Deck 7: Strategies for Competing in Foreign Markets

Question 1

The reasons why a company opts to expand outside its home market include all of the following EXCEPT

A) gaining access to new customers for the company's products/services.
B) spreading its business risk across a wider market base.
C) achieving lower costs through economies of scale, experience, and increased purchasing power.
D) exploiting its core competencies and capabilities.
E) identifying resources and capabilities in the company's home market.

Answer 1

E

Question 2

The primary reasons that companies opt to expand into foreign markets are to

A) raise the entry barriers for industry newcomers, neutralize the bargaining power of important suppliers, grow sales faster, and increase the number of loyal customers.
B) avoid having to employ an export strategy, avoid the threat of cross-market subsidization from rivals, and enable the use of a global strategy instead of a multidomestic strategy.
C) grow sales faster than the industry average, reduce the competitive threats from rivals, and open up more opportunities to enter into strategic alliances.
D) boost returns on investment, broaden their product lines, avoid tariffs and trade restrictions, and escape dealing with strong labor unions.
E) gain access to new customers, achieve lower costs, enhance the company's competitiveness, capitalize on core competencies, and spread business risk across a wider market base.

Answer 2

E

Question 3

Apollo Tires sets up a manufacturing unit in Mexico. Following this, Renault-Nissan signs a supply contract with the tire multinational. In which of the following ways is Renault-Nissan likely to gain from the pact?

A) different styles of management, organization, and strategy
B) knowledge sharing within same value chain system
C) availability of natural resources at low cost
D) growth potential and large size of the market
E) government policies in the host country

Answer 3

B

Question 4

Market size and growth rates in different countries can be influenced positively or negatively by

A) the ability of management to tailor a strategy to take into consideration differences among country markets.
B) which countries have the weakest foreign rivals.
C) competitive rivalry that is only moderate in some countries.
D) differing population sizes, cultures, income levels, infrastructure, and distribution networks among countries.
E) the large size of emerging markets such as Brazil, Russia, China, and India.

Question 5

Which of the following is NOT a possible reason why Uber opted to expand its on-demand transportation services into foreign markets?

A) to spread its business risk across a wider geographic market base
B) to capitalize on company competencies and capabilities
C) to gain access to new customers in new markets
D) to build the profit sanctuary necessary to wage guerrilla offensives against global challengers endeavoring to invade its home market
E) to achieve lower costs and enhance the firm's competitiveness.

Question 6

Exxon Mobil enters into a pact with Gazprom, the world's largest natural gas extractor, to set up a processing unit in Baku, Azerbaijan. Which of the following is most likely the reason for Exxon Mobil to opt for this strategic alliance?

A) to gain access to new customers
B) to scale back its core competencies
C) to restrict its factors of production
D) to gain access to low-cost inputs of production
E) to better compete with Gazprom

Question 7

Which of the following is NOT a factor analyzed by firms when developing competitive strength in a foreign market?

A) buyer tastes for a particular product or service sometimes differing substantially from country to country
B) competitive pressures to lower costs
C) competitive risks associated with a fluctuating exchange rate
D) degree of country political risk
E) level of industry-related support activities to foster customization of products and services

Question 8

Which of the following countries had the highest labor wage rates in 2013?

A) Canada
B) China
C) Norway
D) South Korea
E) United States

Question 9

Which of the following is NOT an accurate statement as concerns competing in the markets of foreign countries?

A) Localizing a global company's product offerings country-by-country leads to low-cost advantage.
B) There are country-to-country differences in consumer buying habits and buyer tastes and preferences.
C) A company must contend with fluctuating exchange rates and country-to-country variations in host government restrictions and requirements.
D) Product designs suitable for one country are often inappropriate in another.
E) Market growth rates vary from country to country.

Question 10

Competing in the markets of foreign countries generally does NOT involve which of the following?

A) country-to-country differences in consumer buying habits and buyer tastes and preferences
B) country-to-country variations in host government restrictions and requirements and fluctuating exchange rates
C) whether to customize the company's offerings in each different country market or whether to offer a mostly standardized product worldwide
D) in which countries to locate company operations for maximum locational advantage, given country-to-country variations in wage rates, worker productivity, energy costs, tax rates, and the like
E) crafting a multidomestic strategy that works just as well in one country as in another and that also has the appeal of turning the world market into a mostly homogeneous market

Question 11

Which of the following is LIKELY to be viewed as a pro-business government policy from the perspective of companies competing on an international basis?

A) Argentina increases its interest rate on loans to foreign entrants from 15% to 19%.
B) The European Union imposes a 16% tariff on the import of agricultural produce.
C) Australia introduces a permanent employer-sponsored visa program for skilled manpower.
D) Denmark levies a per metric ton carbon tax on electricity.
E) The Chinese government favors partial local ownership of foreign-owned companies.

