Deck 15: Global Strategies and the Multinational Corporation

Question 1

Figure 15.7 shows:

A)Traditional structures of corporations found in the 18th century: a European rim, a Japanese hub and an American wheel
B)The structures of large national European, American and Japanese corporations found today
C)Three structures of MNCs from the 20th century
D)Three structures of MNCs commonly found today

Answer 1

C

Question 2

Why do so firms such as Wal*Mart fail in South Korea?

Answer 2

South Korea and other Asian countries have a specific culture, and probably some indirect defense strategies to defend against foreign competition.
In the retail industry, it is likely that one of the main reasons for failure is the specific practice of setting barriers to entry. Maybe business and political connections play an important role. Another reason could be the lack of adaptation of the products to the local tastes. However, this obstacle should disappear rapidly, because the learning curves of these retailers should allow them to adjust their offerings. Overall cultural adaptation is a broader concern that may permeate many activities and aspects of their activities abroad.
France-based Carrefour and US Wal*Mart have demonstrated in other countries their skills and experience in developing a network of superstores.
Only local specificities can explain the difficulties experienced in South Korea.

Question 3

Centers of excellence are a way of:

A)Respecting different local regulatory systems
B)Reconciling conflicting forces for local innovation in leading markets with global exploitation of scale and scope economies
C)Operating in a locally sensitive manner
D)Maximizing global economies of scope

Answer 3

B

Question 4

How do national cultures differ?

Question 5

Which factors are determinants of the success of international alliances?

Question 6

Why do joint ventures with shared management tend to have a higher failure rate compared to firms that have one dominant parent?

Question 7

The European motor scooter, once dominated by Piaggio and Lambretta, demonstrates:

A)The domination of a single country's firms
B)A strong decrease in seller concentration
C)An increase of the importance of outsourced activities
D)The strengths and dynamism of European firms

Question 8

Nokia, Swatch, AP Moller-Maersk, BHP, and Research In Motion illustrate:

A)The opportunities offered to firms with small domestic markets to become global leaders
B)The complexity of the analysis of competitive advantage in global markets
C)Different industries' profitability
D)The rise of Asian firms against Western firms

Question 9

Ecco's value chain illustrates:

A)The highest level of expertise of the "Capability Maturity Model"
B)The location of its R&D in Netherlands
C)The success of a footwear firm
D)The location of its activities where the costs are the lowest

Question 10

What is "cross-subsidization"?

A)Another name for price discrimination
B)Another name for trans-substantiation
C)Using funds from one business or sector to subsidize another
D)Using funds from one customer to subsidize another

Question 11

Firms that have considered offering standard global products and found they must offer local variants to survive include:

A)The world's biggest automakers: Ford, GM, Toyota and Honda
B)Very successful national retailers such as Wal-mart or Tesco
C)Cosmetics, household goods and washing machine manufacturers
D)All of the above

Question 12

Figure 15.8 shows:

A)The ideal structure for all transnational corporations
B)A central hub trying to coordinate decisions and flows between peripheral units with considerable resources & independence
C)Hewlett Packard's global structure in 2008
D)The allocation of responsibilities in a successful transnational corporation

Question 13

What is the role of the national context, in regard to competitive advantage?

Question 14

Which firms illustrate a change of leadership in an industry?

A)Mittal steel vs. US Steel
B)Linux vs. Microsoft
C)BMW vs. Mercedes
D)DHL vs. UPS

Question 15

Where should a firm locate its activities?

Question 16

How can one characterize the different forms of markets, in regard to globalization?

Question 17

Western banks entering the Chinese market hope to:

A)Gain more brand recognition for their home countries
B)Test new technologies in that enormous market
C)Get access to the huge Chinese credit card market
D)Convince the Chinese government to fight counterfeiting more efficiently

Question 18

Going 'glocal' means:

A)Developing global standard platforms for your product using local ingredients
B)Developing global standard platforms for your product with locally-differentiated variants
C)Running as tight a ship as McDonalds
D)Nothing: it's just a buzzword

Question 19

In a globalization strategy, to what extent should a firm adapt its products to local tastes?

Question 20

In the fast food industry, why are some players (Burger King) not as well known as others (McDonalds)?

