Question 1

Why do turnkey operators often require a feasibility study as part of the contract?
A) By adding to the cost, they earn more money.
B) This lessens the risk of contract cancellation when political leadership changes.
C) This lowers their risk of foreign-exchange losses.
D) This helps to define what constitutes "satisfactory completion" of the project.

Accepted Answer

Providing a feasibility study helps to define the project's scope and objectives, which helps clarify what constitutes satisfactory completion of the project. This reduces the likelihood of disagreements between the turnkey operator and the client about the project's goals, which can lead to contract cancellations or legal disputes.

Question 2

Without a proven track record in collaborative arrangements,a company will most likely need to ________.
A) have its home country government approve licensing contracts
B) delegate fewer responsibilities to partners at the company
C) negotiate harder with and make more concessions to a partner
D) depend more on trust as a control mechanism

Accepted Answer

Without a proven track record in collaborative arrangements, a company may find it challenging to establish trust and credibility with potential partners. This situation can lead to the company having to negotiate harder and make more concessions to a partner to compensate for the lack of established trust and to secure the partnership.

Question 3

What is an equity alliance?
A) a collaborative arrangement in which at least one collaborating company takes an ownership position in the other
B) a collaboration in which each contributor receives an equitable return based on relative contribution
C) a collaboration in which partners agree to share technology with each other
D) a wholly owned acquisition to prevent appropriation of intellectual property

Accepted Answer

An equity alliance is a collaborative arrangement in which at least one collaborating company takes an ownership position in the other. This can mean that one company invests in another company, or that two companies merge to form a new entity in which they both have ownership stakes. In either case, the equity alliance typically involves sharing resources, knowledge, and expertise to achieve a specific goal, such as developing a new product or entering a new market.

Question 4

Billions 'of investment dollars are needed to develop many new products.This trend toward higher development costs is likely to have which of the following effects on future modes of operations?
A) Collaborative arrangements are likely to decrease because a company making a breakthrough will be leery of partners' appropriation of knowledge.
B) Collaborative arrangements are likely to increase because of the huge investments needed for development.
C) Exporting will become more important relative to other operating modes because of the large scale production facilities necessary for economic efficiency.
D) Cross-licensing will gain in importance because companies will be forced to specialize more in different technologies.

Accepted Answer

The trend toward higher development costs is likely to lead to an increase in collaborative arrangements because companies will need to pool their resources and expertise in order to make the necessary investments.

Question 5

When no single company has control over a collaborative arrangement,________.
A) the operation may lack direction
B) none of the partners is responsible for legal violations
C) differences in corporate culture are likely to grow
D) one partner's interests are likely to be put ahead of the other partner's interests

Accepted Answer

Without a clear leader, it can be difficult to establish a unified direction for the collaborative effort.

Question 6

Companies typically use various international operating forms simultaneously for all the following reasons EXCEPT which one?
A) They may be at different stages of commitment for different products.
B) They may be at different stages of commitment for different countries.
C) They may need to balance foreign revenues among their operating divisions.
D) Differences in countries' characteristics may necessitate diverse operational forms.

Accepted Answer

Companies typically use various international operating forms to adapt to different stages of commitment and country characteristics, but balancing foreign revenues among divisions is not a reason for using different forms.

Question 7

Tom,a manager at an MNE,has been given the task of identifying a pool of companies with which the firm might form collaborative arrangements.Which of the following activities would be LEAST useful for Tom?
A) attending technical conferences
B) monitoring industry journals
C) attending trade fairs
D) constructing turnkey facilities

Accepted Answer

Constructing turnkey facilities is not directly related to identifying potential collaborative companies, whereas attending technical conferences, monitoring industry journals, and attending trade fairs provide opportunities for networking and gathering information on potential partners.

Question 8

All of the following would be examples of international joint ventures EXCEPT ________.
A) two Japanese companies sharing ownership of a company in Canada
B) a Danish company sharing ownership with a South African company in South Africa
C) a government-owned company from China sharing ownership with an Australian company in Panama
D) two Venezuelan companies sharing ownership of a company in Venezuela

Accepted Answer

The joint venture between two Venezuelan companies is not an international joint venture as both companies are headquartered in the same country. Choices A, B, and C involve companies from different countries sharing ownership of a company, making them international joint ventures.

Question 9

What is an international joint venture?
A) an international agreement between two or more companies to have access to each other's patents
B) the ownership of a company by two or more companies, of which at least one is a foreign company where the venture is located
C) an international agreement between two or more firms for the use of a trademark
D) an agreement between two or more organizations to share management expertise

Accepted Answer

An international joint venture is the ownership of a company by two or more companies, of which at least one is a foreign company where the venture is located. The companies share the risks and rewards of the venture, including the costs and profits. It is a way to enter foreign markets and benefit from the local partner's knowledge, network, and resources.

Question 10

When a large company and a small company enter a collaborative arrangement,________.
A) the large company is expected to contribute more to the arrangement
B) the large company is likely to be more active in the venture
C) the small company is more likely to view the collaboration's expansion as competition to itself
D) the small company is likely to be disadvantaged if legal action is necessary to solve a dispute

Accepted Answer

The answer of When a large company and a small...

Question 11

Large companies that have resources to go it alone may have advantages in product development over small companies that do not because ________.
A) evidence suggests that collaborative arrangements slow the speed of innovation
B) large companies can dictate their terms of operations abroad
C) small companies are disadvantaged in legal settlements
D) large companies need not adapt to national differences

Accepted Answer

Evidence suggests that collaborative arrangements slow the speed of innovation. Therefore, if a large company goes it alone, they can move faster in their product development compared to small companies that might need to collaborate and slow down their pace of innovation.

Question 12

What problem most likely arises when a company wishes to sell techniques/technology that it has either not yet fully developed or used commercially?
A) A buyer is reluctant to buy what it has not seen, and a seller risks divulging secretive information.
B) Most governments want to see contract details, which companies feel are proprietary.
C) It is difficult to develop a rapport between negotiating parties in this type of situation.
D) Parties can seldom agree on the desired level of quality control.

Accepted Answer

When a company wishes to sell techniques/technology that it has not yet fully developed or used commercially, the buyer is usually reluctant to buy something that they have not yet seen, while the seller risks divulging secretive information while trying to convince the buyer of the potential value of the technology. This situation can create a barrier to negotiating a deal.

Question 13

Which of the following would most likely trigger internal tensions as a firm's modes of foreign operations change?
A) losing or gaining responsibilities
B) reluctance to learn about a culture
C) traveling for business purposes
D) geographic diversity

Accepted Answer

When a firm's modes of foreign operations change, it may result in losing or gaining responsibilities among the employees. This could create internal tensions as some employees may feel overburdened or underutilized, leading to conflicts and disagreements.

Question 14

All of the following are differences that need to be overcome for international collaborative arrangements to be effective EXCEPT ________.
A) national disparities in governmental policies
B) company variances in strategic directions and objectives
C) governmental differences in export restrictions
D) company diversity in management styles and structures

Accepted Answer

Governmental differences in export restrictions are not typically a factor that needs to be overcome for international collaborative arrangements to be effective, as they are external regulatory factors rather than internal differences between collaborating entities.

Question 15

Turnkey projects generally differ from other forms of international business in that ________.
A) they tend to be smaller
B) customers are more likely private companies
C) they are more often located in remote areas
D) they depend almost entirely on acquisitions rather than greenfield operations

Accepted Answer

The answer of Turnkey projects generally differ from other forms...

