Question 1

McDonald's has learned the wisdom of leveraging local market knowledge by granting franchisees considerable leeway to tailor restaurant interior designs and menu offerings to suit country-specific preferences and taste.

Accepted Answer

The statement mentions that McDonald's grants franchisees considerable leeway to tailor their restaurant designs and menus to suit country-specific preferences and tastes, indicating that the company has learned the importance of leveraging local market knowledge.

Question 2

Strictly speaking, a (n)________ is an entry strategy for a single target country in which the partners share ownership of a newly created business entity.

Accepted Answer

A joint venture involves creating a new business entity with shared ownership between two or more partners. This is different from an acquisition, licensing, franchising, or exporting strategy.

Question 3

Disadvantages of joint venturing can include all of the following except:

Accepted Answer

Joint ventures allow partners to achieve synergy, which is considered an advantage, not a disadvantage. Synergy means that the combined effect of the partnership is greater than the sum of individual efforts, leading to increased efficiency, innovation, and market reach.

Question 4

Franchising in a global market is actually a market-entry strategy that is typically executed with less localization than is licensing.

Accepted Answer

Franchising typically involves the replication of a successful business model in different countries with minimal localization, while licensing tends to involve more customization to fit local market needs and regulations.

Question 5

The president of a Mexican company recently remarked, "Business in Mexico is done on a consensus basis, very genteel and sometimes slow by U.S. standards." A few months later, the Mexican company and its U.S. joint venture partner parted company. Judging by the president's remark, one important reason for the "divorce" was:

Accepted Answer

The president's remark about business in Mexico being done on a consensus basis and being genteel suggests that the cultural differences between the Mexican company and its U.S. joint venture partner played a role in their decision to part ways.

Question 6

The Russian market for imported premium vehicles is exploding as the number of households that can afford luxury products exhibit rapid growth. The luxury cars include all of the following except:

Accepted Answer

The answer of The Russian market for imported premium vehicles...

Question 7

Nike provides technical specifications to a subcontractor or local manufacturer for its products. What is this arrangement called and what are its major benefits and drawbacks?

Accepted Answer

The answer of Nike provides technical specifications to a subcontractor...

Question 8

GM executives are looking for a joint venture with AvtoVAZ, the largest carmaker in:

Accepted Answer

AvtoVAZ is the largest carmaker in Russia.

Question 9

As a general rule, the Chinese government allows foreign companies to participate in its market only if those companies agree to establish operations with local Chinese enterprises. Which market entry mode would be the appropriate choice under these circumstances?

Accepted Answer

A joint venture would be the appropriate choice as it allows a foreign company to establish operations with a local Chinese enterprise, which is a requirement imposed by the Chinese government. The joint venture would involve a partnership between the two entities, sharing risks and rewards, and would allow for a better understanding of the local market, customs, and regulations. Acquisitions and licensing may not meet the Chinese government's requirement for establishing operations in China, while exporting and franchising would not involve a partnership with a local enterprise.

Question 10

The strategy to use joint ventures has several advantages which do not include:

Accepted Answer

The answer of The strategy to use joint ventures has...

Question 11

According to the international Licensing Industry Merchandisers Association (LIMA), the United States and Canada account for about 90 percent of licensed goods sales.

Accepted Answer

According to the International Licensing Industry Merchandisers' Association (LIMA), the United States and Canada account for a significant portion, but not 90 percent, of the global licensed goods sales. The actual percentage varies but is significantly less, with other regions such as Europe, Asia, and Latin America also contributing substantially to the global market.

Question 12

In a joint venture with Russian manufacturer AvtoVAZ, GM executives were planning to have a stripped-down reengineered car based on its Opel model. However, the market research revealed that a "Made-in-Russia" car would only be acceptable if:

Accepted Answer

The market research revealed that the car would only be acceptable if it sported a very low sticker price, which is only stated in option B.

Question 13

In China, regulations require foreign franchisers to directly own two or more stores for a minimum of one year before franchising.

Accepted Answer

This requirement is known as the "two-year rule" and it applies to foreign franchisers in China. They must operate at least two company-owned stores in China for at least two years before they are allowed to franchise to Chinese partners.

Question 14

Licensing agreements offer limited market control since the licensee typically does not become involved in the licensor's marketing program.

Accepted Answer

Licensing agreements often allow the licensor to set certain conditions and standards, thereby offering them a degree of market control, including involvement in the licensee's marketing program to ensure brand consistency and reputation.

Question 15

Toyota learned many things from its partnership with GM, however American managers involved in the venture complained that:

Accepted Answer

The American managers' complaint was that Toyota did not apply its manufacturing expertise at the GM plant, indicating a perceived lack of contribution or sharing of Toyota's renowned manufacturing efficiencies and techniques in that specific joint venture.

Question 16

Ford Motor Company (United States)has a 50-50 joint venture to build Ford Fiestas with:

Accepted Answer

Ford Motor Company had a joint venture with Mahindra & Mahindra in India to build vehicles, including the Ford Fiesta, although this partnership has seen changes over time.

Question 17

Honda has invested $550 million in building an assembly plant in Greensburg, Indiana; IKEA spent nearly $2 billion to open stores in Russia; and South Korea's LG Electronics purchased a 58% stake in Zenith Electronics. All of these are examples of:

Accepted Answer

FDI (Foreign Direct Investment) refers to an investment made by a company in a foreign country, which typically involves establishing operations or acquiring assets in the foreign country. In this case, Honda, IKEA, and LG Electronics have made significant investments in the form of building an assembly plant, opening stores, and purchasing a stake in a company, respectively, in foreign countries.

Question 18

Walt Disney Company has successfully adapted licensing as a market entry mode in different countries. What are the advantages of using licensing as entry mode?

Accepted Answer

The answer of Walt Disney Company has successfully adapted licensing...

Question 19

Which of the following does not fit into the sequence of experiences Anheuser-Busch had in Japan?

Accepted Answer

All other options (A, B, C, and E) represent steps in Anheuser-Busch's interactions with Japanese breweries, starting with a licensing agreement with Suntory, followed by a joint venture with Kirin Brewery, then dissolving that joint venture, and ending with a reversion to a licensing agreement with Kirin Brewery. Option D represents a repeat of the second step in the sequence, the creation of a joint venture with Kirin Brewery, and therefore does not fit into the overall experience sequence.

Question 20

McDonald's and other fast food restaurants have benefitted tremendously by using franchising as a mode of entry into different countries. What are the benefits of franchising and how does it differ from other modes of entry?

Accepted Answer

The answer of McDonald's and other fast food restaurants have...

Quiz 9: Global Market Entry Strategies: Licensing, Investment, and Strategic Alliances