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| 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 having to deal 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 multicountry 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. |
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| 2 | |
A company is said to be an international competitor (as opposed to a global competitor) when it: |
| | A) | uses a multicountry strategy rather than a global strategy. |
| | B) | has operations on only one of the world's major continents. |
| | C) | competes in a select few foreign markets (and perhaps has only modest ambitions to enter additional country markets). |
| | D) | employs an international strategy. |
| | E) | employs something other than a "think global, act global" strategy. |
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| 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 cross-country transportation costs low |
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| 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 correct to say that the U.S. dollar has grown stronger. |
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| 5 | |
The stand-out characteristic of multicountry competition is: |
| | A) | varying driving forces from country to country. |
| | B) | varying competitive pressures from country to country. |
| | C) | varying buyer requirements and expectations from country to country. |
| | D) | that there is so much cross-country variation in market conditions and in the companies contending for leadership that the market contest among rivals in one country is not closely connected to the market contests in other countries—as a consequence, there is no global or world market, just a collection of self-contained country markets. |
| | E) | varying degrees of product differentiation from country to country. |
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| 6 | |
One of the biggest strategy issues confronting a company competing in the international arena is: |
| | A) | whether to enter country markets where competitive forces are relatively strong or whether to only enter country markets where competition is relatively weak. |
| | B) | whether to charge the same price in all country markets. |
| | C) | whether to license a select few or a large number of foreign firms to produce and distribute the company's products. |
| | D) | whether to offer a mostly standardized product worldwide or whether to customize the company's offerings in each different country market to match the preferences and requirements of local buyers. |
| | E) | how many strategic alliances to form with foreign-based firms. |
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| 7 | |
The essential difference between multicountry competition and global competition is that: |
| | A) | in multicountry competition, the market battle among rivals is mainly among companies in several neighboring countries whereas in global competition the market battle is among countries from many different parts of the world. |
| | B) | in multicountry competition the markets of different countries are not closely linked and rivals battle for "national market championships" whereas in global competition the markets of different countries are closely linked and form a world market, thus pitting rivals in a battle for the "world market championship." |
| | C) | in multicountry competition, rival companies focus on competing in a few country markets (2 to perhaps as many as 10) whereas in global competition companies strive to compete in 50 to 100 or more country markets. |
| | D) | in multicountry competition rivals are positioned in strategic groups consisting of companies from the same geographic area of the world (for example, Europe or Africa or the Middle East or Latin America or North America or the Asian-Pacific) whereas in global competition rival companies are positioned in global strategic groups. |
| | E) | None of the above are really good ways of distinguishing between multicountry and global competition. |
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| 8 | |
Which of the following statements is false? |
| | A) | Export strategies are favored by most participants in foreign markets because domestic plants tend to be more cost efficient than foreign plants, because using domestic plants as a production base for exporting goods to foreign markets is less risky and entails lower capital requirements, and because it is a lot easier to establish distribution capabilities in foreign markets than it is to establish production capabilities. |
| | B) | Profitability in emerging country markets rarely comes quickly or easily—new entrants have to be sensitive to local conditions, be willing to invest in developing the market for their products over the long-term, and be patient in earning a profit. |
| | C) | Using franchising strategies to pursue global expansion is often attractive to service and retailing enterprises. |
| | D) | Using a licensing strategy to participate in foreign markets often makes good sense when a firm with valuable technical know-how or a unique patented product lacks the organizational capability or resources to enter foreign markets on its own. |
| | E) | With multicountry competition, competition in one national market is not closely linked to competition in another national market—thus, there is no global market, just a collection of self-contained country markets. |
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| 9 | |
Which of the following is/are not "valid" strategy options for entering and/or competing in foreign markets? |
| | A) | An import strategy, a strategic alliance strategy, a profit sanctuary strategy, and a cross-market subsidization strategy |
| | B) | A global strategy where a company uses essentially the same competitive strategy approach in all country markets where it has a presence. |
| | C) | A multicountry 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 |
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| 10 | |
A localized or multicountry strategy: |
| | A) | is generally preferable to a global strategy in situations where buyers are price sensitive because a "think local, act local" type of multicountry 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) the bigger the country-to-country variations in strategy, the harder it is difficult to transfer a company's competencies and resources across country boundaries and (2) it does not promote building a single, unified competitive advantage. |
| | D) | is generally inferior to a global strategy when it comes to pursuing product differentiation. |
| | E) | Both B and C. |
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| 11 | |
