Deck 9: Global Market Entry Strategies: Licensing,investment,and Strategic Alliances

Question 1

Licensing,joint ventures,minority or majority equity stake,and ownership are points along a continuum of alternative strategies for global market entry and expansion.

Answer 1

True

Question 2

Avon Products uses both acquisition and joint ventures to enter developing markets.

Answer 2

True

Question 3

Franchising is another variation of licensing strategy.

Answer 3

True

Question 4

In 2008,the largest merger and acquisition deal in the pharmaceutical industry,Roche's acquisition of Genentech,is an example of an equity stake.

Question 5

In China,regulations require foreign franchisers to directly own two or more stores for a minimum of one year before franchising.

Question 6

Companies may move from licensing or joint venture strategies to ownership in order to achieve faster expansion in a market,greater control,or higher profits.

Question 7

The joint venture between Corning Glass and Mexican manufacturer Vitro failed primarily due to conflicts arising out of cultural differences.

Question 8

Japan's Fuji Photo Film Company invested hundreds of millions of dollars in the United States after the U.S.government ruled that Fuji was guilty of dumping.

Question 9

McDonald's has learned the wisdom of leveraging local market knowledge by granting franchisees considerable leeway to tailor restaurant interior designs and menu offerings to suit country-specific preferences and taste.

Question 10

The driving force behind many of the business acquisitions is globalization.

Question 11

A joint venture with a local partner represents a more extensive form of strategy that is similar to exporting and licensing.

Question 12

Starbucks' relentless pursuit of global market opportunities illustrates the fact that most firms face a broad range of strategy alternatives.

Question 13

Franchising in a global market is actually a market-entry strategy that is typically executed with less localization than is licensing.

Question 14

A lesson that can be learned from Anheuser-Busch's experience in Japan is that it is better to give control to a local partner via a licensing agreement rather than making a major investment.

Question 15

Foreign direct investment figures reflect investment flows out of the home country as companies invest in or acquire plants,equipment,or other assets.

Question 16

One of the advantages of a license arrangement is that it can create export market opportunities and open the door to a high-risk manufacturing relationship.

Question 17

Franchising is a variation of licensing strategy in which there is a contract between the parent company franchiser and a franchisee that allows the franchisee to operate a business developed by the franchiser in return for all rights for operations.

Question 18

Licensing is a contractual agreement whereby one company (the licensor)makes a legally protected asset available to another company (the licensee)in exchange for royalties,license fees,or some other form of compensation.

Question 19

Organizations as diverse as Disney,Caterpillar,and National Basketball Association make extensive use of licensing in overseas markets.

Question 20

GM and South Korea's Daewoo Group formed a joint venture which helped Daewoo improve its competitiveness.The venture was terminated since Daewoo prevented the import of GM cars to Korea.

Question 21

The South Korean government has recently abandoned the "chaebol" industry structure in favor of the "keiretsu" structure.

Question 22

Because "keiretsu" relationships are crossing the Pacific and directly affecting the American market,U.S.companies have reason to be concerned.

Question 23

The specialty retailing industry,as well as the fast-food industry,favors ________ for global growth.

A)licensing
B)investment
C)franchising
D)joint ventures
E)strategic alliances

Question 24

Would-be franchisors ask all of the following questions except one before expanding overseas:

A)How tough is the local competition?
B)Does the government respect trademark and copyrights?
C)Can profits be easily repatriated?
D)Can products be easily counterfeited?
E)Is commercial space available?

Question 25

Companies that use "contract manufacturing" provide all of the following advantages except:

A)technical specifications to subcontractors.
B)technical specifications to local manufacturers.
C)licensing firm can specialize in product marketing.
D)limited commitment of financial resources.
E)considerable commitment of management resources.

Question 26

Licensing as a market entry mode has several disadvantages and opportunity costs,which do not include:

A)limited market control.
B)agreement may have short life.
C)leveraging and exploiting by licensee.
D)similar product or technology development by licensee.
E)adaptations by licensee to fit local tastes.

Question 27

In a country and market concentration strategy,a company serves many markets in a few countries.

Question 28

Eventually,an affiliate-based strategy gives way to an export-driven strategy.

Question 29

Despite commanding a 37 percent share of the global cellular handset market,Nokia announced that it would make the source code for handset manufactured by Siemens AG.

