IMANET IMANET Certifications IMANET-CMA Questions & Answers

• Question 1101:

  When a multinational firm decides to sell its products abroad, one of the risks it faces is that the government of the foreign market charges the firm with dumping. Dumping occurs when

  A. The same product sells at different prices in different countries

  B. A firm charges less than it costs to make the product to enter or win a market

  C. Lower quality versions of the product are sold abroad so as to be affordable

  D. Transfer prices are set artificially high so as to minimize tax payments

  Correct Answer: B

  Dumping is an unfair trade practice that violates imitational agreements. It occurs when firm charges a price

  (1)

  lower than that in its home market or

  (2)

  less than the cost to make the product. Dumping may be done to penetrate a market or as a result of export subsidies.

• Question 1102:

  Which of the following is the most significant reason that domestic governments and international organizations seek to eliminate cartels?

  A. The increased sales price reduces the amount of corporate tax revenues payable to the government

  B. True competition keeps prices as low as possible, thus increasing efficiency in the marketplace

  C. Small business cannot survive or grow without government protection

  D. The economic stability of developing countries depends on a global free market

  Correct Answer: B

  A cartel is an organization of sellers (e.g., the oil cartel OPEC) who undertake joint action to maximize member's profits by controlling the supply and therefore the price of their product. Under the laws of many nations, such collusive conduct is illegal when engaged in by firma subject to those laws. The reason is that, as a result of the monopolistic and anticompetitive practices of cartels, supply is lower, prices re high, competition is restrained, and the relevant. Industry is less efficient. Accordingly, governmental and international organizations seek to protect consumers and the health of the domestic and global economy through anti-cartel efforts.

• Question 1103:

  The creation of regional free trade zones is a global phenomenon. Trade barriers are lowered in these areas, and other steps are taken to promote economic cooperation. For example, a common currency has been adopted by the nations of

  A. NAFTA

  B. Mercosul

  C. APEC

  D. The European Union

  Correct Answer: D

  The European Union (EU) is a collection of 15 European nations that have lowered trade barriers among member states an share a common currency and trade policy. The euro is the common currency of the European Union.

• Question 1104:

  Which strategy for a global marketing organization balances local responsiveness and global integration?

  A. Global

  B. Multinational

  C. Glocal

  D. Transnational

  Correct Answer: C

  A glocal strategy combines some elements of local responsiveness or adaptation with some elements of global integration. Successful telecommunications firms are examples of balancing these elements. Local responsiveness is indicated when local product tastes and preferences, regulations, and barrier are significant. Global integration is indicated when demand is homogenous and economies of productive scale are large.

• Question 1105:

  Which strategy for a global marketing organization is based on a portfolio of national markets?

  A. Creation of a division o manage international marketing

  B. A multinational strategy

  C. A glocal strategy

  D. Creation of an export department

  Correct Answer: B

  International marketing efforts take three basic forms: creation of a n export department; creation of a division to mange international marketing, or global organization. The latter encompasses genuinely worldwide functions, e.g., manufacturing, marketing, finance, and logistics. Thus, world wide operations are the organization's focus, not merely that of a department or division of a national firm. A global organization may follow a multinational, global, or glocal strategy. A multinational strategy adopts a portfolio approach. Its emphasis is on national markets because the need for global integration is not strong. The product is customized for each market and therefore incurs higher production costs. Decision making is primarily local with a minimum of central control. This strategy is most effective given large difference between countries. Also, exchange rate risk is reduced when conducting business in this manner.

• Question 1106:

  A firm that moves from not exporting on a regular basis to establishing plants in foreign countries has

  A. Globalize

  B. Nationalized

  C. Glocalized

  D. Internationalized

  Correct Answer: D

  The internationalization process is of crucial interest to nations that wish to encourage local firms to grow and to operate globally. According to Swedish researchers, it involves the following steps:

  (1)

  Lack of regular exports;

  (2)

  export via independent agents with a few markets, with later expansion to more countries;

  (3)

  creation of sales subsidiaries in larger markets; and (4) establishment of plants in foreign countries.

• Question 1107:

  An advantage of a direct investment strategy when entering a foreign market is

  A. Reduction in the capital at risk

  B. Shared control and responsibility

  C. Assurance of access when the foreign country imposes domestic content rules

  D. Avoidance of interaction with the local bureaucracy

  Correct Answer: C

  Direct investment has many advantages:

  (1)

  cheaper materials or labor,

  (2)

  receipt of investment incentives from the host government,

  (3)

  a strong relationship with interested parties in the host country,

  (4)

  control of the investment,

  (5)

  a better image in the host country, and

  (6)

  market access when domestic contest rules are in effect. However, direct investment is risky because of exposure to currency fluctuations, expropriation, potentially high exit barriers, and restraints on sending profits out of the country.

• Question 1108:

  A firm wishing to become global must consider how many national markets to enter. A firm should enter fewer4 national markets when

  A. Communication adaptation costs are low

  B. The product need not be adapted

  C. Entry costs are low

  D. The first countries chosen are heavily populated and have high incomes

  Correct Answer: D

  According to Ayal and Zif, the following are factors indicating that few national markets should be entered:

  (1)

  entry costs are high:

  (2)

  market control costs are high,

  (3)

  product adaptation costs are high;

  (4)

  communication adaptation costs are high;

  (5)

  the first countries selected have large populations, high incomes, and high income growth, and

  (6)

  a dominant firm can erect high entry barriers.

• Question 1109:

  A firm expands into international markets to

  A. Be in foreign markets

  B. Eliminate foreign competition

  C. Pursue new, higher-profit opportunities

  D. Preclude piracy of its products

  Correct Answer: C

  A firm may decide to go abroad for many reasons, for example, to respond to a competitive challenge in its home country by another global firm, to pursue opportunities yielding grater profits, to achieve economies of scale, to diversity, or to follow customers who needs international service.

• Question 1110:

  A global firm

  A. Has achieved economies of scale in its domestic market

  B. Plans, operates, and coordinates business globally

  C. Relies on in direct export

  D. Trend to rely more on one product market

  Correct Answer: B

  According to Kotler,"Global firms plan, operate, and coordinate their activities on a worldwide basis." Thus, a global secures cost or product differentiate advantages not available to domestic firms.