Deck 8: International Strategy

Question 1

A transnational strategy is easy to achieve because the multiple objectives involved reinforce one another.

Answer 1

False

Question 2

Porter's model of national competitive advantage includes the following dimensions: factors of production; resource conditions; firm capabilities, structure and rivalry; and related and supporting industries.

Answer 2

False

Question 3

Liability of foreignness and globalisation are two environmental trends that force multinational firms to engage in more than one type of international corporate-level strategy concurrently.

Answer 3

False

Question 4

International diversification allows a firm to extend its product's life cycle by allowing it to secure the necessary resources.

Question 5

The international low-cost strategy is most likely to be implemented in countries with limited demand.

Question 6

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

Question 7

Fluctuation in the values of different currencies is the primary economic risk associated with international diversification.

Question 8

International business opportunities can be determined by market size, return on investment, economies of scale, learning and location advantages.

Question 9

Multi-domestic strategies allow for the establishment of economies of scale.

Question 10

A firm's international business-level strategy options include multi-domestic, global and transnational alternatives.

Question 11

Although national boundaries, cultural differences and geographical distances all pose barriers to entry into many markets, significant opportunities draw businesses into the international arena.

Question 12

Firms often need to balance local responsiveness and economies of scope when they conduct businesses internationally.

Question 13

Firms that compete in risky emerging markets have limited performance.

Question 14

Strategic alliances tend to increase the risk associated with international expansion.

Question 15

Research has shown that international diversification leads to lower firm performance.

Question 16

Both the available resources and the nature of a country's value system are important in Porter's model of national competitive advantage.

Question 17

A global strategy assumes that business units operating in each country are interdependent.

Question 18

Gaining access to needed and potentially scarce resources coupled with increased pressure to integrate operations on a global scale are two reasons for firms to pursue an international strategy.

Question 19

Changing consumer tastes and practices linked to cultural values or traditions almost always deter firms from engaging in an international strategy.

Question 20

An international strategy is a strategy through which a firm sells its goods or services outside its domestic market.

Question 21

The problems associated with exporting include:

A)merging corporate cultures
B)a partner's incompatibility
C)difficulty in negotiating relationships
D)high transportation costs

Question 22

Which of the following is not a motivation for expanding into international markets?

A)To increase the size of a firm's potential markets
B)To gain economies of scale
C)To gain a competitive advantage through location
D)To pressure host governments to provide concessions and/or legal restrictions desired by the firm

Question 23

A transnational corporate-level strategy seeks to achieve:

A)strategic decentralisation and tailoring of products in each country
B)economies of scale and centralised strategic control
C)global efficiency and local responsiveness
D)top management team leadership and quality improvement in the firm's products

Question 24

Which of the following is not a disadvantage associated with exporting?

A)High costs associated with acquiring foreign production facilities
B)High transportation costs
C)Loss of control over distribution activities
D)Tariffs imposed by local governments

Question 25

A firm that is pursuing global efficiency and responds to local market conditions is following a(n):

A)transnational strategy
B)global strategy
C)international strategy
D)multi-domestic strategy

Question 26

By expanding the number of markets in which they compete, firms may be able to enjoy economies of:

A)scale and learning
B)advantage
C)scope
D)perspective

Question 27

A licensing agreement:

A)occurs when two firms agree to share the risks and the resources of a new venture
B)allows the fastest access to a new market
C)allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host country
D)is often called a greenfield venture

Question 28

A global corporate-level strategy assumes:

A)a rise in income levels across the world
B)more standardisation of products across country markets
C)increasing demand for products in the world
D)increasing levels of cultural differences among nations

Question 29

International corporate-level strategy focuses on the:

A)scope of operations through both product and geographic diversification
B)number of top management team members involved in the development of each respective strategy
C)potential effect on the business's ability to earn above-average returns
D)sophistication of monitoring and controlling systems

Question 30

Which one of the following modes of entry is not a good tactic for early market development?

