Test Bank Answers International Competitive Strategy 2e

Module 09 International Competitive Strategy

1) Companies rely on a mission statement to determine where it is going in the future, how it will get there, and whether or not goals are achieved.

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Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-01 Explain international strategy, competencies, and international competitive advantage.
Topic : Choosing An International Business Strategy
Accessibility : Keyboard Navigation

A company would rely on a strategic plan, not a mission statement, to accomplish these things.

2) To create a sustainable competitive advantage, an international company should try to develop competencies that are valuable, common, difficult to imitate, and readily substitutable.

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To creative a sustainable competitive advantage, an international company should try to develop competencies that are valuable, rare, difficult to imitate, and hard to substitute for.

3) Strategic plans promote consistency of action among the firm's managers worldwide and encourage them to consider the ramifications of their actions in the firm's other geographic and functional areas.

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Strategic plans promote consistency of action among the firm's managers worldwide and encourage them to consider the ramifications of their actions in the firm's other geographic and functional areas.

4) The ultimate managers of strategic planning and strategy making for a company are the members of the executive board.

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⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Describe the global strategic planning process and its components.
Topic : The Global Strategic Planning Process
Accessibility : Keyboard Navigation

The ultimate manager of strategic planning and strategy making is the firm's chief executive officer.

5) Scenarios are forecasts that extrapolate from past data to make predictions.

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Scenarios are intended to be plausible and challenging stories, but they are not forecasts based on the past. Rather, they are a means to force managers to realize that their assumptions based on past experience may no longer apply. Scenarios can help managers to anticipate future challenges and make decisions to help their companies avoid or minimize potential problems.

6) The first step in the process of strategic planning is to define the company's business and mission.

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The first step in the process of strategic planning is to analyze the company's external environment.

7) When making a strategic plan, a company must set corporate objectives before quantifying goals.

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The process of strategic planning provides a formal structure in which managers address the following steps: (1) analyze the company’s external environments; (2) analyze the company’s internal environment; (3) define the company’s business and mission; (4) set corporate objectives; (5) quantify goals; (6) formulate strategies; and (7) make tactical plans.

8) Knowledge that an individual has but that is difficult to express clearly in words, pictures, or formulas, and therefore difficult to transmit to others, is called explicit knowledge.

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Knowledge that an individual has but that is difficult to express clearly in words, pictures, or formulae, and therefore difficult to transmit to others, is called tacit knowledge.

9) A broad statement that defines the purpose for a company's existence is the mission statement.

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Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Describe the global strategic planning process and its components.
Topic : Mission, Vision, and Value Statements
Accessibility : Keyboard Navigation

A broad statement that defines the purpose for a company's existence is the mission statement, including its business, objectives, and approach for reaching those objectives.

10) Most managers prefer objectives that are qualified but not quantified.

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To develop a strategy for reaching its objectives, a company must quantify them. But despite most top managers' preference for verifiable objectives, they frequently do have nonquantifiable or directional goals. Incidentally, objectives do tend to be more quantified as they progress down the organization to the operational level, because, for the most part, strategies at one level become the objectives for the succeeding level.

11) Companies pursuing a home replication strategy typically centralize product development functions in their home country and then transfer innovations to foreign markets to capture additional value.

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Companies pursuing a home replication strategy typically centralize product development functions in their home country and then transfer innovations to foreign markets to capture additional value.

12) A multidomestic strategy tends to be used when a company confronts pressures for local adaptation rather than cost-effectiveness.

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A multidomestic strategy tends to be used when a company confronts pressures for local adaptation rather than cost-effectiveness.

13) A company would select a global strategy when it faces strong pressures for reducing costs and limited pressure to adapt products for local markets.

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A global strategy tends to be used when a company faces strong pressures for reducing costs and limited pressure to adapt products for local markets.

14) Historically, companies tend to standardize more aspects of marketing than manufacturing.

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At a business or corporate level, not all activities of an organization confront the same mix of globalization and localization pressures. For example, historically, companies have standardized more aspects of research and development and manufacturing than of marketing.

15) Companies use a contingency plan as a guideline for marketing media placement.

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Contingency plans are plans for the best- or worst-case scenarios or for critical events that could have a severe impact on the firm.

16) Tactical plans are more detailed than strategic plans.

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Tactical (also called operational) plans are more detailed than strategic plans.

17) Procedures are broad guidelines issued by upper management for the purpose of assisting lower-level managers in handling nonrecurring problems.

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Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Topic : The Global Strategic Planning Process
Learning Objective : 09-03 Describe the features of a strategic plan.
Accessibility : Keyboard Navigation

Policies, not procedures, are broad guidelines issued by upper management for the purpose of assisting lower-level managers in handling recurring problems.

18) An advantage of bottom-up planning is that the people responsible for attaining the goals are formulating them.

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Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Topic : The Global Strategic Planning Process
Learning Objective : 09-04 Discuss the time horizon, organizational level, and different methods of strategic planning.
Accessibility : Keyboard Navigation

An advantage of bottom-up planning is that the people responsible for attaining the goals are formulating them.

19) Repetition of the bottom-up or top-down planning process until all differences are reconciled is called sequential planning.

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Repetition of the bottom-up or top-down planning process until all differences are reconciled is iterative planning.

20) Many managers have moved toward less-structured formats when doing strategic planning based on the ineffectiveness of five-year forecasts.

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Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Topic : The Global Strategic Planning Process
Learning Objective : 09-05 Outline new directions in strategic planning.
Accessibility : Keyboard Navigation

Top managers of many companies have come to realize there is no point in making new detailed five-year forecasts when international crises are exploding their earlier ones. Instead, they have moved toward less-structured formats and much shorter documents and accept that effective strategic planning encourages ideas to surface anywhere in the organization and at any time.

21) International strategy can be described as

A) a forecast about the company's future and how to achieve it.
B) a vision for what the company will become in the future.
C) the basis for a company's mission.
D) a plan that guides the way firms makes choices about developing and deploying resources.

International strategy is a plan that guides the way firms make fundamental choices about developing and deploying scarce resources internationally, including what products or services to offer, which markets to enter, and ways to compete. It deals not with a single area such as marketing or production, but with all the functions and activities of a company and the interactions among them.

22) To be effective, a company's international strategy mustbe

A) the same as the leaders of the industry.
B) consistent among all the functions and activities of the company.
C) the same as the company's domestic strategy.
D) externally consistent among the company's products and regional units.

International strategy deals not with a single area such as marketing or production, but with all the functions and activities of a company and the interactions among them. To be effective, a company's international strategy needs to be consistent among all these functions, and among the company's products and regional units (internal consistency) as well as with the variety of demands in the international competitive environment (external consistency).

23) A company's ability to achieve and maintain a unique and valuable competitive position both within a nation and globally, generating higher rates of profit than its competitors, is known as

A) international strategy.
B) competitive advantage.
C) resource leverage.
D) comparative advantage.

The ability of a company to achieve and maintain a unique and valuable competitive position both within a nation and globally, generating higher rates of profit than its competitors is known as competitive advantage.

24) Jefferson Materials Corp. has developed a fire-resistant fabric that no one else has been able to replicate. It is used throughout the world in firefighting equipment and supplies. Since it is the only company making the product, customers are willing to pay a premium for the fabric. In this scenario, the fire-resistant fabric has helped the company develop a(n)

A) economy of scale.
B) competitive advantage.
C) purchasing power parity.
D) comparative advantage.

Question Details
AACSB : Reflective Thinking
Difficulty : 2 Medium
Learning Objective : 09-01 Explain international strategy, competencies, and international competitive advantage.
Topic : Choosing An International Business Strategy
Bloom's : Apply
Accessibility : Keyboard Navigation

To achieve a sustainable competitive advantage, the international company must either perform more compelling activities than its competitors or perform the same activities in superior ways, by developing skills or competencies that (1) create value for which customers are willing to pay; (2) are rare; (3) are difficult to imitate or substitute for; and (4) allow the company to exploit the competitive value of its valuable, rare, and difficult-to-imitate competencies.

25) Regarding a sustainable competitive advantage, the company must have skills or competencies that

A) reflect the lowest price possible.
B) are easily replicated.
C) are difficult to imitate or substitute for.
D) can be copyrighted or patented.

26) Milo Millworks Inc. has maintained a sustainable competitive advantage for its framing style. In order to accomplish this, the framing style must be

A) priced low.
B) easy to obtain.
C) easy to imitate.
D) difficult to substitute for.

27) To create a competitive advantage that is sustainable over time, the international company should try to develop competencies that

A) create value for customers and for which they are willing to pay.
B) are easy to imitate or substitute for.
C) are expensive to develop and maintain.
D) imitate those of market leaders.

To achieve a sustainable competitive advantage, the international company must either perform more compelling activities than its competitors or perform the same activities in superior ways, by developing skills or competencies that (1) create value for which customers are willing to pay, (2) are rare, (3) are difficult to imitate or substitute for, and (4) allow the company to exploit the competitive value of its valuable, rare, and difficult-to-imitate competencies.

28) Managers of international companies that are attempting to develop a competitive advantage face a formidable challenge because

A) time, talent, and money are scarce.
B) there are an abundance of resources.
C) there are few or no alternative ways to use the company's scarce resources.
D) the company's mission is constantly changing.

Managers of international companies attempting to develop a competitive advantage face a formidable challenge. Why? Because resources—time, talent, and money—are always scarce, and there are many ways to use them. Which nations should we enter? In which technologies should we invest? Which products or services should we develop and offer to customers? As managers, we are forced to choose what to do and what not to do, now and over time. Without adequate planning, we are more likely to make decisions that do not make good sense competitively, and the company's international competitiveness may be harmed.

29) The process by which an organization determines where it is going in the future, how it will get there, and how it will assess whether and to what extent it has achieved its goals is known as

A) value chain analysis.
B) scenario analysis.
C) strategic planning.
D) international strategy.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Learning Objective : 09-01 Explain international strategy, competencies, and international competitive advantage.
Topic : Choosing An International Business Strategy
Difficulty : 1 Easy
Accessibility : Keyboard Navigation

The process by which an organization determines where it is going in the future, how it will get there, and how it will assess whether and to what extent it has achieved its goals is strategic planning.

