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International Business
Q:
Why do firms pursuing global standardization or transnational strategies tend to prefer establishing wholly owned subsidiaries?
A.It gives firms sound knowledge of the local markets, culture, and the political environment.
B.It helps protect competitive advantages based on technology.
C.It allows firms to use the profits generated in one market to improve its competitive position in another market.
D.It is the most politically accepted mode of entry into foreign markets.
E.It has the least costs and risks associated with developing a foreign market.
Q:
What gives a firm tight control for coordinating a globally dispersed value chain?
A.Signing joint-venture agreements
B.Installing manufacturing units in locations with optimal factor conditions
C.Setting up wholly owned marketing subsidiaries
D.Establishing a greenfield venture
E.Using foreign marketing agents
Q:
Which of the following is a disadvantage of wholly owned subsidiaries as a mode of entry into foreign markets?
A.Lack of control over quality
B.High costs and risks
C.Problems with local marketing agents
D.Inability to engage in global strategic coordination
E.Lack of control over technology
Q:
What are the disadvantages of strategic alliances?
Q:
What are the advantages of strategic alliances?
Q:
What are strategic alliances?
Q:
How do firms respond to low cost pressures and low pressures for local responsiveness?
Q:
Describe the localization strategy.
Q:
Describe the global standardization strategy.
Q:
What are the sources of pressures for local responsiveness?
Q:
What are the different types of competitive pressures that firms competing in a global marketplace face? How can firms respond to such pressures?
Q:
What are the sources of economies of scales?
Q:
What is an experience curve? What is its strategic significance?
Q:
What are core competencies? What are their advantages?
Q:
What are the different ways in which a firm can benefit from global expansion?
Q:
What constitutes an organizational structure?
Q:
What are operations of a firm? How can operations be categorized?
Q:
Discuss the significance of value creation. According to Michael Porter, what are the two primary strategies for creating value?
Q:
Managing an alliance successfully requires building interpersonal relationships between the firms' managers, or what is sometimes referred to as:
A.relational capital.
B.interorganizational synergy.
C.power equilibrium.
D.symbiotics.
E.intraorganizational coordination.
Q:
One of the principal risks associated with a strategic alliance is that:
A.it brings together the complementary skills of alliance partners.
B.it makes it difficult for the partner firms to enter into a foreign market.
C.a firm can give away more than it receives.
D.it does not allow firms to share fixed costs.
E.it almost always fails.
Q:
Which of the following is a disadvantage of a strategic alliance?
A.Entering into a strategic alliance makes it difficult for a firm to enter into a foreign market.
B.As a result of strategic alliance, fixed costs of developing new products tend to increase.
C.Strategic alliance gives competitors a low-cost route to new technology and markets.
D.Firms that enter into a strategic alliance with a foreign firm tend to face higher trade barriers.
E.Strategic alliance always leads to a loss to either of the firms involved.
Q:
Which of the following allows two or more firms to share the fixed costs (and associated risks) of developing new products or processes?
A.Franchising agreement
B.Global web
C.Free trade agreement
D.Strategic alliance
E.Dispersion linkage
Q:
Which of the following refers to a cooperative agreement between potential or actual competitors?
A.Tactical union
B.Strategic alliance
C.Political affiliation
D.Economic association
E.Nationalization
Q:
Which of the following statements is true about an international strategy?
A.International strategy typically involves taking products first produced for foreign markets and then customizing them for domestic markets.
B.International strategy should be pursued by a firm if it manufactures a product that satisfies local, rather than universal, needs.
C.When a firm pursues an international strategy, the head office of the firm retains fairly tight control over marketing and product strategy.
D.Firms pursuing the international strategy tend to outsource their development functions such as R&D.
E.International strategy should be pursued by a firm only if it faces strong competition in foreign markets.
Q:
Mayer Life Systems, a manufacturer of surgical and medical appliances, invented and patented a new dialysis machine that radically reduced maintenance and operational issues. Responding to a global demand, it decided to sell the machines manufactured at its plant in the United States to various markets across the globe. Since the product features provided by Mayer were not provided by any other competitor, Mayer did not feel any pressure for cost reductions. Which of the following strategies is most likely being pursued by Mayer?
A.International
B.Localization
C.Global standardization
D.Transnational
E.Nationalization
Q:
Xerox had a monopoly on photocopiers for several years as the technology underlying the photocopier was protected by strong patents. As it served a universal need, this favorable position led Xerox to pursue a(n):
A.global standardization strategy.
B.localization strategy.
C.international strategy.
D.transnational strategy.
E.nationalization strategy.
Q:
Firms that pursue which of the following strategies take products first produced for their domestic market and sell them across various markets with only minimal local customization?