As indicated in Figure 7.1, 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 difference 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). |
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| 12 | |
Based on the information in Figure 7.2, which of the following statements is inaccurate in characterizing the differences between a global strategy and a multicountry strategy? |
| | A) | With a global strategy a firm's product line is mostly standardized from country to country; one of the distinctive features of a localized multicountry strategy is that the company adapts its product offerings to fit the particular needs and expectations of local buyers. |
| | B) | With a global strategy a firm's marketing and distribution approaches are mostly uniform and coordinated worldwide (with minor adaptations to host-country situations where required) whereas with a multicountry strategy a firm's marketing and distribution approaches are adapted to the practices and culture of each host country. |
| | C) | With a global strategy a firm's strategic arena consists of all countries where there is high demand for the product whereas with a multicountry strategy a firm's strategic arena is only a few selected high-demand countries and trading areas. |
| | D) | With a global strategy a firm tends to use the most attractive suppliers from anywhere in the world whereas firms with a multicountry strategy often prefer to use suppliers located in the host country. |
| | E) | With a global strategy a firm's production approach is usually to scatter plants across many different countries so as to achieve balanced geographic distribution and minimize shipping costs whereas with a multicountry strategy plants are located in those countries offering the lowest unit production costs and offering the best tariff protection. |
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| 13 | |
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) | Efficient and effective transfer of competitively valuable competencies and capabilities from the company's domestic market to the targeted foreign markets |
| | 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 facilitate cross-market subsidization and thereby outcompete rivals that have a multicountry strategy. |
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| 14 | |
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. |
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| 15 | |
A country (or geographic region) becomes a company's profit sanctuary when: |
| | A) | a majority of the company's customers are in that country. |
| | B) | that country (or region) is where a company's prices are the highest of any country where it sells its product/service. |
| | C) | a company pursues a "think local, act local" type of multicountry strategy in that country. |
| | D) | the company earns a substantial portion of its total profits from sales in that nation due either to its strong or protected competitive position. |
| | E) | the company is the market share leader in that country market. |
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| 16 | |
Profit sanctuaries are valuable competitive assets because: |
| | A) | they enable a company pursuing a "think global, act local" type of strategy to be more successful. |
| | B) | a domestic competitor with multiple profit sanctuaries can wage and generally win a competitive offensive against a global competitor whose profits are scattered across many different countries. |
| | C) | they provide the financial strength to support strategic offensives in selected country markets and can help fuel a company's race for global market leadership. |
| | D) | without having at least two profit sanctuaries a company is virtually precluded from competing globally. |
| | E) | they enable a company pursuing a global strategy to compete on an equal footing with companies employing a multicountry strategy. |
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| 17 | |
Cross-market subsidization refers to: |
| | A) | the practice of charger higher prices in some countries than in other countries. |
| | B) | supporting competitive offensives in one market with resources and profits diverted from operations in other country markets. |
| | C) | convincing the governments of local countries to help finance and otherwise subsidize a company's entry into their market into order to help it overcome local entry barriers. |
| | D) | using the profits earned in low-cost plants to help keep high-cost plants open. |
| | E) | selling goods at cut-rate prices in the markets of foreign countries. |
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| 18 | |
Which one of the following is not an offensive strategy that a company can use in competing in foreign markets? |
| | A) | Attacking a foreign rival's profit sanctuaries |
| | B) | Employing cross-market subsidization to win customers and sales away from select rivals in select country markets |
| | C) | Dumping goods at cut-rate prices in the markets of foreign rivals |
| | D) | Any of the "standard" offensive strategies discussed in Chapter 6 that any company can use to attack rivals, either foreign or domestic |
| | E) | Using an export strategy to attack rivals in emerging country markets on the basis of both higher quality and lower prices |
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| 19 | |
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 |
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| 20 | |
Based on Figure 7.4, the strategy options for local companies in competing against global challengers include: |
| | A) | transferring company expertise to cross-border markets, dodging rivals by shifting to a new business model or market niche, using home-field advantages as defenses, and moving to compete on more of a global scale. |
| | B) | building multiple profit sanctuaries, employing defensive rather than offensive strategies, entering into strategic alliances with other local companies to defeat the challengers, and not using an import strategy. |
| | C) | acquiring or merging with other local companies to form a domestic giant capable of competing on even terms with large foreign companies. |
| | D) | developing a core competence in as many value chain activities as possible, employing cross-market subsidization, and pursuing a multicountry strategy to quickly build new profit sanctuaries. |
| | E) | Using an export strategy to build multiple profit sanctuaries, forming strategic alliances with global giants, using home-run strategies to enter nearby foreign markets, and relying on patriotic themes in local advertising to defeat global challengers trying to enter their home markets. |
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