Question 1

When concentrating production in a few locations, which of the following can allow a manufacturer to lower unit costs, boost quality, or master a new technology more quickly?
A) significant scale economies
B) learning-curve effects
C) superior resources
D) profit sanctuaries
E) supporting industries

Accepted Answer

The answer of When concentrating production in a few locations,...

Question 2

Companies often implement a transnational strategy because it
A) combines flexible coordination with the pursuit of conflicting objectives simultaneously.
B) provides an easy mode of operating to transfer and share resources and capabilities across borders.
C) is conducive to mass customization techniques that enable companies to address local preferences in an efficient semi-standard manner.
D) is the least complex and easiest to implement of all the strategy choices.
E) is capable of achieving an efficiency potential through centralized decision making and strong headquarter control.

Accepted Answer

A transnational strategy allows for the customization of products or services to meet local preferences while still maintaining efficient processes and coordination across borders. This is particularly useful for companies looking to establish a global presence while still addressing regional differences in consumer needs and preferences.

Question 3

What strategy is considered more conducive to transferring and leveraging subsidiary skills and capabilities across borders?
A) a transnational strategy
B) an international strategy
C) a think-local, act-global strategy
D) a cross-border integrated strategy
E) a standardized integrated strategy

Accepted Answer

A transnational strategy is considered more conducive to transferring and leveraging subsidiary skills and capabilities across borders because it combines the benefits of localization and standardization. It allows for a high level of integration and coordination across borders while still allowing for local customization and adaptation. This makes it easier to transfer skills and capabilities across borders and leverage them in different markets. The other strategies listed may not provide as much flexibility or integration across borders.

Question 4

Dispersing particular value chain activities across many countries rather than concentrating them in a select few countries can be more advantageous, EXCEPT when
A) buyer-related activities (such as sales, advertising, after-sale service and technical assistance) need to take place close to buyers.
B) buyers demand short delivery times and/or high transportation costs make it uneconomical to operate from one or just a few locations.
C) it helps hedge against the risks of exchange rate fluctuations, supply disruptions, and adverse political developments.
D) there are diseconomies of scale in trying to operate from a single location.
E) there are reasons to decouple buyer-related activities in favor of locational advantages.

Accepted Answer

The answer of Dispersing particular value chain activities across many...

Question 5

In competing in foreign markets, companies find it advantageous to concentrate their activities in a limited number of locations in all of these situations, EXCEPT when
A) there are significant scale economies in performing an activity.
B) the costs of manufacturing or other activities are significantly lower in some geographic locations than in others.
C) when there is a steep learning or experience curve associated with performing an activity in a single location (thus making it economical to serve the whole world market from just one or maybe a few locations).
D) certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages.
E) the addition of new production capacity will not adversely impact the supply-demand balance in the local market.

Accepted Answer

Concentrating activities in a limited number of locations may lead to oversupply in the local market if new production capacity is added, resulting in adverse impacts to the supply-demand balance. Therefore, it is not advantageous to concentrate activities in a limited number of locations when the addition of new production capacity will not adversely impact the supply-demand balance in the local market.

Question 6

Companies that compete internationally can pursue competitive advantage in world markets (or offset domestic disadvantages) by
A) using a differentiation-based competitive strategy in those country markets with superior resources.
B) choosing not to compete in countries with high tariffs and high taxes (which then have to be passed along to buyers in the form of higher prices), thus keeping costs and prices lower than rivals.
C) using an export strategy to circumvent the risks of adverse exchange rate fluctuations.
D) locating value chain activities in whatever nations prove most advantageous in a manner that uses location to lower costs or achieve greater product differentiation, allow for the transfer of competitively valuable competencies and capabilities from one country to another, and allow for cross-border coordination.
E) employing a multidomestic strategy instead of a global strategy.

Accepted Answer

Locating value chain activities in advantageous nations is a key aspect of international competitiveness. By leveraging the unique strengths and capabilities of different nations, companies can lower costs, achieve greater product differentiation, and cross-border coordination. This allows companies to compete more effectively on a global scale. The other options listed may provide some benefits, but they do not offer as comprehensive a strategy for achieving competitive advantage in international markets.

