Market Strategic Alliance Trivia Questions
- 1.
Strong pressures for local responsiveness emerge when customer tastes and preferences
- A.
Differ significantly between countries.
- B.
Differ slightly between countries.
- C.
Are universally alike.
- D.
Are cyclical in nature.
- E.
None of the above.
Correct Answer
A. Differ significantly between countries.Explanation
Strong pressures for local responsiveness emerge when customer tastes and preferences differ significantly between countries. This means that when there is a significant variation in what customers want and prefer in different countries, companies need to adapt their products, services, and marketing strategies to meet the specific needs and preferences of each local market. This could involve customizing products, tailoring advertising campaigns, or even developing entirely new products for different markets. By doing so, companies can better satisfy customer demands and gain a competitive advantage in each country.Rate this question:
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- 2.
Which of the following entry modes allow(s) a company to engage in global strategic coordination?
- A.
Exporting
- B.
Licensing
- C.
Joint ventures
- D.
Wholly owned subsidiaries
- E.
Joint ventures and wholly owned subsidiaries
Correct Answer
D. Wholly owned subsidiariesExplanation
Wholly owned subsidiaries allow a company to engage in global strategic coordination. This entry mode involves establishing a new company or acquiring an existing company in the foreign market, giving the parent company full control over operations and decision-making. With this approach, the parent company can align its global strategies and coordinate activities across different markets, ensuring consistency and synergy in its operations worldwide. Exporting and licensing involve less control and coordination, while joint ventures involve shared decision-making with a local partner. Therefore, only wholly owned subsidiaries provide the level of control necessary for global strategic coordination.Rate this question:
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- 3.
A key to making a strategic alliance work is
- A.
Having one partner handle daily operations.
- B.
Selecting the right partner.
- C.
Sharing all knowledge.
- D.
Enforcing one culture for both partners.
- E.
Reducing investment in the alliance to a minimum.
Correct Answer
B. Selecting the right partner.Explanation
In order for a strategic alliance to be successful, it is crucial to select the right partner. This means finding a partner who aligns with the goals and values of the alliance, has complementary strengths and resources, and is committed to working collaboratively. Selecting the right partner ensures that there is a strong foundation for trust, effective communication, and mutual benefit, which are all essential for the success of the alliance.Rate this question:
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- 4.
Which of the following is not a risk of exporting?
- A.
Tariff barriers
- B.
Transportation costs
- C.
Location diseconomies
- D.
Prime interest rates
- E.
Delegation of marketing activities to a local agent
Correct Answer
D. Prime interest ratesExplanation
Prime interest rates are not a risk of exporting because they are a factor that affects borrowing costs and the overall economy, but they do not directly impact the process of exporting goods or services to foreign markets. Tariff barriers, transportation costs, location diseconomies, and delegation of marketing activities to a local agent are all potential risks that exporters may face, as they can increase costs, create logistical challenges, and impact market access.Rate this question:
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- 5.
In which of the following circumstances does a localization strategy make the most sense?
- A.
Global market standardization is not possible, and there are no significant economies of scale to be realized from centralizing global manufacturing.
- B.
Global market standardization is possible, but there are no significant economies of scale to be realized from centralizing global manufacturing.
- C.
Global market standardization is not possible, but there are significant economies of scale to be realized from centralizing global manufacturing.
- D.
Global market standardization is possible, and there are significant economies of scale to be realized from centralizing global manufacturing.
- E.
Consumer tastes and preferences differ among national markets, and economies of scale are substantial.
Correct Answer
E. Consumer tastes and preferences differ among national markets, and economies of scale are substantial.Explanation
A localization strategy makes the most sense when consumer tastes and preferences differ among national markets, and there are substantial economies of scale to be realized from centralizing global manufacturing. This means that by tailoring products and marketing strategies to specific local markets, companies can better meet the unique needs and preferences of consumers in each country. Additionally, by centralizing manufacturing, companies can take advantage of cost efficiencies and economies of scale, leading to lower production costs and higher profitability.Rate this question:
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- 6.
Global economies of scale can be realized by
- A.
Expansion of overseas sales.
- B.
Better utilization of production facilities.
- C.
Boosting bargaining power with suppliers.
- D.
Increasing cost savings through learning effects.
- E.
All of the above.
Correct Answer
E. All of the above.Explanation
Global economies of scale can be realized through various means. Expansion of overseas sales allows companies to reach larger markets and benefit from increased demand and economies of scale. Better utilization of production facilities enables companies to produce more output with the same resources, leading to cost savings. Boosting bargaining power with suppliers allows companies to negotiate better terms and prices, further reducing costs. Increasing cost savings through learning effects refers to the efficiency gains and cost reductions that occur as a result of experience and knowledge gained from operating globally. Therefore, all of the above options contribute to realizing global economies of scale.Rate this question:
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- 7.
Which of the following companies increased company growth rates by developing products at home and then expanding sales of these products in international markets?
- A.
Procter & Gamble
- B.
Ford
- C.
Toyota
- D.
All of the above
- E.
None of the above
Correct Answer
D. All of the aboveExplanation
All of the above companies increased company growth rates by developing products at home and then expanding sales of these products in international markets. Procter & Gamble, Ford, and Toyota are all well-known multinational corporations that have successfully implemented this strategy. By creating innovative products domestically and then selling them globally, these companies were able to tap into new markets and increase their revenue and market share. This approach allowed them to leverage their brand reputation and expertise to gain a competitive advantage in international markets.Rate this question:
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- 8.
Firms should choose likely countries for an international expansion effort based on all of the followingexcept the
- A.
Size of the market.
- B.
Existing wealth of consumers in that market.
- C.
Likely future wealth of consumers in that market.
- D.
Political stability of that market.
- E.
Age of the country.
Correct Answer
E. Age of the country.Explanation
Firms should choose likely countries for international expansion based on factors such as the size of the market, existing wealth of consumers, likely future wealth of consumers, and political stability. However, the age of the country is not a relevant factor in this decision-making process. The age of a country does not directly impact its potential as a market for expansion. Therefore, it is not considered when evaluating potential countries for international expansion efforts.Rate this question:
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- 9.
Global expansion
- A.
Is feasible only for large companies.
- B.
Can enable companies to increase their profitability and grow their profits more rapidly.
- C.
Allows domestic companies in the mature stage of the industry life cycle to maintain profits but not to increase them.
- D.
Requires locating facilities in foreign countries.
- E.
Makes sense for manufacturing firms but not for service firms.
Correct Answer
B. Can enable companies to increase their profitability and grow their profits more rapidly.Explanation
Global expansion can enable companies to increase their profitability and grow their profits more rapidly. This is because expanding into international markets allows companies to tap into new customer bases, access new resources and technologies, and take advantage of economies of scale. By reaching a larger market, companies can increase their sales and revenue, leading to higher profitability. Additionally, global expansion can also lead to cost savings through factors such as lower labor costs or access to cheaper raw materials. Overall, expanding globally can provide companies with new growth opportunities and a higher potential for increased profits.Rate this question:
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- 10.
Foreign subsidiaries play a major role in shaping the future direction of a company pursuing a(n)
- A.
Transnational strategy.
- B.
International strategy.
- C.
Localization strategy.
- D.
Joint venture.
- E.
Global standardization strategy.
Correct Answer
A. Transnational strategy.Explanation
Foreign subsidiaries play a major role in shaping the future direction of a company pursuing a transnational strategy. This strategy involves balancing global integration and local responsiveness, allowing the company to benefit from economies of scale and adapt to local market needs. Foreign subsidiaries contribute by sharing knowledge and best practices across different markets, facilitating innovation and efficiency. They also help in developing and implementing strategies that cater to local customer preferences and cultural differences. Overall, foreign subsidiaries are crucial in supporting the transnational strategy and driving the company's success in the global marketplace.Rate this question:
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- 11.
A company that enters a foreign market by entering into a licensing agreement with a local company
- A.
Can realize location economies.
- B.
Can engage in global strategic coordination.
- C.
Can realize experience-curve effects.
- D.
Can realize experience-curve effects. risks losing control over its technology to the venture partner. risks losing control over its technology to the venture partner.
- E.
Can engage in global strategic coordination and realize experience-curve effects.
Correct Answer
D. Can realize experience-curve effects. risks losing control over its technology to the venture partner. risks losing control over its technology to the venture partner.Explanation
When a company enters a foreign market through a licensing agreement with a local company, it can realize experience-curve effects. This means that as the company gains experience in the foreign market, it can reduce its costs and improve its efficiency. However, there is a risk involved in this strategy, as the company may lose control over its technology to the venture partner. This is because the local company may gain knowledge and expertise about the technology through the licensing agreement, potentially leading to a loss of control for the original company.Rate this question:
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- 12.
What are the risks associated with licensing as a means of entering overseas markets?
- A.
Licensing limits a company's ability to coordinate strategic moves across countries.
- B.
A company may lose control of its technology.
- C.
A company may lose control over its manufacturing, marketing, and strategic functions.
- D.
All of the above.
- E.
None of the above.
Correct Answer
D. All of the above.Explanation
Licensing as a means of entering overseas markets carries several risks. Firstly, it limits a company's ability to coordinate strategic moves across countries, as the licensee may have different goals and strategies. Secondly, there is a risk of losing control over technology, as the licensee may gain access to proprietary knowledge and potentially use it against the licensor. Lastly, licensing can result in losing control over manufacturing, marketing, and strategic functions, as the licensee may not follow the same standards or have the same level of commitment as the licensor. Therefore, all of the above risks are associated with licensing as a means of entering overseas markets.Rate this question:
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- 13.
A nation's companies gain competitive advantage if their domestic customers are
- A.
Nondemanding purchasers.
- B.
Able to obtain products or services in other countries.
- C.
Sophisticated and demanding.
- D.
Willing to spend money on novelties.
- E.
Not willing to accept low-priced products.
Correct Answer
C. Sophisticated and demanding.Explanation
Companies gain competitive advantage when their domestic customers are sophisticated and demanding. This is because sophisticated customers have higher expectations and are more discerning in their purchasing decisions. They are willing to pay a premium for high-quality products or services, which allows companies to differentiate themselves and charge higher prices. Additionally, demanding customers push companies to continuously innovate and improve their offerings, leading to a higher level of competitiveness in the market.Rate this question:
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- 14.
Which of the following has occurred in international trade over the past half-century?
- A.
There has been a dramatic lowering of barriers to international trade.
- B.
Tariff rates on manufactured goods traded by advanced nations have fallen.
- C.
Regulations prohibiting foreign companies from entering domestic markets and establishing production facilities have been removed.
- D.
The volume of world trade has increased dramatically.
- E.
All of the above.
Correct Answer
E. All of the above.Explanation
Over the past half-century, there has been a significant decrease in barriers to international trade, including the lowering of tariff rates on manufactured goods traded by advanced nations. Additionally, regulations that previously prohibited foreign companies from entering domestic markets and establishing production facilities have been removed. As a result of these changes, the volume of world trade has substantially increased. Therefore, the correct answer is "All of the above."Rate this question:
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- 15.
Most manufacturing companies begin their global expansion by
- A.
Licensing.
- B.
Franchising.
- C.
Exporting.
- D.
Forming a joint venture.
- E.
Setting up a wholly owned subsidiary in the host country.
Correct Answer
C. Exporting.Explanation
Exporting is often the first step for manufacturing companies to expand globally because it allows them to enter new markets with relatively low risk and investment. By exporting their products, companies can test the market demand, establish relationships with customers and distributors, and gain valuable market knowledge. This approach also allows companies to maintain control over their products and operations while minimizing the need for extensive resources and infrastructure in the host country. Licensing, franchising, forming joint ventures, and setting up wholly owned subsidiaries usually involve higher levels of commitment and investment, making exporting a more feasible initial option for global expansion.Rate this question:
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- 16.
Which of the following factors increases pressures for cost reductions?
- A.
Differences in distribution channels
- B.
Increasing national wealth
- C.
Great transportation needs
- D.
High switching costs
- E.
Price as the main competitive weapon in a market
Correct Answer
E. Price as the main competitive weapon in a marketExplanation
Price as the main competitive weapon in a market increases pressures for cost reductions because when price is the main factor that determines a customer's choice, companies need to lower their costs in order to offer competitive prices. This means finding ways to reduce production costs, streamline operations, and optimize efficiency. By doing so, companies can maintain profitability while offering lower prices than their competitors, which gives them a competitive advantage in the market.Rate this question:
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- 17.
Attaining a credible commitment from a potential partner
- A.
Is a step in partner selection.
- B.
Requires the ability to share skills with partners.
- C.
Requires the ability to learn from alliance partners.
- D.
Is a way to minimize opportunism.
- E.
Requires the ability to share skills with and learn from alliance partners.
Correct Answer
A. Is a step in partner selection.Explanation
Attaining a credible commitment from a potential partner is a step in partner selection. This means that before entering into a partnership, it is important to ensure that the potential partner is committed to the partnership and its goals. This commitment helps to establish trust and reliability between the partners, which are crucial for the success of the partnership. Without a credible commitment, the partnership may be at risk of opportunistic behavior or lack of cooperation. Therefore, attaining a credible commitment is an essential step in the process of selecting a partner.Rate this question:
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- 18.
Cost reduction pressures can be particularly intense in industries producing
- A.
Commodity-type products.
- B.
Highly differential products.
- C.
Goods that do not compete on the basis of price.
- D.
Goods servicing narrowly defined markets.
- E.
Highly advertised goods.
Correct Answer
A. Commodity-type products.Explanation
Cost reduction pressures are particularly intense in industries producing commodity-type products. This is because commodity-type products are typically standardized and undifferentiated, meaning that customers perceive little difference between competing products. As a result, price becomes a key factor in purchasing decisions, and companies producing these products face intense competition to offer the lowest price. In order to remain competitive, they must constantly seek ways to reduce costs and increase efficiency in their production processes.Rate this question:
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- 19.
The ability to realize cost economies from global volume is greatest in the case of
- A.
Products that need to be customized to local requirements.
- B.
Commodity-type products that serve universal needs.
- C.
Low-weight, high-value products that can be differentiated by global companies.
- D.
Products that can be economically manufactured in small batches.
- E.
Companies competing in industries where they face a large number of multinational competitors.
