Chapter 12

International Business: Environments and Operations, 16e, Global Edition (Daniels et al.
)
Chapter 12 Strategies for International Business
1) Political, legal, economic, monetary, and institutional forces comprise the ________ of
international business and influence managers' actions.
A) environment
B) competition
C) culture
D) threat
Answer: A
Diff: 2
Learning Outcome: Describe the process of selecting and developing an international business
strategy
Skill: Concept
Objective: 12-1 Explain the idea of strategy in the MNE
AACSB: Analytical thinking
2) Phillip is an international business manager with Corbin Manufacturing. Which of the

following serves as an external influence on the business decisions that Phillip makes?
A) production plant locations
B) host country monetary policy
C) supply chain linkages
D) product design standards
Answer: B
Diff: 2
strategy
Skill: Application
AACSB: Application of knowledge
3) ________ is the framework that managers apply to determine the competitive moves and
business approaches that run the company.
A) Competition
B) Growth
C) Strategy
D) Vision
Answer: C
Diff: 1
strategy
Skill: Concept
1
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4) A(n) ________ outlines a firm's ultimate goal and its guiding values in broad terms.
A) mission
B) strategy
C) vision
D) imperative
Answer: C
Diff: 1
strategy
Skill: Concept
AACSB: Reflective thinking
5) Rather than an inspirational statement, a(n) ________ statement is meant to motivate people
to act and specify the objectives that the firm needs to attain.
A) mission
B) vision
C) expectation
D) strategy
Answer: A
Diff: 1
strategy
Skill: Concept
6) The framework that managers use to make decisions that maximize their companies' value
creation performance is referred to as a strategy.
Answer: TRUE
Diff: 2
strategy
Skill: Concept
7) Markets are not always perfectly competitive and some firms consistently outperform industry
averages. This suggests that firm performance is also influenced by the presence of bright,
motivated managers and their keen sense of innovative products or processes.
Answer: TRUE
Diff: 2
strategy
Skill: Concept
2
8) Which force in Toyota's immediate environment would most likely have the greatest impact
on its strategy?
A) interest rate trends
B) technological developments
C) shifts in U.S. political attitudes
D) actions taken by Honda and Mercedes Benz
Answer: D
Diff: 2
strategy
Skill: Application
Objective: 12-2 Profile how executives make strategy
9) The industry organization (IO) paradigm reports that, on average, the BEST predictor of firm
strategy is the ________.
A) company's stockpile of assets, skills, and capabilities
B) aggressiveness of a company's marketing objectives
C) link between a company's products and processes
D) structure of the industry in which it competes
Answer: D
Diff: 2
strategy
Skill: Concept
10) The industry organization (IO) paradigm assumes which of the following?
A) stable political and cultural trends
B) shifting foreign-exchange rates
C) perfect competition
D) unequal value
Answer: C
Diff: 2
strategy
Skill: Concept
3
11) Which of the following is the most important constraint on the explanatory power of the IO
paradigm?
A) Many industries are imperfectly competitive.
B) Many companies are locally but not internationally competitive.
C) Most customers have perfect knowledge of the products they select.
D) Most industries have many firms that each have small market shares.
Answer: A
Diff: 2
strategy
Skill: Concept
12) Improving explanatory power of the IO paradigm can be done by considering the potential
for ________ to lead to a company's sustained competitive advantage.
A) bright, motivated managers
B) political trends and events
C) cultural institutions
D) new markets
Answer: A
Diff: 2
strategy
Skill: Concept
13) Which of the following has the greatest potential to transform an industry's structure?
A) a change in a competitor's management
B) a change in a competitor's pricing structure
C) the expansion of a distribution channel
D) the exit of a competitor from the industry
Answer: D
Diff: 2
strategy
Skill: Concept
4
14) The potential of new entrants is one characteristic of industry structure.
Answer: TRUE
Diff: 1
strategy
Skill: Concept
15) Change in the long-term industry growth rate has the potential to transform an industry's
structure.
Answer: TRUE
Diff: 2
strategy
Skill: Concept
16) In a brief essay, discuss the strategy used by Zara, the firm described in the opening case.
Also discuss the features of Zara's value chain.
Answer: Zara realized that offering standardized fashion styles at reasonable prices neutralized
stubborn local preferences. Its global network, supported by state-of-the-art logistics, gave
customers worldwide real-time access to the newest, coolest fashion trends. Global markets let
Zara leverage its global scale investment in design, manufacturing, distribution, and retail
activities. The resulting efficiencies, in turn, supported making high-quality, low-cost products
that, by offering compelling value, re-powered the cycle. Zara does not adapt products to a
particular country's preferences. The convergence of fashion and taste across national boundaries
endorses management's bias toward standardization. However, some product designs cater to
physical, cultural, or climate differences—smaller sizes in Japan, special women's clothing in
Arab countries, and different seasonal weights in South America. Still, Zara standardized about
85 percent of its designs for the global market. The firm has a concentrated value chain with its
product design, manufacturing, and logistics activities located in Spain at the firm's headquarters.
Diff: 3
strategy
Skill: Synthesis
5
17) A ________ is a special outlook, skill, capability, or technology that runs through the firm's
operations, weaving together all value activities into an integrated value chain.
A) core competency
B) value proposition
C) mission statement
D) learning curve
Answer: A
Diff: 1
strategy
Skill: Concept
Objective: 12-3 Differentiate resources, capabilities, and core competencies
18) Which of the following refers to the means by which management applies the systems that
link a company's value activities, whether those activities are performed in one or in many
countries?
A) configuration
B) logistics
C) coordination
D) core competency
Answer: D
Diff: 1
strategy
Skill: Concept
19) A core competency gives every employee in an MNE a principle that helps them coordinate
transactions between value activities.
Answer: TRUE
Diff: 2
strategy
Skill: Concept
6
20) Digitization has altered location economics and established a new global model for service
providers in the financial and legal industries.
Answer: FALSE
Diff: 2
strategy
Skill: Concept
AACSB: Information technology
21) Using a concentrated configuration, an MNE performs value activities in different countries.
Answer: FALSE
Diff: 2
strategy
Skill: Concept
22) Which of the following is the BEST example of a product disruption driving industry
change?
A) redesign of Toyota's Prius
B) introduction of Apple's iPad
C) AT&T's purchase of T-Mobile
D) merger of United and Continental
Answer: B
Diff: 2
strategy
Skill: Application
Objective: 12-4 Assess approaches to create value
23) Which of the following is the purpose of a company's value proposition?

