Crafting and Executing Strategy, 22e (Thompson)
Chapter 7 Strategies for Competing in International Markets
1) The world economy is globalizing at an accelerated pace because
A) countries previously open to foreign companies have closed their markets.
B) countries that previously had market or mixed economies now embrace planned economies.
C) information technology is exacerbating the importance of geographic distance.
D) growth-minded companies are racing to build stronger competitive positions in the markets of
more countries.
E) countries opposed to market or mixed economies have erected more stringent trade barriers.
2) Social media giant Facebook Inc. decided to expand outside its home market in order to
A) gain access to new customers for the company’s products/services.
B) increase its business risk by competing with local social media providers such as WeChat.
C) achieving differentiation through economies of scale, experience, and increased purchasing
power.
D) match its core competencies and capabilities with rival social media companies such as
Snapchat and Instagram.
E) identify new and stronger resources and capabilities in its home market.
3) The primary reasons that companies opt to expand into foreign markets are to
A) raise the entry barriers for industry newcomers, neutralize the bargaining power of important
suppliers, grow sales faster, and increase the number of loyal customers.
B) avoid having to employ an export strategy, avoid the threat of cross-market subsidization
from rivals, and enable the use of a global strategy instead of a multidomestic strategy.
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) boost returns on investment, broaden their product lines, avoid tariffs and trade restrictions,
and escape dealing with strong labor unions.
E) gain access to new customers, achieve lower costs, enhance the company’s competitiveness,
capitalize on core competencies, and spread business risk across a wider market base.
4) Tiffany & Co. opted to enter into the mining industry in Canada in order to
A) build the profit sanctuary necessary to wage guerrilla offensives against global challengers
endeavoring to invade its home market
B) capitalize on company competencies and capabilities
C) gain access to new customers in new markets
D) access diamonds that could be certified as “conflict-free” and not associated with unethical
mining practices or the finding of military activities in Africa
E) achieve lower costs and enhance the firm’s competitiveness.
5) ExxonMobil enters into a pact with Gazprom, the world’s largest natural gas extractor, to set
up a processing unit in Baku, Azerbaijan. Which of the following is most likely the reason for
ExxonMobil to opt for this strategic alliance?
A) to gain access to new customers
B) to scale back its core competencies
C) to restrict its factors of production
D) to gain access to low-cost inputs of production
E) to better compete with Gazprom
6) Why do companies decide to enter a foreign market?
A) to capture economies of scale in product development, manufacturing, or marketing
B) to raise input costs through greater pooled purchasing power
C) to decrease the rate at which they accumulate experience and move up the learning curve
D) to concentrate risk within a broader base of countries, especially when sales are down in one
area and the company can undermine sales elsewhere
E) to exploit the natural resources found within its home market
7) Whirlpool’s efforts to link its product R&D and manufacturing operations in North America,
Latin America, Europe, and Asia did not enable the company to
A) accelerate the discovery of innovative appliance features.
B) coordinate the introduction of these features in the appliance products marketed in different
countries.
C) create a cost-efficient worldwide supply chain.
D) impart technical knowledge to high-cost human resources in developing nations
E) speed product innovations to market and achieve operational excellence.
8) Crafting a strategy to compete in one or more foreign markets can be considered complex
because
A) factors that affect industry competitiveness are the same from country to country.
B) the potential for location-based advantages to conducting value chain activities in certain
countries.
C) different government policies and economic conditions make the business climate more
favorable in some countries than in others.
D) currency exchange rates among countries are generally fixed and rarely change.
E) buyer tastes and preferences differ among countries and present a challenge for companies
concerning. customizing versus standardizing their products and services.
9) When Disney relied on licensing agreements with the Oriental Land Company to open its first
foreign theme park, Tokyo Disneyland,
A) Disney was able to meet the challenge of localizing its product offerings in Japan, leading to a
low-cost advantage.
B) Japanese consumer buying habits and demographics no longer posed a challenge for Disney.
C) Disney no longer needed to contend with fluctuating exchange rates and country-to-country
variations in host government restrictions and requirements.
D) Its licensing partner, the Oriental Land Company reaped the windfall, because the partner
who bore the risk was also likely to be the biggest beneficiary from any upside gain.
E) It was Disney, not the Oriental Land Company, that reaped the windfall because of learning
curve effects.
10) The diamond framework is not LIKELY to answer which of the following questions about
competing on an international basis?
A) Where will the foreign entrants come from?
B) Which countries have the weakest foreign rivals?
C) What are the attributes of a country’s business environment?
D) What location of value chain activities is most beneficial?
E) What are the disadvantages of allowing foreign competition?
11) Market size and growth rates in different countries can be influenced positively or negatively
by
A) the ability of management to tailor a strategy to take into consideration differences among
country markets.
B) which countries have the weakest foreign rivals.
