BM 376-001 Global Trade
International entrepreneurship
A combination of innovative, proactive, and risk-seeking behavior that crosses national borders and is intended to create wealth in organizations.
Awareness-motivation-capability (AMC) framework
A competitive dynamics framework that suggests that a competitor will not respond to an action unless it is aware of the action, motivated to react, and capable of responding.
Letter of credit (L/C)
A financial contract that states that the importer's bank will pay a specific sum of money to the exporter upon delivery of the merchandise.
Price leader
A firm that has a dominant market share and sets "acceptable" prices and margins in the industry.
Export intermediary
A firm that performs an important middleman function by linking domestic sellers and foreign buyers that otherwise would not have been connected.
Small and medium-sized enterprise (SME)
A firm with fewer than 500 employees in the United States or with fewer than 250 employees in the European Union (other countries may have different definitions).
Linkage, leverage, and learning (LLL) advantages
A firm's quest of linkage (L) advantages, leverage (L) advantages, and learning (L) advantages. These advantages are typically associated with multinationals from emerging economies.
Business model
A firm's way of doing business and creating and capturing value.
Entry mode
A form of operation that a firm employs to enter foreign markets.
Entrepreneur
A founder and/or owner of a new business or a manager of an existing firm, who identifies and exploits new opportunities.
Nonequity mode
A mode of entry (exports and contractual agreements) that tends to reflect relatively smaller commitments to overseas markets.
Stage model
A model of internationalization that portrays the slow step-by-step (stage-by-stage) process a firm must go through to internationalize its business.
Joint venture (JV)
A new corporate entity created and jointly owned by two or more parent companies.
Build-operate-transfer (BOT) agreement
A nonequity mode of entry used to build a longer-term presence by building and then operating a facility for a period of time before transferring operations to a domestic agency or firm.
Microfinance
A practice to provide micro loans ($50-$300) used to start small businesses with the intention of ultimately lifting the entrepreneurs out of poverty.
Counterattack
A set of actions in response to attack.
Born global firm or International new venture
A start-up company that attempts to do business abroad from inception.
Wholly owned subsidiary (WOS)
A subsidiary located in a foreign country that is entirely owned by the parent multinational.
Game theory
A theory that studies the interactions between two parties that compete and/or cooperate with each other.
Market power
Ability to raise prices without the fear of losing customers.
Competitive dynamics
Actions and responses undertaken by competing firms.
Predatory pricing
An attempt to monopolize a market by setting prices below cost and intending to raise prices to cover losses in the long run after eliminating rivals.
Serial entrepreneur
An entrepreneur who starts, grows, and sells several businesses throughout a career.
Dumping
An exporter selling goods below cost.
Reciprocity
An informal agreement based on mutual exchange of gratifications.
Attack
An initial set of actions to gain competitive advantage.
Venture capitalist (VC)
An investor who provides risk capital for early-stage ventures.
Cartel (trust)
An output-fixing and price-fixing entity involving multiple competitors.
Research and development (R&D) contract
An outsourcing agreement in R&D between firms.
Pivot
Being adaptive and flexible in a creative revision process to reach entrepreneurial goals.
First-mover advantage
Benefits that accrue to firms that enter the market first and that late entrants do not enjoy.
Late-mover advantage
Benefits that accrue to firms that enter the market later and that early entrants do not enjoy.
Greenfield operation
Building factories and offices from scratch (on a proverbial piece of "greenfield" formerly used for agricultural purposes).
Collusion
Collective attempts between competing firms to reduce competition.
Sphere of influence
Dominance acknowledged by competitors.
Co-marketing
Efforts among a number of firms to jointly market their products and services.
Crowdfunding
Efforts by entrepreneurial individuals and groups to fund their ventures by drawing on relatively small contributions from a large number of individuals without standard financial intermediaries.
