Your Results:

The correct answer for each question is indicated by a .

1
INCORRECT

In Michael Porter's framework, which of the following factors does not affect a nation's
competitiveness?



A) factor conditions


B) policies that protect the nation's domestic competitors



C) demand characteristics



D) related and supported industries



2
INCORRECT

The sale of Boeing's commercial aircraft and Microsoft's operating systems in many
countries enable these companies to benefit from



A) higher prices in their domestic markets.


B) economies of scale.



C) optimizing the location for many activities in their value chain.



D) reducing their exposure to currency risks.



3
INCORRECT

Demands to "reduce costs" require that



A) the company needs to supplement the local foreign economy in a manner
specified by the local government.



B) a company should not trade idiosyncratic preferences in product features for
higher economic returns.


C) a company must pursue what is economically beneficial to the company
including maximizing economies of scale and learning curve effects.



D) the manager should follow a multidomestic strategy to maximize the economic
benefits to the company.



4
INCORRECT

High pressure for lower costs combined with high pressure for local adaptation would
imply what type of international strategy:



A) global



B) multidomestic



C) differentiation


D) transnational



5
CORRECT

All of the following are global strategy limitations except


A) ability to locate activities in optimal locations.



B) limited ability to adapt to local markets.



C) concentration of activities may increase dependence on a single facility.



D) single locations may lead to higher tariffs and transportation costs.



6
INCORRECT

Which of the following is not a limitation of a multidomestic strategy?



A) less ability to realize cost savings through scale economies



B) greater difficulty in transferring knowledge across countries



C) may lead to "overadaptation" as conditions change


D) single locations may lead to higher tariffs and transportation costs



7
INCORRECT

Which of the following describes the most standard order of entry into foreign markets?



A) franchising, licensing, exporting, joint venture, and wholly owned subsidiary



B) licensing, exporting, franchising, joint venture, and wholly owned subsidiary


C) exporting, licensing, franchising, joint venture, and wholly owned subsidiary



D) exporting, franchising, licensing, joint venture, and wholly owned subsidiary



8
INCORRECT

____________ involve the creation of a third-party legal entity, whereas __________
do not.



A) Licensing agreements, joint ventures



B) Franchising agreements; strategic alliances



C) Strategic alliances; joint ventures


D) Joint ventures; strategic alliances


Your Results:
The correct answer for each question is indicated by a .

1
INCORRECT

In Michael Porter's "diamond of competitive advantage," there are three broad
attributes that, as a system, constitute a nation's competitiveness in an industry.



A) TRUE


B) FALSE



2
INCORRECT

Intense rivalry in domestic markets does not typically force firms to look outside their
national boundaries for new markets.



A) TRUE


B) FALSE



3
CORRECT

Variations in foreign markets such as culture, language and customs can represent
major management risks when firms enter foreign markets.


A) TRUE



B) FALSE



4
INCORRECT

Because it drives economies of scale as far as possible and offers a middle of the road
product appealing to the largest number of consumers in every market, a global
strategy is the most suitable strategy for international operations.



A) TRUE


B) FALSE



5
INCORRECT

Corporations with multiple foreign operations that act very dependently on one another
are following a multidomestic strategy.



A) TRUE


B) FALSE



6
CORRECT

Improved adaptation to all competitive situations is a key tenet of a transnational
strategy, as well as flexibility by capitalizing on communication and knowledge flowing
throughout the organization.


A) TRUE



B) FALSE



7
INCORRECT

The top method of entry into a foreign market is characteristically the establishment of
a wholly owned foreign subsidiary so that the parent organization can maintain a high
level of control.



A) TRUE


B) FALSE


Your Results:
The correct answer for each question is indicated by a .

1
INCORRECT

The Garden.com start-up, the opening case in this chapter, failed because



A) it spent heavily on content and capabilities that customers did not
value.



B) its reputation was damaged by rumors that spread via word of mouth.



C) it was unable to turn shoppers into buyers.


D) all of the above



2
INCORRECT

The types of industries that are expected to be most radically transformed by the
Internet, according to the text are:


A) information-intensive such as financial services



B) research-intensive industries such as pharmaceuticals



C) manufacturing-intensive such as microprocessors



D) all of the above



3
INCORRECT

End users are



A) usually the AC in B2C.



B) the final consumers in a distribution channel.



C) likely to have greater bargaining power because of the Internet.


D) all of the above



4
INCORRECT

One of the utmost threats to supplier power that has materialized because of the
Internet is



A) Internet technologies cannot easily be imitated.


