Q&A Hero

Q: Why does a U.S. company exporting wooden furniture manufactured in Malaysia to the European Union benefit from the decline in the value of the ringgit against the euro? A) Because decline in the value of the ringgit against the euro raises the cost of furniture manufactured in Malaysia, making it less competitive in European markets. B) Because decline in the value of the ringgit against the euro reduces the cost of furniture manufactured in Malaysia, making it more competitive in European markets. C) Because decline in the value of the ringgit against the euro has no impact on the cost of furniture manufactured in Malaysia, both in Malaysian or European markets. D) Because decline in the value of the ringgit against the euro makes European goods more competitive as compared to Malaysian goods. E) Because decline in the value of the ringgit against the euro makes Malaysian goods less competitive in the U.S. market.

Q: A European-based company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to country markets in many different parts of the world A) is competitively disadvantaged when the euro declines in value against the Brazilian real. B) is competitively disadvantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported. C) becomes less competitive in foreign markets when the Brazilian real gains in value against the currencies of the countries to which the Brazilian-made goods are being exported. D) is competitively advantaged when the euro appreciates in value against the Brazilian real. E) has no interest in whether the euro grows stronger or weaker versus the Brazilian real unless its chief competitors are other companies located in countries whose currency is also the euro.

Q: A location-based advantage for competing on an international basis can best be exemplified by A) Microsemi Corporation acquiring California-based Actel Corporation. B) RBC Wealth Management closing operations in South Florida. C) Samsung diversifying and venturing into textiles and food processing. D) Hyundai signing a memorandum of understanding with the government of South Korea to halt exports. E) De Beers establishing greenfield operations in the mining region of South Africa.

Q: A U.S. company that makes all of its goods at a plant in Brazil and then exports the Brazilian-made goods to country markets across the world A) is competitively disadvantaged when the U.S. dollar declines in value against the Brazilian real. B) is competitively advantaged when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported. C) becomes less competitive in foreign markets when the Brazilian real declines in value against the currencies of the countries to which the Brazilian-made goods are being exported. D) is competitively advantaged when the U.S. dollar appreciates in value against the Brazilian real. E) is unaffected by changes in the valuation of foreign currencies against the Brazilian realall that matters to a U.S. company is the valuation of the U.S. dollar against the Brazilian real.

Q: An Irish dairy producer that exports gourmet cheeses made at its Kerry plants to the United States A) is competitively disadvantaged when the euro declines in value against the U.S. dollar. B) is largely unaffected by fluctuating exchange rates between the euro and the U.S. dollar. It would, however, be affected if its plants were in the U.S. C) becomes less competitive in the U.S. market when the euro rises in value against the U.S. dollar. D) becomes more competitive in European markets when the euro declines in value against the U.S. dollar. E) has no interest in whether the euro grows stronger or weaker versus the U.S. dollar unless its chief competitors are other companies located in countries whose currency is also the euro.

Q: When seeking to develop competitive strength in a foreign market, firms generally DO not evaluate the A) differences among buyer tastes for a particular product or service from country to country. B) competitive pressures to lower costs. C) competitive risks associated with a fluctuating exchange rate. D) degree of country political risk. E) level of industry-related support activities to foster customization of products and services.

Q: A U.S. organic personal hygiene product manufacturer that exports toothpaste and deodorant made at its U.S. plants for shipment to the U.K. market A) is competitively disadvantaged when the U.S. dollar declines in value against the British pound. B) is largely unaffected by fluctuating exchange rates. It would, however, be affected if its plants were in the United Kingdom or other foreign countries. C) becomes more competitive in the United Kingdom when the U.S. dollar gains in value against the British pound. D) becomes more competitive in the United Kingdom when the U.S. dollar declines in value against the British pound. E) has no interest in whether the dollar grows stronger or weaker versus the British pound unless it is competing only against companies located in the United Kingdom.

