Deck 13: Country Selection and Entry Modes

Question 1

Deane Manufacturers produces its goods in its home country and then sells it in other countries.In the context of international expansion,which of the following entry modes is exemplified in this scenario?

A)Exporting
B)Licensing
C)Franchising
D)Joint venture

Answer 1

A

Question 2

In the context of the modes of entering a foreign market,equity modes:

A)include the entry modes of exporting.
B)include turnkey operations.
C)prevent firms from getting close to customers.
D)require a large investment.

Answer 2

D

Question 3

Linda wants to purchase a new car.She visits a few of the car showrooms in her city to select the brand of car that would be affordable to her as well as the one that she will be proud to own.After careful research,she decides to choose a car manufactured by a local brand.Although Linda had the option to choose cars from foreign brands that were priced much lesser than the car she chose from the local brand,she preferred the car from the local brand to the car from the foreign brand.The approach shown by Linda in this scenario exemplifies a(n)_____.

A)ethnocentrism bias
B)neglecting probability bias
C)observational selection bias
D)confirmation bias

Answer 3

A

Question 4

Airaan and Nordan,two countries in the same hemisphere,have different climates.In the context of the liability of foreignness,which of the following forms of distances does this illustrate?

A)Geographic distance
B)Cultural distance
C)Administrative distance
D)Economic distance

Question 5

Atlantos and Neora,two countries in the same hemisphere,have different ethnicities.In the context of the liability of foreignness,which of the following forms of distances does this illustrate?

A)Geographic distance
B)Cultural distance
C)Administrative distance
D)Economic distance

Question 6

In the context of the modes of entering a foreign market,which of the following statements is true of equity modes?

A)They include the entry modes of exporting.
B)They require small investments.
C)They prevent firms from getting close to customers.
D)They include joint ventures.

Question 7

Thaodan and Zairen,two countries in the same continent,have different human resources.In the context of the liability of foreignness,which of the following forms of distances does this illustrate?

A)Geographic distance
B)Cultural distance
C)Administrative distance
D)Economic distance

Question 8

In the context of the liability of foreignness,which of the following companies is more likely to succeed?

A)Peacock Talkies,which enters a foreign market with a different cultural base
B)Brittall Inc. ,which enters a foreign market that is geographically located at a vast distance
C)Dearie Hubs,which enters a foreign market that is similar to its home market
D)Coallad Corp. ,which enters a foreign market by increasing the number of adaptations that it must make

Question 9

Varan Inc.is a company based in the country of Jeova,and it wishes to enter a foreign market.If it uses the equity mode for its international expansion,then which of the following entry modes is Varan Inc.most likely using?

A)Exporting
B)Licensing
C)Franchising
D)Joint ventures

Question 10

Which of the following is likely to happen to ABC Inc,a successful company in the domestic market,when it is the first entrant into a foreign market?

A)It captures a leadership position.
B)It loses control over critical resources such as distribution channels.
C)It will move its offices out of its home country.
D)It will reduce the buyer-switching costs.

Question 11

In the context of companies entering foreign markets,identify a true statement about the liability of foreignness?

A)Companies doing business in countries that are geographically distant face a small liability of foreignness.
B)Companies doing business in countries that are economically similar face a small liability of foreignness.
C)Companies doing business in countries that share a common cultural base face a large liability of foreignness.
D)Companies doing business in countries that have few administrative differences face a large liability of foreignness.

Question 12

Albath and Koina,two countries in the same continent,have different trading blocs.In the context of the liability of foreignness,which of the following forms of distances does this illustrate?

A)Geographic distance
B)Cultural distance
C)Administrative distance
D)Economic distance

Question 13

Diraan and Lordan,two countries in the same continent,have different natural resources.In the context of the liability of foreignness,which of the following forms of distances does this illustrate?

A)Geographic distance
B)Cultural distance
C)Administrative distance
D)Economic distance

Question 14

Jeole Handicrafts produces its artifacts in its home country.It then exports some of its goods to other countries.Which of the following statements is true of Jeole Handicrafts in this scenario?

A)It will not be able to modify the number of items shipped to a foreign country.
B)It will not have to distribute large inventory in the countries around the world.
C)It will not have to worry about being subjected to import tariffs.
D)It will not be able to move quickly down the learning curve.

