Deck 8: Global Management

Question 1

Jimland's government has severe restrictions toward the entry of foreign companies into the country. A foreign company interested in Jimland would have to purchase an existing company in order to conduct its business there. Hence, companies can only enter Jimland through a _____.

A) strategic alliance
B) direct foreign investment
C) direct export
D) joint venture

Answer 1

B

Question 2

The difference between voluntary export restraints and quotas is that:

A) unlike quotas, voluntary export restraints limit the amount of a product that can be imported annually.
B) unlike quotas, voluntary export restraints are imposed by the importing company.
C) unlike quotas, voluntary export restraints limit the amount of a product that can be exported annually.
D) unlike quotas, voluntary export restraints are imposed by the exporting company.

Answer 2

D

Question 3

In the context of nontariff barriers, _____ include government loans, grants, and tax deferments given to domestic companies to protect them from foreign competition.

A) export restraints
B) embargoes
C) quotas
D) subsidies

Answer 3

D

Question 4

Hutlot Corp., a clothing company in the country of Pretnola, bought a small clothing company named Midlews in the country of Limlouth. Hutlot is going to sell its own designs through Midlews, and it believes that this venture will be extremely successful. This scenario is an example of _____.

A) strategic alliance
B) direct foreign investment
C) direct export
D) joint venture

Question 5

The _____ is a worldwide trade agreement that reduced and eliminated tariffs, limited government subsidies, and established protections for intellectual property.

A) Asia-Pacific Economic Cooperation
B) General Agreement on Tariffs and Trade
C) Tripartite Free Trade Agreement
D) Maastricht Treaty

Question 6

_____ are defined as nontax methods of increasing the cost or reducing the volume of imported goods.

A) Nontariff barriers
B) Grants
C) Nonresident barriers
D) Quorums

Question 7

Oldhust Corp., an electronics company in the country of Bigmount, bought Specden Corp., an electronics company in the country of Vertholt. This scenario is an example of _____.

A) strategic alliance
B) direct foreign investment
C) direct export
D) joint venture

Question 8

_____ is a government's use of trade barriers to shield domestic companies and their workers from foreign competition.

A) Protectionism
B) Developmentalism
C) Economic nationalism
D) Centralism

Question 9

Bardron, an information technology company in the country of Conimount, wanted to start its business in the country of Bertholt. Hence, it bought Lecden Corp, a severely underperforming information technology company in the country of Bertholt. This scenario is an example of _____.

A) strategic alliance
B) direct foreign investment
C) direct export
D) joint venture

Question 10

Which of the following statements is true of the World Trade Organization (WTO)?

A) It ensures that trade between nations flows as predictably and freely as possible.
B) It transforms different economies and currencies into one common economic market.
C) It aims to create a unified South America by permitting free movement between nations.
D) It aims to establish regions in Europe as a single market by eliminating all tariffs by 2019.

Question 11

In the context of nontariff barriers, which of the following is a similarity between quotas and voluntary export restraints?

A) Both impose a complete ban on any kind of trade with a specific country.
B) Both limit the amount of a product that can be imported annually.
C) Both are imposed by the exporting country rather than the importing country.
D) Both levy a direct tax on imported goods.

Question 12

_____ are specific limits on the number or volume of imported products.

A) Tariffs
B) Quotas
C) Subsidies
D) Embargoes

Question 13

Unlike nontariff barriers, tariffs _____.

A) decrease the cost of exported goods
B) increase the cost of imported goods
C) are direct taxes on imported goods
D) are nontax methods of reducing the volume of imported goods

Question 14

DepDevs, an investment company in the country of Onimount, has purchased several small companies in Primelom, a third world country. DepDevs plans to revive these companies by investing their funds in them and improving their performances in the market. This scenario is an example of _____.

A) strategic alliance
B) direct foreign investment
C) direct export
D) joint venture

Question 15

PriemCrest, an oral care company in the country of Holtmont, bought an oral care company called SerenCrest in the country of Hofstadden. This scenario is an example of _____.

