1. What is a disadvantage of greenfield ventures?

A.They are slower to establish than acquisitions.

B.A firm does not have the freedom to build the kind ofsubsidiary that it wants.

C.Companies find it difficult to avoid falling into the trap ofthe hubris hypothesis.

D.They have a higher potential for throwing up unpleasantsurprises.

E.It is much more difficult to build an organizational culturefrom scratch than to change the culture of an existing unit.

2.What is a disadvantage of franchising?

A.Franchising leads to undesirable results for servicefirms.

B.The franchiser has no long-term interests in the foreigncountry.

C.The franchiser has to bear development costs and risksassociated with foreign expansion.

D.It forces a franchiser to take out profits from one country tosupport competitive attacks in another.

E.It is difficult to maintain quality control across foreignfranchisees that are distant from the franchiser.

3.One argument for a fixed exchange rate system is that

A.each country should be allowed to choose its own inflationrate.

B.it ensures that governments do not expand the monetary supplytoo rapidly, thus causing high price inflation.

C.speculations in exchange rates boost exports and reduceimports.

D.governments can contract their money supply without worryingabout the need to maintain parity.

E.trade balance adjustments do not require the intervention ofthe International Monetary Fund.

4.What is a drawback of licensing as a mode of entry intoforeign markets?

A.Licensing does not give a firm tight control overmanufacturing, marketing, and strategy.

B.Licensing deals fail when there are barriers to foreigninvestment in a particular country.

C.Licensing does not benefit firms lacking the capital to expandoperations overseas.

D,The licensor has to bear all costs and risks associated withdeveloping a foreign market.

E.A firm that enters into a licensing deal with a foreigncountry will have no long-term interest in that country.