Question 1

By dispersing different stages of its value chain to those locations around the world where the value added is maximized or where the costs of value creation are minimized, a firm creates a(n) :

Accepted Answer

A)  integral circle.
B)  dispersal chain.
C)  global web.
D)  international mesh.
E)  worldwide circle.F) B) and C)
G) All of the above

Question 2

Successful global expansion requires the transfer of core competencies to foreign markets where indigenous competitors lack them.

Accepted Answer

A) True 
 B)False

Question 3

What are the disadvantages of strategic alliances?

Accepted Answer

Some commentators have criticized strate...

Question 4

Which of the following is an observation made by researchers Bartlett and Ghoshal regarding modern multinational enterprises?

Accepted Answer

A)  Global logistics industry makes the concept of "location economies" redundant for international firms.
B)  Core competencies and skills can develop in any of the firm's worldwide operations.
C)  Flow of skills between a firm and its global subsidiaries should be unidirectional.
D)  Differentiating across geographic markets helps a firm in reducing costs.
E)  Customer demands for local customization are on the decline worldwide.F) All of the above
G) A) and C)

Question 5

According to Michael Porter, all positions on the efficiency frontier are viable.

Accepted Answer

A) True 
 B)False

Question 6

Of all the value creation activities in a firm, which of the following creates value by discovering consumer needs and communicating them back to the R&D function of the company, which can then design products that better match those needs?

Accepted Answer

A)  Production
B)  Marketing and sales
C)  Human resources
D)  Logistics
E)  Information systemsF) A) and B)
G) C) and D)

Question 7

For a firm to maximize its profitability, it is necessary that it:

Accepted Answer

A)  creates products similar to the products of its competitors.
B)  does not configure its internal operations to reduce costs.
C)  minimizes the value of the consumer surplus.
D)  picks a position on the efficiency frontier that is viable.
E)  strips all the value out of its product offering.F) B) and D)
G) C) and E)

Question 8

Pressures for cost reduction are intense in firms:

Accepted Answer

A)  that produce products that are well differentiated.
B)  whose major competitors are based in high-cost locations.
C)  with persistent low capacity.
D)  in which consumers face low switching costs.
E)  with no international competition.F) A) and C)
G) B) and C)

Question 9

Focusing primarily on increasing the attractiveness of a product is referred to as a:

Accepted Answer

A)  standardization strategy.
B)  differentiation strategy.
C)  target-identification strategy.
D)  low-cost strategy.
E)  profitability strategy.F) A) and E)
G) A) and C)

Question 10

The value creation activities of a firm are categorized as:

Accepted Answer

A)  primary activities and support activities.
B)  strategic activities and functional activities.
C)  ancillary functions and tertiary functions.
D)  primary activities and core activities.
E)  goal-oriented activities and organizational activities.F) A) and B)
G) A) and C)

Question 11

One of the reasons why a firm typically charges for a good or service less than the value placed on that good or service by the customer is because:

Accepted Answer

A)  the firm attempts to create value for the consumers by providing them a wide range of products.
B)  it is normally impossible to segment a market based on each customer's reservation price.
C)  the value creation results in a corresponding reduction in costs of production.
D)  the firm frequently modifies its products to compete with the products introduced by other firms.
E)  it is highly unlikely that the same good or service will be available to the customers from other firms.F) B) and D)
G) D) and E)

Question 12

The price that reflects an individual's assessment of the value of a product is referred to as:

Accepted Answer

A)  the market price.
B)  the customer's negotiated price.
C)  the base value of the product.
D)  the customer's reservation price.
E)  the profit growth price.F) C) and D)
G) A) and D)

Question 13

Firms that pursue an international strategy focus on increasing profitability by reaping the cost reductions that come from economies of scale, learning effects, and location economies.

Accepted Answer

A) True 
 B)False

Question 14

Strategies that increase profitability can also expand a firm's business and thus enable it to attain a higher rate of profit growth.

Accepted Answer

A) True 
 B)False

Question 15

A firm is most likely to pursue a global standardization strategy when:

Accepted Answer

A)  it wants to implement a high-cost strategy on a global scale.
B)  it wants to reduce consumer surplus.
C)  there are no universal needs to be served.
D)  there are strong demands for local responsiveness.
E)  there are strong pressures for cost reduction.F) None of the above
G) A) and E)

Question 16

One of the principal risks associated with a strategic alliance is that:

Accepted Answer

A)  it brings together the complementary skills of alliance partners.
B)  it makes it difficult for the partner firms to enter into a foreign market.
C)  a firm can give away more than it receives.
D)  it does not allow firms to share fixed costs.
E)  it almost always fails.F) B) and C)
G) A) and E)

Question 17

An international strategy involves taking products first produced for their domestic market and selling them internationally with only minimal local customization.

Accepted Answer

A) True 
 B)False

Question 18

Typically, the price a firm charges for a good or service is:

Accepted Answer

A)  less than the value placed on that good or service by the customer.
B)  more than what customers assume it would be.
C)  more than the market price for similar goods or services.
D)  the same as the value placed on that good or service by the customer.
E)  less than the lowest priced similar good or service in the market.F) C) and D)
G) A) and B)

Question 19

According to researchers, firms facing strong pressures for local responsiveness should pursue a global standardization strategy.

Accepted Answer

A) True 
 B)False

Question 20

Consumer surplus captures some of the value of a product thereby reducing the price a firm can charge for it.

Accepted Answer

A) True 
 B)False

Exam 12: The Strategy of International Business

Successful global expansion requires the transfer of core competencies to foreign markets where indigenous competitors lack them.

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A firm is most likely to pursue a global standardization strategy when:

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Which of the following is an observation made by researchers Bartlett and Ghoshal regarding modern multinational enterprises?

Correct AnswerverifiedShow Answer

What are the disadvantages of strategic alliances?

Correct AnswerverifiedSome commentators have criticized strate...View AnswerShow Answer

An international strategy involves taking products first produced for their domestic market and selling them internationally with only minimal local customization.

Correct AnswerverifiedShow Answer

One of the reasons why a firm typically charges for a good or service less than the value placed on that good or service by the customer is because:

Correct AnswerverifiedShow Answer

Firms that pursue an international strategy focus on increasing profitability by reaping the cost reductions that come from economies of scale, learning effects, and location economies.

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Typically, the price a firm charges for a good or service is:

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Pressures for cost reduction are intense in firms:

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One of the principal risks associated with a strategic alliance is that:

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For a firm to maximize its profitability, it is necessary that it:

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Consumer surplus captures some of the value of a product thereby reducing the price a firm can charge for it.

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The price that reflects an individual's assessment of the value of a product is referred to as:

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Focusing primarily on increasing the attractiveness of a product is referred to as a:

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According to researchers, firms facing strong pressures for local responsiveness should pursue a global standardization strategy.

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By dispersing different stages of its value chain to those locations around the world where the value added is maximized or where the costs of value creation are minimized, a firm creates a(n) :

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Strategies that increase profitability can also expand a firm's business and thus enable it to attain a higher rate of profit growth.

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The value creation activities of a firm are categorized as:

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Of all the value creation activities in a firm, which of the following creates value by discovering consumer needs and communicating them back to the R&D function of the company, which can then design products that better match those needs?

Correct AnswerverifiedShow Answer

According to Michael Porter, all positions on the efficiency frontier are viable.

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Some commentators have criticized strate...
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