The Management of Strategy Concepts International Edition 10th Edition by R. Duane Ireland – Test Bank

The Management of Strategy Concepts International Edition 10th Edition by R. Duane Ireland – Test Bank

Chapter 8—Global Strategy

TRUE/FALSE

1. In place of relatively stable and predictable domestic markets, firms across the globe find that they are competing in relatively unstable and unpredictable global markets.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Knowledge

2. After a firm decides to compete internationally, it must select its strategy and choose a mode of entry into international markets.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Knowledge

3. Because there are still several industrial and consumer markets in which only domestic firms compete, many firms do not have to be able to compete internationally.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Comprehension

4. Embracing the global marketplace is important to Starbucks because it commands less that one percent of the global coffee market suggesting that there is room for growth. (Chapter 8 Opening Case)

ANS: T PTS: 1 DIF: Medium OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Application

5. According to the Chapter 8 Strategic Focus, Starbucks’ international strategy for success in China is a cost leadership business-level strategy coupled with a multidomestic corporate-level strategy.

ANS: F PTS: 1 DIF: Medium OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Application

6. According to the Chapter 8 Strategic Focus, Starbucks implements the transnational strategy by using its core competencies to standardize its operations to gain global efficiences while decentralizing decision making responsibilities to local units.

ANS: T PTS: 1 DIF: Hard OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Application

7. As nations industrialize, the demand for some products and services such as Starbucks (Chapter 8 Opening Case) becomes more similiar as a result of similar lifestyles in those nations.

ANS: T PTS: 1 DIF: Medium OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Application

8. One reason why firms pursue international opportunities is to extend the product’s life cycle.

ANS: T PTS: 1 DIF: Easy OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

9. A reason that firms use international strategies is to secure needed resources, especially minerals and energy.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Knowledge of general business functions | Bloom: Knowledge

10. In some industries, technology drives globalization because the economies of scale necessary to reduce costs cannot be met by competing in domestic markets alone.

ANS: T PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Comprehension

11. A major incentive for the use of international an strategy by French-based Carrefour Group is the potential for large demand for goods and services from emerging markets such as China and India.

ANS: T PTS: 1 DIF: Medium OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing the task environment | Bloom: Application

12. The three basic benefits of international strategies are 1) increased market size; 2) increased economies of scale and learning; and 3) development of competitive advantages through location.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing the task environment | Bloom: Knowledge

13. Rivals Airbus and Boeing have multiple manufacturing facilities and outsource activities partly for the purpose of developing economies of scale as a source of being able to create value for customers.

ANS: T PTS: 1 DIF: Hard OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application

14. As an indication of the importance of economies of scale, Ford Motor Company runs a single global business developing cars and trucks that can be built and sold through the world. By 2015, Ford intends for about 75% of the vehicles it sells to be variants of about 5 basic platforms.

ANS: T PTS: 1 DIF: Medium OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application

15. Coca Cola and PepsiCo are examples of firms that have found it unnecessary to aggressively pursue international strategies because of extensive growth opportunities available in the U.S. market.

ANS: F PTS: 1 DIF: Medium OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application

16. Coca Cola and PepsiCo approach international growth differently. Coca Cola is the world’s largest snack-food producer and relies on overseas sales to make up for slower sales volumes in North America. In contrast, PepsiCo which is less diversified, derives only 32% of it sales from North America, an indication of the importance of international markets to its performance.

ANS: F PTS: 1 DIF: Easy OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application

17. Multinational firms have many opportunities to learn from their experiences in international markets, but they must have a strong R&D system to absorb the knowledge.

ANS: T PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Managing logistics & technology | Bloom: Comprehension

18. Cultural differences affect location advantages in that business transactions are less difficult for a firm to complete when there is a strong match among the cultures with which the firm is involved.

ANS: T PTS: 1 DIF: Easy OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

19. Location advantages are influenced by costs of production, access to natural resources and critical supplies, as well as the needs of customers, but not culture.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

20. The three corporate-level international strategies are cost leadership, differentiation, and focus.

ANS: F PTS: 1 DIF: Easy OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Knowledge

21. When a firm initially pursues an international business-level strategy, the resources and capabilities established in the home country frequently allow the firm to pursue the strategy into markets located in other countries.

