Deck 12: Analyzing International Opportunities

Question 1

Traditionally, companies enter the international business arena by choosing to enter familiar nearby countries first.

Answer 1

True

Question 2

Locating production facilities within regional markets (such as the European Union) is popular because producing in one of a region's countries provides duty-free access to every consumer in the trade bloc.

Answer 2

True

Question 3

When substantial product modifications are needed for cultural reasons, a company might choose to establish production facilities in the target market itself.

Answer 3

True

Question 4

A government's attitude toward trade and investment is reflected in the quantity and types of restrictions it places on imports, exports, and investment in its country.

Question 5

The first step in screening potential markets is to assess the national business environment.

Question 6

Companies that hope to secure financing in a market abroad need NOT determine the availability and cost of local capital.

Question 7

The practice of relocating production to countries where workers' wages are lower than they are in the home country is most common among makers of labor-intensive products.

Question 8

Political risk increases when a firm cannot predict the future political environment with a fair degree of accuracy.

Question 9

Companies go international only to increase sales.

Question 10

Under International Monetary Fund rules, governments cannot restrict international companies from freely removing profits earned in the domestic market.

Question 11

Restrictions on profit repatriation can force companies to either hold cash in the host country or to reinvest it in new projects there.

Question 12

The first step in identifying potential markets is to assess the basic demand for a product.

Question 13

Political risk can threaten the market of an exporter, the production facilities of a manufacturer, or the ability of a company to remove profits from a host country.

Question 14

During the site screening process, a site may be eliminated from consideration if it does not display an appropriate work ethic or educational attainment necessary for production.

Question 15

To provide a continuous flow of information into the production process, more and more companies are locating research and development facilities near their production sites abroad.

Question 16

Regulations that can eliminate a market or site from further consideration include strict environmental regulations and requirements that companies divulge proprietary information.

Question 17

Managers usually prefer to take a reactive rather than a proactive stance toward political risk.

Question 18

Poor fiscal and monetary policies of a nation's central bank can cause a drop in inflation, declining budget deficits, and an appreciating currency.

Question 19

The key element of political risk that concerns companies is unforeseen political change.

Question 20

Cultural elements can influence what kinds of products are sold and how they are sold.

Question 21

Logistics refers to the management of the physical flow of products from point of origin as raw materials to end users as finished products.

Question 22

When creating a market-potential indicator for an emerging market, one way to estimate market receptivity is by determining a nation's volume of international trade as a percent of GDP.

Question 23

A product's income elasticity refers to the sensitivity of demand for a product relative to changes in income.

Question 24

Products made in less-developed countries tend to be evaluated more positively than those from relatively more developed countries.

Question 25

When creating a market-potential indicator for an emerging market, market receptivity estimates the wealth or buying power of a market from the expenditures of both individuals and businesses.

Question 26

When creating a market-potential indicator for an emerging market, market size does not estimate the size of a market for a particular product, but rather the size of the overall economy.

Question 27

An income elasticity coefficient greater than 1.0 conveys an income-inelastic product, or one for which demand increases less relative to an increase in income.

Question 28

The three main difficulties associated with conducting international market research are availability of data, measurability of data, and comparability of data.

Question 29

Volatile currency values make it profitable and easier for firms to predict future earnings accurately in terms of the home-country currency.

Question 30

The cost of transporting materials and finished goods usually does not affect decisions about where to locate manufacturing facilities to any great degree.

Question 31

Country image is highly relevant to decisions of where to locate production, research and development (R&D), or any other activity.

Question 32

Given technological advances in emerging and developing nations, previously gathered quality information is easy to obtain.

Question 33

A lack of qualified local managers usually indicates the potential site must be dropped from consideration because no alternatives exist to solve this problem.

Question 34

Secondary data tends to be very expensive because it has already been collected, analyzed, and summarized by another party.

Question 35

In the local infrastructure analysis, telecommunications is of chief importance given increasing reliance on electronic communication.

Question 36

Companies can seldom create one marketing plan for every market in which they sell their products.

Question 37

Companies considering entry into emerging markets often face special problems related to a lack of information.

Question 38

The process of obtaining information that already exists within the company or that can be obtained from outside sources is called primary market research.

Question 39

Market research is the collection and analysis of information used to assist managers in making informed decisions.

Question 40

When creating a market-potential indicator for an emerging market, market consumption capacity is often estimated from the percentage of a market's population in the upper class, thereby concentrating on the core of an economy's buying power.

Question 41

During the ________ stage of the screening process for potential markets and sites, basic appeal for the product or service is identified.

A) first
B) second
C) third
D) fourth

Question 42

The process of collecting and analyzing original data and applying the results to current research needs is called primary market research.

Question 43

Focus group interviews tend to work best when moderators are natives of the countries where the interviews are held.

Question 44

Interviews and focus groups are two main sources of secondary data that help managers make informed decisions.

Question 45

The single greatest disadvantage of survey research is that it provides access to only a small amount of data in a single sweep.

Question 46

One advantage of written surveys is that they can be effectively conducted in countries with high rates of illiteracy.

Question 47

Research in which an interviewer has current or potential buyers answer written or verbal questions to obtain facts, opinions, or attitudes is called a focus group.

Question 48

Locating production facilities within regional markets is popular because ________.

A) producing in one of a region's countries provides duty-free access to every consumer in the whole trade bloc
B) it simplifies language gaps
C) it simplifies political and economic gaps
D) marketing strategies can then be standardized across the bloc

Question 49

Companies trying to break into new markets may want to join industry or trade associations to make contact with others in their field.

Question 50

Recognizing a lack of demand for snow skis in Indonesia would take place during the ________ stage of the screening process for potential markets and sites.

