PepsiCo leads Coca-Cola in the Indian market. Why?

PepsiCo leads Coca-Cola in the Indian market. Why? 

A. PepsiCo entered the market before Coca-Cola.

B. PepsiCo formed a joint venture with two Indian companies to introduce its products under their label.

C. Coca-Cola promoted too many products.

D. Coca-Cola created too much direct employment in the beginning of its operation.

Answer: B

_________ are most appropriate when a firm already has the appropriate knowledge and capabilities that it can leverage rather easily through multiple locations in many countries.

_________ are most appropriate when a firm already has the appropriate knowledge and capabilities that it can leverage rather easily through multiple locations in many countries. 

A. Joint ventures

B. Strategic alliances

C. Licensing agreements

D. Wholly owned subsidiaries

Answer: D

A __________ is a business in which a multinational company owns 100 percent of the stock.

A __________ is a business in which a multinational company owns 100 percent of the stock. 

A. joint venture

B. strategic alliance

C. wholly owned subsidiary

D. franchising operation

Answer: C

________ entail the creation of a third-party legal entity, whereas __________ do not.

________ entail the creation of a third-party legal entity, whereas __________ do not. 

A. Licensing agreements; joint ventures

B. Joint ventures; strategic alliances

C. Strategic alliances; joint ventures

D. Franchising agreements; strategic alliances

Answer: B

The difference between a franchise contract and a licensing contract is that ___________.

The difference between a franchise contract and a licensing contract is that ___________. 

A. a franchise contract is more specific and usually longer in duration

B. a franchise contract must include a foreign government

C. a licensing contract covers more aspects of operations

D. a franchise contract involves less control and less risk

Answer: A

Fees that a multinational receives from a foreign licensee in return for its use of intellectual property (trademark, patent, trade secret, technology) are usually called _____________.

Fees that a multinational receives from a foreign licensee in return for its use of intellectual property (trademark, patent, trade secret, technology) are usually called _____________. 

A. transfer prices

B. dividends

C. royalties

D. intra-corporate inflows


Answer: C

The form of entry strategy into international operations that offers the lowest level of control for the domestic corporation would be _________.

The form of entry strategy into international operations that offers the lowest level of control for the domestic corporation would be _________. 

A. franchising

B. licensing

C. joint venture

D. exporting

Answer: D

A domestic corporation considering international expansion for the first time typically will follow which of these paths?

A domestic corporation considering international expansion for the first time typically will follow which of these paths? 

A. It will start off by implementing a wholly owned foreign subsidiary in order to maintain standards identical to those at home.

B. It will license or franchise its operations.

C. It will implement a low risk-low control strategy such as exporting.

D. It will form a joint venture with a reputable foreign producer.

Answer: C

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

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

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

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

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

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

Answer: B

Which one of the following explains why so few firms are global?

Which one of the following explains why so few firms are global? 

A. Culture, language, and religion are similar between countries.

B. Legal and political systems are similar between countries.

C. Governments are increasing trade restrictions in general.

D. Geographic distance is multiplied by distance in culture, language, religion, and legal and political systems.

Answer: D

Which of the following is a reason for the rise in regional expansion?

Which of the following is a reason for the rise in regional expansion? 

A. increase in the number of trading blocs and free trade zones

B. decrease in the number of trading blocs and free trade zones

C. increasing national trade restrictions

D. increasing local taxes and tariffs

Answer: A

In order to realize the strongest competitive advantage, firms engaged in worldwide competition must ___________.

In order to realize the strongest competitive advantage, firms engaged in worldwide competition must ___________. 

