Strategies for Competing in International Markets Questions Part 2

30. A "think local, act local" multidomestic strategy works particularly well when A. host governments enact regulations requiring that products sold locally meet strictly defined manufacturing specifications or performance standards. B. there are significant country-to-country differences in customer preferences and buying habits. C. diverse and complicated trade restrictions of host governments preclude the use of a uniform strategy from country to country. D. there are significant country-to-country differences in distribution channels and marketing methods. E. All of these. 31. The drawbacks of a localized multidomestic strategy include A. hindering the use of cross-market subsidization techniques and increasing company vulnerability to adverse shifts in currency exchange rates. B. making it very difficult to take into account significant country-to-country differences in distribution channels and marketing methods. C. making it difficult and costly to be responsive to country-to-country differences in customer needs, buying habits, cultural traditions, and market conditions. D. hindering transfer of a company's competencies and resources across country boundaries and hindering the pursuit of a single, uniform competitive advantage in all country markets where a company operates. E. being unsuitable for competing in the markets of emerging countries and posing added difficulty in building multiple profit sanctuaries. 32. Two drawbacks of a "think local, act local" multidomestic strategy are A. that it is especially vulnerable to fluctuating exchange rates and that it can usually be defeated by companies employing cross-market subsidization tactics. B. excessive vulnerability to fluctuating exchange rates and having to craft a separate strategy for each country market in which the company competes. C. hindering a company's transfer of competencies and resources across country boundaries (since somewhat different competencies and capabilities are likely to be employed in different host countries) and not promoting the building of a single, unified competitive advantage in all country markets where a company competes. D. greater exposure to both increases in tariffs and restrictive trade barriers and added difficulty in accommodating the diverse trade restrictions and regulatory requirements of host governments. E. not being able to export products manufactured in one country to markets in other countries and being largely unsuitable for competing in the markets of emerging countries. 33. A "think global, act global" approach to crafting a global strategy involves A. pursuing the same basic competitive strategy theme (low-cost, differentiation, best-cost, focused) in all countries where the firm does business. B. selling much the same products under the same brand names everywhere and expanding into most, if not all, nations where there is significant buyer demand. C. integrating and coordinating the company's strategic moves worldwide. D. utilizing the same competitive capabilities, distribution channels, and marketing approaches worldwide. E. All of these. 34. A "think global, act global" approach to strategy making is preferable to a "think local, act local" approach when A. a big majority of the company's rivals are pursuing localized multidomestic strategies. B. country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy. C. plants need to be scattered across many countries to avoid high shipping costs. D. market growth rates vary considerably from country to country. E. host governments enact regulations requiring that products sold locally meet strict manufacturing specifications or performance standards. 35. The transnational approach of a firm using a "think global, act local" version of a global strategy entails A. producing and marketing a variety of product versions under the same brand name, with each different version being designed specifically to accommodate the needs and preferences of buyers in a particular country. B. little or no strategy coordination across countries. C. pursuing the same basic competitive strategy theme (low-cost, differentiation, best-cost, focused) in all countries where the firm does business but giving local managers some latitude to adjust product attributes to better satisfy local buyers and to adjust production, distribution, and marketing to be responsive to local market conditions. D. selling the company's products under a wide variety of brand names (often one brand for each country or group of neighboring countries) so that buyers in each country market will think they are buying a locally made brand. E. selling numerous product versions (each customized to buyer tastes in one or more countries and sometimes branded for each country) but opting to only sell direct to buyers at the company's website so as to bypass the costs of establishing networks of wholesale/retail dealers in each country market. 36. The competitive strategy of a firm pursuing a "think global, act local" approach to strategy making A. entails little or no strategy coordination across countries. B. usually involves cross-subsidizing the prices in those markets where there are significant country-to-country differences in the product attributes that customers are most interested in. C. involves selling a mostly standardized product worldwide, but varying a company's use of distribution channels and marketing approaches to accommodate local market conditions. D. is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions. E. involves having strongly differentiated product versions for different countries and selling them under distinctly different brand names (one for each country or group of neighboring countries) so that there will be no doubt in customers' minds that the product is more local than global. 37. In expanding outside its domestic market, a company can gain competitive advantage by A. not pursuing costly efforts to build multiple profit sanctuaries. B. deliberately choosing not to compete in countries with high tariffs and high taxes (which then have to be passed along to buyers in the form of higher prices), thus keeping costs and prices lower than rivals. C. using an export strategy to circumvent the risks of adverse exchange rate fluctuations. D. using location to lower costs or help achieve greater product differentiation and it can use cross-border coordination in ways a domestic-only competitor cannot. E. employing a multidomestic strategy instead of a global strategy. 38. To use location to build competitive advantage, a company that operates multinationally or globally must A. employ either an export strategy or a franchising strategy. B. scatter its production plants across many countries in different parts of the world so as to minimize transportation costs. C. consider (1) whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and (2) in which countries to locate particular activities. D. locate production plants in those countries having suppliers that can supply all the necessary raw materials and components so as to avoid inbound shipping costs. E. concentrate all of its value chain activities in a single country—the one that has the best combination of low wage rates, low shipping costs, and low tax rates on profits. 