Results:
The Your correct answer for each question is indicated by a
1
INCORRECT
.
Companies opt to expand into foreign markets for such reasons as to
A) boost returns on investment, broaden their product lines, avoid tariffs
and trade restrictions, and escape having to deal with strong labor
unions.
B) gain access to new customers, achieve lower costs and enhance the
company's competitiveness, capitalize on core competencies, and
spread business risk across a wider market base.
C) grow sales faster than the industry average, reduce the competitive
threats from rivals, and open up more opportunities to enter into
strategic alliances.
D) avoid having to employ an export strategy, avoid the threat of crossmarket subsidization from rivals, and enable the use of a global
strategy instead of a multicountry strategy.
E) raise the entry barriers for industry newcomers, neutralize the
bargaining power of important suppliers, grow sales faster, and
increase the number of loyal customers.
2
INCORRECT
A company is said to be an international competitor (as opposed to a global
competitor) when it
A) uses a multicountry strategy rather than a global strategy.
B) has operations on only one of the world's major continents.
C) competes in a select few foreign markets (and perhaps has only
modest ambitions to enter additional country markets).
D) employs an international strategy.
E) employs something other than a "think global, act global" strategy.
3
INCORRECT
Which one of the following is not a factor that a company must contend with
in competing in the markets of foreign countries?
A) Variations in market growth rates from country to country and
important country-to-country differences in consumer buying habits
and buyer tastes and preferences
B) Country-to-country variations in host government policies and trade
requirements
C) The fact that product designs suitable for one country are sometimes
inappropriate in another
D) Vulnerability to adverse shifts in currency exchange rates
E) A need to convince shippers to keep cross-country transportation
costs low
4
INCORRECT
Which one of the following statements concerning the effects of fluctuating
exchange rates on companies competing in foreign markets is true?
A) Domestic companies trying to combat competition from foreign
imports are hurt even more when their government's currency grows
weaker in relation to the currencies of the countries where the
imported goods are being made.
B) Fluctuating foreign exchange rates greatly reduce the risks of
competing in foreign marketsthe big problem occurs when
exchange rates are fixed at unreasonably low levels.
C) Domestic companies under pressure from lower-cost imports are
benefited when their government's currency grows weaker in relation
to the currencies of the countries where the imported goods are being
made.
D) Manufacturers that are exporting much of what they produce are
benefited when their country's currency grows stronger relative to
the currencies of the countries that the goods are being exported to.
E) If the exchange rate of U.S. dollars for euros changes from $1.15 per
euro to $1.25 per euro, then it is correct to say that the U.S. dollar
has grown stronger.
5
INCORRECT
The stand-out characteristic of multicountry competition is
A) varying driving forces from country to country.
B) varying competitive pressures from country to country.
C) varying buyer requirements and expectations from country to
country.
D) that there is so much cross-country variation in market conditions
and in the companies contending for leadership that the market
contest among rivals in one country is not closely connected to the
market contests in other countriesas a consequence, there is no
global or world market, just a collection of self-contained country
markets.
E) varying degrees of product differentiation from country to country.
6
INCORRECT
One of the biggest strategy issues confronting a company competing in the
international arena is
A) whether to enter country markets where competitive forces are
relatively strong or whether to only enter country markets where
competition is relatively weak.
B) whether to charge the same price in all country markets.
C) whether to license a select few or a large number of foreign firms to
produce and distribute the company's products.
D) whether to offer a mostly standardized product worldwide or
whether to customize the company's offerings in each different
country market to match the preferences and requirements of local
buyers.
E) how many strategic alliances to form with foreign-based firms.
7
INCORRECT
The essential difference between multicountry competition and global
competition is that
A) in multicountry competition, the market battle among rivals is
mainly among companies in several neighboring countries whereas
in global competition the market battle is among countries from
many different parts of the world.
B) in multicountry competition the markets of different countries are
not closely linked and rivals battle for "national market
championships" whereas in global competition the markets of
different countries are closely linked and form a world market, thus
pitting rivals in a battle for the "world market championship."
C) in multicountry competition, rival companies focus on competing in
a few country markets (2 to perhaps as many as 10) whereas in
global competition companies strive to compete in 50 to 100 or more
country markets.
