Deck 5: Growing and Internationalizing

Question 1

One downside to licensing/franchising is that the licensor/franchisor may lose control over how their technology and brand are used.

Answer 1

True

Question 2

Transaction costs are qualitatively higher in international markets.

Answer 2

True

Question 3

Development of entrepreneurship around the world depends on avoiding the impact of formal institutions that govern how entrepreneurs start up new ventures.

Answer 3

False

Question 4

As a general rule, entrepreneurs' previous international experience differentiates rapid internationalization from slow/no internationalization.

Question 5

Selling out can be a viable exit strategy.

Question 6

FDI lowers firm performance more than other forms of entry over the long term).

Question 7

There are no hard and fast rules on whether entrepreneurial firms should internationalize rapidly or slowly.

Question 8

Purchasing established local firms is the fastest route to establishing a presence in a foreign market.

Question 9

Children from wealthy families are less likely to start new businesses.

Question 10

Entrepreneurship is not the exclusive domain of small, young firms.

Question 11

It is much easier for entrepreneurs to walk away from debts incurred in failed/bankrupt ventures in Germany and Japan than in the United States.

Question 12

Compared to underdeveloped countries, governments in developed economies impose more procedures and a higher total cost for new start-ups.

Question 13

The numerous differences in formal institutions and informal cultures/norms are not barriers to internationalization.

Question 14

There are striking differences in government regulations concerning start-ups.

Question 15

Indirect exporting can be achieved through trading companies.

Question 16

Direct exporting involves selling products made in domestic market to customers in foreign markets.

Question 17

Neither large nor small firms decide not to internationalize because of high transactions costs.

Question 18

Most scholars now agree that entrepreneurship is a result of both nature and nurture.

Question 19

The personal traits of entrepreneurs have been the primary motivating force in China and Southeast Asia, not the environments that set formal and informal rules.

Question 20

Innovative, proactive and risk-seeking behavior crosses national borders.

Question 21

Which best describes entrepreneurs?
a. Those who identify and exploit previously unexplored opportunities.
b. Founders and owners of new businesses.
c. Managers of small existing firms i.e. those with fewer than 500 employees).
d. All of the above.
e. None of the above.

Question 22

Harsh bankruptcy laws become exit barriers but not significant barriers to entry.

Question 23

Which of the following would be least likely to enhance the credibility of a SME?
a. Specialize in standardized commodities such as books and airline tickets.
b. Use E-commerce sites.
c. Deal in products in which quality is an issue with consumers.
d. Form strategic alliances with larger firms.
e. Willingness to take ownership of intermediated goods and services.

Question 24

Entrepreneurs and their firms are engines of the creative destruction process.

Question 25

Personal traits of entrepreneurs are no different than non-entrepreneurs.

Question 26

To achieve success, entrepreneurial resources must be:
a. Of low value so as to reduce cost.
b. Common.
c. Non-core competencies that are hard to imitate.
d. Organizationally embedded.
e. All of the above.

Question 27

Behavior of entrepreneurs differs from non-entrepreneurs.

Question 28

Suppose you are an SME with limited financial resources. In view of that, your best choice for entering foreign markets would be:
a. Foreign direct investment.
b. Licensing or franchising.
c. Direct exporting.
d. None of the above.
e. Any of the above.

Question 29

Exporting only after receiving unsolicited foreign inquiries is best described as:
a. Direct exporting.
b. Indirect exporting.
c. Passive or sporadic exporting.
d. Inactive exporting.
e. None of the above.

Question 30

Indirect, subtle attacks that large rivals may not immediately recognize as competitive challenges are hallmarks of which of the following five entrepreneurial strategies?
a. Growth.
b. Innovation.
c. Network.
d. Financing and Governance.
e. Harvest and Exit.

Question 31

One general conclusion that we can reach regarding entrepreneurship is that:
a. Regulatory burdens on new start-ups are much easier in poorer countries.
b. The less entrepreneur-friendly a country's formal institutional requirements are the more likely entrepreneurship will contribute to economic development.
c. Informal institutions do not affect entrepreneurships.
d. Individualistic and low uncertainty-avoidance societies tend to foster relatively more entrepreneurship.
e. Collectivistic societies may result in relatively higher levels of entrepreneurship.

Question 32

In recent years, the country with the least number of bankruptcies was:
a. Japan.
b. France.
c. Great Britain.
d. Germany.
e. The United States.

Question 33

Cautions that should be acknowledged by entrepreneurs is that it may be difficult to:
a. Predict consumer preferences.
b. Effectively price innovative products/services.
c. Build sufficient capacity.
d. All of the above.
e. None of the above.

