chapter12 IB

First mover advantages are only of concern in branded consumer goods industries.

• X  True
• ?    False

The location decision of foreign entry decision is driven by costs of production at the site.

• X  True
• ?    False

A joint venture is established by two or more parent firms.

• :-)  True
• ?    False

Non-equity entry modes include licensing, management contracts, and exporting.

• ?    True
• X  False

Companies engaging in brownfield acquisitions take over an existing firm and substantially transform its operations.

• ?    True
• ?    False

Companies imitating the strategies of their competitors are said to engage in ‘mimetic behaviour’.

• ?    True
• ?    False

High investment risk due to large capital commitment and long pay-back periods, yet no co-owner and integration risks, is associated with which entry mode?

• ?    Greenfield
• ?    Full acquisition
• ?    Joint venture
• ?    Partial acquisition

Which entry mode enables foreign investor to create a local operations in its own image without the need to incorporate existing structures or demands by local partners?

• ?    Greenfield
• ?    Joint venture
• ?    Full acquisition
• ?    Partial acquisition

Which statement about joint-ventures (JVs) is not correct?

• ?    A foreign investor could establish a JVs in form of a minority, majority or equal equity JV,
• ?    A joint ventures allows foreign investors to share costs and risks of an investment with a local partner
• ?    A 50-50 ownership arrangements is strongly discouraged because it creates ambiguities in decision making processes
• ?    A JV does not normally involve integrating and restructuring of an existing operation

Which of the following statements regarding institutional frameworks and foreign entry strategies is correct?

• X  Regulatory institutions may prohibit certain types of operations or transactions
• X  Institutional idiosyncrasies may increase the need for acquiring local knowledge
• X  Lack of contract enforcement institutions may increase the costs of arm-length contracts
• :-)  All of the above statements are correct
• ?    None of the above statements is correct