Entry Strategies Quiz

What are the basic decisions firms make when expanding globally?

• Which markets to enter, when to enter them, and on what scale

• Which markets to enter, when to enter them, and on what cos to enter

• Which markets to enter, when to enter them, and Which products to launch,

• How to diversify, where to invest, and when to merge

How do most firms begin their international expansion?

• With a joint venture

• With licensing or franchising

• With a wholly owned subsidiary

• With exporting

What is the main disadvantage of wholly owned subsidiaries?

• The firm bears the full cost and risk of setting up overseas operations

• High transport costs and tariffs can make it uneconomical

• They make it difficult to realize location and experience curve economies

• They may inhibit the firm's ability to take profits out of one country to support competitive attacks in another

If a firm wants the option of global strategic coordination, the firm should choose

• Licensing

• Joint ventures

• Franchising

• A wholly owned subsidiary

Which of the following is not important to a successful strategic alliance?

• Establishing a 50:50 relationship with partner

• A shared vision

• Creating strong interpersonal relationships

• Learning from the partner

All of the following are advantages of acquisitions except

• They enable firms to preempt their competitors

• It is easy to realize synergies by integrating the operations of the acquired entities

• They are quicker to execute

• They may be less risky

_________ includes the time and effort spent learning the rules of a new market?

• Pioneering costs

• Strategic commitments

• First mover advantages

• Market

Why choose exporting as an entry mode?

• It avoids the costs of establishing local manufacturing operations

• It helps the firm achieve experience curve and location economies

• Agents in a foreign country may not act in exporter’s best interest

• There may be lower-cost manufacturing locations found abroad

Why choose licensing as an entry mode?

• The firm avoids barriers to investment

• The firm avoids development costs and risks associated with opening a foreign market

• The firm can capitalize on market opportunities without developing those applications itself

• The firm doesn’t have the tight control required for realizing experience curve and location economies

Why choose joint ventures as an entry mode?

• The firm may not have the tight control to realize experience curve or location economies

• The firm bears the full cost and risk of setting up overseas operations

• Firms benefit from a local partner's knowledge of local conditions, culture, language, political systems, and business systems

• The firm risks giving control of its technology to its partner