Question 7

To use location to build competitive advantage, a company that operates transnationally or globally must
A) employ either an export strategy or a franchising strategy.
B) scatter its production plants across many countries in different parts of the world so as to minimize transportation costs.
C) consider whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and consider in which countries to locate particular activities.
D) locate production plants in those countries having suppliers that can supply all the necessary raw materials and components so as to avoid inbound shipping costs.
E) concentrate all of its value chain activities in the one country that has the best combination of low wage rates, low shipping costs, and low tax rates on profits.

Accepted Answer

To use location to build competitive advantage, a company must consider whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and consider in which countries to locate particular activities. This involves analyzing factors such as labor costs, transportation costs, taxes, and availability of raw materials in different countries and choosing the best locations for each activity within the value chain. Simply scattering production plants across many countries or concentrating all activities in a single country may not be the most effective strategy.

Question 8

Sharing and transferring resources and capabilities across borders may also contribute to the development of broader or deeper competencies and capabilities, thereby helping a company achieve
A) control over its resource capabilities.
B) a dominating depth in some competitively valuable area.
C) an intensity of resource diversification.
D) precision and compliance in resource agility and responsiveness.
E) direct investments in foreign countries.

Accepted Answer

Sharing and transferring resources and capabilities across borders can help a company develop a dominating depth in some competitively valuable area, thus giving it a competitive advantage in the market. This can be achieved through increased knowledge sharing, learning from local practices, and leveraging complementary assets and capabilities of different regions.

Question 9

A key approach for a company to grow sales and profits in several country markets is to
A) transfer its valuable competencies and resource strengths among these markets to aid in the development of broader competencies and capabilities.
B) employ a multidomestic strategy rather than a global strategy.
C) locate technical after-sale services close to buyers.
D) minimize transportation costs among these markets.
E) take advantage of less restrictive restrictions and requirements of host governments.

Accepted Answer

Transferring competencies and resource strengths helps the company develop broader competencies and capabilities, which can increase sales and profits in multiple country markets. This approach enables the company to leverage its strengths across different markets, rather than starting from scratch in each market. This can lead to economies of scale and scope, which can help the company reduce costs and increase profitability.

Question 10

In expanding into foreign markets, a company can strive to gain competitive advantage (or offset domestic disadvantages) by
A) building a state-of-the-art facility to fully capture scale economies via an export strategy.
B) using export, licensing, or franchising strategies so as to minimize risk and capital investment.
C) locating buyer-related activities in all countries where it sells its product.
D) dispersing its activities among various countries in a manner that lowers costs or else helps achieve greater product differentiation and transferring competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets.
E) avoiding the use of strategies that entail coordinating its domestic strategic moves with its strategic moves in the various foreign markets it enters.

Accepted Answer

Dispersing activities among various countries helps to lower costs and achieve greater product differentiation. It also allows the company to transfer competencies and capabilities from domestic operations to foreign operations, which can result in a competitive advantage. Using different strategies in different countries also allows a company to better adapt to local market conditions.

Question 11

A primary drawback of a global strategy is that it
A) allows firms to address local needs as precisely as locally based rivals can.
B) permits firms to be more responsive to changes in local market conditions, either in the form of new opportunities or competitive threats.
C) provides for lower transportation costs and also may involve higher tariffs.
D) involves higher coordination costs due to more complex tasks of managing a globally integrated enterprise.
E) raises production costs due to the greater variety of designs and components.

Accepted Answer

A primary drawback of a global strategy is that it involves higher coordination costs due to more complex tasks of managing a globally integrated enterprise. While global strategies provide many benefits such as lower transportation costs and the ability to be more responsive to changes in local markets, the management of a globally integrated enterprise can be complex and costly. This involves coordinating activities across different regions, ensuring consistency in branding and messaging, and managing cultural differences among employees and customers.

Question 12

Profit sanctuaries are found to differ by a company's strategy, such that a(n)
A) domestic-only company has access to many profit sanctuary locations worldwide.
B) international competitor usually has a profit sanctuary in its home market and may have other sanctuaries in countries where it has a strong position and market share.
C) globally competitive company generally has a profit sanctuary outside its home market in countries where it is a market leader and enjoys a strong competitive position.
D) transnational company has profit sanctuaries in every country where it operates.
E) company competing in a few country markets has more profit sanctuaries.

