Date: 26 November 2007 (Monday)
Time: 11.30 am – 1.30 pm
Length: 2 hours
Lecturers: Ms Sumathy Ramasamy, Ms Yvonne Woi & Mr. Mark Shim
Please read the following instructions carefully before you begin the examination:
1.
This exam paper has 11 printed pages (including cover page).
2.
The examination is worth 30 % of your final mark.
3.
The examination consists of four parts: PART A, B, C and D.
PARTS CONTENT MARKS
A
B
C
Multiple Choice Questions
(Knowledge/Understanding)
Short Answer
(Knowledge/Communication)
Mini Essay
(Critical thinking/
Communication)
20
30
10
D Case Study Analysis
(Critical thinking/
Communication)
TOTAL
15
75
4.
Answer part A on the answer sheet provided. Parts B, C and D should be answered in the answer booklet provided. Please hand in the answer sheet, answer booklet and exam paper before leaving the classroom. Ensure that you write your name on the answer sheet and the answer booklet.
5.
Answers must be written in standard English format for an academic audience.
6.
Only paper dictionaries are allowed in the exam.
7.
All answers must be written in black or blue pen only.

SECTION A : MULTIPLE CHOICE QUESTIONS 20 marks
(Knowledge/Understanding & Thinking/Inquiry)
Bubble the correct answer, a, b, c, or d, on the MCQ answer sheet provided.
____ 1. The factor that most affects a company’s payroll is a. costs associated with labour b. quality of business leadership and strategy c. efficient use of plants d. general work ethic and healthy lifestyle
____ 2. The Kyoto Protocol is primarily which one of the following types of issue? a. societal issue b. consumer safety issue c. employee issue d. stockholder issue
____ 3. To bring prosperity and improve quality of life, China is moving toward which of the following? a. open society b. free market c. social democracy d. guided individualism
____ 4. A market-driven economy must satisfy the needs and wants of which one of the following? a. consumer b. entrepreneur c. government d. manager
____ 5. Which of the following factors in product delivery is represented by currency exchange rates, tariffs and duties, and translation services? a. climate b. topography c. cost d. distribution
____ 6. The ethical belief that certain absolute truths apply everywhere can be described as a. ethical imperialism b. an ethical dilemma c. a cultural dilemma d. cultural relativism
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____ 7. An organized campaign to refuse to buy products from an erring company or country is a a. demonstration b. march c. boycott d. refusal
____ 8. When a government reduces the value of its currency relative to currencies of other nations, the move is called a a. currency adjustment b. currency devaluation c. currency revaluation d. currency exchange
____ 9. China took a major step toward the international marketplace when it joined (the) a. NAFTA b. WTO c. EU d. all of the above
____ 10. Trade among more than two nations is called a. trading blocs b. reciprocity c. multilateral trade d. bilateral trade
____ 11. When marketers collect primary data, they may use which of the following methods? a. surveys b. interviews c. focus groups d. all of the above
____ 12. A factory that features unsafe working conditions, long hours, and/or low wages is a(n) a. private sector workplace b. public sector workplace c. sweatshop d. activist
____ 13. When companies look for gaps in the international marketplace, which of the following types of analysis are they doing? a. sales presentation b. strategy analysis c. opportunity analysis d. brand identification
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____ 14. Free goods offered when a consumer purchases a product are called a. premiums b. discounts c. savings d. gifts
____ 15. Which of the following types of government is typical of countries that have a marketoriented or capitalist economy? a. autocratic b. democratic c. totalitarian d. socialist
____ 16. The risk that government policy may adversely affect currency exchange rates is called a. risk of political instability b. ownership risk c. operations risk d. transfer risk
____ 17. Which aspect of the government of some countries discourages companies trying to do business? a. public services b. bureaucracies c. promotional campaigns d. historical preservation
____ 18. The fastest transportation mode used for international trade is a. marine b. air c. rail d. truck
____ 19. A company’s willingness to be accountable to its many stakeholders is its a. corporate structure b. corporate vision c. corporate social responsibility d. corporate annual report
____ 20. The biggest problem likely experienced by the seller of products in different cultures is a lack of a. supply of culture b. demand for culture c. profit from culture d. cultural awareness
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____ 21. Political and economic measures used by a government to try to regulate the amount and value of its currency are called exchange a. rates b. currencies c. controls d. devaluations
