Question 1

Licensing increases the exposure to both government intervention and terrorism.

Accepted Answer

Licensing primarily affects a company's legal and operational framework by allowing it to operate or sell certain products or services. It does not directly increase exposure to government intervention or terrorism, which are influenced by broader geopolitical, economic, and security factors.

Question 2

The risk of participating in an international venture is substantially increased for the supplier involved in a management contract.

Accepted Answer

The risk of participating in an international venture is not substantially increased for the supplier involved in a management contract. In a management contract, the supplier provides services and expertise to manage the operations of the local partner, which reduces the risk of financial loss for the supplier. However, there may be other risks such as political instability, cultural differences, and legal issues that need to be considered.

Question 3

Geographic closeness to foreign markets may not translate into real or perceived closeness to the foreign customers.

Accepted Answer

Geographic proximity does not necessarily guarantee that foreign customers perceive a close relationship with a seller or business from another country. Other factors such as cultural differences, language barriers, marketing strategies, and brand perception also influence customers' preferences and buying decisions.

Question 4

The advantage of franchising is that there is no need for standardization.

Accepted Answer

The advantage of franchising is actually standardization. Franchising allows for consistent products, services and operations across all franchise locations, which creates brand recognition and customer loyalty.

Question 5

The small transaction volumes of the sogoshosha provides them with cost advantages.

Accepted Answer

Sogo shosha, or Japanese trading companies, handle very large transaction volumes, which allows them to benefit from economies of scale, not small transaction volumes.

Question 6

Bank participation in export trading companies was intended to allow better access to capital.

Accepted Answer

Bank participation in export trading companies was intended to provide better access to capital for these companies.

Question 7

Corporate desire for growth is a major cause for the increase in foreign direct investment.

Accepted Answer

Corporate desire for growth often leads companies to seek out new markets and opportunities for expansion, which can involve making foreign direct investments in other countries. This can help them access new consumer markets, lower production costs, and tap into new sources of raw materials, among other benefits. As such, foreign direct investment tends to be driven by corporate strategies aimed at maintaining or increasing growth and profitability.

Question 8

Full ownership by multinational firms is a prerequisite for international success.

Accepted Answer

Multinational firms can also achieve success through joint ventures, partnerships, and licensing agreements with local firms. Full ownership may not always be necessary or the best strategy for international success.

Question 9

By raising money locally,multinationals provide the much needed boost to smaller capital markets.

Accepted Answer

The answer of By raising money locally,multinationals provide the much...

Question 10

Strategic alliances are more rigid than joint ventures.

Accepted Answer

Strategic alliances are often less formal and less structured than joint ventures, allowing for more flexibility in their formation and operation. Joint ventures, on the other hand, usually involve the creation of a separate legal entity and require a more strict contractual agreement between the participating parties.

Question 11

One key concern of franchising is the protection of the total business system that a franchise offers.

Accepted Answer

Franchisors aim to ensure that their franchisees adhere to a standardized business model and system to maintain the quality and reputation of the brand. Protecting the total business system is a crucial aspect of franchising.

Question 12

Efficiency seekers attempt to obtain the most economic sources of production.

Accepted Answer

Efficiency seekers strive to find the most cost-effective and optimal ways of producing goods and services.

Question 13

From a recipient-country view,franchising requires considerable outflow of foreign exchange.

Accepted Answer

Franchising actually brings in foreign exchange to the recipient country, as the franchisor (foreign company) will typically require royalty payments and may also require the purchase of goods or equipment from the franchisor's country. Therefore, franchising can actually be a source of foreign exchange inflow for the recipient country.

Question 14

The primary outside influence on a firm's decision to go international is foreign demand.

Accepted Answer

A firm's decision to go international is largely motivated by the potential market demand for its products or services in foreign countries. Other factors such as competition, cost of production, and access to resources also play a role, but demand is often the most significant driver of international expansion.

Question 15

Proactive motivations influence firms that respond to environmental shifts by changing their activities over time.

Accepted Answer

The answer of Proactive motivations influence firms that respond to...

Question 16

Profits provide the strongest proactive incentive to become involved in international marketing.

Accepted Answer

Profits are a major driving force behind companies' decisions to expand their operations and enter new international markets, as they seek to generate revenue and maximize their returns on investment. By targeting new customers and creating demand for their products and services, companies can achieve greater economies of scale, reduce their costs, and ultimately enhance their profitability, which provides a powerful incentive to engage in international marketing.

Question 17

A major cause for the increase in foreign direct investment is derived demand.

Accepted Answer

Derived demand refers to the demand for goods and services that is created as a result of the demand for another good or service. In the case of foreign direct investment, the demand for investment opportunities in a particular country is derived from the demand for goods and services that can be produced or delivered through that investment. Therefore, derived demand is a major cause for the increase in foreign direct investment.

Question 18

Strategic alliances are arrangements between two or more companies with different types of business objectives.

Accepted Answer

The answer of Strategic alliances are arrangements between two or...

Question 19

Nonfinancial incentives offer special funding for the investor by providing land or buildings.

Accepted Answer

Nonfinancial incentives generally do not provide special funding for the investor in the form of land or buildings. Nonfinancial incentives may include things like expedited permit processing or regulatory relief, but they do not typically involve providing physical assets to the investor.

Question 20

Licensing has been criticized as it lets multinational corporations capitalize on older technology.

Accepted Answer

Licensing allows multinational corporations to use older technology that has already been developed by others, rather than investing in their own research and development. This can lead to a lack of innovation and hinder progress in certain industries.

Quiz 9: Market Entry and Expansion