Question 1

Some Asian trading companies act as supply chain organizers for US and European companies

Accepted Answer

Asian trading companies often specialize in organizing and managing supply chains for US and European companies, leveraging their local knowledge and networks to source products, manage production, and ensure efficient logistics.

Question 2

When firms lack resources, expertise and market contacts to cover world markets, they can use trading companies to gain market access

Accepted Answer

Trading companies have the resources, expertise, and established market contacts that can help firms without these capabilities to access and navigate foreign markets effectively.

Question 3

Direct exporting is a good way to build trading expertise and contacts abroad

Accepted Answer

Direct exporting allows a company to establish a direct relationship with foreign markets, which helps in building trading expertise and contacts abroad by dealing directly with the distributors or customers in the target market.

Question 4

Today's trading companies vary in size from small independent operations to large sophisticated trading outfits

Accepted Answer

Trading companies today range in size from small businesses focusing on specific markets or products to large corporations that operate on a global scale, dealing in a wide variety of goods and services.

Question 5

Japanese trading companies have accumulated significant trading expertise and can handle complex trades anywhere in the world

Accepted Answer

Japanese trading companies, known as "sogo shosha," have developed extensive expertise in international trade, allowing them to manage complex transactions across various industries and countries efficiently.

Question 6

Most of today's trading companies are large, sophisticated firms with contacts all over the world

Accepted Answer

The answer of Most of today's trading companies are large,...

Question 7

When firms have expertise in dealing with foreign customers, and in financing and shipping goods abroad, indirect exporting is appropriate

Accepted Answer

Direct exporting is more appropriate for firms with expertise in dealing with foreign customers, and in financing and shipping goods abroad, as they can manage the process and relationships themselves. Indirect exporting is typically for firms with less experience and resources in international markets.

Question 8

Companies rarely or never own their own overseas franchises

Accepted Answer

Many companies do own their own overseas franchises as part of their international expansion strategy, although it's also common to grant franchises to local operators.

Question 9

Trading companies came into being during the twentieth century

Accepted Answer

Trading companies have existed since ancient times, facilitating trade between different cultures and regions long before the twentieth century.

Question 10

Licensing gives companies swift access to markets but entails significant upfront investments

Accepted Answer

Licensing typically involves lower upfront investments compared to establishing new operations, as it allows a company to enter foreign markets by granting rights to use its products, services, or brand to a licensee.

Question 11

Export Trading Companies and Webb-Pomerene Associations are US institutions

Accepted Answer

Export Trading Companies and Webb-Pomerene Associations are both types of organizations in the United States that were created to promote and facilitate export activities among American firms, with Webb-Pomerene Associations specifically being authorized by the Webb-Pomerene Act of 1918 to allow American exporters to join forces in export activities without violating antitrust laws.

Question 12

Under contractual modes of market entry, a company contracts with a foreign firms to render a service to that company in a particular country or group of markets

Accepted Answer

Contractual modes of market entry involve agreements between a company and foreign firms to provide services or products under specific terms, without the need for direct investment in foreign markets. This can include licensing, franchising, and outsourcing arrangements.

Question 13

Export and import strategies are mainly used by small and medium-sized firms

Accepted Answer

Export and import strategies are not limited to small and medium-sized firms; large corporations also extensively use these strategies to expand their market reach, diversify their operations, and increase their profitability.

Question 14

The internet has opened up world markets to many small and medium-sized firms

Accepted Answer

The internet has significantly lowered barriers to entry for small and medium-sized firms, allowing them to access global markets, reach a wider customer base, and compete with larger companies more effectively.

Question 15

Licensing allows a foreign-based firm to use a company's production processes, marketing logos, trademarks or brand names in specified markets for a pre-specified

Accepted Answer

Licensing is a business arrangement in which one company gives another company permission to manufacture its product for a specified payment, allowing the use of its technology, brand name, or product specifications.

Question 16

Franchising works well when firms require rapid international expansion but lack upfront capital

Accepted Answer

Franchising allows firms to expand quickly into international markets by leveraging local franchisees' capital and market knowledge, reducing the need for significant upfront investment from the franchisor.

Question 17

The internet has facilitated international payments, international promotions, and allowed on-line ordering for many companies

Accepted Answer

The internet has significantly enhanced global commerce by enabling international payments, facilitating worldwide promotional activities, and allowing consumers and businesses to place orders online, thus expanding the market reach of many companies.

Question 18

Franchising is similar to licensing but franchisers tend to exert more control over production processes and marketing strategy

Accepted Answer

Franchising agreements typically involve more extensive control and support by the franchiser over how the business is run, including production processes and marketing strategies, compared to licensing agreements which usually grant more autonomy to the licensee.

Question 19

The internet has complicated cross-border communications for small firms

Accepted Answer

The internet has simplified cross-border communications for small firms by providing them with tools and platforms to easily reach global markets and communicate with international clients at a low cost.

Question 20

International firms can control franchisers by concentrating ownership through master franchisers or diluting ownership among thousands of franchisees

Accepted Answer

International firms often use master franchisers to maintain control over their brand and operations in foreign markets. By either concentrating ownership through a few master franchisers or distributing it among many franchisees, they can manage the extent of control and influence they have over the franchise operations. Concentrating ownership allows for more direct control and easier communication, while diluting ownership can expand market presence rapidly, albeit with potentially less direct control over each individual franchisee.

Quiz 8: Market Entry and Servicing Strategies