IB Exam 3

The Duchess and the Duke sells through an import agent, a wholesaler, and a retailer. In this case,

A long channel exists

What is the difference between an ethnocentric and a polycentric staffing approach?

An ethnocentric staffing approach may be more expensive compared to a polycentric staffing approach

A citizen of France who moves to the United States to work at Ford is a(n)

An inpatriate

________ is the direct exchange of goods and/or services between two parties without a cash transaction and is the simplest arrangement

Barter

The term ________ refers to skills within the firm that competitors cannot easily match or imitate and that may exist in the firm's value creation activities

Core Competence

________ occurs when a firm agrees to purchase a certain amount of materials back from a country to which a sale is made

Counter purchase

The "Swiss Made" label has leveraged several watchmakers (for example, TAG Heuer) for decades now. This is an example of a ____ effect

Country of Origin

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 United States meaning of the word sucks was well known in the United Kingdom 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 efficiency frontier has a convex shape because of

Diminishing Returns

Which of the following statements is true? (2)

Direct selling may be the only way to reach consumers in poor nations with low literacy levels

________ are export specialists that offer a full menu of services to handle all aspects of exporting, similar to having an internal exporting department within your own firm

Export management companies (EMCs)

It has been suggested that learning effects are important only during the start-up period of a new process and that they cease after two or three years. Any decline in the experience curve after such a point is due to

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Countries with ________ retail systems tend to have long channels of distribution

Fragmented

Which of the following is a drawback of the polycentric approach to staffing?

Host-country nationals have limited opportunities for advancement beyond senior positions in their subsidiary.

What is an advantage of the geocentric staffing policy?

It enables the firm to build a cadre of international executives who feel at home working in a number of cultures.

Which of the following is a major advantage of using a letter of credit?

It helps international traders engage in trade with trust

A ________ states that the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents

Letter of Credit

The basic strategy paradigm suggests that to maximize its profitability, a firm should do which of the following?

Make sure that the right organization structure is in place to execute its strategy

The term ________ has been coined to describe the ability of companies to use flexible manufacturing technology to reconcile the goals of low cost and product personalization

Mass Customization

________ is the ability to understand why people of other countries behave the way they do

Perceptual ability

Which of the following statements is true of the country factors that govern international business?

Relative factor costs should be considered when selecting a country for production

A country with high car ownership, a large number of households with refrigerators, and a large number of two-income families tends to have

Retail Concentration

This type of factory—often with the same standards as the top factories in the global firm's system—is set up to overcome intangible and tangible barriers in the global marketplace

Server Factory

A ________ is payable on presentation to the drawer

Sight Draft

Japan's ________ have offices all over the world, and they proactively, continuously seek export opportunities for their affiliated companies large and small

Sogo Shosha

Counter-trade emerged in the 1960s as a way for the ________ to purchase imports

Soviet Union and the then-communist states of Eastern Europe

Which of the following is an argument that supports global advertising?

Standardized advertising lowers the costs of value creation by spreading the fixed costs of developing the advertisements over many countries

Which of the following statements is true of export credit insurance?

The Foreign Credit Insurance Association provides coverage against commercial risks and political risks

Which of the following is a disadvantage of using a letter of credit (L/C)?

The importer must pay a bank fee for the letter of credit

Which of the following statements is true of products with high value-to-weight ratios?

Their transportation accounts for a very small percentage of the total costs.

A strategy that focuses on increasing the attractiveness of a product is referred to as

a differentiation strategy

In a concentrated retail system

a few retailers supply most of the market

Which of the following staffing approaches will be most effective for a firm that is pursuing a transnational strategy?

a geocentric staffing policy

A polycentric approach may be effective for firms pursuing

a localization strategy

An ethnocentric approach to staffing is appropriate for firms that are pursuing

an international strategy

A Japanese firm prefers expatriate Japanese managers to head its foreign operations because these managers have been socialized into the firm while employed in Japan. This indicates that the firm

follows an ethnocentric staffing policy to maintain a unified corporate culture

In a seminal study, R.L. Tung found that among American multinationals, the biggest impediment to expatriate success was the

inability of the spouse to adjust

When a channel is exclusive

it is often difficult for a new firm to get access to shelf space in supermarkets

Economies that arise from performing a value creation activity in the optimal location are known as

location economies

Central to the concept of economies of scale is the idea that the best way to achieve high efficiency, and hence low unit costs, is through the

mass production of a standardized output

The level of output at which most plant-level scale economies are exhausted is referred to as the

minimum efficient scale of output

Learning effects tend to be

more significant when a technologically complex task is repeated

Which of the following products will most likely have high value-to-weight ratios?

pharmaceuticals

A multinational enterprise doing business in Nigeria decided to change the labeling on its product to conform to local customs and preferences. What type of competitive pressure did this company experience?

pressure for local responsiveness

When a company's product has a low value-to-weight ratio, the company should

produce the product in multiple locations close to major markets

A push strategy is appropriate when

the firm is selling complex new products

Concentration of production is appropriate when

the product serves universal needs

When the firm simultaneously faces both strong cost pressures and strong pressures for local responsiveness, the ideal strategy to follow is the ________ strategy

transnational

Decentralization of production is appropriate when

volatility in key exchange rates is expected