A.Nationalization
B.Transnational
C.Global standardization
D.International
E.Localization
Q:
Which of the following is true of a transnational strategy?
A.It is easy to implement because it does not place any conflicting demands on a company.
B.It is used when the pressures for cost reductions are low.
C.It is usually used when the pressure for local responsiveness is relatively low.
D.It enables the one-way flow of core competencies.
E.It is used by firms that try to achieve low costs through location economies, economies of scale, and learning effects.
Q:
Firms that pursue which of the following strategies differentiate their product offering across geographic markets to account for local differences?
A.International
B.Global standardization
C.Transnational
D.Multidomestic
E.Nationalization
Q:
Which of the following is an observation made by researchers Bartlett and Ghoshal regarding modern multinational enterprises?
A.Global logistics industry makes the concept of "location economies" redundant for international firms.
B.Core competencies and skills can develop in any of the firm's worldwide operations.
C.Flow of skills between a firm and its global subsidiaries should be unidirectional.
D.Differentiating across geographic markets helps a firm in reducing costs.
E.Customer demands for local customization are on the decline worldwide.
Q:
Which of the following strategies is a firm most likely to pursue when it simultaneously faces both strong cost pressures and strong pressures for local responsiveness?
A.Global standardization strategy
B.Localization strategy
C.International strategy
D.Transnational strategy
E.Nationalization strategy
Q:
A global car manufacturer wants to start production in China. While catering to local responsiveness, what can the firm do to get scale economies?
A.Increase costs whenever possible.
B.Use common vehicle platforms and components across many different models.
C.Shorten the production runs for each component.
D.Increase the duplication of functions required for each operation.
E.Manufacture only one type of car and sell it in all the international markets.
Q:
Which of the following is true of a localization strategy?
A.It allows a firm to capture the cost reductions of mass-producing a standardized product.
B.It reduces duplication of functions.
C.It involves longer production runs.
D.It makes sense if the value added by customization supports higher pricing.
E.It substantially reduces local demand.
Q:
Which of the following strategies focuses on increasing profitability by customizing the firm's goods or services so that they provide a good match to tastes and preferences in different national markets?
A.International strategy
B.Global standardization strategy
C.Localization strategy
D.Transnational strategy
E.Nationalization strategy
Q:
Which of the following strategies is most likely to be pursued by a firm when there are strong pressures for cost reductions and demands for local responsiveness are minimal?
A.Domestic strategy
B.Global standardization strategy
C.International strategy
D.Transnational strategy
E.Nationalization strategy
Q:
A firm is most likely to pursue a global standardization strategy when:
A.it wants to implement a high-cost strategy on a global scale.
B.it wants to reduce consumer surplus.
C.there are no universal needs to be served.
D.there are strong demands for local responsiveness.
E.there are strong pressures for cost reduction.
Q:
Which of the following is true of a firm that pursues a global standardization strategy?
A.It ensures that it pursues a high-cost strategy on a global scale.
B.It has its production, marketing, and R&D activities in only one optimum location.
C.It tries to customize its products to local conditions.
D.It has shorter production runs.
E.It reaps maximum benefits from economies of scale and learning effects.
Q:
Firms that pursue which of the following strategies focus on increasing profitability and profit growth by reaping the cost reductions that come from economies of scale, learning effects, and location economies?
A.International
B.Transnational
C.Localization
D.Global standardization
E.Nationalization
Q:
The appropriateness of the strategy that a firm chooses to use in an international market varies with the extent of pressures for:
A.quality improvement and product standardization.
B.customer surplus and quality improvements.
C.customer surplus and product standardization.
D.cost reductions and local responsiveness.
E.product standardization and cost reductions.
Q:
For an international business, which of the following is most likely to be an outcome of protectionism and nationalism in a host-country?
A.Increase in the attractiveness of location economies
B.Pressure for localization of production
C.Requirement of standardization of products or services
D.Pressure for cost reduction
E.Decrease in the significance of local responsiveness
Q:
Which of the following is most likely to necessitate the delegation of marketing functions to national subsidiaries?
A.Differences in distribution channels
B.Pressures for decreasing consumer surplus
C.Lack of product customization
D.Pressures for increasing economies of scale
E.Pressures for increasing consumers' reservation price
Q:
Which of the following supports the argument that customer demands for local customization are on the decline worldwide?
A.Local and indigenous industries are increasingly filling up available demand.
B.High costs of local customization are deterring companies from doing so.
C.Governments across the world are standardizing their legal procedures.
D.Customer tastes have converged worldwide.
E.Managers worldwide ignore the differences in consumer tastes and preferences.