Question 12

The diamond framework is NOT LIKELY to answer which of the following questions about competing on an international basis?

A) Where will the foreign entrants come from?
B) Which countries have the weakest foreign rivals?
C) What are the attributes of a country's business environment?
D) What location of value chain activities is most beneficial?
E) What are the disadvantages of allowing foreign competition?

Question 13

Why do companies decide to enter a foreign market?

A) to capture economies of scale in product development, manufacturing, or marketing
B) to raise input costs through greater pooled purchasing power
C) to decrease the rate at which they accumulate experience and move up the learning curve
D) to concentrate risk within a broader base of countries, especially when sales are down in one area and the company can undermine sales elsewhere
E) to exploit the natural resources found within its home market

Question 14

Which of the following is NOT a reason why a company decides to enter foreign markets?

A) to spread business risk across a wider geographic market base
B) to capitalize on company competencies and capabilities
C) to achieve lower costs through economies of scale, experience, and increased purchasing power
D) to impart technical knowledge to high-cost human resources in developing nations
E) to gain access to more buyers for the company's products/services

Question 15

Which of the following exemplifies location-based advantage for the companies competing on an international basis?

A) Microsemi Corporation acquires California-based Actel Corporation.
B) RBC Wealth Management closes operations in South Florida.
C) Samsung diversifies and ventures into textiles and food processing.
D) Hyundai signs a memorandum of understanding with the government of South Korea to halt exports.
E) De Beers sets up operations in the mining region of South Africa.

Question 16

Which of the following is NOT a reason why the world economy is globalizing at an accelerated pace?

A) Countries previously closed to foreign companies have opened their markets.
B) Countries that previously had planned economies now embrace mixed or market economies.
C) Information technology is shrinking the importance of geographic distance.
D) Growth-minded companies are racing to build stronger competitive positions in the markets of more countries.
E) Countries opposed to market or mixed economies have stringent trade barriers in place.

Question 17

Government policies that can make it more attractive for foreign companies to locate operations abroad include all of the following EXCEPT

A) tax incentives.
B) stringent environmental compliance regulations.
C) site development assistance.
D) low cost loans.
E) reduced tariffs, quotas, and percentages of local content required in production of products and services.

Question 18

What factor is NOT LIKELY responsible for Apple's decision to set up mobile phone manufacturing facilities in India?

A) growth potential of India's emerging market
B) global standardization of mobile phone technology
C) potential location advantages in wages, inflation rates, and tax rates that reduce costs
D) franchising opportunities in India
E) comparatively lower exchange rate and political risks

Question 19

Which of the following is NOT a reason why crafting a strategy to compete in one or more foreign markets is inherently complex?

A) Because factors that affect industry competitiveness vary from country to country
B) Because of the potential for location-based advantages to conducting value chain activities in certain countries
C) Because different government policies and economic conditions make the business climate more favorable in some countries than others
D) Because of the risks for shifts in currency exchange rates
E) Because similarities in buyer tastes and preferences facilitate standardization of products and services

Question 20

One of the biggest strategic challenges to competing in the international arena includes

A) how to leverage the opportunities arising from shifting exchange rates.
B) how to charge the same price in all country markets.
C) how to identify foreign firms licensed to produce and distribute the company's products.
D) whether to offer a standardized product worldwide or a customized product offering in each different country market.
E) whether to pursue a franchising strategy or a joint venture strategy.

Question 21

The strategic options for expansion into foreign markets do not include

A) relying on home country governments to restrict imports via raising tariffs and local content requirements.
B) establishing a subsidiary in a foreign market.
C) maintaining a national (one-country) production base and exporting goods to foreign markets.
D) licensing foreign firms to produce and distribute one's products.
E) employing a franchising strategy using local ownership.

Question 22

Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is NOT accurate?

A) Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets.
B) The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates.
C) Exporters win when the currency of the country from which the goods are being exported grows weaker relative to the currencies of the countries that the goods are being exported to.
D) The advantages of manufacturing goods in a particular country can be undermined when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.
E) Domestic companies under pressure from lower-cost imports are benefited when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

Question 23

Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true?

A) Fluctuating exchange rates do not pose significant risks to a company's competitiveness in foreign markets.
B) The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates.
C) Companies that are manufacturing goods in a particular country and are exporting much of what they produce are disadvantaged when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to.
D) Companies that are manufacturing goods in a particular country and are exporting much of what they produce are benefited when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to.
E) Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

Question 24

Companies operating in an international marketplace have to respond to all of the following, EXCEPT

A) whether to customize their offerings in each different country market to match the tastes and preferences of local buyers.
B) whether to pursue a strategy of offering a mostly standardized product worldwide.
C) how much to customize their offerings in each different country market to match the tastes and preferences of local buyers.
D) the tensions between market pressures to localize a company's product offerings country by country and the competitive pressures to lower costs through greater product customization.
E) whether to buy a struggling competitor at a bargain price or pay a premium to gain entry to the local market.

