Chapter 08 - Strategy Formulation and Implementation

Chapter 08 - Strategy Formulation and Implementation
Chapter 08
Strategy Formulation and Implementation
True / False Questions
1. Strategic management is required to keep track of increasingly diversified operations in a

continuously changing international environment.
True False
2. There is definitive evidence that strategic planning in the international arena always results
in higher profitability.
True False
3. Many MNCs are convinced that strategic planning is critical to their success and these
efforts are being conducted both at the home office and in the subsidiaries.
True False
4. MNCs that focus on the political imperative employ a worldwide strategy based on cost
leadership, differentiation and segmentation.
True False
5. An economic imperative approach to strategic planning is used when a product is regarded

as a generic good and therefore does not have to be sold based on name brand.
True False
6. TQM covers the full gamut, from strategy formulation to implementation.

True False
8-1
7. A bureaucratic coordination approach to formulation and implementation is one in which

the MNC makes strategic decisions based on the merits of the individual situation.
True False
8. National responsiveness is the need to understand different consumer tastes in segmented

regional markets and respond to different national standards and regulations imposed by
autonomous agencies.
True False
9. To a growing extent, the customers of MNCs have heterogeneous tastes and this has helped
to spread international consumerism.
True False
10. When the need for national responsiveness is low and the need for global integration is
high, a global strategy is appropriate.
True False
11. When the need for national responsiveness is high and the need for global integration is
high, a multi-domestic strategy is appropriate.
True False
12. International strategies are characterized by increased international standardization of

products and services.
True False
13. Strategy formulation attempts to provide management with accurate forecasts of trends
that relate to external changes in geographic areas where the firm is currently doing business.
True False
8-2
14. External resource analysis helps the firm to evaluate its current financial strengths and
weaknesses.
True False
15. Profitability and marketing goals almost always dominate the strategic plans of today's
multinational corporations.
True False
16. Firms that have done well domestically with a product usually have done so because the
competition is effective.
True False
17. In choosing a location, today's MNC has two primary considerations: the country and the
specific locale within the chosen country.
True False
18. In selecting a geographic location to operate, Japanese firms favor heavily unionized
areas.
True False
19. In emerging economies undergoing rapid changes such as privatization, governments have
generally been apprehensive and uncooperative with MNCs.
True False
20. The term "born global" is used for firms that engage in significant international activity a
short time after being established.
True False
8-3
Multiple Choice Questions
21. The process of determining an organization's basic mission and long-term objectives and
then implementing a plan of action for attaining these goals is:
A. Strategic management
B. Tactical management
C. Contingency management
D. Functional management
22. Ford Motor's strategic plan in Thailand is based on:

A. Offering the right price and product
B. Offering the right combination of price and financing to a carefully identified market
segment
C. Offering the right combination of price and financing to all market segments
D. Offering the right financing only
23. Honda and General Motors have both built plants in Thailand to take advantage of
A. Demand and low delivery costs
B. Strategic pricing
C. New technologies and low wages
D. Tax incentives and demand
24. According to the text, strategic planning helps MNCs to do all of the following except:
A. Coordinate and monitor its far-flung operations
B. Deal with political risks
C. Determine performance
D. Get higher profitability
25. A worldwide strategy based on cost leadership, differentiation and segmentation is

referred to as the:
A. Economic imperative
B. Political imperative
C. Quality imperative
D. Administrative coordination strategy
8-4
26. These individuals are the key to stimulating profit growth within a company.
A. Supervisors
B. Middle managers
C. First-line managers
D. Top managers
27. Companies that pursue this strategy typically sell products for which a large portion of
value is added in the upstream activities of the industry's value chain.
A. Quality imperative
C. Economic imperative
D. Administrative coordination
28. MNCs using the _____ approach to strategic planning are country-responsive; their
approach is designed to protect local market niches.
A. Administrative coordination strategy
B. Economic imperative
D. Political imperative
29. The products sold by MNCs pursuing this approach often have a large portion of their
value added in the downstream activities of the value chain.
A. Political imperative
B. Cost imperative
D. Economic imperative
30. Typically, MNCs utilizing this approach to strategic planning use a country-centered or
multi-domestic strategy.
B. Administrative coordination
C. Political imperative
8-5
31. The approach to strategic formulation and implementation utilizing strategies of TQM to
meet or exceed customers' expectations and continuously improve products and/or services is
referred to as the:
A. Value-added imperative
B. Quality imperative
32. All of the following are characteristics of TQM except:

