Question 1

If an international firm's core competence is based on proprietary technology, entering a joint venture might risk losing control of that technology to the joint-venture partner.

Accepted Answer

A) True 
 B)False

Question 2

Establishing a wholly owned subsidiary gives an international firm a 100 percent share in the profits generated in a foreign market.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is a course of action suggested by Christopher Bartlett and Sumantra Ghoshal for companies based in developing nations?

Accepted Answer

A)  Build up financial resources to match those of the largest global competitors.
B)  Enter foreign markets at a similar time and scale as multinational companies.
C)  Enter markets rapidly and exit at an equally rapid pace to avoid heavy losses.
D)  Benchmark one's operations and performance against foreign multinationals.
E)  Do not focus on market niches that multinational companies ignore.

Question 4

Why do firms pursuing global standardization or transnational strategies tend to prefer establishing wholly owned subsidiaries?

Accepted Answer

A)  It gives firms sound knowledge of the local markets, culture, and the political environment.
B)  It helps protect competitive advantages based on technology.
C)  It allows firms to use the profits generated in one market to improve its competitive position in another market.
D)  It is the most politically accepted mode of entry into foreign markets.
E)  It has the least costs and risks associated with developing a foreign market.

Question 5

Small-scale entry into a foreign market makes it difficult to build market share because it:

Accepted Answer

A)  necessitates rapid entry into a foreign market.
B)  is associated with a lack of commitment demonstrated by the foreign firm.
C)  leads to escalating strategic commitments.
D)  requires that extra time be spent in analyzing a foreign market.
E)  leads to increased exposure to a foreign market.

Question 6

Describe how pressures for cost reductions affect the choice of entry mode.

Accepted Answer

The greater the pressures for cost reduc...

Question 7

Which of the following is an advantage of acquisitions as a means of entering foreign markets?

Accepted Answer

A)  They are quick to execute and help firms to rapidly build their presence in the target foreign market.
B)  It is much easier to change the culture of an existing organization than build a new organization.
C)  It is easier to convert the operating routines of acquired units than establish routines in new subsidiaries.
D)  They give firms access to valuable intangible assets while minimizing a pileup of tangible assets.
E)  Acquired firms are often undervalued and hence assets can be purchased at minimal prices.

Question 8

How can a wholly owned subsidiary be established in a foreign market?

Accepted Answer

A)  Through a turnkey operation with a local partner
B)  Through franchising
C)  By acquiring an established firm in the host nation
D)  By exporting
E)  Through a licensing agreement

Question 9

Which of the following is a disadvantage of large-scale entry into a foreign market?

Accepted Answer

A)  Decrease in a firm's exposure to the foreign market
B)  Difficulty attracting customers and distributors for the product
C)  Inability to build rapid market-share irrespective of the scale of entry
D)  Limited product acceptance due to the avoidance of potential losses
E)  Availability of fewer resources to support expansion in other desirable markets

Question 10

What triggers the conflict of interest over strategy and goals in joint ventures?

Accepted Answer

A)  Local partner's knowledge of host country's competitive conditions
B)  Giving control of core technology to the foreign partner
C)  Shifts in relative bargaining power of venture partners
D)  Trying to realize location and experience curve economies
E)  Risk of being subject to adverse government interference

Question 11

Which of the following types of entry into a foreign market allows a firm to learn about the foreign market while limiting the firm's exposure to that market?

Accepted Answer

A)  Early entry
B)  Small-scale entry
C)  Large-scale entry
D)  Late entry
E)  Rapid entry

Question 12

What are first-mover advantages? Describe three first-mover advantages for international businesses.

Accepted Answer

The advantages frequently associated wit...

Question 13

Which of the following is an advantage of franchising as a mode of entry into foreign markets?

Accepted Answer

A)  The franchiser is relieved of many of the costs and risks of opening a foreign market on its own.
B)  The franchiser is allowed to take profits out of one country to support competitive attacks in another.
C)  The franchiser can easily maintain uniform quality across many geographically dispersed franchisees.
D)  Manufacturing concerns can be effectively coordinated across adjacent processes.
E)  The franchiser can support its short-term interests in a country with an unstable economy.

Question 14

Describe the advantages of turnkey projects as a mode of entry into a foreign market.

Accepted Answer

The know-how required to assemble and ru...

Question 15

In international business, joint ventures with local partners face a significantly higher risk of being subject to nationalization.

