Ch14 Test Bank Global Opportunities For Small Firms

Chapter 14- Global Opportunities for Small Firms

True/False

1. One of the reasons why companies expand internationally is to lower their operational costs

Response: See section 14.1

Level: Easy

Learning Objective: Discuss the reasons for seeking business opportunities overseas

1. Firms in Finland expand internationally because of the limited growth opportunities in the domestic market

Response: See section 14.1

Level: Easy

Learning Objective: Discuss the reasons for seeking business opportunities overseas

1. Firms in developed countries expand internationally because there are less political risks in under-developed countries

Response: See section 14.1

Level: Medium

Learning Objective: Discuss the reasons for seeking business opportunities overseas

1. Small businesses must pursue all three forms of internationalization at the same time

Response: See section 14.1

Level: Easy

Learning Objective: Discuss the reasons for seeking business opportunities overseas

1. Any firm that operates internationally is a born-global firm

Response: See section 14.1

Level: Easy

Learning Objective: Discuss the reasons for seeking business opportunities overseas

1. HTC, the phone manufacturer, is an example of a born-global firm

Response: See section 14.1

Level: Easy

Learning Objective: Discuss the reasons for seeking business opportunities overseas

1. Born-global firms are found only in the technology sector

Response: See section 14.1

Level: Easy

Learning Objective: Discuss the reasons for seeking business opportunities overseas

1. One-third of American exports in economic terms comes from small firms

Response: See section 14.2

Level: Easy

Learning Objective: Distinguish between the various modes of internationalization

1. Indirect exporting involves doing business in another country without an intermediary

Response: See section 14.2.1

Level: Easy

Learning Objective: Distinguish between the various modes of internationalization

1. Indirect exporting allows the firm more control over the exporting process and direct contact with the customer

Response: See section 14.2.1

Level: Easy

Learning Objective: Distinguish between the various modes of internationalization

1. Exporting is reserved only for the manufactured goods

Response: See section 14.2.1

Level: Easy

Learning Objective: Distinguish between the various modes of internationalization

1. Exports refers to goods bought from another country

Response: See section 14.2.1

Level: Easy

Learning Objective: Distinguish between the various modes of internationalization

1. There is no difference between licensing and franchising

Response: See section 14.2.2

Level: Easy

Learning Objective: Distinguish between the various modes of internationalization

1. Foreign Partnerships are formal inter-firm relationships between companies from multiple countries

Response: See section 14.2.4

Level: Easy

Learning Objective: Distinguish between the various modes of internationalization

1. A Joint venture is a form of strategic alliance

Response: See section 14.2.4

Level: Easy

Learning Objective: Distinguish between the various modes of internationalization

1. Through Greenfield venture, firms expand internationally with the help of another business

Response: See section 14.2.4

Level: Medium

Learning Objective: Distinguish between the various modes of internationalization

1. When companies expand internationally, there are minimum political risks

Response: See section 14.3.4

Level: Easy

Learning Objective: Explain how and why overseas expansion can be challenging for companies

1. Unexpected changes in exchange rates is a demographic risk for small firms operating internationally

Response: See section 14.3.5

Level: Easy

Learning Objective: Explain how and why overseas expansion can be challenging for companies

1. International strategy is a corporate strategy for competing in two or more countries

Response: See section 14.4

Level: Easy

Learning Objective: Identify the main strategic approaches for competing internationally

1. U.S. and U.K. are high on cultural distance

Response: See section 14.4

Level: Easy

Learning Objective: Identify the main strategic approaches for competing internationally

1. Hofstede’s model of national culture has four dimensions- masculinity, uncertainty avoidance, power distance, and individualism

Response: See section 14.4

Level: Easy

Learning Objective: Identify the main strategic approaches for competing internationally

1. When a firm uses the multi-domestic strategy, it is using different strategies in each of the operating markets

Response: See section 14.4

Level: Easy

Learning Objective: Identify the main strategic approaches for competing internationally

1. A transnational strategy seeks to strike a compromise between the extreme localization of multi-domestic strategy and global strategy

Response: See section 14.4

Level: Medium

Learning Objective: Identify the main strategic approaches for competing internationally

