Test bank for Strategic Management Text and Cases ISE 11th Edition By Gregory G. Dess, Gerry McNamara, Alan B. Eisner

Test bank for Strategic Management Text and Cases ISE 11th Edition By Gregory G. Dess, Gerry McNamara, Alan B. Eisner

1) The trend towards worldwide markets makes it easier to predict where competitors will spring up. Answer: FALSE Explanation: The rise of globalization, meaning the rise of market capitalism around the world, means competitors can now come from just about anywhere. Difficulty: 2 Medium Topic: Globalization, Multinational Enterprise, Foreign Direct Investment, and Global Strategy Learning Objective: 07-01 The importance of international expansion as a viable diversification strategy. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 2) Because many countries are investing in countries other than their own, each country is becoming more autonomous and independent. Answer: FALSE Explanation: Globalization, which is on the rise, has two meanings. One is the increase in international exchange, including trade in goods and services as well as exchange of money, ideas, and information. The second is the growing similarity of laws, rules, norms, values, and ideas across countries. Difficulty: 2 Medium Topic: Globalization, Multinational Enterprise, Foreign Direct Investment, and Global Strategy Learning Objective: 07-01 The importance of international expansion as a viable diversification strategy. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 3) Increasing international exchange in goods and services can run into the difficulty of one offering that meets the needs of customers at differing income levels. Answer: TRUE Explanation: One of the challenges with globalization is determining how to meet the needs of customers at very different income levels. In many developing economies, distributions of income remain much wider than they do in the developed world, leaving many impoverished even as the economies grow. Difficulty: 2 Medium Topic: Globalization, Multinational Enterprise, Foreign Direct Investment, and Global Strategy Learning Objective: 07-01 The importance of international expansion as a viable diversification strategy. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 4) The Michael Porter Diamond of National Advantage is a framework that explains why countries foster successful multinational corporations based on factor endowments and demand conditions only. Answer: FALSE Explanation: The Porter Diamond of National Advantage is a framework for explaining why countries foster successful multinational corporations, consisting of four factors: factor endowments; demand conditions; related and supporting industries; and firm strategy, structure, and rivalry. Difficulty: 2 Medium Topic: Competitive Advantage Learning Objective: 07-02 The sources of national advantage; that is, why an industry in a given country is more (or less) successful than the same industry in another country. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 5) The factor endowments of a country are inherited and cannot be created. Answer: FALSE Explanation: Classical economics suggests that factors of production such as land, labor, and capital are the building blocks that create usable consumer goods and services. However, companies in advanced nations seeking competitive advantage over firms in other nations create many of the factors of production, such as skilled human resources. Difficulty: 2 Medium Topic: Competitive Advantage Learning Objective: 07-02 The sources of national advantage; that is, why an industry in a given country is more (or less) successful than the same industry in another country. Bloom's: Understand AACSB: Knowledge Application Accessibility: Keyboard Navigation 6) With regard to factor conditions, the pool of resources that a firm (or nation) has is much more important than the speed and efficiency with which these resources are deployed. Answer: FALSE Explanation: The pool of resources is less important than the speed and efficiency with which these resources are deployed. Thus, firm-specific knowledge and skills created within a country that are rare, valuable, difficult to imitate, and rapidly and efficiently deployed are the factors of production that ultimately lead to competitive advantage for the nation. Difficulty: 2 Medium Topic: Competitive Advantage Learning Objective: 07-02 The sources of national advantage; that is, why an industry in a given country is more (or less) successful than the same industry in another country. Bloom's: Analyze AACSB: Analytical Thinking Accessibility: Keyboard Navigation 7) Many international firms are increasing their efforts to market their products and services to countries such as India and China as the ranks of their middle class continue to increase. Answer: TRUE Explanation: Many multinational firms are intensifying their efforts to market their products and services to countries such as India and China as the ranks of their middle class have increased over the past decade. An OECD study predicts that consumption by middle-class consumers in Asian markets will grow from 4.9 trillion USD in 2009 to over 30 trillion USD by 2020. At that point, Asia will make up 60 percent of global middle-class consumption, up from 20 percent in 2009. Difficulty: 2 Medium Topic: Globalization, Multinational Enterprise, Foreign Direct Investment, and Global Strategy Learning Objective: 07-03 The motivations (or benefits) and risks associated with international expansion, including the emerging trend for greater offshoring and outsourcing activity. Bloom's: Understand AACSB: Analytical Thinking Accessibility: Keyboard Navigation 8) Arbitrage opportunities are simple trading opportunities and therefore account for little of the success Walmart experiences.