Lee Final 2

Chapter 15 - Entry Modes
Chapter 15 Entry Modes

True / False Questions
1. Evidence suggests that pioneers gain and maintain a competitive advantage in new markets. True False
2. Research shows that surviving pioneers hold a smaller average market share when their industries reach maturity than firms that were either fast followers or late entrants in the product category. True False
3. Volume and market share are the only dimensions by which success can be measured. True False
4. The means of supplying overseas markets-exporting to and production in those markets depend on non-equity modes of entry. True False
5. Entering foreign markets may be described by two levels of involvement, non-equity and equity-based. True False
6. Direct exporting is an excellent means of getting a feel for international business without committing a great amount of human or financial resources. True False
7. The Internet has made direct exporting much easier. True False
15-1
8. A sales company is part of indirect exporting. True False
9. Direct exporting is simpler than indirect exporting because it requires neither special expertise nor large cash outlays. True False
10. Sales companies will import in their own name from the parent and will invoice in the currency of the parent company. True False
11. A sales company is established to market goods or services, not to produce them. True False
12. Turnkey projects export technology, management expertise, and capital equipment. True False
13. Producing a factory ready to operate is similar to producing a "turnkey project." True False
14. Licensing refers to a contractual agreement in which the licensor grants access to its patents, trade secrets, or technology for a fee paid by the licensee. True False
15. The licensee generally pays a fix sum when signing a license agreement and then royalties of five to seven percent of sales over the life of the contract. True False
15-2
16. Some firms do not grant licenses to other firms because of the fear of having a strong competitor upon the expiration of the license. True False
17. A management contract is used only by manufacturing companies to earn income by providing expertise for a fee. True False
18. In the year 2005, more money was spent in acquiring established businesses than in setting up new ones. True False
19. Lack of control is one of the strongest arguments against a joint venture. True False
20. In a joint venture, a management contract is often used as a non-ownership-based control mechanism by any of the firms when an agreement can not be reached. True False
21. Most of the foreign direct investment in the United States has been spent establishing new companies. True False
22. If a firm decides to become involved in overseas manufacturing it has two options: (1) wholly owned subsidiary and (2) joint venture. True False
15-3
23. Historically, firms engaged in FDI have generally preferred wholly owned subsidiaries. True False
24. It is not possible for foreign investors to control a joint venture if the host country's law prevents foreign investors from having more than 49% percent ownership. True False
25. Ford and Volkswagon formed a joint venture to compete in the Brazilian market because they were both suffering losses there. True False
26. When the government of a host country requires companies to have some local participation, foreign firms must engage in strategic alliances with local owners. True False
27. In a joint venture, "sleeping partner" refers to the firm that controls less than a majority of the stock. True False
28. Management contracts can enable the global partner to control many aspects of a joint venture even when holding only a minority position. True False
29. Another name for contract manufacturing is "foreign direct investment without investment." True False
15-4
30. In a 12-country study conducted by Ernst & Young, 65% of U.S. companies were found to be engaged in a strategic alliance. True False
31. Strategic alliances can be not-for-profit. True False
32. Strategic alliances take many forms, including licensing, mergers, joint ventures, and joint research and development partnerships. True False
33. One type of strategic alliance between competitors is an R&D partnership. True False
34. Pooling alliances are driven by the logic of contributing dissimilar resources, while trading alliances are driven by similarity and integration. True False
35. Trading and pooling alliances are typically different in their goals, optimal structures, and managerial challenges. True False
36. Generally mergers and acquisitions are considered alliances. True False
37. Piracy can refer to both high-sea swashbuckling and the illegal appropriation of software, music, video, and other intellectual property. True False
15-5
38. Software piracy can actually result in a net gain to the maker of the software because "pirates" often adopt the software and become paying customers. True False
39. Selecting the channel of distribution which will link the producer with the foreign user will depend on the method of entry into the market. True False
40. Export management companies act as international representatives for various noncompeting manufacturers. True False
41. Export commission agents represent overseas purchasers and act as resident buyers in industrialized nations. True False
42. Korean trading companies, owned by the conglomerates known as chaebol, are responsible for a major part of Korea's exports. True False
43. Export merchants are exporters who buy directly from the manufacturer and then sell in their own names. True False
44. Webb-Pomerene Associations are organizations of competing firms that have joined together for the sole purpose of export trade. True False
15-6
45. Manufacturers agents often stock the products of their suppliers but they do not assume any financial responsibility. True False
46. The concept of a trading company is very well known and often used in the United States. True False
