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Question 1

Meryl Software Inc., an American MNC wishing total control of its operations, wants to acquire an existing firm, Graphiti Animations, in Canada. If acquired, Graphiti Animations would be a:

Question options:

holding company.

greenfield investment.

shell corporation.

fully-owned subsidiary.

Question 2

Which of the following terms refers to the basic means by which a company competes?

Question options:





Question 3

Which of the following is the most likely result of regulations and restrictions enforced by a firm’s home government that prove to be expensive for the firm’s operations?

Question options:

The firm searches for less   restrictive operating environments overseas

The firm becomes entangled in   lengthy litigation

The firm expands its domestic   operations

The firm responds to customers’   demands more promptly

Question 4

Which of the following entry strategies is most likely to serve as a short-term strategy and to provide limited income?

Question options:


Management contract

Joint venture

Fully owned subsidiary

Question 5

Due to the high demand for its handmade soaps in Canada, Fragrance Exotica, an Indian Soap manufacturer, has decided to open a new manufacturing unit in Canada, thereby expanding overseas. In this scenario, which of the following reasons prompted Fragrance Exotica to set up a manufacturing unit overseas?

Question options:

Tax incentives

Trade barriers

Manufacturer demands

Customer demands

Question 6

__________ refers to the establishment of worldwide operations and the development of standardized products and marketing.

Question options:





Question 7

Which of the following would most likely be categorized as a global financial objective of an international firm?

Question options:

Long-term profit growth

Company market share

Quality and cost control

Foreign-exchange management

Question 8

At which three levels should firms ideally perform global environmental analysis?

Question options:

Innovation, production, and local   distribution

Operational, tactical, and top   management

Product, domestic market, and   consumer

Multinational, regional, and local

Question 9

Which of the following is the proactive reason that prompts firms to expand overseas?

Question options:

Avoiding restrictive trade   barriers

Seeking economies of scale

Solving logistics-related problems

Responding to foreign competition

Question 10

Which of the following statements is true of clustering?

Question options:

It helps a firm gain an increase   in efficiencies.

It seldom uses specialized labor.

It typically increases the costs   of production and distribution.

It uses different suppliers and   distribution channels for interdependent companies within an industry.

Question 11

The second part of the strategic management process involves the:

Question options:

analysis stage.

assessment stage.

planning phase.

implementation phase.

Question 12

Futura-Core Technologies, an electronics manufacturing firm, has advantages in financial capability and sustainability, but a disadvantage in speed of innovation. It is also at a disadvantage relative to Core-Dynamix Technologies, another electronics manufacturing firm, in important factors such as manufacturing capability and adaptability to market conditions. Which of the following terms best describes Futura-Core’s abilities in comparison to Core-Dynamix?

Question options:

Comparative advantage

Absolute advantage

Collective bargaining

Competitive advantage

Question 13

Which of the following strategies would a non-European company most likely use if it wanted to gain quick entry inside the European community?

Question options:

Greenfield investment


Turnkey operation

International joint venture

Question 14

Which of the following is a national risk with regard to strategic entry scanning?

Question options:

Energy availability and prices

Legal protection

Regional instability

Political turmoil

Question 15

Restrictive trade barriers most likely influence the globalization of businesses by encouraging firms to:

Question options:

develop joint ventures with local   firms.

switch from exporting to overseas   manufacturing.

import supplies from foreign   vendors.

expand the exportation of raw   materials.

Question 16

The first broad scan of all potential world markets should result in the firm being able to:

Question options:

eliminate markets with   unreasonable entry conditions.

eliminate countries with high   cultural risk.

identify the strengths and   weaknesses of its competitors.

determine the best sources for raw   materials.

Question 17

Which of the following is the most common reactive reason for a firm to extend its operations overseas?

Question options:

Globalization of competitors

Resource access and cost savings

Tax incentives

Economies of scale

Question 18

Which of the following is a global risk with regard to strategic entry scanning?

Question options:

Economic and financial risk


Economic and fiscal policies

Trade restrictions

Question 19

Goals for market volume and profitability are usually set higher for international than domestic operations due to the:

Question options:

presence of stable market   conditions.

involvement of greater risks.

enforcement of government   controls.

presence of stable exchange rates.

Question 20

Which of the following is the quickest and cheapest way to develop a global strategy?

Question options:

Strategic alliances

Fully-owned subsidiaries


Greenfield investments

Section 2

Question 21

Which of the following forms of organization is particularly appropriate in a dynamic and diverse environment?

Question options:

The global product structure

The domestic structure plus   foreign subsidiary

The global functional structure

The domestic structure plus export   department

Question 22

The degree to which headquarters’ practices and goals are transferable most likely depends on whether:

Question options:

top managers are from the head   office, the host country, or a third country.

the organization is product- or   service-oriented.

financial performance reports show   a positive trend in growth over the past several years.

the production system is   standardized.

Question 23

In spite of the potential problems with local partners, many firms rush the process of partner selection because they:

Question options:

are anxious to get into an   attractive market.

want to reduce the amount spent on   establishing subsidiaries abroad

want to take advantage of the   local partner’s technological innovations.

mostly aim at increasing the   number of equity shares within a short period of time.

Question 24

Which of the following is true about the matrix structure of organizational design?

Question options:

Overlapping responsibilities are   absent in a matrix structure.

The matrix structure is developed   to combine geographic support for both global integration and local   responsiveness.

