MRKT 347 International Business Ch. 10 Study Guide

Which of the following is an advantage of R&D contracts?

Ability to tap into the best cost-effective locations

Which of the following terms refers to the clustering of economic activities in certain locations?

Agglomeration

Which of the following is a first mover advantage?

Avoidance of clash with a dominant firm at home

Which of the following is a nonequity mode of entry used to build a longer-term presence by building and then operating a facility for a period of time before transferring operations to a domestic agency or firm?

BOT agreement

Which of the following is an advantage of direct exports?

Better control over distribution

The difference between two cultures along identifiable dimensions is known as _____.

Cultural distance

The most basic nonequity mode of entry, which capitalizes on economies of scale in production concentrated in the home country and provides better control over distribution, is a(n) _____.

Direct export

The distinction between which of the following factors defines a firm as an MNE rather than one that merely exports or imports?

Equity and non-equity modes of entry

Which of the following is true of modes of entry?

Equity modes are indicative of relatively larger, harder to reverse commitments

A build-operate-transfer (BOT) agreement is an equity mode of entry.

False

A disadvantage of licensing is high development costs.

False

A firm that exports or imports, with or without FDI, is regarded as an MNE.

False

According to the stage model, firms will enter culturally distant countries for their first internationalization.

False

Equity modes tend to reflect relatively smaller commitments to overseas markets, whereas non-equity modes are indicative of relatively larger, harder-to-reverse commitments.

False

Greenfield operations are a type of wholly owned subsidiary that does not require any FDI.

False

In this age of globalization, customers don't discriminate against foreign firms.

False

Indirect exports are the most basic mode of entry, capitalizing on economies of scale in production concentrated in the home country.

False

Industrial parks refer to the clustering of economic activities in certain locations.

False

Innovation-seeking firms often single out the most efficient locations featuring a combination of scale of economies and low cost factors.

False

Late movers face greater technological and market uncertainties

False

Liability of foreignness is the inherent disadvantage firms experience in home countries.

False

Licensing and franchising are examples of equity modes of entry

False

Location-specific advantages never change and only tend to grow.

False

Nonequity modes of entry include acquisitions and wholly-owned subsidiaries

False

One of the advantages of being a first-mover is the opportunity to free ride on late-mover investments.

False

The "leverage" in the LLL framework focuses on an MNE's deep understanding of its customer needs and wants.

False

The existence of multiple currencies and the resultant currency risks can be viewed as informal trade and investment barriers.

False

The nonequity mode of indirect exports has better control over distribution than direct exports.

False

The resource-based view suggests that firms need to take actions deemed legitimate and appropriate by the various formal and informal institutions governing market entries.

False

Turnkey projects cannot be established without FDI

False

Which of the following is a late mover advantage?

Fewer technological and market uncertainties

Which of the following conforms to the notion put forward by the school of thought associated with stage models?

Firms enter culturally distant countries in later stages when they may gain more confidence.

A disadvantage of acquisitions is ......

High development costs

Which of the following characterizes an MNE from a non-MNE?

It enjoys OLI advantages

Which of the following entry modes is a type of strategic alliance?

Licensing

In the LLL framework, which of the following refers to an emerging MNE's ability to identify and bridge gaps in its market?

Linkage

Which of the following is a disadvantage of licensing and franchising?

Little control over marketing

Which of the following is an advantage shared by both greenfield operations and acquisitions?

Protection of know-how

Which of the following terms refers to the amount of resources committed to entering a foreign market?

Scale of entry

An advantage of joint ventures is .....

The access to partners' assets

A recent survey revealed that more than nine out of ten people prefer a watch made by firms in Switzerland to one made in India, the US, or any other country. This is an example of _____.

The country of origin effect

Liability of foreignness is _____.

The inherent disadvantage foreign firms experience in host countries

Which of the following is true of licensing/franchising?

The licensor/franchisor does not have tight control over technology and marketing.

Natural resource-seeking firms have compelling reasons to enter culturally and institutionally distant countries. This is a counter example of _____.

The stage model

Which of the following is a benefit of large scale entries?

They demonstrate strategic commitment to certain markets

Which of the following is true of indirect exports?

They export through domestically based export intermediaries

Agglomeration explains why certain cities and regions can attract businesses even in the absence of obvious geographic advantages.

True

An acquisition is an example of a wholly owned subsidiary.

True

An advantage of joint ventures is the shared costs, risks, and profits.

True

Co-marketing has the ability to reach more customers but with limited control and coordination.

True

Cultural distance is the difference between two cultures along some identifiable dimensions.

True

Emerging MNEs primarily lack proprietary ownership of technology compared to MNEs from developed economies.

True

Greenfield operations and acquisitions have complete equity and operational control.

True

Market-seeking firms go to countries that have a strong demand for their products and services.

True

Nonequity modes do not require the establishment of independent organizations overseas.

True

One of the late-mover disadvantages is the establishment of entry barriers by the first mover

True

Strategic goals and cultural and institutional distances influence the location of foreign entries.

True

The preemption of scarce resources is a first-mover advantage

True

The resource-based view argues that foreign firms need to deploy overwhelming resources and capabilities to offset their liability of foreignness.

True

The scale of entry refers to the amount of resources committed to entering a foreign market

True

In which of the following strategies do clients pay contractors to design and construct new facilities and train personnel?

Turnkey projects

Which of the following is a non-equity mode of entry?

Turnkey projects

Greenfield operations are similar to acquisitions in that they are both examples of _____.

Wholly owned subsidiaries

Which of the following is an equity mode of entry?

Wholly owned subsidiaries

A greenfield operation refers to.....

a wholly owned subsidiary created by building a new factory and offices from scratch

Companies with market-seeking strategic goals search for _____.

abundance of strong market demand and customers willing to pay

With regard to foreign market entry, the resource-based view argues that foreign firms need to ____________.

deploy overwhelming resources and capabilities to offset their liability of foreignness

Efficiency-seeking firms go to countries that have _____.

economies of scale and abundance of low-cost factors

Co-marketing refers to......

efforts among a number of firms to jointly market their products and services

The country-of-origin refers to ......

the positive or negative perception of firms and products from a certain country