Question 1

Tariffs are most likely to be a problem for firms following the ____ international entry mode.

Accepted Answer

Tariffs are taxes imposed on imported goods, so exporting firms are most likely to face tariffs when they enter a foreign market. Licensing and franchising involve the transfer of intangible assets, such as technology and trademarks, rather than physical goods, so tariffs are less likely to be a problem for these entry modes. Contract manufacturing involves the production of goods in a foreign country, but the goods are then exported back to the home country, which could result in tariffs, but it is not as likely as for exporting firms.

Question 2

The quickest way to enter a foreign market using foreign direct investment is

Accepted Answer

An acquisition is the quickest way to enter a foreign market using foreign direct investment because it involves purchasing an existing company in the target market, allowing immediate access to the market, customers, and operations.

Question 3

The international strategy that requires the least customization of the company's product or service is the

Accepted Answer

A global strategy involves standardized products or services that can be easily replicated across different markets with minimal customization. This approach allows for economies of scale and cost efficiencies, as well as a consistent brand image. In contrast, multidomestic and transnational strategies require more customization to meet local market needs, and a universal strategy involves even more customization to adapt to a wide variety of cultural contexts. Therefore, a global strategy is the best choice if the goal is to minimize customization of the company's product or service.

Question 4

In the ____ structure a specific division focuses on a single product or product group.

Accepted Answer

The worldwide divisional structure is characterized by divisions that focus on specific products or product groups, allowing for specialization and concentrated attention on the development, production, and marketing of those products.

Question 5

ZigZag, Inc., operates in four international locations: North America, Latin America, Western Europe, and Eastern Europe. For each of these locations, it has profit centers with separate functions such as accounting, marketing, finance, and information systems. ZigZag uses the ____ structure.

Accepted Answer

The answer of ZigZag, Inc., operates in four international locations:...

Question 6

A German firm that manufactures precision scientific instruments has built a new factory in Nebraska on property that it has leased. It has hired German scientists and engineers as well as German technicians to work at the plant. The firm received tax benefits and other economic incentives from Nebraska in order to build this new plant. This is an example of a/an

Accepted Answer

This is a greenfield venture because the German firm has built a new factory in Nebraska on property it has leased. The firm has also received tax benefits and other incentives from Nebraska.

Question 7

If the U.S. dollar continues to be weak compared with the euro for the long term, it will

Accepted Answer

A weak U.S. dollar makes it cheaper for European companies to invest in the U.S. as their euros convert to more dollars, encouraging them to manufacture goods in the U.S. to save on costs and potentially avoid tariffs.

Question 8

Why would a company choose to use foreign direct investment as a way to enter a foreign market instead of other, less risky options? What are the disadvantages of foreign direct investment? What are the types of foreign direct investment?

Accepted Answer

The answer of Why would a company choose to use...

Question 9

What are the differences and similarities between licensing and franchising as means of entering the international market? What are the pros and cons of both licensing and franchising?

Accepted Answer

The answer of What are the differences and similarities between...

Question 10

Bouquet Fragrances, Inc., uses a multidomestic strategy. The ____ structure is most appropriate for it.

Accepted Answer

A geographic-area divisional structure would be the most appropriate for Bouquet Fragrances, Inc., as it uses a multidomestic strategy, in which it customizes its products and marketing strategies to fit the specific needs of local markets. A geographic-area divisional structure allows for decentralized decision-making and autonomy at the regional level, which is critical for a multidomestic strategy. The other options, such as an international matrix or global matrix, are more appropriate for companies using a global standardization strategy, in which products and strategies are standardized across regions. A worldwide divisional structure may be too centralized for Bouquet Fragrances, Inc., and may not allow for enough local flexibility.

Question 11

The ____ international strategy requires centralized production and marketing decisions to be make at a central divisional office.

Accepted Answer

The global international strategy involves centralizing production and marketing decisions at a central divisional office, allowing for standardized products and services across all markets.