Correct Answer
B. Commodity-type products that serve universal needs.Explanation
Commodity-type products that serve universal needs have the greatest ability to realize cost economies from global volume. These products are standardized and have high demand across different markets, allowing companies to achieve economies of scale by producing them in large quantities. By producing and selling these products globally, companies can benefit from lower production costs, efficient supply chains, and economies of scope. This enables them to achieve cost savings and competitive advantages compared to products that require customization or have limited demand.Rate this question:
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- 20.
Factors of production include all but which of the following?
- A.
Land
- B.
Labor
- C.
Raw materials
- D.
Ethnic diversity
- E.
Managerial sophistication
Correct Answer
D. Ethnic diversityExplanation
Factors of production refer to the resources needed to produce goods and services. These typically include land, labor, and raw materials. Ethnic diversity and managerial sophistication are not considered factors of production as they do not directly contribute to the production process. Ethnic diversity refers to the variety of ethnic backgrounds within a population, which may have cultural or social significance but does not directly affect production. Managerial sophistication refers to the level of skill and expertise in management, which is important for effective business operations but is not considered a factor of production.Rate this question:
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- 21.
When entering an overseas market, which of the following factors should be considered?
- A.
Size of the market
- B.
Purchasing power
- C.
Consumer demand for the company's product
- D.
Economic risks
- E.
All of the above
Correct Answer
E. All of the aboveExplanation
When entering an overseas market, several factors should be considered. The size of the market is important because it determines the potential customer base and market saturation. Purchasing power is crucial as it indicates the affordability of the company's product for the target market. Consumer demand for the company's product is essential to ensure there is a market for the product and that it aligns with local preferences. Economic risks, such as currency fluctuations, political instability, and regulatory changes, must also be evaluated to mitigate potential risks and uncertainties. Therefore, all of the mentioned factors should be considered when entering an overseas market.Rate this question:
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- 22.
Which entry mode gives a multinational the tightest control over foreign operations?
- A.
Exporting from the home country and letting a foreign agent organize local marketing
- B.
Licensing
- C.
Franchising
- D.
Entering into a joint venture with a foreign company to set up overseas operations
- E.
Setting up a wholly owned subsidiary
Correct Answer
E. Setting up a wholly owned subsidiaryExplanation
Setting up a wholly owned subsidiary gives a multinational the tightest control over foreign operations. This is because in this mode, the multinational has complete ownership and control over the foreign operations. They can make all the decisions regarding operations, marketing, and strategy without any interference from external parties. This allows the multinational to maintain full control over the brand image, quality standards, and overall business operations in the foreign market.Rate this question:
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- 23.
When a company increases its growth rate by taking goods or services developed at home and selling them internationally, it is
- A.
Leveraging its existing products.
- B.
Taking the path of least resistance.
- C.
Engaging in product positioning.
- D.
Realizing cost economies from global expansion.
- E.
Realizing location economies.
Correct Answer
A. Leveraging its existing products.Explanation
When a company increases its growth rate by taking goods or services developed at home and selling them internationally, it is leveraging its existing products. This means that the company is utilizing its already developed products to expand its market reach and increase sales internationally. By leveraging existing products, the company can capitalize on its strengths and expertise in the domestic market and apply them to international markets, potentially achieving economies of scale and cost savings. This strategy allows the company to maximize the value of its existing products and expand its business globally.Rate this question:
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- 24.
Which of the following isnot a necessity for leveraging the skills of global subsidiaries?
- A.
The firm must have incentives for local managers to share knowledge and ideas.
- B.
The firm's managers must be aware that competencies can develop anywhere.
- C.
The firm must be pursuing a strategy of differentiation.
- D.
The firm's managers must help to transfer competencies around the company.
- E.
The firm must offer incentives that encourage employees to take necessary risks.
Correct Answer
C. The firm must be pursuing a strategy of differentiation. -
- 25.
A localization strategy is most appropriate when
- A.
There are relatively few differences from one location to another.
- B.
Consumer tastes and preferences are universally similar.
- C.
Consumer tastes and perferences differ substantially across nations.
- D.
There is no need to customize products.
- E.
Local demand and national demand are equal.
Correct Answer
C. Consumer tastes and perferences differ substantially across nations.Explanation
A localization strategy is most appropriate when consumer tastes and preferences differ substantially across nations. This means that there are significant variations in consumer preferences and behaviors in different countries, which requires companies to adapt their products, marketing strategies, and business operations to meet the specific needs and preferences of each market. By localizing their offerings, companies can better cater to the unique preferences of consumers in each country, which can lead to increased customer satisfaction and market success.Rate this question:
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- 26.
Companies that pursue a transnational strategy are trying to develop
- A.
A business model that achieves low costs.
- B.
A differentiation strategy across geographical markets.
- C.
A flow of skills between different subsidiaries in the global network.
- D.
