1
Licensing agreements can involve
(A)
patents
(B)
trademarks
(C)
trade secrets
(D)
All of the above
2
Market entry through acquisitions is an attractive option when
(A)
(B)
(C)
(D)
3
South African Breweries became a major world brewery as a result of
(A)
distribution-based alliances
(B)
exporting
(C)
technology-based alliances
(D)
acquisitions
4
Many Chinese firms acquired companies in foreign markets because
(A)
acquisitions were relatively inexpensive
(B)
governments encouraged acquisitions
(C)
they were late movers into those markets
(D)
All of the above
5
Local assembly or compounding is least appropriate for
(A)
clothing
(B)
bread
(C)
automobiles
(D)
pharmaceuticals
6
French Bakery Breads is considering entering the Canadian bread market. Which would
not be a good entry option?
(A)
Establishing manufacturing facilities in Canada
(B)
Establishing compounding facilities in Canada
(C)
Establishing a wholly-owned subsidiary in Canada
(D)
Establishing a joint venture in Canada
7
Texas Taffy is considering entering the U.K. candy market. Which of the following is not
an appropriate entry mode for the company?
(A)
Licensing the product to a U.K. candy manufacturer
(B)
Manufacturing subsidiary
(C)
Exporting utilizing a U.K.-based contract manufacturer
(D)
Marketing subsidiary
8
ABC Pharmaceuticals is considering entering a new national market in West Africa and is
thinking of establishing a marketing subsidiary. Which of the following facts should be of
concern to the firm?
(A)
Local laws require the use of a local agent
(B)
Local contract manufacturers are difficult to find
(C)
Local licensees are difficult to find
(D)
Tariffs on pharmaceuticals are low
9
Action Toys is thinking of employing a contract manufacturer in the Taiwanese market.
Which of the following facts is not a reason to use a contract manufacturer there?
(A)
Toy technology is relatively simple.
(B)
There are many toy manufacturers in Taiwan.
(C)
Taiwanese factories are operating at full capacity.
(D)
Taiwan is a major exporter of toys.
10
ABC Pharmaceuticals is considering employing a contract manufacturer n Brazil. Which of
the following conditions would support such an action?
(A)
There are many sophisticated pharmaceutical manufacturers in Brazil.
(B)
Patent protection has been lax in Brazil.
(C)
Brazilian manufacturers are producing at capacity.
(D)
All of the above
11
Action Toys is considering entering a new market in Central America and is thinking of
establishing a marketing subsidiary. Which of the following facts should be of concern to
the firm?
(A)
Local contract manufacturers are difficult to find
(B)
Local licensees are difficult to find
(C)
Local laws require the use of a local agent
(D)
Tariffs on toys are low
12
Bakery French Breads is considering entering a new national market in Central America
and is thinking of establishing a marketing subsidiary. Which of the following facts should
be of concern to the firm?
(A)
Local contract manufacturers are difficult to find
(B)
Local licensees are difficult to find
(C)
Tariffs are high
(D)
None of the above
13
Which is not a typical type of strategic alliance?
(A)
Production-based alliance
(B)
Technology-based alliance
(C)
Consortium-based alliance
(D)
Distribution-based alliance
14
An alliance involving two or more global firms in which each partner brings a particular
skill or resource is called a
(A)
marketing alliance
(B)
licensing agreement
(C)
strategic alliance
(D)
contract manufacturing
15
A licensing agreement typically
(A)
decreases exposure to political risk for the licensor
(B)
decreases exposure to political risk for the licensee
(C)
Both a and b
(D)
None of the above
16
A disadvantage of a licensing agreement is the
(A)
uncertainty of production quality
(B)
creation of potential competitors
(C)
dependence on a local company to generate revenue
(D)
All of the above
17
Which country is home to the greatest number of franchisors?
(A)
Brazil
(B)
Mexico
(C)
United States
(D)
U.K.
