Question 1

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

Accepted Answer

Pressures for local responsiveness include cross-national differences in terms of consumer preferences and government regulations, but advances in technology are typically considered a pressure for global integration, not local responsiveness.

Question 2

Describe the pressures for local responsiveness that international companies face.

Accepted Answer

The answer of Describe the pressures for local responsiveness that...

Question 3

A distinct disadvantage of an international strategy is ________.

Accepted Answer

Relying on home managers' knowledge of foreign markets can be a disadvantage as they may not have the necessary understanding of cultural and economic differences in target markets. This can result in ineffective marketing strategies, incorrect pricing decisions and ultimately, failure to compete with local rivals.

Question 4

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

Accepted Answer

The global strategy champions worldwide consistency and standardization to support the firm's goal to become the low-cost leader. This includes standardizing products and services across all international markets, utilizing economies of scale, and centralizing decision-making. This approach allows the company to achieve cost savings through streamlined operations and efficient production processes, ultimately resulting in lower prices for customers.

Question 5

A distinct advantage of an international strategy is ________.

Accepted Answer

An international strategy allows a company to transfer its core competencies to foreign markets, leveraging its existing strengths and capabilities across borders.

Question 6

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.

Accepted Answer

The localization strategy is characterized by delegating authority to subsidiaries to respond effectively to local conditions, including having their own manufacturing, marketing, research, and human resource functions. This approach allows for customization of products and services to meet the specific needs of each market.

Question 7

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

Accepted Answer

The transfer of core competencies to foreign markets is not necessarily complicated by the necessity to adapt to local needs; rather, it is a potential advantage of the international strategy, as it allows the company to leverage its existing strengths in new markets.

Question 8

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.

Accepted Answer

Marrin Associates is implementing a transnational strategy which combines elements of both a global and localization strategy. They are leveraging their core competencies worldwide while also adapting to local conditions and reducing costs through location economics. This approach allows Marrin to achieve global efficiency while also being responsive to local markets.

Question 9

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.

Accepted Answer

Preston Electronics is allowing its local facilities to adapt to the specific conditions in each country, indicating a localization strategy. A global strategy would involve standardization of activities across different countries, while an international strategy would involve coordination and control of activities across different countries. "Continental" is not a recognized strategy in international business.

Question 10

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?

Accepted Answer

A localization strategy is best suited for a company that needs to be highly responsive to local markets and customer preferences, while not necessarily needing to reduce costs through global integration. This is because a localization strategy focuses on tailoring products and services to meet local customer needs, which often requires greater customization and adaptation to local market conditions. In contrast, a global integration strategy emphasizes standardization and efficiency to minimize costs across multiple markets. Therefore, a company with a high need for local responsiveness and a low need to reduce costs via global integration would be most likely to benefit from a localization strategy.

Question 11

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.

Accepted Answer

A transnational strategy involves developing new knowledge and capabilities in both domestic and foreign locations and then diffusing them throughout the organization globally. This strategy emphasizes global integration and local responsiveness, making it the most appropriate choice. Localization strategy focuses on adapting products or services to meet the needs of local markets, while a global strategy emphasizes achieving economies of scale through standardization. The matrix strategy involves organizing activities around both product/market and geography, but it doesn't necessarily involve developing and diffusing knowledge and capabilities throughout the organization.

Question 12

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

Accepted Answer

The other strategies mentioned in the question (international, localization, and global) do not cover all aspects of operating in the global environment. The transnational strategy aims to achieve global efficiency, local responsiveness, and knowledge transfer within the organization.

Question 13

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.

Accepted Answer

The answer of When the pressure for global integration is...

Question 14

A global strategy tends to be more successful when ________.

Accepted Answer

A global strategy tends to be more successful when the industry's product is a commodity, as it allows for standardized products that can be produced and distributed efficiently across markets. When buyers are looking for customized products at bargain prices, a localization strategy may be more appropriate. Low entry barriers for new firms and little bargaining power for suppliers may not necessarily impact the success of a global strategy.

Question 15

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.

Accepted Answer

Citibank is taking advantage of location economies by opening a call center in India. This means that they have identified specific advantages of India that make it the best place to respond to customers' calls. These advantages could include lower labor costs, a large and skilled workforce, and favorable tax laws or regulations. By locating their call center in India, Citibank can reduce costs and improve efficiency, while still maintaining a high level of service for their customers.

Question 16

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.

Accepted Answer

Local responsiveness is crucial in industries where companies need to adapt to local market conditions in order to create value. This is because different regions or countries may have unique customer preferences, cultural norms, legal requirements, and economic conditions that necessitate customized products, marketing strategies, supply chain arrangements, or other aspects of business operations. Examples of such industries include retail, hospitality, food and beverage, fashion, media, and telecommunications, among others. In contrast, industries that rely on global standardization, such as commodities, basic materials, or standardized services, may face fewer pressures for local responsiveness.

Question 17

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.

Accepted Answer

Google is engaging a global strategy, as it treats the entire world as a single market without differentiating between countries or regions. It assumes that there are no significant differences in consumer preferences across different regions/countries. A global strategy involves standardizing the products, promotional messages, and distribution channels to achieve economies of scale and maximize profits.

Question 18

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

Accepted Answer

The primary limitation of the transnational strategy is cross-unit coordination difficulties. While the transnational strategy is designed to take full advantage of local strengths, it is difficult to coordinate the different subsidiaries and their activities. This can lead to conflict and inefficiencies within the organization, making it more challenging to achieve the overall strategy. Poor local adaptation, duplication of subsidiary activities, and inability to leverage core competencies are all potential limitations of the transnational strategy, but they are not the primary one.

Question 19

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.

Accepted Answer

Firms that pursue an international strategy focus on transferring their core competencies or products developed at home to foreign markets where local competitors lack similar products or competencies, thus gaining a competitive edge.

Question 20

The MNE that applies a global strategy aims to ________.

Accepted Answer

A global strategy involves competing in the same way wherever the company does business, which often requires standardized processes and operations across different locations. This allows for greater efficiency and cost savings, as well as a consistent brand image and customer experience. Empowering local operations (B) would suggest a localization strategy, while adapting to industry standards (C) and customizing to consumer expectations (D) are more indicative of a multi-domestic strategy.

Quiz 12: The Strategy of International Business