question

The action that managers take to attain the goals of the firm are referred to as a firm's strategy.

answer

True

question

For most firms the preeminent goal is to maximize the value of the firm for its customer.

answer

False

question

Strategy is a ratio or rate of return concept.

answer

False

question

In general, higher profitability and a high rate of profit growth will increase the value of the enterprise and thus the returns gained by its owner.

answer

True

question

The more value customers place on a firm's product, the higher the price that a firm can charge for those products.

answer

True

question

The price a firm charges for a good or service is typically more than the value placed on that good or service by the customer.

answer

False

question

It is normally impossible to segment the market to such a degree that the firm can charge each customer a price that reflects that individuals assessment of the value of the product.

answer

True

question

A company can create more value either by lowering production cost, or making the product more attractive through design, functionality, features, quality, and the like.

answer

True

question

There are two basic strategies to improve a firm's profitability-a differentiation strategy and a diversification strategy.

answer

False

question

For superior value creation relatives to rivals, it is essential for a firm to create the most valuable products in the eyes of the consumer.

answer

False

question

Human resources, material management, and manufacturing are included as the secondary activities in the firm's value chain.

answer

False

question

Primary activities of a firm have to do with the design, creation, and delivery of the products, its marketing, and its support and after-sales service.

answer

True

question

Primary activities of a firm are divided into four functions: R&D, production, marketing and sales, and human resources.

answer

False

question

R&D is concerned with the design of products and production process.

answer

True

question

For services such as banking a bank healthcare, "production" is concerned with selecting the merchandise, stocking the store, and ringing up the sale at the cash register.

answer

False

question

In the context of the value chain, support activities provide the inputs that allow primary activities of production and marketing to occur.

answer

True

question

The combination of R&D and human resources is a particularly potent source of cost savings in many enterprises.

answer

False

question

Organizational infrastructure refers to the totality of a firm's organization.

answer

False

question

The logistical function controls the transmission of physical materials through the value chain, from procurement through production and into distribution.

answer

True

question

Controls are the metrics used to measure the performance of subunits and make judgments about how well those managers are running those subunits.

answer

True

question

Market conditions and company's strategy have to fit with each other in order for a company to attain superior performance.

answer

True

question

Government action and new technology can shift the market conditions.

answer

TRUE

question

Firms that operate internationally are able to reduce the costs of value creation because they realize greater cost economies from experience effects by serving an expanded global market from a central location.

answer

TRUE

question

A firm's ability to increase its profitability is increased by the need to customize its product offering, marketing strategy, and business strategy to differing national conditions.

answer

FALSE

question

Locating a value creation activity in the optimal location for that activity can lower the costs of value creation and help the firm to achieve a low cost position, and/or enable a firm to differentiate its product offering from the offerings of competitors.

answer

TRUE

question

Due to favorable endowments, New Zealand may have a comparative advantage for automobile assembly operations, but high transportation costs would make it an uneconomical location from which to serve global markets.

answer

TRUE

question

The system curve refers to systematic reductions in production costs that have been observed to occur over the life of a product.

answer

FALSE

question

For the most complex tasks, learning curves exist indefinitely.

answer

FALSE

question

Economies of scale refer to cost savings that come from learning by doing.

answer

FALSE

question

The reduction in unit costs achieved by producing a large volume of a product is referred to as diseconomies of scale.

answer

FALSE

question

A firm increases its cost of creating value when it moves down the experience curve.

answer

FALSE

question

One key to progressing downward on the experience curve as rapidly as possible is to increase the volume produced by a single plant as quickly as possible.

answer

TRUE

question

Leveraging the skills created within subsidiaries and applying them to other operations within the firm's global network may create value.

answer

TRUE

question

Firms that compete in the global markets typically face two types of competitive pressure: to be globally responsive and pressures for cost reductions.

answer

FALSE

question

Because customizing product offerings to different national requirements can involve significant duplication and a lack of product standardization, the result is usually a decrease in costs.

answer

FALSE

question

Cost reduction pressures can be particularly intense in industries producing commodity-type products where meaningful differentiation on nonprice factors is difficult and price is the main competitive weapon.

answer

TRUE

question

Firms that simultaneously face both strong cost pressures and strong pressures for local responsiveness pursue a localization strategy.

answer

FALSE

question

Recent decades have seen a reduction in the number of strategic alliances.

answer

FALSE

question

Some commentators have criticized strategic alliances on the grounds that they bring together complementary skills and assets that neither company could easily develop on its own.

answer

FALSE

question

The failure rate for international strategic alliances is very low.

answer

FALSE

question

A firm's _____ can be defined as the actions that managers take to attain the goals of the firm.

answer

strategy

question

A simple example of _____ is rate of return on sales.

