BPS Ch 7 Review
Which one of the following is not a Western hemisphere trade bloc? A. NAFTA B. MERCOSUR C. ASEAN D. Latin American Integration Association
C. ASEAN
According to studies by Rugman and Verbeke, approximately how many of the world's largest 500 firms are global, that is, they have at least 20% of their total revenues each in North America, Asia, and Europe? A. 9 B. 59 C. 79 D. 159
A. 9
A firm can establish a wholly owned subsidiary by A. acquiring an existing company in the home country. B. keeping all of the activity offshore. C. licensing intellectual property. D. entering into a franchising agreement.
A. acquiring an existing company in the home country.
Sources of political risk do not include A. availability of the rule of law. B. social unrest. C. military turmoil. D. demonstrations.
A. availability of the rule of law
Recent trends that might lead managers of multinational corporations (MNCs) to adopt a more decentralized strategy for their operations would include all of the following except A. customer needs, interests, and tastes becoming increasingly homogenized. B. consumers around the world increasingly willing to tradeoff idiosyncratic preferences in product features for lower price. C.flexible manufacturing trends allowing a decline in the minimum volume required to reach acceptable levels of production efficiency. D. fluctuating exchange rates.
A. customer needs, interests, and tastes becoming increasingly homogenized.
Globalization opens the doors for companies to attract new customers. One of the challenges is to determine how to meet the needs of these customers who have A. different income levels. B. low income levels. C. high income levels. D. steady income levels.
A. different income levels.
All of the following would be viewed as advantages of global diversification EXCEPT A. fewer social and political risks than domestic operations. B. a firm not being solely dependent on the domestic market. C. a firm with large margins at home helping subsidize its operations in other nations. D. the potential to lower costs of operation even if the primary market is at home.
A. fewer social and political risks than domestic operations.
The difference between a franchise contract and a licensing contract is that a A. franchise contract is more specific and usually longer in duration. B. franchise contract must include a foreign government. C. licensing contract covers more aspects of operations. D. franchise contract involves less control and less risk.
A. franchise contract is more specific and usually longer in duration.
When firms expand into global markets, they are faced with the choice of reducing costs and/or adapting to the local market. When high pressures exist to lower costs, companies should choose a(n) __________ or __________ in order to compete in the global marketplace. A. global strategy; transnational strategy B. global strategy: multidomestic strategy C. international strategy; multidomestic strategy D. international strategy; transnational strategy
A. global strategy; transnational strategy
Which of the following is a reason for the rise in regional expansion? A. increase in the number of trading blocs and free trade zones B. decrease in the number of trading blocs and free trade zones C. increasing national trade restrictions D. increasing local taxes and tariffs
A. increase in the number of trading blocs and free trade zones
Low pressure for local adaptation combined with low pressure for lower costs would suggest what type of strategy? A. international B. global C. multidomestic D. transnational
A. international
Which would be the appropriate strategy for companies to use to compete in the global marketplace if the marketplace pressure is for lower costs with little pressure for local adaptation? A. international strategy B. global strategy C. multidomestic strategy D. transnational strategy
A. international strategy
A report issued by the World Trade Organization described the production of a particular U.S. car. The study showed that 30 percent of the car value goes to Korea for assembly, 17.5 percent to Japan for components and advanced technology, 7.5 percent to Germany for design, 4 percent to Taiwan and Singapore for minor parts, 2.5 percent to U.K. for advertising and marketing services, and 1.5 percent to Ireland and Barbados for data processing. This is an example of A. outsourcing and offshoring. B. outsourcing and on-shoring. C. insourcing and offshoring. D. insourcing and outsourcing.
A. outsourcing and offshoring.
Similarity of culture, laws, rules, and norms encourages A. regionalization. B. globalization. C. trans-nationalization. D. ethnocentric expansion.
A. regionalization.
Canada and Mexico are the same distance from the United States, but trade is higher between the U.S. and Canada than with Mexico because A. true distance is smaller between the U.S. and Canada. B. all three countries share the same legal system. C. there are few immigration problems with Mexico. D. Americans prefer Canadian food to Mexican food.
