Deck 7: Foreign market entry

Question 1

The growing global protection of intellectual property rights is one of the reasons why licensing is becoming an increasingly popular.

Answer 1

True

Question 2

Assuming product success in the home market, a company can penetrate an international market with a pricing scheme focused on variable costs alone, but this strategy is only feasible with a long-term commitment.

Answer 2

False

Question 3

Sometimes cultural variables, legal factors and other societal norms make a foreign market that is geographically close seem psychologically distant.

Answer 3

True

Question 4

Firms that are only psychologically distant from customers and ports tend to be more active in exporting.

Question 5

Joint venture legislation and the ensuing regulations are often subject to substantial interpretation and arbitrariness.

Question 6

International marketing activities can often provide a good reason for international travel.

Question 7

Proactive firms go international because they want to do so.Reactive motivations influence firms that are responsive to environmental changes and who adjust to them by changing their activities over time.

Question 8

In order for change to take place within an organisation, someone or something within the company must initiate it and shepherd it through to implementation.This person (or this internal condition)is referred to as an expansionist.

Question 9

Many of the problems encountered by joint ventures stem from a lack of careful, advance consideration of how to manage the new endeavour.

Question 10

Declining domestic sales volume (or market share)is only a motivator to enter international marketing if significant lead time exists in the foreign market.

Question 11

Integrated distribution requires dealing with another domestic firm that acts as a sales intermediary for the marketer, often taking over the international side of the marketer's operations.

Question 12

Franchising is attractive to the governments of recipient countries because the outflow of foreign exchange is low.

Question 13

Export activities are so important to revenue that all countries offer tax concessions to their firms.

Question 14

A motivator for a company to begin international marketing of products is stable domestic sales.

Question 15

New management is the primary external change agent in the internationalisation process.

Question 16

Agents have less freedom of movement than distributors.

Question 17

Frequently, international market expansion motivated by overproduction did not represent full commitment by management, but rather safety valve activity designed for short-term activities only.

Question 18

Exporting is the third less risky foreign market entry method.

Question 19

In most cases today, a firm can enter the international market easily, and the process takes less time than participating in the domestic market.

Question 20

The issue of profit repatriation and accumulation may cause discontent.

Question 21

Which of the following is not a cost the licensor wants to cover?

A)Transfer costs
B)R&D costs
C)Opportunity costs
D)Remuneration

Question 22

Which type of intermediaries are typically organised along product lines and provide the international marketer with complete marketing services?

A)Agents
B)Direct exporters
C)Distributors
D)Indirect distributors

Question 23

Which of the following is considered a proactive motivation to go international?

A)Competitive pressures
B)Unique products
C)Over-production
D)Excess capacity

Question 24

Which of the following requires the marketer to make an investment into the foreign market for the purpose of selling its products in that market or more broadly in the region?

A)Agents
B)Indirect exporting
C)Direct exporting
D)Integrated distribution

Question 25

Which of the following is considered a reactive motivation to go international?

A)Profit advantage
B)Saturated domestic markets
C)Managerial urge
D)Technological advantage

Question 26

As a result of overproduction, companies historically would move inventories to foreign markets during periods of domestic downturn.What was this practice called?

A)Sky rocketing
B)Pitching, assuming lag time was present
C)Dumping, assuming lead time was available
D)Safety-valve activity

Question 27

Which of the following is not a specialisation market intermediaries bring?

A)External cultural understanding
B)Detailed information about the competitive conditions in certain markets
C)Evaluation of credit risk
D)Personal contacts with potential buyers abroad

Question 28

Which of the following is not an external change agent in the internationalisation process?

A)Demand
B)Domestic distributors
C)Export management companies
D)New management

Question 29

Firms can become unplanned participants in the international market because of:

A)a salesperson's decision.
B)management's gamble on a new market segment.
C)government mandate.
D)growth of corporate websites.

Question 30

Conditions used to be such that the first entrant into a foreign market could count on being the leader for years, but in today's marketplace, the competitive edge is not as great because:

A)of competing technology and frequent lack of intellectual property rights protection.
B)competing domestic firms were there first.
C)globalisation and the internet do not allow there to be a 'first firm'.
D)most countries do not allow the first entrant to be a foreign firm.

Question 31

____________, ___________, __________ and investment climate are the main causes of FDI.

A)Market factors; barriers of trade; cost factors
B)Government resources; economies of scale; risk management
C)Market factors; government resources; cost factors
D)Reactive factors; proactive factors; risk management.

Question 32

The internationalisation process can be driven by external forces such as:

A)enlightened management, domestic distributors and export intermediaries.
B)the researchers and product developers.
C)demand, other firms and banks.
D)the marketing department.

Question 33

Which of the following is not a reactive reason why firms go international?

A)Managerial urge
B)Overproduction
C)Excess capacity
D)Proximity to customers and ports

Question 34

Why has taxation, although historically a good incentive for exporting, become less of an incentive for companies to go international?

A)Companies do not pay taxes on exports any more.
B)Exports are subject only to taxation when consumed.
C)Because of WTO regulations.
D)Published lists indicate export quota taxation guidelines.

Question 35

Which of the following is not a disadvantage of licensing?

A)It may leave the international marketing functions to the licensee.
B)Transfer costs.
C)The initial toehold in the foreign market may not be a foot in the door.
D)The licensor may create its own competitors.

Question 36

Which of the following is not a proactive reason why firms go international?

