Q&A Hero

Q: A firm that enters many markets at once: A.runs the risk of spreading its limited management resources too thin. B.becomes established in all the markets. C.gets the time to learn about each market. D.has fewer export opportunities. E.reduces the costs of any subsequent failure.

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 a 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 function of an export management company? A.It starts exporting operations for a firm with the understanding that the firm will take over operations after they are well established. B.It coordinates the Export Legal Assistance Network, a nationwide group of international trade attorneys. C.It oversees volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses. D.It collects duties on exported products and sets interest rates for charging foreign investors. E.It gives novice exporters the names and addresses of potential distributors in foreign markets along with businesses they are in.

Q: Which of the following refers to an export specialist that acts as an export marketing department for client firms? A.Export management company B.Export-import firm C.Foreign direct investment management firm D.Strategy management company E.Association of export companies

Q: A nationwide group of international trade attorneys who provide free initial consultations to small businesses on export-related matters is the: A.TradeNet Export Advisor. B.Export Trade Assistance Partnership. C.United States Trade Service. D.Export Legal Assistance Network. E.Ex-Im Network.

Q: The Small Business Administration oversees almost 11,500 volunteers with international trade experience to provide one-on-one counseling to active and new-to-export businesses through its program known as the: A.Export Legal Assistance Network. B.Service Corps of Retired Executives. C.International Trade Veteran's Group. D.Network of Foreign Trade Executives. E.Export Management Company.

Q: Which of the following organizations runs the Service Corps of Retired Executives (SCORE) program? A.Foreign Credit Insurance Association B.International Trade Administration C.Small Business Administration D.U.S. Department of Commerce E.U.S. Commercial Service

Q: The government organization that employs 76 district international trade officers and 10 regional international trade officers throughout the United States as well as a 10-person international trade staff in Washington, D.C. to help potential exporters is the: A.Federal Trade Commission. B.U.S. Commercial Service. C.International Trade Administration. D.Small Business Administration. E.sogo shosha.

Q: Representatives of the U.S. Department of Commerce accompany groups of U.S. businesspeople abroad to meet with qualified agents, distributors, and customers, as part of the: A.matchmaker program. B."best prospects" listing. C.SCORE program. D."comparison shopping service." E.export-import program.

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: The list provided by the International Trade Administration to a potential exporter with the names and addresses of potential distributors in foreign markets, along with businesses they are in, is called the: A.ELAN list. B."best prospects" list. C."comparison shopping service." D.SCORE list. E.export management list.

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

Q: The most comprehensive source of information on export opportunities for U.S. firms is the: A.Small Business Administration. B.Department of Commerce. C.Federal Trade Commission. D.Bureau of Competition. E.Bank of New York.

Q: Which of the following is true of the export performance of the United States, Germany, and Japan? A.Historically, the United States has made its living as a trading nation. B.Germany has been a relatively self-contained continental economy in which international trade played a minor role. C.Unlike Japan, U.S. firms have a strong information advantage when they seek export opportunities. D.The United States has not yet evolved an institutional structure for promoting exports similar to that of Germany. E.The Ministry of International Trade and Industry (MITI) in the United States is always on the lookout for export opportunities.

Q: The sogo shosha of Japan: A.proactively and continuously seek export opportunities for their affiliated companies. B.exclusively serve the largest and most prestigious companies in Japan. C.have offices concentrated in the business district of Tokyo. D.have monopolized the export market in the country. E.consider export only when there is excess production at home.

Q: Japan's great trading houses are referred to as: A.kaizen. B.sogo shosha. C.zaibatsu. D.guanxi. E.kanban.

Q: Due to the complexity and diversity of foreign markets, firms sometimes hesitate to seek export opportunities. These firms can best overcome ignorance by: A.shortening production runs. B.creating revenue. C.outsourcing decisions. D.collecting information. E.lowering unit costs.

Q: Which of the following is true of exporting? A.It takes a very short time before all foreigners are comfortable enough to purchase in significant quantities. B.Novice exporters tend to overestimate the time required to cultivate business in foreign countries. C.Exporters often face voluminous paperwork, complex formalities, and many potential delays and errors. D.Large firms are usually unfamiliar with foreign market opportunities. E.Large firms do not consider exporting until their domestic market is saturated.

Q: Which of the following is true of exporting? A.Many foreign customers require face-to-face negotiations on their home turf. B.Large firms tend to wait for the world to come to them, rather than going out into the world to seek opportunities. C.Exporters have the advantage of reduced paperwork and fewer formalities. D.Medium-sized and small firms are proactive about seeking opportunities for profitable exporting. E.Firms that focus only on exporting often lose out on significant opportunities for growth and cost reduction.

Q: Which of the following is a common pitfall that novice exporters come across? A.Poor understanding of the opportunities in the domestic market B.Low unit costs C.Increased economies of scale D.Problems securing financing E.Familiar distribution systems

Q: Many medium-sized and small firms are not proactive in seeking export opportunities because: A.they are familiar with the foreign market and do not find it challenging enough. B.the export market is similar to the home market in terms of legal and business practices. C.they are intimidated by the complexities and mechanics of exporting to foreign countries. D.domestic regulations limit their ability to export profitably. E.they can't recruit managers with the expertise needed to cultivate business in foreign countries.

Q: Which of the following is true of medium-sized and small firms? A.They are proactive about seeking opportunities for profitable exporting. B.They consider exporting only after their domestic market is saturated. C.They are not intimidated by the complexities of foreign legal systems. D.They have a high degree of familiarity with foreign market opportunities. E.They explore foreign markets to see where the opportunities lie for leveraging their technology.

Q: While seeking opportunities for profitable exporting, large firms generally tend to be: A.passive. B.risk averse. C.wary. D.proactive. E.neutral.

Q: Firms that do not export often: A.face problems of currency conversion. B.lose out on significant opportunities for cost reduction. C.are able to reduce their unit costs. D.are not intimidated by the business practices of foreign countries. E.explore foreign markets to see where they can leverage their technology.

Q: Exporting is nearly always a way to increase the revenue and profit base of a company because: A.there is little competition in the international market. B.foreign governments encourage imports from other countries. C.international markets are less complex than their domestic counterparts. D.the international market is much larger than the domestic market. E.it does not involve wasting resources on paperwork.

Q: Which of the following is an advantage of exporting? A.It helps in easy currency conversion. B.It provides large revenue and profit opportunities. C.It reduces the administrative costs incurred by a company. D.It helps companies increase their unit costs. E.It reduces paperwork and complex formalities.

Q: Countertrade's main attraction is that it can give a firm a way to finance an export deal when other means are not available.

Q: Offset refers to the use of a specialized third-party trading house in a countertrade arrangement.

Q: Barter is primarily used with trading partners who are not creditworthy or trustworthy.

Q: The principle of countertrade is to trade goods and services for money.

Q: Export credit insurance protects an exporter against the possibility of a foreign importer's default on payment when there is a lack of a letter of credit.

Q: The mission of the Foreign Credit Insurance Association is to provide financing aid that will facilitate exports, imports, and the exchange of commodities between the United States and other countries.

Q: The Export-Import Bank provides financing aid to prospective U.S. exporters.

Q: A bill of lading can function as collateral against which funds are advanced to the exporter by its local bank before final payment by the importer.

Q: In international commerce, time drafts are negotiable instruments.

Q: In international commerce, a sight draft allows for a delay in payment.

Q: In domestic trade transactions, a buyer can often obtain possession of merchandise without signing a formal document acknowledging his or her obligation to pay.

Q: In international commerce, a person or business initiating a draft is known as the drafter and the party to whom the draft is presented is known as the draftee.

Q: A draft, an instrument normally used in international commerce to effect payment, is also known as a letter of credit.

Q: A letter of credit may reduce an importer's ability to borrow funds for other purposes.

Q: Issued by a bank at the request of an importer, a bill of lading states that the bank will pay a specified sum of money to a beneficiary, normally the exporter, on presentation of particular, specified documents.

Q: Lack of trust in international trade is exacerbated by the distance between the two parties in space, language, and culture.

Q: Exporting is often not an end in itself, but merely a step on the road toward establishment of foreign production.

Q: It often makes sense for a firm to enter a foreign market on a large scale to reduce the costs of any subsequent failure.

Q: The advantage of export management companies (EMCs) is that they are experienced specialists that can help the neophyte exporter identify opportunities and avoid common pitfalls.

Q: Export management companies (EMCs) start exporting operations for a firm with the understanding that the firm will take over operations after they are well established.

Q: Commercial banks and major accounting firms are rarely willing to assist small firms in starting export operations due to high default risks.

Q: For U.S. firms, the most comprehensive source of information on export opportunities is the U.S. Department of Commerce.

Q: German and Japanese firms are relatively more information-disadvantaged than U.S. firms.

Q: Reactive firms do not consider exporting until their domestic market is saturated.

Q: While small firms tend to be proactive about seeking opportunities for profitable exporting, large firms are very reactive.

Q: Firms that actively export often lose out on significant opportunities for growth and cost reduction.

Q: Only large companies have benefited significantly from the moneymaking opportunities of exporting.

Q: Which of the following modes of entry is suitable for service firms where the risk of losing control over the management skills or technological know-how is not much of a concern, and where the firms' valuable asset is their brand name? A.Exporting B.Franchising C.Licensing D.Turnkey projects E.Cross-licensing

Q: Jupiter Systems is a high-tech firm looking to set up operations in a foreign country. The firm's core competency is in technological know-how. Which of the following modes of entry would be most favorable to the firm if it wants to keep a tight control over its technology? A.Wholly owned subsidiary B.Joint venture C.Franchising D.Licensing E.Turnkey project

Q: Axiom International, an Australian company, wants to expand its operations to China, a country that is politically, culturally, and economically different. The firm needs to select a mode of entry that would give it access to local knowledge, allow sharing of development costs and risks, and also be politically acceptable. Which of the following modes of entry into foreign markets is most suitable for Axiom International? A.Wholly owned subsidiary B.Joint venture C.Exporting D.Greenfield investments E.Licensing

Q: Why should a high-tech firm avoid selecting licensing as a mode of entry? A.Threat of creating efficient partners B.Risk of losing control over technology C.Fear of rapid imitation of core technology D.Lack of a transitory technological advantage E.Inability to deter development costs

Q: Which of the following modes of entry into foreign markets can result in a lack of control over quality? A.Exporting B.Franchising C.Turnkey projects D.Wholly owned subsidiaries E.Joint ventures

Q: A distinction can be drawn between firms whose core competency is in which of the following? A.Scale of entry and strategic commitments B.Location and experience curves C.Acquisitions and greenfield ventures D.Technological know-how and management know-how E.Cost reductions and entry mode

Q: Which of the following is true of international firms considering foreign expansion? A.The timing and scale of entry of foreign expansion are minor details in comparison with the choice of foreign market. B.The long-run economic benefits of doing business in a country are solely a function of the country's population size. C.If the firm's core competence is based on proprietary technology, entering a joint venture might risk losing control of that technology to the joint-venture partner. D.The costs and risks associated with foreign expansion are higher in economically advanced nations. E.Politically unstable and less developed nations offer favorable benefit-cost-risk trade-off conditions.

Q: The risks associated with learning to do business in a new culture are less if the firm: A.engages in global strategic coordination. B.imposes strict marketing guidelines on how to do business. C.enters a greenfield venture in the host country. D.realizes substantial location economies. E.acquires an established host-country enterprise.

Q: When should a firm configure its value chain to maximize value at each stage? A.When government regulations relax B.When cost pressures are intense C.When rapid imitation is expected D.When the number of consumers increases E.When incumbent competitors exist

Q: Which of the following entry modes into a foreign market best serves a high-tech firm? A.Turnkey projects B.Franchising C.Wholly owned subsidiaries D.Joint ventures E.Exporting

Q: How can a wholly owned subsidiary be established in a foreign market? A.Through a turnkey operation with a local partner B.Through franchising C.By acquiring an established firm in the host nation D.By exporting E.Through a licensing agreement

Q: What triggers the conflict of interest over strategy and goals in joint ventures? A.Local partner's knowledge of host country's competitive conditions B.Giving control of core technology to the foreign partner C.Shifts in relative bargaining power of venture partners D.Trying to realize location and experience curve economies E.Risk of being subject to adverse government interference

Q: Which of the following is an advantage of joint ventures as a mode of entry into foreign markets? A.The foreign firm benefits from a local partner's knowledge of the host country. B.The foreign firm can protect its technology from being appropriated by its local partner. C.There is less cause for friction and conflict between the foreign and local partners. D.It gives a firm tight control over subsidiaries, which enables it to realize experience curve or location economies. E.The foreign firm does not have to bear any development costs and risks associated with opening a foreign market.

Q: Which of the following is a disadvantage of franchising? A.The franchiser has to bear development costs and risks associated with foreign expansion. B.Franchising leads to undesirable results for service firms. C.It is difficult to maintain quality control across foreign franchisees that are distant from the franchiser. D.The franchiser has no long-term interests in the foreign country. E.It forces a franchiser to take out profits from one country to support competitive attacks in another.

Q: Which of the following is an advantage of franchising as a mode of entry into foreign markets? A.The franchiser is relieved of many of the costs and risks of opening a foreign market on its own. B.The franchiser is allowed to take profits out of one country to support competitive attacks in another. C.The franchiser can easily maintain uniform quality across many geographically dispersed franchisees. D.Manufacturing concerns can be effectively coordinated across adjacent processes. E.The franchiser can support its short-term interests in a country with an unstable economy.

Q: Franchising as a mode of entry into foreign markets is employed primarily by: A.service firms. B.manufacturing companies. C.online outfits. D.high-technology companies. E.primary industries.

Q: Which of the following is an example of an industry in which cross-licensing agreements are increasingly becoming common? A.Glass-blowing B.Biotechnology C.Organic farming D.Basketry E.Weaving

Q: Which of the following is a drawback of licensing as a mode of entry into foreign markets? A.The licensor has to bear all costs and risks associated with developing a foreign market. B.Licensing does not give a firm tight control over manufacturing, marketing, and strategy. C.Licensing does not benefit firms lacking the capital to expand operations overseas. D.Licensing deals fail when there are barriers to foreign investment in a particular country. E.A firm that enters into a licensing deal with a foreign country will have no long-term interest in that country.

Q: Licensing is NOT attractive to which of the following firms? A.Firms lacking the capital to develop operations overseas B.Firms unwilling to commit substantial financial resources to an unfamiliar market C.Firms requiring tight control of operations for realizing experience curve and location economies D.Firms wanting to explore markets but prohibited from doing so by investment barriers E.Firms with intangible properties with business applications that it does not want to develop itself

Q: In terms of licensing, which of the following is an intangible property? A.Infrastructure B.Machinery C.Leased equipment D.Advanced computing systems E.Patent

Q: Turnkey projects being short-term propositions can be disadvantageous for a firm if a country subsequently proves to be a major market for the output of the process that has been exported. The firm can get around this problem by: A.selling competitive advantage to competitors. B.competing with the local firm in the global market. C.taking a minority equity interest in the operation. D.withholding vital process technology from the local firm. E.establishing a joint venture with a local firm.

Q: Which of the following is an advantage of turnkey projects as a mode of entry into foreign markets? A.It is an ideal way to gain entry into a country where FDI is not limited by government regulations. B.It is a useful strategy to earn great returns from the know-how of a technologically complex process. C.It is an ideal way to establish a firm's long-term presence in a foreign country. D.It helps protect a firm's competitive advantage. E.The firm that enters into a turnkey project with a foreign enterprise avoids giving rise to potential competitors.

Q: Which of the following describes a turnkey project? A.Granting rights to intangible property to other firms B.Establishing firms that are jointly owned by two or more otherwise independent firms C.Exporting process technology to other countries D.Setting up wholly owned subsidiaries in foreign nations E.Selling products produced in one country to residents of other countries

Q: In which of the following modes of entry into foreign markets does a firm agree to set up an operating plant for a foreign client and hand over the plant when it is fully operational? A.Franchising agreement B.Turnkey project C.Licensing agreement D.Wholly owned subsidiary E.Joint venture

Q: In exporting, problems with local marketing agents can be overcome by: A.selling intangible property to a franchisee and insisting on rules to conduct the business. B.changing agents frequently. C.engaging in turnkey projects and exporting process technology to foreign firms. D.entering into cross-licensing agreements with foreign firms. E.setting up wholly owned subsidiaries in foreign nations to handle local marketing.

Q: How can firms avoid incurring high transport costs when exporting bulk products? A.By taking a minority equity interest B.By entering into a turnkey project with a foreign firm C.By manufacturing bulk products regionally D.By setting up subsidiaries irrespective of market reach E.By reducing the quantity of the product offering

Q: Which of the following is an advantage of choosing exporting as a mode of entry into foreign markets? A.A firm can avoid the cost of establishing manufacturing operations in the host country. B.A firm shares the development costs and risks with its host partner. C.A firm can earn returns from process technology skills in countries where FDI is restricted. D.A firm has access to local partner's knowledge. E.A firm has the ability to engage in global strategic coordination.