Intro to International Business Exam 3

avoid cross-licensing agreements.

A company that is concerned that technology that should remain proprietary will be transferred to a strategic alliance partner should do all of the following except:

cultural myopia

A danger of an ethnocentric policy is that it can lead to a firm's failure to understand host-country cultural differences that require different approaches to marketing and management. This is known as _______________.

Are product lines wide and deep enough with sufficient inventories?

A firm considering foreign expansion must make three basic decisions. Which of the following is not one of those three?

global standardization, localization, transnational or international.

A firm must balance the pressures for cost reduction pressures for local responsiveness. The result is generally a choice among:

international

A firm that is selling a product that serves universal needs, but that does not face significant competition is probably following a(n) _______ strategy.

value creation

A firm's ____________ is measured by the difference between the value of a product or service to the average customer and the cost of production per unit.

competition policy of the country

A firm's ability to engage in either price discrimination or strategic pricing may be limited by national or international regulations, and the most important of these are antidumping regulations and _________________.

control

A firm's performance appraisal systems are considered an important part of the firm's _________________ element, which is a central component of its organizational architecture.

transportation

A product's value-to-weight ratio affects ____________ costs, and it is a major product factor in considering where to locate production facilities.

differentiation and low cost

According to Michael Porter, the two basic strategies for creating value and attaining a competitive advantage in an industry are ________________.

about 10 percent

According to a U.N. report, a typical international trade transaction can involve 30 parties, 60 original documents and 360 copies of documents, all of which have costs associated with them. These costs can amount to _________ of the final value of the goods exported.

anticipated synergies prove to be more significant than anticipated.

Acquisitions fail for all of the following reasons except:

employee productivity

After deciding to move production back to the United States, some international business have found they should have looked beyond pay rates and pay closer attention to _________________________ before deciding whether to outsource activities to foreign locations.

Letters of credit are offered at no cost to regular customers of banks with established international departments.

All of the following are true about letters of credit except:

change their strategy and architecture to match new organizational realities

Although almost all organizations suffer from inertia and resistance to change, the complexity and global spread of many multinationals make it particularly difficult for them to ______________________.

centralization can avoid duplication of efforts

Among the arguments for centralization are that it can facilitate coordination, it can help ensure decisions are consistent with company objectives, and ______________________.

host-country nationals have limited opportunities to gain experience outside their own countries, which limits their career options

An important drawback to polycentric staffing policy is that ________________.

the majority of returning expatriates didn't know what their positions would be when they returned.

An often-overlooked element in the training and development of expatriate managers is how to prepare them for reentry - repatriation. Research and practice show:

competition intensifies

As _________________, international and localization strategies tend to become less viable, and firms need to orient their companies toward either a global standardization strategy or a transnational strategy.

transnational; global standardization; geocentric

Both the _______ strategy and the _______ strategy require a ________ approach to staffing.

True

CHAPTER 13 T/F: A firm's strategy can be defined as the actions that managers take to maximize the goals of the firm for its owner subject to the very important constraint that this is done in a legal, ethical, and socially responsible manner.

False

CHAPTER 14 T/F: Processes are the manner in which decisions are made and work is performed within an organization, and the processes include the location of decision-making responsibilities.

True

CHAPTER 15 T/F: The time, effort, and money spent to learn the rules of the game in a foreign business system are a form of pioneering cost.

True

CHAPTER 16 T/F: The advantage of the letter of credit system is that importers and exporters are likely to trust reputable banks, even if they do not trust each other.

False

CHAPTER 17 T/F: Total quality management is a philosophy and approach that grew out of Six Sigma.

True

CHAPTER 18 T/F: Although there is evidence that tastes and preferences are becoming more cosmopolitan, the global culture suggested by Theodore Levitt and convergence theory is still a long way off.

False

CHAPTER 19 T/F: While superior human resource management earns recognition and praise for the firm as a good place to work, it has not proven to be a source of competitive advantage.

between 2 and 10 percent

Countertrade can include barter, counterpurchase, offsets, switch trading, and buybacks. With this variety of options, countertrade amounts to about _______________ of world trade.

large, diverse multinationals.

Countertrade is most attractive to:

high cost manufacturing location; low cost manufacturing location

Currency depreciation can transform a country from a _____ to a ______.

rapid entry

Entering on a large scale involves the commitment of significant resources and implies ____________________.

can help firms launch their own export departments or accept continuing responsibility for exporting operations.

