MNMT 3850 CHAPTER 15 HOMEWORK QUESTIONS AND ANSWERS

1 MNMT 3850 CHAPTER 15 HOMEWORK QUESTIONS AND ANSWERS Essentials of Entrepreneurship & Small Business Mgmt., 7e (Scarborough) Chapter 15 Global Opportunities 1) Becoming a global entrepreneur requires: A) constant innovation. B) maintaining a high level of quality and constantly improving it. C) being sensitive to foreign customers' unique requirements and adopting a more respectful attitude toward foreign habits and customs. D) All of the above Answer: D Diff: 1 Page Ref: 570 AACSB: Reflective Thinking Learning Obj.: 1 2) For an entrepreneur, expanding into international markets: A) guarantees its success in the marketplace. B) makes it a member of GATT automatically. C) helps it grow faster and survive competition better. D) leads to business failure for companies under $100 million in annual revenue. Answer: C Diff: 2 Page Ref: 570 AACSB: Analytic Skills Learning Obj.: 1 3) The first obstacle an entrepreneur must overcome on the way to creating a truly global business is: A) finding a joint venture partner. B) learning to think globally. C) locating motivated, multilingual managers for overseas assignments. D) finding overseas distributors for the company's products. Answer: B Diff: 1 Page Ref: 570 AACSB: Reflective Thinking Learning Obj.: 1 4) Before going global, entrepreneurs should ask themselves questions regarding: A) profit potential and commitment of resources for a global effort. B) a viable exit strategy and the cost of not going global. C) the reasons, rationale, and understanding cultural differences. D) All the above 2 Answer: D Diff: 1 Page Ref: 572 AACSB: Analytic Skills Learning Obj.: 1 3 5) All of these are steps small companies follow when they begin conducting global business on the Web except: A) connecting to e-mail. B) building a globally accessible Web site. C) setting up links to related company Web sites. D) using the Web to conduct international market research. Answer: C Diff: 2 Page Ref: 574 AACSB: Use of IT Learning Obj.: 2 6) Which of the following statements is/are true regarding export management companies? A) Most are merchant intermediaries that work on a buy-and-sell arrangement with domestic small companies. B) They provide small businesses with a low-cost, efficient, independent, international marketing department. C) Many specialize in particular products or product lines and offer services ranging from market research and advice or patent protection, to arranging financing and handling shipping. D) All of the above Answer: D Diff: 1 Page Ref: 575-576 AACSB: Reflective Thinking Learning Obj.: 2 7) An export trading company: A) is a business that buys and sells products in many countries, either in its own name or as an agent for its buyer-seller clients. B) typically offers a wide range of services such as exporting, shipping, storing, distributing, and others to their clients. C) is formed by an agreement by which a licenser gives a foreign licensee the right to use a patent, trademark, copyright, technology, and products in return for a percentage of the licensee's sales or profits. D) Both A and C above Answer: D Diff: 1 Page Ref: 575-576 AACSB: Reflective Thinking Learning Obj.: 2 8) Which of the following trade intermediaries lowers the risk of exporting for a small business? A) Export management companies B) Export trading companies C) Resident buying offices D) All of the above Answer: D Diff: 1 Page Ref: 575-576 AACSB: Reflective Thinking Learning Obj.: 2 4 9) ________ act as international sales representatives in a limited number of markets for various noncompeting domestic companies, typically operating on a commission basis. A) Manufacturers' export agents B) Export merchants C) Resident buying offices D) Foreign distributors Answer: A Diff: 1 Page Ref: 576 AACSB: Analytic Skills Learning Obj.: 2 10) A resident buying office is: A) a business that buys and sells products in many countries, either in its own name or as an agent for its buyer-seller clients. B) a government-owned or business-owned facility set up in a foreign country to buy products that are made there. C) a firm in an overseas distribution network selling noncompetitive products made by other firms. D) formed by an agreement where a licenser gives a foreign licensee the right to use a patent, trademark, copyright, technology, and products in return for a percentage of the licensee's sales or profits. Answer: B Diff: 2 Page Ref: 577 AACSB: Analytic Skills Learning Obj.: 2 11) ________ are domestic wholesalers who do business in foreign markets, buying goods from domestic companies and selling them in foreign markets, often handling competing lines. A) Resident buying offices B) Export trading companies C) Foreign distributors D) Export merchants Answer: D Diff: 1 Page Ref: 577 AACSB: Analytic Skills Learning Obj.: 2 12) Foreign distributors offer small businesses which of the following benefits? A) A detailed knowledge of the local markets in which they sell B) The ability to cover a foreign sales territory thoroughly C) The ability to handle all of the marketing, distribution, and service functions in foreign markets D) All of the above Answer: D Diff: 1 Page Ref: 577 AACSB: Reflective Thinking Learning Obj.: 2 5 13) In a(n) ________, two or more U.S. small businesses form an alliance for the purpose of exporting their goods and services. The companies get antitrust immunity and share responsibility for the business equally. A) foreign joint venture B) trade intermediary C) domestic joint venture D) export management company Answer: C Diff: 1 Page Ref: 579 AACSB: Analytic Skills Learning