Q&A Hero

Q: All of the following are differences that need to be overcome for international collaborative arrangements to be effective EXCEPT ________. A) national disparities in governmental policies B) company variances in strategic directions and objectives C) governmental differences in export restrictions D) company diversity in management styles and structures

Q: Large companies that have resources to go it alone may have advantages in product development over small companies that do not because ________. A) evidence suggests that collaborative arrangements slow the speed of innovation B) large companies can dictate their terms of operations abroad C) small companies are disadvantaged in legal settlements D) large companies need not adapt to national differences

Q: Billions of investment dollars are needed to develop many new products. This trend toward higher development costs is likely to have which of the following effects on future modes of operations? A) Collaborative arrangements are likely to decrease because a company making a breakthrough will be leery of partners' appropriation of knowledge. B) Collaborative arrangements are likely to increase because of the huge investments needed for development. C) Exporting will become more important relative to other operating modes because of the large scale production facilities necessary for economic efficiency. D) Cross-licensing will gain in importance because companies will be forced to specialize more in different technologies.

Q: All of the following are important when establishing and managing a collaborative agreement EXCEPT ________. A) setting up mutual goals and expectations B) avoiding interference about how the partner handles its duties in the operation C) determining whether the agreement is reaching its goals D) assessing periodically whether a different operational form would be preferable

Q: What problem most likely arises when a company wishes to sell techniques/technology that it has either not yet fully developed or used commercially? A) A buyer is reluctant to buy what it has not seen, and a seller risks divulging secretive information. B) Most governments want to see contract details, which companies feel are proprietary. C) It is difficult to develop a rapport between negotiating parties in this type of situation. D) Parties can seldom agree on the desired level of quality control.

Q: Without a proven track record in collaborative arrangements, a company will most likely need to ________. A) have its home country government approve licensing contracts B) delegate fewer responsibilities to partners at the company C) negotiate harder with and make more concessions to a partner D) depend more on trust as a control mechanism

Q: Tom, a manager at an MNE, has been given the task of identifying a pool of companies with which the firm might form collaborative arrangements. Which of the following activities would be LEAST useful for Tom? A) attending technical conferences B) monitoring industry journals C) attending trade fairs D) constructing turnkey facilities

Q: Which of the following would most likely trigger internal tensions as a firm's modes of foreign operations change? A) losing or gaining responsibilities B) reluctance to learn about a culture C) traveling for business purposes D) geographic diversity

Q: Companies typically use various international operating forms simultaneously for all the following reasons EXCEPT which one? A) They may be at different stages of commitment for different products. B) They may be at different stages of commitment for different countries. C) They may need to balance foreign revenues among their operating divisions. D) Differences in countries' characteristics may necessitate diverse operational forms.

Q: When a company's primary motive for entering a collaborative arrangement is to learn from its partner, it is likely to ________. A) leave control to its partner B) "go it alone" after it has learned what it needs to know C) have disagreements with the partner over quality issues D) prefer the arrangement to be a licensing agreement

Q: When no single company has control over a collaborative arrangement, ________. A) the operation may lack direction B) none of the partners is responsible for legal violations C) differences in corporate culture are likely to grow D) one partner's interests are likely to be put ahead of the other partner's interests

Q: When a large company and a small company enter a collaborative arrangement, ________. A) the large company is expected to contribute more to the arrangement B) the large company is likely to be more active in the venture C) the small company is more likely to view the collaboration's expansion as competition to itself D) the small company is likely to be disadvantaged if legal action is necessary to solve a dispute

Q: Which of the following is LEAST likely to trigger the breakup of a joint venture? A) The partners place a different degree of importance on the joint venture. B) The partners develop different capabilities to contribute to the joint venture. C) The partners come from different industries. D) Objectives evolve differently over time.

