INT 6200 Module 3 Knowledge Check |
Questions and Answers | 2026 Updated |
100% Correct.
1. A U.S. technology firm wants to enter a high-potential but politically volatile
emerging market. It seeks to minimize capital exposure while retaining significant
control over its proprietary technology. Which entry mode best aligns with these
objectives?
A. Wholly owned subsidiary
B. Joint venture with a local partner
C. Franchising
D. Turnkey project
Answer: B. Joint venture with a local partner
Rationale: A joint venture allows shared risk and capital while maintaining substantial
control, unlike franchising or turnkey projects which offer less control. A wholly owned
subsidiary maximizes control but also capital exposure, conflicting with the goal of
minimizing exposure.
2. Which of Hofstede's cultural dimensions is most directly concerned with a society's
tolerance for ambiguity and uncertainty?
A. Power distance
B. Individualism vs. collectivism
C. Uncertainty avoidance
D. Long-term orientation
Answer: C. Uncertainty avoidance
Rationale: Uncertainty avoidance measures the extent to which members of a culture feel
threatened by ambiguous or unknown situations. Power distance concerns hierarchy,
individualism-collectivism concerns group vs. individual ties, and long-term orientation
concerns future-oriented virtues.
Page 1 of 50
,3. A country imposes a tax on imported steel to protect its domestic industry. This is
an example of which type of trade barrier?
A. Tariff
B. Quota
C. Embargo
D. Voluntary export restraint
Answer: A. Tariff
Rationale: A tariff is a tax on imports, directly raising the cost of foreign goods. A quota
limits quantity, an embargo bans trade, and a voluntary export restraint is a self-imposed
limit by the exporting country.
4. Which of the following is a primary advantage of a global standardization strategy?
A. Ability to quickly adapt to local preferences
B. Cost reduction through economies of scale
C. Increased responsiveness to local regulations
D. Enhanced local market knowledge
Answer: B. Cost reduction through economies of scale
Rationale: Global standardization focuses on offering a uniform product worldwide to
achieve economies of scale and cost efficiency. Local adaptation, responsiveness, and local
knowledge are advantages of a localization or transnational strategy.
Page 2 of 50
,5. A firm is considering foreign direct investment (FDI) in a country with a history of
expropriation. Which risk mitigation strategy is most appropriate?
A. Purchasing political risk insurance
B. Increasing reliance on local suppliers
C. Using a licensing agreement instead
D. Hedging with currency forwards
Answer: A. Purchasing political risk insurance
Rationale: Political risk insurance specifically covers losses from expropriation, making it
the most direct mitigation. Licensing reduces control but not expropriation risk, local
suppliers do not protect assets, and currency forwards address exchange rate risk, not
political risk.
6. Which regional trade agreement includes the United States, Mexico, and Canada
and replaced NAFTA?
A. CAFTA-DR
B. USMCA
C. TPP
D. Mercosur
Answer: B. USMCA
Rationale: The United States-Mexico-Canada Agreement (USMCA) replaced NAFTA in
2020. CAFTA-DR involves Central American countries, TPP was a transpacific
partnership (U.S. withdrew), and Mercosur is a South American trade bloc.
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, 7. In the context of global supply chain management, which strategy involves
maintaining excess capacity or inventory to buffer against disruptions?
A. Lean manufacturing
B. Just-in-time (JIT)
C. Resilience
D. Six Sigma
Answer: C. Resilience
Rationale: Resilience strategies build redundancy and flexibility to absorb shocks. Lean
and JIT minimize inventory, which can increase vulnerability, while Six Sigma focuses on
quality improvement.
8. A U.S. company has a receivable of 1 million due in 90 days. To hedge against
depreciation of the euro, it should:
A. Buy euro forward contracts
B. Sell euro forward contracts
C. Buy euro call options
D. Sell euro put options
Answer: B. Sell euro forward contracts
Rationale: Selling euros forward locks in an exchange rate, protecting against a decline in
the euro's value. Buying forwards or calls would benefit from euro appreciation, not
protect against depreciation.
