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Test Bank, Chapter 7
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Chapter 7: Competing in Foreign Markets Multiple Choice Questions Why Companies Expand into Foreign Markets 1. The reasons reasons why why a company company opts to expand expand outsid outsidee its home market market include include A) gaining gaining access to new customers customers for the companys companys products products!ser !ser"ices "ices.. B) spreading spreading its its #usiness #usiness risk risk across across a wider wider market market #ase. #ase. C) achie"ing achie"ing lower lower costs and enhancin enhancing g the company$ company$s competiti"e competiti"eness. ness. %) a desire to capital capitali&e i&e on its core compete competencies ncies and capa#il capa#ilitie ities. s. ') All All of thes these. e. Answer( ' age( 1*+ %ifficulty( 'asy Taxonomy( nowledge AAC-B(
/. 0hich of the following following is not a typical reason for companies to expand into into the markets markets of foreign countries A) To gain gain access access to to new new customer customerss B) To strengthen strengthen its capa#ility capa#ility to employ offensi"e offensi"e strategies, strategies, especially especially those that in"ol"e in"ol"e preempti"e strikes C) To achie"e achie"e lower costs costs and enhance enhance the firms competi competiti"e ti"eness ness %) To capitali&e capitali&e on company company competenci competencies es and capa#ili capa#ilities ties ') To spread #usine #usiness ss risk across across a wider wider geographi geographicc market #ase #ase Answer( B age( 1*+ %ifficulty( %ifficulty( 2edium Taxonomy( nowledge AAC-B(
. 0hich one of the following following is is not a reason why a company decides to enter foreign foreign markets A) To spread #usines #usinesss risk across across a wider geograph geographic ic market #ase #ase B) To capitali&e capitali&e on company company competenci competencies es and capa#ili capa#ilities ties C) To achie"e achie"e lower costs costs and enhance enhance the firms competi competiti"e ti"eness ness %) To #uild the profit profit sanctuaries sanctuaries necessary to wage wage guerilla offensi"es offensi"es against against glo#al challengers endea"oring to in"ade its home market ') To gain access access to more more #uyers for for the companys companys produc products!se ts!ser"ic r"ices es Answer( % age( 1*+ %ifficulty( 2edium Taxonomy( nowledge AAC-B(
Test Bank, Chapter 7
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The Difference et!een Competing "nternationally and Competing #lo$ally 3. A company company is is said to to #e an interna internation tional al competit competitor or when A) it competes competes in a ma4ority ma4ority of the worlds worlds different different country country markets. markets. B) it has operat operations ions on on all of the the worlds worlds ma4or ma4or contin continents. ents. C) it competes in a select select few foreign foreign markets 5and perhaps perhaps has only only modest am#itions to to enter additional country markets). %) it employs an international international strategy and competes in 6 or fewer country country markets. ') it has has / or more more prof profit it sanct sanctuar uaries ies.. Answer( C age( 1*+ %ifficulty( %ifficulty( 2edium Taxonomy( nowledge AAC-B(
6. A compa company ny is said said to #e a glo#al glo#al compe competitor titor when A) it competes competes in a ma4ority ma4ority of the worlds worlds different different country country markets. markets. B) it emplo employs ys a glo#al glo#al stra strateg tegy y. C) it has long range strategic intentions intentions to compete in as many many as 6 country markets. markets. %) it compete competess in 16 or more more country country market markets. s. ') it sells its products products in 6 to 1 or more countries countries and is expanding expanding its operations into into additional country markets annually. Answer( ' age( 1*+ %ifficulty( 'asy Taxonomy( nowledge AAC-B(
