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Strategic Management Practice Test: Strategies for Competing in Foreign Markets

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Strategic Management Practice Test: Strategies for Competing in Foreign Markets

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1. The competitive advantage opportunities that a global competitor can gain by dispersing performance of its activities across many nations include

being in better position to choose where and how to challenge rivals.All of these.being able to shift production from one country to another to take advantage of exchange rate fluctuations, differing wage rates, differing energy costs, or differing trade restrictions.locating buyer-related activities (such as sales, advertising, after-sale service and technical assistance) close to buyers.shortening delivery times to customers by having geographically scattered distribution facilities.

2. When a company operates in the markets of two or more different countries, its foremost strategic issue is

whether to maintain a national (one-country) manufacturing base and export goods to the other countries.whether to use strategic alliances to help defeat its rivals.whether to vary the company’s competitive approach to fit specific market conditions and buyer preferences in each host country or whether to employ essentially the same strategy in all countries.whether to test the waters with an export strategy before committing to some other competitive approach.choosing which foreign companies to team up with via strategic alliances or joint ventures.

3. Which of the following is not a potential benefit of strategic alliances or other cooperative arrangements between foreign and domestic companies?

Sharing distribution facilities and dealer networks, thus mutually strengthening their access to buyersGreater ability to employ a global strategy (as opposed to a multicountry strategy)Filling competitively important gaps in their technical expertise and/or knowledge of local marketsGaining wider access to attractive country marketsGaining better access to scale economies in production and/or marketing

4. Which of the following is not a typical reason for companies to expand into the markets of foreign countries?

To capitalize on company competencies and capabilitiesTo strengthen its capability to employ vertical integration strategies, especially those that involve partial integration (building positions in selected stages of the industry’s value chainTo gain access to new customersTo spread business risk across a wider geographic market baseTo achieve lower costs and enhance the firm's competitiveness

5. A company is said to be a global competitor when

it competes in a majority of the world's different country markets.it sells its products in 50 to 100 or more countries and is expanding its operations into additional country markets annually.it competes in 15 or more country markets.it has long range strategic intentions to compete in as many as 50 country markets.it employs a global strategy.

6. The basic strategy options for local companies in competing against global challengers include

best-cost provider, focused low cost, and low-cost leadership strategies.utilizing keen understanding of local customer needs and preferences to create customized products or services, developing business models to exploit shortcoming in local infrastructure, and using acquisitions and rapid growth to defend against expansion-minded multinationalsfocused differentiation and broad differentiation strategies. franchising strategies, multicountry strategies keyed to product superiority, global low-cost leadership strategies, and cross-border coordination strategies.export strategies, licensing strategies, and cross-border transfer strategies.

7. A “think-local, act local” multicountry strategy entails

pursuing strong product differentiation and competing in many buyer segments.aggressive efforts to locate facilities in those country markets which have superior resources.a narrow product line aimed at serving buyers in the same segments of country markets worldwide.extensive efforts to transfer a company’s competencies and resource strengths from one country to another so as to keep entry costs into new country markets low.giving local managers considerable strategy-making latitude and often producing different product versions for different countries.

8. In which of the following situations is employing a 'think local, act local' multicountry strategy highly questionable?

When there are significant country-to-country differences in customer preferences and buying habits industry is characterized by big economies of scale and strong experience curve effectsWhen host governments enact regulations requiring that products sold locally meet strictly-defined manufacturing specifications or performance standardsWhen there are significant country-to-country differences in distribution channels and marketing methodsWhen a company wished to transfer competencies and resources across country boundaries and is striving to build a single, uniform competitive advantage worldwideWhen the trade restrictions of host governments are diverse and complicated

9. 43. A “think local, act local” multicountry type of strategy

can defeat a global strategy if the “think local, act local” multicountry strategist concentrates its efforts exclusively in those foreign markets which have superior resources.becomes more appealing the bigger the country-to-country differences in buyer tastes, cultural traditions, and market conditions.is generally an inferior strategy when one or more foreign competitors is pursuing a global low-cost strategy.is very risky, given fluctuating exchange rates and the propensity of foreign governments to impose tariffs on imported goods.is usually defeated by a “think global, act global” type of strategy.