A) strategic alliance
B) direct foreign investment
C) direct export
D) joint venture

Question 16

Lochmonden already has a company registered under the name of CreateOne. The Aldemeren company with the same brand name was not able to enter Lochmonden market. Hence, the Aldemeren CreateOne had to start a new company in the name of OneCreate to enter the market in Lochmonden. This scenario is an example of _____.

A) strategic alliance
B) direct foreign investment
C) direct export
D) joint venture

Question 17

Which of the following trade barriers is established to protect the health and safety of citizens?

A) Tariffs
B) Quotas
C) Government import standards
D) Voluntary export restraints

Question 18

Which of the following best defines a tariff?

A) It is a specific limit on the volume of imported goods.
B) It is a direct tax on imported goods.
C) It is a complete ban on trade of a certain item.
D) It is a limit on the number of products exported to a particular country.

Question 19

Which of the following is a regional trade agreement between most European countries?

A) The Maastricht Treaty of Europe
B) The Single European Act
C) The EEC and EURATOM treaties
D) The Treaty of Brussels

Question 20

Aldhurst Corp., a software manufacturing firm in Lochmount, a European country, bought Fairden Corp., a software manufacturing firm in Vertholt, an Asian country. This scenario is an example of _____.

A) a strategic alliance
B) direct foreign investment
C) licensing
D) a joint venture

Question 21

Multinat is a large corporate with its headquarters in Asia. It wants to open new divisions in Africa and Australia. The company wants to ensure that the new divisions follow the same policies and guidelines as the parent company. It is evident from the scenario above that Multinat wants to:

A) incorporate local adaptation.
B) establish global consistency.
C) create franchises.
D) form strategic alliances.

Question 22

FitForLife Gym, a large U.S. based fitness center, receives royalty payments from WeWelness, a small Canadian company, for using its name and gym equipment. The FitForLife Gym brand is well known across the world and many fitness centers use its brand to attract customers. This form of agreement is an example of _____.

A) direct foreign investment
B) exporting
C) licensing
D) protectionism

Question 23

Which of the following is an advantage of licensing?

A) It allows companies to earn additional profits without investing more money.
B) It provides licensors an exclusive right to conduct business in a particular location.
C) It allows companies to bear only part of the costs and the risks of that business.
D) It gives the parent company complete control over the foreign facilities.

Question 24

Westburn Inc., a fast-food restaurant chain in Beachden, a European country, opens six outlets in Valcoast, an Asian country. It customizes the menu for the new outlets according to the preferences of the people of Valcoast. This scenario most likely exemplifies the concept of _____.

A) global consistency
B) local adaptation
C) licensing
D) franchising

Question 25

The two kinds of cooperative contracts in global business are:

A) exporting and importing.
B) joint ventures and consortia.
C) strategic alliances and wholly owned affiliates.
D) licensing and franchising.

Question 26

Which of the following is a difference between global consistency and local adaptation?

A) Unlike global consistency, local adaptation is typically preferred by overseas managers who are charged with making the local business successful in other countries.
B) Unlike global consistency, a company following a policy of local adaptation follows the same rules and regulations across all its offices in different countries.
C) Unlike global consistency, a company following a policy of local adaptation modifies its standard operating procedures to adapt to differences in foreign customers, governments, and regulatory agencies.
D) Unlike global consistency, local adaptation simplifies decisions.

Question 27

HungryFrank, a small eatery based in the U.S. was reporting losses and wanted to turn its business around. It decided to start using the same name and menu as JoeClub, a popular Italian restaurant, instead if its own. HungryFrank agreed to pay royalty fees to JoeClub to be able to use its menu and name. This form of agreement is an example of _____.

A) direct foreign investment
B) exporting
C) licensing
D) protectionism

Question 28

LyTV, a large U.S. based broadcast network, receives royalty payments from TipTV, a small Ukrainian broadcast network, for using its channels and television programs. TipTV hopes to improve the viewership of its network by making use of LyTV's popularity. This form of agreement is an example of _____.

