Deck 2: Analytical Tools for International Business

Question 1

Bennington Inc., an American computer technology company, is planning to expand its business in South American and Southeast Asian countries. By operating in multiple countries, Bennington is most likely to:

A) minimize the probability of facing economic and political issues in these countries.
B) minimize the impact of economic swings it may experience over the years.
C) increase the risk of becoming less competitive over the years.
D) be successful if it follows a single marketing strategy for all its products globally.

Answer 1

B

Question 2

Which of the following is true of international business?

A) By diversifying the places where its products are made, a company can soften the impact of price increases or supply shortages that may occur in any one country.
B) Operating in multiple countries can maximize the impact of economic swings an individual company may experience over the years.
C) When a company conducts business globally, external factors are consistent across companies and even industries.
D) When operating globally, companies rely on the fact that the government of a country will not come along and take their property without warning or justification.

Answer 2

A

Question 3

Sherman Inc., a Canadian automaker, is the market leader in the automobile industry in Canada. It wants to expand its business to Southeast Asia. How can Sherman be a global winner in an international setting?

A) By capitalizing on the fact that its customers and suppliers speak the same language
B) By relying on the fact that everyone understands the norms of business
C) By focusing on the external factors that are consistent across industries
D) By being better able to identify and respond to local nuances

Answer 3

D

Question 4

As part of its business, Casper Inc., an Australian smartphone company, has opened its manufacturing plant in Sao Paulo, Brazil. In this scenario, Brazil is the _____.

A) third country
B) parent country
C) host country
D) home country

Question 5

Chris is the global operations manager at Asterisk Inc., a Canadian apparel company. The company is planning to start operations in Brazil and Japan. Chris believes that Asterisk has the potential to boost its overall sales by setting up operations in Brazil and Japan if:

A) it understands that customers in both these countries have similar preferences.
B) it follows the same business strategy for its global operations that it uses for its domestic operations.
C) it can use a universal marketing strategy for its products to appeal to customers of both these countries.
D) it can persuade people in these two countries to buy its products.

Question 6

Pristine Inc., a French athletic footwear company, has started its operations in Argentina. In this scenario, Argentina is the _____.

A) third country
B) parent country
C) home country
D) host country

Question 7

Kulovia, a country in Eastern Europe, allows free trade and foreign investment. Cyan Inc., an American consumer electronics company, thinks that the policies in Kulovia are favorable for conducting business. Which of the following external factors has Cyan taken into consideration?

A) Economic factors
B) Sociocultural factors
C) Technological factors
D) Political factors

Question 8

Nebula Inc. is an American multinational software development company, and it has operations in Orvetia. It has a working hours policy of nine hours a day. However, in Orvetia, a country in Eastern Europe, the labor laws specify that employees should work only eight hours a day. Which of the following external factors is affecting Nebula's operations in Orvetia?

A) Sociocultural factors
B) Technological factors
C) Economic factors
D) Political factors

Question 9

Amanda, a marketing manager at Xenon Inc., believes that the company should engage in international business as it will benefit the company in multiple ways. However, Kyle, an operations manager of the company, feels that it should concentrate on conducting business domestically. Which of the following statements supports Amanda's beliefs?

A) By engaging in international business, Xenon can evade taxation in foreign markets.
B) By engaging in international business, Xenon can acquire new resources and knowledge.
C) By engaging in international business, Xenon can engage in corporate social responsibility.
D) By engaging in international business, Xenon can effectively use a single marketing strategy for all its products.

Question 10

Darwin Inc. is a smartphone company in Nesland, a country in Eastern Europe. It decides to start its operations in Ervetia, a country in Africa. However, because of the poor implementation of property rights in Ervetia, Darwin is forced to shut down its factories there. Darwin's operations are interrupted in Ervetia because of the country's _____.

