Chapter 1 Multiple Choice Questions | Global Strategic Management by Philippe Lasserre

1. Which of the three propositions defines the difference between a global company and a multinational company?

No difference: both terms define firms that operate internationally in many countries It is a matter of size: a multinational firm is a small global firm A global firm operates in the main markets of the world in an integrated and coordinated way while a multinational firm’s international operations are managed on a country-by-country basis Multinational firms adapt their products to local markets, while global firms sell only standardized products

2. Which of the three propositions defines Ricardo’s theory of comparative advantage?

Countries should export products or services for which they have low labor costs Countries should concentrate on the production of those goods and services at which they are most efficient and export them, whilst buying in other products from abroad Countries should export products or services for which they have the lowest input costs Countries should export high value-added products or services

3. Which factor is not conducive to globalization?

GATT and WTO The Internet The reduction in transportation costs Cultural differences between countries

4. Among those elements, which three constitute an argument against globalization?

Disruption of employment in industrialized countries Harm to human rights Standardization and reduced diversity of products Encouragement of conflict among nations Disruption of national cultures

5. What is the main reason why Amazon is obliged to open subsidiaries outside the USA?

Language differences Local governments require it Transportation costs are too high relative to the price of goods delivered To manage taxes globally

6. Which two ‘moves’ can be qualified as an arbitrage?

Avoiding taxes by localizing profit earning in low-tax countries Reducing costs by pooling resources Engaging in a price war in a country where a competitor is strong in order to weaken that competitor’s global cash flow elsewhere Building the ability to launch products all over the world

7. What is the main attribute of industries or segments that are both ‘local’ and ‘global’ (type III)?

Industries which require both economies of scale in production, and flexibility for satisfying diverse customer requirements Industries in which firms use simple processes Industries which depend mainly on natural resources Industries intensive in R&D

8. Which two of the following are benefits of having a global management model versus a multinational one (choose all that apply)?

Agility in adapting to local conditions Cost reduction through economies of scale Ability to address customer diversity all over the world Speed of action in launching new products

9. What is the ‘arbitrage benefit’ enjoyed by global firms?

Global firms can take advantage of cost differences among the countries in which they operate The benefits of being big and therefore influencing local governments The search for dominant positions The benefit of speculation on the stock markets

10. When is there a learning deficit instead of a learning benefit for a global firm? (Select both answers that apply).

When learning is not easy When learning gained in one country is not applicable to other countries When governments control media and publications When there is a resistance to learning from other subsidiaries

Chapter 1: Globalization of Markets and Competition