Deck 6: International Management

Question 1

The most significant disadvantage concerning franchising is brand name recognition.

Answer 1

False

Question 2

"Brexit" threatens the future of the

A)Central America-Dominican Republic Free Trade Agreement (CAFTA-DR).
B)European Union (EU).
C)Asia-Pacific Economic Cooperation (APEC)trade group.
D)North American Free Trade Agreement (NAFTA).
E)Association of Southeast Asian Nations (ASEAN).

Answer 2

B

Question 3

Which of the following countries has become an important provider of online technological support for the United States?

A)Egypt
B)Great Britain
C)India
D)Mexico
E)Taiwan

Answer 3

C

Question 4

Family issues are the main reason expatriates return home early.

Question 5

Using host-country nationals at an overseas subsidiary is generally less expensive than using expatriates.

Question 6

________ occurs when an organization contracts with an external provider to produce one or more of the organization's products or services.

A)Inpatriation
B)Outsourcing
C)Offshoring
D)Expatriation
E)Franchising

Question 7

When pressures for local responsiveness are high and pressures for global integration are low, the global model is appropriate.

Question 8

Which of the following is a consequence of an increasingly integrated global economy?

A)World output and trade have decreased to dramatically low levels.
B)Many companies find their home markets under attack from foreign competition.
C)Companies are making foreign direct investments in home companies.
D)Imports are failing to penetrate deeper into the world's largest economies.
E)There are reduced opportunities for global trade.

Question 9

An organization's economic environment includes

A)growth of developing nations.
B)anticorruption laws.
C)free trade agreements.
D)bribery concerns.
E)climate change.

Question 10

Jean-Michel is the CEO of Kronos Timepieces, a retailer and manufacturer of fashion watches and watch accessories. The company, which was founded in 1925, is based in Switzerland and employs around 1,000 people in five countries. It currently sells its watches in 27 countries, with a recent expansion into several Middle Eastern and far Eastern countries. Kronos has decided to introduce a lower-priced unisex wristwatch. Jean-Michel has been considering contracting a brand new factory located in Singapore to manufacture the lower-priced line of wristwatches, rather than using Kronos' older, main factory, which is located in nearby Grenchen. Which of the following factors best supports Jean-Michel's decision to outsource production of the watches?

A)The company's ability to rapidly and reliably deliver its watches will be increased by the state-of-the-art facilities in the Singapore factory.
B)The manufacture of watches is standardized and the company is sufficiently well-established, making outsourcing an attractive option.
C)Automation can often achieve significant labor cost savings, increasing the advantage of moving production abroad.
D)The current supply chain is not as highly efficient and routine as it could be; using the Singapore factory could address that problem.
E)Even though Kronos will incur additional costs of sending staff from Switzerland to manage the Singapore factory, costs will be lower in the long run.

Question 11

Under the ________, member countries of the European Union agreed to adopt a common European currency called the euro.

A)NAFTA
B)Maastricht Treaty
C)GATT Agreement
D)APEC Treaty
E)European Unification Act

Question 12

One of the advantages of exporting is that it provides scale economies.

Question 13

Pantera Motorcycles moved some of its manufacturing operations to another country where wages are lower. This is an example of which of the following?

A)franchising
B)outsourcing
C)offshoring
D)expatriation
E)inpatriation

Question 14

Which of the following existing agreements includes Costa Rica, Nicaragua, and the United States?

A)NAFTA
B)CAFTA-DR
C)FTAA
D)APEC
E)ASEAN

Question 15

Stewart Wilkinson, CEO of Acme Products, said to his Executive VP of Marketing, "I'm struggling with your proposal to expand our manufacturing operations in China. ________ create a paradox. On one hand, new middle-class consumers in China are purchasing more products, both foreign and domestic. However, at the same time, low-cost manufacturers are moving out of China to set up operations in lower-wage countries."

