Q&A Hero

Q: What are the incentives for firms to use international strategies? What are the three basic benefits firms can derive by moving into international markets?

Q: Discuss the three international corporate-level strategies. On what factors are these strategies based?

Q: All of the following complicate the implementation of an international diversification strategy EXCEPT: a. widespread multilingualism. b. increased costs of coordination between business units. c. cultural diversity. d. logistical costs.

Q: Firms with core competencies that can be exploited across international markets are able to: a. achieve synergies and produce high-quality goods at lower costs. b. enter new markets more quickly. c. enhance their market image and brand loyalty among local consumers. d. meet local government requirements more quickly than their international competitors.

Q: Raymond Vernon states that the classic rationale for international diversification is to: a. pre-emptively dominate world markets before foreign companies can establish dominance. b. avoid domestic governmental regulation. c. extend the product's life cycle. d. avoid international governmental regulation.

Q: The increased pressures for global integration of operations have been driven mostly by: a. new low-cost entrants. b. increasing demand for similar products. c. increased levels of joint ventures. d. the rise of governmental regulation.

Q: Bunyan Heavy Equipment, a U.S. firm, is investigating expanding into Russia using a greenfield venture. The committee researching this project has delivered a negative report. The MAIN concern of the committee is probably: a. loss of intellectual property due to Russian piracy. b. the fluctuation in the value of the ruble. c. the numerous and conflicting legal authorities in Russia. d. Russia's recent actions to gain state control of private firms' assets.

Q: Which of the following is an advantage associated with greenfield ventures? a. Governmental support and subsidies in the host country b. The lower cost of this type of venture c. The level of control over the firm's operations d. The lower level of risks involved

Q: If intellectual property rights in an emerging economy are not well-protected, the number of firms in the industry is rapidly growing, and the need for global integration is high, ____ is the preferred entry mode. a. exporting b. strategic alliance c. a joint venture or wholly owned subsidiary d. licensing

Q: The positive results associated with increasing international diversification have been shown to: a. continue as the level of international diversification increases. b. level off and become negative as diversification increases past some point. c. become negative quickly. d. be centered in only one or two industries.

Q: Increasingly, customers worldwide are demanding emphasis on local requirements and companies require efficiency as global competition increases. This has triggered an increase in the number of firms using the ____ strategy. a. multi-domestic b. transnational c. universal d. global

Q: A licensing agreement: a. results in two firms agreeing to share the risks and the resources of a new venture. b. is best way to protect proprietary technology from future competitors. c. allows a foreign firm to purchase the rights to manufacture and sell a firm's products within a host country. d. can be greatly impacted by currency exchange rate fluctuations.

Q: All of the following are reasons why firms use international strategic alliances EXCEPT: a. sharing of risks and resources. b. alliances facilitate the development of new capabilities. c. learning new competencies particularly those related to technology. d. strategic alliances are easy to manage.

Q: Japan, due to a lack of undeveloped land, would be an unusual choice of location for a U.S. cattle company to set up local grazing operations. This limiting factor would be identified in what part of Porter's determinants of national advantage? a. Factors of production b. Demand conditions c. Related and supporting industries d. Firm strategy, structure, and rivalry

Q: If conflict in a strategic alliance or joint venture is not manageable, a(n) _______may be a better option. a. licensing strategy b. exporting strategy c. acquisition d. new wholly owned subsidiary

Q: The problems associated with exporting include: a. merging corporate cultures. b. a partner's incompatibility. c. difficulty in negotiating relationships. d. high transportation costs and the expense of tariffs.

Q: A multi-domestic corporate-level strategy is one in which: a. a corporation chooses not to compete internationally but where there are a number of international competitors in the firm's local marketplace. b. the firm produces a standardized product, but markets it differently in each country in which it competes. c. the firm customizes the product for each country in which it competes. d. the firm competes in a number of countries, but it is centrally coordinated by the home office.

Q: The transnational strategy is becoming increasingly necessary to compete in international markets for all the following reasons EXCEPT: a. the growing number of competitors heightens the requirements to keep costs down. b. the desire for specialized products to meet consumers' needs. c. differences in culture and institutional environments also require firms to adapt their products and approaches to local environments. d. it is easy to use.

Q: A U.S. manufacturer of adaptive devices for persons with disabilities is considering expanding internationally. It is a fairly small company, but it is looking for growth opportunities. This company should primarily consider the option of: a. licensing. b. exporting. c. a strategic alliance. d. a greenfield venture.