Question 34

Which of the following are NOT true in regards to small and medium-sized enterprises SMEs).
a. They create approximately 50% of total value added in the world.
b. They generate 60-90% of employment, depending on where they are located.
c. Each year 4-6% of adult working population in North America, Western Europe, Central and Eastern Europe attempt to start a new venture.
d. Around the world, a majority of entrepreneurial firms including 60% of start-ups in the US) succeed within 6 years.
e. Entrepreneurship is not the exclusive domain of small, young firms.

Question 35

Which of the following is NOT an example of one of the five entrepreneurial strategies?
a. Use speed and stealth to disrupt and pre-empt competitors.
b. Emphasize analysis over action.
c. Less novel, but substantially new ways of doing business can also be innovative.
d. Centrally located network positions are most helpful.
e. Selling an equity stake to outside investors.

Question 36

A potential benefit of an initial public offering IPO):
a. Can increase firm's financial stability.
b. Focus on short-term results.
c. Fiduciary duty.
d. Entrepreneurs' freedom of action.
e. Increased scrutiny by stakeholder groups.

Question 37

In a manufacturing setting, the purchase of the right to use another firm's proprietary technology is referred to as:
a. Direct exporting.
b. Licensing.
c. Franchising.
d. Exporting.
e. Importing.

Question 38

One problem for failed entrepreneurs is that many will not acknowledge failure and thus avoid exiting the business despite escalating losses.

Question 39

Which would tend to result in a greater level of entrepreneurship?
a. Fewer numbers of incumbents.
b. Capital-intensive industries.
c. Weak bargaining power of suppliers.
d. Ability to reduce the bargaining power of buyers.
e. Lack of threat to incumbents from substitute products/ and services.

Question 40

Which of the following is true regarding internationalizing firms?
a. Only large MNEs are able to internationalize successfully.
b. SMEs do not operate solely in domestic markets.
c. Start-ups are unable to do business in foreign markets from the very beginning - they cannot be "born global."
d. Transaction costs do not prevent large firms from internationalizing.
e. Opportunism is easy to detect and remedy in international markets.

Question 41

"Greenfield ventures" are:
a. Examples of international grain corporations.
b. Environmentally friendly MNEs.
c. Wholly owned subsidiaries that are built from scratch in a foreign country.
d. Irrigation projects in areas stricken by famine.
e. Joint ventures in agriculture between governments and private firms.

Question 42

Which of the following traits would tend to prevent entrepreneurs from establishing new firms?
a. Strong desire for achievement.
b. Strong locus of control.
c. Willingness to take risks and tolerate ambiguity.
d. The tendency to be a serial entrepreneur.
e. None of the above.

Question 43

Suppose you are convinced that you have a product/service that has a huge overseas potential but your funds are very limited and you do not wish to seek partners, investors, or creditors to exploit the opportunity. What can you do?

Question 44

Suppose you have formed a company that is pursuing a product or service that is the current hot fad among investors and it appears that you could quickly enhance your personal wealth as well as quickly provide funds for your company through an IPO. It seems like an awesome opportunity. However, why might you wish to turn it down?

Question 45

How many people have you known who established an SME because he/she wanted to "be his/her own boss?" How many of them actually worked more hours and had less vacation time than if they worked for someone else? How many had to make sacrifices for at least the first few years in terms of income and time with their family as compared to what their situation would likely have been otherwise? What appears to have motivated them? If you have not known anyone like that, what do you think would drive otherwise rational people to "become their own boss?"

Question 46

Which of the following involves the most complexity?
a. Direct exporting.
b. Direct importing.
c. Direct investment.
d. Licensing.
e. Franchising.

Question 47

Which normally provides the most control over technology and brand?
a. Direct investment.
b. Licensing.
c. Franchising.
d. B and C above.
e. There is no difference in any of the above.

Question 48

Which of the following best describes Foreign Direct Investment FDI)?
a. Avoiding the use of financial intermediaries such as brokers.
b. Firm invests directly in production or service activities in another country.
c. Traveling to a country to invest instead of using the Internet.
d. Citizens of a foreign country invest in their own country with their own resources.
e. The use of cash instead of credit.

Question 49

Innovation is at the heart of an entrepreneurial mindset and important to success. However, what if a person does not tend to be creative? Should that person not consider forming an SME? Are there approaches that one can follow which will likely enable such a person to be more innovative than would otherwise have been the case?

Question 50

What were the four implications for action by the savvy entrepreneur listed in the text? Which is the most important for the entrepreneur? Which is the easiest and fastest for that person to implement?