49) When no single company has control over a collaborative arrangement, ________.
A) the operation may lack direction
B) none of the partners is responsible for legal violations
C) differences in corporate culture are likely to grow
D) one partner’s interests are likely to be put ahead of the other partner’s interests
50) When a company’s primary motive for entering a collaborative arrangement is to learn from its
partner, it is likely to ________.
A) leave control to its partner
B) “go it alone” after it has learned what it needs to know
C) have disagreements with the partner over quality issues
D) prefer the arrangement to be a licensing agreement
51) Companies typically use various international operating forms simultaneously for all the following
reasons EXCEPT which one?
A) They may be at different stages of commitment for different products.
B) They may be at different stages of commitment for different countries.
C) They may need to balance foreign revenues among their operating divisions.
D) Differences in countries’ characteristics may necessitate diverse operational forms.
52) Which of the following would most likely trigger internal tensions as a firm’s modes of foreign
operations change?
A) losing or gaining responsibilities
B) reluctance to learn about a culture
C) traveling for business purposes
D) geographic diversity
53) Tom, a manager at an MNE, has been given the task of identifying a pool of companies with which
the firm might form collaborative arrangements. Which of the following activities would be LEAST
useful for Tom?
A) attending technical conferences
B) monitoring industry journals
C) attending trade fairs
D) constructing turnkey facilities
54) Without a proven track record in collaborative arrangements, a company will most likely need to
________.
A) have its home country government approve licensing contracts
B) delegate fewer responsibilities to partners at the company
C) negotiate harder with and make more concessions to a partner
D) depend more on trust as a control mechanism
55) What problem most likely arises when a company wishes to sell techniques/technology that it has
either not yet fully developed or used commercially?
A) A buyer is reluctant to buy what it has not seen, and a seller risks divulging secretive information.
B) Most governments want to see contract details, which companies feel are proprietary.
C) It is difficult to develop a rapport between negotiating parties in this type of situation.
D) Parties can seldom agree on the desired level of quality control.
56) All of the following are important when establishing and managing a collaborative agreement
EXCEPT ________.
A) setting up mutual goals and expectations
B) avoiding interference about how the partner handles its duties in the operation
C) determining whether the agreement is reaching its goals
D) assessing periodically whether a different operational form would be preferable
57) Billions of investment dollars are needed to develop many new products. This trend toward higher
development costs is likely to have which of the following effects on future modes of operations?
A) Collaborative arrangements are likely to decrease because a company making a breakthrough will be
leery of partners’ appropriation of knowledge.
B) Collaborative arrangements are likely to increase because of the huge investments needed for
development.
C) Exporting will become more important relative to other operating modes because of the large scale
production facilities necessary for economic efficiency.
D) Cross-licensing will gain in importance because companies will be forced to specialize more in
different technologies.
58) Large companies that have resources to go it alone may have advantages in product development
over small companies that do not because ________.
A) evidence suggests that collaborative arrangements slow the speed of innovation
B) large companies can dictate their terms of operations abroad
C) small companies are disadvantaged in legal settlements
D) large companies need not adapt to national differences
59) All of the following are differences that need to be overcome for international collaborative
arrangements to be effective EXCEPT ________.
A) national disparities in governmental policies
B) company variances in strategic directions and objectives
C) governmental differences in export restrictions
D) company diversity in management styles and structures
60) Exporting is usually more feasible when transportation costs are high rather than low in relation to
production costs.
61) Appropriability theory describes a firm’s desire to deny rivals access to its competitive resources.
62) Wholly owned operations abroad inhibit a company’s ability to pursue a global strategy.
63) Foreign acquisitions are more advantageous than start-ups when the industry has little excess
capacity than when it has a lot of excess capacity.
64) Governments sometimes prohibit foreign acquisitions because they fear market dominance by
foreign enterprises.
65) Collaborative agreements allow companies to specialize more in those activities that best fit their
competencies.
66) An advantage of collaborative agreements is the ability to spread faster geographically.
67) Collaborative arrangements prevent the possibility of information being passed to potential
competitors.
68) The more a company engages in collaborative agreements, the more it loses control over decisions
and their implementation.
69) An argument for limiting foreign control of key industries is that decisions made abroad can have
adverse effects on the local economy.
70) The dependencia theory holds that the terms for a foreign investor’s operations depend on how much
the investor and the host country need each other’s assets.
71) A licensing agreement is a contract for the granting of rights on tangible property.
72) Patents, copyrights, and trademarks are all examples of property rights that may be licensed to one
company from another.
73) In a licensing arrangement, it is rare for companies to agree to a front-end payment to cover
technology transfer costs.
74) Licenses are often given to companies owned in whole or in part by the licensor.
75) An agreement for the use of a trademark and assistance with business operations is known as a
cross-licensing agreement.
76) When entering foreign countries, many franchisors encounter difficulty in transferring the domestic
success factors of product and service standardization.
77) An international management contract is an agreement between a company and a foreign
government on the number of foreign personnel it can employ.
78) The use of management contracts has been significant in hotel operations.
79) A turnkey operation is a contract for the construction of an operating facility for a fee.
80) Few turnkey projects to date have been in remote areas of the world.
81) An international joint venture is an agreement between two or more companies for the use of a
trademark.
82) The more partners in a joint venture, the more complex the management of the arrangement will be.
83) When a large company and a small company enter a joint venture, the large company is expected to
contribute more to the arrangement.
84) In collaborative arrangements, when one partner cedes control to another partner, it is no longer
responsible for problems.
85) The truly experienced international firm will usually make use of various modes of operation
simultaneously.
86) Internal tension may develop within a company as it changes an international operating mode
because some managers gain responsibility and others lose it.
87) Although a company may have a good track record with collaborative arrangements, this is of little
help when negotiating new collaborative arrangements with different companies.
88) It is important when setting up a collaborative arrangement to agree on mutual goals and
expectations.
89) The sums needed to develop and market many new products are out of reach of most companies
acting alone.
90) In a short essay, discuss how transportation, trade restrictions, domestic capacity, and country-of–
origin affect companies’ decisions about modes of operating internationally.
91) According to the appropriability theory and the internalization theory, why would companies want
to control their foreign operations?
92) There are two ways companies can invest in a foreign country. They can either acquire an interest in
an existing operation or construct new facilities. In a short essay, describe the advantages and
disadvantages of each alternative.
93) What motives do businesses have for entering into collaborative arrangements? What are some of
the problems associated with collaborative arrangements?
94) What is the difference between licensing and cross-licensing? What factors do firms need to
consider before entering into licensing agreements?
95) Explain how franchising agreements differ from licensing agreements.
96) What is a management contract? What are the potential advantages to both parties in the contract?
97) What is a turnkey operation? What features generally make turnkey operations different from other
collaborative arrangements?
98) What is an equity alliance? What motives would a firm have for forming an equity alliance?
99) What are the various types of collaborative arrangement options available to international
businesses? How can firms most effectively manage international collaborative arrangements?