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Exam 6: Strategy in the Global Environment

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Question 1

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Companies pursuing an international strategy tend to centralize product development functions, such as R&D at home.

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Question 2

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Which of the following factors increases pressures for cost reductions?

A) Differences in distribution channels between home and foreign markets are modest.
B) Increasing national wealth is expanding the market.
C) The product has great transportation needs.
D) The product has high switching costs.
E) Differentiation on nonprice factors is difficult, and price is the main competitive weapon in a market.

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Question 3

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Identify and discuss the general ways in which companies can increase their profitability and profit growth through global expansion.

Establishing a wholly owned subsidiary is generally the least costly method of serving a foreign market.

The globalization of production has been increasing as companies take advantage of lower barriers to international trade and investment to disperse important parts of their production process around the globe.

Which of the following is not one of the ways in which expanding globally can enable companies to increase their profitability and grow their profits more rapidly?

Expanding globally can enable a company to increase its profitability and grow its profits more rapidly.

Walmart opened its first stores in Mexico in 1993.

A localization strategy is most appropriate when there are substantial differences across nations with regard to consumer tastes and preferences, and where cost pressures are not too intense.

Consider the case of a family-owned furniture making business, headquartered in the U.S., with fewer than 50 employees, that is contemplating exporting its products for the first time. What market do you recommend it enter, and when and how should it enter? Explain your answers.

The greater the pressures for cost reduction are, the more likely it is that a company will want to pursue some combination of exporting and wholly owned subsidiaries.

Which of the following factors increases pressures for local responsiveness?

Responding to pressures for cost reductions requires that a company try to minimize its ____________.

A problem with the international strategy is that over time, competitors inevitably emerge, and if managers do not take pro-active steps to reduce their cost structure, their company may be rapidly out-flanked by efficient global competitors.

Companies following an international strategy avoid any attempt at local customization of product offering.

When Dell opened a service call center in India to take advantage of an educated, English-speaking workforce and lower its costs, it was realizing which of the following benefits of global expansion?

Companies pursuing a low-cost strategy on a global scale are following a global standardization strategy.

Which of the following is not a drawback to licensing?

The trend toward the globalization of production and markets is on the rise because industry boundaries do not stop at national borders.

An international strategy may not be viable in the long term, and to survive, companies that are able to pursue it might ultimately need to shift towards a global standardization strategy.