Chapter 5
Strategic Management in the Multinational Company: Content and Formulation
MULTIPLE CHOICE
1. Generic strategies
a.
Occur when a company can outmatch its rivals in attracting and maintaining its customers.
b.
Represent basic ways that domestic and multinational companies keep and achieve
competitive advantage.
c.
Are all based on finding ways to provide superior value to the customer.
d.
None of the above
2. Which of the following is a primary generic strategy?
a.
Cross country subsidizing
b.
Low Cost
c.
Competitive pricing
d.
Critical success factors
3. Differentiation leads to higher profits by
a.
Charging a higher price than competitors.
b.
Offering the customer better value.
c.
Offering a product with more features and quality.
d.
All of the above
4. A low cost strategy leads to higher profits by
a.
Charging a higher price than competitors.
b.
Offering the customer products with more features.
c.
The cost savings that firms achieve.
d.
Adding unique features to products.
5. __________ strategies achieve higher profits by charging higher prices.
a.
Low cost
b.
Differentiation
c.
Competitive advantage
d.
Generic
6. The value chain
a.
Represents a generic strategy.
b.
Represents all the activities that a firm uses to market and deliver its products.
c.
Represents all the activities that a firm uses to design, produce, market, deliver, and
support its products.
d.
None of the above
7. Upstream activities in the value chain are concerned, in part, with
a.
The primary activities.
b.
The support activities.
c.
Input logistics.
d.
After market service.
8. Support activities include
a.
Research and development.
b.
Service repair.
c.
Output logistics.
d.
None of the above
9. Sales and dealing with distribution channels refer to _________ activities in the value chain.
a.
Upstream
b.
Support
c.
Secondary
d.
Downstream
10. Capabilities that lead to competitive advantage must be
a.
Valuable, rare, and easy to copy.
b.
Fairly substitutable.
c.
Valuable, rare, and hard to copy.
d.
None of the above
11. Competitive strategies
a.
Are examples of basic generic strategies.
b.
Are moves multinationals and other companies use to defeat competitors.
c.
Can be low cost or differentiation.
d.
All of the above
12. Offensive strategies
a.
Are examples of basic generic strategies.
b.
Are direct targeting/attacking of rivals.
c.
Are attempts to reduce the risk of being attacked.
d.
Are used to convince other firms to seek other targets.
13. Defensive strategies include
a.
Direct attacks, end-run offensive, and acquisitions.
b.
The generic strategies.
c.
Counter-parries.
d.
None of the above
14. Strategies used to attempt to reduce the risk of being attacked are
a.
Defensive competitive strategies.
b.
Offensive competitive strategies.
c.
Generic strategies.
d.
None of the above
15. Counter-parry
a.
Is an example of an offensive strategy.
b.
Is an example of a generic strategy.
c.
Is fending off a competitor’s attack in one country by attacking the competitor in another
country.
d.
None of the above
16. Corporate level strategies
a.
Are similar to the generic strategies.
b.
Pertain to the operation of corporate divisions.
c.
Are concerned with how single business companies choose strategies.
d.
Are concerned with how companies choose their mixtures of different businesses.
17. Business level strategies
a.
Include only the generic strategies.
b.
Pertain to the operation of multiple businesses.
c.
Are concerned with how single business companies choose strategies.
d.
Are concerned with how companies choose their mixtures of different businesses.
18. In related diversification
a.
Companies acquire businesses in any country.
b.
Companies acquire businesses in any industry.
c.
Companies acquire businesses that are similar in some way to their core business.
d.
None of the above
19. Acquisition of mixtures of businesses in any industry is
a.
Low cost strategy.
b.
Unrelated diversification.
c.
Related diversification.
d.
A business level strategy.
20. This is considered to be a popular and controversial way to address internal cost inefficiencies.
a.
Insourcing
b.
Outsourcing
c.
Related diversification
d.
Unrelated diversification
21. Market size, ease of entry and exit, and economies of scale are all examples of
a.
Defensive strategies.
b.
Key success factors.
c.
Dominant economic characteristics.
d.
Differentiation.
22. Key success factors are
a.
Examples of defensive strategies.
b.
Important characteristics of a company or its product that lead to success in an industry.
c.
Similar to generic strategies.
d.
The economic characteristics of countries that lead to success.
23. The acronym SWOT stands for
a.
Strategies with organizational timelines.
b.
Selection, withdrawal, opportunities, and timeliness.
c.
Strengths, weakness, opportunities, and threats.
d.
Strategies, winning, organizations, and tender offers.
24. A strength is
a.
A favorable condition in a company’s environment.
b.
Distinctive capability, resource, skill, or other advantage that a company has vis-à-vis its
competitors.
c.
Represented by changes in the economic conditions in an industry.
d.
None of the above
25. Weaknesses are
a.
Lack of distinctive capabilities, resource, and skills that leads to competitive disadvantage
compared to competitors.
b.
Unfavorable conditions in a firm’s environment.
c.
Relevant to both the internal and external environment of companies.
d.
All of the above
26. BMW and Mercedes view their Japanese rivals moves into the upscale car market as a/an
a.
Strength.
b.
Weakness.
c.
Opportunity.
d.
Threat.
27. Matrix analyses
a.
Help assess business portfolios.
b.
Divide businesses into successes and failures.
c.
Are less complicated for the multinational company.
d.
All of the above
28. In the BCG Matrix, cash cows are
a.
Businesses in a slow-growth industry where the company has a strong market share
position.
b.
Businesses in a fast growing industry where the company has a strong market share
position.
c.
Businesses in a slow-growth industry where the company has a weak market share
position.
d.
Businesses in a fast growing industry where the company has a weak market share
position.
29. In the BCG matrix, the appropriate strategy for dogs should be
a.
Invest and Expand.
b.
Defend and Harvest.
c.
Divest.
d.
None of the above
30. In the BCG Matrix, Defend and Harvest are the most popular strategies for
a.
Stars.
b.
Dogs.
c.
Cash cows.
d.
Problem children.
31. Competitive advantage
a.
Represent the basic ways that companies can provide superior value to customers.
b.
Is one of the basic strategies.
c.
Occurs when a company can outmatch its rivals in attracting and maintaining its
customers.
d.
Is best achieved using a low cost strategy.
32. The GE Portfolio matrix
a.
Is the same as the Boston Consulting Group matrix.
b.
Contains four cells based on industry and business strength.
c.
Can be used to assess business level strategies.
d.
Contains nine cells based on industry strength and business competitive position.
33. Capabilities
a.
Are the inputs into a company’s production or service processes.
b.
Are early activities in the value chain such as R&D and dealing with suppliers.
c.
Are similar to distinctive competencies.
d.
Represent the ability of companies to assemble and coordinate their resources in ways that
lead to lower costs of differentiated outputs.
34. Favorable conditions in a firm’s external environment are known as
a.
Strengths.
b.
Capabilities.
c.
Opportunities.
d.
Distinctive competencies.
35. Which of the following more likely represents a threat to a multinational company like Toyota?
a.
Higher prices charged by Toyota’s competitors.
b.
Lower interest rates around the world that makes cars more affordable.
c.
Toyota’s bad image among teenagers.
d.
Kia and Hyundai’s entry in markets traditionally dominated by Toyota.
36. A company that has a limited product range, and sells to certain buyers in some geographical areas is
said to have which of the following?
a.
Broad competitive scope
b.
Narrow competitive scope
c.
Lack of competition
d.
None of the above
37. Porter’s five forces help a multinational manager understand
a.
The key success factors in an industry.
b.
How to assess the attractiveness of the industries a company is involved in.
c.
How to assess its unrelated diversification efforts.
d.
The trends in its industry.
38. Which of the following forces is NOT one of the forces considered in Porter’s five forces analysis?
a.
Degree of competition among existing competitors
b.
Degree of governmental regulation in the industry
c.
Threat of new entrants in the industry
d.
Bargaining power of buyers in the industry
39. The degree to which competitors are confronted with alternatives for their products is referred to as
which force in Porter’s five forces?
a.
Threat of new entrants
b.
Bargaining power of buyers
c.
Degree of competition
d.
None of the above
40. The national context affects strategy through which of the following processes?
a.
Encourage or discourage certain forms of businesses and strategies in each country
b.
Factor conditions play a role in shaping each country’s unique resource base
c.
Determine which resources are used, how they are used and which are developed
d.
All of the above
ESSAY
1. Describe the low cost strategy as compared to the differentiation strategy.
2. Regarding low cost and differentiation strategies, when is each strategy appropriate?
3. Compare and contrast defensive and offensive strategies. Discuss when a multinational can use
offensive strategies in one country and defensive strategies in another.
ANS:
4. What is the value chain? How can an understanding of the value chain help a company be more
successful in its generic strategy?
5. What is related diversification? When would you expect related diversification to be more profitable
than unrelated diversification?
6. What is sustainable competitive advantage? What are some essential characteristics of company
capabilities that can lead to sustainable competitive advantage?
7. Describe the SWOT analysis. Why is a SWOT analysis more complex for a multinational than for a
domestic company?
ANS:
8. Discuss some of the major issues a multinational manager needs to take into consideration when
conducting an industry analysis.
9. What are key success factors? Discuss some KSFs that are most likely to vary by national context.
10. Discuss each of Porter’s five forces model. What information can a multinational obtain from Porter’s
five forces industry analysis?