INTERNATIONAL BUSINESS CHAPTER 12

 International  International Business, Business, 6e (Griffin/Pustay)

Chapter 12 Strategies for Analyzing and Entering Foreign Marets

1) Which of the following is not one of the three steps in increasing market share, revenue, and  profits? A) Assess alternative markets. B) Evaluate respective costs, benefits, and risks. ) !erform a situation anal"sis. #) $elect market with most potential for entr" or e%pansion. E) All are relevant steps. Answer&  #iff& ' !age (ef& ' *b+ective& 1'.1& #iscuss how firms anal"e anal"e foreign markets. ') $tarbucks uses all of the following entr" methods in its international operations except   --------. A) wholl" owned subsidiaries B) licensing agreements ) franchising agreements #) +oint ventures E) $tarbucks uses all of the above methods Answer&  #iff&  !age (ef& ' $kill& AA$B& lobaliation *b+ective& 1'.'& *utline the process b" which which firms choose their mode of entr" into a foreign foreign market. ) Which of the following factors is commonl" considered when assessing alternative foreign markets? A) current sie of market B) potential sie of market ) competitive levels in market #) legal and political environment in market E) all of the above Answer& E #iff& 1 !age (ef&  $kill& AA$B& lobaliation *b+ective& 1'.1& #iscuss how firms anal"e anal"e foreign markets.

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/) What is the first step in selecting a foreign market? A) assessing market potential B) assessing the level of competition ) monitoring ma+or markets #) evaluating host countr"0s trade policies E) assessing general legal and political environments Answer& A #iff& ' !age (ef& / $kill& AA$B& lobaliation *b+ective& 1'.1& #iscuss how firms anal"e anal"e foreign markets. ) Which of the following is not  a  a critical factor in assessing new market opportunities? A) product2market dimensions B) potential target markets ) success factors #) potential for worldwide learning E) product2market differences Answer& # #iff& ' !age (ef&  *b+ective& 1'.1& #iscuss how firms anal"e anal"e foreign markets. 3) *b+ective measures of the potential for growth in an econom" include all of the following except  --------.  --------. A) #! B) ownership of private automobiles ) changes in per capita income #) energ" consumption E) impact of changes in political regime Answer& E #iff& ' !age (ef& / *b+ective& 1'.1& #iscuss how firms anal"e anal"e foreign markets. 4) Which of the following factors is not  used  used to assess the competitive environment in a foreign market? A) the number of e%isting firms B) the sie of e%isting firms ) current advertising strategies #) relative market shares E) e%isting pricing and distribution strategies Answer&  #iff& ' !age (ef& / $kill& AA$B& lobaliation *b+ective& 1'.1& #iscuss how firms anal"e anal"e foreign markets.

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/) What is the first step in selecting a foreign market? A) assessing market potential B) assessing the level of competition ) monitoring ma+or markets #) evaluating host countr"0s trade policies E) assessing general legal and political environments Answer& A #iff& ' !age (ef& / $kill& AA$B& lobaliation *b+ective& 1'.1& #iscuss how firms anal"e anal"e foreign markets. ) Which of the following is not  a  a critical factor in assessing new market opportunities? A) product2market dimensions B) potential target markets ) success factors #) potential for worldwide learning E) product2market differences Answer& # #iff& ' !age (ef&  *b+ective& 1'.1& #iscuss how firms anal"e anal"e foreign markets. 3) *b+ective measures of the potential for growth in an econom" include all of the following except  --------.  --------. A) #! B) ownership of private automobiles ) changes in per capita income #) energ" consumption E) impact of changes in political regime Answer& E #iff& ' !age (ef& / *b+ective& 1'.1& #iscuss how firms anal"e anal"e foreign markets. 4) Which of the following factors is not  used  used to assess the competitive environment in a foreign market? A) the number of e%isting firms B) the sie of e%isting firms ) current advertising strategies #) relative market shares E) e%isting pricing and distribution strategies Answer&  #iff& ' !age (ef& / $kill& AA$B& lobaliation *b+ective& 1'.1& #iscuss how firms anal"e anal"e foreign markets.

