Exam 1: Introduction: What Is International Business

Freehold Investment Corp. (Scenario) Dan Freehold and his business partner, Bethany Quinn, are successful investors engaged in a variety of enterprises. Recently Dan and Bethany have decided to expand their foreign investing operations. They hold a meeting for individuals interested in participating in certain overseas ventures. -Phillip Hardy, one of the potential investors, expresses the desire to purchase only those types of assets in which he can maintain a relatively short-term interest. Which of the following investment opportunities would be most suited for Mr. Hardy?

Over the last few decades, export activity by nations has grown more quickly than has domestic production.

Globalization has helped increase all of the following EXCEPT ________.

Which of the following types of risk is also known as political risk?

Currency risk refers to the risk posed by adverse fluctuations in exchange rates.

Why might firms choose to pursue internationalization strategies? In a short essay, identify five major motivations for expanding overseas. Classify these motivations as strategic or reactive and provide an example of each.

Exporting is the most common foreign market entry strategy of the SME.

The largest multinational firms are found in each of the following industries EXCEPT ________.

International business is primarily carried out by individual companies.

Each of the following types of organizations is active in international business EXCEPT ________.

Sterling Auto International (Scenario) Sterling Auto International is a successful car manufacturing company headquartered in Detroit, Michigan. Over the past year, the company implemented multiple efforts to expand its overseas operations. At a recent shareholder's meeting, attendees questioned the CEO's motivations for authorizing certain aspects of the expansion efforts. -One shareholder questioned the CEO's rationale for beginning an exploratory effort to establish a new manufacturing plant in India. The CEO responded by explaining that India was an untapped market with a high demand for products such as those produced by Sterling. His rationale represented an example of which of the following reasons for international expansion?

In the past, international trade and investment activities were mainly conducted by companies that sold services.

What distinguishes an MNE from an SME? In a short essay, describe the major differences between the two types of firms.

Overseas Expansion (Scenario) Whittaker Semiconductors has recently decided to expand its operations overseas. Amanda Quan, Vice President of International Business, assigned a team of investigators to analyze the risks faced by the company in making this move. Of particular interest were the risks that might affect the success of a new production plant to be located in one of three potential countries. -Rosa Suarez reported on her analysis of cross-cultural risks involved with establishing the plant in Country C. Each of the following was most likely discussed in her report EXCEPT ________.

Which of the following is an example of a new global challenger?

Overseas Expansion (Scenario) Whittaker Semiconductors has recently decided to expand its operations overseas. Amanda Quan, Vice President of International Business, assigned a team of investigators to analyze the risks faced by the company in making this move. Of particular interest were the risks that might affect the success of a new production plant to be located in one of three potential countries. -Philip Baxter reported on the risks associated with establishing the plant in Country A. The most significant risk, in his view, was posed by the government's complex bureaucratic structure. Philip reported the likelihood of significant administrative delays in opening the plant. The risk identified by Philip is an example of which of the following?

International business is also known as which of the following?

International business today is predominantly the domain of large, multinational companies.

Freehold Investment Corp. (Scenario) Dan Freehold and his business partner, Bethany Quinn, are successful investors engaged in a variety of enterprises. Recently Dan and Bethany have decided to expand their foreign investing operations. They hold a meeting for individuals interested in participating in certain overseas ventures. -At the meeting, Dan explains to the attendees that Freehold direct investment projects differ from international trade in that ________.

________ refers to the transfer of assets to another country or the acquisition of assets in that country.