Deck 8: International Expansion and Global Market Opportunity Assessment

Question 1

Managers also need to take into consideration the macroeconomic factors that will have near-term and long-term effects on the success of their strategy.

Answer 1

True

Question 2

Product differentiation plays a critical role for companies entering a new market.

Answer 2

True

Question 3

Political factors are irrelevant as far as consumer confidence, consumer, and business spending is concerned.

Answer 3

False

Question 4

A PESTEL analysis helps managers gain a better understanding of the opportunities and threats they face.

Question 5

When transportation costs and automation are both high, then the knowledge worker component of the location calculation becomes more important.

Question 6

The rate of industry change remains relatively the same from one industry to the next in one financial year.

Question 7

The factors mentioned in the PESTEL framework are inter-related.

Question 8

The more similar markets in different regions are, the lesser the pressure for an industry to globalize.

Question 9

Home-market norms tend to remain the same over time irrespective of the shifting demographics due to immigration or aging populations.

Question 10

An organization, when it is expanding in a foreign country, enters it through a domestic partner.This would improve the chances of success for the organization.

Question 11

Firms are more likely to be successful when they exploit a change in the environment rather than simply survive or oppose the change.

Question 12

The business competence of an organization renders concepts like political stability and legal security irrelevant.

Question 13

In a truly global industry, the core product is standardized, the marketing approach is relatively uniform, and competitive strategies are integrated in different international markets.

Question 14

When an organization plans to expand in a foreign country, it needs to understand what the local consumers look for when making a purchase decision.

Question 15

The rate of change is the same across industries for instance, the computer industry changes as fast as the steel industry.

Question 16

Market due diligence relies on published research on the markets rather than interviews with potential customers and industry experts.

Question 17

The Internet has made exporting easier as even small firms can access critical information about foreign markets, examine a target market, research the competition, and create lists of potential customers.

Question 18

The advantage of exporting is that firms avoid the expense of establishing operations in the new country.

Question 19

Currency exchange rates do not have an impact on firms, because the cost of exporting is lower than that of the other entry modes.

Question 20

An organization, when it is planning to expand in a foreign country, needs to view the country as a monolith.

Question 21

_____ is the degree to which the company's existing practices, resources and capabilities fit the new market.

A)Market access
B)Business fit
C)Corporate fit
D)Market assimilation
E)Market synergy

Question 22

One disadvantage of partnering is the possibility that the partner's goals differ from the firm's goals.

Question 23

Acquisitions are appealing because they give the company quick, established access to a new market.

Question 24

Government policies on foreign-trade regulation and taxation constitute the _____ factors that have a significant influence on business.

A)economic
B)political
C)sociocultural
D)technological
E)environmental

Question 25

Which of the following questions would help an organization determine the favorability of the technological factors for business expansion in a PESTEL analysis?

A)What are the regulations regarding monopolies and private property?
B)What are the dominant local religions, and what influence do they have on consumer attitudes and opinions?
C)What is the status of employment, health and safety, and product safety laws?
D)What are the regulations regarding waste disposal and energy consumption?
E)What is the status of intellectual property issues in the local environment?

Question 26

A greenfield venture has the most potential to provide above-average returns.

Question 27

_____ occurs when a company contracts with a third party to do some work on its behalf.

A)Exporting
B)Importing
C)Joint venture
D)Outsourcing
E)Insourcing

Question 28

Which of the following questions would help an organization determine the favorability of the environmental factors for business expansion in a PESTEL analysis?

A)What are the country's social-welfare policies?
B)What are the dominant local religions, and what influence do they have on consumer attitudes and opinions?
C)What is the status of employment, health and safety, and product safety laws?
D)What are the regulations regarding waste disposal and energy consumption?
E)What is the level to which the local government and industry fund research, and are those levels changing?

Question 29

Which of the following questions would help an organization determine the favorability of the legal factors for business expansion in a PESTEL analysis?

A)What are the country's foreign-trade regulations?
B)What are the regulations regarding waste disposal and energy consumption?
C)How do the local taxation policies?
D)What are the regulations regarding monopolies and private property?
E)What is the industry's level of interest and focus on technology?

Question 30

_____ involves analyzing markets for their potential size, accessibility, cost of operations, and buyer needs and practices to aid the company in deciding whether to invest in entering that market.

A)Search retargeting
B)Unique selling proposition
C)Rebranding
D)First-mover advantage
E)Market due diligence

Question 31

Acquisition is a bad strategy when an industry is consolidating.

Question 32

_____ is a widely used tool that helps show the big picture of a firm's external environment, particularly as related to foreign markets.

A)Supply chain management
B)Business process re-engineering
C)Balanced Scorecard
D)SWOT analysis
E)PESTEL analysis

Question 33

The process of acquisition affords the firm maximum control and has the most potential to provide above-average returns.

