Q&A Hero

Q: Discuss the efficiency frontier. How does strategic positioning relate to the efficiency frontier?

Q: What is strategy? How does strategy relate to a firm s profitability?

Q: Pursuing a global standardization strategy is appropriate when a firm is facing low pressures for cost reduction but high pressure for local responsiveness. ⊚ true ⊚ false

Q: In a multinational enterprise, skills are primarily generated at the home location and are then dispersed to the rest of the organization. ⊚ true ⊚ false

Q: For a firm, all positions on the efficiency frontier are viable. ⊚ true ⊚ false

Q: The customer is able to receive the consumer surplus because one firm is competing with other firms for the customer s business, so the firm must charge a lower price than it could if it were a monopoly supplier. ⊚ true ⊚ false

Q: A firm s strategy can be defined as the actions that managers take to attain the goals of the firm. ⊚ true ⊚ false

Q: _____ strategy customizes the product offering to local demands and increases the value of that product in the local market. A) A transnational B) A global standardization C) An international D) A localization

Q: For firms selling a product that serves universal needs but not facing significant competition, _____ strategy makes sense. A) a localization B) an international C) a transnational D) a global standardization

Q: A firm that is pursuing _____ strategy is simultaneously trying to achieve low costs through location economies, economies of scale, and learning effects; and trying to differentiate its product offering across geographic markets. A) a global customization B) an international C) a localization D) a transnational

Q: What is a disadvantage of the localization strategy? A) a decrease in the value of the product in the local market B) some duplication of functions C) an inability to accommodate varying tastes and preferences in different markets D) reduced customization

Q: What strategy focuses on increasing profitability by customizing the firm s goods or services so they provide a good match to tastes and preferences in different national markets? A) global standardization strategy B) transnational strategy C) localization strategy D) international strategy

Q: _____ strategy is most appropriate when there are substantial differences across nations with regard to consumer tastes and preferences, and where cost pressures are not too intense. A) Localization B) Transnational C) Global standardization D) International

Q: Which of the following is associated with firms following the global standardization strategy? A) high pressures for local responsiveness B) cost advantage used to support aggressive pricing in world markets C) low pressures for cost reductions D) product offering and marketing strategy customized to local conditions

Q: According to researchers Bartlett and Ghoshal, for transnational enterprises to be successful, they must focus on A) selling a product that serves universal needs. B) leveraging subsidiary skills. C) 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. D) ensuring that the flow of skills from the home country to the foreign subsidiaries is one way and uninterrupted.

Q: The distinguishing feature of many firms that pursue _____ strategy is that they are selling a product that serves universal needs, but they do not face significant competitors. A) an international B) a localization C) a transnational D) a global standardization

Q: _____ strategy makes most sense when demands for local responsiveness are high, but cost pressures are moderate or low. A) A global standardization B) A transnational C) An international D) A localization

Q: Pressures for _____ imply that it may not be possible for a firm to realize the full benefits from economies of scale, learning effects, and location economies. A) local responsiveness B) profitability C) value creation D) global standardization

Q: When AMD sells its computer chips in countries across the world, it doesn t need to worry too much about customizing the product to local needs and preferences because computer chips are ________ needs. A) universal B) homogenous C) basic D) single-user

Q: _____ needs exist when the tastes and preferences of consumers in different nations are similar if not identical. A) Universal B) Homogenous C) Basic D) Bundled

Q: Responding to pressure for _____ requires that a firm differentiate its products and marketing strategy from country to country, even though it may raise costs. A) cost reductions B) experience effects C) lowering the costs of value creation D) being locally responsive

Q: Pressures for cost reduction are intense in industries where A) major competitors are based in high-cost locations. B) consumers are weak and face high switching costs. C) there is persistent excess capacity. D) the company is located in a low-cost location.

Q: Universal needs exist when A) the tastes and preferences of consumers in different nations are similar if not identical. B) conventional commodity products requested in one country are different than those requested in another country. C) the tastes and preferences of consumers in the same nation are similar if not identical. D) consumers are willing to pay a high price for a product regardless of what country they reside in.

Q: Which of the following is true of firms that compete in the global marketplace? A) They must employ a transnational policy in order to have a competitive edge. B) Because differentiation across countries can involve significant duplication and a lack of product standardization, it may raise costs. C) They must employ adomestic policy in order to have a competitive edge. D) Because differentiation across countries can involve significant duplication and a lack of product standardization, it may reduce costs.

