Deck 3: Organizational Participants That Make International Business Happen

Question 1

Retailers play critical roles in the initial stages of the international value chain.

Answer 1

False

Question 2

Compared to large multinationals, SMEs can be more flexible and quicker to respond to global business opportunities.

Answer 2

True

Question 3

The activities of firms, intermediaries, and facilitators in international business are thoroughly distinct and rarely overlap.

Answer 3

False

Question 4

Focal firms and intermediaries represent the demand side of international business transactions.

Question 5

Distribution is an upstream value-chain activity.

Question 6

Joint ventures are less formal than project-based partnerships.

Question 7

A firm that enters into a contractual agreement with a foreign partner to allow the partner the right to use certain intellectual property for a specified period of time in exchange for royalties or other compensation is known as a franchisor.

Question 8

In the years following World War II, most multinationals, typically from the United States and the United Kingdom, went abroad seeking raw materials, production efficiencies, and foreign-based customers.

Question 9

In an international value chain, sourcing occurs before research and development.

Question 10

For most exporters, relying on an independent foreign distributor is a low-cost way to enter foreign markets.

Question 11

Due to their size, MNEs account for the majority of firms active in international business.

Question 12

The majority of focal firms are privately owned multinational enterprises.

Question 13

Sales representatives act as distribution channel intermediaries.

Question 14

All focal firms are private businesses.

Question 15

Focal firms can be analyzed in terms of the entry strategies they use to expand abroad.

Question 16

The emergence of born global firms is associated with international entrepreneurship.

Question 17

Some focal firms are manufacturing businesses, while others are in the service sector.

Question 18

Market research is a downstream value-chain activity.

Question 19

A firm that grants another the right to use an entire business system in exchange for fees, royalties, or other forms of compensation is known as a licensor.

Question 20

The value chain is not the complete business system of the focal firm.

Question 21

Sovereign wealth funds are state-owned investment funds that undertake systematic, global investment activities.

Question 22

Selling products on the Internet has triggered the reduction of traditional intermediaries, such as wholesalers.

Question 23

Which of the following refers to a specialized logistics service provider that arranges international shipping for exporting firms?

A) freight forwarder
B) wholesaler
C) distributor
D) turnkey contractor

Question 24

A ________ is the initiator of an international business transaction.

A) facilitator
B) focal firm
C) distribution channel intermediary
D) freight forwarder

Question 25

Foreign distributors are often called merchant distributors.

Question 26

A ________ is a specialist firm that provides various logistics and marketing services for focal firms as part of international supply chains, both in the focal firm's home country and abroad.

A) facilitator
B) not-for-profit corporation
C) distribution channel intermediary
D) retailer

Question 27

Which of the following stages of the international value chain immediately precedes the marketing stage?

A) sourcing
B) production
C) distribution
D) market research

Question 28

Commercial banks are the monetary authorities in each country that issue currency and regulate national money supplies.

Question 29

Logistics service providers, freight forwarders, and banks are examples of ________.

A) retailers
B) distribution channel intermediaries
C) focal firms
D) facilitators

Question 30

Many commercial banks are reluctant to extend credit to SMEs.

Question 31

A manufacturer's representative is an intermediary contracted by the exporter.

Question 32

Governments often nationalize important companies facing financial ruin.

Question 33

Which of the following refers to the participant responsible for conceiving and designing a product for consumption by customers worldwide?

A) government
B) facilitator
C) focal firm
D) intermediary

Question 34

International manufacturers rarely use common carriers.

Question 35

Which of the following represent the demand side of international business transactions?

A) focal firms
B) facilitators
C) intermediaries
D) retailers

Question 36

A ________ is a firm or an individual with special expertise in banking, legal advice, customs clearance, or related support services that helps focal firms perform international business transactions.

A) facilitator
B) born global firm
C) distribution channel intermediary
D) turnkey contractor

Question 37

The number and role of facilitators have declined due to the complexity of international business operations, intense competition, and technological advances.

Question 38

A retailer represents the first link between distributors and end users.

Question 39

A tax accountant would most likely be involved as a facilitator in which of the following stages of the international value chain?

