Deck 18: Global Opportunities for Small Businesses

Question 1

By informing consumers about the lifestyles of others, globalization is leading toward more diverse consumer preferences.

Answer 1

False

Question 2

Globalization explains the increasing similarity of markets around the world.

Answer 2

True

Question 3

Together, China and India account for more than 50 percent of the world's 6 billion inhabitants.

Answer 3

False

Question 4

The term BRICs refers to Bangladesh, Romania, Ireland, Czechoslovakia, and Slovenia, all emerging markets.

Question 5

The U.S. Department of Industry provides information for entrepreneurs considering global operations.

Question 6

International dissimilarities in language and culture, business practices, and government regulations are increasing over time.

Question 7

Efforts to exploit the competitive advantage of specialized products across several international markets are more important to small businesses than to their large corporate competitors.

Question 8

A production capacity question that needs to be answered before a company goes global with operations is "How much additional production capacity will be needed at home and abroad?"

Question 9

The primary motivation for expansion into Asian markets is to be closer to sources of raw materials.

Question 10

Entrepreneurs decide to go global to expand their opportunities, but sometimes they are forced to enter foreign markets to compete with firms that have already done so.

Question 11

Today, companies tend to focus on developed countries as they search out international markets.

Question 12

While a small firm can have global operations, size will limit growth.

Question 13

The U.S. Department of Commerce publishes a handbook that outlines the important steps entrepreneurs must go through to become a global business.

Question 14

A small business owner who decides to expand internationally should study the competitive forces in the foreign market.

Question 15

Twenty-five percent of the world's population lives in the United States.

Question 16

Increasing sales in international markets is one of many viable ways to recoup a firm's investments in research and development.

Question 17

Born-global firms are small companies launched with cross-border business activities in mind.

Question 18

Products that sell at home usually require little or no adaptation to be well received in foreign markets.

Question 19

Experience curve efficiencies are the per-unit savings gained from the repeated production of the same product.

Question 20

The motivation to take domestic products to foreign markets is more relevant today than in the past.

Question 21

An economic risk for a global company is the threat of new labeling regulations.

Question 22

A greenfield venture is where small firms purchase a foreign business from another firm.

Question 23

International outsourcing and offshoring are increasingly being used by companies going global to cut costs.

Question 24

The unique features of a local environment can yield benefits to small firms locating there even when the costs are greater.

Question 25

Foreign governments sometimes sponsor trade missions to promote strategic alliances in international markets.

Question 26

China, India, and Russia are classified as most challenging according to the World Bank's "Ease of Doing Business Index."

Question 27

Conducting business internationally will never be as easy as doing business on the domestic front.

Question 28

Gains from learning effects continue to grow after startup; economies of scale efficiencies decline as the business grows.

Question 29

Learning effects occur when the insight an employee gains from experience leads to improved work performance.

Question 30

Foreign licensing can be used to protect against counterfeit activity.

Question 31

Increasingly, small firms are going global in search of raw materials.

Question 32

Political moves by an international country have implications on the domestic company's economic risk.

Question 33

Moderately challenging countries according to the World Bank's "Ease of Doing Business Index" include Brazil, Mexico, and Saudi Arabia.

Question 34

Trade leads are accessed most often through contacts.

Question 35

While opening an overseas sales office can be effective, small businesses should wait until sales in the local market are great enough to justify the move.

Question 36

Increasingly, small firms find that they must locate their operations abroad if they are to keep their contracts as suppliers to large companies.

Question 37

Perhaps the easiest way to break into international markets is to use a trade intermediary.

Question 38

A small firm can generate the greatest financial returns using international licensing strategies when these efforts involve the company's products.

Question 39

Exporting involves the sale of products produced in the home country to customers in another country.

Question 40

A small business should begin its research of going global by exhausting primary sources of information.

Question 41

When Wayne opened his business many years ago, most businesses operated only within one country. Thanks to _____, businesses now increasingly take advantage of cross-border activities.

A) born-global businesses
B) globalization
C) economic freedom
D) economic liberty

Question 42

A Canadian grocery store chain with its corporate headquarters in Quebec has approached Antonio, the owner of a company that produces pasta, about exporting its pasta into Canada. Which of the following questions would need to be answered in relation to the company's production capacity objectives?

A) How are the initial expenses of expanding to Canada going to be covered?
B) What international expertise does Antonio have, specifically does he speak French?
C) What are Antonio's reasons for exporting to Canada?
D) How much additional production capacity will be needed at home and abroad?

