Question 1

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 2

The strategy, operations, and organization of a firm must all be consistent with each other if the firm is to _____ and achieve superior profitability.

Accepted Answer

The strategy, operations, and organization of the firm must all be consistent with each other if it is to attain a competitive advantage and garner superior profitability.

Question 3

Top management should be viewed as part of the firm's _____.

Accepted Answer

The final support activity is the company infrastructure, or the context within which all the other value creation activities occur. Because top management can exert considerable influence in shaping these aspects of a firm, top management should also be viewed as part of the firm's infrastructure.

Question 4

Cost savings that come from learning by doing are known as _____.

Accepted Answer

Learning effects refer to cost savings that come from learning by doing. Labor, for example, learns by repetition how to carry out a task, such as assembling airframes, most efficiently.

Question 5

_____ include the design, creation, and delivery of a product.

Accepted Answer

Primary activities have to do with the design, creation, and delivery of the product; its marketing; and its support and after-sale service.

Question 6

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 7

Global expansion offers companies the opportunity to generate greater profits than companies that focus strictly on _____.

Accepted Answer

Expanding globally allows firms to increase their profitability and rate of profit growth in ways not available to purely domestic enterprises.

Question 8

Research and development, production, marketing and sales, and customer service are all examples of _____.

Accepted Answer

Primary activities have to do with the design, creation, and delivery of the product; its marketing; and its support and after-sale service. The primary activities include research and development, production, marketing and sales, and customer service.

Question 9

Which of the following is one of the two types of competitive pressure that affect 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, to leverage products and transfer competencies and skills within the enterprise. They face pressures for cost reductions and pressures to be locally responsive.

Question 10

Learning effects tend to be:

Accepted Answer

Learning effects tend to be more significant when a technologically complex task is repeated, because there is more that can be learned about the task. Thus, learning effects will be more significant in an assembly process involving 1,000 complex steps than in one of only 100 simple steps.

Question 11

Economies that arise from performing a value creation activity in the optimal location are known as _____.

Accepted Answer

Location economies are the economies that arise from performing a value creation activity in the optimal location for that activity, wherever in the world that might be (transportation costs and trade barriers permitting).

Question 12

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 13

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 14

_____ enable a firm to reduce the costs of value creation and/or to create perceived value in such a way that premium pricing is possible.

Accepted Answer

Core competencies are the bedrock of a firm's competitive advantage. They enable a firm to reduce the costs of value creation and/or to create perceived value in such a way that premium pricing is possible.

Question 15

_____ allows a firm to reduce its cost of creating value and increase its profitability.

Accepted Answer

Moving down the experience curve allows a firm to reduce its cost of creating value and increase its profitability. The firm that moves down the experience curve most rapidly will have a cost advantage vis-à-vis its competitors.

Question 16

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 17

_____ is measured by the percentage increase in net profits over time.

Accepted Answer

Profit growth is measured by the percentage increase in net profits over time. In general, higher profitability and a higher rate of profit growth will increase the value of an enterprise and thus the returns garnered by its owners, the shareholders.

Question 18

The amount of value a firm creates is measured by the:

Accepted Answer

The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products.

Question 19

The _____ all of the different positions that a firm can adopt with regard to adding value to the product and low cost assuming that its internal operations are configured efficiently to support a particular position.

Accepted Answer

The efficiency frontier is a convex curve that shows all of the different positions that a firm can adopt with regard to adding value to the product (V) and low cost (C) assuming that its internal operations are configured efficiently to support a particular position.

Question 20

When a firm focuses on increasing profitability by customizing the product or service so that they provide a good match to tastes and preferences in different national markets, the firm is following a(n) _____ 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.

Quiz 13: The Strategy of International Business