50 Question, Answer, Explanation PDF

Chapter 13 1. Which of the following is NOT one of the three basic decisions firms must make when contemplating foreign expansion? A. Which markets to enter B. When to enter those markets C. The desired market share D. On what scale to enter those markets The three key decisions firms need to make w...

Chapter 13 1. Which of the following is NOT one of the three basic decisions firms must make when contemplating foreign expansion? A. Which markets to enter B. When to enter those markets C. The desired market share D. On what scale to enter those markets The three key decisions firms need to make when expanding internationally: 1. Which markets to enter. 2. When to enter them. 3. Scale of entry 2. Which of the following is NOT a mode of entry for firms entering a foreign market? A. Subcontracting B. Licensing or franchising to host-country firms C. Creating a joint venture with a host-country firm D. Creating a wholly owned subsidiary in the host country Six primary modes for entering foreign markets: 1. Exporting 2. Licensing or franchising to host-country firms 3. Creating a joint venture with a host-country firm 4. Creating a wholly owned subsidiary in the host country 5. Acquiring an established enterprise in the host country 6. Strategic alliances 3. Which of the following is NOT a factor that determines the magnitude of advantages and disadvantages associated with each entry mode? A. Market saturation B. Trade barriers C. Political risks D. Economic risks Advantages and disadvantages of different entry modes: 1. Transportation costs. 2. Trade barriers. 3. Political risks. 4. Economic risks. 5. Business risks. 6. Costs. 7. Firm strategy. 4. What is the advantage of entering a foreign market early? A. Reduced risk of nationalization B. Ability to build up sales volume and gain a cost advantage over later entrants C. Lower risk of business failure D. Avoidance of pioneering costs First-mover advantages as a key benefit of entering a market early. 1. Ability to build up sales volume in that country and ride down the experience curve ahead of rivals and gain a cost advantage over later entrants. 2. Ability to preempt rivals and capture demand by establishing a strong brand name. 3. Ability to create switching costs that tie customers into their products or services. 5. What is the disadvantage of entering a foreign market on a large scale? A. Greater difficulty in building market share B. Increased exposure to risk C. Inability to learn about the foreign market D. Limited impact on the competitive playing field Entering foreign markets on a significant scale make a major strategic commitment that changes the competitive playing field. Involves decisions that have a long-term impact and are difficult to reverse. 6. What is the disadvantage of exporting as a mode of entry? A. Relatively high cost B. Foreign agents may not act in the exporter's best interest C. Lack of experience curve and location economies D. A high degree of control over manufacturing and marketing One of the disadvantages of exporting listed in the sources is that Foreign agents fail to act in the exporter’s best interest. This means that the third-party agents or distributors responsible for selling the exporter's products in the foreign market might prioritize their own profits or have conflicting interests, potentially hindering the exporter's success. 7. Which entry mode involves a contractor handling every detail of a project for a foreign client, including the training of operating personnel? A. Exporting B. Turnkey projects C. Licensing D. Franchising A contractor handles every detail of the project for a foreign client, including training of operating personnel. At the project's completion, the client receives a fully operational facility, essentially receiving a "key" to a ready-made business. 8. What is the disadvantage of licensing as an entry mode? A. High development costs and risks B. Difficulty in capitalizing on market opportunities C. Inability to realize location and experience curve economies D. Tight control over manufacturing, marketing, and strategy A disadvantage of licensing is that the firm "doesn’t have the tight control over manufacturing, marketing, and strategy necessary to realize experience curve and location economies”. Licensing, while offering the advantage of lower development costs and risks, limits a firm's control over operations, potentially preventing them from optimizing production efficiency and costs in the same way they could with a wholly owned subsidiary. 9. Which entry mode eliminates the costs and risks of opening a foreign market alone but may inhibit the firm's ability to take profits out of one country to support competitive attacks in another? A. Licensing B. Franchising C. Joint ventures D. Wholly owned subsidiaries Eliminates the costs and risks of opening a foreign market alone" but may "inhibit the firm's ability to take profits out of one country to support competitive attacks in another 10. Which of the following is an advantage of a wholly owned subsidiary as an entry mode? A. Shared costs and risks of opening a foreign market B. Reduced risk of losing control over core competencies C. Opportunity to benefit from a local partner's knowledge D. Minimized risk of nationalization. Wholly owned subsidiary, compared to other entry modes like joint ventures or licensing, reduces "the risk of losing control over core competencies". This is because the firm has complete ownership and therefore greater control over its technology, operations, and strategic decision-making, ensuring the protection of its competitive advantages. Chapter 14 1. What is a significant advantage of exporting for businesses? A) Reduced competition compared to the domestic market B) Access to a larger customer base in the international market C) Elimination of currency exchange risks D) Simplified logistics and supply chain management International market is a much larger market than the domestic market. Exporting allows businesses to expand their reach beyond their home country and tap into a wider pool of potential customers in the global marketplace. 