Question 1

Selling to a foreign organization the rights to use a brand name and operating know-how in return for a lump-sum payment and a share of the profits is referred to as:

Accepted Answer

Franchising involves selling the rights to use a brand name and operating know-how to a foreign organization in exchange for a lump-sum payment and a share of profits. Licensing involves selling the rights to use a product, technology, or intellectual property to a foreign organization. A strategic alliance involves two or more organizations cooperating to achieve a specific goal. Exporting and importing involve the buying and selling of goods and services across borders.

Question 2

_____ is the final step in implementing strategy.

Accepted Answer

Holding specific individuals or groups responsible for the attainment of corporate, divisional, and functional goals is the last step in implementing strategy.

Question 3

The first step in implementing a strategy is:

Accepted Answer

Allocating responsibility for implementation to the appropriate individuals or groups is the first step in implementing a strategy because it ensures that there is clarity about who is responsible for executing the strategy. Without clear responsibility, it becomes difficult to hold anyone accountable for the success or failure of the strategy. Drafting action plans, allocating resources, and establishing a timetable are important parts of the implementation process, but they depend on having clear accountability first. Holding specific individuals or groups responsible for goals comes later in the process, after responsibilities for implementation have been allocated.

Question 4

Allowing a foreign organization to take charge of manufacturing and distributing a product in its country or world region in return for a negotiated fee is referred to as:

Accepted Answer

This scenario describes a licensing agreement, in which a foreign organization is given permission (through a license) to manufacture and distribute a product in its own country or region.

Question 5

_____ is a corporate-level strategy that emphasizes on reinvesting a company's profits in strengthening its competitive position in its current industry.

Accepted Answer

The strategy described in the question is concentration on a single industry, which involves using profits to strengthen the company's competitive position in its current industry. This is one of the three corporate-level strategies, along with diversification and vertical integration.

Question 6

The method of international expansion which presents managers with many threats and is the most expensive due to the high level of foreign investment is the method of international expansion through _____.

Accepted Answer

Wholly owned subsidiaries involve significant foreign investment and can be highly risky due to the lack of local knowledge and established relationships. This method requires the company to completely own and control operations in the foreign market, which can be extremely costly and time-consuming.

Question 7

An agreement in which managers pool or share their organization's resources and know-how with a foreign company, and the two organizations share the rewards and risks of starting a new venture is called a(n) _____.

Accepted Answer

A strategic alliance is an agreement between two or more organizations to pool resources and know-how in a specific area of business. In this type of agreement, the two organizations share the rewards and risks of starting a new venture. It is a way to enter a foreign market without having to create a new subsidiary. The other choices do not accurately describe this type of agreement.

Question 8

Which method of international expansion poses the least amount of risk?

Accepted Answer

Exporting involves the least amount of risk as it involves simply selling a company's products or services in a foreign market without making significant investments or changes to the company's operations. The other methods may involve more risk and investment, such as sharing intellectual property or establishing a physical presence in a foreign market.

Question 9

Two divisions of a company decide to use the same manufacturing facilities to capitalize on the organization's excess capacity and reduce fixed costs. This is an example of _____.

Accepted Answer

This is an example of synergy, which refers to the combined effect of two entities being greater than the sum of their individual effects. In this case, the two divisions of the company are able to generate cost savings and potentially increase overall efficiency by sharing manufacturing facilities.

Question 10

Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company Ericsson combining a part of their resources to manufacture mobile phones is an example of a(n) _____.

Accepted Answer

Sony Corporation and Ericsson coming together to manufacture mobile phones is an example of a joint venture, which involves two or more companies collaborating and combining resources for a specific project or business endeavor. It differs from an acquisition, merger, or wholly owned subsidiary in that it is a temporary partnership rather than a permanent restructuring of companies.

Question 11

In order to cater to local tastes and culinary traditions, and often in respect of particular laws or religious beliefs, McDonald's offers customized versions of its menu to suit different countries. This is an example of _____.

Accepted Answer

This is an example of a multidomestic strategy, which involves customizing products or services to meet the specific needs of each local market.

