Chapter 8 Cross

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19. In emerging economies undergoing rapid changes such as privatization, governments

have generally been apprehensive and uncooperative with MNCs.
True False
20. A growing number of MNCs are finding that they must continually revise their
strategies and make renewed commitment to the quality imperative because they
are being bested by emerging market forces.
True False
Multiple Choice Questions
21. The process of determining an organization's basic mission and long-term objectives
and then implementing a plan of action for attaining these goals is:
A. Strategic
management
B. Tactical
management
C. Contingency
management
D. Functional
management
22. Ford Motor's strategic plan in Thailand is based on:
A. Offering the right price and

product
B. Offering the right combination of price and financing to a carefully identified
market segment
C. Offering the right combination of price and financing to all market
segments
D. Offering the right financing
only
23. Honda and General Motors have both built plants in Thailand to take advantage of:
A. Demand and low delivery

costs
B. Strategic
pricing
C. New technologies and low
wages
D. Tax incentives and
demand
8-3
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24. According to the text, strategic planning helps MNCs to do all of the following except:
A. Coordinate and monitor its far-flung

operations
B. Deal with political
risks
C. Determine
performance
D. Get higher
profitability
25. A worldwide strategy based on cost leadership, differentiation, and segmentation is

referred to as the:
A. Economic
imperative
B. Political
imperative
C. Quality
imperative
D. Administrative coordination
strategy
26. These individuals are the key to stimulating profit growth within a company.
A. Superviso
rs
B. Middle
managers
C. First-line
managers
D. Top
managers
27. Companies that pursue this strategy typically sell products for which a large portion
of value is added in the upstream activities of the industry's value chain.
A. Quality
imperative
B. Political
imperative
C. Economic
imperative
D. Administrative
coordination
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28. MNCs using the _____ approach to strategic planning are country-responsive; their
approach is designed to protect local market niches.
A. Administrative coordination
strategy
B. Economic
imperative
C. Quality
imperative
D. Political
imperative
29. The products sold by MNCs pursuing this approach often have a large portion of their
value added in the downstream activities of the value chain.
A. Political
imperative
B. Cost
imperative
C. Quality
imperative
D. Economic
imperative
30. Typically, MNCs utilizing this approach to strategic planning use a country-centered or
multi-domestic strategy.
A. Quality
imperative
B. Administrative
coordination
C. Political
imperative
D. Economic
imperative
31. The approach to strategic formulation and implementation utilizing strategies of TQM
to meet or exceed customers' expectations and continuously improve products
and/or services is referred to as the:
A. Value-added
imperative
B. Quality
imperative
C. Political
imperative
D. Economic
imperative
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32. The quality strategy is formulated at the ______ management level and is diffused
throughout the _______.
A. top; upper
management
B. top;
organization
C. lowest;
organization
D. middle; lower
level
33. This approach to formulation and implementation is one in which the MNC makes
strategic decisions based on the merits of the individual situation rather than using a
predetermined economic or political strategy.
A. Administrative
coordination
B. Bureaucratic
coordination
C. Value-
added
D. Function
al
34. _____ is the production and distribution of products and services of a homogeneous
type and quality on a worldwide basis.
A. Global
integration
B. Nationalis
m
C. Cross-border
integration
D. Market
standardization
35. TQM techniques range from traditional inspection and statistical quality control to
cutting-edge human resource management techniques, such as:
A. market share and

profitability
B. customer service and quality
control
C. self-managing teams and
empowerment
D. imports and
exports
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36. This strategy is appropriate when the need for national responsiveness is low and the
need for globalization integration is high.
A. Internation
al
B. Multi-
domestic
C. Glob
al
D. Transnation
al
37. When the need for national responsiveness is high and the need for global integration
is also high, this strategy is appropriate.
A. Transnation
al
B. Globalizati
on
C. Internation
al
D. Multi-
domestic
38. When the need for national responsiveness is high and the need for global integration
is low, a(n) _____ strategy is appropriate.
A. Transnation
al
B. Multi-
domestic
C. Internation
al
D. Globalizati
on
39. When the need for national responsiveness is low and the need for global integration
is also low, which of the following strategies would be appropriate?
A. Globalizati
on
B. Transnation
al
C. Internation
al
D. Multi-
domestic
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40. Which of the following is not one of the steps in strategic planning?
A. transferring the successful process used in a developed country to an

emerging economy
B. scanning the external environment for opportunities
and threats
C. conducting an internal resource analysis of company strengths and
weaknesses
D. formulating goals in light of the external scanning and
internal analysis
41. Many large MNCs work to combine the ___________ approaches to strategic planning.
A. economic, environmental, political, and

administrative
B. global, environmental, economic, and
quality
C. political, administrative, regional, and
environmental
D. economic, political, quality, and
administrative
42. _____ attempts to provide management with accurate forecasts of trends that relate
to external changes in geographic areas where the firm is currently doing business or
considering setting up operations.
A. Environmental
scanning
B. Functional
scanning
C. Tactical
scanning
D. Operational
scanning
43. One of the most important foci in _____ is the market and includes the role of all
potential competitors and the relationships surrounding those competitors, such as
affiliation with one another or the connection between the company and its
customers and suppliers.
A. Strategy
implementation
B. Goal
formulation
C. Environmental
scanning
D. Internal resource
analysis
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44. The strategic planning process that helps a firm evaluate its current managerial,
technical, material and financial strengths and weaknesses is:
A. Environmental
scanning
B. Operational
analysis
C. Internal resource
analysis
D. Tactical
analysis
45. This analysis identifies the key factors for success that will dictate how well the firm
is likely to do.
A. Extern
al
B. Intern
al
C. Competiti
ve
D. Marke
t
46. A key success factor is a factor that is necessary for a firm to compete effectively in
a(n):
A. International
market
B. Highly-restricted
market
C. Market
niche
D. Broad market
domain
47. It is not true that the Internet
A. as a medium has removed certain entry barriers that have historically restricted
quick market entry.
B. clearly provides one of the easiest and most efficient methods of becoming
global quickly.
C. provides a business with lower costs and a more diverse customer base than
building-based businesses.
D. business experiences more problems than "bricks and mortar" business during
times of financial crises.
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48. Once strategic goals are set, an MNC will develop specific _____ goals and controls,
usually through a two-way process at the subsidiary or affiliate level.
A. Bureaucrat
ic
B. Operation
al
C. Strateg
ic
D. Contingen
cy
49. The process of providing goods and services in accord with a plan of action is:
A. Strategy
implementation
B. Strategy
formulation
C. Strategy
control
D. Strategy
contingency
50. An MNC must consider all of the following general areas in strategy implementation
except:
A. Management must implement functional strategies in areas such as

