47) ________ 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
48) Economies that arise from performing a value creation activity in the optimal location are
known as
A) international strategies.
B) location economies.
C) localization strategies.
D) economies of scale.
49) Cost savings that come from learning by doing are known as
A) learning curves.
B) economies of scale.
C) learning effects.
D) experience curves.
50) 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.
51) ________ 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
52) A firm benefits by basing each value creation activity it performs at that location where
economic, political, and cultural conditions, including relative factor costs, are most conducive to
the performance of that activity. Firms that pursue such a strategy can realize
A) differentiation.
B) location economies.
C) vertical integration.
D) horizontal integration.
53) Economies that arise from performing a value creation activity in the optimal place for that
activity are referred to as
A) factor economies.
B) production economies.
C) location economies.
D) value creation economies.
54) When companies disperse different stages of the value chain to those locations around the
world where perceived value is maximized or where the costs of value creation are minimized,
companies create
A) a differentiated organization.
B) a location economy curve.
C) economies of scale.
D) a global web of value creation activities.
55) 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.
56) ________ 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
57) 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.
58) When individuals gain knowledge of the most efficient ways to perform particular tasks, they
are saving costs through
A) location economies.
B) value creation effects.
C) experience curve effects.
D) learning effects.
59) Learning effects
A) tend to be less significant when a technologically complex task is repeated.
B) will be less significant in an assembly process involving 1,000 complex steps than in one of
only 100 simple steps.
C) typically disappear after a while, despite the complexity of the task.
D) are more significant after two or three years of the introduction of a new process.
60) It has been suggested that learning effects are important only during the start-up period of a
new process and that they cease after two or three years. Any decline in the experience curve after
such a point is due to
A) reduction in fixed costs.
B) higher depreciation costs.
C) economies of scale.
D) obsolescence.
61) 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
62) 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
63) 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
64) 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 a domestic 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.
65) 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.
66) 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.