Chapter 07 International Strategy: Creating Value in Global Markets

Which of the following is a a business in which a multinational company owns 100 percent of the stock

• An export agent franchise

• A wholly owned subsidiary

• A Licensing firm

• A franchise

The strategy that would be most appropriate when the pressures to lower costs are low and the pressures for local adaptation are low?

• Global strategy

• Transnational strategy

• International strategy

• Multidomestic strategy

The form of entry strategy into international operations that offers the lowest level of control would be

• franchising.

• licensing.

• joint venture.

• exporting.

___________ occurs when a firm decides to utilize other firms to perform value-creating activities that were previously performed in-house.

• Offshoring

• Strategic alliance

• Outsourcing

• Wholly owned subsidiary

The reasons why a company opts to expand outside its home market include all of the following except

• to exploit its core competencies and capabilities

• to identify resources and capabilities in the company's home market

• to achieve lower costs thereby enhancing the firm's competitiveness

• to gain access to new customers for the company's products/services

Exxon Mobil has entered into a pact with Gazprom, the world's largest natural gas extractor, to set up a processing unit in Baku, Azerbaijan. Which of the following is most likely the reason for Exxon Mobil to opt for this strategic alliance?

• To better compete with Gazprom

• To scale back its core competencies

• To gain access to low-cost inputs of production

• To restrict its factors of production

The difference between a franchise and licensing contract is that

• a franchise contract has a broader range of factors and is usually longer in duration.

• a franchise contract must include a foreign government.

• a licensing contract covers more aspects of business profit from operations.

• a franchise contract involves less control and less risk.

Typically, intense rivalry in domestic markets does not force firms to look outside their national boundaries for new markets.

• True

• False

Two opposing pressures that managers face when they compete in foreign markets are: cost reduction and adaptation to local markets.

• True

• False

Many international firms are increasing their efforts to market their products and services to countries such as India and China as the ranks of their middle class continue to increase.

• True

• False