Deck 7: Strategies for Competing in International Markets

Question 1

Cross-country variations in government policies and economic conditions affect:

A) the formation of investment priorities and the steering of corporate resources.
B) the opportunities available to foreign entrants and the risks of operating within that country.
C) the ability of foreign markets to remain competitive.
D) the ability of weak-performing businesses to stage a narrow base for business operations.
E) cross-business opportunities such as transferring skills or technology to the new market.

Answer 1

B

Question 2

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 rights stem from hostility to foreign business,while economic risks stem from the instability of the monetary system.
D) political risks stem from risks due to 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.

Answer 2

A

Question 3

What is the framework that comprises a set of major factors (that vary from country to country)that describe the nature of each country's business environment?

A) Porter's five forces model.
B) Porter's Diamond of National Competitive Advantage.
C) Ricardo's economic rule of comparative advantage.
D) International Business Agenda for Global Environment (IBAGE).
E) All of these.

Answer 3

B

Question 4

The reason the world economy is globalizing at an accelerated pace is because:

A) countries previously open to foreign companies have opened up their markets.
B) countries that previously had market or mixed economies now embrace planned economies.
C) information technology expands the importance of geographic distance.
D) growth-minded companies are racing to build stronger competitive positions in the markets of more countries.
E) All of these.

Question 5

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

A) ways to avoid the risks of shifting exchange rates.
B) ways to charge the same price in all country markets.
C) defining how many foreign firms to license 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 global strategy or an intercontinental strategy.

Question 6

Competing in the markets of foreign countries generally does NOT involve which of the following?

A) Country-to-country differences in consumer buying habits and buyer tastes and preferences.
B) Country-to-country variations in host government restrictions and requirements and fluctuating exchange rates.
C) Whether to customize the company's offerings in each different country market or whether to offer a mostly standardized product worldwide.
D) In 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.
E) Crafting a multidomestic strategy that works just as well in one country as in another and that also has the appeal of turning the world market into a mostly homogeneous market.

Question 7

Which of the following is NOT a typical reason for companies to expand into the markets of foreign countries?

A) To gain access to new customers,especially when a company encounters dwindling growth opportunities in its home market.
B) To strengthen its capability to employ vertical integration strategies,especially those that involve partial integration (building positions in selected stages of the industry's value chain).
C) To achieve lower costs and enhance the firm's competitiveness.
D) To capitalize on company competencies and capabilities.
E) To spread business risk across a wider geographic market base.

Question 8

Competing in the markets of foreign countries entails dealing with such factors as:

A) fluctuating exchange rates,country-to-country parallels in host government restrictions and requirements,and country-to-country variations in cultural,demographic,and market conditions.
B) important country-to-country differences in consumer buying habits and buyer tastes and preferences.
C) whether to customize the company's offerings in each different country market or whether to offer a mostly standardized product worldwide.
D) the fact that product designs suitable for one country are sometimes inappropriate in another.
E) All of these.

Question 9

Why do companies decide to enter a 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 increase the rate at which they disperse 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 10

Which of the following is NOT a reason why crafting a strategy to compete in one or more foreign markets is inherently complex?

A) Because factors that affect industry competitiveness vary from country to country.
B) Because of the potential for location-based advantages to conducting value chain activities in certain countries.
C) Because different government policies and economic conditions make the business climate more favorable in some countries than others.
D) Because of the risks for shifts in currency exchange rates.
E) Because similarities in buyer tastes and preferences creates challenges in standardizing products and services.

Question 11

For a company to create a home country advantage and become competitively strong in a foreign market,it should base its strategy around which of the following factors?

A) The proximity of suppliers,end users,and complementary industries.
B) Different styles of management and organization and the degree of local rivalry.
C) The availability and relative prices of inputs.
D) Demand conditions in the industry's home market,including size and growth potential and the nature of domestic buyers' needs and wants.
E) The level of rivalry existing in the foreign market.

Question 12

Which one of the following is NOT a reason why a company decides to enter foreign markets?