A)Declining incomes
B)Slow-growing numerical increases in the middle class
C)Lack of tariffs
D)Rising incomes
E)Years of economic contraction

Question 16

NAFTA combined the economies of ________ into one of the world's largest trading blocs.

A)the United States, Canada, and Mexico
B)Canada, Mexico, and South America
C)South America, the United States, and Central America
D)Latin America, the Pacific Rim, and the European Union
E)the United States, the European Union, and Canada

Question 17

Collaborating with other countries in trade

A)leads to increased prices.
B)narrows down the market for managers.
C)raises the standards of living.
D)leads to reduced efficiency.
E)causes countries to produce more varied goods.

Question 18

For five years, California-based ExPro Communications had retained a firm in the Philippines to handle its phone-based customer support. However, to address quality and cost control problems, ExPro retained another California-based firm to provide these services instead. This change is an example of

A)offshoring.
B)outsourcing.
C)inshoring.
D)insourcing.
E)offsourcing.

Question 19

The practice followed by some companies of moving jobs to another country is called

A)offshoring.
B)outsourcing.
C)inshoring.
D)insourcing.
E)offsourcing.

Question 20

Which of the following has been an unexpected effect of offshoring?

A)Companies that use offshoring find that their travel costs decrease.
B)Energy costs for the company rise, increasing the benefits of offshoring.
C)Wages in the foreign countries rise, reducing the expected cost savings.
D)It helps reduce wage stagnation of workers in the home country.
E)It has reversed the trend of increased automation.

Question 21

In the integration-responsiveness grid the

A)vertical axis measures pressures for global integration, and the horizontal axis measures pressures for local responsiveness.
B)horizontal axis measures pressures for local interaction, and the vertical axis measures pressures for global responsiveness.
C)horizontal axis measures financial viability, and the vertical axis measures employee satisfaction.
D)vertical axis measures employee satisfaction, and the horizontal axis measures management credibility.
E)vertical axis measures pressures for global systems capacity, and the horizontal axis measures pressures for local financial success.

Question 22

The international model of organizational structure involves

A)large low-cost manufacturing facilities located in selected locations, with products exported to various subsidiaries.
B)subsidiaries located in countries where the company does business, with much of the control exercised by the parent company.
C)subsidiaries located in countries where the company does business, with much of the control exercised by the subsidiaries.
D)manufacturing various components at appropriate sites and assembling the components at national subsidiaries.
E)farming out core functions, such as research and development, to subsidiaries around the world.

Question 23

Which of the following is a major exporter of petroleum, or oil?

A)Australia
B)the Middle East
C)Japan
D)the South Pacific
E)India

Question 24

Which of the following is an advantage of the international model?

A)It facilitates the transfer of skills from the parent company to the subsidiaries.
B)It provides maximum latitude to research and development functions.
C)It provides the opportunity to achieve a low-cost position via scale economies.
D)It requires a minimum amount of effort and coordination by the parent company.
E)It transfers ultimate control of the company to the subsidiaries.

Question 25

Which model should a company adopt when pressures for local responsiveness are high and pressures for global integration are low?

A)global
B)international
C)multinational
D)transnational
E)intranational

Question 26

Which of the following is a major disadvantage of the multinational model?

A)lack of response to local political conditions
B)duplication of efforts
C)inability to customize products
D)centralized decision making
E)rigid procedures

Question 27

________ create strong pressure for a global strategy.

A)Universal needs
B)Traditional practices
C)Political demands imposed by host countries
D)Varied consumer preferences
E)Legal demands imposed by host countries

Question 28

Which of the following is one of the three regions that dominate the global economy?

A)South America
B)Australia
C)Middle East
D)Asia
E)Eastern Europe

Question 29

Which of the following countries is a member of the Asia-Pacific Economic Cooperation Group?

