Deck 10: The Strategy of International Business

Question 1

Because of diminishing returns,the efficiency frontier has concave kind of shape.

Answer 1

False

Question 2

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

Answer 2

True

Question 3

To maximise the value of a firm,managers must pursue strategies that increase the ______f the enterprise and its rate of ______growth over time.

A)value;successful
B)viability;productivity
C)profitability;profit
D)gains;product

Answer 3

C

Question 4

A firm's strategy can be defined as the actions that managers take to attain the goals of the firm.

Question 5

Production is concerned with:

A)the creation of a good or service.
B)productivity and sales.
C)making a profit.
D)customers.

Question 6

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

Question 7

The particular emphasis of Michael Porter's value chain is that this model is critical to:

A)strategy and structure.
B)operations and activities.
C)manufacturing and R&D.
D)survival and growth.

Question 8

Evolution strategies are pursued only by those firms who are evolving.

Question 9

Firms that pursue a global standardisation strategy focus on increasing profitability by customising the firm's goods or services.

Question 10

In North America,companies such as Expedia,Priceline and Hotels.com operate a merchant model where the companies buy the hotel rooms at wholesale and then mark them up and sell them retail.Wotif.com on the other hand operates on different system known as a:

A)margin-rates model.
B)competitor-based model.
C)mark-up based model.
D)commission-based model.

Question 11

The Wotif.com online accommodation success story is based on which strategy?

A)Merchant model.
B)Commission model.
C)Track,grab and compare margins model.
D)Retail buyer and supplier comparison model.

Question 12

Brisbane-based Wotif.com is a specialist online accommodation service provider that attributes its success to a number of factors,which are principally based on:

A)the general environment of a firm,including competitors and suppliers.
B)the formal divisions of an organisation.
C)the location of decision-making responsibilities within a low-cost structure.
D)the establishment of integrating mechanisms to coordinate activities of subunits.

Question 13

With 'strategic fit' market conditions,strategy,operations and organisation must all be consistent with each other for:

A)survival and prosperous growth.
B)avoidance of competitor challenge.
C)superior performance to be attained.
D)going international and global.

Question 14

For their first venture in going international,Wotif.com chose which country to secure market share?

A)Indonesia
B)Thailand
C)New Zealand
D)Japan

Question 15

A transnational strategy makes sense when the firm is not ready to pursue a localisation or global standardisation strategy.

Question 16

One of the hallmarks of the IKEA success story was to develop and incorporate which of the following product strategies?

A)Furniture as 'flat packs' for customers to take home and assemble themselves.
B)Furniture ready-made for quick delivery.
C)A buy now,pay later strategy.
D)A lifetime guarantee or your money back strategy.

Question 17

Value chain activities can be categorised as primary activities and secondary activities.

Question 18

Which principal aspect of a firm can be viewed as a value chain in Michael Porter's work?

A)strategy
B)structure
C)operations
D)systems

Question 19

To maximise its long-run return on invested capital,a firm must establish economies of scale through high-end customisation.

Question 20

The two conditions that determine a firm's profits are the amount of value customers place on the firm's goods and services,and supplier relationships.

Question 21

The two phenomena that help explain the experience curve are:

A)learning effects and economies of scale.
B)technology inputs and economies of scale.
C)wealth transfers and learning effects.
D)wealth transfers and technology inputs.

Question 22

Which strategy makes the most sense when there are strong pressures for cost reductions and demands for local responsiveness are minimal?

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

Question 23

Pressure for local responsiveness arises from differences in ______________.

A)boundary-less preferences
B)distribution channels
C)infrastructure and traditional practices
D)governmental demands

Question 24

Value chain activities can be categorised as:

A)primary activities and secondary activities.
B)input activities and throughput activities.
C)profitable activities and unprofitable activities.
D)primary activities and support activities.

Question 25

Threats of protectionism,economic nationalism and local content rules:

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 26

Firms that compete in the global marketplace typically face two types of competitive pressures.They face pressures for cost reductions and:

A)pressures for volume increases.
B)pressures to be locally responsive.
C)pressures to be politically savvy.
D)pressures for price reductions.

Question 27

Skills within the firm that competitors cannot easily match or imitate are referred to as:

A)core competencies.
B)global competencies.
C)in-born skills.
D)competitive threats.

Question 28

In North America,consumer electrical systems are based on 110 volts,while in Australia,240-volt systems are standard.This is an example of differences in:

A)consumer tastes and preferences.
B)distribution channels.
C)infrastructure and traditional practices.
D)governmental demands.

Question 29

The text explains leveraging of products and markets to mean:

A)core competencies (development of skills within the firm that cannot be easily matched).
B)core capabilities (the building blocks of corporate strategy - business processes).
C)core systems (which are part of the business collective and cross-functional).
D)core skills (that links to staff,style and synergy).

Question 30

Pressures for ____________ that it may not be possible for a firm to realise the full benefits from experience curve and location economies.

