Deck 18: Global Opportunities for Small Business

Question 1

While a small businesscan have global operations, size will limit growth.

Answer 1

False

Question 2

The motivation to take domestic products to foreign markets is more relevant today than in the past.

Answer 2

False

Question 3

Today, companies tend to focus on developed countries as they search out international markets.

Answer 3

False

Question 4

Efforts to exploit the competitive advantage of specialised products across international markets are more important to small businesses than to their large competitors.

Question 5

The SA Chamber of Commerce and Industry provides information for entrepreneurs considering global operations.

Question 6

A production capacity question that needs to be answered before a company goes global with operations is "Will international sales hurt domestic sales?"

Question 7

The term BRICs refers to Bangladesh, Romania, Ireland and Czechoslovakia, all emerging markets.

Question 8

The primary motivation for expansion into European markets is to be closer to sources of raw materials.

Question 9

Once a small business owner decides to expand internationally, s/he should study the competitive forces in the foreign market.

Question 10

Together, China and India account for more than 50 per cent of the world's 6 billion inhabitants.

Question 11

The South African Council on International Relations can assist a company in trade laws and payment issues related to global markets.

Question 12

Born-global businesses are small companies that begin with cross-border businesses around the globe.

Question 13

Products that sell at home usually require little or no adaptation to be well received in foreign markets.

Question 14

10 per cent of the world's population lives in South Africa.

Question 15

Entrepreneurs decide to go global to expand their opportunities, but sometimes they are forced to enter foreign markets to compete with businesses that have already done so.

Question 16

Globalisation explains the increasing similarity of markets around the world.

Question 17

Experience curve efficiencies refer to the savings that arise from repeated production of the same product.

Question 18

International dissimilarities in language and culture, business practices and government regulations are increasing over time.

Question 19

Increasing sales in international markets is one of many ways to recoup a business's investments in research and development.

Question 20

By informing consumers about the lifestyles of others, globalisation is leading toward more diverse consumer preferences.

Question 21

Least challenging countries according to the World Bank's Ease of Doing Business Index include Canada, Mexico and Chile.

Question 22

While opening an overseas sales office can be effective, small businesses should wait until sales in the local market are great enough to justify the move.

Question 23

Counterfeit activity is likely to decrease with the use of foreign licencing, international franchising and international strategic alliances.

Question 24

International business will never be as easy as doing business on the domestic front.

Question 25

A cross-border acquisition is less demanding than a greenfield venture.

Question 26

The unique features of a local environment can yield benefits to small businesses locating there even when the costs are greater.

Question 27

An economic risk for a global company is the threat of new labelling regulations.

Question 28

Trade missions typically are sponsored by foreign governments to promote strategic alliances in international markets.

Question 29

Learning effects occur when an employee gains insight from experience, which leads to improved work performance.

Question 30

Trade leads are accessed most often through contacts.

Question 31

Exporting involves the sale of goods made in the home country to customers in another country.

Question 32

Small businesses that are either already, or interested in, exporting or importing can receive information from the SEBA through conferences, seminars, publications and counselling.

Question 33

A small business can generate the greatest financial returns using international licencing strategies when these efforts involve the company's products.

Question 34

Increasingly, small businesses find that they must locate their operations abroad if they are to keep their contracts as suppliers to large companies.

Question 35

Gains from learning effects continue to grow after start-up; economies of scale efficiencies decline as the business grows.

Question 36

Increasingly, small businesses are going global in search of raw materials.

Question 37

China, India and Russia are classified as moderately challenging according to the World Bank's Ease of Doing Business Index.

Question 38

International outsourcing and offshoring are increasingly being used by companies going global to cut costs.

Question 39

Political moves by an international country have implications on the domestic company's economic risk.

Question 40

Perhaps the easiest way to break into international markets is to use a trade intermediary.

Question 41

Sipho's small chakalaka business is considering exporting.A Gabonese grocery store chain with its corporate headquarters in Libreville has approached him.Which question would need to be answered in relation to the chakalaka company's management experience and resource objectives?

A)How are the initial expenses of expanding to Gabon going to be covered?
B)What international expertise does Sipho have, specifically does he speak French?
C)Why does Sipho want to export to Gabon?
D)Will the Gabonese sales hurt the South African sales?

Question 42

Renee opened her business with the intention of importing goods from Brazil and selling them in South Africa.We could say that this business is:

A)an exporter.
B)born-global.
C)ready to launch offshoring.
D)a trade mission.

