57) An MNE in which new knowledge and capabilities are developed in both domestic and foreign
locations, both independently and jointly, and then diffused throughout the worldwide organization, is
following a ________ strategy.
A) transnational
B) multidomestic
C) global
D) matrix
58) Which of the following is the primary limitation of the transnational strategy?
A) poor local adaptation
B) cross-unit coordination difficulties
C) duplication of subsidiary activities
D) inability to leverage core competencies
59) Marrin Associates is an MNE with operations in Hong Kong, India, and Canada. The firm strives to
leverage its core competencies worldwide, reduce costs by exploiting location economics, and adapt
when efficient to local conditions. Marrin is most likely following a(n) ________ strategy.
A) global
B) multidomestic
C) transnational
D) international
60) The term ________ refers to a global company that thrives on seeking unique ideas and insights
from locations around the world and then leveraging that knowledge in international markets.
A) multidomestic
B) domestic
C) metanational
D) cross-cultural
61) The framework that managers use to make decisions that maximize their companies’ value creation
performance is referred to as a strategy.
62) Markets are not always perfectly competitive and some firms consistently outperform industry
averages. This suggests that firm performance is also influenced by the presence of bright, motivated
managers and their keen sense of innovative products or processes.
63) According to the Industry Organization perspective, firm performance is determined by the presence
of motivated managers and their ability to identify and develop innovative products for emerging
markets.
64) The potential of new entrants in an industry is one of the forces in the Five-Forces Model of Industry
Structure.
65) Change in the long-term industry growth rate has the potential to transform an industry’s structure.
66) Some companies that opt for the cost leadership strategy plan to sell products below the average
industry prices in order to capture market share.
67) When different companies produce the same commodity, their costs are essentially the same.
68) A differentiation strategy is a unique mixture of the multidomestic and global strategies whereby the
company attempts to capture the advantages of both.
69) A differentiation strategy works well in situations where there are many ways to differentiate a
product or service and many buyers perceive these differences as having value.
70) Managers use a value chain analysis to determine how the company will design, make, move, and
sell products; how it will find efficiencies in doing so; and how it will coordinate the decisions in one
part of the business with those made in other parts.
71) Support activities define the infrastructure of the firm and serve as the basis for the daily
implementation of primary activities in the value chain.
72) Using a concentrated configuration, an MNE performs value activities in different countries.
73) Dispersed value chains make sense when costs vary across countries.
74) A core competency gives every employee in an MNE a principle that helps them coordinate
transactions between value activities.
75) Digitization has altered location economics and established a new global model for service providers
in the financial and legal industries.
76) Pressures for global integration include economic integration, convergent consumer preferences, and
political demands imposed by host countries.
77) The quest to maximize individual purchasing power compels local responsiveness.
78) Pressures for local responsiveness are especially important in industries where value creation is a
function of a company’s capacity to adapt to local market conditions.
79) Pressures for local responsiveness include cross-national differences in terms of consumer
preferences, advances in technology, and government regulations.
80) The fundamental outlook of the multidomestic strategy is standardization.
81) The fundamental outlook of the global strategy is adaptation.
82) The strategy of a firm using an international strategy is likely to entail producing and marketing
mostly standardized products worldwide, with some customization where and when necessary.
83) Tel-Comm Tek is a company that believes it has core competencies that its competitors in foreign
markets lack and that it faces relatively weak pressures for local responsiveness and cost reductions. Tel-
Comm Tek is likely to adopt an international strategy.
84) A multidomestic strategy makes the most sense for companies that see high pressures for local
responsiveness and low pressures for cost reductions.
85) Tel-Comm Tek is a company that sees the world as a single market, assuming that consumer
preferences and industry conditions do not vary much among countries. Tel-Comm Tek is likely to
adopt a multidomestic strategy.
86) Mobile Technology is a company that sees the world as a single market, assuming that consumer
preferences and industry conditions do not vary much among countries. Mobile Technology is likely to
adopt a global strategy.
87) A company that develops different capabilities and contributions from different countries and shares
them in integrated worldwide operations is using a transnational strategy.
88) Using a transnational strategy pushes a company to centralize some functions in optimal locations,
base some functions in national subsidiaries to ensure local responsiveness, and develop wide-ranging
communications among various units.
89) Organizational challenges are comparatively more difficult for the firm pursuing a transnational
strategy than for the firm pursuing an international strategy.
90) Micro-multinationals are firms that globalize immediately and enter countries with numerous
customers, productive workers, and attractive industries.
91) What is the Industry Organization (IO) paradigm? Discuss the underlying assumptions of this
model.
92) Describe the two basic ways that companies can create value. What role does the value chain play in
these methods?
93) What is the difference between primary and secondary activities in the value chain? Describe the
functions of configuration and coordination in these value activities.
94) What is configuration? Briefly list and discuss the factors that influence value chain configuration.
95) What is coordination? Describe the factors that influence value chain coordination.
96) Describe the pressures for local responsiveness that international companies face.
97) Discuss the characteristics of international, multidomestic, global, and transnational strategies.
Include situations and a specific example in which each strategy would be most appropriate.
98) In a brief essay, discuss the strategy used by Zara, the firm described in the opening case. Also
discuss the features of Zara’s value chain.
99) What is the relationship between the five-forces model and a firm’s international business strategy?
Provide examples to illustrate your answer.
100) What are core competencies? How do firms that adopt an international strategy utilize their core
competencies? How do firms that adopt a transnational strategy utilize their core competencies?