Deck 13: Global Market Opportunity Assessment

Question 1

When assessing the firm's readiness to internationalize, managers peer into their organization to determine the degree to which it has the resources necessary to successfully engage in international business.

Answer 1

True

Question 2

Assessing organizational readiness and product readiness occurs only in the initial stage of the process to determine a firm's international readiness.

Answer 2

False

Question 3

With a high percentage of college-educated citizens, countries such as China and India have become a source for international firms seeking knowledge workers.

Answer 3

True

Question 4

As long as a firm is confident of its product being sold, it does not need to analyze who initiates the purchase.

Question 5

Screening countries to identify attractive target markets is the first step toward internationalization.

Question 6

Screening countries to identify target markets is the most time-consuming step for most firms.

Question 7

Exporting, FDI, and sourcing all have identical screening criteria.

Question 8

Trade as a percentage of GDP is used to measure a country's market receptivity.

Question 9

Born-global companies seldom venture into countries outside their comfort zone.

Question 10

Natural disasters in foreign countries is one of the reasons for the emergence of potential target markets for selling products and services.

Question 11

The "BRIC" countries show the least potential as target markets in the near future.

Question 12

Countries appropriate for firms intending to use FDI as an entry strategy should exhibit a potential for long-term growth with limited political risk.

Question 13

A SWOT analysis is used to estimate company sales potential for each target market.

Question 14

An efficient method of gathering information about a target market is to introduce a product at an industry trade fair.

Question 15

CORE is a diagnostic tool mainly used by managers to choose qualified business partners.

Question 16

Products or services that are well-received at a firm's home country are more likely to be accepted in foreign countries as well.

Question 17

Global market opportunities depend on timing and location, and they often enhance a firm's performance.

Question 18

Assessing the firm's product's market demand should be done before analyzing its readiness to internationalize.

Question 19

CORE, a diagnostic tool, is the sole property of the U.S. Department of Commerce.

Question 20

When determining a product's potential in numerous foreign markets, it is usually best to assume that buyers have identical needs and purchasing habits across the markets.

Question 21

Which of the following will be accomplished by potential exporters who are involved in studying import statistics?

A) evaluating the political risk of different markets
B) estimating the profitability of domestic sales
C) predicting the culture risk of an emerging market
D) assessing a market's viability for accepting new sales

Question 22

One of the goals that firms most likely want to attain from internationalizing is ________.

A) decrease trade barriers in the foreign markets
B) establish their presence in saturated markets
C) increase their sales and profits
D) minimize country risk

Question 23

Industry market potential is identical to company sales potential.

Question 24

Ongoing globalization has reduced the cost and risk of entering foreign markets.

Question 25

According to the indexing and ranking method for choosing the most promising target market, the researcher assigns scores to countries based on their overall market attractiveness.

Question 26

Which of the following processes involves evaluation of a firm's strengths, weaknesses, opportunities, and threats?

A) SWOT
B) CORE
C) PERT
D) PEST

Question 27

Market consumption capacity is the proportion of a country's population concentrated in cities.

Question 28

Focal firms that intend to sell their trademark and copyrights typically work with foreign licensing partners instead of franchisors.

Question 29

Which of the following tasks should a shoe manufacturing company perform first if it needs to assess the global market opportunity?

A) assess the suitability of the company's shoes for foreign markets
B) analyze the firm's readiness to internationalize
C) choose foreign business partners
D) screen countries to identify foreign markets

Question 30

A favorable global market opportunity for a firm would most likely lead to ________.

A) a change in product packaging
B) the procurement of new distributors
C) the establishment of a production facility
D) the sale of corporate stock

Question 31

By monitoring key industry-specific indicators, a manager can estimate industry market potential.

Question 32

Tapping into supplier networks is one of the methods of estimating industry market potential.

Question 33

Estimates of company sales potential provide managers with the information necessary to select the most appropriate business partners.

Question 34

Which of the following tasks should be performed directly before a company, that is assessing the global market opportunity, estimates its sales potential?

A) analyze the company's readiness to internationalize
B) screen countries to identify target markets
C) assess industry market potential
D) choose qualified foreign business partners

Question 35

While estimating company sales potential, managers may make multiple estimates based on best-case, worst-case, and most-likely case scenarios.

Question 36

Indexing and ranking is the only way to choose markets that offer the best profits.

Question 37

Which of the following is an acronym for a diagnostic tool used by organizations to determine international readiness?

A) SWOT
B) PEST
C) PERT
D) CORE

Question 38

Which of the following questions needs to be addressed by managers to determine the organizational readiness to internationalize?

A) What is the basis of the firm's competitive advantage?
B) Where do people purchase the product or service?
C) Who initiates purchasing?
D) What economic, cultural, geographic, and other factors in the target market may limit sales?

