GB

At which stage in the formation of alliance must a firm decide whether to take a contract or an equity approach?

2

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

Ability to tap into the best

refers to the clustering of economic activities in certain locations

Agglomeration

is designed to combat monopolies and cartels.

Antitrust policy

Which of the following sets of words describes the initial set of actions a firm uses to gain competitive advantage and the other firm's response to it

Attack, counterattack

Which of the following is an advantage of direct exports?

Better control of distribution

International new ventures are also referred to as

Born Global

The price leader's _____ is defined as sufficient resources possessed to deter and combat defection.

Capacity to Punish

People of the same trade seldom meet together, even for merriment and diversion, but their conversation often ends in a conspiracy against the public." This quote from Adam Smith is referring to which of the following business relationship terms?

Collusion

refers to price setting at a level higher than the competitive level by monopolists.

Collusive Price Setting

determines the institutional mix of competition and cooperation that gives rise to the market system and also seeks to balance efficiency and fairness.

Competition Policy

The process of anticipating rivals' actions in order to both revise a firm's plan and prepare to deal with rivals' response is called

Competitor Analysis

The percentage of total industry sales accounted for by the top firms is called:

Concentration Ratio

is the strategy that focuses on a firm engaging in rapid learning and then expanding overseas.

Contender

A non-equity based alliance is also called a

Contractual

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 or U.S.A or any other country. This is an example of

Country of Origin Effect

is an attack on a competitor's other markets if this competitor attacks a firm's original market.

Cross Market Retaliation

is the difference between two cultures along identifiable dimensions.

Cultural Distance

best suits situations where the pressures to globalize are relatively low, and local firms' strengths lie in a deep understanding of local markets.

Defender Strategy

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

Deploy Overwhelming resources and capabilities to offset

Blue ocean strategy focuses on

Developing New Markets

are the most basic non-equity mode of entry, capitalizing on economies of scale in production concentrated in the home country and providing better control over distribution.

Direct Exports

is the sale of products made by entrepreneurial firms in their home country to customers in other countries.

Direct Exports

If a firm is operating in an environment that is customized to home market, which of the following is the most preferred strategy?

Dodger

If a firm is operating in an environment with a high pressure for globalization, which of the following is the most preferred strategy?

Dodger

centers on cooperating through joint ventures with MNEs and sell-offs to MNEs.

Dodger

alliances are based on ownership or financial interest between the firms.

Equity Based

Which of the following industry characteristics contributes to collusion?

Existence of an industry price leader

perform an important "middleman" function by linking sellers and buyers

Export Intermediaries

strategy centers on leveraging home-grown competencies abroad.

Extender

If globalization pressures for a firm are relatively low, and if the firm has skills and assets that are transferable overseas, which of the following is the best strategy for the firm to use?

Extender Strategy

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

False

A disadvantage of licensing is high development costs.

False

A letter of credit increases transaction costs by increasing transaction risks.

False

A low degree of market commonality suggests that if a firm attacks in one market, its rivals may engage in cross-market retaliation.

False

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

False

An industry without a price leader makes it easier for firms in that industry to form collusions.

False

Blue ocean strategy focuses on attacking core markets defended by rivals.

False

Direct exports are the sale of products made through export intermediaries.

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

Franchising is typically used in manufacturing industries.

False

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

False

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

False

Late movers face greater technological and market uncertainties.

False

Licensing and franchising are examples of equity modes of entry.

False

Licensing is mostly used in the service industries.

False

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

False

Price leader is a firm that sets the highest price in the industry.

False

Tacit collusions typically lead to a cartel or trust.

False

The American antitrust policy is pro-incumbent and pro-producer.

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

In a service industry, _____ refers to firm A's agreement to give Firm B the rights to use A's proprietary assets for a royalty fee paid to A by B.

Franchising

Which of the following alliances is a contractual alliance?

Franchising

Which of the following is a popular way to enter into international service markets?

Franchising

Which of the following is one of the methods by which entrepreneurial firms internationalize by entering foreign markets?

Franchising

Which of the following is a theory that studies the interactions between two parties that compete and/or cooperate with each other?

Game Theory

Which is one of the four phases in an alliance dissolution?

Going Public

The second phase in an alliance dissolution

Going public

A disadvantage of acquisitions is

High Development Costs

is a way to reach overseas customers by exporting through domestic-based export intermediaries.

Indirect Exports

Which of the following industrial characteristics makes a collusion difficult but leads to competition?

Lack of market commonality

Which of the following types of contracts are used between exporters and importers to reduce transaction risks?

Letter of Credit

A ____ is a financial contract that states that the importer's bank will pay a specific sum of money to the exporter upon delivery of the merchandise.

Letter of credit

In a manufacturing industry, _____ refers to firm A's agreement to give firm B the rights to use A's proprietary technology (such as a patent) or trademark (such as a corporate logo) for a royalty fee paid to A by B.

Licensing

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

Licensing

The act of setting prices below cost to eliminate rivals while intending to raise them in the long run to make up for the initial losses is known as

Predatory Pricing

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

Protection of Know-How

Which of the following occurs in the uncoupling stage of an alliance dissolution?

Reconciliation

is defined as the extent to which a given competitor possesses strategic endowment comparable, in terms of both type and amount, to those of the focal firm.

Resource Similarity

A price leader is a firm that ____ in the industry.

Sets acceptable prices

Model of internationalization that portrays the slow step-by step process an SME must go through to internationalize its business is referred to as the

Stage Model

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

The Stage Model

The country-of-origin effect refers to

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

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

Antitrust policies aim to balance efficiency and fairness in trade.

True

Cartel is an output- and price-fixing entity involving multiple competitors.

True

Cartels are often labeled as anticompetitive and outlawed by antitrust laws.

True

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

True

Combining resource similarity and market commonality helps yield a framework of competitor analysis for any pair of rivals.

True

Competitive dynamics are the actions and responses undertaken by competing firms.

True

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

True

Entrepreneurial firms can internationalize while staying in domestic markets through indirect exports.

True

Formal institutions governing domestic competition are broadly guided by competition policy.

True

Franchising is a type of internationalizing business model

True

Franchising is a type of internationalizing business model.

True

Greenfield operations and acquisitions have complete equity and operational control.

True

Indirect export is one of the strategies used by entrepreneurial SMEs to internationalize without leaving their home country.

True

Managers involved in alliances require collaborative relationship skills.

True

Prisoners' dilemma is a type of game in which the outcome depends on two parties deciding whether to cooperate or to defect.

True

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

True

The International Trade Administration investigates antidumping cases in the United States.

True

The antitrust policies in the United States make it difficult for incumbents to raise entry barriers for new entrants.

True

The defender strategy centers on local assets in areas in which MNEs are weak.

True

The preemption of scarce resources is a first mover advantage.

True

The price leader in a market possesses the capacity to punish

True

The price leader in a market possesses the capacity to punish.

True

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

True

In _____, 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

Which of the following is an equity mode of entry?

Wholly Owned Sub

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

Wholly owned subside

A greenfield operation refers to

Wholly owned,new factories from office scratch

At stage 1 in the formation of an alliance, a firm must

decide whether growth can be achieved through market transactions

Co-marketing refers to

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

Dumping is defined as a

exporter selling below cost abroad

A(n) ____ is an investment in real operations as opposed to financial capital.

real option