Question 1

To minimize its own risks, the Boomtown Petroleum Corp. of Houston, Texas, operates a South American oil refinery that is owned by residents of that country. Boomtown is engaged in an activity known as:
A) management contracting.
B) a joint venture.
C) exporting.
D) licensing.
E) direct investment.

Accepted Answer

Management contracting means that the seller provides only management and marketing skills, while others own the production and distribution facilities.

Question 2

In international markets, a firm can sell its management and marketing know-how while letting locals own the production and distribution facilities by using
A) licensing.
B) exporting.
C) joint venturing.
D) management contracting.
E) direct investment.

Accepted Answer

Management contracting means that the seller provides only management and marketing skills, while others own the production and distribution facilities.

Question 3

______________ (as a way to enter foreign markets) means selling the right to use some process, trademark, patent, or other right for a fee.
A) Licensing
B) Management contracting
C) Direct investment
D) Joint venturing
E) Exporting

Accepted Answer

Licensing means selling the right to use some process, trademark, patent, or other right for a fee or royalty.

Question 4

Licensing, in international marketing,
A) refers to foreign intermediaries agreeing to sell products produced in this country.
B) requires a producer to pay a licensing fee to the country where it wants to sell its products.
C) increases the risk that a company's production facilities will be taken over by the foreign country.
D) means a company selling the right to use a process, trademark, patent, or other right for a fee or royalty.
E) None of these alternatives is correct.

Accepted Answer

Licensing means selling the right to use some process, trademark, patent, or other right for a fee or royalty.

Question 5

_____ means selling the right to use some process, trademark, patent, or other right for a fee or royalty.
A) Licensing
B) Management contracting
C) Joint venturing
D) Exporting
E) Direct investment

Accepted Answer

Licensing means selling the right to use some process, trademark, patent, or other right for a fee or royalty.

Question 6

When the Rosco International chain of restaurants enters foreign markets, locals own the restaurant facilities, but look to Rosco to provide expertise in management and marketing. Rosco uses the _______ approach to enter international markets.
A) management contracting
B) direct investment
C) exporting
D) joint venture
E) licensing

Accepted Answer

Management contracting means that the seller provides only management and marketing skills, while others own the production and distribution facilities.

Question 7

Josh Adams runs a large cattle farm in Texas. In order to take advantage of higher prices for beef in Europe compared to the United States, he has started selling cattle overseas by using an agent wholesaler who specializes in finding European customers for U.S. firms. He ships the cattle to Europe by water transport. Josh is involved in:
A) exporting.
B) management contracting.
C) licensing.
D) joint venturing.
E) franchising.

Accepted Answer

Exporting refers to selling some of what the firm produces to foreign markets.

Question 8

Sunkist sells foreign companies the right to use the Sunkist brand on soft drinks and citrus juices sold outside the United States. Sunkist gets both an initial fee and a royalty on the sale of goods bearing its brand name. Sunkist is engaged in:
A) exporting.
B) management contracting.
C) licensing.
D) joint venturing.
E) None of these is a good answer.

Accepted Answer

Licensing means selling the right to use some process, trademark, patent, or other right for a fee or royalty.

Question 9

If a producer agrees to enter into a management contracting arrangement with a zinc mining operation in Chile,
A) the company should be prepared to invest large amounts in mining facilities.
B) the company should be prepared to send people to Chile.
C) success will depend on how well the Chilean managers know what needs to be done.
D) the company must assume no political problems will arise, otherwise the risk is very high.
E) None of these alternatives is true.

Accepted Answer

In a management contracting arrangement the seller provides management and marketing skills which would require it to send people to foreign countries.

Question 10

If a firm's involvement in international marketing is limited to managing others' production facilities, it is using:
A) exporting.
B) licensing.
C) direct investment.
D) joint venturing.
E) management contracting.

Accepted Answer

Management contracting means that the seller provides only management and marketing skills.

Question 11

If Wilkinson were to sell Norelco the exclusive rights to produce and sell its brand of shavers in Japan for a 5 percent royalty on all sales, it would be using:
A) licensing.
B) joint venturing.
C) management contracting.
D) exporting.
E) direct investment.

Accepted Answer

Licensing means selling the right to use some process, trademark, patent, or other right for a fee or royalty.

Question 12

Which of the following is typically the lowest risk approach for moving into international markets?
A) licensing
B) exporting
C) joint venturing
D) direct investment
E) management contracting

Accepted Answer

As stated in Exhibit 10-6, exporting involves the lowest investment, risk, and control of marketing.

Question 13

Worldwide Drilling, Inc. of Fort Worth, Texas, operates an oil well in Russia for its owners. Worldwide is involved in:
A) management contracting.
B) exporting.
C) a direct investment.
D) a joint venture.
E) licensing.

Accepted Answer

Management contracting means that the seller provides only management and marketing skills, while others own the production and distribution facilities.

Question 14

Which of the following is the easiest way for a firm to enter foreign markets?
A) joint ventures
B) licensing
C) multinational bargaining
D) direct investment
E) management contracting

Accepted Answer

Since the licensee in the foreign market takes most of the risk, licensing is often an easy way to enter international markets.

Question 15

Using the ______ approach to entering international markets gives a firm complete control of marketing strategy planning in the foreign market.
A) joint venture
B) management contracting
C) direct investment
D) licensing
E) exporting

Accepted Answer

Direct investment gives the parent firm complete control of marketing strategy planning.

Question 16

Which of the following statements about exporting is NOT TRUE?
A) Intermediaries can handle the arrangements as products are shipped outside the country.
B) Channel relationships in international markets take time to build and shouldn't be treated lightly.
C) Exporting requires a firm to establish permanent relationships with international partners.
D) A firm often invests a minimum amount of time and money.
E) None of these; i.e. all of these statements about exporting are TRUE.

Accepted Answer

As stated in Exhibit 10-6, exporting involves the lowest investment, risk, and control of marketing. Exporting does not require any permanent relationships with partners.

Question 17

A joint venture is:
A) a firm that provides only management skills, while others own the production and distribution facilities.
B) a firm selling the right to use some process, trademark, or other right for a fee.
C) a separate firm owned by a parent company.
D) a domestic firm entering into a partnership with a foreign firm.
E) a firm getting rid of surplus inventory.

Accepted Answer

In a joint venture, a domestic firm enters into a partnership with a foreign firm.

Question 18

Oceanside Tools, Inc. of Newport, Rhode Island has agreed to work with a Thai company to produce and sell chemicals in Thailand. The U.S. firm will provide technical and marketing know-how, while its Thai partner will provide knowledge of Thai markets and political connections. The partners will share the costs and profits 50/50. This type of international involvement is called:
A) direct investment.
B) management contracting.
C) licensing.
D) multinational marketing.
E) joint venturing.

Accepted Answer

In a joint venture, a domestic firm enters into a partnership with a foreign firm.

Question 19

In a licensing agreement, the licensee
A) makes no initial investment to get started.
B) does most of the marketing strategy planning for the markets it is licensed to serve.
C) has more control over marketing than other approaches for entering international markets.
D) assumes almost no risk in a foreign market.
E) does not pay any fee or royalties to the licensor.

Accepted Answer

The licensee does most of the marketing strategy planning for the markets it is licensed to serve.

Question 20

A producer that enters into a licensing agreement with a foreign company to better reach foreign customers is most likely selling the rights to use its:
A) production facilities.
B) brand name.
C) channels of distribution.
D) sales force.
E) Any of these are equally likely.

Accepted Answer

Licensing means selling the right to use some process, trademark, patent, or other right for a fee or royalty.

Quiz 10: Place and Development of Channel Systems

To minimize its own risks, the Boomtown Petroleum Corp. of Houston, Texas, operates a South American oil refinery that is owned by residents of that country. Boomtown is engaged in an activity known as:

In international markets, a firm can sell its management and marketing know-how while letting locals own the production and distribution facilities by using

______________ (as a way to enter foreign markets) means selling the right to use some process, trademark, patent, or other right for a fee.

Licensing, in international marketing,

_____ means selling the right to use some process, trademark, patent, or other right for a fee or royalty.

When the Rosco International chain of restaurants enters foreign markets, locals own the restaurant facilities, but look to Rosco to provide expertise in management and marketing. Rosco uses the _______ approach to enter international markets.

Sunkist sells foreign companies the right to use the Sunkist brand on soft drinks and citrus juices sold outside the United States. Sunkist gets both an initial fee and a royalty on the sale of goods bearing its brand name. Sunkist is engaged in:

If a producer agrees to enter into a management contracting arrangement with a zinc mining operation in Chile,

If a firm's involvement in international marketing is limited to managing others' production facilities, it is using:

If Wilkinson were to sell Norelco the exclusive rights to produce and sell its brand of shavers in Japan for a 5 percent royalty on all sales, it would be using:

Which of the following is typically the lowest risk approach for moving into international markets?

Worldwide Drilling, Inc. of Fort Worth, Texas, operates an oil well in Russia for its owners. Worldwide is involved in:

Which of the following is the easiest way for a firm to enter foreign markets?

Using the ______ approach to entering international markets gives a firm complete control of marketing strategy planning in the foreign market.

Which of the following statements about exporting is NOT TRUE?

A joint venture is:

In a licensing agreement, the licensee

A producer that enters into a licensing agreement with a foreign company to better reach foreign customers is most likely selling the rights to use its: