Question 1

Typically, the best method of entry into a foreign market is the establishment of a wholly owned foreign subsidiary so that the parent organization can maintain a high level of control.

Accepted Answer

The best method of entry into a foreign market varies depending on several factors such as the company's resources, market conditions, and strategic objectives. While establishing a wholly owned foreign subsidiary offers high control, it also involves high risk and investment. Other methods like exporting, licensing, franchising, or forming joint ventures might be more suitable depending on the situation.

Question 2

Industries in which proportionally more value is added in upstream activities are more likely to benefit from a global strategy than those in which more value is added downstream (closer to the customer).

Accepted Answer

Industries with a higher proportion of value added in upstream activities, such as raw material extraction and production, can benefit from economies of scale and scope by operating on a global level. On the other hand, industries with more value added downstream, such as retail and customer service, are more influenced by local cultures and preferences, making a global strategy less effective.

Question 3

According to the text, Canadian firms around the world were targets of animal rights groups who did not approve of seal hunting in Newfoundland.

Accepted Answer

The text mentions that Canadian firms were targeted by animal rights groups who opposed seal hunting in Newfoundland.

Question 4

A key tenet of a transnational strategy is improved adaptation to all competitive situations as well as flexibility by capitalizing on communication and knowledge flows throughout the organization.

Accepted Answer

This is true. A transnational strategy aims to improve adaptation to all competitive situations and increase flexibility by utilizing effective communication and knowledge sharing across the organization.

Question 5

Among Theodore Levitt's assumptions that would favour a global strategy is that consumers around the world are becoming less price-sensitive.

Accepted Answer

Theodore Levitt argued that technology has led to a convergence of tastes and preferences among consumers worldwide, making them more open to standardized products, rather than suggesting they are becoming less price-sensitive.

Question 6

Within a worldwide market, the most effective strategies are neither purely multidomestic nor purely global.

Accepted Answer

Companies must find a balance between adapting to local markets (multidomestic strategy) and standardizing operations globally (global strategy) in order to achieve success in a worldwide market. This is known as a transnational strategy.

Question 7

Canadian steel company Dofasco looked at cultural challenges in expanding and decided to stick to its famous motto: "our strength is people."

Accepted Answer

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Question 8

Multinational firms following a transnational strategy strive to optimize the trade-offs associated with efficiency, local adaptation, and learning.

Accepted Answer

Multinational firms following a transnational strategy aim to achieve a balance between global efficiency, local responsiveness, and continuous learning and improvement. Therefore, they try to optimize the trade-offs associated with these three factors.

Question 9

Corporations with multiple foreign operations that act very independently of one another are following a multidomestic strategy.

Accepted Answer

A multidomestic strategy involves decentralization of decision-making and allowing foreign operations to adapt to local markets and cultures. Each operation may act independently to best serve its market, rather than following a consistent approach across all locations.

Question 10

The need to attain economies of scale encourages multinational firms to operate under a multidomestic strategy.

Accepted Answer

The need to attain economies of scale encourages multinational firms to operate under a global or transnational strategy, which focuses on achieving efficiency through standardized products and processes across different countries. The multidomestic strategy, on the other hand, prioritizes local responsiveness and customization to meet the needs and preferences of individual markets, which can hinder the attainment of economies of scale.

Question 11

Two opposing pressures that managers face when they compete in foreign markets are: cost reduction and adaptation to local markets.

Accepted Answer

Managers often try to reduce costs by using standardized products or production methods across multiple markets, but they must also adapt to the unique demands and preferences of local customers to remain competitive. Balancing these two pressures can be a challenge for managers operating in foreign markets.

Question 12

To address the challenges of a multidomestic strategy, Maple Leaf Foods customizes its prepared meats to meet local tastes.

Accepted Answer

Maple Leaf Foods uses a multidomestic strategy and customizes its prepared meats to meet local tastes, as stated in the statement. Therefore, the given statement is true.

Question 13

Explain Michael Porter's "diamond of national advantage."

Accepted Answer

The answer of Explain Michael Porter's "diamond of national advantage."...

Question 14

Explain how the two opposing forces facing MNC managers, cost reduction and local adaptation, create pressures to operate with a global or multidomestic strategy, respectively.

Accepted Answer

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Question 15

A multidomestic strategy is the most appropriate strategy for international operations because it drives economies of scale as far as possible and provides a middle of the road product appealing to the largest number of consumers in every market.

Accepted Answer

A multidomestic strategy involves customizing products and marketing strategies to fit the specific needs of each local market, which can result in higher costs and less standardization than a global or transnational strategy. While it may be effective for targeting specific segments within each market, it may not necessarily drive economies of scale or appeal to the largest number of consumers across markets.

Question 16

Discuss why international expansion is a viable diversification strategy that is being pursued by many firms.

Accepted Answer

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Question 17

A multidomestic strategy would likely include the use of high volume, centralized production facilities to maximize economies of scale.

Accepted Answer

A multidomestic strategy emphasizes local adaptation to meet the unique needs and preferences of each market, so decentralized production facilities are more likely to be used instead of centralized ones.

Question 18

Dispersion of value chains across different countries mainly occurs through offshoring and outsourcing.

Accepted Answer

Offshoring and outsourcing are the two main strategies used by firms to disperse their value chains across different countries. Offshoring involves relocating business activities or production processes to a foreign country while outsourcing involves subcontracting a business process or activity to another company, often located in a different country. Both offshoring and outsourcing facilitate the dispersion of value chains across different countries.

Question 19

Summarize the most important benefits and risks associated with diversification into global markets.

Accepted Answer

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Question 20

In a global strategy a firm operates all its businesses under a single common strategy regardless of location.

Accepted Answer

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Quiz 7: International Strategy: Creating Value in Global Markets