+. The difference difference #etween a company that competes competes 8internationally8 8internationally8 and a company that competes competes 8glo#ally8 is that A) a glo#al competitor operates operates in 9many: country country markets and and an international international competitor competitor operates in 4ust a 9few: country markets. B) an international international competitor competitor competes in a select select few foreign foreign markets 5and perhaps perhaps has only modest am#itions to enter additional country markets) while a glo#al competitor has or is pursuing a market presence on most continents and is expanding its operations into additional country markets annually. C) an international international competitor competitor has a market presence in countries countries on one continent and a glo#al glo#al competitor has a market presence in countries on most all of the worlds continents. %) an international international competitor competitor has a market presence in a few few of the #iggest country country markets in the world and a glo#al competitor has a market presence in most all of the ma4or country markets of the world. ') an international international competitor competitor has an an international international strategy and a glo#al glo#al competitor competitor has a glo#al strategy. Answer( B age( 1*+ %ifficulty( %ifficulty( 2edium Taxonomy( Comprehension AAC-B(
Test Bank, Chapter 7
Cross%Country Differences in Cultural& Demographic& and Market Conditions 7. ;ne of the #iggest #iggest strategic strategic challenges challenges to competing in the international arena include include A) how to a"oid a"oid the the risks risks of shifti shifting ng exchange exchange rates. rates. B) whether whether to charge charge the the same price price in in all country country markets markets.. C) how many foreign firms firms to license license to produce produce and distri#ute distri#ute the the companys products. %) whether to offer a mostly standardi&ed standardi&ed product product worldwide worldwide or whether whether to customi&e the the companys offerings in each different country market to more precisely match the tastes and preferences of local #uyers. ') whether whether to pursue pursue a glo#al strateg strategy y or an internation international al strategy strategy.. Answer( % age( 1*7 < 1*= %ifficulty( %ifficulty( 2edium Taxonomy( Comprehension AAC-B( 6
=. 0hich 0hich of the following following is not an accurate accurate statemen statementt as concerns concerns competing competing in the markets markets of foreign countries A) A multi
uirements. %) roduct designs designs suita#le for one country country are often often inappropriate inappropriate in another another.. ') 2arket 2arket growth growth rates rates "ary "ary from from country country to country country.. Answer( A age( 1*7 < 1*= %ifficulty( %ifficulty( 2edium Taxonomy( Comprehension AAC-B( 6
*. Competing Competing in the the markets of foreign foreign countrie countriess entails entails dealing dealing with such factors factors as A) fluctuating exchange rates, rates, countryuirements, and countryuirements re>uirements and fluctuating exchange rates C) 0hether to customi&e the the companys offerings in each different different country country market or whether to offer a mostly standardi&ed product worldwide %) ?n which countries to to locate company operations operations for maximum locational locational ad"antage 5gi"en countryuotas. B) "ariation "ariationss in price price from from country country to to country country.. C) a market situation situation where where there$s there$s considera#le crossuirements re>uirements and expectations from country country to country. country. ') that each each ri"al company company uses the the same competiti competiti"e "e strategy strategy in each country country where where it competes. Answer( C age( /1 %ifficulty( %ifficulty( 2edium Taxonomy( Comprehension AAC-B(
//. The defini defining ng character characteristi isticc of glo#al glo#al competit competition ion is is A) that dri"ing dri"ing forces and and key success success factors are the same same in all country markets. markets. B) a single single price price for for the the product product worldwid worldwide. e. C) that the the same fi"e competit competiti"e i"e forces forces are present present in all country country markets. markets. %) a market situation situation where where competiti"e competiti"e conditions conditions across national national markets markets are linked linked strongly enough to form a true international or world market and where leading competitors compete head to head in many different countries. ') that the mix of competitors in in each country country market "aries significantly significantly from from country to to country. Answer( % age( /1 %ifficulty( 2edium Taxonomy( Comprehension AAC-B(
/. 0hich 0hich of the following following statements statements regarding regarding multicou multicountry ntry competit competition ion is false A) ;ne of the the features of multicountry multicountry competition competition is that that #uyers in different different countries are attracted to different product attri#utes. B) 0ith multicountry competition, the power and strength of a company$ company$ss strategy and resource capa#ilities in one country significantly enhance its competiti"eness in other country markets. C) ;ne of the the features of multicountry multicountry competition competition is that that industry industry conditions conditions and competiti"e competiti"e forces in each national market differ in important respects. %) ;ne of the features features of multicountry multicountry competition competition is that the the mix of competitors competitors in each country market "aries from country to country. country. ') 0ith multicountry competition, ri"als #attle #attle for national national championships championships and winning in in one country market does not necessarily signal the a#ility to fare well in other countries. Answer( B age( /1 %ifficulty( %ifficulty( 2edium Taxonomy( Comprehension AAC-B(
Test Bank, Chapter 7
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/3. 2ultiuence, there is strictly speaking no 8international market8 or 8world market.8 C) domestic ri"als ri"als pursue focused or market niche strategies and and do not not compete internationally internationally. %) domestic companies companies ha"e a competiti"e competiti"e disad"antage disad"antage in competing competing with foreign ri"als ri"als that operate in many different countries. ') most competi competitors tors operate operate in more than than two country country markets markets #ut rarely rarely in more than than /. Answer( B age( /1 %ifficulty( %ifficulty( 2edium Taxonomy( Comprehension AAC-B(
/6. 2ultiuals the sum of the competiti"e ad"antages 5or disad"antages) it has in each country market where it competes. Answer( ' age( /1 %ifficulty( %ifficulty( 2edium Taxonomy( Comprehension AAC-B(
/=. The character characteristi istics cs of a world market market where glo#al glo#al competiti competition on pre"ails pre"ails include include A) a market situation situation where where competiti"e competiti"e conditions conditions across national national markets markets are linked linked strongly enough to form a true international or world market and where leading competitors typically compete head to head in many different countries. B) minor cost "ariations from countryuir re>uirements ements.. C) #eing cheaper cheaper and more more cost effecti" effecti"ee than licensing licensing and franchi franchising. sing. %) #eing cheaper cheaper and more cost cost effecti"e effecti"e than a multicountr multicountry y strategy strategy. ') facilitating the esta#lishment esta#lishment of profit sanctuaries sanctuaries in foreign countries countries and #eing more suited to accommodating local #uyer tastes than a glo#al strategy. Answer( B age( / %ifficulty( %ifficulty( 2edium Taxonomy( Comprehension AAC-B(
+. 0hich of the following following is false false as concerns concerns use of an export export strategy to compete in foreign foreign markets A) ;ne ad"antage ad"antage of an export strategy strategy is the the a#ility a#ility to test test the international international waters waters #efore ha"ing to commit su#stantial sums to esta#lishing operations in foreign countriesthe amount of capital re>uired to #egin exporting is fre>uently >uite minimal. B) 'xporting carries carries the risk of #eing #eing "ulnera#le "ulnera#le to ad"erse ad"erse shifts shifts in currency currency exchange rates. C) An export strategy is is especially especially well suited suited to accommodating accommodating the the different needs and preferences of #uyers in different countries. %) An export strategy may allow a company to gain additional additional scale economies from centrali&ing production in one or se"eral giant plants. ') An export strategy is is disad"antageous disad"antageous when costs in the country when the goods are #eing manufactured for export are higher than the costs in those locations where ri"als ha"e their plants. Answer( C age( / %ifficulty( %ifficulty( 2edium Taxonomy( Comprehension AAC-B(
Test Bank, Chapter 7
