Deck 10: The Strategy of International Business

Question 1

A firm's strategy can be defined as the reactions of managers to the firm's goals.

Answer 1

False

Question 2

There are two basic strategies for improving a firm's profitability: a diversification strategy and a low-cost strategy.

Answer 2

False

Question 3

Because of diminishing returns, the efficiency frontier has a convex shape.

Answer 3

True

Question 4

Value-chain activities can be divided into initial activities and final activities.

Question 5

Michael Porter has argued that low cost and high quality are two basic strategies for creating and attaining a competitive advantage in an industry.

Question 6

Firms that pursue a global standardisation strategy focus on economies of scale, learning effects and location economies.

Question 7

Ford and ABB have embraced a transnational strategy and found this easier to pursue than a localisation or global standardisation strategy.

Question 8

Which of the following retailing rules relating to international success did IKEA largely ignore when it initially entered the North American market?

A) International success involves extensive market research and analysis.
B) International success involves small-scale expansion into new markets.
C) International success involves tailoring products to national tastes and preferences.
D) International success involves hiring a local workforce.

Question 9

The concept of diminishing returns implies that when a firm already has significant _____________ built into its product offering, increasing that value by a relatively small amount requires ________________ costs.

A) value; significant
B) costs; reducing
C) quality; reducing
D) skills; increasing

Question 10

R&D, production, marketing and sales and customer service are all examples of:

A) primary activities.
B) value-creating activities
C) support activities
D) differentiation activities

Question 11

For superior performance to be attained, there must be a 'strategic fit' between market conditions and:

A) strategy, goals and workforce.
B) market opportunities, skill levels and technology.
C) strategy, operations and organisation.
D) primary activities, value creation and demand.

Question 12

While IKEA is pragmatic about adapting to local tastes and preferences, to exploit economies of scale it still centralises functions such as:

A) the selection of menu items served in its in-store restaurants and the production of catalogues.
B) wrapping of flat packs and home shopping.
C) food production and textile manufacturing.
D) trolley production and its customer service department.

Question 13

The Pearl River success story is based on a ________________ strategy.

A) high-cost, high-quality
B) low-cost, high-quality
C) differentiation, niche-market
D) mass-production, moderate-quality

Question 14

Michael Porter has argued that ________________ and _____________ are two basic strategies for creating value and attaining a competitive advantage.

A) quality; cost structure
B) differentiation; diversification
C) low cost; differentiation
D) low cost; high quality

Question 15

The successful global expansion of manufacturing companies such as Toyota was based not just on ______________ products and selling them in foreign markets, but also on transferring ______________ to foreign markets where indigenous competitors lacked them.

A) low-cost; economies of scale
B) innovative; skilled employees
C) differentiating; technologies
D) leveraging; core competencies

Question 16

Leveraging of a firm's core competencies refers to:

A) developing skills within the firm that cannot easily be matched by competitors.
B) developing business processes as the building blocks of corporate strategy.
C) the core systems that are part of the business collective and are cross-functional.
D) the core skills that link staff, style and synergy.

Question 17

Many industries are now so competitive that firms must adopt a _____________________ strategy. This involves a ___________________ focus on reducing costs, transferring skills and products, and boosting local responsiveness.

A) global standardisation; global
B) localisation; customised
C) diversification; combined
D) transnational; simultaneous

Question 18

Within the context of value chain analysis, which of the following is an example of a support activity?

A) Marketing and sales
B) Information systems
C) Research and development
D) Customer service

Question 19

Economies that arise from performing a value-creation activity in the optimal location for that activity at a cost advantage to the firm are referred to as:

A) economies of scale.
B) core competencies.
C) location economies.
D) operational economies.

Question 20

The _____________ curve refers to the systematic _______________ in production costs that have been observed to occur over the life of a product.

A) experience; reduction
B) product; increase
C) life; change
D) output; decline

Question 21

Responding to pressures to be ____________ responsive requires that a firm ___________ its product offering and market strategy. Because this can involve significant duplication and a lack of product standardisation, it may raise costs.

A) globally; align
B) locally; differentiate
C) customer; streamline
D) environmentally; rationalise

Question 22

Firms typically choose from among four main strategic postures when competing internationally. These can be characterised as:

A) transglobal, local, global standardisation and competitive.
B) global, national, standardised and international.
C) transnational, localisation, global standardisation and international.
D) national standardisation, localisation, global and differentiation.

Question 23

As highlighted in the discussion of MTV's global strategy, pressures for local responsiveness arise from national differences in consumer tastes and preferences as well as from:

A) boundary-less preferences and infrastructure.
B) distribution channels and technology.
C) infrastructure and distribution channels.
D) information systems and business practices.

Question 24

The aim of threats of protectionism, economic nationalism and local content rules is to:

A) try to keep foreign companies out.
B) dictate that international businesses manufacture locally.
C) put harsh regulations on distribution.
D) strictly regulate the raw materials that foreign companies use.

Question 25

Threats of economic nationalism dictate that Bombardier, the Canada-based manufacturer of railcars, aircraft, jet boats and snowmobiles, manufacture locally in the European countries in which it sells its products. To address the high costs resulting from duplication of manufacturing facilities, Bombardier has centralised its __________________________ functions.

A) engineering and purchasing
B) customer service and engineering
C) information system and purchasing
D) marketing and storage

Question 26

Procter & Gamble and Microsoft generally develop new products and conduct R&D in their home countries. While some local customisation of their product offering and marketing strategy occurs, this tends to be rather limited in scope. Which strategy are they pursuing?

A) A domestic strategy
B) A global standardisation strategy
C) An international strategy
D) A transnational strategy

Question 27

An international strategy makes sense if a firm has a ________________ that indigenous competitors in ________________ markets lack.

A) new product; open
B) core competence; foreign
C) competitive advantage; competing
D) unique product; transnational

Question 28

The term 'strategic alliance' refers to ____________ agreements between potential or actual ___________ for the benefit of all companies concerned.

A) legal; partners
B) cooperative; competitors
C) operational; customers
D) trade; competitors

Question 29

In 2004 Warner Brothers entered into a joint venture with two Chinese partners to produce and distribute films in China. Warner Brothers chose to form this strategic alliance in order to:

A) establish technological standards for the industry that would benefit the firm.
B) bring together complementary skills and assets that neither company could easily develop on its own.
C) share fixed costs and associated risks.
D) facilitate its entry into a foreign market.

Question 30

Relational _____________ refers to the successful management of an alliance through the building of successful ______________ relationships between the firms' managers.

A) capital; interpersonal
B) assets; working
C) advantage; alliance
D) management; cooperative