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International Business
Q:
Why do companies engage in international harvesting or divestment?
Q:
Why do companies often treat foreign reinvestment decisions differently than new foreign investment decisions?
Q:
In a short essay, compare the strategies of diversification versus concentration and provide examples of situations in which each would be used.
Q:
What are the major types of published data that managers can use to compare countries? Describe the tools available to managers for making country comparisons.
Q:
What problems are common with the published data available about different countries?
Q:
Compare the advantages of locating foreign operations to avoid where competitors have gone versus locating where competitors are.
Q:
What is meant by liability of foreignness? How might this influence location and allocation decisions?
Q:
In a short essay, discuss liquidity preference as it relates to monetary risk.
Q:
In a short essay, discuss why simply examining a country's per capita GDP and its population doesn't necessarily lead to a good estimate for potential demand.
Q:
What is scanning? What opportunities and risks are most relevant to scanning?
Q:
What is the relationship between a company's international market and its production location decisions? How do firms benefit from the use of scanning techniques when making location decisions?
Q:
The number of computer industry firms located in California's Silicon Valley exemplifies the concept of agglomeration.
Q:
When income inequality is high in a specific country, the per capita GDP figures are more meaningful.
Q:
It is generally agreed that because of technical advancements, managers will not need face-to-face communication in the future.
Q:
In developed countries, the percentage of the working-age population (using today's standards) is expected to rise by 2050.
Q:
Profit figures for individual country operations may obscure the real impact those operations have on total global performance.
Q:
A go-no-go decision for foreign expansion means that management reviews existing information and decides whether more information is needed.
Q:
Companies have tended to wait too long to divest poorly performing foreign facilities, trying instead to improve performance through expensive means.
Q:
Headquarters management often feels that people within an established operation are the best judge of the operation's investment needs.
Q:
The more a company needs to alter its products and ways of doing business to be successful abroad, the more it should rely on a diversification strategy for entering foreign markets.
Q:
In a concentration strategy for international expansion, a company goes first to one or a few countries and builds up fast there before going to other countries.
Q:
Unlike grids, matrices do not require managers to determine weights for factors that indicate risk.
Q:
When choosing international operating locations, companies should outsource the preparation of grids or matrices to experts rather than preparing them with their own personnel.
Q:
Comparability of economic information among countries is hampered by countries' use of different definitions for similar terms.
Q:
Published government data is most often inaccurate because of translation errors from other countries' languages.
Q:
A company can best benefit from a first-mover advantage by moving into a small country, before entering a much larger country.
Q:
An advantage of locating operations where there are many competitors is that the cluster of competing firms attracts multiple suppliers and specialized personnel.
Q:
Liability of foreignness refers to the situation in which a government has more stringent legal operating regulations on foreigners and foreign companies than on its own citizens and companies.
Q:
U.S. companies generally put earlier and more emphasis on countries where they perceive it's easier to operate.
Q:
Losses to companies from natural disasters are much less risky than losses from operating in violent areas.
Q:
Companies are usually willing to accept a lower rate of return on their investments in countries where they can more easily sell those investments and convert the proceeds at a favorable rate.
Q:
In assessing political risk, the observation of past patterns is problematic because situations may change for better or worse.
Q:
Governments that conduct takeovers of foreign companies rarely make formal declarations of their intent to take over in advance of the action.
Q:
Labor cost advantages gained by moving into a country with low wages may be short-lived because tax increases cancel out the low-wage advantages.
Q:
Although capital intensity is growing in most industries, labor compensation remains a significant cost for most companies.
Q:
When comparing economic and demographic variables among countries, one should consider that consumers in developing countries do not necessarily follow the same historical patterns as those in more developed countries.
Q:
Sales potential is probably the most important variable in determining international location decisions because consumer demand exceeds supply.
Q:
Good scanning helps managers avoid the need to make a detailed analysis of countries when deciding where to operate.
Q:
When planning international geographic expansion, decision makers use scanning to reduce the number of options available to a manageable number for further detailed analysis.
Q:
Committing resources to one country usually means forgoing or delaying projects in others.
