IB exam 2

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IB exam 2
2015-04-15 13:56:41
IB exam

IB exam 2
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  1. •Acme,
    Inc. located in Cleveland, Ohio makes fireworks that are sold globally.  This is a very competitive industry with most
    production taking place in low-cost locations. 
    Which of the following strategic and operating decisions is this company
    likely to deploy?
    production and/or global outsourcing


    standardization strategy

    distribution channels

    of the above.
  2. •Apple
    makes mobile phones, computers, tablets, etc. that are desired by customers
    around the world.  Which of the following
    functions would Apple be most likely to outsource?





    of the above
  3. •Ernst
    & Young, a global accounting firm, has a large network of global
    subsidiaries that cater to local firms and to multinational subsidiaries.  Which of the following strategic and
    operating decisions is this company LEAST likely to deploy?

    standardization strategy




    is not likely to deploy any of the above
  4. •True
    or False.  Boeing is more likely to use
    shorter distribution channels than the family-owned Virginia based potato chip
    maker, Route 11 Chips.
  5. What is human resource management?
    • ¦the
    • activities an organization carries out to use its human resources effectively, including: 

    • ØDetermining
    • human resource strategy


    • ØPerformance
    • evaluation

    • ØManagement
    • development


    Labor relations
  6. Why
    is international HRM important to the success
    of the firm?
    • •Strategy
    • is executed through
    • organization

    • •People
    • are the linchpin to the firm’s
    • organization architecture

    • •So,
    • success in international business requires that HRM policies be congruent with
    • the firm’s strategy
  7. types of staffing policy?
    • ethnocentric approach
    • polycentric approach
    • geocentric approach
  8. How can firms reduce the rate of expatriate failure?
    • Expatriate
    • failure rates can be reduced through better selection procedures
  9. traits that predict expatriate success
    • self orientation
    • others-orientation
    • perceptual ability
  10. How can firms use management                   development
    as a strategic tool?
    • Management
    • development programs increase the skill levels of managers through:

    •Management education

    •The rotation of managers through jobs
  11. Should
    firms pay executives in different countries according to the prevailing
    standards in each country, or should it equalize pay on a global basis?
    • Firms
    • using a geocentric policy that want to develop an international cadre of
    • managers must pay executives the same salary regardless of their country of
    • origin
  12. Typical
    compensation packages include(5)
    • 1.Base
    • salary

    • 2.A
    • foreign service premium

    • 3.Allowances
    • of various types


    • 5.Tax
    • differentials
  13. How
    should firms approach labor relations?
    • The
    • HR function should try to promote harmony in relationships between the firm and
    • local labor.
  14. What
    aspects of global marketing and R&D can
    be performed so they
    reduce the costs of value
    and add
    value by better serving
    customer needs?
    • All
    • aspects of the marketing
    • mix (the
    • choices the firm offers to its targeted market):

    • •Product
    • attributes

    • •Distribution
    • strategy

    • •Communication
    • strategy

    • •Pricing
    • strategy

    • can
    • be adapted to fit best with a firm’s global strategy
  15. •Is
    it necessary to localize the marketing mix?
    • •Most experts
    • believe that while there is a trend towards global markets, cultural and
    • economic differences among nations limit any trend toward global consumer tastes
    • and preferences
  16. market segmentation
    • identifying
    • distinct groups of consumers whose purchasing behavior differs from others in
    • important ways
  17. How
    does a country’s level of            economic development influence              marketing?
    • Consumers
    • in highly developed countries tend to demand a lot of extra performance
    • attributes in their
    • products
  18. How do differences in product and                 technical standards impact marketing         decisions?
    • National
    • differences in product and tech. standards force firms to customize the
    • marketing mix
  19. How
    do distribution systems differ         between countries?
    • The
    • main differences between distribution systems are:

    • •Retail
    • concentration

    • •Channel
    • length

    • •Channel
    • exclusivity

    • •Channel
    • quality
  20. what distribution strategy should a firm choose?
  21. How
    should a firm communicate   the attributes
    of its product to   prospective customers?
    • Firms need to consider how to use the
    • following communications channels in different markets:

    • •Direct
    • selling

    • •Sales
    • promotion

    • •Direct
    • marketing

  22. Standardized
    advertising makes sense when
    • It
    • has significant economic advantages

    • oBrand
    • names are global

    • oConsumer
    • segments are global
  23. Standardized
    advertising isn’t appropriate when:
    • oCultural
    • differences among nations are significant

    • oCountry
    • differences in advertising regulations block the implementation of
    • standardized advertising
  24. How
    should a firm price its product
    or service
    in foreign markets
    • Firms
    • must consider:

    • •Price
    • discrimination

    • •Strategic
    • pricing

    • •Government-mandated
    • price controls
  25. Should
    a firm charge the same price   everywhere,
    or price its product on a market-  by-market
    • Firms
    • can maximize profits through price discrimination -
    • charging consumers
    • in different countries different prices for the same product

  26. For
    price discrimination to work
    • The
    • firm must be able to keep national markets separate


    • oDifferent
    • price
    • elasticities of demand must exist in different countries
  27. How
    should a firm configure its      marketing
    • •Standardization
    • versus customization is not an all or nothing concept

    • •Most firms
    • standardize some things and customize others

    • •Decisions
    • about what to standardize and what to customize should be made after exploring
    • the costs and benefits of each  option
  28. Where
    should a firm locate R&D?
    • When
    • R&D is needed to adapt global products to local markets, it should be
    • located where the needs for localization are greatest.

    • •When
    • R&D is for new product development, it should be located where:

    • •Demand
    • is strong

    • •Consumers
    • are affluent

    • •Competition
    • is intense
  29. Where should production activities              be located?
    • When
    • deciding where to locate production facilities, firms must consider:

    • •Country
    • factors

    • •Technological
    • factors

    • •Product
    • factors
  30. When does it make sense to concentrate                      production at a few choice locations?

    • Concentrated production makes sense
    • when:

    • •Fixed
    • costs are substantial

    • •The
    • minimum efficient scale of production is high

    • •Flexible
    • manufacturing technologies are available (so one facility can make a lot of
    • different stuff)

    • Concentrated production doesn’t
    • make sense when:

    • •Both
    • fixed costs and the minimum efficient scale of production are relatively low

    • •Appropriate
    • flexible manufacturing technologies are not
    • available
  31. Two
    product factors impact location decisions:
    • value to weight ratio
    • whether the product serves universal needs
  32. There are two basic strategies for
    locating manufacturing facilities
    • 1.Concentrating
    • them in the optimal location and serving the world market from there

    • 2.Decentralizing
    • them in various regional or national locations that are close to major markets
  33. hidden costs associated with foreign
    • High
    • employee turnover

    • ØShoddy
    • workmanship

    • ØPoor
    • product quality

    • ØLow
    • productivity
  34. Does the rationale for establishing a foreign              production facility change?
    • The
    • strategic role of foreign factories and the strategic advantage of a particular
    • location can change over time


    • ØA
    • factory initially established to make a standard product to serve a local
    • market, or to take advantage of low cost inputs, can evolve into a facility
    • with advanced design capabilities 


    • ØAs
    • governmental regulations
    • change and/or countries upgrade their factors of production the strategic
    • advantage of a particular location can change
  35. advantages of make decisions
    • 1.Facilitates
    • investments in highly specialized assets

    • 2.Protects
    • proprietary technology

    • 3.Facilitates
    • the scheduling of adjacent processes
  36. advantages of buy decisions
    • 1.Gives
    • the firm greater flexibility

    • 2.Can
    • help drive down the firm's cost structure
  37. How can a just-in-time inventory process
    help           a firm?
    • economizes on inventory holding costs by
    • having materials arrive at a manufacturing plant just in time to enter the
    • production process.
  38. What is the role of information                technology in supply chain  management?
    Information Technology:

    • •Facilitates
    • the tracking of inputs

    • •Allows
    • the firm to optimize its production schedule

    • •Allows
    • the firm and its suppliers to communicate in real time

    • •Eliminates
    • the flow of paperwork between a firm and its suppliers
  39. What do firms that want to export need 
      to do?
    • Firms
    • wishing to export must:

    • •Identify
    • export opportunities

    • •Avoid
    • a host of unanticipated problems associated with doing business in a foreign
    • market

    • •Become
    • familiar with the mechanics of export and import financing

    • •Learn
    • where to get financing and export credit insurance

    • •Learn
    • how to deal with foreign exchange
    • risk
  40. What
    are the benefits of exporting?
    • The
    • benefits from exporting can be great--the rest
    • of the world is a much larger market than the domestic market
  41. What are the pitfalls facing exporters?
    Common pitfalls for exporters include:

    • •Poor
    • market analysis

    • •Poor
    • understanding of competitive conditions

    • •A
    • lack of customization for local markets, poor distribution arrangements, bad
    • promotional campaigns

    • •A
    • general underestimation of the differences and expertise required for foreign
    • market penetration 

    • •Difficulty
    • dealing with the tremendous paperwork and formalities involved
  42. What
    assistance can exporters get from export           management companies?
    • Export
    • management companies -
    • export specialists that act as the export marketing department or international
    • department for client firms

    • 1.Start
    • exporting operations for a firm with the understanding that the firm will take
    • over operations after they are well established

    • 2.Start
    • services with the understanding that the EMC will have continuing
    • responsibility for selling the firm’s
    • products
  43. What steps should exporters take to   increase
    their chances of success?
    • Can
    • hire an EMC to help identify opportunities and navigate paperwork and
    • regulations

    • •Start
    • by focusing initially on just one or a few markets

    • •Enter
    • a foreign market on a fairly small scale in order to reduce the costs of any
    • subsequent failures
  44. How
    can firms deal with the lack of    trust that exists in export          transactions?
    • Various
    • mechanisms for financing exports and imports have evolved in response to the
    • lack of trust that exists in export transactions
  45. How is payment actually made in an                        export transaction?
    • a draft is an order written by an exporter instructing an importer, or an
    • importer's agent, to pay a specified amount of money at a specified time
  46. three purposes of bill of lading
    • ØIt is
    • a receipt

    • ØIt is
    • a contract

    • ØIt is
    • a document of title
  47. Where
    can exporters get financing help
    • U.S.
    • exporters can draw on two forms of government-backed assistance to help their
    • export programs

    • 1.They
    • can get financing aid from the Export-Import Bank

    • 2.They
    • can get export credit insurance from the Foreign Credit Insurance Association
  48. What alternatives do exporters have               when conventional methods of payment            are not
    an option?
    • Exporters
    • can use countertrade when
    • conventional means of payment are difficult, costly, or nonexistent
  49. two types of countertrade
    • barter
    • offset
  50. What are the pros and cons of countertrade?
    • Countertrade
    • is a way for firms to finance an export deal when other means are not available

    • •Firms
    • that are unwilling to engage in countertrade
    • may lose
    • an export opportunity to a competitor that will

    • •Countertrade
    • may be required by the government of
    • a country to which a firm is exporting goods or services
  51. How can firms enter foreign markets?
    • Entry
    • options include exports, licensing or franchising to host country firms, joint
    • ventures with host country firms, or a wholly owned
    • subsidiary in the host country  

    •The choice depends on:

    • •Transport
    • costs and trade barriers

    • •Political
    • and economic risks

    • •Firm
    • strategy
  52. What
    are the basic entry decisions for    firms expanding internationally
    • A
    • firm expanding internationally must decide:

    • •Which
    • markets to enter

    • •When
    • to enter them and on what scale

    • How to
    • enter them (the choice of entry mode
  53. What are
    the ways firms can use to   enter
    foreign markets?



