Deck 6: Formulating Strategy

Question 1

All of the following are reasons that global firms like Acer and GE have established facilities in South Africa EXCEPT ________.

A) low tax rates
B) minimal corruption
C) excellent infrastructure
D) lack of labor regulation

Answer 1

D

Question 2

The planning phase of the strategic management process consists of all of the following EXCEPT ________.

A) clarifying the company's mission
B) establishing an organizational structure
C) assessing the external environment
D) performing a SWOT analysis

Answer 2

B

Question 3

The second part of the strategic management process is known as the ________.

A) implementation phase
B) evaluation stage
C) planning phase
D) analysis stage

Answer 3

A

Question 4

Recent problems for Cemex, the Mexican cement giant, were most likely caused by all of the following EXCEPT ________.

A) tightened trade barriers
B) weakened value of the peso
C) aggressive global expansion
D) decline in construction industry

Question 5

The most likely reason that McDonald's has aggressively expanded internationally is to ________.

A) reduce labor costs
B) find new financing sources
C) establish economies of scale
D) overcome restricted domestic growth opportunities

Question 6

Which of the following terms refers to the basic means by which a company competes: its choice of business in which it operates and how it differentiates itself from its competitors?

A) mission
B) procedure
C) strategy
D) process

Question 7

All of the following are proactive reasons that firms expand their operations overseas EXCEPT ________.

A) availability of raw materials
B) demands of foreign customers
C) low labor costs for production workers
D) growth opportunities in emerging markets

Question 8

All of the following are common examples of government incentives used to attract foreign investment EXCEPT ________.

A) loans
B) tax holidays
C) use of property
D) minimum wage reductions

Question 9

The process by which a firm's managers evaluate the future prospects of the firm and decide on appropriate strategies to achieve long-term objectives is called ________.

A) strategic planning
B) internal resource analysis
C) environmental scanning
D) product planning

Question 10

Which of the following charts the direction of the company and provides a basis for strategic decision making?

A) environmental assessment
B) corporate structure
C) organizational mission
D) SWOT analysis

Question 11

When Disney decided to build a park in Paris, the French government gave Disney prime farm land just outside the city limits. This is most likely an example of a firm expanding overseas due to ________.

A) globalization of competitors
B) restrictive trade barriers
C) home country regulations
D) monetary incentives

Question 12

Experts suggest that significant changes in the competitive nature of international business have most likely occurred because of ________.

A) terrorism and technology
B) globalization and the Internet
C) trade and foreign direct investment
D) foreign direct investment and the EU

Question 13

Which of the following is a proactive reason that prompts firms to expand overseas?

A) avoiding restrictive trade barriers
B) solving logistical problems
C) responding to foreign competitors
D) seeking economies of scale

Question 14

Which of the following best explains why Avon expanded to the international market?

A) increased domestic competition in the door-to-door cosmetic industry
B) increased number of American women in the workforce
C) decreased restrictions on cosmetics in the Chinese market
D) decreased number of qualified sales representatives in the U.S.

Question 15

Which of the following best explains why South Africa attracts global firms?

A) highly skilled workers
B) stable exchange rate
C) good credit access
D) low crime rate

Question 16

Which of the following is a true statement about the strategic formulation process?

A) Domestic strategic formulation is more difficult than global strategic formulation.
B) The strategic formulation process is an aspect of a firm's strategic management process.
C) Strategic formulation consists of four defined stages that occur in a consecutive order.
D) Most firms operate on planning cycles of ten or more years with periodic strategy reviews.

Question 17

Which of the following best explains why Europe is attracting more new investment capital?

A) low labor costs in both Eastern and Western Europe
B) the opening of new markets in Eastern Europe
C) unstable currency exchange rates in Asia
D) inadequate infrastructure in South Africa

Question 18

Restrictive trade barriers most likely affect corporate globalization by encouraging firms to ________.

A) develop joint ventures with local firms
B) import supplies from foreign vendors
C) expand the exportation of raw materials
D) switch from exporting to overseas manufacturing

Question 19

What is the most likely effect of costly regulations and restrictions enforced by a firm's home government?

A) Firms search for less restrictive operating environments overseas.
B) Firms respond to customer demands more promptly.
C) Firms become entangled in lengthy litigation.
D) Firms expand their domestic operations.

Question 20

Which of the following is the most common reactive reason for a firm to extend its operations overseas?

A) tax incentives
B) economies of scale
C) globalization of competitors
D) research and development needs

Question 21

A(n) ________ analysis determines which areas of a firm's operations represent strengths or weaknesses (currently or potentially) compared to competitors.

A) external
B) internal
C) strategic
D) industrial

Question 22

The first broad scan of all potential world markets should result in the firm being able to ________.

A) identify the strengths and weaknesses of its competitors
B) eliminate markets with unreasonable entry conditions
C) determine the best sources for raw materials
D) eliminate countries with high cultural risk

Question 23

Which of the following is the most important task in environmental assessment and strategy formulation?

A) SWOT analysis
B) cost benefit analysis
C) cultural risk analysis
D) global competitor analysis

Question 24

Which of the following is most likely NOT one of the ways that formal institutions affect international competition?

A) scanning foreign markets
B) emphasizing education
C) restricting entry
D) enforcing laws

Question 25

Which of the following is the most preferable source of environmental information for environmental scanning purposes?

A) computer database
B) corporate clipping service
C) market analyst of the firm
D) census data from the government

Question 26

Panera Bread is a chain of cafes serving sandwiches, soups, and fresh baked artisan breads. The company began in 1981 with stores primarily located along the east coast of the U.S. Since then, the firm has expanded to over 1,300 locations throughout the U.S. and Canada. The firm has strong earnings and has been designated by Business Week as a "Hot Growth Company." Panera Bread executives are considering the idea of expanding globally by opening cafes in Asia through a franchising strategy. Which of the following questions is LEAST relevant to Panera Bread's decision to expand into Asia through franchising?

A) Will Panera Bread franchisors in Asia have access to the supplies needed for the menu?
B) What aspects of the Asian culture might conflict with Panera Bread's menu offerings?
C) What marketing techniques will Panera Bread be able to use for Asian franchises?
D) What are the strengths and weaknesses of Panera Bread's Asian competitors?

Question 27

An internal analysis focuses on the company's ________.

A) mission
B) past strategy
C) future strategy
D) resources and operations

Question 28

Firms should perform global environmental analysis at which three levels?

A) product, industry, market
B) multinational, regional, and local
C) bargaining power of buyers, suppliers, and rivals
D) factor conditions, demand conditions, and industry structure

Question 29

Which of the following terms refers to the continuous process of gathering and evaluating information about variables and events around the world that may pose threats or opportunities to the firm?

A) strategic management
B) SWOT analysis
C) environmental assessment
D) mission evaluation

Question 30

Why are internal sources of information especially useful for environmental scans of developing countries?

A) misleading nature of government data
B) restrictions placed on foreigners
C) risks associated with culture
D) unreliability of technology

Question 31

Which of the following would most likely be categorized as a global financial objective of an international firm?

A) foreign-exchange management
B) long-term profit growth
C) quality and cost control
D) company market share

Question 32

Which of the following terms refers to the process of gathering information and forecasting relevant trends, competitive actions, and circumstances that will affect operations in geographic areas of potential interest?

A) internal analysis
B) strategic planning
C) cultural analysis
D) environmental scanning

Question 33

Import controls, equity requirements, and local content requirements are all examples of which environmental scanning variable?

A) currency instability
B) political instability
C) global competition
D) nationalism

Question 34

Which of the following is the LEAST relevant operational issue that firms should consider if they want to start or improve international ventures?

A) difficulty of obtaining marketing information in many countries
B) complexities of exchanges rates and government controls
C) problems associated with promotion capabilities
D) poorly developed financial markets

Question 35

Which category is NOT typically addressed by a firm's global corporate objectives?

A) research and development
B) employee profit sharing
C) production
D) marketing

Question 36

Environmental scanning should most likely cover all of the following major variables EXCEPT ________.

A) political instability
B) currency instability
C) global competition
D) marketing strategies

Question 37

Goals for market volume and profitability are usually set higher for international than domestic operations because of ________.

A) greater risks
B) larger markets
C) government controls
D) stable exchange rates

Question 38

Which of the following variables represents a volatile and uncontrollable risk to MNCs that may lead to a loss of ownership in some cases?

A) political instability
B) trade restrictions
C) currency instability
D) global competition

Question 39

Which of the following is exemplified by the U.S. government pressuring Japan to regulate unfair competition? ****

A) ethnocentrism
B) globalization
C) nationalism
D) competition

Question 40

Mitsubishi Trading Company uses ________ to gather and analyze market information for environmental scanning purposes.

A) external industry experts
B) corporate clipping services
C) internal market analysts
D) international census data

Question 41

All of the following are benefits of a global B2B strategy EXCEPT ________.

