50) Sandi is considering conditions that make an internal startup strategy appealing over an
acquisition, and has determined that she would ONLY choose an internal startup strategy when
an internal startup
A) is more costly.
B) affects the supply-demand balance by increasing production capacity.
C) is unable to gain distribution access advantages.
D) has the necessary scale and resource strengths to compete with rivals.
E) lacks the experience in establishing new subsidiaries.
51) A major DISADVANTAGE of strategic alliances, joint ventures, and cooperative
agreements between domestic and foreign firms is
A) to compete on a more global scale while still preserving their independence.
B) to gain better access to scale economies in production and/or marketing.
C) to fill competitively important gaps in their technical expertise and/or knowledge of local
markets.
D) to share distribution facilities and dealer networks, thus mutually strengthening their access to
buyers.
E) to create permanent arrangements between the domestic and foreign firms.
52) A cross-border alliance was not created when
A) Walgreens merged with Alliance Boots in 2014.
B) Hyundai Motor Company planned to open a new manufacturing plant in the Czech Republic.
C) The insurance company Geico became a wholly owned subsidiary of Berkshire Hathaway.
D) Renault-Nissan disclosed that it had sold more than one in ten cars worldwide.
E) Carrefour, a French grocery chain, established a new wholly owned venture in Poland.
53) A cross-border alliance was not created when
A) Deutsch, a New York-based wine importer, and Casella, an Australian wine producer, created
and marketed the Yellowtail wine brand.
B) Pharmaceutical giants Eli Lilly and Kyowa Hakko Kogyo developed and performed clinical
tests of a new cancer treatment called therapyyo.
C) The British insurance company Geico became a wholly owned subsidiary of Berkshire
Hathaway.
D) Yum! Brands offered KFC franchises in China.
E) Lidl, a German deep-discount supermarket chain, established a new wholly owned venture
with a supermarket chain in Poland.
54) An UNLIKELY risk of cross-border alliances between domestic and foreign firms is
A) overcoming language and cultural barriers.
B) launching new initiatives to stay abreast of shifting market conditions.
C) developing mutually agreeable ways of dealing with key issues or differences.
D) disengaging from the alliance once its purpose has been served.
E) becoming overly dependent on foreign partners for essential expertise.
55) The risks of strategic alliances often include all of the following except
A) conflicting objectives and strategies.
B) deep differences of opinion about how to proceed operationally and strategically.
C) important differences in corporate values.
D) misunderstandings about appropriate ethical standards.
E) potential for royalty from trustworthy firms.
56) What is the foremost strategic issue that must be addressed by firms when operating in two
or more foreign markets?
A) deciding on the degree to vary its competitive approach to fit the specific market conditions
and buyer preferences in each host country
B) deciding on the appropriate level of sustainable profitability
C) deciding on the relative cost competitiveness of the home country
D) deciding on the degree of globalization to maintain expansion capabilities
E) deciding on the resources and capabilities of allies
57) One of the strategy options for competing in the markets of foreign countries is a ________
strategy.
A) profit sanctuary
B) country development
C) mapping
D) multidomestic
E) domestic
58) When a company operates in the markets of two or more different countries, its foremost
strategic decision is
A) whether to test the waters with an export strategy before committing to some other
competitive approach.
B) whether to vary the company’s competitive approach to fit specific market conditions and
buyer preferences in each host country or whether to employ essentially the same strategy in all
countries.
C) whether to maintain a national (one-country) manufacturing base and export goods to the
other countries.
D) which foreign companies to team up with via strategic alliances or joint ventures.
E) whether to use strategic alliances to help defeat its rivals.
59) A localized or multidomestic strategy
A) is generally inferior to a global strategy when it comes to pursuing product differentiation.
B) has two big drawbacks: (1) it hinders transfer of a company’s competencies and resources
across country boundaries because the strategies in different host countries can be grounded in
varying competencies and capabilities; and (2) it does not promote building a single, unified
competitive advantage, especially one based on low cost.
C) is generally preferable to a global strategy in situations where buyers are price sensitive
because a “think-local, act-local” type of multidomestic strategy is better suited to achieving low
unit costs than a global strategy.
D) is generally best suited for globally standardized industries, in which small country-by-
country differences can be accommodated.
E) involves much less adherence to using the same basic competitive strategy theme (low-cost,
differentiation, best-cost, or focused) in all country markets.
60) Which statement is not a reason BP implemented a multidomestic competitive strategy to
market its Castrol oil lubricants around the world?
A) Buyers in different countries are attracted to different product attributes.
B) The benefits from global integration and standardization are high.
C) Industry conditions and competitive forces in each national market differ in important
respects.
D) The mix of competitors in each country market varies from country to country.
E) Winning in one country market does not necessarily signal the ability to fare well in other
countries.
61) Véronique is the CEO of a wind power energy company. Identify which company model she
would emulate to craft a multidomestic strategy.
