Deck 12: Global Market Opportunity Assessment

Question 1

Happy Pet Internationalization (Scenario)
Based in California, the Happy Pet Corporation has 45 pet supply stores across the United States. Given the firm's success in the U.S. market, Happy Pet managers are considering internationalizing their operations to the EU. The market research conducted by the company identified several established pet product manufacturing companies. Beth Schultz, the founder and CEO of Happy Pet, has expressed concerns about expanding the firm's operations into the EU. She believes internationalizing in the EU is not profitable because of the presence of these established competitors. However, Edward O'Neal, the COO of Happy Pet, believes the corporation is ready for the next step. Happy Pet executives and managers have gathered to discuss their organization's readiness to internationalize.
Which of the following most likely supports the opinion of Beth Schultz over the opinion of Edward O'Neal?

A) Happy Pet has a monopoly in the U.S. pet products market.
B) Happy Pet's online sales reflect a high demand for premium pet food in the EU.
C) Happy Pet's market research identified the presence of market saturation in the EU.
D) Happy Pet's competitors have successfully branched into foreign markets.

Answer 1

C

Question 2

Happy Pet Internationalization (Scenario)
Based in California, the Happy Pet Corporation has 45 pet supply stores across the United States. Given the firm's success in the U.S. market, Happy Pet managers are considering internationalizing their operations to the EU. The market research conducted by the company identified several established pet product manufacturing companies. Beth Schultz, the founder and CEO of Happy Pet, has expressed concerns about expanding the firm's operations into the EU. She believes internationalizing in the EU is not profitable because of the presence of these established competitors. However, Edward O'Neal, the COO of Happy Pet, believes the corporation is ready for the next step. Happy Pet executives and managers have gathered to discuss their organization's readiness to internationalize.
Which of the following questions would be more important for Happy Pet executives to evaluate when determining the firm's readiness to internationalize?

A) What does Happy Pet hope to gain from internationalizing its operations?
B) How are the domestic sales figures of Happy Pet's competitors?
C) What product pricing strategies should Happy Pet adopt?
D) Where would be the best location for a Happy Pet product distribution center?

Answer 2

A

Question 3

Assessing a firm's readiness to internationalize and suitability of its products and services for foreign markets occurs in the final stage of the global market opportunity assessment process.

Answer 3

False

Question 4

Happy Pet Internationalization (Scenario)
Based in California, the Happy Pet Corporation has 45 pet supply stores across the United States. Given the firm's success in the U.S. market, Happy Pet managers are considering internationalizing their operations to the EU. The market research conducted by the company identified several established pet product manufacturing companies. Beth Schultz, the founder and CEO of Happy Pet, has expressed concerns about expanding the firm's operations into the EU. She believes internationalizing in the EU is not profitable because of the presence of these established competitors. However, Edward O'Neal, the COO of Happy Pet, believes the corporation is ready for the next step. Happy Pet executives and managers have gathered to discuss their organization's readiness to internationalize.
Which of the following should most likely be considered in determining whether Happy Pet is ready to internationalize?

A) What is the market demand for Happy Pet's products in selected target markets?
B) What demands will internationalization make on Happy Pet's financial resources?
C) How will Happy Pet managers determine which foreign market is appropriate?
D) Should Happy Pet relocate its corporate headquarters after internationalizing?

Question 5

Which of the following tasks in the global market opportunity assessment process should be performed directly before the task of estimating company sales potential?

A) analyze the company's readiness to internationalize
B) screen countries to identify target markets
C) assess industry market potential
D) choose qualified foreign business partners

Question 6

CORE asks managers questions about their organizational resources, skills, and motivation to assess the firm's readiness to engage in exporting successfully.

Question 7

Global market opportunities depend on timing and location, and they often enhance a firm's performance.

Question 8

Which of the following processes involves evaluation of a firm's strengths, weaknesses, opportunities, and threats?

A) SWOT
B) CORE
C) PERT
D) PEST

Question 9

Screening to identify the best countries is an essential task. It is especially important in the early stages of internationalization.

Question 10

When assessing the firm's readiness to internationalize, managers peer into their organization to determine the degree to which it has the resources necessary to successfully engage in international business.

Question 11

Describe the purpose of CORE. How does it aid managers?

Question 12

A SWOT analysis is used to estimate company sales potential for each target market.

Question 13

CORE, a diagnostic tool, is the sole property of the U.S. Department of Commerce.

