Shared Flashcard Set

Details

Mgmt 493
Ch. 8
77
Management
03/27/2013

Additional Management Flashcards

 


 

Cards

Term
One of the great growth industries of the past few decades has been the wireless phone industry.

a. True
b. False
Definition
a. True
Term
Nokia and IKEA are both German companies.

a. True
b. False
Definition
b. False
Term
The globalization of production has been increasing as companies take advantage of lower barriers to international trade and location economies.

a. True
b. False
Definition
a. True
Term
Many experts believe that the world's economic system is moving toward a system in which national markets are merging into one huge global marketplace.

a. True
b. False
Definition
a. True
Term
Relative to the United States, Mexico has more advanced factors of production.

a. True
b. False
Definition
b. False
Term
Factor endowments-the cost and quality of factors of production-are a prime determinant of the competitive advantage that certain countries have in certain industries.

a. True
b. False
Definition
a. True
Term
A company can increase its growth rate by taking goods or services developed at home and selling them internationally.

a. True
b. False
Definition
a. True
Term
Location economies refer to the economic benefits that arise from performing a value creation activity at central headquarters.

a. True
b. False
Definition
b. False
Term
A company may create value if it can leverage the skills created within subsidiaries and apply them to other operations within the firm's global network.

a. True
b. False
Definition
a. True
Term
By offering a standardized product to the global marketplace and manufacturing that product in each nation in which it does business, a multinational company can realize substantial scale economies.

a. True
b. False
Definition
b. False
Term
Walmart's basic approach to overseas expansion has been to open retail outlets in each of the countries to which it exports.

a. True
b. False
Definition
b. False
Term
Pressure for cost reductions encourages a firm to pursue a cost-leadership strategy, while pressure for local responsiveness encourages a firm to pursue differentiation.

a. True
b. False
Definition
a. True
Term
Local responsiveness may be driven by economic and political demands placed on companies by host country governments.

a. True
b. False
Definition
a. True
Term

A transnational strategy makes the most sense when there are strong pressures for cost reductions and when demand for local responsiveness is minimal.

a. True

b. False

Definition
b. False
Term
A localization strategy is most appropriate when there are
substantial differences across nations with regard to consumer tastes and preferences and when cost pressures are not too intense.

a. True
b. False
Definition
a. True
Term
Companies that pursue a global standardization strategy are trying to develop a business model that simultaneously achieves low costs and differentiates the product offering across geographic markets.

a. True
b. False
Definition
b. False
Term
Small-scale entry into foreign markets may make it more difficult for the small-scale entrant to build market share and capture first-mover advantages.

a. True
b. False
Definition
a. True
Term
Most manufacturing companies begin their global expansion by exporting.

a. True
b. False
Definition
a. True
Term
An international strategy may not be viable in the long term and to survive, companies that can pursue it need to shift toward a global standardization strategy.

a. True
b. False
Definition
a. True
Term
International licensing is an arrangement whereby a foreign licensee buys the rights to produce a company's product in the licensee's country for a negotiated fee.

a. True
b. False
Definition
a. True
Term
When a company licenses its technology it can quickly lose control over it.

a. True
b. False
Definition
a. True
Term
One advantage of a joint venture is that a company may benefit from a local partner's knowledge of the many dimensions of a host country.

a. True
b. False
Definition
a. True
Term
An early mover entering a foreign country will experience many advantages but few or no disadvantages.

a. True
b. False
Definition
b. False
Term
Small-scale entry into foreign markets can be advantageous because it allows a company to learn about a foreign market while simultaneously limiting the company's exposure to that market.

a. True
b. False
Definition
a. True
Term
If a company's competitive advantage derives from its control of proprietary technological know-how, it should either license its technology to others or pursue a joint venture.

a. True
b. False
Definition
b. False
Term
Careful selection of the right partner is one key to the success of global strategic alliances.

a. True
b. False
Definition
a. True
Term
An important ingredient of success in a strategic alliance appears to be cultural sensitivity.

a. True
b. False
Definition
a. True
Term
The most rapid growth rate for household TV ownership is in the United States.

a. True
b. False
Definition
b. False
Term
The majority of programming for MTV networks now takes place overseas.

a. True
b. False
Definition
b. False
Term
Which of the following has occurred in international trade over the
past half-century?

