Exam 8: Entry Strategies in Global Business

In a free enterprise system, the overriding objective of firms wanting to invest abroad is to funnel the proceeds to a central government.

The Coca-Cola company has operations in more than 140 countries and generates more that 55 percent of its profits from its overseas operations. Coca-Cola's annual profits are, therefore, more stable than those of a firm that focuses upon the U.S. market alone. Coca-Cola is engaging in _____.

In a free enterprise system, the overriding objective of firms wanting to invest abroad is to _____.

Trade barriers lead to decreased competition from abroad, and raise prices and profits of domestic firms. Interestingly, such protection over time will often lead to higher-quality domestic products and services.

The first stage of the product life cycle is _____.

_______ explains what happens to a product's revenue and profits at different stages of its development before the product is discontinued.

Mexico consistently has been the world's largest recipient of FDI capital in the world averaging some $200 billion a year in net FDI inflows since 2005. Mexico has been made more globally competitive as a consequence of such FDI flows.

_____ advantages are internal to the firm that can be transferred at a very low cost within a MNE regardless of location.

Scenario - Lewis Fabrication Lewis Fabrication was founded in 2001 and is based in Maryland, USA. This company manufactures custom designed motorcycle parts and currently has over two thousand U.S. customers. Due to the growing number of inquiries received from foreign countries such as Japan, Canada, China, and Indonesia, Lewis Fabrication has decided to begin operations on a global scale. The owners realize there is much to learn before undertaking this monumental step. However, financial projections indicate about $1 million in profit is very likely in the first year of going global. The owners are very excited and looking forward to the business expansion. -While Lewis Fabrication has decided to begin operations on a global scale, it realizes there is still much to learn. One of the fundamental things it must have knowledge on is the manner in which it can begin operations globally. Which one of the following would not be considered a choice for starting international business operations for this company?

Of the following, which is NOT an emerging-market?

Boseman Clothier, Inc. has been in operation for over 75 years. It is based in South Carolina, USA and is a well-recognized name in the industry. It produces custom fitted men's suits that are in high demand throughout the world. The average cost of one of its suits is in excess of five thousand U.S. dollars. Boseman proudly states it has more customer orders than its one store can fill within the next six months. With growing demand from overseas, the company has recently decided to open operations in four foreign markets next year. Boseman realizes the potential of this move will generate increased revenues for the company. One of the options it is contemplating is exploring forming an international joint venture. Boseman is also entertaining the thought of opening operations differently in each of the four new foreign markets. The company feels the use of different strategies may increase its odds of generating profits in each different market. -Boseman Clothier, Inc. has decided to begin international operations using an international joint venture. Which one of the following is not one of the expectations from this type of entry into the foreign market arena?

Strategic alliances differ from joint ventures in one major characteristic: they involve non-equity arrangements, meaning that strategic alliances do not involve the creation of a separate entity with joint ownership.

Which of the following is NOT true about licensing?

Strategic alliances are primarily aimed at _____.

______ refers to the potential financial loss that entrepreneurs are willing to take in a business.

The last stage of the product life cycle is _____.

A relatively low-risk business operation that involves penetrating foreign markets (by exporting)or importing merchandise at competitive prices for domestic consumption refers to _______.

A fundamental consideration that must be made in business is the risk-return trade-off. In general, the greater the risk (loss of capital invested)entrepreneurs are willing to take, the greater the rewards (profit)they are likely to reap.

Around _____ percent of international trade is conducted by small business.

General Electric, Microsoft, Sony, Toyota, and BMW are examples of _____.