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 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.
Ownership
Internalization
Location
Reputation
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
licensing
6. ________ is the most common form of international business activity.
Licensing
Greenfield strategy
Exporting
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
training
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?
FDI
licensing
franchising
exporting
13. Licensing tends to work well in markets where intellectual property protection is lax.
True
False
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
GDP
demographic trends
17. Which American firm failed in China because consumers there prefer the DIFM, rather than the DIY, approach?
Ikea
Walmart
Home Depot
Lowe’s
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
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