ANS: T PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

22. Michael Porter’s Determinants of National Advantage describe factors associated with the firm’s domestic environment that contribute to its dominance in a particular global industry.

ANS: T PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

23. Both the size and the nature of a country’s domestic demand for a particular industry’s good or service are important in Porter’s determinants of national advantage.

ANS: T PTS: 1 DIF: Medium OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Knowledge

24. Having substantial supplies of critical basic natural resources is a necessary condition for a country to support businesses which can successfully compete in international markets.

ANS: F PTS: 1 DIF: Hard OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

25. South Korea’s success in international markets is primarily a result of its abundant natural resources.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

26. Italy has become the leader in the shoe industry because of related and supporting industries such as a well-established leather-processing industry which provides the leather needed to construct shoes and related products.

ANS: T PTS: 1 DIF: Easy OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application

27. A firm based in a country with a national competitive advantage is not guaranteed success as it implements its chosen international business-level strategy. Instead the actual strategic choices managers make may be the most compelling reasons for success or failure.

ANS: T PTS: 1 DIF: Hard OBJ: Comprehension

NOT: AACSB: Business Knowledge & Analytical Skills | Management: Environmental Influence | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

28. Part of Japan’s success in the video game industry is derived from two related and support industries: cartoons and animation, and electronics.

ANS: T PTS: 1 DIF: Medium OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Knowledge

29. A multidomestic strategy is an international strategy in which a firm’s home office determines the strategies business units are to use in each region.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

30. A multidomestic strategy is an international strategy in which strategic and operating decisions are decentralized to the strategic business units in individual or regions.

ANS: T PTS: 1 DIF: Easy OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

31. A major advantage of multidomestic strategies is the ability to customize for the specific market, although this sacrifices economies of scale.

ANS: T PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

32. The firm using a global strategy seeks to develop economies of scale as it produces the same or virtually the same products for distribution to customers throughout the world who are assumed to have similar needs.

ANS: T PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

33. A global strategy is an international strategy through which the firm offers standardized products across country markets, with competitive strategy being dictated by offices within the host markets served.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

34. The global strategy offers greater opportunities to take innovations developed at the corporate level in one market and apply them to other markets.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

35. Research suggests that the performance of the global strategy in enhanced if it deploys in areas where regional integration across countries is occurring.

ANS: F PTS: 1 DIF: Medium OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Knowledge

36. A transnational strategy is an international strategy in which the firm seeks to achieve both global efficiency and local responsiveness.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Knowledge

37. A transnational strategy is difficult to use because of its conflicting goals.

ANS: T PTS: 1 DIF: Easy OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

38. Even if effectively implemented, the transnational strategy often produces lower performance than does the implementation of either the multidomestic or global strategies.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

39. The growing number of global competitors heightens the requirements to keep costs down and there is the desire for more specialized products to meet customer needs. These two pressures make transnational strategies increasingly necessary.

ANS: T PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

40. A company that chooses a truly global corporate-level strategy assumes that the liability of foreignness will be minimal.

ANS: T PTS: 1 DIF: Hard OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

41. The “liability of foreignness” will have a greater negative impact on a firm using a multidomestic strategy than on a firm using a global strategy.

ANS: F PTS: 1 DIF: Hard OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

42. Four types of distances are associated with the liability of foreignness: cultural, administrative, geographic, and economic.

ANS: T PTS: 1 DIF: Medium OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Knowledge

43. The “liability of foreignness” means that many firms need to focus more on local adaptation or risk problems such as the Walt Disney Company faced opening its theme park in France.

ANS: T PTS: 1 DIF: Hard OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Application

44. The “regionalization” environmental trend means that firms can focus on a region (customization) but also have some standardization or sharing within the region.

ANS: T PTS: 1 DIF: Hard OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Comprehension

45. By choosing a region where markets are more similar, the firm may be able to better understand those markets and cater to their needs, but also achieve economies through sharing of resources.

ANS: T PTS: 1 DIF: Hard OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Comprehension

46. International associations such as the European Union, the Organization of American States, and the North American Free Trade Association encourage regionalization of competition rather than globalization.