47. Generally, the structure of the wholesaling and retailing system is quite similar across nations. True False
Multiple Choice Questions
48. A pioneering firm stands the best chance for long term success in market-share leadership and profitability when: A. there are high entry barriers for competitors B. it has strong patent protection C. proprietary technology D. substantial investment requirements E. A, B, and D F. All of the above
49. In many cases, a firm entering international markets becomes a follower because: A. barriers are low for new entrants. B. strong patent protection exists. C. quicker competition beat it. D. all of the above. E. B and C
15-7
50. Methods for supplying foreign markets may be subsumed in just two activities: A. exporting to a foreign market and manufacturing in it. B. exporting goods to a foreign market and exporting services to it. C. manufacturing in a foreign market and licensing technology. D. establishing joint ventures and wholly-owned production facilities.
51. Companies wishing to export must first choose between A. exporting directly and using sales companies. B. exporting indirectly or using joint ventures. C. exporting directly or indirectly. D. exporting directly and licensing.
52. __________ permits a firm to set up an export program with a minimum of cash outlay and little special expertise. A. Joint venture B. Direct exporting C. Franchising D. Indirect exporting
53. A disadvantage(s) of indirect exporting is that: A. firms gain little experience from the transaction B. commissions have to be paid to agents C. firms are dependent on the agents D. all of the above
54. Names for firms who export for indirect exporters include all of the following except: A. manufacturer's export agents B. export commission agents C. export merchants D. domestic firms
15-8
55. A disadvantage of indirect exporting is: A. foreign business can be lost if exporter changes supply sources B. no expertise or large cash outlays are required C. the firm gains little experience from transactions D. A and C E. All of the above are disadvantages
56. A turnkey project includes all of the following except: A. plan design. B. technology supply. C. supply of raw material. D. personnel training. E. all of the above are included.
57. By means of a licensing agreement, A. an international firm receives permission from a foreign government to set up a subsidiary in that country. B. one firm grants to another the right to use stipulated parts of its expertise. C. a foreign company receives products made for it by another company. D. one firm grants to another the right to use all of its expertise.
58. When a licensing agreement is made, A. the licensee receives expertise from another company. B. the licensee obtains permission from the government to do business in a foreign country. C. the licensor is a foreign government which grants the license. D. the licensor pays to receive assistance from the licensee. E. B and C.
59. According to the text, management contracts usually stipulate that a fee of __________ be paid to the firm providing the management expertise. A. 2 to 5 percent of sales B. 30 to 50 percent of sales C. 2 to 5 percent of profits D. 30 to 50 percent of profits
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60. Licensing provides income for: A. fashion designers. B. computer manufacturers. C. magazine publishers. D. A and B. E. A, B and C.
61. In 2005, foreign firms investing in the United States spent ____________ on establishing new firms as they did on acquiring going firms. A. twice as much B. 25 percent as much C. nine times as much D. one-ninth as much E. about the same amount
62. A joint venture may be: A. a corporate entity formed between an international firm and local owners. B. a corporate entity formed between two or more international firms. C. a corporate undertaking between two or more firms of a limited-duration project. D. A and B. E. A, B and C.
63. Foreign direct investment (FDI) includes all of the following except: A. Wholly Owned Subsidiary B. Joint Venture C. Franchising D. Contract Manufacture E. Management Contract
64. Franchising is a form of: A. contract management. B. licensing. C. contract manufacturing. D. joint venture.
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65. The principal ingredient which a franchiser exports is: A. a brand name. B. marketing strategy. C. a set of proven procedures. D. A and B. E. A, B and C.
66. McDonald's, Kentucky Fried Chicken, and Subway are examples of: A. joint ventures. B. licensing. C. franchising. D. strategic alliances.
67. According to the text, a management contract is useful for: A. joint ventures. B. earning money by providing know-how. C. A and B. D. wholly-owned subsidiaries. E. A, B and D.
68. Hilton and Delta provide assistance to other international companies. That is an example of: A. joint venture. B. management contract. C. strategic alliance. D. contract manufacturing.
69. International firms employ contract manufacturing A. as a means of entering a foreign market without investing in plant facilities. B. to subcontract assembly work or the production of parts to independent companies overseas. C. A and B. D. as a means of direct foreign investment.
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70. Although there are many forms of strategic alliances or competitive alliances, the alliances are often between: A. customers. B. competitors. C. suppliers. D. all of the above. E. B and C.
71. Strategic alliances are A. partnerships between competitors, customers, or suppliers that may take various forms. B. another name for a growth triangle. C. arbitration. D. none of the above.
72. Channels of distribution: A. are systems of agencies through which a product and title pass from producer to user. B. are both controllable and uncontrollable variables. C. are controllable variables. D. A and B.
73. Although there have been a number of European and American international trading companies in operation for centuries, the most diversified and the largest are the: A. sogo shosha. B. keiretsu. C. chaebol. D. dochakuka.
