orrect answer for each question is indicated by a

1
INCORRECT

Companies opt to expand into foreign markets for such reasons as to

_______________
boost returns on investment, broaden their product lines, avoid tariffs
A)and trade restrictions, and escape dealing with strong labor unions.
gain access to new customers, achieve lower costs and enhance the
company's competitiveness, capitalize on core competencies, and spread
B)business risk across a wider market base.
grow sales faster than the industry average, reduce the competitive
threats from rivals, and open up more opportunities to enter into
C)strategic alliances.
avoid having to employ an export strategy, avoid the threat of crossmarket subsidization from rivals, and enable the use of a global strategy
D)instead of a multidomestic strategy.
raise the entry barriers for industry newcomers, neutralize the
bargaining power of important suppliers, grow sales faster, and increase
E)the number of loyal customers.

2
INCORRECT

One of the biggest strategic challenges to competing in the international

arena include _______________
whether to offer a mostly standardized product worldwide or whether to
customize the company's offerings in each different country market to
A)match the tastes and preferences of local buyers.

B)

whether to charge the same price in all country markets.

whether the company should engage in exporting, licensing, or

C)franchising to enter new country markets.

how to take advantage of the low wage rates prevailing in some

D)countries.

E)

3
INCORRECT

whether to pursue a global strategy or an international strategy.

Which one of the following is not a factor that a company must contend with
in competing in the markets of foreign countries?
Variations in market growth rates from country to country and important
country-to-country differences in consumer buying habits and buyer

A)

tastes and preferences.

Country-to-country variations in host-government policies and trade

B)requirements.

The fact that product designs suitable for one country are sometimes
C)inappropriate in another.

D)

E)

4
INCORRECT

Vulnerability to adverse shifts in currency exchange rates.

A need to convince shippers to keep transportation costs low.

Which one of the following statements concerning the effects of fluctuating

exchange rates on companies competing in foreign markets is true?
Domestic companies trying to combat competition from foreign imports
are hurt even more when their government's currency grows weaker in
A)relation to the currencies of the countries where the imported goods are
being made.
Fluctuating foreign exchange rates greatly reduce the risks of competing
in foreign marketsthe big problem occurs when exchange rates are
B)fixed at unreasonably low levels.
Domestic companies under pressure from lower-cost imports are
benefited when their government's currency grows weaker in relation to
C)the currencies of the countries where the imported goods are being
made.
Manufacturers that are exporting much of what they produce are
benefited when their country's currency grows stronger relative to the
D)currencies of the countries that the goods are being exported to.
If the exchange rate of U.S. dollars for euros changes from $1.15 per
euro to $1.25 per euro, then it is correct to say that the U.S. dollar has
E)grown stronger.

5
INCORRECT

Which of the following is/are not "valid" strategy options for entering and/or
competing in foreign markets?
A global strategy where a company uses essentially the same
competitive strategy approach in all country markets where it has a
A)presence.
An import strategy, a strategic alliance strategy, a profit sanctuary
B)strategy, and a cross-market subsidization strategy.

C)

A localized multidomestic strategy.

An export strategy and using strategic alliances or joint ventures with

D)foreign companies as the primary vehicle for entering foreign markets.
A franchising strategy and a strategy of licensing foreign firms to use the
company's technology or to produce and distribute the company's
E)products.

6 CORRECT
The advantages of manufacturing goods in a particular country and exporting
them to foreign markets _______________
are seriously compromised by the potential for local government officials
A)to raise tariffs on the imports of foreign-made goods into their country.

are greatest when local consumers prefer products manufactured inside

B)the country's borders.

are weakened when that country's currency grows stronger relative to

C)the currencies of the countries where the output is being sold.

can be wiped out when that country's currency grows weaker relative to
D)the currencies of the countries where the output is being sold.

E)

7
INCORRECT

are largely unaffected by tariffs or quotas.

Using domestic plants as a production base for exporting goods to selected

foreign country markets _______________

A)

is usually a superior approach to competing in international markets.

can be a competitively successful strategy when a company is focusing

B)on vacant market niches in each foreign country.

C)

can be an excellent initial strategy to pursue international sales.

is usually a weak strategy when competitors are pursuing licensing
strategies.

D)

can be a powerful strategy because the company is not vulnerable to

E)tariffs or quotas.

8 CORRECT
The advantages of using a licensing strategy to participate in foreign markets
include _______________

A)

B)

C)

being especially well suited to exploit a profit sanctuary.

being able to charge lower prices than rivals.

enabling a company to achieve competitive advantage quickly and easily.

being able to achieve lower costs than with a localized multidomestic

D)strategy.
being able to leverage the company's technical know-how or patents
without committing significant additional resources to markets that are
E)unfamiliar, politically volatile, economically uncertain, or otherwise risky.

9
INCORRECT

The advantages of using a franchising strategy to pursue opportunities in

foreign markets include _______________
being particularly well suited to the international expansion efforts of
A)companies with global strategies.
having franchisees bear most of the costs and risks of establishing
foreign locations and requiring the franchiser to expend only the
B)resources to recruit, train, and support foreign franchisees.

C)

D)

helping build brand awareness in international markets.

being well suited to companies that employ cross-market subsidization.

gaining support from local governments in the form of subsidies and

E)meeting local content requirements.

10
INCORRECT

A "think local, act local" multidomestic type of strategy _______________

becomes more appealing the bigger the country-to-country differences in
A)buyer tastes, cultural traditions, and market conditions.

always makes a company vulnerable to rivals employing "think global,

B)act global" strategies.

C)

protects a multinational firm against fluctuating exchange rates.

is generally an inferior strategy when one or more foreign competitors is

D)pursuing a global low-cost strategy.

employs essentially the same basic competitive strategy theme in all

E)country markets.

