Deck 7: Strategies for Competing in International Markets

Question 1

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

A)raise the entry barriers for industry newcomers, neutralize the bargaining power of important suppliers, grow sales faster, and increase the number of loyal customers.
B)avoid having to employ an export strategy, avoid the threat of cross-market subsidization from rivals, and enable the use of a global strategy instead of a multidomestic strategy.
C)grow sales faster than the industry average, reduce the competitive threats from rivals, and open up more opportunities to enter into strategic alliances.
D)boost returns on investment, broaden their product lines, avoid tariffs and trade restrictions, and escape dealing with strong labor unions.
E)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.

Answer 1

E

Question 2

Whirlpool's efforts to link its product R&D and manufacturing operations in North America, Latin America, Europe, and Asia did not enable the company to

A)accelerate the discovery of innovative appliance features.
B)coordinate the introduction of these features in the appliance products marketed in different countries.
C)create a cost-efficient worldwide supply chain.
D)impart technical knowledge to high-cost human resources in developing nations
E)speed product innovations to market and achieve operational excellence.

Answer 2

D

Question 3

The diamond framework is not LIKELY to answer which of the following questions about competing on an international basis?

A)Where will the foreign entrants come from?
B)Which countries have the weakest foreign rivals?
C)What are the attributes of a country's business environment?
D)What location of value chain activities is most beneficial?
E)What are the disadvantages of allowing foreign competition?

Answer 3

E

Question 4

Compared with the other countries on the list below, which country boasted the highest labor wage rates in 2016?

A)Mexico
B)Taiwan
C)Switzerland
D)China
E)New Zealand

Question 5

Apollo Tires sets up a manufacturing unit in Mexico. Following this, Renault-Nissan signs a supply contract with the tire multinational. In which of the following ways is Renault-Nissan likely to gain from the pact?

A)different styles of management, organization, and strategy
B)knowledge sharing within same value chain system
C)availability of natural resources at low cost
D)growth potential and large size of the market
E)government policies in the host country

Question 6

Why do companies decide to enter a foreign market?

A)to capture economies of scale in product development, manufacturing, or marketing
B)to raise input costs through greater pooled purchasing power
C)to decrease the rate at which they accumulate experience and move up the learning curve
D)to concentrate risk within a broader base of countries, especially when sales are down in one area and the company can undermine sales elsewhere
E)to exploit the natural resources found within its home market

Question 7

The world economy is globalizing at an accelerated pace because

A)countries previously open to foreign companies have closed their markets.
B)countries that previously had market or mixed economies now embrace planned economies.
C)information technology is exacerbating the importance of geographic distance.
D)growth-minded companies are racing to build stronger competitive positions in the markets of more countries.
E)countries opposed to market or mixed economies have erected more stringent trade barriers.

Question 8

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

A)how to leverage the opportunities arising from shifting exchange rates.
B)how to charge the same price in all country markets.
C)how to identify foreign firms licensed to produce and distribute the company's products.
D)whether to offer a standardized product worldwide or a customized product offering in each different country market.
E)whether to pursue a franchising strategy or a joint venture strategy.

Question 9

Government policies that can make it more attractive for foreign companies to locate operations abroad include all of the following except

A)tax incentives.
B)stringent environmental compliance regulations.
C)site development assistance.
D)low-cost loans.
E)reduced tariffs, quotas, and percentages of local content required in production of products and services.

Question 10

Tiffany & Co. opted to enter into the mining industry in Canada in order to

A)build the profit sanctuary necessary to wage guerrilla offensives against global challengers endeavoring to invade its home market
B)capitalize on company competencies and capabilities
C)gain access to new customers in new markets
D)access diamonds that could be certified as "conflict-free" and not associated with unethical mining practices or the finding of military activities in Africa
E)achieve lower costs and enhance the firm's competitiveness.

Question 11

You have been asked to consult with Sonic.net, a regional Internet Service Provider, about the advisability of competing abroad. Your assessment of the opportunities for Sonic.net to craft a strategy to compete in one or more countries in the world would not necessarily

A)evaluate country-to-country differences in consumer buying habits and buyer tastes and preferences.
B)evaluate country-to-country variations in host government restrictions and requirements and fluctuating exchange rates for the company's offerings in each different country market or whether to offer a mostly standardized product worldwide.
C)evaluate which countries to locate company operations for maximum locational advantage, given country-to-country variations in wage rates, worker productivity, energy costs, tax rates, and the like.
D)evaluate a multidomestic strategy that considers the world market as a mostly homogeneous market.

Question 12

Crafting a strategy to compete in one or more foreign markets can be considered complex because

A)factors that affect industry competitiveness are the same from country to country.
B)the potential for location-based advantages to conducting value chain activities in certain countries.
C)different government policies and economic conditions make the business climate more favorable in some countries than in others.
D)currency exchange rates among countries are generally fixed and rarely change.
E)buyer tastes and preferences differ among countries and present a challenge for companies concerning. customizing versus standardizing their products and services.