Obj.: 2 14) In a(n) ________, a domestic small business forms an alliance with a company in the target nation for the purpose of exporting to that market. A) foreign joint venture B) trade intermediary C) domestic joint venture D) export management company Answer: A Diff: 1 Page Ref: 579 AACSB: Reflective Thinking Learning Obj.: 2 15) The most important ingredient for a successful joint venture is: A) targeting the right country in which to sell. B) getting government approval and avoiding antitrust charges. C) choosing the right partner. D) splitting costs and profits equally. Answer: C Diff: 2 Page Ref: 579 AACSB: Reflective Thinking Learning Obj.: 2 16) Which of the following is a common problem in joint ventures? A) Incompatible management styles among partners B) Failure of partners to establish common goals C) Failure of partners to carefully determine each party's contributions and responsibilities, distribution of earnings, etc. D) All of the above Answer: D Diff: 1 Page Ref: 579 AACSB: Reflective Thinking Learning Obj.: 2 6 17) Many joint ventures fail because the parties involved neglected to: A) select a partner who shares their company's values. B) spell out in writing exactly how the venture will work and who has decision-making authority. C) select a partner whose skills are different from, but compatible with, their own. D) All of the above Answer: D Diff: 1 Page Ref: 579 AACSB: Reflective Thinking Learning Obj.: 2 18) Foreign licensing has its greatest potential in the licensing of: A) products. B) intangibles, such as technology, copyrights, and trademarks. C) goods. D) franchises. Answer: B Diff: 2 Page Ref: 579-580 AACSB: Multicultural & Diversity Learning Obj.: 2 19) If a business owner cannot afford to invest in foreign facilities and does not have time to learn the foreign market, but is willing to give someone else the right to make and market her product for a fee and royalties, her best bet for entering the foreign market is: A) a foreign management company. B) joint venturing. C) foreign licensing. D) international franchising. Answer: C Diff: 2 Page Ref: 579-580 AACSB: Multicultural & Diversity Learning Obj.: 2 20) Foreign licensing is: A) required when a business buys and sells products in many countries, either in its own name or as an agent for its buyer-seller clients. B) a government-owned or business-owned facility set up in a foreign country to buy products that are made there. C) the use by one firm (the carrier) of its overseas distribution network to sell noncompetitive products made by other firms (riders). D) an agreement in which a licenser gives a licensee in another country the right to use that licenser's patent, trademark, copyright, technology, and products in return for a percentage of the licensee's sales or profits. Answer: D Diff: 1 Page Ref: 579 AACSB: Multicultural & Diversity Learning Obj.: 2 7 21) Domino's Pizza and McDonald's operating in Japan and Europe are examples of: A) foreign management companies. B) joint venturing. C) foreign licensing. D) international franchising. Answer: D Diff: 1 Page Ref: 580 AACSB: Analytic Skills Learning Obj.: 2 22) The first step in establishing a successful global franchise arrangement is to: A) generate lead for potential franchisees. B) structure the franchise deal. C) identify the country or countries that are best suited to the franchiser's business concept. D) select quality candidates. Answer: C Diff: 1 Page Ref: 580-581 AACSB: Analytic Skills Learning Obj.: 2 23) ________ is a transaction in which a company selling goods and services in a foreign market agrees to help promote investment and trade in that country. A) Countertrading B) Bartering C) Foreign licensing D) Exporting Answer: A Diff: 1 Page Ref: 582 AACSB: Analytic Skills Learning Obj.: 2 24) The drawbacks of countertrading include which of the following? A) Countertrade transactions can be complicated, cumbersome, and time consuming. B) Countertrade transactions can increase the chances that a company will be stuck with merchandise it cannot move. C) Countertrade transactions can lead to unpleasant surprises concerning the quantity and quality of products required in the countertrade. D) All of the above Answer: D Diff: 2 Page Ref: 582 AACSB: Analytic Skills Learning Obj.: 2 8 25) ________, the exchange of goods and services for other goods and services, is one way of trading with countries that lack convertible currency. A) Countertrading B) Bartering C) Foreign licensing D) Exporting Answer: B Diff: 1 Page Ref: 583 AACSB: Reflective Thinking Learning Obj.: 2 26) Which of the following is/are often used by companies exporting to countries that lack a convertible currency? A) Countertrading B) Indirect exporting C) Bartering D) A and C only Answer: D Diff: 2 Page Ref: 582,583 AACSB: Reflective Thinking Learning Obj.: 2 27) Nance Technologies, Inc., has agreed to sell some of its computers to a company in Bascovina, a country whose currency is worthless outside its own borders. As part of the agreement, Nance will sell the foreign customer its computers in exchange for a specified number of tons of coffee, a major export of Bascovina. Nance has already arranged to sell the coffee to a major processor for a set price in U.S. dollars. Nance has engaged in: A) bartering. B) foreign licensing. C) exporting. D) countertrading. Answer: A Diff: 2 Page Ref: 583 AACSB: Reflective Thinking Learning Obj.: 3 28) Small companies with fewer than 20 employees account for more than ________ percent of U.S. export sales. A) 20 B) 60 C) 70 D) 90 Answer: C Diff: 2 Page Ref: 583 AACSB: Analytic Skills Learning Obj.: 3