Deck 18: Global Opportunities for Small Business

Question 1

Efforts to exploit the competitive advantage of specialized products across international markets is more important to small businesses than to their large competitors.

Answer 1

True

Question 2

Increasing sales in international markets is one of many ways to recoup a firm's investments in research and development.

Answer 2

False

Question 3

The motivation to take domestic products to foreign markets is more relevant today than in the past.

Answer 3

False

Question 4

International dissimilarities in language and culture, business practices, and government regulations are increasing over time.

Question 5

Twenty-five percent of the world's population lives in the United States.

Question 6

The Council on Foreign Relations can assist a company in trade laws and payment issues related to global markets.

Question 7

Today, companies tend to focus on developed countries as they search out international markets.

Question 8

By informing consumers about the lifestyles of others, globalization is leading toward more diverse consumer preferences.

Question 9

The primary motivation for expansion into European markets is to be closer to sources of raw materials.

Question 10

Globalization explains the increasing similarity of markets around the world.

Question 11

While a small firm can have global operations, size will limit growth.

Question 12

Products that sell at home usually require little or no adaptation to be well received in foreign markets.

Question 13

The term BRICs refers to Bangladesh, Romania, Ireland, and Czechoslovakia, all emerging markets.

Question 14

Once a small business owner decides to expand internationally, s/he should study the competitive forces in the foreign market.

Question 15

A production capacity question that needs to be answered before a company goes global with operations is "Will international sales hurt domestic sales?"

Question 16

Together, China and India account for more than 50 percent of the world's 6 billion inhabitants.

Question 17

The U.S. Department of Industry provides information for entrepreneurs considering global operations.

Question 18

Born-global firms are small companies that begin with cross-border businesses around the globe.

Question 19

Experience curve efficiencies refers to the savings that arise from repeated production of the same product.

Question 20

Entrepreneurs decide to go global to expand their opportunities, but sometimes they are forced to enter foreign markets to compete with firms that have already done so .

Question 21

Learning effects occur when an employee gains insight from experience, which leads to improved work performance.

Question 22

International outsourcing and offshoring are increasingly being used by companies going global to cut costs.

Question 23

An economic risk for a global company is the threat of new labeling regulations.

Question 24

International business will never be as easy as doing business on the domestic front.

Question 25

A cross-border acquisition is less demanding than a greenfield venture.

Question 26

Least challenging countries according to the World Bank's Ease of Doing Business Index include Canada, Mexico, and Chile.

Question 27

Counterfeit activity is likely to decrease with the use of foreign licensing, international franchising, and international strategic alliances.

Question 28

Exporting involves the sale of goods made in the home country to customers in another country.

Question 29

Trade leads are accessed most often through contacts.

Question 30

Trade missions typically are sponsored by foreign governments to promote strategic alliances in international markets.

Question 31

The unique features of a local environment can yield benefits to small firms locating there even when the costs are greater.

Question 32

While opening an overseas sales office can be effective, small businesses should wait until sales in the local market are great enough to justify the move.

Question 33

Gains from learning effects continue to grow after startup; economies of scale efficiencies decline as the business grows.

Question 34

China, India and Russia are classified as moderately challenging according to the World Bank's Ease of Doing Business Index.

Question 35

Increasingly, small firms find that they must locate their operations abroad if they are to keep their contracts as suppliers to large companies.

Question 36

Political moves by an international country have implications on the domestic company's economic risk.

Question 37

Increasingly, small firms are going global in search of raw materials.

Question 38

Small businesses that are either already or interested in exporting or importing can receive information from the SBA through conferences, seminars, publications and counseling.

Question 39

A small firm can generate the greatest financial returns using international licensing strategies when these efforts involve the company's products.

Question 40

Perhaps the easiest way to break into international markets is to use a trade intermediary.

Question 41

Antonio's small pasta firm is considering exporting its products.  A Canadian grocery store chain with its corporate headquarters in Quebec has approached him. Which question would need to be answered in relation to the pasta company's financial capacity objectives?

A) How are the initial expenses of expanding to Canada going to be covered?
B) What international expertise does Antonio have, specifically does he speak French?
C) Why does Antonio want to export to Canada?
D) Will Canadian sales hurt USA sales?

Question 42

A Canadian grocery store chain with its corporate headquarters in Quebec has approached Antonio's small pasta firm about possible exporting. Which question would need to be answered in relation to the pasta company's management objectives?