30) International firms have found it necessary to institute formal global planning

A) to eliminate the practice of informal planning.
B) to provide top management with a means to identify threats and opportunities worldwide.
C) to promote different courses of action among the firm's managers worldwide.
D) to serve as an input for scenario building.

In response to increasingly complex environmental forces, many international firms have found it necessary to institute formal global strategic planning so top management can identify opportunities and threats from all over the world, formulate strategies to handle them, and stipulate how to finance and manage the strategies' implementation. Strategic plans help ensure that decision makers have a common understanding of the business, the strategy, the assumptions behind the strategy, the external business environment pressures, and their own direction. They also promote consistency of action among the firm's managers worldwide and encourage them to consider the ramifications of their actions in the firm's other geographic and functional areas. Strategic planning is also intended to increase the likelihood of strategic innovations, promoting the development, capture, and application of the new ideas needed to succeed in a challenging competitive environment.

31) According to a survey by Bain & Company, since 1993 the management tool most commonly used among global executives is

A) value chain analysis.
B) industry and competitor analysis.
C) strategic planning.
D) environmental analysis.

Question Details
AACSB : Reflective Thinking
Learning Objective : 09-02 Describe the global strategic planning process and its components.
Topic : The Global Strategic Planning Process
Bloom's : Remember
Difficulty : 1 Easy
Accessibility : Keyboard Navigation

Bain & Company's "Management Tools and Trends" survey has consistently reported that strategic planning continues to be among the most commonly used management tool among global executives, and it is the tool with one of the highest reported levels of satisfaction.

32) The firm's ultimate manager of strategic planning is the firm's

A) vice president for planning.
B) chief operating officer.
C) chief executive officer.
D) board of directors.

The ultimate manager of strategic planning and strategy making is the firm's chief executive officer.

33) The strategic planning process provides a formal structure in which managers will

A) establish a corporate level team to prepare the strategic plan.
B) define the company's business and mission.
C) formulate scenarios.
D) implement strategy.

The process of strategic planning provides a formal structure in which managers address the following steps: (1) analyze the company's external environments, (2) analyze the company's internal environment, (3) define the company's business and mission, (4) set corporate objectives, (5) quantify goals, (6) formulate strategies, and (7) make tactical plans.

34) During the meeting, David mentioned two possibilities for the future of the new product line. It could do well initially but then be undercut by competitor challenges or supplier pricing changes. Or, it could fail immediately if marketing promotions aren’t effective in the European market. What is David using in his strategy formulation?

A) policies
B) procedures
C) contingencies
D) scenarios

Question Details
AACSB : Reflective Thinking
Difficulty : 2 Medium
Learning Objective : 09-02 Describe the global strategic planning process and its components.
Topic : The Global Strategic Planning Process
Bloom's : Apply
Accessibility : Keyboard Navigation

Scenarios are intended to be plausible and challenging stories, but they are not forecasts; that is, they do not extrapolate from past data to make predictions. In fact, they are a means to force managers to realize that their assumptions based on past experience no longer apply.

35) Why is scenario analyses an important tool for managers?

A) The objective of the process is to forecast the future.
B) The scenario building team identifies the driving forces and "critical certainties" in a decision and prioritizes them.
C) By anticipating the future and recognizing the warning signs of turbulence ahead, managers can develop more effective strategies.
D) The process extrapolates from past data to build scenarios for guiding decision making.

Scenarios are intended to be plausible and challenging stories, but they are not forecasts; that is, they do not extrapolate from past data to make predictions. The team identifies the implications of the scenarios and the leading indicators management must follow.

36) During the strategic planning discussion, committee members reviewed the current systems in place in the company’s manufacturing plant to determine if it could handle the anticipated increased capacity should the company go through with the foreign investment. Which step in the strategic planning process does this reflect?

A) quantify goals
B) analyze the company’s internal environment
C) define the company's business and mission
D) set corporate objectives

An analysis of the forces controlled by the firm will also include a situational analysis and a forecast. The managers of the various functional areas will either personally submit reports on their units or provide input to a planning staff that will prepare a report for the strategic planning committee.

37) Jenna reported to the management team that their proposed investment in Great Britain could be affected by the Brexit announcement. Which aspect of strategic planning does this demonstrate?

A) Analyze the company's external environments.
B) Analyze the company's internal environments.
C) Define the company's business and mission.
D) Set corporate objectives.

An environmental scanning process is useful for a continuous gathering of information, but managers also need to develop and implement appropriate responses to any changes in key environmental forces such as competitors’ actions and changes in government taxes and regulations.

38) The strategic planning report presented at the meeting included two goals the company wished to achieve: (1) expand into profitable, related businesses and (2) select markets to enter that have not experienced their products. Which part of the strategic planning process does this demonstrate?

A) set corporate objectives
B) implement strategies.
C) analyze external environments
D) quantify the objectives

39) When managers are analyzing the corporate controllable variables, the three key questions they must address about their business include

A) who are the company's target customers?
B) what will be the costs that the company will incur in delivering value to its target customers?
C) how much will the company be able to charge?
D) where should the company's production facilities be located?

When the managers are analyzing the corporate controllable variables, the three key questions managers must address about their business include: (1) Who are the company's target customers? (2) What value does the company want to deliver to these customers? and (3) How will this customer value be created?

