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CBSE Questions for Class 11 Commerce Business Studies International Business Quiz 4 - MCQExams.com
CBSE
Class 11 Commerce Business Studies
International Business
Quiz 4
Which one of the following modes of entry brings the firm closer to international markets?
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Domestic business
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Increasing advertisements in home country
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Improving R&D
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Joint Venture
Explanation
In joint venture, both foreign and local entrepreneurs jointly form a new enterprise. The foreign company benefits from a local partner's knowledge of the host countries regarding the competitive conditions, language, political systems, culture and business system, thus bringing the firm closer to the international markets.
The objective of global marketing is to _______.
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coordinates the marketing activities within the constraints of the global environment
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satisfy global customers better than competition
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find global customers
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achieve all of the above
Explanation
The objective of global marketing is to coordinate the marketing activities within the constraints of global environment, satisfy the global customers that the organization targets and find new global customers to increase sales and market share.
TRIP is one of the WTO agreements that deal with _________.
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Trade in Agriculture
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Trade in Services
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Trade Related Investment Measures
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None of the Above
Explanation
TRIP is one of the WTO agreements that deals with
areas of intellectual property like copyright
and related rights, trademarks
including service marks, patents etc.
If you are purchasing a franchise, one of the reason could be _______.
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it is always much cheaper than setting up a new business venture
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there is complete control over important decisions
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the business can use its own name in advertisements
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the risks of failure are lower as it is buying a well known business idea
Explanation
One of the reason for purchasing a franchise can be its low cost as it is always much cheaper than setting up a new business venture. Franchising is a type of arrangement between two parties for business expansion by allowing other to use it trade mark.
The document containing the guarantee of a bank to honour drafts drawn on it by an exporter is ________.
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Letter of Hypothetication
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Letter of Credit
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Bill of Lading
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Bill of Exchange
Explanation
Letter of hypothetication written agreement, which authorizes a bank or lender to repossess and sell the pledged item in case of a default.
A letter of credit is a guarantee issued by the importer's bank that it will honour up to a certain amount the payment of export bills to the bank of the exporter.
A
bill of lading
is a document issued by a carrier to acknowledge receipt of cargo for shipment.It is a conclusive receipt, i.e. an acknowledgement that the goods have been loaded; and it contains or evidences the terms of the contract.
A
bill of exchange
is a binding agreement by one party to pay a fixed amount of cash to another party as of a predetermined date or on demand. Bills of
exchange
are primarily used in international trade.
A receipt issued by the commanding officer of the ship when the cargo is loaded on the ship is known as ______.
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Shipping Receipt
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Mate Receipt
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Cargo Receipt
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Mate's Receipt
Explanation
A mate receipt is a receipt issued by the commanding officer of the ship when the cargo is loaded on board, and contains the information about the name of the vessel, berth, date of shipment, marks and numbers, description of packages, condition of the cargo at time of the receipt on board the ship.
Compared to licensing, franchising is a more advantageous entry mode because __________.
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it generates economies of scale in marketing to international customers
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it is low-risk and low-cost
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it offers greater control
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all of the above
Explanation
Franchising is a more advantageous entry mode as it helps in expansion of business and also generates economies of scale and also offers greater control to an organisation at a low risk and at low cost.
By EXIM policy we mean ________.
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External and internal policy
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Export-import policy
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Extra import policy
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None of the above
Explanation
Exim Policy is a set of guidelines and instructions related to the import and export of goods.
Indian EXIM policy is the policy designed by the government in order to regulate the import and export trade of the country. Hence, by EXIM policy we mean export-import policy.
Hence, option (B) is the correct option.
________ is the cornerstone of international franchising.
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Focus
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Concentration
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Standardisation
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Adaptation
Explanation
Standardisation is the cornerstone of international franchising as standardisation is the ability of a company to use the same marketing strategy from one country to another to survive globally.
The goals of international marketing are to ________.
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create and retain customers in global markets
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eliminate competition in international markets
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expand business activities abroad
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gain market share and increase profit
Explanation
The goals of international marketing are to create new customers in the global market and retain the existing customers in the global markets.
By implementing international marketing strategies, each company wishes to achieve certain set performance levels. Being a commercial company, it wants to secure the market place with maximum profits in the long run. It also aims at bringing the countries closer thereby reducing the geographical boundaries. This encourages large scale free trade.
What is the advantage to the franchisee in a franchising?
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Marketing
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Economies of scale
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Instant goodwill
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All of the above
Explanation
In franchising, franchisee gets economies of scale i.e. it does not require huge costs to operate its business as it gets knowledge to do work from the franchisor themselves.
Franchiser helps the franchisee on setting up business or not?
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Yes
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No
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Partly yes
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Can't say
Explanation
Yes, franchiser helps the franchisee on setting up a business as it provides know-how, training to the franchisee regarding its business and also give him the rights to sell its products in the market.
Franchising is a part of _______.
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privatization
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liberalization
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globalization
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none of the above
Explanation
Franchising is a part of privatization as franchising offers people the right to own, manage and direct their own business. It involves the owner of a business providing licenses to the third party to sell its products in the market.
Franchising is a _______ method.
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workforce-oriented
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market-oriented
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production-oriented
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management-oriented
Explanation
Franchising is a market oriented method of entering an international market as it is a marketing concept adopted by an organization with a strategy of market expansion.
Franchising agreement involves grant of rights by one party to another for use of technology, trademark and patents in return of the agreed payment for a certain period of time.
It is the uniqueness of the technique that gives the franchiser an edge over its competitors in the field, and makes the would-be-service providers interested in joining the franchising system.
The term loyalty is closely associated with _______.
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licensing
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direct exporting
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contract manufacturing
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piggybacking
Explanation
Customer loyalty is necessary for every business organisation to retain its customers. Business is required to maintain loyalty with its customers and stakeholders so that it can survive in the market. Loyalty is closely associated with licensing.
Compared to licensing, franchising is a more advantageous mode of entry because _______.
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it offers greater control
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it generates economies of scale of operations
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it is a low-risk and a low-cost approach
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all of the above
Explanation
Licensing is a contractual arrangement in which one firm grants access to its patents, trade secrets or technology to another firm in a foreign country for a fee called royalty.
Franchising is a business concept in which franchiser provides permission to the third party i.e. franchisee to sell its products. Here, franchisee has a low risk, greater control and low cost and franchiser gets economies of scale.
As compared to joint ventures and wholly owned subsidiaries, licensing/ franchising is relatively a much easier mode of entering into foreign markets with proven product/technology without much business risks and investments
_________ is the corner stone of international franchising.
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Concentration
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Adaptation
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Standardization
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Focus
Explanation
Standardization is the cornerstone of international franchising as franchising helps the business enterprise in expanding its business by providing licenses of its know-how to the third party.
In line with a franchising agreement, a franchisee may use ______.
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geographic region exclusively
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patents, designs, trade secrets and business know-how
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trade marks, copyright and trade secrets
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all of the above
Explanation
"Franchising is a form of licensing in which a parent company (the franchisor) grants another independent entity (the franchisee) the right to do business in a prescribed manner. This right can take the form of selling the franchisers products, ‘using its name, production and marketing technique, or general business approach.” Donald W. Hacket
Thus it can be said that in a franchising agreement, franchisee uses patents, designs, its know-how, copyrights, trade marks so that it can sell the products of franchiser in the market by fulfilling proper legal requirements.
Advantage(s) to a franchiser in a franchise is/are _______.
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capital injection
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market penetration
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risk sharing
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all of the above
Explanation
“Franchising is basically a specialised form of licensing in which the franchisor not only sells intangible property (normally a trademark) to the franchisee, but also insists that the franchisee agrees to abide by strict rules as to how it does business.” Charles W.L. Hill
Advantages include:
Franchising is, considered a less expensive mode of entering into international business.
Since no or very little foreign investment is involved, franchiser is not a party to the losses.
Since the business in the foreign country is managed by the franchisee who is a local person, there are lower risks.
Thus f
ranchiser is the one who provides permission to the third party i.e. franchisee to sell its brand and products in the market. It helps in expanding the market, in sharing the risk and also in capital injection.
Which of the following is not effective in preventing a potential competitor from entering the market?
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High capital costs
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High switching costs
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Entry barriers - Tariffs
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None of these
Explanation
Generally, a business with sufficient financial resources choose to enter the international markets where costs of capital of such investment is likely to be high. It can be hence said that high capital costs are not always a threat for the competitors to enter a market as people may be ready to bear the costs if they expect huge amount of profits in the future.
International trade in goods and services is sometimes used as a substitute for all of the following except ___________.
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international movements of capital
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domestic production of different goods and services
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international movement of labour
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international movement of technology
Explanation
International trade refers to buying and selling of goods and services in different countries. It involves international movement of capital, labour as well as technology but does not include domestic production of different goods and services.
Which of the following means the special rights given by a manufacturer or a parent organisation to another individual or firm to sell the former's product or service in a specified given area(s)?
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Franchise
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Network marketing
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Indirect marketing
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All of above
Explanation
“Franchising is basically a specialised form of licensing in which the franchisor
not only sells intangible property (normally a trademark) to the franchisee, but
also insists that the franchisee agrees to abide by strict rules as to how it does
business.”
Charles W.L. Hill
The term
franchising applies to service business.
Which among the following allows permission to use the trademark and provides assistance in business for a particular amount?
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Franchise
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Government
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Partnership
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Company
Explanation
A franchisor is a party who owns trademark or trade name. He/She provides support in the form of marketing, advertising, training, sometimes finance in return for an agreed fee.
A franchisee is a party who uses the trade name or trade mark. He/She starts and expands business on the basis support received from franchiser. He/She pays fees to franchiser in return of all the support he/she gets from him/her
Where a firm allows another firm in a foreign market to use its technical know-how and trade mark, it is known as _________.
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franchising
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network marketing
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indirect marketing
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all of above
Explanation
Franchising is a term used in connection with the provision of services. McDonalds, for instance, operates fast food restaurants the world over through its franchising system.
Franchising is a “form of licensing in which a parent company (the franchiser) grants another independent entity (the franchisee) the right to do business in a prescribed manner. This right can take the form of selling the franchisers products, ‘using its name, production and marketing technique, or general business approach.” Donald W. Hackett
Liaison office acts as a communication channel between ________.
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foreign corporation and Indian customers.
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foreign corporation and educational institutes.
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foreign corporation and art galleries.
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none of the above.
Explanation
A
liaison officer
is a person who acts
between
two organizations to
communicate
and coordinate their activities. Generally,
liaison
officers are used to achieving the best
utilization
of resources or employment of services of one organization by another.
Which one of the following is a push factor influencing the internationalization of a company?
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Difficulty in finding skilled staff in the home country
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The need to be close to key resources
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Low-cost labour in other countries
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Financial incentives from governments in emerging markets
Explanation
Some of the reasons why companies wish to become multinationals are:
To secure cheaper premises and labour: Cost of land and labour will be cheaper in developing countries.
To increase market share: Companies may find they are at saturation point in the domestic market and need a new outlet. They may start by exporting to other countries but eventually they may start production overseas.
Hence, the push factor influencing the internationalization of a company is low-cost labour in other countries.
International trade is based on the idea that ____________.
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exports should exceed imports
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resources are less mobile internationally
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resources are more mobile internally than are goods
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imports should not be there
Explanation
International trade refers to buying and selling of goods and services in different countries. Hence, it is based on the idea that resources are less mobile internationally.
The fundamental reason behind international trade is that the countries cannot produce equally well or cheaply all that they need. This is because of the unequal distribution of natural resources among them or differences in their productivity levels.
For international development of business enterprise, it should always take care of which of the following points?
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Unnecessary control on Industrial licencing, reduction in tax, rates, socio-cultural
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Reduction in tax, unnecessary control on Industrial licencing, shareholders
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Media, socio-cultural, shareholders
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Unnecessary control on Industrial licencing, reduction in taxes, freedoms in fixing prices
Explanation
The national economies are increasingly becoming borderless and getting integrated into the world economy.
Differences in the nationality of parties involved, relatively less mobility of factors of production, customer heterogeneity across markets, variations in business practices and political systems, varied business regulations and policies, use of different currencies are the key aspects that differentiate international businesses from domestic business.
These, moreover, are the factors that make international business much more complex and a difficult activity.
Hence a company entering international markets need to take care of unnecessary control on Industrial licencing, reduction in taxes, freedoms in fixing prices.
The marketing mix when applied to international market must __________.
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be standardized throughout the global market
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ignore the cultural and environmental variations between the different markets
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take into account the cultural and environmental variations between the different markets
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both (a) and (b)
Explanation
International business is broader concept to include export and import of goods and services and a wide variety of other ways in which the firms operate internationally.
The marketing mix that is to be applied to the international market must take into account the cultural and environmental variations between different markets as the business environment varies in different markets.
Mr X exported goods to Europe but as a dispute between the supplier and buyer the payment was stopped. The possible resolution to get money back is ______?
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To get the goods back
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To file a suit using the invoice as support document
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To forget as nothing can done
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None of the above
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