1. Which of the following statements is true of technology in industries?

a. High-technology industries are usually not faced with the challenge of developing business models to achieve a competitive advantage like low-technology industries.  

b. High-technology industries do not require to adhere to technical standards to achieve product differentiation.  

c. The lack of complementary products does not affect the success of a high-technology industry.  

d. Technology in industries is accounting for only a minimal share of economic activity.  

e. Technology in industries is revolutionizing aspects of the product even in those not typically considered high-tech.

2. Which of the following is not an attribute of a national or country-specific environment that has an impact on global competitiveness of companies located in that nation?

a. Strategy, structure, and rivalry of firms within the nation  

b. Related and supporting industries  

c. Local demand conditions  

d. Advertising expenses  

e. Factor endowments

3. Which of the following statements is true about technological paradigm shifts?

a. They strongly deter new entrants.  

b. They have the potential to threaten the survival of established industries.  

c. They occur when government regulations restrict the use of certain technologies.  

d. They often do not change the nature of competition in an industry.  

e. They can often be handled by established companies without adopting new strategies.

4. Which of the following is not a factor of production?

a. Competitive forces  

b. Land  

c. Labor  

d. Raw materials  

e. Managerial sophistication

5. When a company grows its sales volume through international expansion, it can realize cost savings from economies of scale through all of the following except:

a. learning effects associated with higher volume.  

b. adopting high cost structures.  

c. spreading fixed costs over its global sales volume.  

d. utilizing its production facilities more intensely.  

e. increased bargaining power with its suppliers.

6. Which of the following statements is true about global standardization strategy?

a. It makes most sense when the pressures for local responsiveness are maximum.  

b. It makes most sense when there are strong pressures for cost reductions.  

c. It emphasizes product customization to specifically meet customer needs.  

d. It involves the spreading of production, marketing, and research and development activities of companies to all the location it operates in.  

e. It fails to focus on achieving location and scale economies.

7. Companies that pursue a _____ strategy are trying to develop a business model that simultaneously achieves low costs, differentiates the product offering across geographic markets, and fosters a flow of skills between different subsidiaries in the company’s global network of operations.

a. localization  

b. centralization  

c. global standardization  

d. transnational  

e. downsizing

8. When standards are part of the public domain, they can be used:

a. only by federal contractors.  

b. freely by any company.  

c. only by companies in a particular industry.  

d. only once without payment of a fee.  

e. by paying a fee to the Federal Communications Commission.

9. In 1999, two pharmaceutical companies that held an equal market share decided to pool their operations to create a new firm that was known by a different name. This is an example of a(n):

a. procurement.  

b. take over.  

c. dissolution.  

d. acquisition.  

e. merger.

10. The Achilles heel of international strategy is that:

a. non-price differences among products hold little importance.  

b. customization of products makes the company lose its credibility.  

c. customer preferences eventually become identical.  

d. competitors inevitably emerge.  

e. economies of scale cannot be achieved.

11. When a company decides to expand into new industries, it must:

a. halt marketing activities in the current industry to avoid being associated with one specific industry.  

b. develop "multibusiness model" that justifies its entry into different businesses.  

c. select a new CEO and reappoint the board of directors.  

d. avoid talking about ways of increasing profitability in the business model.  

e. create one common business model for all the industries rather than each business unit.

12. Google bought Clever Sense, a mobile app company. This is an example of a(n):

a. strategic outsource.  

b. acquisition.  

c. merger.  

d. strategic alliance.  

e. parallel sourcing policy.

13. The various strategies that companies should adopt to win format wars revolve around:

a. getting the federal government to intercede.  

b. charging high license fees.  

c. curbing the supply of complementary products.  

d. making network effects work in their favor and against their competitors.  

e. avoiding aggressive marketing and advertising strategies.

14. SparklingLeaves is one of the major suppliers of automobile tools to StanMotors, a leading automobile company. Many of the tools are customized to meet the specific needs of StanMotors and hence have little other value. In return, StanMotors has agreed to make SparklingLeaves its sole supplier of automobile equipment for a period of 15 years. This scenario illustrates:

a. credible commitment.  

b. parallel sourcing.  

c. vertical integration.  

d. competitive bidding.  

e. horizontal integration.

15. Which of the following is true of first movers?

a. Being a first mover guarantees instant success.  

b. The first mover cannot be able to establish brand loyalty.  

c. The first mover has no opportunity to exploit network effects and positive feedback loops.  

d. The first mover cannot create switching costs for its customers to deter rivals.  

e. The first mover that creates a revolutionary product is in a monopoly position.

