Question 1

Statistics indicate that over half of the world output now comes from emerging markets. This is leading to a(n) ________ of living standards across the globe and is changing the face of business.
A) divergence
B) convergence
C) expansion
D) contraction

Accepted Answer

The sentence is stating that emerging markets are leading to a convergence of living standards across the globe, meaning that the living standards are becoming more similar. Therefore, choice B, convergence, is the best answer.

Question 2

In Euromoney magazine's 2017 semi-annual "Country Risk Rating" evaluating political, economic, and other risks that entrants to international markets potentially face, which of the following countries have the next to the lowest country political risk?
A) Libya and Argentina
B) Singapore and Hong Kong
C) Norway and Canada
D) China and Bahrain

Accepted Answer

Exhibit 7.2 illustrates a sample of country risk ratings from the August 22, 2017 edition of Euromoney. Singapore and Hong Kong have a (2) level economic risk. The highest country political risk is Libya (5).

Question 3

In reviewing the Indian software industry and the diamond of national advantage, which of the following is a relatively weak set of factors in the national competitive advantage in this industry?
A) U.S. demand conditions
B) factor endowments
C) domestic rivalry
D) domestic demand conditions

Accepted Answer

Although the Indian success cannot be explained in terms of its home-market demand (according to the Porter model), the nature of the industry enables software to be transferred among different locations simultaneously by way of communications links. Thus, competitiveness of markets outside India can be enhanced without a physical presence in those markets.

Question 4

Globalization opens the doors for companies to attract new customers. One of the challenges is to determine how to meet the needs of these customers who have
A) different income levels.
B) low income levels.
C) high income levels.
D) steady income levels.

Accepted Answer

Globalization allows companies to expand their customer base to different countries and regions where customers may have varying income levels. Companies need to develop products and pricing strategies that cater to these varying income levels to effectively serve their new customers.

Question 5

Related industries create the probability that new companies will enter the market. This ________ competition and forces existing firms to improve ________.
A) decreases; innovation
B) decreases; efficiency
C) increases; efficiency
D) decreases; sales

Accepted Answer

Related industries create competition by increasing the probability that new companies will enter the market, which forces existing firms to improve their efficiency in order to remain competitive. This increased competition can lead to increased innovation as well, but the question specifically asks about which option will force firms to improve. Decreasing competition (choice A) would lead to less innovation and less efficient firms, while decreasing sales (choice D) may be a consequence of decreased competition but is not the direct cause.

Question 6

Rivalry is intense in nations with conditions of ________ consumer demand, ________ supplier bases, and ________ new entrant potential from related industries.
A) weak; weak; high
B) strong; strong; low
C) weak; weak; low
D) strong; strong; high

Accepted Answer

The statement suggests that intense rivalry is seen in nations with strong consumer demand, strong supplier bases, and high potential for new entrants from related industries. Therefore, the best choice is D.

Question 7

In Fortune's annual list of the 500 biggest companies in the world, 156 firms were from emerging markets in 2015 compared to 18 in 1996, owing to
A) the lower living standards throughout the world.
B) traditional purchasing habits.
C) a rapid rise in global capitalism.
D) a divergence in world living standards.

Accepted Answer

The rapid rise in global capitalism has led to an increase in the number of companies from emerging markets on Fortune's annual list. This suggests that these markets are becoming more integrated into the global economy and are experiencing increased economic growth and development. The other options do not adequately explain the increase in the number of companies from emerging markets on the list.

Question 8

According to the textbook, globalization involves international exchange. Included in this exchange is trade in goods and services as well as the exchange of ________, ________, and ________ across countries.
A) habits; values; ideas
B) traditions; legal systems; history
C) money; ideas; information
D) statistics; personnel; purchasing power

Accepted Answer

Globalization is a term that has two meanings:(1) the increase in international exchange, including trade in goods and services as well as exchange of money, ideas, and information; and (2) the growing similarity of laws, rules, norms, values, and ideas across countries.