A) How are the initial expenses of expanding to Canada going to be covered?
B) What international expertise does Antonio have, specifically does he speak French?
C) Why does Antonio want to export to Canada?
D) Will Canadian sales hurt USA sales?

Question 43

In the past, companies have left the United States to

A) take advantage of unique features of the local market.
B) find raw materials.
C) change the shape of the product life cycle.
D) serve the local community through the business.

Question 44

When Wayne opened his business many years ago, most businesses operated only within one country.  But now thanks to __________, businesses increasingly take advantage of cross-border activities.

A) born-global businesses
B) globalization
C) economic freedom
D) economic liberty

Question 45

For most small businesses, the primary motivation for going global is to

A) develop new market opportunities.
B) reduce the costs of doing business.
C) gain access to resources that are important to the firm's operations.
D) capitalize on special features of location.

Question 46

A Canadian grocery store chain with its corporate headquarters in Quebec has approached Antonio, the owner of a company that produces pasta, about exporting its pasta into Canada.  Which question would need to be answered in relation to the company's production capacity objectives?

A) How are the initial expenses of expanding to Canada going to be covered?
B) What international expertise does Antonio have, specifically does he speak French?
C) Why does Antonio want to export to Canada?
D) Will Canadian sales hurt USA sales?

Question 47

To expand a market, an emerging motivation for going global is to

A) take advantage of unique features of the local market.
B) find buyers for highly specialized products.
C) obtain tariff reductions.
D) extend the product life cycle.

Question 48

Experience curve efficiencies refers to

A) expanding a business globally to decrease per unit costs.
B) having more experienced team members.
C) insights gained by employees that lead to improved work performance.
D) the outcomes of learning effects and economies of scale.

Question 49

A company specializing in flavoring compounds opens a plant near the rain forest.  This move enables its biologists to derive flavors without destroying the plants and supports company globalization efforts being related to

A) reducing tariffs
B) cutting costs.
C) expanding its market.
D) gaining access to resources.

Question 50

An example of a trade intermediary most suited for small businesses is an export remarketer.

Question 51

A company with the most experienced production employees and the lowest unit costs in its industry indicates that it had benefited from

A) learning effects.
B) experience curve efficiencies.
C) economies of scope.
D) economies of scale.

Question 52

Seeking to extend the product life cycle by expanding into international markets has become a less effective strategy because

A) customer preferences have become more similar around the world.
B) income levels in many countries are insufficient to support this strategy.
C) international delivery systems cannot handle the variety of company distribution systems.
D) product life cycles have already been growing over the years.

Question 53

As Antonio's pasta company increases in size, the business is able to realize economies of scale

A) through learning effects from manufacturing experience.
B) through incremental drops in costs that results from the doubling of output.
C) by spreading of an investment across more units of production.
D) through efficiencies of operations in service operations.

Question 54

According to the 2013 BRIC Markets, which country has the highest GNI per capita?

A) Brazil
B) China
C) India
D) Russia

Question 55

Antonio's small pasta firm is considering exporting.  A Canadian grocery store chain with its corporate headquarters in Quebec has approached him. Which question would need to be answered in relation to the pasta company's management experience and resource objectives?

A) How are the initial expenses of expanding to Canada going to be covered?
B) What international expertise does Antonio have, specifically does he speak French?
C) Why does Antonio want to export to Canada?
D) Will Canadian sales hurt USA sales?

Question 56

A revocable letter of credit is an agreement to honor a draft or other demand for payment when specified conditions are met and can only be changed by the seller.

Question 57

Learning effects occur when

A) mistakes are made and then new solutions found.
B) insights gained by employees enhance their work performance.
C) economies of scare are present.
D) companies take advantage of experience curve efficiencies.

Question 58

Renee opened her business with the intention of importing goods from Brazil and selling them in the United States.  We could say that this business is

A) an exporter.
B) born-global.
C) ready to launch offshoring.
D) a trade mission.

Question 59

International markets are increasingly demanding

A) the same products that are distributed to other national markets.
B) differentiated products that satisfy their unique needs and interests.
C) direct access to products sold elsewhere in the world.
D) more expensive products and fewer inexpensive products.

Question 60

Allen is considering entering the global marketplace.  What question should be answered first?

A) Does the company have the necessary "deep pockets" to follow through?
B) Are the company's domestic operations capable of subsidizing overseas operations?
C) Is the company's technology sufficient to enter into the international game?
D) Is the company up to the task?

