Global Business 3rd Edition By Mike Peng – Test Bank

 

To Purchase this Complete Test Bank with Answers Click the link Below

 

https://tbzuiqe.com/product/global-business-3rd-edition-by-mike-peng-test-bank/

 

If face any problem or Further information contact us At tbzuiqe@gmail.com

 

 

Sample Questions

 

 

Chapter 4—Leveraging Resources and Capabilities

 

TRUE/FALSE

 

1.   The resource-based view is developed on the insight that competitors do not share certain resources and capabilities specific to one’s firm.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 96              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

2.   In global business, the institution-based view deals with internal strengths and weaknesses.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 96              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

3.   A SWOT analysis deals with a firm’s external S (strengths) and W (weakness), and internal O (opportunities) and T (threats).

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 96              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

4.   A firm’s resources and capabilities are the tangible and intangible assets used to choose and implement its strategies.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   pp. 96-97       OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

5.   Tangible resources and capabilities are assets that are observable and easily quantified.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 97              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

6.   A firm’s financial resources and capabilities are an example of its intangible assets.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 97              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

7.   A firm’s reputational resources are an example of its tangible resources and capabilities.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 97              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

8.   The value chain exclusively deals with a firm’s primary activities.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 99              OBJ:   LO: 4-2          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

9.   Benchmarking is the process of converting a firm-specific activity into an industry-specific activity.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 99              OBJ:   LO: 4-2          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

10.                Commoditization is the point at which an activity becomes proprietary or firm-specific.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 100            OBJ:   LO: 4-2          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

11.                Activities with high levels of commoditization should be performed in-house to increase competitiveness.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 100            OBJ:   LO: 4-2          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

12.                Onshoring is the process of turning over an organizational activity to a foreign supplier that will perform it on behalf of the focal firm.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 101            OBJ:   LO: 4-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

13.                Offshoring refers to setting up subsidiaries in foreign locations to perform in-house work.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 101            OBJ:   LO: 4-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

14.                Product design is considered an upstream activity in the value chain.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 101            OBJ:   LO: 4-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

15.                The process of outsourcing to a domestic firm is known as captive sourcing.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 101            OBJ:   LO: 4-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

16.                Captive sourcing is also known as foreign direct investment (FDI).

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 103            OBJ:   LO: 4-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

17.                The rarity of a firm’s resources and capabilities is studied under the VRIO framework.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 102            OBJ:   LO: 4-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

18.                The SWOT analysis exclusively focuses on the value and imitability aspects of the resources and capabilities of a firm.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 102            OBJ:   LO: 4-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

19.                According to the VRIO framework, imitable but well organized resources and capabilities will provide sustained competitive advantage to a firm.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 103            OBJ:   LO: 4-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

20.                According to the VRIO framework, only valuable and rare resources and capabilities have the potential to provide temporary competitive advantage for a firm.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 103            OBJ:   LO: 4-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

21.                According to the VRIO framework, valuable, but common resources and capabilities, will lead to a temporary competitive advantage.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 103            OBJ:   LO: 4-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

22.                Tangible resources differ from intangible resources in that tangible resources are easier to imitate.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 105            OBJ:   LO: 4-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

23.                Valuable and rare, but imitable, resources and capabilities give firms a permanently sustainable competitive advantage.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 105            OBJ:   LO: 4-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

24.                According to the VRIO framework, valuable, rare, and hard-to-imitate resources and capabilities will lead to a competitive parity.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 105            OBJ:   LO: 4-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

25.                The combination of resources and assets that enable a firm to gain a competitive advantage are referred to as supplementary assets.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 106            OBJ:   LO: 4-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

26.                In global business, social complexity refers to the socially intricate and interdependent ways firms are typically organized.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 106            OBJ:   LO: 4-4          NAT:  BUSPROG: Diversity

KEY:  Bloom’s: Knowledge

 

27.                The VRIO framework differs from SWOT analysis in that the VRIO framework promotes nonoffshoring.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 106            OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

28.                BPO refers to the outsourcing of low-end manufacturing to third-party providers.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 107            OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

29.                Original equipment manufacturers are firms that design, manufacture, and market branded products.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 108            OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

30.                Original design manufacturers are firms that both design and manufacture products.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 108            OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

31.                Original brand manufacturers cover more value chain activities than original equipment manufacturers.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 108            OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

32.                An original design manufacturer includes final assembly in its value chain activities.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 109            OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

