Question 1

A problem with the international strategy is that over time, competitors inevitably emerge, and if managers do not take pro-active steps to reduce their cost structure, their company may be rapidly out-flanked by efficient global competitors.

Accepted Answer

This is true as in the international market, there will always be new competitors emerging due to a variety of factors such as globalization and the ease of accessing new markets. Therefore, companies need to continuously work on reducing their cost structure to remain competitive. Failure to do so can quickly lead to being outperformed by more efficient global competitors.

Question 2

In companies following a transnational strategy, the flow of skills and product offerings moves in one direction-from the home company to foreign subsidiaries.

Accepted Answer

The answer of In companies following a transnational strategy, the...

Question 3

Sony came to dominate the global television market via franchising.

Accepted Answer

Sony came to dominate the television market through innovative products and marketing strategies, not franchising.

Question 4

A localization strategy is most appropriate when there are substantial differences across nations with regard to consumer tastes and preferences, and where cost pressures are not too intense.

Accepted Answer

A localization strategy aims to tailor products or services to specific local markets to address differences in consumer preferences and tastes. This approach may involve adapting products, marketing messages, or distribution strategies to meet the needs of a particular market. Localization is most appropriate when there are significant differences in consumer preferences between countries or regions. On the other hand, a global standardization strategy may be more suitable in markets where consumer preferences are similar across countries or where cost pressures are intense.

Question 5

Through transnational strategy a firm tries to achieve low costs, product differentiation across geographic markets, and foster skills among different subsidiaries.

Accepted Answer

Transnational strategy involves a combination of multinational and global strategies where the aim is to achieve low costs, product differentiation, and knowledge sharing among different subsidiaries in different geographic markets.

Question 6

One advantage of exporting is that it avoids the cost of establishing manufacturing operations in the host country.

Accepted Answer

Exporting allows companies to sell their products in foreign markets without the need to establish manufacturing operations in the host country. This can save on costs such as building new facilities, hiring local staff, and complying with local regulations.

Question 7

Franchising is a specialized form of licensing in which the franchiser sells the franchisee intangible property (normally a trademark) and insists that the franchisee agree to abide by strict rules about how it does business.

Accepted Answer

Franchising is indeed a specialized form of licensing in which the franchiser (owner of the brand) allows the franchisee (business operator) to use its trademark, and enforces strict rules to maintain consistency in the way business is conducted under the brand name.

Question 8

Companies that pursue a global standardization strategy are trying to develop a business model that simultaneously achieves low costs and differentiates the product offering across geographic markets.

Accepted Answer

A global standardization strategy aims to reap cost reductions through economies of scale by offering a standardized product across all markets, rather than differentiating the product offering across geographic markets.

Question 9

Establishing a wholly owned subsidiary is generally the least costly method of serving a foreign market.

Accepted Answer

Establishing a wholly owned subsidiary involves significant capital investment and operational costs, thus making it one of the most expensive methods of serving a foreign market. Other options such as exporting or licensing may be less costly.

Question 10

Companies following an international strategy avoid any attempt at local customization of product offering.

Accepted Answer

Companies following an international strategy may still attempt some level of local customization in order to adapt to local cultural or legal requirements, or to better meet local customer preferences. However, they will generally aim to maintain a consistent brand image and product offering across different markets.

Question 11

An international strategy may not be viable in the long term, and to survive, companies that are able to pursue it might ultimately need to shift towards a global standardization strategy.

Accepted Answer

An international strategy focuses on customizing products or services for local markets, which can limit economies of scale and efficiency. Over time, to remain competitive, companies may need to adopt a global standardization strategy, which emphasizes producing standardized products for all markets to achieve higher efficiency and lower costs.

Question 12

Companies pursuing an international strategy tend to centralize product development functions, such as R&D at home.

Accepted Answer

Centralizing product development functions such as R&D at home is a common approach for companies pursuing an international strategy. This allows for better control and coordination of product development efforts across global markets.

Question 13

Many of the issues that arise in the case of technological know-how do not arise in the case of management know-how.

Accepted Answer

Technological know-how is based on scientific principles and involves understanding complex systems and processes. Management know-how, on the other hand, is more focused on organizational behavior, leadership, and decision-making. Therefore, many of the issues related to technology such as obsolescence, intellectual property rights, and ethical considerations are not relevant to management know-how.

Question 14

Most manufacturing companies begin their global expansion via international licensing.

Accepted Answer

While licensing can be one method of expanding globally, it is not necessarily the most common or the first method used by manufacturing companies. Other methods such as joint ventures, direct investment, and exporting may also be used.

Question 15

The greater the pressures for cost reduction are, the more likely it is that a company will want to pursue some combination of exporting and wholly owned subsidiaries.

Accepted Answer

This statement is true. When a company faces pressures to reduce costs, they may want to pursue exporting to take advantage of cheaper labor or materials in other countries. Additionally, they may want to establish wholly owned subsidiaries in countries where labor and other costs are lower to further reduce costs. These strategies can help the company stay competitive and maximize profits.

Question 16

An international strategy is appropriate when firms face high cost pressures and low pressures for local responsiveness.

Accepted Answer

An international strategy is more suitable for situations where there are low cost pressures and low pressures for local responsiveness, allowing firms to leverage their home-based core competencies in foreign markets without significant local adaptation. High cost pressures and low local responsiveness pressures typically call for a global standardization strategy.

Question 17

One advantage of joint ventures is that a company may benefit from a local partner's knowledge of the many dimensions of a host country.

Accepted Answer

Joint ventures allow companies to partner with a local business, which can provide valuable insights into the host country's culture, regulations, and business practices. This knowledge can help the foreign company navigate unfamiliar territory and avoid costly mistakes.

Question 18

MTV is a good example of a company that has had to pursue a localization strategy by varying its programming to match the demands of viewers in different nations.

Accepted Answer

MTV has adapted its programming to local tastes and preferences in different countries, which is the essence of a localization strategy.

Question 19

International licensing is an arrangement whereby a foreign licensee buys the rights to produce a company's product in the licensee's country for a negotiated fee.

Accepted Answer

International licensing is a common practice in global business where a foreign company buys the rights to use another company's intellectual property (IP) to produce and sell products or services in a particular market. The licensing agreement typically involves a negotiated fee or royalty payment paid by the licensee to the licensor for the use of the IP.

Question 20

When a company licenses its technology, it can quickly lose control over it.

Accepted Answer

When a company licenses its technology to another company, it gives them permission to use it in exchange for royalties or other forms of compensation. However, once the technology is licensed, the licensee may make modifications or improvements to it without the licensor's permission, potentially leading to loss of control over the technology.

Quiz 6: Strategy in the Global Environment