Deck 9: Market Entry and Expansion

Question 1

Licensing increases the exposure to both government intervention and terrorism.

Answer 1

False

Question 2

The risk of participating in an international venture is substantially increased for the supplier involved in a management contract.

Answer 2

False

Question 3

Geographic closeness to foreign markets may not translate into real or perceived closeness to the foreign customers.

Answer 3

True

Question 4

The advantage of franchising is that there is no need for standardization.

Question 5

The small transaction volumes of the sogoshosha provides them with cost advantages.

Question 6

Bank participation in export trading companies was intended to allow better access to capital.

Question 7

Corporate desire for growth is a major cause for the increase in foreign direct investment.

Question 8

Full ownership by multinational firms is a prerequisite for international success.

Question 9

By raising money locally,multinationals provide the much needed boost to smaller capital markets.

Question 10

Strategic alliances are more rigid than joint ventures.

Question 11

One key concern of franchising is the protection of the total business system that a franchise offers.

Question 12

Efficiency seekers attempt to obtain the most economic sources of production.

Question 13

From a recipient-country view,franchising requires considerable outflow of foreign exchange.

Question 14

The primary outside influence on a firm's decision to go international is foreign demand.

Question 15

Proactive motivations influence firms that respond to environmental shifts by changing their activities over time.

Question 16

Profits provide the strongest proactive incentive to become involved in international marketing.

Question 17

A major cause for the increase in foreign direct investment is derived demand.

Question 18

Strategic alliances are arrangements between two or more companies with different types of business objectives.

Question 19

Nonfinancial incentives offer special funding for the investor by providing land or buildings.

Question 20

Licensing has been criticized as it lets multinational corporations capitalize on older technology.

Question 21

Which of the following refers to the lack of symmetry between growing international markets with respect to cultural variables,legal factors,and other societal norms?

A) The NIH syndrome
B) Disequilibrium
C) Psychological distance
D) Environmental imbalance

Question 22

During downturns in the domestic business cycle,markets abroad provided an ideal outlet
For high inventories.This kind of market expansion represents _____.

A) guerilla marketing
B) innate exporting
C) portfolio investment
D) safety-valve activity

Question 23

A company that starts exporting its products or services within two years of its establishment is called a(n)_____.

A) innate exporter
B) accidental exporter
C) export management company
D) trading company

Question 24

While negotiating licensing agreements,which of the following refers to the costs incurred in the foreclosure of other sources of profit,such as exports or direct investment?

A) Opportunity costs
B) Transfer costs
C) R&D costs
D) Sunk costs

Question 25

_____ permits use of the names or logos of designers,literary characters,sports teams,and movie stars on merchandise such as clothing.

A) Copyright licensing
B) Trademark licensing
C) Patent licensing
D) Utility licensing

Question 26

Under a _____ agreement,one firm permits another to use its intellectual property in exchange for royalty.

A) personal contract purchase
B) franchising
C) hire purchase
D) licensing

Question 27

Which of the following is true about franchising?

A) From a government perspective, franchising replaces exports and export jobs.
B) From a recipient-country view, franchising requires substantial outflow of foreign exchange.
C) Typically, there is no need for standardization in franchising.
D) A key concern of franchising is the issue of selection and training of franchisees.

Question 28

Which of the following costs is covered under the licensing agreement?

A) Switching costs
B) Sunk costs
C) Fixed costs
D) Transfer costs

Question 29

In small and medium-sized firms,the initial decision to go international is usually made by the president,with substantial input provided by the _____.

A) HR department
B) R&D team
C) manufacturing department
D) marketing department

Question 30

In _____,a parent company grants an independent entity the right to do business in a specified manner that includes the right to sell the parent company's products and use its name,along with its production,preparation,and marketing techniques.

A) leasing
B) a joint venture
C) hire purchasing
D) franchising

Question 31

The intervening individual or variable within the firm that initiates change and shepherds it through to implementation is referred to as a _____.

A) dodger
B) change agent
C) resource seeker
D) contender

Question 32

The strongest proactive incentive to become involved in international marketing is _____.

A) to avoid taxation
B) to control overproduction
C) the profit advantage
D) creation of excess capacity

Question 33

Which of the following is true about export management companies (EMCs)?

A) Generally, most EMCs are large.
B) The mode of operations of EMCs is constant for every client.
C) The use of EMCs is a major channel commitment for the manufacturer.
D) EMCs are multinationals involved in foreign investments.

Question 34

A firm with excess capacity assigns all fixed costs to domestic production.For the international markets,the firm uses a pricing scheme that focuses mainly on variable costs.This strategy allows the firm to offer its products abroad at a cost lower than at home.The firm in question could be accused of _____.

A) guerilla marketing
B) dumping
C) price skimming
D) limit pricing

Question 35

Historically,a firm with a competitive edge could count on being the sole supplier to international markets for years to come.However,this advantage has shrunk dramatically because _____.

