Deck 3: Organizational Participants That Make International Business Happen

Question 1

A nation's public sector participates in international business primarily as a regulator.

Answer 1

False

Question 2

A freight forwarder's purpose can be seen as both a distribution channel intermediary and a facilitator.

Answer 2

True

Question 3

A distribution channel intermediary primarily serves to market a firm's products abroad.

Answer 3

False

Question 4

Governments in some advanced economies maintain significant ownership of companies in certain industries.

Question 5

MNEs typically derive more than half of their sales and profits from international sales.

Question 6

Born global firms do business internationally within a few years after their founding.

Question 7

By using independent foreign distributors, exporters are able to make valuable inroads with foreign markets in an inexpensive manner.

Question 8

Many international corporations turn to transportation specialists to handle distribution and storage.

Question 9

Commercial banks readily extend credit to MNEs, but hesitate to lend money to SMEs.

Question 10

Customs brokers help international firms to finance their exporting costs.

Question 11

The main purpose of distribution channel intermediaries is to ________.

A) supply logistics and marketing services for focal firms
B) provide financial support to SMEs
C) facilitate customs clearance for MNEs
D) assist focal firms with legal issues

Question 12

All of the following are characterized as customers except ________.

A) governments
B) retail businesses
C) non-profit organizations
D) freight carriers

Question 13

Rationalizing the value chain means sourcing components in countries that have what advantage?

A) cheapest shipping
B) lowest cost
C) favorable markets
D) facilitators

Question 14

Before purchasing components from international suppliers for the Chevrolet Malibu, General Motors most likely considered all of the following criteria except ________.

A) cost
B) logistics
C) market share
D) quality

Question 15

Which of the following activities happens before the others in the value chain?

A) marketing
B) sourcing
C) distribution
D) after-sales service

Question 16

Which stage of the international value chain is represented by the assembly of a Dell computer in Malaysia?

A) research and development
B) sourcing
C) production
D) after-sales service

Question 17

Which of the following characterizes how multinational enterprises enter foreign markets?

A) direct investments
B) marketing
C) outsourcing
D) tax breaks

Question 18

Compared to other industries, which MNE/focal firm type does the most business?

A) energy
B) information technology
C) telecom
D) financials

Question 19

Which of the following characteristics is considered an advantage for SMEs in the global market?

A) assets
B) personnel
C) product innovation
D) structure

Question 20

Small focal firms are typically involved in the realm of ________.

A) specializing
B) importing
C) manufacturing
D) investing

Question 21

Which of the following has enabled SMEs to market their products at the same level as large multinational enterprises?

A) logistics specialists
B) communication technology
C) local intermediaries
D) foreign investors

Question 22

A born global firm is defined as which of the following?

A) an initiator of an international business transaction
B) a specialist firm that provides marketing services
C) a business with special expertise in customs and banking
D) a company that moves into international markets early in its existence

Question 23

A firm that exchanges intellectual property for royalties is known by which of the following terms?

A) franchisor
B) licensor
C) contractor
D) broker

Question 24

Which of the following is a benefit of licensing agreements?

A) home-based globalization
B) proven business models
C) short-term royalty fees
D) minimal marketing requirements

Question 25

Developing economies often enter into build-own-transfer agreements with ________.

A) joint venture entities
B) turnkey contractors
C) MNEs
D) SMEs

Question 26

Which of the following business functions is an MNE most likely to outsource?

A) distribution
B) market research
C) production
D) sales

Question 27

International collaborative ventures allow focal firms to ________.

A) reduce outsourcing needs and expenses
B) eliminate burdensome customs barriers
C) configure value chains more effectively
D) train and employ skilled foreign workers

Question 28

Two focal firms might partner together in a project-based, non-equity venture in order to ________.

A) pool assets and create a new business
B) compete more effectively against an MNE
C) pursue long-term strategic goals
D) share costs of research and development

Question 29

Independent wholesalers that purchase products from exporters for resale at a profit are known as ________.

A) national franchisors
B) merchant distributors
C) foreign intermediaries
D) sales representatives

Question 30

The last link between distributors and retail customers that both an MNE and SME must consider in targeting a foreign market for expansion is ________.

A) retailers
B) foreign distributors
C) customers
D) sales representatives

Question 31

Producers with limited international business experience often turn to which of the following intermediaries when needing assistance with importing and exporting commodities?

A) export management companies
B) manufacturer's representatives
C) customs brokers
D) trading companies

Question 32

Trading companies play an important role in Japan's external trade dealing in ________.

A) electronics
B) raw materials
C) consumer goods
D) automobiles

Question 33

Internet-based international intermediaries are of particular advantage to companies that ________.

A) rely heavily on local intermediaries
B) have large and established international operations
C) have limited resources
D) have many retail stores

Question 34

Commercial banks facilitate the operations of international businesses by doing all of the following except ________.

A) facilitate government financing to SMEs
B) transfer funds to individuals and foreign banks
C) gather credit information about foreign buyers
D) provide financing to buyers and sellers

Question 35

A tax accountant would most likely be involved as a consultant in which role?

A) multi-country operations
B) preparing internal revenue documentation
C) foreign tax obligations
D) all of the above

Question 36

Shareholders Meeting
A senior manager at Hudson Motors has presented top management at his firm with his manufacturing strategy aimed at improving sales and profits. Based in Kentucky, Hudson Motors has always used American-made parts for its automobiles. However, sales and profits have slumped miserably over the past three years. The Hudson Motors senior manager asks top management to approve his strategy of internationalizing the company's value chain.

-Which of the following benefits does the CEO most likely cite as the rationale for purchasing automobile components from overseas suppliers?

