Deck 15: Global Opportunities

Question 1

A resident buying office is:

A) a business that buys and sells products in many countries, either in its own name or as an agent for its buyer-seller clients.
B) a government-owned or business-owned facility set up in a foreign country to buy products that are made there.
C) a firm in an overseas distribution network selling noncompetitive products made by other firms.
D) formed by an agreement where a licenser gives a foreign licensee the right to use a patent, trademark, copyright, technology, and products in return for a percentage of the licensee's sales or profits.

Answer 1

B

Question 2

Which of the following statements is/are true regarding export management companies?

A) Most are merchant intermediaries that work on a buy-and-sell arrangement with domestic small companies.
B) They provide small businesses with a low-cost, efficient, independent, international marketing department.
C) Many specialize in particular products or product lines and offer services ranging from market research and advice or patent protection, to arranging financing and handling shipping.
D) All of the above

Answer 2

D

Question 3

Which of the following is a common problem in joint ventures?

A) Incompatible management styles among partners
B) Failure of partners to establish common goals
C) Failure of partners to carefully determine each party's contributions and responsibilities, distribution of earnings, etc.
D) All of the above

Answer 3

D

Question 4

Foreign distributors offer small businesses which of the following benefits?

A) A detailed knowledge of the local markets in which they sell
B) The ability to cover a foreign sales territory thoroughly
C) The ability to handle all of the marketing, distribution, and service functions in foreign markets
D) All of the above

Question 5

Before going global, entrepreneurs should ask themselves questions regarding:

A) profit potential and commitment of resources for a global effort.
B) a viable exit strategy and the cost of not going global.
C) the reasons, rationale, and understanding cultural differences.
D) All the above

Question 6

An export trading company:

A) is a business that buys and sells products in many countries, either in its own name or as an agent for its buyer-seller clients.
B) typically offers a wide range of services such as exporting, shipping, storing, distributing, and others to their clients.
C) is formed by an agreement by which a licenser gives a foreign licensee the right to use a patent, trademark, copyright, technology, and products in return for a percentage of the licensee's sales or profits.
D) Both A and C above

Question 7

The most important ingredient for a successful joint venture is:

A) targeting the right country in which to sell.
B) getting government approval and avoiding antitrust charges.
C) choosing the right partner.
D) splitting costs and profits equally.

Question 8

Foreign licensing is:

A) required when a business buys and sells products in many countries, either in its own name or as an agent for its buyer-seller clients.
B) a government-owned or business-owned facility set up in a foreign country to buy products that are made there.
C) the use by one firm (the carrier) of its overseas distribution network to sell noncompetitive products made by other firms (riders).
D) an agreement in which a licenser gives a licensee in another country the right to use that licenser's patent, trademark, copyright, technology, and products in return for a percentage of the licensee's sales or profits.

Question 9

Which of the following trade intermediaries lowers the risk of exporting for a small business?

A) Export management companies
B) Export trading companies
C) Resident buying offices
D) All of the above

Question 10

For an entrepreneur, expanding into international markets:

A) guarantees its success in the marketplace.
B) makes it a member of GATT automatically.
C) helps it grow faster and survive competition better.
D) leads to business failure for companies under $100 million in annual revenue.

Question 11

Becoming a global entrepreneur requires:

A) constant innovation.
B) maintaining a high level of quality and constantly improving it.
C) being sensitive to foreign customers' unique requirements and adopting a more respectful attitude toward foreign habits and customs.
D) All of the above

Question 12

________ act as international sales representatives in a limited number of markets for various noncompeting domestic companies, typically operating on a commission basis.

A) Manufacturers' export agents
B) Export merchants
C) Resident buying offices
D) Foreign distributors

Question 13

________ are domestic wholesalers who do business in foreign markets, buying goods from domestic companies and selling them in foreign markets, often handling competing lines.

A) Resident buying offices
B) Export trading companies
C) Foreign distributors
D) Export merchants

Question 14

Many joint ventures fail because the parties involved neglected to:

A) select a partner who shares their company's values.
B) spell out in writing exactly how the venture will work and who has decision-making authority.
C) select a partner whose skills are different from, but compatible with, their own.
D) All of the above

Question 15

The first obstacle an entrepreneur must overcome on the way to creating a truly global business is:

A) finding a joint venture partner.
B) learning to think globally.
C) locating motivated, multilingual managers for overseas assignments.
D) finding overseas distributors for the company's products.

Question 16

In a(n) ________, a domestic small business forms an alliance with a company in the target nation for the purpose of exporting to that market.

