INTERNATIONAL BUSINESS THE
CHALLENGES OF GLOBALIZATION
COMPREHENSIVE EXAMINATION TEST
COMPLETE QUESTIONS AND CORRECT
ANSWERS
●● three categories of entry modes:
Answer: 1. Exporting, importing, and countertrade
2. Contractual entry
3. Investment entry
●● three main reasons why companies export
Answer: -expand total sales when domestic markets become saturated.
-diversify sales
-gain international business experience (low cost, low risk)
●● Developing an Export Strategy: A Four-Step Model
Answer: STEp 1: IDEnTIFy A pOTEnTIAL MArkET
STEp 2: MATCh nEEDS TO ABILITIES
STEp 3: InITIATE MEETIngS
STEp 4: COMMIT rESOurCES
,●● two basic forms of export involvement
Answer: direct exporting and indirect exporting.
●● direct exporting
Answer: practice by which a company sells its products directly to
buyers in a target market
(sales reps & distributors)
●● indirect exporting
Answer: Practice by which a company sells its products to
intermediaries who then resell to buyers in a target market.
●● Types of Intermediaries
Answer: agents, export management companies, and export trading
companies.
●● Export Management Company (EMC)
Answer: Company that exports products on behalf of indirect exporters.
●● biggest advantage of an EMC
Answer: usually a deep understanding of the cultural, political, legal,
and economic conditions of the target market.
, Its staff works comfortably and effectively in the cultures of both the
exporting and the target nation.
●● only disadvantage of hiring an EMC
Answer: breadth and depth of its service can potentially hinder the
development of the exporter's own international expertise.
●● Export Trading Company (ETC)
Answer: Company that provides services to indirect exporters in
addition to activities related directly to clients' exporting activities.
●● Roles of ETC
Answer: providing import, export, and countertrade services;
developing and expanding distribution channels;
providing storage facilities;
financing trading and investment projects;
and even manufacturing products.
CHALLENGES OF GLOBALIZATION
COMPREHENSIVE EXAMINATION TEST
COMPLETE QUESTIONS AND CORRECT
ANSWERS
●● three categories of entry modes:
Answer: 1. Exporting, importing, and countertrade
2. Contractual entry
3. Investment entry
●● three main reasons why companies export
Answer: -expand total sales when domestic markets become saturated.
-diversify sales
-gain international business experience (low cost, low risk)
●● Developing an Export Strategy: A Four-Step Model
Answer: STEp 1: IDEnTIFy A pOTEnTIAL MArkET
STEp 2: MATCh nEEDS TO ABILITIES
STEp 3: InITIATE MEETIngS
STEp 4: COMMIT rESOurCES
,●● two basic forms of export involvement
Answer: direct exporting and indirect exporting.
●● direct exporting
Answer: practice by which a company sells its products directly to
buyers in a target market
(sales reps & distributors)
●● indirect exporting
Answer: Practice by which a company sells its products to
intermediaries who then resell to buyers in a target market.
●● Types of Intermediaries
Answer: agents, export management companies, and export trading
companies.
●● Export Management Company (EMC)
Answer: Company that exports products on behalf of indirect exporters.
●● biggest advantage of an EMC
Answer: usually a deep understanding of the cultural, political, legal,
and economic conditions of the target market.
, Its staff works comfortably and effectively in the cultures of both the
exporting and the target nation.
●● only disadvantage of hiring an EMC
Answer: breadth and depth of its service can potentially hinder the
development of the exporter's own international expertise.
●● Export Trading Company (ETC)
Answer: Company that provides services to indirect exporters in
addition to activities related directly to clients' exporting activities.
●● Roles of ETC
Answer: providing import, export, and countertrade services;
developing and expanding distribution channels;
providing storage facilities;
financing trading and investment projects;
and even manufacturing products.
