Deck 11: Entering Foreign Markets

Question 1

The idea that a country should be self-sufficient and not take part in international business is known as 'autarky'.

Answer 1

True

Question 2

An arrangement whereby a firm grants the rights to intangible property to another entity for a specified time period in exchange for payment is an exporting agreement.

Answer 2

False

Question 3

Under a cross-licensing agreement,a firm might license some valuable intangible property to a foreign partner,but in addition to a royalty payment,the firm might also request that the foreign partner license some of its valuable know-how to the firm.

Answer 3

True

Question 4

The optimal entry mode for firms depends to some degree on the nature of their core competencies.A distinction can be drawn between firms whose core competency is in technological know-how and those whose core competency is in management _______.

A)skills
B)experience
C)know-how
D)empathy

Question 5

One of the main drawbacks for the international _______ is the repatriation of profits to the host-country _________.

A)franchisee;franchisor
B)exporter;importer
C)manufacturer;agent
D)licensee;licensor

Question 6

Turnkey projects are most common in the chemical,pharmaceutical,petroleum-refining and metal-refining industries.

Question 7

The distinct disadvantages of ____________are the high development costs and risks.

A)wholly owned subsidiary ventures
B)contract manufacturing arrangements
C)strategic alliance structures
D)franchising businesses

Question 8

Franchising is basically a specialised form of licensing in which the franchiser not only sells intangible property to the franchisee,but also insists that the franchisee agrees to abide by strict rules as to how it does business.

Question 9

For novice exporters,it is wise to engage an agent within the home country than deal directly with the overseas customer.

Question 10

A 'sunset' clause is an arrangement that provides for termination in what type of agreement?

A)business networks
B)wholly owned subsidiary
C)franchise
D)joint venture

Question 11

Franchising is similar to:

A)joint ventures
B)licensing.
C)strategic alliance.
D)contract manufacturing.

Question 12

The two entry strategies that have a lot of similarities in common are:

A)licensing and build-own-transfer.
B)franchising and licensing.
C)exporting and importing.
D)wholly owned subsidiary and business networks.

Question 13

A primary advantage of licensing is that the firm does not have to bear the development costs and risks associated with opening a foreign market.

Question 14

The most typical joint venture holds the following per cent ownership stake and contributes a team of managers to share operating control:

A)60/40
B)75/25
C)80/20
D)50/50

Question 15

Governments actively encourage companies to export their goods and services as exporting represents additional jobs and has a positive effect on trade balance.

Question 16

Every export is an import in the recipient country.

Question 17

Turnkey projects are most common in the following industries:

A)wholesale trade,retail trade and contract manufacturing.
B)education,finance and insurance.
C)chemical,pharmaceutical and petroleum refining.
D)agriculture,mining and construction.

Question 18

The two main advantages of exporting is first to avoid the often substantial costs of establishing manufacturing operations overseas,and second,to profit from the venture.

Question 19

A clear advantage of wholly owned subsidiary as a preferred entry mode,particularly when a firm's competitive advantage is based on technological competence,will often be because it:

A)reduces the risk of losing control over that competence.
B)benefits from the host country's competitive conditions.
C)increases control of the development costs and risks of working in a foreign market.
D)maintains control over the capital necessary to get the overseas operation going.

Question 20

General Electric has shifted away from its traditionally preferred method of entering new markets via wholly owned subsidiaries to entering new markets through ________ with local firms for reasons of lowering risk and costs.

A)strategic alliances
B)export strategies
C)joint venture strategies
D)contract manufacturing

Question 21

Exporting has two advantages: These are:

A)forging alliances partners along with sensible exporting.
B)the multiplier effect along with growth prospects.
C)contract manufacturing along with nurturing direct contacts.
D)avoiding substantial manufacturing costs along with experience curve advantages.

Question 22

The trade of goods and services for other goods and services via a whole range of barter-like agreements is called:

A)insider trading.
B)competitive bargaining.
C)countertrade.
D)marketing edge.

Question 23

For the novice small exporter,using an agent located within the home country may be the best option until the firm gains more experience.This is called:

A)indirect exporting.
B)direct exporting.
C)individual exporting.
D)discreet exporting.

Question 24

Countertrades main attraction is that it can give a firm a way to:

A)finance an export deal when other means are not available.
B)broker a deal that will help collect as much pertinent information on potential allies as possible.
C)counteract any criticism in deal-sharing arrangements.
D)get to know the potential partner well before committing to trade.

Question 25

The advantages of franchising as an entry mode are similar to that of:

A)strategic alliances.
B)turnkey projects.
C)licence agreements.
D)contract manufacturing.

Question 26

___________ is basically a specialised form of granting the rights to intangible property to another entity (the licensee)for a specified period.

A)Cooperative synergies
B)Strategic alliances
C)Licensing
D)Tactical partnerships

Question 27

One of the principal risks with turnkey projects is:

A)forging alliances partners.
B)to give control of a firm's technology to its partner(s).
C)a firm has no long-term interest in the foreign country.
D)intangible property rights.

Question 28

A firm and its subsidiaries who own 100% of its shares is regarded as:

A)risk averse.
B)a very successful firm.
C)debt free.
D)a wholly owned subsidiary.

Question 29

One of the principal risks with joint venture agreements is:

A)that they bring together the complementary skills of alliances partners.
B)to give control of a firm's technology to its partner.
C)a firm can give away more than it receives.
D)that they allow firms to share fixed costs.

Question 30

According to the textbook,the success of any type of cooperative venture is a function of three factors.These are: partner selection,alliance structure and ________________.

A)similarity in size of the alliance partners
B)geographic distance between the alliance partners
C)the manner in which the venture is managed
D)government support

Question 31

In cooperative ventures,to increase the probability of selecting a good partner,a firm should do all of the following,except:

A)collect as much pertinent,publicly available information on potential allies as possible.
B)contact the potential ally's family and friends to find out as much information as possible.
C)collect data from informed third parties.
D)get to know the potential partner as well as possible before committing to an alliance.

Question 32

Non-convertibility of currency implies that the exporter may not be paid in his or her home currency,and few exporters would desire payment in a currency that is not convertible.One solution to overcome this problem is to:

A)cross-cultural trade.
B)countenance offset trade.
C)currency hedge.
D)countertrade.

Question 33

If exporting is done well,it usually results in what is called a positive:

A)productivity element.
B)multiplier effect.
C)significant outcome.
D)reproductive capacity.

Question 34

One of the principal risks with franchising is:

A)forging alliances partners.
B)to give control of a firm's technology to its partner(s).
C)a firm must bear the full capital costs and risks of setting up overseas operations.
D)quality control.

Question 35

Skills within the firm that competitors cannot easily match or imitate are referred to as:

A)core competencies.
B)global competencies.
C)in-born skills.
D)competitive strengths.

Question 36

The wine industry in Australia is reliant on oak wood and barrels to manufacture wine.As oak is not a tree that grows in Australia in the quantities and type suitable for the Australian market,oak is therefore:

A)replaced with steel and aluminium barrels.
B)not used very much.
C)used only for expensive wines.
D)imported from New ZealanD.

Question 37

Toyota is able to produce high-quality,well-designed cars at a lower delivered cost than any other firm in the world.This is an example of:

A)a core competency.
B)an external opportunity.
C)an initial strength.
D)a comparative advantage.

Question 38

One of the principal risks with wholly owned subsidiaries is:

A)that they bring together the complementary skills of alliances partners.
B)to give control of a firm's technology to its partner.
C)a firm must bear the full capital costs and risks of setting up overseas operations.
D)that they allow firms to share fixed costs.

Question 39

In cooperative ventures,managing a venture successfully requires building interpersonal relationships between the firms' managers,or what is sometimes referred to as:

A)relational capital.
B)personal capital.
C)personality advantage.
D)relationship advantage.

Question 40

With its roots in the simple trading of goods and services for other goods and services,countertrade has evolved into a diverse set of activities that can be categorised as agreements in all but two of the following ways:

A)barter and counter-purchasing.
B)hedge and speculating.
C)offset and switch trading.
D)compensation and buyback.

Question 41

Pressures for ___________ imply that it may not be possible for a firm to realise the full benefits from experience curve and location economies.

A)government approval
B)consumer guidance
C)national recognition
D)reducing costs

Question 42

Firms that specialise in the design,construction and start-up of a project and then later hand over the ownership of plant when it is fully operational is called:

A)an alliance partnership.
B)a turnkey project.
C)a licence agreement.
D)a takeover.

Question 43

The term _________ refers to a cooperative agreement between potential or actual competitors.

A)tactical union
B)joint venture
C)political affiliation
D)economic association

Question 44

All of the following are characteristics of good allies or partners,except:

A)a good partner helps the firm achieve its strategic goals.
B)a good partner shares the firm's vision for the purpose of the alliance.
C)a good partner divulges all secrets of his organisation to you.
D)a good partner is unlikely to try to opportunistically exploit the alliance for his or her own ends.

Question 45

Which of the following is NOT an attribute of a good joint venture partner?

A)is unlikely to opportunistically exploit the venture for his or her own ends
B)shares the firm's vision for the purpose of the venture
C)must have capabilities identical to his or her partner
D)helps the firm achieve its strategic goals

Question 46

All of the following are characteristics of good allies or partners,except:

A)a good partner helps the firm achieve its strategic goals.
B)a good partner shares the firm's vision for the purpose of the alliance.
C)a good partner divulges all secrets of his organisation to you.
D)a good partner is unlikely to try to opportunistically exploit the alliance for his or her own ends.

Question 47

Implicit in the discussion of leveraging core competencies is the idea that skills are developed first _________ and then transferred _________.

A)internationally;home
B)at home;to foreign operations
C)by managers;to employees
D)by employees;to managers

Question 48

__________ agreements are one way to achieve the goal of swapping skills and technologies that each company in a strategic alliance covets,and ensuring a chance for equitable gain.

A)Joint venture
B)Sharing
C)Cross-licensing
D)Learning

Question 49

Joint venture agreements have three major advantages.These are (1)where they may facilitate trade into a foreign market, (2)allow firms to share the fixed costs and developing new products or processes,and (3):

A)a way to bring together the complementary skills and assets of the participants
B)gives competitors a low-cost route to new technology
C)a firm never gives away more than it gains by participating in an alliance
D)give competitors a low-cost route to new markets

Question 50

Acquisitions fail for all but one of the following reasons:

A)the acquiring firm often overpays for the assets of the acquired firm.
B)many acquisitions fail because there is a clash between the cultures of the acquiring and the acquired firms.
C)as they are quick to execute by buying an established firm,one party can be left 'holding the baby' if the venture sours
D)many acquisitions fail because attempts to realise synergies by integrating the operations of the acquired and acquiring entities often run into roadblocks and take much longer than forecast.