Deck 8: International Market Selection and Entry

Question 1

Overseas markets can be entered using either a concentrated or diversified approach.

Answer 1

True

Question 2

Which of the following is NOT a component of the five-stage overseas market selection process?

A) market responsiveness
B) characteristics of the market
C) domestic regulations and management preferences
D) competitive environment
E) initial entry assessment

Answer 2

B

Question 3

To determine which remaining international markets are not large enough to justify the marketing effort that will be necessary to gain a satisfactory market share, which of the following are relevant?

A) domestic and other foreign competition
B) market share potential
C) high entry costs
D) insufficient demand
E) all of the above

Answer 3

E

Question 4

In the screening process for market selection, Austrade compared the attractiveness of the international market with the competitiveness of the Australian firm. Which of the following does NOT specifically relate to the Australian firm?

A) legislative and sociopolitical conditions
B) technology attributes
C) marketing characteristic technology attributes
D) management characteristics
E) production-related attributes

Question 5

Proxy and multiple factor indices refer to the available information in the product market. If it is unavailable, the organisation can:

A) concentrate on the movement of the product in line with the organisation's plan.
B) ignore the process.
C) wait until the information is available.
D) choose another easier market to assess.
E) estimate likely demand for the product demand patterns for similar products.

Question 6

Due to differing governments and laws, the basic variable in overseas market selection is the nation state.

Question 7

Grouping countries on the basis of macroeconomic potential will ensure market potential.

Question 8

Market entry selection should balance the firm's strategic orientation with the characteristics of the market.

Question 9

Preliminary market screening involves:

A) filtering markets through a succession of criteria.
B) examining the match between market opportunities and company strengths.
C) looking at countries in terms of the risk in the business environment.
D) all of the above.
E) options A and B only.

Question 10

When deciding on market selection, there are two main approaches a firm can consider. One of those is incremental versus simultaneous. The other is:

A) concentrated versus diversified.
B) high commitment versus low commitment.
C) staged versus contingency.
D) international versus global.
E) multi-domestic versus global.

Question 11

By stage 3 of the screening process only about ________% of world markets remain.

A) 30
B) 50
C) 25
D) 40
E) 45

Question 12

E-business firms are more likely to enter markets that are culturally similar rather than traditional firms.

Question 13

When assessing the competitive environment in international markets, the more expensive and time-consuming elements of evaluation should be applied when evaluating all potential targeted countries.

Question 14

The fifth stage of the screening process involves ________ markets because of ________ trade-offs.

A) expanding, internal
B) eliminating, internal
C) eliminating, external
D) expanding, internal
E) none of the above

Question 15

With increasingly sophisticated e-marketing tools, market selection is increasingly influenced by:

A) geographic location.
B) national or political boundaries.
C) the greater number of intermediaries now available.
D) the technological infrastructure around internet access.
E) all of the above.

Question 16

In 1990, the Australian Trade Commission (Austrade) developed a market screening approach to help Australian firms select individual overseas markets where they would have a strong chance of success. The approach compared:

A) the prior business growth in the overseas market with the competencies and capabilities of the Australian firm.
B) the overall attractiveness of the overseas market with the competitiveness of the Australian firm.
C) the level of competitive rivalry in the overseas market with the Australian firm's level of competitiveness in its domestic market.
D) the political, economic, social and technological environments of the overseas market with those of the Australian market.
E) none of the above.

Question 17

A marketing firm's choice of an overseas market may influence some of its other business activities, particularly in areas such as:

A) security of intellectual property.
B) physical risk to the firm's personnel.
C) profitability.
D) all of the above.
E) options B and C only.

Question 18

It is increasingly likely that for an experienced firm, international market selection will be influenced by:

A) strategic objectives, such as establishing a competitive position.
B) cultural and ethnic similarities.
C) geographic boundaries.
D) all of the above.
E) options A and B only.

Question 19

List and describe the major exporting and manufacturing modes of entering foreign markets

Question 20

Within the screening process there is a point when consumer behaviour becomes a factor in determining action by the organisation. Which of the following is NOT a driver of consumer behaviour?

A) family structure
B) religion
C) sociopolitical ideals
D) lifestyle
E) none of the above

Question 21

What is the key difference between licensing and franchising?

A) Licensing involves the payment of a fee for the use of a firm's intellectual property, whereas franchising provides the right to undertake business in a specified manner in return for a royalty payment.
B) Licensing involves the arrangements for manufacturing a firm's products, whereas franchising involves arrangements for marketing the products.
C) Licensing involves a payment for the use of a firm's intellectual property, whereas franchising deals with the operating details of how the intellectual property is used by another company.
D) Licensing involves arrangements for producing and marketing a brand, whereas franchising involves arrangements for distributing the brand.
E) There is no real difference between licensing and franchising.

Question 22

Countertrade between firms is driven by:

A) the desire to reduce transaction costs by building up reciprocity.
B) the desire for technology.
C) declining foreign exchange reserves in developing countries largely due to adverse long-term movement in the terms of trade.
D) all of the above.
E) options A and C only.

Question 23

Manufacturing-based entry is often referred to as direct financial investment (DFI).

Question 24

Using an agent that is based in the home country to get a product into a foreign market is an example of:

A) a greenfield operation.
B) direct exporting.
C) franchising.
D) indirect exporting.
E) strategic alliances.

Question 25

In the implementation of a direct exporting approach, an export agent working on behalf of a producer will sell the producer's goods in the overseas market and will receive a:

A) salary as a direct employee of the producer.
B) commission on the sale after taking ownership of the goods.
C) monthly or annual retainer without taking ownership of the goods.
D) monthly or annual retainer and take ownership of the goods.
E) commission on the sale without taking ownership of the goods.

Question 26

Which of the following is NOT a theoretical explanation underlying strategic alliances?

A) resource dependence
B) transaction costs
C) strategic behaviour
D) relationship marketing
E) none of the above

Question 27

The three basic methods of market entry to overseas markets are:

A) local-based, export-based and manufacturing-based.
B) export-based, franchise-based and manufacturing-based.
C) export-based, manufacturing-based and relationship-based.
D) indirect-based, direct-based and agent-based.
E) local-based, international-based and global-based.

Question 28

A firm that wished to enter the export industry but had limited capital with which to do this would be best to use which of the following methods?

A) indirect exporting
B) franchising
C) licensing
D) direct exporting
E) establishing a sales office in the international market

Question 29

Indirect exporting can include:

A) franchising.
B) cooperative exporting.
C) piggybacking.
D) licensing.
E) options B and C only.

Question 30

A greenfield operation occurs where a firm decides to build its own manufacturing plant overseas using its own funds.

Question 31

When a group of organisations get together to pool information about resources and common features this is referred to as a:

A) consortia.
B) joint venture.
C) greenfield operation.
D) strategic alliance.
E) all of the above.

Question 32

Internal drivers of strategic alliances are reflected in the value chain. With these drivers, the strategic linkages in the chain can be:

A) advantageous and beneficial.
B) vertical or horizontal.
C) horizontal or advantageous.
D) competitive and disadvantaged.
E) options A and B only.

Question 33

Domestic buyers that buy on behalf of firms in overseas markets are known as:

A) export merchants.
B) brokers.
C) export commission houses.
D) manufacturers' export agents.
E) confirming houses.

Question 34

In international marketing, the use of countertrade is usually regarded as an example of ________-based market entry:

A) export
B) government
C) franchise
D) relationship
E) network

Question 35

The acquisition method of market entry is an approach that is generally adopted by small and medium-sized firms, particularly where there is limited competition in the overseas market.

Question 36

Strategic alliances are most likely to be formed when organisations can see that there will be a mutual benefit. Factors driving this move are that firms are:

A) moving into new markets.
B) developing new ideas.
C) filling knowledge gaps.
D) all of the above.
E) options A and C only.

Question 37

Due to increasingly sophisticated e-marketing tools, a cyber-marketplace has developed around internet access and consumption needs.

Question 38

Collaborative arrangements between firms that are aimed at exchanging or sharing some value-creating business activities are generally referred to as:

A) strategic alliances.
B) countertrade.
C) operational networks.
D) mergers or acquisitions.
E) franchising arrangements.

Question 39

Although licensing involves a minimal commitment of resources by the exporter, this market entry approach delivers only a limited return, especially where the authorised licensee does not fully develop the potential that the market has to offer.

Question 40

With indirect exporting, the firm itself contacts the potential consumers overseas and either sells direct to the end user in the target market, or appoints an overseas agent to act as a distributor for their products in that market.

Question 41

List additional factors that need to be weighed when considering decisions requiring foreign direct investment (FDI).

Question 42

The OLI paradigm describes the degree to which the firm has advantages due to its ownership, location and information technology.

Question 43

The OLI paradigm describes the degree to which the firm has advantages due to its:

A) ownership, location and internalisation.
B) openness, location and internationalisation.
C) ownership, licensing and import potential.
D) ownership, location and innovation.
E) openness, location and innovation.

Question 44

List the EXTERNAL factors involved in market screening that are related to the international market.

Question 45

Countertrade involves the linking of an import and an export transaction in a conditional manner. Discuss the drivers of countertrade and outline the various forms it can follow.

Question 46

What factors would a firm need to take into consideration when making a move into a new market or expanding its current position?

Question 47

The strategic alliance is relationship-based and provides benefits to the participants. Discuss the five theoretical underpinnings underlying strategic alliances.

Question 48

List the INTERNAL factors for assessing the competitiveness of the Australian firm involved in the market screening process.

Question 49

According to Williamson, high-control modes of entering foreign markets should be chosen when the firm possesses transaction-specific assets.

Question 50

Australian research has found that international involvement is affected by:

A) the size of the firm.
B) excess capacity within the firm.
C) how high tech the products are.
D) the nature of the domestic market for the firm's product.
E) all of the above.

Question 51

There are a number of key factors that can influence a firm's level of success in an overseas market. These will include:

A) the level of overseas government regulation.
B) the level of domestic government regulation.
C) the extent of prior international experience of the firm's senior management.
D) all of the above.
E) options B and C only.

Question 52

Firms form strategic alliances to defray cost and minimise risk.

Question 53

Name the five stages of the progressive screening of the overseas market selection process.

Question 54

Countertrade is more likely to be a condition of business in times of economic downturn.

Question 55

Environmentalism is an indirect trade barrier that is growing in importance.

Question 56

Australian government assistance concentrates on imports and to a lesser degree on joint ventures.

Question 57

The entry mode of companies that are 'born global' is often dictated by the circumstances of the industry to which they belong.

Question 58

With contract manufacturing, the exporting firm contracts the manufacture of its product to a local manufacturer in the foreign country, and it assigns responsibility for the marketing of the product to that overseas manufacturer.

Question 59

List the approaches to international market selection. Describe advantages and disadvantages of each approach.

Question 60

Cavusgil et al. developed an index of market potential and overall market attractiveness model based on eight dimensions. List and explain them. Be sure to provide the weight of each dimension according to the GlobalEdge model.