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Indicate whether the statement is true or false.
1. A small firm can generate the greatest financial returns using international licensing strategies when these efforts
involve the company’s products.
a. True
b. False
2. By informing consumers about the lifestyles of others, globalization is leading toward more diverse consumer
preferences.
a. True
b. False
3. Trade missions typically are sponsored by foreign governments to promote strategic alliances in international markets.
a. True
b. False
4. Counterfeit activity is likely to decrease with the use of foreign licensing, international franchising, and international
strategic alliances.
a. True
b. False
5. Small businesses that are either already or interested in exporting or importing can receive information from the SBA
through conferences, seminars, publications and counseling.
a. True
b. False
6. Trade leads are accessed most often through contacts.
a. True
b. False
7. Experience curve efficiencies refers to the savings that arise from repeated production of the same product.
a. True
b. False
8. Political moves by an international country have implications on the domestic company’s economic risk.
a. True
b. False
9. Increasingly, small firms are going global in search of raw materials.
a. True
b. False
10. The unique features of a local environment can yield benefits to small firms locating there even when the costs are
greater.
a. True
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b. False
11. Increasing sales in international markets is one of many ways to recoup a firm’s investments in research and
development.
a. True
b. False
12. Products that sell at home usually require little or no adaptation to be well received in foreign markets.
a. True
b. False
13. Gains from learning effects continue to grow after startup; economies of scale efficiencies decline as the business
grows.
a. True
b. False
14. Perhaps the easiest way to break into international markets is to use a trade intermediary.
a. True
b. False
15. Twenty-five percent of the world’s population lives in the United States.
a. True
b. False
16. An economic risk for a global company is the threat of new labeling regulations.
a. True
b. False
17. International dissimilarities in language and culture, business practices, and government regulations are increasing
over time.
a. True
b. False
18. Learning effects occur when an employee gains insight from experience, which leads to improved work performance.
a. True
b. False
19. 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.
a. True
b. False
20. Globalization explains the increasing similarity of markets around the world.
a. True
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b. False
21. 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.
22. International business will never be as easy as doing business on the domestic front.
a. True
b. False
23. Together, China and India account for more than 50 percent of the world’s 6 billion inhabitants.
a. True
b. False
24. Once a small business owner decides to expand internationally, s/he should study the competitive forces in the foreign
market.
a. True
b. False
25. The primary motivation for expansion into European markets is to be closer to sources of raw materials.
a. True
b. False
26. A production capacity question that needs to be answered before a company goes global with operations is “Will
international sales hurt domestic sales?”
a. True
b. False
27. Exporting involves the sale of goods made in the home country to customers in another country.
a. True
b. False
28. The term BRICs refers to Bangladesh, Romania, Ireland, and Czechoslovakia, all emerging markets.
a. True
b. False
29. International outsourcing and offshoring are increasingly being used by companies going global to cut costs.
a. True
b. False
30. 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.
a. True
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b. False
31. China, India and Russia are classified as moderately challenging according to the World Bank’s Ease of Doing
Business Index.
a. True
b. False
32. A cross-border acquisition is less demanding than a greenfield venture.
a. True
b. False
33. While a small firm can have global operations, size will limit growth.
a. True
b. False
34. The Council on Foreign Relations can assist a company in trade laws and payment issues related to global markets.
a. True
b. False
35. Increasingly, small firms find that they must locate their operations abroad if they are to keep their contracts as
suppliers to large companies.
a. True
b. False
36. The motivation to take domestic products to foreign markets is more relevant today than in the past.
a. True
b. False
37. Today, companies tend to focus on developed countries as they search out international markets.
a. True
b. False
38. The U.S. Department of Industry provides information for entrepreneurs considering global operations.
a. True
b. False
39. Efforts to exploit the competitive advantage of specialized products across international markets is more important to
small businesses than to their large competitors.
a. True
b. False
40. Least challenging countries according to the World Bank’s Ease of Doing Business Index include Canada, Mexico,
and Chile.
a. True
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b. False
41. An example of a trade intermediary most suited for small businesses is an export remarketer.
a. True
b. False
42. Born-global firms are small companies that begin with cross-border businesses around the globe.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
43. 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.
44. 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.
45. 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.
46. 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..
47. 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?
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48. The risk that a new government regulation could damage business activity in a country is considered
a. political risk.
b. economic risk.
c. exchange rate risk.
d. global risk.
49. 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.
50. 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.
51. 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.
52. International franchising is a variation on the theme of
a. exporting.
b. importing.
c. foreign licensing.
d. international strategic alliances.
53. 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?
54. 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.
55. The Federation of International Trade Associations website is a source of trade
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a. intermediaries.
b. leads.
c. missions.
d. Two of the above are found at the site.
56. 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?
57. 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.
58. 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.
59. 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.
60. 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.
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.
62. International markets are increasingly demanding
a. the same products that are distributed to other national markets.
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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.
63. 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.
64. 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.
65. When the exchange rate for a currency rises relative to that of another country, the rising currency
a. has decreased in value relative to the other currency.
b. has increased in value relative to the other currency.
c. has been devalued by its government.
d. reflects increased political risk in its home country.
66. 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.
67. According to the 2013 BRIC Markets, which country has the highest GNI per capita?
a. Brazil
b. China
c. India
d. Russia
68. An intermediary that works for foreign firms that are interested in buying U.S. products and is paid a commission for
its services is called a(n) _____.
a. export agent.
b. export trading company.
c. piggyback marketer.
d. confirming house.
69. Melanie’s Marbles is a young company that buys unusual marbles from many places around the world. To provide
assurance for her vendors that they will be paid, Melanies has established a ______________ at her bank.
a. international invoice.
b. bill of lading.
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c. letter of confirmation.
d. letter of credit.
70. 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.
71. 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.
72. 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.
73. 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.
74. Which country would be the least challenging in its ease of doing business according to the World Bank’s index?
a. Argentina
b. Egypt
c. Chile
d. Madagascar
75. 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.
76. 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.
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77. 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?
78. 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
79. 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.
80. A small company can deal with changing currency rates by
a. stating contracts in US dollars as opposed to the international currency.
b. locating all plants in countries with the most advantageous exchange position.
c. limiting sales in each country so as to reduce exposure to any one currency.
d. following the advice of the international sales manager.
81. 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.
82. The unauthorized use of intellectual property is called
a. royalties.
b. international franchising.
c. foreign licensing.
d. counterfeit activity.
83. 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.
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84. 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.
85. From a company-owned plant in Pakistan, Howard manufactures specialty apparel items for his small business,
Garments of Eden. Because of overseas operations of the U.S. military in the region, Howard fears that his plant may be
sabotaged or that the local government may attempt to take over the facility. Specifically, his fears are about
a. economic risk.
b. exchange rate risk.
c. political risk.
d. Two of the above are described risks.
86. Once an exporter has shipped a product internationally and the title has been transferred, the exporter receives what is
called a
a. international invoice.
b. bill of lading.
c. letter of confirmation.
d. letter of credit.
87. 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.
88. Coca-Cola leased land and built a bottling operation in Turkey This new facility is best described as
a. a greenfield venture.
b. a cross-border acquisition.
c. an international transplant.
d. a duplication strategy.
89. 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.
90. 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?