Question 12

All of the following are examples of foreign direct investment except

Accepted Answer

Turnkey projects are not considered foreign direct investment because they involve a contractor agreeing to handle every detail of the project for a foreign client, including the construction and training of operating personnel, but at the end of the contract, the facility is turned over to the purchaser. They do not involve long-term investment in foreign economies or the acquisition of a lasting management interest in a foreign company, which is a key characteristic of foreign direct investment.

Question 13

The international strategy that attempts to combine global scale efficiencies with local responsiveness in a geographic region is the ____ strategy.

Accepted Answer

The transnational strategy aims to achieve worldwide integration while also allowing for local customization based on regional preferences or requirements. This strategy is used by firms to achieve economies of scale while also responding to local market needs. The global strategy focuses on achieving economies of scale by centralizing core activities, whereas the multidomestic strategy puts a greater emphasis on local responsiveness over global integration. The universal strategy is not a recognized term in strategic management.

Question 14

For a fee, McDonald's provides trademarks, the operating system, and its well-known products as well as support services such as advertising, specialized training, and quality assurance programs to partners across the world. This type of market entry is called

Accepted Answer

The scenario describes a franchising model where a company provides trademarks, operating system, and support services to partners for a fee. This is a popular market entry strategy used by companies like McDonald's to expand rapidly across the world while minimizing their investment and risk.

Question 15

Why would a currently-successful firm wish to expand its operations internationally?

Accepted Answer

The answer of Why would a currently-successful firm wish to...

Question 16

If country-specific advantages for production are stronger in the home country, ____ is likely the best choice for entering an international market.

Accepted Answer

When country-specific advantages for production are stronger in the home country, exporting is often the best choice for entering an international market. This is because the firm can capitalize on its domestic production strengths while selling its products or services abroad.

Question 17

Goodie, Goodie, Gumdrops (GGGs) is a retail business appealing to pre-teen girls. It carries specialty clothing, accessories, and even food items all manufactured specifically for its stores. GGGs has been very successful in the U.S. and it plans to expand into selected international markets. The ____ entry mode would probably be most appropriate for GGGs.

Accepted Answer

Franchising is the most appropriate entry mode for GGGs as it allows for a low-risk expansion strategy, providing local knowledge and expertise, while maintaining control over the brand and its products. Franchising also allows for a quicker expansion process as the franchisee is responsible for the majority of the investment and ongoing costs.

Question 18

The organizational structure which provides the most flexibility in designing products and responding to customer needs is the ____ structure.

Accepted Answer

The global matrix structure provides the most flexibility in designing products and responding to customer needs as it combines the benefits of both functional and divisional structures. This structure allows the organization to have multiple lines of authority, which facilitates greater flexibility and adaptability to changing customer needs and market trends. Additionally, the global matrix structure encourages collaboration and knowledge sharing across departments and geographic regions, which can lead to more innovative and effective product design.

Question 19

The transnational strategy is usually implemented through the ____ structure.

Accepted Answer

The global matrix structure allows for coordination and integration across multiple geographic areas and functions, which is necessary for a transnational strategy that seeks to balance global integration and local responsiveness. The other structures listed (international network, geographic-area divisional, worldwide divisional) do not provide the same level of coordination and integration.

Question 20

Mitigation Masters is a company that specializes in the rescue and repair of paper documents and books damaged by water. They are known all over the United States for salvaging governmental records, academic and private libraries, and museum collections. Mitigation Masters has spent years in painstaking research and practical experimentation to develop methods of drying the documents, preventing mold growth, and minimizing the fragility of damaged documents. Mitigation Masters intends to move into the international market. The best entry mode for it would be

Accepted Answer

A greenfield venture would be the best choice for Mitigation Masters to expand into the international market. Their highly specialized and unique service would require them to have control over their operations and processes, and a greenfield venture would allow them to establish their own facilities and equipment while maintaining their expertise and quality standards. Licensing or franchising may not be appropriate as they may not have full control over their operations and outsourcing may not be feasible as it requires transferring their confidential processes and technology to another company.

Quiz 8: Competing Across Borders