Deck 9: International Strategy Emea Edition

Question 1

When a firm initially pursues an international business-level strategy, the resources and capabilities established in the home country frequently allow the firm to pursue the strategy into markets located in other countries.

Answer 1

True

Question 2

Multinational firms have many opportunities to learn from their experiences in international markets, but they must have a strong R&D system to absorb the knowledge.

Answer 2

True

Question 3

The liability of foreignness is generally unaffected by the cultural distance between the two countries in an international transaction.

Answer 3

False

Question 4

The three corporate-level international strategies are cost leadership, differentiation, and focus.

Question 5

As noted in the Opening Case, the Chinese market is attractive only for manufacturing firms such as those in the automobile industry.

Question 6

The "regionalization" environmental trend means that firms can focus on a region (customization) but also have some standardization or sharing within the region.

Question 7

It is generally easier to negotiate employee layoffs in Europe than in the United States because of the generous government-provided social services in Europe.

Question 8

The "liability of foreignness" will have a greater negative impact on a firm using a multidomestic strategy than on a firm using a global strategy.

Question 9

One reason why firms pursue international opportunities is to extend the product's life cycle.

Question 10

The benefits of international diversification must be tempered by political and economic risks and the problems of managing a complex international firm with operations in multiple countries.

Question 11

A multidomestic strategy uses a highly decentralized approach meaning that country managers have the autonomy to customize the firm's products as necessary to meet the needs and preferences of local customers.

Question 12

Many firms choose direct investment in assets in foreign countries (e.g., establishing new subsidiaries, making acquisitions, or building joint ventures) over direct investment because it provides better protection for their assets.

Question 13

In the chapter Strategic Focus, SunTech's success has been attributed in part to country conditions such as the availability of low-cost manufacturing and the strong engineering talents in China.

Question 14

International associations such as the European Union, the Organization of American States, and the North American Free Trade Association encourage regionalization of competition rather than globalization.

Question 15

A transnational strategy is difficult to achieve because the multiple objectives involved are contradictory.

Question 16

Italy has become the leader in the shoe industry because of related and supporting industries such as a well-established leather-processing industry which provides the leather needed to construct shoes and related products.

Question 17

Even if effectively implemented, the transnational strategy often produces lower performance than does the implementation of either the multidomestic or global strategies.

Question 18

Having substantial supplies of critical basic natural resources is a necessary condition for a country to support businesses which can successfully compete in international markets.

Question 19

A firm is more likely to invest R&D to build competitive advantage in smaller markets, even though those markets offer lower potential returns and pose more risk for the firm's investments.

Question 20

A global strategy assumes that the strategic business units operating in each country are interdependent and the home office attempts to achieve integration across these businesses.

Question 21

Counterfeit products are especially problematic for firms that have significant profit margins associated with intellectual property rights such as software makers, entertainment content businesses (i.e., music producers), and branded products.

Question 22

According to the Opening Case about entry into China, a common entry strategy for automobile firms such as General Motors and Volkswagen is

A) exporting.
B) acquisitions.
C) licensing.
D) joint ventures.

Question 23

The chief risks in the international environment are political and cultural.

Question 24

There is no "ideal" level of internationalization as the amount of international diversification that can be managed varies from firm to firm and according to the abilities of each firm's managers.

Question 25

Exporting and licensing are the most appropriate ways for smaller firms to first enter international markets.

Question 26

Fluctuation in the value of different currencies is a major economic risk associated with international diversification.

Question 27

Although licensing is the least costly method to enter a foreign market, its disadvantages include high costs of transportation and low control over the marketing and distribution of goods.

Question 28

The four aspects of Porter's model of international competitive advantage include all of the following EXCEPT

A) factors of production.
B) demand conditions.
C) political and economic institutions.
D) related and supporting industries.

Question 29

The benefits of expanding into international markets include each of the following opportunities EXCEPT

A) increasing the size of the firm's potential markets.
B) increased return on investment.
C) gaining a competitive advantage through location.
D) favorable tax concessions and economic incentives by home-country governments.

Question 30

Most R&D intensive industries are international because

A) of the need to make use of scientific talent in many nations.
B) large markets are necessary for earning above-average returns on investments.
C) of mandatory requirements by emerging economies that firms take part in joint ventures or direct investment in the country in order to sell their products in that country.
D) intellectual property is copied so rapidly that firms must move products into the international market immediately.

Question 31

While there are multiple means of entering new international markets, firms should use one method consistently with all of its various products and across its different markets in order to reduce administrative complexity.

Question 32

Optimal economies of scale in the international market for a standardized product derive from

A) the ability to have production facilities similar to those already used in the home market.
B) effective investment in research and development.
C) access to a low-cost labor force in the host market.
D) rapid advances in new technology with unique demands in each host market.

Question 33

International diversification can help to reduce a firm's overall risk through the stabilization of returns.

Question 34

Legal challenges to counterfeiting generally are successful in emerging economies such as China and Russia.

Question 35

In Porter's model, a specialized factor of production would include

A) abundant natural resources.
B) a large workforce.
C) an extensive highway transportation system.
D) workers with advanced engineering skills.

Question 36

In addition to the four basic dimensions of Porter's "diamond" model, ____ may also contribute to the success or failure of firms.

A) national work ethic
B) educational requirements
C) government policy
D) national pride

Question 37

Raymond Vernon states that the classic rationale for international diversification is to

A) pre-emptively dominate world markets before foreign companies can establish dominance.
B) avoid domestic governmental regulation.
C) extend the product's life cycle.
D) avoid international governmental regulation.