39. To use location to build competitive advantage when competing in both domestic and foreign markets, a company must A. scatter its production plants across many different country markets so as to minimize the costs of shipping to its own distribution centers and/or to wholesalers/retail dealers. B. consider (1) whether to concentrate each activity it performs in a few select countries or to disperse performance of the activity to many nations and (2) in which countries to locate particular activities. C. concentrate buyer-related activities in a few well-chosen locations so as to maximize the capture of distribution-related scale economies. D. disperse both production and distribution activities across many nations in order to hedge against fluctuating exchange rates and lessen the risks of adverse political developments. E. avoid selling in countries where there are high trade barriers or where buyers purchase in small quantities. 40. In competing in foreign markets, companies find it advantageous to concentrate their activities in a limited number of locations when A. there are significant scale economies in performing an activity. B. the costs of manufacturing or other activities are significantly lower in some geographic locations than in others. C. there is a steep learning or experience curve associated with performing an activity in a single location (thus making it economical to serve the whole world market from just one or maybe a few locations). D. certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages. E. All of these. 41. In which of the following circumstances is it not advantageous for a multinational competitor to concentrate its activities in a limited number of locations in order to build competitive advantage? A. When the costs of performing certain value chain activities are significantly lower in certain geographic locations than in others B. When a company has competitively superior patented technology that it can license to foreign partners C. When there is a steep learning or experience curve associated with performing an activity in a single location D. When certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages E. When there are significant scale economies in performing the activity 42. Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous A. when high transportation costs make it expensive to operate from central locations. B. whenever buyer-related activities are best performed in locations close to buyers. C. if diseconomies of large size exist, thereby making it more economical to perform an activity on a smaller scale in several different locations. D. when it is desirable to hedge against (1) the risks of fluctuating exchange rates (such risks are greater when activities are concentrated in a single location) or (2) supply interruptions (due to strikes, mechanical failures, or transportation delays) or (3) adverse political developments. E. All of these. 43. Dispersing particular value chain activities across many countries rather than concentrating them in a select few countries can be more advantageous when A. buyer-related activities (such as sales, advertising, after-sale service and technical assistance) need to take place close to buyers. B. high transportation costs make it uneconomical to operate from one or just a few locations. C. it helps hedge against the risks of exchange rate fluctuations, supply disruptions, and adverse political developments. D. there are diseconomies of scale in trying to operate from a single location. E. All of these. 44. Cross-border coordination contributes to a competitive advantage for a global competitor by A. allowing production to be shifted from country to country to take advantage of exchange rate fluctuations, energy costs, wage rates, or changes in tariffs and quotas. B. allowing knowledge gained in one location to be transferred to operations in other countries. C. shifting workloads from where they are unusually heavy to locations were personnel are underutilized. D. accelerating product development and enhancing innovation by globally linking and coordinating the scattered R&D departments of a multinational company. E. All of these. 45. The ability of a multinational or global competitor to shift production from country to country to take advantage of exchange rate fluctuations, energy costs, wage rates, or changes in tariffs is an example of A. a profit sanctuary. B. cross-border coordination. C. an international strategic alliance. D. cross-market subsidization. E. cross-market differences in cultural, demographic, and market conditions. 46. Companies racing for global market leadership A. generally have to consider establishing competitive positions in the markets of emerging countries. B. are well advised to avoid all the risks and problems of competing in emerging country markets. C. seldom have the resource capabilities it takes to be effective in competing in emerging country markets and usually are at a strong competitive disadvantage to the domestic market leaders. D. can usually be expected to earn sizable profits quickly in emerging country markets. E. usually encounter very low barriers in entering the markets of emerging countries. 47. Which of the following is not a typical option that companies have to consider to tailor their strategy to fit the circumstances of emerging country markets? A. Prepare to compete on the basis of low price B. Be prepared to modify aspects of the company's business model to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding) C. Try to change the local market to better match the way the company does business elsewhere D. Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly E. Stay away from those emerging markets where it is impractical or uneconomic to modify the company's business model to accommodate local circumstances 48. One of the most viable strategic options companies should consider in tailoring their strategy to fit circumstances of emerging country markets includes A. try to change the local market to better match the way the company does business elsewhere. B. be prepared to modify aspects of the company's business model to accommodate local circumstances. C. prepare to compete on the basis of low price. D. stay away from those emerging markets where it is impractical to modify the company's business model to accommodate local circumstances. E. All of these. Short Answer Questions 49. Briefly identify the major reasons a company may choose to expand outside its domestic market. 50. What are the primary country differences that shape strategy choices in international markets? 51. Identify and briefly describe any three of the five strategic options for entering foreign markets. 52. Briefly discuss why a domestic company desirous of entering foreign markets might see attractive advantages in forming strategic alliances with foreign companies. 53. What are the possible benefits and risks of using strategic alliances to try to enhance a company's ability to compete in foreign markets? 54. Discuss in some detail the difference between a localized multidomestic strategy and a global strategy and give the pros and cons of each. 55. What circumstances call for use of a multidomestic strategy for competing in international markets? 56. When is a global strategy "superior" to a multidomestic strategy? 57. A global strategy embraces the theme "think global, act global" whereas a multidomestic strategy relies more on a "think global, act local" mentality. True or false? Explain. 58. Explain the differences between a "think global, act global" strategy and a "think global, act local" strategy. 59. Explain what circumstances make it necessary for a multinational company to concentrate internal processes in a few locations. 60. Under what circumstances is it advantageous for a company competing in foreign markets to disperse certain internal processes across many countries? 61. Explain the importance of competing in emerging markets. 62. List and discuss three strategy options for competing in emerging markets.