Question 1

Which of the following is not one of the three steps in increasing market share, revenue, and profits?
A) Assess alternative markets.
B) Evaluate respective costs, benefits, and risks.
C) Perform a situation analysis.
D) Select market with most potential for entry or expansion.

Accepted Answer

Performing a situation analysis is typically a preliminary step in strategic planning, not specifically one of the three steps focused on increasing market share, revenue, and profits.

Question 2

All of the following are potential benefits of entering a new market except ________.
A) eliminating synergy with other operations
B) lowering manufacturing costs
C) limiting competitors' profits
D) gaining new technology

Accepted Answer

Eliminating synergy with other operations is not a potential benefit of entering a new market. In fact, it may lead to higher costs of doing business due to the lack of synergy and economies of scale. On the other hand, entering a new market can offer benefits such as gaining new technology, limiting competitors' profits, and potentially lowering manufacturing costs.

Question 3

Which of the following is not a mode of entry into foreign markets?
A) exporting
B) importing
C) international licensing
D) greenfield strategy

Accepted Answer

Importing is not a mode of entry into foreign markets but rather a way of sourcing goods or services from foreign suppliers to the domestic market. The other three options, exporting, international licensing, and greenfield strategy, are all viable ways to enter foreign markets.

Question 4

According to the eclectic theory, all of the following should be considered when choosing a mode of entry EXCEPT ________.
A) ownership advantages
B) location advantages
C) financial control advantages
D) internalization advantages

Accepted Answer

The eclectic theory considers ownership advantages, location advantages, and internalization advantages when choosing a mode of entry. However, financial control advantages are not typically included in the analysis.

Question 5

Executives at KBH Enterprises are considering the idea of entering the Taiwanese market through a licensing agreement. Which of the following factors is LEAST relevant to the firm's assessment of the Taiwanese market?
A) current size of market
B) potential size of market
C) foreign exchange in market
D) legal and political environment in market

Accepted Answer

While foreign exchange rates are certainly important to consider when entering a new market, they are generally not as critical or relevant as the other factors listed. The current and potential size of the market, as well as the legal and political environment, are typically much more significant considerations when making strategic decisions about market entry.

Question 6

Toyota's efficient manufacturing techniques and reputation for producing high-quality automobiles are examples of ________.
A) location advantages
B) ownership advantages
C) internalization advantages
D) internationalization advantages

Accepted Answer

Toyota's efficient manufacturing techniques and reputation for producing high-quality automobiles are examples of ownership advantages. Ownership advantages are unique strengths of a company, such as proprietary technology or specialized knowledge, that give it an edge in the global marketplace. In the case of Toyota, its manufacturing techniques and reputation for quality are highly valued by consumers worldwide and contribute to its success in international markets.

Question 7

________ are those factors that affect the desirability of host country production relative to home country production.
A) Ownership advantages
B) Location advantages
C) National competitive advantages
D) Internalization advantages

Accepted Answer

Location advantages refer to the factors that make a particular location more desirable for production compared to other locations, such as availability of resources, labor, infrastructure, and proximity to markets. Ownership advantages refer to firm-specific advantages such as technology, brand, or managerial expertise. National competitive advantages refer to advantages that a country possesses in a particular industry or product category. Internalization advantages refer to the benefits of owning and controlling the production process instead of outsourcing or licensing it to a third party. While all of these factors are important for deciding on a foreign investment, location advantages are specifically related to the desirability of production in a host country relative to home country production.

Question 8

Gameware recently entered the German market. Gameware incurred significant costs associated with setting up a business operation in Frankfurt, transferring managers to Germany, and shipping equipment to the German facility. Gameware's expenses are best described as ________.
A) opportunity costs
B) setup costs
C) direct costs
D) indirect costs

Accepted Answer

The answer of Gameware recently entered the German market. Gameware...

Question 9

Which of the following is not a critical factor in assessing new market opportunities?
A) potential target markets
B) success factors
C) worldwide learning potential
D) product-market differences

Accepted Answer

Although learning potential is important, it is not a critical factor in assessing new market opportunities. The other factors listed (potential target markets, success factors, and product-market differences) are all essential in determining the viability of a new market opportunity.

Question 10

Which of the following factors is not used to assess the competitive environment in a foreign market?
A) the number of existing firms
B) the size of existing firms
C) current advertising strategies
D) relative market shares

Accepted Answer

Current advertising strategies may not necessarily be used to assess the competitive environment in a foreign market. Factors such as the number of existing firms, the size of existing firms, and their relative market shares are commonly used to assess competition.

Question 11

Delvin Pharmaceuticals, a U.S. firm, is considering the idea of entering the Japanese market. Which entry mode will Delvin most likely use?
A) exporting
B) licensing
C) turnkey
D) franchising

Accepted Answer

Licensing is a common entry mode for pharmaceutical companies due to the stringent regulations and need for local knowledge in the healthcare sector, making it a suitable choice for Delvin Pharmaceuticals to enter the Japanese market.

Question 12

Which theory listed below is useful in deciding which mode of entry to use when entering foreign markets?
A) ownership advantage theory
B) internalization theory
C) eclectic theory
D) relative factor endowments

Accepted Answer

Eclectic theory, also known as the OLI framework, considers three key factors in deciding which mode of entry to use when entering foreign markets: ownership advantages, location advantages, and internalization advantages. Ownership advantages refer to the unique advantages a company possesses, such as proprietary technology or a strong brand reputation. Location advantages refer to the benefits of conducting business in a particular country, such as access to natural resources or a favorable regulatory environment. Internalization advantages refer to the benefits of maintaining control over the production and distribution of goods and services, rather than outsourcing or licensing them to third parties. Using this framework, companies can evaluate their own strengths and weaknesses, evaluate potential target markets, and choose the most appropriate mode of entry for their needs.

Question 13

________ are those that make it desirable for a firm to produce a good or service itself rather than contracting with another firm to produce it.
A) Ownership advantages
B) National competitive advantages
C) Internalization advantages
D) Resource availabilities

Accepted Answer

Internalization advantages refer to the benefits of producing goods or services in-house instead of outsourcing to other firms. These advantages may include greater control over quality, reduced transaction costs, and the ability to leverage core competencies or unique resources.

Question 14

Gameware recently entered the German market. Gameware executives also wanted to enter the Canadian market but had to delay the entry because of limited resources. What type of costs will Gameware incur as a result of being unable to enter the Canadian market?
A) indirect costs
B) direct costs
C) opportunity costs
D) variable costs

Accepted Answer

The type of costs that Gameware will incur as a result of being unable to enter the Canadian market are opportunity costs. Opportunity costs refer to the benefits that are foregone as a result of choosing one alternative over another. In this scenario, the opportunity cost of not entering the Canadian market is the potential profits, market share, and brand recognition that could have been gained if they had entered the market.

Question 15

What is the first step in selecting a foreign market?
A) assessing market potential
B) monitoring major markets
C) evaluating host country's trade policies
D) assessing general legal and political environments

Accepted Answer

Assessing market potential is the first step in selecting a foreign market as it helps in understanding the size, growth, and accessibility of the market, which are crucial for making informed decisions.

Question 16

________ refer to expenses incurred by the firm as it enters a new foreign market.
A) Indirect costs
B) Direct costs
C) Opportunity costs
D) Variable costs

Accepted Answer

Direct costs refer to expenses that can be directly attributed to the process of entering a new foreign market, such as market research, legal fees, and travel costs. Indirect costs refer to expenses that are not directly related to the process, such as overhead costs, while opportunity costs refer to the potential benefits or profits that could have been earned if the firm had chosen an alternative course of action. Variable costs refer to expenses that vary depending on the level of production or sales.

Question 17

The informational, political, and cultural disadvantages that foreign firms face when trying to compete against local firms in the host country market are referred to as ________.
A) opportunity costs
B) liability of foreignness
C) internalization disadvantages
D) the burden of internationalization

Accepted Answer

The term used to describe the disadvantages faced by foreign firms when competing with local firms in the host country market is referred to as the liability of foreignness. This includes challenges related to access to information, understanding of local political and cultural norms, and the lack of established relationships and networks in the host country market. Options A, C, and D are not relevant to the definition of this term.

Question 18

LVMH uses all of the following entry methods in its international operations except ________.
A) acquiring small foreign firms
B) entering licensing agreements
C) establishing franchises
D) exporting products

Accepted Answer

LVMH typically does not use franchising as a method for entering international markets, as it prefers to maintain control over its luxury brand image and customer experience.

Question 19

________ are tangible or intangible resources owned by a firm which grant it a competitive advantage over its industry rivals.
A) Ownership advantages
B) Location advantages
C) Internalization advantages
D) Competitive advantages

Accepted Answer

Ownership advantages are resources that a firm owns, which can be tangible or intangible, and give it a competitive edge over its rivals in the industry.

Question 20

Objective measures of the potential for growth in an economy include all of the following except ________.
A) per capita GDP
B) ownership of private automobiles
C) energy consumption
D) impact of changes in political regime

Accepted Answer

Objective measures of economic growth potential typically include quantifiable metrics like per capita GDP, energy consumption, and ownership of private automobiles. The impact of changes in political regime is more subjective and qualitative, not a direct economic measure.

Quiz 12: Strategies for Analyzing and Entering Foreign Markets

Which of the following is not one of the three steps in increasing market share, revenue, and profits?

All of the following are potential benefits of entering a new market except ________.

Which of the following is not a mode of entry into foreign markets?

According to the eclectic theory, all of the following should be considered when choosing a mode of entry EXCEPT ________.

Executives at KBH Enterprises are considering the idea of entering the Taiwanese market through a licensing agreement. Which of the following factors is LEAST relevant to the firm's assessment of the Taiwanese market?

Toyota's efficient manufacturing techniques and reputation for producing high-quality automobiles are examples of ________.

________ are those factors that affect the desirability of host country production relative to home country production.

Gameware recently entered the German market. Gameware incurred significant costs associated with setting up a business operation in Frankfurt, transferring managers to Germany, and shipping equipment to the German facility. Gameware's expenses are best described as ________.

Which of the following is not a critical factor in assessing new market opportunities?

Which of the following factors is not used to assess the competitive environment in a foreign market?

Delvin Pharmaceuticals, a U.S. firm, is considering the idea of entering the Japanese market. Which entry mode will Delvin most likely use?

Which theory listed below is useful in deciding which mode of entry to use when entering foreign markets?

________ are those that make it desirable for a firm to produce a good or service itself rather than contracting with another firm to produce it.

Gameware recently entered the German market. Gameware executives also wanted to enter the Canadian market but had to delay the entry because of limited resources. What type of costs will Gameware incur as a result of being unable to enter the Canadian market?

What is the first step in selecting a foreign market?

________ refer to expenses incurred by the firm as it enters a new foreign market.

The informational, political, and cultural disadvantages that foreign firms face when trying to compete against local firms in the host country market are referred to as ________.

LVMH uses all of the following entry methods in its international operations except ________.

________ are tangible or intangible resources owned by a firm which grant it a competitive advantage over its industry rivals.

Objective measures of the potential for growth in an economy include all of the following except ________.