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76. International strategy refers to a(n):
a.
action plan pursued by American companies to compete against foreign companies operating in the United
States.
b.
strategy through which the firm sells products in markets outside the firm’s domestic market.
c.
political and economic action plan developed by businesses and governments to cope with global competition.
d.
strategy American firms use to dominate international markets.
77. U.S. companies moving into the international market need to be sensitive to the need for local country or regional
responsiveness because of:
a.
increasing rejection of American culture across much of the world.
b.
the sophistication of the international consumer because of the Internet.
c.
consumer needs, political and legal structures, and social norms vary by country.
d.
the increasing loss of economies of scale.
78. All of the following are correct about what managers should know about firms based in a country with a national
competitive advantage EXCEPT:
a.
success is not guaranteed as the firm implements its chosen international business-level strategy.
b.
the actual strategic choices made are most compelling reasons for success or failure.
c.
success is guaranteed as the firm implements its chosen international business-level strategy.
d.
the determinants of national competitive advantage provide a foundation for a firm‘s competitive advantages.
79. A multi-domestic corporate-level strategy has ____ need for global integration and ____ need for local market
responsiveness.
a.
low; low
b.
low; high
c.
high; low
d.
high; high
80. Which of the following is NOT an incentive for firms to become multinational?
a.
To gain access to consumers in emerging markets
b.
To gain easier access to raw materials
c.
To avoid high domestic taxation on corporate income
d.
Opportunities to integrate operations on a global scale
81. Skaredykat Inc. is considering initial expansion beyond its home market. The firm has decided not to enter markets
that differ greatly from its home market, instead expanding within the twelve-nation region that includes its home country.
Which one of these is true?
a.
The firm is not engaging in international trade.
b.
The firm is using a regional approach to international expansion.
c.
The firm will not be able understand the cultures, legal, and social norms of this market.
d.
Skaredykat is too afraid to implement an international strategy.
82. Working in multiple international markets can provide firms with __________ perhaps even in terms of __________.
a.
location advantages; larger markets
b.
research and development activities; larger markets
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c.
new learning opportunities; research and development activities
d.
economies of scale and learning; larger markets
83. One of the primary reasons for failure of cross-border strategic alliances is:
a.
the incompatibility of the partners.
b.
conflict between legal and business systems.
c.
security concerns and terrorism.
d.
high debt financing.
84. U.S. cola companies entered the global market because of:
a.
limited growth opportunities in their domestic market.
b.
lower labor costs in the emerging markets.
c.
economies of scale that offset research and development costs.
d.
an increase in the return on investment from their U.S. bottling plants.
85. International corporate-level strategy focuses on:
a.
the scope of operations through both product and geographic diversification.
b.
competition within each country.
c.
economies of scale.
d.
sophistication of monitoring and controlling systems.
86. Which pair of industries would NOT be considered as “related and supporting” under Porter’s diamond model?
a.
Japanese cameras and copiers
b.
Italian leather-processing and shoes
c.
U.S. computers and software
d.
highway systems and the supply of debt capital
87. Associations such as the European Union, Organization of American States, and the North American Free Trade
Association, encourage:
a.
global strategies.
b.
domestication.
c.
regional strategies.
d.
nationalization.
88. Firms able to standardize the processes used to produce, sell, distribute, and service their products across country
borders enhance their ability to:
a.
learn how to continuously reduce costs while increase the value of their products.
b.
increase investment in research and development.
c.
access to a low-cost labor force in the host market.
d.
mitigate cultural differences.
89. Terrorism creates an economic risk for firms, which:
a.
reduces the amount of investment foreign companies will make in a country perceived to be terror-prone.
b.
is created by governmental bans on doing business with terrorist regimes.
c.
is offset by the above-average returns for firms that have learned how to operate in such an environment.
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d.
is absorbed by firms that are highly geographically diversified and that operate in both secure and insecure
locations.
90. A large domestic market can provide the country’s industries a chance at dominating the world market because:
a.
they have been able to develop economies of scale at home.
b.
they have access to abundant and inexpensive factors of production.
c.
the related and supporting industries will have been developed.
d.
the nation’s culture and educational system will be adapted to producing the labor force needed for the
industry.
91. Disney suffered lawsuits in France at Disneyland Paris as a result of the lack of fit between its transferred personnel
policies and the French employees charged to enact them. This is an example of:
a.
the effects of regionalization.
b.
the risks of a multi-domestic strategy.
c.
the liability of foreignness.
d.
the effect of demand conditions.
92. A firm may narrow its focus to a specific region of the world:
a.
because that market is most different from its domestic market and so represents an unexploited “greenfield
opportunity” for its products.
b.
in order to obtain greater economies of scale.
c.
so that it can better understand the cultures, legal and social norms, and other factors that are important for
effective competition in those markets.
d.
to take advantage of limited protections of intellectual property so that it can manufacture innovative products
without restrictions.
93. Moving into international markets is a particularly attractive strategy to firms whose domestic markets:
a.
demand a differentiation strategy for success.
b.
are limited in opportunities for growth.
c.
have developed unfriendly business attitudes toward the industry.
d.
have too much regulation.
