Question 1

All of the following are advantages of licensing except
A)the foreign country gains employment by having the product manufactured locally.
B)the licensee gains information that allows it to start with a competitive advantage.
C)the low risk to the company granting the license.
D)the licensor's brand name can never be harmed as a result of the licensee.
E)the capital-free entry into a foreign country.

Accepted Answer

The statement "the licensor's brand name can never be harmed as a result of the licensee" is false. If the licensee fails to deliver quality products or engages in unethical behavior, it can negatively impact the licensor's brand reputation. All of the other options listed are valid advantages of licensing.

Question 2

Direct exporting refers to
A)offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual property in return for a royalty or fee.
B)contracting with a foreign firm to manufacture products according to certain specifications.
C)when a foreign country and a local firm invest together to create a local business.
D)using additional parties when a firm sells its domestically produced goods in another country.
E)when a firm sells its domestically produced goods in a foreign country without intermediaries.

Accepted Answer

Direct exporting refers to when a firm sells its domestically produced goods in a foreign country without intermediaries. This means that the company handles all aspects of the exporting process, including marketing, sales, distribution, and customer service, without involving any third-party intermediaries.

Question 3

Exporting refers to a global market entry strategy
A)in which a company will sell its products in international markets but not in its own domestic market.
B)in which a company produces goods in one country and sells them in another country.
C)in which a company will manufacture its product in several countries at the same time using different brand names and slight product modifications.
D)in which a company will manufacture products specifically designed for nondomestic markets, but will sell those products to distributors that take title and resell the products to different companies around the world.
E)whereby a product is made in one country, assembled in a second country, and ultimately marketed to a third country.

Accepted Answer

Exporting refers to the strategy of producing goods in one country and selling them in another country. This allows companies to access new markets and generate additional revenue streams. The company retains control over production and marketing but operates in a foreign market.

Question 4

A small Canadian winery located in British Columbia has developed a superior wine. It has no overseas contacts but wants to get its wine on the shelves in selected Asian and European markets where growth has been substantial in the past two years. What type of exporting option would best suit this company?
A)direct exporting
B)licensing
C)indirect exporting
D)joint venture
E)cooperative partnership

Accepted Answer

Indirect exporting would be suitable as the winery lacks overseas contacts and can use intermediaries to enter foreign markets.

Question 5

Fran Wilson Creative Cosmetics attributes its success to a top-quality product, effective advertising, and a novel __________ strategy.
A)joint venture
B)licensing
C)franchising
D)indirect export
E)direct investment

Accepted Answer

The answer of Fran Wilson Creative Cosmetics attributes its success...

Question 6

The U.S. motorcycle manufacturer Harley-Davidson uses intermediaries to sell its motorcycles in numerous nations outside the United States. Harley-Davidson uses
A)direct exporting.
B)licensing.
C)contract manufacturing.
D)indirect exporting.
E)foreign assembly.

Accepted Answer

Harley-Davidson uses intermediaries to sell its motorcycles in numerous countries outside the United States, indicating that it engages in indirect exporting.

Question 7

Licensing refers to
A)offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual property in return for a royalty or fee.
B)contracting with a foreign firm to manufacture products according to certain specifications.
C)when a foreign country and a local firm invest together to create a local business.
D)having a company handle its own exports directly without intermediaries.
E)exporting through an intermediary, which often has the knowledge and means to succeed in selling a firm's product abroad.

Accepted Answer

Licensing refers to offering the right to a trademark, patent, trade secret or similarly valued items of intellectual property in return for a royalty or fee. This allows the licensee to use the intellectual property without having to invest in the development of their own.

Question 8

What global market entry strategy involves slightly more risk than indirect exporting for a company but also opens the door to increased profits?
A)direct exporting
B)licensing
C)cooperative
D)joint venture
E)direct investment

Accepted Answer

Direct exporting involves selling directly to the foreign market, which carries more risk than indirect exporting but can lead to higher profits as the company has more control over the sales process.