Question 43

An example of a trade intermediary most suited for small businesses is an export remarketer.

Question 44

A Gabonese grocery store chain with its corporate headquarters in Libreville has approached Sipho's small chakalaka business about possible exporting.Which question would need to be answered in relation to the chakalaka company's management objectives?

A)How are the initial expenses of expanding to Gabon going to be covered?
B)What international expertise does Sipho have, specifically does he speak French?
C)Why does Sipho want to export to Gabon?
D)Will the Gabon sales hurt the South Africa sales?

Question 45

Sipho's small chakalaka business is considering exporting its products.A Gabonese grocery store chain with its corporate headquarters in Libreville has approached him.Which question would need to be answered in relation to the chakalaka company's financial capacity objectives?

A)How are the initial expenses of expanding to Gabon going to be covered?
B)What international expertise does Sipho have, specifically does he speak French?
C)Why does Sipho want to export to Gabon?
D)Will the Gabonese sales hurt the South African sales?

Question 46

A revocable letter of credit is an agreement to honour a draft or other demand for payment when specified conditions are met and can only be changed by the seller.

Question 47

A company with the most experienced production employees and the lowest unit costs in its industry indicates that it had benefited from:

A)learning effects.
B)experience curve efficiencies.
C)economies of scope.
D)economies of scale.

Question 48

A company specialising in flavouring compounds opens a plant near the rain forest.This move enables its biologists to derive flavours without destroying the plants and supports company globalisation efforts being related to:

A)reducing tariffs
B)cutting costs.
C)expanding its market.
D)gaining access to resources.

Question 49

A Gabonese grocery store chain with its corporate headquarters in Libreville has approached Sipho, the owner of a company that produces chakalaka, about exporting its sauces into Gabon.Which question would need to be answered in relation to the company's production capacity objectives?

A)How are the initial expenses of expanding to Gabon going to be covered?
B)What international expertise does Sipho have, specifically does he speak French?
C)Why does Sipho want to export to Gabon?
D)Will the Gabonese sales hurt the South African sales?

Question 50

For most small businesses, the primary motivation for going global is to:

A)develop new market opportunities.
B)reduce the costs of doing business.
C)gain access to resources that are important to the business's operations.
D)capitalise on special features of location.

Question 51

Seeking to extend the product life cycle by expanding into international markets has become a less effective strategy because:

A)customer preferences have become more similar around the world.
B)income levels in many countries are insufficient to support this strategy.
C)international delivery systems cannot handle the variety of company distribution systems.
D)product life cycles have already been growing over the years.

Question 52

Learning effects occur when:

A)mistakes are made and then new solutions found.
B)insights gained by employees enhance their work performance.
C)economies of scale are present.
D)companies take advantage of experience curve efficiencies.

Question 53

International markets are increasingly demanding:

A)the same products that are distributed to other national markets.
B)differentiated products that satisfy their unique needs and interests.
C)direct access to products sold elsewhere in the world.
D)more expensive products and fewer inexpensive products.

Question 54

Experience curve efficiencies refers to:

A)expanding a business globally to decrease per unit costs.
B)having more experienced team members.
C)insights gained by employees that lead to improved work performance.
D)the outcomes of learning effects and economies of scale.

Question 55

To expand a market, an emerging motivation for going global is to:

A)take advantage of unique features of the local market.
B)find buyers for highly specialised products.
C)obtain tariff reductions.
D)extend the product life cycle.

Question 56

As Sipho's chakalaka company increases in size, the business is able to realise economies of scale:

A)through learning effects from manufacturing experience.
B)through incremental drops in costs that results from the doubling of output.
C)by spreading of an investment across more units of production.
D)through efficiencies of operations in service operations.

Question 57

Allen is considering entering the global marketplace.What question should be answered first?

A)Does the company have the necessary "deep pockets" to follow through?
B)Are the company's domestic operations capable of subsidising overseas operations?
C)Is the company's technology sufficient to enter into the international game?
D)Is the company up to the task?

Question 58

In the recent past, companies have left South Africa to:

A)take advantage of unique features of the local market.
B)find countries with better economic growth prospects.
C)change the shape of the product life cycle.
D)serve the local community through the business.

Question 59

According to the 2014 BRICs Markets, which country has the highest GNI per capita?

A)Brazil
B)China
C)India
D)Russia

Question 60

When Wayne opened his business many years ago, most businesses operated only within one country.But now thanks to __________, businesses increasingly take advantage of cross-border activities.

