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CBSE Questions for Class 11 Commerce Business Studies International Business Quiz 5 - MCQExams.com
CBSE
Class 11 Commerce Business Studies
International Business
Quiz 5
Providing permission to use technical know how by parent organisation to another individual is known as ________.
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dealership
0%
marketing
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agency
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franchising
Explanation
Franchising
is a form of business by which the owner (
franchisor
) of a product, service or method obtains distribution through affiliated dealers franchisees. If buying an existing business doesn't sound right for you but starting from scratch sounds a bit intimidating, you could be suited for franchise ownership.
Which of the following statement is not correct in relation to 'Franchise'?
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Franchising is the practice to use the another firm's successful business model.
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It is the business relationship between two organisations where a franchiser, who is the owner of a brand name, product or system of a business, permits a franchisee to use its brand, product or business process for a free.
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The franchisor provides training and continuous assistance to the franchisee.
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Franchiser shares all business and trade secrete with franchisee.
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. Hackett
Franchising is the practice to use the another firm's successful business model.
The franchiser provides training and continuous assistance to the franchisee.
Franchiser need not share all business and trade secrete with franchisee.
In the World Bank's Ease of doing Business Ranking, 2015 India is placed at _________.
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154 place out of the total 184 economies
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142 place out of the total 189 economies
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148 place out of the total 190 economies
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146 place out of the total 188 economies
The salient feature(s) of franchising is/are____________.
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the franchiser allows the franchisee to use his trade mark under a license.
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the franchise agreement do not requires the franchisee to follow franchiser's policies regarding mode of operation of business as they are free to conduct business in any way they like.
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the franchiser do not provide training of personnel working in the franchisee organization or any other type of help.
0%
all of above
Explanation
Salient features of franchising are
Well established business.
Needs limited investment.
Easy entry in new markets.
Business has large establishments.
Helps in diverting business risks.
Results in a large turnover.
Separates labor and specialization.
Allows use of brand name and trademark.
The individual or firm which grants right is called _________ (X). Whereas the individual or firm to whom the right is granted is called _________.(Y).
Select the correct answer from the options given below.
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(X) = Franchisee; (Y)=Franchiser
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(X) = Franchiser; (Y)=Franchisee
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(X) = Consignor; (Y)=Consignee
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(X) = Consignee; (Y)=Consignor
Explanation
Franchising is basically a specialised form of licensing in which the franchiser 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.
The right to use the business know-how and trade mark of the franchiser is for a ________period of time.
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unlimited
0%
limited
0%
only for 5 years
0%
none of above
Explanation
Franchise agreements can last for periods as short as three years and as long as 20. Franchise Association Franchise Survey 2010 reports that franchise agreements in the UK are predominately for a fixed term of
five years
, with rights to renew at the end of the term.
Which of the following can be treated as disadvantages of Franchising?
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There is a danger that the franchisee may start an identical business with slightly different brand name.
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The franchiser's brand name and reputation may get tarnished if the franchisee is not able to maintain standards of quality and service.
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There is a risk of trade secrets getting leaked out in the foreign market.
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All of above
Explanation
Disadvantages of Franchising are as follows:
When a franchisee becomes skilled in the manufacture and marketing of the franchised products, there is a danger that the licensee can start marketing an identical product under a slightly different brand name. This can cause severe competition to the franchiser.
If not maintained properly, trade secrets can get divulged to others in the foreign markets. Such lapses on the part of the franchisee can cause severe losses to the franchiser.
Over time, conflicts often develop between the franchiser and franchisee over issues such as maintenance of accounts, payment of royalty and non-adherence to norms relating to production of quality products.
The Licensee pays to the Licensor, a sum of money called ________or using his business know-how and trade mark.
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0%
trade balance
0%
royalty
0%
sales dues
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account balance
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.
The firm that grants such permission to the other firm is known as licensor and the other firm in the foreign country that acquires such rights to use technology or patents is called the licensee.
Franchising is___________.
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purchasing all parts of the company
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allowing another party to use product or service under owner's name
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joining two or more companies
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a company acquiring another company at its will
Explanation
Franchising is based on a marketing concept which can be adopted by an organization as a strategy for business expansion. Where implemented, a franchiser licenses its know-how, procedures, intellectual property, use of its business model, brand and rights to sell its branded products and services to a franchise. for example Mc Donald, KFC etc.
By expanding network Franchising enables the franchiser to increase his --
Goodwill
Reputation
Select the correct answer from the option given below.
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Neither 1 nor 2
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2 only
0%
Both 1 and 2
0%
1 only
Explanation
Franchising is
a method of expansion for an established and successful
business
looking to
grow
a network. It
can
also
help businesses
to expand both nationally or internationally, strengthen the brand and reach of a company and act as a good method of securing its future but only if it's done well.
Which among the following is the easiest way to gain entry in the international market?
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Joint ventures
0%
FDI
0%
Owning foreign subsidiaries
0%
Importing & Exporting
Explanation
The fundamental reason behind international business is that the countries cannot produce equally well or cheaply all that they need.
The easiest way to gain entry in the international market is importing and exporting as the activities creates a name of the importer or the exporter in the international market.
Firms engage in international business to import what is available at lower prices in other countries, and export goods to other countries where they can fetch better prices for their products.
What are the ways of importing and exporting?
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Regular-irregular
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Sufficient-insufficient
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Direct-indirect
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None of the above
Explanation
The two ways of importing and exporting are Direct and indirect.
Direct method involves making the goods available directly to the target customer in a market or by setting up a branch office or subsidiary in the foreign country.
Indirect method involves making the goods available to the customers through a channel partner.
Exporting is made difficult due to ___________.
