International Business: The New Realities, 3e (Cavusgil)

Chapter 13 Global Market Opportunity Assessment

32) A favorable global market opportunity for a firm would most likely lead to ________.
A) a change in product packaging
B) the procurement of new distributors
C) the establishment of a production facility
D) the sale of corporate stock
Answer: C
Difficulty: Easy
Skill: Concept
Objective: 13-1
AACSB: Dynamics of the global economy
33) Which of the following tasks should a shoe manufacturing company perform first if it needs
to assess the global market opportunity?
A) assess the suitability of the company's shoes for foreign markets
B) analyze the firm's readiness to internationalize
C) choose foreign business partners
D) screen countries to identify foreign markets
Answer: B
Difficulty: Easy
Skill: Concept
Objective: 13-1
AACSB: Dynamics of the global economy
34) Which of the following tasks should be performed directly before a company, that is
assessing the global market opportunity, estimates its sales potential?
A) analyze the company's readiness to internationalize
B) screen countries to identify target markets
C) assess industry market potential
D) choose qualified foreign business partners
Answer: D
Difficulty: Easy
Skill: Concept
Objective: 13-1
AACSB: Dynamics of the global economy
35) Which of the following processes involves evaluation of a firm's strengths, weaknesses,
opportunities, and threats?
A) SWOT
B) CORE
C) PERT
D) PEST
Answer: A
Difficulty: Easy
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Skill: Concept
Objective: 13-1
AACSB: Dynamics of the global economy
36) One of the goals that firms most likely want to attain from internationalizing is ________.
A) decrease trade barriers in the foreign markets
B) establish their presence in saturated markets
C) increase their sales and profits
D) minimize country risk
Answer: C
Difficulty: Moderate
Skill: Concept
Objective: 13-1
AACSB: Dynamics of the global economy
37) Which of the following questions needs to be addressed by managers to determine the
organizational readiness to internationalize?
A) What is the basis of the firm's competitive advantage?
B) Where do people purchase the product or service?
C) Who initiates purchasing?
D) What economic, cultural, geographic, and other factors in the target market may limit sales?
Answer: A
Difficulty: Moderate
Skill: Concept
Objective: 13-1
AACSB: Dynamics of the global economy
38) Which of the following is an acronym for a diagnostic tool used by organizations to
determine international readiness?
A) SWOT
B) PEST
C) PERT
D) CORE
Answer: D
Difficulty: Easy
Skill: Concept
Objective: 13-1
AACSB: Dynamics of the global economy
39) Which of the following is a primary question to ask when attempting to determine a product's
potential in a foreign market?
A) How much is the overall production cost?
B) Is the product safe and reliable?
C) Why do people buy the product?
D) How does the product work?
Answer: C
Difficulty: Easy
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Skill: Concept
Objective: 13-2
AACSB: Dynamics of the global economy
40) Which of the following will be accomplished by potential exporters who are involved in
studying import statistics?
A) evaluating the political risk of different markets
B) estimating the profitability of domestic sales
C) predicting the culture risk of an emerging market
D) assessing a market's viability for accepting new sales
Answer: D
Difficulty: Moderate
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
41) Which of the following is the most likely source for foreign market information,
assessments, and statistics?
A) World Trade Organization
B) Canada's Ministry of Foreign Affairs
C) U.S. Department of Commerce
D) Council of the European Union
Answer: C
Difficulty: Easy
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
42) Advances in communications and transportation technology have changed the
internationalization tendencies of firms by ________.
A) establishing a cultural presence in a foreign market prior to establishing a facility
B) providing accessible information about a product to customers but at a significantly higher
cost
C) focusing primarily on the need for local intermediaries to sell products in foreign markets
D) reducing the risk and difficulty of doing business in markets with unfamiliar cultures
Answer: D
Difficulty: Moderate
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy; Use of information technology
43) Which of the following is considered a regional hub?
A) Hong Kong
B) Ireland
C) Canada
D) Russia
Answer: A
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Difficulty: Easy
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
44) Which of the following is management's goal when utilizing gradual elimination?
A) diminish the number of foreign markets served by a large MNE
B) lessen the number of corporate managers involved in subsidiary issues
C) decrease the need for foreign intermediaries to improve profitability
D) reduce the number of nations to investigate as potential foreign markets
Answer: D
Difficulty: Moderate
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
45) When using the process of gradual elimination to screen potential country markets, a
researcher should first, ________.
A) delve into specific information
B) obtain general information on macro-level indicators like population
C) employ specific indicators, such as import statistics
D) narrow down the choices with specific indicators, such as economic growth
Answer: B
Difficulty: Moderate
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
46) A researcher who assigns scores to countries for their overall market attractiveness uses
________ to choose the most promising foreign markets.
A) indexing and ranking
B) behaviorally anchored rating scales
C) thematic apperception tests
D) gradual elimination
Answer: A
Difficulty: Easy
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
47) According to the Emerging Market Potential Indicators index, ________ is an indicator of
market intensity.
A) average annual growth rate of primary energy use
B) percentage share of middle class in income/consumption
C) private consumption as a percentage of GDP
D) per-capita imports from the United States
Answer: C
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Difficulty: Easy
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
48) According to the Emerging Market Potential Indicators index, ________ is an indicator of
market size.
A) real GDP growth rate
B) telephones per 100 habitants
C) population per retail outlet
D) urban population
Answer: D
Difficulty: Easy
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
49) Which of the following dimensions refers to the buying power of the country's residents?
A) market consumption capacity
B) market intensity
C) market size
D) market growth rate
Answer: B
Difficulty: Easy
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
50) In the Emerging Market Potential Indicators index, Internet users per million people are an
indicator of ________.
A) market intensity
B) commercial infrastructure
C) country risk
D) market consumption capacity
Answer: B
Difficulty: Easy
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
51) Which of the following factors is typically most important to firms considering FDI entry?
A) availability of skilled labor and managerial talent
B) pricing strategies of competitors
C) tariffs applied for exporting
D) literacy level of the consumers
Answer: A
Difficulty: Moderate
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Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
52) The extent of a country's openness to imports is termed ________.
A) market intensity
B) market size
C) market receptivity
D) market growth rate
Answer: C
Difficulty: Easy
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
53) The proportion of a country's population concentrated in cities is referred to as ________.
A) market intensity
B) market size
C) market receptivity
D) market growth rate
Answer: B
Difficulty: Easy
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
54) The size and growth rate of a country's middle class is termed as ________.
A) market consumption capacity
B) market intensity
C) market receptivity
D) market size
Answer: A
Difficulty: Easy
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
55) The buying power of the country's residents is termed as ________.
A) market intensity
B) market size
C) market consumption capacity
D) market receptivity
Answer: A
Difficulty: Easy
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
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56) Private consumption as a percentage of GDP is used to measure ________.

A) market intensity
B) market size
C) market receptivity
D) market growth rate
Answer: A
Difficulty: Easy
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
57) According to the A.T. Kearney 2012 Foreign Direct Investment Confidence Index, investors
have the highest confidence in ________.
A) Malaysia and Brazil
B) South Africa and Indonesia
C) Turkey and Russia
D) China and India
Answer: D
Difficulty: Easy
Skill: Concept
Objective: 13-3
AACSB: Dynamics of the global economy
58) Which of the following should be done by a company planning to internationalize when it
assesses market industry potential?
A) take action to eliminate deficiencies in the firm
B) determine the most desirable attributes in foreign business partners
C) develop a 3- to 5-year forecast of industry sales for each target market
D) determine how products or services may need to be adapted for each market
Answer: C
Difficulty: Moderate
Skill: Concept
Objective: 13-4
AACSB: Dynamics of the global economy
59) Which of the following market characteristics offers the most potential for a firm's success at
internationalization?
A) a widely-distributed product or service
B) an unaffordable product or service
C) an unavailable product or service
D) an unknown product or service
Answer: C
Difficulty: Easy
Skill: Concept
Objective: 13-4
AACSB: Dynamics of the global economy
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60) The term industry market potential can best be defined as the ________.
A) expected competition within a foreign market
B) predicted industry sales over a particular period of time
C) anticipated market growth and expansion
D) forecast of a firm's sales in a specific market
Answer: B
Difficulty: Easy
Skill: Concept
Objective: 13-4
AACSB: Dynamics of the global economy
61) In order to estimate industry market potential, managers most likely require ________.
