International Business Final (Ver. 2 Only Content)

Front 1

A firm's ____ refers to the actions that managers take to attain the goals of the firm. Firms need to pursue strategies that increase ___ and __ __.

Back 1

strategy, profitability, profit growth

Front 2

The ____ ___ model looks at the external environment first, while the ___-___ model of above-average returns looks at a companies unique resources and capability first.

Back 2

industrial organization (i/o), resource-based

Front 3

What are Porter's 5 forces?

Back 3

- risk of entry by competitors
- interfirm rivalry
- buyer power
- supplier power
- substitutes

Front 4

Four criteria for ideal competencies:

Back 4

Valuable, Rare, Nonsubstitutable, costly to imitate

Front 5

___ competitive scope means that the firm competes in many customer segments, ___ competitive scope means that the firm selects a segment or group of segments in the industry and tailors its strategy to serving them at the exclusion
of others

Back 5

broad, narrow

Front 6

Types of Business-Level Strategies include (5):

Back 6

cost leadership, differentiation, focused CL, focused diff., integrated cost leadership and differentiation

Front 7

____ ____ _____ allows the firm to understand the parts of its operations that create value and
those that do not

Back 7

Value Chain Analysis

Front 8

How can firms increase profits
through international expansion?

Back 8

1. Expand their market
2. Realize location economies
3. Realize greater cost economies from
experience effects
4. Earn a greater return

Front 9

There are four basic strategies to compete in international
markets...what are they?

Back 9

1. Global standardization
2. Localization
3. Transnational
4. International

Front 10

Firms expanding internationally must decide what 3 things as far as entry strategy is concerned?

Back 10

1. Which markets to enter
2. When to enter them and on what scale
3. Which entry mode to use

Front 11

What are six ways to enter foreign markets?

Back 11

1. exporting
2. turnkey projects
3. licensing
4. franchising
5. joint ventures with a host country
6. wholly owned subsidiary

Front 12

Why are turnkey projects attractive? Unattractive?

Back 12

– they are a way of earning economic returns from the know-how required to assemble and run a technologically complex process
– they can be less risky than conventional FDI

– the firm has no long-term interest in the foreign country
– the firm may create a competitor
– if the firm's process technology is a source of
competitive advantage, then selling this technology through a turnkey project is also selling competitive advantage to potential and/or actual competitors

Front 13

Basic entry decisions include identifying what 3 things?

Back 13

1. which markets to enter
2. when
3. on what scale

Front 14

The ___ ___ ____ assumes
the currency unit used to report financial results is not losing its value due to inflation

Back 14

historic cost principal

Front 15

What does IASB stand for, and what does it do?

Back 15

The International Accounting Standards Board (IASB) is a major proponent of standardization of accounting standards
– common accounting standards will facilitate the
development of global capital markets
– most IASB standards are consistent with standards already in place in the United States

Front 16

A ___ ____ ____ combines the
separate financial statements of two or more companies to yield a single set of financial
statements as if the individual companies were really one

Back 16

consolidated financial statement

– used by multinational firms

Front 17

There are two methods to determine what exchange rate should be used when translating financial statement currencies:

Back 17

1. The current rate method
2. The temporal method

Front 18

Under the ___ ___ method, the
exchange rate at the balance sheet date is used to translate the financial statements of a foreign subsidiary into the home currency of the multinational firm

Back 18

current rate

–can present a misleading picture of the financial situation
–method is incompatible with the historic cost principle

Front 19

The ____ method translates
assets valued in a foreign currency into the home currency using the exchange
rate that exists when assets are purchased

Back 19

temporal

–avoids the problems associated with the current rate method
–is still problematic because different exchange rates are used to translate foreign assets

Front 20

*True or false: Systematic increase in sales that have been observed to occur over the life of the product are referred to as the experience curve

Back 20

False, The experience curve refers to systematic REDUCTION IN PRODUCTION COSTS that have been observed to occur over the life of a product.

Front 21

*True or false: Pressures for cost reduction are minimal in industries where major competitors are based in low-cost locations, where there is persistent excess capacity and where consumers are powerful and face low switching costs

Back 21

False, Pressures for cost reduction are INTENSE in industries where major competitors are based in low-cost locations, where there persistent excess capacity and where consumers are powerful and face low switching costs

Front 22

*True or false: Since banks are the major providers of capital in countries like Germany, financial accounting practices involve overvaluing assets and valuing liabilities conservatively

Back 22

False, Since banks are the major providers of capital in countries like Germany, financial accounting practices involve overvaluing LIABILITIES and valuing ASSETS conservatively

Front 23

*Global expansion allows firms to achieve all of the following except:

a. Expand the market for their domestic product offerings
b. Standardize their product offering, marketing strategy, and business strategy
c. Realize location economies and economies of scale
d. Earn a greater return by leveraging any skills developed in foreign opreations

Back 23

b. Standardize their product offering, marketing strategy, and business strategy (you can try, but you won’t be able to)

Front 24

*Firms may prefer acquisitions to Greenfield investments for all of the following reasons except:

a. Quick to execute
b. To preempt competitors
c. Managers may believe acquisitions to be less risky than greenfield ventures
d. they allow companies to completely sidestep goverment regulations on investment

Back 24

d. they allow companies to completely sidestep goverment regulations on investment

Front 25

*Historically, financial reports prepared by firms in Germany tended to contain more or less information than those of British or U.S. firms?

Back 25

Less

Front 26

*True or false: The impact of the IASB standards has probably least noticeable in the U.S. because most of the standards issued by the IASB have been consistent with opinions already articulated by the U.S. FASB.

Back 26

True

Front 27

*In capital budgeting decisions, the discount rate must be adjusted upward or downward in countries where governments offer foreign firms low-interest loans?

Back 27

Downward. They should be adjusted upward in countries where liquidity is limited.

Front 28

*True or false: Royalties and fees are often tax-deductible locally, so arranging for payment in royalties and fees will reduce a foreign subsidiary’s tax liabilities.

Back 28

True, because they are viewed as an expense.

Front 29

*A ____ __ can circumvent host-country restrictions on the remittance of funds from a foreign subsidiary to the parent company.

Back 29

fronting loan

Front 30

* ___ ____ allows a multinational firm to reduce the transaction costs that arise when many transactions occur between its subsidiaries.

Back 30

multilateral netting

Front 31

Financial management involves what 3 things?

Back 31

1. Investment decisions –what to finance
2. Financing decisions –how to finance
3. Money management decisions –how to manage