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Question No : 31
A firm considering entry into a market abroad may make the selection based on many criteria.
For example, a Portuguese firm applying a psychic proximity criterion will most likely choose to enter which market?
A. Afghanistan.
B. China.
C. India.
D. Brazil.
Answer: D

Explanation:
Psychic proximity means the nearness of the market’s culture, language, and laws to those of the firm’s home country. For example, Portuguese is spoken in Brazil.

Question No : 32
Developing brand equity in a foreign market may be desirable but is subject to considerable risk. A global firm launching a new product in a new market most likely should
A. Initially place most of the firm’s emphasis on advertising geared to the local culture.
B. Fully decentralize control of the marketing process.
C. Avoid creating partnerships with local distribution channels to avoid dilution of the brand.
D. Balance standardization and customization of the product.
Answer: D

Explanation:
The firm should determine the ratio of standardization and customization. Products that can be sold virtually unchanged throughout several markets provide a greater profit opportunity for a global firm. However, cultural differences may require extensive customization to appeal to markets in different countries.

Question No : 33
According to keegan’s model of adaptation strategies, a firm that decides to operate globally by changing its product and its promotion methods has chosen
A. A dual adaptation strategy.
B. The backward variant of a product invention strategy.
C. The forward variant of a product invention strategy.
D. A straight extension strategy.
Answer: A

Explanation:
Communication adaptation is a strategy that does not change the products, but advertising and marketing campaigns are changed to reflect the local culture and beliefs. In contrast, a dual adaptation strategy changes both the product and the promotion to provide the best chance of acceptance in a foreign market.

Question No : 34
Distribution channels ensure that goods in international trade are transferred successfully to end users. Where are intermediaries, such as trading companies, most likely selected?
A. Channels within nations.
B. Export department of the seller.
C. International division of the seller.
D. Channels between nations.
Answer: D

Explanation:
Channels between nations carry goods to foreign borders. They include air, land, sea, or rail transportation channels. At this stage, in addition to transportation methods, intermediaries are selected (e.g., agents or trading companies), and financing and risk management decisions are reached.

Question No : 35
Managerial attitudes toward global operations are viewed by researcher HowardPerl mutteras a key to understanding multinational firms. An ethnocentric attitude is indicated by:
A. An identification with the nationality of the host country.
B. Collaboration between the firm’s subsidiaries and the firm’s central administration.
C. A high volume of information flow in the form of orders and advice to subsidiaries.
D. A staffing emphasis on finding and developing the best people in the world for key positions anywhere in the firm.
Answer: C

Explanation:
An ethnocentric attitude assumes that the home country’s people, practices, and ideas are superior to all others. Thus, the firm’s identification is with the owner’s nationality. Authority and decision making are centralized, so communication is likely to involve a high volume of information flow in the form of orders and advice to subsidiaries. Moreover, home-country standards are apt to be used for performance evaluation of entities and individuals. Also, this ethnocentric attitude is perpetuated by recruiting and developing home-country individuals for key posts throughout the firm. The advantages of an ethnocentric attitude are simplicity and close control. The disadvantages are social and political problems in foreign countries, poor feedback, ineffective planning, lack of flexibility and innovative thinking, and higher turnover of managers in foreign subsidiaries.

Question No : 36
Managerial attitudes toward global operations are viewed by researcher HowardPerl mutteras a key to understanding multinational firms. A polycentric attitude is indicated by
A. An identification with the nationality of the owner.
B. Evaluation and control standards that are both local and global.
C. High information flow in multiple directions.
D. Relatively little decision making by the central administrative authority.
Answer: D

Explanation:
A polycentric attitude assumes that cultural differences require local managers to make most decisions because they are more knowledgeable about local conditions than are central administrators. Thus, development of local managerial talent is crucial. Another result is that foreign operating performance is primarily evaluated based on results. As a consequence,methods, training, and incentives vary significantly among subsidiaries. Furthermore, control is predominantly local, the firm is identified with the nationality of the host nation, and relatively little communication occurs with central administration or among subsidiaries. One disadvantage is that local operations may have inefficiencies because of duplication of activities. Another disadvantage is loss of goal congruence between local entities and the firm as a whole. Advantages are more capable and motivated local managers, better results in local markets, local development of new product ideas, and stronger support by host governments.

