Question 1

Consider the firm in terms of a value chain. What is the difference between primary activities and support activities? Provide examples of each.

Accepted Answer

The operations of a firm can be thought of as a value chain composed of a series of distinct value creation activities. Primary activities have to do with the design, creation, and delivery of the product; its marketing; and its after-sale-service. Normally, primary activities are divided into R&D, production, marketing and sales, and customer service. The support activities of the value chain provide inputs that allow the primary activities to occur. Support activities include information systems, company infrastructure, logistics, and human resources.

Question 2

_____ allows a firm to reduce its cost of creating value and increase its profitability.

Accepted Answer

A)   Moving down the experience curve
B)   Moving up the experience curve
C)   Moving down the learning effect curve
D)   Moving up the learning effect curve A

Question 3

The _____ refers to systematic reductions in production costs that have been observed to occur over the life of a product.

Accepted Answer

A)   economies of scale
B)   value creation
C)   location economies
D)   experience curve D

Question 4

Moving down the experience curve:

Accepted Answer

A)   increases the cost of a firm's raw material.
B)   allows a firm to reduce its cost of creating value.
C)   decreases a firm's profitability.
D)   increases the research and development expenditure of a firm.

Question 5

Which of the following is an example of a support activity in a firm's value chain?

Accepted Answer

A)   Research and development
B)   Customer service
C)   Human resources
D)   Marketing and sales

Question 6

When individuals gain knowledge of the most efficient ways to perform particular tasks, they are saving costs through _____.

Accepted Answer

A)   location economies
B)   value creation effects
C)   experience curve effects
D)   learning effects

Question 7

The skills within the firm that a competitor cannot easily match or imitate are known as core competence.

Accepted Answer

A) True 
 B)False

Question 8

When a firm focuses on increasing profitability by customizing the product or service so that they provide a good match to tastes and preferences in different national markets, the firm is following a(n) _____ strategy.

Accepted Answer

A)   transnational
B)   localization
C)   international
D)   global standardization

Question 9

It has been suggested that learning effects are important only during the start-up period of a new process and that they cease after two or three years. Any decline in the experience curve after such a point is due to:

Accepted Answer

A)   reduction in fixed costs.
B)   higher depreciation costs.
C)   economies of scale.
D)   obsolescence.

Question 10

Once a firm has established a low-cost position, it can act as a barrier to new competition.

Accepted Answer

A) True 
 B)False

Question 11

Economies that arise from performing a value creation activity in the optimal location are known as _____.

Accepted Answer

A)   international strategies
B)   location economies
C)   localization strategies
D)   economies of scale

Question 12

Discuss the evolution of strategy. How does cost become important in the long term?

Accepted Answer

The answer of Discuss the evolution of strategy. How does...

Question 13

According to Porter, the way to create superior value is to drive down the cost structure of the business and/or differentiate the product in some way so that consumers value it more.

Accepted Answer

A) True 
 B)False

Question 14

A(n) _____ strategy makes most sense when demands for local responsiveness are high, but cost pressures are moderate or low.

Accepted Answer

A)   global standardization
B)   transnational
C)   international
D)   localization

Question 15

It has been observed in the aircraft industry that, each time cumulative output of airframes was doubled, unit costs typically declined to 80 percent of their previous level. This is an example of the _____ curve.

Accepted Answer

A)   core performance
B)   location
C)   strategic
D)   experience

Question 16

How can a firm increase its profitability?

Accepted Answer

The answer of How can a firm increase its profitability?...

Question 17

Universal needs exist when:

Accepted Answer

A)   the tastes and preferences of consumers in different nations are similar if not identical.
B)   conventional commodity products requested in one country are different than those requested in another country.
C)   the tastes and preferences of consumers in the same nation are similar if not identical.
D)   consumers are willing to pay a high price for a product regardless of what country they reside in.

Question 18

Which of the following statements is true?

Accepted Answer

A)   The way to increase the profitability of a firm is to create a greater number of products.
B)   The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products.
C)   The more value customers place on a firm's products, the lower the price the firm is able to charge for those products.
D)   The price a firm charges for a good or service is typically more than the value the customer places on that good or service.

Question 19

Learning effects:

Accepted Answer

A)   tend to be less significant when a technologically complex task is repeated.
B)   will be less significant in an assembly process involving 1,000 complex steps than in one of only 100 simple steps.
C)   typically disappear after a while, in spite of the complexity of the task.
D)   are more significant after two or three years of the introduction of a new process.

Question 20

How can the marketing and sales functions of a firm create value?

Accepted Answer

The answer of How can the marketing and sales functions...

Exam 13: The Strategy of International Business

Consider the firm in terms of a value chain. What is the difference between primary activities and support activities? Provide examples of each.

_____ allows a firm to reduce its cost of creating value and increase its profitability.

The _____ refers to systematic reductions in production costs that have been observed to occur over the life of a product.

Moving down the experience curve:

Which of the following is an example of a support activity in a firm's value chain?

When individuals gain knowledge of the most efficient ways to perform particular tasks, they are saving costs through _____.

The skills within the firm that a competitor cannot easily match or imitate are known as core competence.

When a firm focuses on increasing profitability by customizing the product or service so that they provide a good match to tastes and preferences in different national markets, the firm is following a(n) _____ strategy.

It has been suggested that learning effects are important only during the start-up period of a new process and that they cease after two or three years. Any decline in the experience curve after such a point is due to:

Once a firm has established a low-cost position, it can act as a barrier to new competition.

Economies that arise from performing a value creation activity in the optimal location are known as _____.

Discuss the evolution of strategy. How does cost become important in the long term?

According to Porter, the way to create superior value is to drive down the cost structure of the business and/or differentiate the product in some way so that consumers value it more.

A(n) _____ strategy makes most sense when demands for local responsiveness are high, but cost pressures are moderate or low.

It has been observed in the aircraft industry that, each time cumulative output of airframes was doubled, unit costs typically declined to 80 percent of their previous level. This is an example of the _____ curve.

How can a firm increase its profitability?

Universal needs exist when:

Which of the following statements is true?

Learning effects:

How can the marketing and sales functions of a firm create value?