Q&A Hero

Q: In a _____, a mode of entry into foreign markets, a firm agrees to set up an operating plant for a foreign client and hand over the plant when it is fully operational. A. franchising agreement B. turnkey project C. licensing agreement D. wholly owned subsidiary E. joint venture

Q: In exporting, problems with local marketing agents can be overcome by: A. selling intangible property to a franchisee and insisting on rules to conduct the business. B. changing agents frequently. C. engaging in turnkey projects and exporting process technology to foreign firms. D. entering into cross-licensing agreements with foreign firms. E. setting up wholly owned subsidiaries in foreign nations to handle local marketing.

Q: Which of the following is a disadvantage of exporting as a mode of entry into foreign markets? A. The firm incurs the costs of establishing manufacturing operations in the host country. B. The firm is unable to realize experience curve economies through exporting. C. The local agents may not market the firm's products as well as the firm would if it managed its marketing itself. D. The firm cannot use countertrading options when exporting. E. The firm may not realize substantial scale economies from its global sales volume via exporting.

Q: Which of the following is a disadvantage of exporting as a mode of entry into foreign markets? A. The exporting firm incurs the costs of establishing manufacturing operations in the host country. B. The firm is unable to realize curve economies through exporting. C. High transport costs can make exporting uneconomical, particularly for bulk products. D. The firm cannot use countertrading options when exporting. E. A firm may not realize substantial scale economies from its global sales volume via exporting.

Q: Which of the following is an advantage of exporting as a mode of entry into foreign markets? A. It helps a firm achieve experience curve and location economies. B. A firm does not have to bear the development costs and risks associated with opening a foreign market. C. A firm has the ability to engage in global strategic coordination. D. It helps the firm earn returns from process technology skills in countries where FDI is restricted. E. It can provide the firm access to the local partners knowledge.

Q: Which of the following is an advantage of exporting as a mode of entry into foreign markets? A. A firm can avoid the cost of establishing manufacturing operations in the host country. B. A firm does not have to bear the development costs and risks associated with opening a foreign market. C. A firm can earn returns from process technology skills in countries where FDI is restricted. D. A firm has access to local partners knowledge. E. A firm has the ability to engage in global strategic coordination.

Q: Which of the following is a course of action suggested by Christopher Bartlett and Sumantra Ghoshal for companies based in developing nations? A. Build up financial resources to match those of the largest global competitors. B. Enter foreign markets at a similar time and scale as multinational companies. C. Enter markets rapidly and exit at an equally rapid pace to avoid heavy losses. D. Benchmark one's operations and performance against foreign multinationals. E. Do not focus on market niches that multinational companies ignore.

Q: Which of the following is the most likely outcome of a foreign firm entering a developed nation on a small scale after other international businesses in the firm's industry? A. Capturing first-mover advantages B. Higher pioneering costs C. Rapid increase in market share D. Limited future growth potential E. Increase in sales volume

Q: Which of the following is true of market entry by an international firm considering foreign expansion? A. Politically unstable nations, by virtue of their higher potential for growth, are the best foreign markets. B. The value an international business can create in a foreign market does not depend on the nature of indigenous competition. C. The avoidance of pioneering costs that a later entrant has to bear is a first-mover advantage. D. Strategic commitments have minor influence on business decisions. E. Entering a large developing nation before most other international businesses on a large scale is associated with high levels of risk.

Q: Which of the following is the reason why small-scale entry into a foreign market makes it difficult to build market share? A. Small-scale entry necessitates rapid entry into a foreign market. B. Small-scale entry is associated with a lack of commitment demonstrated by the foreign firm. C. Small-scale entry leads to escalating strategic commitments. D. Small-scale entry requires that extra time be spent in analyzing a foreign market. E. Small-scale entry leads to increased exposure to a foreign market.

