Question 1

Define licensing agreements.What are the advantages of this mode of international expansion?

Accepted Answer

A licensing agreement is an arrangement whereby a licensor grants the rights to intangible property to another entity for a specified period in exchange for royalties. The primary advantage of licensing is that the firm does not have to bear the development costs and risks associated with opening a foreign market.As a result,licensing is a very attractive option for firms that lack the capital to open overseas markets.Licensing is also an attractive option when a firm is interested in pursuing a foreign market but does not want to commit substantial resources to an unfamiliar or potentially volatile foreign market.Licensing is also used when a firm wishes to participate in a foreign market,but is prohibited from doing so by barriers to investment.Finally,licensing is used when a firm possesses some intangible property but does not want to pursue a potential application itself.

Question 2

Other things being equal,the benefit-cost-risk trade-off is likely to be most favorable in:

Accepted Answer

A)  politically unstable developing nations that operate with a mixed or command economy. 
B)  nations where there is a dramatic upsurge in either inflation rates or private-sector debt. 
C)  politically stable developed and developing nations that have free market systems. 
D)  developing nations where speculative financial bubbles have led to excess borrowing. 
A)  politically unstable developing nations that operate with a mixed or command economy. 
B)  nations where there is a dramatic upsurge in either inflation rates or private-sector debt. 
C)  politically stable developed and developing nations that have free market systems. 
D)  developing nations where speculative financial bubbles have led to excess borrowing. C

Question 3

A firm can establish a wholly owned subsidiary in a country by building a subsidiary from the ground up,called the _____.

Accepted Answer

A)  joint venture 
B)  turnkey strategy 
C)  licensing agreement 
D)  greenfield strategy 
A)  joint venture 
B)  turnkey strategy 
C)  licensing agreement 
D)  greenfield strategy D

Question 4

Greenfield ventures are less risky than acquisitions in the sense that there is less potential for unpleasant surprises.

Accepted Answer

A) True 
 B)False

Question 5

Licensing limits the firm's ability to realize experience curve and location economies by producing its product in a centralized location.

Accepted Answer

A) True 
 B)False

Question 6

Acquisitions rarely produce disappointing results.

Accepted Answer

A) True 
 B)False

Question 7

Brand names are generally well-protected by international laws pertaining to trademarks.

Accepted Answer

A) True 
 B)False

Question 8

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 9

The choice of which markets to enter should be driven by an assessment of relative long-run growth and profit potential.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is true of turnkey projects?

Accepted Answer

A)  Turnkey projects are most common in industries which use simple,inexpensive production technologies. 
B)  A turnkey strategy can be more risky than conventional FDI. 
C)  A turnkey strategy is particularly useful where FDI is limited by host-government regulations. 
D)  Firms that enter into a turnkey deal have a long-term interest in the foreign country. 
A)  Turnkey projects are most common in industries which use simple,inexpensive production technologies. 
B)  A turnkey strategy can be more risky than conventional FDI. 
C)  A turnkey strategy is particularly useful where FDI is limited by host-government regulations. 
D)  Firms that enter into a turnkey deal have a long-term interest in the foreign country.

Question 11

Contractual safeguards cannot be written into an alliance agreement to guard against the risk of opportunism by a partner.

Accepted Answer

A) True 
 B)False

Question 12

First-mover advantages are the advantages associated with entering a market early.

Accepted Answer

A) True 
 B)False

Question 13

An advantage of joint ventures with a local partner is the knowledge of the local environment that the local partner contributes to the venture.

Accepted Answer

A) True 
 B)False

Question 14

Franchising enables a firm to quickly build a global presence.

Accepted Answer

A) True 
 B)False

Question 15

McDonald's is an example of a firm that uses a franchising strategy.

Accepted Answer

A) True 
 B)False

Question 16

Large strategic commitments increase strategic flexibility.

Accepted Answer

A) True 
 B)False

Question 17

The costs of promoting and establishing a product offering when a firm enters a foreign market prior to its rivals are known as _____.

Accepted Answer

A)  switching costs 
B)  market development costs 
C)  pioneering costs 
D)  promotional development costs 
A)  switching costs 
B)  market development costs 
C)  pioneering costs 
D)  promotional development costs

Question 18

A wholly owned subsidiary is appropriate when:

Accepted Answer

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

Question 19

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 20

Which of the following is a distinct advantage of exporting?

Accepted Answer

A)  It avoids the threat of tariff barriers by the host-country government. 
B)  Firms benefit from a local partner's knowledge of the host country's competitive conditions. 
C)  It avoids the often substantial costs of establishing manufacturing operations in the host country. 
D)  It is appropriate if lower cost locations for manufacturing the product can be found abroad. 
A)  It avoids the threat of tariff barriers by the host-country government. 
B)  Firms benefit from a local partner's knowledge of the host country's competitive conditions. 
C)  It avoids the often substantial costs of establishing manufacturing operations in the host country. 
D)  It is appropriate if lower cost locations for manufacturing the product can be found abroad.

Define licensing agreements.What are the advantages of this mode of international expansion?

Other things being equal,the benefit-cost-risk trade-off is likely to be most favorable in:

A firm can establish a wholly owned subsidiary in a country by building a subsidiary from the ground up,called the _____.

Greenfield ventures are less risky than acquisitions in the sense that there is less potential for unpleasant surprises.

Licensing limits the firm's ability to realize experience curve and location economies by producing its product in a centralized location.

Acquisitions rarely produce disappointing results.

Brand names are generally well-protected by international laws pertaining to trademarks.

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

The choice of which markets to enter should be driven by an assessment of relative long-run growth and profit potential.

Which of the following statements is true of turnkey projects?

Contractual safeguards cannot be written into an alliance agreement to guard against the risk of opportunism by a partner.

First-mover advantages are the advantages associated with entering a market early.

An advantage of joint ventures with a local partner is the knowledge of the local environment that the local partner contributes to the venture.

Franchising enables a firm to quickly build a global presence.

McDonald's is an example of a firm that uses a franchising strategy.

Large strategic commitments increase strategic flexibility.

The costs of promoting and establishing a product offering when a firm enters a foreign market prior to its rivals are known as _____.

A wholly owned subsidiary is appropriate when:

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

Which of the following is a distinct advantage of exporting?

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

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, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 15: Entry Strategy and Strategic Alliances

Define licensing agreements.What are the advantages of this mode of international expansion?

Other things being equal,the benefit-cost-risk trade-off is likely to be most favorable in:

A firm can establish a wholly owned subsidiary in a country by building a subsidiary from the ground up,called the _____.

Greenfield ventures are less risky than acquisitions in the sense that there is less potential for unpleasant surprises.

Licensing limits the firm's ability to realize experience curve and location economies by producing its product in a centralized location.

Acquisitions rarely produce disappointing results.

Brand names are generally well-protected by international laws pertaining to trademarks.

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

The choice of which markets to enter should be driven by an assessment of relative long-run growth and profit potential.

Which of the following statements is true of turnkey projects?

Contractual safeguards cannot be written into an alliance agreement to guard against the risk of opportunism by a partner.

First-mover advantages are the advantages associated with entering a market early.

An advantage of joint ventures with a local partner is the knowledge of the local environment that the local partner contributes to the venture.

Franchising enables a firm to quickly build a global presence.

McDonald's is an example of a firm that uses a franchising strategy.

Large strategic commitments increase strategic flexibility.

The costs of promoting and establishing a product offering when a firm enters a foreign market prior to its rivals are known as _____.

A wholly owned subsidiary is appropriate when:

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

Which of the following is a distinct advantage of exporting?

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

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, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters