Deck 10: International Strategy

Question 1

Strategic alliances tend to increase the risk associated with international expansion.

Answer 1

False

Question 2

In order to achieve economies of scale,some manufacturing industries in nations (such as Korea) with small domestic markets must globalize.

Answer 2

True

Question 3

To the extent that firms are able to standardize products across country borders and use the same or similar production facilities,coordinating critical resource functions,they are likely to achieve a more optimal economic scale.

Answer 3

True

Question 4

As a formerly innovative product becomes standardized,its production can be moved out of the U.S.to a country with low manufacturing costs,thus extending the product's life cycle.

Question 5

While there are multiple means of entering new international markets,firms should employ only one method consistently with all of its various products and across its different markets.

Question 6

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

Question 7

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

Question 8

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

Question 9

Multidomestic strategies allow for the establishment of economies of scale.

Question 10

Firms implementing the multidomestic strategy often attempt to isolate themselves from global competitive forces by establishing the cost leadership position in the industry.

Question 11

Most foreign R&D spending by U.S.affiliates is in India because of its large supply of highly-educated,English speaking professionals and its comparatively lower pay scales.

Question 12

Firms will find it necessary to pursue an international strategy to recoup new product technology expenses because product obsolescence will continue to occur at the same rapid pace.

Question 13

A multidomestic strategy assumes that consumer needs,industry conditions,and social norms are homogeneous in every country.

Question 14

Research has shown international diversification leads to lower firm performance.

Question 15

A transnational strategy is easy to achieve because the multiple objectives involved reinforce one another.

Question 16

The international cost-leadership strategy is most likely to be implemented in countries with limited demand because of the ability to create economies of scale.

Question 17

It is generally easier to negotiate employee layoffs in Europe than in the United States because of employment contract differences.

Question 18

The worldwide product divisional structure has centralized decision-making authority in the worldwide division headquarters to coordinate and integrate decisions and actions among disparate units.

Question 19

McDonald's expanded in China through a strategic alliance with Sinopec gas stations.

Question 20

A firm's international business-level strategy options include multidomestic,global,and transnational alternatives.

Question 21

International corporate-level strategy focuses on the:

A) scope of operations through both product and geographic diversification.
B) number of top management team members involved in the development of each respective strategy.
C) potential effect on the ability of the business to earn above-average returns.
D) sophistication of monitoring and controlling systems.

Question 22

Firms with core competencies that can be applied across international markets are able to:

A) achieve synergies and produce at lower costs.
B) enter new markets more quickly.
C) enhance their market image and brand loyalty among local consumers.
D) meet local government requirements more quickly than their international competitors.

Question 23

Companies need to be sensitive to the need for local country or regional responsiveness due to:

A) universal product demand.
B) the increase in differentiation strategies.
C) customization required by cultural differences.
D) the increasing loss of economies of scale.

Question 24

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

Question 25

Implementing the multidomestic strategy requires decentralization:

A) to facilitate the tailoring of products to the demand in local markets.
B) that utilizes a common approach in each country to maintain consistency.
C) to be avoided at all costs.
D) to make the most of R&D spending.

Question 26

Firms pursuing a multidomestic strategy require ____ in their corporate structure.

A) many integrating mechanisms
B) high coordination among country markets
C) decentralization
D) high formalization

Question 27

The location advantages associated with locating facilities in other countries can include all of the following EXCEPT:

A) lower cost labor.
B) access to certain resources.
C) access to customers.
D) ability to pursue a differentiation strategy.

Question 28

Companies need to understand the pressure on them for local responsiveness,especially where there's:

A) is a need for local repair and service to customers.
B) customization due to cultural differences.
C) government pressure for firms to use local sources for procurement.
D) availability of low labor costs.

Question 29

The motivations for expanding into international markets include each of the following opportunities EXCEPT:

A) to increase the size of the firm's potential markets.
B) to gain economies of scale.
C) to gain a competitive advantage through location.
D) to pressure host governments to provide concessions and/or legal restrictions desired by the firm.

Question 30

In analyzing factors of production,Mexico:

A) has well-developed infrastructure and a skilled,inexpensive labor force.
B) lacks natural resources,but has developed its labor resources.
C) has an abundance of capital and a well developed infrastructure.
D) has an abundance of natural resources,but lacks the communication system necessary to conduct international business.

Question 31

Increasing its market size,achieving economies of scale,obtaining returns on R&D investments,and access to more flexible labor markets are all reasons for the positive effects of international diversification.