Question 13

Gallo Wines is seeking international market entry. One if its top criteria for choosing a country to enter is a pro-business government policy. John would advise Gallo Wines to enter

A)Argentina, which has increased its interest rate on loans to foreign entrants from 15 percent to 19 percent.
B)Germany, since the European Union has imposed a 16 percent tariff on the import of agricultural produce.
C)Australia, which recently introduced a permanent employer-sponsored visa program for skilled manpower.
D)South Africa, which now levies a per metric ton carbon tax on electricity and a per liter surcharge on water.
E)China, whose government favors partial local ownership of foreign-owned companies.

Question 14

A location-based advantage for competing on an international basis can best be exemplified by

A)Microsemi Corporation acquiring California-based Actel Corporation.
B)RBC Wealth Management closing operations in South Florida.
C)Samsung diversifying and venturing into textiles and food processing.
D)Hyundai signing a memorandum of understanding with the government of South Korea to halt exports.
E)De Beers establishing greenfield operations in the mining region of South Africa.

Question 15

ExxonMobil enters into a pact with Gazprom, the world's largest natural gas extractor, to set up a processing unit in Baku, Azerbaijan. Which of the following is most likely the reason for ExxonMobil to opt for this strategic alliance?

A)to gain access to new customers
B)to scale back its core competencies
C)to restrict its factors of production
D)to gain access to low-cost inputs of production
E)to better compete with Gazprom

Question 16

Social media giant Facebook Inc. decided to expand outside its home market in order to

A)gain access to new customers for the company's products/services.
B)increase its business risk by competing with local social media providers such as WeChat.
C)achieving differentiation through economies of scale, experience, and increased purchasing power.
D)match its core competencies and capabilities with rival social media companies such as Snapchat and Instagram.
E)identify new and stronger resources and capabilities in its home market.

Question 17

Market size and growth rates in different countries can be influenced positively or negatively by

A)the ability of management to tailor a strategy to take into consideration differences among country markets.
B)which countries have the weakest foreign rivals.
C)competitive rivalry that is only moderate in some countries.
D)differing population sizes, cultures, income levels, infrastructure, and distribution networks among countries.
E)the large size of emerging markets such as Brazil, Russia, China, and India.

Question 18

When Disney relied on licensing agreements with the Oriental Land Company to open its first foreign theme park, Tokyo Disneyland,

A)Disney was able to meet the challenge of localizing its product offerings in Japan, leading to a low-cost advantage.
B)Japanese consumer buying habits and demographics no longer posed a challenge for Disney.
C)Disney no longer needed to contend with fluctuating exchange rates and country-to-country variations in host government restrictions and requirements.
D)Its licensing partner, the Oriental Land Company reaped the windfall, because the partner who bore the risk was also likely to be the biggest beneficiary from any upside gain.
E)It was Disney, not the Oriental Land Company, that reaped the windfall because of learning curve effects.

Question 19

What factor is not LIKELY responsible for Apple's decision to set up mobile phone manufacturing facilities in India?

A)growth potential of India's emerging market
B)global standardization of mobile phone technology
C)potential location advantages in wages, inflation rates, and tax rates that reduce costs
D)franchising opportunities in India
E)comparatively lower exchange rate and political risks

Question 20

When seeking to develop competitive strength in a foreign market, firms generally DO not evaluate the

A)differences among buyer tastes for a particular product or service from country to country.
B)competitive pressures to lower costs.
C)competitive risks associated with a fluctuating exchange rate.
D)degree of country political risk.
E)level of industry-related support activities to foster customization of products and services.

Question 21

The strategic options for expansion into foreign markets do not include

A)relying on home country governments to restrict imports via raising tariffs and local content requirements.
B)establishing a subsidiary in a foreign market.
C)maintaining a national (one-country)production base and exporting goods to foreign markets.
D)licensing foreign firms to produce and distribute one's products.
E)employing a franchising strategy using local ownership.

Question 22

Among the factors that do not determine whether to employ entry strategy options are

A)cross-border transfer activities and home country advantages.
B)the nature of the firm's objectives and trade barriers.
C)whether the firm has a full range of resources and capabilities needed to operate abroad along with trade barriers.
D)country-specific factors such as trade barriers and transaction costs, such as the cost of contracting with a partner and monitoring compliance with the terms of the contract.
E)transaction costs, such as the cost of contracting with a partner and monitoring compliance with the terms of the contract.

Question 23

An Irish dairy producer that exports gourmet cheeses made at its Kerry plants to the United States

A)is competitively disadvantaged when the euro declines in value against the U.S. dollar.
B)is largely unaffected by fluctuating exchange rates between the euro and the U.S. dollar. It would, however, be affected if its plants were in the U.S.
C)becomes less competitive in the U.S. market when the euro rises in value against the U.S. dollar.
D)becomes more competitive in European markets when the euro declines in value against the U.S. dollar.
E)has no interest in whether the euro grows stronger or weaker versus the U.S. dollar unless its chief competitors are other companies located in countries whose currency is also the euro.

