Topic 11- Selecting and Managing Entry Modes

What is an entry mode in international business?

• A type of financial investment strategy

• A method by which a company enters a foreign market

• A legal agreement between two domestic companies

• A strategy used to avoid exporting

Which of the following is an export strategy step?

• Acquiring a local business

• Identifying a potential market

• Buying a wholly owned subsidiary

• Ignoring cultural differences

Which of the following is an advantage of direct exporting?

• Higher control over sales and profits

• Less involvement in the foreign market

• Higher risk of fraud

• No need for market research

Which of the following describes countertrade?

• A company acquires another company in a foreign market

• A company establishes a wholly owned subsidiary abroad

• A company exchanges goods or services without using money

• A company licenses its brand to a foreign partner

Which of the following is an example of countertrade?

• Selling products through an intermediary

• Engaging in barter transactions between two companies

• Setting up a franchise in a foreign country

• Investing in foreign stocks and bonds

What is an export management company (EMC)?

• A company that manages a business’s import taxes

• A company that handles export activities for other companies

• A company that monitors exchange rates

• A company that handles domestic trade regulations

Which of the following is NOT a type of contractual entry mode?

• Licensing

• Franchising

• Turnkey projects

• Exporting

Which of the following describes licensing?

• A firm grants another company the right to use its intangible property

• A company establishes its own factory abroad

• A company sells goods through direct exporting

• A firm merges with a local competitor

What is a franchising agreement?

• A company supplies another firm with a brand name and operational support

• A company allows another firm to use its raw materials

• A firm grants another firm full ownership of intellectual property

• A company enters a short-term trade partnership

Which of the following is an advantage of franchising?

• High financial risk

• Slow market expansion

• Low cost and low risk

• Complete control over foreign operations