technical standardization requirements are not developed

Which of the following is not a typical reason for a company to expand into the markets of foreign countries?

Strengthening its capability to employ offensive strategies, especially those that involve preemptive strikes

9) Why do companies decide to enter a foreign market?

To capture economies of scale in product development, manufacturing, or marketing.

20) Competitive advantages of manufacturing goods in a particular country and exporting them to foreign markets

are eroded when the manufacturing country's home currency strengthens relative to the currencies of the foreign countries where the output is being sold.

28) The advantages of using a licensing strategy to participate in foreign markets include

being able to leverage the company's technical know-how or patents without committing significant additional resources to markets that are unfamiliar, politically volatile, economically uncertain, or otherwise risky.

26) Using domestic plants as a production base for exporting goods to selected foreign country markets

can be an excellent initial strategy to pursue international sales.

48) To use location to build competitive advantage, a company that operates multinationally or globally must

consider (1) whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and (2) in which countries to locate particular activities.

44) A think global, act global approach to strategy making is preferable to a think local, act local approach when

country-by-country differences are small enough to be accommodated within the framework of a mostly uniform global strategy

23) The strategic options for expansion into foreign markets include all of the following except

creating products and services that are not subject to tariffs and local regulations

40) A think local, act local multidomestic strategy works particularly well when

diverse and complicated trade restrictions of host governments preclude the use of a uniform strategy from country to country.

42) Two major drawbacks of a think local, act local multidomestic strategy are

hindering a company's transfer of competencies and resources across country boundaries (since somewhat different competencies and capabilities are likely to be employed in different host countries) and not promoting the building of a single, unified competitive advantage in all country markets where a company competes.

41) The drawbacks of a localized multidomestic strategy include

hindering the transfer of a company's competencies and resources across country boundaries and hindering the pursuit of a single, uniform competitive advantage in all country markets where a company operates.

22) Government host policies are not likely to increase a country's political and economic risks when

incentives such as reduced taxes, low-cost loans, and site-development assistance are provided to companies agreeing to construct or expand production and distribution facilities.

39) The strength of a think local, act local multidomestic strategy is that

it matches a company's competitive approach to prevailing market and competitive conditions in each country market.

27) The advantages of using an export strategy to build a customer base in foreign markets include

minimizing capital requirements and involvement in foreign markets.

15) Market size and growth rates in different countries can be influenced positively or negatively by

population sizes, income levels and cultural influences, the current state of the infrastructure, and distribution and retail networks available.

45) The transnational approach of a firm using a think global, act local version of a global strategy entails

pursuing the same basic competitive strategy theme (low-cost, differentiation, best-cost, focused) in all countries where the firm does business but giving local managers some latitude to adjust product attributes to better satisfy local buyers and to adjust production, distribution, and marketing to be responsive to local market conditions.

31) Founding a wholly owned subsidiary in a foreign market to take advantage of all essential value chain activities requires a strategy that

supports direct control over all aspects of operating in a foreign market.

3) The reasons why a company opts to expand outside its home market include all of the following except

to identify resources and capabilities in the company's home market

8) One of the biggest strategic challenges to competing in the international arena include

whether to offer a mostly standardized product worldwide or whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers.

29) The advantages of using a franchising strategy to pursue opportunities in foreign markets include

franchisees bear most of the costs and risks of establishing foreign locations, and the franchisor is required to expend only the resources to recruit, train, and support foreign franchisees.

30) The disadvantages of using a franchising strategy to pursue opportunities in foreign markets do not include

franchisees bearing most of the costs and risks of establishing foreign locations, so a franchisor has to expend only the resources to recruit, train, support, and monitor franchisees.

19) What factor is not likely to be responsible for Apple's decision to set up mobile phone manufacturing facilities in India?

franchising opportunities in India

2) Companies opt to expand into foreign markets in order to

gain access to new customers, achieve lower costs, enhance the company's competitiveness, capitalize on core competencies, and spread business risk across a wider market base.

47) When expanding outside its domestic market, a company can gain competitive advantage by

using location to lower costs or help achieve greater product differentiation or using cross-border coordination in ways a domestic-only competitor cannot.

37) When a company operates in the markets of two or more different countries, its foremost strategic decision is

whether to vary the company's competitive approach to fit specific market conditions and buyer preferences in each host country or whether to employ essentially the same strategy in all countries.