Q:
Because many regional trading groups prohibit companies from producing in more than one member country, companies need to understand how to evaluate international geographic alternatives.
Q:
Which of the following best explains why Burger King has developed such a strong presence in many of the small countries of Latin America and the Caribbean?
A) These business environments allowed Burger King to take advantage of economies of scale.
B) These countries are close to a Burger King's headquarters.
C) These countries offered greater mobility of funds than countries in the European Union.
D) Unlike the BRIC countries, these business environments did not require escalation of commitment.
Q:
Carrefour expanded internationally by first ________.
A) entering adjacent countries
B) licensing its name to other companies
C) buying companies in foreign countries
D) entering many countries simultaneously with small commitments in each
Q:
Carrefour has been more successful in Europe than Walmart, whereas Walmart has been more successful in the United States than Carrefour. What is the most likely reason for these results?
A) first-mover advantages
B) nationalistic preferences of consumers
C) lack of knowing how to adapt products
D) increased exporting fees and transportation costs
Q:
All of the following have been predicted to occur in the future as the result of advances in global communications EXCEPT which one?
A) In spite of being able to work anywhere, people will choose to live primarily where their employers are headquartered.
B) The brightest minds will work more at home but will still need face-to-face interaction with their colleagues.
C) People will be drawn to live in the same places that attract people as tourists.
D) People who are both highly motivated and highly creative will continue to be attracted to interact with people like themselves.
Q:
We now have technology to allow people to communicate globally without traveling as much. Leading researchers on urbanization and planning suggest that the most likely consequence of this is ________.
A) a decrease in international airline travel
B) a decreased need for immigration restrictions
C) a smaller number of retirees living in urban areas
D) a greater number of self-motivated workers e-mailing and teleconferencing with colleagues
Q:
Which of the following is true about projected demographic changes up to the year 2050 that could affect future production and sales locations?
A) The share of the working population should rise in developed countries and fall in developing countries.
B) The growth in per capita GDP should be higher in today's developing economies than in today's developed economies.
C) The percentage of the world population living in today's developed countries is expected to increase.
D) The population should fall in sub-Saharan Africa.
Q:
Demographers project that the share (percentage of population) of what we now consider the working-age population in developed countries will decrease up to the year 2050. Which of the following is the most likely result of this trend?
A) an increase in foreign exchange among trading blocs
B) an increase in FDI provided by developed economies
C) a higher percentage in per capita GDP in today's developing economies than in today's developed economies
D) a higher percentage in per capita GDP in today's developed economies than in today's developing economies
Q:
Which of the following reasons most compels companies to make location decisions on one international opportunity at a time rather than comparing among two or more?
A) The lack of comparability in data among countries renders comparison unfeasible.
B) The information on some countries is so unreliable that companies must deal with these countries separately.
C) Decisions are made by teams, and it is usually not feasible to give so many people time away from their usual duties to examine multiple proposals.
D) If an important customer develops opportunities in a foreign country, a company may have little alternative except to follow that customer's lead.
Q:
Assume Company A receives a proposal from Company B to be a joint venture partner abroad. Company A is most likely to make its decision based on ________.
A) an opportunity-risk matrix
B) a go-no-go basis
C) a global matrix comparison
D) an oligopolistic reaction
Q:
Instead of comparing different proposals involving foreign operations, companies often make decisions by looking at proposals one at a time. All of the following are reasons for this behavior EXCEPT which one?
A) Companies need to respond quickly to opportunities.
B) Defensive decisions typically need to be made rapidly.
C) A lack of comparable data on different countries renders comparison impossible.
D) Conclusion of different proposals or studies does not usually happen simultaneously.
Q:
A go-no-go decision means ________.
A) an individual project decision is based on whether the project meets threshold criteria
B) projects are ranked and approved from the top of the list down until available resources are exhausted
C) management reviews existing information and decides whether additional individualized feasibility studies are warranted
D) projects are approved or disapproved based on the potential ease of divestment
Q:
The origin of investment proposals differs from the origin of divestment proposals in that the divestment proposals are more likely to come from ________.
A) subsidiary management
B) outside the organization
C) higher up in the organization
D) line personnel as opposed to staff personnel
Q:
Which of the following best explains why foreign subsidiary managers are often reluctant to propose divestments in the countries where they are working?
A) They are afraid of proposing the elimination of their jobs.
B) They are usually poorly trained in how to sell units or how to close them down.
C) They are too nationalistic to examine political risk objectively.
D) Many are in countries where the cultural attribute of power-distance is very high.
Q:
Which of the following is NOT true about the harvesting or divestment of foreign operations?
A) One of the motives is to use resources where the performance prospects are better.
B) Companies can harvest or divest by selling existing facilities.
C) Closing a facility can be difficult because of governmental performance contracts.
D) Companies have tended to divest too soon, rather than working to improve performance.
Q:
The decision-making process for a company's reinvestment choices is often different from those for new investment choices because ________.
A) internal rate of return and other financial measurement criteria are more difficult to compile and analyze on existing operations, given currency translation distortions
B) failure to support an existing investment may jeopardize the firm's operations and competitiveness in that country
C) most of the net value of foreign investment comes from new international capital transfers rather than from reinvestment of earnings abroad
D) corporate management feels that country managers are best able to make divestment decisions
Q:
A company should probably use a concentration strategy for international expansion when there are ________.
A) high needs for product adaptation and low growth in each market
B) short competitive lead time and low spillover effects
C) high growth rate and long competitive lead time
D) low sales stability and short competitive lead time
Q:
In a diversification strategy for international expansion, a company would move ________.
A) rapidly into many foreign countries, and then gradually increase its presence in those countries
B) rapidly into a few foreign countries with many of its products and most of its resources
C) into one foreign country and fully expand its product lines in that country before moving to another country
D) move quickly into a regional foreign market but build up its resources in only a few of the countries in the region
Q:
In a concentration strategy of foreign expansion, a company would go to ________.
A) many countries very rapidly, and then build up slowly in each
B) a foreign country with one product and not sell other products in that country until a target market share is reached
C) a reporting system that measures performance on a regional rather than a country-by-country basis
D) one or a few foreign countries and build a strong involvement there before going to other countries
Q:
The major use of the matrix as a tool in international location strategy is to ________.
A) pinpoint acceptable and unacceptable characteristics of countries
B) indicate the relative placement of countries in terms of attributes
C) rank countries on the basis of expected investment return
D) show the degree of certainty for projected returns
Q:
Which of the following best describes the purpose of using of an opportunity-risk matrix for comparing countries?
A) narrow alternatives so decision makers can make a detailed analysis of the strongest candidates
B) eliminate countries that have specific unacceptable conditions
C) determine whether to use a concentration versus diversification strategy for international expansion
D) estimate where competitors are most likely to globalize
Q:
A manager needs to prepare a grid to compare countries for location of the firm's international operations. It would be most useful for the manager to ________.
A) prepare an opportunity analysis in-house, but out-source the risk analysis
B) have agents within each country supply governmental data
C) prepare the risk analysis in-house, but out-source the opportunity analysis
D) use a team made up of people from different functions within the company
Q:
Grids are a useful method of comparing countries for international business expansion because they ________.
A) generally show how countries will perform in the future
B) show risk on one axis and opportunity on another
C) set minimum scores for proceeding further
D) highlight first-mover advantages
Q:
Top executives at Jordan, a U.S. consulting firm, are debating whether or not to expand operations into a country with a great deal of violence by staffing mostly with U.S. personnel. A vice president argues that Jordan should send its employees there. Which of the following statements LEAST supports the vice president's position?
A) Jordan can evacuate personnel more quickly than in earlier eras in case of a real emergency.
B) It is hard to identify countries without a possibility for violence.
C) Operating costs are lower in violent areas.
D) Jordan's industry does not allow the firm the luxury of avoiding high risk locations.
Q:
Top executives at Jordan, a U.S. consulting firm, are debating whether or not to expand into a country with a great deal of violence by staffing mostly with U.S. personnel. A vice president argues that Jordan should forego sending its employees there because of the high risk for them of kidnappings in the region. Which of the following statements best supports the vice president's position?
A) There is a high correlation between violence and life-threatening natural disasters.
