Strategic Mgmt Ch 7

Companies tend to concentrate their activities in a limited number of locations

- when the costs of manufacturing or other activities are significantly lower in some geographic locations than in others. - when there are significant scale economies. - when there is a steep learning curve associated with performing an activity. - when certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages.

Which of the following statements about entering developing markets such as China, India, Russia, and Brazil is incorrect?

Among the strategy options for tailoring a company?s strategy to fit the sometimes unusual or challenging circumstances presented in developing-country markets such as China, India, Brazil, or Russia are the following: (1) prepare to compete on the basis of low price, (2) modify aspects of the company?s business model or strategy to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding), (3) try to change the local market to better match the way the company does business elsewhere, and (4) stay away from those emerging markets where it is impractical or uneconomical to modify the company?s business model to accommodate local circumstances. Patience and long-term thinking are also essential, as profitability does not often come quickly or easily to entrants.

Which of the following is not a typical option that companies have to consider to tailor their strategy to fit the circumstances of developing country markets?

Develop new sets of core competencies that allow a company to offer value to consumers of emerging markets in ways unmatched by rivals.

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

Domestic companies under pressure from lower-cost imports are benefited when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

A localized or multidomestic strategy

Two answers are correct: is one where a company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions; and has two big drawbacks: (1) it hinders 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.

Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous

Two answers are correct: when high transportation costs make it expensive to operate from central locations; and whenever buyer-related activities are best performed in locations close to buyers.

Which one of the following is not a factor that a company must contend with in competing in the markets of foreign countries?

a need to convince shippers to keep transportation costs low

The advantages of manufacturing goods in a particular country and exporting them to foreign markets

are weakened when that country?s currency grows stronger relative to the currencies of the countries where the output is being sold.

A "think local, act local" multidomestic type of strategy

becomes more appealing the bigger the country-by-country differences are in buyer tastes, cultural traditions, and market conditions.

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.

Which of the following is not a potential motivation for entering into strategic alliances or other cooperative arrangements with foreign companies?

better enable the use of a "think global, act global" strategy and facilitate cross-market subsidization

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.

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

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

The primary reasons that companies opt to expand into foreign markets are 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.

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

having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchiser to expend only the resources to recruit, train, and support foreign franchisees.

The chief difference between a "think global, act global" and a "think global, act local" approach to crafting a global strategy is that

local managers are given more latitude in adapting the global strategy approach as may be needed to accommodate local buyer preferences and be responsive to local market and competitive conditions.

Which of the following is not one of the ways in which a company can pursue competitive advantage by expanding outside its domestic market and competing multinationally?

pursuing blue ocean opportunities in the company's home country market

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

Multinational competitors tend to concentrate activities in a limited number of locations when

there are significant scale economies and/or steep learning curve effects associated with performing certain activities in a single location, costs of performing the activity are lower in particular geographic locations, and certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages.

One of the biggest strategic challenges to competing in the international arena is

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.