A)born-global businesses
B)globalisation
C)economic freedom
D)economic liberty

Question 61

Importing involves:

A)the authorised use of intellectual property.
B)selling products from abroad in the business's home market.
C)purchasing the right to manufacture and sell a business's product in overseas markets.
D)the sale of products produced in the home country to customers in another country.

Question 62

If an olive oil importer sets up operations in Italy to be near its supplier, the company is going global by:

A)capitalising on the special features of the location.
B)cutting costs.
C)expanding its market.
D)gaining access to resources.

Question 63

Labour rates have risen over time to the point that Sipho's Chakalaka is considering ____________ to reduce costs.

A)outsourcing.
B)offshoring.
C)exporting.
D)importing.

Question 64

Regional free trade areas have been formed in order to:

A)duplicate government regulatory systems.
B)reduce tariffs to increase trade.
C)coordinate the currencies of included countries.
D)accommodate the demands of organised labour.

Question 65

A fundamental activity for global small business success is:

A)avoiding rigid planning that commits the business's resources to a single plan of action.
B)determining international markets that increase the company's unique potentials.
C)figuring out which of the business's competitors is capable of copying its strategy.
D)tapping government programmes that provide incentives for international expansion.

Question 66

If Sipho accepts the offer of the Gabonese grocery chain to sell his South African-made chakalaka in Gabon, he will be:

A)exporting.
B)importing.
C)offshoring.
D)forming an international strategic alliance..

Question 67

Thapelo is interested in joining with a large corporation in a cooperative venture to share risks and pool resources for his small auto parts manufacturing business.The strategy option he is exploring could best be described as:

A)an international strategic alliance.
B)exporting.
C)importing.
D)international cost shifting.

Question 68

Nike and many other companies engage in international outsourcing, which refers to:

A)sending US employees to manage foreign-based operations.
B)relocating stateside operations abroad.
C)obtaining raw materials in foreign countries.
D)accessing foreign labour through contracts with independent providers.

Question 69

Some small businesses choose to outsource internationally in order to:

A)avoid domestic taxes.
B)avoid competition from other South African companies.
C)cut costs and access talented foreign employees.
D)take advantage of legal loopholes in foreign countries.

Question 70

For some small businesses, a recent trend for going global is to:

A)be closer to large clients.
B)extend a product life.
C)find raw materials.
D)reduce transportation costs.

Question 71

The unauthorised use of intellectual property is called:

A)royalties.
B)international franchising.
C)foreign licensing.
D)counterfeit activity.

Question 72

If Vetkoek-Vetkoek contracts with a baker in Hong Kong to manufacture and sell its product in overseas markets, Vetkoek-Vetkoek would be the:

A)royalty receiver.
B)licensor.
C)licensee.
D)license initiator.

Question 73

For each unit produced under the licensing contract, the Hong Kong baker will pay a small fee called ________________ to Vetkoek-Vetkoek .

A)trademark fees.
B)royalties.
C)general licensing fees.
D)copyright fees.

Question 74

Increasingly, small businesses are expanding internationally to:

A)obtain raw materials.
B)gain access to skilled labour.
C)create job opportunities for domestic employees.
D)take advantage of government incentives.

Question 75

Nkoana is a young entrepreneur with grand plans, including international expansion of his new company.Once that decision is made, Nkoana's next step is to:

A)begin to hire employees with international experience.
B)join a trade mission.
C)plan a strategy that increases the potential of the business.
D)spend some time estimating the market potential of various countries.

Question 76

International franchising is a variation on the theme of:

A)exporting.
B)importing.
C)foreign licensing.
D)international strategic alliances.

Question 77

A company that operates a customer service call centre is likely to contract with a company in India to:

A)capitalise on the special features of location.
B)cut costs.
C)expand its market.
D)gain access to resources.

Question 78

When it comes to cutting costs, many foreign companies have chosen to locate production facilities in Mexico to:

A)obtain tariff reductions.
B)find raw materials.
C)follow large client businesses that locate abroad.
D)find suppliers offering highly specialised products.

Question 79

Mattel has allowed a producer in Thailand to manufacture and sell its branded dolls in overseas markets.The company in Thailand is a:

A)royalty receiver.
B)licensor.
C)licensee.
D)license initiator.

Question 80

A business that locates a production facility or sales office overseas by purchasing a foreign business from another business is participating in:

A)a cross-border acquisition.
B)a greenfield venture.
C)offshoring.
D)outsourcing.