Deck 8: Thinking Globally

Question 1

The comparative advantage of different nations has changed more rapidly over the past few decades.

Answer 1

True

Question 2

Demand conditions are important because countries with more sophisticated buyers may help local firms to develop more innovative and higher quality products.

Answer 2

True

Question 3

Global strategy is when a firm develops separate operating subsidiaries, each of which develops products to meet the specific needs of the international market it serves.

Answer 3

False

Question 4

Transnational strategy is when the firm attempts to combine the benefits of global integration to achieve low cost with the benefits of being locally responsive.

Question 5

Multidomestic strategies develop products, services and experiences that respond to national differences.

Question 6

Most firms begin international diversification by exporting.

Question 7

Greenfield ventures are new operations created from the ground up as a wholly-owned subsidiary.

Question 8

DaimlerChrysler's market capitalization in 2003 was greater than pre-merger 1998.

Question 9

In today's competitive environment, firms that confine themselves to a domestic market may put themselves at a significant competitive disadvantage.

Question 10

Toys R Us is an example of a firm that pursues an international strategy using the competitive approach it developed in its home market to enter international markets.

Question 11

Firms following a multidomestic strategy delegate considerable autonomy to each subsidiary, allowing these units to respond effectively to local conditions.

Question 12

Host country governments can demand that international firms customize products or services for the local country.

Question 13

In order to develop a core global brand, Royal Philips Electronics appointed an advisory board composed entirely of Philips outsiders to offer strategic advice.

Question 14

Global strategy attends to differences in local markets but also carries out some activities on a global basis.

Question 15

The main disadvantage of the wholly-owned subsidiary entry mode is the likelihood of realizing lower returns due to high transportation costs and tariffs.

Question 16

Franchisees often pay an application fee and an ongoing percentage of their revenues as royalties, and a percentage of marketing costs.

Question 17

One of the major advantages of acquisitions is that the firm owns 100% of its subsidiary and has complete control over strategic decisions.

Question 18

Tastes are increasingly influenced by other cultures.

Question 19

Economies of scale result from spreading activities across multiple products or businesses.

Question 20

In Porter's diamond model of the determinants of national advantage, factor conditions describe the size, structure and needs of a company's home market.

Question 21

Which of the following is not a major determinant of national advantage identified by Porter?

A) Firm strategy, structure and rivalry
B) Factor conditions
C) Complementary products
D) Demand conditions
E) Related and supporting industries

Question 22

Which of the following is not an 'advanced' factor condition?

A) Communications
B) Natural resources
C) Transportation infrastructure
D) Skilled labour force

Question 23

Which of the following entry modes has the highest level of risk, required investment, potential for returns and level of control?

A) Export
B) Franchising
C) Wholly-owned subsidiary
D) Joint venture
E) Licensing

Question 24

Which of the following is not true about licensing?

A) Agreement to make intellectual property available to a company in another country
B) High risk mode of entry
C) Licensee may gain knowledge from the licensor that enables it to develop its own skills and competencies
D) One special form is franchising
E) Generates low profit returns
F) Example is Canadian brewer using Miller for US distribution

Question 25

According to Laurent, which of the following cultures is most comfortable with hierarchical structures?

A) Indonesia
B) United States
C) Germany
D) France

Question 26

Which of the following is not true about Whirlpool?

A) Did not have much competition in its home market of North America
B) Faced major European competitors pursuing a multidomestic strategy
C) Pursued a global strategy to leverage industry-leading competence in low-cost manufacturing
D) Became the number one selling appliance brand in the world

Question 27

Which of the following firms did not emerge from a developing country?

A) Cemex
B) L'Oreal
C) Ranbaaxy
D) Lukoil

Question 28

Which of the following is not a characteristic of the home market of third world multinationals?

A) Little capital
B) Low-income customers
C) Extensive consumer regulations
D) Developed infrastructure

Question 29

A firm employing a ________ strategy will attempt to combine the benefits of global integration to achieve low cost with the benefits of being locally responsive.

A) Global
B) International
C) Multidomestic
D) Transnational

Question 30

Which of the following is not true about a firm pursuing a global strategy?

A) View all of their national markets as part of an integrated whole market.
B) Requires a low degree of centralization and control at headquarters.
C) Configure value chains to maximize locational advantages and economies of scale.
D) Uniformly implement market strategies worldwide to develop globally recognized brand names

Question 31

Which of the following is not true about IKEA?

A) Pursues a global strategy of offering similar products in similar stores
B) Uses only a few suppliers in a few countries
C) Uses both full-time, in-house and freelance designers
D) Has locations in Europe, Asia, Australia and North America

Question 32

A firm that has little international experience and requires a small level of financial investment might be most likely to pursue what mode of entry?

A) Export
B) Franchise
C) Joint Venture
D) Wholly-owned subsidiary

Question 33

Which of the following is a major advantage of licensing for the licensor?

A) Low-risk mode of entry due to the limited financial investment
B) Generates high profit returns
C) Can share knowledge with the licensee
D) Keeps full control of the use of its products or services

Question 34

Holiday Inn pursues a ________ mode of international entry.

A) Licensing
B) Franchising
C) Joint venture
D) Wholly-owned subsidiary

Question 35

Which of the following is a major advantage of a joint venture?

A) Shared ownership reduces financial investment and risk
B) Firms retain control of their technology and proprietary knowledge
C) Partners always have shared goals
D) Partnerships can not be dissolved over time

Question 36

Which of the following is not true about DaimlerChrysler?

A) In 1998, the merger created the world's largest commercial automobile manufacturer.
B) Merged firm was expected to develop new economics of scale and scope.
C) Massive synergies were exploited.
D) Sold to Cerberus Capital Management for $650 million May 2007.

Question 37

Which of the following firms is not headquartered in the United States?

A) Citigroup
B) ConocoPhillips
C) General Electric
D) ING Group

Question 38

Coca-Cola's use of a single brand name across the globe is an example of:

A) Economy of scale
B) Economy of scope
C) Global Strategy
D) Multidomestic strategy

Question 39

_______'s ________ industry is an example of a national advantage.

A) Switzerland; flowers
B) America; watches
C) Germany; machinery
D) Netherlands; chocolate

Question 40

Which of the following economies is characterized as a 'dragon'?

A) Mexico
B) India
C) Russia
D) Taiwan

Question 41

What are economies of scope? Provide an example.

Question 42

What is a third world multinational? Provide an example.

Question 43

Imagine that your University is considering a possible joint venture with the University of Peking (China's top university) to establish a "Business Summer Study" 3 month program in Beijing. The Dean wants your advice on the idea. Based on your knowledge of joint ventures, what might you think would be three advantages? What might be three disadvantages of the joint venture?

Question 44

Sixteen of the world's top 25 corporations (by revenues) have their headquarters outside the United States. Name three of these companies.

Question 45

Provide three examples of regions or countries with a comparative advantage for a particular industry (e.g. Silicon Valley and high technology).

Question 46

Name and define the characteristics of four alternative strategies for international expansion based on competitive forces for low cost and local responsiveness.

Question 47

Name and define five alternative choices for international entry. Provide an example of each.

Question 48

How can competitive advantage be increased through international expansion?