Cha

pte
r07

I
nte
rna
ti
ona
lSt
rat
egy:
Cre
ati
ngVa
luei
nGl
oba
lMa
rke
ts

True / False Questions

1
. Th
etr
endt
owa
rdswo
rld
widema
rke
tsma
kesi
tea
sie
rtop
red
ictwhe
rec
ompe
ti
tor
swi
lls
pri
ngup
.

Tr
ue Fa
lse

2
. Becaus
emanyco
untr
iesa
rein
ves
ti
ngi
ncou
ntr
iesot
hert
hant
hei
rown
,ea
chc
oun
tryi
sbe
comi
ngmor
e
aut
onomousa
ndind
epende
nt.

Tr
ue Fa
lse

3
.Inc
reas
ingi
nter
nati
onale
xcha
ngei
ngoo
dsandse
rvi
cesc
anru
nint
oth
edi
ffic
ult
yofha
vin
gon
eoffe
rtha
t
me
etst
heneedsofcus
tomer
satdi
ffer
ingi
nco
melevel
s.

Tr
ue Fa
lse

4
. By2
015,
iti
spr
edi
ct
edt
hatt
radewi
thi
nna
ti
onswi
lle
xce
edt
radea
cro
ssn
ati
ons
.

Tr
ue Fa
lse

5
. Ther
eareri
sksas
soci
ate
dwiththeBot
tomoft
hePyra
midst
rat
egy
.Oneoft
hemist
hatt
hen
ewlow-
cos
t
pr
oduct
stha
taredev
elopedmaycanni
bal
iz
eth
esal
esoft
hecor
eprod
uct
softh
ecompan
yusi
ngt
he
st
rat
egy
.

Tr
ue Fa
lse

6
. Emer
gin
gmar
ket
sar
egr
owi
ngs
lowe
rth
ande
vel
ope
dma
rke
ts,
thuss
hif
ti
ngt
hes
tr
uct
ureo
fth
egl
oba
l
ec
onomy.

Tr
ue Fa
lse

7
. Mult
inat
ion
alc
ompani
es,
lik
eGE,
tak
ead
vant
ageofg
lob
ali
zat
iont
ota
pint
ota
lent
arou
ndt
hewor
ldi
n
or
dertobui
ldp
rod
ucts
.

Tr
ue Fa
lse

8
. Theshi
ftintheglo
balau
tomobi
lemar
keto
vert
hepasts
eve
raly
ear
s,i
nwhichChi
nasup
plant
edtheU.
S.a
t
t
helarg
estma r
ketf
oraut
omobil
esi
n2009,
isanexa
mp l
eofhowth
estr
uct
ureoft
heg
lobalec
onomyis
unc
hanging.

Tr
ue Fa
lse

7-1
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
9
. Acco
rdi
ngtoTheEconomi
star
ti
cl
eexpl
ai
nedinExhi
bit7
.1i
nthet
ext
boo
k,t
her
ateo
fGDPgr
owt
hist
he
hi
ghes
tint
heEuropea
nUnionandt
heUnit
edSta
tes
.

Tr
ue Fa
lse

1
0.Glob
a l
iz
ati
onisate
rmu
sedt
ome
ant
hegr
owi
ngd
iss
imi
lar
it
yofl
aws
,ru
les
,no
rms
,va
lue
san
dide
as
ac
rosscount
ri
es.

Tr
ue Fa
lse

1
1.TheMic
haelPo
rte
rDiamon
dofNati
onalAdv
ant
ageisafra
meworkt
hate
xpl
ain
swhyc ount
ri
esf
ost
er
su
cce
ssf
ulmult
ina
ti
ona
lcor
por
ati
onsba
s e
donfa
ctorend
owmentsan
ddemandcon
dit
ionsonl
y.

Tr
ue Fa
lse

1
2.Thef
act
ore
ndo
wme
ntso
fac
oun
trya
rei
nhe
rit
eda
ndc
ann
otbec
rea
ted.

Tr
ue Fa
lse

1
3.Wit
hr e
gardt
ofac
torc
ondi
ti
ons,t
hep
oolo
fres
ourc
estha
tafirm(ornat
ion
)ha
sismu
chmo
rei
mpo
rta
nt
t
hanthespee
dandeffic ienc
ywit
hwhicht
hes
eres
ource
sar
ede
ploy
ed.

Tr
ue Fa
lse

1
4.Demand
ingd
omest
iccons
umer
stendt
opus
hfir mstomo
vea
hea
dofc
ompa
nie
sino
the
rco
unt
ri
eswhe
re
con
sumer
sar
ele
ssdemandi
ngandmor
ecompl
ace
nt.

Tr
ue Fa
lse

1
5.Highl
eve
lsofenvi
ronment
ala
warene
ssinDenmarkha
vel
edt
oad
ecl
inei
nDa
nis
hind
ust
ri
al
co
mpeti
ti
venes
sinthein
ter
nat
ion
alma r
ket
pla
ce.

Tr
ue Fa
lse

1
6.Co
unt
ri
eswi
thas
tr
ongs
upp
lie
rba
seb
ene
fitb
yad
din
geffic
ien
cyt
odo
wns
tr
eama
cti
vit
ies
.

Tr
ue Fa
lse

1
7.Typic
all
y,i
nte
nseri
val
ryi
ndo
mes
ti
cma
rke
tsd
oesn
otf
orc
efir
mst
olo
okou
tsi
det
hei
rna
ti
ona
lbou
nda
rie
s
fornewmarket
s.

Tr
ue Fa
lse

1
8.Riva
lryisp
art
ic
ularl
yint
ens
einnat
ionswit
hcondit
ionso
fst
ron
gcon
sume
rde
mand
,st
ron
gsup
pli
erb
ase
s,
andhighne
w-ent
rantpot
ent
ia
lfr
omr e
lat
edind
ustr
ies.

Tr
ue Fa
lse

1
9.TheIndi
anso f
twar
eindust
ryh
asbe
comeoneofthele
adin
gglobalmar
ketsf
orsoft
war
e.Theindust
ryhas
growntoover60bil
li
onUSD,andI
ndianI
Tfir msp r
ovi
desoft
wareandser
vice
stoove
rhalftheFor
tun
e
500fir ms.Thiss
ucces
sisbei
ngdr
ive
nbyfa
ctorendowmen
tssuchasalar
ge,gr
owin
gma rk
e twit
h
sophi
st
ica
tedcust
omers.

Tr
ue Fa
lse

7-2
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
2
0.TheInd
ianso f
twar
eindust
ryhasbecomeon eoft
helead
ingglobalmark
etsforsof
twar
e.Thei
ndust
ryhas
gro
wntoo ver60bi
lli
onUSD, andIndianI
Tfir mspr
ovidesoft
wareandservic
estoove
rhal
ftheFor
tune
500fir ms.Thiss
uccessisbe
ingdriv
enbyr e
lat
edandsuppo
r t
ingin
dustr
iessuchasala
rgen
etworkof
publ
icandpriva
teeduc
atio
nalins
ti
tut
ions.

Tr
ue Fa
lse

2
1.Man
yinte
rna
ti
onalfir
msa r
einc
rea
sin
gthei
reffo r
tst
omarkett
hei
rpr
odu
ctsa
nds
ervi
cest
ocou
ntr
iess
uch
a
sIndi
aandChi
naast
hera
nksofthe
irmid
dlecl
assc
onti
nuet
oincr
eas
e.

Tr
ue Fa
lse

2
2.Ex
pand
ingt
heg
lob
alpr
ese
nceo
fafir
maut
oma
ti
cal
lyi
ncr
eas
esi
tss
cal
eofo
per
ati
ons
.

Tr
ue Fa
lse

2
3.Ar
bit
rag
eoppo
rtuni
ti
esa
res
imp
let
radi
ngop
por
tuni
ti
esa
ndt
her
efor
eac
coun
tforl
it
tl
eoft
hes
ucc
ess
Wal
martex
per
ienc
es.

Tr
ue Fa
lse

2
4.Arbi
tr
ageoppo
rtuni
ti
esi
nglob
alfinan
cia
lmar
ket
sar
emo r
eat
tr
act
iv
etogl
obalc
ompani
esth
anlocal
co
rpora
ti
ons,b
ecauset
heye
nablet
hemt
obuyi
nhugev
olu
mea n
dther
efo
rei
ncr
easet
hei
rbar
gai
ningpowe
r
wit
hsuppl
ie
rs.

Tr
ue Fa
lse

2
5.I
nte
rna
ti
ona
lexpa
nsi
onc
ane
xte
ndt
hel
if
ecy
cleofap
rod
uctt
hati
sini
tsma
tur
it
yst
agei
nthec
ompa
ny
h
omecount
ry.

Tr
ue Fa
lse

2
6.Adis
advant
ageofin
terna
ti
ona
lexp
ans
ioni
sth
ati
tca
nena
bleafir
mtoo
pti
miz
ethel
oca
ti
onofe
ver
y
a
cti
vit
yinit
svaluecha
in.

Tr
ue Fa
lse

2
7.Thela
wsandt
heenf
orce
me nt
oflawsa
ssoc
iat
edwi
ththepro
tec
ti
onofi
nte
ll
ect
ualp
rop
ert
yri
ght
sre
pre
sent
asi
gnific
antc
urr
encyandma n
ageme
ntri
sktomu
lti
nati
onalfirms
.

Tr
ue Fa
lse

2
8.Reve
rsei
nno
vati
onoc
cur
swhenacompan
yde ve
lop
sap r
oduc
ttha
tme
etst
hene
edso
fad
eve
lop
edc
ount
ry
andt
henada
ptsi
ttot
henee
dsoft
hede
velopi
ngcount
ry.

Tr
ue Fa
lse

2
9.TheWo rl
dBa nkpubli
shest
heEuromoneymag
azin
eCo unt
ryRi
skRa t
ingsemi
annua
lre
po r
t.I
nthete
xt,
t
heJ a
nu a
ry2013s a
mp l
ingoft
hes
erati
ngsi
ndi
cat
esthatNor
wayist
heb es
tcou
ntryi
nwh ic
htoinv
esti
n
t
ermso fit
sexpect
edlev
elofri
skbase
do nt
heeva
luat
ionofi
tsp
olit
ic
al,ec
onomicands
truct
ura
lri
sksand
debti
ndicat
orsandacc
esstoca
pit
al.

Tr
ue Fa
lse

7-3
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
3
0.Fir
msc anle
sse
npoli
ti
cali
nst
abil
it
yanda dv
ers
eg ov
ernmentac
tio
nsri
sksby:compet
ingi
naran
geo f
geogr
aphicmar
ket
s,dev
elo
pingsta
kehold
ercoal
it
ions,c
ult
iv
ati
ngrel
at
ions
hipswit
hkeyinfluenc
es,an
d
in
cludi
ngk e
ypubl
ic-
pri
vat
est
a k
ehold
e r
sinthe
irboar
ds.

Tr
ue Fa
lse

3
1.Twooppos
ingpr
ess
ure
sthatman
age
rsf
acewhe
nthe
ycomp
etei
nfo
rei
gnma
rke
tsa
rec
ostr
edu
cti
ona
nd
ada
pta
ti
ontofo
rei
gnma r
ket
s.

Tr
ue Fa
lse

3
2.Theodor
eLevit
t,amark
eti
ngstr
ate
gis
t,a
rgue
dthatpe
op l
ear
oundt
hewor
ldar
ewil
li
ngtos
acr
ific
e
pr
efe
rencesi
nproduc
tfeat
ure
s,f
uncti
ons
,anddes
ignforl
owerp
ric
esa
ndlowe
rqua
lit
y.

Tr
ue Fa
lse

3
3.Amongtheass
umpti
onsofTheodo
reLevi
ttt
hat
wou
ldf
avo
rag
lob
als
tr
ate
gyi
stha
tco
nsume
rsa
roun
dthe
wor
ldar
eb e
comin
glesspri
ce-
sens
it
iv
e.

Tr
ue Fa
lse

3
4.Wi
thi
nawor
ldwi
dema
rke
t,t
hemo
ste
ffe
cti
ves
tr
ate
gie
sar
ene
ith
erp
ure
lymu
lti
dome
sti
cnorp
ure
lygl
oba
l.

Tr
ue Fa
lse

3
5.Cust
omern
eedsa
ndi
nte
res
tsa
reb
ecomi
ngi
ncr
eas
ing
lyd
ive
rge
ntwor
ldwi
de,
acc
ordi
ngt
oTh
eod
ore
Levi
tt
.

Tr
ue Fa
lse

3
6.TheNe
stl
eli
neofpi
zza
smarket
edi
ntheUni
te
dKingdomi
ncl
udesc
hee
sewit
hhamandpi
nea
ppl
eto
ppi
ng
onaFr
enchbr
eadc
rust
.Thi
sisane
xampl
eofcompa
nyada
pta
ti
ontogl
oba
lmark
ets
.

Tr
ue Fa
lse

3
7.I
naddi
ti
ontore
spo
ndi
ngtopres
sure
stol
owerc
osts
,manag
ersmusts
tr
ivetober
espo
nsi
vetog
lobal
p
res
sur
esinor
dert
ota
il
orthe
irprod
uct
stot
hedemandoft
heloc
almarketi
nwhicht
heydobus
ine
ss.

Tr
ue Fa
lse

3
8.Sinc
ethest
rat
egi
esa
ndtac
ti
c st
odi
fferen
tia
tep
rod
uct
sands
ervi
cest
oloc
alma
rke
tsc
ani
nvol
vea
ddi
ti
ona
l
expens
es,
companyc
ost
swillte
ndt
ofa
ll
.

Tr
ue Fa
lse

3
9.I
nc h
oo s
ingoneofthefou
rbasi
cst
rat
egie
sforc
ompet
ingi
ntheglobalmark
etpl
ace(
inte
rna
ti
onal
,glo
bal,
mult
idomesti
c,t
rans
nat
ional
),t
hes
tr
ategyth
ataco
mpanysel
ect
sd e
pe nd
suponthedegr
eeofpr
ess
ureth
at
i
tisfac
ingforre
venues
.

Tr
ue Fa
lse

7-4
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
4
0.Asth
epres
sur
etol
owerc
ostsi
ncr
eas
es,
fir
msmo
vet
owa
rds
ele
cti
ngg
loba
landt
rans
nat
ion
als
tr
ate
gie
sfor
co
mpeti
ngint
hegl
oba
lma r
ket
pla
ce.

Tr
ue Fa
lse

4
1.I
ndust
ri
esinwhi
chpropor
tional
lymor
ev a
lueisa
ddedi
nupst
rea
ma ct
ivi
ti
esaremor
eli
kel
ytobe
nefitf
rom
agl
obals
tr
ate
gytha
nt hos
ei nwhic
hmo r
evaluei
sadde
ddownst
rea
m( cl
osert
othec
ust
omer)
.

Tr
ue Fa
lse

4
2.I
nag l
oba
lst
rat
egyafir
mope
rat
esa
llo
fit
sbus
ine
sse
sun
deras
ing
lec
ommo
nst
rat
egy
,re
gar
dle
ssof
l
oca
ti
on.

Tr
ue Fa
lse

4
3.Amult
idomest
icstr
ate
gyisthemo s
tappr
opri
at
estr
ate
gyforint
ernat
ion
aloper
ati
ons,
becaus
eitdr
ive
s
e
cono
mie so
fscaleasfara
sp os
sibl
eandpro
vide
sami ddl
e-o
f-t
he-r
oadprod
ucttha
tappe
altothel
arg
est
n
umberofconsumersineve
ryma rk
et.

Tr
ue Fa
lse

4
4.Theneedt
oat
tai
nec
ono
mie
sofs
cal
een
cou
rag
esmul
ti
nat
iona
lfir
mst
oope
rat
eund
eramu
lti
dome
sti
c
st
rat
egy
.

Tr
ue Fa
lse

4
5.Co
rpora
ti
onswit
hmult
ipl
efor
eig
nope
rat
ion
stha
tac
tve
ryi
nde
pen
dent
l
yofo
nea
not
hera
ref
oll
owi
nga
mul
ti
domest
ics
tr
ate
gy.

Tr
ue Fa
lse

4
6.Amult
idomest
icst
rat
egywoul
dli
kel
yin
clud
etheus
eofhi
ghv
olu
me,
cen
tra
li
zedpr
odu
cti
onf
aci
li
ti
est
o
ma
ximiz
ee c
ono mi
esofsc
ale
.

Tr
ue Fa
lse

4
7.Al
imi
ta
ti
onofamu
lti
dome
sti
cst
rat
egyi
stha
tit
mayl
eadt
oov
er-
ada
pta
ti
ona
sco
ndi
ti
onsc
han
ge.

Tr
ue Fa
lse

4
8.Mul
ti
nat
iona
lfir msfol
lo
wingat
ransnat
ionals
tr
ate
gys
tri
vet
oopt
imi
zet
het
rade
-offsa
ssoc
iat
edwi
th
e
ffic i
ency,l
oca
ladapt
at
ion
,an
dl e
arning
.

Tr
ue Fa
lse

4
9.Ake
yteneto
fatr
ansna
tiona
lst
rat
egyi
simprov
edadapta
ti
ontoa
llc
ompeti
ti
vesi
tuat
ion
saswe l
las
flex
ibi
li
tybyc
apit
ali
zi
n goncommuni
cat
ionandkn
o wled
geflowst
hroughou
ttheorga
niz
ati
on.

Tr
ue Fa
lse

7-5
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
5
0.Pana
soni
cne e
dedtocha
ngeitsst
rat
egyint
he1980si
no r
dert
orespondtodemo gra
phicande
conomic
ch
angesinChina
.AstheChinesemiddl
ecl
assbe
gantoemerge
,lo
c alco
mpa ni
esresponde
dwith
co
mpe t
it
ivepr
oduct
s.Pa
nasonicthe
nchang
edit
sstr
ate
gyfromatransnat
ion
alst
r a
tegytoagl
obals
tr
ate
gy.

Tr
ue Fa
lse

5
1.Ac
cor
din
gtos
tud
iesb
yRu
gma
nan
dVe
rbe
ke,
mos
toft
he50
0la
rge
stc
ompa
nie
sint
hewor
lda
reg
lob
al.

Tr
ue Fa
lse

5
2.Tr
adi
ngbl
ocsa
ndf
reet
radez
one
spr
omo
tet
her
is
eofi
nte
rna
ti
ona
lex
pans
ion
.

Tr
ue Fa
lse

5
3.Tra
dit
ion
all
y,c
ompan
yg l
obal
iz
ati
onismeas
ure
dint
ermso
fit
sfor
ei
gns
ale
sasap
erc
ent
ageoft
ota
lsa
les
,
butt
hisc
anbecon
fuse
dwi t
hreg
iona
li
zat
ion
.

Tr
ue Fa
lse

5
4.AU.S.firmexpa
ndsi
ntoChinaa
ndCa na
daatex
actl
ythesamesa
lesv
olu
me.
Theph
ysi
cald
ist
anc
eist
he
o
nlyfa
cto
rtha
taffect
sthet
ruedi
sta
ncebetwe
enthecoun
tri
es.

Tr
ue Fa
lse

5
5.TheU.
S.a
ndAu
str
ali
aha
vec
ommonl
angu
agea
ndc
ult
urea
ndy
ett
het
rued
ist
anc
eisg
rea
t.

Tr
ue Fa
lse

5
6.TheU.
S.a
ndMe
xic
oar
ecl
oseg
eogr
aph
ica
ll
yands
oist
het
rued
ist
anc
e.

Tr
ue Fa
lse

5
7.Ma
jorWe
ste
rnh
emi
sph
eret
radebl
ocsi
ncl
udeNAFTA,
Mer
cos
ur,
andASEAN.

Tr
ue Fa
lse

5
8.Ana
tur
alre
gio
nalt
radeb
locb
ase
dup
onl
angu
agea
ffini
tyi
sther
egi
onf
romAl
ger
iaa
ndMo
roc
cot
oOma
n
a
ndYemen.

Tr
ue Fa
lse

5
9.Cent
rala
ndSout
hAme r
icaarenotpa
rto
fan
atur
alr
egi
ona
lbl
ocb
eca
uset
heyo
nlys
har
ela
ngua
ge,
re
li
gio
n,andc
olo
niz
ati
onh i
st
o r
y.

Tr
ue Fa
lse

6
0.TheEu
rop
eanUn
ioni
sat
rad
ingbl
oct
hate
ase
str
ader
est
ri
ct
ion
s,t
axe
s,a
ndt
ari
ffsf
ori
tsme
mbe
rs.

Tr
ue Fa
lse

6
1.Af
ran
chi
seg
ene
ral
lye
xpi
resa
fte
raf
ewy
ear
s,whe
rea
sal
ic
ens
eisde
sign
edt
ola
sti
ntope
rpe
tui
ty
.

Tr
ue Fa
lse

7-6
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McGraw-Hill Education.

0 0
6
2.Ty
pic
all
y,j
oin
tve
ntur
esi
nvo
lvel
essc
ont
rola
ndr
iskt
hanf
ranc
his
ing
.

Tr
ue Fa
lse

6
3.Typ
ical
ly
,thele
astr
is
kymethodofent
ryint
oafore
ignmark
eti
sthr
ought
hees
tabl
is
hmentofawh
oll
y
ownedfo
reig
nsubsi
dia
rys
ot ha
tthepa
rentor
gani
zat
ionc
anmaint
ai
nah i
ghl
eve
lofcon
trol
.

Tr
ue Fa
lse

6
4.Ex
por
ti
ngi
sane
xpe
nsi
vewa
ytoe
nte
rfor
ei
gnma
rke
ts.

Tr
ue Fa
lse

6
5.Whe
nc onsi
der
ingt
heexpor
ti
ngdeci
si
on,
compa
nie
ssho
uldc
ons
ide
rtha
tthea
bil
it
ytot
ai
lort
hei
rpr
odu
cts
t
omeetlo
calmarke
tne
e dst
ypi
cal
lyi
sver
yli
mit
ed.

Tr
ue Fa
lse

6
6.Whencon
sider
ingth
ee xpor
tdeci
si
on,fir
mss
hou
ldn
otpa
rtne
rwi
thl
oca
ldi
st
ri
but
orsb
eca
usema
ny
f
ore
ignmar
k e
tsarena
ti
o nal
lyr
egul
at
ed.

Tr
ue Fa
lse

6
7.Li
censi
ngisac
ont
rac
tua
larr
ange
mentt
hati
nvol
vesal
ongpe
riodo
fti
mea
ndi
ncl
ude
sfa
ctor
ssuc
has
monit
ori
ngofo
per
ati
ons
,tr
ain
ing
,anda
dver
tis
ing
.

Tr
ue Fa
lse

6
8.I
nint
erna
ti
onalmarke
ts,
ad i
sad
van
tageofl
ic
e ns
ingi
sth
atthefir
mg r
ant
ingali
cens
ein
cur
sli
tt
ler
is
k,
s
inc
eitdoesn
o th
avetoinv
esta
nysi
gnificantre
sou
rce
sintot
hec
oun
tryi
tsel
f.

Tr
ue Fa
lse

6
9.Whol
lyownedsubsi
dia
rie
sarel
eastappr
opri
at
ewhereafir malr
ead
yha
sthea
ppr
opr
iat
ekn
owl
edg
ean
d
c
apa
bili
ti
est
hatitc
anlever
ager
ath
e rea
sil
ythr
oughmult
ipl
eloc
ati
ons
.

Tr
ue Fa
lse

7
0.Whol
lyownedsub
sidi
ari
esar
etypi
cal
lyt
hemos
texp
ens
ivea
ndr
is
kye
ntr
ymod
e.Ther
is
kiss
har
ed,
ho
wever
,wit
hthecompanypar
tner
s.

Tr
ue Fa
lse

Multiple Choice Questions

7-7
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
7
1.Whi
choft
hef
oll
owi
ngi
sn ar
ot i
skno
rma
ll
yas
soc
iat
edwi
thBot
tomo
fthePy
rami
dst
rat
egi
es?

A.Alow-endve
rsi
onofab randmayd et
rac
tfr
omt heove
ral
lbra
nda t
tr
a c
ti
venes
s.
B.Thenewlow-co
stproduct
stheydeve
lopmayc a
nnib
ali
zethesal
esofthei
rcorepr
oduct
s.
C.Ent
renc
hedcomp et
it
orscanimpactt
heabil
it
yofthenewfir mtoe nte
rthemarke
tsucc
essf
ull
y.
D.Newproduct
sma ybep e
rcei
vedasexpl
oit
ingth
eprivi
le
gedcust
omerwi t
hsubst
andar
dproduct
s.

7
2.Mul
ti
nat
iona
lfir
msa
rec
ons
tant
l
yfa
cedwi
tht
hed
ile
mmao
fch
oos
ingb
etwe
en__
____
_and_
___
____
__.

A.l
ocaladapt
ati
on;localinte
grat
ion
B.l
ocaladapt
ati
on;globalinte
grat
ion
C.g
lobaladapt
ati
on;localinte
grat
ion
D.gl
obaladapt
ati
on; gl
oba li
nteg
rati
on

7
3.Theris
eof________
_c api
tal
is
mar
oun
dthewor
ldc
rea
test
reme
ndo
usb
usi
nes
sopp
ort
uni
ti
esf
or
mult
inat
ion
alc
o r
porat
ions
.

A.soc
ial
B.mult
inat
iona
l
C.market
D.democrat
ic

7
4.Accor
din
gtoExhi
bit7.
1int
het
ext
boo
k,t
hec
ount
rye
xpe
rie
nci
ngt
hehi
ghe
str
ateo
fgr
owt
hinGDPf
rom
200
1-2011wa
s

A.theUnit
edSt
at
es.
B.Japa
n.
C.China
.
D.Indi
a.

7
5.Accor
din
gtoExhi
bit7.
1int
het
ext
boo
k,t
hec
ount
rye
xpe
rie
nci
ngt
hel
owe
str
ateofgr
owt
hinGDPf
rom
200
1-2011wa
s

A.theUnit
edSt
at
es.
B.China
.
C.Indi
a
.
D.Japa
n.

7-8
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McGraw-Hill Education.

0 0
7
6.Glob
ali
zat
ionopensthedoor
sfo
rcompa
nie
stoa
ttr
actn
ewc
ust
ome
rs.
Oneoft
hec
hal
le
nge
sist
ode
ter
mine
ho
wt omeettheneedsoft
hesec
ust
omer
swhohave

A.di
ffe r
entin
comel e
vel
s.
B.l
owincomelevel
s.
C.h
ighinc
omel e
vels
.
D.s
tead
yincomelevel
s.

7
7.Thetr
adeamongnat
ionsh
asincr
eas
eddr
amat
ica
ll
yinr
ecent
year
s,a
ndi
tise
sti
mat
edt
hatb
y201
5the
t
rade_____
___nat
ionswi
lle
x c
eedth
etr
ade_
______n
ati
ons.

A.wit
hin;acro
ss
B.acr
oss;wit
hin
C.wit
h;o ut
si
de
of
D.above
;wi t
hin

7
8.Whent
heGEwinden
ergybusi
nes
sta
ppe
dint
owor
ld-
wid
eta
lent
,itwa
sabl
etoe
xpa
ndu
sin
ga(
n)
___
___
____
____
___st
rat
egy.

A.focus
B.div
e r
si
fica
ti
on
C.unrel
ate
d
D.generi
c

7
9.St
ati
st
ic
sindi
cat
ethato
verha
lfo
ftheworl
doutpu
tn owcomesfr
ome merg
ingmar
ket
s.Thi
sisl
ead
ingt
o
a(
n)_____
______ofli
vin
gst
andar
dsac
rosst
heglobeandisc
hangi
ngthefac
eofbus
ine
ss.

A.di
ver
gence
B.c
onver
gence
C.e
xpansi
on
D.c
ontr
acti
on

8
0.Accor
dingtot
hetext
book,
globa
liza
ti
onin
vol
vesi
nte
rna
tio
nalex
chang
e.I
ncl
ude
dinthi
sexc
hangeist
rad
e
i
ng oodsands
ervi
cesaswel
lastheexc
han
geof____
______,
_____
_____,a
nd___
______acr
oss
cou
n t
ri
es.

A.habi
ts;v
alu
es;i d
e a
s
B.t
radi
ti
ons;l
ega lsys
tems;hi
st
ory
C.money;i
deas;infor
ma t
ion
D.st
ati
st
ics
;personnel;pu
rchas
ingpo
wer

7-9
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McGraw-Hill Education.

