Deck 8: Competing Across Borders

Question 1

One of the major problems with the global matrix structure is that reporting relationships are often very complex and vague.

Answer 1

True

Question 2

The simplest and most common mode of entering the international marketplace is licensing.

Answer 2

False

Question 3

A country that has high political instability and increasing incidents of terrorism will be still be considered a high risk for foreign direct investments, even if the country's labor force is cheap.

Answer 3

True

Question 4

Because of environmental and technological changes taking place in the twenty-first century

A) companies are cutting back on the pursuit of international opportunities.
B) international strategies are doubling in volume and dollar value ever three years.
C) international strategies are becoming more widespread.
D) governments across the globe are pushing for higher tariffs.

Question 5

If an organization's goal in internationalizing is learning, then the best approach is the transnational strategy.

Question 6

Exporting and licensing are forms of foreign direct investment.

Question 7

An advantage of the geographic-area divisional structure is that it is easy to achieve economies of scale.

Question 8

A company specializing in all natural health products would be likely to form an alliance with a company in Brazil that manufactures creams, lotions, and body oils from tropical plants using little-known indigenous techniques in order to

A) take advantage of Brazil's low cost labor.
B) gain access to the knowledge of the Brazilian firm.
C) develop new markets in Brazil to offset the saturated U.S. market for food-based health products.
D) eliminate the risk of operating solely in the U.S. market.

Question 9

The cognitive model that motivates a manager to search for opportunities in foreign markets is known as

A) global mindset.
B) competitive mindset.
C) business mindset.
D) expansion mindset.

Question 10

If a firm's success depends on intangible resources and the success of its entry into the international market depends on transferring core competencies, an appropriate mode of entry into the international market would be through an acquisition.

Question 11

For global companies, the Olympics present a significant opportunity to realize operational efficiencies.

Question 12

The island of Madagascar has large, undeveloped deposits of a rare mineral. A European mining company is interested in locating in Madagascar to extract this mineral. This is an example of an international strategy being motivated by

A) sourcing of resources and supplies.
B) seeking to expand or develop new markets.
C) competitive rivalry.
D) leveraging core competencies and learning.

Question 13

A firm using the multidomestic strategy is unlikely to customize its products for the local market.

Question 14

There are two competing pressures organizations must consider when choosing an international strategy: pressures for global efficiencies and pressures for local responsiveness and flexibility.

Question 15

One of the main reasons that companies use contract manufacturing as a mode of entry into the international market is the cost advantage over U.S. manufacturing.

Question 16

A manufacturer of kitchen and laundry appliances plans to produce and sell different varieties of appliances in various countries due to differences in kitchen and home sizes, electrical power variations, alternative fuels, and cultural preferences. This manufacturer will be following the ____ strategy.

A) global
B) transnational
C) multidomestic
D) international customization

Question 17

The Internet has eased international transactions in all of the following ways except

A) allowing service companies to outsource operations to low-cost-labor countries.
B) reducing the amount of investment needed to expand into foreign markets.
C) substantially reducing the liability of foreignness.
D) increasing the efficiency of networking capability among business.

Question 18

A company that has significant internal-coordination advantages should not choose franchising or licensing as a mode of entering the international market.

Question 19

Like many major rivals, Coca-Cola and Pepsi-Cola compete with each other internationally in order to prevent the other from gaining a significant advantage in any one country or region that it could exploit in the U.S. market.

Question 20

An advantage of an international acquisition is that the acquiring firm takes on only a limited portion of the target firm's liabilities. The remainder are forgiven by the local government.

Question 21

Tariffs are most likely to be a problem for firms following the ____ international entry mode.

A) exporting
B) licensing
C) franchising
D) contract manufacturing

Question 22

The quickest way to enter a foreign market using foreign direct investment is

A) a greenfield venture.
B) a strategic alliance.
C) a joint venture.
D) an acquisition.

Question 23

The international strategy that requires the least customization of the company's product or service is the

A) universal.
B) transnational.
C) global.
D) multidomestic.

Question 24

In the ____ structure a specific division focuses on a single product or product group.

A) worldwide divisional
B) international network
C) geographic-area divisional
D) global matrix

Question 25

ZigZag, Inc., operates in four international locations: North America, Latin America, Western Europe, and Eastern Europe. For each of these locations, it has profit centers with separate functions such as accounting, marketing, finance, and information systems. ZigZag uses the ____ structure.

A) global matrix
B) geographic-area divisional
C) worldwide divisional
D) international network

Question 26

A German firm that manufactures precision scientific instruments has built a new factory in Nebraska on property that it has leased. It has hired German scientists and engineers as well as German technicians to work at the plant. The firm received tax benefits and other economic incentives from Nebraska in order to build this new plant. This is an example of a/an

A) franchising venture.
B) turnkey project.
C) greenfield venture.
D) international acquisition.

Question 27

If the U.S. dollar continues to be weak compared with the euro for the long term, it will

A) encourage European companies to increase the export of goods to the U.S.
B) encourage European companies to make direct investments in the U.S. to manufacture goods here.
C) encourage U.S. companies to import European goods
D) discourage European companies from making direct investments in the U.S. to manufacture goods here.

Question 28

Why would a company choose to use foreign direct investment as a way to enter a foreign market instead of other, less risky options? What are the disadvantages of foreign direct investment? What are the types of foreign direct investment?

Question 29

What are the differences and similarities between licensing and franchising as means of entering the international market? What are the pros and cons of both licensing and franchising?

Question 30

Bouquet Fragrances, Inc., uses a multidomestic strategy. The ____ structure is most appropriate for it.

A) international matrix
B) global matrix
C) worldwide divisional
D) geographic-area divisional

Question 31

The ____ international strategy requires centralized production and marketing decisions to be make at a central divisional office.

A) transnational
B) universal
C) multidomestic
D) global

Question 32

All of the following are examples of foreign direct investment except

A) strategic alliances.
B) greenfield ventures.
C) international acquisitions.
D) turnkey projects.

Question 33

The international strategy that attempts to combine global scale efficiencies with local responsiveness in a geographic region is the ____ strategy.

A) global
B) multidomestic
C) transnational
D) universal

Question 34

For a fee, McDonald's provides trademarks, the operating system, and its well-known products as well as support services such as advertising, specialized training, and quality assurance programs to partners across the world. This type of market entry is called

A) franchising.
B) a turnkey project.
C) licensing
D) management contracting.

Question 35

Why would a currently-successful firm wish to expand its operations internationally?

Question 36

If country-specific advantages for production are stronger in the home country, ____ is likely the best choice for entering an international market.

A) franchising
B) joint venture
C) licensing
D) exporting

Question 37

Goodie, Goodie, Gumdrops (GGGs) is a retail business appealing to pre-teen girls. It carries specialty clothing, accessories, and even food items all manufactured specifically for its stores. GGGs has been very successful in the U.S. and it plans to expand into selected international markets. The ____ entry mode would probably be most appropriate for GGGs.

A) greenfield venture
B) acquisition
C) joint venture
D) franchising

Question 38

The organizational structure which provides the most flexibility in designing products and responding to customer needs is the ____ structure.

A) international network
B) geographic-area divisional
C) worldwide divisional
D) global matrix

Question 39

The transnational strategy is usually implemented through the ____ structure.

A) international network
B) global matrix
C) geographic-area divisional
D) worldwide divisional

Question 40

Mitigation Masters is a company that specializes in the rescue and repair of paper documents and books damaged by water. They are known all over the United States for salvaging governmental records, academic and private libraries, and museum collections. Mitigation Masters has spent years in painstaking research and practical experimentation to develop methods of drying the documents, preventing mold growth, and minimizing the fragility of damaged documents. Mitigation Masters intends to move into the international market. The best entry mode for it would be

A) licensing.
B) franchising.
C) outsourcing.
D) a greenfield venture.

Question 41

What are the advantages of the global matrix structure for the organization operating in the international market? What are the other two types of organizational structure and why have they not been replaced by the matrix structure? What are their advantages and disadvantages?