19. In a joint venture, what does the international firm usually not provide?
a.
Capital
c.
Expertise
b.
Infrastructure
d.
A trademark
20. Petrol Complex gas stations in Russia are an example of
a.
a franchise agreement with British Petroleum.
b.
a licensing agreement with British Petroleum.
c.
a joint venture with British Petroleum.
d.
a wholly-owned subsidiary of British Petroleum.
21. Like licensing, joint venture partners can turn into competitors. But in the joint venture situation
a.
the competitor is rarely a threat.
b.
the competitor is not protected by the government.
c.
the international firm may be able to control the supply chain preventing access to
equipment that the competitor needs.
d.
All of the above are true.
22. Why are most governments concerned with consortia?
a.
Consortia tend to exploit workers.
b.
Consortia require countries to give up some of their sovereignty.
c.
Consortia create unique taxation problems.
d.
Consortia create a monopoly effect.
23. Which of the following is an assumption behind a wholly-owned subsidiary?
a.
The company can afford the costs involved in setting up a wholly-owned subsidiary.
b.
The company is willing to commit to the market in the long term.
c.
The local government allows foreign companies to set up wholly-owned subsidiaries.
d.
All of the above are assumptions behind a wholly-owned subsidiary.
24. Greenfielding refers to the process that occurs for a company when it
a.
is forced to comply with international environmental laws.
b.
develops its own subsidiary in another country.
c.
selects a new target market in a region.
d.
takes a “poison pill” to prevent a forced nationalization.
25. The most important advantage that a wholly-owned subsidiary can provide is
a.
a relative control of all company operations in the target market.
b.
a decreased risk for the parent company.
c.
local marketing expertise.
d.
increased influence and lobbying power with the local government.
26. Which of the following is an advantage of wholly-owned subsidiaries?
a.
They do not require market expertise.
b.
They do not require a long-term commitment.
c.
They create only minimal risk for the company.
d.
They provide the company with control over operations.
27. Which international marketing strategy carries the greatest level of risk?
a.
Joint ventures
c.
Branch offices
b.
Wholly-owned subsidiaries
d.
Licensing
28. Stihl, A German manufacturer of chainsaws, is selling products in Romania through a
a.
franchise agreement.
c.
branch office.
b.
licensee.
d.
wholly-owned subsidiary.
29. Which statement regarding branch offices is false?
a.
Branch offices, like subsidiaries, offer a high level of control over operations.
b.
Branch offices are part of the international company (i.e., it is not a separate entity).
c.
Branch offices have a higher level of risk than subsidiaries.
d.
Branch offices of service providers typically engage in a full spectrum of activity.
30. Which of the following is not considered to be a strategic alliance?
a.
Distribution alliances
c.
Marketing alliances
b.
Manufacturing alliances
d.
Intra-firm functional alliances
31. Which of the following is an example of a strategic alliance?
a.
Manufacturing alliances
c.
Distribution alliances
b.
Marketing alliances
d.
All of the above
32. Which of the following is considered to more of a short-term strategic alliance?
a.
Franchising
c.
Consortia
b.
Joint Ventures
d.
Manufacturing alliances
33. The success of outsourcing strategic alliances depends on which of the following?
a.
Outsourcing must be done carefully, with clear objectives and expectations
b.
Outsourcing partners must be selected based on expertise and based on their cultural fit
with the firm
c.
The outsourcing plan should provide clear expectations, requirements, and benefits
d.
The success of the alliance depends on all of the above.
34. Which of the following is NOT an example of a manufacturing alliance
a.
Distribution alliance
c.
Engineering alliance
b.
Technological alliance
d.
Research and development alliance
35. Motorola Inc., and Singapore’s Flextronics International’s relationship is best characterized as a
a.
joint venture.
c.
marketing alliance.
b.
manufacturing alliance.
d.
distribution alliance.
