Question 1

Which of the following types of international firms are most likely to benefit from a global strategy as opposed to a multidomestic strategy?
A) firms that compete in industries in which consumer preferences vary substantially in each country
B) firms in industries that are expanding very rapidly
C) firms in industries that have value added by sales and marketing departments
D) firms in industries that have much value added in research and design or manufacturing

Accepted Answer

Primary activities that are downstream (e.g., marketing and sales, and service), or closer to the customer, tend to require more decentralization in order to adapt to local market conditions (a multidomestic strategy). Primary activities that are upstream (e.g., Research and Development, design, or manufacturing), or further away from the customer, tend to be centralized (a global strategy). This is because there is less need for adapting these activities to local markets and the firm can benefit from economies of scale.

Question 2

Which one of the following is not a strength of transnational strategies?
A) ability to attain economies of scale
B) ability to adapt to local markets
C) ability to locate activities in optimal locations
D) ability to decrease knowledge flows and learning

Accepted Answer

Transnational strategy strengths include the ability to attain economies of scale, adapt to local markets, locate activities in optimal locations, and increase knowledge flows and learning.

Question 3

To be responsive to local pressures,companies must ________ their offerings and strategies from country to country to reflect local consumer preferences.
A) internationalize
B) globalize
C) differentiate
D) standardize

Accepted Answer

In addition to responding to pressures to lower costs, managers must strive to be responsive to local pressures in order to tailor their products to the demand of the local market in which they do business. This requires differentiating their offerings and strategies from country to country to reflect consumer tastes and preferences and making changes to reflect differences in distribution channels, human resource practices, and governmental regulations.

Question 4

Industries in which proportionally more value is added in ________ activities are more likely to benefit from a global strategy.
A) downstream
B) upstream
C) marketing
D) sales

Accepted Answer

Primary activities that are downstream (e.g., marketing and sales, and service), or closer to the customer, tend to require more decentralization in order to adapt to local market conditions (a multidomestic strategy). Primary activities that are upstream (e.g., logistics and operations), or further away from the customer, tend to be centralized (a global strategy). This is because there is less need for adapting these activities to local markets and the firm can benefit from economies of scale.

Question 5

To meet market needs companies sometimes change product names so that the name in the local language is culturally meaningful.This is an example of a company using ________ strategy.
A) an international
B) a multidomestic
C) a single country
D) a transnational

Accepted Answer

A firm whose emphasis is on differentiating its product and service offerings to adapt to local markets follows a multidomestic strategy. To meet the needs of local markets, companies need to go beyond just product designs. One of the simple ways firms have worked to meet market needs is by finding appropriate names for their products.

Question 6

Firms following a global strategy strive to offer ________ products and services as well as locate manufacturing,research and development,and marketing activities in a limited number of locations.
A) widely differentiated
B) more expensive local
C) internationally differentiated
D) standardized

Accepted Answer

Firms following a global strategy strive to offer standardized products and services as well as to locate manufacturing, Research and Development, and marketing activities in only a few locations.

Question 7

Panasonic entered the market in China and found that it needed to balance global integration with local adaptation.It set up a Lifestyle Research Center in China to interpret data on customer wants and needs.This is an example of a company using ________ strategy.
A) an international
B) a multidomestic
C) a single country
D) a transnational

Accepted Answer

A transnational strategy strives to optimize the trade-offs associated with efficiency, local adaptation, and learning. It recognizes the importance of local responsiveness as a tool for flexibility in international operations. Panasonic embraced the need to balance global integration with local adaptation. It set up a Lifestyle Research Center in China. In this center, marketing and product development staff compiled and interpreted data on customer wants and needs. Their charge was to uncover hidden needs in the Chinese market and design products to meet those needs. At the same time, country managers emphasized the need for the center staff to design products that benefited from global integration.

Question 8

Which of the following is not a risk associated with a global strategy?
A) A firm with only one manufacturing location must export its product, sometimes at great distance from the operation.
B) The geographic concentration of any activity may also tend to isolate that activity from the targeted markets.
C) Concentrating an activity in a single location makes the rest of the firm dependent on that location.
D) The pressures for local adaptation may elevate the cost structure of the firm.