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5) A firm might choose to forgo e%porting to a foreign market wh en --------. A) the current sie of market is small B) man" other firms are alread" e%porting ) there are high trade barriers #) the compan" wants to use the market as a platform to other markets E) the firm0s e%isting foreign operations are geographicall" distant Answer&  #iff& ' !age (ef&  $kill& AA$B& lobaliation *b+ective& 1'.1& #iscuss how firms anal"e anal"e foreign markets. 6) -------- refer to e%penses incurred b" the firm as it enters a new foreign market. A) 7ndirect costs B) #irect costs ) *pportunit" costs #) 8ariable costs E) All of the above Answer& B #iff& 1 !age (ef& 3 *b+ective& 1'.1& #iscuss how firms anal"e anal"e foreign markets. 19) Because a firm has limited resources, entering one market ma" preclude its entr" into another. What t"pe of cost is reflected in this situation? A) indirect costs B) direct costs ) opportunit" costs #) variable costs E) all of the above Answer&  #iff& 1 !age (ef& 3 $kill& AA$B& lobaliation *b+ective& 1'.1& #iscuss how firms anal"e anal"e foreign markets. 11) osts associated with setting up a business operation, transferring managers to run it, and shipping e:uipment and merchandise are all e%amples of which t"pe of cost? A) opportunit" costs B) set2up costs ) direct costs #) indirect costs E) opening costs Answer&  #iff& ' !age (ef& 3 *b+ective& 1'.1& #iscuss how firms anal"e anal"e foreign markets.

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1') All of the following are potential benefits of entering a new market except  --------. A) elimination of s"nerg" with other operations B) e%pected sales and profits ) lower ac:uisition and manufacturing costs #) foreclosing of markets to competitors E) access to new technolog" Answer& A #iff& ' !age (ef& 3 *b+ective& 1'.1& #iscuss how firms anal"e foreign markets. 1) Which theor" listed below is useful in deciding which mode of entr" to use when entering foreign markets? A) ownership advantage theor" B) internaliation theor" ) eclectic theor" #) relative factor endowments E) national competitive advantage Answer&  #iff& ' !age (ef& 4 *b+ective& 1'.1& #iscuss how firms anal"e foreign markets. 1/) Which of the following should be considered when choosing a mode of entr"? A) ownership advantages B) location advantages ) internaliation advantages #) need for control E) all of the above Answer& E #iff& 1 !age (ef& 4 *b+ective& 1'.'& *utline the process b" which firms choose their mode of entr" into a foreign market. 1) Which of the following is not one of the decision factors in the choice of entr" mode? A) ownership advantages B) location advantages ) national competitive advantages #) internaliation advantages E) resource availabilit" Answer&  #iff&  !age (ef& 4 *b+ective& 1'.'& *utline the process b" which firms choose their mode of entr" into a foreign market.