40) An assessment conducted on the chain of interlinked activities of an organization or set of interconnected organizations, intended to determine where and to what extent value is added to the final product or service is known as

A) economic value added.
B) internal analysis.
C) value chain analysis.
D) SWOT analysis.

Value chain analysis is an assessment conducted on the chain of interlinked activities of an organization or set of interconnected organizations, intended to determine where and to what extent value is added to the final product or service.

41) Value chain analysis focuses primarily on what question?

A) Who are the company's target customers?
B) What does the customer value and how much is the customer willing to pay for this value?
C) How will this customer value be created?
D) What is the best way for the company to enter a market?

Value chain analysis focuses primarily on the question of how customer value will be created, and it refers to the set of value-creating activities in which the company is engaged, from sourcing basic raw materials or components to delivering the product or service to the final customer.

42) What is the goal of value chain analysis?

A) to enable managers to identify which set of activities it will do itself and which it will outsource
B) to enable managers to identify whether to enter foreign markets or remain with domestic markets
C) to enable managers to identify the true value of the company's stock
D) to enable managers to identify the underlying values and belief of the company and its culture

What is the goal of this analysis? It is to enable managers to identify the set of activities that make up the company's value chain, including those it will do itself and those it will outsource.

43) The practices that organizations and their managers use for identifying, creating, acquiring, developing, dispersing, and exploiting competitively valuable knowledge is known as

A) competitive advantage.
B) international strategy.
C) value analysis.
D) knowledge management.

Knowledge management refers to the practices that organizations and their managers use for identifying, creating, acquiring, developing, dispersing, and exploiting competitively valuable knowledge.

44) Knowledge that an individual has but that is difficult to express clearly in words, pictures, or formulae, and therefore difficult to transmit to others is known as

A) explicit.
B) implicit.
C) tacit.
D) intangible.

Knowledge that an individual has but that is difficult to express clearly in words, pictures, or formulas and is therefore difficult to transmit to others is known as tacit knowledge.

45) Knowledge that is easy for an individual to express clearly in words, pictures, or formulas is known as

A) explicit.
B) implicit.
C) tacit.
D) intangible.

Explicit knowledge is easy to express clearly in words, pictures, or formulas.

46) When the international company's planning committee has completed the internal audit aspect of strategic planning, it is ready to examine

A) external variables.
B) internal production standards.
C) the company's mission and vision.
D) the company's international strategy.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Describe the global strategic planning process and its components.
Topic : Mission, Vision, and Value Statements
Accessibility : Keyboard Navigation

When it has completed this internal audit, the committee is ready to examine the company's mission, vision, and values statements.

47) A broad statement that defines the organization's purpose and scope is known as a

A) strategic plan.
B) mission statement.
C) vision statement.
D) value chain.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Describe the global strategic planning process and its components.
Topic : Mission, Vision, and Value Statements
Accessibility : Keyboard Navigation

A broad statement that defines the organization's purpose and scope is known as a mission statement.

48) A description of the company's desired future position if it can acquire the necessary competencies and successfully implement its strategy is known as a

A) strategic plan.
B) mission statement.
C) vision statement.
D) values statement.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Describe the global strategic planning process and its components.
Topic : Mission, Vision, and Value Statements
Accessibility : Keyboard Navigation

A description of the company's desired future position if it can acquire the necessary competencies and successfully implement its strategy is known as a vision statement.

49) A clear, concise description of the fundamental beliefs and priorities expected of the organization's members, reflecting how they are to behave with each other and with the company's customers, suppliers, and other members of the global community is known as a

A) strategic plan.
B) mission statement.
C) vision statement.
D) values statement.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Describe the global strategic planning process and its components.
Topic : Mission, Vision, and Value Statements
Accessibility : Keyboard Navigation

A clear, concise description of the fundamental values, beliefs, and priorities expected of the organization's members, reflecting how they are to behave with each other and with the company's customers, suppliers, and other members of the global community is known as a values statement.

50) Stanton Construction Corporation was recently acquired by another company. With this merger, the newly formed company created a description of the businesses’ desired future position. What type of statement did it create?

A) values statement
B) vision statement
C) strategic statement
D) mission statement

Question Details
AACSB : Reflective Thinking
Difficulty : 2 Medium
Learning Objective : 09-02 Describe the global strategic planning process and its components.
Topic : Mission, Vision, and Value Statements
Bloom's : Apply
Accessibility : Keyboard Navigation

A vision statement is a description of the company’s desired future position, of what it hopes to accomplish if it can acquire the necessary competencies and successfully implement its strategy.

51) Which aspect of strategic planning helps a company maintain itself within the boundaries of the mission and vision statements?

A) analyzing the internal environment
B) implementing tactical plans
C) setting corporate objectives
D) analyzing the external environment

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Describe the global strategic planning process and its components.
Topic : Mission, Vision, and Value Statements
Accessibility : Keyboard Navigation

Objectives direct the firm’s course of action, maintain it within the boundaries of the stated mission and vision, and ensure its continuing existence.

52) To set corporate objectives, management must first

A) select a viable market segment.
B) quantify them.
C) define the firm's mission.
D) research the market.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Describe the global strategic planning process and its components.
Topic : Mission, Vision, and Value Statements
Accessibility : Keyboard Navigation

After defining any or all of the three statements—mission, vision, and values—management must then set corporate objectives.