Q: What is an equity alliance? A) a collaborative arrangement in which at least one collaborating company takes an ownership position in the other B) a collaboration in which each contributor receives an equitable return based on relative contribution C) a collaboration in which partners agree to share technology with each other D) a wholly owned acquisition to prevent appropriation of intellectual property

Q: All of the following would be examples of international joint ventures EXCEPT ________. A) two Japanese companies sharing ownership of a company in Canada B) a Danish company sharing ownership with a South African company in South Africa C) a government-owned company from China sharing ownership with an Australian company in Panama D) two Venezuelan companies sharing ownership of a company in Venezuela

Q: What is an international consortium? A) the ownership of a company by a government and a foreign company B) an agreement signed by most governments to protect intellectual property rights C) an international joint venture owned by at least three organizations D) an agreement between two or more governments to provide for reciprocal foreign investment protection

Q: What is an international joint venture? A) an international agreement between two or more companies to have access to each other's patents B) the ownership of a company by two or more companies, of which at least one is a foreign company where the venture is located C) an international agreement between two or more firms for the use of a trademark D) an agreement between two or more organizations to share management expertise

Q: Why do turnkey operators often require a feasibility study as part of the contract? A) By adding to the cost, they earn more money. B) This lessens the risk of contract cancellation when political leadership changes. C) This lowers their risk of foreign exchange losses. D) This helps to define what constitutes "satisfactory completion" of the project.

Q: Turnkey projects generally differ from other forms of international business in that ________. A) they tend to be smaller B) customers are more likely private companies C) they are more often located in remote areas D) they depend almost entirely on acquisitions rather than greenfield operations

Q: Which of the following firms would most likely be involved in a turnkey operation? A) American Airlines B) Bechtel Construction C) Burger King D) Microsoft

Q: What is a turnkey operation? A) a contract for the complete construction of an operating facility for a fee B) a contract with a government to service one of its key industries C) the buying of another company D) the repatriation of equity

Q: Hotel chains are large providers of international management services through collaborative operations. All of the following are reasons for this EXCEPT which one? A) Some governments have restricted foreign ownership in hotels. B) Local hotel owners may be very knowledgeable about real estate, but know little about hotel operations. C) Local companies can forego making a capital investment. D) Hotel chains can offer global brand recognition.

Q: The advantage to host countries of international management contracts is that they ________. A) receive state-of-the-art facilities B) get assistance without foreign control C) can pay in local currency D) save on making capital investments

Q: For the provider, management contracts offer the advantage of ________. A) receiving income without making a capital outlay B) increasing their merchandise exports C) reducing their global taxes D) better access to raw materials

Q: Metro Hotels, a U.S. hotel chain, has transferred several of its employees to Myanmar where they will work for three or four years before returning to the U.S. The employees will be working with a Myanmar hotel to provide it with their extensive knowledge regarding how to run a hotel. Metro is most likely involved in a ________. A) franchise B) turnkey operation C) joint venture D) management contract

Q: Franchisees sometimes wish to change the product or service offered by the franchisor to better fit local market needs abroad. Why are these changes a problem for franchisors? A) Too many changes eliminate the need for the franchisors. B) The royalties as a percentage of sales decrease. C) Governments impose more stringent operating restrictions. D) Sales decrease because consumers want to get the "real thing."

Q: Lesser-known franchisors sometimes enter foreign countries with company-owned outlets. A reason for doing this is to ________. A) guarantee profits B) avoid competition C) compete with local stores D) attract potential franchisees

Q: What is a master franchise? A) the original agreement between the franchisor and franchisee B) the franchisee with the highest revenue in a region C) a franchisee with rights to open outlets on its own or develop subfranchises D) the set of standard terms regulating the relationship between franchisor and franchisee

Q: Judson Baked Goods, a U.S. firm, grants the use of its trademark to a company in Sweden and provides the Swedish company with operational assistance on a continuing basis. Judson is most likely involved in ________. A) a management contract B) franchising C) offshoring D) appropriability

Q: When a company wants to be compensated in a foreign subsidiary beyond its contribution in capital and managerial resources, it often ________. A) licenses intangible property to its subsidiary B) negotiates a special agreement with the host government C) establishes a management contract D) sets up an equity alliance

Q: Which of the following is NOT a factor affecting the payment amount of international licensing contracts? A) geographic scope of the sales territory B) tax treaties between the parties' home countries C) length of time the asset will have market value D) market experience of using the asset elsewhere

Q: Licensing companies commonly negotiate a "front-end" payment from licensees to cover ________ transfer costs.A) employeeB) brand nameC) technologyD) copyright

Q: What is the primary reason for technology licensing to take place while a product is still in the developmental stage? A) to enable the licensor to receive some earnings in case the technology never becomes operative B) to ensure that a product launches in various countries at about the same time C) to gain funds to complete the development D) to reduce transaction costs

