Question 1

When it comes to franchising, the parent company's objective is to make sure that when a customer visits its franchisee in any country, the quality of products and services provided are as different and unique in every store.

Accepted Answer

A) True 
 B)False

Question 2

U.S. corporations have been pouring investments into China to build manufacturing facilities to produce goods for the local and export markets. Since economists expect the Chinese yuan to appreciate against the dollar in the future, the forthcoming Chinese yuan profits of U.S. MNEs when converted to U.S. dollars will be high. This is an example of U.S. companies cutting costs by _____.

Accepted Answer

A)  minimizing factor input costs 
B)  generating revenue 
C)  acquiring other companies 
D)  exploring joint ventures 
E)  reacting to exchange rate movements

Question 3

______ are firms that are headquartered in one country, but own and control manufacturing, services, research and development facilities, or other business entities on foreign soil.

Accepted Answer

The answer of ______ are firms that are headquartered in...

Question 4

An agreement between two or more firms that do not involve the creation of a separate entity with joint ownership and in which the firms stand to gain revenues and maximize profits through cooperation for a given period of time is called a(n)_____.

Accepted Answer

A)  license 
B)  franchise 
C)  foreign acquisition 
D)  strategic alliance 
E)  export-import business

Question 5

A relatively simple approach to diversification is to identify overseas projects that have performance levels that are highly correlated to domestic cash flows or project returns over time.

Accepted Answer

A) True 
 B)False

Question 6

Of the following, which is NOT true about the export-import business?

Accepted Answer

A)  Many employees, often 100+, are required for an export-import business to operate. 
B)  The export-import business is a relatively low-risk operation. 
C)  The export-import business involves penetrating foreign markets or importing merchandise at competitive prices for domestic consumption. 
D)  The opportunity to participate in export-import business is significant. 
E)  Government agencies offer specialized seminars and programs on how to identify markets overseas and sell merchandise there.

Question 7

Disney Consumer Goods and Bayer Aspirins are examples of _____.

Accepted Answer

A)  licensing 
B)  franchising 
C)  a foreign acquisition 
D)  a joint venture 
E)  an export-import business

Question 8

To maximize the net present value of future cash flows of foreign investment adjusted for exchange rate movements or to maximize profits so that shareholders could receive larger dividends and see their share prices rise over time refers to ______.

Accepted Answer

The answer of To maximize the net present value of...

Question 9

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.
-The global markets in which Lewis Fabrication plans to expand provides this company with the opportunity for entering relatively high-growth markets with a product that is in demand. Which one of the following would Lewis Fabrication be least likely to expect to find in this type of market?

Accepted Answer

A)  No government or military influence or intervention for Lewis Fabrication 
B)  Per capita incomes are rising and expected to continue to rise 
C)  The middle class is growing in numbers and so is their demand for products 
D)  A larger percent of the population is financially classed as below middle class in certain of these foreign markets 
E)  These foreign markets are considered to have high profitability potential for companies such as Lewis Fabrication

Question 10

The third stage of the product life cycle is _____.

Accepted Answer

A)  decline 
B)  introduction 
C)  growth 
D)  maturity 
E)  development

Question 11

Interestingly, licensing and franchising typically leads to the penetration of international markets without significant capital investment abroad by the parent company.

Accepted Answer

A) True 
 B)False

Question 12

______ refers to the purchase of established firms abroad with the goal of utilizing the existing production, marketing, and distribution networks and of having instant access to foreign markets that fit the purchasing firm's global strategy.

Accepted Answer

The answer of ______ refers to the purchase of established...

Question 13

According to the text, which of the following entry strategies has the highest degree of risk?

Accepted Answer

A)  Licensing 
B)  Wholly-owned foreign subsidiary 
C)  Foreign acquisition 
D)  Joint venture 
E)  Strategic alliance

Question 14

When 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 international joint venture in global markets.

Accepted Answer

A) True 
 B)False

Question 15

When MNEs go abroad, they generally do so for two major reasons. There could be massive competition in the home market or firms may genuinely identify new business opportunities abroad based upon the company's competitive advantage in production, technology and management.

Accepted Answer

A) True 
 B)False

Question 16

Who identified three key economic "advantages" that firms should have for FDI to occur?

Accepted Answer

A)  Hawthorne 
B)  Maslow 
C)  Dunning 
D)  Ford 
E)  Roosevelt

Question 17

Companies go global for three possible motives. Describe each of these three motives and the possible strategies available to companies under each motive.

Accepted Answer

The answer of Companies go global for three possible motives....

Question 18

New facilities built and operated overseas that require large investment of capital to tailor to the exact needs of the home country firm refers to _____.

Accepted Answer

The answer of New facilities built and operated overseas that...

Question 19

Of the following, which is NOT true of mergers and acquisitions?

Accepted Answer

A)  By merging the strengths of the home company with those of the host country firm, the new firm will become more competitive internationally. 
B)  The company being acquired should be well established and have a good reputation in the local market. 
C)  Mergers and acquisitions are relatively low-risk. 
D)  Corporate cultural differences may inhibit smooth integration of the two organizations. 
E)  An exit strategy should be in place that enables the home company to leave the host country.

Question 20

______ is 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.

Accepted Answer

The answer of ______ is a business that is jointly...

Exam 8: Entry Strategies in Global Business

When it comes to franchising, the parent company's objective is to make sure that when a customer visits its franchisee in any country, the quality of products and services provided are as different and unique in every store.

______ are firms that are headquartered in one country, but own and control manufacturing, services, research and development facilities, or other business entities on foreign soil.

An agreement between two or more firms that do not involve the creation of a separate entity with joint ownership and in which the firms stand to gain revenues and maximize profits through cooperation for a given period of time is called a(n) _____.

A relatively simple approach to diversification is to identify overseas projects that have performance levels that are highly correlated to domestic cash flows or project returns over time.

Of the following, which is NOT true about the export-import business?

Disney Consumer Goods and Bayer Aspirins are examples of _____.

To maximize the net present value of future cash flows of foreign investment adjusted for exchange rate movements or to maximize profits so that shareholders could receive larger dividends and see their share prices rise over time refers to ______.

The third stage of the product life cycle is _____.

Interestingly, licensing and franchising typically leads to the penetration of international markets without significant capital investment abroad by the parent company.

______ refers to the purchase of established firms abroad with the goal of utilizing the existing production, marketing, and distribution networks and of having instant access to foreign markets that fit the purchasing firm's global strategy.

According to the text, which of the following entry strategies has the highest degree of risk?

When 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 international joint venture in global markets.

When MNEs go abroad, they generally do so for two major reasons. There could be massive competition in the home market or firms may genuinely identify new business opportunities abroad based upon the company's competitive advantage in production, technology and management.

Who identified three key economic "advantages" that firms should have for FDI to occur?

Companies go global for three possible motives. Describe each of these three motives and the possible strategies available to companies under each motive.

New facilities built and operated overseas that require large investment of capital to tailor to the exact needs of the home country firm refers to _____.

Of the following, which is NOT true of mergers and acquisitions?

______ is 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.