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trade closing
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import restrictions
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high prices
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subsidiary goods
Explanation
The export of a product or goods to a foreign country also depends on the import policies of the foreign country and the restrictions on the import in a foreign country.
Exporting is not a feasible option when import restrictions exist in a foreign country
Produces do not have much contact with the foreign markets as goods are produced in the home country.
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True
0%
False
Explanation
The producers of the goods or products usually distribute their goods to the the traders of the domestic country to export their products. The traders are much involved in the international markets than the producers themselves.
Insurance, packaging & transportation costs are levied on products as they are _________.
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substituted goods
0%
goods to be physically moved
0%
produced goods
0%
repurchased goods
Explanation
The goods are physically moved in international business i.e the goods are imported or exported from a country to the destination.
Since the goods physically move from one country to another, exporting/importing involves additional packaging, transportation and insurance costs. Especially in the case of heavy items, transportation costs alone become an inhibiting factor to their exports and imports.
Import & Export require huge amounts of foreign investments.
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True
0%
False
Explanation
Import and export do not require huge amount of foreign investment as the importer needs an exporter in foreign country. similarly, an exporter will need to follow export laws and need an importer in the foreign country.
A foreign investor cannot invest in a local company to from a joint venture.
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True
0%
False
Explanation
A foreign investor and a local investor can form a joint firm, such type of a joint firm are known as international joint venture. Such kind of a joint venture are the easiest way to enter an international market.
Mutual exchange of knowledge, technology and patent is known as ___________.
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one man lisencing
0%
cross- licensing
0%
royalty licencing
0%
penalty licensing
Explanation
Mutual exchange of knowledge, technology and patent is known as cross-licensing. This usually happens in case of joint ventures or mergers between two companies.
A wholly owned subsidiary in a foreign market can be established in how many ways?
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2
0%
4
0%
6
0%
3
Explanation
A wholly owned subsidiary can be established in two ways. A company can become a wholly owned subsidiary
through an acquisition by the parent company
or having been spun off from the parent company.
Wholly owned subsidiaries is a form of a/an ___________.
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international business
0%
foreign exchange market
0%
trance national company
0%
multi national organisation
Explanation
Wholly owned subsidiary is a form of international business through direct investment in the properties in foreign countries with a view of undertaking
production and marketing of goods and services in those countries.
A company can set up a wholly owned subsidiary abroad by making 100 per cent investment in foreign ventures, and thus acquiring full control over subsidiary’s operations in the foreign market.
A
subsidiary
company is considered
wholly owned
when all of the common stock is
owned
by another company called as the parent company.
A joint venture means establishing a firm that is jointly owned by ______________.
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100 Independent firms
0%
only investors
0%
two or more independent firms
0%
foreign businessmen
Explanation
A joint venture is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity.
The parent company acquires full control over the foreign company by making 100 per cent investment in __________.
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debentures
0%
mutual funds
0%
preference share capital
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equity capital
Explanation
When a company makes a full investment of equity share capital of a company, the company is owned by the investor.
The parent company acquires full control over the foreign company by making 100 per cent investment in equity capital.
How many ways are there to establish a joint venture?
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7
0%
4
0%
9
0%
3
Explanation
There are three ways to establish a joint venture.
The equity joint venture, the contractual joint venture, licensing agreement.
Companies which want to exercise full control over their overseas operations prefer ______ more to enter International business.
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joint venture
0%
stock supplies
0%
importing and exporting
0%
wholly owned subsidiaries
Explanation
This entry mode of international business is preferred by companies which want to exercise full control over their overseas operations.
The parent company acquires full control over the foreign company by making 100 per cent investment in its equity capital
A wholly owned subsidiary in a foreign market can be established in either of the two ways:
(i) Setting up a new firm altogether to start operations in a foreign country — also referred to as a green field venture, or
(ii) Acquiring an established firm in the foreign country and using that firm to manufacture and/or promote its products in the host nation.
Joint venture is a common strategy to enter into a/an ____________.
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Indian market
0%
foreign market
0%
domestic goods market
0%
producers market
Explanation
Joint venture is a common strategy to enter into a foreign market as the domestic company jointly ventures into the foreign market with a domestic company of that region with the required resources and finances.
A foreign and a local investor can form a joint firm.
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True
0%
False
Explanation
A foreign investor and a local investor can form a joint firm, such type of a joint firm are known as international joint venture. Such kind of a joint venture are the easiest way to enter an international market.
The __________ is able to exercise full control over its operations in foreign countries.
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venture firm
0%
parent firm
0%
capital firm
0%
profitable firm
Explanation
The parent firm is able to exercise full control over its operations in foreign countries as the parent firm invests 100% equity capital into its foreign operating firms.
The refund of excise duties paid on the export goods is known as ________.
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EPCG
0%
EXIM
0%
duty drawbacks
0%
neither of the above
Explanation
Duty drawback compensates or refunds exporters for the duties paid on inputs used to manufacture, the excise duties paid for the export of the products.
The ________ arrangement may lead to conflicts, resulting in battle for control between the investing firms.
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0%
contract
0%
dual ownership
0%
sponsorship
0%
investment pattern
Explanation
The dual ownership
arrangement
may lead to conflicts, resulting in battle for control between the investing firms as both the firms are focused on the completion of their own objectives, less coordination between firms may lead to conflicts.
Payment of _________ on a regular basis is to be made to the franchiser.
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Profits
0%
Royalty
0%
Fees
0%
All of the above
Explanation
The payment of royalty is the payment made by the franchisee to the franchiser on a regular basis for him to let the franchisee run a business with his established goodwill, trademark, and processes.
Hence, option (B) is the correct answer.
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Practice Class 11 Commerce Business Studies Quiz Questions and Answers
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