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Global Business Today Study Set 7

Business

Quiz 13 :

Entering Foreign Markets

Quiz 13 :

Entering Foreign Markets

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Licensing gives an international firm tight control over manufacturing, marketing, and strategy that is required for realizing experience curve and location economies.
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True False
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False

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Cross-licensing agreements increase the probability that firms might lose their know-how and technology to a partner firm.
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True False
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False

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When assessing the attractiveness of a country as a potential market, an international business must understand how the benefits, costs, and risks of doing business in that country will balance out.
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True

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In international business, an early entrant to a foreign market may be at a disadvantage relative to a later entrant, if regulations change in a way that diminishes the value of an early entrant's investments.
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If an international firm's core competency is based on proprietary technology, entering a joint venture might risk losing control of that technology to the joint-venture partner.
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The probability of survival decreases if an international business enters a national market after several other foreign firms have already done so.
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Licensing increases the risk of losing control over a firm's proprietary technological know-how.
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Establishing a wholly owned subsidiary provides a company with tight control over the operations in another country.
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If transportation costs are high for bulky products, exporting as a mode of entry into foreign markets may not be economical.
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When a firm's competitive advantage is based on technological competence, a joint venture is the preferred mode of entry into a foreign market because it reduces the risk of losing control over that competence.
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Similar to a licensing agreement, a joint venture puts the control of a company's technology at risk.
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Exporting, as a mode of entry into foreign markets, does not help a firm achieve experience curve and location economies.
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In a joint venture, a firm benefits from a local partner's knowledge of the host country's competitive conditions, culture, language, political systems, and business systems.
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With a wholly owned subsidiary, a firm shares the costs of setting up overseas operations with partner firms.
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The present purchasing power of consumers in a new market is not a factor used by a business to assess the long-run economic benefits of doing business with that nation.
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Fast food restaurants are good examples of the franchise model.
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An international firm that perceives its technological advantage to be transitory and susceptive to rapid imitation might want to license its technology to foreign firms.
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A business that chooses to enter an international market on a large scale implies rapid entry.
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The most typical joint venture is a 50/50 venture, in which there are two parties, each of which holds a 50 percent ownership stake and contributes a team of managers to share operating control.
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A firm contemplating expansion should choose a foreign market based on an assessment of the nation's long-run profit potential.
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