question

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

answer

Strategy.

question

The text defines _____ as the rate of return that the firm makes on its invested capital (ROIC).

answer

Profitability.

question

Profit growth is measured by:

answer

The percentage increase in net profits over time.

question

Which of the following is NOT a strategy for a firm to achieve profitability?

answer

Raising costs.

question

The amount of value created by a firm is measured by:

answer

Estimating the difference between its costs of production and the value that consumers perceive in its products.

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

A consumer surplus.

question

Which of the following is one of the reasons that consumers are able to capture consumer surpluses?

answer

Because it is difficult to segment a market to reflect reservation prices of all customers.

question

The price that reflects an individual's assessment of the value of a product constitutes:

answer

The customer's reservation price.

question

The value of a product to an average consumer is V, the average price that the firm can charge a consumer for that product is P and the average unit cost of producing that product is C. For this scenario, which of the following is true?

answer

The consumer surplus per unit is equal to V - P.

question

Which of the following is one of the ways in which a company can create more value for a product?

answer

By making the product more attractive.

question

A strategy that focuses primarily on increasing the attractiveness of a product is referred to as a _____ strategy.

answer

Differentiation.

question

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

answer

A differentiation strategy and a low-cost strategy.

question

Superior value creation relative to rivals requires a firm to:

answer

Ensure that the gap between value and cost of production be greater than the gap attained by competitors.

question

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

answer

Value creation.

question

When a firm already has significant value built into its product offering, increasing value by a relatively small amount requires significant additional costs. The converse also holds, when a firm already has a low-cost structure, it has to give up a lot of value in its product offering to get additional cost reductions. These are the implications relate to the concept of _____.

answer

Diminishing returns.

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 adequately to support a particular position.

answer

Efficiency frontier.

question

Why does the efficiency frontier manifest itself in a convex shape?

answer

Because of diminishing returns.

question

Which of the following statements about the efficiency frontier is true?

answer

Not all positions on the efficiency frontier are viable.

question

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

answer

Value chain.

question

The value creation activities of a firm can be categorized as _____ and _____ activities.

answer

Primary; support.

question

The _____ activities of a firm have to do with the design, creation, and delivery of the product; its marketing; and its support and after-sale service.

answer

Primary.

question

Which of the following is an example of a primary activity in a firm?

answer

Research and development.

question

Which of the following is an example of support activity in a firm?

answer

Information systems.

question

For a service organization, at which stage does production typically occur?

answer

When the service is delivered to the customer.

question

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

answer

Research and development.

question

When MTV engages in the creation, programming, and broadcasting of content, such as music videos and thematic shows, it is carrying out the function of:

answer

Production.

question

Ford has produced a high-value version of its Ford Expedition SUV. Sold as the Lincoln Navigator and priced around $10,000 higher, the Navigator has the same body, engine, chassis, and design as the Expedition, but through skilled advertising and marketing, supported by some fairly minor features changes (e.g., more accessories and the addition of a Lincoln-style engine grille and nameplate), Ford has fostered the perception that the Navigator is a "luxury SUV." This demonstrates how the marketing function can:

answer

Increase the value that consumers perceive to be contained in a firm's product.

question

One of the ways in which the _____ can create value in a firm is 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.

answer

Marketing and sales.

question

This function can create a perception of superior value in the minds of consumers by solving customer problems and supporting customers after they have purchased the product.

answer

Customer service.

question

The _____ activities of the value chain provide inputs that allow the primary activities to occur.

answer

Support.

question

When customers place an order for a Dell product over the firm's Web site, that data is immediately transmitted, via the Internet, to suppliers, who then configure their production schedules to produce and ship that product so that it arrives at the right assembly plant at the right time, thus reducing the amount of inventory held at factories and saving costs. This is an example of how a company can use its _____ to create value.

answer

Information Systems.

question

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

answer

Logistics.

question

The _____ function ensures that the company has the right mix of skilled people to perform its value creation activities effectively and it also ensures that people are adequately trained, motivated, and compensated to perform their value creation tasks.

answer

Human Resource.

question

Which support function denotes the context within which all the other value creation activities occur, and includes the organizational structure, control systems, and culture of the firm?

answer

Infrastructure.

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

_____ comprises three things: the formal division of the organization into subunits, the location of decision-making responsibilities within these, and the establishment of integrating mechanisms to coordinate the activities of subunits.

answer

Organizational structure.

question

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

answer

Controls.

question

Devices used to reward appropriate managerial behavior are called _____.

answer

Incentives.

question

_____ refers to the manner in which decisions are made and work is performed within the organization.

answer

Processes.

question

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

answer

Organizational culture.

question

In terms of organizational architecture, "people" include:

answer

The employees of the organization.

question

Which of the following constrains a firm's ability to increase its profitability and profit growth by expanding globally?

answer

The imperative of localization.

question

A company can increase its growth rate by taking goods or services developed at home and selling them internationally. The returns from such a strategy are likely to be greater if:

answer

Indigenous competitors in the host nations lack comparable products.

question

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

answer

Core competencies.

question

_____ are the bedrock of a firm's competitive advantage.

answer

Core competencies.

question

_____ economies are those economies that arise from performing a value creation activity in the optimal place for that activity, wherever in the world that might be.

answer

Location.