0 0
8
1.I
nthePo
rte
rDiamondofNa
ti
ona
lAd
vant
agef
rame
wor
k,whi
cho
fthef
oll
owi
ngf
act
orsdo
esn
ota
ffe
ct
n
ati
oncompet
it
iv
enes
s?

A.Theposit
ionoft
henat
ioninfact
orsofpr
oduct
ionnece
ssaryt
oc ompe t
einagive
nindust
ry.
B.Theprese
nceorabs
enceinthenat
ionofi
nte
rnati
onal
lycompeti
tiv
es uppl
ie
rindust
ri
es.
C.Thecondit
ionsi
nth
enati
ong ove
rningt
henatu
reoffore
ignri
valry
.
D.Thenatur
eofhome-mark
e tde
ma ndoft
heproduct
sorservi
cesoftheindus
try
.

8
2.Riva
lryi
sint
ens
einna
tionswit
hc on
dit
ion
sof____
______cons
ume
rde
mand
,__
___
____
_su
ppl
ie
rba
ses
,
and____
__ _
___ne
we ntr
antpo
tenti
alf
romre
lat
edind
ust
rie
s.

A.weak;weak;high
B.st
rong;s
tr
o n
g;low
C.weak;weak;low
D.st
rong;s
trong;hi
gh

8
3.Ac
cor
din
gtoMi
cha
elPo
rte
r,fir
mst
hath
avee
xpe
rie
nce
dint
ens
edo
mes
ti
ccomp
eti
ti
ona
re

A.unl
ike
lytohav
etheti
meorr esourc
est
oc ompet
ea br
oad.
B.morel
ikel
ytodemandprot
ecti
o nfr
omtheirgove
rnments
.
C.mostl
ikel
ytodes
ignst
rat
egie
sa imedpri
ma r
il
yatthedomest
icmark
et.
D.moreli
kel
ytodesi
gnst
rate
giesthatwi
llal
lowthemtosucce
ssful
l
ycomp e
tea
broa
d.

8
4.Whic
hofthefa
ctor
sbe
lowha
sn ma
ot d
ethes
oft
war
ese
rvi
cesi
ndu
str
yinI
ndi
aext
reme
lyc
ompe
ti
ti
veo
na
gl
oba
lsc
ale?

A.l
argepoolofskil
le
dwor ke
rs
B.l
arg
e ,gr
owingma r
ketandsophist
ic
ate
dcust
omers
C.t
axa ndant
it
rustl
egis
lat
ionth
a tpr
otec
tst
hedominantp
lay
ersi
nthei
ndu
str
y
D.l
argenetwor
ko fpubl
icandprivat
eeduca
ti
onali
nst
it
uti
ons

8
5.I
nrevi
ewingt
heIndi
anSof
twar
eindust
ryandthedia
mon dofn
ati
ona
ladvant
age
,whi
cho
fthef
oll
owi
ngi
s
agr
owingdet
rac
tort
othen
ati
onalcompet
it
iv
ea dv
antag
einthi
sin
dust
ry?

A.l
argepoolofski
lle
dworkers
B.e
rodingcostadv
antag
eofIndi
a nfirms
C.r
apidl
yimp ro
vingcommunica
tionsi
nfr
ast
ruct
ure
D.l
arge,gr
owingma r
ketan
ds ophis
ti
cat
edcust
omers

7-10
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McGraw-Hill Education.

0 0
8
6.I
nrevi
ewingt
heIndi
anSof
twar
eindust
ryandthedia
mon dofn
ati
ona
ladvant
age
,whi
cho
fthef
oll
owi
ngi
s
agr
owingdet
rac
tort
othen
ati
onalcompet
it
iv
ea dv
antag
einthi
sin
dust
ry?

A.Engl
ish
-la
nguagecapabi
lit
y
B.gr
owingma r
ketandsophis
ti
cated,
cust
omers
C.dut
y-f
reeacc
esstoimporte
dc ompute
rsandsof
twa
re
D.ri
seofcompeti
nglow-la
bor-c
o s
tcount
ri
es

8
7.I
nrevi
ewingt
heI
ndia
nSoftwar
eindu
str
ya ndthed
iamondofna
ti
ona
ladva
ntage
,whic
hoft
hef
oll
owi
ngi
s
are
lat
iv
elywe
akse
toffa
ctorsi
nthenat
ion
a lc
ompeti
ti
vead
vant
agei
nthi
sindu
str
y?

A.U.S.demandcon di
ti
ons
B.Fa
c t
orendowme nts
C.Dome s
ticri
val
ry
D.Dome s
ticdemandc ond
iti
ons

8
8.Co
untri
eswit
hd e
mand
ingc
ons
ume
rs,
lik
een
vir
onme
nta
ll
y-c
onc
ern
edDe
nma
rk,
dri
ve_
___
____
__t
o
mee
tthedemand.

A.wor
l d
wideinnovat
ion
B.i
n-count
ryinnovat
ion
C.f
oreig
nma nufac
turi
ng
D.gl
ob a
lexcha
n g
e

8
9.Rel
at
edindu
str
iesc
rea
teth
ep ro
bab
ili
tyt
hatn
ewc omp
anieswi
lle
nte
rthema
rke
t.Thi
s__
___
___
co
mpeti
ti
onandfor
cesexi
st
ingfirmstoimpro
ve______
_____.

A.d e
creas
es,in
novat
ion
B.decreas
es,effic i
ency
C.incre
ases,e
ffic i
enc
y
D.incre
ases,s
ales

9
0.Whi
chofthe
sepoin
tso
nthePo
rte
rdi
amo
ndo
fna
ti
ona
lad
vant
agei
sth
est
ron
ges
tind
ica
toro
fgl
oba
l
c
ompet
it
ives
ucc
e s
s?

A.for
eignriva
lry
B.dome st
icri
val
ry
C.glo
ba lr
ival
ry
D.int
ernati
onalr
iva
lry

7-11
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McGraw-Hill Education.

0 0
9
1.Whi
choft
hef
oll
owi
ngi
sn amo
ot tiv
ati
onf
orac
ompa
nyt
opur
suei
nte
rna
ti
ona
lexp
ans
ion
?

A.I
twi
shest
oincr
eas
et hesi
zeofthepo t
ent
ialma r
ket
sforitsproduc
tsandservic
es.
B.I
twi
she
stotak
ea d
v a
n t
ageofar
bit
r a
geoppo r
tunit
ie
sino r
dertoincre
asep r
ofit .
C.I
twi
she
stoopti
mizev a
lue-
cha
inac t
ivi
ti
estoenh a
ncepe r
formance,r
educec os
ts,
andr
educer
is
k.
D.I
twi
shest
oincr
easefor
eignmar
k etpenet
rat
ionbyde v
elopingproduc
tsforthehomemarke
t.

9
2.I
facompa
nyi
scons
ide
rin
go pt
imiz
ingt
hephysi
callo
c a
tio
nforeve
rya
cti
vit
yint
hev
alu
ech
ain
,whi
cho
f
t
hef
oll
owi
ngi
snotaposs
ibl
estr
ate
gica
dvant
ageforthatde
cis
ion?

A.Per
forma nceenh a
ncement
B.Costre
d uct
ion
C.Pol
iti
calris
kred uct
ion
D.Lif
e-cycleenh
a ncement

9
3.Thesa
leofBo
eingcommer
cia
lai
rcr
afta
ndMi
cro
sof
tope
rat
ings
yst
emsi
nma
nyc
oun
tri
ese
nabl
est
hes
e
compa
nie
stobene
fitfrom

A.hi
gherpri
cesinthei
rdome s
ti
cmarket
s.
B.r
educi
ngtheirexposur
etocurr
enc
yrisks.
C.e
conomiesofscale.
D.opt
imizi
ngthelocat
ionformanyact
ivi
ti
esint
hei
rva
luec
hai
n.

9
4.I
ftheU.S.dol
la
rappre
ciat
esr
ela
ti
vet
ofor
ei
gnc
urr
enc
y,wh
ati
sli
kel
ytob
eth
ere
sul
tfort
heU.
S.c
ompa
ny
t
hatha
sb r
anchesa
broad?

A.Profitswil
linc
rease
, whenmeasur
edinU.S.dol
lar
s.
B.Pro
fit swil
ldecre
ase,whenmeasur
edinU.S.doll
ars
.
C.For
eignexpo
rtst
otheUnitedSta
teswil
ldecr
ease
.
D.Fore
igndemandforU.S.g
oo d
sandservi
ceswil
ldecre
ase
.

9
5.___
____
___occur
swh
enafir md
eci
dest
out
il
izeo
the
rfir
mst
ope
rfor
mva
lue
-cr
eat
inga
cti
vit
iest
hatwe
re
pr
evi
ous
lype
rfor
medi
n-ho
use
.

A.Offs h
ori
ng
B.Agl
o ba
lst
rate
gy
C.Out
sour
cin
g
D.Atr
ansnat
ionals
tr
ate
gy

9
6.I
ncon
side
rin
gthed
eci
si
ont
ooffs
hor
e,whi
cho
fthef
oll
owi
ngg
ene
ral
lyi
sn on
ot eoft
heh
idd
enc
ost
s?

A.Tota
lwa gecost
sandi n
dir
ectcost
s
B.Wagede fla t
ion
C.Reduct
ioninintel
lec
tualp
ropert
yright
s
D.Inc
reas
e din
ventoryandcoordi
nat
ioncost
s

7-12
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McGraw-Hill Education.

0 0
9
7.L'
Orea
lacquir
edt woU.S.firmstha
tdev
e l
opedandsol
dhai
rcar
ep r
odu
ctst
oAfri
can-
Ame r
ica
ncust
omers
.
Thi
spermitt
edittobui
ldanewethni
chai
rcaredi
vis
ioninEu
ropeandAfr
ica
.Thi
srepr
ese
ntsanad
vanta
ge
ofi
nte
rnat
ionalexpans
ionus
ing___
_________.

A.arbi
tr
age
B.opti
mizat
ionoft
hel
oca
tio
nofv
alu
e-c
hai
nac
ti
vit
ie
s
C.perf
ormanceenh
anc
ement
D.lea
rnin
g
opport
unit
ies

9
8.GEHe alt
hcar
edev
elopedaport
abl
e,ine
xpens
iveul
tr
aso
unddevi
cef
ort
heemer
gin
gChin
esemar
ket
.It
exp
ectstose
llt
hedevic
eintheUnit
edStat
esatapr
icec
heape
noughf
orev
eryp
hysi
ci
an,
para
medi
c,and
emerg
e n
cyroomnursetopur
chas
e.Thisi
sane x
ampleof

A.t
o t
alwageco s
tsandin
dir
ectc
ost
s.
B.r
iskredu
cti
o n.
C.r
eversei
nnov a
ti
on.
D.opti
mizat
ionofva l
ue-
cha
inact
ivi
tyl
oca
ti
ons
.

9
9.Sou
rce
sofp
oli
ti
calr
is
kdon
oti
ncl
ude

A.ava
il
a bi
lit
yo ft
her
uleo
fla
w.
B.soc
ialunrest
.
C.mil
itary
t
urmoi l
.
D.demonstrat
ions
.

1
00.
Foryea
rsO.R.T.Technol
ogi
esresi
st
edmovi
nganyopera
ti
onsout
sideIsr
ael
.Ho weve
r,whenface
dwitha
shar
pris
einthev a
lueoftheshek
el,t
hemak
erofspec
ial
ize
dsoft
wa r
eforma na
ginggass
tat
ionsfr
ozeal
l
loc
alhi
rin
ga nddecide
dtotra
n s
ferso
medevel
opment
alworkt
oEa st
ernEurope.Thi
sisanexampleof
______
_______r i
sk.

A.polit
ic
al
B.e
c onomic
C.c
ur re
ncy
D.ma nage
ment

7-13
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McGraw-Hill Education.

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1
01.
Areportis
suedbytheWor l
dTr a
deOr gani
zat
iondesc
ribedtheproduct
ionofaparti
cul
arU.S.car
.The
st
udyshowe dt
hat30percentoft
hec arval
uegoestoKo r
eaforasse
mb ly,
17.5perc
enttoJ
ap anfo
r
componentsandadva
ncedtechnol
ogy, 7.
5per
centtoGe r
man yfordes
ign,4perce
nttoTai
wa nand
Sin
gaporeforminorpar
ts,2.
5p e
rcenttoU.K.f
oradverti
si
nga ndma r
keti
ngservi
ces,a
nd1.5p e
rcent
to
Ir
ela
nda ndBarbad
osford at
aproce
s s
ing.Thi
sisanexampleo f

A.outs
ourc
ingandoffs hori
ng.
B.o
utsour
cingandon-
shorin
g.
C.i
nsourc
ingandoffs h
or i
ng.
D.i
n s
ourc
ingandouts
ourc
ing.

1
02.
Ric
ohAmeri
casCo
rpo
rat
ionha
ssign
ificanti
nter
nat
iona
lope
rat
ions.
Facedwi
thloc
alr
eti
cenc
etoadap
t
cha
nge
sth
atcomef
romothe
rglo
balreg
ion
s,whatdoe
sRicohs
uggesti
sth
emo s
tsucc
ess
fula
pproa
ch?

A.Bri
n ging l
obalmarke
trepr
e s
e nta
tiv
est
oforcecha
n g
el oc
all
y.
B.Obligat
elocaloffic estoad optt
hecorpo
rat
ede c
isio
n.
C.Ensurestake
ho l
derp
arti
cip
a t
ione ar
lyi
nthechangeproces
s.
D.Ign
or etheprobl
emb ec
auseiti sonl
yatempora
ryissue.

1
03.
Renau
ltpa
id1b i
ll
ionUSDtoa cq
uirea25percentowner
shi
pst
akeintheRus s
ianautomakerAvt
oVAZin
2008.
Jus
to neyearlat
er
,Russ
ianPrimeMi n
iste
rVl a
dimi
rPuti
nthre
aten
e dtodil
utetheRenaul
towne
rshi
p
st
akeunl
essitcont
ribut
edmoremo neytopr
opu pAv t
oVAZ,whic
hwa sthenexper
iencin
gas i
gnifica
nt
sl
idei
nsal
es .Thi
sisanexampleof_____________ri
sk.

A.cur
rency
B.ec
ono mi
c
C.pol
it
ical
D.management

1
04.
Accor
dingt
otheEur
omoneymag
a z
ine2014a
nnua
lCou
ntr
yRi
skRa
ti
ng,
whi
cho
neo
fthef
oll
owi
ng
cou
n t
ri
esha
sthehi
ghes
tec
onomicri
sk?

A.Sout
hKo rea
B.Chin
a
C.Colo
mbi a
D.Argent
ina

1
05.
Whi
cho
neo
fth
efol
lo
win
giso
neoft
heTh
eodo
reLe
vit
tas
sumpt
ion
ssu
ppo
rti
ngap
ureg
lob
als
tr
ate
gy?

A.Consume r
sa r
ewill
ingtopaymo reforspeci
ficp roductfe
a t
ure
s.
B.Custo
me rneedsandint
erest
sarebe c
omi n
gmor edis
simila
r.
C.MNCsc a
ns ucce
ssf
ull
yc ompeteglobal
lybyaggres
sivel
yprici
ngp r
oduct
satt
hesacr
ificeo
fprodu
ct
fea
ture
s.
D.Ift
hewor l
dma rket
saretre
atedash e
ter
o g
eneous,
substant
ialeco
nomiesofsc
alea
reeas
il
yac
hie
ved.

7-14
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McGraw-Hill Education.

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1
06.
Whe nfirmsexpandint
oglo
balmark
ets
,theyarefa
cedwi t
hth
echoi
ceo
freduci
ngcos
tsand/
ora
dapt
ingt
o
thel
ocalma
rket
.Whe nhi
ghpres
sur
esexi
sttolo
we rcos
ts,
compani
ess
houl
dchoosea
(n)___
_______o
r
______
____inord
ertocompet
eint
heglobalmarket
pla
ce.

A.gl
obals
trat
egy;t
rans
nati
o nalstr
ate
gy
B.g
lobals
tr
a t
egy:mult
ido
me s
ticst
rat
egy
C.i
nte
rnat
ionals
tra
tegy
;mu lti
do mest
ics
tra
tegy
D.i
nter
nat
ionals
trat
egy;t
ransnati
onalst
rat
egy

1
07.
Whe nfirmsexpandint
oglo
balmark
ets
,theyar
efa
cedwitht
hechoi
ceofr
educ
ingcost
sand/
orada
pti
ngto
thel
ocalma
rket
.Whe nhi
ghpres
sur
esexi
sttoada
ptl
ocal
ly
,compa
niess
houl
dchoosea(
n)______
____or
______
____inord
ertocompet
eint
heglobalmar
ket
pla
ce.

A.gl
obals
trat
egy;tr
ansnat
ionalst
rat
egy
B.g
lobals
tr
a t
egy:multi
dome s
ticst
rat
egy
C.i
nter
nat
ionals
trat
egy;gl
ob alst
rat
egy
D.t
rans
nat
ionalstr
ate
gy;mu lt
idomest
icst
rat
egy

1
08.
Toberes
pons
ivetol
ocalpr
ess
ure
s,compani
esmust_______
___
__t
hei
roffe
rin
gsa
nds
tr
ate
gie
sfr
om
cou
ntr
ytocountr
ytore
fle ctl
ocalcon
sumerpr
efer
ence
s.

A.in
ter
nati
o na
li
z
e
B.gl
obal
ize
C.di
ffe renti
at
e
D.st
andar
dize

1
09.
Whendiffere
nti
at
ingpr
odu
ctsa
nds
ervi
cest
olo
calma
rke
ts,
str
ate
gie
sandt
act
ic
sar
eli
kel
yto_
____
____
_
compa
nycos
ts.

A.d e
creas
e
B.incre
ase
C.obli
tera
te
D.d e
centr
ali
z
e

1
10.
Int
heques
ttoachie
vecompe
ti
ti
veadva
ntagei
ng l
oba
lmark
ets,
competi
ti
vepr
essur
esreq
uiret
hatfir
msd o
whatt
heycant
o_ ____
__uni
tcost
ssotha
tconsumer
swi
llnotper
cei
vethe
irp
roducta
nds e
rvi
ceofferi
ngs
ast
ooexpe
nsiv
e.

A.ra
ise
B.dece
ntra
li
z
e
C.defin e
D.lo
we r

7-15
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McGraw-Hill Education.

0 0
1
11.
Whic
hwo uldbet
heappr
opr
iat
est
rat
egyf
orc
ompani
est
ouset
ocompet
einth
egl
oba
lma
rke
tpl
acei
fth
e
mar
ketp
lacepr
ess
urei
sforl
owerc
ost
swit
hli
tt
lep
res
sur
efo
rlo
calad
apt
ati
on?

A.i
nter
n a
tionalst
rat
egy
B.gl
obalstr
a t
egy
C.mult
idome st
icst
rat
egy
D.t
rans
na t
ionalst
rat
egy

1
12.
Highpres
suref
orloc
ala
dap
tat
ionc
ombi
nedwi
thl
owpr
ess
uref
orl
owe
rco
stswou
lds
ugg
estwh
att
ypeo
f
int
erna
ti
onalst
rat
egy
?

A.gl
oba ls
tra
tegy
B.mult
idome st
icst
rat
egy
C.t
ransnat
ionalst
rat
egy
D.ov
e r
allcostl
eader
ships
tr
ate
gy

1
13.
Inconsi
deri
ngthet r
ansnat
ionalstr
a t
egy,Nest
leev
alua
test
helimi
tso
fd e
centr
ali
zati
on.Theclose
rthe
yare
totheconsu
me rinacti
vit
ie
ss ucha sbra
nd i
ngandpri
cing,
themoret
hentendtodecent
ral
ize.
Themo re
the
yd ealwit
hp rod
ucti
ona ndl o
g i
sti
cs,
themo ret
heycent
ral
iz
edeci
sio
n-making.Theproduct
ionand
log
isti
csdeci
sionsinv
olve___ ____acti
viti
es.

A.upst
rea
m
B.i
nits
i
nfra
str
uctur
e
C.do
wn st
ream
D.midst
ream

1
14.
Indus
tri
esinwhic
hp r
opor
ti
ona
ll
ymo
rev
alu
eisa
dde
din_
____
___
__a
cti
vit
ie
sar
emo
rel
ike
lyt
obe
nefit
fr
o mag l
obals
tr
ategy
.

A.downst
ream
B.upst
rea
m
C.market
ing
D.sa
les

1
15.
Whichofthef
oll
owin
gtype
sofinte
rna
ti
ona
lfir
msa
remo
stl
ike
lyt
obe
nefitf
romagl
oba
lst
rat
egya
s
opp
osedtoamulti
domes
ti
cstr
ate
gy?

A.fir
mst
hatc
ompe t
einind
ustri
esinwhichconsumerpr
efe
rence
svarysubs
tant
ia
ll
yineac
hcou
ntr
y
B.fir
msi
nindus
tri
esth
atar
ee xpa
nd i
ngveryra
pidly
C.fir
msi
nindus
tri
esth
athaveval
uea dd
edb ysa
lesandmarke
tin
gd e
pa r
tment
s
D.fir
msi
nindus
tri
estha
thavemuchv al
ueaddedinres
ear
chandd e
signormanuf
act
uri
ng

7-16
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McGraw-Hill Education.

0 0
1
16.
Recent
tre
ndst
hatmigh
tle
admanage
rsofmult
ina
ti
onalc
orpor
ati
ons(MNCs
)toadop
tamo
re
dec
entr
ali
zeds
tr
ate
gyfort
hei
rope
rat
ionswo
uldincl
udeal
loft
hefoll
owi
ngexc
ept

A.c
ust
ome rneeds,i
nter
est
s,andtast
esbecomi
ngincr
eas
ing
lyh
omogeniz
ed.
B.c
onsume rsaroundtheworldincr
easi
ngl
ywill
ingt
otra
deoffidi
osyncr
ati
cpref
ere
ncesi
nprod
uctf
eat
ure
s
f
orl
o werpr i
ce.
C.flexiblema nufac
turi
ngtrendsal
lowin
gadecli
neint
hemini
mumv ol
umer e
quir
edtore
achacc
ept
abl
e
l
eve
lso fproducti
oneffic ie
ncy.
D.fluc t
ua t
ingexchangera
tes.

1
17.
Fir
msfol
lowingaglob
als
trat
egys
tri
vet
ooffer__
_______
_prod uct
san
dservi
cesa
swella
slocat
e
manuf
act
urin
g, Re
sear
chandDeve
lopme
nt,
andmar
ket
ingac
ti
vit
iesinali
mit
ednumbero
flocat
ions
.

A.widel
ydiffe re
nti
ate
d
B.moreexpens
iveloc
al
C.i
nter
nati
onal
lydiffe r
ent
ia
ted
D.st
andar
dized

1
18.
Asint
hecas
eofSi
ebelSy
ste
ms(
nowparto
fOr
acl
e),e
leme
ntso
fag
lob
als
tr
ate
gyma
yfa
cil
it
at
ethe
compe
ti
ti
veadv
ant
ageofdi
ffer
ent
ia
tio
nby

A.i
ncre
asedfr
eedomofindivi
dualbusine
ssunit
stoa dapttol
oca lt
ast
es.
B.t
hecrea
ti
ono faworl
dwidenetworktoachi
evecon si
stents
ervicere
gardl
esso
flo
cati
on.
C.flexibi
li
tyi
na ppl
yin
gRe se
archan dDevel
opme nttome e
tc ount
ry-
speci
ficn e
eds.
D.t
ail
ori
ngproduct
stome e
tcountr
y-speci
ficn eeds.

1
19.
Whi
cho
fthef
oll
owi
ngi
sn ar
ot i
ska
ssoc
iat
edwi
thag
lob
als
tr
ate
gy?

A.Afir m withonlyonema nuf

act
uri
nglocati
onmus texportit
sp r
oduct
,someti
me sa
tgr
eatdi
st
ancef
rom
theoper
ation.
B.Theg e
ographicconc
e nt
rat
ionofanyac
tivit
yma yal
s ote
ndt oisola
teth
atacti
vit
yfromt
hetar
get
ed
ma r
ket
s.
C.Concentr
ati
n ganact
ivit
yinas i
ngl
eloca
t i
onma ke
st her
e stoft
hefir md ependent
ontha
tloc
ati
on.
D.Thep r
essur
e sf
orlocalada
p t
at
ionmayelevat
etheco s
tstruct
ureofthefir m.

1
20.
Whi
cho
neo
fth
efol
lo
win
gisn
otal
imi
ta
ti
onofag
lob
als
tr
ate
gy?

A.l
imi
tedabil
it
yt oa
dapttolocalmarke
ts
B.t
heabi
lit
ytolocat
eact
ivit
iesinopt
imallo
cat
ions
C.t
heconcent
rati
onofa
c t
ivi
tie
sma yincr
eas
edepende
nceonasin
glefa
cil
it
y
D.s
ing
lelocat
ionsmayl
e a
dtohi ghe
rtari
ffsandtrans
por
tat
ioncos
ts

7-17
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McGraw-Hill Education.

0 0
1
21.
Whi
cho
fthef
oll
owi
ngi
sar
eas
onf
ort
her
is
einr
egi
ona
lexp
ans
ion
?

A.i
ncr
eas
einthenu mberoft
radin
gblocsa
ndfre
etra
dezone
s
B.d
ecr
easeinth
enu mberoft
radingbl
ocsandf
reet
radez
ones
C.i
ncr
eas
ingnati
o na
ltr
adere
stri
ct
ion
s
D.i
ncr
eas
inglocalta
xesandt
ariffs

1
22.
Whi
cho
neo
fth
efol
lo
win
gex
pla
inswh
ysof
ewfir
msa
reg
lob
al?

A.Cult
ure,la
nguage,a
ndr el
igi
onares
imilarbet
weencountr
ies.
B.Lega
landpo li
ti
calsy
stemsaresi
milarbet
we e
ncountr
ies
.
C.Govern
me ntsar
eincre
asingtr
adere
stri
ct
ionsingen
eral
.
D.Geographi
cdist
anceismu l
ti
pli
edbydist
a nc
eincul
ture
,languag
e,r
eli
gio
n,a
ndl
ega
landpo
lit
ic
al
sy
stems.

1
23.
Whi
cho
neo
fth
efol
lo
win
gisn
otaWe
ste
rnhe
mis
phe
ret
radebl
oc?

A.NAFTA
B.MERCOSUR
C.ASEAN
D.Lat
inAme
ric
anI
nte
gra
ti
onAs
soc
iat
ion

1
24.
Cana
daa
ndMexic
oar
ethesa
med i
st
anc
efr
omt
heUn
ite
dSt
at
es,
butt
radei
shi
ghe
rbe
twe
ent
heU.
S.a
nd
Cana
dat
hanwi
thMex
icobe
caus
e

A.t
ruedist
a nc
eissmal
lerbet
we e
ntheU.S.andCa na
da.
B.al
lthr
eec ount
ri
essh
arethesameleg
alsyst
e m.
C.t
herearefewimmigr
ationpr
ob l
emswithMe xic
o.
D.Ame r
icanspre
ferCa
na d
ianfoodtoMexic
a nfood.

1
25.
Regi
ona
li
zat
ioni
smo
sti
mpo
rta
ntbe
caus
eitp
ermi
tsc
ompa
nie
stoor
gani
zet
hei
rac
ti
vit
ie
sba
sedup
on

A.phy
sic
a ldist
ancebet
weentheh
omecount
ryandt
hefor
ei
g ncount
ry.
B.t
heextrin
sicd i
st
ancebet
weent
heho
mec oun
trya
ndthefore
igncount
ry.
C.t
hetru
ed ista
nceb e
tweenth
ehomecou
ntryoffera
ndth ef
orei
gncountr
y.
D.s
hareholderexpec
tat
ion
s.

1
26.
Simi
la
rit
yofc
ult
ure
,la
ws,
rul
es,
andno
rmse
nco
ura
ges

A.r
egional
iza
tion.
B.g
lobali
zat
ion.
C.t
rans
-nati
onali
zat
ion.
D.e
thnocent
ricexpansi
on.

7-18
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McGraw-Hill Education.

0 0
1
27.
Accor
din
gtothete
xtb
ook,___
_____
___
___
_ec
ono
mici
nte
gra
ti
onh
asp
rogr
ess
eda
saf
ast
erp
acet
han
___
______ec
o no
micint
egr
ati
on.

