Question 1

Chrysler granted South East Motor (a company in China)rights to produce its Grand Voyager minivan for sale in China in exchange for a fee.This is an example of a ________.
A)licensing agreement
B)bargaining school arrangement
C)technology appropriation
D)turnkey operation

Accepted Answer

This is an example of a licensing agreement, as Chrysler has granted the rights to produce and sell its product to a company in another country in exchange for a fee.

Question 2

Collaborative agreements allow companies to specialize more in those activities that best fit their competencies.

Accepted Answer

Collaborative agreements, such as strategic alliances or joint ventures, often involve dividing tasks and responsibilities between companies to maximize efficiency and effectiveness. This allows each company to focus on their core competencies and the activities they excel at, leading to increased specialization and potentially better results.

Question 3

What is the primary reason for technology licensing to take place while a product is still in the developmental stage?
A)to enable the licensor to receive some earnings in case the technology never becomes operative
B)to ensure that a product launches in various countries at about the same time
C)to gain funds to complete the development
D)to reduce transaction costs

Accepted Answer

The answer of What is the primary reason for technology...

Question 4

Which of the following is NOT one of the arguments for governments to limit foreign control of key industries?
A)Host countries don't need foreign resources such as technology and export markets for these industries.
B)History shows that home governments have used powerful foreign companies to influence policies in the countries where they operate.
C)Important decisions can be made abroad that are contrary to the country's best interest.
D)Foreign companies can find means of profiting in these industries without having to control them.

Accepted Answer

This argument is not a reason for governments to limit foreign control of key industries. In fact, it is often the case that host countries benefit from foreign resources and export markets for these industries. The other arguments given are valid reasons for governments to limit foreign control of key industries.

Question 5

Risk is an important factor for companies engaged in international business.One way a collaborative arrangement helps minimize risk when operating abroad is by ________.
A)reducing the possibility of technological appropriation
B)freeing up resources so a company can diversify into more countries
C)preventing the entry of new competitors
D)eliminating losses from exchange rate depreciation abroad

Accepted Answer

Collaborative arrangements, such as joint ventures or partnerships, allow companies to share resources and costs, thereby freeing up resources that can be used to diversify into more countries, spreading and minimizing risk.

Question 6

The more a company engages in collaborative agreements, the more it loses control over decisions and their implementation.

Accepted Answer

Collaborative agreements involve joint decision-making and shared responsibilities, which can result in a loss of direct control over certain aspects of the business.

Question 7

What is a key industry?
A)an industry that is locked up competitively by domestic producers
B)a turnkey operator specializing in the construction of infrastructure components
C)an industry that receives government subsidies
D)an industry that significantly affects the economy by virtue of its size or influence on other sectors

Accepted Answer

A key industry is one that has significant impact on the economy due to its size or influence on other sectors. This can be seen in industries such as automotive, healthcare, or technology, which are major drivers of economic growth and employment.

Question 8

Which of the following is an example of an exclusive license agreement?
A)Three licensees have worldwide rights to sell the product worldwide for three years, during which time no other companies can use the asset.
B)The licensee is currently the only company using the intangible property, but the licensor has rights to add other licensees.
C)One licensee gets rights for the north island of New Zealand, a second licensee gets rights for the south island of New Zealand, and the licensor agrees to add no new licensees to New Zealand for the next five years.
D)The licensee and licensor use the property in the same market.

Accepted Answer

An exclusive license agreement grants rights to a single licensee and prohibits the licensor from granting those same rights to others. In option C, each licensee has exclusive rights to a specific geographic area (north vs. south island) and the licensor agrees not to add any new licensees to that area for a set period of time, making it an example of an exclusive license agreement. Option A allows for multiple licensees to sell the product worldwide, making it non-exclusive. Option B allows for the licensor to add other licensees in the future, also making it non-exclusive. Option D does not specify whether the license is exclusive or non-exclusive.

Question 9

What are the various types of collaborative arrangement options available to international businesses? How can firms most effectively manage international collaborative arrangements?

Accepted Answer

The answer of What are the various types of collaborative...

Question 10

Which of the following describes a cross-licensing agreement?
A)allocation of exclusive rights to a licensee to prevent competition
B)an agreement between two or more companies not to compete in each other's home countries
C)an exchange of explicit knowledge for tacit knowledge
D)the exchange of intangible property rights between two or more companies

Accepted Answer

A cross-licensing agreement is a legal arrangement between two or more companies where they agree to share intellectual property rights, such as patents, trademarks, or copyrights. This allows each company to use the other's IP without violating any laws, thereby saving time and money on legal proceedings. Essentially, it is the exchange of intangible property rights between companies to benefit both parties involved.

Question 11

Which of the following is an argument for using a collaborative agreement?
A)to prevent problems caused by minority shareholders
B)to preserve a concentration strategy
C)to secure vertical and horizontal links
D)to maintain better control

Accepted Answer

Collaborative agreements can help secure both vertical and horizontal links between companies, allowing for increased efficiency and competitiveness. This would not necessarily be the case for the other options: A) preventing problems caused by minority shareholders could be addressed through other means, such as shareholder agreements or buyout provisions, B) preserving a concentration strategy may not require a collaborative agreement, and D) maintaining better control may actually be hindered by a collaborative agreement if decision-making power is shared among multiple parties.

Question 12

In which of the following situations would Company X most likely seek a collaborative arrangement with Company Z in which Company Z would handle work for Company X?
A)Company X has excess capacity.
B)Fixed costs for the work are high, and Company X has large volumes of work.
C)Company X is inexperienced in outsourcing work.
D)Fixed costs for the work are high, and Company X has small volumes of work.

