Exam 13: Entering Foreign Markets

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A) pay more for the acquired unit to please its existing employees.
B) encourage and facilitate management turnover.
C) acquire a firm without wasting time on screening.
D) move rapidly after an acquisition to put an integration plan in place.
E) ensure that the work cultures are significantly different from each other.

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A) They are greater for late entrants.
B) They are higher in politically democratic nations.
C) They are less pronounced in the case of licensing.
D) They are lower in economically advanced nations.
E) They are called opportunity costs.

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A) ability to create switching costs that tie customers into one's products or services
B) avoidance of pioneering costs that a later entrant into 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

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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.

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A) through a turnkey operation with a local partner
B) through franchising
C) by acquiring an established firm in the host nation
D) by exporting
E) through a licensing agreement

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The consequences of entering on a signif...

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A) decrease in a firm's exposure to the foreign market
B) difficulty attracting customers and distributors for the product
C) inability to build rapid market-share irrespective of the scale of entry
D) limited product acceptance due to the avoidance of potential losses
E) availability of fewer resources to support expansion in other desirable markets

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A) choose to ride on an early entrant's investments.
B) use countertrade agreements.
C) enter a national market early.
D) ride down the experience curve behind their rivals.
E) avoid pioneering costs.

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A) rapid economic growth
B) political instability
C) currency depreciation
D) high cost of living
E) less developed infrastructure

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A) franchising agreement
B) turnkey project
C) licensing agreement
D) wholly owned subsidiary
E) joint venture

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The advantage of establishing a greenfie...

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A problem with licensing is the risk associated with licensing technological know-how to foreign companies.There are ways of reducing this risk.One way is by entering into a cross-licensing agreement with a foreign firm.Under a cross-licensing agreement,a firm might license some valuable intangible property to a foreign partner,but in addition to a royalty payment,the firm might also request that the foreign partner license some of its valuable know-how to the firm.Such agreements are believed to reduce the risks associated with licensing technological know-how,because the licensee realizes that if it violates the licensing contract (by using the knowledge obtained to compete directly with the licensor),the licensor can do the same to it.Cross-licensing agreements enable firms to hold each other hostage,which reduces the probability that they will behave opportunistically toward each other.Such cross-licensing agreements are increasingly common in high-technology industries.Another way of reducing the risk associated with licensing is to follow the Fuji Xerox model and link an agreement to license know-how with the formation of a joint venture in which the licensor and licensee take important equity stakes.Such an approach aligns the interests of licensor and licensee,because both have a stake in ensuring that the venture is successful.

A) acquisition.
B) licensing deal.
C) greenfield venture.
D) turnkey project.
E) exporting deal.

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A) lack of control over quality
B) high costs and risks
C) problems with local marketing agents
D) inability to engage in global strategic coordination
E) lack of control over technology

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A) Glass-blowing
B) Biotechnology
C) Organic farming
D) Basketry
E) Weaving

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