International Business Management test bank Chapter 12 PDF

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International Business, 7e (Griffin/Pustay) Chapter 12 Strategies for Analyzing and Entering Foreign Markets1) Which of the following is not one of the three steps in increasing market share, revenue, and profits? A) Assess alternative markets. B) Evaluate respective costs, benefits, and risks. C) P...

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International Business, 7e (Griffin/Pustay) Chapter 12 Strategies for Analyzing and Entering Foreign Markets 1) Which of the following is not one of the three steps in increasing market share, revenue, and profits? A) Assess alternative markets. B) Evaluate respective costs, benefits, and risks. C) Perform a situation analysis. D) Select market with most potential for entry or expansion. Answer: C Diff: 2 Skill: Concept Objective: 1 2) LVMH uses all of the following entry methods in its international operations except ________. A) acquiring small foreign firms B) entering licensing agreements C) establishing franchises D) exporting products Answer: C Diff: 2 Skill: Concept Objective: 1 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets 3) Executives at KBH Enterprises are considering the idea of entering the Taiwanese market through a licensing agreement. Which of the following factors is LEAST relevant to the firm's assessment of the Taiwanese market? A) current size of market B) potential size of market C) foreign exchange in market D) legal and political environment in market Answer: C Diff: 2 Skill: Application Objective: 1 4) What is the first step in selecting a foreign market? A) assessing market potential B) monitoring major markets C) evaluating host country's trade policies D) assessing general legal and political environments Answer: A Diff: 2 Skill: Concept Objective: 1

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5) Which of the following is not a critical factor in assessing new market opportunities? A) potential target markets B) success factors C) worldwide learning potential D) product-market differences Answer: C Diff: 2 Skill: Concept Objective: 1 6) Objective measures of the potential for growth in an economy include all of the following except ________. A) per capita GDP B) ownership of private automobiles C) energy consumption D) impact of changes in political regime Answer: D Diff: 2 Skill: Concept Objective: 1 7) Which of the following factors is not used to assess the competitive environment in a foreign market? A) the number of existing firms B) the size of existing firms C) current advertising strategies D) relative market shares Answer: C Diff: 2 Skill: Concept Objective: 1 8) ________ refer to expenses incurred by the firm as it enters a new foreign market. A) Indirect costs B) Direct costs C) Opportunity costs D) Variable costs Answer: B Diff: 1 Skill: Concept Objective: 1

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9) Gameware recently entered the German market. Gameware executives also wanted to enter the Canadian market but had to delay the entry because of limited resources. What type of costs will Gameware incur as a result of being unable to enter the Canadian market? A) indirect costs B) direct costs C) opportunity costs D) variable costs Answer: C Diff: 2 Skill: Application Objective: 1 10) Gameware recently entered the German market. Gameware incurred significant costs associated with setting up a business operation in Frankfurt, transferring managers to Germany, and shipping equipment to the German facility. Gameware's expenses are best described as ________. A) opportunity costs B) setup costs C) direct costs D) indirect costs Answer: C Diff: 2 Skill: Application Objective: 1 11) All of the following are potential benefits of entering a new market except ________. A) eliminating synergy with other operations B) lowering manufacturing costs C) limiting competitors' profits D) gaining new technology Answer: A Diff: 2 Skill: Concept Objective: 1 12) Which theory listed below is useful in deciding which mode of entry to use when entering foreign markets? A) ownership advantage theory B) internalization theory C) eclectic theory D) relative factor endowments Answer: C Diff: 2 Skill: Concept Objective: 2

