Deck 10: Entering Foreign Markets

Question 1

Turnkey project refers to outsourcing agreements in R D between firms.

Answer 1

False

Question 2

Co-marketing refers to outsourcing agreements in R D between firms.

Answer 2

False

Question 3

There are numerous differences in formal and informal institutions governing the rules of the game in different countries.

Answer 3

True

Question 4

Late movers face greater technological and market uncertainties.

Question 5

A joint venture is a new corporate entity given birth to and jointly owned by two or more parent companies.

Question 6

Two sets of considerations drive the location of foreign entries, including strategic goals and cultural and institutional distances.

Question 7

Clustering economic activities in a certain location is often referred to as agglomeration.

Question 8

Cultural distance is the difference between two cultures along some identifiable dimensions.

Question 9

The distinction between equity and non-equity modes is trivial.

Question 10

For non-equity modes, an advantage for direct exports is that economies of scale in production are concentrated in the home country.

Question 11

Having access to partners knowledge and assets is an advantage for equity modes, such as joint ventures.

Question 12

Scale of entry is a key dimension in foreign entry decisions.

Question 13

The motto of international business is location, location, location.

Question 14

Overall there are three core perspectives that shed light on a firm s internationalization: the institutional-based view, the resource-based view, and the liability of foreignness.

Question 15

Indirect export is a strategy of exporting through domestically based export intermediaries.

Question 16

A first-mover advantage is preemption of scarce resources.

Question 17

An advantage for wholly owned subsidiaries is sharing costs, risk, and profits.

Question 18

A first-mover advantage is the opportunity to free ride on first-mover investments.

Question 19

Innovation-seeking firms often single out the most efficient locations featuring a combination of economies of scale and low-cost factors.

Question 20

Foreign firms are often discriminated against, sometimes formally sometimes and informally.

Question 21

The motto for international business is:

A) Beat the competition to the marketplace
B) Set strategic goals
C) Partner with local companies
D) Location, Location, Location

Question 22

One advantage of exports is:

A) Marketing distance from customers
B) Concentration of resources on production
C) Trade barriers and protectionism
D) High transportation cost for bulky products

Question 23

First-mover advantages include:

A) Opportunity to free ride on first-mover investments
B) Resolution of technological and market uncertainties
C) Difficulty to adapt to market changes
D) Avoidance of a clash with dominant firms at home

Question 24

One advantage of contractual agreements is:

A) Low development costs
B) Lack of long-term presence
C) Limited coordination
D) Creation of competitors

Question 25

Which item is not a late-mover advantage?

A) Avoidance of a clash with a dominant firm at home
B) Opportunity to free ride on first mover investments
C) Resolution of technological and market uncertainty
D) First mover s difficulty to adapt to market changes

Question 26

Favorable locations in certain countries may give firms:

A) Location-specific advantages
B) Opportunities for expansion
C) Access to new markets
D) All of these answers

Question 27

The resource-based view argues that foreign firms need to:

A) Understand regulatory risks.
B) Employ overwhelming resources and capabilities to offset the liability of foreignness.
C) Understand the rules governing investing.
D) Be aware of trade and investment barriers.

Question 28

There are three primary means to setting up a wholly owned subsidiary, including green-field operations, acquisitions, and joint ventures.

Question 29

Even if a firm does not fully succeed in the first steps of foreign market entry, there is still a good chance that it will be able to become a strong international player.

Question 30

Foreign firms crack new markets by:

A) Undertaking actions deemed legitimate and appropriate by governing institutions
B) Bribing government officials
C) Hiring locals to manage the new entity
D) Outsourcing production

Question 31

One benefit of large-scale market entries investments is to:

A) Assure local customers and suppliers you are here for the long haul
B) Demonstrate a commitment to a long-term investment in dollars and manpower
C) Show you are willing to take a risk
D) Indicate better control over distribution

Question 32

Beyond geographic advantages, location-specific advantages arising from the clustering of economic activities in certain countries are referred to as:

A) Joint ventures
B) Agglomeration
C) Dominant areas
D) Desired marketing locations

Question 33

One disadvantage for non-equity modes contractual agreements is:

A) Low development costs
B) Low risk in overseas expansion
C) Difficult to negotiate and enforce contracts
D) Ability to reach more customers

Question 34

Companies with efficiency-seeking strategic goals search for:

A) An abundance of strong market demand and customers willing to pay
B) Economies of scale and abundance of low cost factors
C) Abundance of innovative individuals, firms, and universities
D) All of these answers

Question 35

According to the resource-based view, managers need to understand the rules of the game.