A)Russia
B)Germany
C)Brazil
D)Nigeria
E)Italy

Question 30

Colas have become available around the globe, and they are used in similar ways worldwide. The situation in which consumer tastes and preferences regarding a product are similar in many different countries is an example of

A)local demand.
B)customized products.
C)traditional practices.
D)universal needs.
E)political demands.

Question 31

Which of the following is a reason that companies adopt a common global strategy?

A)significant differences in consumer tastes among countries
B)differences in traditional practices among countries
C)varying sales practices among countries
D)political demands by host countries
E)competitive pressures to reduce costs

Question 32

When Kumquat, a contemporary sportswear company, tries to open its clothing stores in a new country, it learns that local rules require a certain percentage of its products be manufactured locally. This example fits into which category of pressures for local responsiveness?

A)differences in distribution channels
B)differences in traditional practices
C)economic and political demands
D)differences in consumer tastes
E)global market integration

Question 33

What does an integration-responsiveness grid help a manager to do?

A)determine the profit-loss ratio for a new product
B)choose a price point by graphing a product's supply and demand
C)identify the best strategy for competing in a global marketplace
D)do a cost-benefit analysis for outsourcing
E)compare the economic advantages of outsourcing versus inshoring

Question 34

The strategy model that uses subsidiaries in each country and provides each a great deal of discretion to respond to local conditions is the ________ model.

A)international
B)multinational
C)Global
D)transnational
E)domestic

Question 35

Strong pressures for local responsiveness emerge when

A)consumer tastes and preferences differ significantly.
B)competitive pressures to reduce costs are high.
C)traditional practices among countries are similar.
D)competitors engage in global strategic coordination.
E)sales practices are uniform from country to country.

Question 36

What caused Mexico to emerge as the third-largest trading partner of the United States?

A)NAFTA
B)The World Trade Organization
C)APEC
D)the International Monetary Fund
E)ASEAN

Question 37

LEAP Communications Technology has subsidiaries in each country in which it does business. As the parent company, LEAP runs its research and development department from its home country. As a result, each foreign subsidiary remains dependent on it for new products, processes, and ideas. This illustrates the ________ model for global strategy.

A)international
B)multinational
C)global
D)transnational
E)intranational

Question 38

The model in which managers use their organization's existing core capabilities to expand into foreign markets is called the ________ model.

A)international
B)multinational
C)global
D)transnational
E)contingency

Question 39

Which of the following factors would increase the pressure for local responsiveness?

A)the existence of widely worn traditional clothing styles
B)a food product that has international popularity
C)a technical component used in electronic devices worldwide
D)pressure on a company to reduce costs significantly
E)the existence of competitors engaged in global strategic coordination

Question 40

Which of the following is true of the multinational approach to international competition?

A)The subsidiaries are completely under the control of the parent company.
B)The parent company allows the subsidiaries to respond to local conditions.
C)The companies have centralized manufacturing facilities.
D)The subsidiaries depend completely on the parent company for new products.
E)The system lowers manufacturing costs by eliminating duplication of effort.

Question 41

What is an advantage of exporting as a global expansion entry mode?

A)It is consistent with a pure global strategy.
B)Low-cost sites are available.
C)Transportation costs are generally lower.
D)It is considered responsive to local needs.
E)Trade barriers may be removed.

Question 42

Marko is the CEO of the advertising department at Foster-Ghent, a company that encompasses a variety of personal hygiene brands, including Lush Soap and New Gleem toothpaste. Foster-Ghent does business in 65 countries through one or more operating companies, with a total of about 50 companies in the Foster-Ghent group. Tanvi is the advertising and marketing manager for the Indian market. Based on your knowledge of the transnational model, which of the following best describes how Marco and Tanvi would divide responsibilities?

