MANAGEMENT CH 6

Which of the following has become the world's largest exporter into the United States and also the largest consumer of basic raw materials?

China

What resulted from the formation of the European Union?

Europe became an economic superpower.

Which two statements about global strategic coordination are true?

If one multinational company adopts global strategic coordination, its competitors may be forced to follow. A company that centrally coordinates the purchase of raw materials may gain a cost advantage over its competitors that buy locally.

______, with the world's second largest population, is another critical competitor and has become an important provider of online support for computer software.

India

What are two disadvantages of the international model?

It frequently does not provide scale economies. It does not provide maximum latitude for responding to local conditions.

Which statement about India is true?

It has a skilled work force that makes it attractive to U.S. companies.

What are two disadvantages of the global model?

It involves significant management and paperwork costs. It is less responsive to consumer tastes and demands in different countries.

What factors contribute to the trend toward inshoring today?

Managers who offshore to achieve wage savings often incur unexpected additional costs. Political pressure and quality concerns have led some companies to shift foreign operations back to domestic soil. Automation has reduced the necessity to move jobs overseas.

After NAFTA was enacted, ______ became the United States' third largest trading partner.

Mexico

Which statements about the global organizational model are true?

Subsidiaries focus on marketing and service functions. Manufacturing facilities are centralized in a few locations.

consequences of increasing global integration

There is a higher percentage of imports in large economies. The volume of exports has increased much faster.

NAFTA includes which of the following countries?

United States Mexico Canada

Formed in 1995, ______ provides a forum for nations to negotiate trade agreements and the procedures for administering the agreements, and for resolving disputes among member nations.

WTO

_______ can be especially important in industries where price is the primary competitive weapon and competition among industry players is intense.

costs

The advantage of international licensing is that the company ______.

does not bear the costs and risks of opening up an overseas market

The threat of protectionism and nationalism are examples of what type of demands?

economic political

An advantage of exporting as a global expansion entry mode is that ______.

economies of scale may be realized

Given the associated costs and risks, most manufacturing companies begin global expansion through which entry mode?

exporting

True or false: Offshoring is a strategy used only by U.S. organizations.

false

True or false: The advantages of franchising are quite different from those associated with licensing.

false

The increase in usage of automation technologies means ______.

fewer workers are needed to produce the same quantity of goods

The goal of European unification through the formation of the European Union (EU) was to _______.

foster cooperation through trade

When a service company sells the rights to use its company's brand name in return for a lump-sum payment and a proportion of any profits that are generated, it is referred to as ______.

franchising

In the ______ model companies view the world as one market and assume no tangible differences among countries in consumer tastes and preferences.

global

In which model does the parent company exercise the tightest control over most aspects of worldwide operations?

global

Which of the organizational models requires the highest degree of coordination and oversight by the parent company?

global

What are the four approaches to international competition?

global transnational multinational international

When people have objections to offshoring it is generally because they think ______.

high-paying U.S. jobs are being lost to low-cost countries overseas

Evidence shows that the decline in manufacturing employment in the United States is mainly due to ______.

innovation

Moving work from other countries back to the headquarters country is known as ______.

inshoring

In the ______ model, subsidiaries may have a say in local adaptations, but core functions such as research and development are centralized in the parent company.

international

Of the four approaches to international competition, which one faces low pressure for both global integration and local responsiveness?

international

The ______ model of global strategies is most appropriate when there are few pressures for economies of scale or local responsiveness.

international

The _______ model uses subsidiaries in each country in which the company does business with ultimate control exercised by the parent company.

international

The model in which managers use their organization's existing core capabilities to expand into foreign markets is called the ______ model.

international

Selling the rights to manufacture your company's product to an overseas company for a negotiated fee is ______.

international licensing

Offshoring occurs when you ______.

move jobs to other countries

A major disadvantage of the ________ model of global strategy is that it cannot realize scale economies based on centralized manufacturing.

multinational

Disadvantages of the ______ model are higher manufacturing costs and duplication of effort because similar functions take place in different countries.

multinational

The _____ model provides a great deal of discretion to its subsidiaries to respond to local consumers, competitive conditions, and social structures.

multinational

The practice of moving jobs to other countries, typically where wages are lower, is referred to as ______.

offshoring

The Middle East is a small but important player in the global environment because it supplies such a large amount of ______ to the world's buyers.

oil

Bikes By Design manufactures custom bicycles. The bikes are sent to an outside paint and powder coat company to have the final finish applied to the frames before final assembly. This is an example of ______.

outsourcing

Most concerns about offshoring actually refer to concerns over ______.

outsourcing

______ is defined as when an organization contracts with an outside provider to produce one or more of an organization's products or services.

outsourcing

As a factor influencing global integration, the competitive pressure to reduce costs can be particularly important in industries where ______.

price is the main competitive weapon competition is intense competitors are located in low-wage countries

China's appeal to managers lies in which two factors?

rapid economic growth world's largest population

Functions of the World Trade Organization include ______.

resolving disputes negotiating trade agreements administering trade agreements

The multinational model consists of ______.

subsidiaries that have considerable discretion in decision making and strategy are located in various countries

Which of the following is true of foreign companies doing business in the United States?

they often hire US workers

Which is an example of a political demand that affects local responsiveness?

trade restrictions

Research indicates that the greatest advantage of using the international model is the ability to ______.

transfer skills from the parent company to subsidiaries

When using the ______ model, the experiences of local subsidiaries are shared worldwide to improve the firm's overall knowledge and capabilities.

transnational

Luke's company produces and sells rice to consumers all over the world. His company uses a global strategy because rice meets ______ needs of consumers.

universal

When the tastes and preferences of consumers in different countries are similar, this indicates ______.

universal needs