Accepted Answer

The answer of Profit sanctuaries are found to differ by...

Question 13

Transferring core competencies and resource strengths from one country market to another is
A) a good way for companies to develop broader or deeper competencies and competitive capabilities that can become a strong basis for sustainable competitive advantage.
B) best accomplished with a multidomestic strategy as opposed to a global strategy.
C) feasible only with a global strategy; it can't be done with a multidomestic strategy.
D) unlikely to result in a competitive advantage.
E) nearly always the easiest and most sure-fire way to build competitive advantage in trying to compete successfully in foreign markets.

Accepted Answer

Transferring core competencies and resource strengths from one country market to another can help companies develop broader or deeper competencies and competitive capabilities, which can become a strong basis for sustainable competitive advantage.

Question 14

A strategy that incorporates elements of both multidomestic and global strategies is termed a "transnational" strategy, but sometimes it is referred to as a(n)
A) glocalization strategy.
B) international strategy.
C) think-local, act-global strategy.
D) cross-border integrated strategy.
E) standardized integrated strategy.

Accepted Answer

The term "glocalization" is often used to describe a strategy that combines global and local elements, which is similar to a transnational strategy. However, "glocalization" is not a commonly accepted term in strategic management literature, while "transnational" is a well-established term. Therefore, A) is the best choice. B) and E) are incorrect because they only refer to either global or standardized elements, while transnational strategy involves both. C) and D) are less commonly used terms and not as precise as "transnational."

Question 15

The competitive advantage opportunities that a global competitor can gain by dispersing performance of its activities across many nations include all of the following, EXCEPT
A) being able to shift production from one country to another to take advantage of exchange rate fluctuations, differing wage rates, differing energy costs, or differing trade restrictions.
B) being in better position to choose where and how to challenge rivals.
C) shortening delivery times to customers by having geographically scattered distribution facilities.
D) locating buyer-related activities (such as sales, advertising, after-sale service and technical assistance) close to buyers.
E) centralizing value chain activities to foster just-in-time inventory activities.

Accepted Answer

Centralizing value chain activities to foster just-in-time inventory activities is not a competitive advantage opportunity gained by dispersing performance of activities across many nations. Rather, it implies a centralized approach to value chain activities.

Question 16

Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous in all of the following situations, EXCEPT
A) when high transportation costs make it expensive to operate from central locations.
B) whenever buyer-related activities are best performed in locations close to buyers.
C) if diseconomies of large size exist, thereby making it more economical to perform an activity on a smaller scale in several different locations.
D) when it is desirable to hedge against (1) the risks of fluctuating exchange rates, (2) supply interruptions or (3) adverse political developments.
E) if resources retain their foreign contexts so there is competitive advantage over a broader domain.

Accepted Answer

Dispersing activities is not advantageous if resources retain their foreign contexts, as this does not inherently provide a competitive advantage over a broader domain.

Question 17

What supports competitive offensives in one market with resources and profits diverted from operations in another market?
A) cross-market subsidization
B) a foreign market strategy
C) a domestic-only company
D) a home market offensive
E) a multidomestic company

Accepted Answer

Cross-market subsidization is the practice of using profits from one market to support a competitive offensive in another market. This allows companies to allocate resources and invest strategically, which can give them a competitive advantage over domestic-only companies. A foreign market strategy or a multidomestic company may also support competitive offensives, but neither of these choices specifically addresses the use of resources and profits from one market to support operations in another market. A home market offensive refers specifically to a company's strategy to dominate its domestic market, and does not address cross-market subsidization.

Question 18

The transnational approach of a firm using a "think-global, act-local" version of a global strategy entails
A) selling numerous product versions (each customized to buyer tastes in one or more countries and sometimes branded for each country) but opting to only sell direct to buyers at the company's website so as to bypass the costs of establishing networks of wholesale/retail dealers in each country market.
B) pursuing the same basic competitive strategy theme (low-cost, differentiation, best-cost, focused) in all countries where the firm does business but giving local managers some latitude to adjust product attributes to better satisfy local buyers and to adjust production, distribution, and marketing to be responsive to local market conditions.
C) selling the company's products under a wide variety of brand names (often one brand for each country or group of neighboring countries) so that buyers in each country market will think they are buying a locally made brand.
D) producing and marketing a variety of product versions under the same brand name, with each different version being designed specifically to accommodate the needs and preferences of buyers in a particular country.
E) little or no strategy coordination across countries.