53) To develop a strategy for reaching corporate objectives, management must first try to

A) select a viable market segment.
B) quantify them.
C) define the firm's mission.
D) develop scenarios.

To develop a strategy for reaching its objectives, a company must quantify them.

54) In terms of quantifying objectives and goals, most top managers

A) prefer nonquantifiable, directional goals.
B) prefer nonquantifiable, but verifiable goals.
C) prefer verifiable objectives.
D) have no preference as to quantifiable and nonquantifiable goals.

55) Action plans to enable organizations to reach their objectives are known as

A) competitive strategies.
B) policies.
C) procedures.
D) strategic scenarios.

Action plans to enable organizations to reach their objectives are known as competitive strategies.

56) When developing and assessing strategic alternatives, companies competing in international markets confront which two opposing goals?

A) Reduce investment and increase profits.
B) Reduce complexity and improve effectiveness.
C) Standardize policies and reduce complexity.
D) Reduce costs and adapt to local markets.

When developing and assessing strategic alternatives, companies competing in international markets confront two opposing goals: to reduce costs and adapt to local markets.

57) High-Rise Boots Corp. plans to expand into the European market where it finds weak pressure to respond to local demands and cost reductions are not necessary. Which competitive strategy should the company use based on these factors?

A) multidomestic strategy
B) transnational strategy
C) differentiation strategy
D) home replication strategy

When a company faces relatively weak pressures for local responsiveness and cost reductions, it should tend to use a home replication strategy.

58) Companies pursuing a home replication strategy

A) usually have low operating costs and high efficiency.
B) limit availability of local customization.
C) have loose headquarters control over product strategy.
D) have local subsidiaries that develop unique country-level capabilities.

In companies pursuing a home replication strategy, the extent of local customization of product offerings or marketing strategy tends to be limited.

59) When there is strong pressure for a company to adapt its products or services for local markets, it should probably rely on a

A) home replication strategy.
B) multidomestic strategy.
C) transitional strategy.
D) global strategy.

When there is strong pressure for a company to adapt its products or services for local markets, it should tend to use a multidomestic strategy.

60) Companies pursuing a multidomestic strategy typically have

A) low operating costs and high efficiency.
B) centralized decision making and quick response to changes in local competition.
C) tight headquarters control over product strategy.
D) high levels of local market customization.

Companies pursuing a multidomestic strategy have high levels of local market customization.

61) When a company faces strong pressures for reducing costs and limited pressure to adapt products for local markets, it should consider using a

A) global strategy.
B) multidomestic strategy.
C) transnational strategy.
D) differentiation strategy.

When a company faces strong pressures for reducing costs and limited pressure to adapt products for local markets, it should tend to use a global strategy.

62) Companies pursuing a global strategy typically have

A) low operating costs and high efficiency.
B) decentralized decision making and quick response to changes in local competition.
C) low levels of transportation and tariff costs.
D) high levels of local market customization.

Companies pursuing a global strategy usually have low operating costs and high efficiency.

63) Lexon Corp. produces high-nutrition breakfast products. As it enters into foreign markets, it faces strong pressures for both reducing costs and adapting products for local markets. Based on this, the company should use a

A) global strategy.
B) multidomestic strategy.
C) transnational strategy.
D) home replication strategy.

When a company faces strong pressures for both reducing costs and adapting products for local markets, it may adopt a transnational strategy.

64) Companies pursuing a transnational strategy usually

A) have less decentralized manufacturing operations.
B) have simple organizational structures and processes within and across regions.
C) locate most of their activities in developing countries.
D) have international subsidiaries develop and share knowledge with company operations worldwide.

In companies pursuing a transnational strategy, international subsidiaries are expected to contribute actively to the development of the company's capabilities, as well as to develop and share knowledge with company operations worldwide.

65) Historically, more aspects of ________ have been standardized and coordinated worldwide by companies than has been the case for other value chain activities such as ________.

A) research and development; manufacturing
B) marketing; manufacturing
C) manufacturing; marketing
D) marketing; research and development

Historically companies have standardized more aspects of research and development and manufacturing than of marketing.

66) Multiple, plausible stories that managers consider for what might happen in the future are known as

A) vision statements.
B) contingency plans.
C) scenarios.
D) strategies.

Multiple, plausible stories for probable futures are known as scenarios.

67) Scenarios are used by managers to

A) control the critical elements of the external forces.
B) brainstorm various plausible stories about the future.
C) prepare budgets.
D) understand historical events.

Scenarios are multiple, plausible stories for probable futures. Scenarios integrate a variety of ideas about the future, including key certainties and uncertainties, and present these ideas in a useful and comprehensible manner. Managers can brainstorm various "what-if" scenarios, raising and challenging their assumptions and projected outcomes before committing to a specific course of action.

68) Scenarios allow a business to

A) project possible outcomes of business decisions.
B) extrapolate from past data to make predictions.
C) create a company's vision statement.
D) analyze competitor actions and functions.

Managers can brainstorm various “what-if” scenarios, raising and challenging their assumptions and projected outcomes before committing to a specific course of action.

