23) A U.S. organic personal hygiene product manufacturer that exports toothpaste and deodorant
made at its U.S. plants for shipment to the U.K. market
A) is competitively disadvantaged when the U.S. dollar declines in value against the British
pound.
B) is largely unaffected by fluctuating exchange rates. It would, however, be affected if its plants
were in the United Kingdom or other foreign countries.
C) becomes more competitive in the United Kingdom when the U.S. dollar gains in value against
the British pound.
D) becomes more competitive in the United Kingdom when the U.S. dollar declines in value
against the British pound.
E) has no interest in whether the dollar grows stronger or weaker versus the British pound unless
it is competing only against companies located in the United Kingdom.
24) An Irish dairy producer that exports gourmet cheeses made at its Kerry plants to the United
States
A) is competitively disadvantaged when the euro declines in value against the U.S. dollar.
B) is largely unaffected by fluctuating exchange rates between the euro and the U.S. dollar. It
would, however, be affected if its plants were in the U.S.
C) becomes less competitive in the U.S. market when the euro rises in value against the U.S.
dollar.
D) becomes more competitive in European markets when the euro declines in value against the
U.S. dollar.
E) has no interest in whether the euro grows stronger or weaker versus the U.S. dollar unless its
chief competitors are other companies located in countries whose currency is also the euro.
25) A U.S. company that makes all of its goods at a plant in Brazil and then exports the
Brazilian-made goods to country markets across the world
A) is competitively disadvantaged when the U.S. dollar declines in value against the Brazilian
real.
B) is competitively advantaged when the Brazilian real declines in value against the currencies of
the countries to which the Brazilian-made goods are being exported.
C) becomes less competitive in foreign markets when the Brazilian real declines in value against
the currencies of the countries to which the Brazilian-made goods are being exported.
D) is competitively advantaged when the U.S. dollar appreciates in value against the Brazilian
real.
E) is unaffected by changes in the valuation of foreign currencies against the Brazilian real—all
that matters to a U.S. company is the valuation of the U.S. dollar against the Brazilian real.
26) A European-based company that makes all of its goods at a plant in Brazil and then exports
the Brazilian-made goods to country markets in many different parts of the world
A) is competitively disadvantaged when the euro declines in value against the Brazilian real.
B) is competitively disadvantaged when the Brazilian real declines in value against the
currencies of the countries to which the Brazilian-made goods are being exported.
C) becomes less competitive in foreign markets when the Brazilian real gains in value against the
currencies of the countries to which the Brazilian-made goods are being exported.
D) is competitively advantaged when the euro appreciates in value against the Brazilian real.
E) has no interest in whether the euro grows stronger or weaker versus the Brazilian real unless
its chief competitors are other companies located in countries whose currency is also the euro.
27) Why does a U.S. company exporting wooden furniture manufactured in Malaysia to the
European Union benefit from the decline in the value of the ringgit against the euro?
A) Because decline in the value of the ringgit against the euro raises the cost of furniture
manufactured in Malaysia, making it less competitive in European markets.
B) Because decline in the value of the ringgit against the euro reduces the cost of furniture
manufactured in Malaysia, making it more competitive in European markets.
C) Because decline in the value of the ringgit against the euro has no impact on the cost of
furniture manufactured in Malaysia, both in Malaysian or European markets.
D) Because decline in the value of the ringgit against the euro makes European goods more
competitive as compared to Malaysian goods.
E) Because decline in the value of the ringgit against the euro makes Malaysian goods less
competitive in the U.S. market.
28) The advantages of manufacturing goods in a particular country and exporting them to foreign
markets
A) are largely unaffected by fluctuating exchange rates.
B) are greatest when local distributors and dealers in that country can be convinced not to carry
products that are made outside the country’s borders.
C) can be wiped out when that country’s currency grows weaker relative to the currencies of the
countries where the output is being sold.
D) are weakened when that country’s currency grows stronger relative to the currencies of the
countries where the output is being sold.
E) are multiplied by the potential for local government officials to raise tariffs on the imports of
foreign-made goods into their country.
29) The 2015 merger of Walgreen Boots Alliance, one of the world’s largest pharamaceutical
purchasers, is not likely to
A) reduce the significant risks of fluctuating exchange rates to its competitiveness in foreign
markets.
B) avoid the effects of fluctuations in exchange rates on the costs of manufacturing goods in a
particular country.
C) succeed when the currency of the country from which the goods are being exported grows
weaker relative to the currencies of the countries that the goods are being exported to.
D) see the advantages of manufacturing goods in a particular country erode when that country’s
currency grows stronger relative to the currencies of the countries where the output is being sold.
E) come under pressure from lower-cost imports if local currency grows weaker in relation to the
currencies of the countries where the imported goods are being made.