a. There has been a dramatic lowering of barriers to
international trade.
b. Tariff rates on manufactured goods traded by advanced nations have fallen.
c. Regulations prohibiting foreign companies from entering domestic markets and establishing production facilities have been removed.
d. The volume of world trade has increased  dramatically.
e. All of these choices.
Definition
e. All of these choices.
Term
The globalization of production has allowed firms to

a. increase their market share.
b. lower their cost structure.
c. respond to individual market segments.
d. avoid international competition.
e. all of these choices.
Definition
b. lower their cost structure.
Term
When a company increases its growth rate by taking goods or services developed at home and selling them internationally, it is

a. leveraging its existing products.
b. taking the path of least resistance.
c. engaging in product positioning.
d. realizing cost economies from global expansion.
e. realizing location economies.
Definition
a. leveraging its existing products.
Term
When a company expands its sales volume through international expansion, it can realize cost savings from economies of scale through all of the following except

a. spreading fixed costs over its global sales volume.
b. utilizing its production facilities more intensely.
c. increased bargaining power with its suppliers.
d. learning effects associated with higher volume.
e. improved responsiveness.
Definition
e. improved responsiveness.
Term
When a company performs a value creation activity in the optimal location for that activity, wherever in the world that might be, it is trying to capitalize on

a. economies of scale.
b. economies of scope.
c. the transnational strategy.
d. location economies.
e. its localization strategy.
Definition
d. location economies.
Term
Which of the following is not a necessity for leveraging the skills of global subsidiaries?

a. The firm must have incentives for local managers to share knowledge and ideas.
b. The firm's managers must be aware that competencies can develop anywhere.
c. The firm must be pursuing a strategy of differentiation.
d. The firm's managers must help to transfer competencies around the company.
e. The firm must offer incentives that encourage employees to take necessary risks.
Definition
c. The firm must be pursuing a strategy of differentiation.
Term
Global expansion

a. is feasible only for large companies.
b. can enable companies to increase their profitability and grow their profits more rapidly.
c. allows domestic companies in the mature stage of the industry life cycle to maintain profits but not to increase them.
d. requires locating facilities in foreign countries.
e. makes sense for manufacturing firms but not for service firms.
Definition
b. can enable companies to increase their profitability and grow their profits more rapidly.
Term
The ability to realize cost economies from global volume is greatest in the case of

a. products that need to be customized to local requirements.
b. commodity-type products that serve universal needs.
c. low-weight, high-value products that can be differentiated by global companies.
d. products that can be economically manufactured in small
batches.
e. companies competing in industries where they face a large
number of multinational competitors.
Definition
b. commodity-type products that serve universal needs.
Term
In 1952, the Iranian oil industry was nationalized so that foreign ownership of oil-producing land and equipment was made illegal and the assets were confiscated. Which of the following disadvantages of global
expansion is shown in this example?

a. Political risk
b. Increased tariffs
c. Lower costs for labor and raw materials
d. Commodity products that command low profits
e. Products that need to be customized to local requirements
Definition
a. Political risk
Term
Dell is expanding its market share in European countries because its direct-sales model is more effective than the business model used by its European rivals. Which of the following benefits of global expansion is Dell experiencing, relative to its competitors?

a. Lower costs for labor and raw materials
b. Further exploitation of distinctive competencies
c. Decreased political and economic risk
d. Better realization of location economies
e. More incentive for local subsidiaries to develop competencies
Definition
b. Further exploitation of distinctive competencies
Term
Which of the following factors increases pressures for cost reductions?

a. Differences in distribution channels
b. Increasing national wealth
c. Great transportation needs
d. High switching costs
e. Price as the main competitive weapon in a market
Definition
e. Price as the main competitive weapon in a market
Term
Which of the following factors increases pressures for local responsiveness?

a. Powerful buyers
b. Persistent excess capacity
c. Low-cost competitors
d. Differences in customer tastes and preferences
e. Trade barriers
Definition
d. Differences in customer tastes and preferences
Term
When toymaker Mattel sells Barbie dolls in the Middle East, it changes the doll's shape to one that is a more accurate portrayal of a female body. Mattel does this to

a. create a commodity-type product.
b. transfer technological know-how.
c. increase product standardization.
d. realize experience curve effects.
e. respond to differences in local tastes.
Definition
e. respond to differences in local tastes.
Term
Differences in tastes and preferences

a. increase pressures for cost reductions.
b. reduce profit potential.
c. increase pressures for local responsiveness.
d. reduce pressures from the host government.
e. prevent a company from pursuing a licensing strategy.
Definition
c. increase pressures for local responsiveness.
Term
Host government demands generally

a. increase pressures for local responsiveness.
b. increase pressures for cost reductions.
c. discourage foreign companies from operating in the home country.
d. impede a company's ability to minimize its transaction costs.
e. impede a company's ability to differentiate its product
offering across national borders.
Definition
a. increase pressures for local responsiveness.
Term
A localization strategy is based on which of the following ideas?

a. There is a convergence in the tastes of consumers in different nations of the world.
b. There are substantial economies of scale to be realized from centralizing global production.
c. Consumer tastes and preferences differ among national markets.
d. There are cost advantages associated with manufacturing a standard product for global consumption.
e. Competitive strategy should be centralized at the world head office.
Definition
c. Consumer tastes and preferences differ among national markets.
Term
Clear Vision's decision to own a manufacturing facility overseas was not influenced by which of the following factors?

a. Low labor costs
b. Availability of a skilled work force
c. Geographical proximity to India
d. Tax breaks given by the Hong Kong government
e. Ability to find a Chinese partner
Definition
c. Geographical proximity to India
Term
Cost reduction pressures can be particularly intense in industries producing

a. commodity-type products.
b. highly differential products.
c. goods that do not compete on the basis of price.
d. goods servicing narrowly defined markets.
e. highly advertised goods.
Definition
a. commodity-type products.
Term
Strong pressures for local responsiveness emerge when customer tastes and preferences

a. differ significantly between countries.
b. differ slightly between countries.
c. are universally alike.
d. are cyclical in nature.
e. none of these choices.
Definition
a. differ significantly between countries.
Term
When entering an overseas market, which of the following factors should be considered?

a. Size of the market
b. Purchasing power
c. Consumer demand for the company's product
d. Economic risks
e. All of these choices
Definition
e. All of these choices
Term
In which of the following circumstances does a global
standardization strategy make the most sense?

a. Global market standardization is not possible, and there are no significant economies of scale to be realized from centralizing global manufacturing.
b. Global market standardization is possible, but there are no significant economies of scale to be realized from centralizing global manufacturing.
c. Global market standardization is not possible, but there are significant economies of scale to be realized from centralizing global manufacturing.
d. Consumer tastes and preferences differ among national markets, and economies of scale are insubstantial.
e. Global market standardization is possible, and there are significant economies of scale to be realized from centralizing global manufacturing.
Definition
e. Global market standardization is possible, and there are significant economies of scale to be realized from centralizing global manufacturing.
Term
In which of the following circumstances does a localization strategy make the most sense?

a. Global market standardization is not possible, and there are no significant economies of scale to be realized from centralizing global manufacturing.
b. Global market standardization is possible, but there are no significant economies of scale to be realized from centralizing global manufacturing.
c. Global market standardization is not possible, but there are significant economies of scale to be realized from centralizing global manufacturing.
d. Global market standardization is possible, and there are significant economies of scale to be realized from centralizing global manufacturing.
e. Consumer tastes and preferences differ among national markets, and economies of scale are substantial.
Definition
a. Global market standardization is not possible, and there are no significant economies of scale to be realized from centralizing global manufacturing.
Term
Which of the following companies increased company growth rates by developing products at home and then expanding sales of these products in international markets?

a. Procter & Gamble
b. Ford
c. Toyota
d. All of these choices
e. None of these choices
Definition
d. All of these choices
Term
Procter & Gamble grew rapidly in international markets because of its

a. skills in mass-marketing.
b. patents on essential products.
c. financial stamina.
d. work force diversity.
e. concentric diversification.
Definition
a. skills in mass-marketing.
Term
Managers of a multinational enterprise must recognize that skills

a. need to be transferred from headquarters to the firm's overseas operations.
b. may arise from anywhere within the firm's global network.
c. developed overseas usually do not rise to the level of domestic skills.
d. should not deviate from their domestic level.
e. must be tightly controlled to assume global similarity.
Definition
b. may arise from anywhere within the firm's global network.
Term
The Achilles heel of international strategy is that

a. market demand inevitably dries up.
b. costs cannot be sufficiently controlled over long periods of time.
c. competitors inevitably emerge.
d. prices eventually tumble drastically.
e. all of these choices.
Definition
c. competitors inevitably emerge.
Term
Disadvantages of a global strategy include

a. lack of local responsiveness.
b. inability to engage in global strategic coordination.
c. failure to exploit experience curve effects.
d. lack of control over quality.
e. inability to realize location economies.
Definition
a. lack of local responsiveness.
Term
Which of the following is not an objective of a transnational company?

a. Local responsiveness
b. Realization of experience-based economies
c. Low cross-national integration
d. Global learning
e. Realization of location economies
Definition
c. Low cross-national integration
Term
A company with a business-level strategy of cost leadership should pursue which of the following global expansion strategies?

a. Localization
b. Simple
c. International
d. Transnational
e. Global standardization
Definition
e. Global standardization
Term
A telecommunications firm develops new wireless cellular phones, a technology in which foreign competition is low and the need for local responsiveness is high. What is the most appropriate short-term strategy for this firm?