marketing
B. It should consider investing only in advanced
nations
C. It must carry out entry and ownership
strategies
D. It must decide where to locate
operations
51. A primary consideration for an MNC in investing in a foreign country would be a

decision based on:
A. Corporate
culture
B. Business
ethics
C. Specific
locale
D. Operating
norms
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52. Opportunities to increase market share through increased sales of goods and services
result in MNCs investing into:
A. Advanced industrialized
countries
B. Bribes and
kickbacks
C. Corporate
cultures
D. Syndicate
operations
53. All of the following act as disincentives for MNCs except:
A. Restrictions on profit
repatriation
B. Controls on the transfer of
technology
C. Export maximums for generating foreign
currency
D. Limits on local market
growth
54. A multinational firm's choice of a locale is affected by all of the following factors
except:
A. Desirability of the location for

employees
B. The number of market shares invested in their home
country
C. Proximity to
competitors
D. Nature of the
workforce
55. For products like computers, Japanese firms:
A. Move from their home market directly into fully developed countries and then on to
the newly developing nations
B. Move from their home market directly into developing nations and then on to
developed markets
C. Go only to developed countries to market
products
D. Go only to developing countries to market
products
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56. The implementation of a marketing strategy in international areas is built around the
well-known "four Ps." These are:
A. Place of origin, price, productive life, and

product
B. Promotion, price, production method, and
productive life
C. Product, price, promotion, and
place
D. Place of origin, production method, price, and
people
57. If a firm operates production plants in different countries but makes no attempt to
integrate its overall operations, the company is known as a:
A. Multi-
domestic
B. Glob
al
C. Transnation
al
D. Internation
al
58. MNCs have found that whether they are exporting or producing the goods locally in
the host country, consideration of worldwide production is important. All of the
following are factors to be taken into consideration except:
A. Goods may be produced in foreign countries for export to

other nations
B. A plant will specialize in a particular product and export it to all the
MNC's markets
C. Integration of production is necessary in a global operation only if the firm
produces multiple product lines
D. A plant will produce one or more components that are shipped to a larger network
of assembly plants
59. To respond to risks in emerging markets, MNCs must do all of the following except:
A. Limiting equity
investments
B. Avoiding joint
ventures
C. Collaborating with a local
partner
D. Encouraging shared ownership
structures
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60. When market liberalization is delayed:
A. It gives first movers a significant advantage over later

entrants
B. First movers get clear, significant advantages in transitional
markets
C. It gives later entrants a significant advantage over
first movers
D. Substantial risks to premature entry are
removed
61. Which of the following is not an advantage of first-mover strategies?
A. Capturing learning effects important for increasing

market share
B. Achieving scale
economies
C. Development of alliances with the most attractive local
partners
D. Capitalizing on well-established legal, institutional, and political
frameworks
62. Within the context of international management, the "base of the pyramid" refers to:
A. Front-line employees at the bottom of the organizational

hierarchy
B. Younger generations of the population
pyramid
C. Understanding the foundational issues in international
management
D. Potential low-income customers at the bottom of the
economic pyramid
63. Which of the following is likely to be the most effective strategic approach for the
"base of the pyramid"?
A. Incremental adaptation of existing technologies and

products
B. Establishing partnerships with central governments of emerging
economies
C. Leapfrog technologies including disruptive
technologies
D. Large-scale
strategies
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64. Which of the following findings regarding BOP strategy has significant implications for
the globalization-national responsiveness framework?
A. Building relationships directly and at the local level contributes to the reputation
and fosters the trust necessary to overcome the lack of formal institutions such as
the rule of law
B. The BOP may be an ideal environment for incubating new, leapfrog
technologies
C. These business models may travel profitably to higher-income markets because
adding features to a low-cost model may be easier than removing features from
high-cost models
D. It brings focus to those who are too poor to be viable customers for
multinational companies
65. All of the following are challenges firms could face in the implementation of a BOP
strategy except:
A. Offering affordable
goods
B. Generating awareness regarding the
product
C. Nonexistent distribution
channels
D. Coordinating administrative
functions
66. International management activities of entrepreneurial and new-venture firms have

been made possible by all of the following except:
A. Customized, old access

channels
B. Advances in
telecommunication
C. Greater efficiencies and lower costs in
shipping
D. Allowing firms to access international
customers
67. Firms that internationalize after being domestically established have to overcome all
of the following barriers except:
A. Their domestic
orientation
B. Their internal domestic
political ties
C. Their domestic decision-making
inertia
D. Their anti-risk seeking
behavior
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68. The technological learning gained from varied international environments:
A. Enhances efforts to integrate knowledge

throughout a firm
B. Shows a fall in venture
performance
C. Leads to minimal diversity of national
environments
D. Has no effect on cross-functional
teams
69. Firms that engage in significant international activity a short time after being
established are called:
A. Greenfield
ventures
B. Born
globals
C. Brownfield
firms
D. Traditional
exporters
70. All of the following are features of a "born-global" firm except:
A. They export products to close

markets
B. They employ strategies like unique-products
development
C. They indulge in significant international activity a short time after being
established
D. Their success greatly depends on how developed the area is that the company is
moving into
Essay Questions
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71. Is there a growing need for strategic management among MNCs? If so, why?
72. Describe the difference between global integration and national responsiveness.
What is the principle advantage of each strategy?
73. Identify the four basic strategies that MNCs use and the situations in which they are
used.
74. What is the purpose of internal resource analysis? In the context of internal resource
analysis, what is a "key success factor"?
8-16

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75. What is the "BOP" and why is this strategy challenging to implement?
8-17

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Chapter 08 Strategy Formulation and Implementation Answer

Key
True / False Questions
1. Strategic management is required to keep track of increasingly diversified

operations in a continuously changing international environment.
TRUE
One of the primary reasons that MNCs such as Citibank need strategic
management is to keep track of their increasingly diversified operations in a
continuously changing international environment.
AACSB: Analytic
Blooms: Remember
Learning Objective: 08-01 DISCUSS the meaning; needs; benefits; and approaches of the strategic planning
process for today's MNCs.
Level of Difficulty: 1 Easy
Topic: Strategic Management
2. There is definitive evidence that strategic planning in the international arena

always results in higher profitability.
FALSE
Despite some obvious benefits, there is no definitive evidence that strategic

planning in the international arena always results in higher profitability, especially
when MNCs try to use home strategies across different cultures (see Chapter 6).
Most studies that report favorable results were conducted at least a decade ago.
AACSB: Analytic
Blooms: Remember
3. Many MNCs are convinced that strategic planning is critical to their success and
these efforts are being conducted both at the home office and in the subsidiaries.
TRUE
Many MNCs are convinced that strategic planning is critical to their success, and
these efforts are being conducted both at the home office and in the subsidiaries.
AACSB: Analytic
Blooms: Remember
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Level of Difficulty: 2 Medium

4. Citibank is an example of a company the finds operating in China to be too risky.
FALSE
A good example is provided by Citibank (a unit of Citicorp.), which opened offices

in China in 1902 and continued to do business there until 1949, when communists
took power. However, in 1984 Citibank quietly returned, and over the last two
decades the firm has been slowly increasing its presence in China.
AACSB: Analytic
Blooms: Remember
5. An economic imperative approach to strategic planning is used when a product is

regarded as a generic good and therefore does not have to be sold based on name
brand.
TRUE
The strategy is also used when the product is regarded as a generic good and
therefore does not have to be sold based on name brand or support service.
AACSB: Analytic
Blooms: Remember
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6. TQM covers the full gamut, from strategy formulation to implementation.
TRUE
TQM covers the full gamut, from strategy formulation to implementation. TQM can
be summarized as follows:
1. Quality is operationalized by meeting or exceeding customer expectations.

Customers include not only the buyer or external user of the product or service but
also the support personnel both inside and outside the organization who are
associated with the good or service.
2. The quality strategy is formulated at the top management level and is diffused
throughout the organization. From top executives to hourly employees, everyone
operates under a TQM strategy of delivering quality products or services to
internal and external customers. Middle managers.
3. TQM techniques range from traditional inspection and statistical quality control
to cutting-edge human resource management techniques, such as self-managing
teams and empowerment. will better understand and implement these strategies
if they are a part of the process.
AACSB: Analytic
Blooms: Remember
7. Statistics reveal that foreign direct investment (FDI) has grown ten times faster
than trade and twice as fast as the world gross domestic product.
FALSE
Statistics reveal that FDI has grown three times faster than trade and four times
faster than world gross domestic product (GDP).
AACSB: Analytic
Blooms: Remember
8. National responsiveness is the need to understand different consumer tastes in

segmented regional markets and respond to different national standards and
regulations imposed by autonomous agencies.
TRUE
National responsiveness is the need to understand the different consumer tastes in

segmented regional markets and respond to different national standards and
regulations imposed by autonomous governments and agencies.
AACSB: Analytic
Blooms: Remember
Learning Objective: 08-02 UNDERSTAND the tension between pressures for global integration and national
8-20

lOMoARcPSD|19175542
responsiveness and the four basic options for international strategies.

9. To a growing extent, the customers of MNCs have heterogeneous tastes and this
has helped to spread international consumerism.
FALSE
To a growing extent, the customers of MNCs have homogenized tastes, and this
has helped to spread international consumerism. For example, throughout North
America, the EU, and Japan, there has been a growing acceptance of standardized,
yet increasingly personally, customized goods such as automobiles and
computers.
AACSB: Analytic
Blooms: Remember
10. When the need for national responsiveness is low and the need for global
integration is high, a global strategy is appropriate.
TRUE
In quadrant 1, the need for integration is high and awareness of differentiation is

low. In terms of economies of scale, this situation leads to global strategies based
on price competition.
AACSB: Analytic
Blooms: Remember
11. When the home office interferes with a subsidiary in another country, profitability
suffers, but morale is unaffected and the investment eventually produces high
returns.
FALSE
For example, one study found that when decisions were made mainly at the home
office and close coordination between the subsidiary and home office was
required, return on investment was negatively affected. Simply put, the home
office ends up interfering with the subsidiary, and profitability suffers.
AACSB: Analytic
Blooms: Remember
Level of Difficulty: 3 Hard
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12. International strategies are characterized by increased international

standardization of products and services.
TRUE
Typical strategies in quadrant 2 are characterized by increased international

standardization of products and services. This mixed approach is often referred to
as international strategy.
AACSB: Analytic
Blooms: Remember
13. An example of the political imperative at work is a retail manufacturer who

emphasizes flexibility, response time, small production runs, small minimum-order
quantities, and the ability to shift direction as the trends move.
FALSE
An example of the economic imperative at work is a retail manufacturer who