A) distribution
B) sourcing
C) production
D) after-sales service

Question 40

________ are businesses, institutions, and governments that purchase goods and services as inputs to a production process, or as supplies needed to run a business or organization.

A) Organizational buyers
B) Freight forwarders
C) Retailers
D) Licensors

Question 41

As defined in the European Union, small and medium-sized enterprises (SMEs) are manufacturers or service providers with ________ or fewer employees.

A) 500
B) 5000
C) 1000
D) 250

Question 42

A firm that grants another the right to use an entire business system in exchange for fees, royalties, or other forms of compensation is known as a(n) ________.

A) franchisor
B) licensor
C) export management company
D) broker

Question 43

MNEs are best known for their ________.

A) reluctance to explore emerging markets
B) foreign direct investment activities
C) high rates of employee attrition
D) preference for exporting as the main strategy for entering foreign markets

Question 44

Which of the following is an upstream value-chain activity?

A) marketing
B) sourcing
C) distribution
D) after-sales service

Question 45

In the research and development stage of the international value chain, ________ act as distribution channel intermediaries.

A) universities
B) research labs
C) innovation fairs
D) consolidators

Question 46

Licensing allows companies to ________.

A) internationalize rapidly while remaining in their home market
B) monitor and control employee behavior
C) eliminate the costs of advertising and branding
D) invest in emerging markets abroad

Question 47

A young entrepreneurial company that initiates international business activity early in its evolution, moving rapidly into foreign markets is called a(n) ________.

A) born global firm
B) MNE
C) not-for-profit company
D) conglomerate

Question 48

Within the international value chain, which of the following would operate as a facilitator?

A) importer
B) lawyer
C) retailer
D) distributor

Question 49

The rise of Eastern European SMEs has resulted largely from two trends: the access these firms have gained in recent years to the massive European Union and ________.

A) direct investment by foreign investors in emerging markets
B) an increased emphasis on niche marketing
C) widespread outsourcing
D) regular tax breaks from national governments

Question 50

As defined in Canada and the United States, small and medium-sized enterprises (SMEs) are manufacturers or service providers with ________ or fewer employees.

A) 500
B) 5000
C) 1000
D) 250

Question 51

In ________, some focal firms are partly or wholly owned by the government.

A) free market economies
B) highly developed countries
C) market economies
D) centrally planned economies

Question 52

Which of the following best describes a firm that allows a partner the right to use certain intellectual property for a specified period of time in exchange for royalties or other compensation?

A) franchisor
B) licensor
C) manufacturer
D) trading company

Question 53

Which of the following stages of the international value chain immediately follows the research and development stage?

A) distribution
B) market research
C) production
D) sourcing

Question 54

Delegating certain noncore functions to outside vendors is a strategy known as ________.

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

Question 55

Which of the following is true with regard to MNEs?

A) MNEs are constrained by limited human resource.
B) Due to their smaller size, MNEs often target specialized products.
C) MNEs are more flexible than SMEs.
D) MNEs perform various business activities through a network of subsidiaries.

Question 56

SMEs usually choose ________ as their main strategy for entering foreign markets.

A) exporting
B) importing
C) divesting
D) investing

Question 57

Peter, a graduate student from Michigan, ordered a notebook from Opus Inc., an American MNC manufacturing and selling computers and related products. The notebook that Peter ordered from Michigan was assembled in Opus' factory in Taipei. This exemplifies the ________ stage in the international value chain.

A) research and development
B) sourcing
C) production
D) after-sales service

Question 58

A born global firm is defined as ________.

A) a consortium of firms that plan, finance, organize, manage, and implement all phases of a project and then hand it over to a foreign customer after training local personnel
B) a large global company that sells diverse and unrelated products
C) an intermediary that engages in import and export of a variety of commodities, products, and services
D) a young entrepreneurial company that initiates international business activity early in its evolution, moving rapidly into foreign markets

Question 59

Which of the following is a downstream value-chain activity?

A) marketing
B) sourcing
C) market research
D) research and development

Question 60

Which of the following is true about SMEs?

A) They are more bureaucratic than are most MNEs.
B) They are characterized by low adaptability.
C) They often sustain entrepreneurship and innovation in national economies.
D) They rarely target specialized products.

