PART 3

Question 1

ASSESSING GLOBAL BUSINESS RISKS (3)

Answer 1

Economic Risks
Cultural and Social Risks
Technological Risks

Question 2

Economic fluctuations, currency exchange rates, and inflation can pose risks to global businesses.
Conducting thorough economic analyses helps in risk mitigation

Answer 2

Economic Risks

Question 3

Differences in cultures and societal norms can affect market acceptance.
Adapting products and marketing strategies to local cultures minimizes these risks.

Answer 3

Cultural and Social Risks

Question 4

Rapid technological changes can impact industries.
Businesses must stay updated
Invest in technology to remain competitive
Mitigate obsolescence risks .

Answer 4

Technological Risks

Question 5

IMPORTANCE OF GLOBAL BUSINESS ANALYSIS (4)

Answer 5

Strategic Decision-Making
Risk Mitigation
Competitiveness
Regulatory Compliance

Question 6

provides insights for making informed strategic decisions
helps businesses identify opportunities and threats in various markets

Answer 6

Strategic Decision-Making

Question 7

allows businesses to identify and assess risks
proactive ______ strategies can be developed
minimize potential negative impacts

Answer 7

Risk Mitigation

Question 8

enables businesses to stay competitive
changing market conditions
customer preferences
technological advancements

Answer 8

Competitiveness

Question 9

need to comply with diverse regulations
avoid legal issues
maintain a positive corporate image

Answer 9

Regulatory Compliance

Question 10

MARKET ENTRY STRATEGIES

Answer 10

Exporting
Licensing
Franchising
Joint Ventures and Strategic Alliances
Foreign Direct Investment (FDI)

Question 11

Market Entry Strategies

Answer 11

methods and channels that a company uses to enter a new market

Question 12

the most appropriate method of entering a market depends on the company’s:

Answer 12

Resources
Objectives
Market

Question 13

goal of market entry strategies

Answer 13

enter a new market successfully and achieve sustainable growth

Question 14

expand within its home country
Goal: grow the company’s local market share

Answer 14

Domestic Market Strategy

Question 15

expand outside home country

Answer 15

International Market Strategy

Question 16

Capacity of a market to generate demand for a particular product or service

Answer 16

Market Potential

Question 17

An estimate of the maximum sales opportunity that a product or service may have in a target market

Answer 17

Market Potential

Question 18

an evaluation of the expected sales, given the customer base’s size and the product or service’s demand in the market

Answer 18

Market Potential

Question 19

Marketing and direct sale of domestically produced goods in another country

Answer 19

EXPORTING

Question 20

traditional and well-established method

Answer 20

EXPORTING

Question 21

no investment in foreign production

Answer 21

EXPORTING

Question 22

Most cost: marketing expenses

Answer 22

EXPORTING

Question 23

the easiest way to enter an international market

Answer 23

EXPORTING

Question 24

the sale of products and services in foreign countries that are sourced from the home country

Answer 24

EXPORTING

Question 25

A company that wants to get into an international market quickly while taking only limited financial and legal risks

Answer 25

LICENSING

Question 26

Allows a foreign company (the ____) to sell the products of a producer (the _____) or to use its ______ (such as patents, trademarks, copyrights, technology) in exchange for ____

Answer 26

licensee, licensor, intellectual property, royalty fees

Question 27

Essentially permits a company in the target country to use the property of the licensor. Such property is usually _____, such as ____,____, _____. The licensee pays a fee in exchange for the rights to use the intangible property and possibly for technical assistance as well.

Answer 27

intangible rademarks, patents, and production techniques

Question 28

Commonly used in industries like fast food, hospitality, and retail

Answer 28

FRANCHISING

Question 29

is a natural form of global expansion for companies that operate domestically according to a franchise model, including restaurant chains, such as McDonald’s and Kentucky Fried Chicken, and hotel chains, such as Holiday Inn and Best Western.

Answer 29

FRANCHISING

Question 30

Under an international franchise agreement, a company (the _____) grants a foreign company (the ______) the right to use its brand name and to sell its products or services.

Answer 30

franchiser, franchisee

Question 31

The ______ is responsible for all operations but agrees to operate according to a ______ established by the ______.

Answer 31

franchisee business model franchiser

Question 32

The ______usually provides advertising, training, and new-product assistance.

Answer 32

franchiser

Question 33

form of international business entry where a company from one country makes a substantial investment in another country, acquiring a significant degree of control or ownership in a business entity located in the foreign market

Answer 33

FOREIGN DIRECT INVESTMENT

Question 34

signifies a long-term interest and commitment by the investing company in the economic activities of the host country

Answer 34

FOREIGN DIRECT INVESTMENT

Question 35

involves the establishment of a physical presence in the foreign market

Answer 35

FOREIGN DIRECT INVESTMENT

Question 36

involves the establishment of a physical presence in the foreign market (3 factors)

Answer 36

acquiring or establishing subsidiaries joint ventures wholly-owned enterprises

Question 37

IMPORTANT FACTORS TO CONSIDER IN MARKET ENTRY (4)

Answer 37

Cultural and linguistic differences Quality and training of local contacts and/or employees Political and economic issues Experience of the partner company

Question 38

These affect all relationships and interactions inside the company, with customers, and with the government. Understanding the local business culture is critical to success.

Answer 38

Cultural and linguistic differences

Question 39

Evaluating skill sets and then determining if the local staff is qualified is a key factor for success.

Answer 39

Quality and training of local contacts and/or employees

Question 40

Policy can change frequently, and companies need to determine what level of investment they’re willing to make, what’s required to make this investment, and how much of their earnings they can repatriate.

Answer 40

Political and economic issues

Question 41

Assessing the experience of the partner company in the market—with the product and in dealing with foreign companies—is essential in selecting the right local partner

Answer 41

Experience of the partner company