33.                An original equipment manufacturer does not include marketing in its value chain activities.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 109            OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

34.                An original brand manufacturer includes research and development in its value chain activities.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 109            OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

35.                A competitive advantage that is sustained implies that it is permanent.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 113            OBJ:   LO: 4-6          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

MULTIPLE CHOICE

 

1.   Which of the following business tools focuses on a firm’s external threats and opportunities?

a.	The VRIO framework
b.	The BCG matrix
c.	The SWOT analysis
d.	The Pareto analysis

 

 

ANS:  C                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 96              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

2.   The resource-based view differs from the institution-based view in that the resource-based view focuses on a firm’s _____.

a.	external threats and opportunities
b.	internal strengths and weaknesses
c.	external strengths and opportunities
d.	internal threats and weaknesses

 

 

ANS:  B                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 96              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

3.   The institution-based view deals with the ____ in the SWOT analysis.

a.	external strengths and weaknesses
b.	internal weaknesses and opportunities
c.	external opportunities and threats
d.	internal strengths and threats

 

 

ANS:  C                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 96              OBJ:   LO: 4-1          NAT:  BUSPROG: Diversity

KEY:  Bloom’s: Knowledge

 

4.   Which of the following is considered as a tangible resource of a firm?

a.	The research and developmental capabilities of a firm
b.	The organizational culture of a firm
c.	The copyrights that belong to a firm
d.	The reputation of a firm as being socially responsible

 

 

ANS:  C                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 97              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

5.   Which of the following is considered as an intangible resource of a firm?

a.	The ability to raise external capital
b.	The access to raw materials of production
c.	The possession of patents to an invention
d.	The managerial skills of an employee

 

 

ANS:  D                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 97              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

6.   The ability to raise external capital is an example of a firm’s _____.

a.	human resources
b.	technological resources
c.	financial resources
d.	intangible resources

 

 

ANS:  C                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 97              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

7.   Which of the following is an example of a firm’s physical resources and capabilities?

a.	Integrated management information systems
b.	Access to raw materials and distribution channels
c.	Ability to generate internal funds
d.	Capacities for organizational innovation and change

 

 

ANS:  B                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 97              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

8.   Which of the following is an example of a firm’s technological resources and capabilities?

a.	Location of plants, offices, and equipment
b.	Managerial talents of employees
c.	Possession of patents, trademarks, copyrights, and trade secrets
d.	Reputation of employees as socially responsible citizens

 

 

ANS:  C                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 97              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

9.   Organizational culture is an example of _____.

a.	human resources and capabilities
b.	physical resources and capabilities
c.	organizational resources and capabilities
d.	technological resources and capabilities

 

 

ANS:  A                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 97              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

10.                Which of the following is an example of innovation resources and capabilities of a firm?

a.	Integrated management information systems
b.	Possession of patents, trademarks, copyrights, and trade secrets
c.	Formal planning, command, and control systems
d.	Research and development capabilities

 

 

ANS:  D                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 97              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

11.                The perceptions of product quality, durability, and reliability are an example of _______ resources and capabilities.

a.	physical
b.	reputational
c.	technological
d.	human

 

 

ANS:  B                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 97              OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

12.                Which of the following primary activities of a firm corresponds to its support activity of infrastructure?

a.	Research and development
b.	Components
c.	Final assembly
d.	Marketing

 

 

ANS:  A                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 99              OBJ:   LO: 4-2          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

13.                Which of the following primary activities of a firm corresponds to its support activity of human resources?

a.	Final assembly
b.	Marketing
c.	Components
d.	Research and development

 

 

ANS:  B                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 99              OBJ:   LO: 4-2          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

14.                Which of the following support activities corresponds to a firm’s primary activity of final assembly?

a.	Technology development
b.	Human resources
c.	Infrastructure
d.	Logistics

 

 

ANS:  D                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 99              OBJ:   LO: 4-2          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

15.                _____ is an examination as to whether a firm has resources and capabilities to perform a particular activity in a manner superior to competitors.

a.	Commoditization
b.	Performance appraisal
c.	Asset appraisal
d.	Benchmarking

 

 

ANS:  D                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 99              OBJ:   LO: 4-2          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

16.                The point at which an industry-specific activity becomes common across industries and the need to keep it proprietary no longer exists is called _____.

a.	commoditization
b.	monopolization
c.	break-even point
d.	captive sourcing

 