A) market size and growth rates specific to the industry
B) manufacturing specifications and production output
C) anticipated improvements within public infrastructure
D) expected long-term IT needs and e-commerce trends
Answer: A
Difficulty: Moderate
Skill: Concept
Objective: 13-4
AACSB: Dynamics of the global economy
62) A car-rental agency that was planning to internationalize its operations would most likely
select a(n) ________.
A) distributor
B) intermediary
C) franchisor
D) licensor
Answer: C
Difficulty: Moderate
Skill: Application
Objective: 13-5
AACSB: Dynamics of the global economy
63) An arrangement in which the firm allows another the right to use an entire business system in
exchange for fees, royalties, or other forms of compensation is known as ________.
A) franchising
B) licensing
C) outsourcing
D) offshoring
Answer: A
Difficulty: Easy
Skill: Concept
Objective: 13-5
AACSB: Dynamics of the global economy
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64) ________ refer to cross-border business alliance whereby partnering firms pool their
resources and share costs and risks to undertake a new business venture.
A) International collaborative ventures
B) Turnkey operations
C) Greenfield investments
D) Acquisitions
Answer: A
Difficulty: Easy
Skill: Concept
Objective: 13-5
AACSB: Dynamics of the global economy
65) Which of the following tasks is the final stage of assessing the global market opportunities of
a firm?
A) screen countries to identify target markets
B) assess product suitability for foreign markets
C) estimate company sales potential
D) assess industry market potential
Answer: C
Difficulty: Easy
Skill: Concept
Objective: 13-6
AACSB: Dynamics of the global economy
66) The estimate of the share of annual industry sales the firm expects to generate in a particular
target market is known as ________.
A) industry market potential
B) company sales potential
C) break-even analysis
D) SWOT analysis
Answer: B
Difficulty: Easy
Skill: Concept
Objective: 13-6
AACSB: Dynamics of the global economy
67) Trade audits may provide managers insight regarding ________.
A) manufacturing cost estimates
B) company employee opinions
C) competitors' offerings and pricing
D) market fluctuation tendencies
Answer: C
Difficulty: Easy
Skill: Concept
Objective: 13-6
AACSB: Dynamics of the global economy
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68) ________ is used by some firms to gauge long-term sales potential without fully committing
to a foreign market.
A) Competitor assessment
B) Test marketing
C) Market segmentation
D) End-user surveys
Answer: B
Difficulty: Easy
Skill: Concept
Objective: 13-6
AACSB: Dynamics of the global economy
69) Which of the following market research tools relies on known information about one product
to infer the market potential of another product?
A) proxy indicator
B) analogy
C) trade audit
D) comparative surveys
Answer: A
Difficulty: Easy
Skill: Concept
Objective: 13-6
AACSB: Dynamics of the global economy
Happy Pet Internationalization (Scenario)
Based in California, the Happy Pet Corporation has 45 pet supply stores across the United States.
Given the firm's success in the U.S. market, Happy Pet managers are considering
internationalizing their operations to the EU. The market research conducted by the company
identified several established pet product manufacturing companies. Beth Schultz, the founder
and CEO of Happy Pet, has expressed concerns about expanding the firm's operations into the
EU. She believes internationalizing in the EU is not profitable because of the presence of these
established competitors. However, Edward O'Neal, the COO of Happy Pet, believes the
corporation is ready for the next step. Happy Pet executives and managers have gathered to
discuss their organization's readiness to internationalize.
70) Which of the following questions would be more important for Happy Pet executives to
evaluate when determining the firm's readiness to internationalize?
A) What does Happy Pet hope to gain from internationalizing its operations?
B) How are the domestic sales figures of Happy Pet's competitors?
C) What product pricing strategies should Happy Pet adopt?
D) Where would be the best location for a Happy Pet product distribution center?
Answer: A
Difficulty: Hard
Skill: Application
Objective: 13-1
AACSB: Dynamics of the global economy
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71) Which of the following most likely supports the opinion of Beth Schultz over the opinion of
Edward O'Neal?
A) Happy Pet has a monopoly in the U.S. pet products market.
B) Happy Pet's online sales reflect a high demand for premium pet food in the EU.
C) Happy Pet's market research identified the presence of market saturation in the EU.
D) Happy Pet's competitors have successfully branched into foreign markets.
Answer: C
Difficulty: Hard
Skill: Critical Thinking
Objective: 13-1
AACSB: Dynamics of the global economy; Reflective thinking skills
72) Which of the following should most likely be considered in determining whether Happy Pet
is ready to internationalize?
A) What is the market demand for Happy Pet's products in selected target markets?
B) What demands will internationalization make on Happy Pet's financial resources?
C) How will Happy Pet managers determine which foreign market is appropriate?
D) Should Happy Pet relocate its corporate headquarters after internationalizing?
Answer: B
Difficulty: Hard
Skill: Application
Objective: 13-1
AACSB: Dynamics of the global economy
All You Cosmetics (Scenario)
Executives of All You Cosmetics Company, a Canadian company, have hired a consulting firm,
Brown and Associates, to identify foreign markets that might be appropriate for
internationalization. Brown consultants have been working for two weeks with All You managers
to identify the best foreign markets for the Canadian cosmetics company, which specializes in
organic cosmetics and skin care products. So far, Brown consultants have narrowed down the list
of countries to fifteen. However, the consultants need to eliminate unattractive markets and reduce
the list to five nations, which will then be researched more closely.
73) Which of the following factors should most likely be considered by Brown consultants as
they screen countries for All You Cosmetics?
A) Which markets have the highest number of skin cancer cases among women?
B) In which markets are women the primary breadwinners for their families?
C) Which markets have the highest number of environmentally-friendly corporations?
D) In which markets are organic cosmetics and skin care products currently unavailable?
Answer: D
Difficulty: Hard
Skill: Application
Objective: 13-3
AACSB: Dynamics of the global economy
74) Which of the following statements most likely supports using gradual elimination for country
screening instead of indexing and ranking?
A) All You managers want a list of foreign markets and rank these markets based on specific
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variables, such as market size and growth rate.

B) All You managers are primarily looking for a market with a large urban population and a great
deal of economic freedom.
C) All You managers will consider any reasonable market and want to narrow down the list with
increasingly specific information.
D) All You managers have assigned values to different variables within the cosmetic and skin
care industry.
Answer: C
Difficulty: Hard
Skill: Critical Thinking
Objective: 13-3
AACSB: Dynamics of the global economy; Reflective thinking skills
75) Which of the following would most likely be useful market data for the Brown consultants?
A) discretionary income of young women
B) annual health care expenditures
C) average level of education
D) number of cellular phone subscribers
Answer: A
Difficulty: Moderate
Skill: Application
Objective: 13-3
AACSB: Dynamics of the global economy
Australian Business Partner (Scenario)
The Coffee Cup Corporation (CCC) is a large U.S.-based coffee retailer with stores across
America. After months of research, CCC executives have decided to open their first international
store in Sydney, Australia. CCC managers have been assigned the task of selecting an
appropriate Australian business partner for the coffee company. CCC managers flew to Sydney
to interview potential business partners, and they have narrowed the list to three.
76) Business Partner X, who owns a small chain of Sydney coffee shops, has offered to make an
equity investment in CCC. Which of the following types of relationships would most likely
result if Business Partner X is selected?
A) turnkey operation
B) licensing partnership
C) franchising partnership
D) international collaborative venture
Answer: D
Difficulty: Hard
Skill: Application
Objective: 13-5
AACSB: Dynamics of the global economy
77) All of the following are criteria most likely established by CCC managers for choosing the
best foreign business partner EXCEPT ________.
A) requirement for competent management skills and qualified staff
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B) familiarity with U.S. government franchising regulations

C) knowledge about the food and beverage industry
D) good connections with the Australian government
Answer: B
Difficulty: Hard
Skill: Application
Objective: 13-6
AACSB: Dynamics of the global economy
78) Which of the following statements most likely supports CCC managers selecting Business
Partner Y instead of Business Partner Z?
A) Business Partner Y has good reputation in the marketplace.
B) Business Partner Y is fairly young and hence requires experience in the food and beverage
industry.
C) Business Partner Y has distinct goals and objectives compared to CCC.
D) Business Partner Y has the most experience in the automobile industry but now wants to
venture into the food and beverage industry.
Answer: A
Difficulty: Hard
Skill: Critical Thinking
Objective: 13-6
AACSB: Dynamics of the global economy; Reflective thinking skills

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