Mana 4321 ch 13 – Flashcards
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All the nations in the world do not all hold the same profit potential for a firm contemplating foreign expansion.
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Which of the following is true of foreign expansion?
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Which foreign markets to enter
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Which of the following is the first basic entry decision that a firm contemplating foreign expansion must make?
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The attractiveness of a country as a potential market for an international business depends on balancing the benefits, costs, and risks associated with doing business in that country.
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Which of the following is true of the basic entry decisions a firm must make before a firm contemplates foreign expansion?
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first-mover advantages
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In international business, the benefits frequently associated with entering a foreign market early are known as _____.
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The ability to create switching costs that tie customers into one's products or services
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Which of the following is an example of a first-mover advantage?
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_____ refer to costs that an early entrant in a foreign market has to bear that a later entrant can avoid.
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Pioneering costs
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the business system in a foreign country is so different from that in a firm's home market that the enterprise has to devote considerable effort, time, and expense to learning the rules of the game
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Pioneering costs ARISE WHEN
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A firm can avoid the cost of establishing manufacturing operations in the host country.
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Which of the following is an advantage of exporting as a mode of entry into foreign markets
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Pioneering costs
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In terms of an international firm considering foreign expansion, _____ include the costs of promoting and establishing a product offering, and educating customers
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Large-scale entrants are more likely to capture first-mover advantages.
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Which of the following is true of the scale of entry into a foreign market for an international firm considering foreign expansion?
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Availability of fewer resources to support expansion in other desirable markets
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Which of the following is a disadvantage of large-scale entry into a foreign market?
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a firm achieve experience curve and location economies.
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Which of the following is an advantage of exporting as a mode of entry into foreign markets? helps..
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High transport costs can make exporting uneconomical, particularly for bulk products.
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Which of the following is a disadvantage of exporting as a mode of entry into foreign markets?
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may not market the firm's products as well as the firm would if it managed its marketing itself.
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Which of the following is a disadvantage of exporting as a mode of entry into foreign markets? local agents
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setting up wholly owned subsidiaries in foreign nations to handle local marketing.
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In exporting, problems with local marketing agents can be overcome by
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In a _____, a mode of entry into foreign markets, a firm agrees to set up an operating plant for a foreign client and hand over the plant when it is fully operational
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turnkey project
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exporting process technology to other countries
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In the context of modes of entry into foreign markets, turnkey projects are a means of:
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-It is a useful strategy to earn great returns from the know-how of a technologically complex process. -It can be less risky than conventional FDI.
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Which of the following is an advantage of turnkey projects as a mode of entry into foreign markets?
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taking a minority equity interest in the operation.
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Turnkey projects being short-term propositions can be disadvantageous for a firm if a country subsequently proves to be a major market for the output of the process that has been exported. The firm can get around this problem by:
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licensing agreement
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In a(n) _____,a mode of entry into foreign markets, a firm grants the rights to intangible property to another firm for a specified period, and in return, receives a royalty fee
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-The licensor receives a royalty fee from the licensee -The licensee puts up most of the capital necessary to get the overseas operation operational.
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Which of the following is true of licensing as a mode of entry into foreign markets?
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-The licensor does not have to bear the development costs and risks associated with opening a foreign market.
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Which of the following is an advantage of licensing as a mode of entry into foreign markets?
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Licensing does not give a firm tight control over manufacturing, marketing, and strategy
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Which of the following is a drawback of licensing as a mode of entry into foreign markets?
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The franchiser insists that the franchisee agree to abide by strict rules as to how it does business.
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Which of following is true of franchising as a mode of entry into foreign markets?
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By acquiring an established firm in the host nation
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Which of the following is a way in which a wholly owned subsidiary may be established in a foreign market?
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wholly owned subsidiary
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Establishing a _____ gives international firms a 100 percent share in the profits generated in a foreign market.
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Wholly owned subsidiary
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Which of the following is generally the most costly form of serving a foreign market from a capital investment standpoint?
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Wholly owned subsidiaries
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Which of the following modes of entry into foreign markets has the distinct advantages of protection of technology, the ability to engage in global strategic coordination, and the ability to realize location and experience curve economies?
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Franchising
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Which of the following modes of entry into foreign markets can result in a lack of control over quality?
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Exporting
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Which of the following modes of entry into foreign markets has the ability to realize location and experience curve economies?
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Licensing
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Which of the following modes of entry into foreign markets have the advantage of being characterized by low development costs and risks?
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High costs and risks
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Which of the following is a disadvantage of wholly owned subsidiaries as a mode of entry into foreign markets?
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greenfield venture
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An advantage of a(n) _____, a mode of entry into foreign markets, is that it provides a firm with much greater ability to build the kind of subsidiary company that it wants.
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-There is a possibility of being preempted by aggressive global competitors who enter via acquisitions. -It is slower to establish than acquisitions.
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Which of the following is a disadvantage of greenfield ventures as a mode of entering foreign markets?
