Question 1

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 among markets allows a company to develop broader competencies and capabilities, leading to increased sales and profits. This strategy helps the company to achieve economies of scale and scope, reduce duplication of efforts, and enhance operational efficiency. It also enables a company to respond to local market conditions and adapt to changing customer preferences.

Question 2

Which one of the following is not one of the ways a company can strive to gain competitive advantage (or offset domestic disadvantages)by expanding into foreign markets?
A) By competing in both developed and emerging country markets and/or by selling direct to foreign buyers via the company's Web site
B) By dispersing its activities among various countries in a manner that lowers costs.
C) By transferring competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets
D) By dispersing its activities among various countries in a manner that helps achieve greater product differentiation and, and/or working to deepen/broaden its resource strengths and capabilities
E) By using cross-border coordination of its strategic moves in ways that a domestic-only competitor cannot

Accepted Answer

Selling directly to foreign buyers via a company's website is a method of market entry but not specifically a strategy for gaining competitive advantage or offsetting domestic disadvantages.

Question 3

In which of the following circumstances is it not advantageous for a multinational competitor to concentrate its activities in a limited number of locations in order to build competitive advantage?
A) When the costs of performing certain value chain activities are significantly lower in certain geographic locations than in others
B) When a company has competitively superior patented technology that it can license to foreign partners
C) When there is a steep learning or experience curve associated with performing an activity in a single location
D) When certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages
E) When there are significant scale economies in performing the activity

Accepted Answer

When a company has patented technology that it can license to foreign partners, it is advantageous to spread activities in multiple locations to maximize the exploitation of licensing opportunities. In this case, concentrating activities in a limited number of locations will limit its potential licensing opportunities and may lead to a loss of competitive advantage. In all the other circumstances listed, concentrating activities in a limited number of locations can lead to cost savings, coordination benefits, or scale economies that can enhance competitive advantage.

Question 4

To use location to build competitive advantage when competing in both domestic and foreign markets,a company must
A) scatter its production plants across many different country markets so as to minimize the costs of shipping to its own distribution centers and/or to wholesalers/retail dealers.
B) consider (1) whether to concentrate each activity it performs in a few select countries or to disperse performance of the activity to many nations and (2) in which countries to locate particular activities.
C) concentrate buyer-related activities in a few well-chosen locations so as to maximize the capture of distribution-related scale economies.
D) disperse both production and distribution activities across many nations in order to hedge against fluctuating exchange rates and lessen the risks of adverse political developments.
E) avoid selling in countries where there are high trade barriers or where buyers purchase in small quantities.

Accepted Answer

To use location as a competitive advantage in both domestic and foreign markets, a company must consider whether to concentrate each activity it performs in a few select countries or to disperse the activity to many nations, and also decide in which countries to locate particular activities. This is because different countries offer different advantages for different activities, and a company must choose the location that maximizes its competitive advantage. For example, a company may choose to concentrate its research and development activities in a few countries where there is a concentration of research experts and facilities. Similarly, it may choose to locate its manufacturing activities in countries where labor is inexpensive, regulations are favorable, and supply chain costs are low. By making such choices, a company can achieve greater cost efficiencies, differentiation, or both, thereby gaining a competitive advantage.

Question 5

The competitive advantage opportunities that a global competitor can gain by dispersing performance of its activities across many nations include
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) All of these.

Accepted Answer

All of these options are advantages that a global competitor can gain by dispersing the performance of its activities across many nations. By having production facilities in multiple countries, a company can take advantage of currency fluctuations, wage disparities, and trade restrictions. This flexibility allows companies to adjust their operations to remain profitable in changing economic climates. Additionally, having operations in different countries allows companies to strategically choose how and where to challenge their competitors, providing a competitive advantage. Locating buyer-related activities near customers shortens delivery times and enhances customer service. Overall, these benefits work together to give global competitors a strategic edge over their rivals.

Question 6

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 that it enters.

Accepted Answer

Dispersing activities to lower costs or achieve greater product differentiation is a way to gain a competitive advantage in foreign markets. Transferring competencies and capabilities from domestic operations to operations in foreign markets can also lead to a competitive advantage. Building a state-of-the-art facility to fully capture scale economies via an export strategy would be costly and may not necessarily lead to a competitive advantage. Using export, licensing, or franchising strategies may minimize risk and capital investment, but it may not necessarily lead to a competitive advantage. Locating buyer-related activities in all countries where it sells its product may not lead to a competitive advantage either. Avoiding coordination of strategic moves between domestic and foreign markets can lead to inefficiencies and missed opportunities.

