International Business, 8e (Griffin/Pustay)

Chapter 11 International Strategic Management

1) ________ is a comprehensive and ongoing management planning process aimed at

formulating and implementing strategies that enable a firm to compete effectively
internationally.
A) International strategic management
B) International operations strategy
C) Multinational flexibility
D) Global management
Answer: A
Diff: 1
Skill: Concept
Objective: 1

2) ________ is the process of developing a particular international strategy.

A) Strategic planning
B) Global management
C) Multinational flexibility
D) International strategic management
Answer: A
Diff: 1
Skill: Concept
Objective: 1
Learning Outcome: Describe the process of selecting and developing an international business
strategy

3) Which of the following would be the most involved with strategic planning at Olson
Pharmaceuticals, an MNE?
A) Aaron, a top-level executive
B) Brenda, a middle manager
C) Carl, an operational manager
D) Debra, a functional executive
Answer: A
Diff: 2
Skill: Application
Objective: 1

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4) ________ are comprehensive frameworks for achieving a firm's fundamental goals.
A) Strategic business units
B) International strategies
C) Competitive goals
D) International operational plans
Answer: B
Diff: 2
Skill: Concept
Objective: 1
Learning Outcome: Describe the process of selecting and developing an international business
strategy

5) Garmin Footwear, an MNE, establishes facilities anywhere in the world that yields the lowest
production or distribution costs. Garmin most likely benefits from ________.
A) multinational flexibility
B) economies of scale
C) location efficiencies
D) economies of scope
Answer: C
Diff: 2
Skill: Application
Objective: 1
Learning Outcome: Describe the process of selecting and developing an international business
strategy

6) JBX Automobiles, a global firm, builds factories to serve more than one country and lower the
MNE's production costs. JBX Automobiles most likely benefits from ________.
A) multinational flexibility
B) economies of scale
C) location efficiencies
D) economies of scope
Answer: B
Diff: 2
Skill: Application
Objective: 1
Learning Outcome: Describe the process of selecting and developing an international business
strategy

7) What form of efficiency did Mercedes-Benz capture by initially producing its sport utility
vehicle only in Alabama?
A) multinational flexibility
B) economies of scale
C) location efficiencies
D) economies of scope
Answer: B
Diff: 2
Skill: Concept
Objective: 1
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8) Carvel Industries, an MNE, broadens its product line in each of the countries that it enters.
Carvel most likely benefits from ________.
A) multinational flexibility
B) economies of scale
C) location efficiencies
D) economies of scope
Answer: D
Diff: 2
Skill: Application
Objective: 1
Learning Outcome: Describe the process of selecting and developing an international business
strategy

9) ________ occur(s) when firms build factories that serve more than one country and lower
their production costs.
A) Multinational flexibility
B) Economies of scale
C) Location efficiencies
D) Economies of scope
Answer: B
Diff: 1
Skill: Concept
Objective: 1

10) Nike achieved ________ by centering its manufacturing in countries where labor costs are
relatively low.
A) multinational flexibility
B) economies of scale
C) location efficiencies
D) economies of scope
Answer: C
Diff: 2
Skill: Concept
Objective: 1

11) Martin Enterprises, an MNE with operations in India, Japan, and Taiwan, has decided to
delegate an increasing amount of responsibility to the managers of its local subsidiaries. Which
of the following will most likely be enhanced as a result?
A) multinational flexibility
B) economies of scale
C) location efficiencies
D) economies of scope
Answer: A
Diff: 2
Skill: Application
Objective: 1

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12) Which of the following would most likely be minimized if too much power was centralized
in one unit of the firm?
A) worldwide learning
B) economies of scale
C) location efficiencies
D) economies of scope
Answer: A
Diff: 2
Skill: Concept
Objective: 1

13) A global firm's worldwide learning may be increased by ________.

A) economies of scope and scale
B) diverse operating environments
C) similar domestic experiences
D) stringent selection practices
Answer: B
Diff: 2
Skill: Concept
Objective: 1

14) Multinational flexibility is ________.

A) higher when strategy is centralized
B) higher when R&D is concentrated at the headquarters
C) greater when marketing programs develop domestically
D) enhanced when responsibility is delegated to subsidiaries
Answer: D
Diff: 2
Skill: Concept
Objective: 1

15) When using a(n) ________, a firm utilizes the core competency or firm-specific advantage it
developed in the domestic market as its main competitive weapon in the foreign markets it
enters.
A) multidomestic strategy
B) home replication strategy
C) transnational strategy
D) international strategy
Answer: B
Diff: 2
Skill: Concept
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

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16) With the home replication strategy ________.
A) the firm utilizes the core competency of the firm or firm-specific advantage it developed in
domestic markets as its main competitive weapon in the foreign market it enters
B) the firm views itself as a collection of relatively independent operating subsidiaries
C) the firm views the world as a single marketplace and has as its primary goal the creation of
standardized goods and services that will address the needs of customers worldwide
D) the firm assigns responsibility for various organizational tasks to the unit of the organization
best able to achieve the dual goals of efficiency and flexibility
Answer: A
Diff: 2
Skill: Concept
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

17) Mercedes-Benz relies on its brand name and reputation for well-engineered, luxurious cars to
succeed in foreign markets. Mercedes-Benz is most likely using the ________ strategy.
A) multidomestic
B) home replication
C) transnational
D) global
Answer: B
Diff: 2
Skill: Application
Objective: 2

18) Parker Sportswear is an MNE with retail stores around the world. Parker views itself as a
collection of relatively independent operating subsidiaries, each of which focuses on a specific
domestic market. Parker most likely uses a ________ strategy.
A) multidomestic
B) home replication
C) transnational
D) global
Answer: A
Diff: 2
Skill: Application
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

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19) With the multidomestic strategy ________.
A) the firm utilizes the core competency of the firm or firm-specific advantage it developed at
home as its main competitive weapon in the foreign market it enters
B) the firm views itself as a collection of relatively independent operating subsidiaries
C) the firm views the world as a single marketplace and has as its primary goal the creation of
standardized goods and services that will address the needs of customers worldwide
D) the firm assigns responsibility for various organizational tasks to the unit of the organization
best able to achieve the dual goals of efficiency and flexibility
Answer: B
Diff: 2
Skill: Concept
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

20) Hanson Manufacturing, an MNE, has operations in India, Taiwan, China, and Argentina.
Since Hanson focuses on the specific domestic market in each location, the firm allows its
subsidiaries to customize products and develop marketing campaigns that will appeal to local
customers. Hanson most likely uses a ________ strategy.
A) multidomestic
B) home replication
C) transnational
D) global
Answer: A
Diff: 2
Skill: Application
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

21) Which approach is most appropriate when economies of scale for production, distribution,
and marketing are low?
A) multidomestic strategy
B) home replication strategy
C) transnational strategy
D) global strategy
Answer: A
Diff: 2
Skill: Concept
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

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22) Executives at Harper Industries are evaluating the firm's international strategy to determine if
the current approach is effective. Harper has been using a multidomestic strategy for the last five
years. Which of the following statements best supports Harper continuing to use the same
strategy?
A) Few differences exist between national markets.
B) Central headquarters makes most decisions.
C) Economies of scale for production are low.
D) Products are marketed to global consumers.
Answer: C
Diff: 3
AACSB: Reflective Thinking
Skill: Critical Thinking
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

23) With the global strategy ________.

A) the firm utilizes the core competency of the firm or firm-specific advantage it developed at
home as its main competitive weapon in the foreign market it enters
B) the firm views itself as a collection of relatively independent operating subsidiaries
C) the firm views the world as a single marketplace and has as its primary goal the creation of
standardized goods and services that will address the needs of customers worldwide
D) the firm assigns responsibility for various organizational tasks to the unit of the organization
best able to achieve the dual goals of efficiency and flexibility
Answer: C
Diff: 2
Skill: Concept
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

24) A firm following the ________ views the world as a single marketplace.
A) multidomestic strategy
B) home replication strategy
C) transnational strategy
D) global strategy
Answer: D
Diff: 2
Skill: Concept
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

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25) The primary goal of a(n) ________ is the creation of standardized goods and services that
will address the needs of customers worldwide.
A) multidomestic strategy
B) home replication strategy
C) transnational strategy
D) global strategy
Answer: D
Diff: 2
Skill: Concept
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

26) Dixon Enterprises, an MNE, uses a global strategy, which means that the firm most likely
has a ________ structure.
A) decentralized
B) centralized
C) geographic
D) market
Answer: B
Diff: 2
Skill: Application
Objective: 2

27) Firms using a ________ conduct business the same way anywhere in the world.
A) multi-market strategy
B) transnational strategy
C) global strategy
D) multidomestic strategy
Answer: C
Diff: 2
Skill: Concept
Objective: 2

28) Which strategy combines the benefits of global scale efficiencies and local responsiveness?
A) multidomestic strategy
B) home replication strategy
C) transnational strategy
D) global strategy
Answer: C
Diff: 2
Skill: Concept
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

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29) With the transnational strategy ________.
A) the firm utilizes the core competency of the firm or firm-specific advantage it developed at
home as its main competitive weapon in the foreign market it enters
B) the firm views itself as a collection of relatively independent operating subsidiaries
C) the firm views the world as a single marketplace and has as its primary goal the creation of
standardized goods and services that will address the needs of customers worldwide
D) the firm assigns responsibility for various organizational tasks to the unit of the organization
best able to achieve the dual goals of efficiency and flexibility
Answer: D
Diff: 2
Skill: Concept
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

