Question 1

Explain franchising and provide examples of companies that would typically use this form of entry into a foreign market.

Accepted Answer

Franchising is similar to licensing, alt...

Question 2

Describe how pressures for cost reductions affect the choice of entry mode.

Accepted Answer

The greater the pressures for cost reduc...

Question 3

Service-based companies typically favor a combination of franchising and master subsidiaries to control the franchises within a region.

Accepted Answer

A) True 
 B)False

Question 4

Describe the disadvantages of licensing as a mode of entry into the foreign market.

Accepted Answer

Licensing, a mode of entry into a foreig...

Question 5

List and briefly describe the six different modes a business can use to enter a foreign market.

Accepted Answer

Firms can use six different modes to ent...

Question 6

Why should a high-tech firm avoid selecting licensing as a mode of entry?

Accepted Answer

A)   threat of creating efficient partners
B)   risk of losing control over technology
C)   fear of rapid imitation of core technology
D)   lack of a transitory technological advantage
E)   inability to deter development costs

Question 7

What are the advantages and disadvantages of exporting as a mode of entry into foreign markets?

Accepted Answer

Exporting has two distinct advantages. F...

Question 8

The risks associated with learning to do business in a new culture are less if the firm

Accepted Answer

A)   engages in global strategic coordination.
B)   imposes strict marketing guidelines on how to do business.
C)   enters a greenfield venture in the host country.
D)   realizes substantial location economies.
E)   acquires an established host-country enterprise.

Question 9

Which entry mode into a foreign market best serves a high-tech firm because it reduces the risk of losing that competence?

Accepted Answer

A)   turnkey projects
B)   franchising
C)   wholly owned subsidiaries
D)   joint ventures
E)   exporting

Question 10

What is a drawback of licensing as a mode of entry into foreign markets?

Accepted Answer

A)   The licensor has to bear all costs and risks associated with developing a foreign market.
B)   Licensing does not give a firm tight control over manufacturing, marketing, and strategy.
C)   Licensing does not benefit firms lacking the capital to expand operations overseas.
D)   Licensing deals fail when there are barriers to foreign investment in a particular country.
E)   A firm that enters into a licensing deal with a foreign country will have no long-term interest in that country.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Autumn Roofing, an American firm, recently acquired another company, Shingle Shores, in Indonesia. The high-level managers at Shingle Shores quit because they could not cope with the domineering and straightforward approach of their American counterparts. This illustrates how acquisitions may fail because

Accepted Answer

A)   managers overestimate their ability to create value from an acquisition.
B)   integration of operations between the two firms takes longer than forecasted.
C)   there is a clash between the cultures of the acquired and the acquiring firm.
D)   an acquiring firm overpays for the assets of an acquired firm.
E)   inadequate pre-acquisition screening has been done.

Question 13

Comp-U-Learn Inc. prides itself on a competitive advantage based on their proprietary educational software technology. What two entry modes should the company avoid in order to minimize the risk of losing this technology?

Accepted Answer

A)   joint venture and wholly owned subsidiary
B)   exporting and franchising
C)   acquisitions and greenfield ventures
D)   licensing and joint venture
E)   licensing and exporting

Question 14

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.

Accepted Answer

A) True 
 B)False

Question 15

Fast food restaurants are good examples of the franchise model.

Accepted Answer

A) True 
 B)False

Question 16

When considering modes of entry, Christopher Bartlett and Sumantra Ghoshal suggest that companies based in developing nations should

Accepted Answer

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 operations and performance against foreign multinationals.
E)   not focus on market niches that multinational companies ignore.

Question 17

Why do acquisitions fail sometimes?

Accepted Answer

A)   There is a clash between the cultures of the acquiring and acquired firms.
B)   Acquisitions take a long time to execute.
C)   Acquisitions are easily preempted by making greenfield investments.
D)   The revenue and profit stream generated by an acquisition's resources is usually unknown.
E)   Losses produced by intangible assets outweigh profits from acquired tangible assets.

Question 18

Which mode of entry into foreign markets can result in a lack of control over quality?

Accepted Answer

A)   exporting
B)   franchising
C)   turnkey projects
D)   wholly owned subsidiaries
E)   joint ventures

Question 19

What are the consequences of an international firm entering a foreign market on a significant scale?

Accepted Answer

The consequences of entering on a signif...

Question 20

The risk of failure of an acquisition can be reduced by

Accepted Answer

A)   undervaluing the assets of an acquired firm.
B)   ensuring that firms are acquired in the home country.
C)   replacing high-level managers of an acquired firm.
D)   a detailed auditing of operations, financial position, and management culture.
E)   investing only in a firm that is managing to break even.

Exam 13: Entering Foreign Markets

Why do acquisitions fail sometimes?

