Deck 15: Global Opportunities

Question 1

Entrepreneurs can use the Web to generate sales leads by researching customers and market characteristics in other countries.

Answer 1

True

Question 2

All of these are steps small companies follow when they begin conducting global business on the Web except ________.

A) connecting to e-mail
B) building a globally-accessible Web site
C) setting up links to related company Web sites
D) using the Web to conduct international market research

Answer 2

C

Question 3

________ are domestic wholesalers who do business in foreign markets, buying goods from domestic companies and selling them in foreign markets, often handling competing lines.

A) Resident buying offices
B) Export trading companies
C) Foreign distributors
D) Export merchants

Answer 3

D

Question 4

Which of the following statements is/are true regarding export management companies?

A) Most are merchant intermediaries that work on a buy-and-sell arrangement with domestic small companies.
B) They provide small businesses with a low-cost, efficient, independent, international marketing department.
C) Many specialize in particular products or product lines and offer services ranging from market research and advice or patent protection, to arranging financing and handling shipping.
D) All of the above

Question 5

Some of the strategic options entrepreneurs have when deciding to go global include the Web, joint ventures, and franchising.

Question 6

Which of the following trade intermediaries lowers the risk of exporting for a small business?

A) Export management companies
B) Export trading companies
C) Resident buying offices
D) All of the above

Question 7

Foreign distributors offer small businesses which of the following benefits?

A) A detailed knowledge of the local markets in which they sell.
B) The ability to cover a foreign sales territory thoroughly.
C) The ability to handle all of the marketing, distribution, and service functions in foreign markets.
D) All of the above

Question 8

Only about one-third of the world's purchasing power lies outside the borders of the United States.

Question 9

Learning to think globally may be the first (and most threatening) obstacle an entrepreneur must overcome on the way to creating a truly global business.

Question 10

Explain why it is important to "go global." What benefits can companies that take the plunge into global business expect?

Question 11

An export trading company ________.

A) is a business that buys and sells products in many countries, either in its own name or as an agent for its buyer-seller clients
B) typically offers a wide range of services such as exporting, shipping, storing, distributing, and others to their clients
C) is formed by an agreement by which a licenser gives a foreign licensee the right to use a patent, trademark, copyright, technology, and products in return for a percentage of the licensee's sales or profits
D) Both A and C above

Question 12

Becoming a global entrepreneur requires ________.

A) constant innovation
B) maintaining a high level of quality and constantly improving it
C) being sensitive to foreign customers' unique requirements and adopting a more respectful attitude toward foreign habits and customs
D) All of the above

Question 13

Before going global, entrepreneurs should ask themselves questions regarding ________.

A) profit potential and commitment of resources for a global effort
B) a viable exit strategy and the cost of not going global
C) the reasons, rationale, and understanding cultural differences
D) All the above

Question 14

For an entrepreneur, expanding into international markets ________.

A) guarantees its success in the marketplace
B) makes it a member of GATT automatically
C) helps it grow faster and survive competition better
D) leads to business failure for companies under $100 million in annual revenue

Question 15

A resident buying office is ________.

A) a business that buys and sells products in many countries, either in its own name or as an agent for its buyer-seller clients
B) a government-owned or business-owned facility set up in a foreign country to buy products that are made there
C) a firm in an overseas distribution network selling noncompetitive products made by other firms
D) formed by an agreement where a licenser gives a foreign licensee the right to use a patent, trademark, copyright, technology, and products in return for a percentage of the licensee's sales or profits.

Question 16

Success in the global economy requires constant innovation, high quality, and flexibility and the ability to have a new perspective about the potential of a business.

Question 17

________ act as international sales representatives in a limited number of markets for various noncompeting domestic companies, typically operating on a commission basis.

A) Manufacturers' export agents
B) Export merchants
C) Resident buying offices
D) Foreign distributors

Question 18

Small companies that take the plunge into global business can extend their products' life cycles, raise their quality levels, and increase sales and profits.

Question 19

The first obstacle an entrepreneur must overcome on the way to creating a truly global business is ________.

A) finding a joint venture partner
B) learning to think globally
C) locating motivated, multilingual managers for overseas assignments
D) finding overseas distributors for the company's products

Question 20

As the trend toward increased globalization continues, successful companies must consider themselves businesses without borders.

Question 21

Which of the following is/are often used by companies exporting to countries that lack a convertible currency?

A) Countertrading
B) Indirect exporting
C) Bartering
D) A and C only

Question 22

________ is a transaction in which a company selling goods and services in a foreign market agrees to help promote investment and trade in that country.

A) Countertrading
B) Bartering
C) Foreign licensing
D) Exporting

Question 23

Which of the following is a common problem in joint ventures?

A) Incompatible management styles among partners.
B) Failure of partners to establish common goals.
C) Failure of partners to carefully determine each party's contributions and responsibilities, distribution of earnings, etc.
D) All of the above

Question 24

If a business owner cannot afford to invest in foreign facilities and does not have time to learn the foreign market, but is willing to give someone else the right to make and market her/his product for a fee and royalties, her/his best bet for entering the foreign market is ________.

A) a foreign management company
B) joint venturing
C) foreign licensing
D) international franchising

Question 25

Foreign licensing has its greatest potential in the licensing of ________.

A) products
B) intangibles (e.g., technology, copyrights, and trademarks).
C) goods
D) franchises

Question 26

The most important ingredient for a successful joint venture is ________.

A) targeting the right country in which to sell
B) getting government approval and avoiding antitrust charges
C) choosing the right partner
D) splitting costs and profits equally

Question 27

The biggest barrier facing companies that have never exported is ________.

A) finding the financing to launch an export program
B) not knowing where or how to start
C) locating a trade intermediary to represent them in foreign markets
D) winning government approval to begin selling in foreign markets

Question 28

Many joint ventures fail because the parties involved neglected to ________.

A) select a partner who shares their company's values
B) spell out in writing exactly how the venture will work and who has decision-making authority
C) select a partner whose skills are different from, but compatible with, their own
D) All of the above

Question 29

Foreign licensing is ________.

A) required when a business buys and sells products in many countries, either in its own name or as an agent for its buyer-seller clients
B) a government-owned or business-owned facility set up in a foreign country to buy products that are made there
C) the use by one firm (the carrier) of its overseas distribution network to sell noncompetitive products made by other firms (riders)
D) an agreement in which a licenser gives a licensee in another country the right to use that licenser's patent, trademark, copyright, technology, and products in return for a percentage of the licensee's sales or profits

Question 30

In a(n) ________, a domestic small business forms an alliance with a company in the target nation for the purpose of exporting to that market.

A) foreign joint venture
B) trade intermediary
C) domestic joint venture
D) export management company

Question 31

The drawbacks of countertrading include which of the following?

A) Countertrade transactions can be complicated, cumbersome, and time-consuming.
B) Countertrade transactions can increase the chances that a company will be stuck with merchandise it cannot move.
C) Countertrade transactions can lead to unpleasant surprises concerning the quantity and quality of products required in the countertrade.
D) All of the above

Question 32

Domino's Pizza and McDonald's operating in Japan and Europe are examples of ________.

A) foreign management companies
B) joint venturing
C) foreign licensing
D) international franchising

Question 33

The second step to creating a sound export strategy involves ________.

A) analyzing the product or service
B) recognizing the potential to export
C) analyze your commitment
D) research market and pick your target

Question 34

Two valuable resources for entrepreneurs to investigate for going global should include ________.

A) U.S. Department of Commerce
B) International Trade Administration
C) A and B above
D) Neither of these resources will provide real value or insight

Question 35

The first step in establishing a successful global franchise arrangement is to ________.

A) generate lead for potential franchisees
B) structure the franchise deal
C) identify the country or countries that are best suited to the franchiser's business concept
D) select quality candidates

Question 36

The first step to create a sound export strategy is to ________.

A) recognize that even the smallest companies and least experienced entrepreneurs have the potential to export
B) analyze your product or service
C) analyze your commitment
D) research markets and pick your target

Question 37

In a(n) ________, two or more U.S. small businesses form an alliance for the purpose of exporting their goods and services. The companies get antitrust immunity and share responsibility for the business equally.

A) foreign joint venture
B) trade intermediary
C) domestic joint venture
D) export management company

Question 38

________, the exchange of goods and services for other goods and services, is one way of trading with countries that lack convertible currency.

A) Countertrading
B) Bartering
C) Foreign licensing
D) Exporting

Question 39

Nance Technologies, Inc., has agreed to sell some of its computers to a company in Bascovina, a country whose currency is worthless outside its own borders. As part of the agreement, Nance will sell the foreign customer its computers in exchange for a specified number of tons of coffee, a major export of Bascovina. Nance has already arranged to sell the coffee to a major processor for a set price in U.S. dollars. Nance has engaged in ________.

A) bartering
B) foreign licensing
C) exporting
D) countertrading

Question 40

Small businesses contribute ________ percent of U.S. export sales.

A) 20
B) 25
C) 33
D) 40

Question 41

Entrepreneurs who are considering importing goods and services or outsourcing their manufacturing to foreign countries should begin by ________.

A) making sure that importing or outsourcing is right for their business
B) do your research before you leave home
C) establish a target market for your product
D) do your groundwork once you arrive

Question 42

In the United States alone, companies import more than ________ worth of goods and services annually.

A) $3.2 million
B) $1.2 trillion
C) $2.7 trillion
D) $2.3 trillion

Question 43

Selling to a resident buying office is just like selling to domestic customers since the buying office handles all of the details of exporting the products.