Question 25

The advantages of manufacturing goods in a particular country and exporting them to foreign markets

A) are largely unaffected by fluctuating exchange rates.
B) are greatest when local distributors and dealers in that country can be convinced not to carry products that are made outside the country's borders.
C) can be wiped out when that country's currency grows weaker relative to the currencies of the countries where the output is being sold.
D) are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.
E) are multiplied by the potential for local government officials to raise tariffs on the imports of foreign-made goods into their country.

Question 26

An Irish dairy producer that exports gourmet cheeses made at its Kerry plants to the United States

A) is competitively disadvantaged when the euro declines in value against the U.S. dollar.
B) is largely unaffected by fluctuating exchange rates between the euro and the U.S. dollar. It would, however, be affected if its plants were in the U.S.
C) becomes less competitive in the U.S. market when the euro rises in value against the U.S. dollar.
D) becomes more competitive in European markets when the euro declines in value against the U.S. dollar.
E) has no interest in whether the euro grows stronger or weaker versus the U.S. dollar unless its chief competitors are other companies located in countries whose currency is also the euro.

Question 27

The advantages of manufacturing goods in a particular country and exporting them to foreign markets

A) are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.
B) are greatest when local consumers prefer products manufactured inside the country's borders.
C) are largely unaffected by fluctuating exchange rates.
D) can be wiped out when that country's currency grows weaker relative to the currencies of the countries where the output is being sold.
E) are largely unaffected by tariffs or quotas.

Question 28

A U.S. company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to country markets across the world

A) is competitively disadvantaged when the U.S. dollar declines in value against the Brazilian real.
B) is competitively advantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported.
C) becomes less competitive in foreign markets when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported.
D) is competitively advantaged when the U.S. dollar appreciates in value against the Brazilian real.
E) is unaffected by changes in the valuation of foreign currencies against the Brazilian real-all that matters to a U.S. company is the valuation of the U.S. dollar against the Brazilian real.

Question 29

Why does a U.S. company exporting wooden furniture manufactured in Malaysia to the European Union benefit from the decline in the value of ringgit against the euro?

A) Because decline in the value of the ringgit against the euro raises the cost of furniture manufactured in Malaysia, making it less competitive in European markets.
B) Because decline in the value of the ringgit against the euro reduces the cost of furniture manufactured in Malaysia, making it more competitive in European markets.
C) Because decline in the value of the ringgit against the euro has no impact on the cost of furniture manufactured in Malaysia, both in Malaysian or European markets.
D) Because decline in the value of the ringgit against the euro makes European goods more competitive as compared to Malaysian goods.
E) Because decline in the value of the ringgit against the euro makes Malaysian goods less competitive in the U.S. market.

Question 30

A U.S. organic personal hygiene product manufacturer that exports toothpaste and deodorant made at its U.S. plants for shipment to the U.K. market

A) is competitively disadvantaged when the U.S. dollar declines in value against the British pound.
B) is largely unaffected by fluctuating exchange rates. It would, however, be affected if its plants were in the U.K or other foreign countries.
C) becomes more competitive in the U.K. when the U.S. dollar gains in value against the British pound.
D) becomes more competitive in the U.K. when the U.S. dollar declines in value against the British pound.
E) has no interest in whether the dollar grows stronger or weaker versus the British pound unless it is competing only against companies located in the U.K.

Question 31

Using domestic plants as a production base for exporting goods to selected foreign country markets

A) can be an excellent initial strategy to test the international waters and learn if attractive market positions can be established in foreign markets.
B) can be a competitively successful strategy when a company is focusing on vacant market niches in each foreign country and does not have to compete head-to-head against strong host country competitors.
C) can be a powerful strategy since a company can maintain a one-country production base allowing it to capitalize on company competencies and capabilities.
D) can be a weak strategy when competitors are pursuing multi-country strategies.
E) can be a powerful strategy because a company is not vulnerable to fluctuating exchange rates.

Question 32

Which of the following factors does NOT determine whether to employ entry strategy options?

A) cross-border transfer activities and home country advantages
B) the nature of the firm's objectives
C) whether the firm has a full range of resources and capabilities needed to operate abroad
D) country-specific factors such as trade barriers
E) transaction costs involved (the cost of contracting with a partner and monitoring compliance with the terms of the contract)

Question 33

A European-based company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to country markets in many different parts of the world

A) is competitively disadvantaged when the euro declines in value against the Brazilian real.
B) is competitively disadvantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported.
C) becomes less competitive in foreign markets when the Brazilian real gains in value against the currencies of the countries to which the Brazilian-made goods are being exported.
D) is competitively advantaged when the euro appreciates in value against the Brazilian real.
E) has no interest in whether the euro grows stronger or weaker versus the Brazilian real unless its chief competitors are other companies located in countries whose currency is also the euro.