30) IKEA attempts to capture global efficiencies while remaining responsive to local conditions.
IKEA follows a ________.
A) multidomestic strategy
B) home replication strategy
C) transnational strategy
D) global strategy
Answer: C
Diff: 2
Skill: Application
Objective: 2

31) Firms using a ________ are more likely to locate responsibility for one product line in one
country and responsibility for a second product line in another.
A) multidomestic strategy
B) home replication strategy
C) transnational strategy
D) global strategy
Answer: C
Diff: 2
Skill: Concept
Objective: 2

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32) Abelman Home Goods, an MNE, faces significant pressure to respond to local conditions but
very little pressure to integrate globally. Which strategy would most likely be best for Abelman?
A) home replication strategy
B) transnational strategy
C) global strategy
D) multidomestic strategy
Answer: D
Diff: 2
Skill: Application
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

33) Kraft Foods is more concerned with meeting the specific needs of local customers than with
reducing manufacturing costs. Which strategy is most likely used by Kraft Foods?
A) home replication strategy
B) transnational strategy
C) global strategy
D) multidomestic strategy
Answer: D
Diff: 2
Skill: Application
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

34) Sargent Software faces significant pressure to move towards global integration , but the
MNE does not need to respond locally. Which strategy should most likely be used by Sargent
Software?
A) home replication strategy
B) transnational strategy
C) global strategy
D) multidomestic strategy
Answer: C
Diff: 2
Skill: Application
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

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35) Sony designs its products with an international market in mind, so the firm most likely uses a
________.
A) home replication strategy
B) transnational strategy
C) global strategy
D) multidomestic strategy
Answer: C
Diff: 2
Skill: Application
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

36) When pressures for global integration and local responsiveness are both high, firms usually
adopt the ________.
A) home replication strategy
B) transnational strategy
C) global strategy
D) multidomestic strategy
Answer: B
Diff: 2
Skill: Concept
Objective: 2

37) Which of the following situations does not indicate a low need for global integration?
A) differentiated products
B) weak brand name
C) after-sales support services
D) quality differences
Answer: B
Diff: 2
Skill: Concept
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

38) ________ require(s) the transfer of information and experiences from the parent to each
subsidiary, from each subsidiary to the parent, and among subsidiaries.
A) Global efficiencies
B) Economies of scope
C) Worldwide learning
D) Transnational strategies
Answer: C
Diff: 1
Skill: Concept
Objective: 2

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39) Which strategy is likely the best for promoting global learning?
A) multidomestic strategy
B) home replication strategy
C) transnational strategy
D) global strategy
Answer: C
Diff: 2
Skill: Concept
Objective: 2

40) A firm using a ________ strategy would most likely have a matrix structure, project teams,
and informal management networks to transfer knowledge among subsidiaries.
A) multidomestic strategy
B) home replication strategy
C) transnational strategy
D) global strategy
Answer: C
Diff: 2
Skill: Concept
Objective: 2

41) Which of the following is one of the components of strategy development?

A) distinctive competence
B) differential advantage
C) scope of operations
D) economies of scale
Answer: C
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the process of selecting and developing an international business
strategy

42) ________ answers the question, "What do we do exceptionally well, especially as compared
to our competitors?"
A) Distinctive competence
B) Differential advantage
C) Scope of operations
D) Resource deployment
Answer: A
Diff: 3
Skill: Concept
Objective: 3
Learning Outcome: Describe the process of selecting and developing an international business
strategy

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43) Sony has cutting edge technology, efficient distribution networks, and superior
organizational practices. These characteristics are most relevant to which component of
international strategy?
A) distinctive competence
B) scope of operations
C) resource deployment
D) synergy
Answer: A
Diff: 2
Skill: Application
Objective: 3

44) Disney's name, image, and portfolio of characters are examples of which component of
international strategy?
A) distinctive competence
B) scope of operations
C) resource deployment
D) synergy
Answer: A
Diff: 2
Skill: Application
Objective: 3

45) ________ answers the question, "Where are we going to conduct business?"
A) Distinctive competence
B) Scope of operations
C) Resource deployment
D) Synergy
Answer: B
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the process of selecting and developing an international business
strategy

46) The compatibility of software programs with the Windows operating system is an example of
Microsoft's ________.
A) distinctive competence
B) differential advantage
C) scope of operations
D) synergy
Answer: A
Diff: 2
Skill: Application
Objective: 3

