Test Bank – Essentials of Strategic
Management: The Quest for Competitive
Advantage |
Chapter 7
Social media giant Facebook Inc. decided to expand outside its home market in order to
identify new and stronger resources and capabilities in its home market.
match its core competencies and capabilities with rival social media companies such as Snapchat
and Instagram.
achieve differentiation through economies of scale, experience, and increased purchasing power.
increase its business risk by competing with local social media providers such as WeChat.
gain access to new customers for the company’s products/services.
The world economy is globalizing at an accelerating pace as ambitious, growth-minded companies race to
build stronger competitive positions in the markets of more and more countries, as countries previously
closed to foreign companies open up their markets, as countries that previously had planned economies
embrace market or mixed economies, and as information technology shrinks the importance of geographic
,2. Award: 10.00 po ints
distance. Accordingly, Facebook may opt to expand outside its domestic market for any of five major
reasons: (1) to gain access to new customers; (2) to achieve lower costs through economies of scale,
experience, and increased purchasing power; (3) to gain access to low-cost inputs of production; (4) to
further exploit its core competencies; and (5) to gain access to resources and capabilities located in foreign
markets. Cross-border strategic alliances create value through resource sharing and risk spreading.
Companies opt to expand into foreign markets in order to
grow sales faster than the industry average, reduce the competitive threats from rivals, and open
up more opportunities to enter into strategic alliances.
boost returns on investment, broaden their product lines, avoid tariffs and trade restrictions, and
escape dealing with strong labor unions.
avoid having to employ an export strategy, avoid the threat of cross-market subsidization from
rivals, and enable the use of a global strategy instead of a multidomestic strategy.
raise the entry barriers for industry newcomers, neutralize the bargaining power of important
suppliers, grow sales faster, and increase the number of loyal customers.
gain access to new customers, achieve lower costs, enhance the company’s competitiveness,
capitalize on core competencies, and spread business risk across a wider market base.
Strengthening capability to employ offensive strategies is not one of the five principal reasons that
companies choose to expand into foreign markets. A company may opt to expand outside its home
country for a variety of reasons, which include (1) the ability to gain access to new customers; (2) to
achieve lower costs and enhance competitiveness; (3) to leverage core competencies in new markets; (4)
to gain access to resources and capabilities (labor, resources, technology, distribution networks) in foreign
markets; and (5) to spread business risk across a wider market base.
,3. Award: 10.00 po ints
Tiffany & Co. opted to enter into the mining industry in Canada in order to
exploit its core competencies and capabilities.
access diamonds that could be certified as “conflict-free” and not associated with unethical mining
practices or the finding of military activities in Africa.
to achieve lower costs, thereby enhancing the firm’s competitiveness.
gain access to new customers in new markets.
achieve lower costs and enhance the firm’s competitiveness.
Differences in wage rates, worker productivity, energy costs, and the like create sizable variations in
manufacturing costs from country to country. By locating its plants in certain countries, firms in some
industries can reap major manufacturing cost advantages because of input quality and availability, lower
input costs (especially labor), relaxed government regulations, the proximity of suppliers and
technologically related industries, or unique natural resources. For Tiffany & Co., Canada offered input
quality and availability; in this instance, the primary consideration was assuring diamonds that could be
certified as “conflict-free” and not associated with unethical mining practices or the finding of military
activities in Africa.
Whirlpool’s efforts to link its product R&D and manufacturing operations in North America, Latin America,
Europe, and Asia did not enable the company to
accelerate the discovery of innovative appliance features.
coordinate the introduction of these features in the appliance products marketed in different
countries.
create a cost-efficient worldwide supply chain.
speed product innovations to market and achieve operational excellence.
, 4. Award: 10.00 po ints
impart technical knowledge to high-cost human resources in developing nations.
A company like Whirlpool may opt to expand its R&D activities outside its domestic markets to gain access
to new customers; to achieve lower costs through economies of scale, experience, and increased
purchasing power; and to further exploit its core competencies. Whirlpool’s efforts to link its product R&D
and manufacturing operations in North America, Latin America, Europe, and Asia allowed it to accelerate
the discovery of innovative appliance features, coordinate the introduction of these features in the
appliance products marketed in different countries, and create a costefficient worldwide supply chain.
Whirlpool’s conscious efforts to integrate and coordinate its various operations around the world have
helped it achieve operational excellence and speed product innovations to market.
Which one of the following is not a reason a company decides to enter foreign markets?
spreading business risk across a wider geographic market base
capitalizing on company competencies and capabilities
achieving lower costs and enhance the firm’s competitiveness
building the profit sanctuary necessary to wage guerrilla offensives against global challengers
endeavoring to invade its home market
gaining access to new customers
Building a profit sanctuary to wage guerilla offensives is not one of the five principal reasons that
companies choose to expand into foreign markets. A company may opt to expand outside its home
country for a variety of reasons, including: (1) the ability to gain access to new customers; (2) to achieve
lower costs and enhance competitiveness; (3) to leverage core competencies in new markets; (4) to gain
access to resources and capabilities (labor, resources, technology, distribution networks) in foreign
markets; and (5) to spread business risk across a wider market base.
