Question 1

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

Accepted Answer

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.F) B) and C)
G) A) and E)

Question 2

In a typical international licensing deal, a licensor puts up most of the capital necessary to get an overseas operation going.

Accepted Answer

A) True 
 B)False

Question 3

Why do acquisitions fail sometimes?

Accepted Answer

A)  There is a clash between the cultures of the acquiring and acquired firm.
B)  Acquisitions take a long time to execute.
C)  Acquisitions are easily preempted by making greenfield investments.
D)  The revenue and profit stream generated by an acquisition's resources is usually unknown.
E)  Losses produced by intangible assets outweigh profits from acquired tangible assets.F) B) and D)
G) All of the above

Question 4

Licensing, a mode of entry into a foreign market, gives an international firm tight control over manufacturing, marketing, and strategy that is required for realizing experience curve and location economies.

Accepted Answer

A) True 
 B)False

Question 5

Describe the pros and cons of greenfield ventures.

Accepted Answer

The advantage of establishing a greenfie...

Question 6

When a firm's competitive advantage is based on technological competence, a joint venture is the preferred mode of entry into a foreign market because it reduces the risk of losing control over that competence.

Accepted Answer

A) True 
 B)False

Question 7

The liability associated with foreign expansion is greater for foreign firms that:

Accepted Answer

A)  choose to ride on an early entrant's investments.
B)  use countertrade agreements.
C)  enter a national market early.
D)  ride down the experience curve behind their rivals.
E)  avoid pioneering costs.F) B) and E)
G) B) and D)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Acquiring firms often overpay for the assets of the acquired firms.

Accepted Answer

A) True 
 B)False

Question 10

How can firms avoid incurring high transport costs when exporting bulk products?

Accepted Answer

A)  By taking a minority equity interest
B)  By entering into a turnkey project with a foreign firm
C)  By manufacturing bulk products regionally
D)  By setting up subsidiaries irrespective of market reach
E)  By reducing the quantity of the product offeringF) D) and E)
G) B) and E)

Question 11

The most typical joint venture is a 50/50 venture, in which there are two parties, each of which holds a 50 percent ownership stake and contributes a team of managers to share operating control.

Accepted Answer

A) True 
 B)False

Question 12

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 firmsF) A) and B)
G) A) and C)

Question 13

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

Accepted Answer

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.F) None of the above
G) A) and B)

Question 14

Which of the following is an advantage of choosing exporting as a mode of entry into foreign markets?

Accepted Answer

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.F) B) and E)
G) B) and C)

Question 15

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 16

A risk-averse international firm that enters a foreign market on a small scale will increase its potential losses.

Accepted Answer

A) True 
 B)False

Question 17

A firm contemplating expansion should choose a foreign market based on an assessment of the nation's long-run profit potential.

Accepted Answer

A) True 
 B)False

Question 18

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 19

In terms of licensing, which of the following is an intangible property?

Accepted Answer

A)  Infrastructure
B)  Machinery
C)  Leased equipment
D)  Advanced computing systems
E)  PatentF) A) and C)
G) All of the above

Question 20

If a firm is seeking to enter a market via a wholly owned subsidiary where there are already well-established incumbent enterprises, and where global competitors are also interested in establishing a presence, a suitable mode of entry is a(n) :

Accepted Answer

A)  acquisition.
B)  licensing deal.
C)  greenfield venture.
D)  turnkey project.
E)  exporting deal.F) None of the above
G) B) and D)

Exam 13: Entering Foreign Markets

Describe the pros and cons of greenfield ventures.

Correct AnswerverifiedThe advantage of establishing a greenfie...View AnswerShow Answer

How can firms avoid incurring high transport costs when exporting bulk products?

Correct AnswerverifiedShow Answer

A firm contemplating expansion should choose a foreign market based on an assessment of the nation's long-run profit potential.

Correct AnswerverifiedShow Answer

When a firm's competitive advantage is based on technological competence, a joint venture is the preferred mode of entry into a foreign market because it reduces the risk of losing control over that competence.

Correct AnswerverifiedShow Answer

A risk-averse international firm that enters a foreign market on a small scale will increase its potential losses.

Correct AnswerverifiedShow Answer

Which of the following is an advantage of choosing exporting as a mode of entry into foreign markets?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Acquiring firms often overpay for the assets of the acquired firms.

Correct AnswerverifiedShow Answer

If a firm is seeking to enter a market via a wholly owned subsidiary where there are already well-established incumbent enterprises, and where global competitors are also interested in establishing a presence, a suitable mode of entry is a(n) :

Correct AnswerverifiedShow Answer

In a typical international licensing deal, a licensor puts up most of the capital necessary to get an overseas operation going.

Correct AnswerverifiedShow Answer

The most typical joint venture is a 50/50 venture, in which there are two parties, each of which holds a 50 percent ownership stake and contributes a team of managers to share operating control.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In terms of licensing, which of the following is an intangible property?

Correct AnswerverifiedShow Answer

Licensing, a mode of entry into a foreign market, gives an international firm tight control over manufacturing, marketing, and strategy that is required for realizing experience curve and location economies.

Correct AnswerverifiedShow Answer

Why do acquisitions fail sometimes?

Correct AnswerverifiedShow Answer

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

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 liability associated with foreign expansion is greater for foreign firms that:

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

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

Correct AnswerverifiedShow Answer

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