answer

profitability

question

The price a firm charges for a good or service is typically less than the value placed on that good or service by the customer. This is because the consumer captures some of that value in the form of what economists call:

answer

consumer surplus.

question

There are two basic strategies for improving a firm's profitability. These are:

answer

a differentiation strategy and a low-cost strategy.

question

The _____ of a firm is measured by the difference between value and cost.

answer

value creation

question

A strategy that focuses primarily on increasing the attractiveness of a product is referred to as a(n):

answer

differentiation strategy.

question

The _____ shows all of the different positions that a firm can adopt with regard to value creation and low cost assuming that its internal operations are configured efficiently to support a particular position.

answer

efficiency frontier

question

Because of diminishing returns, the efficiency frontier has what kind of shape?

answer

Convex

question

To maximize its long-run return on invested capital, a firm must do all of the following EXCEPT:

answer

establish economies of scale through high-end customization.

question

According to the text, it is useful to think of the firm as a(n) _____ composed of a series of distinct activities, including production, marketing, materials management, R&D, human resources, information systems, and the firm infrastructure.

answer

value chain

question

The _____ activities of a firm have to do with creating the product, marketing and delivering the product to buyers, and providing support and after-sales service to the buyers of the product.

answer

primary

question

In the context of value chain analysis, which of the following is an example of a "primary" activity?

answer

Research and development

question

Which function of a firm is concerned with the design of products and production processes?

answer

Research and development

question

Which of the following is NOT a support activity in the value chain? A. Company infrastructure

answer

Production

question

_____ is concerned with the creation of goods or services.

answer

Production

question

Which function of a firm can help create value through brand positioning and advertising?

answer

The marketing and sales function

question

Which function ensures that the company has the right mix of skilled people to perform its value creation activities effectively?

answer

Human resources

question

Which of the following is NOT an example of an information system?

answer

An employee-training pamphlet

question

All of the following are included in infrastructure EXCEPT:

answer

brand positioning

question

The term _____ can be used to refer to the totality of a firm's organization, including its organizational structure, control systems and incentives, and people.

answer

organization architecture

question

Which of the following is NOT a part of organizational structure?

answer

The market environment of a firm.

question

Which of the following is NOT part of the organizational architecture?

answer

Competitors

question

Devices used to reward appropriate managerial behavior are called:

answer

incentives.

question

The manner in which decisions are made and work is performed within the organization refers to:

answer

processes

question

The norms and value systems that are shared among the employees of an organization refer to its:

answer

organizational culture

question

For a firm to attain superior performance and earn a high return on capital, its strategy must make sense given:

answer

market conditions

question

Firms that operate internationally are able to do all of the following EXCEPT:

answer

expand their international market by selling those products in the domestic market.

question

Skills within the firm that competitors cannot easily match or imitate are referred to as:

answer

core competencies.

question

Toyota is able to produce high-quality, well-designed cars at a lower delivered cost. This is an example of a(n):

answer

core competency

question

Implicit in the discussion of leveraging core competencies is the idea that:

answer

firms should transfer core competencies to foreign locations.

question

_____ permitting, the firm will benefit by basing each value creation activity it performs at that location where economic, political, and cultural positions are most conducive to the performance of that activity.

answer

Trade barriers and transportation costs

question

Economies that arise from performing a value creation activity in the optimal location for that activity are called:

answer

location economies

question

If the most productive labor force for assembly operations is in Mexico, assembly operations should be based in Mexico. This is based on the principle of:

answer

location economies.

question

Location economies are important because locating an optimal location can:

answer

increase value and support higher pricing.

question

According to the text, a firm creates a(n) _____ by dispersing the stages of its value chain to those locations around the globe where the value added is maximized or where the costs of value creation are minimized.

answer

global web

question

Which of the following is NOT an important caveat that is likely to discourage global expansion?

answer

Cultural differences

question

The _____ refers to the systematic reduction in production costs that have been observed to occur over the life of a product.

answer

experience curve

question

A number of studies have observed that a product's _____ decline by some characteristic each time cumulative output doubles.

answer

production costs

question

The two phenomena that help explain the experience curve are:

answer

learning effects and economies of scale.

question

_____ refer to cost savings that come from acquiring knowledge of repetition of how to carry out a task.

answer

Learning effects

question

Learning effects tend to be more significant when a _____ task is repeated because there is more that can be learned about the task.

answer

technologically complex

question

The ability to spread fixed costs over a large volume results in a cost-savings phenomenon is referred to as:

answer

economies of scale.

question

Production costs eventually decline due to increasing labor productivity and management efficiency because of:

answer

learning effects

question

A firm would move down the experience curve if it:

answer

chooses an optimal location for a particular value creation activity.

question

Firms that compete in the global marketplace typically face two types of competitive pressures. They face pressures for cost reductions and:

answer

pressures to be locally responsive.

