Global Strategy and Experience Curve Worksheet

Which two factors are the primary drivers of the "Experience Curve"?

• Market saturation and inflation

• Learning effects and economies of scale

• Political risk and trade barriers

• Product differentiation and brand loyalty

When a firm moves down the experience curve, what is the impact on its competitive position?

• It suffers losses due to high cumulative output

• It can lower prices while maintaining profit, creating a barrier for new entrants

• Its unit costs increase due to organizational complexity

• It is forced to switch to a localization strategy

In the context of global strategy, "Pressures for Local Responsiveness" arise from:

• Universal needs for a product

• Differences in consumer tastes, preferences, and host-government demands

• High transportation costs and global branding

• The need to minimize unit costs

A firm that ignores local responsiveness and offers a standardized product worldwide to maximize cost reductions is using a:

• Transnational Strategy

• Localization Strategy

• International Strategy

• Global Standardization Strategy

Which strategy is most appropriate when there are high pressures for local responsiveness and low pressures for cost reductions?

• Global Standardization Strategy

• Localization Strategy

• Transnational Strategy

• Experience Curve Strategy

The "Transnational Strategy" is often considered the most difficult to implement because it requires:

• Focusing only on the home market

• Balancing the conflicting goals of high efficiency and high local customization

• Avoiding all forms of foreign direct investment

• Standardizing products across all global regions

An "International Strategy" typically involves:

• Heavy customization for every local market

• Taking products first produced for the domestic market and selling them internationally with minimal local customization

As competition intensifies over time, many firms that started with an International Strategy are forced to shift toward:

• Purely domestic strategy

• Global standardization or Transnational strategy

• Localization strategy with higher price points

• Strategy based on high trade barriers

"Location Economies" help a firm:

• Increase its political risk

• Lower the costs of value creation or help it differentiate its product offering

• Avoid the need for learning effects

• Centralize all activities in its home country

When a firm creates a global web of value creation activities, it is:

• Performing different stages of the value chain in optimal locations

• Concentrating all production in one high-cost country

• Ignoring the experience curve

• Reducing its responsiveness to local markets