Q&A Hero

Q: A European manufacturer that exports goods made at its European 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 more competitive in the U.S. market when the euro declines 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: A U.S. manufacturer that exports goods made at its U.S. plants for shipment to foreign markets: A. is competitively disadvantaged when the U.S. dollar declines in value against the currencies of the countries to which it is exporting. B. is largely unaffected by fluctuating exchange rates. It would, however, be affected if its plants were in foreign countries. C. becomes more competitive in foreign markets when the U.S. dollar gains in value against the currencies of the countries to which it is exporting. D. becomes more competitive in foreign markets when the U.S. dollar declines in value against the currencies of the countries to which it is exporting. E. has no interest in whether the dollar grows stronger or weaker versus foreign currencies unless it is competing only against companies located in foreign countries.

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: Which of the following is NOT a typical host government requirement that affects the operations of foreign companies? 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: Which of the following is LIKELY to be viewed as a pro-business government policy from the perspective of companies competing on an international basis? A. Argentina increases its interest rate on loans to foreign entrants from 15% to 19%. B. The European Union imposes a 16% tariff on the import of agricultural produce. C. Australia introduces a permanent employer-sponsored visa program for skilled manpower. D. Denmark levies a per metric ton carbon tax on electricity. E. The Chinese government favors partial local ownership of foreign-owned companies.

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 can be used to reveal the answers to all of the following that are important for competing on an international basis EXCEPT: A. where foreign entrants into an industry are most likely to come from. B. how to formulate an exit strategy to push foreign competitors out of the market. C. which countries' foreign rivals are likely to be the weakest. D. how managers can decide which foreign markets to enter first. E. where to locate different value chain activities so they are the most beneficial.

Q: Which of the following exemplifies location-based advantage for the companies competing on an international basis? A. Microsemi Corporation acquires California based Actel Corporation. B. RBC Wealth Management closes operations in South Florida. C. Samsung diversifies and ventures into textiles and food processing. D. Hyundai signs a memorandum of understanding with the government of South Korea to halt exports. E. De Beers sets up operations in the mining region of South Africa.

Q: Which of the following is NOT a factor analyzed and relied on by firms when developing competitive strength in a foreign market? A. The relative size of the market, its growth potential, and the nature of domestic buyers' needs and wants B. The availability, quality, and cost of raw materials and other inputs that firms will require to produce their products and services C. The development of different styles of management, organization, and strategy D. The degree of collaboration with key suppliers and the greater the knowledge sharing throughout the related-industry cluster E. The level of industry-related support activities to foster customization of products and services

Q: What aspect of the diamond framework is MOST LIKELY responsible for GlenmarkPharma setting up manufacturing facilities in the United States, the world's largest market for pharmaceuticals? A. Licensing strategies B. Demand conditions C. Joint venture strategies D. Franchising strategies E. Firm strategy, structure, and rivalry

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: Competing in the markets of foreign countries generally does NOT involve which of the following? A. Country-to-country differences in consumer buying habits and buyer tastes and preferences B. Country-to-country variations in host government restrictions and requirements and fluctuating exchange rates C. Whether to customize the company's offerings in each different country market or whether to offer a mostly standardized product worldwide D. In 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 E. Crafting a multidomestic strategy that works just as well in one country as in another and that also has the appeal of turning the world market into a mostly homogeneous market

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: Which of the following is NOT an accurate statement as concerns competing in the markets of foreign countries? A. Localizing a global company's product offerings country-by-country leads to low-cost advantage. B. There are country-to-country differences in consumer buying habits and buyer tastes and preferences. C. A company must contend with fluctuating exchange rates and country-to-country variations in host government restrictions and requirements. D. Product designs suitable for one country are often inappropriate in another. E. Market growth rates vary from country to country.