Question 34

Which of the following is NOT a typical host government requirement that affects the operations of foreign companies?

A) establishing local content requirement on goods made inside their borders by foreign companies
B) having rules and policies that protect local companies from foreign competition
C) placing restrictions on exports to ensure adequate local supplies
D) requiring foreign companies to use vertical integration to support operations of local companies
E) imposing burdensome tax structures and regulatory requirements upon foreign companies doing business within their borders

Question 35

Which of the following does NOT exemplify cross-country differences in demographic, cultural, and market conditions?

A) Fisher and Paykel produces energy-efficient, top-loading washing machines for sale in France.
B) Starbucks develops a new line of Vietnamese coffee drinks for sale in Southeast Asian markets.
C) Ireland provides low-costs loans to foreign entrants to stimulate capital investment.
D) Pizza Hut's store layouts and menus are identical across the world.
E) Ben & Jerry's Ice Cream produces kimchi-flavored ice cream for sale in South Korea.

Question 36

Which of the following exemplifies cross-country differences in demographic, cultural, and market conditions?

A) Nike produces its own line of skate shoes.
B) Starbucks acquires a large coffee farm in Costa Rica.
C) Ireland provides low-costs loans to foreign entrants to stimulate capital investment.
D) Intel's silicon chips are identical across the world.
E) McDonald's offers 100% beef-free products in its outlets in India.

Question 37

Which of the following is an example of an export strategy?

A) The popular Harry Potter character Voldemort can only be leased or rented for use by amusement park operators.
B) ZipCar allows taxi fleet operators to use its trademarks, services, and products for a fee.
C) The Unites States is home to the world's three largest producers and suppliers of artificial heart valves.
D) American Airlines' common stock, owned by AMR Corp., is not available for public purchase.
E) Facebook generates 51% of its advertising revenue outside the United States.

Question 38

Which of the following is NOT a strategic option for expansion into foreign markets?

A) employing a franchising strategy using local ownership
B) relying on strategy alliances, joint ventures, or other cooperative agreements with foreign companies
C) pursuing a profit sanctuary strategy
D) establishing a subsidiary via acquisition or greenfield development
E) maintaining a national (one-country) production base and exporting goods to foreign markets

Question 39

The difference between political risks and economic risks is that

A) political risks stem from instability or weakness in national governments, while economic risks stem from the stability of a country's monetary system, and its economic and regulatory policies.
B) political risks stem from stability in foreign business, while economic risks stem from an excess of property right protections.
C) political risks stem from hostility to foreign currencies, while economic risks stem from the instability of the monetary system.
D) political risks stem from exchange rate fluctuations, while economic risks stem from hostility to foreign business.
E) political risks stem from the stability of a country's monetary system, while economic risks stem from instability in national business.

Question 40

A weaker U.S. dollar is an economically favorable exchange-rate shift for manufacturing plants based in the United States.

A) This is a true statement.
B) No, the U.S. dollar must be stronger.
C) Yes, because it provides for a weakened foreign demand for U.S.-made goods.
D) Yes, because it makes such plants less cost competitive with foreign plants.
E) Yes, because it provides incentives of foreign companies to locate manufacturing facilities in the U.S. to make goods for U.S. consumers.

Question 41

Which of the following is NOT an advantage of strategic alliances, joint ventures, and cooperative agreements between domestic and foreign firms?

A) competing on a more global scale while still preserving their independence
B) gaining better access to scale economies in production and/or marketing
C) filling competitively important gaps in their technical expertise and/or knowledge of local markets
D) sharing distribution facilities and dealer networks, thus mutually strengthening their access to buyers
E) creating permanent arrangements between the domestic and foreign firms

Question 42

The risks of strategic alliances often include all of the following EXCEPT

A) conflicting objectives and strategies.
B) deep differences of opinion about how to proceed operationally and strategically.
C) important differences in corporate values.
D) misunderstandings about appropriate ethical standards.
E) potential for royalty from trustworthy firms.

Question 43

Which of the following is an NOT an example of a cross-border alliance?

A) A New York-based wine importer and an Australian wine producer create and market the Yellowtail wine brand.
B) Pharmaeutical giants Eli Lilly and Kyowa Hakko Kogyo develop and perform clinical tests of a new cancer treatment called therapyyo.
C) The insurance company Geico is a wholly owned subsidiary of Berkshire Hathaway.
D) Western Union purchases the global payments division of British-owned Travelex Ltd.
E) Lidl, a German deep-discount supermarket chain, establishes a new wholly-owned venture with a supermarket chain in Poland.

