Deck 8: Entering Global Markets

Question 1

Shana and her finance colleagues are discussing the costs associated with an international market expansion,which includes the need for new product development funds.Their concerns represent __________ factors.

A) uncontrollable
B) external
C) internal
D) domestic

Answer 1

C
Explanation: The company's funding resources are largely under their control.

Question 2

The most important indicator of how quickly a firm is ready and willing to export is the speed at which resources beneficial to international competitiveness are developed.

Answer 2

True

Question 3

The fact that the typical channel of distribution in State Chemical's target market involves many intermediaries and several layers of pricing discouraged them pursuing business there.The firm was impacted by the target country factor of __________________________.

A) environment
B) technology
C) market
D) production

Answer 3

C
Explanation: This category includes the political, economic, geographic and social factors that make one country more attractive for international commerce than another, and is unrelated to channels of distribution.

Question 4

The two categories of external factors considered in determining the mode of global market entry are ____________________________.

A) production and environmental conditions
B) market size and competitive environment
C) controllable and uncontrollable factors
D) target country factors and domestic country factors

Question 5

While small and large companies are different in many respects,their choices of market entry methods are often the same.

Question 6

When Nutrablend Corporation assessed its mode of entry for operations in Belgium,it discovered that foreign sales office personnel were subject to high levels of corporate contribution to social security programs.Nutrablend then decided to utilize its UK sales office for sales into the market.The company was affected by the target country's factor of ___________________ conditions.

A) market
B) environmental
C) technical
D) competitive

Question 7

Diamond Machining Technology was forced to improve its domestic operations by virtue of global competition.

Question 8

Responding to import competition from China and Israel,Diamond Machining Technology,discussed in Box 8-1,deliberately initiated exports of its diamond-based sharpeners to those markets.

Question 9

A large and growing domestic market will commonly provide incentive for companies to expand internationally.

Question 10

Bernie is poring over data accumulated to fine-tune his company's foreign market entry plans.His stack of papers include statements of business ethics,income and balance sheets,maps of geographic and market coverage and a series of client references.Bernie is most likely investigating __________________________________.

A) country market legal issues
B) tariff and non-tariff barriers to entry
C) country market suitability
D) alternative distributor candidates

Question 11

Exporters that utilize intermediaries who specialize in this activity from the home base are implementing ___________________.

A) direct exporting
B) indirect exporting
C) distributorships in the target country
D) exports to subsidiaries

Question 12

The laws and regulations regarding import/export partnerships are generally consistent from country to country owing to the increasing numbers of foreign trade agreements.

Question 13

Exporting is limited to actual physical products that are produced outside the target country market.

Question 14

Low- to moderate-risk strategies commonly employed by SMEs include all of these options except _______________.

A) franchising
B) licensing
C) exporting
D) direct investment

Question 15

"What are the key success factors for our products?" "Do we have excess production capacity?" and "Which of our products have the highest potential abroad?" are all questions posed when a firm determines ___________________________.

A) whether or not to globalize
B) its mode of entry for pursuing international markets
C) if it should source globally
D) its global branding strategy

Question 16

Changes in economic,competitive,government,and market factors,can be anticipated by the process of _______________________________.

A) environmental scanning
B) the International Product Life Cycle model
C) competitive scanning
D) technology scanning

Question 17

Functional Furniture Inc.has uncovered a market for its compact,ready-to-assemble children's furniture in Japan.Because it has limited financial,marketing,and human resource capabilities,and must tap the market quickly,its best entry method is likely ___________________.

A) export
B) direct investment
C) franchising
D) a turnkey operation

Question 18

All of the following are reasons that a firm expands into international markets except: ___________________________.

A) to immunize itself from the pressures of global competition
B) to expand beyond a saturated domestic market
C) to find new source of profits
D) to follow customers who are going abroad

Question 19

Hakim is lucky.He loves his job! As an executive with Lean Jean denim in the U.S.,he is responsible for arranging the marketing,sales and transport for the firm's clothing lines to all of its global markets through his company's subsidiaries worldwide.Lean Jeans conducts international business via ______________________.

A) direct exporting
B) indirect exporting
C) his U.S. sales agents
D) indirect retailing

Question 20

In order to optimize foreign markets,the entry mode employed must be consistent and retain its original structure.

