Q1 .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.
Q2. 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.
Q3. 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.
Q4. 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.
Q5 . 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.
Q6. 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.
Q7. 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.
Q8 . 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.
Q9. 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.
Q10. 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.
Q11. 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.
Q12. 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.
Q13. 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).
Q14. 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.
Q15. 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.
Q16. Multinational competitors tend to concentrate
activities in a limited number of locations when _______________
A) prices and competitive 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.
Q17. 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.
Q18. 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.
Q19. 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.
Q20. 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.
