8) Escalation of commitment is best described as the ________.

increased likelihood of investing in a country because of having spent considerable time and money in examining it

strategy of first entering a country on a small scale

process of entering a country because "everyone else is going there"

expectation of a higher return in more politically risky environments

9) Sales expansion is probably the most important variable in determining international location decisions. This statement is most likely based on the assumption that ________.

increased sales will lead to more profits

the company will have a first-mover advantage

raw materials are available in the country targeted for sales

10) Dawson Manufacturing produces and sells DVD players and is planning to expand sales internationally. Dawson has narrowed down the list of potential countries to India and Guatemala. A Dawson manager has the task of obtaining data regarding the number of DVD players sold annually in India and Guatemala. If unable to locate this information, she might most likely estimate the sales potential of these two countries by ________.

examining the sales history of flat-screen televisions

calculating future inflation rates

reviewing the countries' dependence on steel imports

11) Gucci, a maker of luxury fashion and leather goods, plans to expand its sales market. The firm needs to compare countries for the market potential of its products. Which of the following is the best indicator for Gucci to use?

the number of millionaires in each country

per capita income in each country

population size of each country

gross domestic product for each country

12) When examining economic and demographic variables to compare countries' sales potential for your product, you should also consider all the following EXCEPT which one?

If countries depend heavily on the import of raw materials, what is the price of elasticity for the demand?

Consumers in some countries may more conveniently substitute certain products than consumers in some other countries.

Consumers in developing countries may leapfrog technologies by first purchasing the latest products.

Trading blocs may enhance sales potential above what is indicated in individual country figures.

13) Which of the following is most likely a true statement about companies' acquisition of resources/assets abroad?

Resource availability limits a firm's production location choices.

Regardless of industry, cheap labor is the most sought after resource.

Regardless of industry, raw materials are the most sought after resource.

Risks are higher for resource-seeking than for sales-seeking foreign operations.

14) The ability to compare production costs among countries in an effort to determine where to locate production is significantly hampered by all of the following EXCEPT ________.

the number of ways the same product can be made

restrictions on the international flow of data

the ways that laws may be enforced

future costs from exchange rate changes

15) In which of the following situations would tax rate differences among countries be most important for deciding where to place an investment?

Companies want to serve an entire region within a regional trading bloc.

Companies find advantages in being located near specialized private and public institutions.

Companies must compare the benefits of labor- versus capital-intensive production.

Companies must deal with difficult start-up regulations.

16) Labor cost advantages gained by moving into a country with low wages may be short-lived because ________.

competitors follow leaders into low-wage areas

transport costs go up to cancel out the cost savings

tax increases cancel out all labor cost differentials

rivals adopt capital-intensive production methods

17) Which of the following statements is NOT true about risk as it affects companies' choice of locations for foreign operations?

Companies choose the cheapest location regardless of risks.

Companies and their managers differ in their perception of what is risky.

One company's risk may be another company's opportunity.

There are means to reduce risk other than avoiding locations.

18) A company's operations are most likely to be taken over by a host government when ________.

the operations are substantial and have a widespread effect on the country because of the company's size

the operations are relatively small and, thus, unlikely to incur the wrath of the company's home government

the host country becomes involved in a regional war

the firm produces discretionary rather than essential products

19) In terms of political risk, it is most accurate to state that high risk ________.

if avoided, may lead to higher competitive risk

affects all geographic regions of a country equally

affects all foreign companies in the same manner

20) Fidelity Manufacturing is considering expanding its operations into the Philippines. A manager at Fidelity has the task of predicting political risk in the Philippines. Which of the following approaches should the manager LEAST use to accomplish the task?

analyzing the market share of competitors in the country

analyzing the country's past political patterns and trends

seeking and analyzing opinions of influential people in the country

examining social and economic conditions within the country

21) The concept of liquidity preference in international operations refers to ________.

a company's willingness to accept a lower rate of return on investments in countries where it can more easily sell them and convert the proceeds at a favorable rate

a company's willingness to accept lower rates of return in poor countries that really need the investments

management's need to maintain sufficient funds, preferably in local currency, in each country of operation to ensure meeting daily cash needs

investors' preference for foreign stocks over foreign bonds because of the larger market for them

22) Risks to companies from natural disasters and communicable diseases are ________.

most prevalent in the poorest countries of the world

evenly distributed around the world

more complicated today because of publicity

a minor issue to global firms because of insurance

23) U.S. companies generally put earlier and more sales-seeking emphasis on countries ________.

where operating conditions seem similar to those at home

with regional trading blocs and high tariffs

where governments give operating incentives

25) Which of the following best explains why U.S. firms typically place earlier and greater emphasis on expansion into Canada and the U.K.?