A letter of credit increases transaction costs by increasing transaction risks. T/F
False
According to the stage model, firms will enter culturally distant countries for their first internationalization. T/F
False
An industry with heterogeneous products, in which rivals are forced to compete on price, is likely to lead to collusion T/F
False
An industry with many competitors offers an environment conducive to collusion. T/F
False
Blue ocean strategy focuses on attacking core markets defended by rivals. T/F
False
Developing new markets where there is less competition is a method used by competitors to signal their intention to other competitors to reduce competitive intensity. T/F
False
Direct exports are the sale of products made through export intermediaries. T/F
False
FDI as an entry mode for entrepreneurs can be costly, but is simple to undertake. T/F
False
Foreign direct investment is the only way in which SMEs can enter foreign markets. T/F
False
From an institution-based view, imitability affects a firm's ability to enter a foreign market. T/F
False
Globally, SMEs make up the smallest number of firms. T/F
False
In general, governments in developed economies impose more procedures to start a company than those in poorer countries. T/F
False
Indirect exports are the most basic mode of entry, capitalizing on economies of scale in production concentrated in the home country. T/F
False
Licensing and franchising are examples of equity modes of entry T/F
False
Local responsiveness makes local customers and governments happy and helps decrease costs. T/F
False
Making a rival aware of an attack makes it easier for the attacker to achieve its objective. T/F
False
The resource-based view of entrepreneurship believes the success or failure of entrepreneurial firms lies in how well those firms take advantage of formal and informal institutional resources. T/F
False
Gig economy
Finding short-term online or onsite service jobs (such as driving, translations, or baby-sitting).
Franchising
Firm A's agreement to give Firm B the rights to use A's proprietary assets for a royalty fee paid to A by B. This is typically done in service industries.
Explicit collusion
Firms directly negotiate output and pricing and divide markets.
Multimarket competition
Firms engage the same rivals in multiple markets.
Tacit collusion
Firms indirectly coordinate actions by signaling their intention to reduce output and maintain pricing above competitive levels.
Coordination
Formal or informal cooperation among competitors.
Antitrust policy
Government policy designed to combat monopolies and cartels.
Competition policy
Government policy governing the rules of the game in competition.
Prisoner's dilemma
In game theory, a type of game in which the outcome depends on two parties deciding whether to cooperate or to defect.
Social entrepreneurship
Innovative, proactive, and risk-seeking entrepreneurial behavior that endeavors to meet social goals that benefit people and the society
Institutional void
Institutional conditions of a country lacking market-supporting infrastructure.
Antitrust law
Law that makes cartels (trusts) illegal.
Antidumping law
Law that makes it illegal for an exporter to sell goods below cost abroad with the intent to raise prices after eliminating local rivals.
Sharing economy
Making available to others part of one's own goods and services (such as renting out a room in one's apartment).
Equity mode
Mode of entry (JV and WOS) that indicates a relatively larger, harder-to-reverse commitment.
Mutual forbearance
Multimarket firms respect their rivals' spheres of influence in certain markets and their rivals reciprocate, leading to tacit collusion.
Collusive price setting
Price setting by monopolists or collusion parties at a level higher than the competitive level.
Turnkey project
Project in which clients pay contractors to design and construct new facilities and train personnel.
Cross-market retaliation
Retaliatory attacks on a competitor's other markets if this competitor attacks a firm's original market.
Blue ocean strategy
Strategy that focuses on developing new markets ("blue ocean") and avoids attacking core markets defended by rivals, which is likely to result in a bloody price war ("red ocean").
Capacity to punish
Sufficient resources possessed by a price leader to deter and combat defection.
Scale of entry
The amount of resources committed to entering a foreign market.
Location-specific advantage
The benefits a firm reaps from the features specific to a place.
Resource similarity
The extent to which a given competitor possesses strategic endowments comparable, in terms of both type and amount, to those of the focal firm.
Entrepreneurship
The identification and exploitation of previously unexplored opportunities.
Market commonality
The overlap between two rivals' markets.
Concentration ratio
The percentage of total industry sales accounted for by the top four firms.
Country-of-origin effect
The positive or negative perception of firms and products from a certain country.
Competitor analysis
The process of anticipating rivals' actions in order to both revise a firm's plan and prepare to deal with rivals' response.
Direct export
The sale of products made by firms in their home country to customers in other countries.
Indirect export
The sale of products made by firms in their home country to customers in other countries.
Antitrust policies aim to balance efficiency and fairness in trade. T/F
True
Combining resource similarity and market commonality helps yield a framework of competitor analysis for any pair of rivals T/F
True
Competitive dynamics are the actions and responses undertaken by competing firms. T/F
True
During the first stage of alliance formation, a firm decides whether growth can be achieved strictly through market transactions, acquisitions, or alliances. T/F
True
Elon Musk has founded Tesla, SpaceX, PayPal, and the Boring Company to name a few. Musk is an example of a serial entrepreneur. T/F
True
Foreign acquisitions are an example of an FDI entry into foreign markets. T/F
True
In order to win a predation case in the US, "an attempt to monopolize" must be proved against the accused. T/F
True
Industry demand that facilitates a pool of specialized suppliers and buyers is an example of a location-specific advantage. T/F
True
It is important that the entry mode into a foreign market match the strategic goals of the company. T/F
True
Microfinance emerged in response to the lack of financing for entrepreneurial opportunities in many developing countries. T/F
True
One way a company can gain a competitive advantage is by undertaking a marketing campaign. T/F
True
The antitrust policies in the United States make it difficult for incumbents to raise entry barriers for new entrants. T/F
True
The cost of doing business abroad has declined in recent years, making it easier for entrepreneurs to think globally when it comes to launching their business. T/F
True
The price leader in a market possesses the capacity to punish. T/F
True
The scale of entry refers to the amount of resources committed to entering a foreign market. T/F
True
In the European Union, small and medium-sized enterprises (SMEs) are defined as firms with less than _____. a. 250 employees b. 750 employees c. 1000 employees d. 500 employees
a. 250 employees
In the United States, small- and medium-sized enterprises (SMEs) are defined as firms with less than _____. a. 500 employees b. 250 employees c. 20 employees d. 1000 employees
a. 500 employees
Which statement about dumping is correct? a. An exporter sells below cost abroad but then plans to raise them once the local competition has been eliminated. b. An exporter sells below cost abroad and plans to keep prices low regardless of the local competition. c. An exporter colludes with local companies to set prices higher than competitive level. d. An exporter plans to raise prices after eliminating local competition.
a. An exporter sells below cost abroad but then plans to raise them once the local competition has been eliminated.
Which of the following is a nonequity mode of entry used to build a longer-term presence by building and then operating a facility for a period of time before transferring operations to a domestic agency or firm? a. BOT agreement b. JV c. WOS d. R&D contract
a. BOT agreement
Which of the following nations has the highest level of informal investment, as a percentage of GDP, in the world? a. China b. Sweden c. Japan d. Greece
a. China
If a country's competition and antitrust policies are "proincumbent" and "proproducer," which of the following is a likely outcome? a. Domestic consumers will most likely pay higher prices. b. The country will be subject to heavy trade embargoes from other countries. c. There will be few competitors in each market segment. d. There will be many international competitors in each market segment.
a. Domestic consumers will most likely pay higher prices.
Which is the best-case scenario for an equity-based alliance? a. High tacitness and high importance to direct organizational monitoring and control. b. Low potential as real options and low influence of formal institutions. c. High tacitness and low influence of formal institutions. d. Low tacitness and high importance to direct organizational monitoring and control.
a. High tacitness and high importance to direct organizational monitoring and control.
Which of the following is the fundamental component required for an entrepreneurial mindset? a. Innovation b. Leadership c. Financing d. Firm size
a. Innovation
Which of the following industrial characteristics makes a collusion difficult but leads to competition? a. Lack of market commonality b. Existence of few firms in the industry c. Existence of an industry price leader d. High barriers of entry
a. Lack of market commonality
Which of the following is an advantage shared by both greenfield operations and acquisitions? a. Protection of know-how b. Fast entry speed c. Add new capacity to industry d. Low development costs
a. Protection of know-how
Which of the following is true of indirect exports? a. They export through domestically based export intermediaries. b. They typically provoke protectionism, potentially triggering antidumping actions. c. They treat foreign demand as an extension of domestic demand. d. They do not enjoy the economies of scale similar to direct exports.
a. They export through domestically based export intermediaries.