Q: What factor is not LIKELY responsible for Apple's decision to set up mobile phone manufacturing facilities in India? A) growth potential of India's emerging market B) global standardization of mobile phone technology C) potential location advantages in wages, inflation rates, and tax rates that reduce costs D) franchising opportunities in India E) comparatively lower exchange rate and political risks

Q: One of the biggest strategic challenges to competing in the international arena includes A) how to leverage the opportunities arising from shifting exchange rates. B) how to charge the same price in all country markets. C) how to identify foreign firms licensed to produce and distribute the company's products. D) whether to offer a standardized product worldwide or a customized product offering in each different country market. E) whether to pursue a franchising strategy or a joint venture strategy.

Q: The difference between political risks and economic risks is that A) political risks stem from instability or weakness in national governments, while economic risks stem from the stability of a country's monetary system, and its economic and regulatory policies. B) political risks stem from stability in foreign business, while economic risks stem from an excess of property right protections. C) political risks stem from hostility to foreign currencies, while economic risks stem from the instability of the monetary system. D) political risks stem from exchange rate fluctuations, while economic risks stem from hostility to foreign business. E) political risks stem from the stability of a country's monetary system, while economic risks stem from instability in national business.

Q: A typical host government requirement that is not said to impact the operations of foreign companies is A) establishing local content requirement on goods made inside their borders by foreign companies. B) having rules and policies that protect local companies from foreign competition. C) placing restrictions on exports to ensure adequate local supplies. D) requiring foreign companies to use vertical integration to support operations of local companies. E) imposing burdensome tax structures and regulatory requirements upon foreign companies doing business within their borders.

Q: You have been asked to consult with Sonic.net, a regional Internet Service Provider, about the advisability of competing abroad. Your assessment of the opportunities for Sonic.net to craft a strategy to compete in one or more countries in the world would not necessarily A) evaluate country-to-country differences in consumer buying habits and buyer tastes and preferences. B) evaluate country-to-country variations in host government restrictions and requirements and fluctuating exchange rates for the company's offerings in each different country market or whether to offer a mostly standardized product worldwide. C) evaluate which countries to locate company operations for maximum locational advantage, given country-to-country variations in wage rates, worker productivity, energy costs, tax rates, and the like. D) evaluate a multidomestic strategy that considers the world market as a mostly homogeneous market.

Q: Gallo Wines is seeking international market entry. One if its top criteria for choosing a country to enter is a pro-business government policy. John would advise Gallo Wines to enter A) Argentina, which has increased its interest rate on loans to foreign entrants from 15 percent to 19 percent. B) Germany, since the European Union has imposed a 16 percent tariff on the import of agricultural produce. C) Australia, which recently introduced a permanent employer-sponsored visa program for skilled manpower. D) South Africa, which now levies a per metric ton carbon tax on electricity and a per liter surcharge on water. E) China, whose government favors partial local ownership of foreign-owned companies.

Q: Compared with the other countries on the list below, which country boasted the highest labor wage rates in 2016? A) Mexico B) Taiwan C) Switzerland D) China E) New Zealand

Q: Market size and growth rates in different countries can be influenced positively or negatively by A) the ability of management to tailor a strategy to take into consideration differences among country markets. B) which countries have the weakest foreign rivals. C) competitive rivalry that is only moderate in some countries. D) differing population sizes, cultures, income levels, infrastructure, and distribution networks among countries. E) the large size of emerging markets such as Brazil, Russia, China, and India.

Q: Apollo Tires sets up a manufacturing unit in Mexico. Following this, Renault-Nissan signs a supply contract with the tire multinational. In which of the following ways is Renault-Nissan likely to gain from the pact? A) different styles of management, organization, and strategy B) knowledge sharing within same value chain system C) availability of natural resources at low cost D) growth potential and large size of the market E) government policies in the host country

Q: The diamond framework is not LIKELY to answer which of the following questions about competing on an international basis? A) Where will the foreign entrants come from? B) Which countries have the weakest foreign rivals? C) What are the attributes of a country's business environment? D) What location of value chain activities is most beneficial? E) What are the disadvantages of allowing foreign competition?

Q: Government policies that can make it more attractive for foreign companies to locate operations abroad include all of the following except A) tax incentives. B) stringent environmental compliance regulations. C) site development assistance. D) low-cost loans. E) reduced tariffs, quotas, and percentages of local content required in production of products and services.

Q: When Disney relied on licensing agreements with the Oriental Land Company to open its first foreign theme park, Tokyo Disneyland, A) Disney was able to meet the challenge of localizing its product offerings in Japan, leading to a low-cost advantage. B) Japanese consumer buying habits and demographics no longer posed a challenge for Disney. C) Disney no longer needed to contend with fluctuating exchange rates and country-to-country variations in host government restrictions and requirements. D) Its licensing partner, the Oriental Land Company reaped the windfall, because the partner who bore the risk was also likely to be the biggest beneficiary from any upside gain. E) It was Disney, not the Oriental Land Company, that reaped the windfall because of learning curve effects.

Q: Crafting a strategy to compete in one or more foreign markets can be considered complex because A) factors that affect industry competitiveness are the same from country to country. B) the potential for location-based advantages to conducting value chain activities in certain countries. C) different government policies and economic conditions make the business climate more favorable in some countries than in others. D) currency exchange rates among countries are generally fixed and rarely change. E) buyer tastes and preferences differ among countries and present a challenge for companies concerning. customizing versus standardizing their products and services.

Q: Whirlpool's efforts to link its product R&D and manufacturing operations in North America, Latin America, Europe, and Asia did not enable the company to A) accelerate the discovery of innovative appliance features. B) coordinate the introduction of these features in the appliance products marketed in different countries. C) create a cost-efficient worldwide supply chain. D) impart technical knowledge to high-cost human resources in developing nations E) speed product innovations to market and achieve operational excellence.

Q: Why do companies decide to enter a foreign market? A) to capture economies of scale in product development, manufacturing, or marketing B) to raise input costs through greater pooled purchasing power C) to decrease the rate at which they accumulate experience and move up the learning curve D) to concentrate risk within a broader base of countries, especially when sales are down in one area and the company can undermine sales elsewhere E) to exploit the natural resources found within its home market

Q: Under what circumstances is it advantageous for a company competing in foreign markets to disperse certain value chain activities across many countries?

Q: ExxonMobil enters into a pact with Gazprom, the world's largest natural gas extractor, to set up a processing unit in Baku, Azerbaijan. Which of the following is most likely the reason for ExxonMobil to opt for this strategic alliance? A) to gain access to new customers B) to scale back its core competencies C) to restrict its factors of production D) to gain access to low-cost inputs of production E) to better compete with Gazprom

Q: Imagine that you are the manager of an aspiring multinational social media company. Identify and briefly explain two ways that your company could expand outside your domestic market to improve overall competitiveness.

Q: Tiffany & Co. opted to enter into the mining industry in Canada in order to A) build the profit sanctuary necessary to wage guerrilla offensives against global challengers endeavoring to invade its home market B) capitalize on company competencies and capabilities C) gain access to new customers in new markets D) access diamonds that could be certified as "conflict-free" and not associated with unethical mining practices or the finding of military activities in Africa E) achieve lower costs and enhance the firm's competitiveness.

Q: Explain why a company desirous of competing in foreign markets needs to pay careful attention to where it locates it value chain activities.

Q: The primary reasons that companies opt to expand into foreign markets are to A) raise the entry barriers for industry newcomers, neutralize the bargaining power of important suppliers, grow sales faster, and increase the number of loyal customers. B) avoid having to employ an export strategy, avoid the threat of cross-market subsidization from rivals, and enable the use of a global strategy instead of a multidomestic strategy. C) grow sales faster than the industry average, reduce the competitive threats from rivals, and open up more opportunities to enter into strategic alliances. D) boost returns on investment, broaden their product lines, avoid tariffs and trade restrictions, and escape dealing with strong labor unions. E) gain access to new customers, achieve lower costs, enhance the company's competitiveness, capitalize on core competencies, and spread business risk across a wider market base.

Q: Social media giant Facebook Inc. decided to expand outside its home market in order to A) gain access to new customers for the company's products/services. B) increase its business risk by competing with local social media providers such as WeChat. C) achieving differentiation through economies of scale, experience, and increased purchasing power. D) match its core competencies and capabilities with rival social media companies such as Snapchat and Instagram. E) identify new and stronger resources and capabilities in its home market.

Q: Explain the differences between a "think-global, act-global" strategy and a "think-global, act-local" strategy.