Page 4 of 50
Questions and Answers | 2026 Updated |
100% Correct.
1. A U.S. technology firm wants to enter a high-potential but politically volatile
emerging market. It seeks to minimize capital exposure while retaining significant
control over its proprietary technology. Which entry mode best aligns with these
objectives?
A. Wholly owned subsidiary
B. Joint venture with a local partner
C. Franchising
D. Turnkey project
Answer: B. Joint venture with a local partner
Rationale: A joint venture allows shared risk and capital while maintaining substantial
control, unlike franchising or turnkey projects which offer less control. A wholly owned
subsidiary maximizes control but also capital exposure, conflicting with the goal of
minimizing exposure.
2. Which of Hofstede's cultural dimensions is most directly concerned with a society's
tolerance for ambiguity and uncertainty?
A. Power distance
B. Individualism vs. collectivism
C. Uncertainty avoidance
D. Long-term orientation
Answer: C. Uncertainty avoidance
Rationale: Uncertainty avoidance measures the extent to which members of a culture feel
threatened by ambiguous or unknown situations. Power distance concerns hierarchy,
individualism-collectivism concerns group vs. individual ties, and long-term orientation
concerns future-oriented virtues.
Page 1 of 50
,3. A country imposes a tax on imported steel to protect its domestic industry. This is
an example of which type of trade barrier?
A. Tariff
B. Quota
C. Embargo
D. Voluntary export restraint
Answer: A. Tariff
Rationale: A tariff is a tax on imports, directly raising the cost of foreign goods. A quota
limits quantity, an embargo bans trade, and a voluntary export restraint is a self-imposed
limit by the exporting country.
4. Which of the following is a primary advantage of a global standardization strategy?
A. Ability to quickly adapt to local preferences
B. Cost reduction through economies of scale
C. Increased responsiveness to local regulations
D. Enhanced local market knowledge
Answer: B. Cost reduction through economies of scale
Rationale: Global standardization focuses on offering a uniform product worldwide to
achieve economies of scale and cost efficiency. Local adaptation, responsiveness, and local
knowledge are advantages of a localization or transnational strategy.
Page 2 of 50
,5. A firm is considering foreign direct investment (FDI) in a country with a history of
expropriation. Which risk mitigation strategy is most appropriate?
A. Purchasing political risk insurance
B. Increasing reliance on local suppliers
C. Using a licensing agreement instead
D. Hedging with currency forwards
Answer: A. Purchasing political risk insurance
Rationale: Political risk insurance specifically covers losses from expropriation, making it
the most direct mitigation. Licensing reduces control but not expropriation risk, local
suppliers do not protect assets, and currency forwards address exchange rate risk, not
political risk.
6. Which regional trade agreement includes the United States, Mexico, and Canada
and replaced NAFTA?
A. CAFTA-DR
B. USMCA
C. TPP
D. Mercosur
Answer: B. USMCA
Rationale: The United States-Mexico-Canada Agreement (USMCA) replaced NAFTA in
2020. CAFTA-DR involves Central American countries, TPP was a transpacific
partnership (U.S. withdrew), and Mercosur is a South American trade bloc.
Page 3 of 50
, 7. In the context of global supply chain management, which strategy involves
maintaining excess capacity or inventory to buffer against disruptions?
A. Lean manufacturing
B. Just-in-time (JIT)
C. Resilience
D. Six Sigma
Answer: C. Resilience
Rationale: Resilience strategies build redundancy and flexibility to absorb shocks. Lean
and JIT minimize inventory, which can increase vulnerability, while Six Sigma focuses on
quality improvement.
8. A U.S. company has a receivable of 1 million due in 90 days. To hedge against
depreciation of the euro, it should:
A. Buy euro forward contracts
B. Sell euro forward contracts
C. Buy euro call options
D. Sell euro put options
Answer: B. Sell euro forward contracts
Rationale: Selling euros forward locks in an exchange rate, protecting against a decline in
the euro's value. Buying forwards or calls would benefit from euro appreciation, not
protect against depreciation.
Page 4 of 50
