Exam (elaborations)
Strategic Management Chapter 8
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Chapter 8—International StrategyTRUE/FALSE
1. Many firms choose direct investment in assets in foreign countries (e.g., establishing new subsidiaries,
making acquisitions, or building joint ventures) over direct investment because it provides better
protection for their assets.
ANS: T PTS: 1 DIF: Medium REF: 218
OBJ: 08-01 TYPE: knowledge
NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff &
Rubin: Managing the task environment
2. After a firm decides to compete internationally, it must select its strategy and choose a mode of entry
into international markets.
ANS: T PTS: 1 DIF: Easy REF: 218 (Figure 8.1)
OBJ: 08-01 TYPE: knowledge
NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff &
Rubin: Managing the task environment
3. The benefits of international diversification must be tempered by political and economic risks and the
problems of managing a complex international firm with operations in multiple countries.
ANS: T PTS: 1 DIF: Easy REF: 218
OBJ: 08-01 TYPE: knowledge
NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff &
Rubin: Managing the task environment
4. According to the Opening Case about entry into China, a common entry strategy for automobile firms
such as General Motors and Volkswagen is licensing.
ANS: F PTS: 1 DIF: Medium REF: 217-218 | 233-234
OBJ: 08-01 | 08-06 TYPE: application
NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff &
Rubin: Managing the task environment
5. As noted in the Opening Case, the Chinese market is attractive only for manufacturing firms such as
those in the automobile industry.
ANS: F PTS: 1 DIF: Medium REF: 217
OBJ: 08-01 TYPE: application
NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff &
Rubin: Managing the task environment
6. The Opening case gives examples of Chinese firms such as Huawei Technologies Co. Ltd. which has
been more successful abroad than in China.
ANS: T PTS: 1 DIF: Medium REF: 217
OBJ: 08-01 TYPE: application
NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff &
Rubin: Managing the task environment
, 7. An important aspect of doing business internationally is that firms develop relationships with
suppliers, customers, and partners and learn from these relationships as SAIC did in its partnerships
with GM and Volkswagen.
ANS: T PTS: 1 DIF: Medium REF: 217-219
OBJ: 08-01 TYPE: application
NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff &
Rubin: Managing the task environment
8. One reason why firms pursue international opportunities is to extend the product's life cycle.
ANS: T PTS: 1 DIF: Easy REF: 219-220
OBJ: 08-01 TYPE: comprehension
NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Managing
strategy & innovation
9. A traditional motive for internationalization has been to secure needed resources, especially minerals
and energy.
ANS: T PTS: 1 DIF: Easy REF: 220
OBJ: 08-01 TYPE: knowledge
NOT: AACSB: Multicultural & Diversity | Management: Strategy | Dierdorff & Rubin: Knowledge of
general business functions
10. In some industries, technology drives globalization because the economies of scale necessary to reduce
costs cannot be met by competing in domestic markets alone.
ANS: T PTS: 1 DIF: Medium REF: 220
OBJ: 08-01 TYPE: comprehension
NOT: AACSB: Multicultural & Diversity | Management: Environmental Influence | Dierdorff &
Rubin: Managing the task environment
11. It is generally easier to negotiate employee layoffs in Europe than in the United States because of the
generous government-provided social services in Europe.
ANS: F PTS: 1 DIF: Hard REF: 220
OBJ: 08-01 TYPE: knowledge
NOT: AACSB: Multicultural & Diversity| Management: Legal Responsibilities | Dierdorff & Rubin:
Managing the task environment
12. The four benefits of international strategies are 1) increased market size; 2) greater return on
investment; 3) greater economies of scale and learning; and 4) location advantages.
ANS: T PTS: 1 DIF: Easy REF: 220-221
OBJ: 08-02 TYPE: knowledge
NOT: AACSB: Multicultural & Diversity| Management: Strategy | Dierdorff & Rubin: Managing the
task environment
13. To the extent that a firm is able to standardize its products across country borders, use the same or
similar production facilities, and coordinate critical resource functions, the more likely it is to achieve
optimum economies of scale.
ANS: T PTS: 1 DIF: Easy REF: 222
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