A. true distance is smaller between the U.S. and Canada.
In considering the transnational strategy, Nestle evaluates the limits of decentralization. The closer they are to the consumer in activities such as branding and pricing, the more then tend to decentralize. The more they deal with production and logistics, the more they centralize decision-making. The production and logistics decisions involve _______ activities. A. upstream B. in its infrastructure C. downstream D. midstream
A. upstream
Software Tech, Inc., a company in the computer software industry, invests heavily in Research and Development, and product design. Thus, most of its value is added ________. A. upstream B. in its infrastructure C. downstream D. midstream
A. upstream
A __________ is a business in which a multinational company owns 100 percent of the stock. A. wholly owned subsidiary B. strategic alliance C. joint venture D. franchising operation
A. wholly owned subsidiary
A domestic corporation considering international expansion for the first time typically will follow which of these paths? A. It will start by implementing a wholly owned foreign subsidiary. B. It will implement a low risk-low control strategy such as exporting. C. It will license or franchise its operations D. It will form a joint venture with a reputable foreign producer.
B. It will implement a low risk-low control strategy such as exporting.
PepsiCo leads Coca-Cola in the Indian market. Why? A. PepsiCo entered the market before Coca-Cola. B. PepsiCo formed a joint venture with two Indian companies to introduce its products under their label. C. Coca-Cola promoted too many products. D. Coca-Cola created too much direct employment in the beginning of its operation.
B. PepsiCo formed a joint venture with two Indian companies to introduce its products under their label.
If the U.S. dollar appreciates relative to foreign currency, what is likely to be the result for the U.S. company that has branches abroad? A. Profits will increase, when measured in U.S. dollars. B. Profits will decrease, when measured in U.S. dollars. C. Foreign exports to the United States will decrease. D. Foreign demand for U.S. goods and services will decrease.
B. Profits will decrease, when measured in U.S. dollars.
In considering the decision to offshore, which of the following generally is not one of the hidden costs? A. Total wage costs and indirect costs B. Wage deflation C. Reduction in intellectual property rights D. Increased inventory and coordination costs
B. Wage deflation
Pressures to "reduce costs" require that A. a company should not trade idiosyncratic preferences in product features for higher economic returns. B. a company must pursue what is economically beneficial to the company including maximizing economies of scale and learning curve effects. C. the manager should follow a multidomestic strategy to maximize the economic benefits to the company. D. the company needs to supplement the local foreign economy in a manner specified by the local government.
B. a company must pursue what is economically beneficial to the company including maximizing economies of scale and learning curve effects.
The trade among nations has increased dramatically in recent years, and it is estimated that by 2015 the trade ________ nations will exceed the trade _______ nations. A. within; across B. across; within C. with; outside of D. above; within
B. across; within
Statistics indicate that over half of the world output now comes from emerging markets. This is leading to a(n) ___________ of living standards across the globe and is changing the face of business. A. divergence B. convergence C. expansion D. contraction
B. convergence
When the GE wind energy business tapped into world-wide talent, it was able to expand using a(n) _________________ strategy. A. focus B. diversification C. unrelated D. generic
B. diversification
Which of these points on the Porter diamond of national advantage is the strongest indicator of global competitive success? A. foreign rivalry B. domestic rivalry C. global rivalry D. international rivalry
B. domestic rivalry
In reviewing the Indian Software industry and the diamond of national advantage, which of the following is a growing detractor to the national competitive advantage in this industry? A. large pool of skilled workers B. eroding cost advantage of Indian firms C. rapidly improving communications infrastructure D. large, growing market and sophisticated customers
B. eroding cost advantage of Indian firms
Countries with demanding consumers, like environmentally-concerned Denmark, drive __________ to meet the demand. A. worldwide innovation B. in-country innovation C. foreign manufacturing D. global exchange
B. in-country innovation
When differentiating products and services to local markets, strategies and tactics are likely to __________ company costs. A. decrease B. increase C. obliterate D. decentralize
B. increase
What agreement entails the creation of a third-party legal entity? A. strategic alliance B. joint venture C. licensing D. exporting
B. joint venture
Multinational firms are constantly faced with the dilemma of choosing between _______ and __________. A. local adaptation; local integration B. local adaptation; global integration C. global adaptation; local integration D. global adaptation; global integration
B. local adaptation; global integration
High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy? A. global strategy B. multidomestic strategy C. transnational strategy D. overall cost leadership strategy
B. multidomestic strategy
Shared Arabic language and the Muslim religion is one reason that explains regionalism tendencies in A. South America. B. the Maghreb. C. European Union. D. North America.