Question 15

Gotin Manufacturers produces its goods in its home country.It then exports its manufactured goods to other countries.Which of the following is an advantage that Gotin Manufacturers will have by exporting its products?

A)Goods supplied will not be subjected to import tariffs.
B)Exporting will save time and money when goods supplied are bulky.
C)It will be able to lower the cost of labor in the home country.
D)It will be able to respond quickly to changes in global demand.

Question 16

In the context of the modes of entering a foreign market,identify a difference between nonequity modes and equity modes.

A)Nonequity modes carry more risk than equity modes.
B)Nonequity modes bring fewer rewards than equity modes.
C)Unlike equity modes,nonequity modes allow a firm to get close to customers.
D)Unlike equity modes,nonequity modes solely include joint ventures.

Question 17

In the context of the liability of foreignness,customers exhibit a(n)_____ when they prefer and are willing to pay more for local brands even when the quality is inferior.

A)ethnocentrism bias
B)neglecting probability bias
C)observational selection bias
D)confirmation bias

Question 18

In the context of companies entering foreign markets,which of the following is likely to face a small liability of foreignness?

A)Abc Corp. ,a company located in the country of Neora,is entering the market in the country of Loen,where Neora and Loen have high economic dissimilarities
B)Octave Sys Inc. ,a company located in the country of Gota,is entering the market in the country of Hannat,where Gota and Hannat are geographically situated very close to each other
C)Mnk Creative Systems,a company located in the country of Plethod,is entering the market in the country of Koraew,where Plethod and Koraew do not share cultural bases
D)Syskant Corp. ,a company located in the country of Ghina,is entering the market in the country of Milkhan,where Ghina and Milkhan possess huge administrative differences

Question 19

In the context of companies entering foreign markets,which of the following statements is true of the liability of foreignness?

A)Companies doing business in countries that are geographically proximate face a small liability of foreignness.
B)Companies doing business in countries that are economically dissimilar face a small liability of foreignness.
C)Companies doing business in countries that share a common cultural base face a large liability of foreignness.
D)Companies doing business in countries that have few administrative differences face a large liability of foreignness.

Question 20

In the context of the modes of entering a foreign market,which of the following is a difference between nonequity modes and equity modes?

A)Nonequity modes carry less risk than equity modes.
B)Nonequity modes bring more rewards than equity modes.
C)Unlike equity modes,nonequity modes allow a firm to get close to customers.
D)Unlike equity modes,nonequity modes solely include joint ventures.

Question 21

In the context of a company entering a foreign market,identify a difference between licensing and wholly owned subsidiaries.

A)Licensing is an equity mode of entering a foreign market,whereas wholly owned subsidiaries refer to a nonequity mode of entering a foreign market.
B)Licensing possesses high risk,whereas wholly owned subsidiaries are subjected to low risk.
C)Licensing protects intellectual property,whereas wholly owned subsidiaries are prone to losing their intellectual property.
D)Licensing creates distance from customers,whereas wholly owned subsidiaries provide direct exposure to local customers.

Question 22

Fredora Design House wants to enter the foreign market.However,as its designs are its intellectual property,it does not wish to risk its authority to have complete control over the sales and marketing of its products in a foreign nation.Which of the following forms of entering a foreign market should Fredora choose in this scenario such that there is a reduced risk of valuable information being leaked to competitors,thereby enabling a business partner from becoming a future competitor?

A)Turnkey operation
B)Franchising
C)Joint venture
D)Wholly owned subsidiary

Question 23

Nemmark Fantasy World is a leading water park in Neora.Solaris Creators wants to open a similar water park in its country,Lisdon.To accomplish this,a contractual agreement is made between Nemmark and Solaris.According to the contract,Nemmark will receive 20 percent royalty on ticket sales in exchange for providing Solaris Creators the authority to use Nemmark's brand.In the context of entering a foreign market,this scenario exemplifies the entry mode of _____.

A)turnkey operation
B)licensing
C)joint venture
D)exporting

Question 24

In the context of a company entering a foreign market,which of the following is a difference between licensing and wholly owned subsidiaries?

A)Licensing is an equity mode of entering a foreign market,whereas wholly owned subsidiaries refer to a nonequity mode of entering a foreign market.
B)Licensing possesses low risk,whereas wholly owned subsidiaries are subjected to high risk.
C)Licensing protects intellectual property,whereas wholly owned subsidiaries are prone to losing their intellectual property.
D)Licensing grants complete control of product and brand,whereas wholly owned subsidiaries have limited control of product and brand.

