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International Business 2


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Bargaining strengths for countries include _____.
large markets
Which of the following statements regarding a company's bargaining position is accurate?
MNEs that have products with global brand recognition tend to have more bargaining power.
Indirect incentives that countries can offer MNEs include
a trained labor force.
The theory that an MNEs' bargaining strength is eroded as a host country gradually gains assets from it is known as
theory of obsolescing bargain.
Which of the following statements regarding cultural differences among negotiators is accurate?
Negotiators from monochronic cultures prefer to give their undivided attention to one issue at a time.
If a negotiator has a low familiarity with his counterparts culture and his counterpart has a low familiarity with the negotiator's culture, what is the most feasible strategy?
employ an agent or an advisor.
When a negotiator's familiarity with their counterpart's culture is _________ and the counterpart's familiarity with the negotiator's culture is ____________ the best strategy is to try to improvise an approach and effect symphony
high; high
As of 2000 which region of the world had the highest rate of software piracy?
Eastern Europe
According to the Anti-Counterfeiting Coalition what percent of the value of all world trade is in counterfeit products?
The first widespread attempt to regulate international companies on a multilateral basis was the
League of Nations
If a U.S. company looking to expand internationally for the first time perceived similar market size, political and economic risk and opportunity in the following countries, which country would they be most likely to prefer?
_____ refers to the situation where the more time and money companies invest in examining an alternative, the more likely they are to accept it regardless of its merits.
Escalation of commitment
Which of the following statements regarding the advantages firms can gain by moving to emerging economies to exploit labor-cost differences is accurate?
These advantages are short-lived because competitors follow leaders into low-wage areas.
_____ refers to the fact that foreign companies have a lower survival rate than local companies for many years after they begin operations.
Liability of foreignness
To pursue the imitation lag strategy, companies will move first to those countries whose companies invest _____ in technology and whose government offer _____ protection for the innovator's intellectual property rights.
a great deal; very little
Expropriation of property occurred _____ in the 1970s and early 1980s, and has been _____ in recent years.
frequently; negligible
The most expensive source of market research for companies looking to invest internationally are
business consulting companies that prepare individualized reports.
Which country comparison tool highlights a company's specific product advantage on a country-by-country basis?
the country attractiveness-company strength matrix
When Marks & Spencer closed its poorly performing stores in continental Europe to concentrate its efforts on improving its efforts on improving its performance in its home U.K. markets this was an example of
When a company moves rapidly into many foreign markets, gradually increasing its commitments within each one it is said to be pursuing a _____ strategy.
Which of the following modes of market expansion is considered to be a collaborative arrangement?
a turnkey operation in a foreign country
_____ is considered to be a general motive for engaging in collaborative agreements.
Spreading and reducing costs
_____ is a motive for engaging in collaborative arrangements that is specific to international business.
Overcoming governmental or legal constraints
Which theory holds that each company has a unique combination of competencies and that a company may improve its performance by concentrating on those activities that best fit its competencies and by depending on other firms to supply it with products, s
resource-based view of the firm
In determining the compensation for the international licensing of technology, which of the following would be considered an agreement-specific factor?
age of the technology
Which form of cooperative agreement is a specialized form of licensing in which one company sells another the use of intangible property essential to the other company's business and then provides operational assistance to the other business on a continu
franchise agreement
In industries in which technological changes are frequent and affect many products, companies in various countries often exchange technology rather then compete with each other on every product in every market through arrangements known as _____.
____ are a type of collaborative arrangement in which one company contracts another to build complete, ready-to-operate facilities.
Turn key operations
Which of the following collaborative strategies offers a company the most control of its foreign operations?
joint venture
In an international collaborative agreement which party can be held responsible for problems, such as in the issue of tax evasion that arose in KFC's joint venture in China?
both parties
The first step in the international planning process is
setting a long-range strategic intent.
Which organizational structure is the most popular among international companies today?
product division structure
The _____ structure is the most appropriate for MNEs such as Nestlé that have large foreign operations that are not dominated by a single company or region.
geographic division structure
_____ decision making, implies that decisions are made at higher levels in the organization?
Decentralized decision making is most appropriate when
local adaptation is needed to ensure success in international operations.
The common values that a company's employees share constitute its _____.
corporate culture
Which of the following statements regarding reports as a control mechanism is accurate?
Written reports are more important in an international setting than in a domestic setting.
Which of the following statements regarding control mechanisms is accurate?
