Question 1

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 2

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

Accepted Answer

A multidomestic strategy focuses on adapting products and services to meet the specific needs of each local market instead of standardizing them globally. This often involves decentralized production facilities that can cater to local preferences and regulations. Therefore, high volume, centralized production facilities would not fit into this strategy.

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

Canadian firms have indeed been targeted by animal rights groups globally due to their opposition to seal hunting practices in Newfoundland, as these groups often campaign against activities they consider to be cruel to animals.

Question 4

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 that add more value in upstream activities (ex: extracting raw materials, manufacturing components) have a greater dependence on global suppliers and larger economies of scale in production. As a result, a company in such an industry is more likely to benefit from a global strategy, which can help reduce costs and ensure a stable supply chain. In contrast, industries that add more value downstream (ex: retail, distribution) may benefit more from localization and tailoring their products/services to specific local customer preferences.

Question 5

International expansion can extend the life cycle of a product that is in its maturity stage in a firm's home country.

Accepted Answer

Expanding into international markets can introduce a product to new customers, potentially revitalizing sales and extending its life cycle beyond what is experienced in the firm's home country.

Question 6

Arbitrage opportunities represent a disadvantage of international expansion.

Accepted Answer

Arbitrage opportunities are generally considered an advantage of international expansion because they allow businesses to exploit differences in prices, costs, or interest rates across different markets to make a profit.

Question 7

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

Accepted Answer

This statement is true. Managers need to balance the need for cost reduction with the need to adapt their products and marketing strategies to local markets in order to be successful in foreign markets.

Question 8

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

Accepted Answer

A multidomestic strategy involves customizing products to meet the specific tastes and preferences of different national markets, which is what Maple Leaf Foods does by adapting its prepared meats for local tastes.

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 tailoring products and marketing to each individual country or region, allowing for independence and autonomy in decision-making by local operations.

Question 10

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

Accepted Answer

This statement is true because while pure multidomestic and pure global strategies have their advantages, the most successful companies typically utilize a combination of both approaches in order to achieve balance between local responsiveness and global integration. This is known as a transnational approach.

Question 11

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

Accepted Answer

A global strategy involves standardizing products and marketing strategies across different countries to achieve economies of scale and consistency.

Question 12

The absence of rules or the lack of uniform enforcement of existing rules leads to what might often seem to be arbitrary and inconsistent decisions by government officials.

Accepted Answer

When rules are absent or not uniformly enforced, it creates a vacuum where decisions can appear arbitrary and inconsistent, as there is no clear standard or guideline being consistently applied by government officials.

Question 13

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

A transnational strategy emphasizes the importance of communication and knowledge sharing throughout the organization in order to adapt to and remain flexible in competitive situations.

Question 14

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 standardization strategy, rather than a multidomestic strategy. A multidomestic strategy prioritizes local responsiveness over global efficiency, which may result in higher costs and lower integration between international operations.

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 focuses on adapting products and strategies to fit the specific needs of each country or market, rather than driving economies of scale or creating a uniform product for all markets.

Question 16

IMAX claims that every new theatre that opens somewhere in the world lowers the cost of production of its unique movies.

Accepted Answer

IMAX claims that every new theatre that opens somewhere in the world lowers the cost of production of its unique movies.

Question 17

It is most appropriate to use a multidomestic strategy when the pressure to lower costs are high and the pressure for local adaptation is also high.

Accepted Answer

A multidomestic strategy is most appropriate when the pressure for local adaptation is high but the pressure to lower costs is low, as it focuses on tailoring products and services to each local market, which can be costly.

Question 18

Differences in foreign markets such as culture, language, and customs can represent significant management risks when firms enter foreign markets.

Accepted Answer

Cultural, linguistic, and customs differences between foreign markets and the home market can create significant risks for firms entering international markets. These differences can impact a company's marketing strategies, supply chain management, and human resources practices. Therefore, companies need to carefully assess and adapt to these differences to mitigate potential risks in their international operations.

Question 19

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 balance global efficiency with local adaptation and learning, achieving the optimal mix of all three factors to gain a competitive advantage in the global market.

Question 20

An advantage of international expansion is that it can enable a firm to optimize the location of every activity in its value chain.

Accepted Answer

International expansion can allow a firm to choose the best location for each activity in its value chain, taking into consideration factors such as resources, labor costs, and market demand. This can result in increased efficiency and profitability.

Quiz 7: International Strategy: Creating Value in Global Markets

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

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

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

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).

International expansion can extend the life cycle of a product that is in its maturity stage in a firm's home country.

Arbitrage opportunities represent a disadvantage of international expansion.

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

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

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

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

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

The absence of rules or the lack of uniform enforcement of existing rules leads to what might often seem to be arbitrary and inconsistent decisions by government officials.

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.

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

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.

IMAX claims that every new theatre that opens somewhere in the world lowers the cost of production of its unique movies.

It is most appropriate to use a multidomestic strategy when the pressure to lower costs are high and the pressure for local adaptation is also high.

Differences in foreign markets such as culture, language, and customs can represent significant management risks when firms enter foreign markets.

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

An advantage of international expansion is that it can enable a firm to optimize the location of every activity in its value chain.