D) in multicountry competition rivals are positioned in strategic groups
consisting of companies from the same geographic area of the world
(for example, Europe or Africa or the Middle East or Latin America
or North America or the Asian-Pacific) whereas in global
competition rival companies are positioned in global strategic
groups.
E) None of the above are really good ways of distinguishing between
multicountry and global competition.
8 CORRECT
Which of the following statements is false?
A) Export strategies are favored by most participants in foreign markets
because domestic plants tend to be more cost efficient than foreign
plants, because using domestic plants as a production base for
exporting goods to foreign markets is less risky and entails lower
capital requirements, and because it is a lot easier to establish
distribution capabilities in foreign markets than it is to establish
production capabilities.
B) Profitability in emerging country markets rarely comes quickly or
easilynew entrants have to be sensitive to local conditions, be
willing to invest in developing the market for their products over the
long-term, and be patient in earning a profit.
C) Using franchising strategies to pursue global expansion is often
attractive to service and retailing enterprises.
D) Using a licensing strategy to participate in foreign markets often
makes good sense when a firm with valuable technical know-how or
a unique patented product lacks the organizational capability or
resources to enter foreign markets on its own.
E) With multicountry competition, competition in one national market
is not closely linked to competition in another national marketthus,
there is no global market, just a collection of self-contained country
markets.
9 CORRECT
Which of the following is/are not "valid" strategy options for entering and/or
competing in foreign markets?
A) An import strategy, a strategic alliance strategy, a profit sanctuary
strategy, and a cross-market subsidization strategy
B) A global strategy where a company uses essentially the same
competitive strategy approach in all country markets where it has a
presence.
C) A multicountry strategy
D) An export strategy and using strategic alliances or joint ventures with
foreign companies as the primary vehicle for entering foreign
markets
E) A franchising strategy and a strategy of licensing foreign firms to use
the company's technology or to produce and distribute the company's
products
10
INCORRECT
A localized multicountry strategy
A) is generally preferable to a global strategy in situations where buyers
are price sensitive because a "think local, act local" type of
multicountry strategy is better suited to achieving low unit costs than
a global strategy.
B) is one where a company varies its product offering and competitive
approach from country to country in an effort to be responsive to
differing buyer preferences and market conditions.
C) has two big drawbacks: (1) the bigger the country-to-country
variations in strategy, the harder it is difficult to transfer a company's
competencies and resources across country boundaries and (2) it
does not promote building a single, unified competitive advantage.
D) is generally inferior to a global strategy it when comes to pursuing
product differentiation.
E) Both B and C.
11
INCORRECT
As indicated in Figure 7.1, the chief difference between a "think global, act
global" and a "think global, act local" approach to crafting a global strategy is
that
A) a "think global, act local" approach involves charging much
B)
C)
D)
E)
12
INCORRECT
difference prices in the various country markets where the company
competes.
a "think global, act local" approach involves much less adherence to
using the same basic competitive strategy theme (low-cost,
differentiation, best-cost, or focused) in all country markets.
a "think global, act local" approach involves considerably less
adherence to utilizing the same capabilities, distribution channels,
and marketing approaches worldwide.
local managers are given more latitude in adapting the global
strategy approach as may be needed to accommodate local buyer
preferences and be responsive to local market and competitive
conditions.
a "think global, act global" approach involves selling under a single
brand worldwide whereas a "think global, act local" approach
involves the use of multiple brands (often a local brand for each local
market).
Based on the information in Figure 7.2, which of the following statements is
inaccurate in characterizing the differences between a global strategy and a
multicountry strategy?
A) With a global strategy a firm's product line is mostly standardized
from country to country; one of the distinctive features of a localized
multicountry strategy is that the company adapts its product
offerings to fit the particular needs and expectations of local buyers.
B) With a global strategy a firm's marketing and distribution approaches
are mostly uniform and coordinated worldwide (with minor
adaptations to host-country situations where required) whereas with
a multicountry strategy a firm's marketing and distribution
approaches are adapted to the practices and culture of each host
country.
C) With a global strategy a firm's strategic arena consists of all
countries where there is high demand for the product whereas with a
multicountry strategy a firm's strategic arena is only a few selected
high-demand countries and trading areas.
D) With a global strategy a firm tends to use the most attractive
suppliers from anywhere in the world whereas firms with a
multicountry strategy often prefer to use suppliers located in the host
country.
