International Management CH 6-11

International Management, 8e (Deresky) Chapter 6 Formulating Strategy 1) The process by which a firm's managers evaluate the future prospects of the firm and decide on appropriate strategies to achieve long-term objectives is called ________. A) strategic planning B) strategic delegation C) organizational design D) product planning Answer: A Diff: 1 Chapter: 6 Skill: Concept Objective: 1 2) Which of the following terms refers to the basic means by which a company competes? A) mission B) procedure C) strategy D) process Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 1 3) A company's choice to operate in a business or businesses and the ways in which it differentiates itself from its competitors is called its ________. A) strategy B) procedure C) mission D) process Answer: A Diff: 1 Chapter: 6 Skill: Concept Objective: 1 4) Which of the following is the most common reactive reason for a firm to extend its operations overseas? A) tax incentives B) economies of scale C) globalization of competitors D) resource access and cost savings Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 5) Restrictive trade barriers most likely influence the globalization of businesses by encouraging firms to ________. A) develop joint ventures with local firms B) import supplies from foreign vendors C) expand the exportation of raw materials D) switch from exporting to overseas manufacturing Answer: D Diff: 2 Chapter: 6 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 6) Roch, a Swiss chocolate company, recently opened a manufacturing unit in Spain. The purpose of this move was that Roch wanted to avoid Spain's high import tariffs. Which of the following reasons prompted Roch to open the manufacturing unit in Spain? A) customer demands B) trade barriers C) globalization of competitors D) growth opportunities Answer: B Diff: 3 Chapter: 6 Skill: Application Objective: 1 AACSB: Analytic skills 7) Which of the following is the most likely result of regulations and restrictions enforced by a firm's home government that prove to be expensive for the firm's operations? A) the firm searches for less restrictive operating environments overseas B) the firm responds to customers' demands more promptly C) the firm becomes entangled in lengthy litigation D) the firm expands its domestic operations Answer: A Diff: 2 Chapter: 6 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 8) Due to the high demand for its handmade soaps in Canada, Fragrance Exotica, an Indian Soap manufacturer, has decided to open a new manufacturing unit in Canada, thereby expanding overseas. In this scenario, which of the following reasons prompted Fragrance Exotica to set up a manufacturing unit overseas? A) trade barriers B) manufacturer demands C) customer demands D) tax incentives Answer: C Diff: 3 Chapter: 6 Skill: Application Objective: 1 AACSB: Analytic skills 9) Which of the following is the proactive reason that prompts firms to expand overseas? A) avoiding restrictive trade barriers B) solving logistics-related problems C) responding to foreign competition D) seeking economies of scale Answer: D Diff: 1 Chapter: 6 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 10) Which of the following is a reactive reason that prompts a firm to expand overseas? A) customer demands B) seeking economies of scale C) growth opportunities D) seeking incentives Answer: A Diff: 1 Chapter: 6 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 11) A country seeks new infusions of capital, technology, and know-how. It announces that it shall exempt taxes and grant concessions for foreign investors. Which of the following measures is the country employing? A) providing incentives B) imposing regulations C) establishing trade barriers D) ensuring economies of scale Answer: A Diff: 1 Chapter: 6 Skill: Concept Objective: 1 12) When Disney decided to build a park in Paris, the French government gave Disney prime farmland just outside the city limits. This is most likely an example of a firm expanding overseas due to ________. A) globalization of competitors B) restrictive trade barriers C) home country regulations D) provision of incentives Answer: D Diff: 3 Chapter: 6 Skill: Application Objective: 1 AACSB: Analytic skills 13) Which of the following statements is true of the strategic formulation process? A) The global strategic formulation process is completely independent of the process followed in domestic companies. B) The strategic formulation process is part of the strategic management process in which most firms engage, either formally or informally. C) Strategic formulation consists of four defined stages that occur in a consecutive order. D) Most firms operate on planning cycles of one or two years with periodic strategy reviews. Answer: B Diff: 2 Chapter: 6 Skill: Concept Objective: 2 14) Jamie decides to plan his strategies for starting an electric equipment manufacturing company. His main aim is to ensure that it runs efficiently. He decides to do this in two phases: the planning phase and the implementation phase. Which of the following processes is Jamie employing? A) retrenchment B) organizational restructuring C) strategic management D) globalization Answer: C Diff: 3 Chapter: 6 Skill: Application Objective: 2 AACSB: Analytic skills 15) Which of the following is the first step of the planning phase of a strategic management process? A) assessment of the external environment that the firm will face in the future B) establishment of the company's mission C) analysis of the firm's relative capabilities to deal successfully with the external environment D) seeking alternative strategies using competitive analysis Answer: B Diff: 1 Chapter: 6 Skill: Concept Objective: 2 16) The second part of the strategic management process involves the ________. A) implementation phase B) assessment stage C) planning phase D) analysis stage Answer: A Diff: 1 Chapter: 6 Skill: Concept Objective: 2 17) Which of the following would most likely be categorized as a global financial objective of an international firm? A) foreign-exchange management B) long-term profit growth C) quality and cost control D) company market share Answer: A Diff: 1 Chapter: 6 Skill: Concept Objective: 2 AACSB: Dynamics of the global economy 18) Which of the following charts the direction of the company and provides a basis for strategic decision making? A) environmental assessment B) corporate structure C) organizational mission D) SWOT analysis Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 2 19) Goals for market volume and profitability are usually set higher for international than domestic operations due to the ________. A) involvement of greater risks B) presence of stable market conditions C) enforcement of government controls D) presence of stable exchange rates Answer: A Diff: 2 Chapter: 6 Skill: Concept Objective: 2 AACSB: Dynamics of the global economy 20) ________ includes environmental scanning and continuous monitoring to keep abreast of variables around the world that are pertinent to the firm. A) Environmental mitigation B) Internal analysis C) Competitive analysis D) Environmental assessment Answer: D Diff: 1 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 21) Which of the following terms refers to the continuous process of gathering and evaluating information about variables and events around the world that may pose threats or opportunities to the firm? A) business process reengineering B) PEST analysis C) environmental assessment D) fundamental analysis Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 22) Which of the following is a global risk with regard to strategic entry scanning? A) economic and fiscal policies B) corruption C) economic and financial risk D) trade restrictions Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 23) Which of the following is a regional risk with regard to strategic entry scanning? A) financial and currency instability B) varying fiscal strategies C) repatriation policies D) shifting production and consumption Answer: A Diff: 1 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 24) Which of the following is a national risk with regard to strategic entry scanning? A) energy availability and prices B) regional instability C) legal protection D) political turmoil Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 25) The process of gathering information and forecasting relevant trends, competitive actions, and circumstances that will affect operations in geographic areas of potential interest is called ________. A) internal analysis B) sustainable development C) cultural analysis D) environmental scanning Answer: D Diff: 1 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 26) At which three levels should firms ideally perform global environmental analysis? A) product, domestic market, and consumer B) multinational, regional, and local C) operational, tactical, and top management D) innovation, production, and local distribution Answer: B Diff: 2 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 27) The first broad scan of all potential world markets should result in the firm being able to ________. A) identify the strengths and weaknesses of its competitors B) eliminate markets with unreasonable entry conditions C) determine the best sources for raw materials D) eliminate countries with high cultural risk Answer: B Diff: 2 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 28) Which of the following is a way in which formal institutions affect international competition? A) decreasing trade restrictions B) enforcing organizational laws C) enforcing antidumping laws D) enforcing strict exit barriers Answer: C Diff: 2 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 29) Which of the following is the most preferred source of environmental information for environmental scanning purposes in a firm? A) computer database B) corporate clipping service C) internal sources D) information packages Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 30) A(n) ________ determines which areas of a firm's operations represent strengths or weaknesses (currently or potentially) compared to competitors. A) transactional analysis B) internal analysis C) structural analysis D) break-even analysis Answer: B Diff: 1 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 31) An internal analysis focuses on the company's ________. A) vision and mission B) market share C) competitors D) resources and operations Answer: D Diff: 1 Chapter: 6 Skill: Concept Objective: 3 32) ________ reveal an inefficient use of assets that restricts profitability. A) Sales-force analyses B) Concentration ratios C) Financial ratios D) Competitive analyses Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 3 33) ________ are usually difficult for competitors to imitate and represent a major focus for strategic development at the corporate level. A) Break-even points B) Comparative advantages C) Absolute advantages D) Distinctive competencies Answer: D Diff: 1 Chapter: 6 Skill: Concept Objective: 3 34) A ________ is an assessment of a firm's capabilities relative to those of its competitors as pertinent to the opportunities and threats in the environment for those firms. A) SWOT analysis B) transactional analysis C) PEST analysis D) break-even analysis Answer: A Diff: 1 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 35) Futura-Core Technologies, an electronics manufacturing firm, has advantages in financial capability and sustainability, but a disadvantage in speed of innovation. It is also at a disadvantage relative to Core-Dynamix Technologies, another electronics manufacturing firm, in important factors such as manufacturing capability and adaptability to market conditions. Which of the following terms best describes Futura-Core's abilities in comparison to Core-Dynamix? A) comparative advantage B) collective bargaining C) competitive advantage D) absolute advantage Answer: A Diff: 3 Chapter: 6 Skill: Application Objective: 3 AACSB: Analytic skills 36) ________ refers to the establishment of worldwide operations and the development of standardized products and marketing. A) Customization B) Globalization C) Nationalization D) Regionalization Answer: B Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 37) Which of the following is the quickest and cheapest way to develop a global strategy? A) fully-owned subsidiaries B) greenfield investments C) strategic alliances D) acquisitions Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 38) Regional strategies are more appropriate than global strategies for firms that operate in ________. A) multidomestic industries B) high-tech industries C) newly emerging industries D) mature industries Answer: A Diff: 2 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 39) Which of the following most likely encourages firms to localize? A) increasing tariffs at the host country B) providing domestic subsidies C) demand for undifferentiated, standardized products D) need for economies of scale Answer: B Diff: 2 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 40) Dell is an American corporation that deals with computer technology. With its worldwide sourcing and fully merged production and marketing system, Dell is considered to be a ________. A) greenfield investment B) turnkey operation C) shell corporation D) globally integrated company Answer: D Diff: 3 Chapter: 6 Skill: Application Objective: 5 AACSB: Analytic skills 41) According to Ghemawat, which of the following offers room for cross-border strategy to have content distinct from single-country strategy? A) regional integration B) nationalization C) semi-globalization D) privatization Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 42) Which of the following terms best describes a company that has operations in various countries, follows policies to develop local R&D to tailor products to markets, lets plants set their own rules, and aims at being a good corporate citizen in every country? A) GLOCAL B) global elite C) counter trade D) global commons Answer: A Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 43) ________ are companies that start out with a global reach, typically by using their Internet capabilities and also through hiring people with international experience and contacts around the world. A) GLOCALS B) Global civics C) Born globals D) Global commons Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 44) Which of the following entry strategies requires little investment and enables quick and easy market withdrawal? A) franchising B) joint ventures C) turnkey projects D) exporting Answer: D Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 45) Which of the following grants the rights to a firm in the host country to either produce or sell a product, or both? A) international licensing agreement B) voluntary export restraint C) memorandum of association D) letter of credit Answer: A Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 46) Which of the following can be regarded as a pressure to globalize? A) decreasing competitive clout B) information technology expansion C) increasing tariffs D) spread of economic nationalism Answer: B Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 47) Licensing is especially suitable for ________. A) firms with a single product line and a constant technological environment B) large firms with huge financial and managerial resources for direct investment abroad C) the mature phase of a product's life cycle when production is relatively standardized D) firms that want to control all of the licensee's activities and performances Answer: C Diff: 2 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 48) Which of the following is the most critical aspect of a franchising strategy? A) customer base B) distribution C) quality control D) local marketing Answer: C Diff: 2 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 49) ________ is an ideal strategy for small businesses with few financial and managerial resources for direct investment abroad. A) A joint venture B) Licensing C) Offshoring D) A turnkey operation Answer: B Diff: 2 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 50) The primary motive in the contract manufacturing strategy is ________. A) utilizing inexpensive overseas labor B) obtaining rights to patented technology C) sharing managerial expertise D) sharing financial resources Answer: A Diff: 2 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 51) Panera Bread is a chain of cafes serving sandwiches, soups, and freshly baked breads. The company began in 1981 with stores primarily located along the east coast of the U.S. Since then, the firm has expanded to over 1,300 locations throughout the U.S. and Canada. The firm has strong earnings and has been designated by Business Week as a "Significant Growth Company." Panera Bread executives are considering the idea of expanding globally by opening cafes in Asia through a franchising strategy. Which of the following, if true, supports the argument that Panera Bread should expand into Asia through franchising? A) Panera Bread executives want to test the Asian market with a short-term commitment that allows them to make quick profits. B) Panera Bread executives want fast access to the Asian market without a significant investment of capital. C) The Panera Bread menu changes rapidly, and each cafe's artisan bread bakers receive regular training on new recipes. D) The Panera Bread mission is to make excellent bread available to customers around the world. Answer: B Diff: 3 Chapter: 6 Skill: Critical Thinking Objective: 5 AACSB: Reflective thinking skills 52) Panera Bread is a chain of cafes serving sandwiches, soups, and freshly baked breads. The company began in 1981 with stores primarily located along the east coast of the U.S. Since then, the firm has expanded to over 1,300 locations throughout the U.S. and Canada. The firm has strong earnings and has been designated by Business Week as a "Significant Growth Company." Panera Bread executives are considering the idea of expanding globally by opening cafes in Asia through a franchising strategy. Which of the following, if true, undermines the argument that Panera Bread should expand into Asia through franchising? A) Quality control is a high priority for Panera Bread. B) Panera Bread wants to access the Asian market quickly. C) Panera Bread's primary competitor has already expanded to Asia. D) Many Panera Bread managers have expressed interest in relocating to Asia. Answer: A Diff: 3 Chapter: 6 Skill: Critical Thinking Objective: 5 AACSB: Reflective thinking skills 53) Offshoring provides the company with access to foreign markets while avoiding ________. A) relocation of the company to other countries B) competition between companies in the global market C) trade risks D) trade barriers Answer: D Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 54) Which of the following terms refers to operating in concentrations of related, interdependent companies within an industry that uses the same suppliers, specialized labor, and distribution channels? A) outsourcing B) dumping C) franchising D) clustering Answer: D Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 55) Which of the following statements is true of clustering? A) It uses different suppliers and distribution channels for interdependent companies within an industry. B) It helps a firm gain an increase in efficiencies. C) It seldom uses specialized labor. D) It typically increases the costs of production and distribution. Answer: B Diff: 2 Chapter: 6 Skill: Concept Objective: 5 56) The use of professional or skilled workers located in countries other than that of the home country is referred to as ________. A) franchising B) licensing C) outsourcing D) importing Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 57) A company designs and constructs a facility abroad, trains local personnel, and then transfers the facility to local management for a fee. Which of the following entry strategies is being implemented by the company? A) franchising B) offshoring C) turnkey operation D) contract manufacturing Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 58) A ________ gives a foreign company the rights to oversee the daily operations of a business but not to make decisions regarding ownership, financing, or strategic and policy changes. A) licensing agreement B) management contract C) turnkey operation D) lease Answer: B Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 59) Which of the following entry strategies is most likely to serve as a short-term strategy and to provide limited income? A) joint venture B) management contract C) offshoring D) fully owned subsidiary Answer: B Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 60) Which of the following strategies would most likely be used by a non-European company wanting to gain quick entry inside the European community? A) international joint venture B) greenfield investment C) turnkey operation D) offshoring Answer: A Diff: 3 Chapter: 6 Skill: Application Objective: 6 AACSB: Analytic skills 61) Meryl Software Inc., an American MNC wishing total control of its operations, wants to acquire an existing firm, Graphiti Animations, in Canada. If acquired, Graphiti Animations would be a ________. A) fully-owned subsidiary B) holding company C) greenfield investment D) shell corporation Answer: A Diff: 3 Chapter: 6 Skill: Application Objective: 5 AACSB: Analytic skills 62) Which of the following is an advantage of establishing a new, fully-owned foreign manufacturing? A) absence of expropriation risks B) currency stability C) full control over decision making D) repatriation Answer: C Diff: 2 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 63) Which of the following is generally viewed as the most risky entry strategy? A) turnkey operations B) new, fully-owned subsidiaries C) international joint ventures D) service sector outsourcing Answer: B Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 64) Which of the following environmental factors would most likely increase the risk for a firm that has established a fully owned subsidiary in a country? A) expropriation threats B) unreliable distributors C) infrastructure weaknesses D) quality control issues Answer: A Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 65) Which of the following is a critical success factor for exporting? A) reliable infrastructure B) domestic client acceptance C) choice of distributor D) differences in business models Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 6 AACSB: Dynamics of the global economy 66) Which of the following is the primary advantage of using e-business as a local-level entry strategy? A) shared costs and risks B) access to highly skilled workers C) rapid entry and exit from markets D) avoidance of tariffs and regulations Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 6 AACSB: Dynamics of the global economy 67) Which of the following is an internal factor that affects the choice of international entry mode for a company? A) potential of local market B) knowledge of local market C) industrial globalization D) global experience of firm and managers Answer: D Diff: 1 Chapter: 6 Skill: Concept Objective: 6 AACSB: Dynamics of the global economy 68) Which of the following is an external factor that affects the choice of international entry mode for a company? A) industry growth rate B) long-term strategy C) costs of making or enforcing contracts with local partners D) intent to conduct research and development with local partners Answer: A Diff: 1 Chapter: 6 Skill: Concept Objective: 6 AACSB: Dynamics of the global economy 69) Which of the following is a venture-specific factor that affects the choice of international entry mode for a company? A) competition in local market B) level of global competition C) ability to protect proprietary technology D) corporate culture and structure Answer: C Diff: 1 Chapter: 6 Skill: Concept Objective: 6 AACSB: Dynamics of the global economy 70) According to Gupta and Govindarajan, an alliance-based entry strategy is most suitable when ________. A) firms have a significant amount of capital B) the risk of asymmetric learning by the partner is low C) cultural distance between home and host countries is extremely low D) the subsidiary would be highly integrated with the rest of the global operations Answer: B Diff: 1 Chapter: 6 Skill: Concept Objective: 6 AACSB: Dynamics of the global economy 71) The process by which a firm's managers evaluate the future prospects of the firm and decide on appropriate strategies to achieve long-term objectives is called strategic planning. Answer: TRUE Diff: 1 Chapter: 6 Skill: Concept Objective: 1 72) Globalization of competitors is one of the proactive reasons that prompt a company to operate overseas. Answer: FALSE Diff: 1 Chapter: 6 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 73) Companies seek out less restrictive foreign operating environments when the regulations and restrictions enforced by the firm's home government become expensive. Answer: TRUE Diff: 2 Chapter: 6 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 74) Operations in foreign countries frequently start as a response to customer demands. Answer: TRUE Diff: 1 Chapter: 6 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 75) One pressing reason for many large firms to expand overseas is to seek economies of scale. Answer: TRUE Diff: 2 Chapter: 6 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 76) It is impossible for small businesses, such as those with fewer than 500 workers, to do business overseas. Answer: FALSE Diff: 2 Chapter: 6 Skill: Concept Objective: 1 77) The availability of raw materials and other resources offers both greater control over inputs and lower transportation costs. Answer: TRUE Diff: 2 Chapter: 6 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 78) Tax exemptions, subsidies, and loans decrease risk and increase profits. Hence, they are attractive to foreign companies. Answer: TRUE Diff: 2 Chapter: 6 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 79) The strategic management process invariably follows a linear format. Answer: FALSE Diff: 1 Chapter: 6 Skill: Concept Objective: 2 80) The strategic management process consists of independent and discontinuous steps. Answer: FALSE Diff: 1 Chapter: 6 Skill: Concept Objective: 2 81) The mission of an organization provides a basis for strategic decision making. Answer: TRUE Diff: 1 Chapter: 6 Skill: Concept Objective: 2 82) Production, one of the five global corporate objectives, deals with development of new products with global patents. Answer: FALSE Diff: 2 Chapter: 6 Skill: Concept Objective: 2 AACSB: Dynamics of the global economy 83) After clarifying the corporate mission and objectives, the first major step in weighing international strategic options is the environmental assessment. Answer: TRUE Diff: 2 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 84) Environmental scanning should be conducted on the national level exclusively. Answer: FALSE Diff: 2 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 85) Antidumping laws enable formal institutions to affect international competition. Answer: TRUE Diff: 2 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 86) In environmental scanning, the first broad scan of all potential world markets results in the firm being able to eliminate from its list those markets that are closed or insignificant or do not have reasonable entry conditions. Answer: TRUE Diff: 2 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 87) Internal analysis is carried out to assess a firm's capabilities and critical success factors compared to those of its competitors. Answer: FALSE Diff: 1 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 88) Core competencies are typically easy for competitors to imitate. Answer: FALSE Diff: 1 Chapter: 6 Skill: Concept Objective: 3 89) The term globalization refers to the establishment of worldwide operations and the development of standardized products and marketing. Answer: TRUE Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 90) Offshoring is when a company moves one or all of its factories from the host country to the home country. Answer: FALSE Diff: 1 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 91) What is strategy? What is strategic planning? Answer: Strategy is the basic means by which a company competes. It includes the choice of business or businesses in which to operate and the ways to differentiate itself from competitors. Strategic planning is the process by which a firm's managers evaluate the future prospects of the firm and decide on appropriate strategies to achieve long-term objectives. Diff: 1 Chapter: 6 Skill: Concept Objective: 1 92) List the reasons a company would have if it wants to operate internationally. Answer: A company can operate internationally for different reasons. These reasons are of two types: reactive (or defensive) and proactive (or aggressive). The reactive reasons are globalization of competitors, trade barriers, regulations and restrictions, and customer demands. The proactive reasons are seeking economies of scale, growth opportunities, resource access and cost savings, and incentives. Diff: 1 Chapter: 6 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 93) List the seven steps in the strategic management process. Answer: The seven steps of strategic management process are: (1) defining the company's mission and objectives; (2) assessing the environment for threats and opportunities; (3) assessing the company's internal strengths and weaknesses; (4) considering alternative strategies using competitive analysis; (5) choosing a strategy; (6) implementing the chosen strategy through complementary structure, systems, and operational processes; and (7) setting up control and evaluation systems to ensure success and feedback to planning. Diff: 1 Chapter: 6 Skill: Concept Objective: 2 94) What is environmental scanning? What areas are most commonly focused in environmental scanning? Answer: Environmental scanning is the process of gathering information and forecasting relevant trends, competitive actions, and circumstances that will affect operations in geographic areas of potential interest. This activity should be conducted on three levels—multinational, regional, and national. Scanning should focus on the future interests of the firm and should cover the major variables such as political and economic risk; major technological, legal, and physical constraints; and the global competitive arena, as well as the opportunities available in different countries. Diff: 2 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 95) What is the difference between environmental scanning at the multinational level and the regional level? Answer: Companies should assess the multinational level for significant worldwide trends through identification, monitoring, and forecasting activities. These trends would include the political and economic developments of nations around the world, as well as global technological progress. From this information, managers can choose certain appropriate regions of the world to consider further. At the regional level, the analysis should focus more on the critical environmental factors that would generate threats or opportunities for marketing the company's products, services, or technologies. Diff: 2 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 96) Describe the various sources of information that are available to managers. Answer: The various sources of information that are available to managers are: (1) computer databases, having business information services that are tailored to specific industries and regions; (2) corporate "clipping" services; (3) information packages; (4) alert field personnel who, with firsthand observations, can provide up-to-date and relevant information for the firm. Diff: 2 Chapter: 6 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 97) What is a SWOT analysis? How is it used in strategic planning? Answer: A SWOT analysis is a summary of the external issues (opportunities and threats) and internal resources (strengths and weaknesses) that are most likely to influence the future or intended direction of the firm. In comparing the company with potential international competitors in host markets, a SWOT analysis becomes useful for managers to draw up a competitive position matrix for each potential location. This analysis is used after assessing the external and internal environments to help firms determine their strategic direction. Diff: 1 Chapter: 6 Skill: Concept Objective: 3 98) What are the two levels of strategic alternatives that a firm must consider when competing internationally? Answer: The first level, global strategic alternatives, determines what overall approach to the global marketplace a firm wishes to take. The second level, entry strategy alternatives, applies to firms of any size; these alternatives determine what specific entry strategy is appropriate for each country in which the firm plans to operate. Diff: 1 Chapter: 6 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 99) Compare and contrast globalization and regionalization. Answer: Globalization is the strategy of treating the world as an undifferentiated marketplace, and the establishment of worldwide operations and the development of standardized products and marketing. A regionalization strategy focuses more on certain regions of the world only and their distinctiveness. With a regionalization strategy, local markets are linked together within a region allowing more local responsiveness and specialization. Globalization requires establishing worldwide economies of scale; regionalization requires flexibility and adaptability. Diff: 2 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 100) Describe the strategies of globalization and regionalization. When can each strategy be used most effectively? Answer: A globalization strategy is based on the premise that the world can be treated as an undifferentiated marketplace and the firm can develop and market standardized products. The rationale is to compete by establishing worldwide economies of scale, offshore manufacturing, and international cash flows. Companies such as Sony, Caterpillar, and ICI follow globalization strategies.A regionalization strategy is more effective for those firms that are in multidomestic industries. In such cases, local markets are linked together within a region, allowing more local responsiveness and specialization. Top managers within each region decide on their own investment locations, product mixes, and competitive positioning–– thus running their subsidiaries as quasi-independent organizations. Such a strategy often reduces environmental risk and allows for more adaptation to the local market. Samsung Tesco is an example of a firm that has successfully used the regionalization strategy. Diff: 2 Chapter: 6 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy International Management, 8e (Deresky) Chapter 7 Global Alliances and Strategy Implementation 1) ________ are partnerships between two or more firms that decide they can better pursue their mutual goals by combining their resources as well as their existing distinctive competitive advantages. A) Greenfield investments B) Strategic alliances C) Foreign subsidiaries D) Turnkey operations Answer: B Diff: 1 Chapter: 7 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 2) Alliances are also known as ________. A) competitive strategies B) cooperative strategies C) relational strategies D) virtual strategies Answer: B Diff: 1 Chapter: 7 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 3) ________ are transition mechanisms that propel the partners' strategies forward in a turbulent environment faster than would be possible for each company alone. A) Cooperative strategies B) Entry strategies C) Options strategies D) Competitive strategies Answer: A Diff: 1 Chapter: 7 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 4) A ________ is a new independent entity that is collectively created and owned by two or more parent companies. A) subsidiary B) joint venture C) greenfield investment D) turnkey operation Answer: B Diff: 1 Chapter: 7 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 5) SoftCorp and TechGig, upcoming software companies in San Diego, have decided to create a new and independent telecommunications company, ST-source. Each parent firm has agreed to have 50 percent equity in the new company. This is an example of a(n) ________. A) e-business B) subsidiary C) franchise D) joint venture Answer: D Diff: 3 Chapter: 7 Skill: Application Objective: 1 AACSB: Analytic skills 6) A(n) ________ refers to a JV among companies in different countries. A) international joint venture B) equity joint venture C) global joint venture D) transnational joint venture Answer: A Diff: 1 Chapter: 7 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 7) Which of the following is the most beneficial aspect of an international joint venture? A) the international partner receives the entire profit B) the responsibility of risks is solely taken by the international partner C) the partner's local contacts and markets will be utilized