MG 415 FINAL

Omega, Inc. sells its fitness wrist band for $100. It cost the company $62 to make the product. Customers value the wrist band at $110. In this scenario, Omega's value creation is

$10.

Omega, Inc. sells its fitness wrist band for $100. It cost the company $62 to make the product. Customers value the wrist band at $110. In this scenario, the consumer surplus is

$10.

Steven converted $1,000 to ×105,000 for a trip to Japan. However, he spent only ×50,000. During this period, the value of the dollar weakened against the yen. Considering a current exchange rate of $1 = ×100, how many dollars did Steven spend on the trip?

$450

The Jones Consumer Products Company wants to expand internationally. In order to do this successfully, the company's CEO, Meredith Jones believes that new products are vital. Which of the following functions of the Jones Consumer Products Company is required to create new products?

research and development

Many of the world's developing nations peg their currencies, primarily to the

U.S. dollar.

Which of the following statements is true about the various exchange rate systems?

Under the Bretton Woods system, currency devaluations over 10 percent were allowed only with the approval of the IMF.

Algonquin Cosmetics markets skin care products for teenage girls between sixteen and nineteen. In approaching its international markets, Algonquin believes that its target segment spans multiple countries, transcending national borders. Algonquin Cosmetics' target segment is called a(n) _____ segment.

intermarket

Which of the following refers to the institutional arrangements that govern exchange rates?

international monetary system

In a floating exchange rate, the relative value of a currency

is determined by market forces.

While personal fitness trackers (such as Fitbit) are widely available in the U.S., they are scarcely available in international markets. Given the increasing awareness of a healthy lifestyle, such products satisfy an unmet need. A product such as Fitbit in international markets

is likely to have greater value.

Omega, Inc. sells its fitness wrist band for $100. It cost the company $62 to make the product. Customers value the wrist band at $110. One of the reasons why Omega typically charges for its wrist band less than the value placed on it by the customer is because

it is normally impossible to segment a market based on each customer's reservation price.

Typically, the price a firm charges for a good or service is

less than the value placed on that good or service by the customer.

Which of the following is a reason why a relatively poor country may be an attractive target for inward investment?

rapid economic growth

Manufacturing firms should typically aim at lowering the costs of value creation by

reducing production costs.

A second strategic objective shared by production and supply chain management is to increase product quality. In this context, quality means

reliability.

_____ can constrain the globalization of markets.

Differences in technical standards

Unhappy with the speed with which the company's export initiative was going, the CEO called Mary Adams, the person in charge of exports at Ambient Products, to understand the reasons for the company's delay. Which of the following is a valid defense that Mary Adams can use?

Exporters often face voluminous paperwork, complex formalities, and many potential delays and errors.

Which of the following is true according to Theodore Levitt's article in the Harvard Business Review about the globalization of world markets?

Global corporations operate at low relative costs.

What is the advantage of a geocentric staffing policy?

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

How is a geocentric staffing policy beneficial to a firm?

It enables the firm to make the best use of its human resources.

Which of the following is a disadvantage of an ethnocentric staffing policy?

It leads to resentment in the host country.

Which of the following is a characteristic of an ethnocentric staffing policy?

It places parent-country nationals in key management positions.

Darren Bloom, the sales manager for John Fountain Products, a small family business, is eager to get the company on an export path. The CEO of the company is not convinced, however. Which of the following is an advantage of exporting that Bloom should use to convince the CEO?

It provides large revenue and profit opportunities.

Which of the following is true of exporting?

Many foreign customers require face-to-face negotiations on their home turf.

Which of the following is true of Theodore Levitt's arguments concerning the globalization of world markets?

Modern transportation is facilitating a convergence of tastes and preferences among consumers in advanced countries of the world.

_____ is/are an element of a firm's marketing mix.

Product attributes

Rinker Audio Products has had recurring problems in its product quality. The company's manufacturing vice president suggests that Rinker use a statistically based methodology that aims to reduce defects, boost productivity, eliminate waste, and cut costs throughout the company and whose ultimate goal would be to have just 3.4 defects per million units that Rinker produces. What is the methodology that the manufacturing vice president is considering?