When evaluating management performance it is best to compare actual results to a budget that has been agreed upon by headquarters and subsidiary managers.
In a shared ownership situation, a company with a minority equity can maintain control by
spreading the remaining ownership among many shareholders.
A foreign operation not legally separate from the parent company is known as a _____.
Which of the following statements regarding estimating potential demand is accurate?
Emerging economies tend to display a higher elasticity of demand than those in developed countries.
Companies that operate according to _____ orientation ask questions such as "What can the company sell in country A?"
Which part of a company's sales gap can be accounted for by competitors who sell where the company does not?
distribution gap
Genco is entering a new market and plans to introduce their products at a low price to get a maximum number of consumers to try it. Genco is using a _____ strategy.
A push marketing strategy is favored over a pull marketing strategy when _____.
there are sales people to whom customers can turn for opinions on products.
When companies standardize advertising among markets this can result in
better quality at the local level.
The course, physical path or legal title, which goods take between production and consumption, is known as _____.
Distribution may be handled internally when
there is complex after-sales service.
Among the countries listed _____ has the longest distribution chain with, on average, 2.21 wholesale steps between producers and retailers.
According to eMarketer in 2000 there were 352.2 million internet users worldwide and by 2004 they estimate there will be _____ million internet users worldwide.
Which of the following is an ownership advantage that can impact a company's choice of entry mode?
international experience
Which of the following statements regarding exporting is accurate?
The probability of being an exporter increases as company size, as defined by revenues, increases.
Small business now makes up _____% of U.S. exporters, and it accounts for _____ of the value of U.S. exports.
88%; one-fifth
If Tea, Inc was engaging in exporting and found itself unable to cope with the demands of exporting it would be said to be in which stage of export development?
initial exporting
Which of the following is a mistake frequently made by companies new to exporting?
Insufficient care in selecting overseas agents or distributors.
A _____ sells products in foreign markets on a commission basis, without assuming risk or responsibility.
sales representative
Large Korean business groups that contain a trading company as a part of the group are known as _____.
In _____ an exporter turns over its export receivables, sometimes for a small administrative fee, to a funding source who gives the exporter about 80 to 85 percent of value of the receivables up front and then collects the debt itself, paying the balance
If an automobile exporter were to partner with a company in the importer's country to manufacture components that would be used in the manufacture of the automobile this would be an example of what type of countertrade?
direct offsets
_____ is the oldest form of countertrade in which goods or services are traded for goods or services of equal value without any flow of cash.
When comparing supply chain management and logistics, which of the following statements is accurate?
Logistics focuses much more on the transportation and storage of materials and final goods, where supply chain management extends beyond that to include the management of supplier and customer relations.
_____% of Fortune 1000 companies outsource logistics and distribution.
When considering the success of a global manufacturing strategy, _____ refers to the degree of consistency between the foreign investment decision and the company's competitive strategy.
Given the increasing prevalence of offshore manufacturing, _____ has been termed by the Wall Street Journal as the "world's factory floor?"
Companies that are new to exporting are most likely to use which manufacturing configuration?
centralized manufacturing in one country
The electronic linkage of suppliers, customers, and third-party intermediaries to expedite documents and financial flows is known as _____.
_____% of large and medium sized companies use some form of ERP?
_____ is a quality control system aimed at eliminating defects, slashing product cycle times and cutting costs across the board.
Six Sigma
Which of the following statements regarding ISO 9000:2000 is accurate?
ISO 9000: 2000 evaluates the management of the manufacturing process according to standards it has created in 20 domains from purchasing to design to training.
In a 2002 survey conducted by Accenture that questioned 150 executives from Fortune 1000 companies what was the most commonly identified barrier to expanding their use of outsourcing?
loss of operational control
Which of the following country groups is the highest on both secrecy and conservatism in terms of measurement and disclosure in accounting systems?
