Question 1

Small Business Intermediaries (Scenario) 
Mary's Mosaics is a small business in California that creates custom-designed decorative items from mosaic tiles and glass. The international e-commerce created for Mary's Mosaics generates the majority of the firm's business, although the firm also sells items to U.S. retailers for domestic sale. Mary Boyd, the CEO of Mary's Mosaics, recently received an order from a Spanish retailer for $20,000 worth of mosaic items. Similar orders have been placed from importers in Australia, England, and Canada. Mary needs to identify appropriate foreign intermediaries for each market.
-Which of the following should be established by Mary's Mosaics to avoid intermediary difficulties?

Accepted Answer

A)   It should seek a long-term joint venture partnership.
B)   It should use countertrade as the method of payment when doing business with foreign intermediaries.
C)   It should seek permanent employment with the foreign intermediary.
D)   It should establish a contractual clarification of responsibilities.E) A) and C)
F) B) and C)

Question 2

Which of the following is true about FDI?

Accepted Answer

A)   A focal firm makes minimum resource commitment as domestic firms take most of the financial responsibilities.
B)   A focal firm establishes a relatively permanent base in the foreign market, which increases flexibility for market and company conditions.
C)   A focal firm attains decreased risk due to the certainty in the foreign business environment.
D)   A focal firm attains maximum control by establishing a physical presence in the foreign market.E) A) and D)
F) B) and C)

Question 3

In a short essay, explain why most firms use exporting as part of their internationalization portfolio, and discuss how Incoterms have mitigated problems with logistics.

Accepted Answer

Beyond initial entry, most firms, large ...

Question 4

Which of the following represents outbound home-based international exchange activities?

Accepted Answer

A)   foreign direct investment
B)   equity-based collaborative venture
C)   exporting
D)   franchisingE) All of the above
F) A) and B)

Question 5

Large MNEs use exporting as a manner of initial internationalization, but once they build large manufacturing facilities abroad, the firm no longer exports many products due to the high costs involved.

Accepted Answer

A) True 
 B)False  False

Question 6

Which of the following is a characteristic of direct exporting?

Accepted Answer

A)   exporter uses few corporate resources and personnel
B)   exporter develops a closer relationship with foreign buyers
C)   exporter contracts with domestic intermediaries
D)   exporter delegates responsibility of finding buyersE) B) and C)
F) All of the above

Question 7

Which of the following is an advantage of exporting?

Accepted Answer

A)   It allows focal firms to attain maximum control by establishing ownership of key assets in the foreign market.
B)   It is a high-control strategy that requires substantial resource commitment when compared to equity joint ventures.
C)   It minimizes exposure to tariffs and other trade barriers, as well as fluctuations in exchange rates.
D)   It increases overall sales volume, improves market share, and reduces per-unit costs of manufacturing.E) None of the above
F) A) and C)

Question 8

Which of the following foreign market entry strategies requires the most substantial resource commitment on the part of the focal firm?

Accepted Answer

A)   global sourcing
B)   licensing
C)   franchising
D)   majority-owned equity joint ventureE) B) and C)
F) All of the above

Question 9

Which of the following is the LEAST secure method of getting in international business?

Accepted Answer

A)   letter of credit
B)   open account
C)   countertrade
D)   cash in advanceE) None of the above
F) A) and B)

Question 10

Which of the following actions most likely occurs in the experimental involvement stage of internationalization?

Accepted Answer

A)   Managers open franchises within an economic bloc to gain valuable experience.
B)   Management aggressively targets the domestic market to take control over competitors.
C)   Managers target low-risk, culturally close markets through exporting or licensing.
D)   Management targets psychically close markets through collaborative ventures or FDI.E) A) and D)
F) A) and C)

Question 11

Trade fairs are not only excellent sites to meet potential intermediaries, they also provide the means to become familiar with key players in the local industry and to generally learn about the target market.

Accepted Answer

A) True 
 B)False

Question 12

Because of the risk involved in an open account, exporters use this approach only with customers of long-standing or excellent credit, or with a subsidiary owned by the exporter.

Accepted Answer

A) True 
 B)False

Question 13

Export Development Corporation is an example of a government assistance program in India.

Accepted Answer

A) True 
 B)False

Question 14

When government agencies cite statistics on trade deficits, trade surpluses, and the volume of merchandise trade for individual countries, these data generally refer to firms' collective exporting and importing activities.