Q:
Which of the following conditions is most favorable to reap gains from global scale economies?
A.Low demand for local responsiveness
B.High pressures for cost reduction
C.Lack of universal needs
D.National differences in accepted business practices
E.High pressure to delegate production to domestic subsidiaries
Q:
The liberalization of the world trade and investment environment in recent decades, by facilitating greater international competition, has generally:
A.increased cost pressures.
B.decreased the demand for local responsiveness.
C.decreased pressures for cost reduction.
D.increased consumer surplus.
E.reduced the production of conventional commodity products.
Q:
Pressures for cost reduction are intense in firms:
A.that produce products that are well differentiated.
B.whose major competitors are based in high-cost locations.
C.with persistent low capacity.
D.in which consumers face low switching costs.
E.with no international competition.
Q:
Which of the following terms best represents the requirements that are the same all over the world, such as steel, bulk chemicals, and industrial electronics?
A.Universal needs
B.Efficiency frontier
C.Global web
D.Lateral requirements
E.Supreme needs
Q:
Cost reduction pressures tend to be particularly intense in industries that:
A.create products that serve universal needs.
B.create customized products.
C.are not involved in international business.
D.produce products that have inelastic demand.
E.serve different customers with different needs.
Q:
Firms that compete in the global marketplace typically face two types of competitive pressure:
A.pressures for increasing investment and pressures to minimize consumer surplus.
B.pressures for labor skill enhancement and pressures to minimize economies of scale.
C.pressures for cost reductions and pressures to be locally responsive.
D.pressures for global promotions and pressures to move down the efficiency frontier.
E.pressures for product standardization and pressures to move up the experience curve.
Q:
Serving a global market from a single location is consistent with:
A.establishing a high-cost position.
B.taking advantage of location economies.
C.moving down the experience curve.
D.operating from a position which falls inside the efficiency frontier.
E.going up the global web.
Q:
Which of the following terms best represents the systematic reductions in production costs that have been observed to occur over the life of a product?
A.Global web
B.Dispersion linkage
C.Economies of scale
D.Experience curve
E.Efficiency frontier
Q:
Which of the following statements is true about economies of scale?
A.Economies of scale lead to an increase in the average unit cost of a product.
B.Attaining economies of scale increases a firm's profitability.
C.The ability to spread variable costs over a large volume is a source of economies of scale.
D.Economies of scale result due to the increase in the perceived value of a product.
E.Economies of scale refer to cost savings that come from learning by doing.
Q:
Spreading fixed costs over a large volume results in a cost-savings phenomenon referred to as:
A.volume synergies.
B.economies of scale.
C.captured savings.
D.size effects.
E.location economies.
Q:
Which of the following refers to the reductions in unit cost achieved by producing a large volume of a product?
A.Location economies
B.Learning effects
C.Standardization economies
D.Core economies
E.Economies of scale
Q:
Learning effects tend to be more significant when:
A.a task involves a few simple steps.
B.a task is repeated for a period of over five years.
C.the workforce consists of unskilled labor.
D.the cumulative output becomes half of what it was originally.
E.a technologically complex task is repeated.
Q:
Which of the following is true about learning effects?
A.They tend to be more significant in nonrepetitive tasks.
B.They tend to be less significant when a task is technologically complex.
C.They typically last a lifetime.
D.They are important only during the start-up period of a new process.
E.They do not have any effect on the cost of production.
Q:
In which of the following tasks will the learning effects be most significant?
A.Pizza delivery for a fast-food major
B.Data entry for a loan recovery center
C.Assembly process involving 1,000 complex steps
D.Sewing buttons onto shirts in a garment factory
E.Delivering letters to different recipients
Q:
Labor productivity increases over time as individuals understand the most efficient ways to perform particular tasks. This is a result of:
A.diminishing returns.
B.location economies.
C.economies of time.
D.learning effects.
E.an efficiency frontier.
Q:
Which of the following refers to cost savings that come from acquiring knowledge from doing a task?
A.Learning effects
B.Exponential effects
C.Ancillary effects
D.Economies of scale
E.Location economies
Q:
The two phenomena that help explain the experience curve are:
A.learning effects and economies of scale.
B.technology inputs and wealth transfer.
C.leveraging subsidiary and local responsiveness.
D.standardized manufacturing and global web.
E.efficiency frontier and location economies.
Q:
A number of studies have observed that a product's production costs decline by some quantity about each time:
A.annual output is halved.
B.cumulative output doubles.
C.the workforce is trimmed by 75 percent.
D.fixed investment triples.
E.foreign domestic investment doubles.
Q:
Which of the following refers to systematic reductions in production costs that have been observed to occur over the life of a product?