Question 9

Offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual property in return for a royalty or fee is referred to as
A)direct exporting.
B)indirect exporting.
C)licensing.
D)contract manufacturing.
E)outside branding.

Accepted Answer

Licensing involves offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual property in return for a royalty or fee. Direct exporting (A) involves a firm exporting its products directly to customers overseas, while indirect exporting (B) involves using intermediaries such as export agents or trading companies. Contract manufacturing (D) involves hiring a firm to manufacture a product to the hiring firm's specifications, while outside branding (E) is not a commonly used term in international business.

Question 10

When a U.S. airplane manufacturer sells its airplanes to a company in Germany without using intermediaries, it is referred to as
A)direct exporting.
B)indirect exporting.
C)licensing.
D)foreign manufacturing.
E)foreign assembly.

Accepted Answer

Direct exporting involves a company in one country selling its products directly to a customer or company in another country without using intermediaries. In this case, the U.S. airplane manufacturer is selling its airplanes directly to a company in Germany without the use of intermediaries, making it a direct export.

Question 11

Indirect exporting refers to
A)offering the right to a trademark, patent, trade secret, or similarly valued item of intellectual property in return for a royalty or fee.
B)selling a firm's domestically produced products in a foreign country without interference by that government.
C)contracting with a foreign firm to manufacture products according to stated specifications.
D)avoiding the use of additional parties when a firm sells its domestically produced products in another country.
E)selling a firm's domestically produced products in a foreign country through an intermediary.

Accepted Answer

Indirect exporting refers to selling a firm's domestically produced products in a foreign country through an intermediary. This intermediary could be an export management company, trading company, broker, or agent. The intermediary takes on the responsibility for logistics, documentation, and customs clearance, allowing the firm to focus on production and domestic operations. Indirect exporting is a low-risk entry mode for firms that are new to international business or have limited resources for foreign market development.

Question 12

To avoid competing with Japanese firms through their traditional channel of distribution, Fran Wilson Creative Cosmetics Moodmatcher lip coloring is sold in which type of retail venue?
A)grocery stores
B)flower shops
C)beauty salons
D)department stores
E)gift stores

Accepted Answer

To avoid competing with Japanese firms through their traditional channel of distribution, Fran Wilson Creative Cosmetics Moodmatcher lip coloring is sold in beauty salons.

Question 13

The prominent global market entry strategy among small- and medium-sized companies is
A)direct exporting.
B)direct franchising.
C)licensing.
D)joint venture.
E)direct investment.

Accepted Answer

Direct exporting is the most common and feasible method for small- and medium-sized companies to enter global markets because it requires minimal investment and allows organizations to test the waters in different markets before establishing a physical presence. Direct franchising may not be a feasible option for small- and medium-sized companies as it requires a significant investment and a well-established brand. Licensing and joint-venture strategies can be complex and require a significant investment of time and resources, which may not be feasible for small- and medium-sized companies. Direct investment requires a significant initial investment, which may not be feasible for small- and medium-sized companies.

Question 14

What type of exporting has the least amount of commitment and risk but will probably return the least profit?
A)direct
B)indirect
C)licensing
D)joint
E)unilateral

Accepted Answer

Indirect exporting typically involves working with an intermediary, such as an export management company, who handles the logistics of exporting. This requires less commitment and risk on the part of the exporting company, but also typically yields lower profits since the intermediary takes a portion of the revenue.

Question 15

A global market entry strategy in which a company produces goods in one country and sells them in another country is referred to as
A)exporting.
B)direct investment.
C)countertrade.
D)licensing.
E)multinational marketing.

Accepted Answer

Exporting is the process of producing goods in one country and selling them in another country. This strategy allows a company to enter a new market without having to invest in physical infrastructure or establish a local presence. Instead, the company ships its products across international borders and relies on local distributors or retailers to sell the goods to end consumers.

Question 16

When a firm sells its domestically produced products in a foreign country through an intermediary, it is referred to as
A)direct exporting.
B)indirect exporting.
C)licensing.
D)franchising.
E)foreign assembly.