Why would firms in a multimarket competitive situation want to avoid engaging in cross-market retaliation? a. They might discover that a price war may be too costly for all involved. b. They might draw the scrutiny of government regulators who may impose industry restrictions. c. They might fear getting caught in illegal activity. d. They might lose employees to their competitors.
a. They might discover that a price war may be too costly for all involved.
Assume that a firm is looking to expand into a foreign market, but it needs an opportunity that has low development costs and little risk. What would the best option be? a. a contractual agreement b. a wholly owned subsidiary c. a greenfield project d. a partially owned subsidiary
a. a contractual agreement
What is the stage model of internationalization? a. a slow step-by-step process a SME must go through to internationalize their business. b. a way for SMEs to reach overseas customers by licensing c. a way for SMEs to reach overseas customers through alliances d. a way for SMEs to reach overseas customers by FDI
a. a slow step-by-step process a SME must go through to internationalize their business.
Efficiency-seeking firms go to countries that have _____. a. economies of scale and abundance of low-cost factors b. a strong demand for their products and services c. world-class innovations (innovative individuals, firms, and universities) d. an abundance of natural resources and related transport and communication infrastructure
a. economies of scale and abundance of low-cost factors
Creating a wholly owned subsidiary as a means of entering a foreign market is an example of which type of entry mode? a. equity mode b. direct export c. non equity d. strategic alliance
a. equity mode
According to the text, Walmart's failure in India could be attributed to which of the following factors? a. failure to understand the rules of the game b. failure to find employees c. failure to match its market entry and geographic diversification with existing strategic goals d. failure to access the capital needed to expand in India
a. failure to understand the rules of the game
Which of the following strategies can a firm utilize to enter a foreign market? a. franchising, direct exporting, and FDI b. FDI, direct exporting, and becoming a supplier of foreign firms c. FDI, franchising, and becoming a supplier of foreign firms d. franchising, FDI, and indirect exporting
a. franchising, direct exporting, and FDI
A disadvantage of acquisitions is _____. a. high development costs b. the inability to coordinate globally c. the slow entry speed d. the inability to add new capacity to industry
a. high development costs
Some MNEs in emerging economies are using the LLL framework to challenge the conventional wisdom on international growth. What elements comprise the LLL framework? a. linkage, leverage, and learning b. linkage, location, and labor c. linkage, leverage, and logistics d. leverage, location, and logistics
a. linkage, leverage, and learning
Miami is ideal for both North American firms looking to expand their businesses to Central and South America and for Latin American companies to grow their businesses to North America. What concept does this best describe? a. location-specific advantage b. regulation advantage c. timing advantage d. efficiency advantage
a. location-specific advantage
Some people believe that anything made in a certain country is poorly made and therefore not worth much money. This bias may have a negative impact on those firms when they attempt to sell well-made, quality, valuable products in foreign markets. What would these firms be facing in this situation? a. location-specific advantage b. suffering from the liability of foreignness c. encountering trade barriers d. nonequity mode of entering a foreign marke
a. location-specific advantage b. suffering from the liability of foreignness
According to the AMC framework, what prompts a competitor to launch a counterattack? a. motivation, awareness, and capabilities b. motivation, capabilities, and capital c. awareness, resources, and capabilities d. motivation, market access, and awareness
a. motivation, awareness, and capabilities
What is an effective method for growing strong informal institutional norms that an entrepreneur can engage in to promote entrepreneurship? a. provide seed money as angel investors for new ventures b. make political contributions to politicians who support entrepreneurship c. pay higher business tax rates d. push for entrepreneur-friendly rules governing new firms
a. provide seed money as angel investors for new ventures
People tend to associate entrepreneurship with what type of business? a. small and medium size enterprises (SMEs) b. partnerships c. large firms d. sole proprietorships
a. small and medium size enterprises (SMEs)
What does a firm need to be successful in managing market dynamics? a. strong skills in competitor analysis b. use warlike language to show you are a serious competitor c. adequate capabilities d. ability to ignore the "rules of the game"
a. strong skills in competitor analysis
What is entrepreneurship? a. the identification and exploitation of previously unexplored opportunities b. ownership of a business that has fewer than 25 employees c. the identification and exploitation of existing opportunities d. ownership of a business that is less than one year old
a. the identification and exploitation of previously unexplored opportunities
Why do companies "dump" products in foreign markets? a. to gain market share and establish the brand. b. to gain trust in the marketplace. c. to drive up demand in the domestic market. d. because they know it is difficult to prove.
a. to gain market share and establish the brand.