All of the above.
- E.
None of the above.
Correct Answer
D. All of the above.Explanation
A transnational strategy is a business approach that combines elements of both global integration and local responsiveness. It aims to achieve low costs by leveraging global efficiencies, differentiate its products or services across different markets to cater to local preferences, and facilitate the flow of skills and knowledge between different subsidiaries in the global network to foster innovation and collaboration. Therefore, the correct answer is "all of the above."Rate this question:
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- 27.
Which of the following factors increases pressures for local responsiveness?
- A.
Powerful buyers
- B.
Persistent excess capacity
- C.
Low-cost competitors
- D.
Differences in customer tastes and preferences
- E.
Trade barriers
Correct Answer
D. Differences in customer tastes and preferencesExplanation
Differences in customer tastes and preferences increase pressures for local responsiveness because companies need to tailor their products or services to meet the specific needs and preferences of different customer segments in different markets. This requires adapting marketing strategies, product features, packaging, and other aspects of the business to cater to the unique preferences of local customers. By doing so, companies can better compete in the market and gain customer loyalty by offering products or services that resonate with their tastes and preferences.Rate this question:
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- 28.
Procter & Gamble grew rapidly in international markets because of its
- A.
Skills in mass-marketing.
- B.
Patents on essential products.
- C.
Financial stamina.
- D.
Work force diversity.
- E.
Concentric diversification.
Correct Answer
E. Concentric diversification.Explanation
Procter & Gamble's rapid growth in international markets can be attributed to its strategy of concentric diversification. This means that the company expanded into new markets and industries that were related or complementary to its existing products and expertise. By leveraging its skills in mass-marketing and financial stamina, Procter & Gamble was able to successfully enter and thrive in new markets, leading to its rapid growth. Additionally, the company's work force diversity may have played a role in its success by bringing in different perspectives and ideas that contributed to innovation and market expansion.Rate this question:
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- 29.
When a company performs a value creation activity in the optimal location for that activity, wherever in the world that might be, it is trying to capitalize on
- A.
Economies of scale.
- B.
Economies of scope.
- C.
The transnational strategy.
- D.
Location economies.
- E.
Its localization strategy.
Correct Answer
D. Location economies.Explanation
When a company performs a value creation activity in the optimal location for that activity, it is trying to capitalize on location economies. Location economies refer to the cost advantages that a company can achieve by locating its operations in a specific geographic location. This can include factors such as lower labor costs, access to key resources or markets, favorable government regulations, or infrastructure advantages. By taking advantage of location economies, a company can reduce costs, improve efficiency, and gain a competitive advantage in the global market.Rate this question:
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- 30.
For a hotel company whose competitive advantage is based on high brand-name recognition, which of the following ways of serving an overseas market makes the most sense?
- A.
Franchising
- B.
Licensing
- C.
Exporting
- D.
Entering into a joint venture with a foreign company
- E.
Setting up a wholly owned subsidiary
Correct Answer
A. FranchisingExplanation
Franchising makes the most sense for a hotel company whose competitive advantage is based on high brand-name recognition. By franchising, the company can expand its presence in the overseas market while leveraging the brand recognition it has already established. Franchising allows the company to maintain control over the brand and standards while benefiting from the local knowledge and resources of the franchisees. This approach also reduces the financial and operational risks associated with other options like setting up a wholly owned subsidiary or entering into a joint venture.Rate this question:
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- 31.
Host government demands generally
- A.
Increase pressures for local responsiveness.
- B.
Increase pressures for cost reductions.
- C.
Discourage foreign companies from operating in the home country.
- D.
Impede a company's ability to minimize its transaction costs.
- E.
Impede a company's ability to differentiate its product offering across national borders.
Correct Answer
A. Increase pressures for local responsiveness.Explanation
Host government demands generally increase pressures for local responsiveness. This means that when a host government imposes certain requirements or regulations on foreign companies operating in their country, it often necessitates adapting products, services, or business strategies to meet the specific needs and preferences of the local market. This can include customizing products, adjusting marketing strategies, or even establishing local production facilities. By doing so, companies can better meet the demands and expectations of the host government and local consumers, which can enhance their competitiveness and success in the foreign market.Rate this question:
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- 32.
Clear Vision's decision to own a manufacturing facility overseas was not influenced by which of the following factors?
- A.
Low labor costs
- B.
Availability of a skilled work force
- C.
Geographical proximity to India
- D.
Tax breaks given by the Hong Kong government
- E.
Ability to find a Chinese partner
Correct Answer
C. Geographical proximity to IndiaExplanation
Clear Vision's decision to own a manufacturing facility overseas was not influenced by the factor of geographical proximity to India. This means that the company did not consider the proximity to India as a significant factor in their decision-making process. The other factors mentioned in the question, such as low labor costs, availability of a skilled workforce, tax breaks given by the Hong Kong government, and the ability to find a Chinese partner, could have played a role in their decision to own a manufacturing facility overseas.Rate this question:
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- 33.