A)Tanvi designs, from start to finish, an advertising campaign for Clearly Clean, Foster-Ghent's new line of contact lens solution. Marko signs the check to pay for the billboards.
B)The new advertising campaign for Foster-Ghent's Clearly Clean contact solution are fully designed by Marco and his local team. Tanvi oversees translation of the ads.
C)Marco and his local team create an advertising campaign and strict guidelines for implementing it. Tanvi is merely responsible for ensuring the guidelines are followed by her staff.
D)The general guidelines for the new Clearly Clean contact solution advertising comes from Marco's team, but Tanvi is allowed to design campaigns that will appeal to the local market.
E)Members of Marko's local team personally direct all advertising, traveling to India to meet with Tanvi several times a year to direct the design and launch of its various campaigns.

Question 43

FreshFaced, a cosmetics manufacturer, assumes that people all over the world will view and use its products in the same way. Therefore, it produces exactly the same makeup products, using the same color palettes, in several countries with attractive labor rates, and offers them to all of its markets around the world. FreshFaced uses the ________ model of international competition.

A)international
B)multinational
C)global
D)transnational
E)intranational

Question 44

Which of the following is an advantage of a multinational model?

A)manufacturing costs are low
B)launching coordinated global attacks against competitors is easy
C)subsidiaries can customize products according to local preferences
D)it reduces the duplication of efforts
E)it increases profits because of economies of scale

Question 45

Crest Craft is a speedboat manufacturing company based in California. The company operates a subsidiary in Australia, marketing products that are customized to appeal to Australian tastes. In this case, Crest Craft is following the ________ model.

A)domestic
B)international
C)multinational
D)contingency
E)global

Question 46

The ________ organizational model is designed to enable a company to market a standardized product in the worldwide marketplace and to manufacture that product in a limited number of locations where the mix of costs and skills is most favorable.

A)international
B)multinational
C)global
D)transnational
E)decentralized

Question 47

Exporting, licensing, franchising, joint ventures, and wholly owned subsidiaries are all methods of

A)identifying lucrative consumers on a global scale.
B)operating a transnational business.
C)entering overseas markets.
D)optimizing global profit.
E)reducing costs.

Question 48

The organizational model that enables managers to "think globally but act locally" is the

A)intranational model.
B)international model.
C)multinational model.
D)global model.
E)transnational model.

Question 49

A disadvantage of the global model is that it

A)is less responsive to consumer tastes and demands.
B)has high manufacturing costs.
C)requires spending more money on product customization.
D)limits its subsidiaries to market and service functions.
E)provides too much freedom to its subsidiaries.

Question 50

The two strategic models that have relatively high manufacturing costs are

A)global and transnational.
B)international and transnational.
C)multinational and international.
D)global and international.
E)multinational and transnational.

Question 51

In companies that adopt the ________ model of organizational structure, functions are centralized where it makes sense to do so, but a great deal of decision making also takes place at the local level.

A)international
B)multinational
C)global
D)transnational
E)intranational

Question 52

In order to achieve cost economies, Apogee Manufacturing bases its production plants in Mexico and gets its engineering services from skilled workers in Japan. In this case, Apogee is using the ________ model of organizational structure.

A)international
B)multinational
C)global
D)transnational
E)intranational

Question 53

________ is an arrangement by which an organization in another country buys the rights to manufacture a company's product in its own country for a negotiated fee.

A)Franchising
B)International licensing
C)Entering a joint venture
D)Exporting
E)Patenting

Question 54

Which of the following companies is an example of a transnational company?

A)Sony
B)IBM
C)Heineken
D)Panasonic
E)Unilever

Question 55

A disadvantage of exporting is that

A)it does not provide scale economies.
B)the company may face tariff barriers.
C)it is the most expensive method of expanding globally.
D)the company risks losing control of its intellectual property.
E)it is inconsistent with a pure global strategy.

Question 56

Which model involves fostering communication among subsidiaries to permit transfer of skills?

A)international
B)multinational
C)intranational
D)global
E)transnational

Question 57

Which of the following entry modes do most manufacturing companies use to begin global expansion?

