International Business, 12e (Hill)
1) The choice of which international markets to enter should be driven by an assessment of
absolute short-run growth and profit potential.
2) The attractiveness of a country as a potential market for an international business depends on
balancing the benefits, costs, and risks associated with doing business in that country.
3) When determining the value of a foreign market, an international firm must consider both its
products and the competition.
4) Educating customers is an element of pioneering costs.
5) A strategic commitment can be reversed by the top management at will.
6) Gadgets, Inc., wants to enter a foreign market on a small scale. This will allow it to learn about
the market while limiting the firm’s exposure to that market.
7) Exporting from a firm’s home base is most appropriate when lower-cost locations for
manufacturing the product can be found abroad.
9) By producing its product in a centralized location, licensing limits a firm’s ability to realize
experience curve and location economies.
10) Franchising enables a firm to quickly build a global presence.
11) The most typical joint venture is a 60–40 venture, in which one party holds most of the
ownership stake.
12) A wholly owned subsidiary limits a firm’s control over marketing and sales in different
countries.
13) If a firm’s core competence is proprietary technological knowledge, a joint venture is
preferable.
14) Brand names such as Starbucks and Subway are well protected by international laws
pertaining to trademarks.
15) A joint venture is often politically more acceptable than a wholly owned subsidiary and brings
a degree of local knowledge to the subsidiary.
16) The greater the pressures for cost reductions, the more likely a firm will want to pursue some
combination of exporting and wholly owned subsidiaries.
17) Acquisitions rarely produce disappointing results.
18) Overpayment for assets of an acquired firm is one reason acquisitions fail.
19) Greenfield ventures are less risky than acquisitions in the sense that there is less potential for
unpleasant surprises.
20) Johan’s firm is considering entering a country where there are no incumbent competitors to be
acquired. Its best option is likely to be a greenfield venture.
21) Unlike joint ventures, strategic alliances require the firm to bear all the costs and risks of
foreign expansion.
22) A good ally will expropriate the firm’s technological know-how while giving away little in
return.
23) Contractual safeguards cannot be written into an alliance agreement to guard against the risk of
opportunism by a partner.
24) To maximize the learning benefits of an alliance, a firm must try to learn from its partner and
then apply the knowledge within its own organization.
25) According to Bartlett and Ghoshal, how should firms from developing countries approach
international expansion?
A) They suggest joint ventures to improve the firm’s presence in the country while also growing
the business opportunities for companies in the developing country.
B) They suggest that franchising should be used in order to minimize risk and allow for the
maximum expansion in the quickest amount of time.
C) They suggest turnkey operations that allow for a rapid startup.
D) They suggest that companies should use the entry of foreign multinationals as an opportunity to
learn from these competitors by benchmarking their operations and performance against them.
26) The costs and risks associated with doing business in a foreign country are typically
A) low in an economically advanced nation.
B) low in the countries of the European Union.
C) high in an economically advanced nation.
D) high in a politically stable democratic nation.
27) ________ are the advantages associated with entering a market early.
A) Pioneering advantages
B) First–mover advantages
C) Core competencies
D) Late-mover advantages