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