B) the Internet inhibits the ability of suppliers to offer highly differentiated
products or services.



C) procurement technologies eliminate the need for suppliers.



D) the cost of accessing business customers has increased.



5
INCORRECT

On the whole, the threat of substitutes is heightened because the Internet:



A) lowers switching costs.



B) lowers barriers to entry.


C) introduces new ways to accomplish the same tasks.



D) increases output per unit of cost.



6
CORRECT

All of the following are reasons the Internet increases the intensity of competitive
rivalry except:


A) the Internet has made it more difficult to imitate the advantages
achieved by competitors.



B) the Internet makes it more difficult for firms to differentiate themselves.



C) the Internet has Acommoditized@ products that previously were
regarded as rare or unique.



D) the Internet has eliminated the importance of location by making
geographically distant products available online.



7
INCORRECT

Which of the following is not a way that Internet technologies are being used to improve
an overall cost leadership strategy?



A) Direct access to progress reports and the ability for customers to
periodically check work-in-progress is minimizing rework.



B) Online bidding and order processing are eliminating the need for sales
calls and minimizing sales force expenses.


C) Quick online responses to service requests and rapid feedback to
customer surveys and product promotions are enhancing marketing
efforts.



D) Online purchase orders are making many transactions paperless,
reducing the costs of procurement and paper.



8
INCORRECT

Which of the following phrases best completes the following sentence: Because of the
Internet, firms that utilize a focus strategy have new opportunities to
_____________________



A) respond quickly to customer requests.


B) access niche markets in a highly specialized fashion.



C) provide more services and features.



D) access markets less expensively.



9
CORRECT

An enormous amount of money was spent promoting Pets.com's brand, but the
company ultimately closed during the dot-com downturn. Which of the following was
not one of the reasons Pets.com failed:


A) it overextended its focus on a market niche and tried to appeal to an
overly broad audience.



B) it was based on a faulty business model with overly thin margins.



C) despite its efforts, the Pets.com marketing campaign was ill-conceived
and did not create name recognition.



D) its strategy was based on a value proposition that customers did not
value.


Your Results:
The correct answer for each question is indicated by a .

1
CORRECT

By using the Internet to launch their businesses, new entrants can use
overall low cost and/or differentiation strategies to compete.


A) TRUE



B) FALSE



2
INCORRECT

The bargaining power of distribution channel buyers may increase because
of the Internet.



A) TRUE


B) FALSE



3
INCORRECT

An overall reduction in business opportunities is due to reintermediation.



A) TRUE


B) FALSE



4
INCORRECT

Few analysts agree that use of the Internet will lower transactions costs.



A) TRUE


B) FALSE



5
CORRECT

The fact that the service or capability of many Internet start-ups offer can
easily be imitated is the greatest danger to their success.


A) TRUE



B) FALSE



6
CORRECT

The Internet diminishes many differentiation advantages.


A) TRUE



B) FALSE


Your Results:
The correct answer for each question is indicated by a .
1
INCORRECT

Which factor in the diamond of national advantage is exemplified by the
development of just-in-time inventory management by Japanese companies
who lacked available physical land space for warehousing?


A)
demand conditions


B)
related and supporting industries


C)
firm strategy, structure, and rivalry


D)

factor endowments

Classical economics suggests that factors of production such as land,
labor, and capital are the building blocks that create usable consumer
goods and services. However, companies in advanced nations seeking
competitive advantage over firms in other nations create many of the
factors of production. The island nation of Japan has little land mass,
making warehouse space needed for inventory prohibitively expensive.
But by pioneering just-in-time inventory management, Japanese
companies created a resource from which they gained advantage over
companies in other nations that spent large sums to warehouse
inventory.

2
INCORRECT

What benefit of international expansion motivates a firm to locate its call
centers in India, its manufacturing plants in China, and its R&D in Europe,
where specific personnel talents may be available at the lowest price?


A)
extending a product life cycle


B)
applying arbitrage


C)
avoiding arbitrage


D)

shortening a product life cycle
Taking advantage of arbitrage opportunities is an advantage of
international expansion. In its simplest form, arbitrage involves buying
something from where it is cheap and selling it somewhere where it
commands a higher price. For example, a firm may locate its call centers
in India, its manufacturing plants in China, and its R&D in Europe,
where the specific types of talented personnel may be available at the
lowest possible price.

3
INCORRECT


Which of the following forms of risk makes it difficult for foreign firms to
conduct business, when there is an absence of rules or a lack of uniform
enforcement of existing rules that leads to inconsistent and arbitrary
government decisions?


