Deck 6: Multinational and Entry-Mode Strategies: Content and Formulation

Question 1

Dispersing value-chain activities anywhere in the world where the company can do them best or cheapest refers to seeking

A)The global-local dilemma.
B)Comparative advantage of nations.
C)Competitive advantage of firms.
D)Locations advantages.

Answer 1

D

Question 2

A regional strategy refers to

A)Managing raw-material sourcing, production, marketing, and support activities within a particular region.
B)Selling global products and using similar marketing techniques worldwide.
C)Dispersing value-chain activities anywhere in the world where the company can do them best or cheapest.
D)None of the above

Answer 2

A

Question 3

Global companies usually seek to

A)Provide unique products for all countries of the world.
B)Take advantage of different factor costs among countries.
C)Manufacture their products in every country.
D)Focus only on downstream activities in the value chain.

Answer 3

B

Question 4

Having one set of products for North American countries and another set of products for Europe illustrates which strategy?

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

Question 5

Globalization drivers

A)Fall into four categories: market, costs, governments, and competition.
B)Are conditions in an industry that favor transnational or international strategies over multidomestic or regional strategies.
C)Indicate the degree of globalization of an industry.
D)All of the above

Question 6

Comparative advantage is

A)Similar to competitive advantage.
B)A local responsiveness solution.
C)Where the company can produce the cheapest.
D)Advantages of nations over other nations.

Question 7

According to the text,a fundamental dilemma faced by all multinationals is

A)The form of competitive strategy they should use.
B)How much they emphasize responding to differences in all the markets they operate.
C)How to fight their rivals.
D)None of the above

Question 8

Which strategy attempts to balance advantages from three other multinational strategies?

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

Question 9

A multidomestic company gives strategic priority to

A)Providing a low cost product to local customers.
B)Adapting a product or service to local needs.
C)Having multiple locations for sources its raw materials.
D)Controlling the strategic options of local companies.

Question 10

Conducting business similarly throughout the world,and locating company units wherever there is high quality and low cost is

A)The global-local dilemma.
B)The global integration solution.
C)The local responsiveness solution.
D)The multidomestic solution.

Question 11

Using intermediaries or go-between firms to provide the knowledge and contacts necessary to sell overseas is usually associated with

A)Direct exporting.
B)Franchising.
C)Indirect exporting.
D)Licensing.

Question 12

Asking diagnostic questions such as are there economies of scale,are there cheaper sources of raw materials,are there global sources of low-cost raw materials provide information regarding which globalization driver?

A)Global markets
B)Costs
C)Competition
D)Governments

Question 13

Comparative advantages are

A)Cost or quality advantages particular to a nation.
B)Similar to competitive advantages.
C)Emphasized through multidomestic strategies.
D)None of the above

Question 14

Entry-mode strategies

A)Include multidomestic and transnational strategies.
B)Are options multinationals have to enter foreign markets and countries.
C)Are only processes by which firms fill overseas orders like domestic orders.
D)None of the above

Question 15

Selling global products and using similar marketing techniques worldwide is an example of a

A)Transnational strategy.
B)International strategy.
C)Multidomestic strategy.
D)Regional strategy.

Question 16

Responding to differences in the markets in all the countries in which a company operates is

A)The global-local dilemma.
B)The best strategy for success for a multinational.
C)The local-responsiveness solution.
D)The global solution.

Question 17

International franchising

A)Is a comprehensive licensing agreement where the franchisor grants to the franchisee the use of a whole business operation.
B)When multinationals make a project fully operational and train local managers and workers before the owner takes control.
C)The use of intermediaries or go-between firms to provide the knowledge and contacts necessary to sell overseas is.
D)None of the above

Question 18

Common customer needs,global sources of raw material,and favorable trade policies all lead to

A)An increased focus on local markets.
B)More use of the multidomestic strategy.
C)More use of the local solution to the global-local dilemma.
D)A greater likelihood that companies select global strategies.

Question 19

The global solution to the global-local dilemma refers to

A)Conducting business similarly around the world.
B)Responding to differences in the global markets in which a company operates.
C)Customization of products to regional but not country differences.
D)None of the above

Question 20

A company that treats and fills overseas orders like domestic orders is an example of a

A)Indirect exporter.
B)Export management company.
C)Aggressive exporter.
D)Passive exporter.

Question 21

What dictates the choice of a multinational entry-mode strategy?

A)Strategic competition
B)Strategic reason to be in the market
C)Companies want to share risks and costs of developing technology
D)Companies want to achieve economies of scale

Question 22

A company pursuing a regional strategy

A)Has worldwide products and a worldwide value chain.
B)Sells the same product using only minor modification in marketing and product offerings.
C)Is similar to a company pursuing an international strategy.
D)Attempt to gain location advantages of more global transnational combined with some of the local-adaptation advantages of the multidomestic company.

Question 23

If strategists in a firm believe that centralizing key activities such as R&D is necessary to reduce coordination costs and to achieve economies of scale,they are more likely to choose

A)An international strategy.
B)A transnational strategy.
C)A local strategy.
D)None of the above

Question 24

As entry-mode strategies,direct and indirect exporting have

A)High levels of control and low levels of risk.
B)Similar levels of risk and control as FDI.
C)Low levels of risk and control.
D)Are among the most risky.

Question 25

Which of the following refers to the negative impact of political decisions or events on a multinational's profitability?

A)Economic risk
B)Local government risk
C)Political risk
D)Control risk

Question 26

Which of the following statements regarding exporting is FALSE?

A)Exporting is the easiest of entry-mode strategies.
B)Export can be of the passive form where overseas orders are treated like domestic orders.
C)Export can be indirect where companies rely on intermediaries to sell overseas.
D)Because it is the easiest form of going international, exports are not as important to the US economy.

Question 27

Major drawbacks of licensing include

A)The risk of losing the capital investment.
B)The risk of the local government changing international trade policies.
C)The loss of control and the possibility of creating a new competitor.
D)All of the above

Question 28

Advantages of foreign direct investment include

A)Increased capital investment.
B)Greater control of product and marketing strategy.
C)Greater exposure to financial risks.
D)The lower costs of using expatriates managers.

Question 29

Companies should license if

A)They want to control all aspects of operation.
B)Their product is older or a soon-to-be replaced technology.
C)They have the necessary resources to export or invest directly.
D)There are no tariffs or quotas.

Question 30

If a company seeks a strategic alliance with another firm,it is a

A)Low cost strategy.
B)Franchising agreement.
C)Competitive agreement.
D)Cooperative agreement.

Question 31

When multinationals make a project fully operational and train local managers and workers before the owner takes control,they are using which entry-mode strategy?

A)Licensing
B)Franchising
C)Turnkey
D)Direct export

Question 32

To deal with political risk,various private and government agencies offer

A)Insurance.
B)Assurance.
C)Investment.
D)All of the above are true.

Question 33

Which of the following strategies gives top priority to seeking location advantages and to gaining operation efficiencies from worldwide operation?

A)Multidomestic strategy
B)Regional strategy
C)Transnational strategy
D)International strategy

Question 34

Foreign direct investment

A)Exists when two or more firms have an ownership position in a separate company.
B)Requires at least three separate companies to combine resources.
C)Exists when two or more companies agree to cooperate in any value-chain activity.
D)The above statements are all true for equity international joint ventures.

Question 35

When deciding on an entry-mode strategy,cultural distance is

A)The physical distance between two countries.
B)Not the distance between an organization's culture and the local national culture.
C)Similar to the geographic distance.
D)None of the above

Question 36

Foreign direct investment

A)Is an entry-mode strategy.
B)Means that a multinational owns, in part or in whole, an operation in another country.
C)Symbolizes the highest rate of internationalization.
D)All of the above

Question 37

If management believes that it must control foreign sales,customer credit,and the eventual sale of the product,then the company should choose which of the following entry-mode strategies?

A)Indirect exporting
B)Licensing
C)Direct exporting
D)Franchising

Question 38

Which of the following is NOT a factor considered when assessing political risk?

A)The durability of the political system
B)The role of the government, unions and the media in political stability
C)The profitability
D)The reliability of the rule of law

Question 39

When a firm from another country has an equity (or ownership)position in a separate company,it is engaging in

A)An international cooperative alliance.
B)A turnkey operation.
C)A contract manufacturer.
D)FDI.

Question 40

If a company believes that it needs to control foreign sales,customer credit,and sale of product to the customer,it is more likely to choose

A)Indirect exporting.
B)Rely on foreign intermediaries for export purposes.
C)Direct exporting.
D)None of the above

Question 41

Discuss some key issues to consider when choosing an entry-mode strategy.

Question 42

You work for a small company that has an innovative low-cost production method for laser disks that allow it to produce at very low cost.A Belgian firm approaches your CEO and offers to export your disks to Belgium for a commission.The CEO asks you to write a report detailing the risks and potential benefits of this deal.What will you include in your report and why

Question 43

Discuss the conditions when a transnational or international firm is likely to outcompete a multidomestic or regional strategist.Contrast this with the opposite situation where the multidomestic is most likely to be successful.

Question 44

Contrast the transnational and international strategies in their approach to location advantages.

Question 45

Describe the global-local dilemma.When is each solution most appropriate?

Question 46

Discuss some general strategic considerations regarding multinational strategy when choosing a entry-mode strategy.

Question 47

Under what conditions would a regional strategy be best for a multinational? Explain.

Question 48

What are globalization drivers?

Question 49

What is political risk? Discuss some of the aspects of political risk assessment.How can multinationals use political risk assessment?

Question 50

You work for a small company that has an innovative low-cost production method for laser disks.A Japanese firm approaches your CEO to license the technology.The CEO asks you to write a report detailing the risks and potential benefits of this deal.What will you include in the report and why?