Question 1

Explain what the differences are between a business plan and an opportunity assessment plan.

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Question 2

Identify and briefly describe the four sections of an opportunity assessment plan.

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Question 3

Explain the major factors an entrepreneur needs to consider in choosing the best distribution channel in a foreign country.

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Question 4

What are the major reasons why an entrepreneur would go global?

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Question 5

Define political risk analysis,and identify and briefly describe the three major types of political risk.
Political risk analysis - Prior to entering into business in another country,an assessment of that country's political policies and its stability
A.Operating risk - risk of interference with the operations of the venture
B.Transfer risk - risk in attempting to shift assets or other funds out of the country
C.Ownership risk - the largest potential risk,where the country takes over the venture's property and employees

Accepted Answer

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Question 6

_____ is a type of merger in which acquiring and acquired companies have related production and/or distribution activities but do not have products that compete directly with each other.
A)Market extension merger
B)Horizontal merger
C)Product extension merger
D)Vertical merger

Accepted Answer

In a product extension merger, the acquiring and acquired companies have related production and/or distribution activities but do not have products that compete directly with each other. This type of merger allows companies to diversify their product offering and expand into new markets without creating direct competition between their existing products.

Question 7

List the seven various aspects of culture.

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Question 8

What is a nonequity arrangement? Define the two major types of nonequity arrangements: licensing and turn-key projects,and give at least one advantage and disadvantage for each.
Nonequity arrangement - a method by which an entrepreneur can enter a market and obtain sales and profits without direct equity investment in the foreign market.
A.Licensing - involves an entrepreneur who is a manufacturer (licensee)giving a foreign manufacturer (licensor)the right to use a patent,trademark,technology,production process,or product in return for the payment of a royalty.
Benefit: Low development costs and risks.
Disadvantages: Lack of control over technology,inability to realize location and experience curve economies,inability to engage in global strategic coordination.
B.Turn-key projects - A method of doing international business whereby a foreign entrepreneur supplies the manufacturing technology or infrastructure for a business and then turns it over to local owners.
Benefits: relatively low risk,ability to earn returns from process technology skills in countries where FDI is restricted.
Disadvantages: Creation of efficient competitors,lack of long-term market presence.

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Question 9

The North American Free Trade Agreement (NAFTA)is between which of the following countries?
A)United States,Brazil,and Canada
B)United States,Mexico,and Brazil
C)United States,Argentina,and Brazil
D)United States,Canada,and Mexico

Accepted Answer

NAFTA is a trade agreement between the United States, Canada, and Mexico, creating a trilateral trade bloc in North America.

Question 10

Philip Morris acquiring Miller Brewing is an example of what type of merger?
A)Market extension merger
B)Horizontal merger
C)Product extension merger
D)Vertical merger

Accepted Answer

Philip Morris acquiring Miller Brewing is an example of a product extension merger because it involves a company expanding its product line or market reach by acquiring another company that operates in a related sector, thereby offering complementary products or services.

Question 11

McDonald's acquiring its store franchises is an example of what type of merger?
A)Market extension merger
B)Horizontal merger
C)Product extension merger
D)Vertical merger

Accepted Answer

McDonald's acquiring its store franchises is an example of a vertical merger, where a company acquires a business that operates in the same industry but at a different level of the supply chain. McDonald's is acquiring its franchisees, which operate at the retail level, allowing the company to have more control over its supply chain and streamline operations.

Question 12

According to the text,the most prevalent reason for mergers is:
A)taxation.
B)economies of scale.
C)currency fluctuations.
D)to combine complementary resources.

Accepted Answer

The text states that the most prevalent reason for mergers is "to achieve economies of scale, which refers to reductions in unit costs achieved by producing a large volume of a product or service."

Question 13

All of the following is true of the General Agreement on Tariffs and Trade except:
A)it includes over 100 nations.
B)it reduces tariffs,subsidies,and import quotas.
C)it has extensive authority to enforce trade practices due to its voluntary membership.
D)it is one of the longest-lasting agreements on trade.

Accepted Answer

The General Agreement on Tariffs and Trade (GATT) does not have extensive authority to enforce trade practices, as its membership is voluntary and it relies on negotiation and consultation between member nations. Enforcement of trade practices is handled by the World Trade Organization (WTO), which was established in 1995 to replace GATT as the primary mechanism for international trade negotiations and dispute resolution. The other statements are true of GATT.

Quiz 5: Identifying and Analyzing Domestic and International Opportunities

Explain what the differences are between a business plan and an opportunity assessment plan.

Identify and briefly describe the four sections of an opportunity assessment plan.

Explain the major factors an entrepreneur needs to consider in choosing the best distribution channel in a foreign country.

What are the major reasons why an entrepreneur would go global?

_____ is a type of merger in which acquiring and acquired companies have related production and/or distribution activities but do not have products that compete directly with each other.

List the seven various aspects of culture.

The North American Free Trade Agreement (NAFTA) is between which of the following countries?

Philip Morris acquiring Miller Brewing is an example of what type of merger?

McDonald's acquiring its store franchises is an example of what type of merger?

According to the text,the most prevalent reason for mergers is:

All of the following is true of the General Agreement on Tariffs and Trade except: