Question 1

In order to secure worldwide competitive advantage,a multinational firm should pursue all of the following objectives,except:
A) the development of global-scale efficiencies.
B) the development of multinational flexibility.
C) the ability to develop innovation.
D) maximizing market share in all subsidiaries simultaneously.

Accepted Answer

Developing scale efficiencies,multinational flexibility,and learning and innovation are the three strategic objectives a company must achieve to have worldwide advantage Choices a,b,and c respectively.It may not be realistic to try and achieve maximum market share in all subsidiaries simultaneously.

Question 2

At the annual meeting of the board of directors of LabZaws Co.,James Wilson,the CEO of the company,was directed to focus primarily on enhancing the firm's efficiency.How could he achieve this objective?
A) focus on cost reduction alone.
B) focus on revenue enhancement alone.
C) focus on both cost reduction and revenue enhancement.
D) downsize and outsource many of the firm's activities.

Accepted Answer

Efficiency of a company can be described as the ratio of the value of its outputs to the value of its inputs.Therefore,in order to enhance its efficiency,the firm should try to cut costs and increase revenues at the same time.

Question 3

Which of the following is not a benefit associated with higher production volumes?
A) exploiting scale economies.
B) enhancing innovation.
C) accumulating learning.
D) taking advantage of the learning curve effect to further reduce production costs.

Accepted Answer

Higher production volume will not only result in scale economies (choice a) through the reduction of fixed cost of each unit produced, but it will result in learning-by-experience (choice c).The accumulated learning will benefit the firm by progressive cost reduction as the firm moves down its learning curve (choice d).Therefore, among the choices, innovation (choice b) is the only one that will not be enhanced through higher production volumes.

Question 4

Which of the following explain why cost reduction occurs in the context of scope economies?
A) high production volumes.
B) high production volumes and similarities in the resource requirements for different products.
C) high production volumes and the tendency of the firm to fully exploit its existing resources.
D) similarities in resource requirements for different products, as well as the tendency of the firm to fully exploit its existing resources.

Accepted Answer

When a company has resources and capabilities that are not fully exploited through current products/services,it may diversify by introducing products that require similar resources with the aim of fully exploiting its resources.This is explained by scope economies choice d.While choice a explains scale economies,choices b and c are a combination of scale and scope economies.

Question 5

The main drivers of MNEs' continual growth and prosperity are the desire to protect existing revenues and to increase profits.

Accepted Answer

Search for additional profit or desire to protect existing revenue may explain why MNEs come to exist,but they do not provide a complete explanation of why some of them continue to grow and flourish.The multinational's exposure to the diversity of environments,however,allows it to develop diverse capabilities that may help the MNE in its continual growth.

Question 6

The diversity of environments in which MNEs operates enables them to develop diverse capabilities and experience multiple learning opportunities.

Accepted Answer

A key asset of the MNE is the diversity of environments in which it operates.This provides it with broader learning opportunities than are available to a purely domestic firm and will help them pursue the objective of worldwide learning.

Question 7

The CEO of Informatix Co.,suggested to the board of directors that if the firm was going to adopt a transnational strategy,rather than having treasury operations situated in the headquarters,the company should relocate this operation to London in order to enhance access to financial markets.Consequently,the treasury operations would still be centralized,but situated in a different location.Flexible specialization,or excentralization,is an important attribute of firms that adopt a transnational strategy.

Accepted Answer

With flexible specialization,transnational companies enjoy the complementary benefits of scale economies with flexibility of accessing low input costs or scarce resources.

Question 8

If middle-class consumers' ability to buy is low and their needs are global,a company can develop which type of strategy to better serve them:
A) Shape or localize
B) Reinvent the business model
C) Create a platform
D) Target niche

Accepted Answer

The answer of If middle-class consumers' ability to buy is...

Question 9

Which of the following is not considered a source of global competitive advantage?
A) scale economies.
B) market leadership.
C) national differences.
D) scope economies.

Accepted Answer

Scale economies,national differences,and scope economies choices a,c,and d are the three sources of competitive advantage.Market leadership may or may not be the result of having a global competitive advantage.

Question 10

Johnnie Walker's advertising campaign "Keep Walking" is an example of which type of strategy?
A) International
B) Multinational
C) Global
D) Transnational

Accepted Answer

The elements of the campaign were slightly modified depending on the culture and market it appeared in however,the underlying message was retained.

Question 11

Having a city-specific strategy is always a better choice than country-specific strategy in emerging markets.

Accepted Answer

The decision to bring the strategy level down to the city-level does not depend on being in an emerging market or in an advanced market.Instead,it is often a question of scale and pace: Does the city have enough scale to make it a stand-alone unit for a separate strategy? And is the pace of change mostly economic growth so high that a separate city-specific strategy is required?

Question 12

A "regional" strategy becomes feasible when:
A) Geographic regions or groups of countries are sufficiently large and internally homogeneous markets but differ substantially from other regions or groups
B) Geographic regions or groups of countries are sufficiently small and internally homogeneous markets but differ substantially from other regions or groups
C) Geographic regions or groups of countries are sufficiently large and internally homogeneous markets but differ marginally from other regions or groups
D) Geographic regions or groups of countries are sufficiently small and internally homogeneous markets but differ marginally from other regions or groups

Accepted Answer

A regional strategy becomes feasible when geographic regions or groups of countries are sufficiently large and internally homogeneous markets but differ substantially from other regions or groups. This allows companies to target their marketing and distribution efforts to the specific needs and preferences of those regions, without having to deal with too much variation within the region itself or too much competition from other regions.