similarities in culture and legal systems

most significant sales opportunities

availability of necessary natural resources

government incentives for allied nations

26) Which of the following best explains Blockbuster's failed expansion into Germany?

laws limiting hours of operation

lack of public interest in films

28) Companies are more likely to gain advantages by locating near competitors for all the following reasons EXCEPT to ________.

agree with competitors on production limitations

take advantage of competitors' research to pick an ideal location

attract multiple suppliers and personnel with specialized skills

attract buyers who want to compare suppliers

29) An example of a first-mover advantage in international operations is ________.

lining up the best suppliers and distributors before competitors enter the market

gaining economies of scale at a lower output level than competitors

increasing sales response functions and customer service

using a small country for market tests prior to entering a large country

30) Which of the following describes a company's strategy of moving first to those countries where local competitors are most likely to catch up to the firm's innovative advantage?

oligopolistic reaction strategy

liability of foreignness strategy

31) A manager has the task of collecting and analyzing data that will help the firm decide where to locate its international operations. Which of the following best describes how the manager should handle this task?

compare the costs of data collection with the probable payoff for the firm in order to budget and schedule the collection

conduct extensive research, regardless of the expense, in order to avoid costly mistakes

continue data gathering until all data have been collected, regardless of how long this takes

focus all data collection on governmental resources because they have the highest reliability

32) Which of the following is the LEAST likely reason for inaccuracies in published governmental data?

translation errors from the host country language

limitations of government resources and finances

purposeful publication of misleading information

false information provided to data collectors

33) Which of the following is the LEAST likely reason that inaccuracies appear in published information about countries?

poor methodology used in data collection

inclusion of both legal and illegal economic activities

inclusion of both market and non-market economic activities

use of different translation software

34) Which of the following is generally the most costly information source for companies?

reports from international agencies

reports from government agencies

published reports by accounting firms

35) Top executives at Jordan, a U.S. consulting firm, are debating whether or not to expand into a country with a great deal of violence by staffing mostly with U.S. personnel. A vice president argues that Jordan should forego sending its employees there because of the high risk for them of kidnappings in the region. Which of the following statements best supports the vice president's position?

Violence is a harbinger of additional risks that affect operations negatively.

There is a high correlation between violence and life-threatening natural disasters.

Local personnel are immune from violence and are capable of filling positions.

The ability to evacuate people when necessary is much slower than it was in the past.

36) Top executives at Jordan, a U.S. consulting firm, are debating whether or not to expand operations into a country with a great deal of violence by staffing mostly with U.S. personnel. A vice president argues that Jordan should send its employees there. Which of the following statements LEAST supports the vice president's position?

Operating costs are lower in violent areas.

Jordan can evacuate personnel more quickly than in earlier eras in case of a real emergency.

It is hard to identify countries without a possibility for violence.

Jordan's industry does not allow the firm the luxury of avoiding high risk locations.

37) Grids are a useful method of comparing countries for international business expansion because they ________.

set minimum scores for proceeding further

generally show how countries will perform in the future

show risk on one axis and opportunity on another

highlight first-mover advantages

38) A manager needs to prepare a grid to compare countries for location of the firm's international operations. It would be most useful for the manager to ________.

use a team made up of people from different functions within the company

prepare an opportunity analysis in-house, but out-source the risk analysis

have agents within each country supply governmental data

prepare the risk analysis in-house, but out-source the opportunity analysis

39) Which of the following best describes the purpose of using of an opportunity-risk matrix for comparing countries?

narrow alternatives so decision makers can make a detailed analysis of the strongest candidates

eliminate countries that have specific unacceptable conditions

determine whether to use a concentration versus diversification strategy for international expansion

estimate where competitors are most likely to globalize

40) The major use of the matrix as a tool in international location strategy is to ________.

indicate the relative placement of countries in terms of attributes

pinpoint acceptable and unacceptable characteristics of countries

rank countries on the basis of expected investment return

show the degree of certainty for projected returns

41) In a concentration strategy of foreign expansion, a company would go to ________.

one or a few foreign countries and build a strong involvement there before going to other countries

many countries very rapidly, and then build up slowly in each

a foreign country with one product and not sell other products in that country until a target market share is reached

a reporting system that measures performance on a regional rather than a country-by-country basis

42) In a diversification strategy for international expansion, a company would move ________.

rapidly into many foreign countries, and then gradually increase its presence in those countries

rapidly into a few foreign countries with many of its products and most of its resources

into one foreign country and fully expand its product lines in that country before moving to another country

quickly into a regional foreign market but build up its resources in only a few of the countries in the region

43) A company should probably use a concentration strategy for international expansion when there are ________.

high growth rate and long competitive lead times

high needs for product adaptation and low growth in each market

short competitive lead times and low spillover effects

low sales stability and short competitive lead times

44) The decision-making process for a company's reinvestment choices is often different from those for new investment choices because ________.

failure to support an existing investment may jeopardize the firm's operations and competitiveness in that country

internal rate of return and other financial measurement criteria are more difficult to compile and analyze on existing operations, given currency translation distortions

most of the net value of foreign investment comes from new international capital transfers rather than from reinvestment of earnings abroad

corporate management feels that country managers are best able to make divestment decisions

45) Which of the following is NOT true about the harvesting or divestment of foreign operations?