A) to exceed customers' expectations
B) to force competitors into a price war
C) to identify consumers for whom the company creates products
D) to explain why a consumer should buy the company's products
Answer: D
Diff: 2
strategy
Skill: Concept
7
24) A strategy that focuses on lowering operating costs is referred to as a ________ strategy.
A) differentiation
B) cost leadership
C) niche market
D) diversification
Answer: B
Diff: 1
strategy
Skill: Concept
25) ________ are the two basic strategies for creating value and attaining a competitive
advantage in an industry.
A) Diversification and niche marketing
B) Industry leadership and market dominance
C) Customer satisfaction and product innovation
D) Cost leadership and differentiation
Answer: D
Diff: 1
strategy
Skill: Concept
26) A company that employs a(n) ________ strategy creates value by generating customer
insights and translating those insights into innovations.
A) differentiation
B) diversification
C) cost leadership
D) innovation
Answer: A
Diff: 1
strategy
Skill: Concept
8
27) The essence of a differentiation strategy is to ________.
A) target the most sophisticated segment of the market
B) incorporate the greatest number of features into a product
C) offer a unique product that supports a premium price
D) outspend rivals on product advertising
Answer: C
Diff: 2
strategy
Skill: Concept
28) A differentiation strategy works well when ________.

A) a company designs a universal product for a broad market
B) buyers believe minor product differences are irrelevant to price
C) buyers are highly sensitive to price shifts and quality control
D) a company can continually develop products that have unique features
Answer: D
Diff: 2
strategy
Skill: Concept
29) Successful implementation of a ________ strategy requires a company to develop unique