In dealing with accounting and reporting differences, the _____ approach is being used in situations in which a foreign registrant who wants to list and have their securities traded on a foreign stock exchange need only provide information prepared accor
reconciliation to local GAAP
The FASB requires that U.S. companies report foreign currency transactions at the _____ and that subsequent gains and losses on foreign-currency receivables _____ put on the income statement.
original spot exchange rate; be
When translating foreign-currency financial statements into dollars, if the functional currency is that of the local operating environment, the company must use the _____ method.
historical-rate method or current-rate method
According to IRS guidelines, for a company to quality as an FSC it must
maintain a foreign office
Which of the following would be considered active income of a CFC under U.S. tax law?
sales of products manufactured by the CFC in a foreign country
From the standpoint of the U.S. tax code, any _____ of an MNE would automatically _____ considered a CFC.
foreign subsidiary; be
If Coca-Cola were to sell one of its bottling subsidiaries 100 million gallons of Coke syrup, the price that Coca-Cola charged its subsidiary for this syrup would be known as the _____.
transfer price
A dollar-for-dollar reduction of tax liability that must coincide with the recognition of income is known as a _____.
tax credit
Which tax practice tries to avoid double taxation of corporate income through split tax rates or tax credits?
integrated system
_____ involves analyzing investment opportunities.
Capital budgeting
A study of foreign subsidiaries of U.S. MNEs found that the debt/assets of those studied averaged _____.
Companies from _____ are, on average, the most leveraged.
Eurodollars consistently represent _____% to _____% of the Eurocurrency market.
65%; 80%
On average banks constitute _____% of corporate funding.
If a Spanish company floated a bond issue in German marks in Germany, this would be an example of a _____.
foreign bond
From 2000 to 2001 which region suffered the greatest percentage decrease in venture capital?
Central and South America
_____ exposure arises because the dollar value of the exposed asset or liability changes as the exchange rate changes.
If Chez Skin, a French cosmetics company, is doing business in the United States and expects the U.S. dollar to weaken versus the French Franc what should NUSkin do to lessen its exposure?
Collect receivables due in U.S. dollars before the U.S. dollar weakens.
On average, U.S. firms spend _____ for each expatriate during the course of a typical three-year foreign assignment.
$1.3 million
If an American MNE hires a Dutch citizen to manage a project to build an oil field in Iraq, the manger would be considered a _____.
third-country national
Recent surveys indicated that _____ of expatriates fail to complete their assignments abroad.
less than 10%
Attacks on U.S. citizens and U.S. facilities abroad are most common in _____.between 1995-2001.
Latin America
CEOs in _____ have the highest total compensation.
the United States
Of the companies listed _____ has the smallest difference between CEOs and the average worker, measured as a multiple of the compensation of the typical hourly employee.
The "_____" type of manager is the most effective at balancing global and local needs.
dual citizen
In _____ societies such as Japan, there is a compensation preference for _____.
collectivist; egalitarian allocations, regardless of contribution
Which of the following statements regarding trends affecting union membership is accurate?
There has been a rising portion of women in the workforce and traditionally, women have been less likely to join unions.
Union membership as a percentage of the workforce in trade unions has declined since 1995 in virtually every country except a few such as _____.
Each country has a different mix of available workers and a different mix of labor costs. (T/F)
When a company has a global or transnational strategy there is much less need to impose standard human resources practices or a corporate culture abroad than when a company has a multidomestic strategy. (T/F)
When managers speak different native languages the use of e-mail will completely alleviate any communication difficulties.(T/F)
MNEs that follow a multidomestic strategy do not need to transfer human resource competencies from one unit to another; in fact it is not generally possible.(T/F)
Top managers in foreign subsidiaries usually have narrower duties than do managers of similar-sized home-country operations.(T/F)
Expatriate managers represent a much larger portion of subsidiary managers in industrial than in developing countries.(T/F)
Up to a third of returning expatriates typically leave their companies within one year of repatriation and nearly half within two years of returning home.(T/F)
Since 1998, the number of attacks against U.S. facilities and attacks in which U.S. citizens suffered causalities has increased each year. (T/F)
The least common international form of cooperation among unions is exchanging information.(T/F)
When labor participates in the management of companies this is known as codetermination. (T/F)
The finance function in the firm focuses on cash flows.(T/F)
Capital structuring involves analyzing investment opportunities.(T/F)
One of the major causes of the Asian financial crisis in 1997 was that Asian companies relied too much on equity to fund their growth.(T/F)
The degree to which a firm funds the growth of the business by debt is known as leverage.(T/F)
A Eurocurrency is any currency of a member of the EU. (T/F)
The Eurocurrency market is a retail rather than a wholesale market so transactions are very small.(T/F)
Of the top five investment banks that deal in the Eurobond market, four are from the United States.(T/F)
In terms of market capitalization the 10 largest stock markets are in developed countries.(T/F)
The most popular way for a Euroequity to get a listing in the United States is to issue an ADR.(T/F)
A lag strategy means either collecting foreign-currency receiveables before they are due when the foreign currency is expected to weaken or paying foreign-currency payables before they are due when the foreign currency is expected to strengthen. (T/F)
The financial manager of any company-domestic or international-is responsible for procuring and managing the company's financial resources but is usually not one of the members of the top management team.(T/F)
A company's contollership function collects and analyzes data for internal and external users and the role of the corporate controller has expanded beyond the traditional roles of management accounting. (T/F)
With the 2000 implementation of global accounting standards associated with ISO 9000:2000 accounting standards and practices around the world have been harmonized.(T/F)
For countries that follow the GAAP principles, income must be consistently reported across these countries. (T/F)
The Financial Accounting Standards Board sets accounting standards in the United States.(T/F)
Culture has a major influence on accounting standards and practices.(T/F)
Transparency and secrecy are the degree of caution companies exhibit in valuing assets and recognizing income.(T/F)
Stock exchanges in 52 countries permit IAS as at least an allowable alternative to their country GAAP.(T/F)
Companies operating in the EU countries must adopt International Accounting Standards as set forth by the IOSCO no later than 2005. (T/F)
Consolidation is the process of restating foreign-currency financial statements into U.S. dollars.(T/F)
A company's supply chain encompasses the coordination of materials, information, and funds from the initial raw material supplier to the ultimate customer. (T/F)
Logistics encompasses only the outbound logistics or the movement and management of products from manufactures facilities to the end user.(T/F)
The use of the internet to link a company with outsiders is known as a WAN.(T/F)
Kaizen is the Japanese process of continuous improvement and the cornerstone of TQM.(T/F)
Under ISO 9000:2000 companies must document how workers perform every function that affects quality and install mechanisms to ensure that they follow through on the documented routine. (T/F)
Sourcing is the firm's process of supplying outputs to sellers.(T/F)
Outsourcing is the purchasing of inputs from outside suppliers not related to the company.(T/F)
A study based on the responses of U.S. and European companies found that those that use e-sourcing are able to shorten time-to-market cycles by 40-50%.(T/F)
JIT is the sourcing of raw materials and parts just as they are needed in the manufacturing process.(T/F)
In the United States only the coastal states have free trade zones.(T/F)
Importing is sending goods and services from one country to another and exporting is bringing goods and services into one country from another.(T/F)
The largest exporter in the world is the United States.(T/F)
In general, companies that have low levels of ownership advantages either do not enter foreign markets or use low-risk entry modes such as exporting.(T/F)
Export intensity is defined as the percentage of total revenues coming from exports.
Most large companies are in the more advanced stages of export development while smaller companies are generally in the earlier stages.(T/F)
The first step in designing an export strategy is to make sure there is enough production capacity to delve the goods or services to forcing customers. (T/F)
An import broker is responsible for obtaining various government permissions and other clearances before forwarding necessary paperwork to the carrier that is to deliver the goods to the importer.(T/F)
In direct selling the exporter sells goods directly to or through an independent domestic intermediary in the exporter's home country that exports the products to foreign markets. (T/F)
Of the 16 trading companies in the Fortune Global 500 companies ranked according to revenues in2002, 8 of the companies were from the United States.(T/F)
Offset trade occurs when an exporter sells products for cash and then helps the importer find opportunities to earn hard currencies.(T/F)
Domestically, but not internationally, the major indicators for potential sales of most products are present income and population, plus growth in each. (T/F)
Where income inequality is high, the per capita income figure gives the most accurate picture of potential demand.(T/F)
In using gap analysis to determine why sales are not reaching forecasted levels, the term usage gap is used to describe a situation in which less product is being sold by all competitors than estimated market potential would predict. (T/F)
A production orientation is appropriate for commodity sales, especially those where there is little need or possibility of differentiation by country.
Internationally, sales orientation means a company crafts products different than what it offers domestically to sell in foreign markets. (T/F)
Companies with societal marketing orientations realize that successful international marketing requires serious consideration of potential environmental, health, social and work-related problems that may arise when selling or making products abroad.
When foreign legal requirements are less stringent than domestic ones a company may not be legally compelled to alter its products for foreign sales.