A) foreign joint venture
B) trade intermediary
C) domestic joint venture
D) export management company

Question 17

In a(n) ________, two or more U.S. small businesses form an alliance for the purpose of exporting their goods and services. The companies get antitrust immunity and share responsibility for the business equally.

A) foreign joint venture
B) trade intermediary
C) domestic joint venture
D) export management company

Question 18

If a business owner cannot afford to invest in foreign facilities and does not have time to learn the foreign market, but is willing to give someone else the right to make and market her product for a fee and royalties, her best bet for entering the foreign market is:

A) a foreign management company.
B) joint venturing.
C) foreign licensing.
D) international franchising.

Question 19

Foreign licensing has its greatest potential in the licensing of:

A) products.
B) intangibles, such as technology, copyrights, and trademarks.
C) goods.
D) franchises.

Question 20

All of these are steps small companies follow when they begin conducting global business on the Web except:

A) connecting to e-mail.
B) building a globally accessible Web site.
C) setting up links to related company Web sites.
D) using the Web to conduct international market research.

Question 21

In the United States alone, companies import more than ________ worth of goods and services annually.

A) $3.2 million
B) $1.2 trillion
C) $3.2 trillion
D) $2.3 trillion

Question 22

A ________ is an agreement between an exporter's bank and the foreign buyer's bank that guarantees payment to the exporter for a specific shipment of goods.

A) bank draft
B) letter of credit
C) repurchase agreement
D) trade acceptance

Question 23

The most frequently encountered impediment to international trade for small and medium-sized manufacturers is:

A) foreign sales not sufficiently profitable.
B) transportation and shipping costs.
C) language and cultural barriers.
D) foreign regulations.

Question 24

Nance Technologies, Inc., has agreed to sell some of its computers to a company in Bascovina, a country whose currency is worthless outside its own borders. As part of the agreement, Nance will sell the foreign customer its computers in exchange for a specified number of tons of coffee, a major export of Bascovina. Nance has already arranged to sell the coffee to a major processor for a set price in U.S. dollars. Nance has engaged in:

A) bartering.
B) foreign licensing.
C) exporting.
D) countertrading.

Question 25

A ________ is a document an exporter draws on a foreign buyer, requiring the buyer to pay the face amount, either on sight or on a specified date, once the goods are shipped.

A) bank draft
B) letter of credit
C) repurchase agreement
D) trade acceptance

Question 26

The first step in establishing a successful global franchise arrangement is to:

A) generate lead for potential franchisees.
B) structure the franchise deal.
C) identify the country or countries that are best suited to the franchiser's business concept.
D) select quality candidates.

Question 27

Two valuable resources for entrepreneur's to investigate for going global should include:

A) U.S. Department of Commerce.
B) International Trade Administration.
C) A and B above
D) Neither of these resources will provide real value or insight.

Question 28

The biggest barrier facing companies that have never exported is:

A) finding the financing to launch an export program.
B) not knowing where or how to start.
C) locating a trade intermediary to represent them in foreign markets.
D) winning government approval to begin selling in foreign markets.

Question 29

The second step to creating a sound export strategy involves:

A) analyzing the product or service.
B) recognizing the potential to export.
C) analyze your commitment.
D) research market and pick your target.

Question 30

Which of the following is/are often used by companies exporting to countries that lack a convertible currency?

A) Countertrading
B) Indirect exporting
C) Bartering
D) A and C only

Question 31

Which of the following is not one of the three major advantages to establishing an international location?

A) Lower production costs
B) Need for smaller staff
C) Lower marketing costs
D) Development of an intimate knowledge of customer preferences

Question 32

________, the exchange of goods and services for other goods and services, is one way of trading with countries that lack convertible currency.

A) Countertrading
B) Bartering
C) Foreign licensing
D) Exporting

Question 33

Domino's Pizza and McDonald's operating in Japan and Europe are examples of:

A) foreign management companies.
B) joint venturing.
C) foreign licensing.
D) international franchising.

Question 34

________ is a transaction in which a company selling goods and services in a foreign market agrees to help promote investment and trade in that country.

A) Countertrading
B) Bartering
C) Foreign licensing
D) Exporting

Question 35

One of the biggest barriers to small business exports is lack of:

A) access to adequate financing.
B) attractive countries that are not already saturated by franchising efforts.
C) effective distribution strategies.
D) information to make informed decisions about franchising.

Question 36

Small companies with fewer than 20 employees account for more than ________ percent of U.S. export sales.

