pop quiz overall

Comprehensive Alliance

- arises when participating firms agree to perform together multiple stages of the process by which goods or services are brought to the market - involves all functions - typically organized as JV's - broad scope

Functional Alliance

- involves a single functional area of business - do not often take the form of a JV - narrow scope

3 Methods of Joint Venture Management

1) Founding firms may jointly share management, each appointing key personnel who report back to officers of the parent. 2) One parent may assume primary responsibility. 3) An independent team of managers may be hired to run it (most often preferred because managers focus on best interests of JV)

There are three approaches to managing a JV: 1) Founding firms share management jointly 2) One founder takes primary responsibility 3) An independent team manages the JV Which approach is most often preferred, and why?

3, because the independent team is focused on the success of the JV rather than its parents

Which two countries form the political and geostrategic core of MERCOSUR?

Argentina and Brazil

Burger King has established a franchise agreement with an individual in Tokyo. Burger King will most likely provide the Japanese franchisee with all of the following EXCEPT ________.

financial capital

Production Alliance

functional alliance in which two or more firms each manufacture products or provide services in a shared or common facility

Marketing Alliance

functional alliance in which two or more firms share marketing services or expertise

Financial Alliance

functional alliance of firms that want to reduce the financial risks associated with a project

Under the GATT, if the U.S. lowered its tariffs to Country X, a developing country, but required the normal tariff for all other countries, the U.S. was most likely using the ________.

generalized system of preferences

To evaluate market potential, you would use data on all of the following EXCEPT

government elections

R&D Alliance

partners agree to undertake joint research to develop new products or services - not often formed as a JV because scientific knowledge can be readily transmitted among partners through other means/cross-licensing

The highest level of economic integration is

political union

Which of the following is NOT a potential advantage of a strategic alliance?

possible loss of autonomy

What type of venture did Gulf Canada and the government of the Ivory Coast enter into when they combined to explore and develop prospective oil fields in its coastal waters?

public-private venture

Forms of Ownership

public-private venture joint venture limited partnership

Delegated Arrangement

reserved for JVs, the partners agree not to get involved in ongoing operations and so delegate management control to the executives of the JV itself - managers have real authority/autonomy

According to the UNCTAD World Investment report, the majority of greenfield FDI projects are in the ____ sector.

services

Boeing collaborated in a strategic alliance with Siemens in the development and production of energy solutions for the U.S. military to take advantage of Siemens' technology. What benefit of strategic alliances was Boeing most likely seeking?

shared knowledge

Boeing collaborated in a strategic alliance with Fuji, Mitsubishi, and Kawasaki in the development and production of the Boeing 777 to minimize Boeing's financial exposure. What benefit of strategic alliances was Boeing seeking?

shared risk

Executives at Bantam Bicycles realize that the firm lacks the necessary internal resources to compete internationally. Which of the following would most likely enable Bantam to compete in the global market?

strategic alliance

Which of the following is/are characteristic/s of international franchises?

All of these: They use established products and systems They often have some flexibility to meet local tastes They are relatively low-cost and low-risk

All of the following are steps in assessing alternative foreign markets EXCEPT

Analyze CEO preferences

All of the following are disadvantages of joining the Eurozone EXCEPT

Exchange-rate risks are lower for companies inside the Eurozone

Level of economic integration are (from high to low)

Political Union/Full Integration Economic Union Common Market Customs Union Free Trade Area*

Before the U.S. pulled out of the agreement, which country has notably been left out of the Trans-Pacific Partnership?

China

What are factors MNCs must consider when choosing a partner MNC?

Compatibility Nature of Potential Partner's Products or Services Relative Safeness of the Alliance Learning Potential of Alliance

Selection of Partners

Compatibility Nature of potential partner's products or services relative safeness of the alliance learning potential of an alliance

Scope of Strategic Alliances

Comprehensive Alliances Functional Alliances

When British Petroleum ships crude oil from its storage facilities in Kuwait to its Australian subsidiary, ________ has occurred.

an intracorporate transfer

A public/private joint venture works best in countries with high levels of political instability.

false

_______ can be used to determine overall potential growth and future business opportunities in a market.

Demographic data

Which African economic initiative includes 16 West African members that promote regional economic cooperation?

