Question 1

In a global strategy a firm operates all its businesses under a single common strategy regardless of location.

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Question 2

Explain how the two opposing forces facing MNC managers,cost reduction and local adaptation,create pressures to operate with a global or multidomestic strategy,respectively.

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Question 3

Within a worldwide market,the most effective strategies are neither purely multidomestic nor purely global.

Accepted Answer

In a worldwide market, the most effective strategies are a combination of both multidomestic and global strategies. This approach, known as a transnational strategy, allows companies to tailor their products and services to local markets while also standardizing certain aspects across different regions for cost efficiency and consistency.

Question 4

To address the challenges of a multidomestic strategy,Maple Leaf Foods customizes its prepared meats to meet local tastes.

Accepted Answer

Maple Leaf Foods does indeed customize its prepared meats to meet local tastes as part of its multidomestic strategy.

Question 5

Dispersion of value chains across different countries mainly occurs through offshoring and outsourcing.

Accepted Answer

Offshoring and outsourcing involve companies relocating certain business operations, such as manufacturing or customer service, to other countries where costs are lower or expertise is more readily available. This can result in the dispersion of value chains across multiple countries.

Question 6

Canadian steel company Dofasco looked at cultural challenges in expanding and decided to stick to its famous motto: "our strength is people."

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Question 7

The need to attain economies of scale encourages multinational firms to operate under a multidomestic strategy.

Accepted Answer

The need to attain economies of scale encourages multinational firms to operate under a global or transnational strategy, as these strategies allow for greater cost efficiency and the leveraging of resources across international markets. The multidomestic strategy, in contrast, focuses on customizing products and marketing strategies to meet the needs of specific local markets, which may not always result in the same economies of scale.

Question 8

Summarize the most important benefits and risks associated with diversification into global markets.

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Question 9

Multinational firms following a transnational strategy strive to optimize the trade-offs associated with efficiency,local adaptation,and learning.

Accepted Answer

Multinational firms following a transnational strategy do strive to optimize the trade-offs associated with efficiency, local adaptation, and learning.

Question 10

Typically,the best method of entry into a foreign market is the establishment of a wholly owned foreign subsidiary so that the parent organization can maintain a high level of control.

Accepted Answer

The best method of entry into a foreign market varies depending on several factors such as the company's resources, market conditions, and strategic objectives. While establishing a wholly owned foreign subsidiary offers high control, it also involves high risk and investment. Other methods like exporting, licensing, franchising, or forming joint ventures might be more suitable depending on the situation.

Question 11

A multidomestic strategy would likely include the use of high volume,centralized production facilities to maximize economies of scale.

Accepted Answer

A multidomestic strategy focuses on catering to the specific needs and preferences of each local market. Therefore, it would require decentralized production facilities that can adapt to local tastes, regulations, and cultural factors. High volume, centralized production facilities would not be suitable for this approach as they prioritize consistency and efficiency over customization.

Question 12

Corporations with multiple foreign operations that act very independently of one another are following a multidomestic strategy.

Accepted Answer

A multidomestic strategy involves adapting products and services to meet the unique cultural, legal, and economic factors in each country where a company operates. This often leads to high autonomy for each foreign operation, and a focus on local responsiveness rather than global integration.

Question 13

Among Theodore Levitt's assumptions that would favour a global strategy is that consumers around the world are becoming less price-sensitive.

Accepted Answer

Theodore Levitt argued that technology has led to a convergence of tastes and preferences among consumers worldwide, making them more open to standardized products, rather than suggesting they are becoming less price-sensitive.

Question 14

Explain Michael Porter's "diamond of national advantage."

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Question 15

A key tenet of a transnational strategy is improved adaptation to all competitive situations as well as flexibility by capitalizing on communication and knowledge flows throughout the organization.

Accepted Answer

A transnational strategy involves leveraging communication and knowledge flows throughout the organization in order to better adapt and be flexible in all competitive situations. Therefore, the statement is true.

Question 16

Industries in which proportionally more value is added in upstream activities are more likely to benefit from a global strategy than those in which more value is added downstream (closer to the customer).

Accepted Answer

This is because industries with more value added in upstream activities, such as raw material extraction and processing, can achieve economies of scale and scope by purchasing inputs globally and coordinating production activities across multiple locations. In contrast, industries with more value added downstream, such as distribution and marketing, typically require a more localized strategy to meet the needs and preferences of local customers.

Question 17

Two opposing pressures that managers face when they compete in foreign markets are: cost reduction and adaptation to local markets.

Accepted Answer

Managers often face the pressure to reduce costs as they compete in foreign markets, but they also need to adapt to local markets by customizing their products or services to meet the needs and preferences of local customers. These two pressures can create tension and challenges for managers in multinational corporations.

Question 18

Discuss why international expansion is a viable diversification strategy that is being pursued by many firms.

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Question 19

According to the text,Canadian firms around the world were targets of animal rights groups who did not approve of seal hunting in Newfoundland.

Accepted Answer

The text states that animal rights groups targeted Canadian firms around the world who were involved in seal hunting in Newfoundland.

Question 20

A multidomestic strategy is the most appropriate strategy for international operations because it drives economies of scale as far as possible and provides a middle of the road product appealing to the largest number of consumers in every market.

Accepted Answer

A multidomestic strategy focuses on tailoring products and operations to individual markets rather than driving economies of scale. It is not designed to appeal to the largest number of consumers in every market, but rather to meet the unique demands of each market.

Quiz 7: International Strategy: Creating Value in Global Markets