BA 405: Chapter 7 (part 2) And Chapter
8 Latest Exam With 100% Correct
Answers 2025/2026 Version.
Cost Reduction - Answer Nike's decision to source the manufacture of athletic shoes from
Asian countries such as China, Vietnam, and Indonesia.
The decision of Volkswagen to locate a new auto production plant in Chattanooga, Tennessee,
to leverage the relatively low labor costs in the area as well as low shipping costs due to
Chattanooga's close proximity to both rail and river transportation.
These are examples of which of the 3 strategic advantages of optimizing the location of value-
chain activities?
Cost Reduction - Answer Such location decisions can affect the cost structure in terms of
local manpower and other resources, transportation and logistics, and government incentives
and the local tax structure. This relates to which of the 3 strategic advantages of optimizing the
location of value-chain activities?
Performance enhancement; cost-reduction - Answer [?] and [?] benefits parallel the
business-level strategies of differentiation and overall cost leadership. They can at times be
attained simultaneously.
Risk Reduction - Answer Given the erratic swings in the exchange ratios between the U.S.
dollar and the Japanese yen, an important basis for cost competition between Ford and Toyota
has been their relative ingenuity at managing currency risk. Which of the 3 strategic advantages
of optimizing the location of value-chain activities does this relate to?
Risk Reduction - Answer One way to manage currency risk has been to spread the high-cost
elements of manufacturing operations across a few select and carefully chosen locations around
the world. Location decisions such as these can affect the overall risk profile of the firm with
respect to currency, economic, and political risk. Which of the 3 strategic advantages of
optimizing the location of value-chain activities does this relate to?
learning opportunities - Answer By expanding into new markets, corporations expose
themselves to differing market demands, R&D capabilities, functional skills, organizational
processes, and managerial practices. This provides opportunities for managers to transfer the
knowledge that results from these exposures back to their home office and to other divisions in
the firm. Thus, expansion into new markets provides a range of [?]
, Learning opportunities - Answer L'Oreal acquired two U.S. firms that developed and sold hair
care products to African-American customers. L'Oreal gained knowledge on what is referred to
in the industry as "ethnic hair care." It then took this knowledge and built a new ethnic hair care
division in Europe and later began making inroads in African markets. This is an example of
which of the motivations for international expansion?
Learning opportunities - Answer More generally, research suggests that overseas expansion
leads to valuable learning at home. One study found that, rather than distracting the firm in its
efforts in its home market, overseas acquisitions led to substantial performance improvements,
an average of a 12 percent increase, in home markets. Which of the motivations for
international expansion does this relate to most?
Reverse innovation - Answer New products developed by developed-country multinational
firms for emerging markets that have adequate functionality at a low cost.
reverse innovation - Answer Exploring possibilities for [?] has become a major motivation for
international expansion. Many leading companies are discovering that developing products
specifically for emerging markets can pay off in a big way.
reverse innovation - Answer In the past, multinational companies typically developed
products for their rich home markets and then tried to sell them in developing countries with
minor adaptions. However, as growth slows in rich nations and demand grows rapidly in
developing countries such as India and China, this approach becomes increasingly inadequate.
This relates to what concept?
reverse innovation - Answer Companies like GE have committed significant resources to
developing products that meet the needs of developing nations, products that deliver adequate
functionality at a fraction of the cost. This process is referred to as [?], a new motivation for
international expansion.
Reverse innovation - Answer [?] becomes increasingly important because customers and
governments in high-income countries are trying to reduce healthcare costs. Facing significant
demographic changes such as an aging population and longer lifespans, high-income countries
may be able to benefit tremendously from adopting process innovations invented in the
healthcare delivery sector of emerging markets. What concept related to motivations for
international expansion does this relate to?
rating systems - Answer To help companies assess the risk of entering foreign markets, [?]
have been developed to evaluate political and economic, as well as financial and credit risk.
political risk - Answer potential threat to a firm's operations in a country due to
ineffectiveness of the domestic political system.
