Chapter 7 International Strategies: Strategic Management in Action, 6e (Coulter)

Strategic Management in Action, 6e (Coulter)
Chapter 7 International Strategies
1) International strategy is a corporate strategy that describes companies that do business in

multiple countries simultaneously.
Answer: TRUE
Diff: 1 Page Ref: 197
Topic: Describe International Strategy, and Explain Why it's Important
AACSB: Reflective Thinking
Objective: Explain how strategies are implemented in international business
2) Organizations are considered international if they exchange goods and services with
consumers in other countries.
Answer: TRUE
3) International strategy is a type of growth strategy.

Answer: TRUE
4) One of the advantages of going international is that it can potentially lower operational costs.
Answer: TRUE
AACSB: Analytical Skills
5) Quality issues are a potential advantage of going international.

Answer: FALSE
6) Protectionism is one of the drwabacks of being international.

Answer: TRUE
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Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall
7) Going international can lead to achieving benefits of economies of scale.
Answer: TRUE
8) One of the potential drawbacks of going international is that interdependencies among

multiple countries cannot be exploited.
Answer: FALSE
9) The legal-political environment in the United States is stable.

Answer: TRUE
Topic: Explain the Issues That Arise as Organizations Go International
10) Global political risk is minimized when a firm goes international.

Answer: FALSE
11) Australia is an example of a country on the low political stability list.

Answer: FALSE
12) Organizations wanting to do business in countries with low stability levels face great
certainty.
Answer: FALSE
2
13) A free market economy is one in which resources are primarily owned and controlled by the
private sector.
Answer: TRUE
14) A planned economy is one in which economic decisions are planned by the private sector.
Answer: FALSE
15) Vietnam and North Korea are examples of planned economies.

Answer: TRUE
16) ________ refers to the values and attitudes shared by individuals from a specific country that
shape their behavior and their beliefs about what is important.
A) National culture
B) National values
C) International value systems
D) Global culture
E) None of the above
Answer: A
3
17) The ________ approach is one in which the strategies are basically the same in all countries
in which the organization does business.
A) transnational
B) multidomestic
C) global
D) country-specific
E) ethnocentric
Answer: C
Topic: Describe the Important International Strategy Alternatives and Explain How They Are
Implemented and Evaluated
18) The global approach to strategy is designed to help develop a (n) ________ advantage.
A) low-cost
B) differentiation
C) integrated
D) niche
E) None of the above
Answer: A
19) A ________ approach is one in which the organization's strategies vary according to the
country in which it does business.
A) global
B) multicountry
C) transnational
D) differentiated
E) integrated
Answer: B
4
20) A multicountry approach is based on developing a ________ advantage.
A) differentiation
B) low-cost
C) integrated
D) focused
E) None of the answer choices is correct.
Answer: A
21) In the ________ approach, products are tailored to fit consumer tastes and preferences.
A) global.
B) multicountry
C) integrated
D) focused
E) reactor
Answer: B
22) ________ is purchasing materials or labor from around the world wherever it is cheapest.
A) Transnational sourcing
B) Global sourcing
C) Value chain sourcing
D) Niche-based sourcing
E) Cooperative sourcing
Answer: B
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23) Which of the following is NOT an international strategy alternative?
A) Exporting
B) Importing
C) Deporting
D) Licensing
E) Franchising
Answer: C
24) ________ and ________ are similar approaches involving one organization giving another
organization the right to use its brand name, technology, or product specifications in return for a
lump sum payment or a fee usually based on sales.
A) Importing, exporting
B) Sourcing, procuring
C) Licensing, franchising
D) Globalizing, internationalizing
Answer: C
25) ________ involves acquiring products made abroad and selling them domestically.
A) Exporting
B) Importing
C) Licensing
D) Franchising
E) Focusing
Answer: B
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26) ________ is primarily used by manufacturing companies.
A) Franchising
B) Licensing
C) Focusing
D) Procuring
Answer: B
27) ________ is primarily used by service organizations.

A) Licensing
B) Franchising
C) Sourcing
D) Procuring
E) Importing
Answer: B
28) Anheuser-Busch InBev uses a ________ strategy in foreign markets.