A. Quality is operationalized by meeting or exceeding customer expectations
B. The quality strategy is formulated by the front-line employees and is diffused throughout
the organization
C. Everyone from top executives to hourly employees operates under a TQM strategy of
delivering quality products/services to internal and external customers
D. TQM techniques range from traditional inspection and statistical quality control to cutting-
edge human resource management techniques
33. This approach to formulation and implementation is one in which the MNC makes
strategic decisions based on the merits of the individual situation rather than using a
predetermined economic or political strategy.
A. Administrative coordination
B. Bureaucratic coordination
C. Value-added
D. Functional
34. _____ is the production and distribution of products and services of a homogeneous type
and quality on a worldwide basis.
A. Global integration
B. Nationalism
C. Cross-border integration
D. Market standardization
8-6
35. The need to understand the different consumer tastes in segmented regional markets and
respond to different national standards and regulations imposed by autonomous governments
and agencies is:
B. International entrepreneurship
C. National responsiveness
D. Statutory compliance
36. This strategy is appropriate when the need for national responsiveness is low and the need
for globalization integration is high.
A. International
B. Multi-domestic
C. Global
D. Transnational
also high, this strategy is appropriate.
A. Transnational
B. Globalization
C. International
D. Multi-domestic
low, a(n) _____ strategy is appropriate.
A. Transnational
B. Multi-domestic
C. International
D. Globalization
8-7
39. When the need for national responsiveness is low and the need for global integration is
also low, which of the following strategies would be appropriate?
A. Globalization
B. Transnational
C. International
D. Multi-domestic
40. Which foreign marketing strategy is characterized by niche companies that adapt their
products to satisfy the high demands of differentiation and ignore economies of scale because
integration is not very important?
A. Multi-domestic
B. International
C. Globalization
D. Transnational
41. Which of the following strategies has the highest need for integration and differentiation?
A. National responsiveness
B. Globalization
C. International
D. Transnational
42. _____ attempts to provide management with accurate forecasts of trends that relate to
external changes in geographic areas where the firm is currently doing business or considering
setting up operations.
A. Environmental scanning
B. Functional scanning
C. Tactical scanning
D. Operational scanning
8-8
43. One of the most important foci in _____ is the market and includes the role of all potential
competitors and the relationships surrounding those competitors, such as affiliation with one
another or the connection between the company and its customers and suppliers.
A. Strategy implementation
B. Goal formulation
C. Environmental scanning
D. Internal resource analysis
44. The strategic planning process that helps a firm evaluate its current managerial, technical,
material and financial strengths and weaknesses is:
B. Operational analysis
C. Internal resource analysis
D. Tactical analysis
45. This analysis identifies the key factors for success that will dictate how well the firm is
likely to do.
A. External
B. Internal
C. Competitive
D. Market
46. A key success factor is a factor that is necessary for a firm to compete effectively in a(n):
A. International market
B. Highly-restricted market
C. Market niche
D. Broad market domain
47. According to the text, which of the following sets of goals almost always dominate the
strategic plans of today's MNCs?
A. Quality and cost control
B. Finance and operations
C. Accounting and R&D
D. Profitability and marketing
8-9
48. Once strategic goals are set, an MNC will develop specific _____ goals and controls,
usually through a two-way process at the subsidiary or affiliate level.
A. Bureaucratic
B. Operational
C. Strategic
D. Contingency
49. The process of providing goods and services in accord with a plan of action is:
B. Strategy formulation
C. Strategy control
D. Strategy contingency
50. An MNC must consider all of the following general areas in strategy implementation
except:
A. Management must implement functional strategies in areas such as marketing
B. It should consider investing only in advanced nations
C. It must carry out entry and ownership strategies
D. It must decide where to locate operations
51. A primary consideration for an MNC in investing in a foreign country would be a decision
based on:
A. Corporate culture
B. Business ethics
C. Specific locale
D. Operating norms
52. Opportunities to increase market share through increased sales of goods and services
result in MNCs investing into:
A. Advanced industrialized countries
B. Bribes and kickbacks
C. Corporate cultures
D. Syndicate operations
8-10
53. All of the following act as disincentives for MNCs except:

A. Restrictions on profit repatriation
B. Controls on the transfer of technology
C. Export maximums for generating foreign currency
D. Limits on local market growth
54. A multinational firm's choice of a locale is affected by all of the following factors except:
A. Desirability of the location for employees
B. The number of market shares invested in their home country
C. Proximity to competitors
D. Nature of the workforce
55. For products like computers, Japanese firms:

A. Move from their home market directly into fully developed countries and then on to the
newly developing nations
B. Move from their home market directly into developing nations and then on to developed
markets
C. Go only to developed countries to market products
D. Go only to developing countries to market products
56. The implementation of a marketing strategy in international areas is built around the well-
known "four Ps". These are:
A. Place of origin, price, productive life and product
B. Promotion, price, production method and productive life
C. Product, price, promotion and place
D. Place of origin, production method, price and people
57. If a firm operates production plants in different countries but makes no attempt to
integrate its overall operations, the company is known as a:
A. Multi-domestic
B. Global
C. Transnational
D. International
8-11
58. MNCs have found that whether they are exporting or producing the goods locally in the
host country, consideration of worldwide production is important. All of the following are
factors to be taken into consideration except:
A. Goods may be produced in foreign countries for export to other nations
B. A plant will specialize in a particular product and export it to all the MNC's markets
C. A plant will produce goods for many locales
D. A plant will produce one or more components that are shipped to a larger network of
assembly plants
59. To respond to risks in emerging markets, MNCs must do all of the following except:
A. Limiting equity investments
B. Avoiding joint ventures
C. Collaborating with a local partner
D. Encouraging shared ownership structures
60. When market liberalization is delayed:

A. It gives first movers a significant advantage over later entrants
B. First movers get clear, significant advantages in transitional markets
C. It gives later entrants a significant advantage over first movers
D. Substantial risks to premature entry are removed
61. Which of the following is not an advantage of first-mover strategies?

A. Capturing learning effects important for increasing market share
B. Achieving scale economies
C. Development of alliances with the most attractive local partners
D. Capitalizing on well-established legal, institutional and political frameworks
62. Within the context of international management, the "base of the pyramid" refers to:
A. Front-line employees at the bottom of the organizational hierarchy
B. Younger generations of the population pyramid
C. Understanding the foundational issues in international management
D. Potential low-income customers at the bottom of the economic pyramid
8-12
63. Which of the following is likely to be the most effective strategic approach for the "base
of the pyramid"?
A. Incremental adaptation of existing technologies and products
B. Establishing partnerships with central governments of emerging economies
C. Leapfrog technologies including disruptive technologies
D. Large-scale strategies
64. Which of the following findings regarding BOP strategy has significant implications for
the globalization-national responsiveness framework?
A. Building relationships directly and at the local level contributes to the reputation and
fosters the trust necessary to overcome the lack of formal institutions such as the rule of law
B. The BOP may be an ideal environment for incubating new, leapfrog technologies
C. These business models may travel profitably to higher-income markets because adding
features to a low-cost model may be easier than removing features from high-cost models
D. It brings focus to those who are too poor to be viable customers for multinational
companies
65. All of the following are challenges firms could face in the implementation of a BOP
strategy except:
A. Offering affordable goods
B. Generating awareness regarding the product
C. Nonexistent distribution channels
D. Coordinating administrative functions
66. International management activities of entrepreneurial and new-venture firms have been
made possible by all of the following except:
A. Customized, old access channels
B. Advances in telecommunication
C. Greater efficiencies and lower costs in shipping
D. Allowing firms to access international customers
8-13
67. Firms that internationalize after being domestically established have to overcome all of
the following barriers except:
A. Their domestic orientation
B. Their internal domestic political ties
C. Their domestic decision-making inertia
D. Their anti-risk seeking behavior
68. The technological learning gained from varied international environments:

A. Enhances efforts to integrate knowledge throughout a firm
B. Shows a fall in venture performance
C. Leads to minimal diversity of national environments
D. Has no effect on cross-functional teams
69. Firms that engage in significant international activity a short time after being established
are called:
A. Greenfield ventures
B. Born globals
C. Brownfield firms
D. Traditional exporters
70. All of the following are features of a "born-global" firm except:

A. They export products to close markets
B. They employ strategies like unique-products development
C. They indulge in significant international activity a short time after being established
D. They seek joint ventures or acquisitions as a method to expand internationally
8-14
Essay Questions
71. Is there a growing need for strategic management among MNCs? If so, why?
72. Describe the difference between global integration and national responsiveness. What is
the principle advantage of each strategy?
73. Identify the four basic strategies that MNCs use and the situations in which they are used.
74. What is the purpose of internal resource analysis? In the context of internal resource
analysis, what is a "key success factor"?
8-15
75. What is the "BOP" and why is this strategy challenging to implement?
8-16
Chapter 08 Strategy Formulation and Implementation Answer Key
True / False Questions
1. (p. 271) Strategic management is required to keep track of increasingly diversified operations
in a continuously changing international environment.
TRUE
Difficulty: Easy
2. (p. 273) There is definitive evidence that strategic planning in the international arena always
results in higher profitability.
FALSE
Difficulty: Easy
3. (p. 273) Many MNCs are convinced that strategic planning is critical to their success and these
efforts are being conducted both at the home office and in the subsidiaries.
TRUE
Difficulty: Medium
4. (p. 273) MNCs that focus on the political imperative employ a worldwide strategy based on
cost leadership, differentiation and segmentation.
FALSE
Difficulty: Easy
8-17
5. (p. 273) An economic imperative approach to strategic planning is used when a product is
regarded as a generic good and therefore does not have to be sold based on name brand.
TRUE
Difficulty: Medium
6. (p. 275) TQM covers the full gamut, from strategy formulation to implementation.
TRUE
Difficulty: Easy
7. (p. 277) A bureaucratic coordination approach to formulation and implementation is one in

which the MNC makes strategic decisions based on the merits of the individual situation.
FALSE
Difficulty: Easy
8. (p. 277) National responsiveness is the need to understand different consumer tastes in
segmented regional markets and respond to different national standards and regulations
imposed by autonomous agencies.
TRUE
Difficulty: Medium
9. (p. 277) To a growing extent, the customers of MNCs have heterogeneous tastes and this has
helped to spread international consumerism.
FALSE
Difficulty: Easy
8-18
10. (p. 278) When the need for national responsiveness is low and the need for global integration
is high, a global strategy is appropriate.
TRUE
Difficulty: Medium
11. (p. 279) When the need for national responsiveness is high and the need for global
integration is high, a multi-domestic strategy is appropriate.
FALSE
Difficulty: Hard
12. (p. 279) International strategies are characterized by increased international standardization
of products and services.
TRUE
Difficulty: Easy
13. (p. 280) Strategy formulation attempts to provide management with accurate forecasts of
trends that relate to external changes in geographic areas where the firm is currently doing
business.
FALSE
Difficulty: Easy
14. (p. 282) External resource analysis helps the firm to evaluate its current financial strengths
and weaknesses.
FALSE
Difficulty: Medium
8-19
15. (p. 284) Profitability and marketing goals almost always dominate the strategic plans of
today's multinational corporations.
TRUE
Difficulty: Medium
16. (p. 284) Firms that have done well domestically with a product usually have done so because
the competition is effective.
FALSE
Difficulty: Medium
17. (p. 285) In choosing a location, today's MNC has two primary considerations: the country
and the specific locale within the chosen country.
TRUE
Difficulty: Medium
18. (p. 286) In selecting a geographic location to operate, Japanese firms favor heavily unionized
areas.
FALSE
Difficulty: Medium
19. (p. 290) In emerging economies undergoing rapid changes such as privatization,
governments have generally been apprehensive and uncooperative with MNCs.
FALSE
Difficulty: Medium
8-20
20. (p. 296) The term "born global" is used for firms that engage in significant international
activity a short time after being established.
TRUE
Difficulty: Medium
Multiple Choice Questions
21. (p. 271) The process of determining an organization's basic mission and long-term objectives
and then implementing a plan of action for attaining these goals is:
A. Strategic management
B. Tactical management
C. Contingency management
D. Functional management
Difficulty: Easy
22. (p. 272) Ford Motor's strategic plan in Thailand is based on:
A. Offering the right price and product
B. Offering the right combination of price and financing to a carefully identified market
segment
C. Offering the right combination of price and financing to all market segments
D. Offering the right financing only
Difficulty: Medium
23. (p. 272) Honda and General Motors have both built plants in Thailand to take advantage of
A. Demand and low delivery costs
B. Strategic pricing
C. New technologies and low wages
D. Tax incentives and demand
Difficulty: Medium
8-21
24. (p. 273) According to the text, strategic planning helps MNCs to do all of the following
except:
A. Coordinate and monitor its far-flung operations
B. Deal with political risks
C. Determine performance
D. Get higher profitability
Difficulty: Medium
25. (p. 273) A worldwide strategy based on cost leadership, differentiation and segmentation is
referred to as the:
A. Economic imperative
D. Administrative coordination strategy
Difficulty: Easy
26. (p. 273) These individuals are the key to stimulating profit growth within a company.
A. Supervisors
B. Middle managers
C. First-line managers
D. Top managers
Difficulty: Medium
27. (p. 273) Companies that pursue this strategy typically sell products for which a large portion
of value is added in the upstream activities of the industry's value chain.
C. Economic imperative
D. Administrative coordination
Difficulty: Medium
8-22
28. (p. 274) MNCs using the _____ approach to strategic planning are country-responsive; their
approach is designed to protect local market niches.
A. Administrative coordination strategy
B. Economic imperative
D. Political imperative
Difficulty: Easy
29. (p. 274) The products sold by MNCs pursuing this approach often have a large portion of
their value added in the downstream activities of the value chain.
A. Political imperative
B. Cost imperative
Difficulty: Medium
30. (p. 274) Typically, MNCs utilizing this approach to strategic planning use a country-centered
or multi-domestic strategy.
B. Administrative coordination
Difficulty: Medium
31. (p. 275) The approach to strategic formulation and implementation utilizing strategies of
TQM to meet or exceed customers' expectations and continuously improve products and/or
services is referred to as the:
A. Value-added imperative
B. Quality imperative
Difficulty: Easy
8-23
32. (p. 275-276) All of the following are characteristics of TQM except:
A. Quality is operationalized by meeting or exceeding customer expectations
B. The quality strategy is formulated by the front-line employees and is diffused throughout
the organization
C. Everyone from top executives to hourly employees operates under a TQM strategy of
delivering quality products/services to internal and external customers
D. TQM techniques range from traditional inspection and statistical quality control to cutting-
edge human resource management techniques
Difficulty: Hard
33. (p. 277) This approach to formulation and implementation is one in which the MNC makes
strategic decisions based on the merits of the individual situation rather than using a
predetermined economic or political strategy.
A. Administrative coordination
B. Bureaucratic coordination
C. Value-added
D. Functional
Difficulty: Easy
34. (p. 277) _____ is the production and distribution of products and services of a homogeneous
type and quality on a worldwide basis.
B. Nationalism
C. Cross-border integration
D. Market standardization
Difficulty: Easy
8-24
35. (p. 277) The need to understand the different consumer tastes in segmented regional markets
and respond to different national standards and regulations imposed by autonomous
governments and agencies is:
B. International entrepreneurship
C. National responsiveness
D. Statutory compliance
Difficulty: Easy
36. (p. 279) This strategy is appropriate when the need for national responsiveness is low and the
need for globalization integration is high.
A. International
B. Multi-domestic
C. Global
D. Transnational
Difficulty: Medium
integration is also high, this strategy is appropriate.
A. Transnational
B. Globalization
C. International
D. Multi-domestic
Difficulty: Medium
integration is low, a(n) _____ strategy is appropriate.
A. Transnational
B. Multi-domestic
C. International
D. Globalization
Difficulty: Medium
8-25
39. (p. 279) When the need for national responsiveness is low and the need for global integration
is also low, which of the following strategies would be appropriate?
A. Globalization
B. Transnational
C. International
D. Multi-domestic
Difficulty: Medium
40. (p. 279) Which foreign marketing strategy is characterized by niche companies that adapt
their products to satisfy the high demands of differentiation and ignore economies of scale
because integration is not very important?
A. Multi-domestic
B. International
C. Globalization
D. Transnational
Difficulty: Hard
41. (p. 279) Which of the following strategies has the highest need for integration and
differentiation?
A. National responsiveness
B. Globalization
C. International
D. Transnational
Difficulty: Medium
8-26
42. (p. 281) _____ attempts to provide management with accurate forecasts of trends that relate
to external changes in geographic areas where the firm is currently doing business or
considering setting up operations.
B. Functional scanning
C. Tactical scanning
D. Operational scanning
Difficulty: Easy
43. (p. 281) One of the most important foci in _____ is the market and includes the role of all
potential competitors and the relationships surrounding those competitors, such as affiliation
with one another or the connection between the company and its customers and suppliers.
B. Goal formulation
C. Environmental scanning
D. Internal resource analysis
Difficulty: Medium
44. (p. 282) The strategic planning process that helps a firm evaluate its current managerial,
technical, material and financial strengths and weaknesses is:
B. Operational analysis
C. Internal resource analysis
D. Tactical analysis
Difficulty: Medium
8-27
45. (p. 282) This analysis identifies the key factors for success that will dictate how well the firm
is likely to do.
A. External
B. Internal
C. Competitive
D. Market
Difficulty: Medium
46. (p. 282) A key success factor is a factor that is necessary for a firm to compete effectively in
a(n):
A. International market
B. Highly-restricted market
C. Market niche
D. Broad market domain
Difficulty: Medium
47. (p. 284) According to the text, which of the following sets of goals almost always dominate
the strategic plans of today's MNCs?
A. Quality and cost control
B. Finance and operations
C. Accounting and R&D
D. Profitability and marketing
Difficulty: Medium
48. (p. 284) Once strategic goals are set, an MNC will develop specific _____ goals and controls,
usually through a two-way process at the subsidiary or affiliate level.
A. Bureaucratic
B. Operational
C. Strategic
D. Contingency
Difficulty: Medium
8-28
49. (p. 284) The process of providing goods and services in accord with a plan of action is:
B. Strategy formulation
C. Strategy control
D. Strategy contingency
Difficulty: Easy
50. (p. 284) An MNC must consider all of the following general areas in strategy implementation
except:
A. Management must implement functional strategies in areas such as marketing
B. It should consider investing only in advanced nations
C. It must carry out entry and ownership strategies
D. It must decide where to locate operations
Difficulty: Medium
51. (p. 285) A primary consideration for an MNC in investing in a foreign country would be a
decision based on:
A. Corporate culture
B. Business ethics
C. Specific locale
D. Operating norms
Difficulty: Medium
52. (p. 285) Opportunities to increase market share through increased sales of goods and services
result in MNCs investing into:
A. Advanced industrialized countries
B. Bribes and kickbacks
C. Corporate cultures
D. Syndicate operations
Difficulty: Easy
8-29
53. (p. 286) All of the following act as disincentives for MNCs except:
A. Restrictions on profit repatriation
B. Controls on the transfer of technology
C. Export maximums for generating foreign currency
D. Limits on local market growth
Difficulty: Medium
54. (p. 286) A multinational firm's choice of a locale is affected by all of the following factors
except:
A. Desirability of the location for employees
B. The number of market shares invested in their home country
C. Proximity to competitors
D. Nature of the workforce
Difficulty: Medium
55. (p. 288) For products like computers, Japanese firms:

