Question 1

Large-scale entry allows an international firm to learn about a foreign market while limiting the firm's exposure to that market.

Accepted Answer

A) True 
 B)False

Question 2

In exporting, problems with local marketing agents can be overcome by:

Accepted Answer

A)  selling intangible property to a franchisee and insisting on rules to conduct the business.
B)  changing agents frequently.
C)  engaging in turnkey projects and exporting process technology to foreign firms.
D)  entering into cross-licensing agreements with foreign firms.
E)  setting up wholly owned subsidiaries in foreign nations to handle local marketing.F) A) and B)
G) D) and E)

Question 3

Which of the following is a disadvantage of wholly owned subsidiaries as a mode of entry into foreign markets?

Accepted Answer

A)  Lack of control over quality
B)  High costs and risks
C)  Problems with local marketing agents
D)  Inability to engage in global strategic coordination
E)  Lack of control over technologyF) All of the above
G) A) and E)

Question 4

The need for preempting competitors is particularly great in the telecommunications market.

Accepted Answer

A) True 
 B)False

Question 5

To reduce the risks of failure of an acquisition, managers must:

Accepted Answer

A)  pay more for the acquired unit to please its existing employees.
B)  encourage and facilitate management turnover.
C)  acquire a firm without wasting time on screening.
D)  move rapidly after an acquisition to put an integration plan in place.
E)  ensure that the work cultures are significantly different from each other.F) A) and C)
G) A) and B)

Question 6

Licensing is NOT attractive to which of the following firms?

Accepted Answer

A)  Firms lacking the capital to develop operations overseas
B)  Firms unwilling to commit substantial financial resources to an unfamiliar market
C)  Firms requiring tight control of operations for realizing experience curve and location economies
D)  Firms wanting to explore markets but prohibited from doing so by investment barriers
E)  Firms with intangible properties with business applications that it does not want to develop itselfF) B) and E)
G) A) and E)

Question 7

Which of the following is true of international firms considering foreign expansion?

Accepted Answer

A)  The timing and scale of entry of foreign expansion are minor details in comparison with the choice of foreign market.
B)  The long-run economic benefits of doing business in a country are solely a function of the country's population size.
C)  If the 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.
D)  The costs and risks associated with foreign expansion are higher in economically advanced nations.
E)  Politically unstable and less developed nations offer favorable benefit-cost-risk trade-off conditions.F) B) and E)
G) B) and C)

Question 8

Which of the following is an example of a first-mover advantage?

Accepted Answer

A)  The ability to create switching costs that tie customers into one's products or services
B)  The avoidance of pioneering costs that a later entrant into the foreign market has to bear
C)  The increased probability of surviving in a foreign market
D)  The opportunity to observe and learn from the mistakes of other entrants
E)  The ability to let later entrants ride ahead on the experience curveF) A) and B)
G) None of the above

Question 9

A drawback of exporting is that tariff barriers can make it uneconomical as a mode of entry into a foreign market.

Accepted Answer

A) True 
 B)False

Question 10

The attractiveness of a country as a potential market for an international business depends solely on the size of its consumer market.

Accepted Answer

A) True 
 B)False

Question 11

Jupiter Systems is a high-tech firm looking to set up operations in a foreign country. The firm's core competency is in technological know-how. Which of the following modes of entry would be most favorable to the firm if it wants to keep a tight control over its technology?

Accepted Answer

A)  Wholly owned subsidiary
B)  Joint venture
C)  Franchising
D)  Licensing
E)  Turnkey projectF) A) and E)
G) A) and D)

Question 12

Which of the following entry modes into a foreign market best serves a high-tech firm?

Accepted Answer

A)  Turnkey projects
B)  Franchising
C)  Wholly owned subsidiaries
D)  Joint ventures
E)  ExportingF) A) and D)
G) B) and E)

Question 13

An international firm that enters into a turnkey deal has a long-term interest in the foreign country.

Accepted Answer

A) True 
 B)False

Question 14

A distinction can be drawn between firms whose core competency is in which of the following?

