Question 1

Pizzaria, a renowned restaurant in Italy, enters into an agreement with Ruth's Pizza House in the United States to operate a chain of restaurants. Ruth's will provide capital for running the chain and Pizzaria will contribute its world-renowned expertise on consumer tastes. In this case, Pizzaria enters a foreign market through ________.

Accepted Answer

Pizzaria enters a foreign market through management contracting, where it provides its expertise on consumer tastes and Ruth's Pizza House provides the capital for running the chain.

Question 2

________ is a method of going global in which a company makes agreements with producers in the foreign market to produce its product or provide its service.

Accepted Answer

Contract manufacturing involves making agreements with foreign producers to produce a company's product or service, allowing the company to expand its business globally without investing in foreign facilities or infrastructure.

Question 3

Providing a host-country partner the right to use a company's manufacturing process, trademark, patent, trade secret, or other item of value is referred to as ________.

Accepted Answer

Providing a host-country partner the right to use a company's manufacturing process, trademark, patent, trade secret, or other item of value is referred to as licensing.

Question 4

Which of the following is a type of joint venture?

Accepted Answer

Management contracting is a type of joint venture where one company provides management services to another company, usually in a foreign country. This allows both companies to benefit from the expertise and experience of the other, while sharing the risks and rewards of the venture. Direct exporting, direct investment, retailing, and wholesaling are not types of joint ventures.

Question 5

Valdo, a cosmetic firm located in the United States, markets its products in Asian and European countries through independent international distributors. In this case, Valdo has entered international markets through ________.

Accepted Answer

Valdo has entered international markets through indirect exporting, as it is using independent international distributors to market its products.

Question 6

The difference between direct and indirect exporting is that indirect exporting involves ________.

Accepted Answer

Indirect exporting involves using intermediaries such as export management companies (EMCs) or export trading companies (ETCs) to handle export activities, and therefore requires less investment and lower risks compared to direct exporting, which involves self-handling of exports and greater investment in marketing, logistics, and legal procedures. Indirect exporters may receive lower returns due to the commission paid to intermediaries, but they may benefit from their expertise, contacts, and knowledge of foreign markets.

Question 7

Operating domestically only is ________.

Accepted Answer

Operating domestically only is easier and safer because it eliminates the risks and challenges associated with international operations, such as currency fluctuations, political instability, and cultural differences.

Question 8

Which of the following is true about joint venturing?

Accepted Answer

Joint venturing typically involves partnering with a local company in the host country to sell or market products. This partner can provide valuable knowledge and resources for navigating the local market, but also shares risks and rewards with the domestic firm. Management contracting, contract manufacturing, and licensing do not necessarily require a host country partner, and investing in foreign-based facilities may or may not be necessary depending on the specific arrangement.

Question 9

Under management contracting, a domestic firm ________.

Accepted Answer

Under management contracting, a domestic firm provides management services to a foreign company, which may include technical expertise, training, and consulting services. The domestic firm does not manufacture products, export its own products or provide financial capital to the foreign company. Although it may adopt management know-how from the foreign company, this is not the primary focus of management contracting.

Question 10

Which of the following is most likely a benefit of contract manufacturing?

Accepted Answer

Contract manufacturing allows new entrants in international markets to quickly begin manufacturing products without the need for building and staffing their own manufacturing facilities, allowing for a faster start in the market. None of the other options listed are likely benefits of contract manufacturing.

Question 11

Which of the following is an advantage of licensing?

Accepted Answer

Licensing allows the licensee to use the licensor's product, technology or brand name, which saves the licensee time and money by not having to develop a product from scratch. This gives the licensee instant recognition in the market.

Question 12

Social critics worry that large American internationals aren't just globalizing their brands, they are ________.

Accepted Answer

Social critics often argue that American multinationals are exporting American cultural values to other countries through their products and marketing strategies. This can lead to homogenization of culture and a loss of unique local traditions and values.

Question 13

________ is a method of entering a foreign market by associating with foreign companies to produce or market products or services.

Accepted Answer

Joint venturing is a form of partnership where two or more companies come together to form a new company that allows them to share resources, technology, expertise, and risks in a foreign market. This enables the companies to benefit from each other's strengths and expand their reach in the market.

Question 14

Which of the following is true of exporting?

Accepted Answer

Exporting involves the least change in a company's product lines as the company simply sends its goods and services to another country without modifying them extensively.

Question 15

Which of the following is a disadvantage of licensing?

Accepted Answer

Licensing involves sharing intellectual property with a licensee, which potentially creates a competitor in the form of the licensee. This can be a disadvantage for the licensor who may lose market share or face increased competition. The other options are not accurate disadvantages of licensing.

Question 16

Which of the following is most likely a drawback of contract manufacturing?

Accepted Answer

Contract manufacturing often involves outsourcing production to a third-party manufacturer, which can result in decreased control over the manufacturing process. This can lead to issues with quality control, supply chain management, and communication between the parties involved.

Question 17

Montano Boutiques promotes its brand in new international markets by providing rights to local boutiques to use its patented designs and brand name. In this case, Montano Boutiques' market-entering strategy is referred to as ________.

Accepted Answer

Montano Boutiques is giving licensing rights to local boutiques to use its brand name and designs, which is a form of licensing as a market-entry strategy.

Question 18

The simplest way to enter a foreign market is through ________.

Accepted Answer

Exporting is the easiest and least expensive way to enter a foreign market as it requires minimal investment and allows the company to test the waters before investing further in the market. Other options such as joint ownership, direct investment, licensing, and contract manufacturing require a higher level of investment and commitment.

Question 19

According to the most recent Millward Brown Optimor brand value survey of global consumer brands, 17 of the top 20 brands were ________.

Accepted Answer

According to the question, the survey focused on global consumer brands and out of the top 20 brands, the majority were American. Therefore, the best answer is E - American.

Question 20

Which of the following is an advantage of management contracting?

Accepted Answer

Management contracting yields income from the beginning of the contract as the contracting firm provides management services to the managed company and receives payment immediately. This can provide a steady stream of income for the contracting firm without having to invest significant resources in setting up operations or entering new product lines. Option A is not a characteristic specific to management contracting, and options B, C, and E refer to other modes of entry into foreign markets.

Quiz 16: The Global Marketplace