2. Which of the following is NOT a common pitfall for exporters? A) Poor market analysis B) Lack of an effective distribution program C) Strong understanding of competitive conditions D) Problems securing financing "Poor understanding of competitive conditions" as a common pitfall for exporters. Therefore, a strong understanding of the competitive landscape is not a pitfall, but rather a crucial factor for successful exporting. 3. What is a common pitfall encountered by exporters? A) Inadequate understanding of the competitive landscape in foreign markets B) Thorough market research and analysis C) Effective product customization for target markets D) Robust distribution networks in export destinations Exporters need to thoroughly research and analyze the competitive environment in target markets to develop effective strategies. 4. What is a key characteristic of Germany and Japan's approach to exporting? A) Limited government support for export promotion B) Well-established institutional frameworks to encourage and facilitate exports C) Strict regulations that hinder export activities D) Lack of specialized trading companies to support exporters "Germany and Japan have extensive institutional structures for promoting exports." These structures, such as Japan's Ministry of International Trade and Industry (MITI) and sogo shosha (trading houses), provide support and resources to businesses engaged in exporting. 5. Where can U.S. firms find comprehensive information and resources to support their export endeavors? A) U.S. Department of Commerce B) Department of Defense C) Department of Education D) Department of Energy U.S. Department of Commerce as "the most comprehensive source of information for U.S. firms." It provides various services, including the U.S. and Foreign Commercial Service and International Trade Administration, to assist businesses in their export endeavors. 6. What is the primary function of an export management company (EMC)? A) Providing export credit insurance to mitigate financial risks B Issuing letters of credit to guarantee payment to exporters C) Managing all aspects of the export process for businesses D) Regulating export activities and enforcing compliance Export management companies (EMCs), as described in the chapter, "handle all aspects of exporting." This includes tasks such as market research, finding buyers, handling documentation, and arranging logistics. They act as intermediaries, simplifying the export process for businesses. 7. What challenge arises in export and import financing due to the lack of trust between the parties involved? A) Importers insisting on payment before shipment B) Exporters seek payment upfront while importers prefer to pay after receiving the goods C) Banks refusing to issue letters of credit for international transactions D) Exporters and importers agreeing on payment terms without involving banks "Exporters prefer to be paid in advance, while importers prefer to pay after shipment arrives." 8. What is the purpose of a letter of credit in international trade? A) To serve as an order for payment from the exporter to the importer B) To act as a receipt for the goods transported by the carrier C) To provide a guarantee of payment from the importer's bank to the exporter upon fulfilling specified conditions D) To ensure the exporter against potential losses due to non-payment A letter of credit is a document issued by the importer's bank that guarantees payment to the exporter upon presentation of specified documents, such as a bill of lading and commercial invoice. "Issued by a bank at the request of an importer stating the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents." 9. What distinguishes a sight draft from a time draft in export financing? A) A sight draft allows for a delayed payment, while a time draft requires immediate payment. B) A sight draft is payable upon presentation, whereas a time draft permits a specified period for payment. C) A sight draft represents a document of title for the goods, while a time draft serves as a payment order. D) A sight draft is used in countertrade transactions, while a time draft applies to traditional payment methods. A sight draft requires immediate payment by the importer when the draft is presented. "A sight draft is payable on presentation to the drawee." 10. What is the primary motivation for exporters to engage in countertrade? A) To facilitate trade when conventional means of payment are challenging or unavailable B) To obtain hard currency payments, which are generally preferred in international trade C) To bypass government regulations and trade barriers D) To maximize profit margins by receiving goods instead of cash payments Countertrade is a form of international trade where goods and services are exchanged for other goods and services instead of using money as payment. A range of barter-like agreements that facilitate the trade of goods and services for other goods and services when they cannot be traded for money. Exporters use countertrade when conventional means of payment are difficult, costly, or nonexistent. Chapter 15 1. What are the two central activities involved in value creation within the context of global production and supply chain management? A) Marketing and sales. B) Research and development. C) Production and supply chain management. D) Finance and accounting. Production: Activities involved in creating a product or service. Supply Chain Management: The procurement and physical transmission of material through the supply chain, from suppliers to customers 2. Which of the following is NOT a strategic objective of the production and logistics function? A) To lower costs B) To increase product quality C) To maximize employee satisfaction D) To accommodate demands for local responsiveness. Strategic objectives of the production and logistics function as: To lower costs. To increase product quality by eliminating defective products. To accommodate demands for local responsiveness. 