Accepted Answer

A) True 
 B)False

Question 15

In a short essay, describe the three categories of internationalization strategies, and explain why it is more difficult and risky to internationalize through FDI than through franchising. Provide examples of firms that have done each, as well as their motivations for internationalizing.

Accepted Answer

Three categories of internationalization strategies are as follows:
1. Trade of products and services are generally home-based international exchange activities, such as global sourcing, exporting, and countertrade. Global sourcing, also known as importing, global procurement, or global purchasing, is the strategy of buying products and services from foreign sources and bringing them into the home country or a third country. While sourcing and importing represent an inbound flow, exporting represents outbound international business. Thus, exporting refers to the strategy of producing products or services in one country (often the producer's home country) and selling and distributing them to customers located in other countries. In both global sourcing and exporting, the firm manages its international operations largely from the home country. Countertrade refers to an international business transaction in which full or partial payments are made in kind rather than cash. That is, instead of receiving money as payment for exported products, the firm receives other products or commodities.
2. Equity or ownership-based international business activities typically are foreign direct investment (FDI) and equity-based collaborative ventures. In contrast to home-based international operations, here the firm establishes a presence in the foreign market by investing capital in and securing ownership of a factory, subsidiary, or other facility there. Collaborative ventures include joint ventures in which the firm makes similar equity investments abroad, but in partnership with another company.
3. Contractual relationships usually take the form of licensing and franchising, in which the firm allows a foreign partner to use its intellectual property in return for royalties or other compensation. Firms such as McDonalds, Dunkin Donuts, and Century 21 Real Estate use franchising to serve customers abroad.
For companies that launch exporting, licensing, or franchising ventures, internationalization motives tend to be relatively straightforward. In most cases, management seeks to maximize returns from investments that the firm has made in products, services, and know-how by seeking a broader customer base located abroad. When such firms as Intel (computer technology) and Subway (restaurants) internationalize, they are essentially exploiting their competitive assets in a broader geographic space.
In contrast, FDI and collaborative ventures usually involve more complex motivations. They pose greater risks for managers, and require careful consideration of the likely costs and benefits of internationalization. For example, the Swedish appliance maker Electrolux recently built assembly operations in such diverse markets as Hungary, Mexico, and Thailand. Home appliances represent a complex global industry in which profit margins are tight and competition is intense. By undertaking product development, manufacturing, supply-chain coordination, and workforce management in relatively risky markets, Electrolux has taken on formidable challenges.

Question 16

In the ________ stage of internationalization, a firm's critical management activity would be to allocate resources based on available international business opportunities.

Accepted Answer

A)   experimental involvement
B)   committed involvement
C)   active involvement
D)   pre-internationalizationE) A) and C)
F) All of the above

Question 17

An open account is a contract between the banks of a buyer and a seller that ensures payment from the buyer to the seller upon receipt of an export shipment.

Accepted Answer

A) True 
 B)False

Question 18

Licensing and franchising are typical examples of home-based international exchange activities.

Accepted Answer

A) True 
 B)False

Question 19

In order to find appropriate foreign intermediaries, exporters would most likely consult ________.

Accepted Answer

A)   industry trade associations
B)   newspapers
C)   magazines
D)   social networking sitesE) A) and D)
F) B) and C)

Question 20

Compensation deal is a type of countertrade in which goods are directly exchanged without the transfer of any money.

Accepted Answer

A) True 
 B)False  False

Exam 14: Exporting and Countertrade

Correct Answer
verified

Which of the following is true about FDI?

Correct Answer
verified

In a short essay, explain why most firms use exporting as part of their internationalization portfolio, and discuss how Incoterms have mitigated problems with logistics.

Correct Answer
verified
Beyond initial entry, most firms, large ...
View Answer

Which of the following represents outbound home-based international exchange activities?

Correct Answer
verified

Large MNEs use exporting as a manner of initial internationalization, but once they build large manufacturing facilities abroad, the firm no longer exports many products due to the high costs involved.

Correct Answer
verified
False

Which of the following is a characteristic of direct exporting?

Correct Answer
verified

Which of the following is an advantage of exporting?

Correct Answer
verified

Which of the following foreign market entry strategies requires the most substantial resource commitment on the part of the focal firm?

Correct Answer
verified

Which of the following is the LEAST secure method of getting in international business?

Correct Answer
verified

Which of the following actions most likely occurs in the experimental involvement stage of internationalization?

Correct Answer
verified

Trade fairs are not only excellent sites to meet potential intermediaries, they also provide the means to become familiar with key players in the local industry and to generally learn about the target market.

Correct Answer
verified

Because of the risk involved in an open account, exporters use this approach only with customers of long-standing or excellent credit, or with a subsidiary owned by the exporter.

Correct Answer
verified

Export Development Corporation is an example of a government assistance program in India.

Correct Answer
verified

When government agencies cite statistics on trade deficits, trade surpluses, and the volume of merchandise trade for individual countries, these data generally refer to firms' collective exporting and importing activities.

Correct Answer
verified

In a short essay, describe the three categories of internationalization strategies, and explain why it is more difficult and risky to internationalize through FDI than through franchising. Provide examples of firms that have done each, as well as their motivations for internationalizing.

In the ________ stage of internationalization, a firm's critical management activity would be to allocate resources based on available international business opportunities.

Correct Answer
verified

An open account is a contract between the banks of a buyer and a seller that ensures payment from the buyer to the seller upon receipt of an export shipment.

Correct Answer
verified

Licensing and franchising are typical examples of home-based international exchange activities.

Correct Answer
verified

In order to find appropriate foreign intermediaries, exporters would most likely consult ________.

Correct Answer
verified

Compensation deal is a type of countertrade in which goods are directly exchanged without the transfer of any money.

Correct Answer
verified
False

Exam 14: Exporting and Countertrade

Correct AnswerverifiedShow Answer

Which of the following is true about FDI?

Correct AnswerverifiedShow Answer

In a short essay, explain why most firms use exporting as part of their internationalization portfolio, and discuss how Incoterms have mitigated problems with logistics.

Correct AnswerverifiedBeyond initial entry, most firms, large ...View AnswerShow Answer

Which of the following represents outbound home-based international exchange activities?

Correct AnswerverifiedShow Answer

Large MNEs use exporting as a manner of initial internationalization, but once they build large manufacturing facilities abroad, the firm no longer exports many products due to the high costs involved.

Correct AnswerverifiedFalse

Which of the following is a characteristic of direct exporting?

Correct AnswerverifiedShow Answer

Which of the following is an advantage of exporting?

Correct AnswerverifiedShow Answer

Which of the following foreign market entry strategies requires the most substantial resource commitment on the part of the focal firm?

Correct AnswerverifiedShow Answer

Which of the following is the LEAST secure method of getting in international business?

Correct AnswerverifiedShow Answer

Which of the following actions most likely occurs in the experimental involvement stage of internationalization?

Correct AnswerverifiedShow Answer

Trade fairs are not only excellent sites to meet potential intermediaries, they also provide the means to become familiar with key players in the local industry and to generally learn about the target market.

Correct AnswerverifiedShow Answer

Because of the risk involved in an open account, exporters use this approach only with customers of long-standing or excellent credit, or with a subsidiary owned by the exporter.

Correct AnswerverifiedShow Answer

Export Development Corporation is an example of a government assistance program in India.

Correct AnswerverifiedShow Answer

When government agencies cite statistics on trade deficits, trade surpluses, and the volume of merchandise trade for individual countries, these data generally refer to firms' collective exporting and importing activities.

Correct AnswerverifiedShow Answer

In a short essay, describe the three categories of internationalization strategies, and explain why it is more difficult and risky to internationalize through FDI than through franchising. Provide examples of firms that have done each, as well as their motivations for internationalizing.

In the ________ stage of internationalization, a firm's critical management activity would be to allocate resources based on available international business opportunities.

Correct AnswerverifiedShow Answer

An open account is a contract between the banks of a buyer and a seller that ensures payment from the buyer to the seller upon receipt of an export shipment.

Correct AnswerverifiedShow Answer

Licensing and franchising are typical examples of home-based international exchange activities.

Correct AnswerverifiedShow Answer

In order to find appropriate foreign intermediaries, exporters would most likely consult ________.

Correct AnswerverifiedShow Answer

Compensation deal is a type of countertrade in which goods are directly exchanged without the transfer of any money.

Correct AnswerverifiedFalse

Correct Answer
verified

Correct Answer
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Correct Answer
verified
Beyond initial entry, most firms, large ...
View Answer

Correct Answer
verified

Correct Answer
verified
False

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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False