International Business, 14e (Daniels et al.)
Chapter 11 The Strategy of International Business
1) Which of the following statements about Zara is most likely FALSE?
A) Zara puts fewer products on clearance racks than most of its competitors in the industry.
B) Zara’s large advertising budget generates word-of-mouth and attracts new buyers.
C) New products and designs are delivered to Zara stores every three to four weeks.
D) Most of Zara’s products move through the firm’s distribution center in Spain.
2) Political, legal, economic, monetary, and institutional forces comprise the ________ of international
business and influence managers’ actions.
A) environment
B) competition
C) culture
D) threat
3) Phillip is an international business manager with Corbin Manufacturing. Which of the following
serves as an external influence on the business decisions that Phillip makes?
A) production plant locations
B) host country monetary policy
C) supply chain linkages
D) product design standards
4) ________ is the framework that managers apply to determine the competitive moves and business
approaches that run the company.
A) Competition
B) Growth
C) Strategy
D) Vision
5) Which force in Toyota’s immediate environment would most likely have the greatest impact on its
strategy?
A) interest rate trends
B) technology developments
C) shifts in U.S. political attitudes
D) actions taken by Honda and Mercedes Benz
6) Which of the following is NOT among the five forces in the Five-Forces Model of Industry
Structure?
A) governments
B) substitute products
C) potential new entrants
D) suppliers of raw materials
7) Which of the following is the best example of a product disruption driving industry change?
A) redesign of Toyota’s Prius
B) introduction of Apple’s iPad
C) AT&T’s purchase of T-Mobile
D) merger of United and Continental
8) The industry organization (IO) paradigm reports that, on average, the best predictor of firm strategy is
the ________.
A) company’s stockpile of assets, skills, and capabilities
B) aggressiveness of a company’s marketing objectives
C) link between a company’s products and processes
D) structure of the industry in which it competes
9) The Industry Organization (IO) paradigm assumes which of the following?
A) stable political and cultural trends
B) shifting foreign exchange rates
C) perfect competition
D) unequal value
10) Which of the following is the most important constraint on the explanatory power of the IO
paradigm?
A) Many industries are imperfectly competitive.
B) Many companies are locally but not internationally competitive.
C) Most customers have perfect knowledge of the products they select.
D) Most industries have many firms that each have small market shares.
11) Improving explanatory power of the IO paradigm can be done by considering the potential for
________ to lead to a company’s sustained competitive advantage.
A) bright, motivated managers
B) political trends and events
C) cultural institutions
D) new markets
12) As a result of the global economic crisis, the potential for profitability in all sorts of industries has
________.
A) decreased
B) increased
C) become less predictable
D) become more projectable
13) Which of the following has the greatest potential to transform an industry’s structure?
A) a change in a competitor’s management
B) a change in a competitor’s pricing structure
C) the expansion of a distribution channel
D) the exit of a competitor from the industry
14) Which of the following is the purpose of a company’s value proposition?
A) to exceed customers’ expectations
B) to force competitors into a price war
C) to identify consumers for whom the company creates products
D) to explain why a consumer should buy the company’s products
15) A strategy that focuses on lowering operating costs is referred to as a ________ strategy.
A) differentiation
B) cost leadership
C) niche market
D) diversification
16) Value-Mart has achieved the status of overall low-cost producer in its industry, which means that
Value-Mart ________.
A) can strongly defend its market position in the event of a price war
B) will earn the largest profits of any company in the industry
C) makes the most appealing product in its industry
D) can block the entry of new firms into the industry
17) ________ are the two basic strategies for creating value and attaining a competitive advantage in an
industry.
A) Diversification and niche marketing
B) Industry leadership and market dominance
C) Customer satisfaction and product innovation
D) Cost leadership and differentiation
18) A company that employs a ________ strategy creates value by generating customer insights and
translating those insights into innovations.
A) differentiation
B) diversification
C) cost leadership
D) innovation
19) The essence of a differentiation strategy is to ________.
A) target the most sophisticated segment of the market
B) incorporate the greatest number of features into a product
C) offer a unique product that supports a premium price
D) outspend rivals on product advertising
20) A differentiation strategy works well when ________.
