Deck 11: The Strategy of International Business

Question 1

Improving explanatory power of the IO paradigm can be done by considering the potential for ________ to lead to a company's sustained competitive advantage.

A) bright, motivated managers
B) political trends and events
C) cultural institutions
D) new markets

Answer 1

A

Question 2

A company that employs a ________ strategy creates value by generating customer insights and translating those insights into innovations.

A) differentiation
B) diversification
C) cost leadership
D) innovation

Answer 2

A

Question 3

Value-Mart has achieved the status of overall low-cost producer in its industry,which means that Value-Mart ________.

A) can strongly defend its market position in the event of a price war
B) will earn the largest profits of any company in the industry
C) makes the most appealing product in its industry
D) can block the entry of new firms into the industry

Answer 3

A

Question 4

A differentiation strategy works well when ________.

A) a company designs a universal product for a broad market
B) buyers believe minor product differences are irrelevant to price
C) buyers are highly sensitive to price shifts and quality control
D) a company can continually develop products that have unique features

Question 5

Which force in Toyota's immediate environment would most likely have the greatest impact on its strategy?

A) interest rate trends
B) technology developments
C) shifts in U.S. political attitudes
D) actions taken by Honda and Mercedes Benz

Question 6

Which of the following has the greatest potential to transform an industry's structure?

A) a change in a competitor's management
B) a change in a competitor's pricing structure
C) the expansion of a distribution channel
D) the exit of a competitor from the industry

Question 7

Political,legal,economic,monetary,and institutional forces comprise the ________ of international business and influence managers' actions.

A) environment
B) competition
C) culture
D) threat

Question 8

Which of the following statements about Zara is most likely FALSE?

A) Zara puts fewer products on clearance racks than most of its competitors in the industry.
B) Zara's large advertising budget generates word-of-mouth and attracts new buyers.
C) New products and designs are delivered to Zara stores every three to four weeks.
D) Most of Zara's products move through the firm's distribution center in Spain.

Question 9

________ is the framework that managers apply to determine the competitive moves and business approaches that run the company.

A) Competition
B) Growth
C) Strategy
D) Vision

Question 10

Phillip is an international business manager with Corbin Manufacturing. Which of the following serves as an external influence on the business decisions that Phillip makes?

A) production plant locations
B) host country monetary policy
C) supply chain linkages
D) product design standards

Question 11

Which of the following is the best example of a product disruption driving industry change?

A) redesign of Toyota's Prius
B) introduction of Apple's iPad
C) AT&T's purchase of T-Mobile
D) merger of United and Continental

Question 12

Which of the following is the most important constraint on the explanatory power of the IO paradigm?

A) Many industries are imperfectly competitive.
B) Many companies are locally but not internationally competitive.
C) Most customers have perfect knowledge of the products they select.
D) Most industries have many firms that each have small market shares.

Question 13

The essence of a differentiation strategy is to ________.

A) target the most sophisticated segment of the market
B) incorporate the greatest number of features into a product
C) offer a unique product that supports a premium price
D) outspend rivals on product advertising

Question 14

The Industry Organization (IO)paradigm assumes which of the following?

A) stable political and cultural trends
B) shifting foreign exchange rates
C) perfect competition
D) unequal value

Question 15

As a result of the global economic crisis,the potential for profitability in all sorts of industries has ________.

A) decreased
B) increased
C) become less predictable
D) become more projectable

Question 16

Which of the following is the purpose of a company's value proposition?

A) to exceed customers' expectations
B) to force competitors into a price war
C) to identify consumers for whom the company creates products
D) to explain why a consumer should buy the company's products

Question 17

A strategy that focuses on lowering operating costs is referred to as a ________ strategy.

A) differentiation
B) cost leadership
C) niche market
D) diversification

Question 18

The industry organization (IO)paradigm reports that,on average,the best predictor of firm strategy is the ________.

