In the Porter Diamond of National Advantage framework which of the following factors does not affect nation competitiveness?

50.

Which of the following is not a risk normally associated with Bottom of the Pyramid strategies?    A.  A low-end version of a brand may detract from the overall brand attractiveness. B.  The new low-cost products they develop may cannibalize the sales of their core products. C.  Entrenched competitors can impact the ability of the new firm to enter the market successfully. D.  New products may be perceived as exploiting the privileged customer with substandard products. Multinational firms are constantly faced with the dilemma of choosing between local adaptation (in product offerings, locations, advertising, and pricing) and global integration.

AACSB: Analytic Blooms: Understand Learning Objective: 07-01 The importance of international expansion as a viable diversification strategy. Level of Difficulty: 2 Medium Topic: The Global Economy: A Brief Overview

51.

Multinational firms are constantly faced with the dilemma of choosing between _______ and __________.    A.  local adaptation; global integration B.  local adaptation; local integration C.  global adaptation; local integration D.  global adaptation; global integration Some governments make better use of inflows of foreign investment and know-how than others. Explanations include the need of governments to have track records of business-friendly policies to attract multinationals and local entrepreneurs to train workers, invest in modern technology, and nurture local suppliers and managers. Also, it means carefully managing the broader economic factors in an economy, such as interest rates, inflation, and unemployment.

AACSB: Analytic Blooms: Understand Learning Objective: 07-01 The importance of international expansion as a viable diversification strategy. Level of Difficulty: 2 Medium Topic: The Global Economy: A Brief Overview

52.

In the Porter Diamond of National Advantage framework which of the following factors does not affect nation competitiveness?    A.  The position of the nation in factors of production necessary to compete in a given industry. B.  The presence or absence in the nation of supplier industries that are internationally competitive. C.  The conditions in the nation governing the nature of foreign rivalry. D.  The nature of home-market demand of the products or services of the industry. Porter concluded that there are four broad attributes of nations that individually, and as a system, constitute what is termed the Diamond of National Advantage. In effect, these attributes jointly determine the playing field that each nation establishes and operates for its industries. These factors are: factor endowments, demand condition, related and supporting industries, and firm strategy, structure, and rivalry.

AACSB: Analytic Blooms: Understand Learning Objective: 07-02 The sources of national advantage; that is; why an industry in a given country is more (or less) successful than the same industry in another country. Level of Difficulty: 2 Medium Topic: Factors Affecting Nation Competitiveness

53.

Rivalry is intense in nations with conditions of __________ consumer demand, __________ supplier bases, and __________ new entrant potential from related industries.    A.  weak; weak; high B.  strong; strong; low C.  weak; weak; low D.  strong; strong; high Rivalry is particularly intense in nations with conditions of strong consumer demand, strong supplier bases, and high new entrant potential from related industries. This competitive rivalry increases the efficiency with which firms develop, market, and distribute products and services within the home country.

AACSB: Analytic Blooms: Understand Learning Objective: 07-02 The sources of national advantage; that is; why an industry in a given country is more (or less) successful than the same industry in another country. Level of Difficulty: 2 Medium Topic: Factors Affecting Nation Competitiveness

54.

According to Michael Porter, firms that have experienced intense domestic competition are _________________________________.    A.  unlikely to have the time or resources to compete abroad B.  more likely to demand protection from their governments C.  most likely to design strategies aimed primarily at the domestic market D.  more likely to design strategies and structures that allow them to successfully compete abroad Competitive rivalry increases the efficiency with which firms develop, market, and distribute products and services within the home country. This intense rivalry forces firms to look outside their national boundaries for new markets, setting up the conditions necessary for global competitiveness.

AACSB: Analytic Blooms: Understand Learning Objective: 07-02 The sources of national advantage; that is; why an industry in a given country is more (or less) successful than the same industry in another country. Level of Difficulty: 2 Medium Topic: Factors Affecting Nation Competitiveness

55.

Which of the factors below has not made the software services industry in India extremely competitive on a global scale?    A.  large pool of skilled workers B.  large network of public and private educational institutions C.  tax and antitrust legislation that protects the dominant players in the industry D.  large, growing market and sophisticated customers In India, the Diamond of National Advantage framework for software shows a large pool of skilled workers, a large network of public and private educational institutions, a large, growing market, and sophisticated customers.

AACSB: Analytic Blooms: Understand Learning Objective: 07-02 The sources of national advantage; that is; why an industry in a given country is more (or less) successful than the same industry in another country. Level of Difficulty: 2 Medium Topic: Factors Affecting Nation Competitiveness

56.

Which of the following is not a motivation for a company to pursue international expansion?    A.  It wishes to increase the size of the potential markets for its products and services. B.  It wishes to take advantage of arbitrage opportunities in order to increase profit. C.  It wishes to optimize value-chain activities to enhance performance, reduce costs, and reduce risk. D.  It wishes to increase foreign market penetration by developing products for the home market. There are many motivations for a company to pursue international expansion. The most obvious one is to increase the size of potential markets for its products and services. A second reason is that the company can take advantage of arbitrage opportunities. A third reason is that a company wishes to enhance the growth rate of a product that is in its maturity state in the home country. A fourth reason is that the company wishes to benefit from optimizing the physical location for every activity in its value chain. A fifth reason is that possibilities exist for reverse innovation, whereby a company develops new products for emerging markets that have adequate functionality at a low cost and then often are introduced to the home country after successfully penetrating the emerging market.

AACSB: Analytic Blooms: Understand Learning Objective: 07-03 The motivations (or benefits) and the risks associated with international expansion; including the emerging trend for greater offshoring and outsourcing activity. Level of Difficulty: 2 Medium Topic: International Expansion Company Motivations and Risks

57.

If a company is considering optimizing the physical location for every activity in the value chain, which of the following is not a possible strategic advantage for that decision?    A.  Performance enhancement B.  Cost reduction C.  Political risk reduction D.  Life-cycle enhancement Optimizing the location for every activity in the value chain can yield one or more of three strategic advantages: performance enhancement, cost reduction, and risk reduction.

AACSB: Analytic Blooms: Understand Learning Objective: 07-03 The motivations (or benefits) and the risks associated with international expansion; including the emerging trend for greater offshoring and outsourcing activity. Level of Difficulty: 2 Medium Topic: International Expansion Company Motivations and Risks

58.

The sale of Boeing commercial aircraft and Microsoft operating systems in many countries enables these companies to benefit from ____________.    A.  higher prices in their domestic markets B.  reducing their exposure to currency risks C.  economies of scale D.  optimizing the location for many activities in their value chain Expanding the global presence of a company automatically increases its scale of operations, providing it with a larger revenue and asset base, which potentially enables a firm to attain economies of scale. One advantage is the spreading of fixed costs such as research and development over a larger volume of production. Examples include the sale in many foreign countries of commercial aircraft by Boeing and operating systems by Microsoft.

AACSB: Analytic Blooms: Understand Learning Objective: 07-03 The motivations (or benefits) and the risks associated with international expansion; including the emerging trend for greater offshoring and outsourcing activity. Level of Difficulty: 2 Medium Topic: International Expansion Company Motivations and Risks

59.

If the U.S. dollar appreciates relative to foreign currency, what is likely to be the result for the U.S. company that has company branches abroad?    A.  Profits will increase, when measured in U.S. dollars. B.  Profits will decrease, when measured in U.S. dollars. C.  Foreign exports to the United States will decrease. D.  Foreign demand for U.S. goods and services will decrease. When the U.S. dollar appreciates against other currencies, U.S. goods can be more expensive to consumers in foreign countries. Appreciation of the U.S. dollar can have negative implications for American companies that have branch operations overseas. The reason for this is that profits from abroad must be exchanged for dollars at a more expensive rate of exchange, reducing the amount of profit when measured in dollars.

AACSB: Analytic Blooms: Apply Learning Objective: 07-03 The motivations (or benefits) and the risks associated with international expansion; including the emerging trend for greater offshoring and outsourcing activity. Level of Difficulty: 3 Hard Topic: International Expansion Company Motivations and Risks

60.

__________ occurs when a firm decides to utilize other firms to perform value-creating activities that were previously performed in-house.    A.  Offshoring B.  A global strategy C.  Outsourcing D.  A transnational strategy Outsourcing occurs when a firm decides to utilize other firms to perform value-creating activities that were previously performed in-house. It may be a new activity that the firm is perfectly capable of doing but chooses to have someone else perform for cost or quality reasons. Outsourcing can be to either a domestic or foreign firm.

AACSB: Analytic Blooms: Remember Learning Objective: 07-03 The motivations (or benefits) and the risks associated with international expansion; including the emerging trend for greater offshoring and outsourcing activity. Level of Difficulty: 1 Easy Topic: International Expansion Company Motivations and Risks