Theory of Strategic Management with Cases International Edition – Test Bank

Theory of Strategic Management with Cases International Edition by Charles W. L. Hill – Test Bank

Chapter 8—Strategy in the Global Environment

TRUE/FALSE

1.The globalization of production has been decreasing as companies face lower barriers to international trade and location economies.

ANS:FPTS:1DIF:Moderate

OBJ:2 – Discuss the motives for expanding internationally

NAT: AACSB Analytic | Environmental Influence KEY: Knowledge

2.Factor endowments-the cost and quality of factors of production-are a prime determinant of the competitive advantage that certain countries have in certain industries.

ANS:TPTS:1DIF:Moderate

OBJ:2 – Discuss the motives for expanding internationally

NAT: AACSB Analytic | Environmental Influence KEY: Knowledge

3.A company can increase its growth rate by taking goods or services developed at home and selling them internationally.

ANS:TPTS:1DIF:Easy

OBJ: 2 –  Discuss the motives for expanding internationally

NAT: AACSB Analytic | Creation of Value KEY: Knowledge

4.Location economies refer to the economic benefits that arise from performing a value creation activity at central headquarters.

ANS:FPTS:1DIF:Moderate

OBJ:2 – Discuss the motives for expanding internationally

NAT: AACSB Analytic | Creation of Value KEY: Knowledge

5.A company may create value if it can leverage the skills created within subsidiaries and apply them to other operations within the firm’s global network.

ANS:TPTS:1DIF:Moderate

OBJ:2 – Discuss the motives for expanding internationally

NAT: AACSB Analytic | Creation of Value KEY: Knowledge

6.By offering a standardized product to the global marketplace and manufacturing that product in each nation in which it does business, a multinational company can realize substantial scale economies.

ANS:FPTS:1DIF:Moderate

OBJ:2 – Discuss the motives for expanding internationally

NAT: AACSB Analytic | Creation of Value KEY: Knowledge

7.Local responsiveness may be driven by economic and political demands placed on companies by host country governments.

ANS:TPTS:1DIF:Moderate

OBJ:2 – Discuss the motives for expanding internationally

NAT: AACSB Analytic | Environmental Influence KEY: Comprehension

8.A transnational strategy makes the most sense when there are strong pressures for cost reductions and when demand for local responsiveness is minimal.

ANS:FPTS:1DIF:Moderate

OBJ: 3 – Review the different strategies that companies use to compete in the global market place

NAT:AACSB Analytic | StrategyKEY:Comprehension

9.A localization strategy is most appropriate when there are substantial differences across nations with regard to consumer tastes and preferences and when cost pressures are not too intense.

ANS:TPTS:1DIF:Moderate

OBJ: 3 – Review the different strategies that companies use to compete in the global market place

NAT:AACSB Analytic | StrategyKEY:Comprehension

10.Companies that pursue a global standardization strategy are trying to develop a business model that simultaneously achieves low costs and differentiates the product offering across geographic markets.

ANS:FPTS:1DIF:Moderate

OBJ: 3 – Review the different strategies that companies use to compete in the global market place

NAT: AACSB Analytic | Strategy KEY: Knowledge

11.Most manufacturing companies begin their global expansion by exporting.

ANS:TPTS:1DIF:Easy

OBJ: 4 – Explain the pros and cons of different modes for entering foreign markets

NAT: AACSB Analytic | Strategy KEY: Knowledge

12.An international strategy may not be viable in the long term and to survive, companies that can pursue it need to shift toward a global standardization strategy.

ANS:TPTS:1DIF:Moderate

OBJ: 3 – Review the different strategies that companies use to compete in the global market place

NAT:AACSB Analytic | StrategyKEY:Comprehension

13.When a company licenses its technology it can quickly lose control over it.

ANS:TPTS:1DIF:Moderate

OBJ: 4 – Explain the pros and cons of different modes for entering foreign markets

NAT: AACSB Technology | Information Technologies KEY: Knowledge

14.One advantage of a joint venture is that a company may benefit from a local partner’s knowledge of the many dimensions of a host country.

ANS:TPTS:1DIF:Moderate

OBJ: 4 – Explain the pros and cons of different modes for entering foreign markets

NAT: AACSB Analytic | Strategy KEY: Knowledge

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