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

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

In theory, which of the following is true of a firm implementing a global web of operations versus a single-location competitor?

answer

It should be able to raise the perceived value.

question

Which of the following is an important caveat that is likely to discourage global expansion?

answer

Trade barriers.

question

The _____ refers to the systematic reductions 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 production costs decline by some quantity about each time _____ doubles.

answer

Cumulative output.

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

Labor productivity increases over time as individuals understand the most efficient ways to perform particular tasks. This could be attributed to _____.

answer

Learning effects.

question

In which of the following tasks will the learning effects be most significant?

answer

Network administration for a data analytics center.

question

Which of the following is true of learning effects?

answer

Learning effects are important only during the start-up period of a new process.

question

Which of the following is true of economies of scale?

answer

A firm may not be able to attain an efficient scale of production unless it serves global markets.

question

Which of the following is true about experience curve?

answer

Serving a global market from a single location is consistent with moving down the experience curve.

question

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

answer

Economies of scale.

question

Labor productivity increases over time as individuals understand and use the most efficient ways to perform particular tasks. Equally important, in new production facilities, management typically learns how to manage the new operation more efficiently over time. This demonstrates how 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: pressures for _____ and pressures to _____.

answer

Cost reductions; be locally responsive.

question

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

answer

Create products that serve universal needs.

question

_____ exist(s) when the tastes and preferences of consumers in different nations are similar if not identical.

answer

Universal needs.

question

Why do companies find it a difficult strategic challenge when they face high pressures for both cost reductions and local responsiveness?

answer

Being locally responsive tends to raise costs.

question

Which of these firms would face intense pressures for cost reduction?

answer

Firms whose consumers face low switching costs.

question

Which of the following products will have intense pressures for cost reduction?

answer

Sugar.

question

The liberalization of the world trade and investment environment in recent decades, by facilitating greater international competition, has generally:

answer

Increased cost pressures.

question

Which of the following conditions would be most favorable for reaping global scale economies?

answer

Low demand for local responsiveness.

question

Which of the following is an argument presented by commentators claiming that demands for local customization are on the decline worldwide?

answer

Customer tastes have converged worldwide.

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

For an international business, which of the following is a necessary outcome of threats of protectionism and nationalism?

answer

Pressures for localization.

question

Which of the following is most likely to necessitate the delegation of marketing functions to national subsidiaries?

answer

Difference in distribution channels.

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

Firms that pursue a(n) _____ strategy focus on increasing profitability and profit growth by reaping the cost reductions that come from economies of scale, learning effects, and location economies.

answer

Global standardization.

question

Which of the following is NOT true of firms pursuing a global standardization strategy?

answer

The production, marketing, and R&D activities of such firms are distributed across various locations.

question

Which of the following is true of a localization strategy?

answer

It makes sense if added value supports higher pricing.

question

A global car manufacturer wants to set a shop in China. While catering to local responsiveness, what can the firm do to reap scale economies?

answer

Use common vehicle platforms and components across many different models

question

Which of the following strategies is apt when the firm simultaneously faces both strong cost pressures and strong pressures for local responsiveness?

answer

Transnational strategy.

question

Which strategy makes 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 would do well to pursue a global standardization strategy?

answer

A company manufacturing rubber tires.

question

Which of the following is a pertinent observation made by researchers Bartlett and Ghoshal regarding modern multinational enterprises?

answer

Core competencies and skills can develop in any of the firm's worldwide operations.

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 strategy.

question

Which of the following could be the most appropriate strategy for MTV, given the business imperative that their programming provides a good match to tastes and preferences in different national markets?

answer

Localization 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 strategy.

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

Xerox had a monopoly on photocopiers for several years as the technology underlying the photocopier was protected by strong patents. As it served a universal need, this favorable position led Xerox to pursue a(n) _____ strategy.

answer

International.

question

Mayer Life Systems, a manufacturer of surgical and medical appliances, have recently invented and patented a new dialysis machine that radically reduces maintenance and operational issues. Responding to global demand, they have decided to sell the machines manufactured at their plant in the U.S. to various markets across the globe. Which strategy is Mayer pursuing here?

answer

International strategy.

question

Which of the following is a disadvantage for firms pursuing an international strategy?

answer

The head office retains fairly tight control over marketing and product strategy.

question

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

answer

Strategic alliance.

question

Which of the following is a disadvantage of strategic alliances?

answer

They give competitors a low-cost route to new technology and markets.

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 has a radically different agenda in forming the alliance.

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

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

answer

Relational capital.

Flashcards About International Business Chapter 11

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