Question 1

Under ________ agreement, a firm might license some valuable intangible property to a foreign partner, but in addition to a royalty payment, the firm might also request that the foreign partner license some of its valuable know-how to the firm.

Accepted Answer

A)   an integrated licensing
B)   a chartering
C)   a franchising
D)   a cross-licensing

Question 2

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 products

Question 3

The most typical joint venture is a 60-40 venture, in which one party holds most of the ownership stake.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is true of establishing a greenfield venture in a foreign country?

Accepted Answer

A)   Greenfield investments are less risky than acquiring an existing company in a foreign market.
B)   A degree of uncertainty is associated with a greenfield venture because of future revenue and profit prospects.
C)   Greenfield investments virtually eliminate the possibility of a more aggressive global competitor entering the market via acquisitions.
D)   Greenfield investments are quick to establish.

Question 5

Which of the following statements about franchising is true?

Accepted Answer

A)   It guarantees consistent product quality.
B)   It tends to involve more short-term commitments than licensing.
C)   It is a specialized form of licensing.
D)   It is employed primarily by manufacturing firms.

Question 6

________ can be used to formalize arrangements to swap skills and technology in a strategic alliance.

Accepted Answer

A)   Modularization
B)   Cross-licensing agreements
C)   Structured transfer agreements
D)   Contractual safeguards

Question 7

Which of the following is true of strategic alliances?

Accepted Answer

A)   Strategic alliances can make entry into a foreign market difficult.
B)   Strategic alliances, while they have many benefits, do not allow firms to share the fixed costs of developing new products or processes.
C)   Strategic alliances allow firms to bring together complementary skills and assets that neither company could easily develop on its own.
D)   Strategic alliances, while beneficial to firms, make the establishment of technological standards for an industry difficult.

Question 8

A disadvantage of ________ is that the firm that enters into such an arrangement will have no long-term interest in the foreign country.

Accepted Answer

A)   wholly owned subsidiaries
B)   exporting
C)   licensing
D)   turnkey projects

Question 9

Exporting from a firm's home base is most appropriate when lower-cost locations for manufacturing the product can be found abroad.

Accepted Answer

A) True 
 B)False

Question 10

What is the primary advantage of licensing?

Accepted Answer

A)   It helps a firm avoid the development costs and risks associated with opening a foreign market.
B)   It gives a firm the tight control over manufacturing, marketing, and strategy.
C)   It helps a firm achieve experience curve and location economies.
D)   It increases a firm's ability to utilize a coordinated strategy.

Question 11

Educating customers is an element of pioneering costs.

Accepted Answer

A) True 
 B)False

Question 12

When technological know-how constitutes a firm's core competence, which entry mode is the optimal choice?

Accepted Answer

A)   foreign franchises controlled by joint ventures
B)   licensing agreements
C)   wholly owned subsidiaries
D)   turnkey contracts

Question 13

Managing an alliance successfully requires building interpersonal relationships between the firms' managers. This is sometimes referred to as

Accepted Answer

A)   relational capital.
B)   relational assets.
C)   operational assets.
D)   venture capital.

Question 14

In ____, the contractor agrees to handle every detail of the project for a foreign client, including the training of operating personnel.

Accepted Answer

A)   exporting
B)   licensing
C)   franchising
D)   turnkey projects

Question 15

The costs and risks associated with doing business in a foreign country are typically

Accepted Answer

A)   low in an economically advanced nation.
B)   low in the countries of the European Union.
C)   high in an economically advanced nation.
D)   high in a politically stable democratic nation.

Question 16

Discuss the three primary characteristics of a good ally.

Accepted Answer

A good ally, or partner, has three chara...

Question 17

Firms entering markets where there are no incumbent competitors to be acquired should choose

Accepted Answer

A)   greenfield investments.
B)   joint ventures.
C)   acquisitions.
D)   takeovers.

Question 18

Which of the following is a distinct advantage of exporting?

Accepted Answer

A)   It avoids the threat of tariff barriers by the host-country government.
B)   Firms benefit from a local partner's knowledge of the host country's competitive conditions.
C)   It avoids the often substantial costs of establishing manufacturing operations in the host country.
D)   It is appropriate if lower cost locations for manufacturing the product can be found abroad.

Question 19

A ________ entails establishing a firm that is owned together by two or more otherwise independent firms.

Accepted Answer

A)   joint venture
B)   licensing agreement
C)   franchisee
D)   turnkey contract

Question 20

A wholly owned subsidiary is appropriate when the firm wants

Accepted Answer

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

Exam 15: Entry Strategy and Strategic Alliances

Firms entering markets where there are no incumbent competitors to be acquired should choose

Correct AnswerverifiedShow Answer

Which of the following is a distinct advantage of exporting?

Correct AnswerverifiedShow Answer

A disadvantage of ________ is that the firm that enters into such an arrangement will have no long-term interest in the foreign country.

Correct AnswerverifiedShow Answer

What is the primary advantage of licensing?

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________ can be used to formalize arrangements to swap skills and technology in a strategic alliance.

Correct AnswerverifiedShow Answer

A ________ entails establishing a firm that is owned together by two or more otherwise independent firms.

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The most typical joint venture is a 60-40 venture, in which one party holds most of the ownership stake.

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Discuss the three primary characteristics of a good ally.

Correct AnswerverifiedA good ally, or partner, has three chara...View AnswerShow Answer

Exporting from a firm's home base is most appropriate when lower-cost locations for manufacturing the product can be found abroad.

Correct AnswerverifiedShow Answer

In ____, the contractor agrees to handle every detail of the project for a foreign client, including the training of operating personnel.

Correct AnswerverifiedShow Answer

Which of the following is true of establishing a greenfield venture in a foreign country?

Correct AnswerverifiedShow Answer

When technological know-how constitutes a firm's core competence, which entry mode is the optimal choice?

Correct AnswerverifiedShow Answer

Managing an alliance successfully requires building interpersonal relationships between the firms' managers. This is sometimes referred to as

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

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Which of the following is true of strategic alliances?

Correct AnswerverifiedShow Answer

The costs and risks associated with doing business in a foreign country are typically

Correct AnswerverifiedShow Answer

Under ________ agreement, a firm might license some valuable intangible property to a foreign partner, but in addition to a royalty payment, the firm might also request that the foreign partner license some of its valuable know-how to the firm.

Correct AnswerverifiedShow Answer

Educating customers is an element of pioneering costs.

Correct AnswerverifiedShow Answer

A wholly owned subsidiary is appropriate when the firm wants

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Which of the following statements about franchising is true?

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A good ally, or partner, has three chara...
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