A) sociocultural factors
B) technological factors
C) political factors
D) economic factors

Question 11

Relish Inc. is an American food manufacturing company that produces cereal and convenience foods. It wants to expand its market in Johivia, a country in West Asia. Which of the following is a sociocultural factor that it should consider before starting operations in Johivia?

A) Johivia's labor laws
B) The stability of trade cycles in Johivia
C) Information systems in Johivia
D) Educational standards of the people in Johivia

Question 12

Sienna Inc., a cosmetics company, recently started its business in the United States. It has experienced fast growth in the first eight months. To continue its success in the international market, Sienna has decided to open its branches in Europe. Given this information, it can be said that Sienna is a _____ firm.

A) partnership
B) born global
C) joint venture
D) boutique

Question 13

Citron Corp., a German car manufacturer, wants to start its operations in Southeast Asia. By engaging in international business, Citron can:

A) gain minerals or other natural resources that cannot be found in the home country.
B) reduce its fixed costs, such as research and development costs.
C) effectively follow a single marketing strategy for all its products globally.
D) be free from business regulations in overseas markets.

Question 14

Hexagram Inc., an American car-manufacturer, recently started its operations in India. To successfully carry out its operations in India, Hexagram should:

A) assume that the Indian customers and suppliers speak the same language.
B) assume that all Indian businesspeople understand the norms of business.
C) consider all the assumptions and culture-specific knowledge about India.
D) consider the fact that the Indian government can take its property without warning.

Question 15

Sharon is the chief executive officer of Kacey Cosmetics, a leading cosmetics brand in Australia. She is in consultation with the company's board of directors to plan strategies about expanding the company's operations to Europe. Which of the following can help Kacey Cosmetics in successfully engaging in international business?

A) Focusing on the external factors that are consistent across companies and industries
B) Knowing that the best way to do business domestically is the best way to do business internationally
C) Knowing how to manage activities when differences arise
D) Understanding that customers and suppliers speak the same language

Question 16

Dalton Inc., a Canadian apparel company, wants to open its stores in South Korea. Which of the following is an economic factor that Dalton should consider before opening the stores in South Korea?

A) Specific industry conditions and related changes in South Korea
B) Common values and ideologies of the people of South Korea
C) Labor laws and property rights of South Korea
D) Intellectual infrastructure of South Korea

Question 17

Rhombus Inc. is a German consumer electronics company. It is planning to start its operations in India. Which of the following is an economic factor that Rhombus should consider before starting its operations in India?

A) The major and minor religions in India
B) The stability of trade cycles in India
C) India's labor laws
D) India's intellectual infrastructure

Question 18

One of the major objectives that motivates companies to engage in international business is to:

A) reduce the risk of being exposed to a given market.
B) evade taxation in foreign markets.
C) engage in corporate social responsibility.
D) understand local businesses.

Question 19

Unlike domestic business, international business:

A) necessarily places greater emphasis on differences between countries.
B) assumes that everyone understands the norms of business.
C) is wary of the fact that the government can take its property without warning.
D) assumes that its customers and suppliers speak the same language.

Question 20

Ezura Inc. is an American consumer electronics company. Its business growth has become stagnant. For this reason, the company is planning strategies to boost its business. Jared, the head of the marketing function, believes that engaging in international business can help Ezura increase its sales. He further claims that increased sales from abroad will benefit the company in the long run. Which of the following supports his claim?

A) Increased sales from abroad can enable Ezura to decrease labor-related expenses.
B) Increased sales from abroad can enable Ezura to acquire specific types of resources at low costs.
C) Increased sales from abroad can enable Ezura to reduce its per-unit costs by covering its fixed costs.
D) Increased sales from abroad can enable Ezura to base its subunits on specific geographic locations.

Question 21

Carmine Inc., a Brazilian smartphone manufacturer, purchases semiconductors from the United States. These semiconductors are used in the production of smartphones. Carmine chiefly sells its smartphones in Brazil. In this scenario, Semiconductors are _____ for Carmine.

