Quiz Week 5 (Chapters 6 & 7)
1.
Multinational competitors tend to concentrate activities in
a limited number of locations when
prices and competitive conditions are strongly linked across
country markets to form a world market.
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.
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.
competitive conditions make it infeasible to employ a profit
sanctuary strategy or an export strategy.
the risk of fluctuating exchange rates is very high.
2.
Which of the following is not an advantage of outsourcing
the performance of certain value chain activities to outsiders?
being able to reduce the company’s risk exposure to changing
technology and/or buyer preferences
allowing a company to concentrate on its core business,
leverage its key resources and core competencies, and do even better what it
already does best
being able to reduce distribution costs by eliminating the
use of wholesale distributors and retail dealers and, instead, selling direct
to end-users at the company’s website
improving organizational flexibility and speeding time to
market
allowing a company to reduce costs if the activity is not
crucial to the firm’s ability to achieve sustainable competitive advantage and
won’t hollow out its capabilities, core competencies, or technical know-how
3.
A hit-and-run or guerrilla warfare type of offensive
strategy involves
tactics that work best if the guerrilla is the industry’s
low-cost leader.
pitting a small company’s own competitive strengths head-on
against the strengths of much larger rivals.
surprising moves by small challengers that have neither the
resources nor the market visibility to mount a full-fledged attack on industry
leaders.
random offensive attacks used by a market leader to steal
customers away from unsuspecting smaller rivals.
undertaking surprise moves to secure an advantageous
position in a fast-growing and profitable market segment; usually the guerrilla
signals rivals that it will use deep price cuts to defend its newly won
position.
4.
Experience indicates that strategic alliances
work well in cooperatively developing new technologies and
new products but seldom work well in promoting greater supply chain efficiency.
have a high “divorce rate.”
work best when they are aimed at achieving a mutually
beneficial competitive advantage for the allies.
are rarely useful in helping a company win the race for
global industry leadership and establish positions in industries of the future.
are generally successful.
5.
A “think global, act global” approach to strategy
making is preferable to a “think local, act local” approach when
it is necessary to delegate strategy making to local
managers with firsthand knowledge of local conditions.
host governments enact regulations requiring that products
sold locally meet strict manufacturing specifications or performance standards.
country-to-country differences are small enough to be
accommodated with the framework of a mostly uniform global strategy.
plants need to be scattered across many countries to avoid
high shipping costs.
customer preferences vary significantly from country to
country.
6.
The primary reasons that companies opt to expand into
foreign markets are to
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.
gain access to new customers, achieve lower costs, enhance
the company’s competitiveness, capitalize on core competencies, and spread
business risk across a wider market base.
raise the entry barriers for industry newcomers, neutralize
the bargaining power of important suppliers, grow sales faster, and increase
the number of loyal customers.
boost returns on investment, broaden their product lines,
avoid tariffs and trade restrictions, and escape dealing with strong labor
unions.
grow sales faster than the industry average, reduce the
competitive threats from rivals, and open up more opportunities to enter into
strategic alliances.
7.
Which one of the following is not a strategic choice that a
company must make to complement and supplement its choice of one of the five
generic competitive strategies?
whether and when to go on the offensive and initiate
aggressive strategic moves to improve the company’s market position, or to go
on the defensive
whether to integrate forward or backward into more stages of
the industry value chain
whether to enter into strategic alliances or collaborative
partnerships
whether to employ a low-cost strategy, a differentiation
strategy, or a hybrid strategy
which value chain activities, if any, should be outsourced
8.
Dispersing the performance of value chain activities to many
different countries rather than concentrating them in a few country locations
tends to be advantageous
if economies of scale are essential to achieving acceptable production
costs.
None of these are correct.
whenever buyer-related activities are best performed in
locations close to buyers.
Two answers are correct: when high transportation costs make
it expensive to operate from central locations; and whenever buyer-related
activities are best performed in locations close to buyers.
when high transportation costs make it expensive to operate
from central locations.
9.
The advantages of using a licensing strategy to participate
in foreign markets include
being especially well suited to exploit a profit sanctuary.
enabling a company to achieve competitive advantage quickly
and easily.
being able to achieve lower costs than with a localized
multidomestic strategy.
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.
being able to charge lower prices than rivals.
10.
