Management 5-8 (141-160)
Which of the following is a similarity between licensing and franchising?
Both are types of cooperative contracts.
_____ is selling domestically produced products to customers in foreign countries.
Exporting
Which of the following is an advantage of licensing?
It allows companies to earn additional profits without investing more money.
Which of the following statements is true of global consistency?
It simplifies decisions for managers at the headquarters of a multinational company.
Which of the following statements is true of the Maastricht Treaty of Europe?
Its purpose was to transform twelve different economies and currencies into one common economic market with one common currency.
Which of the following is a regional trade agreement between most European countries?
The Maastricht Treaty of Europe
Which of the following is an advantage of joint ventures?
They help companies avoid tariff and nontariff barriers to entry.
Which of the following is a disadvantage of exporting?
Transportation costs can significantly increase the price of an exported product.
Which of the following is a difference between global consistency and local adaptation?
Unlike global consistency, a company following a policy of local adaptation modifies its standard operating procedures to adapt to differences in foreign customers, governments, and regulatory agencies.
The two kinds of cooperative contracts in global business are:
licensing and franchising.
If companies focus too much on local adaptation, they run the risk of:
losing the cost effectiveness and productivity that result from using standardized rules and procedures throughout the world.
The most common _____ is a joint venture, which occurs when two existing companies collaborate to form a third company.
strategic alliance
Unlike a licensing arrangement, the parent company of a wholly owned business:
has complete control over the foreign facilities.
Which of the following is an example of the process of exporting?
FootSoul, a U.S.-based shoe manufacturing company, selling its shoes in the U.S., Germany, and France
Which of the following is a disadvantage of franchising?
Franchisors face a loss of control when they sell businesses to franchisees who are thousands of miles away.
Which of the following statements is true of the World Trade Organization (WTO)?
It ensures that trade between nations flows as predictably and freely as possible.
Unlike joint ventures, wholly owned affiliates are:
fully owned by their parent company.
_____ are foreign offices, facilities, and manufacturing plants that are 100 percent possessed by the parent company.
Wholly owned affiliates
One of the advantages of _____ is that the founding companies bear only part of the costs and the risks of that business.
a joint venture
A _____ is an agreement in which companies combine key resources, costs, risks, technology, and people.
strategic alliance