A)exporting
B)wholly owned subsidiaries
C)franchising
D)licensing
E)joint ventures

Question 58

An advantage of licensing as a method of entering global competition is that the

A)licensee bears most of the costs and risks associated.
B)licensing company has control over its technology.
C)licensing company has control over quality levels.
D)licensing company has lower communication costs.
E)licensee has lower production costs.

Question 59

Which of the following is true of the global model?

A)It is highly responsive to consumer taste.
B)Decision making is done at a local level.
C)Customer satisfaction is high.
D)A large amount of discretion is given to the subsidiaries.
E)The products are standardized.

Question 60

A disadvantage of a multinational model is that it

A)cannot easily transfer core skills among international operations.
B)does not give any freedom to its subsidiaries to respond to local conditions.
C)standardizes its goods and services, ignoring customers' preferences.
D)cannot easily launch a coordinated global attack against competitors.
E)centralizes functions of research and development to the parent company.

Question 61

Which of the following methods of entering global competition best allows a company to have operations in other countries and maintain tight control over them?

A)exporting
B)licensing
C)a joint venture
D)franchising
E)a wholly owned subsidiary

Question 62

Big Ed's Barbecue sells small business owners the rights to use the company's brand name in return for a lump-sum payment and a share of the buyer's profits. This practice is referred to as

A)offshoring.
B)international licensing.
C)exporting.
D)franchising.
E)royalty facilitation.

Question 63

One of the drawbacks of exporting is

A)loss of scale economies.
B)decreased scale volume.
C)loss of control over quality.
D)high transportation costs.
E)loss of control over technology.

Question 64

A major disadvantage of operating a wholly owned subsidiary is that

A)a loss of control over technology is likely to occur.
B)a wholly owned subsidiary offers too much flexibility over operations.
C)high costs and risk are associated with this type of operation.
D)overseas consumers are often resentful of foreigners.
E)host countries can impose higher tariffs on the firm.

Question 65

A disadvantage of licensing is that the licensing company

A)may lose control over its technology.
B)takes on greater political risk.
C)takes on greater development costs.
D)realizes higher profit margins.
E)bears most of the risks associated.

Question 66

Myer Products, Inc., headquartered in Chicago, was enjoying unparalleled success in its Paris, France, branch office. At the annual corporate management meeting in Chicago, Jules Moreau, European Division Manager, modestly cited several reasons for this success. He said, "Our decision to hire Mila Keller to manage our Paris office turned out to be a wise one. Mila is a native of Basel, Switzerland. As a result of her knowledge of business in her home country, she has opened doors to many new clients in Switzerland. This has resulted in a business volume beyond what we had envisioned." In this instance, Mila is a(n)

A)expatriate.
B)host-country national.
C)third-country national.
D)inpatriate.
E)parent-country national.

Question 67

Which of the following is the preferred strategy when a company's competitive advantage is based on technology and the company wishes to enter the global marketplace?

A)exporting
B)licensing
C)franchising
D)creating a joint venture
E)creating a wholly owned subsidiary

Question 68

Denise Smithson, CEO of Lytle International, Inc., said to her vice president of international operations, Paul Robinette, "Pete has been managing our Indian operations for two years. As you know, the costs that we are incurring for Pete's and his family's relocation and in-country support in Mumbai are significant-living expenses for his family, transportation, escalated salary, private education for his children, and trips home, just to name a few. What is our current staffing plan?" Paul replied, "Pete has been training Ram Reddy to take over as Indian operations manager, so that Pete can come back to headquarters. That will help with customer relations and will significantly reduce our costs. For many reasons, it makes sense for a(n)________ to manage our Indian operations."