16. Under a competitive bidding strategy, independent component suppliers compete with each other to be the company that will be chosen to supply:

a. all parts for a particular product a manufacturer needs in the industry.  

b. a particular part for a particular manufacturer.  

c. all parts for all products a manufacturer needs in the industry.  

d. all of the parts for a particular manufacturer.  

e. a particular part for all manufacturers in the industry.

17. Which of the following will NOT help an established company in addressing the potential challenge of a disruptive technology?

a. Asking customers if they are interested in the new technology  

b. Separating out the disruptive technology and creating an autonomous operating division solely for this new technology  

c. Investing in newly emerging technologies that may ultimately become disruptive technologies  

d. Access to knowledge about how disruptive technologies can revolutionize markets  

e. Understanding that a disruptive technology will require a radically different value chain with a different cost structure

18. Under which of the following circumstances is vertical integration considered hazardous?

a. When the company's competitors are also following a strategy of vertical integration  

b. When the value added by successive stages of production is declining  

c. When the industries involved are undergoing rapid expansion  

d. When the demand for the product fluctuates frequently  

e. When vertical integration involves moving downstream into retailing

19. Black and Decker, Capitol One, Gillette, and Unilever are all companies that conduct business in two or more national markets. These companies are known as:

a. national companies.  

b. bimarket companies.  

c. domestic companies.  

d. multinational companies.  

e. localized companies.

20. An adequate supply of complements to a product results in:

a. higher switching costs.  

b. more customers opting for the product.  

c. a significant decrease in customer demand for the product.  

d. the company failing to win a format war.  

e.  significant decrease in the sales of the product.

21. Cell phone technology is replacing traditional wired phone technology. This is an example of a(n):

a. format war.  

b. complementary product.  

c. technological paradigm shift.  

d. embryonic industry.  

e. first-mover advantage

22. Which of the following statements is true in the context of attributes of national competitive advantage?

a. The benefits of investments in advanced factors of production by related and supporting industries are confined to those industries.  

b. Companies are typically least sensitive to the needs of their closest customers.  

c. Domestic rivalry creates pressures to increase costs and avoid investing in upgrading advanced factors.  

d. Factor endowments do not encompass aspects such as managerial sophistication.  

e. The nature of home demand shapes the attributes of domestically made products .

23. For a strategic alliance, firms should seek partners that are:

a.different in terms of vision and agendas.  

b. known for being opportunistic.  

c. radically different when it comes to strategic goals.  

d. similar when it comes to capabilities.  

e. willing to share costs and risks of product development.

24. Long-term contracts:

a. are preferable to vertical integration when it is not feasible to exchange hostages.  

b. generally result in lower prices than competitive bidding.  

c. are a low-cost alternative to vertical integration when it is possible to build cooperative relationships with suppliers.  

d. achieve exactly the same outcomes as vertical integration, but they incur higher bureaucratic costs.  

e. are preferable to short-term contracts when there is a minimal need for cooperation.  

25. Which of the following factors increases pressures for cost reductions?

a. Competitors that are based in high-cost locations  

b. High switching costs  

c. Persistent excess capacity  

d. Reduced international competition  

e. Meaningful differentiation between products

26. Which of the following is an advantage of franchising?

a. It enables companies to engage in global strategic coordination.  

b. It ensures tight control over quality.  

c. It enables the company to collect all the profits made by the franchisees.  

d. It involves low development costs and risks.  

e. It frees companies from the task of monitoring and assisting operations at franchisees.

27. In order to work towards winning a format war, a company should:

a. refrain from cooperating with competitors under any circumstances.  

b. develop its own killer applications.  

c. refrain from aggressive marketing and advertising.  

d. ensure that there is a limited supply of complementary products.  

e. keep the prices high even if the customer demand is extremely low.

28. An automobile company enters into a long-term contract with two suppliers for the same automobile tool. This is to ensure the company is protected in the event one of the suppliers adopts an uncooperative attitude. Which of the following concepts is illustrated in this scenario?    

a. Full integration  

b. Horizontal integration  

c. Outsourcing  

d. Parallel sourcing  

e. Vertical integration

29. Which of the following is an advantage of international licensing?

a. It eliminates the risk of losing control over a technology that the company owns.  

b. It enables the company realize scale economies and location economies through manufacturing products in a centralized location.  

c. It allows the company  to collect profits from one licensee and use it to support others.  

d. It takes away the pressure of development costs and risks associated with opening up a foreign market from the company.  

e. It enables the company to coordinate its strategy efficiently to achieve competitive advantage.