Question 38

The increased pressures for global integration of operations have been driven mostly by

A) new low cost entrants.
B) universal product demand.
C) increased levels of joint ventures.
D) the rise of governmental regulation.

Question 39

The greenfield venture option is useful when control of technology is important in an international expansion.

Question 40

A fundamental reason for a country's development of advanced and specialized factors of production is often its

A) lack of basic resources.
B) monetary wealth.
C) small workforce.
D) protective tariffs.

Question 41

A licensing agreement

A) results in two firms agreeing to share the risks and the resources of a new venture.
B) is best way to protect proprietary technology from future competitors.
C) allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host country.
D) can be greatly impacted by currency exchange rate fluctuations.

Question 42

According to the chapter Strategic Focus, counterfeit products are especially problematic for firms that have significant profit margins associated with all of the following EXCEPT

A) software makers.
B) music producers.
C) branded products.
D) generic drugs.

Question 43

Which of the following is NOT a disadvantage associated with exporting?

A) potential loss of proprietary technologies
B) high transportation costs
C) loss of control over distribution activities
D) tariffs imposed by local governments

Question 44

Internationally diversified firms

A) earn greater returns on their innovations through larger or more numerous markets.
B) are more likely to produce below-average returns for investors in the long run.
C) may need to decrease international activities when domestic profits are poor.
D) are generally unable to achieve high levels of synergy because of differences in cultures.

Question 45

A nation's competitiveness depends on the capacity of its industry to ____ and thereby maintain its competitive advantage.

A) diversify internationally
B) have access to critical resources
C) protect its proprietary capabilities
D) innovate

Question 46

One of the primary reasons for failure of cross-border strategic alliances is

A) the incompatibility of the partners.
B) conflict between legal and business systems.
C) security concerns and terrorism.
D) high debt financing.

Question 47

The decision of what entry mode to use is primarily based on all of the following factors EXCEPT

A) the industry's competitive conditions.
B) the country's situation and government policies.
C) the worldwide economic situation.
D) the firm's unique set of resources, capabilities, and core competencies.

Question 48

To maximize profitability, the best international corporate-level strategy to use always

A) is the multidomestic strategy.
B) is the transnational strategy
C) is the global strategy.
D) depends on the product or service being offered.

Question 49

The means of entry into international markets that offers the greatest control is

A) licensing.
B) acquisitions.
C) joint ventures.
D) greenfield ventures.

Question 50

In the chapter Strategic Focus, Sun Tech's success has been attributed in part to

A) national work ethic.
B) educational requirements.
C) country conditions such as low-cost manufacturing and strong engineering talents.
D) related and supporting industries.

Question 51

The transnational strategy is becoming increasingly necessary to compete in international markets for all the following reasons EXCEPT

A) the growing number of competitors heightens the requirements to keep costs down.
B) the desire for specialized products to meet consumers' needs.
C) differences in culture and institutional environments also require firms to adapt their products and approaches to local environments.
D) it is easy to use.

Question 52

All of the following are international corporate-level strategies EXCEPT the ____ strategy.

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

Question 53

Most firms enter international markets sequentially, introducing their ____ first.

A) most innovative products
B) largest and strongest lines of business
C) most generic products, which will be more likely to generate universal product demand,
D) products customized to the region

Question 54

The positive results associated with increasing international diversification have been shown to

A) continue as the level of international diversification increases.
B) level off and become negative as diversification increases past some point.
C) become negative quickly.
D) be centered in only one or two industries.

Question 55

International associations such as the European Union, Organization of American States, and the North American Free Trade Association, encourage

A) global strategies.
B) domestication.
C) regional strategies.
D) nationalization.

Question 56

The choices that a firm has for entering the international market include all of the following EXCEPT

A) exporting.
B) licensing.
C) leasing.
D) acquisition.

Question 57

International corporate-level strategy focuses on

A) the scope of operations through both product and geographic diversification.
B) competition within each country.
C) economies of scale.
D) sophistication of monitoring and controlling systems.

Question 58

A global strategy

A) is easy to manage because of common operating decisions across borders.
B) achieves efficient operations without sharing resources across country boundaries.
C) increases risk because decision-making is centralized at the home office.
D) lacks responsiveness to local markets.

Question 59

A multidomestic corporate-level strategy is one in which

A) a corporation chooses not to compete internationally but where there are a number of international competitors in the firm's local marketplace.
B) the firm produces a standardized product, but markets it differently in each country in which it competes.
C) the firm customizes the product for each country in which it competes.
D) the firm competes in a number of countries, but it is centrally coordinated by the home office.

Question 60

Disney suffered lawsuits in France at Disneyland Paris as a result of the lack of fit between its transferred personnel policies and the French employees charged to enact them. This is an example of

A) the effects of regionalization.
B) the risks of a multidomestic strategy.
C) the liability of foreignness.
D) the effect of demand conditions.

Question 61

Identify and describe the modes of entering international markets. What are their advantages and disadvantages?

Question 62

Identify and describe the major risks of international diversification.

Question 63

What are the motives for firms to pursue international diversification? What are the four basic benefits firms can derive by moving into international markets?

Question 64

What are the four factors that provide a basis for international business-level strategies?

Question 65

Discuss the three international corporate-level strategies. On what factors are these strategies based?