3. What is the primary focus of Total Quality Management (TQM)? A) Reducing production costs through automation. B) Improving the quality of a company's products and services. C) Increasing production speed and efficiency. D) Minimizing the environmental impact of production processes. Total Quality Management (TQM) as: "A management philosophy with a central focus on the need to improve the quality of a company’s products and services." 4. What is the significance of 'location economies' in determining where to produce? A) They refer to the availability of skilled labor in a particular location. B) They represent cost advantages gained by locating production activities in optimal geographic locations. C) They indicate the proximity of production facilities to major transportation hubs. D) They signify the level of government support and incentives provided to businesses in a specific region. "Location economies" as a country factor to consider when deciding where to produce 5. What is meant by the term 'minimum efficient scale' in the context of production? A) The smallest production volume required to achieve profitability. B) The level of output at which most plant-level scale economies are exhausted. C) The minimum number of employees needed to operate a production facility efficiently. D) The lowest price point at which a product can be sold competitively. Minimum efficient scale as: "The level of output at which most plant-level scale economies are exhausted." 6. How does flexible manufacturing technology contribute to mass customization? A) By automating the entire production process, eliminating the need for human intervention. B) By enabling companies to produce large quantities of identical products at a low cost. C) By allowing companies to produce a wide variety of products at a unit cost that traditionally would require mass production of a standardized output. D) By using advanced robotics to assemble products with high precision and speed. Flexible manufacturing technology "enables firms to produce a wide variety of end products at a unit cost that traditionally would require mass production of a standardized output." This means that companies can produce custom products without incurring the high costs typically associated with small-scale production. 7. What is an 'offshore factory' in the context of global production? A) A production facility located in a coastal area to facilitate easy shipping. B) A factory located in a foreign country that is primarily used to produce goods for export back to the home country or other markets. C) A factory that specializes in the production of components or parts that are then assembled in other locations. D) A factory that is jointly owned and operated by two or more companies from different countries. Given the context of global production, an offshore factory is likely located in a foreign country to take advantage of factors like lower labor costs or proximity to raw materials. These factories mainly produce goods for export back to the company's home country or other international markets. 8. What are some potential hidden costs associated with establishing production facilities in foreign locations? A) Lower labor costs and access to raw materials. B) Favorable tax rates and government incentives. C) High employee turnover, shoddy workmanship, and low productivity. D) Reduced transportation costs and shorter lead times. Hidden costs of foreign locations: High employee turnover Shoddy workmanship Poor product quality Low productivity 9. Which of the following is NOT a core activity of global logistics? A) Product design and development. B) Global distribution center management. C) Inventory management. D) Transportation. The core activities of global logistics: Global distribution center management. Inventory management. Packaging and materials handling. Transportation. Reverse logistics. 10. What is the primary goal of 'reverse logistics'? A) To optimize the after-market activity or make it more efficient. B) To reduce transportation costs by using the most efficient shipping methods. C) To ensure that products are delivered to customers on time and in perfect condition. D) To minimize waste and environmental impact throughout the supply chain. Reverse logistics. Process of moving inventory from point of consumption to point of origin for the purpose of recapturing value or proper disposal. Ultimate goal is to optimize the after-market activity or make it more efficient. Chapter 16 1. What is the central role of the marketing mix in international business? A) To analyze market trends and predict future consumer behavior. B) To offer the best possible combination of product, distribution, communication, and price to a specific target market in a country or region. C) To manage the flow of goods and services from production to consumption. D) To develop and implement human resource strategies for a global workforce. "The best way to think about the marketing mix is that it represents the tactical activities and behaviors that are implemented by a global company based on its international marketing strategy to offer the best possible “mix” of product, distribution, communication, and price to a specific target market in a country or region." 