Q: Which of the following is NOT a reason why crafting a strategy to compete in one or more foreign markets is inherently complex? A. Because factors that affect industry competitiveness vary from country to country B. Because of the potential for location-based advantages to conducting value chain activities in certain countries C. Because different government policies and economic conditions make the business climate more favorable in some countries than others D. Because of the risks for shifts in currency exchange rates E. Because similarities in buyer tastes and preferences facilitate standardization of products and services

Q: Which of the following is NOT a reason why a company decides to enter foreign markets? A. To spread business risk across a wider geographic market base B. To capitalize on company competencies and capabilities C. To achieve lower costs through economies of scale, experience, and increased purchasing power D. To impart technical knowledge to high-cost human resources in developing nations E. To gain access to more buyers for the company's products/services

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: Exxon Mobil enters into a pact with Gazprom, the world's largest natural gas extractor, to set up a processing unit in Moscow. Which of the following is most likely the reason for Exxon Mobil 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 Gasprom

Q: The reasons why a company opts to expand outside its home market include all of the following EXCEPT: A. gaining access to new customers for the company's products/services. B. spreading its business risk across a wider market base. C. achieving lower costs through economies of scale, experience, and increased purchasing power. D. exploiting its core competencies and capabilities. E. identifying resources and capabilities in the company's home market.

Q: The reason the world economy is globalizing at an accelerated pace is 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 expands 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 stringent trade barriers in place.

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

Q: Identify and briefly describe the strategic options for tailoring a company's strategy to compete in emerging country markets.

Q: Discuss why a company desirous of competing in foreign country markets needs to pay close attention to the advantages of the cross-border transfer of competencies and capabilities. Are these transfers often a key to competitive advantage? Why or why not?

Q: Identify and briefly discuss three factors a company must consider in order to capture the benefits of engaging in strategic alliances.

Q: What are the merits of strategic alliances and collaborative partnerships for companies racing to seize opportunities in an industry of the future? Under what circumstances do they make sense? How do they contribute to competitive advantage?

Q: Instead of entering into an alliance or partnership, Smith Limited opts to merge with Design Limited. What are the reasons for preferring a merger to an alliance or partnership? Explain the other organizational mechanisms that are also preferable to alliances.

Q: What are the advantages of strategic alliances and collaborative partnerships with key suppliers?

Q: Identify and briefly discuss four disadvantages of a vertical integration system.

Q: Identify at least three factors that can aid companies in forming a successful strategic alliance.

Q: What does a company racing to stake out a strong position in an industry of the future need strategic alliances for?

Q: What does a company racing for global market leadership need strategic alliances for?

Q: What are the three principal advantages of strategic alliances over vertical integration or mergers/acquisitions?

Q: Identify and explain at least two drawbacks to forming a strategic alliance.

Q: What are the merits of outsourcing the performance of certain value chain activities as opposed to performing them in-house? Under what circumstances does outsourcing make good strategic sense?

Q: What are the strategic disadvantages of a forward vertical integration strategy?

Q: What are the strategic advantages of a forward vertical integration strategy?

Q: What are the strategic disadvantages of a backward vertical integration strategy?

Q: What are the strategic advantages of a backward vertical integration strategy?

Q: What are the general strategic objectives of merger and acquisition strategies?

Q: What are mergers and/or acquisitions? How do they contribute to enhancing a company's position?

Q: Identify and briefly explain what is meant by each of the following terms: a. a first-mover advantage b. a first-mover disadvantage (or late-mover advantage)

Q: Discuss why timing of strategic moves is important.

Q: Identify and briefly discuss two "best targets" for offensive attacks by companies.

Q: What is a blue-ocean strategy and what is its appeal?

Q: There are a number of offensive strategy options for improving market positions using cost-based and blue-ocean type strategies. Define the terms and suggest ways in which the strategies could be operationalized.

Q: Strategic offensives should, as a general rule, be grounded in a company's strategic assets and employ a company's strengths to attack rivals. Define and discuss the term strategic assets and its significance in gaining a competitive advantage.

Q: Alliance management is considered an organizational capability and: A. develops over time, out of effort and learning. B. decreases a company's knowledge assets. C. creates successful strategic alliances. D. decreases a company's knowledge capabilities. E. rapidly transfers assets into the strategic alliance.

Q: A company that fails to manage its strategic alliance probably has: A. incorporated contractual safeguards. B. made opportunities for learning a routine management process. C. created a system to manage alliances in a systematic fashion. D. established strong interpersonal relationships and established trust. E. refrained from making commitments to its partners and ensured they do the same.

Q: A company that has greater success in managing its strategic alliance can credit all of the following, EXCEPT: A. establishing strong interpersonal relationships to facilitate communication. B. incorporating contractual safeguards. C. making opportunities for learning a routine management process. D. establishing a system to manage alliances in a systematic fashion. E. creating organizational learning barriers across boundaries.

