Final Assessments
A firm that develops the capacity to sell its products by investing in marketing and selling operations is ________.
acquiring downstream value-chain facilities
When developing strategies, managers start by ________.
examining the firm's specific strengths and weaknesses
Which of the following is a trend seen in the modern international economy?
Firms from both advanced and emerging economies employ FDI.
which of the following is management's goal when utilizing gradual elimination?
reduce the number of nations to investigate as potential foreign markets
GramTech Solutions is a software development firm based in the United States. The firm's CEO, David Ghaster, wants to open an outlet in India. Being a visionary leader, he would ________.
require managers to acquire an openness to, and awareness of, culture in India
Business activities that would most likely be offshored are characterized by ________.
routine tasks that do not relate to the firm's primary service or product
MNEs often engage in transfer pricing for ________.
shifting profits out of a country that has high corporate income taxes into a country with low corporate income taxes to increase company-wide profitability
which of the following is considered a regional hub?
Hong Kong
which of the following is true about global teams?
To develop global strategies, the team should include culturally diverse managers whose business activities span the globe.
Which of the following is true with regard to strategies for minimizing the risks of global sourcing?
To ensure the success of sourcing ventures, the focal firm must exercise great care to identify and screen potential suppliers and then monitor the activities of those suppliers from which it sources.
Which of the following countries is home to the largest number of franchisors?
US
Which of the following is the most likely source for foreign market information, assessments, and statistics?
US Department of Commerce
Which of the following documents is the contract between the shipping company and the exporter?
bill of lading
How can international human resource managers effectively minimize culture shock for expatriates?
by training personnel to understand the host country's government, culture, and language
which of the following gives headquarters considerable authority and control over the firm's activities worldwide?
centralized approach
In the Emerging Market Potential Indicators index, households with Internet access per 100 inhabitants are an indicator of ________.
commercial infrastructure
the estimate of the share of annual industry sales the firm expects to generate in a particular target market is known as _____
company sales potential
To minimize the complexity of franchising, focal firms must ________.
conduct advance research on the host country's laws on intellectual property
The pattern or geographic arrangement of locations where the firm carries out value-chain activities is known as ________.
configuration of value-adding activity
________ is the primary rationale for sourcing abroad.
cost efficiency
Which of the following terms is used to refer to a focal firm's partial ownership of an existing firm?
equity participation
Which of the following activities is highly important to firms as a strategic asset?
marketing and branding
Organizational culture is ________.
the pattern of shared values, behavioral norms, systems, policies, and procedures that employees learn and adopt
All You Cosmetics (Scenario) Executives of All You Cosmetics Company, a Canadian company, have hired a consulting firm, Brown and Associates, to identify foreign markets that might be appropriate for internationalization. Brown consultants have been working for two weeks with All You managers to identify the best foreign markets for the Canadian cosmetics company, which specializes in organic cosmetics and skin care products. So far, Brown consultants have narrowed down the list of countries to fifteen. However, the consultants need to eliminate unattractive markets and reduce the list to five nations, which will then be researched more closely. Which of the following statements most likely supports using gradual elimination for country screening instead of indexing and ranking?
All You managers will consider any reasonable market and want to narrow down the list with increasingly specific information.
Which of the following is an example of licensing?
An American electronics firm has given the right to a new process for manufacturing e-book readers to an electronics manufacturer in Canada.
Australian Business Partner (Scenario) The Coffee Cup Corporation (CCC) is a large U.S.-based coffee retailer with stores across America. After months of research, CCC executives have decided to open their first international store in Sydney, Australia. CCC managers have been assigned the task of selecting an appropriate Australian business partner for the coffee company. CCC managers flew to Sydney to interview potential business partners, and they have narrowed the list to three. Which of the following statements most likely supports CCC managers selecting Business Partner Y instead of Business Partner Z?
Business Partner Y has a good reputation in the marketplace.