 

ANS:  A                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 100            OBJ:   LO: 4-2          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

17.                Which of the following strategies would suit a firm activity that is both firm-specific and industry-specific?

a.	Keep the activity in-house
b.	Offshore the activity to a foreign supplier
c.	Outsource the activity to a domestic firm
d.	Set up a subsidiary in a foreign location to perform the activity

 

 

ANS:  A                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   pp. 100-101   OBJ:   LO: 4-2          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

18.                _____ is defined as turning over an organizational activity to an outside supplier that will perform it on behalf of the focal firm.

a.	Deregulation
b.	Outsourcing
c.	Commoditizing
d.	Securitization

 

 

ANS:  B                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 101            OBJ:   LO: 4-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

19.                Which of the following activities is achieved within the domestic location of a firm?

a.	Offshoring
b.	FDI
c.	Captive sourcing
d.	Onshoring

 

 

ANS:  D                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 101            OBJ:   LO: 4-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

20.                Turning over an organizational activity to an international firm or foreign firm is called _____.

a.	captive sourcing
b.	onshoring
c.	offshoring
d.	commoditizing

 

 

ANS:  C                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 101            OBJ:   LO: 4-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

21.                Turning over an organizational activity to a domestic firm is called _____.

a.	captive sourcing
b.	onshoring
c.	offshoring
d.	nearshoring

 

 

ANS:  B                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 101            OBJ:   LO: 4-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

22.                _____ includes setting up subsidiaries abroad so that the work done is in-house but the location is foreign.

a.	Captive sourcing
b.	Onshoring
c.	Offshoring
d.	Insourcing

 

 

ANS:  A                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 101            OBJ:   LO: 4-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

23.                Captive sourcing is also known as _____.

a.	business process outsourcing
b.	foreign direct investment
c.	securitization
d.	domestic in-house activity

 

 

ANS:  B                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 101            OBJ:   LO: 4-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

24.                According to the VRIO framework, non-value-adding resources and capabilities will lead to _____ for a firm.

a.	a temporary competitive advantage
b.	a competitive parity
c.	a sustained competitive advantage
d.	a competitive disadvantage

 

 

ANS:  D                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 103            OBJ:   LO: 4-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

25.                According to the VRIO framework, a firm with an organized, valuable, rare, but imitable resources and capabilities will display a(n) _____ performance.

a.	below average
b.	average
c.	above average
d.	poor

 

 

ANS:  C                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 103            OBJ:   LO: 4-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

26.                Which of the following firms is most likely to have a sustained competitive advantage based on the VRIO framework?

a.	A firm with valuable but common resources and capabilities
b.	A firm with valuable and rare but imitable resources and capabilities
c.	A firm with valuable, rare, inimitable resources, and organizationally capabilities
d.	A firm with non-value-adding resources and capabilities

 

 

ANS:  C                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 103            OBJ:   LO: 4-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

27.                The difficulty of identifying the causal determinants of successful firm performance is called _____.

a.	causal determination
b.	causal indifference
c.	causal agency
d.	causal ambiguity

 

 

ANS:  D                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 105            OBJ:   LO: 4-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

28.                _____ refers to a combination of resources and assets that enables a firm to gain a competitive advantage.

a.	Core assets
b.	Standard assets
c.	Supplementary assets
d.	Complementary assets

 

 

ANS:  D                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 106            OBJ:   LO: 4-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

29.                An original equipment manufacturer refers a firm that _____.

a.	executes design blueprints provided by other firms and manufactures such products
b.	both designs and manufactures products
c.	designs, manufactures, and markets branded products
d.	licenses its patented inventions to other firms for manufacturing

 

 

ANS:  A                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 108            OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

30.                Which of the following is true of OEMs?

a.	It includes research and development in its value chain.
b.	It does not include procurement of components in its value chain.
c.	It does not include marketing in its value chain.
d.	It does not include final assembly in its value chain.