A. require that all of their various business units follow the same strategy regardless of location

B. ensure that all business units follow a strategy strictly tailored to their respective locations

C. pursue a strategy that combines the uniformity of a global strategy and the specificity of a multidomestic strategy in order to achieve optimal results

D. attempt to use the strategy that was most successful in their home country

Answer: C

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

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

A. less ability to realize cost savings through scale economies

B. limited ability to adapt to local markets

C. unique managerial challenges in fostering knowledge transfer

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

Answer: C

Units coordinate their activities with headquarters and with one another. Units adapt to special circumstances only they face. The entire organization draws upon relevant corporate resources. These are all attributes of which type of strategy?

Units coordinate their activities with headquarters and with one another. Units adapt to special circumstances only they face. The entire organization draws upon relevant corporate resources. These are all attributes of which type of strategy? 

A. global strategy

B. transnational strategy

C. international strategy

D. multidomestic strategy

Answer: B

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

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

A. global strategy

B. multidomestic strategy

C. transnational strategy

D. differentiation strategy

Answer: C

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

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. single locations may lead to higher tariffs and transportation costs

D. may lead to overadaptation as conditions change

Answer: C

Elements of a multidomestic strategy may facilitate the competitive advantage of cost leadership by __________.

Elements of a multidomestic strategy may facilitate the competitive advantage of cost leadership by __________. 

A. flexibility in adjusting to local laws and customs

B. decreased duplication of inventories which are often involved in having multiple plants producing similar products

C. decreased shipping and transportation costs inherent in local production

D. economies of scale gained through centralized production of standardized products

Answer: C

Which one of the following is not a limitation of a global strategy?

Which one of the following is not a limitation of a global strategy? 

A. limited ability to adapt to local markets

B. the ability to locate activities in optimal locations

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

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

Answer: B

Which of the following is not a risk associated with a global strategy?

Which of the following is not a risk associated with a global strategy? 

A. A firm with only one manufacturing location must export its product, sometimes at great distance from the operation.

B. The geographic concentration of any activity may also tend to isolate that activity from the targeted markets.

C. Concentrating an activity in a single location makes the rest of the firm dependent on that location.

D. The pressures for local adaptation may elevate the cost structure of the firm.

Answer: D

As in the case of Siebel Systems (now part of Oracle), elements of a global strategy may facilitate the competitive advantage of differentiation by _______.

As in the case of Siebel Systems (now part of Oracle), elements of a global strategy may facilitate the competitive advantage of differentiation by _______. 

A. increased freedom of individual business units to adapt to local tastes

B. the creation of a worldwide network to achieve consistent service regardless of location

C. flexibility in applying Research and Development to meet country-specific needs

D. tailoring products to meet country-specific needs

Answer: B

Firms following a global strategy strive to offer __________ products and services as well as locate manufacturing, Research and Development, and marketing activities in a limited number of locations.

Firms following a global strategy strive to offer __________ products and services as well as locate manufacturing, Research and Development, and marketing activities in a limited number of locations. 

A. widely differentiated

B. more expensive local

C. internationally differentiated

D. standardized

Answer: D

Recent trends that might lead managers of multinational corporations (MNCs) to adopt a more decentralized strategy for their operations would include all of the following EXCEPT ______.

Recent trends that might lead managers of multinational corporations (MNCs) to adopt a more decentralized strategy for their operations would include all of the following EXCEPT ______. 

A. customer needs, interests, and tastes becoming increasingly homogenized

B. consumers around the world increasingly willing to tradeoff idiosyncratic preferences in product features for lower price

C. flexible manufacturing trends allowing a decline in the minimum volume required to reach acceptable levels of production efficiency

D. fluctuating exchange rates

Answer: A

Which of the following types of international firms are most likely to benefit from a global strategy as opposed to a multidomestic strategy?

Which of the following types of international firms are most likely to benefit from a global strategy as opposed to a multidomestic strategy? 

A. firms that compete in industries in which consumer preferences vary substantially in each country

B. firms in industries that are expanding very rapidly

C. firms in industries that have value added by sales and marketing departments

D. firms in industries that have much value added in research and design or manufacturing

Answer: D

Industries in which proportionally more value is added in __________ activities are more likely to benefit from a global strategy.

