IB: CH 13 – Flashcard
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The means of supplying overseas markets—exporting to and production in those markets—depend on nonequity modes of entry.
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False
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Entering foreign markets may be described by two levels of involvement, nonequity-and equity- based.
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True
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One benefit of exporting is that it can enable a company to serve markets where the company has no or limited production facilities.
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True
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Exporting is an expensive option for testing foreign markets and foreign competition.
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False
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Exporting is a way for firms to improve the efficiency of manufacturing equipment.
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True
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Exports can help to offset cyclical sales in a firm's domestic market.
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True
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Exporting can extend a product's life cycle by exporting to currently unserved markets where the product will be at the introduction stage of the life cycle.
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True
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Direct exporting is simpler than indirect exporting because it requires neither special expertise nor large cash outlays.
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False
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Export merchants are exporters that sell for the manufacturer but do not take ownership of the product.
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False
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A fundamental drawback of indirect exporting is that companies must pay a commission to all of the companies that handle their exports.
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False
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Direct exporting is an excellent means of getting a feel for international business without committing a great amount of human or financial resources.
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True
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A sales company is part of indirect exporting.
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False
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Sales companies will import in their own name from the parent and will invoice in the currency of the parent company.
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False
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A sales company is established to market goods or services, not to produce them.
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True
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The Internet has made direct exporting much easier.
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True
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Wholesale importers are independent merchants that buy for their own account.
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True
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Trading companies are privately owned firms that develop international trade and serve as intermediaries between foreign buyers and domestic sellers, and vice versa.
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False
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Turnkey projects export technology, management expertise, and capital equipment.
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True
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Producing a factory ready to operate is similar to producing a turnkey project.
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True
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Licensing refers to a contractual agreement in which the licensor grants access to its patents, trade secrets, or technology for a fee paid by the licensee.
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True
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The licensee generally pays a fixed sum when signing a license agreement and then royalties of 5 to 7 percent of sales over the life of the contract.
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False
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Some firms do not grant licenses to other firms because of the fear of having a strong competitor upon the expiration of the license.
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True
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The potential of licensing for generating income has been more limited in recent years because courts have not upheld patent infringement claims as much as they used to.
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False
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Piracy is an option for helping a firm to enter new markets.
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True
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Licensing is a form of franchising.
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False
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A management contract is used only by manufacturing companies to earn income by providing expertise forafee.
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False
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One way in which contract manufacturing is used is to subcontract assembly work or the production of parts to subsidiaries overseas.
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False
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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.
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True
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If a firm decides to become involved in overseas manufacturing, it has two options: (1) wholly owned subsidiary and (2) joint venture.
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FAlse
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Historically, firms engaged in FDI have generally preferred wholly owned subsidiaries.
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True
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Most of the foreign direct investment in the United States has been spent establishing new companies.
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False
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In the year 2008, twice as much FDI invested in the United States was spent in acquiring established businesses than in setting up new ones.
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False
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Lack of control is one of the strongest arguments against a joint venture.
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true
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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.
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true
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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.
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false
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When the government of a host country requires companies to have some local participation, foreign firms must engage in strategic alliances with local owners.
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false
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Management contracts can enable the global partner to control many aspects of a joint venture even when holding only a minority position.
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true
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In a 12-country study conducted by Ernst & Young, 65 percent of U.S. companies were found to be engaged in a strategic alliance.
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false
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Strategic alliances take many forms, including licensing, mergers, joint ventures, and joint research and development partnerships.
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true
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One type of strategic alliance between competitors is an R&D partnership.
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true
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Pooling alliances are driven by the logic of contributing dissimilar resources, while trading alliances are driven by similarity and integration.
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false
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Trading and pooling alliances are typically different in their goals, optimal structures, and managerial challenges
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true
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Generally mergers and acquisitions are considered alliances.
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false
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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.
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false
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Alliances can allow a partner to acquire a firm's technological or other competencies, thereby raising important competitive concerns.
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true
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A pioneering firm stands the best chance for long-term success in market-share leadership and profitability when:
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all of the above.
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A pioneering firm stands the best chance for long-term success in market-share leadership and profitability when:
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the firm has sufficient size, resources, and competencies.
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In many cases, a firm entering international markets becomes a follower because:
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quicker competition beats it.
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A follower firm stands the best chance for success in market-share leadership when:
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there is high potential for imitation.
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Most firms begin their involvement in overseas business by:
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exporting.
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Which of the following are reasons that many firms engage in exporting?
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Exports can offset cyclical sales in the firm's domestic market.
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Which of the following are reasons that many firms engage in exporting?
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TwoofA,B,andC.
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Which of the following are reasons that many firms engage in exporting?
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TwoofA,B,andC.
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Companies wishing to export must first choose between:
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exporting directly and exporting indirectly.
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__________ permits a firm to set up an export program with a minimum of cash outlay and little special expertise.
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Indirect exporting
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A company can engage in indirect exporting by using which of the following companies in its own country?
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Export commission agents
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A company can engage in indirect exporting by using which of the following companies in its own country?
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TwoofA,B,andC
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The disadvantages of indirect exporting include:
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all of the above.
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The disadvantages of indirect exporting include:
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two of the above.
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A business established for the purpose of marketing goods and services, not producing them, is:
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a sales company.
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A turnkey project includes all of the following except:
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none of the above.
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Exporters of a turnkey project may include which of the following?
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TwoofA,B,andC
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A contractual arrangement in which one firm grants access to its patents, trade secrets, or technology to another for a fee is:
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none of the above.
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By means of a licensing agreement:
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one firm grants to another the right to use all of its expertise.
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When a licensing agreement is made:
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the licensee receives expertise from another company.
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According to the text, licensing agreements usually stipulate that a royalty of __________ be paid to the licensor.
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2 to 5 percent of sales
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Licensing provides income for:
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all of the above.
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Which of the following was stated in the text as being a concern with licensing?
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It can create a competitor.
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Franchising is a form of:
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licensing.
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The principal ingredient(s) that a franchiser exports is:
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allofA,B,andC.
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McDonald's, Kentucky Fried Chicken, and Subway are examples of:
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franchising.
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An arrangement by which one firm provides management in all or specific areas to another firm is:
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a management contract.
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According to the text, management contracts usually stipulate that a fee of __________ be paid to the firm providing the management expertise.
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2 to 5 percent of sales
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According to the text, a management contract is useful for:
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allofA,B,andD.
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Hilton and Delta provide assistance to other international companies. That is an example of:
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a management contract.
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An arrangement in which one firm contracts with another firm to produce products to its specifications but assumes responsibility for marketing is:
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contract manufacturing.
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International firms employ contract manufacturing:
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A and B.
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Foreign direct investment without investment" is a term sometimes applied to:
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contract manufacturing.
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Foreign direct investment (FDI) includes all of the following except:
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management contract.
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In 2008, foreign firms investing in the United States spent about ____________ on establishing new firms as they did on acquiring going firms.
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one-thirteenth as much
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Historically, firms making a foreign direct investment have generally preferred:
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wholly owned subsidiaries.
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According to the text, a company that wishes to own a foreign subsidiary outright may:
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twoofA,B,andC.
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A joint venture may be:
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allofA,B,andC.
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Benefits of joint ventures may include:
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two of the above.
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Partnerships between or among competitors, customers, or suppliers that may take one or more of various forms, both equity and nonequity, are known as:
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strategic alliances.
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Although there are many forms of strategic alliances or competitive alliances, the alliances are often between:
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all of the above.
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Strategic alliances are:
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partnerships between competitors, customers, or suppliers that may take various forms.
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According to a 12-country study conducted by Ernst & Young, _____ percent of U.S. companies are engaged in some form of strategic alliance.
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75
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________ alliances are driven by similarity and integration.
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Pooling
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Which of the following is true about alliances?
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TwoofA,B,andC
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