C) competitive rivalry that is only moderate in some countries.
D) differing population sizes, cultures, income levels, infrastructure, and distribution networks
among countries.
E) the large size of emerging markets such as Brazil, Russia, China, and India.
12) Compared with the other countries on the list below, which country boasted the highest labor
wage rates in 2016?
A) Mexico
B) Taiwan
C) Switzerland
D) China
E) New Zealand
13) You have been asked to consult with Sonic.net, a regional Internet Service Provider, about
the advisability of competing abroad. Your assessment of the opportunities for Sonic.net to craft
a strategy to compete in one or more countries in the world would not necessarily
A) evaluate country-to-country differences in consumer buying habits and buyer tastes and
preferences.
B) evaluate country-to-country variations in host government restrictions and requirements and
fluctuating exchange rates for the company’s offerings in each different country market or
whether to offer a mostly standardized product worldwide.
C) evaluate which countries to locate company operations for maximum locational advantage,
given country-to-country variations in wage rates, worker productivity, energy costs, tax rates,
and the like.
D) evaluate a multidomestic strategy that considers the world market as a mostly homogeneous
market.
14) One of the biggest strategic challenges to competing in the international arena includes
A) how to leverage the opportunities arising from shifting exchange rates.
B) how to charge the same price in all country markets.
C) how to identify foreign firms licensed to produce and distribute the company’s products.
D) whether to offer a standardized product worldwide or a customized product offering in each
different country market.
E) whether to pursue a franchising strategy or a joint venture strategy.
15) What factor is not LIKELY responsible for Apple’s decision to set up mobile phone
manufacturing facilities in India?
A) growth potential of India’s emerging market
B) global standardization of mobile phone technology
C) potential location advantages in wages, inflation rates, and tax rates that reduce costs
D) franchising opportunities in India
E) comparatively lower exchange rate and political risks
16) When seeking to develop competitive strength in a foreign market, firms generally DO not
evaluate the
A) differences among buyer tastes for a particular product or service from country to country.
B) competitive pressures to lower costs.
C) competitive risks associated with a fluctuating exchange rate.
D) degree of country political risk.
E) level of industry-related support activities to foster customization of products and services.
17) A location-based advantage for competing on an international basis can best be exemplified
by
A) Microsemi Corporation acquiring California-based Actel Corporation.
B) RBC Wealth Management closing operations in South Florida.
C) Samsung diversifying and venturing into textiles and food processing.
D) Hyundai signing a memorandum of understanding with the government of South Korea to
halt exports.
E) De Beers establishing greenfield operations in the mining region of South Africa.
18) Government policies that can make it more attractive for foreign companies to locate
operations abroad include all of the following except
A) tax incentives.
B) stringent environmental compliance regulations.
C) site development assistance.
D) low-cost loans.
E) reduced tariffs, quotas, and percentages of local content required in production of products
and services.
19) Apollo Tires sets up a manufacturing unit in Mexico. Following this, Renault-Nissan signs a
supply contract with the tire multinational. In which of the following ways is Renault-Nissan
likely to gain from the pact?
A) different styles of management, organization, and strategy
B) knowledge sharing within same value chain system
C) availability of natural resources at low cost
D) growth potential and large size of the market
E) government policies in the host country
20) Gallo Wines is seeking international market entry. One if its top criteria for choosing a
country to enter is a pro-business government policy. John would advise Gallo Wines to enter
A) Argentina, which has increased its interest rate on loans to foreign entrants from 15 percent to
19 percent.
B) Germany, since the European Union has imposed a 16 percent tariff on the import of
agricultural produce.
C) Australia, which recently introduced a permanent employer-sponsored visa program for
skilled manpower.
D) South Africa, which now levies a per metric ton carbon tax on electricity and a per liter
surcharge on water.
E) China, whose government favors partial local ownership of foreign-owned companies.
21) A typical host government requirement that is not said to impact the operations of foreign
companies is
A) establishing local content requirement on goods made inside their borders by foreign
companies.
B) having rules and policies that protect local companies from foreign competition.
C) placing restrictions on exports to ensure adequate local supplies.
D) requiring foreign companies to use vertical integration to support operations of local
companies.
E) imposing burdensome tax structures and regulatory requirements upon foreign companies
doing business within their borders.
22) The difference between political risks and economic risks is that
A) political risks stem from instability or weakness in national governments, while economic
risks stem from the stability of a country’s monetary system, and its economic and regulatory
policies.
B) political risks stem from stability in foreign business, while economic risks stem from an
excess of property right protections.
C) political risks stem from hostility to foreign currencies, while economic risks stem from the
instability of the monetary system.
D) political risks stem from exchange rate fluctuations, while economic risks stem from hostility
to foreign business.
E) political risks stem from the stability of a country’s monetary system, while economic risks
stem from instability in national business.