Question 24

Cross-country differences in demographic, cultural, and market conditions are not present for

A)Fisher and Paykel, a company that produces energy-efficient, top-loading washing machines for sale in France.
B)Starbucks, which has developed a new line of Vietnamese coffee drinks for sale in Southeast Asian markets.
C)Ireland, a country that provides low-cost loans and tax havens to foreign entrants in order to stimulate capital investment.
D)Pizza Hut, whose store layouts and menus are uniform in all its locations around the world.
E)Ben & Jerry's Ice Cream, which produces kimchi-flavored ice cream for sale in South Korea.

Question 25

A typical host government requirement that is not said to impact the operations of foreign companies is

A)establishing local content requirement on goods made inside their borders by foreign companies.
B)having rules and policies that protect local companies from foreign competition.
C)placing restrictions on exports to ensure adequate local supplies.
D)requiring foreign companies to use vertical integration to support operations of local companies.
E)imposing burdensome tax structures and regulatory requirements upon foreign companies doing business within their borders.

Question 26

Companies operating in an international marketplace have to respond to all of the following, except

A)whether to customize their offerings in each different country market to match the tastes and preferences of local buyers.
B)whether to pursue a strategy of offering a mostly standardized product worldwide.
C)how much to customize their offerings in each different country market to match the tastes and preferences of local buyers.
D)the tensions between market pressures to localize a company's product offerings country by country and the competitive pressures to lower costs through greater product customization.
E)whether to buy a struggling competitor at a bargain price or pay a premium to gain entry to the local market.

Question 27

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

A)are largely unaffected by fluctuating exchange rates.
B)are greatest when local distributors and dealers in that country can be convinced not to carry products that are made outside the country's borders.
C)can be wiped out when that country's currency grows weaker relative to the currencies of the countries where the output is being sold.
D)are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.
E)are multiplied by the potential for local government officials to raise tariffs on the imports of foreign-made goods into their country.

Question 28

Sara is researching cross-country differences in demographic, cultural, and market conditions. She would not likely discover that

A)Nike produces its own line of skate shoes.
B)Keurig has acquired a large coffee farm in Costa Rica.
C)Scotland provides low-cost loans to U.S. craft whisky distillers seeking entry to its markets in order to stimulate competitive rivalry.
D)Intel's silicon chips are identical across the world.
E)McDonald's offers 100 percent beef-free products in its outlets in India.

Question 29

The 2015 merger of Walgreen Boots Alliance, one of the world's largest pharamaceutical purchasers, is not likely to

A)reduce the significant risks of fluctuating exchange rates to its competitiveness in foreign markets.
B)avoid the effects of fluctuations in exchange rates on the costs of manufacturing goods in a particular country.
C)succeed when the currency of the country from which the goods are being exported grows weaker relative to the currencies of the countries that the goods are being exported to.
D)see the advantages of manufacturing goods in a particular country erode when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.
E)come under pressure from lower-cost imports if local currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

Question 30

The difference between political risks and economic risks is that

A)political risks stem from instability or weakness in national governments, while economic risks stem from the stability of a country's monetary system, and its economic and regulatory policies.
B)political risks stem from stability in foreign business, while economic risks stem from an excess of property right protections.
C)political risks stem from hostility to foreign currencies, while economic risks stem from the instability of the monetary system.
D)political risks stem from exchange rate fluctuations, while economic risks stem from hostility to foreign business.
E)political risks stem from the stability of a country's monetary system, while economic risks stem from instability in national business.

Question 31

A U.S. company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to country markets across the world

A)is competitively disadvantaged when the U.S. dollar declines in value against the Brazilian real.
B)is competitively advantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported.
C)becomes less competitive in foreign markets when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported.
D)is competitively advantaged when the U.S. dollar appreciates in value against the Brazilian real.
E)is unaffected by changes in the valuation of foreign currencies against the Brazilian real-all that matters to a U.S. company is the valuation of the U.S. dollar against the Brazilian real.

Question 32

Why does a U.S. company exporting wooden furniture manufactured in Malaysia to the European Union benefit from the decline in the value of the ringgit against the euro?

A)Because decline in the value of the ringgit against the euro raises the cost of furniture manufactured in Malaysia, making it less competitive in European markets.
B)Because decline in the value of the ringgit against the euro reduces the cost of furniture manufactured in Malaysia, making it more competitive in European markets.
C)Because decline in the value of the ringgit against the euro has no impact on the cost of furniture manufactured in Malaysia, both in Malaysian or European markets.
D)Because decline in the value of the ringgit against the euro makes European goods more competitive as compared to Malaysian goods.
E)Because decline in the value of the ringgit against the euro makes Malaysian goods less competitive in the U.S. market.

