MCQ chapter 13

1. A firm contemplating A. T
expansion should choose a B. F
foreign market based on an
assessment of the nation's
long-run profit potential.
2. Omega, Inc., a U.S.-based A. early entry
maker of personal fitness
trackers, is not sure about B. small-scale entry
the attractiveness of
entering the country of C. large-scale entry
Mattica. Mattica had
recently emerged as a D. late entry
democracy after nearly one
hundred years of E. rapid entry
dictatorship. Which of the
following types of entry
into Mattica would allow
Omega, Inc. to learn about
the foreign market while
limiting the firm's exposure
to that market?
3. Which of the following is a A. possibility of escalating commitment leading to major
disadvantage of small-scale financial losses
entry for an international
firm considering foreign B. limited availability of resources for use in other
expansion? markets

C. lack of flexibility associated with strategic

commitments

D. increase in economic exposure due to minimal time

spent in evaluating a foreign market

E. difficulty of building market share and capturing first-

mover advantages
4. An advantage of choosing
exporting as a mode of
entry into foreign markets
is that a firm
5. The attractiveness of a
country as a potential
market for an international
business depends solely on
the size of its consumer
market
6. Kitchen Guru decided to
export its products to
foreign markets by hiring
local marketing agents in
each country. Over the
years, Kitchen Guru ran
into various problems with
these local marketing
agents that affected both
sales and profitability.
Kitchen Guru can
overcome its problems with
local marketing agents by
7. In which of the following
modes of entry into foreign
markets does a firm agree
to set up an operating plant
for a foreign client and
hand over the plant when it
is fully operational?
A. can avoid the cost of establishing manufacturing
operations in the host country.
B. shares the development costs and risks with its host
partner.
C. can earn returns from process technology skills in
countries where FDI is restricted.
D. has access to local partner's knowledge.
E. has the ability to engage in global strategic
coordination.
A. T
B. F
A. selling intangible property to a franchisee and
insisting on rules to conduct the business.
B. changing agents frequently.
C. engaging in turnkey projects and exporting process
technology to foreign firms.
D. entering into cross-licensing agreements with foreign
firms.
E. setting up wholly owned subsidiaries in foreign
nations to handle local marketing.
A. franchising agreement
B. turnkey project
C. licensing agreement
D. wholly owned subsidiary
E. joint venture
8. In terms of licensing,
which of the following is
an intangible property?
E. patent
9. Licensing is NOT attractive A. firms lacking the capital to develop operations
to which of the following
firms?
B. firms unwilling to commit substantial financial
10. Franchising as a mode of
entry into foreign markets
is employed primarily by
11. Nantucket Food Products
desires to expand
internationally. Director of
Sales, Esme Jones, prefers
that the company export to
foreign markets. Which of
the following rationales
should Jones use as an
advantage of choosing
exporting as a mode of
entry into foreign markets?
A. infrastructure
B. machinery
C. leased equipment
D. advanced computing systems
overseas
resources to an unfamiliar market
C. firms requiring tight control of operations for
realizing experience curve and location economies
D. firms wanting to explore markets but prohibited from
doing so by investment barriers
E. firms with intangible properties with business
applications that it does not want to develop itself
A. service firms.
B. manufacturing companies.
C. online outfits.
D. high-technology companies.
E. primary industries.
A. A firm can avoid the cost of establishing
manufacturing operations in the host country.
B. A firm shares the development costs and risks with its
host partner.
C. A firm can earn returns from process technology
skills in countries where FDI is restricted.
D. A firm has access to local partner's knowledge.
E. A firm has the ability to engage in global strategic
coordination.
12. Which of the following is
an advantage of joint
ventures as a mode of entry
into foreign markets?
13. Which of the following
entry modes into a foreign
market best serves a high-
tech firm?
14. Which of the following is
true of international firms
considering foreign
expansion?
A. The foreign firm benefits from a local partner's
knowledge of the host country.
B. The foreign firm can protect its technology from
being appropriated by its local partner.
C. There is less cause for friction and conflict between
the foreign and local partners.
D. It gives a firm tight control over subsidiaries, which
enables it to realize experience curve or location
economies.
E. The foreign firm does not have to bear any
development costs and risks associated with opening
a foreign market.
A. turnkey projects
B. franchising
C. wholly owned subsidiaries
D. joint ventures
E. licensing
A. The timing and scale of entry of foreign expansion
are minor details in comparison with the choice of
foreign market.
B. The long-run economic benefits of doing business in
a country are solely a function of the country's
population size.