emphasizes flexibility, response time, small production runs, small minimum-order
quantities, and the ability to shift direction as the trends move.
AACSB: Analytic
Blooms: Understand
14. External resource analysis helps the firm to evaluate its current financial strengths
and weaknesses.
FALSE
Internal resource analysis helps the firm to evaluate its current managerial,
technical, material, and financial resources and capabilities to better assess its
strengths and weaknesses.
AACSB: Analytic
Blooms: Remember
Learning Objective: 08-03 IDENTIFY the basic steps in strategic planning; including environmental scanning;
internal resource analysis of the MNC's strengths and weaknesses; and goal formulation.
Topic: The Basic Steps in Formulating Strategy
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15. Profitability and marketing goals almost always dominate the strategic plans of
today's multinational corporations.
TRUE
Profitability and marketing goals almost always dominate the strategic plans of
today's MNCs. Profitability, as shown in Table 8-1, is so important because MNCs
generally need higher profitability from their overseas operations than they do
from their domestic operations.
AACSB: Analytic
Blooms: Remember
16. Firms that have done well domestically with a product usually have done so
because the competition is effective.
FALSE
In addition, a firm that has done well domestically with a product or service usually
has done so because the competition is minimal or ineffective.
AACSB: Analytic
Blooms: Remember
17. In choosing a location, today's MNC has two primary considerations: the country
and the specific locale within the chosen country.
TRUE
In choosing a location, today's MNC has two primary considerations: the country
and the specific locale within the chosen country. Quite often, the first choice is
easier than the second, because there are many more alternatives from which to
choose a specific locale.
AACSB: Analytic
Blooms: Remember
Learning Objective: 08-04 DESCRIBE how an MNC implements the strategic plan; such as how it chooses a site
for overseas operations.
Topic: Strategy Implementation
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18. In selecting a geographic location to operate, Japanese firms favor heavily

unionized areas.
FALSE
Japanese firms in particular tend to avoid heavily unionized areas.
AACSB: Analytic
Blooms: Remember
19. In emerging economies undergoing rapid changes such as privatization,

governments have generally been apprehensive and uncooperative with MNCs.
FALSE
In emerging economies that are undergoing rapid changes such as privatization

and market liberalization, there may be a narrow window of time within which
these opportunities can be best exploited.
AACSB: Analytic
Blooms: Remember
Learning Objective: 08-06 EXPLAIN specialized strategies appropriate for emerging markets and international
new ventures.
Topic: Specialized Strategies
20. A growing number of MNCs are finding that they must continually revise their
TRUE
A growing number of MNCs are finding that they must continually revise their
AACSB: Analytic
Blooms: Remember
Multiple Choice Questions
8-24

lOMoARcPSD|19175542
21. The process of determining an organization's basic mission and long-term

objectives and then implementing a plan of action for attaining these goals is:
A. Strategic
management
B. Tactical
management
C. Contingency
management
D. Functional
management
Strategic management is the process of determining an organization's basic

mission and long-term objectives and then implementing a plan of action for
pursuing this mission and attaining these objectives.
AACSB: Analytic
Blooms: Remember
22. Ford Motor's strategic plan in Thailand is based on:
A. Offering the right price and

product
B. Offering the right combination of price and financing to a carefully identified
market segment
C. Offering the right combination of price and financing to all market
segments
D. Offering the right financing
only
One is Ford Motor, which has reentered the market in Thailand and has built a
strong sales force to garner market share. The firm's strategic plan here is based
on offering the right combination of price and financing to a carefully identified
market segment. In particular, Ford is working to keep down the monthly
payments so that customers can afford a new vehicle.
AACSB: Analytic
Blooms: Remember
8-25

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23. Honda and General Motors have both built plants in Thailand to take advantage
of:
A. Demand and low delivery

costs
B. Strategic
pricing
C. New technologies and low
wages
D. Tax incentives and
demand
Toyota, Honda Motor Co., and General Motors Co. have also built plants in
Thailand, Southeast Asia's second-biggest economy, lured by tax incentives and
demand amid a domestic population of 70 million.
AACSB: Analytic
Blooms: Remember
24. According to the text, strategic planning helps MNCs to do all of the following
except:
A. Coordinate and monitor its far-flung

operations
B. Deal with political
risks
C. Determine
performance
D. Get higher
profitability
Despite some obvious benefits, there is no definitive evidence that strategic

planning in the international arena always results in higher profitability, especially
when MNCs try to use home strategies across different cultures (see Chapter 6).
AACSB: Analytic
Blooms: Remember
8-26

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25. A worldwide strategy based on cost leadership, differentiation, and segmentation

is referred to as the:
A. Economic
imperative
B. Political
imperative
C. Quality
imperative
D. Administrative coordination
strategy
MNCs that focus on the economic imperative employ a worldwide strategy based
on cost leadership, differentiation, and segmentation.
AACSB: Analytic
Blooms: Remember
26. These individuals are the key to stimulating profit growth within a company.
A. Superviso
rs
B. Middle
managers
C. First-line
managers
D. Top
managers
Middle managers are the key to stimulating profit growth within a company, so
expanding those efforts on an international level is a necessary tool to learn for
today's new managers.
AACSB: Analytic
Blooms: Remember
8-27

lOMoARcPSD|19175542
27. Companies that pursue this strategy typically sell products for which a large
portion of value is added in the upstream activities of the industry's value chain.
A. Quality
imperative
B. Political
imperative
C. Economic
imperative
D. Administrative
coordination
MNCs that focus on the economic imperative employ a worldwide strategy based
on cost leadership, differentiation, and segmentation. Many of these companies
typically sell products for which a large portion of value is added in the upstream
activities of the industry's value chain.
AACSB: Analytic
Blooms: Remember
28. MNCs using the _____ approach to strategic planning are country-responsive; their
approach is designed to protect local market niches.
A. Administrative coordination
strategy
B. Economic
imperative
C. Quality
imperative
D. Political
imperative
MNCs using the political imperative approach to strategic planning are country-
responsive; their approach is designed to protect local market niches.
AACSB: Analytic
Blooms: Remember
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lOMoARcPSD|19175542
29. The products sold by MNCs pursuing this approach often have a large portion of
their value added in the downstream activities of the value chain.
A. Political
imperative
B. Cost
imperative
C. Quality
B
imperative
Av big
D. Economic
imperative
The products sold by MNCs often have a large portion of their value added in the
downstream activities of the value chain. Industries such as insurance and
consumer packaged goods are examples—the success of the product or service
generally depends heavily on marketing, sales, and service.
AACSB: Analytic
Blooms: Remember
30. Typically, MNCs utilizing this approach to strategic planning use a country-centered
or multi-domestic strategy.
A. Quality
imperative
B. Administrative
coordination
C. Political
imperative
D. Economic
imperative
Typically, MNCs utilizing the political imperative approach to strategic planning use
a country-centered or multi-domestic strategy.
AACSB: Analytic
Blooms: Remember
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31. The approach to strategic formulation and implementation utilizing strategies of

TQM to meet or exceed customers' expectations and continuously improve
products and/or services is referred to as the:
A. Value-added
imperative
B. Quality
imperative
C. Political
imperative
D. Economic
imperative
A quality imperative takes two interdependent paths: (1) a change in attitudes and
a raising of expectation for service quality and (2) the implementation of
management practices that are designed to make quality improvement an ongoing
process. Commonly called total quality management, or simply TQM, the approach
takes a wide number of forms, including cross-training personnel to do the jobs of
all members in their work group, process re-engineering designed to help identify
and eliminate redundant tasks and wasteful effort, and reward systems designed
to reinforce quality performance.
AACSB: Analytic
Blooms: Remember
32. The quality strategy is formulated at the ______ management level and is diffused
throughout the _______.
A. top; upper
management
B. top;
organization
C. lowest;
organization
D. middle; lower
level
The quality strategy is formulated at the top management level and is diffused
throughout the organization. From top executives to hourly employees, everyone
operates under a TQM strategy of delivering quality products or services to
internal and external customers. Middle managers will better understand and
implement these strategies if they are a part of the process.
AACSB: Analytic
Blooms: Remember
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lOMoARcPSD|19175542
33. This approach to formulation and implementation is one in which the MNC makes
strategic decisions based on the merits of the individual situation rather than using
a predetermined economic or political strategy.
A. Administrative
coordination
B. Bureaucratic
coordination
C. Value-
added
D. Function
al
An administrative coordination approach to formulation and implementation is one

in which the MNC makes strategic decisions based on the merits of the individual
situation rather than using a predetermined economic or political strategy. A good
example is provided by Walmart, which has expanded rapidly into Latin America in
recent years. While many of the ideas that worked well in the North American
market served as the basis for operations in the Southern Hemisphere, the
company soon realized that it was doing business in a market where local tastes
were different and competition was strong.
AACSB: Analytic
Blooms: Remember
34. _____ is the production and distribution of products and services of a homogeneous
type and quality on a worldwide basis.
A. Global
integration
B. Nationalis
m
C. Cross-border
integration
D. Market
standardization
As used here, global integration is the production and distribution of products and
services of a homogeneous type and quality on a worldwide basis. To a growing
extent, the customers of MNCs have homogenized tastes, and this has helped to
spread international consumerism.
AACSB: Analytic
Blooms: Remember
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35. TQM techniques range from traditional inspection and statistical quality control to
cutting-edge human resource management techniques, such as:
A. market share and

profitability
B. customer service and quality
control
C. self-managing teams and
empowerment
D. imports and
exports
TQM techniques range from traditional inspection and statistical quality control to
cutting-edge human resource management techniques, such as self-managing
teams and empowerment.
AACSB: Analytic
Blooms: Remember
36. This strategy is appropriate when the need for national responsiveness is low and
the need for globalization integration is high.
A. Internation
al
B. Multi-
domestic
C. Glob
al
D. Transnation
al
In quadrant 1, the need for integration is high and awareness of differentiation is

low. In terms of economies of scale, this situation leads to global strategies based
on price competition.
AACSB: Analytic
Blooms: Apply
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lOMoARcPSD|19175542
37. When the need for national responsiveness is high and the need for global
integration is also high, this strategy is appropriate.
A. Transnation
al
B. Globalizati
on
C. Internation
al
D. Multi-
domestic
In quadrant 3, the needs for integration and differentiation are high. There is a
strong need for integration in production along with higher requirements for
regional differentiation in marketing. MNCs trying to simultaneously achieve these
objectives often refer to them as transnational strategy.
AACSB: Analytic
Blooms: Apply
38. When the need for national responsiveness is high and the need for global
integration is low, a(n) _____ strategy is appropriate.
A. Transnation
al
B. Multi-
domestic
C. Internation
al
D. Globalizati
on
The opposite situation is represented by quadrant 4, where the need for

differentiation is high but the concern for integration low. This quadrant is referred
to as multi-domestic strategy. In this case, niche companies adapt products to
satisfy the high demands of differentiation and ignore economies of scale because
integration is not very important.
AACSB: Analytic
Blooms: Apply
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lOMoARcPSD|19175542
39. When the need for national responsiveness is low and the need for global
integration is also low, which of the following strategies would be appropriate?
A. Globalizati
on
B. Transnation
al
C. Internation
al
D. Multi-
domestic
Quadrant 2 incorporates those cases in which both the need for integration and
awareness of differentiation are low. Both the potential to obtain economies of
scale and the benefits of being sensitive to differentiation are of little value. Typical
strategies in quadrant 2 are characterized by increased international
standardization of products and services. This mixed approach is often referred to
as international strategy.
AACSB: Analytic
Blooms: Apply
40. Which of the following is not one of the steps in strategic planning?
A. transferring the successful process used in a developed country to an

emerging economy
B. scanning the external environment for opportunities
and threats
C. conducting an internal resource analysis of company strengths and
weaknesses
D. formulating goals in light of the external scanning and
internal analysis
In international management, strategic planning can be broken into the following

steps: (1) scanning the external environment for opportunities and threats; (2)
conducting an internal resource analysis of company strengths and weaknesses;
and (3) formulating goals in light of the external scanning and internal analysis.
AACSB: Analytic
Blooms: Remember
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lOMoARcPSD|19175542
41. Many large MNCs work to combine the ___________ approaches to strategic
planning.
A. economic, environmental, political, and

