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Exam 13: The Strategy of International Business

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Question 21

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Top management should be viewed as part of the firm's infrastructure.

A) True
B) False

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Question 22

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The strategy, operations, and organization of a firm must all be consistent with each other if the firm is to attain a competitive advantage and achieve superior profitability.

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B) False

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Question 23

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Core competencies enable a firm to reduce the costs of value creation and/or to create perceived value in such a way that premium pricing is possible.

Explain the concept of location economies.

Diminishing returns imply that when a firm already has significant value built into its product offering, increasing value by a relatively small amount requires significant additional costs.

When the firm simultaneously faces both strong cost pressures and strong pressures for local responsiveness, the ideal strategy to follow is the transnational strategy.

What is strategy? How does strategy relate to a firm's profitability?

Learning effects tend to be more significant when a technologically simple task is repeated.

Global expansion offers companies the opportunity to generate greater profits than companies that focus strictly on the domestic market.

The basic strategy paradigm suggests that to maximize its profitability, a firm should do all of the following, EXCEPT:

A multinational firm may need to delegate marketing functions to national subsidiaries to be responsive to local differences in distribution channels.

The percentage increase in net profits over time measures:

When a firm focuses on increasing profitability by customizing the product or service so that they provide a good match to tastes and preferences in different national markets, the firm is following a transnational strategy.

The price a firm charges for a good or service is typically less than the value placed on that good or service by the customer. This is because:

Explain the concept of universal needs and in which type of industry it is most likely to occur.

Research has shown that in the modern multinational enterprise, core competencies and skills typically reside in the home country.

Learning effects:

How can a firm increase its profitability?

A firm benefits by basing each value creation activity it performs at that location where economic, political, and cultural conditions, including relative factor costs, are most conducive to the performance of that activity. Firms that pursue such a strategy can realize:

Discuss efficiency frontier. How does strategic positioning relate to the efficiency frontier?