Multiple Choice

Question 1

The price that a firm charges for a good or service is typically less than the value placed on that good or service by the customer. This is because

Answer 1

the customer captures some of that value in the form of consumer surprlus

Question 2

a strategy that focuses on increasing the attractiveness of a product is referred to as a

Answer 2

differentiation strategy

Question 3

which of the following is an example of a primary activity in a firm’s value chain

Answer 3

research and development

Question 4

(blank) activities of the value chain provide inputs that allow the primary activities to occur

Answer 4

support

Question 5

it has been observed in the aircraft industry that if the output of airframes was double, costs declined 80%

Answer 5

experience curve

Question 6

learning effects are important during the first three years anything after that is due to

Answer 6

economies of scale

Question 7

(blank) exists when the tastes and preferences of consumers in different nations are similar if not identical

Answer 7

universal needs

Question 8

when a firm has a strategic goal of pursuing a low-cost strategy on a worldwide scale, the firm should follow a

Answer 8

globalization strategy

Question 9

(blank) strategy is most appropriate when there are substantial differences across nations with regard to consumer tastes and preferences, and where cost pressures are not too intense

Answer 9

localization

Question 10

a firm that is facing both strong cost pressures and strong pressures for local responsiveness should follow a

Answer 10

transnational strategy

Question 11

the norms and value systems that are shared among the employees of a company are referred to as

Answer 11

organization culture

Question 12

which of the following is an argument favoring decentralization

Answer 12

it permits greater flexibility

Question 13

regardless of a firm’s domestic structure, its international division tends to be organized on

Answer 13

geography

Question 14

a (blank) is valuable because it can be used as a non bureaucratic conduit for information flows within a multinational enterprise

Answer 14

knowledge network

Question 15

control through a system of rules and procedures that directs the actions of subunits is

Answer 15

bureaucratic control

Question 16

other things being equal, the benefit cost risk trade off is likely to be most favorable in

Answer 16

politically stable developed nations with free market systems

Question 17

early entrants to a market that are able to create switching costs that tie the customer to the product are capitalizing on

Answer 17

first mover advantage

Question 18

the cost of promoting and establishing a product offering when a firm enters a foreign market price prior too its rivals ar eknown as

Answer 18

pioneering costs

Question 19

many american firms that sold oil-refining technology to firms in the Gulf now find themselves competing with these firms

Answer 19

firms entering a turnkey project with a foreign enterprise

Question 20

what is the primary advantage of licensing

Answer 20

helps a firm avoid development costs associated with opening a foreign market

Question 21

firms engaging in a (blank) benefit from a local partner’s knowledge of the host country

Answer 21

joint venture

Question 22

the most typical joint venture is

Answer 22

50/50

Question 23

a firm can establish a wholly owned subsidiary in a country by building a subsidiary from the ground up called the

Answer 23

greenfield strategy

Question 24

top managers typically overestimate their ability to create value from an acquisition

Answer 24

hubris hypothesis

Question 25

(blank) refer to cooperative agreements between potential or actual competitors

Answer 25

strategic alliances

Question 26

which of the following statement is true of EMCs

Answer 26

EMCs are export specialists that act on behalf of their client firms

Question 27

a (blank) states the bank will pay a specified sum of money to the beneficiary

Answer 27

letter of credit

Question 28

a banker’s acceptance

Answer 28

is a time draft that has been drawn on and accepted by a bank

Question 29

logistics is the activity that controls the

Answer 29

transmission of a physical materials through the value chain

Question 30

the EU requires that the quality of the firm’s manufacturing processes and products be certified under a quality standard known an

Answer 30

ISO 9000

Question 31

which of the following statements is true of six sigma

Answer 31

it is a statistically based philosophy to reduce defects and boost productivitiy

Question 32

which of the following is a factor that transforms a low-cost location to a high-cost location

Answer 32

appreciation of local currency

Question 33

flexible manufacturing technology is also known as

Answer 33

lean production

Question 34

which of the following products will most likely have high value-to-weight ratios

Answer 34

pharmaceuticals

Question 35

when a company’s product has a low value-to-weight ratio, the company should

Answer 35

produce the product in multiple locations close to major markets

Question 36

the idea that valuable knowledge does not reside just in a firm’s domestic operations but can also be found in nits foreign subsidiaries is called

Answer 36

global learning

Question 37

just-in-time inventory systems

Answer 37

economize on inventory

Question 38

a (blank) retail system is one in which there are many retailers

Answer 38

fragmented

Question 39

if a producer sells through an import agent, wholesaler, and a retailer then

Answer 39

a long channel exists

Question 40

(blank) refers to the expertise, competencies, and skills of established retailers in a nation, and their ability to sell and support the products of international businesses

Answer 40

channel quality

Question 41

the profitability of effective communication is reduced by

Answer 41

noise

Question 42

in order for price discrimination to be successful

Answer 42

national markets must be kept separate

Question 43

(blank) occurs when an a business capitalizes on a price differential for a firm’s product between two countries

Answer 43

arbitrage

Question 44

(blank) pricing is the use of price as a competitive weapon to dive a weaker competitor out of a national market

Answer 44

predatory

Question 45

(blank) refers to the fact a firm’s pricing strategy in one market may have an impact on its’ rivals pricing

Answer 45

multipoint pricing

Question 46

(blank) occurs when a firm sells a product for a price that is less than the cost of producing it

Answer 46

dumping

Question 47

a push strategy is appropriate when

Answer 47

the firm is selling complex new products

Question 48

an ethnocentric staffing policy is one in which

Answer 48

all key management positions are filled by parent country nationals

Question 49

if a company recruits host country nationals to manage subsidiaries while parent country nationals occupy headquarters follows

Answer 49

polycentric staffing policy

Question 50

a (blank) seeks the best people for key jobs throughout the organization, regardless of nationality

Answer 50

geocentric staffing policy

Question 51

which of the following is the most common approach to expatriate pay

Answer 51

balance sheet approach

Question 52

which of the following is true regarding approached to labor relations

Answer 52

many firms are now using the threat to move production to another country in their negotiations with unions

Question 53

the technical process by which an independent person gathers evidence for determining if financial accounts conform to required accounting standards is known as

Answer 53

an audit

Question 54

transfer price refers to the

Answer 54

price at which goods and services are transferred to a subisidiary

Question 55

transnational financing occurs when a firm based in one country enters another country enters another country to raise capital

Answer 55

from the sale of stocks or bonds