Exam 6: Entering Foreign Markets

Which of the following is not a location specific advantage? a. Agglomeration. b. Knowledge spillovers. c. A skilled labor force. d. A pool of specialized suppliers and buyers. e. All of the above are location advantages.

MNEs that enter foreign markets through foreign direct investment do not have OLI advantages.

First mover advantages do not include: a. Developing proprietary, technological leadership. b. Preempting scarce assets. c. Establishing entry barriers. d. Successful clashes with dominant firms in domestic markets. e. Creating good relationships with key stakeholders.

Selling the rights to intellectual property for a royalty fee is involved in: a. Licensing/franchising. b. Turnkey projects. c. R&D contracts. d. Comarketing. e. All of the above.

Which is not true of joint ventures? a. They are jointly owned by two or more parent companies. b. They share risks with local partners. c. They gain access o the local partner's knowledge about the host country. d. They are politically less acceptable than wholly owned subsidiaries. e. The goals of partners may diverge.

The differences in formal and informal institutions that govern the rules of the game in different countries include _______ differences. a. Regulatory b. Language c. Cultural d. All of the above e. None of the above

An underlying reason for firms to NOT go abroad is the size of the domestic market.

Large-scale entries do which of the following? a. Benefit from a strategic commitment. b. Assure local customers and suppliers. c. Deter potential entrants. d. A and B above. e. All of the above.

Which of the following exemplify trade barriers? a. Tariffs. b. Local content requirements. c. Restrictions on certain entry modes. d. A and C above. e. All of the above.

Entry strategies may change over time.

Non-equity modes of entry typically involve: a. Exports and contractual agreements. b. Larger, harder-to-reverse commitments. c. Establishing independent organizations overseas. d. Joint ventures JVs). e. Wholly owned subsidiaries.

All of the follow are true of direct exports except: a. Most basic mode of entry. b. Capitalizes on economies of scale in production concentrated in the home country. c. Affords better control over distribution. d. The agendas and objectives of the intermediaries and exporters are the same. e. Designs and productions geared for the domestic market first and foremost.

MNEs are firms that are truly global.

One of the drawbacks of large-scale entries is limited strategic flexibility.

An underlying reason for firms to NOT go abroad is the size of the firm.

Under the Stage Model school of thought firms will enter culturally similar countries during their first stage of internationalization.

In regards to industry-based considerations, the higher the entry barriers, the more intensely firms will attempt to compete abroad.

Some foreignness is never an asset.

As firms expand into more countries, they should recognize: a. Foreign firms are still often discriminated against. b. Foreign firms primarily deploy overwhelming resources and capabilities that offset the liability of foreignness. c. Foreign firms are able to offset the liability of foreignness and still have some competitive advantage. d. All of the above. e. None of the above.

Late mover advantages do not include: a. Taking a free ride on first movers' investments. b. Joining the game with massive firepower when some of the uncertainties are removed. c. Preempting scarce assets. d. Taking advantage of first movers' inflexibility by leapfrogging over them. e. Choice of Strategy.