Question 16

What is an international consortium?
A) the ownership of a company by a government and a foreign company
B) an agreement signed by most governments to protect intellectual property rights
C) an international joint venture owned by at least three organizations
D) an agreement between two or more governments to provide for reciprocal foreign investment protection

Accepted Answer

An international consortium is an international joint venture owned by at least three organizations. It is formed when several organizations from different countries come together to work on a specific project. The ownership and management of the consortium are shared among the participating organizations. The consortium is usually formed for a specific purpose and can be dissolved once the project is completed.

Question 17

Exporting is usually more feasible when transportation costs are high rather than low in relation to production costs.

Accepted Answer

Exporting tends to be more feasible and cost-effective when transportation costs are low in relation to production costs, as high transportation costs can significantly increase the overall cost of goods sold abroad, making exports less competitive.

Question 18

Which of the following is LEAST likely to trigger the breakup of a joint venture?
A) The partners place a different degree of importance on the joint venture.
B) The partners develop different capabilities to contribute to the joint venture.
C) The partners come from different industries.
D) Objectives evolve differently over time.

Accepted Answer

While partners coming from different industries can lead to some challenges in a joint venture, it is not necessarily a trigger for a breakup. In fact, having partners from different industries can often bring diverse perspectives and expertise to the joint venture. On the other hand, differences in importance placed on the joint venture, different capabilities to contribute, and diverging objectives over time can all create significant conflicts and ultimately lead to the breakup of the joint venture.

Question 19

All of the following are important when establishing and managing a collaborative agreement EXCEPT ________.
A) setting up mutual goals and expectations
B) avoiding interference about how the partner handles its duties in the operation
C) determining whether the agreement is reaching its goals
D) assessing periodically whether a different operational form would be preferable

Accepted Answer

Avoiding interference about how the partner handles its duties in the operation is not important when establishing and managing a collaborative agreement. In fact, it is essential to establish clear roles and responsibilities for each partner to ensure effective collaboration. The other options listed (setting up mutual goals and expectations, determining if the agreement is reaching its goals, and periodically assessing if a different operational form would be preferable) are all important components of establishing and managing a collaborative agreement.

Question 20

When a company's primary motive for entering a collaborative arrangement is to learn from its partner,it is likely to ________.
A) leave control to its partner
B) "go it alone" after it has learned what it needs to know
C) have disagreements with the partner over quality issues
D) prefer the arrangement to be a licensing agreement

Accepted Answer

If a company's primary motive for entering a collaboration is to learn from its partner, it is likely to terminate the collaboration once it learns what it needs to know and then "go it alone."

Quiz 15: Direct Investment and Collaborative Strategies

Why do turnkey operators often require a feasibility study as part of the contract?

Without a proven track record in collaborative arrangements,a company will most likely need to ________.

What is an equity alliance?

Billions 'of investment dollars are needed to develop many new products.This trend toward higher development costs is likely to have which of the following effects on future modes of operations?

When no single company has control over a collaborative arrangement,________.

Companies typically use various international operating forms simultaneously for all the following reasons EXCEPT which one?

Tom,a manager at an MNE,has been given the task of identifying a pool of companies with which the firm might form collaborative arrangements.Which of the following activities would be LEAST useful for Tom?

All of the following would be examples of international joint ventures EXCEPT ________.

What is an international joint venture?

When a large company and a small company enter a collaborative arrangement,________.

Large companies that have resources to go it alone may have advantages in product development over small companies that do not because ________.

What problem most likely arises when a company wishes to sell techniques/technology that it has either not yet fully developed or used commercially?

Which of the following would most likely trigger internal tensions as a firm's modes of foreign operations change?

All of the following are differences that need to be overcome for international collaborative arrangements to be effective EXCEPT ________.

Turnkey projects generally differ from other forms of international business in that ________.

What is an international consortium?

Exporting is usually more feasible when transportation costs are high rather than low in relation to production costs.

Which of the following is LEAST likely to trigger the breakup of a joint venture?

All of the following are important when establishing and managing a collaborative agreement EXCEPT ________.

When a company's primary motive for entering a collaborative arrangement is to learn from its partner,it is likely to ________.