Question 1

Gen-Supply reminds employees that its flagship product used to cost the company $154 to manufacture when the company launched ten years ago. Now, the same product costs just $58 to manufacture. This demonstrates the effects of

Accepted Answer

A)   a global web.
B)   dispersion linkage.
C)   economies of scale.
D)   the experience curve.
E)   the efficiency frontier.F) A) and E)
G) C) and E)

Question 2

WiseGuy Inc. sells its finance software for $100. It costs the company $59 to make the product. Customers value the software at $90. In this scenario, WiseGuy Inc.'s value creation is

Accepted Answer

A)   $59.
B)   $31.
C)   $10.
D)   $28.
E)   $272.F) B) and C)
G) A) and E)

Question 3

The term mini-multinational refers to the totality of a firm's organization, including organization architecture, control systems and incentives, organizational culture, processes, and people.

Accepted Answer

A) True 
 B)False

Question 4

An international strategy involves taking products first produced for their domestic market and selling them internationally with only minimal local customization.

Accepted Answer

A) True 
 B)False

Question 5

One of the principal risks associated with a strategic alliance is that

Accepted Answer

A)   it brings together the complementary skills of alliance partners.
B)   it makes it difficult for the partner firms to enter into a foreign market.
C)   a firm can give away more than it receives.
D)   it does not allow firms to share fixed costs.
E)   it almost always fails.F) B) and D)
G) D) and E)

Question 6

Consumer surplus captures some of the value of a product, which reduces the price a firm can charge for it.

Accepted Answer

A) True 
 B)False

Question 7

Firms that compete in the global marketplace typically face which two types of competitive pressure?

Accepted Answer

A)   pressures for increasing investment and pressures to minimize consumer surplus
B)   pressures for labor skill enhancement and pressures to minimize economies of scale
C)   pressures for cost reductions and pressures to be locally responsive
D)   pressures for global promotions and pressures to move down the efficiency frontier
E)   pressures for product standardization and pressures to move up the experience curveF) B) and E)
G) A) and B)

Question 8

A(n)  ________ is used by economists when referring to charging each customer a price that reflects that individual's assessment of the value of a product.

Accepted Answer

A)   producer surplus
B)   reservation price
C)   value price
D)   efficiency frontier
E)   competitive advantage.F) A) and D)
G) B) and D)

Question 9

By standardizing equipment and streamlining its operations, PinPoint Airlines competes by offering less expensive flights than the competition. According to Michael Porter, the strategy that PinPoint Airlines is using is

Accepted Answer

A)   low-cost.
B)   differentiation.
C)   value transfer.
D)   efficiency frontier.
E)   diversification.F) A) and B)
G) A) and C)

Question 10

What is a support activity in the operations of a firm?

Accepted Answer

A)   research and development
B)   customer service
C)   marketing and sales
D)   creation and maintenance of information systems
E)   productionF) A) and E)
G) B) and C)

Question 11

A cooperative agreement between potential or actual competitors is called a(n)

Accepted Answer

A)   tactical union.
B)   strategic alliance.
C)   political affiliation.
D)   economic association.
E)   nationalization.F) A) and E)
G) A) and B)

Question 12

StickyGlue Corp. creates adhesives used in the construction business. A primary activity in the operations of StickyGlue Corp. would be

Accepted Answer

A)   logistics.
B)   research and development.
C)   information systems.
D)   human resources.
E)   company infrastructure.F) B) and D)
G) B) and E)

Question 13

Who should be considered as part of a firm's infrastructure because of the considerable influence associated with the position?

Accepted Answer

A)   procurement manager
B)   top management
C)   production manager
D)   research and development scientist
E)   marketing personnelF) B) and D)
G) A) and B)

Question 14

Merck, a pharmaceutical company, has taken thousands of drugs through the federal approval process and so can do it more cost efficiently than many competitors who are new to the industry. These cost savings that come to Merck in the drug approval process are an example of

Accepted Answer

A)   learning effects.
B)   factor endowments.
C)   ancillary effects.
D)   economies of scale.
E)   location economies.F) A) and E)
G) A) and D)

Question 15

Location economies are the economies that arise from performing a value creation activity in the optimal location for that activity, wherever in the world that might be.

Accepted Answer

A) True 
 B)False

Question 16

How does a company measure profit growth?