10. Which of the following statements regarding global competition is false?

In global competition, there’s more cross-country variation in industry conditions and competitive forces than there is in industries where multicountry competition prevails.In globally competitive industries, the power and strength of a company’s strategy and resource capabilities in one country significantly enhance its competitiveness in other country markets.In global competition, a firm’s overall competitive advantage (or disadvantage) grows out of its entire worldwide operations.In global competition, many of the same rival companies compete against each other in many different countries, but especially so in countries where sales volumes are large and where having a competitive presence is strategically important to building a sIn global competition, rivals vie for worldwide market leadership.

11. To use location to build competitive advantage when competing in both domestic and foreign markets, a company must

concentrate buyer-related activities in a few well-chosen locations so as to maximize the capture of distribution-related scale economies. avoid selling in countries where there are high trade barriers or where buyers purchase in small quantities.disperse both production and distribution activities across many nations in order to hedge against fluctuating exchange rates and lessen the risks of adverse political developments.scatter its production plants across many different country markets so as to minimize the costs of shipping to its own distribution centers and/or to wholesalers/retail dealers. consider (1) whether to concentrate each activity it performs in a few select countries or to disperse performance of the activity to many nations and (2) in which countries to locate particular activities.

12. Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is not accurate?

Fluctuating exchange rates pose significant risks to a company’s competitiveness in foreign markets.The advantages of manufacturing goods in a particular country can be undermined when that country’s currency grows stronger relative to the currencies of the countries where the output is being sold.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.Exporters win when the currency of the country from which the goods are being exported grows weaker relative to the currencies of the countries that the goods are being exported to.The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates.

13. One of the most viable strategic options companies should consider in tailoring their strategy to fit circumstances of emerging country markets include

Be prepared to modify aspects of the company’s business model to accommodate local circumstancesTry to change the local market to better match the way the company does business elsewhereStay away from those emerging markets where it is impractical to modify the company’s business model to accommodate local circumstancesAll of thesePrepare to compete on the basis of low price

14. A 'think global, act global' approach to strategy-making is preferable to a “think local, act local” approach when

host governments enact regulations requiring that products sold locally meet strict manufacturing specifications or performance standards.plants need to be scattered across many countries to avoid high shipping costs.a big majority of the company's rivals are pursuing localized multicountry strategies.country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy.market growth rates vary considerably from country to country.

15. The strength of a “think local, act local” multicountry strategy is that

it avoids host country ownership requirements and import quotas.it matches a company's competitive approach to prevailing market and competitive conditions in each country market, country by country.it eliminates the costs and burdens of trying to coordinate the strategic moves undertaken in one country with the moves undertaken in the other countries.the plants located in different countries can be operated independent of one another, thus promoting greater achievement of scale economies.each of a company’s country strategies is almost totally different from and unrelated to its strategies in other countries.

16. Which of the following is not one of the generic strategy options for competing in the markets of foreign countries?

A profit sanctuary strategyA franchising strategyAn export strategyA global strategyA multicountry strategy

17. Competing in the markets of foreign countries generally does not involve which of the following?

Country-to-country differences in consumer buying habits and buyer tastes and preferencesIn which countries to locate company operations for maximum locational advantage, given country-to-country variations in wages rates, worker productivity, energy costs, tax rates, and the likeWhether to customize the company's offerings in each different country market or whether to offer a mostly standardized product worldwideCrafting a multicountry strategy that works just as well in one country as in another and that also has the appeal of turning the world market into a mostly homogeneous marketCountry-to-country variations in host government restrictions and requirements and fluctuating exchange rates

18. Which of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true?

Fluctuating exchange rates pose significant risks to a company’s competitiveness in foreign markets.Companies that are manufacturing goods in a particular country and are exporting much of what they produce lose out when that country’s currency grows weaker relative to the currencies of the countries that the goods are being exported to.The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates.The advantages of manufacturing goods in a particular country improve when that country’s currency grows stronger relative to the currencies of the countries where the output is being sold. Domestic companies under pressure from lower-cost 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.