Accepted Answer

A) True 
 B)False

Question 16

First-mover disadvantages refer to:

Accepted Answer

A)  disadvantages associated with entering a foreign market before other international businesses.
B)  costs that a late entrant to a foreign market has to bear.
C)  a direct restriction on the quantity of a good that can be imported into a country.
D)  imperfections in the operation of the market mechanism.
E)  disadvantages experienced by being a late entrant in a foreign market.

Question 17

What are some of the ways in which a firm can reduce the risk of losing its proprietary know-how to foreign companies through licensing agreements?

Accepted Answer

A problem with licensing is the risk ass...

Question 18

Which of the following is a disadvantage of small-scale entry for an international firm considering foreign expansion?

Accepted Answer

A)  The possibility of escalating commitment leading to major financial losses
B)  The limited availability of resources for use in other markets
C)  The lack of flexibility associated with strategic commitments
D)  The increase in economic exposure due to minimal time spent in evaluating a foreign market
E)  The difficulty of building market share and capturing first-mover advantages

Question 19

If an international business can offer a product that has been widely available in that market, the value of that product to consumers is likely to be much greater than if the international business offers a product that has not been widely available in that market.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is an example of an industry in which cross-licensing agreements are increasingly becoming common?

Accepted Answer

A)  Glass-blowing
B)  Biotechnology
C)  Organic farming
D)  Basketry
E)  Weaving

Exam 13: Entering Foreign Markets

Establishing a wholly owned subsidiary gives an international firm a 100 percent share in the profits generated in a foreign market.

Correct AnswerverifiedShow Answer

First-mover disadvantages refer to:

Correct AnswerverifiedShow Answer

Which of the following is a disadvantage of large-scale entry into a foreign market?

Correct AnswerverifiedShow Answer

Which of the following is an advantage of acquisitions as a means of entering foreign markets?

Correct AnswerverifiedShow Answer

Describe the advantages of turnkey projects as a mode of entry into a foreign market.

Correct AnswerverifiedThe know-how required to assemble and ru...View AnswerShow Answer

How can a wholly owned subsidiary be established in a foreign market?

Correct AnswerverifiedShow Answer

Small-scale entry into a foreign market makes it difficult to build market share because it:

Correct AnswerverifiedShow Answer

Which of the following is an advantage of franchising as a mode of entry into foreign markets?

Correct AnswerverifiedShow Answer

What triggers the conflict of interest over strategy and goals in joint ventures?

Correct AnswerverifiedShow Answer

What are some of the ways in which a firm can reduce the risk of losing its proprietary know-how to foreign companies through licensing agreements?

Correct AnswerverifiedA problem with licensing is the risk ass...View AnswerShow Answer

In international business, joint ventures with local partners face a significantly higher risk of being subject to nationalization.

Correct AnswerverifiedShow Answer

Why do firms pursuing global standardization or transnational strategies tend to prefer establishing wholly owned subsidiaries?

Correct AnswerverifiedShow Answer

Describe how pressures for cost reductions affect the choice of entry mode.

Correct AnswerverifiedThe greater the pressures for cost reduc...View AnswerShow Answer

Which of the following is a course of action suggested by Christopher Bartlett and Sumantra Ghoshal for companies based in developing nations?

Correct AnswerverifiedShow Answer

What are first-mover advantages? Describe three first-mover advantages for international businesses.

Correct AnswerverifiedThe advantages frequently associated wit...View AnswerShow Answer

Which of the following is a disadvantage of small-scale entry for an international firm considering foreign expansion?

Correct AnswerverifiedShow Answer

If an international firm's core competence is based on proprietary technology, entering a joint venture might risk losing control of that technology to the joint-venture partner.

Correct AnswerverifiedShow Answer

Which of the following types of entry into a foreign market allows a firm to learn about the foreign market while limiting the firm's exposure to that market?

Correct AnswerverifiedShow Answer

If an international business can offer a product that has been widely available in that market, the value of that product to consumers is likely to be much greater than if the international business offers a product that has not been widely available in that market.

Correct AnswerverifiedShow Answer

Which of the following is an example of an industry in which cross-licensing agreements are increasingly becoming common?

Correct AnswerverifiedShow Answer

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The know-how required to assemble and ru...
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A problem with licensing is the risk ass...
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The greater the pressures for cost reduc...
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The advantages frequently associated wit...
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