78) The marker of a true transnational strategy is
A) a big majority of the company’s rivals are pursuing localized multidomestic strategies.
B) striking the right balance between thinking globally and acting locally, even though it is more
costly and complex to implement.
C) host governments enact regulations requiring that products sold locally meet strict
manufacturing specifications or performance standards.
D) plants need to be scattered across many countries to avoid high shipping costs.
E) market growth rates vary considerably from country to country.
79) The approach of a firm using a “think-global, act-local” version of a transnational strategy
entails
A) producing and marketing a variety of product versions under the same brand name, with each
different version being designed specifically to accommodate the needs and preferences of
buyers in a particular country.
B) having little or no strategy coordination across countries.
C) pursuing the same basic competitive strategy theme (low cost, differentiation, best cost,
focused) in all countries where the firm does business but giving local managers some latitude to
adjust product attributes to better satisfy local buyers and to adjust production, distribution, and
marketing to be responsive to local market conditions.
D) selling the company’s products under a wide variety of brand names (often one brand for each
country or group of neighboring countries) so buyers in each country market will think they are
buying a locally made brand.
E) selling numerous product versions (each customized to buyer tastes in one or more countries
and sometimes branded for each country), but opting to only sell direct to buyers at the
company’s website so as to bypass the costs of establishing networks of wholesale/retail dealers
in each country market.
80) The essential difference between a “think-global, act-global” and a “think-global, act-local”
approach to strategy-making is that
A) a “think-global, act-global” approach entails extensive strategy coordination across countries
and a “think-global, act-local” approach entails little or no strategy coordination across countries.
B) the former aims at implementing the same business model worldwide, whereas the latter aims
at implementing customized business models to better match local market circumstances.
C) the “think-global, act-global” approach gives local managers more latitude to make minor
strategy variations where necessary to better satisfy local buyers and to better match local market
conditions.
D) a “think-global, act-global” approach involves selling a mostly standardized product
worldwide, whereas a “think-global, act-global” approach entails selling products that are highly
differentiated from country to country.
E) a “think-global, act-global” approach involves selling under a single brand name worldwide,
whereas a “think-global, act-local” approach entails utilizing multiple brands (typically one for
each different country or group of neighboring countries).
81) A primary drawback of a global strategy is that it
A) allows firms to address local needs as precisely as locally based rivals can.
B) permits firms to be more responsive to changes in local market conditions, either in the form
of new opportunities or competitive threats.
C) provides for lower transportation costs and also may involve higher tariffs.
D) involves higher coordination costs due to more complex tasks of managing a globally
integrated enterprise.
E) raises production costs due to the greater variety of designs and components.
82) A strategy that incorporates elements of both multidomestic and global strategies is termed a
“transnational” strategy, but sometimes it is referred to as a(n) ________ strategy.
A) glocalization
B) international
C) think-local, act-global
D) cross-border integrated
E) standardized integrated
83) Companies often implement a transnational strategy because it
A) combines flexible coordination with the pursuit of conflicting objectives simultaneously.
B) provides an easy mode of operating to transfer and share resources and capabilities across
borders.
C) is conducive to mass customization techniques that enable companies to address local
preferences in an efficient semi-standard manner.
D) is the least complex and easiest to implement of all the strategy choices.
E) is capable of achieving an efficiency potential through centralized decision making and strong
headquarters control.
84) The transnational approach of a firm using a “think-global, act-local” version of a global
strategy entails
A) selling numerous product versions (each customized to buyer tastes in one or more countries
and sometimes branded for each country) but opting to only sell direct to buyers at the
company’s website so as to bypass the costs of establishing networks of wholesale/retail dealers
in each country market.
B) pursuing the same basic competitive strategy theme (low-cost, differentiation, best-cost,
focused) in all countries where the firm does business but giving local managers some latitude to
adjust product attributes to better satisfy local buyers and to adjust production, distribution, and
marketing to be responsive to local market conditions.
C) selling the company’s products under a wide variety of brand names (often one brand for each
country or group of neighboring countries) so that buyers in each country market will think they
are buying a locally made brand.
D) producing and marketing a variety of product versions under the same brand name, with each
different version being designed specifically to accommodate the needs and preferences of
buyers in a particular country.
E) little or no strategy coordination across countries.
85) What strategy is considered more conducive to transferring and leveraging subsidiary skills
and capabilities across borders?
