Question 1

If an international business can offer a product that has been widely available in that market,the value of that product to consumers is likely to be much greater than if the international business offers a product that has not been widely available in that market.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is an example of an industry in which cross-licensing agreements are increasingly becoming common?

Accepted Answer

A)   Glass-blowing
B)   Biotechnology
C)   Organic farming
D)   Basketry
E)   Weaving

Question 3

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

Accepted Answer

A)   The firm incurs the costs of establishing manufacturing operations in the host country.
B)   The firm is unable to realize experience curve economies through exporting.
C)   The local agents may not market the firm's products as well as the firm would if it managed its marketing itself.
D)   The firm cannot use countertrading options when exporting.
E)   The firm may not realize substantial scale economies from its global sales volume via exporting.

Question 4

A firm that expects rapid imitation of its core technology by competitors should:

Accepted Answer

A)   revert to older technologies.
B)   engage in exporting on a large scale.
C)   license its technology to foreign firms.
D)   set up a wholly owned subsidiary.
E)   enter into a joint venture with a foreign firm.

Question 5

Which of the following is true of basic entry decisions for an international firm into a foreign market?

Accepted Answer

A)   Greater value of a product in a foreign market translates into an ability to charge higher prices and/or to build sales volume more rapidly.
B)   An international firm should not rank countries in terms of their attractiveness because the parameter can change frequently.
C)   If an international business can offer a product that has not been widely available in a foreign market and that satisfies an unmet need, the value of that product to consumers is likely to be much lesser.
D)   The costs and risks associated with doing business in a foreign country are typically lower in less developed nations.
E)   Other things being equal, the benefit-cost-risk trade-off is likely to be unfavorable in politically stable nations that have free market systems.

Question 6

Which of the following is an advantage of acquisitions as a means of entering foreign markets?

Accepted Answer

A)   Acquiring firms often underpay for the assets of the acquired firm.
B)   It enables firms to preempt their competitors.
C)   After an acquisition, many acquired companies face increased recruitments.
D)   Integrating the operations of the acquired and acquiring entities takes a very short time.
E)   Most acquisitions are successful due to adequate pre-acquisition screening.

Question 7

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

Accepted Answer

A)   Joint ventures with local partners face a high risk of being subjected to government interference.
B)   Joint ventures can lead to conflicts and battles for control between the investing firms.
C)   Firms engaged in joint ventures have short-term commitments in the foreign market.
D)   In many countries, political considerations make joint ventures impractical as an entry mode.
E)   The foreign firm cannot rely on its local partner for unbiased information about the host country.

Question 8

Which of the following is an example of a first-mover advantage?

Accepted Answer

A)   The ability to create switching costs that tie customers into one's products or services
B)   The avoidance of pioneering costs that a later entrant into the foreign market has to bear
C)   The increased probability of surviving in a foreign market
D)   The opportunity to observe and learn from the mistakes of other entrants
E)   The ability to let later entrants ride ahead on the experience curve

Question 9

Which of the following is a way in which a wholly owned subsidiary may be established in a foreign market?

Accepted Answer

A)   Through a turnkey operation with a local partner
B)   Through franchising
C)   By acquiring an established firm in the host nation
D)   By exporting
E)   Through a licensing agreement

Question 10

Which of the following is a reason why a relatively poor country may be an attractive target for inward investment?

Accepted Answer

A)   Rapid economic growth
B)   Political instability
C)   Currency depreciation
D)   High cost of living
E)   Less developed infrastructure

Question 11

Which of the following is an advantage of joint ventures as a mode of entry into foreign markets?

Accepted Answer

A)   A foreign firm shares the costs and risks of development with its local partner.
B)   A foreign firm can easily maintain control over how its technological know-how is used by a local partner.
C)   There is less cause for friction and conflict between partners involved in a joint venture.
D)   Joint ventures are ideal to maintain tight control over subsidiaries.
E)   Joint ventures benefit firms lacking the capital to expand operations overseas.

Question 12

Which of the following is generally the most costly form of serving a foreign market from a capital investment standpoint?

Accepted Answer

A)   Joint venture
B)   Licensing
C)   Franchising
D)   Wholly owned subsidiary
E)   Exporting

Question 13

Which of the following types of entry into a foreign market allows a firm to learn about the foreign market while limiting the firm's exposure to that market?

Accepted Answer

A)   Early entry
B)   Small-scale entry
C)   Large-scale entry
D)   Late entry
E)   Rapid entry

Question 14

In a(n) _____,a mode of entry into foreign markets,a firm grants the rights to intangible property to another firm for a specified period,and in return,receives a royalty fee.