A.Experience curve
B.Learning effects
C.Location economies
D.Efficiency slope
E.Economies of scale
Q:
Which of the following caveats is most likely to discourage global expansion of businesses?
A.Economies of scale
B.High consumers' reservation prices
C.Trade barriers
D.Mass customization
E.Low transportation costs
Q:
By dispersing different stages of its value chain to those locations around the world where the value added is maximized or where the costs of value creation are minimized, a firm creates a(n):
A.integral circle.
B.dispersal chain.
C.global web.
D.international mesh.
E.worldwide circle.
Q:
Which of the following is most likely to be the advantage of locating a value creation activity in the optimal location for that activity?
A.It increases the costs of value creation.
B.It decreases consumer surplus.
C.It helps the firm to achieve a high-cost position.
D.It nullifies all trade barriers.
E.It enables a firm to differentiate its product offering from those of competitors.
Q:
If a value creation activity of a firm can take place in Mexico most effectively, then that activity of the firm must be based in Mexico. Firms that pursue such a strategy are most likely to realize:
A.a position inside the efficiency frontier.
B.the experience curve.
C.economies of scale.
D.location economies.
E.demographic advantages.
Q:
How does possessing a core competence help a firm?
A.It helps a firm to create value in such a way that premium pricing is impossible.
B.It reduces a firm's dependence on its logistics function.
C.It enables a firm to reduce the costs of value creation.
D.It reduces the scope of transfer of skills to foreign markets.
E.It reduces the need to replicate a business model in a foreign market.
Q:
A company can increase its growth rate by taking goods or services developed at home and selling them internationally. The returns from such a strategy are likely to be greater if:
A.the product is already being offered by local companies in the nations that the company enters.
B.the product is a generic product that requires little differentiation.
C.indigenous competitors in the nations that the company enters lack comparable products.
D.there is a high inflation in the nations that the company enters.
E.the product is perceived to be very costly in the home country of the company.
Q:
A firm's ability to increase its profitability and profit growth by expanding globally is constrained:
A.by the imperative of localization.
B.by the economies of scale.
C.due to customer surplus.
D.due to the leveraging of skills developed in foreign operations.
E.due to the dispersion of individual value creation activities.
Q:
Which of the following terms best represents the norms and value systems that are shared among the employees of an organization?
A.Process scenario
B.Organizational structure
C.Business structure
D.Organizational culture
E.Management structure
Q:
Processes are the:
A.manner in which decisions are made and work is performed within the organization.
B.metrics used to measure the performance of subunits.
C.devices used to reward appropriate managerial behavior.
D.metrics used to make judgments about how well managers are running the subunits.
E.norms and value systems that are shared among the employees of an organization.
Q:
Which of the following is a part of the organization architecture that consists of the metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits?
A.Reports
B.Controls
C.Rewards
D.Knowledge flows
E.Dominions
Q:
Who among the following should be viewed as part of a firm's infrastructure?
A.Procurement manager
B.Top management
C.Production manager
D.Research and development scientist
E.Marketing personnel
Q:
Which of the following support functions is most likely to involve dealing with the organizational structure, control systems, and culture of the firm?
A.Human resources
B.Logistics
C.Information systems
D.Company infrastructure
E.Inventory management
Q:
Which of the following is the function of a value chain that controls the transmission of physical materials through the value chain, from procurement through production and into distribution?
A.Human resource
B.Finance
C.Marketing
D.Logistics
E.Research and development
Q:
Which of the following is a value creation activity that falls into the category of primary activities?
A.Creation and maintenance of information systems
B.Customer service
C.Human resources
D.Logistics
E.Company infrastructure maintenance
Q:
Which of the following functions creates a perception of superior value in the minds of consumers by solving consumer problems and by supporting them after they have purchased the product?
A.Production
B.Marketing and sales
C.Human resources
D.Customer service
E.Logistics
Q:
Of all the value creation activities in a firm, which of the following creates value by discovering consumer needs and communicating them back to the R&D function of the company, which can then design products that better match those needs?
A.Production
B.Marketing and sales
C.Human resources
D.Logistics
E.Information systems
Q:
Which of the following is a support activity in the operations of a firm?
A.Research and development
B.Customer service
C.Marketing and sales
D.Creation and maintenance of information systems
E.Production
Q:
For services such as banking or health care, "production" typically occurs when the:
A.customer specifies the service requirements.
B.service is paid for by the customer.
C.service is designed in-house.
D.service is delivered to the customer.
E.customer provides feedback.
Q:
Which of the following is a primary activity in the operations of a firm?
A.Logistics function
B.Research and development
C.Information systems
D.Human resource function
E.Company infrastructure