Deck 1: Introduction to International Business

Question 1

In Dayan v. McDonald's Corporation , the court ruled that:

A) McDonald's quality standards were inadequate under French law.
B) the McDonald's franchise contract was illegal under French law.
C) McDonald's had fulfilled its responsibility to the franchisee in France under U.S. law.
D) the French do not like hamburgers.

Answer 1

C

Question 2

Freight forwarders are regulated by the Department of State and arrange the transportation of goods for the importer and represent the importer with customs.

Answer 2

False

Question 3

Small and medium-size companies lack the competitive advantage to compete with large multinational corporations and therefore have little to contribute to the international marketplace.

Answer 3

False

Question 4

Intellectual property rights are valuable assets that can be licensed to a foreign licensee as a means to penetrate a foreign market rather than establish a wholly owned subsidiary.

Question 5

Customs brokers are government inspection officials who have the responsibilities of inspecting and regulating the shipment of goods and services imported into the United States.

Question 6

International licensing agreements are contracts by which the holder of intellectual property grants certain rights in that property to a foreign firm for a specified period of time.

Question 7

Indirect exporters commonly employ the services of export trading companies and export management companies.

Question 8

The World Intellectual Property Organization defines intellectual property rights as "legal rights which result from intellectual activity in the industrial, scientific, literary, and artistic fields."

Question 9

A host country refers to the country under whose laws the investing corporation was created or is headquartered.

Question 10

Freight forwarders act as the seller's or exporter's agent.

Question 11

A company that makes unauthorized copies of a movie and sells the copies on DVDs is infringing on the movie owner's intellectual property rights.

Question 12

Trade consists of the import and export of goods or services.

Question 13

A potential negative aspect of  the transfer of technology is that the licensee could be your competitor in the future.

Question 14

A sovereign nation has the power to nationalize a foreign private enterprise without compensation.

Question 15

A home country refers to the country under whose laws the investing corporation was created or is incorporated.

Question 16

Non-tariff barriers, such as technical standards, do not have a significant influence on how firms make their trade and investment decisions.

Question 17

Indirect exporting but not direct exporting involves sales through sales agents or to foreign distributors.

Question 18

Currency exchange risk cannot be managed because the fluctuations of currencies cannot be predicted.

Question 19

Exporting is the shipment of goods or rendering of services to a foreign buyer located in a foreign country.

Question 20

The three forms of international business are exporting, importing, and licensing.

Question 21

International business may be classified into which of the following three categories:

A) trade, import/export, foreign exchange.
B) international licensing agreements, investments, law.
C) trade, international licensing agreements, investment.
D) international licensing agreements, trade, franchising.

Question 22

International licensing agreements pertain to forms of intellectual property such as:

A) government property.
B) trademarks, copyrights, patents.
C) real estate, personal property.
D) contracts.

Question 23

The concept of local participation refers to:

A) a portion of the employees of the business in the host country will be nationals of the home country.
B) employees of the business contribute a certain number of hours to community service.
C) a portion of the business must be owned by nationals of the host country.
D) the host country retains mineral rights.

Question 24

Which of the following statements most accurately describes the traditional economic climate in developing countries?

A) They are largely communist countries.
B) They have well-developed free market mechanisms.
C) They have mixed economies with strong central planning features.
D) The economies of developing countries make them practically unsuitable for Western companies to do business there.

Question 25

Two examples of non-tariff barriers that refer to quantitative restrictions on importing and a total or near total ban on trade respectively are:

A) partial embargoes, embargoes.
B) trade seizures, limits.
C) embargoes, quotas.
D) quotas, embargoes.

Question 26

The two types of exporting are:

A) impartial; partial.
B) direct; indirect.
C) foreign; domestic.
D) individual; joint.

Question 27

Firms that assist indirect exporters and are licensed to operate under the antitrust laws of the U.S. are:

A) export management companies.
B) indirect exporter merchants.
C) export trading companies.
D) none of the above.

Question 28

The shipment of goods or rendering of services to a foreign buyer located in a foreign country is:

A) importing.
B) exporting.
C) foreign exchange.
D) A and B.

Question 29

Tariffs on imported products are imposed for which of the following reasons?

A) Collection of revenue
B) Protection of domestic industries
C) To assert political objectives
D) All of the above

Question 30

In Gaskin v. Stumm Handel GmbH , the District Court ruled:

A) that employment contracts must be in writing.
B) that the plaintiff was excused from performing a contract written in German because he understood only English.
C) that the contract was unconscionable because it was written in a language foreign to the plaintiff.
D) that the plaintiff's signing of a jural document makes the signatory conclusively bound.

Question 31

The type of risk that includes controls on exports, imports, controls on the movement of currency, restrictions on licensing and investment, and controls over physical property located in a country is:

A) legal risk.
B) political risk.
C) economic risk.
D) currency risk.

Question 32

The process of buying goods from a foreign supplier and entering them into the customs territory of a different country is:

A) exporting.
B) international exchange.
C) trade by design.
D) none of the above.

Question 33

Which of the following is not a characteristic of multinational corporations?

A) The United States is usually their home nation.
B) They derive capital resources worldwide.
C) They operate facilities of production in more than one country.
D) They move production, technology, and capital to those countries with the most hospitable environment.

Question 34

If a party does not fulfill their obligations as set forth in a sales contract, it is known as:

A) non-payment.
B) termination.
C) non-performance.
D) all of the above.

Question 35

Which of the following does not generally characterize foreign distributors?

A) They are independent firms.
B) They are usually located in the country from which the goods are exported.
C) They assume the risks of warehousing the goods.
D) The often trail end users of the product.

Question 36

A cooperative business arrangement between two or more companies may be a:

A) partnership.
B) joint venture.
C) corporation.
D) all of the above.

Question 37

In the case In re Union Carbide Corporation Gas Plant Disaster at Bhopal , the U.S. court ruled:

A) that Union Carbide was criminally responsible for the deaths at the Indian plant.
B) that Union Carbide was liable to the plaintiffs under Indian law.
C) that Union Carbide was not responsible for the negligent acts of its subsidiary in India.
D) that the case brought in U.S. courts should be transferred to the courts of India.

Question 38

Export management companies assist indirect exporters by serving as:

A) consultants.
B) attorneys.
C) foreign currency traders.
D) accountants.

Question 39

An independent firm that purchases goods for resale directly from the exporter, assumes credit risks in the local market, and provides product service and support is known as:

A) a foreign sales representative.
B) a sales agent.
C) a foreign distributor.
D) a freight forwarder.
E) a customs broker.

Question 40

International franchising allows the franchisee the right to use a(n):

A) export management company.
B) export trading company.
C) copyright.
D) none of the above.

Question 41

Compare and contrast possible methods of managing currency risk.

Question 42

Devise "managerial guidelines" or "Troubleshooter's Guide" to which a U.S. franchise representative should refer in supervising or consulting with a new, foreign franchisee.

Question 43

Which of the following does not accurately characterize export management companies?

A) They act as advisors or consultants.
B) They engage in foreign market research.
C) They exhibit goods at foreign trade shows.
D) They use their extensive sales contracts to market the products of other companies.

Question 44

Compare and contrast the ethical and strategic aspects of providing contract interpretation services to foreign business partners.

Question 45

Why do the risks to the firm increase as the penetration of the foreign market increases?

Question 46

Compare and contrast the benefits and risks of direct and indirect exporting.

Question 47

Which of the following is NOT an example of the transfer of technology?

A) Medical researchers at a university providing research data to a pharmaceutical company as part of an effort to find a cure for cancer.
B) A computer programmer sharing her source code with the public via the Internet.
C) A website designer downloading a copy of a photograph for use on a website, without the photographer's knowledge or permission.
D) A franchisor teaching a new franchise owner how to set up and run his franchise, using the franchisor's methods and materials.

Question 48

How do you feel doing business in the Middle East would differ from doing business elsewhere? What special factors (e.g. religious differences, cultural variables, Arab-Israeli relations) bear on your answer?

Question 49

As a form of foreign direct investment, a foreign branch is a business presence by the investor in the ________ country.

A) home
B) host
C) neighboring
D) local

Question 50

The World Intellectual Property Organization, or WIPO, is a specialized agency of the:

A) United Nations.
B) World Trade Organization.
C) World Customs Organization.
D) International Chamber of Commerce.

Question 51

Weigh the risks and benefits of entering the international market with those of entering or doing business in the domestic market.

Question 52

Design a business plan for doing business in the Middle East, addressing religious and cultural differences.

Question 53

Weigh the relative benefits and risks of a medium-sized American firm licensing technology to a developed nation? A developing nation?

Question 54

In what ways is doing business in the developing nations of Eastern Europe both similar and different from doing business in the United States? Western Europe?

Question 55

Choose a product and a country to which you wish to export that product. Prepare an export plan, identifying in particular the factors that would need to be addressed in order to ensure a successful venture.

Question 56

Compare and contrast the three basic forms of international business or market entry strategies.

Question 57

Identify a domestic franchise. Craft a franchising agreement that addresses standards/quality or service (in the manner of McDonald's).