administrative
B. global, environmental, economic, and
quality
C. political, administrative, regional, and
environmental
D. economic, political, quality, and
administrative
Many large MNCs work to combine the economic, political, quality, and
administrative approaches to strategic planning. For example, IBM relies on the
economic imperative when it has strong market power (especially in less
developed countries), the political and quality imperatives when the market
requires a calculated response (European countries), and an administrative
coordination strategy when rapid, flexible decision making is needed to close the
sale. Of the four, however, the first three approaches are much more common
because of the firm's desire to coordinate its strategy both regionally and globally.
AACSB: Analytic
Blooms: Remember
42. _____ attempts to provide management with accurate forecasts of trends that
relate to external changes in geographic areas where the firm is currently doing
business or considering setting up operations.
A. Environmental
scanning
B. Functional
scanning
C. Tactical
scanning
D. Operational
scanning
Environmental scanning attempts to provide management with accurate forecasts

of trends that relate to external changes in geographic areas where the firm is
currently doing business or considering setting up operations. These changes
relate to environmental factors that can affect the company and include the
industry or market, technology, regulatory, economic, social, and political aspects.
AACSB: Analytic
Blooms: Remember
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lOMoARcPSD|19175542
43. One of the most important foci in _____ is the market and includes the role of all
potential competitors and the relationships surrounding those competitors, such as
affiliation with one another or the connection between the company and its
customers and suppliers.
A. Strategy
implementation
B. Goal
formulation
C. Environmental
scanning
D. Internal resource
analysis
One of the most important foci is the industry or the market. This includes the role
of all potential competitors and the relationships surrounding those competitors,
such as affiliation with one another or the connection between the company and
its customers and suppliers.
AACSB: Analytic
Blooms: Remember
44. The strategic planning process that helps a firm evaluate its current managerial,
technical, material and financial strengths and weaknesses is:
A. Environmental
scanning
B. Operational
analysis
C. Internal resource
analysis
D. Tactical
analysis
Internal resource analysis helps the firm to evaluate its current managerial,
technical, material, and financial resources and capabilities to better assess its
strengths and weaknesses. This assessment then is used by the MNC to determine
its ability to take advantage of international market opportunities.
AACSB: Analytic
Blooms: Remember
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lOMoARcPSD|19175542
45. This analysis identifies the key factors for success that will dictate how well the
firm is likely to do.
A. Extern
al
B. Intern
al
C. Competiti
ve
D. Marke
t
An internal analysis identifies the key factors for success that will dictate how well
the firm is likely to do.
AACSB: Analytic
Blooms: Remember
46. A key success factor is a factor that is necessary for a firm to compete effectively
in a(n):
A. International
market
B. Highly-restricted
market
C. Market
niche
D. Broad market
domain
A key success factor (KSF) is a factor that is necessary for a firm to compete
effectively in a market niche.
AACSB: Analytic
Blooms: Remember
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lOMoARcPSD|19175542
47. It is not true that the Internet
A. as a medium has removed certain entry barriers that have historically restricted
quick market entry.
B. clearly provides one of the easiest and most efficient methods of becoming
global quickly.
C. provides a business with lower costs and a more diverse customer base than
building-based businesses.
D. business experiences more problems than "bricks and mortar" business during
times of financial crises.
The company was in danger of being left behind when it could not get out of the
red, but in 2005, the company was able to become profitable due to the low cost
of Internet business and its extremely diverse customer base. Although it had its
ups and downs in the following years, it survived the financial crisis with fewer
problems than many "bricks and mortar" brokerages.
AACSB: Analytic
Blooms: Remember
new ventures.
48. Once strategic goals are set, an MNC will develop specific _____ goals and controls,
usually through a two-way process at the subsidiary or affiliate level.
A. Bureaucrat
ic
B. Operation
al
C. Strateg
ic
D. Contingen
cy
Once the strategic goals are set, the MNC will develop specific operational goals
and controls, usually through a two-way process at the subsidiary or affiliate level.
AACSB: Analytic
Blooms: Remember
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lOMoARcPSD|19175542
49. The process of providing goods and services in accord with a plan of action is:
A. Strategy
implementation
B. Strategy
formulation
C. Strategy
control
D. Strategy
contingency
Strategy implementation provides goods and services in accord with a plan of

action.
AACSB: Analytic
Blooms: Remember
50. An MNC must consider all of the following general areas in strategy
implementation except:
A. Management must implement functional strategies in areas such as

marketing
B. It should consider investing only in advanced
nations
C. It must carry out entry and ownership
strategies
D. It must decide where to locate
operations
International management must consider three general areas in strategy

implementation. First, the MNC must decide where to locate operations. Second,
the MNC must carry out entry and ownership strategies (discussed in Chapter 9).
Finally, management must implement functional strategies in areas such as
marketing, production, and finance.
AACSB: Analytic
Blooms: Remember
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lOMoARcPSD|19175542
51. A primary consideration for an MNC in investing in a foreign country would be a

decision based on:
A. Corporate
culture
B. Business
ethics
C. Specific
locale
D. Operating
norms
In choosing a location, today's MNC has two primary considerations: the country
and the specific locale within the chosen country. Quite often, the first choice is
easier than the second, because there are many more alternatives from which to
choose a specific locale.
AACSB: Analytic
Blooms: Remember
52. Opportunities to increase market share through increased sales of goods and
services result in MNCs investing into:
A. Advanced industrialized
countries
B. Bribes and
kickbacks
C. Corporate
cultures
D. Syndicate
operations
MNCs often invest in advanced industrialized countries because they offer the
largest markets for goods and services. In addition, the established country or
geographic locale may have legal restrictions related to imports, encouraging a
local presence.
AACSB: Analytic
Blooms: Remember
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lOMoARcPSD|19175542
53. All of the following act as disincentives for MNCs except:
A. Restrictions on profit
repatriation
B. Controls on the transfer of
technology
C. Export maximums for generating foreign
currency
D. Limits on local market
growth
These benefits will be weighed against any disincentives or performance

requirements that must be met by the MNC, such as job-creation quotas, export
minimums for generating foreign currency, limits on local market growth, labor
regulations, wage and price controls, restrictions on profit repatriation, and
controls on the transfer of technology.
AACSB: Analytic
Blooms: Remember
54. A multinational firm's choice of a locale is affected by all of the following factors
except:
A. Desirability of the location for