A) a company designs a universal product for a broad market
B) buyers believe minor product differences are irrelevant to price
C) buyers are highly sensitive to price shifts and quality control
D) a company can continually develop products that have unique features
21) Successful implementation of a(n) ________ strategy requires a company to develop unique
competencies that rivals find hard, if not impossible, to match or copy.
A) differentiation
B) cost leadership
C) globalization
D) marketing
22) A useful way to understanding the purpose of strategy is to think of the firm as a(n) ________,
composed of a series of distinct activities, including production, marketing, materials management, R &
D, human resources, information systems, and the firm infrastructure.
A) activity network
B) value constellation
C) task succession
D) value chain
23) A company’s value chain is best described as the ________.
A) variable sequence of converting product ideas into value for shareholders
B) mixture of activities taken to define product value standards and price points
C) discrete series of steps taken to move a product from conception to end-users
D) blueprint that must be followed to leverage the core capabilities of a global firm
24) In the context of value chain analysis, the support activities of a firm include ________.
A) outbound logistics, human resources, and information systems
B) production, marketing, and operations
C) shipping and customer service
D) research and development
25) Which of the following is considered a primary activity in a company’s value chain?
A) shipping
B) product design
C) systems and solutions
D) materials and equipment
26) Dispersing value activities where and in how many places in the world is the issue of ________.
A) logistics
B) clustering
C) coordination
D) configuration
27) Citibank decides to open a call center in Mumbai, India because a detailed analysis of the country-
specific advantages suggests that India is the optimal place for responding to customers’ calls. Citibank
is exploiting ________ by running a call center in India.
A) value configuration synergies
B) location economies
C) geographic arbitrage
D) value offshoring
28) Zara creates, produces, and distributes most of its products from its headquarters in Spain. Zara is
most likely using a ________ configuration.
A) concentrated
B) coordinated
C) dispersed
D) logical
29) Johnson Enterprises manufactures computer chips used in cell phones. The MNE has long
production runs that lower the per unit cost of each chip. The firm also purchases materials in bulk from
its suppliers with whom Johnson has long-term contracts. Johnson is most likely benefiting from
________.
A) economies of scale
B) the cluster effect
C) digitization
D) location economies
30) A ________ is a special outlook, skill, capability, or technology that runs through the firm’s
operations, weaving together all value activities into an integrated value chain.
A) core competency
B) value proposition
C) mission statement
D) learning curve
31) Which of the following refers to the means by which management applies the systems that link a
company’s value activities, whether those activities are performed in one or in many countries?
A) configuration
B) logistics
C) coordination
D) core competency
32) Social network analysis indicates that information flows more efficiently in a(n) ________ manner.
A) collaborative
B) competitive
C) hierarchical
D) impersonal
33) Firms that compete in the global marketplace typically face the asymmetric forces of pressures for
________ and ________.
A) global integration; local responsiveness
B) price reductions; cost reductions
C) politically sensitivity; market leadership
D) cost reductions; customer satisfaction
34) No matter the country or culture, money has three fundamental features that motivate consumers
around the world to maximize purchasing power by buying the highest possible quality product for the
lowest possible price. These three features include all of the following EXCEPT which one?
A) scarcity
B) difficulty of acquisition
C) difficulty of allocation
D) difficulty of saving
35) In the demand-pull versus supply-push views of the market, which of the following is best classified
as a push dynamic that drives supply in the global market?
A) digitization
B) media access
C) standardization
D) market globalization
36) Which of the following would most likely pressure an MNE to globally integrate its value activities?
A) costs of producing in separate facilities exceeding those of producing in a single facility
B) variability in consumers’ tastes and preferences shifting across countries
C) market pressures to add new product features continually
D) demands imposed by host country governments
37) Which of the following is LEAST likely to trigger the standardization of consumer preferences?
A) intrinsic functions of money
B) global access to common media
C) increasing nationalism
D) improved communications technologies
38) Which of the following is NOT a factor driving local responsiveness among global firms?
A) cross-national differences in distribution channels
B) diverging consumer tastes and preferences
C) cross-national differences in product standards
D) host government support of freer international trade
39) Advantages of following a strategy of local responsiveness include the ________.