A. Move from their home market directly into fully developed countries and then on to the
newly developing nations
B. Move from their home market directly into developing nations and then on to developed
markets
C. Go only to developed countries to market products
D. Go only to developing countries to market products
Difficulty: Medium
56. (p. 288) The implementation of a marketing strategy in international areas is built around the
well-known "four Ps". These are:
A. Place of origin, price, productive life and product
B. Promotion, price, production method and productive life
C. Product, price, promotion and place
D. Place of origin, production method, price and people
Difficulty: Easy
8-30
57. (p. 289) If a firm operates production plants in different countries but makes no attempt to
integrate its overall operations, the company is known as a:
A. Multi-domestic
B. Global
C. Transnational
D. International
Difficulty: Easy
58. (p. 288) MNCs have found that whether they are exporting or producing the goods locally in
the host country, consideration of worldwide production is important. All of the following are
factors to be taken into consideration except:
A. Goods may be produced in foreign countries for export to other nations
B. A plant will specialize in a particular product and export it to all the MNC's markets
C. A plant will produce goods for many locales
D. A plant will produce one or more components that are shipped to a larger network of
assembly plants
Difficulty: Hard
59. (p. 290) To respond to risks in emerging markets, MNCs must do all of the following except:
A. Limiting equity investments
B. Avoiding joint ventures
C. Collaborating with a local partner
D. Encouraging shared ownership structures
Difficulty: Medium
60. (p. 290) When market liberalization is delayed:

A. It gives first movers a significant advantage over later entrants
B. First movers get clear, significant advantages in transitional markets
C. It gives later entrants a significant advantage over first movers
D. Substantial risks to premature entry are removed
Difficulty: Medium
8-31
61. (p. 290) Which of the following is not an advantage of first-mover strategies?
A. Capturing learning effects important for increasing market share
B. Achieving scale economies
C. Development of alliances with the most attractive local partners
D. Capitalizing on well-established legal, institutional and political frameworks
Difficulty: Medium
62. (p. 291) Within the context of international management, the "base of the pyramid" refers to:
A. Front-line employees at the bottom of the organizational hierarchy
B. Younger generations of the population pyramid
C. Understanding the foundational issues in international management
D. Potential low-income customers at the bottom of the economic pyramid
Difficulty: Medium
63. (p. 291) Which of the following is likely to be the most effective strategic approach for the
"base of the pyramid"?
A. Incremental adaptation of existing technologies and products
B. Establishing partnerships with central governments of emerging economies
C. Leapfrog technologies including disruptive technologies
D. Large-scale strategies
Difficulty: Hard
64. (p. 292) Which of the following findings regarding BOP strategy has significant implications
for the globalization-national responsiveness framework?
A. Building relationships directly and at the local level contributes to the reputation and
fosters the trust necessary to overcome the lack of formal institutions such as the rule of law
B. The BOP may be an ideal environment for incubating new, leapfrog technologies
C. These business models may travel profitably to higher-income markets because adding
features to a low-cost model may be easier than removing features from high-cost models
D. It brings focus to those who are too poor to be viable customers for multinational
companies
Difficulty: Hard
8-32
65. (p. 292) All of the following are challenges firms could face in the implementation of a BOP
strategy except:
A. Offering affordable goods
B. Generating awareness regarding the product
C. Nonexistent distribution channels
D. Coordinating administrative functions
Difficulty: Hard
66. (p. 295) International management activities of entrepreneurial and new-venture firms have
been made possible by all of the following except:
A. Customized, old access channels
B. Advances in telecommunication
C. Greater efficiencies and lower costs in shipping
D. Allowing firms to access international customers
Difficulty: Easy
67. (p. 296) Firms that internationalize after being domestically established have to overcome all
of the following barriers except:
A. Their domestic orientation
B. Their internal domestic political ties
C. Their domestic decision-making inertia
D. Their anti-risk seeking behavior
Difficulty: Medium
68. (p. 296) The technological learning gained from varied international environments:
A. Enhances efforts to integrate knowledge throughout a firm
B. Shows a fall in venture performance
C. Leads to minimal diversity of national environments
D. Has no effect on cross-functional teams
Difficulty: Hard
8-33
69. (p. 296) Firms that engage in significant international activity a short time after being
established are called:
A. Greenfield ventures
B. Born globals
C. Brownfield firms
D. Traditional exporters
Difficulty: Easy
70. (p. 296) All of the following are features of a "born-global" firm except:
A. They export products to close markets
B. They employ strategies like unique-products development
C. They indulge in significant international activity a short time after being established
D. They seek joint ventures or acquisitions as a method to expand internationally
Difficulty: Medium
Essay Questions
71. (p. 272-273) Is there a growing need for strategic management among MNCs? If so, why?
There is a growing need for strategic management among MNCs. Some of the primary
reasons include: foreign direct investment is increasing, planning is needed to coordinate and
integrate increasingly diverse operations via an overall focus and emerging international
challenges require strategic planning.
Difficulty: Medium
8-34
72. (p. 277-278) Describe the difference between global integration and national responsiveness.
What is the principle advantage of each strategy?
Global integration is the production and distribution of products and services of a

