Question 1

An industrial firm's first encounter with an overseas market usually involves the formation of a wholly-owned subsidiary in another country.

Accepted Answer

An industrial firm's first encounter with an overseas market typically involves exporting or forming joint ventures, not immediately establishing a wholly-owned subsidiary.

Question 2

A multidomestic strategy seeks competitive advantage with strategic choices that are highly integrated across countries.

Accepted Answer

A multidomestic strategy focuses on tailoring products and strategies to fit local markets, rather than integrating them across countries.

Question 3

A firm whose products are technically complex and are protected by U.S. patents is a good candidate for relocating to a rapidly developing economy.

Accepted Answer

Relocating to a rapidly developing economy may pose risks such as intellectual property theft, lack of skilled labor, and inadequate infrastructure, which could be detrimental for a firm with technically complex and patented products.

Question 4

Some research suggests that, compared to consumer goods, industrial and high-technology products may be more appropriate for global brand strategies.

Accepted Answer

Industrial and high-technology products often have universal applications and standards, making them suitable for global branding strategies, unlike consumer goods which may require adaptation to local tastes and preferences.

Question 5

The purest global strategy concentrates as many activities as possible in one country, serves the world market from this home base, and closely coordinates those activities that must be performed near the buyer.

Accepted Answer

This strategy is known as a centralized global strategy, where a company focuses on centralizing its operations in one location to achieve economies of scale and efficiency, while coordinating necessary local activities to meet market demands.

Question 6

Problems often plague joint ventures and, as a result, many of them fall short of expectations or are disbanded.

Accepted Answer

Joint ventures can face challenges such as cultural differences, misaligned objectives, and management conflicts, which can lead to underperformance or dissolution.

Question 7

Exporting involves giving up direct control of the marketing program, which often makes it difficult to coordinate activities.

Accepted Answer

Exporting typically involves relying on foreign intermediaries or partners, which can lead to a loss of direct control over marketing activities and coordination challenges.

Question 8

The choice of a particular entry mode will also depend on the size of the market and its growth potential.

Accepted Answer

The choice of entry mode is influenced by market size and growth potential because larger and rapidly growing markets may justify higher investment and risk, while smaller or stagnant markets may require more cautious approaches.

Question 9

A factory in a rapidly developing economy can be built with 70% of the investment level needed in a highly developed economy.

Accepted Answer

In rapidly developing economies, costs such as labor, materials, and land are often lower compared to highly developed economies, allowing factories to be built with less investment.

Question 10

The home base for a business is the location where strategy is set and a critical mass of sophisticated production and service activities reside.

Accepted Answer

The home base is typically where a company's strategic decisions are made and where significant production and service operations are concentrated.

Question 11

For truly global industries, a firm's position in one country significantly affects its position elsewhere, so a multi-domestic strategy is required.

Accepted Answer

A multi-domestic strategy treats each country as a separate market, focusing on local adaptation rather than leveraging global positions.

Question 12

In high-risk foreign markets, firms can reduce their equity exposure by adopting low-commitment modes of entry such as licensing or contract manufacturing.

Accepted Answer

Low-commitment modes of entry like licensing or contract manufacturing allow firms to enter foreign markets with less financial risk and investment, thus reducing their equity exposure.

Question 13

The two primary sources of cost advantages driving firm to implement operations in rapidly developing economies are lower operating costs and lower capital investment requirements.

Accepted Answer

Lower operating costs and lower capital investment requirements are key factors that attract firms to rapidly developing economies, as these can lead to significant cost advantages.

Question 14

Markets of limited size surrounded by trade barriers may be supplied most cost effectively by using the exporting mode of entry.

Accepted Answer

The answer of Markets of limited size surrounded by trade...

Question 15

In multidomestic industries, a firm's competitive position in one country is significantly influenced by its position in other countries.

Accepted Answer

In multidomestic industries, each country's market is treated independently, and a firm's competitive position in one country is not significantly influenced by its position in other countries.

Question 16

The need for a global strategy is determined by the nature of international competition in a particular industry.

Accepted Answer

The nature of international competition in an industry influences how companies must strategize globally to effectively compete and succeed.

Question 17

Coordination centers on where each activity is performed, including the number of locations.

Accepted Answer

Coordination focuses on the integration and alignment of activities across different locations, rather than just the number of locations where activities are performed.

Question 18

A single-country may not be large enough for a firm to realize economies of scale.

Accepted Answer

Economies of scale occur when a firm reduces its costs by increasing production. A single-country market may not provide enough demand to justify the large-scale production needed to achieve these cost savings.

Question 19

As an entry strategy, licensing requires a major capital investment in a foreign market.

Accepted Answer

Licensing involves granting permission to a foreign company to produce and sell a product, which typically requires less capital investment compared to other entry strategies like establishing a subsidiary.

Question 20

Upstream activities in the value chain involve those primary activities that are closely tied to where the buyer is located.

Accepted Answer

Upstream activities in the value chain are related to the initial stages of production, such as sourcing raw materials and manufacturing, rather than being tied to the buyer's location.

Quiz 6: Business Marketing Strategies for Global Markets