International Business: The Challenges of Globalization, 7e (Wild)
Chapter 11 International Strategy and Organization
1) Strategy is the set of planned actions that managers take to help a company meet its
objectives.
2) All parties ranging from suppliers and employers to consumers who are affected by a
company’s activities are called its stockholders.
3) Objectives at the highest level in a company are always stated in the most specific terms.
4) Objectives of individual business units in an organization exclusively contain numerical
targets of performance.
5) Core competencies of organizations are the special skills of certain employees that give a
company an edge over other organizations.
6) Core competencies are developed by organizations over long periods of time.
7) Technology development is an example of a primary activity in the value chain of an
organization.
8) Customer service is an example of a support activity in the value chain of an organization.
9) Support activities assist companies in performing their primary activities.
10) Free-market economies tend to levy high taxes on business profits whereas socialist
economic systems normally levy lighter taxes.
11) A multinational strategy is most appropriate for companies that do not have foreign direct
investments but rather export their products to foreign markets.
12) A multinational strategy entails having a separate strategy for each nation in which a
company markets its products.
13) A multinational strategy is best suited to industries in which price competitiveness is a key
success factor.
14) The main benefit of a global strategy is that it allows companies to monitor buyer
preferences closely in each local market.
15) A global strategy does not allow a company to modify its products except for the most
superficial features.
16) A growth strategy is designed to increase the scale or scope of a corporation’s operations.
17) The scope of a corporation’s operations refers to the size of its operations.
18) A joint venture is an example of a retrenchment strategy of an organization.
19) The closing of factories with unused capacity is an example of a stability strategy.
20) The purpose of a combination strategy is to mix growth, retrenchment, and stability
strategies across a corporation’s business units.
21) A low-cost leadership strategy typically requires a company to have a large market share.
22) A negative aspect of a low-cost leadership strategy is low customer loyalty.
23) A differentiation strategy is often implemented when a company wants to exploit economies
of scale to have the lowest cost structure.
24) A focus strategy works best with mass-marketed products aimed at price-sensitive buyers.
25) Centralized decision making is beneficial when fast-changing national business
environments put a premium on local responsiveness.
26) Decentralization can help foster participative management practices.
27) An international area structure separates domestic from international business activities by
creating a separate international division with its own manager.
28) An international division structure reduces the authority of country managers in an
organization’s subsidiaries.
29) A main goal of the global product structure is to bring together geographic and product area
managers in joint decision making.
30) A global matrix structure is an organizational structure that divides worldwide operations
according to a company’s product areas.
31) The main purpose of self-managed teams is to help break down barriers between
departments.
32) ________ is the process of identifying and selecting an organization’s objectives and
deciding how the organization will achieve those objectives.
A) Stratification
B) Planning
C) Economic transition
D) Value chain analysis
33) A ________ is a set of planned actions taken by managers to help a company meet its
objectives.
A) mission statement
B) vision
C) strategy
D) core competency
34) Which of the following refers to a written statement of why a company exists and what it
plans to accomplish?
A) memorandum of association
B) mission statement
C) vision statement
D) articles of association
35) Which of the following is the first stage of the strategy-formulation process?
A) identification of value-creating activities
B) formulation of strategies
C) identification of company mission and goals
D) identification of core competency
36) Which of the following statements is true of objectives?
A) Objectives of individual business units in a company tend to be stated in the most general
terms.
B) Objectives become more precise at the level of individual departments.
C) Objectives at the highest level in an organization tend to be more specific.
D) Objectives at the highest level in an organization are more concrete as they contain numerical
targets.
37) The objectives at the ________ of an organization are typically more precise and contain
numerical targets of performance.
A) department-level
B) business-level
C) global-level
D) corporate-level
38) Which of the following is a special ability of a company that competitors find extremely
difficult to equal?
A) comparative advantage
B) absolute advantage
C) core competency
D) economy of scale
39) ________ is the process of dividing a company’s activities into primary and support activities
and identifying those that create value for customers.
A) Fundamental analysis
B) Technical analysis
C) Structural analysis
D) Value-chain analysis
40) Which of the following is considered as a primary activity in an organization?
