Question 1

A firm that realizes location economies by dispersing each of its value creation activities to its optimal location should have a comparative advantage vis-à-vis a firm that bases all of its value creation activities at a single location.

Accepted Answer

The answer of A firm that realizes location economies by...

Question 2

A business strategy that seeks experience-based economies and location economies,transfers distinctive competencies within the firm,and pays attention to pressures for local responsiveness is a transnational strategy.

Accepted Answer

A transnational strategy involves seeking experience-based economies and location economies, transferring distinctive competencies within the firm, and paying attention to pressures for local responsiveness.

Question 3

Strategy is often concerned with identifying and taking actions that will lower the costs of value creation and will differentiate the firm's product offering through superior design,quality,service,and functionality.

Accepted Answer

This statement is true. Strategy involves finding ways to reduce costs while also differentiating the company from its competitors through various means such as better product design, higher quality, superior customer service, and more advanced functionality.

Question 4

Firms pursuing a multidomestic strategy orient themselves toward achieving maximum local responsiveness.

Accepted Answer

A multidomestic strategy aims to tailor products or services to individual countries or regions to achieve maximum local responsiveness.

Question 5

Firms that compete in the global markets typically face two types of competitive pressure: to be globally responsive and pressures for cost reductions.

Accepted Answer

The answer of Firms that compete in the global markets...

Question 6

Firms that operate internationally are able to reduce the costs of value creation because they realize greater cost economies from experience effects by serving an expanded global market from a central location.

Accepted Answer

By serving an expanded global market from a central location, firms can reduce costs through economies of scale and experience effects such as better production techniques, improved supply chain management, and increased efficiency in logistics and distribution. This can lead to lower production costs and increased competitiveness in the international market.

Question 7

Due to organizational problems,a transnational strategy is difficult to implement.

Accepted Answer

A transnational strategy involves coordination and integration of activities across different countries, which requires a high level of organizational alignment and communication. If the organization has significant problems in these areas, implementing a transnational strategy would be challenging.

Question 8

According to Theodore Levitt,consumer demands for local customization are on the increase worldwide.

Accepted Answer

Theodore Levitt argued that technology has led to the globalization of markets, where consumer preferences converge on a global scale, reducing the demand for local customization.

Question 9

A firm increases its cost of creating value when it moves down the experience curve.

Accepted Answer

Moving down the experience curve means that the firm has gained more experience and expertise in producing its goods or services, which should lead to lower costs of creating value. Therefore, the statement is false.

Question 10

A transnational strategy makes sense when a firm faces low pressures for cost reductions and low pressures for local responsiveness.

Accepted Answer

A transnational strategy is most effective when a firm faces high pressures for cost reductions and high pressures for local responsiveness, allowing it to leverage global efficiencies while being adaptable to local markets.

Question 11

A multidomestic strategy makes most sense when there are low pressures for local responsiveness and high pressures for cost reductions.

Accepted Answer

A multidomestic strategy makes most sense when there are high pressures for local responsiveness, meaning that companies need to adapt their products or services to meet local preferences and cultures. This often results in higher costs due to the need to establish local operations and supply chains. Therefore, a multidomestic strategy typically prioritizes local adaptation over cost reductions.

Question 12

The reduction in unit costs achieved by producing a large volume of a product is referred to as economies of scale.

Accepted Answer

Economies of scale refer to the reduction in unit costs achieved through producing a large volume of a product. This is because fixed costs can be spread over a larger number of units, resulting in lower average costs per unit.

Question 13

The system curve refers to systematic reductions in production costs that have been observed to occur over the life of a product.

Accepted Answer

The system curve actually refers to the relationship between the head (pressure) and flow rate of a pumping system. It is not related to reductions in production costs over the life of a product.

Question 14

Skills within the firm that competitors can easily match or imitate are called core competence.

Accepted Answer

Skills within the firm that competitors can easily match or imitate are not considered core competencies. Core competencies are unique strengths or strategic advantages that competitors cannot easily replicate.

Question 15

In selecting a partner it is important to look for a partner who has capabilities that the firm lacks.

Accepted Answer

It is important for a firm to select a partner who can complement their own capabilities and fill any gaps or weaknesses in their business. This can lead to a stronger and more successful partnership.

Question 16

When there are differences in infrastructure and/or traditional practices between countries,pressures for local responsiveness emerge.

Accepted Answer

When there are differences in infrastructure and traditional practices between countries, it can create challenges for businesses to implement standardized processes across different markets. As a result, there may be pressures for companies to adapt their strategies to meet the unique needs of each local market. These pressures for local responsiveness can be driven by factors such as regulations, cultural differences, and consumer preferences.

Question 17

The experience curve refers to the systematic reductions in production costs that have been observed to occur over the life of a product.

Accepted Answer

The experience curve theory describes the relationship between the cumulative volume of production and the average cost per unit. As production volumes increase, economies of scale, learning effects, and other factors can all contribute to a decrease in unit costs.

Question 18

To get down the experience curve rapidly,a firm may need to price and market aggressively so demand will expand rapidly.

Accepted Answer

Pricing and marketing aggressively can help the firm to gain more customers and increase demand for their product, which in turn can help them move down the experience curve more rapidly.

Question 19

Labour relations increase over time as individuals learn the most efficient ways to perform particular tasks.

Accepted Answer

Labour relations refer to the overall relationship between management and employees, including negotiations, collective bargaining, and workplace conflict resolution, rather than the efficiency of performing tasks, which relates more to skill development and productivity.

Question 20

Locating a value creation activity in the optimal location for that activity can lower the costs of value creation and help the firm to achieve a low cost position,and/or enable a firm to differentiate its product offering from the offerings of competitors.

Accepted Answer

Locating value creation activities in an optimal location can reduce costs and support a low-cost strategy or differentiation strategy.

Quiz 11: Global Strategy