Deck 6: International Market Entry

Question 1

A franchisee will normally develop accounting and finance applications for the franchisor to use, and assist in marketing and promotion.

Answer 1

False

Question 2

Importing is still the dominant type of international activity for many firms because it requires the least investment overseas.

Answer 2

False

Question 3

Typically, as sales increase, a firm will next try to import goods through an alliance, such as a joint venture.

Answer 3

False

Question 4

Once a firm makes a major investment in capital assets, its ability to leave is reduced, as is its negotiation ability.

Question 5

In perfectly efficient markets, there are no at-par profits.

Question 6

Trade barriers in the form of tariffs have increased significantly in recent years.

Question 7

Success in market entry is often the result of the process pursued, rather than whether the strategy was correct.

Question 8

In a licensing arrangement, there is an alliance between two firms but it tends to be much more coordinated than in a franchise.

Question 9

Mergers typically involve more risk and costs but less than alliances.

Question 10

The most immediate way to internationalize a firm is to directly export goods to a market outside the home country.

Question 11

Mergers and acquisitions are not mere linkages between firms-they create permanent changes to the structure of the firms involved.

Question 12

In a transnational firm, the business assets are highly specialized, but interdependent with the other assets of the firm.

Question 13

The impact of increased market share can affect a firm in several ways, including offering new sales when the firm's existing market is saturated.

Question 14

Most firms based in large continental markets, such as the U.S. or Brazil, will focus on the domestic market and pursue international sales.

Question 15

A born global firm builds an understanding of international markets over time.

Question 16

The keys to success for a greenfield venture are ready-made applications that allow the firm to start doing business immediately.

Question 17

Non-tariff trade barriers are barriers to free trade that take a form other than tariffs.

Question 18

A firm may internationalize as part of an effort to manage its value chain effectively, particularly with respect to minimizing costs.

Question 19

The least formal method by which to enter an international market is an informal alliance.

Question 20

A joint venture commonly has detailed agreements covering what each party is to provide, what each can expect, and how each is to operate within the joint venture.

Question 21

_____ are goods that may have most of the value added in one country but due to trade barriers the product is shipped to another country where final production on the good occurs, with the good then being listed as an export from that country.

A) Indirect exports
B) Indirect imports
C) Direct imports
D) Direct exports

Question 22

A(n) _____ is a transaction involving two or more corporations in which only one permanent corporation survives.

A) franchise
B) merger
C) informal alliance
D) joint venture

Question 23

_____ is a type of alliance where a contract is established between the parent and the individual who actually buys the business unit to sell a given product or conduct business under its trademark.

A) Licensing
B) A merger
C) Franchising
D) An informal alliance

Question 24

If customers have low brand loyalty and primarily are driven by product choice, a late entrant can have a desirable position.

Question 25

Which of the following statements about franchising is true?

A) It is a type of formal equity alliance.
B) It begins when there are direct sales.
C) It is the most immediate way to internationalize a firm.
D) It typically does not even have a signed document.

Question 26

_____ are formal agreements between two or more firms where a new separate entity is created for the purpose of producing or distributing goods and services.

A) Joint ventures
B) Greenfield ventures
C) Brownfield ventures
D) Franchises

Question 27

Which of the following statements about a joint venture is false?

A) Two or more firms contribute equity to form a new third organization.
B) A joint venture agreement is typically quite short.
C) The level of commitment and risk is considerably high.
D) Most agreements have a finite time in which the venture exists as a going concern.

Question 28

Shrinkage is the loss of goods due to stealing or breakage, often in a retail store.

Question 29

When a firm can enter the market immediately with a ready-made application that allows the firm to start doing business immediately, it is known as a:

A) license.
B) franchise.
C) turnkey operation.
D) joint venture.

Question 30

The first firm into an area is typically referred to as a first mover.

Question 31

In a(n) _____, a firm moves into a market in association with other firms.