19. A key approach for a company to grow sales and profits in several country markets is to

minimize transportation costs among these markets.employ a multicountry strategy rather than a global strategy.locate technical after-sale services close to buyers.transfer its valuable competencies and resource strengths among these markets to aid in the development of broader competencies and capabilities.take advantage of less restrictive restrictions and requirements of host governments.

20. Which of the following statements regarding multicountry and global competition is false?

With multicountry competition, the competitive contest is localized, with rivals battling for national market leadership; moreover, winning in one country market does not necessarily signal that a company has the ability to fare well in the markets of othIn global competition, the size of a firm’s worldwide competitive advantage (or disadvantage) equals the sum of the competitive advantages (or disadvantages) it has in each country market where it competes.One of the features of multicountry competition is there is greater cross-country variation in market conditions and the nature of the competitive contest among rivals than tends to be the case in globally competitive markets.In globally competitive industries, a company’s competitive position in one country both affects and is affected by its position in other countries.In global competition, rivals vie for worldwide market leadership and the leading competitors compete head-to-head in the markets of many different countries.

21. In competing in foreign markets, companies find it advantageous to concentrate their activities in a limited number of locations when

there are significant scale economies in performing an activity.the costs of manufacturing or other activities are significantly lower in some geographic locations than in others.when there is a steep learning or experience curve associated with performing an activity in a single location (thus making it economical to serve the whole world market from just one or maybe a few locations).certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages.All of the above.

22. Which of the following is not a typical option that companies have to consider to tailor their strategy to fit the circumstances of emerging country markets?

Prepare to compete on the basis of low priceTry to change the local market to better match the way the company does business elsewhereBe prepared to modify aspects of the company’s business model to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding)Stay away from those emerging markets where it is impractical or uneconomic to modify the company’s business model to accommodate local circumstancesDevelop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly

23. Using domestic plants as a production base for exporting goods to selected foreign country markets

can be an excellent initial strategy to test the international waters and learn if attractive market positions can be established in foreign markets.is usually a weak strategy when competitors are pursuing multi-country strategies.can be a competitively successful strategy when a company is focusing on vacant market niches in each foreign country and does not have to compete head-to-head against strong host country competitors.can be a powerful strategy since a company can maintain a one-country production base allowing it to capitalize on company competencies and capabilities.can be a powerful strategy because a company is not vulnerable to fluctuating exchange rates.

24. In which of the following circumstances is it not advantageous for a multinational competitor to concentrate its activities in a limited number of locations in order to build competitive advantage?

When certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantagesWhen a company has competitively superior patented technology that it can license to foreign partnersWhen there is a steep learning or experience curve associated with performing an activity in a single locationWhen there are significant scale economies in performing the activityWhen the costs of performing certain value chain activities are significantly lower in certain geographic locations than in others

25. Companies racing for global market leadership

are well-advised to avoid all the risks and problems of competing in emerging country markets.usually encounter very low barriers in entering the markets of emerging countries.can usually be expected to earn sizable profits quickly in emerging country markets.seldom have the resource capabilities it takes to be effective in competing in emerging country markets and usually are at a strong competitive disadvantage to the domestic market leaders.generally have to consider establishing competitive positions in the markets of emerging countries.

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25 Questions

❤ If you liked Fatskills, consider supporting us by checking out The Life Manuals You Never Got.

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About | Explore | User Guide | Topics | Subjects | Doubt Solver | Career Aptitude Test | Answers | Free Tools | OSHA Basics Quiz | What Should We Know?
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