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Free IIA IIA-CIA-PART4 Exam Questions (page: 8)

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PDF with 535 Questions

A firm considering entry into a market abroad may make the selection based on many criteria.
For example, a Portuguese firm applying a psychic proximity criterion will most likely choose to enter which market?

  1. Afghanistan.
  2. China.
  3. India.
  4. Brazil.

Answer(s): D

Explanation:

Psychic proximity means the nearness of the market's culture, language, and laws to those of the firm's home country. For example, Portuguese is spoken in Brazil.



Developing brand equity in a foreign market may be desirable but is subject to considerable risk. A global firm launching a new product in a new market most likely should

  1. Initially place most of the firm's emphasis on advertising geared to the local culture.
  2. Fully decentralize control of the marketing process.
  3. Avoid creating partnerships with local distribution channels to avoid dilution of the brand.
  4. Balance standardization and customization of the product.

Answer(s): D

Explanation:

The firm should determine the ratio of standardization and customization. Products that can be sold virtually unchanged throughout several markets provide a greater profit opportunity for a global firm. However, cultural differences may require extensive customization to appeal to markets in different countries.



According to keegan's model of adaptation strategies, a firm that decides to operate globally by changing its product and its promotion methods has chosen

  1. A dual adaptation strategy.
  2. The backward variant of a product invention strategy.
  3. The forward variant of a product invention strategy.
  4. A straight extension strategy.

Answer(s): A

Explanation:

Communication adaptation is a strategy that does not change the products, but advertising and marketing campaigns are changed to reflect the local culture and beliefs. In contrast, a dual adaptation strategy changes both the product and the promotion to provide the best chance of acceptance in a foreign market.



Distribution channels ensure that goods in international trade are transferred successfully to end users. Where are intermediaries, such as trading companies, most likely selected?

  1. Channels within nations.
  2. Export department of the seller.
  3. International division of the seller.
  4. Channels between nations.

Answer(s): D

Explanation:

Channels between nations carry goods to foreign borders. They include air, land, sea, or rail transportation channels. At this stage, in addition to transportation methods, intermediaries are selected (e.g., agents or trading companies), and financing and risk management decisions are reached.



Managerial attitudes toward global operations are viewed by researcher HowardPerl mutteras a key to understanding multinational firms. An ethnocentric attitude is indicated
by:

  1. An identification with the nationality of the host country.
  2. Collaboration between the firm's subsidiaries and the firm's central administration.
  3. A high volume of information flow in the form of orders and advice to subsidiaries.
  4. A staffing emphasis on finding and developing the best people in the world for key positions anywhere in the firm.

Answer(s): C

Explanation:

An ethnocentric attitude assumes that the home country's people, practices, and ideas are superior to all others. Thus, the firm's identification is with the owner's nationality. Authority and decision making are centralized, so communication is likely to involve a high volume of information flow in the form of orders and advice to subsidiaries. Moreover, home-country standards are apt to be used for performance evaluation of entities and individuals. Also, this ethnocentric attitude is perpetuated by recruiting and developing home-country individuals for key posts throughout the firm. The advantages of an ethnocentric attitude are simplicity and close control. The disadvantages are social and political problems in foreign countries, poor feedback, ineffective planning, lack of flexibility and innovative thinking, and higher turnover of managers in foreign subsidiaries.



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