Question No : 37
Managerial attitudes toward global operations are viewed by researcher HowardPerl mutteras a key to understanding multinational firms. A geocentric attitude is indicated by
A. An identification with national perspectives even though the firm is genuinely international.
B. Control and evaluation methods that are locally determined.
C. Decision making concentrated in the central administrative authority.
D. Little communication among subsidiaries.
Answer: A

Explanation:
A geocentric attitude is truly internationally oriented while absorbing the best that various cultures offer. It is a completely balanced approach with full collaboration between central administrators and subsidiaries, control and evaluation methods that harmonize local and overall firm standards, and frequent communication in all directions (i.e., between central administrators and subsidiaries and among subsidiaries). Moreover, talent, not nationality, determines personnel decisions throughout the firm.

Question No : 38
According to research on the international contingency model of leadership, which path-goal leadership style is most likely to be accepted around the world as culturally appropriate?
A. Directive.
B. Participative.
C. Supportive.
D. Achievement-oriented.
Answer: B

Explanation:
A participative style entails consultation with employees and serious attention to their ideas. The participative style, although not always the best, is the most widely accepted internationally. Every country surveyed found it to be culturally acceptable.

Question No : 39
Research on the common characteristics of leaders of global firms found that:
A. Ambition and relentless drive were more significant than honesty and trustworthiness.
B. The leaders tended to have multidisciplinary problem solving ability.
C. Being multilingual was unimportant.
D. Having traveled extensively before entering the working world was relatively uncommon.
Answer: B

Explanation:
A common characteristic of successful leaders of global firms is that they have effective problem- solving skills that draw from a multidisciplinary approach. The best candidates have varied backgrounds and can draw on a multitude of life experiences. They also tend to be flexible and adaptable, have good interpersonal skills, and communicate successfully.

Question No : 40
For a multinational firm, which of the following is a disadvantage of an ethnocentric staffing policy in which all key management positions are filled by parent-company nationals?
A. An ethnocentric staffing policy significantly raises compensation, training, and staffing costs.
B. An ethnocentric staffing policy produces resentment among the firm’s employees in host countries.
C. An ethnocentric staffing policy limits career mobility for parent-country nationals.
D. An ethnocentric staffing policy isolates headquarters from foreign subsidiaries.
Answer: B

Explanation:
An ethnocentric staffing policy has the advantage that expatriates may understand the objectives, policies, and procedures of the parent firm better than local employees do. However, ethnocentrism in hiring has the following disadvantages, among others:(1) Expatriate managers have difficulty in adapting to a new culture, language, and physical environment;
(2)
training and relocation costs may be high;

(3)
host-country governments prefer local control;

(4)
the morale and performance of host-country employees will suffer.

Question No : 41
Which of the following is a source of communication breakdown within an organization due to a sense of superiority by members of a particular culture?
A. Perceptual problem.
B. Stereotyping.
C. Ethnocentrism.
D. Uncertainty avoidance.
Answer: C

Explanation:
Ethnocentrism is the attitude that one’s own group is superior. It is perpetuated through the value structures and nationalistic spirit of the people.

Question No : 42
Which of the following management orientations is characterized by an organization’s efforts to adapt the product and marketing program to each local environment?
A. Ethnocentric.
B. Polycentric.
C. Geocentric.
D. Fegiocentric.
Answer: B

Explanation:
A polycentric attitude assumes that cultural differences require local managers to make most decisions because they are more knowledgeable about local conditions than are central administrators. Thus, development of local managerial talent is crucial. Another result is that foreign operating performance is primarily evaluated based on results. As a consequence, methods, training, and incentives vary significantly among subsidiaries. Furthermore, control is predominantly local, the firm is identified with the nationality of the host nation, and relatively little communication occurs with central administration or among subsidiaries. One disadvantage is that local operations may have inefficiencies because of duplication of activities. Another disadvantage is loss of goal congruence between local entities and the firm as a whole. Advantages are more capable and motivated local managers, better results in local markets, local development of new product ideas, and stronger support by host governments. Accordingly, the polycentric attitude adapts to each local environment.