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47) ________ may be defined in terms of geographic regions, markets, or product niches.
A) Distinctive competence
B) Scope of operations
C) Resource deployment
D) Synergy
Answer: B
Diff: 2
Skill: Concept
Objective: 3

48) Disney has constructed theme parks in Japan, the United States, and France. This refers to
Disney's ________.
A) distinctive competence
B) scope of operations
C) resource deployment
D) synergy
Answer: B
Diff: 2
Skill: Application
Objective: 3

49) ________ answers the question, "Given that we are going to compete in these markets, how
will we allocate our resources to them?"
A) Distinctive competence
B) Scope of operations
C) Resource deployment
D) Synergy
Answer: C
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the process of selecting and developing an international business
strategy

50) When Disney decides to make a low investment in its Tokyo park, a higher investment in
Disneyland Paris, and a similar investment in Hong Kong's theme park, Disney is modifying
which component of international strategy?
A) distinctive competence
B) scope of operations
C) resource deployment
D) synergy
Answer: C
Diff: 2
Skill: Application
Objective: 3

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51) Although Daimler AG's newest plant is in Alabama, most Mercedes are still German built.
This is an example of Daimler AG's ________.
A) distinctive competence
B) scope of operations
C) resource deployment
D) synergy
Answer: C
Diff: 2
Skill: Application
Objective: 3

52) ________ answers the question, "How can different elements of our business benefit each
other?"
A) Distinctive competence
B) Scope of operations
C) Resource deployment
D) Synergy
Answer: D
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the process of selecting and developing an international business
strategy

53) The goal of ________ is to create a situation where the whole is greater than the sum of the
parts.
A) distinctive competence
B) scope of operations
C) resource deployment
D) synergy
Answer: D
Diff: 1
Skill: Concept
Objective: 3

54) Disney's ________ is evident in the fact that people recognize its characters from television
and movies, visit Disney theme parks, and buy merchandise featuring the Disney characters.
A) distinctive competence
B) scope of operations
C) resource deployment
D) synergy
Answer: D
Diff: 2
Skill: Application
Objective: 3

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55) When managers develop, refine, and agree on which markets to enter or exit and how to best
compete in each, the managers are engaged in the strategy ________ process.
A) development
B) formulation
C) implementation
D) evaluation
Answer: B
Diff: 1
Skill: Concept
Objective: 4
Learning Outcome: Describe the process of selecting and developing an international business
strategy

56) In ________, the firm develops the tactics for achieving the formulated international
strategies.
A) strategy development
B) strategy formulation
C) strategy implementation
D) strategy evaluation
Answer: C
Diff: 1
Skill: Concept
Objective: 4
Learning Outcome: Describe the process of selecting and developing an international business
strategy

57) The first step in the strategic planning process is to ________.

A) perform a SWOT analysis
B) develop a mission statement
C) establish strategic goals
D) develop a control framework
Answer: B
Diff: 2
Skill: Concept
Objective: 4
Learning Outcome: Describe the process of selecting and developing an international business
strategy

58) Which of the following clarifies the organization's purpose, values, and direction?
A) code of ethics
B) SWOT analysis
C) strategic plan
D) mission statement
Answer: D
Diff: 1
Skill: Concept
Objective: 4

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59) Which of the following would most likely be initiated through an environmental scan?
A) BCG matrix
B) diversification
C) SWOT analysis
D) strategic formulation
Answer: C
Diff: 1
Skill: Concept
Objective: 4
Learning Outcome: Describe the process of selecting and developing an international business
strategy

60) A(n) ________ is a systematic collection of data about all elements of the firm's external and
internal environments.
A) environmental scan
B) strategic analysis
C) strategic formulation
D) situation analysis
Answer: A
Diff: 2
Skill: Concept
Objective: 4
Learning Outcome: Describe the process of selecting and developing an international business
strategy

61) Which term was developed by Michael Porter to describe the firm's important activities, such
as production, marketing, and HR management?
A) control framework
B) economies of scale
C) supply network
D) value chain
Answer: D
Diff: 1
Skill: Concept
Objective: 4

62) Which term refers to the major objectives that a firm wants to accomplish through pursuing a
specific course of action?
A) tactics
B) value chains
C) strategic goals
D) control frameworks
Answer: C
Diff: 1
Skill: Concept
Objective: 4

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63) What is the final step of formulating an international business strategy?
A) developing a control framework
B) conducting an environmental scan
C) specifying tactical goals and plans
D) identifying relevant value chain activities
Answer: A
Diff: 2
Skill: Concept
Objective: 4
Learning Outcome: Describe the process of selecting and developing an international business
strategy

