INTB 1203 Exam #3
Why Do Firms Internationalize? correct answers1. Expand the market for
their domestic product offerings by selling those products in international
markets
-Leveraging core competencies: skills within the firm that competitors
cannot easily imitate
2.Realize location economies by dispersing individual value creation
activities to locations around the globe where they can be performed most
efficiently and effectively
3.Realize greater cost economies from experience effects by serving
an expanded global market from a central location,
thereby reducing the costs of value creation
-Economies of scale: reductions in unit cost achieved by producing a large
volume of a product
4.Earn a greater return by leveraging any valuable skills developed in
foreign operations and transferring them to other entities within the
firm's global network of operations
Pressures for cost reductions are greatest correct answers1. In industries
producing commodity type products that fill universal needs where price is
the main competitive weapon
5. When major competitors are based in low cost locations
6. Where there is persistent excess capacity
7. Where consumers are powerful and face low switching costs
Pressures for local responsiveness arise from correct answers1.
Differences in consumer tastes and preferences
8. Differences in traditional practices and infrastructure
9. Differences in distribution channels
10.Host government demands
11.The rise of regionalism
Firms use four basic strategies in global markets: correct
answersglobal standardization, localization, transnational,
international
global standardization strategy correct answersfocuses on increasing
profitability and profit growth by reaping the cost reductions that come
from economies of scale, learning effects, and location economies
¡ The goal is to pursue a low-cost strategy on a global scale
¡ Makes sense when there are strong pressures for cost reductions and
demands for local
responsiveness are minimal
Why Do Firms Internationalize? correct answers1. Expand the market for
their domestic product offerings by selling those products in international
markets
-Leveraging core competencies: skills within the firm that competitors
cannot easily imitate
2.Realize location economies by dispersing individual value creation
activities to locations around the globe where they can be performed most
efficiently and effectively
3.Realize greater cost economies from experience effects by serving
an expanded global market from a central location,
thereby reducing the costs of value creation
-Economies of scale: reductions in unit cost achieved by producing a large
volume of a product
4.Earn a greater return by leveraging any valuable skills developed in
foreign operations and transferring them to other entities within the
firm's global network of operations
Pressures for cost reductions are greatest correct answers1. In industries
producing commodity type products that fill universal needs where price is
the main competitive weapon
5. When major competitors are based in low cost locations
6. Where there is persistent excess capacity
7. Where consumers are powerful and face low switching costs
Pressures for local responsiveness arise from correct answers1.
Differences in consumer tastes and preferences
8. Differences in traditional practices and infrastructure
9. Differences in distribution channels
10.Host government demands
11.The rise of regionalism
Firms use four basic strategies in global markets: correct
answersglobal standardization, localization, transnational,
international
global standardization strategy correct answersfocuses on increasing
profitability and profit growth by reaping the cost reductions that come
from economies of scale, learning effects, and location economies
¡ The goal is to pursue a low-cost strategy on a global scale
¡ Makes sense when there are strong pressures for cost reductions and
demands for local
responsiveness are minimal