2. According to Theodore Levitt, what trend in world markets might make it unnecessary to localize the marketing mix? A) Increasing cultural diversity among consumers. B) Rising trade barriers and protectionist policies. C) Growing similarities in consumer preferences across nations. D) A shift towards personalized and niche marketing strategies. "Theodore Levitt: world markets are becoming increasingly similar, making it unnecessary to localize the marketing mix." 3. Which of the following is NOT a typical basis for market segmentation? A) Geography B) Demography C) Sociocultural factors D) Product Life Cycle stage Geography, Demography, and Sociocultural factors as typical bases for market segmentation. 4. What type of analytics focuses on describing and summarizing past data to gain insights into historical performance? A) Predictive Analytics B) Prescriptive Analytics C) Descriptive Analytics C) Diagnostic Analytics Business analytics refers to the knowledge, skills, and technology used to analyze a company's international strategies and guide its future development and implementation. 5. What is the key distinction between primary data and secondary data in international market research? A) Primary data is collected firsthand for a specific research project, while secondary data is pre-existing information gathered for other purposes. B) Primary data is quantitative, while secondary data is qualitative. C) Primary data is more reliable and accurate than secondary data. D) Primary data is less expensive and time-consuming to collect than secondary data. "In market research, we talk about two forms of data that can be used: primary and secondary data." "If secondary data are available, such data are typically available as a less costly alternative to collecting primary data." 6. Which of the following factors can significantly influence product attributes in different countries? A) Culture and Levels of Economic Development B) Exchange rates and currency fluctuations C) Political stability and government regulations D) Technological advancements and innovation Consumer needs vary by country and that products sell well when their attributes match consumer needs. Consumers in highly developed countries tend to want products with more performance attributes, whereas consumers in less developed countries may prefer simpler products. 7. In the context of distribution strategy, what characterizes a 'fragmented' retail system? A) A few large retailers dominate the market. B) Online retailers have a significant market share. C) There are many retailers, none of which has a major share of the market. D) The distribution channels are short and direct. A fragmented retail system as one in which there are many retailers, but none of them have a significant market share. This contrasts with a concentrated retail system, in which a few retailers supply most of the market. 8. What is a 'push strategy' in international communication? A) A marketing approach that emphasizes personal selling and direct communication with potential customers. B) An advertising strategy that focuses on mass media channels to reach a wide audience. C) A digital marketing campaign that utilizes social media platforms to engage with consumers. D) A public relations effort to build a positive brand image and reputation. A push strategy in international communication emphasizes personal selling. This approach with a pull strategy, which emphasizes mass media advertising. 9. Which pricing strategy involves setting a low price worldwide to gain market share rapidly, even if it means initial losses? A) Predatory Pricing B) Multipoint Pricing C) Premium Pricing D) Experience Curve Pricing Experience curve pricing involves setting a low price for a product worldwide, even if this means taking a loss initially, in order to build global sales volume as quickly as possible. Companies using this strategy believe that they will be able to make substantial profits in the future after moving down the experience curve. 10. What is the purpose of 'antidumping regulations' in international trade? A) To protect domestic industries from unfair competition by foreign companies selling products below cost. B) To encourage free trade and reduce barriers to international commerce. C) To regulate the environmental impact of global production and supply chain activities. D) To promote ethical labor practices and fair wages for workers in developing countries. Antidumping regulations as rules that establish a lower limit on export prices. This limits the ability of companies to use strategic pricing to undercut domestic competitors. Chapter 17 1. What is the primary focus of Human Resource Management (HRM) in an international business context? A) Managing financial resources and investments across different countries. B) Developing and implementing marketing strategies for global markets. C) Effectively utilizing human resources in a globally diverse and complex environment. D) Negotiating and managing relationships with international suppliers and distributors. Human Resource Management (HRM) in an international business context is more complex than domestic HRM because of differences in labor markets, culture, legal systems, and economic systems across countries. 2. Which staffing approach prioritizes filling key management positions with parent-country nationals? A) Ethnocentric Approach B) Polycentric Approach C) Geocentric Approach D) Regiocentric Approach The ethnocentric approach to staffing prioritizes filling key management positions with parent-country nationals. One reason a firm might choose this approach is that it believes the host country lacks qualified individuals. 