Deck 8: International Strategy

Question 1

Multinational firms have many opportunities to learn from their experiences in international markets, but they must have a strong R&D system to absorb the knowledge.

Answer 1

True

Question 2

Both the size and the nature of a country's domestic demand for a particular industry's good or service are important in Porter's determinants of national advantage.

Answer 2

True

Question 3

A major incentive for the use of international strategy by French-based Carrefour S.A.is the potential for large demand for goods and services from emerging markets such as China and India.

Answer 3

True

Question 4

The three basic benefits of international strategies are increased market size, economies of scale and learning, and location advantages.

Question 5

Rivals Airbus SAS and Boeing have multiple manufacturing facilities and outsource some activities to firms located throughout the world, partly for the purpose of developing economies of scale as a source of being able to create value for customers.

Question 6

When a firm initially pursues an international business-level strategy, the resources and capabilities established in the home country frequently allow the firm to pursue the strategy into markets located in other countries.

Question 7

South Korea's success in international markets is primarily a result of its abundant natural resources.

Question 8

EagleCrest Industries, a U.S.based company, is facing a limitation in the amount of minerals needed to manufacture its products that can be mined in North America.It would likely benefit from an international strategy that would enable it to secure needed resources.

Question 9

Costco provides the service of buying goods in large quantities and selling them to consumers at lower prices.Economies of scale are a key aspect of Costco's business model.

Question 10

Location advantages are influenced by costs of production, access to natural resources and critical supplies, as well as the needs of customers, but not culture.

Question 11

After a firm decides to compete internationally, it must select its strategy and choose a mode of entry into international markets.

Question 12

In some industries, technology drives globalization because the economies of scale necessary to reduce costs cannot be met by competing in domestic markets alone.

Question 13

In place of what historically were relatively stable and predictable domestic markets, firms across the globe find that they are now competing in relatively unstable and unpredictable global markets.

Question 14

The three corporate-level international strategies are cost leadership, differentiation, and focus.

Question 15

Cultural elements may affect location advantages in that business transactions are easier for a firm to complete when there is a strong cultural match with the institutions with which the firm is involved while implanting its international strategy.

Question 16

A firm is considering the pursuit of international opportunities.In considering the pros and cons, the analyst likely pointed out that the firm would gain access to labor, resources, and customers, all of which are benefits related to economies of scale, through international strategies.

Question 17

Michael Porter's determinants of national advantage describe factors associated with the firm's domestic environment that contribute to its dominance in a particular global industry.

Question 18

Coca-Cola and PepsiCo are examples of firms that have found it unnecessary to aggressively pursue international strategies because of extensive growth opportunities available in the U.S.market.

Question 19

Having substantial supplies of critical basic natural resources is a necessary condition for a country to support businesses that can successfully compete in international markets.

Question 20

Because there are still several industrial and consumer markets in which only domestic firms compete, many firms do not have to be able to compete internationally.

Question 21

The global strategy offers greater opportunities to take innovations developed at the corporate level, or in one market, and apply them in other markets.

Question 22

A company that chooses a truly global corporate-level strategy assumes that the liability of foreignness will be minimal.

Question 23

Evidence suggests that, in general, using an international cost leadership strategy when exporting to developed countries has the most positive effect on firm performance, while using an international differentiation strategy with larger scale when exporting to emerging economies leads to the greatest amount of success.

Question 24

The growing number of global competitors heightens the requirements to keep costs down and there is the desire for more specialized products to meet customer needs.These two pressures make transnational strategies increasingly necessary.

Question 25

A transnational strategy is difficult to use because of its conflicting goals.

Question 26

A firm based in a country with a national competitive advantage is not guaranteed success as it implements its chosen international business-level strategy.Instead, the actual strategic choices managers make may be the most compelling reasons for success or failure.

Question 27

Research suggests that the performance of the global strategy is enhanced if it deploys in areas where regional integration among countries is occurring.

Question 28

The firm using a global strategy seeks to develop economies of scale as it produces the same, or virtually the same, products for distribution to customers throughout the world who are assumed to have similar needs.

Question 29

Because of the lack of protection of intellectual property in some foreign countries, licensing arrangements are one of the best ways for a firm to protect its technology from being appropriated by potential competitors.

Question 30

Four types of distances are associated with the liability of foreignness: cultural, administrative, geographic, and economic.

Question 31

Even if effectively implemented, the transnational strategy often produces lower performance than does the implementation of either the multidomestic or global strategies.

Question 32

Exporting and licensing are the most appropriate ways for smaller firms to first enter international markets.

Question 33

The "regionalization" environmental trend means that firms can focus on a region (customization) but also have some standardization or sharing within the region.

Question 34

Italy has become the leader in the shoe industry because of related and supporting industries such as a well-established leather-processing industry that provides the leather needed to construct shoes and related products.

Question 35

International associations such as the European Union, the Organization of American States, and the North American Free Trade Agreement encourage regionalization strategies rather than globalization.

Question 36

A major advantage of multidomestic strategies is the ability to customize products and services for the specific market, although this sacrifices economies of scale.

Question 37

FanFare United is a global firm with operations in 20 countries.The home office of FanFare United determines the strategies that business units are to use in each country or region.FanFare is applying a multidomestic strategy.

Question 38

Rendell Corp.has just entered international markets.While it has begun to see some benefits, it is also challenged by the high cost of transportation and the expense of tariffs.Rendell most likely used exporting as its mode of entry.

Question 39

By choosing a region where markets are more similar, the firm may be able to better understand those markets and cater to their needs, but also achieve economies through sharing of resources.

Question 40

Grassley-Partition Ltd.(GPL) is embarking on an international strategy.The firm wants to be able to take advantage of the economies of scale offered by global efficiency and, at the same time, be responsive to the individual markets into which it enters.GPL needs to pursue a transnational strategy.

Question 41

Establishing a wholly owned subsidiary provides the quickest access to a new market.

Question 42

Raymond Vernon states that the classic rationale for international diversification is to:

A) preemptively dominate world markets before foreign companies can establish dominance.
B) avoid domestic governmental regulation.
C) extend the product's life cycle.
D) discover product innovations.

Question 43

Although licensing is the least costly method to enter a foreign market, its disadvantages include high costs of transportation and low control over the marketing and distribution of goods.

Question 44

An increase in the value of the U.S.dollar is an example of an economic risk in that it can reduce the value of U.S.multinational firms' international assets and earnings in other countries.

Question 45

The stabilization of returns through international diversification helps reduce a firm's overall risk.

Question 46

Acquisitions, greenfield ventures, and sometimes joint ventures are appropriate when firms want to establish a strong presence in an international market.

Question 47

International diversification is a strategy through which a firm expands the sale of its goods or services across the borders of global regions and countries into a potentially large number of geographic locations of markets.Instead of entering one or just a few markets, the international diversification means that the firm enters multiple markets.

Question 48

Which of the following is NOT an incentive for firms to become multinational?

A) To gain access to consumers in emerging markets
B) To gain easier access to raw materials
C) To avoid high domestic taxation on corporate income
D) Opportunities to integrate operations on a global scale

Question 49

When the country risk is high, firms prefer to enter with a greenfield investment rather than a joint venture.

Question 50

While there are multiple means of entering new international markets, firms should use one method consistently with all of its various products and across its different markets in order to reduce administrative complexity.

Question 51

Fluctuation in the value of different currencies is a major economic risk associated with international diversification.

Question 52

The chief risks in the international environment are political and cultural.

Question 53

A U.S.manufacturer of pigments for household paint that exports about 40 percent of its production to European markets will find its sales will be harmed by a weak dollar.

Question 54

The amount of diversification in a firm's international operations that can be managed varies from company to company and is affected by managers' abilities to deal with ambiguity and complexity.

Question 55

Exporting, licensing, and the strategic alliance entry modes are all appropriate for initial entrance into a new market.

Question 56

Lampster Corp.is exploring options for entering into international markets.The key stakeholders have expressed a desire for low cost and low risk, and are willing to give up control and to accept low returns.The best type of entry for Lampster would be a strategic alliance.

Question 57

International strategy refers to a(n):

A) action plan pursued by American companies to compete against foreign companies operating in the United States.
B) strategy through which the firm sells its goods or services outside its domestic market.
C) political and economic action plan developed by businesses and governments to cope with global competition.
D) strategy American firms use to dominate international markets.

Question 58

RoserOpp Corp.has begun to increase its commitment to international diversification.Stakeholders should expect an initial decrease in returns, followed by a quick increase as RoserOpp learns how to manage its increased geographic diversification.

Question 59

Strategic alliances tend to increase the risk associated with international expansion for the U.S.partner because of the greater dependence on the foreign firm.

Question 60

The greenfield venture option is useful when control of proprietary technology is important in an international expansion.

Question 61

Which of the following is NOT a factor pressuring companies for local responsiveness?

A) Differences in employment laws
B) Customization due to cultural differences
C) Government pressure for firms to use local sources for procurement
D) Availability of low labor costs

Question 62

All of the following are correct about what managers should know about firms based in a country with a national competitive advantage EXCEPT:

A) continuous adjustments are needed based on the nature of competition encountered.
B) the actual strategic choices made are most compelling reasons for success or failure.
C) success is guaranteed as the firm implements its chosen international business-level strategy.
D) the determinants of national competitive advantage provide a foundation for a firm's competitive advantages.