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7. The ad"antages ad"antages of using a licensing strategy to to participate participate in foreign markets markets include include A) #eing especially especially well well suited suited to the use use of crossuickly >uickly and easily. easily. %) #eing a#le to le"erage the companys companys technical knowuality >uality and #etter #etter product performance than than with an an export strategy. Answer( % age( / < /3 %ifficulty( %ifficulty( 'asy Taxonomy( Comprehension AAC-B(
=. The ad"antages ad"antages of using using a franchising franchising strategy to pursue opportunities opportunities in foreign foreign markets include A) ha"ing franchisees franchisees #ear most of the the costs and and risks of esta#lishing esta#lishing foreign foreign locations and re>uiring the franchiser to expend only the resources to recruit, train, and support foreign franchisees. B) #eing particularly particularly well suited to the glo#al expansion efforts of companies with with multicountry multicountry strategies. C) helping helping #uild #uild multiple multiple profi profitt sanctuar sanctuaries. ies. %) #eing well well suited to companies companies who employ crossuireme re>uirements nts and import import >uotas. >uotas. ') it eliminates eliminates the costs costs and #urdens of trying to coordinate the the strategic mo"es undertaken undertaken in one country with the mo"es undertaken in the other countries. Answer( A age( /3 < /6 %ifficulty( 2edium Taxonomy( Comprehension AAC-B(
3/. A 9think local, local, act local: multicountry multicountry strategy works works particularly particularly well well when A) host go"ernments go"ernments enact regulations re>uiring that that products sold locally locally meet strictlyuestiona#le >uestiona#le A) 0hen a company$s company$s strategic intent intent is glo#al glo#al market leadership leadership and it is is stri"ing to to #uild a single, uniform competiti"e ad"antage worldwide B) 0hen there there are significant countryuiring that products products sold sold locally locally meet strictly< defined manufacturing specifications or performance standards Answer( A age( /+ %ifficulty( %ifficulty( 2edium Taxonomy( Comprehension AAC-B( 6
33. The draw#ack draw#ackss of a locali&e locali&ed d multicou multicountry ntry strateg strategy y include include A) hindering the use of crossues and increasing increasing company company "ulnera#ility "ulnera#ility to ad"erse shifts in currency exchange rates. B) making it "ery difficult difficult to take into account significant significant countryuirements of host go"ernments. ') not #eing a#le to export products products manufactured manufactured in one country to markets in other countries countries and #eing largely unsuita#le for competing in the markets of emerging countries. Answer( C age( /+ %ifficulty( %ifficulty( 2edium Taxonomy( Comprehension AAC-B( 6
Test Bank, Chapter 7
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3+. A 9think 9thinkuiring local local managers in host countries to stick close to the chosen glo#al strategy strategy ') -elling -elling much the the same products products under under same #rand #rand names names worldwide worldwide Answer( B age( /= %ifficulty( %ifficulty( 'asy Taxonomy( Comprehension AAC-B(
6. A 9think glo#al, glo#al, act glo#al: approach approach to strategyuiring re>uiring that that products products sold locally meet strict strict manufacturing specifications or performance standards. Answer( B age( /7 %ifficulty( %ifficulty( 'asy Taxonomy( Comprehension AAC-B(
61. The approach of a firm firm using a 9think glo#al, glo#al, act local: local: "ersion "ersion of a glo#al strategy strategy entails entails A) producing and and marketing a "ariety of product "ersions under under the same #rand name, name, with each each different "ersion #eing designed specifically to accommodate the needs and preferences of #uyers in a particular country. country. B) little little or no strate strategy gy coordin coordinatio ation n across across countries countries.. C) pursuing the same #asic competiti"e competiti"e strategy strategy theme theme 5lowuired #y host go"ernments). C) A glo#al strategy strategy tends to in"ol"e in"ol"e use of of similar distri#ution and marketing approaches worldwide whereas a multicountry strategy often entails adapting distri#ution and marketing to local customs and the culture of each country. country. %) A glo#al strategy in"ol"es stri"ing stri"ing to #e the glo#al lowuantities. Answer( B age( /* %ifficulty( %ifficulty( 2edium Taxonomy( Comprehension AAC-B(