Question No : 43
According to research on path-goal leadership styles done in many countries, which styles are neither the most nor the least accepted internationally?
I. Directive
II. Supportive
III. Participative
IV.
Achievement-oriented

A.
land II.

B.
land Ill.

C.
II and IV.

D.
Ill and IV.
Answer: C

Explanation:
The participative style, although not always the best, is the most widely accepted internationally. The directive style is the least accepted internationally. It was not deemed appropriate in the U.S., U.K., Canada, Australia, Germany, and Sweden. Theachievement orientedstyle was found unacceptable in such countries as Brazil, France, Italy, and Japan. The supportive style was not accepted in such countries as Brazil, France, India, and Sweden.

Question No : 44
With the globalization of economies, many organizations have expanded their operations to international locations. As an advisor to management, an internal auditor will most likelyrecommend that a geocentric, or worldwide, attitude be adopted. Select the reason the geocentric attitude is preferred.
A. It promotes a simpler organizational structure.
B. It provides greater autonomy for host country managers.
C. It provides the best balance of local and worldwide objectives.
D. It promotes tighter organizational control.
Answer: C

Explanation:
According to Howard Perlmutter, the geocentric attitude toward international operations is world oriented. The intention is to balance local and worldwide objectives in all aspects of operations, to maintain global standards while permitting local managers to exercise appropriate discretion.

Question No : 45
Cultures have been described as low-context or high-context. Which culture is high-context?
A. Germany.
B. Saudi Arabia.
C. Great Britain.
D. Swillerland.
Answer: B

Explanation:
Hall drew a distinction between high-context and low-context cultures. In high-context cultures (e.g., Japanese, Chinese, Arabic, and Korean), much meaning is transmitted by nonverbal cues and situational circumstances. Thus, a person’s status in a firm, rank in society, and reputation convey the primary message. In low- context cultures (e.g., Northern Europe and North America), primary messages are transmitted verbally. Hence, precise written contractual agreements are highly valued. In contrast, social events are more highly valued in a highcontext culture.

Question No : 46
Which country is best described as having an individualistic culture?
A. India.
B. Japan.
C. Canada.
D. China.
Answer: C

Explanation:
Individualistic cultures are societies that place a higher value on the rights and accomplishments of individual persons within the society. Examples are the U.S., U.K,Canada, and Australia. Collectivist cultures focus much more on the goals of family, friends, country, and the organization. Examples are China, India, Mexico, Japan, and Egypt.

Question No : 47
According to Edward T. Hall, the perception of time is monochronic or polychronic. Which cultures perceive time as monochronic?
A. Northern European.
B. Latin American.
C. Arabic.
D. Mediterranean.
Answer: A

Explanation:
The perception of time as it relates to business and social life varies with the culture. Polychronic time is based on a perception that time is nonlinear, flexible, and multidimensional. This perception is typical of Mediterranean, Latin American, and Arabic cultures. Monochronic time is based on a perception that time is the same for everyone and is measurable in standard units. This perception is common in Northern Europe and the
U.S. These western cultures believe in punctuality and that time is money and should not be wasted.

Question No : 48
Dutch researcher Geert Hofstede has examined the cultural dimensions of organizational behavior in 40 countries. The United States ranked the highest in which dimension?
A. Power distance.
B. Uncertainty avoidance.
C. Individualism.
D. Masculinity.
Answer: C

Explanation:
The individualism-collectivism dimension addresses whether the organization or individual must meet his/her own security needs.

Question No : 49
In some regions of the world, business is conducted more often through personal relationship building than through legal contracts. This is an example of a
A. Cultural factor.
B. Commercial factor.
C. Technical factor.
D. Legal factor.
Answer: A

Explanation:
In high-context cultures (e.g., Japanese, Chinese, Arabic, and Korean), much meaning is transmitted by nonverbal cues and situational circumstances. Thus, a person’s status in a firm, rank in society, and reputation convey the primary message. In low-context cultures (e.g., Northern Europe and North America), primary messages are transmitted verbally. Hence, precise written contractual agreements are highly valued. In contrast, social events aremore highlyvalued in a high-context culture. Attitudes, tastes, behavior, and social codes are culturalfactors. Accordingly, a preference for personal relationships rather than precise writtencontracts is a cultural factor.