Q: The principal advantages of strategic alliances over vertical integration or horizontal mergers/acquisitions are: A. resource pooling and risk sharing, more adaptive response capabilities, and greater speed of deployment. B. potential profitability of the alliance and related experience-curve economics. C. the facilitation of best practices, more production capacity, and relevant synergistic savings. D. the transactional and relational concept of operating practices and competencies. E. E)material additions to a company's technological capabilities, strengthening of the firm's competitive position, and boosting of its profitability.

Q: The Achilles heel (or biggest disadvantage/pitfall) of relying heavily on alliances and cooperative strategies is: A. that partners will not fully cooperate or share all they know, preferring instead to guard their most valuable information and protect their more valuable know-how. B. becoming dependent on other companies for essential expertise and capabilities. C. the added time and extra expenses associated with engaging in collaborative efforts. D. having to compromise the company's own priorities and strategies in reaching agreements with partners. E. the collaborative arrangements will not live up to expectations.

Q: Experience indicates that strategic alliances: A. are generally successful. B. work well in cooperatively developing new technologies and new products but seldom work well in promoting greater supply chain efficiency. C. work best when they are aimed at achieving a mutually beneficial competitive advantage for the allies. D. can suffer culture clash and integration problems due to different management styles and business practices. E. are rarely useful in helping a company win the race for global industry leadership.

Q: Which of the following is NOT a typical reason that many outsourcing alliances prove unstable or break apart? A. Anticipated gains may fail to materialize due to an overly optimistic view of the synergies. B. Anticipated gains may fail to materialize due to a poor fit in terms of the combination of resources and capabilities. C. A partner can gain access to a company's proprietary knowledge base, technologies, or trade secrets. D. The partners may disagree over how to divide the profits gained from joint collaboration. E. There is a risk of becoming dependent on other companies.

Q: Capturing the benefits of strategic alliances is not easy, but success generally is a function of all of the following factors, EXCEPT: A. being sensitive to cultural differences B. managing the learning process and allowing for emerging circumstances C. picking a good partner with good chemistry D. recognizing that the alliance must benefit both sides E. ensuring the division of work is directly apportioned to appropriate skill sets

Q: Which of the following is NOT one of the factors that affects whether a strategic alliance will be successful and realize its intended benefits? A. Picking a good partner B. Recognizing that the alliance must benefit both sides C. Minimizing the amount of resources that the partners commit to the alliance D. Ensuring that both parties live up to their commitments E. Structuring the decision-making process so actions can be taken swiftly when needed

Q: A company racing to seize opportunities on the frontiers of advancing technology often utilizes strategic alliances and collaborative partnerships to: A. discourage rival companies from merging with or acquiring the very companies that it is partnering with. B. reduce overall business risk and raise entry barriers into the newly emerging industry. C. help master new technologies and build new expertise and competencies, establish a stronger beachhead for participating in the target industry, and open up broader opportunities in the target industry. D. help defeat competitors that are employing broad differentiation strategies. E. enhance its chances of achieving global low-cost leadership.

Q: Companies racing against rivals for global market leadership need strategic alliances and collaborative partnerships with companies in foreign countries to: A. combat the bargaining power of foreign suppliers and help defend against the competitive threat of substitute products produced by foreign rivals. B. help raise needed financial capital from foreign banks and use the brand names of their partners to make sales to foreign buyers. C. get into critical country markets quickly, gain inside knowledge about unfamiliar markets and cultures, and access valuable skills and competencies that are concentrated in particular geographic locations. D. help wage price wars against foreign competitors. E. exercise better control over efforts to revamp the global industry value chain.

Q: Which of the following is NOT a strategically beneficial reason why a company may enter into strategic partnerships or cooperative arrangements with key suppliers, distributors, or makers of complementary products? A. To improve access to new markets B. To expedite the development of promising new technologies or products C. To enable greater opportunities for employee advancement D. To improve supply chain efficiency E. To overcome disadvantages of small production volumes that limit scale economies and low production costs

Q: The best strategic alliances: A. are highly selective, focusing on particular value chain activities and on obtaining a particular competitive benefit. B. are those whose purpose is to create an industry key success factor. C. are those which help a company move quickly from one strategic group to another. D. involve joining forces in R&D to develop new technologies, cheaper than a company could develop the technology on its own. E. aim at raising an industry's barriers to entry.

