Types of International Businesses: A Comprehensive Guide for Students

Question 1

What is a primary advantage of forming a strategic alliance in international business?

Accepted Answer

Increased market reach

Answer

Lower operating costs

Answer

Assured higher profits

Question 2

Which of the following is **not** a type of international business structure?

Accepted Answer

Franchise

Answer

Multinational corporation

Answer

Joint venture

Answer

Strategic alliance

Question 3

Which type of international business structure involves two or more companies **jointly owning** and controlling a new entity?

Accepted Answer

Joint venture

Answer

Multinational corporation

Answer

Strategic alliance

Answer

Subsidiary

Question 4

Which of the following is NOT a challenge faced by multinational corporations?

Accepted Answer

Tax incentives

Answer

Cultural differences

Answer

Political instability

Answer

Language barriers

Question 5

The distinction between a subsidiary and a branch in international business is that a:

Accepted Answer

Subsidiary is a separate legal entity, while a branch is not

Answer

Branch is a separate legal entity, while a subsidiary is not

Answer

Subsidiary and branch are the same thing

Answer

Both subsidiaries and branches are separate legal entities

Question 6

In international business, what is the fundamental purpose of a licensing agreement?

Accepted Answer

To grant exclusive rights to use a trademark or technology

Answer

To establish a joint venture partnership

Answer

To acquire full ownership of a foreign subsidiary

Answer

To share risk and resources in a new market

Question 7

Define franchising in the context of international business.

Accepted Answer

A franchisor grants a franchisee the right to operate a business using its brand and systems

Answer

A parent company acquires a majority stake in a foreign enterprise

Answer

Two or more companies form a legal entity to share risk and resources

Answer

A company grants a license to another company to manufacture and sell its products

Question 8

Which of the following is NOT an economic benefit of participating in international business?

Accepted Answer

Reduced competition in domestic markets

Answer

Increased trade and investment

Answer

Job creation and economic growth

Answer

Access to new markets and resources

Question 9

In the context of international trade agreements, what is the definition of a tariff?

Accepted Answer

A tax or duty imposed on imported goods

Answer

A subsidy or incentive given to exporters

Answer

A restriction on the quantity of imported goods

Answer

A prohibition on the import or export of certain goods

Question 10

Which of the following is the defining characteristic of a joint venture?

Accepted Answer

Joint ownership and shared control between two or more companies

Answer

Independent operation from parent companies

Answer

Exclusive distribution rights in a specific region

Answer

Temporary partnership with clearly defined goals

Question 11

Which type of international business involves a limited-term collaboration between companies?

Accepted Answer

Strategic alliance

Answer

Multinational corporation

Answer

Joint venture

Answer

Global subsidiary

Question 12

True or False: Joint ventures always involve equal ownership stakes between participating companies.

Accepted Answer

False

Answer

True

Question 13

True or False: Multinational corporations are legally required to be headquartered in the country where they were founded.

Accepted Answer

False

Answer

True

Question 14

Which type of international business involves collaboration between two or more companies without forming a new legal entity?

Accepted Answer

Strategic alliance

Answer

Joint venture

Answer

Wholly-owned subsidiary

Answer

Licensing agreement

Question 15

What is the purpose of a licensing agreement in international business?

Accepted Answer

To grant permission to use intellectual property

Answer

To facilitate joint venture partnerships

Answer

To establish manufacturing partnerships

Answer

To provide financial assistance

Question 16

Which type of international business structure offers the highest level of control and autonomy?

Accepted Answer

Wholly-owned subsidiary

Answer

Joint venture

Answer

Strategic alliance

Answer

Licensing agreement

Question 17

What is a primary goal of forming a strategic alliance?

Accepted Answer

To achieve mutually beneficial objectives

Answer

To comply with government regulations

Answer

To reduce competition

Answer

To gain access to new technologies

Question 18

Which of the following is a defining characteristic of a multinational corporation (MNC)?

Accepted Answer

Operates in multiple countries and coordinates its activities across borders

Answer

Has a centralized management structure with headquarters overseeing global operations

Answer

Focuses primarily on serving local markets within each country where it operates

Answer

Relies solely on joint ventures as its primary mode of international expansion

Question 19

What is a key advantage of a joint venture over a wholly-owned subsidiary in international business?