69) In his book, The Art of the Long View, Peter Schwartz identified the process of constructing multiple stories of what could happen next as an important step for companies to take. What was the author referring to?

A) scenarios
B) a vision statement
C) a mission statement
D) sales forecasting

In his classic book, The Art of the Long View, Peter Schwartz identifies the following seven steps to successful scenario planning: (1)Determine the area, scope, and timing of the decisions with the greatest relevance to or impact on your organization. (2) Research existing conditions and trends in a wide variety of areas (including those areas you might not typically consider). (3) Examine the drivers or key factors that will likely determine the outcome of the stories you are beginning to build. (4) Construct multiple stories of what could happen next These stories refer to scenarios. (5) Play out what the impact of each of these possible futures might be for your business or organization. (6) Examine your answers and look for those actions or decisions you’d make that were common to all two or three of the stories you built. (7) Monitor what does develop so as to trigger your early response system.

70) According to the text, what is the primary value of scenario planning efforts?

A) the transformation in strategic thinking that results
B) the strategic plans that are created
C) the ability to control external forces that impact the firm
D) the ability to eliminate uncertainty that arises

It is not so much the strategic plans that are created but rather the transformation in strategic thinking that results from this activity.

71) Plans for the best- or worst-case scenarios or for critical events that could have a severe impact on the firm are known as

A) scenario plans.
B) strategic plans.
C) contingency plans.
D) tactical plans.

Plans for the best- or worst-case scenarios or for critical events that could have a severe impact on the firm are known as contingency plans.

72) Timmerman Holding Corp. created a business recovery center 20 miles from its headquarters where employees could work if anything should happen to their main office. This would allow the company to continue doing business without interruption in the wake of a critical event. The business recovery center is an example of a

A) scenario.
B) mission statement.
C) tactical plan.
D) contingency plan.

Contingency plans are plans for the best- or worst-case scenarios or for critical events that could have a severe impact on the firm. Many companies prepare contingency plans for worst- and best-case scenarios and for critical events as well.

73) Tactical plans are also known as

A) strategic plans.
B) operational plans.
C) global plans.
D) contingency plans.

Tactical (also called operational) plans are a requisite for spelling out in detail how the objectives will be reached. In other words, very specific, short-term means for achieving the goals are the objective of tactical planning.

74) A strategic plan is used by a company to

A) guarantee how the firm's goals will be met.
B) present sales forecasts and budgets.
C) create a firm's vision statement.
D) analyze a contingency plan.

Two prominent features of the strategic plan are sales forecasts and budgets.

75) What part of the strategic plan provides managers with an estimate of future revenue to be received and the units to be sold, and also serves as the basis for planning in the other functional areas?

A) sales forecast
B) budget
C) marketing plan
D) contingency plan

The sales forecast, which is a prediction of future sales performance, not only provides managers with an estimate of the revenue to be received and the units to be sold but also serves as the basis for planning in the other functional areas.

76) An itemized projection of revenues and expenses for a future time period is a

A) sales forecast.
B) budget.
C) marketing plan.
D) strategic plan.

Question Details
AACSB : Reflective Thinking
Topic : The Global Strategic Planning Process
Learning Objective : 09-03 Describe the features of a strategic plan.
Bloom's : Remember
Difficulty : 1 Easy
Accessibility : Keyboard Navigation

An itemized projection of revenues and expenses for a future time period is a budget.

77) Following the merger of Hintz Corp. and Minor Holdings Corp., the new company issued a list of broad guidelines that managers should use when dealing with problems. These were viewed as general guides that were left to the interpretation of managers. These guidelines are an example of

A) procedures.
B) policies.
C) contingency plans.
D) a vision statement.

Question Details
AACSB : Reflective Thinking
Difficulty : 2 Medium
Topic : The Global Strategic Planning Process
Learning Objective : 09-03 Describe the features of a strategic plan.
Bloom's : Apply
Accessibility : Keyboard Navigation

Policies are broad guidelines used to assist lower-level managers to handle recurring problems. Because policies are broad, they permit discretionary action and interpretation.

78) A company would create proceduresin order to

A) specify how certain activities will be carried out.
B) assure that all scenarios will be the same.
C) provide input for strategic plans.
D) demonstrate general guidelines for common activities.

Procedures are guides that specify the way certain tasks or activities will be carried out, thereby ensuring uniform action on the part of all corporate members.

79) Performance measures are done to assess

A) the time the company takes to acculturate new employees.
B) if the strategy and its implementation are proceeding successfully.
C) assumptions about how the strategic lists affect the business.
D) whether the strategic forecasts are precise.

A key part of strategic planning is measuring performance to assess whether the strategy and its implementation are proceeding successfully or whether modifications need to be made.

80) A company would rely on triple-bottom-line accounting to

A) assess the value of marketing promotions.
B) balance imports and exports.
C) measure the company’s strategic performance.
D) examine economies of scale procedures.

A range of concepts and tools, including the balanced scorecard and triple-bottom-line accounting, have been promoted as alternatives for helping to measure strategic performance.

81) What are two important differentiators of strategic plans?

