BUSMHR 2000 EXAM 1 QUESTIONS & ANSWERS
What is the LEAST likely motive for international expansion?
A. Gaining flexibility in product sourcing
B. Seeking growth opportunities through market diversification
C. Developing economies of scale in production and R&D
D. Learning about a new culture
E. Identifying innovative products and services - Answer -D. Learning about a new
culture
Which of the following would be a cross-cultural risk in internationalization?
A. Mismanagement of the economy
B. Different international taxation
C. Different languages
D. Different protectionism laws
E. Poor execution of strategy - Answer -C. Different languages
Why would firms internationalize to earn higher margins and profits?
A. Firms move to serve clients relocating for higher profits.
B. Market growth in mature countries is often flat, and foreign markets may be
underserved.
C. Firms can access labor and managerial talent at lower costs.
D. Unique foreign environments expose firms to new ideas for products.
E. Foreign markets can extend the marketable life of products that have reached
maturity at home - Answer -B. Market growth in mature countries is often flat, and
foreign markets may be underserved
[ ] refers to the performance of trade and investment activities by firms across national
borders.
A. International business
B. Foreign direct investment
C. International investment
D. Global sourcing
E. Exporting - Answer -A. International business
A focal firm is a company that _________________.
A. Offers banking services
B. Provides marketing services
C. Arranges international shipping
, D. Initiates international business transactions
E. Offers logistics services - Answer -D. Initiates international business transactions
If a firm is operating in a foreign country, what type of risk does it face from the country's
political, legal, and economic environment?
A. Cross-cultural risk
B. Currency risk
C. Commercial risk
D. Country risk
E. Communication risk - Answer -D. Country risk
Custom Cars, a painting and auto modification company, has expanded operations into
South America. The first problem Custom Cars encountered was determining the
applicable laws in the new country. Next, Custom Cars was informed by the local mayor
that the firm will be shut down if it does not prepay its taxes in cash. Which risk in
international business is Custom Cars encountering?
A. Global risk
B. Currency risk
C. Commercial risk
D. Country risk
E. Cross-cultural risk - Answer -D. Country risk
Which type of investment is the passive ownership of foreign securities for the purpose
of generating financial returns?
A. Global sourcing
B. Globalization
C. International portfolio investment
D. International investment
E. Foreign direct investment - Answer -C. International portfolio investment
Pioneer Systems is a young entrepreneurial company that has engaged in international
business from the day it opened its doors. Pioneer is categorized as a ________.
A. born global firm
B. multinational enterprise
C. medium-sized enterprise
D. franchise
E. nongovernmental organization - Answer -A. born global firm
Carol wants to expand her recycled toy business abroad because demand for recycled
products is much higher in Europe and Asia than in the United States. She locates three
suppliers in Europe and three in Asia, and creates one factory in Germany and one in
Singapore. She seeks ways to advance her machinery to meet the needs of her
What is the LEAST likely motive for international expansion?
A. Gaining flexibility in product sourcing
B. Seeking growth opportunities through market diversification
C. Developing economies of scale in production and R&D
D. Learning about a new culture
E. Identifying innovative products and services - Answer -D. Learning about a new
culture
Which of the following would be a cross-cultural risk in internationalization?
A. Mismanagement of the economy
B. Different international taxation
C. Different languages
D. Different protectionism laws
E. Poor execution of strategy - Answer -C. Different languages
Why would firms internationalize to earn higher margins and profits?
A. Firms move to serve clients relocating for higher profits.
B. Market growth in mature countries is often flat, and foreign markets may be
underserved.
C. Firms can access labor and managerial talent at lower costs.
D. Unique foreign environments expose firms to new ideas for products.
E. Foreign markets can extend the marketable life of products that have reached
maturity at home - Answer -B. Market growth in mature countries is often flat, and
foreign markets may be underserved
[ ] refers to the performance of trade and investment activities by firms across national
borders.
A. International business
B. Foreign direct investment
C. International investment
D. Global sourcing
E. Exporting - Answer -A. International business
A focal firm is a company that _________________.
A. Offers banking services
B. Provides marketing services
C. Arranges international shipping
, D. Initiates international business transactions
E. Offers logistics services - Answer -D. Initiates international business transactions
If a firm is operating in a foreign country, what type of risk does it face from the country's
political, legal, and economic environment?
A. Cross-cultural risk
B. Currency risk
C. Commercial risk
D. Country risk
E. Communication risk - Answer -D. Country risk
Custom Cars, a painting and auto modification company, has expanded operations into
South America. The first problem Custom Cars encountered was determining the
applicable laws in the new country. Next, Custom Cars was informed by the local mayor
that the firm will be shut down if it does not prepay its taxes in cash. Which risk in
international business is Custom Cars encountering?
A. Global risk
B. Currency risk
C. Commercial risk
D. Country risk
E. Cross-cultural risk - Answer -D. Country risk
Which type of investment is the passive ownership of foreign securities for the purpose
of generating financial returns?
A. Global sourcing
B. Globalization
C. International portfolio investment
D. International investment
E. Foreign direct investment - Answer -C. International portfolio investment
Pioneer Systems is a young entrepreneurial company that has engaged in international
business from the day it opened its doors. Pioneer is categorized as a ________.
A. born global firm
B. multinational enterprise
C. medium-sized enterprise
D. franchise
E. nongovernmental organization - Answer -A. born global firm
Carol wants to expand her recycled toy business abroad because demand for recycled
products is much higher in Europe and Asia than in the United States. She locates three
suppliers in Europe and three in Asia, and creates one factory in Germany and one in
Singapore. She seeks ways to advance her machinery to meet the needs of her
