business international

chapter 13

QuICk Study 1

1. What are the four steps, in order, involved in creating an export strategy?

A successful export strategy involves (1) identifying a potential market, (2) matching
needs to abilities, (3) initiating meetings, and (4) committing resources.

2. When a company sells its products to intermediaries who then resell to buyers in a
target market it is called what?

Direct exporting is when a company sells its products directly to buyers in a target market.

Indirect exporting occurs when a company sells its products to intermediaries who then
resell to buyers in a target market.

3. What is the name of a specific type of countertrade?

Countertrade is selling goods or services that are paid for with other goods or services; it can
take the form of (1) barter, (2) counterpurchase, (3) offset, (4) switch trading, and (5)
buyback

QuICk Study 2

1. Export/import financing that presents the most risk for exporters is called what?

With advance payment an importer pays an exporter for merchandise before it is shipped.

• Documentary collection calls for a bank to act as an intermediary without accepting

financial risk.

• Under a letter of credit, the importer’s bank issues a document stating that the bank will pay
the exporter when the exporter fulfills the terms of the document.

• Under open account, an exporter ships merchandise and later bills the importer for its
value.

2. Export/import financing in which a bank acts as an intermediary without financial

risk is called what?

Documentary collection calls for a bank to act as an intermediary without accepting

financial risk.
3. Export/import financing in which the importer’s bank issues a document stating
that the exporter will get paid when it fulfills the terms of the document is called
what?

a letter of credit, the importer’s bank issues a document stating that the bank will pay the
exporter when the exporter fulfills the terms of the document.

QuICk Study 3
1. What is the name of a specific type of contractual entry mode?

Licensing is when a company that owns intangible property (the licensor) grants another
firm (the licensee) the right to use that property for a specified period of time.

Franchising occurs when one company (the franchiser) supplies another (the franchisee)
with intangible property and other assistance over an extended period.

A management contract is when one company supplies another with managerial

expertise for a specific period of time. It can transfer two types of knowledge—the
specialized knowledge of technical managers and the business-management skills of
general managers.

A turnkey (build–operate–transfer) project is when one company designs, constructs,

and tests a production facility for a client.

2. What is it called when companies use agreements to exchange intangible property?

Cross Licensing Practice by which companies use licensing agreements to exchange intangible property
with one another.

3. A disadvantage of both management contracts and turnkey projects is what?

turnkey projects can create future competitors. A newly created local competitor could
become a major supplier in its own domestic market and perhaps even in other markets where
the supplier operates. Therefore, companies try to avoid projects in which there is danger of
transferring their core competencies to others

In what ways does franchising differ from licensing?

First, franchising gives a company greater control over the sale of its product in a target market than does
licensing. Second, franchising is primarily used in the service sector, whereas licensing is common in
manufacturing industries. Third, franchising requires ongoing assistance from the franchiser, but licensing
normally involves a one-time transfer of property

QuICk Study 4
1. What is the name of a specific type of investment entry mode?

A wholly owned subsidiary is entirely owned and controlled by a single company.

• A separate company created and jointly owned by two or more independent entities
to achieve a common business objective is called a joint venture.

• Joint ventures can involve forward integration (investing in downstream activities),

backward integration (investing in upstream activities), a buyback joint venture (input
is provided by and output is absorbed by each partner), and a multistage joint venture
(downstream integration by one partner and upstream integration by another).

• A strategic alliance is a relationship in which two or more entities cooperate (but do

not form a separate company).

2. A wholly owned subsidiary is a facility owned and controlled by what?

A wholly owned subsidiary is entirely owned and controlled by a single company.

3. What is the name of a specific type of joint venture?

Toyota has a joint venture with Peugeot-Citroën in the Czech Republic called TPCA

4. A strategic alliance is similar to a joint venture except for that it doesn’t involve
what?

A strategic alliance is a relationship in which two or more entities cooperate (but do not form
a separate company).

