Deck 9: Global Market Entry Strategies

Question 1

Which of the following is a step in the market entry decision process?

A)Forecast a corporate budget.
B)Conduct a marketing audit.
C)Review mode of entry (evaluate if it's the most appropriate given external factors and internal objectives).
D)Review transportation strengths.
E)Analyze domestic demand.

Answer 1

C

Question 2

The four-step procedure that can be employed for the initial screening process includes all of the following except:

A)select indicators and data selection.
B)analyze parallel strengths and weaknesses of the market.
C)determine the importance of country indicators.
D)rate the countries in the pool on each indicator.
E)compute the overall scores for each country.

Answer 2

B

Question 3

Markets can be classified in five types of countries based on their respective market attractiveness.Vietnam and the Philippines would fall into which of the types listed below (where the purpose would be to build up an initial presence such as through a liaison office)?

A)platform countries.
B)emerging countries.
C)maturing and established countries.
D)growth countries.
E)none of the above.

Answer 3

B

Question 4

In the mode of entry, some companies see liaison office as a low-cost _____.

A)joint venture
B)export management company
C)listening post
D)contract exporter
E)alliance post

Question 5

In global market entry, all of the following are entry decisions that must be made by management before entering an international market except:

A)decide on the time of entry.
B)decide on the target product/market.
C)decide on the goals of the target markets.
D)decide on the mode of entry.
E)decide on the target budget.

Question 6

MetLife, the insurance company, opened a liaison office in Shanghai and Beijing while it was waiting for permission from the Chinese government to start operations.This is an example of dealing with_____ in markets.

A)consumer demand analysis
B)government risk
C)cross-fertilization
D)demand conflict
E)unfairness

Question 7

The _____ of a market refers to the country's distribution system, transportation network, and communication system.

A)demographic environment
B)infrastructure
C)logistical
D)physical distribution
E)physical infrastructure

Question 8

Markets can be classified in five types of countries based on their respective market attractiveness.Which of the following of those types can be used to build up an initial presence (such as through a liaison office)?

A)platform countries.
B)emerging countries.
C)maturing and established countries.
D)growth countries.
E)none of the above

Question 9

When marketers are making the decision to enter an international market or not, the first step is generally to:

A)decide on the target budget.
B)decide on the target product/market.
C)decide on the goals of the target markets.
D)decide on the mode of entry.
E)decide on the time of entry.

Question 10

Markets can be classified in five types of countries based on their respective market attractiveness.Which of the following countries would most likely be listed as a maturing/established market?

A)China
B)Burma
C)India
D)Taiwan
E)Vietnam

Question 11

Markets can be classified in five types of countries based on their respective market attractiveness.All of the following are part of the classification scheme except:

A)platform countries.
B)emerging countries.
C)low-tech countries.
D)growth countries.
E)maturing and established countries.

Question 12

A variety of reasons that may cause a positive relationship between entry scale and post-entry performance.Which is not a reason?

A)large-scale entry may induce volume-driven cost advantages
B)in industries or services where location matters, large-scale entry (e.g., with many outlets) can lead to a lock-up of the more attractive locations
C)existing players are less likely to respond aggressively when the entrant has made substantial investments
D)existing competitors are more likely to expand in the country of origin of the entering company
E)large-scale entry could deter other prospective players to enter the country afterward

Question 13

When Colgate-Palmolive sees prospects in countries with purchasing power as a major driver behind market opportunities and Coca-Cola looks at per capita income and the number of minutes that it would take someone to work to be able to afford a Coca-Cola product, they are following which of the following steps of the initial screening process for market entry?

A)indicator selection and data selection.
B)analyze parallel strengths and weaknesses of the market.
C)determine the importance of country indicators.
D)rate the countries in the pool on each indicator.
E)compute overall scores for each country.

Question 14

Which of the following most accurately describes a critical initial step in the market entry decision process?

A)Decide on the strategic objectives, from the company's global mission, are to be met via new market entry.
B)Decide on the mode of entry.
C)Decide on the time of entry.
D)Decide on the marketing mix plan.

