Question QUESTION 1 Which one of the following is not a reason a company decides to enter foreign markets? To spread business risk across a wider geographic market base To capitalize on company competencies and capabilities To achieve lower costs and enhance the firm’s competitiveness To build the profit sanctuaries necessary to wage guerrilla offensives against global challengers endeavoring to invade its home market To gain access to more buyers for the company’s products/services 4 points Saved QUESTION 2 The advantages of using a licensing strategy to participate in foreign markets include being especially well suited to the use of cross-market subsidization. being able to charge lower prices than rivals. enabling a company to achieve competitive advantage quickly and easily. being able to leverage the company’s technical know-how or patents without committing significant additional resources to markets that are unfamiliar, politically volatile, economically uncertain, or otherwise risky. being able to achieve higher product quality and better product performance than with an export strategy. 4 points Saved QUESTION 3 Two drawbacks of a “think local, act local” multidomestic strategy are that it is especially vulnerable to fluctuating exchange rates and that it can usually be defeated by companies employing cross-market subsidization tactics. excessive vulnerability to fluctuating exchange rates and having to craft a separate strategy for each country market in which the company competes. hindering a company’s transfer of competencies and resources across country boundaries (since somewhat different competencies and capabilities are likely to be employed in different host countries) and not promoting the building of a single, unified competitive advantage in all country markets where a company competes. greater exposure to both increases in tariffs and restrictive trade barriers and added difficulty in accommodating the diverse trade restrictions and regulatory requirements of host governments. not being able to export products manufactured in one country to markets in other countries and being largely unsuitable for competing in the markets of emerging countries. 4 points Saved QUESTION 4 The advantages of using a franchising strategy to pursue opportunities in foreign markets include having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchisor to expend only the resources to recruit, train, and support foreign franchisees. being particularly well suited to the global expansion efforts of companies with multicountry strategies. helping build multiple profit sanctuaries. being well suited to companies that employ cross-market subsidization. being well suited to the global expansion efforts of manufacturers. 4 points Saved QUESTION 5 The reasons behind the accelerating pace of globalization include countries with previously planned economies are embracing market or mixed economies. information technology shrinks the importance of geographic distances. ambitious growth-minded countries race to build global share. lower barriers to international trade. All of these. 4 points Saved QUESTION 6 A “think global, act global” approach to strategy making is preferable to a “think local, act local” approach when a big majority of the company’s rivals are pursuing localized multidomestic strategies. country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy. plants need to be scattered across many countries to avoid high shipping costs. market growth rates vary considerably from country to country. host governments enact regulations requiring that products sold locally meet strict manufacturing specifications or performance standards. 4 points Saved QUESTION 7 The strategic options for expansion into foreign markets include employing a franchising strategy. maintaining
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