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WorksheetsChapter 6: Entering Foreign Markets
Total questions: 15
Worksheet time: 5mins
Which of the following is not an advantage associated with entering a foreign market before other international businesses?
Ability to preempt rivals and capture demand by establishing a strong brand name.
Ability to ride down the experience curve ahead of rivals.
Ability to create switching costs.
Ability to avoid pioneering costs.
Early entrants to a market that are able to create switching costs that tie the customer to the product are capitalizing on:
economies of scale
pioneering costs
first-mover advantages
late-mover advantages
A large-scale entrant is more likely than a small-scale entrant to be able to capture first-mover advantages associated with:
demand preemption
diseconomies of scale
pioneering costs
diseconomies of scope
_____ arise(s) from using resource endowments or assets that are tied to a particular foreign location and that a firm finds valuable to combine with its own unique assets.
Multipoint competition
The eclectic paradigm
Location-specific advantages
Outflow of FDI
Firms engaging in _____ with a local company can benefit from a local partner's knowledge of the host country's competitive conditions, culture, language, political systems, and business systems.
turnkey projects
joint ventures
greenfield investments
licensing arrangements
If a service firm wants to build a global presence quickly and at a relatively low cost and risk, _____makes sense.
a wholly owned subsidiary
exporting
a turnkey project
franchising
Firms that lack the capital necessary to develop foreign operations may choose _____ as a means of expanding internationally.
turnkey projects
licensing
greenfield investments
acquisitions
Identify the incorrect statement about turnkey projects.
The contractor agrees to handle every detail of the project for a foreign client.
They are most common in industries which use inexpensive production technologies.
This is a means of exporting process technology to other countries.
They create efficient global competitors in the process.
When an exporting firm finds that its local agent is also carrying competitors' products, the firm may switch to a _____ to handle local marketing, sales, and service.
wholly owned subsidiary
franchising arrangement
turnkey operation
licensing agreement
When local agents carry the products of competing firms and have divided loyalties, _____ is not appropriate.
franchising
licensing
exporting
greenfield investment
…... risks are the risks associated with the unauthorized diffusion of firm-specific assets
dissemination
regulatory
currency
……... are ownership, location, and internalization advantages, which are typically associated with MNEs
Internalization advantages
Ownership advantages
Location-specific advantages
OLI advantages
…... is the inherent disadvantage foreign firms experience in host countries because of their nonnative status.
Obsolescing bargain
Liability of foreignness
Sunk costs
Expropriation
Which of the following statements about small-scale entry is true?
The commitment associated with a small-scale entry makes it possible for the small-scale entrant to capture first-mover advantages.
Small-scale entry is a way to gather information about a foreign market before deciding whether to enter on a significant scale.
By giving a firm time to collect information, small-scale entry increases the risks associated with a subsequent large-scale entry.
Small-scale entry limits a firms ability to learn about a foreign market thereby also limiting the firm's exposure to that market.
A large-scale entrant is more likely than a small-scale entrant to be able to capture first-mover advantages associated with:
diseconomies of scope
diseconomies of scale
demand preemption
pioneering costs
