Strategic Management Test Notes

1. When a company expands its sales volume through international expansion, it can realize cost savings from economies of scale through all of the following except
a.
spreading fixed costs over its global sales volume.
b.
utilizing its production facilities more intensely.
c.
increased bargaining power with its suppliers.
d.
learning effects associated with higher volume.
e.
improved responsiveness.

2. The ability to realize cost economies from global volume is greatest in the case of
a.
products that need to be customized to local requirements.
b.
commodity-type products that serve universal needs.
c.
low-weight, high-value products that can be differentiated by global companies.
d.
products that can be economically manufactured in small batches.
e.
companies competing in industries where they face a large number of multinational competitors.

3. Dell is expanding its market share in European countries because its direct-sales model is more effective than the business model used by its European rivals. Which of the following benefits of global expansion is Dell experiencing, relative to its competitors?
a.
Lower costs for labor and raw materials
b.
…..Further exploitation of distinctive competencies
c.
Decreased political and economic risk
d.
Better realization of location economies
e.
More incentive for local subsidiaries to develop competencies

4. . When toymaker Mattel sells Barbie dolls in the Middle East, it changes the doll's shape to one that is a more accurate portrayal of a female body. Mattel does this to
a.
create a commodity-type product.
b.
transfer technological know-how.
c.
increase product standardization.
d.
realize experience curve effects.
e.
respond to differences in local tastes.

5. A localization strategy is based on which of the following ideas?
a.
There is a convergence in the tastes of consumers in different nations of the world.
b.
There are substantial economies of scale to be realized from centralizing global production.
c.
...Consumer tastes and preferences differ among national markets.
d.
There are cost advantages associated with manufacturing a standard product for global consumption.
e.
Competitive strategy should be centralized at the world head office.