A.gl
obal;
i
nte
rnati
onal
B.i
nte
rnati
onal
;reg
ional
C.r
egi
on a
l;gl
obal
D.r
egional
;in
ter
-r
egion
al

1
28.
Regio
nsrepr
ese
nttheo
utc
ome sofce
ntu
rie
sofp
oli
ti
cala
ndc
ult
ura
lhi
st
oryt
hat
res
ult
sinn
oton
ly
________
_butals
omutual_
__ __
_____
___.

A.di
ffe r
ences
;expec
tat
ions
B.s
imil
ari
ti
es;e
xpect
ati
ons
C.c
ommon al
it
ies
;lo
sses
D.c
ommon al
it
ies
;affin it
ie
s

1
29.
Sha
redSpa
nis
hco
lon
ial
is
miso
ner
eas
ont
hate
xpl
ai
nsr
egi
ona
li
smt
end
enc
iesi
n

A.As i
a.
B.South
Ame ri
ca.
C.theUnite
dSt
at
es.
D.Africa
.

1
30.
Sha
redAr
abi
cla
ngu
agea
ndt
heMus
li
mre
li
gioni
son
ere
asont
hate
xpl
ai
nsr
egi
ona
li
smt
ende
nci
esi
n

A.SouthAme r
ica
.
B.t
heMa g
hreb
.
C.EuropeanUni
on.
D.North
Ame ri
ca.

1
31.
Whi
cho
fthef
oll
owi
ngd
esc
ribe
sth
emo
stt
ypi
calor
dero
fen
tryi
ntof
ore
ignma
rke
ts?

A.f
ranchi
si
ng,li
cens
ing,expor
tin
g,j
ointv
ent
ure
,andwhol
lyowne
dsubs
idi
ary
B.e
xporti
ng,f
ranchi
si
ng,lic
ensi
ng,j
oin
tvent
ure
,andwho
llyo
wnedsubs
idi
ary
C.l
ic
ensing
,export
ing,
franchi
si
ng,j
oin
tvent
ure
,andwho
llyo
wnedsubs
idi
ary
D.e
xp o
rti
ng,l
icens
ing,f
ranchi
sin
g,j
ointv
ent
ure,a
ndwhol
lyowne
dsubs
idi
ary

7-19
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McGraw-Hill Education.

0 0
1
32.
Ado me
sti
ccor
por
ati
onc
ons
ide
rin
gint
erna
ti
ona
lex
pans
ionf
ort
hefir
stt
imet
ypi
cal
lywi
llf
oll
owwhi
cho
f
the
sepa
ths?

A.I
twi
lls
tar
tbyimp l
ementi
ngawho ll
yown e
df o
rei
gnsubs
idi
ary
.
B.I
twi
lli
mplementalowrisk
-lo
wc ont
rolst
rat
egysuchase
xport
ing
.
C.I
twi
lll
ic
enseorfra
nchis
eitsoper
ati
ons
D.I
twi
llf
orm aj
ointvent
urewithareput
abl
eforei
gnpro
ducer
.

1
33.
Thef
ormofent
ryst
rat
egyint
oint
ern
ati
ona
lope
rat
ionst
hato
ffe
rst
hel
owe
stl
eve
lofc
ont
rol
fort
he
dome
sti
ccor
por
ati
onwo ul
dbe

A.f
ranchi
s i
ng.
B.l
ic
ensing.
C.j
ointventur
e.
D.e
xpo r
ti
n g.

1
34.
Feest
hatamult
ina
ti
onalr
ece
ive
sfromafor
ei
gnli
cense
einret
urnf
ori
tsu
seo
fint
el
le
ctua
lpr
ope
rty
(t
rade
ma r
k,p
ate
nt,t
rades
ecr
et,
tec
hnol
ogy)ar
eusua
ll
yc a
ll
ed

A.tr
ansf
erp r
ice
s.
B.di
viden
ds .
C.ro
yalt
ie
s.
D.in
tra
-corpora
tei
nflo
ws.

1
35.
Thedi
ffe
renc
ebe
twe
enaf
ranc
his
econ
tra
cta
ndal
ic
ens
ingc
ont
rac
tist
hata

A.f
ranchi
secont
racti
smor especi
fica ndusual
lylongeri
ndur
ati
on.
B.f
ranchi
sec
ontrac
tmu stinc
ludeafor
eigngove
rnme nt
.
C.l
ic
e ns
ingc
on t
rac
tcoversmo r
easpec
tsofoper
ati
on s
.
D.f
ranchi
secont
racti
nvolve
slesscont
rolan
dlessri
sk.

1
36.
The__
___
____
_ent
ai
lthec
rea
ti
ono
fat
hir
d-p
art
yle
gale
nti
ty
,wh
ere
ast
he__
___
____
_dono
t.

A.l
icensi
nga gree
me nt
s;joi
ntventur
es
B.s
tr
a t
egica l
li
ances
; j
oin
tventure
s
C.j
ointventures
;str
ate
gicall
ia
nc e
s
D.f
ranchi
s i
nga gr
eements;s
tra
tegical
li
anc
es

1
37.
A__
___
____
_isab
usi
nes
sinwhi
chamu
lti
nat
ion
alc
ompa
nyo
wns1
00p
erc
ent
oft
hes
toc
k.

A.wholl
yowne dsubs
idi
ary
B.s
tr
a t
egi
ca l
li
ance
C.j
ointve
nture
D.f
ranchi
si
ngop e
rat
ion

7-20
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McGraw-Hill Education.

0 0
1
38.
_________
_aremosta
ppr
op r
iat
ewhe
nafir ma l
rea
dyhast
heap
propr
iat
ekn
owl
edg
ean
dca
pab
ili
ti
est
hat
it
canle
v e
rag
era
there
asi
lyt
hroughmul
ti
plel
oca
ti
onsinman
ycount
ri
es.

A.Joi
ntv e
ntures
B.Str
ategi
ca l
li
ances
C.Licensi
ngagreement
s
D.Wh oll
yo wnedsubsi
dia
rie
s

1
39.
Wha
tagr
eeme
nte
nta
il
sthec
rea
ti
ono
fat
hir
d-p
art
yle
gale
nti
ty?

A.s
tra
tegical
li
anc
e
B.j
ointvent
ure
C.l
ic
ensing
D.e
xpo r
ti
n g

1
40.
Afir
mca
nes
tabl
is
hawho
llyo
wne
dsub
sidi
aryb
y

A.a
cqui
ringa nexis
tin
gc ompan
yinthehomec
oun
try
.
B.k
eepi
nga l
lo ftheacti
vit
yoffs ho
re.
C.l
ic
ensi
ngi nte
ll
e c
tualpr
oper
ty.
D.e
nter
ingintoaf r
anchis
inga
greement
.

7-21
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McGraw-Hill Education.

0 0
 Ch
apt
er0
7Int
erna
tio
nalSt
rat
egy
:Cr
eat
ingVa
luei
nGl
oba
lMa
rke
tsAn
swe
r
Key

True / False Questions

1
. Th
etr
endt
owa
rdswo
rld
widema
rke
tsma
kesi
tea
sie
rtopr
edi
ctwhe
rec
omp
eti
tor
swi
lls
pri
ngup
.

FALSE
Ther
is
eofgl
obal
iz
atio
n,meani
ngther
iseo
fma
rke
tca
pit
ali
sma
roun
dthewor
ld,
mea
nsc
omp
eti
tor
s
ca
nnowcomefr
omj us
tabo
utanywher
e.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

2
. Beca
usemanyco
untr
iesa
reinve
sti
ngi
ncou
ntr
ieso
the
rtha
nthe
iro
wn,
eac
hco
unt
ryi
sbe
comi
ngmor
e
aut
onomousa
ndind
ependent
.

FALSE
Globa
liz
ati
on,whi
chisontheri
se,ha
stwome an
ings
.Oneistheinc
reas
eininter
nat
ion
alexch
ang
e,
inc
lud
ingtr
adeingoo
dsands er
vic
esaswella
sexcha
ngeofmo ne
y,idea
s,andinf
ormat
ion.
Thesecon
d
ist
hegrowin
gsimi
lar
ityofla
ws,rul
es,no
rms,val
ues
,andide
a sa
crosscou
n t
ri
es.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

3
. I
ncre
asi
ngint
ern
ati
ona
lexch
a n
geingoodsa
ndse
rvi
cesc
anrunint
oth
edi
ffic
ult
yofha
vin
gon
eoffe
r
t
hatmeet
stheneed
sofcu
stomersa
tdifferi
ngi
nco
meleve
ls.

TRUE
Oneoft
hecha
ll
enge
swithglo
bali
zat
ionisdet
ermini
nghowtome etthene
e dsofcus
tomer
satve
ry
di
ffe r
ent
inc
omeleve
ls.I
nma nydeve
lopi
ngeconomies,
dis
tri
buti
onsofincomeremainmuchwide
rth
an
t
heydoint
hedev
elo
pedworld,l
eavi
ngma n
yimpo ve
ris
hedevenastheec
on omiesgr
ow.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

7-22
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McGraw-Hill Education.

0 0
4
. By2
015,
iti
spr
edi
ct
edt
hatt
radewi
thi
nna
ti
onswi
lle
xce
edt
radea
cro
ssn
ati
ons
.

FALSE
Thetr
adeamongnat
ionshasi
ncr
eas
eddramat
ica
ll
yi nr
ece
nty
ear
sandi
tise
sti
mat
edt
hatb
y201
5,t
he
tr
adeacr
ossn
ati
onswille
xcee
dthet
radewit
hinnat
ions
.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

5
. Ther
eareri
sksass
oci
ate
dwiththeBot
tomoft
hePyra
midst
rat
egy
.Oneoft
hemist
hatt
hen
ewlo
w-cos
t
pr
oduct
sthatar
edeve
lopedmaycanni
bal
iz
eth
esal
esoft
hecor
eprod
uct
softh
ecompan
yusi
ngt
he
st
rat
egy
.

TRUE
Firmsn e
e dtoacti
vel
yma nagetheri
s ksth
ataccompanyBOPs t
rate
gies
.The s
ei n
cludec o
nc e
rnsabout
theimageo fthefir miftheyarepe rc
eiv
eda sexpl
oit
ingunderpri
vil
egedcustomersbyp rovi
dingt
hem
withsubstandar
dp r
oductsorsel
li
ngt hems omethi
ngtheydonot needorcannotaffo rd.Second,t
herei
s
ariskthatalow-endvers
ionofab randma yd e
trac
tfr
omt heoveral
latt
ract
ivenes
so ft
hebr and.Thi
rd,
thenewl ow-costpr
oduct
stheyd ev
elopma yc an
nibal
izeth
es a
lesofthei
rco r
ep r
od uc
ts.Final
ly
, firms
employingaBOPs tr
ate
gyne edtobea wareoftheent
renchedcompe t
it
orst
he yma yfac
e .

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

6
. Emer
gin
gmar
ket
sar
egr
owi
ngs
lowe
rth
and
eve
lop
edma
rke
ts,t
huss
hif
ti
ngt
hes
tr
uct
ureo
fth
egl
oba
l
ec
onomy.

FALSE
Theg rowthexper
iencedb ydev
elopedeco
no mi
esinthefir s
tdeca
d eofthe2000swasanemic,
whil
ethe
gr
o wthindev e
lop
inge c
o nomie
swa srob
ust.Thi
str
e ndisc
onti
nui
ng ,wi
the merg
ingmarke
tsgro
wing4
perce
n tfa
ste
rthandevelopedmarket
sin201 1a
nd2 012.Thi
shasre
s ul
te
di nad r
amati
cshi
fti
nthe
st
ructureofthegl
ob a
lec onomy.Asof2013,ov
erhalfthewor
ldoutputwillco
mef r
ome merg
ing
markets.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

7-23
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McGraw-Hill Education.

0 0
7
. Mult
inat
ion
alc
ompani
es,
lik
eGE,
tak
ead
vant
ageofg
lob
ali
zat
iont
ota
pint
ota
lent
arou
ndt
hewor
ldi
n
or
dertobui
ldp
rod
ucts
.

TRUE
TheGEwi ndenerg
ybu s
inessbenefitsbyt a
pp i
ngi
ntot
al
entar
oun
dt hewor
ld.Thefir mhasbui
lt
r
esea
r c
hcent
e r
sinChina
, Germany,I
ndia,
a ndtheU.
S.CEOJeffreyI mmel
texpla
inst
hatt
heydothi
sin
or
dertoac
cessthebes
tbrainsever
ywhereintheworl
d.Al
lfou
rcent
ershavep
layedakeyrol
einGEs
de
velopme
nt ofhug
e92-tonturbi
nes.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

8
. Theshi
ftinthegloba
lau
tomobi
lemar
keto
v e
rthepa
stse
vera
lye
ars
, i
nwh i
chChin
asuppl
ante
dt h
eU.S.
att
hela
rgestma r
ketf
oraut
omobi
le
sin2009,i
sanexampl
eofhowthest
ruct
ureo
ftheg
lobaleconomy
isu
nchangin
g .

FALSE
Thisra
pidris
ei ng l
ob alcapit
a l
ismh asdramat
iceffe c
tsont hegrowthind i
ffe renteconomiczones.As
showninExh i
bit7 .
1 ,t
heg rowthe xperi
encedbydevelopede c
on omie
si nthefirs tdec
ad eofthe2000s
wasanemic,whilet heg r
owt hindev e
lopingec
onomi eswa srobust
.Thisha sr
esul
tedinadr amati
cshift
int
hestruct
ureo fthegl o
ba leconomy .Overhal
foftheou tputintheworldn o
wc ome sf
rome me rg
ing
market
s.Thisislead i
ngtoac onver
g e
nceo fl
ivi
ngs t
andardsacrosstheglobeandischangingthefaceof
busi
ness
. Oneexa mp l
eo fthisistheshifti
ntheglobalautomobilema rk
et.Chinasuppla
ntedtheUn it
ed
Sta
tesasthela
rge s
tma r
ketfora ut
omo bile
sin2009.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

9
. Acc
ordi
ngtoTheEc
onomita
s r
ti
clee
xpl
aine
dinExhi
bit
7.1i
nth
ete
xtb
ook
,th
era
teo
fGDPg
rowt
his
t
hehigh
esti
ntheEu
rope
anUnionan
dtheUnit
edSt
at
es.

FALSE
Thisr
apidris
eing lobalcapit
alis
mh asdramat
iceffe c
tsontheg r
o wthindiffe r
enteconomiczones.As
sho
wni nExh i
bit7.
1 ,t
heg rowthe xperi
encedbydeve
lopedeconomi e
sinthefir stdeca
d eofthe2000s
wasanemic,whiletheg r
owt hindev el
opingec
onomieswasr o
bust.Thishasres
ult
edinadr amati
cshif
t
int
hestruct
ureofthegl o
ba leconomy .Overhal
ftheworl
d'soutp
ut nowc omesfro
me me r
gingma r
kets.
Thisi
sleadin
gtoac o
n ver
ge nc
eo flivin
gs t
andar
dsacr
osstheglobeandisc h
angingth
efa ceofbusi
ness.
Accor
dingtothetextbookExh ibit7.1,Ja
panhasthesmall
estGDPgr owthrate,f
oll
owedb ythe
Europ
eanUn ionandt heUni t
edSt a
tes.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

7-24
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
1
0. Global
iz
ati
onisate
rmus
edt
ome
ant
hegr
owi
ngd
iss
imi
la
rit
yofl
aws
,ru
les
,no
rms
,va
lue
san
did
eas
ac
ro s
scount
ri
es.

FALSE
Global
iza
tionisate
rmt ha
thastwomeani
ngs
:(1)thein
creas
eini
nter
nat
ionale
xcha
nge,
inc
ludi
ngtr
ade
ingoodsandservi
cesaswella
sexcha
ngeofmoney,i
deas,a
ndinf
ormat
ion;
(2)thegr
owi
ngsimi
lar
it
yof
laws
,rule
s, no
rms,val
ues,a
ndideasa
cros
scount
ri
e s
.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

1
1. TheMic
haelPo
rte
rDi a
mondofNati
ona
lAdvan
tageisafr
ame
workt
hate
xpl
ai
nswhyc ou
ntri
esf
ost
er
su
cce
ssf
ulmult
ina
tion
alcor
por
ati
onsba
sedonfa
ctorend
owment
san
ddemandcon
dit
ionsonl
y.

FALSE
ThePort
erDia
mon dofNa t
ionalAd v
antag
eisafra
me workforexpl
aini
ngwh yc
ountr
iesf
ost
er
suc
cess
fulmul
tin
ati
onalcorpor
a t
ions,c
onsi
st
ingoffourfa
ctor
s:fac
torendowment
s;demandcon
dit
ion
s;
re
lat
edandsuppor
ti
ngindustr
ies;andfir mst
rat
egy,str
uctur
e,andriv
alr
y.

AACS B:An a l
yti
calTh i
n ki
ng
Acces
sibi
lit
y:Ke yboardNa vigati
on
Blooms:Re me mber
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orless)succ
essfulthan
t
h esameindustr
yi na not
hercou ntry
.
LevelofDi ffic ulty
:1Eas y
T
opi
c:Fact
orsAffe c
tingNa t
ionComp eti
tive
ness

1
2. Th
efa
ctore
ndo
wme
ntso
fac
oun
trya
rei
nhe
rit
eda
ndc
ann
otbec
rea
ted.

FALSE
Clas
sic
ale c
onomicssugges
tsth
atfa
ctor
sofp r
oduct
ionsucha
sland,l
abor
,andca
pit
a la
retheb ui
ldi
ng
blo
cksthatcre
ateusabl
econsumergood
sa ndser
vic
e s
.However
,co
mpa n
iesina
dvancednationsse
ekin
g
competi
tiv
ea d
vanta
geo ve
rfir msinothe
rn a
tio
nsc r
eat
emanyofthefa
ctor
sofproduc
tion,suchas
ski
ll
edh umanresour
c e
s.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

7-25
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
1
3. Wit
hr e
gardt
ofac
torc
ond
iti
ons,th
epoolo
fres
ourc
est
hatafirm(ornat
ion
)ha
sismu
chmo
rei
mpo
rta
nt
t
hanthespee
dandeffic iencywit
hwhicht
hes
eres
ourc
esa
rede
ploy
ed.

FALSE
Thepoolofresourc
esisles
simp o
rta
ntthant
hespeedandeffic ie
ncywithwhic
ht hes
ereso
urce
sa r
e
depl
oye
d.Th us,fir m-spec
ifickn owle
dgeandski
llsc
rea
tedwi
thi
nacountr
ythatarerar
e,v
alua
ble,
diffic ulttoimitat
e,andrap
idlyandeffic i
entl
ydepl
oyeda
rethef
act
orsofproduc
ti
onthatul
ti
ma t
el
yle
ad
toco
mpe t
it
ivea d
vantagefo
rthenati
on.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

1
4. De
ma n
dingdomes
ti
ccons
umer
ste
ndt
opus
hfir mst
omo v
eahe
adofc
ompa
nie
sino
the
rco
unt
ri
es
whe
reconsume
rsar
ele
ssdema
ndi
nga
ndmorec
ompla
cen
t.

TRUE
Countri
eswithdemandin
gc onsumersdr
ivefirmsint ha t
countr
ytome ethi
ghstandar
ds,
upgrade
exi
st
ingp r
oduct
sands e
rvic
e s
,andcrea
teinno
vati
veprod uct
sands e
rvi
ces.Denmarkisknownfori
ts
envi
ronmentala
wa r
eness
.De mandfromconsumersf
ore nviron
me nt
all
ysafeprod
uctshass
purre
d
Danishmanufac
turer
stobecomel e
ader
sinwa t
erpol
lutionc on
tro
lequipmentwhichite
xport
s
suc
cessful
ly
.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

1
5. Hi
ghl
evel
sofenvi
ron
me nt
ala
warene
ssinDenmar
kha
vel
edt
oad
ecl
inei
nDa
nis
hind
ust
ri
al
co
mpe
tit
ive
nes
sinthein
ter
nat
ion
alma r
ket
pla
ce.

FALSE
Countri
eswithdemandin
gc onsumersdr
ivefirmsint ha t
countr
ytome ethi
ghstandar
ds,
upgrade
exi
st
ingp r
oduct
sands e
rvic
e s
,andcrea
teinno
vati
veprod uct
sands e
rvi
ces.Denmarkisknownfori
ts
envi
ronmentala
wa r
eness
.De mandfromconsumersf
ore nviron
me nt
all
ysafeprod
uctshass
purre
d
Danishmanufac
turer
stobecomel e
ader
sinwa t
erpol
lutionc on
tro
lequipmentwhichite
xport
s
suc
cessful
ly
.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

7-26
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
1
6. Co
unt
ri
eswi
thas
tr
ongs
upp
lie
rba
seb
ene
fitb
yad
din
geffic
ien
cyt
odo
wns
tr
eama
cti
vit
ies
.

TRUE
Rel
atedandsupport
ingindus
tri
ese
nablefirmstomanagei
nputsmoreeffecti
vel
y.Count
ri
eswit
ha
st
rongsu
pp l
ierba
seb enefitbyaddi
nge ffic i
encyt
od o
wn s
tre
ama c
ti
vit
ie
s.Ac ompet
it
iv
esuppl
ierb
ase
hel
psafir mo btai
nin p
utsusi
ngcos
t-
e ffe
cti
ve,t
imel
yme t
hods,t
husr
educi
ngma nuf
act
uri
ngcos
ts.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

1
7. Typ
ical
ly
,in
tens
eri
val
ryi
ndo me
sti
cma
rke
tsd
oesn
otf
orc
efir
mst
olo
oko
uts
idet
hei
rna
ti
ona
l
bound
ari
esforn
ewmarke
ts.

FALSE
Dome s
ti
criv
alrypr
ovidesast
rongimpe
tusf
orfirmst oinno
vatea
ndfindn e
wsourc
esofc
ompe
tit
iv
e
adva
ntage
.Thisin
tenseri
val
ryfor
cesfirmstolo
oko uts
ideth
eirn
ati
ona
lbou
ndar
iesf
orn
ewmark
ets,
se
tti
ngupthecondit
ionsnec
essa
ryforg
loba
lcompet
it
ivenes
s.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

1
8. Ri
val
ryisp
arti
cul
arl
yint
ensei
nn a
ti
onswit
hcondi
ti
onsofst
ron
gcon
sume
rde
mand
,st
ron
gsu
ppl
ie
r
ba
ses
,andhig
hnew-entr
antpo
tent
ialf
romr
ela
tedi
ndust
ri
es.

TRUE
Ri
val
ryisp
art
ic
ular
lyi
ntens
einna
ti
onswi
thcondi
ti
onsofst
ron
gcon
sume
rde
mand
,st
ron
gsu
ppl
ie
r
ba
ses
,andhi
ghnew-en
tra
ntpot
ent
ia
lfr
omrel
ate
dindust
ri
es.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

7-27
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
1
9. TheIndia
ns o
ftwareindust
ryhasbe
comeoneofthel
eadi
ngglobalmarket
sforso
ftware
.Theindust
ry
ha
sg r
o wntoover60b il
li
onUSD, a
ndIndi
anITfir mspro
videsoft
wa r
ean ds
ervic
estoove
rh a
lfthe
For
tune500fir ms.Th i
ssucce
ssi
sbei
ngdri
venbyfac
torendowmentssuchasalar
ge,gr
owingma r
ket
wit
hsop hi
st
icat
edcus t
omers.

FALSE
Fact
orendowmen
tsa
rep
roduct
ion,
suchasski
ll
edl
aborori
nfr
ast
ruc
ture,ne
ces
sar
ytocompe
tei
na
giv
enindus
try
.Dema
ndcondi
ti
onsref
ert
othedemand
sthatc
onsumerspla
ceonanind
ust
ryf
orgoo
ds
andser
vice
s.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

2
0. TheIndia
nso f
twareind
ustr
yh asbe
comeo neofthel
eadi
ngglo
balma r
ketsf
orsoft
ware.Theindust
ry
ha
sg r
o wntoover60b i
ll
ionUSD, a
ndIndianITfir mspro
videsof
twareandser
vicestoov
erh a
lfthe
For
tune500fir ms.Thissuc
cessi
sbei
n gdri
venbyrel
at
edandsupport
ingi
n du
str
iessuchasalar
ge
ne
tworkofp ubl
icandpriva
teeduca
ti
onalins
ti
tut
ions
.

TRUE
Rel
at
eda
nds
uppo
rti
ngi
ndu
str
iese
nab
lefir
mst
oma
nag
ein
put
smo
ree
ffe
cti
vel
y.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

2
1. Manyi
nte
rnat
iona
lfirmsarei
ncr
eas
ingthe
ire
ffo r
tstomar k
ett
hei
rprod
uct
san
dse
rvi
cest
ocou
ntr
ies
s
uchasI
ndiaandChi
naast
hera
nksofthe
irmid
dlec
las
sc on
tinuet
oinc
reas
e.

TRUE
Manymul t
inat
ionalfir msa r
eint
ensify
ingthe
ireffo r
tstoma r
kett
heirpro
du c
tsandser
vic
estocoun
tri
es
su
cha sI
ndiaandCh inaastheranksofthei
rmiddl
eclas
sh a
vei n
creas
edo v
erthep a
stde
cade.
An
OECDs t
udypr edi
ctsthatcons
umptionbymi dd
le-
cla
ssconsumersinAsianma r
ketswi
llgr
owf r
om4.9
t
ril
li
onUSDi n2 009too ve
r30t r
il
lionUSDb y2020.Attha
tp oi
nt,Asi
awi l
lma keup60perc
entof
gl
obalmiddle
-cla
ssc ons
umpt i
on,upfrom2 0per
centi
n2009.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

7-28
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
2
2. Exp
andi
ngt
heg
lob
alpr
ese
nceo
fafir
maut
oma
ti
cal
lyi
ncr
eas
esi
tss
cal
eofo
per
ati
ons
.

TRUE
Expandi
ngc ompanyg l
obalpres
encea l
s oautomati
call
yincre
a s
esit
ss c
aleofoperat
ions
,provid
ingit
wit
hal a
rgerreve
nu eandass
e tbas
e.Suc ha nincr
easeinrev
enu e
san dass
etbasepotent
ial
lyenabl
esa
fir mtoatt
a i
neco no
miesofs c
ale.Thisp rovi
desmu l
ti
plebenefit s,i
ncl
udingthespr
eadingoffix e
dco
sts
suc
ha sResear
chan dDevelo
pme ntov e
ral argervol
umeofpr oduct
ion.Examplesin
cludethesal
eof
Boein
gc omme r
cialai
rcr
aftandMi crosoftoperat
ingsys
temsinma nyforei
gncountri
es.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

2
3. Ar
bit
rageo
pport
uni
ti
esa
res
imp
let
rad
ingop
por
tuni
ti
esa
ndt
her
efor
eac
coun
tforl
it
tl
eoft
hes
ucc
ess
Wal
ma r
texpe
rie
nce
s.

FALSE
Init
ssi
mp l
estform,arbi
tr
ageinvol
vesbuyingsomethi
ngfrom wher
eiti
scheapandsel
li
ngit
somewher
ewhe r
eitcomma ndsahigherpri
ce.Ab i
gpartofth
eWa lmar
tsuc
cesscanbeatt
ri
butedt
oit
s
expe
rti
sei
na rbit
rage
.Thepo ss
ibil
it
iesf
orarbit
rag
ea r
en o
tneces
sar
ilyc
onfin edtosi
mpletra
ding
oppor
tuni
ti
es.Itcanbeappli
edtov i
rtual
lyanyfac
torofprodu
cti
onandever
ys t
ageoft
hevaluecha
in.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

2
4. Arbit
rageoppor
tuni
ti
esing
loba
lfinan
cia
lma
rke
tsar
emo r
eat
tr
act
iv
etogl
oba
lcompani
est
hanloca
l
co
r por
ati
ons,be
causeth
eyena
blet
hemt
obuyi
nhugevol
umean
dther
efo
rei
ncr
eas
ethe
irbar
gai
nin
g
powerwi t
hsuppl
ier
s.