A)Licensing
B)Acquisitions
C)Joint ventures
D)Exporting

Question 31

________ are key factors in determining a firm's foreign R&D investments.

A)Home growth potential and host human capital
B)Changing consumer tastes and cultural practices
C)Home market size and host market size
D)Host market size and host science base

Question 32

A global strategy:

A)is easy to manage because of common operating decisions across borders
B)achieves efficient operations without sharing resources across country boundaries
C)is difficult to pursue successfully
D)lacks responsiveness to local markets

Question 33

Which one of the following is not a characteristic of the multi-domestic corporate-level strategy?

A)Economies of scale
B)Decentralisation
C)Customisation
D)Localised competition

Question 34

Which of the following is not likely to result from the alliance mode of entry?

A)High uncertainty
B)Strategic flexibility
C)Knowledge sharing
D)Economies of scale and scope

Question 35

In addition to the four basic dimensions of Porter's 'diamond' model of the determinants of national advantage, ________ may also contribute to the success or failure of firms.

A)management skill
B)educational requirements
C)government policy
D)national pride

Question 36

Which of the following is not one of the four aspects of Porter's model of international competitive advantage?

A)Substitute products
B)Related and supporting industries
C)Factors of production
D)Demand conditions

Question 37

The location advantages associated with locating facilities in other countries do not include:

A)access to customers
B)ability to pursue a differentiation strategy
C)lower cost labour
D)access to certain resources

Question 38

Narrowing its focus to a specific region of the world allows a firm to be more effective in handling ________ norms.

A)social, legal and technological
B)cultural, social and legal
C)political, technological and social
D)cultural, legal and political

Question 39

Which of the following is not a disadvantage of international acquisitions?

A)They are very expensive and often require debt financing.
B)The acquiring firm has to deal with the regulatory requirements of a host country.
C)Negotiations are complex.
D)It is the slowest way to enter a new market.

Question 40

The least costly form of international expansion is likely:

A)exporting
B)licensing
C)strategic alliances
D)greenfield ventures

Question 41

Which of the following is an economic risk to international firms?

A)Currency exchange rate fluctuations
B)Threat of war
C)Government regulation
D)Nationalisation of operations

Question 42

The positive results associated with international diversification have been shown to:

A)continue as the level of international diversification increases
B)level off and become negative as diversification increases past some point
C)quickly become negative
D)be centred in only one or two industries

Question 43

Which of the following conditions is not suitable for the wholly owned subsidiary mode of entry?

A)Intellectual property rights in the host country are not well protected.
B)The pace of technological advancement is fast.
C)The number of firms in the industry is growing fast.
D)The need for global integration is high.

Question 44

Which of the following is a political risk to international firms?

A)Global warming
B)Firm restructuring among European Union countries
C)Implementing WTO agreements
D)Government regulation

Question 45

What are some of the factors that influence location advantages?

Question 46

Discuss the three international corporate-level strategies.

Question 47

What are the three basic benefits of an international strategy? State and explain each benefit.

Question 48

Discuss the relationship between international diversification and innovation.

Question 49

International diversification leads to:

A)less innovation
B)no more innovation
C)the facilitation of more innovation
D)a geometric expansion of innovation

Question 50

Firms in less developed countries:

A)gain more from being product-diversified than firms in developed countries
B)are more likely to produce below-average returns for investors
C)may need to decrease international activities when domestic profits are poor
D)are generally unable to achieve high levels of synergy

Question 51

What are some of the criteria that firms can use to identify international opportunities?

Question 52

What factors affect a firm's entry mode choice when it diversifies into international markets?

Question 53

Describe environmental trends of international markets.

Question 54

What are the four factors identified in Michael Porter's model of the competitive advantage of nations? What is the significance of these four factors to a firm's choice of international business-level strategy?

Question 55

Describe the characteristics of international modes of entry including exporting, licensing, strategic alliances, acquisitions and new wholly owned subsidiaries.

Question 56

Which one of the following does not limit international expansion?

A)Geography
B)Culture
C)Human capital base
D)Technological base