Question 61

Nike and many other companies engage in international outsourcing, which refers to

A) sending US employees to manage foreign-based operations.
B) relocating stateside operations abroad.
C) obtaining raw materials in foreign countries.
D) accessing foreign labor through contracts with independent providers.

Question 62

Increasingly, small businesses are expanding internationally to

A) obtain raw materials.
B) gain access to skilled labor.
C) create job opportunities for domestic employees.
D) take advantage of government incentives.

Question 63

International franchising is a variation on the theme of

A) exporting.
B) importing.
C) foreign licensing.
D) international strategic alliances.

Question 64

Labor rates have risen over time to the point that Antonio's Pasta is considering ____________ to reduce costs.

A) outsourcing.
B) offshoring.
C) exporting.
D) importing.

Question 65

A fundamental activity for global small business success is

A) avoiding rigid planning that commits the firm's resources to a single plan of action.
B) determining international markets that increase the company's unique potentials.
C) figuring out which of the firm's competitors is capable of copying its strategy.
D) tapping government programs that provide incentives for international expansion.

Question 66

When it comes to cutting costs, many foreign companies have chosen to locate production facilities in Mexico to

A) obtain tariff reductions.
B) find raw materials.
C) follow large client firms that locate abroad.
D) find suppliers offering highly specialized products.

Question 67

Edward is a young entrepreneur with grand plans, including international expansion of his new company.  Once that decision is made, Edwards next step is to:

A) begin to hire employees with international experience.
B) join a trade mission.
C) plan a strategy that increases the potential of the firm.
D) spend some time estimating the market potential of various countries.

Question 68

Mattel has allowed a producer in Thailand to manufacture and sell its branded dolls in overseas markets.  The company in Thailand is a:

A) royalty receiver.
B) licensor.
C) licensee.
D) license initiator.

Question 69

John is interested in joining with a large corporation in a cooperative venture to share risks and pool resources for his small auto parts manufacturing business.  The strategy option he is exploring could best be described as

A) an international strategic alliance.
B) exporting.
C) importing.
D) international cost shifting.

Question 70

For each unit produced under the licensing contract, the Hong Kong baker will pay a small fee called ________________ to Finagle-A-Bagel.

A) trademark fees.
B) royalties.
C) general licensing fees.
D) copyright fees.

Question 71

If Finagle-A-Bagel contracts with a baker in Hong Kong to manufacture and sell a product in overseas markets, Finagle-A-Bagel would be the

A) royalty receiver.
B) licensor.
C) licensee.
D) license initiator.

Question 72

A business that locates a production facility or sales office overseas by purchasing a foreign business from another firm is participating in

A) a cross-border acquisition.
B) a greenfield venture.
C) offshoring.
D) outsourcing.

Question 73

Importing involves

A) the authorized use of intellectual property.
B) selling products from abroad in the firm's home market.
C) purchasing the right to manufacture and sell a firm's product in overseas markets.
D) the sale of products produced in the home country to customers in another country.

Question 74

In Antonio accepts the offer of the Canadian grocery to sell his American-made pasta in Canada, he will be:

A) exporting.
B) importing.
C) offshoring.
D) forming an international strategic alliance..

Question 75

For some small businesses, a recent trend for going global is to

A) be closer to large clients.
B) extend a product life.
C) find raw materials.
D) reduce transportation costs.

Question 76

The unauthorized use of intellectual property is called

A) royalties.
B) international franchising.
C) foreign licensing.
D) counterfeit activity.

Question 77

Some small firms choose to outsource internationally in order to

A) avoid domestic taxes.
B) avoid competition from other US companies.
C) cut costs and access talented foreign employees.
D) take advantage of legal loop-holes in foreign countries.

Question 78

A company that operates a customer service call center is likely to contract with a company in India to

A) capitalize on the special features of location.
B) cut costs.
C) expand its market.
D) gain access to resources.

Question 79

Regional free trade areas have been formed in order to

A) duplicate government regulatory systems.
B) reduce tariffs to increase trade.
C) coordinate the currencies of included countries.
D) accommodate the demands of organized labor.

Question 80

If an olive oil importer sets up operations in Italy to be near its supplier, the company is going global by

A) capitalizing on the special features of location.
B) cutting costs.
C) expanding its market.
D) gaining access to resources.