Q&A Hero

Q: Because there are still several industrial and consumer markets in which only domestic firms compete, many firms do not have to be able to compete internationally. a. True b. False

Q: The global strategy offers greater opportunities to take innovations developed at the corporate level or in one market and apply them to other markets. a. True b. False

Q: A U.S. manufacturer of pigments for household paint that exports about 40 percent of its production to European markets will find its sales will be harmed by a weak dollar. a. True b. False

Q: The growing number of global competitors heightens the requirements to keep costs down and there is the desire for more specialized products to meet customer needs. These two pressures make transnational strategies increasingly necessary. a. True b. False

Q: A multi-domestic strategy is an international strategy in which a firm's home office determines the strategies business units are to use in each region. a. True b. False

Q: South Korea's success in international markets is primarily a result of its abundant natural resources. a. True b. False

Q: An increase in the value of the U.S. dollar is an example of an economic risk in that it can reduce the value of U.S. multinational firms' international assets and earnings in other countries. a. True b. False

Q: A reason that firms use international strategies is to secure needed resources, especially minerals and energy. a. True b. False

Q: Export, licensing, and the strategic alliance entry modes are all appropriate for early market development. a. True b. False

Q: A transnational strategy is an international strategy in which the firm seeks to achieve both global efficiency and local responsiveness. a. True b. False

Q: The amount of diversification in a firm's international operations that can be managed varies from company to company and is affected by managers' abilities to deal with ambiguity and complexity. a. True b. False

Q: Michael Porter's Determinants of National Advantage describe factors associated with the firm's domestic environment that contribute to its dominance in a particular global industry. a. True b. False

Q: Cultural differences affect location advantages in that business transactions are less difficult for a firm to complete when there is a strong match among the cultures with which the firm is involved. a. True b. False

Q: A major incentive for the use of international strategy by French-based Carrefour Group is the potential for large demand for goods and services from emerging markets such as China and India. a. True b. False

Q: Strategic alliances tend to increase the risk associated with international expansion for the U.S. partner because of the greater dependence on the foreign firm. a. True b. False

Q: Both the size and the nature of a country's domestic demand for a particular industry's good or service are important in Porter's determinants of national advantage. a. True b. False

Q: Location advantages are influenced by costs of production, access to natural resources and critical supplies, as well as the needs of customers, but not culture. a. True b. False

Q: International diversification is a strategy through which a firm expands the sale of its goods and services across borders of global regions and countries into a potentially large number of geographic locations of markets. Instead of entering one or a few markets, international diversification means that the firm enters multiple markets. a. True b. False

Q: Even if effectively implemented, the transnational strategy often produces lower performance than does the implementation of either the multi-domestic or global strategies. a. True b. False

Q: In place of relatively stable and predictable domestic markets, firms across the globe find that they are competing in relatively unstable and unpredictable global markets. a. True b. False

Q: A major advantage of multi-domestic strategies is the ability to customize products and services for the specific market, although this sacrifices economies of scale. a. True b. False

Q: The greenfield venture option is useful when control of proprietary technology is important in an international expansion. a. True b. False

Q: A company that chooses a truly global corporate-level strategy assumes that the liability of foreignness will be minimal. a. True b. False

Q: Research suggests that the performance of the global strategy is enhanced if it deploys in areas where regional integration across countries is occurring. a. True b. False

Q: Four types of distances are associated with the liability of foreignness: cultural, administrative, geographic, and economic. a. True b. False

Q: Establishing a wholly-owned subsidiary provides the quickest access to a new market. a. True b. False

Q: Multinational firms have many opportunities to learn from their experiences in international markets, but they must have a strong R&D system to absorb the knowledge. a. True b. False

Q: After a firm decides to compete internationally, it must select its strategy and choose a mode of entry into international markets. a. True b. False

Q: Because of the lack of protection of intellectual property in some foreign countries, licensing arrangements are one of the best ways for a firm to protect its technology from being appropriated by potential competitors. a. True b. False

Q: Although licensing is the least costly method to enter a foreign market, its disadvantages include high costs of transportation and low control over the marketing and distribution of goods. a. True b. False

Q: International diversification can help to reduce a firm's overall risk through the stabilization of returns. a. True b. False

Q: The high cost of transportation, expense of tariffs, and loss of control are three disadvantages of exporting. a. True b. False

Q: Some of the costs incurred by firms pursuing international diversification may derive from higher coordination expenses, trade barriers, and lack of familiarity with local cultures. a. True b. False

Q: When a firm initially pursues an international business-level strategy, the resources and capabilities established in the home country frequently allow the firm to pursue the strategy into markets located in other countries. a. True b. False

Q: A transnational strategy is difficult to use because of its conflicting goals. a. True b. False

Q: Coca Cola and PepsiCo are examples of firms that have found it unnecessary to aggressively pursue international strategies because of extensive growth opportunities available in the U.S. market. a. True b. False

Q: The firm using a global strategy seeks to develop economies of scale as it produces the same or virtually the same products for distribution to customers throughout the world who are assumed to have similar needs. a. True b. False

Q: The "regionalization" environmental trend means that firms can focus on a region (customization) but also have some standardization or sharing within the region. a. True b. False

Q: The three corporate-level international strategies are cost leadership, differentiation, and focus. a. True b. False

Q: Although leaders in Russia have tried to reassure potential investors about their property rights, political risks in the form of weak laws and commonplace government corruption make firms leery of investing in Russia. a. True b. False

Q: While there are multiple means of entering new international markets, firms should use one method consistently with all of its various products and across its different markets in order to reduce administrative complexity. a. True b. False

Q: One reason why firms pursue international opportunities is to extend the product's life cycle. a. True b. False