64) A(n) ________ calls for a firm to rely on a single business, product, or service for all its
revenue.
A) corporate strategy
B) single-business strategy
C) related diversification strategy
D) unrelated diversification strategy
Answer: B
Diff: 2
Skill: Concept
Objective: 5
Learning Outcome: Describe the process of selecting and developing an international business
strategy

65) A(n) ________ calls for the firm to operate in several different but fundamentally related
businesses, industries, or markets at the same time.
A) corporate strategy
B) single-business strategy
C) related diversification strategy
D) unrelated diversification strategy
Answer: C
Diff: 2
Skill: Concept
Objective: 5
Learning Outcome: Describe the process of selecting and developing an international business
strategy

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66) Firms using a(n) ________ operate in several unrelated industries and markets.
A) corporate strategy
B) single-business strategy
C) related diversification strategy
D) unrelated diversification strategy
Answer: D
Diff: 2
Skill: Concept
Objective: 5
Learning Outcome: Describe the process of selecting and developing an international business
strategy

67) Which strategy attempts to establish and maintain the image that an SBU's product or
services are fundamentally unique from other products or services in the same market segment?
A) corporate strategy
B) differentiation strategy
C) related diversification strategy
D) unrelated diversification strategy
Answer: B
Diff: 2
Skill: Concept
Objective: 5
Learning Outcome: Describe the process of selecting and developing an international business
strategy

68) Which strategy calls for a firm to focus on achieving highly efficient operating procedures so
that its costs are lower than its competitors?
A) focus strategy
B) single-business strategy
C) overall cost leadership strategy
D) unrelated diversification strategy
Answer: C
Diff: 1
Skill: Concept
Objective: 5
Learning Outcome: Describe the process of selecting and developing an international business
strategy

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69) Which strategy calls for a firm to target specific types of products for certain customer
groups or regions?
A) focus strategy
B) single-business strategy
C) related diversification strategy
D) unrelated diversification strategy
Answer: A
Diff: 2
Skill: Concept
Objective: 5
Learning Outcome: Describe the process of selecting and developing an international business
strategy

70) There are many similarities between developing a strategy for competing in a single country
and developing one for competing in multiple countries.
Answer: TRUE
Diff: 1
Skill: Concept
Objective: 1

71) Multinational flexibility is enhanced when control is centralized.

Answer: FALSE
Diff: 2
Skill: Concept
Objective: 1

72) Related diversification is the most common corporate strategy.

Answer: TRUE
Diff: 2
Skill: Concept
Objective: 4

73) It is typically fairly easy for a firm to exploit worldwide learning, multinational flexibility,
and global efficiencies simultaneously.
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 1

74) Resource deployment might be specific along product lines, geographical lines, or both.
Answer: TRUE
Diff: 1
Skill: Concept
Objective: 2

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75) Often, transnational corporations locate responsibility for one product line in one country and
responsibility for a second product line in another.
Answer: TRUE
Diff: 2
Skill: Concept
Objective: 3

76) The multidomestic strategy is especially effective when the cost of coordination between the
parent corporation and its various foreign subsidiaries is low.
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

77) Resource deployment answers the question: "How can different elements of our business
benefit each other?"
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the process of selecting and developing an international business
strategy

78) International strategic management is carried out in two broad stages, strategy formulation
and strategy development.
Answer: FALSE
Diff: 1
Skill: Concept
Objective: 4
Learning Outcome: Describe the process of selecting and developing an international business
strategy

79) The mission statement clarifies the organization's purpose, values, and directions.
Answer: TRUE
Diff: 1
Skill: Concept
Objective: 4

80) Strengths and weaknesses are part of a firm's internal environment.

Answer: TRUE
Diff: 1
Skill: Concept
Objective: 4

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81) An abundance of managerial talent, cutting edge technology, and well-known brand names
are all examples of firm strengths.
Answer: TRUE
Diff: 2
Skill: Concept
Objective: 4
Learning Outcome: Discuss arguments for and against regional economic integration

82) A firm's value chain is a breakdown of a firm's most important product lines.
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 4

83) The major objectives the firm wants to accomplish through pursuing a particular course of
action are known as tactics.
Answer: FALSE
Diff: 1
Skill: Concept
Objective: 4
Learning Outcome: Discuss arguments for and against regional economic integration

84) A control framework is the set of managerial and organizational processes that keep the firm
moving toward its strategic goals.
Answer: TRUE
Diff: 2
Skill: Concept
Objective: 4

85) Firms that use a related diversification strategy are more vulnerable to economic threats than
firms using a single-business strategy.
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 5
Learning Outcome: Describe the process of selecting and developing an international business
strategy

86) Disney uses the related diversification strategy.

