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Q:
From a CEO's perspective, coordinating functional specialists to implement a vertical integration strategy almost always involves
A) conflict resolution.
B) competitive positioning.
C) product differentiation.
D) corporate expansion.
Q:
Describe the competitive strategy of niche market exporting.
Q:
Which organizational structure is used to implement a vertical integration strategy?
A) Matrix
B) Functional
C) Multidivisional
D) Product-divisional
Q:
Describe the market requirement and product characteristics in global competition.
Q:
The major substitute for vertical integration is
A) vertical disintegration.
B) strategic alliances.
C) a product-differentiation strategy.
D) a low-cost strategy.
Q:
Which of the following statements regarding direct duplication and substitutes for vertical integration is accurate?
A) A firm's valuable and rare vertical integration choices may be subject to direct duplication and substitutes.
B) A firm's valuable and rare vertical integration choices are subject to neither direct duplication nor substitutes.
C) A firm's valuable and rare vertical integration choices may be subject to direct duplication but not to substitutes.
D) A firm's valuable and rare vertical integration choices may be subject to substitutes but not to direct duplication.
Q:
Briefly explain the factors that drive the success of global companies.
Q:
What are the location and coordination issues that global firms face?
Q:
A firm is likely to be among the first in its industry to vertically disintegrate an exchange when
A) the firm concludes that the level of specific investment required to manage an economic exchange is high.
B) the firm believes that the exchange is costly to imitate.
C) the level of uncertainty about the value of an exchange has increased.
D) the firm believes that the exchange is rare.
Q:
What is a global industry? What are the reasons strategic management planning must be global?
Q:
If a computer company decided to open its own call centers to provide technical support to its corporate customers because the employees in these call centers need a significant level of in-depth training that was highly specialized to the computer company's products, this would be consistent with which explanation of vertical integration?
A) Opportunism-based
B) Flexibility-based
C) Firm capabilities-based
D) Alliance-based
Q:
What is a multidomestic industry? What factors increase the degree to which an industry is multidomestic?
Q:
Some observers predict that by ________ an additional 3.3 million jobs in the United States will be outsourced, many to operations overseas.
A) 2010
B) 2012
C) 2014
D) 2015
Q:
What control problem do global firms face?
Q:
If a firm decided to maintain relationships with several different call center management companies, each of which have adopted different technological solutions to the problem of how to use call center employees to assist customers who are using very complex products, to reduce the uncertainty of whether the people staffing the phone can help the firm's customers, this would be consistent with which explanation of vertical integration?
A) Opportunism-based
B) Flexibility-based
C) Firm capabilities-based
D) Alliance-based
Q:
What factors contribute to the increased complexity of the global environment? Explain.
Q:
Which of the explanations of vertical integration is the oldest and has received the greatest empirical support?
A) Opportunism-based
B) Flexibility-based
C) Firm capabilities-based
D) Alliance-based
Q:
Briefly describe the different orientations companies may have toward their overseas activities.
Q:
A(n) ________ approach to vertical integration suggests that rather than vertically integrating into a business activity whose value is highly uncertain firms should not vertically integrate and instead should form a strategic alliance to manage this exchange.
A) alliance-based
B) flexibility-based
C) firm capabilities-based
D) opportunism-based
Q:
What are the key issues to consider at the start of a firms globalization process?
Q:
A decision-making setting is ________ when the future of an exchange cannot be known when investments in that exchange are being made.
A) uncertain
B) opportunistic
C) flexible
D) dynamic
Q:
Why do firms globalize?
Q:
Research suggests that, in general, vertically integrating is ________ than not vertically integrating.
A) significantly more flexible
B) somewhat more flexible
C) comparatively flexible
D) less flexible
Q:
Describe the four strategy levels involved in the evolution of a global corporation.
Q:
________ refers to how costly it is for a firm to alter its strategic and organizational decisions.
A) Flexibility
B) Dynamic capability
C) Opportunism
D) Uncertainty
Q:
What is globalization? How are standardization and customization relevant in globalization?
Q:
To the extent that other firms may have competitive advantages in business activities that a firm is considering to enter through vertical integration, vertically integrating into these activities could put the firm at a
A) competitive advantage.
B) temporary dynamic disadvantage.
C) sustainable competitive advantage.
D) competitive disadvantage.
Q:
(p. 142) Risks of foreign subsidiaries include
A. The home country's expectations of long-term commitment
B. The home country's expectations that a number of foreign nationals be employed
C. Changing standards mandated by foreign regulations
D. A commitment to profits
Q:
The essence of the ________ to vertical integration is that if a firm possesses valuable, rare, and costly-to-imitate resources in a business activity, it should vertically integrate into that activity otherwise it should not vertically integrate into that activity.