74. What are the functions of an indirect exporter? A. Sell for the manufacturer B. Buy for their overseas customers C. Buy and sell for their own account D. A and B E. All of the above
15-12
75. The Export Trading Company Act A. permits businesses to join together to export goods and services without fear of violating antitrust laws. B. permits banks to participate in export trading companies. C. benefits are extended to all exporters, not just export trading companies. D. A and B. E. A, B and C.
76. When a firm chooses to do its own exporting, which of the following middlemen is an option? A. Manufacturer's agents. B. Distributors. C. Retailers. D. Trading companies. E. all of the above.
77. In most cases the marketer will be able to select wholesalers that take title to the goods. Another name for such a wholesaler is: A. merchant wholesalers B. rack jobbers C. drop shippers D. agents or brokers E. a, b and c
Essay Questions
78. In what way does contract manufacturing resemble direct investment?
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79. Explain the various forms that a joint venture may take.
80. Why have more of the investment outlays made in the United States by foreign firms been spent on acquiring going companies rather than establishing new ones?
81. If a firm wishes to go abroad but is unable to provide all the capital a wholly subsidiary would require, what other means of foreign involvement are available? Describe each one.
82. How can a foreign partner control a joint venture even if it has only a minority ownership position in the venture?
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83. What are the four basic types of overseas middlemen from which a firm can choose if the firm chooses to do indirect exporting?
Fill in the Blank Questions
84. _________________ is an excellent means of getting a feel for international business without committing a great amount of human or financial resources. ________________________________________
85. Through a __________ agreement, one firm may grant to another firm the right to use its expertise, such as manufacturing processes, marketing procedures, or trademarks. ________________________________________
86. The exporting of goods and services by the firm that produces them is __________ __________. ________________________________________
87. The exporting of goods and services through various home-based exporters is __________ __________. ________________________________________
88. A __________ __________ is a business established by a direct exporter for purpose of marketing goods in a foreign market, not producing them in that market. ________________________________________
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89. A cooperative effort among two or more organizations who share a common interest in a business enterprise or undertaking is a __________ __________. ________________________________________
90. An arrangement by which one firm provides management in all or specific areas to another firm is a __________ __________. ________________________________________
91. __________ is a contractual arrangement in which one firm grants access to its patents, trade secrets, or technology to another for a fee. ________________________________________
92. A form of licensing in which one firm contracts with another to operate a certain type of business under an established name according to specific rules is __________. ________________________________________
93. An arrangement in which one firm contracts with another to produce products according to its specifications but assumes responsibility for marketing is __________ __________. ________________________________________
94. A firm established principally to export domestic goods and services and to help unrelated companies export their products is an __________ __________ __________. ________________________________________
95. Independent sales representatives of various non-competing suppliers are called __________ __________. ________________________________________
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Chapter 15 Entry Modes Answer Key
True / False Questions
1. (p. 446) Evidence suggests that pioneers gain and maintain a competitive advantage in new markets. TRUE
AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: 1 Topic: Market pioneers
2. (p. 446) Research shows that surviving pioneers hold a smaller average market share when their industries reach maturity than firms that were either fast followers or late entrants in the product category. FALSE
AACSB: Analytic Bloom: Knowledge Difficulty: Hard Learning Objective: 1 Topic: Market pioneers
3. (p. 446) Volume and market share are the only dimensions by which success can be measured. FALSE
15-17
4. (p. 447) The means of supplying overseas markets-exporting to and production in those markets - depend on non-equity modes of entry. FALSE
AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: 2 Topic: Entering foreign markets
5. (p. 447) Entering foreign markets may be described by two levels of involvement, non-equity and equity-based. TRUE
6. (p. 448) Direct exporting is an excellent means of getting a feel for international business without committing a great amount of human or financial resources. TRUE
AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: 2 Topic: Nonequity modes of entry
7. (p. 448) The Internet has made direct exporting much easier. TRUE
15-18
8. (p. 448) A sales company is part of indirect exporting. FALSE
AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: 2 Topic: Nonequity modes of entry
9. (p. 448) Direct exporting is simpler than indirect exporting because it requires neither special expertise nor large cash outlays. FALSE
10. (p. 448) Sales companies will import in their own name from the parent and will invoice in the currency of the parent company. FALSE