1. When the economy is in a downturn and people see themselves struggling to make ends meet, the preference for globalization is stronger than nationalism

Response: See section 14.5

Level: Easy

Learning Objective: Describe the reasons why internationalization attracts considerable opposition

1. Cultural concerns center around the anxiety and worry that ideas and practices from other countries are diluting the culture of one’s country

Response: See section 14.5

Level: Easy

Learning Objective: Describe the reasons why internationalization attracts considerable opposition

Multiple Choice Questions

1. Which of the following is a drawback of expanding internationally for firms ________
2. Access to new customers
3. Access to cheaper labor
4. Access to rare production inputs
5. High inventory carrying costs

Response: See section 14.1

Level: Easy

Learning Objective: Discuss the reasons for seeking business opportunities overseas

1. Why do firms in United States look for labor in foreign countries?
2. Labor is cheaper in some foreign countries
3. Domestic workers, sometimes, lack the right education and training needed to perform the job
4. Domestic workers are not willing to work in some sectors
5. All of the above

Response: See section 14.1

Level: Medium

Learning Objective: Discuss the reasons for seeking business opportunities overseas

1. __________involves overseas expansion of the downstream supply chain in search of new customers to buy the company’s products
2. Factor market internationalization (FMI)
3. Product market internationalization (PMI)
4. Capital market internationalization (CMI)
5. Natural market internationalization (NMI)

Response: See section 14.1

Level: Medium

Learning Objective: Discuss the reasons for seeking business opportunities overseas

1. Which of the following is NOT a form of internationalization?
2. Factor market internationalization (FMI)
3. Product market internationalization (PMI)
4. Capital market internationalization (CMI)
5. Natural market internationalization (NMI)

Response: See section 14.1

Level: Easy

Learning Objective: Discuss the reasons for seeking business opportunities overseas

1. _________refers to raising money for the firm overseas, either through selling equity in the company or by tapping debt markets
2. Factor market internationalization (FMI)
3. Product market internationalization (PMI)
4. Capital market internationalization (CMI)
5. Natural market internationalization (NMI)

Response: See section 14.1

Level: Medium

Learning Objective: Discuss the reasons for seeking business opportunities overseas

1. Which of the following is NOT a characteristic of a born-global firm?
2. Operates across national boundaries from the very beginning
3. Top management has an international mindset
4. Expands internationally after five years of its inconception
5. Limited tangible resources in the domestic market

Response: See section 14.1

Level: Medium

Learning Objective: Discuss the reasons for seeking business opportunities overseas

1. Which of the following is a drawback of exporting?
2. Access to new customers
3. High transportation risk
4. Creates better jobs
5. Assistance from Small Business Administration

Response: See section 14.2

Level: Medium

Learning Objective: Distinguish between the various modes of internationalization

1. Which of the following is NOT a mode of internationalization?
2. Exporting
3. Franchising
4. Licensing
5. Localization

Response: See section 14.2

Level: Easy

Learning Objective: Distinguish between the various modes of internationalization

1. Veetsa, a mattress company, sells its eco-friendly mattresses and other sleeping products to United Kingdom through Amazon. Veetsa is involved in :
2. Importing
3. Direct exporting
4. Indirect exporting
5. Franchising

Response: See section 14.2.1

Level: Easy

Learning Objective: Distinguish between the various modes of internationalization

1. Veetsa, a mattress company, sells its eco-friendly mattresses and other sleeping products directly to United Kingdom. Veetsa is involved in :
2. Importing
3. Direct exporting
4. Indirect exporting
5. Franchising

Response: See section 14.2.1

Level: Easy

Learning Objective: Distinguish between the various modes of internationalization

1. Before starting to export, small businesses should do all of the following EXCEPT:
2. Always rely on guesstimation
3. Learn about the process of exporting
4. Aware of laws and regulations surrounding exporting
5. Aware of business conditions of the destination country

Response: See section 14.2.1

Level: Easy

Learning Objective: Distinguish between the various modes of internationalization

1. What is a disadvantage of internationalizing through licensing?
2. A low-cost avenue for overseas expansion
3. The licensee may continue to use the know-how even after the contract expires without paying for it
4. The licensor receives a royalty
5. Promotion of products to new customers

Response: See section 14.2.2

Level: Easy

Learning Objective: Distinguish between the various modes of internationalization

1. International franchising involves:
2. A company offering a standard package of systems and services to a company, in a different country, that brings capital and operational management to the business
3. A company in a technology sector that merges with another company from a different industry
4. Partnerships that involve equity sharing
5. A company taking over another company forcefully

Response: See section 14.2.3

Level: Medium

Learning Objective: Distinguish between the various modes of internationalization

1. Which of the following is NOT a strategic alliance?
2. Joint venture
3. Merger
4. Equity strategic alliance
5. Non-equity strategic alliance

Response: See section 14.2.4

Level: Medium

Learning Objective: Distinguish between the various modes of internationalization

1. _________is starting from scratch a wholly owned subsidiary by setting up facilities in a foreign country
2. Joint venture
3. Merger
4. Equity strategic alliance
5. Greenfield venture

Response: See section 14.2.4

Level: Medium

Learning Objective: Distinguish between the various modes of internationalization

1. When establishing overseas partnerships, small firms prefer to work with larger foreign firms to gain advantage of :
2. Brand reputation
3. Existing infrastructure
4. Existing sales team and service personnel
5. All of the above

Response: See section 14.2.4

Level: Medium

Learning Objective: Distinguish between the various modes of internationalization

1. _________and_______ are go-it alone approaches to expanding in foreign markets
2. Joint venture, mergers
3. Cross-border acquisition, joint venture
4. Greenfield venturing, cross-border acquisition
5. Cross-border acquisition, strategic alliance

Response: See section 14.2.4

Level: Medium

Learning Objective: Distinguish between the various modes of internationalization

1. Which of the following is a challenge for small firms to expand internationally?
2. Foreign government policies
3. Lack of political influence
4. Language barrier
5. All of the above

Response: See section 14.3.2

Level: Medium

Learning Objective: Explain how and why overseas expansion can be challenging for companies

1. ________refers to restrictions on export of U.S. products and technology for use in industries the government considers sensitive to military or national-security concerns
2. Foreign direct product rule
3. Foreign direct investment
4. Foreign portfolio investment
5. Foreign institutional rule

Response: See section 14.3.2

Level: Easy

Learning Objective: Explain how and why overseas expansion can be challenging for companies

1. Which of the following is an economic risk that a company may face internationally?
2. A country’s citizenry revolts against dictatorial leaders
3. A war between two countries
4. Elections resulted in the change of a political party
5. Inflation rates skyrockets in an operating country

Response: See section 14.3.4

Level: Medium

Learning Objective: Explain how and why overseas expansion can be challenging for companies

1. Which of the following refers to governmental actions in an operating country that may adversely impact the long-term profit or value of a firm?
2. Economic risks
3. Political risks
4. Uncertainty avoidance
5. Adverse impact

Response: See section 14.3.4

Level: Easy

Learning Objective: Explain how and why overseas expansion can be challenging for companies

1. Which of the following risk companies face in the international environment?
2. Exchange rate fluctuations
3. Political risk
4. Lack of Cultural knowledge
5. All of the above

Response: See section 14.3.5

Level: Easy

Learning Objective: Explain how and why overseas expansion can be challenging for companies

1. __________means that a company’s decision to enter a particular market is driven by peer or rival firms who are already in that market
2. Isomorphism
3. Equilibrium
4. Fragmentation
5. Reduction

Response: See section 14.4

Level: Easy

Learning Objective: Identify the main strategic approaches for competing internationally

1. A________ is one in which a firm varies its competitive approach and product offerings from country to country in an effort to meet varied buyer needs and address differing local conditions
2. Transnational strategy
3. Multi-domestic strategy
4. Global Strategy
5. Standardization

Response: See section 14.4

Level: Easy

Learning Objective: Identify the main strategic approaches for competing internationally

1. When the economy is in a downturn and people see themselves struggling to make ends meet, the preference for nationalism _______and interest in globalization _______
2. Decreases, becomes stronger
3. Decreases, increases
4. Becomes stronger, decreases
5. Decreases, decreases

Response: See section 14.5

Level: Easy

Learning Objective: Describe the reasons why internationalization attracts considerable opposition