Regional managers are solely   responsible for the operations and performance of the countries within a   given region.

In the matrix structure,   communication problems, confusion, and conflict are minimal.

Question 25

Which of the following is a cultural difference that can significantly affect cross-border alliances?

Question options:

Protectionist legislation

Emergence of market firms in the   host country

Use of e-commerce enablers

Organizational formality

Question 26

Managers choose the manufacturing location for each product based on where the best combination of cost, quality, and technology can be attained in order to achieve:

Question options:




customer loyalty.

Question 27

Sedona Inc. is an American firm that manufactures high-quality handbags,
duffel bags, and leather belts at its facility in Arizona. Sedona’s
products have been featured in various fashion magazines, and as a
result, consumer demand has increased significantly. Currently, Sedona
is organized as a domestic structure plus export department. Executives
at Sedona believe the firm is ready to internationalize its operations,
and they are considering various organizational structures.

Which of the
following best supports the argument that Sedona should give its
subsidiary managers significant autonomy?

Question options:

Sedona is a family-owned business   that began as a subsidiary to Aloha enterprises.

Sedona has recently reorganized   into a domestic structure plus foreign subsidiary.

Praxis Inc., one of Sedona’s   domestic competitors, has a flat
  organizational structure.

Sedona conducts a large percentage   of domestic sales through the
  company’s website.

Question 28

All of the following are cooperative aspects of strategic alliances EXCEPT:

Question options:

limiting investment risks through   shared resources.

learning new intangible skills   from alliance partners.

forming upstream–downstream   divisions of labor.

creating economies of scale in   tangible assets.

Question 29

Barton & Green is an MNC based in the U.S. that makes a wide range of software development products. Executives at the firm are considering the idea of outsourcing the company’s IT infrastructure. Which of the following questions is the most relevant to Barton & Green’s decision to outsource its IT infrastructure to TMC Enterprises, a firm in India?

Question options:

Which type of operating system is   primarily used by TMC Enterprises?

What is the financial health of   TMC Enterprises?

Which other firms have outsourced   their processes to TMC Enterprises?

What is the attitude of U.S.   consumers about TMC Enterprises?

Question 30

Overlooking cultural differences in cross-border alliances can create a negative impact when target country:

Question options:

is technologically superior to the   host country.

and host country equally   participate in decision making.

has conflicting practices and   systems.

has similar views on   organizational formality.

Question 31

According to David Lei, the single greatest impediment managers face when seeking to learn or renew sources of competitive advantage is that:

Question options:

good venture partners are hard to   find.

partners can become competitors.

technologies change very rapidly.

governments can be fickle.

Question 32

Which of the following primarily determines the extent of control exercised over an IJV by its parent company?

Question options:

Policies of the smaller firm

Staffing choices for top IJV   positions

Cultural background

IJV industry

Question 33

Which of the following is true with regard to the global geographic structure?

Question options:

In a geographic structure,   problems of coordination across different regions are virtually nonexistent.

The geographic structure is not an   adequate structure for consolidating regional expertise.

With the geographic structure, the   focus is on importing.

Marketing-oriented companies are   most likely to opt for this structure.

Question 34

Which of the following indicates a need for change in organizational design?

Question options:

New management with different   goals and strategies

Seamless innovation

Low turnover

A decrease in overseas customer   complaints

Question 35

Which of the following types of alliances can be formed between a company and a foreign government?

Question options:

Equity strategic alliance

Non-equity strategic alliance

Global strategic alliance

International joint venture

Question 36

Which of the following is a competitive aspect of strategic alliances? Answer: C

Question options:

Sharing resources to limit   investment risk when entering new markets or uncertain technological fields

Lowering exit barriers in mature   industries, therefore, assisting short-term corporate restructurings

Accelerating diffusion of industry   standards and new technologies to create barriers to entry

Creating a critical mass to   develop new technologies to protect domestic, strategic industries

Question 37

NextLinx Corporation provides a wide range of strategic implementation services for small- and medium-sized organizations. It allows all trading partners to collaborate in a single online location, using the same information and processes. Therefore, NextLinx is an example of a(n):

Question options:

outsourcing company.

knowledge management firm.

e-commerce enabler.

IJV controller.

Question 38

Trout Corp., Kirgo Ltd., and Sturgeon Inc., three of the leading construction companies in the U.S., have decided to join hands and create a new cement manufacturing company. According to their agreement, Trout Corp. will have 50 percent equity, Kirgo Ltd. will have 20 percent equity, and Sturgeon Inc. will have 30 percent equity. In this given scenario, Sturgeon Inc. is referred to as a(n):

Question options:


majority JV partner.

minority JV partner.

sole proprietor.

Question 39

Papillion Inc. is a small American high-technology firm that has been successfully competing in the international business arena from its inception two years ago. Instead of internationalizing slowly, Papillion embarked upon an ambitious plan to leverage niche market opportunities worldwide—right from the beginning. Papillion Inc. exemplifies the __________ phenomenon.

Question options:





Question 40

Nimbus Inc. is a hybrid organization. The organizational structure of
the company has been developed to combine geographic support for both
global integration and local responsiveness. Nimbus is not a
hierarchical organization and uses cross-functional teams to quickly
adapt to the dynamic business environment.

If the above information is
true, which of the following can be fittingly inferred?

Question options:

Nimbus has only a few SBUs.

Nimbus is a born global.

Nimbus does not favor   standardization of its products.

Nimbus has a matrix structure.

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