18
Major U.S. fast-food chains expand nationally and internationally through
(A)
licensing consortiums
(B)
franchising
(C)
indirect exporting
(D)
direct exporting
19
Master franchisees have traditionally been
(A)
U.S.-based multinational firms
(B)
sophisticated local partners of established multinational franchise chains
(C)
franchises specializing in industrial products
(D)
European-based multinational firms
20
Contract manufacturing is preferred in countries
(A)
with lower market potential and high tariffs
(B)
with high market potential
(C)
where there is a need to defend market position
(D)
with low market potential and low tariffs
21
Franchisors from _________are the most common foreign franchisors in Morocco.
(A)
France
(B)
Lebanon
(C)
Spain
(D)
United States
22
Overseas assembly has been common in which industry?
(A)
Steel
(B)
Automobiles
(C)
Petroleum
(D)
Nail polish
23
Which involves the greatest level of manufacturing commitment by a multinational firm to
a market?
(A)
Assembly
(B)
Compounding
(C)
Full-scale integrated production
(D)
Contract manufacturing
24
Most franchising operations in Kazakhstan are supervised by master franchisees operating
out of _________and _________.
(A)
China and Russia
(B)
Turkey and Russia
(C)
Russia and the United States
(D)
Europe and the United States
25
Which product is too costly to transport long distances and is therefore a poor choice for
export?
(A)
Clothing
(B)
Coffee
(C)
Shoes
(D)
Fresh orange juice
26
Tom Miller is deciding which mode of entry to propose to a European car manufacturer
thinking of entering the relatively small East African market of Kenya. Which of the
following would be least appropriate for such a market?
(A)
Exporting to Kenya utilizing a Kenyan distributor
(B)
Exporting to Kenya utilizing a marketing subsidiary
(C)
Assembling cars in Kenya for sale there
(D)
Establishing an integrated production facility for the Kenyan market
27
Lisa Fritz is deciding which mode of entry to propose to a Japanese pharmaceutical
manufacturer thinking of entering the relatively small Peruvian market. Which of the
following would be least appropriate for such a market?
(A)
Establishing a compounding facility
(B)
Establishing an integrated production facility
(C)
Exporting to Peru utilizing a marketing subsidiary
(D)
Exporting to Peru utilizing a Peruvian distributor
28
Samer Ali owns a carpet manufacturing company in Egypt. He is deciding which mode of
entry to use for entering the relatively small market of Chile. Which of the following would
be least appropriate for such a market?
(A)
Exporting using local Chilean agents
(B)
Exporting using Chilean distributors
(C)
Indirect exporting
(D)
Establishing a production facility in Chile
29
Parish Products produces and sells Cajun spice mixes in the United States. The firm is
considering expanding to Mexico. This will be its first foreign market. At this point Parish
Products should consider
(A)
joining a Mexican export consortium
(B)
replacing its Mexican agent
(C)
employing an export management company
(D)
finding a Mexican joint venture partner
30
Canon Car Mirrors is considering using a licensee for the Thai market. Which of the
following facts is not a good reason for Cannon to license in Thailand?
(A)
Canon does not want to commit any time or resources to the Thai market
(B)
Thailand will never be a major market for Canon
(C)
Canon does not have much money to invest in the Thai market
(D)
Thailand is more politically risky than Canon’s other markets
31
Universal University Courses is considering using a licensee for the Saudi Arabian market.
Which of the following facts is not a good reason for UUC to license in Saudi Arabia?
(A)
UUC does not want to commit any time or resources to the Saudi market
(B)
Saudi Arabia will never be a major market for UUC
(C)
UUC does not have much money to invest in the Saudi market
(D)
Saudi Arabia is more politically risky than UUC’s other markets
32
A Japanese pharmaceutical company is considering using a licensee for the Venezuelan
market. Which of the following facts is not a good reason for the firm to license in
Venezuela?
(A)
Venezuela is more politically risky than the firm’s other markets
(B)
The firm does not want to commit any time or resources to the Venezuelan market
(C)
Venezuela will never be a major market for the firm
(D)
The firm does not have much money to invest in Venezuela
33
Bakery French Restaurants (BFR) is interested in franchising in Mexico. What advice
would you give BFR?