A) first
B) second
C) third
D) fourth

Question 51

Measuring market or site potential takes place during the ________ stage of the screening process for potential markets and sites.

A) first
B) second
C) third
D) fourth

Question 52

Industry data cannot tell us how individuals feel about a company or its products.

Question 53

The first step in the screening process for potential markets and sites is to ________.

A) select the market/site
B) obtain government approval for research
C) identify basic appeal
D) assess the national business environment

Question 54

Assessing the national business environment is the ________ step in the screening process for potential markets and sites.

A) first
B) second
C) third
D) fourth

Question 55

Which of the following is the correct sequence in the screening process for potential markets and sites?

A) Measure market/site potential, identify basic appeal, select market/site, assess the national business environment
B) Identify basic appeal, assess the national business environment, measure market/site potential, select the market/site
C) Assess the national business environment, identify basic appeal, select the market/site, measure the potential
D) Select the market/site, measure the potential, assess the national business environment, identify basic appeal

Question 56

Once the basic appeal of a market/site has been identified, which of these should occur in the screening process?

A) Assess the national business environment
B) Select the market/site
C) Measure the market/site potential
D) Conduct a climate suitability test

Question 57

A trade show is an independent trip by government officials and businesspeople that is organized by agencies of national or provincial governments for the purpose of exploring international business opportunities.

Question 58

Which of these is the final step in the screening process for potential markets and sites?

A) Assess the national business environment
B) Measure market/site potential
C) Select the market/site
D) Identify basic appeal

Question 59

Selecting the market or site would take place in the ________ stage of the screening process for potential market and sites.

A) first
B) second
C) third
D) fourth

Question 60

The Internet can be especially useful in seeking information about potential production sites.

Question 61

A typical industry analysis includes which of the following?

A) Volume of exports and imports of a product
B) Structure of the wholesale and retail distribution networks
C) Total expenditure on the product in the market and future outlook
D) All of the above

Question 62

Assessing how country image affects the decision to enter a particular market is part of the ________ stage of the screening process for potential markets and sites.

A) first
B) second
C) third
D) fourth

Question 63

The sensitivity of demand for a product relative to changes in income is called ________.

A) income elasticity
B) product elasticity
C) the relativity principle
D) the market intensity

Question 64

Which of the following refers to management of the physical flow of products from point of origin as raw materials to end users as finished products?

A) Market receptivity
B) Logistics
C) Commercial infrastructure
D) Environmental scanning

Question 65

All of these are true about country image EXCEPT that ________.

A) it embodies every facet of a nation's business environment
B) the positive or negative image is the same across all product classes
C) it can change over time
D) products made in relatively more developed countries tend to be evaluated more positively

Question 66

Fiscal and monetary policies of a nation are evaluated in which step of the market/site screening process?

A) Assess the national business environment
B) Identify basic appeal
C) Select the market/site
D) Measure market/site potential

Question 67

Specialists on the current political climate of a market include which of the following?

A) Political leaders
B) Union leaders
C) Reporters
D) All of the above

Question 68

A product's income elasticity is determined in which of these steps of the market/site screening process?

A) Measure market/site potential
B) Identify basic appeal
C) Select the market/site
D) Assess the national business environment

Question 69

Poor fiscal and monetary policies of a nation's central bank can cause which of the following?

A) High rates of inflation
B) Increasing budget deficits
C) Flagging innovation
D) All of the above

Question 70

Government regulation and government bureaucracy are evaluated in which step of the market/site screening process?

A) Identify basic appeal
B) Measure market/site potential
C) Analyze the infrastructure
D) Assess the national business environment

Question 71

Which of these government regulations or actions would indicate that it is quite receptive to international trade and investment?

A) Creating investment barriers to ensure domestic control of an industry
B) Requiring companies to divulge proprietary secrets
C) Allowing companies to remove profits earned in the domestic market
D) Barring companies entirely from certain sectors of the domestic economy

Question 72

Currency and liquidity problems create all of the following challenges for companies EXCEPT ________.

A) it is difficult to predict future earnings accurately in the home-country currency
B) it is difficult to calculate the capital a company needs for an investment
C) liquidating assets is more difficult
D) a company could find its assets liquidated quickly

Question 73

A coefficient of ________ conveys an income-elastic product.

A) 0.25
B) greater than 1.0
C) greater than 0.5 but less than 1.0
D) less than 1.0

Question 74

Government regulations can ________.

A) create investment barriers to ensure domestic control of a company or industry
B) extend investment rules to bar international companies from competing in certain sectors of the domestic economy
C) restrict companies from freely removing profits earned in a nation
D) all of the above

Question 75

Assessing how culture affects the national business environment is part of the ________ stage of the screening process for potential markets and sites.

A) first
B) second
C) third
D) fourth

Question 76

Which of these typically lowers investor confidence and forces international companies to scale back or cancel proposed investments?

A) High rates of inflation
B) Increasing budget deficits
C) Falling productivity levels
D) All of the above

Question 77

The likelihood that a society will undergo political changes that negatively affect local business activity is known as ________.

A) business risk
B) investment risk
C) political risk
D) production risk

Question 78

The key element of political risk that concerns companies is ________.

A) the cost of transporting materials and goods
B) unforeseen political change
C) currency and liquidity problems
D) letting past political events blind future opportunities

Question 79

Quality of workforce, materials, and infrastructure is analyzed in which step of the screening process for potential markets and sites?

A) Step 1: Identify basic appeal
B) Step 2: Assess the national business environment
C) Step 3: Measure market or site potential
D) Step 4: Select the market or site

Question 80

Exploring the cost of transporting goods is part of which step in the screening process for potential markets and sites?

A) Step 1: Identify basic appeal
B) Step 2: Assess the national business environment
C) Step 3: Measure market or site potential
D) Step 4: Select the market or site