A)government approval
B)consumer guidance
C)national recognition
D)local responsiveness

Question 31

Implicit in the discussion of leveraging core competencies is the idea that skills are developed first _________ and then transferred _________.

A)internationally;home
B)at home;to foreign operations
C)by managers;to employees
D)by employees;to managers

Question 32

A strategy that focuses primarily on lowering costs is referred to as a _________ strategy,while a strategy that focuses primarily on increasing the attractiveness of a product is referred to as a _________ strategy.

A)low-quality;diversion
B)low-cost;high-quality
C)low-quality;high-quality
D)low-cost;differentiation

Question 33

Cost-reduction pressures tend to be particularly intense in industries that:

A)create products that serve universal needs.
B)create customised products.
C)are not involved in international business.
D)rely on suppliers and outsourcing.

Question 34

For superior performance to be achieved,a firm's strategic fit comprise:

A)strategy,structure,systems and staff.
B)growth,development,maturity and competitiveness.
C)supply,demand,suppliers and substitute products.
D)market conditions,strategy,operations and organisation.

Question 35

The ability to spread fixed costs over a large volume results in a cost-savings phenomenon referred to as:

A)volume synergies.
B)economies of scale.
C)captured savings.
D)size effects.

Question 36

Location economies are important because locating in an optimal location can:

A)lower costs only.
B)increase value only.
C)lower costs and increase value.
D)cause competitors to move in.

Question 37

The appropriateness of the strategy that a firm uses in an international market varies with the extent of pressures for ____________d ________________.

A)cost reductions;availability of financing.
B)price concessions;quality improvements
C)availability of financing;product standardisation
D)cost reductions;local responsiveness

Question 38

In the context of value chain analysis,which of the following is an example of a 'primary' activity?

A)materials management
B)research and development
C)manufacturing
D)human relations

Question 39

Firms use four basic strategies to compete in the international environment.These are:

A)an international strategy,a localisation strategy,a global strategy and a transnational strategy.
B)a cross-cultural strategy,a trade block strategy,a regional strategy and a world strategy.
C)a domestic-based strategy,an international-focused strategy,a local/regional-based strategy and a cultural-based strategy.
D)an international strategy,a regional strategy,a global strategy and a world strategy.

Question 40

The ____________efers to the systematic reduction in production costs that have been observed to occur over the life of a product.

A)experience curve
B)forward advantage
C)positive-sum result
D)managed advantage

Question 41

Which strategy makes the most sense when cost pressures are intense and demands for local responsiveness is limited?

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

Question 42

Strategic alliances have three major advantages.These are (1)they may facilitate trade into a foreign market, (2)allow firms to share the fixed costs and develop new products or processes,and (3):

A)are a way to bring together the complementary skills and assets of the participants.
B)gives competitors a low-cost route to new technology.
C)a firm never gives away more than it gains by participating in a strategic alliance.
D)gives competitors a low-cost route to new markets.

Question 43

The term ____________efers to cooperative agreements between potential or actual competitors.

A)tactical union
B)strategic alliance
C)political affiliation
D)economic association

Question 44

According to the textbook,the success of a strategic alliance is a function of three factors.These are: partner selection,alliance structure and __________________.

A)similarity in size of the alliance partners
B)geographic distance between the alliance partners
C)the manner in which the alliance is managed
D)government support

Question 45

____________ run the range from formal joint ventures to short-term contractual agreements.

A)Cooperative synergies
B)Strategic alliances
C)Franchise organisations
D)Tactical partnerships

Question 46

______egy makes sense if a firm has a valuable core competence that indigenous competitors in foreign markets lack.

A)A global
B)An international
C)A multidomestic
D)A transnational

Question 47

Which strategy focuses on increasing profitability by customising the firm's goods or services so that they provide a good match to tastes and preferences in different national markets?

A)international
B)global standardisation
C)localisation
D)transnational

Question 48

_________ agreements are one way to achieve the goal of swapping skills and technologies that each company in a strategic alliance covets,and ensuring a chance for equitable gain.

A)Joint venture
B)Sharing
C)Cross-licensing
D)Learning

Question 49

For years,Motorola complained about formal and informal Japanese trade barriers.In 1987,Motorola allied itself with Toshiba to build microprocessors.This alliance helped Motorola secure government approval to enter the Japanese market.This is an example of which advantage to strategic alliances?

A)A strategic alliance could help the firm establish technological standards for the industry that will benefit the firm.
B)A strategic alliance is a way to bring together complementary skills and assets that neither company could easily develop on its own.
C)Strategic alliances allow firms to share fixed costs.
D)Strategic alliances may facilitate entry into a foreign market.

Question 50

Managing an alliance successfully requires building interpersonal relationships between the firms' managers,or what is sometimes referred to as:

A)relational capital.
B)personal capital.
C)personality advantage.
D)relationship advantage.