INTERNATIONAL BUSINESS - FINAL
EXAMINATION Chapters 15, 8, 13, 14, 19, 17, & 18
Question 1
What are the three basic decisions that all firms must consider when pursuing
foreign expansion?
A) Which markets to enter, how to finance entry, and who to partner with
B) Which markets to enter, when to enter those markets, and on what scale to enter
C) Which products to sell, how to price them, and where to manufacture
D) Which competitors to target, how to differentiate, and when to exit
Correct Answer: B
Rationale: According to international business strategy, firms contemplating
foreign expansion must address three fundamental decisions: (1) selecting which
foreign markets to enter, (2) determining the timing of entry into those markets,
and (3) deciding on the appropriate scale of entry. These decisions form the
foundation of international market entry strategy and directly influence the firm's
potential for success abroad.
Question 2
When evaluating which foreign market to enter, what factors should a firm
consider regarding market attractiveness?
A) Only the size of the market and its growth potential
B) The political stability and legal system exclusively
C) The balance of benefits, costs, and risks associated with doing business in that
country
D) The cultural similarity to the home country
Correct Answer: C
Rationale: The attractiveness of a country as a potential market depends on
balancing the benefits, costs, and risks associated with doing business in that
country. While market size, wealth, growth capacity, and political stability are
important considerations, firms must comprehensively evaluate all factors to make
an informed decision about market attractiveness.
,Question 3
Which of the following is NOT a factor typically considered when evaluating a
country's market attractiveness?
A) Size of the market
B) Present wealth of consumers
C) Capacity for growth
D) Climate conditions
Correct Answer: D
Rationale: While climatic conditions might affect certain industries, the textbook
identifies size of the market, present wealth, consumers in the market, capacity for
growth, and political stability as the key factors in evaluating market attractiveness.
Climate conditions are not listed as a primary consideration in this framework.
Question 4
What distinguishes early entry from late entry in international business?
A) Early entry occurs when a firm enters before competitors; late entry occurs after
competitors have entered
B) Early entry means entering during the first quarter of the fiscal year
C) Early entry refers to entering developed markets; late entry refers to developing
markets
D) Early entry means establishing a subsidiary; late entry means using exporting
Correct Answer: A
Rationale: Timing of entry is defined by the firm's position relative to other
foreign firms. Early entry occurs when a firm enters a foreign market before other
foreign firms establish themselves, while late entry occurs when a firm enters after
other international businesses have already established operations in that market.
Question 5
Which of the following is considered a first-mover advantage?
,A) The ability to observe competitors' mistakes
B) Lower initial investment requirements
C) The ability to preempt rivals and capture demand by establishing a strong brand
name
D) Reduced regulatory scrutiny
Correct Answer: C
Rationale: First-mover advantages include the ability to preempt rivals and
capture demand by establishing a strong brand name and customer satisfaction.
Additional advantages include building sales volume and riding down the
experience curve ahead of rivals, as well as creating switching costs that make it
difficult for customers to switch to later entrants.
Question 6
How does entering a market on a large scale differ from entering on a small scale?
A) Large-scale entry requires fewer resources
B) Large-scale entry requires significant resources and implies rapid entry
C) Large-scale entry always leads to higher profits
D) Large-scale entry is less risky than small-scale entry
Correct Answer: B
Rationale: Entering a market on a large scale requires significant resources and
implies rapid entry into the market. This represents a strategic commitment that
can signal the firm's long-term intentions but also involves greater risk exposure
compared to smaller-scale entry strategies.
Question 7
What is meant by "strategic commitments" in the context of international
expansion?
A) Financial promises made to investors
B) Significant resource allocations that are difficult to reverse and signal long-term
intentions
, C) Legal contracts with host country governments
D) Marketing campaigns designed to build brand awareness
Correct Answer: B
Rationale: Strategic commitments refer to significant resource allocations that are
difficult to reverse and signal the firm's long-term intentions in a market. Large-
scale entry represents such a commitment, as it commits substantial resources and
demonstrates the firm's serious interest in that market.
SECTION B: ENTRY MODES - EXPORTING
Question 8
How is exporting defined in the context of international business?
A) The purchase of products from foreign suppliers
B) The sale of products produced in one country to residents of another country
C) The establishment of manufacturing facilities abroad
D) The licensing of production rights to foreign firms
Correct Answer: B
Rationale: Exporting is defined as the sale of products produced in one country to
residents of another country. It represents a low-level commitment and
involvement in international operations compared to other entry modes.
Question 9
Which of the following best describes the level of commitment associated with
exporting?
A) High-level commitment with significant resource investment
B) Low-level commitment and involvement
C) Medium-level commitment with moderate resource allocation
D) Variable commitment depending on the product
Correct Answer: B
Rationale: Exporting is characterized as a low-level commitment and involvement
strategy. It allows firms to enter foreign markets with minimal investment and risk
EXAMINATION Chapters 15, 8, 13, 14, 19, 17, & 18
Question 1
What are the three basic decisions that all firms must consider when pursuing
foreign expansion?
