Essentials of Strategic Management Ch7

Strategies for Competing in International Markets- CH7
1 Companies opt to expand into foreign markets
for such reasons as to _______________
A) boost returns on investment, broaden their
product lines, avoid tariffs and trade restrictions, and escape dealing with
strong labor unions.
B) gain access to new customers, achieve lower
costs and enhance the company’s competitiveness, capitalize on core
competencies, and spread business risk across a wider market base.
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) 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.
E) raise the entry barriers for industry
newcomers, neutralize the bargaining power of important suppliers, grow sales
faster, and increase the number of loyal customers.
2 One of the biggest strategic challenges to
competing in the international arena include _______________
A) whether to offer a mostly standardized
product worldwide or whether to customize the company’s offerings in each
different country market to match the tastes and preferences of local buyers.
B) whether to charge the same price in all
country markets.
C) whether the company should engage in
exporting, licensing, or franchising to enter new country markets.
D) how to take advantage of the low wage rates
prevailing in some countries.
E) whether to pursue a global strategy or an
international strategy.
3 Which one of the following is not a factor
that a company must contend with in competing in the markets of foreign
countries?
A) Variations in market growth rates from
country to country and important country-to-country differences in consumer
buying habits and buyer tastes and preferences.
B) Country-to-country variations in
host-government policies and trade requirements.
C) The fact that product designs suitable for
one country are sometimes inappropriate in another.
D) Vulnerability to adverse shifts in currency
exchange rates.
E) A need to convince shippers to keep
transportation costs low.
4 Which one of the following statements
concerning the effects of fluctuating exchange rates on companies competing in
foreign markets is true?
A) Domestic companies trying to combat
competition from foreign imports are hurt even more when their government’s
currency grows weaker in relation to the currencies of the countries where the
imported goods are being made.
B) Fluctuating foreign exchange rates greatly
reduce the risks of competing in foreign markets—the big problem occurs when
exchange rates are fixed at unreasonably low levels.
C) Domestic companies under pressure from
lower-cost imports are benefited when their government’s currency grows weaker
in relation to the currencies of the countries where the imported goods are
being made.
D) Manufacturers that are exporting much of
what they produce are benefited when their country’s currency grows stronger
relative to the currencies of the countries that the goods are being exported
to.
E)If the exchange rate of U.S. dollars for
euros changes from $1.15 per euro to $1.25 per euro, then it is to say that the U.S. dollar has grown
stronger.
5 Which of the following is/are not
“valid” strategy options for entering and/or competing in foreign
markets?
A) A global strategy where a company uses
essentially the same competitive strategy approach in all country markets where
it has a presence.
B) An import strategy, a strategic alliance
strategy, a profit sanctuary strategy, and a cross-market subsidization
strategy.
C) A localized multidomestic strategy.
D) An export strategy and using strategic
alliances or joint ventures with foreign companies as the primary vehicle for
entering foreign markets.
E)A franchising strategy and a strategy of
licensing foreign firms to use the company’s technology or to produce and
distribute the company’s products.
6 The advantages of manufacturing goods in a
particular country and exporting them to foreign markets _______________
A) are seriously compromised by the potential
for local government officials to raise tariffs on the imports of foreign-made
goods into their country.
B) are greatest when local consumers prefer
products manufactured inside the country’s borders.
C) are weakened when that country’s currency
grows stronger relative to the currencies of the countries where the output is
being sold.
D) can be wiped out when that country’s
currency grows weaker relative to the currencies of the countries where the
output is being sold.
E) are largely unaffected by tariffs or
quotas.
7 Using domestic plants as a production base for
exporting goods to selected foreign country markets _______________
A) is usually a superior approach to competing
in international markets.
B) can be a competitively successful strategy
when a company is focusing on vacant market niches in each foreign country.
C) can be an excellent initial strategy to
pursue international sales.
D) is usually a weak strategy when competitors
are pursuing licensing strategies.
E) can be a powerful strategy because the
company is not vulnerable to tariffs or quotas.
8 The advantages of using a licensing strategy
to participate in foreign markets include _______________
A) being especially well suited to exploit a
profit sanctuary.
B) being able to charge lower prices than
rivals.
C) enabling a company to achieve competitive
advantage quickly and easily.
D) being able to achieve lower costs than with
a localized multidomestic strategy.
E) being able to leverage the company’s
technical know-how or patents without committing significant additional
resources to markets that are unfamiliar, politically volatile, economically
uncertain, or otherwise risky.
9 The advantages of using a franchising strategy
to pursue opportunities in foreign markets include _______________
A) being particularly well suited to the
international expansion efforts of companies with global strategies.
B) having franchisees bear most of the costs
and risks of establishing foreign locations and requiring the franchiser to
expend only the resources to recruit, train, and support foreign franchisees.
C) helping build brand awareness in
international markets.
D) being well suited to companies that employ
cross-market subsidization.
E) gaining support from local governments in
the form of subsidies and meeting local content requirements.
10 A “think local, act local”
multidomestic type of strategy _______________
A) becomes more appealing the bigger the
country-to-country differences in buyer tastes, cultural traditions, and market
conditions.
B) always makes a company vulnerable to rivals
employing “think global, act global” strategies.
C) protects a multinational firm against
fluctuating exchange rates.
D) is generally an inferior strategy when one
or more foreign competitors is pursuing a global low-cost strategy.