When deciding on the extent and mix of the product line, managers should be aware that broadening the product line allows for concentration of efforts. (T/F)
A product facing declining sales in one country may have growing or sustained sales in another.(T/F)
A penetration strategy involves charging a high price for a new product by aiming first at consumers willing to pay the price and then progressively lowering the price. (T/F)
Control is defined as management's planning, implementation, evaluation, and correction of performance to ensure that the organization meets its objectives. (T/F)
When Allied Irish Banks (AIB) allowed its Allfirst Bank in the United States to operate independently, with hardly any control from headquarters in Ireland, one of its foreign exchange traders at Allfirst lost $730 million before AIB became aware of it.
Operating plans outline major commitments, such as what businesses the company will be in and where.(T/F)
Most experts agree that it is easier to plan in the international sphere than in the domestic sphere.(T/F)
In an international division structure, all of a company's foreign subsidiaries report to the same department or division of headquarters because that department or division is responsible for all of the company's international business.(T/F)
The international division structure is probably best suited for global strategies.(T/F)
The functional division structure is popular among companies with a broad range of products.(T/F)
The term metanational is used to describe a company that thrives on the process of seeking out uniqueness that it might exploit elsewhere or that might complement its own existing operations. (T/F)
The more important specific foreign operations are to total corporate performance, the higher the corporate level to which those units should report. (T/F)
Most MNEs use reports for foreign operations that are very different than those they use domestically.(T/F)
In reality, the term strategic alliance often describes a wide variety of collaborations, whether or not they are of real strategic importance.(T/F)
The strategic alliance motive of learning from other companies is specific to international business.(T/F)
One of the fastest growth areas for collaborative arrangements has been in industries with projects that were too large for any single company to handle such as new aircraft and communications systems.(T/F)
In Japan most foreign companies need to collaborate with Japanese companies that can help in securing distribution and a competent workforce.(T/F)
In general, the less risk managers perceive in a foreign market, the more they will desire to form collaborative agreements in that market.(T/F)
The more a company depends on collaborative arrangements, the less likely it is to lose control over decisions, including those regarding quality, new product directions and where to expand output. (T/F)
The payment a company ordinarily receives from a licensing agreement is known as a royalty.(T/F)
In a franchising agreement the franchisor sells an independent franchisee the use of intellectual property essential to the franchisee's business but does not assist the business on a continuing basis. (T/F)
As companies enter into more collaborative arrangements, they get better performance from these arrangements.(T/F)
When two or more organizations participate in a joint venture the arrangement may be referred to as a consortium. (T/F)
The first step in choosing a new location is to scan for alternatives based on broad variables that indicate opportunities and risks.(T/F)
The least important variable managers use when determining where and whether to make an investments is market size. (T/F)
In general, companies are highly attracted to countries that share the same language.
Regardless of other considerations such as image or the liability of foreignness, companies will virtually always opt for the least-cost production location. (T/F)
When considering locations, companies may choose to locate where competitors are to gain advantages such as reduced site selection cost, easier access to potential suppliers and buyers and better access to innovation.(T/F)
In general, political instability affects all foreign businesses in a country.(T/F)
A company can usually, but not always, gain all of the information its managers would like when making site selection decisions. (T/F)
In most industrial countries, such as the United States, governments collect very detailed demographic and purchasing data, which are available relatively inexpensively to any company or individual.(T/F)
Companies must carefully consider the information they use in making site selection decisions as some false or purposefully misleading data may be published to mislead government superiors, the country's rank and file, or companies and institutions abroa
Most companies examine multiple expansion proposals simultaneously to ensure they select the best project.(T/F)
According to the bargaining school theory the negotiated terms for a foreign investor's operations depend on how much the investor and host country need each other's assets.(T/F)
Companies prefer to invest in developing countries because those countries offer large markets, less business risk and greater political stability.(T/F)
In the bargaining process, agreement occurs only if there are overlapping acceptance zones. (T/F)
In the current economic and political environment, it is common for companies making foreign investments in developing countries to obtain concessions on fixed terms for long periods or to expect that the original terms will not change.(T/F)
A company that is responsive to the local economy's changing needs and desires can maintain or improve its bargaining position by offering (or withholding) additional resources to the host country. (T/F)
Compared to negotiators from low-context cultures, those from high-context cultures want to spend more time developing general rapport and trust before addressing business details. (T/F)
Dependicia theory holds that developing countries have significant power in their dealings with MNEs.(T/F)
The International Chamber of Commerce in Paris can help mediate disputes between MNEs and host countries.(T/F)
Generally, developing countries offer stronger legal protection for intellectual property than do developed countries.(T/F)
Even if a brand name has a trademark, it may become a generic name in some countries because it takes on the name of a product rather than a brand. (T/F)

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