A) direct foreign investment
B) exporting
C) licensing
D) protectionism

Question 29

Zinocorp Inc., a multinational retail corporation with its headquarters in Australia, wants to open shopping malls in China and Japan. The company wants the new malls to follow the same set of rules and regulations that the parent company follows. It is evident from the scenario that Zinocorp Inc. wants to:

A) incorporate local adaptation.
B) establish global consistency.
C) create franchises.
D) form strategic alliances.

Question 30

_____ is selling domestically produced products to customers in foreign countries.

A) Domestic trade
B) Entrepot trade
C) Importing
D) Exporting

Question 31

Which of the following is a disadvantage of franchising?

A) Franchisors face tariff and nontariff barriers when trying to enter a market.
B) Franchisors face a loss of control when they sell businesses to franchisees who are thousands of miles away.
C) Franchisors face power struggles and a lack of leadership when trying to adapt the franchisee's management practices.
D) Franchisors can eventually become competitors, especially when a licensing agreement includes access to important technology or proprietary business knowledge.

Question 32

Which of the following is an example of the process of exporting?

A) Allied Pharmacy receiving royalty payment from Wings Pharmacy for allowing it to produce and sell its trademark cough syrup
B) TechnoDorm, a manufacturer of mobile devices, licensing its entire business to DreamyTech
C) FootSoul, a U.S.-based shoe manufacturing company, selling its shoes in the U.S., Germany, and France
D) BiteSweet Inc. and NutriPack Inc. collaborating to form a new company, BitePack Inc., which manufactures energy bars

Question 33

A franchise is a collection of networked firms in which the manufacturer or marketer of a product or service licenses the entire business to another person or organization called the _____.

A) licensee
B) franchisor
C) licensor
D) franchisee

Question 34

Which of the following statements is true of global consistency?

A) It modifies a company's standard operating procedures.
B) It occurs when two existing companies collaborate to form a third company.
C) It allows managers to adapt to differences in foreign customers.
D) It simplifies decisions for managers at the headquarters of a multinational company.

Question 35

PreFab, a clothing company is selling its goods in the country of Irmana. The clothing is manufactured in PreFab's home country and a tax is levied on it by the government of Irmana. This form of business is an example of _____.

A) direct foreign investment
B) exporting
C) licensing
D) protectionism

Question 36

Which of the following is a similarity between licensing and franchising?

A) Under both, the produced goods are subject to tariff and nontariff barriers.
B) Both require the parent company to invest in production equipment and facilities to produce the
Product.
C) Both are types of cooperative contracts.
D) Under both, the parent company retains complete control over the quality of the product or service sold by another company.

Question 37

Which of the following statements is true of the Maastricht Treaty of Europe?

A) Its purpose was to liberalize trade between countries so that businesses could plan for one market rather than for three separate markets.
B) Its purpose was to transform twelve different economies and currencies into one common economic market with one common currency.
C) Its purpose was to eliminate most product tariffs and prevent the member countries from increasing existing tariffs or introducing new ones.
D) Its purpose was to permit free movement between nations, creating a common infrastructure that includes an interoceanic highway.

Question 38

If companies focus too much on local adaptation, they run the risk of:

A) using management procedures poorly suited to particular countries' markets, cultures, and employees.
B) losing the cost effectiveness and productivity that result from using standardized rules and procedures throughout the world.
C) losing control over the quality of the product or service sold by the foreign licensee.
D) failing to benefit from an active global strategy.

Question 39

Which of the following is a disadvantage of exporting?

A) The companies exporting products lose their control over the quality of the products.
B) It makes the exporting company dependent on sales in its home market.
C) Transportation costs can significantly increase the price of an exported product.
D) Exporting tends to dilute the brand's reputation through overexposure.

Question 40

The government of Mentlands levies large taxes and has set up a limit on the amount of goods FarTrek, a foreign sports goods manufacturer, can sell in Mentlands. In this scenario, FarTrek is most likely involved in _____.

A) direct foreign investment
B) exporting
C) licensing
D) protectionism

Question 41

Jimpeg, a manufacturer of imaging and optical products based in the U.S., operates under the name of Pixpem and SetJpeg in six different countries. The company operates using different names, but it sells the same products in every country. The revenue generated in the different countries goes back to the parent company. Which of the following methods for conducting global business has Jimpeg used in this scenario?

