Deck 12: The Strategy of International Business

Question 1

A ________ is a special outlook, skill, capability, or technology that runs through the firm's operations, weaving together all value activities into an integrated value chain.

A)core competency
B)value proposition
C)mission statement
D)learning curve

Answer 1

A

Question 2

Markets are not always perfectly competitive and some firms consistently outperform industry averages.This suggests that firm performance is also influenced by the presence of bright, motivated managers and their keen sense of innovative products or processes.

Answer 2

True

Question 3

________ is the framework that managers apply to determine the competitive moves and business approaches that run the company.

A)Competition
B)Growth
C)Strategy
D)Vision

Answer 3

C

Question 4

Political, legal, economic, monetary, and institutional forces comprise the ________ of international business and influence managers' actions.

A)environment
B)competition
C)culture
D)threat

Question 5

Which of the following has the greatest potential to transform an industry's structure?

A)a change in a competitor's management
B)a change in a competitor's pricing structure
C)the expansion of a distribution channel
D)the exit of a competitor from the industry

Question 6

Phillip is an international business manager with Corbin Manufacturing.Which of the following serves as an external influence on the business decisions that Phillip makes?

A)production plant locations
B)host country monetary policy
C)supply chain linkages
D)product design standards

Question 7

Which of the following is the most important constraint on the explanatory power of the IO paradigm?

A)Many industries are imperfectly competitive.
B)Many companies are locally but not internationally competitive.
C)Most customers have perfect knowledge of the products they select.
D)Most industries have many firms that each have small market shares.

Question 8

Rather than an inspirational statement, a(n)________ statement is meant to motivate people to act and specify the objectives that the firm needs to attain.

A)mission
B)vision
C)expectation
D)strategy

Question 9

A(n)________ outlines a firm's ultimate goal and its guiding values in broad terms.

A)mission
B)strategy
C)vision
D)imperative

Question 10

Digitization has altered location economics and established a new global model for service providers in the financial and legal industries.

Question 11

Change in the long-term industry growth rate has the potential to transform an industry's structure.

Question 12

Which of the following refers to the means by which management applies the systems that link a company's value activities, whether those activities are performed in one or in many countries?

A)configuration
B)logistics
C)coordination
D)core competency

Question 13

The industry organization (IO)paradigm assumes which of the following?

A)stable political and cultural trends
B)shifting foreign-exchange rates
C)perfect competition
D)unequal value

Question 14

Which force in Toyota's immediate environment would most likely have the greatest impact on its strategy?

A)interest rate trends
B)technological developments
C)shifts in U.S. political attitudes
D)actions taken by Honda and Mercedes Benz

Question 15

The framework that managers use to make decisions that maximize their companies' value creation performance is referred to as a strategy.

Question 16

The potential of new entrants is one characteristic of industry structure.

Question 17

A core competency gives every employee in an MNE a principle that helps them coordinate transactions between value activities.

Question 18

In a brief essay, discuss the strategy used by Zara, the firm described in the opening case.Also discuss the features of Zara's value chain.

Question 19

Improving explanatory power of the IO paradigm can be done by considering the potential for ________ to lead to a company's sustained competitive advantage.

A)bright, motivated managers
B)political trends and events
C)cultural institutions
D)new markets

Question 20

The industry organization (IO)paradigm reports that, on average, the BEST predictor of firm strategy is the ________.

A)company's stockpile of assets, skills, and capabilities
B)aggressiveness of a company's marketing objectives
C)link between a company's products and processes
D)structure of the industry in which it competes

Question 21

A differentiation strategy works well when ________.

A)a company designs a universal product for a broad market
B)buyers believe minor product differences are irrelevant to price
C)buyers are highly sensitive to price shifts and quality control
D)a company can continually develop products that have unique features

Question 22

A company that employs a(n)________ strategy creates value by generating customer insights and translating those insights into innovations.

A)differentiation
B)diversification
C)cost leadership
D)innovation

Question 23

A company's value chain is best described as the ________.

A)variable sequence of converting product ideas into value for shareholders
B)mixture of activities taken to define product value standards and price points
C)discrete series of steps taken to move a product from conception to end-users
D)blueprint that must be followed to leverage the core capabilities of a global firm

Question 24

A strategy that focuses on lowering operating costs is referred to as a ________ strategy.

A)differentiation
B)cost leadership
C)niche market
D)diversification

Question 25

Describe the two basic ways that companies can create value.What role does the value chain play in these methods?

Question 26

Dispersing value activities where and in how many places in the world is the issue of ________.

A)logistics
B)clustering
C)coordination
D)configuration

Question 27

A differentiation strategy is a unique mixture of the localization and global strategies whereby the company attempts to capture the advantages of both.

Question 28

Successful implementation of a ________ strategy requires a company to develop unique competencies that rivals find hard, if not impossible, to match or copy.

A)differentiation
B)cost leadership
C)globalization
D)marketing

Question 29

In the context of value chain analysis, the support activities of a firm include ________.