 

 

ANS:  C                    PTS:   1                    DIF:    Difficulty: Easy

REF:   pp. 108-109   OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

31.                An ODM is similar to an OBM in that both _____.

a.	execute design blueprints provided by other firms
b.	include product marketing in their organizational boundary
c.	exclude manufacturing in their organizational boundary
d.	design and manufacture their own products

 

 

ANS:  D                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 108            OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

32.                Firms that design, manufacture, and market distinguished products are called _____.

a.	original design manufacturers
b.	original equipment manufacturers
c.	original brand manufacturers
d.	business process outsourcing firms

 

 

ANS:  C                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 108            OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

33.                Which of the following value chain activities does an original equipment manufacturer perform?

a.	Research and development
b.	Product branding
c.	Final assembly
d.	Marketing

 

 

ANS:  C                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 109            OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

34.                Including _____ into its organizational boundaries would convert an OEM into an ODM.

a.	research and development
b.	components
c.	final assembly
d.	marketing

 

 

ANS:  A                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 109            OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

35.                An original design manufacturer (ODM) differs from an original brand manufacturer (OBM) in that an ODM _____.

a.	does not include final assembly in its organizational boundary
b.	does not include research and development in its organizational boundary
c.	does not include marketing in its organizational boundary
d.	only executes design blueprints provided by other firms

 

 

ANS:  C                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   pp. 108-109   OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

ESSAY

 

1.   Identify the four categories of tangible resources that a firm can possess.

 

ANS:

The first category of tangible resources is financial resources and capabilities, meaning the depth of a firm’s financial pockets. The capabilities include abilities to generate internal funds and raise external capital.

The second is physical resources and capabilities, such as plants, offices, and equipment, their geographic locations, and access to raw materials and distribution channels.

Technological resources and capabilities, the third category, include skills and assets that generate leading edge products and services supported by patents, trademarks, copyrights, and trade secrets.

Organizational resources and capabilities, or a firm’s planning, command, and control systems and structures are the last category. Younger firms tend to rely more on the visions of managers, often founders. More established firms usually have more formal systems and structures.

 

PTS:   1                    DIF:    Difficulty: Moderate                                 REF:    p. 97

OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic                                 KEY:   Bloom’s: Comprehension

 

2.   Explain the different categories of intangible resources and capabilities that a firm could possess.

 

ANS:

Human resources and capabilities: This represents the knowledge, trust, and talents embedded within a firm that are not captured by its formal tangible systems and structures.

Innovation resources and capabilities: A firm’s assets and skills to (1) research new products and services, and (2) innovate and change ways of organizing.

Reputational resources and capabilities: A firm’s ability to develop and leverage its reputation as a quality provider of goods/services, an attractive employer, and/or socially responsible corporate citizen.

 

PTS:   1                    DIF:    Difficulty: Moderate                                 REF:    p. 97

OBJ:   LO: 4-1          NAT:  BUSPROG: Analytic                                 KEY:   Bloom’s: Comprehension

 

3.   What is a value chain?

 

ANS:

A value chain is a series of activities used in the production of goods and services that make a product or service more valuable. A value chain indicates that most goods and services are produced through a chain of vertical activities from upstream to downstream. The value chain typically consists of two areas: primary and support activities. Each activity requires a number of resources and capabilities. Value chain analysis forces managers to examine a firm’s resources and capabilities at a very micro activity-based level. The key is to examine whether a firm has the resources and capabilities to perform a particular activity in a manner superior to competitors, a process known as benchmarking in SWOT analysis.

 

PTS:   1                    DIF:    Difficulty: Moderate                                 REF:    p. 99

OBJ:   LO: 4-2          NAT:  BUSPROG: Analytic                                 KEY:   Bloom’s: Comprehension

 

4.   Briefly explain outsourcing and its different types.

 

ANS:

Outsourcing is defined as turning over an organizational activity to an outside supplier that will perform the tasks on behalf of a focal firm. For example, many consumer products companies, which possess strong capabilities in upstream activities (such as design) and downstream activities (such as marketing), have outsourced manufacturing to suppliers in low-cost countries. Recently, services are now being outsourced, including tax return preparation, logistics, and human resources. For client firms, outsourcing results in “leaner and meaner” organizations, enabling the firms to better focus on their core competencies.

There are different types of outsourcing methods. Offshoring refers to outsourcing to an international/foreign firm. Onshoring refers to outsourcing to a domestic firm. Captive sourcing refers to setting up subsidiaries to perform in-house work in foreign locations. It is also known as foreign direct investment (FDI).