Q: An alliance becomes "strategic" as opposed to just a convenient business arrangement when it serves all of the following strategic purposes EXCEPT: A. builds, sustains, or enhances a core competence or competitive advantage. B. blocks a competitive threat. C. increases the bargaining power of alliance members over suppliers or buyers. D. opens up important new market opportunities. E. contracts out certain value chain activities that are normally performed in-house to outside vendors.

Q: Entering into strategic alliances and collaborative partnerships can be competitively valuable because: A. working closely with outsiders is essential in developing new technologies and new products in virtually every industry. B. cooperative arrangements with other companies are very helpful in racing against rivals to build a strong global presence and/or racing to seize opportunities on the frontiers of advancing technology. C. they represent highly effective ways to achieve low-cost leadership and capture first-mover advantages. D. they are a powerful way for companies to build loyalty and goodwill among customers with diverse needs and expectations. E. they are quite effective in helping a company transfer the risks of threatening external developments to other companies.

Q: The formation of a new corporation, jointly owned by two or more companies agreeing to share in the revenues, expenses, and control, is known as: A. a joint venture. B. a limited liability company. C. a partnership. D. sole proprietorship. E. an S corporation.

Q: Which of the following is NOT a factor that makes an alliance "strategic" as opposed to just a convenient business arrangement?A. The alliance is critical to the company's achievement of an important objective.B. The alliance helps block a competitive threat.C. The alliance helps open up important new market opportunities.D. The alliance helps build, enhance, or sustain a core competence or competitive advantage.E. The alliance helps the company obtain additional financing on better credit terms.

Q: Which of the following is defined as a formal agreement between two or more separate companies in which they agree to work cooperatively toward some common objective? A. Joint venture B. Vertical integration C. Strategic alliance D. Forward integration E. Outsourcing

Q: Strategic alliances are: A. the cheapest means of developing new technologies and getting new products to market quickly. B. collaborative formal arrangements where two or more companies join forces and agree to work cooperatively toward some strategically relevant objective. C. a proven means of reducing the costs of performing value chain activities. D. best used to insulate a company from the impact of the five competitive forces. E. the best way to help insulate a firm from the adverse impacts of industry driving forces.

Q: The big risk of employing an outsourcing strategy is: A. causing the company to become partially integrated instead of being fully integrated. B. hollowing out a firm's own capabilities and losing touch with activities and expertise that contribute fundamentally to the firm's competitiveness and market success. C. hurting a company's R&D capability. D. putting the company in the position of being a late mover instead of an early mover. E. increasing the firm's risk exposure to both supply chain management failures and shifts in the composition of the industry value chain.

Q: Outsourcing strategies can offer such advantages as: A. increasing a company's ability to strongly differentiate its product and be successful with either a broad differentiation strategy or a focused differentiation strategy. B. obtaining higher quality and/or cheaper components or services, improving a company's ability to innovate, and reducing its risk exposure. C. speeding a company's entry into foreign markets. D. permitting greater use of strategic alliances and collaborative partnerships. E. giving a firm more direct control over the costs of value chain activities.

Q: Relying on outsiders to perform certain value chain activities offers such strategic advantages as: A. ensuring more costly components or services. B. improving the company's inability to innovate by allying with "best-in-class" suppliers. C. reducing the company's risk exposure to changing technology and/or changing buyer preferences. D. increasing the firm's inability to assemble diverse kinds of expertise speedily and efficiently. E. reducing its information technology and operational costs so that organizational flexibility is maintained.

Q: Which of the following is NOT one of the benefits of outsourcing value chain activities presently performed in-house? A. Streamlines company operations in ways that improve organizational flexibility and cuts the time it takes to get new products into the marketplace B. Allows a company to concentrate on its core business, leverage its key resources, and do even better what it already does best C. Helps the company assemble diverse kinds of expertise speedily and efficiently D. Enables a company to gain better access to end users and better market visibility E. Improves a company's ability to innovate

Q: Outsourcing the performance of value chain activities presently performed in-house to outside vendors and suppliers makes strategic sense EXCEPT when: A. an activity can be performed better or more cheaply by outside specialists. B. it allows a company to focus its entire energies on its core business. C. it restricts a company's ability to assemble diverse kinds of expertise speedily and efficiently. D. it reduces the company's risk exposure to changing technology and/or changing buyer preferences. E. it allows a company to leverage its key resources.

