Chapter 13 The Strategy of International Business Answer Key
True / False Questions
1. A firm's strategy can be defined as the actions that managers take to attain the goals
of the firm.
TRUE
A firm's strategy can be defined as the actions that managers take to attain the goals
of the firm.
2. The preeminent strategic goal for most firms is to maximize the value of the firm for its
owners.
TRUE
A firm's strategy can be defined as the actions that managers take to attain the goals
of the firm. For most firms, the preeminent goal is to maximize the value of the firm for
its owners, its shareholders.
3. Profit growth is measured by the percentage increase in net profits over time.
TRUE
Profit growth is measured by the percentage increase in net profits over time. In
general, higher profitability and a higher rate of profit growth will increase the value of
an enterprise and thus the returns garnered by its owners, the shareholders.
4. The amount of value a firm creates is measured by the difference between its costs of
production and the price that it charges for its products.
FALSE
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.
5. The customer is able to garner the benefit of the consumer surplus because one firm is
competing with other firms for the customer's business, so the firm must charge a
lower price than it could if it were a monopoly supplier.
TRUE
The price a firm charges for a good or service is typically less than the value placed on
that good or service by the customer. This is because the customer captures some of
that value in the form of what economists call a consumer surplus. The customer is
able to do this because the firm is competing with other firms for the customer's
business, so the firm must charge a lower price than it could, were it a monopoly
supplier.