Exam 13: Entering Foreign Markets

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A) undervaluing the assets of an acquired firm.
B) ensuring that firms are acquired in the home country.
C) replacing high-level managers of an acquired firm.
D) a detailed auditing of operations,financial position,and management culture.
E) investing only in a firm that is managing to break even.

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A) It is an ideal way to gain entry into a country where FDI is not limited by government regulations.
B) It is a useful strategy to earn great returns from the know-how of a technologically complex process.
C) It is an ideal way to establish a firm's long-term presence in a foreign country.
D) It helps protect a firm's competitive advantage.
E) The firm that enters into a turnkey project with a foreign enterprise avoids giving rise to potential competitors.

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A) A firm can avoid the cost of establishing manufacturing operations in the host country.
B) A firm shares the development costs and risks with its host partner.
C) A firm can earn returns from process technology skills in countries where FDI is restricted.
D) A firm has access to local partner's knowledge.
E) A firm has the ability to engage in global strategic coordination.

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A) scale of entry and strategic commitments
B) location and experience curves
C) acquisitions and greenfield ventures
D) technological know-how and management know-how
E) cost reductions and entry mode

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A) The foreign firm benefits from a local partner's knowledge of the host country.
B) The foreign firm can protect its technology from being appropriated by its local partner.
C) There is less cause for friction and conflict between the foreign and local partners.
D) It gives a firm tight control over subsidiaries,which enables it to realize experience curve or location economies.
E) The foreign firm does not have to bear any development costs and risks associated with opening a foreign market.

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A) the product is widely available in the foreign market
B) sales volumes is relatively low in the foreign market
C) the product offers greater value to customers in the foreign market
D) the product is more suitable to other foreign markets
E) domestic competitors are selling alternatives at reduced prices

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

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A) They are quick to execute and help firms to rapidly build their presence in the target foreign market.
B) It is much easier to change the culture of an existing organization than build a new organization.
C) It is easier to convert the operating routines of acquired units than establish routines in new subsidiaries.
D) They give firms access to valuable intangible assets while minimizing a pileup of tangible assets.
E) Acquired firms are often undervalued and hence assets can be purchased at minimal prices.

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Acquisitions have three major points in ...

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A) It gives firms sound knowledge of the local markets,culture,and the political environment.
B) It helps protect competitive advantages based on technology.
C) It allows firms to use the profits generated in one market to improve its competitive position in another market.
D) It is the most politically accepted mode of entry into foreign markets.
E) It has the least costs and risks associated with developing a foreign market.

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A) enters a national market after several other foreign firms have already done so.
B) avoids the use of countertrade agreements.
C) enters a national market early.
D) enters a foreign market via turnkey projects.
E) avoids engaging in joint ventures.

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A) greenfield venture
B) joint venture
C) licensing agreement
D) franchising deal
E) turnkey project

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The know-how required to assemble and ru...

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A) selling competitive advantage to competitors.
B) competing with the local firm in the global market.
C) taking a minority equity interest in the operation.
D) withholding vital process technology from the local firm.
E) establishing a joint venture with a local firm.

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A) create switching costs that tie customers into products or services.
B) capture demand by establishing a strong brand name.
C) build sales volume and ride down the experience curve before early entrants.
D) ride on an early entrant's investments in learning and customer education.
E) create a cost advantage over first movers.

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