1) Countertrade is ________. A) the establishment of a firms presence in a foreign market by investing capital and securingownership of a factory, subsidiary, or other facility thereB) the procurement of products or services from independent suppliers or company-ownedsubsidiaries located abroad for consumption in the home country or a third countryC) an international business transaction where all or partial payments are made in kind ratherthan cashD) the strategy of producing products or services in one country (often the producers homecountry), and selling and distributing them to customers located in other countriesOrganic Towel Exports (Scenario)The Organic Towel Company (OTC) employs 400 workers at its facility in Liverpool, England, where the firm has been manufacturing 100% organic cotton towels for five years. OTC sells towels in the United Kingdom primarily to boutique hotels and specialty retail stores, as well as to individual consumers through the companys . Recently, OTC managers attended a trade show in London where they made contact with numerous foreign market managers. OTC received a request from Earth Waves, an organic clothing store in Toronto, Canada, for a large order of towels. OTC had not been looking into expanding, but firm managers are seriously considering the opportunity to reach a global niche market with their towels.2) Which of the following questions must be evaluated by OTC managers as a first step to exporting? A) How can OTC adapt its distribution strategy in Canada?B) What are the risks involved in exporting OTC towels to Earth Waves?C) Do Canadian towel companies have a high success rate when they export? D) Will OTC save money on domestic marketing by exporting?3) Which of the following actions most likely occurs in the experimental involvement stage of internationalization?A) Management targets psychically close markets through collaborative ventures or FDI. B) Managers open franchises within an economic bloc to gain valuable experience.C) Management aggressively targets the domestic market to take control over competitors. D) Managers target low-risk, culturally close markets through exporting or licensing.4) After managers have chosen an appropriate market for exporting, the next step is to ________. A) engage appropriate international trade attorneysB) decide about the resources to be committedC) modify advertising and promotional activities to suit individual markets D) acquire the skills and competencies to handle export operations5) Company-owned subsidiary is ________. A) typically achieved by contracting with intermediaries located in the foreign marketB) a foreign intermediary that serves as an extension of the exporter, negotiating on behalf of the exporter and assuming such responsibilities as local supply-chain management, pricing, and customer serviceC) a representative office of the focal firm that handles marketing, physical distribution, promotion, and customer service activities in the foreign marketD) accomplished by contracting with intermediaries located in the firms home marketInternational Business Class (Scenario)Students in Professor Mannings international business class have been assigned the task of explaining the different types of FDI. Professor Manning formed groups among students. The groups are to research their assigned topic and present their information to the class using examples of real-world firms for illustration. Jessica Hanson is the leader of Group A; Manu Patel is the leader of Group B; and Mario Witherspoon is the leader of Group C.6) During her presentation, Jessica describes how two automakers joined forces and formed a separate firm by pooling their assets. Which of the following topics was most likely assigned toGroup A?A) equity joint venture B) greenfield investment C) vertical integration D) acquisition7) During his presentation, Mario describes how a large Japanese automaker built a factory in Kentucky. Which of the following topics was most likely assigned to Group C?A) consortium B) equity joint venture C) horizontal integration D) greenfield investment8) How does the acquisition of a foreign company most likely benefit a focal firm in the foreign market?A) The firm eliminates the need to train its own employees by utilizing the workers previously hired by the foreign firm.B) The MNE avoids domestic and foreign taxation, which enables the firm to invest more resources in the foreign market.C) irm managers can reduce their workload by ensuring that all decision-making responsibilities are taken up by foreign managers.D) The focal firm can extend its market reach through readily available distribution networks.9) Firms that anticipate close public scrutiny of their foreign operations often avoid potential difficulties by ________.A) diversifying their corporate activities B) hiring additional local personnel C) locating in culturally similar countries D) investing in international securities10) Which of the following is the most likely motive behind firms in the mining industry wanting to enter new foreign markets?A) access to natural resourcesB) payment of wages remain the same in both the new market as well as the existing marketC) availability of excessive non-skilled labor force D) increase in refining capacity11) Which of the following best exemplifies corporate social responsibility? A) a telecommunications firm charging high-rates to low-income customersB) an automobile manufacturer selling low-fuel economy cars and trucksC) a computer firm charging a high fee for recycling old computersD) an automotive battery firm offering free technical training to students of a deprivedcommunity12) A firm that develops the capacity to sell its products by investing in marketing and selling operations is demonstrating ________.A) forward vertical integration C) backward vertical integrationB) decentralization D) centralization13) Which of the following is an example of a market-seeking motive for FDI? A) a firm follows its key customers abroadB) a company wishes to gain access to knowledge C) a firm wishes to gain access to raw materials D) a company intends to avoid trade barriers14) Which of the following is an advantage of franchising to the franchisee? A) reduced expenses as the franchisor provides supplies, equipment, and productsB) use of a well-known, recognizable brand nameC) franchisee holds much power, including superior bargaining power D) minimum initial investments or royalty payments are applicable15) Which of the following statements is true of infringement of intellectual property? A) Counterfeiting and piracy can be particularly troublesome in advanced economies because ofsubjective ethical standards.B) The most commonly counterfeited goods include heavy machinery and computermanufacturing.C) It amounts to piracy and takes the form of production and distribution of counterfeit goods.D) It is the ability to control important intellectual property before it reaches competitors.16) ________ is a fee paid periodically to compensate a licensor for the temporary use of its intellectual property, often based on a percentage of gross sales generated from the use of the licensed asset.A) Duty B) Royalty C) Residual D) Tariff17) Which of the following is protected under copyright laws? A) the Nike swooshB) Winnie the Pooh imageC) McDonalds clown shaped man with puffed out costume legs D) the art of Jackson Pollack18) Which of the following is most likely a disadvantage to firms who use exporting as an entry strategy?A) high cost of foreign market entryB) high risk due to uncertainty in the political environment of the foreign marketC) high risk of low sales due to fluctuations in exchange rates D) difficulties withdrawing from foreign markets19) Which of the following foreign market entry strategies requires the most substantial resource 19) commitment on the part of the focal firm?A) franchising B) licensingC) majority-owned equity joint venture D) global sourcing20) The purchase of an existing company or facility is known as a(n) ________. A) acquisition B) equity joint ventureC) greenfield investment D) licensing21) A firm that owns the activities performed in a single stage of its value chain is demonstrating ________.A) horizontal integration C) reverse integrationB) centralization D) decentralization22) The reputation of a licensor will be jeopardized by a licensing agreement if the licensee ________. A) markets competing products for significantly lower pricesB) does not guarantee future expansion in the marketC) uses the licensing asset to create products of poor quality D) refuses to pay the agreed upon royalties to the licensor23) By establishing a brand name and market power through a licensing agreement, licensors are able to ________.A) control the dissipation of important intellectual property to competitors B) avoid the risk of creating a future competitorC) establish a more durable presence in the local market D) control the use of the licensed asset24) Which of the following is a disadvantage of equity joint ventures? A) termination difficulties B) vague contractual partnershipC) lesser control over future directions D) imbalanced relationship25) Which of the following is characteristic of master franchise arrangements? A) franchise networks that pay fewer royalties to franchisorsB) franchise networks where franchisor provides a lump-sum payment to get started in a foreign marketC) subfranchises to other independent businesses and thus assumes the role of the local franchisorD) franchisee provides completely standardized business activities, replicated across diverse markets