International Business Test 3

At Six Sigma, a production process would be highly accurate and create just _____.

3.4 defects per million units

Which of the following is an example of a positive source effect?

An Audi R8

Which of the following is a factor that transforms a low-cost location to a high-cost location?

Appreciation of local currency

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

Barter

_____ is viewed as the most restrictive countertrade arrangement and is primarily used for one-time-only deals in transactions with trading partners who are not creditworthy or trustworthy.

Barter

____ refers to the expertise, competencies, and skills of established retailers in a nation, and their ability to sell and support the products of international businesses.

Channel quality

_____ is a reciprocal buying agreement and occurs when a firm agrees to buy a certain amount of materials back from a country to which a sale is made.

Counterpurchase

_____ denotes a whole range of barter-like agreements and its principle is to trade goods and services for other goods and services when they cannot be traded for money.

Countertrade

_____ is an alternative means of structuring an international sale when conventional means of payment are difficult, costly, or nonexistent.

Countertrade

Which of the following is a major drawback of engaging in countertrade?

Countertrade may involve the exchange of unusable goods.

Which of the following statements is true of countertrade?

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

Which of the following statements is true?

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

Which of the following is one of the four elements that constitute a firm's marketing mix?

Distribution strategy

A _____ is simply an order written by an exporter instructing an importer, or an importer's agent, to pay a specified amount of money at a specified time.

Draft

____ occurs whenever a firm sells a product for a price that is less than the cost of producing it.

Dumping

With a(n) _____ system, suppliers, shippers, and the purchasing firm can communicate with each other with no time delay.

EDI

Which of the following is a nationwide group of international trade attorneys who provide free initial consultations to miniature businesses on export-related matters?

ELAN

Which of the following is NOT a successful exporting strategy used by 3M?

Enter many markets at one time to gain maximum exposure.

Which of the following is a common difficulty that traders face when exporting goods or services to other countries?

Exporters often face voluminous paperwork and complex formalities.

Which of the following is a technological factor that affects international business?

Fixed costs of setting up a production plant

Which of the following makes being dependent on one location particularly risky?

Floating exchange rates

Which of the following is a hidden cost associated with basing production in a foreign location?

High employee turnover

Before a firm is allowed access to the European marketplace, the European Union requires that the quality of the firm's manufacturing processes and products be certified under a quality standard known as _____.

ISO 9000

Which of the following is one of the important factors in determining the elasticity of demand for a product in a given country?

Income level

Which of the following is a major source of the improvement in the capabilities of a foreign site?

Increasing abundance of advanced factors of production in the nation where the factory is located

Identify an advantage of adopting a low minimum efficient scale.

It allows the firm to accommodate demands for local responsiveness.

How has the adoption of just-in-time inventory systems, computer-aided design, and computer-aided manufacturing impact firms' associations with suppliers?

It has increased pressures to establish long-term relationships with suppliers.

Which of the following statements is true of exporting?

It helps a firm achieve economies of scale.

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

It helps international traders engage in trade with trust.

Which of the following statements is true of Six Sigma?

It is a statistically based philosophy to reduce defects and boost productivity.

Which of the following is an advantage of countertrade?

It is an effective way of doing business with developing nations.

Which of the following is a drawback of a just-in-time system?

It leaves a firm without a buffer stock of inventory.

_____ allows the company to produce a wider variety of end products at a unit cost that at one time could be achieved only through the mass production of a standardized output.

Lean production

In a(n) ____, one party agrees to purchase goods and services with a specified percentage of the proceeds from the original sale and this party can fulfill the obligation with any firm in the country to which the sale is being made.

Offset

Which of the following statements about retail systems is true?

One factor contributing to greater retail concentration is an increase in car ownership.

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

Pharmaceuticals

Which of the following is a desired outcome of flexible manufacturing technology?

Reducing setup times for complex equipments

Through its _____ program, the SBA oversees about 850 volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses.

SCORE

RSA is a bicycle manufacturing company. Which of the following is a make-or-buy decision that the company will have to make?

Should the company outsource production to a low-cost vendor?

Which of the following terms refers to the use of a specialized third-party trading house in a countertrade arrangement?

Switch trading

According to Levitt, which of the following statements is true?

Technology drives the world toward a converging commonalty.

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

The FCIA provides coverage against commercial risks and political risks.

Which of the following statements is true about Small Business Administration (SBA)?

The SBA employs trade officers throughout the United States.

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 account for a very small percentage of the total costs.

Which of the following statements is true of reactive firms?

