b.
extend a product life.
c.
find raw materials.
d.
reduce transportation costs.
28. 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.
29. 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.
30. 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..
31. Importing can be described as the
a.
authorized use of intellectual property.
b.
“flip side” of exporting.
c.
purchase of the right to manufacture and sell a firm’s product in overseas markets.
d.
sale of products produced in the home country to customers in another country.
32. 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.
33. 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.
34. 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.
35. The unauthorized use of intellectual property is called
a.
royalties.
b.
international franchising.
c.
foreign licensing.
d.
counterfeit activity.
36. International franchising is a variation on the theme of
a.
exporting.
b.
importing.
c.
foreign licensing.
d.
international strategic alliances.
37. 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.
38. 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.
39. 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.
40. 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.
41. Economic risk refers to the
a.
risk that a startup will not generate the performance necessary to stay in business long
term.
b.
potential for loss of capital in a business deal.
c.
probability that a government will mismanage its economy and affect the business
environment in ways that hinder the performance of firms operating there.
d.
chance that an entrepreneur will not be financially successful.
42. 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.
43. 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.
44. 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
45. The Federation of International Trade Associations website is a source of trade
a.
intermediaries.
b.
leads.
c.
missions.
d.
Two of the above are found at the site.
46. Manufacturers or service firms that distribute a second firm’s product or service is called a(n) _____.
a.
export agent.
b.
export trading company.
c.
piggyback marketer.
d.
remarketer.
47. 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, Melanie’s has established a
______________ at her bank.
a.
international invoice.
b.
bill of lading.
c.
letter of confirmation.
d.
letter of credit.
48. 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.
49. Which government organization is an excellent source information about analyzing markets, financing
and planning strategy?
a.
TradePort
b.
Small Business Administration
c.
Export Assistance Center
d.
Department of Commerce
ESSAY
1. What are question topics that should be considered before going global specifically related to
management objectives, management experience and resources, production capacity and financial
capacity?
2. Dustin had contracts for web designs in Japan and France and therefore has decided to start a business.
The company will be reaching an international market strictly through online operations. Based on
this type of global business, what organizations could offer advice to make this business feasible?
3. After identifying each of the four driving forces that encourage entrepreneurs to go global, discuss the
change in traditional to emerging perspectives.
4. Describe six strategies that a small firm can use to go global.
5. What are the differences and similarities of exporting and importing?
6. Polly has formed an agreement with a French company to produce and sell her scarves in their ten
stores across Europe. The scarves are Polly’s original designs and are of different colors and fabrics.
They will then pay Polly a fee for each scarf they produce. What are the advantages and disadvantages
of the globalization strategy Polly will be utilizing?
7. Nicole is the CEO of a small business which is looking to expand globally. She wants to move her
business to a European country and feels that is where the product will be most profitable. What are
three challenges that Nicole needs to analyze for the area in which she is considering expanding her
company?
8. What options do small businesses have when dealing with political risks globally?
9. Describe the role trade intermediaries play in assisting small businesses that choose to go global.
Identify the types of trade intermediaries that are most useful to small businesses.
10. A group of four Kentucky business owners all in business in the international equine industry fly to
Ireland to meet potential buyers. Describe what this group would be hoping to accomplish from the
trip.
MATCHING
Match the term with its definition. Some terms may not be used.
a.
Economic risk
f.
International strategic alliance
b.
Experience curve efficiencies
g.
Learning effects
c.
Foreign licensing
h.
Licensee
d.
International franchising
i.
Licensor
e.
International outsourcing
1. A strategy that involves accessing foreign labor through contracts with independent providers
2. Per-unit savings gained from repeated production of the same product
3. Insights gained from experience that lead to improved work performance
4. The company selling licensing rights
5. Selling a standard package of products, systems, and management services to a company in another
country
6. The company buying licensing rights
7. Allowing a company in another country to purchase the rights to manufacture and sell a company’s
products in international markets
8. A combination of efforts and/or assets of companies in different countries for the sake of pooling
resources and sharing risks
Match the term with its definition. Some terms may not be used.
a.
Born-global firms
f.
Importing
b.
Cross-border acquisition
g.
Offshoring
c.
Exporting
h.
Trade intermediary
d.
Globalization
i.
Trade mission
e.
Greenfield venture
9. A wholly owned subsidiary formed from scratch in another country
10. An agency that distributes a company’s products on a contract basis to customers in another country
11. The purchase by a business in one country of a company located in another country
12. A trip organized to help small business owners meet with potential foreign buyers and establish
strategic alliances in an international market
13. A strategy that involved relocating operations abroad
14. Selling products produced in the home country to customers in another country
15. Selling products produced in another country to buyers in the home country
16. The expansion of international business
Match the term with its definition. Some terms may not be used.
a.
Bill of lading
f.
Exchange rate
b.
Born-global firms
g.
Letter of credit
c.
Counterfeit activity
h.
Offshoring
d.
Economic risk
i.
Political risk
e.
Economies of scale
j.
Royalties
17. The unauthorized use of a company’s intellectual property or manufacture of its products
18. Efficiencies that result from expansion of production
19. A document indicating that a product has been shipped and the title to that product has been
transferred
20. An agreement issued by a bank to honor a draft or other demand for payment when specified
conditions are met
21. Small companies launched with cross-border business activities in mind
22. Fees paid by the licensee to the licensor for each unit produced under a licensing contract
23. The probability that a country’s government will mismanage its economy in ways that hinder the
performance of firms operating there
24. The potential for political forces in a country to negatively affect the performance of businesses
operating within its borders
25. The value of one country’s currency relative to that of another country