Question 39

Market intensity is defined as the size and growth rate of the country's middle class.

Question 40

Which of the following is a primary question to ask when attempting to determine a product's potential in a foreign market?

A) How much is the overall production cost?
B) Is the product safe and reliable?
C) Why do people buy the product?
D) How does the product work?

Question 41

Which of the following market characteristics offers the most potential for a firm's success at internationalization?

A) a widely-distributed product or service
B) an unaffordable product or service
C) an unavailable product or service
D) an unknown product or service

Question 42

According to the A.T. Kearney 2012 Foreign Direct Investment Confidence Index, investors have the highest confidence in ________.

A) Malaysia and Brazil
B) South Africa and Indonesia
C) Turkey and Russia
D) China and India

Question 43

Which of the following is management's goal when utilizing gradual elimination?

A) diminish the number of foreign markets served by a large MNE
B) lessen the number of corporate managers involved in subsidiary issues
C) decrease the need for foreign intermediaries to improve profitability
D) reduce the number of nations to investigate as potential foreign markets

Question 44

According to the Emerging Market Potential Indicators index, ________ is an indicator of market size.

A) real GDP growth rate
B) telephones per 100 habitants
C) population per retail outlet
D) urban population

Question 45

Private consumption as a percentage of GDP is used to measure ________.

A) market intensity
B) market size
C) market receptivity
D) market growth rate

Question 46

Which of the following dimensions refers to the buying power of the country's residents?

A) market consumption capacity
B) market intensity
C) market size
D) market growth rate

Question 47

The buying power of the country's residents is termed as ________.

A) market intensity
B) market size
C) market consumption capacity
D) market receptivity

Question 48

In the Emerging Market Potential Indicators index, Internet users per million people are an indicator of ________.

A) market intensity
B) commercial infrastructure
C) country risk
D) market consumption capacity

Question 49

When using the process of gradual elimination to screen potential country markets, a researcher should first, ________.

A) delve into specific information
B) obtain general information on macro-level indicators like population
C) employ specific indicators, such as import statistics
D) narrow down the choices with specific indicators, such as economic growth

Question 50

Which of the following is the most likely source for foreign market information, assessments, and statistics?

A) World Trade Organization
B) Canada's Ministry of Foreign Affairs
C) U.S. Department of Commerce
D) Council of the European Union

Question 51

Advances in communications and transportation technology have changed the internationalization tendencies of firms by ________.

A) establishing a cultural presence in a foreign market prior to establishing a facility
B) providing accessible information about a product to customers but at a significantly higher cost
C) focusing primarily on the need for local intermediaries to sell products in foreign markets
D) reducing the risk and difficulty of doing business in markets with unfamiliar cultures

Question 52

Which of the following should be done by a company planning to internationalize when it assesses market industry potential?

A) take action to eliminate deficiencies in the firm
B) determine the most desirable attributes in foreign business partners
C) develop a 3- to 5-year forecast of industry sales for each target market
D) determine how products or services may need to be adapted for each market

Question 53

According to the Emerging Market Potential Indicators index, ________ is an indicator of market intensity.

A) average annual growth rate of primary energy use
B) percentage share of middle class in income/consumption
C) private consumption as a percentage of GDP
D) per-capita imports from the United States

Question 54

A researcher who assigns scores to countries for their overall market attractiveness uses ________ to choose the most promising foreign markets.

A) indexing and ranking
B) behaviorally anchored rating scales
C) thematic apperception tests
D) gradual elimination

Question 55

Which of the following is considered a regional hub?

A) Hong Kong
B) Ireland
C) Canada
D) Russia

Question 56

The size and growth rate of a country's middle class is termed as ________.

A) market consumption capacity
B) market intensity
C) market receptivity
D) market size

Question 57

The term industry market potential can best be defined as the ________.

A) expected competition within a foreign market
B) predicted industry sales over a particular period of time
C) anticipated market growth and expansion
D) forecast of a firm's sales in a specific market

Question 58

The proportion of a country's population concentrated in cities is referred to as ________.

A) market intensity
B) market size
C) market receptivity
D) market growth rate

Question 59

Which of the following factors is typically most important to firms considering FDI entry?

A) availability of skilled labor and managerial talent
B) pricing strategies of competitors
C) tariffs applied for exporting
D) literacy level of the consumers

Question 60

The extent of a country's openness to imports is termed ________.