A)outbound logistics, human resources, and information systems
B)production, marketing, and operations
C)shipping and customer service
D)research and development

Question 30

________ are the two basic strategies for creating value and attaining a competitive advantage in an industry.

A)Diversification and niche marketing
B)Industry leadership and market dominance
C)Customer satisfaction and product innovation
D)Cost leadership and differentiation

Question 31

Which of the following is the BEST example of a product disruption driving industry change?

A)redesign of Toyota's Prius
B)introduction of Apple's iPad
C)AT&T's purchase of T-Mobile
D)merger of United and Continental

Question 32

Which of the following is the purpose of a company's value proposition?

A)to exceed customers' expectations
B)to force competitors into a price war
C)to identify consumers for whom the company creates products
D)to explain why a consumer should buy the company's products

Question 33

A useful way to understanding the purpose of strategy is to think of the firm as a(n)________, composed of a series of distinct activities, including production, marketing, materials management, R&D, human resources, information systems, and the firm infrastructure.

A)activity network
B)value constellation
C)task succession
D)value chain

Question 34

The essence of a differentiation strategy is to ________.

A)target the most sophisticated segment of the market
B)incorporate the greatest number of features into a product
C)offer a unique product that supports a premium price
D)outspend rivals on product advertising

Question 35

When different companies produce the same commodity, their costs are essentially the same.

Question 36

Using a concentrated configuration, an MNE performs value activities in different countries.

Question 37

A differentiation strategy works well in situations where there are many ways to differentiate a product or service and many buyers perceive these differences as having value.

Question 38

Some companies that opt for the cost leadership strategy plan to sell products below the average industry prices in order to capture market share.

Question 39

Zara creates, produces, and distributes most of its products from its headquarters in Spain.Zara is most likely using a ________ configuration.

A)concentrated
B)coordinated
C)dispersed
D)logical

Question 40

Which of the following is considered a primary activity in a company's value chain?

A)shipping
B)product design
C)systems and solutions
D)materials and equipment

Question 41

Support activities define the infrastructure of the firm and serve as the basis for the daily implementation of primary activities in the value chain.

Question 42

Johnson Enterprises manufactures computer chips used in cell phones.The MNE has long production runs that lower the per unit cost of each chip.The firm also purchases materials in bulk from its suppliers with whom Johnson has long-term contracts.Johnson is most likely benefiting from ________.

A)economies of scale
B)the cluster effect
C)digitization
D)location economies

Question 43

Tel-Comm Tek is a company that sees the world as a single market, assuming that consumer preferences and industry conditions do not vary much among countries.Tel-Comm Tek is likely to adopt a multidomestic strategy.

Question 44

Advantages of following a strategy of local responsiveness include the ________.

A)improved ability to transfer skills to employees in different locations
B)opportunity to adopt a global advertising program
C)ease in standardizing manufacturing methods across countries
D)flexibility to apply location-specific skills to local opportunities

Question 45

What is configuration? Briefly list and discuss the factors that influence value chain configuration.

Question 46

The term ________ refers to a global company that thrives on seeking unique ideas and insights from locations around the world and then leveraging that knowledge in international markets.

A)multidomestic
B)domestic
C)metanational
D)cross-cultural

Question 47

The strategy of a firm using an international strategy is likely to entail producing and marketing mostly standardized products worldwide, with some customization where and when necessary.

Question 48

Dispersed value chains make sense when costs vary across countries.

Question 49

Which of the following is NOT a factor driving local responsiveness among global firms?

A)cross-national differences in distribution channels
B)diverging consumer tastes and preferences
C)cross-national differences in product standards
D)host government support of freer international trade

Question 50

Pressures for global integration include economic integration, convergent consumer preferences, and political demands imposed by host countries.

Question 51

Host governments' growing demands for increasing operational transparency will most likely spur companies to make their value chains more ________.

A)locally responsive
B)globally integrated
C)concise
D)complex

Question 52

According to the Integration-Responsiveness (IR)Grid, consumer electronics and corporate banking are two types of industries with ________ industry pressure for global integration and ________ industry

A)low; low
B)high; high
C)low; high
D)high; low

Question 53

The quest to maximize individual purchasing power compels local responsiveness.

Question 54

Micro-multinationals are firms that globalize immediately and enter countries with numerous customers, productive workers, and attractive industries.

Question 55

Which of the following would most likely pressure an MNE to globally integrate its value activities?

A)costs of producing in separate facilities exceeding those of producing in a single facility
B)variability in consumers' tastes and preferences shifting across countries
C)market pressures to add new product features continually
D)demands imposed by host country governments

Question 56

The Integration-Responsiveness (IR)Grid expresses how a company's ________ is a function of the relationship between its value chain and the prevailing pressures for global integration or local responsiveness in its industry.

A)value proposition
B)target market
C)mission
D)strategy

Question 57

Firms that compete in the global marketplace typically face the asymmetric forces of pressures for ________ and ________.

