Question 1

If a firm's core competency is based on control over proprietary technological know-how,_____ and _____ arrangements should be avoided if possible to minimize the risk of losing control over that technology.

Accepted Answer

A)   licensing; joint-venture
B)   wholly owned subsidiary; exporting
C)   turnkey contracts; exporting
D)   exporting; joint-ventureE) A) and C)
F) None of the above

Question 2

When an exporting firm finds that its local agent is also carrying competitors' products,the firm may switch to a _____ to handle local marketing,sales,and service.

Accepted Answer

A)   wholly owned subsidiary
B)   franchising arrangement
C)   turnkey operation
D)   licensing agreementE) None of the above
F) A) and B)

Question 3

By its very nature,licensing increases a firm's ability to utilize a coordinated strategy.

Accepted Answer

A) True 
 B)False

Question 4

Small-scale entry allows a firm to learn about a foreign market while limiting the firm's exposure to that market.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is true of strategic alliances?

Accepted Answer

A)   The fixed costs and associated risks of developing new products or processes are borne by the alliance partner.
B)   They are a way to bring together complementary skills and assets that both companies develop.
C)   They limit the entry of firms into foreign markets.
D)   Firm risks giving away technological know-how and market access to its alliance partner.E) B) and C)
F) A) and C)

Question 6

In a turnkey project,the contractor agrees to handle every detail of the project for a foreign client.

Accepted Answer

A) True 
 B)False

Question 7

Relational capital refers to the building of interpersonal relationships between the firms' managers in a strategic alliance.

Accepted Answer

A) True 
 B)False

Question 8

A joint venture is often politically more acceptable than a wholly owned subsidiary and brings a degree of local knowledge to the subsidiary.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is an advantage of establishing a joint venture?

Accepted Answer

A)   Joint ventures with local partners do not face any risk of being subject to nationalization or other forms of adverse government interference.
B)   Joint ventures give a firm a tight control over subsidiaries that it might need to realize experience curve or location economies.
C)   When the development costs and/or risks of opening a foreign market are high, a firm might gain by sharing these costs and or risks with a local partner.
D)   The firm is deprived of the knowledge of the host country's competitive conditions, culture, language, etc.E) A) and B)
F) A) and C)

Question 10

Firms pursuing global standardization or transnational strategies tend to prefer joint-venture arrangements over wholly owned subsidiaries.

Accepted Answer

A) True 
 B)False

Question 11

If a firm can realize location economies by moving production elsewhere,it should avoid:

Accepted Answer

A)   exporting.
B)   turnkey contracts.
C)   licensing.
D)   wholly owned subsidiaries.E) B) and C)
F) C) and D)

Question 12

A wholly owned subsidiary is appropriate when:

Accepted Answer

A)   the firm wants to share the cost and risk of developing a foreign market.
B)   the firm wants 100 percent of the profits generated in a foreign market.
C)   the firm wants a plant that is ready to operate.
D)   the firm wants to test a market.E) A) and B)
F) All of the above

Question 13

Acquisitions rarely produce disappointing results.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is true of acquisitions?

Accepted Answer

A)   It is a time-consuming process and takes a lot of time to execute.
B)   They are less risky than greenfield ventures in the sense that there is less potential for unpleasant surprises.
C)   They give the firm a much greater ability to build the kind of subsidiary company that it wants.
D)   In many cases, firms make acquisitions to preempt their competitors.E) B) and C)
F) A) and C)

Question 15

The choice of which markets to enter should be driven by an assessment of relative long-run growth and profit potential.

Accepted Answer

A) True 
 B)False

Question 16

Costs that an early entrant has to bear that a later entrant can avoid are known as first-mover costs.

Accepted Answer

A) True 
 B)False

Question 17

The costs and risks associated with doing business in a foreign country are typically high in an economically advanced and politically stable democratic nation.

Accepted Answer

A) True 
 B)False

Question 18

A large-scale entrant is more likely than a small-scale entrant to be able to capture first-mover advantages associated with _____.

Accepted Answer

A)   scale economies
B)   diseconomies of scale
C)   pioneering costs
D)   diseconomies of scopeE) A) and B)
F) A) and D)

Question 19

The value an international business creates in a foreign market depends on the suitability of its product offering to that market and the nature of indigenous competition.

Accepted Answer

A) True 
 B)False

Question 20

Turnkey projects are most common in which of the following industries?

Accepted Answer

A)   fresh fruit, grain, and meat products
B)   chemical, pharmaceutical, and metal refining
C)   consumer durables, computer peripherals, and automotive parts
D)   apparel, shoes, and leather productsE) All of the above
F) A) and B)

Exam 15: Entry Strategy and Strategic Alliances

Costs that an early entrant has to bear that a later entrant can avoid are known as first-mover costs.

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If a firm can realize location economies by moving production elsewhere,it should avoid:

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The choice of which markets to enter should be driven by an assessment of relative long-run growth and profit potential.

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Small-scale entry allows a firm to learn about a foreign market while limiting the firm's exposure to that market.

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Which of the following is true of acquisitions?

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A wholly owned subsidiary is appropriate when:

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The costs and risks associated with doing business in a foreign country are typically high in an economically advanced and politically stable democratic nation.

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Acquisitions rarely produce disappointing results.

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A joint venture is often politically more acceptable than a wholly owned subsidiary and brings a degree of local knowledge to the subsidiary.

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The value an international business creates in a foreign market depends on the suitability of its product offering to that market and the nature of indigenous competition.

Correct AnswerverifiedShow Answer

Firms pursuing global standardization or transnational strategies tend to prefer joint-venture arrangements over wholly owned subsidiaries.

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If a firm's core competency is based on control over proprietary technological know-how,_____ and _____ arrangements should be avoided if possible to minimize the risk of losing control over that technology.

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Which of the following is an advantage of establishing a joint venture?

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In a turnkey project,the contractor agrees to handle every detail of the project for a foreign client.

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Relational capital refers to the building of interpersonal relationships between the firms' managers in a strategic alliance.

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By its very nature,licensing increases a firm's ability to utilize a coordinated strategy.

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When an exporting firm finds that its local agent is also carrying competitors' products,the firm may switch to a _____ to handle local marketing,sales,and service.

Correct AnswerverifiedShow Answer

A large-scale entrant is more likely than a small-scale entrant to be able to capture first-mover advantages associated with _____.

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Which of the following statements is true of strategic alliances?

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Turnkey projects are most common in which of the following industries?

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If a firm's core competency is based on control over proprietary technological know-how,_ and _ arrangements should be avoided if possible to minimize the risk of losing control over that technology.

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