E) With a global strategy a firm's production approach is usually to
scatter plants across many different countries so as to achieve
balanced geographic distribution and minimize shipping costs
whereas with a multicountry strategy plants are located in those
countries offering the lowest unit production costs and offering the
best tariff protection.
13
INCORRECT
Which of the following is not one of the ways in which a company can
pursue competitive advantage by expanding outside its domestic market and
competing multinationally?
A) Locating value chain activities among various countries in a manner
that lowers costs
B) Efficient and effective transfer of competitively valuable
competencies and capabilities from the company's domestic market
to the targeted foreign markets
C) Locating value chain activities among various countries in a manner
that helps achieve greater product differentiation
D) Cross-border coordination of its activities in ways that contribute to
building a competitive edge
E) Employing a profit sanctuary strategy to facilitate cross-market
subsidization and thereby outcompete rivals that have a multicountry
strategy.
14
INCORRECT
Multinational competitors tend to concentrate activities in a limited number
of locations when
A) prices and competitive conditions are strongly linked across country
markets to form a world market.
B) there are significant scale economies and/or steep learning curve
effects associated with performing certain activities in a single
location, costs of performing the activity are lower in particular
geographic locations, and certain locations have superior resources,
allow better coordination of related activities, or offer other valuable
advantages.
C) the risk of fluctuating exchange rates is very high.
D) host country governments can be persuaded to erect high tariff
barriers to protect the company's operations from foreign
competitors and when it is not imperative to be responsive to buyer
needs and competitive conditions in each country.
E) competitive conditions make it infeasible to employ a profit
sanctuary strategy or an export strategy.
15
CORRECT
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 economies of scale are essential to achieving acceptable
production costs.
D) Both A and B.
E) None of the above.
16
INCORRECT
Transferring core competencies and resource strengths from one country
market to another is
A) best accomplished with a Think-Local, Act-Local strategy as
opposed to a Think-Global-Act Global strategy.
B) feasible only with a Think Global-Act Local strategy.
C) a good way for companies to develop broader or deeper
competencies and competitive capabilities that can become a strong
basis for sustainable competitive advantage.
D) unlikely to result in a competitive advantage.
E) nearly always the easiest and most sure-fire way to build competitive
advantage in trying to compete successfully in foreign markets.
17
INCORRECT
A key approach for a company to grow sales and profits in several country
markets is to
A) employ an export strategy rather than a global strategy.
B) locate distribution centers close to buyers.
C) minimize transportation costs among these markets.
D) transfer its valuable competencies and resource strengths among
these markets to aid in the development of broader competencies and
capabilities.
E) take advantage of subsidies offered by a company's host country
government.
18
INCORRECT
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) Develop new sets of core competencies that allow a company to
offer value to consumers of emerging markets in ways unmatched by
rivals
B) Prepare to compete on the basis of low price
C) 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)
D) Try to change the local market to better match the way the company
does business elsewhere
E) Stay away from those emerging markets where it is impractical or
uneconomic to modify the company's business model to
accommodate local circumstances
19
INCORRECT
Which of the following is not a viable strategy option for a local company in
competing against global challengers?
A) Developing business models to exploit shortcoming in local
distribution networks or infrastructure
B) Preparing to compete on the basis of price and modifying elements
of the company's business model to better defend against strong
multinational competitors
C) Taking advantage of low-cost labor and other competitively
important local work-force qualities
D) Transferring a company's expertise to cross-border markets and
initiating actions to contend on a global scale
E) Using acquisitions and rapid growth strategies to defend against
expansion-minded multinationals
20
INCORRECT
The strategy options for local companies in competing against global
challengers include
A) develop business models that exploit the shortcomings of local
distribution networks and infrastructure, utilize keen understanding
of local customer needs and preferences, and transferring company
expertise to cross-border markets.
B) employing defensive rather than offensive strategies, entering into
strategic alliances with other local companies to defeat the
challengers, and not using an import strategy.
C) licensing the company's technology to industry participants
competing in foreign markets.
D) developing a core competence in as many value chain activities as
possible, and pursuing a multicountry strategy to quickly build new
profit sanctuaries.
E) Using an export strategy to gain economies of scale, forming
strategic alliances with global giants, using home-run strategies to
enter nearby foreign markets, and relying on patriotic themes in local
advertising to defeat global challengers trying to enter their home
markets.