Deck 6: Entering Foreign Markets

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

​Customer discrimination against foreign firms has been eliminated in recent years.

Answer 3

False

Question 4

Small firms often go abroad to follow their large counterparts as suppliers.
​

Question 5

​In an obsolescing bargain,an MNE receives greater incentives from a foreign government after entering that market.

Question 6

The small size of a firm is a main reason firms go abroad.

Question 7

The large size of the domestic market is the main reason firms go abroad.

Question 8

Currency risks can be reduced by currency hedging or strategic and hedging.

Question 9

​Small firms in a large domestic market are less likely to internationalize because of their relatively poor resource base and large size of their domestic market.

Question 10

​Industries in which suppliers and buyers locate in a specific region are more likely to benefit from location-specific advantages.

Question 11

The bargaining power of buyers may lead to forward vertical integration.

Question 12

​The more a company leverages its patented,branded,and trademarked products abroad,the less likely it is that counterfeits of these products will pop up.

Question 13

​Firms with a market-seeking strategy will locate primarily where the advantages include an abundance of innovative individuals,firms,and universities.

Question 14

The liability of foreignness is the inherent disadvantage foreign firms experience in host countries because of their nonnative status.

Question 15

​One of the best ways for a foreign market entrant to overcome the liability of foreignness is through its superb value of firm-specific assets.

Question 16

The bargaining power of suppliers may prompt backward vertical integration.

Question 17

​A host country's local content requirements are primarily an attempt to avoid the presence of screwdriver plants.

Question 18

​Firms that face high dissemination risks are more likely to choose against entering a foreign market.

Question 19

The market potential of substitute products may encourage firms to bring them abroad.

Question 20

Backward vertical integration refers to vertical integration that has not been updated.

Question 21

​One of the disadvantages of franchising is the risk of creating competitors.

Question 22

Formal rather than informal "rules of the game" govern competition in foreign markets.

Question 23

​One of the main first-mover advantages a firm tries to gain is the resolution of technological and market uncertainties.

Question 24

​Equity and non-equity modes of entry into foreign markets are essentially the same.

Question 25

​Country-of-origin affect consistently confers a positive perception of foreign firms and products.

Question 26

​In order to be successful in foreign markets,it is necessary for a firm to match its efforts in market entry and geographic diversification with its strategic goals.

Question 27

Indirect exporting firms avoid exporting through domestically based intermediaries.

Question 28

MNEs are firms that are truly global.

Question 29

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

Question 30

​Non-equity modes of entry include direct exports and licensing.

Question 31

Some foreignness is never an asset.

Question 32

Direct exports may work best if the export volume is small.

Question 33

​A firm that merely exports/imports with no FDI is usually not regarded as an MNE.

Question 34

Acquisition adds no new capacity.

Question 35

​An emerging MNE's ability to identify and bridge gaps is known as location advantage.

Question 36

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

Question 37

​Non-equity modes of entry include joint ventures and wholly owned subsidiaries.

Question 38

Entry strategies may change over time.

Question 39

​First-mover advantages always outweigh late-mover advantages.

Question 40

Turnkey projects reduce the competitiveness of foreign clients and increase their dependence when selling state of the art technology.

Question 41

As firms expand into more countries,they should recognize that:

A) Foreign firms are less likely to be discriminated against.
B) Foreign firms primarily deploy overwhelming resources and capabilities that offset the liability of foreignness.
C) Foreign firms seldom are able to offset the liability of foreignness and still have some competitive advantage.
D) Discrimination against foreign firms happens in informal ways and rarely in formal ways.

Question 42

​Which of the following would be considered an obstacle to internationalization for a small firm in a large domestic market?

A) ​A plentiful resource base.
B) ​The large size of their domestic market.
C) ​A large margin for error.
D) ​All of the above.

Question 43

The superb value of firm-specific resources and capabilities results in foreign entrants being:

A) Faced with serious dissemination risk.
B) Less able to leverage such assets overseas.
C) Better able to overcome the liability of foreignness.
D) None of the above.

Question 44

​Among the resource-based consideration a firm faces when deciding whether to enter foreign markets is:

A) ​High entry barriers.
B) ​The bargaining power of suppliers.
C) ​The level of dissemination risks.
D) ​Currency risks.

Question 45

Firms may choose not to enter certain countries if:

A) They possess rare firm-specific assets.
B) The transaction costs are be too low.
C) There are dissemination risks.
D) There is an authorized diffusion of firm-specific assets.

Question 46

​The liability of foreignness is:

A) ​The inherent disadvantage foreign firms experience in host countries.
B) ​Related strictly to the formal institutions that govern the way business is done in a foreign country.
C) ​A challenge when it comes to resource supply but not to competitive advantage.
D) ​Irrelevant in the process of entering foreign markets.

Question 47

Organizing firm-specific resources and capabilities as a bundle:

A) Favors firms with strong complementary assets.
B) Prevents having assets integrated as a system.
C) Discourages use of them overseas.
D) Occurs only in domestic markets

Question 48

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

Question 49

​Which of the following mottos is applicable when considering the where-to-enter question of foreign market entry?

A) ​Wait for the dust to settle.
B) ​Money makes the world go round.
C) ​Actions speak louder than words.
D) ​Location,location,location.

Question 50

Which of the following exemplify trade barriers?

A) Tariffs.
B) Local content requirements.
C) Restrictions on certain entry modes.
D) All of the above

Question 51

​Which of the following is NOT considered a trade barrier?