Question 7

Which of the following does not accurately characterize the differences between a localized multidomestic strategy and a global strategy?
A) A global strategy entails extensive strategy coordination across countries and a multidomestic strategy entails little or no strategy coordination across countries.
B) A global strategy often entails use of the best suppliers from anywhere in the world whereas a multidomestic strategy may entail fairly extensive use of local suppliers (especially where use of local sources is required by host governments).
C) A global strategy tends to involve use of similar distribution and marketing approaches worldwide whereas a multidomestic strategy often entails adapting distribution and marketing to local customs and the culture of each country.
D) A global strategy involves striving to be the global low-cost provider by economically producing and marketing a mostly standardized product worldwide whereas a multidomestic strategy entails pursuing broad differentiation and striving to strongly differentiate its products in one country from the products it sells in other countries.
E) A global strategy relies upon the same technologies, competencies, and capabilities worldwide whereas a multidomestic strategy often entails the use of somewhat different technologies, competencies, and capabilities as may be needed to accommodate local buyer tastes, cultural traditions, and market conditions.

Accepted Answer

Option D is incorrect because it characterizes a global strategy as striving for low-cost production while a multidomestic strategy is characterized as aiming for product differentiation. In reality, both strategies can pursue these goals. The other options accurately characterize the differences between a localized multidomestic strategy and a global strategy.

Question 8

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 is a good way for companies to develop broader or deeper competencies and competitive capabilities that can become a strong basis for sustainable competitive advantage. This can be achieved through both global and multidomestic strategies. However, it requires careful consideration of the differences in the new market and adaptation of the strategy accordingly. Simply transferring competencies and resources without modification is unlikely to result in competitive advantage.

Question 9

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

Accepted Answer

Profit sanctuaries refer to geographic regions or country markets where a company derives substantial profits due to its protected market position or unassailable competitive advantage. Option A refers to competitive advantage opportunities, option B describes strategic fit, option D refers to a loss of competitive advantage, and option E describes reinvestment of dividends in foreign markets - none of which directly relate to the concept of profit sanctuaries.

Question 10

Which of the following is not a typical option that companies have to consider to tailor their strategy to fit the circumstances of emerging country markets?
A) Prepare to compete on the basis of low price
B) Be prepared to modify aspects of the company's business model to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding)
C) Try to change the local market to better match the way the company does business elsewhere
D) Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly
E) Stay away from those emerging markets where it is impractical or uneconomic to modify the company's business model to accommodate local circumstances

Accepted Answer

Developing a strategy for the short-term and forgetting about the long-term is not a typical option for companies to tailor their strategy to fit the circumstances of emerging country markets. In fact, companies need to have a long-term perspective while developing their strategy even in emerging markets.

Question 11

One of the most viable strategic options companies should consider in tailoring their strategy to fit circumstances of emerging country markets include
A) Try to change the local market to better match the way the company does business elsewhere
B) Be prepared to modify aspects of the company's business model to accommodate local circumstances
C) Prepare to compete on the basis of low price
D) Stay away from those emerging markets where it is impractical to modify the company's business model to accommodate local circumstances
E) All of these

Accepted Answer

The answer of One of the most viable strategic options...

Question 12

What supports competitive offensives in one market with resources and profits diverted from operations in another market?
A) Cross-market subsidization.
B) Foreign market strategy.
C) Domestic-only company.
D) Home market offensive.
E) Multidomestic company.

Accepted Answer

Cross-market subsidization refers to the strategy of using profits and resources from one market to support competitive offensives in another market. This can give a company an advantage over competitors who are not able to benefit from such resources and profits.

Question 13

In competing in foreign markets,companies find it advantageous to concentrate their activities in a limited number of locations 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) All of these.

Accepted Answer

All of the choices listed are reasons why companies find it advantageous to concentrate their activities in a limited number of locations when competing in foreign markets. Significant scale economies, lower costs, steep learning or experience curves, superior resources, and better coordination of related activities are all factors that can lead to greater efficiency and profitability for companies operating in foreign markets. Therefore, the best choice is E.

Question 14

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) All of these.

Accepted Answer

Companies that compete on an international basis have the advantage of coordinating activities across different countries' domains, which can lead to economies of scale, learning, and sharing of best practices. This advantage is not solely for the benefit of their shareholders, nor does it guarantee big profits or returns on investment. Developing sufficient resource strengths and competitive capabilities for success is necessary but not unique to competing internationally.

Question 15

To use location to build competitive advantage,a company that operates multinationally 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 (1) whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and (2) 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 a single country-the one 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 which activities to perform in which countries based on factors such as resource availability, cost structure, and regulatory environment. This involves deciding whether to concentrate activities in a few countries or disperse them across many nations, and which countries to locate particular activities in. This approach is known as a multinational or global strategy, which differs from an export or franchising strategy (choice A), scattering production plants to minimize transportation costs (choice B), locating plants in countries with local suppliers to avoid inbound shipping costs (choice D), or concentrating all activities in a single country based on low wage rates, shipping costs, and tax rates (choice E).

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
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) All of these.

Accepted Answer

All of the listed reasons are advantages of dispersing value chain activities to many different countries, making it the best choice. Higher transportation costs, the need for proximity to buyers, and diseconomies of large scale can all be addressed by spreading activities out. Additionally, dispersing activities can hedge against risks such as fluctuations in exchange rates, supply interruptions, or adverse political developments.

Question 17

What can happen when international rivals compete against one another in multiple-country markets?
A) Businesses create attractive industries which would have badly deteriorated.
B) Would create a business line up that consists of too many slow-growth, declining, low-margin, or competitively weak businesses.
C) A greater diversity in the types of value chain activities between each business.
D) The deterrence effect that restrains them from taking aggressive action against one another due to the fear of a retaliatory response that might escalate the battle into a cross-border competitive war.
E) Increased shareholder interests by concentrating corporate resources on foreign business activities to contend for market leadership.

Accepted Answer

When international rivals compete against one another in multiple-country markets, the deterrence effect can occur. Companies may be restrained from taking aggressive action against each other for fear of retaliation, which could escalate the competition into a cross-border competitive war. This can help to maintain a certain level of stability and avoid excessive aggression in the market.

Question 18

Companies racing for global market leadership
A) generally have to consider establishing competitive positions in the markets of emerging countries.
B) are well-advised to avoid all the risks and problems of competing in emerging country markets.
C) seldom have the resource capabilities it takes to be effective in competing in emerging country markets and usually are at a strong competitive disadvantage to the domestic market leaders.
D) can usually be expected to earn sizable profits quickly in emerging country markets.
E) usually encounter very low barriers in entering the markets of emerging countries.

Accepted Answer

Companies racing for global market leadership need to establish competitive positions in the markets of emerging countries as these markets offer significant growth opportunities. However, they need to be aware of the risks and challenges of operating in emerging markets such as political instability, weak infrastructure, and regulatory hurdles. Companies also need to have the resource capabilities and local knowledge to be effective competitors in these markets.

Question 19

Dispersing particular value chain activities across many countries rather than concentrating them in a select few countries can be more advantageous 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) All of these.

Accepted Answer

Dispersing particular value chain activities across many countries can be advantageous in all of the scenarios described in the options, including when buyer-related activities need to take place close to buyers, buyers demand short delivery times and/or high transportation costs make it uneconomical to operate from one or just a few locations, it helps hedge against the risks of exchange rate fluctuations, supply disruptions, and adverse political developments, and when there are diseconomies of scale in trying to operate from a single location. Therefore, the best choice is E, all of these.

Question 20

In expanding outside its domestic market,one way a company can strive to gain competitive advantage (or offset domestic disadvantages)is by
A) using a differentiation-based competitive strategy in those country markets with superior resources.
B) deliberately 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) using location in a manner that lowers costs or else helps achieve greater product differentiation and allowing for the transfer of competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets.
E) employing a multidomestic strategy instead of a global strategy.

Accepted Answer

By using location in a manner that lowers costs or achieves greater product differentiation, a company can gain a competitive advantage in foreign markets. This can also allow for the transfer of valuable competencies and capabilities from domestic operations to foreign operations, further enhancing the company's competitive position. Export strategies (C) may not be viable in all cases, and deliberately choosing not to compete in certain countries (B) may limit potential growth opportunities. While differentiation-based competitive strategies (A) can be effective, they may not always be feasible or sufficient on their own. Multidomestic strategies (E) may also limit a company's ability to fully leverage its resources and capabilities across different markets.

Quiz 7: Strategies for Competing in International Markets

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

Which one of the following is not one of the ways a company can strive to gain competitive advantage (or offset domestic disadvantages) by expanding into foreign markets?

In which of the following circumstances is it not advantageous for a multinational competitor to concentrate its activities in a limited number of locations in order to build competitive advantage?

To use location to build competitive advantage when competing in both domestic and foreign markets,a company must

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

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

Which of the following does not accurately characterize the differences between a localized multidomestic strategy and a global strategy?

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

Profit sanctuaries are country markets or geographic regions whereby

Which of the following is not a typical option that companies have to consider to tailor their strategy to fit the circumstances of emerging country markets?

One of the most viable strategic options companies should consider in tailoring their strategy to fit circumstances of emerging country markets include

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

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

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

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

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

What can happen when international rivals compete against one another in multiple-country markets?

Companies racing for global market leadership

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

In expanding outside its domestic market,one way a company can strive to gain competitive advantage (or offset domestic disadvantages) is by