Question 13

Cost reductions due to scale-economies are static and constant over time and few dynamic benefits are associated with scale economies.

Accepted Answer

The higher volumes that allows a firm to exploit scale benefits also allows it to accumulate learning.This learning effect leads to a progressive and dynamic cost reduction as the firm moves down its learning curve.

Question 14

The overall efficiency can be viewed as the ratio of the value of its outputs to the value of its inputs.

Accepted Answer

Yes, this is true. The efficiency of a system can be calculated by dividing the output value by the input value, which gives the ratio of how much useful work is actually being done compared to the amount of energy or resources put into the system.

Question 15

Product diversification as a source of scope economics and shared external relations can lead a company to use common distribution channels for multiple products.

Accepted Answer

Product diversification allows a company to offer multiple products under one brand, which can lead to cost savings through shared external relations like distribution channels. Common distribution channels can help reduce costs and improve efficiency for the company.

Question 16

Which of the following best describes scope economies?
A) cost advantage resulting from production, development or distribution in more than one country.
B) cost advantage resulting from large volume production, development or distribution.
C) cost advantage resulting from the joint production, development or distribution of more than one product.
D) cost advantage resulting from the production, development or distribution of very high quality products.

Accepted Answer

Scope economies is based on the notion that certain economies arise from the fact that the cost of joint production 
or development or distribution of two or more products can be less than the cost of producing them separately.

Question 17

Companies using multinational strategies are characterized by asset and capability configurations that are dispersed,interdependent and specialized.

Accepted Answer

Companies that use a multinational strategy configure their assets and capabilities as decentralized and nationally self-sufficient.This will result in considerable local autonomy,and high flexibility and responsiveness to the local environment.However,they suffer problems of inefficiencies and inability to exploit the knowledge and competencies of other national units.Dispersed,interdependent and specialized asset configuration is the characteristic of a transnational strategy.

Question 18

Since efficiency,flexibility and learning are conflicting goals,a transnational company should focus on only one of these goals and try to exploit it through the three sources of worldwide competitive advantage - national differences in both input and output markets,scale economies and scope economies.

Accepted Answer

The main distinction of a transnational company to international,multinational,or global companies is its strategic orientation of developing global efficiency,flexibility,and worldwide learning simultaneously,as opposed to focusing on only one of them.This will help the transnational management company to protect and enhance the particular strength it has while simultaneously building the other capabilities.

Question 19

Lindux Co.,intends to enhance its competitive advantage by exploiting the national differences that prevail in the countries that host its subsidiaries.Which of the following is consistent with this intention?
A) moving the manufacture of labor-intensive components to Vietnam in order to capitalize on the lower cost labor found in Vietnam.
B) hiring local managers for its foreign subsidiaries rather than employing expatriates.
C) centralizing the company's R&D activities in the home country for reasons of strategic security.
D) using a common distribution channel for multiple products.

Accepted Answer

Locating manufacture of labor-intensive components in Vietnam,a country well-known for its low labor-cost provides Lindux Co.with competitive advantage which is the result of inter-country differences in factor costs.The difference between a local and expatriate manager is valid for every home and host country regardless of the differences or similarities they may have.Therefore,choice b cannot be the right answer.Also,centralizing the company's R&D activities in the home country for reasons of strategic security choice c is not relevant to inter-country differences.Finally,a common distribution channel is a means of achieving scope economies which is independent of inter-country differences.

Question 20

MNEs can maximize each of the following objectives independently: global scale efficiency,multinational flexibility and innovation development.

Accepted Answer

These objectives are different and,at times,conflicting.Therefore,a company can develop competitive advantage by taking strategic actions that optimize,rather than maximize,achievement of these goals.

Quiz 3: Developing Transnational Strategies: Building Layers of Competitive Advantage

In order to secure worldwide competitive advantage,a multinational firm should pursue all of the following objectives,except:

At the annual meeting of the board of directors of LabZaws Co.,James Wilson,the CEO of the company,was directed to focus primarily on enhancing the firm's efficiency.How could he achieve this objective?

Which of the following is not a benefit associated with higher production volumes?

Which of the following explain why cost reduction occurs in the context of scope economies?

The main drivers of MNEs' continual growth and prosperity are the desire to protect existing revenues and to increase profits.

The diversity of environments in which MNEs operates enables them to develop diverse capabilities and experience multiple learning opportunities.

If middle-class consumers' ability to buy is low and their needs are global,a company can develop which type of strategy to better serve them:

Which of the following is not considered a source of global competitive advantage?

Johnnie Walker's advertising campaign "Keep Walking" is an example of which type of strategy?

Having a city-specific strategy is always a better choice than country-specific strategy in emerging markets.

A "regional" strategy becomes feasible when:

Cost reductions due to scale-economies are static and constant over time and few dynamic benefits are associated with scale economies.

The overall efficiency can be viewed as the ratio of the value of its outputs to the value of its inputs.

Product diversification as a source of scope economics and shared external relations can lead a company to use common distribution channels for multiple products.

Which of the following best describes scope economies?

Companies using multinational strategies are characterized by asset and capability configurations that are dispersed,interdependent and specialized.

Lindux Co.,intends to enhance its competitive advantage by exploiting the national differences that prevail in the countries that host its subsidiaries.Which of the following is consistent with this intention?

MNEs can maximize each of the following objectives independently: global scale efficiency,multinational flexibility and innovation development.