Question 1

Suppose General Motors decided to manufacture brakes in Ireland,because a detailed analysis of country specific advantages indicated that Ireland is the optimal place in the world to produce brakes.In this example,General Motors is capturing ____________ by manufacturing brakes in Ireland.

Accepted Answer

Location economies refer to the cost advantages that arise from performing a value creation activity in the optimal location for that activity. In this case, General Motors is capturing location economies by manufacturing brakes in Ireland, indicating that Ireland is the optimal place in the world for GM to produce brakes.

Question 2

Locating a value creation activity in the optimal location for that activity can have one or two effects.First,it can lower the costs of value creation and help the firm to achieve a low-cost position,and/or:

Accepted Answer

By locating a value creation activity in the optimal location, a firm can lower its costs of value creation and achieve a low-cost position. This can give the firm a competitive edge over its rivals, as it can offer its products or services at a lower price, which can attract price-sensitive customers. Differentiation, lowering marketing and service costs, expediting R&D, and creating political goodwill are all possible outcomes of locating a value creation activity in an optimal location, but they are not directly related to achieving a low-cost position.

Question 3

Moving down the experience curve allows a firm to reduce its cost of:

Accepted Answer

The answer of Moving down the experience curve allows a...

Question 4

In theory,a firm that realizes _______________ by dispersing each of its value creation activities to its optimal location should have a competitive advantage vis-à-vis a firm that bases all its value creation activities at a single location.

Accepted Answer

The concept described in the question is that of location economies. A firm that can disperse its value creation activities to their optimal location can achieve cost savings and efficiency gains, ultimately creating a competitive advantage over a firm that does not have this capability. Therefore, the best choice is E.

Question 5

McDonald's core competencies are:

Accepted Answer

The answer of McDonald's core competencies are:
...

Question 6

The term _______________ refers to the reduction in unit cost achieved by producing a large volume of a product.

Accepted Answer

Economies of Scale refers to the reduction in unit cost achieved by producing a large volume of a product. This means that as the production volume increases, the cost of production per unit decreases due to certain cost efficiencies.

Question 7

The ____________ refers to the systematic reductions in production costs that have been observed to occur over the life of a product.

Accepted Answer

The systematic reductions in production costs over the life of a product are referred to as the experience curve. This phenomenon is often observed in industries where the production process is repetitive and can be optimized over time. As the production process becomes more efficient through learning and experience, the costs of producing each unit decrease, resulting in economies of scale.

Question 8

Learning effects tend to be more significant when a ____________ task is repeated because there is more than can be learned about the task.

Accepted Answer

Learning effects are more significant when a task is repeated and there is more to be learned about the task. This is particularly true for technologically complex tasks where there are more nuances and details to be learned with each repetition. Repetitive manufacturing and standardized manufacturing may also benefit from learning effects, but to a lesser extent as these tasks may not require as much learning with each repetition. Standardized service and multi-level tasks may not necessarily benefit from learning effects at all.

Question 9

Economies that arise from performing a value creation activity in the optimal location for that activity are called _____________.

Accepted Answer

Location economies refer to cost savings or efficiencies that arise from performing an activity in the optimal location for that activity, such as lower labor or transportation costs, favorable tax or regulatory environments, or access to specialized skills or resources. Site expediencies, site commerce, location synergies, and offshore savings are not commonly used terms in international business or economics.

Question 10

If Honda noticed that the unit costs of Honda Accords went down as the number of Accord's produced went up,Honda would be realizing the benefits of _______________.

Accepted Answer

Economies of scale refer to the phenomenon whereby the cost of producing a product decreases as the volume of production increases. This is due to factors such as increased efficiency in production processes, greater bargaining power with suppliers, and spreading fixed costs over a larger output. Therefore, if Honda noticed that the unit cost of producing Honda Accords decreased as the number of units produced increased, this would indicate that they have achieved economies of scale.

Question 11

__________________ is a way of further exploiting the value creation potential of a company's skills and product offerings by applying these skills and products in a larger market.

Accepted Answer

Global expansion involves taking a company's skills and product offerings and applying them in a larger market, thus further exploiting the value creation potential of the company.

Question 12

All of the following are distinct advantages Mexico has over many Asian countries as a location for value creation activities,except:

Accepted Answer

The statement "more hard workers are found in Mexico than in Asia" is subjective and cannot be measured objectively. Therefore, it is not a distinct advantage that Mexico has over Asian countries. The other options (A, C, and D) are distinct advantages that Mexico has over many Asian countries as a location for value creation activities. Therefore, the correct answer is B.

Question 13

____________ permitting,the firm will benefit by basing each value creation activity it performs at that location where economic,political,and cultural positions are most conducive to the performance of that activity.

Accepted Answer

Trade barriers and transportation costs permitting, the firm can optimize its value creation activities by choosing locations that are most favorable economically, politically, and culturally.

Question 14

Which of the following is not something firms that operate internationally are able to do?

Accepted Answer

Firms that operate internationally cannot realize greater cost economies from experience effects by serving an expanded global market from a central location, and increasing the costs of value creation. This is because serving a global market from a central location may not always be cost-effective due to the differences in customer preferences, regulations, and infrastructure across different countries. Thus, firms need to adapt their value creation activities to the local conditions in each market to achieve cost efficiencies.

Question 15

A number of studies have observed that a product's __________ decline by some characteristic each time accumulated output doubles.

Accepted Answer

This observation is known as the learning curve effect, where production costs decline as accumulated output doubles due to increased efficiencies in the production process, improvements in technology, and experience gained by workers.

Question 16

According to our textbook,a firm creates a(n)_____________ by dispersing the stages of its value chain to those locations around the globe where the value added is maximized or where the costs of value creation are minimized.

Accepted Answer

A firm creates a "global web" by dispersing the stages of its value chain to optimize value addition or minimize costs, leveraging global efficiencies.

Question 17

_____________ refer to cost savings that come from learning by doing.

Accepted Answer

Learning effects refer to cost savings that come from learning by doing. As workers and firms become more experienced in producing a particular product or service, they develop more efficient processes and gain knowledge that allows them to produce better quality outputs with fewer resources. This leads to cost savings and increased productivity over time.

Question 18

If Goodyear Tire Corporation experienced systematic reductions in the production costs of a particular product over the life of the product,they would be realizing ____________ effects.

Accepted Answer

The systematic reductions in the production costs over the life of the product are known as experience curve effects. As the production experience increases, the production costs decrease due to factors such as learning as well as efficiency improvements. This concept is also known as the learning curve, which is an important tool for managing and forecasting production costs. Therefore, the most suitable choice is C, experience curve.

Question 19

The ability to spread fixed costs over a large volume results in a cost-savings phenomenon referred to as:

Accepted Answer

Economies of scale refer to cost savings that occur when a company increases production and can spread fixed costs over a larger volume of goods. This results in a lower cost per unit and can translate into higher profitability.

Question 20

Skills within the firm that competitors cannot easily match or imitate are referred to as

Accepted Answer

Core competencies are skills and capabilities unique to a firm that competitors cannot easily replicate or imitate. They give a company a competitive advantage over its rivals in the marketplace.

Quiz 11: Global Strategy