A) Which markets to enter, how to finance entry, and who to partner with
B) Which markets to enter, when to enter those markets, and on what scale to enter
C) Which products to sell, how to price them, and where to manufacture
D) Which competitors to target, how to differentiate, and when to exit
Correct Answer: B
Rationale: According to international business strategy, firms contemplating
foreign expansion must address three fundamental decisions: (1) selecting which
foreign markets to enter, (2) determining the timing of entry into those markets,
and (3) deciding on the appropriate scale of entry. These decisions form the
foundation of international market entry strategy and directly influence the firm's
potential for success abroad.
Question 2
When evaluating which foreign market to enter, what factors should a firm
consider regarding market attractiveness?
A) Only the size of the market and its growth potential
B) The political stability and legal system exclusively
C) The balance of benefits, costs, and risks associated with doing business in that
country
D) The cultural similarity to the home country
Correct Answer: C
Rationale: The attractiveness of a country as a potential market depends on
balancing the benefits, costs, and risks associated with doing business in that
country. While market size, wealth, growth capacity, and political stability are
important considerations, firms must comprehensively evaluate all factors to make
an informed decision about market attractiveness.
,Question 3
Which of the following is NOT a factor typically considered when evaluating a
country's market attractiveness?
A) Size of the market
B) Present wealth of consumers
C) Capacity for growth
D) Climate conditions
Correct Answer: D
Rationale: While climatic conditions might affect certain industries, the textbook
identifies size of the market, present wealth, consumers in the market, capacity for
growth, and political stability as the key factors in evaluating market attractiveness.
Climate conditions are not listed as a primary consideration in this framework.
Question 4
What distinguishes early entry from late entry in international business?
A) Early entry occurs when a firm enters before competitors; late entry occurs after
competitors have entered
B) Early entry means entering during the first quarter of the fiscal year
C) Early entry refers to entering developed markets; late entry refers to developing
markets
D) Early entry means establishing a subsidiary; late entry means using exporting
Correct Answer: A
Rationale: Timing of entry is defined by the firm's position relative to other
foreign firms. Early entry occurs when a firm enters a foreign market before other
foreign firms establish themselves, while late entry occurs when a firm enters after
other international businesses have already established operations in that market.
Question 5
Which of the following is considered a first-mover advantage?
,A) The ability to observe competitors' mistakes
B) Lower initial investment requirements
C) The ability to preempt rivals and capture demand by establishing a strong brand
name
D) Reduced regulatory scrutiny
Correct Answer: C
Rationale: First-mover advantages include the ability to preempt rivals and
capture demand by establishing a strong brand name and customer satisfaction.
Additional advantages include building sales volume and riding down the
experience curve ahead of rivals, as well as creating switching costs that make it
difficult for customers to switch to later entrants.
Question 6
How does entering a market on a large scale differ from entering on a small scale?
A) Large-scale entry requires fewer resources
B) Large-scale entry requires significant resources and implies rapid entry
C) Large-scale entry always leads to higher profits
D) Large-scale entry is less risky than small-scale entry
Correct Answer: B
Rationale: Entering a market on a large scale requires significant resources and
implies rapid entry into the market. This represents a strategic commitment that
can signal the firm's long-term intentions but also involves greater risk exposure
compared to smaller-scale entry strategies.
Question 7
What is meant by "strategic commitments" in the context of international
expansion?
A) Financial promises made to investors
B) Significant resource allocations that are difficult to reverse and signal long-term
intentions
, C) Legal contracts with host country governments
D) Marketing campaigns designed to build brand awareness
Correct Answer: B
Rationale: Strategic commitments refer to significant resource allocations that are
difficult to reverse and signal the firm's long-term intentions in a market. Large-
scale entry represents such a commitment, as it commits substantial resources and
demonstrates the firm's serious interest in that market.
SECTION B: ENTRY MODES - EXPORTING
Question 8
How is exporting defined in the context of international business?
A) The purchase of products from foreign suppliers
B) The sale of products produced in one country to residents of another country
C) The establishment of manufacturing facilities abroad
D) The licensing of production rights to foreign firms
Correct Answer: B
Rationale: Exporting is defined as the sale of products produced in one country to
residents of another country. It represents a low-level commitment and
involvement in international operations compared to other entry modes.
Question 9
Which of the following best describes the level of commitment associated with
exporting?
A) High-level commitment with significant resource investment
B) Low-level commitment and involvement
C) Medium-level commitment with moderate resource allocation
D) Variable commitment depending on the product
Correct Answer: B
Rationale: Exporting is characterized as a low-level commitment and involvement
strategy. It allows firms to enter foreign markets with minimal investment and risk
