Question 1

Which of the following statements is true about firms pursuing a multidomestic business strategy?
A) There is a huge amount of data and control information flow between the home and subsidiary locations.
B) The knowledge transfer between subsidiaries is abundant.
C) They have standard offerings across markets and give preference to international business.
D) They use a loose federation of associated business units.
E) They work in a centralized fashion and the home location exerts strong control on the subsidiaries.

Accepted Answer

Firms pursuing a multidomestic business strategy usually use a loose federation of associated business units, with each unit operating autonomously in the local market. They do not have standard offerings across markets and give preference to local responsiveness over global integration. There is typically less data and control information flowing between the home and subsidiary locations, with more emphasis on knowledge transfer between subsidiaries. The home location also exerts less control over the subsidiaries.

Question 2

In the context of international business strategies,focusing on core competencies in a domestic market is an advantage of a(n)________ strategy.
A) import
B) global
C) multidomestic
D) home-replication
E) transnational

Accepted Answer

A home-replication strategy involves focusing on core competencies and leveraging them in foreign markets by replicating home market-based strategies. This approach emphasizes the strengths and capabilities developed in the domestic market.

Question 3

Which of the following actions distinguishes firms pursuing a transnational business strategy from firms using other business strategies?
A) responding to local challenges and opportunities quickly
B) exerting strong control over its subsidiaries
C) striking a balance between centralization and decentralization
D) responding to global challenges and opportunities quickly
E) standardizing product offerings to achieve economies of scale

Accepted Answer

The transnational business strategy is characterized by a balance between centralization and decentralization. This means that decision-making power is dispersed among different levels of the organization while still maintaining some degree of central control. This allows the firm to respond to local challenges and opportunities quickly while maintaining a consistent global strategy. The other options are not unique to transnational strategy as other business strategies also aim to respond to both global and local challenges, exert control over subsidiaries, and achieve economies of scale through standardization.

Question 4

Identify an advantage of a transnational business strategy.
A) can achieve benefits of multidomestic and global strategies
B) has the ability to control localization
C) has the ability to refine a task into a number of subtasks
D) can apply predicate logics and set theories
E) can determine the organizational dynamics within a company

Accepted Answer

Transnational strategy allows a company to reap the benefits of both multidomestic (local adaptation) and global (standardization) strategies. It allows for global efficiency and coordination while also accommodating local market differences.

Question 5

Which of the following statements is true about firms pursuing a home-replication strategy?
A) They attempt to achieve economies of scale by producing identical products in large quantities for a variety of different markets.
B) They view their home operations as secondary to international operations, thus providing a minor role to information systems in facilitating this strategy.
C) They focus on their domestic customers' needs and wants and merely export their products to generate additional sales.
D) They have a need to create integrated networks between the home office and multiple local subsidiaries.
E) They leverage the flexibility offered by a decentralized organization while at the same time reaping economies of scale enjoyed by centralization.

Accepted Answer

Firms pursuing a home-replication strategy focus on meeting domestic customer needs and wants and simply exporting products to generate additional sales. This strategy does not involve creating integrated networks or achieving economies of scale by producing large quantities of identical products for different markets. Information systems may still play a role in facilitating this strategy, but it is not viewed as a secondary role to international operations. Decentralization and centralization are not necessarily key components of a home-replication strategy.

Question 6

With respect to general approaches for applying freeconomics to various industries,the ________ approach means creating an environment that allows people to participate and collaborate to create something of value for everyone.
A) gift economy
B) freemium
C) cross subsidies
D) zero marginal cost
E) labor exchange

Accepted Answer

The gift economy approach involves people voluntarily giving goods, services or efforts to others without expectation of receiving something in return. This approach relies on social norms and values to encourage cooperation and sharing, and is often used in open-source software development, art communities, and other collaborative ventures.

Question 7

According to basic economics within a competitive marketplace,the price of a product is set by its ________.
A) opportunity cost
B) sunk cost
C) marginal cost
D) transaction cost
E) fixed cost

Accepted Answer

In a competitive marketplace, the price of a product is set by the marginal cost, which is the cost of producing one additional unit of the product. This price ensures that the producers can cover their costs and make a profit, while also ensuring that the price is competitive and attractive to consumers. Opportunity cost refers to the cost of forgoing one option in favor of another, sunk cost is a cost that has already been incurred and cannot be recovered, transaction cost refers to the cost of making a transaction or conducting business, and fixed cost refers to the cost that remains constant regardless of the level of production.

Question 8

Which of the following is a disadvantage for firms that pursue a global strategy?
A) lack of control over subsidiaries
B) limited knowledge transfer between individual subsidiaries
C) lack of interest in obtaining additional knowledge about foreign operations
D) inability to control decentralization
E) inability to react to local market conditions

Accepted Answer

A global strategy often involves standardizing products and services across different markets, which can limit a firm's flexibility and responsiveness to local market conditions and preferences.

