CH 13
59) Because many regional trading groups prohibit companies from producing in more than one member country, companies need to understand how to evaluate international geographic alternatives.
FALSE
62) Good scanning helps managers avoid the need to make a detailed analysis of countries when deciding where to operate.
FALSE
63) Sales potential is probably the most important variable in determining international location decisions because consumer demand exceeds supply.
FALSE
66) Labor cost advantages gained by moving into a country with low wages may be short-lived because tax increases cancel out the low-wage advantages.
FALSE
67) Governments that conduct takeovers of foreign companies rarely make formal declarations of their intent to take over in advance of the action.
FALSE
70) Losses to companies from natural disasters are much less risky than losses from operating in violent areas.
FALSE
72) Liability of foreignness refers to the situation in which a government has more stringent legal operating regulations on foreigners and foreign companies than on its own citizens and companies.
FALSE
74) A company can best benefit from a first-mover advantage by moving into a small country, before entering a much larger country.
FALSE
75) Published government data is most often inaccurate because of translation errors from other countries' languages.
FALSE
77) When choosing international operating locations, companies should outsource the preparation of grids or matrices to experts rather than preparing them with their own personnel.
FALSE
78) Unlike grids, matrices do not require managers to determine weights for factors that indicate risk.
FALSE
80) The more a company needs to alter its products and ways of doing business to be successful abroad, the more it should rely on a diversification strategy for entering foreign markets.
FALSE
83) A go/no-go decision for foreign expansion means that management reviews existing information and decides whether more information is needed.
FALSE
85) In developed countries, the percentage of the working-age population (using today's standards) is expected to rise by 2050.
FALSE
86) It is generally agreed that because of technical advancements, managers will not need face-to-face communication in the future.
FALSE
87) When income inequality is high in a specific country, the per capita GDP figures are more meaningful.
FALSE
51) Which of the following reasons most compels companies to make location decisions on one international opportunity at a time rather than comparing among two or more?
If an important customer develops opportunities in a foreign country, a company may have little alternative except to follow that customer's lead.
12) When examining economic and demographic variables to compare countries' sales potential for your product, you should also consider all the following EXCEPT which one?
If countries depend heavily on the import of raw materials, what is the price of elasticity for the demand?
55) All of the following have been predicted to occur in the future as the result of advances in global communications EXCEPT which one?
In spite of being able to work anywhere, people will choose to live primarily where their employers are headquartered.
36) Top executives at Jordan, a U.S. consulting firm, are debating whether or not to expand operations into a country with a great deal of violence by staffing mostly with U.S. personnel. A vice president argues that Jordan should send its employees there. Which of the following statements LEAST supports the vice president's position?
Operating costs are lower in violent areas.
13) Which of the following is most likely a true statement about companies' acquisition of resources/assets abroad?
Resource availability limits a firm's production location choices.
6) Which of the following most accurately compares the techniques of scanning versus detailed analysis of countries?
Scanning considers a large number of countries so that only the most promising ones undergo a detailed analysis.
60) Committing resources to one country usually means forgoing or delaying projects in others.
TRUE
61) When planning international geographic expansion, decision makers use scanning to reduce the number of options available to a manageable number for further detailed analysis.
TRUE
64) When comparing economic and demographic variables among countries, one should consider that consumers in developing countries do not necessarily follow the same historical patterns as those in more developed countries.
TRUE
65) Although capital intensity is growing in most industries, labor compensation remains a significant cost for most companies.
TRUE
68) In assessing political risk, the observation of past patterns is problematic because situations may change for better or worse.
TRUE
69) Companies are usually willing to accept a lower rate of return on their investments in countries where they can more easily sell those investments and convert the proceeds at a favorable rate.
TRUE
71) U.S. companies generally put earlier and more emphasis on countries where they perceive it's easier to operate.
TRUE
73) An advantage of locating operations where there are many competitors is that the cluster of competing firms attracts multiple suppliers and specialized personnel.
TRUE
76) Comparability of economic information among countries is hampered by countries' use of different definitions for similar terms.
TRUE
79) In a concentration strategy for international expansion, a company goes first to one or a few countries and builds up fast there before going to other countries.
