61. An increase in the value of the U.S. dollar is an example of an economic risk in that it can reduce the value of U.S.
multinational firms’ international assets and earnings in other countries.
a. True
b. False
62. Some of the costs incurred by firms pursuing international diversification may derive from higher coordination
expenses, trade barriers, and lack of familiarity with local cultures.
a. True
b. False
63. Although leaders in Russia have tried to reassure potential investors about their property rights, political risks in the
form of weak laws and commonplace government corruption make firms leery of investing in Russia.
a. True
b. False
64. The amount of diversification in a firm‘s international operations that can be managed varies from company to
company and is affected by manager’s abilities to deal with ambiguity and complexity.
a. True
b. False
Multiple Choice
65. 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.
66. 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.
67. 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
68. 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.
69. The benefits of expanding into international markets include each of the following opportunities EXCEPT
a. increasing the size of the firm’s potential markets.
b. economies of scale and learning.
c. location advantages.
d. favorable tax concessions and economic incentives by home-country governments.
70. 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.
71. 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
72. 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.
73. 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.
74. 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.
c. new learning opportunities; research and development activities.
d. economies of scale and learning; larger markets.
75. Firms able to standarize 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.
76. 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.
77. The location advantages associated with locating facilities in other countries can include all of the following
EXCEPT
a. low-cost labor.
b. access to critical supplies.
c. access to customers.
d. evasion of host country governmental regulations.
78. Factors of production in Porter’s model of international competitive advantage include all of the following EXCEPT
a. labor.
b. capital.
c. infrastructure.
d. technology.
79. In Porter’s model, a specialized factor of production would include
a. abundant natural resources.
b. a large workforce.
c. an extensive highway transportation system.
d. workers with advanced engineering skills.
80. In Porter’s model, if a country has both and production factors, it is likely to serve an
industry well by spawning strong home-country competitors that can also be successful global competitors.
a. basic; advanced
b. advanced; generalized
c. basic; generalized
d. advanced; specialized
81. 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
82. 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.
83. The four aspects of Porter’s model of international competitive advantage include all of the following EXCEPT
a. factors of production.
b. demand conditions.
c. political and economic institutions.
d. related and supporting industries.
84. 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
85. In France, fine dressmaking and tailoring have been a tradition predating Queen Marie Antoinette. Cloth
manufacturers, design schools, craft apprenticeship programs, modeling agencies, and so forth, all exist to supply
the clothing industry. This is an example of the in Porter’s model.
a. strategy, structure, and rivalry among firms
b. related and supporting industries
c. demand conditions
d. factors of production
86. 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.
87. In addition to the four basic dimensions of Porter‘s “diamond” model,
failure of firms.
a. national work ethic
b. educational requirements
c. government policy
d. national pride
may also contribute to the success or
88. 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.
89. Under industry structural analysis (Chapter 2), rivalry is viewed as detrimental to profitability. Under the
model of national advantage (Chapter 8),
firms are able to compete against global rivals.
a. low; low; beneficial
b. low; low; detrimental
c. high; high; beneficial
d. high; high; detrimental
rivalry is viewed as as it results in competition and surviving
90. All of the following are international corporate-level strategies EXCEPT the strategy.
a. multidomestic
b. universal
c. global
d. transnational
91. 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.
92. Effectively implementing the international corporate-level strategy often produces higher performance
than does implementing either the _______ or _________ strategies.
a. multidomestic; global; transnational
b. global; multidomestic; transnational
c. cost leadership; differentation; focus
d. transnational; multidomestic; global
93. A multidomestic corporate-level strategy is one in which
a. a corporation chooses not to compete internationally but where there are a number of international
competitors 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.
94. A multidomestic corporate-level strategy has
responsiveness.
a. low; low
b. low; high
c. high; low
d. high; high
need for global integration and need for local market
95. A global corporate-level strategy differs from a multidomestic 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.
96. 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.
97. A global strategy
a. is easy to manage because of common operating decisions across borders.
b. achieves efficient operations without sharing resources across country boundaries.
c. increases risk because decision making is centralized at the home office.
d. lacks responsiveness to local markets.
98. A global corporate-level strategy assumes
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.
99. A transnational corporate-level strategy seeks to achieve
a. customization for the local market.
b. economies of scale and centralized strategic control.
c. global efficiency and local responsiveness.
d. standardization of products across countries.
100. 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.
101. 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
corporate-level strategy.
a. transnational
b. global
c. differentiation
d. multidomestic
international
102. Increasingly, customers worldwide are demanding emphasis on local requirements and companies are needing
efficiency as global competition increases. This has triggered an increase in the number of firms using the
strategy.
a. multidomestic
b. transnational
c. universal
d. global
103. 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.
104. 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 multidomestic strategy.
c. the liability of foreignness.
d. the effect of demand conditions.
105. is the set of costs associated with unfamiliar operating environments; economic, administrative and
cultural differences; and the challenges of coordination over distances.
a. Transnational risk
b. Regionalization
c. Liability of foreignness
d. International risk
106. 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.
107. 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.
108. 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.
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 a scaredy-cat.
109. Most firms enter international markets sequentially, introducing their first.
a. most innovative products
b. largest and strongest lines of business
c. most generic products, which will be more likely to generate universal product demand,
d. products customized to the region
110. 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.
111. The choices that a firm has for entering the international market include all of the following EXCEPT
a. exporting.
b. licensing.
c. leasing.
d. acquisition.