Industries in which proportionally more value is added in __________ activities are more likely to benefit from a global strategy. 

A. downstream

B. upstream

C. marketing

D. sales

Answer: B

Software Tech, Inc., a company in the computer software industry, invests heavily in Research and Development, and product design. Thus, most of its value is added ________.

Software Tech, Inc., a company in the computer software industry, invests heavily in Research and Development, and product design. Thus, most of its value is added ________. 

A. upstream

B. in its infrastructure

C. downstream

D. midstream

Answer: A

High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy?

High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy? 

A. global strategy

B. multidomestic strategy

C. transnational strategy

D. overall cost leadership strategy

Answer: B

Which would be the appropriate strategy for companies to use to compete in the global marketplace if the marketplace pressure is for lower costs with little pressure for local adaptation?

Which would be the appropriate strategy for companies to use to compete in the global marketplace if the marketplace pressure is for lower costs with little pressure for local adaptation? 

A. international strategy

B. global strategy

C. multidomestic strategy

D. transnational strategy

Answer: A

When firms expand into global markets, they are faced with the choice of reducing costs and/or adapting to the local market. When high pressures exist to adapt locally, companies should choose a __________ or __________ in order to compete in the global marketplace.

When firms expand into global markets, they are faced with the choice of reducing costs and/or adapting to the local market. When high pressures exist to adapt locally, companies should choose a __________ or __________ in order to compete in the global marketplace. 

A. global strategy; transnational strategy

B. global strategy: multidomestic strategy

C. international strategy; global strategy

D. transnational strategy; multidomestic strategy

Answer: D

When firms expand into global markets, they are faced with the choice of reducing costs and/or adapting to the local market. When high pressures exist to lower costs, companies should choose a __________ or __________ in order to compete in the global marketplace.

When firms expand into global markets, they are faced with the choice of reducing costs and/or adapting to the local market. When high pressures exist to lower costs, companies should choose a __________ or __________ in order to compete in the global marketplace. 

A. global strategy; transnational strategy

B. global strategy: multidomestic strategy

C. international strategy; multidomestic strategy

D. international strategy; transnational strategy

Answer: A

Which one of the following is one of the Theodore Levitt assumptions supporting a pure global strategy?

Which one of the following is one of the Theodore Levitt assumptions supporting a pure global strategy? 

A. Consumers are willing to pay more for specific product features.

B. Customer needs and interests are becoming more dissimilar.

C. MNCs can successfully compete globally by aggressively pricing products at the sacrifice of product features.

D. If the world markets are treated as heterogeneous, substantial economies of scale are easily achieved.

Answer: C

In considering the decision to offshore, which of the following generally is not one of the hidden costs?

In considering the decision to offshore, which of the following generally is not one of the hidden costs? 

A. Total wage costs and indirect costs

B. Increased inventory and coordination costs

C. Reduced market responsiveness and intellectual property rights

D. Wage deflation

Answer: D

_______ occurs when a firm decides to utilize other firms to perform value-creating activities that were previously performed in-house.

_______ occurs when a firm decides to utilize other firms to perform value-creating activities that were previously performed in-house. 

A. Offshoring

B. A global strategy

C. Outsourcing

D. A transnational strategy

Answer: C

If the U.S. dollar appreciates relative to foreign currency, what is likely to be the result for the U.S. company that has company branches abroad?

If the U.S. dollar appreciates relative to foreign currency, what is likely to be the result for the U.S. company that has company branches abroad? 

A. Profits will increase, when measured in U.S. dollars.

B. Profits will decrease, when measured in U.S. dollars.

C. Foreign exports to the United States will decrease.

D. Foreign demand for U.S. goods and services will decrease.

Answer: B

The sale of Boeing commercial aircraft and Microsoft operating systems in many countries enables these companies to benefit from ____________.

The sale of Boeing commercial aircraft and Microsoft operating systems in many countries enables these companies to benefit from ____________. 

A. higher prices in their domestic markets

B. reducing their exposure to currency risks

C. economies of scale

D. optimizing the location for many activities in their value chain

Answer: C

If a company is considering optimizing the physical location for every activity in the value chain, which of the following is not a possible strategic advantage for that decision?

If a company is considering optimizing the physical location for every activity in the value chain, which of the following is not a possible strategic advantage for that decision? 

A. Performance enhancement

B. Cost reduction

C. Political risk reduction

D. Life-cycle enhancement

Answer: D

Which of the following is not a motivation for a company to pursue international expansion?

Which of the following is not a motivation for a company to pursue international expansion? 

A. It wishes to increase the size of the potential markets for its products and services.

B. It wishes to take advantage of arbitrage opportunities in order to increase profit.

C. It wishes to optimize value-chain activities to enhance performance, reduce costs, and reduce risk.

D. It wishes to increase foreign market penetration by developing products for the home market.

Answer: D

Which of the factors below has not made the software services industry in India extremely competitive on a global scale?

Which of the factors below has not made the software services industry in India extremely competitive on a global scale? 

A. large pool of skilled workers

B. large network of public and private educational institutions

C. tax and antitrust legislation that protects the dominant players in the industry

D. large, growing market and sophisticated customers

Answer: C

According to Michael Porter, firms that have experienced intense domestic competition are ________.

According to Michael Porter, firms that have experienced intense domestic competition are  ________. 

A. unlikely to have the time or resources to compete abroad

B. more likely to demand protection from their governments

C. most likely to design strategies aimed primarily at the domestic market

D. more likely to design strategies and structures that allow them to successfully compete abroad

Answer: D

Rivalry is intense in nations with conditions of __________ consumer demand, __________ supplier bases, and __________ new entrant potential from related industries.

Rivalry is intense in nations with conditions of __________ consumer demand, __________ supplier bases, and __________ new entrant potential from related industries. 

A. weak; weak; high

B. strong; strong; low

C. weak; weak; low

D. strong; strong; high

Answer: D

In the Porter Diamond of National Advantage framework which of the following factors does not affect nation competitiveness?

In the Porter Diamond of National Advantage framework which of the following factors does not affect nation competitiveness? 

A. The position of the nation in factors of production necessary to compete in a given industry.

B. The presence or absence in the nation of supplier industries that are internationally competitive.

C. The conditions in the nation governing the nature of foreign rivalry.

D. The nature of home-market demand of the products or services of the industry.

Answer: C

Multinational firms are constantly faced with the dilemma of choosing between _______ and __________.

Multinational firms are constantly faced with the dilemma of choosing between _______ and __________. 

A. local adaptation; global integration

B. local adaptation; local integration

C. global adaptation; local integration

D. global adaptation; global integration

Answer: A

Which of the following is not a risk normally associated with Bottom of the Pyramid strategies?

Which of the following is not a risk normally associated with Bottom of the Pyramid strategies? 

A. A low-end version of a brand may detract from the overall brand attractiveness.

B. The new low-cost products they develop may cannibalize the sales of their core products.

C. Entrenched competitors can impact the ability of the new firm to enter the market successfully.

D. New products may be perceived as exploiting the privileged customer with substandard products.

Answer: D

Antitakeover tactics include all of the following EXCEPT _________.

Antitakeover tactics include all of the following EXCEPT _________. 

A. greenmail

B. poison pills

C. golden parachutes

D. golden handcuffs

Answer: D

The term golden parachute refers to _________.

The term golden parachute refers to _________. 

A. a clause requiring that huge dividend payments be made upon takeover

B. pay given to executives fired because of a takeover

C. financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it

D. managers of a firm in a hostile takeover approaching a third party about making the acquisition

Answer: B

An antitakeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price is called ______.

An antitakeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price is called ______. 

