CH 7

Question 1

Increase in international exchange and the growing similarity of laws and cultural values

Answer 1

Globalization

Question 2

Framework for explaining why countries foster successful multinational corporations, consisting of four factors

Answer 2

Diamond of National Advantage

Question 3

The nature of home-market demand for the industry’s product or service

Answer 3

Demand Conditions

Question 4

The conditions in the nation governing how companies are created, organized, and managed, as well as the nature of domestic rivalry

Answer 4

Firm strategy, structure, rivalry

Question 5

Firms that manage operations in more than one country

Answer 5

Multinational Firms

Question 6

Arbitrage Opportunities

Answer 6

An opportunity to profit by buying and selling the same good in different markets

Question 7

New products developed by developed country multinational firms for emerging markets that have adequate functionality at a low cost

Answer 7

Reverse Innovation

Question 8

Potential threat to a firm’s operations in the country due to ineffectiveness of the domestic political system

Answer 8

Political Risk

Question 9

A characteristic of legal systems where behavior is governed by rules that uniformly enforced

Answer 9

Rule of Law

Question 10

Potential threat to a firm’s operations in the country due to economic policies and conditions, including property rights laws and enforcement of those laws

Answer 10

Economic Risk

Question 11

Selling of trademarked goods without the consent of the trademarked holder

Answer 11

Counterfeiting

Question 12

Potential threat to a firm’s operations in the country due to fluctuations in the local currency’s exchange rate

Answer 12

Currency Risk

Question 13

Potential threat to a firm’s operations in a country due to the problems that managers have making decisions in the context of foreign markets

Answer 13

Management Risk

Question 14

Index that reveals the most corrupt countries

Answer 14

Transparency International Corruption Perceptions Index

Question 15

Using other firms to perform value-creating activities that were previously performed in house

Answer 15

Outsourcing

Question 16

Shifting a value-creating activity from a domestic location to a foreign location

Answer 16

Offshoring

Question 17

A strategy based on a firm’s diffusion and adaptation of the parent company’s knowledge and expertise in foreign markets

Answer 17

International Strategy

Question 18

A strategy based on firm’s centralization and control by the corporate office, with the primary emphasis on controlling costs, and used in industries where the pressure for local adaptation is low

Answer 18

Global Strategy

Question 19

Strategy based on firms differentiating their products and services to adapt to local markets, used in industries where the pressure for local adaptation is high and lowering costs is low

Answer 19

Multidomestic Strategy

Question 20

Strategy based on firms optimizing the trade-offs associated with efficiency, local adaptation, and learning, used in industries where the pressure for adaptation and lowering costs is high

Answer 20

Transnational Strategy

Question 21

Q. In order to realize the strongest competitive advantage, firms engaged in worldwide competition must:

Answer 21

Pursue a strategy that combines the uniformity of a global strategy and the specificity of a multidomestic strategy

Question 22

Increasing international exchange of goods, and the increasing similarity of culture

Answer 22

Regionalization

Question 23

Groups of countries agreeing to increase trade between them by lowering trade barriers

Answer 23

Trading Blocs

Question 24

Q. A domestic corporation considering expanding into international markets for the first time will typically:

Answer 24

Consider implementing a low risk/low control strategy such as exporting

Question 25

Producing goods in one country to sell to residents of another country

Answer 25

Exporting

Question 26

Contractual agreement in which a company receives a royalty in exchange for selling goods

Answer 26

Licensing

Question 27

Contractual agreement in which a company a company receives a fee for using intellectual property

Answer 27

Franchising

Question 28

A business in which a multinational company company owns all of the stock

Answer 28

Wholly Owned Subsidiary