A) a transnational strategy
B) an international strategy
C) a think-local, act-global strategy
D) a cross-border integrated strategy
E) a standardized integrated strategy
86) Companies that compete internationally can pursue competitive advantage in world markets
(or offset domestic disadvantages) by
A) using a differentiation-based competitive strategy in those country markets with superior
resources.
B) choosing not to compete in countries with high tariffs and high taxes (which then have to be
passed along to buyers in the form of higher prices), thus keeping costs and prices lower than
rivals.
C) using an export strategy to circumvent the risks of adverse exchange rate fluctuations.
D) locating value chain activities in whatever nations prove most advantageous in a manner that
uses location to lower costs or achieve greater product differentiation, allow for the transfer of
competitively valuable competencies and capabilities from one country to another, and allow for
cross-border coordination.
E) employing a multidomestic strategy instead of a global strategy.
87) In expanding into foreign markets, a company can strive to gain competitive advantage (or
offset domestic disadvantages) by
A) building a state-of-the-art facility to fully capture scale economies via an export strategy.
B) using export, licensing, or franchising strategies so as to minimize risk and capital investment.
C) locating buyer-related activities in all countries where it sells its product.
D) dispersing its activities among various countries in a manner that lowers costs or else helps
achieve greater product differentiation and transferring competitively valuable competencies and
capabilities from its domestic operations to its operations in foreign markets.
E) avoiding the use of strategies that entail coordinating its domestic strategic moves with its
strategic moves in the various foreign markets it enters.
88) To use location to build competitive advantage, a company that operates transnationally or
globally must
A) employ either an export strategy or a franchising strategy.
B) scatter its production plants across many countries in different parts of the world so as to
minimize transportation costs.
C) consider whether to concentrate each activity it performs in a few select countries or disperse
performance of the activity to many nations and consider in which countries to locate particular
activities.
D) locate production plants in those countries having suppliers that can supply all the necessary
raw materials and components so as to avoid inbound shipping costs.
E) concentrate all of its value chain activities in the one country that has the best combination of
low wage rates, low shipping costs, and low tax rates on profits.
89) In competing in foreign markets, companies find it advantageous to concentrate their
activities in a limited number of locations in all of these situations, except when
A) there are significant scale economies in performing an activity.
B) the costs of manufacturing or other activities are significantly lower in some geographic
locations than in others.
C) when there is a steep learning or experience curve associated with performing an activity in a
single location (thus making it economical to serve the whole world market from just one or
maybe a few locations).
D) certain locations have superior resources, allow better coordination of related activities, or
offer other valuable advantages.
E) the addition of new production capacity will not adversely impact the supply-demand balance
in the local market.
90) When concentrating production in a few locations, which of the following can allow a
manufacturer to lower unit costs, boost quality, or master a new technology more quickly?
A) significant scale economies
B) learning-curve effects
C) superior resources
D) profit sanctuaries
E) supporting industries
91) Dispersing the performance of value chain activities to many different countries rather than
concentrating them in a few country locations tends to be advantageous in all of the following
situations, except
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 diseconomies of large size exist, thereby making it more economical to perform an activity
on a smaller scale in several different locations.
D) when it is desirable to hedge against (1) the risks of fluctuating exchange rates, (2) supply
interruptions, or (3) adverse political developments.
E) if resources retain their foreign contexts so there is competitive advantage over a broader
domain.
92) The competitive advantage opportunities that a global competitor can gain by dispersing
performance of its activities across many nations include all of the following, except
A) being able to shift production from one country to another to take advantage of exchange rate
fluctuations, differing wage rates, differing energy costs, or differing trade restrictions.
B) being in a better position to choose where and how to challenge rivals.
C) shortening delivery times to customers by having geographically scattered distribution
facilities.
D) locating buyer-related activities (such as sales, advertising, after-sale service and technical
assistance) close to buyers.
E) centralizing value chain activities to foster just-in-time inventory activities.
93) Dispersing particular value chain activities across many countries rather than concentrating
them in a select few countries can be more advantageous, except when
A) buyer-related activities (such as sales, advertising, after-sale service, and technical assistance)
need to take place close to buyers.
B) buyers’ demand for short delivery times and/or high transportation costs make it
uneconomical to operate from one or just a few locations.
C) it helps hedge against the risks of exchange rate fluctuations, supply disruptions, and adverse
political developments.
D) there are diseconomies of scale in trying to operate from a single location.
E) there are reasons to decouple buyer-related activities in favor of locational advantages.