When toymaker Mattel sells Barbie dolls in the Middle East, it changes the doll's shape to one that is a more accurate portrayal of a female body. Mattel does this to
- A.
Create a commodity-type product.
- B.
Transfer technological know-how.
- C.
Increase product standardization.
- D.
Realize experience curve effects.
- E.
Respond to differences in local tastes.
Correct Answer
E. Respond to differences in local tastes.Explanation
Mattel changes the doll's shape to a more accurate portrayal of a female body when selling Barbie dolls in the Middle East in order to respond to differences in local tastes. This suggests that the Middle Eastern market prefers dolls that reflect their cultural ideals of beauty and body image. By adapting the doll's shape, Mattel aims to cater to the specific preferences and expectations of the local consumers, ensuring that the product aligns with their cultural norms and tastes.Rate this question:
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- 34.
In which of the following circumstances does a global standardization strategy make the most sense?
- A.
Global market standardization is not possible, and there are no significant economies of scale to be realized from centralizing global manufacturing.
- B.
Global market standardization is possible, but there are no significant economies of scale to be realized from centralizing global manufacturing.
- C.
Global market standardization is not possible, but there are significant economies of scale to be realized from centralizing global manufacturing.
- D.
Consumer tastes and preferences differ among national markets, and economies of scale are insubstantial.
- E.
Global market standardization is possible, and there are significant economies of scale to be realized from centralizing global manufacturing.
Correct Answer
E. Global market standardization is possible, and there are significant economies of scale to be realized from centralizing global manufacturing.Explanation
A global standardization strategy makes the most sense when global market standardization is possible, meaning that consumer tastes and preferences are similar across different national markets. Additionally, there should be significant economies of scale to be gained from centralizing global manufacturing. This means that by producing and selling the same standardized product globally, the company can benefit from cost savings and efficiency improvements. This strategy is effective when there is a high level of market homogeneity and the company can achieve economies of scale by consolidating production and distribution processes.Rate this question:
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- 35.
Which of the following is not an objective of a transnational company?
- A.
Local responsiveness
- B.
Realization of experience-based economies
- C.
Low cross-national integration
- D.
Global learning
- E.
Realization of location economies
Correct Answer
C. Low cross-national integrationExplanation
Low cross-national integration is not an objective of a transnational company because transnational companies strive to integrate their operations across different countries in order to achieve efficiency and effectiveness. They aim to leverage resources, knowledge, and capabilities from different locations to create value and gain a competitive advantage. Low cross-national integration would hinder the company's ability to coordinate and align its activities globally, limiting its ability to realize the benefits of a transnational approach.Rate this question:
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- 36.
Managers of a multinational enterprise must recognize that skills
- A.
Need to be transferred from headquarters to the firm's overseas operations.
- B.
May arise from anywhere within the firm's global network.
- C.
Developed overseas usually do not rise to the level of domestic skills.
- D.
Should not deviate from their domestic level.
- E.
Must be tightly controlled to assume global similarity.
Correct Answer
B. May arise from anywhere within the firm's global network.Explanation
The correct answer is "may arise from anywhere within the firm's global network." This means that skills needed in a multinational enterprise can come from any part of the company's global network, not just from headquarters or domestic operations. This recognizes the importance of diverse skills and expertise from different locations in order to effectively operate and compete in a global market.Rate this question:
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- 37.
The timing of entry into an overseas market
- A.
Doesn't matter in the long run.
- B.
Has little effect on long-term success.
- C.
Is a matter for careful consideration.
- D.
Has little or no effect on the overall costs of market entry.
- E.
Depends on the entry of competition.
Correct Answer
C. Is a matter for careful consideration.Explanation
The timing of entry into an overseas market is a matter for careful consideration. This means that the decision of when to enter a foreign market should be thoughtfully evaluated. It suggests that there are various factors that need to be taken into account, such as market conditions, competition, and the company's resources and capabilities. Making a well-informed decision about the timing of entry can significantly impact the long-term success of the company in the foreign market.Rate this question:
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- 38.
Which of the following is not an attribute of a national or country-specific environment that has an impact on global competitiveness of companies located in that nation?
- A.
Factory production endowments
- B.
Local demand conditions
- C.
Related and supporting industries
- D.
Strategy, structure, and rivalry of firms within the nation
- E.
Advertising expenses
Correct Answer
E. Advertising expensesExplanation
Advertising expenses are not an attribute of a national or country-specific environment that has an impact on the global competitiveness of companies located in that nation. Factors such as factory production endowments, local demand conditions, related and supporting industries, and the strategy, structure, and rivalry of firms within the nation are all important determinants of a nation's global competitiveness. However, advertising expenses are a specific business decision made by individual companies and do not directly influence the overall competitiveness of a nation's companies on a global scale.Rate this question:
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- 39.