Question 30

Pollo Campero,a chicken restaurant chain based in Central America,is using the following method for expanding operations in the United States:

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

Question 31

The agreements that allow McDonald's franchisees around the globe to use McDonald's trademarked name and menu items represent,in essence,which form of market entry?

A)joint ventures
B)franchising
C)100% ownership
D)exporting
E)acquisition

Question 32

The alliance between GE and Snecma got off to a strong start due to the personal chemistry between the top two executives of respective companies in spite of the differing views regarding governance,management,and organization.

Question 33

For Starbucks and other companies whose business models include a service component,it is not recommended that they use one of the following methods for going global.

A)joint ventures
B)licensing
C)100-percent ownership
D)exporting
E)franchising

Question 34

In order to prevent a licensor-competitor from gaining unilateral benefit,licensing agreements should provide for:

A)contract manufacturing.
B)franchising.
C)cross licensing.
D)strategic decision making.
E)adaptation for local tastes.

Question 35

One of the advantages of licensing is:

A)licensees have limited control.
B)licensees have considerable autonomy.
C)license agreements have short life.
D)licensees can develop similar products.
E)licensees have considerable leverage.

Question 36

The failure of partnership between Great Britain's General Electric Company and Siemens AG was blamed in part on the fact that the former was run by finance-oriented executives,the latter by engineers.

Question 37

________ represent(s)a market entry strategy whereby one company permits a foreign company to make use of its patents,know-how,technology,company name,or other intangible assets in return for a royalty payment.

A)Joint ventures
B)One-hundred-percent ownership
C)Licensing
D)Exporting
E)Global strategic alliances

Question 38

The virtual corporation will seem to be a single entity with vast capabilities but will really be the result of numerous collaborations assembled only when needed.

Question 39

Prior to the economic crisis of 1997-1998,the South Korea's "chaebol" had become bloated and heavily in debt.

Question 40

Sony entered into a strategic partnership with Samsung in order to produce flat-panel TV screens due to the high product development costs.

Question 41

The Russian market for imported premium vehicles is exploding as the number of households that can afford luxury products exhibit rapid growth.The luxury cars include all of the following except:

A)Porsche.
B)Lexus.
C)BMW.
D)Rolls-Royce.
E)Infiniti.

Question 42

Which of the following currently owns a 70% stake in Skoda,the Czech automaker?

A)GM
B)Volkswagen
C)Ford
D)DaimlerChrysler
E)Renault

Question 43

Competitive business environment is now characterized by all of the following except:

A)unprecedented degrees of turbulence.
B)dynamism.
C)unpredictibility.
D)inadaptability.
E)environmental responsiveness.

Question 44

McDonald's success in franchising in global markets can be attributed to several factors which do not include:

A)a well known global brand name.
B)a business system that can be easily replicated.
C)local market knowledge.
D)cross licensing.
E)granting franchisees leeway to tailor menu offerings to suit local tastes.

Question 45

The president of a Mexican company recently remarked,"Business in Mexico is done on a consensus basis,very genteel and sometimes slow by U.S.standards." A few months later,the Mexican company and its U.S.joint venture partner parted company.Judging by the president's remark,one important reason for the "divorce" was:

A)failure of one partner to live up to the terms of the contract.
B)cultural differences.
C)the cancellation of NAFTA.
D)the U.S.government's insistence on quick negotiations.
E)the language barrier.

Question 46

Toyota learned many things from its partnership with GM,however American Managers involved in the venture complained that:

A)Toyota learned many things about U.S.supply system.
B)Toyota learned about U.S.transport system.
C)Toyota learned about managing American workers.
D)Toyota did not apply manufacturing expertise at GM plant.
E)Toyota applied expertise at its Camry plant.

Question 47

The disadvantages of joint venturing can include all of the following except:

A)Joint venture partners must share rewards as well as risks.
B)Joint ventures allow partners to achieve synergy.
C)Joint ventures can have the potential for conflict between partners.
D)A dynamic joint venture partner can evolve into a strong competitor.
E)A company incurs very significant costs by joint venturing.

Question 48

As a general rule,the Chinese government allows foreign companies to participate in its market only if those companies agree to establish operations with local Chinese enterprises.Which market entry mode would be the appropriate choice under these circumstances?

