Question 1

Which of the following factors of Michael Porter's diamond model refers to the conditions in a nation that govern how companies are created,organized,and managed,and how intensely they compete domestically?

Accepted Answer

Company strategy, structure, and rivalry refer to the domestic competition within the country. It includes the degree of rivalry among existing firms, the presence of new entrants, the conditions for foreign firms to enter, and the presence of substitute products. Therefore, the correct option is A.

Question 2

In the context of the problems faced when entering foreign markets,which of the following refers to political uncertainty?

Accepted Answer

Political uncertainty refers specifically to conditions like unstable governments, social unrest, and armed conflict that could cause disruptions or risks for a company entering a foreign market. The other answer choices refer to different aspects of cross-cultural differences or economic conditions.

Question 3

Which of the following statements is true about multidomestic companies?

Accepted Answer

Multidomestic companies give power to local managers to make necessary decisions and are held accountable for results. They decentralize decision-making to local subsidiaries, allowing them to tailor their strategies and products to local market needs and preferences. This approach promotes greater responsiveness to local customers, but it also creates duplication of efforts and makes it difficult to achieve economies of scale.

Question 4

Sashes and Bows Inc. ,a clothing company headquartered in Milan,specializes in producing exquisite designer wear.All its materials are sourced indigenously,and all the members of the design team are of Italian descent.According to Michael Porter's model,Sashes and Bows Inc.has established a competitive advantage over its rivals because of:

Accepted Answer

The answer of Sashes and Bows Inc. ,a clothing company...

Question 5

Serenity Incorporation is a leading international watch manufacturer and has established several stores across Europe.The company competes on a market-by-market basis,and each of its international subsidiaries operates autonomously.This indicates that Serenity Incorporation is a:

Accepted Answer

A multidomestic corporation operates as a collection of decentralized subsidiaries, where each subsidiary operates independently in different markets. This description matches Serenity Incorporation's approach of competing on a market-by-market basis and allowing each international subsidiary to operate autonomously.

Question 6

The national government of Turnbury regulates the amount of earned and invested funds that can be withdrawn from it.It only permits government bodies to engage in currency dealings.It also places limits on the percentage of investments that can be made by foreign companies.These rules and regulations are attributed to which of the following?

Accepted Answer

The rules and regulations described in the scenario are most closely related to exchange controls and ownership restrictions, which are measures used by governments to control the inflow and outflow of foreign investments and regulate the ownership of certain assets. Import restrictions, political uncertainty, and cultural misunderstandings are not directly related to these specific government interventions.

Question 7

Which of the following is true about import quotas and tariffs?

Accepted Answer

Import quotas and tariffs can create obstacles for multinational firms by making it more difficult and expensive to import goods into a country. This can limit the ability of a multinational firm to sell its products in that country or to access necessary inputs for production.

Question 8

A&B Ltd. ,a cellphone manufacturer headquartered in the Netherlands,has expanded its operations to many nations,including Afghanistan.However,due to civil unrest,violent terrorism,and the country's unstable government,the company's branch in Afghanistan has not been able to function successfully.Which of the following problems has affected A&B's operations in Afghanistan?

Accepted Answer

The civil unrest, violent terrorism, and unstable government in Afghanistan indicate political uncertainty, which has affected the company's operations. Exchange controls and ownership restrictions, import restrictions, and cultural misunderstandings are not mentioned as factors affecting the company's operations in this scenario.

Question 9

The central government of Arcadia requires that 80 percent of the proprietorship of a corporation should be held by its citizens.This particular requirement of the government is attributed to which of the following?

Accepted Answer

The requirement that 80 percent of the proprietorship of a corporation should be held by Arcadian citizens is an ownership restriction imposed by the central government. This is aimed at controlling foreign ownership and maintaining local control over businesses operating within the country.

Question 10

Singapore is one of the leading producers of coffee in the world.However,there are a few companies in Singapore that import coffee from Brazil and India.Which of the following can Singapore establish to promote self-sufficiency?

Accepted Answer

Import quotas would limit the amount of coffee that can be imported from Brazil and India, thereby promoting self-sufficiency in the production of coffee in Singapore. This would encourage local coffee producers to increase production and create a more sustainable coffee industry within the country. Import liberalization (A) would have the opposite effect, allowing for more imports and potentially discouraging local production. Export incentives (B) would not be relevant in this scenario, as Singapore is not a major exporter of coffee. Complementary import policy (D) is too vague to determine if it would be effective in promoting self-sufficiency in coffee production.