Accepted Answer

When a firm sells its domestically produced products in a foreign country through an intermediary, it is referred to as indirect exporting. Direct exporting involves the firm selling its products directly to customers in the foreign country, without an intermediary. Licensing involves a firm granting another firm the right to use its intellectual property in exchange for a fee or royalty. Franchising involves a firm granting another firm the right to use its business model and brand name in exchange for a fee or percentage of profits. Foreign assembly involves a firm setting up a production facility in a foreign country to assemble its products using foreign labor and resources.

Question 17

Indirect exporting occurs when a firm sells its domestically produced products in a foreign country
A)in violation of a quota.
B)without paying import tariffs.
C)without paying export duties.
D)through a joint venture.
E)through an intermediary.

Accepted Answer

Indirect exporting involves selling products overseas through an intermediary, such as an export management company or trading company. These intermediaries handle the logistics of exporting, such as obtaining export licenses, arranging transportation, and handling documentation.

Question 18

Most companies become involved in direct exporting when
A)foreign governments believe that they will benefit the most from allowing the entry of direct exports.
B)emerging markets in foreign countries become economically viable.
C)they believe their volume of sales will be sufficiently large and easy to obtain so that they do not require intermediaries.
D)the domestic market becomes saturated with competing products and services.
E)evolving technologies in foreign countries come online.

Accepted Answer

Direct exporting is a method of international trade where a company sells its products directly to customers in foreign markets without intermediaries. Companies usually become involved in direct exporting when they believe their volume of sales will be sufficiently large and easy to obtain so that they do not require intermediaries. This allows the company to have more control over the distribution of its products and can result in higher profits.

Question 19

What market entry option allows a company to make the least number of changes in terms of its product, its organization, and even its corporate goals?
A)exporting
B)licensing
C)joint venture
D)direct investment
E)franchising

Accepted Answer

Exporting allows a company to sell its products in a foreign market without making significant changes to its product, organizational structure or corporate goals. The company simply needs to find a local distributor or agent to handle the sales and distribution. This option is often preferred by companies with limited resources or expertise in international business. It also carries the lowest financial risk compared to other market entry options.

Question 20

Which of the following is an advantage inherent in the use of licensing?
A)The licensor retains control of its product.
B)The licensor is protected from creating a potential competitor.
C)It provides an exemption from domestic trade regulations.
D)There is an increase in potential profit compared with direct investment.
E)The licensee gains information about the dynamics of the market.

Accepted Answer

Licensing allows the licensee to gain valuable insights and information about the market dynamics, which can be beneficial for their operations and strategy.

Quiz 7: Understanding and Reaching Global Consumers and Markets

All of the following are advantages of licensing except

Direct exporting refers to

Exporting refers to a global market entry strategy

Fran Wilson Creative Cosmetics attributes its success to a top-quality product, effective advertising, and a novel __________ strategy.

The U.S. motorcycle manufacturer Harley-Davidson uses intermediaries to sell its motorcycles in numerous nations outside the United States. Harley-Davidson uses

Licensing refers to

What global market entry strategy involves slightly more risk than indirect exporting for a company but also opens the door to increased profits?

Offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual property in return for a royalty or fee is referred to as

When a U.S. airplane manufacturer sells its airplanes to a company in Germany without using intermediaries, it is referred to as

Indirect exporting refers to

To avoid competing with Japanese firms through their traditional channel of distribution, Fran Wilson Creative Cosmetics Moodmatcher lip coloring is sold in which type of retail venue?

The prominent global market entry strategy among small- and medium-sized companies is

What type of exporting has the least amount of commitment and risk but will probably return the least profit?

A global market entry strategy in which a company produces goods in one country and sells them in another country is referred to as

When a firm sells its domestically produced products in a foreign country through an intermediary, it is referred to as

Indirect exporting occurs when a firm sells its domestically produced products in a foreign country

Most companies become involved in direct exporting when

What market entry option allows a company to make the least number of changes in terms of its product, its organization, and even its corporate goals?

Which of the following is an advantage inherent in the use of licensing?