IBUS Exam Three Review

Which statement about fragmented retail systems is true?

Fragmented retail systems tend to promote the growth of wholesalers to serve retailers

As a receipt, the bill of lading indicates the carrier

Has obtained the merchandise described on the face of document

What is true of acquisitions?

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

A company wants to expand internationally and is weighing the pros and cons of various entry modes. What rationale would you use to show the advantage of exporting as a mode of entry?

It avoids the often substantial costs of established manufacturing operations in the host country

What is a distinct advantage of exporting?

It avoids the often substantial costs of establishing manufacturing operations in the host country

Which statement is true of strategic alliances?

Strategic alliances allow firms to bring together complementary skills and assets that neither company could easily develop on its own

Which statement about the choice of distribution strategy is true?

The longer a channel, the greater the aggregate markup, and the higher the price that consumers are charged for the final product

Assume that a European nation operates under a fixed exchange rate regime. What would occur if this nation rapidly increased its money supply by printing more currency?

The prices of imports would become more attractive in the country

What will happen if a country increases its money supply rapidly under a fixed exchange rate regime?

The trade deficit would widen in that country

What is a reason that firms take a reactive approach to exporting rather than a proactive approach?

They are intimidated by the comlextiles and mechanics of exporting to countries where business practices, language, culture legal systems, and currency are very different from the home market

According to Bartlett and Ghoshal, how should firms from developing countries approach international expansion

They suggest that companies should use the entry of foreign multinationals as an opportunity to learn from these competitors by benchmarking their operations and performance against them

Supporters of floating exchange rates

argue that floating rates help adjust trade imbalances

If India traded textiles with the United States in exchange for corn products, this would be an of which form of countertrade?

barter

Countertrade is a form of

bartering

Pure Water manufacturers portable water filtration systems. It wants to market these products in undeveloped nations where water quality is poor and people lack easy access to these systems. The company knows that to successfully enter a foreign market, the retailers will have to be educated on how these products work. What distribution factor does this represent?

channel quality

Other things being equal, the rate of new-product development seems to be greater in countries where

consumers are affluent

In the 1960s, the Swedish vacuum manufacturer Electrolux successfully marketed vacuums in the United Kingdom with the slogan "Nothing sucks like an Electrolux". The informal U.S. meaning of the word 'sucks' was already well known in the UK at the time, and the company hoped the slogan, with its possible double entendre, would gain attention. When this slogan was used in the American market, it was a catastrophe. This is an example of:

cultural differences

The value of US dollar increased between 1980 and 1985

despite running a growing trade deficit

A channel is considered to be very short if the producer sells

directly to the consumer

West Cost Lumbers, based in Oregon, has contracted with a company in Italy to export 1 ton of lumber. West Coast Lumbers has written an order requesting that the Italian company pay $20,000 by August 1 prior to the shipping date. This order is called a

draft

Those against the use of fixed exchange rates would argue that

each country had the freedom to choose its own inflation rate

Advocates of a ______ argue that removal of the obligation to maintain exchange rate parity would restore monetary control to a government.

floating exchange rate regime

In a typical international trade transaction, the

importers bank sends a letter of credit to the exports bank

Booze brothers developed an alcohol-flavored additive that can be added to water to mimic the taste of a margarita, but without the alcohol. The company granted the right to use this technology to a major bottled water manufacturer. The water manufacturer produced a line of water bottles with the flavored additive and Booze Brothers recieves a $1.00 royalty for every "margarita" water bottle that is sold. This is an example of

licensing

Currencies of countries with currency boards will become uncompetitive and overvalued if

local inflations rates remain higher than the inflation rate in the country to which the currency is pegged

The costs and risks associated with doing business in a foreign country are typically

low in an economically advanced nation

During the 1990s, some Japanese and Western banks were far too willing to lend large amounts to companies that were already overleveraged. The banks knew the government would save them if these loans were foreclosed. What type of activity does this represent?

moral hazard

The great virtue claimed for a ________ is that it imposes monetary discipline on a country and leads to low inflation

pegged exchange rate

Prestige Consulting is a large software service provider. The company has the larget market share in the industry. In order to restrain the smaller competitors in the market, the company sells some of its products at very low prices. This is an example of _________ pricing

predatory

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

screen the foreign enterprise to be acquired

Bank charges on letter of credit will depend on the

size of the transaction

If a ________ change in a price produces a ______ change in demand, then demand is said to be elastic.

small, large

French wine, Italian clothes, and German luxury cars all benefit from

source effects

Which entry mode into a foreign market best serves a high-tech firm because it reduces the risk of losing that competence?

wholly owned subsidiaries

What is a successful exporting strategy used by 3M

Add additional products once exporting becomes successful

Which statement is true of countertrade?

Countertrade occurs when goods and services are traded for other goods and services

Repayment of medium- and long-term loans that U.S. commercial banks make to foreign borrowers for purchasing U.S. exports is guaranteed by the

EXIM banks

Under _____ agreements, a firm might license some valuable intangible property to a foreign partner, but in addition to a royalty payment, the firm might also request that the foreign partner license some of its valuable know-how to the firm.

a cross-licensing

A push strategy is appropriate when

the firm is selling complex new products

Under a currency board system

the government lacks the ability to set interest rates.