Accepted Answer

The "think-global, act-local" approach entails pursuing the same basic competitive strategy worldwide but allowing for some customization to better satisfy local buyers and adapting production, distribution, and marketing techniques to meet local market conditions. This allows for a balance between achieving economies of scale and being responsive to local markets. Option A, selling custom versions but only direct to consumers, limits market reach and removes the possibility of benefitting from the distribution networks of local wholesalers and retailers. Option C, selling under a variety of brand names, can confuse customers and dilute the company's image. Option D, producing various product versions under one brand name, can be confusing for customers and may not effectively address local market needs. Option E, having little to no coordination across countries, is not a sound strategy for a global firm.

Question 19

Companies that compete on an international basis have a competitive advantage over their purely domestic rivals
A) to achieve a larger domestic interest by developing sufficient resource strengths and competitive capabilities for success.
B) to benefit from coordinating activities across different countries' domains.
C) solely for the benefit of their shareholders.
D) that guarantees the generation of big profits, big returns on investment, and big cash surpluses after dividends are paid.
E) to give full access to the proprietary technological expertise or other competitively valuable capabilities.

Accepted Answer

Companies that compete on an international basis can benefit from coordinating activities across different countries' domains, such as sourcing materials and labor, accessing new markets, and taking advantage of favorable exchange rates. This can provide a competitive advantage over purely domestic rivals who may not have these opportunities.

Question 20

Profit sanctuaries are country markets or geographic regions where a company
A) can rank the competitive advantage opportunities in each industry.
B) possesses good strategic fit with other businesses and identifies the value chain where this fit occurs.
C) derives substantial profits because of its protected market position or unassailable competitive advantage.
D) creates substantial investment strategies because it is losing competitive advantage over competitors.
E) invests its dividends in expanding its foreign market presence.

Accepted Answer

Profit sanctuaries are geographic regions or markets where companies are able to derive substantial profits due to their protected market position or unassailable competitive advantage. This allows the company to dominate the market and generate high profits without significant competition. Therefore, C is the best choice.

Quiz 7: Strategies for Competing in Foreign Markets

When concentrating production in a few locations, which of the following can allow a manufacturer to lower unit costs, boost quality, or master a new technology more quickly?

Companies often implement a transnational strategy because it

What strategy is considered more conducive to transferring and leveraging subsidiary skills and capabilities across borders?

Dispersing particular value chain activities across many countries rather than concentrating them in a select few countries can be more advantageous, EXCEPT when

In competing in foreign markets, companies find it advantageous to concentrate their activities in a limited number of locations in all of these situations, EXCEPT when

Companies that compete internationally can pursue competitive advantage in world markets (or offset domestic disadvantages) by

To use location to build competitive advantage, a company that operates transnationally or globally must

Sharing and transferring resources and capabilities across borders may also contribute to the development of broader or deeper competencies and capabilities, thereby helping a company achieve

A key approach for a company to grow sales and profits in several country markets is to

In expanding into foreign markets, a company can strive to gain competitive advantage (or offset domestic disadvantages) by

A primary drawback of a global strategy is that it

Profit sanctuaries are found to differ by a company's strategy, such that a(n)

Transferring core competencies and resource strengths from one country market to another is

A strategy that incorporates elements of both multidomestic and global strategies is termed a "transnational" strategy, but sometimes it is referred to as a(n)

The competitive advantage opportunities that a global competitor can gain by dispersing performance of its activities across many nations include all of the following, EXCEPT

Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous in all of the following situations, EXCEPT

What supports competitive offensives in one market with resources and profits diverted from operations in another market?

The transnational approach of a firm using a "think-global, act-local" version of a global strategy entails

Companies that compete on an international basis have a competitive advantage over their purely domestic rivals

Profit sanctuaries are country markets or geographic regions where a company