Question 1

The idea that a country should be self-sufficient and not take part in international business is known as 'autarky'.

Accepted Answer

Autarky is the concept of economic self-sufficiency, where a country seeks to produce all the goods and services it needs without engaging in international trade.

Question 2

An arrangement whereby a firm grants the rights to intangible property to another entity for a specified time period in exchange for payment is an exporting agreement.

Accepted Answer

An arrangement whereby a firm grants the rights to intangible property to another entity for a specified time period in exchange for payment is a licensing agreement, not an exporting agreement.

Question 3

Under a cross-licensing agreement,a firm might license some valuable intangible property to a foreign partner,but in addition to a royalty payment,the firm might also request that the foreign partner license some of its valuable know-how to the firm.

Accepted Answer

This statement accurately describes a cross-licensing agreement, in which two firms exchange licenses for their respective intellectual property or know-how. This can involve one firm licensing their property to a foreign partner in exchange for royalties, while also requesting access to the foreign partner's intellectual property.

Question 4

The optimal entry mode for firms depends to some degree on the nature of their core competencies.A distinction can be drawn between firms whose core competency is in technological know-how and those whose core competency is in management _______.
A)skills
B)experience
C)know-how
D)empathy

Accepted Answer

The optimal entry mode for firms often depends on their core competencies. For firms with a core competency in management, the term "know-how" is commonly used to describe their expertise and skills in managing operations effectively.

Question 5

One of the main drawbacks for the international _______ is the repatriation of profits to the host-country _________.
A)franchisee;franchisor
B)exporter;importer
C)manufacturer;agent
D)licensee;licensor

Accepted Answer

The correct answer is A because the question is about the repatriation of profits to the host-country, which is a concern for franchisors.

Question 6

Turnkey projects are most common in the chemical,pharmaceutical,petroleum-refining and metal-refining industries.

Accepted Answer

Turnkey projects are projects that are fully designed, constructed and equipped by a single contractor, who then turns over the finished product to the client for use. These types of projects are common in industries where highly specialized equipment and expertise are required, such as chemical, pharmaceutical, petroleum-refining and metal-refining industries.

Question 7

The distinct disadvantages of ____________are the high development costs and risks.
A)wholly owned subsidiary ventures
B)contract manufacturing arrangements
C)strategic alliance structures
D)franchising businesses

Accepted Answer

Wholly owned subsidiary ventures involve a significant investment in the foreign market, including infrastructure and personnel. This makes it a high-risk venture, and the development costs can be quite substantial. Contract manufacturing arrangements, strategic alliance structures, and franchising businesses usually entail lower development costs and risks.

Question 8

Franchising is basically a specialised form of licensing in which the franchiser not only sells intangible property to the franchisee,but also insists that the franchisee agrees to abide by strict rules as to how it does business.

Accepted Answer

Franchising is indeed a form of licensing where the franchiser not only sells intangible property but also enforces strict rules regarding how the franchisee conducts business.

Question 9

For novice exporters,it is wise to engage an agent within the home country than deal directly with the overseas customer.

Accepted Answer

Engaging an agent within the home country can be beneficial for novice exporters as the agent can provide knowledge and guidance regarding export procedures and regulations, as well as act as a intermediary in communication with the overseas customer. This can help to mitigate risks and avoid misunderstandings that could arise from dealing directly with the customer.

Question 10

A 'sunset' clause is an arrangement that provides for termination in what type of agreement?
A)business networks
B)wholly owned subsidiary
C)franchise
D)joint venture

Accepted Answer

A 'sunset' clause is typically used in a joint venture agreement. This clause specifies the expiration of the agreement after a specific period or upon the completion of a particular project.

Question 11

Franchising is similar to:
A)joint ventures
B)licensing.
C)strategic alliance.
D)contract manufacturing.

Accepted Answer

Franchising is a type of licensing agreement in which a company (franchisor) grants the right to use its brand name, products, and operational systems to another company (franchisee) in exchange for a fee or royalty. While joint ventures, strategic alliances, and contract manufacturing also involve partnerships between two or more companies, these concepts are different from franchising in terms of their structure, purpose, and legal framework.

Question 12

The two entry strategies that have a lot of similarities in common are:
A)licensing and build-own-transfer.
B)franchising and licensing.
C)exporting and importing.
D)wholly owned subsidiary and business networks.

Accepted Answer

Both franchising and licensing involve allowing another business to use your brand and/or products, while still retaining some level of control over how they operate. The key difference is that franchising typically involves more hands-on support and training from the franchisor, while licensing is often more hands-off. However, overall the two strategies have many similarities in terms of the benefits and risks involved.

Question 13

A primary advantage of licensing is that the firm does not have to bear the development costs and risks associated with opening a foreign market.