Q: The world economy is globalizing at an accelerated pace because A) countries previously open to foreign companies have closed their markets. B) countries that previously had market or mixed economies now embrace planned economies. C) information technology is exacerbating the importance of geographic distance. D) growth-minded companies are racing to build stronger competitive positions in the markets of more countries. E) countries opposed to market or mixed economies have erected more stringent trade barriers.

Q: A global strategy embraces the theme "think-global, act-global," whereas a multidomestic strategy relies more on a "think-local, act-local" mentality. True or false? Explain.

Q: Answer: As stated in Chapter 7, the competitive prospects for local companies facing global giants are by no means grim. Studies of local companies in developing markets have disclosed five strategies that have proved themselves in defending against globally competitive companies.

Q: When should a company enter a new country via internal development?

Q: Identify and briefly describe a local company's strategic options in competing against global challengers.

Q: How does a transnational strategy differ from a multidomestic or a global strategy?

Q: When is a global strategy "superior" to a multidomestic strategy?

Q: Explain the importance of competing in emerging markets.

Q: What circumstances call for use of a multidomestic strategy for competing in international markets?

Q: List and discuss three strategy options for competing in emerging markets.

Q: Discuss in some detail the difference between a multidomestic strategy and a global strategy. Give the pros and cons of each.

Q: What are the pros and cons of using strategic alliances to try to enhance a company's ability to compete in foreign markets?

Q: Explain why an acquisition is better than a greenfield venture.

Q: Modification of a company's business model to accommodate the unique local circumstances of developing countries is best exemplified by A) Mahindra and Mahindra's number one ranking in J. D. Power Asia Pacific's annual new-vehicle overall quality category. B) Home Depot relying on its value propositions only in some developing countries. C) Unilever developing a low-cost detergent, named Wheel, for the Indian market. D) Japan's reputation for competitive strength in consumer electronics. E) Dell entering China by deviating from its traditional Internet-based orders to orders over phone and fax.

Q: Compare and contrast the advantages for entering and competing in foreign markets for the strategic options of exporting, licensing, and franchising.

Q: When tailoring their strategy to fit circumstances of emerging country markets, viable strategic options companies should consider include all of the following, except A) trying to change the local market to better match the way the company does business elsewhere. B) being prepared to modify aspects of the company's business model to accommodate local circumstances. C) preparing to compete on the basis of low price. D) staying away from those emerging markets where it is impractical to modify the company's business model to accommodate local circumstances. E) focusing on local markets whose circumstances will be most challenging to the company's business model.

Q: Identify and explain the significance of each of the following terms and concepts: a. global strategy b. export strategy c. licensing strategy d. franchising strategy

Q: Tailoring a strategy to fit the circumstances of emerging country markets does not typically involve A) competing on the basis of low price. B) modifying aspects of the company's business model to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding). C) transforming the local market to better match the way the company does business elsewhere. D) developing a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly. E) avoiding those emerging markets where it is impractical or uneconomic to modify the company's business model to accommodate local circumstances.

Q: Explain how exchange rate fluctuations pose a risk to manufacturing companies that rely upon an export strategy to compete in foreign markets.

Q: In today's world, companies aspiring for global market leadership cannot afford A) to ignore establishing competitive positions in the markets of emerging countries. B) to embrace all the risks and problems of competing in emerging country markets. C) to have the resource capabilities it takes to be effective in competing in emerging country markets and usually are at a strong competitive disadvantage to the domestic market leaders. D) to forego sizable profits from developed country markets. E) to hurdle the high barriers to entry into the markets of emerging countries.

Q: Briefly identify the special features of competing in foreign markets.

Q: What can happen when international rivals compete against one another in multiple-country markets? A) It could create attractive industries that would have otherwise badly deteriorated. B) It could produce a business lineup consisting of too many slow-growth, declining, low-margin, or competitively weak businesses. C) It could create a greater diversity in the types of value chain activities between each business. D) It could initiate a deterrence effect that encourages mutual restraint in taking aggressive action against one another due to the fear of a retaliatory response that might escalate the battle into a cross-border competitive war. E) It could increase shareholder interests by concentrating corporate resources on foreign business activities to contend for market leadership.

Q: Explain why the strategies of firms that expand internationally are usually grounded in home-country advantages or core competencies.

Q: ________ is when a company sells its goods in foreign markets at prices that are below the prices at which it normally sells in its home market or well below its full costs per unit. A) Dumping practices B) Price-clearing system C) Clearance sale D) Discounting practices E) Competitive advantage

Q: Identify and briefly discuss the key reasons why a company may consider expanding outside its domestic market.

Q: What does the World Trade Organization (WTO) not do primarily? A) promotes fair trade practices B) actively polices dumping C) deals with the rules of trade between nations D) helps producers, exporters, and importers conduct business E) sets countries' tariff rates

Q: A viable strategy option for a local company when entering into competition with global challengers does not involve? A) using cross-market transfer strategies to hedge against the risks of exchange rate fluctuations and adverse political developments B) developing business models to exploit shortcomings in local distribution networks or infrastructures C) taking advantage of low-cost labor and other competitively important local workforce qualities D) transferring a company's expertise to cross-border markets and initiating actions to contend on a global scale E) using acquisitions and rapid growth strategies to defend against expansion-minded multinationals

Q: What supports competitive offensives in one market with resources and profits diverted from operations in another market? A) cross-market subsidization B) a foreign market strategy C) a domestic-only company D) a home market offensive E) a multidomestic company

Q: Televisa, a Mexican media company, became the world's most prolific producer of Spanish-language soap operas owing to its expertise in Spanish culture and linguistics. Which of the following strategies did Televisa employ to defend against global giants? A) The company developed business models that exploit shortcomings in local distribution networks or infrastructure. B) It utilized keen understanding of local customer needs and preferences to create customized products or services. C) Televisa took advantage of aspects of the local workforce with which large international companies may be unfamiliar. D) The company transferred company expertise to cross-border markets and initiated actions to contend on an international level. E) It used acquisition and rapid-growth strategies to better defend against expansion-minded internationals.

Q: Profit sanctuaries are found to differ by a company's strategy, such that a(n) A) domestic-only company has access to many profit sanctuary locations worldwide. B) international competitor usually has a profit sanctuary in its home market and may have other sanctuaries in countries where it has a strong position and market share. C) globally competitive company generally has a profit sanctuary outside its home market in countries where it is a market leader and enjoys a strong competitive position. D) transnational company has profit sanctuaries in every country where it operates. E) company competing in a few country markets has more profit sanctuaries.

Q: The basic strategy options for local companies in competing against global challengers include A) best-cost provider and focused low-cost provider and low-cost leadership strategies. B) export strategies, licensing strategies, and cross-border transfer strategies. C) utilizing understanding of local customer needs and preferences to create customized products or services, developing business models to exploit shortcoming in local infrastructure, and using acquisitions and rapid growth to defend against expansion-minded multinationals. D) franchising strategies, multidomestic strategies keyed to product superiority, global low-cost leadership strategies, and cross-border coordination strategies. E) focused differentiation and broad differentiation strategies.

Q: Profit sanctuaries are country markets or geographic regions where a company A) can rank the competitive advantage opportunities in each industry. B) possesses good strategic fit with other businesses and identifies the value chain where this fit occurs. C) derives substantial profits because of its protected market position or unassailable competitive advantage. D) creates substantial investment strategies because it is losing competitive advantage over competitors. E) invests its dividends in expanding its foreign market presence.

Q: Sharing and transferring resources and capabilities across borders may also contribute to the development of broader or deeper competencies and capabilities, thereby helping a company achieve A) control over its resource capabilities. B) a dominating depth in some competitively valuable area. C) an intensity of resource diversification. D) precision and compliance in resource agility and responsiveness. E) direct investments in foreign countries.

Q: Companies that compete on an international basis have a competitive advantage over their purely domestic rivals A) to achieve a larger domestic interest by developing sufficient resource strengths and competitive capabilities for success. B) to benefit from coordinating activities across different countries' domains. C) solely for the benefit of their shareholders. D) that guarantees the generation of big profits, big returns on investment, and big cash surpluses after dividends are paid. E) to give full access to the proprietary technological expertise or other competitively valuable capabilities.