Question 9

Web sites like Ultramuzzic.com and Sonetz.com pursue a(n)________ approach for applying freeconomics when they offer free music downloads for users because reproduction and distribution of these products come at no cost.
A) gift economy
B) zero marginal cost
C) advertising
D) cross subsidies
E) freemium

Accepted Answer

The zero marginal cost approach refers to the fact that the reproduction and distribution of digital goods, such as music downloads, have a negligible cost. This allows companies like Ultramuzzic.com and Sonetz.com to offer free music downloads without incurring significant expenses.

Question 10

Infostruct is a free,Web-based,collaborative,multilingual encyclopedia project supported by the non-profit Wikimedia Foundation.Its 17 million articles have been written collaboratively by volunteers around the world,and almost all of its articles can be edited by anyone with access to the site.This allows people to participate and create something of value for everyone.Wikipedia is pursuing a ________ approach for applying freeconomics.
A) gift economy
B) zero marginal cost
C) labor exchange
D) cross subsidies
E) freemium

Accepted Answer

A gift economy is based on the principle of giving without expectation of direct return or payment. Wikipedia relies on volunteers to create and edit content, without any monetary compensation, making it similar to a gift economy.

Question 11

Unilever decides when to centralize and when to decentralize depending on the products and the local markets.This is an example of a(n)________ company.
A) transnational
B) home-replication
C) multidomestic
D) national
E) import

Accepted Answer

Unilever is an example of a transnational company because it allows for both centralized and decentralized decision-making depending on the product and local market. This approach creates a balance between global efficiency and local responsiveness, which is a key characteristic of transnational companies.

Question 12

Which of the following defines marginal cost?
A) It is the cost of an alternative that must be forgone in order to pursue a certain action.
B) It is the cost of producing an additional unit of output.
C) It is the cost that is independent of the level of goods or services produced by the business.
D) It is the cost that has already been incurred and cannot be recovered.
E) It is the cost incurred in making an economic exchange.

Accepted Answer

Marginal cost is the cost of producing an additional unit of output. It is the increase in total cost that arises when the quantity produced increases by one unit. This is an important concept in economics as it helps businesses determine the optimal level of production and pricing for their goods and services.

Question 13

Iver Audio is an all-in-one music management tool that was first marketed in 1999.Most users can use the Basic version that is free,but a $19.99 upgrade provides extra features such as supertagging,faster ripping and burning.Which of the following explains this approach for applying freeconomics?
A) labor exchange approach
B) freemium approach
C) zero marginal cost approach
D) cross subsidies approach
E) gift economy approach

Accepted Answer

This approach is known as the freemium approach, where a basic version of the product is offered for free and additional features are available for purchase through an upgrade.

Question 14

Mystic Co.,a Texas-based fashion apparel company with subsidiaries in more than 25 countries across the world,is one of the most recognized brands in the global and domestic markets.In a recent interview with The New York Times,the CEO and spearhead of Mystic Co.,Burt Swager said,"The secret of the company's success is its ability to strike the right balance between centralization and decentralization." Mystic Co.is a firm that successfully pursues a(n)________ business strategy.
A) global
B) transnational
C) home-replication
D) multidomestic
E) international

Accepted Answer

Mystic Co.'s subsidiaries in over 25 countries show that it has a global presence. However, the CEO's statement that the company strikes the right balance between centralization and decentralization suggests that Mystic Co. has a transnational business strategy. Transnational companies maintain a global outlook while allowing subsidiaries to operate autonomously and adapt to local markets. Home-replication and multidomestic strategies do not fit the description provided. International strategy is too broad and does not specify how the company manages its subsidiaries. Therefore, the best choice is B, transnational.

Question 15

A(n)________ business strategy allows companies to leverage the flexibility offered by a decentralized organization,while at the same time reaping economies of scale enjoyed by centralization.
A) international
B) global
C) multidomestic
D) transnational
E) home-replication

Accepted Answer

Transnational strategy allows companies to benefit from both decentralization and centralization. It emphasizes global integration and local responsiveness. This strategy requires companies to maintain and coordinate closely its dispersed subsidiaries and operations worldwide.

Question 16

With respect to general approaches for applying freeconomics to various industries,reduction of sale price of one item in order to sell something else of value is known as ________ approach.
A) labor exchange
B) gift economy
C) freemium
D) zero marginal cost
E) cross subsidies

Accepted Answer

The approach described in the question, i.e. reducing the sale price of one item to sell something else of value, is known as the cross subsidies approach. This approach involves subsidizing the cost of one product or service by charging a higher price for another product or service offered by the same company. For example, a company may offer a free basic version of its software to attract users, but charge for premium features. This approach is commonly used in industries such as telecommunications, where companies may offer discounted phone plans in exchange for customers signing up for a long-term contract. Choice E, cross subsidies, best describes this approach.