Question 25

Which of the following is typically a billion-dollar project undertaken by governments collaborating with large multinational companies that use sophisticated technologies in industries into which governments are unwilling to let foreign companies enter directly?

A)Licensing
B)Franchising
C)Turnkey operation
D)Joint venture

Question 26

Irony Pizzas has entered a unique form of licensing with Rob Jasons Inc.to open fifty stores across the city of Norjan.This exemplifies a(n)_____.

A)master franchise arrangement
B)turnkey operation
C)allied incubation
D)bonded joint venture

Question 27

In the context of different foreign market entry modes,in which of the following modes can customers become competitors?

A)Wholly owned subsidiaries
B)Joint ventures
C)Licensing
D)Turnkey operations

Question 28

In the context of entering a foreign market,which of the following companies should avoid choosing export as its entry mode?

A)Deano Herbal,which does not wish to invest much on its infrastructure
B)Lanne Inc. ,which uses e-marketers to sell directly to consumers around the globe
C)Shethan Co. ,which supplies bulky and heavy machineries to its customers
D)Tandem Footwear,which does not want to keep an inventory in different locations around the world

Question 29

A new management has been formed at Griod Tech after the company overcame a severe financial crisis.Most of the members of the management feel that the company should expand to overcome the losses incurred.It believes that it should enter the foreign market in the form of a wholly owned subsidiary.However,the Director of Griod Tech,Harry,feels otherwise and considers this option to be a risky endeavor.Which of the following justifies Harry's viewpoint?

A)The company will be unable to maintain a tight control over its foreign operations.
B)The company will need to split revenues if it wants to use the profits made in one market to develop another market.
C)The company will not be able to learn directly from the local market where it wishes to enter.
D)The company will have to bear initial costs and establish distribution entirely by itself.

Question 30

DoItBurgers,one of the leading fast-food restaurants serving large-sized burgers,is involved in a unique form of licensing in which it has granted several small fast-food houses to produce and supply its trademark burgers.However,DoItBurgers continues to be an active participant in the ongoing operations of the restaurants that serve its burgers.In the context of entering a foreign market,which of the following entry modes is exemplified in this scenario?

A)Exporting
B)Turnkey operation
C)Franchising
D)Joint venture

Question 31

In the context of entering a foreign market,in a greenfield operation,a:

A)legal entity is owned by two or more existing companies.
B)partner is given the right to use another firm's brand name.
C)firm builds a facility in a foreign market for a client.
D)firm creates a subsidiary company from scratch.

Question 32

RedLeaf Goods and Co.has been producing and supplying its designer footwear in its home country for almost a decade.It has not expanded internationally because of various reasons.However,when Linda Goodmen joins the company as its chief operating officer,she calls the members of the management for a meeting and suggests that the company should enter foreign markets.The management votes for export as an entry mode;however,Linda is not thoroughly convinced by the idea as she sees a disadvantage in using export as an entry mode among the other options.Which of the following is most likely the disadvantage that Linda foresees in this scenario?

A)The company will need to make a massive infrastructure investment.
B)The company will not be able to function with flexibility when sales go up or down.
C)The company will not be able to quickly move down the learning curve.
D)The company will have to pay for import tariffs.

Question 33

Which of the following is a disadvantage associated with joint ventures?

A)Increased political risk
B)Partners having different goals
C)Partners not sharing the costs
D)Unfair regulation

Question 34

Hrotton Pumps,a leading pump manufacturer in Lisdon,decides to enter the Kuwain market.It enters into a joint venture with Pecu Manufacturers,a company located in Kuwai.Which of the following statements is true in this scenario?

A)The joint venture will not permit sharing of costs between Hrotton Pumps and Pecu Manufacturers.
B)Hrotton Pumps will have the opportunity to leverage local knowledge.
C)Hrotton Pumps will have increased chances of facing political risks in the new country.
D)The joint venture will guarantee protection of intellectual property for both Hrotton Pumps and Pecu Manufacturers.

Question 35

The government of Ethipeo seeks the help of Newrange Refineries,which has its home base in the country of Lisdon,in building an oil refinery in Ethipeo.Once the setup is complete,technicians from Newrange would require to train their workers at the new oil refinery in Ethipeo.Once all the staff members are trained to operate and maintain the facility,Newrange will hand over the keys to the government of Ethipeo,which would operate it then on.This scenario exemplifies the entry mode of _____.

