exam 3 international business

1. Identify an advantage of a low minimum efficient scale. A. Allows the firm to accommodate demands for local responsiveness B. Discounts currency risk by manufacturing all products in one location C. Helps keep overheads low at the expense of fixed costs D. Helps a firm to standardize its products for all markets

A. Allows the firm to accommodate demands for local responsiveness

1. Which of the following statements about retail systems is true? A. One factor contributing to greater retail concentration is an increase in car ownership. B. The number of households with refrigerators leads to lesser retail concentration in developed countries. C. There is a tendency for greater retail concentration in many developing countries. D. Retail systems are very fragmented in developed countries.

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

25. The Duchess and the Duke sells through an import agent, a wholesaler, and a retailer. In this case, A. a long channel exists. B. the retail system must be concentrated. C. a short channel exists. D. there is no channel.

A. a long channel exists.

Demand is said to be elastic when A. a small change in price produces a large change in demand. B. it is independent of the price and quality of a product. C. a product is considered as a necessary commodity. D. the demand for a product is independent of other goods or services.

A. a small change in price produces a large change in demand.

Concentration of production is appropriate when A. the product's value-to-weight ratio is high. B. exchange rates are expected to be volatile. C. trade barriers between countries is low. D. the product does not serve universal needs.

A. the product's value-to-weight ratio is high.

1. Standardized advertising makes sense in all of the following situations except A. when cultural differences among nations are significant B. when a firm is trying to save money C. when creative talent is scarce and one large effort to develop a campaign will be more successful than numerous smaller efforts D. when brand names are global

A. when cultural differences among nations are significant

1. When an exporting firm finds that its local agent is also carrying competitors' products, the firm may switch to a _____ to handle local marketing, sales, and service. A. wholly owned subsidiary B. franchising arrangement C. turnkey operation D. licensing agreement

A. wholly owned subsidiary

13. Firms pursuing global standardization or transnational strategies tend to prefer _____ arrangements. A. wholly owned subsidiary B. franchising C. joint-venture D. licensing

A. wholly owned subsidiary

Which of the following countries has a concentrated retail system? A. China B. USA C. Japan D. India

B. USA

The "Swiss Made" label has leveraged several watch-making companies (for example, TAG Heuer) for decades now. This is an example of a ____ effect. A. linguistic B. country of origin C. noise D. cultural

B. country of origin

The benefits of making all or part of a product in-house seem to be greatest when the firm _____. A. wants to accumulate dynamic capabilities B. has highly specialized assets C. lacks efficiency in some processes D. faces the risk of strategic inflexibility

B. has highly specialized assets

17. Which of the following is an advantage of engaging in in-house production of the entire product? A. A firm that manufactures products in-house has fewer subunits to control. B. Firms can lower costs through in-house production if it is more efficient than other companies. C. In-house production will help the firm capture more orders from other countries. D. The firms can achieve strategic flexibility with respect to the availability of materials through in-house production.

B. Firms can lower costs through in-house production if it is more efficient than other companies.

How can a firm protect its proprietary information in a joint venture? A. Share only the technology that is central to the core competence of the firm. B. Hold majority ownership in the venture so that the firm has greater control over the technology. C. Share only the technology of the firm, not the patents and copyrighted information. D. Hold minority ownership in the venture so that the firm does not have to give over control of the technology.

B. Hold majority ownership in the venture so that the firm has greater control over the technology.

24. 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 A. Six Sigma. B. ISO 9000. C. Kaizen. D. total quality management.

B. ISO 9000.

15. Which of the following is an advantage of countertrade? A. Countertrade uses instruments such as time draft and sight draft. B. It is an effective way of doing business with developing nations. C. It provides exporters and opportunity to obtain direct revenue. D. Countertrade prevents exchange of unusable or poor-quality goods.

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

14. Which of the following is a valid observation of the Export-Import (Ex-Im) Bank? A. Ex-Im Bank is an international financial institution formed to help developing nations. B. It is an independent agency of the U.S government and promotes international trade. C. Ex-Im Bank is an international financial institution that provides capital loans. D. It focuses on policies that have an impact on the exchange rate and the balance of payments

B. It is an independent agency of the U.S government and promotes international trade.

1. For U.S. firms, the most comprehensive source of export opportunities information is the: A. Small Business Administration. B. U.S. Department of Commerce. C. Federal Trade Commission. D. Foreign embassy.

B. U.S. Department of Commerce.

20. Other things being equal, the rate of new product development seems to be greater in countries where A. underlying domestic demand is weak. B. intense competition is present. C. consumers belong to lower social strata. D. infrastructure is in the developing phase.

B. intense competition is present.

23. Bank charges on letters of credit will depend on the A. Exporter's creditworthiness. B. size of the transaction. C. Exporter's means of finance. D. time taken to approve the sale.

B. size of the transaction.

18. An advantage of buying component parts, or even an entire product, from independent suppliers is that: A. it can make planning, coordination, and scheduling of adjacent processes easier for the firm. B. the firm can maintain its flexibility by switching orders according to circumstances. C. the firm will be able to maintain strict control over its proprietary technology. D. the firm will have access to superior quality raw materials and will deliver high quality products.

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

8. A _____ states that the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents. A. bill of exchange B. bill of lading C. letter of credit D. bank statement

C. letter of credit

1. Which of the following statements about franchising is true? A. It guarantees consistent product quality B. It tends to involve more short-term commitments than licensing C. It is a specialized form of licensing D. It is employed primarily by manufacturing firms

C. It is a specialized form of licensing

Forming a strategic alliance is a way to A. increase control within an organization. B. reduce conflicts between employees. C. bring together complementary skills. D. increase coordination within an organization.

C. bring together complementary skills.

How do most firms begin their international expansion? A. with a joint venture B. with a wholly owned subsidiary C. with licensing or franchising D. with exporting

D. with exporting

In ____, the contractor agrees to handle every detail of the project for a foreign client, including the training of operating personnel. A. exporting B. licensing C. franchising D. turnkey projects

D. turnkey projects

Concentration of production is not favored when important exchange rates are expected to remain relatively stable.

FALSE Concentration of production is favored when important exchange rates are expected to remain relatively stable.

The main principle of countertrade is to accept advance payments for goods and services that are exported to another country.

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

The case 'Microsoft in India', shows that Microsoft has changed its marketing approach of developing products specifically designed to meet the needs of the Indian market to a highly standardized approach.

FALSE It shows that Microsoft has changed its marketing approach of developing products specifically designed to meet the needs of the Indian market to a localized approach.

A relatively low level of fixed costs can make it economical to perform a particular activity in several locations at once.

TRUE

The more fragmented the retail system, the more expensive it is for a firm to make contact with each individual retailer.

TRUE