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IB: CH 13

Some evidence suggests that pioneers gain and maintain a competitive advantage in new markets.
True
Research shows that surviving pioneers hold a smaller average market share when their industries reach maturity than firms that were either fast followers or late entrants in the product category.
False
A pioneer will most likely succeed when there are low entry barriers and the firm has sufficient size, resources, and competencies to take advantage of its pioneering position.
False
A follower will most likely succeed when there are few legal, technological, cultural, or financial barriers to inhibit entry, as long as it has sufficient resources or competencies to overwhelm the pioneer’s early advantage.
True
The means of supplying overseas markets—exporting to and production in those markets—depend on nonequity modes of entry.
False
Entering foreign markets may be described by two levels of involvement, nonequity-and equity- based.
True
One benefit of exporting is that it can enable a company to serve markets where the company has no or limited production facilities.
True
Exporting is an expensive option for testing foreign markets and foreign competition.
False
Exporting is a way for firms to improve the efficiency of manufacturing equipment.
True
Exports can help to offset cyclical sales in a firm’s domestic market.
True
Exporting can extend a product’s life cycle by exporting to currently unserved markets where the product will be at the introduction stage of the life cycle.
True
Direct exporting is simpler than indirect exporting because it requires neither special expertise nor large cash outlays.
False
Export merchants are exporters that sell for the manufacturer but do not take ownership of the product.
False
A fundamental drawback of indirect exporting is that companies must pay a commission to all of the companies that handle their exports.
False
Direct exporting is an excellent means of getting a feel for international business without committing a great amount of human or financial resources.
True
A sales company is part of indirect exporting.
False
Sales companies will import in their own name from the parent and will invoice in the currency of the parent company.
False
A sales company is established to market goods or services, not to produce them.
True
The Internet has made direct exporting much easier.
True
Wholesale importers are independent merchants that buy for their own account.
True
Trading companies are privately owned firms that develop international trade and serve as intermediaries between foreign buyers and domestic sellers, and vice versa.
False
Turnkey projects export technology, management expertise, and capital equipment.
True
Producing a factory ready to operate is similar to producing a turnkey project.
True
Licensing refers to a contractual agreement in which the licensor grants access to its patents, trade secrets, or technology for a fee paid by the licensee.
True
The licensee generally pays a fixed sum when signing a license agreement and then royalties of 5 to 7 percent of sales over the life of the contract.
False
Some firms do not grant licenses to other firms because of the fear of having a strong competitor upon the expiration of the license.
True
The potential of licensing for generating income has been more limited in recent years because courts have not upheld patent infringement claims as much as they used to.
False
Piracy is an option for helping a firm to enter new markets.
True
Licensing is a form of franchising.
False
A management contract is used only by manufacturing companies to earn income by providing expertise forafee.
False
One way in which contract manufacturing is used is to subcontract assembly work or the production of parts to subsidiaries overseas.
False
One way in which contract manufacturing is used is for a company to contract with a local manufacturer to produce products for the company, according to the company’s specifications.
True
If a firm decides to become involved in overseas manufacturing, it has two options: (1) wholly owned subsidiary and (2) joint venture.
FAlse
Historically, firms engaged in FDI have generally preferred wholly owned subsidiaries.
True
Most of the foreign direct investment in the United States has been spent establishing new companies.
False
In the year 2008, twice as much FDI invested in the United States was spent in acquiring established businesses than in setting up new ones.
False
Lack of control is one of the strongest arguments against a joint venture.
true
In a joint venture, a management contract is often used as a control mechanism by firms, even if they hold only a minority position in the venture.
true
It is not possible for foreign investors to control a joint venture if the host country’s law prevents foreign investors from having more than 49 percent ownership.
false
When the government of a host country requires companies to have some local participation, foreign firms must engage in strategic alliances with local owners.
false
Management contracts can enable the global partner to control many aspects of a joint venture even when holding only a minority position.
true
In a 12-country study conducted by Ernst & Young, 65 percent of U.S. companies were found to be engaged in a strategic alliance.
false
Strategic alliances take many forms, including licensing, mergers, joint ventures, and joint research and development partnerships.
true
One type of strategic alliance between competitors is an R&D partnership.
true
Pooling alliances are driven by the logic of contributing dissimilar resources, while trading alliances are driven by similarity and integration.
false
Trading and pooling alliances are typically different in their goals, optimal structures, and managerial challenges
true
Generally mergers and acquisitions are considered alliances.
false
The existence of two or more partners, which typically have differences in strategies, operating practices, and organizational cultures, is a factor that tends to promote successful management and performance of strategic alliances.
false
Alliances can allow a partner to acquire a firm’s technological or other competencies, thereby raising important competitive concerns.
true
A pioneering firm stands the best chance for long-term success in market-share leadership and profitability when:
all of the above.