Q: Which of the following is a disadvantage of small-scale entry for an international firm considering foreign expansion? A. The possibility of escalating commitment leading to major financial losses B. The limited availability of resources for use in other markets C. The lack of flexibility associated with strategic commitments D. The increase in economic exposure due to minimal time spent in evaluating a foreign market E. The difficulty of building market share and capturing first-mover advantages

Q: Which of the following types of entry into a foreign market allows a firm to learn about the foreign market while limiting the firm's exposure to that market? A. Early entry B. Small-scale entry C. Large-scale entry D. Late entry E. Rapid entry

Q: Which of the following is true of significant strategic commitments to foreign expansion made by an international firm? A. Significant strategic commitments of a foreign firm have little or no influence on the nature of competition in a market. B. The large-scale entry of a foreign firm does not give other foreign institutions considering entry into the market a reason to pause. C. The large-scale entry of a foreign firm gives customers reasons for believing that the foreign firm will not remain in the market for the long run. D. Significant strategic commitments are associated with higher strategic flexibility of the international firm. E. Significant strategic commitments are neither unambiguously good nor bad.

Q: Which of the following is a disadvantage of large-scale entry into a foreign market? A. Decrease in a firm's exposure to the foreign market B. Difficulty attracting customers and distributors for the product C. Inability to build rapid market-share irrespective of the scale of entry D. Limited product acceptance due to the avoidance of potential losses E. Availability of fewer resources to support expansion in other desirable markets

Q: Which of the following is true of the scale of entry into a foreign market for an international firm considering foreign expansion? A. Small-scale entrants are more likely to capture first-mover advantages. B. Small-scale entry does not allow a firm to learn about a foreign market. C. Large-scale entrants are more likely to capture first-mover advantages. D. Large-scale entrants are more likely to avoid pioneering costs. E. Small-scale entrants are more prone to risks than large-scale entrants.

Q: Which of the following is true of strategic commitments for an international firm considering foreign expansion? A. They have a short-term impact. B. They are frequently subject to change. C. They fail to have a significant influence on business decisions. D. They are difficult to reverse. E. They are made on a day-to-day basis by employees at various levels in an organization.

Q: In international business, an advantage of being a late entrant in a foreign market is the ability to: A. create switching costs that tie customers into products or services. B. capture demand by establishing a strong brand name. C. build sales volume and ride down the experience curve before early entrants. D. ride on an early entrant's investments in learning and customer education. E. create a cost advantage over first-movers.

Q: In terms of an international firm considering foreign expansion, _____ include the costs of promoting and establishing a product offering, and educating customers. A. Sunk costs B. Pioneering costs C. Opportunity costs D. Intangible costs E. Standard costs

Q: The probability of survival for an international business increases if it: A. enters a national market after several other foreign firms have already done so. B. avoids the use of countertrade agreements. C. enters a national market early. D. enters a foreign market via turnkey projects. E. avoids engaging in joint ventures.

Q: The liability associated with foreign expansion is greater for foreign firms that: A. choose to ride on an early entrant's investments. B. use countertrade agreements. C. enter a national market early. D. ride down the experience curve behind their rivals. E. avoid pioneering costs.

Q: _____ arise when the business system in a foreign country is so different from that in a firms home market that the enterprise has to devote considerable effort, time, and expense to learning the rules of the game. A. Sunk costs B. Variable costs C. Pioneering costs D. Opportunity costs E. Standard costs

Q: Which of the following is an example of a first-mover advantage? A. The ability to build sales volume in the foreign country B. The avoidance of pioneering costs that a later entrant has to bear C. The increased probability of surviving in a foreign market D. The opportunity to observe and learn from the mistakes of late entrants in the foreign market E. The ability to allow later entrants to the foreign market ride ahead on the experience curve

Q: Which of the following is an example of a first-mover advantage? A. The ability to capture demand by establishing a strong brand name B. The avoidance of pioneering costs that a later entrant has to bear C. The increased probability of surviving in a foreign market D. The opportunity to observe and learn from the mistakes of later entrants E. The ability to let later entrants ride ahead on the experience curve

Q: _____ refer to costs that an early entrant in a foreign market has to bear that a later entrant can avoid. A. Sunk costs B. Standard costs C. Variable costs D. Pioneering costs E. Opportunity costs

Q: First-mover disadvantages refer to: A. disadvantages associated with entering a foreign market before other international businesses. B. costs that a late entrant to a foreign market has to bear. C. a direct restriction on the quantity of a good that can be imported into a country. D. imperfections in the operation of the market mechanism. E. disadvantages experienced by being a late entrant in a foreign market.