competencies that rivals find hard, if not impossible, to match or copy.
A) differentiation
B) cost leadership
C) globalization
D) marketing
Answer: A
Diff: 2
strategy
Skill: Concept
9
30) Some companies that opt for the cost leadership strategy plan to sell products below the
average industry prices in order to capture market share.
Answer: TRUE
Diff: 2
strategy
Skill: Concept
31) When different companies produce the same commodity, their costs are essentially the same.
Answer: FALSE
Diff: 2
strategy
Skill: Concept
32) A differentiation strategy is a unique mixture of the localization and global strategies
whereby the company attempts to capture the advantages of both.
Answer: FALSE
Diff: 2
strategy
Skill: Concept
33) A differentiation strategy works well in situations where there are many ways to differentiate
a product or service and many buyers perceive these differences as having value.
Answer: TRUE
Diff: 2
strategy
Skill: Concept
10
34) Describe the two basic ways that companies can create value. What role does the value chain
play in these methods?
Answer: Companies create value in two basic ways—cost leadership and differentiation. Cost
leadership emphasizes high production volumes, low costs, and low prices to attract customers.
Firms that choose this strategy strive to be the low-cost producer in an industry for a given level
of quality. This strategy pushes a firm to sell its products either at average industry prices to earn
a profit higher than that of rivals or below average industry prices to capture market share. A
differentiation strategy spurs the company to provide a unique good or service that rivals find
hard, if not impossible, to match or copy. Firms that choose this strategy aspire to develop
products that offer unique attributes that they reason are highly valued by customers and that
customers perceive to be better than or sufficiently different from products offered by other
companies.
The practices of successful MNEs advise managers to interpret the activities the firm performs as
elements of a value chain. The value chain follows from the principle that "every firm is a
collection of discrete activities performed to do business that occur within the scope of the firm."
It specifies a clear-cut framework that lets managers deconstruct the abstraction of "create value"
into a step-by-step system. Modeling its sequence requires MNEs to configure functions and
coordinate processes that move products from conception in R&D through sourcing materials,
organizing manufacturing, supervising logistics, applying marketing, and setting-up service
options.
Diff: 3
strategy
Skill: Synthesis
35) A useful way to understanding the purpose of strategy is to think of the firm as a(n)
________, composed of a series of distinct activities, including production, marketing, materials
management, R&D, human resources, information systems, and the firm infrastructure.
A) activity network
B) value constellation
C) task succession
D) value chain
Answer: D
Diff: 1
strategy
Skill: Concept
Objective: 12-5 Diagram the features and functions of the value chain
11
36) A company's value chain is best described as the ________.
A) variable sequence of converting product ideas into value for shareholders
B) mixture of activities taken to define product value standards and price points
C) discrete series of steps taken to move a product from conception to end-users
D) blueprint that must be followed to leverage the core capabilities of a global firm
Answer: C
Diff: 2
strategy
Skill: Concept
37) In the context of value chain analysis, the support activities of a firm include ________.
A) outbound logistics, human resources, and information systems
B) production, marketing, and operations
C) shipping and customer service
D) research and development
Answer: C
Diff: 2
strategy
Skill: Concept
38) Which of the following is considered a primary activity in a company's value chain?
A) shipping
B) product design
C) systems and solutions
D) materials and equipment
Answer: B
Diff: 2
strategy
Skill: Concept
12
39) Dispersing value activities where and in how many places in the world is the issue of
________.
A) logistics
B) clustering
C) coordination
D) configuration
Answer: D
Diff: 1
strategy
Skill: Concept
40) Zara creates, produces, and distributes most of its products from its headquarters in Spain.
Zara is most likely using a ________ configuration.
A) concentrated
B) coordinated
C) dispersed
D) logical
Answer: A
Diff: 2
strategy
Skill: Application
41) Johnson Enterprises manufactures computer chips used in cell phones. The MNE has long
production runs that lower the per unit cost of each chip. The firm also purchases materials in
bulk from its suppliers with whom Johnson has long-term contracts. Johnson is most likely
benefiting from ________.
A) economies of scale
B) the cluster effect
C) digitization
D) location economies
Answer: A
Diff: 2
strategy
Skill: Application
13
42) The term ________ refers to a global company that thrives on seeking unique ideas and
insights from locations around the world and then leveraging that knowledge in international
markets.
A) multidomestic
B) domestic
C) metanational
D) cross-cultural
Answer: C
Diff: 2
strategy
Skill: Concept
43) Managers use a value chain analysis to determine how the company will design, make,
move, and sell products; how it will find efficiencies in doing so; and how it will coordinate the
decisions in one part of the business with those made in other parts.
Answer: TRUE
Diff: 2
strategy
Skill: Concept
