1. If A Business Has An Internalization Advantage, It Is More Likely To Face The Liability Of Foreignness Engage In Contract

1. If A Business Has An Internalization Advantage, It Is More Likely To Face The Liability Of Foreignness Engage In Contract

1. If a business has an internalization advantage, it is more likely to

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face the liability of foreignness

engage in contract manufacturing

own a resource that gives it a competitive advantage over its rivals

use FDI as a market-entry strategy


2. An American toy manufacturer is thinking of expanding either to Japan or China. If it chooses to expand to China, which of the following would be a direct potential cost of business?

The cost of building a new plant in Japan

The cost of R&D for toys sold at home

The cost of building a new plant in China

The potential profits lost in the Japanese market


3. ________ advantages are advantages that make it desirable for a firm to produce a good/service itself rather than contract out to another firm to produce it.






4. A manufacturer of hard drives sells its product to an American computer maker, which then exports the finished laptops. The hard-drive manufacturer has engaged in

direct exporting

business process outsourcing

intracorporate transfer

indirect exporting


5. What is the term used to describe when a firm sells its product to a domestic customer, which in turn exports the product, in either its original form or a modified form?

intracorporate transfer

direct exporting

indirect exporting



6. ________ is the most common form of international business activity.


Greenfield strategy


Management contract


7. Suppose Tesla, a U.S. car manufacturer, buys a production facility in Vietnam. Which term best describes Tesla’s activities?

greenfield strategy

acquisition strategy

mudfield strategy

joint venture


8. Comtex, a U.S. clock manufacturer, recently built a new production facility in Bangladesh. Which term best describes the activities of Comtex?

greenfield strategy

brownfield strategy

joint venture strategy

acquisition strategy


9. Flying Biscuit Café, an American restaurant, wants to enter the Latin American market through an international franchising agreement. All of the following are advantages to Flying Biscuit of using this mode of entry EXCEPT

relatively low-risk

increasing profits from shared revenues

relatively low-cost

learning opportunities for other markets


10. Burger King has established a franchise agreement with an individual in Tokyo. Burger King will most likely provide the Japanese franchisee with all of the following EXCEPT ________.

financial capital

intellectual property


operating systems


11. Which of the following is/are characteristic/s of international franchises?

They are relatively low-cost and low-risk

They often have some flexibility to meet local tastes

They use established products and systems

All of these


12. Which mode of market entry is NOT recommended in countries with weak intellectual property laws and/or lax enforcement of those laws?






13. Licensing tends to work well in markets where intellectual property protection is lax.




14. Executives at Gator Beer, a U.S. firm, have decided to enter the Chinese market through a licensing agreement with a beverage manufacturer located in Beijing. Which of the following statements, if true, would most likely undermine this decision?

Gator Beer is concerned about protecting its unique beverage formula to prevent duplication

Gator Beer typically relies on freight forwarders to handle global shipments

Gator Beer is low on capital due to a recent expansion of its domestic production plant

Gator Beer successfully entered the European and Australian markets last year


15. All of the following are steps in assessing alternative foreign markets EXCEPT

Examine sociocultural influences

Analyze market potential

Assess levels of competition

Analyze CEO preferences


16. To evaluate market potential, you would use data on all of the following EXCEPT

government elections

consumption patterns


demographic trends


17. Which American firm failed in China because consumers there prefer the DIFM, rather than the DIY, approach?



Home Depot



18. ABC Law Firm in Orlando, FL, has been looking for a way to cut costs. They recently hired a group of paralegals located in Bangalore, India, to transcribe all recorded depositions and legal proceedings for the attorneys in their firm. The firm e-mails the paralegals electronic files of the recordings, which they transcribe and send back to Orlando. ABC Law Firm most likely engages in which of the following?

business process outsourcing

management contract

foreign direct investment

contract manufacturing


19. All of the following are advantages of contract manufacturing EXCEPT

locational advantages

loss of control

reduced costs

focus on distinctive competence


20. Juanita recently purchased an FDX Computer. She needs assistance setting it up and contacts the firm’s customer-service center, which is located in Bangalore, India. FDX Computer most likely engages in which of the following?

business process outsourcing

B-O-T projects

foreign direct investment

brownfield strategies

To view answers to the questions, click here.

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