Exam 8: Entry Strategies in Global Business

A major reason why growth-oriented MNEs establish operations abroad is to diversify and minimize risk so that overall corporate cash flows and earnings will be relatively stable.

Differentiate between strategic alliances and international joint ventures.

The ultimate objective of most joint ventures is _____.

The purchase of established firms abroad with the goal of using the existing production, marketing, and distribution networks and of having instant access to foreign markets that fit the purchasing firm's global strategy is known as a(n)_____.

In 1993, Coca-Cola acquired major assets of Parle Exports in India, it instantly received access to Parle's huge national bottling and distribution network. This is an example of a(n)

According to the text, wholly-owned foreign subsidiary businesses have_____ risk and _____ return.

The practice in which the parent firm is obligated to provide its brand name, specialized equipment and/or service, and sometimes to fund some startup costs, to another firm in return for an annual fee is known as _____.

_______ refers to the practice in which a company or individual provides the foreign partner with the technology to manufacture and sell products or services in a target country for an annual fee.

Brazil is one of the world's lowest cost producers of ethanol and soybeans. Japanese corporations have heavily invested in Brazil to lease large tracts of land to grow soybeans for export to Japan, where they are used to derive products such as soy sauce and chicken feed. These Japanese companies are cutting costs by _____.

Subsidiaries require major marketing efforts to penetrate the international market because of cultural differences and because the entrant is new and relatively unknown.

While economic growth rates in stable economies may be high compared with emerging-market economies like BRIC, their high per-capita-income levels translate to poor levels of consumption that could prove to be an unstable source of revenue and profits for MNEs wanting to enter these markets.

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 indicated it would like to use different entry strategies for each of the four markets it plans to enter. Which of the following would not be considered a benefit from using licensing in the other foreign markets it plans to enter?

The United States spends _____ percent of its GDP on health care.

General Electric (United States), Sony (Japan), BMW (Germany), and Petrobras (Brazil)are just a few of the hundreds examples of large MNEs.

Which of the following is NOT true about franchising?

ABC Manufacturing is exploring entering the global arena. Describe the three lowest risk entry strategies in global business for ABC.

A business that is jointly owned and operated by two or more firms that pool their resources to penetrate host country markets, generate and split profits, and share commercial risk is called a(n)_____.

_______ describes how countries exercise authority and how efficiently they deliver basic infrastructure services like water, sanitation, roads, electricity, security, and the like for public as well as private firms.

Briefly describe Dunning's Eclectic Theory of Foreign Direct Investment.

Dunning identified _____ key economic "advantages" that firms should have for FDI to occur.