Question1. Multinational competitors tend to concentrate activities in a limited number of locations whenprices and competitive conditions are strongly linked across country markets to form a world market.host-country governments can be persuaded to erect high tariff barriers to protect the company’s operations from foreign competitors and when it is not imperative to be responsive to buyer needs and competitive conditions in each country.there are significant scale economies and/or steep learning curve effects associated with performing certain activities in a single location, costs of performing the activity are lower in particular geographic locations, and certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages.competitive conditions make it infeasible to employ a profit sanctuary strategy or an export strategy.the risk of fluctuating exchange rates is very high.2. Which of the following is not an advantage of outsourcing the performance of certain value chain activities to outsiders?being able to reduce the company’s risk exposure to changing technology and/or buyer preferencesallowing a company to concentrate on its core business, leverage its key resources and core competencies, and do even better what it already does bestbeing able to reduce distribution costs by eliminating the use of wholesale distributors and retail dealers and, instead, selling direct to end-users at the company’s websiteimproving organizational flexibility and speeding time to marketallowing a company to reduce costs if the activity is not crucial to the firm’s ability to achieve sustainable competitive advantage and won’t hollow out its capabilities, core competencies, or technical know-how3. A hit-and-run or guerrilla warfare type of offensive strategy involvestactics that work best if the guerrilla is the industry’s low-cost leader.pitting a small company’s own competitive strengths head-on against the strengths of much larger rivals.surprising moves by small challengers that have neither the resources nor the market visibility to mount a full-fledged attack on industry leaders.random offensive attacks used by a market leader to steal customers away from unsuspecting smaller rivals.undertaking surprise moves to secure an advantageous position in a fast-growing and profitable market segment; usually the guerrilla signals rivals that it will use deep price cuts to defend its newly won position.4. Experience indicates that strategic allianceswork well in cooperatively developing new technologies and new products but seldom work well in promoting greater supply chain efficiency.have a high “divorce rate.”work best when they are aimed at achieving a mutually beneficial competitive advantage for the allies.are rarely useful in helping a company win the race for global industry leadership and establish positions in industries of the future.are generally successful.5. A “think global, act global” approach to strategy making is preferable to a “think local, act local” approach whenit is necessary to delegate strategy making to local managers with firsthand knowledge of local conditions.host governments enact regulations requiring that products sold locally meet strict manufacturing specifications or performance standards.country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy.plants need to be scattered across many countries to avoid high shipping costs.customer preferences vary significantly from country to country.6. The primary reasons that companies opt to expand into foreign markets are toavoid having to employ an export strategy, avoid the threat of cross-market subsidization from rivals, and enable the use of a global strategy instead of a multidomestic strategy.gain access to new customers, achieve lower costs, enhance the company’s competitiveness, capitalize on core competencies, and spread business risk across a wider market base.raise the entry barriers for industry newcomers, neutralize the bargaining power of important suppliers, grow sales faster, and increase the number of loyal customers.boost returns on investment, broaden their product lines, avoid tariffs and trade restrictions, and escape dealing with strong labor unions.grow sales faster than the industry average, reduce the competitive threats from rivals, and open up more opportunities to enter into strategic alliances.7. Which one of the following is not a strategic choice that a company must make to complement and supplement its choice of one of the five generic competitive strategies?whether and when to go on the offensive and initiate aggressive strategic moves to improve the company’s market position, or to go on the defensivewhether to integrate forward or backward into more stages of the industry value chainwhether to enter into strategic alliances or collaborative partnershipswhether to employ a low-cost strategy, a differentiation strategy, or a hybrid strategywhich value chain activities, if any, should be outsourced8. Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageousif economies of scale are essential to achieving acceptable production costs.whenever buyer-related activities are best performed in locations close to buyers.when high transportation costs make it expensive to operate from central locations; and whenever buyer-related activities are best performed in locations close to buyers.when high transportation costs make it expensive to operate from central locations.All of these are correct.9. The advantages of using a licensing strategy to participate in foreign markets includebeing especially well suited to exploit a profit sanctuary.enabling a company to achieve competitive advantage quickly and easily.being able to achieve lower costs than with a localized multidomestic strategy.being able to leverage the company’s technical know-how or patents without committing significant additional resources to markets that are unfamiliar, politically volatile, economically uncertain, or otherwise risky.being able to charge lower prices than rivals.10. Companies tend to concentrate their activities in a limited number of locationswhen certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages.when there is a steep learning curve associated with performing an activity.when there are significant scale economies.when the costs of manufacturing or other activities are significantly lower in some geographic locations than in others.All of these choices are correct.11. Being first to initiate a particular move can have a high payoff whenfirst-time customers remain strongly loyal to pioneering firms in making repeat purchases.pioneering helps build up a firm’s image and reputation with buyers.moving