Question 1

One of the major problems with the global matrix structure is that reporting relationships are often very complex and vague.

Accepted Answer

In a global matrix structure, employees have multiple reporting lines and this can lead to confusion and lack of clarity about who has authority over whom.

Question 2

The simplest and most common mode of entering the international marketplace is licensing.

Accepted Answer

Licensing is a common mode of entering international markets, but the simplest and most common mode is often exporting, as it involves less risk and investment.

Question 3

A country that has high political instability and increasing incidents of terrorism will be still be considered a high risk for foreign direct investments, even if the country's labor force is cheap.

Accepted Answer

Political instability and terrorism increase the overall risk of investing in a country, making it less attractive to foreign investors even if labor costs are low.

Question 4

Because of environmental and technological changes taking place in the twenty-first century

Accepted Answer

Due to environmental and technological changes, international strategies are becoming more widespread as companies seek opportunities to expand and adapt to a changing global marketplace. Cutting back on international pursuits or increasing tariffs would not align with this trend. There is no evidence to support the claim that international strategies are doubling in volume and dollar value every three years.

Question 5

If an organization's goal in internationalizing is learning, then the best approach is the transnational strategy.

Accepted Answer

The transnational strategy emphasizes learning and knowledge sharing across borders, making it the ideal approach for organizations seeking to internationalize for the purpose of learning.

Question 6

Exporting and licensing are forms of foreign direct investment.

Accepted Answer

Exporting and licensing are not forms of foreign direct investment, as they do not involve the direct ownership or control of a foreign company or its assets. FDI typically involves the establishment of wholly-owned subsidiaries, joint ventures, or mergers and acquisitions in a foreign market.

Question 7

An advantage of the geographic-area divisional structure is that it is easy to achieve economies of scale.

Accepted Answer

The geographic-area divisional structure often leads to duplication of resources and functions across different regions, which can make it more challenging to achieve economies of scale compared to a centralized structure.

Question 8

A company specializing in all natural health products would be likely to form an alliance with a company in Brazil that manufactures creams, lotions, and body oils from tropical plants using little-known indigenous techniques in order to

Accepted Answer

By forming an alliance with a company in Brazil that manufactures health products from tropical plants using little-known indigenous techniques, the all-natural health products company can gain access to the knowledge and expertise of the Brazilian firm. This could help the company expand its product line and potentially develop new markets, while also providing a competitive advantage through unique and high-quality ingredients. The other options (A, C, and D) do not necessarily align with the benefits of forming this specific type of alliance.

Question 9

The cognitive model that motivates a manager to search for opportunities in foreign markets is known as

Accepted Answer

The cognitive model that motivates a manager to search for opportunities in foreign markets is called a global mindset. This mindset involves having an openness and awareness of different cultures, a willingness to learn and adapt to local customs and practices, and a strategic approach to identifying and seizing opportunities in foreign markets. This mindset is essential for businesses seeking to expand their reach and enter new markets. The other answer choices do not accurately describe the specific cognitive model that motivates managers to pursue foreign market opportunities.

Question 10

If a firm's success depends on intangible resources and the success of its entry into the international market depends on transferring core competencies, an appropriate mode of entry into the international market would be through an acquisition.

Accepted Answer

Acquiring a company in the international market can be a more effective way to transfer and integrate intangible resources and core competencies compared to other modes of entry such as licensing or franchising. This is because acquisition allows for greater control over the acquired company and its resources, making it easier to transfer and utilize them within the overall strategy of the firm.

Question 11

For global companies, the Olympics present a significant opportunity to realize operational efficiencies.

Accepted Answer

The Olympics primarily offer global companies opportunities for marketing, branding, and sponsorship rather than operational efficiencies. Operational efficiencies are more related to internal processes and cost reductions within a company's operations.

Question 12

The island of Madagascar has large, undeveloped deposits of a rare mineral. A European mining company is interested in locating in Madagascar to extract this mineral. This is an example of an international strategy being motivated by

Accepted Answer

The European mining company is motivated by sourcing of resources and supplies, as it seeks to extract a rare mineral that is abundant in Madagascar. This is a classic example of an international strategy that is driven by the need to access and exploit natural resources in other countries.

Question 13

A firm using the multidomestic strategy is unlikely to customize its products for the local market.

Accepted Answer

The multidomestic strategy involves customizing products and marketing strategies for each local market in which the firm operates. Therefore, a firm using this strategy is very likely to customize its products for the local market.

Question 14

There are two competing pressures organizations must consider when choosing an international strategy: pressures for global efficiencies and pressures for local responsiveness and flexibility.

Accepted Answer

This statement is true. Organizations must balance the desire for global efficiencies, such as cost savings and standardization, with the need to be responsive to local markets and adaptable to cultural differences. Focusing too much on one pressure at the expense of the other can lead to strategic failures.

Question 15

One of the main reasons that companies use contract manufacturing as a mode of entry into the international market is the cost advantage over U.S. manufacturing.

Accepted Answer

Contract manufacturing in countries with lower labor and production costs can provide cost advantages over U.S. manufacturing, making it an attractive option for companies entering the international market.

Question 16

A manufacturer of kitchen and laundry appliances plans to produce and sell different varieties of appliances in various countries due to differences in kitchen and home sizes, electrical power variations, alternative fuels, and cultural preferences. This manufacturer will be following the ____ strategy.

Accepted Answer

The multidomestic strategy involves producing and selling customized products or services in different countries based on local market demands and preferences. This is exactly what the manufacturer in the given scenario is planning to do by producing different varieties of appliances in various countries based on differences in kitchen and home sizes, electrical power variations, alternative fuels, and cultural preferences.

Question 17

The Internet has eased international transactions in all of the following ways except

Accepted Answer

The Internet has not substantially reduced the liability of foreignness, which refers to the difficulties and costs that firms encounter when entering foreign markets due to differences in language, culture, legal systems, and other factors. While the Internet has reduced some barriers to international trade, such as communication and information costs, many challenges associated with doing business in foreign markets persist.

Question 18

A company that has significant internal-coordination advantages should not choose franchising or licensing as a mode of entering the international market.

Accepted Answer

Franchising or licensing primarily benefits companies looking to expand with minimal investment and risk by leveraging external partners. However, a company with significant internal-coordination advantages likely has proprietary processes, technologies, or business models that are better exploited and controlled through direct investment and operations, rather than risking dilution or mismanagement through franchising or licensing.

Question 19

Like many major rivals, Coca-Cola and Pepsi-Cola compete with each other internationally in order to prevent the other from gaining a significant advantage in any one country or region that it could exploit in the U.S. market.

Accepted Answer

Coca-Cola and Pepsi-Cola are major rivals and compete with each other internationally to maintain their positions and prevent the other from gaining an advantage in any one country or region that they could exploit in the US market.

Question 20

An advantage of an international acquisition is that the acquiring firm takes on only a limited portion of the target firm's liabilities. The remainder are forgiven by the local government.

Accepted Answer

This statement is false. In an international acquisition, the acquiring firm usually takes on all the liabilities of the target firm, including any outstanding debts or legal obligations. The local government does not typically forgive these liabilities.

Quiz 8: Competing Across Borders