Question 1

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?

Accepted Answer

A)   Exporting
B)   Franchising
C)   Licensing
D)   Turnkey projects
E)   Cross-licensingF) B) and D)
G) C) and D)

Question 2

Which of the following is an advantage of exporting as a mode of entry into foreign markets?

Accepted Answer

A)   A firm can avoid the cost of establishing manufacturing operations in the host country.
B)   A firm does not have to bear the development costs and risks associated with opening a foreign market.
C)   A firm can earn returns from process technology skills in countries where FDI is restricted.
D)   A firm has access to local partner's knowledge.
E)   A firm has the ability to engage in global strategic coordination.F) A) and C)
G) A) and B)

Question 3

Which of the following is a disadvantage of franchising as a mode of entry into foreign markets?

Accepted Answer

A)   The franchiser has to bear development costs and risks associated with foreign expansion.
B)   Franchising leads to undesirable results for service firms.
C)   It is difficult to maintain quality control across foreign franchisees that are distant from the franchiser.
D)   The franchiser has no long-term interests in the foreign country.
E)   It forces a franchiser to take out profits from one country to support competitive attacks in another.F) A) and C)
G) B) and C)

Question 4

Large-scale entry allows an international firm to learn about a foreign market while limiting the firm's exposure to that market.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is true of the basic entry decisions a firm must make before a firm contemplates foreign expansion?

Accepted Answer

A)   The long-run economic benefits of doing business in a country are solely a function of the number of consumers in the market.
B)   The attractiveness of a country as a potential market for an international business depends on balancing the benefits, costs, and risks associated with doing business in that country.
C)   The costs and risks associated with doing business in a foreign country are typically higher in economically advanced and politically stable democratic nations.
D)   The benefit-cost-risk trade-off is likely to be most favorable in politically unstable countries.
E)   All the nation-states in the world hold the same profit potential for a firm contemplating foreign expansion.F) C) and D)
G) A) and D)

Question 6

Which of the following is an advantage of wholly owned subsidiaries as a mode of entry into foreign markets?

Accepted Answer

A)   A foreign firm is relieved of many of the costs and risks associated with opening a foreign market on its own.
B)   The risk of losing control over a firm's technological competence is reduced.
C)   A foreign firm is insulated completely from the threat posed by high transport costs.
D)   It is the most politically acceptable mode of entry into foreign markets.
E)   It helps create competition which in turn increases the quality of production.F) None of the above
G) B) and C)

Question 7

Which of the following is true of licensing as a mode of entry into foreign markets?

Accepted Answer

A)   The licensor grants the rights to tangible property to a licensee.
B)   A licensing agreement grants rights to intangible property to a licensee for an unspecified period.
C)   The licensee puts up most of the capital necessary to get the overseas operation operational.
D)   The licensor bears the development costs and risks associated with opening a foreign market.
E)   A licensing agreement allows a licensor to maintain control over its technological know-how.F) A) and D)
G) A) and B)

Question 8

Describe the advantages and disadvantages of acquisitions as a means of establishing a wholly owned subsidiary.

Accepted Answer

Acquisitions have three major points in ...

Question 9

A drawback of exporting is that tariff barriers can make it uneconomical as a mode of entry into a foreign market.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is an advantage of franchising as a mode of entry into foreign markets?

Accepted Answer

A)   The franchiser is relieved of many of the costs and risks of opening a foreign market on its own.
B)   The franchiser is allowed to take profits out of one country to support competitive attacks in another.
C)   The franchiser can easily maintain uniform quality across many geographically dispersed franchisees.
D)   Manufacturing concerns can be effectively coordinated across adjacent processes.
E)   The franchiser can support its short-term interests in a country with an unstable economy.F) A) and B)
G) C) and D)

Question 11

In terms of the various modes of entry into a foreign market,franchising is employed primarily by service firms,whereas licensing is pursued primarily by manufacturing firms.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)   create switching costs that tie customers into products or services.
B)   capture demand by establishing a strong brand name.
C)   build sales volume and ride down the experience curve before early entrants.
D)   ride on an early entrant's investments in learning and customer education.
E)   create a cost advantage over first-movers.F) A) and B)
G) B) and E)

Question 13

Which of the following is a disadvantage of franchising as a mode of entry into foreign markets?

Accepted Answer

A)   The franchiser has to bear development costs and risks associated with foreign expansion.
B)   While franchising offers an ideal entry mode for manufacturing firms, it often leads to undesirable results for service firms.
C)   Poor quality standards of a foreign franchisee can cause a decline in the franchising firm's worldwide reputation.
D)   The franchiser has no incentive to sustain a long-term interest in the foreign country.
E)   Franchising often forces a franchiser to take out profits from one country to support competitive attacks in another.F) B) and D)
G) B) and C)

Question 14

Which of the following is an advantage of acquisitions as a means of entering foreign markets?