    • 4.Joint
    • ventures

    • 5.Wholly
    • owned subsidiaries
  54. Core competencies can involve:
    • 1.Technological
    • know-how

    • 2.Management
    • know-how
  55. Should
    a firm establish a wholly owned subsidiary in a country by building a subsidiary from
    the ground up (greenfield strategy), or by acquiring an established enterprise in
    the target market (acquisition
    pon fit with firm’s global strategy


    • ØAre
    • quick to execute

    • ØEnable
    • firms to preempt their competitors

    • ØCan
    • be less risky than greenfield ventures
  56. Why do acquisitions fail?
    • Acquisitions
    • fail when:

    • •The
    • firm overpays for the assets of the acquired firm

    • •There
    • is a clash between the cultures of the acquiring and acquired firm

    • •Attempts
    • to realize synergies by integrating the operations of the acquired and
    • acquiring entities run into roadblocks and take much longer than forecast

    • •There
    • is inadequate pre-acquisition screening
  57. How
    can firms reduce the problems            associated with acquisitions?
    • Through
    • careful screening of the firm to be acquired

    • •By moving rapidly once the firm is
    • acquired to implement an integration plan
  58. Why are greenfield ventures attractive?
    • They
    • allow the firm to build the kind of subsidiary company
    • that it wants

    • •However,
    • greenfield ventures:

    • ØAre
    • slower to establish


    • ØAre
    • risky because they have no proven track record
  59. What actions can managers take to compete
    more effectively in a global        
    Managers must consider:

    • •The
    • benefits of expanding into foreign markets

    • •Which
    • strategies to pursue in foreign markets

    • •The
    • value of collaboration with global competitors
  60. How
    can firms increase profitability?
    • By
    • creating value for the consumer

    • •Value creation is measured by the difference between V
    • (the price that the firm can charge for that product given competitive
    • pressures) and C (the costs of producing that product)

    • •The
    • two basic strategies for creating value are:


    • 2.Low
    • cost
  61. Firms
    that expand internationally can increase their profitability and profit growth
    • .Entering
    • markets where competitors lack similar competencies

    • 2.Realizing
    • location economies

    • 3.Exploiting
    • experience curve effects

    • 4.Transferring
    • valuable skills within the organization
  62. Pressures
    for local responsiveness arise from:
    • 1.Differences
    • in consumer tastes and preferences

    • 2.Differences
    • in traditional practices and infrastructure

    • 3.Differences
    • in distribution channels

    • 4.Host
    • government demands
  63. How
    do the pressures for cost reductions             and local responsiveness influence
    a              firm’s choice of strategy?
    • Firms
    • use four basic strategies in global markets:

    1. Global standardization

    2. Localization

    3. Transnational

    4. International
  64. When
    does a global standardization strategy           make sense?
    • A global
    • standardization strategy focuses
    • on increasing profitability and profit growth by reaping the cost reductions
    • that come from economies of scale, learning effects, and location economies
  65. iis
    the choice of strategy static?
    • •As
    • competition increases, international and localization strategies become less
    • viable

    • •To
    • survive, firms may need to shift to a global standardization strategy or a
    • transnational strategy in advance of competitors
  66. What
    are strategic alliances?
    • cooperative
    • agreements between potential or actual competitors
  67. Why
    form a strategic alliance?
    • Strategic
    • alliances are attractive because they:

    • •Facilitate entry into a foreign
    • market

    • •Allow firms to share the fixed
    • costs and risks of developing new products or processes

    • •Bring together complementary skills
    • and assets that neither partner could easily develop on its own

    • •Can help establish technological
    • standards for the industry that will benefit the firm
  68. What
    are the drawbacks of strategic   alliances?
    • Strategic
    • alliances can give competitors low-cost routes to new technology and markets

    • •Unless
    • a firm is careful, it can give away more in a strategic alliance than it
    • receives
  69. How can firms increase the success of            their alliances?
    • •Many
    • international strategic alliances run into problems

    • •The
    • success of an alliance is a function of:

    • 1.
    • Partner selection

    • 2.
    • Alliance structure

    • 3.
    • The manner in which the alliance is managed