30) The impact of fluctuating exchange rates on companies competing in foreign markets
A) are easy to predict in spite of the variety of factors involved and the uncertainties surrounding
when and by how much these factors will change.
B) never change the pecking order consisting of which countries represent the low-cost
manufacturing locations and which rivals have the upper hand in the marketplace.
C) always disadvantage domestic companies facing competitive pressure from lower-cost
imports when their government’s currency grows weaker.
D) always benefit domestic companies facing competitive pressure from lower-cost imports
when their government’s currency grows weaker.
E) help domestic companies under pressure from lower-cost imports when their government’s
currency grows weaker in relation to the currencies of the countries where the imported goods
are being made.
31) The advantages of manufacturing goods in a particular country and exporting them to foreign
markets
A) are weakened when that country’s currency grows stronger relative to the currencies of the
countries where the output is being sold.
B) are greatest when local consumers prefer products manufactured inside the country’s borders.
C) are largely unaffected by fluctuating exchange rates.
D) can be wiped out when that country’s currency grows weaker relative to the currencies of the
countries where the output is being sold.
E) are largely unaffected by tariffs or quotas.
32) A weaker U.S. dollar is an economically favorable exchange-rate shift for manufacturing
plants based in the United States.
A) This is a true statement.
B) No, the U.S. dollar must be stronger.
C) Yes, because it provides for a weakened foreign demand for U.S.-made goods.
D) Yes, because it makes such plants less cost competitive with foreign plants.
E) Yes, because it provides incentives of foreign companies to locate manufacturing facilities in
the U.S. to make goods for U.S. consumers.
33) Cross-country differences in demographic, cultural, and market conditions are not present for
A) Fisher and Paykel, a company that produces energy-efficient, top-loading washing machines
for sale in France.
B) Starbucks, which has developed a new line of Vietnamese coffee drinks for sale in Southeast
Asian markets.
C) Ireland, a country that provides low-cost loans and tax havens to foreign entrants in order to
stimulate capital investment.
D) Pizza Hut, whose store layouts and menus are uniform in all its locations around the world.
E) Ben & Jerry’s Ice Cream, which produces kimchi-flavored ice cream for sale in South Korea.
34) Sara is researching cross-country differences in demographic, cultural, and market
conditions. She would not likely discover that
A) Nike produces its own line of skate shoes.
B) Keurig has acquired a large coffee farm in Costa Rica.
C) Scotland provides low-cost loans to U.S. craft whisky distillers seeking entry to its markets in
order to stimulate competitive rivalry.
D) Intel’s silicon chips are identical across the world.
E) McDonald’s offers 100 percent beef-free products in its outlets in India.
35) Companies operating in an international marketplace have to respond to all of the following,
except
A) whether to customize their offerings in each different country market to match the tastes and
preferences of local buyers.
B) whether to pursue a strategy of offering a mostly standardized product worldwide.
C) how much to customize their offerings in each different country market to match the tastes
and preferences of local buyers.
D) the tensions between market pressures to localize a company’s product offerings country by
country and the competitive pressures to lower costs through greater product customization.
E) whether to buy a struggling competitor at a bargain price or pay a premium to gain entry to
the local market.
36) The strategic options for expansion into foreign markets do not include
A) relying on home country governments to restrict imports via raising tariffs and local content
requirements.
B) establishing a subsidiary in a foreign market.
C) maintaining a national (one-country) production base and exporting goods to foreign markets.
D) licensing foreign firms to produce and distribute one’s products.
E) employing a franchising strategy using local ownership.
37) Strategic options for expansion into foreign markets do not consist of
A) employing a franchising strategy using local ownership.
B) relying on strategy alliances, joint ventures, or other cooperative agreements with foreign
companies.
C) pursuing a profit sanctuary strategy.
D) establishing a subsidiary via acquisition or greenfield development.
E) maintaining a national (one-country) production base and exporting goods to foreign markets.
38) Among the factors that do not determine whether to employ entry strategy options are
A) cross-border transfer activities and home country advantages.
B) the nature of the firm’s objectives and trade barriers.
C) whether the firm has a full range of resources and capabilities needed to operate abroad along
with trade barriers.
D) country-specific factors such as trade barriers and transaction costs, such as the cost of
contracting with a partner and monitoring compliance with the terms of the contract.
E) transaction costs, such as the cost of contracting with a partner and monitoring compliance
with the terms of the contract.
39) Using domestic plants as a production base for exporting goods to selected foreign country
markets can be a(n)
A) excellent initial strategy to test the international waters and learn if attractive market positions
can be established in foreign markets.
B) competitively successful strategy when a company is focusing on vacant market niches in
each foreign country and does not have to compete head-to-head against strong host country
competitors.
C) powerful strategy since a company can maintain a one-country production base allowing it to
capitalize on company competencies and capabilities.
D) weak strategy when competitors are pursuing multicountry strategies.
E) powerful strategy because a company is not vulnerable to fluctuating exchange rates.
40) Maya has chosen to research the export strategies of several global products. She would
consider a good example of a DOMINANT export strategy to be
A) the popular Harry Potter character Voldemort, which can only be leased or rented for use by
amusement park operators.
B) ZipCar, which allows taxi fleet operators to use its trademarks, services, and products for a
fee.
C) the United States, which is home to the world’s three largest producers and suppliers of
artificial heart valves.
D) American Airlines’ common stock, which is owned by AMR Corp., but is not available for
public purchase.
E) Facebook, which generates 51 percent of its advertising revenue outside the United States.
41) The advantages of using a licensing strategy to participate in foreign markets include
A) being especially well-suited to achieve scale economies.
B) being able to charge lower prices than rivals.
C) being able to achieve first-mover advantages quickly and easily.
D) being able to leverage the company’s technical know-how, appealing brand, or patents
without committing their resources or capabilities to foreign markets.
E) being able to achieve higher product quality and better product performance than with an
export strategy.
42) The advantages of using a franchising strategy to pursue opportunities in foreign markets
include
A) having franchisees bear most of the costs and risks of establishing foreign locations and
requiring the franchisor to expend only the resources to recruit, train, and support and monitor
franchisees.
B) being particularly well-suited to the global expansion efforts of companies with
multidomestic strategies.
C) allowing a company to achieve scale economies.
D) being well suited to companies who employ cross-border transfer strategies.
E) being well suited to the global expansion efforts of manufacturers.
43) The big problem a franchisor faces is
A) allowing franchisees to achieve scale economies.
B) maintaining quality control due to a lack of commitment to consistency and standardization.
C) eliminating the costs and risks associated with establishing a foreign business location.
D) sharing foreign facilities and marketing strategies with local businesses.
E) achieving higher product quality and better product performance than with an export strategy.
44) The advantages of using an acquisition strategy to pursue opportunities in foreign markets
include
A) having a high level of control and speed as an entry strategy to overcome trade barriers.
B) allowing a company to achieve scalable economies.
C) eliminating the costs and risks associated with establishing a foreign business location.
D) achieving variable product quality and competitive product performance.
E) exporting goods at higher costs than rivals in those locations.
45) The big issue an acquisition-minded firm must consider is whether
A) to acquire the firm at a price that cannot recapture the investment.
B) to require the acquired firm’s resources and management capability to sustain the ongoing
struggling operation.
C) to pay a premium price for a successful local company or to buy a struggling firm at a
discount price.
D) to pay a price that builds in all the synergistic advantages to the acquired firm.
E) to pay a very high premium price that sends a signal to the market that the new firm has
arrived.
46) A greenfield venture in a foreign market is one
A) where the company creates a wholly owned subsidiary business by setting up all aspects of
the operation upon entering the market from the ground up.
B) where foreign facilities and marketing strategies are shared with local businesses.
C) where the company learns through training by the foreign entity on how to compete.
D) that supports exports into a foreign market by marketing indirectly through local rivals.
E) that offers lower risk and a faster path to financial returns.
47) Acquisition of an existing firm rather than via internal development may be the least risky
and cost-efficient means of overcoming entry barriers such as
A) putting its own strategy into place.
B) accelerating efforts to build a strong market presence.
C) moving directly to the task of transferring resources and personnel, integrating and redirecting
activities into its own operation.
D) fast-tracking exports into a foreign market by marketing indirectly through local rivals.
E) gaining access to local distribution networks, building supplier networks, and establishing
working relationships with key government officials.
48) When justifying her considerations for her China-based wine importation company’s foreign
market entry, Ming-Chi probably would not choose
A) entering a new foreign country via internal development and building a foreign subsidiary
from scratch when having scale economies to compete against local rivals.
B) entering a new foreign country via internal development and building a foreign subsidiary
from scratch by having the ability to gain increased access to distribution channels and networks.
C) entering a new foreign country via internal development and building a foreign subsidiary
from scratch adding new production capacity, because it will adversely impact the supply-
demand balance in the local market.
D) entering a new foreign country via internal development and building a foreign subsidiary
from scratch, because it is cheaper than making an acquisition.
E) entering a new foreign country via internal development and building a foreign subsidiary
from scratch, because it is cheaper than entering into strategic alliances and cooperative
agreements.
49) Greenfield ventures, like all market entry strategies, can pose serious problems to achieving
foreign market entry success. What is not deemed a barrier to success?
A) Such ventures can require costly capital investments.
B) Such ventures can have a tendency to divert valuable resources from current business.
C) Such ventures really need well-functioning strong markets.
D) Such ventures are the fastest entry route to achieve a sizeable market share.
E) Such ventures require legal protections of foreign investors.