Q: Dispersing activities to many locations is competitively advantageous when A) high transportation costs, diseconomies of large size, and trade barriers make it too expensive to operate from a central location. B) a multidomestic strategy is better than a global strategy. C) technical after-sale services are unimportant to buyers. D) achieving economies of scale and scope in materials procurement, parts manufacture, finished-goods assembly, technology research, and new product development can frequently be decoupled from buyer locations and performed wherever advantage lies. E) host governments offer less restrictive trade barriers and regulatory requirements to companies that conform to local business practices.

Q: Companies that compete internationally can pursue competitive advantage in world markets (or offset domestic disadvantages) by A) using a differentiation-based competitive strategy in those country markets with superior resources. B) choosing not to compete in countries with high tariffs and high taxes (which then have to be passed along to buyers in the form of higher prices), thus keeping costs and prices lower than rivals. C) using an export strategy to circumvent the risks of adverse exchange rate fluctuations. D) locating value chain activities in whatever nations prove most advantageous in a manner that uses location to lower costs or achieve greater product differentiation, allow for the transfer of competitively valuable competencies and capabilities from one country to another, and allow for cross-border coordination. E) employing a multidomestic strategy instead of a global strategy.

Q: What strategy is considered more conducive to transferring and leveraging subsidiary skills and capabilities across borders? A) a transnational strategy B) an international strategy C) a think-local, act-global strategy D) a cross-border integrated strategy E) a standardized integrated strategy

Q: Transferring core competencies and resource strengths from one country market to another is A) a good way for companies to develop broader or deeper competencies and competitive capabilities that can become a strong basis for sustainable competitive advantage. B) best accomplished with a multidomestic strategy as opposed to a global strategy. C) feasible only with a global strategy; it can't be done with a multidomestic strategy. D) unlikely to result in a competitive advantage. E) nearly always the easiest and most surefire way to build competitive advantage in trying to compete successfully in foreign markets.

Q: The transnational approach of a firm using a "think-global, act-local" version of a global strategy entails A) selling numerous product versions (each customized to buyer tastes in one or more countries and sometimes branded for each country) but opting to only sell direct to buyers at the company's website so as to bypass the costs of establishing networks of wholesale/retail dealers in each country market. B) pursuing the same basic competitive strategy theme (low-cost, differentiation, best-cost, focused) in all countries where the firm does business but giving local managers some latitude to adjust product attributes to better satisfy local buyers and to adjust production, distribution, and marketing to be responsive to local market conditions. C) selling the company's products under a wide variety of brand names (often one brand for each country or group of neighboring countries) so that buyers in each country market will think they are buying a locally made brand. D) producing and marketing a variety of product versions under the same brand name, with each different version being designed specifically to accommodate the needs and preferences of buyers in a particular country. E) little or no strategy coordination across countries.

Q: Dispersing particular value chain activities across many countries rather than concentrating them in a select few countries can be more advantageous, except when A) buyer-related activities (such as sales, advertising, after-sale service, and technical assistance) need to take place close to buyers. B) buyers' demand for short delivery times and/or high transportation costs make it uneconomical to operate from one or just a few locations. C) it helps hedge against the risks of exchange rate fluctuations, supply disruptions, and adverse political developments. D) there are diseconomies of scale in trying to operate from a single location. E) there are reasons to decouple buyer-related activities in favor of locational advantages.

Q: Companies often implement a transnational strategy because it A) combines flexible coordination with the pursuit of conflicting objectives simultaneously. B) provides an easy mode of operating to transfer and share resources and capabilities across borders. C) is conducive to mass customization techniques that enable companies to address local preferences in an efficient semi-standard manner. D) is the least complex and easiest to implement of all the strategy choices. E) is capable of achieving an efficiency potential through centralized decision making and strong headquarters control.

Q: The competitive advantage opportunities that a global competitor can gain by dispersing performance of its activities across many nations include all of the following, except A) being able to shift production from one country to another to take advantage of exchange rate fluctuations, differing wage rates, differing energy costs, or differing trade restrictions. B) being in a better position to choose where and how to challenge rivals. C) shortening delivery times to customers by having geographically scattered distribution facilities. D) locating buyer-related activities (such as sales, advertising, after-sale service and technical assistance) close to buyers. E) centralizing value chain activities to foster just-in-time inventory activities.

