Reference no: EM134040104
Questions
1. Netflix started as a DVD rental-by-mail service in the United States in 1997. However, as the streaming industry emerged, Netflix recognized the limitations of relying solely on the domestic market. The company faced challenges such as reaching saturation in the U.S. market and increasing competition from local streaming providers. In that same vein, moving into international markets is a particularly attractive strategy to firms whose domestic markets
demand a differentiation strategy for success.
are limited in opportunities for growth.
have developed unfriendly business attitudes toward the industry.
have too much regulation.
2. Managing a geographically diverse multinational firm requires skill in
coordinating diverse points of view.
centralizing decision-making processes.
standardizing business operations.
minimizing cultural diversity.
3. Why does pursuing an international diversification strategy make managing a firm more difficult?
It leads to a decrease in firm size.
It reduces operational complexity.
It increases coordination costs.
It simplifies implementation and control.
4. In 2001, Sony and Ericsson formed a 50-50 joint venture known as Sony Ericsson to compete in the rapidly growing mobile phone market. The alliance aimed to leverage Sony's brand strength and Ericsson's expertise in telecommunications technology to develop innovative mobile devices. However, the partnership faced significant challenges, leading to its eventual dissolution. More broadly, which of the following is a primary reason for failure of cross-border strategic alliances?
The incompatibility of the partners
Conflict between legal and business systems
Security concerns and terrorism
High debt financing
5. Which of the following statements is true of locating operations in geographically close and culturally similar countries for multinational firms?
It increases coordination costs.
It results in cultural conflicts.
It reduces trade barriers and enhances adaptability.
It limits the firm's international expansion opportunities.
6. The acquisition of WhatsApp by Facebook serves as an example of how international acquisitions can facilitate geographic expansion, leverage user synergy, integrate technologies, and provide a competitive edge. Such acquisitions can offer strategic advantages, allowing companies to tap into new markets, strengthen their offerings, and position themselves for future growth. Having mentioned the advantages, which of the following is NOT a disadvantage of international acquisitions?
They are very expensive and often require debt financing.
The acquiring firm has to deal with the regulatory requirements of a host country.
Merging the acquired and acquiring firm is difficult.
It is the slowest way to enter a new market.
7. What can significantly affect a firm's competitiveness in global markets due to its effect on product prices in different countries?
Political risk
Currency risk
Legal risk
Intellectual property risk
8. The relationship among international geographic diversification, innovation, and returns is influenced by all of the following EXCEPT:
effective managerial practices.
cultural diversity of top management teams.
nature of incentives for top management.
salaries of top management.
9. Why do multinational firms often locate operations in geographically close and culturally similar countries?
To reduce trade barriers
To increase coordination costs
To overcome cultural barriers
To expand their operations internationally
10. Internationally diversified firms
earn greater returns on their innovations through larger or more numerous markets.
are more likely to produce below-average returns for investors in the long run.
may need to decrease international activities when domestic profits are poor.
are generally unable to achieve high levels of synergy because of differences in cultures.
11. An international diversification strategy can help firms overcome the challenges of rapid technological obsolescence by
investing in capital-intensive operations.
focusing on domestic markets.
developing larger domestic markets.
diversifying into several international markets.
12. What can be a strong barrier to the transfer of a firm's core competencies from one market to another?
Geographic diversity
Cultural factors
Coordination costs
Trade barriers
13. Which factor holds multinational firms accountable not only for their own operations but also for the business practices of foreign suppliers?
Geographic diversity
Cultural integration
Government regulations
Coordination costs
14. Which aspect of managing multinational firms can be influenced by differences in government policies and practices across host countries?
Geographic diversity
Trade barriers
Cultural integration
Coordination costs