A) imports
B) patents
C) royalties
D) embargoes

Question 22

Which of the following is true of external factors that affect a company's modes of operation in a foreign market?

A) In developed countries, manufacturing has traditionally been a stronger sector because of the low cost of labor.
B) Companies are increasingly turning to manual labor for manufacturing jobs for cost cutting.
C) The number of manufacturing jobs is increasing in many countries because of the increased emphasis on and quality of manufacturing technologies.
D) Advances in technology have pushed employment out of manufacturing and toward more service-oriented jobs.

Question 23

Windsor Inc., an American home appliances manufacturer, engages in international business by shipping its products to multiple countries around the world. Given the scenario, it can be said that Windsor is involved in _____.

A) franchising
B) licensing
C) exporting
D) importing

Question 24

Franchising is similar to licensing in that:

A) it requires that the franchiser allows the franchisee to use its trademarks, patents, and copyrights according to a strict template outlining the way it does business.
B) it requires the franchisee to pay a royalty in return for using the franchiser's intellectual property and receiving managerial support.
C) it involves the franchiser building new plants or offices and then hiring employees when the franchisee enters the franchiser's market.
D) it involves the franchiser purchasing goods or services from the franchisee to be sold in the franchiser's home market.

Question 25

In the case of international business, a _____ is one in which a company already operating in a particular country builds a building, plant, or machine for a foreign company.

A) franchisee
B) turnkey project
C) joint venture
D) subsidiary

Question 26

Sapphire Inc., an American consumer electronics company, wants to conduct a PEST analysis before starting its operations in Brazil. Which of the following is a political factor that Sapphire should take into consideration in its PEST analysis?

A) Local business practices in Brazil
B) Wage rates in Brazil
C) Poverty rates in Brazil
D) Industrial policies in Brazil

Question 27

Dylan is the global operations manager at Orchid Inc., an American smartphone company. He has planned a strategy to expand the company's business in France. He proposes to analyze different contextual environments in France to understand the long-term business trends and how they might affect Orchid's business in France. Which of the following tools should Orchid use to get a picture of the competitive landscape in France?

A) CATWOE analysis
B) MOST analysis
C) PEST analysis
D) SWOT analysis

Question 28

Apricot Inc., an American food and beverage company, is devising strategies to expand its business in Austria. Jonathan, a manager at Apricot, believes that a PEST analysis is the best way to get a picture of the competitive landscape in Austria. Which of the following statements supports his belief?

A) A PEST analysis can be used to analyze the internal business environment of the company.
B) A PEST analysis can be used to reinforce old assumptions about how managers should run the company in Austria.
C) A PEST analysis can be used to increase its per-unit costs by excluding its fixed costs.
D) A PEST analysis can be used to implement appropriate practices from local Austrian cultures while avoiding problematic ones.

Question 29

Crimson Corp., an American apparel company, has a tie-up with a European football club. Crimson sells a line of jerseys with the football club's logo on it. The company has to pay a percentage of its earnings from the sales of the jerseys to the football club. In this scenario, the payments are called _____.

A) royalties
B) patents
C) quotas
D) embargoes

Question 30

Argon Inc., a designer handbag company, is planning to open its stores in Mexico. Which of the following is a technological factor that is likely to affect Argon's modes of operation in Mexico?

A) The method and style of communication used in Mexico
B) The stability of trade cycles in Mexico
C) Mexico's intellectual infrastructure
D) Mexico's social structure

Question 31

Which of the following is an internal management factor that companies need to consider as they decide to do business internationally?

A) The mode of entry into new countries
B) The cost of raw materials and resources
C) Local business practices
D) Industrial policies

Question 32

Tangerine Inc., a German software company, wants to conduct a PEST analysis before starting its operations in South Korea. Which of the following is a sociocultural factor that Tangerine should take into consideration in its PEST analysis?

