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Strategy and Management > Ch8. Global Strategies and the Multinational Corporation > Flashcards

Ch8. Global Strategies and the Multinational Corporation Flashcards

1
Q

Internationalization occurs through two main mechanisms: cultural collaboration and military rivalry.
a. true
b. false

A

b. false
p. 272
Internationalization occurs through two mechanisms: trade and direct investment.

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2
Q

The growth of world trade has exceeded growth in the world’s output.
a. true
b. false

A

a. true
p. 272

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3
Q

Internationalization occurs through trade and indirect investment.
a. true
b. false

A

b. false
p. 272

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4
Q

The IKEA case demonstrates that it unnecessary for large companies to adapt to national differences.
a. true
b. false

A

b. false
p. 274-277

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5
Q

We can identify different types of industry according to the extent and mode of their internationalization.
a. true
b. false

A

a. true
p. 277-279

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6
Q

Multidomestic industries are those where internationalization occurs primarily through imports and exports.
a. true
b. false

A

b. false
p. 277-279
Multidomestic industries are those that internationalize through direct investment, either because trade is unfeasible (as in the case of service industries such as retail banking, consulting or hotels) or because products are nationally differentiated (e.g. frozen meals, recorded music).

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7
Q

Internationalization usually results in lower industry profitability.
a. true
b. false

A

a. true
p. 279-280

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8
Q

In international industries, like national industries, competitive advantage depends solely on a firm’ internal resources and capabilities.
a. true
b. false

A

b. false
p. 280-281

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9
Q

Porter’s national diamond framework identifies four factors that determine a company’s competitive advantage within a sector.
a. true
b. false

A

b. false
p. 281-283
Porter’s national diamond framework identifies four key factors which determine a country’s competitive advantage within a particular sector.

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10
Q

By factor conditions in his ‘national diamond’ Porter means either the growth of specialized, local resources or their unusually strong absence which can lead to the development of innovative substitutes.
a. true
b. false

A

a. true
p. 281-283

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11
Q

By strategy, structure and rivalry Porter means things such as intense domestic competition - e.g. good restaurants in France.
a. true
b. false

A

a. true
p. 281-283

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12
Q

A criticism of the national diamond is that it is so general it does not produce testable (falsifiable) predictions.
a. true
b. false

A

a. true
p. 283

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13
Q

Firms try to locate production of each stage of the value chain in those countries where transport costs to the next stage are the lowest.
a. true
b. false

A

b. false
p. 285-288
Cost is just one factor in offshoring decisions: because cost advantages are vulnerable to exchange rate changes, it is important to consider underlying issues concerning the availability and quality of resources and capabilities.

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14
Q

A long term agreement between an American soft drinks producer and a Mexican bottling company is an example of a transaction-based market entry strategy.
a. true
b. false

A

a. true
p. 288-290

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15
Q

If a firm’s product is difficult to transport, it is better for the firm to expand overseas by issuing licenses to local companies in foreign market rather than by exporting.
a. true
b. false

A

a. true
p. 288-290

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16
Q

Whether a firm licenses the use of its resources or chooses to exploit them directly depends partly on appropriability considerations.
a. true
b. false

A

a. true
p. 288-290

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17
Q

A global strategy allows a firm to exploit scale economies in product development, manufacturing and marketing.
a. true
b. false

A

a. true
p. 292-293

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18
Q

National cultural differences matter when the industry or product is close to the consumer - such as in retailing.
a. true
b. false

A

a. true
p. 293-295

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19
Q

Most MNCs today are trying to reconcile the advantages of national differentiation of products with those of global economies of scale or other gains from global integration.
a. true
b. false

A

a. true
p. 295-296

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20
Q

Internationalization has:

a. Increased global efficiency but reduced consumer choice
b. Increased global efficiency and growth options for large and small firms
c. Increased global efficiency and growth options, and widened consumer choice
d. Increased global efficiency and growth options but reduced consumer choice

A

c. Increased global efficiency and growth options, and widened consumer choice

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21
Q

Two mechanisms promote internationalization:

a. Inter-governmental bond borrowing, and inter-bank capital flows
b. Inter-bank capital flows and trade
c. Inter-bank capital flows and direct investment
d. Direct investment and trade

A

d. Direct investment and trade

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22
Q

Underlying both direct investment and trade are the quests to:

a. Exploit foreign resources, capabilities, and competitive advantage
b. Exploit foreign resources, capabilities and markets
c. Limit foreign competitive advantages
d. Limit foreign companies’ ambitions

A

b. Exploit foreign resources, capabilities and markets

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23
Q

Internationalization opens:

a. Borders for foreign workers
b. Doors for commercial spies
c. Domestic markets to foreign competitors
d. Answers a and c

A

c. Domestic markets to foreign competitors

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24
Q

In its first, largely European, phase of internationalization IKEA:

a. Kept its markets and products unchanged
b. Made minimal changes to its products and processes
c. Consciously changed its culture but not its products
d. Changed its products but not its culture

A

b. Made minimal changes to its products and processes

25
Q

On expanding into the USA, IKEA changed:

a. Kept its markets and products unchanged
b. Made minimal changes to its products and processes
c. Consciously changed its culture but not its products
d. Changed its products but not its culture

A

b. Made minimal changes to its products and processes

26
Q

Sheltered industries are protected from:

a. Imports
b. Imports and Exports
c. Inward direct investment and imports
d. Direct and Indirect inward investment

A

c. Inward direct investment and imports

27
Q

Sheltered industries are protected by their:

a. Perishability
b. Transport difficulties and high transport costs
c. Very small size of operation and lack of scale economies
d. Any of the above

A

d. Any of the above

28
Q

Trading industries are distinguished by:

a. The widespread practice of importing and exporting
b. The widespread practice of moving capital investments from one country to another
c. The tendency for employees to move from one country to another
d. All of the above

A

a. The widespread practice of importing and exporting

29
Q

Multi-domestic industries:

a. Are distinguished by their focus on products for the domestic sector
b. Have very high transport costs
c. Supply standard products around the world with instructions in the local language
d. Internationalize through direct investment

A

d. Internationalize through direct investment

30
Q

Consumer electronics (laptops, personal devices etc.) are an example of:

a. A multi-domestic industry
b. A global industry
c. A trading industry
d. The phishing industry

A

b. A global industry

31
Q

A country has a comparative advantage:

a. In producing those products or services that make intense use of its skilled labour
b. In producing those products that make intense use of its natural resources
c. In producing those products or services that make intense use of those resources in which it has a relative abundance
d. In producing those products or services that make intense use of those resources for which it has the lowest domestic demand

A

c. In producing those products or services that make intense use of those resources in which it has a relative abundance

32
Q

Comparative advantage refers to:

a. A country’s absolute efficiency in producing goods or services
b. A country’s relative efficiency in producing goods or services
c. A country’s total efficiency in producing goods or services
d. A country’s inefficiency in producing goods or services

A

b. A country’s relative efficiency in producing goods or services

33
Q

Porter’s national diamond identifies some factors that:

a. Determine a country’s competitive advantage for a sector
b. Determine a country’s national income
c. Determine the growth rate of a country’s national income
d. Determine the growth rate of its exports

A

a. Determine a country’s competitive advantage for a sector

34
Q

Porter’s national diamond can be used to:

a. Predict the strategies of different countries
b. Analyze why some firms and countries succeed internationally, and provide an intellectual framework for future analysis
c. Calculate a firm’s chances of success in an international venture
d. Map the evolution of corporations like De Beers

A

b. Analyze why some firms and countries succeed internationally, and provide an intellectual framework for future analysis

35
Q

In Porter’s national diamond Porter emphasizes that rivalry:

a. Is crucial: cooperation and the growth of complementary services require lots of friendly rivals
b. Is crucial: intense domestic competition drives innovation, efficiency and the growth of firms’ individual competitive advantages
c. Must be killed, in order to create national champions
d. Is less important than having a good strategy and structure

