Question 1

Which of the following is a disadvantage of a strategic alliance?

Accepted Answer

A)  Entering into a strategic alliance makes it difficult for a firm to enter into a foreign market.
B)  As a result of strategic alliance, fixed costs of developing new products tend to increase.
C)  Strategic alliance gives competitors a low-cost route to new technology and markets.
D)  Firms that enter into a strategic alliance with a foreign firm tend to face higher trade barriers.
E)  Strategic alliance always leads to a loss to either of the firms involved.F) B) and C)
G) A) and E)

Question 2

Universal needs exist when the tastes and preferences of consumers in different nations are different.

Accepted Answer

A) True 
 B)False

Question 3

According to Michael Porter, what are the two basic strategies for creating value and attaining a competitive advantage in an industry?

Accepted Answer

A)  Differentiation and low-cost
B)  Value creation and generalization
C)  One-size-fits-all and zero-sum
D)  Comparison and standardization
E)  Profitability and strategic fitF) None of the above
G) A) and C)

Question 4

A firm maximizes its profitability when it:

Accepted Answer

A)  creates products similar to the products of its competitors.
B)  minimizes the value provided by its products.
C)  picks a position on the efficiency frontier that is not viable.
D)  strips all the value out of its product offering.
E)  configures its internal operations to support the position selected by it on the efficiency frontier.F) A) and C)
G) C) and D)

Question 5

Which of the following is true of a transnational strategy?

Accepted Answer

A)  It is easy to implement because it does not place any conflicting demands on a company.
B)  It is used when the pressures for cost reductions are low.
C)  It is usually used when the pressure for local responsiveness is relatively low.
D)  It enables the one-way flow of core competencies.
E)  It is used by firms that try to achieve low costs through location economies, economies of scale, and learning effects.F) A) and B)
G) D) and E)

Question 6

Which of the following supports the argument that customer demands for local customization are on the decline worldwide?

Accepted Answer

A)  Local and indigenous industries are increasingly filling up available demand.
B)  High costs of local customization are deterring companies from doing so.
C)  Governments across the world are standardizing their legal procedures.
D)  Customer tastes have converged worldwide.
E)  Managers worldwide ignore the differences in consumer tastes and preferences.F) C) and E)
G) A) and B)

Question 7

Superior value creation relative to rivals requires that the firm:

Accepted Answer

A)  creates similar products as its competitors so that consumers do not have to pay a premium price.
B)  has the highest cost structure in the industry.
C)  creates the least valuable product in the eyes of consumers.
D)  ensures that the gap between value and cost of production is greater than the gap attained by competitors.
E)  drives up the cost structure of its business.F) C) and E)
G) A) and B)

Question 8

Which of the following strategies is most likely to be pursued by a firm when there are strong pressures for cost reductions and demands for local responsiveness are minimal?

Accepted Answer

A)  Domestic strategy
B)  Global standardization strategy
C)  International strategy
D)  Transnational strategy
E)  Nationalization strategyF) C) and D)
G) B) and E)

Question 9

Profit growth is measured by:

Accepted Answer

A)  dividing the net profits of the firm by total invested capital.
B)  subtracting the previous year's gross profit from the current year's gross profit.
C)  calculating the difference between the previous year's profitability and the current year's profitability.
D)  the percentage increase in net profits over time.
E)  adding the profitability of the last two fiscal years.F) B) and C)
G) C) and D)

Question 10

In general, the more value customers place on a firm's products:

Accepted Answer

A)  the lesser the profitability of the firm.
B)  the higher the competitive pressure from other firms.
C)  the lesser the quality of the product.
D)  the lesser the consumer surplus for those products.
E)  the higher the price the firm can charge for those products.F) None of the above
G) B) and D)

Question 11

Cost reduction pressures tend to be particularly intense in industries that:

Accepted Answer

A)  create products that serve universal needs.
B)  create customized products.
C)  are not involved in international business.
D)  produce products that have inelastic demand.
E)  serve different customers with different needs.F) C) and D)
G) A) and D)

Question 12

As a result of consumer surplus, a firm typically charges a lower price for a good or service than the value placed on it by customers because:

Accepted Answer

A)  the value creation results in a corresponding reduction in costs of production.
B)  it is highly unlikely that the same good or service will be available to the customers from other firms.
C)  the firm is competing with other firms for the customer's business.
D)  the firm charges a price that reveals a consumer's assessment of the product's value.
E)  the firm creates value for the customer by producing a wide range of products.F) B) and C)
G) A) and E)

Question 13

Maintaining the company infrastructure is a support activity.

Accepted Answer

A) True 
 B)False

Question 14

Describe the localization strategy.

Accepted Answer

A localization strategy focuses on incre...

Question 15

What are strategic alliances?

Accepted Answer

Strategic alliances are cooperative agre...

Question 16

Learning effects will be more significant in an assembly process which involves 100 simple steps than in an assembly process which involves 1,000 complex steps.

Accepted Answer

A) True 
 B)False

Question 17

The experience curve refers to systematic increases in production costs that have been observed to occur over the life of a product.

Accepted Answer

A) True 
 B)False

Question 18

The term organizational structure refers to the totality of a firm's organization, including organization architecture, control systems and incentives, organizational culture, processes, and people.

Accepted Answer

A) True 
 B)False

Question 19

A global standardization strategy makes most sense when there are strong pressures for cost reductions and demands for local responsiveness are minimal.

Accepted Answer

A) True 
 B)False

Question 20

For an international business, which of the following is most likely to be an outcome of protectionism and nationalism in a host-country?

Accepted Answer

A)  Increase in the attractiveness of location economies
B)  Pressure for localization of production
C)  Requirement of standardization of products or services
D)  Pressure for cost reduction
E)  Decrease in the significance of local responsivenessF) A) and E)
G) B) and C)

Exam 12: The Strategy of International Business

The term organizational structure refers to the totality of a firm's organization, including organization architecture, control systems and incentives, organizational culture, processes, and people.

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Which of the following is a disadvantage of a strategic alliance?

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Which of the following supports the argument that customer demands for local customization are on the decline worldwide?

Correct AnswerverifiedShow Answer

For an international business, which of the following is most likely to be an outcome of protectionism and nationalism in a host-country?

Correct AnswerverifiedShow Answer

Superior value creation relative to rivals requires that the firm:

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As a result of consumer surplus, a firm typically charges a lower price for a good or service than the value placed on it by customers because:

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A global standardization strategy makes most sense when there are strong pressures for cost reductions and demands for local responsiveness are minimal.

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The experience curve refers to systematic increases in production costs that have been observed to occur over the life of a product.

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Which of the following is true of a transnational strategy?

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Maintaining the company infrastructure is a support activity.

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Learning effects will be more significant in an assembly process which involves 100 simple steps than in an assembly process which involves 1,000 complex steps.

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According to Michael Porter, what are the two basic strategies for creating value and attaining a competitive advantage in an industry?

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In general, the more value customers place on a firm's products:

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What are strategic alliances?

Correct AnswerverifiedStrategic alliances are cooperative agre...View AnswerShow Answer

Describe the localization strategy.

Correct AnswerverifiedA localization strategy focuses on incre...View AnswerShow Answer

Profit growth is measured by:

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Cost reduction pressures tend to be particularly intense in industries that:

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A firm maximizes its profitability when it:

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Which of the following strategies is most likely to be pursued by a firm when there are strong pressures for cost reductions and demands for local responsiveness are minimal?

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Universal needs exist when the tastes and preferences of consumers in different nations are different.

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Strategic alliances are cooperative agre...
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A localization strategy focuses on incre...
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