SOM 354 Chapter 13 Final

39. In international business, a product that is not widely available in a foreign market and satisfies an unmet need: A. is likely to have greater value. B. will have to be priced relatively low. C. will see a decrease in sales volume. D. is not suited to that particular market. E. will fail to make a profit.

A

Franchising as a mode of entry into foreign markets is employed primarily by: A. service firms. B. manufacturing companies. C. online outfits. D. high-technology companies. E. primary industries.

A

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? A. Wholly owned subsidiary B. Joint venture C. Franchising D. Licensing E. Turnkey project

A

The probability of survival for an international business increases if it: A. enters a national market after several other foreign firms have already done so. B. avoids the use of countertrade agreements. C. enters a national market early. D. enters a foreign market via turnkey projects. E. avoids engaging in joint ventures.

A

Which of the following is a reason why a relatively poor country may be an attractive target for inward investment? A. Rapid economic growth B. Political instability C. Currency depreciation D. High cost of living E. Less developed infrastructure

A

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

A

82. Which of the following modes of entry is suitable for service firms where the risk of losing control over the management skills or technological know-how is not much of a concern, and where the firms' valuable asset is their brand name? A. Exporting B. Franchising C. Licensing D. Turnkey projects E. Cross-licensing

B

Axiom International, an Australian company, wants to expand its operations to China, a country that is politically, culturally, and economically different. The firm needs to select a mode of entry that would give it access to local knowledge, allow sharing of development costs and risks, and also be politically acceptable. Which of the following modes of entry into foreign markets is most suitable for Axiom International? A. Wholly owned subsidiary B. Joint venture C. Exporting D. Greenfield investments E. Licensing

B

In which of the following modes of entry into foreign markets does a firm agree to set up an operating plant for a foreign client and hand over the plant when it is fully operational? A. Franchising agreement B. Turnkey project C. Licensing agreement D. Wholly owned subsidiary E. Joint venture

B

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

B

When should a firm configure its value chain to maximize value at each stage? A. When government regulations relax B. When cost pressures are intense C. When rapid imitation is expected D. When the number of consumers increases E. When incumbent competitors exist

B

Which of the following countries presents a favorable benefit-cost-risk trade-off scenario for foreign expansion? A. A country ridden by private-sector debt B. A country with a free market system C. A country experiencing a dramatic upsurge in inflation rates D. A country that is heavily populated E. A country that is less developed and politically unstable

B

Which of the following is a drawback of licensing as a mode of entry into foreign markets? A. The licensor has to bear all costs and risks associated with developing a foreign market. B. Licensing does not give a firm tight control over manufacturing, marketing, and strategy. C. Licensing does not benefit firms lacking the capital to expand operations overseas. D. Licensing deals fail when there are barriers to foreign investment in a particular country. E. A firm that enters into a licensing deal with a foreign country will have no long-term interest in that country.

B

Which of the following is an advantage of turnkey projects as a mode of entry into foreign markets? A. It is an ideal way to gain entry into a country where FDI is not limited by government regulations. B. It is a useful strategy to earn great returns from the know-how of a technologically complex process. C. It is an ideal way to establish a firm's long-term presence in a foreign country. D. It helps protect a firm's competitive advantage. E. The firm that enters into a turnkey project with a foreign enterprise avoids giving rise to potential competitors.

B

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

B

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

C

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

C

How can firms avoid incurring high transport costs when exporting bulk products? A. By taking a minority equity interest B. By entering into a turnkey project with a foreign firm C. By manufacturing bulk products regionally D. By setting up subsidiaries irrespective of market reach E. By reducing the quantity of the product offering

C

The liability associated with foreign expansion is greater for foreign firms that: A. choose to ride on an early entrant's investments. B. use countertrade agreements. C. enter a national market early. D. ride down the experience curve behind their rivals. E. avoid pioneering costs.

C

Which of the following entry modes into a foreign market best serves a high-tech firm? A. Turnkey projects B. Franchising C. Wholly owned subsidiaries D. Joint ventures E. Exporting

C

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

D

According to Christopher Bartlett and Sumantra Ghoshal, how can local companies differentiate themselves from foreign multinationals? A. By licensing their core technologies B. By entering into turnkey projects C. By standardizing their product offerings D. By focusing on market niches E. By raising trade barriers

D

Which of the following is true of the costs and risks associated with doing business in a foreign country? A. They are greater for late entrants. B. They are higher in politically democratic nations. C. They are less pronounced in the case of licensing. D. They are lower in economically advanced nations. E. They are called opportunity costs.

D

In terms of licensing, which of the following is an intangible property? A. Infrastructure B. Machinery C. Leased equipment D. Advanced computing systems E. Patent

E

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

E