All of the following are first-mover advantages except the ability to
- A.
Ride down the experience curve ahead of rivals.
- B.
Avoid pioneering costs.
- C.
Discourage new entrants.
- D.
Create switching costs for customers.
- E.
Preempt rivals by building a strong brand name.
Correct Answer
B. Avoid pioneering costs.Explanation
The ability to ride down the experience curve ahead of rivals is a first-mover advantage because it allows a company to gain expertise and efficiency in production, leading to cost advantages. Discouraging new entrants is a first-mover advantage as it creates barriers to entry and reduces competition. Creating switching costs for customers is a first-mover advantage because it makes it difficult for customers to switch to a competitor. Preempting rivals by building a strong brand name is a first-mover advantage as it establishes customer loyalty and recognition. However, avoiding pioneering costs is not a first-mover advantage because being the first to enter a market often involves higher costs and risks associated with developing new products or technologies.Rate this question:
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- 40.
A localization strategy is based on which of the following ideas?
- A.
There is a convergence in the tastes of consumers in different nations of the world.
- B.
There are substantial economies of scale to be realized from centralizing global production.
- C.
Consumer tastes and preferences differ among national markets.
- D.
There are cost advantages associated with manufacturing a standard product for global consumption.
- E.
Competitive strategy should be centralized at the world head office.
Correct Answer
C. Consumer tastes and preferences differ among national markets.Explanation
Consumer tastes and preferences differ among national markets. This means that what appeals to consumers in one country may not necessarily appeal to consumers in another country. Therefore, a localization strategy takes into consideration these differences and adapts the product or service to meet the specific needs and preferences of each market. By understanding and catering to the unique preferences of consumers in different countries, companies can gain a competitive advantage and increase their chances of success in those markets.Rate this question:
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- 41.
When technology in an industry is changing rapidly, a company pursuing a strategy of vertical integration may find itself
- A.
Locked into an old, inefficient technology.
- B.
Able to sell its products at continually lower prices.
- C.
Increasing returns on its assets.
- D.
All of the above.
- E.
None of the above.
Correct Answer
A. Locked into an old, inefficient technology.Explanation
In rapidly changing technological industries, a company pursuing vertical integration may find itself locked into an old, inefficient technology. This is because vertical integration involves owning and controlling various stages of the supply chain, including the production of technology. If the company has invested heavily in a particular technology and it becomes outdated or inefficient due to rapid advancements, the company may find it difficult to adapt or switch to newer technologies. As a result, they may be stuck with an outdated technology that hinders their competitiveness and growth in the industry.Rate this question:
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- 42.
Which of the following statements concerning vertical integration is not correct?
- A.
Vertical integration can reduce a company's overall cost of production.
- B.
Vertical integration allows a company to circumvent powerful buyers and suppliers.
- C.
Vertical integration can be used to protect a company's investments in proprietary technology.
- D.
Vertical integration is a means of implementing just-in-time inventory systems when suppliers are unreliable.
- E.
Vertical integration facilitates the attainment of economies of scope.
Correct Answer
C. Vertical integration can be used to protect a company's investments in proprietary technology.Explanation
Vertical integration is a means of implementing just-in-time inventory systems when suppliers are unreliable. This statement is not correct because vertical integration is not specifically used for implementing just-in-time inventory systems. Vertical integration refers to a company's expansion into different stages of the supply chain, such as owning suppliers or distributors, in order to gain control over costs, quality, and distribution. It can reduce a company's overall cost of production, allow it to bypass powerful buyers and suppliers, protect investments in proprietary technology, and facilitate economies of scope.Rate this question:
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- 43.
Hewlett Packard and Compaq recently completed a merger. The combined firm is larger and therefore can negotiate lower prices from suppliers. This benefit of horizontal integration is called
- A.
Economies of scale.
- B.
Reduction of excess capacity.
- C.
Cross-selling.
- D.
Product bundling.
- E.
Market power.
Correct Answer
E. Market power.Explanation
The correct answer is market power. When two companies merge and become larger, they gain more market power. This means that they have a greater ability to influence prices and conditions in the market. With increased market power, the combined firm can negotiate lower prices from suppliers, giving them a competitive advantage over smaller firms. Economies of scale refer to cost advantages that arise from increased production, while reduction of excess capacity refers to eliminating unused production capacity. Cross-selling and product bundling are marketing strategies that aim to increase sales by offering complementary products or services.Rate this question:
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- 44.
Observing the pattern of consolidation in U.S. industries over time, one will notice that
- A.
Horizontal integration has never been a very popular strategy.
- B.
Firms that horizontally integrate tend to divest later.
- C.
Horizontal integration has been very popular in the last decade.
- D.
While a few industries have consolidated since 1970, most remain fragmented.
- E.
Mergers were very common and acquisitions were rare from 1900 to 1999.