Firms can create value when engaging rivals in all of the following ways EXCEPT for which approach? a. undertaking advertising campaigns that highlight the inferiority of rivals' products b. securing patents on key products c. launching products in multiple markets d. holding a dominant position in key markets
a. undertaking advertising campaigns that highlight the inferiority of rivals' products
According to the text, entrepreneurs who perform the best tend to possess what resources? a. unique knowledge and deep insights about opportunities b. a diverse product portfolio and good leadership c. strong formal institutional support and imitable resources d. access to capital and a strong network
a. unique knowledge and deep insights about opportunities
Mapping along the two dimensions of resource similarity and market commonality can help managers to do what? a. Surprise their rivals with stealth attacks b. Allocate resources in proportion to the degree of threat presented c. Develop points of market sustainability d. Understand the formal institutions that govern competitive dynamics
b. Allocate resources in proportion to the degree of threat presented
________ is the difference between two cultures along identifiable dimensions. a. Culture shock b. Cultural distance c. Reverse culture shock d. Cultural cringe
b. Cultural distance
Which of the following is one of the methods by which entrepreneurial firms internationalize by entering foreign markets? a. Indirect exports b. Franchising c. Harvest and exit d. Microfinancing
b. Franchising
Which combination of resource similarity and market commonality results in the most intense competition? a. High resource similarity, high market commonality b. High resource similarity, low market commonality c. Low resource similarity, high market commonality d. Low resource similarity, low market commonality
b. High resource similarity, low market commonality
Which of the following is a disadvantage of licensing and franchising? a. High risk in overseas expansion b. Little control over marketing c. High development costs d. Creation of a monopoly
b. Little control over marketing
How can managers offset the liability of foreignness? a. by understanding the rules of the game b. by developing overwhelming capabilities c. by matching market entry and geographic diversification to the firm's strategic goals d. by eliminating all local competition
b. by developing overwhelming capabilities
What is price setting by a monopolist at a level higher than the competitive price level called? a. predatory pricing b. collusive price setting c. fair pricing d. dumping
b. collusive price setting
The process of anticipating rivals' actions in order to both revise a firm's plan and prepare to deal with rivals' response is called _____. a. multimarket competition b. competitor analysis c. prisoners' dilemma d. mutual forbearance
b. competitor analysis
Pre-acquisition analysis often focuses on strategic fit, which is the effective matching of ______ strategic capabilities. a. competitive b. complementary c. rational d. Collaborative
b. complementary
What is a benefit of being a late mover into a foreign market? a. proprietary, technological leadership b. first mover's difficulty to adapt to market changes c. relationships with key stakeholders such as governments d. pre-emption of scarce resources
b. first mover's difficulty to adapt to market changes
What is meant by the term "born global"? a. firms that are established only in the foreign markets but not in the home markets b. start-up firms that attempt to do business abroad from inception c. firms having a good global reputation d. firms getting listed on a foreign stock exchange
b. start-up firms that attempt to do business abroad from inception
An advantage of joint ventures is ______. a. the protection of know-how b. the access to partners' assets c. the case of global coordination d. the complete equity and operational control
b. the access to partners' assets
Liability of foreignness is _____. a. the inherent advantage foreign firms experience in home countries b. the inherent disadvantage foreign firms experience in host countries c. the negative perception of firms and products of the home country d. the positive perception of firms and products of the host country
b. the inherent disadvantage foreign firms experience in host countries
Which statement is TRUE about competitive advantage? a. Achieving a dominant market position is easy, but maintaining it is hard. b. Once a dominant position is achieved, maintaining that position is assured. c. Achieving and maintaining a dominant market position is a dynamic and ever-changing process. d. Having a competitive advantage is not necessary.
c. Achieving and maintaining a dominant market position is a dynamic and ever-changing process.
Laws that make it illegal for an exporter to sell goods below cost abroad with the intent to raise prices after eliminating local rivals are called what kind of laws? a. Anticartel b. Antitrust c. Antidumping d. Collusion
c. Antidumping
Which of the following supports the notion that most new ventures in China are financed by friends and family? a. Credit reporting agencies are abundant in China. b. Informal investments are outlawed in China. c. China lacks formal market-supporting institutions. d. Venture capitalists are the biggest investors for entrepreneurship in China.
c. China lacks formal market-supporting institutions.
Which of the following determines the institutional mix of competition and cooperation that gives rise to the market system and also seeks to balance efficiency and fairness? a. Mutual forbearance b. Antitrust policy c. Competition policy d. Fairness policy
c. Competition policy
Which of the following is an attack on a competitor's other markets if this competitor attacks a firm's original market? a. Mutual forbearance b. Multimarket dependency c. Cross-market retaliation d. Market commonality
c. Cross-market retaliation
The distinction between which of the following factors defines a firm as an MNE rather than one that merely exports or imports? a. Small- and large-scale of entry b. Direct and indirect exports c. Equity and non-equity modes of entry d. Licensing and franchising
c. Equity and non-equity modes of entry
Which of the following terms refers to the amount of resources committed to entering a foreign market? a. Mode of entry b. Benchmarking c. Scale of entry d. Institutional distance
c. Scale of entry
Which of the following is true of SMEs? a. They generate less employment than larger firms around the world. b. They generally have more than a thousand employees per firm. c. They account for over 95 per cent of total firms around the world. d. They are less entrepreneurial than large firms, on average.
c. They account for over 95 per cent of total firms around the world.
Which of the following is a non-equity mode of entry? a. Acquisitions b. Green-fields c. Turnkey projects d. Joint ventures
c. Turnkey projects
Which of the following is a first-mover advantage? a. resolve technological and market uncertainty b. difficulty adapting to market changes c. avoid clashing with dominant firms in their home market d. provide an opportunity for a free ride on pioneering investments in the market
c. avoid clashing with dominant firms in their home market
Blue ocean strategy focuses on _____. a. attacking core markets defended by rivals b. attacking new markets explored by rivals c. developing new markets d. leading a price war
c. developing new markets
Which of the following entry modes is considered a non-equity method? a. greenfield projects b. joint venture c. exports d. acquisition
c. exports
Firms can create value by engaging in all of the following EXCEPT which activity? a. respond rapidly to a challenge when it arises b. gain a dominant position in key markets c. imitate the business model of your strongest competitor d. launch a product offering simultaneously in multiple countries
c. imitate the business model of your strongest competitor
An entrepreneurial firm internationalizing while remaining in their home country is an example of what concept? a. licensing b. direct exporting c. indirect exporting d. franchising
c. indirect exporting
The resource-based view of entrepreneurship suggests that an entrepreneur needs to create value and possess rare, inimitable resources. What else should an entrepreneur need from the resource perspective? a. resources that are easy to copy b. resources that are the same for everyone c. resources that are embedded in the organization d. resources that are not value-added
c. resources that are embedded in the organization
Firms indirectly coordinate actions by signaling their intentions, often in an attempt to reduce output and maintain pricing above competitive levels. When this occurs, what is it called? a. dumping b. explicit collusion c. tacit collusion d. competitor analysis
c. tacit collusion
Natural resource-seeking firms have compelling reasons to enter culturally and institutionally distant countries. This is a counter example of _____ a. large-scale entry b. the equity mode of entry c. the stage model d. the country-of-origin effect
c. the stage model
Which of the following is an advantage of R&D contracts? a. Negligible threat from competitors b. Continuous improvement of core innovation capabilities c. Easy to negotiate and enforce contracts d. Ability to tap into the best cost-effective locations
d. Ability to tap into the best cost-effective locations
Which of the following statements is true as to why collusion fails? a. Collusion often fails because colluding parties refuse to accept lower profits. b. Collusion often fails because it is inherently wrong and unethical. c. Collusion often fails because colluding parties do not like each other. d. Collusion often fails because it has incentive problems associated with the "prisoners' dilemma.
d. Collusion often fails because it has incentive problems associated with the "prisoners' dilemma.