A)turnkey operation
B)licensing
C)joint venture
D)franchising

Question 36

In the context of entering into foreign markets,which of the following statements is true of licensing?

A)Licensing prevents companies from entering geographic or product markets that are outside their own strategic goals.
B)A licensor becomes one step closer to customers and can obtain direct feedback from them.
C)With an increase in the number of licensees,companies can easily prevent their brand from being misused.
D)Licensing agreements provide only limited control over the way in which a licensed brand is used.

Question 37

In the context of entering a foreign market,which of the following exemplifies a greenfield operation?

A)Ophal Tech,an existing pharmaceutical company,creates Ophalturbo,a subsidiary company,from scratch.
B)Abc Corp.and XYZ Inc. ,two parent companies,enter into a joint venture with a 50/50 arrangement.
C)GrowKids,a day-care center,gives the right to use its brand name to upcoming day-care units.
D)Uro Refineries helps the government of Jorgat to set up its own oil refinery.

Question 38

Peter and Arnold are the co-owners of HKL Creations.Peter wants to enter into the international market by licensing the products created by HKL.However,Arnold is against licensing.Which of the following is a reason that Arnold can use to justify his viewpoint?

A)The company will lose the opportunity to get feedback directly from customers.
B)The company will be prevented from entering product markets that are outside its own strategic goals.
C)The company will not be able to leverage its brand into new industries.
D)The company will need to bear great financial liability.

Question 39

Loen Handicrafts is a company that has entered the international market through exporting.It wants to use the entry tactic of making.Which of the following is most likely true in the given scenario?

A)Loen Handicrafts purchases sales and marketing channels.
B)Loen Handicrafts enters into a joint venture with a partner.
C)Loen Handicrafts establishes its own sales and distribution.
D)Loen Handicrafts begins a greenfield operation.

Question 40

LifeStem Pharma is a pharmaceutical company based in the country of Jortan.It licenses the drugs that it manufactures to Uron Medicine,a foreign company,based in the country of Kolea.In which of the following ways can licensing help LifeStem Pharma in this scenario?

A)It solves the problems of pricing a good across markets.
B)It allows the licensor to obtain direct feedback from the consumers.
C)It grants complete control over the way in which a licensed brand is used.
D)It guarantees that the licensor does not risk a loss of core capabilities.

Question 41

BuildTow,a construction company based in the country of Neora;Kchneidan Electric,an energy company based in the country of Rhothaa;and Ginnerad,a solar support company based in the country of Ramanbia have teamed up to build the largest solar park in Rhothaa for Neojen Powers,a Rhothaan-based renewable energy company.In the context of using internationalization entry tactics,these firms have entered a(n)_____ in this scenario.

A)consortium
B)ad-hoc relationship
C)proprietorship
D)franchising agreement

Question 42

According to you,if companies increase the number of licensees,will the difficulties associated with protecting the company brand from being misused increase? Give reasons to support your answer.

Question 43

In the context of entry tactics available for different entry modes,explain with an example how the ally strategy offers firms a hybrid mode of entry into foreign markets.

Question 44

According to you,is a joint venture an attractive entry mode when a company is concerned about physically entering a new market? Give reasons to support your answer.

Question 45

A contractual relationship between two or more companies is referred to as a(n)_____.

A)annuity
B)alliance
C)warranty
D)turnkey

Question 46

Feldo Systems entered the Lithiopian market by purchasing Kylied,a Lithiopian local trading site.The acquisition allowed Feldo Systems to quickly enter and expand in the Lithiopian market without the lead time required or the risk entailed when developing operations in a foreign market.This scenario exemplifies the internationalization entry tactic of:

A)making.
B)buying.
C)donating.
D)allying.

Question 47

In the context of internationalization entry tactics,which of the following statements is true of joint ventures?

A)They do not allow foreign firms to enter an unrelated global market.
B)They can make use of the entry tactic to develop its own operations in a new market.
C)They cannot buy an existing joint venture.
D)They can be formed to enter the home market of one of the parent companies.

Question 48

Do you think joint ventures can lead to the loss of intellectual property? Give reasons to support your answer.

