Question 1

Marketing functions may have to be delegated to national subsidiaries when there is a

Accepted Answer

The correct answer is A because different distribution channels in different countries may require different marketing strategies and tactics.

Question 2

Gen-Supply reminds employees that its flagship product used to cost the company $154 to manufacture when the company launched ten years ago. Now, the same product costs just $58 to manufacture. This demonstrates the effects of

Accepted Answer

The reduction in manufacturing costs over time is an example of the experience curve, which reflects how a company becomes more efficient and reduces costs as it gains experience in production.

Question 3

A ________ is most favorable to reap gains from global scale economies.

Accepted Answer

The answer of A ________ is most favorable to reap...

Question 4

When Brite Fabrics first began operations, it took six hours to make a coat in the workroom. Today, that task takes three hours as more efficient sewing and patterning techniques have been introduced. This improvement in efficiency is an example of

Accepted Answer

Learning effects refer to the improvements in efficiency and productivity that occur as a result of gaining experience and knowledge over time. In this case, Brite Fabrics has reduced the time to make a coat from six hours to three hours due to improved techniques, which is a classic example of learning effects.

Question 5

Rite-Right Pen Corp., based in Florida, has a manufacturing facility in Thailand where local content rules regulate manufacturing processes. These rules show the effects of

Accepted Answer

Local content rules are a form of host-government demands that require a certain percentage of a product to be made from local resources or labor.

Question 6

Amazon Prime incurs a huge fixed cost to obtain streaming rights to movies and television programs. However, it is able to spread this cost over a large number of subscribers that results in a cost-savings phenomenon referred to as

Accepted Answer

Economies of scale occur when a company can spread its fixed costs over a larger number of units, resulting in a lower cost per unit. In this case, Amazon Prime is able to spread its fixed costs over a large number of subscribers, resulting in a lower cost per subscriber.

Question 7

Firms that compete in the global marketplace typically face which two types of competitive pressure?

Accepted Answer

Firms in the global marketplace often face pressures to reduce costs to remain competitive and pressures to be locally responsive to meet the specific needs and preferences of different markets.

Question 8

By producing its products in larger volume than its competitors, Epli-Mart is able to achieve substantial reductions in unit cost. In other words, Epli-Mart achieves

Accepted Answer

Economies of scale refer to the cost advantage that arises with increased output of a product, as the fixed costs are spread over more units, leading to a reduction in the per-unit cost.

Question 9

A number of studies have observed that a product's production costs decline by some quantity about each time

Accepted Answer

This phenomenon is known as the "learning curve" or "experience curve" effect, where production costs decrease as cumulative output increases, typically when cumulative output doubles.

Question 10

The liberalization of the world trade and investment environment in recent decades, by facilitating greater international competition, has generally

Accepted Answer

The liberalization of world trade and investment has increased international competition, leading to increased cost pressures as companies strive to remain competitive in a global market.

Question 11

Merck, a pharmaceutical company, has taken thousands of drugs through the federal approval process and so can do it more cost efficiently than many competitors who are new to the industry. These cost savings that come to Merck in the drug approval process are an example of

Accepted Answer

Learning effects refer to the cost advantages that a firm gains from experience and practice over time, leading to more efficient processes. Merck's experience in taking drugs through the approval process allows it to do so more cost-efficiently than newer competitors, exemplifying learning effects.

Question 12

The ________ refers to systematic reductions in production costs that have been observed to occur over the life of a product.

Accepted Answer

The experience curve refers to the systematic reductions in production costs that occur over the life of a product as companies gain experience and efficiency in production processes.

Question 13

Cost reduction pressures tend to be particularly intense in industries that

Accepted Answer

Industries that create products serving universal needs face intense cost reduction pressures because these products are standardized and competition is often based on price.

Question 14

Learning effects will be most significant in which of these tasks?

Accepted Answer

Learning effects are most significant in tasks that are complex and involve many steps, as there is more room for improvement and efficiency gains through practice and experience.

Question 15

________ are most likely to discourage global expansion of businesses.

Accepted Answer

Trade barriers, such as tariffs, quotas, and regulations, can increase costs and limit market access, discouraging businesses from expanding globally.

Question 16

Products such as steel, bulk chemicals, and industrial electronics do not require much differentiation because the taste and preference for these products is similar all around the world. These products are examples of

Accepted Answer

These products are examples of universal needs because they do not require much differentiation and have similar demand and usage globally.

Question 17

Economies of scale are achieved when a company reduces unit costs by

Accepted Answer

Economies of scale occur when a company increases production and lowers costs, as fixed costs are spread over a larger number of goods.

Question 18

One argument for the idea that customer demands for local customization are on the decline worldwide is that

Accepted Answer

Customer tastes have converged worldwide due to globalization, leading to a decline in demand for local customization.

Question 19

The two phenomena that help explain the experience curve are

Accepted Answer

Learning effects and economies of scale are the two phenomena that help explain the experience curve. Learning effects refer to the decrease in production costs as a result of increased experience in producing a good or service. Economies of scale refer to the decrease in production costs as a result of increased production volume.

Question 20

Learning effects tend to be more significant when

Accepted Answer

Learning effects are more significant when a technologically complex task is repeated because there is more room for improvement and efficiency gains as workers become more familiar with the complex processes involved.

Quiz 12: The Strategy of International Business