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| 1 | |
One of the first mover disadvantages is the pioneering costs that arise when the business system in a foreign country is so different that the firms must devote considerable effort, time, and expense to learning the rules of the game. |
| | A) | True |
| | B) | False |
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| 2 | |
A turnkey project entry has two distinct advantages – avoiding substantial manufacturing costs and helping a firm achieve learning curve and location economies. |
| | A) | True |
| | B) | False |
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| 3 | |
A significant disadvantage of franchising is that the firm loses the ability to control quality, which is especially important in a service. |
| | A) | True |
| | B) | False |
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| 4 | |
The optimal entry mode for a firm will depend to some degree on whether the firm’s core competence is in technical know-how or management know-how. |
| | A) | True |
| | B) | False |
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| 5 | |
Acquisitions and mergers give a firm greater flexibility to build the kind of organization where and how they want, but they are slower to establish and risky. |
| | A) | True |
| | B) | False |
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| 6 | |
There are three basic decisions that a firm contemplating foreign expansion must make: |
| | A) | cost, accessibility, timing. |
| | B) | entrance, timing, scale. |
| | C) | location, licensing, distribution. |
| | D) | liability, partnering, competition. |
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| 7 | |
The risk-averse firm that enters a foreign market on a small scale may limit its potential losses but also ___________________. |
| | A) | achieve cost savings |
| | B) | miss the chance to capture first-mover advantages |
| | C) | avoid first-mover disadvantages |
| | D) | capture market share others lose |
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| 8 | |
Risks associated with licensing can be avoided largely by _________________. |
| | A) | outright sale of rights |
| | B) | triggering law suits |
| | C) | cross-licensing |
| | D) | multiple-releases |
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| 9 | |
Which of the following is NOT one of the advantages of a joint venture? |
| | A) | It is one of the least risky forms of entry. |
| | B) | Firms can benefit from a local partner’s knowledge of the host country. |
| | C) | High development costs can be shared with a partner. |
| | D) | In some countries, political considerations may make this the only feasible entry mode. |
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| 10 | |
Wholly owned subsidiaries in foreign countries usually take one of two forms – an acquisition or __________________. |
| | A) | equity partnerships |
| | B) | a greenfield investment |
| | C) | selective franchising |
| | D) | exclusive licensing arrangements |
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| 11 | |
When selecting an entry mode: |
| | A) | trade-offs are inevitable. |
| | B) | there is usually one best approach based on thorough and thoughtful analysis of the political economy of the country. |
| | C) | a firm should decide the approach first, and then seek out a partner depending on the corporate strategy toward joint ventures. |
| | D) | consider the long-term profit picture before considering the use or potential loss of proprietary technologies. |
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| 12 | |
A firm with technological competitive advantages should avoid licensing and joint-venture arrangements in all of following conditions EXCEPT: |
| | A) | a technological advantage is transitory and competitors could easily imitate it. |
| | B) | an arrangement can be structured to protect the proprietary technology. |
| | C) | the technology itself has been another firm’s proprietary process and that firm will not likely protect its intellectual property. |
| | D) | the firm wants to establish its technology as the industry standard or dominant design. |
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| 13 | |
An acquisition has three main points in its favor: it is quick to execute, it may preempt competitors, and ____________________________. |
| | A) | it may be less risky than a greenfield venture |
| | B) | it has a solid record of successes |
| | C) | it is less capital intensive than other modes |
| | D) | it is relatively easy to end if profits do not meet expectations |
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| 14 | |
Which of the following is not an approach a firm can use to reduce the risk of failure in acquisitions. |
| | A) | Careful screening beforehand, including a detailed audit of operations, financial position and management culture. |
| | B) | Reducing management attrition after the acquisition. |
| | C) | Developing plans and contingency plans in anticipation of resistance. |
| | D) | Moving slowly to integrate the firm to ensure that cultural taboos are not violated. |
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| 15 | |
If a firm is considering entering a country where there are no current competitors or where the competitive advantage of the firm is based on the transfer of organizationally embedded competencies, skills, routines and cultures, it is probably preferable to use _________________ entry mode. |
| | A) | an acquisition |
| | B) | a franchising |
| | C) | a greenfield investment |
| | D) | an exporting |
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