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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. 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?

Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidlyPrepare 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 circumstances

2. Which of the following statements regarding multicountry competition is false?

With multicountry competition, rivals battle for national championships and winning in one country market does not necessarily signal the ability to fare well in other countries.With multicountry competition, the power and strength of a company’s strategy and resource capabilities in one country significantly enhance its competitiveness in other country markets.One of the features of multicountry competition is that the mix of competitors in each country market varies from country to country.One of the features of multicountry competition is that buyers in different countries are attracted to different product attributes.One of the features of multicountry competition is that industry conditions and competitive forces in each national market differ in important respects.

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

The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates.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 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.Fluctuating exchange rates pose significant risks to a company’s competitiveness in foreign markets.

4. Which of the following are not generic strategy options for competing in foreign markets?

Franchising and licensing strategies An export strategy and a multicountry strategyUsing strategic alliances and joint ventures with foreign competitors as the primary vehicles for entering and competing in foreign marketsGlobal strategies keyed either to low-cost or differentiationCross-border transfer strategies and home-field advantage strategies

5. Which one of the following is not a reason why a company decides to enter foreign markets?

To spread business risk across a wider geographic market baseTo achieve lower costs and enhance the firm's competitivenessTo gain economic incentives offered by governments of developing countries wishing to expand industry and job creationTo capitalize on company competencies and capabilitiesTo gain access to more buyers for the company's products/services

6. 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 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 the costs of performing certain value chain activities are significantly lower in certain geographic locations than in othersWhen certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantagesWhen there are significant scale economies in performing the activity

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

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

8. A “think local, act local” multicountry strategy works particularly well when

there are significant country-to-country differences in distribution channels and marketing methods.there are significant country-to-country differences in customer preferences and buying habits.diverse and complicated trade restrictions of host governments preclude the use of a uniform strategy from country-to-country.host governments enact regulations requiring that products sold locally meet strictly-defined manufacturing specifications or performance standards.All of the above.

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

certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages.All of the above.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).the costs of manufacturing or other activities are significantly lower in some geographic locations than in others.there are significant scale economies in performing an activity.

10. Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous

if diseconomies of large size exist, thereby making it more economical to perform an activity on a smaller scale in several different locations.All of the above.whenever buyer-related activities are best performed in locations close to buyers.when it is desirable to hedge against (1) the risks of fluctuating exchange rates, (2) supply interruptions or (3) adverse political developments.when high transportation costs make it expensive to operate from central locations.

11. The approach of a firm using a “think global, act local” version of a global strategy entails

little or no strategy coordination across countries.pursuing the same basic competitive strategy theme (low-cost, differentiation, best-cost, focused) in all countries where the firm does business but giving local managers some latitude to adjust product attributes to better satisfy local buyers and to adjust production, distribution, and marketing to be responsive to local market conditions.producing and marketing a variety of product versions under the same brand name, with each different version being designed specifically to accommodate the needs and preferences of buyers in a particular country.selling numerous product versions (each customized to buyer tastes in one or more countries and sometimes branded for each country) but opting to only sell direct to buyers at the company’s Web site so as to bypass the costs of establishing networks of whselling the company’s products under a wide variety of brand names (often one brand for each country or group of neighboring countries) so that buyers in each country market will think they are buying a locally-made brand.

12. One important concern a company has in trying to compete successfully in foreign markets is

whether it will have to integrate forward into wholesale and/or retail activities in order to gain visibility for its products in foreign countries.developing the expertise to avoid the impact of fluctuating exchange rates. convincing shippers to keep cross-country transportation costs low enough that the company can export its goods to foreign countries cheaply.how it can gain competitive advantage based on where it locates its various value chain activities.how to convince local government officials to reduce tariffs on the imports of its goods into their country.

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

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

14. Dispersing particular value chain activities across many countries rather than concentrating them in a select few countries can be more advantageous when

buyers demand short delivery times and/or high transportation costs make it uneconomical to operate from one or just a few locations.it helps hedge against the risks of exchange rate fluctuations, supply disruptions, and adverse political developments.there are diseconomies of scale in trying to operate from a single location.All of these.buyer-related activities (such as sales, advertising, after-sale service and technical assistance) need to take place close to buyers.

15. The drawbacks of a localized multicountry strategy include

making it very difficult to take into account significant country-to-country differences in distribution channels and marketing methods.being unsuitable for competing in the markets of emerging countries and posing added difficulty in modifying a company’s business model to compete on the basis of low price.hindering the use of cross-border coordination of a company’s activities and increasing company vulnerability to adverse shifts in currency exchange rates.hindering transfer of a company’s competencies and resources across country boundaries and hindering the pursuit of a single, uniform competitive advantage in all country markets where a company operates.making it difficult and costly to be responsive to country-to-country differences in customer needs, buying habits, cultural traditions, and market conditions.