 

PTS:   1                    DIF:    Difficulty: Moderate                                 REF:    p. 101

OBJ:   LO: 4-3          NAT:  BUSPROG: Analytic                                 KEY:   Bloom’s: Comprehension

 

5.   Describe the VRIO framework.

 

ANS:

The VRIO framework focuses on the value (V), rarity (R), imitability (I), and organizational (O) aspects of resources and capabilities. Only value-adding resources can lead to competitive advantage, whereas non-value-adding capabilities may lead to competitive disadvantage. Valuable but common resources and capabilities will lead to competitive parity but not an advantage. Valuable and rare resources and capabilities have the potential to provide some temporary competitive advantage. Valuable and rare resources and capabilities can be a source of competitive advantage only if competitors have a difficult time imitating them. Valuable and rare, but imitable, resources and capabilities may give firms some temporary competitive advantage, leading to above-average performance for some period of time. However, such advantage is not likely to be sustainable. Overall, only valuable, rare, and hard-to-imitate capabilities that are organizationally embedded and exploited can possibly lead to sustained competitive advantage and persistently above-average performance.

 

PTS:   1                    DIF:    Difficulty: Challenging                   REF:   pp. 102-106

OBJ:   LO: 4-4          NAT:  BUSPROG: Reflective Thinking     KEY:  Bloom’s: Comprehension

 

6.   Articulate the benefits of offshoring.

 

ANS:

Outsourcing low-end manufacturing to countries such as China and Mexico is now widely practiced. But increased outsourcing of high-end services, particularly IT and other business process outsourcing (BPO) services, to countries such as India is controversial. Because digitization and commoditization of service work are enabled only by the very recent rise of the Internet and the reduction of international communication costs, it is debatable whether such offshoring proves to be a long-term benefit or hindrance to Western firms and economies. Proponents argue that offshoring creates enormous value for firms and economies. Western firms are able to tap into low-cost yet high-quality labor, translating into significant cost savings. Firms can also focus on their core capabilities, which may add more value than noncore (and often uncompetitive) activities. In turn, offshoring service providers, such as Infosys and Wipro, develop their core competencies in IT/BPO. While acknowledging that some US employees may regrettably lose their jobs, offshoring proponents suggest that, on balance, offshoring is a win-win solution for both US and Indian firms and economies. In other words, offshoring can be conceptualized as the latest incarnation of international trade (in tradable services), which theoretically will bring mutual gains to all involved countries.

 

PTS:   1                    DIF:    Difficulty: Moderate                                 REF:    pp. 107-108

OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic                                 KEY:   Bloom’s: Comprehension

 

7.   Illustrate with examples the difference between OEMs, ODMs, and OBMs.

 

ANS:

Student answer may vary.

 

In manufacturing, many Asian firms, which used to be original equipment manufacturers (OEMs) executing design blueprints provided by Western firms, now want to have a piece of the action in design by becoming original design manufacturers (ODMs). Having mastered low-cost and high-quality manufacturing, Asian firms such as BenQ, Compal, Flextronics, Hon Hai/Foxconn, and Huawei are indeed capable of capturing some design function from Western firms such as Dell, HP, Kodak, and Nokia. Therefore, increasing outsourcing of design work by Western firms may accelerate their own long-run demise. A number of Asian OEMs, now quickly becoming ODMs, have openly announced that their real ambition is to become original brand manufacturers (OBMs). For example, HTC has emerged as a hot new OBM whose “HTC” branded smartphones enjoy a higher smartphone market share in Apple’s homeland, the United States.

 

PTS:   1                    DIF:    Difficulty: Moderate                                 REF:    pp. 108-109

OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic                                 KEY:   Bloom’s: Comprehension

 

8.   Give an account of the political argument against outsourcing practiced by US firms.

 

ANS:

Student answer may vary.

 

The political argument follows many large US firms claim that they are global companies and, consequently, that they should neither represent nor be bound by American values any more. According to this view, all that these firms are interested in is the cheapest and most exploitable labor. Not only is work commoditized, people are degraded as tradable commodities that can be jettisoned. As a result, large firms that outsource work to emerging economies are often accused of being unethical, destroying jobs at home, ignoring corporate social responsibility, violating customer privacy, and in some cases undermining national security.