E) employs essentially the same basic
competitive strategy theme in all country markets.
11 A localized or multidomestic strategy
_______________
A) is generally preferable to a global
strategy in situations where buyers are price sensitive because a “think
local, act local” type of multidomestic strategy is better suited to
achieving low unit costs than a global strategy.
B) is one where a company varies its product
offering and competitive approach from country to country in an effort to be
responsive to differing buyer preferences and market conditions.
C) has two big drawbacks: (1) it hinders
transfer of a company’s competencies and resources across country boundaries
because the strategies in different host countries can be grounded in varying
competencies and capabilities; and (2) it does not promote building a single,
unified competitive advantage, especially one based on low cost.
D) is generally inferior to a global strategy
when it comes to pursuing product differentiation.
E) Both B and C.
12 A “think global, act global”
approach to strategy making is preferable to a “think local, act
local” approach when _______________
A) customer preferences vary significantly
from country to country.
B) it is necessary to delegate strategy making
to local managers with firsthand knowledge of local conditions.
C) plants need to be scattered across many
countries to avoid high shipping costs.
D) country-to-country differences are small
enough to be accommodated with the framework of a mostly uniform global
strategy.
E) host governments enact regulations
requiring that products sold locally meet strict manufacturing specifications
or performance standards.
13 The chief difference between a “think
global, act global” and a “think global, act local” approach to
crafting a global strategy is that _______________
A) a “think global, act local”
approach involves charging much different prices in the various country markets
where the company competes.
B) a “think global, act local”
approach involves much less adherence to using the same basic competitive
strategy theme (low-cost, differentiation, best-cost, or focused) in all
country markets.
C) a “think global, act local”
approach involves considerably less adherence to utilizing the same
capabilities, distribution channels, and marketing approaches worldwide.
D) local managers are given more latitude in
adapting the global strategy approach as may be needed to accommodate local
buyer preferences and be responsive to local market and competitive conditions.
E) a “think global, act global”
approach involves selling under a single brand worldwide whereas a “think
global, act local” approach involves the use of multiple brands (often a
local brand for each local market).
14 Which of the following is not a potential
motivation for entering into strategic alliances or other cooperative
arrangements with foreign companies?
A) To gain wider access to attractive country
markets.
B) To gain better access to scale economies in
production and/or marketing.
C) To fill competitively important gaps in
their technical expertise and/or knowledge of local markets.
D) To better enable the use of a “think
global, act global” strategy and facilitate cross-market subsidization.
E) To share distribution facilities and dealer
networks, thus mutually strengthening the allies’ access to buyers.
15 Which of the following is not one of the ways
in which a company can pursue competitive advantage by expanding outside its
domestic market and competing multinationally?
A) Locating value chain activities among
various countries in a manner that lowers costs.
B) Pursuing blue ocean opportunities in the
company’s home country market.
C) Locating value chain activities among
various countries in a manner that helps achieve greater product
differentiation.
D)Cross-border coordination of its activities
in ways that contribute to building a competitive edge.
E) Employing a profit sanctuary strategy to
wage a strategic offensive.
16 Multinational competitors tend to concentrate
activities in a limited number of locations when _______________
A) prices and competitve conditions are
strongly linked across country markets to form a world market.
B) there are significant scale economies
and/or steep learning curve effects associated with performing certain
activities in a single location, costs of performing the activity are lower in
particular geographic locations, and certain locations have superior resources,
allow better coordination of related activities, or offer other valuable
advantages.
C) the risk of fluctuating exchange rates is
very high.
D) Host-country governments can be persuaded
to erect high tariff barriers to protect the company’s operations from foreign
competitors and when it is not imperative to be responsive to buyer needs and
competitive conditions in each country.
E) competitive conditions make it infeasible
to employ a profit sanctuary strategy or an export strategy.
17 Dispersing the performance of value chain
activities to many different countries rather than concentrating them in a few
country locations tends to be advantageous _______________
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 economies of scale are essential to
achieving acceptable production costs.
D) Both A and B.
E) None of the above.
18 Companies tend to concentrate their activities
in a limited number of locations _______________
A) When the costs of manufacturing or other
activities are significantly lower in some geographic locations than in others.
B) When there are significant scale economies.
C) When there is a steep learning curve
associated with performing an activity.
D) When certain locations have superior
resources, allow better coordination of related activities, or offer other
valuable advantages.
E) All of these.
19 Which of the following statements about
entering developing markets such as China, India, Russia, and Brazil is wrong?
A) Profitability in emerging markets rarely
comes quickly or easily.
B) Building a market for the company’s
products can often turn into a long-term process that involves reeducation of
consumers.
C) Entering an emerging market often involves
upgrading the local infrastructure (the supplier base, transportation systems,
distribution channels, labor markets, and capital markets).
D) Tailoring products to fit conditions in an
emerging country market such as China, however, often involves more than making
minor product changes and becoming more familiar with local cultures.
E) None of these.
20 Which of the following is not a typical option
that companies have to consider to tailor their strategy to fit the
circumstances of developing country markets?
A) Develop new sets of core competencies that
allow a company to offer value to consumers of emerging markets in ways
unmatched by rivals.
B) Prepare to compete on the basis of low
price.
C) Be prepared to modify 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).
D) Try to change the local market to better
match the way the company does business elsewhere.
E) Stay away from those emerging markets where
it is impractical or uneconomical to modify the company’s business model to
accommodate local circumstances.