a. Global standardization
b. International
c. Localization
d. Transnational
e. Joint venture
Definition
b. International
Term
Foreign subsidiaries play a major role in shaping the future direction of a company pursuing a(n)

a. transnational strategy.
b. international strategy.
c. localization strategy.
d. joint venture.
e. global standardization strategy.
Definition
a. transnational strategy.
Term
Firms should choose likely countries for an international expansion effort based on all of the following except the

a. size of the market.
b. existing wealth of consumers in that market.
c. likely future wealth of consumers in that market.
d. political stability of that market.
e. age of the country.
Definition
e. age of the country.
Term
A localization strategy is most appropriate when

a. there are relatively few differences from one location to another.
b. consumer tastes and preferences are universally similar.
c. consumer tastes and preferences differ substantially across nations.
d. there is no need to customize products.
e. local demand and national demand are equal.
Definition
c. consumer tastes and preferences differ substantially across nations.
Term
A company that enters a foreign market by entering into a licensing agreement with a local company

a. can realize location economies.
b. can engage in global strategic coordination.
c. can realize experience-curve effects.
d. risks losing control over its technology to the venture
partner.
e. can engage in global strategic coordination and realize
experience-curve effects.
Definition
d. risks losing control over its technology to the venture
partner.
Term
For a hotel company whose competitive advantage is based on high brand-name recognition, which of the following ways of serving an overseas market makes the most sense?

a. Franchising
b. Licensing
c. Exporting
d. Entering into a joint venture with a foreign company
e. Setting up a wholly owned subsidiary
Definition
a. Franchising
Term
Which entry mode gives a multinational the tightest control over foreign operations?

a. Exporting from the home country and letting a foreign agent organize local marketing
b. Licensing
c. Franchising
d. Entering into a joint venture with a foreign company to set up overseas operations
e. Setting up a wholly owned subsidiary
Definition
e. Setting up a wholly owned subsidiary
Term
Which of the following companies exemplifies the trend toward national markets merging into one large global marketplace?

a. McDonald's
b. Starbucks
c. Coca-Cola
d. Nokia
e. All of these choices
Definition
e. All of these choices
Term
Which of the following is not an attribute of a national
or country-specific environment that has an impact on global competitiveness of companies located in that nation?

a. Factory production endowments
b. Local demand conditions
c. Related and supporting industries
d. Strategy, structure, and rivalry of firms within the nation
e. Advertising expenses
Definition
e. Advertising expenses
Term
A nation's companies gain competitive advantage if their domestic customers are

a. nondemanding purchasers.
b. able to obtain products or services in other countries.
c. sophisticated and demanding.
d. willing to spend money on novelties.
e. not willing to accept low-priced products.
Definition
c. sophisticated and demanding.
Term
Global economies of scale can be realized by

a. expansion of overseas sales.
b. better utilization of production facilities.
c. boosting bargaining power with suppliers.
d. increasing cost savings through learning effects.
e. all of these choices.
Definition
e. all of these choices.
Term
Factors of production include all but which of the following?

a. Land
b. Labor
c. Raw materials
d. Ethnic diversity
e. Managerial sophistication
Definition
d. Ethnic diversity
Term
Which of the following entry modes allow(s) a company to engage in global strategic coordination?

a. Exporting
b. Licensing
c. Joint ventures
d. Wholly owned subsidiaries
e. Joint ventures and wholly owned subsidiaries
Definition
d. Wholly owned subsidiaries
Term
A key to making a strategic alliance work is

a. having one partner handle daily operations.
b. selecting the right partner.
c. sharing all knowledge.
d. enforcing one culture for both partners.
e. reducing investment in the alliance to a minimum.
Definition
b. selecting the right partner.
Term
Attaining a credible commitment from a potential partner

a. is a step in partner selection.
b. requires the ability to share skills with partners.
c. requires the ability to learn from alliance partners.
d. is a way to minimize opportunism.
e. requires the ability to share skills with and learn from
alliance partners.
Definition
d. is a way to minimize opportunism.
Term
Companies that pursue a transnational strategy are trying to develop

a. a business model that achieves low costs.
b. a differentiation strategy across geographical markets.
c. a flow of skills between different subsidiaries in the global network.
d. all of these choices.
e. none of these choices.
Definition
d. all of these choices.
Term
Most manufacturing companies begin their global expansion by

a. licensing.
b. franchising.
c. exporting.
d. forming a joint venture.
e. setting up a wholly owned subsidiary in the host country.
Definition
c. exporting.
Term
Which of the following is not a risk of exporting?

a. Tariff barriers
b. Transportation costs
c. Location diseconomies
d. Prime interest rates
e. Delegation of marketing activities to a local agent
Definition
d. Prime interest rates
Term
What are the risks associated with licensing as a means of entering overseas markets?

a. Licensing limits a company's ability to coordinate strategic moves across countries.
b. A company may lose control of its technology.
c. A company may lose control over its manufacturing, marketing, and strategic functions.
d. All of these choices.
e. None of these choices.
Definition
d. All of these choices.