 

PTS:   1                    DIF:    Difficulty: Moderate                                  REF:    p. 109

OBJ:   LO: 4-5          NAT:  BUSPROG: Analytic                                 KEY:   Bloom’s: Comprehension

Chapter 7—Dealing with Foreign Exchange

 

TRUE/FALSE

 

1.   A foreign exchange rate refers to the price of buying and selling commodities for future delivery.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 68              OBJ:   LO: 7-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

2.   An appreciation is an increase in the value of the currency whereas a depreciation is a loss in the value of the currency.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 68              OBJ:   LO: 7-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

3.   Basic economic theory suggests that the price of a commodity is most fundamentally determined by its supply and demand.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 68              OBJ:   LO: 7-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

4.   The foreign exchange markets are influenced only by economic factors and free from the effect of social or political pressures.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 70              OBJ:   LO: 7-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

5.   The theory of purchasing power parity suggests that in the absence of trade barriers, the price for identical products sold in different countries will be different.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 70              OBJ:   LO: 7-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

6.   If one country’s interest rate is high relative to other countries, the country will attract foreign funds.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 72              OBJ:   LO: 7-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

7.   The rise of a country’s productivity is usually accompanied by increased demand for its home currency.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 72              OBJ:   LO: 7-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

8.   A country highly productive in manufacturing typically generates a merchandise trade deficit.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 72              OBJ:   LO: 7-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

9.   A country’s current account deficit can only be financed using its savings.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 73              OBJ:   LO: 7-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

10.                Governments adopting the floating exchange rate policy tend to set the exchange rate of a currency relative to other currencies.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 75              OBJ:   LO: 7-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

11.                Many countries with high inflation have pegged their currencies to the yuan in order to restrain domestic inflation.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 75              OBJ:   LO: 7-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

12.                Balance of payments and exchange rate policies usually determine long-run movements of a currency.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 75              OBJ:   LO: 7-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

13.                The effect of investors moving in the same direction at the same time leads to a bandwagon effect.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 76              OBJ:   LO: 7-1          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

14.                Under the gold standard, to be able to redeem its currency in gold at a fixed price, every central bank needed to maintain gold reserves.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 76              OBJ:   LO: 7-2          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

15.                The Bretton Woods system was centered on the British pound as the new common denominator.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 77              OBJ:   LO: 7-2          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

16.                The Bretton Woods system did not allow the United States to unilaterally change the exchange rate of the dollar.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 77              OBJ:   LO: 7-2          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

17.                The Bretton Woods system had been built on the condition that the US inflation rate had to be continuously high.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 77              OBJ:   LO: 7-2          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

18.                The International Monetary Fund offers free grants to countries depending on the stability and need of the borrower.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 78              OBJ:   LO: 7-2          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

19.                The foreign exchange market has no central physical location and is the largest and most active market in the world.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 80              OBJ:   LO: 7-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

20.                Forward transactions allow participants to buy and sell currencies now for future delivery.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 81              OBJ:   LO: 7-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

21.                Currency hedging is a popular way to minimize the foreign exchange risk inherent in all nonspot transactions.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 81              OBJ:   LO: 7-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

22.                Forward discount is a condition under which the forward rate of one currency relative to another currency is lower than the spot rate.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 81              OBJ:   LO: 7-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

23.                The primary participants of the foreign exchange market are IMF and World Bank.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 81              OBJ:   LO: 7-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

24.                Strategic hedging means spreading out activities in a number of countries in different currency zones to offset the currency losses in certain regions through gains in other regions.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 82              OBJ:   LO: 7-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

25.                Strategic hedging focuses on using forward contracts and swaps to contain currency risks.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 82              OBJ:   LO: 7-3          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

26.                Proponents of fixed exchange rates argue that fixed exchange rates impose monetary discipline by preventing governments from engaging in inflationary monetary policies.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 83              OBJ:   LO: 7-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

27.                Proponents of fixed exchange rates believe that market forces should take care of supply, demand, and price of any currency.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 83              OBJ:   LO: 7-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension

 

28.                A floating exchange rate allows each country to make its own monetary policy.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 83              OBJ:   LO: 7-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

29.                Floating exchange rates are less volatile than fixed rates.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 83              OBJ:   LO: 7-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

30.                The most extreme fixed rate policy is through a currency board.

 

ANS:  T                    PTS:   1                    DIF:    Difficulty: Easy

REF:   p. 83              OBJ:   LO: 7-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Knowledge

 

31.                In terms of international trade competitiveness, a strong dollar makes it easier for US firms to export and to compete on price when combating imports.

 

ANS:  F                    PTS:   1                    DIF:    Difficulty: Moderate

REF:   p. 84              OBJ:   LO: 7-4          NAT:  BUSPROG: Analytic

KEY:  Bloom’s: Comprehension