Question 15

When Coca-Cola looks at per capita income and the number of minutes that it would take for somebody to work to be able to afford a Coca-Cola product, the company is following which of the following steps of the initial screening process for market entry?

A)indicator selection and data selection.
B)analyze parallel strengths and weaknesses of the market.
C)determine the importance of country indicators.
D)rate the countries in the pool on each indicator.
E)compute overall scores for each country.

Question 16

The goals of a preliminary screen to determine market opportunities are to minimize mistakes of ignoring countries that offer viable opportunities for the product and:

A)offending local governments.
B)offending local cultures.
C)offending local merchants.
D)violating local advertising laws.
E)not wasting time on countries that offer little or no potential.

Question 17

Markets can be classified in five types of countries based on their respective market attractiveness.Hong Kong and Singapore would fall into which of the types listed below (where the purpose would be to gather intelligence and establish a network)?

A)platform countries.
B)emerging countries.
C)maturing and established countries.
D)growth countries.
E)none of the above.

Question 18

To identify market opportunities for a given product or service, the international marketer usually starts off with a large pool of candidate countries.To narrow down this pool, the company will typically do a(n) _____.

A)internal audit.
B)external audit.
C)cross-border budget.
D)preliminary screen.
E)econometric analysis.

Question 19

A four-step procedure that can be employed for the initial screening process includes the following except:

A)select indicators and collect data.
B)determine importance of country indicators.
C)run a marketing mix evaluation
D)rate the countries in the pool on each indicator.
E)compute overall score for each country.

Question 20

Markets can be classified in five types of countries based on their respective market attractiveness.Which of the following of those types can be used to gather intelligence and establish a network?

A)platform countries.
B)emerging countries.
C)maturing and established countries.
D)growth countries.
E)none of the above.

Question 21

Markets can be classified in five types of countries based on their respective market attractiveness.Which of the following countries would most likely be listed as an established/maturing market?

A)China.
B)the Philippines.
C)India.
D)Vietnam.
E)Japan.

Question 22

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

A)licensing.
B)franchising.
C)cooperative exporting.
D)direct exporting.
E)indirect exporting.

Question 23

Markets can be classified in five types of countries based on their respective market attractiveness.Which of the following countries would most likely be listed as a growth country?

A)Hong Kong.
B)Vietnam.
C)China.
D)Taiwan.
E)Japan.

Question 24

_____ offers several advantages.Chief among these are the firm gets instant foreign market expertise, very little risk is involved, and no major resource commitments are required.

A)Licensing
B)Parallel exporting
C)Cooperative exporting
D)Direct exporting
E)Indirect exporting

Question 25

In the area of exporting, a middleman could be an _____.

A)export outsourcing company
B)export management company
C)export production company
D)export specialist company
E)export manufacturing company

Question 26

One of the main advantages of direct exporting over indirect exporting is that the exporter has more:

A)leverage.
B)risk.
C)control over its international operations.
D)control over its budget.
E)leadership.

Question 27

Benefits of licensing include:

A)not very demanding on company resources.
B)always protected against copying or technical theft.
C)always a strong partner relationship.
D)low profits, therefore, low taxes.
E)licensee is always enthusiastic.

Question 28

Piggyback exporting is when two different transportation modes (such as truck and rail) are combined.

Question 29

_____ means that the firm uses a middleman based in its home market to do the exporting.

A)Licensing
B)Contract manufacturing
C)Cooperative exporting
D)Venture exporting
E)Indirect exporting

Question 30

_____ has disadvantages.Chief among these are that the company has little or no control over the way their product is marketed in a foreign country, lack of adequate sales support (among other support variables) can lead to poor sales, and bad decisions made by an intermediary can damage the corporate image.

A)Licensing
B)Parallel exporting
C)Cooperative exporting
D)Direct exporting
E)Indirect exporting

Question 31

One of the most popular forms of cooperative exporting is called:

A)specialist exporting.
B)lean exporting.
C)long-range exporting.
D)backward exporting.
E)piggyback exporting.

Question 32

Nurturing a future competitor is the biggest danger in _____.

A)licensing
B)parallel exporting
C)cooperative exporting
D)direct exporting
E)indirect exporting

Question 33

The Oriental Land Company in Japan owns Tokyo Disneyland.This would be an example of an international _____ agreement between the Oriental Land Company (owner) and Disneyland (receives royalties).

A)licensing
B)parallel exporting
C)cooperative exporting
D)direct exporting
E)indirect exporting

Question 34

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.

A)sales franchise
B)master franchise
C)strategic franchise
D)cross-country franchise
E)border-territory franchise

Question 35

Most companies start their international expansion with _____.

A)exporting
B)joint ventures
C)licensing
D)franchising.
E)contract manufacturing.

Question 36

_____ means that the firm enters into an agreement with another firm (local or foreign) where the partner will use its distribution network to sell the exporter's goods.

A)Licensing
B)Parallel exporting
C)Cooperative exporting
D)Venture exporting
E)Indirect exporting

Question 37

Companies that plan to engage in exporting have a choice between indirect, _____, and direct exporting.

A)licensing
B)parallel
C)cooperative
D)venture
E)summation

Question 38

_____ is a contractual strategy where the firm offers some proprietary assets to a foreign company in exchange for royalty fees.

A)Licensing
B)Parallel exporting
C)Cooperative exporting
D)Direct exporting
E)Indirect exporting

Question 39

One of the most popular forms of cooperative exporting is _____.With this method, the company uses the overseas distribution network of another company (local or foreign) for selling its goods in the foreign market.

A)parallel exporting.
B)venture exporting.
C)piggyback exporting.
D)make-or-buy exporting.
E)foreign export management exporting.

Question 40

_____ means that the company sets up its own export organization within the company and relies on a middleman based in a foreign market (foreign distributor).

A)Licensing
B)Parallel exporting
C)Cooperative exporting
D)Direct exporting
E)Indirect exporting

Question 41

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

A)joint venture
B)strategic alliance
C)greenfield
D)franchise
E)piggyback

Question 42

Wholly owned subsidiaries give MNCs _____ of their operations.

A)almost no control
B)partial control
C)moderate control
D)full control
E)strategic control only

Question 43

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

A)Contract manufacturing agreements
B)Parallel exporting agreements
C)Cooperative exporting agreements
D)Wholly owned subsidiaries
E)Joint ventures

Question 44

One of the chief disadvantages of a wholly owned subsidiary is that:

A)complete ownership means that the parent company will have to carry the full burden of potential losses
B)it is often perceived as generating low profits.
C)it is often perceived as having problems in supply lines.
D)it is often perceived as being more expensive
E)it is often perceived as a threat to the local media for promotion.

Question 45

The partnership established by Coca-Cola and Nestle to market ready-to-drink coffees and teas under the Nescafe and Nestea brand names is an example of which of the following:

A)strategic alliance.
B)contract manufacturing.
C)licensing.
D)wholly owned subsidiary.
E)exporting.

Question 46

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

A)pick a partner with which control can be maintained.
B)pick the right partner.
C)establish clear objectives from the beginning.
D)bridge cultural gaps.
E)get top management commitment and respect.

Question 47

A study by a team of McKinsey consultants advises parent companies to create a launch team during the launch phase-beginning with the signing of a memorandum of understanding and continuing through the first 100 days of operation.The launch team should address the four key joint venture challenges.Which is not one they name?

A)Build and maintain strategic alignment across the separate corporate entities

B)Coordinate the travel between the parties, particularly its leadership
C)Create a governance system that promotes oversight
D)Manage the economic interdependencies between the corporate parents and the joint venture
E)Build the organization for the joint venture (e.g., staffing positions and assigning responsibilities)

Question 48

According to the textbook, in franchising, companies can capitalize on a/n _____ expanding overseas with a minimum of investment.

A)cheap business formula.
B)expensive business formula.
C)winning business formula.
D)parallel business formula.
E)hybrid business formula.

Question 49

Advantages of wholly owned subsidiaries include all of the following except:

A)full control.
B)control of profits.
C)own processes.
D)control government relationships.
E)can often be set quicker that other forms of investment.

Question 50

_____ are described as a coalition of two or more organizations to achieve strategically significant goals that are mutually beneficial.