A) The formation of a joint venture
B) The establishment of a strategic alliance
C) The formation of wholly owned affiliates
D) The establishment of a cooperative contract

Question 42

Petnro, a bike manufacturing firm based in the U.S., operates bike manufacturing plants in China, Japan, Taiwan, and Singapore under the name of BikMe. The parent company receives all the profits made by these facilities, and it has complete control over all the different segments of the plants. Which of the following methods for conducting global business has Petnro used in this scenario?

A) The formation of a joint venture
B) The establishment of a strategic alliance
C) The formation of wholly owned affiliates
D) The establishment of a cooperative contract

Question 43

Cad Cream Inc., an ice cream company, has collaborated with Bite Snack Inc., a food manufacturing company, to come up with a third company, Cream Bite Inc. This new company manufactures energy bars with a variety of flavors. In this context, Cream Bite Inc. is a _____.

A) joint venture
B) global new venture
C) multinational franchise
D) wholly owned affiliate

Question 44

One of the advantages of _____ is that the founding companies bear only part of the costs and the risks of that business.

A) a business acquisition
B) direct foreign investment
C) direct exporting
D) a joint venture

Question 45

Which of the following is an advantage of joint ventures?

A) They provide companies an exclusive right to conduct business in a particular location.
B) They give companies training and assistance with marketing and advertising.
C) They help companies avoid tariff and nontariff barriers to entry.
D) They allow companies to earn additional profits without investing more money.

Question 46

_____ are foreign offices, facilities, and manufacturing plants that are 100 percent possessed by the parent company.

A) Joint ventures
B) Wholly owned affiliates
C) Strategic alliances
D) Business acquisitions

Question 47

Unlike joint ventures, wholly owned affiliates are:

A) created by merging two or more companies.
B) disadvantageous because the parent company has no control over the quality of products.
C) fully owned by their parent company.
D) advantageous because the parent company has no liability for any losses incurred by the wholly owned affiliates.

Question 48

Ingente Corp. and Ventruni Corp. will be combining their resources to build the largest railway system in the world. Both companies will equally share costs and profits from this venture. This form of global business is an example of a _____.

A) strategic alliance
B) wholly owned affiliate
C) conglomerate
D) franchise

Question 49

Which of the following trends has allowed companies to skip the phase model of globalization when going global?

A) Countries with growing levels of purchasing power are good choices for attractive global markets.
B) Low-cost communication technologies make it easier to communicate with global customers.
C) Companies do not have to establish a manufacturing location in each country they enter.
D) Masculinity and femininity capture the difference between highly assertive and nurturing cultures.

Question 50

Primo Call Inc., a cell phone manufacturing company, has collaborated with Tech Friend Inc., a computer manufacturing company, to start a third company under the name of Primo Tech Inc. This new company will manufacture mobile devices such as tablets, smart watches, and handheld video game consoles. In this context, Primo Tech Inc. is a _____.

A) joint venture
B) global new venture
C) multinational franchise
D) wholly owned affiliate

Question 51

A _____ is an agreement in which companies combine key resources, costs, risks, technology, and people.

A) strategic alliance
B) business acquisition
C) merger
D) divestiture

Question 52

Riytiz Corp. and Tenkriz Corp. are two industrial developers. They plan to combine their funds, finances, risks, and expertise to build the Opobip Bridge. This bridge is said to connect two states that are not connected by a highway. In this scenario, the venture between Riytiz Corp. and Tenkriz Corp. would be called a _____.

A) strategic alliance
B) wholly owned affiliate
C) conglomerate
D) franchise

Question 53

For initial fee plus royalties, Inding Inc., a U.S.-based firm, will provide Caliste Works, a firm based in Singapore, with an exclusive right to conduct Inding's business in its country. This form of global business is an example of a _____.

A) wholly owned affiliate
B) conglomerate
C) franchise
D) joint venture

Question 54

Leodan, a glass manufacturing firm based in the U.S., has sole control over several glass manufacturing facilities located all over the world. The company assumes the entire risk if any of the facilities undergoes losses, and it enjoys all the profits if the facilities do well. Which of the following methods has Leodan used to conduct business globally in this scenario?