Export management companies:

decentralize.

Firms following a local responsiveness strategy are more likely to choose to:

core competencies

Firms often expand internationally to gain greater returns from their _____________,

the firm's organization architecture must be consistent with its strategy

For a firm to be successful, the firm's strategy must be consistent with the environment in which the firm operates and __________________.

caused temporary shutdowns in production.

For many firms that used JIT systems, the September 11 attacks on the World Trade Centers:

retail concentration, channel length, channel exclusivity and channel quality.

Four factors a firm must consider in selecting an appropriate distribution strategy are:

Processes

HRM professional have a strategic role in each of the following elements of organizational architecture except:

reduce the risks in exporting

Hiring an EMC, focusing on a few markets, entering on a small scale, devoting the time and resources for the long term, and working with locals in the target markets are all strategies that can be used to _____________________.

international

In firms pursuing a(an) _________ strategy, headquarters typically maintains centralized control over the firm's core competency, and while they require a complex organization, it is not the most complex.

can draw on large reservoirs of experience, skills, information, and other resources

In terms of exporting, Germany and Japan _______________________.

are very reactive in their approach to exporting

In terms of exporting, many small and medium-sized firms ____________________.

technological innovation

In today's world, competition is as much about _________________ as anything else, and its "creative destruction" makes it critical that firms stay on the leading edge to succeed.

the shared ownership agreement can lead to conflicts for control among the investing firms.

Joint ventures share disadvantages with other forms of entry, including potential loss of proprietary technology and know-how and the inability to realize experience curve or location economies. One distinct disadvantage is that:

the economies achieved by performing value creation activities in the optimal location, transportation costs, and trade barriers permitting.

Location economies are:

global learning.

Many international businesses are moving toward seeing factories as potential centers of excellence where design and advanced manufacturing can take place. This part of a transnational strategy is known as:

the competitive advantage of many service firms is based on management know-how

Many service firms favor a combination of franchising and subsidiaries to control the franchises within particular countries or regions because _________________.

resist the temptation to relocate because an underlying variable like wage rate might rise.

Once a factory has been established and skills have been accumulating, managers of an international business should:

integrating mechanisms

One way to coordinate units of a firm is through centralization, but if the units are large, diverse or geographically dispersed, the firm may instead use formal and informal __________________.

being able to respond quickly to shifts in customer demand

Production and logistics can have particular importance for the international business by being able to accommodate demands for local responsiveness and ___________________.

the strategy and architecture of the firm must make sense given the competitive conditions in the market

Superior enterprise profitability requires that three conditions be fulfilled: the firm's organizational architecture must be internally consistent, the organizational architecture must match or fit the strategy of the firm, and ________________________.

False

T/F: A sight draft is payable in up to 60 days, while a time draft is payable 90 days and beyond.

False

T/F: Collaboration among competitors has proven to be a risky idea; recent decades have seen a marked decline in the number of strategic alliances.

True

T/F: Cultural training, language training, and practical trading all seem to reduce expatriate failure.

True

T/F: Failure rates for American expatriates sent to developing countries run as high as 70 percent.

True

T/F: Firms using exporting as a means of serving a foreign market avoid the costs of setting up manufacturing operations in the host country and may be in a position to achieve experience curve and location economies.

True

T/F: In order to realize all major plant-level scale economies, a plant must operate at the minimum efficient scale of output.

True

T/F: Logistics should create value and create competitive advantages for the firm by reducing costs and serving customer needs.

False

T/F: Multipoint pricing is the use of price as a competitive weapon to drive weaker competitors out of a national market.

False

T/F: Source effects and country of origin effects always have a negative impact on the firm.

True

T/F: The Ex-Im Bank is an independent agency of the U.S. government that provides financing aid that facilitates exports, imports, and the exchange of commodities between the U.S. and other countries.

True

T/F: The great strength of a knowledge network is that it can be used as a nonbureaucratic conduit for knowledge flows within a multinational organization.

True

T/F: The need for coordination is greatest in transnational firms.

True

T/F: The skills within a firm that competitors cannot easily match or imitate are the firm's core competencies.

False

T/F: The strategy, operations, and organization of a firm might be consistent, but this consistency is not necessary to attain competitive advantage and garner superior profitability.

cultural toughness

The ______ dimension of Mendenhall and Oddou's theory refers to the relationship between the country of assignment and how well the expatriate adjusts to a particular posting.

global web

The _____________ of value creation activities is characterized by different stages of the value chain being dispersed to those locations around the globe where perceived value is maximized or where the costs of creation are minimized.

concentrating

The arguments for _________________ production at a few choice locations are strong when fixed costs are substantial, the minimum efficient scale of production is high, and flexible technologies are not available.

noise levels

The effectiveness of a firm's international communication efforts can be jeopardized by three variables: cultural barriers, source effects, and ______________.

underlying demand is weak.

The rate of product development tends to be greater in countries where all of the following conditions exists except:

the foreign sites upgrade their own capacity

The strategic role of a foreign production site can change over time. Often these sites are established where labor costs are low, but they may become important centers for the design and assembly of products if ________________________.

the manner in which the alliance is managed

The success of a strategic alliance hinges on three main factors: partner selection, alliance structure, and ____________________.

the experience curve

The systematic reduction in production costs that have been observed to occur over the life of a product is called:

separate national markets and different price elasticities of demand.separate national markets and different price elasticities of demand.

Two conditions are necessary for profitable price discrimination:

Global standardization

When a firm focuses on cost reductions through a variety of efforts including economies of scale, with little customization of products, the firm uses which kind of strategy?

the existence of segments that transcend national borders

When marketers in an international business are segmenting markets in foreign countries, they must be aware of two major issues: the differences between countries in the structure of market segments and ___________.

there will be a high elasticity of demand.

When there are many competitors:

there is intense pressure for cost reductions

Where major competitors are based in low-cost locations, where there is persistent excess capacity, and where consumers are powerful and face low switching costs:

Be established before rules and regulations change so the firm can be exempt from the changes

Which of the following is not considered one of the first-mover advantages?

Communications infrastructure

Which of the following is not considered part of an organization's architecture?

Move quickly to impose key cultural elements of the acquiring firm that have led to its successes

Which of the following is not one of the actions international businesses can take to reduce the risk of failure in acquisitions?

They do not require a significant amount of headquarters involvement.

Which of the following is not one of the advantages of acquisitions?

The team should all be from the same culture speaking the same language.

Which of the following is not one of the attributes of a successful cross-functional product development team?

Developing the added production capacity to support exporting

Which of the following is not one of the challenges small to medium-sized businesses face in exporting?

Tariff-free transactions

Which of the following is not one of the distinct forms of countertrade?

price of the product compared to competitive offerings

Which of the following is not one of the factors that would help determine the relative attractiveness of push and pull strategies in international communications?

It is almost impossible to enforce licensing agreements due to conflicting legal systems.

Which of the following is not one of the three serious drawbacks of licensing?

As long as change is clearly explained and demonstrated, it can be accomplished quickly and relatively painlessly.

Which of the following is not true about organizational change?

Location of decision-making responsibilities, formal divisions, and integrating mechanisms

Which three dimensions generally refer to an organization's structure?

volatility of countries' political economies, exchange rate movements, and changes in relative factor costs.

While outsourcing decisions are often difficult for purely domestic businesses, they are even more so for international businesses. These decisions are complicated by:

The Foreign Credit Insurance Association

_____ provides coverage against commercial risks and political risks to American firms doing business in foreign markets.

Centralization

_______ makes sense for firms pursuing global standardization strategies.

Performance ambiguity

__________ exists when the causes of a subunit's poor performance are not clear.

Dynamic capabilities

____________ describes the skills that become more valuable over time through learning.

Exporting

_____________ can enable a firm to grow and reduce costs through opening new markets and achieving economies of scale.

The development of the Internet; the entry of large discount superstores

________________ and __________ have helped to shorten channel length.

Firms in highly developed countries

_________________ tend to build extra performance attributes into products, but these attributes may not be demanded by consumers in less developed nations, where preferences are for more basic products.

Web-based information systems

___________________ play a crucial role in modern material management by tracking component parts and optimizing scheduling.

Localization

_______________________ is the most appropriate strategy when there are substantial differences across nations with regard to consumer tastes and preferences, and where cost pressures are not too intense.

Pressures for local responsiveness

_________________________ arise from national differences in consumer tastes and preferences, infrastructure, accepted business practices, distribution channels, and host-government demands.