Question 17

Which of the following actions of a firm suggests that it uses the freemium approach for applying freeconomics?
A) It provides free services to customers and gets paid for it by third parties.
B) It reduces the sale price of one item in order to sell something else of value.
C) It distributes products to customers without an appreciable cost to anyone.
D) It offers basic services for free but charges a premium for special features.
E) It allows people to participate and collaborate to create something of value.

Accepted Answer

The freemium approach involves offering basic services for free, but charging a premium for additional features. This is often used in software or mobile apps, where users can use the basic version for free, but have to pay for additional functionality. Choice A describes an advertising-based business model, while Choice B is an example of bundling. Choice C may refer to a cost-leadership strategy, while Choice E is related to crowdsourcing.

Question 18

Madfly Communication,a mobile manufacturer,offers free mobile connections to people who buy its mobile phones.The cost of the mobile connection is actually included in the price of the mobile phone.Madfly Communication is pursuing a(n)________ approach for applying freeconomics.
A) cross subsidies
B) gift economy
C) zero marginal cost
D) advertising
E) freemium

Accepted Answer

Madfly Communication is using cross subsidies because they are offering free mobile connections to those who buy their mobile phones, and the cost of the mobile connection is included in the price of the phone. This allows Madfly Communication to offer the mobile connections for free while still making money from the sale of their phones.

Question 19

Which of the following is a disadvantage for firms pursuing a multidomestic business strategy?
A) limited knowledge transfer between individual subsidiaries
B) exerting unnecessary control over subsidiaries
C) lack of interest in obtaining additional knowledge about foreign operations
D) inability to react quickly to local challenges and opportunities
E) restriction of decision-making ability of subsidiaries

Accepted Answer

A multidomestic business strategy involves a firm tailoring its approach to fit the demands of different international markets. A disadvantage of this strategy is limited knowledge transfer between individual subsidiaries, as each operates independently and focuses on local adaptation, potentially leading to silos within the organization.

Question 20

Freeconomics is the leveraging of digital technologies to ________.
A) provide high quality products and services at low prices as a business strategy for gaining a competitive advantage
B) provide free product information to customers as a business strategy for gaining a competitive advantage
C) provide dissatisfied customers easy access to business premises and top management of the firm
D) match customer preferences with product features to increase the customer base
E) provide free goods and services to customers as a business strategy for gaining a competitive advantage

Accepted Answer

Freeconomics involves providing free goods and services to customers as a business strategy for gaining a competitive advantage. This can be achieved by leveraging digital technologies to reduce the costs of providing these products or by using them to generate revenue through alternative means, such as advertising or subscription models.

Quiz 2: Gaining Competitive Advantage Through Information Systems

Which of the following statements is true about firms pursuing a multidomestic business strategy?

In the context of international business strategies,focusing on core competencies in a domestic market is an advantage of a(n) ________ strategy.

Which of the following actions distinguishes firms pursuing a transnational business strategy from firms using other business strategies?

Identify an advantage of a transnational business strategy.

Which of the following statements is true about firms pursuing a home-replication strategy?

With respect to general approaches for applying freeconomics to various industries,the ________ approach means creating an environment that allows people to participate and collaborate to create something of value for everyone.

According to basic economics within a competitive marketplace,the price of a product is set by its ________.

Which of the following is a disadvantage for firms that pursue a global strategy?

Web sites like Ultramuzzic.com and Sonetz.com pursue a(n) ________ approach for applying freeconomics when they offer free music downloads for users because reproduction and distribution of these products come at no cost.

Unilever decides when to centralize and when to decentralize depending on the products and the local markets.This is an example of a(n) ________ company.

Which of the following defines marginal cost?

Iver Audio is an all-in-one music management tool that was first marketed in 1999.Most users can use the Basic version that is free,but a $19.99 upgrade provides extra features such as supertagging,faster ripping and burning.Which of the following explains this approach for applying freeconomics?

A(n) ________ business strategy allows companies to leverage the flexibility offered by a decentralized organization,while at the same time reaping economies of scale enjoyed by centralization.

With respect to general approaches for applying freeconomics to various industries,reduction of sale price of one item in order to sell something else of value is known as ________ approach.

Which of the following actions of a firm suggests that it uses the freemium approach for applying freeconomics?

Madfly Communication,a mobile manufacturer,offers free mobile connections to people who buy its mobile phones.The cost of the mobile connection is actually included in the price of the mobile phone.Madfly Communication is pursuing a(n) ________ approach for applying freeconomics.

Which of the following is a disadvantage for firms pursuing a multidomestic business strategy?

Freeconomics is the leveraging of digital technologies to ________.