A) Government efficiency in South Korea
B) Workforce productivity in South Korea
C) Offshoring backlash in South Korea
D) Advancement of infrastructure in South Korea

Question 33

_____ is the permission to use another company's trademarks, patents, copyrights, and expertise according to a strict template setting out the way it does business.

A) Exporting
B) Importing
C) Franchising
D) Insourcing

Question 34

Mauve Inc., an American chain of cosmetics stores, purchases makeup applicators from China and sells them in its stores across the United States. Given this information, it can be said that Mauve is engaged in _____.

A) franchising
B) licensing
C) exporting
D) importing

Question 35

Genevieve is a manager at Titanium Inc., an American apparel company. Before opening its manufacturing units in China, Genevieve believes that Titanium should analyze different contextual environments to understand long-term trends in China and assess how they might affect Titanium's business there. Which of the following is an economic factor that Titanium should take into consideration in its PEST analysis?

A) Government efficiency in China
B) Workforce productivity in China
C) Offshoring backlash in China
D) Advancement of infrastructure in China

Question 36

Ether Inc., a British telecommunications services company, uses PEST analysis to identify and assess the technological factors that are likely to affect its business operations in India. Which of the following is a technological factor that Ether is most likely to examine in its PEST analysis?

A) Preferences of customers in India
B) Workforce productivity in India
C) Offshoring backlash in India
D) Advancement of infrastructure in India

Question 37

Neon Inc. wants to engage in international business to increase its sales. Travis, a manager at Neon, feels that licensing is the best way through which the company can enter a foreign market. However, Isaac, another manager at the company, is skeptical of licensing. Which of the following statements supports Isaac's skepticism?

A) Licensing often increases the risks of not knowing the local market.
B) Licensing transfers the ownership of the child company to the parent company.
C) Licensing can result in lost opportunities for parent companies.
D) Licensing can prevent companies from receiving royalties.

Question 38

Gabriella is a manager at Ivory Inc., an Australian footwear brand. She proposes that by engaging in business in the United States, Ivory can increase its sales. She suggests that by conducting a PEST analysis, Ivory can gain insights about the business environment in the United States. Which of the following is an economic factor that Ivory should take into consideration in its PEST analysis?

A) Local competition in the United States
B) Government efficiency in the United States
C) Offshoring backlash in the United States
D) Advancement of infrastructure in the United States

Question 39

Vermilion Inc. is an American business consulting company. The company is planning to open its office in Argentina. Jensen, a manager at Vermilion, suggests that the company should conduct a PEST analysis before taking this step. Which of the following is a political factor that Vermilion should take into consideration in its PEST analysis?

A) Tax rates in Argentina
B) Wage rates in Argentina
C) Poverty rates in Argentina
D) Specific industry conditions in Argentina

Question 40

Germanium Inc., a software company, uses common operating systems for all its computers connected through the Internet. Given this information, it can be said that these operating systems are _____.

A) business intelligence portals
B) integrated technology platforms
C) enterprise planning systems
D) strategic information systems

Question 41

Which of the following is true of horizontal structuring?

A) It involves following a strict chain of command.
B) It determines where in a hierarchy a company's decisions are made.
C) It reflects the way a company decides to subdivide itself.
D) It involves clearly defining job responsibilities.

Question 42

Do you think a company can effectively enter a foreign market is through licensing? Justify your answer.

Question 43

Do you think a host country's sociocultural factors have important implications when it comes to a company's decision about when and how to do business there? Justify your answer.

Question 44

In which of the following ways can an organization be structured horizontally?

A) It can acquire an existing foreign company.
B) It can appoint one decision maker for its global operations.
C) It can base its subunits on specific geographic locations.
D) It can determine where in its hierarchy organizational decisions should be made.

Question 45

Vermilion Inc. is a multinational conglomerate. It has three subdivisions that deal with apparel, consumer electronics, and healthcare products. Each subdivision has the authority to make its own business decisions. This scenario illustrates _____.

