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12-1
Module 12 International Markets: Assessment and Entry Modes
Answer Key
True / False Questions
1.
Market screening is a modified version of environmental scanning in which the firm
studies the stock market to eliminate the less desirable markets.
2.
By conducting environmental scanning, a firm can monitor the natural resources around
the world that may affect it.
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3.
In environmental scanning the firm scans the world for environmental forces that might
affect it.
4.
Environmental scanning provides the firm with information about world opportunities and
threats.
5.
Country and segment are units of analysis for market screening.
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6.
Country and region are units of analysis for market screening.
7.
Climate, topography, and natural resources refer to environmental scanning.
8.
In general, when the basic need for a product is absent, no reasonable expenditure of
effort is likely to enable a firm to market its goods or services.
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9.
Projections for future dollar value of a product are part of the initial screening.
10.
Assessing the basic need potential and foreign trade and investment potential are both
part of the initial screening.
11.
Knowing the number of imports to a specific country gives a firm a complete measure of
market potential.
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12.
Trade flows are good indicators of the magnitude of present sales.
13.
Imports to a country can be a good indicator of the potential demand for a new product.
14.
During the second screening, analysts are highly concerned with inflation trends,
exchange rates, and interest rates.
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15.
During the second screening, analysts are highly concerned with inflation rates, education
levels, and entry barriers.
16.
Analysis of the paying habits of customers is studied as part of the sociocultural forces
screening.
17.
The means of supplying overseas markets—exporting to and production in those
markets—depend on non-equity modes of entry.
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18.
Entering foreign markets may be described by two levels of involvement: nonequity and
equity-based.
19.
Direct exporting is an excellent means of getting a feel for international business without
committing a great amount of human or financial resources.
20.
Turnkey projects export technology, management expertise, and capital equipment.
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21.
Producing a factory ready to operate is similar to producing a "turnkey project."
22.
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.
23.
The licensee generally pays a fixed sum when signing a license agreement and then
royalties over the life of the contract.
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24.
Some firms grant licenses to other firms in order to reduce the competitive level of a
potential rival, especially in the fashion industry.
25.
A management contract is used only by manufacturing companies to earn income by
providing expertise for a fee.
26.
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 cannot be reached.
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27.
If a firm decides to become involved in overseas manufacturing it has two options: (1)
wholly owned subsidiary and (2) joint venture.
28.
When the government of a host country requires companies to have some local
participation, foreign firms must engage in strategic alliances with local owners.
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29.
Another name for contract manufacturing is "foreign direct investment without
investment."
30.
Market indicators and market factors measure market demand.
Multiple Choice Questions
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31.
Environmental scanning is mostly used
32.
Market screening is needed to
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33.
In what order is the selection of foreign markets process presented in the textbook?
34.
Market screening eliminates
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35.
Market screening is divided into which of the following:
36.
Industry association listings or specialized trade journals are good sources when
conducting
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37.
The analyst is mostly concerned with which of the following during the second screening?
38.
Credit availability, paying habits of customers, and rates of return are considered in the
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39.
All of the following are part of the e-commerce readiness index except
40.
Market size, market growth rate, and e-commerce indexes are all part of
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41.
The market growth rate index is measured by
42.
Most companies enter a market in stages. Which of the following is not listed in the
textbook as a stage of market entry?
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43.
Entry barriers, profit remittance barriers, and policy stability are all part of the
44.
Which of the following does not organize trade missions?
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45.
The final step in the screening process will generally include
46.
Cultural problems and technical difficulties cause problems
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47.
Mail surveys can be a difficult foreign market research tool because
48.
There are several criteria for segmenting markets. Which of the following is not a criterion
for segmenting?
