Question 1

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 associated with licensing technological know-how to foreign companies.There are ways of reducing this risk.One way is by entering into a cross-licensing agreement with a foreign firm.Under a cross-licensing 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.Such agreements are believed to reduce the risks associated with licensing technological know-how,because the licensee realizes that if it violates the licensing contract (by using the knowledge obtained to compete directly with the licensor),the licensor can do the same to it.Cross-licensing agreements enable firms to hold each other hostage,which reduces the probability that they will behave opportunistically toward each other.Such cross-licensing agreements are increasingly common in high-technology industries.Another way of reducing the risk associated with licensing is to follow the Fuji Xerox model and link an agreement to license know-how with the formation of a joint venture in which the licensor and licensee take important equity stakes.Such an approach aligns the interests of licensor and licensee,because both have a stake in ensuring that the venture is successful.

Question 2

Firms pursuing global standardization or transnational strategies tend to prefer setting up wholly owned marketing subsidiaries.

Accepted Answer

A) True 
 B)False  True

Question 3

Under a cross-licensing agreement,a firm is not likely to license some valuable intangible property to a foreign partner.

Accepted Answer

A) True 
 B)False  False

Question 4

How can a wholly owned subsidiary 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 
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 5

An advantage of choosing exporting as a mode of entry into foreign markets is that a firm

Accepted Answer

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

Question 6

If an international firm's core competence is based on proprietary technology,entering a joint venture might risk losing control of that technology to the joint-venture partner.

Accepted Answer

A) True 
 B)False

Question 7

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

Question 8

In which of the following modes of entry into foreign markets does a firm agree to set up an operating plant for a foreign client and hand over the plant when it is fully operational?

Accepted Answer

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

Question 9

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. 
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.

Question 10

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

Accepted Answer

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

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

In terms of international business,briefly describe pioneering costs.

Accepted Answer

Pioneering costs are costs that an early

Question 13

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 
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

Question 14

The CEO of Jamil Circuits is unhappy with the firm's choice of wholly owned subsidiaries as the mode of foreign entry.He has pointed out a number of disadvantages to this mode.However,the CFO of the company is not sure if all of the disadvantages that the CEO is noting are correct.Which of the following is a disadvantage of wholly owned subsidiaries as a mode of entry into foreign markets?

Accepted Answer

A) lack of control over quality 
B) high costs and risks 
C) problems with local marketing agents 
D) inability to engage in global strategic coordination 
E) lack of control over technology 
A) lack of control over quality 
B) high costs and risks 
C) problems with local marketing agents 
D) inability to engage in global strategic coordination 
E) lack of control over technology

Question 15

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. 
A) acquisition. 
B) licensing deal. 
C) greenfield venture. 
D) turnkey project. 
E) exporting deal.

Question 16

Describe the pros and cons of greenfield ventures.

Accepted Answer

The advantage of establishing a greenfie

Question 17

To reduce the risks of failure of an acquisition,managers must

Accepted Answer

A) pay more for the acquired unit to please its existing employees. 
B) encourage and facilitate management turnover. 
C) acquire a firm without wasting time on screening. 
D) move rapidly after an acquisition to put an integration plan in place. 
E) ensure that the work cultures are significantly different from each other. 
A) pay more for the acquired unit to please its existing employees. 
B) encourage and facilitate management turnover. 
C) acquire a firm without wasting time on screening. 
D) move rapidly after an acquisition to put an integration plan in place. 
E) ensure that the work cultures are significantly different from each other.

Question 18

Which of the following is true of the costs and risks associated with doing business in a foreign country?

Accepted Answer

A) They are greater for late entrants. 
B) They are higher in politically democratic nations. 
C) They are less pronounced in the case of licensing. 
D) They are lower in economically advanced nations. 
E) They are called opportunity costs. 
A) They are greater for late entrants. 
B) They are higher in politically democratic nations. 
C) They are less pronounced in the case of licensing. 
D) They are lower in economically advanced nations. 
E) They are called opportunity costs.

Question 19

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 20

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 
A) rapid economic growth 
B) political instability 
C) currency depreciation 
D) high cost of living 
E) less developed infrastructure

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?

Firms pursuing global standardization or transnational strategies tend to prefer setting up wholly owned marketing subsidiaries.

Under a cross-licensing agreement,a firm is not likely to license some valuable intangible property to a foreign partner.

How can a wholly owned subsidiary be established in a foreign market?

An advantage of choosing exporting as a mode of entry into foreign markets is that a firm

If an international firm's core competence is based on proprietary technology,entering a joint venture might risk losing control of that technology to the joint-venture partner.

_____ is an example of an industry in which cross-licensing agreements are increasingly becoming common.

In which of the following modes of entry into foreign markets does a firm agree to set up an operating plant for a foreign client and hand over the plant when it is fully operational?

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

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

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

In terms of international business,briefly describe pioneering costs.

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

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)

Describe the pros and cons of greenfield ventures.

To reduce the risks of failure of an acquisition,managers must

Which of the following is true of the costs and risks associated with doing business in a foreign country?

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

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

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Strategy of International Business

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and Research and Development

Global Human Resource Management

Filters

Exam 13: Entering Foreign Markets

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?

Firms pursuing global standardization or transnational strategies tend to prefer setting up wholly owned marketing subsidiaries.

Under a cross-licensing agreement,a firm is not likely to license some valuable intangible property to a foreign partner.

How can a wholly owned subsidiary be established in a foreign market?

An advantage of choosing exporting as a mode of entry into foreign markets is that a firm

If an international firm's core competence is based on proprietary technology,entering a joint venture might risk losing control of that technology to the joint-venture partner.

_____ is an example of an industry in which cross-licensing agreements are increasingly becoming common.

In which of the following modes of entry into foreign markets does a firm agree to set up an operating plant for a foreign client and hand over the plant when it is fully operational?

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

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

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

In terms of international business,briefly describe pioneering costs.

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

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)

Describe the pros and cons of greenfield ventures.

To reduce the risks of failure of an acquisition,managers must

Which of the following is true of the costs and risks associated with doing business in a foreign country?

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

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

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Strategy of International Business

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and Research and Development

Global Human Resource Management

Filters