Deck 9: Market Entry and Expansion

Question 1

Only large firms are capable of carrying out global market expansion through foreign direct investment of management contracts.

Answer 1

False

Question 2

Safety-valve activity is demonstrated by governments with politically motivated desires who allow a market to be flooded with competing products without going through customs.

Answer 2

False

Question 3

Under a licensing agreement, one firm permits another to use its intellectual property in exchange for compensation designed as a royalty.

Answer 3

True

Question 4

The acronym EMC represents Electronic Management Changes and is a sophisticated technique for documenting internal and external change within a firm's international management structure.

Question 5

The primary outside influence on a firm's decision to become international is the influence of new movie releases that allow foreign nationals an opportunity to see the product being used in an environment similar to their own.

Question 6

Proactive firms go international because they want to, while reactive ones go international because they have to.

Question 7

The practice of franchising originated in Bavaria.

Question 8

If a company reacts to a saturated domestic market by entering the international market in order to combat declining domestic sales, this tends to shorten the lifecycle of the product.

Question 9

One big motivator for a company to begin international marketing of products is slumping domestic sales.

Question 10

The primary internal change agent in a company is often a long-time employee who is not management-level.

Question 11

A firm with a competitive edge in terms of technological advantage usually succeeds in the international market because no other firms will be able to know about the technology and will not be able to adequately compete due to this lack of information

Question 12

Portfolio investment is a way to see a company before purchasing it by looking at a group of online photos and archived company portraiture.

Question 13

Firms that are far away from customers and ports tend to be more active in exporting.

Question 14

In order for change to take place within an organization, someone or something within the company must initiate it and shepherd it through to implementation. This person or condition is referred to as expansionism.

Question 15

With an increase in production on the international level, costs for production in the domestic market often double or triple.

Question 16

When a firm is said to have been born global, this means that it was founded for the explicit purpose of marketing abroad.

Question 17

Multinational corporations are defined by the United Nations as those enterprises which own or control production or service facilities outside the country in which they are based.

Question 18

Geographical closeness to a foreign market may not necessarily translate into real or perceived closeness to the foreign customers and the concept of psychological distance needs to be understood.

Question 19

The most famous trading companies are the sogoshosha of Japan.

Question 20

Portfolio investment is a primary concern to the international financial community.

Question 21

The most stimulating motivation to become involved in international marketing is:

A) to avoid taxation.
B) to create international partnerships.
C) the profit advantage.
D) ego.

Question 22

A joint venture is a collaboration of two or more organizations for more than a transitory period.

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

Tax measures designed to serve as an attraction to the foreign investor are called physical incentives.

Question 25

Government consortia is a form of cooperation which takes place at the industry level and is typically characterized by government support or even subsidization.

Question 26

Efficiency seekers attempt to obtain the most economic sources of production.

Question 27

Derived demand is the result of the move abroad by established customers.

Question 28

Marketing consideration and the attractive investment climate for growth are major causes for the increase in foreign direct investment.

Question 29

Which of the following statements about companies that export is not true?

A) Companies that export have a higher rate of taxation than those that do not.
B) Companies that export grow faster than those that do not export.
C) Companies that export are more productive than those that do not export.
D) Companies that export have employees that tend to earn more.

Question 30

Through their investment, multinational corporations bring economic vitality and jobs to their host countries and often pay higher wages than the average domestically-oriented firms.

Question 31

Natural resources are typically man-made components used to produce other products.

Question 32

A major cause of the increase in foreign direct investment is government incentives.

Question 33

Resource seekers search for financial contributors who can invest in the foreign market along with the domestic company.

Question 34

When a global marketing firm participates in foreign direct investment with 100% ownership of an entity, this is known as sole proprietorship.

Question 35

One reason global marketers directly invest in a foreign market is the cost factor; corporations are always trying to obtain low-cost resources and ensure their sources of supply.

Question 36

Another term for strategic alliance is individual monopoly.

Question 37

Which of the following statements adequately describes the profitability of international startup?

A) The profitability will be low because the startup costs are high.
B) The profitability will be high because the startup costs are low.
C) Investors rarely invest in start up companies.
D) International law prohibits profit taking in the first five years.

Question 38

Corporations primarily in search of better opportunities to enter and expand within markets are called opportunity seekers.

Question 39

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 40

Financial incentives offer special funding for the investor by providing land, buildings, loans, loan guarantees, or wage subsidies.

Question 41

One of the most important factors in creating change in an organization is:

A) competitive threats.
B) preliminary development.
C) acoustic remnants.
D) enlightened management.

Question 42

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) Opportunists
C) Functional shippers
D) Product arrangers

Question 43

In order for change to take place, someone or something within the firm must initiate it and shepherd it through to implementation. This person/thing is called the:

A) shepherd.
B) change agent.
C) cambio.
D) leader.

Question 44

The primary external influence on a firm's decision to become international is:

A) a salespersons decision.
B) management's gamble on a new market segment.
C) government mandate.
D) foreign demand.

Question 45

As a result of overproduction, companies historically would move inventories to foreign markets during periods of domestic downturn. This practice was beneficial because of the lag time between domestic and foreign markets. What was this practice called?

A) Sky rocketing
B) Pitching
C) Dumping
D) Safety-valve activity

Question 46

Sumitomo, Mitsubishi, and Mitsui are all famous Japanese trading companies. What is the Japanese word for these trading companies?

A) Irashamashet
B) Yakisoba
C) Sogoshosha
D) Yankee imperialists

Question 47

Which United States department of government is actively involved in encouraging exports?

A) The Department of Commerce
B) The U.S. Chamber of Commerce
C) The Federal Trade Commission
D) The Commission on Exporting to Foreign Land

Question 48

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 a frequent lack of intellectual property rights protection.
B) competing firms were there first.
C) globalization and the Internet do not allow there to be a "first firm".
D) most countries do not allow startup firms to enter into the market.

Question 49

In small and medium-sized firms, the initial decision to export is usually made by the president, with substantial input provided by:

A) his wife.
B) the researchers and product developers.
C) lawyers.
D) the marketing department.

Question 50

Which of the following is not a cost associated with negotiating a licensing agreement?

A) Transfer cost
B) Position cost
C) R&D cost
D) Opportunity cost

Question 51

A company that starts exporting within two years of start up is called:

A) an innate exporter.
B) fast.
C) a jump-the-gun exporter.
D) a trade visionary.

Question 52

Those domestic firms that specialize in performing international services as commission representatives or distributors for several other firms are called:

A) opportunists.
B) government agents.
C) Export Management Companies (EMCs).
D) washboard brokers.

Question 53

Other external change agents include all but:

A) banks.
B) accountants.
C) the company's owner.
D) advertising agencies.

Question 54

This concept originated with European trading houses before being formalized by the monarchs.

A) Tahachepe
B) Trading companies
C) Smugglers Inn
D) Dish network

Question 55

When a parent company grants another, independent entity the right to do business in a specified manner, including the right to sell the parent company's products and use its name, production, preparation, and marketing techniques, this is called:

A) market partnering.
B) cooperative advertising.
C) punitive partnering.
D) franchising.

Question 56

The Boston Consulting Group conducted a study that shows that doubling of output can:

A) increase taxable income for companies.
B) motivate employees to unionize.
C) provide substantiating profitization.
D) reduce production costs by up to thirty percent.

Question 57

Which of following terms is exemplified in this statement: The United States is "closer" to Canada than it is to Mexico because the U.S. and Canada have similar cultures.

A) Separation
B) Transcontinental
C) Psychological distance
D) Placement

Question 58

For the concept of an export management company to work, both parties must do all of the following except:

A) call each other every day to discuss fluctuations in the market.
B) recognize the delegation of responsibilities.
C) realize the costs associated with these activities.
D) realize the need for information sharing, and cooperation.

Question 59

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

A) lucky.
B) an accidental exporter.
C) a suave business.
D) pushy.

Question 60

Under this type of agreement, one firm permits another firm to use its intellectual property in exchange for royalty compensation. This property might include patents, trademarks, copyrights, technology, technical know-how, or specific marketing skills. What is this type of agreement called?

A) Outright purchase
B) Posture positioning
C) Focal market agreement (FMA)
D) Licensing

Question 61

What effect do multinational corporations have on economic vitality and jobs in host countries?