D) the entire cost of production will be borne by the local partner Answer: C Diff: 2 Chapter: 7 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 8) Trout Corp., Kirgo Ltd., and Sturgeon Inc., three of the leading construction companies in the U.S., have decided to join hands and create a new cement manufacturing company. According to their agreement, Trout Corp. will have 50 percent equity, Kirgo Ltd. will have 20 percent equity, and Sturgeon Inc. will have 30 percent equity. In this given scenario, Sturgeon Inc. is referred to as a(n) ________. A) minority JV partner B) majority JV partner C) sole proprietor D) franchisor Answer: A Diff: 3 Chapter: 7 Skill: Application Objective: 1 AACSB: Analytic skills 9) Alliances in which two or more partners have different relative ownership shares in the new venture are called ________. A) cultural strategic alliances B) equity strategic alliances C) non-equity strategic alliances D) transmodal strategic alliances Answer: B Diff: 1 Chapter: 7 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 10) France's Thomson Electronics combined with China's TCL to form TCL-Thomson Electronics. Thomson owns 33% and TCL owns the remaining 67% of TCL-Thomson Electronics. This is best described as a(n) ________. A) turnkey operation B) acquisition C) international licensing agreement D) equity strategic alliance Answer: D Diff: 3 Chapter: 7 Skill: Application Objective: 1 AACSB: Analytic skills 11) Alliances that are carried out through contract rather than ownership sharing are called ________. A) cultural strategic alliances B) equity strategic alliances C) non-equity strategic alliances D) transmodal strategic alliances Answer: C Diff: 1 Chapter: 7 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 12) Runnerz Inc., a leading manufacturing and retail company that designs and develops footwear and apparel, has signed a contract with a particular courier service for managing the delivery process. The courier service is required to deliver goods from the factory to the warehouse, to customers, and also to collect customer payments for the goods. This is a typical example of a(n) ________. A) non-equity strategic alliance B) turnkey operation C) greenfield investment D) international licensing agreement Answer: A Diff: 3 Chapter: 7 Skill: Application Objective: 1 AACSB: Analytic skills 13) Which of the following types of alliances can be formed between a company and a foreign government? A) international joint venture B) equity strategic alliance C) non-equity strategic alliance D) global strategic alliance Answer: D Diff: 2 Chapter: 7 Skill: Concept Objective: 1 AACSB: Dynamics of the global economy 14) Which of the following is NOT a typical reason for forming cross-border alliances? A) to avoid import barriers B) to share R&D costs and risks C) to gain access to specific markets D) to test marketing campaigns overseas Answer: D Diff: 2 Chapter: 7 Skill: Concept Objective: 2 AACSB: Dynamics of the global economy 15) Which of the following motivates a company to form cross-border alliances? A) to regulate and favor domestic companies B) to gain rapid entry into a new and consolidating market C) to remove exporting barriers for domestic companies D) to allow local companies to gain access to international products and services Answer: B Diff: 2 Chapter: 7 Skill: Concept Objective: 2 AACSB: Dynamics of the global economy 16) Globe Cars, a leading automobile ancillary firm in China, has decided to form a global alliance with Fulda, a German tire manufacturing company. Which of the following is a primary challenge that Globe Cars is most likely to face in this alliance? A) existing competitors B) risk of investment C) extreme trade barriers in China D) differences in national cultures Answer: D Diff: 3 Chapter: 7 Skill: Application Objective: 2 AACSB: Analytic skills 17) Which of the following is a pitfall of cross-border alliances? A) increase in the number of existing competitors B) disputes over management C) convincing expatriates D) finding local skilled employees Answer: B Diff: 2 Chapter: 7 Skill: Concept Objective: 2 AACSB: Dynamics of the global economy 18) Which of the following factors has the maximum influence on the success of multinational firm alliances? A) form of governance chosen B) introduction of new competition C) differing national cultures D) cumulative learning of partner Answer: A Diff: 2 Chapter: 7 Skill: Concept Objective: 2 AACSB: Dynamics of the global economy 19) Joint ventures are often the chosen form of multinational firm alliances because they ________. A) provide greater control of proprietary technology B) increase the level of competition between partner firms C) enhance the specific skills of the personnel D) enhance the rewards of the firm Answer: A Diff: 2 Chapter: 7 Skill: Concept Objective: 2 AACSB: Dynamics of the global economy 20) According to David Lei, the single greatest impediment managers face when seeking to learn or renew sources of competitive advantage is that ________. A) good venture partners are hard to find B) technologies change very rapidly C) partners can become competitors D) governments can be fickle Answer: C Diff: 2 Chapter: 7 Skill: Concept Objective: 2 21) Cross-border allies often have difficulty collaborating effectively, especially in competitively sensitive areas. This generally leads to ________. A) mistrust and secrecy B) limitation of investment C) short-term corporate restructuring D) lowering of exit barriers Answer: A Diff: 2 Chapter: 7 Skill: Concept Objective: 2 AACSB: Dynamics of the global economy 22) The dual role of strategic alliance refers to the ________. A) constant requirement of resources and markets B) process of finding skilled personnel and training them to work efficiently C) conflict between cooperation and competition D) differences between home and host governments Answer: C Diff: 2 Chapter: 7 Skill: Concept Objective: 2 AACSB: Dynamics of the global economy 23) All of the following are cooperative aspects of strategic alliances EXCEPT ________. A) creating economies of scale in tangible assets B) forming upstream–downstream divisions of labor C) limiting investment risks through shared resources D) learning new intangible skills from alliance partners Answer: D Diff: 2 Chapter: 7 Skill: Concept Objective: 2 AACSB: Dynamics of the global economy 24) Which of the following is a competitive aspect of strategic alliances? A) sharing resources to limit investment risk when entering new markets or uncertain technological fields B) lowering exit barriers in mature industries, therefore, assisting short-term corporate restructurings C) accelerating diffusion of industry standards and new technologies to create barriers to entry D) creating a critical mass to develop new technologies to protect domestic, strategic industries Answer: C Diff: 2 Chapter: 7 Skill: Concept Objective: 2 AACSB: Dynamics of the global economy 25) Which of the following is a cooperative aspect of strategic alliances? A) creating economies of scale in tangible assets B) accelerating diffusion of industry standards to erect barriers to entry C) learning new intangible skills from alliance partners D) denying technological and learning initiative to partners Answer: A Diff: 2 Chapter: 7 Skill: Concept Objective: 2 AACSB: Dynamics of the global economy 26) MNCs often partner with local SMEs in order to ________. A) capture new innovations and ideas B) reduce the potential risks of the company C) ensure international expansion D) maximize the autonomy of the partners Answer: A Diff: 1 Chapter: 7 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 27) According to Dovev Lavie, which of the following is a value-creation strategy? A) setting organizational buffers between competing partners B) allying with multiple partners in one industry to limit power C) assimilating network resources to acquire new skills and capabilities D) aligning organizational units to create coherent interfaces Answer: C Diff: 1 Chapter: 7 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 28) According to Dovev Lavie, which of the following is a caution given to global companies by value capture strategies? A) Set organizational and technological buffers between competing partners. B) Avoid partners that compete in your industry if they enjoy superior bargaining power. C) Learn and assimilate network resources in order to develop new skills and capabilities. D) Align organizational units and create a coherent interface with each partner in the alliance. Answer: B Diff: 1 Chapter: 7 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 29) In order to minimize potential problems in alliances, companies should most likely choose partners with ________. A) competitively sensitive technology B) complementary products and skills C) significant control of the target market D) superior bargaining power in the same industry Answer: B Diff: 1 Chapter: 7 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 30) Which of the following is NOT a characteristic of strategic implementation of the McDonald's corporation? A) minimizing autonomy B) hiring locals whenever possible C) forming paradigm-busting arrangements with suppliers D) making minor changes to the standard menu based on location Answer: A Diff: 2 Chapter: 7 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 31) Which of the following is a strategic implementation used by McDonald's? A) keeping prices low to build market share B) altering menu items significantly to match cultural norms C) using American managers to run international franchises D) forming joint ventures with foreign restaurants to enter new markets Answer: A Diff: 2 Chapter: 7 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 32) Which of the following most likely provides a strategic advantage during the implementation of a global alliance? A) non-collaboration in competitively sensitive areas B) unified technology infrastructure C) centralized decision making by one partner D) high levels of competition between the partners Answer: B Diff: 2 Chapter: 7 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 33) Which of the following factors most significantly affects all other variables necessary for the successful implementation of a global alliance? A) organizational policies B) organizational structure C) employee leadership D) product performance Answer: C Diff: 1 Chapter: 7 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 34) Which of the following terms suggests that global sourcing can produce gains in efficiency, productivity, quality, and profitability by fully leveraging talent around the world? A) transformational outsourcing B) business process reengineering C) inverted sourcing D) lean integration Answer: A Diff: 1 Chapter: 7 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 35) Barton & Green is an MNC based in the U.S. that provides a wide range of software development products. Executives at the firm are considering the idea of outsourcing the company's IT infrastructure. Which of the following best supports the argument that Barton & Green should outsource its IT infrastructure to TMC Enterprises, one of the best IT infrastructure maintenance firms in India? A) The main competitor of Barton & Green outsources all IT functions. B) Outsourcing will enhance Barton & Green's competitiveness. C) Barton & Green's employees frequently need IT support, so it is best to outsource the IT infrastructure. D) Barton & Green has proprietary technology and processes. Answer: B Diff: 3 Chapter: 7 Skill: Critical Thinking Objective: 3 AACSB: Reflective thinking skills 36) Barton & Green is an MNC based in the U.S. that makes a wide range of software development products. Executives at the firm are considering the idea of outsourcing the company's IT infrastructure. Which of the following questions is the most relevant to Barton & Green's decision to outsource its IT infrastructure to TMC Enterprises, a firm in India? A) Which type of operating system is primarily used by TMC Enterprises? B) What is the attitude of U.S. consumers about TMC Enterprises? C) What is the financial health of TMC Enterprises? D) Which other firms have outsourced their processes to TMC Enterprises? Answer: C Diff: 3 Chapter: 7 Skill: Critical Thinking Objective: 3 AACSB: Reflective thinking skills 37) Opening its own subsidiaries in the host country may be better than contracting with an outside firm in the host country, if it is crucial for the firm to ________. A) produce gains in efficiency, productivity, and quality B) keep control of proprietary technology and processes C) minimize job losses in the home country D) market its products in the host country Answer: B Diff: 2 Chapter: 7 Skill: Concept Objective: 3 AACSB: Dynamics of the global economy 38) The initial challenge in implementing strategies in emerging markets is likely to be how to ________. A) compete with other emerging markets B) allocate responsibilities between the partners C) set up new policies and regulations D) navigate poor infrastructures Answer: D Diff: 2 Chapter: 7 Skill: Concept Objective: 5 AACSB: Dynamics of the global economy 39) Parent companies use the IJV control process in order to ensure that the management of the joint venture conforms to ________. A) international accounting standards B) qualitative standards C) its own interests D) industry standards Answer: C Diff: 2 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 40) Organizational design as a mechanism for factoring international joint venture control refers to the ________. A) human resource plans and policies of the joint venture B) market share and profitability ratios of the organization C) geographic location of the joint venture's facilities D) amount of decision-making power that the joint venture holds Answer: D Diff: 2 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 41) ________ refers to the processes that management puts in place in order to direct the success of the joint venture's goals. A) IJV control B) Knowledge management C) Turnkey operations D) Offshoring Answer: A Diff: 1 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 42) The most important single factor determining IJV success or failure is the ________. A) percentage of equity share held by each partner B) choice of a partner C) proprietary technologies held by a partner D) amount of decision-making control given to each firm Answer: B Diff: 2 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 43) International joint ventures are like a marriage because ________. A) the firms cannot be separated into single entities after the merging B) each firm will have access to all of the others' proprietary technologies and competitively sensitive information C) the more issues that can be settled before the merger, the less likely it will be to break up D) each firm will have equal decision-making powers