C. If the firm's core competence is based on proprietary
technology, entering a joint venture might risk losing
control of that technology to the joint-venture partner.
D. The costs and risks associated with foreign expansion
are higher in economically advanced nations.
E. Politically unstable and less developed nations offer
favorable benefit-cost-risk trade-off conditions.
15. Axiom International, an A. wholly owned subsidiary
Australian company, wants
to expand its operations to B. joint venture
China, a country that is
politically, culturally, and C. exporting
economically different. The
firm needs to select a mode D. greenfield investments
of entry that would give it
access to local knowledge, E. licensing
allow sharing of
development costs and
risks, and also be
politically acceptable.
Which of the following
modes of entry into foreign
markets is most suitable for
Axiom International?
16. Jupiter Systems is a high- A. wholly owned subsidiary
tech firm looking to set up
operations in a foreign B. joint venture
country. The firm's core
competency is in C. franchising
technological know-how.
Which of the following D. licensing
modes of entry would be
most favorable to the firm E. turnkey project
if it wants to keep a tight
control over its
technology?
17. The CFO of At Home A. lack of control over quality
Products is unhappy with
the firm’s choice of wholly B. high costs and risks
owned subsidiaries as the
mode of foreign entry. He C. problems with local marketing agents
has pointed out a number
of disadvantages to this D. inability to engage in global strategic coordination
mode. Which of the
following is a disadvantage E. lack of control over technology
of wholly owned
subsidiaries as a mode of
entry into foreign markets?
18. The risk of failure of an
acquisition can be reduced
by
19. Which of the following is a
disadvantage of greenfield
ventures?
20. If a firm is seeking to enter
a market via a wholly
owned subsidiary where
there are already well-
established incumbent
enterprises, and where
global competitors are also
interested in establishing a
presence, a suitable mode
of entry is a(n)
A. undervaluing the assets of an acquired firm.
B. ensuring that firms are acquired in the home country.
C. replacing high-level managers of an acquired firm.
D. a detailed auditing of operations, financial position,
and management culture.
E. investing only in a firm that is managing to break
even.
A. They have a higher potential for throwing up
unpleasant surprises.
B. It is much more difficult to build an organizational
culture from scratch than to change the culture of an
existing unit.
C. Companies find it difficult to avoid falling into the
trap of the hubris hypothesis.
D. It is slower to establish than acquisitions.
E. A firm does not have the freedom to build the kind of
subsidiary that it wants.
A. acquisition.
B. licensing deal.
C. greenfield venture.
D. turnkey project.
E. exporting deal.
21. Which of the following is
an advantage of joint
ventures as a mode of entry
into foreign markets?
E. The foreign firm does not have to bear any
22. Which of the following is A. ability to create switching costs that tie customers into
an example of a first-mover
advantage
B. avoidance of pioneering costs that a later entrant into
23. Omega, Inc. is considering
international expansion and
wants to know if it is likely
to command a high price
for its fitness product. In
which of the following
situations can Omega, Inc.
command higher prices for
its fitness product in a
foreign market?
A. The foreign firm benefits from a local partner's
knowledge of the host country.
B. The foreign firm can protect its technology from
being appropriated by its local partner.
C. There is less cause for friction and conflict between
the foreign and local partners.
D. It gives a firm tight control over subsidiaries, which
enables it to realize experience curve or location
economies.
development costs and risks associated with opening
a foreign market.
one's products or services
the foreign market has to bear
C. increased probability of surviving in a foreign market
D. opportunity to observe and learn from the mistakes of
other entrants
E. ability to let later entrants ride ahead on the
experience curve
A. the product is widely available in the foreign market
B. sales volumes is relatively low in the foreign market
C. the product offers greater value to customers in the
foreign market
D. the product is more suitable to other foreign markets
E. domestic competitors are selling alternatives at
reduced prices
 24. While personal fitness A. is likely to have greater value.
trackers (such as Fitbit) are
widely available in the B. will have to be priced relatively low.
U.S., they are scarcely
available in international C. will see a decrease in sales volume.
markets. Given the
increasing awareness of a D. is not suited to that particular market.
healthy lifestyle, such
products satisfy an unmet E. will fail to make a profit.
need. A product such as
Fitbit in international
markets
25. Which of the following is a A. rapid economic growth
reason why a relatively
poor country may be an B. political instability
attractive target for inward
investment? C. currency depreciation

D. high cost of living

E. less developed infrastructure

26. Acquiring firms often A. T
overpay for the assets of
the acquired firms. B. F
Total (/26)