Accepted Answer

Shared risk, investment, and expertise between multiple partners

Answer

Greater control over decision-making and operations compared to a joint venture

Answer

Reduced administrative burden and simplified management structure

Answer

Guaranteed financial success and profitability for all partners involved

Question 20

Which of the following is NOT a potential challenge associated with strategic alliances in international business?

Accepted Answer

Assured success and guaranteed positive outcomes for all parties involved

Answer

Cultural differences and varying business practices across partner organizations

Answer

Communication difficulties and language barriers that can hinder effective collaboration

Answer

Increased competition and market rivalry due to the sharing of resources and knowledge

Question 21

Which type of international business strategy involves the establishment of a new, fully-owned company in a foreign country?

Accepted Answer

Wholly-owned subsidiary

Answer

Joint venture

Answer

Strategic alliance

Answer

Franchising

Question 22

What is the primary goal of forming a strategic alliance in international business?

Accepted Answer

To combine resources, capabilities, and expertise to achieve shared objectives

Answer

To gain exclusive access to new markets and distribution channels

Answer

To reduce operational costs and increase profit margins

Answer

To eliminate competition and create a monopoly in a specific industry

Question 23

What is the key distinction between a joint venture and a strategic alliance in international business?

Accepted Answer

Joint ventures involve shared ownership and control, while strategic alliances do not.

Answer

Strategic alliances are more formal and legally binding than joint ventures.

Answer

Joint ventures are typically formed for long-term collaborations, whereas strategic alliances are short-lived.

Answer

There is no significant difference in terms of ownership or control between the two.

Question 24

Which of the following is NOT a potential risk associated with international business operations?

Accepted Answer

Assured financial success and guaranteed returns on investment

Answer

Fluctuations in currency exchange rates that can affect profitability

Answer

Language barriers and cultural differences that can hinder communication and understanding

Answer

Political instability or changes in government policies that can disrupt operations

Question 25

Which of the following is NOT a characteristic of a joint venture?

Accepted Answer

Indefinite duration

Answer

Shared ownership and control

Answer

Separate legal entity

Answer

Distribution of profits based on investment

Question 26

What is the primary goal of a strategic alliance?

Accepted Answer

To combine resources and capabilities

Answer

To enter new markets

Answer

To reduce costs

Answer

To share risks

Question 27

Identify the feature that does NOT characterize multinational corporations (MNCs):

Accepted Answer

High degree of local autonomy

Answer

Centralized decision-making

Answer

Global presence

Answer

Standardized products and services

Question 28

Which type of international business maintains a high level of control over its subsidiaries?

Accepted Answer

Wholly owned subsidiary

Answer

Joint venture

Answer

Strategic alliance

Answer

Exporting firm

Question 29

Identify the key characteristic of an export management company (EMC):

Accepted Answer

Acts as an export department for multiple firms

Answer

Assumes ownership of exported goods

Answer

Handles all aspects of distribution and logistics

Answer

Provides financing and credit facilities to exporters

Question 30

Identify the non-equity entry strategy in the following list:

Accepted Answer

Licensing

Answer

Joint venture

Answer

Wholly owned subsidiary

Answer

Strategic alliance

Question 31

State the primary purpose of the World Trade Organization (WTO):

Accepted Answer

Promote free trade and reduce trade barriers

Answer

Resolve trade disputes between member nations

Answer

Provide financial assistance to developing countries

Answer

Set global standards for international trade

Question 32

Which type of international business is established when a home country-based company establishes and controls foreign operations through direct investment?

Accepted Answer

Multinational Corporation

Answer

Joint Venture

Answer

Strategic Alliance

Question 33

A key advantage of joint ventures in international business is:

Accepted Answer

Shared risk and resources

Answer

Complete control over operations

Answer

Low entry barriers

Question 34

Which type of international business structure involves a domestic company granting permission to a foreign company to use its brand and operating methods in exchange for fees?

Accepted Answer

Franchise

Answer

Multinational Corporation

Answer

Joint Venture

Question 35

The main distinction between a multinational corporation and a joint venture lies in:

Accepted Answer

Ownership structure and control

Answer

Size and revenue

Answer

Product offerings

Question 36

Which of the following is a defining characteristic of multinational corporations (MNCs)?

Accepted Answer

Centralized decision-making and ownership structure

Answer

Operations primarily within a single country

Answer

Limited scale of operations

Answer

Dominance in niche markets

Question 37

What is a primary advantage of forming a joint venture in international business?

Accepted Answer

Shared risk and resource pooling

Answer

Complete authority over decision-making

Answer

Elimination of competition in target markets

Answer

Access to exclusive government contracts

Question 38

What is the fundamental difference between imports and exports in international trade?

Accepted Answer

Imports refer to goods purchased from other countries, while exports are goods sold to other countries

Answer

Exports refer to goods purchased from other countries, while imports are goods sold to other countries

Answer

Both imports and exports involve the movement of goods or services across international borders

Answer

There is no distinction between imports and exports

Question 39

When expanding internationally, which factor primarily determines the legal and ethical rules that apply to a business?

Accepted Answer

Legal system and regulations of the host country

Answer

Political stability of the host country

Answer

Cultural values and norms of the host country

Question 40

**Which of the following is a key advantage of a multinational corporation (MNC)?**

Accepted Answer

Access to global markets and resources

Answer

Absence of political instability risk

Answer

Lower production costs in all cases

Answer

Reduced regulatory compliance

Question 41

**Which type of international business involves shared ownership and control between two or more companies from different countries?**

Accepted Answer

Joint venture

Answer

Multinational corporation

Answer

Licensing agreement

Answer

Strategic alliance

Question 42

**Which of the following is a potential challenge for a multinational corporation operating in a foreign country?**

Accepted Answer

Cultural differences and legal complexities

Answer

Favorable exchange rates

Answer

Government incentives and support

Answer

Availability of a skilled workforce

Question 43

**Which type of international business involves a contractual agreement between two companies, where one company grants the other the right to use its brand, technology, or other intellectual property?**

Accepted Answer

Licensing agreement

Answer

Strategic alliance

Answer

Joint venture

Question 44

**Which of the following is a characteristic of a strategic alliance?**

Accepted Answer

Collaboration between companies in different industries or sectors, often with complementary strengths

Answer

Shared ownership and control

Answer

Complete transfer of ownership

Question 45

**Which of the following is a benefit of international business for developing countries?**

Accepted Answer

Job creation and economic development

Answer

Exploitation of local workers

Answer

Increased pollution and environmental degradation

Answer

Depletion of natural resources

Question 46

**Which type of international business involves a company establishing a new subsidiary in a foreign country, creating a wholly-owned operation?**

Accepted Answer

Foreign direct investment (FDI)

Answer

Exporting

Answer

Joint venture

Question 47

**Which of the following is a factor that influences the decision to establish a joint venture?**

Accepted Answer

Sharing of risks, resources, and expertise

Answer

Circumventing government regulations

Answer

Avoiding cultural differences

Answer

Solely seeking low labor costs

Question 48

**Which of the following is an example of a greenfield investment?**

Accepted Answer

Building a new factory or facility from scratch in a foreign country

Answer

Acquiring an existing business in a foreign country

Answer

Establishing a joint venture with a local company

Question 49

**Which of the following is a potential drawback of a strategic alliance?**

Accepted Answer

Potential lack of control over decision-making and operations

Answer

Improved access to advanced technology

Answer

Reduced operating costs and expenses

Answer

Increased market share and growth opportunities

Question 50

Which of the following is a defining characteristic of a multinational corporation (MNC)?

Accepted Answer

Owns and controls production facilities in multiple countries

Answer

Formed through a partnership between two or more companies

Answer

Primarily exports goods and services from its home country

Question 51

A joint venture is typically established when:

Accepted Answer

Two or more companies combine resources to undertake a specific project

Answer

A company acquires a majority stake in a foreign company

Answer

A company licenses its technology to a foreign company

Question 52

A company that exports a majority of its products to foreign countries but maintains its headquarters and production facilities in its home country is known as:

Accepted Answer

Exporting company

Answer

Multinational corporation

Answer

Strategic alliance

Answer

Joint venture

Question 53

Which of the following is a potential challenge faced by MNCs?

Accepted Answer

Cultural differences and regulatory barriers

Answer

High transportation costs

Answer

Competition from local businesses

Answer

Limited access to capital

Question 54

A company that establishes a subsidiary in a foreign country is engaging in:

Accepted Answer

Foreign direct investment

Answer

Exporting

Answer

Licensing

Question 55

A franchise is a type of international business where:

Accepted Answer

A company licenses its business model and trademark to another company

Answer

Two or more companies merge to form a new entity

Answer

A company acquires a majority stake in a foreign company

Question 56

A company that engages in cross-border trade of goods and services is known as:

Accepted Answer

Trading company

Answer

Multinational corporation

Answer

Joint venture

Answer

Strategic alliance