A) company's stockpile of assets, skills, and capabilities
B) aggressiveness of a company's marketing objectives
C) link between a company's products and processes
D) structure of the industry in which it competes

Question 19

Which of the following is NOT among the five forces in the Five-Forces Model of Industry Structure?

A) governments
B) substitute products
C) potential new entrants
D) suppliers of raw materials

Question 20

________ are the two basic strategies for creating value and attaining a competitive advantage in an industry.

A) Diversification and niche marketing
B) Industry leadership and market dominance
C) Customer satisfaction and product innovation
D) Cost leadership and differentiation

Question 21

A company's value chain is best described as the ________.

A) variable sequence of converting product ideas into value for shareholders
B) mixture of activities taken to define product value standards and price points
C) discrete series of steps taken to move a product from conception to end-users
D) blueprint that must be followed to leverage the core capabilities of a global firm

Question 22

Johnson Enterprises manufactures computer chips used in cell phones. The MNE has long production runs that lower the per unit cost of each chip. The firm also purchases materials in bulk from its suppliers with whom Johnson has long-term contracts. Johnson is most likely benefiting from ________.

A) economies of scale
B) the cluster effect
C) digitization
D) location economies

Question 23

Which of the following refers to the means by which management applies the systems that link a company's value activities,whether those activities are performed in one or in many countries?

A) configuration
B) logistics
C) coordination
D) core competency

Question 24

Zara creates,produces,and distributes most of its products from its headquarters in Spain. Zara is most likely using a ________ configuration.

A) concentrated
B) coordinated
C) dispersed
D) logical

Question 25

In the demand-pull versus supply-push views of the market,which of the following is best classified as a push dynamic that drives supply in the global market?

A) digitization
B) media access
C) standardization
D) market globalization

Question 26

Which of the following is considered a primary activity in a company's value chain?

A) shipping
B) product design
C) systems and solutions
D) materials and equipment

Question 27

Firms that compete in the global marketplace typically face the asymmetric forces of pressures for ________ and ________.

A) global integration; local responsiveness
B) price reductions; cost reductions
C) politically sensitivity; market leadership
D) cost reductions; customer satisfaction

Question 28

Which of the following is NOT a factor driving local responsiveness among global firms?

A) cross-national differences in distribution channels
B) diverging consumer tastes and preferences
C) cross-national differences in product standards
D) host government support of freer international trade

Question 29

Dispersing value activities where and in how many places in the world is the issue of ________.

A) logistics
B) clustering
C) coordination
D) configuration

Question 30

Which of the following is LEAST likely to trigger the standardization of consumer preferences?

A) intrinsic functions of money
B) global access to common media
C) increasing nationalism
D) improved communications technologies

Question 31

A useful way to understanding the purpose of strategy is to think of the firm as a(n)________,composed of a series of distinct activities,including production,marketing,materials management,R & D,human resources,information systems,and the firm infrastructure.

A) activity network
B) value constellation
C) task succession
D) value chain

Question 32

Citibank decides to open a call center in Mumbai,India because a detailed analysis of the country-specific advantages suggests that India is the optimal place for responding to customers' calls. Citibank is exploiting ________ by running a call center in India.

A) value configuration synergies
B) location economies
C) geographic arbitrage
D) value offshoring

Question 33

A ________ is a special outlook,skill,capability,or technology that runs through the firm's operations,weaving together all value activities into an integrated value chain.

A) core competency
B) value proposition
C) mission statement
D) learning curve

Question 34

Advantages of following a strategy of local responsiveness include the ________.

A) improved ability to transfer skills to employees in different locations
B) opportunity to adopt a global advertising program
C) ease in standardizing manufacturing methods across countries
D) flexibility to apply location-specific skills to local opportunities

Question 35

In the context of value chain analysis,the support activities of a firm include ________.

A) outbound logistics, human resources, and information systems
B) production, marketing, and operations
C) shipping and customer service
D) research and development

Question 36

Successful implementation of a(n)________ strategy requires a company to develop unique competencies that rivals find hard,if not impossible,to match or copy.

A) differentiation
B) cost leadership
C) globalization
D) marketing

Question 37

No matter the country or culture,money has three fundamental features that motivate consumers around the world to maximize purchasing power by buying the highest possible quality product for the lowest possible price. These three features include all of the following EXCEPT which one?

A) scarcity
B) difficulty of acquisition
C) difficulty of allocation
D) difficulty of saving

Question 38

Social network analysis indicates that information flows more efficiently in a(n)________ manner.

A) collaborative
B) competitive
C) hierarchical
D) impersonal

Question 39

Which of the following would most likely pressure an MNE to globally integrate its value activities?

A) costs of producing in separate facilities exceeding those of producing in a single facility
B) variability in consumers' tastes and preferences shifting across countries
C) market pressures to add new product features continually
D) demands imposed by host country governments

Question 40

Host governments' growing demands for increasing operational transparency will most likely spur companies to make their value chains more ________.

A) locally responsive
B) globally integrated
C) concise
D) complex

Question 41

An MNE in which new knowledge and capabilities are developed in both domestic and foreign locations,both independently and jointly,and then diffused throughout the worldwide organization,is following a ________ strategy.

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

Question 42

A disadvantage of the ________ strategy is that firms that adopt this strategy can decentralize too much autonomy to national subsidiaries.

A) multidomestic
B) continental
C) international
D) transnational

Question 43

A global strategy tends to be more successful when ________.

A) buyers are looking for customized products at bargain prices
B) the industry's product is a commodity
C) entry barriers are low for new firms
D) suppliers have little bargaining power

Question 44

The term ________ refers to a global company that thrives on seeking unique ideas and insights from locations around the world and then leveraging that knowledge in international markets.

A) multidomestic
B) domestic
C) metanational
D) cross-cultural

Question 45

The integration-responsiveness (IR)expresses how a company's ________ is a function of the relationship between its value chain and the prevailing pressures for global integration or local responsiveness in its industry.

A) value proposition
B) target market
C) mission
D) strategy

Question 46

In the global environment,firms use an international strategy,a multidomestic strategy,a global strategy,or a ________ strategy.

A) regional
B) standardization
C) transnational
D) locational

Question 47

According to the integration-responsiveness (IR)grid,consumer electronics and corporate banking are two types of industries with ________ industry pressure for global integration and ________ industry pressure for local responsiveness.

A) low; low
B) high; high
C) low; high
D) high; low

Question 48

Which of the following is the primary limitation of the transnational strategy?

A) poor local adaptation
B) cross-unit coordination difficulties
C) duplication of subsidiary activities
D) inability to leverage core competencies

Question 49

Darvin Foods is an MNE that is in the process of revising its international business strategy. Most of the firm's top executives believe that Darvin should implement a multidomestic strategy. Which of the following conditions would most likely support this type of strategy?

A) a high need for local responsiveness and a low need to reduce costs via global integration
B) a high need for local responsiveness and a high need to create efficiencies via global integration
C) a low need for local responsiveness and a low need to reduce costs via global integration
D) a low need for local responsiveness and a high need to create efficiencies via global integration

Question 50

Firms that pursue a(n)________ strategy create value by transferring core competencies from the home market to foreign markets in which local rivals lack a competitive alternative.

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

Question 51

Which strategy champions worldwide consistency and standardization to support the firm's goal to become the low-cost leader?

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

Question 52

Which of the following is NOT a disadvantage of the international strategy?

A) Headquarters can misread foreign-market opportunities and threats.
B) The transfer of core competencies to foreign markets is complicated by the need to adapt to local needs.
C) Local subsidiaries are not given the opportunity to adapt value activities and share what they have learned with headquarters.
D) The company can be blindsided by an unexpectedly innovative rival in a foreign market.