8 Latest Exam With 100% Correct
Answers 2025/2026 Version.
Cost Reduction - Answer Nike's decision to source the manufacture of athletic shoes from
Asian countries such as China, Vietnam, and Indonesia.
The decision of Volkswagen to locate a new auto production plant in Chattanooga, Tennessee,
to leverage the relatively low labor costs in the area as well as low shipping costs due to
Chattanooga's close proximity to both rail and river transportation.
These are examples of which of the 3 strategic advantages of optimizing the location of value-
chain activities?
Cost Reduction - Answer Such location decisions can affect the cost structure in terms of
local manpower and other resources, transportation and logistics, and government incentives
and the local tax structure. This relates to which of the 3 strategic advantages of optimizing the
location of value-chain activities?
Performance enhancement; cost-reduction - Answer [?] and [?] benefits parallel the
business-level strategies of differentiation and overall cost leadership. They can at times be
attained simultaneously.
Risk Reduction - Answer Given the erratic swings in the exchange ratios between the U.S.
dollar and the Japanese yen, an important basis for cost competition between Ford and Toyota
has been their relative ingenuity at managing currency risk. Which of the 3 strategic advantages
of optimizing the location of value-chain activities does this relate to?
Risk Reduction - Answer One way to manage currency risk has been to spread the high-cost
elements of manufacturing operations across a few select and carefully chosen locations around
the world. Location decisions such as these can affect the overall risk profile of the firm with
respect to currency, economic, and political risk. Which of the 3 strategic advantages of
optimizing the location of value-chain activities does this relate to?
learning opportunities - Answer By expanding into new markets, corporations expose
themselves to differing market demands, R&D capabilities, functional skills, organizational
processes, and managerial practices. This provides opportunities for managers to transfer the
knowledge that results from these exposures back to their home office and to other divisions in
the firm. Thus, expansion into new markets provides a range of [?]
, Learning opportunities - Answer L'Oreal acquired two U.S. firms that developed and sold hair
care products to African-American customers. L'Oreal gained knowledge on what is referred to
in the industry as "ethnic hair care." It then took this knowledge and built a new ethnic hair care
division in Europe and later began making inroads in African markets. This is an example of
which of the motivations for international expansion?
Learning opportunities - Answer More generally, research suggests that overseas expansion
leads to valuable learning at home. One study found that, rather than distracting the firm in its
efforts in its home market, overseas acquisitions led to substantial performance improvements,
an average of a 12 percent increase, in home markets. Which of the motivations for
international expansion does this relate to most?
Reverse innovation - Answer New products developed by developed-country multinational
firms for emerging markets that have adequate functionality at a low cost.
reverse innovation - Answer Exploring possibilities for [?] has become a major motivation for
international expansion. Many leading companies are discovering that developing products
specifically for emerging markets can pay off in a big way.
reverse innovation - Answer In the past, multinational companies typically developed
products for their rich home markets and then tried to sell them in developing countries with
minor adaptions. However, as growth slows in rich nations and demand grows rapidly in
developing countries such as India and China, this approach becomes increasingly inadequate.
This relates to what concept?
reverse innovation - Answer Companies like GE have committed significant resources to
developing products that meet the needs of developing nations, products that deliver adequate
functionality at a fraction of the cost. This process is referred to as [?], a new motivation for
international expansion.
Reverse innovation - Answer [?] becomes increasingly important because customers and
governments in high-income countries are trying to reduce healthcare costs. Facing significant
demographic changes such as an aging population and longer lifespans, high-income countries
may be able to benefit tremendously from adopting process innovations invented in the
healthcare delivery sector of emerging markets. What concept related to motivations for
international expansion does this relate to?
rating systems - Answer To help companies assess the risk of entering foreign markets, [?]
have been developed to evaluate political and economic, as well as financial and credit risk.
political risk - Answer potential threat to a firm's operations in a country due to
ineffectiveness of the domestic political system.