A) The formation of a joint venture
B) The establishment of a strategic alliance
C) The formation of wholly owned affiliates
D) The establishment of a cooperative contract

Question 55

Opep Corp. received a new building project that had very short turnover and very high resource cost. The company decided to ask Imog Corp., another builder, to aid them in this project, and the two companies together formed a third company by combining their resources. This third company was formed for the duration of the project and received equal credit after completion. In this scenario, Opep Corp. and Imog Corp. are forming a _____.

A) joint venture
B) global new venture
C) multinational franchise
D) wholly owned affiliate

Question 56

Rinsen Corp., a U.S.-based firm, is allowing Blink Traders, a firm based in Ireland, to conduct Rinsen's business in its country. Rinsen Corp. is going to provide training, equipment, and advertising assistance to Blink Traders for initial fee plus royalties. This form of global business is an example of a _____.

A) wholly owned affiliate
B) conglomerate
C) franchise
D) joint venture

Question 57

Unlike a licensing arrangement, the parent company of a wholly owned business:

A) gives up control over the quality of the product or service sold by the foreign business.
B) has complete control over the foreign facilities.
C) functions in the foreign market by obtaining a license from the local manufacturers.
D) receives a percentage of the profits.

Question 58

Which of the following is a disadvantage of wholly owned affiliates?

A) The high risk of losing intellectual property
B) The slow execution of strategic priorities
C) The cost of selling existing business
D) The expense of building new operations

Question 59

The most common _____ is a joint venture, which occurs when two existing companies collaborate to form a third company.

A) business acquisition
B) licensing agreement
C) franchising agreement
D) strategic alliance

Question 60

Upstart Corp. was formed when Bencanc Corp. and Torperd Corp. pooled their resources to work on a construction project for the government. The project had a short turnaround time along with intensive requirements that could not be fulfilled by one company alone. In this context, Upstart Corp. is a _____.

A) joint venture
B) global new venture
C) multinational franchise
D) wholly owned affiliate

Question 61

_____ is associated with the risk of major changes in political regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events.

A) Political conflict
B) Political uncertainty
C) Political failure
D) Political corruption

Question 62

Benkemel Corp., an industrial chemicals manufacturer in Noemern, has entered a foreign market. It now plans to establish a chemical manufacturing plant in that country. Which of the following is a qualitative factor that Benkemel should consider while choosing the new manufacturing plant location?

A) Company strategy
B) Tariff and nontariff barriers
C) Transportation costs
D) Exchange rates

Question 63

Unlike political uncertainty, policy uncertainty:

A) deals with the risk of changes in governments that can result from war, revolution, social unrest, or other influential events.
B) can be minimized by using an avoidance strategy.
C) deals with the risk associated with changes in laws and government rules that directly affect the way foreign companies conduct business.
D) can be minimized by using control and cooperation.

Question 64

In the context of global markets, which of the following factors helps companies determine the growth potential of foreign markets?

A) Political uncertainty
B) Purchasing power
C) Organizational structure
D) Land availability

Question 65

Worthen, an information technology firm based in the U.S., was created with the goal of standardizing its services in all the developing nations of the world. Rather than strategizing for one country at a time, Worthen's plan is to focus on all the nations at the same time. Worthen is an example of a _____.

A) licensee
B) strategic alliance
C) global new venture
D) franchise

Question 66

Emeremen Corp., an automobile manufacturer in Mallowdeer, plans to enter a foreign market. It wants to establish its new office in Ostview. Which of the following is a qualitative factor that should be considered by Emeremen Corp. while choosing a new office location?

A) Company strategy
B) Tariff and nontariff barriers
C) Transportation costs
D) Exchange rates

Question 67

In the context of political risks, unlike cooperation, an avoidance strategy:

A) can limit the risk associated with foreign ownership of a business.
B) involves the use of joint ventures and collaborative contracts.
C) does not minimize the political uncertainty of doing business in a country.
D) is used when the political risks associated with a country are too great.