Question 44

While export management companies tend to focus on exporting, export trading companies usually perform both import and export trades across many countries' borders.

Question 45

Unlike an EMC or an ETC, manufacturers' export agents act as international sales representatives in a limited number of markets for various noncompeting domestic companies, typically operating on a commission basis.

Question 46

Foreign distributors offer exporting small businesses the benefit of knowledge of the local markets in which they sell, the ability to cover a foreign sales territory thoroughly, and the ability to handle all of the marketing, distribution, and service functions in foreign markets.

Question 47

The final step in creating a sound export strategy is to ________.

A) find your customer
B) ship your goods
C) collect your money
D) find financing

Question 48

Some foreign countries place limitations on joint ventures with host companies within their borders, for example by requiring the host company to own at least 51 percent of the venture.

Question 49

Most small businesses getting started in conducting global business do not need the services of trade intermediaries because "going global" has become so easy that even the smallest businesses can do it alone.

Question 50

Trade intermediaries are domestic agencies that serve as distributors in foreign countries for domestic companies of all sizes.

Question 51

When two small businesses in the target nation form an alliance, they have formed a foreign joint venture.

Question 52

Export trading companies are government-owned operations established in countries around the world (including the United States) for the purpose of buying goods there.

Question 53

One reason joint ventures fail is because entrepreneurs did not select a partner who shares their company's values and standards of conduct.

Question 54

In a domestic joint venture, a domestic company forms an alliance with a company in the target nation.

Question 55

Most export merchants buy goods, often competing lines, from many domestic companies and then sell them in foreign markets.

Question 56

Which of the following is not one of the three major advantages to establishing an international location?

A) Lower production costs
B) Need for smaller staff
C) Lower marketing costs
D) Development of an intimate knowledge of customer preferences

Question 57

A ________ is a document an exporter draws on a foreign buyer, requiring the buyer to pay the face amount, either on sight or on a specified date, once the goods are shipped.

A) bank draft
B) letter of credit
C) repurchase agreement
D) trade acceptance

Question 58

Most export management companies (EMCs) are merchant intermediaries that work on a buy-and-sell arrangement with domestic small companies, providing small businesses with a low-cost, efficient, independent, international marketing department.

Question 59

A ________ is an agreement between an exporter's bank and the foreign buyer's bank that guarantees payment to the exporter for a specific shipment of goods.

A) bank draft
B) letter of credit
C) repurchase agreement
D) trade acceptance

Question 60

One of the biggest barriers to small business exports is lack of ________.

A) access to adequate financing
B) attractive countries that are not already saturated by franchising efforts
C) effective distribution strategies
D) information to make informed decisions about franchising

Question 61

A countertrade is a transaction in which a company selling goods and services in a foreign country agrees to help promote investment and trade in that country.

Question 62

Collecting foreign accounts is usually less complex than collecting domestic ones.

Question 63

Before engaging in foreign licensing, a business owner should secure patent, trademark and copyright protection.

Question 64

Foreign licensing is when a business buys and sells products in many countries, either in its own name, or as an agent for its buyer-seller clients.

Question 65

Although franchising is a popular way to do business in the United States, it is not a popular strategy in international markets.

Question 66

Foreign licensing is a relatively simple way for even the most inexperienced business owner to extend his reach into global markets.

Question 67

The licensing potential for intangibles, such as technology, trademarks, and other forms of protection, is often greater than the licensing opportunities for products.

Question 68

A franchiser should have sufficient managerial and financial resources to devote to globalization.

Question 69

Researching potential export markets is a waste of time and resources for small business owners; the best way to find export opportunities is to travel abroad and sell.

Question 70

Although franchise outlets operate throughout the world, the primary market for U.S. franchisers is Europe.

Question 71

What advantages do taking on a partner in a joint venture offer a small business in an international business opportunity? Disadvantages?

Question 72

A letter of credit is an agreement between an exporter's bank and a foreign buyer's bank that guarantees payment to the exporter for a specific shipment of goods.

Question 73

Lack of export financing remains a significant barrier to small businesses selling in foreign markets.

Question 74

As the domestic market for franchises has become increasingly saturated with outlets, the number of franchisers attracted to foreign markets has grown.

Question 75

One reason for McDonald's success in foreign markets is its decision to stick to exactly the same menu in every country that it offers in the United States.

Question 76

Outline the eight strategies for "going global" available to the small business owner.

Question 77

FOB is when the seller must deliver goods to the carrier, obtain export licenses, pay export taxes, and bear the risk of loss until the goods are delivered to the buyer.

Question 78

One of the eight strategies a company uses to "go global" includes the use of trade intermediaries. Identify the six types of trade intermediaries and explain why a small business owner might use each one.

Question 79

If a country's currency is not convertible into any other currency, companies exporting to that country usually engage in either countertrading or bartering.

Question 80

Successful bartering is easier than countertrade but requires finding a business with complementary needs.