Question 44

The advantages of using a licensing strategy to participate in foreign markets include

A) being especially well-suited to achieve scale economies.
B) being able to charge lower prices than rivals.
C) being able to achieve first-mover advantages quickly and easily.
D) being able to leverage the company's technical know-how, appealing brand, or patents without committing their resources or capabilities to foreign markets.
E) being able to achieve higher product quality and better product performance than with an export strategy.

Question 45

The advantages of using an acquisition strategy to pursue opportunities in foreign markets include

A) having a high level of control and speed as an entry strategy to overcome trade barriers.
B) allowing a company to achieve scalable economies.
C) eliminating the costs and risks associated with establishing a foreign business location.
D) achieving variable product quality and competitive product performance.
E) exporting goods at higher costs than rivals in those locations.

Question 46

A greenfield venture in a foreign market is one

A) where the company creates a wholly owned subsidiary business by setting up all aspects of the operation upon entering the market from the ground up.
B) where foreign facilities and marketing strategies are shared with local businesses.
C) where the company learns through training by the foreign entity on how to compete.
D) that supports exports into a foreign market by marketing indirectly thru local rivals.
E) that offers lower risk and a faster path to financial returns.

Question 47

Which of the following statements regarding multidomestic competition is false?

A) Buyers in different countries are attracted to different product attributes.
B) The benefits from global integration and standardization are high.
C) Industry conditions and competitive forces in each national market differ in important respects.
D) The mix of competitors in each country market varies from country to country.
E) Winning in one country market does not necessarily signal the ability to fare well in other countries.

Question 48

The advantages of using a franchising strategy to pursue opportunities in foreign markets include

A) having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchisor to expend only the resources to recruit, train, and support and monitor franchisees.
B) being particularly well-suited to the global expansion efforts of companies with multidomestic strategies.
C) allowing a company to achieve scale economies.
D) being well suited to companies who employ cross-border transfer strategies.
E) being well suited to the global expansion efforts of manufacturers.

Question 49

Which of the following is NOT a risk of cross-border alliances between domestic and foreign firms?

A) overcoming language and cultural barriers
B) launching new initiatives to stay abreast of shifting market conditions
C) developing mutually agreeable ways of dealing with key issues or differences
D) disengaging from the alliance once its purpose has been served
E) becoming overly dependent on foreign partners for essential expertise

Question 50

Which of the following is NOT one of the strategy options for competing in the markets of foreign countries?

A) a profit sanctuary strategy
B) an international strategy
C) a global strategy
D) a multidomestic strategy
E) a transnational strategy

Question 51

Acquisition of an existing firm rather than via internal development may be the least risky and cost-efficient means of overcoming entry barriers such as

A) putting its own strategy into place.
B) accelerating efforts to build a strong market presence.
C) moving directly to the task of transferring resources and personnel, integrating and redirecting activities into its own operation.
D) fast-tracking exports into a foreign market by marketing indirectly thru local rivals.
E) gaining access to local distribution networks, building supplier networks, and establishing working relationships with key government officials.

Question 52

Which of the following is an example of a cross-border alliance?

A) Facebook took over WhatsApp for $19 billion in February 2014.
B) Hyundai Motor Company plans to open a new manufacturing plant in the Czech Republic.
C) The insurance company Geico is a wholly owned subsidiary of Berkshire Hathaway.
D) Renault-Nissan sells more than one in ten cars worldwide.
E) Carrefour, a French grocery chain, established a new wholly-owned venture in Poland.

Question 53

The big problem a franchisor faces is

A) allowing franchisees to achieve scale economies.
B) maintaining quality control due to a lack of commitment to consistency and standardization.
C) eliminating the costs and risks associated with establishing a foreign business location.
D) sharing foreign facilities and marketing strategies with local businesses.
E) achieving higher product quality and better product performance than with an export strategy.

Question 54

What is the foremost strategic issue that must be addressed by firms when operating in two or more foreign markets?

A) deciding on the degree to vary its competitive approach to fit the specific market conditions and buyer preferences in each host country
B) deciding on the appropriate level of sustainable profitability
C) deciding on the relative cost competitiveness of the home country
D) deciding on the degree of globalization to maintain expansion capabilities
E) deciding on the resources and capabilities of allies

Question 55

Which of the following is a condition that makes an internal startup strategy appealing over an acquisition?

A) when an internal startup is more costly
B) when an internal startup affects the supply-demand balance by increasing production capacity
C) when an internal startup is unable to gain distribution access advantages
D) when an internal startup has the necessary scale and resource strengths to compete with rivals
E) when an internal startup lacks the experience in establishing new subsidiaries

Question 56

Which of the following is not one of the four conditions that make entry via an internally developed start-up strategy in a foreign country appealing?