44) Support activities define the infrastructure of the firm and serve as the basis for the daily
implementation of primary activities in the value chain.
Answer: TRUE
Diff: 2
strategy
Skill: Concept
45) Dispersed value chains make sense when costs vary across countries.
Answer: TRUE
Diff: 2
strategy
Skill: Concept
14
46) The strategy of a firm using an international strategy is likely to entail producing and
marketing mostly standardized products worldwide, with some customization where and when
necessary.
Answer: TRUE
Diff: 2
strategy
Skill: Concept
47) Tel-Comm Tek is a company that sees the world as a single market, assuming that consumer
preferences and industry conditions do not vary much among countries. Tel-Comm Tek is likely
to adopt a multidomestic strategy.
Answer: FALSE
Diff: 2
strategy
Skill: Application
48) Micro-multinationals are firms that globalize immediately and enter countries with numerous
customers, productive workers, and attractive industries.
Answer: TRUE
Diff: 2
strategy
Skill: Concept
15
49) What is the difference between primary and secondary activities in the value chain? Describe
the functions of configuration and coordination in these value activities.
Answer: A value chain has primary and secondary activities. Primary activities are those
involved in the physical movement of raw materials and finished products, in the production of
goods and services, and in the marketing, sales, and subsequent services of the outputs of the
business. Secondary activities make up the managerial infrastructure of the firm that supports
carrying out the primary activities. The support activities include the processes and systems
installed to coordinate decisions and transactions among the various value activities. Secondary
activities apply to each primary activity. An MNEs competitiveness depends on efficiently
distributing value activities and effectively linking them. Distributing value activities around the
world is the matter of configuration. Linking them is the matter of coordination. Configuration
and coordination, flip sides of the value chain coin, are intrinsically related.
Diff: 3
strategy
Skill: Synthesis
16
50) What is configuration? Briefly list and discuss the factors that influence value chain
configuration.
Answer: Configuration is the way that managers arrange the activities of the value chain. MNEs
greatly improve their competitiveness and performance by configuring value activities to capture
potential location economies—namely, the economies that arise from performing a value
creation activity in the optimal location for that activity, given prevailing economic, political,
and cultural conditions. Therefore, several conditions shape how managers configure value
chains worldwide, most notably, cost factors, cluster effects, logistics, digitization, economies of
scale, and business environments.
a. Differences in cost factors, such as wage rates, worker productivity, inflation rates, and
government regulations, create significant variations in production costs from country to country.
b. The cluster effect is when a particular industry gradually clusters more and more related
value creation effects in a specific location. Each economic cluster creates unique location
advantages that offer firms in that locale access to specialized resources that can dramatically
improve the potential for innovation.
c. Logistics is how companies obtain, produce, and exchange material and services in the
proper place and in proper quantities for the proper value activity.
d. Degree of digitization, or the degree to which an analog product can be converted into a
string of zeros and ones, influences how a company configures its value chain.
e. An economy of scale refers to the reductions in unit cost achieved by producing a large
volume of a product. Generally, economies of scale occur in industries with high capital costs in
which those costs can be distributed across a large number of units of production, thereby
resulting in lower per-unit costs.
f. The business environment is influenced by government policies, and these policies can make
a country more or less attractive for an MNE.
Diff: 3
strategy
Skill: Critical Thinking
51) Firms that compete in the global marketplace typically face the asymmetric forces of
pressures for ________ and ________.
A) global integration; local responsiveness
B) price reductions; cost reductions
C) political sensitivity; market leadership
D) cost reductions; customer satisfaction
Answer: A
Diff: 1
strategy
Skill: Concept
Objective: 12-6 Compare global integration and local responsiveness
17
52) Which of the following would most likely pressure an MNE to globally integrate its value
activities?
A) costs of producing in separate facilities exceeding those of producing in a single facility
B) variability in consumers' tastes and preferences shifting across countries
C) market pressures to add new product features continually
D) demands imposed by host country governments
Answer: A
Diff: 2
strategy
Skill: Concept
53) Which of the following is LEAST likely to trigger the standardization of consumer
preferences?
A) intrinsic functions of money
B) global access to common media
C) increasing nationalism
D) improved communications technologies
Answer: C
Diff: 2
strategy
Skill: Concept
54) Which of the following is NOT a factor driving local responsiveness among global firms?
A) cross-national differences in distribution channels
B) diverging consumer tastes and preferences
C) cross-national differences in product standards
D) host government support of freer international trade
Answer: D
Diff: 2
strategy
Skill: Concept
18
55) Advantages of following a strategy of local responsiveness include the ________.
A) improved ability to transfer skills to employees in different locations
B) opportunity to adopt a global advertising program
C) ease in standardizing manufacturing methods across countries
D) flexibility to apply location-specific skills to local opportunities
Answer: D
Diff: 2
strategy
Skill: Concept
56) Host governments' growing demands for increasing operational transparency will most likely
spur companies to make their value chains more ________.
A) locally responsive
B) globally integrated
C) concise
D) complex
Answer: A
Diff: 2
strategy
Skill: Concept
57) According to the Integration-Responsiveness (IR) Grid, consumer electronics and corporate
banking are two types of industries with ________ industry pressure for global integration and
________ industry pressure for local responsiveness.
A) low; low
B) high; high
C) low; high
D) high; low
Answer: B
Diff: 3
strategy
Skill: Concept
19
58) The Integration-Responsiveness (IR) Grid expresses how a company's ________ is a
function of the relationship between its value chain and the prevailing pressures for global
integration or local responsiveness in its industry.
A) value proposition
B) target market
C) mission
D) strategy
Answer: D
Diff: 1
strategy
Skill: Concept
59) Pressures for global integration include economic integration, convergent consumer
preferences, and political demands imposed by host countries.
Answer: FALSE
Diff: 1
strategy
Skill: Concept
60) The quest to maximize individual purchasing power compels local responsiveness.
Answer: FALSE
Diff: 2
strategy
Skill: Concept
61) Pressures for local responsiveness are especially important in industries where value creation
is a function of a company's capacity to adapt to local market conditions.
Answer: TRUE
Diff: 2
strategy
Skill: Concept
20
62) Pressures for local responsiveness include cross-national differences in terms of consumer
preferences, advances in technology, and government regulations.
Answer: FALSE
Diff: 1
strategy
Skill: Concept
63) Describe the pressures for local responsiveness that international companies face.
Answer: The two main pressures for local responsiveness that international companies face are
consumer divergence and host-government policies.
a. Consumer divergence: Some maintain that fundamental divergences in consumer tastes and
preferences across countries have and will continue to exert strong pressure for local
responsiveness. Many think that differences in consumer tastes and preferences across countries
emerge and endure due to several factors, including cultural predisposition, historical legacy,
emergent nationalism (i.e., "buy local" campaigns), and economic prosperity. No matter the
cause, proponents of customer divergence say the outcome is the same: consumers prefer goods
that are sensitive to their way of life.
b. Host-government policies: Host-country governments mandate policies that differ widely
from each other, causing variability in political, legal, and economic situations around the world.
The movement toward privatization, economic freedom, and deregulation has reduced the
variability among countries, but differences among countries remain. In light of the recent
economic crisis, these differences are again growing as countries take more steps to intervene in
an unstable marketplace. These differences push firms to determine how to best configure and
coordinate their value chain so that they provide the necessary degree of local responsiveness
without jeopardizing their capability to create value. Host governments also have a range of
aggressive tools to ensure that an MNE is locally responsive. These tools can be broad policy
directives, explicit threats or acts of trade protectionism, local content rules, or simply national
product standards that can be met only by local operations. Each policy boosts the pressure on
companies to make sure that part or all of its value chain can respond to the local pressures.
Diff: 3
strategy
21
64) Citibank decides to open a call center in Mumbai, India because a detailed analysis of the
country-specific advantages suggests that India is the optimal place for responding to customers'
calls. Citibank is exploiting ________ by running a call center in India.
A) value configuration synergies
B) location economies
C) geographic arbitrage
D) value offshoring
Answer: B
Diff: 2
strategy
Skill: Application
Objective: 12-7 Differentiate the types of strategies used by MNEs
65) In the global environment, firms use an international strategy, a localization strategy, a
global strategy, or a ________ strategy.
A) regional
B) standardization
C) transnational
D) locational
Answer: C
Diff: 1
strategy
Skill: Concept
66) When the pressure for global integration is high and the pressure for local responsiveness is
low, a company is most likely to pursue a(n) ________ strategy.
A) global
B) transnational
C) localization
D) international
Answer: D
Diff: 2
strategy
Skill: Concept
22
67) Firms that pursue a(n) ________ strategy create value by transferring core competencies
from the home market to foreign markets in which local rivals lack a competitive alternative.
A) transnational
B) localization
C) global
D) international
Answer: D
Diff: 2
strategy
Skill: Concept
68) Which of the following is NOT a disadvantage of the international strategy?