Accepted Answer

A)   by dividing the net profits of the firm by total invested capital
B)   by subtracting the previous year's gross profit from the current year's gross profit
C)   by calculating the difference between the previous year's profitability and the current year's profitability
D)   by finding the percentage increase in net profits over time
E)   by adding the profitability of the last two fiscal yearsF) B) and C)
G) A) and D)

Question 17

The two phenomena that help explain the experience curve are

Accepted Answer

A)   learning effects and economies of scale.
B)   technology inputs and wealth transfer.
C)   leveraging subsidiary and local responsiveness.
D)   standardized manufacturing and global web.
E)   efficiency frontier and location economies.F) None of the above
G) B) and C)

Question 18

The advantages of strategic alliances are as follows:

Accepted Answer

1. Strategic alliances may facilitate en...

Question 19

For Bank of America, the "production" activity typically occurs when the

Accepted Answer

A)   customer specifies the service requirements.
B)   service is paid for by the customer.
C)   service is designed in-house.
D)   service is delivered to the customer.
E)   customer provides feedback.F) A) and B)
G) A) and C)

Question 20

In general, the more value customers place on a firm's products, the more it leads to

Accepted Answer

A)   less profit for the firm.
B)   higher competitive pressure from other firms.
C)   lesser the quality of the product.
D)   lesser the consumer surplus for those products.
E)   higher prices the firm can charge for those products.F) A) and E)
G) A) and D)

Exam 12: The Strategy of International Business

An international strategy involves taking products first produced for their domestic market and selling them internationally with only minimal local customization.

Correct AnswerverifiedShow Answer

Merck, a pharmaceutical company, has taken thousands of drugs through the federal approval process and so can do it more cost efficiently than many competitors who are new to the industry. These cost savings that come to Merck in the drug approval process are an example of

Correct AnswerverifiedShow Answer

What is a support activity in the operations of a firm?

Correct AnswerverifiedShow Answer

In general, the more value customers place on a firm's products, the more it leads to

Correct AnswerverifiedShow Answer

WiseGuy Inc. sells its finance software for $100. It costs the company $59 to make the product. Customers value the software at $90. In this scenario, WiseGuy Inc.'s value creation is

Correct AnswerverifiedShow Answer

One of the principal risks associated with a strategic alliance is that

Correct AnswerverifiedShow Answer

A cooperative agreement between potential or actual competitors is called a(n)

Correct AnswerverifiedShow Answer

StickyGlue Corp. creates adhesives used in the construction business. A primary activity in the operations of StickyGlue Corp. would be

Correct AnswerverifiedShow Answer

Consumer surplus captures some of the value of a product, which reduces the price a firm can charge for it.

Correct AnswerverifiedShow Answer

The two phenomena that help explain the experience curve are

Correct AnswerverifiedShow Answer

For Bank of America, the "production" activity typically occurs when the

Correct AnswerverifiedShow Answer

By standardizing equipment and streamlining its operations, PinPoint Airlines competes by offering less expensive flights than the competition. According to Michael Porter, the strategy that PinPoint Airlines is using is

Correct AnswerverifiedShow Answer

Who should be considered as part of a firm's infrastructure because of the considerable influence associated with the position?

Correct AnswerverifiedShow Answer

The advantages of strategic alliances are as follows:

Correct Answerverified1. Strategic alliances may facilitate en...View AnswerShow Answer

Gen-Supply reminds employees that its flagship product used to cost the company $154 to manufacture when the company launched ten years ago. Now, the same product costs just $58 to manufacture. This demonstrates the effects of

Correct AnswerverifiedShow Answer

How does a company measure profit growth?

Correct AnswerverifiedShow Answer

Firms that compete in the global marketplace typically face which two types of competitive pressure?

Correct AnswerverifiedShow Answer

A(n) ________ is used by economists when referring to charging each customer a price that reflects that individual's assessment of the value of a product.

Correct AnswerverifiedShow Answer

The term mini-multinational refers to the totality of a firm's organization, including organization architecture, control systems and incentives, organizational culture, processes, and people.

Correct AnswerverifiedShow Answer

Location economies are the economies that arise from performing a value creation activity in the optimal location for that activity, wherever in the world that might be.

Correct AnswerverifiedShow Answer

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1. Strategic alliances may facilitate en...
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