Question 1

Denim Supply Inc. does not feel the pressure to create custom jeans for any of its markets around the world, but it does want to focus on cost reductions. What strategy should this company consider using to achieve this?

Accepted Answer

A)   domestic strategy
B)   global standardization strategy
C)   international strategy
D)   transnational strategy
E)   nationalization strategyF) A) and C)
G) A) and B)

Question 2

What is an experience curve? What is its strategic significance?

Accepted Answer

The experience curve refers to systemati...

Question 3

Assume that the value of a base model computer to an average consumer is $300, the average price that Dell can charge a consumer for that product is $275, and the average unit cost of producing that product for Dell is $150. For this scenario, which statement is true?

Accepted Answer

A)   Dell can easily increase its price above $300.
B)   The profit for Dell on each computer is $150.
C)   The consumer surplus per computer is $25.
D)   The higher the intensity of competitive pressure, the higher the price that Dell can charge relative to $300.
E)   The lower the consumer surplus, the greater the value for the money the consumer gets.F) C) and D)
G) A) and B)

Question 4

Economies of scale are achieved when a company reduces unit costs by

Accepted Answer

A)   manufacturing products based on factor endowments.
B)   producing a larger volume of product.
C)   reducing staff.
D)   eliminating competitor value.
E)   acquiring a new supplier.F) A) and B)
G) A) and C)

Question 5

Profit growth is measured by the percentage increase in a company's total production over time.

Accepted Answer

A) True 
 B)False

Question 6

A strategic alliance is a cooperative agreement between potential or actual competitors.

Accepted Answer

A) True 
 B)False

Question 7

Of all the value creation activities in a firm, ________ creates value by discovering consumer needs and communicating them back to the R&D function of the company, which can then design products that better match those needs.

Accepted Answer

A)   production
B)   marketing and sales
C)   its human resources
D)   logistics
E)   its information systemF) A) and B)
G) None of the above

Question 8

Varying distribution channels among countries may make it necessary for a company to place marketing functions within national subsidiaries.

Accepted Answer

A) True 
 B)False

Question 9

________ are most likely to discourage global expansion of businesses.

Accepted Answer

A)   Economies of scale
B)   Factor endowments
C)   Trade barriers
D)   Mass customization
E)   Low transportation costsF) A) and B)
G) D) and E)

Question 10

Firms that operate internationally are able to realize location economies by dispersing individual value creation activities to locations where they are performed most efficiently and effectively.

Accepted Answer

A) True 
 B)False

Question 11

The information system of a company is an example of a support activity.

Accepted Answer

A) True 
 B)False

Question 12

Universal needs exist when the tastes and preferences of consumers in different nations are identical.

Accepted Answer

A) True 
 B)False

Question 13

Marketing functions may have to be delegated to national subsidiaries when there is a

Accepted Answer

A)   difference in distribution channels.
B)   pressure for decreasing consumer surplus.
C)   lack of product customization.
D)   pressure for increasing economies of scale.
E)   pressure for increasing consumers' reservation price.F) B) and D)
G) B) and C)

Question 14

Discuss the significance of value creation. According to Michael Porter, what are the two primary strategies for creating value?

Accepted Answer

The way to increase the profitability of...

Question 15

Frisco Corp. and Farren Industries agreed to a short-term contract in which Frisco Corp. would develop the software for Farren Industries to use when selling to the international customer. This short-term agreement is an example of a

Accepted Answer

A)   franchising agreement.
B)   global web.
C)   free trade agreement.
D)   strategic alliance.
E)   licensing deal.F) C) and E)
G) B) and D)

Question 16

Amazon Prime incurs a huge fixed cost to obtain streaming rights to movies and television programs. However, it is able to spread this cost over a large number of subscribers that results in a cost-savings phenomenon referred to as

Accepted Answer

A)   volume synergies.
B)   economies of scale.
C)   captured savings.
D)   size effects.
E)   location economies.F) C) and E)
G) A) and B)

Question 17

A localization strategy should be considered when

Accepted Answer

A)   it allows a firm to capture the cost reductions of mass-producing a standardized product.
B)   it reduces duplication of functions.
C)   it involves longer production runs.
D)   it makes sense if the value added by customization supports higher pricing.
E)   it substantially reduces local demand.F) B) and C)
G) D) and E)

Question 18

As the manager of the U.S. branch, Poitr knows it is important to build relationships between himself and the managers of the branches in Singapore and Dublin. Poitr wants to create

Accepted Answer

A)   relational capital.
B)   the Sullivan principle.
C)   factor endowments.
D)   symbiotics.
E)   a first-mover advantage.F) C) and D)
G) D) and E)

Question 19

Discuss the different types of competitive pressures that firms competing in a global marketplace face. How can firms respond to such pressures?

Accepted Answer

Firms that compete in the global marketp...

Question 20

By producing its products in larger volume than its competitors, Epli-Mart is able to achieve substantial reductions in unit cost. In other words, Epli-Mart achieves

Accepted Answer

A)   location economies.
B)   learning effects.
C)   standardization economies.
D)   core economies.
E)   economies of scale.F) A) and E)
G) A) and D)

Exam 12: The Strategy of International Business

Denim Supply Inc. does not feel the pressure to create custom jeans for any of its markets around the world, but it does want to focus on cost reductions. What strategy should this company consider using to achieve this?

Correct AnswerverifiedShow Answer

Discuss the significance of value creation. According to Michael Porter, what are the two primary strategies for creating value?

Correct AnswerverifiedThe way to increase the profitability of...View AnswerShow Answer

Economies of scale are achieved when a company reduces unit costs by

Correct AnswerverifiedShow Answer

Varying distribution channels among countries may make it necessary for a company to place marketing functions within national subsidiaries.

Correct AnswerverifiedShow Answer

A localization strategy should be considered when

Correct AnswerverifiedShow Answer

Marketing functions may have to be delegated to national subsidiaries when there is a

Correct AnswerverifiedShow Answer

As the manager of the U.S. branch, Poitr knows it is important to build relationships between himself and the managers of the branches in Singapore and Dublin. Poitr wants to create

Correct AnswerverifiedShow Answer

Discuss the different types of competitive pressures that firms competing in a global marketplace face. How can firms respond to such pressures?

Correct AnswerverifiedFirms that compete in the global marketp...View AnswerShow Answer

Universal needs exist when the tastes and preferences of consumers in different nations are identical.

Correct AnswerverifiedShow Answer

Profit growth is measured by the percentage increase in a company's total production over time.

Correct AnswerverifiedShow Answer

Amazon Prime incurs a huge fixed cost to obtain streaming rights to movies and television programs. However, it is able to spread this cost over a large number of subscribers that results in a cost-savings phenomenon referred to as

Correct AnswerverifiedShow Answer

A strategic alliance is a cooperative agreement between potential or actual competitors.

Correct AnswerverifiedShow Answer

________ are most likely to discourage global expansion of businesses.

Correct AnswerverifiedShow Answer

What is an experience curve? What is its strategic significance?

Correct AnswerverifiedThe experience curve refers to systemati...View AnswerShow Answer

Firms that operate internationally are able to realize location economies by dispersing individual value creation activities to locations where they are performed most efficiently and effectively.

Correct AnswerverifiedShow Answer

Frisco Corp. and Farren Industries agreed to a short-term contract in which Frisco Corp. would develop the software for Farren Industries to use when selling to the international customer. This short-term agreement is an example of a

Correct AnswerverifiedShow Answer

The information system of a company is an example of a support activity.

Correct AnswerverifiedShow Answer

Of all the value creation activities in a firm, ________ creates value by discovering consumer needs and communicating them back to the R&D function of the company, which can then design products that better match those needs.

Correct AnswerverifiedShow Answer

By producing its products in larger volume than its competitors, Epli-Mart is able to achieve substantial reductions in unit cost. In other words, Epli-Mart achieves

Correct AnswerverifiedShow Answer

Assume that the value of a base model computer to an average consumer is $300, the average price that Dell can charge a consumer for that product is $275, and the average unit cost of producing that product for Dell is $150. For this scenario, which statement is true?

Correct AnswerverifiedShow Answer

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The way to increase the profitability of...
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Firms that compete in the global marketp...
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The experience curve refers to systemati...
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