Correct Answer
C. Horizontal integration has been very popular in the last decade. -
- 45.
Outsourcing occurs when a firm
- A.
Buys one of its rivals.
- B.
Merges with one of its suppliers.
- C.
Enters into a joint venture with a rival.
- D.
Hires another firm to perform value creation activities.
- E.
Enters into contracts with two suppliers simultaneously.
Correct Answer
D. Hires another firm to perform value creation activities.Explanation
Outsourcing occurs when a firm hires another firm to perform value creation activities. This means that instead of conducting certain activities in-house, the firm decides to delegate them to an external company. By doing so, the firm can focus on its core competencies while benefiting from the expertise and efficiency of the external firm. This can lead to cost savings, improved quality, and increased flexibility.Rate this question:
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- 46.
When a company decides to expand into new industries, it must
- A.
Construct its business models at two levels.
- B.
Secure government approval from the Securities and Exchange Commission (SEC).
- C.
Select a new CEO.
- D.
All of the above.
- E.
None of the above.
Correct Answer
A. Construct its business models at two levels.Explanation
When a company decides to expand into new industries, it must construct its business models at two levels. This means that the company needs to develop a strategic plan and framework for its expansion, taking into consideration the unique characteristics and challenges of each industry it plans to enter. By constructing business models at two levels, the company ensures that it has a comprehensive and well-thought-out approach to entering new industries, which increases its chances of success in those markets. This is a crucial step in the expansion process and is necessary for the company to effectively navigate the complexities of new industries.Rate this question:
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- 47.
Which of the following is not an accurate statement about outsourcing?
- A.
Outsourcing should be done for an entire function—for example, all of human resources.
- B.
Outsourcing requires that some value creation activities be performed outside an organization.
- C.
A risk of outsourcing is the decreased control that organizations have over how the functions are performed.
- D.
Outsourcing means that activities can be performed by companies that specialize in that activity.
- E.
Outsourcing is a strategy that is primarily used by small firms who cannot afford skilled personnel in every specialty.
Correct Answer
A. Outsourcing should be done for an entire function—for example, all of human resources.Explanation
The given answer states that outsourcing should be done for an entire function, such as all of human resources. However, this is not an accurate statement about outsourcing. Outsourcing can be done for specific tasks or processes within a function, and it does not necessarily require outsourcing the entire function. Organizations often outsource certain activities to external companies that specialize in those activities, allowing them to benefit from their expertise and efficiency. Therefore, the statement that outsourcing should be done for an entire function is not accurate.Rate this question:
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- 48.
Antitrust regulation
- A.
Favors large companies.
- B.
Reduces industry competition.
- C.
Is concerned with companies' abuse of their market power to raise prices for consumers above the level that would exist in more competitive situations.
- D.
Tends to raise prices for consumers.
- E.
Enables the achievement of market power.
Correct Answer
C. Is concerned with companies' abuse of their market power to raise prices for consumers above the level that would exist in more competitive situations.Explanation
Antitrust regulation is a set of laws and policies that aim to prevent companies from abusing their market power to the detriment of consumers. It is concerned with ensuring fair competition in the industry and preventing companies from engaging in anti-competitive practices such as price-fixing or monopolistic behavior. The correct answer states that antitrust regulation is specifically focused on addressing companies' abuse of market power to raise prices for consumers above what would be seen in a more competitive market. This explanation aligns with the purpose and goals of antitrust regulation.Rate this question:
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- 49.
Which of the following is not a benefit of vertical integration?
- A.
Facilitating investments in specialized assets
- B.
Enhancing product quality
- C.
Improved scheduling
- D.
Increasing cost structure
- E.
None of the above
Correct Answer
D. Increasing cost structureExplanation
Vertical integration refers to a company expanding its operations by acquiring or merging with businesses at different stages of the production process. While it offers several advantages such as facilitating investments in specialized assets, enhancing product quality, and improving scheduling, increasing cost structure is not one of them. In fact, vertical integration can often lead to cost savings by eliminating the need to rely on external suppliers and reducing transaction costs. Therefore, increasing cost structure is not a benefit of vertical integration.Rate this question:
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- 50.
Which of the following strategies facilitates the implementation of a just-in-time inventory system?
- A.
Short-term contracts
- B.
Vertical integration
- C.
Unrelated diversification
- D.
Diversification based on transferring competencies
- E.
Diversification based on realizing economies of scope
Correct Answer
B. Vertical integrationExplanation
Vertical integration facilitates the implementation of a just-in-time inventory system because it involves the integration of different stages of the supply chain, allowing for better coordination and control over the flow of materials and products. By vertically integrating, a company can directly control the production, distribution, and delivery processes, reducing the need for excess inventory and ensuring that materials are available exactly when they are needed. This helps in minimizing waste, reducing costs, and improving overall efficiency in the inventory management system.Rate this question:
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