30. When a company performs a value creation activity in a region that is optimal for that activity, wherever in the world that might be, it is trying to capitalize on:

a. negative feedback loops.  

b. locaton economies.  

c. its localization strategy.  

d. economies of scope.  

e. the transnational strategy.

31. Outsourcing:

a. reorders the steps in a firm's value chain.  

b. moves some value chain activities outside the firm.  

c. strengthens the firm's capabilities in each value chain function.  

d. eliminates the need for a value chain.  

e. reduces the firm's dependence on its value chain.

32. John's surfboard shop has a long-term relationship with two surfboard makers. John is using:

a. parallel sourcing.  

b. horizontal integration.  

c. vertical integration.  

d. product bundling.  

e. cross-selling.

33. Which of the following is not a necessity for leveraging the competencies of global subsidiaries?

a. Transfer of competencies around the company  

b. Assertion of monopoly of the corporate center over subsidiaries  

c. Awareness among managers that competencies can develop anywhere  

d. Incentives that encourage employees to take necessary risks  

e. Incentives for local managers to share knowledge and ideas

34. A company pursuing a strategy of vertical integration may expand its operations:

a. backward into an industry that produces inputs for the company's products.  

b. by making specialized investments jointly with its competitor.  

c. laterally into an industry that competes with the company's products.  

d. by using its capital resources to purchase another company within the industry.  

e. by merging with industry competitors.

35. Most manufacturing companies begin their global expansion by:

a. exporting.  

b. licensing.  

c. franchising.  

d. setting up a wholly owned subsidiary in the host country.  

e. forming a joint venture.

36. With reference to high-technology industries, which of the following is an example of a technical standard?

a. The prices of complementary products  

b. The number of manufacturing units per industry  

c. The layout of keys on a keyboard  

d. The medium of advertising used for technology products  

e. The color of gadgets produced

37. Consumers will bear the costs of switching technologies if:

a. the new products are packaged attractively.  

b. switching costs are substantial.  

c. there is a lack of complementary products.  

d. the new technology is advertised subtly.  

e. the benefits of adopting the new technology outweigh the costs of switching.

38. When a first mover does not have complementary assets, barriers to imitation are high, and there are several capable competitors, the first mover should:

a. enter into a joint venture to protect the product.  

b. license the innovation to others.  

c. wait until competitors develop an alternative product.  

d. sell the technology outright to another firm.  

e. lower the barriers for imitation.

39. Network effects arise in an industry where:

a. a large network of companies in an industry use the same business model and strategies.  

b. the size of the network of complementary products is a primary determinant of demand for an industry's product.  

c. a company is able to adhere to the same technical standards across its network of outlets.  

d. companies network together and lobby for establishing certain technical standards.  

e. companies that are not in favor of a technical standard network together.

40. Which of the following statements is true about establishing technical standards?

a. Companies cannot adopt technical standards that are in the public domain.  

b. The strategy and business model a company has developed for promoting its technological standard holds little importance when it comes to establishing standards.  

c. Technical standards are often set by cooperation among businesses, without government help.  

d. Companies in an industry cannot lobby the government to mandate an industry standard.  

e. Market demand is not taken into consideration when it comes to establishing technical standards.

41. Horizontal integration may be thought of as:

a. giving control to suppliers.  

b. gaining control of distributors.  

c. staying inside the industry in which the company currently operates.  

d. combining functional units within the company.  

e.  moving into a new unrelated industry.

42. Mathematica 1.0 was one of the most distinctive applications for the short-lived NeXT Computer. It still sets the standard for symbolic math and visualization on Windows, Mac, Linux, and Unix. Mathematica 1.0 can be described as a(n) _____ application.

a. analogous  

b. hardware  

c. strategic  

d. killer  

e. dominant

43. Credible commitments refer to:

a. believable promises that support the development of a long-term relationship between companies.  

b. the acquisition of one company by another company.  

c. the merging of two companies that have an equal market share.  

d. to obtaining of goods, services or works from an external source.  

e. the outsourcing of after-sale services to a different company.

44. Which of the following problems is associated with the strategy of vertical integration?

a. Decrease in cost structure  

b. Vulnerability to unpredictable demand  

c. Lack of bureaucratic costs  

d. Increase in industry competition  

e. Assured conflict with the antitrust authorities

45. Which of the following statements is true about marginal costs in high-technology industries?

a. They do not exist if the product is sold by a sales force directly to end-users.  

b. They include the costs of packaging and product distribution.  

c. They are invariably higher than fixed costs.  

d. They are the costs that customers need to bear in order to adopt a new technology.  

e. They are extremely high in software-making companies.