Question 33

The impact of fluctuating exchange rates on companies competing in foreign markets

A)are easy to predict in spite of the variety of factors involved and the uncertainties surrounding when and by how much these factors will change.
B)never change the pecking order consisting of which countries represent the low-cost manufacturing locations and which rivals have the upper hand in the marketplace.
C)always disadvantage domestic companies facing competitive pressure from lower-cost imports when their government's currency grows weaker.
D)always benefit domestic companies facing competitive pressure from lower-cost imports when their government's currency grows weaker.
E)help domestic companies under pressure from lower-cost imports when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

Question 34

A U.S. organic personal hygiene product manufacturer that exports toothpaste and deodorant made at its U.S. plants for shipment to the U.K. market

A)is competitively disadvantaged when the U.S. dollar declines in value against the British pound.
B)is largely unaffected by fluctuating exchange rates. It would, however, be affected if its plants were in the United Kingdom or other foreign countries.
C)becomes more competitive in the United Kingdom when the U.S. dollar gains in value against the British pound.
D)becomes more competitive in the United Kingdom when the U.S. dollar declines in value against the British pound.
E)has no interest in whether the dollar grows stronger or weaker versus the British pound unless it is competing only against companies located in the United Kingdom.

Question 35

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

A)are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.
B)are greatest when local consumers prefer products manufactured inside the country's borders.
C)are largely unaffected by fluctuating exchange rates.
D)can be wiped out when that country's currency grows weaker relative to the currencies of the countries where the output is being sold.
E)are largely unaffected by tariffs or quotas.

Question 36

Strategic options for expansion into foreign markets do not consist of

A)employing a franchising strategy using local ownership.
B)relying on strategy alliances, joint ventures, or other cooperative agreements with foreign companies.
C)pursuing a profit sanctuary strategy.
D)establishing a subsidiary via acquisition or greenfield development.
E)maintaining a national (one-country)production base and exporting goods to foreign markets.

Question 37

A weaker U.S. dollar is an economically favorable exchange-rate shift for manufacturing plants based in the United States.

A)This is a true statement.
B)No, the U.S. dollar must be stronger.
C)Yes, because it provides for a weakened foreign demand for U.S.-made goods.
D)Yes, because it makes such plants less cost competitive with foreign plants.
E)Yes, because it provides incentives of foreign companies to locate manufacturing facilities in the U.S. to make goods for U.S. consumers.

Question 38

Using domestic plants as a production base for exporting goods to selected foreign country markets can be a(n)

A)excellent initial strategy to test the international waters and learn if attractive market positions can be established in foreign markets.
B)competitively successful strategy when a company is focusing on vacant market niches in each foreign country and does not have to compete head-to-head against strong host country competitors.
C)powerful strategy since a company can maintain a one-country production base allowing it to capitalize on company competencies and capabilities.
D)weak strategy when competitors are pursuing multicountry strategies.
E)powerful strategy because a company is not vulnerable to fluctuating exchange rates.

Question 39

A European-based company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to country markets in many different parts of the world

A)is competitively disadvantaged when the euro declines in value against the Brazilian real.
B)is competitively disadvantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported.
C)becomes less competitive in foreign markets when the Brazilian real gains in value against the currencies of the countries to which the Brazilian-made goods are being exported.
D)is competitively advantaged when the euro appreciates in value against the Brazilian real.
E)has no interest in whether the euro grows stronger or weaker versus the Brazilian real unless its chief competitors are other companies located in countries whose currency is also the euro.

Question 40

Maya has chosen to research the export strategies of several global products. She would consider a good example of a DOMINANT export strategy to be

A)the popular Harry Potter character Voldemort, which can only be leased or rented for use by amusement park operators.
B)ZipCar, which allows taxi fleet operators to use its trademarks, services, and products for a fee.
C)the United States, which is home to the world's three largest producers and suppliers of artificial heart valves.
D)American Airlines' common stock, which is owned by AMR Corp., but is not available for public purchase.
E)Facebook, which generates 51 percent of its advertising revenue outside the United States.

Question 41

When justifying her considerations for her China-based wine importation company's foreign market entry, Ming-Chi probably would not choose

A)entering a new foreign country via internal development and building a foreign subsidiary from scratch when having scale economies to compete against local rivals.
B)entering a new foreign country via internal development and building a foreign subsidiary from scratch by having the ability to gain increased access to distribution channels and networks.
C)entering a new foreign country via internal development and building a foreign subsidiary from scratch adding new production capacity, because it will adversely impact the supply-demand balance in the local market.
D)entering a new foreign country via internal development and building a foreign subsidiary from scratch, because it is cheaper than making an acquisition.
E)entering a new foreign country via internal development and building a foreign subsidiary from scratch, because it is cheaper than entering into strategic alliances and cooperative agreements.

Question 42

An UNLIKELY risk of cross-border alliances between domestic and foreign firms is

A)overcoming language and cultural barriers.
B)launching new initiatives to stay abreast of shifting market conditions.
C)developing mutually agreeable ways of dealing with key issues or differences.
D)disengaging from the alliance once its purpose has been served.
E)becoming overly dependent on foreign partners for essential expertise.

Question 43

The advantages of using an acquisition strategy to pursue opportunities in foreign markets include

A)having a high level of control and speed as an entry strategy to overcome trade barriers.
B)allowing a company to achieve scalable economies.
C)eliminating the costs and risks associated with establishing a foreign business location.
D)achieving variable product quality and competitive product performance.
E)exporting goods at higher costs than rivals in those locations.

Question 44

The risks of strategic alliances often include all of the following except

A)conflicting objectives and strategies.
B)deep differences of opinion about how to proceed operationally and strategically.
C)important differences in corporate values.
D)misunderstandings about appropriate ethical standards.
E)potential for royalty from trustworthy firms.

Question 45

The advantages of using a licensing strategy to participate in foreign markets include

A)being especially well-suited to achieve scale economies.
B)being able to charge lower prices than rivals.
C)being able to achieve first-mover advantages quickly and easily.
D)being able to leverage the company's technical know-how, appealing brand, or patents without committing their resources or capabilities to foreign markets.
E)being able to achieve higher product quality and better product performance than with an export strategy.

Question 46

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

A)having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchisor to expend only the resources to recruit, train, and support and monitor franchisees.
B)being particularly well-suited to the global expansion efforts of companies with multidomestic strategies.
C)allowing a company to achieve scale economies.
D)being well suited to companies who employ cross-border transfer strategies.
E)being well suited to the global expansion efforts of manufacturers.

Question 47

A major DISADVANTAGE of strategic alliances, joint ventures, and cooperative agreements between domestic and foreign firms is

A)to compete on a more global scale while still preserving their independence.
B)to gain better access to scale economies in production and/or marketing.
C)to fill competitively important gaps in their technical expertise and/or knowledge of local markets.
D)to share distribution facilities and dealer networks, thus mutually strengthening their access to buyers.
E)to create permanent arrangements between the domestic and foreign firms.

Question 48

When a company operates in the markets of two or more different countries, its foremost strategic decision is

A)whether to test the waters with an export strategy before committing to some other competitive approach.
B)whether to vary the company's competitive approach to fit specific market conditions and buyer preferences in each host country or whether to employ essentially the same strategy in all countries.
C)whether to maintain a national (one-country)manufacturing base and export goods to the other countries.
D)which foreign companies to team up with via strategic alliances or joint ventures.
E)whether to use strategic alliances to help defeat its rivals.

Question 49

One of the strategy options for competing in the markets of foreign countries is a ________ strategy.

A)profit sanctuary
B)country development
C)mapping
D)multidomestic
E)domestic

Question 50

Acquisition of an existing firm rather than via internal development may be the least risky and cost-efficient means of overcoming entry barriers such as

A)putting its own strategy into place.
B)accelerating efforts to build a strong market presence.
C)moving directly to the task of transferring resources and personnel, integrating and redirecting activities into its own operation.
D)fast-tracking exports into a foreign market by marketing indirectly through local rivals.
E)gaining access to local distribution networks, building supplier networks, and establishing working relationships with key government officials.

Question 51

What is the foremost strategic issue that must be addressed by firms when operating in two or more foreign markets?

A)deciding on the degree to vary its competitive approach to fit the specific market conditions and buyer preferences in each host country
B)deciding on the appropriate level of sustainable profitability
C)deciding on the relative cost competitiveness of the home country
D)deciding on the degree of globalization to maintain expansion capabilities
E)deciding on the resources and capabilities of allies

Question 52

The big issue an acquisition-minded firm must consider is whether

A)to acquire the firm at a price that cannot recapture the investment.
B)to require the acquired firm's resources and management capability to sustain the ongoing struggling operation.
C)to pay a premium price for a successful local company or to buy a struggling firm at a discount price.
D)to pay a price that builds in all the synergistic advantages to the acquired firm.
E)to pay a very high premium price that sends a signal to the market that the new firm has arrived.

Question 53

A cross-border alliance was not created when

A)Walgreens merged with Alliance Boots in 2014.
B)Hyundai Motor Company planned to open a new manufacturing plant in the Czech Republic.
C)The insurance company Geico became a wholly owned subsidiary of Berkshire Hathaway.
D)Renault-Nissan disclosed that it had sold more than one in ten cars worldwide.
E)Carrefour, a French grocery chain, established a new wholly owned venture in Poland.

Question 54

Sandi is considering conditions that make an internal startup strategy appealing over an acquisition, and has determined that she would ONLY choose an internal startup strategy when an internal startup

A)is more costly.
B)affects the supply-demand balance by increasing production capacity.
C)is unable to gain distribution access advantages.
D)has the necessary scale and resource strengths to compete with rivals.
E)lacks the experience in establishing new subsidiaries.

