Ch.16 Test Bank Answers Cross-cultural management strategies

Chapter 17

Test Bank

Type: true-false

Title: Chapter 17 Question 01

1) International business strategy is perhaps best understood based on a firm’s international orientation and its geographic scope.

a. True

Feedback: this describes the extent and nature of the ways in which the firm engages with overseas markets. Much of our understanding of strategy formulation within international business is based on an influential study of MNEs undertaken by Bartlett and Ghoshal (1989). In studying the strategies adopted by a number of significant international businesses, the authors identified three principal strategy types: multi-domestic, global, and transnational.

A-head reference: 17.6 International strategy formulation

b. False

Type: true-false

Title: Chapter 17 Question 02

2) Digital Darwinism describes an era where technology and society are evolving faster than businesses can naturally adapt.

a. True

Feedback: In strategy terms, a global factory is one that focuses on engaged connections with all stakeholders, internally and externally. The depth and number of connections becomes the source of competitive advantage that enables the company to overcome digital Darwinism.

A-head reference: 17.1 Introduction

b. False

Type: true-false

Title: Chapter 17 Question 03

3) Value creation describes activities that increase the value of goods or services to consumers.

a. True

Feedback: The statement is true. Adding to what consumers value (and are willing to pay extra for) is value adding and is expected to occur across a value (adding) chain.

A-head reference: 17.3 What strategy is not

b. False

Type: true-false

Title: Chapter 17 Question 04

4) Planning for stability is a highly prized attribute of the global factory.

a. True

b. False

Feedback: The global factory recognizes that stability is not a realistic aspiration and can be detrimental where it encourages inertia, asset hoarding, and an aversion to continuous adaptation.

A-head reference: 17.3 What strategy is not

Type: true-false

Title: Chapter 17 Question 05

5) The global factory model emphasizes the importance of control and not simply ownership, of competitive advantages.

a. True

Feedback: The global factory has a range of competitive advantages, some of which may be created and held by outsiders. It is the identification, integration and exploitation of multiple sources of advantage that is the distinguishing attribute of the global factory.

A-head reference: 17.9 Strategy and the global factory

b. False

Type: true-false

Title: Chapter 17 Question 06

6) Outsourcing by a firm is a sign of weakness indicating that 'hollowing out' has occurred.

a. True

b. False

Feedback: This view of outsourcing is now outdated. Increasingly, outsourcing is seen as offering opportunities for the outsourcer to release scarce resources which can be applied more profitably along the value chain. Hollowing out then implies a move from lower to higher value adding activities.

A-head reference: 17.1 Introduction

Type: true-false

Title: Chapter 17 Question 07

7) Efficiency means emphasising consensus-based decision-making and problem solving in which managers readily share their knowledge.

a. True

b. False

Feedback: The statement is false. Efficiency relates to lowering the cost of the firm's operations and activities on a global scale.

A-head reference: 17.4 What strategy is

Type: true-false

Title: Chapter 17 Question 08

8) Differences in customer tastes and preferences are a strong pressure for companies to be locally responsive.

a. True

Feedback: The statement is true. When market conditions are dissimilar, the international firm must customize strategies to reflect local preferences, institutions, and market conditions.

A-head reference: 17.6 International strategy formulation

b. False

Type: true-false

Title: Chapter 17 Question 09

9) Strategy formulation in SMEs is very similar to the strategy formulation in MNEs

a. True

b. False

Feedback: It is important to recognize that when we are considering smaller or nonmanufacturing firms there may be significant differences in the ways in which strategies are developed. These variations result from differences in firm and industry characteristics.

A-head reference: 17.7 Strategy formulation in small and medium-sized enterprises

Type: true-false

Title: Chapter 17 Question 10

10) Most global markets are for consumer goods despite the national differences in tastes and preferences.

a. True

b. False

Feedback: The statement is false. Globalization has occurred just as strongly in markets for industrial goods and for financial assets. There is no evidence that consumer markets are more global than others.

