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International Business
Q:
Which of the following occurs when a company sells its products to buyers in a target market without going through intermediary companies?
A) export through local distributors
B) export through agents
C) sale through export management companies
D) sale through export trading companies
Q:
What is countertrade? Explain the concept of buyback as a type of countertrade, and discuss buyback as a joint venture configuration.
Q:
Why would an exporter use a sales representative or a distributor? Why would the exporter be reluctant to offer an open account payment method?
Q:
Explain why companies consider exporting. Describe the four-step model of developing a successful export strategy.
Q:
The brand name or trademark of a company is normally the single most important item desired by a franchisee.
Q:
Letters of credit are popular among traders because banks assume most of the risks.
Q:
A confirmed letter of credit is guaranteed by both the exporter's bank in the country of export and the importer's bank in the country of import.
Q:
Switch trading is the export of industrial equipment in return for products produced by that equipment.
Q:
Countertrade is not an option for smaller companies because of the cash outlays involved.
Q:
Countertrade provides a way for firms to trade either by using a small amount of hard currency or even none at all.
Q:
Agency relationships are popular among exporters because they are easy to terminate should difficulties arise.
Q:
Using a distributor increases an exporter's risk.
Q:
Typically, indirect exporting relies on local sales representatives or distributors.
Q:
Direct exporters always sell directly to end users.
Q:
Companies can achieve economies of scale by expanding into international markets.
Q:
Most large companies use exporting as a means of expanding total sales when the domestic market has become saturated.
Q:
The most common method used for buying and selling goods internationally is licensing.
Q:
Which of the following will most likely help Techno Toys sell its toys directly to buyers in the target market?
A) agents
B) sales representatives
C) export management companies
D) export trading companies
Q:
If Owen's HomeCare Products decides to sell their products to intermediaries who then resell them to buyers in target markets, the company would be engaging in ________.A) indirect exportingB) counterpurchaseC) an acquisitionD) a joint venture
Q:
Which of the following steps would Owen implement toward the end while developing a successful export strategy?
A) initiation of meetings with intermediaries
B) identification of a potential market
C) commitment of resources
D) matching of market needs to company abilities
Q:
Through his research, Owen learns that the first step in developing a successful export strategy is ________.
A) initiation of meetings with intermediaries
B) identification of a potential market
C) commitment of resources
D) matching of market needs to company abilities
Q:
Which of the following statements is true of the strategic factors that influence a company's international entry mode selection?A) Low tariffs and high quota limits encourage market entry by means of investment.B) Companies that produce goods with high shipping costs prefer exporting.C) Companies set up production units in a host market if the total cost of production is lower in the home market.D) Markets that are likely to remain relatively small consider exporting as a viable option.
Q:
Which of the following is a strategic factor that influences a company's international entry mode selection?
A) market consumption capacity
B) market receptivity
C) market size
D) market intensity
Q:
Which of the following statements is true of countertrade?
A) Countertrade is practiced by countries when there is a lack of hard currency.
B) Countertrade involves products whose prices on world markets tend to remain steady.
C) Countertrade usually involves industrial products and computer softwares.
D) Hedging risk in countertrade is prohibited.
Q:
A form of countertrade that usually typifies long-term relationships between the companies involved is called ________.
A) barter
B) franchising
C) offset
D) buyback
Q:
Buyback is defined as ________.
A) the export of industrial equipment in return for products produced by that equipment
B) an agreement that a company will offset a hard-currency sale to a nation by making a hard-currency purchase of an unspecified product from that nation in the future
C) the sale of goods or services to a country by a company that promises to make a future purchase of a specific product from that country
D) the exchange of goods or services for a certain amount of money
Q:
________ is a countertrade whereby one company sells to another its obligation to make a purchase in a given country.
A) Franchising
B) Joint venture
C) Switch trading
D) Barter
Q:
An offset agreement differs from a counterpurchase agreement in that an offset agreement ________.
A) fails to specify the type of product that must be purchased
B) fails to specify the amount that will be spent on the purchase
C) fails to give a business greater freedom in fulfilling its end of a countertrade deal
D) fails to make a hard-currency purchase of any product from that nation in the future
Q:
A company proposes that in exchange for a hard-currency sale, it will make a hard-currency purchase of an unspecified product from the buyer nation in the future. Which of the following is the company proposing?