TRUE
Inthecur
rentint
egrat
edglobalfina nci
alma r
ket
s,afir mc a
nborrowanywher
eintheworl
dwh e
recapi
ta
l
i
sc hea
pandu seitt
of un
dapr oj
ectinacoun t
rywh e
recapi
tali
sexp
ensive
.Suchar
bit
rageop
port
unit
ie
s
areeve
nmor eatt
ract
ivetogloba
lcorporat
ionsbec
ausethei
rlar
gers
izeenabl
est
hemtobu yi
nhuge
volume,t
husincr
e a
singthei
rbarg
ainingpowerwithsuppl
ie
rs.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

7-29
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
2
5. I
n t
ern
ati
ona
lexpa
nsi
onc
ane
xte
ndt
hel
if
ecy
cleofap
rod
uctt
hati
sini
tsma
tur
it
yst
agei
nth
eco
mpa
ny
homec o
unt
ry.

TRUE
Exte
ndin
gthelif
ecycl
eo faproductt
hatisi
nitsmaturi
tysta
geinthehomec oun
trybutthath
a sgre
ate
r
demandpot
enti
alel
sewhereisabenefito fin
ter
n a
tio
nalexpans
ion.I
nrecentdecade
s,U.S.soft
-dr
ink
pr
oducer
ssuchasCo c
a-ColaandPe p
siCohaveaggres
siv
elypurs
uedint
ern
ationalmarke
tstoatta
in
l
evel
sofgro
wt htha
tsimplywouldn o
tbea v
ail
abl
eintheUni t
edStat
es.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

2
6. Adis
advan
tageofin
ter
nat
iona
lexp
ans
ioni
sth
ati
tca
nen
abl
eafir
mtoo
pti
miz
ethel
oca
ti
onofe
ver
y
a
cti
vit
yinit
svaluecha
in.

FALSE
Opti
mizingtheph
ysi
call
ocat
ionf
oreve
ryact
ivi
tyinit
sval
uec
haini
sanot
herbene
fitofin
ter
nat
ion
al
expans
ion.Thi
scanyi
eldoneormor
eo ft
hre
estr
ategi
cad
vant
age
s:per
for
manceenha
nce
ment,
cos
t
redu
cti
on,andri
skre
ducti
on.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

2
7. Thel
awsandthee
nfo
rcementofl
awsa
ssoc
iat
edwi
ththep
rot
ect
ionofint
el
le
c t
ualp
rop
ert
yri
ght
s
re
pre
sen
tasig
nificantcu
rre
ncyandmanage
ment
ris
ktomult
inat
ion
alfir ms.

FALSE
Ther
earefou
rmaintypesofri
sk:poli
ti
calri
sk,
economi
cris
k,cur
rencyri
sk,an
dma nage
me n
tris
k.Th
e
la
wsandtheenf
orce
me ntofl
awsa s
soci
atedwit
hthepro
tec
ti
onofinte
lle
ctua
lproper
tyri
ght
scanbea
majo
rpote
nti
aleco
nomi cri
sk(r
athert
hanc u
rre
ncyormanageme
ntris
k)inente
rin
gn ewcount
ri
es.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

7-30
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
2
8. Rev
ers
einn
ovat
ionoccur
swhenacompanyde
velopsapr
oductt
hat
mee
tst
hene
edso
fad
eve
lop
ed
cou
ntr
yandthe
na da
ptsi
ttot
hene
e dso
fthedev
e l
opi
ngcou
ntry
.

FALSE
Ma nyleadingcompa nie
sa rediscoveri
n gthatd ev
elopingp roduct
ss pecific al
lyf
ore mergin
gma rketsca
n
payo ffi nab i
gwa y.I
nt hepast,mul ti
na t
ionalcompa niestypica
llyd evel
op edproduct
sfortheirri
ch
homema rket
sa ndt hentriedtosellthemi nde vel
op i
ngc ou nt
rie
swi thmi no radapt
ati
ons.Ho wever,
as
growths l
owsi nr i
chna t
ion sandd ema ndg rowsrapidl
yi nde vel
opin gcoun t
r i
essuchasIndiaandCh ina
,
thi
sa pproac
hb ec ome sincrea
singl
yi na d
eq uate.I
nstea
d, compa nie
sl ikeGEh avecommi tt
eds i
gnific a
nt
res
our c
estod evelopingpr oduct
sthatme ettheneedso fdev el
opingn ati
ons, produc
tsthatdel
iver
adequatefuncti
o nalit
ya tafract
ionoft hec ost.Theseprod uct
sh aves ubs
eq uentl
yfoundc onsi
derable
successinvalues egme ntsinwea l
thyc ountriesaswe l
l.He nce,th
isp rocessisrefe
rredtoasreverse
innovati
on,an ewmo tiv
a t
ionforinternati
on alexpansi
on .

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

2
9. TheWor l
dBa nkpubli
shest
heEur omoneymag
azi
neCo un
tryRiskRa t
ingsemiannua
lre
po r
t.I
nthetext
,
theJa
nu a
ry2013samp l
ingofthes
er a
tin
gsi
ndi
cat
estha
tNo r
wa yisthebes
tcountryi
nwh ic
htoinve
stin
ter
mso fit
sexpec
tedleve
lofriskbasedont
heeva
lua
ti
ono fit
spolit
ical
,ec
on omicands
truct
ura
lri
sks
anddebtindi
cat
orsandacces
stoca pi
tal
.

TRUE
Euromoneyma ga
z in
epu bli
shesas e
mi a
nnualCountryRiskRatingt
hateva
luat
espol
it
ical
,e c
onomi c
,
andotherri
skst
hate ntr
antspote
ntial
lyfac
e.Exhibi
t7.3prese
ntsasampleofcount
ryris
kr at
ings,
publi
shedbytheWor ldBank, f
romt he178countr
iestha
tEu r
o moneyev
aluat
es.Not
ethatthelowerthe
sco
re,thehi
gherthee xpec
tedlevelofri
skfornewen t
rant
sintothemark
et.Theover
allr
iskrati
ngscore
f
orNo rwayis89.
9 7.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

3
0. Fi
rmsc a
nless
enpoli
ti
cali
nst
abil
it
yanda dv
ers
ego v
ernmentac
ti
onsri
sksby:compet
ingi
naran
geof
geogr
aphi
cma r
ket
s,dev
elo
pingsta
kehold
ercoal
it
ions,c
ult
iv
ati
ngre
lat
ions
hipswit
hkeyinfluenc
es,a
nd
in
cludi
ngkeypubl
ic-
pri
vat
estak
ehold
e r
sinthe
irboards
.

TRUE
Fir
msc anle
sse
np oli
ti
cali
nst
abil
it
yanda dv
e r
segove
r nmentac
tio
nsri
sksby:compet
ingi
naran
geo f
geogr
aphicmark
ets,de
velo
pingsta
kehold
ercoali
ti
ons, c
ult
iv
ati
ngrel
at
ions
hipswit
hkeyinfluenc
es,an
d
in
cludi
ngk e
ypublic
-pri
vat
estak
ehold
e r
sinthei
rboards.

AACS B:Anal
yti
calThink
ing
Ac
ces
sib
ili
ty:Key
boardNa v
igat
ion
Blo
oms:Un der
stand

7-31
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpans
ion,inc
lud
ingt
heemergingt
rend
forgreat
eroffshoringandout
sour
cingact
ivi
ty.
Le ve
lofDiffic ulty
:2Me dium
To
pic
:Int
ernat
ionalExpansi
onComp anyMoti
vat
ion
sa ndRis
ks

3
1. T
woopposi
ngpr
essur
est
hatman
age
rsf
acewhe
nthe
ycomp
etei
nfo
rei
gnma
rke
tsa
rec
ostr
edu
cti
ona
nd
a
dap
tat
iont
ofo
reig
nma r
kets
.

FALSE
Ther
earetwooppos
ingfo
rce
stha
tfir
msf
acewh
ent
heye
xpa
ndi
ntog
loba
lma
rke
ts:c
ostr
educ
ti
ona
nd
ada
ptat
iont
oloca
lma r
ket
s.

AACS B:An a
lyt
icalTh i
nking
Access
ibi
li
ty:Keyboar
dNa vig
ation
Blooms:Re memb er
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—thatfir msfacewh ene nt
eri
ng
int
ernat
ionalmar ket
s.
LevelofDiffic ul
ty:1Easy
To
pic
:Achie
vin
gCompe
tit
iv
eAd v
antageinGlobalMar kets

3
2. Theo
doreLevi
tt
,amark
eti
ngstr
ate
gis
t,a
rguedt
hatpe
op l
earo
undthewor
ldar
ewill
ingtos
acr
ific
e
pr
efe
rence
sinpro
duc
tfeat
ure
s,fun
cti
ons,a
nddesi
gnforlo
werpr
icesa
ndlowerq
uali
ty.

FALSE
Levit
tadvoc
a t
edg l
obalprodu
ctandb r
an dstr
ate
g i
esbas
edonthreeassumpti
ons:cus
tome rneed
sa nd
in
tere
stsar
ebe comingincr
easi
ngl
yh omo geneousworl
dwide;peopl
earoundtheworl
da rewill
ingto
sac
rificep re
ferenc
esinfeat
ures
,design,andthelik
eforlowerpri
cesathi
ghq ua
li
ty;substa
nti
al
economie
so fscal
einp r
oduct
ionandma r
keti
ngc anbeachi
eve
dt hr
oughsupplyi
ngglobalma r
kets
.

AACS B:An a
lyt
icalThinki
ng
Accessi
b i
li
ty:Keyboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—t hatfir msfacewh enente
ring
int
ernat
ionalmarkets
.
LevelofDiffic ulty:2Me di
um
To
pic
:Achie
vin
gCompe
tit
iv
eAd vantageinGlobalMar ke
ts

3
3. Amongt
heass
umpti
onsofTheodor
eLevit
ttha
twou
ldf
avo
rag
lob
als
tr
ate
gyi
sth
atc
ons
ume
rsa
roun
d
t
heworl
dar
ebecomi
nglesspr
ice-
sens
it
iv
e.

FALSE
Levit
tadvoc
a t
edg l
obalprodu
ctandb r
an dstr
ate
g i
esbas
edonthreeassumpti
ons:cus
tome rneed
sa nd
in
tere
stsar
ebe comingincr
easi
ngl
yh omo geneousworl
dwide;peopl
earoundtheworl
da rewill
ingto
sac
rificep re
ferenc
esinfeat
ures
,design,andthelik
eforlowerpri
cesathi
ghq ua
li
ty;substa
nti
al
economie
so fscal
einp r
oduct
ionandma r
keti
ngc anbeachi
eve
dt hr
oughsupplyi
ngglobalma r
kets
.

AACS B:An a
lyt
icalThinki
ng
Accessi
b i
li
ty:Keyboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—t hatfir msfacewh enente
ring
int
ernat
ionalmarkets
.
LevelofDiffic ulty:2Me di
um
To
pic
:Achie
vin
gCompe
tit
iv
eAd vantageinGlobalMar ke
ts

7-32
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
3
4. Wit
hinawor
ldwi
dema
rke
t,t
hemo
ste
ffe
cti
ves
tr
ate
gie
sar
ene
ithe
rpu
rel
ymu
lti
dome
sti
cnorpu
rel
y
gl
obal
.

TRUE
Al
lfir msmustba
lan
cetheneedt
olowerc
ost
s(whe
rehi
ghl
ystand
ard
ize
dp r
oduc
tsar
epref
err
ed)wit
h
t
henee
dt obere
spo
nsi
vetoloc
alpr
ess
ure
s(wher
ediffer
ent
iat
ingofferi
ngsisr
equ
ire
d).Mostst
rat
egi
es
i
nco
rpor
a t
esomeel
ement
sofboth.

AACS B:An a
lyt
icalThinki
ng
Accessi
b i
li
ty:Keyboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—t hatfir msfacewh enente
ring
int
ernat
ionalmarkets
.
LevelofDiffic ulty:2Me di
um
To
pic
:Achie
vin
gCompe
tit
iv
eAd vantageinGlobalMar ke
ts

3
5. Cu
stomern
eed
sandi
nte
res
tsa
rebe
comi
ngi
ncr
eas
ing
lyd
ive
rge
ntwor
ldwi
de,
acc
ordi
ngt
oTh
eod
ore
Le
vitt
.

FALSE
TheLe
vit
tappr
oachr
est
edonthr
eekeya
ssumpti
ons
.Th
efir
sti
stha
tcu
sto
mern
eedsa
ndi
nte
res
tsa
re
bec
omi
ngincr
easi
ngl
yhomoge
neouswor
ldwid
e.

AACS B:An a
lyt
icalThinki
ng
Accessi
b i
li
ty:Keyboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—t hatfir msfacewh enente
ring
int
ernat
ionalmarkets
.
LevelofDiffic ulty:2Me di
um
To
pic
:Achie
vin
gCompe
tit
iv
eAd vantageinGlobalMar ke
ts

3
6. TheNes
tl
eli
neofpi
zza
smar
kete
dintheUni
tedKin
gdomincl
ude
schee
sewit
hhamandpi
neapp
le
to
ppi
ngonaFre
nchbre
adc
rust
.Thi
sisanex
ampleofcompa
nyadap
tat
iont
oglo
balma
rke
ts.

FALSE
Ma nyothercompani
esadap
tli
nestoidio
sy nc
rat
iccount
rypre
fer
enc
esandde
vel
opl
ocalb
ran
dstar
get
ed
toloca
lma rk
e ts
egment
s.Forex
amp l
e,theNe s
tl
elineofpi
zzasmar
kete
dint
heUni
te
dKingdom
inc
ludescheesewit
hhama ndpin
eappletoppi
ngo naFrenc
hbreadcr
ust
.

AACS B:An a
lyt
icalThinki
ng
Accessi
b i
li
ty:Keyboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—t hatfir msfacewh enente
ring
int
ernat
ionalmarkets
.
LevelofDiffic ulty:2Me di
um
To
pic
:Achie
vin
gCompe
tit
iv
eAd vantageinGlobalMar ke
ts

7-33
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
3
7. I
naddit
iontor
espond
ingtopres
sure
stolo
we rc
ost
s,manag
ersmusts
tr
ivetober
espo
nsi
vetog
loba
l
pr
ess
uresinor
dertot
ail
orthe
irproduc
tst
othedemandoft
heloc
almarketi
nwhicht
heydobus
ine
ss.

FALSE
Inaddi
ti
ontore
spond
ingtopres
sure
stol
owerc
ost
s,manag
ersmusts
tr
ivetober
espo
nsi
vetol
ocal
pre
ssur
esinor
dertot
ail
orthe
irprod
uct
stot
hedemandoft
heloc
almarketi
nwhicht
heydobus
ine
ss.

AACS B:An a
lyt
icalThinki
ng
Accessi
b i
li
ty:Keyboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—t hatfir msfacewh enente
ring
int
ernat
ionalmarkets
.
LevelofDiffic ulty:2Me di
um
To
pic
:Achie
vin
gCompe
tit
iv
eAd vantageinGlobalMar ke
ts

3
8. Sinc
ethest
rat
egi
esa
ndta
cti
cst
odiffer
ent
ia
tep
roduc
tsa
nds
ervi
cest
olo
calma
rke
tsc
ani
nvol
ve
addi
ti
onale
xpens
es,
compan
ycost
swi
llt
endt
ofal
l.

FALSE
Sinc
ethest
rat
egi
esandta
cti
cst
odiffer
ent
ia
tep
roduc
tsa
nds
ervi
cest
olo
calma
rke
tsc
ani
nvol
ve
addi
ti
onale
xpens
es,
c ompan
ycost
swi
llt
endt
ori
se.

AACS B:An a
lyt
icalThinki
ng
Accessi
b i
li
ty:Keyboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—t hatfir msfacewh enente
ring
int
ernat
ionalmarkets
.
LevelofDiffic ulty:2Me di
um
To
pic
:Achie
vin
gCompe
tit
iv
eAd vantageinGlobalMar ke
ts

3
9. I
nchoosi
ngoneofthefourbas
icst
rat
egi
esforco
mpeti
ngi
nthegl
obalmar
ket
pla
ce(
int
ern
ati
onal
,
gl
obal
,mult
idomes
tic
,tra
nsnat
iona
l),t
hest
rat
egyth
ataco
mpanysel
ect
sdepe
ndsup
onthedegr
eeof
pr
ess
uret
hatiti
sfa
c i
ngforre
venues
.

FALSE
Thetwoo pp
osingpre
ssur
esresulti
nfourd i
ffe re
ntbasi
cs t
rat
egi
esthatcompani
esca
nusetocompe
tei
n
thegl
obalmarket
pla
ce:int
erna
tional,
global
,multi
dome s
ti
c,andtr
a ns
nati
onal.
Thest
rat
egyth
atafirm
sel
ect
sdependsonthedegre
eo fp r
ess
urethati
tisfac
ingforcos
treduct
ionsandth
eimport
anc
eo f
adapt
ingt
olocalmarket
s.

AACS B:An a
lyt
icalThinki
ng
Accessi
b i
li
ty:Keyboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—t hatfir msfacewh enente
ring
int
ernat
ionalmarkets
.
LevelofDiffic ulty:2Me di
um
To
pic
:Achie
vin
gCompe
tit
iv
eAd vantageinGlobalMar ke
ts

7-34
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
4
0. Ast
hepr
essur
etolowe
rcost
sincr
ease
s,fir
msmo
vet
owa
rds
ele
cti
ngg
loba
landt
rans
nat
ion
als
tr
ate
gie
s
f
orco
mpeti
nginthegl
obalmar
ketpl
ace.

TRUE
Th etwoo pposi
ngpres
suresresulti
nf ourd i
ffe re
ntba s
icstr
ate
g iesthatc ompa niescanus etoc omp e
tei
n
t
hegl oba lma r
ketpl
ace
:inter
n a
tional,global
,multi
dome st
ic,an
dt ransnational.Thes tr
ategyt hatafir m
select
sde pendsonthed e
greeo fp r
essurethati
tisfac
ingforcostredu c
ti
on sandt heimp ort
a nceo f
adapti
n gtol oca
lma r
ket
s.Ex hi
b i
t7.4s howsthecondit
ionsunderwhi c
he achoft hesest
ra t
egieswo uld
bemo stappropri
ate
.Asthepr essure
st olowercost
sincreas
e,fir msmo vef r
omi nte
rnationalstra
tegyto
globals t
rate
gy.Asthep r
essuresforlocaladapti
onincr
e a
se,atthesa metimea sthepr es
s ur
e stolower
costsincrease,firmsmo vef r
ommu lt
idome s
ti
cstr
ategytotra
ns nati
ona lstra
tegy .

AACS B:An a
lyt
icalThinki
ng
Accessi
b i
li
ty:Keyboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—t hatfir msfacewh enente
ring
int
ernat
ionalmarkets
.
LevelofDiffic ulty:2Me di
um
To
pic
:Achie
vin
gCompe
tit
iv
eAd vantageinGlobalMar ke
ts

4
1. I
ndus
tri
esinwhic
hp ro
port
iona
llymor
ev a
luei
saddedi
nupstr
eama
cti
vit
ie
sa r
emo r
elike
lytobe
nefit
f
romag l
obals
tr
ategytha
nthoseinwhi
chmo r
eval
ueisadd
eddowns
tr
eam( c
lose
rtothecus
tomer
).

TRUE
Typic
all
y,pr
ima r
yacti
vit
iest
hata
redownst
rea
m( e.
g.,
ma r
keti
ngorser
vice)
, orclo
sertot
hecustomer,
req
uiremoredecent
ral
iza
ti
ontoadaptt
oloca
lmarketcon
dit
ions(amult
idome st
icst
rat
egy)
.Upstr
e a
m
pri
ma r
yacti
v i
ti
es(e
.g.
,logi
st
ic
sandopera
ti
ons)t
endtobecentral
iz
ed(aglobalstr
ate
gy)beca
usethere
isl
essneedforadap
tin
gthemtoloca
lma r
ket
sandthefir mb enefit
sf r
ome c
onomiesofscal
e.

AACS B:Analyt
icalThinki
ng
Acce
ssi
bili
ty:Key
bo ardNa v
igati
on
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:i
nte
rna t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:2Me di
um
To
pic
:Achi
evi
ngCompeti
ti
veAdvantagei
nGl obalMar ket
s

4
2. I
nag l
oba
lst
rat
egyafir
mope
rat
esa
llo
fit
sbus
ine
sse
sund
eras
ingl
ecommo
nst
rat
egy
,re
gar
dle
sso
f
l
oca
ti
on.

TRUE
Withaglo
bals
tr
ate
gy,
comp
eti
ti
ves
tr
ate
gyi
sce
ntr
ali
zeda
ndc
ont
rol
le
dtoal
arg
eex
tent
byt
he
co
rpora
teoffic e.

AACS B:Analyt
icalTh i
nking
Acce
ssi
bili
ty:KeyboardNa vig
atio
n
Blooms:Re memb er
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:in
tern
a t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:1Eas
y
To
pic
:Achi
evi
ngCompeti
ti
veAdvantageinGlobalMar kets

7-35
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
4
3. Amult
idomes
ti
cstra
tegyi
sthemo s
tappr
opri
at
estr
ate
gyforint
ern
ati
ona
loper
ati
ons,beca
usei
tdr
ive
s
e
c o
nomie
sofscal
easfara
sp os
sibl
eandpro
vide
sami ddl
e-o
f-t
he-
roadp
roduc
ttha
ta pp
ealtot
hel
arg
est
numbe
rofcons
ume r
sineve
ryma rk
et.

FALSE
Afir mwho s
eemphas
isi
so nd
ifferent
ia
tingit
spr
oducta
nds e
rvi
ceoffe r
ingst
oadap
ttoloca
lma
rke
ts
fol
lowsamu l
ti
domes
ti
cstr
ate
gy.De
cis
ionsev
olvi
ngfromamu l
ti
domest
icst
rat
egyte
ndtobe
decent
ral
iz
edtoper
mitt
hefir mtota
il
orit
sp r
oduct
sandre
spondra
pidl
ytochange
sinde
ma nd
.

AACS B:Analyt
icalThinki
ng
Acce
ssi
bili
ty:Key
bo ardNa v
igati
on
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:i
nte
rna t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:2Me di
um
To
pic
:Achi
evi
ngCompeti
ti
veAdvantagei
nGl obalMar ket
s

4
4. Thenee
dtoa
tt
ai
nec
ono
mie
sofs
cal
eenc
our
age
smu
lti
nat
ion
alfir
mst
oope
rat
eund
eramu
lti
dome
sti
c
st
rat
egy
.

FALSE
Afir mwhoseemphas
isi
so nd
iffere
nti
at
ingit
sprodu
ctandse
rvi
ceofferi
ngstoada
ptt
oloc
alma
rke
ts
fol
lowsamul
tido
mesti
cstr
ate
gy.Th
ist
ypi
cal
lyre
sult
sinlo
werabi
li
tyt
olev
era
geeconomi
esofs
cal
e
andh i
ghe
rco
stst
ruc
ture
s.

AACS B:Analyt
icalThinki
ng
Acce
ssi
bili
ty:Key
bo ardNa v
igati
on
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:i
nte
rna t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:2Me di
um
To
pic
:Achi
evi
ngCompeti
ti
veAdvantagei
nGl obalMar ket
s

4
5. Co
rpor
ati
onswi
thmu l
ti
plef
ore
igno
per
ati
onst
hata
ctv
eryi
nde
pen
den
tlyofo
nea
not
hera
ref
oll
owi
nga
mul
ti
domest
ics
tr
ate
gy.

TRUE
Afir mwho s
eemphas
isi
so nd
ifferent
ia
tingit
spr
oducta
nds e
rvi
ceoffe r
ingst
oadap
ttoloca
lma
rke
ts
f
oll
owsamu l
ti
domes
ti
cstr
ate
gy.De
cis
ionsev
olvi
ngfromamu l
ti
domest
icst
rat
egyte
ndtobe
de
cent
ral
iz
edtoper
mitt
hefir mtota
il
orit
sp r
oduct
sandre
spondra
pidl
ytochange
sinde
ma nd
.

AACS B:Analyt
icalTh i
nking
Acce
ssi
bili
ty:KeyboardNa vig
atio
n
Blooms:Re memb er
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:in
tern
a t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:1Eas
y
To
pic
:Achi
evi
ngCompeti
ti
veAdvantageinGlobalMar kets

7-36
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
4
6. Amul
ti
domes
ti
cst
rat
egywoul
dli
kel
yin
clud
etheus
eofhi
ghv
olu
me,
cen
tra
li
zedpr
odu
cti
onf
aci
li
ti
es
t
omaxi
mizee
cono
miesofs
cal
e.

FALSE
Afir mwhoseemphas
isi
so nd
iffere
nti
at
ingit
sprodu
ctandse
rvi
ceofferi
ngstoada
ptt
oloc
alma
rke
ts
fol
lowsamul
tido
mesti
cstr
ate
gy.Th
ist
ypi
cal
lyre
sult
sinlo
werabi
li
tyt
olev
era
geeconomi
esofs
cal
e
andh i
ghe
rco
stst
ruc
ture
s.

AACS B:Analyt
icalTh i
nking
Acce
ssi
bili
ty:KeyboardNa vig
atio
n
Blooms:Re memb er
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:in
tern
a t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:1Eas
y
To
pic
:Achi
evi
ngCompeti
ti
veAdvantageinGlobalMar kets

4
7. Al
imi
ta
ti
onofamu
lti
dome
sti
cst
rat
egyi
stha
tit
mayl
eadt
oov
er-
ada
pta
ti
ona
scon
dit
ion
scha
nge
.

TRUE
Whilet
hemulti
domesti
cstr
ate
gyisbase
do na
daptat
iontoloc
alcondi
ti
ons
,theopt
imalde
greeo
floca
l
adap
tat
ionev
olv
eso v
erti
me.Firmsmustre
cal
ibr
atet
hen eedf
orloc
aladap
tati
ononanongoi
ngbas
is;
exc
essi
veada
ptat
ionext
rac
tsap r
icea
ssure
lyasunderadap
tat
ion
.

AACS B:Analyt
icalThinki
ng
Acce
ssi
bili
ty:Key
bo ardNa v
igati
on
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:i
nte
rna t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:2Me di
um
To
pic
:Achi
evi
ngCompeti
ti
veAdvantagei
nGl obalMar ket
s

4
8. Mul
ti
nat
ionalfirmsfol
lowi
ngatr
ansn
ati
ona
lst
rat
egys
tri
vet
oopt
imi
zet
het
rade
-offsa
sso
cia
tedwi
th
effic ie
ncy,l
ocala
dapt
ati
on,
andle
arni
ng.

TRUE
Atransnat
ionalst
rat
egyst
ri
vest
oo pt
imizethetr
ade
-offsass
oci
at
edwit
he ffic iency,l
ocala
daptat
ion,
andlea
r ni
ng.Itse
ekseffic i
encynotforit
sownsak
e,bu
tasamean
stoa c
hie
veglobalco
mpe t
it
ive
ness.It
rec
ognizestheimport
anc
eoflocalr
esponsi
venes
sbuta
satool
forflexi
bil
it
yinin
terna
tiona
lopera
ti
ons .

AACS B:Analyt
icalTh i
nking
Acce
ssi
bili
ty:KeyboardNa vig
atio
n
Blooms:Re memb er
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:in
tern
a t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:1Eas
y
To
pic
:Achi
evi
ngCompeti
ti
veAdvantageinGlobalMar kets

7-37
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McGraw-Hill Education.

0 0
4
9. Ake
ytenetofat
rans
nat
iona
lst
rat
egyi
simprov
edada
pta
ti
ontoa
llc
ompet
it
ivesi
tuat
ion
saswellas
flexi
bil
it
yb yc
apit
al
iz
ingoncommuni
cat
ionandkn
owled
geflowst
hroughou
ttheorga
niz
ati
on.

TRUE
Ac e
ntralphi
los
oph yoft
hetr
ansna
ti
on a
lorga
nizat
ionisenh
anceda d
apta
tiont
oa l
lcompet
it
ive
si
tua
tionsaswellasflexibi
li
tybycapit
al
izi
ngonc ommunica
tio
na ndkn owl
edgeflowsthrough
outt
he
firm. Ap ri
ncip
alc h
ara
cte
ris
ti
cistheint
egr
ati
onofu ni
quecont
ribut
ionsofal
lunit
sint
oworldwi
de
oper
atio
ns.

AACS B:Analyt
icalTh i
nking
Acce
ssi
bili
ty:KeyboardNa vig
atio
n
Blooms:Re memb er
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:in
tern
a t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:1Eas
y
To
pic
:Achi
evi
ngCompeti
ti
veAdvantageinGlobalMar kets

5
0. Panas
onicnee
d e
dtoc ha
ngeitsst
rat
egyint
he1980sinorde
rtor
espondtodemogra
phicandeconomi
c
chan
gesinChina.AstheChinesemiddl
ecl
assb
e g
antoe mer
ge,
localco
mpa ni
esr
espondedwit
h
competi
ti
veproduc
ts.Pa
nasonicthe
nchang
edit
sstra
tegyfr
omat r
ansnat
ion
alst
rat
egytoagloba
l
st
rat
egy.

FALSE
Panasoni
cb e
nefit edfrommo vin
gf r
om ag l
obalt
oat ransnationalstr
ategy. Pana soni
cmo vedi
ntoCh i
na
inthelat
e1980s,see
ingi tasal ow-costre gioninwh i
cht oma nu f
actureit
sp ro ducts.Tra
ditional
ly,
Panasoni
ch a
dus e
dag loba lst
ra t
egyini tso per
ati
ons.Itdesigneds t
and ar
d i
ze dp roduct
sinJ apan,
ma nuf
act
uredtheminlo w-costma rket
s,a n dsoldit
sp r
o duct
sp rimaril
yi nde ve l
op edmarke t
s.China
simplyser
vedasama nufa ct
uringlocati
on .Thisworkedwe l
lun ti
ltheCh inesee c onomysta rt
edtogrow
andma t
ure.AstheChin esemi ddleclassbe gantoeme rge,localcomp eti
tors,s ucha sHaier,quic
kly
jumpedinwi t
hproductsde si
gne dfort
heCh ine
sema rketando ut
-comp et
edPa na s
on i
cintheg rowing
ma rk
et.
Th i
sledPanasonict oradical
lyc ha ngeit
swa yofc ompe ti
ngi ntheg lob alma r
ket.Panasoni
c
embracedtheneedtoba l
a nceglobalintegr at
ionwithlocalada pta
tion.

AACS B:Analyt
icalThinki
ng
Acce
ssi
bili
ty:KeyboardNa v
igati
on
Blooms:App l
y
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:in
tern
a t
ional
,global,
multi
domesti
c,andtransnat
ional.
LevelofDiffic ulty
:3Ha r
d
To
pic
:Achi
evi
ngCompeti
ti
veAdvantageinGlobalMar ket
s

5
1. Acco
rdi
ngt
ost
udi
esb
yRu
gma
nandVe
rbe
ke,
mos
toft
he50
0la
rge
stc
ompa
nie
sint
hewor
lda
re
gl
obal
.

FALSE
Exte
nsi
veanal
ysi
softhedist
ribut
iondat
aofsal
esa
cro
ssd i
ffere
ntcou
ntr
iesandr
egi
onsle
dAl an
RugmanandAlai
nVer be
ketoc oncl
udetha
tthe
rei
sastr
ongca
setob
ema deth
atmostco
mpa n
iestoda
y
ar
eregi
onalo
rb i
-r
egi
o na
l,notglobal
.

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

7-38
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
5
2. Tr
adi
ngb
loc
sandf
reet
radez
one
spr
omo
tet
her
is
eofi
nte
rna
ti
ona
lex
pan
sio
n.

FALSE
Anothe
rreas
onforregio
na le
xpansi
oni
stheri
seoft
hetra
dingbl
ocsa
ndfre
etr
adezon
es.
An umberof
re
giona
lagre
eme nt
sh a
veb ee
nc r
eat
edt
hatfa
cil
it
at
ethegrowtho
fbus
ine
sswit
hint
hes
eregi
onsb
y
eas
ingtr
aderes
tri
ct
ions,andtax
esandt
ari
ffs .

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

5
3. Tr
adit
ional
ly
,compan
yglob
ali
zat
ioni
sme a
sure
di nt
ermso
fit
sfo
rei
gns
ale
sasap
erc
ent
ageoft
ota
l
sa
les
,b ut
thi
scanbecon
fus
edwithre
gio
nali
zat
ion.

TRUE
Th isme asurecanbemi slea
ding.Forexample,c
onsi
de raU. S.firmt ha
th asexpandeditsact
ivi
ti
esint
o
Ca nada.Cl earl
y,t
hisin
itiat
iv
eisq ual
it
ati
vel
yd i
ffe ren tfroma c
hievi
ngthes amesa l
esvolumeinad i
st
ant
cou nt
rys ucha sChina.Simil
arl
y,ifaMa la
ysi
anfir me xpandsint
oSingaporeoraGe r
ma nfir mstar
ts
selli
ngitsp roduct
sinAu str
ia,t
hiswou l
drepre
sentane xp ansi
onintoageographi
callyadjac
entcount
ry.
Suc hne a
rb ycountr
ieswo ul
do f
tensharema n
yc ommo nc hara
cte
ris
tic
sintermso flanguage,
cult
ure,
infras
tructure,andcust
o merprefe
rences
.Inotherwords, thi
sismo r
eac as
eo fregionali
zat
iontha
n
glob a
li
z a
tion.

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

5
4. AU.S.firmexpandsi
ntoChi
naandCana
daatex
actl
ythesamesal
esv
olu
me.
Thep
hys
ica
ldi
st
anc
eis
t
heonlyf
act
ort
hataffectst
hetr
uedi
st
anceb
etweenthecou
ntr
ies
.

FALSE
Whe nwel ookatwhatwemig htca
llt
hetruedis
tancebet
weentheU.S.andChina,theeffe ct
sof
geogr
aphicdist
ancear
emultipli
edbydist
anceinter
mso fcu
ltur
e,lan
guage,re
li
gion,andleg
aland
poli
ti
calsyst
emsbetweenth
et wocountr
ies
. Ontheothe
rhand,alt
houghU.S.andAus t
ral
iaar
e
geogr
aphical
lydis
tant
,thet
rued i
st
anceissomewhatles
swheno neconsi
dersdi
sta
n c
ea l
ongtheot
her
dimensi
ons.

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

7-39
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
5
5. Th
eU.
S.a
ndAu
str
ali
aha
vec
ommonl
angu
agea
ndc
ult
urea
ndy
ett
het
rued
ist
anc
eisg
rea
t.

FALSE
Alt
houghU.
S.andAus
tra
li
aar
eg e
ogra
phic
all
ydi
sta
nt,
thetru
edis
tan
ceissome
wha
tle
sswhe
none
con
sid
ersdi
st
anc
ealon
gtheot
herdimen
sio
nssuc
haslangu
ageandcul
tur
e.

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

5
6. Th
eU.
S.a
ndMe
xic
oar
ecl
oseg
eogr
aph
ica
ll
yands
oist
het
rued
ist
anc
e.

FALSE
Bo t
hCa nadaandMe xic
oa r
eth esa
med i
sta
ncefromtheUni t
edStat
es.However
,U.S.compa n
iesfindit
easi
ertoexpandoperati
on sint
oCa nad at
hanintoMe x
ico.
Ca nad
aa ndtheU.S.s
harema ny
commo nali
ti
esinte
rmso flanguage,cult
ure,e
conomicdevel
opment,leg
alandpoli
tic
alsys
tems,and
inf
rast
ruct
ured e
vel
opme n t
.Th us,
ifwev iewdista
nceashavingma n
yd i
mension
s,theU.S.andCa na
da
arever
yc l
ose,where
a sthereisgreat
e rdi
stanc
ebe t
weentheU.S.andMe xi
co.Thetruedis
tanceis
clos
erbetweentheU.S.a ndCa nadathanb e
tweentheU.S.andMe xic
o.

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

5
7. Ma
jorWe
ste
rnh
emi
sph
eret
radeb
loc
sinc
lud
eNAFTA,
Mer
cos
ur,
andASEAN.

FALSE
Anu mberofregio
nalagr
ee ment
shavebe e
ncre
atedt
ha tf
aci
li
ta
tethegrowthofbusi
nesswi
thi
nthes
e
reg
ionsbyeasi
n gtr
adere
stric
ti
onsandtaxesa
ndtari
ffs .Thesehavein
clude
dth eEur
opeanUni
on(EU)
,
NorthAme r
ica
nFr eeTra
d eAgree
me nt(NAFTA),Associ
ati
onofSoutheas
tAsianNati
ons(
ASEAN) ,
andMERCOSUR( aSouthAme ri
cantra
d i
ngbl
ock).
Onl yNAFTAa ndMERCOSURc once
rnthe
We s
ter
nh e
misph e
re.

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

7-40
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
5
8. Ana
tur
alr
egi
onalt
radeb
locb
ase
dup
onl
angu
agea
ffini
tyi
sther
egi
onf
romAl
ger
iaa
ndMo
roc
cot
o
Omana
ndYemen.

TRUE
Str
etc
hin
gf r
om Alg
eri
aandMoroccoint
heWes
ttoOmanandYemenintheEast
,moret
han30
count
ri
esshar
etheArabi
cla
ngu
a g
ea ndt
heMus
limre
li
gion
,maki
ngth
e s
ec ou
ntr
iesana
tur
alr
egi
ona
l
blo
c.

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

5
9. Cent
rala
ndSout
hAme ri
caar
enotpa
rto
fan
atu
ralr
egi
ona
lbl
ocb
eca
uset
heyo
nlys
har
ela
ngua
ge,
re
li
gio
n,andco
loni
zat
ionhi
st
ory
.

FALSE
Regionale
conomi cintegra
ti
o nhaspro
gress
eda tafast
erp a
cethanglobalecon
omi cint
egr
ati
on,andthe
tra
dea ndi
nve
s t
me nt patt
ernsofthel
arge
stcompa nie
srefle ctthi
sreal
ity
.Afterall
,re
gionsr
epre
sentthe
outco
me sofc
e nturie
so fpolit
ic
alandcult
uralhis
torythatr
esult
sinnotonlycommo nali
ti
esbutal
so
mu t
ualaffin it
y.Thec ountri
esofSout
ha ndCe ntr
alAme ri
casharet
heSpa nis
hlanguage(e
xceptBra
zil
),
theCathol
icr
eligion,andahi st
oryofSpani
shc ol
onial
ism.

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

6
0. Th
eEur
ope
anUni
oni
sat
rad
ingbl
oct
hate
ase
str
ader
est
ri
ct
ion
s,t
axe
s,a
ndt
ari
ffsf
ori
tsme
mbe
rs.

TRUE
Anothe
rreas
onforregio
na le
xpansi
oni
stheri
seoft
hetra
dingbl
ocsa
ndfre
etr
adezon
es.
An umberof
re
giona
lagre
eme nt
sh a
veb ee
nc r
eat
edt
hatfa
cil
it
at
ethegrowtho
fbus
ine
sswit
hint
hes
eregi
onsb
y
eas
ingtr
aderes
tri
ct
ions,andtax
esandt
ari
ffs .

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

7-41
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
6
1. Af
ranc
his
ege
ner
all
yex
pir
esa
fte
raf
ewy
ear
s,whe
rea
sal
ic
ens
eisd
esi
gne
dtol
asti
ntope
rpe
tui
ty
.

FALSE
Licen
sin
ge nabl
esacomp a
n yt
or e
ceiv
earoya
ltyorfeeine
xcha
ngefort
herighttouseit
stra
de mar
k,
pat
ent,t
radesec
ret
,orotherva
luablei
temofi
n t
el
lec
tualpr
ope
rty.
Franc
hisi
ngc ont
ract
sgeneral
ly
inc
ludeab r
oaderr
angeoffact
orsinanope
rat
ionandhavealo
ngerti
mep e
riodd ur
ingwhichthe
agre
ement i
sineffe ct
.

AACS B:Analyt
ica
lTh i
nking
Acc
ess
ibil
it
y:Keyboar
dNa vig
atio
n
Blooms:Rememb er
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksasso
ciat
edwitheachofthem.
LevelofDiffic ul
ty:1Easy
T
opic:Entr
yMo de
so fI
nter
nati
onalExpansio
n

6
2. Ty
pic
all
y,j
ointv
ent
ure
sin
vol
vel
essc
ont
rola
ndr
iskt
hanf
ranc
his
ing
.

FALSE
Ajoi
ntvent
ureha
sah
ighe
rde
gre
eofo
wne
rshi
p(b
othi
nve
stme
nta
ndr
isk
)andc
ont
rolt
hando
es
fr
anc
his
ing.

AACS B:Analyt
ica
lTh i
nking
Acc
ess
ibil
it
y:Keyboar
dNa vig
atio
n
Blooms:Rememb er
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksasso
ciat
edwitheachofthem.
LevelofDiffic ul
ty:1Easy
T
opic:Entr
yMo de
so fI
nter
nati
onalExpansio
n

6
3. Typ
ical
ly
,thele
astr
is
kymeth
odofent
ryint
oafor
eignmark
eti
sthrou
ght
hees
tabl
is
hmentofawh
oll
y
ownedfor
eig
nsubsi
dia
rys
othatt
hepa
rentor
gani
zati
onc
anmainta
inahi
ghl
evelo
fcon
trol
.

FALSE
Establ
is
hingawho l
lyowne dsubsi
diar
yisthemo stexpensi
vea ndriskyofthevari
ousent
rymod es
.
Ho wever
,itc
ana l
soyiel
dtheh i
ghestr
eturns
.I nadditi
on, i
tprovidesthemu l
ti
nat
iona
lcompa n
ywi t
h
thegreat
estd
egreeofcontr
olofallact
ivit
ies
,includi
n gma nufa
c tu
ring,market
ing
,dis
tri
but
ion,and
technol
ogydevel
opment.Wh oll
yo wnedsubsidia
riesaremo stappropria
tewh e
reafir ma l
readyhast
he
appropr
iat
ekn o
wledgeandc a
p a
bili
ti
esthati
tc anlevera
g erat
he reasi
lythr
oughmulti
plelo
cati
ons.

AACSB:An al
ytica
lTh i
nki
ng
Acc
essi
bil
ity
:Ke y
boardNa vig
ati
on
Blo
oms :Un derst
and
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksassoci
ate
dwi theac hoft
hem.
LevelofDiffic ulty:2Me di
um
T
opic:Entr
yMo desofInte
rnat
ionalEx pansi
on

6
4. Exp
ort
ingi
sane
xpe
nsi
vewa
ytoe
nte
rfor
ei
gnma
rke
ts.

FALSE
Expo
rti
ngisar
el
at
iv
elyi
nex
pen
siv
ewa
ytoe
nte
rfor
ei
gnma
rke
ts,
buti
tisno
twi
tho
uts
ign
ific
ant
downs
ides
.

AACS B:Anal
yti
calThink
ing
Ac
ces
sib
ili
ty:Key
boardNa v
igat
ion
Blo
oms:Un der
stand

7-42
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McGraw-Hill Education.

0 0
 Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandr
isk
sassoc
iat
edwit
he achoft
hem.
Levelo
fDiffic ult
y:2Me di
um
T
opic:Entr
yModesofIn
tern
ati
onalExpansi
on

6
5. Whencon
sid
eri
ngtheexp
ort
ingdeci
si
on,compa
niess
houl
dcon
sid
ert
hatt
hea
bil
it
ytot
ai
lort
hei
r
pr
oduc
tst
ome e
tlo
c a
lmarke
tneedst
ypic
all
yisver
yli
mite
d.

TRUE
Expo
rti
ngisare
lat
iv
elyin
expensi
vewa
ytoent
erfor
ei
gnma r
kets
,buti
tisnotwit
houtsi
gni
ficant
downs
ides
.Theabi
li
tytotai
lorc
ompan
yprodu
ctstomee
tlocalmar
ketneedst
ypi
call
yisver
yli
mit
ed.

AACSB:An al
ytica
lTh i
nki
ng
Acc
essi
bil
ity
:Ke y
boardNa vig
ati
on
Blo
oms :Un derst
and
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksassoci
ate
dwi theac hoft
hem.
LevelofDiffic ulty:2Me di
um
T
opic:Entr
yMo desofInte
rnat
ionalEx pansi
on

6
6. Whencon
sider
ingtheexpor
tdeci
si
on,fir
mss
hou
ldn
otpa
rtne
rwi
thl
oca
ldi
st
ri
but
orsb
eca
usema
ny
f
ore
ignmark
etsarenat
ional
lyr
egul
ate
d.

FALSE
Exp or
tingconsis
tsofproduci
nggoodsinonecount
rytosellinano t
her.Th
ee nt
rystr
ategyena
blesa
fir mt oinvestt
heleas
ta mountofre
sour
cesinter
mso fit
sp roduct
,itsor
ganiz
ati
on,anditove
rall
corporat
estra
tegy.Becausemanyfore
ignma r
ket
sarenati
onallyregula
tedanddominate
db ynet
wor ksof
loc
a lin
termediar
ies,
fir msneedtopar
tnerwit
hloca
ld i
st
ribu t
orstobenefitfromthe i
rval
uableexp
erti
se
andk nowledgeofthei
ro wnma r
ket
s.

AACSB:An al
ytica
lTh i
nki
ng
Acc
essi
bil
ity
:Ke y
boardNa vig
ati
on
Blo
oms :Un derst
and
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksassoci
ate
dwi theac hoft
hem.
LevelofDiffic ulty:2Me di
um
T
opic:Entr
yMo desofInte
rnat
ionalEx pansi
on

6
7. Li
cen
singisac
ontr
actua
larr
angementt
hati
nvol
vesal
ongp
eri
odo
fti
mea
ndi
ncl
ude
sfa
ctor
ssuc
has
moni
tor
ingofope
rat
ions
,tr
aini
ng,a
nda d
vert
is
ing
.

TRUE
Fr
anc
hisi
ngusual
lyi
nvol
vesalon
gerti
meper
iodtha
nli
cens
inga
ndi
ncl
ude
sot
herf
act
ors
,suc
has
moni
tor
ingofope
rat
ions
,tr
ain
ing,a
ndadv
ert
is
ing
.

AACSB:An al
ytica
lTh i
nki
ng
Acc
essi
bil
ity
:Ke y
boardNa vig
ati
on
Blo
oms :Un derst
and
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksassoci
ate
dwi theac hoft
hem.
LevelofDiffic ulty:2Me di
um
T
opic:Entr
yMo desofInte
rnat
ionalEx pansi
on

7-43
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McGraw-Hill Education.

0 0
6
8. I
ninte
rna
ti
onalmark
ets,
ad i
sad
vant
ageofl
ic
ensi
ngisth
a tthefir
mgrant
ingali
cens
ein
cur
sli
tt
ler
is
k,
s
incei
tdoesn
o th
avetoinv
esta
nysi
gnificantr
esou
rcesintot
hec
oun
tryi
tsel
f.

FALSE
Ini
nte
rna
ti
onalmark
ets,
ana dv
anta
geofli
censin
gistha
tthefir mgra
nti
ngali
cens
ein
cur
sli
tt
ler
is
k,
si
ncei
tdoesn
o th
avetoinv
estanysi
gni
fic antre
sou
rcesint
otheco
untr
yit
sel
f.

AACSB:An al
ytica
lTh i
nki
ng
Acc
essi
bil
ity
:Ke y
boardNa vig
ati
on
Blo
oms :Un derst
and
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksassoci
ate
dwi theac hoft
hem.
LevelofDiffic ulty:2Me di
um
T
opic:Entr
yMo desofInte
rnat
ionalEx pansi
on

6
9. Wholl
yownedsu
bsi
dia
rie
sarel
eas
tapp
ropri
at
ewhereafir malr
ead
yh a
sthea
ppr
opr
iat
ekn
owl
edg
eand
ca
pabi
li
ti
est
hati
tca
nlever
ager
ath
erea
sil
ythrou
ghmult
ipl
eloc
ati
ons.

FALSE
Wholl
yownedsubs
idia
rie
sar
emo s
tapprop
riat
ewh er
eafirma l
rea
dyha st
hea
ppr
opr
iat
ekn
owl
edg
e
andc
apab
ili
ti
est
hatitca
nlev
era
gerat
hereasi
lythr
oughmul
ti
plel
ocat
ions
.

AACSB:An al
ytica
lTh i
nki
ng
Acc
essi
bil
ity
:Ke y
boardNa vig
ati
on
Blo
oms :Un derst
and
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksassoci
ate
dwi theac hoft
hem.
LevelofDiffic ulty:2Me di
um
T
opic:Entr
yMo desofInte
rnat
ionalEx pansi
on

7
0. Whol
lyown
edsubs
idi
ari
esar
etypi
cal
lyt
hemos
texp
ens
ivea
ndr
is
kye
ntr
ymo
de.
Ther
iski
ssha
red,
ho
wever
,wi
tht
hecompanypar
tner
s.

FALSE
Who l
lyown edsubsi
dia
riesar
etypi
call
ythemos texpe
nsi
veandri
skye ntr
ymo de.Withfr
anchi
si
ng,
joi
ntventu
res,orst
rat
egical
li
ances
,theri
skissharedwit
hthefir m'spart
ners
.Wi t
hwho l
lyowned
subsi
diar
ies
,theenti
reri
skisass
ume dbytheparentcompan
y.Theris
ksa ss
oci
atedwithdoin
gbu s
ine
ss
inanewc ountr
y( e
.g.
,poli
ti
cal
,cul
tura
l,andle
ga l
)canbele
ssene
db yh i
ri
nglocalt
alent
.

AACSB:An al
ytica
lTh i
nki
ng
Acc
essi
bil
ity
:Ke y
boardNa vig
ati
on
Blo
oms :Un derst
and
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksassoci
ate
dwi theac hoft
hem.
LevelofDiffic ulty:2Me di
um
T
opic:Entr
yMo desofInte
rnat
ionalEx pansi
on

Multiple Choice Questions

7-44
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McGraw-Hill Education.

0 0
7
1. Whi
cho
fthef
oll
owi
ngi
sn ar
ot i
skno
rma
ll
yas
soc
iat
edwi
thBot
tomo
fthePyr
ami
dst
rat
egi
es?

A.Al ow-endv er
sionofabr andma yde tra
ctfromt heo veral
lbra
nda t
tr
activeness
.
B.Th enewl ow-costproduc
tstheyd evelopma ycan nibali
zethesalesofthe i
rcoreproducts
.
C.Entrenchedcompe tit
orscanimp acttheab i
li
tyoft hene wfir mt oe nt
e rthema r
ketsucces
sful
ly.
D.Ne wp r
odu ct
sma ybepe rcei
v e
da sexp l
oiti
ngthep ri
vil
egedcustomerwi thsubsta
ndardp r
oducts
.
Inmanydevelopi
nge conomies,distr
ibutionsofincomer emainmu chwide rthantheydoi nthe
dev
elope
dwor ld,l
ea vi
ngma nyi mpoverishede v
ena sth eeconomiesg r
ow. Th echal
leng
ef or
mult
inat
ion
a lfir msi stota
il
ort hei
rp roductsands ervice
stome etthenee dsofthebottomofthe
pyr
amid.Globalcorporati
onsa r
ei n
creasinglychangingt hei
rproductoffe ri
n g
stome ettheneedsofthe
nea
rly5bil
lionpoorpe oplei
nt hewor ldwh oinhabitd evel
opingcountri
es.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

7
2. Mult
inat
ionalfir
msa
rec
ons
tant
l
yfa
cedwi
tht
hed
ile
mmao
fch
oos
ingbe
twe
en__
____
_and
___
__ _
__ __
.

A.l ocaladapt
ati
on;loc
a lintegr
ati
on
B.l ocaladapt
ati
on;globalin t
egr
ati
o n
C.g l
obaladapt
ati
on;localin t
egr
ati
on
D.g l
obaladapt
ati
on;globa lint
egra
tion
Someg o
v e
rnmentsmakeb e t
teruseo finflo wsoffo r
eig
ninvest
mentandknow-howthanother
s.
Explanati
onsincl
udethen ee dofgove r
nme ntstohavetr
ackrec
ordsofbusi
nes
s-f
rie
ndlypoli
cie
sto
at
tractmu l
ti
nati
onal
sandl o calent
repreneurstotr
ainwo r
ker
s,inve
sti
nmo der
ntechnol
ogy,andnurt
ure
lo
ca lsuppl
ier
sandma nag e
r s.Als
o,itme ansc a
ref
ull
yma nagin
gthebroade
reconomicfa
c t
orsi
na n
economy ,suc
hasinter
estra t
es,infla ti
on,a ndunemployment.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

7-45
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
7
3. Th
eris
eo f_______
__c api
tal
is
mar
oun
dthewor
ldc
rea
test
reme
ndo
usb
usi
nes
sopp
ort
uni
ti
esf
or
mul
ti
nat
ionalco
rporat
ions.

A.social
B.mu lt
inati
on a
l
C.ma rk
e t
D.demo crat
ic
Theri
seo fglobal
izat
ion( meani
ngtheri
seofmark
etcapit
ali
sma r
oundtheworl
d)ha
sundeni
abl
y
cr
eat
edtreme ndousbusinessoppor
tuni
ti
esformul
ti
nat
ionalcor
porati
ons
.Forexa
mple,
while
smar
tphonesalesdecli
ne dinWester
nEu r
opeint
hethi
rdq ua
rte
ro f2014
,the
ygrewata50perc
ent
rat
e
i
nEaster
nEur op e,
theMi d dl
eEast
,andAfric
a.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

7
4. Acco
rdi
ngt
oEx hi
bit7.
1int
het
ext
boo
k,t
hec
oun
trye
xpe
rie
nci
ngt
heh
igh
estr
ateofgr
owt
hinGDP
fr
om2001-
2011was

A.t heUni t
edStates.
B.J apan.
C.Ch i
n a
.
D.I ndia.
Ass howni nExhibit7.1,thegrowthexper
ienc e
db ydevel
opede conomiesinthefir stdecadeoft
he
2000swa sa n
emic,wh ilethegrowthindevelopingeconomieswasrob u
s t
.Thishasres
u l
tedina
dramati
cs hif
tinthes t
ructureofthegl
obalec onomy.Ov e
rhalfoftheou t
putofthewor l
dn owcomes
fr
o meme rgingma r
k et
s.Thisisleadi
ngtoac onv e
rgenceofli
vingsta
nd ar
dsa c
ros
st h
eg lobeandis
changingthefaceofbu siness
.On eexa
mp l
eo fthisistheshi
ftintheglobalaut
omo bi
lema rke
t.Chi
na
suppla
n t
edt h
eUni t
e dSta t
esasthela
rges
tma rk
etforautomobil
esin20 09.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

7-46
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McGraw-Hill Education.

0 0
7
5. Acco
rdi
ngt
oEx hi
bit7.
1int
het
ext
boo
k,t
hec
oun
trye
xpe
rie
nci
ngt
hel
owe
str
ateofgr
owt
hinGDP
fr
om2001-
2011was

A.t heUni t
edStates.
B.Ch i
n a
.
C.I ndia.
D.J apan.
Ass howni nExhibit7.1,thegrowthexper
ienc e
db ydevel
opede conomiesinthefir stdecadeoft
he
2000swa sa n
emic,wh ilethegrowthindevelopingeconomieswasrob u
s t
.Thishasres
u l
tedina
dramati
cs hif
tinthes t
ructureofthegl
obalec onomy.Ov e
rhalfoftheou t
putofthewor l
dn owcomes
fr
o meme rgingma r
k et
s.Thisisleadi
ngtoac onv e
rgenceofli
vingsta
nd ar
dsa c
ros
st h
eg lobeandis
changi
n gthefaceofbu siness
.On eexa
mp l
eo fthisistheshi
ftintheglobalaut
omo bi
lema rke
t.Chi
na
suppla
n t
edt h
eUni t
e dSta t
esasthela
rges
tma rk
etforautomobil
esin20 09.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

7
6. Gl
obali
zat
ionop
enst
hedoor
sforcomp
ani
estoat
tr
actn
ewcus
tome
rs.
Oneoft
hec
hal
len
gesi
sto
de
ter
mineh o
wtomeett
heneedso
fthe
secu
stomer
swhoha
ve

A.di ffe r
entincomel e
ve l
s.
B.l o
wi ncomel e
vels.
C.highi nc
o melevels
.
D.s t
eadyincomel e
v el
s.
Oneofth echal
lenge
swi thglobal
iza
ti
onisdet
ermini
nghowt ome e
ttheneedsofcus
tome r
satve
ry
differentinco
mel evels
.Inma nydevel
opi
ngeconomies,di
st
rib
utionso
fincomerema i
nmu chwidertha
n
t
heyd ointhedevelopedwor l
d,le
avin
gma n
yimpo ve
ris
hedevenastheeconomiesgr
o w.Thecha
llenge
f
ormul t
inat
ionalfir msi stota
il
orthei
rpr
oductsandser
vice
stome ett
heneedsofthebott
omo fthe
pyra
mid.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

7-47
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McGraw-Hill Education.