Companies have tended to divest too soon, rather than working to improve performance.

One of the motives is to use resources where the performance prospects are better.

Companies can harvest or divest by selling existing facilities.

Closing a facility can be difficult because of governmental performance contracts.

46) Which of the following best explains why foreign subsidiary managers are often reluctant to propose divestments in the countries where they are working?

They are afraid of proposing the elimination of their jobs.

They are usually poorly trained in how to sell units or how to close them down.

They are too nationalistic to examine political risk objectively.

Many are in countries where the cultural attribute of power-distance is very high.

47) The origin of investment proposals differs from the origin of divestment proposals in that the divestment proposals are more likely to come from ________.

line personnel as opposed to staff personnel

48) A go/no-go decision means ________.

an individual project decision is based on whether the project meets threshold criteria

projects are ranked and approved from the top of the list down until available resources are exhausted

management reviews existing information and decides whether additional individualized feasibility studies are warranted

projects are approved or disapproved based on the potential ease of divestment

49) Instead of comparing different proposals involving foreign operations, companies often make decisions by looking at proposals one at a time. All of the following are reasons for this behavior EXCEPT which one?

A lack of comparable data on different countries renders comparison impossible.

Companies need to respond quickly to opportunities.

Defensive decisions typically need to be made rapidly.

Conclusion of different proposals or studies does not usually happen simultaneously.

51) Which of the following reasons most compels companies to make location decisions on one international opportunity at a time rather than comparing among two or more?

If an important customer develops opportunities in a foreign country, a company may have little alternative except to follow that customer's lead.

The lack of comparability in data among countries renders comparison unfeasible.

The information on some countries is so unreliable that companies must deal with these countries separately.

Decisions are made by teams, and it is usually not feasible to give so many people time away from their usual duties to examine multiple proposals.

Chap 13

Authored by K62.FTU Ngô Thị Hồng Thơm

English

University

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

1) Comparing countries in international business is LEAST useful for determining the ________.

best location for sales and production

sequence of entering different countries

amount of resources to allocate in each country

selection of which managers to send to which countries

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

2) International managers most likely need to understand how to evaluate international geographic alternatives because ________.

they usually have a surplus of resources and need to take advantage of all opportunities

many regional trading groups prohibit companies from outside of the trading group from manufacturing in more than one member country

the commitment of resources to one locale may require forgoing projects in other locales

decreased worldwide transportation costs and increased trade liberalization now allow companies to serve worldwide markets from a single production location

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

3) Executives at Wilson Enterprises need to determine how to leverage and improve the firm's existing competencies on a global basis. What are the two most basic questions that they must answer?

Which markets should we serve and where should production be located to serve those markets?

What are the short-term competitive advantages of the project and what is the return on investment?

What is the total investment required and what are the managerial resources needed to supervise the investment?

What is the availability of land and what is the cost of labor?

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

4) A company's overall geographic strategy should be flexible enough to ________.

implement concentration strategies instead of diversification strategies

respond to new opportunities and withdraw from less profitable ones

import from anywhere in the world to a single production location

export anywhere in the world from a single production location

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

5) Elison Enterprises is planning international geographic expansion. A manager at Elison has been given the task of scanning for locations primarily to ________.

reduce the number of options available to a manageable number for further detailed analysis

assure the compatibility between the mode of corporate operation and the country

assure that all countries within a region have similar investment climates

decide whether to use a concentration or a diversification strategy

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

6) Which of the following most accurately compares the techniques of scanning versus detailed analysis of countries?

Scanning is used for planning and detailed analysis is used for control.

Detailed analysis is used to consider countries overlooked in the scanning process.

Scanning considers a large number of countries so that only the most promising ones undergo a detailed analysis.

Scanning compares one country to another, whereas detailed analysis compares regions within a single country.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

7) Opal Computers is considering international production expansion. After scanning to decide on a few countries to consider more closely, Opal managers will most likely need to ________.

identify firms with which to form joint ventures

add some more countries for closer consideration

travel to the locations to analyze and collect specific data

make final decisions by expanding in locations near their rivals

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