Deck 9: Global Market Entry Strategies

Question 1

Operating a warehousing operation would be a typical task for a marketing subsidiary.

Answer 1

True

Question 2

In indirect exporting,a major disadvantage of using a domestic intermediary is its lack of knowledge of foreign market conditions.

Answer 2

False

Question 3

A direct exporting operation requires a larger degree of expertise,management time,and financial resources compared to indirect exporting.

Answer 3

True

Question 4

Independent distributors are preferred over marketing subsidiaries because they provide better control of after-sale service.

Question 5

A firm must choose between exporting to a foreign market or opening a marketing subsidiary there.

Question 6

Governments often use anti-trust laws to break up export consortiums.

Question 7

An export management company is one that handles all aspects of export operations under a contractual agreement.

Question 8

Licensing agreements are standard across all industries and have to follow WTO regulations.

Question 9

A licenser is the firm that initiates a licensing agreement.

Question 10

Marketing subsidiaries are required in most developing countries.

Question 11

Marketing subsidiaries are outlawed in most developed countries.

Question 12

Reaching markets through an intermediary located in the exporter's home country is called direct exporting.

Question 13

Brazil outlaws export consortia.

Question 14

A licensee may one day become a competitor of the licenser.

Question 15

U.S.multinational corporations sometimes choose licensing as a means of market entry because the U.S.government encourages licensing.

Question 16

Licensing can be a means of entering a foreign market quickly.

Question 17

An advantage of licensing to the licensee is that the licensee typically makes no capital investments.

Question 18

Marketing subsidiaries are required in most developed countries.

Question 19

Using licensing as a method of market entry,a company can gain market presence without an equity investment.

Question 20

Licensing is preferred in markets where the market potential is too small to support a new manufacturing and marketing operation.

Question 21

Owning 100 percent of a foreign subsidiary assures management control over that subsidiary.

Question 22

Most franchising operations in Kazakhstan are supervised by master franchisees.

Question 23

U.S.-based franchisers dominate among foreign franchisers in Mexico.

Question 24

Licensing fees in general are substantially lower than the profits that can be made through exporting or local manufacturing.

Question 25

In countries such as Mexico and the Philippines franchising accounts for less than one percent of GDP.

Question 26

Wholly owned subsidiaries are operations in a host country that are fully owned by a foreign parent firm.

Question 27

Full-scale integrated production units are a good option in countries with low costs and high market demand.

Question 28

U.S.-based franchisers dominate among foreign franchisers in Morocco.

Question 29

French franchisers dominate among foreign franchisers in Morocco.

Question 30

Brazil is home to the greatest number of franchisers.

Question 31

Parallel firms compete illegally.

Question 32

Most franchises in Kazakhstan are supervised by master franchisees operating out of Turkey or Russia.

Question 33

Contract manufacturing is chosen for countries with a high market potential combined with low tariff protection.

Question 34

Legal disputes between licensers and foreign licensees are commonly settled at the International Court at Hague.

Question 35

Most franchises in Kazakhstan are supervised by master franchisees operating out of China or Russia.

Question 36

Establishing parallel firms increases the chances of joint venture success.

Question 37

Spanish franchisers dominate among foreign franchisers in Mexico.

Question 38

The United States is home to the greatest number of franchisers.

Question 39

U.S.fast-food chains including McDonald's and Kentucky Fried Chicken expand globally through franchising.

Question 40

The highest growth rates for franchising is in the United States.

Question 41

Marketing subsidiaries are preferred over independent distributors because

A)of lower fixed cost to the company.
B)of government regulations.
C)of higher tariffs on imports.
D)they provide better control of after-sale service.

Question 42

When a company unbundles,it essentially divides its operations in a country into different companies.

Question 43

When re-entering the Chinese market,Dunkin Donuts increased the level of sugar in its pastries.

Question 44

Joint ventures can be successful if the partners share the same goal and one partner accepts primary responsibility for operational matters.

Question 45

A major problem with an international joint venture is that the partners are legally contracted together forever.

Question 46

In the case of indirect exporting,

A)markets are reached through intermediaries in the foreign market.
B)markets are reached through intermediaries in the exporters' home market.
C)licensing agreements are arranged with other companies.
D)marketing operations are set up overseas.

Question 47

Which is an advantage of a marketing subsidiary over an independent distributor?

A)A firm has more control over after-sale service.
B)There are no fixed costs involved.
C)There are no host government restrictions on establishing marketing subsidiaries.
D)None of the above.

Question 48

Independent distributors overseas earn profits

A)by earning a margin on the selling price.
B)by price fixing.
C)through bribes.
D)None of the above.

Question 49

Which is an advantage of utilizing an export agent?

A)An agent handles export documentation and shipping tasks.
B)An agent buys your products and resells them overseas.
C)A typical agent has good market contacts in most countries in the world.
D)An agent is necessary to enter markets.

Question 50

Acquisition is an attractive strategy when a market is already dominated by established brands and saturated with competitors.

