Question 1

Which of the following entry modes do most manufacturing companies use to begin global expansion?

Accepted Answer

Most manufacturing companies begin global expansion as exporters and later switch to one of the other modes for serving an overseas market.The advantages of exporting are that it (1)provides scale economies by avoiding the costs of manufacturing in other countries and (2)is consistent with a pure global strategy.

Question 2

Exporting,licensing,franchising,joint ventures,and wholly owned subsidiaries are all methods of:

Accepted Answer

When considering global expansion,international managers must decide on the best means of entering an overseas market.The five basic ways to expand overseas are exporting,licensing,franchising,entering into a joint venture with a host-country company,and setting up a wholly owned subsidiary in the host country.

Question 3

A disadvantage of exporting is that:

Accepted Answer

Exporting has a number of drawbacks,including higher domestic production costs,high transportation costs,and potential tariff barriers.

Question 4

A disadvantage of the global model is that:

Accepted Answer

Because a company pursuing a purely global approach tries to standardize its goods and services,it may be less responsive to consumer tastes and demands in different countries.

Question 5

An organizational model that consists of a company's overseas subsidiaries and is characterized by centralized decision making and tight control by the parent company over most aspects of worldwide operations is known as the:

Accepted Answer

The global model is an organizational model consisting of a company's overseas subsidiaries and characterized by centralized decision making and tight control by the parent company over most aspects of worldwide operations.It is typically adopted by organizations that base their global competitive strategy on cost considerations.

Question 6

Road Rage is a sports goods manufacturing company based and founded in Plutonia.The company operates a subsidiary in Bradford,marketing products that are customized to appeal to the people of Bradford.In this case,Road Rage is following the _____ model.

Accepted Answer

The multinational model,sometimes referred to as multidomestic,uses subsidiaries in each country in which the company does business and provides a great deal of discretion to those subsidiaries to respond to local conditions.Because of this autonomy,each multinational subsidiary can customize its products and strategies according to the tastes and preferences of local consumers.

Question 7

Which of the following is true of the global model?

Accepted Answer

The global model has been adopted by companies that view the world as one market and assume that no tangible differences exist among countries with regard to consumer tastes and preferences.A company pursuing a purely global approach tries to standardize its goods and services and it may be less responsive to consumer tastes and demands in different countries.

Question 8

The _____ organizational model is designed to enable a company to market a standardized product in the worldwide marketplace and to manufacture that product in a limited number of locations where the mix of costs and skills is most favorable.

Accepted Answer

The global model is designed to enable a company to market a standardized product in the global marketplace and to manufacture that product in a limited number of locations where the mix of costs and skills is most favorable.

Question 9

In companies that adopt the _____ model of organizational structure,functions are centralized where it makes sense to do so,but a great deal of decision making also takes place at the local level.

Accepted Answer

In companies that adopt the transnational model,functions are centralized where it makes sense to do so,but a great deal of decision making also takes place at the local level.

Question 10

Candace Apparel,a women's clothing manufacturer,assumes that people all over the world will view and use its products in the same way.Therefore it produces standardized versions of its apparel in several countries with attractive labor rates,and offers them to all of its international markets.Candace Apparel uses the _____ model of international competition.

Accepted Answer

The global model is designed to enable a company to market a standardized product in the global marketplace and to manufacture that product in a limited number of locations where the mix of costs and skills is most favorable.The global model has been adopted by companies that view the world as one market and assume that no tangible differences exist among countries with regard to consumer tastes and preferences.

Question 11

Which of the following is an advantage of a multinational model?

Accepted Answer

Each multinational subsidiary can customize its products and strategies according to the tastes and preferences of local consumers.A major disadvantage of the multinational form is higher manufacturing costs and duplication of effort.

Question 12

The two strategic models that have relatively high manufacturing costs are:

Accepted Answer

One disadvantage of the international model is that it frequently does not provide the opportunity to achieve a low-cost position via scale economies.One disadvantage of the multinational form is higher manufacturing costs and duplication of effort.

Question 13

The organizational model that enables managers to "think globally but act locally" is known as the:

Accepted Answer

The transnational model is designed to help managers to simultaneously pursue local responsiveness,transfer of know-how,and cost economies.It is an approach that enables managers to "think globally but act locally."

Question 14

In order to achieve cost economies,Apex Manufacturing bases its production plants in Mexico and gets its engineering services from skilled workers in Germany.In this case,Apex is using the _____ model of organizational structure.

Accepted Answer

To achieve cost economies with a transnational model,companies may base global-scale production plants for labor-intensive products in low-wage countries such as China and production plants that require a skilled workforce in high-skill countries such as Germany and Japan.

Question 15

A disadvantage of a multinational model is that it:

Accepted Answer

Because a multinational approach tends to decentralize strategy decisions,launching coordinated global attacks against competitors is difficult.This can be a significant disadvantage when competitors have this ability.

Question 16

Which of the following models of organization structure depends most heavily on communication and coordination between subsidiaries?

Accepted Answer

The most important distinguishing characteristic of the transnational organization is the fostering of communications among subsidiaries and the ability to integrate the efforts of subsidiaries when doing so makes sense.

Question 17

_____ is an arrangement by which an organization in another country buys the rights to manufacture a company's product in its own country for a negotiated fee.

Accepted Answer

International licensing is an arrangement by which a licensee in another country buys the rights to manufacture a company's product in its own country for a negotiated fee (typically royalty payments on the number of units sold).The licensee then puts up most of the capital necessary to get the overseas operation going.

Question 18

Which of the following companies is an example of a transnational company?

Accepted Answer

Panasonic's experience in China has made it more of a transnational company.Panasonic,a Japanese company,initially saw China primarily as a low-cost site for manufacturing its home appliances.

Question 19

An advantage of exporting as a global expansion entry mode is that:

Accepted Answer

The advantages of exporting are that it (1)provides scale economies by avoiding the costs of manufacturing in other countries and (2)is consistent with a pure global strategy.

Question 20

Which of the following is true of the transnational model?

Accepted Answer