Question 43

Allen is considering entering the global marketplace. Which of the following questions should be answered first?

A) Does the company have the necessary "deep pockets" to follow through?
B) Are the company's domestic operations capable of subsidizing overseas operations?
C) Is the company's technology sufficient to enter into the international game?
D) Is the company up to the task?

Question 44

A revocable letter of credit is an agreement to honor a draft or other demand for payment when specified conditions are met and can only be changed by the seller.

Question 45

For most small businesses, the primary motivation for going global is to

A) develop new market opportunities.
B) reduce the costs of doing business.
C) gain access to resources that are important to the firm's operations.
D) capitalize on special features of location.

Question 46

Seeking to extend the product life cycle by expanding into international markets has become a less effective strategy because

A) customer preferences have become more similar around the world.
B) income levels in many countries are insufficient to support this strategy.
C) international delivery systems cannot handle the variety of company distribution systems.
D) product life cycles have already been growing over the years.

Question 47

A company specializing in flavoring compounds opens a plant near the rain forest. This move enables its biologists to derive flavors without destroying the plants and supports company globalization efforts being related to

A) reducing tariffs.
B) cutting costs.
C) expanding its market.
D) gaining access to resources.

Question 48

To expand a market, an emerging motivation for going global is to

A) take advantage of unique features of the local market.
B) find buyers for highly specialized products.
C) obtain tariff reductions.
D) extend the product life cycle.

Question 49

In the past, companies have left the United States to

A) take advantage of unique features of the local market.
B) find raw materials.
C) change the shape of the product life cycle.
D) serve the local community through the business.

Question 50

A Canadian grocery store chain with its corporate headquarters in Quebec has approached Antonio's small pasta firm about possible exporting. Which of the following questions would need to be answered in relation to the pasta company's management objectives?

A) How are the initial expenses of expanding to Canada going to be covered?
B) What international expertise does Antonio have, specifically does he speak French?
C) What are Antonio's reasons for exporting to Canada?
D) How much additional production capacity will be needed at home and abroad?

Question 51

Experience curve efficiencies refers to

A) expanding a business globally to decrease per unit costs.
B) having more experienced team members.
C) insights gained by employees that lead to improved work performance.
D) the outcomes of learning effects and economies of scale.

Question 52

Learning effects occur when

A) mistakes are made and then new solutions are found.
B) insights gained by employees enhance their work performance.
C) economies of scale are present.
D) companies take advantage of experience curve efficiencies.

Question 53

Antonio's small pasta firm is considering exporting its products. A Canadian grocery store chain with its corporate headquarters in Quebec has approached him. Which of the following questions would need to be answered in relation to the pasta company's financial capacity objectives?

A) How are the initial expenses of expanding to Canada going to be covered?
B) What international expertise does Antonio have, specifically does he speak French?
C) What are Antonio's reasons for exporting to Canada?
D) How much additional production capacity will be needed at home and abroad?

Question 54

An export remarketer sells the products overseas under its own name through contacts and assumes all risks.

Question 55

As Antonio's pasta company increases in size, the business is able to realize economies of scale

A) through learning effects from manufacturing experience.
B) through incremental drops in costs that result from the doubling of output.
C) by spreading investment costs across more units of output.
D) through efficiencies of operations in service operations.

Question 56

A company with the most experienced production employees and the lowest unit costs in its industry indicates that it has benefited from

A) learning effects.
B) experience curve efficiencies.
C) economies of scope.
D) economies of scale.

Question 57

International markets are increasingly demanding

A) the same products that are distributed to other national markets.
B) differentiated products that satisfy their unique needs and interests.
C) direct access to products sold elsewhere in the world.
D) more expensive products and fewer inexpensive products.

Question 58

According to the 2017 BRICS Markets, which of the following countries has the greatest economic growth?

A) Brazil
B) China
C) India
D) Russia

Question 59

Renee opened her business with the intention of importing goods from Brazil and selling them in the United States. We could say that this business is

A) an exporter.
B) born global.
C) ready to launch offshoring.
D) a trade mission.

Question 60

Antonio's small pasta firm is considering exporting. A Canadian grocery store chain with its corporate headquarters in Quebec has approached him. Which question would need to be answered in relation to the pasta company's management experience and resource objectives?

A) How are the initial expenses of expanding to Canada going to be covered?
B) What international expertise does Antonio have, specifically does he speak French?
C) What are Antonio's reasons for exporting to Canada?
D) How much additional production capacity will be needed at home and abroad?

Question 61

Nike and many other companies engage in international outsourcing, which refers to

A) sending U.S. employees to manage foreign-based operations.
B) relocating stateside operations abroad.
C) obtaining raw materials in foreign countries.
D) accessing foreign business operations through contracts with independent providers.

Question 62

An increasing number of technology companies are relocating their operations in Russia to

A) obtain raw materials.
B) gain access to skilled labor.
C) create job opportunities for domestic employees.
D) take advantage of government incentives.

Question 63

The unauthorized use of intellectual property is called

A) royalties.
B) international franchising.
C) foreign licensing.
D) counterfeit activity.

Question 64

Edward is a young entrepreneur with grand plans, including international expansion of his new company. Once that decision is made, Edward's next step is to

A) begin to hire employees with international experience.
B) join a trade mission.
C) plan a strategy that increases the potential of the firm.
D) spend some time estimating the market potential of various countries.

Question 65

Importing involves

A) the authorized use of intellectual property.
B) selling products from abroad in the firm's home market.
C) purchasing the right to manufacture and sell a firm's product in overseas markets.
D) the sale of products produced in the home country to customers in another country.

Question 66

A company that operates a customer service call center is likely to contract with a company in India to

A) capitalize on the special features of location.
B) cut costs.
C) expand its market.
D) gain access to resources.

Question 67

If Antonio accepts the offer of the Canadian grocery to sell his American-made pasta in Canada, he will be

A) exporting.
B) importing.
C) offshoring.
D) forming an international strategic alliance.

Question 68

Some small firms choose to outsource internationally in order to

A) avoid domestic taxes.
B) avoid competition from other U.S. companies.
C) cut costs and access talented foreign employees.
D) take advantage of legal loop-holes in foreign countries.

Question 69

International franchising is a variation on the theme of

A) exporting.
B) importing.
C) foreign licensing.
D) international strategic alliances.

Question 70

If Finagle-A-Bagel contracts with a baker in Hong Kong to manufacture and sell a product in overseas markets, Finagle-A-Bagel would be the

A) royalty receiver.
B) licensor.
C) licensee.
D) license initiator.

Question 71

Mattel has allowed a producer in Thailand to manufacture and sell its branded dolls in overseas markets. The company in Thailand is a

A) royalty receiver.
B) licensor.
C) licensee.
D) license initiator.

Question 72

Labor rates have risen over time to the point that Antonio's Pasta is considering _____ to reduce costs.

A) learning effects
B) offshoring
C) exporting
D) importing

Question 73

For each unit produced under the licensing contract, the Hong Kong baker will pay _____ to Finagle-A-Bagel.

A) trademark fees
B) royalties
C) general licensing fees
D) copyright fees

Question 74

When it comes to cutting costs, many foreign companies have chosen to locate production facilities in Mexico to

A) obtain tariff reductions.
B) find raw materials.
C) follow large client firms that locate abroad.
D) find suppliers offering highly specialized products.

Question 75

For some small businesses, a recent trend for going global is to

A) be closer to large clients.
B) extend a product life.
C) find raw materials.
D) reduce transportation costs.

Question 76

If an olive oil importer sets up operations in Italy to be near its supplier, the company is going global by

A) capitalizing on the special features of location.
B) cutting costs.
C) expanding its market.
D) gaining access to resources.

Question 77

A business that locates a production facility or sales office overseas by purchasing a foreign business from another firm is participating in

A) a cross-border acquisition.
B) a greenfield venture.
C) offshoring.
D) outsourcing.

Question 78

Regional free-trade areas have been formed in order to

A) duplicate government regulatory systems.
B) reduce tariffs to increase trade.
C) coordinate the currencies of included countries.
D) accommodate the demands of organized labor.

Question 79

A fundamental activity for global small business success is

A) avoiding rigid planning that commits the firm's resources to a single plan of action.
B) finding international markets that fit the company's unique potential.
C) figuring out which of the firm's competitors is capable of copying its strategy.
D) tapping government programs that provide incentives for international expansion.

Question 80

John is interested in joining with a large corporation in a cooperative venture to share risks and pool resources for his small auto parts manufacturing business. The strategy option he is exploring could best be described as

A) an international strategic alliance.
B) exporting.
C) importing.
D) international cost shifting.