Accepted Answer

If fixed costs for the work are high and Company X has small volumes of work, it may not be economically feasible for Company X to handle the work in-house. In this case, outsourcing to Company Z through a collaboration can be a cost-effective solution. A collaborative arrangement can help Company X to benefit from economies of scale and save on fixed costs. Excess capacity (A) or volume of work (B) are not mentioned as reasons for seeking a collaborative arrangement. Inexperience in outsourcing work (C) is not necessarily a factor as Company X could seek external advice or expertise.

Question 13

What is an equity alliance? What motives would a firm have for forming an equity alliance?

Accepted Answer

The answer of What is an equity alliance? What motives...

Question 14

What motives do businesses have for entering into collaborative arrangements? What are some of the problems associated with collaborative arrangements?

Accepted Answer

The answer of What motives do businesses have for entering...

Question 15

An advantage of collaborative agreements is the ability to spread faster geographically.

Accepted Answer

Collaborative agreements allow for multiple parties to work together towards a common goal, which can increase the speed at which the agreement is implemented and reach a wider geographic area. By working together, each party can bring their own unique resources and expertise, leading to a faster and more widespread impact.

Question 16

Coca-Cola has collaborative arrangements whereby it produces concentrate that it sells to other companies to bottle its drinks.Which of the following terms best describes this type of arrangement?
A)vertical alliance
B)horizontal alliance
C)link alliance
D)scale alliance

Accepted Answer

A vertical alliance is a collaboration between two companies in the same industry, but at different stages of the value chain. In this case, Coca-Cola produces the concentrate (an upstream activity) and sells it to other companies to bottle and distribute the drinks (downstream activities). This type of arrangement is commonly seen in the beverage industry and helps to reduce costs for both parties involved.

Question 17

In which of the following situations is a firm most likely to be able to choose the foreign operating form it would most like to use?
A)Its main motive is to gain location-specific assets.
B)It has a desired and unique resource.
C)Its preference for entering foreign markets is via acquisition of foreign facilities.
D)It has little concern about appropriability.

Accepted Answer

A firm with a desired and unique resource is in a stronger position to choose its preferred mode of foreign operation because it possesses something valuable that gives it leverage in negotiations or decisions regarding how to enter or operate in a foreign market.

Question 18

Which of the following is NOT one of the arguments for permitting foreign control of key industries?
A)Managers, whether in a foreign or local company, make decisions based on what they think is best for the company rather than based on some local socioeconomic agenda.
B)MNEs staff their organizations abroad mainly with local nationals and depend in part on their input for making decisions.
C)Foreign governments can no longer use their home-based companies to influence policies abroad.
D)The security arguments for restrictions on foreign ownership are really just a sham to protect politically powerful industries and employment.

Accepted Answer

This argument is not one of the arguments for permitting foreign control of key industries. The other three arguments are commonly used to justify foreign control of key industries.

Question 19

Dependencia theory holds that ________.
A)countries should seek to diversify their economies
B)low-income countries have practically no power in dealings with MNEs
C)in a globalized world, no nation can be independent economically or politically
D)there is a natural division of labor whereby developing countries depend on production using fairly unskilled labor and developed countries depend on highly educated workers

Accepted Answer

Dependency theory argues that low-income countries are highly dependent on more powerful, developed countries and multinational corporations for economic development and prosperity. Therefore, they have practically no power in dealings with MNEs.

Question 20

The more a company engages in international collaborative arrangements as opposed to wholly owned foreign operations, the more it is likely to ________.
A)decrease its exposure to political risk
B)increase its control over foreign operations
C)learn rapidly about foreign environments
D)protect its core assets

Accepted Answer

The more a company engages in international collaborative arrangements, the more it is likely to decrease its exposure to political risk. This is because collaborative arrangements involve sharing ownership and control with other companies, which can help to spread the risk of political instability or government interference.

Quiz 15: Direct Investment and Collaborative Strategies

Chrysler granted South East Motor (a company in China) rights to produce its Grand Voyager minivan for sale in China in exchange for a fee.This is an example of a ________.

Collaborative agreements allow companies to specialize more in those activities that best fit their competencies.

What is the primary reason for technology licensing to take place while a product is still in the developmental stage?

Which of the following is NOT one of the arguments for governments to limit foreign control of key industries?

Risk is an important factor for companies engaged in international business.One way a collaborative arrangement helps minimize risk when operating abroad is by ________.

The more a company engages in collaborative agreements, the more it loses control over decisions and their implementation.

What is a key industry?

Which of the following is an example of an exclusive license agreement?

What are the various types of collaborative arrangement options available to international businesses? How can firms most effectively manage international collaborative arrangements?

Which of the following describes a cross-licensing agreement?

Which of the following is an argument for using a collaborative agreement?

In which of the following situations would Company X most likely seek a collaborative arrangement with Company Z in which Company Z would handle work for Company X?

What is an equity alliance? What motives would a firm have for forming an equity alliance?

What motives do businesses have for entering into collaborative arrangements? What are some of the problems associated with collaborative arrangements?

An advantage of collaborative agreements is the ability to spread faster geographically.

Coca-Cola has collaborative arrangements whereby it produces concentrate that it sells to other companies to bottle its drinks.Which of the following terms best describes this type of arrangement?

In which of the following situations is a firm most likely to be able to choose the foreign operating form it would most like to use?

Which of the following is NOT one of the arguments for permitting foreign control of key industries?

Dependencia theory holds that ________.

The more a company engages in international collaborative arrangements as opposed to wholly owned foreign operations, the more it is likely to ________.