Accepted Answer

A)   They are quick to execute and help firms to rapidly build their presence in the target foreign market.
B)   It is much easier to change the culture of an existing organization than build a new organization.
C)   It is easier to convert the operating routines of acquired units than establish routines in new subsidiaries.
D)   They give firms access to valuable intangible assets while minimizing a pileup of tangible assets.
E)   Acquired firms are often undervalued and hence assets can be purchased at minimal prices.F) All of the above
G) A) and B)

Question 15

Which of the following is a disadvantage of small-scale entry for an international firm considering foreign expansion?

Accepted Answer

A)   The possibility of escalating commitment leading to major financial losses
B)   The limited availability of resources for use in other markets
C)   The lack of flexibility associated with strategic commitments
D)   The increase in economic exposure due to minimal time spent in evaluating a foreign market
E)   The difficulty of building market share and capturing first-mover advantagesF) B) and C)
G) C) and D)

Question 16

Which of the following is the reason why small-scale entry into a foreign market makes it difficult to build market share?

Accepted Answer

A)   Small-scale entry necessitates rapid entry into a foreign market.
B)   Small-scale entry is associated with a lack of commitment demonstrated by the foreign firm.
C)   Small-scale entry leads to escalating strategic commitments.
D)   Small-scale entry requires that extra time be spent in analyzing a foreign market.
E)   Small-scale entry leads to increased exposure to a foreign market.F) A) and C)
G) B) and C)

Question 17

Which of the following is the first basic entry decision that a firm contemplating foreign expansion must make?

Accepted Answer

A)   When to enter a foreign market
B)   On what scale to enter a foreign market
C)   Which foreign markets to enter
D)   Whether to enter a market before other firms and claim first-mover advantages
E)   Whether to enter into licensing agreements or use the franchising modelF) None of the above
G) A) and E)

Question 18

Why do firms pursuing global standardization or transnational strategies tend to prefer establishing wholly owned subsidiaries?

Accepted Answer

A)   It gives firms sound knowledge of the local markets, culture, and the political environment.
B)   It helps protect competitive advantages based on technology.
C)   It allows firms to use the profits generated in one market to improve its competitive position in another market.
D)   It is the most politically accepted mode of entry into foreign markets.
E)   It has the least costs and risks associated with developing a foreign market.F) A) and D)
G) All of the above

Question 19

Jupiter Systems is a high-tech firm looking to set up operations in a foreign country to profit from its technological know-how which is its core competency.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?

Accepted Answer

A)   Wholly owned subsidiary
B)   Joint venture
C)   Franchising
D)   Licensing
E)   Turnkey projectF) C) and D)
G) A) and C)

Question 20

Which of the following is a disadvantage of wholly owned subsidiaries as a mode of entry into foreign markets?

Accepted Answer

A)   Lack of control over quality
B)   High costs and risks
C)   Problems with local marketing agents
D)   Inability to engage in global strategic coordination
E)   Lack of control over technologyF) A) and D)
G) B) and E)

Exam 13: Entering Foreign Markets

Which of the following is an advantage of franchising as a mode of entry into foreign markets?

Correct AnswerverifiedShow Answer

Which of the following is true of licensing as a mode of entry into foreign markets?

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In terms of the various modes of entry into a foreign market,franchising is employed primarily by service firms,whereas licensing is pursued primarily by manufacturing firms.

Correct AnswerverifiedShow Answer

Which of the following is a disadvantage of franchising as a mode of entry into foreign markets?

Correct AnswerverifiedShow Answer

Which of the following is a disadvantage of wholly owned subsidiaries as a mode of entry into foreign markets?

Correct AnswerverifiedShow Answer

Which of the following is an advantage of acquisitions as a means of entering foreign markets?

Correct AnswerverifiedShow Answer

Jupiter Systems is a high-tech firm looking to set up operations in a foreign country to profit from its technological know-how which is its core competency.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?

Correct AnswerverifiedShow Answer

Which of the following is an advantage of wholly owned subsidiaries as a mode of entry into foreign markets?

Correct AnswerverifiedShow Answer

Which of the following is an advantage of exporting as a mode of entry into foreign markets?

Correct AnswerverifiedShow Answer

Which of the following is the reason why small-scale entry into a foreign market makes it difficult to build market share?

Correct AnswerverifiedShow Answer

Which of the following is a disadvantage of franchising as a mode of entry into foreign markets?

Correct AnswerverifiedShow Answer

Describe the advantages and disadvantages of acquisitions as a means of establishing a wholly owned subsidiary.

Correct AnswerverifiedAcquisitions have three major points in ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is the first basic entry decision that a firm contemplating foreign expansion must make?

Correct AnswerverifiedShow Answer

A drawback of exporting is that tariff barriers can make it uneconomical as a mode of entry into a foreign market.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Why do firms pursuing global standardization or transnational strategies tend to prefer establishing wholly owned subsidiaries?

Correct AnswerverifiedShow Answer

Which of the following is true of the basic entry decisions a firm must make before a firm contemplates foreign expansion?

Correct AnswerverifiedShow Answer

Large-scale entry allows an international firm to learn about a foreign market while limiting the firm's exposure to that market.

Correct AnswerverifiedShow Answer

Which of the following is a disadvantage of small-scale entry for an international firm considering foreign expansion?

Correct AnswerverifiedShow Answer

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Acquisitions have three major points in ...
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