Question 36

Antidumping occurs when an exporter sells abroad below cost and raises prices after eliminating local rivals.

Question 37

Companies with innovation-seeking strategic goals target countries and regions:

A) With an abundance of strong market demand and customers willing to pay
B) Economies of scale and abundance of low cost factors
C) Renowned for generating first-class innovators
D) All of these answers

Question 38

One advantage of wholly owned subsidiaries is:

A) Protection of know-how
B) Complete equity and operation control
C) Fast entry speed
D) All of these answers

Question 39

Companies with market-seeking strategic goals search for:

A) An abundance of strong market demand and customers willing to pay
B) Economies of scale and abundance of low cost factors
C) Abundance of innovative individuals, firms, and universities
D) All of these answers

Question 40

Sometimes foreign firms are discriminated against:

A) Formally
B) Informally
C) Randomly
D) Both formally and informally

Question 41

Managers, to succeed, need to:

A) Match efforts in market entry with strategic goals
B) Develop overwhelming resources and capabilities
C) Understand the rules of the game
D) All of these answers

Question 42

What determines the success or failure of businesses in foreign market entries?

A) Overwhelming resources and capabilities to offset the liability of foreignness.
B) Understanding the rules of the game governing competition in foreign countries
C) Matching efforts in market entry and geographic diversification with strategic goals.
D) All of these answers

Question 43

Indirect export is a(n):

A) Strategy for exporting to foreign countries
B) Strategy of exporting through domestically based intermediaries
C) Strategy for exporting through local governments
D) Indirect way to generate new revenues

Question 44

From a resource-based view, managers need to:

A) Develop more trained workers
B) Develop overwhelming capabilities to offset the liability of foreignness
C) Enter into more joint venture agreements
D) Outsource work to the lowest bidder

Question 45

Why is it difficult for companies to succeed in foreign markets?

Question 46

Licensing/franchising agreements refer to:

A) Outsourcing agreements in R D firms
B) A new corporate entity given birth to and jointly owned by two or more companies
C) Efforts among a number of firms to jointly market their products and services
D) The licensor/franchiser selling the rights to intellectual property

Question 47

Turnkey projects refer to:

A) A non-equity mode of entry used to build a longer-term presence
B) Efforts among a number of firms to jointly market their products and services
C) Projects in which clients pay contractors to design and construct new facilities and train personnel
D) Outsourcing agreements in R D firms

Question 48

Although Megabus is a brand new, no-frills entrant into the US market, it is backed by the full strengths of second largest transport firm in the UK, Stagecoach Group. What four factors have attracted young customers, allowing Megabus to turn a declining national trend of bus ridership around and succeed in the US market?

Question 49

What are the two schools of thought that have emerged concerning cultural distances?

Question 50

Against such local competition, how do foreign firms crack new markets?

Question 51

What are the two sets of considerations that drive the location of foreign entities?

Question 52

What is a turnkey project? What are its advantages and disadvantages compared to other modes of entry?

Question 53

A green-field operation refers to:

A) A wholly owned subsidiary created through direct foreign investment
B) A wholly owned subsidiary created by building a new factory and offices from scratch
C) A wholly owned subsidiary created by acquisition
D) A licensing agreement with a firm in a host country

Question 54

Identify three first-mover advantages and three disadvantages.

Question 55

Foreign market entry is a(n) ____ overseas actions.

A) Obstacle to
B) Conclusion of
C) Foundation for
D) Unrelated concept to