A) To spread business risk across a wider geographic market base.
B) To capitalize on company competencies and capabilities.
C) To achieve lower costs through economies of scale,experience,and increased purchasing power.
D) To gain economic incentives offered by governments of developing countries wishing to expand industry and job creation.
E) To gain access to more buyers for the company's products/services.

Question 13

Which of the following factors is NOT a factor analyzed and relied on by firms when developing competitive strength in a foreign market?

A) The relative size of the market,its growth potential,and the nature of domestic buyers' needs and wants.
B) The availability,quality,and cost of raw materials and other inputs that firms will require to produce their products and services.
C) The development of different styles of management,organization,and strategy.
D) The degree of collaboration with key suppliers and the greater the knowledge sharing throughout the related-industry cluster.
E) The level of industry-related support activities to foster customization of products and services.

Question 14

Which of the following is NOT a typical host government requirement that affects the operations of foreign companies?

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 15

The diamond framework is an aid in deciding/revealing:

A) the appropriate level of competition one can expect.
B) the basis of the new rival's strengths.
C) the countries where rivals will be weakest.
D) the advantages of conducting particular business activities in that country.
E) All of these.

Question 16

One important concern a company has in trying to compete successfully in foreign markets is:

A) convincing shippers to keep cross-country transportation costs low enough that the company can export its goods to foreign countries cheaply.
B) whether it will have to integrate forward into wholesale and/or retail activities in order to gain visibility for its products in foreign countries.
C) how it can gain location-based competitive advantage in locating its various value chain activities.
D) how to convince local government officials to reduce tariffs on the imports of its goods into their country.
E) developing the expertise to avoid the impact of fluctuating exchange rates.

Question 17

When can companies gain competitive advantage over those rivals with plants in countries where costs are high?

A) When companies have production facilities that carry input costs (especially labor)much higher than that found in low-cost countries.
B) When companies meet government regulations that favor the local business climate and environmental regulations.
C) When companies can build production facilities in low-cost countries (or source their products from contract manufacturers in these countries).
D) When unique natural resources are easily extracted and carry very high export/tariffs or quotas.
E) All of these.

Question 18

The diamond framework can be used to reveal the answers to all of the following that are important for competing on an international basis EXCEPT:

A) where foreign entrants into an industry are most likely to come from.
B) how to formulate an exit strategy to push foreign competitors out of the market on the basis of competing strengths.
C) which countries' foreign rivals are likely to be the weakest.
D) how managers can decide which foreign markets to enter first.
E) where to locate different value chain activities so they are the most beneficial.

Question 19

Which of the following is NOT an accurate statement as concerns competing in the markets of foreign countries?

A) A multi-country strategy is generally superior to a global strategy.
B) There are country-to-country differences in consumer buying habits and buyer tastes and preferences.
C) A company must contend with fluctuating exchange rates and country-to-country variations in host government restrictions and requirements.
D) Product designs suitable for one country are often inappropriate in another.
E) Market growth rates vary from country to country.

Question 20

The reasons why a company opts to expand outside its home market include all of the following EXCEPT:

A) gaining access to new customers for the company's products/services.
B) spreading its business risk across a wider market base.
C) achieving lower costs through economies of scale,experience,and increased purchasing power.
D) exploiting its core competencies and capabilities.
E) identifying resources and capabilities in the company's home market.

Question 21

A European manufacturer that exports goods made at its European 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 more competitive in the U.S.market when the euro declines 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 22

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

A) Fluctuating exchange rates do not pose significant risks to a company's competitiveness in foreign markets.
B) The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates.
C) Companies that are manufacturing goods in a particular country and are exporting much of what they produce are disadvantaged when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to.
D) Companies that are manufacturing goods in a particular country and are exporting much of what they produce are benefited when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to.
E) Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

Question 23

The competitiveness of any company's facilities in any country is partly dependent upon:

A) whether exchange rate changes over time have a favorable or unfavorable cost impact.
B) exchange rate movements,which are unpredictable,swinging,first one way and then another way.
C) the government's currency growing weaker in relation to the currencies of the countries where the lower-cost imports are being made.
D) a weak currency.
E) All of these

Question 24

Which of the following is not a generic strategy option for entering into foreign markets?