Answer: TRUE
Diff: 2
Skill: Concept
Objective: 5

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87) The low cost of coordinating the operations of related divisions is a primary advantage of
related diversification.
Answer: FALSE
Diff: 3
Skill: Concept
Objective: 5
Learning Outcome: Describe the process of selecting and developing an international business
strategy

88) A single business strategy increases the firm's vulnerability to its competition and to changes
in the external environment.
Answer: TRUE
Diff: 2
Skill: Concept
Objective: 5
Learning Outcome: Describe the process of selecting and developing an international business
strategy

89) General Electric owns NBX, a semiconductor manufacturer, and an investment bank.
General Electric is following a focus strategy.
Answer: FALSE
Diff: 2
Skill: Application
Objective: 5

90) A conglomerate refers to firms comprising unrelated businesses.

Answer: TRUE
Diff: 1
Skill: Concept
Objective: 5

91) Firms following an unrelated diversification strategy typically experience more risk due to
the inability to raise capital quickly.
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 5
Learning Outcome: Describe the process of selecting and developing an international business
strategy

92) A business strategy focuses on the overall organization, while a corporate strategy focuses on
subsidiaries.
Answer: FALSE
Diff: 2
Skill: Concept
Objective: 5

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93) The three basic forms of business strategy are differentiation, overall cost leadership, and
focus.
Answer: TRUE
Diff: 2
Skill: Concept
Objective: 5

94) A differentiation strategy is not a commonly used business strategy.

Answer: FALSE
Diff: 2
Skill: Concept
Objective: 5

95) A focus strategy calls for a firm to target specific types of products for certain customer
groups or regions.
Answer: TRUE
Diff: 1
Skill: Concept
Objective: 5

96) International human resource strategy focuses on the people who work for an organization.
Answer: TRUE
Diff: 1
Skill: Concept
Objective: 3

97) International operations strategy deals with the creation of the firm's products or services.
Answer: TRUE
Diff: 2
Skill: Concept
Objective: 5

98) Functional strategies address issues related to human resources, marketing, operations, and
R&D.
Answer: TRUE
Diff: 2
Skill: Concept
Objective: 5

99) What are the three sources of competitive advantage available to international businesses?
Answer: Global efficiencies, multinational flexibility, and worldwide learning.
Diff: 2
Skill: Concept
Objective: 1

24
Copyright © 2015 Pearson Education, Inc.
100) Why did Toyota initially struggle in the Chinese market?
Answer: Toyota initially struggled in China because it assumed that the market would be similar
to the Japanese market, when in fact it was more similar to the U.S. market.
Diff: 3
Skill: Concept
Objective: 1

101) What are the similarities and differences between the home replication strategy and the
global strategy?
Answer: The home replication strategy has a home-country advantage–it assumes that a firm's
domestic strategy will work in foreign markets. A global strategy has no such home-country bias.
Under either strategy, the firm conducts business the same way anywhere in the world.
Diff: 3
AACSB: Reflective Thinking
Skill: Critical Thinking
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

102) What strategic approach seeks to achieve local responsiveness and global integration?
Answer: The transnational strategy seeks to achieve both local responsiveness and global
integration.
Diff: 2
Skill: Concept
Objective: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

103) What type of strategy does IKEA follow?

Answer: IKEA follows a transnational strategy and so tries to capture the benefits of global
scale efficiencies while remaining responsive to local conditions.
Diff: 2
Skill: Concept
Objective: 2

104) When is a global strategy most appropriate?

Answer: It is most appropriate when the pressures for global integration are high, but the need
for local responsiveness is low.
Diff: 2
Skill: Concept
Objective: 2

25
Copyright © 2015 Pearson Education, Inc.
105) What are the four basic components of strategy development?
Answer: The four basic components of strategy development are distinctive competence, scope
of operations, resource deployment, and synergy.
Diff: 2
Skill: Concept
Objective: 3
Learning Outcome: Describe the process of selecting and developing an international business
strategy

106) What is a distinctive competence?

Answer: A distinctive competence answers the question: "What do we do exceptionally well,
especially as compared to our competitors?" The competence may be cutting-edge technology,
efficient distribution networks, superior organizational practices, or well-respected brand names.
Diff: 2
Skill: Concept
Objective: 3

107) What activities are involved in the strategy formulation and strategy implementation stages?
Answer: In the strategy formulation stage, the firm establishes its goals and the strategic plan
that will lead to the achievement of those goals. In the strategy implementation stage, the firm
develops the tactics for achieving the formulated international strategies.
Diff: 3
Skill: Concept
Objective: 5
Learning Outcome: Describe the process of selecting and developing an international business
strategy

108) Explain the purpose of a mission statement.