0 0
7
7. Thetr
adeamongn
ati
onsh
asincr
eas
eddramat
ica
ll
yinr
ece
ntyea
rs,
andi
tise
sti
mat
edt
hatb
y201
5the
tr
ade_____
___na
tio
nswil
lexc
eedthet
rade_
______n
ati
ons
.

A.wi t
hin;acro
ss
B.a c
ross;wit
hin
C.wi t
h;ou t
si
de
of
D.a b
ove ;wit
hin
Thetr
adea mongn at
ionshasi
ncr
eas
eddramat
ica
ll
yi nr
ece
nty
ear
s,a
ndi
tise
sti
mat
edt
hatb
y201
5the
t
radeacr
o ssnat
ionswille
xcee
dthet
radewit
hinnat
ions
.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

7
8. Whent
heGEwinde
nerg
ybusin
esst
app
edi
ntowo
rld
-wi
det
al
ent
,itwa
sabl
etoe
xpa
ndu
sin
ga(
n)
___
___
____
____
___st
rat
egy
.

A.foc us
B.div ers
ific a
tion
C.un rela
ted
D.g eneric
Theimp ort
anceofinte
rnat
ionalexpans
ionasavi
abledi
v e
rsi
fic at
ionstra
tegycanbei
ll
u s
trat
edbyGEs
windene r
gybu s
ines
sthatbenefit sbyta
ppingi
ntota
lentaro
undthewor l
d.Thefir mh asbuil
tre
sea
rch
ce
ntersinCh i
na,Germa n
y,India
,andtheU.S.CEOJ e
ffr eyImme ltsa
ysthatt
hiss
olu
tionwa scr
eat
edin
or
dertoa cces
sthebestbrai
nseverywher
eintheworl
d.Allfourc
entershavepla
yedakeyroleinGEs
de
velop mentofhuge92-t
onturbine
s.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

7
9. Sta
ti
s t
ic
sindi
cat
etha
toverhal
fofthewor
ldoutpu
tnowco
mesfr
ome mer
gingmark
ets.
Thisi
sle
adi
ng
toa(n)___
_______
_o fl
ivi
ngsta
ndardsa
cros
sthegl
obea
ndi
schan
gingthefa
ceofbusi
nes
s.

A.di ve
rgence
B.c onver
gence
C.e xpansi
on
D.c ontr
acti
on
Overhalfoftheworl
doutpu
tnowcomesf
romemerg
ingmar
ket
s.Thi
sisl
eadi
ngt
oac
onv
erg
enc
eof
l
ivi
ngs t
andardsac
rosst
heglob
eandi
schang
ingt
hefac
eofbus
ine
ss.

AACS
B:An
aly
tic
alTh
ink
ing

7-48
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McGraw-Hill Education.

0 0
 Ac
cessi
bil
it
y:Keyboar
dNa vi
gati
on
Bl
ooms:Unders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificati
onstr
ategy
.
Leve
lofDiffic ult
y:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOver
view

8
0. Accor
din
gtothet
ext
book,g
loba
li
zat
ionin
volv
esint
ern
ati
onalex
chang
e.I
ncl
udedint
hise
xchangei
s
t
radeingood
sandse
rvi
cesaswel
lasthee
xchang
eof__________,
_____
_____
, a
nd________
_a c
ros
s
cou
n t
ri
es.

A.habi
ts;values;i deas
B.tr
adit
ions;leg alsyst
e ms;h is
tor
y
C.mon e
y ;id
e as;in f
orma ti
on
D.st
ati
sti
c s
;p er
s on ne
l;p ur
c hasi
ngpower
Gl
obal
izat
ioni sat ermt hatha stwomeani
ngs
:(1)thein
creas
eini
nter
nat
ionale
xcha
nge,
inc
ludi
ngtr
ade
i
ngoodsands ervice saswe llasexcha
ngeofmoney,i
deas,a
ndinf
ormat
ion;
(2)thegr
owi
ngsimi
lar
it
yof
l
aws,
rules,norms ,v al
ues, a
ndi deasa
cros
scount
ri
e s
.

AACSB:Analyt
ic
a lThinki
ng
Ac
cessi
bil
it
y:Keyboar
dNa v
igati
on
Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-01Th
eimp
ort
anc
eofi
nte
rnat
iona
lexpans
ionasav i
abl
ed i
vers
ificationstr
ategy
.
Leve
lofDiffic ulty:2Me di
um
Top
ic:TheGlobalEconomy:ABriefOve r
view

8
1. I
nthePor
terDia
mon dofNa
ti
ona
lAd
vant
agef
rame
wor
k,whi
cho
fthef
oll
owi
ngf
act
orsdo
esn
ota
ffe
ct
na
ti
oncompeti
ti
vene
ss?

A.Thep osit
ionoft hen ati
oninfactorsofproduct
ionn ece
ssarytocompe t
einag ive
nindu s
try.
B.Th ep resenceo rabsenceinthenationofinter
n at
ional
lyco mpet
iti
vesuppli
erindust
ri
es.
C.Thec onditionsi nthen at
iongoverningthenatureoffore
ignr i
val
ry.
D.Then atureofho me -
ma rketdemando ftheproductsorservic
esoftheindustr
y.
Port
erconclud edt hattherearefourbroadattr
ibutesofnati
onst h
atindi
v i
dual
ly,andasasy s
tem,
const
it
utewh a tiste r
me dt h
eDi amondo fNa t
ionalAd va
ntage.Ineffe ct,t
heseatt
ri
butesjoint
ly
det
erminet hepl ayingfie ldthateac
hn ati
one st
ablis
hesandop erat
esforit
sindust
rie
s.Th es
efact
orsare
:
fac
torendowme n
ts,d ema ndcondit
ion,rel
atedands upport
ingindust
ri
es,andfir mstr
ategy,st
ruct
ure
,
andriv
alry.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

7-49
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McGraw-Hill Education.

0 0
8
2. Ri
val
ryisi
nte
nseinna
ti
onswi
thcond
iti
onsof___
_______c
onsumerde
mand
,__
___
____
_su
ppl
ie
r
ba
ses
,and______
____newen
tra
ntpot
enti
alfr
omrel
ate
dindus
tri
es.

A.we ak;weak;hi
gh
B.s t
rong;st
rong
;low
C.we ak;weak;lo
w
D.s t
rong;st
rong
;high
Riv
alryispart
ic
ular
lyint
ensei
nnat
ionswit
hconditi
onsofst
rongconsumerdemand,st
rongsuppl
ie
r
bas
es,andh i
ghnewe nt
rant
pot
ent
ialf
romrela
tedindust
ri
es.Th
iscompe t
iti
veri
val
ryinc
reas
esthe
effic iencywit
hwhi c
hfir msdev
e l
op,mark
et,anddis
tr
ibut
ep r
oductsandser
vic
eswithi
nthehome
count
ry.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

8
3. Ac
cor
din
gtoMi
cha
elPo
rte
r,fir
mst
hath
avee
xpe
rie
nce
din
ten
sed
ome
sti
ccomp
eti
ti
ona
re

A.un l
ike
lytohavetheti
meo rresourc
estoc ompe t
ea br
oa d.
B.mo reli
kel
ytod emandprot
ec t
ionfromthe i
rgo v
ernme nts
.
C.mo stl
ikel
ytod e
signst
rat
egiesaimedprima ri
lyatthedo mest
icma r
ket.
D.mor eli
kel
ytod esi
gnst
rate
giesthatwil
la ll
owt hemt osucces
sful
l
yc omp et
eabroad.
Competi
ti
veriva
lryincr
eas
esthee ffic iencywi thwhi chfir msdevelop,
ma r
ket,anddis
tr
ibutep
rodu
cts
andser
vice
swithinthehomec ountr
y.Thisintens
er iv
a l
ryforce
sfir mst olookouts
idethei
rnati
onal
bound
arie
sfornewma r
ket
s,set
tin
gupt heco ndi
tionsn e
cessar
yforglobalcompet
iti
veness.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

7-50
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McGraw-Hill Education.

0 0
8
4. Whic
ho ft
hefac
tor
sbe
lowha
sn ma
ot d
ethes
oft
war
ese
rvi
cesi
ndu
str
yinI
ndi
aext
reme
lyc
omp
eti
ti
ve
onaglo
balsc
ale
?

A.la r
gepoolofs ki
ll
edwo rk
e r
s
B.la r
ge,gro
wi ngma r
ke tandsop h
ist
ic
atedcust
ome r
s
C.ta xandantit
rustl
egislat
ionthatprot
ect
sthedominantplaye
rsinthei
ndus
try
D.la r
genetworkofp ublicandpr i
vat
eeducat
ionali
nsti
tut
ions
InIndia
,theDiamon do fNa t
ionalAdvant
ageframeworkforsoft
waresho
wsalargep
oolofs
kil
led
workers
,alargenetworko fpubli
ca ndpri
vat
ee duca
ti
onalinst
it
uti
ons,al
arg
e,growi
ngmark
et,
and
soph
isti
cat
edc ust
ome rs
.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

8
5. I
nrevi
ewin
gtheInd
ianSof
twarei
ndus
tr
yan dth
ed i
amondofnat
ion
alad
v a
ntag
e,whicho
fthe
f
oll
owin
gisagro
wingdetr
act
ortot
henat
ionalcompet
it
iv
eadv
antag
einthi
sindus
try
?

A.l arg
epo olofs kil
le
dwo rker
s
B.e rodin
gc ostad va
ntageofIndianfir ms
C.r apidl
yimp rovingcommu nicat
ionsinf
rastr
uct
ure
D.l arg
e,growingma rk
etands ophi
sti
catedcust
omers
Itisi
ntere
sti
ngt on ot
ethatthec o
stadvantag
eo fI
ndia
nfir msh a
sero
ded.Forexampl
e,TCSengi
nee
r
compe ns
ati
ons oared13pe rc
entin2 010.Furt
her,I
BM andAccent
urear
eaggres
siv
elybui
ldi
ngupt
hei
r
India
no per
a t
ions,hiri
ngtensofthousandsofsought
-af
terI
ndi
ansbypayi
ngthem more
,ther
eby
l
o weri
ngtheircostswhi l
erai
singthoseofTCS.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

7-51
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McGraw-Hill Education.

0 0
8
6. I
nrevi
ewin
gtheInd
ianSof
twarei
ndus
tr
yan dth
ed i
amondofnat
ion
alad
v a
ntag
e,whicho
fthe
f
oll
owin
gisagro
wingdetr
act
ortot
henat
ionalcompet
it
iv
eadv
antag
einthi
sindus
try
?

A.En g
lish-l
ang uagecapabili
ty
B.g rowingma rketandsop hi
st
icate
d, cus
tome rs
C.du ty-f
reea ccesstoimpo rt
edcomp uter
sa nds oftwar
e
D.r is
eo fcompe t
inglow-labor
-costcountr
ies
Itisi
nterest
ington otethatthecostadvanta
geo fI ndia
nfir msh a
se r
oded.Fore xampl
e,TCSengi
neer
compe n
sationsoa red13pe rce
ntin2 010.Further,IBM andAc cent
ureareag gres
siv
elybui
ldi
ngupt
hei
r
India
no perat
ions ,hi
rin
gt ensofthousandsofs ough t
-af
terIndi
ansbyp ay
ingt hem more
,ther
eby
l
o weri
ngth ei
rc ostswhilerais
ingthoseofTCS. Finall
y,ma nylo
w-labor
-costc ou
ntri
es,
suchasChi
na,
t
hePh il
ipp i
nes,a n
dVi etnam, a
reeme rgi
nga sthre a
tstotheIndi
anc ompeti
tors.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

8
7. I
nrevi
ewin
gtheIndi
anSof
twa
reindu
stryandth
ediamondofn
ati
onala
dvant
age,
whichofthe
f
oll
owin
gisarel
ati
vel
yweaks
etoffa
ctorsi
nthena
ti
o na
lcompe
ti
ti
veadva
ntag
einth
isindu
s t
ry?

A.U. S. dema ndcondit

ions
B.Fa ctore ndowme n
ts
C.Dome st
icr i
val
ry
D.Do me st
icd emandco nd
itio
ns
Alt
hou ght heIndia
ns ucces
sc annotbeexpl
ai
nedinter
mso fi
tshome-mark
etde
ma nd(a
ccord
ingt
othe
Por
termo del)
, t
henatureoftheindustr
yenabl
essof
twaret
obetrans
ferr
edamongdifferentl
oca
tio
ns
si
multane ouslybywayofc o mmu nic
ati
onsli
nks.
Thus,compet
it
ive
nessofmar
ketsout
si
deIndiac
anbe
enha
nc edwi t
houtaph y
sicalpres
enceinthos
ema r
ket
s.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

7-52
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McGraw-Hill Education.

0 0
8
8. Co
un t
ri
eswit
hd e
mand
ingc
ons
ume
rs,
lik
een
vir
onme
nta
ll
y-c
onc
ern
edDe
nma
rk,d
riv
e___
___
____t
o
meett
hedemand.

A.wor ldwideinnovati
on
B.in-coun tr
yinnovati
on
C.foreignma nufact
urin
g
D.g lo
ba lexchange
Consume rswhode mandh i
ghlyspecific ,sophis
tic
atedproduct
sands e
rvice
sfor
cefir mstocreat
e
i
nnovativ
e ,adva
nc e
dp r
oductsandse r
vic
e st
ome ett
hede mand.Thisconsu
me rpr
ess
urepre
sents
chal
lengestoac ount
ry'
sindust
ri
e s
. Buti
nr esponsetothesecha
lle
nges,i
mpr o
vement
stoexis
tin
gg oods
andservi
c esoft
enresult
,cr
eati
ngc ondit
ionsn e
cessar
yf orco
mpe t
it
iveadvant
ageove
rfir msino t
her
count
ries
.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

8
9. Rel
at
edindus
tr
iesc
rea
teth
ep r
oba
bil
it
ytha
tne
wc ompa
n i
eswil
len
tert
hema
rke
t.Thi
s__
___
___
co
mpeti
tiona
ndfor
cesexi
st
ingfirmstoi
mprov
e________
___.

A.decreases,i
nnovat
ion
B.decreases,e
ffic iency
C.incre
as es
,effic ie
ncy
D.incre
as es
,sal
es
Rel
at
edind ust
ri
escreatetheproba
bil
it
ythatnewc o
mpa ni
eswil
lent
erthemarke
t,i
ncr
eas
ing
co
mpetit
iona ndfor
cinge xi
st
ingfirmst obecomemo recompet
it
iv
ethrou
ghe ffort
ssuchasco
stc
ont
rol
,
pr
oductinnovat
ion,a
ndn ov
elappr
oachestodi
str
ibut
ion.Combi
ned,t
hesegiv
ethehomecount
ry'
s
i
ndust
rie
sas ourceofcomp eti
ti
veadvant
age.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

7-53
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McGraw-Hill Education.

0 0
9
0. Whic
hofthe
s epoi
ntso
nthePo
rte
rdi
amon
dofn
ati
ona
lad
vant
agei
sthes
tr
ong
esti
ndi
cat
oro
fgl
oba
l
co
mpeti
ti
vesucc
e s
s?

A.foreignr i
v a
lry
B.do me sti
cr i
valry
C.globa lrival
ry
D.interna t
ionalri
va l
ry
Amo nga l
lthepo int
so nthePo r
terdi
amon dofnat
ionalad
vant
age,domest
icri
v a
lryisp
erha
psthe
st
rong
esti ndicat
oro fglobalc
ompe t
it
iv
es ucc
ess
.Firmsthatha
veexperi
encedinte
nsedomest
ic
competi
tiona remor eli
k e
lytohavedesi
gnedstr
ate
giesandst
ruct
urest
hatall
owt hemtosuc
cess
ful
ly
competeinwo rl
dma r
kets
.

AACS B:An al
yti
calThin ki
ng
Acces
sibi
lit
y:KeyboardNa vi
g ati
on
Bl
ooms:Un derstand
Le
arn
ingOb
jec
ti
ve:07
-02Thes
our
cesofna
tio
nala
dva
nta
ge,
tha
tis
,wh
yani
ndu
str
yinagi
vencountr
yismor e(orle
ss)succ
e s
sfulthan
t
h esameindustryi
na not
hercou ntry
.
Levelo fDi
ffic ul
ty:2Me di
um
T
opi
c:Fact
orsAffe c
tingNati
onComp et
itive
ness

9
1. Whi
cho
fthef
oll
owi
ngi
sn amo
ot tiv
ati
onf
orac
ompa
nyt
opur
suei
nte
rna
tio
nale
xpa
nsi
on?

A.I twishest
oinc rea
sethesizeofthepo te
ntialma rket
sforitsprod uctsands ervic
e s.
B.I twishest
ot akeadvantag
eofa rbit
rag eoppo rt
uniti
esino rdertoi ncre
a s
ep rofit .
C.I twishest
oo ptimizevalu
e-chainactivit
iestoe nhancep er
forma nc e,r
edu c
ec o
sts,andr educ er i
sk.
D.I twishest
oi ncreas
eforei
gnma r
ketpe netr
ationb ydevelopingp roductsfortheh o mema rket.
Therearema nymo ti
vati
on sf
orac omp anyt opu rs
uei nt
ernati
o nalexp ans
ion.Themo stob viouso neis
t
oinc re
asethesi
z eofpo t
enti
alma rket
sfo rit
sp roductsands ervice
s. As econdr easonist hatthe
compa nycantakea dv
antageofarbit
rageop portunit
ies.At hir
dr easoni sthatac ompa nywi s
he sto
enhancethegrowthr at
eofap roductthatisinitsma turi
tys t
ateintheho mec oun t
ry. Afou rthrea so
nis
t
hatt h
ec ompanywi shest
ob enefitf romop ti
mi zi
n gthephy sic
alloc at
ionfore verya ct
ivityini tsval
ue
chain.Afif threasonisthatpossi
b i
li
tiesexistforrevers
ei nnovati
on ,wh erebyac o mpan yd evelopsnew
product
sforeme r
gi n
gma rket
sthath a
vea dequatefuncti
onalit
ya tal owc ostandt heno ftena re
i
ntroducedtotheh omec ount
rya f
tersucc es
sfull
ype n e
trat
ingthee me r
gingma rket.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

7-54
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McGraw-Hill Education.

0 0
9
2. I
facompanyi
scons
ide
rin
go pt
imi
zin
gtheph
ysi
call
ocat
ionfo
reverya
cti
vit
yint
hev
alu
ech
ain
,whi
ch
oft
hef
oll
owin
gisnotaposs
ibl
est
rat
egi
cadv
ant
agefort
hatdeci
si
on?

A.Pe r
forma nc
ee nhancement
B.Co stre
d uct
ion
C.Politi
calris
kr educt
ion
D.Life-cy
clee nhancement
Opti
mizingthelo c
a t
ionforev
e r
ya c
ti
vit
yintheval
uec
hai
ncanyi
el
do neormor
eoft
hre
est
rat
egi
c
ad
vantages
:pe r
forma nceenhancement
,cos
tredu
cti
on,
andri
skr
educ
ti
on .

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

9
3. Thes
aleofBoe
ingcommer
cia
lai
rcr
afta
ndMi
cro
sof
tope
rat
ings
yst
emsi
nma
nyc
oun
tri
ese
nabl
est
hes
e
co
mpanie
stobenefitf
rom

A.hig herp ri
cesi ntheirdome st
icma r
ket
s.
B.r e
du cingt he
ire xposuretoc ur
rencyri
sks.
C.e cono mi e
so fscale.
D.op timiz i
ngthel ocati
onf orma n
ya ct
ivi
ti
esintheirval
uechain.
Expandingt heg l
ob alpresenceofac ompanyautomatica
ll
yincreas
esi t
ssca
leofop era
tio
ns,pro
vidingi
t
wit
hal arge rrev
e nuea nda s
s e
tbase,whic
hp ot
entia
ll
ye nabl
esafir mt oat
tai
ne conomiesofsca
le.One
adva
nta geisthes preadingo ffix edcost
ssucha sre
s e
archanddevelopmentoveralargervo
lumeo f
pro
duc ti
on .Examp l
esincludethesaleinmanyfo r
eig
nc ount
ri
e sofcomme rc
ialair
craftbyBoei
nga nd
oper
atings yste
msb yMi crosoft.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

7-55
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McGraw-Hill Education.

0 0
9
4. I
fth
eU.S.
dolla
rappre
cia
tesre
lat
iv
etof
ore
ignc
urr
enc
y,wh
ati
sli
kel
ytob
eth
ere
sul
tfort
heU.
S.
c
ompan
ythathasbr
anche
sa b
road?

A.Profit swi l
lincre
a s
e,whenme asure
di nU.S.dolla
rs.
B.Profit swi l
ldecrease
,wh enmeasuredinU.S.d ol
lar
s.
C.Forei
gne xportstotheUnite
dSt a
teswilldecreas
e.
D.Forei
gnd ema ndforU.S.goodsands er
viceswilldecr
ease.
WhentheU. S.doll
arapp r
eci
atesagai
nstothercurr
encie
s,U.S.goodscanbemo r
ee xpens
iveto
con
sumersinforeigncountri
es.Appreci
ati
onoft heU.S.doll
arcanhavene
gati
veimp li
cat
ionsfor
Ameri
cancomp a
niesthathavebra
n c
hop erat
ionsovers
eas.Thereas
onfort
hisisthatprofit sf
rom
abr
oadmu s
tb eexchangedfordoll
arsatamo reexpensiv
erateofexcha
nge,r
educingtheamo untofpr
ofit
whenmeasuredind oll
ars.

AACS B:Analyt
icalTh i
nking
Ac
ces
sibi
li
ty:KeyboardNa vig
ation
Blooms:App ly
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,in
cludi
ngthee mergingtr
end
forgreat
eroffshoringando u
tsourci
nga cti
vi
ty.
LevelofDiffic ul
ty:3Ha r
d
To
pic
:Int
ernat
ionalExpansi
onComp anyMotivat
ionsandRi sks

9
5. ___
___
____occu
rswhenafirmd e
cide
stou
til
iz
eot
herfir
mst
ope
rfor
mva
lue
-cr
eat
inga
cti
vit
ie
stha
t
wer
epre
vio
usl
yperf
ormedi
n-h
ous
e.

A.Offs hori
ng
B.Ag lob alst
rat
egy
C.Ou t
so urci
ng
D.At r
a nsnati
onals
trat
egy
Outsour
c ingoc c
urswhenafir mdeci
dest
outi
li
zeot
herfir mstoper
for
mv al
ue-
crea
ti
ngact
ivi
ti
est
hat
wereprev iousl
yperf
ormedin-
hous
e.I
tmaybean e
wa c
ti
vit
ythatt
hefir misper
fec
tl
yc a
pabl
eofdoi
ng
butchoos estohavesomeonee
lsep
erf
ormforc
ostorq
uali
tyre
asons.
Outso
urci
ngcanbetoei
the
ra
dome s
ti
corf or
eignfir m.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

7-56
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McGraw-Hill Education.

0 0
9
6. I
ncon
side
rin
gthed
eci
si
ont
ooffs
hor
e,whi
cho
fthef
oll
owi
ngg
ene
ral
lyi
sn on
ot eoft
heh
idd
enc
ost
s?

A.Totalwa gecost
sa ndind i
rectcosts
B.Wa gede fla t
ion
C.Re duct
ioninintel
lectualprop er
tyr i
ghts
D.Increas
edi nve
ntorya ndcoo rdinat
ionc o
sts
Commons avingsfromo ffs ho ring,suchaslowe rwages,benefits,ene
rgyc os
ts,r
egul
atorycost
s,and
t
axes
,arealleasil
yvisibl
ea ndi mme d
iate.I
nco ntra
st,t
hereareahostofhid
de ncost
sthatari
seover
t
imeandof t
eno verwhelmt heco stsavin
gso foffs horing
. Thes
eh i
ddencostsinc
lude:t
otalwagecosts
,
i
ndir
ectcosts
,increas
edin vent
ory ,r
e ducedmark e
tresponsi
veness
,coordi
nat
ionc os
ts,i
ntel
lect
ual
pr
opert
yr i
ghts,andwa geinfla ti
on .

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

9
7. L
'Or
ealacq
uire
dtwoU.S.fir msthatde
v e
lopedandsol
dhai
rcar
eproduct
stoAfr
ica
n-Amer
ica
n
c
ust
omers.Thi
sper
mitt
editt
ob ui
ldan e
we thni
chairca
red
ivi
si
oninEuropeandAfri
ca.
Thi
s
r
epr
esen
tsanadva
ntag
eo fi
nte
rnat
ionalexpans
ionusi
ng___
_______
__ .

A.a rbitr
age
B.op timizat
iono ftheloca
ti
ono fvalu
e -
chainact
ivit
ies
C.pe rformancee nhancement
D.lea rni
ng
opp ort
unit
ies
Byexp andingintonewma r
kets
,corporat
ionsexposethemselve
stodiffe r
ingmarke
tdemands,res
earch
andde vel
opme ntcapabil
it
ies
,funct
ionalski
lls,or
ganiza
tionalpr
oces
ses
, a
ndma nag
eri
alpr
acti
ces.This
pro
vid esopport
un it
iesf
orma nage
rstotrans
fertheknowle d
gethatr
esul
tsfr
omt h
eseexpos
uresbackto
t
heirh omeoffic eandtoo t
herdivi
sionsinthefir m. Thus,ex
pansi
onintonewmarket
sp r
ovidesaran
ge
ofle
ar nin
gop portunit
ie
s.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

7-57
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
9
8. GEHe al
thc
aredeve
lopedaport
abl
e,ine
xpens
iveul
tr
aso
un ddevi
cef
ortheemer
gingChin
e s
emark
et.I
t
expe
ctst
osellt
hedevic
eint
h eUnit
edStat
esatapri
cecheapeno
ughforev
eryphy
sic
ian,par
ame
dic,
andemerge
ncyroomnu r
set
op ur
chase.
Thisi
sa ne
xampleo f

A.totalwagec o
stsa ndindirec
tc ost
s.
B.r i
skreduct
ion.
C.reversein
no va
tion.
D.op t
imizat
iono fva l
ue-
c hai
na cti
vit
ylocati
on s
.
Anu mberoffir msh aves ee
nt heneedtod e
ve l
optech
nologi
esandp r
oduct
st hatarea
ppropr
iat
eto
deve
lopingmarkets,onlytofin dt ha
tthesei
n nova
ti
onsarevalu
ableinthei
rh omema rke
tsaswell
.
Rever
seinnovati
oni samo tivat
ionforinte
rnati
onalexpans
ioninwh i
chnewpr od uc
tsdeve
lope
db y
deve
loped-c
ountrymu l
ti
nationalfir msfore mergi
ngma r
k e
tshaveadequa
tefu nct
iona
li
tyatalowcos
t
andoft
ena r
ema rketedlat
e rtode ve
lopedcountri
es.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

9
9. Sou
rce
sofp
oli
ti
calr
is
kdon
oti
ncl
ude

A.a v
ailabil
it
yo ftherul
eo fla
w.
B.s ocialunrest.
C.mi l
itary
turmoi l
.
D.de mo ns
trat
ions.
Somec ountri
esaroundtheg l
obema ybeha z
ardoustot heh ea
ltho fcor
por at
eini
ti
at
ivesbecau
seo f
pol
iticalris
k.Fo r
cessuchassocialunre
st,
mi l
ita
rytu r
moi l
,demo nst
rat
ion s
,andevenviol
entconflict
andt e
rroris
mc anposeser
iousthreat
s.Anothersour
c eo fpoli
tic
alr i
skinma nycountr
iesi
sthea b
sence
ofther uleoflaw.Thea bs
enceo frul
esorthelackofu niforme nf
or c
eme ntofexi
st
ingrule
sleadsto
wha tmi ghtoft
ense e
mt obea r
bitr
aryandinconsis
tentde ci
sionsbyg ov
e rnmentoffic ial
s.Thisca
nmak
e
itd
iffic ultf
orforei
gnfir mstoconductbusiness.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

7-58
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McGraw-Hill Education.

