Entrepreneurship Ch. 5
How does an entrepreneur select a good partner in an international market?
By gathering as much data as possible on potential partners.
Which of the following is true of language?
It is often thought of as the mirror of a country or region's culture.
Identify a true statement about the second major section of an opportunity assessment plan.
It focuses on the growth rate of the market.
Identify an accurate statement about aesthetics.
It has implications for gift giving, product packaging, and office design.
Which of the following is true of social structure?
It influences the purchasing patterns of individuals.
How do independent distributors influence the process of direct exporting?
They normally oversee services for companies looking for relatively quick entry into a high amount of foreign markets.
Which of the following are reasons why an entrepreneur forms a joint venture?
To share the costs and risks of a project and to obtain a competitive advantage
Identify the different types of non equity arrangements.
Turn-key projects, licensing, and management contracts
A country's _____ is the difference between the value of a country's imports and exports over time and it affects the valuation of its currency and its monetary policy.
current account
The final section of an opportunity assessment plan must focus on
determining who will fund the launch of a product idea
A conglomerate merger that involves the consolidation of two essentially unrelated firms is known as a
diversified activity merger
The purchase of over 50 percent of the equity in a foreign business is known as
majority interest
Which of the following is true of a minority interest?
It can supply a company with a steady source of raw materials.
The constituent countries of NAFTA are
Mexico, Canada, and the US
Which of the following is true of turn-key projects?
They are financed by a local company or the government, with periodic payments being made over the life of a project.
When is a licensing agreement most appropriate?
When an entrepreneur has no desire to enter a market through exporting or direct investment
Identify the situations in which joint ventures are most often utilized by entrepreneurs.
When swift entry into a market is necessary and when an entrepreneur seeks to buy native knowledge and an already set-up manufacturing facility
The section of an opportunity assessment plan that establishes a time line that displays the steps that need to be followed to successfully start a product/service idea is the _____ section.
final
An entrepreneur is most likely to form a joint venture if
his or her firm has a high degree of synergy with another firm
Monetary policy of a country refers to
interest and exchange rates, which in turn impacts inflation
In the context of the various factors that affect businesses, psychographics refer to
interests, activities, and opinions and help explain what consumers value and how they make their choices
The method of direct exporting
involves the use of independent distributors or a company's own overseas sales office in conducting international business.
Culture
is a learned behavior that encompasses a wide variety of elements, including language, social structure, religion, economic and political philosophy, education, manners and customs, and aesthetics.
The type of exporting that involves the lowest degree of knowledge for an entrepreneur occurs when the entrepreneur
is actively sought out by foreign purchasers who require sources of supply
A horizontal merger
is the combination of two firms that produce one or more of the same or closely related products in the same geographic area.
A vertical merger
is the combination of two or more firms in successive stages of production that often involve a buyer-seller relationship.
A true statement about psychological distance is that
it is beneficial for companies to first do business in psychologically close countries before moving to psychologically distant nations
A method by which an entrepreneur can enter a market and obtain sales and profits without direct equity investment in the foreign market is known as a
non equity arrangement
A method by which an entrepreneur can enter a market and obtain sales and profits without direct equity investment in the foreign market is known as a
non-equity arrangement
Licensing
normally involves an entrepreneur, who is a manufacturer, giving a foreign manufacturer the right to use a patent, trademark, technology, production process, or product in return for the payment of a royalty.
Liscensing
normally involves an entrepreneur, who is a manufacturer, giving a foreign manufacturer the right to use a patent, trademark, technology, production process, or product in return for the payment of a royalty.
Trade barriers increase an entrepreneur's costs
of exporting products or semifinished products to a country.
Entrepreneurs are recommended to gain entry to a foreign market by
partnering up with an entrepreneur from that particular market.
Entrepreneurs should have an understanding of
property rights, contract law, product safety, and product liability.
When an entrepreneur seeks to launch a new commodity or good in a new market, the entrepreneur should
recognize the amount of emphasis the culture places on certain skills or career paths
A true statement about the North American Free Trade Agreement (NAFTA) is that it is an agreement
to decrease trade barriers between constituent countries
Majority interest allows the entrepreneur
to obtain managerial control while maintaining the acquired firm's local identity
Factors that create issues for entrepreneurs by hindering international business are known as
trade barriers
The method of doing international business whereby a foreign entrepreneur supplies the manufacturing technology or infrastructure for a business and then turns it over to local owners is known as a
turn key project
The multilateral agreement with the objective of liberalizing trade by eliminating or reducing tariffs, subsidies, and import quotas is the
General Agreement on Tariffs and Trade
A form of direct foreign investment in which an investing entrepreneur holds a minority ownership position in a foreign venture is known as a
Minority interest
An accurate statement about social structure and institutions is that
economic class can have a tremendous impact on the way people from one social strata behave
The most widespread reason for mergers is probably
economies of scale
An attribute of management contracts is that
it allows a buying nation to acquire foreign expertise without allowing foreigners to buy its resources
A characteristic of a horizontal merger is that
it is motivated by economies of scale in marketing, production, or sales
An accurate statement about the PEST analysis is that
it is valuable when exploring new international business opportunities
An accurate statement about a vertical merger is that
it tends to stabilize supply and production and gives firms greater control over these aspects
A feature of the General Agreement on Tariffs and Trade (GATT) is that
its voluntary membership means it has limited authority to enforce unrestricted trade
The joining of two firms in order to form a third company in which the equity is shared is known as a
joint venture
The non equity method of international business in which an entrepreneur contracts his or her management techniques and skills to a (foreign) purchasing company is the
management contract