Question 1

An importer takes goods manufactured domestically and sells them abroad.

Accepted Answer

An importer brings goods into a country from abroad for sale, rather than selling domestically manufactured goods abroad. That role is typically referred to as an exporter.

Question 2

Franchising is a low-risk way to enter a market because the concept is already proven.

Accepted Answer

Franchising allows an individual to operate a business under an established brand and proven business model, reducing the risks associated with starting a new venture from scratch.

Question 3

The most common reason cited by Canadian marketers for going global is to find other markets for their products.

Accepted Answer

Canadian marketers often seek to expand globally primarily to access new markets for their products, aiming to increase sales, diversify their market base, and leverage opportunities in international markets.

Question 4

Importing and exporting products is a low-risk strategy for entering a foreign market, as it allows a firm more control over how products are sold.

Accepted Answer

Importing and exporting offer lower control over how products are sold in foreign markets compared to direct investment methods, as they rely on local distributors or retailers.

Question 5

An exporter will sell domestically produced goods in foreign markets.

Accepted Answer

An exporter sells domestically produced goods in foreign markets, which is the essence of exporting activities.

Question 6

Foreign licensing grants foreign marketers the right to distribute a firm's merchandise or use its trademark, patent, or process in a specified geographic area.

Accepted Answer

Foreign licensing is a business arrangement in which a firm allows another firm in a foreign country to produce and market its products or use its trademark, patent, or process within a specified geographic area, in exchange for royalties or other compensation.

Question 7

Licensing has an advantage over exporting because the company enters the market with a known product, leases manufacturing space, hires foreign labour and, for a limited time, manufactures a product that has a high probability of success.

Accepted Answer

Licensing involves granting permission to a foreign company to produce and sell a product, not directly entering the market or managing production and labor.

Question 8

Both import/export and licensing strategies do not require capital outlays in the form of investment in the foreign markets that are being served.

Accepted Answer

Import/export and licensing strategies typically involve selling goods or granting rights to use intellectual property without the need for direct investment in foreign market infrastructure.

Question 9

Acquiring an existing firm in a country where the company wants to do business is a form of international direct investment.

Accepted Answer

Acquiring an existing firm in a foreign country is a common form of international direct investment, also known as foreign direct investment. This allows the acquiring company to bypass some of the challenges of starting a new business from scratch in a foreign market and gain access to an established customer base, distribution networks, and local expertise.

Question 10

Firms often use more than one strategy to enter into foreign markets.

Accepted Answer

Firms often use a combination of strategies, such as exporting and joint venture, to enter into foreign markets. This allows them to diversify their risk and capture different opportunities in the market.

Question 11

For firms that experience success in exporting, the next logical step is international direct investment due to the low risk potential and low level of required involvement.

Accepted Answer

International direct investment typically involves higher risks and requires a significant level of involvement and commitment, as it may include establishing production facilities or acquiring businesses in the target country.

Question 12

Neither export-management nor export-trade takes ownership of the product; in both cases, title for the product is retained by the manufacturer until a buyer is located and the sales transaction is completed.

Accepted Answer

Export-management companies (EMCs) typically act as the export department for a manufacturer, facilitating the export process and sometimes taking title to the goods, whereas export-trading companies (ETCs) might or might not take title to the goods but focus on trading a variety of products. The key difference is in their roles and functions, not in the ownership of the product, which can vary based on the agreement between the parties.

Question 13

Marketing abroad requires only one step: all rules and regulations for bringing the product to market must be researched and considered.

Accepted Answer

Marketing abroad involves multiple steps including understanding cultural differences, adapting marketing strategies to local preferences, and considering logistical aspects in addition to researching rules and regulations.

Question 14

International direct investment involves a higher degree of risk and involvement than does foreign licensing.

Accepted Answer

International direct investment requires a firm to commit significant resources and capital in a foreign country, exposing it to higher financial, political, and operational risks compared to foreign licensing, which typically involves less investment and lower risk as it's a contractual agreement to use intellectual property.

Question 15

Subcontracting to a foreign company is a contractual agreement that allows avoidance of the import duties and regulations.

Accepted Answer

Subcontracting to a foreign company involves outsourcing a portion of the production process to a company in another country, which allows the importing company to avoid import duties and regulations that would apply if the goods were imported directly.

Question 16

Joint ventures involve contractual agreements in which foreign companies are hired to produce the domestic firm's goods or services in the foreign market.

Accepted Answer

Joint ventures involve a partnership between a domestic firm and a foreign company to create a separate legal entity to produce goods or services, sharing resources, risks, and profits, rather than hiring foreign companies as contractors.

Question 17

Offset agreements combine small firms with major international companies; the larger company acts as the primary contractor, and the smaller firm supports the larger with specialized exporting knowledge.

Accepted Answer

Offset agreements typically involve a larger company agreeing to purchase goods or services from a smaller company in the same country as the buyer, to offset the economic impact of a large purchase, rather than the smaller firm supporting the larger with specialized exporting knowledge.

Question 18

International direct investment can be achieved by a company acquiring an existing firm in a country where it wants to do business.

Accepted Answer

International direct investment often involves a company directly investing in foreign operations, which can include acquiring an existing firm in another country to establish a business presence there.

Question 19

Export-management companies provide a marketer with business advice and administrative services that might include working with the foreign government to ensure all of the regulations are met and the necessary paperwork is completed.

Accepted Answer

Export-management companies assist businesses in navigating the complexities of exporting goods and services, including compliance with foreign regulations and completion of required documentation.

Question 20

A manufacturer retains more control over the export process when it deals with an export-management company than if it were to sell the goods outright to an export-trading company.

Accepted Answer

An export-management company acts as an agent for the manufacturer, handling the export process on its behalf. This gives the manufacturer more control over the process than if it were to sell the goods outright to an export-trading company, which would then take ownership of the goods and handle the export process itself.

Quiz 7: Serving Global Markets