Question 14

Which of the following is an acronym for a diagnostic tool used by organizations to determine international readiness?

A) SWOT
B) PEST
C) PERT
D) CORE

Question 15

Which of the following questions needs to be addressed by managers to determine the organizational readiness to internationalize?

A) What is the basis of the firm's competitive advantage?
B) Where do people purchase the product or service?
C) Who initiates purchasing?
D) What economic, cultural, geographic, and other factors in the target market may limit sales?

Question 16

When assessing the firm's readiness to internationalize, managers examine their organization to determine the degree to which it has the motivation, resources, and skills necessary to engage in international business successfully.

Question 17

A favorable global market opportunity for a firm would most likely lead to ________.

A) a change in product packaging
B) the procurement of new distributors
C) the establishment of a production facility
D) the sale of corporate stock

Question 18

One of the goals that firms most likely want to attain from internationalizing is ________.

A) decrease trade barriers in the foreign markets
B) establish their presence in saturated markets
C) increase their sales and profits
D) minimize country risk

Question 19

Which of the following tasks should a shoe manufacturing company perform first if it needs to assess the global market opportunity?

A) assess the suitability of the company's shoes for foreign markets
B) analyze the firm's readiness to internationalize
C) choose foreign business partners
D) screen countries to identify foreign markets

Question 20

Explain the concept of a global market opportunity, and discuss the key questions to assess a firm's organizational readiness to pursue global market opportunities.

Question 21

Products or services that are well-received at a firm's home country are more likely to be accepted in foreign countries as well.

Question 22

Which of the following is the most likely source for foreign market information, assessments, and statistics?

A) World Trade Organization
B) Canada's Ministry of Foreign Affairs
C) U.S. Department of Commerce
D) Council of the European Union

Question 23

Which of the following factors is typically most important to firms considering FDI entry?

A) availability of skilled labor and managerial talent
B) pricing strategies of competitors
C) tariffs applied for exporting
D) literacy level of the consumers

Question 24

When determining a product's potential in numerous foreign markets, it is usually best to assume that buyers have identical needs and purchasing habits across the markets.

Question 25

Explain the four factors contributing to product suitability for international markets, and describe how these factors can help an international firm with a gradual elimination screening methodology.

Question 26

Which of the following is management's goal when utilizing gradual elimination?

A) diminish the number of foreign markets served by a large MNE
B) lessen the number of corporate managers involved in subsidiary issues
C) decrease the need for foreign intermediaries to improve profitability
D) reduce the number of nations to investigate as potential foreign markets

Question 27

According to the Market Potential Indicators index, ________ is an indicator of market size.

A) real GDP growth rate
B) telephones per 100 habitants
C) population per retail outlet
D) urban population and electricity consumption

Question 28

Natural disasters in foreign countries is one of the reasons for the emergence of potential target markets for selling products and services.

Question 29

A researcher who assigns scores to countries for their overall market attractiveness uses ________ to choose the most promising foreign markets.

A) indexing and ranking
B) behaviorally anchored rating scales
C) thematic apperception tests
D) gradual elimination

Question 30

In the Market Potential Indicators index, households with Internet access per 100 inhabitants are an indicator of ________.

A) market intensity
B) commercial infrastructure
C) country risk
D) market consumption capacity

Question 31

Even if a firm is confident of its product being sold, it still needs to analyze who initiates the purchase.

Question 32

Which of the following is considered a regional hub or gateway country?

A) Singapore
B) Ireland
C) Canada
D) Russia

Question 33

Advances in communications and transportation technology have changed the internationalization tendencies of firms by ________.

A) establishing a cultural presence in a foreign market prior to establishing a facility
B) providing accessible information about a product to customers but at a significantly higher cost
C) focusing primarily on the need for local intermediaries to sell products in foreign markets
D) reducing the risk and difficulty of doing business in markets with unfamiliar cultures

Question 34

Which of the following dimensions refers to the buying power of the country's residents?

A) market consumption capacity
B) market intensity
C) market size
D) market growth rate

Question 35

According to the Market Potential Indicators index, ________ is an indicator of market intensity.

A) average annual growth rate of primary energy use
B) percentage share of middle class in income/consumption
C) private consumption as a percentage of GDP and GNI per capita
D) per-capita imports from the United States

Question 36

An efficient method of gathering information about a target market is to introduce a product at an industry trade fair.

Question 37

Which of the following will be accomplished by potential exporters who are involved in studying import statistics?

