159) According to Figure 7-4 above, points A and D would most likely represent ________ and
________ options, respectively, for entering the global marketplace.
A) joint venture and licensing
B) licensing and exporting
C) licensing and joint venture
D) direct investment and licensing
E) exporting and direct investment
160) A global market entry strategy in which a company produces goods in one country and sells
them in another country is referred to as
A) exporting.
B) direct investment.
C) countertrade.
D) licensing.
E) multinational marketing.
161) Exporting refers to a global market entry strategy in which
A) a company will sell its products in international markets but not in its own domestic market.
B) a company produces goods in one country and sells them in another country.
C) a company will manufacture its product in several countries at the same time using different
brand names and slight product modifications.
D) a company will manufacture products specifically designed for nondomestic markets, but will
sell those products to distributors that take title and resell the products to different companies
around the world.
E) a product is made in one country, assembled in a second country, and ultimately marketed to a
third country.
162) Which market entry option allows a company to make the least number of changes in terms
of its product, its organization, and even its corporate goals?
A) exporting
B) licensing
C) joint venture
D) direct investment
E) franchising
163) Indirect exporting refers to
A) offering the right to a trademark, patent, trade secret, or similarly valued item of intellectual
property in return for a royalty or fee.
B) selling a firm’s domestically produced products in a foreign country without interference by
that government.
C) contracting with a foreign firm to manufacture products according to stated specifications.
D) avoiding the use of additional parties when a firm sells its domestically produced products in
another country.
E) selling a firm’s domestically produced products in a foreign country through an intermediary.
164) When a firm sells its domestically produced products in a foreign country through an
intermediary, it is referred to as
A) direct exporting.
B) indirect exporting.
C) licensing.
D) franchising.
E) foreign assembly.
165) Indirect exporting occurs when a firm sells its domestically produced products in a foreign
country
A) in violation of a quota.
B) without paying import tariffs.
C) without paying export duties.
D) through a joint venture.
E) through an intermediary.
166) Which type of exporting has the least amount of commitment and risk but will probably
return the least profit?
A) direct
B) indirect
C) licensing
D) joint
E) unilateral
167) A small Canadian winery located in British Columbia has developed a new table wine. It
has no overseas contacts but wants to get its wine on the shelves in selected Asian and European
markets where growth has been substantial in the past two years. Which type of exporting option
would best suit this company?
A) direct exporting
B) licensing
C) indirect exporting
D) joint venture
E) cooperative partnership
168) The U.S. motorcycle manufacturer Harley-Davidson uses intermediaries to sell its
motorcycles in numerous nations outside the United States. Harley-Davidson uses
A) direct exporting.
B) licensing.
C) contract manufacturing.
D) indirect exporting.
E) foreign assembly.
169) U.S.-based Fran Wilson Creative Cosmetics attributes its success in Japan to a top-quality
product, effective advertising, and a novel ________ strategy, in which it uses Japanese
distributors to reach beauty salons rather than department stores.
A) joint venture
B) licensing
C) franchising
D) indirect export
E) direct investment
170) To avoid competing with Japanese firms through their traditional channel of distribution,
Fran Wilson Creative Cosmetics Moodmatcher lip coloring is sold in which type of retail venue?
A) grocery stores
B) flower shops
C) beauty salons
D) department stores
E) gift stores
171) Direct exporting refers to
A) offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual
property in return for a royalty or fee.
B) contracting with a foreign firm to manufacture products according to certain specifications.
C) a foreign country and a local firm investing together to create a local business.
D) using additional parties when a firm sells its domestically produced goods in another country.
E) a firm selling its domestically produced goods in a foreign country without intermediaries.
172) Which global market entry strategy involves slightly more risk than indirect exporting for a
company but also opens the door to increased profits?
A) direct exporting
B) licensing
C) cooperative
D) joint venture
E) direct investment
173) Most companies become involved in direct exporting when
A) foreign governments believe that they will benefit the most from allowing the entry of direct
exports.
B) emerging markets in foreign countries become economically viable.
C) they believe their volume of sales will be sufficiently large and easy to obtain that they do not
require intermediaries.
D) the domestic market becomes saturated with competing products and services.
E) evolving technologies in foreign countries come online.
174) The prominent global market-entry strategy among small- and medium-sized companies is
A) exporting.
B) franchising.
C) licensing.
D) joint venture.
E) direct investment.
175) When a U.S. airplane manufacturer sells its airplanes to a company in Germany without
using intermediaries, it is referred to as
A) direct exporting.
B) indirect exporting.
C) licensing.
D) foreign manufacturing.
E) foreign assembly.
176) Licensing refers to
A) offering the right to a trademark, patent, trade secret, or other similarly valued items of
intellectual property in return for a royalty or a fee.
B) contracting with a foreign firm to manufacture products according to certain specifications.
C) a foreign country and a local firm investing together to create a local business.
D) having a company handle its own exports directly without intermediaries.
E) exporting through an intermediary, which often has the knowledge and means to succeed in
selling a firm’s product abroad.
177) Offering the right to a trademark, patent, trade secret, or other similarly valued items of
intellectual property in return for a royalty or a fee is referred to as
A) direct exporting.
B) indirect exporting.
C) licensing.
D) contract manufacturing.
E) external branding.
178) Which of the following is an advantage inherent in the use of licensing as a global market-
entry strategy?
A) The licensor retains control of its product.
B) The licensor is protected from creating a potential competitor.
C) It provides an exemption from domestic trade regulations.
D) There is an increase in potential profit compared with direct investment.
E) The licensee gains information about the dynamics of the market.
179) All of the following are advantages of licensing except which?
A) the foreign country gains employment by having the product manufactured locally
B) the licensee gains information that allows it to start with a competitive advantage
C) the lower risk to the company granting the license compared to direct investment.
D) the licensor’s ability to protect its brand name from harm
E) the capital-free entry into a foreign country
180) Which of the following is a disadvantage associated with licensing?
A) The licensee pays lower wages and sells at lower prices.
B) The licensor may create its own competition.
C) The foreign government dislikes it because it does not increase local employment.
D) This is the most expensive and risky method for global expansion.
E) The firm’s brand does not get international exposure.
181) Which form of entry into a global market makes a firm the most vulnerable to harm
regarding its brand name or reputation?
A) direct exporting
B) indirect exporting
C) licensing
D) direct investment
E) joint venture
182) All of the following are disadvantages of licensing except which?
A) The licensor has reduced potential profits compared to direct investment.
B) The foreign country does not benefit from increases in local employment for product
manufacturing.
C) The licensor forgoes control of its product.
D) Should the licensee prove to be a poor choice, the name or reputation of the company may be
harmed.
E) The licensor may be creating its own competition.
183) Select Service Partner (SSP) Group has operations in 30 countries involving food and
beverage establishments, often in transit hubs such as airports and railway stations. SSP also
operates Starbucks locations in airports in Finland, Sweden, and Norway. SSP pays Starbucks a
royalty based on sales, as well as a fee for each store. In these instances, Starbucks is engaged in
A) direct exporting.
B) indirect exporting.
C) contract manufacturing.
D) foreign assembly.
E) franchising.
184) A form of low-risk and capital-free entry into international markets that includes local
manufacturing is referred to as
A) indirect exporting.
B) direct ownership.
C) joint ventures.
D) licensing.
E) direct exporting.
185) One variation of licensing is referred to as
A) direct investment.
B) joint ventures.
C) direct exporting.
D) franchising.
E) dual adaptation.
186) Yum! Brands, the restaurant division of PepsiCo, has 12,600 KFC restaurants abroad, with
more than 3,700 restaurants in China. Many of the latter are locally owned and subject to a
contractual agreement that allows the owners to operate the business under the established KFC
brand name and according to specific rules. Yum! Brands is engaged in
A) contract assembly.
B) a joint venture.
C) contract manufacturing.
D) a partnership.
E) franchising.
187) Yogen Früz is a successful chain of frozen yogurt shops originating in Canada. Archeology
Investments has an agreement with the Canadian firm that grants rights to its company to open
and operate Yogen Früz shops in Dubai, Oman, Qatar, Bahrain, and Kuwait. Yogen Früz is
engaged in
A) dual adaptation.
B) a joint venture.
C) direct exporting.
D) indirect exporting.
E) franchising.
188) A joint venture entails
A) offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual
property in return for a royalty or a fee.
B) contracting with a foreign firm to manufacture products according to certain specifications.
C) a foreign company and a local firm investing together to create a local business.
D) having a company handle its own exports directly, but using intermediaries for importing.
E) exporting through an intermediary, which often has the knowledge and means to succeed in
selling a firm’s products abroad.
189) A global market-entry strategy in which a foreign company and a local firm invest together
to create a local business in order to share ownership, control, and profits of the new company is
referred to as
A) licensing.
B) a joint venture.
C) direct exporting.
D) contract assembly.
E) dual adaptation.
190) PepsiCo and the Strauss Group have together formed an Israeli business to market Frito-
Lay’s, Cheetos, Ruffles, and Doritos in Israel. This global market-entry strategy is known as
A) franchising.
B) a joint venture.
C) licensing.
D) direct investment.
E) exporting.
191) The ________ arrangement between Ericsson, a Swedish telecommunications firm, and
CGCT, a French switch maker, enabled them together to beat out AT&T for a $100 million
French contract.
A) franchising
B) licensing
C) joint venture
D) direct investment
E) exporting
192) A disadvantage of a joint venture arrangement when entering a new global market is that
A) intermediaries have the potential to harm the brand.
B) the firm entering the foreign market must pay royalties to the other firm.
C) one of the companies forgoes control over its product.
D) the two companies may disagree about policies.
E) this method is likely to provide the fewest subsidies from the host country’s government.
193) Starbucks and Tata Global Beverage have together formed TATA Starbucks Limited in
order to bring Starbucks to India. The global market entry strategy is known as
A) franchising.
B) a joint venture.
C) licensing.
D) direct investment.
E) exporting.
194) Direct investment in as a global market-entry strategy refers to
A) offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual
property in return for a royalty or a fee.
B) contracting with a foreign firm to manufacture products according to certain specifications.
C) a foreign company and a local firm investing together to create a local business.
D) having a company handle its own exports directly, without intermediaries.
E) a domestic firm actually investing in and owning a foreign subsidiary or division.
195) A global market entry strategy that entails a domestic firm actually investing in and owning
a foreign subsidiary or division is referred to as
A) licensing.
B) local assembly.
C) a joint venture.
D) direct investment.
E) local manufacturing.
196) When Nestlé actually owns a subsidiary or division in a foreign country, such as its own ice
cream manufacturing operation in China, this global market entry strategy is known as ________
and represents the greatest commitment a company can make to international sales.
A) licensing
B) local assembly
C) a joint venture
D) direct investment
E) local manufacturing
197) Which form of entry into a foreign market requires the greatest commitment?
A) direct exporting
B) direct investment
C) joint venture
D) licensing
E) indirect exporting
198) One advantage of direct investment when entering a new global market is that
A) intermediaries have the potential to harm the brand.
B) the firm entering the foreign market does not have to pay royalties to the government.
C) the company forgoes control over its product.
D) the firm gains and uses a better understanding of local market conditions.
E) this method is likely to provide the fewest subsidies from the host country’s government.