A) Maintaining a national (one-country)production base and exporting goods to foreign markets.
B) Establishing a subsidiary via acquisition or opt for a de nova approach.
C) Franchising and licensing strategies.
D) Alliances or joint ventures strategies.
E) An enterprise-wide strategy to take over local competition.

Question 25

Companies operating in an international marketplace have to respond to:

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) All of these.

Question 26

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 seriously compromised by the potential for local government officials to raise tariffs on the imports of foreign-made goods into their country.

Question 27

A U.S.manufacturer that exports goods made at its U.S.plants for shipment to foreign markets:

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

Question 28

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 29

Which of the following factors does not determine whether to employ the entry strategy options?

A) Cross-border transfer activities and home country advantages
B) The nature of the firm's objectives
C) Whether the firm has a full range of resources and capabilities needed to operate abroad
D) Country-specific factors such as trade barriers
E) Transaction costs involved (the cost of contracting with a partner and monitoring compliance with the terms of the contract)

Question 30

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 31

One of the big risks of competing in foreign markets is:

A) the extent to which the advantages of exporting goods from a particular country can be wiped out when fluctuating exchange rates result in that country's currency growing much weaker relative to the currencies of the countries to which the goods are being exported.
B) whether the economies of foreign countries will continue to grow at double-digit rates.
C) the fact that some countries have lower wage rates than others.
D) the potential for local government officials to reduce tariffs on the imports of its goods into their country.
E) the extent to which the advantages of manufacturing goods in a particular country can be wiped out when fluctuating exchange rates result in that country's currency growing stronger relative to the currencies of the countries where the output is being sold.

Question 32

Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is NOT accurate?

A) Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets.
B) The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates.
C) Exporters win 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) The advantages of manufacturing goods in a particular country can be undermined when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.
E) Domestic companies under pressure from lower-cost imports are benefited when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

Question 33

The advantages of using an export strategy to build a customer base in foreign markets include:

A) being able to minimize shipping costs,avoiding tariffs,and curbing the effects of fluctuating exchange rates.
B) minimizing its risk and direct investments requirements.
C) being cheaper and more cost effective than licensing and franchising.
D) being cheaper and more cost effective than a multicountry strategy.
E) being more suited to accommodating local buyer tastes and host government regulations than a global strategy.

Question 34

The primary strategic options for entering foreign markets,depends on the firm's wherewithal to:

A) rely on strategic alliances or joint ventures with foreign companies.
B) maintain a national (one-country)production base and exporting goods to foreign markets.
C) adopt a licensing approach with foreign firms to produce and distribute one's products or to use the company's technology.
D) employ a franchising strategy.
E) All of these.

Question 35

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 36

Which of the following statements about fluctuating exchange rates and the related effects on companies competing in foreign markets is true?

A) Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets.
B) The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates.
C) Companies that are manufacturing goods in a particular country and are exporting much of what they produce lose out when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to.
D) The advantages of manufacturing goods in a particular country improve when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.
E) Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

Question 37

Which of the following is false as concerns use of an export strategy to compete in foreign markets?

A) One advantage of an export strategy is the ability to test the international waters before having to commit substantial sums to establishing operations in foreign countries-the amount of capital required to begin exporting is frequently quite minimal.
B) Exporting carries the risk of being vulnerable to adverse shifts in currency exchange rates.
C) An export strategy is especially well suited to accommodating the different needs and preferences of buyers in different countries.
D) An export strategy may allow a company to gain additional scale economies from centralizing production in one or several giant plants.
E) An export strategy is disadvantageous when costs in the country where the goods are being manufactured for export are higher than the costs in those locations where rivals have their plants.

Question 38

Using domestic plants as a production base for exporting goods to selected foreign country markets:

A) can be an excellent initial strategy to test the international waters and learn if attractive market positions can be established in foreign markets.
B) can be a 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) can be a powerful strategy since a company can maintain a one-country production base allowing it to capitalize on company competencies and capabilities.
D) is usually a weak strategy when competitors are pursuing multi-country strategies.
E) can be a powerful strategy because a company is not vulnerable to fluctuating exchange rates.

Question 39

An export strategy is vulnerable except when an exporter is:

A) exposed to higher manufacturing costs in the home country than in foreign countries where rivals have plants.
B) subject to the relatively high costs associated with shipping the product to distant foreign countries.
C) affected by adverse shifts occurring in currency exchange rates.
D) dependent on the importing countries' enforcement of tariffs or other trade barriers.
E) affected by both production and shipping costs remaining competitive with rivals.

Question 40

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) enabling a company 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 41

Multidomestic competition refers to situations where:

A) no domestic companies have very large market shares and each national market has many competitors.
B) competition in one national market is independent of competition in other national markets,and as a consequence,there is-strictly speaking-no "international or world market."
C) domestic rivals pursue focused or market niche strategies and do not compete internationally.
D) domestic companies have a competitive disadvantage in competing with foreign rivals that operate in many different countries.
E) most competitors operate in more than 2 country markets but rarely in more than 20.

Question 42

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 43

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 and are the slowest entry route for building the business.
B) Such ventures can have a tendency to divert valuable resources from current business.
C) Such ventures really need well-functioning strong markets as well as well established institutions to ensure protection of foreign investor rights.
D) Such ventures require managerial talent experienced in getting new subsidiaries up and running.
E) Such ventures can be costlier than making an acquisition.

Question 44

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 thru local rivals.
E) that offers lower risk and a faster path to financial returns.

Question 45

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) being able to achieve variable product quality and competitive product performance.
E) being able to export goods at higher costs than rivals in those locations.

Question 46

Cross-border alliances between domestic and foreign firms are more effective in:

A) building multiple profit sanctuaries than in forging a mutually supportive global strategy.
B) reducing supply chain costs than in reducing distribution costs.
C) helping establish a new beachhead of opportunity rather than in achieving and sustaining global market leadership.
D) helping the partners pursue a multidomestic strategy as compared to a global strategy.
E) helping the partners pursue a global strategy as compared to a multidomestic strategy.

Question 47

Which of the following statements regarding multidomestic competition is false?

A) One of the features of multidomestic competition is that buyers in different countries are attracted to different product attributes.
B) With multidomestic competition,the power and strength of a company's strategy and resource capabilities in one country significantly enhance its competitiveness in other country markets.
C) One of the features of multidomestic competition is that industry conditions and competitive forces in each national market differ in important respects.
D) One of the features of multidomestic competition is that the mix of competitors in each country market varies from country to country.
E) With multidomestic competition,rivals battle for national championships,and winning in one country market does not necessarily signal the ability to fare well in other countries.

Question 48

Which of the following is one of the four conditions that make an internal startup strategy appealing over an acquisition?

A) When an internal startup is more costly.
B) When adding production capacity has a significant impact on supply-demand balancing.
C) When an internal startup has the inability to gain distribution access advantages.
D) When the internal startup will have the necessary scale and resource strengths to compete with rivals.
E) All of these.

Question 49

Which of the following is NOT one of the strategy options for competing in the markets of foreign countries?

A) A profit sanctuary strategy.
B) An international strategy.
C) A global strategy.
D) A multicountry strategy.
E) A transnational strategy.

Question 50

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

A) to acquire the firm at a price that is prohibitive-in other words,a price that cannot recapture the investment.
B) to require the acquired firm's resources and management capability to sustain the on-going 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 51

What makes cross-border alliances an attractive strategic means of gaining a foothold in foreign markets?

A) Alliances provide the flexibility to readily disengage when the purpose has been served or the benefits prove elusive and also provide the firm with some degree of autonomy and operating control,as well as independence.
B) Alliances are permanent arrangements and thus are considered a long-term strategic advantage.
C) Alliances bind firms to "local" customary behavior,language,and cultural identities and operating practices.
D) Alliances are not relevant compared to acquisition approaches for foreign entry.
E) Alliances direct the firm's competitive energies to each other instead of toward mutual rivals,allowing advanced internal strategic responses to differences in operating practices.

