Question 1

Economies of scale arise from which of the following sources?

Accepted Answer

Economies of scale refer to the reductions in unit cost achieved by producing a large volume of a product. Attaining economies of scale lowers a firm's unit costs and increases its profitability.

Question 2

Which of the following is associated with firms following the global standardization strategy?

Accepted Answer

Firms pursuing a global standardization strategy try not to customize their product offering and marketing strategy to local conditions because customization involves shorter production runs and the duplication of functions, which tend to raise costs. Instead, they prefer to market a standardized product worldwide so that they can reap the maximum benefits from economies of scale and learning effects.

Question 3

________ needs exist when the tastes and preferences of consumers in different nations are similar if not identical.

Accepted Answer

Universal needs exist when the tastes and preferences of consumers in different nations are similar if not identical. This is the case for conventional commodity products such as bulk chemicals, petroleum, steel, sugar, and the like.

Question 4

________ strategy makes most sense when demands for local responsiveness are high, but cost pressures are moderate or low.

Accepted Answer

Localization is most appropriate when there are substantial differences across nations with regard to consumer tastes and preferences, and where cost pressures are not too intense. By customizing the product offering to local demands, the firm increases the value of that product in the local market.

Question 5

A multinational firm may need to delegate marketing functions to national subsidiaries to

Accepted Answer

A firm's marketing strategies may have to be responsive to differences in distribution channels among countries, which may necessitate the delegation of marketing functions to national subsidiaries.

Question 6

When a firm has a strategic goal of pursuing a low-cost strategy on a worldwide scale, the firm should follow ________ strategy.

Accepted Answer

Firms pursuing a global standardization strategy try not to customize their product offering and marketing strategy to local conditions because customization involves shorter production runs and the duplication of functions, which tends to raise costs. Instead, they prefer to market a standardized product worldwide so that they can reap the maximum benefits from economies of scale and learning effects. They also tend to use their cost advantage to support aggressive pricing in world markets.

Question 7

The distinguishing feature of many firms that pursue ________ strategy is that they are selling a product that serves universal needs, but they do not face significant competitors.

Accepted Answer

Many enterprises have pursued an international strategy, taking products first produced for their domestic market and selling them internationally with only minimal local customization. The distinguishing feature of many such firms is that they are selling a product that serves universal needs, but they do not face significant competitors.

Question 8

When a firm focuses on increasing profitability by customizing the product or service so that it provides a good match to tastes and preferences in different national markets, the firm is following ________ strategy.

Accepted Answer

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

Question 9

According to researchers Bartlett and Ghoshal, for transnational enterprises to be successful, they must focus on

Accepted Answer

Researchers Bartlett and Ghoshal note that in transnational enterprises, the flow of skills and product offerings should be a two-way channel between the home country and foreign subsidiaries. Transnational enterprises must focus on leveraging subsidiary skills.

Question 10

Pressures for cost reduction are intense in industries where

Accepted Answer

Pressures for cost reductions are intense in industries where major competitors are based in low-cost locations, where there is persistent excess capacity, and where consumers are powerful and face low switching costs.

Question 11

Firms usually respond to pressures for cost reduction by trying to

Accepted Answer

In competitive global markets, international businesses often face pressures for cost reductions. Responding to pressures for cost reduction requires a firm to try to lower the costs of value creation.

Question 12

Pressures for ________ imply that it may not be possible for a firm to realize the full benefits from economies of scale, learning effects, and location economies.

Accepted Answer

Pressures for local responsiveness imply that it may not be possible for a firm to realize the full benefits from economies of scale, learning effects and location economies. It may not be possible to serve the world from a single low-cost location.

Question 13

A multinational enterprise doing business in Nigeria decided to change the labeling on its product to conform to local customs and preferences. What type of competitive pressure did this company experience?

Accepted Answer

Responding to pressures to be locally responsive requires that a firm differentiates its product offering and marketing strategy from country to country in an effort to accommodate the diverse demands arising from national differences in consumer tastes and preferences, business practices, distribution channels, competitive conditions, and government policies.

Question 14

When AMD sells its computer chips in countries across the world, it doesn't need to worry too much about customizing the product to local needs and preferences because computer chips are ________ needs.

Accepted Answer

Universal needs exist when the tastes and preferences of consumers in different nations are similar if not identical. This is the case for many industrial and consumer products, for example, handheld calculators, semiconductor chips, personal computers, and liquid crystal display screens.

Question 15

Universal needs exist when

Accepted Answer

Pressures for cost reduction can be particularly intense in industries producing commodity-type products where meaningful differentiation on nonprice factors is difficult and price is the main competitive method. Universal needs exist when the tastes and preferences of consumers in different nations are similar if not identical. This is the case for conventional commodity products such as bulk chemicals, petroleum, steel, sugar, and the like.

Question 16

Responding to pressure for ________ requires that a firm differentiate its products and marketing strategy from country to country, even though it may raise costs.

Accepted Answer

Responding to pressures to be locally responsive requires that a firm differentiate its products and marketing strategy from country to country in an effort to accommodate these factors, all of which tend to raise the firm's cost structure.

Question 17

Which of the following is one of the two types of competitive pressure that affects the ability of multinational enterprises to compete in the global marketplace?

Accepted Answer

Firms that compete in the global marketplace typically face two types of competitive pressure that affect their ability to realize location economies and experience effects, and to leverage products and transfer competencies and skills within the enterprise. They face pressures for cost reductions and pressures to be locally responsive.

Question 18

Which of the following is true of firms that compete in the global marketplace?

Accepted Answer

Firms that compete in the global marketplace face pressures for cost reductions and pressures to be locally responsive. Because differentiation across countries can involve significant duplication and a lack of product standardization, it may raise costs.

Question 19

When the firm simultaneously faces both strong cost pressures and strong pressures for local responsiveness, the ideal strategy to follow is the ________ strategy.

Accepted Answer

Sometimes a firm simultaneously faces both strong cost pressures and strong pressures for local responsiveness. How can managers balance the competing and inconsistent demands such divergent pressures place on the firm? According to some researchers, the answer is to pursue what has been called a transnational strategy.

Question 20

________ strategy is most appropriate when there are substantial differences across nations with regard to consumer tastes and preferences, and where cost pressures are not too intense.

Accepted Answer