homogeneous type and quality on a worldwide basis. To a growing extent, the customers of
MNCs have homogenized tastes and this has helped to spread international consumerism.
This provides an opportunity for some firms to sell standardized products worldwide.
Globalization generates economies of scale and also capitalizes on further lowering unit costs
as a firm moves into worldwide markets selling its products or services. National
responsiveness is the need to understand the different consumer tastes in segmented regional
markets and respond to different national standards and regulations imposed by autonomous
governments and agencies. Sometimes what works well in one country does not work in
another. A national responsiveness strategy enables a company to tailor its products and
services to each individual market.
Difficulty: Medium
8-35
73. (p. 278-280) Identify the four basic strategies that MNCs use and the situations in which they
are used.
MNCs can be characterized as using one of four basic international strategies: an international
strategy, a multi-domestic strategy, a global strategy and a transnational strategy. The
appropriateness of each strategy depends on pressures for cost reduction and local
responsiveness in each country served. Firms that pursue an international strategy have
valuable core competencies that host-country competitors do not possess and face minimal
pressures for local responsiveness and cost reductions. International firms such as
McDonald's, Wal-Mart and Microsoft have been successful using an international strategy.
Organizations pursuing a multi-domestic strategy should do so when there is high pressure for
local responsiveness and low pressure for cost reductions. A global strategy is a low-cost
strategy. Firms that experience high cost pressures should use a global strategy in an attempt
to benefit from scale economies in production, distribution and marketing. By offering a
standardized product worldwide, firms can leverage their experience and use aggressive
pricing schemes. This strategy makes most sense where there are high cost pressures and low
demand for localized product offerings. A transnational strategy should be pursued when there
are high cost pressures and high demands for local responsiveness. However, a transnational
strategy is very difficult to pursue effectively. Pressures for cost reduction and local
responsiveness put contradictory demands on a company because localized product offerings
increase cost. Organizations that can find appropriate synergies in global corporate functions
are the ones that can leverage a transnational strategy effectively.
Difficulty: Hard
74. (p. 282-283) What is the purpose of internal resource analysis? In the context of internal
resource analysis, what is a "key success factor"?
An internal resource analysis helps the firm to evaluate its current managerial, technical,
material and financial strengths and weaknesses. This assessment is then used by the MNC to
determine its ability to take advantage of international market opportunities. The primary
purpose of this analysis is to match external opportunities with internal capabilities. An
internal analysis identifies the key factors for success that will dictate how well the firm is
likely to do. A key success factor (KSF) is a factor that is necessary for a firm to compete
effectively in a market niche.
Difficulty: Medium
8-36
75. (p. 291-2295) What is the "BOP" and why is this strategy challenging to implement?
A group of researchers and companies have begun exploring the potentially untapped markets
at the base of the pyramid (BOP). They have found that incremental adaptation of existing
technologies and products is not effective at the BOP and that the BOP forces MNCs to
fundamentally rethink their strategies. Companies must consider smaller-scale strategies and
build relationships with local governments, small entrepreneurs and nonprofits rather than
depend on established partners such as central governments and large local companies. The
BOP strategy is challenging to implement. Companies have to offer affordable goods that are
highly available in a community that is willing to accept the product. Most importantly,
however is that the company must bring awareness of the product to the general population.
Balancing these is not a simple task, since advertising and efficient distribution networks, for
example, cost a significant amount, yet the companies cannot add a high price tag.
Furthermore, illiteracy issues, poor infrastructure, corruption and nonexistent distribution
channels often associated with poverty-stricken societies deter companies from wanting to
invest.
Difficulty: Hard
8-37

Chapter 08 - Strategy Formulation and Implementation

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chapter 08 - Strategy Formulation and Implementation

Uploaded by

Copyright:

Available Formats

Chapter 08 - Strategy Formulation and Implementation

True / False Questions

1. Strategic management is required to keep track of increasingly diversified operations in a

5. An economic imperative approach to strategic planning is used when a product is regarded

6. TQM covers the full gamut, from strategy formulation to implementation.

7. A bureaucratic coordination approach to formulation and implementation is one in which

8. National responsiveness is the need to understand different consumer tastes in segmented

12. International strategies are characterized by increased international standardization of

22. Ford Motor's strategic plan in Thailand is based on:

25. A worldwide strategy based on cost leadership, differentiation and segmentation is

32. All of the following are characteristics of TQM except:

53. All of the following act as disincentives for MNCs except:

55. For products like computers, Japanese firms:

60. When market liberalization is delayed:

61. Which of the following is not an advantage of first-mover strategies?

68. The technological learning gained from varied international environments:

70. All of the following are features of a "born-global" firm except:

Chapter 08 Strategy Formulation and Implementation Answer Key

True / False Questions

7. (p. 277) A bureaucratic coordination approach to formulation and implementation is one in

Multiple Choice Questions

55. (p. 288) For products like computers, Japanese firms:

60. (p. 290) When market liberalization is delayed:

Global integration is the production and distribution of products and services of a

You might also like