A) Their presence results in flat consortium expansion.
B) They encourage previously uncharted marketing experience.
C) They can offer higher wages than the average domestically-oriented firm.
D) They average a low return on local investment.

Question 62

Which of the following is not different about partners in a strategic alliance?

A) Profit
B) Products
C) Geographic
D) Functional strength

Question 63

When a multinational firm employs the best and the brightest from the domestic country and moves them to another market, this is known as:

A) brain drain.
B) scholar holler.
C) science pretense.
D) executive switching.

Question 64

Which of the following are defined as enterprises which own or control production or service facilities outside the country in which they are based?

A) Pollyanna restoration corporations
B) Multinational corporations
C) Strategic operations
D) Transcontinental airline flights

Question 65

When an international company owns 100 percent of the multinational firm, this is considered:

A) capitalization.
B) full ownership.
C) profiteering.
D) corporation management.

Question 66

A multinational firm may wish to expand abroad because demand abroad is the result of the move abroad by established customers. What is the term used to describe this?

A) Derived demand
B) Abroad demand
C) Manufacturer sustenance
D) Enterprise zone

Question 67

Organizations such as the United Nations have developed behavioral requirements for multinational corporations so that the corporations' presence is not harmful to the domestic or the foreign country. Which area does the UN not address in these instances?

A) Employment practices
B) Consumer and environmental protection
C) Commercialization
D) Human rights

Question 68

Which of the following is the proper definition of portfolio investment?

A) Direct investment in capital resources in foreign entities
B) Purchase of a manufacturing plant in a foreign market
C) Outright purchase of a competing company
D) Purchase of stocks and bonds internationally

Question 69

The flow of imports that foreign direct investors often bring with them affect the host country in a variety of ways. Which of the following is a negative effect of foreign direct investment by multinational companies?

A) Spacial disorientation
B) Land/sea acquisition
C) Preventing possible partnerships
D) Weakening of a nation's international trade position

Question 70

Very often, foreign direct investors, particularly multinational corporations, are praised by governments and individuals for bringing capital, economic activity, transferring technology and managerial skills, and one other key component to the country. What is that key component?

A) Pacing
B) Interlocking values
C) Deference
D) Employment

Question 71

Which of the following is not a service firm that might follow a multinational firm abroad?

A) Advertising agency
B) Engineering firms
C) Insurance company
D) Bolt manufacturer

Question 72

Special tax measures designed to serve as an attraction for foreign investment are called:

A) payola.
B) prestige payoffs.
C) mordida.
D) fiscal incentives.

Question 73

Non-financial incentives can consist of guaranteed government purchases, special protection from competition through tariffs, import quotas and local content requirements, and ____________.

A) investments in infrastructure facilities
B) promotion participation
C) placement requisition
D) rising prices

Question 74

When two or more organizations collaborate for more than a transitory period and share assets, risks, and profits, this is known as a:

A) value partnership.
B) money exchange.
C) forward dominance.
D) joint venture.

Question 75

A major concern of both governments and citizens is the concept of transfer of profit from the new foreign market back to the domestic country. What is the term used for this transfer?

A) Profit repatriation
B) Domestic sharing
C) Currency liquidation
D) Credit acceptance corporation

Question 76

Which of the following is one reason that a multinational company may resist the temptation to wholly own its company in a foreign market?

A) Expense
B) Income
C) Market instability
D) Fundamentalism

Question 77

Which of the following is a special joint venture that is more than the traditional customer-vendor relationship but less than an outright acquisition?

A) Futures market
B) Strategic alliance
C) Pre-channel offering
D) Think tank

Question 78

Which of the following is not shared in a joint venture?

A) Assets
B) Risks
C) Profits
D) Competition sunk costs

Question 79

Financial incentives are defined as:

A) the relationship between a buy and seller.
B) an indirect stimulus.
C) special funding for the investor in the form of buildings, loans, loan guarantees, and subsidies.
D) a predisposition for accounting related programs of virtual reality.

Question 80

Which of the following is not a reason joint ventures are disbanded?

A) Success rates
B) Non-disclosure of sensitive information
C) Conflicts of interest
D) Disagreements about profit sharing