GMS 522 MIDTERM TERMS EXAM
QUESTIONS WITH COMPLETE
SOLUTIONS
According to Dunning's OLI Framework a firm's foreign investment decisions are driven
by: - Answer-Ownership, Location and Internalization factors
Ainsworth, John and Peter are executives of a major petroleum company
headquartered in Calgary. They were very concerned about the investment they had
made in the Bolivian energy sector. News reports indicated that the Bolivian
government had sent in the army to take over the operation of all foreign owned oil
companies. There was little the executives could do but hope that the government's
intention was _______________ not _______________ and that their company would
at least receive some compensation. - Answer-Expropriation, Confiscation
Sweetie Inc, a global manufacturer of candy, was recently forced to relocate its
operations from southern Ontario to Mexico. While some importation was allowed new
rules introduced in Canada now placed restrictions on the amount of sugar Sweetie
could import from third world countries such as Mauritius. Sweetie and a number of
other confectionary manufacturers had already lobbied Ottawa for a reversal of the rule,
but to no avail. In Mexico there were no restrictions on sugar imports. Sweetie's
relocation to Mexico was caused by - Answer-Government quotas
In the fall of 2012 Toyota Motor Corp. reported that its sales in China had declined by
49% from a year earlier while Honda Motor Co. reported that its sales in China had slid
by 41%. Suzuki Motor Corp., another Japanese firm, saw its shipments to dealerships in
China fall by 43% over the same month the previous year. The poor sales performance
of these Japanese companies in China has been linked to a territorial dispute between
the two countries over two East China Sea islands and has resulted in violent protests
in both countries. The poor sales performance of Japanese auto manufacturers in China
is the result of _________________________________. - Answer-Chinese boycott of
Japanese products
With a _______________ internationalization strategy country selection is based on
market potential and not psychic distance. - Answer-Sprinkler
The Mexican ambassador to Canada knew exactly why he was being asked to attend a
meeting in Ottawa. Mexican vegetable farmers were rumored to be subsidized by their
government. Canadian farmers in British Columbia and Ontario (two Canadian
provinces) had complained to the Canadian government calling for the imposition of
________________ on Mexican imports. The Mexican ambassador knew that if he was
not careful in discussions with trade officials in Ottawa the matter could soon be before
the World Trade Organization. - Answer-Countervailing duties
, Dreher (2006) measures globalization on three dimensions: economic, social and
political. The political dimension would capture: - Answer-Diffusion of government
policies around the world
In Europe the European Commission examines transactions when any firm buys an
overseas company, engages in a joint venture with a foreign firm, or makes an
agreement with a competing firm in order to ensure that competition is not stifled. The
Commission is enforcing Europe's ________________ laws. - Answer-Antitrust
Which is not a form of government export promotion? - Answer-Establishing voluntary
export restrictions on local firms
Raymond and William had completed their foreign market entry analysis. They were just
about ready to make a recommendation to the Board on which country the company
should enter next. William recalled, however, that the last time they had conducted such
an analysis they did not factor in corruption levels. This omission created serious
problems for the company as the constant requests for bribes made day to day
operations in the country difficult. Below is a shortlist of countries Raymond and William
are considering entering with their TI corruption scores. Ignoring possible
methodological problems if perceived corruption level is the only deciding factor, which
country should be entered? Transparency International (TI) Corruption Perception Index
(2011) Denmark - 9.4 New Zealand - 9.5 Trinidad - 3.2 Iraq - 1.8 Somalia - 1.0 -
Answer-3) New Zealand
LCD Inc., a privately owned Asian company, had developed a revolutionary technology
which significantly improved the screen resolution of the video iPod and PDAs. The firm
was interested in penetrating the North American market but did not have the capital to
set up manufacturing facilities to produce its own line of these hand held devices. LCD
knew that other firms were doing research in this area and may soon have a competing
technology. As a consultant to LCD you would recommend: - Answer-2) Licensing the
technology to a manufacturer of hand held devices
The CEO of Ainsworth Inc. was committed to global expansion. Ainsworth was,
however, a new firm and had no track record operating outside of Canada. The CEO
was particularly concerned about political risk and the impact it could have on the firm's
expansion plans. Based only on the Profit Opportunity Recommendation (POR) scores
below which country should the CEO of Ainsworth avoid? POR Scores: Switzerland - 76
China - 58 Singapore - 72 India - 62 Russia - 43 - Answer-Russia
Which (if any) is a potential effect of bribery and corruption? - Answer-2) All of these
options
Henry was given responsibility for the implementation of a global marketing strategy for
Ambrosia Inc., a major food manufacturing firm. One of the biggest problems Henry will
