Chapter 10 Quiz

Which of the following statements is true of local responsiveness? A. It helps reinforce a cost-leadership strategy at the business level. B. Local responsiveness generally entails higher costs. C. It reduces the differentiation of products and services. D. Local responsiveness forms the basis for the globalization hypothesis.

B. Local responsiveness generally entails higher costs.

Rekall Autos Inc., an automobile company based in the country of Springfield, made a capital investment of $400,000 to set up production units and distribution channels in the country of Uganda from where it plans to access the Uganda market. Such investments are best known as A. corporate leveraged buyouts. B. foreign direct investments. C. corporate venture capital investments. C. foreign exchange.

B. foreign direct investments.

Which of the following strongly affects the cultural distance between two countries? A. the difference in consumer income in the two countries B. the languages spoken in each country C. the status of financial institutions in each country D. the transportation networks connecting the two countries

B. the languages spoken in each country

Which of the following is a feature of Logitech as a global collaboration network? A. It has been able to operate as a multinational company with self-contained operations in a few key countries. B. Logitech has been able to keep its knowledge flow one-way, from its domestic headquarters to international outposts. C. The company has been able to organize work continuously because its teams in different locations around the globe can work 24/7. D. It has been unable to keep its costs low because of its centers of expertise that are spread across the globe.

C. The company has been able to organize work continuously because its teams in different locations around the globe can work 24/7.

The best explanation of why Gulf airlines are giving U.S. legacy carriers stiff competition is that the Gulf carriers A. offer more special deals to business travelers than do the U.S. legacy carriers. B. have taken advantage of U.S. trade laws that allow for unrestricted foreign competition. C. offer better service for lower costs than do the U.S. legacy carriers. D. have built luxury hubs throughout Europe and the United States.

C. offer better service for lower costs than do the U.S. legacy carriers.

Which of the following is an advantage of using licensing or franchising as a foreign entry mode? A. Licensing or franchising reduces a firm's exposure to loss of reputation. B. Either one reduces a firm's exposure to loss of intellectual property. C. Licensing or franchising allows for high levels of control. D. Either one requires low capital investments.

D. Either one requires low capital investments.

Relaxicab Inc. is a 100-year-old, multinational enterprise (MNE). Which of the following activities would the company most likely have been involved in during the stage of Globalization 2.0? A. Relaxicab would have restricted all its business activities to its home country. B. It would have ventured into foreign markets essentially by exporting goods. C. Relaxicab would have organized itself as a global collaboration network with the help of internet technologies. D. It would have increased its local responsiveness to country-specific circumstances by duplicating business functions overseas.

D. It would have increased its local responsiveness to country-specific circumstances by duplicating business functions overseas.

Which of the following foreign entry modes requires the highest level of investment in terms of capital and other resources and allows for a high level of control? A. exporting B. franchising C. joint ventures D. acquisitions

D. acquisitions

The additional costs of doing business in an unfamiliar cultural and economic environment, and of coordinating across geographic distances, are best described as a(n) A. economic embargo. B. social cost. C. opportunity cost. D. liability of foreignness.

D. liability of foreignness.

Which of the following factors best helps capture administrative and political distances? A. the wealth and per capita income of consumers B. the linguistic and religious differences between two countries C. the physical size and topography of a country D. the absence or presence of weak legal and financial institutions

D. the absence or presence of weak legal and financial institutions

________ is how firms are able to source supplies at lower costs, to learn new competencies, and to further differentiate their products and services overseas.

Globalization

________ are described as the benefits from locating value chain activities in prime geographies for a specific activity.

Location economies

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. Which of the following strategies does the company pursue?

a multidomestic strategy

Global strategy is a firm's quest to gain a(n) ________ when competing against foreign companies around the world.

competitive advantage

The strategic foundations of the globalization hypothesis are based primarily on

cost reduction.

According to Porter's diamond of national competitive advantage, factor conditions are best described as a country's

endowments in terms of natural, human, and other resources.

Prestige Worldwide Inc. owns coffee plantations in Brazil. The company trades its coffee produce directly with coffee merchants in foreign markets who later resell and distribute it throughout their country. In this scenario, Prestige Worldwide's activities best illustrate

exporting.

Tyrell Corporation is an electronics company based in the country of Palmia. The company has manufacturing facilities in four other countries where labor costs are low. It also has its research centers in three other countries because these countries offer best-of-class capabilities. However, Tyrell Corporation does not offer much product differentiation, which means that price is the main competitive weapon. In this scenario, Tyrell Corporation most likely implements a __________ strategy.

global-standardization

"A process of closer integration and exchange between different countries and peoples worldwide, made possible by falling trade and investment barriers, advances in telecommunications, and reductions in transportation costs" is the definition of

globalization.

The Bluth Company is a condominium-building company that is based in the country of Veritas. It sells high-priced homes to consumers in Veritas as well as to consumers in other countries. It has extremely high brand loyalty. The industry it operates in is characterized by low pressure for local responsiveness and low pressure for cost reductions. In this scenario, The Bluth Company most likely pursues a(n) _________ strategy.

international

Companies from wealthy countries tend to trade with other rich countries rather than poor countries because they can

replicate their existing business model more easily.

According to the CAGE distance framework, cultural distance most affects industries or products

that are related to national and/or religious identity.

According to the CAGE distance framework, what does cultural distance represent?

the cultural disparity between an internationally expanding firm's home country and its targeted host country

Multinational enterprises will often make foreign direct investments (FDI) which is a firm's investment in _________ abroad.

value chain activities