Six Sigma

Hans (from Germany), Abe (from Japan) and Chris (from the U.S.) were having a heated argument at an international electronics trade show. The argument was about the export performance of companies from the three countries. Which of the following is a valid statement made by the three people involved in the argument?

The United States has not yet evolved an institutional structure for promoting exports similar to that of Germany.

Assume that the value of a base model computer to an average consumer is $300, the average price that Dell can charge a consumer for that product is $275, and the average unit cost of producing that product for Dell is $150. For this scenario, which of the following is true?

The consumer surplus per computer is $25.

Which of the following best describes the relationship between the number of "sigmas" and the number of errors?

The higher the number of "sigmas," the smaller the number of errors.

A French company wants to invest 20 million euros for three months. The company found that investing in a Thai money market account would give it a higher interest rate than domestic investments. Which of the following is true about this investment?

The investment is not risk-free because foreign currency movements in the intervening period can affect the profitability of the firm.

_____ asserted in an article in the Harvard Business Review that modern transportation and communications technologies are facilitating a convergence of certain tastes and preferences among consumers in the more advanced countries of the world.

Theodore Levitt

Which of the following is true of the costs and risks associated with doing business in a foreign country?

They are lower in economically advanced nations.

Which of the following is true of medium-sized and small firms?

They consider exporting only after their domestic market is saturated.

Without the foreign exchange market, international trade and international investment on the scale that we see today would be impossible; companies would have to resort to barter. The foreign exchange market is the lubricant that enables companies based in countries that use different currencies to trade with each other.

Venadia's exports to Lutetia will increase, because Venadian goods will become cheaper in Lutetia.

The total quality management philosophy was developed by a number of American consultants. Which of the following individuals is one of them?

W. Edward Deming

The 1944 Bretton Woods conference created two major international institutions that play 11a role in the international monetary system—the International Monetary Fund (IMF) and the

World Bank.

A(n) expatriate manager refers to

a citizen of one country who is working abroad in one of the firm's subsidiaries.

Which of the following countries presents a favorable benefit-cost-risk trade-off scenario for foreign expansion?

a country with a free market system

Joanna's assessment of the value of a handbag sold at $110 is $200. The $200 is referred to as the

customer's reservation price.

Which of the following is an example of a first-mover advantage?

ability to create switching costs that tie customers into one's products or services

The interest rate on borrowings in Rhodia is 2 percent and the interest rate on bank deposits in Maritia is 7.5 percent. In this scenario, a carry trade would be to

borrow money in Rhodian currency, convert it into Maritian currency, and deposit it in a Maritian bank.

Assume that the interest rate on borrowings in India is 1 percent while the interest rate on bank deposits in a U.S. bank is 6 percent. John, an active currency trader borrows in Japanese yen, converts the money into U.S. dollars and deposits it in a U.S. bank. John is engaging in

carry trade.

Pink Polka Fashion Inc., a multinational clothing brand, has plans to expand in the European Union (EU) marketplace. To do so, the EU requires the company to

certify its products under ISO 9000.

Due to the complexity and diversity of foreign markets, firms sometimes hesitate to seek export opportunities. These firms can best overcome ignorance by

collecting information.

Gunther Home Products, Gmbh, a German manufacturer did not succeed in its international ventures because it used its domestic marketing mix "as-is" in foreign markets in addition to using the same domestic-centric approach to managing its foreign operations. Gunther Home Products' failure to understand host-country cultural differences that require different approaches to marketing and management is referred to as

cultural myopia.

Rhone-Rohrer Chemicals, a French leader in specialty chemicals used an ethnocentric policy to approach international markets. It followed the same domestic marketing and management practices in foreign markets. Rhone-Rohrer Chemicals' international expansion failed miserably because Rhone-Rohrer Chemicals suffered from

cultural myopia.

Which of the following caused a decline in the dollar/yen carry trade during 2008-2009?

decrease in interest rate differentials as the U.S. rates came down

The effect of improved quality control is to lower the costs of value creation by reducing production costs and

decreasing after-sales service costs.

