International Business Final Exam

What triggers the conflict of interest over strategy and goals in joint ventures?

Shifts in relative bargaining power of venture partners.

Which of the following is true of barter as a countertrade arrangement?

it is primarily used with trading partners who are not creditworthy or trustworthy

Which of the following is an advantage of turnkey projects as a mode of entry into foreign markets?

it is useful strategy to earn great returns from the know-how of technologically complex process.

Which of the following is true of a letter of credit in international trade?

it states that the bank will pay a specified sum of money to a beneficiary on presentation of particular, specified documents

To reduce the risks of failure of an acquisition, managers must:

move rapidly after an acquisition to put an integration plan in place.

The risk of failure of an acquisition can be reduced by:

a detailed auditing of operations, financial positions, and management culture.

Which of the following is an advantage of choosing exporting as a mode of entry into foreign markets?

a firm can avoid the cost of establishing manufacturing operations in the host country.

The risks associated with learning to do business in a new culture are less if the firm:

acquires an established host-country enterprise

If a firm is seeking to enter a market via a wholly owned subsidiary where there are already well-established incumbent enterprises, and where global competitors are also interested in establishing a presence, a suitable mode of entry is a(n):

acquisition

In international business, a product that is not widely available in a foreign market and satisfies an unmet need:

is likely to have greater value.

Why do firms pursuing global standardization or transnational strategies tend to prefer establishing wholly owned subsidiaries?

it allows firms to use profits generated in one market to improve its competitive position in another market

Which of the following is a disadvantage of greenfield ventures?

it does not give a firm tight control over subsidairies

Which of the following is an example of a first-mover advantage?

Ability to create switching costs that tie customers into one's product or service

How can a wholly owned subsidiary be established in a foreign market?

By acquiring an established firm in the host nation

How can firms avoid incurring high transport costs when exporting bulk products?

By manufacturing bulk products regionally

First-mover disadvantages refer to:

Disadvantages associated with entering a foreign market before other international businesses.

Which of the following is true of exporting?

It avoids the costs of establishing manufacturing operations in the host country.

Which of the following is an advantage of acquisitions as a means of entering foreign markets?

It enables firms to preempt their competitors.

When a bill of lading specifies that the carrier is obligated to provide a transportation service in return for a certain charge, it serves as a:

as a contract, the bill of lading specifies that the carrier

The direct exchange of goods and/or services between two parties without a cash transaction is referred to as:

barter

Which of the following is issued to an exporter by a common carrier transporting the merchandise and serves as a receipt, a contract, and a document of title?

bill of lading

A firm builds a plant in a country and agrees to take a certain percentage of the plant's output as partial payment for the contract. This type of countertrade is called a(n):

buyback

When serving as collateral, the bill of lading:

can be used to advance funds to the exporter by its local bank before or during shipment.

Due to the complexity and diversity of foreign markets, firms sometimes hesitate to seek export opportunities. These firms can best overcome ignorance by:

collecting information

In international commerce, an order written by an exporter instructing an importer to pay a specified amount of money at a specified time is known as a:

correct draft

The type of countertrade where a firm agrees to purchase a certain amount of materials back from a country to which a sale is made is called:

counter purchase

A firm sells some products to a foreign country. The foreign country pays the firm in dollars but in exchange the firm agrees to spend some of the proceeds from the sale on textiles produced by the foreign country. In which of the following types of countertrade arrangement are the two parties engaged?

counter purchase.

Which of the following is a strategic step taken to increase a firm's probability of exporting successfully?

entering a foreign market on a small scale

Which of the following refers to an export specialist that acts as an export marketing department for client firms?

export management company

The Foreign Credit Insurance Association (FCIA) is an association of private commercial institutions operating under the guidance of the:

export-import bank

Which of the following is a disadvantage of franchising?

franchise has no flexibility as it is required to follow the franchisor's procedures to the letter.

Which of the following is true of international firms considering foreign expansion?

if the firm's core competence is based on proprietary technology, entering a joint venture might risk losing control of that technology to the joint-venture partner.

Which of the following is a reason why firms often overpay for the assets of an acquired firm?

interest of more than one party in acquiring a particular firm

In international trade, an exporter wants to be paid before a consignment is shipped. Correspondingly, the importer wants to pay only upon receipt of the consignment. These conflicting preferences of the parties are a manifestation of:

lack of trust

Once accepted by the drawee, a time draft becomes a(n):

promise to pay by the accepting party

Which of the following is a reason why a relatively poor country may be an attractive target for inward investment?

rapid economic growth

In international business, an advantage of being a late entrant in a foreign market is the ability to:

ride on an early entrant's investments in learning and customer

A firm that enters many markets at once:

runs the risk of spreading its limited management resources too thin.

Franchising as a mode of entry into foreign markets is employed primarily by:

service

The Small Business Administration oversees almost 11,500 volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses through its program known as the:

service corps of retired executives

In exporting, problems with local marketing agents can be overcome by:

setting up wholly owned subsidiaries in foreign nations to handle local marketing.

Which of the following drafts is payable on presentation to the drawee?

slight draft

A type of countertrade where a third-party trading house buys the firm's counterpurchase credits and sells them to another firm that can better use them is called:

switch trading

Spring, an American firm, recently acquired another company, Tazel Inc., in Indonesia. The high-level managers at Tazel quit because they could not cope with the domineering and straightforward approach of their American counterparts. This illustrates how acquisitions may fail because:

there is a clash between the cultures of the acquired and the acquiring firm

Many medium-sized and small firms are not proactive in seeking export opportunities because:

they are intimidated by the complexities and mechanics of exporting to foreign countries

Which of the following is true of medium-sized and small firms?

they consider exporting only after their domestic market is saturated

When should a firm configure its value chain to maximize value at each stage?

when cost pressure are intense.

When a time draft is presented to a drawee, he or she signifies acceptance of it by:

writing or stamping a notice of acceptance on its face