21. A firm\'s ability to increase its profitability and profit growth by expandi

Question

21. A firm's ability to increase its profitability and profit growth by expanding globally is constrained:

A. by the imperative of localization.

B. by the economies of scale.

C. due to customer surplus.

D. due to the leveraging of skills developed in foreign operations.

E. due to the dispersion of individual value creation activities.

22. Serving a global market from a single location is consistent with:

A. establishing a high-cost position.

B. taking advantage of location economies.

C. moving down the experience curve.

D. operating from a position which falls inside the efficiency frontier.

E. going up the global web.

Explanation / Answer

21. Ans: by the imperative of localization.

Explanation: A firm's ability to increase its profitability and profit growth by expanding globally is constrained by the need to customize its product offering, marketing strategy, and business strategy to differing national conditions; that is, by the imperative of localization.

22. Ans: moving down the experience curve

Explanation: Serving a global market from a single location is consistent with moving down the experience curve and establishing a low-cost position. Moving down the experience curve allows a firm to reduce its cost of creating value.

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