A) Intel strongly encourages its trading partners to use the UN/EDIFACT ISO standard ISO
9735 for syntax and data exchange.
B) Castrol produces over 3,000 different formulas of oil lubricants to meet the requirements of
different climates, vehicle types and uses, and equipment applications that characterize different
country markets.
C) Tiffany & Co., an American luxury jewelry and specialty retailer, controls its general market
approach from its headquarters in New York.
D) Ford Motors establishes its own ride-sharing business in Mumbai, India.
E) Vueling, a low-cost carrier based in Spain, adapts its price to competitive pressures from
Norwegian Air, RyanAir, and EasyJet.
62) When is it appropriate to use a think-local, act-local approach strategy?
A) when the need for local responsiveness is minimal and when potential efficiency gains from
standardization is unrestricted by cross-country opportunities
B) when the local manager is intellectually savvy
C) when the local market provides strong opportunity for growth and profitability
D) when the need for local responsiveness is high due to significant cross-country differences in
demographic, cultural, and market conditions and where benefits from standardization is limited
E) when the need for centralized decision making is relevant due to various macroeconomic and
market conditions
63) Choose the statement that is not a reason a global strategy contrasts sharply with a
multidomestic strategy.
A) In global competition, rivals vie for worldwide market leadership.
B) In globally competitive industries, the power and strength of a company’s strategy and
resource capabilities in one country significantly enhance its competitiveness in other country
markets.
C) In global competition, a firm’s overall competitive advantage (or disadvantage) grows out of
its entire worldwide operations.
D) In global competition, there’s more cross-country variation in industry conditions and
competitive forces than there is in industries where multidomestic competition prevails.
E) In global competition, many of the same rival companies compete against each other in many
different countries, but especially so in countries where sales volumes are large and where
having a competitive presence is strategically important to building a strong global position in
the industry.
64) Despite their obvious benefits, think-local, act-local strategies have all of the following
drawbacks except
A) in global competition, rivals vie for worldwide market leadership and the leading competitors
compete head-to-head in the markets of many different countries.
B) in globally competitive industries, a company’s competitive position in one country both
affects and is affected by its position in other countries.
C) in multidomestic competition, there is greater cross-country variation in market conditions
and the nature of the competitive contest among rivals than tends to be the case in globally
competitive markets.
D) with multidomestic competition, the competitive contest is localized, with rivals battling for
national market leadership; moreover, winning in one country market does not necessarily signal
that a company has the ability to fare well in the markets of other countries.
E) in global competition, the size of a firm’s worldwide competitive advantage (or disadvantage)
equals the sum of the competitive advantages (or disadvantages) it has in each country market
where it competes.
65) The most unlikely element of a localized multidomestic strategy is
A) granting country managers fairly wide strategy-making latitude
B) scattering plants across many host countries, each producing product versions for local area
markets
C) adapting marketing and distribution to the buying habits, customs, and culture of each host
country
D) considering the preference for local suppliers (use of some local suppliers may be mandated
by host governments)
E) selling directly to buyers (perhaps via the company’s website) to avoid having to establish
networks of wholesale/retail dealers in each country market
66) A “think-local, act-local” multidomestic type of strategy
A) is very risky, given fluctuating exchange rates and the propensity of foreign governments to
impose tariffs on imported goods.
B) is usually defeated by a “think-global, act-global” type of strategy.
C) is more appealing when the country-to-country differences in buyer tastes, cultural traditions,
and market conditions are diverse.
D) is generally an inferior strategy when one or more foreign competitors are pursuing a global
low-cost strategy.
E) can defeat a global strategy if the “think-local, act-local” multicountry strategist concentrates
its efforts exclusively in those foreign markets which have superior resources.
67) The strength of a “think-local, act-local” multidomestic strategy is that it
A) matches a company’s competitive approach to prevailing market and competitive conditions
in each country market, country by country.
B) employs strategies that are almost totally different from and also unrelated to its strategies in
other countries.
C) operates independent plants, located in different countries, thus promoting greater
achievement of scale economies.
D) avoids host country ownership requirements and import quotas.
E) eliminates the costs and burdens of trying to coordinate the strategic moves undertaken in one
country with the moves undertaken in the other countries.
68) A “think-local, act-local” multidomestic strategy works particularly well in all of the
following situations, except when there are
A) regulations enacted by the host governments requiring that products sold locally meet strictly
defined manufacturing specifications or performance standards.
B) significant country-to-country differences in customer preferences and buying habits.
C) diverse and complicated trade restrictions of host governments preclude the use of a uniform
strategy from country-to-country.
D) significant country-to-country differences in distribution channels and marketing methods.
E) large demands to pursue conflicting objectives simultaneously.
69) A “think-local, act-local” multidomestic strategy entails
A) offering a narrow product line aimed at serving buyers in the same segments of country
markets worldwide.