Question 32

If a firm chooses to expand internationally,it must attempt to compete in all world markets.

Question 33

Firms competing in industries with more intensive R&D requirements pursue an international strategy in part because:

A) it is crucial to have a large market to earn the necessary return on their large investment.
B) it allows firms to pull R&D expertise from all over the world.
C) it allows the firm to pursue patents on a worldwide basis to protect its intellectual property.
D) technological knowledge knows no national boundaries.

Question 34

Moving into international markets is a particularly attractive strategy to firms where the domestic markets:

A) demand a differentiation strategy for success.
B) are limited in opportunities for growth.
C) have developed unfriendly business attitudes toward the industry.
D) have too much regulation.

Question 35

A multidomestic strategy would be associated with:

A) high levels of formalization.
B) low levels of formalization.
C) no formalization.
D) low performance.

Question 36

A worldwide geographic area structure is an organizational form in which:

A) interdependencies are created by pursuing a global strategy.
B) the structure and controls emphasize competition between separate divisions for corporate capital.
C) national interests dominate and management adapts to local or cultural differences.
D) management employs a high number of integration devices and horizontal human resource practices to foster cooperation.

Question 37

Which of the following is NOT a motive for firms to become multinational?

A) To take advantage of potential opportunities to expand the market for the firm's products
B) To secure access to low-cost factors of production
C) To reduce domestic country political pressures to expand
D) To secure key input resources

Question 38

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

Question 39

A multidomestic corporate-level strategy is one in which:

A) a corporation chooses not to compete internationally but where there are a number of international competitors in the firm's local marketplace.
B) there are a relatively large number of local firms which choose not to compete internationally.
C) strategic and operating decisions are decentralized to the strategic business unit in each country.
D) strategic and operating decisions are centralized across the firm's international strategic business units.

Question 40

Some of the costs incurred by firms pursuing international diversification may derive from higher coordination expenses,trade barriers,and lack of familiarity with local cultures.

Question 41

Which of the following is NOT one of the primary disadvantages of the global strategy?

A) The difficulty coordinating decisions and actions across countries
B) The lack of scale economies that normally result from linking the various functions
C) The inability to respond quickly to the needs of local markets
D) The challenge of responding effectively to the preferences of local markets

Question 42

The problems associated with exporting include:

A) merging corporate cultures.
B) a partner's incompatibility.
C) difficulty in negotiating relationships.
D) high transportation costs.

Question 43

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

A) High costs associated with acquiring foreign production facilities
B) High transportation costs
C) Loss of control over distribution activities
D) Tariffs imposed by local governments

Question 44

The primary disadvantage of the multidomestic strategy and worldwide geographic area structure relates to limited:

A) economies of scale.
B) economies of scope.
C) ability to meet local market needs.
D) potential for global efficiency.

Question 45

The widespread use of the Internet in international business has resulted in:

A) the near-elimination of the liability of foreignness
B) an anti-foreign mentality in many regions
C) a continued need for local adaptation
D) the ability to use uniform marketing methods across the globe

Question 46

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

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

Question 47

The least costly form of international expansion is:

A) exporting.
B) licensing.
C) strategic alliances.
D) greenfield ventures.

Question 48

A global corporate-level strategy is different from a multidomestic corporate-level strategy in that in a global strategy:

A) competitive strategy is dictated by the home office.
B) competitive strategy is decentralized and controlled by individual strategic business units.
C) products are customized to meet the individual needs of each country.
D) the firm sells in only a single country.

Question 49

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

A) incompatible partners
B) conflict between legal and business systems
C) cultural differences
D) high-debt financing

Question 50

China is an attractive location for cross-border alliances because of ____.

A) its large potential demand
B) its efficient distribution channels
C) the technological knowledge it can share with its alliance partners
D) its pro-business regulatory policies

Question 51

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

A) They are very expensive and often require debt financing.
B) The acquiring firm has to deal with the regulatory requirements of a host country.
C) Negotiations are complex.
D) It is the slowest way to enter a new market.

Question 52

A licensing agreement:

A) occurs when two firms agree to share the risks and the resources of a new venture.
B) allows the fastest access to a new market.
C) allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host country.
D) is often called a greenfield venture.

Question 53

A firm may narrow its focus to a specific region of the world in order to:

A) decrease the pressures on managers to coordinate efforts on a worldwide basis.
B) obtain greater economies of scale.
C) better understand cultures,legal and social norms,and other factors that are important to effective competition in local markets.
D) avoid depleting financial resources in markets where the firm may not be successful.