A

b. Is crucial: intense domestic competition drives innovation, efficiency and the growth of firms’ individual competitive advantages

36
Q

The three main determinants of the geographic location of activities should be:

a. the competitive advantages of the country, natural resource availability, and tradability of the product or service
b. National resource availability, tradability, and firm-specific competitive advantages
c. Attractiveness of the market, political context, and demographics
d. Based solely on a PESTEL analysis of each country

A

b. National resource availability, tradability, and firm-specific competitive advantages

37
Q

Tradability refers to the idea that:

a. Some products or services are almost impossible to export or import
b. Some goods have to be produced where they are consumed: eating a meal in a restaurant would be a good example
c. Answers a and b both illustrate the idea of tradability
d. All other answers are wrong; tradability simply means the shipping cost as a percentage of the sales price

A

c. Answers a and b both illustrate the idea of tradability

38
Q

Considering firm-specific competitive advantages means:

a. Locating where the firm’s labor costs are most flexible
b. Locating where the firm’s resource costs can be minimized
c. Locating where the firm’s distinctive resources and capabilities can be optimized
d. Finding a location which is a unique selling point

A

c. Locating where the firm’s distinctive resources and capabilities can be optimized

39
Q

A globally-dispersed value chain is:

a. Where firms place key operations in countries with an abundance of the resources needed at that operational stage
b. Driven mainly by considerations of tax breaks and government grants
c. Driven by security-of-supply considerations
d. To be avoided unless you have an absolutely standardized global product

A

a. Where firms place key operations in countries with an abundance of the resources needed at that operational stage

40
Q

What are the main considerations in an off-shoring decision?

a. Low labor costs now and in the future
b. Low wage rates currently
c. Cost and ease of entry to the country - and exit
d. Access to top quality resources and overall operational efficiency

A

d. Access to top quality resources and overall operational efficiency

41
Q

What is the disadvantage of fragmenting the value chain of a firm to identify the best place to locate each part?

a. The added cost of coordinating and transporting globally dispersed activities
b. The government’s incentives or penalties regarding that location
c. Assessing the extra transportation costs of greater dispersion
d. Assessing the delays caused by greater dispersion of the activities of the value chain

A

a. The added cost of coordinating and transporting globally dispersed activities

42
Q

The two main modes of entering an overseas market are:

a. Sales contracts and alliances
b. Direct investment and transactions
c. Transactions and joint ventures
d. Technology transfers and franchise

A

b. Direct investment and transactions

43
Q

When considering foreign entry strategies the text asks 5 questions Which of these factors belong on that list?

a. The product tradability, barriers to trade, and the existence transaction costs
b. The firm or country-based attribute of a firm’s competitive advantage, and the appropriability of the returns by that firm
c. The ownership of a large set of resources and capabilities to establish a competitive advantage overseas
d. All of the above

A

d. All of the above

44
Q

International strategic alliances allow:

a. Governments to share national resources
b. Retailers to control their suppliers
c. Strong firms to dominate weak ones without having to buy them
d. Firms to share resources and capabilities

A

d. Firms to share resources and capabilities

45
Q

The advantage of alliances is that they:

a. Allow firms to economize on resources
b. Allow firms access to specialized resources or capabilities
c. Answers a and b
d. Keep all strategic options open

A

c. Answers a and b

46
Q

Alliances usually go wrong if:

a. Firms squabble over the contributions and returns from the alliance
b. Each firm really wants to acquire the other’s core capabilities
c. The firms are Customer and Supplier
d. Either answers a or b

A

d. Either answers a or b

47
Q

Being international can be a source of competitive advantage if:

a. Your product or service is tradable
b. There are significant economies of scale in your industry
c. Your customers only consider local conditions
d. Answers a and b

A

b. There are significant economies of scale in your industry

48
Q

Knowledge-based assets are best exploited through:

a. Replicating the product or service in other countries or markets
b. Internationalizing the product or service
c. A focus strategy
d. Moving employees around every two years

A

a. Replicating the product or service in other countries or markets

In service industries, the cost efficiencies from international operation derive primarily from economies in the replication of knowledge‐based assets, including organizational capabilities. Once a company has created a knowledge‐based asset or product – be it a recipe, a piece of software or an organizational system – it can be replicated in additional national markets at a fraction of the cost of creating the original.