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13) ;he informational, political, and cultural disadvantages that foreign firms face when tr"ing to compete against local firms in the host countr" market are referred to as --------. A) opportunit" costs B) liabilit" of foreignness ) internaliation disadvantages #) ownership liabilit" E) the burden of internationaliation Answer& B #iff& 1 !age (ef& 5 $kill& AA$B& lobaliation *b+ective& 1'.'& *utline the process b" which firms choose their mode of entr" into a foreign market. 14) Which of the following is not  a mode of entr" into foreign markets? A) e%porting B) importing ) international licensing #) international franchising E) greenfield strateg" Answer& B #iff& 1 !age (ef& 4 $kill& AA$B& lobaliation *b+ective& 1'.'& *utline the process b" which firms choose their mode of entr" into a foreign market. 15) -------- are tangible or intangible resources owned b" a firm which grant it a competitive advantage over its industr" rivals. A) *wnership advantages B) anufacturers0 agents B) E%port and import brokers ) reight forwarders #) >anufacturers0 e%port agents E) $ogo sosha Answer&  #iff& 1 !age (ef& /5 $kill& AA$B& lobaliation *b+ective& 1'. #escribe forms of e%porting and the t"pes of intermediaries available to assist firms in e%porting their goods. 6) ;he >itsubishi orporation is a firm that is directl" engaged in importing and e%porting a wide variet" of goods for its own account and is a part of a keiretsu s"stem. What t"pe of e%port intermediar" is it? A) e%port management compan" B) Webb2!omerene association ) sogo sosha #) freight forwarder  E) e%port and import broker  Answer&  #iff&  !age (ef& /6 $kill& AA$B& lobaliation *b+ective& 1'. #escribe forms of e%porting and the t"pes of intermediaries available to assist firms in e%porting their goods. 39) ;he =intendo ompan" manufactures electronic video game pla"ers and game cartridges.  =intendo provides game designers with technical specifications for how its game pla"ers work. ;he design firms create the games and then pa" =intendo a fee to manufacture those games. What mode of entr" is described in this e%ample? A) e%porting B) franchising ) licensing #) greenfield strateg" E) +oint venture Answer&  #iff&  !age (ef& /5 $kill& AA$B& lobaliation *b+ective& 1'./& 7dentif" the basic issues in international licensing and discuss the advantages and disadvantages of licensing.

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31) ;he firm that leases the right to use intellectual propert" is called -- ------. A) the leasee B) the leasor  ) the licensor  #) the licensee E) the franchisee Answer&  #iff& 1 !age (ef& /5 *b+ective& 1'./& 7dentif" the basic issues in international licensing and discuss the advantages and disadvantages of licensing. 3') Which is not a part of the licensing process? A) the boundaries of the agreement B) establishment of the compensation rates ) agreement on the rights, privileges, and constraints conve"ed in the agreement #) specification of the duration of the agreement E) all of the above are part of the licensing process Answer& E #iff& ' !age (ef& 9 *b+ective& 1'./& 7dentif" the basic issues in international licensing and discuss the advantages and disadvantages of licensing. 3) ow are ro"alties determined in licensing agreements? A) flat fee B) fi%ed amount per unit sold ) percentage of sales #) all of the above E) onl" B and  Answer& # #iff& ' !age (ef& 9 *b+ective& 1'./& 7dentif" the basic issues in international licensing and discuss the advantages and disadvantages of licensing. 3/) All of the following are disadvantages of licensing except  --------. A) licensing offers low financial risk  B) licensing limits market opportunities ) licensing creates co2dependenc" #) licensing could create a future competitor  E) All of the above are disadvantages of licensing. Answer& A #iff& ' !age (ef& 1 *b+ective& 1'./& 7dentif" the basic issues in international licensing and discuss the advantages and disadvantages of licensing.

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3) 7n a franchise agreement, what does the franchisor provide to the franchisee? A) intellectual propert" @such as brand name) B) operating s"stems ) advertising support service #) training E) all of the above Answer& E #iff& ' !age (ef& ' *b+ective& 1'.& 7dentif" the basic issues in international franchising and discuss the advantages and disadvantages of franchising. 33) As compared to franchising, licensing offers --------. A) a similar level of control B) a higher level of control ) a lower level of control #) greater support E) similar support Answer&  #iff& ' !age (ef&  *b+ective& 1'.& 7dentif" the basic issues in international franchising and discuss the advantages and disadvantages of franchising. 34) When is international franchising most likel" to succeed? A) when the franchisor has uni:ue products B) when the franchisor has an advantageous operating procedure ) when success factors are easil" transferable to foreign markets #) when foreign investors are interested in entering into franchise agreements E) all of the above Answer& E #iff& 1 !age (ef& ' $kill& AA$B& lobaliation *b+ective& 1'.& 7dentif" the basic issues in international franchising and discuss the advantages and disadvantages of franchising. 35) A -------- is used b" firms that outsource most or all of their manufacturing needs to other companies. A) management contract B) turnke" pro+ect ) contract manufacturing strateg" #) greenfield strateg" E) licensing Answer&  #iff& ' !age (ef&  *b+ective& 1'.3& Anal"e contract manufacturing, management contracts, and turnke" operations as specialied entr" modes for international business.

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36) A -------- is an agreement whereb" one firm provides managerial assistance, technical e%pertise, or specialied services to a second firm for some ag reed2upon time in return for monetar" compensation. A) management contract B) turnke" pro+ect ) contract manufacturing strateg" #) greenfield strateg" E) licensing Answer& A #iff& ' !age (ef& / *b+ective& 1'.3& Anal"e contract manufacturing, management contracts, and turnke" operations as specialied entr" modes for international business. 49) A -------- is a contract under which a firm agrees to full" design, construct, and e:uip a facilit" and then turn the pro+ect over to the purchaser when it is read" for operation. A) management contract B) turnke" pro+ect ) contract manufacturing strateg" #) greenfield strateg" E) licensing Answer& B #iff& ' !age (ef&  *b+ective& 1'.3& Anal"e contract manufacturing, management contracts, and turnke" operations as specialied entr" modes for international business. 41) What t"pe of construction pro+ect commonl" involves the use of an international turnke" contract? A) nuclear power plant B) airport ) oil refiner" #) all of the above E) both A and B Answer& # #iff& ' !age (ef&  $kill& AA$B& lobaliation *b+ective& 1'.3& Anal"e contract manufacturing, management contracts, and turnke" operations as specialied entr" modes for international business.

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4') A -------- means that the firm builds a facilit", operates it, and later transfers ownership of the pro+ect to some other part". A) management contract B) B*; pro+ect ) contract manufacturing strateg" #) greenfield strateg" E) license Answer& B #iff& ' !age (ef&  *b+ective& 1'.3& Anal"e contract manufacturing, management contracts, and turnke" operations as specialied entr" modes for international business. 4) Which of the following is a method for foreign direct investment? A) building new facilities B) bu"ing e%isting assets in a foreign countr" ) participating in a +oint venture #) ac:uisition strateg" E) all of the above Answer& E #iff& 1 !age (ef& 4 $kill& AA$B& lobaliation *b+ective& '.1& Evaluate the impact of the political and economic characteristics of the world0s various marketplaces on the opportunities available to international businesses. 4/) A greenfield strateg" can be beneficial because of all of the following except  --------. A) it allows the firm to select the site that meets its needs B) the firm can construct modern facilities ) the firm starts with a clean slate #) the firm can acclimate itself with the new culture at its own pace E) the firm must compl" with local and national regulations Answer& E #iff& ' !age (ef& 4 *b+ective& 1'.4& haracterie the greenfield and ac:uisition forms of #7. 4) When two or more firms agree to work together and create a +oint owned firm to promote mutual interest, -------- has occurred. A) an ac:uisition B) a greenfield investment ) a +oint venture #) a licensing agreement E) a franchise agreement Answer&  #iff& 1 !age (ef& 5 *b+ective& 1'.4& haracterie the greenfield and ac:uisition forms of #7.

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43) Assessing market potential is the second step in the process of foreign market anal"sis. Answer& Aanagement contracts are attractive because the" allow firms to earn additional revenues without incurring an" investment risks or obligations. Answer& ;(DE #iff& ' !age (ef& / *b+ective& 1'.3& Anal"e contract manufacturing, management contracts, and turnke" operations as specialied entr" modes for international business. 19/) When there is overcapacit" in an industr", ac:uisition is best strateg". Answer& ;(DE #iff& ' !age (ef& 4 *b+ective& 1'.4& haracterie the greenfield and ac:uisition forms of #7. 19) ;he number of +oint ventures being formed toda" is on the decline. Answer& A