Question 54

One of the primary disadvantages of the global strategy and worldwide product divisional structure is that:

A) it will be necessary to communicate with managers who speak another language.
B) the firm must develop centers to offer after-sales service to customers.
C) these make it difficult to respond effectively to local market needs and preferences.
D) achieving economies of scale with this strategy/structure combination is nearly impossible.

Question 55

In situations where there is high uncertainty,where cooperation is needed and where strategic flexibility is important,____ are most likely to succeed.

A) licensing strategies
B) strategic alliances
C) acquisitions.
D) new wholly owned subsidiaries

Question 56

As a result of problems that domestic U.S.car manufacturers have had in competing with Asian automakers,Ford is moving toward a ____ strategy that will allow it to have both greater control over what happens in each of its foreign car companies and to be more responsive to regional needs.

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

Question 57

A transnational corporate-level strategy seeks to achieve:

A) strategic decentralization and tailoring of products in each country.
B) economies of scale and centralized strategic control.
C) global efficiency and local responsiveness.
D) top management team leadership and quality improvement in the firm's products.

Question 58

A global strategy:

A) is easy to manage because of common operating decisions across borders.
B) achieves efficient operations without sharing resources across country boundaries.
C) is difficult to pursue successfully.
D) lacks responsiveness to local markets.

Question 59

Which of the following is NOT a disadvantage of licensing?

A) Little control over the marketing of the products
B) Licensees may develop a competitive product after the license expires
C) Decreased potential returns
D) The high costs of establishing manufacturing facilities

Question 60

In the 21^st century,firms ____ in their international diversification plans.

A) may focus more on established markets
B) may focus more on emerging markets
C) may focus more on truly global markets
D) may focus more on adaptation to regional markets

Question 61

Firms such as Toyota and GM have turned to strategic alliances to overcome barriers such as:

A) an incompatible initial product mix for international markets.
B) the devaluation of currencies in certain regions.
C) governmental policies and regulations.
D) the lack of customization.

Question 62

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

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

Question 63

Which of the following is an example of an economic risk in the international environment?

A) Mexico's nationalization of its oil industry
B) Devaluation of the Brazilian real
C) Threats of war in Mozambique
D) Government instability in Indonesia

Question 64

Internationally diversified firms:

A) gain benefits from learning about new products and processes.
B) are more likely to produce below-average returns for investors.
C) may need to decrease international activities when domestic profits are poor.
D) are generally unable to achieve high levels of synergy.

Question 65

International diversification leads to:

A) less innovation.
B) no more (or less) innovation.
C) the facilitation of more innovation.
D) a geometric expansion of innovation.

Question 66

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

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

Question 67

Which of the following is NOT one of the advantages associated with international diversification?

A) Potential for returns
B) Level of complexity
C) Economies of scale
D) Return stabilization

Question 68

As international diversification increases,firm returns tend to:

A) remain stable.
B) decrease.
C) become more variable.
D) increase.

Question 69

Identify and describe the modes of entering international markets.

Question 70

Discuss the three international corporate-level strategies.

Question 71

If intellectual property rights in an emerging economy are not well-protected,the number of firms in the industry is rapidly growing,and the need for global integration is high,____ is the preferred entry mode.

A) exporting
B) strategic alliance
C) wholly-owned subsidiary
D) licensing

Question 72

Discuss the effect of international diversification on a firm's returns and innovation.

Question 73

Which of the following is an economic risk to international firms?

A) Currency exchange rate fluctuations
B) Threat of war
C) Government regulation
D) Nationalization of operations

Question 74

Explain why the positive outcomes from international expansion are limited.

Question 75

Political risks in international diversification include:

A) the changes that a domestic government forces on a domestic firm.
B) changes in exchange rates.
C) those related to instability in national governments.
D) the dangers associated with the inflation rate in given countries and how the local national bank responds.

Question 76

All of the following complicate the implementation of an international diversification strategy EXCEPT:

A) increased sophistication of international competitors.
B) increased costs of coordination between business units.
C) cultural diversity.
D) logistical costs.

Question 77

Which of the following is an advantage associated with greenfield ventures?

A) The ease of setting up the operation
B) The lower cost of this type of venture
C) The level of control over the firm's technology,marketing and distribution
D) The lower level of risks involved

Question 78

Name and describe several major risks of international acquisitions.

Question 79

What are the motives for firms to pursue international diversification?