A pioneering firm stands the best chance for long-term success in market-share leadership and profitability when:
the firm has sufficient size, resources, and competencies.
In many cases, a firm entering international markets becomes a follower because:
quicker competition beats it.
A follower firm stands the best chance for success in market-share leadership when:
there is high potential for imitation.
Most firms begin their involvement in overseas business by:
exporting.
Which of the following are reasons that many firms engage in exporting?
Exports can offset cyclical sales in the firm’s domestic market.
Which of the following are reasons that many firms engage in exporting?
TwoofA,B,andC.
Which of the following are reasons that many firms engage in exporting?
TwoofA,B,andC.
Companies wishing to export must first choose between:
exporting directly and exporting indirectly.
__________ permits a firm to set up an export program with a minimum of cash outlay and little special expertise.
Indirect exporting
A company can engage in indirect exporting by using which of the following companies in its own country?
Export commission agents
A company can engage in indirect exporting by using which of the following companies in its own country?
TwoofA,B,andC
The disadvantages of indirect exporting include:
all of the above.
The disadvantages of indirect exporting include:
two of the above.
A business established for the purpose of marketing goods and services, not producing them, is:
a sales company.
A turnkey project includes all of the following except:
none of the above.
Exporters of a turnkey project may include which of the following?
TwoofA,B,andC
A contractual arrangement in which one firm grants access to its patents, trade secrets, or technology to another for a fee is:
none of the above.
By means of a licensing agreement:
one firm grants to another the right to use all of its expertise.
When a licensing agreement is made:
the licensee receives expertise from another company.
According to the text, licensing agreements usually stipulate that a royalty of __________ be paid to the licensor.
2 to 5 percent of sales
Licensing provides income for:
all of the above.
Which of the following was stated in the text as being a concern with licensing?
It can create a competitor.
Franchising is a form of:
licensing.
The principal ingredient(s) that a franchiser exports is:
allofA,B,andC.
McDonald’s, Kentucky Fried Chicken, and Subway are examples of:
franchising.
An arrangement by which one firm provides management in all or specific areas to another firm is:
a management contract.
According to the text, management contracts usually stipulate that a fee of __________ be paid to the firm providing the management expertise.
2 to 5 percent of sales
According to the text, a management contract is useful for:
allofA,B,andD.
Hilton and Delta provide assistance to other international companies. That is an example of:
a management contract.
An arrangement in which one firm contracts with another firm to produce products to its specifications but assumes responsibility for marketing is:
contract manufacturing.
International firms employ contract manufacturing:
A and B.
Foreign direct investment without investment” is a term sometimes applied to:
contract manufacturing.
Foreign direct investment (FDI) includes all of the following except:
management contract.
In 2008, foreign firms investing in the United States spent about ____________ on establishing new firms as they did on acquiring going firms.
one-thirteenth as much
Historically, firms making a foreign direct investment have generally preferred:
wholly owned subsidiaries.
According to the text, a company that wishes to own a foreign subsidiary outright may:
twoofA,B,andC.
A joint venture may be:
allofA,B,andC.
Benefits of joint ventures may include:
two of the above.
Partnerships between or among competitors, customers, or suppliers that may take one or more of various forms, both equity and nonequity, are known as:
strategic alliances.
Although there are many forms of strategic alliances or competitive alliances, the alliances are often between:
all of the above.
Strategic alliances are:
partnerships between competitors, customers, or suppliers that may take various forms.
According to a 12-country study conducted by Ernst & Young, _____ percent of U.S. companies are engaged in some form of strategic alliance.
75
________ alliances are driven by similarity and integration.
Pooling
Which of the following is true about alliances?
TwoofA,B,andC

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