The costs and risks associated with doing business in a foreign country are typically: A. low in an economically advanced nation. A. low in an economically advanced nation. _____ are the advantages associated with entering a market early. A. Pioneering advantages B. First-mover advantages Costs that an early entrant has to bear that a later entrant can avoid are known as _____. A. first-mover costs Large strategic commitments: A. have many benefits and little to no risks. D. limit strategic flexibility. A _____ is more likely to capture first-mover advantages associated with demand preemption, scale economies, and switching costs. A. large-scale entrant _____ is advantageous because it avoids the cost of establishing manufacturing operations in the host country and because it may help a firm achieve experience curve and location economies. A. Licensing In a(n) _____, the contractor agrees to handle every detail of the project for a foreign client. A. joint venture A disadvantage of _____ is that the firm that enters into such an arrangement will have no long-term interest in the foreign country. A. wholly owned subsidiaries By its very nature, _____ limits a firm's ability to utilize a coordinated strategy. A. licensing McDonald's is an example of a firm that uses _____. A. wholly owned subsidiaries B. a franchising strategy An advantage of _____ with a local partner is the knowledge of the local environment that the local partner contributes to the venture. A. turnkey contracts Firms entering a market via a _____ must bear all the costs and risks associated with the venture. A. licensing contract D. wholly owned subsidiary Firms pursuing global standardization or transnational strategies tend to prefer _____ arrangements. A. wholly owned subsidiary A. wholly owned subsidiary _____ allow a firm to rapidly build its presence in the target foreign market. A. Joint ventures The main advantage of _____ is that it gives the firm a much greater ability to build the kind of subsidiary company that it wants. A. an acquisition If a firm is trying to enter a market where there are already well-established companies, and where global competitors are also interested in establishing a presence, the firm should choose a(n) _____. A. franchise A(n) _____ is a way to bring together complementary skills and assets that neither company could easily develop on its own. A. alliance _____ can be used to formalize arrangements to swap skills and technology in a strategic alliance. A.
Modularization B. Cross-licensing agreements _____ refers to the building of interpersonal relationships between the firms' managers in a strategic alliance. A. Alliance
partnerships Other things being equal, the benefit-cost-risk trade-off is likely to be most favorable in: A. politically unstable developing nations that operate with a mixed or command economy. C. politically stable developed and developing nations that have free market systems. Early entrants to a market that are able to create switching costs that tie the customer to the product are capitalizing on: A. first-mover advantages. A. first-mover advantages. Which of the following is a first-mover advantage? A. Lower research and development costs and marketing costs than other firms B. Ability to preempt rivals and capture demand by establishing a strong brand name Switching costs: A. drive early entrants out of the market. C. make it difficult for later entrants to win business. The costs of promoting and establishing a product offering when a firm enters a foreign market prior to its rivals are known as _____. A. switching costs A large-scale entrant is more likely than a small-scale entrant to be able to capture first-mover advantages associated with _____. A. scale economies Which of the following statements about small-scale entry is true? A. The commitment associated with a small-scale entry makes it possible for the small-scale entrant to capture first-mover
advantages. B. Small-scale entry is a way to gather information about a foreign market before deciding whether to enter on a significant scale. If a firm can realize location economies by moving production elsewhere, it should avoid _____. A. exporting Which of the following is a distinct advantage of exporting? A. It avoids the threat of tariff barriers by the host-country government. C. It avoids the often substantial costs of establishing manufacturing operations in the host country. When an exporting firm finds that its local agent is also carrying competitors' products, the firm may switch to a _____ to handle local marketing, sales, and service. A. wholly owned subsidiary A. wholly owned subsidiary In ____, the contractor agrees to handle every detail of the project for a foreign client, including the training of operating personnel. A. exporting Turnkey projects are most common in which of the following industries? A. Fresh fruit, grain, and meat products B. Chemical, pharmaceutical, and metal refining Which of the following statements is true of turnkey projects? A. Turnkey projects are most common in industries which use simple, inexpensive production technologies. C. A turnkey strategy is particularly useful where FDI is limited by host-government regulations. Many American firms that sold oil-refining technology to firms in the Gulf now find themselves competing with these firms in the world oil market. This is an example of: A. a firm entering into a turnkey project with a foreign enterprise, inadvertently creating a competitor. A. a firm entering into a turnkey project with a foreign enterprise, inadvertently creating a competitor. An arrangement whereby a firm grants the right of intangible property to another entity for a specified time period in exchange for royalties is a(n) _____ agreement. A. turnkey Patents, inventions, formulas, processes, designs, copyrights, and trademarks are all forms of _____. A. licensing agreements What is the primary advantage of licensing? A. It helps a firm avoid the development costs associated with opening a foreign market. A. It helps a firm avoid the development costs associated with opening a foreign market. Which of the following is a disadvantage of licensing? A. It does not help firms that lack capital to develop operations overseas. B. It does not give a firm the tight control over strategy that is required for realizing experience curve and location economies. 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. A. integrated licensing Cross-licensing agreements are increasingly common in the _____ industries. A. transportation _____ is pursued primarily by manufacturing firms and _____ is employed primarily by service firms. A. Licensing; franchising A. Licensing; franchising If a service firm wants to build a global presence quickly and at a relatively low cost and risk, it must employ _____. A. chartering Which of the following statements about franchising is true? A. It guarantees consistent product quality. C. It is a specialized form of licensing. Which of the following is an advantage of franchising? A. A firm takes profits out of one country to support competitive attacks in another. B. A firm is relieved of many of the costs and risks of opening a foreign market on its own. Firms engaging in a _____ with a local company can benefit from a local partner's knowledge of the host country's competitive conditions, culture, language, political systems, and business systems. A. turnkey project The most typical joint venture is a _____ venture. A. 50/50 Which of the following is an advantage of establishing a joint venture? A. Joint ventures with local partners do not face any risk of being subject to nationalization or other forms of adverse government interference. C. When the development costs and/or risks of opening a foreign market are high, a firm might gain by sharing these costs and or risks with a local partner. In a ____, the firm owns 100 percent of the stock. A. joint venture B. wholly owned subsidiary Which of the following is true of wholly owned subsidiaries? A. It is the least expensive method of serving a foreign market from a capital investment standpoint. C. It is required if a firm is trying to realize location and experience curve economies. A wholly owned subsidiary is appropriate when the firm wants: A. to share the cost and risk of developing a foreign market. B. 100 percent of the profits generated in a foreign market. If a firm's core competency is based on control over proprietary technological know-how, _____ and _____ arrangements should be avoided if possible to minimize the risk of losing control over that technology. A. licensing; joint-venture A. licensing; joint-venture If a high-tech firm sets up operations in a foreign country to profit from a core competency in technological know-how, which of the following entry strategy is best? A. joint ventures C. wholly owned subsidiaries The valuable asset of firms, whose competitive advantage is based on management know-how, is their _____. A. top management staff Most service firms have found that _____ with local partners work best for controlling subsidiaries. A. joint ventures A firm can establish a wholly owned subsidiary in a country by building a subsidiary from the ground up, called the _____. A. joint venture Which of the following is true of acquisitions? A. It is a time-consuming process and takes a lot of time to execute. D. In many cases, firms make acquisitions to preempt their competitors. According to the _____, top managers typically overestimate their ability to create value from an acquisition. A. misvaluation theory To increase the potential for a successful acquisition, a firm should: A. always bid low to allow for partial failure. D. seek companies only from similar national cultures. Firms entering markets where there are no incumbent competitors to be acquired should choose _____. A. greenfield investments A. greenfield investments 80. _____ refer to cooperative agreements between potential or actual competitors. A. Greenfield investments Which of the following statements is true of strategic alliances? A. The fixed costs and associated risks of developing new products or processes are borne by the alliance partner. D. Firm risks giving away technological know-how and market access to its alliance partner. Managing an alliance successfully requires building interpersonal relationships between the firms' managers. This is sometimes referred to as ____. A. relational capital A _____ entails establishing a firm that is owned together by two or more otherwise independent firms. A. joint venture An advantage of exporting products to another country is that it: A. minimizes exchange rate risks. B. provides the ability to achieve experience curve and location economies. An advantage of forming a strategic alliance is that it helps firms: A. protect their procedures and technologies. C. share the risks of developing new products or processes. What is Bartlett and Ghoshal's perspective on how firms from developing countries should approach international expansion? A. They suggest joint ventures to improve the firm's presence in the country while also growing
the business opportunities for companies in the developing country. D. They suggest that companies should use the entry of foreign multinationals as an opportunity to learn from these competitors by benchmarking their operations and performance against them. Which of the following is true of exporting? A. It avoids the often substantial costs of
establishing manufacturing operations in the host country. A. It avoids the often substantial costs of establishing manufacturing operations in the host country. Which of the following is true of licensing? A. Licensing is used when a firm possesses some tangible property but does not want to pursue a potential application itself. B. The firm does not have to bear the development costs and risks associated with opening a foreign market. _____ agreements enable firms to hold each other "hostage," thereby reducing the risk they will behave in an opportunistic manner toward each other. A. Turnkey There are several disadvantages of franchising as an entry mode. Which of the following is one of them? A. There is little incentive for the franchisee to build a profitable operation as
quickly as possible. D. Franchising may inhibit the firm's ability to take profits out of one country to support competitive attacks in another. In many countries, political considerations make _____ the only feasible entry mode. A. joint ventures How can a firm protect its proprietary information in a joint venture arrangement? A. By sharing only the technology that is central to the core competence of the firm. B. Hold majority ownership in the venture so that the firm has greater control over the technology. When technological know-how constitutes a firm's core competence, which entry mode is the optimal choice? A. Foreign franchises controlled by joint ventures C. Wholly owned subsidiaries For a company whose core competency is management know-how, which entry mode would be optimal? A. Turnkey contracts D. Foreign franchises controlled by joint ventures Which of the following is one of the reasons why acquisitions fail? A. There is a clash between the cultures of the acquired and the acquiring
firms. A. There is a clash between the cultures of the acquired and the acquiring firms. Which of the following is true of establishing greenfield venture in a foreign country? A. Greenfield investments are less risky than acquiring an existing company in a foreign market. B. An inherent degree of uncertainty is associated with a greenfield venture because of future revenue and profit prospects. Which of the following is true of strategic alliances? A. Strategic alliances can make entry into a foreign market difficult. C. Strategic alliances allow firms to bring together complementary skills and assets that neither company could easily develop on its own. |
Is pursued primarily by manufacturing firms and _____ is employed primarily by service firms
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