A) market intensity
B) market size
C) market receptivity
D) market growth rate

Question 61

Happy Pet Internationalization (Scenario)
Based in California, the Happy Pet Corporation has 45 pet supply stores across the United States. Given the firm's success in the U.S. market, Happy Pet managers are considering internationalizing their operations to the EU. The market research conducted by the company identified several established pet product manufacturing companies. Beth Schultz, the founder and CEO of Happy Pet, has expressed concerns about expanding the firm's operations into the EU. She believes internationalizing in the EU is not profitable because of the presence of these established competitors. However, Edward O'Neal, the COO of Happy Pet, believes the corporation is ready for the next step. Happy Pet executives and managers have gathered to discuss their organization's readiness to internationalize.
Which of the following most likely supports the opinion of Beth Schultz over the opinion of Edward O'Neal?

A) Happy Pet has a monopoly in the U.S. pet products market.
B) Happy Pet's online sales reflect a high demand for premium pet food in the EU.
C) Happy Pet's market research identified the presence of market saturation in the EU.
D) Happy Pet's competitors have successfully branched into foreign markets.

Question 62

Which of the following market research tools relies on known information about one product to infer the market potential of another product?

A) proxy indicator
B) analogy
C) trade audit
D) comparative surveys

Question 63

Australian Business Partner (Scenario)
The Coffee Cup Corporation (CCC) is a large U.S.-based coffee retailer with stores across America. After months of research, CCC executives have decided to open their first international store in Sydney, Australia. CCC managers have been assigned the task of selecting an appropriate Australian business partner for the coffee company. CCC managers flew to Sydney to interview potential business partners, and they have narrowed the list to three.
Business Partner X, who owns a small chain of Sydney coffee shops, has offered to make an equity investment in CCC. Which of the following types of relationships would most likely result if Business Partner X is selected?

A) turnkey operation
B) licensing partnership
C) franchising partnership
D) international collaborative venture

Question 64

Trade audits may provide managers insight regarding ________.

A) manufacturing cost estimates
B) company employee opinions
C) competitors' offerings and pricing
D) market fluctuation tendencies

Question 65

Happy Pet Internationalization (Scenario)
Based in California, the Happy Pet Corporation has 45 pet supply stores across the United States. Given the firm's success in the U.S. market, Happy Pet managers are considering internationalizing their operations to the EU. The market research conducted by the company identified several established pet product manufacturing companies. Beth Schultz, the founder and CEO of Happy Pet, has expressed concerns about expanding the firm's operations into the EU. She believes internationalizing in the EU is not profitable because of the presence of these established competitors. However, Edward O'Neal, the COO of Happy Pet, believes the corporation is ready for the next step. Happy Pet executives and managers have gathered to discuss their organization's readiness to internationalize.
Which of the following should most likely be considered in determining whether Happy Pet is ready to internationalize?

A) What is the market demand for Happy Pet's products in selected target markets?
B) What demands will internationalization make on Happy Pet's financial resources?
C) How will Happy Pet managers determine which foreign market is appropriate?
D) Should Happy Pet relocate its corporate headquarters after internationalizing?

Question 66

A car-rental agency that was planning to internationalize its operations would most likely select a(n) ________.

A) distributor
B) intermediary
C) franchisor
D) licensor

Question 67

________ refer to cross-border business alliance whereby partnering firms pool their resources and share costs and risks to undertake a new business venture.

A) International collaborative ventures
B) Turnkey operations
C) Greenfield investments
D) Acquisitions

Question 68

________ is used by some firms to gauge long-term sales potential without fully committing to a foreign market.

A) Competitor assessment
B) Test marketing
C) Market segmentation
D) End-user surveys

Question 69

Explain the concept of a global market opportunity, and discuss the key questions to assess a firm's organizational readiness to pursue global market opportunities.

Question 70

An arrangement in which the firm allows another the right to use an entire business system in exchange for fees, royalties, or other forms of compensation is known as ________.

A) franchising
B) licensing
C) outsourcing
D) offshoring

Question 71

In order to estimate industry market potential, managers most likely require ________.

A) market size and growth rates specific to the industry
B) manufacturing specifications and production output
C) anticipated improvements within public infrastructure
D) expected long-term IT needs and e-commerce trends

Question 72

All You Cosmetics (Scenario)
Executives of All You Cosmetics Company, a Canadian company, have hired a consulting firm, Brown and Associates, to identify foreign markets that might be appropriate for internationalization. Brown consultants have been working for two weeks with All You managers to identify the best foreign markets for the Canadian cosmetics company, which specializes in organic cosmetics and skin care products. So far, Brown consultants have narrowed down the list of countries to fifteen. However, the consultants need to eliminate unattractive markets and reduce the list to five nations, which will then be researched more closely.
Which of the following factors should most likely be considered by Brown consultants as they screen countries for All You Cosmetics?

A) Which markets have the highest number of skin cancer cases among women?
B) In which markets are women the primary breadwinners for their families?
C) Which markets have the highest number of environmentally-friendly corporations?
D) In which markets are organic cosmetics and skin care products currently unavailable?

