Question 1

To increase the potential for a successful acquisition, a firm should:

Accepted Answer

A)  always bid low to allow for partial failure. 
B)  try to acquire a firm with a very different corporate culture so there is no forced "overlap." 
C)  screen the foreign enterprise to be acquired. 
D)  seek companies only from similar national cultures. 
A)  always bid low to allow for partial failure. 
B)  try to acquire a firm with a very different corporate culture so there is no forced "overlap." 
C)  screen the foreign enterprise to be acquired. 
D)  seek companies only from similar national cultures. D

Question 2

Which of the following is true of licensing?

Accepted Answer

A)  Licensing is used when a firm possesses some tangible property but does not want to pursue a potential application itself. 
B)  The firm does not have to bear the development costs and risks associated with opening a foreign market. 
C)  It is also an attractive option when a firm is interested in pursuing a foreign market and is ready to commit substantial resources to a foreign market. 
D)  It is an attractive option for firms that have the capital to open overseas markets. 
A)  Licensing is used when a firm possesses some tangible property but does not want to pursue a potential application itself. 
B)  The firm does not have to bear the development costs and risks associated with opening a foreign market. 
C)  It is also an attractive option when a firm is interested in pursuing a foreign market and is ready to commit substantial resources to a foreign market. 
D)  It is an attractive option for firms that have the capital to open overseas markets. B

Question 3

Which of the following is one of the reasons why acquisitions fail?

Accepted Answer

A)  There is a clash between the cultures of the acquired and the acquiring firms. 
B)  The acquired firm often overpays for the assets of the acquiring firm. 
C)  The synergies of the two firms happens quickly and neither acquired nor acquiring firm are prepared for full integration. 
D)  Despite adequate pre-acquisition screening, the entities encounter unexpected governmental involvement. 
A)  There is a clash between the cultures of the acquired and the acquiring firms. 
B)  The acquired firm often overpays for the assets of the acquiring firm. 
C)  The synergies of the two firms happens quickly and neither acquired nor acquiring firm are prepared for full integration. 
D)  Despite adequate pre-acquisition screening, the entities encounter unexpected governmental involvement. A

Question 4

Unlike joint ventures, strategic alliances require the firm to bear all the costs and risks of foreign expansion.

Accepted Answer

A) True 
 B)False

Question 5

Switching costs:

Accepted Answer

A)  drive early entrants out of the market. 
B)  make it easy for later entrants to win business. 
C)  make it difficult for later entrants to win business. 
D)  give later entrants a cost advantage over early entrants. 
A)  drive early entrants out of the market. 
B)  make it easy for later entrants to win business. 
C)  make it difficult for later entrants to win business. 
D)  give later entrants a cost advantage over early entrants.

Question 6

Firms pursuing global standardization or transnational strategies tend to prefer _____ arrangements.

Accepted Answer

A)  wholly owned subsidiary 
B)  franchising 
C)  joint-venture 
D)  licensing 
A)  wholly owned subsidiary 
B)  franchising 
C)  joint-venture 
D)  licensing

Question 7

The costs and risks associated with doing business in a foreign country are typically:

Accepted Answer

A)  low in an economically advanced nation. 
B)  low in the countries of the European Union. 
C)  high in an economically advanced nation. 
D)  high in a politically stable democratic nation. 
A)  low in an economically advanced nation. 
B)  low in the countries of the European Union. 
C)  high in an economically advanced nation. 
D)  high in a politically stable democratic nation.

Question 8

_____ refers to the building of interpersonal relationships between the firms' managers in a strategic alliance.

Accepted Answer

A)  Alliance partnerships 
B)  Joint management 
C)  Relational capital 
D)  Team building 
A)  Alliance partnerships 
B)  Joint management 
C)  Relational capital 
D)  Team building

Question 9

Managing an alliance successfully requires building interpersonal relationships between the firms' managers. This is sometimes referred to as ____.

Accepted Answer

A)  relational capital 
B)  relational assets 
C)  operational assets 
D)  venture capital 
A)  relational capital 
B)  relational assets 
C)  operational assets 
D)  venture capital

Question 10

Exporting is most appropriate when lower-cost locations for manufacturing the product can be found abroad.

Accepted Answer

A) True 
 B)False

Question 11

Firms entering markets where there are no incumbent competitors to be acquired should choose _____.

Accepted Answer

A)  greenfield investments 
B)  joint ventures 
C)  acquisitions 
D)  takeovers 
A)  greenfield investments 
B)  joint ventures 
C)  acquisitions 
D)  takeovers

Question 12

If a firm's core competency is based on control over proprietary technological know-how, _____ and _____ arrangements should be avoided if possible to minimize the risk of losing control over that technology.

Accepted Answer

A)  licensing; joint-venture 
B)  wholly owned subsidiary; exporting 
C)  turnkey contracts; exporting 
D)  exporting; joint-venture 
A)  licensing; joint-venture 
B)  wholly owned subsidiary; exporting 
C)  turnkey contracts; exporting 
D)  exporting; joint-venture

Question 13

A wholly owned subsidiary is appropriate when the firm wants:

Accepted Answer

A)  to share the cost and risk of developing a foreign market. 
B)  100 percent of the profits generated in a foreign market. 
C)  a plant that is ready to operate. 
D)  to test a market. 
A)  to share the cost and risk of developing a foreign market. 
B)  100 percent of the profits generated in a foreign market. 
C)  a plant that is ready to operate. 
D)  to test a market.

Question 14

Overpayment for assets of an acquired firm is one reason acquisitions fail.

Accepted Answer

A) True 
 B)False

Question 15

For a company whose core competency is management know-how, which entry mode would be optimal?

Accepted Answer

A)  Turnkey contracts 
B)  Licensing agreements 
C)  Strategic alliances 
D)  Foreign franchises controlled by joint ventures 
A)  Turnkey contracts 
B)  Licensing agreements 
C)  Strategic alliances 
D)  Foreign franchises controlled by joint ventures

Question 16

A large-scale entrant is more likely than a small-scale entrant to be able to capture first-mover advantages associated with _____.

Accepted Answer

A)  scale economies 
B)  diseconomies of scale 
C)  pioneering costs 
D)  diseconomies of scope 
A)  scale economies 
B)  diseconomies of scale 
C)  pioneering costs 
D)  diseconomies of scope

Question 17

Cross-licensing agreements are increasingly common in the _____ industries.

Accepted Answer

A)  transportation 
B)  high-technology 
C)  construction 
D)  consumer durables 
A)  transportation 
B)  high-technology 
C)  construction 
D)  consumer durables

Question 18

A _____ entails establishing a firm that is owned together by two or more otherwise independent firms.

Accepted Answer

A)  joint venture 
B)  licensing agreement 
C)  franchisee 
D)  turnkey contract 
A)  joint venture 
B)  licensing agreement 
C)  franchisee 
D)  turnkey contract

Question 19

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.

Accepted Answer

A) True 
 B)False

Question 20

_____ allow a firm to rapidly build its presence in the target foreign market.

Accepted Answer

A)  Joint ventures 
B)  Acquisitions 
C)  Subsidiaries 
D)  Turnkey contracts 
A)  Joint ventures 
B)  Acquisitions 
C)  Subsidiaries 
D)  Turnkey contracts

To increase the potential for a successful acquisition, a firm should:

Which of the following is true of licensing?

Which of the following is one of the reasons why acquisitions fail?

Unlike joint ventures, strategic alliances require the firm to bear all the costs and risks of foreign expansion.

Switching costs:

Firms pursuing global standardization or transnational strategies tend to prefer _____ arrangements.

The costs and risks associated with doing business in a foreign country are typically:

_____ refers to the building of interpersonal relationships between the firms' managers in a strategic alliance.

Managing an alliance successfully requires building interpersonal relationships between the firms' managers. This is sometimes referred to as ____.

Exporting is most appropriate when lower-cost locations for manufacturing the product can be found abroad.

Firms entering markets where there are no incumbent competitors to be acquired should choose _____.

If a firm's core competency is based on control over proprietary technological know-how, _ and _ arrangements should be avoided if possible to minimize the risk of losing control over that technology.

A wholly owned subsidiary is appropriate when the firm wants:

Overpayment for assets of an acquired firm is one reason acquisitions fail.

For a company whose core competency is management know-how, which entry mode would be optimal?

A large-scale entrant is more likely than a small-scale entrant to be able to capture first-mover advantages associated with _____.

Cross-licensing agreements are increasingly common in the _____ industries.

A _____ entails establishing a firm that is owned together by two or more otherwise independent firms.

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.

_____ allow a firm to rapidly build its presence in the target foreign market.

Globalization

National Differences in Political Economy, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Trade Pacts Give the Mexican Auto Industry an Edge

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 15: Entry Strategy and Strategic Alliances

To increase the potential for a successful acquisition, a firm should:

Which of the following is true of licensing?

Which of the following is one of the reasons why acquisitions fail?

Unlike joint ventures, strategic alliances require the firm to bear all the costs and risks of foreign expansion.

Switching costs:

Firms pursuing global standardization or transnational strategies tend to prefer _____ arrangements.

The costs and risks associated with doing business in a foreign country are typically:

_____ refers to the building of interpersonal relationships between the firms' managers in a strategic alliance.

Managing an alliance successfully requires building interpersonal relationships between the firms' managers. This is sometimes referred to as ____.

Exporting is most appropriate when lower-cost locations for manufacturing the product can be found abroad.

Firms entering markets where there are no incumbent competitors to be acquired should choose _____.

If a firm's core competency is based on control over proprietary technological know-how, _____ and _____ arrangements should be avoided if possible to minimize the risk of losing control over that technology.

A wholly owned subsidiary is appropriate when the firm wants:

Overpayment for assets of an acquired firm is one reason acquisitions fail.

For a company whose core competency is management know-how, which entry mode would be optimal?

A large-scale entrant is more likely than a small-scale entrant to be able to capture first-mover advantages associated with _____.

Cross-licensing agreements are increasingly common in the _____ industries.

A _____ entails establishing a firm that is owned together by two or more otherwise independent firms.

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.

_____ allow a firm to rapidly build its presence in the target foreign market.

Globalization

National Differences in Political Economy, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Trade Pacts Give the Mexican Auto Industry an Edge

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

If a firm's core competency is based on control over proprietary technological know-how, _ and _ arrangements should be avoided if possible to minimize the risk of losing control over that technology.