Question 1

When individuals gain knowledge of the most efficient ways to perform particular tasks, they are saving costs through _____.

Accepted Answer

Learning effects refer to cost savings that come from learning by doing. Labor, for example, learns by repetition how to carry out a task, such as assembling airframes, most efficiently.

Question 2

Which strategy focuses on increasing profitability by customizing the firm's goods or services so they provide a good match to tastes and preferences in different national markets?

Accepted Answer

A localization strategy focuses on increasing profitability by customizing the firm's goods or services so that they provide a good match to tastes and preferences in different national markets.

Question 3

_____ exists when the tastes and preferences of consumers in different nations are similar if not identical.

Accepted Answer

Universal needs exist when the tastes and preferences of consumers in different nations are similar if not identical. This is the case for conventional commodity products such as bulk chemicals, petroleum, steel, sugar, and the like.

Question 4

Lenovo's ThinkPad laptop computers are designed in the United States, the case, keyboard, and hard drive are made in Thailand; the display screen and memory in South Korea; the built-in wireless card in Malaysia; and the microprocessor in the United States. In each case, these components are manufactured and sourced from the optimal location given current factor costs. In this example, Lenovo has:

Accepted Answer

Locating a value creation activity in the optimal location for that activity can have one of two effects. It can lower the costs of value creation and help the firm to achieve a low-cost position, and/or it can enable a firm to differentiate its product offering from those of competitors. One result of this kind of thinking is the creation of a global web of value creation activities, with different stages of the value chain being dispersed to those locations around the globe where perceived value is maximized or where the costs of value creation are minimized.

Question 5

Responding to pressure for _____ requires that a firm differentiate its product offering and marketing strategy from country to country.

Accepted Answer

Responding to pressures to be locally responsive requires that a firm differentiate its product offering and marketing strategy from country to country in an effort to accommodate the diverse demands arising from national differences in consumer tastes and preferences, business practices, distribution channels, competitive conditions, and government policies.

Question 6

Moving down the experience curve:

Accepted Answer

Moving down the experience curve allows a firm to reduce its cost of creating value and increase its profitability. The firm that moves down the experience curve most rapidly will have a cost advantage vis-à-vis its competitors.

Question 7

It has been observed that a product's production costs decline by some quantity about each time cumulative output _____.

Accepted Answer

The experience curve refers to systematic reductions in production costs that have been observed to occur over the life of a product. A number of studies have observed that a product's production costs decline by some quantity about each time cumulative output doubles.

Question 8

It has been observed in the aircraft industry that, each time cumulative output of airframes was doubled, unit costs typically declined to 80 percent of their previous level. This is an example of the _____ curve.

Accepted Answer

The experience curve refers to systematic reductions in production costs that have been observed to occur over the life of a product. A number of studies have observed that a product's production costs decline by some quantity about each time cumulative output doubles.

Question 9

Learning effects:

Accepted Answer

Learning effects tend to be more significant when a technologically complex task is repeated, because there is more that can be learned about the task. No matter how complex the task, however, learning effects typically disappear after a while.

Question 10

Economies of scale arise from which of the following sources?

Accepted Answer

Economies of scale refer to the reductions in unit cost achieved by producing a large volume of a product. Attaining economies of scale lowers a firm's unit costs and increases its profitability.

Question 11

Which of the following is a disadvantage of the localization strategy?

Accepted Answer

On the downside, because the localization strategy involves some duplication of functions and smaller production runs, customization limits the ability of the firm to capture the cost reductions associated with mass-producing a standardized product for global consumption.

Question 12

Which of the following is less likely to add to the pressure for a firm to be locally responsive?

Accepted Answer

Pressures for local responsiveness arise from national differences in consumer tastes and preferences, infrastructure, accepted business practices, and distribution channels, and from host-government demands. Responding to pressures to be locally responsive requires a firm to differentiate its products and marketing strategy from country to country to accommodate these factors, all of which tends to raise the firm's cost structure.

