Question 1

Tanner Tractors is considering licensing its new line of tractors to its joint venture in India.Which of the following facts would make this unfeasible?

Accepted Answer

Licensing a product to a joint venture is feasible regardless of the tariff situation, and it is indeed possible to license products to your own joint venture.

Question 2

Paris Pharmaceuticals is based in France and is planning to enter the U.S.market to sell its new hypertension medicine there.Which of the following is not an appropriate entry mode for the company?

Accepted Answer

Exporting utilizing U.S.-based contract manufacturers may not be an appropriate entry mode as it involves partnering with a third-party manufacturer, which may not offer complete control over the production process and the quality of the product. Additionally, it may not be cost-effective for Paris Pharmaceuticals to establish a production facility in the U.S. as it may require significant capital investment and may involve regulatory hurdles. The most appropriate entry mode for the company would be to license the product to a U.S. pharmaceutical firm or to form a distribution-based alliance with a U.S. pharmaceutical firm as this would provide access to established distribution networks and existing customer bases. Exporting utilizing distributors may also be a viable option as it would involve minimum investment and allow the company to test the waters before committing to a more significant investment.

Question 3

French Bakery Breads is considering entering the Canadian bread market.Which would not be a good entry option?

Accepted Answer

Establishing compounding facilities in Canada would not be a good entry option as this option only involves mixing raw materials together to make dough, which is not a unique selling point for French Bakery Breads compared to other players in the Canadian bread market. Establishing manufacturing facilities, wholly-owned subsidiary or joint venture in Canada would be a better option as it would involve the production, distribution, and marketing of their unique bread products in the Canadian market.

Question 4

Action Toys is considering entering a new market in Central America and is thinking of establishing a marketing subsidiary.Which of the following facts should be of concern to the firm?

Accepted Answer

Local laws requiring the use of a local agent can complicate and potentially increase costs for the firm when establishing a marketing subsidiary. The difficulty in finding local contract manufacturers or licensees may also impact the firm's ability to efficiently operate in the new market, but it is not as critical as complying with local laws. The low tariffs on toys may even be an advantage for the firm.

Question 5

Tin City Bicycles has decided to open a marketing subsidiary in Italy.Now the company will have to

Accepted Answer

Opening a marketing subsidiary in Italy does not necessarily entail building a factory or partnering with a contract manufacturer. The main focus of the subsidiary would be to handle the marketing, pricing, promotion, and distribution of Tin City Bicycles' products in Italy. Therefore, C is the best choice.

Question 6

Tanner Tractors is considering utilizing either a licensee or a contract manufacturer for its tractors in a small West African country.Which of the following would indicate that a contract manufacturer would be the better option?

Accepted Answer

Using a contract manufacturer allows Tanner Tractors to maintain control over the marketing of its products, as it involves outsourcing production while keeping the marketing and product strategy in-house.

Question 7

ABC Pharmaceuticals is considering employing a contract manufacturer n Brazil.Which of the following conditions would support such an action?

Accepted Answer

The existence of many sophisticated pharmaceutical manufacturers in Brazil would make it a favorable choice for a contract manufacturer. This would ensure that the quality of the products is up to the necessary standards. However, patent protection issues and capacity constraints would negatively impact the decision to employ a contract manufacturer in Brazil.

Question 8

Action Toys is thinking of employing a contract manufacturer in the Taiwanese market.Which of the following facts is not a reason to use a contract manufacturer there?

Accepted Answer

The fact that Taiwanese factories are operating at full capacity is not a reason to use a contract manufacturer there. In fact, it may make it more difficult to find a factory with available production capacity. The other three facts are all reasons why Taiwan may be a good choice for a contract manufacturer for Action Toys.

Question 9

Latin Shoes has decided to open a marketing subsidiary in Mexico.Now the company will have to

Accepted Answer

Opening a marketing subsidiary in Mexico does not necessarily require building a factory or registering with an export consortium. However, the subsidiary will need to make decisions on pricing, promotion, and distribution strategies in order to effectively market and sell their shoes in the Mexican market. Choosing a licensee could be an option, but it is not specified in the scenario.

