International Business Final

Exporting is advantageous because it avoids the cost of establishing manufacturing operations in the host country and because it may help a firm achieve experience curve and location economies.

true

Firms pursuing a global standardization strategy are more centralized than enterprises pursuing a localization or international strategy.

true

High relative price inflation, a widening current account deficit, excessive expansion of domestic borrowing and asset price inflation are all underlying causes of banking or foreign debt crises.

true

Production denotes both service and manufacturing activities.

true

The activity that controls the transmission of physical materials through the value chain, from procurement through production and into distribution is known as logistics.

true

The foreign exchange market is a global network of banks, brokers and foreign exchange dealers connected by electronic communications systems.

true

The foreign exchange market is a market for converting the currency of one country into that of another country.

true

The institutional arrangements that govern exchange rates are referred to as the international monetary system

true

The long-run benefits of doing business in a country are a function of factors such as the size of the market, the present wealth of consumers in that market and the likely future wealth of customers.

true

The marketing mix is comprised of product attributes, distribution strategy, communication strategy and pricing strategy.

true

The rapid globalization of capital markets enables individuals and institutions based in one nation to invest in corporations based elsewhere with relative ease

true

The risk that arises from volatile changes in exchange rates is known as foreign exchange risk.

true

Identify the incorrect statement pertaining to exchange rate movements. ______

A low-cost location can be transformed into a high-cost location because of currency depreciation

When a firm has a strategic goal of pursuing a low cost strategy on a worldwide scale, the firm should follow a(n) ________

Global standardization strategy

A foreign debt crisis _____

Is a situation in which a country cannot service its debt obligations

Systematic risk _____

Is the level of non-diversifable risk in an economy

The amount of value a firm creates is best measured by the difference between _____

Its cost of production and the value that consumer perceive in its products

Decisions a firm must make about whether to perform a certain value creation activity themselves or outsource it to another entity are best known as _____

Make-or-buy decisions

A banking crisis ____

Refers to a loss of confidence in the banking system that leads to a run on banks, as individuals withdraw their deposits

To increase the potential for a successful acquisition, a firm should _____

Screen the foreign enterprise to be acquired

A pair of shoes costs 30 Britain dollars. The identical pair costs $45 in the U.S. The exchange rate is 1 Britain dollar = $1.80. In terms of cost of the shoes, _______

The U.S. offers a better deal

One drawback of relying on EMCs is that _____

The company can fail to develop its own exporting capabilities

What is vertical differentiation? _____

The location of decision-making responsibilities within a structure

What is the biggest advantage of using a letter of credit system? ______

The trust established, for the importer and exporter, because of a reputable bank

Firms may prefer acquisitions to greenfield investments for all of the following reasons except _______

They allow companies to completely sidestep government regulations on investment

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

distribution strategy

The _________ shows all of the different positions a firm can adopt with regard to adding value to the product and low cost assuming the firm's internal operations are configured efficiently to support a particular position

efficiency frontier

As long as a firm's strategy is in line with the competitive environment, it is not necessary for the strategy to be consistent with the organizational architecture.

false

Entering a foreign market on a large scale provides the opportunity to learn about the foreign country.

false

Firms pursuing global standardization or transnational strategies tend to prefer joint-venture arrangements over wholly owned subsidiaries.

false

Floating exchange rates reduce the element of risk involved in investing in foreign assets

false

Import agents are typically limited to independent trading houses.

false

It is more important to have a common culture in firms employing a localization strategy than a transnational strategy

false

Under the Bretton Woods system, only the dollar, the pound and the yen were convertible to gold.

false

When substantial investments in specialized assets are required to manufacture a component, the firm will prefer to contract it out to a supplier.

false

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

A firm's strategy can be defined as the actions that mangers take to attain the goals of the firm.

true

As exporting has become easier, the volume of export activity in the world economy has been rising.

true

Barriers to cross-border capital flows limit the ability of capital to roam the world freely in search of the highest risk-adjusted return, consequently, at any one time, there may be too much capital invested in some markets and too little in others

true

By centralizing decision making, a firm can avoid the duplication of activities that occurs when similar activities are carried on by various subunits within the organization

true