MGMT 450 Exam 1 UPDATED
QUESTIONS AND CORRECT ANSWERS
international business - CORRECT ANSWER consists of business transactions
between parties from more than one country. Countries could use different currencies, legal
systems could differ, cultures could differ, and the availability of resources in the countries
involved could differ. International businesspeople must be knowledgeable about cultural,
legal, political, and social differences among countries.
JIT system (just-in-time system) - CORRECT ANSWER Japanese firms pioneered this
inventory management technique, under which suppliers are expected to deliver necessary
inputs just as they are needed
exporting - CORRECT ANSWER the selling of products made in one's own country
for use or resale in other countries
importing - CORRECT ANSWER is the buying of products made in other countries for
use or resale in one's own country
merchandise exports and imports - CORRECT ANSWER exporting and importing
activities often are divided into two groups. One group of activities is trade in goods -
tangible products such as clothing, computers, and raw materials. Official U.S. gov
publications call this type of trade __, the British call it 'visible trade'
service exports and imports - CORRECT ANSWER exporting and importing activities
often are divided into two groups. One group of activities is trade in services - intangible
products such as banking, travel, and accounting activities. U.S. calls this type of trade __,
British call it 'invisible trade'
international investments - CORRECT ANSWER major form of international business
activity - is capital supplied by residents of one country to residents of another. Such
investments are divided into two categories: foreign direct investments and foreign portfolio
investments
, FDI (foreign direct investments) - CORRECT ANSWER investments made for the
purpose of actively controlling property, assets, or companies located in host countries.
Companies HQ country is called the 'home country', any other country in which the parent
company operates is known as the 'host country'
FPI (foreign portfolio investments) - CORRECT ANSWER are purchases of foreign
financial assets (stocks, bonds, and certificates of deposit) for a purpose other than control.
An example of a portfolio investment is the purchase of 1,000 shares of Sony's common
stock by a Danish pension fund. With this investment the pension fund is trying to raise the
rate of return on its asset portfolio rather than control Sony's decision making. For the same
reason many investors in recent years have bought shares of mutual funds that specialize in
foreign stocks and bonds
international licensing - CORRECT ANSWER is a contractual arrangement in which a
firm in one country licenses the use of its intellectual property to a firm in second country in
return for a royalty payment. The Walt Disney company may permit a German clothing
manufacturer to market children's pajamas embroidered with Mickey's smiling face in return
for a % of the company's sales
international franchising - CORRECT ANSWER a specialized form of international
licensing, occurs when a firm in one country (the franchisor) authorizes a firm in a second
country (the franchisee) to utilize its operating systems as well as its brand names,
trademarks, and logos in return for a royalty payment. i.e. McDonald's Corporation
international management contract - CORRECT ANSWER is an arrangement wherein
a firm in one country agrees to operate facilities or provide other management services to a
firm in another country for an agreed-upon fee. These contracts are common, for instance, in
the upper end of the international hotel industry
MNC (multinational corporation) - CORRECT ANSWER is used to identify firms that
have extensive involvement in international business, more precisely a firm "that engages in
foreign direct investment and owns or controls value-adding activities in more than one
country." In addition to owning and controlling foreign assets, MNCs typically buy resources
in a variety of countries, create goods and/or services in a variety of countries, and then sell
those goods/services in a variety of countries
QUESTIONS AND CORRECT ANSWERS
international business - CORRECT ANSWER consists of business transactions
between parties from more than one country. Countries could use different currencies, legal
systems could differ, cultures could differ, and the availability of resources in the countries
involved could differ. International businesspeople must be knowledgeable about cultural,
legal, political, and social differences among countries.
JIT system (just-in-time system) - CORRECT ANSWER Japanese firms pioneered this
inventory management technique, under which suppliers are expected to deliver necessary
inputs just as they are needed
exporting - CORRECT ANSWER the selling of products made in one's own country
for use or resale in other countries
importing - CORRECT ANSWER is the buying of products made in other countries for
use or resale in one's own country
merchandise exports and imports - CORRECT ANSWER exporting and importing
activities often are divided into two groups. One group of activities is trade in goods -
tangible products such as clothing, computers, and raw materials. Official U.S. gov
publications call this type of trade __, the British call it 'visible trade'
service exports and imports - CORRECT ANSWER exporting and importing activities
often are divided into two groups. One group of activities is trade in services - intangible
products such as banking, travel, and accounting activities. U.S. calls this type of trade __,
British call it 'invisible trade'
international investments - CORRECT ANSWER major form of international business
activity - is capital supplied by residents of one country to residents of another. Such
investments are divided into two categories: foreign direct investments and foreign portfolio
investments
, FDI (foreign direct investments) - CORRECT ANSWER investments made for the
purpose of actively controlling property, assets, or companies located in host countries.
Companies HQ country is called the 'home country', any other country in which the parent
company operates is known as the 'host country'
FPI (foreign portfolio investments) - CORRECT ANSWER are purchases of foreign
financial assets (stocks, bonds, and certificates of deposit) for a purpose other than control.
An example of a portfolio investment is the purchase of 1,000 shares of Sony's common
stock by a Danish pension fund. With this investment the pension fund is trying to raise the
rate of return on its asset portfolio rather than control Sony's decision making. For the same
reason many investors in recent years have bought shares of mutual funds that specialize in
foreign stocks and bonds
international licensing - CORRECT ANSWER is a contractual arrangement in which a
firm in one country licenses the use of its intellectual property to a firm in second country in
return for a royalty payment. The Walt Disney company may permit a German clothing
manufacturer to market children's pajamas embroidered with Mickey's smiling face in return
for a % of the company's sales
international franchising - CORRECT ANSWER a specialized form of international
licensing, occurs when a firm in one country (the franchisor) authorizes a firm in a second
country (the franchisee) to utilize its operating systems as well as its brand names,
trademarks, and logos in return for a royalty payment. i.e. McDonald's Corporation
international management contract - CORRECT ANSWER is an arrangement wherein
a firm in one country agrees to operate facilities or provide other management services to a
firm in another country for an agreed-upon fee. These contracts are common, for instance, in
the upper end of the international hotel industry
MNC (multinational corporation) - CORRECT ANSWER is used to identify firms that
have extensive involvement in international business, more precisely a firm "that engages in
foreign direct investment and owns or controls value-adding activities in more than one
country." In addition to owning and controlling foreign assets, MNCs typically buy resources
in a variety of countries, create goods and/or services in a variety of countries, and then sell
those goods/services in a variety of countries
