Question 1

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.

Accepted Answer

Multinat wants to establish global consistency by ensuring that the new divisions in Africa and Australia follow the same policies and guidelines as the parent company. This suggests that Multinat is more focused on maintaining uniformity across its global operations, rather than adapting to local market conditions or creating franchises or forming strategic alliances.

Question 2

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

Accepted Answer

This is an example of licensing, in which one company allows another company to use its name or intellectual property in exchange for royalty payments.

Question 3

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.

Accepted Answer

Licensing allows companies to earn additional profits without investing more money as they can charge royalties for allowing others to use their intellectual property or technology.

Question 4

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

Accepted Answer

Westburn Inc. is customizing the menu for the new outlets based on the preferences of people in Valcoast. This means they are adapting to the local market, making B the correct answer. A may be a valid option if Westburn Inc. kept the same menu and marketing strategy as in Beachden. Licensing and franchising are not mentioned in the scenario.

Question 5

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.

Accepted Answer

Licensing and franchising are cooperative contracts where a company allows another to use its brand, product, or business model in exchange for fees or royalties.

Question 6

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.

Accepted Answer

Global consistency refers to maintaining similar marketing strategies, products, and operations across different countries, while local adaptation involves modifying strategies and operations to suit the unique differences in foreign markets. Therefore, the main difference between global consistency and local adaptation is that the latter involves modifying the standard operating procedures to adapt to foreign customers, governments, and regulatory agencies. Options A and D are incorrect since they do not provide a clear contrast between global consistency and local adaptation. Option B is also incorrect as it is inconsistent with the definition of local adaptation.

Question 7

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

Accepted Answer

This is an example of licensing. Licensing is a contractual agreement in which a company allows another company to use its intellectual property (such as trademarks, patents, or technology) for a fee or royalty. In this case, HungryFrank is paying a royalty fee to JoeClub to use its name and menu. This allows HungryFrank to benefit from JoeClub's established brand and offerings without having to develop its own.

Question 8

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

Accepted Answer

The agreement between LyTV and TipTV involves licensing. Licensing refers to an agreement where one company (licensor) allows another company (licensee) to use its trademarks, patents, technology, or other resources in exchange for royalties or other forms of compensation. In this case, LyTV is allowing TipTV to use its channels and television programs in exchange for royalty payments.

Question 9

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.

Accepted Answer

Zinocorp Inc. wants the new malls to follow the same set of rules and regulations as the parent company, indicating that they are seeking global consistency.

Question 10

_____ is selling domestically produced products to customers in foreign countries.
A) Domestic trade
B) Entrepot trade
C) Importing
D) Exporting

Accepted Answer

Exporting refers to the act of selling domestically produced products to customers in foreign countries. This allows businesses to expand their customer base and reach new markets outside of their home country.

Question 11

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.

Accepted Answer

Franchisors may face a loss of control when they sell businesses to franchisees who are located far away, as they may not be able to directly monitor and ensure that the franchisees are adhering to the franchise system's guidelines and standards. This can result in inconsistencies in the quality of the products or services offered, which can harm the franchisor's reputation.

Question 12

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

Accepted Answer

Exporting refers to the process of selling goods or services produced in one country to customers located in another country. FootSoul, a U.S.-based shoe manufacturing company selling its shoes in the U.S., Germany, and France is an example of exporting. Option A refers to a royalty payment, Option B refers to licensing, and Option D refers to collaboration to form a new company, none of which involve the process of exporting.

Question 13

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

Accepted Answer

The franchisee is the person or organization to whom the franchisor licenses the entire business. The licensee is a general term used for someone who has obtained a license to use a product or service, but in this context, it does not specifically refer to someone who has acquired a franchise. The licensor is the party that grants the license, which in this case would be the franchisor. Therefore, the best choice is D.

Question 14

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.

Accepted Answer

Global consistency involves standardizing procedures across all locations of a multinational company to simplify decision-making for managers at the headquarters. This helps to ensure that all employees are following the same rules and procedures, which can improve efficiency and reduce the risk of errors or inconsistencies in service delivery. It does not modify standard operating procedures but rather standardizes them across all locations. Collaboration between two existing companies to form a third entity is known as a joint venture, which is not related to global consistency. The adaptation of managers to differences in foreign customers is known as local responsiveness, which is an opposite concept to global consistency.

Question 15

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

Accepted Answer

The scenario described in the question is an example of exporting, which is the sale of goods or services produced in one country to another country. This is because PreFab is manufacturing the clothing in their home country and selling it in Irmana, without setting up any physical presence in Irmana. The tax levied by the Irmana government is a form of trade barrier, but it doesn't fit the definition of protectionism, which refers to government policies that restrict international trade in order to protect domestic industries from foreign competition. Direct foreign investment involves setting up a physical presence, such as a subsidiary or branch, in a foreign country, while licensing involves giving another company the right to use your intellectual property in exchange for a fee or royalty.

Question 16

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.

Accepted Answer

Both licensing and franchising are types of cooperative contracts where the parent company allows another company to use its intellectual property or business model in exchange for royalties or fees.

Question 17

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.

Accepted Answer

The Maastricht Treaty, also known as the Treaty on European Union, was signed in 1992 with the purpose of creating a common economic market and introducing a common currency (the euro) between twelve European Union member states. It did not specifically address trade liberalization or tariffs, nor did it include provisions for free movement between nations outside of labor mobility for EU citizens.

Question 18

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.

Accepted Answer

If companies focus too much on local adaptation, they may lose the cost-effectiveness and productivity that comes from using standardized rules and procedures throughout the world. This can lead to increased costs and decreased efficiency, which ultimately impacts the company's bottom line.

Question 19

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.

Accepted Answer

Transportation costs can significantly increase the price of an exported product, which can make it less competitive in the foreign market. This can lead to a decrease in sales and profitability.

Question 20

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

Accepted Answer

FarTrek is involved in exporting as it is selling goods to Mentlands, and the government is imposing taxes and limits on the amount of goods that can be sold, which are common measures affecting exports.

Quiz 8: Global Management

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:

Which of the following is an advantage of licensing?

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 _____.

The two kinds of cooperative contracts in global business are:

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

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

Which of the following is a disadvantage of franchising?

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

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 _____.

Which of the following statements is true of global consistency?

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 _____.

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

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

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

Which of the following is a disadvantage of exporting?

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 _____.