question

Cost reduction pressures tend to be particularly intense in industries that:

answer

create products that serve universal needs.

question

Which of the following is NOT an example of a conventional commodity product?

answer

Diamonds

question

Among global firms, which of the following is NOT a factor that is driving pressures for local responsiveness?

answer

Similarities in consumer tastes and preferences

question

In North America, consumer electrical systems are based on 110 volts, while in some European countries, 240-volt systems are standard. This is an example of:

answer

differences in infrastructure and traditional practices.

question

All of these countries have a similar per capita income on a purchasing power parity basis EXCEPT:

answer

Australia

question

A firm's _____ strategies may have to be responsive to differences in distribution channels among countries.

answer

marketing

question

Threats of protectionism, economic nationalism, and local content rules:

answer

dictate that international businesses manufacture locally.

question

Pressures for _____ imply that it may not be possible for a firm to realize the full benefits from learning effects and location economies.

answer

local responsiveness

question

Firms use four basic strategies to compete in the international environment. These are:

answer

global standardization strategy, a localization strategy, a transnational strategy, and an international strategy.

question

The appropriateness of the strategy that a firm chooses to use in an international market varies with the extent of pressures for _____ and ______.

answer

cost reductions; local responsiveness.

question

Which of the following is NOT one of the four basic strategies used by firms to deal with cost reduction and local responsiveness?

answer

Exit strategy

question

Which strategy makes the most sense when there are strong pressures for cost reductions and demands for local responsiveness are minimal?

answer

Global standardization strategy

question

Which of the following companies DOES NOT pursue a global standardization strategy?

answer

McDonald's

question

Which strategy focuses on increasing profitability by customizing the firm's goods or services so that they provide a good match to tastes and preferences in different national markets?

answer

Localization

question

MTV is a company that had to pursue a(n):

answer

localization strategy.

question

Which strategy makes the most sense when cost pressures are intense, and demands for local responsiveness are high?

answer

Transnational strategy

question

The work of Christopher Bartlett and Sumantra Ghoshal is associated with:

answer

transnational strategy.

question

A(n) _____ strategy makes sense when a firm faces high pressures for cost reductions, high pressures for local responsiveness, and significant opportunities for leveraging valuable skills within a multinational's global network of operations.

answer

transnational

question

According to the text, which of the following strategies is difficult to implement due to conflicting demands?

answer

Transnational

question

Firms that pursue a(n) _____ strategy try to create value by transferring valuable skills and products to foreign markets where indigenous competitors lack those skills and products.

answer

international

question

A(n) _____ strategy makes sense if a firm has a valuable core competence that indigenous competitors in foreign markets lack.

answer

international

question

Localizing the product offering, yet simultaneously capturing some scale economies are advantages of which strategy?

answer

Transnational

question

The term _____ refers to cooperative agreements between potential or actual competitors.

answer

strategic alliance

question

_____ run the range from formal joint ventures to short-term contractual agreements.

answer

Strategic alliances

question

_____ allow firms to share the fixed costs of developing new products or processes.

answer

Strategic alliances

question

Many firms tie up with Chinese firms to be able to do business successfully in China. On their own, they will not be able to establish business connections essential to succeed in China. This is an example of which advantage of a strategic alliance?

answer

Strategic alliances may facilitate entry into a foreign market.

question

Strategic alliances have three major advantages. These are (1) may facilitate trade into a foreign market, (2) allow firms to share the fixed costs and developing new products or processes, and (3):

answer

a way to bring together the complementary skills and assets of the participants.

question

One of the principal risks with strategic alliances is:

answer

a firm can give away more than it receives.

question

According to the text, the success of a strategic alliance is a function of three factors. These are: partner selection, alliance structure, and:

answer

the manner in which the alliance is managed.

question

Which of the following is NOT a required attribute of a good strategic alliance partner?

answer

It must have capabilities identical to his/her partner.

question

All of the following are characteristics of good allies or partners EXCEPT:

answer

a good partner divulges all secrets of his organization to you.

question

To increase the probability of selecting a good partner, a firm should do all of the following EXCEPT:

answer

contact the potential ally's family and friends to find out as much information as possible.

question

The four safeguards against opportunism by alliance partners include: walling off critical technology, establishing contractual safeguards, agreeing to swap valuable skills and technologies, and:

answer

extracting significant credible commitments.

question

_____ agreements are one way to achieve the goal of swapping skills and technologies that each company in a strategic alliance covets, and ensuring a chance for equitable gain.

answer

Cross-licensing

question

Managing an alliance successfully requires building interpersonal relationships between the firms' managers, or what is sometimes referred to as:

answer

relational capital.

Ch. 11-The Strategy of International Business – Flashcards

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