A) ​Tariffs.
B) ​Tariffs.
C) ​Local content requirements.
D) ​Entry mode restrictions.

Question 52

Which of the following is not a location-specific advantage?

A) Agglomeration.
B) Knowledge spillovers.
C) An unskilled labor force.
D) A pool of specialized suppliers and buyers.

Question 53

​A location-specific advantage that a firm with efficiency-seeking strategy would be:

A) ​A location-specific advantage that a firm with efficiency-seeking strategy would be:
B) ​Strong market demand.
C) ​Economies of scale.
D) ​Innovative labor force.

Question 54

The strategic goal of __________ involves going after countries that offer the highest price.

A) Natural resources-seeking
B) Market-seeking
C) Efficiency-seeking
D) Innovation-seeking

Question 55

Small firms in a large domestic market are referred to as:

A) Enthusiastic internationalizers.
B) Follower internationalizers.
C) Slow internationalizers.
D) Occasional internationalizers.

Question 56

​In industries that face high barriers to entry,firms are more likely to:

A) ​Be more intense in their attempts to compete abroad.
B) ​Avoid competing in foreign markets.
C) ​Ignore economies of scale.
D) ​All of the above.

Question 57

Which of the following is not a regulatory risk?

A) An obsolescing bargain.
B) Deals that have been struck by MNEs and host governments.
C) Nationalization.
D) Recent trends among host governments regarding their relationships with MNEs.

Question 58

​When it comes to the propensity to internationalize,an enthusiastic internationalizer will most likely be characterized by being a:

A) ​Large firm in a large domestic market.
B) ​Large firm in a small domestic market.
C) ​Small firm in a large domestic market.
D) ​Small firm in a small domestic market.

Question 59

​A global trend since the 1980s and 1990s has been toward:

A) ​Nationalization of foreign MNE assets.
B) ​Privatization of assets.
C) ​Expropriation of assets.
D) ​None of the above.

Question 60

​A firm that spreads out its activities in a number of countries in different currency zones in order to offset the currency losses in certain regions through gains in other regions is engaged in:

A) ​Tariffs.
B) ​Local content requirements.
C) ​Strategic hedging.
D) ​Sunk costs.

Question 61

​According to the textbook,what is most necessary to overcome the liability of foreignness?

A) ​Grasping the dynamism underlying the industry.
B) ​Developing overwhelming resources and capabilities.
C) ​Understanding the rules of the game.
D) ​Matching market entry efforts with strategic goals.
E) ​Creating good relationships with key stakeholders.

Question 62

Selling the rights to intellectual property for a royalty fee happens with:

A) Licensing/franchising.
B) Turnkey projects.
C) R&D contracts.
D) Co-marketing.

Question 63

Greenfield operations refer to:

A) Wholly owned subsidiaries.
B) Turnkey projects.
C) R&D contracts.
D) Co-marketing.

Question 64

​Which of the following would NOT be considered a drawback of small-scale entry into a foreign market?

A) ​Lack of strong commitment.
B) ​Learning by doing.
C) ​Difficulties in building market share.
D) ​Inability to capture first-mover advantage.

Question 65

​The ________ strategy treats foreign demand as an extension of domestic demand.

A) ​Turnkey operations.
B) ​Direct exporting.
C) ​Greenfield operations.
D) ​Joint venture.

Question 66

Institutional distance involves all of the following EXCEPT that which is:

A) Regulatory.
B) Normative.
C) Cognitive.
D) Integrative.

Question 67

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) None of the above.

Question 68

​A key dimension in foreign entry decisions is the amount of resources committed to entering the foreign market,referred to as:

A) ​Scale of entry.
B) ​Regulatory risk.
C) ​Regulatory risk.
D) ​Local content requirement.

Question 69

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.

Question 70

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).

Question 71

​The first-mover advantage of a company such as Amazon is:

A) ​Developing proprietary,technological leadership.
B) ​Opportunity for a free ride.
C) ​Resolution of market uncertainties.
D) ​Lowering the barriers to market entry.

Question 72

​Which of the following would NOT be considered an advantage of MNEs?

A) Ownership.​
B) ​Internalization.
C) ​Barriers.
D) ​Location.

Question 73

​Emerging MNEs do not always fit into the traditional framework of successful multinationals,but are falling under a new theory called the LLL advantage.Which of the following is NOT part of that theory?

A) ​Location.
B) ​Leverage.
C) ​Linking.
D) ​Learning.

Question 74

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.

Question 75

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 to the local partner's knowledge about the host country.
D) They are politically less acceptable than wholly owned subsidiaries.

Question 76

Small-scale entries normally benefit by their:

A) Unlimited upside risk.
B) Emphasis on "learning by doing."
C) Strong strategic commitment.
D) First mover advantages.

Question 77

​One of the factors that explains why exporters choose intermediaries primarily is:

A) ​The development of proprietary,technological leadership.
B) ​Information asymmetries concerning foreign markets.
C) ​Intermediaries share the same objectives as exporters.
D) ​Indirect exports provide more information about product performance overseas.

Question 78

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.

Question 79

​First-mover preemptive investments would include:

A) ​Avoiding scarce resources.
B) ​Finding free-ride opportunities.
C) ​Waiting for market uncertainties to be resolved.
D) ​Cherry picking leading local suppliers and distributors.

Question 80

​The liability of foreignness sometimes has a positive effect on customers' perception and their desire for products from a certain country.This concept is known as:

A) ​Strategic hedging.
B) ​Country-of-origin effect.
C) ​OLI advantage.
D) ​Co-marketing.