A-head reference: 17.6 International strategy formulation

Type: true-false

Title: Chapter 17 Question 11

11) SMEs lack of innovation is one of the reasons SMEs face difficulties in entering international markets

a. True

Feedback: The difficulty arises where SMEs lack the innovative strength of larger firms. They may not have the same technological track record or the resources necessary for R&D. Small firms may avoid industries in which technological investment is considerable, or may focus on sectors such as electronics or software in which high rates of technological obsolescence mean there are few barriers to entry.

A-head reference: 17.7 Strategy formulation in small and medium-sized enterprises

b. False

Type: true-false

Title: Chapter 17 Question 12

12) Core competencies are skills that competitors cannot easily match or imitate

a. True

Feedback: The statement is true and describes what core competencies are. The key point is they are skills (not products or brand names or similar assets) and they are difficult for competitors to emulate.

A-head reference: 17.5 Strategy formulation tools

b. False

Type: multiple choice question

Title: Chapter 17 Question 13

13) As a result of disruptive innovation _______

Feedback: Companies know that they are victims of disruptive innovation when it is evident that a rival’s innovation requires incumbents to undertake a complete overhaul of the business model. When an industry is transformed by disruptive innovation, often the once-dominant are reluctant or unable to commit fully to this revolution and this allows others, often start-ups, to emerge as the new industry leaders.

A-head reference: 17.5 Strategy formulation tools

a. A company once dominant keep the pace with new innovation

b. A company once dominant keep the pace with new innovation with more costs

c. A company once dominant keep the pace with new innovation with less costs

d. A once-dominant company is reluctant or unable to commit fully to this innovation

Type: multiple choice question

Title: Chapter 17 Question 14

14) Which of the following is not one of Porter's Five Forces?

Feedback: The correct answer is c. Porter listed the threat of new competitors, not the exit of established competitors.

A-head reference: 17.5 Strategy formulation tools

a. Bargaining power of buyers

b. Bargaining power of suppliers

c. Exit of established competitors

d. Threat of substitute products

Type: multiple choice question

Title: Chapter 17 Question 15

15) _______ is characteristic of a red ocean strategy.

Feedback: The correct answer is a. All the others are characteristic of a blue ocean strategy.

A-head reference: 17.4 What strategy is

a. Exploiting existing demand

b. Breaking the value-cost trade-off

c. Making the competition irrelevant

d. Creating uncontested market space

Type: multiple choice question

Title: Chapter 17 Question 16

16) A _______ describes a firm’s international expansion philosophy emphasising detailed evaluation of foreign markets and a recognition of the need for separate orientations toward each market.

Feedback: The correct answer is a multi-domestic perspective since this is the philosophy that highlights differences between markets and the need to treat them separately (local responsiveness).

A-head reference: 17.6 International strategy formulation

a. global perspective

b. philosophy perspective

c. multi-domestic perspective

d. market-extension perspective

Type: multiple choice question

Title: Chapter 17 Question 17

17) _______ is a basic characteristic of all services.

Feedback: Intangibility is a fundamental characteristic of services. The other factors may apply to some, but not all, services.

A-head reference: 17.8 Strategy formulation in service MNEs

a. High cost

b. Significant intellectual content

c. Intangibility

d. Originality

Type: true-false

Title: Chapter 17 Question 18

18) Flexibility and resilience are critical elements for avoiding strategic decay.

a. True

Feedback: The statement is true. In the highly competitive global economy the free flow of information and the ability to adapt to changing conditions are indispensable to strategic success and avoiding strategic decay.

A-head reference: 17.1 Introduction

b. False

Type: true-false

Title: Chapter 17 Question 19

19) A prescriptive or planned approach to strategy is most suited to unstable market conditions where planning is essential.

a. True

b. False

Feedback: The statement is false. A planned approach is more suited to stable market conditions where planning is feasible. In unstable conditions a learning approach is deemed to be more appropriate.

A-head reference: 17.2 Approaches to strategy formulation

Type: true-false

Title: Chapter 17 Question 20

20) Competitive strategy for the global factory is based on responding to direct competitors.

a. True

b. False

Feedback: The statement is false. The global factory has the overarching goal of strategy being customer creation and retention. It is Porter who argues that the focus should be competitors.

A-head reference: 17.9 Strategy and the global factory