Question 1

When Sony Corporation of Japan purchased Columbia Pictures Entertainment, Inc., of the United States, Sony made a(n)
A) countertrade with Columbia Pictures.
B) indirect investment in the United States.
C) direct investment in the United States.
D) strategic alliance with Columbia Pictures.
E) exporting agreement with the United States.

Accepted Answer

A purchase is a form of direct investment as Sony directly acquired Columbia Pictures.

Question 2

A ____ is issued by a bank upon request of an importer stating that the bank will pay an amount of money to a stated beneficiary.
A) license
B) letter of credit
C) bill of lading
D) draft
E) voucher

Accepted Answer

A letter of credit is a document issued by a bank that guarantees payment to the beneficiary on behalf of the importer. It specifies the amount, terms, and conditions under which payment will be made.

Question 3

Which of the following is a potential drawback of licensing?
A) If quality is compromised, it may reflect poorly on the company providing the license.
B) Licensing will provide the original producer with much foreign marketing experience.
C) It is a relatively inexpensive way to market your product internationally.
D) It is an extremely expensive and highly involved method of international expansion.
E) It provides no compensation for the original company.

Accepted Answer

Licensing involves giving the rights to use your product or technology to another company, which means you have limited control over how they use it. If the licensee does not maintain the quality of the product or service, it can reflect poorly on the original company and damage its reputation.

Question 4

Janet hires an export merchant to help expand her business internationally. After signing contracts with a foreign purchaser outlining the terms of sale and delivery, the exporter will send Janet's merchandise when
A) Janet's bank receives a letter of credit from the importer's bank.
B) it receives a letter of credit from Janet's bank.
C) its bank receives a draft from the importer's bank.
D) Janet receives a bill of lading.
E) the ultimate consumer sends a bill of lading to the exporter's bank.

Accepted Answer

A letter of credit from the importer's bank serves as a guarantee of payment for the exporter. Once the exporter's bank receives the letter of credit, it can proceed with sending the merchandise.

Question 5

Soccer to the Masses is interested in global expansion but does not want to make a large financial commitment. Therefore, it decides to allow a Japanese company to manufacture and distribute products under the Soccer to the Masses name. This is a(n) ____ agreement.
A) exporting
B) strategic alliance
C) licensing
D) countertrade
E) bill of lading

Accepted Answer

A licensing agreement allows a company to grant permission to another company to use its intellectual property (in this case, the Soccer to the Masses name) in exchange for royalties or other forms of compensation. This allows for global expansion without requiring a large financial commitment, as the Japanese company will bear the costs of manufacturing and distributing the products.

Question 6

The best method of learning from experience in international business is to
A) enter into a licensing agreement.
B) start exporting through an export merchant.
C) start exporting through an export agent.
D) invest directly in a foreign country.
E) form a joint venture.

Accepted Answer

Investing directly in a foreign country allows a business to gain firsthand experience and understanding of the local market, culture, and business practices, which is crucial for learning and adapting in international business.

Question 7

Which of the following best compares licensing and exporting as tools for entering foreign markets?
A) Licensing and exporting are both low-risk methods, but licensing is not as simple as exporting.
B) Licensing is riskier and more complicated than exporting.
C) Exporting is much riskier and more complicated than licensing.
D) Licensing and exporting are both low-risk, but exporting is more complicated.
E) Licensing and exporting are both complicated and expensive methods.

Accepted Answer

The answer of Which of the following best compares licensing...

Question 8

Forming a joint venture with an existing foreign company offers all of the following advantages except
A) joining an established firm.
B) requiring less commitment from all parties involved in the joint venture.
C) providing immediate marketing knowledge.
D) providing reduced risk.
E) providing control over product attributes.

Accepted Answer

Forming a joint venture typically requires a significant commitment from all parties involved, as it involves sharing resources, knowledge, and risks to achieve a common goal. The other options (joining an established firm, providing immediate marketing knowledge, reducing risk, and providing control over product attributes) are generally considered advantages of forming a joint venture.

Question 9

When it built production lines in the United States, BMW engaged in what type of international expansion?
A) Totally owned facilities
B) Joint venture
C) Strategic alliance
D) Indirect investment
E) Exporting

Accepted Answer

By building production lines in the United States, BMW engaged in direct investment and established totally owned facilities in the host country rather than collaborating with local partners or exporting. This type of international expansion is known as foreign direct investment (FDI), where a company establishes ownership or control over production facilities overseas to serve local or global markets.

Question 10

Ben Schumpert decides his company will start exporting and he wants to start at the most basic level. What action should Ben take to meet his objectives?
A) License the company's brand name and products to foreign manufacturers.
B) Contact Sears World Trade to find foreign consumers.
C) Open new facilities around the world.
D) Form a joint venture with a complementary company in a foreign country.
E) Sell the company's products to an export-import merchant.

Accepted Answer

Selling the company's products to an export-import merchant is the most basic level of exporting. The merchant will handle the logistics of exporting the products, making it an easy starting point for a company new to exporting. Licensing the brand name and products to foreign manufacturers, forming a joint venture, or opening new facilities around the world requires a higher level of investment and commitment to exporting. Contacting Sears World Trade would be more applicable for a larger company with more experience in international trade.

Question 11

Miller Beer allows a Canadian firm to use its name, formula, and brands in return for a royalty. This is known as
A) exporting.
B) licensing.
C) direct investment.
D) manufacturing in foreign countries.
E) none of the above.

Accepted Answer

This is an example of licensing, which involves a company allowing another company (in this case, a Canadian firm) to use its name, formula, and brands in exchange for a payment (royalty). Exporting involves selling products to other countries, direct investment involves a company investing directly in a foreign market, and manufacturing in foreign countries involves producing goods in another country.

Question 12

A ____ is a partnership formed to achieve a specific goal or to operate for a specific period of time.
A) trading company
B) strategic alliance
C) licensing company
D) countertrade agreement
E) joint venture

Accepted Answer

A joint venture is a partnership where two or more parties come together to achieve a specific goal or operate for a specific period of time. It is a separate entity formed for the purpose of carrying out a particular business venture or project.

Question 13

Ford Motor Company, Mazda Motor Corporation, and Matsushita Electrical Industrial Company formed a ____ to make heating and cooling units in Japan for Mazda cars beginning in 1988. The new company's heating and cooling units may also be used in Ford's cars.
A) sales branch
B) joint venture
C) subsidiary
D) licensing agreement
E) sole proprietorship

Accepted Answer

Ford Motor Company, Mazda Motor Corporation, and Matsushita Electrical Industrial Company formed a joint venture to make heating and cooling units in Japan for Mazda cars.

Question 14

A ____ is issued by the exporter's bank, ordering the importer's bank to pay for the merchandise.
A) license
B) letter of credit
C) bill of lading
D) draft
E) voucher

Accepted Answer

The answer of A ____ is issued by the exporter's...

Question 15

If Procter & Gamble, a U.S. leader in household products, and Reckitt Benckiser, a British leader in household products, form a partnership to develop and distribute a disinfectant line of ecologically friendly laundry detergent, the partnership would be a(n)
A) corporation.
B) joint venture.
C) monopoly.
D) licensing agreement.
E) international alliance.

Accepted Answer

The partnership between Procter & Gamble and Reckitt Benckiser to develop and distribute a disinfectant line of ecologically friendly laundry detergent would be considered a joint venture, as it involves two separate companies coming together to work on a specific project or product line. This differs from a corporation, which is a single entity that operates independently, a monopoly, which involves a single company dominating a particular market, a licensing agreement, which involves the use of a company's intellectual property by another entity, or an international alliance, which could refer to a broad range of collaborative efforts between companies from different countries.

Question 16

A ____ is issued by the transport carrier to the exporter to prove merchandise has been shipped.
A) license
B) letter of credit
C) bill of lading
D) draft
E) voucher

Accepted Answer

A bill of lading is a document issued by a transport carrier (such as a shipping line or airline) to the exporter as proof of shipment. It contains details of the goods being shipped, the names of the parties involved, the shipping route, and the terms of the transportation agreement. The bill of lading serves as a receipt of the goods, a contract of carriage, and a document of title, enabling the exporter or their agent to claim ownership of the goods and to transfer them to a buyer. The bill of lading is crucial for obtaining payment and for customs clearance.