Question 55

A cross-border alliance was not created when

A)Deutsch, a New York-based wine importer, and Casella, an Australian wine producer, created and marketed the Yellowtail wine brand.
B)Pharmaceutical giants Eli Lilly and Kyowa Hakko Kogyo developed and performed clinical tests of a new cancer treatment called therapyyo.
C)The British insurance company Geico became a wholly owned subsidiary of Berkshire Hathaway.
D)Yum! Brands offered KFC franchises in China.
E)Lidl, a German deep-discount supermarket chain, established a new wholly owned venture with a supermarket chain in Poland.

Question 56

The big problem a franchisor faces is

A)allowing franchisees to achieve scale economies.
B)maintaining quality control due to a lack of commitment to consistency and standardization.
C)eliminating the costs and risks associated with establishing a foreign business location.
D)sharing foreign facilities and marketing strategies with local businesses.
E)achieving higher product quality and better product performance than with an export strategy.

Question 57

Greenfield ventures, like all market entry strategies, can pose serious problems to achieving foreign market entry success. What is not deemed a barrier to success?

A)Such ventures can require costly capital investments.
B)Such ventures can have a tendency to divert valuable resources from current business.
C)Such ventures really need well-functioning strong markets.
D)Such ventures are the fastest entry route to achieve a sizeable market share.
E)Such ventures require legal protections of foreign investors.

Question 58

A greenfield venture in a foreign market is one

A)where the company creates a wholly owned subsidiary business by setting up all aspects of the operation upon entering the market from the ground up.
B)where foreign facilities and marketing strategies are shared with local businesses.
C)where the company learns through training by the foreign entity on how to compete.
D)that supports exports into a foreign market by marketing indirectly through local rivals.
E)that offers lower risk and a faster path to financial returns.

Question 59

A localized or multidomestic strategy

A)is generally inferior to a global strategy when it comes to pursuing product differentiation.
B)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.
C)is generally preferable to a global strategy in situations where buyers are price sensitive because a "think-local, act-local" type of multidomestic strategy is better suited to achieving low unit costs than a global strategy.
D)is generally best suited for globally standardized industries, in which small country-by-country differences can be accommodated.
E)involves much less adherence to using the same basic competitive strategy theme (low-cost, differentiation, best-cost, or focused)in all country markets.

Question 60

Which statement is not a reason BP implemented a multidomestic competitive strategy to market its Castrol oil lubricants around the world?

A)Buyers in different countries are attracted to different product attributes.
B)The benefits from global integration and standardization are high.
C)Industry conditions and competitive forces in each national market differ in important respects.
D)The mix of competitors in each country market varies from country to country.
E)Winning in one country market does not necessarily signal the ability to fare well in other countries.

Question 61

Despite their obvious benefits, think-local, act-local strategies have all of the following drawbacks except

A)in global competition, rivals vie for worldwide market leadership and the leading competitors compete head-to-head in the markets of many different countries.
B)in globally competitive industries, a company's competitive position in one country both affects and is affected by its position in other countries.
C)in multidomestic competition, there is greater cross-country variation in market conditions and the nature of the competitive contest among rivals than tends to be the case in globally competitive markets.
D)with multidomestic competition, the competitive contest is localized, with rivals battling for national market leadership; moreover, winning in one country market does not necessarily signal that a company has the ability to fare well in the markets of other countries.
E)in global competition, the size of a firm's worldwide competitive advantage (or disadvantage)equals the sum of the competitive advantages (or disadvantages)it has in each country market where it competes.

Question 62

The marker of a true transnational strategy is

A)a big majority of the company's rivals are pursuing localized multidomestic strategies.
B)striking the right balance between thinking globally and acting locally, even though it is more costly and complex to implement.
C)host governments enact regulations requiring that products sold locally meet strict manufacturing specifications or performance standards.
D)plants need to be scattered across many countries to avoid high shipping costs.
E)market growth rates vary considerably from country to country.

Question 63

A global strategy is one in which a company performs all of the following tasks, except it

A)employs the same basic competitive approach in all countries where it operates.
B)sells much of the same products everywhere.
C)strives to build global brands.
D)coordinates its actions worldwide with strong headquarters control that represents a think-global, act-global approach.
E)uses local brand names to cater to a country's specific needs.

Question 64

The strength of a "think-local, act-local" multidomestic strategy is that it

A)matches a company's competitive approach to prevailing market and competitive conditions in each country market, country by country.
B)employs strategies that are almost totally different from and also unrelated to its strategies in other countries.
C)operates independent plants, located in different countries, thus promoting greater achievement of scale economies.
D)avoids host country ownership requirements and import quotas.
E)eliminates the costs and burdens of trying to coordinate the strategic moves undertaken in one country with the moves undertaken in the other countries.