A) evaluating the political risk of different markets
B) estimating the profitability of domestic sales
C) predicting the culture risk of an emerging market
D) assessing a market's viability for accepting new sales

Question 38

When using the process of gradual elimination to screen potential country markets, a researcher should first, ________.

A) delve into specific information
B) obtain general information on macro-level indicators such as population, income, and economic growth
C) employ specific indicators, such as import statistics
D) narrow down the choices with specific indicators, such as economic growth

Question 39

Which of the following is a primary question to ask when attempting to determine a product's potential in a foreign market?

A) How much is the overall production cost?
B) Is the product safe and reliable?
C) Why do people buy the product?
D) How does the product work?

Question 40

Describe the four factors that contribute to the likelihood of success for a product or service in an international market.

Question 41

All You Cosmetics (Scenario)
Executives of All You Cosmetics Company, a Canadian company, have hired a consulting firm, Brown and Associates, to identify foreign markets that might be appropriate for internationalization. Brown consultants have been working for two weeks with All You managers to identify the best foreign markets for the Canadian cosmetics company, which specializes in organic cosmetics and skin care products. So far, Brown consultants have narrowed down the list of countries to fifteen. However, the consultants need to eliminate unattractive markets and reduce the list to five nations, which will then be researched more closely.
Which of the following factors should most likely be considered by Brown consultants as they screen countries for All You Cosmetics?

A) Which markets have the highest number of skin cancer cases among women?
B) In which markets are women the primary breadwinners for their families?
C) Which markets have the highest number of environmentally friendly corporations?
D) In which markets are organic cosmetics and skin care products currently unavailable?

Question 42

With a high percentage of college-educated citizens, countries such as China and India have become a source for international firms seeking knowledge workers.

Question 43

Born-global companies seldom venture into countries outside their comfort zone.

Question 44

The extent of a country's openness to imports is termed ________.

A) market intensity
B) market size
C) market receptivity
D) market growth rate

Question 45

A country's population is referred to as ________.

A) market intensity
B) market size
C) market receptivity
D) market growth rate

Question 46

The buying power of the country's residents is termed as ________.

A) market intensity
B) market size
C) market consumption capacity
D) market receptivity

Question 47

Trade as a percentage of GDP is used to measure a country's market receptivity.

Question 48

Market intensity is defined as the size and growth rate of the country's middle class.

Question 49

Market consumption capacity is the proportion of a country's population concentrated in cities.

Question 50

All You Cosmetics (Scenario)
Executives of All You Cosmetics Company, a Canadian company, have hired a consulting firm, Brown and Associates, to identify foreign markets that might be appropriate for internationalization. Brown consultants have been working for two weeks with All You managers to identify the best foreign markets for the Canadian cosmetics company, which specializes in organic cosmetics and skin care products. So far, Brown consultants have narrowed down the list of countries to fifteen. However, the consultants need to eliminate unattractive markets and reduce the list to five nations, which will then be researched more closely.
Which of the following would most likely be useful market data for the Brown consultants?

A) discretionary income of young women
B) annual health care expenditures
C) average level of education
D) number of cellular phone subscribers

Question 51

Indexing and ranking is the only way to choose markets that offer the most promise.

Question 52

All You Cosmetics (Scenario)
Executives of All You Cosmetics Company, a Canadian company, have hired a consulting firm, Brown and Associates, to identify foreign markets that might be appropriate for internationalization. Brown consultants have been working for two weeks with All You managers to identify the best foreign markets for the Canadian cosmetics company, which specializes in organic cosmetics and skin care products. So far, Brown consultants have narrowed down the list of countries to fifteen. However, the consultants need to eliminate unattractive markets and reduce the list to five nations, which will then be researched more closely.
Which of the following statements most likely supports using gradual elimination for country screening instead of indexing and ranking?

A) All You managers want a list of foreign markets and rank these markets based on specific variables, such as market size and growth rate.
B) All You managers are primarily looking for a market with a large urban population and a great deal of economic freedom.
C) All You managers will consider any reasonable market and want to narrow down the list with increasingly specific information.
D) All You managers have assigned values to different variables within the cosmetic and skin care industry.

Question 53

Brazil, Russia, India, and China, known collectively as the BRIC countries, show remarkable potential as target markets in coming years.

Question 54

The size and growth rate of a country's middle class is termed as ________.