With regard to foreign market entry, the resource-based view argues that foreign firms need to a. Take actions deemed legitimate and appropriate by the various formal and informal institutions governing market entries. b. Understand the numerous differences in cultures, norms, and values. c. Be aware of the numerous regulatory risks and trade and investment barriers. d. Deploy overwhelming resources and capabilities to offset their liability of foreignness.
d. Deploy overwhelming resources and capabilities to offset their liability of foreignness.
Which of the following is a way to reach overseas customers by exporting through domestic-based export intermediaries? a. Licensing b. Letters of credit c. Direct exports d. Indirect exports
d. Indirect exports
From a manager's perspective, what does Sun Tzu's advice of "know yourself" mean? a. It is important to know your individual limitations. b. It is important to know what your firm can do if attacked by a rival. c. It is important to know your individual strengths and competencies. d. It is important to know what your division, firm, and industry are capable of doing.
d. It is important to know what your division, firm, and industry are capable of doing.
In the LLL framework, which of the following refers to an emerging MNE's ability to identify and bridge gaps in its market? a. Learning b. Leverage c. Location d. Linkage
d. Linkage
The ability to raise prices without the fear of losing customers is known as what? a. Cross-market retaliation b. Capacity to punish c. Mutual forbearance d. Market power
d. Market power
If a firm chooses not to counterattack because the attacked market is of marginal value, the managers lack what? a. Capabilities b. Signals c. Awareness d. Motivation
d. Motivation
What does the Triad region include? a. Europe, Africa, Asia, and Australia b. Asia, North America, and South America c. North America, Europe, and Asia, and Australia d. North America, Asia, and Europe
d. North America, Asia, and Europe
Which of the following is defined as the extent to which a given competitor possesses strategic endowment comparable, in terms of both type and amount, to those of the focal firm? a. Collusion b. Game theory c. Mutual forbearance d. Resource similarity
d. Resource similarity
Which of the following is a part of the VRIO framework? a. Orientation b. Reliability c. Impulse d. Value
d. Value
What is a business model? a. a firm's explanation of why an organization exists and what its overall goal is b. a firm's core principles that guide and direct it c. a firm's promise of value to be delivered, communicated, and acknowledged d. a firm's way of doing business and creating and capturing value
d. a firm's way of doing business and creating and capturing value
Disneyland Tokyo became immensely popular because it played up its U.S. image. What concept does this best illustrate? a. liability of foreignness b. reciprocity c. regional geographic diversification d. asset of foreignness
d. asset of foreignness
What is the strategy of creating unexplored new markets referred to as? a. yellow ocean b. green ocean c. red ocean d. blue ocean
d. blue ocean
Which of the following is an example of explicit collusion? a. signaling to competitors your intent to reduce output and maintain prices above competitive levels b. creating a directory of all competitors and prices for a product so consumers can compare to the product you offer c. as a market leader, deciding to set your price above the industry average d. directly negotiating an agreement with competitors to fix prices
d. directly negotiating an agreement with competitors to fix prices
Which of the following is an example of a strategic investor? a. friends b. family c. founders d. government agencies
d. government agencies
Which of the following is considered an equity mode of foreign market entry? a. exports b. service outsourcing c. contractual agreements d. greenfield projects
d. greenfield projects
What is microfinance? a. the IMF giving money to entrepreneurs in developing countries b. the IMF giving money to large corporations c. lending institutions providing loans to large corporations d. lending institutions providing tiny loans to start small businesses in developing countries
d. lending institutions providing tiny loans to start small businesses in developing countries
Which of the following industry characteristics makes collusion difficult? a. the existence of a price leader in the industry b. a high concentration of a few firms in the market c. homogeneous products d. low entry barriers
d. low entry barriers
In which type of country is an entrepreneur likely to have to spend more money to launch a company? a. high income b. easy income c. It costs the same in all three types of countries. d. low income
d. low income
The act of setting prices below cost to eliminate rivals while intending to raise them in the long run to make up for the initial losses is known as _____. a. collusive price setting b. dumping c. counterattack d. predatory pricing
d. predatory pricing
What factors have contributed to entry barriers being lowered for many entrepreneurs? a. higher business tax rates b. decline in venture capital investing c. greater interest in entrepreneurship d. sharing economy
d. sharing economy