Question 65

What is the best way to achieve the efficiency potential of a global strategy?

A)Managerial attention should be focused on objective-setting, specifically oriented toward production practices.
B)Resources and best practices should be shared, value chain activities should be integrated, and capabilities should be transferred from one location to another as they are developed.
C)The best identified resources and capabilities should be centralized at headquarters.
D)Value chain activities must be dispersed across many countries to elevate cost control management as a primary focus in all countries.
E)Local managers should be given considerable latitude for executing strategies for the country markets they are responsible for.

Question 66

When is it appropriate to use a think-local, act-local approach strategy?

A)when the need for local responsiveness is minimal and when potential efficiency gains from standardization is unrestricted by cross-country opportunities
B)when the local manager is intellectually savvy
C)when the local market provides strong opportunity for growth and profitability
D)when the need for local responsiveness is high due to significant cross-country differences in demographic, cultural, and market conditions and where benefits from standardization is limited
E)when the need for centralized decision making is relevant due to various macroeconomic and market conditions

Question 67

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

A)is very risky, given fluctuating exchange rates and the propensity of foreign governments to impose tariffs on imported goods.
B)is usually defeated by a "think-global, act-global" type of strategy.
C)is more appealing when the country-to-country differences in buyer tastes, cultural traditions, and market conditions are diverse.
D)is generally an inferior strategy when one or more foreign competitors are pursuing a global low-cost strategy.
E)can defeat a global strategy if the "think-local, act-local" multicountry strategist concentrates its efforts exclusively in those foreign markets which have superior resources.

Question 68

Employing a "think-local, act-local" multidomestic strategy is highly questionable when

A)a company desires to transfer competencies and resources across country boundaries and is striving to build a single, uniform competitive advantage worldwide.
B)there are significant country-to-country differences in customer preferences and buying habits and the industry is characterized by big economies of scale and strong experience curve effects.
C)the trade restrictions of host governments are diverse and complicated.
D)there are significant country-to-country differences in distribution channels and marketing methods.
E)host governments enact regulations requiring that products sold locally meet strictly defined manufacturing specifications or performance standards.

Question 69

When comparing and contrasting the differences between a localized multidomestic strategy and a global strategy you would not say that

A)a global strategy entails extensive strategy coordination across countries and a multidomestic strategy entails little or no strategy coordination across countries.
B)a global strategy often entails use of the best suppliers from anywhere in the world, whereas a multidomestic strategy may entail fairly extensive use of local suppliers (especially where use of local sources is required by host governments).
C)a global strategy tends to involve use of similar distribution and marketing approaches worldwide, whereas a multidomestic strategy often entails adapting distribution and marketing to local customs and the culture of each country.
D)a global strategy involves striving to be the global low-cost provider by economically producing and marketing a mostly standardized product worldwide, whereas a multidomestic strategy entails pursuing broad differentiation and striving to strongly differentiate its products in one country from the products it sells in other countries.
E)a global strategy relies upon the same technologies, competencies, and capabilities worldwide, whereas a multidomestic strategy often entails the use of somewhat different technologies, competencies, and capabilities as may be needed to accommodate local buyer tastes, cultural traditions, and market conditions.

Question 70

Choose the statement that is not a reason a global strategy contrasts sharply with a multidomestic strategy.

A)In global competition, rivals vie for worldwide market leadership.
B)In globally competitive industries, the power and strength of a company's strategy and resource capabilities in one country significantly enhance its competitiveness in other country markets.
C)In global competition, a firm's overall competitive advantage (or disadvantage)grows out of its entire worldwide operations.
D)In global competition, there's more cross-country variation in industry conditions and competitive forces than there is in industries where multidomestic competition prevails.
E)In global competition, many of the same rival companies compete against each other in many different countries, but especially so in countries where sales volumes are large and where having a competitive presence is strategically important to building a strong global position in the industry.

Question 71

A "think-local, act-local" multidomestic strategy entails

A)offering a narrow product line aimed at serving buyers in the same segments of country markets worldwide.
B)giving local managers considerable strategy-making latitude and often producing different product versions for different countries.
C)adopting aggressive efforts to locate facilities in those country markets that have superior resources.
D)pursuing strong product differentiation and competing in many buyer segments.
E)extensive efforts to transfer a company's competencies and resource strengths from one country to another so as to keep entry costs into new country markets low.

Question 72

The approach of a firm using a "think-global, act-local" version of a transnational strategy entails

A)producing and marketing a variety of product versions under the same brand name, with each different version being designed specifically to accommodate the needs and preferences of buyers in a particular country.
B)having little or no strategy coordination across countries.
C)pursuing the same basic competitive strategy theme (low cost, differentiation, best cost, focused)in all countries where the firm does business but giving local managers some latitude to adjust product attributes to better satisfy local buyers and to adjust production, distribution, and marketing to be responsive to local market conditions.
D)selling the company's products under a wide variety of brand names (often one brand for each country or group of neighboring countries)so buyers in each country market will think they are buying a locally made brand.
E)selling numerous product versions (each customized to buyer tastes in one or more countries and sometimes branded for each country), but opting to only sell direct to buyers at the company's website so as to bypass the costs of establishing networks of wholesale/retail dealers in each country market.