Answer: C Diff: 2 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 44) International joint ventures are less likely to break up when ________. A) issues are settled before the merger B) new policies are created after the merger C) one partner has all the decision-making autonomy and the other has none D) each firm explicitly states its actions and requirements after the merger Answer: A Diff: 2 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 45) Which of the following human resource problems can be simplified by increasing the autonomy of the IJV? A) workplace deviance B) employment discrimination C) staffing friction D) employee silence Answer: C Diff: 1 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 46) In spite of the potential problems with local partners, many firms rush the process of partner selection because ________. A) they want to reduce the amount spent on establishing subsidiaries abroad B) they want to take advantage of the local partner's technological innovations C) they mostly aim at increasing the number of equity shares within a short period of time D) they are anxious to get into an attractive market Answer: D Diff: 2 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 47) With regard to less-developed countries, most problems with international joint ventures involve ________. A) the parent corporation B) the local partner C) differences in accounting standards between nations D) differences in control system information management between nations Answer: B Diff: 2 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 48) Where ownership is divided among several partners, the parent organizations are more likely to delegate the operational running of the IJV to ________. A) local IJV management B) parent company management C) middle managers at the parent company level D) management teams from the largest company in the joint venture Answer: A Diff: 2 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 49) All of the following are examples of international joint venture control mechanisms used by parent firms EXCEPT ________. A) staffing policies B) legal contracts C) regional authorities D) organizational design Answer: C Diff: 2 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 50) Which of the following primarily determines the extent of control exercised over an IJV by its parent company? A) staffing choices for top IJV positions B) policies of the smaller firm C) cultural background D) IJV industry Answer: A Diff: 2 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 51) The need for knowledge management in IJVs primarily stems from ________. A) employee concerns regarding job security and benefits B) cultural and system differences between partners C) local government regulations and restrictions D) proprietary information legalities Answer: B Diff: 1 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 52) Which of the following terms refers to the process by which the firm integrates and benefits from the experiences and skills learned by its employees? A) knowledge management B) employee value proposition C) employee retention D) business process outsourcing Answer: A Diff: 1 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 53) ________ is the conscious and active management of creating, disseminating, evolving, and applying facts, information, or skills acquired through experience or education, to strategic ends. A) Business continuity management B) Employee value proposition C) Knowledge management D) Employee retention Answer: C Diff: 1 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 54) According to Berdrow and Lane, the process of transfer can be defined as ________. A) managing the flow of existing knowledge between parents and from the parents to the IJV B) managing the transformation and creation of knowledge within the IJV through its independent activities C) managing the flow of transformed and newly created knowledge from the IJV back to the parents D) capturing and keeping knowledge confidential that exists among the local partners Answer: A Diff: 1 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 55) According to Berdrow and Lane, the process of harvest can be defined as ________. A) managing the flow of existing knowledge between parents and from the parents to the IJV B) managing the flow of transformed and newly created knowledge from the IJV back to the parents C) capturing knowledge of local partners and keeping it confidential D) managing the transformation and creation of knowledge within the IJV through its independent activities Answer: B Diff: 1 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 56) According to Berdrow and Lane, the process of transformation can be defined as ________. A) transforming the existing knowledge of parents and managing the flow of this transformed knowledge between parents B) managing the transformation and creation of knowledge within the IJV through its independent activities C) capturing and keeping knowledge that exists within the local partners confidential D) managing the flow of transformed and newly created knowledge from the IJV back to the parents Answer: B Diff: 1 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 57) Which of the following is NOT a knowledge management process? A) transferring existing knowledge B) transforming and creating of knowledge C) harvesting knowledge from the IJV to the parents D) distributing knowledge to clients and media outlets Answer: D Diff: 2 Chapter: 7 Skill: Concept Objective: 4 AACSB: Dynamics of the global economy 58) Which of the following represents government influence on IJVs? A) copyright protection B) partnership of firm C) organization structure D) negotiation practice Answer: A Diff: 2 Chapter: 7 Skill: Concept Objective: 6 AACSB: Dynamics of the global economy 59) Which of the following is an area where the host government influences the strategic choices and implementations of foreign firms? A) level of taxation B) equity share in joint venture C) knowledge management D) partnership of target firms Answer: A Diff: 2 Chapter: 7 Skill: Concept Objective: 6 AACSB: Dynamics of the global economy 60) Which of the following variables is frequently overlooked when deciding on entry strategies and alliances, particularly when the target country is perceived to be similar to the home country? A) political stability B) culture C) currency stability D) competition Answer: B Diff: 2 Chapter: 7 Skill: Concept Objective: 6 AACSB: Dynamics of the global economy 61) Overlooking cultural differences in cross-border alliances can create a negative impact when ________. A) target country has similar views on organizational formality B) target country and host country equally participate in decision making C) target country is technologically superior to the host country D) target country has conflicting practices and systems Answer: D Diff: 2 Chapter: 7 Skill: Concept Objective: 6 AACSB: Dynamics of the global economy 62) In a cross-border alliance, cultural differences can be overlooked when ________. A) the target country is similar to the home country B) when there is a considerable difference in practices of the target country C) the target country has a high number of domestic mergers D) the target country insists on participating in the decision-making processes Answer: A Diff: 2 Chapter: 7 Skill: Concept Objective: 6 AACSB: Dynamics of the global economy 63) Which of the followin