A) infrastructure
B) marketing and sales
C) procurement
D) human resource management
41) According to value-chain analysis, inbound and outbound logistics are considered as
________.
A) tertiary activities
B) primary activities
C) support activities
D) core competencies
42) Which of the following is considered as a support activity in an organization?
A) inbound logistics
B) marketing and sales
C) procurement
D) customer service
43) Which of the following statements is true of the environmental forces that affect strategy
formulation?
A) Socialist economic systems normally levy light taxes on business profits.
B) Countries that excessively spend on R&D tend to have lower levels of prosperity.
C) Approval of the host government is almost always necessary for making direct investments.
D) Free-market economies tend to levy high taxes on business profits.
44) Adapting products and their marketing strategies in each of the national markets of a
company to suit local preferences is called a ________ strategy.
A) multinational
B) blue ocean
C) global
D) retrenchment
45) Companies often establish largely independent, self-contained units in each of its national
markets to implement a ________ strategy.
A) retrenchment
B) global
C) multinational
D) blue ocean
46) Which of the following strategies is appropriate for companies in industries where buyer
preferences do not converge across national borders?
A) retrenchment strategy
B) global strategy
C) multidomestic strategy
D) mass customization strategy
47) The main benefit of a multidomestic strategy is that it ________.
A) exploits scale economies in product development and marketing
B) is cost-saving due to product and marketing standardization
C) takes advantage of location economies
D) responds quickly and effectively to emerging buyer preferences
48) The main drawback of a multinational strategy is that it does not allow a company to
________.
A) exploit scale economies in product development or marketing
B) closely monitor buyer preferences in each local market
C) modify its products except for the most superficial features
D) respond quickly and effectively to emerging buyer preferences
49) A ________ strategy typically increases the cost structure for international companies and
forces them to charge higher prices to recover such costs.
A) retrenchment
B) global
C) multidomestic
D) blue ocean
50) Offering the same products using the same marketing strategy in all national markets of an
organization is referred to as a ________ strategy.
A) global
B) retrenchment
C) multinational
D) blue ocean
51) Companies that produce entire inventories of products or components in one or very few
optimal locations are most likely to follow a ________ strategy.
A) retrenchment
B) global
C) blue ocean
D) multinational
52) Companies that typically design promotional campaigns and advertising strategies at their
headquarters are most likely to follow a ________ strategy.
A) retrenchment
B) global
C) blue ocean
D) multidomestic
53) Global products are most commonly seen in industries where there is ________.
A) little convergence of buyer preference across national borders
B) low pressure to contain costs
C) high demand for customized products
D) significant price competition
54) A ________ strategy can create cost savings due to product and marketing standardization.
A) retrenchment
B) multidomestic
C) blue ocean
D) global
55) The main benefit of a global strategy is that it allows a company to ________.
A) closely monitor buyer preferences in each local market
B) save costs due to product and marketing standardization
C) customize its products and services
D) respond effectively to emerging buyer preferences
56) Companies involved in more than one line of business must first formulate a ________
strategy.
A) business-level
B) department-level
C) corporate-level
D) global-level
57) A growth strategy is designed to ________.
A) guard against organizational change
B) increase the scale or scope of a corporation’s operations
C) support the stability strategies of an organization
D) support the retrenchment strategies of an organization
58) Which of the following strategies is designed to increase the scale or scope of a corporation’s
operations?
A) differentiation strategy
B) growth strategy
C) stability strategy
D) retrenchment strategy
59) Organic growth refers to an organization’s corporate strategy that relies on growth ________.
A) through mergers and acquisitions
B) based on strategic alliances
C) generated internally
D) achieved from joint ventures
60) A strategy designed to reduce the scale or scope of a corporation’s business is called a
________ strategy.
A) growth
B) differentiation
C) retrenchment
D) stability
61) A retrenchment strategy is designed to ________.
A) encourage growth through joint ventures
B) reduce the scale or scope of a corporation’s operations
C) focus exclusively on internally generated growth
D) guard against organizational change
62) A company that is closing factories with unused capacity and laying-off workers is most
likely following a ________ strategy.