A) of competing technologies and imitation due to insufficient protection of intellectual property rights
B) it is becoming increasingly difficult to gain knowledge about foreign customers, marketplaces, or market situations
C) globalization and the Internet do not allow the existence of a "first firm"
D) most countries do not allow established big firms to enter their market

Question 36

The primary external influence on a firm's decision to go international is _____.

A) increasing competition at the international level
B) management's gamble on a new market segment
C) government mandate requiring the firm to do so
D) foreign demand for a particular product or service

Question 37

Which of the following is an internal change agent associated with the internationalization process?

A) Demand
B) Competition
C) Governmental activities
D) New management

Question 38

_____ are domestic firms that perform international marketing services as commissioned representatives or as distributors for several other firms.

A) Sogoshoshas
B) Innate exporters
C) Export management companies
D) Shell corporations

Question 39

Which of the following is a key impediment to international franchising?

A) The protection of the total business system that a franchise offers
B) The franchisee's concern about increased risks upon implementing a proven concept
C) Increased outflow of foreign exchange from recipient nations
D) The government's concern regarding replacement of export jobs

Question 40

Which of the following is a proactive motivation to go international?

A) Competitive pressures
B) Unique products
C) Overproduction
D) Excess capacity

Question 41

Which of the following types of incentives consist of special depreciation allowances,tax credits or rebates,special deductions for capital expenditures,tax holidays,and other reductions of the tax burden on the investor?

A) Financial incentives
B) Fiscal incentives
C) Nonfiscal incentives
D) Nonfinancial incentives

Question 42

A major concern for governments about full ownership by multinational firms is profit _____,which is the transfer of profits from the new foreign market back to the domestic country.

A) repatriation
B) sharing
C) abolition
D) disbursement

Question 43

Which of the following observations is true of a management contract?

A) For the supplier, the risk of participating in an international venture is substantially increased.
B) The supplier will be unable to exercise any amount of operational control.
C) For the client, expertise that is built up is provided.
D) For the client, organizational skills that are not available locally can be provided.

Question 44

What is the difference between proactive and reactive motivators that spur a company to go international?

Question 45

One special form of joint ventures consists of _____,which are arrangements between two or more companies with a common business objective.

A) wholly owned subsidiaries
B) strategic alliances
C) franchises
D) reverse mergers

Question 46

The United Nations defines _____ as "enterprises which own or control production or service facilities outside the country in which they are based."

A) trading companies
B) multinational corporations
C) shell corporations
D) export management companies

Question 47

Multinational firms are accused of causing _____,when they deprive domestic firms of talent by employing the brightest locals and moving them to another country.

A) a brain drain
B) cross-subsidization
C) NIH syndrome
D) profit repatriation

Question 48

_____ incentives are specific tax measures designed to attract the foreign investor.

A) Financial
B) Fiscal
C) Nonfiscal
D) Nonfinancial

Question 49

The collaboration of two or more organizations for more than a transitory period to share assets,risks,and profits is referred to as a(n)_____.

A) sole proprietorship
B) acquisition
C) portfolio investment
D) joint venture

Question 50

_____ incentives consist of guaranteed government purchases; special protection from competition through tariffs,import quotas,and local content requirements; and investments in infrastructure facilities.

A) Financial
B) Fiscal
C) Nonfiscal
D) Nonfinancial

Question 51

_____ demand is said to occur when large multinational firms who would like to maintain their established business relationships,encourage their suppliers to follow them abroad.

A) Derived
B) Overfull
C) Latent
D) Irregular

Question 52

Which of the following is a major deterrent to full ownership of FDI?

A) Profitability
B) Product differentiation
C) Market instability
D) Competition

Question 53

_____ incentives offer special funding for the investor by providing land or buildings,loans,loan guarantees,or wage subsidies.

A) Financial
B) Fiscal
C) Nonfiscal
D) Nonfinancial

Question 54

Describe three types of ownership in foreign direct investment.

Question 55

Which of the following best describes portfolio investment?

A) It refers to direct investment in foreign entities.
B) It is the purchase of a manufacturing plant in a foreign market.
C) It is the outright purchase of a competing company.
D) It focuses on the purchase of stocks and bonds internationally.

Question 56

Which of the following is the negative effect of foreign direct investments by multinational companies?

A) Lower wage rates compared to the average domestically oriented firms
B) Economic instability in the host countries
C) Decrease in the number of jobs in the host countries
D) Entry of imports on an ongoing basis

Question 57

List and describe the key corporate export stages.

Question 58

In a _____,the supplier brings together a package of skills that will provide an integrated service to the client without incurring the risk and benefit of ownership.

A) joint venture
B) full ownership mechanism
C) management contract
D) portfolio investment