Question 1

The factors mentioned in the PESTEL framework are inter-related.

Accepted Answer

The PESTEL framework considers political, economic, social, technological, environmental, and legal factors. These factors are often inter-related and influence each other. For example, changes in political policies can impact the economic environment, which in turn can influence social factors such as income levels and consumer behavior. As such, it is important to consider all of these factors together rather than in isolation.

Question 2

When transportation costs and automation are both high, then the knowledge worker component of the location calculation becomes more important.

Accepted Answer

False

Question 3

The more similar markets in different regions are, the lesser the pressure for an industry to globalize.

Accepted Answer

False

Question 4

The business competence of an organization renders concepts like political stability and legal security irrelevant.

Accepted Answer

While business competence is certainly important for an organization's success, factors such as political stability and legal security can still have a significant impact on their ability to operate effectively and thrive in the long term. Uncertainty and instability in these areas can create barriers to growth and undermine the trust of investors, customers, and other stakeholders. Therefore, it is important for organizations to consider these broader contextual factors alongside their own internal capabilities and strategies.

Question 5

When an organization plans to expand in a foreign country, it needs to understand what the local consumers look for when making a purchase decision.

Accepted Answer

Understanding local consumer behavior is important for any organization planning to expand in a foreign country as it helps in creating products and services that meet the needs and preferences of the local market, leading to better sales and growth prospects.

Question 6

In a truly global industry, the core product is standardized, the marketing approach is relatively uniform, and competitive strategies are integrated in different international markets.

Accepted Answer

In a truly global industry, the goal is to create a standardized product and marketing approach that can be used across different international markets. This simplifies operations and allows the company to take advantage of economies of scale, but it also requires careful coordination and integration of competitive strategies to stay ahead of rival firms.

Question 7

A PESTEL analysis helps managers gain a better understanding of the opportunities and threats they face.

Accepted Answer

A PESTEL analysis examines the Political, Economic, Sociocultural, Technological, Environmental, and Legal factors that can impact a business. By understanding these external factors, managers can identify opportunities to capitalize on as well as potential threats to mitigate or avoid.

Question 8

Firms are more likely to be successful when they exploit a change in the environment rather than simply survive or oppose the change.

Accepted Answer

This statement is true as firms that adapt and take advantage of a change in the environment have the potential to gain a competitive advantage over those that simply try to survive or resist the change. By innovating and responding to changing customer needs and preferences, firms can increase their chances of success.

Question 9

The advantage of exporting is that firms avoid the expense of establishing operations in the new country.

Accepted Answer

Exporting allows firms to enter new markets without having to invest in physical assets or establish a presence in the new country. This can save significant amounts of money as compared to other market entry modes like licensing, joint ventures or wholly-owned subsidiaries. However, exporting may also come with its own set of challenges like language barriers, transportation costs, cultural differences, etc.

Question 10

An organization, when it is expanding in a foreign country, enters it through a domestic partner.This would improve the chances of success for the organization.

Accepted Answer

Entering a foreign market through a domestic partner can provide valuable local knowledge, resources, and connections that can improve the chances of success for the organization. The domestic partner can help navigate cultural and legal differences, provide insight into local consumer preferences, and establish relationships with key stakeholders.

Question 11

An organization, when it is planning to expand in a foreign country, needs to view the country as a monolith.

Accepted Answer

An organization should not view a foreign country as a monolith because there may be significant regional, cultural, economic, and political differences within the country that could impact the success of the expansion plan. It is important to conduct thorough research and analysis of the specific regions or markets in the foreign country that the organization intends to enter.

Question 12

Political factors are irrelevant as far as consumer confidence, consumer, and business spending is concerned.

Accepted Answer

Political factors can have a significant impact on consumer confidence and spending behavior. Uncertainty about political policies, elections, or international relations can cause consumers to be cautious and hesitant about spending. Businesses may also delay investments or hiring decisions due to uncertainty about political and economic conditions.

Question 13

Market due diligence relies on published research on the markets rather than interviews with potential customers and industry experts.

Accepted Answer

Market due diligence involves a comprehensive analysis that includes both reviewing published research and conducting interviews with potential customers, industry experts, and other stakeholders to gain a deep understanding of the market dynamics, trends, and customer needs.

Question 14

The Internet has made exporting easier as even small firms can access critical information about foreign markets, examine a target market, research the competition, and create lists of potential customers.

Accepted Answer

The statement is true as the Internet has made it easier for small firms to access information and research about foreign markets, which in turn makes exporting easier for them.

Question 15

The rate of industry change remains relatively the same from one industry to the next in one financial year.

Accepted Answer

The rate of industry change can vary greatly from one industry to another and can also fluctuate within the same industry from one financial year to the next.

Question 16

Entrepreneurs and small businesses are most likely to avoid the use of exporting as a way to get their products into markets around the globe because the cost of exporting is higher than that of the other entry modes.

Accepted Answer

The answer of Entrepreneurs and small businesses are most likely...

Question 17

Managers also need to take into consideration the macroeconomic factors that will have near-term and long-term effects on the success of their strategy.

Accepted Answer

Managers cannot solely rely on their internal analysis and must also consider external economic factors that could impact the success of their strategy. These macroeconomic factors could include changes in interest rates, inflation, exchange rates, and geopolitical events.

Question 18

Product differentiation plays a critical role for companies entering a new market.

Accepted Answer

Product differentiation allows companies to distinguish themselves from competitors, which can be particularly important in a crowded or competitive market. It can help companies attract customers, build brand loyalty, and command higher prices. Therefore, product differentiation is often a key strategy for companies entering a new market, as it can help them stand out and establish a foothold in the market.

Question 19

Home-market norms tend to remain the same over time irrespective of the shifting demographics due to immigration or aging populations.

Accepted Answer

Home-market norms can shift over time in response to changing demographics, such as the introduction of new cultural practices or the adaptation of existing norms to accommodate the needs of aging populations.

Question 20

Organizations that promote coherent images and brands globally, realize economies of scope and scale.

Accepted Answer

Organizations that maintain consistent image and branding across multiple markets are able to save costs and achieve greater efficiencies due to economies of scope and scale.

Quiz 8: International Expansion and Global Market Opportunity Assessment