94) Transferring core competencies and resource strengths from one country market to another is
A) a good way for companies to develop broader or deeper competencies and competitive
capabilities that can become a strong basis for sustainable competitive advantage.
B) best accomplished with a multidomestic strategy as opposed to a global strategy.
C) feasible only with a global strategy; it can’t be done with a multidomestic strategy.
D) unlikely to result in a competitive advantage.
E) nearly always the easiest and most surefire way to build competitive advantage in trying to
compete successfully in foreign markets.
95) Dispersing activities to many locations is competitively advantageous when
A) high transportation costs, diseconomies of large size, and trade barriers make it too expensive
to operate from a central location.
B) a multidomestic strategy is better than a global strategy.
C) technical after-sale services are unimportant to buyers.
D) achieving economies of scale and scope in materials procurement, parts manufacture,
finished-goods assembly, technology research, and new product development can frequently be
decoupled from buyer locations and performed wherever advantage lies.
E) host governments offer less restrictive trade barriers and regulatory requirements to
companies that conform to local business practices.
96) Companies that compete on an international basis have a competitive advantage over their
purely domestic rivals
A) to achieve a larger domestic interest by developing sufficient resource strengths and
competitive capabilities for success.
B) to benefit from coordinating activities across different countries’ domains.
C) solely for the benefit of their shareholders.
D) that guarantees the generation of big profits, big returns on investment, and big cash surpluses
after dividends are paid.
E) to give full access to the proprietary technological expertise or other competitively valuable
capabilities.
97) Sharing and transferring resources and capabilities across borders may also contribute to the
development of broader or deeper competencies and capabilities, thereby helping a company
achieve
A) control over its resource capabilities.
B) a dominating depth in some competitively valuable area.
C) an intensity of resource diversification.
D) precision and compliance in resource agility and responsiveness.
E) direct investments in foreign countries.
98) Profit sanctuaries are country markets or geographic regions where a company
A) can rank the competitive advantage opportunities in each industry.
B) possesses good strategic fit with other businesses and identifies the value chain where this fit
occurs.
C) derives substantial profits because of its protected market position or unassailable competitive
advantage.
D) creates substantial investment strategies because it is losing competitive advantage over
competitors.
E) invests its dividends in expanding its foreign market presence.
99) Profit sanctuaries are found to differ by a company’s strategy, such that a(n)
A) domestic-only company has access to many profit sanctuary locations worldwide.
B) international competitor usually has a profit sanctuary in its home market and may have other
sanctuaries in countries where it has a strong position and market share.
C) globally competitive company generally has a profit sanctuary outside its home market in
countries where it is a market leader and enjoys a strong competitive position.
D) transnational company has profit sanctuaries in every country where it operates.
E) company competing in a few country markets has more profit sanctuaries.
100) What supports competitive offensives in one market with resources and profits diverted
from operations in another market?
A) cross-market subsidization
B) a foreign market strategy
C) a domestic-only company
D) a home market offensive
E) a multidomestic company
101) What does the World Trade Organization (WTO) not do primarily?
A) promotes fair trade practices
B) actively polices dumping
C) deals with the rules of trade between nations
D) helps producers, exporters, and importers conduct business
E) sets countries’ tariff rates
102) ________ is when a company sells its goods in foreign markets at prices that are below the
prices at which it normally sells in its home market or well below its full costs per unit.
A) Dumping practices
B) Price-clearing system
C) Clearance sale
D) Discounting practices
E) Competitive advantage
103) What can happen when international rivals compete against one another in multiple-country
markets?
A) It could create attractive industries that would have otherwise badly deteriorated.
B) It could produce a business lineup consisting of too many slow-growth, declining, low-
margin, or competitively weak businesses.
C) It could create a greater diversity in the types of value chain activities between each business.
D) It could initiate a deterrence effect that encourages mutual restraint in taking aggressive
action against one another due to the fear of a retaliatory response that might escalate the battle
into a cross-border competitive war.
E) It could increase shareholder interests by concentrating corporate resources on foreign
business activities to contend for market leadership.
104) In today’s world, companies aspiring for global market leadership cannot afford
A) to ignore establishing competitive positions in the markets of emerging countries.
B) to embrace all the risks and problems of competing in emerging country markets.
C) to have the resource capabilities it takes to be effective in competing in emerging country
markets and usually are at a strong competitive disadvantage to the domestic market leaders.
D) to forego sizable profits from developed country markets.
E) to hurdle the high barriers to entry into the markets of emerging countries.