Question 51

Export agents

A)handle all aspects of export operations.
B)export directly to their customers.
C)assist in exporting to one country or one part of the world.
D)All of the above.

Question 52

Market entry through acquisitions is an attractive option when a market is saturated with competitors.

Question 53

A benefit to the firm of establishing a marketing subsidiary in a foreign market is that

A)it is always cheaper than using independent local agents.
B)they are required in most developing countries.
C)Both a and b
D)None of the above.

Question 54

A cultural need in ____ and ____ to see and feel products stymies exporting via the Internet.

A)Egypt,Mexico
B)France,Germany
C)France,Italy
D)United States,Canada

Question 55

Companies unite to share logistics and promotion costs of entering foreign markets by creating

A)import consortiums.
B)strategic development centers.
C)export consortiums.
D)licensing agreements.

Question 56

A cultural need to see and feel products stymies

A)export consortiums.
B)exporting via the Internet.
C)franchising in developing countries.
D)licensing in developing countries.

Question 57

Licensing agreements can involve

A)patents.
B)trademarks.
C)trade secrets.
D)All of the above.

Question 58

Acquisitions are always successful because they are fair deals and will improve the profitability of the parent company.

Question 59

When re-entering the Chinese market,Dunkin Donuts decreased the level of sugar in its pastries.

Question 60

Consolidation is the process of expanding business operations through licensing,franchising,or acquisitions.

Question 61

A disadvantage of a licensing agreement is the

A)uncertainty of production quality.
B)nurturing of potential competitors.
C)dependence on a local company to generate revenue.
D)All of the above.

Question 62

Most franchising operations in Kazakhstan are supervised by master franchisees operating out of ____ and ____.

A)China and Russia
B)Turkey and Russia
C)Russia and the United States
D)Europe and the United States

Question 63

Which is not a typical type of strategic alliance?

A)Production-based alliance
B)Technology-based alliance
C)Consortium-based alliance
D)Distribution-based alliance

Question 64

Which country is home to the greatest number of franchisers?

A)Brazil
B)Mexico
C)United States
D)U.K.

Question 65

Master franchisees have traditionally been

A)U.S.-based multinational firms.
B)sophisticated local partners of established multinational franchise chains.
C)franchises specializing in industrial products.
D)European-based multinational firms.

Question 66

Joint ventures are preferred in markets

A)with high transportation costs.
B)with low market potential.
C)with high political risk.
D)where important customers are willing to invest for a portion of the output.

Question 67

Franchisers from ____ are the most common foreign franchisers in Morocco.

A)France
B)Lebanon
C)Spain
D)United States

Question 68

A licensing agreement typically

A)decreases exposure to political risk for the licensor.
B)decreases exposure to political risk for the licensee.
C)Both a and b
D)None of the above.

Question 69

Contract manufacturing is preferred in countries

A)Procter & Gamble
B)Starbucks
C)Unilever
D)All of the above

Question 70

Which product is too costly to transport long distances and is therefore a poor choice for export?

A)Clothing
B)Coffee
C)Shoes
D)Fresh orange juice

Question 71

The agreement between Harvard Business School and Infopro to produce a Chinese version of the prestigious HBR management journal is an example of

A)contract manufacturing.
B)franchising.
C)a licensing agreement.
D)an export consortium.

Question 72

An alliance involving two or more global firms in which each partner brings a particular skill or resource is called a

A)marketing alliance.
B)licensing agreement.
C)strategic alliance.
D)contract manufacturing.

Question 73

South African Breweries became the second largest brewery in the world as a result of

A)distribution-based alliances.
B)exporting.
C)technology-based alliances.
D)acquisitions.

Question 74

Which of the following is not a reason for Brazilians developing orange groves in Florida?

A)There are high transportation costs from Brazil to U.S.markets for fresh orange juice.
B)The U.S.consumes 40 percent of all orange juice.
C)There is a high market potential in the United States.
D)U.S.competitors attacked the Brazilian market.

Question 75

Major U.S.fast-food chains expand nationally and internationally through

A)licensing consortiums.
B)franchising.
C)indirect exporting.
D)direct exporting.

Question 76

Many Chinese firms acquired companies in foreign markets because

A)acquisitions were relatively inexpensive.
B)governments encouraged acquisitions.
C)they were late movers into those markets
D)All of the above

Question 77

Contract manufacturing is preferred in countries

A)with lower market potential and high tariffs.
B)with high market potential.
C)where there is a need to defend market position.
D)with low market potential and low tariffs.

Question 78

Which involves the greatest level of manufacturing commitment by a multinational firm to a market?

A)Assembly
B)Compounding
C)Full-scale integrated production
D)Contract manufacturing

Question 79

Market entry through acquisitions is an attractive option when

A)a market is saturated with competitors.
B)there is no competition in the market.
C)a company is an early entrant into the market.
D)high inflation exists in the market.

Question 80

Overseas assembly has been common in which industry?

A)Steel
B)Automobiles
C)Petroleum
D)Nail polish