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| 1.
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The time, effort, and money spent to learn the rules of the game in a foreign business system are a form of pioneering cost. |
| | A) | True |
| | B) | False |
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| 2.
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Firms using exporting as a means of serving a foreign market avoid the costs of setting up manufacturing operations in the host country, and may be in a position to achieve experience curve and location economies. |
| | A) | True |
| | B) | False |
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| 3.
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Turnkey operations are popular because they completely eliminate the risk of creating a competitor. |
| | A) | True |
| | B) | False |
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| 4.
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A joint venture is generally considered to be the most capital-intensive form of market entry. |
| | A) | True |
| | B) | False |
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| 5.
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A key advantage of a Greenfield investment is that it gives the firm the ability to build the type of operation that it wants. |
| | A) | True |
| | B) | False |
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| 6.
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A company that enters a foreign market before other foreign firms will be able to capitalize on |
| | A) | economies of scale |
| | B) | pioneering costs |
| | C) | first mover advantages |
| | D) | early entrant advantages |
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| 7.
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If a firm wants to avoid the costs of establishing manufacturing operations in the host country, the firm should enter the market through |
| | A) | a wholly owned subsidiary |
| | B) | a joint venture |
| | C) | a turnkey project |
| | D) | exporting |
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| 8.
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By establishing a ______ in a foreign market, a firm can control local marketing, sales, and service while simultaneously capitalizing on location advantages. |
| | A) | a turnkey project |
| | B) | a joint venture with a local enterprise |
| | C) | licensing arrangement |
| | D) | a wholly owned subsidiary |
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| 9.
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Turnkey projects are common in all of the following industries except |
| | A) | pharmaceuticals |
| | B) | petroleum refining |
| | C) | chemicals |
| | D) | computer |
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| 10.
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Firms wishing to avoid the risk of sharing proprietary information should avoid |
| | A) | wholly owned subsidiaries |
| | B) | exporting |
| | C) | joint ventures |
| | D) | turnkey operations |
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| 11.
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_____ reduces the risk associated with licensing technological know-how. |
| | A) | licensing |
| | B) | cross-licensing |
| | C) | franchising |
| | D) | turnkey projects |
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| 12.
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An arrangement whereby one firm sells a trademark to another company and insists that the buying company agree to strict rules as to how to do business is a ______ arrangement. |
| | A) | franchising |
| | B) | a joint venture |
| | C) | a strategic alliance |
| | D) | a turnkey operation |
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| 13.
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If a company wants to share the development costs and/or risks of opening a foreign market, the firms should choose |
| | A) | a joint venture |
| | B) | a turnkey operation |
| | C) | exporting |
| | D) | licensing |
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| 14.
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In a ______ the firm owns 100 percent of the stock. |
| | A) | turnkey arrangement |
| | B) | strategic alliance |
| | C) | joint venture |
| | D) | wholly owned subsidiary |
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| 15.
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When a firm sets up a new operation in a foreign market, the new operation is referred to as |
| | A) | an acquisition |
| | B) | a turnkey operation |
| | C) | a Greenfield investment |
| | D) | a portfolio investment |
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| 16.
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If a company's competitive advantage is based on technological competence, ________ will be the preferred means of entering a foreign market. |
| | A) | exporting |
| | B) | a joint venture |
| | C) | a licensing arrangement |
| | D) | a wholly owned subsidiary |
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| 17.
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If a firm wants to quickly establish a sizeable presence in a foreign market, the firm should consider |
| | A) | exporting |
| | B) | a joint venture |
| | C) | a Greenfield investment |
| | D) | an acquisition |
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| 18.
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Acquisitions fail for all of the following reasons except |
| | A) | the acquiring firm often overpays for the assets of the acquired firm |
| | B) | there is a clash of cultures between the acquiring and the acquired firm |
| | C) | anticipated synergies prove to be more significant than anticipated |
| | D) | there is inadequate pre-acquisition screening |
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| 19.
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The advantage of a Greenfield investment over an acquisition is |
| | A) | the speed at which the Greenfield operation can be put into place |
| | B) | it gives the company the chance to build the subsidiary the way it wants |
| | C) | there are usually more unpleasant surprises than with acquisitions |
| | D) | they minimize the likelihood that another firm will preempt the market |
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| 20.
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A good strategic alliance partner should have all of the following characteristics except |
| | A) | shared vision |
| | B) | the capabilities that the firm lacks |
| | C) | behavior that is not opportunistic |
| | D) | being a relative stranger to the firm |
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| 21.
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The notion that a firm is "hollowed out" refers to |
| | A) | a company that has significantly cut its workforce in response to pressure to reduce costs |
| | B) | a company that has lost its competitive advantage via a strategic alliance with a predatory partner |
| | C) | a company that has streamlined its operations and shifted most production to offshore markets |
| | D) | a company that no longer participates in the key industry product lines but instead focuses on a few complementary products |
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| 22.
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Firms that want to increase the probability of selecting a good strategic alliance partner should |
| | A) | avoid listening to third parties and make their own assessments |
| | B) | form a strategic alliance with a relatively unknown company |
| | C) | collect data on potential allies |
| | D) | find a partner without shared interests |
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| 23.
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Building interpersonal relationships between managers of firms that are involved in a strategic alliance is known as |
| | A) | interpersonal value |
| | B) | relational capital |
| | C) | corporate culture |
| | D) | interpersonal harmony |
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| 24.
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A company that is concerned that technology that should remain proprietary will be transferred to a strategic alliance partner should do all of the following except |
| | A) | wall off critical technology |
| | B) | establish contractual safeguards |
| | C) | seek credible commitments |
| | D) | avoid cross licensing agreements |
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| 25.
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According to a study of strategic alliances by Hamel, Doz, and Prahalad, Western firms viewed alliances as _____ while their Japanese counterparts viewed alliances as ______. |
| | A) | cost sharing devices, risk sharing devices |
| | B) | cost sharing devices, opportunities to learn |
| | C) | opportunities to learn, cost sharing devices |
| | D) | opportunities to learn, risk sharing devices |
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