94. A fundamental reason for a country’s development of advanced and specialized factors of production is often its:
a.
lack of basic resources.
b.
monetary wealth.
c.
small workforce.
d.
protective tariffs.
95. The means of entry into international markets that offers the greatest control is:
a.
licensing.
b.
acquisitions.
c.
joint ventures.
d.
greenfield ventures.
96. A global corporate-level strategy assumes:
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a.
efficiency and customization can be achieved simultaneously.
b.
a rise in income levels across the world.
c.
increasing levels of cultural differences among nations.
d.
more standardization of products across country markets.
97. A global corporate-level strategy differs from a multi-domestic corporate-level strategy in that in a global strategy:
a.
competitive strategy is dictated by the home office.
b.
competitive strategy is decentralized and controlled by individual strategic business units.
c.
products are customized to meet the individual needs of each country.
d.
the firm sells in multiple countries.
98. A global corporate-level strategy emphasizes:
a.
differentiated products.
b.
economies of scale.
c.
sensitivity to local product preferences.
d.
decentralizing control and limited monitoring.
99. In China, Starbucks is standardizing its operations while simultaneously decentralizing some decision-making
responsibility to local levels to meet customers’ tastes. Starbucks is following the __________ international corporate-
level strategy.
a.
transnational
b.
global
c.
differentiation
d.
multi-domestic
100. When a firm INITIALLY becomes internationally diversified, its returns:
a.
remain stable.
b.
decrease.
c.
become more variable.
d.
increase.
101. Effectively implementing the ________ international corporate-level strategy often produces higher performance
than does implementing either the _______ or _________ strategies.
a.
multi-domestic; global; transnational
b.
global; multi-domestic; transnational
c.
cost leadership; differentation; focus
d.
transnational; multi-domestic; global
102. Which of the following is NOT a factor pressuring companies for local responsiveness?
a.
Differences in employment laws
b.
Customization due to cultural differences
c.
Government pressure for firms to use local sources for procurement
d.
Availability of low labor costs
103. The location advantages associated with locating facilities in other countries can include all of the following
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EXCEPT:
a.
low-cost labor.
b.
access to critical supplies.
c.
access to customers.
d.
evasion of host country governmental regulations.
104. Which of the following is NOT a typical disadvantage of licensing?
a.
Little control over the marketing of the products
b.
Licensees may develop a competitive product after the license expires
c.
Lower potential returns than the use of exporting or strategic alliances
d.
Incompatibility of the licensing partners
105. The two important environmental trends that influence a firm’s choice and use of international corporate-level
strategies are _________ and __________.
a.
culture; geographic scope
b.
cost; quality
c.
regionalization; globalization
d.
liability of foreignness; regionalization
106. Arkadelphia Polymers, Inc., earns 60 percent of its revenue from exports to Europe and Asia. The CEO of the
company would be:
a.
concerned if the value of the dollar strengthened.
b.
pleased if the value of the dollar strengthened.
c.
unconcerned about the fluctuation in the value of the dollar because the company is widely diversified
geographically.
d.
likely to consider moving to international strategic alliances or acquisitions if the value of the dollar fell and
remained low.
107. A U.S. manufacturer of adaptive devices for persons with disabilities is considering expanding internationally. It is a
fairly small company, but it is looking for growth opportunities. This company should primarily consider the option of:
a.
licensing.
b.
exporting.
c.
a strategic alliance.
d.
a greenfield venture.
108. The transnational strategy is becoming increasingly necessary to compete in international markets for all the
following reasons EXCEPT:
a.
the growing number of competitors heightens the requirements to keep costs down.
b.
the desire for specialized products to meet consumers’ needs.
c.
differences in culture and institutional environments also require firms to adapt their products and approaches
to local environments.
d.
it is easy to use.
109. A multi-domestic corporate-level strategy is one in which:
a.
a corporation chooses not to compete internationally but where there are a number of international competitors
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in the firm’s local marketplace.
b.
the firm produces a standardized product, but markets it differently in each country in which it competes.
c.
the firm customizes the product for each country in which it competes.
d.
the firm competes in a number of countries, but it is centrally coordinated by the home office.
110. The problems associated with exporting include:
a.
merging corporate cultures.
b.
a partner’s incompatibility.
c.
difficulty in negotiating relationships.
d.
high transportation costs and the expense of tariffs.
111. If conflict in a strategic alliance or joint venture is not manageable, a(n) _______may be a better option.
a.
licensing strategy
b.
exporting strategy
c.
acquisition
d.
new wholly owned subsidiary
112. Japan, due to a lack of undeveloped land, would be an unusual choice of location for a U.S. cattle company to set up
local grazing operations. This limiting factor would be identified in what part of Porter’s determinants of national
advantage?
a.
Factors of production
b.
Demand conditions
c.
Related and supporting industries
d.
