Deck 9: Foreign Operations Modes

Question 1

Exporting is the most common form of market entry for small and medium sized firm (SMEs)

Answer 1

True
Explanation: It is true because exporting provides a relatively low cost, low risk but high control method of entering foreign markets. It appeals to SMEs who may have limited resources and experience in international business.

Question 2

The overall attractiveness of a potential new market is determined by the balance between the costs, risks and benefits of doing business in that market.

Answer 2

True
Explanation: Correct because market selection is based on a weighing up of these three considerations, the costs, benefits and risks of the market. In turn, these factors influence the choice of market operating mode.

Question 3

One of the advantages of being a first mover is _______

A) a higher level of certainty of demand
B) certainty as to the future level of competition
C) certainty with regard to future government policies
D) the opportunity to create brand awareness and influence market development.

Answer 3

D
Explanation: An early entrant has very limited knowledge of likely demand, future competition or policy evolution so the correct response is d) and the opportunity to build a strong initial market position.

Question 4

Standardisation is a widely used market entry mode

Question 5

Greenfield market entry offers _______

A) a high level of control and a high level of risk
B) a low level of control and risk
C) a high level of control and low risk
D) a flexible entry mode that is easily reversed

Question 6

The majority of service firms enter a foreign market using exporting

Question 7

Examples of platforms models are: (select all that applies)

A) McDonalds
B) Airbnb
C) Tesla
D) Uber

Question 8

If a company is seeking to enter a foreign market with a culture highly dissimilar to its own, it could consider using a strategy of licensing

Question 9

FDI can take two forms: greenfield; and mergers and acquisitions

Question 10

_______ is one of the main internal factors affecting the choice of foreign market operating mode

A) Demand uncertainty
B) Firm capability
C) Locational advantage
D) The regulatory environment

Question 11

Foreign market operating strategies entail decisions on market selection, entry mode and timing

Question 12

In the case of resource transfer modes, ownership and control are shared between the firm and its local partner

Question 13

In the case of resource transfer modes, ownership and control are _______

A) retained by the lead firm
B) shared between the firm and its local partner
C) shared with an agent and local supplier
D) unclear it depends on the terms of the contract

Question 14

International experience is one of the primary external factors affecting the choice of foreign market operating mode

Question 15

Different entry modes are expected to have a differential impact on a firm's performance in a foreign market

Question 16

Direct exporting involves the production of goods in the home market and marketing into a foreign market _______

A) with the use of an intermediary
B) with sales made to an agent
C) without the use of an intermediary
D) With sales dependent on a domestic partner organisation

Question 17

Selection of the correct overseas market requires consideration of _______

A) resources
B) control
C) risk
D) all of the above

Question 18

Divestment is one element in the strategic planning activities of firms operating in a dynamic global economy

Question 19

A disadvantage of late entrants to a market is being able to "free-ride" on the investments of early movers

Question 20

Foreign market operating strategies that offer low exit costs inhibit flexibility and opportunities for mode switching .