A) flexibility-based explanation
B) opportunism-based explanation
C) firm capability explanation
D) opportunity-based explanation
Q:
(p. 140) Host countries may require a foreign branch to be
A. Domesticated
B. Globalized
C. Centralized
D. Localized
Q:
According to ________ of when vertical integration creates value, vertical integration is valuable when it reduces threats from a firm's suppliers or buyer due to any transaction-specific investments a firm has made.
A) firm capability explanations
B) opportunity-based explanations
C) flexibility-based explanations
D) opportunism-based explanations
Q:
(p. 140) When one company buys another, the purchase is called a(n)
A. divestiture B. joint venture
C. acquisition
D. franchise
Q:
A(n) ________ is any investment in an exchange that has significantly more value in the current exchange than it does in alternative exchanges.
A) opportunity-specific investment
B) transaction-specific investment
C) competition-specific investment
D) opportunistic investment
Q:
________ exists when a firm is unfairly exploited in an exchange.
A) Competitive advantage
B) Business level strategy
C) Opportunism
D) Corporate level strategy
Q:
(p. 139) Joint ventures:
A. Can not address complex markets
B. Speed efforts to integrate into the foreign environment with less financial commitment than acquiring a foreign subsidiary
C. Must be overseen by an outside board of directors
D. Requires no disclosure of proprietary information
Q:
(p. 139) A special form of licensing is
A. Green-field investment
B. Exporting
C. Joint venture
D. Franchising
Q:
In 1937, which Nobel Prize-winning economist first articulated the question of vertical integration, which stages of the value chain should be included within a firm's boundaries and why?
A) Ronal Coase
B) Adam Smith
C) David Ricardo
D) Milton Freidman
Q:
(p. 139) Licensing and contract manufacturing types of strategies are used best in
A. Small-sized companies
B. Companies large enough to have a combination of international strategic activities
C. Firms with broadly diversified products in high margin industries
D. Firms with highest level of commitment to international markets
Q:
A firm with a ________ ratio between value added and sales has brought ________ of the value-creating activities associated with its business inside its boundaries, consistent with a high level of vertical integration.
A) low; many
B) high; many
C) medium; many
D) medium; few
Q:
(p. 138) The transfer of an industrial property right is called
A. Franchising
B. Licensing
C. Exporting
D. Bartering
Q:
Which of the following is not used to determine a firm's level of vertical integration using the value added as a percentage of sales approach?
A) Value added
B) Net income
C) Sales
D) Gross margin
Q:
(p. 138) Companies between exporting and an equity position on foreign soil:
A. Can pool capital in a joint venture
B. Can choose to establish a contractual arrangement such as licensing
C. Extend the company with a foreign branch
D. Extend the company with a foreign subsidiary
Q:
A firm's ________ measures the percentage of a firm's sales that is generated by activities done within the boundaries of a firm.
A) value added as a percentage of sales
B) simple product diversification
C) competitive advantage
D) competitive dynamic
Q:
(p. 138) ______ usually requires minimal capital investment.
A. Joint venture
B. Exporting
C. Foreign branch
D. Wholly owned foreign subsidiary
Q:
(p. 138) Which strategy shows the highest commitment to international market?
A. Export
B. Joint venture
C. Licensing
D. Wholly owned foreign subsidiary
Q:
If Dell computers were to open its own factory to manufacture the LCD televisions it sells at its online store, this would be an example of
A) forward vertical integration.
B) product differentiation.
C) forward horizontal integration.
D) backward vertical integration.
Q:
When Apple, Inc. opened retail stores to sell its computers and iPods, this was an example of
A) forward vertical integration.
B) backward vertical integration.
C) forward horizontal integration.
D) backward horizontal integration.
Q:
(p. 138) Which of these strategies shows the lowest commitment to international market?
A. Export
B. Joint venture
C. Licensing
D. Wholly owned foreign subsidiary
Q:
The number of steps in a firm's value chain that it accomplishes within its boundaries describes the firm's level of
A) product differentiation.
B) diversification.
C) vertical integration.
D) competitive dynamics.
Q:
(p. 137) The primary niche for the market approach for exporting:
A. Begins with a mutually agreeable pooling of capital
B. Involves the transfer of some industrial property right
C. Is to modify select product performance or measurement characteristics to special foreign demands
D. Utilizes a foreign branch extension to distribute
Q:
Vertical integration is a type of
A) business strategy.
B) generic strategy.
C) differentiation strategy.
D) corporate strategy.
