Deck 8: Market Entry and Servicing Strategies

Question 1

Some Asian trading companies act as supply chain organizers for US and European companies

Answer 1

True

Question 2

When firms lack resources, expertise and market contacts to cover world markets, they can use trading companies to gain market access

Answer 2

True

Question 3

Direct exporting is a good way to build trading expertise and contacts abroad

Answer 3

True

Question 4

Today's trading companies vary in size from small independent operations to large sophisticated trading outfits

Question 5

Japanese trading companies have accumulated significant trading expertise and can handle complex trades anywhere in the world

Question 6

Most of today's trading companies are large, sophisticated firms with contacts all over the world

Question 7

When firms have expertise in dealing with foreign customers, and in financing and shipping goods abroad, indirect exporting is appropriate

Question 8

Companies rarely or never own their own overseas franchises

Question 9

Trading companies came into being during the twentieth century

Question 10

Licensing gives companies swift access to markets but entails significant upfront investments

Question 11

Export Trading Companies and Webb-Pomerene Associations are US institutions

Question 12

Under contractual modes of market entry, a company contracts with a foreign firms to render a service to that company in a particular country or group of markets

Question 13

Export and import strategies are mainly used by small and medium-sized firms

Question 14

The internet has opened up world markets to many small and medium-sized firms

Question 15

Licensing allows a foreign-based firm to use a company's production processes, marketing logos, trademarks or brand names in specified markets for a pre-specified

Question 16

Franchising works well when firms require rapid international expansion but lack upfront capital

Question 17

The internet has facilitated international payments, international promotions, and allowed on-line ordering for many companies

Question 18

Franchising is similar to licensing but franchisers tend to exert more control over production processes and marketing strategy

Question 19

The internet has complicated cross-border communications for small firms

Question 20

International firms can control franchisers by concentrating ownership through master franchisers or diluting ownership among thousands of franchisees

Question 21

In highly competitive, saturated markets, mergers and acquisitions are usually preferred to greenfield operations

Question 22

In the negotiation of international joint ventures, technology transfers, asset valuations and divisions of management responsibilities are rarely in dispute

Question 23

International mergers and acquisitions are almost always successful

Question 24

Subcontracting of manufacturing can create future competitors and create problems in quality control

Question 25

In-market investments enable firms to learn about customers and monitor local rivals and have few other problems

Question 26

Contract manufacturing organizations have emerged as the production arms of many leading international firms

Question 27

In all international joint ventures, mutual trust and respect are usually more important than who controls the venture

Question 28

In international joint ventures, international company managers often feel that their expertise entitles them to make major important decisions

Question 29

Joint ventures occur when international companies and local firms join forces to share ownership and management responsibilities in specially created enterprises

Question 30

Management contracts are agreements to train local employees and manage foreign-based facilities but never include the building of foreign facilities

Question 31

Legal framework and political unrest are rarely problems for franchisers

Question 32

For most international joint ventures, foreign partners provide manufacturing facilities and market knowledge while local partners provide technologies, management expertise and capital

Question 33

Open and continuous communication among parent companies, and between international joint venture managers are key factors in resolving conflicts

Question 34

There are few if any disadvantages to the subcontracting of manufacturing

Question 35

Firms that subcontract their manufacturing often refocus their resources on new product development, brand-building, and supplier, distributor relationships

Question 36

International joint ventures can be easily and quickly negotiated

Question 37

In highly competitive, saturated markets, greenfield operations are usually preferred to mergers and acquisitions

Question 38

Taking manufacturing out of company supply chains does not affect parent company corporate cultures or organization

Question 39

Contract manufacturing organizations are convenient for international firms but can never match them from a cost or manufacturing expertise perspective

Question 40

International mergers and acquisitions are small proportions of total foreign direct investment totals

Question 41

When integrating functions after an acquisition, a key factors affecting potential synergies is product mix overlap

Question 42

After foreign acquisition has been made, non-integration ('stand alone') works best when the two firms have very different corporate cultures and/or operating environments