Accepted Answer

Some risks associated with a global strategy include:if a firm has only one manufacturing facility, it must export its output to other markets, some of which may be a great distance from the operation; the geographic concentration of any activity may also tend to isolate that activity from the targeted markets and; concentrating an activity in a single location also makes the rest of the firm dependent on that location.

Question 9

As in the case of Siebel Systems (now part of Oracle),elements of a global strategy may facilitate the competitive advantage of differentiation by
A) increased freedom of individual business units to adapt to local tastes.
B) the creation of a worldwide network to achieve consistent service regardless of location.
C) flexibility in applying research and development to meet country-specific needs.
D) tailoring products to meet country-specific needs.

Accepted Answer

One advantage of a global strategy is that it can enable a firm to create a standard level of quality throughout the world. Tom Siebel, former chairman of Siebel Systems (now part of Oracle), e-business application software developer, says that his customers, global companies like IBM, Zurich Financial Services, and Citicorp, expect the same high level of service and quality, and the same licensing policies, no matter where they do business with them around the world.

Question 10

Which of the following is a reason for the rise in regional expansion?
A) increase in the number of trading blocs and free trade zones
B) decrease in the number of trading blocs and free trade zones
C) increasing national trade restrictions
D) increasing local taxes and tariffs

Accepted Answer

Another reason for regional expansion is the rise of the trading blocs and free trade zones. A number of regional agreements have been created that facilitate the growth of business within these regions by easing trade restrictions and taxes and tariffs.

Question 11

Which one of the following explains why so few firms are global?
A) Culture, language, and religion are similar between countries.
B) Legal and political systems are similar between countries.
C) Governments are increasing trade restrictions in general.
D) Geographic distance is multiplied by distance in culture, language, religion, and legal and political systems.

Accepted Answer

Distance, in the final analysis, may be viewed as a concept with many dimensions, not just a measure of geographical distance. When the effects of geographic distance are multiplied by distance in terms of culture, language, religion, and legal and political systems between two countries, companies will choose to remain regional or, at best, biregional.

Question 12

Which one of the following is not a limitation of a global strategy?
A) limited ability to adapt to local markets
B) the ability to locate activities in optimal locations
C) the concentration of activities may increase dependence on a single facility
D) single locations may lead to higher tariffs and transportation costs

Accepted Answer

Limitations of global strategies include:a limited ability to adapt to local markets, a concentration of activities that may increase dependence on a single facility, and single locations that may lead to higher tariffs and transportation costs.

Question 13

In the quest to achieve competitive advantage in global markets,competitive pressures require that firms do what they can to ________ unit costs so that consumers will not perceive their product and service offerings as too expensive.
A) raise
B) decentralize
C) define
D) lower

Accepted Answer

The opposing pressures that managers face place conflicting demands on firms as they strive to be competitive. On the one hand, competitive pressures require that firms do what they can to lower unit costs so that consumers will not perceive their product and service offerings as too expensive. This may lead them to consider locating manufacturing facilities where labor costs are low and developing products that are highly standardized across multiple countries.

Question 14

Limitations of transnational strategies include all the following except
A) unique challenges in determining optimal locations of activities to ensure cost .
B) unique managerial challenges in fostering knowledge transfer.
C) unique ability to adapt to local markets.
D) unique challenges in determining optimal locations of activities to ensure quality.

Accepted Answer

Transnational strategy limitations include:unique challenges in determining optimal locations of activities to ensure cost and quality and unique challenges in determining optimal locations of activities to ensure cost and quality.

Question 15

In considering the transnational strategy,Nestle evaluates the limits of decentralization.The closer they are to the consumer in activities such as branding and pricing,the more they tend to decentralize.The more they deal with production and logistics,the more they centralize decision-making.The production and logistics decisions involve ________ activities.
A) upstream
B) in its infrastructure
C) downstream
D) midstream

Accepted Answer

Primary activities that are upstream (e.g., logistics and operations), or further away from the customer, tend to be centralized. This is because there is less need for adapting these activities to local markets and the firm can benefit from economies of scale. Additionally, many support activities, such as information systems and procurement, tend to be centralized in order to increase the potential for economies of scale.