B) giving local managers considerable strategy-making latitude and often producing different
product versions for different countries.
C) adopting aggressive efforts to locate facilities in those country markets that have superior
resources.
D) pursuing strong product differentiation and competing in many buyer segments.
E) extensive efforts to transfer a company’s competencies and resource strengths from one
country to another so as to keep entry costs into new country markets low.
70) Employing a “think-local, act-local” multidomestic strategy is highly questionable when
A) a company desires to transfer competencies and resources across country boundaries and is
striving to build a single, uniform competitive advantage worldwide.
B) there are significant country-to-country differences in customer preferences and buying habits
and the industry is characterized by big economies of scale and strong experience curve effects.
C) the trade restrictions of host governments are diverse and complicated.
D) there are significant country-to-country differences in distribution channels and marketing
methods.
E) host governments enact regulations requiring that products sold locally meet strictly defined
manufacturing specifications or performance standards.
71) What is a primary drawback of a localized multidomestic strategy?
A) It hinders the use of cross-border coordination of a company’s activities and increases a
company’s vulnerability to adverse shifts in currency exchange rates.
B) It makes it very difficult to take into account significant country-to-country differences in
distribution channels and marketing methods.
C) It makes it difficult and costly to be responsive to country-to-country differences in customer
needs, buying habits, cultural traditions, and market conditions.
D) It hinders the transfer of a company’s competencies and resources across country boundaries
and hinders the pursuit of a single, uniform competitive advantage in all country markets where a
company operates.
E) It is unsuitable for competing in the markets of emerging countries and posing added
difficulty in modifying a company’s business model to compete on the basis of low price.
72) A global strategy allows for
A) the leading companies to compete for the biggest share of the world market, but only
occasionally compete head-to-head in different countries.
B) the markets in various countries to be part of the world market and competitive conditions
across country markets to be strongly linked.
C) a company’s overall market strength to be the sum of its market shares in each country market
where it has a presence.
D) the industry leaders to be foreign companies, while domestic companies are relegated to
runner-up status.
E) a firm’s overall competitive advantage to be determined by the size of the competitive
advantage it has in each of its profit sanctuaries.
73) A global strategy is one in which a company performs all of the following tasks, except it
A) employs the same basic competitive approach in all countries where it operates.
B) sells much of the same products everywhere.
C) strives to build global brands.
D) coordinates its actions worldwide with strong headquarters control that represents a think-
global, act-global approach.
E) uses local brand names to cater to a country’s specific needs.
74) A think-global, act-global strategic theme puts emphasis on
A) executing a global domination strategy that focuses the company’s resource strengths on entry
strategies across all country boundaries.
B) ensuring that value chain activities are defined by country-specific attributes to capitalize on
economies of scale.
C) building a global brand name and aggressively pursuing opportunities to transfer ideas,
products, and capabilities from one country to another.
D) elevating resources and capabilities developed on a country-by-country basis so as to
capitalize on a country’s uniqueness.
E) implementing mass-customization techniques that can address local preferences efficiently.
75) What is the best way to achieve the efficiency potential of a global strategy?
A) Managerial attention should be focused on objective-setting, specifically oriented toward
production practices.
B) Resources and best practices should be shared, value chain activities should be integrated, and
capabilities should be transferred from one location to another as they are developed.
C) The best identified resources and capabilities should be centralized at headquarters.
D) Value chain activities must be dispersed across many countries to elevate cost control
management as a primary focus in all countries.
E) Local managers should be given considerable latitude for executing strategies for the country
markets they are responsible for.
76) Four Seasons Hotels uses which strategy to compete globally?
A) A “think-local, act-local approach.”
B) A “think-global, act-local approach.”
C) A “think-global, act-global approach.”
D) A “think-local, act-global approach.”
E) An “emerging market, profit sanctuary approach.”
77) When comparing and contrasting the differences between a localized multidomestic strategy
and a global strategy you would not say that
A) a global strategy entails extensive strategy coordination across countries and a multidomestic
strategy entails little or no strategy coordination across countries.
B) a global strategy often entails use of the best suppliers from anywhere in the world, whereas a
multidomestic strategy may entail fairly extensive use of local suppliers (especially where use of
local sources is required by host governments).
C) a global strategy tends to involve use of similar distribution and marketing approaches
worldwide, whereas a multidomestic strategy often entails adapting distribution and marketing to
local customs and the culture of each country.
D) a global strategy involves striving to be the global low-cost provider by economically
producing and marketing a mostly standardized product worldwide, whereas a multidomestic
strategy entails pursuing broad differentiation and striving to strongly differentiate its products in
one country from the products it sells in other countries.
E) a global strategy relies upon the same technologies, competencies, and capabilities
worldwide, whereas a multidomestic strategy often entails the use of somewhat different
technologies, competencies, and capabilities as may be needed to accommodate local buyer
tastes, cultural traditions, and market conditions.