Question 43

In mergers and acquisitions, carnivore acquirers perform takeovers routinely and are experts in managing their integrations

Question 44

In selecting a manufacturing site within a country, government incentives play little or no part in the ultimate site selection

Question 45

Greenfield operations have the advantage of instant relationships with a country's suppliers and distributors

Question 46

When acquired firms are under-performing and the acquirer's management feels that the firm's strategy implementation is at fault, the first move would be to replace top management

Question 47

Greenfield investments allow firms to develop markets at their own pace, secure proprietary technologies and introduce their own brands and corporate cultures

Question 48

There are three stages to mergers and acquisition implementation: prospect evaluation, post-acquisition strategies, and assessment

Question 49

Post acquisition analyses are an essential part of M & A strategy

Question 50

In mergers and acquisitions, white hunter acquirers often go after firms that are much bigger than they are

Question 51

When integrating functions after an acquisition, few overlaps in product mixes usually means that there is lots of potential for synergies and savings

Question 52

After an acquisition, rationalizing manufacturing facilities may involve the closing of factories and worker layoffs

Question 53

After foreign acquisition has been made, non-integration ('stand alone') works best when the acquirer is vastly experienced in M & A

Question 54

After foreign acquisitions have been made, a key decision is whether to integrate the acquired firm or leave it as it is

Question 55

The aim of many mega-mergers is to build critical mass and scale economies, and usually involve companies in different regions of the world (e.g. Asia and North America).

Question 56

After foreign acquisition has been made, non-integration ('stand alone') works best when the acquired company has poor results or is otherwise under-performing

Question 57

In mergers and acquisitions, gentleman shooter acquirers target companies they feel will benefit them over the long-term, and move very quickly to acquire them, often overcoming much opposition

Question 58

Greenfield operations are when firms custom-build foreign subsidiaries according to their needs

Question 59

When acquired firms are under-performing and the acquirer's management feels that the firm's strategy is at fault, the first move would be to replace middle management

Question 60

When acquired firms are under-performing and the acquirer's management feels that the firm's strategy is at fault, the first move would be to replace top management

Question 61

In selecting a manufacturing site within a country, firms are least concerned with transportation and infrastructure facilities

Question 62

In markets with considerable competitive activity, firms are likely to rule out joint ventures, global alliances, and acquisitions

Question 63

Marketing and operating costs are heaviest when firms make investments in foreign markets via joint ventures, acquisitions or greenfield operations

Question 64

An advantage of indirect exporting is that firms learn a lot about international markets

Question 65

External factors affecting market entry strategies include corporate objectives and corporate resources

Question 66

When R & D facilities are important inputs into mainstream businesses, they tend to be located in subsidiaries with significant market sizes and product ranges

Question 67

Some firms may avoid foreign investments if they feel that proprietary manufacturing processes or quality control over final output may be compromised

Question 68

In selecting a manufacturing site within a country, consumer goods firms are more interested in skilled labor resources and raw materials than in the location of economically significant consumers

Question 69

Where companies do not have sufficient managerial or international management resources, then direct exporting or direct investments are favored market entry alternatives

Question 70

In siting R & D facilities, international firms recognize 'competence regions' that have acknowledged expertise in specific research fields and top quality researchers

Question 71

Worldwide information systems are the only way to coordinate global R & D

Question 72

Internal factors affecting market entry decisions include analyses of global industry, environmental and competitive situations

Question 73

Small and medium-sized markets are more likely to be serviced through exports or contractual agreements

Question 74

When companies lack international experience, market environment analyses become important inputs into market entry decisions

Question 75

Countries with significant market sizes and growth rates tend to merit trade or contractual agreements

Question 76

Countries with significant market sizes and growth rates tend to merit investments

Question 77

Corporate factors affecting market entry decisions include learning, market feedback, control and corporate resource needs

Question 78

Small and medium-sized markets are more likely to be serviced through greenfield investments

Question 79

Where markets are undeveloped, or show signs of economic or political instability, exporting into the market, contractual agreements or joint ventures are likely

Question 80

The optimal size for R & D laboratories is about 200-250 people