Question 1

A large domestic market such as in the United States makes it possible for U.S.companies to enjoy _________________ in mass production and mass marketing, enabling them to become lower cost producers than their competition in foreign countries.

Accepted Answer

Economies of scale refer to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale. A large domestic market allows companies to produce and market goods on a mass scale, leading to lower costs per unit.

Question 2

To encourage improved standards of living, governments should encourage investment in ______.

Accepted Answer

Skill-intensive industries typically require a highly educated and trained workforce, which can lead to improved standards of living through increased productivity and innovation.

Question 3

An example of ____________________ competition is when BMW exports its sports cars to Japan, while Honda exports its competing models to Germany.

Accepted Answer

Intra-industry competition refers to competition among firms within the same industry, such as the automotive industry in this case, where companies from different countries compete in each other's markets with similar products.

Question 4

Preference similarity explains why:

Accepted Answer

Preference similarity among industrialized countries with similar income levels leads to increased intra-industry trade, as these countries often produce and trade similar goods and services that cater to similar tastes and preferences of their consumers. This phenomenon is distinct from the traditional comparative advantage theory, which explains trade by differences in countries' production capabilities.

Question 5

One of the key underlying assumptions in the international product cycle theory is that:

Accepted Answer

The international product cycle theory suggests that new products typically originate in wealthier countries, responding to local demand, and then spread globally. This aligns with the idea that "Necessity is the mother of invention," as innovations often arise from the need to solve a problem or fulfill a need.

Question 6

When Nestlé, a Swiss food company, enjoys economies of scale by considering European, U.S., and Japanese markets together as its primary market it is using the _________________________ argument.

Accepted Answer

The answer of When Nestlé, a Swiss food company, enjoys...

Question 7

Technological innovation can provide an innovative company a competitive advantage, or _____________________ over its competitors both at home and abroad.

Accepted Answer

Technological innovation can give a company a "technological gap" advantage, meaning it has developed or adopted new technologies that its competitors have not, giving it a competitive edge in efficiency, product offerings, or services.

Question 8

Suppose that you are a strategic planner for Nike.You observe that shoe manufacturing is extremely labor-intensive, while shoe designing is becoming increasingly skill-intensive.If you advise to open a manufacturing-assembly plant in Vietnam, your decision is an illustration of _____________________ thinking.

Accepted Answer

Comparative advantage refers to the ability of a party to produce a particular good or service at a lower opportunity cost than another. In this scenario, choosing Vietnam for its labor-intensive manufacturing capabilities suggests leveraging Vietnam's comparative advantage in lower-cost labor for manufacturing, while likely retaining the skill-intensive designing aspect in a location with a comparative advantage in skilled labor.

Question 9

Companies from this country (these countries) excel in developing and marketing small energy-efficient products of all kinds.

Accepted Answer

Japanese companies are renowned for their innovation and efficiency in creating small, energy-efficient products, particularly in electronics and automotive industries.

Question 10

In the __________________ stage of the international product cycle theory, U.S.companies typically increase exports to Europe and Japan as those foreign markets expand.

Accepted Answer

In the growth stage of the international product cycle theory, U.S. companies typically increase their exports to expanding foreign markets such as Europe and Japan, as demand in these regions grows and becomes more attractive for international business.

Question 11

When a company such as Nike wishes to pursue a comparative advantage strategy, it would have product designing and development and special material development conducted in the United States and _________________ operations conducted in labor-abundant countries like China or Brazil.

Accepted Answer

Manufacturing operations are typically outsourced to labor-abundant countries to leverage lower labor costs, which aligns with a comparative advantage strategy by focusing on cost efficiency in production.

Question 12

Historically, _______________ companies developed and introduced many products that were labor- and time-saving or responded to high-income consumer needs, including dishwashers, microwave ovens, automatic washers, and dryers, PCs, and so on:

Accepted Answer

Historically, U.S. companies have been at the forefront of developing and introducing labor- and time-saving products, as well as those catering to high-income consumer needs. This includes innovations such as dishwashers, microwave ovens, automatic washers and dryers, and personal computers.

Question 13

The following statement characterizes which country's orientation to introducing products to their mass market: Innovate on material- and capital-saving products and processes to meet their local consumer's needs and lifestyle orientation (such as small and no-frill automobiles and recyclable products).

Accepted Answer

The answer of The following statement characterizes which country's orientation...

Question 14

The following statement characterizes which country's orientation to introducing products to their mass market: Developing and marketing products that not only conserve material and capital but also space to address their consumer's acute concern about space limitation.

Accepted Answer

Japan is known for its limited space, especially in urban areas, leading to a consumer market that highly values products designed to be efficient in terms of space, as well as material and capital. This has influenced the way products are developed and marketed in Japan, with a focus on compactness and efficiency.

Question 15

The comparative advantage theory is useful in explaining _____________________ between countries that have very different factor endowments.

Accepted Answer

The comparative advantage theory, introduced by David Ricardo, explains inter-industry trade between countries that have different factor endowments. It suggests that countries will export goods in which they have a comparative advantage (lower opportunity cost) and import goods in which they have a comparative disadvantage, leading to more efficient global resource allocation and increased overall economic welfare.

Question 16

In general, a capital-abundant country (such as the United States) tends to specialize in capital-intensive industry and export capital-intensive products, and import labor-intensive products.This statement is an illustration of the ____________________ of comparative advantage.

Accepted Answer

This statement illustrates the factor endowment theory, also known as the Heckscher-Ohlin theory, which posits that countries will specialize and export goods that make intensive use of the factors of production (such as capital or labor) in which they are relatively abundant.

Question 17

With respect to the international product cycle theory, which stage's orientation is primarily domestic in nature?

Accepted Answer

The Introduction stage of the international product cycle theory is primarily domestic in nature because it is during this phase that a new product is developed and first introduced within the local market, before potentially being introduced to foreign markets in later stages.

Question 18

When a company such as Nike has product designing and development and special material development conducted in the United States and has manufacturing operations in labor-abundant countries like China, the company is using ______________________ strategy.

Accepted Answer

This strategy is known as using a comparative advantage. Nike is leveraging the strengths of different countries—innovation and high-value activities in the US where these capabilities are strong, and manufacturing in countries like China where labor costs are lower, thus each country is producing goods or services at a lower opportunity cost than the other.

Question 19

In general, a labor-abundant country (such as China) tends to specialize in labor-intensive industry and export labor-intensive products, and imports capital-intensive products.This statement is an illustration of the ____________________________ of comparative advantage.

Accepted Answer

This statement illustrates the factor endowment theory, also known as the Heckscher-Ohlin theory, which posits that countries will export goods that make intensive use of the factors of production (such as labor or capital) in which they are relatively abundant.

Question 20

The __________________________ addresses the following questions: Why and how does competition tend to evolve over time and across national boundaries in the same industry? How does a company develop its marketing strategy in the presence of competitors at home and abroad?

Accepted Answer

The International Product Cycle Theory explains how a product's production and market competition evolves and shifts from advanced countries to developing ones over time. It addresses the evolution of competition and strategic marketing in response to global market dynamics, which aligns with the questions about the evolution of competition and marketing strategy development in the presence of domestic and international competitors.

Quiz 1: Globalization Imperative