Question 21

Internationalization of a large firm can lead to:

A)A reduction in economies of scale
B)A decrease in marketing expenses
C)A increase in unit costs of its products
D)An increase in its bargaining power versus its suppliers

Question 22

With regard to internationalization theories, national cultures:

A)Are minimal and can be ignored
B)Have a strong influence
C)Inject complexity into the analysis
D)Are treated via second.order effects

Question 23

Trade theory integrates the following elements:

A)Natural resource endowments
B)Labor resources and capital
C)Knowledge-related resources
D)All of the above

Question 24

Internationalization is driven by:

A)The quest for efficiency, and the quest for new markets
B)On the demand side, the quest for new markets, and, on the supply side, the quest to acquire new resources and capabilities
C)First, the internationalization of customers, and, second, the emergence of cheap labor countries
D)First, the emergence of cheap labor countries, and, second, lower transport costs

Question 25

Internationalization occurs through two mechanisms:

A)Direct investment and trade
B)Trade and financial flows
C)Production and consumption
D)Joint ventures and industry mergers

Question 26

Large countries have an advantage over small countries in technology and capital-intensive industries, because:

A)They may influence the rest of the world's technical standards
B)Small markets keep firms from being too ambitious
C)A large home market means development costs can be recovered more quickly and new specialist service providers evolve more rapidly
D)The population of small countries often has a low level of education

Question 27

The theory of comparative advantage is concerned with:

A)Economic unfairness among countries and differences in their economic development
B)The impact of national resource availability on competitiveness in particular industries
C)Cheap labor countries
D)Low cost capital and micro-loans

Question 28

Trade and foreign direct investment are, respectively:

A)Technology transfers from one country to another; and transfer of capital from one country to another
B)Hiring workers in one country, transferring them to another; and sending their salaries back to their home country
C)Technology transfers from one country to another; and mergers and acquisitions across countries
D)Selling goods or services made in one country in another; and transferring the funds to create productive assets from one country to another

Question 29

Porter's national diamond can be used to:

A)Predict the strategies of different countries
B)Analyze why some firms and countries succeed internationally, and provide an intellectual framework for future analysis
C)Calculate a firm's chances of success in an international venture
D)Map the evolution of corporations like De Beers

Question 30

Internationalization typically follows a regular pattern of stages:

A)Appoint agent, exports, foreign production
B)Foreign production, imports, appoint agent
C)Exports, foreign sales subsidiary, vertically integrated foreign subsidiary
D)Exports, foreign sales subsidiary, appoint agent

Question 31

Global industries are those where:

A)International trading is high
B)Technology transfers are high
C)Foreign direct investment is low
D)Both trade and direct investment are high

Question 32

Internationalization has led to?

A)Expanding opportunities for firms
B)Increases in efficiency
C)Wider consumer choice
D)All of the above

Question 33

With international markets competition from new entrants increases because:

A)The diversity of potential rivals increases
B)Global profit rates are falling
C)Barriers to entry that would deter domestic firms may be easily overcome by large specialist international firms
D)Many cheap labor countries favor, and subsidize, a national champion to compete internationally

Question 34

The example of the 2007-8 financial crisis shows:

A)The scale of the impact of internationalization on the modern economy
B)Banks should be forbidden to trade internationally
C)Regulation of banks should be much stricter
D)Nothing: banks don't trade, they merely move money around.

Question 35

Japanese dominance of the world camera industry illustrates:

A)A deep Japanese love of Zen art
B)A Japanese love of high quality amateur photography
C)A home market where customers eagerly adopt new gadgets and technologies
D)Both b and c

Question 36

Comparative advantage means:

A)Relative efficiencies in market research
B)Relative efficiencies in distributing products
C)Relative efficiencies in producing different products
D)Relative advantages in product development

Question 37

A consequence of internationalization for management is:

A)The difficulty of analyzing costs
B)The difficulty of analyzing competitive advantage for large industries
C)Its increasing complexity
D)The need to travel long distances at very short notice

Question 38

In Porter's national diamond Porter emphasizes that rivalry:

A)Is crucial: cooperation and the growth of complementary services require lots of friendly rivals
B)Is crucial: intense domestic competition drives innovation, efficiency and the growth of firms' individual competitive advantages
C)Must be killed, in order to create national champions
D)Is less important than having a good strategy and structure

Question 39

Internationalization increases rivalry pressures because,:

A)The number of producers in any market increases
B)The diversity of those sellers increases
C)Global excess capacity increases
D)All of the above

Question 40

Internationalization is:

A)An interesting phenomenon
B)An issue only for politicians
C)The strongest force reshaping our environment
D)A 21st century phenomenon

Question 41

The first assumption that a firm makes when it enters a foreign market is that it will be profitable. What is the second assumption?

A)The firm can establish a competitive advantage in that market
B)Competition exists at a reasonable level
C)The infrastructure of the foreign country allows easy business
D)No powerful developing country's champion is already present in that market

Question 42

What are the main considerations in an off-shoring decision?