10) Which of the following is not a reason why a company decides to enter foreign markets?

To impart technical knowledge to high-cost human resources in developing nations

14) Which of the following statements is false?

Companies like Samsung that export goods to foreign countries always gain in competitiveness when the currency of South Korea, in which the goods are manufactured, is strong.

1) Which of the following is not a reason why the world economy is globalizing at an accelerated pace?

Countries opposed to market or mixed economies have stringent trade barriers in place.

18) Competing in the markets of foreign countries generally does not involve which of the following?

Crafting a multicountry strategy that can transform the world market into one big profit sanctuary

7) Exxon Mobil has entered into a pact with Gazprom, the world's largest natural gas extractor, to set up a processing unit in Baku, Azerbaijan. Which of the following is most likely the reason for Exxon Mobil to opt for this strategic alliance?

To gain access to low-cost inputs of production

57) Which of the following is not a typical option that companies have to consider in order to tailor their strategy to fit the circumstances of emerging country markets?

Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly.

58) Which of the following is not a typical option that companies have to consider in order to tailor their strategy to fit the circumstances of emerging country markets?

Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly.

53) Which of the following is an example of a modification in a particular company's business model to accommodate the unique local circumstances of developing countries?

In China, Dell moved from its traditional Internet-based orders to orders over phone and fax.

11) Which of the following is not an accurate statement as concerns competing in the markets of foreign countries?

Localizing Apple's product offerings country-by-country leads to low-cost advantage.

36) Which of the following is not one of the problems and risks of cross-border strategic alliances, that is, between domestic and foreign firms?

Making it harder to pursue a multidomestic strategy as compared to a global strategy

25) Which of the following is an example of an export strategy?

The United States is home to the world's three largest producers and suppliers of artificial heart valves.

6) Which of the following is not a possible reason why Uber opted to expand its on-demand transportation services into foreign markets?

To build the profit sanctuary necessary to wage guerrilla offensives against global challengers endeavoring to invade its home market

54) Televisa, a Mexican media company, became the world's most prolific producer of Spanish-language soap operas owing to its expertise in Spanish culture and linguistics. Which of the following strategies did Televisa employ to defend against global giants?

Transfer company expertise to cross-border markets and initiate actions to contend on an international level.

34) Which of the following is not an example of a cross-border alliance?

Western Union purchases the global payments division of British-owned Travelex Ltd.

51) In which of the following circumstances is it not advantageous for a multinational competitor to concentrate its activities in a limited number of locations in order to build competitive advantage?

When a company has a competitively superior patented technology that it can license to foreign partners

49) To use location to build competitive advantage when competing in both domestic and foreign markets, a company must

consider (1) whether to concentrate each activity it performs in a few select countries or to disperse performance of the activity to many nations and (2) in which countries to locate particular activities.

17) Competing in the markets of foreign countries entails dealing with such factors except

the prevalence of global brands

55) The ability of a multinational or global competitor to shift production from country to country to take advantage of exchange rate fluctuations, energy costs, wage rates, or changes in tariffs is an example of

cross-border coordination.

32) Acquisition of an existing firm rather than via internal development may be the least risky and cost-efficient means of overcoming entry barriers such as

gaining access to local distribution networks, building supplier networks, and establishing working relationships with key government officials.

56) Companies racing for global market leadership

generally have to consider establishing competitive positions in the markets of emerging countries.

43) A localized or multidomestic strategy

has two big drawbacks: (1) it hinders the transfer of a company's competencies and resources across country boundaries because the strategies in different host countries can be grounded in varying competencies and capabilities, and (2) it does not promote building a single, unified competitive advantage, especially one based on low cost.

52) Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous in all of the following situations except

if resources retain their foreign contexts so there is competitive advantage over a broader domain.

46) The competitive strategy of a firm pursuing a think global, act local approach to strategy making

is essentially the same in all country markets where it competes, but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions.

38) A think local, act local multidomestic type of strategy

is more appealing the bigger the country-to-country differences in buyer tastes, cultural traditions, and marketing methods.

50) In competing in foreign markets, companies find it advantageous to concentrate their activities in a limited number of locations in all of these situations, except when

the addition of new production capacity will not adversely impact the supply-demand balance in the local market.