Refrigerator Adaptations (Scenario) Cold-Aire Inc. manufactures refrigerators from its facilities in the United States and China and ships them to retail stores around the world. Kitchen sizes vary around the world, and as a result, refrigerator sizes must vary as well. U.S. retailers want large refrigerators, while European and Asian retailers demand smaller units. Cold-Aire manufactures over 20 different models of refrigerators, which often vary in size by only a few inches. Cold-Aire managers are concerned that the firm is losing money because of product adaptations. Cold-Aire management is meeting to discuss the various cost-saving options for the firm. Which of the following questions would be the most important for Cold-Aire managers to evaluate when determining how the firm could reduce production costs in a single market?
Can Cold-Aire standardize its refrigerators?
International Management Qualifications (Scenario) Core Computer Corporation (CCC) recently opened a customer service facility in New Delhi, India. Managers of the Texas-based firm have been displeased with the local manager hired to run the New Delhi facility because of a variety of problems that took place. CCC managers believe that a representative from the headquarters should manage the Indian facility for one year in order to train personnel and to improve the quality of customer service. Two CCC executives have expressed a desire to work and live in India: Craig Springer and Devon Parks. The CCC human resources department is comparing the qualifications and characteristics of the two men in order to determine which candidate would be the most successful in India. Which of the following, if true, most seriously undermines the argument in favor of hiring Devon Parks as manager for CCC's facility in New Delhi?
Devon has few local connections in New Delhi where success is largely determined by local connections and networking.
Extra Clean Strategy (Scenario) Extra Clean Soap Company has been manufacturing soap products, such as dishwashing liquid, bath soap, and shampoo, for over 20 years from its facility and headquarters in Dublin, Ireland. A recent opportunity allowed Extra Clean to purchase soap companies in Taiwan and India. Extra Clean is now servicing both foreign and domestic markets with its products and manufacturing in all three locations. Recent reports from managers in the foreign facilities indicate that Extra Clean sales in Taiwan and India are low due to a lack of local responsiveness. Extra Clean managers from Ireland, India, and Taiwan are having a teleconference in an attempt to devise a strategy to improve the profitability of Extra Clean. Which of the following most likely supports Extra Clean implementing a multidomestic strategy instead of a global strategy?
Extra Clean managers lack internationalization experience.
ABC Appliance (Scenario) The ABC Appliance Corporation is a Florida-based manufacturer of refrigerators, dishwashers, and other large household appliances. ABC takes advantage of NAFTA, and as a result, the firm has loyal customers across North America. ABC managers would like to expand into the Asian market, but are unsure of the best way to do so. ABC managers are meeting to discuss various possibilities for entering the Asian market. Which of the following questions would most likely be important for ABC managers to evaluate as they consider expanding into the Asian market?
How much control does ABC management want to have over their Asian operations?
Organic Towel Exports (Scenario) The Organic Towel Company (OTC) employs 400 workers at its facility in Liverpool, England, where the firm has been manufacturing 100% organic cotton towels for five years. OTC sells towels in the United Kingdom primarily to boutique hotels and specialty retail stores, as well as to individual consumers through the company's. Recently, OTC managers attended a trade show in London where they made contact with numerous foreign market managers. OTC received a request from Earth Waves, an organic clothing store in Toronto, Canada, for a large order of towels. OTC had not been looking into expanding, but firm managers are seriously considering the opportunity to reach a global niche market with their towels. Which of the following should be considered first in making the decision to export OTC towels to Canada?
How much fluctuation occurs in the exchange rate between the Canadian dollar and the British pound?
Quik Meal Structure (Scenario) Quik Meal is a fast-growing MNE that manufactures and sells energy gels for consumption by serious athletes, such as marathoners and triathletes. The energy gels produced by Quik Meal taste much better than the gels sold by other firms, which has led to an increase in sales. Managers and executives with Quik Meal need to determine the best organizational structure for the young firm. Quik Meal has subsidiaries in Japan and Brazil, while company headquarters are based in San Francisco. Which of the following questions would be more important for Quik Meal executives to evaluate when determining whether to centralize or decentralize the firm's structure?
How much modification is needed for Quik Meal products in Japan and Brazil?
International human resource management is usually more complex than domestic human resource management because ________.
IHRM managers are required to demonstrate greater involvement in employees' personal lives
Which of the following is true with regard to the risks of global sourcing?
Inadequate legal systems, red tape, convoluted tax systems, and complex business regulations complicate local operations in many countries.
Big Boy Burgers (Scenario) Big Boy Burgers (BBB) is an American fast food restaurant chain that has franchises around the world. Recently, BBB managers have been concerned about protecting the firm's intellectual property, which includes the recipes for its unique burger sauces and specialty burger buns. Although BBB has never experienced a theft of intellectual property, the firm's managers feel BBB should be more cautious. Managers are meeting with security and legal experts to discuss the options available to the firm which would protect BBB from future international problems. Which of the following statements most likely supports BBB legal experts fully investigating the intellectual property laws of each nation in which BBB has franchises?
Intellectual property laws and its enforcement varies from country to country.
____ refers to a cross-border business alliance whereby partnering firms pool their resources and share costs and risks to undertake a new business venture?
International collaborative ventures
Big Boy Burgers (Scenario) Big Boy Burgers (BBB) is an American fast food restaurant chain that has franchises around the world. Recently, BBB managers have been concerned about protecting the firm's intellectual property, which includes the recipes for its unique burger sauces and specialty burger buns. Although BBB has never experienced a theft of intellectual property, the firm's managers feel BBB should be more cautious. Managers are meeting with security and legal experts to discuss the options available to the firm which would protect BBB from future international problems. Which of the following questions would be more important for the experts to evaluate when determining how to ensure intellectual property protection for Big Boy Burgers?
Is BBB partnering with ethical franchisees that have no intention of becoming BBB competitors in the future?
Which of the following is a disadvantage of licensing for technological firms?
It increases the risk of creating a future competitor.
Which of the following is true about franchising as an entry strategy?
It restricts a firm's ability to expand more rapidly abroad.
Organic Towel Exports (Scenario) The Organic Towel Company (OTC) employs 400 workers at its facility in Liverpool, England, where the firm has been manufacturing 100% organic cotton towels for five years. OTC sells towels in the United Kingdom primarily to boutique hotels and specialty retail stores, as well as to individual consumers through the company's. Recently, OTC managers attended a trade show in London where they made contact with numerous foreign market managers. OTC received a request from Earth Waves, an organic clothing store in Toronto, Canada, for a large order of towels. OTC had not been looking into expanding, but firm managers are seriously considering the opportunity to reach a global niche market with their towels. Which of the following most likely supports OTC exporting their towels to Earth Waves?
OTC is an SME that can readily adapt to the demands of the Canadian market.
CEO Hiring Interview (Scenario) The Ace Children's Clothing Company is a mature MNE that has been manufacturing and selling children's clothing in Ace stores around the world for 30 years. Ace has seen a downturn in global sales recently due to trendy adult clothing companies branching out into children's clothing. The Ace board of directors is interviewing candidates to replace the outgoing CEO. The board wants a CEO who will take Ace into the future and pull customers back into Ace stores. Two candidates are being interviewed for the position: Dan Elizarde and Tanya Carson. Tanya and Dan have comparable executive experience with retail clothing companies. Therefore, the board will be basing its final decision on visionary leadership skills. Which of the following best supports the decision by the Ace board of directors to hire Tanya as the CEO?
Tanya's innovative ideas and ability to spot future retail trends
Which of the following challenges is applicable to the franchisee in a franchising agreement?
The franchisor holds much power, including superior bargaining power.
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was created by the ________.
WTO
Organic Towel Exports (Scenario) The Organic Towel Company (OTC) employs 400 workers at its facility in Liverpool, England, where the firm has been manufacturing 100% organic cotton towels for five years. OTC sells towels in the United Kingdom primarily to boutique hotels and specialty retail stores, as well as to individual consumers through the company's. Recently, OTC managers attended a trade show in London where they made contact with numerous foreign market managers. OTC received a request from Earth Waves, an organic clothing store in Toronto, Canada, for a large order of towels. OTC had not been looking into expanding, but firm managers are seriously considering the opportunity to reach a global niche market with their towels. Which of the following questions must be evaluated by OTC managers as a first step to exporting?
What are the risks involved in exporting OTC towels to Earth Waves?
Manufacturers of branded products are concerned about gray market activity because it can lead to ________.
a tarnished brand image
International Business Class (Scenario) Students in Professor Manning's international business class have been assigned the task of explaining the different types of FDI. Professor Manning formed groups among students. The groups are to research their assigned topic and present their information to the class using examples of real-world firms for illustration. Jessica Hanson is the leader of Group A; Manu Patel is the leader of Group B; and Mario Witherspoon is the leader of Group C. During his presentation, Manu describes how a large U.S. retailer entered the Mexican market by purchasing the stores and assets of a Mexican retailer. Which of the following topics was most likely assigned to Group B?
acquisition
Which of the following must be considered in selecting foreign direct investment locations? -rate of inflation -tax rates for profit repatriation -stability of currency -all of these
all of these
Critical incident analysis examines ________.
an episode in which tension arises between employee and foreign counterpart due to a cross-cultural misunderstanding
which of the following market characteristics offers the most potential for a firm's success at internationalization?
an unavailable product or service
Which of the following will be accomplished by potential exporters who are involved in studying import statistics?
assessing a market's viability for accepting new sales
which of the following is an example of a global industry?
automobiles
Which of the following factors is typically most important to firms considering FDI entry?
availability of skilled labor and managerial talent
Cross-licensing often occurs in the semiconductor and chemical industries in order to ________.
avoid research duplication and building on each other's innovations
________ refers to an employee's ability to function effectively with those from different cultural backgrounds or in different cultural contexts.
cultural intelligence
Buyer receptiveness differs as a function of ________.
culture and language
After managers have chosen an appropriate market for exporting, the next step is to ________.
decide about the resources to be committed
Armaz Inc., a manufacturing company, has its headquarters located in Texas, U.S., and subsidiaries in India, China, and Vietnam. Which of the following decisions will be the most centralized?
decision about building factories in Cambodia
Armaz Inc., a manufacturing company, has its headquarters located in Texas, U.S., and subsidiaries in India, China, and Vietnam. Which of the following decisions will be the LEAST decentralized?
decision about hiring a marketing manager in the US
Leasing is especially beneficial to ________.
developing economies
Which of the following makes it difficult to completely duplicate a food franchise in every global market?
different local ingredients
________ refers to lowering the cost of the firm's operations and activities on a global scale.
efficiency
Linda Grahams, an American citizen, works in a global conglomerate based in Washington D.C. A few months ago, Linda was assigned to work in the company's office in Hong Kong and live there for the next three years. Which of the following can Linda be best described as?
expatriate
Which of the following organizational arrangements for foreign operations is most closely associated with home replication strategy?
export department
Which of the following is a characteristic of an equity joint venture?
facilitates knowledge transfer between partners
Area studies refer to ________.
factual knowledge of the historical, political, and economic environment of the host country
Which of the following industries considers proximity to customers especially important in the decision to enter a foreign market?
fashion
Which of the following is a disadvantage of a geographic area structure?
geographic area managers' lack of global orientation for developing and managing products
A ________ strategy is characterized by substantial control over country operations by headquarters in order to increase efficiency and integration.
global
In international business, firms frequently formulate market segments by ________.
grouping countries based on macro-level variables
Which of the following refers to a risk, stemming from environmental factors, that is closely associated with global sourcing?