Question No : 50
Edward T. Hall has distinguished between high-context and low-context cultures. Which
culture is high-context?
A. United States.
B. Canada.
C. Germany.
D. Japan.
Answer: D

Explanation:
Hall drew a distinction between high-context and low-context cultures. In high-context cultures (e.g., Japanese, Chinese, Arabic, and Korean), much meaning is transmitted by nonverbal cues and situational circumstances. Thus, a person’s status in a firm, rank in society, and reputation convey the primary message. Section 2:Sec Two (51 to 90) Details: Industry and Market Analysis

Question No : 51
Which of the following is not a step in the establishment of a competitive intelligence system?
A. Data analysis.
B. Data collection.
C. Information dissemination.
D. Classification of competitors.
Answer: D

Explanation:
A competitive intelligence system is established to identify competitor strategies, monitor their new-product introductions, analyze markets for the firm’s own new-product introductions and acquisitions, obtain information about nonpublic firms, evaluate competitor R&D activity, learn about competitors’ senior executives, and perform other necessary information gathering tasks. Its establishment consists of setting up the system, collecting data, analyzing the data, and disseminating the information. Classification of competitors, however, is not a step in this process. Competitors are classified and targeted by a firm based on that classification following the results of a customer value analysis (CVA).

Question No : 52
Which of the following are steps in a customer value analysis (CVA)?
I. Determining what customers value
II. Having customers rank the relative significance of the elements of customer value
III.Evaluating how well the firm and its competitors perform relative to the elements of customer value
IV.Focusing on performance with respect to each element of customer value
A. I, Ill, and IV only.
B. I, II, and Ill only.
C. I, II, and IV only.
D. I, II, Ill, and IV.
Answer: D

Explanation:
The steps in a CVA are to:
.
Determine what customers value.

.
Assign quantitative amounts to the elements of customer value and have customers rank their relative significance.

.
Evaluate how well the firm and its competitors perform relative to each element.

.
Focus on performance with respect to each element, vis-a-vis an important competitor in a given market segment.

.
Repeat the foregoing steps as circumstances change.

Question No : 53
Usually, the cheapest way to gain market share is by targeting what class of competitors?
A. Close competitors.
B. Distant competitors.
C. Weak competitors.
D. Bad competitors.
Answer: C

Explanation:
Using the results of a customer value analysis, a firm may target a given class of competitors in order to gain market share. Although there are various methods, targeting weak competitors is usually the cheapest way to gain market share because weak competitors generally do not offer much resistance.

Question No : 54
A starting point for developing competitive strategies is customer value analysis (CVA). According to theCVA approach.
A. Customer value equals customer benefits.
B. Bad competitors rather than good competitors should be targeted.
C. Strong competitors should be avoided even when they have exploitable weaknesses.
D. Distant competitors are the usual threats.
Answer: B

Explanation:
Bad competitors should be targeted rather than good competitors. The former disturb the competitive equilibrium, e.g., by excessive expansion of capacity or overly risky behavior. The latter make sound business decisions that promote the long-term health of the industry, e.g., about prices, entry into newsegments, and pursuit of market share.

Question No : 55
A company sells a diverse line of cookies. Its acquisition of another company, a maker of cake mixes, is most likely an example of
A. Vertical integration.
B. Horizontal diversification.
C. Concentric diversification.
D. Conglomerate diversification.
Answer: B

Explanation:
Horizontal diversification is the acquisition of businesses making products unrelated to current offerings but that might appeal to the firm’s current customers. Cookies and cake mixes are based on different technologies but may be demanded by the same customers.

Question No : 56
A strategic business unit (SBU) has a relative market share (RMS) of 2.0 and a market growth rate (MGR) of 9.5%. According to the portfolio model for competitive analysis created by the Boston Consulting Group, such an SBU is considered a
A. Star.
B. Question mark.
C. Cash cow.
D. Dog.
Answer: C

Explanation:
The annual MGR reflects the maturity and attractiveness of the market and the relative need for cash to finance expansion. An MGR of 10% or more is generally regarded as high. The RMS reflects an SBU’s competitive position in the marketsegment. An RMS of 1.0 or moresignifies that the SBU has a strong competitive position. Cash cows have high RMS and low MGR. They are strong competitors and cash generators in low-growth markets.

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