IB Set 4

The most typical joint venture is a _____ venture.

50/50

Which of the following staffing approaches will be most effective for a firm that is pursuing a transnational strategy?

A geocentric staffing policy

What is the difference between an ethnocentric and a polycentric staffing approach?

An ethnocentric staffing approach is more expensive compared to a polycentric staffing approach

Which of the following is the most common approach to expatriate pay?

Balance sheet approach

Which of the following statements is true of the deregulation of financial industry?

Deregulation helped the development of an international capital market.

____ imply that when a firm already has significant value built into its product offering, increasing value by a relatively small amount requires significant additional costs.

Diminishing returns

Which of the following statements is true?

Direct selling may be the only way to reach consumers in poor nations with low literacy levels.

Which of the following is NOT a successful exporting strategy used by 3M?

Enter many markets at one time to gain maximum exposure.

Which of the following statements is true of Eurocurrency?

Eurocurrency can be created anywhere in the world.

Which of the following is a drawback of the Eurocurrency market?

Exposure to foreign exchange risk

Which of the following statements is true of the use of information technology in financial services?

Financial services is an information-intensive industry.

Which of the following statements is true of strategic alliances?

Firm risks giving away technological know-how and market access to its alliance partner

Which among the following should be done in order to reduce bias in the performance appraisal process for expatriates

Home-office managers should be consulted before an on-site manager completes a formal termination evaluation.

Which of the following is an example of a support activity in a firm's value chain?

Human resources

Which of the following changes were made to IMF's Articles of Agreement in the Jamaica agreement?

IMF members were permitted to sell their gold reserves at the market price.

Before a firm is allowed access to the European marketplace, the European Union requires that the quality of the firm's manufacturing processes and products be certified under a quality standard known as _____.

ISO 9000

Which of the following statements is true about a product divisional structure?

In a product divisional structure, each product division is set up as a self-contained, largely autonomous entity with its own functions.

Which of the following is true of acquisitions?

In many cases, firms make acquisitions to preempt their competitors.

Which of the following is one of the important factors in determining the elasticity of demand for a product in a given country?

Income level

What is the most important advantage of using a geocentric staffing policy?

It enables the firm to build a cadre of international executives who feel at home working in a number of cultures

Which of the following is a major advantage of using a letter of credit?

It helps international traders engage in trade with trust.

_____ is pursued primarily by manufacturing firms and _____ is employed primarily by service firms.

Licensing; franchising

_____ can inject risk into foreign currency borrowing.

Movements in exchange rates

____ refers to the fact a firm's pricing strategy in one market may have an impact on its rivals' pricing strategy in another market.

Multipoint pricing

Which of the following statements about barrier to international communication is true?

Noise is extremely high in highly developed countries such as the United States

Which of the following products will have low value-to-weight ratios?

Refined sugar

Which of the following statements is true of the country factors that govern international business?

Relative factor costs should be considered when selecting a country for production.

Which of the following is an example of a primary activity in a firm's value chain?

Research and development

_____ refer to cooperative agreements between potential or actual competitors.

Strategic alliances

Which of the following statements is true of products with high value-to-weight ratios?

Their transportation account for a very small percentage of the total costs

Which of the following statements is true of reactive firms?

They consider exporting only after their domestic market is saturated.

Many American firms that sold oil-refining technology to firms in the Gulf now find themselves competing with these firms in the world oil market. This is an example of:

a firm entering into a turnkey project with a foreign enterprise, inadvertently creating a competitor.

A currency crisis occurs due to ____.

a speculative attack on the exchange value

Practical training is:

aimed at helping the expatriate manager and family ease themselves into day-to-day life in the host country

Gold par value refers to the ____.

amount of a currency needed to purchase one ounce of gold

Systematic risk refers to movements in a stock portfolio's value that are ____.

attributable to macroeconomic forces affecting an economy

Centralization:

can give top-level managers the means to bring about needed major organizational changes by concentrating power and authority in one individual or a management team.

The value of a product to an average consumer is V; and the average price that the firm can charge a consumer for that product is P. Here, V - P can be termed as:

consumer surplus per unit.

As investors increase the number of stocks in their portfolio, the portfolio's risk ____.

declines rapidly in the beginning

To overcome cultural barriers, companies should:

develop cross-cultural literacy.

It has been observed that a product's production costs decline by some quantity about each time, cumulative output:

doubles.

____ occurs whenever a firm sells a product for a price that is less than the cost of producing it.

dumping

Many firms pursuing a(n) ____ pricing strategy on an international scale will price low worldwide in attempting to build global sales volume as rapidly as possible, even if this means taking large losses initially.

experience curve

After World War II, the world's major industrial nations arranged their currencies against each other at a mutually agreed on exchange rate. This is an example of a _____ system.

fixed exchange rate

A pegged exchange rate means that the value of a currency is ____.

fixed relative to a reference currency

A(n) _____ is a grouping of various types of machinery, a common materials handler, and a centralized cell controller.

flexible machine cell

If a service firm wants to build a global presence quickly and at a relatively low cost and risk, it must employ ____.

franchising

Regardless of a firm's domestic structure, its international division tends to be organized on:

geography

When a firm has a strategic goal of pursuing a low-cost strategy on a worldwide scale, the firm should follow a(n) _____ strategy.

global standardization

When evaluating expatriates, home-country managers usually rely on:

hard data such as market share.

As a receipt, the bill of lading indicates that the carrier ____.

has obtained the merchandise described on the face of the document

Firms pursuing a transnational strategy:

have a very high need for cultural controls.

Cross-licensing agreements are increasingly common in the _____ industries.

high-technology

A citizen of France who moves to the U.S. to work at Ford is a(n):

inpatriate.

A banker's acceptance ____.

is a time draft that has been drawn on and accepted by a bank

An advantage of engaging in in-house production of products and components is that _____.

it enables a firm to protect the proprietary technologies that it has

A country's trade balance is in surplus when _____.

its exports are more than its imports

The great promise of exporting is that ____.

large revenue opportunities are often found in foreign markets

A _____ states that the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents.

letter of credit

Switching costs:

make it difficult for later entrants to win business.

Hedge funds ____.

make short bets on assets that they think will decline in value

The identification of distinct groups of consumers whose purchasing behavior differs from others in important ways is known as ____.

market segmentation

The term _____ has been coined to describe the ability of companies to use flexible manufacturing technology to reconcile the goals of low cost and product personalization.

mass customization

Central to the concept of economies of scale is the idea that the best way to achieve high efficiency, and hence low unit costs, is through the _____.

mass production of a standardized output

In the _____ program organized by the U.S. Department of Commerce, department representatives accompany groups of U.S. businesspeople abroad to meet with qualified agents, distributors, and customers

matchmaker

Contrary to Levitt's suggestions, consumers in the most developed countries are often:

not willing to sacrifice their preferred attributes for lower prices.

When a company's product has a low value-to-weight ratio, the company should _____.

produce the product in multiple locations close to major markets

A firm that depends more on mass media advertising to communicate the marketing message to potential consumers is using a:

pull strategy.

To increase the potential for a successful acquisition, a firm should:

seek companies only from similar national cultures.

Bank charges on a letter of credit will depend on the ____.

size of the transaction

A _____ is an asset whose value is contingent upon a particular relationship persisting.

specialized asset

The major cost saving associated with JIT systems comes from _____.

speeding up inventory turnover

In an international transaction involving a bank as a third party, the exporter ships the product after ____.

the bank promises to pay on the importer's behalf

Integration mechanisms are:

the mechanisms for coordinating subunits.

Concentration of production is appropriate when _____.

the product serves universal needs

Moral hazard arises when people behave recklessly because ____.

they know they will be saved if things go wrong

A _____ allows for a delay in payment.

time draft

_____ exist when the tastes and preferences of consumers in different nations are similar if not identical.

universal needs

A hardship allowance is paid:

when the expatriate is being sent to a location where such basic amenities are grossly deficient by the standards of the expatriate's home country

Make-or-buy decisions are decisions about _____.

whether or not to outsource value creation activities

In a ____, the firm owns 100 percent of the stock.

wholly owned subsidiary