Q: The two big drivers of outsourcing are: A. an increased ability to cut R&D expenses and an increased ability to avoid the problems of strategic alliances. B. that outsiders can often perform certain activities better or more cheaply, and outsourcing allows a firm to focus its entire energies on those activities that are at the center of its expertise (its core competencies). C. a desire to reduce the company's investment in fixed assets and the need to narrow the scope of the company's in-house competencies and competitive capabilities. D. the ability to avoid capital investments that accompany vertical integration and a desire to reduce the company's risk exposure to changing technology and/or changing buyer preferences. E. that a smaller in-house workforce and a low investment in intellectual capital will produce cost savings.

Q: An outsourcing strategy: A. is nearly always a more attractive strategic option than merger and acquisition strategies. B. carries the substantial risk of raising a company's costs. C. carries the substantial risk of making a company overly dependent on its suppliers. D. increases a company's risk exposure to changing technology and/or changing buyer preferences. E. involves farming out certain value chain activities presently performed in-house to outside vendors.

Q: A strategy of vertical integration can have both important strengths and weaknesses depending on all of the following, EXCEPT: A. whether it can limit the performance of strategy-critical activities in ways that increase cost, build expertise, protect proprietary know-how, or increase differentiation. B. the impact on investment costs, flexibility, and response times. C. the administrative costs of coordinating operations across more vertical chain activities. D. how difficult it will be for the company to acquire the set of skills and capabilities needed to operate in another stage of the vertical chain. E. whether competitors outsource any of their value chain activities.

Q: A strategy of vertical integration can have substantial drawbacks, including: A. whether horizontal integration can limit the performance of strategy-critical activities in ways that increase cost, build expertise, protect proprietary know-how, or increase differentiation. B. raising the firm's capital investment in the industry and increasing business risk, as well as providing less flexibility in accommodating shifting buyer preferences by locking the firm into relying on its own in-house activities. C. the environmental costs of coordinating operations across vertical chain activities. D. loss of technological know-how. E. the difficulties faced in entering outside vertical and horizontal markets.

Q: Bypassing regular wholesale/retail channels in favor of direct sales and Internet retailing can have appeal if it: A. reinforces the brand, enhances consumer satisfaction, and results in lower prices to end users. B. can result in better coordination of the firm's direct sales activity to wholesalers and distributors C. can establish a retail frontal attack while efficiently managing its backward (defensive) sales orientation. D. combines the best of all sales channels and provides financial support to distribution allies. E. creates a channel conflict, thereby providing competitive improvisation.

Q: Which of the following is NOT a strategic disadvantage of vertical integration? A. Vertical integration boosts a firm's capital investment in the industry, thus increasing business risk if the industry becomes unattractive later. B. Vertical integration backward into parts and components manufacturing can impair a company's operating flexibility when it comes to changing out the use of certain parts and components. C. Vertical integration reduces the opportunity for achieving greater product differentiation. D. Forward or backward integration often calls for radically different skills and business capabilities than the firm possesses. E. Vertical integration poses all kinds of capacity-matching problems.

Q: Which of the following is typically the strategic impetus for forward vertical integration? A. Being able to control the wholesale/retail portion of the industry value chain B. Experiencing fewer disruptions in the delivery of the company's products to end users C. Gaining better access to end users and better market visibility D. Broadening the company's product line E. Allowing the firm access to greater economies of scale

Q: The strategic impetus for forward vertical integration is to:A. gain better access to end users and better market visibility.B. achieve the same scale economies as wholesale distributors and/or retail dealers.C. control price at the retail level.D. bypass distributors and dealers and sell direct to consumers at the company's website.E. build a core competence in mass merchandising.

Q: Backward vertical integration can produce a: A. full integration when activities remain the domain of key suppliers. B. tapered integration if the firm consolidates all activities in-house. C. differentiation-based competitive advantage when activities enhance the performance of the final product. D. focused differentiation strategy when the market is broad and the product is a commodity. E. lower degree of flexibility in accommodating shifting buyer preferences.

Q: Which of the following is NOT a potential advantage of backward vertical integration? A. Reduced vulnerability to powerful suppliers (who may be inclined to raise prices at every opportunity) B. Reduced risks of disruptions in obtaining crucial components or support services C. Reduced costs D. Reduced business risk because of controlling a bigger portion of the overall industry value chain E. Increase in a company's differentiation capabilities and perhaps achieving a differentiation-based competitive advantage