A) the size of the company and the plan's time horizon
B) what nation and culture the company is from and the organizational structure of the company
C) the company's organizational structure and the company's competitive strategy
D) the level of the organization for which it is made and the plan's time horizon

Question Details
AACSB : Reflective Thinking
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : 09-04 Discuss the time horizon, organizational level, and different methods of strategic planning.
Topic : Overview of International Strategy
Accessibility : Keyboard Navigation

Two important differentiators of strategic plans are the time horizon of the plan and the level of the organization for which it is made.

82) The time horizon of a strategic plan will vary according to

A) the size of the company and the size of its industry.
B) the age of the firm and the stability of its market.
C) the geographic scope of the company.
D) the diversity of a company's operations.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-04 Discuss the time horizon, organizational level, and different methods of strategic planning.
Topic : Overview of International Strategy
Accessibility : Keyboard Navigation

The time horizon of a strategic plan will vary according to the age of the firm and the stability of its market.

83) What is a disadvantage of top-down planning?

A) It restricts initiative at lower levels of the organization.
B) It is highly sensitive to differences in local conditions.
C) It reduces the need for consultation, especially in an international company.
D) It has corporate headquarters develop and provide guidelines.

Disadvantages of top-down planning are that it restricts initiative at the lower levels and shows some insensitivity to local conditions, particularly when a company's top management team exhibits ethnocentric tendencies.

84) What is a disadvantage of bottom-up planning?

A) It restricts initiative at lower levels of the organization.
B) It shows some insensitivity to local conditions, particularly when a company's top management team exhibits ethnocentric tendencies.
C) There is no guarantee that the sum total of all the affiliates' goals will coincide with those of headquarters.
D) Subsidiary directors' hands-on perspective may allow them to recognize potentially innovative opportunities.

Bottom-up planning has a disadvantage: because each affiliate is free to some extent to pursue the goals it wishes to pursue, there is no guarantee that the sum total of all the affiliates' goals will coincide with those of headquarters. When discrepancies occur, top management must take extra steps to eliminate them.

85) The planning method that appears to be becoming more popular is

A) top-down.
B) bottom-up.
C) sequential.
D) iterative.

Iterative planning consists of repetition of the bottom-up or top-down planning process until all differences have been reconciled. Iterative planning appears to be becoming more popular, especially in global companies that seek to have a single global plan while operating in many diverse foreign environments.

86) Camille is frustrated at work. The company headquarters is based in the UK and she works in the New York office. Headquarters is constantly changing the directives the company is taking and isn’t interested in her thoughts on what’s happening in the U.S. market. She knows that the new directives won’t help in the U.S. market, but no one will listen to her. Which method of planning does her company use?

A) bottom-up
B) scenario
C) iterative
D) top-down

Question Details
AACSB : Reflective Thinking
Difficulty : 2 Medium
Learning Objective : 09-04 Discuss the time horizon, organizational level, and different methods of strategic planning.
Bloom's : Apply
Topic : Overview of International Strategy
Accessibility : Keyboard Navigation

Disadvantages of top-down planning are that it restricts initiative at the lower levels and shows some insensitivity to local conditions, particularly when a company’s top management team exhibits ethnocentric tendencies.

87) What is a characteristic of a traditional strategic planning approach?

A) The CEO and the head of planning get together to devise a corporate plan, which is then handed to the operating people for execution.
B) Interaction with important customers and suppliers is included.
C) Governments and other stakeholder activities are direct participants.
D) There is a strong and effective responsiveness to differences that occur in local markets.

The traditional strategic planning approach commonly consists of a company's CEO and the head of planning getting together to devise a corporate plan, which is then handed to the operating people for execution.

88) Compared to the traditional process, in the new strategic planning process

A) top management is assigning strategic planning to teams of line and staff managers from the same business.
B) interaction with important customers and suppliers is included.
C) governments and other stakeholder activities are direct participants.
D) strategic planning is done by the implementers within the local subsidiaries.

A difference between the new and the old approaches: traditional planning is a company activity done in seclusion, while the new approach often includes interaction with such parties as important customers, distributors, suppliers, and alliance partners, in order to gain firsthand experience with the firm's markets. Other important stakeholders such as governments and activists (social, environmental, and political) are also relevant influences, if not necessarily direct participants, in this strategic planning process.

89) How have the new directions in planning affected companies?

A) They have made strategic planners dominant in the planning process.
B) They have brought operating managers into the planning process.
C) They have relieved the firm's chief executive officer of the responsibility for strategic planning.
D) They have made strategic planning longer term in orientation, typically planning 5 to 10 years into the future.

Top management, at the urging of strategy consultants, is assigning strategic planning to teams of line and staff managers from different business, geographic, and functional areas, much as it has already done with process improvement and quality improvement.

90) Changes in the way corporate planning is done today include

A) greater use of structured formats to planning.
B) the use of advanced computing techniques to make detailed five-year forecasts.
C) heavy emphasis on the use of specialized headquarters staff.
D) interaction with important customers, distributors, and suppliers.

The new approach to corporate planning often includes interaction with such parties as important customers, distributors, suppliers, and alliance partners, in order to gain firsthand experience with the firm's markets.

91) In regard to strategic planning, there has recently been a decided move among many firms

A) to use advanced statistical techniques to help produce voluminous and detailed strategic plans.
B) toward a less-structured format and a shorter plan.
C) to concentrate on factors that can be easily quantified.
D) to avoid including issues that are vague and uncertain.