A)acquisition
B)licensing
C)joint venture
D)exporting
E)franchising

Question 49

The strategy to use joint ventures has several advantages which do not include:

A)risk sharing.
B)reduced financial risk.
C)reward sharing.
D)achieve synergy.
E)only way to enter a country or region.

Question 50

Ford and Mazda have market entry and expansion in a relationship known as:

A)joint venture.
B)licensorship.
C)franchising.
D)contract manufacturing.
E)none of the above

Question 51

Which automaker currently has a joint venture with Hindustan Motors (India)?

A)Volkswagen
B)Ford
C)GM
D)Renault
E)Mazda

Question 52

Which of the following does not fit into the sequence of experiences Anheuser-Busch had in Japan?

A)Anheuser-Busch first entered Japan by means of a licensing agreement with Suntory,the smallest brewery in Japan.
B)Anheuser-Busch created a joint venture with Kirin Brewery,the market leader.
C)Anheuser-Busch dissolved the joint venture with Kirin Brewery.
D)Anheuser-Busch entered into a joint venture with Kirin Brewery.
E)Anheuser-Busch reverted to a licensing agreement with Kirin Brewery.

Question 53

Honda has invested $550 million in building an assembly plant in Greensburg,Indiana;IKEA spent nearly $2 billion to open stores in Russia;and South Korea's LG Electronics purchased a 58% stake in Zenith Electronics.All of these are examples of:

A)acquisition.
B)licensing.
C)franchising.
D)FDI.
E)exporting.

Question 54

In a joint venture with Russian manufacturer AvtoVAZ,GM executives were planning to have a stripped-down reengineered car based on its Opel model.However,the market research revealed that a "Made-in-Russia" car would only be acceptable if:

A)it has a German name.
B)it sported a very low sticker price.
C)it has an American name.
D)it has a very high sticker price.
E)it has a Russian name.

Question 55

GM executives are looking for a joint venture with AvtoVAZ,the largest carmaker in:

A)Germany.
B)Lithuania.
C)Russia.
D)Kazakhstan.
E)Turkey.

Question 56

Tata Motors (India)acquired the following auto company:

A)Volkswagen AG (Germany).
B)Volvo (Sweden).
C)Jaguar (UK).
D)Toyota (Japan).
E)Hyundai (South Korea).

Question 57

Avon Products uses ________ to enter developing markets.

A)franchising and licensing
B)joint venture and licensing
C)acquisition and franchising
D)licensing and franchising
E)acquisition and joint ventures

Question 58

Which of the following is not a characteristic of global strategic alliances?

A)Participants maintain independence outside the framework of alliance.
B)Participants share benefits of the alliance.
C)Participants share control over the performance of the assigned tasks.
D)Participants make ongoing contributions in technology,products,and other areas.
E)Participants agree not to compete in areas unrelated to the alliance.

Question 59

Ford Motor Company (United States)has a 50-50 joint venture to build Ford Fiestas with:

A)Toyota (Japan).
B)Shanghai Automotive Industry (China).
C)BMW (Germany).
D)Mahindra & Mahindra (India).
E)Mazda (Japan).

Question 60

Which automaker owns an equity stake in Japan's Nissan Motor?

A)GM
B)Volkswagen
C)Ford
D)DaimlerChrysler
E)Renault

Question 61

Which of the following is not a characteristic of global strategic alliances?

A)Participants maintain independence outside the framework of alliance.
B)Participants share benefits as well as control.
C)Participants make ongoing contributions in technology,products,and other areas.
D)Participants focus on an individual country market.
E)Participants share benefits of the alliance.

Question 62

The success of CFM International (the strategic partnership between GE and Snecma)can be attributed to which of the following?

A)compatibility of the partners
B)capability of the partners
C)commitment of the partners
D)personal chemistry between executives
E)all of the above

Question 63

"Corporate amnesia" in global partnership is a term which refers to:

A)achieving world leadership by differentiation.
B)short-term goals with no memory on how to compete.
C)relationship which is short lived.
D)discontinuation of partnership due to personal chemistry.
E)losing national identity and ideology.