QUESTIONS WITH COMPLETE
SOLUTIONS
According to Dunning's OLI Framework a firm's foreign investment decisions are driven
by: - Answer-Ownership, Location and Internalization factors
Ainsworth, John and Peter are executives of a major petroleum company
headquartered in Calgary. They were very concerned about the investment they had
made in the Bolivian energy sector. News reports indicated that the Bolivian
government had sent in the army to take over the operation of all foreign owned oil
companies. There was little the executives could do but hope that the government's
intention was _______________ not _______________ and that their company would
at least receive some compensation. - Answer-Expropriation, Confiscation
Sweetie Inc, a global manufacturer of candy, was recently forced to relocate its
operations from southern Ontario to Mexico. While some importation was allowed new
rules introduced in Canada now placed restrictions on the amount of sugar Sweetie
could import from third world countries such as Mauritius. Sweetie and a number of
other confectionary manufacturers had already lobbied Ottawa for a reversal of the rule,
but to no avail. In Mexico there were no restrictions on sugar imports. Sweetie's
relocation to Mexico was caused by - Answer-Government quotas
In the fall of 2012 Toyota Motor Corp. reported that its sales in China had declined by
49% from a year earlier while Honda Motor Co. reported that its sales in China had slid
by 41%. Suzuki Motor Corp., another Japanese firm, saw its shipments to dealerships in
China fall by 43% over the same month the previous year. The poor sales performance
of these Japanese companies in China has been linked to a territorial dispute between
the two countries over two East China Sea islands and has resulted in violent protests
in both countries. The poor sales performance of Japanese auto manufacturers in China
is the result of _________________________________. - Answer-Chinese boycott of
Japanese products
With a _______________ internationalization strategy country selection is based on
market potential and not psychic distance. - Answer-Sprinkler
The Mexican ambassador to Canada knew exactly why he was being asked to attend a
meeting in Ottawa. Mexican vegetable farmers were rumored to be subsidized by their
government. Canadian farmers in British Columbia and Ontario (two Canadian
provinces) had complained to the Canadian government calling for the imposition of
________________ on Mexican imports. The Mexican ambassador knew that if he was
not careful in discussions with trade officials in Ottawa the matter could soon be before
the World Trade Organization. - Answer-Countervailing duties
, Dreher (2006) measures globalization on three dimensions: economic, social and
political. The political dimension would capture: - Answer-Diffusion of government
policies around the world
In Europe the European Commission examines transactions when any firm buys an
overseas company, engages in a joint venture with a foreign firm, or makes an
agreement with a competing firm in order to ensure that competition is not stifled. The
Commission is enforcing Europe's ________________ laws. - Answer-Antitrust
Which is not a form of government export promotion? - Answer-Establishing voluntary
export restrictions on local firms
Raymond and William had completed their foreign market entry analysis. They were just
about ready to make a recommendation to the Board on which country the company
should enter next. William recalled, however, that the last time they had conducted such
an analysis they did not factor in corruption levels. This omission created serious
problems for the company as the constant requests for bribes made day to day
operations in the country difficult. Below is a shortlist of countries Raymond and William
are considering entering with their TI corruption scores. Ignoring possible
methodological problems if perceived corruption level is the only deciding factor, which
country should be entered? Transparency International (TI) Corruption Perception Index
(2011) Denmark - 9.4 New Zealand - 9.5 Trinidad - 3.2 Iraq - 1.8 Somalia - 1.0 -
Answer-3) New Zealand
LCD Inc., a privately owned Asian company, had developed a revolutionary technology
which significantly improved the screen resolution of the video iPod and PDAs. The firm
was interested in penetrating the North American market but did not have the capital to
set up manufacturing facilities to produce its own line of these hand held devices. LCD
knew that other firms were doing research in this area and may soon have a competing
technology. As a consultant to LCD you would recommend: - Answer-2) Licensing the
technology to a manufacturer of hand held devices
The CEO of Ainsworth Inc. was committed to global expansion. Ainsworth was,
however, a new firm and had no track record operating outside of Canada. The CEO
was particularly concerned about political risk and the impact it could have on the firm's
expansion plans. Based only on the Profit Opportunity Recommendation (POR) scores
below which country should the CEO of Ainsworth avoid? POR Scores: Switzerland - 76
China - 58 Singapore - 72 India - 62 Russia - 43 - Answer-Russia
Which (if any) is a potential effect of bribery and corruption? - Answer-2) All of these
options
Henry was given responsibility for the implementation of a global marketing strategy for
Ambrosia Inc., a major food manufacturing firm. One of the biggest problems Henry will