Q: Which of the following describes a cross-licensing agreement? A) allocation of exclusive rights to a licensee to prevent competition B) an agreement between two or more companies not to compete in each other's home countries C) an exchange of explicit knowledge for tacit knowledge D) the exchange of intangible property rights between two or more companies

Q: Which of the following is an example of an exclusive license agreement? A) Three licensees have worldwide rights to sell the product worldwide for three years, during which time no other companies can use the asset. B) The licensee is currently the only company using the intangible property, but the licensor has rights to add other licensees. C) One licensee gets rights for the north island of New Zealand, a second licensee gets rights for the south island of New Zealand, and the licensor agrees to add no new licensees to New Zealand for the next five years. D) The licensee and licensor use the property in the same market.

Q: Chrysler granted South East Motor (a company in China) rights to produce its Grand Voyager minivan for sale in China in exchange for a fee. This is an example of a(n) ________. A) licensing agreement B) bargaining school arrangement C) technology appropriation D) turnkey operation

Q: Dependencia theory holds that ________. A) countries should seek to diversify their economies B) low-income countries have practically no power in dealings with MNEs C) in a globalized world, no nation can be independent economically or politically D) there is a natural division of labor whereby developing countries depend on production using fairly unskilled labor and developed countries depend on highly educated workers

Q: All of the following are arguments for permitting foreign control of key industries EXCEPT which one? A) Managers, whether in a foreign or local company, make decisions based on what they think is best for the company rather than based on some local socio-economic agenda. B) MNEs staff their organizations abroad mainly with local nationals and depend in part on their input for making decisions. C) Foreign governments can no longer use their home-based companies to influence policies abroad. D) The security arguments for restrictions on foreign ownership are really just a sham to protect politically powerful industries and employment.

Q: All of the following are arguments for governments to limit foreign control of key industries EXCEPT which one? A) Host countries don't need foreign resources such as technology and export markets for these industries. B) History shows that home governments have used powerful foreign companies to influence policies in the countries where they operate. C) Important decisions can be made abroad that are contrary to the country's best interest. D) Foreign companies can find means of profiting in these industries without having to control them.

Q: What is a key industry? A) an industry that is locked up competitively by domestic producers B) a turnkey operator specializing in the construction of infrastructure components C) an industry that receives government subsidies D) an industry that significantly affects the economy by virtue of its size or influence on other sectors

Q: The more a company engages in international collaborative arrangements as opposed to wholly owned foreign operations, the more it is likely to ________. A) decrease its exposure to political risk B) increase its control over foreign operations C) learn rapidly about foreign environments D) protect its core assets

Q: In which of the following situations is a firm most likely to be able to choose the foreign operating form it would most like to use? A) Its main motive is to gain location-specific assets. B) It has a desired and unique resource. C) Its preference for entering foreign markets is via acquisition of foreign facilities. D) It has little concern about appropriability.

Q: Risk is an important factor for companies engaged in international business. One way a collaborative arrangement helps minimize risk when operating abroad is by ________. A) reducing the possibility of technological appropriation B) freeing up resources so a company can diversify into more countries C) preventing the entry of new competitors D) eliminating losses from exchange rate depreciation abroad

Q: Coca-Cola has collaborative arrangements whereby it produces concentrate that it sells to other companies to bottle its drinks. Which of the following terms best describes this type of arrangement? A) vertical alliance B) horizontal alliance C) link alliance D) scale alliance

Q: Which of the following is an argument for using a collaborative agreement? A) to prevent problems caused by minority shareholders B) to preserve a concentration strategy C) to secure vertical and horizontal links D) to maintain better control

Q: In which of the following situations would Company X most likely seek a collaborative arrangement with Company Z in which Company Z would handle work for Company X? A) Company X has excess capacity. B) Fixed costs for the work are high, and Company X has large volumes of work. C) Company X is inexperienced in outsourcing work. D) Fixed costs for the work are high, and Company X has small volumes of work.

Q: A greenfield investment is another name for a company's decision to ________. A) acquire an interest in an existing foreign operation B) implement sustainable marketing practices C) construct a new facility in a foreign market D) build a facility for a local company

Q: Executives at a U.S. firm are debating whether to start a new operation in Russia or acquire an existing one. Which of the following factors best supports a decision to start up a new operation in Russia? A) The Russian government places restrictions on the outward transfer of foreign capital. B) Labor relations at existing Russian firms are poor and difficult to change. C) Russia's currency is weak and stock market prices are significantly depressed. D) Existing companies have goodwill and positive brand recognition in Russia.

Q: A company that makes a foreign investment largely to acquire knowledge is most likely to use ________ as a means of expansion. A) a greenfield investment B) internalization C) an acquisition D) a licensing agreement

Q: A U.S. firm is acquiring an existing company in Germany rather than starting up a new foreign operation. Which of the following statements best supports this decision? A) Because the German firm is performing poorly, there is a good turn-around opportunity. B) The U.S. firm's U.S. facility is working at capacity. C) Stock market prices have been very high in Germany. D) The German firm has skilled personnel that the U.S. firm cannot hire at a good price on its own.

Q: Why can a company more easily pursue a global strategy when it owns 100 percent of foreign operations? A) The company is not likely to face overcapacity issues. B) The company limits foreign exchange rates fluctuations. C) The company avoids communication misunderstandings. D) The company can sub-optimize results in one country in order to optimize results globally.

Q: Appropriability theory refers to ________. A) denying rivals access to competitive resources such as management know-how B) categorizing the appropriateness of a firm's foreign investments in terms of host country objectives C) explaining an investing firm's choice of partner in a joint venture D) predicting the general pattern of direct investment locations

Q: A U.S. firm with a production facility in Brazil uses its own personnel to handle almost all activities because their outsourcing would be too costly and inefficient. Its internalization will most likely lead to cost savings because the firm can avoid ________. A) costly customs brokers B) high, fixed start-up costs C) the costs of enforcing an agreement D) sharing profits

Q: A U.S. firm owns 100% of its production facility in Brazil, thus is most likely using a ________ strategy. A) comprehensive ownership B) vertical integration C) appropriability D) internalization

Q: Small economies are sometimes less successful than large countries in attracting FDI by raising import restrictions. What is the most likely reason for this? A) Large economies impose higher trade restrictions. B) Transportation costs are generally higher in small economies. C) People in small economies are more nationalistic in their purchases. D) Small economies frequently lack sufficient markets for large-scale production.

Q: A U.S. firm plans to shift from exporting to production in China to serve the Chinese market. Which of the following statements would best explain this decision? A) China's currency is appreciating relative to the U.S. dollar. B) The firm is nearing capacity utilization in its U.S. plant. C) The company need not alter its products for the Chinese market. D) Transportation costs have become low relative to production costs.

Q: Which of the following is the LEAST likely reason that consumers would prefer domestically made products over imports? A) belief that imports are subsidized B) feelings of national pride and sentiment C) negative associations with products from certain countries D) concerns that parts will be difficult to obtain for foreign products

Q: All of the following are ways that Coca-Cola has been attempting to increase its global sales EXCEPT ________. A) gaining licenses to use brand names of other companies B) acquiring companies with complementary products C) adding alcoholic beverages to its product line D) distributing soft drinks from other companies

Q: Coca-Cola collaborates extensively abroad, but it refuses collaboration that might imperil control of its core competency. As a result, which of the following is NOT one of its international collaborative forms? A) sharing ownership in the production of its secret formula concentrate B) using franchisers to bottle, sell, and deliver Coke beverages C) licensing Coke's trademark for use on products in which it lacks skills D) forming joint ventures with companies that provide supplies for Coke products

Q: Ownership advantages refer to a firm's specific assets, international experience, and the ability to develop either low-cost or highly differentiated products within the context of its particular value chain.

Q: A company classified as a small and medium-sized enterprise (SME) has fewer than 500 employees.

Q: The opportunity to increase profitability is the primary reason that firms decide to export.

Q: As described in the opening case, SpinCent's CEO analyzed foreign markets, assessed industries, prepped his company, traveled overseas, and hired trustworthy distributors. SpinCent manages the export process including making and marketing its products for foreign buyers. The nature of these activities shows that the leadership of SpinCent is committing the company to ________. A) countertrade B) direct exporting C) indirect exporting D) third party logistics

Q: Fair Day Paper Products is a family-owned start up that imports bamboo paper from China to make custom greeting cards. The firm has experienced many problems in receiving the supplies from China; recurring problems include lost shipments, delays, and damaged products. Fair Day would most likely benefit by enlisting the help provided by which of the following? A) countertraders B) customs brokers C) import agents D) third party logistics

Q: All of the following are benefits of countertrade EXCEPT ________. A) decreasing trade protectionism B) increasing access to innovative technology C) developing new trade relationships with foreign companies D) preserving foreign exchange reserves

Q: Fundamentally, countertrade is best described as a(n)________ transaction. A) simple B) common C) desirable D) inefficient

Q: Proctor & Gamble exchanges cleaning products for machinery with Russia and Hungary. The nature of this transaction indicates that Proctor & Gamble is engaging in ________. A) third-party logistics B) freight forwarding C) countertrade D) e-commerce

Q: Companies can anticipate conducting countertrade with businesses in countries that ________. A) experience widespread economic problems B) command strong negotiation positions C) have sufficient access to cash D) weakly regulate international trade

Q: Ultimately, countertrade is an inefficient way of doing business because it ________. A) encourages buyers and sellers to use customs brokers to handle exchanges B) requires buyers and sellers to negotiate a fair value on the exchange C) reduces the risk that the goods sent as payment are of poor quality D) eliminates the potential for price and financial distortion

Q: ________ refers to any one of several different arrangements that business parties negotiate so that they can trade goods and services with limited or no use of currency. A) Factoring B) Offset C) Countertrade D) Barter

Q: Countertrade is an alternative means of structuring an international sale when ________. A) natural resources are highly desirable B) an importer is able to obtain a bank loan C) an importer does not belong to the World Bank D) conventional forms of payment are difficult, costly, or nonexistent

Q: Jordan Jewelry is a U.S. firm that designs, manufactures, and sells inexpensive jewelry and accessories. Executives at the firm believe that Jordan Jewelry could significantly increase its profitability by exporting products to foreign markets. Before engaging in international trade, Jordan executives need to develop an export plan. Which of the following questions is LEAST relevant to this activity? A) Would Jordan's resources be better utilized developing business in the United States? B) How much will it cost to get Jordan's products to the targeted markets? C) What marketing campaign would be best for Jordan's foreign markets? D) Is exporting consistent with Jordan's long-term goals?

Q: What is typically the most difficult aspect of an export plan for SMEs? A) finding a freight forwarder B) identifying core competencies C) creating countertrade activities D) targeting the right foreign market

Q: Which of the following types of agents moves international cargo, facilitates shipment tracking, and handles product returns for exporters and importers? A) trade intermediaries B) third party logistics C) customs brokers D) freight forwarders

Q: A freight forwarder performs which of the following functions? A) arranging the fastest and cheapest transportation of products to and from foreign suppliers B) taking title to the goods it exports and imports from country to country C) acting as a sales representative in a foreign market D) valuing products that qualify for favorable tariffs

Q: Morris Lighting is a U.S. firm that wants to start exporting its high-end lighting fixtures to foreign markets. Morris Lighting should seek assistance from U.S. government agencies for all of the following EXCEPT ________. A) organizing trade events that help potential exporters make foreign contacts and explore export opportunities B) understanding how to comply with domestic and foreign trade regulations C) acting as an export marketing department or international department for the company D) providing information about market demographics and product demand

Q: Federal, state, and local governments that recognize the benefits of international trade, actively aid the efforts of potential and active exporters and ________. A) ensure the quality of exported products B) establish barriers to punish foreign rivals C) collect a fee for each successful export sale D) protect the interests of struggling importers

Q: The Internet supports more companies' efforts to launch a direct exporting strategy by ________. A) providing information quickly and inexpensively B) eliminating the need for highly detailed export plans C) letting software take over customer service responsibilities D) countering the power of electronic data interchange systems

Q: An exporter that implements a(n) ________ strategy does so with the intent to develop its own international marketing capability. A) indirect selling B) freight forwarding C) direct exporting D) export intermediation

Q: Exporters who opt for direct exporting are most likely to _______. A) sustain long-term profitability B) sell products to domestic retailers C) depend on international marketers D) sell products to a foreign distributor