A. greenmail

B. a golden parachute

C. a poison pill

D. scorched earth

Answer: C

The antitakeover tactic, _______, is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it.

The antitakeover tactic, _______, is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it. 

A. golden parachute

B. poison pill

C. greenmail

D. scorched earth

Answer: C

According to Michael Porter, there is a tremendous allure to _________. It is the big play, the dramatic gesture. With one stroke of the pen you can add billions to size, get a front-page story, and create excitement in markets.

According to Michael Porter, there is a tremendous allure to _________. It is the big play, the dramatic gesture. With one stroke of the pen you can add billions to size, get a front-page story, and create excitement in markets. 

A. strategic alliances and joint ventures

B. internal development

C. mergers and acquisitions

D. differentiation strategies

Answer: C

Internal development may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through __________ and __________ can provide.

Internal development may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through __________ and __________ can provide. 

A. strategic alliances; joint ventures

B. strategic alliances; mergers

C. mergers; acquisitions

D. mergers; strategic alliances

Answer: C

Which of the following statements regarding internal development as a means of diversification is FALSE?

Which of the following statements regarding internal development as a means of diversification is FALSE? 

A. Many companies use internal development to extend their product or service offers.

B. An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services.

C. The firm is able to capture wealth created without having to share the wealth with alliance partners.

D. Firms can often develop products or services at a lower cost, if they rely on their own resources instead of external funding.

Answer: B

Which of the following is not part of a good guideline list for managing strategic alliances?

Which of the following is not part of a good guideline list for managing strategic alliances? 

A. establishing a clear understanding between partners

B. not shortchanging your partner

C. relying primarily on a contract to make the joint venture work

D. working hard to ensure a collaborative relationship between partners

Answer: C

Cooperative relationships such as __________ have potential advantages such as entering new markets, reducing manufacturing (or other) costs in the value chain, and developing and diffusing new technologies.

Cooperative relationships such as __________ have potential advantages such as entering new markets, reducing manufacturing (or other) costs in the value chain, and developing and diffusing new technologies. 

A. joint ventures

B. mergers

C. acquisitions

D. joint ventures and strategic alliances

Answer: D

Verizon Wireless and ILS Technology have a _________ whereby Verizon integrates technology developed by ILS to improve its machine-to machine (M2M) data transmission systems. M2M systems allow firms to securely transmit data to and from various devices.

Verizon Wireless and ILS Technology have a _________ whereby Verizon integrates technology developed by ILS to improve its machine-to machine (M2M) data transmission systems. M2M systems allow firms to securely transmit data to and from various devices. 

A. joint diversification

B. divestment

C. strategic alliance

D. global integration

Answer: C

Divesting of businesses can accomplish many different objectives, except _______.

Divesting of businesses can accomplish many different objectives, except _______. 

A. enabling managers to focus their efforts more directly on the core businesses of the firm

B. providing the firm with more resources to spend on more attractive alternatives

C. dispersing manager focus

D. raising cash to help fund existing businesses

Answer: C

The downsides or limitations of mergers and acquisitions include all of the following EXCEPT:

The downsides or limitations of mergers and acquisitions include all of the following EXCEPT: 

A. Premiums that are frequently paid to acquire a business are expensive.

B. Difficulties exist in integrating the activities and resources of the acquired firm into on-going operations.

C. There can be many cultural issues that can doom an otherwise promising acquisition.

D. It is a slow means to enter new markets and acquire skills and competences.

Answer: D

The primary means by which a firm can diversify are __________, _________, and ________.

The primary means by which a firm can diversify are __________, _________, and ________. 

A. mergers and acquisitions; differentiation; overall cost leadership

B. mergers and acquisitions; joint ventures and strategic alliances; internal development

C. joint ventures and strategic alliances; integration of value chain activities; acquiring human capital

D. mergers and acquisitions; internal development; differentiation

Answer: B