Question 12

In a first of its kind, a multinational tire manufacturer, introduces a new range of premium tires that can handle extreme temperatures better at a higher price. The tires are designed keeping in mind the climatic conditions in the Middle East and products are marketed only in the Middle East. The manufacturer is pursuing ____.

Accepted Answer

The manufacturer is pursuing a focused differentiation strategy by targeting a specific market (Middle East) with a product that caters to their unique needs (extreme temperatures). This strategy allows the company to charge a premium price for their specialized product.

Question 13

Entering a new business or industry to create a competitive advantage in one or more of an organization's existing divisions or businesses is called _____.

Accepted Answer

Related diversification strategy involves entering a new business or industry that is related in some way to an organization's existing divisions or businesses, with the aim of creating a competitive advantage. This can involve sharing resources, capabilities, or technologies across different businesses, which can help to reduce costs, increase efficiency, and improve overall performance. It is often seen as a less risky approach to diversification than unrelated diversification, as there may be more opportunities for synergies and cross-selling between related businesses.

Question 14

Selling the same standardized product and using the same basic marketing approach in each national market is called _____.

Accepted Answer

Selling the same standardized product and using the same basic marketing approach in each national market is called a global strategy. This approach emphasizes consistency across all markets, which can lead to cost savings and increased efficiency.

Question 15

_____ is a corporate-level strategy in which a company expands its business operations into a new industry that produces inputs for the company's products.

Accepted Answer

Backward vertical integration involves expanding a company's business operations into a new industry that produces inputs for the company's products. This allows the company to have more control over its supply chain and potentially reduce costs or improve the quality of the inputs. Forward vertical integration would involve expanding into an industry that is further downstream in the supply chain, such as distribution or retail. Horizontal integration involves expanding into industries that are related to the company's core business, while unrelated diversification involves expanding into industries that are not related to the company's core business at all. Backward horizontal integration is not a commonly used term in strategic management.

Question 16

Most electronic goods have the option of changing the operating language. This done by manufacturers so that the same electronic device can be supplied and marketed around the world. The manufacturers in this case are applying a(n) _____.

Accepted Answer

The use of a common language across different markets indicates a global strategy, where the manufacturer seeks to standardize the product and marketing approach across different markets. This enables economies of scale in production, marketing, and distribution, and ensures consistency in brand image and customer experience worldwide. The other strategies listed are not applicable here, as they pertain to different aspects of the firm's operations, such as product differentiation, diversification, or localization.

Question 17

Nokia has established production operations in foreign countries to sell its phones in those regions. The production operations perform as separate entities without any local direct involvement. These production operations are _____ of Nokia.

Accepted Answer

Wholly owned subsidiaries are separate legal entities controlled by a parent company. In this case, Nokia has established production operations in foreign countries as separate entities without local direct involvement, indicating that they are wholly owned subsidiaries.

Question 18

A toy manufacturing company which previously sold its products through a popular toy and juvenile-product retailer decides to enter the retail industry, quickly establishing several retail outlets exclusively for its products. The toy manufacturing company is engaging in _____.

Accepted Answer

Forward vertical integration refers to a company expanding its operations to control the distribution or selling of its products, which is the case with the toy manufacturing company establishing its own retail outlets.

Question 19

Cameo Ltd., a record label company, subsequently entered the airline industry to expand business. This example of a record label company entering the airline industry is an example of _____.

Accepted Answer

Managers pursue unrelated diversification when they establish divisions or buy companies in new industries that are not linked in any way to their current businesses or industries.

Question 20

Which of the following statements about simultaneously pursuing both a low-cost strategy and a differentiation strategy is true?

Accepted Answer

Simultaneously pursuing a low-cost strategy and differentiation strategy, also known as hybrid strategy, is difficult but not impossible. Extremely well-managed companies may be able to keep low costs and differentiate their products, giving them a competitive advantage in the market. However, organizations stuck in the middle tend to have lower levels of performance than those that pursue a clear low-cost or differentiation strategy. Focusing on differentiation alone may not result in reduced costs for a company, and focusing on cost reduction alone may not differentiate the products from competitors.

Quiz 8: The Manager As a Planner and a Strategist