Accepted Answer

When a firm licenses its technology or product to another firm in a foreign market, the licensee is responsible for the costs and risks associated with developing and introducing the product in that market. This allows the licensor to enter the market without having to invest significant amounts of money or take on the risks associated with entering a new market. Therefore, the primary advantage of licensing is that the firm does not have to bear the development costs and risks associated with opening a foreign market.

Question 14

The most typical joint venture holds the following per cent ownership stake and contributes a team of managers to share operating control:
A)60/40
B)75/25
C)80/20
D)50/50

Accepted Answer

50/50 joint ventures are the most common and typically refer to a partnership where both parties share equal ownership and control. This allows for an equal say in the direction and management of the joint venture, making it a fair and balanced arrangement. While other ownership percentages may be used, a 50/50 split is often seen as the most equitable option.

Question 15

Governments actively encourage companies to export their goods and services as exporting represents additional jobs and has a positive effect on trade balance.

Accepted Answer

Governments typically offer various incentives and support measures to encourage companies to export their goods and services, as this can lead to increased economic activity and improved balance of trade.

Question 16

Every export is an import in the recipient country.

Accepted Answer

This statement is true. When a country exports goods to another country, those goods become imports for the recipient country. This is because the recipient country is importing those goods from the exporting country.

Question 17

Turnkey projects are most common in the following industries:
A)wholesale trade,retail trade and contract manufacturing.
B)education,finance and insurance.
C)chemical,pharmaceutical and petroleum refining.
D)agriculture,mining and construction.

Accepted Answer

Turnkey projects are most common in industries where complex and specialized equipment and processes are required, such as chemical, pharmaceutical, and petroleum refining industries. These industries often require specialized expertise and equipment, making turnkey solutions an attractive option. The other industries listed may also use turnkey projects, but they are not as common as in the industries mentioned in option C.

Question 18

The two main advantages of exporting is first to avoid the often substantial costs of establishing manufacturing operations overseas,and second,to profit from the venture.

Accepted Answer

The answer of The two main advantages of exporting is...

Question 19

A clear advantage of wholly owned subsidiary as a preferred entry mode,particularly when a firm's competitive advantage is based on technological competence,will often be because it:
A)reduces the risk of losing control over that competence.
B)benefits from the host country's competitive conditions.
C)increases control of the development costs and risks of working in a foreign market.
D)maintains control over the capital necessary to get the overseas operation going.

Accepted Answer

A wholly owned subsidiary allows the firm to maintain full control over its technological competence, reducing the risk of losing control over it to a partner or competitor.

Question 20

General Electric has shifted away from its traditionally preferred method of entering new markets via wholly owned subsidiaries to entering new markets through ________ with local firms for reasons of lowering risk and costs.
A)strategic alliances
B)export strategies
C)joint venture strategies
D)contract manufacturing

Accepted Answer

General Electric has shifted to entering new markets through joint venture strategies with local firms to lower risk and costs, as joint ventures allow sharing of resources and risks with local partners.

Quiz 11: Entering Foreign Markets

The idea that a country should be self-sufficient and not take part in international business is known as 'autarky'.

An arrangement whereby a firm grants the rights to intangible property to another entity for a specified time period in exchange for payment is an exporting agreement.

Under a cross-licensing agreement,a firm might license some valuable intangible property to a foreign partner,but in addition to a royalty payment,the firm might also request that the foreign partner license some of its valuable know-how to the firm.

The optimal entry mode for firms depends to some degree on the nature of their core competencies.A distinction can be drawn between firms whose core competency is in technological know-how and those whose core competency is in management _______.

One of the main drawbacks for the international _ is the repatriation of profits to the host-country ___.

Turnkey projects are most common in the chemical,pharmaceutical,petroleum-refining and metal-refining industries.

The distinct disadvantages of ____________are the high development costs and risks.

Franchising is basically a specialised form of licensing in which the franchiser not only sells intangible property to the franchisee,but also insists that the franchisee agrees to abide by strict rules as to how it does business.

For novice exporters,it is wise to engage an agent within the home country than deal directly with the overseas customer.

A 'sunset' clause is an arrangement that provides for termination in what type of agreement?

Franchising is similar to:

The two entry strategies that have a lot of similarities in common are:

A primary advantage of licensing is that the firm does not have to bear the development costs and risks associated with opening a foreign market.

The most typical joint venture holds the following per cent ownership stake and contributes a team of managers to share operating control:

Governments actively encourage companies to export their goods and services as exporting represents additional jobs and has a positive effect on trade balance.

Every export is an import in the recipient country.

Turnkey projects are most common in the following industries:

The two main advantages of exporting is first to avoid the often substantial costs of establishing manufacturing operations overseas,and second,to profit from the venture.

A clear advantage of wholly owned subsidiary as a preferred entry mode,particularly when a firm's competitive advantage is based on technological competence,will often be because it:

General Electric has shifted away from its traditionally preferred method of entering new markets via wholly owned subsidiaries to entering new markets through ________ with local firms for reasons of lowering risk and costs.