Question 1

An American pharmaceutical enters into an agreement with an Indian biotechnology company.The medicines are to be sold in the Indian market.The agreement explicitly states that only the American firm is entitled to maintain the technology and provide know-how regarding technology use and repair.This is an example of:

Accepted Answer

The answer of An American pharmaceutical enters into an agreement...

Question 2

A popular fast-food chain decides to enter a foreign market by allowing a local food chain to produce and market its products in return for a fee.This type of entry strategy is known as:

Accepted Answer

Franchising is a type of entry strategy where a company allows a local business (the franchisee) to use its name, products, and marketing in return for a fee. This allows the company to expand into a foreign market without direct investment or ownership, and the local franchisee benefits from the established brand reputation and support from the company.

Question 3

Determining the selling price in the global market?place is an extremely difficult task.Which of the following best explains the rationale for the above statement?

Accepted Answer

Rules, quotas, and antidumping laws vary by country, affecting pricing strategies and complicating the determination of selling prices in the global marketplace.

Question 4

A gaming console developed by a U.S.technology firm is priced at $500 in the United States.The firm markets a modified version of the product in the Indian market to decrease its costs and cater to low-income consumers.The factor that is influencing the product strategy of the firm is:

Accepted Answer

Economic development influences a firm's product strategy when it modifies a product to cater to low-income consumers in different markets, as it indicates adapting to the purchasing power of consumers in a specific region.

Question 5

A Canadian cement manufacturing firm decides to invest in China.To gain more profits the company decides to invest independently in the new market by setting up its own plants and distributing its products through its own sales force.This type of entry strategy is known as:

Accepted Answer

The entry strategy described in the scenario is direct investment where the Canadian cement manufacturing firm is setting up its own plants and distributing its products through its own sales force in China. This is the most involved and high-risk type of entry strategy, but also offers the potential for the highest return on investment. It is not a strategic alliance, exporting, joint venture, or franchising.

Question 6

The entry strategy that requires the highest levels of investment and exposes firms to significant risks is:

Accepted Answer

direct investment involves establishing wholly-owned subsidiaries or acquiring existing firms in foreign markets. This requires significant financial resources and exposes firms to a high level of risks, such as political instability, cultural differences, and the possibility of expropriation. In contrast, other entry strategies like franchising, licensing, joint ventures, and strategic alliances may require less investment and are less risky. Therefore, direct investment is the most challenging and resource-intensive way for firms to enter international markets.

Question 7

A shoe manufacturing company in Canada wants to pursue global marketing.As part of its globalization, it decides to diversify its products and add leather bags, belts, and other accessories to its product list while entering the local markets in Brazil.Since it has no experience with these new products and little knowledge of local markets, it forms a contract with a local firm in Brazil to produce its products by providing resources and technology to the firm.This is an example of:

Accepted Answer

This is an example of a joint venture, where the Canadian company collaborates with a local firm in Brazil to produce and market its products, sharing resources and technology.

Question 8

CADIC serves a group of member hospitals that are located in many countries.The partnering members do not invest in each other's institutions, but CADIC coordinates with members on mutual interests, helping them create value through collaboration.This is an example of:

Accepted Answer

CADIC's coordination with member hospitals on mutual interests and creation of value through collaboration is a clear example of a strategic alliance. A strategic alliance is a cooperative agreement between two or more firms in which they work together to achieve a specific goal. In this case, the member hospitals are working together to create value through collaboration facilitated by CADIC. Exporting, franchising, joint ventures, and direct investment all involve some form of monetary investment or ownership in another institution, which is not the case with CADIC's member hospitals.

Question 9

Which of the following is a low-risk method of entering a country's market without setting up operations in the country?

Accepted Answer

Management contracting is a low-risk method because it involves a company providing management expertise to a foreign company without having to invest in the foreign market directly.

Question 10

A popular ice cream chain enters a new market in another country by allowing local retailers to market its products, including the use of its brand name and format.This form of entry strategy into a new market is known as:

Accepted Answer

The scenario describes a form of franchising where the popular ice cream chain is allowing local retailers to market its products and use its brand name and format. Franchising is a form of entry strategy in which a company grants permission to other individuals or firms to sell its products or use its intellectual property in return for a fee or other compensation.