A) Headquarters can misread foreign-market opportunities and threats.
B) The transfer of core competencies to foreign markets is complicated by the necessity to adapt
to local needs.
C) Local subsidiaries are not given the opportunity to adapt value activities and share what they
have learned with headquarters.
D) The company can be blindsided by an unexpectedly innovative rival in a foreign market.
Answer: B
Diff: 3
strategy
Skill: Concept
69) A distinct advantage of an international strategy is ________.

A) transferring core competencies to foreign markets
B) reaping benefits of global learning
C) customizing product offerings to local conditions
D) leveraging local managers' knowledge of their markets
Answer: A
Diff: 2
strategy
Skill: Concept
23
70) A distinct disadvantage of an international strategy is ________.
A) restricting the movement of core competencies to local markets
B) capitalizing on the benefits of global learning
C) customizing product offerings to local conditions
D) relying on home managers' knowledge of foreign markets
Answer: D
Diff: 2
strategy
Skill: Concept
71) Darvin Foods is an MNE that is in the process of revising its international business strategy.
Most of the firm's top executives believe that Darvin should implement a localization strategy.
Which of the following conditions would most likely support this type of strategy?
A) a high need for local responsiveness and a low need to reduce costs via global integration
B) a high need for local responsiveness and a high need to create efficiencies via global
integration
C) a low need for local responsiveness and a low need to reduce costs via global integration
D) a low need for local responsiveness and a high need to create efficiencies via global
integration
Answer: A
Diff: 2
strategy
Skill: Application
72) Preston Electronics is an MNE with facilities located in Taiwan, Singapore, and Germany.
Preston gives its local operations the authority to adapt value activities to prevailing local
economic, political, legal, and cultural conditions. Preston is most likely using a(n) ________
strategy.
A) global
B) localization
C) international
D) continental
Answer: B
Diff: 2
strategy
Skill: Application
24
73) Johnson & Johnson delegates to its subsidiaries a great deal of authority to respond to local
conditions. Many subsidiaries have their own manufacturing, marketing, research, and human
resource functions. This value chain configuration illustrates the ________ strategy.
A) transnational
B) global
C) localization
D) international
Answer: C
Diff: 2
strategy
Skill: Application
74) Google essentially views the entire world as one market and assumes that there are no
fundamental differences among countries with regard to consumers' preferences. Google is
engaging a(n) ________ strategy.
A) international
B) localization
C) transnational
D) global
Answer: D
Diff: 2
strategy
Skill: Application
75) A global strategy tends to be more successful when ________.

A) buyers are looking for customized products at bargain prices
B) the industry's product is a commodity
C) entry barriers are low for new firms
D) suppliers have little bargaining power
Answer: B
Diff: 2
strategy
Skill: Concept
25
76) The MNE that applies a global strategy aims to ________.
A) compete essentially the same way wherever the company does business
B) empower local operations to make decisions about value activities
C) adapt activities to the industry standards in critical markets
D) customize its business practices to consumer expectations
Answer: A
Diff: 2
strategy
Skill: Concept
77) Which strategy champions worldwide consistency and standardization to support the firm's
goal to become the low-cost leader?
A) international strategy
B) localization strategy
C) global strategy
D) transnational strategy
Answer: C
Diff: 2
strategy
Skill: Concept
78) An MNE in which new knowledge and capabilities are developed in both domestic and
foreign locations, both independently and jointly, and then diffused throughout the worldwide
organization, is following a ________ strategy.
A) transnational
B) localization
C) global
D) matrix
Answer: A
Diff: 1
strategy
Skill: Concept
26
79) Which of the following is the primary limitation of the transnational strategy?
A) poor local adaptation
B) cross-unit coordination difficulties
C) duplication of subsidiary activities
D) inability to leverage core competencies
Answer: B
Diff: 2
strategy
Skill: Concept
80) Marrin Associates is an MNE with operations in Hong Kong, India, and Canada. The firm
strives to leverage its core competencies worldwide, reduce costs by exploiting location
economics, and adapt when efficient to local conditions. Marrin is most likely following a(n)
________ strategy.
A) global
B) localization
C) transnational
D) international
Answer: C
Diff: 2
strategy
Skill: Application
81) A global strategy drives performance by making standardized products that are marketed
with minimum adaptation to local conditions.
Answer: TRUE
Diff: 1
strategy
Skill: Concept
27
82) Tel-Comm Tek is a company that believes it has core competencies that its competitors in
foreign markets lack and that it faces relatively weak pressures for local responsiveness and cost
reductions. Tel-Comm Tek is likely to adopt an international strategy.
Answer: TRUE
Diff: 2
strategy
Skill: Application
83) A localization strategy makes the most sense for companies that see high pressures for local
responsiveness and low pressures for cost reductions.
Answer: TRUE
Diff: 2
strategy
Skill: Concept
84) Mobile Technology is a company that sees the world as a single market, assuming that
consumer preferences and industry conditions do not vary much among countries. Mobile
Technology is likely to adopt a global strategy.
Answer: TRUE
Diff: 2
strategy
Skill: Application
85) A company that develops different capabilities and contributions from different countries and
shares them in integrated worldwide operations is using a transnational strategy.
Answer: TRUE
Diff: 1
strategy
Skill: Concept
28
86) Discuss the characteristics of international, localization, global, and transnational strategies.
Include situations and a specific example in which each strategy would be most appropriate.
Answer:
a. International strategy: Companies adopt the international strategy when they aim to leverage
their core competencies by expanding opportunistically into foreign markets. The international
model relies on local subsidiaries in each country to administer business as instructed by
headquarters. Some subsidiaries may have latitude to adapt products to local conditions as well
as set up some light assembly operations or promotion programs. Still, ultimate and absolute
control resides with managers at headquarters who reason they know best the basis and potential
extension of the company's core competencies.
b. Localization strategy: A strategy in which the company allows each of its foreign country
operations to act fairly independently, such as designing and producing a product or service in
France for the French market and in Japan for the Japanese market. The main reason for adopting
a localization strategy is that in some cases, cultural, legal-political, and economic conditions
may dictate very different optimum operating practices from one country to another.
c. Global strategy: A strategy in which a company integrates its operations located in different
countries. For example, it might design a product or service with a global market segment in
mind. Or it might depend on its operations in different countries to produce the components used
in the products and services. In this type of company, managers in the company's home country
essentially develop capabilities and make decisions to diffuse them globally.
d. Transnational strategy: A strategy in which a company develops different capabilities and
contributions from different countries and shares them in integrated worldwide operations. In
essence, this is a hybrid of localization and global strategies in that the company attempts to gain
the advantages of both. This strategy is ideal for companies that gain a great deal from global
integration and need a great deal of adaptation to local markets. Such industries as
pharmaceuticals and automobiles fall into this category.
Diff: 3
strategy
29

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International Business: Environments and Operations, 16e, Global Edition (Daniels et al.

2) Phillip is an international business manager with Corbin Manufacturing. Which of the

23) Which of the following is the purpose of a company's value proposition?

28) A differentiation strategy works well when ________.

29) Successful implementation of a ________ strategy requires a company to develop unique

68) Which of the following is NOT a disadvantage of the international strategy?

69) A distinct advantage of an international strategy is ________.

75) A global strategy tends to be more successful when ________.

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