36. Opel’s two-year contract to market its automobiles to AOL customers is an example of a
a.
franchise agreement
c.
distribution alliance
b.
marketing alliance
d.
joint venture
37. Which of the following is true about outsourcing?
a.
The strategic use of outside resources to perform activities typically handled by internal
staff
b.
It has been around for a long time
c.
Until now, it was restricted to technology
d.
All of the above are true about outsourcing
38. What type of activities can be outsourced?
a.
Billing
c.
Technology
b.
Customer service
d.
All of the above can be outsourced
39. What region has been identified as the outsourcing hub and back-office of the Western world?
a.
Southeastern Europe
c.
Asia
b.
South America
d.
Africa
40. Which of the following is true about outsourcing?
a.
The strategic use of outside resources to perform activities typically handled by internal
staff
b.
It has been around for a long time
c.
Until now, it was restricted to technology
d.
All of the above are true about outsourcing
COMPLETION
1. Labor costs in the United States are quite high, averaging around _________________________.
2. Moving manufacturing to Mexico would further lower labor costs to less than
_________________________ per hour.
3. In Singapore and Korea, average hourly costs are about _________________________ and
_________________________, respectively; considering the high productivity of these countries’
highly educated workforce, Singapore and Korea may be attractive labor markets for skilled
manufacturing work.
4. The _________________________ mode of entry is the least risky entry mode.
5. _________________________ means that the company sells its products to intermediaries in the
company’s home country who, in turn, sell the product overseas.
6. A company engaging in _________________________ can use middlemen such as export
management companies, trading companies, or agents/brokers to distribute its products overseas.
7. A company can use cooperative exporting, which is also known as “piggybacking” or
“_________________________.”
8. Companies engaging in _________________________ have their own in-house exporting expertise,
usually in the form of an exporting department.
9. France’s Renault granted a license to build ____________________ brand automobiles in Romania in
the 1960’s.
10. ____________________ permits the company access to markets that may be closed, or that may have
high entry barriers.
11. In the event of a national disaster or a government takeover, the licensor licensing without the name
only incurs the loss of ____________________.
12. ____________________ is a principal entry mode for the service industry.
13. _________________________ involve a foreign company joining with a local company, sharing
capital, equity, labor, among others, to set up a new corporate entity.
14. It is typical for the local government of a developing country to limit the joint venture ownership of
international firms to less than ____________________.
15. Because the local government frequently discourages the repatriation of profits, the international firm
is likely to engage in _________________________, a method whereby the parent company of the
international joint venture partner charges the joint venture for equipment and expertise.
16. Joint ventures in Europe are increasingly coming under the scrutiny of the
_________________________, which assesses their impact on competition.
17. Airbus is an international ____________________ involving France, the United Kingdom, Germany,
and Spain.
18. Airbus has subsidiaries in _________________________, ____________________, and
____________________.
19. The company can develop its own subsidiary, referred to as ____________________, which
represents a costly proposition.
20. ______________________________ carry the greatest level of risk and offer the most control for a
company.
21. ______________________________ offer the company control over how to handle revenue and
profits.
22. ______________________________ carry the greatest level of risk of nationalization.
23. _________________________, like subsidiaries, also offer companies a high level of control over
operations and profits in international markets. In terms of risk, however, the company invests much
less in the market that can be lost in a government takeover attempt, compared with a subsidiary.
24. U.S. based Northwest Airlines is in charge of all sales in the United States for the KLM Royal Dutch
Airlines. This is an example of a(n) _________________________.
25. Mitsui and Mitsubishi have set up a(n) _________________________ with Coca Cola in Japan which
allows them to bottle all Coke products in their market.
ESSAY
1. Compare and contrast indirect exporting and direct exporting.
2. Why would a licensor offer a license to a firm while insisting that it not use the brand name of the
licensor?
3. What are the advantages and disadvantages of licensing?
4. Why would a firm choose to enter a market through a joint venture?
5. What are the assumptions behind a wholly-owned subsidiary?