Question 34

_____ occurs when a function is taken out of one's country of residence to be performed in another country, generally at a lower cost.

A)Open sourcing
B)Offshoring
C)Exporting
D)Importing
E)Licensing

Question 35

Companies employ _____ to understand the latent, unarticulated needs of local consumers.

A)quantitative methodologists
B)ethnographers
C)physiologists
D)psychiatrists
E)statisticians

Question 36

Local lifestyle trends, the dominant religions, views toward leisure time, and the age and lifespan demographics constitute the _____ factors that significantly influence business.

A)economic
B)political
C)sociocultural
D)technological
E)environmental

Question 37

Which of the following questions would help an organization determine the favorability of the sociocultural factors for business expansion in a PESTEL analysis?

A)What are the current exchange rates between critical markets?
B)What are the current and forecast interest rates?
C)How do the activities of international activist groups affect the business?
D)What pending legislation could affect corporate social policies?
E)What is the industry's level of interest and focus on technology?

Question 38

_____ involves the sale of products or services in one country that are sourced in another country.

A)Exporting
B)Importing
C)Offshoring
D)Outsourcing
E)Insourcing

Question 39

"_____" refers to the presence of and adherence to laws related to business contracts.

A)Rule of law
B)Rule of lenity
C)Rule of logs
D)Rule of corporate fit
E)Rule of market due diligence

Question 40

If the acquiring firm is in a country with a strong currency, acquisitions becomes expensive for the acquiring firm.

Question 41

Which of the following questions would help an organization determine the favorability of the economic factors for business expansion in a PESTEL analysis?

A)What are the local taxation policies? How do these affect your business?
B)What are the local employment levels per capita, and how are they changing?
C)What pending legislation could affect corporate social policies?
D)What is the level of consumerism, and what are the popular attitudes toward it?
E)What is the level and distribution of education and income?

Question 42

Which of the following question would help an organization determine the favorability of the sociocultural factors for business expansion in a PESTEL analysis?

A)What are the country's social-welfare policies?
B)What are the dominant local religions, and what influence do they have on consumer attitudes and opinions?
C)What is the status of employment, health and safety, and product safety laws?
D)What are the regulations regarding waste disposal and energy consumption?
E)What is the level to which the local government and industry fund research, and are those levels changing?

Question 43

_____ is the delegation of one or more IT-intensive business processes to an external provider that in turn owns, administers, and manages the selected process based on defined and measurable performance criteria.

A)Global sourcing
B)Importing
C)Open sourcing
D)Business-process outsourcing
E)Insourcing

Question 44

Which of the following is an advantage of exporting?

A)High control and low transportation costs
B)Zero risk of exchange rate fluctuation
C)Fast entry and low risk
D)Established manufacturing operations in the foreign country
E)High local knowledge

Question 45

Which of the following is true of acquisitions?

A)The acquiring company will be eligible for any financial help from the company whose shares it is trying to acquire.
B)It affords the firm maximum control and has the most potential to provide above-average returns.
C)The acquiring company enters into an agreement with the target business to pursue a set of agreed-upon goals while remaining independent organizations.
D)The acquiring firm avoids the expense of establishing operations in the new country.
E)The acquiring company gains control of another firm by purchasing its stock.

Question 46

The United States is separated from Nigeria by 5,840 miles and the Atlantic Ocean.According to the CAGE framework this is a case of:

A)emotional distance.
B)economic distance.
C)cultural distance.
D)geographic distance.
E)administrative distance.

Question 47

The GDP of France is 2.113 trillion USD whereas Sierra Leone's GDP is approximately 4.812 billion USD.According to the CAGE framework, this is a case of:

A)emotional distance.
B)economic distance.
C)cultural distance.
D)geographic distance.
E)administrative distance.

Question 48

A(n)_____ involves a contractual agreement between two or more enterprises stipulating that the involved parties will cooperate in a certain way for a certain time to achieve a common purpose.

A)merger
B)acquisition
C)standstill agreement
D)demerger
E)strategic alliance

Question 49

Institutional differences refer to differences in the:

A)political systems of two countries.
B)languages of two countries.
C)climates of two countries.
D)natural resources of two countries.
E)social norms of two countries.

Question 50

Firms export mostly to countries that are close to their facilities because:

A)of lower transportation costs.
B)exported goods can sold for a higher price in these countries.
C)of the compulsions of international trade laws.
D)of WTO regulations.
E)they get raw materials at a subsidized rate from these countries.

Question 51

Which of the following is affected by the absence of colonial ties in the CAGE framework?

A)Emotional distance
B)Economic distance
C)Cultural distance
D)Geographic distance
E)Administrative distance

Question 52

Which of the following is an advantage of an acquisition?

A)Established manufacturing operations in the foreign country
B)Low cost
C)Absence of integration issues with home office
D)Eligibility for any financial help from the target company
E)Right to ignore the current liabilities associated with the business being acquired

Question 53

Which of the following is an advantage of licensing and franchising?

A)High control
B)Irrelevance of the legal and regulatory environment
C)Fast entry, low risk and low cost
D)Established manufacturing operations in the foreign country
E)Negligible chances of licensee becoming a competitor

Question 54

Emerging markets lack many of the specialized intermediaries that make financial markets work.The lack of such intermediaries is referred to as:

A)intermediary void.
B)institutional void.
C)infrastructural void.
D)market void.
E)organizational void.

Question 55

Americans use the English language as the primary means of communication whereas Asian Indians have a host of local languages that serve as the means of communication.This difference between the two countries would be categorized as:

A)emotional distance.
B)economic distance.
C)cultural distance.
D)geographic distance.
E)administrative distance.

Question 56

A(n)_____ is a transaction in which a firm gains control of another firm by purchasing its stock, exchanging the stock for its own, or, in the case of a private firm, paying the owners a purchase price.

A)standstill agreement
B)demerger
C)strategic alliance
D)merger
E)acquisition

Question 57

_____ refers to outsourcing work to a nondomestic third party.

A)Exporting
B)Importing
C)Nonentity joint venture
D)International outsourcing
E)Insourcing

Question 58

Which of the following is affected by institutional weakness in the CAGE framework?

A)Political distance
B)Economic distance
C)Cultural distance
D)Administrative distance
E)Geographic distance

Question 59

_____ refers to the sale of products and services in foreign countries that are sourced from the home country.

A)Exporting
B)Importing
C)Global sourcing
D)Outsourcing
E)Insourcing

Question 60

Which of the following is an advantage of partnering and strategic alliance?

A)Lower cost than exporting, licensing, or franchising
B)High control over product quality, operating costs, and employees
C)Limited liability
D)Absence of integration problems between corporate cultures
E)Shared costs reduce investment needed

Question 61

Which of the following is an advantage of a greenfield venture?

A)High control
B)Low cost
C)Low risk
D)Fast entry
E)Established manufacturing operations

Question 62

Consumer safari refers to the initiatives taken by Unilever executives to spend a day with consumers in their homes to:

A)understand how they use products.
B)convince them to use more Unilever products.
C)train them to make multiple use of their products.
D)estimate how many products they use.
E)help them set up cottage industries for their products.

Question 63

_____ are straight-line, one-factor projections from present to future.

A)Estimates
B)Opportunities
C)Scenarios
D)Forecasts
E)Plans

Question 64

_____ is a strategic-management tool that helps an organization take stock of its internal characteristics and assess the external environmental conditions.

A)Scenario planning
B)Business process re-engineering
C)Balanced Scorecard
D)SWOT analysis
E)PESTEL analysis

Question 65

A _____ works best with one situation or scenario but provides little direction when there is uncertainty about potential changes to critical features of the scenario.

A)Scenario planning
B)Business process re-engineering
C)Balanced Scorecard
D)SWOT analysis
E)PESTEL analysis

Question 66

Certification agencies, consumer reports, and regulatory authorities are examples of specialized intermediaries for:

A)financial markets.
B)markets for managerial talent.
C)markets for products.
D)auction markets.
E)labor markets.

Question 67

What are the three steps in the PESTEL analysis?

Question 68

Management institutes, certification agencies, and headhunting firms are examples of specialized intermediaries for:

A)financial markets.
B)markets for managerial talent.
C)markets for products.
D)auction markets.
E)labor market.

Question 69

_____ helps leaders develop a detailed, internally consistent picture of a range of plausible outcomes as an industry evolves over time.

A)Scenario planning
B)Business process re-engineering
C)Balanced Scorecard
D)SWOT analysis
E)PESTEL analysis

Question 70

What are the three strategies generally used by organizations for handling institutional voids?

Question 71

_____ refer to the forces of change whose direction and pace is largely unknown.

A)Uncertainties
B)Trends
C)Occurrences
D)Scenarios
E)Forecasts

Question 72

What are the factors that decide an organization's choice of the mode of entry in the international market?

Question 73

What could be the disadvantages of exporting of goods?

Question 74

Venture-capital firms, private equity providers, and mutual funds are examples of specialized intermediaries for:

A)financial markets.
B)markets for managerial talent.
C)markets for products.
D)auction markets.
E)labor markets.

Question 75

What could be the disadvantages of partnering with local companies when entering a new market? Provide an example.

Question 76

Importing is a stealth form of internationalization.Explain.

Question 77

Why do firms establish partnerships with local companies when they enter into a new market?

Question 78

_____ refer to the forces of change whose direction and sometimes timing can be predicted.

A)Uncertainties
B)Trends
C)Occurrences
D)Scenarios
E)Forecasts

Question 79

How has the strengthening of different currencies affected acquisitions?

Question 80

What are the reasons for companies wishing to embark on an expansion strategy?