B. the Maghreb.
Which one of the following is not a limitation of a global strategy? A. limited ability to adapt to local markets B. the ability to locate activities in optimal locations C. the concentration of activities may increase dependence on a single facility D. single locations may lead to higher tariffs and transportation costs
B. the ability to locate activities in optimal locations
As in the case of Siebel Systems (now part of Oracle), elements of a global strategy may facilitate the competitive advantage of differentiation by _______. A. increased freedom of individual business units to adapt to local tastes B. the creation of a worldwide network to achieve consistent service regardless of location C. flexibility in applying Research and Development to meet country-specific needs D. tailoring products to meet country-specific needs
B. the creation of a worldwide network to achieve consistent service regardless of location
Microsoft decided to establish a corporate research laboratory in Cambridge, England A. because England is an ally of the United States. B. to access the outstanding technical and professional talent available there so that they can attain world-class excellence in selected value-creating activities. C. because the local language is English. D. because the company views the United States as a risky place to expand due to the actions of the U.S. Department of Justice.
B. to access the outstanding technical and professional talent available there so that they can attain world-class excellence in selected value-creating activities.
Units coordinate their activities with headquarters and with one another. Units adapt to special circumstances only they face. The entire organization draws upon relevant corporate resources. These are all attributes of which type of strategy? A. global strategy B. transnational strategy C. international strategy D. multidomestic strategy
B. transnational strategy
Industries in which proportionally more value is added in __________ activities are more likely to benefit from a global strategy. A. downstream B. upstream C. marketing D. sales
B. upstream
Ricoh Americas Corporation has significant international operations. Faced with local reticence to adapt changes that come from other global regions, what does Ricoh suggest is the most successful approach? A. Bring in global market representatives to force change locally. B. Obligate local offices to adopt the corporate decision. C. Ensure stakeholder participation early in the change process. D. Ignore the problem because it is only a temporary issue.
C. Ensure stakeholder participation early in the change process.
Which one of the following is one of the Theodore Levitt assumptions supporting a pure global strategy? A. Consumers are willing to pay more for specific product features. B. Customer needs and interests are becoming more dissimilar. C. MNCs can successfully compete globally by aggressively pricing products at the sacrifice of product features. D. If the world markets are treated as heterogeneous, substantial economies of scale are easily achieved.
C. MNCs can successfully compete globally by aggressively pricing products at the sacrifice of product features.
__________ occurs when a firm decides to utilize other firms to perform value-creating activities that were previously performed in-house. A. Offshoring B. A global strategy C. Outsourcing D. A transnational strategy
C. Outsourcing
In the Porter Diamond of National Advantage framework, which of the following factors does not affect nation competitiveness? A. The position of the nation in factors of production necessary to compete in a given industry. B. The presence or absence in the nation of internationally competitive supplier industries. C. The conditions in the nation governing the nature of foreign rivalry. D. The nature of home-market demand of the products or services of the industry.
C. The conditions in the nation governing the nature of foreign rivalry.
For years O.R.T. Technologies resisted moving any operations outside Israel. However, when faced with a sharp rise in the value of the shekel, the maker of specialized software for managing gas stations froze all local hiring and decided to transfer some developmental work to Eastern Europe. This is an example of _____________ risk. A. political B. economic C. currency D. management
C. currency
Elements of a multidomestic strategy may facilitate the competitive advantage of cost leadership by __________. A. flexibility in adjusting to local laws and customs B. decreased duplication of inventories which are often involved in having multiple plants producing similar products C. decreased shipping and transportation costs inherent in local production D. economies of scale gained through centralized production of standardized products
C. decreased shipping and transportation costs inherent in local production
To be responsive to local pressures, companies must ____________ their offerings and strategies from country to country to reflect local consumer preferences. A. internationalize B. globalize C. differentiate D. standardize
C. differentiate
The sale of Boeing commercial aircraft and Microsoft operating systems in many countries enables these companies to benefit from A. higher prices in their domestic markets. B. reducing their exposure to currency risks. C. economies of scale. D. optimizing the location for many activities in their value chain.
C. economies of scale.
Optimizing the location of every activity in the value chain can yield all of the following strategic advantages EXCEPT A. performance enhancement. B. cost reduction. C. extending the life cycle of the product of service. D. risk reduction.
C. extending the life cycle of the product of service.
The reasons that explain why some governments make better use of the inflows from foreign investment and know-how than others include all of the following EXCEPT A. governmental practices that are business-friendly. B. local entrepreneurs that can train workers and invest in modern technology. C. high tariffs and taxes on foreign investors and multinational corporations provide income to improve living conditions. D. sound management of broader economic factors such as interest rates and inflation.
C. high tariffs and taxes on foreign investors and multinational corporations provide income
Related industries create the probability that new companies will enter the market. This ________ competition and forces existing firms to improve ___________. A. decreases, innovation B. decreases, efficiency C. increases, efficiency D. increases, sales
C. increases, efficiency
The __________ entail the creation of a third-party legal entity, whereas the __________ do not. A. licensing agreements; joint ventures B. strategic alliances; joint ventures C. joint ventures; strategic alliances D. franchising agreements; strategic alliances
C. joint ventures; strategic alliances
Appreciation of the U.S. dollar will have the following impact on McDonald's A. lower sales abroad because foreign customers cannot afford McDonald's; products. B. more transfer of ingredients from the U.S. to branches abroad to take advantage of the higher dollar. C. lower profits, because foreign profits will be reduced when measured in dollars. D. no impact at all.
C. lower profits, because foreign profits will be reduced when measured in dollars.
The rise of _________ capitalism around the world creates tremendous business opportunities for multinational corporations. A. social B. multinational C. market D. democratic
C. market
According to the textbook, globalization involves international exchange. Included in this exchange is trade in goods and services as well as the exchange of __________, __________, and _________ across countries. A. habits; values; ideas B. traditions; legal systems; history C. money; ideas; information D. statistics; personnel; purchasing power
C. money; ideas; information
Renault paid 1 billion USD to acquire a 25 percent ownership stake in the Russian automaker AvtoVAZ in 2008. Just one year later, Russian Prime Minister Vladimir Putin threatened to dilute the Renault ownership stake unless it contributed more money to prop up AvtoVAZ, which was then experiencing a significant slide in sales. This is an example of _____________ risk. A. currency B. economic C. political D. management
C. political
In order to realize the strongest competitive advantage, firms engaged in worldwide competition must ___________. A. require that all of their various business units follow the same strategy regardless of location B. ensure that all business units follow a strategy strictly tailored to their respective locations C. pursue a strategy that combines the uniformity of a global strategy and the specificity of a multidomestic strategy in order to achieve optimal results D. attempt to use the strategy that was most successful in their home country
C. pursue a strategy that combines the uniformity of a global strategy and the specificity of a multidomestic strategy in order to achieve optimal results
According to the textbook, _______________ economic integration has progressed as a faster pace than _________ economic integration. A. global; international B. international; regional C. regional; global D. regional; inter-regional
C. regional; global
GE Healthcare developed a portable, inexpensive ultrasound device for the emerging Chinese market. It expects to sell the device in the United States at a price cheap enough for every physician, paramedic, and emergency room nurse to purchase. This is an example of A. total wage costs and indirect costs. B. risk reduction. C. reverse innovation. D. optimization of value-chain activity locations.
C. reverse innovation.
Fees that a multinational receives from a foreign licensee in return for its use of intellectual property (trademark, patent, trade secret, technology) are usually called A. transfer prices. B. dividends. C. royalties. D. intra-corporate inflows.
C. royalties.
Which of the following is not a limitation of a multidomestic strategy? A. less ability to realize cost savings through scale economies B. greater difficulty in transferring knowledge across countries C. single locations may lead to higher tariffs and transportation costs D. may lead to overadaptation as conditions change
C. single locations may lead to higher tariffs and transportation costs
Which of the factors below has not made the software services industry in India extremely competitive on a global scale? A. large pool of skilled workers B. large, growing market and sophisticated customers C. tax and antitrust legislation that protects the dominant players in the industry D. large network of public and private educational institutions
C. tax and antitrust legislation that protects the dominant players in the industry
Gillette's worldwide success with its Sensor razor demonstrates A. the importance of merging global and multidomestic strategies. B. the values of establishing joint ventures with several multinational corporations. C. that a global marketing effort can sometimes be successful. D. the usefulness of a multidomestic strategy.
C. that a global marketing effort can sometimes be successful.
Regionalization is most important because it permits companies to organize their activities based upon A. physical distance between the home country and the foreign country. B. the extrinsic distance between the home country and the foreign country. C. the true distance between the home country offer and the foreign country. D. shareholder expectations.
C. the true distance between the home country offer and the foreign country.
High pressure for local adaptation combined with high pressure for lower costs would suggest what type of international strategy? A. global strategy B. multidomestic strategy C. transnational strategy D. differentiation strategy
C. transnational strategy
Which of the following is a disadvantage of a transnational strategy? A. less ability to realize cost savings through scale economies B. limited ability to adapt to local markets C. unique managerial challenges in fostering knowledge transfer D. single locations may lead to higher tariffs and transportation costs
C. unique managerial challenges in fostering knowledge transfer
Shared Spanish colonialism is one reason that explains regionalism tendencies in A. Asia. B. South America. C. the United States. D. Africa.
D. Africa.
According to the Euromoney magazine 2014 annual Country Risk Rating, which one of the following countries has the highest economic risk? A. South Korea B. China C. Colombia D. Argentina
D. Argentina
In reviewing the Indian Software industry and the diamond of national advantage, which of the following is a relatively weak set of factors in the national competitive advantage in this industry? A. U.S. demand conditions B. Factor endowments C. Domestic rivalry D. Domestic demand conditions
D. Domestic demand conditions
Which one of the following explains why so few firms are global? A. Culture, language, and religion are similar between countries. B. Legal and political systems are similar between countries. C. Governments are increasing trade restrictions in general. D. Geographic distance is multiplied by distance in culture, language, religion, and legal and political systems.
D. Geographic distance is multiplied by distance in culture, language, religion, and legal and political systems.
According to Exhibit 7.1 in the textbook, the country experiencing the highest rate of growth in GDP from 2001-2011 was A. the United States. B. Japan. C. China. D. India.
D. India.
Which of the following is not a motivation for a company to pursue international expansion? A. It wishes to increase the size of the potential markets for its products and services. B. It wishes to take advantage of arbitrage opportunities in order to increase profit. C. It wishes to optimize value-chain activities to enhance performance, reduce costs, and reduce risk. D. It wishes to increase foreign market penetration by developing products for the home market.
D. It wishes to increase foreign market penetration by developing products for the home market.
According to Exhibit 7.1 in the textbook, the country experiencing the lowest rate of growth in GDP from 2001-2011 was A. the United States. B. China. C. India. D. Japan.
D. Japan.
If a company is considering optimizing the physical location for every activity in the value chain, which of the following is not a possible strategic advantage for that decision? A. Performance enhancement B. Cost reduction C. Political risk reduction D. Life-cycle enhancement
D. Life-cycle enhancement
Which of the following is not a risk normally associated with Bottom of the Pyramid strategies? A. A low-end version of a brand may detract from the overall brand attractiveness. B. The new low-cost products they develop may cannibalize the sales of their core products. C. Entrenched competitors can impact the ability of the new firm to enter the market successfully. D. New products may be perceived as exploiting the privileged customer with substandard products.
D. New products may be perceived as exploiting the privileged customer with substandard products.
Which of the following is not a risk associated with a global strategy? A.A firm with only one manufacturing location must export its product, sometimes at great distance from the operation. B. The geographic concentration of any activity may also tend to isolate that activity from the targeted markets. C. Concentrating an activity in a single location makes the rest of the firm dependent on that location. D. The pressures for local adaptation may elevate the cost structure of the firm.
D. The pressures for local adaptation may elevate the cost structure of the firm.
__________ are most appropriate when a firm already has the appropriate knowledge and capabilities that it can leverage rather easily through multiple locations in many countries. A. Joint ventures B. Strategic alliances C. Licensing agreements D. Wholly owned subsidiaries
D. Wholly owned subsidiaries
__________ are most appropriate where a firm already has the appropriate knowledge and capabilities that it can leverage rather easily through multiple locations in many countries. A. Joint ventures B. Strategic alliances C. Licensing agreements D. Wholly owned subsidiaries
D. Wholly owned subsidiaries
A major trend in international developments includes A. greater international trade and operations. B. a growing recognition of an international managerial perspective. C. a large increase in international investment. D. all of these.
D. all of these.
Regions represent the outcomes of centuries of political and cultural history that results in not only _________ but also mutual _____________. A. differences; expectations B. similarities; expectations C. commonalities; losses D. commonalities; affinities
D. commonalities; affinities
Which of the following describes the most typical order of entry into foreign markets? A. franchising, licensing, exporting, joint venture, and wholly owned subsidiary B. exporting, franchising, licensing, joint venture, and wholly owned subsidiary C. licensing, exporting, franchising, joint venture, and wholly owned subsidiary D. exporting, licensing, franchising, joint venture, and wholly owned subsidiary
D. exporting, licensing, franchising, joint venture, and wholly owned subsidiary
The form of entry strategy into international operations that offers the lowest level of control for the domestic corporation would be A. franchising. B. licensing. C. joint venture. D. exporting.
D. exporting.
Which of the following types of international firms are most likely to benefit from a global strategy as opposed to a multidomestic strategy? A. firms that compete in industries in which consumer preferences vary substantially in each country B. firms in industries that are expanding very rapidly C. firms in industries that have value added by sales and marketing departments D. firms in industries that have much value added in research and design or manufacturing
D. firms in industries that have much value added in research and design or manufacturing
L'Oreal acquired two U.S. firms that developed and sold hair care products to African-American customers. This permitted it to build a new ethnic hair care division in Europe and Africa. This represents an advantage of international expansion using ____________. A. arbitrage B. optimization of the location of value-chain activities C. performance enhancement D. learning opportunities
D. learning opportunities
In the quest to achieve competitive advantage in global markets, competitive pressures require that firms do what they can to _______ unit costs so that consumers will not perceive their product and service offerings as too expensive. A. raise B. decentralize C. define D. lower
D. lower
According to Michael Porter, firms that have experienced intense domestic competition are A. unlikely to have the time or resources to compete abroad. B. more likely to demand protection from their governments. C. most likely to design strategies aimed primarily at the domestic market. D. more likely to design strategies that will allow them to successfully compete abroad.
D. more likely to design strategies that will allow them to successfully compete abroad.
Michael Porter's framework all of the following factors affect a nation's competitiveness EXCEPT A. factor conditions. B. demand characteristics. C. related and supported industries. D. policies that protect the nation's domestic competitors.
D. policies that protect the nation's domestic competitors.
In reviewing the Indian Software industry and the diamond of national advantage, which of the following is a growing detractor to the national competitive advantage in this industry? A. English-language capability B. growing market and sophisticated, customers C. duty-free access to imported computers and software D. rise of competing low-labor-cost countries
D. rise of competing low-labor-cost countries
Firms following a global strategy strive to offer __________ products and services as well as locate manufacturing, Research and Development, and marketing activities in a limited number of locations. A. widely differentiated B. more expensive local C. internationally differentiated D. standardized
D. standardized
Firms following a global strategy strive to offer __________ products and services as well as locate manufacturing, R&D, and marketing activities in __________ locations. A. a wide variety of; several B. a wide variety of; few C. standardized; several D. standardized; few
D. standardized; few
Rivalry is intense in nations with conditions of __________ consumer demand, __________ supplier bases, and __________ new entrant potential from related industries. A. weak; weak; high B. strong; strong; low C. weak; weak; low D. strong; strong; high
D. strong; strong; high
Many U.S. multinational companies set up maquiladora operations south of the U.S.-Mexico border primarily A. to sell products into the growing Mexican market. B. as part of US government-initiated measures to discourage illegal immigration. C. to take advantage of the lower tax rates in Mexico. D. to take advantage of the low cost of labor.
D. to take advantage of the low cost of labor.
When firms expand into global markets, they are faced with the choice of reducing costs and/or adapting to the local market. When high pressures exist to adapt locally, companies should choose a(n) __________ or __________ in order to compete in the global marketplace. A. global strategy; transnational strategy B. global strategy: multidomestic strategy C. international strategy; global strategy D. transnational strategy; multidomestic strategy
D. transnational strategy; multidomestic strategy