A) franchising
B) sourcing
C) importing
D) licensing
Answer: D
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29) Because they entail minimal investment and risk, many small businesses often use ________
and ________ to do business globally.
A) exporting, importing
B) exporting, sourcing
C) importing, sourcing
D) exporting, licensing
E) importing, licensing
Answer: A
30) Setting up a(n) ________ involves directly investing in a foreign country.

A) licensee
B) subsidiary
C) franchisee
D) international division
Answer: B
31) In relative terms, which of the following involves minimal global investment?
A) Exporting
B) Importing
C) Global sourcing
D) Licensing
E) Franchising
Answer: C
8
32) In relative terms, which of the following involves significant global investment?
A) Global sourcing
B) Foreign subsidiary
C) Licensing
D) Franchising
E) Exporting
Answer: B
33) A subsidiary in a multidomestic organization is managed through

A) transnational control.
B) globalized control.
C) centralized control.
D) local control.
Answer: D
34) A subsidiary in a global organization is managed through

A) local control.
B) decentralized control.
C) centralized control.
D) national control.
Answer: C
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35) Which of the following involves the greatest commitment of resources and poses the greatest
amount of risk?
A) Global sourcing
B) Exporting and importing
C) Licensing
D) Franchising
E) Foreign subsidiary
Answer: E
36) A(n)________ is any type of international company that maintains operations in multiple
countries.
A) international company
B) conglomerate
C) multinational corporation
D) prospector.
Answer: C
37) One type of MNC is a

A) multidomestic corporation.
B) transformational company.
C) border organization
D) All of the above answer choices are correct
Answer: A
10
38) A ________ decentralizes management and other decisions to the local country.
A) multidomestic corporation
B) global company
C) glocal company
D) transnational organization
E) borderless organization
Answer: A
39) A ________ doesn't attempt to replicate its domestic successes by managing foreign
operations from its home country.
A) multidomestic corporation
B) global company
C) glocal company
E) boundryless organization
Answer: A
40) Nestle has operations in almost every country on the globe and its managers match the
company's products to its consumers. Nestle is an example of a
A) global company.
B) glocal company.
C) transnational organization.
D) multidomestic corporation.
Answer: D
11
41) When Frito-Lay (a division of PepsiCo) markets a Dorito chip in the British market that
differs in both taste and texture from the U.S. and Canadian version, Frito-Lay is most likely
operated as a
A) global company.
B) multidomestic corporation.
C) glocal company.
D) transnational organization.
E) borderless organization.
Answer: B
42) Many consumer product companies that compete in the global market organize themselves
as a ________ because they must adapt their products to meet the needs of local markets.
A) global company
B) multidomestic corporation
C) transnational organization
D) borderless organization
Answer: B
43) When Walmart Stores "thinks locally to act globally," it is most likely approaching the
global market as a
A) global company.
B) transnational organization.
C) borderless organization.
D) multidomestic corporation.
Answer: D
12
44) A ________ centralizes its management and other decisions in the home country.
A) global company
B) glocal company
C) multidomestic corporation
E) borderless organization
Answer: A
45) ________ treat the world market as an integrated whole.

A) Multidomestic corporations
B) Transnational organizations
C) Global companies
D) Glocal organizations
Answer: C
46) ________ focus on the need for global efficiency and cost savings.
A) Global companies
B) Multidomestic corporations
C) Transnational organizations
D) Focused organizations
Answer: A
13
47) When a company says, "We don't want people to think we're based anyplace," the company
is organized as a
A) transnational organization.
B) global company.
C) multidomestic corporation.
D) focused corporation.
Answer: A
48) A transnational organization is also called a

A) borderless organization.
C) global company.
D) focused organization.
Answer: A
49) A ________ eliminates artificial geographic barriers.

A) transnational organization
B) multidomestic corporation
C) global company
D) focused organization
Answer: A
14
50) When IBM dropped its organizational structure based on country and reorganized into
industry groups worldwide, it became a
A) transnational organization.
C) global company.
D) focused organization.
Answer: A
Colossus Consumer Products (CCP) is a United Stated-based company that operates in the skin
care industry. The company first ventured into international markets in 2008 and by 2012 was
operating in 22 markets besides its home market. Due to less than stellar results from its global
expansion, CCP's CEO, Megan Mulcahy has hired you as a consultant to help streamline the
company's international push.
51) Megan Mulcahy and CCP believe that because the company has been extremely successful
in the U.S., its home country work approaches and practices are the best and that these should be
used globally. What is CCP's global perspective?
A) Geocentric attitude
B) Polycentric attitude
C) Ethnocentric attitude
D) Regiocentric attitude
Answer: C
52) Ms. Mulcahy wants to understand the advantages of being international. Which of the
following would you suggest?
A) Interdependencies among multiple countries can be exploited.
B) Potentially higher operational costs
C) Increased global competition for jobs, markets, and talents
D) Quality issues
Answer: A
15
53) One of the countries that Megan Mulcahy wants to enter is North Korea. You explain to her
that North Korea is a ________ economy because economic decisions are planned by a central
government.
A) tourist
B) planned
C) free market
D) focused
E) differentiated
Answer: B
54) Mulcahy believes that in the skincare industry, local responsiveness is important because
significant country-to-country differences exist. She is suggesting a ________ approach.
A) global
B) ethnocentric
C) regiocentric
D) multicountry
E) regional
Answer: D
55) As a manufacturing company, CCP should probably use ________ in going international.
A) franchising
B) licensing
C) focusing
D) preempting
E) transitioning
Answer: B
16
56) What is parochialism?
Answer: Parochialism is viewing the world solely through one's own eyes and perspectives.
People with a parochial attitude do not recognize that others have different ways of living and
working. They ignore others' values and customs and rigidly apply an attitude of "ours is better
than theirs" to foreign cultures.
57) What is the difference between a free market and a planned economy?
Answer: Countries have different types of economic systems. A free market economy is one in
which resources are primarily owned and controlled by the private sector. In contrast, a planned
economy is one in which economic decisions are planned by a central government. While no
market is purely free market or planned, the U.S. and the U.K lean toward the free market
system, while North Korea is more a planned economy.
58) How does the multicountry approach differ from the global approach?
Answer: There are two basic international strategy alternatives. A multicountry approach is one
in which an organization's strategies vary according to the countries in which it does business.
Such an approach is based on developing a differentiation advantage and is particularly useful
when significant country-by-country differences exist. The global approach is one where
strategies are basically the same in all countries in which the organization does business. The
global approach is designed to help develop a low-cost advantage.
Diff: 2 Page Ref: 202-203
59) What are the important potential advantages of being international?

Answer:
∙ Interdependencies among multiple countries can be exploited
∙ Way to learn more about a particular market or world region
∙ Strategically locate for tax benefits and regulations
∙ Potentially lower operational costs
∙ Way to supplement or strengthen domestic growth, benefit from economies of scale, and
become a stronger competitor
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60) Explain the key differences between a multidomestic corporation and a global company.
Answer:
Multidomestic
∙ Management decentralized
∙ Local employees hired to manage each country's operations
∙ Marketing strategies tailored to each country's unique characteristics
Global
∙ Management centralized in home country
∙ World markets treated as an integrated whole
∙ Focus is on global efficiency
∙ Emphasizes cost savings
18

Chapter 7 International Strategies: Strategic Management in Action, 6e (Coulter)

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Chapter 7 International Strategies: Strategic Management in Action, 6e (Coulter)

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Strategic Management in Action, 6e (Coulter)

Chapter 7 International Strategies

1) International strategy is a corporate strategy that describes companies that do business in

3) International strategy is a type of growth strategy.

5) Quality issues are a potential advantage of going international.

6) Protectionism is one of the drwabacks of being international.

8) One of the potential drawbacks of going international is that interdependencies among

9) The legal-political environment in the United States is stable.

10) Global political risk is minimized when a firm goes international.

11) Australia is an example of a country on the low political stability list.

15) Vietnam and North Korea are examples of planned economies.

27) ________ is primarily used by service organizations.

28) Anheuser-Busch InBev uses a ________ strategy in foreign markets.

30) Setting up a(n) ________ involves directly investing in a foreign country.

33) A subsidiary in a multidomestic organization is managed through

34) A subsidiary in a global organization is managed through

37) One type of MNC is a

45) ________ treat the world market as an integrated whole.

48) A transnational organization is also called a

49) A ________ eliminates artificial geographic barriers.

59) What are the important potential advantages of being international?

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