AACSB: Analytic Bloom: Comprehension Difficulty: Hard Learning Objective: 2 Topic: Nonequity modes of entry
11. (p. 448) A sales company is established to market goods or services, not to produce them. TRUE
15-19
12. (p. 448) Turnkey projects export technology, management expertise, and capital equipment. TRUE
13. (p. 448) Producing a factory ready to operate is similar to producing a "turnkey project." TRUE
14. (p. 449) Licensing refers to a contractual agreement in which the licensor grants access to its patents, trade secrets, or technology for a fee paid by the licensee. TRUE
15. (p. 449) The licensee generally pays a fix sum when signing a license agreement and then royalties of five to seven percent of sales over the life of the contract. FALSE
15-20
16. (p. 449) Some firms do not grant licenses to other firms because of the fear of having a strong competitor upon the expiration of the license. TRUE
17. (p. 451) A management contract is used only by manufacturing companies to earn income by providing expertise for a fee. FALSE
AACSB: Analytic Bloom: Comprehension Difficulty: Medium Learning Objective: 2 Topic: Nonequity modes of entry
18. (p. 452) In the year 2005, more money was spent in acquiring established businesses than in setting up new ones. TRUE
AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: 2 Topic: Equity modes of entry
19. (p. 452) Lack of control is one of the strongest arguments against a joint venture. TRUE
AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: 2 Topic: Equity modes of entry
15-21
20. (p. 452) In a joint venture, a management contract is often used as a non-ownership-based control mechanism by any of the firms when an agreement can not be reached. FALSE
21. (p. 452) Most of the foreign direct investment in the United States has been spent establishing new companies. FALSE
22. (p. 452) If a firm decides to become involved in overseas manufacturing it has two options: (1) wholly owned subsidiary and (2) joint venture. FALSE
23. (p. 451) Historically, firms engaged in FDI have generally preferred wholly owned subsidiaries. TRUE
15-22
24. (p. 453) It is not possible for foreign investors to control a joint venture if the host country's law prevents foreign investors from having more than 49% percent ownership. FALSE
AACSB: Analytic Bloom: Knowledge Difficulty: Hard Learning Objective: 2 Topic: Equity modes of entry
25. (p. 452) Ford and Volkswagon formed a joint venture to compete in the Brazilian market because they were both suffering losses there. TRUE
26. (p. 453) When the government of a host country requires companies to have some local participation, foreign firms must engage in strategic alliances with local owners. FALSE
27. (p. 454) In a joint venture, "sleeping partner" refers to the firm that controls less than a majority of the stock. FALSE
15-23
28. (p. 454) Management contracts can enable the global partner to control many aspects of a joint venture even when holding only a minority position. TRUE
29. (p. 451) Another name for contract manufacturing is "foreign direct investment without investment." TRUE
30. (p. 454) In a 12-country study conducted by Ernst & Young, 65% of U.S. companies were found to be engaged in a strategic alliance. FALSE
31. (p. 454) Strategic alliances can be not-for-profit. TRUE
15-24
32. (p. 454) Strategic alliances take many forms, including licensing, mergers, joint ventures, and joint research and development partnerships. TRUE
33. (p. 454) One type of strategic alliance between competitors is an R&D partnership. TRUE
34. (p. 455) Pooling alliances are driven by the logic of contributing dissimilar resources, while trading alliances are driven by similarity and integration. FALSE
35. (p. 455) Trading and pooling alliances are typically different in their goals, optimal structures, and managerial challenges. TRUE
15-25
36. (p. 455) Generally mergers and acquisitions are considered alliances. FALSE
37. (p. 450, 460) Piracy can refer to both high-sea swashbuckling and the illegal appropriation of software, music, video, and other intellectual property. TRUE
AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: 3 Topic: Piracy
38. (p. 450, 460) Software piracy can actually result in a net gain to the maker of the software because "pirates" often adopt the software and become paying customers. TRUE
AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: 3 Topic: Piracy
39. (p. 456) Selecting the channel of distribution which will link the producer with the foreign user will depend on the method of entry into the market. TRUE
AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: 4 Topic: Channels of distribution
15-26
40. (p. 456) Export management companies act as international representatives for various noncompeting manufacturers. TRUE
AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: 4 Topic: Indirect exporting
41. (p. 458) Export commission agents represent overseas purchasers and act as resident buyers in industrialized nations. TRUE
AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: 4 Topic: Indirect exporting
42. (p. 458) Korean trading companies, owned by the conglomerates known as chaebol, are responsible for a major part of Korea's exports. TRUE
43. (p. 458) Export merchants are exporters who buy directly from the manufacturer and then sell in their own names. TRUE
15-27
44. (p. 458) Webb-Pomerene Associations are organizations of competing firms that have joined together for the sole purpose of export trade. TRUE
45. (p. 459) Manufacturers agents often stock the products of their suppliers but they do not assume any financial responsibility. TRUE
AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: 4 Topic: Direct exporting
46. (p. 459) The concept of a trading company is very well known and often used in the United States. FALSE
47. (p. 461) Generally, the structure of the wholesaling and retailing system is quite similar across nations. FALSE
AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: 4 Topic: Direct exporting
15-28

Multiple Choice Questions
48. (p. 446) A pioneering firm stands the best chance for long term success in market-share leadership and profitability when: A. there are high entry barriers for competitors B. it has strong patent protection C. proprietary technology D. substantial investment requirements E. A, B, and D F. All of the above
AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: 1 Topic: Market pioneers
49. (p. 446) In many cases, a firm entering international markets becomes a follower because: A. barriers are low for new entrants. B. strong patent protection exists. C. quicker competition beat it. D. all of the above. E. B and C
AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: 1 Topic: Market pioneers
50. (p. 446) Methods for supplying foreign markets may be subsumed in just two activities: A. exporting to a foreign market and manufacturing in it. B. exporting goods to a foreign market and exporting services to it. C. manufacturing in a foreign market and licensing technology. D. establishing joint ventures and wholly-owned production facilities.
15-29
51. (p. 447) Companies wishing to export must first choose between A. exporting directly and using sales companies. B. exporting indirectly or using joint ventures. C. exporting directly or indirectly. D. exporting directly and licensing.
52. (p. 447) __________ permits a firm to set up an export program with a minimum of cash outlay and little special expertise. A. Joint venture B. Direct exporting C. Franchising D. Indirect exporting
53. (p. 447) A disadvantage(s) of indirect exporting is that: A. firms gain little experience from the transaction B. commissions have to be paid to agents C. firms are dependent on the agents D. all of the above
15-30
54. (p. 447) Names for firms who export for indirect exporters include all of the following except: A. manufacturer's export agents B. export commission agents C. export merchants D. domestic firms
55. (p. 447) A disadvantage of indirect exporting is: A. foreign business can be lost if exporter changes supply sources B. no expertise or large cash outlays are required C. the firm gains little experience from transactions D. A and C E. All of the above are disadvantages
56. (p. 448) A turnkey project includes all of the following except: A. plan design. B. technology supply. C. supply of raw material. D. personnel training. E. all of the above are included.
15-31
57. (p. 449) By means of a licensing agreement, A. an international firm receives permission from a foreign government to set up a subsidiary in that country. B. one firm grants to another the right to use stipulated parts of its expertise. C. a foreign company receives products made for it by another company. D. one firm grants to another the right to use all of its expertise.
58. (p. 449) When a licensing agreement is made, A. the licensee receives expertise from another company. B. the licensee obtains permission from the government to do business in a foreign country. C. the licensor is a foreign government which grants the license. D. the licensor pays to receive assistance from the licensee. E. B and C.
59. (p. 451) According to the text, management contracts usually stipulate that a fee of __________ be paid to the firm providing the management expertise. A. 2 to 5 percent of sales B. 30 to 50 percent of sales C. 2 to 5 percent of profits D. 30 to 50 percent of profits
AACSB: Analytic Bloom: Knowledge Difficulty: Hard Learning Objective: 2 Topic: Nonequity modes of entry
15-32
60. (p. 449) Licensing provides income for: A. fashion designers. B. computer manufacturers. C. magazine publishers. D. A and B. E. A, B and C.
61. (p. 452) In 2005, foreign firms investing in the United States spent ____________ on establishing new firms as they did on acquiring going firms. A. twice as much B. 25 percent as much C. nine times as much D. one-ninth as much E. about the same amount
62. (p. 452) A joint venture may be: A. a corporate entity formed between an international firm and local owners. B. a corporate entity formed between two or more international firms. C. a corporate undertaking between two or more firms of a limited-duration project. D. A and B. E. A, B and C.
AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: 2 Topic: Equity-based modes of entry
15-33
63. (p. 451) Foreign direct investment (FDI) includes all of the following except: A. Wholly Owned Subsidiary B. Joint Venture C. Franchising D. Contract Manufacture E. Management Contract
64. (p. 450) Franchising is a form of: A. contract management. B. licensing. C. contract manufacturing. D. joint venture.
65. (p. 450) The principal ingredient which a franchiser exports is: A. a brand name. B. marketing strategy. C. a set of proven procedures. D. A and B. E. A, B and C.
15-34
66. (p. 450) McDonald's, Kentucky Fried Chicken, and Subway are examples of: A. joint ventures. B. licensing. C. franchising. D. strategic alliances.
AACSB: Analytic Bloom: Comprehension Difficulty: Easy Learning Objective: 2 Topic: Nonequity modes of entry
67. (p. 451) According to the text, a management contract is useful for: A. joint ventures. B. earning money by providing know-how. C. A and B. D. wholly-owned subsidiaries. E. A, B and D.
68. (p. 451) Hilton and Delta provide assistance to other international companies. That is an example of: A. joint venture. B. management contract. C. strategic alliance. D. contract manufacturing.
15-35
69. (p. 451) International firms employ contract manufacturing A. as a means of entering a foreign market without investing in plant facilities. B. to subcontract assembly work or the production of parts to independent companies overseas. C. A and B. D. as a means of direct foreign investment.
70. (p. 454) Although there are many forms of strategic alliances or competitive alliances, the alliances are often between: A. customers. B. competitors. C. suppliers. D. all of the above. E. B and C.
71. (p. 454) Strategic alliances are A. partnerships between competitors, customers, or suppliers that may take various forms. B. another name for a growth triangle. C. arbitration. D. none of the above.
AACSB: Analytic Bloom: Knowledge Difficulty: Easy Learning Objective: 2 Topic: Equity-based modes of entry
15-36
72. (p. 455) Channels of distribution: A. are systems of agencies through which a product and title pass from producer to user. B. are both controllable and uncontrollable variables. C. are controllable variables. D. A and B.
AACSB: Analytic Bloom: Knowledge Difficulty: Hard Learning Objective: 4 Topic: Channels of distribution
73. (p. 456) Although there have been a number of European and American international trading companies in operation for centuries, the most diversified and the largest are the: A. sogo shosha. B. keiretsu. C. chaebol. D. dochakuka.
AACSB: Analytic Bloom: Knowledge Difficulty: Medium Learning Objective: 4 Topic: Channels of distribution
74. (p. 456) What are the functions of an indirect exporter? A. Sell for the manufacturer B. Buy for their overseas customers C. Buy and sell for their own account D. A and B E. All of the above
15-37
75. (p. 458) The Export Trading Company Act A. permits businesses to join together to export goods and services without fear of violating antitrust laws. B. permits banks to participate in export trading companies. C. benefits are extended to all exporters, not just export trading companies. D. A and B. E. A, B and C.
AACSB: Analytic Bloom: Knowledge Difficulty: Hard Learning Objective: 4 Topic: Indirect exporting
76. (p. 459) When a firm chooses to do its own exporting, which of the following middlemen is an option? A. Manufacturer's agents. B. Distributors. C. Retailers. D. Trading companies. E. all of the above.
77. (p. 461) In most cases the marketer will be able to select wholesalers that take title to the goods. Another name for such a wholesaler is: A. merchant wholesalers B. rack jobbers C. drop shippers D. agents or brokers E. a, b and c
15-38

