QUESTION 11

One reason why a relatively poor country may be an attractive target for inward investment is the potential for

A) rapid economic growth.

B) a high cost of living.

C) currency depreciation.

D) a less developed infrastructure.

E) political instability.

QUESTION 12

Rather than build a new facility in Brazil where it wants to make a presence, San Diego-based Beach Bikes Inc. decides to purchase Big Tire Bikes based in So Paulo. This purchase allows Beach Bikes Inc. to establish a bigger presence much faster than exporting their products to customers in Brazil. What mode of entry did Beach Bikes Inc. use?

A) wholly owned subsidiary

B) turnkey project

C) acquisition

D) franchising

E) licensing

QUESTION 13

Renata developed a hair dye additive that is guaranteed to cover grey hair. She granted the right to use this additive to a major hair color manufacturer, and Renata now receives a $1.00 royalty for every box of hair dye sold that contains this additive. What is this an example of?

A) licensing

B) franchising

C) exporting

D) acquisition

E) turnkey project

QUESTION 14

Senior System Technology is a high-tech firm looking to set up operations in a foreign country. The firm's core competency is in technological know-how. Which mode of entry would be most favorable to the firm if it wants to keep a tight control over its technology?

A) licensing

B) joint venture

C) turnkey project

D) franchising

E) wholly owned subsidiary

QUESTION 15

The risk of failure associated with an acquisition can be reduced by

A) a detailed auditing of operations, financial position, and management culture.

B) investing only in a firm that is managing to break even.

C) replacing high-level managers of an acquired firm.

D) ensuring that firms are acquired in the home country.

E) undervaluing the assets of an acquired firm.