A) having scale economies to compete against local rivals
B) having the ability to gain increased access to distribution channels and networks
C) adding new production capacity will adversely impact the supply-demand balance in the local market
D) creating an internal start-up is cheaper than making an acquisition
E) creating an internal start-up is cheaper than entering into strategic alliances and cooperative agreements

Question 57

The big issue an acquisition-minded firm must consider is whether

A) to acquire the firm at a price that cannot recapture the investment.
B) to require the acquired firm's resources and management capability to sustain the ongoing struggling operation.
C) to pay a premium price for a successful local company or to buy a struggling firm at a discount price.
D) to pay a price that builds in all the synergistic advantages to the acquired firm.
E) to pay a very high premium price that sends a signal to the market that the new firm has arrived.

Question 58

When a company operates in the markets of two or more different countries, its foremost strategic decision is

A) whether to test the waters with an export strategy before committing to some other competitive approach.
B) whether to vary the company's competitive approach to fit specific market conditions and buyer preferences in each host country or whether to employ essentially the same strategy in all countries.
C) whether to maintain a national (one-country) manufacturing base and export goods to the other countries.
D) which foreign companies to team up with via strategic alliances or joint ventures.
E) whether to use strategic alliances to help defeat its rivals.

Question 59

Greenfield ventures, like all market entry strategies, can pose serious problems to achieving foreign market entry success. What is NOT deemed a barrier to success?

A) Such ventures can require costly capital investments.
B) Such ventures can have a tendency to divert valuable resources from current business.
C) Such ventures really need well-functioning strong markets.
D) Such ventures are the fastest entry route to achieve a sizeable market share.
E) Such ventures require legal protections of foreign investors.

Question 60

A localized or multidomestic strategy

A) is generally inferior to a global strategy when it comes to pursuing product differentiation.
B) has two big drawbacks: (1) it hinders transfer of a company's competencies and resources across country boundaries because the strategies in different host countries can be grounded in varying competencies and capabilities; and (2) it does not promote building a single, unified competitive advantage, especially one based on low cost.
C) is generally preferable to a global strategy in situations where buyers are price sensitive because a "think-local, act-local" type of multidomestic strategy is better suited to achieving low unit costs than a global strategy.
D) is generally best suited for globally standardized industries, in which small country-by-country differences can be accommodated.
E) involves much less adherence to using the same basic competitive strategy theme (low-cost, differentiation, best-cost, or focused) in all country markets.

Question 61

Which of the following statements regarding multidomestic and global competition is false?

A) In global competition, rivals vie for worldwide market leadership and the leading competitors compete head-to-head in the markets of many different countries.
B) In globally competitive industries, a company's competitive position in one country both affects and is affected by its position in other countries.
C) In multidomestic competition, there is greater cross-country variation in market conditions and the nature of the competitive contest among rivals than tends to be the case in globally competitive markets.
D) With multidomestic competition, the competitive contest is localized, with rivals battling for national market leadership; moreover, winning in one country market does not necessarily signal that a company has the ability to fare well in the markets of other countries.
E) In global competition, the size of a firm's worldwide competitive advantage (or disadvantage) equals the sum of the competitive advantages (or disadvantages) it has in each country market where it competes.

Question 62

A "think-local, act-local" multidomestic type of strategy

A) is very risky, given fluctuating exchange rates and the propensity of foreign governments to impose tariffs on imported goods.
B) is usually defeated by a "think-global, act-global" type of strategy.
C) is more appealing when the country-to-country differences in buyer tastes, cultural traditions, and market conditions are diverse.
D) is generally an inferior strategy when one or more foreign competitors are pursuing a global low-cost strategy.
E) can defeat a global strategy if the "think-local, act-local" multicountry strategist concentrates its efforts exclusively in those foreign markets which have superior resources.

Question 63

During the 1980s, the YKK Group developed and manufactured all its fastening products within Japan. Which of the following aspects of the global strategy was YKK trying to achieve?

A) YKK catered to homogenous buyer needs across countries and regions.
B) YKK centralized its value chain thereby facilitating centralized control.
C) YKK engaged in higher levels of R&D by spreading risks over higher-volume output.
D) YKK sold the same products under the same brand name everywhere.
E) YKK established a single plant to produce different versions of the same product.

Question 64

What is the best way to achieve the efficiency potential of a global strategy?

A) It demands managerial attention to be focused on objective-setting specifically oriented toward production practices.
B) It requires that resources and best practices be shared, value chain activities be integrated, and capabilities be transferred from one location to another as they are developed.
C) It requires that the best identified resources and capabilities be centralized at headquarters.
D) It requires value chain activities to be dispersed across many countries to elevate cost control management as a primary focus in all countries.
E) It requires giving local managers considerable latitude for executing strategies for the country markets they are responsible for.