employees
B. The number of market shares invested in their home
country
C. Proximity to
competitors
D. Nature of the
workforce
Once the MNC has selected the country in which to locate, the firm must choose
the specific locale. A number of factors influence this choice. Common
considerations include access to markets, proximity to competitors, availability of
transportation and electric power, and desirability of the location for employees
coming in from the outside.
AACSB: Analytic
Blooms: Remember
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lOMoARcPSD|19175542
55. For products like computers, Japanese firms:
A. Move from their home market directly into fully developed countries and then
on to the newly developing nations
B. Move from their home market directly into developing nations and then on to
developed markets
C. Go only to developed countries to market
products
D. Go only to developing countries to market
products
For some products, however, such as computers, the Japanese have moved from
their home market directly into fully developed countries and then on to the newly
developing nations.
AACSB: Analytic
Blooms: Remember
Learning Objective: 08-05 REVIEW the three major functions of marketing; production; and finance that are
used in implementing a strategic plan.
56. The implementation of a marketing strategy in international areas is built around

the well-known "four Ps." These are:
A. Place of origin, price, productive life, and

product
B. Promotion, price, production method, and
productive life
C. Product, price, promotion, and
place
D. Place of origin, production method, price, and
people
The implementation of marketing strategy in the international arena is built around

the well-known "four Ps" of marketing: product, price, promotion, and place.
AACSB: Analytic
Blooms: Remember
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lOMoARcPSD|19175542
57. If a firm operates production plants in different countries but makes no attempt to
integrate its overall operations, the company is known as a:
A. Multi-
domestic
B. Glob
al
C. Transnation
al
D. Internation
al
As mentioned in the first part of the chapter, if the firm operates production plants
in different countries but makes no attempt to integrate its overall operations, the
company is known as a multi-domestic. A recent trend has been away from this
scattered approach and toward global coordination of operations.
AACSB: Analytic
Blooms: Remember
58. MNCs have found that whether they are exporting or producing the goods locally in
the host country, consideration of worldwide production is important. All of the
following are factors to be taken into consideration except:
A. Goods may be produced in foreign countries for export to

other nations
B. A plant will specialize in a particular product and export it to all the
MNC's markets
C. Integration of production is necessary in a global operation only if the firm
produces multiple product lines
D. A plant will produce one or more components that are shipped to a larger
network of assembly plants
In recent years, however, MNCs have found that whether they are exporting or
producing the goods locally in the host country, consideration of worldwide
production is important. For example, goods may be produced in foreign countries
for export to other nations. Sometimes, a plant will specialize in a particular
product and export it to all the MNC's markets; other times, a plant will produce
goods only for a specific locale, such as Western Europe or South America. Still
other facilities will produce one or more components that are shipped to a larger
network of assembly plants.
AACSB: Analytic
Blooms: Remember
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lOMoARcPSD|19175542
59. To respond to risks in emerging markets, MNCs must do all of the following except:
A. Limiting equity
investments
B. Avoiding joint
ventures
C. Collaborating with a local
partner
D. Encouraging shared ownership
structures
MNCs must adjust their strategy to respond to these risks. For example, in these
risky markets, it may be wise to engage in arm's-length or limited equity
investments or to maintain greater control of operations by avoiding joint ventures
or other shared ownership structures. In other circumstances, it may be wiser to
collaborate with a local partner who can help buffer risks through its political
connections.
AACSB: Analytic
Blooms: Remember
new ventures.
60. When market liberalization is delayed:
A. It gives first movers a significant advantage over later

entrants
B. First movers get clear, significant advantages in transitional
markets
C. It gives later entrants a significant advantage over
first movers
D. Substantial risks to premature entry are
removed
First movers who succeed in taking over newly privatized state-owned enterprises,
such as telecom and energy firms, possess a significant advantage over later
entrants, especially when market liberalization is delayed and the host
government provides protection to the newly privatized incumbent firms.
AACSB: Analytic
Blooms: Remember
new ventures.
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lOMoARcPSD|19175542
61. Which of the following is not an advantage of first-mover strategies?
A. Capturing learning effects important for increasing

market share
B. Achieving scale
economies
C. Development of alliances with the most attractive local
partners
D. Capitalizing on well-established legal, institutional, and political
frameworks
In general, in particular industries and economic environments, significant

economies are associated with first-mover or early-entry positioning—being the
first or one of the first to enter a market. These include capturing learning effects
important for increasing market share, achieving scale economies that accrue from
opportunities for capturing that greater share, and development of alliances with
the most attractive (or in some cases the only) local partner.
AACSB: Analytic
Blooms: Remember
new ventures.
62. Within the context of international management, the "base of the pyramid" refers
to:
A. Front-line employees at the bottom of the organizational

hierarchy
B. Younger generations of the population
pyramid
C. Understanding the foundational issues in international
management
D. Potential low-income customers at the bottom of the
economic pyramid
Because of this focus, MNC strategies aimed at tailoring existing practices and
products to better fit the needs of emerging-market customers have not
succeeded in making products and services available to the mass markets in the
developing world—the 4-5 billion people at the bottom of the economic pyramid
who represent fully two-thirds of the world's population.
AACSB: Analytic
Blooms: Remember
new ventures.
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lOMoARcPSD|19175542
63. Which of the following is likely to be the most effective strategic approach for the
"base of the pyramid"?
A. Incremental adaptation of existing technologies and

products
B. Establishing partnerships with central governments of emerging
economies
C. Leapfrog technologies including disruptive
technologies
D. Large-scale
strategies
The BOP may also be an ideal environment for incubating new, leapfrog
technologies, including "disruptive" technologies that reduce environmental
impacts and increase social benefit such as renewable energy and wireless
telecom.
AACSB: Analytic
Blooms: Understand
new ventures.
64. Which of the following findings regarding BOP strategy has significant implications
for the globalization-national responsiveness framework?
A. Building relationships directly and at the local level contributes to the