Question 53

Marrin Associates is an MNE with operations in Hong Kong,India,and Canada. The firm strives to leverage its core competencies worldwide,reduce costs by exploiting location economics,and adapt when efficient to local conditions. Marrin is most likely following a(n)________ strategy.

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

Question 54

Google essentially views the entire world as one market and assumes that there are no fundamental differences among countries with regard to consumers' preferences. Google is engaging a(n)________ strategy.

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

Question 55

A distinct disadvantage of an international strategy is ________.

A) restricting the movement of core competencies to local markets
B) capitalizing on the benefits of global learning
C) customizing product offerings to local conditions
D) relying on home managers' knowledge of foreign markets

Question 56

A distinct advantage of an international strategy is ________.

A) transferring core competencies to foreign markets
B) reaping benefits of global learning
C) customizing product offerings to local conditions
D) leveraging local managers' knowledge of their markets

Question 57

Johnson & Johnson delegates to its subsidiaries a great deal of authority to respond to local conditions. Many subsidiaries have their own manufacturing,marketing,research,and human resource functions. This value chain configuration illustrates the ________ strategy.

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

Question 58

When the pressure for global integration is high and the pressure for local responsiveness is low,a company is most likely to pursue a(n)________ strategy.

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

Question 59

The MNE that applies a global strategy aims to ________.

A) compete essentially the same way wherever the company does business
B) empower local operations to make decisions about value activities
C) adapt activities to the industry standards in critical markets
D) customize its business practices to consumer expectations

Question 60

Preston Electronics is an MNE with facilities located in Taiwan,Singapore,and Germany. Preston gives its local operations the authority to adapt value activities to prevailing local economic,political,legal,and cultural conditions. Preston is most likely using a(n)________ strategy.

A) global
B) multidomestic
C) international
D) continental

Question 61

Using a concentrated configuration,an MNE performs value activities in different countries.

Question 62

Managers use a value chain analysis to determine how the company will design,make,move,and sell products; how it will find efficiencies in doing so; and how it will coordinate the decisions in one part of the business with those made in other parts.

Question 63

Markets are not always perfectly competitive and some firms consistently outperform industry averages. This suggests that firm performance is also influenced by the presence of bright,motivated managers and their keen sense of innovative products or processes.

Question 64

Dispersed value chains make sense when costs vary across countries.

Question 65

The fundamental outlook of the multidomestic strategy is standardization.

Question 66

According to the Industry Organization perspective,firm performance is determined by the presence of motivated managers and their ability to identify and develop innovative products for emerging markets.

Question 67

Pressures for global integration include economic integration,convergent consumer preferences,and political demands imposed by host countries.

Question 68

A differentiation strategy works well in situations where there are many ways to differentiate a product or service and many buyers perceive these differences as having value.

Question 69

Some companies that opt for the cost leadership strategy plan to sell products below the average industry prices in order to capture market share.

Question 70

The framework that managers use to make decisions that maximize their companies' value creation performance is referred to as a strategy.

Question 71

Pressures for local responsiveness are especially important in industries where value creation is a function of a company's capacity to adapt to local market conditions.

Question 72

The quest to maximize individual purchasing power compels local responsiveness.

Question 73

A differentiation strategy is a unique mixture of the multidomestic and global strategies whereby the company attempts to capture the advantages of both.

Question 74

Digitization has altered location economics and established a new global model for service providers in the financial and legal industries.

Question 75

When different companies produce the same commodity,their costs are essentially the same.

Question 76

Support activities define the infrastructure of the firm and serve as the basis for the daily implementation of primary activities in the value chain.

Question 77

A core competency gives every employee in an MNE a principle that helps them coordinate transactions between value activities.

Question 78

The potential of new entrants in an industry is one of the forces in the Five-Forces Model of Industry Structure.

Question 79

Pressures for local responsiveness include cross-national differences in terms of consumer preferences,advances in technology,and government regulations.

Question 80

Change in the long-term industry growth rate has the potential to transform an industry's structure.