chapter 7 practice questions Flashcards
- China is pressuring Airbus to increase its productions facilities in China by using which
technique?
A) decreasing political risk through a multidomestic strategy
B) reducing potential loss from counterfeiting
C) using political favors in exchange for influence
D) increasing bottom line returns through outsourcing
C) using political favors in exchange for influence
- Building production capacity in locations outside of Europe can threaten ________, an
issue typically raised when investing in China.
A) European economic risk
B) intellectual property rights protection
C) European investment potential
D) balance of trade
B) intellectual property rights protection
- Indian Coke, a subsidiary of Coca-Cola, offers a drink called Maaza Chunky. Production
required modification of the production technique and the introduction of newly designed cans.
These represent aspects of a ________ strategy.
A) production
B) global
C) multidomestic
D) consumer
C) multidomestic
- One of the reasons Ford found it difficult to increase sales in China is that
A) its cars are too expensive.
B) its cars did not meet customer expectations.
C) it kept all of the manufacturing in China.
D) it kept all engineering and design in China
B) its cars did not meet customer expectations.
- Community hospitals in Mississippi can video conference with the specialists at the
University of Mississippi Medical Center thus lowering health care delivery costs and increasing
the quality of medical care. This system mirrors that of the Indian health care delivery system for
reaching rural areas. This is an example of
A) vertical innovation.
B) forward innovation.
C) reverse innovation.
D) arbitrage.
C) reverse innovation.
- According to Michael Porter, firms that have experienced intense domestic competition
are
A) unlikely to have the time or resources to compete abroad.
B) more likely to demand protection from their governments.
C) most likely to design strategies aimed primarily at the domestic market.
D) more likely to design strategies that will allow them to successfully compete abroad.
D) more likely to design strategies that will allow them to successfully compete abroad.
- In reviewing the Indian software industry and the diamond of national advantage, which
of the following is a relatively weak set of factors in the national competitive advantage in this
industry?
A) U.S. demand conditions
B) factor endowments
C) domestic rivalry
D) domestic demand conditions
D) domestic demand conditions
- Which of the following is not a source of political risk in many countries?
A) the presence of social unrest
B) the presence of the rule of law
C) the presence of military turmoil
D) the presence of violent conflict
B) the presence of the rule of law
- When the U.S. dollar appreciates against other currencies, U.S. goods can be ________ to
consumers in foreign countries but can have ________ implications for American companies
with branch operations overseas.
A) less expensive, positive
B) more expensive, negative
C) less expensive, negative
D) more expensive, positive
B) more expensive, negative
- The sale of Boeing commercial aircrafts and Microsoft operating systems in many
countries enables these companies to benefit from
A) higher prices in their domestic markets.
B) reducing their exposure to currency risks.
C) economies of scale.
D) optimizing the location for many activities in their value chain
C) economies of scale.
- Exemplifying the phenomenon of ________, companies like GE have committed
significant resources to developing products that meet the needs of developing nations, products
that deliver adequate functionality at a fraction of the cost. Interestingly, these products have
subsequently found considerable success in value segments in wealthy countries as well.
A) total wage costs and indirect costs
B) risk reduction
C) reverse innovation
D) the optimization of value-chain activity locations
C) reverse innovation
- Renault paid 1 billion USD to acquire a 25 percent ownership stake in the Russian
automaker AvtoVAZ in 2008. Just one year later, Russian Prime Minister Vladimir Putin
threatened to dilute the Renault ownership stake unless it contributed more money to prop up
AvtoVAZ, which was then experiencing a significant slide in sales. This is an example of
________ risk.
A) currency
B) economic
C) political
D) management
C) political
- When firms expand into global markets, they are faced with the choice of reducing costs
and/or adapting to the local market. When high pressures exist to lower costs, companies should
choose a(n) ________ strategy or ________ strategy in order to compete in the global
marketplace.
A) global; transnational
B) global; multidomestic
C) international; multidomestic
D) international; transnational
A) global; transnational
- To be responsive to local pressures, companies must ________ their offerings and
strategies from country to country to reflect local consumer preferences.
A) internationalize
B) globalize
C) differentiate
D) standardize
C) differentiate
- Which would be the appropriate strategy for companies to use to compete in the global
marketplace if both the pressures to lower costs and adapt locally are low?
A) international strategy
B) global strategy
C) multidomestic strategy
D) transnational strategy
A) international strategy