Question 65

When is a think-local, act-local approach to strategy making appropriate?

A) when the need for local responsiveness is minimal and when potential efficiency gains from standardization is unrestricted by cross-country opportunities
B) when the local manager is intellectually savvy
C) when the local market provides strong opportunity for growth and profitability
D) when the need for local responsiveness is high due to significant cross-country differences in demographic, cultural, and market conditions and where benefits from standardization is limited
E) when the need for centralized decision making is relevant due to various macroeconomic and market conditions

Question 66

In which of the following situations is employing a "think-local, act-local" multidomestic strategy highly questionable?

A) when a company desires to transfer competencies and resources across country boundaries and is striving to build a single, uniform competitive advantage worldwide
B) when there are significant country-to-country differences in customer preferences and buying habits industry is characterized by big economies of scale and strong experience curve effects
C) when the trade restrictions of host governments are diverse and complicated
D) when there are significant country-to-country differences in distribution channels and marketing methods
E) when host governments enact regulations requiring that products sold locally meet strictly defined manufacturing specifications or performance standards

Question 67

Which of the following does NOT accurately characterize the differences between a localized multidomestic strategy and a global strategy?

A) A global strategy entails extensive strategy coordination across countries and a multidomestic strategy entails little or no strategy coordination across countries.
B) A global strategy often entails use of the best suppliers from anywhere in the world, whereas a multidomestic strategy may entail fairly extensive use of local suppliers (especially where use of local sources is required by host governments).
C) A global strategy tends to involve use of similar distribution and marketing approaches worldwide, whereas a multidomestic strategy often entails adapting distribution and marketing to local customs and the culture of each country.
D) A global strategy involves striving to be the global low-cost provider by economically producing and marketing a mostly standardized product worldwide, whereas a multidomestic strategy entails pursuing broad differentiation and striving to strongly differentiate its products in one country from the products it sells in other countries.
E) A global strategy relies upon the same technologies, competencies, and capabilities worldwide, whereas a multidomestic strategy often entails the use of somewhat different technologies, competencies, and capabilities as may be needed to accommodate local buyer tastes, cultural traditions, and market conditions.

Question 68

The strength of a "think-local, act-local" multidomestic strategy is that

A) it matches a company's competitive approach to prevailing market and competitive conditions in each country market, country by country.
B) it employs strategies that are almost totally different from and also unrelated to its strategies in other countries.
C) it operates independent plants, located in different countries, thus promoting greater achievement of scale economies.
D) it avoids host country ownership requirements and import quotas.
E) it eliminates the costs and burdens of trying to coordinate the strategic moves undertaken in one country with the moves undertaken in the other countries.

Question 69

Which of the following is the most unlikely element of a localized multidomestic strategy?

A) granting country managers fairly wide strategy-making latitude
B) scattering plants across many host countries, each producing product versions for local area markets
C) adapting marketing and distribution to the buying habits, customs, and culture of each host country
D) considering the preference for local suppliers (use of some local suppliers may be mandated by host governments)
E) selling directly to buyers (perhaps via the company's website) to avoid having to establish networks of wholesale/retail dealers in each country market

Question 70

A global strategy allows for

A) the leading companies to compete for the biggest share of the world market, but only occasionally compete head-to-head in different countries.
B) the markets in various countries to be part of the world market and competitive conditions across country markets to be strongly linked.
C) a company's overall market strength to be the sum of its market shares in each country market where it has a presence.
D) the industry leaders to be foreign companies, while domestic companies are relegated to runner-up status.
E) a firm's overall competitive advantage to be determined by the size of the competitive advantage it has in each of its profit sanctuaries.

Question 71

A think-global, act-global strategic theme puts emphasis on

A) executing a global domination strategy that focuses the company's resource strengths on entry strategies across all country boundaries.
B) ensuring that value chain activities are defined by country-specific attributes to capitalize on economies of scale.
C) building a global brand name and aggressively pursuing opportunities to transfer ideas, products, and capabilities from one country to another.
D) elevating resources and capabilities developed on a country-by-country basis so as to capitalize on a country's uniqueness.
E) implementing mass-customization techniques that can address local preferences efficiently.

Question 72

The approach of a firm using a "think-global, act-local" version of a transnational strategy entails

A) producing and marketing a variety of product versions under the same brand name, with each different version being designed specifically to accommodate the needs and preferences of buyers in a particular country.
B) having little or no strategy coordination across countries.
C) pursuing the same basic competitive strategy theme (low cost, differentiation, best cost, focused) in all countries where the firm does business but giving local managers some latitude to adjust product attributes to better satisfy local buyers and to adjust production, distribution, and marketing to be responsive to local market conditions.
D) selling the company's products under a wide variety of brand names (often one brand for each country or group of neighboring countries) so buyers in each country market will think they are buying a locally made brand.
E) selling numerous product versions (each customized to buyer tastes in one or more countries and sometimes branded for each country), but opting to only sell direct to buyers at the company's website so as to bypass the costs of establishing networks of wholesale/retail dealers in each country market.

