Deck 10: International Entry Strategies

Question 1

_____________is a foreign entity in a host country in which it is not incorporated but exists as an office of extension of the parent.

A) Local office
B) Host country branch
C) Representative offices
D) Branch office

Answer 1

D

Question 2

The ____________ rate determines the general level of the tax burden shouldered by firms.

A) Statutory rate
B) Effective tax rate
C) Sales tax rate
D) Corporate tax rate

Answer 2

A

Question 3

The_______________ on corporate income, which is the statutory corporate rate adjusted for all other taxes and subsidies affecting an MNE's taxable income, determines the company's net return from its revenues.

A) Statutory rate
B) Effective tax rate
C) Sales tax rate
D) Corporate tax rate

Answer 3

B

Question 4

____________________ is a type of entry mode in which a foreign licensor grants specified intangible property rights to the local licensee for a specified period of time in exchange for a royalty fee.

A) Domestic licensing
B) International franchising
C) International licensing
D) Domestic franchising

Question 5

_________________is a term of price in which the seller covers all costs and risks up to the point whereby the goods are delivered on the board of the ship.

A) Free alongside ship
B) Free on board
C) Cost, insurance, freight
D) Cost and freight

Question 6

_____________________movers can "piggy back" on early investment if imitation is easy, thereby gaining profit without having to pay as many innovators.

A) Later
B) Earlier
C) Foreign
D) Local

Question 7

Later movers who use a________________strategy gain from lessons from early movers.

A) walk-and-see
B) wait-and-see
C) come-and-see
D) none of the above

Question 8

Early movers gain from____________________________.

A) preemptive opportunities
B) economic reform
C) preemptive promotion
D) market power.

Question 9

________________ is mainly concerned with whether an MNE primarily targets a host country market, export market, or both.

A) Location
B) Timing-of-entry
C) Market orientation
D) Local markets

Question 10

A number of host______________________have an impact on choice of entry mode.

A) industry-specific factors
B) firm-specific factors
C) country-specific factors
D) project-specific factors

Question 11

A foreign investor may consider establishing an______________ enterprise to achieve investment in subsidiary projects.

A) umbrella
B) wholly owned subsidiary
C) joint-venture
D) none of the above

Question 12

________________ managers should be familiar with key documentation in exporting.

A) Importing
B) Country
C) Exporting
D) Facility

Question 13

Early movers also often pay __________________ costs in learning and adapting to local environments and in countervailing imitation.

A) lower
B) same
C) equal
D) higher

Question 14

_______________________is a type of market oriented project that is highly sensitive to demand and strategic factors in the environments.

A) Foreign
B) Local
C) State
D) Country

Question 15

__________________is an establishment of fully owned new facilities and operations from scratch by the company alone.

A) International mergers
B) Internal acquisition
C) Greenfield investments
D) Evolutionary paths

Question 16

Which of the following is NOT a component of local determinants?

A) Cost / Tax factors
B) Supply factors
C) Strategic factors
D) Sociopolitical factors

Question 17

Market size and growth factors are components of demand factors. How they can be determined?

A) Average income growth
B) Average consumption growth rate
C) Average market size
D) All of the above

Question 18

___________are specific forms or ways of entering a target country to achieve planned strategic goals underlying international presence in that country.

A) Exit mode
B) Entry mode
C) Entry levels
D) Entry country

Question 19

Korean ____________ are aggressive late movers such that they wait until the best time but commit aggressively after entry to seize emerging opportunities.

A) Bogean
B) Wan
C) Chuerla
D) Chaebol

Question 20

Pioneer investors may be confronted with great environmental uncertainty and _________________.

A) money risks
B) liability risks
C) operational risks
D) utility risks.

Question 21

A _______________ is a reciprocal buying agreement whereby one firm sells its products to another at one point and is compensated in the form of the other's products at some future time.

A) counterpurchase
B) import /export
C) export management
D) export intermediarie

Question 22

____________ is a term of price in which the seller covers cost of the goods, insurance, and all transportation and miscellaneous charges to the named foreign port in the country of final destination.

A) FOB
B) FAS
C) CIF
D) C&F

Question 23

__________ is a term of price in which the seller covers all costs and risks up to the side of the ship in a designated shipment (export) port. The buyer bears all costs and risks thereafter.

A) FOB
B) FAS
C) CIF
D) C&F

Question 24

_____________ is a term of price in which the seller covers all costs and risks up to the point whereby the goods are delivered on board the ship in a designated shipment (export) port, and the buyer bears all costs and risks from that point on.

A) FOB
B) FAS
C) CIF
D) C&F

Question 25

_____________ are third parties that specialize in facilitating imports and exports.

A) WTO
B) Export intermediaries
C) NAFTA
D) None of the above

Question 26

Which of the following is NOT a disadvantage to operational aspect of Early-Movers?

A) An increase of qualified supply sources and other production inputs such as talented managers and R&D workforce
B) Under-developed support services such as local financing, foreign exchange, arbitration, consulting, and marketing
C) Poor infrastructure in transportation, utilities, and communications
D) An unstable market structure in which market demand and supply are misaligned and local governments often interfere with MNE operations

Question 27

Which of the following is NOT a disadvantage to the environmental aspect of Early-Movers?

A) underdeveloped FDI laws and regulations in a host country
B) the host government's lack of experience in dealing with MNEs
C) maturity stages of the industry or market in a host country
D) none of the above

Question 28

___________ have the right to preempt marketing, promotion, and distribution channels, while gaining product image.

A) Early movers
B) Early followers
C) Late movers
D) None of the above

Question 29

What are some sociopolitical variables that are likely to have a stronger effect on a local market orientation than on an export orientation?

A) cultural distance
B) government efficiency or corruption
C) political stability
D) all of the above

Question 30

Which of the following is NOT a component of FDI policy?

A) Know what entry mode(s) are allowed.
B) A host government may require MNEs to locate projects in certain geographical regions to help boost regional economies.
C) Check content localization requirements.
D) Appraise foreign exchange control measures in the home country.

Question 31

The cost and availability of local capital are a major concern for MNEs because local financing provides much of the capital needed for mass production and operations. This is a component of

A) cost savings
B) investment incentives
C) financing cost
D) none of the above

Question 32

____________systems require a supplier base that is capable, reliable, and physically close.

A) Inventory management
B) Just-in-time
C) Supply management
D) None of the above

Question 33

Build-Operate-Transfer (BOT) is a "turnkey" investment in which a foreign investor assumes responsibility for the design and construction of an entire operation and, upon completion of the project, turns the project over to the purchaser and hands over management to local personnel whom it has trained.

Question 34

Compensation arrangement occurs when a firm provides a local company with inputs for manufacturing products to be bought in international markets and agrees to take a certain percentage of the output produced by the local firm as partial payment.

Question 35

International entry modes are those associated with transfer of ownership or exploitation of specified property from one party to another in exchange for fees and royalties.

Question 36

The option of being a first mover is not entirely under the firm's control.

Question 37

Early movers often pay lower costs in learning and adapting to local environments and in countervailing imitation.

Question 38

In today's increasingly integrated marketplace, where demand level, consumption sophistication, and rivalry intensity are all changing drastically, the decision of when to embark on international expansion is critical for transactional operations.

Question 39

The umbrella mode helps improve the cash flows and capital structure of various investments by acting as a clearing house for intra-group financing.

Question 40

Contrarily, later movers who use a wait-and-see strategy usually do not gain from lessons from the earlier movers.

Question 41

Strategic options may have benefited early movers.

Question 42

Barter trade occurs either between individuals, between governments, between firms, or between government and firm, all from one different country.

Question 43

Market pioneers may benefit from the advantages of holding technical leadership, seizing scarce resources, and creating buyer switching costs.

Question 44

In today's increasingly integrated global marketplace, where demand level, consumption sophistication, and rivalry intensity are all changing drastically.

Question 45

International acquisition is an across border transaction in which a foreign investor acquires an established local firm and makes the acquired local firm a subsidiary business within its global portfolio.

Question 46

Build-operate-transfer is a "turn key" investment.

Question 47

A letter of credit is a contract between an importer and a bank that transfers liability for paying the exporter from the importer to the importer's bank.

Question 48

National subcontracting is subcontracting that has been extensively used by MNEs seeking low labor costs in a host's country.

Question 49

An import management company (ICM) is an intermediatary that acts as its clients' export department.

Question 50

Managing complex projects requires special expertise.

Question 51

International entry strategies concern where (location selection), when (timing of entry), and how (entry-mode selection) international companies should enter and invest in a foreign territory during international expansion.

Question 52

Terms of sale are conditions stipulating rights/responsibilities and costs/risks borne by exporter and importer.

Question 53

Export intermediaries are third parties that specialize in facilitating imports and exports.

Question 54

Late investors do suffer from the preceding uncertainties and risks.

Question 55

In today's increasingly integrated global marketplace, where demand level, consumption sophistication, and rivalry intensity are all changing drastically, the decision on when to embark on international expansion is critical for transnational operations.

Question 56

Timing of entry is not as important once the company identifies its environments and opportunities.

Question 57

Overall, differences in culture between the home and host countries can become other triggers of uncertainty.

Question 58

Outbound (market) logistics are based largely on proximity to major buyers and end consumers.

Question 59

Major investment infrastructure variables include transportation (highways, ports, airports, and railroads), telecommunications, utilities, and governmental efficiency.

Question 60

Depending on the extent of these subsidies and other taxes, the statutory corporate tax rate may differ substantially from the effective corporate tax rate because the latter is adjusted to include tax-related incentives such as investment tax credits, tax breaks, and accelerated depreciation.

Question 61

Foreign production is less likely to occur when production costs are lower abroad than at home.

Question 62

The statutory tax rate determines the general level of the tax burden shouldered by firms.

Question 63

The statutory rate on corporate income, which is the statutory corporate rate adjusted for all other taxes and subsidies affecting an MNE's taxable income, determines the company's net return from its revenues.

Question 64

For site selection, MNEs need to calculate the convenience and costs of the various transportation channels (air, sea, railway, and highway) from the candidate site to destinations of major local and foreign customers.

Question 65

Locational determinants can be categorized into the following groups:

Question 66

International location selection involves country selection and regional selection (e.g., state, province, or city) within the chosen country for an MNE's foreign direct investment project(s)

Question 67

Export intermediaries are third-place parties that specialize in facilitating imports and exports.