A) expanded sales channels
B) improved customer loyalty
C) clear government jurisdiction
D) better relationships with distributors

Question 42

Which of the following is generally the least risky entry strategy?

A) franchising
B) offshoring
C) exporting
D) licensing

Question 43

Which of the following is an assessment of a firm's capabilities relative to those of its competitors as pertinent to the opportunities and threats in the environment for those firms?

A) SWOT analysis
B) environmental analysis
C) strategic analysis
D) industry analysis

Question 44

Wal-Mart's effective distribution channels are best described as the firm's ________.

A) multidomestic strategy
B) institutional effect
C) key success factor
D) material culture

Question 45

Panasonic and Toyota are best categorized as ________ firms.

A) GLOCAL
B) B2B
C) regional
D) e-local

Question 46

The licensing strategy is especially suitable for which of the following?

A) high-tech products
B) newly emerging industries
C) mature products with declining profits
D) large firms with many financial resources

Question 47

Which of the following terms refers to a mutual benefit in the exchange of goods between countries, where each country exports those products in which it is relatively more efficient in production than other countries?

A) comparative advantage
B) collective bargaining
C) competitive advantage
D) control system

Question 48

Which of the following is most likely to encourage a firm to localize?

A) decreasing tariffs
B) domestic subsidies
C) low costs of e-commerce
D) need for economies of scale

Question 49

All of the following are critical environmental factors that firms should consider before exporting EXCEPT ________.

A) tariffs
B) freight costs
C) distance from supplier countries
D) patent and trademark protection

Question 50

Which of the following is NOT one of the primary reasons that firms globalize?

A) declining tariffs that open up new markets
B) decreasing consumer interest in domestic products
C) increasing competition from regional trading blocs
D) advancements in technology that simplify global operations

Question 51

The licensing strategy is LEAST appropriate when a firm ________.

A) markets a diverse product line
B) uses standardized production methods
C) has mature products with rising margins
D) uses rapidly changing technologies

Question 52

Which of the following is NOT an advantage of using licensing as an entry strategy?

A) avoids the tariffs and quotas usually imposed on exports
B) gives licensors total control over the licensee's activities
C) requires little investment which minimizes risk
D) offers fast market access

Question 53

Regional strategies are more appropriate than global strategies for firms which operate in what kind of situation?

A) multi-domestic industries
B) high-tech industries
C) newly emerging industries
D) mature industries

Question 54

Which of the following terms refers to companies that go global from the outset, often through the use of the Internet for their operations?

A) GLOCALS
B) MNEs
C) born globals
D) e-globals

Question 55

Which of the following entry strategies requires little investment and enables quick and easy market withdrawal?

A) wholly owned subsidiaries
B) joint ventures
C) turnkey projects
D) exporting

Question 56

What is the quickest and cheapest way to develop a global strategy?

A) wholly owned subsidiaries
B) exporting
C) strategic alliances
D) importing

Question 57

The e-local approach is LEAST appropriate when ________.

A) supply-chain management is very important to success
B) customer behavior and market structures are similar within a region
C) production and consumption are regional rather than global in scope
D) consumer demand for the product or service exists on an international level

Question 58

Which of the following terms refers to the establishment of worldwide operations and the development of standardized products and marketing?

A) customization
B) globalization
C) nationalization
D) internationalization

Question 59

Which of the following terms refers to the strengths that allow companies to outperform rivals?

A) affective appeals
B) comparative advantage
C) organizational culture
D) distinctive competencies

Question 60

Dell, with its worldwide sourcing and fully integrated production and marketing system is considered to be a ________.

A) multidomestic company
B) regional company
C) fully local company
D) globally integrated company

Question 61

Which of the following is generally viewed as the most risky entry strategy?

A) turnkey operations
B) fully owned subsidiaries
C) international joint ventures
D) service sector outsourcing

Question 62

Panera Bread is a chain of cafes serving sandwiches, soups, and fresh baked artisan breads. The company began in 1981 with stores primarily located along the east coast of the U.S. Since then, the firm has expanded to over 1,300 locations throughout the U.S. and Canada. The firm has strong earnings and has been designated by Business Week as a "Hot Growth Company." Panera Bread executives are considering the idea of expanding globally by opening cafes in Asia through a franchising strategy. Which of the following, if true, undermines the argument that Panera Bread should expand into Asia through franchising?

A) Quality control is a high priority for Panera Bread.
B) Panera Bread wants to access the Asian market quickly.
C) Panera Bread's primary competitor has already expanded to Asia.
D) Many Panera Bread managers have expressed interest in relocating to Asia.

Question 63

Which of the following is most likely to serve as a short-term strategy and to provide limited income?

A) joint venture
B) management contract
C) contract manufacturing
D) subsidiary

Question 64

________ and ________ are examples of location factors in entry mode planning.

A) Country risk; cultural distance
B) Size of planned venture; knowledge of local market
C) Industry growth rate; potential of local market
D) International experience; competition in local market

Question 65

The use of professional or skilled workers located in countries other than that in which the firm is domiciled is best known as ________.

A) franchising
B) licensing
C) outsourcing
D) importing

Question 66

A ________ gives a foreign company the rights to manage the daily operations of a business but not to make decisions regarding ownership, financing, policy, or strategy.

A) licensing agreement
B) management contract
C) turnkey operation
D) contract manufacturing agreement

Question 67

Which of the following sets minimum standards for EU exports and imports?

A) harmonization laws
B) strategic alliances
C) matrix structures
D) virtual global teams

Question 68

A fully owned subsidiary is most likely a high-risk entry strategy because of ________.

A) expropriation threats
B) unreliable distributors
C) infrastructure weaknesses
D) quality control issues

Question 69

Central and Eastern European countries most likely offer all of the following benefits to SMEs that want to gain access to the EU market EXCEPT ________.

A) low wages
B) low corporate taxes
C) highly educated workers
D) advanced technology systems

Question 70

In a ________, a company designs and constructs a facility abroad, trains local personnel, and then transfers the facility to local management for a fee.

A) franchise
B) management contract
C) turnkey operation
D) contract manufacturing agreement

Question 71

Which of the following is the most critical aspect of a franchising strategy?

A) customer base
B) political risk
C) quality control
D) local marketing

Question 72

Which of the following strategies would most likely be used by a non-European company wanting to gain quick entry inside the European community?

A) International joint venture
B) management contract
C) turnkey operation
D) franchising

Question 73

Which of the following terms refers to operating in concentrations of related, interdependent companies within an industry that uses the same suppliers, specialized labor, and distribution channels?

A) service sector outsourcing
B) globalizing
C) franchising
D) clustering

Question 74

All of the following are reasons that nearly 60% of international joint ventures fail EXCEPT ________.

A) careless partner selection
B) inappropriate type of joint venture
C) mismatched objectives between partners
D) too much sharing of managerial decisions

Question 75

According to Gupta and Govindrajan, an alliance-based entry strategy is most suitable when ________.

A) firms have a significant amount of capital
B) risk of asymmetric learning by the partner is low
C) cultural distance between home and host countries is extremely low
D) the subsidiary would be highly integrated with the rest of the global operations

Question 76

Panera Bread is a chain of cafes serving sandwiches, soups, and fresh baked artisan breads. The company began in 1981 with stores primarily located along the east coast of the U.S. Since then, the firm has expanded to over 1,300 locations throughout the U.S. and Canada. The firm has strong earnings and has been designated by Business Week as a "Hot Growth Company." Panera Bread executives are considering the idea of expanding globally by opening cafes in Asia through a franchising strategy. Which of the following, if true, supports the argument that Panera Bread should expand into Asia through franchising?

A) Panera Bread executives want to test the Asian market with a short-term commitment that allows them to make quick profits.
B) Panera Bread executives want fast access to the Asian market without a significant investment of capital.
C) The Panera Bread menu changes rapidly, and each cafe's artisan bread bakers receive regular training on new recipes.
D) The Panera Bread mission is to make excellent bread available to customers around the world.

Question 77

Which of the following is the primary advantage of using e-business as a local-level entry strategy?

A) shared costs and risks
B) access to highly skilled workers
C) rapid entry and exit from markets
D) avoidance of tariffs and regulations

Question 78

All of the following are critical factors for success with a turnkey operation EXCEPT ________.

A) reliability of the infrastructure
B) availability of local supplies
C) royalty limits of host country
D) access to skilled workers

Question 79

A country that has highly qualified technical workers and has benefited from service sector outsourcing from the U.S. is ________.

A) Nigeria
B) Iceland
C) Japan
D) India

Question 80

The primary motive in the contract manufacturing strategy generally is ________.

A) utilizing inexpensive overseas labor
B) obtaining rights to patented technology
C) sharing managerial expertise
D) sharing financial resources