Question 68

The government of Bicana recently passed a law requiring every foreign country operating in Bicana to pay 50% of its earnings in taxes. As a result, many foreign companies are planning to shut down their ventures in the country. This is a type of _____ faced by companies that want to conduct business in Bicana.

A) political uncertainty
B) cost uncertainty
C) policy uncertainty
D) control uncertainty

Question 69

The government of Diarmina recently passed a law that requires foreign companies to partner with Diarminian companies if they want to conduct their business in the country. Many investors and companies started to pull their funds and business out of the country because of this. This scenario exemplifies _____.

A) political uncertainty
B) cost uncertainty
C) policy uncertainty
D) control uncertainty

Question 70

WindWing Inc., an airline company with great success in the domestic market, started WingDream Ventures with the goal of bringing its airline services to all the major countries in the world. WingDream is an example of a _____.

A) licensee
B) strategic alliance
C) global new venture
D) franchise

Question 71

Political uncertainty is the risk associated with:

A) policies affecting foreign companies.
B) changes in government policies.
C) social unrest.
D) changes in law.

Question 72

BlazeTrack Cars is a U.S.-based automaker. It is planning to introduce a new premium car in Ireland, Norway, Sweden, and Switzerland. The company is not sure if its car will be successful in these diverse markets, and it is concerned about its growth. It can afford to launch the product in only three countries. To choose these three countries, which of the following parameters should the company most likely consider to determine the growth potential of these foreign markets?

A) Purchasing power
B) Political uncertainty
C) Expropriation potential
D) Sociocultural differences

Question 73

Flywater Inc. is refusing to expand its global operations into North Marland due to the civil wars that frequently occur in the country. This threat of civil wars in the country is an example of _____.

A) political uncertainty
B) purchase uncertainty
C) policy uncertainty
D) pandemic uncertainty

Question 74

Crimson Corp., an electronics manufacturer in Mallowdeer, plans to enter a foreign market. It wants to establish its new office in Ostview. Which of the following is a qualitative factor that Crimson Corp. should consider while choosing the new office location?

A) Company strategy
B) Tariff and nontariff barriers
C) Transportation costs
D) Exchange rates

Question 75

MekTech is a U.S.-based electronics company. It is planning to introduce a new home theatre system in a foreign country. It has identified Mexico and Canada to be the easiest foreign markets to enter; however, it only wants to launch the system in one country. Which of the following parameters should the company most likely consider to determine the growth potential of these foreign markets?

A) Purchasing power
B) Political uncertainty
C) Expropriation potential
D) Sociocultural differences

Question 76

Jepmem Inc. is expanding its global operations into North Pidlin, even though the country has a high global terrorism index. As Jepmem Inc. expands into North Pidlin, it must deal with _____.

A) political uncertainty
B) purchase uncertainty
C) policy uncertainty
D) pandemic uncertainty

Question 77

Pinkmake Inc. is expanding its global operations into Jartainia in spite of the frequent changes in its government due to the assassination attempts on its prominent leaders. As Pinkmake Inc. expands into Jartainia, it must deal with _____.

A) political uncertainty
B) purchase uncertainty
C) policy uncertainty
D) pandemic uncertainty

Question 78

Lakeri Inc. is expanding its global operations into South Fordland in spite of the allegations made against its prominent leaders to have had criminal connections. As Lakeri Inc. expands into South Fordland, it must deal with _____.

A) political uncertainty
B) purchase uncertainty
C) policy uncertainty
D) pandemic uncertainty

Question 79

_____ are new companies that are founded with an active global strategy and have sales, employees, and financing in different countries.

A) Joint ventures
B) Strategic alliances
C) Global new ventures
D) Global new acquisitions

Question 80

Dustind Inc. is expanding its global operations into Arcland in spite of the constant threat of war between Arcland and its neighboring countries over petroleum reserves. As Dustind Inc. expands its operations into Arcland, it must deal with _____.

A) political uncertainty
B) purchase uncertainty
C) policy uncertainty
D) pandemic uncertainty