Accepted Answer

A)  Scale of entry and strategic commitments
B)  Location and experience curves
C)  Acquisitions and greenfield ventures
D)  Technological know-how and management know-how
E)  Cost reductions and entry modeF) B) and E)
G) A) and D)

Question 15

How should a firm choose between a greenfield venture and an acquisition?

Accepted Answer

The choice between acquisitions and gree...

Question 16

In terms of the various modes of entry into a foreign market, franchising is employed primarily by service firms, whereas licensing is pursued primarily by manufacturing firms.

Accepted Answer

A) True 
 B)False

Question 17

Shared ownership agreements can lead to conflicts and battles for control between investing firms.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following factors determines the value that an international business can create in a foreign market?

Accepted Answer

A)  Population density in the foreign market
B)  Political stability of the foreign market
C)  Nature of indigenous competition
D)  Per capita income in the foreign market
E)  Type of political system in the foreign marketF) B) and C)
G) A) and E)

Question 19

In terms of international business, briefly describe pioneering costs.

Accepted Answer

Pioneering costs are costs that an early...

Question 20

In terms of the entry modes into a foreign market, a joint venture does not give an international firm the tight control over subsidiaries that might be required to realize experience curve or location economies.

Accepted Answer

A) True 
 B)False

Exam 13: Entering Foreign Markets

Shared ownership agreements can lead to conflicts and battles for control between investing firms.

Correct AnswerverifiedShow Answer

In terms of the entry modes into a foreign market, a joint venture does not give an international firm the tight control over subsidiaries that might be required to realize experience curve or location economies.

Correct AnswerverifiedShow Answer

How should a firm choose between a greenfield venture and an acquisition?

Correct AnswerverifiedThe choice between acquisitions and gree...View AnswerShow Answer

To reduce the risks of failure of an acquisition, managers must:

Correct AnswerverifiedShow Answer

The attractiveness of a country as a potential market for an international business depends solely on the size of its consumer market.

Correct AnswerverifiedShow Answer

Jupiter Systems is a high-tech firm looking to set up operations in a foreign country. The firm's core competency is in technological know-how. Which of the following modes of entry would be most favorable to the firm if it wants to keep a tight control over its technology?

Correct AnswerverifiedShow Answer

Which of the following factors determines the value that an international business can create in a foreign market?

Correct AnswerverifiedShow Answer

In terms of international business, briefly describe pioneering costs.

Correct AnswerverifiedPioneering costs are costs that an early...View AnswerShow Answer

Which of the following is a disadvantage of wholly owned subsidiaries as a mode of entry into foreign markets?

Correct AnswerverifiedShow Answer

An international firm that enters into a turnkey deal has a long-term interest in the foreign country.

Correct AnswerverifiedShow Answer

Licensing is NOT attractive to which of the following firms?

Correct AnswerverifiedShow Answer

The need for preempting competitors is particularly great in the telecommunications market.

Correct AnswerverifiedShow Answer

In exporting, problems with local marketing agents can be overcome by:

Correct AnswerverifiedShow Answer

Which of the following is an example of a first-mover advantage?

Correct AnswerverifiedShow Answer

A distinction can be drawn between firms whose core competency is in which of the following?

Correct AnswerverifiedShow Answer

Which of the following entry modes into a foreign market best serves a high-tech firm?

Correct AnswerverifiedShow Answer

A drawback of exporting is that tariff barriers can make it uneconomical as a mode of entry into a foreign market.

Correct AnswerverifiedShow Answer

Large-scale entry allows an international firm to learn about a foreign market while limiting the firm's exposure to that market.

Correct AnswerverifiedShow Answer

In terms of the various modes of entry into a foreign market, franchising is employed primarily by service firms, whereas licensing is pursued primarily by manufacturing firms.

Correct AnswerverifiedShow Answer

Which of the following is true of international firms considering foreign expansion?

Correct AnswerverifiedShow Answer

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The choice between acquisitions and gree...
View Answer

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Pioneering costs are costs that an early...
View Answer

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