Question 73

Describe the purpose of CORE. How does it aid managers? Provide an example of an organization that benefited from CORE.

Question 74

All You Cosmetics (Scenario)
Executives of All You Cosmetics Company, a Canadian company, have hired a consulting firm, Brown and Associates, to identify foreign markets that might be appropriate for internationalization. Brown consultants have been working for two weeks with All You managers to identify the best foreign markets for the Canadian cosmetics company, which specializes in organic cosmetics and skin care products. So far, Brown consultants have narrowed down the list of countries to fifteen. However, the consultants need to eliminate unattractive markets and reduce the list to five nations, which will then be researched more closely.
Which of the following statements most likely supports using gradual elimination for country screening instead of indexing and ranking?

A) All You managers want a list of foreign markets and rank these markets based on specific variables, such as market size and growth rate.
B) All You managers are primarily looking for a market with a large urban population and a great deal of economic freedom.
C) All You managers will consider any reasonable market and want to narrow down the list with increasingly specific information.
D) All You managers have assigned values to different variables within the cosmetic and skin care industry.

Question 75

The estimate of the share of annual industry sales the firm expects to generate in a particular target market is known as ________.

A) industry market potential
B) company sales potential
C) break-even analysis
D) SWOT analysis

Question 76

Australian Business Partner (Scenario)
The Coffee Cup Corporation (CCC) is a large U.S.-based coffee retailer with stores across America. After months of research, CCC executives have decided to open their first international store in Sydney, Australia. CCC managers have been assigned the task of selecting an appropriate Australian business partner for the coffee company. CCC managers flew to Sydney to interview potential business partners, and they have narrowed the list to three.
Which of the following statements most likely supports CCC managers selecting Business Partner Y instead of Business Partner Z?

A) Business Partner Y has good reputation in the marketplace.
B) Business Partner Y is fairly young and hence requires experience in the food and beverage industry.
C) Business Partner Y has distinct goals and objectives compared to CCC.
D) Business Partner Y has the most experience in the automobile industry but now wants to venture into the food and beverage industry.

Question 77

Australian Business Partner (Scenario)
The Coffee Cup Corporation (CCC) is a large U.S.-based coffee retailer with stores across America. After months of research, CCC executives have decided to open their first international store in Sydney, Australia. CCC managers have been assigned the task of selecting an appropriate Australian business partner for the coffee company. CCC managers flew to Sydney to interview potential business partners, and they have narrowed the list to three.
All of the following are criteria most likely established by CCC managers for choosing the best foreign business partner EXCEPT ________.

A) requirement for competent management skills and qualified staff
B) familiarity with U.S. government franchising regulations
C) knowledge about the food and beverage industry
D) good connections with the Australian government

Question 78

Which of the following tasks is the final stage of assessing the global market opportunities of a firm?

A) screen countries to identify target markets
B) assess product suitability for foreign markets
C) estimate company sales potential
D) assess industry market potential

Question 79

Happy Pet Internationalization (Scenario)
Based in California, the Happy Pet Corporation has 45 pet supply stores across the United States. Given the firm's success in the U.S. market, Happy Pet managers are considering internationalizing their operations to the EU. The market research conducted by the company identified several established pet product manufacturing companies. Beth Schultz, the founder and CEO of Happy Pet, has expressed concerns about expanding the firm's operations into the EU. She believes internationalizing in the EU is not profitable because of the presence of these established competitors. However, Edward O'Neal, the COO of Happy Pet, believes the corporation is ready for the next step. Happy Pet executives and managers have gathered to discuss their organization's readiness to internationalize.
Which of the following questions would be more important for Happy Pet executives to evaluate when determining the firm's readiness to internationalize?

A) What does Happy Pet hope to gain from internationalizing its operations?
B) How are the domestic sales figures of Happy Pet's competitors?
C) What product pricing strategies should Happy Pet adopt?
D) Where would be the best location for a Happy Pet product distribution center?

Question 80

All You Cosmetics (Scenario)
Executives of All You Cosmetics Company, a Canadian company, have hired a consulting firm, Brown and Associates, to identify foreign markets that might be appropriate for internationalization. Brown consultants have been working for two weeks with All You managers to identify the best foreign markets for the Canadian cosmetics company, which specializes in organic cosmetics and skin care products. So far, Brown consultants have narrowed down the list of countries to fifteen. However, the consultants need to eliminate unattractive markets and reduce the list to five nations, which will then be researched more closely.
Which of the following would most likely be useful market data for the Brown consultants?

A) discretionary income of young women
B) annual health care expenditures
C) average level of education
D) number of cellular phone subscribers