105) Tailoring a strategy to fit the circumstances of emerging country markets does not typically
involve
A) competing on the basis of low price.
B) modifying aspects of the company’s business model to accommodate local circumstances (but
not so much that the company loses the advantage of global scale and global branding).
C) transforming the local market to better match the way the company does business elsewhere.
D) developing a strategy for the short-term and forget about a long-term strategy because
conditions in emerging country markets change so rapidly.
E) avoiding those emerging markets where it is impractical or uneconomic to modify the
company’s business model to accommodate local circumstances.
106) When tailoring their strategy to fit circumstances of emerging country markets, viable
strategic options companies should consider include all of the following, except
A) trying to change the local market to better match the way the company does business
elsewhere.
B) being prepared to modify aspects of the company’s business model to accommodate local
circumstances.
C) preparing to compete on the basis of low price.
D) staying away from those emerging markets where it is impractical to modify the company’s
business model to accommodate local circumstances.
E) focusing on local markets whose circumstances will be most challenging to the company’s
business model.
107) Modification of a company’s business model to accommodate the unique local
circumstances of developing countries is best exemplified by
A) Mahindra and Mahindra’s number one ranking in J. D. Power Asia Pacific’s annual new-
vehicle overall quality category.
B) Home Depot relying on its value propositions only in some developing countries.
C) Unilever developing a low-cost detergent, named Wheel, for the Indian market.
D) Japan’s reputation for competitive strength in consumer electronics.
E) Dell entering China by deviating from its traditional Internet-based orders to orders over
phone and fax.
108) The basic strategy options for local companies in competing against global challengers
include
A) best-cost provider and focused low-cost provider and low-cost leadership strategies.
B) export strategies, licensing strategies, and cross-border transfer strategies.
C) utilizing understanding of local customer needs and preferences to create customized products
or services, developing business models to exploit shortcoming in local infrastructure, and using
acquisitions and rapid growth to defend against expansion-minded multinationals.
D) franchising strategies, multidomestic strategies keyed to product superiority, global low-cost
leadership strategies, and cross-border coordination strategies.
E) focused differentiation and broad differentiation strategies.
109) Televisa, a Mexican media company, became the world’s most prolific producer of Spanish-
language soap operas owing to its expertise in Spanish culture and linguistics. Which of the
following strategies did Televisa employ to defend against global giants?
A) The company developed business models that exploit shortcomings in local distribution
networks or infrastructure.
B) It utilized keen understanding of local customer needs and preferences to create customized
products or services.
C) Televisa took advantage of aspects of the local workforce with which large international
companies may be unfamiliar.
D) The company transferred company expertise to cross-border markets and initiated actions to
contend on an international level.
E) It used acquisition and rapid-growth strategies to better defend against expansion-minded
internationals.
110) A viable strategy option for a local company when entering into competition with global
challengers does not involve?
A) using cross-market transfer strategies to hedge against the risks of exchange rate fluctuations
and adverse political developments
B) developing business models to exploit shortcomings in local distribution networks or
infrastructures
C) taking advantage of low-cost labor and other competitively important local workforce
qualities
D) transferring a company’s expertise to cross-border markets and initiating actions to contend
on a global scale
E) using acquisitions and rapid growth strategies to defend against expansion-minded
multinationals
111) Identify and briefly discuss the key reasons why a company may consider expanding
outside its domestic market.
112) Explain why the strategies of firms that expand internationally are usually grounded in
home-country advantages or core competencies.
113) Briefly identify the special features of competing in foreign markets.
114) Explain how exchange rate fluctuations pose a risk to manufacturing companies that rely
upon an export strategy to compete in foreign markets.
115) Identify and explain the significance of each of the following terms and concepts:
a. global strategy
b. export strategy
c. licensing strategy
d. franchising strategy
116) Compare and contrast the advantages for entering and competing in foreign markets for the
strategic options of exporting, licensing, and franchising.
92
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While licensing works well for manufacturers and owners of proprietary technology, franchising
is often better suited to the international expansion efforts of service and retailing enterprises.
Franchising has many of the same advantages as licensing. The franchisee bears most of the
costs and risks of establishing foreign locations; a franchisor has to expend only the resources to
recruit, train, support, and monitor franchisees. The problem a franchisor faces is maintaining
quality control; foreign franchisees do not always exhibit strong commitment to consistency and
standardization, especially when the local culture does not stress the same kinds of quality
concerns. A question that can arise is whether to allow foreign franchisees to make modifications
in the franchisor’s product offering so as to better satisfy the tastes and expectations of local
buyers.
Difficulty: 3 Hard
Topic: Why Compete Abroad? The Advantages and Disadvantages of a Global Strategy
Learning Objective: 07-03 The differences among the five primary modes of entry into foreign
markets.
Bloom’s: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
117) Explain why an acquisition is better than a greenfield venture.