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c13 Key
1. A firm contemplating expansion should choose a foreign market based on an assessment of the nation's
long-run profit potential.
2. The attractiveness of a country as a potential market for an international business depends solely on the size
of its consumer market.
3. Small-scale entrants are more likely to capture first-mover advantages associated with switching costs.
4. If an international business can offer a product that has been widely available in that market, the value of that
product to consumers is likely to be much greater than if the international business offers a product that has not
been widely available in that market.
5. By considering advantages and disadvantages, trade-offs can often be avoided when selecting an entry mode.
6. The probability of survival decreases if an international business enters a national market after several other
foreign firms have already done so.
7. In international business, a strategic commitment has a short-term impact and is easily reversible.
8. In international business, an early entrant to a foreign market may be at a disadvantage relative to a later
entrant, if regulations change in a way that diminishes the value of an early entrant's investments.
9. Large-scale entry allows an international firm to learn about a foreign market while limiting the firm's
exposure to that market.
10. A risk-averse international firm that enters a foreign market on a small scale will increase its potential
losses.
11. According to Christopher Bartlett and Sumantra Ghoshal, firms from developing countries cannot succeed
in foreign markets in the presence of other established global competitors.
12. Exporting, as a mode of entry into foreign markets, does not help a firm achieve experience curve and
location economies.
13. A drawback of exporting is that tariff barriers can make it uneconomical as a mode of entry into a foreign
market.
14. An international firm that enters into a turnkey deal has a long-term interest in the foreign country.
15. Licensing, a mode of entry into a foreign market, gives an international firm tight control over
manufacturing, marketing, and strategy that is required for realizing experience curve and location economies.
16. In a typical international licensing deal, a licensor puts up most of the capital necessary to get an overseas
operation going.
17. Under a cross-licensing agreement, a firm can either request a royalty payment or license some valuable
intangible property to a foreign partner.
18. In terms of the various modes of entry into a foreign market, franchising is employed primarily by service
firms, whereas licensing is pursued primarily by manufacturing firms.
19. Franchising, a mode of entry into a foreign market, helps firms exert greater quality control over franchises
in foreign locations.
20. The most typical joint venture is a 50/50 venture, in which there are two parties, each of which holds a 50
percent ownership stake and contributes a team of managers to share operating control.
21. In a joint venture, a firm benefits from a local partner's knowledge of the host country's competitive
conditions, culture, language, political systems, and business systems.
22. In international business, joint ventures with local partners face a significantly higher risk of being subject
to nationalization.
23. In terms of the entry modes into a foreign market, a joint venture does not give an international firm the
tight control over subsidiaries that might be required to realize experience curve or location economies.
24. When a firm's competitive advantage is based on technological competence, a joint venture is the preferred
mode of entry into a foreign market because it reduces the risk of losing control over that competence.
25. The need for preempting competitors is particularly great in the telecommunications market.
26. Establishing a wholly owned subsidiary gives an international firm a 100 percent share in the profits
generated in a foreign market.
27. Shared ownership agreements can lead to conflicts and battles for control between investing firms.
be.
28. If an international firm's core competence is based on proprietary technology, entering a joint venture might
risk losing control of that technology to the joint-venture partner.
29. Licensing increases the risk of losing control over a firm's proprietary technological know-how.
30. An international firm that perceives its technological advantage to be transitory and susceptive to rapid
imitation might want to license its technology to foreign firms.
31. Firms pursuing global standardization or transnational strategies tend to prefer setting up wholly owned
marketing subsidiaries.
32. Acquiring firms often overpay for the assets of the acquired firms.
33. When an international firm makes an acquisition in a foreign market, it acquires valuable intangible as well
as tangible assets.
34. According to David Ravenscraft and Mike Scherer's study, many acquisitions destroy rather than create
value.
35. An advantage of establishing a greenfield venture in a foreign country is that it gives the firm a much
greater ability to build the kind of subsidiary company that it wants.
36. Which of the following is a reason why a relatively poor country may be an attractive target for inward
investment?
37. Which of the following countries presents a favorable benefit-cost-risk trade-off scenario for foreign
expansion?
38. Which of the following factors determines the value that an international business can create in a foreign
market?
39. In international business, a product that is not widely available in a foreign market and satisfies an unmet
need:
40. In which of the following situations can an international business command higher prices for a particular
product in a foreign market?
41. Which of the following is an example of a first-mover advantage?
42. First-mover disadvantages refer to:
43. Which of the following is true of the costs and risks associated with doing business in a foreign country?
44. An early entrant find may find itself at a disadvantage if it:
45. The liability associated with foreign expansion is greater for foreign firms that:
46. The probability of survival for an international business increases if it:
47. Which of the following is a risk of entering developing nations like India and China on a large scale?
48. In international business, an advantage of being a late entrant in a foreign market is the ability to:
49. According to Christopher Bartlett and Sumantra Ghoshal, how can local companies differentiate themselves
from foreign multinationals?
50. Which of the following is a disadvantage of large-scale entry into a foreign market?
51. Which of the following types of entry into a foreign market allows a firm to learn about the foreign market
while limiting the firm's exposure to that market?
