Question 1

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

If a company has competitively superior patented technology that it can license to foreign partners, then it may be advantageous to disperse its activities in different locations to maximize profits from licensing its technology. Concentrating activities in a limited number of locations may make it easier for competitors to imitate the technology and reduce the value of licensing opportunities.

Question 2

When is a global strategy "superior" to a multidomestic strategy?

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Question 3

Explain what circumstances make it necessary for a multinational company to concentrate internal processes in a few locations.

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Question 4

Under what circumstances is it advantageous for a company competing in foreign markets to disperse certain internal processes across many countries?

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Question 5

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

In order to achieve global market leadership, companies must consider establishing a competitive position in the markets of emerging countries. These markets present significant growth opportunities and can contribute significantly to a company's overall success. However, companies must also navigate the unique challenges and risks associated with operating in these markets.

Question 6

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 short-term strategy and ignoring long-term planning is not a typical option for companies to consider. Companies need to have a long-term plan to achieve sustained success in emerging country markets despite the rapidly changing conditions. The other options listed (A, B, C, and E) are all common strategies that companies adopt to tailor their approach to emerging market conditions.

Question 7

Cross-border coordination contributes to a competitive advantage for a global competitor by
A) allowing production to be shifted from country to country to take advantage of exchange rate fluctuations,energy costs,wage rates,or changes in tariffs and quotas.
B) allowing knowledge gained in one location to be transferred to operations in other countries.
C) shifting workloads from where they are unusually heavy to locations were personnel are underutilized.
D) accelerating product development and enhancing innovation by globally linking and coordinating the scattered R&D departments of a multinational company.
E) All of these.

Accepted Answer

All of the options listed contribute to a competitive advantage for a global competitor. Cross-border coordination allows for greater flexibility in responding to market conditions, sharing knowledge and resources, optimizing production and distribution, and stimulating innovation. By combining the strengths of different regions and markets, multinational companies can achieve economies of scale, reduce costs, and enhance their overall competitiveness.

Question 8

What circumstances call for use of a multidomestic strategy for competing in international markets?

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Question 9

What are the primary country differences that shape strategy choices in international markets?

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Question 10

A global strategy embraces the theme "think global,act global" whereas a multidomestic strategy relies more on a "think global,act local" mentality.True or false? Explain.

Accepted Answer

A global strategy indeed embraces the theme of "think global, act global." This approach involves a company applying the same business strategy across all countries in which it operates. The idea is to standardize products, services, and even marketing to achieve economies of scale and present a consistent brand image worldwide. Companies that employ a global strategy prioritize efficiency and integration across their operations, often centralizing decision-making at the headquarters.
On the other hand, a multidomestic strategy aligns more closely with the theme of "think local, act local." This strategy is characterized by a company tailoring its approach to fit the needs, tastes, and preferences of local markets. Businesses that adopt a multidomestic strategy often have decentralized decision-making, allowing local subsidiaries significant autonomy to develop products, services, and marketing campaigns that resonate with the local culture and consumer base. The emphasis is on differentiation and responsiveness to local market conditions rather than standardization.
Therefore, the correct themes for these strategies are:
- Global strategy: "Think global, act global."
- Multidomestic strategy: "Think local, act local."
The phrase "think global, act local" is often associated with transnational or international strategies, where a company seeks to combine the benefits of global coordination with the flexibility to adapt to local markets. However, this is not typically used to describe a multidomestic strategy.

Question 11

Explain the differences between a "think global,act global" strategy and a "think global,act local" strategy.

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Question 12

Briefly identify the major reasons a company may choose to expand outside its domestic market.

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Question 13

Discuss in some detail the difference between a localized multidomestic strategy and a global strategy and give the pros and cons of each.

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Question 14

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 (such risks are greater when activities are concentrated in a single location)or (2)supply interruptions (due to strikes,mechanical failures,or transportation delays)or (3)adverse political developments.
E) All of these.

Accepted Answer

All of the aforementioned factors can be advantages for dispersing the performance of value chain activities to multiple locations, including high transportation costs, buyer proximity, diseconomies of large size, and risk mitigation measures such as exchange rate fluctuations, supply interruptions, and political instability.

Question 15

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) 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

All of the given options are valid reasons for dispersing particular value chain activities across many countries rather than concentrating them in select few countries. For example, dispersing buyer-related activities across many countries can help to be closer to the customers, while dispersing production activities across many countries can help to hedge against risks due to exchange rate fluctuations, supply disruptions, and adverse political developments. Similarly, dispersing logistics and distribution activities across many countries can help to reduce transportation costs and avoid diseconomies of scale. Therefore, the best choice is E.

Question 16

What are the possible benefits and risks of using strategic alliances to try to enhance a company's ability to compete in foreign markets?

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Question 17

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

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Question 18

The ability of a multinational or global competitor to shift production from country to country to take advantage of exchange rate fluctuations,energy costs,wage rates,or changes in tariffs is an example of
A) a profit sanctuary.
B) cross-border coordination.
C) an international strategic alliance.
D) cross-market subsidization.
E) cross-market differences in cultural,demographic,and market conditions.

Accepted Answer

The ability to shift production from country to country to take advantage of various factors is an example of cross-border coordination, which allows multinational companies to optimize their operations across borders. The other choices do not accurately describe this phenomenon.

Quiz 7: Strategies for Competing in International 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?

When is a global strategy "superior" to a multidomestic strategy?

Explain what circumstances make it necessary for a multinational company to concentrate internal processes in a few locations.

Under what circumstances is it advantageous for a company competing in foreign markets to disperse certain internal processes across many countries?

Companies racing for global market leadership

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?

Cross-border coordination contributes to a competitive advantage for a global competitor by

What circumstances call for use of a multidomestic strategy for competing in international markets?

What are the primary country differences that shape strategy choices in international markets?

A global strategy embraces the theme "think global,act global" whereas a multidomestic strategy relies more on a "think global,act local" mentality.True or false? Explain.

Explain the differences between a "think global,act global" strategy and a "think global,act local" strategy.

Briefly identify the major reasons a company may choose to expand outside its domestic market.

Discuss in some detail the difference between a localized multidomestic strategy and a global strategy and give the pros and cons of each.

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

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

What are the possible benefits and risks of using strategic alliances to try to enhance a company's ability to compete in foreign markets?

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

The ability of a multinational or global competitor to shift production from country to country to take advantage of exchange rate fluctuations,energy costs,wage rates,or changes in tariffs is an example of