Q:
(p. 137) Which of the following is NOT a competitive strategy for firms in foreign markets?
A. Licensing
B. Vertical integration
C. Franchising
D. Joint venture
Q:
Strategizing is one of the most important control mechanisms available to CEOs in vertically integrated U-form organizations.
Q:
(p. 137) Diversity in a firm's product line refers to
A. The length of a firm's business lines
B. The breadth of the firm's business lines
C. The number of critical success factors
D. The quality of the product
Q:
Numerous conflicts can arise among functional managers in a vertically integrated U-form organization.
Q:
(p. 137) The complexity of a strategy refers to:
A. The breadth of a firm's business lines
B. A continuum of possible strategic choices
C. The diversity of the products
D. The number of critical success factors required
Q:
From a CEO's perspective, coordinating functional specialists to implement a vertical integration strategy rarely involves conflict resolution.
Q:
(p. 137) When a company offers many product lines, ____ is high.
A. complexity
B. diversity
C. integration
D. planning
Q:
While the functional or U-form structure is used to implement a cost-leadership or product-differentiation strategy, a matrix structure is most often used to implement a vertical integration strategy.
Q:
(p. 136) Which one of the following is a key dimension of customer demand in foreign markets?
A. Customer acceptance of standardized products
B. The number of suppliers in that foreign market
C. The companys desire to propagate its brand name
D. Loose coordination of geographic activities
Q:
Strategic alliances are the major substitute for vertical integration.
Q:
(p. 136) Which one of the following is a key dimension of customer demand in foreign markets?
A. Customer's acceptance of sub-standard products
B. The rate of product innovation desired
C. The company's desire to propagate its brand name
D. The number of suppliers in that foreign market
Q:
A firm's ability to conceive of and implement vertical integration strategies tends to be highly susceptible to direct duplication.
Q:
(p. 136) Standardized products in all markets include ______
A. dolls
B. toilets
C. trucks
D. petrochemicals
Q:
A firm may be able to gain an advantage from vertically integrating when it resolves some uncertainty it faces sooner than its competition.
Q:
(p. 136) All markets can be arrayed along a continuum from markets in which products are ____ to markets in which products must be _____ for customers from market to market.
A. imported, exported
B. exported, imported
C. standardized, customized
D. manufactured, ordered
Q:
If a firm has capabilities that are valuable and rare, then vertically integrating into businesses that exploit these capabilities can enable the firm to gain at least a temporary competitive advantage.
Q:
(p. 135) As its industry becomes increasingly ______, a firm must begin to coordinate an increasing number of functional activities to effectively compete across countries.
A. local
B. global
C. multidomestic
D. regional
Q:
A firm's vertical integration strategy can only be rare when it is the only firm that is able to vertically integrate efficiently.
Q:
(p. 135) An industry can be ranked along a continuum that ranges between _____ at one extreme and ____ at the other.
A. regiocentric, polycentric
B. international, global
C. ethnocentric, regiocentric
D. multidomestic, global
Q:
Outsourcing can help firms reduce costs and focus their efforts on those business functions that are central to their competitive advantage.
Q:
(p. 135) A multi-national corporation:
A. Has limited location options for functional activities
B. Should not have different locations for marketing and operations
C. Should spread research and development functions across facilities
D. Must determine how to coordinate activities
Q:
A firm's vertical integration strategy is rare when few competing firms are able to create value by vertically integrating in the same way.
Q:
(p. 135) All of these are factors that drive the success of global companies EXCEPT
A. Multidomestic strategy
B. Global financing
C. Global management team
D. Global marketing
Q:
The downside risks associated with investing in a strategic alliance are unknown but fixed.
Q:
(p. 134) A global firm competing in a global industry must:
A. Be responsive to global conditions only
B. Be responsive to both global and local conditions
C. Be responsive to local conditions only
D. Compete in multi-domestic industry also
Q:
A flexibility-based approach to vertical integration suggests that when the decision-making setting regarding a business activity is highly uncertain, firms should form a strategic alliance to enter this activity instead of vertically integrating.
Q:
(p. 135) Factors that drive the success of global companies include
A. Regional management teams
B. Regional marketing
C. Multidomestic strategy
D. Global financing
Q:
The use of budgets in a vertically integrated U-form organization can lead functional managers to overemphasize short-term behavior that is easy to measure and underemphasize longer-term behavior that is more difficult to measure.
Q:
(p. 134) Among the factors that make for the creation of a global industry are all of these EXCEPT
A. Economies of scale
B. The presence of heterogeneous product needs across markets
C. A low level of trade regulation
D. A high level of R & D expenditures on products