International Business Chapter 13

In international business, an advantage of being a late entrant in a foreign market is the ability to

ride on an early entrant's investments in learning and customer education

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

True

T/F In a joint venture, a firm benefits from a local partner's knowledge of the host country's competitive conditions, culture, language, political systems, and business systems

True

T/F The most typical joint venture is a 50/50 venture, in which there are two parties, each of which holds a 50 percent ownership stake and contributes a team of managers to share operating control

True

Which of the following countries presents a favorable benefit-cost-risk trade-off scenario for foreign expansion?

A country with a free market system

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

Ability to create switching costs that tie customers into one's products or services

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

Availability of fewer resources to support expansion in other desirable markets

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

Benchmark one's operations and performance against foreign multinationals

T/F A firm contemplating expansion should choose a foreign market based on an assessment of the nation's long-run profit potential

True

The liability associated with foreign expansion is greater for foreign firms that

Enter a national market early

T/F A risk-averse international firm that enters a foreign market on a small scale will increase its potential losses

False

T/F By considering advantages and disadvantages, trade-offs can often be avoided when selecting an entry mode

False

T/F Exporting, as a mode of entry into foreign markets, does not help a firm achieve experience curve and location economies

False

T/F Licensing, a mode of entry into a foreign market, gives an international firm tight control over manufacturing, marketing, and strategy that is required for realizing experience curve and location economies

False

T/F The probability of survival decreases if an international business enters a national market after several other foreign firms have already done so

False

T/F Under a cross-licensing agreement, a firm is not likely to license some valuable intangible property to a foreign partner

False

According to Christopher Bartlett and Sumantra Ghoshal, how can local companies differentiate themselves from foreign multinationals?

Focusing on market niches

Which of the following is a reasno why a relatively poor country may be an attractive target for inward investment?

Rapid economic growth

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

Setting up wholly owned subsidiaries in foreign nations to handle local marketing

In which of the following situations can an international business command higher prices for a particular product in a foreign market?

The product offers greater value to customers in that foreign market