Question 21

When Saudi Aramco and Dow Chemical announced their plans to construct and operate a new petrochemical facility in Jubail,Saudi Arabia,each with a percentage ownership in the facility,they described a basic _______________________________.

A) international joint venture
B) strategic alliance
C) outsourcing arrangement
D) licensing arrangement

Question 22

International franchising gives more control to the franchisee company over the franchisor who has provided the company's trademarks,products and/or services,and production and/or operation processes.

Question 23

Licensing generally involves smaller up-front risks and expenditures than other foreign market entry modes.

Question 24

Joint ventures are created when two or more companies share ownership of a third commercial entity and collaborate in the production of its goods or services.

Question 25

Regina is interested in the market opportunity evident in Malvania for her line of rubber cleaning products.Her concerns regarding market entry include the fact that her product line is highly mature.In addition,the Malvanian government often imposes high tariffs on rubber products due to its own rubber industry,and has been known to impose profit repatriation restrictions.Regina should consider ___________________.

A) identifying a less risky target market
B) indirect export
C) direct export
D) licensing

Question 26

Jalal's firm recently underwent a spate of negative publicity regarding their manufacturing processes.Not only were they lacking control over their production quality,but serious allegations regarding treatment and compensation of labor arose.Jalal is concerned that the _______________________ arrangement intended to save his company money actually ended up costing them!

A) strategic alliance
B) export
C) contract manufacturing
D) franchising

Question 27

When two or more partners form a joint venture to produce a final or intermediate product,or to integrate wholesale and retail activities,an upstream JV has been established.

Question 28

One of the larger concerns related to the licensing process is that _______________.

A) providing technology to a foreign partner can result in the creation of a competitor
B) it is one of the most costly forms of market entry
C) it involves the inclusion of multiple intermediaries
D) royalties do not often translate into direct profits for the licensor

Question 29

The process of transferring the rights to a firm's products to an overseas company for the purpose of producing or selling it there is referred to as _________________.

A) a turnkey operation
B) exporting
C) direct investment
D) licensing

Question 30

Another common term for contract manufacturing is outsourcing.

Question 31

The heaviest users of outsourcing are human resource firms.

Question 32

Licensors are compensated via _____________________.

A) commissions
B) royalty fees
C) direct sales revenues
D) consignment proceeds

Question 33

Franchising has reached a saturation point in both developed and emerging markets.

Question 34

Contract manufacturing has become a controversial issue due to its ______________________________.

A) decreasing popularity
B) ability to improve employee compensation
C) inherent trend to move production jobs across borders
D) ability to generate large savings

Question 35

Management companies are typically tasked to decide on ownership,financial,strategic or policies issues for the business.

Question 36

Virginie is President of Plast-Right products,a firm planning on manufacturing food service equipment in a new facility in Abu Dhabi .At a party,her nephew quizzes her about the project."You must be inundated with issues regarding equipment,site visits and local compliance issues!" he observes."Not at all," she replied."I've got my issues,believe me,but these details are all being handled as part of our ___________".

A) management contract
B) franchise agreement
C) turnkey operation
D) strategic alliance

Question 37

The purchaser of a turnkey operation must accommodate all of the following except ___________________.

A) direct involvement in design and construction of the facility
B) long-term time commitments
C) long-term exchange rate fluctuations
D) exposure to elevated political and economic risks

Question 38

One of the disadvantages of IJVs is that there is little sharing of risk.

Question 39

Reducing the uncertainties inherent in international business is not a realistic objective in the management of a cross-border partnership.

Question 40

The market entry mode in which facilities are designed,constructed,equipped and then remitted to the purchaser,often with trained personnel,is known as __________________________.

A) a turnkey operation
B) a franchise
C) exporting
D) licensing

Question 41

Compared to direct investment,international strategic alliances embody all of the following benefits except _____________________.

A) the pooling of resources across multiple firms
B) the sharing of risk
C) a lower level of financial investment
D) a commonality of decision-making styles

Question 42

When ServiceWrap,a major blow molder of consumer food service films and wraps,cooperates with Alumall,metal processors making food service foils and stainless steel tableware,to tap the hospitality market in Russia,the firms have formed a _________________________.

A) vertical strategic alliance
B) horizontal strategic alliance
C) turnkey operation
D) diagonal strategic alliance