Chapter 7

Question 1

increase in international exchange including trade in goods and services, money, ideas, and information

growing similarly of laws, rules, norms, and values across countries

Answer 1

globalization

Question 2

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

Answer 2

arbitrage apportunities

Question 3

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

Answer 3

reverse innovation

Question 4

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

Answer 4

political risk

Question 5

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

Answer 5

rule of law

Question 6

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

Answer 6

economic risk

Question 7

selling of trademarked goods without the consent of the trademark holder

Answer 7

counterfeiting

Question 8

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

Answer 8

currency risk

Question 9

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 9

management risk

Question 10

strategy based on firms’ diffusion and adaptation of the parent companies’ knowledge and expertise to foreign markets

used in industries where the pressures for both local adaptation and lowering costs are low

Answer 10

international strategy

Question 11

strategy based on firms’ centralization and control by the corporate office with the primary emphasis on controlling costs

used in industries where the pressure for local adaptation is low and the pressure of lowering costs is high

Answer 11

global strategy

Question 12

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 the pressure for lowering costs is low

Answer 12

multidomestic strategy

Question 13

strategy based on firms’ optimizing the trade-offs associated with efficiency, local adaptation, and learning

used in industries where the pressures for both local adaptation and lowering costs are high

Answer 13

transnational strategy