46. Host government demands generally:

a. do not encompass local content rules.  

b. impede a company's ability to differentiate its product offering across national borders.  

c. increase pressures for local responsiveness.  

d. decrease pressures for cost reductions.  

e. compel companies to abandon localization strategies.

47. Cellular phone service providers often sell the phone itself at very low prices and then charge a relatively high fee for usage. This illustrates:

a. the first-mover strategy.  

b. competitive cooperation.  

c. the razor and blade strategy.  

d. format licensing.  

e. competitive positioning.

48. Aggressive marketing in the context of format wars:

a. does not encompass point-of-sales promotion techniques.  

b. results in lower emphasis on killer applications.  

c. usually triggers a negative feedback loop.  

d. helps a company jump-start demand.  

e. deters early adopters.

49. Adam's boss tells him that their company is pursuing the strategy of horizontal integration. Which of the following is true of this scenario?

a. The company will acquire one of its suppliers.  

b. The company will merge with another company that belongs to a different industry.  

c. The company will buy or merge with one of its rivals.  

d. The company will change the organizational structure to make it more flat.  

e. The company will begin to distribute its own products.

50. Libra Electronics has invented a new technology to make laptops that are extremely lightweight and unbreakable. The company is advertising aggressively and wishes to create demand for its new range of laptops. To attract customers, the company has priced the laptops attractively. However, in order to make profits, the company has priced the batteries required for the laptops extremely high. Which of the following is illustrated in this scenario?

a. downsizing strategy.  

b. harvest strategy.  

c. divestment strategy.  

d. switching costs.  

e. razor and blade strategy.

51. Long-term agreements between two or more companies to jointly develop new products or processes that benefit all of the companies involved in the agreement are known as:

a. vertical integration.  

b. horizontal integration.  

c. strategic alliance.  

d. outsourcing.  

e. joint venture.

52. Vertical integration is based on a company entering only those industries that:

a. are considered as potential competitors.  

b. are involved in sourcing raw materials.  

c. add value to its core products.  

d. are not in any way related to the company's current business operation.  

e. are involved in the distribution of products.

53. Which of the following is a benefit that firms should expect to gain from the use of horizontal integration?

a. Better realization of economies of scale  

b. Greater control over the entire supply chain  

c. Reduced need for investment in core activities  

d. Reduced risk of coming into conflict with the FTC  

e. Reduced risk of holdup

54. Which of the following is not a risk of exporting?

a. Delegation of marketing activities to a local agent  

b. High manufacturing costs  

c. Location diseconomies  

d. Transportation costs  

e. Tariff barriers

55. Which entry mode gives a multinational the tightest control over foreign operations?

a. Entering into a joint venture with a foreign company to set up overseas operations  

b. Franchising  

c. Licensing  

d. Setting up a wholly owned subsidiary  

e. Exporting from the home country and letting a foreign agent organize local marketing

56. Which of the following statements is true in the context of local demand conditions?

a. Home demand plays little role in helping companies upgrade their national competitive advantage.  

b. Companies are typically least sensitive to the needs of their closest customers.  

c. Local demand characteristics have little role to play in creating pressure for innovation and quality.  

d. A nation’s companies gain competitive advantage if their domestic customers are sophisticated and demanding.  

e. The characteristics of international demand alone shape the attributes of a company's products; not local demand.

57. The price that one division of a company charges another division for its products, which are the inputs the other division requires to manufacture its own products is known as:

a. tapered pricing.  

b. related diversification.  

c. transfer pricing.  

d. related pricing.  

e. vertical disintegration.

58. Strong pressures for convergence due to a shared history and culture, or the establishment of a trading block where there are deliberate attempts to harmonize trade policies, infrastructure, and regulations have contributed to the rise in what trend?

a. Regionalism

b. Monopolies  

c. Traditional Practices

d. Nationalism

e. Globalization  

59. Vertical disintegration occurs when:

a. a company takes advantage of another company it does business with after the other company has made an substantial investment in assets to meet the needs of the company.  

b. a company decides to exit industries to its core industry.  

c. a company decides to acquire its suppliers and distributors.  

d. a company decides to sell its business model to another company.  

e. a company uses its capital resources to purchase its competitor.

60. With reference to high-technology industries, which of the following statements is true about technical standards?

a. They cause compatibility problems between products and their complements.  

b. They increase the risks associated with supplying complementary products.  

c. They often result in higher production costs.  

d. They emerge because there are economic benefits associated with them.  

e. They can create a lot of confusion in the minds of consumers.