A) turnkey operation
B) alliance
C) greenfield venture
D) brownfield venture

Question 32

Efforts between nations to have the same code of standards for products and how they are treated in regards to tariffs is called:

A) harmonization.
B) objective setting.
C) restructuring.
D) evaluation and control.

Question 33

All nations require the permission of the governments if there are layoffs due to a merger or acquisition.

Question 34

In which type of agreement does a firm agrees to pay a firm for the right to either manufacture or sell a product?

A) Greenfield venture
B) Franchising
C) Informal alliance
D) Licensing

Question 35

Which of the following requires the least investment overseas?

A) A greenfield venture
B) Licensing
C) Informal alliance
D) Exporting

Question 36

Most of the differences in the implementation of joint ventures center on the fact that the two parties are joining together of their own free will and that within the confines of their agreement, the parties can also leave that arrangement.

Question 37

Which of the following typically does not even have a signed document, but is simply a statement by one firm to another?

A) Licensing
B) Franchising
C) An informal alliance
D) Importing

Question 38

An estimated _____ percent of U.S. retail business is conducted through franchisors.

A) 5
B) 15
C) 30
D) 40

Question 39

Typically, _____ begins when there are direct sales and the firm is directly contacted by customers.

A) exporting
B) licensing
C) franchising
D) a joint venture

Question 40

The shipping of a good from the home market to markets outside the home country is called:

A) licensing.
B) a greenfield venture.
C) exporting.
D) an informal alliance.

Question 41

Which type of venture is the most difficult to pursue, but gives a firm the greatest control because it is able to design every detail of the business?

A) Greenfield venture
B) Informal alliance
C) Merger
D) Acquisition

Question 42

What is franchising? Explain how this alliance works.

Question 43

What is a greenfield venture and why is it the most difficult venture to pursue?

Question 44

As demand increases, a firm begins to try to serve that demand and the first means is typically through:

A) franchising.
B) turnkey operations.
C) licensing.
D) joint ventures.

Question 45

List the key points in implementing a merger or acquisition.

Question 46

In a(n) _____ firm, the business assets are highly specialized, but interdependent with the other assets of the firm.

A) global
B) international
C) multidomestic
D) transnational

Question 47

Those firms that enter the market whether a nation or product market after it has become established are:

A) late entrants.
B) early followers.
C) second movers.
D) fast followers.

Question 48

Which of the following statements about first movers is false?

A) The first firm into an area is typically referred to as a first mover.
B) Being a first mover is the only preferable position in all situations.
C) A first mover is able to develop an understanding of a market before any other firm.
D) A first mover may need to educate consumers about the product extensively, and this cost is high.

Question 49

Which of the following is a benefit of early followers?

A) They have high customer loyalty.
B) Have a low risk due to market uncertainty.
C) The ability to build relationships can result in a defendable competitive advantage.
D) Can benefit from the education of the market done by the first mover.

Question 50

A firm that builds a wholly-owned subsidiary from the ground up is building a:

A) franchise.
B) licensing arrangement.
C) turnkey operation.
D) greenfield venture.

Question 51

Why is it better for a firm to enter a market in a small way?

Question 52

Which of the following statements about born global firms is false?

A) They build an understanding of international markets over time.
B) The growth of born global businesses has increased in recent years.
C) Often these are technology-focused firms.
D) They are entrepreneurial firms that are global from their inception.

Question 53

What is the risk associated with being a first mover?

A) If customer loyalty is very high, critical relationships may be established and a barrier to entry into the market already established.
B) Competition is based on cost and it may be difficult to be profitable.
C) Costs of establishing the market are hard to recover.
D) These industries and nations have low customer loyalty.

Question 54

Write a explanatory note on informal alliances.

Question 55

A(n) _____ is an organizational form that focuses strictly on the country in which the organization has entered.

A) licensing arrangement
B) wholly-owned subsidiary
C) turnkey operation
D) acquisition

Question 56

What is a transnational firm? Mention at least one distinguishing characteristic.

Question 57

How can firms gain market share by expanding internationally?