0 0
1
00. Forye
arsO.R.T.Technolog
iesr
e s
ist
edmovi
nganyope
rati
onsouts
ideI
srae
l.However
,whenf a
cedwith
ashar
pr i
seinthevalueofthesheke
l,t
hemake
rofspe
c i
al
ize
ds o
ftwar
eformanagi
ngg a
ss t
at
ionsfr
oze
al
lloc
alhiri
nga nddecide
dt ot
ransf
ers
omedevel
opmenta
lworktoEast
ernEur
op e
.Thisisanexample
of_____________risk
.

A.po li
ti
cal
B.e conomi c
C.c urr
ency
D.ma n
a g
eme nt
Curr
e nc
yflu ct
uati
onscanposesubstant
ia
lris
ks.Acompanywithoper
ati
onsi
nseve
ralco
un t
rie
smust
cons
tantl
ymon i
tortheexc
hangeratebetweenit
sowncurr
enc
ya ndtha
toftheho
stcount
ryt
omi nimi
ze
cur
rencyrisks.Evenas mal
lch
a ngeintheexchan
gerat
ecanres
ulti
nas i
gni
fic a
ntdifferenceint
hecos
t
ofpr
od uct
ionorne tprofitwh end oi
ngbusine
ssove
rsea
s.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

1
01. Areporti
ssuedbytheWo rl
dTr a
deOr gani
zat
ionde sc
ribedt
heproduc
tionofaparti
cul
arU.S.car
.The
st
udyshowe dt
hat30percentofthecarval
ueg oestoKo r
eafora
sse
mb ly,
17.5perc
enttoJ
ap anfo
r
componentsandadva
ncedtechnology
, 7.
5percenttoGe r
manyfordes
ign,4perce
nttoTai
wa nand
Si
ngaporeforminorpar
ts,2.
5p erc
enttoU.K.foradverti
si
ngandma r
keti
ngservi
ces,a
nd1.5p e
rcent
to
Ir
ela
nda ndBarbad
osford at
aprocess
ing.Thi
si sanexampleof

A.ou tsourci
ngando ffs ho r
ing.
B.ou tsourci
ngando n-shori
ng.
C.i ns
ou rci
ngando ffs h
oring.
D.insou rci
ngando utso
urcing.
Arepo r
ti s
suedbytheWo rl
dTr a
deOr ga
nizat
ionde s
cri
bedtheproducti
ono fapart
icu
larU. S.cara
s
f
ollows:3 0perc
entofthec arval
ueg oe
stoKo re
af oras
sembly,
17 .
5p er
ce ntt
oJapanforcompo nent
s
andadva ncedt
echnology,7.5percen
ttoGe r
ma nyfordesi
gn,4percenttoTaiwanandSin g
a por
efor
minorpa rt
s,2.
5p e
rcenttoU. K.foradv
ert
isi
nga ndma r
keti
ngservi
ces,an d1.5per
centtoIrel
andand
Barbadosf o
rdataprocessi
ng.Today,weareincr
e a
singl
ywitnes
singtwoi nte
rrel
at
edtr
e nds:out
sourci
ng
ando ffs hori
ng.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

7-59
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McGraw-Hill Education.

0 0
1
02. Ri
cohAmeri
casCo
rpor
ati
onhassi
gni
fic a
nti
nter
nat
iona
lope
rat
ions.
Facedwi
thloc
alr
eti
cencet
oada
pt
ch
ange
sth
atcomefr
omo t
herg
lobalr
egi
ons
,whatdoe
sRicohs
uggesti
sth
emo s
tsucc
ess
fulapp
roac
h?

A.Br inging lobalma rk

etrepresentati
vestof orcechan geloca
lly.
B.Obl igatelocaloffic estoa do p
tthec orporated eci
sion.
C.En sures t
a ke
ho l
derp a
rti
cipationearlyinthec ha ngeprocess.
D.I gnorethep roblemb ec
ausei tisonlyat emp oraryissue.
Anothercha l
lengethatisfai
rl
yt yp i
calisthatthen ot-i
nvented-her
eme nt
ali
tyma ys etinwh enon e
reg
ionprop osesani deaacro
sst heg l
obe .Thereisn oq uest
iont h
atthep as
sionfora nide aistypic
all
y
goi
ngt oliewi t
htheo rig
inat
or;a sar es
ult,itma yb ediffic ultfortha
tpe rso
nt oun derst
ando racce
pt
r
e s
ist
ancef r
oma notherre
gionwh enthatregio ndoe snotfeelt
h esamep assi
o nfortheid eaorcon c
ept.I
t
mayt u
rni ntoalo ng,emoti
ona lba t
tl
eo fwillsiftheot herregi
onbe li
evesithasas uperioridea,conce
pt,
orcurr
e n
twa yofo per
atin
g.Thi siso f
tenas urprisetoape rsonne wtog l
oba lma r
ketingor
commu nicati
on s
.Thek e
ytos ucce s
sistoe nsu r
etha tt
h ekeystakeholder
sha veav oiceint heproces
s
ear
lyandc ans eetheirfin gerprintsonthefini shedidea.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

1
03. Renaul
tpa i
d1b il
li
onUSDt oacq
uirea25pe
rce
ntowners
hipst
akei
ntheRussi
anautomake
rAv toVAZ
in2008.Justoneyearla
ter
,Russi
anPrimeMini
st
erVla
dimirPut
int
hreat
enedt
odil
u t
etheRenault
ownershi
ps t
akeunlessi
tcontr
ibut
edmoremoneytop
ropupAvtoVAZ,wh i
chwasthenexpe
rie
nc i
nga
si
gnific antsl
ideinsal
es.Thi
sisanexampl
eof____
_________ri
sk.

A.curr
ency
B.economic
C.poli
ti
cal
D.ma nag
eme nt
Anot
hersourc
eo fpol
it
ic
alris
ki nmanycountr
iesist
hea bs
enceoftherul
eoflaw.Inthi
scas
e ,Renau
lt
r
eal
ize
ditsown e
rshi
pclai
mma ynotha
veh e
ldupi nthecor
ruptRussi
ancourts
y s
tem.Ther
efor
e ,
itwas
f
orc
edtone g
oti
ateandevent
uall
yagree
dtotransf
e ro
ver300mi l
li
onUSDi ntechnolo
gyande x
perti
se
t
otheRussia
nfir mtoensur
eitsowner
shipst
ak ewouldst
ayat25p er
cent
.

AACSB:An alyt
icalThinki
ng
Ac
ces
s i
bil
it
y:Ke yboardNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hint
e r
n at
ion
alexpansi
on,incl
udingthee mergi
ngtrend
forgreat
eroffsho ri
ngan do u
tsourci
nga c
tiv
ity
.
Leve
lofDi ffic ul
ty:2Me di
um
To
pic
:Int
ernat
ionalExpansi
onComp anyMot i
v at
ionsandRisks

7-60
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
1
04. Accor
din
gtotheEuromon
eymag
azi
ne2014a
nnu
alCo
unt
ryRi
skRa
ti
ng,
whi
cho
neoft
hef
oll
owi
ng
cou
ntri
esha
sthehig
h e
ste
con
omicr
is
k?

A.So uthKo r
ea
B.Ch ina
C.Co lomb i
a
D.Ar gent
ina
Accor
d i
ngtotheEuromoneymagazi
ne20 14annualCount
ryRis
kRa ti
ng,t
hecount
ryli
st
edwi ththe
hi
ghes
te conomicr
iskisLib
yawitharat
ingof5o utof5.I
nthesel
ect
ionofchoi
cesgi
venforthis
que
sti
on ,t
hec o
unt
rywi t
htheh
igheconomicris
ki sArge
nti
nawitharat
ingof4outof5.Notethatt
he
ov
eral
lr a
ti
n g
srang
ef r
om1t o5,wit
hhigherr
iskrecei
vin
gthehi
gh e
rscor
e.

AACSB:An alyt
ic
a lThinki
ng
Accessi
bil
it
y:Ke yboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-03Th
emo
tiv
ati
ons(
orbe
nefi
ts)a
ndt
her
isk
sas
soc
iat
edwit
hinte
rn at
ion
alexpansi
on,incl
udingtheeme rgi
ngtrend
forgreat
eroffs hori
ngan do u
tsou
rc i
nga c
tiv
ity
.
Leve
lofDi ffic ulty:2Me di
um
Top
ic:Achi
evingComp et
it
iv
eAd vant
ageinGl obalMar ke
ts

1
05. Whic
honeoft
hef
oll
owi
ngi
soneo
ftheTh
eod
oreLe
vit
tas
sumpt
ionss
uppo
rti
ngap
ureg
lob
al
s
tr
ate
gy?

A.Con sumersarewi l
lin
gt op aymo reforspecificpr oductfe at
ures.
B.Cu st
o merneedsa ndi nt
erestsarebe c
omin gmor ediss i
mi l
ar.
C.MNCsc ans uccessfull
yc ompe teglobal
lyb yaggressivelypr i
cingproduct
satthesacri
fic eofproduc
t
f
eat
ures.
D.Ifthewor l
dma rk etsaretr
e at
eda sh e
ter
og eneous,sub st
antialeconomiesofscal
ea r
eeasi
lyachie
ved.
Levi
ttadvoc
a t
eds t
rategiesthatfavoredglobalproductsa ndb r
a nds.Thisappr
o a
c hre
ste
dont hre
ek e
y
as
sumptions
:c us
tome rneedsa ndinter
e s
tsar
eb e co
mi ngi ncre
a sin
glyh omogeneousworl
dwide;peopl
e
ar
oundthewor l
da rewi ll
ingtos acrific eprefere
ncesi np r
od uctfeatu
res,f
uncti
ons,desi
gn,andtheli
ke
f
orlowerpri
c e
sa thighq ualit
y;s u
bs t
anti
alecon omiesofs caleinp roduct
ionandma rke
tin
gcanb e
ac
hieve
dt hr
oughs up plyi
ngg lobalma rket
s.

AACS B:An a
lyt
icalThinki
ng
Accessi
b i
li
ty:Keyboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—t hatfir msfacewh enente
ring
int
ernat
ionalmarkets
.
LevelofDiffic ulty:2Me di
um
To
pic
:Achie
vin
gCompe
tit
iv
eAd vantageinGlobalMar ke
ts

7-61
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McGraw-Hill Education.

0 0
1
06. Whenfirmsexpandint
og lo
balma r
kets
,theyar
eface
dwi t
ht hechoi
ceofre
duc
ingcos
tsand
/ora
dap
tin
g
t
othel
oca
lmarket
.Wh enhighpres
suresexi
sttol
owercost
s,companie
sshoul
dchoos
ea(n)
___
___
____or__________inordert
oc ompetei
ntheglo
balma rk
etpl
ace
.

A.g l
obalstr
a t
egy;t
ransnat
ionalstr
ategy
B.globalstr
a t
egy:multi
dome s
ticstr
ategy
C.intern
a t
ionalst
rat
egy;mu l
ti
do mesticst
rategy
D.intern
a t
ionalst
rat
egy;tr
ansnati
on a
ls t
rate
gy
Thetwoo pposingpre
ssure
sr e
sultinfourd i
ffe re
ntb a
sicst
rat
egi
esth a
tc omp ani
escanusetocompet
ein
t
heglobalma rket
pla
ce:int
ernat
ional,global,multi
dome st
ic
,andtransnat
ional.Thestr
ateg
ythatafir m
sel
ect
sdependso nthedegreeofp r
essurethatitisfac
ingforcos
treducti
on sandt h
eimp or
tan
ceo f
adapt
ingtolocalmarket
s.Whe nfir msa refacedwithhighpres
surestolowe rcost
s,t
heinte
rnat
iona
l
st
rat
egyandt hemu l
ti
dome s
ticstr
ategywou ldb emo stappr
opri
at
e.

AACS B:An a
lyt
icalThinki
ng
Accessi
b i
li
ty:Keyboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—t hatfir msfacewh enente
ring
int
ernat
ionalmarkets
.
LevelofDiffic ulty:2Me di
um
To
pic
:Achie
vin
gCompe
tit
iv
eAd vantageinGlobalMar ke
ts

1
07. Whenfirmsexpandint
og lo
balma r
kets
,theyar
eface
dwi t
hthechoi
ceo fr
educi
ngcost
sand
/ora
dap
tin
g
t
othel
oca
lmarket
.Wh enhighpres
suresexi
sttoa
daptl
ocall
y,co
mpa n
iesshoul
dchoosea(
n)
___
___
____or__________inordert
oc ompetei
ntheglo
balmarke
tplac
e.

A.g l
oba lstrat
egy;t
ransnat
ionalstr
ategy
B.globa lstrat
egy:multi
dome s
ticstr
ategy
C.interna t
ionalst
rat
egy;gl
ob alst
rate
g y
D.t r
ansna t
ionalst
rat
egy;mul t
idome s
ticstr
ategy
Thetwoo pposingpre
ssure
sr es
u l
tinfourd i
ffe re
ntb a
sicst
rat
egi
esth a
tc ompanie
sc a
nusetoc ompet
ein
t
heglobalma rket
pla
ce:int
ernati
onal,global,
mul ti
dome st
ic
,andtransnat
ional.
Thes t
rat
egythatafir m
sel
ect
sde pen dsonthedegreeofp r
essurethatitisfac
ingforcos
treducti
on sandtheimport
anceo f
adapt
ingtol ocalmarket
s.Whe nfir msa refacedwithhighpres
surestoadapt l
ocal
ly,t
hetr
ansnati
ona
l
st
rat
egya ndt hemu l
ti
dome s
ticstr
ategywou ldb emo stappr
opri
at
e.

AACS B:An a
lyt
icalThinki
ng
Accessi
b i
li
ty:Keyboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—t hatfir msfacewh enente
ring
int
ernat
ionalmarkets
.
LevelofDiffic ulty:2Me di
um
To
pic
:Achie
vin
gCompe
tit
iv
eAd vantageinGlobalMar ke
ts

7-62
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McGraw-Hill Education.

0 0
1
08. Tobere
spo
nsi
vetol
oca
lpr
ess
ure
s,compani
esmust____
_____
___t
hei
roffe
rin
gsa
nds
tr
ate
gie
sfr
om
cou
ntr
ytocou
ntr
ytore
flectl
ocalc
onsumerpr
efer
ence
s.

A.i nt
ernati
onali
z
e
B.gl obal
ize
C.di ffe renti
at
e
D.s ta
nd ar
dize
Inadditi
ontor e
spondi
ngtopr ess
ure
st ol
o wercost
s,ma nag
ersmustst
ri
vetoberespons
ivetoloc
al
pres
suresino r
dertota
il
ortheirproduct
stothedema ndo ft
heloc
alma r
keti
nwh i
chtheyd obusi
nes
s.
Thisrequir
esd i
ffe re
ntia
tin
gt hei
ro ffe ri
ngsandstra
tegi
esfr
omc ount
rytocountr
ytorefle ctc
onsumer
t
a s
tesandpre f
ere
ncesandma kingchangestorefle ctdiffere
ncesindis
tri
but
ionchannel
s,humanre
s ou
rce
prac
tices
,andg over
nme nt
alregul
ati
ons.

AACS B:An a
lyt
icalThinki
ng
Accessi
b i
li
ty:Keyboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—t hatfir msfacewh enente
ring
int
ernat
ionalmarkets
.
LevelofDiffic ulty:2Me di
um
To
pic
:Achie
vin
gCompe
tit
iv
eAd vantageinGlobalMar ke
ts

1
09. Whendi
ffere
nti
at
ingpr
oduct
san
dse
rvi
cest
olo
calma
rke
ts,
str
ate
gie
san
dta
cti
csa
rel
ike
lyt
o
___
___
____c
ompanycos
ts.

A.decre a
se
B.increase
C.ob l
iter
ate
D.dece nt
rali
z
e
Thi
srequiresdiffe re
nti
at
ingt hei
roffe r
ingsands t
rat
egiesf
ro mcount
rytocountr
ytorefle ctco
nsumer
t
ast
esan dprefe
rencesandma kingchan
gestorefle ctdi
ffe r
e nce
sindis
tri
buti
onchanne
ls,humanresou
rce
pr
act
ices,andg o
vernmenta
lre gul
ati
ons.Howeve
r,sincethestr
ategi
esandtac
tic
stodifferenti
ate
pr
oductsands er
vic
e st
olocalma rk
etscani
nvolv
ea ddit
ionalexpenses
,afir m'sco
stswil
ltendtori
se.

AACS B:An a
lyt
icalThinki
ng
Accessi
b i
li
ty:Keyboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—t hatfir msfacewh enente
ring
int
ernat
ionalmarkets
.
LevelofDiffic ulty:2Me di
um
To
pic
:Achie
vin
gCompe
tit
iv
eAd vantageinGlobalMar ke
ts

7-63
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McGraw-Hill Education.

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1
10. I
ntheques
ttoa
chi
evecompet
it
iv
ea d
van
tag
ei ngl
oba
lmark
ets
,compet
it
ivepr
ess
uresr
equi
ret
hatfir
ms
dowhatt
heyca
nto______
_un i
tcos
tss
othatco
nsumer
swil
lnotpe
rce
ivethe
irpr
oducta
ndser
vic
e
offeri
ngsast
ooexpe
nsi
ve.

A.raise
B.de c
entrali
z
e
C.de fine
D.lowe r
Theopposingpressure
sthatmanagersfacep la
cec onflict
ingdemandsonfir msastheyst
ri
vet
ob e
co
mpe t
iti
ve.Ont heo n
eh and,c
ompe ti
ti
v ep r
essure sre
qui
rethatfirmsdowh att
heycantolo
weruni
t
co
stssothatconsume r
swi l
lnotperc
eivet hei
rp rod uc
tandserv
iceoffering
sa st
ooexpens
ive
.Thi
sma y
l
eadthemt oconsiderloc
atin
gma nufact
ur in
gf a
c ili
tie
swherelaborc
ost
sarelowanddevel
opi
ng
pr
oductsthatar
eh ighl
ystandar
diz
eda crossmu ltiplecoun
tri
es.

AACS B:An a
lyt
icalThinki
ng
Accessi
b i
li
ty:Keyboar
dNa vi
gat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-04Th
etwoo
ppo
sin
gfo
rce
s—c
ostr
edu
cti
onan
dadap
tat
iontol
oca
lma
rket
s—t hatfir msfacewh enente
ring
int
ernat
ionalmarkets
.
LevelofDiffic ulty:2Me di
um
To
pic
:Achie
vin
gCompe
tit
iv
eAd vantageinGlobalMar ke
ts

1
11. Whi
chwoul
db et
heappr
opr
iat
estr
ate
gyforc
ompanie
stous
etocompet
einthegl
oba
lma
rke
tpl
acei
f
t
hemar
ket
pla
cepres
sur
eisf
orlowercos
tswi
thl
it
tl
epres
sur
eforl
oca
ladapt
ati
on?

A.int
e r
nat
ionalst
rat
egy
B.globalst
rat
egy
C.mu lt
idomest
icst
rate
gy
D.tra
nsnati
onalst
rat
egy
Anint
ernat
ionalst
rat
egywouldbet
hebes
tpur
echoi
cef
oracompanytomakeinit
squ
estt
ocomp
etei
n
t
heglobalmarket
plac
e,ifbo
ththep
res
sur
est
olowe
rcos
tsandada
ptloca
ll
yarelo
w.

AACS B:Analyt
icalThinki
ng
Acce
ssi
bili
ty:Key
bo ardNa v
igati
on
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:i
nte
rna t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:2Me di
um
To
pic
:Achi
evi
ngCompeti
ti
veAdvantagei
nGl obalMar ket
s

7-64
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McGraw-Hill Education.

0 0
1
12. Highpres
sur
eforl
ocalada
pta
ti
onc
ombi
nedwi
thl
owpr
ess
uref
orl
owe
rco
stswou
lds
ugg
estwh
att
ype
ofint
erna
ti
onals
tr
ate
g y
?

A.globa lst
rat
egy
B.mu lti
do mest
icstr
ategy
C.tra
ns nati
onalstr
ate
gy
D.overallcostle
adershipst
rat
egy
Amultido mest
icst
rate
gyi suse
dinind
ust
ri
eswhe
ret
hep
res
sur
eforl
oca
lada
pta
ti
oni
shi
gha
ndt
he
pr
ess
uref orloweri
ngco st
sislo
w.

AACS B:Analyt
icalThinki
ng
Acce
ssi
bili
ty:Key
bo ardNa v
igati
on
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:i
nte
rna t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:2Me di
um
To
pic
:Achi
evi
ngCompeti
ti
veAdvantagei
nGl obalMar ket
s

1
13. I
nc onsider
ingthetr
ans
nationalst
rat
egy,
Ne s
tleeva
luat
esthel
imit
sofde
centr
ali
zat
ion.
Th ecl
osert
hey
aret
ot heconsumerinact
ivit
iessuchasbra
ndingandpric
ing,
themoret
hentendtodec
entra
li
ze.The
mo r
eth eydealwit
hproducti
ona ndlo
gis
tic
s,themoretheyce
ntr
ali
zede
cis
ion-maki
ng.Theproduc
ti
on
andlogist
icsdeci
si
onsi
n v
ol v
e_ ______act
ivi
tie
s.

A.up st
rea
m
B.inits
i
nfra
str
uctur
e
C.do wnst
ream
D.mi dst
rea
m
Pri
ma r
ya c
ti
viti
esthatar
eu p
str
eam(e.g.
,logi
sti
csandopera
tions)
,orfur
therawayfromt h
ec u
stomer,
t
endtob ecent
ral
ized.Thi
sisbecaus
ethereisle
ssneedforadapti
ngth
eseactivi
ti
estolocalmark
e t
sand
t
hefir mc anbe n
efitf romeconomiesofscal
e.Additi
onal
ly,manysupportact
ivi
tie
s,suchasinf
ormati
on
sy
stemsandp r
ocurement,t
endtobecentr
aliz
edinordertoi
nc r
easet
hep o
tenti
alforeconomie
so fsca
le.

AACS B:Analyt
icalThinki
ng
Acce
ssi
bili
ty:KeyboardNa v
igati
on
Blooms:App l
y
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:in
tern
a t
ional
,global,
multi
domesti
c,andtransnat
ional.
LevelofDiffic ulty
:3Ha r
d
To
pic
:Achi
evi
ngCompeti
ti
veAdvantageinGlobalMar ket
s

7-65
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McGraw-Hill Education.

0 0
1
14. I
ndus
tri
esi
nwh
ichpropo
rti
onal
lymo
rev
alu
eisa
dde
din__
____
___
_ac
ti
vit
ie
sar
emo
rel
ike
lyt
o
be
nefitfr
omaglob
alstr
ate
gy.

A.do wn st
ream
B.up stre
am
C.ma r
k e
tin
g
D.s ale
s
Pri
ma ryacti
vit
iest
hataredown s
trea
m( e.
g.,ma r
keti
ngands a
les,a
nds er
vic
e),orcl
o s
e rt
othecus
tomer,
t
endt orequi
remo r
ed e
centra
liza
tioni nord
e rtoadaptt
ol o
calmarketcondi
ti
ons(amu l
ti
domest
ic
st
rate
gy )
.Primaryact
ivi
ti
esthatareu pst
ream( e.
g.,l
ogi
stic
sandop er
ati
ons)
,orfurtherawayfr
omt he
cus
tome r,t
endtobecentra
liz
ed( aglob a
lstr
a t
egy).Thi
sisbecausether
eisle
ssn e
edfo rada
pti
ngthes
e
ac
tivi
tiestoloc
almarket
sa ndthefir mc anbe ne
fitf rome con
o mie
so fs
cal
e .

AACS B:Analyt
icalThinki
ng
Acce
ssi
bili
ty:KeyboardNa v
igati
on
Blooms:App l
y
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:in
tern
a t
ional
,global,
multi
domesti
c,andtransnat
ional.
LevelofDiffic ulty
:3Ha r
d
To
pic
:Achi
evi
ngCompeti
ti
veAdvantageinGlobalMar ket
s

1
15. Whichofthef
oll
owin
gtype
sofinte
rna
ti
ona
lfir
msa
remo
stl
ike
lyt
obe
nefitf
romagl
oba
lst
rat
egya
s
opp
osedtoamulti
domes
ti
cstr
ate
gy?

A.fir mst ha
tc ompeteinind us
tri
esi nwhichc onsume rprefer
enc e
sv arysubst
anti
all
yi neachcountr
y
B.fir msi nindustr
iesthatareexpandingve r
yr apidl
y
C.fir msi nindustr
iesthathavevalueadde dbys alesandma rketingde p
a r
tment
s
D.fir msi nindustr
iesthathavemu chv al
uea ddedi nresea
rcha ndd esignormanu f
acturi
ng
Pri
ma r
ya cti
vit
iesthataredown st
ream( e.
g.,ma r
k et
inga ndsales,ands er
vice),
orc l
osertothecust
omer,
t
endtoreq ui
remo r
ed e
c e
ntral
izat
ionino rdertoa dapttolocalma rketcondit
ions(
amu l
tidomest
ic
st
rat
egy).Primarya ct
ivi
ti
est h
atareups tr
eam( e.
g .,
Re sear
cha ndDe v e
lopme nt
,desi
gn, or
manufac
tur i
ng)
, orfurt
herawa yfromt hecustome r,t
endt obec entr
alized(aglobalst
rat
e gy
).Thisis
bec
ausethe r
eislessneedf o
ra dapti
ngt hes
ea ct
iviti
estol oc
alma r
ketsandt hefir mc anbe n
efitf r
om
eco
nomi esofsc a
le.

AACS B:Analyt
icalThinki
ng
Acce
ssi
bili
ty:Key
bo ardNa v
igati
on
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:i
nte
rna t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:2Me di
um
To
pic
:Achi
evi
ngCompeti
ti
veAdvantagei
nGl obalMar ket
s

7-66
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McGraw-Hill Education.

0 0
1
16. Rec
entt
rendst
hatmigh
tle
admanage
rsofmul
ti
nat
iona
lcorpor
ati
ons(MNCs
)toado
ptamo
re
de
cent
ral
ize
dstr
ate
gyfort
hei
rope
rat
ionswo
uldin
clud
ealloft
hefoll
owi
ngexc
ept

A.cus t
ome rn eeds,int
erest
s,andtast
e sbecomingincreas
ingl
yhomo geniz
ed.
B.c onsumer saroundt hewo r
ldincre
as i
ngl
ywi ll
ingtotradeoffi d
iosyncr
aticpr
efe
renc
esi
np r
odu
ct
f
eature
sf orlowe rprice.
C.fle xibl
ema nu f
acturi
ngtrendsall
o win
gad e
c l
ineinthemini
mu mv olumerequi
redt
orea
ch
a
c cep
tablel eve
lso fproduct
ioneffic i
ency.
D.fluc tuatingexcha ngerat
es.
Adec ent
ral
ize dstr
a t
egys uchasthatseenwi t
hinthemu lt
idomes
ticorg
a ni
zati
on,al
lowsf
orgr
eat
er
ada
ptati
ona tthel ocallev
e l
,whichwo uldnotbene cess
aryifcus
tomerswe r
eb ec
omingmore
homo g
enous.

AACS B:Analyt
icalThinki
ng
Acce
ssi
bili
ty:Key
bo ardNa v
igati
on
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:i
nte
rna t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:2Me di
um
To
pic
:Achi
evi
ngCompeti
ti
veAdvantagei
nGl obalMar ket
s

1
17. Fi
rmsfol
lo
wingaglob
als
tra
tegys
tri
vet
ooffe r__
_______
_p r
oduct
san
dserv
ice
saswellasl
ocat
e
manu
fact
uri
ng,Re
sear
chandDeve
lopment
,an
dma r
ket
ingac
ti
vit
iesi
nali
mit
ednumbero
fl o
cat
ions
.

A.widel
yd i
ffe re
nti
ated
B.mo r
eexpe nsi
veloca
l
C.int
erna
tionall
ydiffe r
enti
at
ed
D.st
andardi
ze d
Fi
rmsfol
lowingag l
obalst
rat
egyst
ri
vet
ooffers
tand
ardi
zedprodu
c t
sands
ervi
cesaswel
last
olo
cat
e
manu
fact
urin
g ,Resea
rchandDevel
opme
nt,
andmar
ket
ingact
ivi
ti
esinonl
yafewloca
tio
ns.

AACS B:Analyt
icalThinki
ng
Acce
ssi
bili
ty:Key
bo ardNa v
igati
on
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:i
nte
rna t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:2Me di
um
To
pic
:Achi
evi
ngCompeti
ti
veAdvantagei
nGl obalMar ket
s

7-67
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
1
18. Asint
hecas
eofSi
ebelSy
ste
ms(
nowparto
fOr
acl
e),
ele
men
tso
fag
lob
als
tr
ate
gyma
yfa
cil
it
at
ethe
co
mpeti
ti
veadv
ant
ageofdi
ffer
ent
ia
tio
nby

A.i ncreasedfree
dom ofindi
vidualb usinessunitstoadapttoloca lt
ast
es.
B.t hec re
a t
ionofaworldwidene t
wor kt oachieveconsis
tentservicerega
rdles
sofloca
tion.
C.fle xibi
lit
yinapplyi
ngRe sear
c handDe velopme n
ttome e
tc ountr
y-spe
cificn eeds.
D.t ail
oringp r
oduct
stome etcountry-s
pe cificn eeds.
Onea dvantageofag l
obalstr
ategyistha titcane nabl
eafir mt oc re
ateastanda
rdlevelofqual
it
y
thr
ou ghouttheworld.
TomSi ebe l
,forme rchairma nofSiebelSystems(nowpa rtofOracle
),e-
busi
ness
appli
c a
tionsoftwar
edeveloper
,saysthat hiscustome r
s,globalcompa nie
slikeIBM, Zu
r i
chFinanci
al
Services,andCiti
corp,e
xp ec
tthesa meh i
ghleve lofser
viceandq ua
lit
y,andthesamelicens
ingpoli
ci
es,
noma t
terwhe r
etheydobu si
nesswi t
ht hema roun dthewor l
d.

AACS B:Analyt
icalThinki
ng
Acce
ssi
bili
ty:Key
bo ardNa v
igati
on
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:i
nte
rna t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:2Me di
um
To
pic
:Achi
evi
ngCompeti
ti
veAdvantagei
nGl obalMar ket
s

1
19. Whi
cho
fthef
oll
owi
ngi
sn ar
ot i
ska
ssoc
iat
edwi
thag
lob
als
tr
ate
gy?

A.Afir m wi thonlyonema nu f
acturi
ngl ocat
ionmus te xporti
tsp r
oduct
,some ti
me satgreatdist
ance
f
romt heo perat
ion.
B.Th eg eographicconcentra
ti
ono fa nya c
tivi
tyma yalsot endtoisola
tethatac
tivi
tyf r
omt het a
rget
ed
markets
.
C.Co ncentratin
ga nacti
vityinas in
glelo c
a t
ionma kesther estofthefir md e
pe ndentontha tl
ocati
on.
D.Thep r
ess ure
sforlocaladaptat
ionma ye lev
atethec o
s tstruct
ureofthefir m.
Somer i
sksa ssoci
atedwithagl obalstr
ategyinclude:i
fafir mh aso nl
yonema nu f
acturi
ngfa ci
li
ty,i
t
mustexportitsoutputtootherma r
k et
s,someofwh ichma yb eag r
eatdis
tancef
ro mtheop era
tion;the
geo
graphicc oncentr
ati
onofa nya cti
vit
yma yalsotendtoi solat
ethatact
ivi
tyfromt hetarg
etedma rket
s;
conc
entrat
inga na ct
ivi
tyinas in
g l
elo cat
ionalsoma kesther estofthefir mde pendentont h
a tloc
ati
on.

AACS B:Analyt
icalThinki
ng
Acce
ssi
bili
ty:Key
bo ardNa v
igati
on
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:i
nte
rna t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:2Me di
um
To
pic
:Achi
evi
ngCompeti
ti
veAdvantagei
nGl obalMar ket
s

7-68
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McGraw-Hill Education.

0 0
1
20. Whi
cho
neoft
hef
oll
owi
ngi
sn al
ot i
mit
at
ionofag
lob
als
tr
ate
gy?

A.limi
tedabili
tytoadapttolocalmarket
s
B.theabil
it
yt olocat
eacti
viti
esinoptimallo
cati
o ns
C.theconcentr
ati
onofa ct
ivit
iesmayincreas
ed ependenceonas i
nglefa
cil
it
y
D.sing
lelocat
ionsma ylea
dt oh i
ghertar
iffsa ndtranspor
tat
ioncosts
Li
mitat
ionsofglobalst
rat
egiesincl
ude:alimit
eda bi
li
tytoadapttoloca
lma r
ket
s,aco
nce
ntr
ati
onof
ac
ti
vit
iest
h a
tma yincre
ased epe
nd e
nceo nasingl
ef a
c i
li
ty,a
nds i
ngleloc
ati
onst
hatmayl
eadtohi
ghe
r
t
ari
ffsa ndt r
ansport
ati
onc ost
s.

AACS B:Analyt
icalThinki
ng
Acce
ssi
bili
ty:Key
bo ardNa v
igati
on
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-05Thea
dva
nta
gesa
ndd
isad
vant
age
sas
soc
iat
edwi
theac
hofth
efourba
sicst
rate
gies:i
nte
rna t
ional
,g l
obal,
multi
domesti
c,andtransnati
onal.
LevelofDiffic ul
ty:2Me di
um
To
pic
:Achi
evi
ngCompeti
ti
veAdvantagei
nGl obalMar ket
s

1
21. Whi
cho
fthef
oll
owi
ngi
sar
eas
onf
ort
her
is
einr
egi
ona
lexp
ans
ion
?

A.i nc
reaseinthen umb ero ftr
adingblocsandfr
eetradezones
B.d ecre
a s
einthenu mbe roftradi
ngblocsandfre
et ra
dezones
C.i nc
reasi
ngn ati
on altr
ader est
ric
tion
s
D.i nc
reasi
ngloc altaxesa ndtar
iffs
Anotherreas
onf orregionalexp a
nsionistheri
seofthetra
dingbloc
sandfre
etr
adezon
es.
An umberof
re
gionalagree
me ntsh aveb eencrea
tedthatfac
il
it
atethegrowthofbus
ine
sswit
hint
hes
eregi
onsb
y
eas
ingtraderes
tricti
on sandt ax
esandt ar
iffs .

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

1
22. Whi
cho
neoft
hef
oll
owi
nge
xpl
ain
swh
ysof
ewfir
msa
reg
lob
al?

A.Cul ture,
language ,andr e
li
g i
ona r
esimilarbetwe encountr
ies.
B.Le galandp olit
icalsystemsa r
esimilarbetwee ncountri
es.
C.Go ve r
nme ntsareinc re
asingtr
ader e
stri
cti
on sing ener
al.
D.Ge ographicd i
stancei smu l
ti
pliedbydistancei ncult
ure,l
anguage,
reli
gio
n, a
ndleg
alandpol
it
ica
l
sys
tems .
Dis
tance,inthefina lanalys
is,mayb ev i
ewe dasac onceptwithmanyd i
me nsi
ons
,notjus
tameas
ureof
ge
ogr a
phicald i
st
ance .Wh e
nthee ffe ct
so fg eographi
cd i
sta
ncea r
emu lt
ipl
iedbydi
stanc
eint
ermsof
cu
lture,la
ngua ge
, r
eligion,andlegalandpo l
it
icals yst
emsb e
tweentwoc ount
ries
,co
mpa ni
eswi
llch
oose
t
ore mainregionalor,atbe st
,bi-
regiona
l.

AACS B:Anal
yti
calThink
ing
Ac
ces
sib
ili
ty:Key
boardNa v
igat
ion

7-69
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McGraw-Hill Education.

0 0
 Blooms
:Un der
sta
nd
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp ani
esandtru
lygl
obalcompanie
s.
Lev
elofDiffic ulty
:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vant
agei
nGlobalMarkets

1
23. Whi
cho
neoft
hef
oll
owi
ngi
sn aWe
ot ste
rnhe
mis
phe
ret
radeb
loc
?

A.NAFTA
B.MERCOSUR
C.ASEAN
D.La t
inAme ric
anI n
tegrati
onAs soci
at
ion
NorthAme ri
canFreeTrad eAgreement(NAFTA) ,Associ
ati
onofSo ut
heastAsia
nNa t
ions(ASEAN),
andMERCOSUR( aSout hAme ric
antradi
ngb l
ock),
La t
inAme ric
anInte
grati
onAs s
ocia
tion(LAIAor
ALADI )isaregi
onalorgan i
zat
ionwho s
eme mbe r
shi
pi n
cludesArgent
ina,Boli
via
,Brazi
l,Chile
,
Colombia
, Cuba,Ecuador,Me x
ico,Para
guay,Panama,Peru,UruguayandVenezuel
a.AllASEAN
memberstate
sa r
elocat
e dinsoutheas
tAs i
a.

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

1
24. Cana
daandMexi
coaret
hesamedi
st
ancef
romt
heUn
ite
dSt
at
es,
butt
radei
shi
ghe
rbe
twe
ent
heU.
S.
andCana
dat
hanwit
hMe xi
cobec
ause

A.truedist
a nceissma ll
erbet
we entheU. S. a
ndCa nada.
B.allthr
eec ountri
ess har
ethesa mel eg
alsy s
tem.
C.therearef e
wi mmi grat
ionproblemswi thMe xic
o .
D.Ame r
icansp r
eferCa nad
ianfoodt oMe xicanfood.
Dis
tance,i
nt hefina lanal
ysi
s, mayb eviewe dasac o
nceptwit
hma n
yd i
mensi
ons
,notjus
tameas
ureof
ge
ographic
ald is
tance.Truedist
anc eincl
udest heeffe ct
sofgeogr
aphi
cdist
anc
emu l
ti
pli
edbyd
ist
ancei
n
t
ermsofc ul
ture,lan
gu age,r
eli
gion, a
n dlegalandpoli
ti
calsys
temsbet
weentwocou
ntri
es.

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

7-70
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McGraw-Hill Education.

0 0
1
25. Re
gio
nal
iz
ati
oni
smo
sti
mpor
tant
bec
aus
eitp
ermi
tsc
ompa
nie
stoo
rga
niz
eth
eira
cti
vit
ie
sba
sedup
on

A.ph y
sicaldist
ancebetweentheho mec ou nt
ryandt heforei
gnc ount
ry.
B.theextrinsi
cdista
ncebetweent heho mec ountr
ya ndt h
eforei
gnc ount
ry.
C.thetrued is
tancebet
we e
nth ehomec ountryoffe randtheforei
gnc o
untry.
D.shareholderexpect
ati
ons.
Dis
tance,i
nt hefina lanal
ysi
s ,mayb ev iewedasac o nce
ptwithma nydimensions
,notjus
tameasureof
ge
ographicaldis
tance
.Truedistanceincludestheeffe ct
sofg e
o gra
phicdis
tancemu l
ti
pli
edbydi
st
a ncei
n
t
ermsofc ul
ture,la
nguage,r
eli
gion, a
n dlegalandp ol
itica
lsyst
emsb etweentwoc ou
ntri
es.Mos
t
co
mpa nie
sa reregi
onalor,a
tbe s
t,bioregional
, n
otg l
oba l
,event
od ay.

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

1
26. Si
mil
ari
tyofc
ult
ure
,la
ws,
rul
es,
andno
rmse
nco
ura
ges

A.r e
g io
naliz
ation .
B.gl obali
zat
ion.
C.t r
ans-nati
onalizat
ion.
D.e t
hn ocent
rice xpansi
on.
Regional
izati
oni stheincre
asingi
nte
rnat
ion
alexch
angeo
fgoods
,se
rvic
es,mo
ney,p
eopl
e,i
dea
s,a
nd
i
nforma t
ion;andt heincr
easin
gs i
mil
ari
tyofcu
ltur
e,l
aws
,rul
es,
andnormswi
thi
nareg
ionsuc
has
Europe,No r
thAme rica
,orAs i
a.

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

1
27. Acco
rdi
ngtot
het
ext
book,
________
___
____e
con
omi
cin
teg
rat
ionh
asp
rogr
ess
eda
saf
ast
erpa
cet
han
___
______ec
ono
micin
tegr
ati
on.

A.g l
obal;
i
nter
nati
onal
B.inter
n a
tio
nal;r
egional
C.regional
;globa
l
D.regional
;int
er-
regional
Regi
onaleconomicinte
gr a
ti
o nha
spr
ogres
sedatafas
terpa
cet
hanglob
alecon
omi
cin
tegr
ati
on,
andt
he
t
radeandinvest
ment patt
ernsoft
hel
arg
estcompan
iesreflec
tthi
srea
li
ty.

AACS B:Anal
yti
calThink
ing
Ac
ces
sib
ili
ty:Key
boardNa v
igat
ion
Blo
oms:Un der
stand

7-71
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McGraw-Hill Education.

0 0
 Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp ani
esandtru
lyg
lob
alcompanie
s.
Lev
elofDiffic ult
y:2Medium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vant
agei
nGlobalMark
ets

1
28. Regio
nsrepr
esentt
heou
tcomesofce
nturi
esofp
oli
ti
cala
ndc
ult
ura
lhi
st
oryt
hatr
esul
tsi
nnot
onl
y
________
_b ut
alsomut
ual_____
________.

A.diffe r
ences;e x
pect
ation
s
B.simil
ari
ti
es;ex pec
tat
ions
C.commo nal
iti
es ;l
osse
s
D.common al
iti
es ;affin i
t i
es
Regi
onsre
presenttheoutcome sofc
ent
uri
esofp
oli
ti
cala
ndc
ult
ura
lhi
st
oryt
hat
res
ult
sinn
oton
ly
co
mmo nal
it
iesbu tals
omut ualaffini t
y.

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

1
29. Sh
are
dSpa
nis
hco
lon
ial
is
miso
ner
eas
ont
hate
xpl
ai
nsr
egi
ona
li
smt
end
enc
iesi
n

A.As ia.
B.So uthAme ri
ca.
C.theUni t
edState
s.
D.Af ri
ca
.
Regi
onsr e
presen
ttheout
come sofc
ent
uri
esofpoli
ti
calandcul
tur
alhi
st
orythatr
esul
tsi
nnoton
ly
co
mmo nal
it
iesbutal
somutualaffini ty
.Thecountr
iesofSout
handCentra
lAme ri
cash
aret
heSpa
nis
h
l
anguage(exc
e ptBr
azi
l)
,theCa t
hol
icr
eli
gio
n,andahist
oryofSpani
shcol
onial
is
m.

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

7-72
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McGraw-Hill Education.

0 0
1
30. Sh
are
dAr
abi
cla
ngu
agea
ndt
heMus
li
mre
li
gioni
son
ere
asont
hate
xpl
ain
sre
gion
ali
smt
end
enc
iesi
n

A.Sou thAme r
ica.
B.t heMa ghreb.
C.Eur opeanUn ion.
D.Nor th
Ame ri
ca.
Regionsrepre
senttheou t
come sofcen
turi
esofpoli
ti
calandcult
uralh
ist
orythatr
esul
tsinnot onl
y
co
mmo nal
itie
sbu tals
omut u
alaffini ty
.Str
etc
hingfro
m Algeri
aandMo roccoint
heWe sttoOma na
nd
Yeme nintheEa s
t,mo r
et han30countr
iessha
retheArabicla
nguageandtheMu sl
imreli
gion,ma ki
ng
t
hes ecountr
iesan at
uralr
e gi
onalbl
oc.TheMa ghre
bincl
ud e
sMo rocc
o,Algeri
a,Tuni
sia
, Lib
y a,
Ma uri
tani
a,andtheWe st
ernSahara
.

AACSB:An alyt
icalThinkin
g
Accessi
bil
ity
:Ke y
bo ardNa v
igat
ion
Blooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-06Thed
iffe
rencebet
weenreg
ion
alc
omp anie
san dtr
ulyg l
obalcomp anie
s.
LevelofDiffic ulty:2Me dium
To
pic:Achi
evi
ngCompe
tit
iv
eAd vantag
einGl obalMar ket
s

1
31. Whi
cho
fthef
oll
owi
ngd
esc
ribe
sth
emo
stt
ypi
calo
rde
rofe
ntr
yint
ofor
ei
gnma
rke
ts?

A.f r
anchisi
ng,lic
ensi
ng,exp ort
ing,j
ointv e
nture,a
ndwholl
yownedsubs
idi
ary
B.e xport
ing,fr
anchis
ing,lic
e ns
ing,j
ointv e
nture,
andwholl
yownedsubs
idi
ary
C.l i
censi
ng, e
xpo r
ti
ng,fr
a nchis
ing,j
ointv e
nture,
andwholl
yownedsubs
idi
ary
D.e xport
ing,l
icensi
ng,fr
a nchis
ing,j
ointv e
nture,a
ndwholl
yownedsubs
idi
ary
Thev ar
ioustypesofentr
yf orm ac on
tinuumr angi
ngfr
ome x
port
ing(l
owinv
est
me nta
ndr
is
k,lo
w
cont
rol)
, f
oll
owe dbylic
ensing, f
ranchi
sin
g ,joi
ntvent
urea
ndfina ll
ytoawholl
yo wn
eds
ubsi
dia
ry(
hig
h
i
n v
estmentandr i
sk,hi
ghc ontrol
).

AACSB:An al
ytica
lTh i
nki
ng
Acc
essi
bil
ity
:Ke y
boardNa vig
ati
on
Blo
oms :Un derst
and
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksassoci
ate
dwi theac hoft
hem.
LevelofDiffic ulty:2Me di
um
T
opic:Entr
yMo desofInte
rnat
ionalEx pansi
on

7-73
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McGraw-Hill Education.

0 0
1
32. Adomest
iccor
por
ati
onc
ons
ide
rin
gint
ern
ati
ona
lexp
ans
ionf
ort
hefir
stt
imet
ypi
cal
lywi
llf
oll
owwhi
ch
oft
hes
epath
s?

A.I twills
tar
tbyi mp l
eme nt
ingawho llyownedforei
gnsub s
idi
ary
.
B.I twilli
mp l
eme ntalo wri
s k-
lowcontrolst
rat
egysuchasexport
ing.
C.I twilll
ice
nseo rfranchi
seitsopera
tions
D.I twillf
orm ajointventur
ewi thareputabl
eforei
gnproducer
.
Exp o
rti
ngconsist
so fproducinggoodsino necount
rytoselli
nanother
.Thi
sentr
ystr
ategyena
blesa
fir mt oinv
esttheleastamou ntofre
sou r
cesinter
mso fi
tsproduct
,it
sorg
ani
zati
on,andit
sover
all
corpora
testr
ate
gy .
Mul tinat
ional
so f
tenstumbleontoaste
pwisestr
ate
gyforpe
netr
ati
ngma r
kets
,
beginni
ngwi t
hthee xporti
ngofp rodu
cts.

AACSB:An al
ytica
lTh i
nki
ng
Acc
essi
bil
ity
:Ke y
boardNa vig
ati
on
Blo
oms :Un derst
and
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksassoci
ate
dwi theac hoft
hem.
LevelofDiffic ulty:2Me di
um
T
opic:Entr
yMo desofInte
rnat
ionalEx pansi
on

1
33. Thef
ormofent
ryst
rat
egyint
oin
ter
nat
iona
lope
rat
ionst
hato
ffe
rst
hel
owe
stl
eve
lofc
ont
rolf
ort
he
dome
sti
ccor
pora
ti
onwo ul
dbe

A.franchisi
ng.
B.licensing.
C.jointv e
nture
.
D.ex porti
ng.
Theva r
ioustypesofe
ntr
yfor
m acont
inu
umrangi
ngfr
omexpor
ti
ng(l
owinv
est
ment
andr
is
k,l
ow
con
trol)toawh oll
yowneds
ubsi
dia
ry(hi
ghi
nve
s t
ment
andr
isk,
highc
ont
rol
).

AACSB:An al
ytica
lTh i
nki
ng
Acc
essi
bil
ity
:Ke y
boardNa vig
ati
on
Blo
oms :Un derst
and
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksassoci
ate
dwi theac hoft
hem.
LevelofDiffic ulty:2Me di
um
T
opic:Entr
yMo desofInte
rnat
ionalEx pansi
on

1
34. Feest
hatamult
ina
ti
onalr
ece
ive
sfromafo
rei
gnl
ice
nseei
nretur
nfo
rit
sus
eofi
nte
ll
ect
ualp
rop
ert
y
(t
rade
ma r
k,p
atent
,tr
ades
ecr
et,
tec
hnol
ogy)a
reu
suall
yca
lle
d

A.transf
erp r
ice
s.
B.dividends.
C.royalt
ies.
D.intra
-corpora
tein
flo ws.
Li
censin
ge nable
sac omp
anytore
ceiv
earo
yal
tyorfeeine
xch
angef
ort
her
igh
ttou
sei
tst
rade
mar
k,
pa
tent
, t
radesecr
et,
orothe
rval
uablei
temo
fin
tel
lec
tualpr
ope
rty
.

AACS B:Anal
yti
calThink
ing
Ac
ces
sib
ili
ty:Key
boardNa vi
gat
ion
Bl
ooms:Re member

7-74
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McGraw-Hill Education.

0 0
 Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandr
isk
sass
ociat
edwit
he achofthem.
Le
velofDiffic ul
ty:1Easy
T
opic:Entr
yModesofI
nter
nati
onalExpansio
n

1
35. Th
edi
ffe
ren
cebe
twe
enaf
ranc
his
econ
tra
cta
ndal
ic
ens
ingc
ont
rac
tist
hata

A.f r
anchis
ec ontr
acti
smo res peci
fica ndusual
lylongeri
nd urat
ion.
B.f r
anchis
ec ontr
actmustincludeaf oreigngover
nme nt.
C.l i
censi
ngcon t
ractco
versmor ea spectsofoperat
ions.
D.f r
anchis
ec ontr
acti
nvolveslessco ntr
ola n
dlessri
s k
.
Licen
singenablesacomp a
n ytor e
ceiv earoyalt
yoraf eeinex
ch a
ngef ortheri
ghtt
ou s
eit
stra
demar
k,
pat
ent,tr
adesecret
,orothervaluableitemo fint
ell
ect
ua lpr
opert
y.Fran c
hisi
ngcont
ract
sgener
all
y
i
n c
ludeab r
oaderrangeoffactorsina nop er
ati
onandha vealongerti
mep er
ioddur
ingwhi
c ht
he
agre
eme nti
sine ffe ct
.

AACSB:An al
ytica
lTh i
nki
ng
Acc
essi
bil
ity
:Ke y
boardNa vig
ati
on
Blo
oms :Un derst
and
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksassoci
ate
dwi theac hoft
hem.
LevelofDiffic ulty:2Me di
um
T
opic:Entr
yMo desofInte
rnat
ionalEx pansi
on

1
36. Th
e___
___
___
_en
tai
lthec
rea
ti
ono
fat
hir
d-p
art
yle
gale
nti
ty
,wh
ere
ast
he_
___
____
__d
ono
t.

A.licensin
ga greeme nts;joi
ntv e
ntures
B.s t
rat
egicalli
anc e
s ;j
o intvent
ures
C.jointventures;st
rategicall
iances
D.franchisi
nga greeme nts;st
rate
gicall
iances
Joi
ntventure
sa nds t
rategicall
iancesdiffe rint
hatj
ointventu
resent
ai
lthec
reat
ionofathir
d-part
yle
gal
ent
it
y,wh ere
a sst
r a
tegica ll
ia
nc e
sd onot.Inaddi
ti
on,
stra
tegical
li
ance
sgener
all
yfocusonini
ti
a t
ive
s
t
hataresma l
lerins copet hanjoin
tv e
ntures.

AACS B:Analyt
ica
lTh i
nking
Acc
ess
ibil
it
y:Keyboar
dNa vig
atio
n
Blooms:Rememb er
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksasso
ciat
edwitheachofthem.
LevelofDiffic ul
ty:1Easy
T
opic:Entr
yMo de
so fI
nter
nati
onalExpansio
n

1
37. A__
___
___
__i
sab
usi
nes
sinwh
ichamu
lti
nat
iona
lcompa
nyo
wns1
00pe
rce
ntoft
hes
toc
k.

A.wh ollyownedsubsi
dia
ry
B.s t
rat
egical
lia
nce
C.jointvent
ure
D.f r
anchis
ingopera
ti
on
Awh oll
yo wnedsubsi
dia
ryisabusi
nes
sinwh i
chamu l
tinat
ionalc
ompanyowns100perc
entoft
he
st
ock.Twowa ysafir mc a
nesta
bli
shawh ol
lyownedsubsidi
aryare
:ac
quir
eanexi
sti
ngcompanyi
nth
e
homec ount
ryordevel
opatota
ll
yn e
wop e
rati
on(of
tenr
e fe
rredtoasagr
eenfiel
dv e
ntur
e).

AACS
B:An
aly
tic
alTh
ink
ing

7-75
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
 Acc
ess
ibil
it
y:Keyboar
dNa vig
atio
n
Blooms:Rememb er
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksasso
ciat
edwit
he achofthem.
LevelofDiffic ul
ty:1Easy
T
opic:Entr
yMo de
so fI
nter
nati
onalExpansio
n

1
38. _
_________aremos
tappr
opr
iat
ewhenafirmalr
eadyhastheap
propri
at
ekn o
wle
dgea
ndc
apa
bil
it
ie
s
t
hati
tcanlev
erag
erat
here
asi
lyt
hrou
ghmul
ti
plel
ocat
ionsi
nma n
yc ou
ntri
es.

A.Joi
ntventure
s
B.Str
ateg
ica l
li
ances
C.Licen
singagree
me nt
s
D.Who l
lyown edsubsi
diar
ies
Wholl
yown edsubsi
diar
iesar
emo s
tappr
opri
at
ewh e
nafir malr
eadyha
sthea
ppr
opr
iat
ekn
owl
edg
ean
d
ca
pabi
li
ti
esthatitc
anlevera
gerat
herea
sil
ythr
oughmul
ti
plel
oca
tio
ns.

AACSB:An al
ytica
lTh i
nki
ng
Acc
essi
bil
ity
:Ke y
boardNa vig
ati
on
Blo
oms :Un derst
and
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksassoci
ate
dwi theac hoft
hem.
LevelofDiffic ulty:2Me di
um
T
opic:Entr
yMo desofInte
rnat
ionalEx pansi
on

1
39. Wha
tagr
eeme
nte
nta
il
sthec
rea
ti
ono
fat
hir
d-p
art
yle
gale
nti
ty?

A.stra
t e
g i
call
ianc
e
B.jointventur
e
C.licensi
ng
D.e x
po rt
ing
Jo
intventure
sentai
lthec
rea
ti
onofat
hir
d-pa
rtyl
ega
len
tit
y,whe
rea
sst
rat
egi
cal
li
anc
esd
ono
t.

AACSB:An al
ytica
lTh i
nki
ng
Acc
essi
bil
ity
:Ke y
boardNa vig
ati
on
Blo
oms :Un derst
and
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandri
sksassoci
ate
dwi theac hoft
hem.
LevelofDiffic ulty:2Me di
um
T
opic:Entr
yMo desofInte
rnat
ionalEx pansi
on

1
40. Afir
mca
nes
tabl
is
hawh
oll
yowne
dsub
sidi
aryb
y

A.a c
qu ir
inga nexis
tingc o
mpa n yi
ntheh omecount
ry.
B.k ee
p in
ga llofthea c
ti
v i
tyoffs hor
e.
C.licensi
ngi nte
llec
tualprop e
rty.
D.e nt
eringintoaf r
anchisin
ga greement.
Awh ollyown edsubsidia
ryi sab us
ines
sinwh i
chamu l
tina
ti
onalc
ompa n
yowns100perc
entofthe
st
ock.Twowa ysafir mc ane s
tabl
ishawh ol
lyownedsubsi
dia
ryaret
o(1)a
cqui
reanexi
sti
ngc o
mpa ny
i
ntheh omec ou n
tryor( 2)developatota
ll
yn e
wop er
ati
on(oft
enre
ferr
edtoa
sagreen
fie ldventur
e).

AACS B:Anal
yti
calThink
ing
Ac
ces
sib
ili
ty:Key
boardNa v
igat
ion

7-76
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0
 Bl
ooms:Un ders
tand
Le
arn
ingOb
jec
ti
ve:07
-07Thef
ourba
sict
ype
sofe
ntr
yst
rat
egi
esan
dth
ere
lat
iv
ebe n
efi tsandr
isk
sassoc
iat
edwitheac hoft
hem.
Levelo
fDiffic ulty:2Me di
um
T
opic:Entr
yModesofIn
tern
ati
onalEx pansi
on

7-77
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

0 0