BUSMHR 2500 Chapter 5

True or false: Entrepreneurs should have an understanding of property rights, contract law, product safety, and product liability.

True Reason: This is true. Entrepreneurs should have an understanding of property rights, contract law, product safety, and product liability. They should have an overall sense of the legal system of a country and especially the areas that directly affect them.

________ is a learned behavior that encompasses a wide variety of elements, including language, social structure, religion, economic and political philosophy, education, manners and customs, and aesthetics.

culture

The purchase of over 50 percent of the equity in a foreign business is known as ________ ________.

majority interest

Rank the following steps of the five-step approach of market selection in their increasing order of occurrence. Collect data and convert into comparable indicators Establish an appropriate weight for each indicator Analyze the data Develop appropriate indicators Select the appropriate market from the market rankings

1. develop appropriate indicators 2. collect data and convert into comparable indicators 3. establish an appropriate weight for each indicator 4. analyze the data 5. select the appropriate market from the market rankings

How does an entrepreneur select a good partner in an international market? Multiple choice question. By gathering as much data as possible on potential partners By selecting the entrepreneur who is the latest entrant to the market By primarily relying on instinct and gut feeling By primarily relying on his or her perception of the market

By gathering as much data as possible on potential partners

True or false: Aesthetics has implications with only gift giving.

False Reason: This is false. Aesthetics has implications not only with gift giving but also how your product is packaged and even how your office is designed.

True or false: International entrepreneurship does not consist of exporting and licensing a sales office in another country.

False Reason: This is false. International entrepreneurship may consist of exporting, licensing, opening a sales office in another country, or something as simple as placing a classified advertisement in the Paris edition of the International Herald Tribune.

The multilateral agreement with the objective of liberalizing trade by eliminating or reducing tariffs, subsidies, and import quotas is the _____. Multiple choice question. Trade-Related Aspects of Intellectual Property Rights Trade-Related Investment Measures General Agreement on Information Technology General Agreement on Tariffs and Trade

General Agreement on Tariffs and Trade

Which of the following are the general classifications of exporting? (Check all that apply.) Multiple select question. Indirect exporting Vertical exporting Horizontal exporting Direct exporting

Indirect exporting Direct exporting

Which of the following is true of a minority interest? Multiple choice question. It is a basic type of nonequity arrangement. It involves giving a foreign manufacturer the right to use a patent in return for the payment of a royalty. It is primarily used to make a major commitment to a foreign market. It can supply a company with a steady source of raw materials.

It can supply a company with a steady source of raw materials.

Identify an accurate statement about aesthetics. Multiple choice question. It is not influenced by one's culture. It has implications only with gift giving. It has implications for gift giving, product packaging, and office design. It has implications only with how a product is packaged.

It has implications for gift giving, product packaging, and office design.

Which of the following is true of language? Multiple choice question. Nonverbal language is far more important than verbal language. It is often thought of as the mirror of a country or region's culture. Verbal language is far more important than nonverbal language. It is only important for information gathering and evaluation.

It is often thought of as the mirror of a country or region's culture.

Identify the constituent countries of the North American Free Trade Agreement (NAFTA). (Check all that apply.) Multiple select question. Mexico The United States Cuba Canada Panama

Mexico The United States Canada

Identify the major factors that are most likely to define or have an impact on business as identified by Francis J. Aguilar. (Check all that apply.) Multiple select question. Political Language Economic Technical Social Religion

Political Economic Social Technical

What are the motivations that are most likely to lead to companies going global with their products and services? (Check all that apply.) Multiple select question. Low production capacity Profits Tax benefits Unique market chance Increasing home country sales Technological superiority

Profits Tax benefits Unique market chance Technological superiority

Which of the following is true of the strategic effects of a company going global? Multiple choice question. The company will always be technologically superior to its competition in the new market. Geographic closeness to a foreign market will necessarily provide a perceived closeness to the foreign customer. Psychological closeness to a country will allow the company to conduct its business more easily in the country. The company will experience more success in a geographically close market than in a psychologically close market.

Psychological closeness to a country will allow the company to conduct its business more easily in the country.

Identify an accurate statement about companies that go global. Multiple choice question. Increasing home country sales is often the most important motivation for going global. Companies will only seek to go global if they are faced with a high amount of government regulations at home. The expenses borne by companies that go global usually have an adverse impact on profits. Companies that go global typically do so without establishing distribution channels in the foreign market.