11
CORRECT

A localized or multidomestic strategy _______________

is generally preferable to a global strategy in situations where buyers are
price sensitive because a "think local, act local" type of multidomestic
A)strategy is better suited to achieving low unit costs than a global
strategy.
is one where a company varies its product offering and competitive
approach from country to country in an effort to be responsive to
B)differing buyer preferences and market conditions.
has two big drawbacks: (1) it hinders transfer of a company's
competencies and resources across country boundaries because the
C)strategies in different host countries can be grounded in varying
competencies and capabilities; and (2) it does not promote building a
single, unified competitive advantage, especially one based on low cost.
is generally inferior to a global strategy when it comes to pursuing
D)product differentiation.

E)

12
INCORRECT

Both B and C.

A "think global, act global" approach to strategy making is preferable to a

"think local, act local" approach when _______________

A)

customer preferences vary significantly from country to country.

it is necessary to delegate strategy making to local managers with

B)firsthand knowledge of local conditions.

plants need to be scattered across many countries to avoid high shipping

C)costs.

country-to-country differences are small enough to be accommodated

D)with the framework of a mostly uniform global strategy.

host governments enact regulations requiring that products sold locally

E)meet strict manufacturing specifications or performance standards.

13
INCORRECT

The chief difference between a "think global, act global" and a "think global,
act local" approach to crafting a global strategy is that _______________
a "think global, act local" approach involves charging much different
A)prices in the various country markets where the company competes.
a "think global, act local" approach involves much less adherence to
using the same basic competitive strategy theme (low-cost,
B)differentiation, best-cost, or focused) in all country markets.
a "think global, act local" approach involves considerably less adherence
to utilizing the same capabilities, distribution channels, and marketing
C)approaches worldwide.
local managers are given more latitude in adapting the global strategy
approach as may be needed to accommodate local buyer preferences
D)and be responsive to local market and competitive conditions.
a "think global, act global" approach involves selling under a single brand
worldwide whereas a "think global, act local" approach involves the use
E)of multiple brands (often a local brand for each local market).

14
INCORRECT

Which of the following is not a potential motivation for entering into strategic
alliances or other cooperative arrangements with foreign companies?

A)

B)

To gain wider access to attractive country markets.

To gain better access to scale economies in production and/or marketing.

To fill competitively important gaps in their technical expertise and/or
knowledge of local markets.

C)

To better enable the use of a "think global, act global" strategy and
D)facilitate cross-market subsidization.

To share distribution facilities and dealer networks, thus mutually

E)strengthening the allies' access to buyers.

15
INCORRECT

Which of the following is not one of the ways in which a company can pursue
competitive advantage by expanding outside its domestic market and
competing multinationally?
Locating value chain activities among various countries in a manner that
A)lowers costs.

Pursuing blue ocean opportunities in the company's home country

B)market.

Locating value chain activities among various countries in a manner that

C)helps achieve greater product differentiation.

Cross-border coordination of its activities in ways that contribute to

D)building a competitive edge.

E)

16
INCORRECT

Employing a profit sanctuary strategy to wage a strategic offensive.

Multinational competitors tend to concentrate activities in a limited number

of locations when _______________
prices and competitive conditions are strongly linked across country
A)markets to form a world market.
there are significant scale economies and/or steep learning curve effects
associated with performing certain activities in a single location, costs of
B)performing the activity are lower in particular geographic locations, and
certain locations have superior resources, allow better coordination of
related activities, or offer other valuable advantages.

C)

the risk of fluctuating exchange rates is very high.

Host-country governments can be persuaded to erect high tariff barriers

to protect the company's operations from foreign competitors and when
D)it is not imperative to be responsive to buyer needs and competitive
conditions in each country.

competitive conditions make it infeasible to employ a profit sanctuary

E)strategy or an export strategy.

17
INCORRECT

Dispersing the performance of value chain activities to many different

countries rather than concentrating them in a few country locations tends to
be advantageous _______________
when high transportation costs make it expensive to operate from central
A)locations.

whenever buyer-related activities are best performed in locations close

B)to buyers.

if economies of scale are essential to achieving acceptable production

C)costs.

D)

E)

18
CORRECT

Both A and B.

None of the above.

Companies tend to concentrate their activities in a limited number of

locations _______________
When the costs of manufacturing or other activities are significantly
A)lower in some geographic locations than in others.

B)

When there are significant scale economies.

When there is a steep learning curve associated with performing an

C)activity.

When certain locations have superior resources, allow better coordination

D)of related activities, or offer other valuable advantages.

E)

All of these.

19
CORRECT

Which of the following statements about entering developing markets such

as China, India, Russia, and Brazil is wrong?

A)

Profitability in emerging markets rarely comes quickly or easily.

Building a market for the company's products can often turn into a longB)term process that involves reeducation of consumers.
Entering an emerging market often involves upgrading the local
infrastructure (the supplier base, transportation systems, distribution
C)channels, labor markets, and capital markets).
Tailoring products to fit conditions in an emerging country market such
as China, however, often involves more than making minor product
D)changes and becoming more familiar with local cultures.

E)

20
INCORRECT

None of these.

Which of the following is not a typical option that companies have to consider
to tailor their strategy to fit the circumstances of developing country
markets?
Develop new sets of core competencies that allow a company to offer
A)value to consumers of emerging markets in ways unmatched by rivals.

B)

Prepare to compete on the basis of low price.

Be prepared to modify aspects of the company's business model to

accommodate local circumstances (but not so much that the company
C)loses the advantage of global scale and global branding).
Try to change the local market to better match the way the company
D)does business elsewhere.
Stay away from those emerging markets where it is impractical or
uneconomical to modify the company's business model to accommodate
E)local circumstances.