(A)
Franchising is outlawed in Mexico
(B)
Franchising is culturally unacceptable to Mexicans
(C)
Master franchisees often make Latin American markets unprofitable
(D)
Franchising will require BFR to expend time and effort for the Mexican market
34
When a company exports to foreign markets directly or through an intermediary located
in the foreign market, the approach is termed as ^___^.
35
When a company enters foreign markets by assigning the right to a copyright or patent
and/or a trademark to another company for a fee or royalty, the strategy is known as
^___^.
36
Licensees pay licensers ^___^, which are usually determined as a percentage of sales.
37
Under a(n) ^___^ agreement for local production, a company arranges to have its
products manufactured by an independent local company on a contractual basis.
38
Market entry by inviting an outside partner, typically a local firm or individual located in
the host market, to share stock ownership in the new unit is known as a(n) ^___^.
39
A ^___^ firm is established by a local joint venture partner to illegally compete with the
joint venture.
40
SCS Graphics produces and sells stylish computer covers in the United States. The firm is
considering expanding to the United Kingdom. This will be its first foreign market. At this
point SCS Graphics should consider
(A)
replacing its U.K. agent
(B)
employing an export management company
(C)
finding a U.K. joint venture partner
(D)
joining a U.K. export consortium
41
Texas Tents produces and sells tents and camping gear in the United States. The firm is
considering expanding to Germany. This will be its first foreign market. At this point Texas
Tents should consider
(A)
finding a German joint venture partner
(B)
joining a German export consortium
(C)
replacing its German agent
(D)
employing an export management company
42
Western Electronics has decided to open a marketing subsidiary to sell cash registers in a
small Central American country. Now the company will have to
(A)
find a local partner
(B)
choose a contract manufacturer
(C)
decide how to price, promote, and distribute its cash registers in the local market
(D)
All of the above
43
Tin City Bicycles has decided to open a marketing subsidiary in Italy. Now the company
will have to
(A)
build a factory in Italy
(B)
choose a contract manufacturer
(C)
decide how to price, promote, and distribute its bicycles in Italy
(D)
All of the above
44
Latin Shoes has decided to open a marketing subsidiary in Mexico. Now the company will
have to
(A)
build a factory in Mexico
(B)
decide how to price, promote, and distribute its shoes in Mexico
(C)
choose a licensee
(D)
register with an export consortium
45
Tanner Tractors is considering utilizing either a licensee or a contract manufacturer for its
tractors in a small West African country. Which of the following would indicate that a
contract manufacturer would be the better option?
(A)
Tanner wants to protect itself from political risk
(B)
Tanner wants to control the marketing of its product in the country
(C)
Tanner wants its products to avoid the country’s high tariffs
(D)
Tanner wants to take advantage of a local partner’s knowledge of the local market
46
Tanner Tractors is considering licensing its new line of tractors to its joint venture in
India. Which of the following facts would make this unfeasible?
(A)
Tariffs on tractors are high in India
(B)
Tariffs on tractors are low in India
(C)
You cannot license products to your own joint venture
(D)
None of the above
47
Tarox Automobiles is considering a joint venture to build an automobile assembly plant in
Morocco. Which of the following facts would argue against such a decision?