Firm strategy, structure, and rivalry
113. All of the following are reasons why firms use international strategic alliances EXCEPT:
a.
sharing of risks and resources.
b.
alliances facilitate the development of new capabilities.
c.
learning new competencies particularly those related to technology.
d.
strategic alliances are easy to manage.
114. A licensing agreement:
a.
results in two firms agreeing to share the risks and the resources of a new venture.
b.
is best way to protect proprietary technology from future competitors.
c.
allows a foreign firm to purchase the rights to manufacture and sell a firm’s products within a host country.
d.
can be greatly impacted by currency exchange rate fluctuations.
115. Increasingly, customers worldwide are demanding emphasis on local requirements and companies require efficiency
as global competition increases. This has triggered an increase in the number of firms using the ____ strategy.
a.
multi-domestic
b.
transnational
c.
universal
d.
global
116. The positive results associated with increasing international diversification have been shown to:
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a.
continue as the level of international diversification increases.
b.
level off and become negative as diversification increases past some point.
c.
become negative quickly.
d.
be centered in only one or two industries.
117. If intellectual property rights in an emerging economy are not well-protected, the number of firms in the industry is
rapidly growing, and the need for global integration is high, ____ is the preferred entry mode.
a.
exporting
b.
strategic alliance
c.
a joint venture or wholly owned subsidiary
d.
licensing
118. Which of the following is an advantage associated with greenfield ventures?
a.
Governmental support and subsidies in the host country
b.
The lower cost of this type of venture
c.
The level of control over the firm’s operations
d.
The lower level of risks involved
119. Bunyan Heavy Equipment, a U.S. firm, is investigating expanding into Russia using a greenfield venture. The
committee researching this project has delivered a negative report. The MAIN concern of the committee is probably:
a.
loss of intellectual property due to Russian piracy.
b.
the fluctuation in the value of the ruble.
c.
the numerous and conflicting legal authorities in Russia.
d.
Russia’s recent actions to gain state control of private firms’ assets.
120. The increased pressures for global integration of operations have been driven mostly by:
a.
new low-cost entrants.
b.
increasing demand for similar products.
c.
increased levels of joint ventures.
d.
the rise of governmental regulation.
121. Raymond Vernon states that the classic rationale for international diversification is to:
a.
pre-emptively dominate world markets before foreign companies can establish dominance.
b.
avoid domestic governmental regulation.
c.
extend the product’s life cycle.
d.
avoid international governmental regulation.
122. Firms with core competencies that can be exploited across international markets are able to:
a.
achieve synergies and produce high-quality goods at lower costs.
b.
enter new markets more quickly.
c.
enhance their market image and brand loyalty among local consumers.
d.
meet local government requirements more quickly than their international competitors.
123. All of the following complicate the implementation of an international diversification strategy EXCEPT:
a.
widespread multilingualism.
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b.
increased costs of coordination between business units.
c.
cultural diversity.
d.
logistical costs.
124. Discuss the three international corporate-level strategies. On what factors are these strategies based?
125. What are the incentives for firms to use international strategies? What are the three basic benefits firms can derive by
moving into international markets?
126. Discuss the effect of international diversification on a firm’s returns.
127. Identify and describe the modes of entering international markets. What are their advantages and disadvantages?
128. What are the three basic benefits of international strategies?
129. Identify and describe the major risks of international diversification.
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Answer Key
1. True
2. True
3. True
4. True
5. False
6. True
7. False
8. True
9. True
10. False
11. True
12. True
13. True
14. True
15. True
16. False
17. False
18. True
19. True
20. False
21. True
22. True
23. True
25. True
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26. True
27. False
28. True
29. False
30. True
31. False
32. True
33. True
34. True
35. True
36. True
37. True
38. True
39. True
40. False
41. False
42. True
43. False
44. True
45. False
46. True
47. True
48. False
49. True
51. True
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52. True
53. True
54. False
55. True
56. True
57. True
58. True
59. False
60. a
61. d
62. b
63. c
64. c
65. c
66. b
67. d
68. c
69. b
70. d
71. d
72. a
73. d
74. b
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77. c
78. c
79. b
80. c
81. b
82. c
83. a
84. a
85. a
86. d
87. c
88. a
89. a
90. a
91. c
92. c
93. b
94. a
95. d
96. d
97. a
98. b
99. a
100. b
102. d
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103. d
104. d
105. d
106. a
107. b
108. d
109. c
110. d
111. c
112. a
113. d
114. c
115. b
116. b
117. c
118. c
119. d
120. b
121. c
122. a
123. a
124. International corporate strategy focuses on the scope of a firm’s operations through both product and geographic
diversification. The three basic international corporate-level strategies vary on the need for local responsiveness to the
market and the need for global integration. The multi-domestic strategy focuses on competition within each country in
which the firm operates. Firms employing a multi-domestic strategy decentralize strategic and operating decisions to the
strategic business units operating in each country so business units can customize their goods and services to the local
market. The use of global integration in this strategy is low. The global strategy assumes more standardization of product
demand across country boundaries. Therefore, competitive strategy is centralized and controlled by the home office,
placing high emphasis on global integration of operations. The strategic business units in each country are interdependent
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