A)A firm may produce goods or services that are not widely available from international competitors or may have made technological advances in a specialised field.
B)They have exclusive market information, such as knowledge about customers and marketplaces.
C)The size of the international market may enable the firm to increase output and slide more rapidly on the learning curve.
D)During downturns in the domestic business cycle, markets abroad provided an ideal outlet for high inventories.

Question 37

Which of the following is not a key issue in negotiating licensing agreements?

A)Remuneration
B)Compensation
C)Licensee compliance
D)Dispute resolution

Question 38

_____________ allows companies to improve their sustainability and be seen by consumers and stakeholders as more environmentally friendly.

A)Foreign direct investment
B)Exporting
C)Franchising
D)Licensing

Question 39

Historically, during downturns in the domestic business cycle, markets abroad provided an ideal outlet for high inventories.Such international market expansion does not represent full commitment by management, but rather a temporary _______________ designed for short-term activities

A)investment
B)psychic distance
C)safety valve activity
D)production

Question 40

Which of the following is the primary outside influence on a firm's decision to become international?

A)In more than half of all cases, unsolicited orders
B)To take advantage of holiday destinations in colder months
C)Foreign demand
D)To satisfy a desire for continuous growth and market expansion

Question 41

A firm that finds itself unexpectedly exporting its products without much planning is:

A)lucky.
B)an accidental exporter.
C)subject to heavy competitive scrutiny in the long term.
D)unlikely to succeed in the long term.

Question 42

Which of the following is not required to be stipulated in the licensing agreement?

A)Licensee's marketing strategies
B)Export control regulations
C)Confidentiality of the intellectual property and technology provided
D)Record keeping and provisions for licensor audits

Question 43

One special form of joint venture is the ____________, or partnership.These _______________ arrangements between two or more companies with a common business objective result from growing global competition, rapid increases in the investment required for technological progress and growing risk of failure.

A)joint ventures; unusual
B)joint ventures; informal
C)strategic alliance; formal
D)strategic alliance; formal or informal

Question 44

Explain the three major types of foreign investment that governments offer to FDI.

Question 45

Which of the following statements is correct?

A)There is a love-hate relationship between governments and foreign direct investors.
B)Particularly in developed countries, the knowledge advantage of foreign investors may offer opportunities for exploitation.
C)Governments criticise foreign direct investors for bringing capital and employment.
D)None of the above

Question 46

An international distributor:

A)does not purchase the products.
B)is organised along product lines.
C)operates exclusively for one international marketer.
D)None of the above

Question 47

Merchandising licensing agreements:

A)can have fees ranging from 7-12 per cent of net sales.
B)only apply to trademarks.
C)need considerable effort on the part of licensors.
D)can have fees ranging from 7-12 per cent of net sales and only apply to trademarks.

Question 48

Which of the following statements is incorrect?

A)Exporting permits a broader and quicker coverage of world markets with the ability to respond to changes.Risks are lower, but costs tend to be higher because of transhipment and transaction expenses.
B)An increase will occur in the trend towards strategic alliances, or partnering, permitting the formation of collaborative arrangements between firms.
C)FDI reflects the long-term nature of a firm's objectives and makes use of local advantages.
D)The least visible and powerful players in the FDI field are larger-sized firms and multinational corporations.

Question 49

_____________incentives are specific tax measures designed to serve as an attraction to the foreign investor._______ incentives offer special funding for the investor by providing land or buildings, loans.loan guarantees or wage subsidies._________ incentives can consist of guaranteed government purchases; special protection from competition through tariffs, import quotas and local content requirements; and investments in infrastructure facilities.

A)Financial; Fiscal; Non-fiscal
B)Fiscal; Financial; Non-fiscal
C)Fiscal; Financial; Non-financial
D)Semi-financial; Financial; Non-financial

Question 50

Which of the following is a form of franchising?

A)Manufacturer-retailer systems
B)Manufacturer-wholesaler systems
C)Service firm-retailer systems
D)All of these choices

Question 51

All of the following options are disadvantages of joint ventures, except:

A)Relationships are hard to maintain in partnerships.
B)In some cases, managers are interested in launching the venture but have little concern with actually running the enterprise.
C)Joint ventures permit better relationships with local organisations - government, local authorities or labour unions.
D)Reconciling conflicts of loyalty is one of the greatest human resource challenges for joint ventures.

Question 52

Which of the following is not a key impediment to international franchising?

A)Meeting and training qualities and reliable franchisees overseas
B)Collection and transfer of franchise fee
C)Storage of raw materials, equipment and other products
D)Shipping and handling of equipment needed to operate a foreign franchise

Question 53

Why is licensing so popular with many potential international marketers?

Question 54

Agents have less freedom than distributors because:

A)they operate on a commission basis.
B)they do not usually physically handle the goods.
C)the marketer can ensure the customer gets the most appropriate product version.
D)All of these choices

Question 55

Export management companies and trading companies are firms that assist other firms in marketing products abroad.What are these international broker-like companies called?

A)Export intermediaries
B)Export agents
C)Trading agents and distributors
D)Product representatives

Question 56

What is the difference between proactive and reactive motivators that spur a company to go international?

Question 57

Under a licensing agreement:

A)the licensor permits another to use its intellectual property.
B)the licensee is paid on a royalty basis.
C)there are no intangibles.
D)control is shifted from the original centre of gravity on the vertical supply chain.

Question 58

Which of the following is not a reason for foreign domestic investment?

A)Marketing factors
B)Trade restrictions
C)IPRS concerns
D)Cost factors