Chapter 8

A company, Pluto Inc., employs the franchising strategy to enter a new national market. Which of the following statements is more likely to be true of Pluto?

a. It is more likely to be a service company.

Strong pressures for convergence due to a shared history and culture, or the establishment of a trading block where there are deliberate attempts to harmonize trade policies, infrastructure, and regulations have contributed to the rise in what trend?

a. Regionalism

Which of the following is disadvantage of strategic alliances?

a. They give competitors a low-cost route to new technology and markets.

Cost reduction pressures can be particularly intense in industries producing:

a. commodity-type products.

Host government demands generally:

a. increase pressures for local responsiveness.

Companies that pursue a _____ strategy are trying to develop a business model that simultaneously achieves low costs, differentiates the product offering across geographic markets, and fosters a flow of skills between different subsidiaries in the company's global network of operations.

a. transnational

Swedish strength in fabricated steel products (such as ball bearings and cutting tools) has drawn on strengths in Sweden's specialty steel industry. This is an example of which of the following attributes that impact national competitive advantage?

b. Competitiveness of related and supporting industries

Dietizza is a fast food network that makes low-calorie pizzas. As the firm wishes to expand its operations in different locations, it has licensed a few entrepreneurs to open Dietizza outlets under the company's trademark. The entrepreneurs will take up the responsibility of costs, while Dietizza will assist them in running operations. The company will receive royalty payments and a percentage of profits from the entrepreneurs. Which of the following concepts is illustrated here?

b. Franchising

Which of the following has occurred in international trade over the past half-century?

b. Tariff rates on manufactured goods traded by advanced nations have fallen.

Global expansion:

b. can enable companies to increase their profitability and grow their profits more rapidly.

Nutrimax, a sports foods manufacturer, has recently expanded its operations to different countries. The company has realized that customers in different countries have different tastes and preferences. So, the company customizes its products based on the country where it's selling. In this scenario, Nutrimax is most likely to be using _____ strategy.

b. localization

The globalization of production has caused firms to:

b. lower their cost structure.

Relish is a large fast food chain that operates in many countries. As there are several competitors in the fast food sector, the company has been facing intense pressures for achieving low cost structures. The company also faces the task of customizing its product line as there are significant differences in tastes and preferences among customers in different geographic locations. In order to achieve both low costs and product differentiation, the company should aim to pursue a _____ strategy.

b. transnational

Which of the following statements is true in the context of local demand conditions?

c. A nation's companies gain competitive advantage if their domestic customers are sophisticated and demanding.

Which of the following is not a necessity for leveraging the competencies of global subsidiaries?

c. Assertion of monopoly of the corporate center over subsidiaries

Which of the following ideas is a localization strategy is based on?

c. Consumer tastes and preferences differ among national markets.

Which of the following factors increases pressures for local responsiveness?

c. Host government demands

Which of the following is an advantage of franchising?

c. It involves low development costs and risks.

Which of the following statements is true about global standardization strategy?

c. It makes most sense when there are strong pressures for cost reductions.

Which of the following statements is true about international strategy?

c. It often involves the head office retaining tight control over marketing and product strategy.

WKL Entertainment Inc. is a service-based firm with very few competitors. The company is looking to sell its services in different nations with substantial differences in consumer preferences and where cost pressures are not too intense. Which of the following strategies should WKL Entertainment Inc. managers pursue?

c. Localization

The Achilles heel of international strategy is that:

c. competitors inevitably emerge.

Most manufacturing companies begin their global expansion by:

c. exporting.

Differences in tastes and preferences:

c. increase pressures for local responsiveness.

Aries Travels is a company that offers holiday and travel packages. The company realizes that customer preferences vary and thus extensively customizes its packages. As there are not many competitors in the market in which Aries Travels operates, there are minimal pressures to reduce costs. Aries Travels is most likely to have adopted a _____ strategy.

c. localization

For a strategic alliance, firms should seek partners that are:

c. willing to share costs and risks of product development.

Which of the following is not a factor of production?

d. Competitive forces

Which of the following is not a risk of exporting?

d. High manufacturing costs

Which of the following statements is true about transnational strategy?

d. It fosters a flow of competencies between different subsidiaries in the company's global network of operations.

Which of the following statements is true about localization strategy?

d. It involves some duplication of functions and smaller production runs.

Which of the following entry modes allows a company to engage in global strategic coordination?

d. Wholly owned subsidiaries

When a company performs a value creation activity in a region that is optimal for that activity, wherever in the world that might be, it is trying to capitalize on:

d. location economies.

Black and Decker, Capitol One, Gillette, and Unilever are all companies that conduct business in two or more national markets. These companies are known as:

d. multinational companies.

Which of the following is not an attribute of a national or country-specific environment that has an impact on global competitiveness of companies located in that nation?

e. Advertising expenses

In the wireless telecommunications industry, different technical standards are found in different parts of the world. A technical standard known as GSM is common in Europe, and an alternative standard, CDMA, is more common in the United States and parts of Asia. Equipment designed for GSM will not work on a CDMA network and vice versa. Which of the following pressures for local responsiveness does this represent?

e. Differences in infrastructure

Which of the following statements is true in the context of globalization of production and markets?

e. Globalization has significantly increased the threat of entry.

Which of the following is an advantage of international licensing?

e. It takes away the pressure of development costs and risks associated with opening up a foreign market from the company.

Which of the following factors increases pressures for cost reductions?

e. Persistent excess capacity

Which entry mode gives a multinational the tightest control over foreign operations?

e. Setting up a wholly owned subsidiary

Which of the following statements is true in the context of attributes of national competitive advantage?

e. The nature of home demand shapes the attributes of domestically made products .

When a company grows its sales volume through international expansion, it can realize cost savings from economies of scale through all of the following except:

e. adopting high cost structures.

Global economies of scale can be realized by:

e. spreading the fixed costs associated with developing.