A)Low labor costs now and in the future
B)Low wage rates currently
C)Cost and ease of entry to the country - and exit
D)Access to top quality resources and overall operational efficiency

Question 43

Major benefits of a global strategy can include:

A)Serving customers who demand a global supplier
B)Learning how to please the most demanding customers on the planet
C)Economies of scale in R&D or product development
D)All of the above

Question 44

To establish a competitive advantage in a global industry, a firm must:

A)Possess many strong connections among local politicians
B)Possess a large network in the corporate world
C)Achieve congruence between its strategy and the country comparative advantage
D)Be confident in its strengths

Question 45

The fact that Cadbury-Schweppes licenses its trademarks and product recipes to Hershey shows that:

A)Cadbury views Hershey as a capable and reliable partner
B)They have reached an agreement
C)They have overcome the risk of opportunistic behavior
D)Both are resourcd.rich

Question 46

Considering firm-specific competitive advantages means:

A)Locating where the firm's labor costs are most flexible
B)Locating where the firm's resource costs can be minimized
C)Locating where the firm's distinctive resources and capabilities can be optimized
D)Finding a location which is a unique selling point

Question 47

When considering foreign entry strategies the text asks 5 questions Which of these factors belong on that list?

A)The product tradability, barriers to trade, and the existence transaction costs
B)The firm or country-based attribute of a firm's competitive advantage, and the appropriability of the returns by that firm
C)The ownership of a large set of resources and capabilities to establish a competitive advantage overseas
D)All of the above

Question 48

Porter's National diamond updates the theory of comparative advantage by integrating firms' development of resources and capabilities into a theory of factor and demand conditions, rather than relative (and fixed) factor endowments

Question 49

Establishing a relationship with a local firm can be an excellent way to access country-specific resources. The type of relationship to establish depends on:

A)The resources and capabilities needed
B)The power of the local firm targeted
C)The availability of worldwide activities of the firm that enters a foreign market
D)The cultural compatibility with the local firm targeted

Question 50

The two main modes of entering an overseas market are:

A)Sales contracts and alliances
B)Direct investment and transactions
C)Transactions and joint ventures
D)Technology transfers and franchise

Question 51

Product tradability refers to:

A)The extent to which a product can be transported
B)The extent to which it is subject to trade barriers
C)The extent to which it has a low weight
D)Answers a and b

Question 52

One important motive for internationalization is:

A)Increasing profit margins
B)Expanding a firm's access to valuable resources and capabilities located abroad
C)Accessing raw material sources
D)Expanding a firm's access to declining markets

Question 53

Table 15.3 shows:

A)That firms must employ economists when making strategic location decisions
B)That the economic theory of comparative advantage can be quantified and tested
C)That the USA should dominate clothes manufacturing (apparel)
D)That Hong Kong should dominate fiber production

Question 54

Comparative advantage refers to countries' relative efficiencies in producing different products

Question 55

Multinational firms tend increasingly to separate their decisions about the location of their production and about their final markets

Question 56

A country's national comparative advantage can translate into a competitive advantage for its firms provided exchange rates remain close to Purchasing Power Parities

Question 57

Indian IT outsourcing firms, Philippines-based eTelecare, and Taiwan-based Waffer illustrate that:

A)Some outsourcing firms in developing countries have reached very high levels of sophistication in their fields
B)Competition will emerge not just from Western firms
C)Outsourcing strategies have surprising and unexpected consequences
D)Asia represents a competitive threat

Question 58

The theory of comparative advantage describes the effect of national resource availability on domestic competitiveness

Question 59

Strategic international alliances result in:

A)Mixed success
B)Strong success
C)Failures
D)Many different situations that cannot be categorized

Question 60

Besides opening up vast potential markets, 'Going global' gives a firm an opportunity to:

A)Stretch its resources and capabilities beyond sane limits
B)Make the most of its innate culture, strategy , resources, and capabilities, by expanding production and sales to the limit
C)Apply its products and unique business model in socialist countries
D)Travel the world looking for unique opportunities

Question 61

A big difference between a 20th century American corporation and a modern transnational corporation (Figures 15.7 and 15.8) is that in the TNC national units and centers of excellence communicate directly, so the hub is informed rather than controlling

Question 62

A center of excellence is a way of conceding power to national units while maintaining critical mass and coordination

Question 63

When looking for international alliance or joint venture partners a firm should target firms with cultures, resources and capabilities as close to your own as possible

Question 64

According to Jack Welch, former GE chairman, globalization requires a firm to look abroad for many different sources of resources and talents

Question 65

"Offshoring" is shifting an activity of the value chain outside a firm's home country

Question 66

Sheltered industries are protected from new entrants

Question 67

Standard global products or services work well in cars and retailing but not in cosmetics or washing machines

Question 68

Globalization decreases global efficiency by increasing global excess capacity

Question 69

Globalization lowers seller concentration

Question 70

The three fundamental international business activities are trading, human resource transfers, and foreign direct investment

Question 71

Tradability, or the ease of transporting a product, is a major determinant of the decision where to locate production

Question 72

Globalization is the second most important force to have reshaped the business environment in the last fifty years

Question 73

National differentiation means asserting the independence and values of one's home country

Question 74

In general, globalization results in more competition and lower profitability

Question 75

A global strategy views the world as a single market