Question 11

The market entry strategy in which a firm entering a new market pools its resources with those of a local firm to form a new company in which ownership, control, and profits are shared is called:

Accepted Answer

A joint venture is a market entry strategy in which two or more firms pool their resources to create a new company in which ownership, control, and profits are shared. This allows the firms to benefit from the local knowledge and resources of the local partner, while mitigating the risks and costs of entering a new market individually. Licensing involves granting permission to use a firm's intellectual property, direct investment involves establishing a wholly owned subsidiary in the new market, strategic alliances involve collaboration between firms without the creation of a new company, and franchising involves granting rights to use a firm's business model and brand.

Question 12

A Canadian firm allows a local firm in Singapore to use its technology to manufacture products and sell them in Singapore.This is an example of:

Accepted Answer

In this scenario, the Canadian firm is allowing the local firm in Singapore to use its technology to manufacture products and sell them in Singapore. This is a classic example of contract manufacturing, where a company provides a contract to a local firm to manufacture its products. In this case, the Canadian firm is not directly managing the operations of the Singaporean firm, and there is no merger or acquisition involved, which rules out options A, B, and E. An exporting agreement would involve the Canadian firm exporting products to Singapore, rather than allowing the local firm to manufacture and sell the products in Singapore. Therefore, the best choice is C) contract manufacturing.

Question 13

Michael's Pizza, a popular pizza outlet in Europe, is entering the Indian market as part of its globalization program.The firm decides to develop unique Indian flavours to cater to consumers in India.The cultural difference between the two markets is influencing which strategy of the firm?

Accepted Answer

The firm's decision to develop unique Indian flavors indicates that it is focusing on the product strategy to cater to the cultural differences in the Indian market.

Question 14

A joint venture differs from direct investment in that direct investment:

Accepted Answer

Direct investment involves complete ownership and control of assets, facilities, and operations in a foreign country by a foreign firm, unlike joint venture where two or more firms come together and share ownership and control of a new entity formed to carry out a specific business activity. Option A, C, and D describe joint venture and not direct investment. Option E is inaccurate as returns on direct investments may take time to materialize.

Question 15

An entry strategy in which a firm maintains complete ownership of its plants, operational facilities, and offices in a foreign country is called:

Accepted Answer

Direct investment involves maintaining complete ownership and control over operations and facilities in a foreign country. Strategic alliances and joint ventures involve shared ownership and control, while franchising and licensing involve granting some level of control or rights to another entity.

Question 16

A financial services firm enters a new market by combining its resources with a local firm in a foreign country.The firm enters into this alliance because the local firm can provide it with a greater understanding of the market.This entry strategy employed by the firm is called:

Accepted Answer

A joint venture involves two or more parties combining resources to achieve a specific goal, often to enter a new market, leveraging local knowledge and expertise.

Question 17

The entry strategy that offers firms complete control over their operations in a foreign country is known as:

Accepted Answer

Direct investment allows a firm to have complete control over their operations in a foreign country, including ownership of facilities and hiring of employees. This strategy involves significant financial investment and commitment from the firm, but also offers the highest potential for profits and long-term success. Franchising and strategic alliances involve sharing control with a partner, joint venture involves sharing ownership with a partner, and exporting involves selling goods to a foreign market without establishing a physical presence.

Question 18

Lanco Inc., located in Canada, bought the Australian mining company Griffin Coal and now runs a 100-percent owned mining entity in Australia.This venture has allowed Lanco complete control over the local market.This strategy is an example of:

Accepted Answer

Direct investment involves buying a company or establishing a wholly-owned subsidiary in a foreign market, which is exactly what Lanco Inc. did when they bought Griffin Coal in Australia. This gives Lanco complete control over the local market, as stated in the question. Strategic alliance, exporting, franchising, and joint ventures do not involve complete ownership and control of a foreign entity.

Question 19

Which of the following is a market entry strategy in which the parent company allows a host country firm to use its name and format and to operate its business in the host country?

Accepted Answer

Franchising is a market entry strategy in which the parent company allows a host country firm to use its name and format and to operate its business in the host country. This strategy allows a company to expand its business and brand presence in a foreign market without bearing the high costs of setting up a new business from scratch.

Question 20

A collaborative relationship between independent firms in which the partnering firms do not create an equity partnership is called:

Accepted Answer

A strategic alliance refers to a relationship between two independent firms that collaborate for mutual benefit without creating a new legal entity or an equity partnership. It involves sharing of resources, knowledge, expertise, and technology to achieve common goals. Examples of strategic alliances include joint research and development projects, co-marketing agreements, and production partnerships. Franchising, joint venture, direct investment, and indirect exporting are distinct forms of business partnerships that involve different levels of collaboration and ownership.

Quiz 17: Global Marketing