Marketing MCQ: Entering Foreign Markets

Entering Foreign Markets

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In the LLL framework, _____ refers to an emerging MNE's ability to identify and bridge gaps in its market.

a. leverage
b. learning
c. linkage
d. location

Answer: c. linkage

A recent survey revealed that more than nine out of ten people prefer a watch made by firms in Switzerland to one made in India or U.S.A or any other country. This is an example of _____.

a. benchmarking
b. the country-of-origin effect
c. agglomeration
d. the liability of foreignness

Answer: b. the country-of-origin effect

The country-of-origin effect refers to _____.

a. the inherent disadvantages foreign firms experience in home countries
b. the positive or negative perception of firms and products from a certain country
c. only the negative perception of firms and products from a certain country
d. the inherent advantages domestic firms experience in their home countries

Answer: b. the positive or negative perception of firms and products from a certain country

Greenfield operations are similar to acquisitions in that they are both examples of _____.

a. partially owned subsidiaries
b. non-equity mode of entry into foreign markets
c. wholly owned subsidiaries
d. equity mode of entry into foreign markets limited to a contractual agreement

Answer: c. wholly owned subsidiaries

A greenfield operation refers to _____.

a. a wholly owned subsidiary created by acquisition
b. an outsourcing agreement in R&D between firms
c. a wholly owned subsidiary created by building a new factory and offices from scratch
d. a new corporate entity created and jointly owned by two or more parent companies

Answer: c. a wholly owned subsidiary created by building a new factory and offices from scratch

Co-marketing refers to _____.

a. a project in which clients pay contractors to market and distribute the product/service
b. efforts among a number of firms to jointly market their products and services
c. outsourcing agreements in marketing between firms
d. selling the rights to intellectual property to another firm for a royalty fee

Answer: b. efforts among a number of firms to jointly market their products and services

A(n) _____ is a non-equity mode of entry used to build a longer-term presence by building and then operating a facility for a period of time before transferring operations to a domestic agency or firm.

a. JV
b. WOS
c. BOT agreement
d. R&D contract

Answer: c. BOT agreement

Which of the following is true of licensing/franchising?

a. The licensor/franchisor has the ability to coordinate globally.
b. The licensor/franchisor has to bear the full costs and risks associated with foreign expansion.
c. The licensing/franchising strategy creates very limited competitors.
d. The licensor/franchisor does not have tight control over production and marketing.

Answer: d. The licensor/franchisor does not have tight control over production and marketing.

Which of the following is true of indirect exports?

a. They export through domestically based export intermediaries.
b. They treat foreign demand as an extension of domestic demand.
c. They typically provoke protectionism, potentially triggering antidumping actions.
d. They do not enjoy the economies of scale similar to direct exports.

Answer: a. They export through domestically based export intermediaries.

A disadvantage of acquisitions is _____.

a. high development costs
b. the inability to add new capacity to industry
c. the inability to coordinate globally
d. the slow entry speed

Answer: a. high development costs

An advantage of joint ventures is _____.

a. the access to partners' assets
b. the complete equity and operational control
c. the ease of global coordination
d. the protection of know-how

Answer: a. the access to partners' assets

Which of the following is an advantage of R&D contracts?

a. Continuous improvement of core innovation capabilities
b. Easy to negotiate and enforce contracts
c. Negligible threat from competitors
d. Ability to tap into the best, cost-effective locations

Answer: d. Ability to tap into the best, cost-effective locations

Which of the following is a disadvantage of licensing and franchising?

a. High development costs
b. High risk in overseas expansion
c. Little control over marketing
d. Creation of a monopoly

Answer: c. Little control over marketing

Which of the following is an advantage of direct exports?

a. Low transportation costs for bulky products
b. Avoid export processes
c. Better control over distribution
d. No trade barriers made barriers

Answer: c. Better control over distribution

Which of the following entry modes is a type of strategic alliance?

a. Licensing
b. Wholly owned subsidiary
c. Export
d. Acquisition

Answer: a. Licensing

_____ are the most basic non-equity mode of entry, capitalizing on economies of scale in production concentrated in the home country and providing better control over distribution.

a. Indirect exports
b. Direct exports
c. Turnkey projects
d. Acquisitions

Answer: b. Direct exports

Which of the following is an equity mode of entry?

a. Wholly owned subsidiaries
b. R&D contracts
c. Licensing/franchising
d. Indirect exports

Answer: a. Wholly owned subsidiaries

Which of the following is a non-equity mode of entry?

a. Acquisitions
b. Joint ventures
c. Turnkey projects
d. Green-fields

Answer: c. Turnkey projects

Which of the following characterizes an MNE from a non-MNE?

a. It exports or imports with or without FDI.
b. It enjoys OLI advantages.
c. It enters foreign markets via non-equity modes.
d. It enters foreign markets through FPI.

Answer: b. It enjoys OLI advantages.

Which of the following is an advantage shared by both greenfield operations and acquisitions?

a. Low development costs
b. Add new capacity to industry
c. Fast entry speed
d. Protection of know-how

Answer: d. Protection of know-how