Answer: The mission statement clarifies the organization's purpose, values, and directions.
Diff: 1
Skill: Concept
Objective: 4

109) What is the purpose of an environmental scan? Why is it important to perform an

environmental scan when developing an international business strategy?
Answer: An environmental scan is a systematic collection of data about all elements of the
firm's external and internal environments, including markets, regulatory issues, competitors
actions, production costs, and labor productivity. Environmental scanning is important because it
yields data about environmental threats to the firm that could make the firm's manufacturing
facilities or product lines obsolete.
Diff: 3
Skill: Critical Thinking
Objective: 4
Learning Outcome: Describe the process of selecting and developing an international business
strategy

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Copyright © 2015 Pearson Education, Inc.
110) What is a control framework?
Answer: A control framework is the set of managerial and organizational processes that keep the
firm moving toward its strategic goals.
Diff: 2
Skill: Concept
Objective: 4

111) What are the three levels of international strategy for MNCs?
Answer: Corporate, business, and functional.
Diff: 2
Skill: Concept
Objective: 5

112) What are the three types of corporate strategies an MNC might choose to follow?
Answer: Single-business strategy, related diversification, and unrelated diversification.
Diff: 2
Skill: Concept
Objective: 5

113) What is a single-business strategy?

Answer: A single-business strategy calls for a firm to rely on a single business, product, or
service for all its revenue.
Diff: 2
Skill: Concept
Objective: 5

114) What is a related diversification strategy?

Answer: A related diversification strategy calls for the firm to operate in several different but
fundamentally related businesses, industries, or markets at the same time.
Diff: 2
Skill: Concept
Objective: 5

115) What is the difference between an overall cost leadership strategy and a focus strategy?
Provide examples of firms that use each type of strategy.
Answer: The overall cost leadership strategy calls for a firm to focus on achieving highly
efficient operating procedures so that its costs are lower than its competitors. Timex (watches),
Vizio (high-definition TVs), Hyundai (automobiles), the Aldi (grocery stores), and Hynix
(DRAM memory chips) use the overall cost leadership strategy. The focus strategy calls for the
firm to target specific types of products for certain customer groups or regions. Hollister Co., a
division of Abercrombie & Fitch, has targeted a narrow but lucrative slice of the apparel market
by using the focus strategy.
Diff: 3
AACSB: Reflective Thinking
Skill: Critical Thinking
Objective: 5
Learning Outcome: Describe the process of selecting and developing an international business
strategy
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Copyright © 2015 Pearson Education, Inc.
116) What are the unique challenges of the international strategic management process? Briefly
describe the international strategic management process.
Answer: Some possible answers include language, culture, politics, economy, currency, legal
and accounting systems, governmental interference, and labor. In domestic operations, English is
universally used, while in international operation the use of local language is required in many
situations. In domestic operations, culture is relatively homogeneous, while it is quite diverse in
international operations. Politics are stable and somewhat unimportant domestically but could be
volatile internationally. The economy is uniform domestically but varies internationally. Finally,
governmental interference is extensive and subject to change in international operations but
minimal in domestic operations. The steps in the process are to 1) develop a mission statement,
2) perform a SWOT analysis, 3) set strategic goals, 4) develop tactical goals and plans, and 5)
develop a control framework.
Diff: 3
AACSB: Analytical Thinking
Skill: Synthesis
Objective: 1, 5
Learning Outcome: Describe the process of selecting and developing an international business
strategy

117) What are the three sources of competitive advantage that are available to MNCs but
unavailable to domestic firms? Identify the four strategic alternatives MNCs use to balance these
three sources of competitive advantage.
Answer: The three sources of competitive advantage are global efficiencies, worldwide learning,
and multinational flexibility. Global efficiencies can be captured through location efficiencies, or
locating facilities anywhere in the world that yields the lowest production or distribution costs, or
that best improves the quality of service. Global efficiencies can also be captured through
economies of scale and economies scope. Worldwide learning is accomplished by working
within the diverse operating environments of an MNC. A firm can learn from differences in one
country and transfer the learning to operations in other countries. Multinational flexibility means
that international businesses respond to a change in one country by implementing a change in
another country. Multinational corporations typically adopt one of four strategic alternatives in
their attempt to balance the three goals of global efficiencies, multinational flexibility, and
worldwide learning, home replication strategy, multidomestic strategy, global strategy, and
transnational strategy.
Diff: 3
AACSB: Analytical Thinking
Skill: Synthesis
Objective: 1, 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy

28
Copyright © 2015 Pearson Education, Inc.
118) Briefly describe the four strategic alternatives for international business. Identify the four
basic components of any type of international strategy.
Answer: The four strategies are home replication, multidomestic, global, and transnational. A
home replication strategy means that the organization simply replicates what has worked in the
home market in its markets abroad. A multidomestic strategy suggests that a firm operates
differently in its various markets based on local market characteristics. A global strategy means
that the firm attempts to develop global efficiencies by standardizing its activities from country
to country. A transnational strategy suggests that the firm attempts to respond to local market
preferences while achieving global efficiencies. The appropriate strategy is based on a firm's
need for local responsiveness and its need for global efficiencies. The components are distinctive
competence, scope of operations, resource deployment, and synergy.
Diff: 3
AACSB: Analytical Thinking
Skill: Synthesis
Objective: 2, 3
Learning Outcome: Describe the process of selecting and developing an international business
strategy

119) What are the four basic components of strategy development? Explain the meaning of each
component.
Answer: The four basic components of strategy development are distinctive competence, scope
of operations, resource deployment, and synergy. Distinctive competence answers the question,
"What do we do exceptionally well especially as compared to our competitors?" Scope of
operations answers the question, "Where are we going to conduct business?" Resource
deployment answers the question, "Given that we are going to compete in these markets, how
will we allocate our resources to them?" Synergy answers the question, "How can different
elements of our business benefit each other?"
Diff: 3
Skill: Application
Objective: 3
Learning Outcome: Describe the process of selecting and developing an international business
strategy

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Copyright © 2015 Pearson Education, Inc.
120) What is the purpose of conducting a SWOT analysis? As an international manager, how
would you conduct a SWOT analysis? How would you use the gathered information?
Answer: SWOT is an acronym for "Strengths, Weaknesses, Opportunities, and Threats." A firm
typically initiates its SWOT analysis by performing an environmental scan, a systematic
collection of data about all elements of the firm's external and internal environments, including
markets, regulatory issues, competitors' actions, production costs, and labor productivity.
Managers use information derived from the SWOT analysis to develop specific effective
strategies. Effective strategies are those that exploit environmental opportunities and
organizational strengths, neutralize environmental threats, and protect or overcome
organizational weaknesses.
Diff: 3
AACSB: Reflective Thinking
Skill: Critical Thinking
Objective: 4
Learning Outcome: Describe the process of selecting and developing an international business
strategy

121) Describe the value chain and how it is used to assess a firm's strengths and weaknesses.
Answer: The value chain is a breakdown of the firm into its important activities. Primary
activities include manufacturing, marketing and sales, and service. Support activities include the
company infrastructure, information systems, human resources, research and development, and
sourcing and logistics. Each activity can be the source of an organizational strength or weakness.
Diff: 3
AACSB: Reflective Thinking
Skill: Critical Thinking
Objective: 4
Learning Outcome: Describe the process of selecting and developing an international business
strategy

30
Copyright © 2015 Pearson Education, Inc.
122) What strategic management challenges are faced by international businesses that have
business units scattered around the world? How can a business strategy help improve a firm's
ability to compete?
Answer: Managers in an international business must coordinate the implementation of their
firm's strategy among business units located in different parts of the world with different time
zones, different cultural contexts, and different economic conditions, as well as monitoring and
controlling their performance. Business strategy focuses on specific businesses, subsidiaries, or
operating units within the firm. Business strategy seeks to answer the question: "How should we
compete in each market we have chosen to enter?" By focusing on the competitive environment
of each business or SBU, business strategy helps the firm improve its distinctive competence for
that business or unit. Once a firm selects a business strategy for an SBU, it typically uses that
strategy in all geographical markets the SBU serves. The firm may develop a unique business
strategy for each of its SBUs, or it may pursue the same business strategy for all of them.
Diff: 3
AACSB: Analytical Thinking
Skill: Synthesis
Objective: 1, 5
Learning Outcome: Describe the process of selecting and developing an international business
strategy

123) What is international strategic management? How do international, corporate, business, and
functional strategies differ?
Answer: International strategic management is a comprehensive and ongoing management
planning process aimed at formulating and implementing strategies that enable a firm to compete
effectively internationally. International strategic management results in the development of
various international strategies, which are comprehensive frameworks for achieving a firm's
fundamental goals. Corporate strategy attempts to define the domain of businesses in which the
firm intends to operate. Whereas corporate strategy deals with the overall organization, business
strategy focuses on specific businesses, subsidiaries, or operating units within the firm. Business
strategy seeks to answer the question: "How should we compete in each market we have chosen
to enter?" Functional strategies attempt to answer the question: "How will we manage the
functions of finance, marketing, operations, human resources, and research and development
(R&D) in ways consistent with our international corporate and business strategies?"
Diff: 3
AACSB: Reflective Thinking
Skill: Synthesis
Objective: 1, 5
Learning Outcome: Describe the process of selecting and developing an international business
strategy

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Copyright © 2015 Pearson Education, Inc.