They consider exporting only after their domestic market is saturated.

Which of the following countries has a concentrated retail system?

USA

Which of the following statements is true of Web-based EDI systems?

Web-based systems are much easier to install compared to proprietary solutions.

Dynamic capabilities describe skills that _____.

become more valuable over time through learning

In a letter of credit transaction, the importer secures the letter of credit ____.

before product shipment

A _____ is issued to the exporter by the common carrier transporting the merchandise and serves as a receipt, a contract, and a document of title.

bill of lading

Which of the following is a document used to give the title of the products to a bank?

bill of lading

A(n) _____ occurs when a firm builds a plant in a country and agrees to take a certain percentage of the plant's output as partial payment for the contract.

buyback

The extent to which the place of manufacturing influences product evaluations is known as ____.

country of origin effects

The continuing persistence of ____ differences between nations acts as a major brake on any trend toward global consumer tastes and preferences.

cultural and economic

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 US 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.

To overcome cultural barriers, companies should:

develop cross-cultural literacy.

The means a firm chooses for delivering the product to the consumer is its ____.

distribution strategy

Just-in-time inventory systems _____.

economize on inventory holding costs

A(n) ____ distribution channel is one that is difficult for outsiders to access.

exclusive

Many firms pursuing a(n) ____ pricing strategy on an international scale will price low worldwide in attempting to build global sales volume as rapidly as possible, even if this means taking large losses initially.

experience curve

In theory, the advantage of EMCs is that they are __________________.

experienced specialists who can help the neophyte exporter

The ____ industry is often thought of as one in which global standardization of the marketing mix is the norm.

financial services

A(n) _____ is a grouping of various types of machinery, a common materials handler, and a centralized cell controller.

flexible machine cell

A ____ retail system is one in which there are many retailers, no one of which has a major share of the market.

fragmented

The idea that valuable knowledge does not reside just in a firm's domestic operations but can also be found in its foreign subsidiaries is called _____.

global learning

The benefits of making all or part of a product in-house seem to be greatest when the firm _____.

has highly specialized assets

As a receipt, the bill of lading indicates that the carrier ____.

has obtained the merchandise described on the face of the document

The Six Sigma methodology _____.

is a direct descendant of the total quality management philosophy

A draft used in international transactions ____.

is a document requesting payment

A banker's acceptance ____.

is a time draft that has been drawn on and accepted by a bank

An advantage of engaging in in-house production of products and components is that _____.

it enables a firm to protect the proprietary technologies that it has

The great promise of exporting is that ____.

large revenue opportunities are often found in foreign markets

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

Deming, the proponent of total quality management, argued that _____.

management should train employees in new skills

The identification of distinct groups of consumers whose purchasing behavior differs from others in important ways is known as ____.

market segmentation

Research has long maintained that a major factor of success for new products is the closeness of the relationship between:

marketing and R&D.

The set of choices the firm offers to its targeted market is known as the ____.

marketing mix

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

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

In order for price discrimination to be successful:

national markets must be kept separate.

Contrary to Levitt's suggestions, consumers in the most developed countries are often:

not willing to sacrifice their preferred attributes for lower prices.

In a country where competition is limited, ____.

prices will be high

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

Tight cross-functional integration between R&D, production, and marketing can help a company to ensure that all of the following take place except:

product development projects are driven by internal needs.

A firm that depends more on mass media advertising to communicate the marketing message to potential consumers is using a:

pull strategy.

When a firm emphasizes personal selling rather than mass media advertising in the promotional mix, the firm is using a:

push strategy.

_____ is payable on presentation to the drawee.

sight draft

Bank charges on letter of credit will depend on the ____.

size of the transaction

A _____ is an asset whose value is contingent upon a particular relationship persisting.

specialized asset

The major cost saving associated with JIT systems comes from _____.

speeding up inventory turnover

In an international transaction involving bank as a third party, the exporter ships the product after ____.

the bank promises to pay on the importer's behalf

An advantage of buying component parts, or even an entire product, from independent suppliers is that _____.

the firm can maintain its flexibility by switching orders according to circumstances

A push strategy is appropriate when:

the firm is selling complex new products.

The way a product is delivered is determined by:

the firm's entry strategy.

Concentration of production is appropriate when _____.

the product serves universal needs

A _____ allows for a delay in payment.

time draft

Logistics is the activity that controls the _____.

transmission of physical materials through the value chain

According to the concept of economies of scale, as plant output expands, _____.

unit costs decrease

Make-or-buy decisions are decisions about _____.

whether or not to outsource value creation activities