A)global integration; local responsiveness
B)price reductions; cost reductions
C)political sensitivity; market leadership
D)cost reductions; customer satisfaction

Question 58

Managers use a value chain analysis to determine how the company will design, make, move, and sell products; how it will find efficiencies in doing so; and how it will coordinate the decisions in one part of the business with those made in other parts.

Question 59

What is the difference between primary and secondary activities in the value chain? Describe the functions of configuration and coordination in these value activities.

Question 60

Which of the following is LEAST likely to trigger the standardization of consumer preferences?

A)intrinsic functions of money
B)global access to common media
C)increasing nationalism
D)improved communications technologies

Question 61

Pressures for local responsiveness include cross-national differences in terms of consumer preferences, advances in technology, and government regulations.

Question 62

Describe the pressures for local responsiveness that international companies face.

Question 63

A distinct disadvantage of an international strategy is ________.

A)restricting the movement of core competencies to local markets
B)capitalizing on the benefits of global learning
C)customizing product offerings to local conditions
D)relying on home managers' knowledge of foreign markets

Question 64

Which strategy champions worldwide consistency and standardization to support the firm's goal to become the low-cost leader?

A)international strategy
B)localization strategy
C)global strategy
D)transnational strategy

Question 65

A distinct advantage of an international strategy is ________.

A)transferring core competencies to foreign markets
B)reaping benefits of global learning
C)customizing product offerings to local conditions
D)leveraging local managers' knowledge of their markets

Question 66

Johnson & Johnson delegates to its subsidiaries a great deal of authority to respond to local conditions.Many subsidiaries have their own manufacturing, marketing, research, and human resource functions.This value chain configuration illustrates the ________ strategy.

A)transnational
B)global
C)localization
D)international

Question 67

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

A)Headquarters can misread foreign-market opportunities and threats.
B)The transfer of core competencies to foreign markets is complicated by the necessity to adapt to local needs.
C)Local subsidiaries are not given the opportunity to adapt value activities and share what they have learned with headquarters.
D)The company can be blindsided by an unexpectedly innovative rival in a foreign market.

Question 68

Marrin Associates is an MNE with operations in Hong Kong, India, and Canada.The firm strives to leverage its core competencies worldwide, reduce costs by exploiting location economics, and adapt when efficient to local conditions.Marrin is most likely following a(n)________ strategy.

A)global
B)localization
C)transnational
D)international

Question 69

Preston Electronics is an MNE with facilities located in Taiwan, Singapore, and Germany.Preston gives its local operations the authority to adapt value activities to prevailing local economic, political, legal, and cultural conditions.Preston is most likely using a(n)________ strategy.

A)global
B)localization
C)international
D)continental

Question 70

Darvin Foods is an MNE that is in the process of revising its international business strategy.Most of the firm's top executives believe that Darvin should implement a localization strategy.Which of the following conditions would most likely support this type of strategy?

A)a high need for local responsiveness and a low need to reduce costs via global integration
B)a high need for local responsiveness and a high need to create efficiencies via global integration
C)a low need for local responsiveness and a low need to reduce costs via global integration
D)a low need for local responsiveness and a high need to create efficiencies via global integration

Question 71

An MNE in which new knowledge and capabilities are developed in both domestic and foreign locations, both independently and jointly, and then diffused throughout the worldwide organization, is following a ________ strategy.

A)transnational
B)localization
C)global
D)matrix

Question 72

In the global environment, firms use an international strategy, a localization strategy, a global strategy, or a ________ strategy.

A)regional
B)standardization
C)transnational
D)locational

Question 73

When the pressure for global integration is high and the pressure for local responsiveness is low, a company is most likely to pursue a(n)________ strategy.

A)global
B)transnational
C)localization
D)international

Question 74

A global strategy tends to be more successful when ________.

A)buyers are looking for customized products at bargain prices
B)the industry's product is a commodity
C)entry barriers are low for new firms
D)suppliers have little bargaining power

Question 75

Citibank decides to open a call center in Mumbai, India because a detailed analysis of the country-specific advantages suggests that India is the optimal place for responding to customers' calls.Citibank is exploiting ________ by running a call center in India.

A)value configuration synergies
B)location economies
C)geographic arbitrage
D)value offshoring

Question 76

Pressures for local responsiveness are especially important in industries where value creation is a function of a company's capacity to adapt to local market conditions.

Question 77

Google essentially views the entire world as one market and assumes that there are no fundamental differences among countries with regard to consumers' preferences.Google is engaging a(n)________ strategy.

A)international
B)localization
C)transnational
D)global

Question 78

Which of the following is the primary limitation of the transnational strategy?

A)poor local adaptation
B)cross-unit coordination difficulties
C)duplication of subsidiary activities
D)inability to leverage core competencies

Question 79

Firms that pursue a(n)________ strategy create value by transferring core competencies from the home market to foreign markets in which local rivals lack a competitive alternative.

A)transnational
B)localization
C)global
D)international

Question 80

The MNE that applies a global strategy aims to ________.

A)compete essentially the same way wherever the company does business
B)empower local operations to make decisions about value activities
C)adapt activities to the industry standards in critical markets
D)customize its business practices to consumer expectations