Question 17

ABC Company wants to be prepared for the ASEAN free trade area. The company plans to develop its own production and marketing facilities in one or more ASEAN countries. The best choice for ABC Company is
A) a joint venture.
B) a licensing agreement.
C) totally owned facilities.
D) exporting.
E) sales offices.

Accepted Answer

Totally owned facilities give ABC Company complete control over its production and marketing strategies, allowing for direct investment in the ASEAN region and better preparation for the free trade area by establishing a strong local presence.

Question 18

A medium-sized hardware manufacturer wants to become deeply involved in exporting, but it does not yet wish to actually manufacture any of its products overseas. The company wants to maintain control over its sales while gaining experience in foreign markets. Which option would be best for this company?
A) Licensing its products for sale in foreign countries
B) Selling its products outright to an export/import merchant
C) Establishing its own sales offices in foreign countries
D) Developing totally owned facilities in a foreign market
E) Hiring an export/import agent to assist with foreign sales

Accepted Answer

Establishing its own sales offices in foreign countries allows the company to maintain control over its sales and gain experience in foreign markets without manufacturing overseas.

Question 19

Totally owned facilities overseas are an example of
A) indirect investment.
B) direct investment.
C) roundabout investment.
D) licensing.
E) joint venture.

Accepted Answer

Totally owned facilities overseas refer to direct investment, where a company controls the entire operation without sharing profits or responsibilities with a local partner.

Question 20

A(n) ____ will, for a commission or fee, arrange the sale of a company's products to foreign intermediaries.
A) export-import merchant
B) international bank
C) joint venture
D) export-import agent
E) trading broker

Accepted Answer

An export-import agent acts as an intermediary between a company and foreign buyers, arranging the sale of the company's products for a commission or fee. They do not take possession of the products themselves, but rather facilitate the transaction between the company and the foreign intermediary. The other choices (A, B, C, and E) do not accurately describe this role. An export-import merchant, for example, buys and sells products themselves, while a joint venture is a partnership between two or more entities.

Quiz 3: A: Exploring Global Business

When Sony Corporation of Japan purchased Columbia Pictures Entertainment, Inc., of the United States, Sony made a(n)

A ____ is issued by a bank upon request of an importer stating that the bank will pay an amount of money to a stated beneficiary.

Which of the following is a potential drawback of licensing?

Janet hires an export merchant to help expand her business internationally. After signing contracts with a foreign purchaser outlining the terms of sale and delivery, the exporter will send Janet's merchandise when

Soccer to the Masses is interested in global expansion but does not want to make a large financial commitment. Therefore, it decides to allow a Japanese company to manufacture and distribute products under the Soccer to the Masses name. This is a(n) ____ agreement.

The best method of learning from experience in international business is to

Which of the following best compares licensing and exporting as tools for entering foreign markets?

Forming a joint venture with an existing foreign company offers all of the following advantages except

When it built production lines in the United States, BMW engaged in what type of international expansion?

Ben Schumpert decides his company will start exporting and he wants to start at the most basic level. What action should Ben take to meet his objectives?

Miller Beer allows a Canadian firm to use its name, formula, and brands in return for a royalty. This is known as

A ____ is a partnership formed to achieve a specific goal or to operate for a specific period of time.

Ford Motor Company, Mazda Motor Corporation, and Matsushita Electrical Industrial Company formed a ____ to make heating and cooling units in Japan for Mazda cars beginning in 1988. The new company's heating and cooling units may also be used in Ford's cars.

A ____ is issued by the exporter's bank, ordering the importer's bank to pay for the merchandise.

If Procter & Gamble, a U.S. leader in household products, and Reckitt Benckiser, a British leader in household products, form a partnership to develop and distribute a disinfectant line of ecologically friendly laundry detergent, the partnership would be a(n)

A ____ is issued by the transport carrier to the exporter to prove merchandise has been shipped.

ABC Company wants to be prepared for the ASEAN free trade area. The company plans to develop its own production and marketing facilities in one or more ASEAN countries. The best choice for ABC Company is

Totally owned facilities overseas are an example of

A(n) ____ will, for a commission or fee, arrange the sale of a company's products to foreign intermediaries.