Correct Answer
verified

What are the advantages and disadvantages of exporting as a mode of entry into foreign markets?

Correct Answer
verified
Exporting has two distinct advantages. F...
View Answer

Which mode of entry into foreign markets can result in a lack of control over quality?

Correct Answer
verified

Fast food restaurants are good examples of the franchise model.

Correct Answer
verified

Correct Answer
verified

Explain franchising and provide examples of companies that would typically use this form of entry into a foreign market.

Correct Answer
verified
Franchising is similar to licensing, alt...
View Answer

List and briefly describe the six different modes a business can use to enter a foreign market.

Correct Answer
verified
Firms can use six different modes to ent...
View Answer

Which entry mode into a foreign market best serves a high-tech firm because it reduces the risk of losing that competence?

Correct Answer
verified

Comp-U-Learn Inc. prides itself on a competitive advantage based on their proprietary educational software technology. What two entry modes should the company avoid in order to minimize the risk of losing this technology?

Correct Answer
verified

The risk of failure of an acquisition can be reduced by

Correct Answer
verified

Why should a high-tech firm avoid selecting licensing as a mode of entry?

Correct Answer
verified

Service-based companies typically favor a combination of franchising and master subsidiaries to control the franchises within a region.

Correct Answer
verified

Describe the disadvantages of licensing as a mode of entry into the foreign market.

Correct Answer
verified
Licensing, a mode of entry into a foreig...
View Answer

When considering modes of entry, Christopher Bartlett and Sumantra Ghoshal suggest that companies based in developing nations should

Correct Answer
verified

What are the consequences of an international firm entering a foreign market on a significant scale?

Correct Answer
verified
The consequences of entering on a signif...
View Answer

The risks associated with learning to do business in a new culture are less if the firm

Correct Answer
verified

What is a drawback of licensing as a mode of entry into foreign markets?

Correct Answer
verified

Describe how pressures for cost reductions affect the choice of entry mode.

Correct Answer
verified
The greater the pressures for cost reduc...
View Answer

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

Correct Answer
verified

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.

Correct Answer
verified

Exam 13: Entering Foreign Markets

Why do acquisitions fail sometimes?

Correct AnswerverifiedShow Answer

What are the advantages and disadvantages of exporting as a mode of entry into foreign markets?

Correct AnswerverifiedExporting has two distinct advantages. F...View AnswerShow Answer

Which mode of entry into foreign markets can result in a lack of control over quality?

Correct AnswerverifiedShow Answer

Fast food restaurants are good examples of the franchise model.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Explain franchising and provide examples of companies that would typically use this form of entry into a foreign market.

Correct AnswerverifiedFranchising is similar to licensing, alt...View AnswerShow Answer

List and briefly describe the six different modes a business can use to enter a foreign market.

Correct AnswerverifiedFirms can use six different modes to ent...View AnswerShow Answer

Which entry mode into a foreign market best serves a high-tech firm because it reduces the risk of losing that competence?

Correct AnswerverifiedShow Answer

Comp-U-Learn Inc. prides itself on a competitive advantage based on their proprietary educational software technology. What two entry modes should the company avoid in order to minimize the risk of losing this technology?

Correct AnswerverifiedShow Answer

The risk of failure of an acquisition can be reduced by

Correct AnswerverifiedShow Answer

Why should a high-tech firm avoid selecting licensing as a mode of entry?

Correct AnswerverifiedShow Answer

Service-based companies typically favor a combination of franchising and master subsidiaries to control the franchises within a region.

Correct AnswerverifiedShow Answer

Describe the disadvantages of licensing as a mode of entry into the foreign market.

Correct AnswerverifiedLicensing, a mode of entry into a foreig...View AnswerShow Answer

When considering modes of entry, Christopher Bartlett and Sumantra Ghoshal suggest that companies based in developing nations should

Correct AnswerverifiedShow Answer

What are the consequences of an international firm entering a foreign market on a significant scale?

Correct AnswerverifiedThe consequences of entering on a signif...View AnswerShow Answer

The risks associated with learning to do business in a new culture are less if the firm

Correct AnswerverifiedShow Answer

What is a drawback of licensing as a mode of entry into foreign markets?

Correct AnswerverifiedShow Answer

Describe how pressures for cost reductions affect the choice of entry mode.

Correct AnswerverifiedThe greater the pressures for cost reduc...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Exporting has two distinct advantages. F...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Franchising is similar to licensing, alt...
View Answer

Correct Answer
verified
Firms can use six different modes to ent...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Licensing, a mode of entry into a foreig...
View Answer

Correct Answer
verified

Correct Answer
verified
The consequences of entering on a signif...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The greater the pressures for cost reduc...
View Answer

Correct Answer
verified

Correct Answer
verified