ECOWAS

Benefits of Strategic Alliances

Ease of Market Entry Shared Risk Shared Knowledge and Expertise Synergy and Competitive Advantage

Which country is NOT a MERCOSUR member?

Ecuador & Chile

________ is the most common form of international business activity.

Exporting

A joint venture usually takes the form of a corporation that is incorporated in one of the partners' home countries.

False

Because joint ventures are not considered separate legal entities, they generally last longer than non-joint ventures.

False

By signing a joint-license agreement, all the MNCs involved in an R&D alliance will be able to use what is developed in the new business.

False

Functional alliances occur when the MNCs agree to work together on many of the stages of the process to bring the goods or services to market.

False

Licensing tends to work well in markets where intellectual property protection is lax.

False

Most comprehensive alliances are formed as non-joint ventures.

False

Non-joint ventures are generally mores stable and last longer than a joint venture.

False

Once the euro was created, participating members increased control over their own domestic money supplies and, sometimes, fiscal policy.

False

R & D alliances are usually formed as joint ventures

False

Research suggests that strategic alliances are more likely to succeed if the skills and resources of the partners are similar.

False

The agreement venture involving Kodak, Fuji, Canon, Minolta, and Nikon for the new type of film was an example of a successful joint venture.

False

The more productive and efficient a firm is, the more likely it is to self-select into exporting; however, once a firm starts exporting, it earns lower profits and becomes less efficient than firms that do not export.

False

Which of the following has the lowest level of economic integration?

Free Trade Area*

What countries were granted the most-favored-nation status under the GATT?

GATT member countries

A(n) _____ alliance occurs when partners share the expenses of bringing a good or service to the market.

financial

________ advantages are advantages that make it desirable for a firm to produce a good/service itself rather than contract out to another firm to produce it.

Internalization

All of the following are Asia-Pacific Trade Blocs EXCEPT

MERCOSUR

Which country has benefited most from NAFTA?

Mexico

_______ are those that pull a firm into foreign markets as a result of opportunities available there.

Proactive motivations

Types of Functional Alliances

R&D Production Marketing Financial

Implementation of Strategic Alliances

Selection of Partners Forms of Ownership Joint Management Considerations

Joint Management Considerations

Shared-Management agreement Assigned arrangement Delegated agreement

Which of the following are the three arrangements that may be used to jointly managing a strategic alliance?

Shared-Management agreement Assigned arrangement Delegated agreement

To which African economic organization does South Africa belong?

Southern African Development Community

The _______ requires ______ members to limit their annual government deficits to no more than 3% of GDP.

Stability and Growth Pact; Eurozone

All of the following are African free-trade agreements EXCEPT

The African Union

Which of the following is NOT an organization that governs the EU?

The World Trade Organization

R&D (Research) consortium

This type of alliance is usually in the high technology fields where the companies band together to research and develop new products and processes with the assistance of government funding

Which of the following was an exception to the most-favored-nation status under the GATT?

Trade agreements promoting economic integration

A joint venture is a new business entity that is legally separate and distinct from its parent companies.

True

A strategy alliance is an agreement between two firms to cooperate on a venture for their mutual benefit.

True

After NAFTA was signed, bilateral trade in goods between Mexico and the U.S. increased, while bilateral trade in services between the two countries remained mostly flat.

True

Economies of scope and scale in marketing and distribution confer benefits for firms that aggressively and quickly enter numerous markets.

True

Governmental support plays a major role in the formation of R&D consortiums.

True

In a limited partnership arrangement, the managing partner assumes full financial responsibility for the venture, regardless of the amount of its own investment

True

The cross-licensing of proprietary technology is an example of a strategy alliance.