Question 73

A think-global, act-global strategic theme puts emphasis on

A)executing a global domination strategy that focuses the company's resource strengths on entry strategies across all country boundaries.
B)ensuring that value chain activities are defined by country-specific attributes to capitalize on economies of scale.
C)building a global brand name and aggressively pursuing opportunities to transfer ideas, products, and capabilities from one country to another.
D)elevating resources and capabilities developed on a country-by-country basis so as to capitalize on a country's uniqueness.
E)implementing mass-customization techniques that can address local preferences efficiently.

Question 74

What is a primary drawback of a localized multidomestic strategy?

A)It hinders the use of cross-border coordination of a company's activities and increases a company's vulnerability to adverse shifts in currency exchange rates.
B)It makes it very difficult to take into account significant country-to-country differences in distribution channels and marketing methods.
C)It makes it difficult and costly to be responsive to country-to-country differences in customer needs, buying habits, cultural traditions, and market conditions.
D)It hinders the transfer of a company's competencies and resources across country boundaries and hinders the pursuit of a single, uniform competitive advantage in all country markets where a company operates.
E)It is unsuitable for competing in the markets of emerging countries and posing added difficulty in modifying a company's business model to compete on the basis of low price.

Question 75

The most unlikely element of a localized multidomestic strategy is

A)granting country managers fairly wide strategy-making latitude
B)scattering plants across many host countries, each producing product versions for local area markets
C)adapting marketing and distribution to the buying habits, customs, and culture of each host country
D)considering the preference for local suppliers (use of some local suppliers may be mandated by host governments)
E)selling directly to buyers (perhaps via the company's website)to avoid having to establish networks of wholesale/retail dealers in each country market

Question 76

Véronique is the CEO of a wind power energy company. Identify which company model she would emulate to craft a multidomestic strategy.

A)Intel strongly encourages its trading partners to use the UN/EDIFACT ISO standard ISO 9735 for syntax and data exchange.
B)Castrol produces over 3,000 different formulas of oil lubricants to meet the requirements of different climates, vehicle types and uses, and equipment applications that characterize different country markets.
C)Tiffany & Co., an American luxury jewelry and specialty retailer, controls its general market approach from its headquarters in New York.
D)Ford Motors establishes its own ride-sharing business in Mumbai, India.
E)Vueling, a low-cost carrier based in Spain, adapts its price to competitive pressures from Norwegian Air, RyanAir, and EasyJet.

Question 77

A global strategy allows for

A)the leading companies to compete for the biggest share of the world market, but only occasionally compete head-to-head in different countries.
B)the markets in various countries to be part of the world market and competitive conditions across country markets to be strongly linked.
C)a company's overall market strength to be the sum of its market shares in each country market where it has a presence.
D)the industry leaders to be foreign companies, while domestic companies are relegated to runner-up status.
E)a firm's overall competitive advantage to be determined by the size of the competitive advantage it has in each of its profit sanctuaries.

Question 78

Four Seasons Hotels uses which strategy to compete globally?

A)A "think-local, act-local approach."
B)A "think-global, act-local approach."
C)A "think-global, act-global approach."
D)A "think-local, act-global approach."
E)An "emerging market, profit sanctuary approach."

Question 79

A "think-local, act-local" multidomestic strategy works particularly well in all of the following situations, except when there are

A)regulations enacted by the host governments requiring that products sold locally meet strictly defined manufacturing specifications or performance standards.
B)significant country-to-country differences in customer preferences and buying habits.
C)diverse and complicated trade restrictions of host governments preclude the use of a uniform strategy from country-to-country.
D)significant country-to-country differences in distribution channels and marketing methods.
E)large demands to pursue conflicting objectives simultaneously.

Question 80

The essential difference between a "think-global, act-global" and a "think-global, act-local" approach to strategy-making is that

A)a "think-global, act-global" approach entails extensive strategy coordination across countries and a "think-global, act-local" approach entails little or no strategy coordination across countries.
B)the former aims at implementing the same business model worldwide, whereas the latter aims at implementing customized business models to better match local market circumstances.
C)the "think-global, act-global" approach gives local managers more latitude to make minor strategy variations where necessary to better satisfy local buyers and to better match local market conditions.
D)a "think-global, act-global" approach involves selling a mostly standardized product worldwide, whereas a "think-global, act-global" approach entails selling products that are highly differentiated from country to country.
E)a "think-global, act-global" approach involves selling under a single brand name worldwide, whereas a "think-global, act-local" approach entails utilizing multiple brands (typically one for each different country or group of neighboring countries).