Question 9

In Euromoney magazine's 2017 semi-annual "Country Risk Rating" evaluating political, economic, and other risks that entrants to international markets potentially face, which of the following countries has the highest overall country rating for risk?
A) Norway
B) Hong Kong
C) Bahrain
D) Argentina

Accepted Answer

Exhibit 7.2 illustrates a sample of country risk ratings from the August 22, 2017 edition of Euromoney. Argentina and Libya are the highest overall country rating for risk (5), followed by Bahrain (4), Hong Kong (2), and Norway (1).

Question 10

According to Michael Porter, firms that have experienced intense domestic competition are
A) unlikely to have the time or resources to compete abroad.
B) more likely to demand protection from their governments.
C) most likely to design strategies aimed primarily at the domestic market.
D) more likely to design strategies that will allow them to successfully compete abroad.

Accepted Answer

According to Michael Porter, firms that have experienced intense domestic competition have typically developed strategies that have enabled them to successfully compete in the domestic market. These strategies can be leveraged and adapted for international markets, making these firms more likely to design strategies that will allow them to successfully compete abroad.

Question 11

Which of the following is not a motivation for a company to pursue international expansion?
A) It wishes to increase the size of the potential markets for its products and services.
B) It wishes to take advantage of arbitrage opportunities to increase profit.
C) It wishes to optimize value-chain activities to enhance performance, reduce costs, and reduce risk.
D) It wishes to increase foreign market penetration by developing products for the home market.

Accepted Answer

Pursuing international expansion in order to develop products for the home market does not make logical sense, as developing products for home market would imply a focus on the domestic market rather than an international one.

Question 12

In the Porter diamond-of-national-advantage framework, which of the following factors does not affect competitiveness of a nation?
A) the position of the nation in factors of production necessary to compete in a given industry
B) the presence or absence in the nation of internationally competitive supplier industries
C) the conditions in the nation governing the nature of foreign rivalry
D) the nature of home-market demand of the products or services of the industry

Accepted Answer

Porter concluded that there are four broad attributes of nations that individually, and as a system, constitute what is termed the "diamond of national advantage." In effect, these attributes jointly determine the playing field that each nation establishes and operates for its industries. These factors are:factor endowments, demand condition, related and supporting industries, and firm strategy, structure, and rivalry.

Question 13

In Euromoney magazine's 2017 semi-annual "Country Risk Rating" evaluating political, economic, and other risks that entrants to international markets potentially face, which of the following countries have the next to the highest country economic risk?
A) South Africa and Russia
B) Singapore and China
C) Argentina and Bahrain
D) Kazakhstan and Colombia

Accepted Answer

Exhibit 7.2 illustrates a sample of country risk ratings from the August 22, 2017 edition of Euromoney. Argentina and Bahrain have a (4) level economic risk. The highest country economic risk is Libya (5).

Question 14

Countries with demanding consumers, like environmentally-concerned Denmark, drive ________ to meet the demand.
A) worldwide innovation
B) in-country innovation
C) foreign manufacturing
D) global exchange

Accepted Answer

Demanding consumers in Denmark would likely drive in-country innovation, as companies in Denmark would work to create environmentally-friendly products and services to meet the demand. This may also lead to worldwide innovation as other countries take note of Denmark's environmentally-conscious market trends. However, it is less likely to drive foreign manufacturing or global exchange.

Question 15

Multinational firms are constantly faced with the decision of choosing between ________ adaptation and ________ integration.
A) local; local
B) local; global
C) global; local
D) global; global

Accepted Answer

Multinational firms are constantly faced with many important decisions. These include entry strategies, the dilemma of choosing between local adaptation-in product offerings, locations, advertising, and pricing-global integration, and others.

Question 16

Which of these points on the Porter diamond of national advantage is the strongest indicator of global competitive success?
A) foreign rivalry
B) domestic rivalry
C) global rivalry
D) international rivalry

Accepted Answer

Domestic rivalry is the strongest indicator of global competitive success on the Porter diamond. This is because it drives companies to constantly improve and innovate, leading to higher productivity, quality, and efficiency. The pressure of domestic competition also pushes companies to expand internationally, further increasing their competitiveness on a global scale. Foreign, global, and international rivalry may also play a role in competitive success, but not to the same extent as strong domestic competition.