Pomeroy, Inc. is a major player in the U.S. consumer electronics markets. It sells radios, televisions, CD players, and a number of similar products. Its CEO believes that Pomeroy can go into international markets with the same product line that it offers in the U.S. Which of the following factors constrains Pomeroy, Inc.'s ability to sell a standardized product to a global market using a standardized marketing strategy?

differences in product and technical standards

The government of Darnia allows its currency to nominally float freely against other currencies, but the government has the right to intervene, buying and selling currency, if it believes that the currency has deviated too far from its fair value. What Darnia is doing is called a _____ float.

dirty

First-mover disadvantages refer to

disadvantages associated with entering a foreign market before other international businesses.

Omega, Inc. sells its fitness wrist band for $100. It cost the company $62 to make the product. While Tom values the Omega wrist band at $122, his friend Dan values it at $105. The value placed by Tom and Dan are what economists would call

each customer's reservation price.

The liability associated with foreign expansion is greater for foreign firms that

enter a national market early.

Dalian Pharma, a Chinese company, prides itself on its corporate culture that it has developed over a twenty-year period. Dalian believes that its corporate culture is a key to its competitive advantage. What is the staffing policy likely to be followed by Dalian Pharma if it expands to Germany?

ethnocentric

In the Swiss firm Terabithia Systems AG, all the important positions in its international operations are held by Swiss nationals. What is the staffing policy followed by Terabithia?

ethnocentric

Which of the following staffing policies is concerned with filling all key management positions by parent-country nationals?

ethnocentric

Which of the following is a reason for the emergence of the gold standard?

expansion in the volume of international trade due to the Industrial Revolution

Ichiro Kawasaki, a Japanese citizen, is sent by his company, Kagemusha Corporation, a Japanese company, to head the company's sales office in the United States. In this situation, Ichiro is an example of a(n)

expatriate manager.

Megan, a U.S. citizen, is the operations manager at the Middle East office of HS Constructions Inc., an American firm. In this situation, she is an example of a(n)

expatriate manager.

Omega, Inc. is an early entrant for its fitness product in the country of Malnesia. As an early entrant, Omega, Inc. may find itself at a disadvantage if it

faces a subsequent change in business regulations in Malnesia.

Moora and Trun, two countries that are part of the BURPHA common market have an exchange rate system where the values of their currencies are set against each other at a mutually agreed on exchange rate. Moora and Trun's exchange rate system is called

fixed.

Which of the following includes a grouping of various types of machinery, a common materials handler, and a computer to control the production of a family of parts or products?

flexible machine cell

Jarinia, a leading global economic power, lets the foreign exchange market determine the relative value of its currency, called the junid. Jarnia's exchange rate regime is called a _____ exchange rate.

floating

Which of the following enables organizations to conduct international trade without having to resort to barter?

foreign exchange market

Rinker Audio Products has a fully-staffed purchasing department that procures various inputs. It also has various domestic manufacturing facilities that coordinate with the purchasing department. Rinker's distribution function coordinates the shipment of finished products. Taken together, Rinker Audio Products' purchasing, manufacturing, and distribution functions constitute the company's

logistics.

Darren Bloom, the sales manager for John Fountain Products, a small family business, is eager to get the company on an export path. The CEO of the company is not convinced, however. To convince the CEO, Bloom should point out that firms that do not export often

lose out on significant opportunities for cost reduction.

Robben Inc. converts $1,000,000 into euros when the exchange rate is $1 = €0.75. After three months, the company converts this back into dollars when the exchange rate is $1 = €0.80. Which of the following is the outcome of this transaction?

loss of $62,500

An important objective shared by both production and logistics functions of an international firm is to

lower costs by dispersing production activities.