(A)
Tariffs on automobiles are high in Morocco
(B)
Morocco has quotas on automobile imports
(C)
Tarox’s potential partner insists on a “prenuptial agreement” in case disagreements arise
between partners
(D)
None of the above
48
LeBlanc Enterprises produces high-end purses and scarves for women. It is currently
exporting to Brazil though several Brazilian distributors. The company now wants to take
greater control over the marketing of its products in Brazil. LeBlanc Enterprises should
(A)
join an export consortium
(B)
establish a marketing subsidiary
(C)
employ an export management company
(D)
replace its distributors with local agents
49
Texas Taffy produces high quality candy. It is currently exporting to Mexico though
several Mexican distributors. The company now wants to take greater control over the
marketing of its products in Mexico. Texas Taffy should
(A)
replace its distributors with local agents
(B)
employ an export management company
(C)
join an export consortium
(D)
establish a marketing subsidiary
50
Turkish Textoys produces unique stuffed dolls. It is currently exporting to the United
States though several U.S. distributors. The company now wants to take greater control
over the marketing of its products in the United States. It should
(A)
employ an export management company
(B)
replace its distributors with local agents
(C)
establish a marketing subsidiary
(D)
join an export consortium
51
Ballentine Gourmet Breads wants to enter the Argentine bread market but does not want
to become involved itself in producing bread in Argentina. However, Ballentine does want
to keep control over the marketing of its bread in Argentina. Ballentine should
(A)
license its bread in Argentina
(B)
seek a contract manufacturer in Argentina
(C)
employ an export management company for Argentina
(D)
establish a joint venture in Argentina
52
Taiwan Mirrors wants to enter the Vietnamese car mirror market but does not want to
become involved itself in producing mirrors in Vietnam. However, the company does want
to keep control over the marketing of its mirrors in Vietnam. Taiwan Mirrors should
(A)
license its mirrors in Vietnam
(B)
employ an export management company for Vietnam
(C)
establish a joint venture in Vietnam
(D)
seek a contract manufacturer in Vietnam
53
The alliance between Toshiba Electronics and GE for reasons of gaining easier access to
markets, exploitation of complementary technology, and a need to reduce the time taken
to bring an innovation to market is an example of a(n) ^___^ strategic alliance.
54
Reaching markets through an intermediary located in the exporter’s home country is
called direct exporting.
(A)
True
(B)
False
55
Licensing agreements are standard across all industries and have to follow WTO
regulations.
(A)
True
(B)
False
56
Using licensing as a method of market entry, an MNC can gain market presence without an
equity investment.
(A)
True
(B)
False
57
Licensing is preferred in markets where the market potential is too small to support a new
manufacturing and marketing operation.
(A)
True
(B)
False
58
U.S. multinational corporations sometimes choose licensing as a means of market entry
because the U.S. government encourages licensing.
(A)
True
(B)
False
59
Licensing can be a means of entering a foreign market quickly.
(A)
True
(B)
False
60
Licensing fees in general are substantially lower than the profits that can be made
through exporting or local manufacturing.
(A)
True
(B)
False
61
Legal disputes between licensers and foreign licensees are commonly settled at the
International Court at Hague.
(A)
True
(B)
False
62
U.S. fast-food chains including McDonald’s and KFC expand globally through franchising.
(A)
True
(B)
False
63
The highest growth rates for franchising is in the United States.
(A)
True
(B)
False
64
The United States is home to the greatest number of franchisors.
(A)
True
(B)
False
65
Brazil is home to the greatest number of franchisors.
(A)
True
(B)
False
66
An advantage of licensing to the licensee is that the licensee typically makes no capital
investments.
(A)
True
(B)
False
67
A licensee may one day become a competitor of the licenser.
(A)
True
(B)
False
68
In indirect exporting, a major disadvantage of using a domestic intermediary is its lack of
knowledge of foreign market conditions.
(A)
True
(B)
False
69
An export management company is one that handles all aspects of export operations
under a contractual agreement.
(A)
True
(B)
False
70
A direct exporting operation requires a larger degree of expertise, management time, and
financial resources compared to indirect exporting.
(A)
True
(B)
False
71
A firm must choose between exporting to a foreign market or opening a marketing
subsidiary there.
(A)
True
(B)
False
72
Operating a warehousing operation would be a typical task for a marketing subsidiary.
(A)
True
(B)
False
73
Independent distributors are preferred over marketing subsidiaries because they provide
better control of after-sale service.
(A)
True
(B)
False
74
Marketing subsidiaries are outlawed in most developed countries.
(A)
True
(B)
False
75
Marketing subsidiaries are required in most developed countries.
(A)
True
(B)
False
76
Marketing subsidiaries are required in most developing countries.
(A)
True
(B)
False
77
Brazil outlaws export consortia.