____ 22. Which of the following agreements do smaller companies seek when they see an attractive product that has not yet been marketed in their own country? a. brand distribution rights b. exclusive distribution rights c. manufacturing rights d. independence
____ 23. When a company buys into foreign companies, to avoid dependence on one country’s economy, the strategy is known as a. processing b. creating c. outsourcing d. diversification
____ 24. The organization formed to raise the level of corporate citizenship in member countries is the a. Organization for Economic Cooperation and Development b. World Bank Group c. International Monetary Fund d. World Economic Forum
____ 25. When a multinational company (MNC) operates globally much as it would at home, it is a. ethnocentric b. polycentric c. geocentric d. regiocentric
____ 26. When country A’s currency is weak relative to country B’s currency, which of the following encourages foreign investment in A? a. A’s exports are more expensive b. A’s imports are cheaper c. A’s exports are cheaper d. B’s exports are cheaper
____ 27. The factors of production include a. land b. labour c. capital d. all of the above
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____ 28. When a company makes a product or service internationally, it must formulate a number of business decisions called a. marketing mix b. marketing goals c. marketing strategies d. marketing branding
____ 29. In an international skills inventory, tolerance and sensitivity to others is called a. adaptation skills b. coping skills c. work effectiveness skills d. intercultural communications skills
____ 30. Which of the following theories helps marketers understand the behaviour of consumers when it comes to needs? a. Thorndyke’s theory b. Maslow’s hierarchy c. Notman’s emotional theory d. Wilson’s rational theory
____ 31. Translation services, interest charges, metric labelling requirements, and local taxes are part of a. retail value b. hidden costs c. the exporter’s fee d. the importer’s fee
____ 32. In which of the following types of investment does an investor buy a share of a foreign company without a controlling interest in that company? a. private-sector b. portfolio c. public-sector d. foreign direct
____ 33. A bank document assuring that a business has enough funds on deposit to cover an international transaction is called a a. bank draft b. letter of credit c. money order d. line of credit
____ 34. When a multinational company (MNC) seeks total integration of its global operations, it is a. ethnocentric b. polycentric c. geocentric d. regiocentric
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____ 35. The rules of correct or appropriate behaviour when meeting with officials or business people are called a. manners b. common sense c. guidelines d. protocol
____ 36. Self-sufficiency is the ability to provide for all of your basic needs, such as a. allowances, books, and savings b. all luxury items c. food, clothing, shelter, and water d. all of the above
____ 37. Which of the following is a particular challenge for a global company? a. maintaining quality product standards throughout the company’s facilities b. saving on raw materials and labour c. ability to market a product worldwide d. worldwide access to knowledge and ideas
____ 38. Political risk can take the form of which of the following? a. financial gain b. increased market share c. technical breakdown d. all of the above
____ 39. Charges for the transportation of goods can include one or more of the following components: a. the shipment method b. the freight forwarder c. the volume of the goods d. all of the above
____ 40. If each of the following represents a difference between the culture of plant employees and the culture of a foreign plant manager, which difference is most serious? a. work hours b. work ethic c. wages d. scheduling
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SECTION B: SHORT ANSWER 30 marks
( Knowledge/Understanding/Thinking/Inquiry/Communication & Application)
Choose and answer 6 questions only. Your answers should be in complete sentences and in paragraph form. All answers must be written in the answer booklet provided.
1.
Why do companies import goods rather than produce them in their own country?
Provide two reasons?
2.
3.
What is diversification and how may diversification help a company?
Describe two methods how one country can be protectionist against another. Provide three reasons why a country would use trade barriers.
4.
5.
6.
Describe a positive business climate by giving and describing three specific qualities.
Describe two benefits for a country or company of a high productivity rate.
List and briefly describe three advantages that member nations of the European Union
(EU) enjoy when trading with each other.
7.
8.
Describe a mixed economy in comparison to two other types of economic systems.
Give a product that uses a push strategy? Why does it use a push strategy instead of a pull strategy?
SECTION C : MINI ESSAY 10 marks
(Thinking/Inquiry & Communication)
Choose one of the three questions below, and write a mini essay (300 – 400 words) in the answer booklet provided.
1.
What is corporate social responsibility and why is it important? How may a MNC demonstrate good corporate social responsibility?
2.
Argue either in favour of, or against free trade. Provide several reasoned arguments in demonstrating your position.
3.
In what type of political systems would most corporations prefer to do business? Explain.
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SECTION D : CASE STUDY 15 marks
(Thinking/Inquiry & Application)
Toys “R” Us opened its first international outlet in Canada in 1984, and then it moved to parts of Europe, Hong Kong, and Singapore, where the company's “discount formula” was as popular as in the United States. The international business model applied to new markets was the same as that used by the company in the United States: the stores resembled each other, and each store had a self-service supermarket format that offered a great variety of toys sold at low prices.
By 2004, 38 per cent of Toys “R” Us stores were located outside the United States. Yet, entering a new market has not always been easy for the company. As this case shows, cultural differences and regulations can make establishing a foreign business model very difficult.
Toys “R" Us in Germany
Many multinationals like to set up operations in Europe, particularly in the largest economy,
Germany. Despite its economic downturn in the 1990s, this country has a very strong economy, and it greatly influences what happens in the rest of the EU.
When Toys “R” Us decided to enter the German market, it was greeted by a partial boycott and a public relations blitz that condemned the concept of a self-service toy supermarket as being alien and wrong. Even though the managing director of Toys "R" Us was German, strong objections were directed against a US retailer wanting large-area sales space in
Germany. The company soon learned that legal and cultural barriers could be effectively used to block foreign competition.
When Toys "R" Us applied for a construction permit in Cologne, the city fathers asked the local chamber of commerce and retailers' association how they felt about the application. The latter replied that a toy store belongs in the center of the city, not on the edge of town. Yet this is exactly where Toys "R" Us needed to be located so that it could build a sprawling store and a parking lot that was the size of a football field. In addition, the German Toy Manufacturers
Association questioned why a toy store would sell so many non-toy items.
The managing director for Toys "R" Us refused to allow these early setbacks to thwart his efforts. He continued making the rounds of trade shows, negotiating for store sites, and presenting the company's plans to local officials; eventually he wore down the resistance.
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Even the competition began to realize that successful large toy stores could spark a boom in the toy market. Soon, competitors began copying some of the approaches used by Toys "R"
Us, such as piling shelves at the back of the store with baby food and diapers. Parents who come in to get diapers or baby food seldom leave without buying a toy for the child.
The German experience has taught the management that despite cultural, legal, and technical barriers, a retail company can succeed in Europe if it is patient, maintains a strong consumeroriented marketing focus, and is nationally responsive.
By 2003, Toys "R" Us had 48 stores in Germany. It had another 182 outlets in Europe, including Min the United Kingdom, 33 in France, and 32 in Spain.
Toys “R” Us in Japan
The Japanese toy market is one of the largest, making it an attractive market for Toys "R" Us.
Yet, when the firm decided to enter this market in 1991, it had some major hurdles to overcome. Despite the rapid growth it had experienced, Japan's toy industry remained highly fragmented and locally focused. Japanese reportedly preferred personal attention from the shop owner rather than low prices. In addition to customers' habits and personal loyalties,
Japan's retail structure was also bolstered by a series of laws restricting the spread of larger retail stores.
At the time, a typical Japanese toy store was less than 3,200 square feet in area. Nearly all retail shops were domestically owned and bought their toys from local wholesalers, usually for 75-80 per cent of the manufacture" suggested price. Retailers then sold the toys for the suggested price, deviating from it only rarely. Fragmented wholesalers served these shops.
These wholesalers sold their products through a complex distribution system that typically involved between three and five layers of intermediaries.
The Toys "R" Us business model clashed with traditional business structures. Its self-serve format put more attention on lower prices, minimizing personal attention to each customer, and cutting out any intermediaries from the supply process. Japan not only presented great possibilities but also involved a high risk of failure, especially if the company didn't adapt its business model.
To overcome the problems of Japanese culture and history being incompatible with the Toys
"R" Us business model, Den Fujita, who had successfully run McDonald’s Japan, was enlisted as a local partner. At the time, he was the only Japanese business leader who had succeeded in bringing foreign non-luxury retail business into the restrictive Japanese market. His experience, political influence, vision, and unique understanding of both Japanese and
American cultures enhanced the probability of success of Toys "R" Us in Japan.
With the help of Fujita, a powerful opinion leader affects government policy-making, and a younger generation that had started to realize that they were paying inflated prices for many consumer goods, many commercial restrictions were lifted, and Toys "R" Us was able to implement a business model similar to that in the United States. As of 2003, Toys "R" Us has
146 stores in Japan.
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1.
In which country is the company, Toys "R" Us, based?
2.
Describe three competitive advantages of Toys "R" Us?
[1]
[3]
3.
Explain in details the specific cultural barriers does Toys “R” Us faces in Japan? [4]
4.
Provide two solutions how Toys "R" Us could overcome its cultural barriers in Japan.
[4]
5.
Provide reasons why Toys "R" Us may have been more successful in Japan than
Germany? [3]
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