The expenses borne by companies that go global usually have an adverse impact on profits.

Which of the following factors should be considered by an entrepreneur when determining the best channel of distribution in a country? (Check all that apply.) Multiple select question. The overall size of the company in terms of the number of employees The overall sales potential The cost of a service or product The number of years since the establishment of the company The amount and kind of competition The overall marketing plan

The overall sales potential The cost of a service or product The amount and kind of competition The overall marketing plan

True or false: Entrepreneurs are recommended to gain entry to a foreign market by partnering up with an entrepreneur from that particular market.

True Reason: This is true. A good way for an entrepreneur to enter an international market is to partner with an entrepreneur in that country. These foreign entrepreneurs know the country and culture and can facilitate business transactions while keeping the entrepreneur current on business, economic, and political conditions. This partnering is facilitated by understanding the nature of entrepreneurship in the country.

The sale and shipping of products manufactured in one country to a customer located in another country is known as

exporting

Monetary policy of a country refers to _____. Multiple choice question. the overall tax that is imposed on products, services income, and property interests, activities, and opinions that help explain what consumers value and how they make their choices trends that shape the business deals of the major companies in a country interest and exchange rates, which in turn impacts inflation

interest and exchange rates, which in turn impacts inflation

The process of an entrepreneur conducting business activities across national boundaries is known as ________ _______.

international entrepreneurship

Identify the different types of nonequity arrangements. (Check all that apply.) Multiple select question. Management contracts Indirect exporting Licensing Joint ventures Turn-key projects

licensing turn-key projects management contracts

A form of direct foreign investment in which an investing entrepreneur holds a minority ownership position in a foreign venture is known as a(n) ________ ________.

minority interest

Which of the following is true of social structure? Multiple choice question. It influences the purchasing patterns of individuals. It has no impact on how managers and subordinates interact in a formal organization. Cooperation between employees is always elicited through equality irrespective of social structure. Reference groups in a society only provide overall socialization.

t influences the purchasing patterns of individuals.

A difference between an opportunity assessment plan and a business plan is that _____. Multiple choice question. the business plan has no computer-based spreadsheet the opportunity assessment plan is longer the opportunity assessment plan is used to decide if a company should act on an idea the business plan focuses on an opportunity, not a venture

the opportunity assessment plan is used to decide if a company should act on an idea

In the context of the various factors that affect businesses, psychographics refer to _____. Multiple choice question. interests, activities, and opinions and help explain what consumers value and how they make their choices economic factors that determine the monetary policies of countries social factors that influence technology adoption and usage by people trends in the fields of media, lifestyle, politics, health, and technology

interests, activities, and opinions and help explain what consumers value and how they make their choices

An attribute of an opportunity assessment plan is that _____. Multiple choice question. it is shorter than a business plan it has six different sections it is a business plan it is created on a computer-based spreadsheet

it is shorter than a business plan

True or false: The political and the economic philosophy of a country has no impact on an entrepreneur's decision on market entry and how to conduct business transactions.

False Reason: This is false. The political and the economic philosophy of a country can impact entrepreneurs and their decision on market entry and how to conduct business transactions.

Identify an accurate statement about the effects of the methods of enacting public policy on business. Multiple choice question. Entrepreneurs need not have an overall sense of the legal system of a country. Entrepreneurs should understand that court verdicts can also have the effect of law. Entrepreneurs must understand all the specific details of the legal system of a country. Entrepreneurs should be aware that treaties between two countries do not have the effect of law.

Entrepreneurs should understand that court verdicts can also have the effect of law.

True or false: The majority interest does not permit an entrepreneur to gain managerial powers.

False Reason: This is false. The majority interest allows the entrepreneur to obtain managerial control while maintaining the acquired firm's local identity.

Psychographics primarily help an entrepreneur _____. Multiple choice question. build a target consumer profile find multiple channels of product distribution reduce the cost of product development reduce the use of manual labor

build a target consumer profile

Entrepreneurs are educators. Hence, before presenting a new product or commodity in a foreign market or country, entrepreneurs must _____. Multiple choice question. be aware of all the legal processes and laws of the country comprehend how both informal and formal learning influence the country recognize that verbal communication is far more important than nonverbal communication recognize that social structure has no influence on the buying decisions of individuals

comprehend how both informal and formal learning influence the country

A country's _____ is the difference between the value of a country's imports and exports over time and it affects the valuation of its currency and its monetary policy. Multiple choice question. capital account exchange rate current account interest rate

current account

An accurate statement about social structure and institutions is that _____. Multiple choice question. social structure and stratification do not impact the roles of managers and subordinates entrepreneurs need to recognize that social structure only involves family economic class can have a tremendous impact on the way people from one social strata behave social structure and institutions do not develop a person's concept of self

economic class can have a tremendous impact on the way people from one social strata behave