A)
economic


B)
political


C)
currency


D)

management
Another source of political risk in many countries is the absence of the
rule of law. The absence of rules or the lack of uniform enforcement of
existing rules leads to what might often seem to be arbitrary and
inconsistent decisions by government officials. This can make it difficult
for foreign firms to conduct business.

4
INCORRECT

As an alternative to offshoring technology services, many companies are
considering which of the following alternative solutions that may overcome
the pitfalls of offshoring?


A)
increased homogeneity of offerings


B)
eliminating customer service functions


C)
moving production facilities to foreign soil


D)

rural outsourcing in the US
While there is a compelling logic for companies to engage in offshoring,
there can be many pitfalls. This has spurred many companies to
outsource tech services to low-cost locations within the United States,
instead of offshoring to foreign countries. This trend is discussed in
Strategy Spotlight 7.6.

5
INCORRECT


One of marketing strategist Theodore Levitt's assumptions in support of
global products and brands was that people around the world are not
willing to sacrifice preferences in product features, functions, and design for
lower prices and high quality.


A)
True


B)
False
Marketing strategist Theodore Levitt advocated strategies that favored
global products and brands. He suggested that firms should standardize
their products and services for all of their worldwide markets. Levitt's
approach rested on three key assumptions, one of which is that people
around the world are willing to sacrifice preferences in product
features, functions, design, and the like for lower prices at high quality.

6
INCORRECT


In choosing optimal locations for operations under the ________ strategy
for expanding into global markets, managers must realize that location
alone cannot guarantee that the quality and cost of factor inputs will be
optimal unless potential weaknesses of the locations are managed.


A)
global


B)
transnational


C)
international


D)

multidomestic
There are some unique risks and challenges associated with a
transnational strategy. The choice of a seemingly optimal location
cannot guarantee that the quality and cost of factor inputs (i.e., labor,
materials) will be optimal. Managers must ensure that the relative
advantage of a location is actually realized, not squandered because of
weaknesses in productivity and the quality of internal operations.

7 CORRECT


According to a study by Rugman and Verbeke, few of the world's largest
firms today can be considered completely global in terms of sales.


A)
True


B)
False
Alan Rugman and Alain Verbeke conclude that there is a stronger case
to be made in favor of regionalization than globalization. With a
criterion of 20 percent of sales each in at least two of the three
economic regions, only 25 of the 500 largest firms could be considered
global. Even today, most companies are considered to be regional or at
best, bioregional, but not global.

8 CORRECT


When expanding internationally, licensing offers a firm a lower investment
and risk, and degree of ownership and control than does a joint venture.


True
A)


B)
False
Refer to: Exhibit 7.10
Exhibit 7.10 illustrates a wide variety of modes of foreign entry,
including exporting, licensing, franchising, joint ventures, strategic
alliances, and wholly owned subsidiaries. As the exhibit indicates,
licensing offers a lower investment and risk, and degree of ownership
and control than does a joint venture.

9
INCORRECT

In considering countries with weak laws protecting intellectual property,
which of the following entry modes for international expansion would be the
best choice?


A)
exporting


B)
strategic alliance


C)
wholly owned subsidiary


D)

licensing
With licensing, the licensee may eventually become so familiar with the
patent and trade secrets that it may become a competitor; that is, the
licensee may make some modifications to the product and manufacture
and sell it independently of the licensor, without having to pay a royalty
fee. This potential situation is aggravated in countries that have
relatively weak laws for protecting intellectual property.

10
CORRECT


The risks associated with using a wholly owned subsidiary for expansion
can be lessened by hiring local talent.


A)
True


B)
False
With franchising, joint ventures, or strategic alliances, the risk is shared
with the firm's partners. With wholly owned subsidiaries, the entire risk
is assumed by the parent company. The risks associated with doing
business in a new country (e.g., political, cultural, and legal) can be
lessened by hiring local talent.
Your Results:
The correct answer for each question is indicated by a .
1
INCORRECT


In recognizing opportunities, what two phases of activity are involved that
lead to viable new venture opportunities?


A)
brainstorming and identification


discovery and evaluation
B)


C)
start-up and development


D)

resource collection and start-up

Opportunity recognition refers to more than just the Eureka feeling that
people sometimes experience at the moment they identify a new idea.
Although such insights are often very important, the opportunity
recognition process involves two phases of activity (discovery and
evaluation) that lead to viable new venture opportunities.

2
INCORRECT


Young, small firms get start-up funding most frequently from which of the
following?


A)
peer-to-peer lending via the Internet


B)
personal savings or contributions from family and friends


C)
bank or public financing


D)

venture capital or "angel" investors
The funding available to young and small firms tends to be quite limited.
In fact, the majority of new firms are low-budget start-ups, launched
with personal savings and the contributions of family and friends.
Among firms included in the Entrepreneur list of the 100 fastest-
growing new businesses in a recent year, 61 percent reported that their
start-up funds came from personal savings.

3
INCORRECT


Which of the following are benefits of social capital for new firms?


A)
offering contracts and providing training


B)
providing a base of experience and loan guarantees


C)
gaining exposure and building legitimacy faster


D)

underwriting loans and providing counseling
New ventures founded by entrepreneurs who have extensive social
contacts are more likely to succeed than are ventures started without
the support of a social network. Even though a venture may be new, if
the founders have contacts who will vouch for them, they gain exposure
and build legitimacy faster.

4
INCORRECT


Three characteristics of leadership for entrepreneurs defined by the text are
vision, dedication and drive and relevant experience.


A)
True


B)
False

Entrepreneurs put themselves to the test and get their satisfaction from
acting independently, overcoming obstacles, and thriving financially. To
do so, they must embody three characteristics of leadership, vision,
dedication and drive, and commitment to excellence, and pass these on
to all those who work with them.

5
INCORRECT


In applying the five-forces model to new ventures, the threat of retaliation
by established firms is not an important consideration.


A)
True


B)
False
A second factor that may be especially important to a young venture is
the threat of retaliation by incumbents. In many cases, entrepreneurial
ventures are the new entrants that pose a threat to incumbent firms.
Therefore, in applying the five-forces model to new ventures, the threat
of retaliation by established firms needs to be considered.

6
INCORRECT


When automakers introduced electric vehicles such as the Chevy Volt and
the Nissan Leaf in 2010 and 2011, Tesla had been in the design and
manufacture electric cars since 2003. These later to market offers
represent what type of entry strategy?


A)
pioneering


B)
prospective


C)
imitative


D)

comparative
An imitative new entry strategy is used by entrepreneurs who see
products or business concepts that have been successful in one market
niche or physical locale and introduce the same basic product or service
in another segment of the market. Tesla's car is a high performance
vehicle, while the latter entrants are mainstream offerings using electric
technology.

7 CORRECT


New ventures can achieve overall cost leadership relative to competitors
through the use of nimble organizational structures.


A)
True


B)
False
Because new ventures are typically small, they usually don't have high
economies of scale relative to competitors. Because they are usually
cash strapped, they can't make large capital investments to increase
their scale advantages. Because many are young, they often don't have
a wealth of accumulated experience to draw on to achieve cost
reductions. Compared to large firms, new ventures often have simple
organizational structures that make decision making both easier and
faster. The smaller size also helps young firms change more quickly
when upgrades in technology or feedback from the marketplace indicate
that improvements are needed. They are also able to make decisions at
the time they are founded that help them deal with the issue of
controlling costs. Thus, new firms have several avenues for achieving
low cost leadership.

8
INCORRECT

Which types of strategies often are associated with entrepreneurial
ventures because there is a natural fit between the scope of the strategy
and the size of the firm?


A)
Cost leadership


B)
Combination


C)
Differentiation


D)

Focus
Focus strategies are often associated with small businesses because
there is a natural fit between the narrow scope of the strategy and the
small size of the firm. Young firms can often succeed best by finding a
market niche where they can get a foothold and make small advances
that erode the position of existing competitors. From this position, they
can build a name for themselves and grow.

9 CORRECT


The model of competitive dynamics includes new competitive action, threat
analysis, motivation and capability to respond, types of competitive actions,
and likelihood of competitive reaction.


A)
True


B)
False
According to Exhibit 8.7, the components of competitive dynamics
analysis are: new competitive action, threat analysis, motivation and
capability to respond, types of competitive actions, and likelihood of
competitive reaction.

10
CORRECT


Smaller, less established firms tend to be better at surprise competitive
attacks because of their superior mobility.


A)
True


B)
False
Most entrepreneurial new ventures start out small. The smaller size
makes them more nimble compared to large firms so they can respond
quickly to competitive attacks. Because they are not well-known, start-
ups also have the advantage of the element of surprise in how and
when they attack. Large firms tend to be slower to respond. Older firms
tend to be predictable in their responses because they often lose touch
with the competitive environment and rely on strategies and actions
that have worked in the past.