first constitutes a preemptive strike, making imitation extra hard or unlikely.All of these choices are correct.early commitments to new technologies, new-style components, new or emerging distribution channels, and so on can produce an absolute cost advantage over rivals.12. Architects of mergers and acquisition strategies typically set sights on which of the following objectives?gaining quick access to new technologies or other resources and competitive capabilities, and leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunitiescreating a more cost-efficient operation, expanding a company’s geographic coverage, and extending a company’s business into new product categories, and gaining quick access to new technologies or other resources and competitive capabilities, and leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunitiescreating a more cost-efficient operation, expanding a company’s geographic coverage, and extending a company’s business into new product categoriesfacilitating the employment of both offensive and defensive strategiesrevamping a company’s value chain13. The advantages of using a franchising strategy to pursue opportunities in foreign markets includehaving franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchiser to expend only the resources to recruit, train, and support foreign franchisees.gaining support from local governments in the form of subsidies and meeting local content requirements.being well suited to companies that employ cross-market subsidization.helping build brand awareness in international markets.being particularly well-suited to the international expansion efforts of companies with global strategies.14. Which one of the following is not a good type of rival for an offensive-minded company to target?other offensive-minded companies with a sizable war chest of cash and marketable securitiesmarket leaders that are vulnerablerunner-up firms with weaknesses in areas where the challenger is strongsmall local and regional companies with limited capabilitiesstruggling enterprises that are on the verge of going under15. A localized or multidomestic strategyis generally inferior to a global strategy when it comes to pursuing product differentiation.is one where a company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions.Two answers are correct: is one where a company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions; and has two big drawbacks: (1) it hinders transfer of a company’s competencies and resources across country boundaries because the strategies in different host countries can be grounded in varying competencies and capabilities; and (2) it does not promote building a single, unified competitive advantage, especially one based on low cost.has two big drawbacks: (1) it hinders transfer of a company’s competencies and resources across country boundaries because the strategies in different host countries can be grounded in varying competencies and capabilities; and (2) it does not promote building a single, unified competitive advantage, especially one based on low cost.is generally preferable to a global strategy in situations where buyers are price sensitive because a “think local, act local” type of multidomestic strategy is better suited to achieving low unit costs than a global strategy.16. Which one of the following statements about merger and acquisition strategies is true?Mergers and acquisitions do not always produce the hoped-for outcomes. Cost savings may prove smaller than expected. Gains in competitive capabilities may take substantially longer to realize or may never materialize. Efforts to mesh the corporate cultures can stall due to formidable resistance from organization members.Merger and acquisition strategies are nearly always a superior strategic alternative to forming alliances or partnerships with these same companies.Mergers and acquisition strategies are very high risk because of the financial drain of using the company’s cash resources to accomplish the merger or acquisition.Merger and acquisition strategies are one of the best ways for helping a company strengthen its brand image.Merger and acquisition strategies tend to be far more successful than forming strategic alliances and cooperative partnerships with other companies.17. Which of the following is typically the strategic impetus for forward vertical integration?to charge lower retail prices and thereby attract a bigger, more loyal clientele of customersto gain better access to end users and better market visibilityto achieve greater control over advertising and in-store retail merchandisingto make it easier to expand the company’s product lineto gain better access to greater economies of scale18. A “think local, act local” multidomestic type of strategyemploys essentially the same basic competitive strategy theme in all country markets.is generally an inferior strategy when one or more foreign competitors is pursuing a global low-cost strategy.becomes more appealing the bigger the country-by-country differences are in buyer tastes, cultural traditions, and market conditions.always makes a company vulnerable to rivals employing “think global, act global” strategies.protects a multinational firm against fluctuating exchange rates.19. Which of the following is not a typical reason that many alliances do not live up to expectations?diverging objectives and prioritiesinability of partners to work well togetherchanging conditions make the purpose of the alliance obsoleteemergence of more attractive technological pathsdisagreement over how to divide the added market share and profits gained from joint collaboration20. Which one of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true?Fluctuating foreign exchange rates greatly reduce the risks of competing in foreign markets; the big problem occurs when exchange rates are fixed at unreasonably low levels.Manufacturers that are exporting much of what they produce are benefited when their country’s currency grows stronger relative to the currencies of the countries to which the goods are being exported.Domestic companies trying to combat competition from foreign imports are hurt even more when their government’s currency grows weaker in relation to the currencies of the countries where the imported goods are being made.If the exchange rate of U.S. dollars for euros changes from $1.15 per euro to $1.25 per euro, then it is correct to say that the U.S. dollar has grown stronger.Domestic companies under pressure from lower-cost imports are benefited when their government’s currency grows weaker in relation to the currencies of the countries where the imported goods are being made.