MGT 4230 Exam 3

Organizational structure incorporates what three things? (Check all that apply.)

Formal division of organization into subunits Integrating mechanisms to coordinate subunit activities Location of decision-making responsibilities within the structure

______ involves one firm selling intangible property to another firm and insisting that the receiver of the intangible property abides by strict rules on how it does business.

Franchising

If a service firm's core competency is managerial know-how, which two foreign entry modes make the most sense? (Check all that apply.)

Franchising Joint ventures

In 1969, which countries created the Andean Pact that was modeled on the EU, but was not as successful in achieving regional groups objectives?

In 1969, which countries created the Andean Pact that was modeled on the EU, but was not as successful in achieving regional groups objectives?

Which three statements are TRUE about franchising? (Check all that apply.)

It is similar to a license but with a longer time commitment. The franchiser typically receives a royalty payment. The franchisee commits to abiding by strict rules on how it does business.

What are two disadvantages of joint ventures? (Check all that apply.)

Not having tight control over a local partner to realize experience curve or location economies Giving up control of technology to the host country partner

Which three elements elements must all be consistent with each other for superior organizational performance to be attained? (Check all that apply.)

Operations Strategy Market conditions

According to the basic strategy paradigm, what three things must a firm do to maximize profitability? (Check all that apply.)

Pick a position on the efficiency frontier where there is enough demand to support the choice. Configure internal operations so they support the position selected on the efficiency frontier. Make sure the firm has the right organization structure in place to execute its strategy.

What are three examples of information systems used to support the value chain?

Product pricing Inventory management Sales tracking

Organizational structure incorporates what three things? (Check all that apply.)

Purchasing power of consumers Future wealth of consumers Size of the market

What three things must be in place to achieve superior performance within a company? (Check all that apply.)

The operations of a firm must be configured to support the strategy of the firm. The organization's strategy must make sense given market conditions. The organization's architecture must match the operations and strategy of the firm.

Identify the two reasons that the EU is NOT considered a perfect economic union. (Check all that apply.)

There is a difference in tax rates across the countries. Not all markets are fully deregulated.

What three basic decisions must firms evaluate when considering foreign expansion? (Check all that apply.)

Which markets to enter On what scale to enter markets When to enter markets

Which objective of the Andean Community has NOT yet been implemented?

Which objective of the Andean Community has NOT yet been implemented?

Bob's Bicycle Company is planning to enter into foreign markets where there are already well-established incumbent enterprises and in which global competitors are also interested in establishing a presence. Based on these circumstances, Bob's Bicycle Company should enter the foreign markets via ______.

acquisition

While the EU is seen as an economic union, it is considered imperfect because not all members of the EU have

adopted the same currency.

A lag strategy occurs when a firm attempts to delay the collection of foreign currency receivables when a currency is expected to ______ and delay foreign currency payables when a currency is expected to ______.

appreciate; depreciate

Companies that follow a global standardization strategy

avoid customizing their products.

Residents of the hypothetical nation of Jarna feared that the country's economy was failing. They rushed to convert their domestic currency into US dollars and investors in businesses in Jarna also converted their financial holdings. This mass conversion of currency is known as _____.

capital flight

______ are the metrics used to measure the performance of subunits.

controls

Six Caribbean-area countries established the CSME in 2006 to accomplish what two things?

coordinate macroeconomic and monetary policy and lower trade barriers

When the logistics function is carried out efficiently, it can create value because it lowers

costs

When General Electric won a contract for a $150 million generator project in Romania, it agreed to take payment in the form of Romanian goods that could be sold for $150 million on international markets. This is an example of

countertrade

Currently, the Andean Community functions as a

customs union.

