Chapter 2 Multiple Choice Questions

. Strategic fit can be defined as:

developing strategies based on opportunities and threats in the external environment.

forecasting opportunities and threats in the external environment.

reacting to strategic opportunities and threats in the external environment.

matching the resources and activities of a firm to the external environment.

. PEST analysis is:

a broad framework to help managers understand the environment in which their business operates.

a checklist to ask how political, economic, strategic or technological developments can influence an industry and a company.

a checklist for forecasting political, economic, strategic or technological factors.

a framework for strategic analysis of internal and external environment.

. Which of the following is NOT an example of a political risk?

Government regulations

Cost of production

War

Civil unrest

. Multinational firms engaged in corruption:

are normally more successful than those that are not engaged in corruption.

are likely to become less innovative.

can expand faster in global markets.

Are always small- and medium-sized enterprises.

. Technology scanning refers to:

strategies of multinational firms based on technologies.

locating a firm's research centres in countries or regions where relevant cutting-edge research is pursued.

a framework for strategic planning in the knowledge economy.

the process of identifying technologies in the external business environment.

. Michael Porter has argued that:

the logic of old economy strategies remains the same for internet-based companies.

the internet did not bring new types of products/services or large efficiency gains.

the internet does not matter to global competition.

the internet does not help to improve company operations.

. The Diamond Model assumes that:

Multinational firms must develop global strategies based only on home demand conditions.

Multinational firms must pay less attention to global consumers than domestic consumers.

The national home base of a firm must be the biggest market for a multinational firm.

The national home base of a firm plays a key role in shaping that firm's competitive advantage in global markets.

. The Diamond Model suggests that four factors determine a firm's competitive advantage:

1) home demand conditions; 2) home supply conditions; 3) firm strategy and structure; 4) supporting industries.

1) home demand and factor conditions; 2) firm strategy, structure and rivalry; 3) related industries; 4) supporting industries.

1) home demand conditions; 2) home factor conditions; 3) firm strategy, structure and rivalry; 4) related and supporting industries.

1) home demand conditions; 2) home supply; 3) firm strategy; 4) related and supporting industries.

. The idea of a Double Diamond suggests that managers of a multinational firm based in a small country should:

no longer pay attention to home demand and factor conditions.

develop corporate strategies around global products and services targeted at niche markets.

assess the conditions of competitiveness in both their home country and the large neighbouring country when developing corporate strategies.

move their corporate headquarters from their home country to the large neighbouring country.

. What is the importance of globalization for multinational firms?

Home demand, home factor conditions and domestic rivalry are no longer important to multinational firms.

A multinational firm can gain a competitive advantage in a foreign country.

The home base is no longer important to multinational firms.

Regions are no longer important in global competition.

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