B) Violence is a harbinger of additional risks that affect operations negatively.
C) Local personnel are immune from violence and are capable of filling positions.
D) The ability to evacuate people when necessary is much slower than it was in the past.
Q:
Which of the following is generally the most costly information source for companies?
A) individualized reports
B) reports from international agencies
C) reports from government agencies
D) published reports by accounting firms
Q:
Which of the following LEAST explains why inaccuracies appear in published information about countries?
A) inclusion of both legal and illegal economic activities
B) inclusion of both market and non-market economic activities
C) poor methodology used in data collection
D) use of different translation software
Q:
Which of the following is the LEAST likely reason for inaccuracies in published governmental data?
A) translation errors from the host country language
B) limitations of government resources and finances
C) purposeful publication of misleading information
D) false information provided to data collectors
Q:
A manager has the task of collecting and analyzing data that will help the firm decide where to locate its international operations. Which of the following best describes how the manager should handle this task?
A) conduct extensive research, regardless of the expense, in order to avoid costly mistakes
B) compare the costs of data collection with the probable payoff for the firm in order to budget and schedule the collection
C) continue data gathering until all data have been collected, regardless of how long this takes
D) focus all data collection on governmental resources because they have the highest reliability
Q:
Which of the following describes a company's strategy of moving first to those countries where local competitors are most likely to catch up to the firm's innovative advantage?
A) lead country strategy
B) imitation lag strategy
C) oligopolistic reaction strategy
D) liability of foreignness strategy
Q:
An example of a first-mover advantage in international operations is ________.
A) gaining economies of scale at a lower output level than competitors
B) increasing sales response functions and customer service
C) using a small country for market tests prior to entering a large country
D) lining up the best suppliers and distributors before competitors enter the market
Q:
Companies are more likely to gain advantages by locating near competitors for all the following reasons EXCEPT to ________.
A) take advantage of competitors' research to pick an ideal location
B) attract multiple suppliers and personnel with specialized skills
C) agree with competitors on production limitations
D) attract buyers who want to compare suppliers
Q:
The crowding of a foreign market to prevent competitors' advantages is known as ________.
A) oligopolistic reaction
B) concentration strategy
C) liability of foreignness
D) a harvesting strategy
Q:
Which of the following best explains Blockbuster's failed expansion into Germany?
A) laws limiting hours of operation
B) lack of public interest in films
C) inadequate tax incentives
D) communication problems
Q:
Which of the following best explains why U.S. firms typically place earlier and greater emphasis on expansion into Canada and the U.K.?
A) most significant sales opportunities
B) similarities in culture and legal systems
C) availability of necessary natural resources
D) government incentives for allied nations
Q:
The lower survival rate of foreign companies in comparison to local firms for many years after they begin operations is known as ________.
A) ethnocentric reaction
B) polycentric reaction
C) liability of foreignness
D) most-favored-nation behavior
Q:
U.S. companies generally put earlier and more sales-seeking emphasis on countries ________.
A) with the largest economies
B) with regional trading blocs and high tariffs
C) where governments give operating incentives
D) where operating conditions seem similar to those at home
Q:
Risks to companies from natural disasters and communicable diseases are ________.
A) evenly distributed around the world
B) more complicated today because of publicity
C) a minor issue to global firms because of insurance
D) most prevalent in the poorest countries of the world
Q:
The concept of liquidity preference in international operations refers to ________.
A) a company's willingness to accept a lower rate of return on investments in countries where it can more easily sell them and convert the proceeds at a favorable rate
B) a company's willingness to accept lower rates of return in poor countries that really need the investments
C) management's need to maintain sufficient funds, preferably in local currency, in each country of operation to ensure meeting daily cash needs
D) investors' preference for foreign stocks over foreign bonds because of the larger market for them
Q:
Fidelity Manufacturing is considering expanding its operations into the Phillipines. A manager at Fidelity has the task of predicting political risk in the Phillipines. Which of the following approaches should the manager LEAST use to accomplish the task?
A) analyzing the market share of competitors in the country
B) analyzing the country's past political patterns and trends
C) seeking and analyzing opinions of influential people in the country
D) examining social and economic conditions within the country