question

Acquistion

answer

If a firm is seeking to enter a market via a wholly owned subsidiary where there are already well-established incumbent enterprises, and where global competitors are also interested in establishing a presence

question

Absence of prior foreign entrants

answer

A risk of entering developing nations like India and China on a large scale

question

Patents

answer

in terms of licensing; is an intangible property

question

Exporting

answer

A product that is not widely available in a foreign market and satisfies an unmet need

question

First-mover disadvantages

answer

associated with entering a foreign market before other international businesses

question

Wholly Owned Subsidiaries

answer

entry modes into a foreign market best serves a high-tech firms

question

International firms considering foreign expansion

answer

the difficulty of building market shares and capturing first-mover advantages

question

Turnkey Project

answer

Exporting process technology to other countries

question

Licensing is NOT attractive to

answer

firms requiring tight control of operations for realizing experience curve and location economics

question

In exporting, problems with local marketing agents can be overcome by

answer

Setting up wholly owned subsidiaries in foreign nations to handle local marketing

question

An early entrant may find itself at a disadvantage if it:

answer

is entering a foreign market before other international businesses

question

Setting up wholly owned marketing subsidiaries

answer

gives a firm tight control for coordinating a globally dispersed value chain

question

Advantage of acquisitions as a means of entering foreign markets

answer

they are quick to execute and help firms to rapidly build their presence in the target foreign market

question

How can firms avoid incurring high transport costs when exporting bulk products

answer

by manufacturing bulk products regionally

question

The attractiveness of a country as a potential market for an international business

answer

depends solely on the size of its consumer market

question

Acquisitions Fail

answer

because there is a clash between the cultures of the acquiring and acquired firm

question

If an international firm's core competence is based on proprietary technology

answer

entering a joint venture might risk losing control of that technology to the joint-venture partner

question

Acquiring firms

answer

often overpay for the assets of the acquired firms

question

In international business, joint ventures

answer

when firms can use cross-licensing agreements or link the agreement with the decision

question

Firms pursuing global standardization or transnational strategies

answer

tend to prefer setting up wholly owned marketing subsidiaries

question

Turnkey Deal/ Project Disadvantages

answer

-no long-term interest in the country -can create a competitor -process technology is a source of competitive advantage

question

Advantages of Turnkey Deal/Project

answer

-allow firms to earn great economic returns from the know-how required to assemble and run a technologically complex process -less risky in countries where the political and economic environment is such that a longer-term investment might expose the firm to unacceptable political and/or economic risk

question

Under a cross-licensing agreement

answer

companies can reduce this risk by linking the agreement with the decision to form a joint venture

question

Franchising

answer

as a mode of entry into foreign markets is employed primarily by service firms

question

When an international firm makes an acquisition in a foreign market,

answer

it acquires valuable intangible as well as tangible assets

question

The most typical joint venture is

answer

a 50/50 venture, in which there are two parties, each of which holds a 50 percent ownership stake and contributes a team of managers to share operating control.

question

Licensing

answer

increases the risk of losing control over a firm's proprietary technological know-how.

question

A firm contemplating expansion should

answer

choose a foreign market based on an assessment of the nation's long-run profit potential

question

Shared ownership agreements can

answer

lead to conflicts and battles for control between investing firms.

question

A drawback of exporting is that

answer

tariff barriers can make it uneconomical as a mode of entry into a foreign market

question

Disadvantage of Greenfield Ventures

answer

it is slower to establish than acquistions

question

A reason why firms often overpay for the assets of an acquired firm

answer

The price of the target firm can get bid up if more than one firm is interested in

question

Wholly Owned Subsidiary

answer

Jupiter Systems is a high-tech firm looking to set up operations in a foreign country. The firm's core competency is in technological know-how. Which of the following modes of entry would be most favorable to the firm if it wants to keep a tight control over its technology

question

Rapid Economic Growth

answer

is a reason why a relatively poor country may be an attractive target for inward investment

question

The risks associated with learning to do business in a new culture are less if the firm

answer

acquires an established host-country enterprise

question

High costs and risks

answer

is a disadvantage of wholly owned subsidiaries as a mode of entry into foreign markets

question

Turnkey Project

answer

A firm agrees to set up an operating plant for a foreign client and hand over the plant when it is fully operational

question

Small-Scale Entry

answer

allows a firm to learn about the foreign market while limiting the firm's exposure to that market

question

Favorable benefit-cost-risk trade off scenario for foreign expansion

answer

a country with a free market

question

The liability associated with foreign expansion is greater for foreign firms that:

answer

enter a national market early

question

Disadvantage of large-scale entry into a foreign market

answer

availability of fewer resources to support expansion in other desirable markets

question

Factors determines the value that an international business can create in a foreign market

answer

Nature of indigenous competition

question

Biotechnology

answer

is an industry in which cross-licensing agreements are increasingly becoming common

question

An international firm that perceives its technological advantage to be transitory

answer

and susceptible to rapid imitation might want to license its technology to foreign firms

question

If an international firm's core competence is based on proprietary technology,

answer

entering a joint venture might risk losing control of that technology to the joint-venture partner

IB: Chapter 13 – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards