Last month, Jim Logan completed his undergraduate degree in finance and decided to pursue his dream of managing his own sporting goods business. Logan had worked in a sporting goods shop while going to college, and he had noticed that many customers wanted to purchase a low-priced football. However, the sporting goods store where he worked, like many others, sold only top-of-the-line footballs. From his experience, Logan was aware that top-of-the-line footballs had a high markup and that a low-cost football could possibly penetrate the U.S. market. He also knew how to produce footballs. His goal was to create a firm that would produce low-priced footballs and sell them on a wholesale basis to various sporting goods stores in the United States. Unfortunately, many sporting goods stores began to sell low-priced footballs just before Logan was about to start his business. The firm that began to produce the low-cost footballs already provided many other products to sporting goods stores in the United States and therefore had already established a business relationship with these stores. Logan did not believe that he could compete with this firm in the U.S. market. Rather than pursue a different business, Logan decided to implement his idea on a global basis. Although football (as it is played in the United States) has not been a traditional sport in foreign countries, it has become more popular in some foreign countries in recent years. Furthermore, the expansion of cable networks in foreign countries would allow for much more exposure to U.S. football games in those countries in the future. To the extent that this would increase the popularity of football (U.S. style) as a hobby in the foreign countries, it would result in a demand for footballs in foreign countries. Logan asked many of his foreign friends from college days if they recalled seeing footballs sold in their home countries. Most of them said they rarely noticed footballs being sold in sporting goods stores but that they expected the demand for footballs to increase in their home countries. Consequently, Logan decided to start a business of producing low-priced footballs and exporting them to sporting goods distributors in foreign countries. Those distributors would then sell the footballs at the retail level. Logan planned to expand his product line over time once he identified other sports products that he might sell to foreign sporting goods stores. He decided to call his business Sports Exports Company. To avoid any rent and labor expenses, Logan planned to produce the footballs in his garage and to perform the work himself. Thus his main business expenses were the cost of the materials used to produce footballs and expenses associated with finding distributors in foreign countries who would attempt to sell the footballs to sporting goods stores.

1-Logan will select the foreign coutry according to......................

Multiple Choice

• the volatility of the foreign currency relative to the dollar.

• potential demand for footballs

• Friendship

2-The main method used by Logan to go internationally is to.

Multiple Choice

• be a franchisee of a US foreign football producer

• take a license from US producer to produce & sell products in foreign country

• export products to foreign countries

3-

The Sports Exports Company might . to increase its presence in foreign markets by working with one or more foreign companies.

Multiple Choice

• establish new a subsidiary

• use a licensing agreement

• acquire existing company

4-

Is Sports Exports Company a multinational corporation

Group startsTrue or False

True, unselectedFalse, unselected

5-

The Sports Exports Company has a comparative advantage over the U.S. firms that produce the top-of-the-line footballs in the U.S. market in ..

Multiple Choice

• applying an idea that has been successful in the U.S. to other countries.

• selling the footballs at a low price.

• providing many other products to sporting goods stores in the foreign countries

Group Ends

6-

Logan plans to ..for establishing his international business in one country.

Multiple Choice

• travel abroad and sell products to retail stores

• find a distributor of sporting goods that would sell the footballs to retail stores in various countries

• export products to his friends to sell them