Question 10

LeBlanc Enterprises produces high-end purses and scarves for women.It is currently exporting to Brazil though several Brazilian distributors.The company now wants to take greater control over the marketing of its products in Brazil.LeBlanc Enterprises should

Accepted Answer

To have greater control over the marketing of its products in Brazil, LeBlanc Enterprises should establish a marketing subsidiary. This will allow the company to have its own marketing team in Brazil, and have complete control over the promotion and distribution of its products. Joining an export consortium would involve sharing marketing resources with other companies, and therefore would not give LeBlanc complete control. Employing an export management company would still involve relying on a third party to handle marketing, and replacing distributors with local agents may not provide the level of control that the company desires.

Question 11

Texas Taffy is considering entering the U.K.candy market.Which of the following is not an appropriate entry mode for the company?

Accepted Answer

Exporting utilizing a U.K.-based contract manufacturer is not an entry mode but rather a manufacturing strategy. Entry modes typically involve how a company enters a foreign market, such as through a marketing subsidiary, licensing, or establishing a manufacturing subsidiary.

Question 12

Texas Taffy produces high quality candy.It is currently exporting to Mexico though several Mexican distributors.The company now wants to take greater control over the marketing of its products in Mexico.Texas Taffy should

Accepted Answer

Establishing a marketing subsidiary would give Texas Taffy greater control over the marketing of its products in Mexico. By establishing a subsidiary, Texas Taffy will have its own team in Mexico to oversee product distribution, pricing, and promotion, and make strategic decisions accordingly. This option would likely be more expensive than the other options, but it would also be the most effective in terms of control and flexibility.

Question 13

Tom Miller is deciding which mode of entry to propose to a European car manufacturer thinking of entering the relatively small East African market of Kenya.Which of the following would be least appropriate for such a market?

Accepted Answer

Establishing an integrated production facility for the Kenyan market would be least appropriate due to the relatively small size of the market, which might not justify the high investment and operational costs associated with such a facility.

Question 14

Samer Ali owns a carpet manufacturing company in Egypt.He is deciding which mode of entry to use for entering the relatively small market of Chile.Which of the following would be least appropriate for such a market?

Accepted Answer

Establishing a production facility in Chile would be the least appropriate option for entering a small market such as Chile. This option involves significant investment in infrastructure, personnel, and regulatory compliance, and may not be economically feasible for a small market like Chile. Exporting using local Chilean agents or distributors or using indirect exporting would be more appropriate and cost-effective options for entering the Chilean market.

Question 15

Lisa Fritz is deciding which mode of entry to propose to a Japanese pharmaceutical manufacturer thinking of entering the relatively small Peruvian market.Which of the following would be least appropriate for such a market?

Accepted Answer

Establishing an integrated production facility would not be appropriate for entering the relatively small Peruvian market because it would require a significant investment of resources and would be more suitable for a larger market size. Options A, C, and D would be more feasible for entering the Peruvian market.

Question 16

ABC Pharmaceuticals is considering entering a new national market in West Africa and is thinking of establishing a marketing subsidiary.Which of the following facts should be of concern to the firm?

Accepted Answer

The requirement to use a local agent could potentially add an additional layer of complexity and cost to establishing a marketing subsidiary in the new national market.

Question 17

Local assembly or compounding is least appropriate for

Accepted Answer

The answer of Local assembly or compounding is least appropriate...

Question 18

Tarox Automobiles is considering a joint venture to build an automobile assembly plant in Morocco.Which of the following facts would argue against such a decision?

Accepted Answer

None of the options A, B, or C argue against building an assembly plant in Morocco. In fact, high tariffs and quotas on automobile imports (A and B) could make local production more attractive. A "prenuptial agreement" (C) is a prudent measure to manage potential future disagreements, not a deterrent to the venture.

Question 19

Bakery French Breads is considering entering a new national market in Central America and is thinking of establishing a marketing subsidiary.Which of the following facts should be of concern to the firm?

Accepted Answer

Local laws requiring the use of a local agent can pose a challenge for the firm as they will need to establish a relationship with a local agent to conduct business in the new market. This may involve additional costs and potential cultural and language barriers. A and B are also concerns, but they are not directly related to the establishment of a marketing subsidiary.

Question 20

Western Electronics has decided to open a marketing subsidiary to sell cash registers in a small Central American country.Now the company will have to

Accepted Answer

Opening a marketing subsidiary to sell products in a new market requires adapting pricing, promotion, and distribution strategies to local conditions, but does not necessarily require finding a local partner or choosing a contract manufacturer, as these are specific strategies that may or may not be part of entering a new market.

Quiz 9: Global Market Entry Strategies