Which of the following types of joint ventures involve parties investing together in downstream business activities quizlet?

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Terms in this set [20]

Companies involved in direct exporting typically rely on ________.
A] distributors
B] agents
C] export management companies
D] All of these

D] All of these

Scenario: Sports Stuff Inc.
Herb Graham is vice president of Sports Stuff Inc., a business that develops, manufactures, and markets sports products. The company is looking to expand its operations into the European market. Herb believes that if the company expands its product line to include products reflecting sports that are popular in Europe, the company will achieve success there.

The CEO of Sports Stuff has decided that the company needs to retain complete control over its operations in Europe. To achieve this objective, Herb would most likely recommend that the firm establish a ________.
A] strategic alliance
B] joint venture
C] cross licensing agreement
D] wholly owned subsidiary

D] wholly owned subsidiary

Which of the following occurs when a company sells its products to buyers in a target market without going through intermediary companies?
A] direct export
B] indirect export
C] licensing
D] contract manufacturing

A] direct export

Franchising is primarily used in service industries.
TRUE
FALSE

TRUE

Scenario: Sports Stuff Inc.
Herb Graham is vice president of Sports Stuff Inc., a business that develops, manufactures, and markets sports products. The company is looking to expand its operations into the European market. Herb believes that if the company expands its product line to include products reflecting sports that are popular in Europe, the company will achieve success there.

Which of the following entry modes would Sports Stuff be implementing if it hires a company to design, construct, and test a production facility on its behalf?
A] joint venture
B] franchising
C] wholly owned subsidiary
D] turnkey project

D] turnkey project

________ occur[s] when a firm sells its products to a domestic customer, which in turn exports the product, in either its original form or a modified form.
A] Indirect exporting
B] Intracorporate transfers
C] Intercorporate transfers
D] Direct exporting

A] Indirect exporting

Scenario: Gro-Tru Grows To Europe
Gro-Tru, a maker of chemical fertilizers and pesticides, sees enormous growth potential in Central Europe. The company has received several inquiries from potential importers in the region, but in most cases, the potential importers have expressed difficulty in obtaining the hard currency to pay for Gro-Tru's products. Alistair Green, vice-president for business development, is exploring how Gro-Tru can meet the needs of the potential market.

In his research, Alistair discovers a type of arrangement in which industrial equipment is exported in return for products produced by that equipment. This arrangement is known as ________.
A] switch trading
B] buyback
C] offset
D] barter

B] buyback

Cross licensing occurs when companies use licensing agreements to swap intangible property with one another.
TRUE
FALSE

TRUE

Which of the following steps of the strategy development process for exports involves establishing relationships with potential local distributors?
A] identification of a potential market
B] initiation of meetings
C] commitment of resources
D] match market needs to the company's abilities

B] initiation of meetings

Which of the following normally takes the form of a wire transfer of money from the bank account of the importer directly to that of the exporter prior to shipment of merchandise?
A] advance payment
B] letter of credit
C] open account
D] documentary collection

A] advance payment

Which of the following is a disadvantage of strategic alliances?
A] They fail to tap into the competitors' specific strengths.
B] They increase the likelihood that one parter will try to take advantage of the other.
C] They are the most expensive among the investment entry modes.
D] They create future competitors.

D] They create future competitors.

Countertrade is not an option for smaller companies because of the cash outlays involved.
TRUE
FALSE

FALSE

________ is the most common form of international business activity.
A] Exporting
B] Countertrade
C] Joint Venture
D] Licensing

A] Exporting

Scenario: Gro-Tru Grows To Europe
Gro-Tru, a maker of chemical fertilizers and pesticides, sees enormous growth potential in Central Europe. The company has received several inquiries from potential importers in the region, but in most cases, the potential importers have expressed difficulty in obtaining the hard currency to pay for Gro-Tru's products. Alistair Green, vice-president for business development, is exploring how Gro-Tru can meet the needs of the potential market.

Gro-Tru would be engaging in ________, if it decides that in exchange for a hard-currency sale it would make a hard-currency purchase of an unspecified product from the importing nation in the future.
A] buyback
B] offset
C] switch trading
D] barter

B] offset

Which of the following types of joint ventures involve parties investing together in downstream business activities?
A] forward integration
B] backward integration
C] buyback
D] multistage

A] forward integration

A[n] ________ exports products on behalf of an indirect exporter.
A] export management company
B] sales representative
C] subsidiary
D] local distributor

A] export management company

Advance payment made by an importer to an exporter normally takes the form of a sight draft.
TRUE
FALSE

FALSE

Advance payment is commonly used for export/import financing when ________.
A] the buyer has obtained credit for the transaction
B] the transaction is for a relatively high amount
C] the buyer has good credit rating at banks
D] two parties are unfamiliar with each other

D] two parties are unfamiliar with each other

The sale of goods and services to a country by a company that promises to buy a specific product from that country in the future is called a[n] ________.
A] barter
B] counterpurchase
C] joint venture
D] offset

B] counterpurchase

Typically, indirect exporting relies on local sales representatives or distributors.
TRUE
FALSE

FALSE

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