A) a counterpurchase
B) an offset
C) a buyback
D) a barter
Q:
The sale of goods and services to a country by a company that promises to buy a specific product from that country in the future is called a(n) ________.
A) counterpurchase
B) offset
C) joint venture
D) barter
Q:
Which of the following is the oldest known form of countertrade?
A) counterpurchase
B) switch trading
C) offset
D) barter
Q:
Which of the following allows a country to earn back some of the currency it pays out for imports?
A) switch trading
B) counterpurchase
C) buyback
D) barter
Q:
Which of the following occurs when a company sells its products to intermediaries who then resell to buyers in a target market?
A) indirect exporting
B) counterpurchase
C) an acquisition
D) a joint venture
Q:
Which of the following is true of distributors?
A) The use of distributors increases the exporter's control over the price buyers are charged.
B) They are compensated with a fixed salary plus commissions based on the value of their sales.
C) They are seldom required to take ownership of the merchandise when it enters their country.
D) They can stunt the growth of the exporter's market share by charging very high prices.
Q:
Which of the following is the first step in developing a successful export strategy?
A) identification of a potential market
B) match market needs to the company's abilities
C) initiation of meetings
D) commitment of resources
Q:
Which of the following steps of the strategy development process for exports involves establishing relationships with potential local distributors?
A) identification of a potential market
B) match market needs to the company's abilities
C) initiation of meetings
D) commitment of resources
Q:
Which of the following steps of the strategy development process for exports involves performing market research and interpreting results obtained from the research?
A) identification of a potential market
B) match needs of the market to the company's abilities
C) initiation of meetings
D) commitment of resources
Q:
Which of the following is the most common method of buying and selling goods internationally?
A) exporting and importing
B) countertrade
C) a turnkey project
D) A merger or an acquisition
Q:
Identify the strategic factors that influence a company's international entry mode selection. Explain any three of them.
Q:
Products for which there are fewer substitutes can more easily absorb higher shipping and production costs.
Q:
Which of the following statements best differentiates between franchising and licensing?
A) Licensing gives a company greater control than franchising over the sale of its product in a target market.
B) Franchising is common in manufacturing industries while licensing is primarily used in service industries.
C) Franchising requires ongoing assistance from the franchiser while licensing normally involves a one-time transfer of property.
D) Licensees must often meet strict guidelines on product quality, day-to-day management duties, and marketing promotions unlike franchisees.
Q:
What are the differences between a turnkey project and a strategic alliance?
Q:
What are the advantages of pursuing a wholly owned subsidiary as an entry strategy?
Q:
Under a turnkey project, one company supplies another with managerial expertise for a specific period of time.
Q:
The primary advantage of franchising is that franchisees have a great degree of organizational flexibility.
Q:
Franchising is primarily used in the manufacturing industries.
Q:
The board of directors of Sports Stuff is concerned with the firm's lack of experience in foreign markets. To minimize this problem, Herb recommends that the firm create a ________ with a local partner.
A) joint venture
B) turnkey project
C) wholly owned subsidiary
D) franchise
Q:
The CEO of Sports Stuff has decided that the company needs to retain complete control over its operations in Europe. To achieve this objective, Herb would most likely recommend that the firm establish a ________.
A) joint venture
B) cross licensing agreement
C) wholly owned subsidiary
D) strategic alliance
Q:
Which of the following is a disadvantage of strategic alliances?A) They are the most expensive among the investment entry modes.B) They increase the likelihood that one partner will try to take advantage of the other.C) They create future competitors.D) They fail to tap into their competitors' specific strengths.
Q:
A ________ joint venture is formed when each partner requires the same component in its production process.
A) backward
B) multistage
C) forward
D) buyback
Q:
Which of the following types of joint ventures involve parties investing together in downstream business activities?
A) backward integration
B) forward integration
C) multistage
D) buyback
Q:
A ________ is a separate company created and owned by two or more independent entities to achieve a common business objective.
A) wholly owned subsidiary
B) joint venture
C) strategic alliance
D) turnkey project
Q:
Which of the following is an advantage of wholly owned subsidiaries?
A) The parent company receives all profits generated by the subsidiary.
B) They are the least expensive investment entry modes.
C) They help in the sharing of the cost of an international investment project.
D) They are the least risky when compared to other investment entry modes.
Q:
Which of the following is an investment entry mode?
A) licensing
B) franchising
C) joint venture
D) turnkey project
Q:
When one company is hired to design, construct, and test a production facility for a client, the arrangement is called ________.
A) a turnkey project
B) licensing
C) a joint venture
D) franchising
Q:
Which of the following is a contractual entry mode in which one company supplies another with intangible property and other assistance over an extended period?
A) franchising
B) management contract
C) licensing
D) strategic alliance
Q:
Which of the following statements is true of licensing?
A) Licensing restricts finances needed for international expansion.
B) Cross licensing grants a company the right to use a property but does not grant it sole access to a market.
C) A major advantage of licensing is that it is the least risky method of international expansion.
D) Licensing increases the likelihood that a licensor's product will appear on the black market.
Q:
Discuss the advantages of licensing, low-cost production, and low-cost shipping for international companies.
Q:
Explain franchising with examples. Mention the advantages and disadvantages associated with franchising. How is franchising different from licensing?
Q:
Low tariffs and high quota limits encourage market entry by means of investment.
Q:
The most important disadvantage of a strategic alliance is that it can create a future local or even global competitor.
Q:
In a backward integration joint venture, the parties choose to invest together in downstream business activities.
Q:
Which of the following entry modes would Sports Stuff be implementing if it hires a company to design, construct, and test a production facility on its behalf?
A) joint venture
B) turnkey project
C) wholly owned subsidiary
D) franchising
Q:
Which of the following is a contractual entry mode in which a company owning intangible property grants another firm the right to use that property for a specified period of time?A) franchisingB) licensingC) management contractD) strategic alliance
Q:
Which of the following is a contractual entry mode?
A) wholly owned subsidies
B) turnkey projects
C) joint ventures
D) strategic alliances
Q:
Which of the following refers to the exchange of goods or services directly for other goods or services without the use of money?
A) offset
B) barter
C) counterpurchase
D) switch trading
Q:
Selling goods or services that are paid for, in whole or part, with other goods or services is called ________.
A) indirect exporting
B) countertrade
C) licensing
D) a joint venture
Q:
The biggest advantage of an export management company is usually its ________.
A) knowledge of the target market's cultural, political, legal, and economic conditions
B) well-developed and extensive distribution channels and storage facilities
C) well-rounded experience in countertrade-related activities
D) financial understanding of investment projects and its manufacturing expertise
Q:
Describe the process of how the documentary collection procedure works using an example.
Q:
What are the different financing methods available to exporters and importers?
Q:
Discuss the steps companies should take to avoid export and import blunders. How can an advance payment method help exporters reduce financial risk?
Q:
Cross licensing occurs when companies use licensing agreements to swap intangible property with one another.
Q:
The open account method of export/import financing is used when the two parties are unfamiliar with each other.
Q:
A sight draft extends the period of time following delivery by which the importer must pay for goods.
Q:
Advance payment made by an importer to an exporter normally takes the form of a sight draft.
Q:
Advance payment is the least favorable method of payment collection for exporters.
Q:
Matching market needs to the company's abilities is the first step in developing a successful export strategy.
Q:
Herb has been exploring another type of entry mode that requires ongoing assistance on the part of one firm, often in the form of start-up capital, management training, or location advice. Herb is most likely considering ________.
A) a strategic alliance
B) franchising
C) licensing
D) a joint venture
Q:
Herb knows that much of the success his company enjoys is due to the patents and copyrights that protect the company's products. If Sports Stuff chooses an entry mode in which it grants another firm the right to use its intangible property for a specified period of time, it would be engaging in ________.
A) a turnkey project
B) franchising
C) licensing
D) a joint venture
Q:
In his research, Alistair discovers a type of arrangement in which industrial equipment is exported in return for products produced by that equipment. This arrangement is known as ________.A) barterB) offsetC) switch tradingD) buyback