Question 52

Which of the following is NOT a potential benefit of cross-border strategic alliances or other cooperative arrangements between foreign and domestic companies?

A) Gaining wider geographic coverage and access to attractive country markets through the foreign partner's familiarity with the market.
B) Gaining better access to scale economies in production and/or marketing.
C) Filling competitively important gaps in their technical expertise and/or knowledge of local markets.
D) A greater ability to employ a global strategy (as opposed to a multicountry strategy).
E) Sharing distribution facilities and dealer networks,thus mutually strengthening their access to buyers.

Question 53

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 local responsiveness to product sales in each country.
D) Deciding on the degree of globalization to maintain expansion capabilities.
E) All of these.

Question 54

A primary disadvantage of a licensing strategy is the need to:

A) monitor the licensing agreement.
B) safeguard the company's proprietary know-how.
C) work with reputable firms.
D) lose some degree of control over their competitive offering.
E) All of these.

Question 55

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) one where foreign facilities and marketing strategies are shared with local businesses.
E) being able to achieve higher product quality and better product performance than with an export strategy.

Question 56

Which of the following are NOT generic strategy options for competing in foreign markets?

A) A multidomestic strategy.
B) Global strategies keyed either to low-cost or differentiation.
C) Cross-border transfer strategies and home-field advantage strategies.
D) Using strategic alliances and joint ventures with foreign competitors as the primary vehicles for entering and competing in foreign markets.
E) A transnational strategy.

Question 57

Which of the following is NOT one of the problems and risks of cross-border alliances between domestic and foreign firms?

A) Overcoming language and cultural barriers.
B) The amount of time required to build trust,effective communication,and coordination between allies.
C) Developing mutually agreeable ways of dealing with key issues or differences.
D) Making it harder to pursue a multidomestic strategy as compared to a global strategy.
E) Suspicions about whether allies are being forthright in exchanging information and expertise.

Question 58

The risks of strategic alliances often include partners discovering they have:

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) All of these.

Question 59

Strategic alliances,joint ventures,and cooperative agreements between domestic and foreign firms are a potentially fruitful means for the partners to:

A) enter additional country markets and compete on a more global scale while still preserving their independence.
B) gain better access to scale economies in production and/or marketing.
C) fill competitively important gaps in their technical expertise and/or knowledge of local markets.
D) share distribution facilities and dealer networks,thus mutually strengthening their access to buyers.
E) All of these.

Question 60

Which of the following is the role played by local managers within experienced multinational companies?

A) To contribute needed understanding of local market conditions,local buying habits,and local ways of doing business.
B) To run the local operations for the company.
C) To understand how "the system" works to detour the hazards of collaborative alliances with local companies.
D) To serve as conduits for the flow of information between the corporate office and local operations.
E) All of these.

Question 61

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

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 62

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

A) 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) 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 63

Which of the following statements regarding global competition is false?

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 64

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) All of these.

Question 65

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) becomes more appealing the bigger the country-to-country differences in buyer tastes,cultural traditions,and market conditions.
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 66

In which of the following situations is employing a "think local,act local" multidomestic strategy highly questionable?

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

Question 67

The characteristics of a world market where global competition prevails include:

A) a market situation where competitive conditions across national markets are linked strongly enough to form a true world market and where leading competitors typically compete head to head in many different countries.
B) minor cost variations from country to country (as concerns production,distribution,sales and marketing,and other primary components of the industry value chain)and minimal cross-country trade restrictions.
C) a competitive environment comprised of so many competitors that no company has a sizable worldwide market share.
D) many companies racing for global market leadership,with most contenders using the same basic type of competitive strategy and positioned in the same strategic group.
E) low barriers to entry,such a large number of rivals that the actions of any one rival have little impact on the sales and market shares of other rivals,and key success factors that vary from country to country.