+. ?n competing in foreign foreign markets, companies companies find it ad"antageous ad"antageous to concentrate their their acti"ities acti"ities in a limited num#er of locations when A) there there are significant significant scale scale economies economies in performing performing an acti"ity acti"ity.. B) the costs of manufacturing manufacturing or other other acti"ities acti"ities are significantly significantly lower lower in some some geographic geographic locations than in others. C) when there is a steep learning or experience cur"e cur"e associated with performing performing an acti"ity acti"ity in a single location 5thus making it economical to ser"e the whole world market from 4ust one or may#e a few locations). %) certain locations locations ha"e superior resources, resources, allow allow #etter coordination coordination of related acti"ities, acti"ities, or offer other "alua#le ad"antages. ') All All of the the a#o" a#o"e. e. Answer( ' age( /* < /1 %ifficulty( %ifficulty( 2edium Taxonomy( Comprehension AAC-B(
+1. The classic or most per"asi"e per"asi"e reason reason why a multinational or glo#al competitor chooses chooses to locate an acti"ity in a particular country is A) low cost ost. B) to facilitate facilitate good customer customer ser"ice. ser"ice. C) to keep keep distri distri#uti #ution on costs costs to to a minimu minimum. m. %) to facilitate facilitate cross<#order cross<#order transfer transfer of skills, expertise, competencies, competencies, and and capa#ilities. capa#ilities. ') to minimi&e minimi&e exposur exposuree to ad"erse ad"erse exchange exchange rate rate fluctuatio fluctuations. ns. Answer( A age( /11 %ifficulty( 'asy Taxonomy( Comprehension Comprehen sion AAC-B(
Test Bank, Chapter 7
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+/. The classic reason why companies choose choose to locate a particular "alue "alue chain acti"ity in in a particular particular country is A) to a"oid a"oid strong strong compe competit tition ion.. B) to escape escape paying paying tarif tariffs fs and!or and!or to escape escape high high taxes. taxes. C) to #e clos closee to custom customers ers.. %) low cost ost. ') a count country$ ry$ss low low wage wage rates rates.. Answer( % age( /11 %ifficulty( 'asy Taxonomy( Comprehension Comprehen sion AAC-B(
+. %ispersing the performance performance of "alue chain chain acti"ities acti"ities to many different different countries countries rather than concentrating them in a few country locations tends to #e ad"antageous A) when high high transportation transportation costs make it expensi"e expensi"e to operate from central locations. locations. B) whene"er #uyeruired for trust<#uilding, trust<#uilding, communication, and coordination B) The trou#le trou#le allies can can ha"e resol"ing resol"ing differences differences and reaching mutually mutually agreea#le ways to deal with key issues C) Becoming o"erly o"erly dependent dependent on another company company for essential expertise and competiti"e competiti"e capa#ilities %) 2aking it harder to pursue a multicountry strategy as compared to to a glo#al glo#al strategy ') -uspicions a#out whether allies allies are #eing forthright forthright in in exchanging exchanging information information and expertise Answer( % age( /1= %ifficulty( ard Taxonomy( Comprehension AAC-B( *trategies That Fit the Markets of Emerging Countries 7*. Companies Companies racing racing for for glo#al glo#al market market leadershi leadership p A) generally ha"e ha"e to consider consider esta#lishing esta#lishing competiti"e competiti"e positions positions in the markets of emerging emerging countries. B) are welluickly in emerging emerging country markets. ') usually usually encounter encounter "ery low #arrier #arrierss in entering entering the markets markets of emerging emerging countries. countries. Answer( A age( // %ifficulty( %ifficulty( ard Taxonomy( Comprehension AAC-B(
Test Bank, Chapter 7
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=. 0hich of the following following is not a typical option that that companies ha"e to consider to tailor their strategy to fit the circumstances of emerging country markets A) repare repare to compet competee on the the #asis #asis of low low price price B) Be prepared to modify aspects of the company$s company$s #usiness model to accommodate local circumstances 5#ut not so much that the company loses the ad"antage of glo#al scale and glo#al #randing) C) Try to to change the local market to #etter match the way the company does #usiness #usiness elsewhere elsewhere %) %e"elop a strategy for for the short