(A)
True
(B)
False
78
Governments often use anti-trust laws to break up export consortiums.
(A)
True
(B)
False
79
In Mexico franchising accounts for less than one percent of GDP.
(A)
True
(B)
False
80
Spanish franchisors dominate among foreign franchisors in Mexico.
(A)
True
(B)
False
81
U.S.-based franchisors dominate among foreign franchisors in Mexico.
(A)
True
(B)
False
82
Acquisition is an attractive strategy when a market is already dominated by established
brands and saturated with competitors.
(A)
True
(B)
False
83
Market entry through acquisitions is an attractive option when a market is saturated with
competitors.
(A)
True
(B)
False
84
Acquisitions are always successful because they are fair deals and will improve the
profitability of the parent company.
(A)
True
(B)
False
85
In the case of indirect exporting,
(A)
markets are reached through intermediaries in the foreign market
(B)
markets are reached through intermediaries in the exporters’ home market
(C)
licensing agreements are arranged with other companies
(D)
marketing operations are set up overseas
86
Which is an advantage of utilizing an export agent?
(A)
An agent handles export documentation and shipping tasks
(B)
An agent buys your products and resells them overseas
(C)
A typical agent has good market contacts in most countries in the world
(D)
An agent is necessary to enter markets
87
Independent distributors overseas earn profits
(A)
by earning a margin on the selling price
(B)
by price fixing
(C)
through bribes
(D)
None of the above
88
Marketing subsidiaries are preferred over independent distributors because
(A)
of lower fixed cost to the company
(B)
of government regulations
(C)
of higher tariffs on imports
(D)
they provide better control of after-sale service
89
Which is an advantage of a marketing subsidiary over an independent distributor?
(A)
A firm has more control over after-sale service
(B)
There are no fixed costs involved
(C)
There are no host government restrictions on establishing marketing subsidiaries
(D)
None of the above
90
A benefit to the firm of establishing a marketing subsidiary in a foreign market is that
(A)
it is always cheaper than using independent local agents
(B)
they are required in most developing countries
(C)
Both a and b
(D)
None of the above
91
Companies unite to share logistics and promotion costs of entering foreign markets by
creating
(A)
import consortiums
(B)
strategic development centers
(C)
export consortiums
(D)
licensing agreements
92
A cultural need to see and feel products stymies
(A)
export consortiums
(B)
exporting via the Internet
(C)
franchising in developing countries
(D)
licensing in developing countries
93
A major problem with an international joint venture is that an MNC can only be a minority
partner.
(A)
True
(B)
False
94
Joint ventures have declined as a percentage of U.S. foreign direct investment.
(A)
True
(B)
False
95
U.S.-based franchisors dominate among foreign franchisors in Morocco.
(A)
True
(B)
False
96
French franchisors dominate among foreign franchisors in Morocco.
(A)
True
(B)
False
97
Contract manufacturing is chosen for countries with a high market potential combined
with low tariff protection.
(A)
True
(B)
False
98
Most franchising operations in Kazakhstan are supervised by master franchisees.
(A)
True
(B)
False
99
Most franchises in Kazakhstan are supervised by master franchisees operating out of
China or Russia.
(A)
True
(B)
False
100
Most franchises in Kazakhstan are supervised by master franchisees operating out of
Turkey or Russia.
(A)
True
(B)
False
101
Owning 100 percent of a foreign subsidiary assures management control over that
subsidiary.
(A)
True
(B)
False
102
Parallel firms compete illegally.
(A)
True
(B)
False
103
Establishing parallel firms increases the chances of joint venture success.
(A)
True
(B)
False
104
MNCs sometimes establish production abroad to show commitment to a host-country
market.
(A)
True
(B)
False
105
Wholly owned subsidiaries are operations in a host country that are fully owned by a
foreign parent firm.
(A)
True
(B)
False
106
A cultural need in ___________and ___________ to see and feel products stymies
exporting via the Internet.
(A)
Egypt , Mexico
(B)
France, Germany
(C)
France, Italy
(D)
United States, Canada