Question 61

A(n) ________ is an intermediary (often an individual or a small firm) that handles orders to buy and sell commodities, products, and services in international business transactions for a commission.

A) agent
B) licensor
C) franchisor
D) foreign distributor

Question 62

Dealing directly with foreign-based retailers is efficient because ________.

A) it shortens the distribution channel
B) it enhances the brand image of products
C) it helps create market monopolies
D) it eliminates competition

Question 63

Trading companies play an important role in Japan's external trade because Japan ________.

A) manufactures technological devices
B) has few natural resources
C) has a steadily rising population
D) has a high average per-capita income

Question 64

Which of the following is true with regard to online intermediaries?

A) They discourage customers to visit physical outlets.
B) They consolidate wholesale channels.
C) They broker transactions between buyers and sellers worldwide.
D) They complement traditional intermediaries.

Question 65

________ assume the international marketing function on behalf of producers, especially those with limited international business experience.

A) Export management companies
B) Manufacturer's representatives
C) Customs brokers
D) Trading companies

Question 66

Distribution channel intermediaries perform all of the following functions for focal firms EXCEPT ________.

A) production
B) advertising
C) customer service
D) warehousing

Question 67

A(n) ________ is an intermediary contracted by the exporter to represent and sell its merchandise or services in a designated country or territory.

A) licensor
B) retailer
C) franchisor
D) agent

Question 68

A(n) ________ is a crossborder business alliance in which partnering firms pool their resources to create a new venture, sharing the associated costs and risks.

A) SME
B) build-own-transfer venture
C) MNE
D) international collaborative venture

Question 69

In a market consisting of many small, widely dispersed buyers and sellers, the function of which of the following is especially important?

A) foreign distributors
B) licensors
C) agents
D) retailers

Question 70

Collaborative arrangements help focal firms to ________.

A) create and sustain market monopolies
B) connect with domestic customers
C) configure value chains more effectively
D) monitor and control employee behavior

Question 71

Commercial banks facilitate the operations of international businesses by doing all of the following EXCEPT ________.

A) regulating national money supplies
B) transferring funds to individuals and foreign banks
C) supplying credit information on foreign buyers
D) providing credit to buyers and sellers

Question 72

An increasingly popular type of turnkey contract in the developing economies is the ________, in which the contractors acquire an ownership stake in the facility for a period of time until it is turned over to the client.

A) international collaborative venture
B) build-own-transfer venture
C) joint venture
D) project-based, nonequity venture

Question 73

Common carriers are firms that ________.

A) plan, manage, and implement all phases of a project on behalf of foreign governments
B) assist retailers in developing e-commerce based marketing systems
C) own the ships, trucks, and airplanes used to transport goods around the world
D) provide expert counsel to MNEs on the legal aspects of international business

Question 74

Foreign distributors that purchase products from exporters for resale at a profit are known as ________.

A) brokers
B) merchant distributors
C) domestic intermediaries
D) sales representatives

Question 75

A focal firm that creates and owns a new legal entity through equity investment or pooling of assets is called a(n) ________.

A) project-based partner
B) joint venture partner
C) build-own-transfer venture
D) nonequity venture partner

Question 76

Distribution channel intermediaries ________.

A) deliver products and services in the home country and abroad
B) provide financial support to SMEs
C) facilitate customs clearance for MNEs
D) assist focal firms with legal issues

Question 77

Project-based partnerships ________.

A) are extremely formal ventures
B) undertake projects with a relatively broad scope
C) involve equity investment in the parent companies
D) are short-term, nonequity ventures

Question 78

The increase in the number of international business facilitators has been driven by all of the following EXCEPT ________.

A) technological advances
B) complexity of international business operations
C) intense competition
D) declining trade in international services

Question 79

Which of the following assist focal firms in resolving disputes with foreign business partners?

A) insurance companies
B) trade lawyers
C) consultants
D) market research firms

Question 80

________ specialize in international construction, engineering, design, and architectural projects, usually for airports, hospitals, factories, power plants, oil refineries, campuses, and upgrades to public transportation such as bridges, roadways, and rail systems.

A) Freight forwarders
B) Turnkey contractors
C) Export management companies
D) Retailers