Question 1

Once a company has decided to enter the global marketplace, it must select a means of market entry. Four general options exist: (1) exporting; (2) __________; (3) joint venture; and (4) direct investment.

Accepted Answer

Licensing allows a company to grant permission to a foreign company to use its intellectual property, such as trademarks, patents, or copyrights, in exchange for a fee. This is a low-risk market entry option, as the licensee assumes most of the costs and risks associated with producing and marketing the product or service in the foreign market. It also allows the licensor to gain access to new markets without having to invest significant amounts of capital or resources.

Question 2

A firm's profit potential and control over marketing activities __________ as it moves from exporting to direct investment as a global market-entry strategy.

Accepted Answer

As a firm moves from exporting to direct investment as a global market-entry strategy, its profit potential and control over marketing activities generally increase. This is because direct investment allows the firm to have greater control over pricing, distribution, and promotion in the foreign market. It also provides an opportunity to customize products and services to better meet the needs of local customers. However, there may be risks and challenges associated with direct investment, such as political instability or cultural differences, that could impact the firm's profit potential and control over marketing activities.

Question 3

Once a company has decided to enter the global marketplace, it must select a means of market entry. Four general options exist: (1) exporting; (2) licensing; (3) __________; and (4) direct investment.

Accepted Answer

Joint venture allows the company to partner with a local business in the foreign market, providing the company with knowledge and expertise of the local market while sharing the costs and risks of entering the market. This option also allows the company to have more control and a larger stake in the venture compared to licensing or franchising. Direct investment may be too risky and expensive for some companies, while exporting may not provide enough market presence or opportunities for growth.

Question 4

Once a company has decided to enter the global marketplace, it must select a means of market entry. Four general options exist: (1) __________; (2) licensing; (3) joint venture; and (4) direct investment.

Accepted Answer

The answer of Once a company has decided to enter...

Question 5

The PRS group maintains a website that can be used to determine

Accepted Answer

The PRS group's website provides country-specific information to determine a country's political risk rating, using multiple databases.

Question 6

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

Accepted Answer

Indirect exporting involves selling domestically produced products in a foreign country through an intermediary, such as an export management company or a distributor. The intermediary assumes the risk of exporting and handles tasks such as market research, shipping, and customs clearance. This approach allows the firm to have a presence in foreign markets without investing in international infrastructure and can help mitigate risks of doing business in foreign countries.

Question 7

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

Accepted Answer

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

Question 8

Once a company has decided to enter the global marketplace, it must select a means of market entry. Four general options exist: (1) exporting; (2) licensing; (3) joint venture; and (4) __________.

Accepted Answer

Direct investment is the best choice for a company that wants to have a high level of control over its operations in the foreign market. This option involves establishing and operating a subsidiary or branch in the foreign market. This allows the company to customize its products and services to the local market and also have full control over the operations. While it is a high-risk option compared to the others, the returns can be higher as well. However, the decision on the means of market entry ultimately depends on the company's goals, resources, and capabilities.

Question 9

Japanese car safety rules effectively require all automobile replacement parts to be Japanese and the country has about 11,000 other rules that specify how other goods are to be made and marketed. These rules often function as __________.

Accepted Answer

The statement suggests that these rules are creating barriers to trade by effectively requiring all automobile replacement parts to be Japanese, and by specifying how other goods are to be made and marketed. Therefore, the rules function as trade barriers to protect domestic industries.

Question 10

Indirect exporting refers to

Accepted Answer

Indirect exporting involves selling a firm's domestically produced products in a foreign country through an intermediary, such as an export management company, a trading company, or an agent. As such, choice E is the best answer. Option A refers to licensing, and option B refers to free trade. Option C refers to contract manufacturing, and option D refers to direct exporting.

Question 11

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

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 refers to a situation where a firm sells its products directly to customers in a foreign market without involving intermediaries. Licensing and franchising involve giving the rights to use a company's brand, products, or services to another firm in a foreign country. Foreign assembly refers to the process of assembling products in a foreign country with locally sourced components.

Question 12

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

Accepted Answer

Exporting is the strategy of producing goods in one country and selling them in another country. Direct investment refers to a company setting up operations in a foreign country, while countertrade involves the exchange of goods and services between two countries without the use of cash. Licensing refers to a company allowing another company to use its intellectual property in exchange for fees or royalties. Multinational marketing involves adapting marketing strategies to meet the unique cultural, regulatory, and economic factors of different countries.

Question 13

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?

Accepted Answer

Exporting allows a company to sell its product in foreign markets without having to make significant changes to its product, organizational structure, or corporate goals. This entry option also involves lower financial risk and fewer legal requirements compared to other entry options like direct investment or joint ventures.

Question 14

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

Accepted Answer

Harley-Davidson uses intermediaries to sell its motorcycles in numerous nations outside the United States, indicating that the company is employing indirect exporting as a market entry method.

Question 15

A small Canadian winery located in British Columbia has developed a superior tasting 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 last two years. What type of exporting option would best suit this company?

Accepted Answer

The answer of A small Canadian winery located in British...

Question 16

As a firm changes its global market-entry strategy from exporting to direct investment, all of the following increase EXCEPT:

Accepted Answer

Divestiture decreases as a firm moves from exporting to direct investment because the firm is investing more in establishing a permanent presence in a foreign market rather than just exporting products. The other options - marketing control, risk, profit potential, and financial commitment - all increase as a firm moves from exporting to direct investment.

Question 17

Exporting refers to a global market-entry strategy

Accepted Answer

Exporting refers to a market-entry strategy in which a company produces goods in one country and sells them in another country. It is a common way for businesses to expand their reach into international markets without having to set up production facilities in every country they wish to sell to.

Question 18

A firm's profit potential and control over marketing activities increases as it moves from exporting to direct investment as a global market-entry strategy. But so does the firm's

Accepted Answer

As a firm moves from exporting to direct investment, the financial commitment and risk increase. This is because direct investment involves significant investments in foreign land, infrastructure, and workforce. Therefore, the best choice is B.

Question 19

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?

Accepted Answer

Fran Wilson Creative Cosmetics Moodmatcher lip coloring is sold in beauty salons to avoid competing with Japanese firms through their traditional channel of distribution. Beauty salons provide a unique distribution channel for cosmetics, which is different from conventional retail avenues like department stores or grocery stores. This strategy helps the company differentiate its products and reach its target market effectively.

Question 20

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

Accepted Answer

Indirect exporting involves using intermediaries, such as export management companies or trading companies, to handle the export process. This requires the least amount of commitment and risk because the intermediary takes on much of the responsibility and the exporting company does not have to establish a presence in foreign markets. However, because the intermediary takes a portion of the profits, the return is likely to be less than other types of exporting.

Quiz 6: Understanding and Reaching Global Consumers and Markets