Companies tend to concentrate their activities in a limited
number of locations
when certain locations have superior resources, allow better
coordination of related activities, or offer other valuable advantages.
when there is a steep learning curve associated with
performing an activity.
when there are significant scale economies.
when the costs of manufacturing or other activities are
significantly lower in some geographic locations than in others.
All of these choices are correct.
11.
Being first to initiate a particular move can have a high
payoff when
first-time customers remain strongly loyal to pioneering
firms in making repeat purchases.
pioneering helps build up a firm’s image and reputation with
buyers.
moving first constitutes a preemptive strike, making
imitation extra hard or unlikely.
All of these choices are correct.
early commitments to new technologies, new-style components,
new or emerging distribution channels, and so on can produce an absolute cost
advantage over rivals.
12.
Architects of mergers and acquisition strategies typically
set sights on which of the following objectives?
gaining quick access to new technologies or other resources
and competitive capabilities, and leading the convergence of industries whose
boundaries are being blurred by changing technologies and new market
opportunities
Two answers are correct: creating a more cost-efficient
operation, expanding a company’s geographic coverage, and extending a company’s
business into new product categories,and gaining quick access to new
technologies or other resources and competitive capabilities, and leading the
convergence of industries whose boundaries are being blurred by changing
technologies and new market opportunities
creating a more cost-efficient operation, expanding a
company’s geographic coverage, and extending a company’s business into new
product categories
facilitating the employment of both offensive and defensive
strategies
revamping a company’s value chain
13.
The advantages of using a franchising strategy to pursue
opportunities in foreign markets include
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.
gaining support from local governments in the form of
subsidies and meeting local content requirements.
being well suited to companies that employ cross-market
subsidization.
helping build brand awareness in international markets.
being particularly well-suited to the international
expansion efforts of companies with global strategies.
4.
Which one of the following is not a good type of rival for
an offensive-minded company to target?
other offensive-minded companies with a sizable war chest of
cash and marketable securities
market leaders that are vulnerable
runner-up firms with weaknesses in areas where the
challenger is strong
small local and regional companies with limited capabilities
struggling enterprises that are on the verge of going under
15.
A localized or multidomestic strategy
is generally inferior to a global strategy when it comes to
pursuing product differentiation.
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.
Two answers are correct: 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; and 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.
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.
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.
16.
Which one of the following statements about merger and
acquisition strategies is true?
Mergers and acquisitions do not always produce the hoped-for
outcomes. Cost savings may prove smaller than expected. Gains in competitive
capabilities may take substantially longer to realize or may never materialize.
Efforts to mesh the corporate cultures can stall due to formidable resistance
from organization members.
Merger and acquisition strategies are nearly always a
superior strategic alternative to forming alliances or partnerships with these
same companies.
Mergers and acquisition strategies are very high risk
because of the financial drain of using the company’s cash resources to
accomplish the merger or acquisition.
Merger and acquisition strategies are one of the best ways
for helping a company strengthen its brand image.
Merger and acquisition strategies tend to be far more successful
than forming strategic alliances and cooperative partnerships with other
companies.
17.
Which of the following is typically the strategic impetus
for forward vertical integration?
to charge lower retail prices and thereby attract a bigger,
more loyal clientele of customers
to gain better access to end users and better market
visibility
to achieve greater control over advertising and in-store
retail merchandising
to make it easier to expand the company’s product line
to gain better access to greater economies of scale
18.
A “think local, act local” multidomestic type of
strategy
employs essentially the same basic competitive strategy
theme in all country markets.
is generally an inferior strategy when one or more foreign
competitors is pursuing a global low-cost strategy.
becomes more appealing the bigger the country-by-country
differences are in buyer tastes, cultural traditions, and market conditions.
always makes a company vulnerable to rivals employing
“think global, act global” strategies.
protects a multinational firm against fluctuating exchange
rates.
19.
Which of the following is not a typical reason that many
alliances do not live up to expectations?
diverging objectives and priorities
inability of partners to work well together
changing conditions make the purpose of the alliance
obsolete
emergence of more attractive technological paths
disagreement over how to divide the added market share and
profits gained from joint collaboration
20.
Which one of the following statements concerning the effects
of fluctuating exchange rates on companies competing in foreign markets is
true?
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.
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 to which the goods are being exported.
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.
If the exchange rate of U.S. dollars for euros changes from
$1.15 per euro to $1.25 per euro, then it is correct to say that the U.S.
dollar has grown stronger.
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.