92) ________ is a plan that guides the way firms make fundamental choices about developing and deploying scarce resources internationally, including what products or services to offer, which markets to enter, and ways to compete.

93) ________ is the ability of a company to achieve and maintain a unique and valuable competitive position both within a nation and globally, generating higher rates of profit than its competitors.

Competitive advantage is the ability of a company to achieve and maintain a unique and valuable competitive position both within a nation and globally, generating higher rates of profit than its competitors.

94) ________ is the process by which an organization determines where it is going in the future, how it will get there, and how it will assess whether and to what extent it has achieved its goals.

Strategic planning is the process by which an organization determines where it is going in the future, how it will get there, and how it will assess whether and to what extent it has achieved its goals.

95) The first step in the process of strategic planning is to analyze the company's ________ environment.

The first step in the process of strategic planning is to analyze the company's external environments.

96) A ________ is a set of interlinked activities that adds value to the final product or service.

A value chain is a set of interlinked activities that adds value to the final product or service.

97) Knowledge that an individual has but that is difficult to express clearly in words, pictures, or formulas and is therefore difficult to transmit to others is known as ________ knowledge.

Knowledge that an individual has but that is difficult to express clearly in words, pictures, or formulas and is therefore difficult to transmit to others is known as tacit knowledge.

98) Knowledge that is easy to communicate to others via words, pictures, formulas, or other means is known as ________ knowledge.

Knowledge that is easy to communicate to others via words, pictures, formulas, or other means is known as explicit knowledge.

99) A broad statement that defines the purpose for a company's existence, including its business, objectives, and approach for reaching those objectives is known as a ________ statement.

A broad statement that defines the purpose for a company's existence, including its business, objectives, and approach for reaching those objectives is known as a mission statement.

100) ________ direct the firm's course of action, maintain it within the boundaries of the stated mission and vision, and ensure its continuing existence.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Describe the global strategic planning process and its components.
Topic : Mission, Vision, and Value Statements
Accessibility : Keyboard Navigation

Objectives direct the firm's course of action, maintain it within the boundaries of the stated mission and vision, and ensure its continuing existence.

101) Action plans to enable organizations to reach their objectives are known as ________.

Action plans to enable organizations to reach their objectives are known as competitive strategies.

102) Companies pursuing a ________ strategy typically centralize product development functions in their home country and then transfer innovations to foreign markets in order to capture additional value.

Companies pursuing a home replication strategy typically centralize product development functions in their home country and then transfer innovations to foreign markets to capture additional value.

103) A company may adopt a ________ when confronting simultaneous pressures for cost-effectiveness and local adaptation.

A company may adopt a transnational strategy when confronting simultaneous pressures for cost-effectiveness and local adaptation.

104) A ________ tends to be used when a company faces strong pressures for reducing costs and limited pressure to adapt products for local markets.

A global strategy tends to be used when a company faces strong pressures for reducing costs and limited pressure to adapt products for local markets.

105) A ________ strategy is effective when the pressure to adapt products or services for local markets is strong, and decision making tends to be more decentralized.

A multidomestic strategy is effective when the pressure to adapt products or services for local markets is strong, and decision making tends to be more decentralized.

106) ________ are multiple, plausible stories a company uses when assessing probable futures.

Scenarios are multiple, plausible stories a company uses when assessing probable futures.

107) ________ are plans for the best- or worst-case scenarios or for critical events that could have a severe impact on the firm.

Contingency plans are plans for the best- or worst-case scenarios or for critical events that could have a severe impact on the firm.

108) Because strategic plans are fairly broad, ________ (also called operational) plans are a requisite for spelling out in detail how the objectives will be reached.

Because strategic plans are fairly broad, tactical (also called operational) plans are a requisite for spelling out in detail how the objectives will be reached.

109) ________ are an itemized projection of revenues and expenses for a future time period.

Budgets are an itemized projection of revenues and expenses for a future time period.

110) ________ are broad guidelines issued by upper management for the purpose of assisting lower-level managers in handling recurring problems.

Policies are broad guidelines issued by upper management for the purpose of assisting lower-level managers in handling recurring problems.

111) ________ are guides that specify the way certain tasks or activities will be carried out, thereby ensuring uniform action on the part of all corporate members.

Procedures are guides that specify the way certain tasks or activities will be carried out, thereby ensuring uniform action on the part of all corporate members.

112) A planning process that begins at the lowest level in the organization and continues upward is known as ________ planning.

A planning process that begins at the lowest level in the organization and continues upward is known as bottom-up planning.

113) ________ planning consists of repetition of the bottom-up or top-down planning process until all differences have been reconciled.

Iterative planning consists of repetition of the bottom-up or top-down planning process until all differences have been reconciled.

114) What is international strategy and why it is important?

115) Discuss the seven steps in global strategic planning process.

116) Compare and contrast a mission statement, a vision statement, a values statement, and objectives.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : 09-02 Describe the global strategic planning process and its components.
Topic : Mission, Vision, and Value Statements
Accessibility : Keyboard Navigation

117) Describe the primary differences between global, multidomestic, and transnational strategies.When would companies elect to use these strategies?

118) Compare new directions in the strategic planning process with actions used in traditional strategic planning.

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