Question 68

Which of the following is the most unlikely element of a localized multidomestic strategy?

A) Granting country managers fairly wide strategy-making latitude.
B) Plants scattered across many host countries,each producing product versions for local area markets.
C) Marketing and distribution adapted to the buying habits,customs,and culture of each host country.
D) Preference for local suppliers (use of some local suppliers may be mandated by host governments).
E) Selling direct to buyers (perhaps via the company's website)to avoid having to establish networks of wholesale/retail dealers in each country market.

Question 69

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

A) whether to use strategic alliances to help defeat its rivals.
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) choosing which foreign companies to team up with via strategic alliances or joint ventures.
E) whether to test the waters with an export strategy before committing to some other competitive approach.

Question 70

Which of the following statements regarding multidomestic and global competition is false?

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) One of the features of multidomestic competition is 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 71

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

A) It demands managerial attention to be focused on objective-setting specifically oriented toward production practices.
B) It requires that resources and best practices be shared,value chain activities be integrated,and capabilities be transferred from one location to another as they are developed.
C) It requires that the best identified resources and capabilities be centralized at headquarters.
D) It requires value chain activities to be dispersed across many countries to elevate cost control management as a primary focus in all countries.
E) All of these.

Question 72

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

A) it matches a company's competitive approach to prevailing market and competitive conditions in each country market,country by country.
B) each of a company's country strategies is almost totally different from and also unrelated to its strategies in other countries.
C) the plants located in different countries can be operated independent of one another,thus promoting greater achievement of scale economies.
D) it avoids host country ownership requirements and import quotas.
E) it 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 73

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

A) a big majority of the company's rivals are pursuing localized multidomestic strategies.
B) country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy.
C) plants need to be scattered across many countries to avoid high shipping costs.
D) market growth rates vary considerably from country to country.
E) host governments enact regulations requiring that products sold locally meet strict manufacturing specifications or performance standards.

Question 74

A multidomestic strategy represents:

A) a think-local,act-local approach to international strategy.
B) a sound approach when decision-making is centralized.
C) a focused strategy on a global scale with decision making centralized.
D) a decision-based approach whereby senior managerial positions are occupied by home-country staff.
E) All of these.

Question 75

A global strategy is one in which a company:

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 represents a think-global,act-global approach.
E) All of these.

Question 76

Multidomestic competition is best characterized as a situation where:

A) the competitive arena among rival companies involves several neighboring countries rather than either a single country or the world market as a whole.
B) competition is mainly among the domestic companies of a few neighboring countries (five countries at most).
C) there are extensive trade restrictions,sharply fluctuating exchange rates,and high tariff barriers in many country markets that work against the formation of a true world market.
D) competition among domestic companies predominates and foreign competitors are a minor factor.
E) there is no international or global market,just a collection of mostly self-contained country markets.

Question 77

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 78

A "think local,act local" multidomestic strategy works particularly well when:

A) host governments enact regulations requiring that products sold locally meet strictly defined manufacturing specifications or performance standards.
B) there are 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) there are significant country to country differences in distribution channels and marketing methods.
E) All of these.

Question 79

What are two drawbacks of a "think local,act local" multidomestic strategy?

A) The especially high vulnerability to fluctuating exchange rates and the fact it can usually be defeated by companies employing cross-border coordination techniques.
B) The excessive vulnerability and exposure that exists to fluctuating exchange rates and the need to craft a separate strategy for each country market in which the company competes.
C) The hindering of a company's transfer of competencies and resources across country boundaries (since somewhat different competencies and capabilities are likely to be employed in different host countries)and that it does not promote the building of a single unified competitive advantage in all country markets where a company competes.
D) The greater exposure to both increases in tariffs and restrictive trade barriers and the added difficulty in accommodating the diverse trade restrictions and regulatory requirements of host governments.
E) Not being able to export products manufactured in one country to markets in other countries and the fact that the strategy is largely unsuitable for competing in the markets of emerging countries.

Question 80

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.