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The risk of intellectual property appropriation increases when companies follow a multidomestic strategy because products are


A) difficult to differentiate.
B) complex to produce.
C) exported long distances.
D) manufactured locally.

E) B) and C)
F) A) and C)

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In Michael Porter's diamond framework,_____ describe a country's endowments in terms of natural,human,and other resources.


A) market conditions
B) factor conditions
C) demand conditions
D) supply conditions

E) A) and D)
F) A) and B)

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Which of the following is a drawback faced by multinational enterprises (MNEs) pursuing an international strategy?


A) They cannot leverage their home-based core competencies in foreign markets.
B) They are highly affected by exchange rate fluctuations.
C) They have to be highly responsive to local needs and preferences.
D) They cannot reap the benefits of economies of scale due to their highly customized products.

E) A) and B)
F) B) and C)

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Which of the following statements best describes local responsiveness?


A) the process of producing goods in one country and selling them in another
B) the need to tailor product and service offerings to fit native consumer preferences and host-country requirements
C) the belief that consumer needs and preferences throughout the world are converging and thus becoming increasingly homogenous
D) the additional costs of doing business in an unfamiliar culture and economic environment, and of coordinating across geographic distances

E) B) and C)
F) A) and B)

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A multinational enterprise (MNE) is said to be pursuing a multidomestic strategy when it


A) is pursued in response to low pressure for local responsiveness and low pressure for cost reduction.
B) attempts to reap significant economies of scale by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost.
C) attempts to maximize local responsiveness, hoping that the host country consumers will perceive it to be a local company.
D) operates on the assumptions made in the globalization hypothesis in order to lower costs.

E) B) and D)
F) C) and D)

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When a firm pursues a(n) _____,it sells the same products or services in both domestic and foreign markets.


A) domestic strategy
B) international strategy
C) differentiation strategy
D) localization strategy

E) C) and D)
F) A) and B)

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Stop n' Save Inc.,a supermarket chain,is implementing a multidomestic strategy.SunLife Inc.,a company that manufactures solar panels for commercial and domestic purposes,is pursuing a global-standardization strategy.How will the two companies most likely differ from each other?


A) Stop n' Save Inc. will focus more on cost-reduction than SunLife Inc.
B) Stop n' Save Inc. will have its business functions spread across the world; SunLife Inc.'s business functions will be highly centralized.
C) Unlike SunLife Inc., Stop n' Save Inc. will be able to pursue a differentiation strategy at the business level.
D) Unlike SunLife Inc., Stop n' Save Inc. will be able to reap significant economies of scale and location economies.

E) None of the above
F) B) and C)

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In which of the following stages of globalization did firms organize as networks to pursue a global-standardization strategy?


A) Globalization 1.0
B) Globalization 2.0
C) Globalization 3.0
D) Globalization 4.0

E) A) and D)
F) B) and D)

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Which of the following is an observable feature in the Globalization 3.0 stage?


A) Knowledge flow between the local replicas of the multinational enterprises and their U.S. headquarters is limited.
B) Only sales and distribution functions of a multinational enterprise are located in a few key countries.
C) Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world.
D) Firms have reorganized from a global enterprise with different centers of expertise to a multinational company with self-contained operations in a few selected countries.

E) All of the above
F) A) and B)

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Some multinational enterprises (MNEs) attempt to reap significant economies of scale and location economies by pursuing an international division of labor based on wherever best-of-class capabilities reside at the lowest cost.This is known as a(n) _____ strategy.


A) international
B) multidomestic
C) global-standardization
D) localization

E) A) and C)
F) B) and D)

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The administrative and political distance between two trading countries reduces when


A) there are FDI restrictions in the host country.
B) there is no independent central bank in the host country.
C) there are tariffs and trade quotas in the host country.
D) there is a well-functioning capital market in the host country.

E) All of the above
F) A) and B)

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United Borova Laboratories Inc.has a national competitive advantage in the pharmaceutical industry.This means that the country


A) is a world leader in the pharmaceutical industry.
B) has nationalized the pharmaceutical industry.
C) has low levels of competition, providing other multinational companies with an opportunity to take over the pharmaceutical industry.
D) is a potential foreign market for multinational pharmaceutical companies to sell their products.

E) B) and D)
F) A) and D)

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European aircraft maker Airbus is investing $600 million in Mobile,Alabama,to build jetliners.Which of the following statements best explains why it is employing this strategy?


A) to take advantage of the high labor costs in the southern United States
B) to take advantage of the high cost of living in the southern United States
C) to take advantage of the low impact of globalization in the United States
D) to take advantage of lower taxes in the southern United States

E) A) and C)
F) All of the above

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Shine Enterprises Inc.is a large financial conglomerate that operates in more than 50 countries and employs over 80,000 people across the world.It operates through multiple regional product divisions,which tend to function as autonomous profit-and-loss centers.This allows the company to reap significant economies of scale.Though each division acts as an autonomous firm with its individual regional leaders,frequent sharing of knowledge between the divisions allows for global learning.These factors help the company reconcile product and service differentiations at low cost.Which of the following strategies does Shine Enterprises Inc.most likely use?


A) an international strategy
B) a focused-differentiation strategy
C) a multidomestic strategy
D) a transnational strategy

E) All of the above
F) A) and B)

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Which of the following statements is true of an international strategy?


A) It enables firms to leverage their home-based core competencies in foreign markets.
B) It is advantageous when firms face high pressures for both local responsiveness and cost reductions.
C) It relies on joint ventures to reap economies of scale by accessing a larger market.
D) It effectively protects a firm from exchange rate fluctuations.

E) None of the above
F) B) and D)

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Fragra Inc.,a company that manufactures and sells premium perfumes,is pursuing an international strategy.SaveMart Inc.,a supermarket chain,follows a multidomestic strategy.Which of the following statements is most likely true of this scenario?


A) Fragra Inc. will sell the same products and services in both domestic and foreign markets, whereas SaveMarket Inc. will customize its product offerings to suit local requirements.
B) Fragra Inc. will pursue a differentiation strategy at the business level, whereas SaveMarket Inc. will pursue a cost-leadership strategy at the business level.
C) Fragra Inc. will be better protected from exchange rate fluctuations when compared to SaveMarket Inc.
D) Fragra Inc. will not be able to leverage its home-based core competencies in foreign markets as much as SaveMarket Inc.

E) B) and C)
F) A) and D)

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A greater cultural distance between two trading countries


A) increases linguistic similarities between the two countries.
B) increases the liability of foreignness.
C) reduces the uncertainty of doing business.
D) reduces the transaction costs associated with business.

E) A) and C)
F) All of the above

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Swiss-based Nestlé,the largest food company in the world,is well-known for customizing its product offerings to suit local preferences,tastes,and requirements.By doing this,Nestlé is pursuing a(n)


A) multidomestic strategy.
B) international strategy.
C) global-standardization strategy.
D) transnational strategy.

E) A) and B)
F) All of the above

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A(n) _____ arises out of the combination of high pressure for local responsiveness and low pressure for cost reductions.


A) international strategy
B) transnational strategy
C) global-standardization strategy
D) multidomestic strategy

E) A) and B)
F) None of the above

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A firm pursuing a transnational strategy would believe that


A) key business functions should be located in its home country headquarters.
B) local-responsiveness is more important than cost-reductions for competitive advantage.
C) best practices, ideas, and innovations should be diffused throughout the world.
D) the majority of the value creation should take place in the home country.

E) A) and C)
F) All of the above

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