Quiz 12: The Strategy of International Business

In terms of attaining a competitive advantage, support activities can be as important as the primary activities of the firm.

According to Michael Porter, one way to create superior value is to differentiate the product so that consumers are willing to pay a premium price.

Moving down the experience curve means higher costs of increasing value and lower levels of profitability for a firm.

A strategy that focuses primarily on increasing the manufacturing rate of a product is referred to as a low-cost strategy.

Profit growth is measured by the percentage increase in a company's total production over time.

The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products.

Strategies that increase profitability can also expand a firm's business and thus enable it to attain a higher rate of profit growth.

Firms that pursue an international strategy focus on increasing profitability by reaping the cost reductions that come from economies of scale, learning effects, and location economies.

Consumer surplus captures some of the value of a product, which reduces the price a firm can charge for it.

A strategic alliance is a cooperative agreement between potential or actual competitors.

The experience curve refers to systematic increases in production costs that have been observed to occur over the life of a product.

Learning effects are more evident in the sales profession than in manual labor jobs.

The information system of a company is an example of a support activity.

The term mini-multinational refers to the totality of a firm's organization, including organization architecture, control systems and incentives, organizational culture, processes, and people.

The ability to spread fixed costs over a large volume is a source of economies of scale.

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

Universal needs exist when the tastes and preferences of consumers in different nations are identical.

Firms that operate internationally are able to realize location economies by dispersing individual value creation activities to locations where they are performed most efficiently and effectively.

Varying distribution channels among countries may make it necessary for a company to place marketing functions within national subsidiaries.

A firm's core competencies refers to those activities that are easily matched by competitors.