A)Joint ventures
B)Strategic alliances
C)Greenfield operations
D)Franchises
E)Piggyback arrangements

Question 51

The chief reason that some firms choose acquisitions (or mergers) to enter a foreign market is that they can:

A)receive greater tax relief.
B)receive greater profits.
C)reduce debt.
D)increase stock price.
E)enter the market more quickly.

Question 52

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

A)contract manufacturing agreement
B)parallel exporting agreement
C)cooperative exporting agreement
D)export management company
E)equity joint venture

Question 53

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

A)contract manufacturing agreements
B)parallel exporting agreements
C)cooperative exporting agreements
D)export management companies
E)joint ventures

Question 54

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.

A)conflicting purchasing objectives
B)conflicting process objectives
C)control objectives
D)budget objectives
E)staffing objectives

Question 55

Companies that enter via wholly owned subsidiaries are sometimes perceived as a threat to the culture and/or economic sovereignty of the_____.

A)host country.
B)home country.
C)buffer country.
D)greenfield country.
E)high-tech country.

Question 56

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

A)greater return potential.
B)shared profits instead of shared royalties.
C)more control over operations.
D)increased cost controls.
E)synergies.

Question 57

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

A)joint venture
B)strategic alliance
C)greenfield
D)franchise
E)piggyback

Question 58

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

A)the return potential.
B)infrastructure enhancement.
C)expansion of stockholders.
D)division of leadership.
E)an increase in ethical standards.

Question 59

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.

A)demand
B)parallel management
C)consensus management
D)domestication
E)synergy

Question 60

One way to address hostility to foreign acquisitions in the host country is by _____ the firm's presence in the foreign market by hiring local managers, sourcing locally, and developing local brands.

A)regionalizing
B)localizing
C)socializing
D)acculturating
E)emphasizing the self-reference criterion (SRC)

Question 61

In many instances, the key determinant of entry choice decisions is the income of the population.

Question 62

An example of a growth market (with respect to market attractiveness) is the Philippines.

Question 63

Colgate-Palmolive views per capita purchasing power as a major driver behind market opportunities.

Question 64

Indirect exporting means the firm enters into an agreement with another company (local or foreign) where the partner will use its distribution network to sell the exporter's goods.

Question 65

To identify market opportunities for a given product (or service), the international marketer usually starts off with a large pool of candidate countries.

Question 66

Preliminary screening is an accepted method of reducing the number of candidates for market entry.

Question 67

Most companies start their international expansion by exporting.

Question 68

As an example of a preliminary screening process in assessing international market opportunities, Colgate-Palmolive uses assessments of whether people bathe regularly or not as a critical factor in deciding whether to enter a market or not.

Question 69

Indirect exporting happens when the firm decides to sell its products in the foreign market through independent intermediaries.

Question 70

An example of a growth country is China.

Question 71

Government regulations are a major consideration in entry-mode choices.

Question 72

Decisions to exit or divest a foreign market may have all the following reasons except:

A)sustained losses.
B)volatility.
C)premature entry.
D)ethical reasons.
E)new market.

Question 73

Corporate objectives have no influence in choosing entry modes.

Question 74

From a transaction-cost economics perspective, market failure typically happens when transaction-specific assets become _____ and therefore more high-control situations are needed.

A)optional
B)valuable
C)expendable
D)less-valuable
E)weaker

Question 75

A _____ perspective argues that the desirable governance structure (high- versus low-control mode) will depend on the comparative transaction costs, that is,the costs of running an operation.

A)demand-delivery
B)just-in-time management
C)management-by-objectives
D)quantity-cost allocation
E)transaction-cost economics

Question 76

An example of a platform country is India.

Question 77

Risks of exiting a foreign market may lead to all the following except:

A)fixed costs of exit.
B)disposition of assets.
C)short-term opportunities.
D)signal to other markets.
E)long-term opportunities.

Question 78

When contrasted with greenfield operations, _____ provide(s) a rapid means to get access to the local market.

A)licensing
B)exporting
C)contract manufacturing
D)acquisitions
E)joint ventures

Question 79

Entry scale is a very important element of a firm's globalization strategy.

Question 80

Direct exporting means that the company sets up its own export organization and relies on a middleman based in a foreign market.