A) growth
B) retrenchment
C) stability
D) combined
63) A company that is selling unprofitable business units is most likely following a ________
strategy.
A) growth
B) retrenchment
C) stability
D) combined
64) Which of the following strategies is designed to guard an organization against change?
A) stability strategy
B) growth strategy
C) retrenchment strategy
D) differentiation strategy
65) Which of the following strategies works best for an organization that practices mass
production and mass-marketing?
A) differentiation strategy
B) focus strategy
C) low-cost leadership strategy
D) retrenchment strategy
66) A business-level strategy in which a company exploits economies of scale is called a
________.
A) differentiation strategy
B) stability strategy
C) low-cost leadership strategy
D) retrenchment strategy
67) Decreasing levels of customer loyalty to an organization’s products is a major disadvantage
of the ________ strategy.
A) blue ocean
B) stability
C) low-cost leadership
D) growth
68) A ________ strategy is one in which a company designs its products to be perceived by
buyers as unique throughout its industry.
A) differentiation
B) stability
C) low-cost leadership
D) retrenchment
69) Which of the following business-level strategies should a company follow in order to charge
a higher price for its products and enjoy greater customer loyalty?
A) differentiation strategy
B) stability strategy
C) mass customization strategy
D) retrenchment strategy
70) Which of the following is a characteristic based on which products are typically
differentiated?
A) brand loyalty
B) brand equity
C) product design
D) product cost
71) A ________ strategy is one in which a company emphasizes on serving the needs of a
narrowly defined market segment by being the low-cost leader, differentiating its product, or
both.
A) global
B) focus
C) stability
D) retrenchment
72) A ________ strategy often means designing products and promotions aimed at consumers
who are either dissatisfied with existing choices or who want something distinctive.
A) global
B) stability
C) low-cost leadership
D) focus
73) A(n) ________ strategy deals with the primary and support activities in an organization that
create value for customers.
A) business-level
B) department-level
C) corporate-level
D) international
74) The way in which a company divides its activities among separate units and coordinates
activities among those units is referred to as ________.
A) organizational structure
B) organizational network analysis
C) organizational diagnostics
D) organizational climate
75) ________ decision making occurs at a high organizational level in one location, such as an
organization’s headquarters.
A) Centralized
B) Facilitative
C) Participative
D) Consultative
76) ________ decision making disperses decisions to lower organizational levels, such as to
international subsidiaries.
A) Decentralized
B) Top-down
C) Authoritative
D) Top management
77) Decentralized decision making is beneficial when ________.
A) all subsidiaries use the same inputs in production
B) fast-changing national business environments put a premium on local responsiveness
C) one subsidiary’s output is another’s input
D) it aims to create a single global organizational culture
78) The lines of authority in an organization that run from top management to individual
employees and specify internal reporting relationships is called ________.
A) grapevine communication
B) symbolic interactionism
C) value chain
D) chains of command
79) A(n) ________ structure separates domestic from international business activities by creating
a separate global branch with its own manager.
A) international area
B) international division
C) global matrix
D) global product
80) An organizational structure that organizes a company’s entire global operations into countries
or geographic regions is referred to as a(n) ________ structure.
A) international area
B) international division
C) global matrix
D) global product
81) A(n) ________ structure is best suited to companies that treat each national market as unique
due to the vast cultural, political, or economic differences between nations.
A) international division
B) international area
C) global matrix
D) global product
82) Which of the following is a disadvantage of a company with an international area structure?
A) Country managers have very little authority.
B) The subsidiaries fail to develop organizational cultures suited to their locations.
C) Individual responsibility and accountability is foggy.
D) Cross-fertilization of knowledge from one unit to another may be less than desirable.
83) An organizational structure that splits the chain of command between product and area
divisions is referred to as a(n) ________ structure.
A) international area
B) international division
C) global matrix
D) global product
84) A team in which employees from a single department take on responsibilities of their former
supervisors is called a ________ team.
A) cross-functional
B) self-managed
C) global
D) virtual
85) ________ teams are self-managed teams that help reduce waste in the production processes
of many manufacturing companies.
A) Cross-functional
B) Quality-improvement
C) Interdependent
D) Virtual