Question 73

Which of the following strategies identifies a multidomestic approach?

A) Texas Instruments strongly encourages its trading partners to use the UN/EDIFACT standard.
B) Hard Rock Cafes in Hawaii offer fish tacos and ahi tuna sandwich.
C) Coca Cola's general market approach is controlled from Atlanta.
D) Nestle established its own distribution network in China.
E) Air Asia adapts its price to industry pressures.

Question 74

A "think-local, act-local" multidomestic strategy works particularly well in all of the following situations, EXCEPT when there are

A) regulations enacted by the host governments requiring that products sold locally meet strictly defined manufacturing specifications or performance standards.
B) significant country-to-country differences in customer preferences and buying habits.
C) diverse and complicated trade restrictions of host governments preclude the use of a uniform strategy from country-to-country.
D) significant country-to-country differences in distribution channels and marketing methods.
E) large demands to pursue conflicting objectives simultaneously.

Question 75

A "think-global, act-global" approach to strategy making is preferable to a "think-local, act-local" approach when

A) a big majority of the company's rivals are pursuing localized multidomestic strategies.
B) country-by-country differences are small enough to be accommodated within the framework of a mostly uniform global strategy.
C) host governments enact regulations requiring that products sold locally meet strict manufacturing specifications or performance standards.
D) plants need to be scattered across many countries to avoid high shipping costs.
E) market growth rates vary considerably from country to country.

Question 76

The essential difference between a "think-global, act-global" and a "think-global, act-local" approach to strategy-making is that

A) a "think-global, act-global" approach entails extensive strategy coordination across countries and a "think-global, act-local" approach entails little or no strategy coordination across countries.
B) the former aims at implementing the same business model worldwide, whereas the latter aims at implementing customized business models to better match local market circumstances.
C) the "think-global, act-global" approach gives local managers more latitude to make minor strategy variations where necessary to better satisfy local buyers and to better match local market conditions.
D) a "think-global, act-global" approach involves selling a mostly standardized product worldwide, whereas a "think-global, act-global" approach entails selling products that are highly differentiated from country to country.
E) a "think-global, act-global" approach involves selling under a single brand name worldwide, whereas a "think-global, act-local" approach entails utilizing multiple brands (typically one for each different country or group of neighboring countries).

Question 77

What is a primary drawback of a localized multidomestic strategy?

A) It hinders the use of cross-border coordination of a company's activities and increases a company's vulnerability to adverse shifts in currency exchange rates.
B) It makes it very difficult to take into account significant country-to-country differences in distribution channels and marketing methods.
C) It makes it difficult and costly to be responsive to country-to-country differences in customer needs, buying habits, cultural traditions, and market conditions.
D) It hinders the transfer of a company's competencies and resources across country boundaries and hinders the pursuit of a single, uniform competitive advantage in all country markets where a company operates.
E) It is unsuitable for competing in the markets of emerging countries and posing added difficulty in modifying a company's business model to compete on the basis of low price.

Question 78

Which of the following statements regarding global competition is false?

A) In global competition, rivals vie for worldwide market leadership.
B) In globally competitive industries, the power and strength of a company's strategy and resource capabilities in one country significantly enhance its competitiveness in other country markets.
C) In global competition, a firm's overall competitive advantage (or disadvantage) grows out of its entire worldwide operations.
D) In global competition, there's more cross-country variation in industry conditions and competitive forces than there is in industries where multidomestic competition prevails.
E) In global competition, many of the same rival companies compete against each other in many different countries, but especially so in countries where sales volumes are large and where having a competitive presence is strategically important to building a strong global position in the industry.

Question 79

A "think-local, act-local" multidomestic strategy entails

A) offering a narrow product line aimed at serving buyers in the same segments of country markets worldwide.
B) giving local managers considerable strategy-making latitude and often producing different product versions for different countries.
C) adopting aggressive efforts to locate facilities in those country markets that have superior resources.
D) pursuing strong product differentiation and competing in many buyer segments.
E) extensive efforts to transfer a company's competencies and resource strengths from one country to another so as to keep entry costs into new country markets low.

Question 80

A global strategy is one in which a company performs all of the following tasks, EXCEPT

A) employs the same basic competitive approach in all countries where it operates.
B) sells much of the same products everywhere.
C) strives to build global brands.
D) coordinates its actions worldwide with strong headquarters control represents a think-global, act-global approach.
E) uses local brand names to cater to a country's specific needs.