Atkinson Appliance has improved the look, design, and speed of its dishwashers to make them more attractive to consumers. The company is trying to create value creation by using a(n) ______ strategy.

differentiation

What are two disadvantages of small-scale entry?

difficult to build market share difficult to capture first-mover advantages

In a forward exchange transaction, $1 buys more lira with a spot exchange than with a 30-day forward exchange. When this occurred, it is said that the dollar is selling at a _____ on the 30-day forward market

discount

The extent to which income from individual transactions is affected by fluctuations in foreign exchange values is known as transaction ______.

exposure

A(n) ______ convertible currency allows only nonresidents to convert it into a foreign currency without any limitations.

externally

True or False: Distribution channels are consistent across the world and do NOT affect local responsiveness.

false

True or false: Based on the basic strategy paradigm, In order to maximize its profitability, a firm can invest in any of the positions found on the efficiency frontier.

false

Forward exchange rates are exchange rates that govern _____ transactions.

future

Henri works for a company that makes pasta to be sold in grocery stores. The company prefers to market the same product worldwide in order to take advantage of economies of scale and learning effects. It also prices its pasta aggressively. Which strategy is this company using?

global standardization strategy

One way to control technology in a joint venture arrangement is for one company to

hold majority ownership.

A company that elects to use a differentiation strategy would focus on

increasing the attractiveness of a product.

True or false: Based on the basic strategy paradigm, In order to maximize its profitability, a firm can invest in any of the positions found on the efficiency frontier.

information

Something of worth that cannot be touched or held, such as a formula, is considered to be ______ property.

intangible

When entering a global market using a(n) BLANK-scale (large or small?) entry strategy, a firm may be able to capture first-mover advantages associated with scale economies.

large

Company ABC is unwilling to commit the necessary capital to construct a facility in Malaysia. However, they have determined that they want to enter that market. One option for the company might be a

licensing agreement.

Which company function controls the transmission of materials from raw goods to the distribution of the finished product?

logistics

Economic exposure is concerned with the BLANK- term effect of changes in exchange rates on future prices, sales, and costs. (Choose short or long.)

long

Many service firms base their competitive advantage on

management know-how.

In Britain, pharmaceutical sales adopt a soft-sell approach, while a hard-sell approach is used in the United States. This demonstrates how a company has to adapt its ______ strategy to address the concerns of local responsiveness.

marketing

When $1 buys more lira with a forward exchange than with a spot exchange, it is said that the dollar is selling at a _____ on the 30-day forward market.

premium

A business ______ is the manner in which decisions are made in a company.

process

Cross-licensing agreements allow firms to do what two things?

protect technological know-how make the partner accountable

Acquisitions are considered _____ (slow or quick?) to execute.

quick

The adverse consequences of unpredictable changes in exchange rates is called foreign exchange BLANK

risk

The production divisions within a company, the location of a company's decision-making responsibilities, and the establishment of integrating mechanisms all make up the organizational ______ of a company.

structure

______ analysis is based on the premise that there are analyzable market trends and that these past trends can be used to predict future trends.

technical

CARICOM was a customs union created in 1991 among countries in _____.

the Caribbean

In 1969, which countries created the Andean Pact that was modeled on the EU, but was not as successful in achieving regional groups objectives?

the Court of Justice

The economic policies of the European Union are established by the four main institutions in the political structure: the European Commission, the Council of the European Union, the European Parliament, and _____.

the Court of Justice

When considering the three basic decisions a firm must make when it decides to enter a foreign market, it must determine the market to enter, the timing of entrance, and

the scale.

International businesses use foreign exchange markets for what three reasons?

to pay a foreign company for its products or services in its country's currency to convert foreign currencies it receives from transactions into its own currency to invest spare cash for the short term in money markets

________ exposure is the risk, faced by companies involved in international trade, that currency exchange rates will change after the companies have already entered into financial obligations. Such exposure to fluctuating exchange rates can lead to major losses for firms.

transaction

True or false: A cross-licensing agreement reduces the probability that each firm will take advantage of the other's intangible property.

true

True or false: Foreign market entry decisions are based on the varying levels of risk and reward.

true

True or false: Many acquisitions fail because of a clash between the cultures of the two organizations.

true

Under the Andean Pact,, which two members received special concessions based on the size of these countries?

Bolivia and Ecuador

Capital flight is most likely to occur when

Capital flight is most likely to occur when

The European Parliament must approve all members of the European ______ before this body can begin its work.

Commission

What are two key political institutions of the EU? (Check all that apply.)

Council of the European Union European Commission

_____ typically involves the short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates.

Currency speculation