MGMT 450 Midterm || errorless answers 100%.
what are the cost reduction pressures faced by firms? correct answers 1. commodity products - all
negotiation revolves price
2. competitors w cost advantages
3. reduced barriers to trade -> global competition
4. powerful global buyers -> can demand lowest prices
5. powerful global suppliers -> can demand highest prices
what are the local customization pressures faced by firms? correct answers 1. differences in tastes or
preferences
2. differences in infrastructure and distribution
3. differences in local regulations and practices
types of strategies (integration vs. responsiveness) correct answers 1. international strategy
2. multi domestic strategy
3. global standardization strategy
4. transnational strategy
international strategy correct answers ex) Rolex watch or Harley Davidsons
no need to adapt to foreign markets and can charge a lot
multidomestic strategy correct answers ex) Nestle, Heinz
customize for different markets but can charge more
global standardization strategy correct answers ex) Lenovo, Apple, ketchup
firms that achieve economies of scale and don't need to customize product for markets
transnational strategy correct answers ex) IKEA
low cost but customizes for local markets
, Integration Strategy correct answers lower costs while increasing differentiation (value added)
Cost Leadership Strategy correct answers focuses on lowering costs while retaining value
what types of innovations help firms overcome the cost-differentiation trade-off? correct answers 1.
process innovation
ex) lean manufacturing in Toyota. increased quality and lowered costs
2. product/service innovation
ex) IKEA's retail layout - lower costs but very differentiated
how firms can save money by being international correct answers 1. leveraging location advantage (cheap
labor)
2. economies of scale (produce in tons of countries at scale)
3. economies of scope (brand expenses cover TONS of products)
4. economies of learning (labor force learning/mastering the process)
Differentiation Strategy correct answers focuses on increasing value while controlling the cost
how firms can differentiate by being international correct answers 1. leverage location advantage ex)
"Made in Turkey"
2. drawing on global learning ex) Chinese HEIR fridges learned from selling in the US
3. Local adaptation (ex) putting TAMU logo in Texas cities, but not in France, McDonald's foods around
the world)
what is economic value added comprised of? correct answers 1. consumer surplus (max WTP $25, paid
$20 = I earned $5!)
2. firm profits
currency conversion correct answers ___ ___ is the lifeblood of the international business system
what are the cost reduction pressures faced by firms? correct answers 1. commodity products - all
negotiation revolves price
2. competitors w cost advantages
3. reduced barriers to trade -> global competition
4. powerful global buyers -> can demand lowest prices
5. powerful global suppliers -> can demand highest prices
what are the local customization pressures faced by firms? correct answers 1. differences in tastes or
preferences
2. differences in infrastructure and distribution
3. differences in local regulations and practices
types of strategies (integration vs. responsiveness) correct answers 1. international strategy
2. multi domestic strategy
3. global standardization strategy
4. transnational strategy
international strategy correct answers ex) Rolex watch or Harley Davidsons
no need to adapt to foreign markets and can charge a lot
multidomestic strategy correct answers ex) Nestle, Heinz
customize for different markets but can charge more
global standardization strategy correct answers ex) Lenovo, Apple, ketchup
firms that achieve economies of scale and don't need to customize product for markets
transnational strategy correct answers ex) IKEA
low cost but customizes for local markets
, Integration Strategy correct answers lower costs while increasing differentiation (value added)
Cost Leadership Strategy correct answers focuses on lowering costs while retaining value
what types of innovations help firms overcome the cost-differentiation trade-off? correct answers 1.
process innovation
ex) lean manufacturing in Toyota. increased quality and lowered costs
2. product/service innovation
ex) IKEA's retail layout - lower costs but very differentiated
how firms can save money by being international correct answers 1. leveraging location advantage (cheap
labor)
2. economies of scale (produce in tons of countries at scale)
3. economies of scope (brand expenses cover TONS of products)
4. economies of learning (labor force learning/mastering the process)
Differentiation Strategy correct answers focuses on increasing value while controlling the cost
how firms can differentiate by being international correct answers 1. leverage location advantage ex)
"Made in Turkey"
2. drawing on global learning ex) Chinese HEIR fridges learned from selling in the US
3. Local adaptation (ex) putting TAMU logo in Texas cities, but not in France, McDonald's foods around
the world)
what is economic value added comprised of? correct answers 1. consumer surplus (max WTP $25, paid
$20 = I earned $5!)
2. firm profits
currency conversion correct answers ___ ___ is the lifeblood of the international business system