49
Q

Major benefits of a global strategy can include:

a. Serving customers who demand a global supplier
b. Learning how to please the most demanding customers on the planet
c. Economies of scale in R&D or product development
d. All of the above

A

d. All of the above

50
Q

Ghemawat’s CAGE framework can be used to:

a. Evaluate which countries should form economic unions
b. Evaluate in which countries a firm should consider allowing locally-differentiated products to be developed
c. Evaluate in which countries a firm should not consider establishing arbitrage agents
d. All of the above

A

b. Evaluate in which countries a firm should consider allowing locally-differentiated products to be developed

51
Q

Going ‘glocal’ means:

a. Developing global standard platforms for your product using local ingredients
b. Developing global standard platforms for your product with locally-differentiated variants
c. Running as tight a ship as McDonalds
d. Nothing: it’s just a buzzword

A

b. Developing global standard platforms for your product with locally-differentiated variants

52
Q

A global strategy is appropriate in product markets in which:

a. national preferences are pronounced
b. customer preferences are homogeneous
c. few economies of scale are available
d. the costs of customization are low

A

b. customer preferences are homogeneous

53
Q

A multi-domestic strategy is appropriate in product markets in which:

a. national preferences are pronounced
b. customer preferences are homogeneous
c. there are significant economies of scale
d. Both b and c

A

a. national preferences are pronounced

54
Q

Figure 8.7 shows

a. Traditional structures of corporations found in the 18th century: a European rim, a Japanese hub and an American wheel
b. The structures of large national European, American and Japanese corporations found today
c. Three structures of MNCs from the 20th century
d. Three structures of MNCs commonly found today

A

c. Three structures of MNCs from the 20th century

55
Q

Figure 8.8 shows

a. The ideal structure for all transnational corporations
b. A central hub trying to coordinate decisions and flows between peripheral units with considerable resources & independence
c. Hewlett Packard’s global structure in 2008
d. The allocation of responsibilities in a successful transnational corporation

A

b. A central hub trying to coordinate decisions and flows between peripheral units with considerable resources & independence

56
Q

According to Bartlett, the simultaneous pursuit of responsiveness to national markets and global coordination requires:

a. A multi-divisional structure based on geographic groupings
b. A strong corporate headquarters and centralised decision-making
c. The development of managers with broadly-based perspectives and relationships
d. All of the above

A

c. The development of managers with broadly-based perspectives and relationships

57
Q

Transnational corporations (TNCs) differ from multinational corporations (MNCs) in that:

a. They have different kinds of internal financial reconciliation processes
b. TNCs are a global network of independent profit centers
c. TNCs are a globally integrated network of interdependent resources and capabilities
d. There is no real difference

A

c. TNCs are a globally integrated network of interdependent resources and capabilities

58
Q

A symbol of TNCs acting differently from MNCs is:

a. Creating or moving divisional or corporate headquarters out of the firm’s country of origin
b. Developing product logos that are globally recognizable
c. Listing the company’s shares on several global stock markets
d. All of the above

A

a. Creating or moving divisional or corporate headquarters out of the firm’s country of origin

59
Q

Many firms that have been outstandingly successful in their home markets have failed in their overseas expansion because they haven’t recognised the difficulty of:

a. transferring the resources that underpin their competitive advantages in their home market to overseas markets
b. replicating the capabilities that underpin their competitive advantage in their home market to overseas markets
c. designing structures and systems appropriate to their international strategy
d. all of the above

A

d. all of the above

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