Q: Which of the following is an example of a first-mover advantage? A. The ability to create switching costs that tie customers into one's products or services B. The avoidance of pioneering costs that a later entrant into the foreign market has to bear C. The increased probability of surviving in a foreign market D. The opportunity to observe and learn from the mistakes of other entrants E. The ability to let later entrants ride ahead on the experience curve

Q: In international business, the benefits frequently associated with entering a foreign market early are known as _____. A. pioneering costs B. first-mover advantages C. absolute advantages D. bandwagon effects E. factor endowments

Q: In which of the following situations can an international business command higher prices for a particular product in a foreign market? A. When the product is widely available in the foreign market B. When sales volumes is relatively low in the foreign market C. When the product offers greater value to customers in the foreign market D. When the product is more suitable to other foreign markets E. When domestic competitors are selling alternatives at reduced prices

Q: Which of the following is true of basic entry decisions for an international firm into a foreign market? A. Greater value of a product in a foreign market translates into an ability to charge higher prices and/or to build sales volume more rapidly. B. An international firm should not rank countries in terms of their attractiveness because the parameter can change frequently. C. If an international business can offer a product that has not been widely available in a foreign market and that satisfies an unmet need, the value of that product to consumers is likely to be much lesser. D. The costs and risks associated with doing business in a foreign country are typically lower in less developed nations. E. Other things being equal, the benefitcostrisk trade-off is likely to be unfavorable in politically stable nations that have free market systems.

Q: In international business, a product that is not widely available in a foreign market and satisfies an unmet need: A. is likely to have greater value. B. will have to be priced relatively low. C. will see a decrease in sales volume. D. is not suited to that particular market. E. will fail to make a profit.

Q: Which of the following factors determine the value that an international business can create in a foreign market? A. Population density in the foreign market B. Political stability of the foreign market C. Nature of indigenous competition D. Per capita income in the foreign market E. Type of political system in the foreign market

Q: Which of the following is true of the value that an international business can create in a foreign market? A. If the international business offers the same type of product that indigenous competitors are offering, then the value of that product is likely to be greater. B. If the international business can offer a product that satisfies an unmet need, the value of that product to consumers is likely to be lower. C. Greater value of an international business translates into an inability to charge higher prices and/or to build sales volume more rapidly. D. The value that an international business can create in a foreign market depends on the suitability of its product offering to that market and the nature of indigenous competition. E. An international firm should not rank countries in terms of their attractiveness and long-run profit potential because these factors are always changing.

Q: Which of the following countries presents a favorable benefit-cost-risk trade-off scenario for foreign expansion? A. A country ridden by private-sector debt B. A country with a free market system C. A country experiencing a dramatic upsurge in inflation rates D. A country that is heavily populated E. A country that is less developed and politically unstable

Q: Which of the following is true of the basic entry decisions a firm must make before a firm contemplates foreign expansion? A. The long-run economic benefits of doing business in a country are solely a function of the number of consumers in the market. B. The attractiveness of a country as a potential market for an international business depends on balancing the benefits, costs, and risks associated with doing business in that country. C. The costs and risks associated with doing business in a foreign country are typically higher in economically advanced and politically stable democratic nations. D. The benefitcostrisk trade-off is likely to be most favorable in politically unstable countries. E. All the nation-states in the world hold the same profit potential for a firm contemplating foreign expansion.

Q: Which of the following is a reason why a relatively poor country may be an attractive target for inward investment? A. Rapid economic growth B. Political instability C. Currency depreciation D. High cost of living E. Less developed infrastructure

Q: Which of the following is true of the factors regarding the selection of a foreign market? A. All nation states in the world hold the same profit potential for a firm contemplating foreign expansion. B. The long-run economic benefits of foreign expansion are a function of factors such as the likely future wealth of consumers. C. Less populous nations have a higher potential for economic growth. D. Politically unstable nations by virtue of their higher potential for growth are the best foreign markets. E. The attractiveness of a country as a potential market for an international business depends only on its geographical location.

Q: Which of the following is the first basic entry decision that a firm contemplating foreign expansion must make? A. When to enter a foreign market B. On what scale to enter a foreign market C. Which foreign markets to enter D. Whether to enter a market before other firms and claim first-mover advantages E. Whether to enter into licensing agreements or use the franchising model

Q: Which of the following is true of foreign expansion? A. The timing and scale of entry for foreign expansion are minor details in comparison with the choice of foreign market. B. The long-run economic benefits of doing business in a country are a function of the country's population size. C. All the nations in the world do not all hold the same profit potential for a firm contemplating foreign expansion. D. The costs and risks associated with foreign expansion are higher in economically advanced nations. E. Other things being equal, the benefitcostrisk trade-off is likely to be most favorable in politically unstable nations.

Q: An advantage of establishing a greenfield venture in a foreign country is that it gives the firm a much greater ability to build the kind of subsidiary company that it wants.

Q: According to David Ravenscraft and Mike Scherer's study, many acquisitions destroy rather than create value.

Q: When an international firm makes an acquisition in a foreign market, it acquires valuable intangible as well as tangible assets.

Q: One of the advantages of acquisitions is that they are quick to execute.

Q: The greater the pressures for cost reductions are, the more likely an international firm will want to pursue some combination of exporting and wholly owned subsidiaries.

Q: An international firm that perceives its technological advantage to be transitory and susceptive to rapid imitation might want to license its technology to foreign firms.

Q: An advantage of licensing and franchising is the low development costs and risks.

Q: If an international firms core competence is based on proprietary technology, entering a joint venture might risk losing control of that technology to the joint-venture partner.

Q: Establishing a wholly owned subsidiary is generally the cheapest method of serving a foreign market from a capital investment standpoint.

Q: Establishing a wholly owned subsidiary gives an international firm a 100 percent share in the profits generated in a foreign market.

Q: An advantage of a wholly owned subsidiary is that it may be required if a firm is trying to realize location and experience curve economies.

Q: When a firm's competitive advantage is based on technological competence, a joint venture is the preferred mode of entry into a foreign market because it reduces the risk of losing control over that competence.

Q: In terms of the entry modes into a foreign market, a joint venture does not give an international firm the tight control over subsidiaries that might be required to realize experience curve or location economies.

Q: In international business, joint ventures with local partners face a significantly higher risk of being subject to nationalization.

Q: What are the advantages of strategic alliances?

Q: What are strategic alliances?

Q: Describe the global standardization strategy.

Q: What are the sources of pressures for local responsiveness?

Q: What is an experience curve? What is its strategic significance?

Q: Managing an alliance successfully requires building interpersonal relationships between the firms' managers, or what is sometimes referred to as: A. relational capital. B. interorganizational synergy. C. power equilibrium. D. symbiotics. E. intraorganizational coordination.

Q: One of the principal risks associated with a strategic alliance is that: A. it brings together the complementary skills of alliance partners. B. it makes it difficult for the partner firms to enter into a foreign market. C. a firm can give away more than it receives. D. it does not allow firms to share fixed costs. E. it almost always fails.

Q: Which of the following is a disadvantage of a strategic alliance? A. Entering into a strategic alliance, makes it difficult for a firm to enter into a foreign market. B. As a result of strategic alliance, fixed costs of developing new products tend to increase. C. Strategic alliance gives competitors a low-cost route to new technology and markets. D. Firms that enter into a strategic alliance with a foreign firm tend to face higher trade barriers. E. Strategic alliance always leads to a loss to either of the firms involved.

Q: A _____ allows two or more firms to share the fixed costs (and associated risks) of developing new products or processes. A. franchising agreement B. global web C. free trade agreement D. strategic alliance E. dispersion linkage

Q: The term _____ refers to cooperative agreements between potential or actual competitors. A. tactical union B. strategic alliance C. political affiliation D. economic association E. nationalization

Q: Which of the following statements is true about an international strategy? A. International strategy typically involves taking products first produced for foreign markets and then customizing them for domestic markets. B. International strategy should be pursued by a firm if it manufactures a product that satisfies local, rather than universal, needs. C. When a firm pursues an international strategy, the head office of the firm retains fairly tight control over marketing and product strategy. D. Firms pursuing the international strategy tend to outsource their development functions such as R&D. E. International strategy should be pursued by a firm only if it faces strong competition in foreign markets.

Q: Mayer Life Systems, a manufacturer of surgical and medical appliances, invented and patented a new dialysis machine that radically reduced maintenance and operational issues. Responding to a global demand, it decided to sell the machines manufactured at its plant in the U.S. to various markets across the globe. Since the product features provided by Mayer were not provided by any other competitor, Mayer did not feel any pressure for cost reductions. Which of the following strategies is most likely being pursued by Mayer? A. International strategy B. Localization strategy C. Global standardization strategy D. Transnational strategy E. Nationalization strategy

Q: Xerox had a monopoly on photocopiers for several years as the technology underlying the photocopier was protected by strong patents. As it served a universal need, this favorable position led Xerox to pursue a(n) _____ strategy. A. global standardization B. localization C. international D. transnational E. nationalization

Q: Pursuing a(n) _____ strategy makes sense if a firm has a valuable core competence that indigenous competitors in foreign markets lack. A. global standardization B. international C. nationalization D. transnational E. nationalization

Q: Firms that pursue a(n) _____ strategy take products first produced for their domestic market and sell them across various markets with only minimal local customization. A. nationalization B. transnational C. global standardization D. international E. localization

Q: Which of the following is true of a transnational strategy? A. It is easy to implement because it does not place any conflicting demands on a company. B. It is used when the pressures for cost reductions are low. C. It is usually used when the pressure for local responsiveness is relatively low. D. It enables the one-way flow of core competencies. E. It is used by firms that try to achieve low costs through location economies, economies of scale, and learning effects.

Q: Firms that pursue a(n) _____ strategy differentiate their product offering across geographic markets to account for local differences. A. international B. global standardization C. transnational D. multidomestic E. nationalization

Q: Which of the following is an observation made by researchers Bartlett and Ghoshal regarding modern multinational enterprises? A. Global logistics industry makes the concept of "location economies" redundant for international firms. B. Core competencies and skills can develop in any of the firm's worldwide operations. C. Flow of skills between a firm and its global subsidiaries should be unidirectional. D. Differentiating across geographic markets helps a firm in reducing costs. E. Customer demands for local customization are on the decline worldwide.

Q: Which of the following strategies is a firm most likely to pursue when it simultaneously faces both strong cost pressures and strong pressures for local responsiveness? A. Global standardization strategy B. Localization strategy C. International strategy D. Transnational strategy E. Nationalization strategy

Q: A global car manufacturer wants to start production in China. While catering to local responsiveness, what can the firm do to get scale economies? A. Increase costs whenever possible B. Use common vehicle platforms and components across many different models C. Shorten the production runs for each component D. Increase the duplication of functions required for each operation E. Manufacture only one type of car and sell it in all the international markets

Q: Which of the following is true of a localization strategy? A. It allows a firm to capture the cost reductions of mass-producing a standardized product. B. It reduces duplication of functions. C. It involves longer production runs. D. It makes sense if the value added by customization supports higher pricing. E. It substantially reduces local demand.

Q: Which of the following strategies focuses on increasing profitability by customizing the firm's goods or services so that they provide a good match to tastes and preferences in different national markets? A. International strategy B. Global standardization strategy C. Localization strategy D. Transnational strategy E. Nationalization strategy

Q: Which of the following strategies is most likely to pursued by a firm when there are strong pressures for cost reductions and demands for local responsiveness are minimal? A. Domestic strategy B. Global standardization strategy C. International strategy D. Transnational strategy E. Nationalization strategy

Q: A firm is most likely to pursue a global standardization strategy when: A. it wants to implement a high-cost strategy on a global scale. B. it wants to reduce consumer surplus. C. there are no universal needs to be served. D. there are strong demands for local responsiveness. E. there are strong pressures for cost reduction.

Q: Which of the following is true of a firm that pursues a global standardization strategy? A. It ensures that it pursues a high-cost strategy on a global scale. B. It has its production, marketing, and R & D activities in only one optimum location. C. It tries to customize its products to local conditions. D. It has shorter production runs. E. It reaps maximum benefits from economies of scale and learning effects.

Q: Firms that pursue a(n) _____ strategy focus on increasing profitability and profit growth by reaping the cost reductions that come from economies of scale, learning effects, and location economies. A. international B. transnational C. localization D. global standardization E. nationalization

Q: The appropriateness of the strategy that a firm chooses to use in an international market varies with the extent of pressures for _____ and _____. A. quality improvement; product standardization B. customer surplus; quality improvements C. customer surplus; product standardization D. cost reductions; local responsiveness E. product standardization; cost reductions

Q: For an international business, which of the following is most likely to be an outcome of protectionism and nationalism in a host-country? A. Increase in the attractiveness of location economies B. Pressure for localization of production C. Requirement of standardization of products or services D. Pressure for cost reduction E. Decrease in the significance of local responsiveness