A)expatriate
B)host-country national
C)third-country national
D)parent-country national
E)inpatriate

Question 69

________ are natives of a country other than the home country or the host country of an overseas subsidiary.

A)Third-country nationals
B)Host-country nationals
C)Immigrants
D)Expatriates
E)Inpatriates

Question 70

Isabella Ruiz, Vice President of International Operations for Worldwide Products Corporation, was working with her subordinate, Jake Harris, to plan his upcoming 18-month overseas assignment to the firm's new office in Athens, Greece. Based upon her experience with previous failed overseas assignments, she was taking steps to avoid another failure. Therefore, one of the key features of Isabella's plan for Jake was to

A)develop a reentry plan for Jake prior to the completion of the overseas assignment.
B)limit communication to every-other-month status phone calls so as to not micromanage Jake.
C)develop performance measures after Jake had completed his first year.
D)save costs by avoiding a "look-see" trip for Jake and his family, given Jake's enthusiasm.
E)develop the assignment "on the fly" given the uncertainties involved.

Question 71

The main cause of failure of overseas managers is

A)a low salary level.
B)lack of adequate housing.
C)inadequate access to health benefits.
D)personal and social issues.
E)lack of proper training.

Question 72

After 18 months as office manager in Taiwan, Dennis Cooper, called his boss, Jack Swanson, headquartered in Chicago. Dennis said, "Jack, I hate to tell you this, but things aren't well on the home front. We just haven't been able to make the adjustment to living in a foreign country. I'd like to request a transfer back to the States." Jack replied, "Let me see what I can do." After the phone conversation was concluded, Jack soberly reflected that, as is often the case, an expatriate, in this case Dennis, had failed in a foreign assignment due to

A)extensive travel.
B)cultural differences.
C)family issues.
D)language barriers.
E)religious beliefs.

Question 73

Parent company nationals who are sent to work at a foreign subsidiary are known as

A)third-country nationals.
B)host-country nationals.
C)immigrants.
D)expatriates.
E)inpatriates.

Question 74

Which of the following methods of entering global competition runs the biggest risk of conflict between partners over who controls what?

A)exporting
B)licensing
C)joint ventures
D)franchising
E)wholly owned subsidiaries

Question 75

Bluestone Systems is opening a branch office in Taiwan. The responsibility for staffing this office falls to Jack Swanson, Vice President of International Operations, based in Chicago. Jack has decided to enlist the help of a Taiwan-based agent, Rick Wang, to help him fill several open positions in the new office. Rick advises Jack to fill the positions with ________, in other words, native Taiwanese because they will better understand how to conduct business with clients in Taiwan.

A)third-country nationals
B)host-country nationals
C)second-country nationals
D)ethnocentricists
E)expatriates

Question 76

Bluestone Systems opened a branch office in Taiwan a year ago. Jack Swanson, Vice President of International Operations, is based in Chicago, and he selected Dennis Cooper, his top subordinate in Chicago, to head up the new office. Jack is now disappointed that the Taiwan operation was not thriving; Dennis had not been successful in developing relationships with potential clients. Jack wondered if, instead of sending a(n)________ from the United States to lead the office, he should have heeded the advice of his Taiwanese agent, who had recommended that Jack hire a native Taiwanese to lead the office.

A)third-country national
B)host-country national
C)second-country national
D)inpatriate
E)expatriate

Question 77

Which of the following businesses is the most likely to use the franchising model?

A)an automotive plant
B)a smartphone manufacturer
C)a pipe fabricator
D)a restaurant chain
E)a clothing factory

Question 78

Nurul is a native of Malaysia where Regal Menswear is building its new plant. If Nurul goes to work at Regal's factory, she will be considered a(n)

A)third-country national.
B)host-country national.
C)immigrant.
D)expatriate.
E)inpatriate.

Question 79

When a company sets up its own overseas operations, independent of foreign partners or governments, it has established a(n)

A)purely global strategy.
B)competitive venture.
C)wholly owned subsidiary.
D)independent venture.
E)multinational contract.

Question 80

Which of the following is a disadvantage of franchising?

A)There is a large amount of risk for the franchisor.
B)The franchisor has to put in a large amount of capital.
C)The cost of development is high.
D)There is a high amount of political risk.
E)There is a possibility of losing quality control.