Question 63

Operating in multiple international markets can provide firms with __________ perhaps even in terms of __________.

A) location advantages; larger markets
B) research and development activities; larger markets
C) new learning opportunities; research and development activities
D) economies of scale and learning; larger markets

Question 64

Firms with core competencies that can be exploited across international markets are able to:

A) achieve synergies and produce high-quality goods at lower costs.
B) enter new markets more quickly.
C) enhance their market image and brand loyalty among local consumers.
D) meet local government requirements more quickly than their international competitors.

Question 65

In France, fine dressmaking and tailoring have been a tradition predating Queen Marie Antoinette.Cloth manufacturers, design schools, craft apprenticeship programs, modeling agencies, and so forth, all exist to supply the clothing industry.This is an example of the __________ in Porter's model.

A) firm strategy, structure, and rivalry
B) related and supporting industries
C) demand conditions
D) factors of production

Question 66

Moving into international markets is a particularly attractive strategy to firms whose domestic markets:

A) demand a differentiation strategy for success.
B) are limited in opportunities for growth.
C) have developed unfriendly business attitudes toward the industry.
D) have too much regulation.

Question 67

A fundamental reason for a country's development of advanced and specialized factors of production is often its: ​

A) lack of basic resources.
B) monetary wealth.
C) small workforce.
D) protective tariffs.

Question 68

International corporate-level strategy focuses on:

A) the scope of a firm's operations through geographic diversification.
B) competition within each country.
C) economies of scale.
D) sophistication of monitoring and controlling systems.

Question 69

The increased pressures for global integration of operations have been driven mostly by:

A) new low-cost entrants.
B) increasing demand for similar products.
C) increased levels of joint ventures.
D) the rise of governmental regulation.

Question 70

Which pair of industries would NOT be considered as "related and supporting" under Porter's diamond model?

A) Japanese cameras and copiers
B) Italian leather processing and shoes
C) U.S.computers and software
D) Highway systems and the supply of debt capital

Question 71

Japan, which has a lack of undeveloped land, would be an unusual choice of location for a U.S.cattle company to set up local grazing operations.This limiting factor would be identified in what part of Porter's determinants of national advantage?

A) Factors of production
B) Demand conditions
C) Related and supporting industries
D) Firm strategy, structure, and rivalry

Question 72

Factors of production in Porter's model of international competitive advantage include all of the following EXCEPT:

A) labor.
B) capital.
C) infrastructure.
D) supporting industries.

Question 73

All of the following are international corporate-level strategies EXCEPT the __________ strategy.

A) multidomestic
B) universal
C) global
D) transnational

Question 74

The benefits of expanding into international markets include all of the following opportunities EXCEPT:

A) increasing the size of the firm's potential markets.
B) economies of scale and learning.
C) location advantages.
D) favorable tax concessions and economic incentives by home-country governments.

Question 75

The four determinants in Porter's model of international competitive advantage include all of the following EXCEPT:

A) factors of production.
B) demand conditions.
C) political and economic institutions.
D) related and supporting industries.

Question 76

Firms able to continually improve the processes used to produce, sell, distribute, and service their products across country borders enhance their ability to:

A) learn how to continuously reduce costs while increasing the value of their products.
B) increase investment in research and development.
C) access a low-cost labor force in the host market.
D) mitigate cultural differences.

Question 77

The location advantages associated with locating facilities in other countries can include all of the following EXCEPT:

A) low-cost labor.
B) access to critical supplies.
C) access to customers.
D) avoidance of host country governmental regulations.

Question 78

Why do U.S.companies moving into the international market need to be sensitive to the need for local country or regional responsiveness?

A) There is increasing rejection of American culture across much of the world.
B) The international consumer has become more sophisticated because of the Internet.
C) Consumer needs and desires, industry conditions, political and legal structures, and social norms vary by country.
D) International expansion brings an increasing loss of economies of scale.

Question 79

U.S.soft drink companies entered the global market because of:

A) limited growth opportunities in their domestic market.
B) lower labor costs in the emerging markets.
C) economies of scale that offset research and development costs.
D) an increase in the return on investment from their U.S.bottling plants.

Question 80

In Porter's model, if a country has both __________ and __________ production factors, it is likely to serve an industry well by spawning strong home-country competitors that can also be successful global competitors.

A) basic; advanced
B) advanced; generalized
C) basic; generalized
D) advanced; specialized