True

R&D Consortium (defined)

a confederation of organizations that band together to research and develop new products and processes for world markets

Suppose Tesla, a U.S. car manufacturer, buys a production facility in Vietnam. Which term best describes Tesla's activities?

acquisition strategy

In a(n) ______ arrangement, one partner in a JV assumes primary responsibility for running it.

assigned

Carmichael Candies, a U.S. firm, is considering the idea of entering the EU market through an international franchising agreement. What is the MAIN advantage to Carmichael if the firm chooses this entry method?

avoidance of tariffs

strategic alliance

business arrangement whereby two or more firms choose to cooperate for their mutual benefit

General Mills and Nestlé created a joint venture that fully integrated all the efforts necessary to compete against Kellogg in the European cereal market. This is an example of a(n) ________ alliance.

comprehensive

Suppose pharmaceutical companies Roche and Pfizer create a joint venture that fully integrates all efforts necessary to compete against rival GlaxoSmithKline in the Chinese pharmaceutical market. This is an example of a(n) _______ alliance.

comprehensive

When two or more firms integrate different operating procedures along the chain of development and production to bring goods and/or services to the market, a _____ alliance has been formed.

comprehensive

When two or more firms integrate different operating procedures to bring goods and/or services to the market, a _____ alliance has been formed.

comprehensive

Suppose Pentax develops a new photo editing software and negotiates agreements with a Vietnamese manufacturer to assemble most Pentax cameras. Which entry mode for international business is Pentax utilizing?

contract manufacturing

In this type of strategic alliance, the partners agree not to get involved in ongoing operations and so delegate management control to the executives of the joint venture itself.

delegated arrangement

Shared-Management Agreement

each partner fully and actively participates in managing the alliance - requires high coordination, near-perfect agreement between partners, managers have limited authority - most difficult to maintain - most prone to conflict among partners

In a(n) ________ members eliminate internal trade barriers, adopt a common external policy toward nonmembers, eliminate barriers to the movement of the factors of production, and coordinate economic policies.

economic union

Which of the following is the primary pitfall MNC partners experience in a strategic alliance?

incompatibility

Pitfalls of Strategic Alliances

incompatibility of partners access to information distribution of earnings loss of autonomy changing circumstances

public-private venture (defined)

involves a partnership between a privately owned firm and government

This type of strategy alliance must have its own set of managers and board of directors to allow it a broader purpose, scope, and duration.

joint venture

When an MNC considers forming an alliance with another MNC, which of the following was not mentioned as one of the three most critical issues they will face in deciding how to manage the new business?

learning potential of an alliance

Mattel manufactures Barbie dolls. Mattel provides specifications of the dolls' size to accessories manufacturers, who make clothes, shoes, and jewelry for the dolls. The accessories maker pays a fee to Mattel to manufacture those items. What mode of entry is described in this example?

licensing

Which mode of market entry is NOT recommended in countries with weak intellectual property laws and/or lax enforcement of those laws?

licensing

A Canadian company is examining the relative wages, land-acquisition costs, and access to R&D facilities before deciding to enter a new foreign market. This means that _____ is/are particularly important to the company's choice of a mode of entry.

location advantages

All of the following are advantages of contract manufacturing EXCEPT

loss of control

Marriott International Inc., provides a small hotel in Bordeaux, France, with assistance and reservation services for an agreed period of time and price. Marriott and the hotel have a

management contract

The Japanese company Bandai and the U.S. toymaker Mattel entered into a strategic alliance. Bandai agreed to distribute Mattel products like Barbie dolls in Japan while Mattel agreed to distribute Power Rangers in Latin America. What type of alliance is this?

marketing

Most joint ventures take the form of a corporation because corporations

offer a beneficial tax structure

Assigned Arrangement

one partner assumes primary responsibility for operations of the strategic alliance - management is simplified because authority is almost autonomous with one partner

Before the WTO was created, ____ governed international trade.

the General Agreement on Tariffs and Trade

joint venture (defined)

type of strategic alliance in which two or more firms join together to create a new business entity that is legally separate and distinct from its parents, established as corporations.