Management: The Quest for Competitive
Advantage |
Chapter 7
Social media giant Facebook Inc. decided to expand outside its home market in order to
identify new and stronger resources and capabilities in its home market.
match its core competencies and capabilities with rival social media companies such as Snapchat
and Instagram.
achieve differentiation through economies of scale, experience, and increased purchasing power.
increase its business risk by competing with local social media providers such as WeChat.
gain access to new customers for the company’s products/services.
The world economy is globalizing at an accelerating pace as ambitious, growth-minded companies race to
build stronger competitive positions in the markets of more and more countries, as countries previously
closed to foreign companies open up their markets, as countries that previously had planned economies
embrace market or mixed economies, and as information technology shrinks the importance of geographic
,2. Award: 10.00 po ints
distance. Accordingly, Facebook may opt to expand outside its domestic market for any of five major
reasons: (1) to gain access to new customers; (2) to achieve lower costs through economies of scale,
experience, and increased purchasing power; (3) to gain access to low-cost inputs of production; (4) to
further exploit its core competencies; and (5) to gain access to resources and capabilities located in foreign
markets. Cross-border strategic alliances create value through resource sharing and risk spreading.
Companies opt to expand into foreign markets in order to
grow sales faster than the industry average, reduce the competitive threats from rivals, and open
up more opportunities to enter into strategic alliances.
boost returns on investment, broaden their product lines, avoid tariffs and trade restrictions, and
escape dealing with strong labor unions.
avoid having to employ an export strategy, avoid the threat of cross-market subsidization from
rivals, and enable the use of a global strategy instead of a multidomestic strategy.
raise the entry barriers for industry newcomers, neutralize the bargaining power of important
suppliers, grow sales faster, and increase the number of loyal customers.
gain access to new customers, achieve lower costs, enhance the company’s competitiveness,
capitalize on core competencies, and spread business risk across a wider market base.
Strengthening capability to employ offensive strategies is not one of the five principal reasons that
companies choose to expand into foreign markets. A company may opt to expand outside its home
country for a variety of reasons, which include (1) the ability to gain access to new customers; (2) to
achieve lower costs and enhance competitiveness; (3) to leverage core competencies in new markets; (4)
to gain access to resources and capabilities (labor, resources, technology, distribution networks) in foreign
markets; and (5) to spread business risk across a wider market base.
,3. Award: 10.00 po ints
Tiffany & Co. opted to enter into the mining industry in Canada in order to
exploit its core competencies and capabilities.
access diamonds that could be certified as “conflict-free” and not associated with unethical mining
practices or the finding of military activities in Africa.
to achieve lower costs, thereby enhancing the firm’s competitiveness.
gain access to new customers in new markets.
achieve lower costs and enhance the firm’s competitiveness.
Differences in wage rates, worker productivity, energy costs, and the like create sizable variations in
manufacturing costs from country to country. By locating its plants in certain countries, firms in some
industries can reap major manufacturing cost advantages because of input quality and availability, lower
input costs (especially labor), relaxed government regulations, the proximity of suppliers and
technologically related industries, or unique natural resources. For Tiffany & Co., Canada offered input
quality and availability; in this instance, the primary consideration was assuring diamonds that could be
certified as “conflict-free” and not associated with unethical mining practices or the finding of military
activities in Africa.
Whirlpool’s efforts to link its product R&D and manufacturing operations in North America, Latin America,
Europe, and Asia did not enable the company to
accelerate the discovery of innovative appliance features.
coordinate the introduction of these features in the appliance products marketed in different
countries.
create a cost-efficient worldwide supply chain.
speed product innovations to market and achieve operational excellence.
, 4. Award: 10.00 po ints
impart technical knowledge to high-cost human resources in developing nations.
A company like Whirlpool may opt to expand its R&D activities outside its domestic markets to gain access
to new customers; to achieve lower costs through economies of scale, experience, and increased
purchasing power; and to further exploit its core competencies. Whirlpool’s efforts to link its product R&D
and manufacturing operations in North America, Latin America, Europe, and Asia allowed it to accelerate
the discovery of innovative appliance features, coordinate the introduction of these features in the
appliance products marketed in different countries, and create a costefficient worldwide supply chain.
Whirlpool’s conscious efforts to integrate and coordinate its various operations around the world have
helped it achieve operational excellence and speed product innovations to market.
Which one of the following is not a reason a company decides to enter foreign markets?
spreading business risk across a wider geographic market base
capitalizing on company competencies and capabilities
achieving lower costs and enhance the firm’s competitiveness
building the profit sanctuary necessary to wage guerrilla offensives against global challengers
endeavoring to invade its home market
gaining access to new customers
Building a profit sanctuary to wage guerilla offensives is not one of the five principal reasons that
companies choose to expand into foreign markets. A company may opt to expand outside its home
country for a variety of reasons, including: (1) the ability to gain access to new customers; (2) to achieve
lower costs and enhance competitiveness; (3) to leverage core competencies in new markets; (4) to gain
access to resources and capabilities (labor, resources, technology, distribution networks) in foreign
markets; and (5) to spread business risk across a wider market base.
