Chapter 7 International Strategy: Creating Value in Global Markets True/False Questions 1. The trend towards worldwide markets makes it easier to predict where competitors will spring up. Answer: False 2. Because many countries are investing in countries other than their own, each country is becoming more autonomous and independent. Answer: False 3. An advantage of international expansion is that competition within foreign countries is generally very similar to that of the United States. Answer: False 4. In Michael Porter's “diamond of competitive advantage,” there are four broad attributes that, as a system, constitute a nation's competitiveness in an industry. Answer: True 5. The factor conditions of a country are inherited and cannot be created. Answer: False 6. With regard to “factor conditions,” the pool of resources that a firm (or nation) has is much more important than the speed and efficiency with which these resources are deployed. Answer: False 7. Demanding domestic consumers tend to push firms to move ahead of companies in other countries where consumers are less demanding and more complacent. Answer: True 8. High levels of environmental awareness in Denmark have led to a decline in Denmark's industrial competitiveness in the international marketplace. Answer: False 349
Chapter 7 International Strategy: Creating Value in Global Markets 9. Countries with a strong supplier base benefit by adding efficiency to upstream activities. Answer: True 10. Typically, intense rivalry in domestic markets does not force firms to look outside their national boundaries for new markets. Answer: False 11. Many international firms are increasing their efforts to market their products and services to countries such as India and China as the ranks of their middle class continue to increase. Answer: True 12. International expansion can extend the life cycle of a product that is in its maturity stage in a firm's home country. Answer: True 13. An advantage of international expansion is that it can enable a firm to optimize the location of every activity in its value chain. Answer: True 14. The laws, and the enforcement of laws, associated with the protection of intellectual property rights represent a significant currency and management risk to multinational firms. Answer: False 15. Differences in foreign markets such as culture, language, and customs can represent significant management risks when firms enter foreign markets. Answer: True 16. Two opposing pressures that managers face when they compete in foreign markets are: cost reduction and adaptation to local markets. Answer: True 350
Chapter 7 International Strategy: Creating Value in Global Markets 17. Within a worldwide market, the most effective strategies are neither purely multidomestic nor purely global. Answer: True
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