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Section A (50 marks)
This section contains TWENTY (20) questions. You are required to answer ALL
questions in the answer sheets given.
1. There are 3 basic decisions that a firm contemplating foreign expansion must make :
A. Cost, Accessibility and Timing
B. Entrance, Timing and Scale
C. Liability, Partnering and Competition
D. Location, Licensing and Distribution
2. Which of the following is NOT one of the advantages of a joint venture?
A. Firms can benefit from a local partner’s knowledge of the host country
B. In some countries, political considerations may make this the only feasible entry
C. It is one of the least risky forms of entry
D. High development costs can be shared with a partner

3. Whole own subsidiaries in foreign countries usually take one or two forms- an
acquisition or ____
A. Selective franchising
B. Greenfield Investment
C. Equity partnership
D. Exclusive licensing agreements.
4. An acquisition has 3 main points in its favour: its quick to execute, to may pre-empt
competitors, and _______________.
A. It has a solid record of successes
B. It is less capital intensive than other modes.
C. It is relatively easy to end if profits do not meet expectations
D. It may be less risky than a greenfield venture
5. If a firm is considering to enter a country where there are no current competitors or
where the competitive advantage of the firm is based on the transfer of
organizationally embedded competencies, skills, routines and cultures, it is probably
preferable to use _____ entry mode.
A. Franchising
B. Greenfield investment
C. Exporting
D. Acquisition.


Make use of new knowledge within its own organization C. A. Products that serve_____ when tastes and preferences of consumers in different nations are similar if not identical A. Universal Needs D. Research suggests that when FDI takes the form in acquisition. 10. The firm must ________ to maximize the learning benefits of an alliance. Inflation 11. Declare war B. Experience Curve D. Shield inside knowledge as proprietary unless necessary B. Money supply C. Seize foreign goods 2 . Core needs B. Unaffected 12. Falls off rapidly and rarely recovers C. A. IBM 1143 INTERNATIONAL BUSINESS FINAL EXAMINATION _____ refers to the systematic reduction in production costs over the life of a product based on the learning effects and economies of scale. A localization strategy seeks to increase profitability by : A. Apply knowledge transferences carefully D. Government will ________when foreign imports flood a domestic market to attract customers or threated local firms. Brokering through strategic alliances with local partners D. De-flation D. _____ is fuelled. Fall first then tends to grow faster than domestic rivals B. A. Offering Discounts and promotions to match local needs. Customizing the firm’s products to match local tastes B. 9. Marketing local goods instead of imported ones C. Seek 3rd party protections against industrial espionage. Begin boosting exports C. When the growth in the country’s money supply is faster than the growth in its output (GDP).CONFIDENTIAL 6. Trade creation B. Increase D. Transnational needs C. Sustainable Competitive Advantage C. Total Quality Control 7. Local responsive 8. Location economy B. Impose countervailing duties D. A. employment in the host country would A.

An extensive 20 year old study of the relationship between economic growth and economic growth demonstrated _____. C. An import surcharge C.CONFIDENTIAL IBM 1143 INTERNATIONAL BUSINESS FINAL EXAMINATION 13. A quota rent. A. Regulation D. Privatization B. Loan Hazard B. Despite more economic freedom. _______ risk is defined as the likelihood that political forces will cause drastic changes in a country’s business environment that adversely affect the profit and goals of a business enterprise. More economic freedom. Dispersing productions to around the world 16. Plan the production of goods and services in that country D. Which of the following is not a business strategy for dealing with risks in exchange rate movements? A. IMF rescued efforts for trouble economies may involve enabling week governments a way out of their management financial messes created by reckless behaviour. Debt Hazard 15. This is known to the economists as : A. A windfall profit B. Allocate resources for “ the good of society” B. more economic growth D. Which of the following is NOT one of the steps in a shift toward a market-based economic system? A. Legal B. De-regulation C. Less economic freedom. A. Re-distribute income to create equitable access to the market C. more economic growth 17. Contracting out manufacturing B. Insurance coverage D. 14. The role of the government in a market economy is to ____. No significant relationship between the two B. 18. The creation of a legal system to safeguard property rights. Monetary Hazard C. Encourage vigorous free and fair competition between private producers 3 . A stable price of petroleum and other natural resources D. Deregulation C. Moral Hazard D. The extra profit that producers/ manufactures make when supply is artificially limited by an import quota is referred to as _____. Political 19. economic growth in fact slows down. A. Insisting payments to be made in gold certificates C. A. A subsidy D.

Mobilize resources for the public good B. Please fill in the figure below that shows the relationship between quality and costs. In this context. Open up markets both at home and abroad D. Write your answers in the answer sheet. implying that the products has no defects and performs well. Section B (20 marks) This section contains FIVE (5) questions.CONFIDENTIAL IBM 1143 INTERNATIONAL BUSINESS FINAL EXAMINATION 20. quality means reliability. One of the strategic objective shared by production and logistics is to increase product quality by eliminating defective products from both the supply chain and the manufacturing process. Ensure free supply of products. A. Take over troubled industries C. The objective of a command economy is to ____. (not in this paper) 4 . You are required to answer ALL questions in the answer sheets given.

times have changed. However. You are required to answer ALL questions in the answer sheets given. the retail lending arm of GE’s financial services business.and credit cards. General Electric’s Joint VentureGeneral Electric formerly entered a foreign market by either acquiring an established firm or establishing a greenfield subsidiary. GE Money. for example. the largest bank in the 5 . Since the early 2000s joint ventures have become one of the most powerful strategic tools in GE’s arsenal. Similarly. mortgages.CONFIDENTIAL IBM 1143 INTERNATIONAL BUSINESS FINAL EXAMINATION a) d) Improve Performance Reliability Increases Profits b) e) c) Part C : Case Study (30 marks) This section contains FIVE (5) questions.To enter the South Korean market. GE has a 43 percent stake in these ventures. Joint ventures with a local company were almost never considered. The prevailing philosophy was that without full control. and in Central America it has a joint venture with BAC-Credomatic. in Spain it has formed several joint ventures with local banks to provide consumer loans and credit cards to Spanish residents. the company didn’t do the deal. formed joint ventures with Hyundai to offer auto loans.

Deutsch. 2007. joint ventures are no panacea. GE now sees joint ventures as a great way to dip its toe into foreign markets where it lacks local knowledge. which has become one of the world’s largest companies leasing shipping containers. 1. GE ended talks aimed at establishing the venture. and business relationships that the local partner brings to the table. political. GE used to be able to buy its way into majority ownership in almost any business. for example. in September of the same year. However. and it believes that entering via joint ventures into nations where it lacks a presence is the only way of attaining these goals. Hyundai had refused to cede control to GE. economic. with GE acquiring access to knowledge about local markets. and cultural considerations make joint ventures an easier option than either acquisitionsor greenfield ventures. Sources: C. or even a 50/50 split.CONFIDENTIAL IBM 1143 INTERNATIONAL BUSINESS FINAL EXAMINATION region. The company has a well-earned reputation for being a good partner. 6 . GE’s agreements normally give even the minority partner in a joint venture veto power over major strategic decisions. For the first time.There are several reasons for the switch in strategy. Nevertheless. Moreover.” The New York Times .” Financial Wire . General Electric has done joint ventures in the in certain sectors of the Chinese economy and some others. and partners earning cutting-edge management techniques from GE that can be used to boost their own productivity. it did soas a minority partner even though it would have preferred a majority position.local laws prohibit other entry modes. in 2007 the company derived the majority of its revenue from foreign operations. it has a long standing 50/50 joint venture with the French company Snecma to make engines for commercial jet aircraft. GE has adopted aggressive growth goals. In January 2007. Better to form a joint venture.But all of these ventures came about only after GE had explored other ways to gain access to particular markets or technology.GE managers also note there is no shortage of partners willing to enter into a joint venture with the company. GE also is well known for its innovative management techniques and excellent management development programs. pp. when GE entered into a joint venture with Hyundai Motor to offer auto loans. “Odd Couple: Jet Engines. and “GE. Of course. than risk paying too much for a company that turns out to have problems that are discovered only after the acquisition. 72. and a third with Sea Containers of the United Kingdom. in certain nations. and control issues can scuttle some ventures. p. Once the last option for GE. so the thinking goes.GE announced it would enter into a venture with Britain’s Smiths Group to make aerospace equipment. GE has also found that as much as it would like majority ownership. establishing joint ventures is now often the preferred entry strategy. BAC Joint Venture to Buy Banco Mercantil. another with Fanuc of Japan to make controls for electrical equipment. For example. Many partners are happy to team up with GE to get access to this know-how. October 5. The knowledge flow goes both ways. GE has rapidly expanded its international presence over the past decade. legal. May 5. 2007. but prices for acquisitions have been bid so high that GE is reluctant to acquire for fear of overpaying. C1. Fueled by its large number of joint ventures. p. under the leadership of CEO Jeffrey Immelt.Just as importantly. stating it could not reach an agreement over the vision for the joint venture. local expertise. In 2003. January 11. GE believes it can often benefit from the political contacts. “The Venturesome Giant. sometimes it has to settle for a minority stake to gain access to a foreign market. H. 2007. China being a case in point. C8. For one thing. Finally.” The Economist . GE also sees joint ventures as a good way to share the risk of building a business in a nation where it lacks local knowledge.

what other assets do you think GE brings to the table that make it an attractive joint-venture partner ( 6 marks) 7 .CONFIDENTIAL IBM 1143 INTERNATIONAL BUSINESS FINAL EXAMINATION Questions 1. The case mentions about GE has a well-earned reputation for being a good partner. What are the risks that GE must assume when it enters into a joint venture? Is ther any way for GE to reduce these risks ( 6 marks) 4. Why do you think this was the case? (6 marks) 2. opportunistically taking advantage of a partner. Why do you think GE has come to favour joint ventures in recent years? (6 marks) 3. What are the likely benefits for this reputation to GE? If GE were to tarnish its reputation by. GE used to prefer acquistions or greenfield ventures as an entry mode. rather than joint ventures. In addition to its reputation for being a good partner. how might this impact the company going forward? ( 6marks) 5. for example.