Accepted Answer

A)   licensing agreement
B)   turnkey project
C)   acquisition
D)   joint venture
E)   wholly owned subsidiary

Question 15

Which of the following factors determine the value that an international business can create in a foreign market?

Accepted Answer

A)   Population density in the foreign market
B)   Political stability of the foreign market
C)   Nature of indigenous competition
D)   Per capita income in the foreign market
E)   Type of political system in the foreign market

Question 16

Which of the following is an advantage of turnkey projects as a mode of entry into foreign markets?

Accepted Answer

A)   It helps create competition which in turn increases the quality of production.
B)   It can be less risky than conventional FDI.
C)   It is an ideal way to establish a long-term presence in a foreign country.
D)   It helps protect the competitive advantage of process technology.
E)   The firm that enters into a turnkey project with a foreign enterprise avoids giving rise to potential competitors.

Question 17

Spring,an American firm,recently acquired another company known as Tazel Inc.in Indonesia.The high-level managers at Tazel Inc.quit because they could not cope with the domineering and straightforward approach of their American counterparts.This illustrates how acquisitions may fail because:

Accepted Answer

A)   managers overestimate their ability to create value from an acquisition.
B)   integration of operations between the two firms takes longer than forecasted.
C)   there is a clash between the cultures of the acquired and the acquiring firm.
D)   an acquiring firm overpays for the assets of an acquired firm.
E)   inadequate pre-acquisition screening has been done.

Question 18

Under a(n) _____ 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

A)   open source licensing
B)   non-exclusive licensing
C)   cross-licensing
D)   exclusive licensing
E)   reciprocal licensing

Question 19

Which of the following modes of entry into foreign markets have the advantage of being characterized by low development costs and risks?

Accepted Answer

A)   Exporting
B)   Licensing
C)   A greenfield investment
D)   A wholly owned subsidiary
E)   A joint venture

Question 20

Which of the following is an advantage of an acquisition as a means of entry into foreign markets?

Accepted Answer

A)   It is much easier to change the culture of an existing organization than build a new organization.
B)   It is easier to convert the operating routines of acquired units than establish routines in new subsidiaries.
C)   It yields greater long-run returns than greenfield ventures.
D)   It gives firms access to valuable intangible assets along with a set of tangible assets.
E)   Acquired firms are often undervalued and hence assets can be purchased at minimal prices.

Exam 13: Entering Foreign Markets

Spring,an American firm,recently acquired another company known as Tazel Inc.in Indonesia.The high-level managers at Tazel Inc.quit because they could not cope with the domineering and straightforward approach of their American counterparts.This illustrates how acquisitions may fail because:

Correct AnswerverifiedShow Answer

If an international business can offer a product that has been widely available in that market,the value of that product to consumers is likely to be much greater than if the international business offers a product that has not been widely available in that market.

Correct AnswerverifiedShow Answer

Which of the following is generally the most costly form of serving a foreign market from a capital investment standpoint?

Correct AnswerverifiedShow Answer

Which of the following is an advantage of an acquisition as a means of entry into foreign markets?

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Which of the following is an advantage of turnkey projects as a mode of entry into foreign markets?

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A firm that expects rapid imitation of its core technology by competitors should:

Correct AnswerverifiedShow Answer

Under a(n) _____ 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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is an example of an industry in which cross-licensing agreements are increasingly becoming common?

Correct AnswerverifiedShow Answer

Which of the following types of entry into a foreign market allows a firm to learn about the foreign market while limiting the firm's exposure to that market?

Correct AnswerverifiedShow Answer

Which of the following is a way in which a wholly owned subsidiary may be established in a foreign market?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is an advantage of acquisitions as a means of entering foreign markets?

Correct AnswerverifiedShow Answer

In a(n) _____,a mode of entry into foreign markets,a firm grants the rights to intangible property to another firm for a specified period,and in return,receives a royalty fee.

Correct AnswerverifiedShow Answer

Which of the following modes of entry into foreign markets have the advantage of being characterized by low development costs and risks?

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Which of the following is a reason why a relatively poor country may be an attractive target for inward investment?

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Which of the following is an advantage of joint ventures as a mode of entry into foreign markets?

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Which of the following is an example of a first-mover advantage?

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Which of the following factors determine the value that an international business can create in a foreign market?

Correct AnswerverifiedShow Answer

Which of the following is true of basic entry decisions for an international firm into a foreign market?

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