Q: A multinational enterprise doing business in Nigeria decided to change the labeling on its product to conform to local customs and preferences. What type of competitive pressure did this company experience? A) pressure for cost increases B) pressure for local responsiveness C) pressure for value creation D) pressure for increased profitability

Q: Which of the following is one of the two types of competitive pressure that affects the ability of multinational enterprises to compete in the global marketplace? A) pressure for cost increases B) pressure for local responsiveness C) pressure for value creation D) pressure for increased profitability

Q: Economies of scale arise from which of the following sources? A) increasing fixed costs by limiting them to small volumes B) serving domestic and international markets from the same production facilities C) serving only domestic markets D) bargaining with distributors to drive up the product costs

Q: It has been observed that a product s production costs decline by some quantity about each time cumulative output A) increases by 25 percent. B) quadruples. C) doubles. D) triples.

Q: _____ refer(s) to systematic reductions in production costs that have been observed to occur over the life of a product. A) Experience curve B) Economies of scale C) Location economies D) Production possibility

Q: Lenovo s ThinkPad laptop computers are designed in the United States; the case, keyboard, and hard drive are made in Thailand; the display screen and memory in South Korea; the built-in wireless card in Malaysia; and the microprocessor in the United States. In each case, these components are manufactured and sourced from the optimal location given current factor costs. In this example, Lenovo has A) vertical integration advantages. B) a global web of value creation activities. C) learning effects. D) high local responsiveness.

Q: _____ allows a firm to reduce its cost of creating value and increase its profitability. A) Moving down the experience curve B) Moving up the experience curve C) Moving down the learning effect curve D) Moving up the learning effect curve

Q: Learning effects tend to be A) the same regardless of whether a task is simple or complex. B) more significant when a technologically simple task is repeated. C) less significant when a technologically complex task is repeated. D) more significant when a technologically complex task is repeated.

Q: Cost savings that come from learning by doing are known as A) learning curves. B) economies of scale. C) learning effects. D) experience curves.

Q: _____ enable a firm to reduce the costs of value creation and/or to create perceived value in such a way that premium pricing is possible. A) Core competencies B) Global standardization strategies C) Operations D) Location economies

Q: The _____ refers to systematic reductions in production costs that have been observed to occur over the life of a product. A) economies of scale B) value creation C) location economies D) experience curve

Q: Location economies are the economies that arise from performing a _____ activity in the optimal location for that activity. A) universal need B) core competence C) value creation D) localization strategy

Q: The term ________ refers to skills within the firm that competitors cannot easily match or imitate and that may exist in the firm s value creation activities. A) experience curves B) core competence C) economies of scale D) learning effects

Q: Michael Porter argues that A) those firms that create superior value will achieve superior profitability. B) standardization of product is a basic strategy for attaining a competitive advantage in an industry. C) it is necessary for a firm to have the lowest cost structure or create the most valuable product. D) it is important that the gap between value and the cost of production be smaller than that of competitors.

Q: _____ activities of the value chain provide inputs that allow the primary activities to occur. A) Complementary B) Basic C) Core D) Support

Q: _____ activities are basically concerned with creating the product, marketing and delivering the product to buyers, and providing support and after-sales service. A) Support B) Subordinate C) Ancillary D) Primary

Q: _____ imply that when a firm already has significant value built into its product offering, increasing value by a relatively small amount requires significant additional costs. A) Efficiency matrixes B) Diminishing returns C) Cost plus curves D) Strategy convex curves

Q: Which of the following statements is true? A) The way to increase the profitability of a firm is to create a greater number of products. B) The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products. C) The more value customers place on a firm s products, the lower the price the firm is able to charge for those products. D) The price a firm charges for a good or service is typically more than the value the customer places on that good or service.

Q: _____ can be defined as the rate of return that the firm makes on its invested capital, which is calculated by dividing the net profits of the firm by total invested capital. A) Profitability B) Performance C) Cash flow D) Efficiency

Q: Top management should be viewed as part of the firm s A) primary activities. B) experience curve. C) infrastructure. D) universal strategy.

Q: Research and development, production, marketing and sales, and customer service are all examples of A) core competencies. B) primary activities. C) value creation. D) secondary activities.

Q: _____ include the design, creation, and delivery of a product. A) Primary activities B) Core competencies C) Support activities D) Universal needs

Q: The _____ all of the different positions that a firm can adopt with regard to adding value to the product and low cost assuming that its internal operations are configured efficiently to support a particular position. A) economies of scale are B) diminishing returns imply C) efficiency frontier shows D) value creation scale shows

Q: The amount of value a firm creates is measured by the A) economies of scale they are able to achieve. B) difference between its costs of production and the value that consumers perceive in its products. C) profitability the firm achieves. D) difference between its costs of production and the price that it charges for its products.

Q: _____ is measured by the percentage increase in net profits over time. A) Profit growth B) Value C) Profitability D) Operational economy

Q: Discuss how a firm s marketing strategies may have to address differences in distribution channels in other countries.