Question 64

According to a 1991 report by McKinsey & Co. ,problems of alliances between Western and Japanese firms were related to all of the following factors except:

A)objective levels of performance.
B)a feeling of mutual disillusionment.
C)difference in expectations.
D)balance between partners.
E)frictional loss.

Question 65

Boeing developed the wide-bodied aircraft,the 777,with about ________ of the work subcontracted out to Mitsubishi,Fuji,and Kawasaki.

A)50%
B)25%
C)20%
D)60%
E)75%

Question 66

Which of the following is not true of Japanese keiretsu?

A)promotes risk sharing
B)promotes long-term employment
C)ensures low prices for Japanese consumers
D)blocks foreign suppliers from the Japanese market
E)relationships are cemented by bank ownership

Question 67

Saab markets two luxury car models,both prized by drivers for their "quirkiness." About 30% of Saab's sales come from the USA,with most of the rest from Western Europe.Which strategy does Saab appear to be using?

A)country concentration / market segment concentration
B)country diversification / market segment concentration
C)country concentration / market segment diversification
D)country diversification / market segment diversification
E)none of the above

Question 68

"Discussion and consensus must be the norms.Partners must be viewed as equals." When applied to global strategic partnerships,this statement indicates the importance of which factor?

A)mission
B)strategy
C)governance
D)culture
E)organization

Question 69

Which of the following does not fit in with the factors that should be considered by companies forming GSPs?

A)Partners are competitors to each other.
B)Harmony is not the most important measure of success.
C)All employees and managers must understand where cooperation ends and competitive compromise begins.
D)Learning from partners is critically important.
E)none of the above

Question 70

The terminology used to describe the new forms of cooperation strategies varies widely and the phrases used include all of the following except:

A)collaborative agreements.
B)strategic alliances.
C)global strategic partnerships.
D)strategic international alliances.
E)Greenfield operations.

Question 71

Which of the following statements most accurately describes the extent to which GM and Toyota outsource components?

A)GM and Toyota each outsource approximately 50% of their components.
B)Toyota outsources about 50% of its components;GM outsources about 75%.
C)GM outsources about 50% of its components;Toyota outsources about 75%.
D)Neither GM nor Toyota outsources a significant proportion of its components.
E)GM and Toyota each outsource approximately 25% of their components.

Question 72

Another perspective on the future of cooperative strategies envisions the emergence of:

A)mergers and acquisition.
B)virtual corporations.
C)franchising.
D)joint ventures.
E)keiretsu.

Question 73

An attribute which does not represent true global partnership is:

A)achieving world leadership by differentiation.
B)achieving a reciprocal relationship.
C)relationship is organized vertical lines.
D)continual transfer of resources.
E)retaining national identities.

Question 74

Walt Disney Company has successfully adapted licensing as a market entry mode in different countries.What are the advantages of using licensing as entry mode?

Question 75

A number of factors combine to make Russia an excellent location for an alliance which do not include:

A)a well-educated workforce.
B)quality is important to Russian consumers.
C)abundance of supplies.
D)potential for economic growth.
E)potential for growth in service sector.

Question 76

Nike provides technical specifications to a subcontractor or local manufacturer for its products.What is this arrangement called and what are its major benefits and drawbacks?

Question 77

GSPs (Global Strategic Partnerships)are attractive for several reasons which do not include:

A)sharing high product development costs.
B)sharing technological developments.
C)securing access to national and regional markets.
D)continuous transfer of technology between partners.
E)focus on a single national market or a specific problem.

Question 78

Having partners from another country can have advantages which include all of the following except:

A)reducing product development costs.
B)securing technology.
C)access to capital.
D)shared risks.
E)increased competition.

Question 79

Which of the following is true about Japanese keiretsu?

A)Toyota is a vertical keiretsu,Mitsubishi is a horizontal keiretsu.
B)Toyota is a horizontal keiretsu,Mitsubishi is a vertical keiretsu.
C)Toyota and Mitsubishi are both horizontal keiretsu.
D)Toyota and Mitsubishi are both vertical keiretsu.
E)none of the above

Question 80

"Successful GSPs create win-win situations,where participants pursue objectives on the basis of mutual advantage." When applied to global strategic partnerships,this statement indicates the importance of which factor?

A)mission
B)strategy
C)governance
D)culture
E)organization