reputation and fosters the trust necessary to overcome the lack of formal
institutions such as the rule of law
B. The BOP may be an ideal environment for incubating new, leapfrog
technologies
C. These business models may travel profitably to higher-income markets because
adding features to a low-cost model may be easier than removing features from
high-cost models
D. It brings focus to those who are too poor to be viable customers for
multinational companies
Finally, business models forged successfully at the base of the pyramid have the
potential to travel profitably to higher-income markets because adding cost and
features to a low-cost model may be easier than removing cost and features from
high-cost models.
AACSB: Analytic
Blooms: Remember
new ventures.
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lOMoARcPSD|19175542
65. All of the following are challenges firms could face in the implementation of a BOP
strategy except:
A. Offering affordable
goods
B. Generating awareness regarding the
product
C. Nonexistent distribution
channels
D. Coordinating administrative
functions
The BOP strategy is challenging to implement. Companies have to offer affordable

goods that are highly available in a community that is willing to accept the
product. Most importantly, however, is that the company must bring awareness of
the product to the general populace. Balancing these is not a simple task, since
advertising and efficient distribution networks, for example, cost a significant
amount, yet the companies cannot add a high price tag. Furthermore, illiteracy
issues, poor infrastructure, corruption, and nonexistent distribution channels often
associated with poverty-stricken societies deter companies from wanting to invest.
AACSB: Analytic
Blooms: Remember
new ventures.
66. International management activities of entrepreneurial and new-venture firms

have been made possible by all of the following except:
A. Customized, old access

channels
B. Advances in
telecommunication
C. Greater efficiencies and lower costs in
shipping
D. Allowing firms to access international
customers
This has been made possible by advances in telecommunication and Internet

technologies and by greater efficiencies and lower costs in shipping, allowing firms
that were previously limited to local or national markets to access international
customers. These new access channels, however, suggest particular strategies
that must be customized and tailored to the unique situations and resource
limitations of small, entrepreneurial firms.
AACSB: Analytic
Blooms: Remember
new ventures.
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lOMoARcPSD|19175542
67. Firms that internationalize after being domestically established have to overcome
all of the following barriers except:
A. Their domestic
orientation
B. Their internal domestic
political ties
C. Their domestic decision-making
inertia
D. Their anti-risk seeking
behavior
Indeed, one study among privately held Finnish electronics firms during the mid-
1990s showed that firms that internationalize after they are established
domestically must overcome a number of barriers to that international expansion,
such as their domestic orientation, internal domestic political ties, and domestic
decision-making inertia.
AACSB: Analytic
Blooms: Remember
new ventures.
68. The technological learning gained from varied international environments:
A. Enhances efforts to integrate knowledge

throughout a firm
B. Shows a fall in venture
performance
C. Leads to minimal diversity of national
environments
D. Has no effect on cross-functional
teams
In addition, the breadth, depth, and speed of technological learning from varied
international environments is significantly enhanced by formal organizational
efforts to integrate knowledge throughout a firm such as cross-functional teams
and formal analysis of both successful and failed projects.
AACSB: Analytic
Blooms: Remember
new ventures.
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lOMoARcPSD|19175542
69. Firms that engage in significant international activity a short time after being
established are called:
A. Greenfield
ventures
B. Born
globals
C. Brownfield
firms
D. Traditional
exporters
Another dimension of the growth of international entrepreneurial activities is the

increasing incidence of international new ventures, or born-global firms—firms that
engage in significant international activity a short time after being established.
AACSB: Analytic
Blooms: Remember
new ventures.
70. All of the following are features of a "born-global" firm except:
A. They export products to close

markets
B. They employ strategies like unique-products
development
C. They indulge in significant international activity a short time after being
established
D. Their success greatly depends on how developed the area is that the company
is moving into
Truly born-global firms tend to distribute goods to distant markets in multiple

regions.
AACSB: Analytic
Blooms: Remember
new ventures.
Essay Questions
8-49

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19. In emerging economies undergoing rapid changes such as privatization, governments

Multiple Choice Questions

22. Ford Motor's strategic plan in Thailand is based on:

A. Offering the right price and

A. Demand and low delivery

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A. Coordinate and monitor its far-flung

25. A worldwide strategy based on cost leadership, differentiation, and segmentation is

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Downloaded by raja selvan (extratime228502@gmail.com)

A. market share and

Downloaded by raja selvan (extratime228502@gmail.com)

Downloaded by raja selvan (extratime228502@gmail.com)

A. transferring the successful process used in a developed country to an

A. economic, environmental, political, and

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47. It is not true that the Internet

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A. Management must implement functional strategies in areas such as

51. A primary consideration for an MNC in investing in a foreign country would be a

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53. All of the following act as disincentives for MNCs except:

A. Desirability of the location for

55. For products like computers, Japanese firms:

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A. Place of origin, price, productive life, and

A. Goods may be produced in foreign countries for export to

Downloaded by raja selvan (extratime228502@gmail.com)

60. When market liberalization is delayed:

A. It gives first movers a significant advantage over later

61. Which of the following is not an advantage of first-mover strategies?

A. Capturing learning effects important for increasing

A. Front-line employees at the bottom of the organizational

A. Incremental adaptation of existing technologies and

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66. International management activities of entrepreneurial and new-venture firms have

A. Customized, old access

Downloaded by raja selvan (extratime228502@gmail.com)

68. The technological learning gained from varied international environments:

A. Enhances efforts to integrate knowledge

70. All of the following are features of a "born-global" firm except:

A. They export products to close

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Downloaded by raja selvan (extratime228502@gmail.com)

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Chapter 08 Strategy Formulation and Implementation Answer

True / False Questions

1. Strategic management is required to keep track of increasingly diversified

2. There is definitive evidence that strategic planning in the international arena

Despite some obvious benefits, there is no definitive evidence that strategic

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Level of Difficulty: 2 Medium

4. Citibank is an example of a company the finds operating in China to be too risky.

A good example is provided by Citibank (a unit of Citicorp.), which opened offices

5. An economic imperative approach to strategic planning is used when a product is

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6. TQM covers the full gamut, from strategy formulation to implementation.

1. Quality is operationalized by meeting or exceeding customer expectations.

8. National responsiveness is the need to understand different consumer tastes in

National responsiveness is the need to understand the different consumer tastes in

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responsiveness and the four basic options for international strategies.