TRUE
81) Headquarters management often feels that people within an established operation are the best judge of the operation's investment needs.
TRUE
82) Companies have tended to wait too long to divest poorly performing foreign facilities, trying instead to improve performance through expensive means.
TRUE
84) Profit figures for individual country operations may obscure the real impact those operations have on total global performance.
TRUE
88) The number of computer industry firms located in California's Silicon Valley exemplifies the concept of agglomeration.
TRUE
53) Which of the following is true about projected demographic changes up to the year 2050 that could affect future production and sales locations?
The growth in per capita GDP should be higher in today's developing economies than in today's developed economies.
35) Top executives at Jordan, a U.S. consulting firm, are debating whether or not to expand into a country with a great deal of violence by staffing mostly with U.S. personnel. A vice president argues that Jordan should forego sending its employees there because of the high risk for them of kidnappings in the region. Which of the following statements best supports the vice president's position?
Violence is a harbinger of additional risks that affect operations negatively.
3) Executives at Wilson Enterprises need to determine how to leverage and improve the firm's existing competencies on a global basis. What are the two most basic questions that they must answer?
Which markets should we serve and where should production be located to serve those markets?
21) The concept of liquidity preference in international operations refers to ________.
a company's willingness to accept a lower rate of return on investments in countries where it can more easily sell them and convert the proceeds at a favorable rate
50) Assume Company A receives a proposal from Company B to be a joint venture partner abroad. Company A is most likely to make its decision based on ________.
a go/no-go basis
54) We now have technology to allow people to communicate globally without traveling as much. Leading researchers on urbanization and planning suggest that the most likely consequence of this is ________.
a greater number of self-motivated workers e-mailing and teleconferencing with colleagues
52) Demographers project that the share (percentage of population) of what we now consider the working-age population in developed countries will decrease up to the year 2050. Which of the following is the most likely result of this trend?
a higher percentage in per capita GDP in today's developing economies than in today's developed economies
28) Companies are more likely to gain advantages by locating near competitors for all the following reasons EXCEPT to ________.
agree with competitors on production limitations
48) A go/no-go decision means ________.
an individual project decision is based on whether the project meets threshold criteria
20) Fidelity Manufacturing is considering expanding its operations into the Philippines. A manager at Fidelity has the task of predicting political risk in the Philippines. Which of the following approaches should the manager LEAST use to accomplish the task?
analyzing the market share of competitors in the country
56) Carrefour has been more successful than Walmart in Europe, whereas Walmart has been more successful than Carrefour in the United States. What is the most likely reason for these results?
first-mover advantages
43) A company should probably use a concentration strategy for international expansion when there are ________.
high growth rate and long competitive lead times
47) The origin of investment proposals differs from the origin of divestment proposals in that the divestment proposals are more likely to come from ________.
higher up in the organization
19) In terms of political risk, it is most accurate to state that high risk ________.
if avoided, may lead to higher competitive risk
30) Which of the following describes a company's strategy of moving first to those countries where local competitors are most likely to catch up to the firm's innovative advantage?
imitation lag strategy
8) Escalation of commitment is best described as the ________.
increased likelihood of investing in a country because of having spent considerable time and money in examining it
9) Sales expansion is probably the most important variable in determining international location decisions. This statement is most likely based on the assumption that ________.
increased sales will lead to more profits
40) The major use of the matrix as a tool in international location strategy is to ________.
indicate the relative placement of countries in terms of attributes
34) Which of the following is generally the most costly information source for companies?
individualized reports
26) Which of the following best explains Blockbuster's failed expansion into Germany?
laws limiting hours of operation
24) The lower survival rate of foreign companies in comparison to local firms for many years after they begin operations is known as ________.
liability of foreignness
29) An example of a first-mover advantage in international operations is ________.
lining up the best suppliers and distributors before competitors enter the market
22) Risks to companies from natural disasters and communicable diseases are ________.
most prevalent in the poorest countries of the world
39) Which of the following best describes the purpose of using of an opportunity-risk matrix for comparing countries?
narrow alternatives so decision makers can make a detailed analysis of the strongest candidates
27) The crowding of a foreign market to prevent competitors' advantages is known as ________.
oligopolistic reaction
41) In a concentration strategy of foreign expansion, a company would go to ________.
one or a few foreign countries and build a strong involvement there before going to other countries
33) Which of the following is the LEAST likely reason that inaccuracies appear in published information about countries?
poor methodology used in data collection
42) In a diversification strategy for international expansion, a company would move ________.
rapidly into many foreign countries, and then gradually increase its presence in those countries
5) Elison Enterprises is planning international geographic expansion. A manager at Elison has been given the task of scanning for locations primarily to ________.
reduce the number of options available to a manageable number for further detailed analysis
4) A company's overall geographic strategy should be flexible enough to ________.
respond to new opportunities and withdraw from less profitable ones
1) Comparing countries in international business is LEAST useful for determining the ________.
selection of which managers to send to which countries
37) Grids are a useful method of comparing countries for international business expansion because they ________.
set minimum scores for proceeding further
25) Which of the following best explains why U.S. firms typically place earlier and greater emphasis on expansion into Canada and the U.K.?
similarities in culture and legal systems
2) International managers most likely need to understand how to evaluate international geographic alternatives because ________.
the commitment of resources to one locale may require forgoing projects in other locales
11) Gucci, a maker of luxury fashion and leather goods, plans to expand its sales market. The firm needs to compare countries for the market potential of its products. Which of the following is the best indicator for Gucci to use?
the number of millionaires in each country
14) The ability to compare production costs among countries in an effort to determine where to locate production is significantly hampered by all of the following EXCEPT ________.
the number of ways the same product can be made
18) A company's operations are most likely to be taken over by a host government when ________.
the operations are substantial and have a widespread effect on the country because of the company's size
32) Which of the following is the LEAST likely reason for inaccuracies in published governmental data?
translation errors from the host country language
7) Opal Computers is considering international production expansion. After scanning to decide on a few countries to consider more closely, Opal managers will most likely need to ________.
travel to the locations to analyze and collect specific data
38) A manager needs to prepare a grid to compare countries for location of the firm's international operations. It would be most useful for the manager to ________.
use a team made up of people from different functions within the company
23) U.S. companies generally put earlier and more sales-seeking emphasis on countries ________.
where operating conditions seem similar to those at home
49) Instead of comparing different proposals involving foreign operations, companies often make decisions by looking at proposals one at a time. All of the following are reasons for this behavior EXCEPT which one?
A lack of comparable data on different countries renders comparison impossible.
17) Which of the following statements is NOT true about risk as it affects companies' choice of locations for foreign operations?
Companies choose the cheapest location regardless of risks.
45) Which of the following is NOT true about the harvesting or divestment of foreign operations?
Companies have tended to divest too soon, rather than working to improve performance.
15) In which of the following situations would tax rate differences among countries be most important for deciding where to place an investment?
Companies want to serve an entire region within a regional trading bloc.
58) Which of the following best explains why Burger King has developed such a strong presence in many of the small countries of Latin America and the Caribbean?
These countries are close to a Burger King's headquarters.
46) Which of the following best explains why foreign subsidiary managers are often reluctant to propose divestments in the countries where they are working?
They are afraid of proposing the elimination of their jobs.
31) A manager has the task of collecting and analyzing data that will help the firm decide where to locate its international operations. Which of the following best describes how the manager should handle this task?
compare the costs of data collection with the probable payoff for the firm in order to budget and schedule the collection
16) Labor cost advantages gained by moving into a country with low wages may be short-lived because ________.
competitors follow leaders into low-wage areas
57) Carrefour expanded internationally by first ________.
entering adjacent countries
10) Dawson Manufacturing produces and sells DVD players and is planning to expand sales internationally. Dawson has narrowed down the list of potential countries to India and Guatemala. A Dawson manager has the task of obtaining data regarding the number of DVD players sold annually in India and Guatemala. If unable to locate this information, she might most likely estimate the sales potential of these two countries by ________.
examining the sales history of flat-screen televisions
44) The decision-making process for a company's reinvestment choices is often different from those for new investment choices because ________.
failure to support an existing investment may jeopardize the firm's operations and competitiveness in that country