Q: By choosing a region where markets are more similar, the firm may be able to better understand those markets and cater to their needs, but also achieve economies through sharing of resources. a. True b. False

Q: Exporting and licensing are the most appropriate ways for smaller firms to first enter international markets. a. True b. False

Q: Evidence suggests that, in general, using an international cost leadership strategy when exporting to developed countries has the most positive effect on firm performance while using an international differentiation strategy with larger scale when exporting to emerging economies leads to the greatest amounts of success. a. True b. False

Q: When the actual results of an acquisition strategy fall short of the projected results, firms consider using restructuring strategies. a. True b. False

Q: Transaction costs resulting from an acquisition refer to the direct and indirect costs resulting from the use of acquisition strategies to create synergies. a. True b. False

Q: A major problem with buying other companies in order to gain access to their product lines is that the acquiring firm may lose its own ability to innovate. a. True b. False

Q: Hostile acquisitions provide greater financial returns to the acquiring company as it is easier for managers to integrate the firms. a. True b. False

Q: Acquisitions can become a substitute for innovation in some firms and trigger future rounds of acquisitions. a. True b. False

Q: Research suggests that horizontal acquisitions of firms with dissimilar characteristics result in higher performance levels. a. True b. False

Q: Restructuring refers to changes in the composition of a firm's set of businesses or its financial structure. a. True b. False

Q: One of the potential problems associated with acquisitions is that the additional costs required to manage the larger firm will exceed the benefits of economies of scale and additional market power. a. True b. False

Q: Restructuring strategies are commonly used to correct or deal with the results of ineffective mergers and acquisitions. a. True b. False

Q: How difficult is it for merger and acquisition strategies to create value and which firms benefit the most from M & A activity?

Q: What are the results of the three forms of restructuring?

Q: Describe how an acquisition program can result in managerial time and energy absorption.

Q: Describe the seven problems in achieving a successful acquisition.

Q: What are the attributes of a successful acquisition program?

Q: How have changing conditions in the external environment influenced the type of M & A activity firms pursue?

Q: What are the differences between downscoping and downsizing and why are each used?

Q: Identify and explain the seven reasons firms engage in an acquisition strategy.

Q: What is an LBO and what have been the results of such activities?

Q: What is restructuring and what are its common forms?

Q: Private synergy: a. occurs in most related acquisitions and allows firms to see increased returns. b. is frequently achieved in conglomerates. c. is not easy for competitors to understand and imitate. d. is assessed by managers during the due diligence process.

Q: ____ typically result(s) in the acquiring firm being able to prevent valuable human resources in the acquired firm from leaving. a. Financial slack b. Private synergy c. Friendly acquisitions d. High compensation

Q: Claude holds a large number of shares of Bayou Beauty, a regional brewing company that is considered a likely takeover target by a major international brewer. It would probably be in Claude's financial interest if Bayou Beauty's owners: a. resisted selling at any price. b. sold the company to the larger brewer. c. designed a poison pill to discourage a takeover. d. looked for smaller brewers to acquire instead of selling to the larger brewer.

Q: Failing to ____________ appropriately will result in too many employees doing the same work and prevent the new firm from realizing the cost synergies it anticipated. a. downsize b. spin-off c. downscope d. buyout

Q: The factors that lead to poor long-term performance by acquisitions include all of the following EXCEPT firms: a. with insufficient diversification. b. having too much debt. c. being unable to achieve synergy. d. growing too large.

Q: During the recent financial crisis, M&A activity ______, whereas in 2011, M&A activity ______. a. declined; increased b. declined; declined c. increased; increased d. increased; declined

Q: Magma, Inc., acquired Vulcan, Inc., 3 years ago. Effective integration of the two companies' culture was never achieved, and the two firms' assets were not complementary. It is very likely that Magma will: a. go public through an IPO. b. review the due diligence information collected before the acquisition. c. restructure. d. review its tactical-level strategies.

Q: Entering new markets through acquisitions of companies with new products is not risk-free, especially if acquisition becomes a substitute for: a. market discipline. b. innovation. c. risk analysis. d. international diversification.

Q: After a leveraged buyout, ____ typically occur(s). a. selling of assets b. further rounds of acquisitions c. due diligence d. private synergy

Q: Each of the following is a rationale for acquisitions EXCEPT: a. achieving greater market power. b. overcoming significant barriers to entry. c. increasing speed of market entry. d. positioning the firm for a tactical competitive move.

Q: Baby Doe's, a designer and manufacturer of children's clothing, has decided to purchase a retail chain specializing in children's clothing. This purchase is a(n): a. merger. b. unrelated acquisition. c. horizontal acquisition. d. vertical acquisition.

Q: A manager in your company is proposing the acquisition of Taylor Company, which has developed a new, innovative product instead of a strategy of developing new products in-house. All of the following arguments are correct EXCEPT: a. the acquisition of Taylor should be primarily for defensive rather than strategic reasons. b. research suggests that acquisition strategies are a common means of avoiding risky internal ventures. c. the outcomes of acquisitions can be estimated more easily and accurately than the outcomes for an internal product development process. d. acquisitions could become a substitute for innovation within your firm.

Q: When a firm acquires its supplier, it is engaging in a(n): a. merger. b. unrelated acquisition. c. hostile takeover. d. vertical acquisition.

Q: A(n) ____ occurs when one firm buys a controlling, or 100 percent interest, in another firm. a. merger b. acquisition c. spin-off d. restructuring

Q: Typically, in a failed acquisition, the organization will: a. restructure. b. go into bankruptcy. c. focus on building private synergy. d. increase integration.

Q: There are few true mergers because: a. few firms have complementary resources. b. integration problems are more severe than in outright acquisitions. c. one firm usually dominates in terms of market share, size, or value of assets. d. of managerial resistance. True mergers result in significant managerial-level layoffs.