Question 1

Which of following is true of franchising as a mode of entry into foreign markets?

Accepted Answer

A)   The franchiser insists that the franchisee agree to abide by strict rules as to how it does business.
B)   The franchiser incurs all costs related to starting operations in a foreign market.
C)   Franchising is employed primarily by manufacturing firms.
D)   Franchising allows firms to take profits from one country to support competitive attacks in another.
E)   A significant advantage of franchising is quality control.

Question 2

What are some of the ways in which a firm can reduce the risk of losing its proprietary know-how to foreign companies through licensing agreements?

Accepted Answer

A problem with licensing is the risk ass...

Question 3

In a joint venture,a firm benefits from a local partner's knowledge of the host country's competitive conditions,culture,language,political systems,and business systems.

Accepted Answer

A) True 
 B)False

Question 4

Franchising,a mode of entry into a foreign market,helps firms exert greater quality control over franchises in foreign locations.

Accepted Answer

A) True 
 B)False

Question 5

The management of an acquiring firm is often too optimistic about the value that can be created via an acquisition and is thus willing to pay a significant premium over a target firm's market capitalization.This is known as the _____ and is the reason why acquisitions fail.

Accepted Answer

A)   bandwagon effect
B)   Fisher effect
C)   hubris hypothesis
D)   international Fisher effect
E)   learning effect

Question 6

An advantage of a wholly owned subsidiary is that it may be required if a firm is trying to realize location and experience curve economies.

Accepted Answer

A) True 
 B)False

Question 7

In international business,joint ventures with local partners face a significantly higher risk of being subject to nationalization.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a drawback of licensing as a mode of entry into foreign markets?

Accepted Answer

A)   The licensor has to bear all costs and risks associated with developing a foreign market.
B)   Licensing does not give a firm tight control over manufacturing, marketing, and strategy.
C)   Licensing does not benefit firms lacking the capital to expand operations overseas.
D)   Licensing deals fail when there are barriers to foreign investment in a particular country.
E)   A firm that enters into a licensing deal with a foreign country will have no long-term interest in that country.

Question 9

What are the consequences of an international firm entering a foreign market on a significant scale?

Accepted Answer

The consequences of entering on a signif...

Question 10

Which of the following is a reason why firms often overpay for the assets of an acquired firm?

Accepted Answer

A)   Studies supporting the rise of failed companies post acquisitions
B)   Evidence of high management turnover post acquisitions
C)   The success rate of acquisitions exceeding that of failures
D)   Interest of more than one party in acquiring a particular firm
E)   Inevitable clash between cultures of acquiring and acquired firms

Question 11

When an international firm makes an acquisition in a foreign market,it acquires valuable intangible as well as tangible assets.

Accepted Answer

A) True 
 B)False

Question 12

According to Christopher Bartlett and Sumantra Ghoshal,firms from developing countries cannot succeed in foreign markets in the presence of other established global competitors.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a disadvantage of greenfield ventures as a mode of entry into foreign markets?

Accepted Answer

A)   They have a higher potential for throwing up unpleasant surprises.
B)   It is much more difficult to build an organizational culture from scratch than to change the culture of an existing unit.
C)   Companies find it difficult to avoid falling into the trap of the hubris hypothesis.
D)   It is slower to establish than acquisitions.
E)   A firm does not have the freedom to build the kind of subsidiary that it wants. D

Question 14

Which of the following is a disadvantage of large-scale entry into a foreign market?

Accepted Answer

A)   Decrease in a firm's exposure to the foreign market
B)   Difficulty attracting customers and distributors for the product
C)   Inability to build rapid market-share irrespective of the scale of entry
D)   Limited product acceptance due to the avoidance of potential losses
E)   Availability of fewer resources to support expansion in other desirable markets E

Question 15

What are the advantages and disadvantages of using joint venture as a mode of entry into a foreign market?

Accepted Answer

Joint ventures have a number of advantag...

Question 16

Which of the following modes of entry into foreign markets can result in a lack of control over quality?

Accepted Answer

A)   Exporting
B)   Franchising
C)   Turnkey projects
D)   Wholly owned subsidiaries
E)   Joint ventures B

Question 17

First-mover disadvantages refer to:

Accepted Answer

A)   disadvantages associated with entering a foreign market before other international businesses.
B)   costs that a late entrant to a foreign market has to bear.
C)   a direct restriction on the quantity of a good that can be imported into a country.
D)   imperfections in the operation of the market mechanism.
E)   disadvantages experienced by being a late entrant in a foreign market.

Question 18

In international business,an early entrant to a foreign market may be at a disadvantage relative to a later entrant,if regulations change in a way that diminishes the value of an early entrant's investments.

Accepted Answer

A) True 
 B)False

Question 19

In international business,a strategic commitment has a short-term impact and is easily reversible.

Accepted Answer

A) True 
 B)False

Question 20

In exporting,problems with local marketing agents can be overcome by:

Accepted Answer

A)   selling intangible property to a franchisee and insisting on rules to conduct the business.
B)   changing agents frequently.
C)   engaging in turnkey projects and exporting process technology to foreign firms.
D)   entering into cross-licensing agreements with foreign firms.
E)   setting up wholly owned subsidiaries in foreign nations to handle local marketing.

Exam 13: Entering Foreign Markets

Which of following is true of franchising as a mode of entry into foreign markets?

Correct AnswerverifiedShow Answer

What are some of the ways in which a firm can reduce the risk of losing its proprietary know-how to foreign companies through licensing agreements?

Correct AnswerverifiedA problem with licensing is the risk ass...View AnswerShow Answer

In a joint venture,a firm benefits from a local partner's knowledge of the host country's competitive conditions,culture,language,political systems,and business systems.

Correct AnswerverifiedShow Answer

Franchising,a mode of entry into a foreign market,helps firms exert greater quality control over franchises in foreign locations.

Correct AnswerverifiedShow Answer

The management of an acquiring firm is often too optimistic about the value that can be created via an acquisition and is thus willing to pay a significant premium over a target firm's market capitalization.This is known as the _____ and is the reason why acquisitions fail.

Correct AnswerverifiedShow Answer

An advantage of a wholly owned subsidiary is that it may be required if a firm is trying to realize location and experience curve economies.

Correct AnswerverifiedShow Answer

In international business,joint ventures with local partners face a significantly higher risk of being subject to nationalization.

Correct AnswerverifiedShow Answer

Which of the following is a drawback of licensing as a mode of entry into foreign markets?

Correct AnswerverifiedShow Answer

What are the consequences of an international firm entering a foreign market on a significant scale?

Correct AnswerverifiedThe consequences of entering on a signif...View AnswerShow Answer

Which of the following is a reason why firms often overpay for the assets of an acquired firm?

Correct AnswerverifiedShow Answer

When an international firm makes an acquisition in a foreign market,it acquires valuable intangible as well as tangible assets.

Correct AnswerverifiedShow Answer

According to Christopher Bartlett and Sumantra Ghoshal,firms from developing countries cannot succeed in foreign markets in the presence of other established global competitors.

Correct AnswerverifiedShow Answer

Which of the following is a disadvantage of greenfield ventures as a mode of entry into foreign markets?

Correct AnswerverifiedD

Which of the following is a disadvantage of large-scale entry into a foreign market?

Correct AnswerverifiedE

What are the advantages and disadvantages of using joint venture as a mode of entry into a foreign market?

Correct AnswerverifiedJoint ventures have a number of advantag...View AnswerShow Answer

Which of the following modes of entry into foreign markets can result in a lack of control over quality?

Correct AnswerverifiedB

First-mover disadvantages refer to:

Correct AnswerverifiedShow Answer

In international business,an early entrant to a foreign market may be at a disadvantage relative to a later entrant,if regulations change in a way that diminishes the value of an early entrant's investments.

Correct AnswerverifiedShow Answer

In international business,a strategic commitment has a short-term impact and is easily reversible.

Correct AnswerverifiedShow Answer

In exporting,problems with local marketing agents can be overcome by:

Correct AnswerverifiedShow Answer

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A problem with licensing is the risk ass...
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The consequences of entering on a signif...
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D

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E

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Joint ventures have a number of advantag...
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B

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