3. What is a potential drawback of the ethnocentric staffing approach? A) It can lead to cultural myopia, where managers fail to understand and adapt to the local culture. B) It is the most expensive staffing approach, as it involves relocating and compensating expatriate managers. C) It limits career opportunities for host-country nationals, potentially leading to resentment and demotivation. D) It makes it difficult to transfer core competencies and best practices from the parent company to foreign subsidiaries. The ethnocentric approach can lead to cultural myopia, which happens when managers fail to understand and adapt to the local culture. 4. Which staffing approach emphasizes hiring host-country nationals to manage local subsidiaries, while parent-country nationals hold positions at headquarters? A) Ethnocentric Approach B) Polycentric Approach C) Geocentric Approach D) Regiocentric Approach The polycentric approach emphasizes hiring host-country nationals to manage local subsidiaries, while parent-country nationals hold positions at headquarters. 5. What is a significant challenge associated with managing expatriate managers? A) High failure rates due to factors such as the inability of the manager or spouse to adjust to the foreign environment. B) Difficulty in finding qualified candidates willing to relocate to foreign countries. C) Language barriers that hinder communication and collaboration with local employees. D) Lack of cultural sensitivity and awareness among expatriate managers. A major issue with expatriate managers is expatriate failure, which is the premature return of an expatriate manager to the home country. For US and European multinational enterprises (MNEs), the main reason for expatriate failure is the inability of the spouse to adjust. 6. Which of the following is NOT a dimension identified by Mendenhall and Oddou as a predictor of expatriate success? A) Self-Orientation B) Others-Orientation C) Perceptual Ability D) Technical Expertise Mendenhall and Oddou identified four dimensions that predict expatriate success: Self-orientation, Others-orientation, Perceptual ability, and Cultural toughness. Technical Expertise is not one of the dimensions identified by Mendenhall and Oddou. 7. What is the key difference between training and management development? A) Training focuses on developing technical skills, while management development focuses on soft skills. B) Training prepares managers for a specific job, while management development aims to develop skills over their entire career. C) Training is typically provided to lower-level employees, while management development is reserved for senior managers. D) Training is a short-term activity, while management development is a long-term process. Training focuses on preparing the manager for a specific job, while management development focuses on developing the skills of the manager over their entire career with the firm. 8. What is the purpose of 'repatriation' in the context of expatriate management? A) To prepare and support expatriate managers for their return to their home country organization. B) To extend the duration of an expatriate assignment based on performance and business needs. C) To recruit and select suitable candidates for international assignments. D) To provide cross-cultural training and language instruction to expatriate managers. Repatriation in the context of expatriate management is the process of preparing and supporting expatriate managers for their return to their home country organization. This involves HRM planning for the employee's role in the home country and how to utilize the knowledge they acquired abroad. 9. Why is the 'balance sheet approach' widely used for expatriate pay? A) To ensure that expatriates receive the same salary as their counterparts in the host country. B) To simplify the compensation process and reduce administrative costs for the company. C) To equalize purchasing power across countries so that expatriates can maintain a comparable standard of living to their home country. D) To minimize tax liabilities for both the expatriate and the company. The balance sheet approach is the most common approach to expatriate pay. It equalizes purchasing power across countries so employees can have the same standard of living in the foreign country as they did at home. 10. What is a key concern of organized labor regarding multinational corporations? A) The potential for technology transfer and knowledge sharing between countries. B) The creation of new jobs and economic growth in developing countries. C) The ability of multinationals to move production to countries with lower labor costs, weakening union bargaining power. D) The standardization of employment practices and compensation systems across different cultures. The concerns of organized labor regarding multinational corporations: Multinationals can counter union bargaining power by threatening to move production to another country. Multinationals will keep highly skilled tasks in the home country and farm out only low-skilled tasks. Imported employment practices and contractual agreements will reduce union influence and power. The ability of multinationals to move production to countries with lower labor costs is a key concern of organized labor because it weakens their bargaining power. If a union tries to negotiate higher wages or better benefits, the multinational corporation can simply threaten to move production to a country where labor costs are lower. This gives the corporation a significant advantage in labor negotiations.