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Question
Despite its advantages, FDI has been described as an "expensive" and "risky" international growth strategy. Other things being equal, why is FDI expensive and risky when compared to licensing and exporting?
Answer
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Related questions
Q:
Flexible manufacturing technologies enable companies to:
A. establish multiple manufacturing facilities in each major national market.
B. build large inventories.
C. achieve product standardization across markets.
D. increase their work in progress.
E. produce customized products without a significant cost penalty.
Q:
A _____ includes a grouping of various types of machinery, a common materials handler, and a computer to control the production of a family of parts or products.
A. specialized asset
B. dynamic capability
C. turnkey project
D. flexible machine cell
E. just-in-time inventory
Q:
Mass customization reconciles the two goals of:
A. mass production and long production runs.
B. standardization and economies of scale.
C. high fixed costs and single production facility.
D. low cost and product customization.
E. local responsiveness and decentralized production.
Q:
Producing a standardized product in large volumes will:
A. result in diseconomies of scale.
B. increase production efficiency.
C. increase production costs.
D. result in shorter production runs.
E. result in a high minimum efficient scale of output.
Q:
The level of output at which most plant-level scale economies are exhausted is known as _____.
A. mass customization
B. breakeven point
C. minimum efficient scale
D. just-in-time
E. lean production
Q:
Which of the following statements is true of Six Sigma?
A. The higher the number of "sigmas," the higher the number of errors.
B. At Six Sigma, a production process would be 90 percent accurate.
C. Six Sigma work standards are based solely on numbers or quotas.
D. It is almost impossible for a company to achieve Six Sigma perfection.
E. Six Sigma is the modern successor to ISO 9000.
Q:
The total quality management philosophy was developed by a number of American consultants. Which of the following individuals is one of them?
A. W. Edward Deming
B. Philip Kotler
C. Michael Porter
D. Henry Ford
E. Valerie Zeithaml
Q:
The principal tool that most managers now use to increase the reliability of their product offering is _____, a statistically based methodology for improving product quality. It is a direct descendant of the total quality management philosophy.
A. Six Sigma
B. lean manufacturing
C. just-in-time inventory
D. ISO 9000
E. mass customization
Q:
Champion Works Inc. is an animation company, headquartered in the U.S. The CEO of the company has decided to outsource some of the production to companies in developing countries, as the firm seems to be losing out on its competitive advantage. This decision to shift functions or processes to less developed countries is due to their:
A. strong intellectual property rights laws.
B. lower labor costs.
C. accessibility to better technology.
D. sophisticated infrastructure.
E. currency appreciation.
Q:
The drawback of a just-in-time inventory system is that it leaves a firm with excess unsold inventory that it has to write off against earnings or price low to sell.
Q:
In recent years, the outsourcing decision in international businesses has gone beyond the manufacture of physical products to embrace the production of service activities.
Q:
In recent years, time-based competition has lost its importance in international business.
Q:
In international business, production and logistics functions need not accommodate demands for local responsiveness.
Q:
W. Edward Deming believed that achieving better quality requires the commitment of everyone in a company.
Q:
The objectives of reducing costs and increasing quality in a firm are independent of each other.
Q:
The production and logistics functions of an international firm are independent of each other.
Q:
When a firm enters a(n) _____ agreement with a country, it often ends up with what are called counterpurchase credits, which can be used to purchase goods from that country.
A. arbitrage
B. offset
C. switch trading
D. buyback
E. compensation
Q:
From an exporter's perspective, why is an offset more attractive than a straight counterpurchase agreement?
A. It is the simplest countertrade arrangement.
B. It gives the exporter greater flexibility to choose the goods that it wishes to purchase.
C. It allows the use of a specialized third-party trading house.
D. It gives the exporter counterpurchase credits, which can be used to purchase goods from another country.
E. It allows direct exchange of goods and/or services between two parties without a cash transaction.
Q:
_____ refers to an alternative means of structuring an international sale when conventional means of payment are difficult, costly, or nonexistent.
A. Guanxi
B. Factoring
C. Securitization
D. Countertrade
E. Sogo shosha
Q:
The Foreign Credit Insurance Association (FCIA) is an association of private commercial institutions operating under the guidance of the _____.
A. Federal Mediation and Conciliation Service
B. U.S. Department of Commerce
C. ExportImport Bank
D. International Trade Administration
E. Ministry of International Trade and Industry
Q:
An export credit insurance is necessary when the:
A. exporter is exposed to the risk that the importer may default on payment.
B. exporter is dealing in a country that has a nonconvertible currency.
C. exporter is unable to obtain any pre-export financing.
D. exporter has received a letter of credit from the importer's bank.
E. exporter has to enter a barterlike agreement.
Q:
When serving as a _____, a bill of lading specifies that the carrier is obligated to provide a transportation service in return for a certain charge.
A. contract
B. receipt
C. document of title
D. letter of credit
E. bill of exchange
Q:
Which of the following is a characteristic of a time draft?
A. It has no value given the deferred nature of the document.
B. It is generally not preferred in international transactions.
C. It is a negotiable instrument.
D. It is also known as a bill of lading.
E. It cannot be sold by an exporter.
Q:
When a time draft is presented to a drawee, he or she signifies acceptance of it by:
A. delivering the goods immediately.
B. paying the draft amount immediately.
C. providing a collateral for the amount specified in the bill.
D. writing or stamping a notice of acceptance on its face.
E. selling the draft to an investor at a discount from its face value.
Q:
Which of the following is an advantage of having a letter of credit?
A. It allows payment for merchandise after its delivery.
B. It facilitates an exporter to obtain pre-export financing.
C. It allows an exporter to get a higher price for his or her goods.
D. It helps exporters incur lower shipping costs.
E. It does not require the importer to pay any fee.
Q:
Which of the following is true of a letter of credit in international trade?
A. No cash deposit or collateral is required from the importer.
B. The exporter pays the trusted third party (usually a bank) a fee for the service.
C. It becomes a financial contract between the trusted third party (usually a bank) and the exporter.
D. It is issued by the exporter at the request of the importer.
E. The creditworthiness of the importer is irrelevant when issuing a letter of credit.
Q:
A lack of trust between two parties engaged in international trade is exacerbated by the:
A. saturation of the domestic market.
B. similar preferences of the parties regarding how a transaction should be configured.
C. narrowing distance between the two parties due to technological advances.
D. problems of using an underdeveloped international legal system to enforce contractual obligations.
E. possibility of doing business with someone with whom they have been associated for a long time.
Q:
Which of the following is a drawback of relying on an export management company (EMC)?
A. It does not provide references and has no antecedents.
B. The exporting company can fail to develop its own exporting capabilities.
C. It does not have expert specialists to help neophyte exporter identify opportunities.
D. It typically lacks information about local business regulations.
E. The exporting company cannot avoid the common pitfalls of exporting.
Q:
Which of the following is a way in which the U.S. Department of Commerce helps potential exporters?
A. It oversees volunteers with international trade experience and directs them to provide one-on-one counseling to active and new-to-export businesses.
B. It assembles a "comparison shopping service" for 14 countries that are major markets for U.S. exports.
C. It coordinates a nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters.
D. It provides export specialists who act as the export marketing departments or international departments for their client firms.
E. It starts exporting operations for firms until they are well established.
Q:
Which of the following institutions within the U.S. Department of Commerce is dedicated to providing businesses with intelligence and assistance for attacking foreign markets?
A. The International Trade Administration
B. The Small Business Administration
C. The Federal Trade Commission
D. The Bureau of Competition
E. The Bank of New York