A) improved ability to transfer skills to employees in different locations
B) opportunity to adopt a global advertising program
C) ease in standardizing manufacturing methods across countries
D) flexibility to apply location-specific skills to local opportunities
40) Host governments’ growing demands for increasing operational transparency will most likely spur
companies to make their value chains more ________.
A) locally responsive
B) globally integrated
C) concise
D) complex
41) According to the integration-responsiveness (IR) grid, consumer electronics and corporate banking
are two types of industries with ________ industry pressure for global integration and ________
industry pressure for local responsiveness.
A) low; low
B) high; high
C) low; high
D) high; low
42) In the global environment, firms use an international strategy, a multidomestic strategy, a global
strategy, or a ________ strategy.
A) regional
B) standardization
C) transnational
D) locational
43) The integration-responsiveness (IR) expresses how a company’s ________ is a function of the
relationship between its value chain and the prevailing pressures for global integration or local
responsiveness in its industry.
A) value proposition
B) target market
C) mission
D) strategy
44) When the pressure for global integration is high and the pressure for local responsiveness is low, a
company is most likely to pursue a(n) ________ strategy.
A) global
B) transnational
C) multidomestic
D) international
45) Firms that pursue a(n) ________ strategy create value by transferring core competencies from the
home market to foreign markets in which local rivals lack a competitive alternative.
A) transnational
B) multidomestic
C) global
D) international
46) Which of the following is NOT a disadvantage of the international strategy?
A) Headquarters can misread foreign-market opportunities and threats.
B) The transfer of core competencies to foreign markets is complicated by the need to adapt to local
needs.
C) Local subsidiaries are not given the opportunity to adapt value activities and share what they have
learned with headquarters.
D) The company can be blindsided by an unexpectedly innovative rival in a foreign market.
47) A distinct advantage of an international strategy is ________.
A) transferring core competencies to foreign markets
B) reaping benefits of global learning
C) customizing product offerings to local conditions
D) leveraging local managers’ knowledge of their markets
48) A distinct disadvantage of an international strategy is ________.
A) restricting the movement of core competencies to local markets
B) capitalizing on the benefits of global learning
C) customizing product offerings to local conditions
D) relying on home managers’ knowledge of foreign markets
49) Darvin Foods is an MNE that is in the process of revising its international business strategy. Most of
the firm’s top executives believe that Darvin should implement a multidomestic strategy. Which of the
following conditions would most likely support this type of strategy?
A) a high need for local responsiveness and a low need to reduce costs via global integration
B) a high need for local responsiveness and a high need to create efficiencies via global integration
C) a low need for local responsiveness and a low need to reduce costs via global integration
D) a low need for local responsiveness and a high need to create efficiencies via global integration
50) Preston Electronics is an MNE with facilities located in Taiwan, Singapore, and Germany. Preston
gives its local operations the authority to adapt value activities to prevailing local economic, political,
legal, and cultural conditions. Preston is most likely using a(n) ________ strategy.
A) global
B) multidomestic
C) international
D) continental
51) Johnson & Johnson delegates to its subsidiaries a great deal of authority to respond to local
conditions. Many subsidiaries have their own manufacturing, marketing, research, and human resource
functions. This value chain configuration illustrates the ________ strategy.
A) transnational
B) global
C) multidomestic
D) international
52) A disadvantage of the ________ strategy is that firms that adopt this strategy can decentralize too
much autonomy to national subsidiaries.
A) multidomestic
B) continental
C) international
D) transnational
53) Google essentially views the entire world as one market and assumes that there are no fundamental
differences among countries with regard to consumers’ preferences. Google is engaging a(n) ________
strategy.
A) international
B) multidomestic
C) transnational
D) global
54) A global strategy tends to be more successful when ________.
A) buyers are looking for customized products at bargain prices
B) the industry’s product is a commodity
C) entry barriers are low for new firms
D) suppliers have little bargaining power
55) The MNE that applies a global strategy aims to ________.
A) compete essentially the same way wherever the company does business
B) empower local operations to make decisions about value activities
C) adapt activities to the industry standards in critical markets
D) customize its business practices to consumer expectations
56) Which strategy champions worldwide consistency and standardization to support the firm’s goal to
become the low-cost leader?
A) international strategy
B) multidomestic strategy
C) global strategy
D) transnational strategy