Question 13

It has been suggested that learning effects are important only during the start-up period of a new process and that they cease after two or three years. Any decline in the experience curve after such a point is due to:

Accepted Answer

No matter how complex the task, learning effects typically disappear after a while. It has been suggested that they are important only during the start-up period of a new process and that they cease after two or three years. Any decline in the experience curve after such a point is due to economies of scale.

Question 14

A firm that is facing both strong cost pressures and strong pressures for local responsiveness should follow a(n) _____ strategy.

Accepted Answer

Firms that pursue a transnational strategy are trying to simultaneously achieve low costs through location economies, economies of scale, and learning effects; differentiate their product offering across geographic markets to account for local differences; and foster a multidirectional flow of skills between different subsidiaries in the firm's global network of operations.

Question 15

When a firm has a strategic goal of pursuing a low-cost strategy on a worldwide scale, the firm should follow a(n) _____ strategy.

Accepted Answer

Firms pursuing a global standardization strategy try not to customize their product offering and marketing strategy to local conditions because customization involves shorter production runs and the duplication of functions, which tends to raise costs. Instead, they prefer to market a standardized product worldwide so that they can reap the maximum benefits from economies of scale and learning effects.

Question 16

Which of the following is associated with firms following the global standardization strategy?

Accepted Answer

Firms pursuing a global standardization strategy try not to customize their product offering and marketing strategy to local conditions because customization involves shorter production runs and the duplication of functions, which tends to raise costs. Instead, they prefer to market a standardized product worldwide so that they can reap the maximum benefits from economies of scale and learning effects.

Question 17

A firm that is pursuing a(n) _____ strategy is simultaneously trying to achieve low costs through location economies, economies of scale, and learning effects, and trying to differentiate its product offering across geographic markets.

Accepted Answer

Firms that pursue a transnational strategy are trying to simultaneously achieve low costs through location economies, economies of scale, and learning effects; differentiate their product offering across geographic markets to account for local differences; and foster a multidirectional flow of skills between different subsidiaries in the firm's global network of operations.

Question 18

_____ refer(s) 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 systematic reductions in production costs that have been observed to occur over the life of a product.

Question 19

_____ 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

Localization 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. By customizing the product offering to local demands, the firm increases the value of that product in the local market.

Question 20

Firms usually respond to pressures for cost reduction by trying to:

Accepted Answer

In competitive global markets, international businesses often face pressures for cost reductions. Responding to pressures for cost reduction requires a firm to try to lower the costs of value creation.

Quiz 13: The Strategy of International Business

When individuals gain knowledge of the most efficient ways to perform particular tasks, they are saving costs through _____.

Which strategy focuses on increasing profitability by customizing the firm's goods or services so they provide a good match to tastes and preferences in different national markets?

_____ exists when the tastes and preferences of consumers in different nations are similar if not identical.

Responding to pressure for _____ requires that a firm differentiate its product offering and marketing strategy from country to country.

Moving down the experience curve:

It has been observed that a product's production costs decline by some quantity about each time cumulative output _____.

It has been observed in the aircraft industry that, each time cumulative output of airframes was doubled, unit costs typically declined to 80 percent of their previous level. This is an example of the _____ curve.

Learning effects:

Economies of scale arise from which of the following sources?

Which of the following is a disadvantage of the localization strategy?

Which of the following is less likely to add to the pressure for a firm to be locally responsive?

It has been suggested that learning effects are important only during the start-up period of a new process and that they cease after two or three years. Any decline in the experience curve after such a point is due to:

A firm that is facing both strong cost pressures and strong pressures for local responsiveness should follow a(n) _____ strategy.

When a firm has a strategic goal of pursuing a low-cost strategy on a worldwide scale, the firm should follow a(n) _____ strategy.

Which of the following is associated with firms following the global standardization strategy?

A firm that is pursuing a(n) _____ strategy is simultaneously trying to achieve low costs through location economies, economies of scale, and learning effects, and trying to differentiate its product offering across geographic markets.

_____ refer(s) to systematic reductions in production costs that have been observed to occur over the life of a product.

_____ 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.

Firms usually respond to pressures for cost reduction by trying to: