Ch. 13 Quiz Answers Essay

question

A pioneer will most likely succeed when there are low entry barriers and the firm has sufficient size, resources, and competencies to take advantage of its pioneering position. T/F
answer

False
question

A follower will most likely succeed when there are few legal, technological, cultural, or financial barriers to inhibit entry, as long as it has sufficient resources or competencies to overwhelm the pioneer’s early advantage. T/F
answer

True
question

The means of supplying overseas markets—exporting to and production in those markets—depend on nonequity modes of entry. T/F
answer

True
question

A pioneering firm stands the best chance for long-term success in market-share leadership and profitability when:A. there are high entry barriers for competitors. B. it has strong patent protection. C. there are substantial investment requirements. D. all of the above. E. two of A, B, and C.
answer

all of the above.
question

A pioneering firm stands the best chance for long-term success in market-share leadership and profitability when:A. there are few cultural barriers to entry. B. the firm has sufficient size, resources, and competencies. C. there is high potential for imitation. D. all of the above. E. two of A, B, and C.
answer

the firm has sufficient size, resources, and competencies.
question

Some evidence suggests that pioneers gain and maintain a competitive advantage in new markets. T/F
answer

True
question

Research shows that surviving pioneers hold a smaller average market share when their industries reach maturity than firms that were either fast followers or late entrants in the product category. T/F
answer

False
question

A follower will most likely succeed when there are few legal, technological, cultural, or financial barriers to inhibit entry, as long as it has sufficient resources or competencies to overwhelm the pioneer’s early advantage. T/F
answer

True
question

In many cases, a firm entering international markets becomes a follower because: A. barriers are high for new entrants. B. strong patent protection exists. C. quicker competition beats it. D. all of the above. E. two of A, B and C.
answer

quicker competition beats it.
question

A follower firm stands the best chance for success in market-share leadership when: A. there are high barriers to entry. B. the firm has small size. C. there is high potential for imitation. D. all of the above. E. two of A, B, and C.
answer

there is high potential for imitation.
question

When the government of a host country requires companies to have some local participation, foreign firms must engage in strategic alliances with local owners. T/F
answer

False
question

In a 12-country study conducted by Ernst & Young, 65 percent of U.S. companies were found to be engaged in a strategic alliance. T/F
answer

False
question

Strategic alliances take many forms, including licensing, mergers, joint ventures, and joint research and development partnerships. T/F
answer

True
question

One type of strategic alliance between competitors is an R&D partnership. T/F
answer

True
question

Pooling alliances are driven by the logic of contributing dissimilar resources, while trading alliances are driven by similarity and integration. T/F
answer

False
question

Trading and pooling alliances are typically different in their goals, optimal structures, and managerial challenges. T/F
answer

True
question

Generally mergers and acquisitions are considered alliances. T/F
answer

False
question

The existence of two or more partners, which typically have differences in strategies, operating practices, and organizational cultures, is a factor that tends to promote successful management and performance of strategic alliances. T/F
answer

False
question

Alliances can allow a partner to acquire a firm’s technological or other competencies, thereby raising important competitive concerns. T/F
answer

True
question

McDonald’s, Kentucky Fried Chicken, and Subway are examples of: A. joint ventures. B. licensing. C. franchising. D. strategic alliances. E. none of the above.
answer

franchising
question

Hilton and Delta provide assistance to other international companies. That is an example of: A. a joint venture. B. a management contract. C. a strategic alliance. D. contract manufacturing. E. licensing.
answer

a management contract.
question

Foreign direct investment (FDI) includes all of the following except: A. wholly owned subsidiary. B. joint venture. C. management contract. D. strategic alliance. E. none of the above. (All four are included within foreign direct investment.)
answer

management contract.
question

Partnerships between or among competitors, customers, or suppliers that may take one or more of various forms, both equity and nonequity, are known as:A. licenses. B. joint ventures. C. wholly owned subsidiaries. D. strategic alliances. E. management contracts.
answer

strategic alliances.
question

Although there are many forms of strategic alliances or competitive alliances, the alliances are often between:A. customers. B. competitors. C. suppliers. D. all of the above. E. two of A, B, and C.
answer

all of the above.
question

Strategic alliances are: A. partnerships between competitors, customers, or suppliers that may take various forms. B. another name for a growth triangle. C. arbitration. D. none of the above. E. two of A, B, and C.
answer

partnerships between competitors, customers, or suppliers that may take various forms.
question

According to a 12-country study conducted by Ernst & Young, _____ percent of U.S. companies are engaged in some form of strategic alliance.A. 25 B. 50 C. 65 D. 75 E. 90
answer

75
question

________ alliances are driven by similarity and integration. A. Strategic B. Trading C. Pooling D. Equity-based E. None of the above
answer

Pooling
question

Which of the following is true about alliances? A. Many alliance partners are also competitors. B. Alliances are often difficult to manage. C. The use of alliances is likely to decline as markets internationalize. D. All of the above. E. Two of A, B, and C.
answer

Two of A, B, and C
question

If a firm decides to become involved in overseas manufacturing, it has two options: (1) wholly owned subsidiary and (2) joint venture. T/F
answer

False
question

Historically, firms engaged in FDI have generally preferred wholly owned subsidiaries. T/F
answer

True
question

Most firms begin their involvement in overseas business by: A. exporting. B. licensing. C. joint ventures. D. wholly owned subsidiaries. E. none of the above.
answer

exporting.
question

Historically, firms making a foreign direct investment have generally preferred: A. direct exporting. B. joint ventures. C. strategic alliances. D. wholly owned subsidiaries. E. contract manufacturing.
answer

wholly owned subsidiaries
question

Most of the foreign direct investment in the United States has been spent establishing new companies. T/F
answer

False
question

“Foreign direct investment without investment” is a term sometimes applied to: A. franchising. B. exporting. C. a joint venture. D. a management contract. E. contract manufacturing.
answer

contract manufacturing.
question

Lack of control is one of the strongest arguments against a joint venture. T/F
answer

True
question

In a joint venture, a management contract is often used as a control mechanism by firms, even if they hold only a minority position in the venture. T/F
answer

True
question

It is not possible for foreign investors to control a joint venture if the host country’s law prevents foreign investors from having more than 49 percent ownership. T/F
answer

False
question

Management contracts can enable the global partner to control many aspects of a joint venture even when holding only a minority position. T/F
answer

True
question

Companies wishing to export must first choose between: A. exporting directly and using sales companies. B. exporting indirectly and using joint ventures. C. exporting directly and exporting indirectly. D. exporting directly and licensing. E. none of the above.
answer

exporting directly and exporting indirectly.
question

__________ permits a firm to set up an export program with a minimum of cash outlay and little special expertise.A. A joint venture B. Direct exporting C. Franchising D. Indirect exporting E. Licensing
answer

Indirect exporting
question

A joint venture may be: A. a corporate entity formed between an international firm and local owners. B. a corporate entity formed between two or more international firms. C. a corporate undertaking between two or more firms of a limited-duration project. D. two of the above. E. all of A, B, and C.
answer

all of A, B, and C.
question

Benefits of joint ventures may include: A. the ability to respond to strong nationalistic sentiment in the host nation. B. access to expertise that the company lacks. C. differing strategies and cultures of the partners. D. two of the above. E. all of A, B, and C.
answer

two of the above.
question

A management contract is used only by manufacturing companies to earn income by providing expertise for a fee. T/F
answer

False
question

One way in which contract manufacturing is used is for a company to contract with a local manufacturer to produce products for the company, according to the company’s specifications T/F
answer

True
question

An arrangement by which one firm provides management in all or specific areas to another firm is: A. a license. B. a franchise. C. a management contract. D. all of the above. E. two of A, B, and C.
answer

a management contract.
question

According to the text, management contracts usually stipulate that a fee of __________ be paid to the firm providing the management expertise.A. 2 to 5 percent of sales B. 30 to 50 percent of sales C. 2 to 5 percent of profits D. 30 to 50 percent of profits E. 5 to 7 percent of profits
answer

2 to 5 percent of sales
question

According to the text, a management contract is useful for: A. joint ventures. B. earning money by providing know-how. C. two of A, B, and D. D. wholly owned subsidiaries. E. all of A, B, and D.
answer

all of A, B, and D.

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