A) licensing
B) vertical structuring
C) franchising
D) horizontal structuring

Question 46

Do you agree that a downturn in one country can be a growth period in another? Express your views with an example.

Question 47

In a greenfield venture, _____.

A) the parent company allows the child company to use its trademarks, patents, copyrights, or expertise
B) two or more companies jointly own a third, separate company
C) the parent company buys an established company in a foreign country
D) the parent company builds new plants or offices and then hires employees when it enters the market

Question 48

_____ determines where in a hierarchy the decisions about a company are made.

A) Horizontal structuring
B) Vertical structuring
C) Franchising
D) Licensing

Question 49

As part of its international expansion strategy, Jade Inc., an American software company, acquired Verde Inc., a Mexican software company. All of Verde's operations are now owned by Jade. One of the challenges that Jade faced was overcoming the cultural and language barriers that posed difficulty in the integration of Verde's existing culture with that of Jade's. Given this information, it can be said that Verde is a _____ of Jade.

A) proprietorship
B) licensee
C) franchisee
D) subsidiary

Question 50

Do you think a company can gain specific types of resources from foreign sources by engaging in international business? Give reasons to support your answer.

Question 51

One of the key objectives of any international strategy is to help a company:

A) manage the wide differences that exist across countries and regions.
B) modify the existing organizational culture of the company that it is acquiring.
C) evade taxation in a host country.
D) centralize its global operations for smooth functioning in foreign markets.

Question 52

Justify the argument that the level of technology available in a country influences the threats and opportunities foreign companies face.

Question 53

_____ represents a deep understanding of local context and customer needs and the ability to cultivate that knowledge in new contexts and locations.

A) Market savvy
B) Emotional intelligence
C) Functional excellence
D) Industry expertise

Question 54

_____ is the ability to work across different departments of an organization, such as finance, marketing, information technology, to ensure corporate level operations work in different countries.

A) Cognitive empathy
B) Emotional intelligence
C) Functional excellence
D) Industry expertise

Question 55

Delish Inc., an American convenience food company, formed a new company called Sapid in collaboration with Alpha Foods Inc., an Indian food and beverages company as part of its global expansion strategy. The purpose of this collaboration was to develop breakfast cereals that would specifically target the needs of Indian consumers. Given this information, it can be said that Sapid is a _____.

A) turnkey project
B) franchisee
C) joint venture
D) subsidiary

Question 56

Which of the following best exemplifies a subsidiary?

A) Crimson Inc. is owned by Delta Inc. that owns 100% of its operations.
B) Osmium Inc. is formed by the merger of Iris Inc. and Hexagon Inc.
C) Chromium Inc. uses trademarks, patents, and copyrights of Radon Inc. according to a strict template.
D) Krypton Inc. pays Argon Inc. a royalty on all sales of its merchandise with Argon Inc.'s logo.

Question 57

Industry expertise means:

A) working across different industries to ensure corporate level operations work in different countries.
B) understanding a global company in an industry and its mission and values, including how different localities can contribute strengths to compensate for one another's weaknesses.
C) understanding an industry and its customer needs and cultivating that knowledge in a new industry.
D) understanding where an industry is going in the future, who the key players and competitors are, and how a company might lead that industry.

Question 58

Do you think it is possible to run a large organization with only one decision maker? Justify your answer. How can a company structure itself to enable smooth decision making?

Question 59

_____ is a larger understanding of a global company and its mission and values, including how different localities can contribute strengths to compensate for one another's weaknesses.

A) A strong organizational commitment
B) A strong corporate vision
C) Functional excellence
D) Industry expertise

Question 60

Which of the following is true of a joint venture?

A) It involves one company allowing another company to use its trademarks, patents, copyrights, or expertise.
B) It is similar to licensing, but it requires a much higher level of commitment from the two companies involved.
C) It increases the risks of not knowing the local market.
D) It ensures that neither of the two original companies is directly harmed by failure.