A) market consumption capacity
B) market intensity
C) market receptivity
D) market size

Question 55

Exporting, FDI, and sourcing all have identical screening criteria.

Question 56

Trade as a percentage of GDP is used to measure ________.

A) market intensity
B) market size
C) market receptivity
D) market growth rate

Question 57

Ongoing globalization has reduced the cost and risk of entering foreign markets.

Question 58

Countries appropriate for firms intending to use FDI as an entry strategy should exhibit a potential for long-term growth with limited political risk.

Question 59

Private consumption as a percentage of GDP is used to measure ________.

A) market intensity
B) market size
C) market receptivity
D) market growth rate

Question 60

Screening countries to identify target markets is the most time-consuming step for most firms.

Question 61

Explain why it is especially critical for a firm to select the most appropriate market for its product or service during the primary stage of internationalization. What are the negative consequences of making a poor market selection for firms planning to globalize through FDI?

Question 62

Compare and contrast industry market potential and company sales potential. How is an estimate of industry market potential helpful to managers? What factors are necessary to determine industry market potential?

Question 63

Which of the following market characteristics offers the most potential for a firm's success at internationalization?

A) a widely distributed product or service
B) an unaffordable product or service
C) an unavailable product or service
D) an unknown product or service

Question 64

Which of the following should be done by a company planning to internationalize when it assesses market industry potential?

A) take action to eliminate deficiencies in the firm
B) determine the most desirable attributes in foreign business partners
C) develop a 3- to 5-year forecast of industry sales for each target market
D) determine how products or services may need to be adapted for each market

Question 65

Discuss four macroeconomic trends that have the potential to significantly alter the current status of international business and trade. Discuss the questions that managers should investigate to deepen knowledge about the international market potential of a product or service.

Question 66

Tapping into supplier networks is one of the methods of estimating industry market potential.

Question 67

Describe the two methods typically used to screen potential foreign markets for exporting: gradual elimination and indexing and ranking.

Question 68

An arrangement in which the firm allows another the right to use an entire business system in exchange for fees, royalties, or other forms of compensation is known as ________.

A) franchising
B) licensing
C) outsourcing
D) offshoring

Question 69

According to the indexing and ranking method for choosing the most promising target market, the researcher assigns scores to countries based on their overall market attractiveness.

Question 70

A car rental agency that was planning to internationalize its operations would most likely select a(n) ________.

A) distributor
B) intermediary
C) franchisor
D) licensor

Question 71

Describe the various types of partners an international firm might adopt when expanding internationally. How can a business partner affect a company's sales potential?

Question 72

Industry market potential is identical to company sales potential.

Question 73

Australian Business Partner (Scenario)
The Coffee Cup Corporation (CCC) is a large U.S.-based coffee retailer with stores across America. After months of research, CCC executives have decided to open their first international store in Sydney, Australia. CCC managers have been assigned the task of selecting an appropriate Australian business partner for the coffee company. CCC managers flew to Sydney to interview potential business partners, and they have narrowed the list to three.
Business Partner X, who owns a small chain of Sydney coffee shops, has offered to make an equity investment in CCC. Which of the following types of relationships would most likely result if Business Partner X is selected?

A) turnkey operation
B) licensing partnership
C) franchising partnership
D) international collaborative venture

Question 74

By monitoring key industry-specific indicators, a manager can estimate industry market potential.

Question 75

Which of the following tasks is the final stage of assessing the global market opportunities of a firm?

A) screen countries to identify target markets
B) assess product suitability for foreign markets
C) estimate company sales potential
D) assess industry market potential

Question 76

Describe the variables used to identify the best markets for FDI entry. Which countries are popular for FDI entry? Why are they popular?

Question 77

Focal firms that intend to sell their trademark and copyrights typically work with foreign licensing partners instead of franchisors.

Question 78

________ refers to a cross-border business alliance whereby partnering firms pool their resources and share costs and risks to undertake a new business venture.

A) International collaborative ventures
B) Turnkey operations
C) Greenfield investments
D) Acquisitions

Question 79

The term industry market potential can best be defined as the ________.

A) expected competition within a foreign market
B) predicted industry sales over a particular period of time
C) anticipated market growth and expansion
D) forecast of a firm's sales in a specific market

Question 80

In order to estimate industry market potential, managers most likely require ________.

A) market size and growth rates specific to the industry
B) manufacturing specifications and production output
C) anticipated improvements within public infrastructure
D) expected long-term IT needs and e-commerce trends