question

Some evidence suggests that pioneers gain and maintain a competitive advantage in new markets.

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.

answer

False

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.

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.

answer

True

question

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

answer

False

question

Entering foreign markets may be described by two levels of involvement, nonequity-and equity- based.

answer

True

question

One benefit of exporting is that it can enable a company to serve markets where the company has no or limited production facilities.

answer

True

question

Exporting is an expensive option for testing foreign markets and foreign competition.

answer

False

question

Exporting is a way for firms to improve the efficiency of manufacturing equipment.

answer

True

question

Exports can help to offset cyclical sales in a firm's domestic market.

answer

True

question

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.

answer

True

question

Direct exporting is simpler than indirect exporting because it requires neither special expertise nor large cash outlays.

answer

False

question

Export merchants are exporters that sell for the manufacturer but do not take ownership of the product.

answer

False

question

A fundamental drawback of indirect exporting is that companies must pay a commission to all of the companies that handle their exports.

answer

False

question

Direct exporting is an excellent means of getting a feel for international business without committing a great amount of human or financial resources.

answer

True

question

A sales company is part of indirect exporting.

answer

False

question

Sales companies will import in their own name from the parent and will invoice in the currency of the parent company.

answer

False

question

A sales company is established to market goods or services, not to produce them.

answer

True

question

The Internet has made direct exporting much easier.

answer

True

question

Wholesale importers are independent merchants that buy for their own account.

answer

True

question

Trading companies are privately owned firms that develop international trade and serve as intermediaries between foreign buyers and domestic sellers, and vice versa.

answer

False

question

Turnkey projects export technology, management expertise, and capital equipment.

answer

True

question

Producing a factory ready to operate is similar to producing a turnkey project.

answer

True

question

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.

answer

True

question

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.

answer

False

question

Some firms do not grant licenses to other firms because of the fear of having a strong competitor upon the expiration of the license.

answer

True

question

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.

answer

False

question

Piracy is an option for helping a firm to enter new markets.

answer

True

question

Licensing is a form of franchising.

answer

False

question

A management contract is used only by manufacturing companies to earn income by providing expertise forafee.

answer

False

question

One way in which contract manufacturing is used is to subcontract assembly work or the production of parts to subsidiaries overseas.

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.

answer

True

question

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

answer

FAlse

question

Historically, firms engaged in FDI have generally preferred wholly owned subsidiaries.

answer

True

question

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

answer

False

question

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.

answer

False

question

Lack of control is one of the strongest arguments against a joint venture.

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.

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.

answer

false

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.

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.

answer

true

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.

answer

false

question

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

answer

true

question

One type of strategic alliance between competitors is an R&D partnership.

answer

true

question

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

answer

false

question

Trading and pooling alliances are typically different in their goals, optimal structures, and managerial challenges

answer

true

question

Generally mergers and acquisitions are considered alliances.

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.

answer

false

question

Alliances can allow a partner to acquire a firm's technological or other competencies, thereby raising important competitive concerns.

answer

true

question

A pioneering firm stands the best chance for long-term success in market-share leadership and profitability when:

answer

all of the above.

question

A pioneering firm stands the best chance for long-term success in market-share leadership and profitability when:

answer

the firm has sufficient size, resources, and competencies.

question

In many cases, a firm entering international markets becomes a follower because:

answer

quicker competition beats it.

question

A follower firm stands the best chance for success in market-share leadership when:

answer

there is high potential for imitation.

question

Most firms begin their involvement in overseas business by:

answer

exporting.

question

Which of the following are reasons that many firms engage in exporting?

answer

Exports can offset cyclical sales in the firm's domestic market.

question

Which of the following are reasons that many firms engage in exporting?

answer

TwoofA,B,andC.

question

Which of the following are reasons that many firms engage in exporting?

answer

TwoofA,B,andC.

question

Companies wishing to export must first choose between:

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.

answer

Indirect exporting

question

A company can engage in indirect exporting by using which of the following companies in its own country?

answer

Export commission agents

question

A company can engage in indirect exporting by using which of the following companies in its own country?

answer

TwoofA,B,andC

question

The disadvantages of indirect exporting include:

answer

all of the above.

question

The disadvantages of indirect exporting include:

answer

two of the above.

question

A business established for the purpose of marketing goods and services, not producing them, is:

answer

a sales company.

question

A turnkey project includes all of the following except:

answer

none of the above.

question

Exporters of a turnkey project may include which of the following?

answer

TwoofA,B,andC

question

A contractual arrangement in which one firm grants access to its patents, trade secrets, or technology to another for a fee is:

answer

none of the above.

question

By means of a licensing agreement:

answer

one firm grants to another the right to use all of its expertise.

question

When a licensing agreement is made:

answer

the licensee receives expertise from another company.

question

According to the text, licensing agreements usually stipulate that a royalty of __________ be paid to the licensor.

answer

2 to 5 percent of sales

question

Licensing provides income for:

answer

all of the above.

question

Which of the following was stated in the text as being a concern with licensing?

answer

It can create a competitor.

question

Franchising is a form of:

answer

licensing.

question

The principal ingredient(s) that a franchiser exports is:

answer

allofA,B,andC.

question

McDonald's, Kentucky Fried Chicken, and Subway are examples of:

answer

franchising.

question

An arrangement by which one firm provides management in all or specific areas to another firm is:

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.

answer

2 to 5 percent of sales

question

According to the text, a management contract is useful for:

answer

allofA,B,andD.

question

Hilton and Delta provide assistance to other international companies. That is an example of:

answer

a management contract.

question

An arrangement in which one firm contracts with another firm to produce products to its specifications but assumes responsibility for marketing is:

answer

contract manufacturing.

question

International firms employ contract manufacturing:

answer

A and B.

question

Foreign direct investment without investment" is a term sometimes applied to:

answer

contract manufacturing.

question

Foreign direct investment (FDI) includes all of the following except:

answer

management contract.

question

In 2008, foreign firms investing in the United States spent about ____________ on establishing new firms as they did on acquiring going firms.

answer

one-thirteenth as much

question

Historically, firms making a foreign direct investment have generally preferred:

answer

wholly owned subsidiaries.

question

According to the text, a company that wishes to own a foreign subsidiary outright may:

answer

twoofA,B,andC.

question

A joint venture may be:

answer

allofA,B,andC.

question

Benefits of joint ventures may include:

answer

two of the above.

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:

answer

strategic alliances.

question

Although there are many forms of strategic alliances or competitive alliances, the alliances are often between:

answer

all of the above.

question

Strategic alliances are:

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.

answer

75

question

________ alliances are driven by similarity and integration.

answer

Pooling

question

Which of the following is true about alliances?

answer

TwoofA,B,andC

IB: CH 13 – Flashcard

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