A) 20
B) 60
C) 70
D) 90

Question 37

The drawbacks of countertrading include which of the following?

A) Countertrade transactions can be complicated, cumbersome, and time consuming.
B) Countertrade transactions can increase the chances that a company will be stuck with merchandise it cannot move.
C) Countertrade transactions can lead to unpleasant surprises concerning the quantity and quality of products required in the countertrade.
D) All of the above

Question 38

The first step to create a sound export strategy is to:

A) recognize that even the smallest companies and least experienced entrepreneurs have the potential to export.
B) analyze your product or service.
C) analyze your commitment.
D) research markets and pick your target.

Question 39

Entrepreneurs who are considering importing goods and services or outsourcing their manufacturing to foreign countries should begin by:

A) making sure that importing or outsourcing is right for their business.
B) do your research before you leave home
C) establish a target market for your product.
D) do your groundwork once you arrive

Question 40

The final step in creating a sound export strategy is to:

A) find your customer.
B) ship your goods.
C) collect your money.
D) find financing.

Question 41

An American executive went to a foreign country to sign a business contract. While there, he found that there were numerous complex government regulations his company needed to meet before closing the deal. This executive was experiencing which barrier to international trade?

A) Tariff
B) Political
C) Cultural
D) Domestic

Question 42

An American executive went to a Middle Eastern country to sign an oil contract. Before the contract was signed, the American and the Arab official met for tea. Relaxing, the American put his feet up on a table. The official became angry and left the room. Later it was found that showing the soles of shoes was a serious insult. This represents which barrier to international trade?

A) Tactical
B) Political
C) Strategic
D) Cultural

Question 43

Old assumptions regarding global business assumptions for exporting includes:

A) I am "too small" to go global and my product or service won't sell outside the U.S.
B) Exporting is too risky for my small company and my domestic market is currently secure.
C) Getting paid is difficult and this will impede my success.
D) All of the above

Question 44

A tariff is:

A) a law that a government uses to regulate products that are imported into the country.
B) the maximum amount of a product that can be imported or exported.
C) a prohibition or suspension of foreign trade of specific imports or exports.
D) a duty, or tax, that a government puts on products that are imported into the country.

Question 45

________ is the practice of selling substantial quantities of a product in a foreign market at prices that are below either the home-market price or below the full cost of producing it.

A) Exporting
B) Bartering
C) Dumping
D) Price discrimination

Question 46

John wants to expand into the foreign markets, but he cannot convince his partners. They believe that international markets are the domain of large corporations. John is facing which barrier to international trade?

A) Financing
B) Political
C) Cultural
D) Attitude

Question 47

The ________ of a nation includes the belief, values, views, and mores that its inhabitants share.

A) political atmosphere
B) culture
C) tariffs
D) free trade area

Question 48

The most frequently encountered impediment to international trade for small and medium-sized service firms is:

A) foreign sales not sufficiently profitable.
B) transportation and shipping costs.
C) language and cultural barriers.
D) foreign regulations

Question 49

The small country of Bascovina wanted to protect its infant basket industry and imposed a 400 percent tariff on all imported baskets. The high tariff dropped the bottom out of imported basket sales, and imports of baskets stops. Why did this happen?

A) The citizens realized that because the government imposed the tariff, imported basket purchases were undesirable.
B) The tariff reduced the price of imported baskets and consumers felt that because of the low prices, the baskets were of low quality and stopped their purchases.
C) The tariff barred all shipments of baskets to Bascovina.
D) The tariff makes the price of imported baskets so high that they are not competitive.

Question 50

Malcolm won a contract to provide nuts, bolts, and washers to a small African country's military. Unfortunately, neither his bankers nor venture capitalists would provide the loans needed to buy the material to produce the order. The bank did not do international loans. Which barrier to international trade is Malcolm experiencing?

A) Financing
B) Information
C) Cultural
D) Attitude

Question 51

A quota is:

A) a duty or tax that a government puts on products that are imported into the country.
B) the maximum amount of a product that can be imported into a country.
C) a prohibition or suspension of foreign trade of specific imports or exports.
D) a law that a government uses to regulate products that are imported into the country.

Question 52

Business owners new to international business are sometimes shocked:

A) by the wide range of labor costs they encounter.
B) that practices common in the United States, such as overtime, women workers, and employee benefits, are restricted, disfavored, or forbidden in other cultures.
C) that what appear to be "bargain" labor rates turn out to be excessively high after accounting for the quality of the labor force and the benefits their governments mandate.
D) All of the above

Question 53

Which of the following is a domestic barrier to small business exporting?

A) The attitude, "I'm too small to export"
B) A lack of information about how to get started in exporting
C) A lack of export financing for small companies
D) All of the above

Question 54

Many nations have lowered tariffs they impose on products and services brought into their border and rely on other:

A) nontariff structure as protectionist trade barriers.
B) taxes.
C) duty fees.
D) dumping.

Question 55

Which of the following is a guideline for becoming a successful international competitor?

A) Make yourself at home in all of the world's key markets-North America, Europe, and Asia.
B) Become familiar with foreign customs and languages.
C) Consider using partners and joint ventures to break into foreign markets you cannot penetrate on your own.
D) All of the above

Question 56

An embargo is:

A) a duty, or tax, that a government puts on products that are imported into the country.
B) the maximum amount of a product that can be imported or exported.
C) a prohibition or suspension of foreign trade of specific imports or exports.
D) a law that a government uses to regulate products that are imported into the country.

Question 57

As of 2003, the World Trade Organization (WTO) had 155 member countries that represent over ________ of all world trade.

A) 97 percent
B) 39 percent
C) 76 percent
D) 52 percent

Question 58

The North American Free Trade Agreement has which of the following provisions?

A) The immediate elimination of all tariff and quota barriers on all goods
B) The elimination of tariffs on most goods
C) A lowering of safety and air quality standards
D) The formation of a North American Trade Organization

Question 59

The North American Free Trade Agreement, also known as NAFTA, served to:

A) bring South America, Mexico, the U.S., and Canada together as one market.
B) eliminate all tariffs among member nations, effective immediately, and raise them to nonmembers.
C) mostly benefit the trading relationship between Canada and the United States.
D) create a unified market of 465 million people and $18.1 trillion in goods and services.

Question 60

The North American Free Trade Agreement (NAFTA) created a free trade area among:

A) Canada, Mexico, and the United States.
B) Japan, Mexico, and Canada
C) Mexico, Japan, and the United States
D) None of the above

Question 61

Selling to a resident buying office is just like selling to domestic customers since the buying office handles all of the details of exporting the products.

Question 62

Small companies that take the plunge into global business can extend their products' life cycles, raise their quality levels, and increase sales and profits.

Question 63

One reason joint ventures fail is because entrepreneurs did not select a partner who shares their company's values and standards of conduct.

Question 64

When two small businesses in the target nation form an alliance, they have formed a foreign joint venture.

Question 65

Only about one-third of the world's purchasing power lies outside the borders of the United States.

Question 66

Most small businesses getting started in conducting global business do not need the services of trade intermediaries because "going global" has become so easy that even the smallest businesses can do it alone.

Question 67

Foreign distributors offer exporting small businesses the benefit of knowledge of the local markets in which they sell, the ability to cover a foreign sales territory thoroughly, and the ability to handle all of the marketing, distribution, and service functions in foreign markets.

Question 68

Most export merchants buy goods, often competing lines, from many domestic companies and then sell them in foreign markets.

Question 69

As the trend toward increased globalization continues, successful companies must consider themselves businesses without borders.

Question 70

Entrepreneurs can use the Web to generate sales leads by researching customers and market characteristics in other countries.

Question 71

Some foreign countries place limitations on joint ventures with host companies within their borders, for example by requiring the host company to own at least 51 percent of the venture.

Question 72

Learning to think globally may be the first-and most threatening-obstacle an entrepreneur must overcome on the way to creating a truly global business.

Question 73

Trade intermediaries are domestic agencies that serve as distributors in foreign countries for domestic companies of all sizes.

Question 74

Unlike an EMC or an ETC, manufacturers' export agents act as international sales representatives in a limited number of markets for various noncompeting domestic companies, typically operating on a commission basis.

Question 75

Export trading companies are government-owned operations established in countries around the world (including the United States) for the purpose of buying goods there.

Question 76

In a domestic joint venture, a domestic company forms an alliance with a company in the target nation.

Question 77

Some of the strategic options entrepreneurs have when deciding to go global include the Web, joint ventures, and franchising.

Question 78

While export management companies tend to focus on exporting, export trading companies usually perform both import and export trades across many countries' borders.

Question 79

Success in the global economy requires constant innovation, high quality, and flexibility and the ability to have a new perspective about the potential of a business.

Question 80

Most export management companies (EMCs) are merchant intermediaries that work on a buy-and-sell arrangement with domestic small companies, providing small businesses with a low-cost, efficient, independent, international marketing department.