Question 11

Franklin Inc. ,an apparel manufacturer based in Scotland,opened a new store in the United States.Franklin's designs were well received by consumers in the host country.However,the firm incurred very high expenses due to high rent and high costs of labor.Also,there was a hike in the price of fuel in the United States.This led to increased expenditures on the transportation of goods.This indicates that Franklin Inc.had serious issues in the United States due to poor:

Accepted Answer

The high expenses incurred by Franklin Inc. in the United States were due to economic conditions such as high rent, labor costs, and fuel prices, which are beyond the control of the company. Poor political conditions, legal conditions, or cultural conditions are not mentioned as contributing factors to the issues faced by the company.

Question 12

The nation of Lancaster is embroiled in civil war.Its citizens,who are against the government,have resorted to armed conflict.Consequently,which of the following problems is a foreign company operating in Lancaster likely to face?

Accepted Answer

Political uncertainty is a direct consequence of civil war, affecting the stability and predictability needed for business operations.

Question 13

RL Inc. ,an American insurance company,attempted to sell life insurance in Spain.However,the company failed to understand that life insurance policies are viewed with a negative attitude in Spain.People are averse to profiting from someone else's death,and hence the company failed to reach its sales target.In this scenario,RL Inc.experienced:

Accepted Answer

RL Inc. faced cultural misunderstanding as they failed to understand the negative attitude towards life insurance policies in Spain.

Question 14

Some nations establish limits on the amount of earned and invested funds that can be withdrawn from it.These exchange controls are usually established by nations that:

Accepted Answer

Exchange controls are typically established by nations that are experiencing balance-of-payment problems. These controls are put in place to limit the outflow of earned and invested funds to help stabilize the country's economy. Countries with high trade surpluses or that are part of larger trade agreements are less likely to need exchange controls, as their economies are already stable and less vulnerable to external economic shocks. Similarly, open economies, which are characterized by free movement of capital, are also less likely to impose exchange controls.

Question 15

Identify a true statement about a global company.

Accepted Answer

A global company integrates its resources and strategies across countries to achieve competitive advantage, rather than adapting to local conditions in a fragmented manner.

Question 16

Daffy Inc.is an international gaming corporation.Each of its overseas subsidiaries is autonomous,and the manager in each unit is given the authority to make necessary decisions and is held accountable for the results.From this information,we can conclude that Daffy Inc.is a:

Accepted Answer

Daffy Inc. is a multidomestic corporation because its overseas subsidiaries are autonomous and have the authority to make decisions, which suggests that they are customized to local conditions and needs. In a global corporation, decision-making is centralized, and there is little to no autonomy. A national corporation operates primarily in one country, and a state-owned corporation is owned by the government of a particular state.

Question 17

Alice Inc. ,an American firm,signed a contract with an Indian retailer to sell its latest range of furniture.Due to wrong analysis about the buying power and preferences of the Indian population,the furniture was priced high,consequently leading to low sales.From this scenario,we can infer that Alice Inc.did not succeed due to the _____ existing in India.

Accepted Answer

Alice Inc. failed due to economic conditions, as the pricing strategy did not align with the buying power of the Indian population.

Question 18

Mark,an employee of Easel Co. ,an American-based multinational firm,was transferred to Japan to oversee the operations there.He was surprised to find that the Japanese employees addressed their coworkers only by their last names and rarely made eye contact with each other.Moreover,Mark found it difficult to adjust to the local customs.Which of the following problems with entering a foreign market did Mark face?

Accepted Answer

Mark faced cultural misunderstanding when he found it difficult to adjust to the local customs and the way Japanese employees address each other. Legal risk, political uncertainty, and economic risk do not seem to be relevant factors in this scenario.

Question 19

Identify a true statement about a multidomestic company.

Accepted Answer

A multidomestic company pursues different strategies in each of its foreign markets, taking into account the local culture, laws, and regulations. This approach allows for greater flexibility and responsiveness to local market conditions.

Question 20

Which of the following is true of a global corporation?

Accepted Answer

A global corporation emphasizes universal consumer needs and wants rather than differences. This means that the corporation seeks to create products or services that can be marketed globally, rather than adapting to local cultural differences or competing on a market-by-market basis. To achieve this goal, global corporations often have centralized management that coordinates operations across countries and seeks to create a standardized experience for customers worldwide. Individual international subsidiaries may have some autonomy, but they are expected to follow the overall strategy of the corporation.

Quiz 13: Global Marketing