Question 17

Which of the following is not a risk normally associated with bottom-of-the-pyramid strategies?
A) A low-end version of a brand may detract from the overall brand attractiveness.
B) The new low-cost products they develop may cannibalize the sales of their core products.
C) Entrenched competitors can impact the ability of the new firm to enter the market successfully.
D) New products may be perceived as exploiting the privileged customer with substandard products.

Accepted Answer

This risk is not normally associated with bottom-of-the-pyramid strategies as these strategies are developed specifically to serve low-income customers by providing products at affordable prices. Therefore, the perception of exploiting privileged customers with substandard products is not relevant. The other three risks mentioned (A, B, and C) are commonly associated with bottom-of-the-pyramid strategies.

Question 18

Which of the factors below has not made the software services industry in India extremely competitive on a global scale?
A) large pool of skilled workers
B) large, growing market and sophisticated customers
C) tax and antitrust legislation that protects the dominant players in the industry
D) large network of public and private educational institutions

Accepted Answer

In India, the diamond-of-national-advantage framework for software shows a large pool of skilled workers, a large network of public and private educational institutions, a large, growing market, and sophisticated customers.

Question 19

The rise of ________ capitalism around the world creates tremendous business opportunities for multinational corporations.
A) social
B) multinational
C) market
D) democratic

Accepted Answer

The term "market capitalism" refers to a type of economic system where prices are determined by supply and demand, and private individuals and businesses own the means of production. This system has been on the rise around the world, particularly in developing countries, creating new business opportunities for multinational corporations. Social capitalism and democratic capitalism are not commonly used terms, and while multinational corporations may benefit from globalization and operating across borders, "multinational capitalism" is not a recognized term.

Question 20

When the GE wind energy business tapped into world-wide talent, it was able to expand using a(n) ________ strategy.
A) focus
B) diversification
C) unrelated
D) generic

Accepted Answer

Diversification strategy involves entering new markets with new products or services. By tapping into world-wide talent, GE wind energy business was able to expand into new global markets with its wind energy products and services.

Quiz 7: International Strategy Creating Value in Global Markets

Statistics indicate that over half of the world output now comes from emerging markets. This is leading to a(n) ________ of living standards across the globe and is changing the face of business.

In Euromoney magazine's 2017 semi-annual "Country Risk Rating" evaluating political, economic, and other risks that entrants to international markets potentially face, which of the following countries have the next to the lowest country political risk?

In reviewing the Indian software industry and the diamond of national advantage, which of the following is a relatively weak set of factors in the national competitive advantage in this industry?

Globalization opens the doors for companies to attract new customers. One of the challenges is to determine how to meet the needs of these customers who have

Related industries create the probability that new companies will enter the market. This competition and forces existing firms to improve .

Rivalry is intense in nations with conditions of consumer demand, supplier bases, and new entrant potential from related industries.

In Fortune's annual list of the 500 biggest companies in the world, 156 firms were from emerging markets in 2015 compared to 18 in 1996, owing to

According to the textbook, globalization involves international exchange. Included in this exchange is trade in goods and services as well as the exchange of , , and across countries.

In Euromoney magazine's 2017 semi-annual "Country Risk Rating" evaluating political, economic, and other risks that entrants to international markets potentially face, which of the following countries has the highest overall country rating for risk?

According to Michael Porter, firms that have experienced intense domestic competition are

Which of the following is not a motivation for a company to pursue international expansion?

In the Porter diamond-of-national-advantage framework, which of the following factors does not affect competitiveness of a nation?

In Euromoney magazine's 2017 semi-annual "Country Risk Rating" evaluating political, economic, and other risks that entrants to international markets potentially face, which of the following countries have the next to the highest country economic risk?

Countries with demanding consumers, like environmentally-concerned Denmark, drive ________ to meet the demand.

Multinational firms are constantly faced with the decision of choosing between adaptation and integration.

Which of these points on the Porter diamond of national advantage is the strongest indicator of global competitive success?

Which of the following is not a risk normally associated with bottom-of-the-pyramid strategies?

Which of the factors below has not made the software services industry in India extremely competitive on a global scale?

The rise of ________ capitalism around the world creates tremendous business opportunities for multinational corporations.

When the GE wind energy business tapped into world-wide talent, it was able to expand using a(n) ________ strategy.