Q: Arkadelphia Polymers, Inc., earns 60 percent of its revenue from exports to Europe and Asia. The CEO of the company would be: a. concerned if the value of the dollar strengthened. b. pleased if the value of the dollar strengthened. c. unconcerned about the fluctuation in the value of the dollar because the company is widely diversified geographically. d. likely to consider moving to international strategic alliances or acquisitions if the value of the dollar fell and remained low.

Q: The two important environmental trends that influence a firm's choice and use of international corporate-level strategies are _________ and __________. a. culture; geographic scope b. cost; quality c. regionalization; globalization d. liability of foreignness; regionalization

Q: Which of the following is NOT a typical disadvantage of licensing? a. Little control over the marketing of the products b. Licensees may develop a competitive product after the license expires c. Lower potential returns than the use of exporting or strategic alliances d. Incompatibility of the licensing partners

Q: The location advantages associated with locating facilities in other countries can include all of the following EXCEPT: a. low-cost labor. b. access to critical supplies. c. access to customers. d. evasion of host country governmental regulations.

Q: Which of the following is NOT a factor pressuring companies for local responsiveness? a. Differences in employment laws b. Customization due to cultural differences c. Government pressure for firms to use local sources for procurement d. Availability of low labor costs

Q: Effectively implementing the ________ international corporate-level strategy often produces higher performance than does implementing either the _______ or _________ strategies. a. multi-domestic; global; transnational b. global; multi-domestic; transnational c. cost leadership; differentation; focus d. transnational; multi-domestic; global

Q: When a firm INITIALLY becomes internationally diversified, its returns: a. remain stable. b. decrease. c. become more variable. d. increase.

Q: In China, Starbucks is standardizing its operations while simultaneously decentralizing some decision-making responsibility to local levels to meet customers' tastes. Starbucks is following the __________ international corporate-level strategy. a. transnational b. global c. differentiation d. multi-domestic

Q: A global corporate-level strategy emphasizes: a. differentiated products. b. economies of scale. c. sensitivity to local product preferences. d. decentralizing control and limited monitoring.

Q: A global corporate-level strategy differs from a multi-domestic corporate-level strategy in that in a global strategy: a. competitive strategy is dictated by the home office. b. competitive strategy is decentralized and controlled by individual strategic business units. c. products are customized to meet the individual needs of each country. d. the firm sells in multiple countries.

Q: A global corporate-level strategy assumes: a. efficiency and customization can be achieved simultaneously. b. a rise in income levels across the world. c. increasing levels of cultural differences among nations. d. more standardization of products across country markets.

Q: The means of entry into international markets that offers the greatest control is: a. licensing. b. acquisitions. c. joint ventures. d. greenfield ventures.

Q: A fundamental reason for a country's development of advanced and specialized factors of production is often its: ​ a. lack of basic resources. b. monetary wealth. c. small workforce. d. protective tariffs.

Q: Moving into international markets is a particularly attractive strategy to firms whose domestic markets: a. demand a differentiation strategy for success. b. are limited in opportunities for growth. c. have developed unfriendly business attitudes toward the industry. d. have too much regulation.

Q: A firm may narrow its focus to a specific region of the world: a. because that market is most different from its domestic market and so represents an unexploited "greenfield opportunity" for its products. b. in order to obtain greater economies of scale. c. so that it can better understand the cultures, legal and social norms, and other factors that are important for effective competition in those markets. d. to take advantage of limited protections of intellectual property so that it can manufacture innovative products without restrictions.

Q: Disney suffered lawsuits in France at Disneyland Paris as a result of the lack of fit between its transferred personnel policies and the French employees charged to enact them. This is an example of: a. the effects of regionalization. b. the risks of a multi-domestic strategy. c. the liability of foreignness. d. the effect of demand conditions.

Q: A large domestic market can provide the country's industries a chance at dominating the world market because: a. they have been able to develop economies of scale at home. b. they have access to abundant and inexpensive factors of production. c. the related and supporting industries will have been developed. d. the nation's culture and educational system will be adapted to producing the labor force needed for the industry.

Q: Terrorism creates an economic risk for firms, which: a. reduces the amount of investment foreign companies will make in a country perceived to be terror-prone. b. is created by governmental bans on doing business with terrorist regimes. c. is offset by the above-average returns for firms that have learned how to operate in such an environment. d. is absorbed by firms that are highly geographically diversified and that operate in both secure and insecure locations.

Q: Firms able to standardize the processes used to produce, sell, distribute, and service their products across country borders enhance their ability to: a. learn how to continuously reduce costs while increase the value of their products. b. increase investment in research and development. c. access to a low-cost labor force in the host market. d. mitigate cultural differences.

Q: Associations such as the European Union, Organization of American States, and the North American Free Trade Association, encourage: a. global strategies. b. domestication. c. regional strategies. d. nationalization.

Q: Which pair of industries would NOT be considered as "related and supporting" under Porter's diamond model? a. Japanese cameras and copiers b. Italian leather-processing and shoes c. U.S. computers and software d. highway systems and the supply of debt capital

Q: International corporate-level strategy focuses on: a. the scope of operations through both product and geographic diversification. b. competition within each country. c. economies of scale. d. sophistication of monitoring and controlling systems.

Q: U.S. cola companies entered the global market because of: a. limited growth opportunities in their domestic market. b. lower labor costs in the emerging markets. c. economies of scale that offset research and development costs. d. an increase in the return on investment from their U.S. bottling plants.

Q: One of the primary reasons for failure of cross-border strategic alliances is: a. the incompatibility of the partners. b. conflict between legal and business systems. c. security concerns and terrorism. d. high debt financing.

Q: Working in multiple international markets can provide firms with __________ perhaps even in terms of __________. a. location advantages; larger markets b. research and development activities; larger markets c. new learning opportunities; research and development activities d. economies of scale and learning; larger markets

Q: Skaredykat Inc. is considering initial expansion beyond its home market. The firm has decided not to enter markets that differ greatly from its home market, instead expanding within the twelve-nation region that includes its home country. Which one of these is true? a. The firm is not engaging in international trade. b. The firm is using a regional approach to international expansion. c. The firm will not be able understand the cultures, legal, and social norms of this market. d. Skaredykat is too afraid to implement an international strategy.

Q: Which of the following is NOT an incentive for firms to become multinational? a. To gain access to consumers in emerging markets b. To gain easier access to raw materials c. To avoid high domestic taxation on corporate income d. Opportunities to integrate operations on a global scale

Q: A multi-domestic corporate-level strategy has ____ need for global integration and ____ need for local market responsiveness. a. low; low b. low; high c. high; low d. high; high

Q: All of the following are correct about what managers should know about firms based in a country with a national competitive advantage EXCEPT: a. success is not guaranteed as the firm implements its chosen international business-level strategy. b. the actual strategic choices made are most compelling reasons for success or failure. c. success is guaranteed as the firm implements its chosen international business-level strategy. d. the determinants of national competitive advantage provide a foundation for a firm's competitive advantages.

Q: U.S. companies moving into the international market need to be sensitive to the need for local country or regional responsiveness because of: a. increasing rejection of American culture across much of the world. b. the sophistication of the international consumer because of the Internet. c. consumer needs, political and legal structures, and social norms vary by country. d. the increasing loss of economies of scale.

Q: International strategy refers to a(n): a. action plan pursued by American companies to compete against foreign companies operating in the United States. b. strategy through which the firm sells products in markets outside the firm's domestic market. c. political and economic action plan developed by businesses and governments to cope with global competition. d. strategy American firms use to dominate international markets.

Q: The decision of what entry mode to use is primarily based on all of the following factors EXCEPT: a. the industry's competitive conditions. b. the country's situation and government policies. c. the worldwide economic situation. d. the firm's unique set of resources, capabilities, and core competencies.

Q: All of the following are international corporate-level strategies EXCEPT the ____ strategy. a. multi-domestic b. universal c. global d. transnational

Q: A global strategy: a. is easy to manage because of common operating decisions across borders. b. achieves efficient operations without sharing resources across country boundaries. c. increases risk because decision making is centralized at the home office. d. lacks responsiveness to local markets.

Q: Which of the following is NOT a disadvantage associated with exporting? a. Potential loss of proprietary technologies b. High transportation costs c. Loss of control over distribution activities d. Tariffs imposed by local governments

Q: Factors of production in Porter's model of international competitive advantage include all of the following EXCEPT: a. labor. b. capital. c. infrastructure. d. technology.

Q: Which of the following is NOT a disadvantage of international acquisitions? a. They are very expensive and often require debt financing. b. The acquiring firm has to deal with the regulatory requirements of a host country. c. Merging the acquired and acquiring firm is difficult. d. It is the slowest way to enter a new market.

Q: An international diversification strategy is one in which a firm: a. expands into nearby markets. b. expands into a potentially large number of geographic locations and markets. c. expands into one or a few markets. d. acquires a firm in a foreign country.

Q: The four aspects of Porter's model of international competitive advantage include all of the following EXCEPT: a. factors of production. b. demand conditions. c. political and economic institutions. d. related and supporting industries.

Q: The benefits of expanding into international markets include each of the following opportunities EXCEPT: a. increasing the size of the firm's potential markets. b. economies of scale and learning. c. location advantages. d. favorable tax concessions and economic incentives by home-country governments.

Q: In France, fine dressmaking and tailoring have been a tradition predating Queen Marie Antoinette. Cloth manufacturers, design schools, craft apprenticeship programs, modeling agencies, and so forth, all exist to supply the clothing industry. This is an example of the ____ in Porter's model. a. strategy, structure, and rivalry among firms b. related and supporting industries c. demand conditions d. factors of production

Q: In addition to the four basic dimensions of Porter's "diamond" model, ____ may also contribute to the success or failure of firms. a. national work ethic b. educational requirements c. government policy d. national pride

Q: The choices that a firm has for entering the international market include all of the following EXCEPT: a. exporting. b. licensing. c. leasing. d. acquisition.

Q: _________ is the set of costs associated with unfamiliar operating environments; economic, administrative and cultural differences; and the challenges of coordination over distances. a. Transnational risk b. Regionalization c. Liability of foreignness d. International risk

Q: Most firms enter international markets sequentially, introducing their ____ first. a. most innovative products b. largest and strongest lines of business c. most generic products, which will be more likely to generate universal product demand, d. products customized to the region

Q: In Porter's model, if a country has both ________ and __________ production factors, it is likely to serve an industry well by spawning strong home-country competitors that can also be successful global competitors. a. basic; advanced b. advanced; generalized c. basic; generalized d. advanced; specialized

Q: Internationally diversified firms: a. earn greater returns on their innovations through larger or more numerous markets. b. are more likely to produce below-average returns for investors in the long run. c. may need to decrease international activities when domestic profits are poor. d. are generally unable to achieve high levels of synergy because of differences in cultures.

Q: The chief risks in the international environment are political and cultural. a. True b. False Indicate the answer choice that best completes the statement or answers the question.

Q: A firm based in a country with a national competitive advantage is not guaranteed success as it implements its chosen international business-level strategy. Instead, the actual strategic choices managers make may be the most compelling reasons for success or failure. a. True b. False

Q: In some industries, technology drives globalization because the economies of scale necessary to reduce costs cannot be met by competing in domestic markets alone. a. True b. False

Q: Acquisitions, greenfield ventures, and sometimes joint ventures are appropriate when firms want to establish a strong presence in an international market. a. True b. False

Q: The three basic benefits of international strategies are 1) increased market size; 2) increased economies of scale and learning; and 3) development of competitive advantages through location. a. True b. False

Q: When the country risk is high, firms prefer to enter with a greenfield investment rather than a joint venture. a. True b. False

Q: International associations such as the European Union, the Organization of American States, and the North American Free Trade Association encourage regionalization of competition rather than globalization. a. True b. False

Q: Fluctuation in the value of different currencies is a major economic risk associated with international diversification. a. True b. False

Q: Research has shown that, as international diversification increases, firms' returns decrease initially but then increase quickly as firms learn to manage international expansion. a. True b. False

Q: Having substantial supplies of critical basic natural resources is a necessary condition for a country to support businesses that can successfully compete in international markets. a. True b. False

Q: Rivals Airbus and Boeing have multiple manufacturing facilities and outsource activities partly for the purpose of developing economies of scale as a source of being able to create value for customers. a. True b. False

Q: Research suggests that wholly owned subsidiaries and expatriate staff are inappropriate for service industries because those industries require close contact with customers, high levels of professional skills, specialized know-how, and customization. a. True b. False

Q: Italy has become the leader in the shoe industry because of related and supporting industries such as a well-established leather-processing industry that provides the leather needed to construct shoes and related products. a. True b. False

Q: As an indication of the importance of economies of scale, Ford Motor Company runs a single global business developing cars and trucks that can be built and sold through the world. a. True b. False