Question 16

High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy?
A) global strategy
B) multidomestic strategy
C) transnational strategy
D) overall cost leadership strategy

Accepted Answer

A multidomestic strategy is used in industries where the pressure for local adaptation is high and the pressure for lowering costs is low.

Question 17

Which would be the appropriate strategy for companies to use to compete in the global marketplace if both the pressures to lower costs and adapt locally are low?
A) international strategy
B) global strategy
C) multidomestic strategy
D) transnational strategy

Accepted Answer

An international strategy would be the best pure choice for a company to make in its quest to compete in the global marketplace if both the pressures to lower costs and adapt locally are low.

Question 18

Trends that might lead managers of multinational corporations (MNCs)to adopt a more decentralized strategy for their operations would include all of the following except
A) customer needs, interests, and tastes becoming increasingly homogenized.
B) consumers around the world increasingly willing to trade preferences in product features for lower price.
C) manufacturing trends allowing a decline in the minimum volume required to reach acceptable levels of production efficiency.
D) fluctuating exchange rates.

Accepted Answer

A decentralized strategy such as that seen within the multidomestic organization, allows for greater adaptation at the local level, which would not be necessary if customers were becoming more homogeneous.

Question 19

Green tea Oreos in China,chocolate and peanut butter Oreos in Indonesia,and banana dulce de leche Oreos in Argentina are examples of Kraft using ________ strategy.
A) an international
B) a multidomestic
C) a single country
D) a transnational

Accepted Answer

A firm whose emphasis is on differentiating its product and service offerings to adapt to local markets follows a multidomestic strategy.

Question 20

When differentiating products and services to local markets,strategies and tactics are likely to ________ company costs.
A) decrease
B) increase
C) obliterate
D) decentralize

Accepted Answer

This requires differentiating their offerings and strategies from country to country to reflect consumer tastes and preferences and making changes to reflect differences in distribution channels, human resource practices, and governmental regulations. However, since the strategies and tactics to differentiate products and services to local markets can involve additional expenses, a firm's costs will tend to rise.

Quiz 7: International Strategy: Creating Value in Global Markets

Which of the following types of international firms are most likely to benefit from a global strategy as opposed to a multidomestic strategy?

Which one of the following is not a strength of transnational strategies?

To be responsive to local pressures,companies must ________ their offerings and strategies from country to country to reflect local consumer preferences.

Industries in which proportionally more value is added in ________ activities are more likely to benefit from a global strategy.

To meet market needs companies sometimes change product names so that the name in the local language is culturally meaningful.This is an example of a company using ________ strategy.

Firms following a global strategy strive to offer ________ products and services as well as locate manufacturing,research and development,and marketing activities in a limited number of locations.

Panasonic entered the market in China and found that it needed to balance global integration with local adaptation.It set up a Lifestyle Research Center in China to interpret data on customer wants and needs.This is an example of a company using ________ strategy.

Which of the following is not a risk associated with a global strategy?

As in the case of Siebel Systems (now part of Oracle) ,elements of a global strategy may facilitate the competitive advantage of differentiation by

Which of the following is a reason for the rise in regional expansion?

Which one of the following explains why so few firms are global?

Which one of the following is not a limitation of a global strategy?

In the quest to achieve competitive advantage in global markets,competitive pressures require that firms do what they can to ________ unit costs so that consumers will not perceive their product and service offerings as too expensive.

Limitations of transnational strategies include all the following except

High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy?

Which would be the appropriate strategy for companies to use to compete in the global marketplace if both the pressures to lower costs and adapt locally are low?

Trends that might lead managers of multinational corporations (MNCs) to adopt a more decentralized strategy for their operations would include all of the following except

Green tea Oreos in China,chocolate and peanut butter Oreos in Indonesia,and banana dulce de leche Oreos in Argentina are examples of Kraft using ________ strategy.

When differentiating products and services to local markets,strategies and tactics are likely to ________ company costs.