16. A company is said to be an international competitor when

it competes in a majority of the world's different country markets.it has 2 or more profit sanctuaries. it has operations on all of the world's major continents.it competes in a select few foreign markets and perhaps has only modest ambitions to enter additional country markets.it employs an international strategy and competes in 50 or fewer country markets.

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

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.Fluctuating exchange rates do not 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 are disadvantaged 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.Companies that are manufacturing goods in a particular country and are exporting much of what they produce are benefited when that country’s currency grows weaker relative to the currencies of the countries that the goods are being exported to.

18. The essential difference between a “think global, act global” and a “think global, act local” approach to strategy-making is that

the “think global, act local” approach gives local managers more latitude to make minor strategy variations where necessary to better satisfy local buyers and to better match local market conditions.a “think global, act global” approach involves selling a mostly standardized product worldwide whereas a “think global, act local” approach entails selling products that are highly differentiated from country to country.a “think global, act global” approach entails extensive strategy coordination across countries and a “think global, act local” approach entails little or no strategy coordination across countries.the former aims at implementing the same business model worldwide whereas the latter aims at implementing customized business models to better match local market circumstances.a “think global, act global” approach involves selling under a single brand name worldwide whereas a “think global, act local” approach entails utilizing multiple brands (typically one for each different country or group of neighboring countries).

19. A U.S. manufacturer that exports goods made at its U.S. plants for shipment to foreign markets

becomes more competitive in foreign markets when the U.S. dollar declines in value against the currencies of the countries to which it is exporting.becomes more competitive in foreign markets when the U.S. dollar gains in value against the currencies of the countries to which it is exporting.is competitively disadvantaged when the U.S. dollar declines in value against the currencies of the countries to which it is exporting.has no interest in whether the dollar grows stronger or weaker versus foreign currencies unless it is competing only against companies located in foreign countries.is largely unaffected by fluctuating exchange rates; it would, however, be affected if its plants were in foreign countries.

20. The generic strategic options for competing in foreign markets include

licensing foreign firms to produce and distribute one's products or to use the company’s technology.a custom-tailored country-by-country approach based on meeting the particular needs of particular buyers in each target country.All of the above.global low-cost, global differentiation, global best-cost, and global focus strategies.maintaining a national (one-country) production base and exporting goods to foreign markets.

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

When a company wished to transfer competencies and resources across country boundaries and is striving to build a single, uniform competitive advantage worldwideWhen 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 the trade restrictions of host governments are diverse and complicatedWhen there are significant country-to-country differences in distribution channels and marketing methodsWhen host governments enact regulations requiring that products sold locally meet strictly-defined manufacturing specifications or performance standards

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

Crafting 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 marketIn 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 likeCountry-to-country differences in consumer buying habits and buyer tastes and preferencesWhether to customize the company's offerings in each different country market or whether to offer a mostly standardized product worldwideCountry-to-country variations in host government restrictions and requirements and fluctuating exchange rates

23. Multi-country competition is best characterized as a situation where

there is no international or global market, just a collection of mostly self-contained country markets.the competitive arena among rival companies involves several neighboring countries rather than either a single country or the world market as a whole.competition is mainly among the domestic companies of a few neighboring countries (five countries at most).there are extensive trade restrictions, sharply fluctuating exchange rates, and high tariff barriers in many country markets that work against the formation of a true world market.competition among domestic companies predominates and foreign competitors are a minor factor.

24. Which of the following is not one of the problems and risks of strategic alliances between domestic and foreign firms?

Overcoming language and cultural barriersDeveloping mutually agreeable ways of dealing with key issues or differencesMaking it harder to pursue a multicountry strategy as compared to a global strategySuspicions about whether allies are being forthright in exchanging information and expertiseThe amount of time required to build trust, effective communication, and coordination between allies

25. Multi-country competition refers to situations where

competition in one national market is independent of competition in other national markets and, as a consequence, there is strictly speaking no international or world market.""no domestic companies have king-sized market shares and each national market has many competitors.domestic rivals pursue focused or market niche strategies and do not compete internationally.most competitors operate in more than two country markets but rarely in more than 20.domestic companies have a competitive disadvantage in competing with foreign rivals that operate in many different countries.

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

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

Without work one finishes nothing. - Ralph Waldo Emerson© 2026 Fatskills.com

All trademarks, logos and brand names are the property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, trademarks and brands does not imply endorsement.

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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