Q: Describe the benefits of global expansion for firms.

Q: Historically, regulatory barriers have made national equity markets work together. ⊚ true ⊚ false

Q: Eurobonds fall within the regulatory domain of the European Economic Community. ⊚ true ⊚ false

Q: Foreign bonds are sold within the borrower s country and are denominated in the currency of the country in which they are issued. ⊚ true ⊚ false

Q: Depositors are not protected against bank failures in the Eurocurrency market. ⊚ true ⊚ false

Q: Governments give banks less freedom when they deal in foreign currencies. ⊚ true ⊚ false

Q: Any currency can become a Eurocurrency. ⊚ true ⊚ false

Q: If the international capital market continues to grow, financial intermediaries likely will provide less quality information about foreign investment opportunities. ⊚ true ⊚ false

Q: The global capital market often lacks information about the fundamental quality of foreign investments. ⊚ true ⊚ false

Q: The globalization of capital has been universally seen as a positive development. ⊚ true ⊚ false

Q: The Eurocurrency market has been one cause of a decrease in global financial regulations. ⊚ true ⊚ false

Q: Financial services has historically been the most tightly regulated of all industries. ⊚ true ⊚ false

Q: The cost of recording, transmitting, and processing information has doubled with advancements in technology since 1964. ⊚ true ⊚ false

Q: Financial services is an information-intensive industry. ⊚ true ⊚ false

Q: Entering into a forward contract will A) increase the risk involved in a transaction. B) lower the borrower s cost of capital. C) benefit the borrower because the interest rate will be lower. D) raise the borrower s cost of capital.

Q: Borrowers can hedge against foreign exchange risks by entering into a _____ contract. A) hedge fund insurance B) prevailing exchange rate C) forward D) global capital market

Q: _____ can inject risk into foreign currency borrowing. A) Movements in exchange rates B) Use of fixed-exchange rates C) Issue of domestic bonds D) Use of pegged exchange rates

Q: Which of the following is true of the Eurobond market? A) There are many regulations that protect investors. B) Government limitations are generally more stringent for securities denominated in foreign currencies. C) There are less stringent disclosure requirements than in most domestic bond markets. D) They have an unfavorable tax status.

Q: Which of the following is a drawback of the Eurocurrency market? A) Borrowing funds within its home country can expose a company to foreign exchange risk. B) There is a greater probability of a bank failure that would cause depositors to lose their money. C) The system is overregulated and, therefore, more costly. D) The higher interest rate received on home-country deposits reflects the costs of insuring against bank failure.

Q: Approximately two-thirds of all Eurocurrencies are A) Euro-yen. B) Euro-pound. C) Euro-euro. D) Euro-dollars.

Q: Historically, _____ separated national equity markets from each other. A) substantial regulatory barriers B) fixed exchange rates C) financial similarities D) desire for high levels of profit

Q: What makes Eurobonds more attractive than most major domestic bonds? A) presence of regulatory interference B) strong disclosure requirements C) favorable tax status D) protection from exchange risks

Q: An Italian corporation issues a bond denominated in dollars that has no regulatory interference. This is an example of a A) foreign bond. B) Eurobond. C) micro bond. D) regulatory bond.

Q: Eurobonds are A) denominated in the currency of the country in which they are issued. B) normally underwritten by an international syndicate of banks. C) denominated in a currency that is accepted by the European Union. D) sold outside the borrower s county with reference to the originating currency.

Q: _____ are international bonds, normally underwritten by an international syndicate of banks and placed in countries other than the one in whose currency the bond is denominated. A) Micro bonds B) Foreign bonds C) Eurobonds D) Regulatory bonds

Q: The United States sells bonds that are denominated in dollars in Europe.This isan example of a A) foreign bond. B) Eurobond. C) micro bond. D) regulatory bond.

Q: _____ are sold outside of the borrower s country and are denominated in the currency of the country in which they are issued. A) Micro bonds B) Eurobonds C) Foreign bonds D) Regulatory bonds

Q: One drawback of the Eurocurrency market is A) increased governmental controls. B) high reserve ratio requirements. C) low interest rates on deposits. D) exposure to foreign exchange risk.

Q: When using the Euromarkets, companies A) have funds that lack liquidity. B) pay less for loans. C) attract low interest rates. D) are secured from foreign exchange risks.

Q: What is an advantage that banks have when they deal with foreign currencies? A) Interest payments to customers are low when dealing with foreign currencies. B) Accounts need not be maintained when dealing with foreign currencies. C) Risks that investors face are low when dealing with foreign currencies. D) Governments give banks more freedom when dealing with foreign currencies.