Question 1

The manufacturer of Marlboro cigarette has given Japan Tobacco the legal right to use its trademarks and patents to manufacture Marlboro cigarettes in Japan.For this right,Japan Tobacco pays a fee.This is an example of the use of _____ to enter an international market.

Accepted Answer

Licensing is a strategy in which one company (the licensor) allows another company (the licensee) to use its intellectual property (such as trademarks and patents) for a fee. In this case, the manufacturer of Marlboro cigarettes (the licensor) has given Japan Tobacco (the licensee) the legal right to use its trademarks and patents to manufacture Marlboro cigarettes in Japan in exchange for a fee. Therefore, this is an example of the use of licensing to enter an international market.

Question 2

U.S.wine producers only export about 14 percent of their total annual production of wine.This statement indicates that the U.S.wine industry:

Accepted Answer

The statement indicates that the U.S. wine industry is not heavily globalized as only 14 percent of their total annual production is exported. Therefore, it is an industry in the first stages of globalization.

Question 3

A Dutch manufacturer of electronics has decided to find a firm in Brazil to do contract manufacturing.As the manufacturer plans its Brazilian operations,it will:

Accepted Answer

The Dutch manufacturer will need to set up a marketing division in Brazil because even though the Brazilian manufacturer will handle the production, the Dutch manufacturer will still need to promote and sell their products in the Brazilian market. Setting up a local marketing division will help them understand and address the unique needs of Brazilian consumers and compete against local firms. Building the plant and determining pricing and promotional mix will come later in the process. Marketing research will also be important but may come after the decision to set up a marketing division has been made.

Question 4

A(n)_____ is a global intermediary that operates primarily in agriculture and raw materials by bringing the buyer and seller together.

Accepted Answer

An export broker is a type of global intermediary that operates primarily in agriculture and raw materials by bringing the buyer and seller together. They do not take title to the goods and do not operate as import agents, license agents, or buyer for export.

Question 5

FedEx entered into an alliance with Chronopost Internationale,a subsidiary of the French post office.Under this alliance,FedEx will transport French international shipments in its aircraft,and the French postal service will deliver FedEx packages across Europe.This is an example of:

Accepted Answer

The alliance between FedEx and Chronopost Internationale is an example of a joint venture, where two companies come together to form a partnership for a specific purpose or project. In this case, FedEx and Chronopost Internationale have formed a partnership to improve their cross-border logistics capabilities by leveraging each other's strengths.

Question 6

Disney sells the rights for an investment company to run a Disneyland theme park in Tokyo.The investment company gains most of the profits from the enterprise while paying Disney a percentage in royalties.This is an example of:

Accepted Answer

This is an example of licensing, as Disney is granting the investment company the rights to use their intellectual property (the Disneyland theme park brand and concept) in exchange for royalties.

Question 7

The _____ is an intermediary in the global market who assumes all risks and sells globally for its own account.The domestic manufacturer usually treats it like a domestic customer.

Accepted Answer

This is the definition of a buyer for export.

Question 8

Active ownership (either a controlling interest or large minority interest)of a foreign company or overseas manufacturing or marketing facilities is an example of:

Accepted Answer

Active ownership of a foreign company or overseas manufacturing or marketing facilities is an example of direct investment. Direct investment involves ownership or control of foreign assets such as factories, real estate, and businesses by a foreign entity. This is in contrast to other forms of international business involvement such as exporting, licensing, and franchising.

Question 9

The role of a domestic company that sells to an export merchant is to:

Accepted Answer

A domestic company selling to an export merchant typically sells the product to the merchant, who then resells it in foreign markets independently, without further involvement from the original manufacturer.

Question 10

Leuwin & Thomason is a British manufacturer of rifles used in competition.It wants to make its products more readily available in the United States and Canada.The company feels it is important to retain strict quality control over its production processes and wants its global expansion to yield a high return.Which method should Leuwin & Thomason choose to enter the global marketplace?

Accepted Answer

Direct investment is the best choice for Leuwin & Thomason to maintain strict quality control over its production processes while expanding globally. With direct investment, the company can establish its own manufacturing facilities in the United States and Canada, thus ensuring complete control over the production process. This also allows the company to have a greater return on investment as it retains ownership over its operations in those regions.

Question 11

DigiSystems Inc.manufactures personal gauges for measuring contact with potentially hazardous materials.Its management wants to expand into international markets while also limiting the risks involved.Additionally,DigiSystems has a limited capital base for new or expanded facilities.Which of the following options for entering international markets should DigiSystems most use?

Accepted Answer

Licensing allows DigiSystems to enter international markets with minimal risk and capital investment by granting foreign companies the rights to produce and sell its products.

Question 12

Mitsubishi Heavy Industries and Kawasaki Heavy Industries produce McDonnell Douglas's F-15 fighter planes in Japan.The two Japanese companies pay McDonnell Douglas royalties for use of its manufacturing processes and patents.This is an example of:

Accepted Answer

This is an example of licensing, as Mitsubishi Heavy Industries and Kawasaki Heavy Industries are paying royalties for the use of McDonnell Douglas's intellectual property.

Question 13

Ericsson is a Swedish telecommunications firm.GCCT is a French electronics switch manufacturer.With the use of Ericsson's money and technology and GCCT's knowledge of the French market,the two companies created a new entity and beat out AT&T for a $100 million contract with the French government.The relationship between the two companies is an example of:

Accepted Answer

The relationship between Ericsson and GCCT is an example of a joint venture, which involves two or more companies joining together to create a new entity in which they share ownership, control, and profits. In this case, Ericsson and GCCT combined their resources and knowledge to form a new entity that was able to secure a major contract with the French government. Contract manufacturing, exporting, direct investment, and contract bidding do not accurately describe this relationship.

Question 14

_____ are situations in which the domestic firm assumes an equity position (partial ownership)in a foreign firm to manufacture and/or market the domestic company's goods.

Accepted Answer

Joint ventures are situations in which the domestic firm assumes an equity position (partial ownership) in a foreign firm to manufacture and/or market the domestic company's goods. Direct investments involve the establishment of a wholly-owned subsidiary, while buying-for-export agreements involve purchasing goods from a foreign firm for export. Demographic groupings are not related to foreign investments, and franchise relationships involve granting a license to use the firm's trademarks and business processes, rather than an equity ownership position.

Question 15

_____ are foreign sales agents-distributors who live in a foreign country and represents a domestic company in sales situations.They perform the same functions as domestic manufacturers' agents who help with financing and shipping.

Accepted Answer

Export agents are specifically mentioned as foreign sales agents-distributors who represent a domestic company in sales situations and perform similar functions to domestic manufacturers' agents. The other options, such as import brokers and licensing agents, do not fit the description given.

Question 16

A U.S.licensor can try to prevent a licensee from voiding its contract and using what it has learned to create a competitor by:

Accepted Answer

Even with lawyers writing it and a code of ethics,there is nothing to prevent a licensee from voiding the contract.Licensees typically pay a fee or a royalty to the licensor.Without patents and trademarks,protection becomes almost impossible.

Question 17

Franchising is a form of:

Accepted Answer

Franchising is a form of licensing. This means that a franchisor allows a franchisee to use their trademark, business model, and operating system in exchange for fees and royalties.

Question 18

_____ takes place when a foreign company produces goods to specification set by a domestic company,with the domestic firm's brand name affixed to the goods.

Accepted Answer

Contract manufacturing refers to a foreign company producing goods according to specifications provided by a domestic company, with the domestic company's brand name being affixed to the products. This arrangement allows the domestic company to benefit from the cost savings of offshore production while maintaining control over the product and its branding.

Question 19

When Krispy Kreme decided to expand its operation internationally,it chose to first make its doughnuts available in Canada to minimize its risk.In accordance with the policy of risk minimization,the company sold the right to manufacture and sell its doughnuts to Canadians.In other words,Krispy Kreme used:

Accepted Answer

Krispy Kreme used licensing to sell the right to manufacture and sell its doughnuts in Canada. This allowed the company to minimize its risk by allowing Canadians to handle the operations instead of directly investing in the market or using contract manufacturing. Licensing also allowed Krispy Kreme to earn revenue through royalties while maintaining control over the quality and consistency of its products.

Question 20

_____ is a legal process whereby a firm agrees to let another firm use its manufacturing process,trademarks,patents,trade secrets,or other proprietary knowledge in return for a fee or royalty.

Accepted Answer

Licensing is the legal process in which a company allows another company to use its proprietary knowledge, such as patents, trademarks, trade secrets, etc. in exchange for a fee or royalty. This can be a beneficial strategy for companies that want to expand their business without investing in additional resources.

Quiz 4: Developing a Global Vision27