high energy costs
To maximize returns, management should outsource those activities ________.
in which it is relatively weak
International Management Position (Scenario) Global Choppers Inc. is an MNE based in Vancouver that manufactures high-quality motorcycles for sale around the world. The majority of design work is done at the Vancouver headquarters, but manufacturing and assembly are performed in company facilities located in Romania. In order to maintain control over manufacturing quality, Global Choppers sends representatives from the company headquarters to manage the Romanian facility for one year rotations. Conrad O'Neil has been selected to run the foreign facility for the upcoming year. The human resources department of Global Choppers will be preparing him for his foreign assignment through a variety of training methods. Which of the following sums up the goal of training Conrad for his assignment in Romania?
increasing Conrad's effectiveness abroad
An advantage to firms that use a product structure arrangement is that ________.
individual product lines are coordinated and managed globally
Which of the following is a disadvantage of a multidomestic strategy?
inefficient manufacturing
Prox Inc. is a U.S.-based manufacturer of consumer electronics. It decides to export to Mexico and wants to protect its goods against damage, loss, and pilferage. Which of the following documents is applicable here?
insurance certificate
Australian Business Partner (Scenario) The Coffee Cup Corporation (CCC) is a large U.S.-based coffee retailer with stores across America. After months of research, CCC executives have decided to open their first international store in Sydney, Australia. CCC managers have been assigned the task of selecting an appropriate Australian business partner for the coffee company. CCC managers flew to Sydney to interview potential business partners, and they have narrowed the list to three. Business Partner X, who owns a small chain of Sydney coffee shops, has offered to make an equity investment in CCC. Which of the following types of relationships would most likely result if Business Partner X is selected?
international collaborative venture
Which of the following is NOT one of the four dimensions of cultural intelligence?
introversion
Typically, ________ provide(s) a means for collective bargaining.
labor unions
________ is an arrangement in which a contractor supplies managerial know-how to operate a hotel, hospital, airport, or other facility in exchange for compensation.
management contract
Focal firms that internationalize through exporting will most likely perform ________ in the home market.
manufacturing
The buying power of the country's residents is termed as ________.
market intensity
Which of the following dimensions refers to the buying power of the country's residents?
market intensity
The extent of a country's openness to imports is termed ________.
market receptivity
the extent of a country's openness to imports is termed ____
market receptivity
A firm's subsidiary is the primary contributor to ________.
marketing
A(n)________ is a special type of acquisition in which two companies join to form a larger firm.
merger
________ refers to a marketing strategy in which the firm develops both the product and its marketing to evoke a distinct impression in the customer's mind, emphasizing differences from competitors' offerings.
positioning
According to the Emerging Market Potential Indicators index, ____ is an indicator of market intensity.
private consumption as a percentage of GDP
Firms that emphasize global integration make and sell ________.
products that require minimal adaptation
Which of the following is characteristic of master franchise arrangements?
subfranchises to other independent businesses and thus assumes the role of the local franchisor
The growth of global sourcing has been driven by ________.
technological advances in communications
Which of the following is a disadvantage of equity joint ventures?
termination difficulties
Which of the following is protected under copyright laws?
the art of jackson pollack
Firms prefer HCNs when ________.
the host country environment is complex
________ makes performance evaluations more complex in the international context.
the problem of non-comparable outcomes
Which of the following is true about foreign units of a company using a multidomestic strategy?
they are autonomous and operate independently
All of the following are true of global new-product planning teams EXCEPT ________.
they are responsible for global promotion of products and services
________ is an arrangement in which the focal firm or a consortium of firms plans, finances, organizes, manages, and implements all phases of a project abroad and then hands it over to a foreign customer after training local workers.
turnkey contracting
Gray marketers are ________.
unauthorized intermediaries
The reputation of a licensor will be jeopardized by a licensing agreement if the licensee ________.
uses the licensing asset to create products of poor quality