Elderly travelers as well as those who are physically challenged find it hard to climb stairs when they are allotted motel rooms which are not on the first floor. The Convenience Inn has succeeded in catering to this specific group of customers via its motels, all of which have one floor of rooms with no stairs to climb. Which of the following refers to The Convenience Inn's success in identifying distinct groups of consumers whose needs, wants, and purchasing behavior differ from others in important ways?

market segmentation

Harbinger Products competes in the branded consumer foods market. Since its domestic (U.S.) market is getting quite competitive, the company wants to expand internationally. The company's CFO, Bing Jones wants to sell the company's products "as-is" in foreign markets because he wants to minimize costs. Shayna Rodriguez, the company's marketing manager is vehemently opposed to this idea. She believes that the company has to address the product attributes, distribution strategy, communication strategy, and pricing strategy for each of the markets that the company is considering enter. What is Shayna Rodriguez referring to?

marketing mix

Milly Adams, the marketing manager for Nuance Cosmetics believes that in order for the company to succeed in international markets, it has to address the choices that it has about product attributes, distribution strategy, communication strategy, and pricing strategy in its targeted markets. What is Milly Adams referring to?

marketing mix

The value that an international business can create in a foreign market is determined by the

nature of indigenous competition

The value of Surnum's, a developing economy, currency is fixed relative to the U.S. dollar. The exchange rate between the Surnum currency and other currencies is determined by the dollar exchange rate. Surnum's exchange rate is

pegged.

Which of the following refers to the gold standard?

pegging currencies to gold and guaranteeing convertibility

Which of the following staffing approaches limits career mobility and isolates headquarters from foreign subsidiaries?

polycentric

While seeking opportunities for profitable exporting, large firms generally tend to be

proactive.

Which of the following is a common pitfall that novice exporters come across?

problems securing financing

The rate of return that a firm makes on its invested capital is referred to as

profitability.

Which of the following is a function of the foreign exchange market?

provide some insurance against foreign exchange risk

Which of the following refers to currency speculation?

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

Japan's great trading houses are referred to as

sogo shosha.

Imogene Davis of Benedict Pharmaceuticals' Human Resources department is responsible for developing the criteria for selecting people for particular jobs. Which of the following strategies is Imogene Davis involved in?

staffing policy

A firm that adopts a polycentric staffing policy is less likely to

suffer from cultural myopia.

Omega, Inc. sells its fitness wrist band for $100. It cost the company $62 to make the product. Customers value the wrist band at $110. While Omega's pricing practice results in a consumer surplus, it typically charges a lower price for the wrist band than the value placed on it by customers because

the firm is competing with other firms for the customer's business.

In general, the more value customers place on a firm's products

the higher the price the firm can charge for those products.

Exporting is nearly always a way to increase the revenue and profit base of a company because

the international market is much larger than the domestic market.

Profit growth is measured by

the percentage increase in net profits over time.

In which of the following situations can an international business command higher prices for a particular product in a foreign market?

the product offers greater value to customers in the foreign market

Omega, Inc. is considering international expansion and wants to know if it is likely to command a high price for its fitness product. In which of the following situations can Omega, Inc. command higher prices for its fitness product in a foreign market?

the product offers greater value to customers in the foreign market

Assume that the interest rate on borrowings in India is 1 percent while the interest rate on bank deposits in a U.S. bank is 6 percent. John, an active currency trader borrows in Japanese yen, converts the money into U.S. dollars and deposits it in a U.S. bank. The speculative element of John's carry trade is that its success is based upon his belief that

there will be no adverse movement in exchange rates or interest rates.

Mary Warner, the sales manager for a medium-sized apparel company, is facing a tremendous challenge in convincing her boss to get the company to export. As she reflected on this challenge, she realized that many medium-sized firms like hers are not proactive in seeking export opportunities because

they are intimidated by the complexities and mechanics of exporting to foreign countries.

Which of the following is a philosophy that was widely adopted, first by Japanese companies and then American companies during the 1980s and early 1990s and from which the Six Sigma methodology directly descended?

total quality management

Gundogan Food Products manufactures and markets a wide range of dairy products. In the lead up to going international, the company's marketing and international sales staff is having a big debate with regards to the factors affecting product attributes for their business. In terms of the factors affecting product attributes, the impact of which of the following is particularly important for Gundogan Food Products?

tradition

Rinker Audio Products sources raw materials from six different suppliers around the world. These inputs are stored in Rinker-owned warehouses close to its manufacturing facility in Canton, Ohio. What part of the global supply chain do the suppliers and inputs warehouse together constitute?

upstream