Quick Study Questions
Quick Study 1
1. Q: What are the four steps, in order, involved in creating an export strategy?
A: Companies should not simply respond to international requests for their products, but
develop a detailed export strategy. First, they should identify a potential market. In order to
identify clearly whether demand exists in a particular target market, market research should be
meetings are designed to estimate the potential success of any agreement if interest is shown on
2. Q: When a company sells its products to intermediaries who then resell to buyers in a target
market it is call what?
A: Indirect exporting occurs when a company sells its products to intermediaries who then
intermediaries including agents, export management companies, and export trading companies.
3. Q: What is the name of a specific type of countertrade?
A: Countertrade is the practice of selling goods or services that are paid for, in whole or part,
with other goods or services. Countertrade can provide access to markets that are otherwise off-
equipment.
Quick Study 2
1. Q: Export/import financing that presents the most risk for exporters is called what?
A: Open account is export and import financing in which an exporter ships merchandise and
later bills the importer for its value. Open account reduces the risk of non-shipment that the
2. Q: Export/import financing in which a bank acts as an intermediary without financial risk is
called what?
A: Documentary collection is export and import financing in which a bank acts as an
business relationship between two parties.
3. Q: Export/import financing in which the importer’s bank issues a document stating that the
exporter will get paid when it fulfills the terms of the document is called what?
A: A letter of credit is export/import financing in which the importer’s bank issues a document
Quick Study 3
1. Q: What is the name of a specific type of contractual entry mode?
A: A company can use a variety of contractual modes, such as, licensing, franchising,
markets beyond its national borders.
2. Q: What is it called when companies use agreements to exchange intangible property?
A: Licensing is a contractual entry mode in which a company owning intangible property (the
time.
3. Q: A disadvantage of both management contracts and turnkey projects is what?
A: A disadvantage of both management contracts and turnkey projects is that a future
competitor may be created.
Quick Study 4
1. Q: What is the name of a specific type of investment entry mode?
A: There are three common forms of investment entry modes: wholly owned subsidiary, joint
2. Q: A wholly owned subsidiary is a facility owned and controlled by what?
A: A wholly owned subsidiary is a facility entirely owned and controlled by a single parent
company.
3. Q: What is the name of a specific type of joint venture?
A: A joint venture is a separate company that is created and jointly owned by two or more
independent entities to achieve a common business objective. In the forward integration joint
4. Q: A strategic alliance is similar to a joint venture except for that it doesn’t involve what?
A: A strategic alliance is similar to a joint venture except for that it doesn’t involve the
formation of a separate firm.
Quick Study 5
1. Q: When selecting a partner for cooperation it is important to remember what?
A: Every partner must be firmly committed to the goals of the venture or agreement. Trust is
also important, so that often firms naturally prefer to partner with firms that they have had a
2. Q: What factors may discourage an investment entry mode?
A: The factors to be considered are the cultural environment, the political and legal
experience.
3. Q: What factors may encourage an investment entry mode?
A: Just as the factors listed to discourage investment, in turn they could also serve to encourage
investment entry modes.
Ethical Challenge
You are chief operating officer of a U.S.-based telecommunications firm considering a joint venture
inside China with a Chinese firm. The consultant you hired to help you through the negotiations has
just informed you that ethical concerns can arise when international companies consider a cooperative
form of market entry (such as a joint venture) with a local partner in any market. This is especially true
when each partner contributes personnel to the venture because cultural perspectives cause people to
see ethical dilemmas differently. This is of special concern to you because the venture had planned to
employ people from both China and the United States. In light of this recent information, you are
reassessing your entry mode options.
13-5 Do you think your two companies can establish a set of ethical principles before commencing
operations that will guide a potential joint venture?
A: Many firms are confronted with a dilemma similar to this one when they sign joint venture
agreements with firms from developing countries that have cultures with a different set of
13-6 What ethical issues might arise in conjunction with other entry modes discussed in this
chapter?
A: There are many differences between the U.S. and Chinese cultures that can add to the
complexity of a joint venture agreement. Perceptions of trustworthiness, honesty, candor, and
13-7 Is there a company that succeeded under circumstances that are similar to those that your firm
faces?
A: There are many differences between the U.S. and Chinese cultures that can add to the
complexity of a joint venture agreement. The differences in saving face, low versus high
context culture, and individualism between U.S. and Chinese workers should be considered
Teaming Up
Negotiation Project. This project is designed to introduce you to the complexity of negotiations and to
help develop your negotiating skills.
Background: A Western European automobile manufacturer is considering entering markets in
Southeast Asia. The company wants to construct an assembly plant outside Ho Chi Min City, Vietnam,
Financial capital is flowing into Vietnam at a fair pace. The currency is strong, and inflation
remains low. As with other nations in the region, investors are generally wary of the nation’s stability.
Activity: Break into an equal number of negotiating teams of three or four persons. Half the teams are
to represent the company and the other half the government. As a group, meet for 15 minutes to
develop the team’s opening position and negotiating strategy. Meet with a team from the other side
and undertake 20 minutes of negotiations. After the negotiating session, spend 15 minutes comparing
the progress of your negotiations with that of the other pairs of teams.
A: This exercise can teach students to evaluate investment projects not only from the standpoint of
be able to judge their abilities as international negotiators.
Practicing International Management Case
Telecom Ventures Unite the World
13-10 Q: What strengths did AT&T bring to its joint venture with Unisource?
A: AT&T offered a globally recognized brand name and a presence in practically every major
international relationships as well as the firm’s association with WorldPartners.
13-11 Q: Can you think of any potential complications that could arise in the AT&T–Unisource joint
venture?
A: Perhaps the greatest potential danger is the potential for complications caused by the fact
that there are so many partners involved in the venture. Not only can there be conflicts over the
13-12 Q: Assess the formation of Global One, Unisource, and other partnerships in this case. Which
strategic factors might have influenced the entry mode choices that these firms made?
A: Students should be sure to cover at least the main points listed near the end of the chapter.
scenario should be assessed and evaluated.