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13) According to the eclectic theory, all of the following should be considered when choosing a mode of entry EXCEPT ________. A) ownership advantages B) location advantages C) financial control advantages D) internalization advantages Answer: C Diff: 2 Skill: Concept Objective: 2 14) The informational, political, and cultural disadvantages that foreign firms face when trying to compete against local firms in the host country market are referred to as ________. A) opportunity costs B) liability of foreignness C) internalization disadvantages D) the burden of internationalization Answer: B Diff: 1 Skill: Concept Objective: 2 15) Which of the following is not a mode of entry into foreign markets? A) exporting B) importing C) international licensing D) greenfield strategy Answer: B Diff: 1 Skill: Concept Objective: 2 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets 16) ________ are tangible or intangible resources owned by a firm which grant it a competitive advantage over its industry rivals. A) Ownership advantages B) Location advantages C) Internalization advantages D) Competitive advantages Answer: A Diff: 1 Skill: Concept Objective: 2

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17) ________ are those factors that affect the desirability of host country production relative to home country production. A) Ownership advantages B) Location advantages C) National competitive advantages D) Internalization advantages Answer: B Diff: 1 Skill: Concept Objective: 2 18) ________ are those that make it desirable for a firm to produce a good or service itself rather than contracting with another firm to produce it. A) Ownership advantages B) National competitive advantages C) Internalization advantages D) Resource availabilities Answer: C Diff: 1 Skill: Concept Objective: 2 19) Toyota's efficient manufacturing techniques and reputation for producing high-quality automobiles are examples of ________. A) location advantages B) ownership advantages C) internalization advantages D) internationalization advantages Answer: B Diff: 2 Skill: Application Objective: 2 20) Delvin Pharmaceuticals, a U.S. firm, is considering the idea of entering the Japanese market. Which entry mode will Delvin most likely use? A) exporting B) licensing C) turnkey D) franchising Answer: B Diff: 2 Skill: Application Objective: 2 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets

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21) ________ is the most common form of international business activity. A) Exporting B) Licensing C) Greenfield strategy D) Management contract Answer: A Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Discuss the roles of exporting, importing, and countertrade in international business 22) Which of the following is NOT a characteristic of exporting? A) high financial exposure B) gradual market entry C) logistical complexities D) local market knowledge Answer: A Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Discuss the roles of exporting, importing, and countertrade in international business 23) ________ are those that pull a firm into foreign markets as a result of opportunities available there. A) Reactive motivations B) Proactive motivations C) Opportunity motivations D) Avoidance motivations Answer: B Diff: 1 Skill: Concept Objective: 3 24) ________ for exporting are those that push a firm into foreign markets. A) Reactive motivations B) Proactive motivations C) Opportunity motivations D) Avoidance motivations Answer: A Diff: 1 Skill: Concept Objective: 3

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25) Which of the following is not a disadvantage of exporting? A) vulnerability to tariffs B) logistical complexities C) potential conflicts with distributors D) restrictions on foreign investment Answer: D Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets 26) Which mode of entry has the most potential to create a future competitor? A) licensing B) exporting C) turnkey project D) contract manufacturing Answer: A Diff: 2 Skill: Concept Objective: 4 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets 27) Which of the following is a characteristic of foreign direct investment? A) relatively low financial investment B) low exposure to political risk C) high profit potential D) simple management Answer: C Diff: 2 Skill: Concept Objective: 7 Learning Outcome: Explain the implications of foreign direct investment for both host and home country 28) Franklin Carpets engages in indirect exporting, so the firm sells its carpets to a(n)________. A) domestic customer who then sells the carpets to a foreign customer B) foreign customer who then sells the carpets to a domestic customer C) affiliated company located in a foreign country D) foreign customer through e-commerce Answer: A Diff: 2 Skill: Application Objective: 3 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets

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29) ________ occur(s) when a firm sells its products to a domestic customer, which in turn exports the product, in either its original form or a modified form. A) Indirect exporting B) Direct exporting C) Intercorporate transfers D) Intracorporate transfers Answer: A Diff: 2 Skill: Concept Objective: 3 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets 30) When Hewlett-Packard buys microchips from Intel to use in manufacturing computers and then exports the completed computers to Europe, ________ has occurred. A) indirect exporting of Intel's chips B) direct exporting of Intel's chips C) an intercorporate transfer of Intel's chips D) an intracorporate transfer of Intel's chips Answer: A Diff: 2 Skill: Application Objective: 3 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets 31) Which term refers to sales made to either distributors or end-users located outside the firm's home country? A) indirect exporting B) direct exporting C) intercorporate transfers D) intracorporate transfers Answer: B Diff: 1 Skill: Concept Objective: 3 32) Which term refers to the sale of goods by a firm in one country to an affiliated firm in another country? A) indirect exporting B) direct exporting C) intercorporate transfers D) intracorporate transfers Answer: D Diff: 1 Skill: Concept Objective: 3 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets 8 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

33) When British Petroleum ships crude oil from its storage facilities in Kuwait to its Australian subsidiary, ________ has occurred. A) indirect exporting B) direct exporting C) an intracorporate transfer D) an intercorporate transfer Answer: C Diff: 2 Skill: Application Objective: 3 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets 34) Which form of exporting is used by firms in order to lower their production costs? A) indirect exporting B) direct exporting C) intercorporate transfers D) intracorporate transfers Answer: D Diff: 2 Skill: Concept Objective: 3 35) Which of the following would most likely discourage an international firm from relying on exports as an entry mode? A) tariffs B) export promotion policies C) export financing programs D) home country subsidization Answer: A Diff: 2 Skill: Concept Objective: 3 36) What are the third parties that specialize in facilitating imports and exports called? A) intermediaries B) wholesalers C) exporters D) distributors Answer: A Diff: 2 Skill: Concept Objective: 3

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37) ________ offer services including export management companies, Webb-Pomerene associations, and international trading companies. A) Intermediaries B) Wholesalers C) Exporters D) Distributors Answer: A Diff: 2 Skill: Concept Objective: 3 38) A(n) ________ is a firm that acts as its client's export department. A) Webb-Pomerene association B) Greenfield organization C) export management company D) international trading company Answer: C Diff: 1 Skill: Concept Objective: 3 39) Tanya is employed by an export management company that provides its services to many exporters in the Chicago area. Tanya would LEAST likely be responsible for ________. A) shipping goods B) clearing customs C) creating strategic marketing plans D) giving advice about consumer needs Answer: C Diff: 2 Skill: Concept Objective: 3 40) When an export management company (EMC) acts as a commission agent for exporters, the EMC most likely ________. A) obtains long-term financing B) handles shipping responsibilities C) monitors currency exchange rates D) resells the goods to domestic distributors Answer: B Diff: 2 Skill: Concept Objective: 3

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41) A(n) ________ is a group of U.S. firms that operate within the same industry and are allowed by law to coordinate their export activities without fear of violating U.S. antitrust laws. A) Webb-Pomerene association B) Greenfield organization C) export management company D) international trading company Answer: A Diff: 1 Skill: Concept Objective: 3 42) Which of the following statements about Webb-Pomerene associations is most likely true? A) The number of Webb-Pomerene associations is growing due to globalization. B) Most Webb-Pomerene associations facilitate trade in the garment industry. C) Webb-Pomerene associations participate in marketing and promotion. D) Webb-Pomerene associations are unable to negotiate contracts. Answer: C Diff: 3 Skill: Concept Objective: 3 43) A(n) ________ is a firm directly engaged in importing and exporting a wide variety of goods for its own account. A) Webb-Pomerene association B) export management company C) international trading company D) management broker Answer: C Diff: 1 Skill: Concept Objective: 3 44) Unlike an export management company, an international trading company ________. A) offers customer financing B) facilitates customs documentation C) manages international transportation logistics D) participates in exporting and importing activities Answer: D Diff: 3 Skill: Concept Objective: 3