Lorenzo is the CEO of an electronics company that is based in California. Currently, his company only sells its products in North America. He seeks to establish a global base in Europe and Asia. While selecting the appropriate market to invest in initially, Lorenzo must _____. Multiple choice question. rely primarily on his assumptions and gut feel first determine an appropriate entry strategy and a market plan consider geographical distance rather than psychological distance first determine the overall market size and growth indicators of a potential market

first determine the overall market size and growth indicators of a potential market

A true statement about psychological distance is that _____. Multiple choice question. there are more differences than similarities between individual entrepreneurs regardless of the country it is beneficial for companies to first do business in psychologically close countries before moving to psychologically distant nations the distance envisioned by an entrepreneur will always be based more on reality than perception there are no differences between markets or nations that are psychologically similar

it is beneficial for companies to first do business in psychologically close countries before moving to psychologically distant nations

A characteristic of culture is that _____. Multiple choice question. it has one universal definition it is not a learned behavior it is the identity of a person and society it typically has no impact on international entrepreneurship

it is the identity of a person and society

An accurate statement about the PEST analysis is that _____. Multiple choice question. it states that only economic and political factors affect business it was never identified as a general business strategy it is valuable when exploring new international business opportunities it states that only economic and social factors affect business

it is valuable when exploring new international business opportunities

A feature of the General Agreement on Tariffs and Trade (GATT) is that _____. Multiple choice question. its membership is obligatory for every member of the United Nations its objective is to liberalize trade by increasing tariffs its voluntary membership means it has limited authority to enforce unrestricted trade it provides countries with legal and judicial power to punish a violating country

its voluntary membership means it has limited authority to enforce unrestricted trade

The joining of two firms in order to form a third company in which the equity is shared is known as a(n)

joint venture

When an entrepreneur seeks to launch a new commodity or good in a new market, the entrepreneur should _____. Multiple choice question. focus on only introducing products that are too sophisticated for the market understand that social structure only affects how managers and subordinates interact recognize that verbal communication is far more important than nonverbal communication recognize the amount of emphasis the culture places on certain skills or career paths

recognize the amount of emphasis the culture places on certain skills or career paths

A true statement about distribution channels is that _____. Multiple choice question. while determining a distribution channel in a country, a company should only consider the overall sales potential they remain the same in different countries while determining a distribution channel in a country, a company should avoid considering the overall marketing plan they are critical and crucial to the success of a company in a foreign market

they are critical and crucial to the success of a company in a foreign market

A true statement about the North American Free Trade Agreement (NAFTA) is that it is an agreement _____. Multiple choice question. between Mexico, Costa Rica, and Cuba to discourage investment among constituent countries between the United States and Cuba to decrease trade barriers between constituent countries

to decrease trade barriers between constituent countries

Identify the true statements about the influence of political philosophy on businesses. (Check all that apply.) Multiple select question. A country's philosophy only affects the role it plays in embargoes, trade sanctions, and export controls. It has an impact on the number of foreign businesses that are allowed to function in a country. A country's philosophy affects the extent to which profits can be moved across nations. It lacks any impact on how businesses gain market entry into a country.

It has an impact on the number of foreign businesses that are allowed to function in a country. A country's philosophy affects the extent to which profits can be moved across nations.

Identify the situations in which joint ventures are most often utilized by entrepreneurs. (Check all that apply.) Multiple select question. When local help is not required When an entrepreneur wants to establish production houses in a foreign country When swift entry into a market is necessary When an entrepreneur seeks to buy native knowledge and an already set-up manufacturing facility

When swift entry into a market is necessary When an entrepreneur seeks to buy native knowledge and an already set-up manufacturing facility

A method by which an entrepreneur can enter a market and obtain sales and profits without direct equity investment in the foreign market is known as a(n) ________ ________.

nonequity arrangements

An accurate statement about language is that _____. Multiple choice question. nonverbal language of a culture is always considered to be more important than verbal language it is not essential for communication among those involved in a new business nonverbal language of a culture is as important as verbal language it is only important for information gathering and evaluation

nonverbal language of a culture is as important as verbal language