Question 49

Dienne Automobiles has chosen to enter the foreign market by creating a wholly owned subsidiary.This subsidiary is developed through a greenfield venture.Which of the following internationalization entry tactics is being used by Dienne Automobiles in this scenario?

A)The entry tactic of ally
B)The entry tactic of buy
C)The entry tactic of make
D)The entry tactic of donate

Question 50

Heall Aircraft and G&H Airways,two companies based in the country of Islea,came together to develop and sell the JKL356 aircraft engine globally.In this scenario,Heall Aircraft and G&H Airways have formed a _____ to enter the foreign market.

A)joint venture
B)turnkey agreement
C)wholly owned subsidiary
D)franchise

Question 51

In the context of entry tactics available for different entry modes,which of the following statements is true of white-label goods?

A)They can easily be branded and sold under a partner's brand name.
B)They refer to a licensor's patented goods that can be used by a licensee.
C)They can easily be exported to foreign nations without being subjected to import tariffs.
D)They refer to goods that are donated by franchisees to nonprofit organizations.

Question 52

Explain how high relative costs in the country where production occurs is a disadvantage of exporting.

Question 53

In the context of using internationalization entry tactics,which of the following is a difference between exporting and licensing?

A)Unlike with an exporting entry mode,greenfield operations allow a licensor to enter a foreign market.
B)Unlike with an exporting entry mode,allying is the only entry tactic available with a licensing entry mode.
C)Unlike with an exporting entry mode,creation of a consortium works as an entry tactic for the licensing entry mode.
D)Unlike with an exporting entry mode,purchasing distributors serve as a prime form of allying for a licensor.

Question 54

Zainne textiles uses the services of GoUTrade,an e-commerce firm,to handle its payment and delivery processes whenever it exports its garments to foreign nations.Which of the following forms of internationalization entry tactic has Zainne used when it chooses GoUTrade as its partner to accomplish its exporting activities?

A)The entry tactic of ally
B)The entry tactic of buy
C)The entry tactic of make
D)The entry tactic of donate

Question 55

In the context of the entry tactics available for different entry modes,which of the following is a difference between the "make" tactic and the "ally" tactic?

A)In the "make" tactic,a company partners with existing firms in the local market,whereas in the "ally" tactic,a firm develops its own operations in the foreign country.
B)In the "make" tactic,a firm develops its own operations in the foreign country,whereas in the "ally" tactic,a company partners with existing firms in the local market.
C)In the "make" tactic,a firm will acquire another firm already operating in the local market,whereas in the "ally" tactic,a firm develops its own operations in the foreign country.
D)In the "make" tactic,a firm partners with existing firms in the local market,whereas in the "ally" tactic,a firm will acquire another firm already operating in the local market.

Question 56

In the context of entry tactics available for different entry modes,which of the following is a difference between the "make" tactic and the "buy" tactic?

A)Licensing uses the "make" tactic,whereas a turnkey project uses the "buy" tactic.
B)Joint ventures use the "make" tactic,whereas licensing uses the "buy" tactic.
C)Unlike with the "make" tactic,with the "buy" tactic,a firm develops its own operations in a new market.
D)Unlike with the "make" tactic,with the "buy" tactic,a firm can acquire existing franchisee operations to enter a new international market.

Question 57

Saoros textiles,which exports its goods to foreign nations,lacks expertise in lobbying activities.It obtains a partner to handle these activities.Which of the following internationalization entry tactics is Saoros using in this scenario?

A)The entry tactic of ally
B)The entry tactic of buy
C)The entry tactic of make
D)The entry tactic of donate

Question 58

Briefly explain with an example how in global licensing,a licensor may risk a loss of core capabilities.

Question 59

When Kione Systems entered the Eliptian market,it exported washing machines to Kielbher,an appliance company in Eliptia,without a label.Kielbher thereupon could brand and sell the washing machines under its label.In this scenario,the washing machines exported by Kione Systems are referred to as:

A)screen-label goods.
B)allied goods.
C)white-label goods.
D)footprinted goods.

Question 60

When Hrojo Chemicals engages in international business through a turnkey operation,it becomes responsible for developing the facility required to run a chemical factory in a foreign nation,along with the tasks of making the utility operational,training the staffs,and finally handing over the operations to the local owners.In this scenario,which of the following internationalization entry tactics is being used by Hrojo Chemicals?

A)The entry tactic of ally
B)The entry tactic of buy
C)The entry tactic of make
D)The entry tactic of donate