Question 1

Like licensing and franchising, nurturing a future competitor is one of the biggest dangers in ___________________.

Accepted Answer

Contract manufacturing involves outsourcing the production of goods to a third-party manufacturer. This third-party manufacturer might eventually become a competitor if they learn about your products and processes while producing your goods. Therefore, nurturing a future competitor is a significant danger in contract manufacturing.

Question 2

One of the problems with joint ventures is ________________ between partners. An example would be when one partner wants to stress reduction of political and
Economic controls on decision-making and the other partner wants to accept
Technology and capital but precludes foreign authority infringement on sovereignty
And ideology.

Accepted Answer

Control objectives can lead to conflicts in joint ventures when partners have differing views on decision-making authority and sovereignty.

Question 3

There are no magic ingredients to foster the stability of joint ventures, however, all of the following are good guidelines EXCEPT:

Accepted Answer

Maintaining control over a partner is not a guideline for fostering stability in joint ventures. Instead, collaboration and mutual respect are key, as reflected in the other options.

Question 4

When a multinational company chooses to invest in foreign markets with wholly owned subsidiaries, these subsidiaries may be acquisitions or _______________
Operations.

Accepted Answer

Greenfield operations refer to the establishment of a new subsidiary from scratch in a foreign market. This option provides complete control over the operations and allows the company to build the subsidiary in accordance with its own requirements and specifications. Acquisitions refer to the purchase of an existing company in the foreign market, joint ventures are partnerships with local companies, strategic alliances involve collaborative agreements, and franchising involves licensing the use of a company's products, services, or branding to a third party.

Question 5

With respect to joint ventures, the ________________ argument is illustrated by not only shared capital and risk but possible contributions brought in by the local
Partner in land, raw materials, expertise on the local environment, and access to
Local distribution networks.

Accepted Answer

The argument described pertains to the concept of synergy, in which the joint venture partners bring together their resources and expertise to create a mutually beneficial outcome. The shared capital and risk, as well as the contributions of the local partner in land, raw materials, expertise and access to distribution networks all exemplify the principle of synergy in joint ventures.

Question 6

Nurturing a future competitor is the biggest danger in ___________________.

Accepted Answer

Licensing involves sharing knowledge and technology with a third party, so there is a risk that the licensee (the third party) may become a competitor in the future by using the knowledge and technology gained through the licensing agreement.

Question 7

In ____________________, the company arranges with a local manufacturer to manufacture parts of the product or even the entire product. The marketing of the
Product, however, is still the responsibility of the international firm.

Accepted Answer

Contract manufacturing refers to a situation where an international firm arranges with a local manufacturer to produce parts or the entire product, while the marketing of the product is still the responsibility of the international firm.

Question 8

Benefits of licensing include:

Accepted Answer

Licensing is not very demanding on company resources because it allows a company to expand its brand or technology without significant investment in new facilities, equipment, or marketing. The other options are not guaranteed benefits of licensing. Protection against copying or technical theft is not always ensured, strong partner relationships depend on the specific circumstances and are not guaranteed, profits can vary widely and are not inherently low, and licensee enthusiasm can also vary and is not a guaranteed outcome.

Question 9

Wholly owned subsidiaries give MNCs _______________ of their operations.

Accepted Answer

Wholly owned subsidiaries give MNCs full control of their operations. This is because the MNC owns 100% of the subsidiary's shares, and therefore has the right to make all decisions relating to the subsidiary's operations.

Question 10

One of the most popular entry modes in the international marketplace for service firms is:

Accepted Answer

Franchising is a popular entry mode for service firms because it allows them to expand quickly and efficiently, while also benefiting from the local knowledge and expertise of the franchisee. Franchising also reduces financial risk and allows for better control over the brand and operations compared to licensing or exporting.

Question 11

A major advantage of joint ventures, as compared to lesser forms of resource commitment such as licensing, is:

Accepted Answer

The answer of A major advantage of joint ventures, as...

Question 12

_____________________ come about when multinational companies prefer to enter new markets with 100 percent ownership.

Accepted Answer

Wholly owned subsidiaries occur when a multinational company enters a foreign market with 100 percent ownership. This means that the company has complete control over operations in that market, rather than entering into a joint venture or cooperative agreement with another company.

Question 13

According to the textbook, in franchising, companies can capitalize on a _______________________________.

Accepted Answer

Franchising allows companies to capitalize on a winning business formula, which has already been tried and tested by the franchisor. This gives franchisees a higher chance of success compared to starting a business from scratch, as they are operating under a proven system with established brand recognition and support.

Question 14

Lack of trust and mutual conflicts can often turn ______________ into partnerships doomed to failure.

Accepted Answer

Lack of trust and mutual conflicts can lead to the failure of joint ventures. Joint ventures involve a significant amount of resources and risk, and if the partners are not in agreement and do not trust each other, the venture is more likely to fail. Contract manufacturing and export management companies do not necessarily involve partnerships, and parallel and cooperative exporting agreements may not be as risky or resource-intensive as joint ventures.

Question 15

With a __________________, the foreign company agrees to share equity and other resources with other partners to establish a new entity in the target country.

Accepted Answer

The description perfectly matches the definition of a joint venture, where a foreign company collaborates with local partners to form a new joint entity in the target country. A contract manufacturing agreement involves outsourcing the production process to a third-party manufacturer. Parallel exporting agreement pertains to exporting products through unauthorized channels. Cooperative exporting agreement refers to a partnership between two or more companies to export products. An export management company addresses export activities on behalf of another company.

Question 16

One of the most popular franchise plans used in international marketing is ____________________ where the franchiser gives the franchise to a local
Entrepreneur who in turn sells local franchises within a territory.

Accepted Answer

The description provided matches the concept of a master franchise, where the franchiser grants the rights of the franchise to a local entrepreneur who then sells sub-franchises within a designated territory. The other options provided do not accurately describe this specific type of franchise plan.

Question 17

In contract manufacturing, because of "nurture-a-future competitor" threat, many companies prefer to make ___________________ or products that involve
Proprietary design features in-house.

Accepted Answer

Companies prefer to make high-value items or products that involve proprietary design features in-house because they are more critical to their success and provide a competitive advantage. By keeping the production of high-value items in-house, companies can ensure that their valuable intellectual property is protected and that there is no risk of the contract manufacturer becoming a future competitor.

Question 18

All of the following are considered benefits of forming joint ventures EXCEPT:

Accepted Answer

The answer of All of the following are considered benefits...

Question 19

___________________ are(is) the prime motivation behind contract manufacturing.

Accepted Answer

Cost savings are the prime motivation behind contract manufacturing as companies can outsource production to countries with lower labor costs and lower production costs overall, resulting in cost savings for the company.

Question 20

A _________________ operation (with respect to wholly owned subsidiaries) is one which is started from scratch.

Accepted Answer

A greenfield operation refers to building a new subsidiary from scratch, often involving constructing a new facility, purchasing new equipment, and hiring new employees. This is in contrast to joint ventures and strategic alliances, which involve partnering with existing companies, or franchises and piggybacking, which involve using existing business models to expand.

Quiz 9: Global Market Entry Strategies