ANS: T PTS: 1 DIF: Easy OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Comprehension

47. Exporting and licensing are the most appropriate ways for smaller firms to first enter international markets.

ANS: T PTS: 1 DIF: Medium OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Knowledge

48. The high cost of transportation, expense of tariffs, and loss of control are three disadvantages of exporting.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Knowledge

49. Evidence suggests that, in general, using an international cost leadership strategy when exporting to developed countries has the most positive effect on firm performance while using an international differentation strategy with larger scale when exporting to emerging economies leads to the greatest amounts of success.

ANS: T PTS: 1 DIF: Hard OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

50. Because of the lack of protection of intellectual property in some foreign countries, licensing arrangements are one of the best ways for a firm to protect its technology from being appropriated by potential competitors.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

51. Although licensing is the least costly method to enter a foreign market, its disadvantages include high costs of transportation and low control over the marketing and distribution of goods.

ANS: F PTS: 1 DIF: Easy OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Managing strategy & innovation | Bloom: Comprehension

52. Strategic alliances tend to increase the risk associated with international expansion for the U.S. partner because of the greater dependence on the foreign firm.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

53. Establishing a wholly-owned subsidiary provides the quickest access to a new market.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

54. Research suggests that wholly-owned subsidiaries and expatriate staff are inappropriate for service industries because those industries require close contact with customers, high levels of professional skills, specialized know-how, and customization.

ANS: T PTS: 1 DIF: Easy OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

55. The greenfield venture option is useful when control of proprietary technology is important in an international expansion.

ANS: T PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

56. When the country risk is high, firms prefer to enter with a greenfield investment rather than a joint venture.

ANS: F PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

57. While there are multiple means of entering new international markets, firms should use one method consistently with all of its various products and across its different markets in order to reduce administrative complexity.

ANS: F PTS: 1 DIF: Hard OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

58. Walmart depends on its distribution, warehousing, logistics, and data management core competencies developed in domestic markets when entering international markets (Chapter 8 Strategic Focus).

ANS: T PTS: 1 DIF: Hard OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Application

59. In order to preserve its competitive advantage in low-cost operations, Walmart uses only new wholly-owned subsidiaries (greenfields) to enter international markets (Chapter 8 Strategic Focus).

ANS: F PTS: 1 DIF: Hard OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Application

60. Walmart’s most common entry modes into international markets are acquisitions and joint ventures (Chapter 8 Strategic Focus).

ANS: F PTS: 1 DIF: Medium OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Application

61. Export, licensing, and the strategic alliance entry modes are all appropriate for early market development.

ANS: T PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

62. Export, licensing, and the strategic alliance entry modes are also appropriate when firms want to establish a strong presence in an international market.

ANS: T PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

63. Acquisitions, greenfield ventures, and sometimes joint ventures are appropriate when firms want to establish a strong presence in an international market.

ANS: T PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

64. International diversification can help to reduce a firm’s overall risk through the stabilization of returns.

ANS: T PTS: 1 DIF: Easy OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

65. Asahi Group Holdings Ltd. of Japan is an example of a firm that seeks to become one of the top 10 food and beverage companies via international diversification.

ANS: T PTS: 1 DIF: Hard OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Application

66. Research has shown that, as international diversification increases, firms’ returns decrease initially but then increase quickly as firms learn to manage international expansion.

ANS: T PTS: 1 DIF: Hard OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

67. International diversification is a strategy through which a firm expands the sale of its goods and services across borders of global regions and countries into a potentially large number of geographic locations of markets. Instead of entering one or a few markets, international diversification means that the firm enters multiple markets.

ANS: T PTS: 1 DIF: Easy OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

68. The chief risks in the international environment are political and cultural.

ANS: F PTS: 1 DIF: Easy OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Knowledge

69. Fluctuation in the value of different currencies is a major economic risk associated with international diversification.

ANS: T PTS: 1 DIF: Easy OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Knowledge

70. A U.S. manufacturer of pigments for household paint that exports about 40 percent of its production to European markets will find its sales will be harmed by a weak dollar.

ANS: F PTS: 1 DIF: Hard OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Application

71. A increase in the value of the U.S. dollar is an example of an economic risk in that it can reduce the value of U.S. multinational firms’ international assets and earnings in other countries.

ANS: T PTS: 1 DIF: Hard OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Comprehension

72. Some of the costs incurred by firms pursuing international diversification may derive from higher coordination expenses, trade barriers, and lack of familiarity with local cultures.

ANS: T PTS: 1 DIF: Medium OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Knowledge

73. Although leaders in Russia have tried to reassure potential investors about their property rights, political risks in the form of weak laws and commonplace government corruption make firms leery of investing in Russia.

ANS: T PTS: 1 DIF: Medium OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Application

74. The amount of diversification in a firm’s international operations that can be managed varies from company to company and is affected by manager’s abilities to deal with ambiguity and complexity.

ANS: T PTS: 1 DIF: Easy OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

75. The Haier Group would be an example of a company pursuing international diversification since it has expanded into multiple markets and regions rather than just a few (Chapter 8 Strategic Focus).

ANS: T PTS: 1 DIF: Easy OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Application

76. The Haier Group concluded that its diversification strategy should be confined to countries in Asia where it had strengths in understanding cultures and institutions (Chapter 8 Strategic Focus).

ANS: F PTS: 1 DIF: Easy OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Application

77. The Haier Group is an example of a firm using the multidomestic international corporate-level strategy as a means to build its global brand name (Chapter 8 Strategic Focus).

ANS: T PTS: 1 DIF: Easy OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Application

MULTIPLE CHOICE

1. Which international corporate-level strategy strategy does Starbucks use? (Chapter 8 Opening Case)

a.

global

b.

multidomestic

c.

licensing

d.

transnational

ANS: D PTS: 1 DIF: Medium OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Application

2. The Chapter 8 Opening Case indicates that main basic benefit that Starbucks derives from its international strategies is

a.

economies of scale and learning

b.

location advantages

c.

increased market size

d.

extending the product life cycle

ANS: C PTS: 1 DIF: Easy OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Application

3. International strategy refers to a(an)

a.

action plan pursued by American companies to compete against foreign companies operating in the United States.

b.

strategy through which the firm sells products in markets outside the firm’s domestic market.

c.

political and economic action plan developed by businesses and governments to cope with global competition.

d.

strategy American firms use to dominate international markets.

ANS: B PTS: 1 DIF: Easy OBJ: Application

NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Strategic & systems skills | Bloom: Knowledge

4. Raymond Vernon states that the classic rationale for international diversification is to

a.

pre-emptively dominate world markets before foreign companies can establish dominance.

b.

avoid domestic governmental regulation.

c.

extend the product’s life cycle.

d.

avoid international governmental regulation.

ANS: C PTS: 1 DIF: Medium OBJ: Knowledge

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Knowledge

5. Which of the following is NOT an incentive for firms to become multinational?

a.

to gain access to consumers in emerging markets.

b.

to gain easier access to raw materials.

c.

to avoid high domestic taxation on corporate income.

d.

opportunities to integrate operations on a global scale.

ANS: C PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

6. The increased pressures for global integration of operations have been driven mostly by

a.

new low cost entrants.

b.

increasing demand for similar products.

c.

increased levels of joint ventures.

d.

the rise of governmental regulation.

ANS: B PTS: 1 DIF: Easy OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Comprehension

7. The benefits of expanding into international markets include each of the following opportunities EXCEPT

a.

increasing the size of the firm’s potential markets.

b.

economies of scale and learning.

c.

location advantages.

d.

favorable tax concessions and economic incentives by home-country governments.

ANS: D PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

8. U.S. companies moving into the international market need to be sensitive to the need for local country or regional responsiveness because of

a.

increasing rejection of American culture across much of the world.

b.

the sophistication of the international consumer because of the Internet.

c.

consumer needs, political and legal structures, and social norms vary by country.

d.

the increasing loss of economies of scale.

ANS: C PTS: 1 DIF: Medium OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Creation of Value | Dierdorff & Rubin: Strategic & systems skills | Bloom: Comprehension

9. Which of the following is NOT a factor pressuring companies for local responsiveness?

a.

differences in employment laws

b.

customization due to cultural differences

c.

government pressure for firms to use local sources for procurement

d.

availability of low labor costs

ANS: D PTS: 1 DIF: Hard OBJ: Comprehension

NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff & Rubin: Managing the task environment | Bloom: Comprehension