An investment entry mode that gives a company the most control over day-to-day activities in
a host country is called a ?

A wholly owned subsidiary

QuICk Study 5
1. When selecting a partner for cooperation it is important to remember what?

Commitment
Trustworthiness
Culture knowledge
Valuable contribution

2. What factors may discourage an investment entry mode?

Political and Legal Elements, Cultural Environment

3. What factors may encourage an investment entry mode?

market size, production and Shipping Costs, International Experience

Chapter 14
1. Deciding whether to keep a marketing strategy the same or to modify it abroad is
also known as the what?

standardizing or adapting advertisements

2. What factors influence a company’s international product strategy?

Laws and Regulations, Cultural Differences, Brand and Product Names, National image,
Counterfeit goods and Black markets, Shortened Product Life Cycles

3. What product characteristic is more likely than others to offend people in another culture?

4.What elements in the national business environment influence decisions about whether to
standardize or adapt international marketing efforts?

Laws and regulations can force product alteration. Cultural differences can force adaptations to better
suit local preferences. National image can influence perception of quality. Counterfeit goods can
damage a brand’s image. And shortened product life cycles result from rapid new product development.

QUIck STUdy 2

1.A strategy that pressures channel members to carry and promote a product is called a what?

whereas a push strategy pressures channel members to carry and promote a product.

2. Firms that standardize international advertising often control campaigns from where?

Firms that standardized advertising often control campaigns from the home office.

3. The process of sending promotional messages about products to target markets is called
what?

is called marketing communication.

6.A company that creates buyer demand that will encourage channel members to stock a
product is using a?

Pull strategy

QUIck STUdy 3

1. What type of channel grants the right to sell a product to many resellers?

An intensive channel grants the right to sell a product to many resellers, which offers less control
over reseller decisions.

2. In terms of channel length, direct marketing is also known as a what?

In a zero-level channel—which is also called direct marketing—producers sell directly to final buyers.

3. A product with a low value density tends to have a distribution system that is more what?

a rule, the lower a product’s value density, the more localized the distribution system.
4. In what ways do exclusive and intensive channels of distribution differ?

An exclusive channel is one in which a manufacturer grants rights to sell a product to one or a limited
number of resellers, as in automobiles.

An intensive channel is one in which a producer grants the right to sell a product to many resellers,
as in general office supplies.

5.A pricing strategy in which a company must keep its domestic and international buyers
separate is called?

Dual pricing

QUIck STUdy 4

1. What makes a worldwide pricing policy difficult to achieve in practice?

First, production costs differ from one nation to another.

Second, a company that produces in just one location cannot guarantee that selling prices will be
the same in every target market.

Third, the purchasing power of local buyers must be taken into account.

Finally, fluctuating currency values also must be taken into account

2. To apply dual pricing successfully, how must a firm treat its domestic and international
buyers?

a company must be able to keep its domestic buyers and international buyers separate

3. Parent firms and subsidiaries often transfer products among themselves at a price called
what?

Prices charged for goods or services transferred among a company and its subsidiaries are called
transfer prices.

chapter 15

Quick StuDy 1

1. Assessing a firm’s ability to produce enough output to satisfy demand is called what?

is called capacity planning.

2. Location economies can arise from the optimal execution of what?

Economic benefits derived from locating production activities in optimal locations.

3. What typically determines the process that a firm uses to create its product?

Deciding how a company will create its product is called process planning. The particular process to be
used is typically determined by a firm’s business-level strategy.

Quick StuDy 2
1. Vertical integration is the process by which a company extends its control over what?

Vertical integration is the process by which a company extends its control over additional stages of
production

2. Why might a company make a product in-house rather than buy it?

Lower Costs and Greater Control,

3. Why might a firm buy a product rather than make it in-house?

Greater Flexibility, market Power, Barriers to Buying, lower risk

Quick StuDy 3

1. Why might a company strive for quality improvement?

Companies strive toward quality improvement for two reasons: costs and customer value.

2. The international certification that a company gets when it meets the highest quality
standardsin its industry is called what?

The ISO 9000 is an international certification that companies get when they meet the highest quality
standards in their industries.

3. Under what conditions might a company reinvest earnings in its operations?

Companies often reinvest profits in markets that require long payback periods as long as the long-
term outlook is good.

Promising outlook, growing market, highest return

Quick StuDy 4
1. In general, through what source do companies obtain financial resources?

the organizations obtain financial resources through one of three sources:

1. Borrowing (debt)
2. Issuing equity (stock ownership)
3. Internal funding

2. A common way for non-U.S. companies to access U.S. capital markets is to issue
what?

issuing American depository (ADRs)

3. A firm’s mix of equity, debt, and internally generated funds that it uses to finance
its activities is called what?

The capital structure of a company is the mix of equity, debt, and internally generated
funds that it uses to finance its activities.

4.Describe the elements to consider when formulating production strategies.

Capacity planning,Facilities location planning,process planning,facilities
layout planning.

5.the potential ways to finance business operations.

Borrowing,In back-to-back loans,Depository Receipts (ADRs),Venture

capital,Revenue,internal funding, emergin stock

chapter 16

QuiCk Study 1
1. A firm that staffs its operations abroad with home-country nationals uses a staffing
policy called what?

In ethnocentric staffing, individuals from the home country manage operations abroad. This
policy tends to appeal to companies that want to maintain tight control over decision making
in branch offices abroad.

2. Polycentric staffing is when a company staffs its operations with people from
where?

In polycentric staffing, individuals from the host country manage operations abroad.

It is well suited to companies who want to give national units a degree of autonomy in
decision making.

3. Geocentric staffing is typically reserved for whom?

In geocentric staffing, the best-qualified individuals, regardless of nationality, manage

operations abroad. The local operation may choose managers from the host country, from
the home country, or from a third country.

This policy is typically reserved for top-level managers.

QuiCk Study 2
1. The process of forecasting a company’s human resource needs and its supply is
called what?

Human resource planning. Process of forecasting a company’s human resource needs

and its supply.

2. When recruiting employees, from where can companies attract qualified

applicants?

the companies can recruit internally from among their current employees or look to
external sources

3. Culture shock is a psychological process that affects people who live where?
Psychological process affecting people living abroad that is characterized by
homesickness, irritability, confusion, aggravation, and depression.

QuiCk Study 3
1. What constitutes the most basic level of cultural training?

Environmental (area) briefings and culture orientation

Environmental (area) briefings constitute the most basic level of training often the starting point
for studying other cultures. Briefings include information on local housing, health care,
transportation, schools, and climate.

Cultural orientations offer insight into social, political, legal, and economic institutions.

2. What type of training is said to get one “into the mind” of the local people?

language training.

This level of training entails more than memorizing phrases for ordering dinner or asking
directions. It gets a trainee “into the mind” of local people.

QuiCk Study 4
1. A manager who goes to work in an unstable country might receive a bonus called
what?

Bonuses for managers who are asked to go into a particularly unstable country or one with a
very low standard of living often receive hardship pay.

2. Some factors that contribute to the compensation of expatriate managers include

what?

Culture also plays an important role in the compensation of expatriate managers. Some
nations offer more paid holidays than others. Many offer free medical care to everyone
living and working there.

Companies that hire managers in the local market might encounter additional costs
engendered by social attitudes.

QuiCk Study 5
1. Because labor-management relations are human relations they are rooted in what?

Because relations between laborers and managers are human relations, they are rooted in
culture and are often affected by political movements in a market.

2. German workers have a direct say in the strategies and policies of their employers
under a plan called what?
in fact, under a plan called codetermination,This plan allows labor representatives to
participate in high-level company meetings by actually voting on proposed actions.