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45) Where are the world's most important international trading companies located? A) Germany B) Japan C) Canada D) China Answer: B Diff: 1 AACSB: Dynamics of the global economy Skill: Concept Objective: 3 46) A sogo sosha is best described as a(n) ________. A) export management company B) freight forwarder C) international trading company D) manufacturers' agent Answer: C Diff: 2 Skill: Concept Objective: 3 47) Which of the following best explains the success of the sogo shosha? A) access to information about global economic conditions B) ability to generate e-commerce profits and sales C) support from local and foreign governments D) acquisition of intellectual property rights Answer: A Diff: 3 AACSB: Dynamics of the global economy Skill: Concept Objective: 3 Learning Outcome: Discuss the roles of exporting, importing, and countertrade in international business 48) Which of the following solicits domestic orders for foreign manufacturers on a commission basis? A) manufacturers' agent B) export and import broker C) freight forwarder D) manufacturers' export agent Answer: A Diff: 1 Skill: Concept Objective: 3

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49) The ________ acts as a foreign sales department for domestic producers by selling those firms' goods in foreign markets. A) manufacturers' agent B) export and import broker C) freight forwarder D) manufacturers' export agent Answer: D Diff: 1 Skill: Concept Objective: 3 50) ________ can bring together international buyers and sellers of standardized commodities like coffee and grains. A) A manufacturers' agent B) An export and import broker C) A freight forwarder D) A sogo sosha Answer: B Diff: 1 Skill: Concept Objective: 3 51) BTV Enterprises specializes in the physical transportation of goods for its clients by arranging customs documentation and obtaining transportation services. BTV Enterprises is most likely a(n) ________. A) manufacturers' agent B) export and import broker C) freight forwarder D) manufacturers' export agent Answer: C Diff: 2 Skill: Application Objective: 3 52) The Mitsubishi Corporation is a firm that is directly engaged in importing and exporting a wide variety of goods for its own account and is a part of a keiretsu system. What type of export intermediary is it? A) export management company B) sogo sosha C) freight forwarder D) export and import broker Answer: B Diff: 2 Skill: Application Objective: 3 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets

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53) The Nintendo Company manufactures electronic video consoles and game cartridges. Nintendo provides game design firms with technical specifications for how Nintendo consoles function. The game design firms create the games and then pay Nintendo a fee to manufacture those games. What mode of entry is described in this example? A) exporting B) franchising C) licensing D) joint venture Answer: C Diff: 2 Skill: Application Objective: 4 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets 54) The firm that leases the right to use intellectual property is called the ________. A) leasor B) licensor C) licensee D) franchisee Answer: B Diff: 1 Skill: Concept Objective: 4 55) Which of the following is NOT an aspect of the licensing process? A) defining the agreement's boundaries B) establishing compensation rates C) creating a strategic marketing plan D) specifying the agreement's duration Answer: C Diff: 2 Skill: Concept Objective: 4 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets

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56) Executives at Smithson Soda, a U.S. firm, have decided to enter the Chinese market through a licensing agreement with a beverage manufacturer located in Shanghai. Which of the following statements, if true, most likely undermines this decision? A) Smithson Soda is low on capital due to a recent expansion of its domestic production plant. B) Smithson Soda successfully entered the European and Australian markets last year. C) Smithson Soda typically relies on freight forwarders to handle global shipments. D) Smithson Soda must protect its unique beverage formula to prevent duplication. Answer: D Diff: 3 AACSB: Reflective thinking skills Skill: Critical Thinking Objective: 4 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets 57) Executives at Smithson Soda, a U.S. firm, have decided to enter the Chinese market through a licensing agreement with a beverage manufacturer located in Shanghai. Which of the following statements, if true, best supports this decision? A) Smithson Soda recently sold one of its manufacturing facilities. B) Smithson Soda is unfamiliar with the needs of Chinese consumers. C) Smithson Soda uses an EMC to ship its products to a Chinese distributor. D) Smithson Soda belongs to a Webb-Pomerene association to gather market research. Answer: B Diff: 3 AACSB: Reflective thinking skills Skill: Critical Thinking Objective: 4 Learning Outcome: Summarize the main entry strategies and modes that businesses use to enter into foreign markets 58) Which term re...