A) improved quality
B) reduced shipping expenses
C) lower costs
D) technological advances

Question 37

Shareholders Meeting
A senior manager at Hudson Motors has presented top management at his firm with his manufacturing strategy aimed at improving sales and profits. Based in Kentucky, Hudson Motors has always used American-made parts for its automobiles. However, sales and profits have slumped miserably over the past three years. The Hudson Motors senior manager asks top management to approve his strategy of internationalizing the company's value chain.

-The CEO refers to a primary supplier of headlights based in France, although the components would most likely be manufactured in ________.

A) Mexico
B) Japan
C) Germany
D) Korea

Question 38

Nanocell
Two years ago, Nanocell, a small Canadian company, began manufacturing a solar cell that holds a charge for 24 hours, many times longer than any competing solar cell. International sales of the palm-sized solar cell occurred quickly, and soon Nanocell was exporting to Australia, China, and Africa. Today, Nanocell is a growing multinational enterprise with sales expected to climb even higher.

-Nanocell's management team is considering entering into other foreign markets using a strategy of foreign direct investment (FDI). Which of the following, if true, would most support the claim that expansion through FDI would benefit Nanocell?

A) Most small companies enter foreign markets by exporting, as Nanocell did two years ago.
B) Competing solar cell companies typically start foreign expansion by licensing their technologies.
C) Nanocell would be most likely to promote its growth by expanding exports to new markets.
D) FDI is a common and successful foreign market entry strategy for multinational enterprises.

Question 39

Nanocell
Two years ago, Nanocell, a small Canadian company, began manufacturing a solar cell that holds a charge for 24 hours, many times longer than any competing solar cell. International sales of the palm-sized solar cell occurred quickly, and soon Nanocell was exporting to Australia, China, and Africa. Today, Nanocell is a growing multinational enterprise with sales expected to climb even higher.

-Nanocell is considering partnering with either an agent or a foreign distributor to expand its overseas sales. Which of the following, if true, would most support Nanocell's decision to partner with an agent instead of a foreign distributor for the purpose of expanding sales?

A) Nanocell has more widespread connections with foreign partners in Asia than in Europe.
B) Nanocell's executives are opposed to having a foreign partner take title to their product.
C) The major foreign distributors of solar power technology have strong track records of success.
D) The market price of Nanocell's products is too low to support payment of commissions.

Question 40

Nanocell
Two years ago, Nanocell, a small Canadian company, began manufacturing a solar cell that holds a charge for 24 hours, many times longer than any competing solar cell. International sales of the palm-sized solar cell occurred quickly, and soon Nanocell was exporting to Australia, China, and Africa. Today, Nanocell is a growing multinational enterprise with sales expected to climb even higher.

-Which of the following questions is most relevant for evaluating whether Nanocell should partner with an agent or foreign distributor to expand its overseas sales?

A) Has FDI been successfully used by solar technology companies expanding abroad?
B) What would be the cost of capital required to finance additional expansion?
C) Who do Nanocell's competitors typically collaborate with when expanding operations?
D) Does Nanocell have an appropriate legal team in place to handle the requirements of expansion?

Question 41

Super Cola
U.S.-based Super Cola, one of the top five cola manufacturers, has previously attempted entering the Asian beverage market with little success. Lacking the name recognition of its competitors, Super Cola was unable to gain market share and ceased shipping its products overseas after six months. Super Cola realizes that the large Asian market would be extremely profitable, but the company requires a new strategy. Consultants hired by Super Cola propose two different methods for entering the market: licensing and franchising.

-Why would franchising be an unlikely solution for Super Cola?

A) Super Cola needs the use of a beverage manufacturing facility in Asia.
B) International shipping would slow down the distribution of Super Cola.
C) A lack of raw materials in many Asian countries would hinder manufacturing.
D) Strict laws in China prohibit many corporations from franchising.

Question 42

Super Cola
U.S.-based Super Cola, one of the top five cola manufacturers, has previously attempted entering the Asian beverage market with little success. Lacking the name recognition of its competitors, Super Cola was unable to gain market share and ceased shipping its products overseas after six months. Super Cola realizes that the large Asian market would be extremely profitable, but the company requires a new strategy. Consultants hired by Super Cola propose two different methods for entering the market: licensing and franchising.

-If Super Cola enters a licensing agreement with Tsang Cola, what is the benefit for Super Cola?

A) Super Cola would learn the marketing techniques used by cola manufacturers in Asia, and would simulate them after the agreement had expired.
B) Super Cola would be represented on the Tsang board of directors and would oversee Tsang operations in Asia and the U.S.
C) Super Cola would learn the manufacturing techniques used by Tsang and use the same methods in the U.S.
D) Super Cola would receive royalties from beverage sales and an entry into the Asian market.

Question 43

In a short essay, describe the three major nongovernmental participants in international business. Explain how the three work together in international business activities.

Question 44

In a short essay, explain why SMEs now comprise the majority of firms active in international business.

Question 45

In a short essay, explain the meaning of the term international collaborative venture. What is the benefit?

Question 46

In a short essay, identify the tasks of distribution channel intermediaries when they are employed by focal firms. Why do exporters rely on intermediaries?

Question 47

In a short essay, discuss the reason that exporting firms often use trading companies as intermediaries.

Question 48

What is sogo shosha? In a short essay, explain the meaning of the term.

Question 49

Most exporters use freight forwarders as facilitators in international business. In a short essay, explain the ways in which freight forwarders benefit exporting businesses.

Question 50

In a short essay, discuss the role of insurance companies in the world of international business.

Question 51

In a short essay, discuss how government performs its role as a facilitator of international business.

Question 52

What is the purpose of a central bank and include an example of their activities?