FINAL EXAM CHP13, 14

Question 1

How can firms increase profits through international expansion?

Answer 1

o Expand their market
o Realize location economies
o Realize greater cost economies from experience effects
o Earn a greater return

Question 1

What can firms do to increase profitability and profit growth?

Answer 1

Add value, lower costs, sell more in existing markets, and expand internationally.

Question 2

Core competencies

Answer 2

Skills within the firm that competitors cannot easily match or imitate.

Question 3

Economies of scale

Answer 3

The reductions in unit cost achieved by producing a large volume of product.

Question 4

Global standardization

Answer 4

Increase profitability and profit growth by reaping the cost reductions from economies of scale, learning effects, and location economies.

Question 5

Localization

Answer 5

Increase profitability by customizing goods or services so that they match tastes and preferences in different national markets.

Question 6

Transnational

Answer 6

Tries to simultaneously achieve low costs through location economies, economies of scale, and learning effects.

Question 7

International

Answer 7

Trying to create value by transferring core competencies to foreign markets where indigenous competitors lack those competencies.

Question 8

Centralized decision making

Answer 8

 Facilitates coordination
 Ensures decisions are consistent with the organization’s objectives
 Avoids duplication of activities

Question 9

Decentralized decision making

Answer 9

 Motivates individuals
 Permits greater flexibility
 Can result in better decisions

Question 10

The 4 different types of control systems

Answer 10

o Personal controls
o Bureaucratic controls
o Output controls
o Cultural controls