Q: Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous in all of the following situations, except A) when high transportation costs make it expensive to operate from central locations. B) whenever buyer-related activities are best performed in locations close to buyers. C) if diseconomies of large size exist, thereby making it more economical to perform an activity on a smaller scale in several different locations. D) when it is desirable to hedge against (1) the risks of fluctuating exchange rates, (2) supply interruptions, or (3) adverse political developments. E) if resources retain their foreign contexts so there is competitive advantage over a broader domain.

Q: A strategy that incorporates elements of both multidomestic and global strategies is termed a "transnational" strategy, but sometimes it is referred to as a(n) ________ strategy. A) glocalization B) international C) think-local, act-global D) cross-border integrated E) standardized integrated

Q: A primary drawback of a global strategy is that it A) allows firms to address local needs as precisely as locally based rivals can. B) permits firms to be more responsive to changes in local market conditions, either in the form of new opportunities or competitive threats. C) provides for lower transportation costs and also may involve higher tariffs. D) involves higher coordination costs due to more complex tasks of managing a globally integrated enterprise. E) raises production costs due to the greater variety of designs and components.

Q: When concentrating production in a few locations, which of the following can allow a manufacturer to lower unit costs, boost quality, or master a new technology more quickly? A) significant scale economies B) learning-curve effects C) superior resources D) profit sanctuaries E) supporting industries

Q: In competing in foreign markets, companies find it advantageous to concentrate their activities in a limited number of locations in all of these situations, except when A) there are significant scale economies in performing an activity. B) the costs of manufacturing or other activities are significantly lower in some geographic locations than in others. C) when there is a steep learning or experience curve associated with performing an activity in a single location (thus making it economical to serve the whole world market from just one or maybe a few locations). D) certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages. E) the addition of new production capacity will not adversely impact the supply-demand balance in the local market.

Q: The essential difference between a "think-global, act-global" and a "think-global, act-local" approach to strategy-making is that A) a "think-global, act-global" approach entails extensive strategy coordination across countries and a "think-global, act-local" approach entails little or no strategy coordination across countries. B) the former aims at implementing the same business model worldwide, whereas the latter aims at implementing customized business models to better match local market circumstances. C) the "think-global, act-global" approach gives local managers more latitude to make minor strategy variations where necessary to better satisfy local buyers and to better match local market conditions. D) a "think-global, act-global" approach involves selling a mostly standardized product worldwide, whereas a "think-global, act-global" approach entails selling products that are highly differentiated from country to country. E) a "think-global, act-global" approach involves selling under a single brand name worldwide, whereas a "think-global, act-local" approach entails utilizing multiple brands (typically one for each different country or group of neighboring countries).

Q: The approach of a firm using a "think-global, act-local" version of a transnational strategy entails A) producing and marketing a variety of product versions under the same brand name, with each different version being designed specifically to accommodate the needs and preferences of buyers in a particular country. B) having little or no strategy coordination across countries. C) pursuing the same basic competitive strategy theme (low cost, differentiation, best cost, focused) in all countries where the firm does business but giving local managers some latitude to adjust product attributes to better satisfy local buyers and to adjust production, distribution, and marketing to be responsive to local market conditions. D) selling the company's products under a wide variety of brand names (often one brand for each country or group of neighboring countries) so buyers in each country market will think they are buying a locally made brand. E) selling numerous product versions (each customized to buyer tastes in one or more countries and sometimes branded for each country), but opting to only sell direct to buyers at the company's website so as to bypass the costs of establishing networks of wholesale/retail dealers in each country market.

Q: To use location to build competitive advantage, a company that operates transnationally or globally must A) employ either an export strategy or a franchising strategy. B) scatter its production plants across many countries in different parts of the world so as to minimize transportation costs. C) consider whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and consider in which countries to locate particular activities. D) locate production plants in those countries having suppliers that can supply all the necessary raw materials and components so as to avoid inbound shipping costs. E) concentrate all of its value chain activities in the one country that has the best combination of low wage rates, low shipping costs, and low tax rates on profits.