Essay Questions
78. (p. 451) In what way does contract manufacturing resemble direct investment? Answers may vary.
AACSB: Analytic Bloom: Analysis Difficulty: Medium Learning Objective: 2 Topic: Nonequity modes of entry
79. (p. 452) Explain the various forms that a joint venture may take. Answers may vary
AACSB: Analytic Bloom: Analysis Difficulty: Easy Learning Objective: 2 Topic: Equity-based modes of entry
80. (p. 452) Why have more of the investment outlays made in the United States by foreign firms been spent on acquiring going companies rather than establishing new ones? Answers may vary
AACSB: Analytic Bloom: Analysis Difficulty: Hard Learning Objective: 2 Topic: Equity-based modes of entry
15-39
81. (p. 448) If a firm wishes to go abroad but is unable to provide all the capital a wholly subsidiary would require, what other means of foreign involvement are available? Describe each one. Answers may vary
AACSB: Analytic Bloom: Analysis Difficulty: Medium Learning Objective: 2 Topic: Nonequity modes of entry
82. (p. 453) How can a foreign partner control a joint venture even if it has only a minority ownership position in the venture? Answers may vary.
AACSB: Analytic Bloom: Analysis Difficulty: Easy Learning Objective: 2 Topic: Equity-based modes of entry
83. (p. 447) What are the four basic types of overseas middlemen from which a firm can choose if the firm chooses to do indirect exporting? Answers may vary.
AACSB: Analytic Bloom: Analysis Difficulty: Medium Learning Objective: 2 Topic: Indirect exporting
15-40

Fill in the Blank Questions
84. (p. 447) _________________ is an excellent means of getting a feel for international business without committing a great amount of human or financial resources. Exporting
85. (p. 449) Through a __________ agreement, one firm may grant to another firm the right to use its expertise, such as manufacturing processes, marketing procedures, or trademarks. licensing
AACSB: Analytic Bloom: Comprehension Difficulty: Medium Learning Objective: 3 Topic: Licensing
86. (p. 448) The exporting of goods and services by the firm that produces them is __________ __________. direct exporting
87. (p. 447) The exporting of goods and services through various home-based exporters is __________ __________. indirect exporting
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88. (p. 448) A __________ __________ is a business established by a direct exporter for purpose of marketing goods in a foreign market, not producing them in that market. sales company
89. (p. 452) A cooperative effort among two or more organizations who share a common interest in a business enterprise or undertaking is a __________ __________. joint venture
AACSB: Analytic Bloom: Comprehension Difficulty: Easy Learning Objective: 2 Topic: Equity-based modes of entry
90. (p. 451) An arrangement by which one firm provides management in all or specific areas to another firm is a __________ __________. management contract
91. (p. 449) __________ is a contractual arrangement in which one firm grants access to its patents, trade secrets, or technology to another for a fee. Licensing
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92. (p. 450) A form of licensing in which one firm contracts with another to operate a certain type of business under an established name according to specific rules is __________. franchising
93. (p. 451) An arrangement in which one firm contracts with another to produce products according to its specifications but assumes responsibility for marketing is __________ __________. contract manufacturing
94. (p. 458) A firm established principally to export domestic goods and services and to help unrelated companies export their products is an __________ __________ __________. export trading company
AACSB: Analytic Bloom: Comprehension Difficulty: Easy Learning Objective: 4 Topic: Indirect exporting
95. (p. 459) Independent sales representatives of various non-competing suppliers are called __________ __________. manufacturers' agents
AACSB: Analytic Bloom: Comprehension Difficulty: Medium Learning Objective: 4 Topic: Direct exporting
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Chapter 15 - Entry Modes

Chapter 15 Entry Modes

Chapter 15 - Entry Modes

8. A sales company is part of indirect exporting. True False

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31. Strategic alliances can be not-for-profit. True False

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Chapter 15 - Entry Modes

Multiple Choice Questions

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78. In what way does contract manufacturing resemble direct investment?

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Fill in the Blank Questions

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True / False Questions

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8. (p. 448) A sales company is part of indirect exporting. FALSE

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31. (p. 454) Strategic alliances can be not-for-profit. TRUE

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