Foreign Direct Investment in Foreign Market Entry
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Questions and Answers

What are the three main types of foreign market entry modes discussed in Chapter 7?

  • Online, Offline, and Mergers
  • Indirect, Direct, and FDI (correct)
  • Domestic, International, and Global
  • Exporting, Licensing, and Franchising
  • Which type of market entry mode involves minimal ownership and control of marketing activities?

  • Franchising
  • Joint Venture
  • Direct Market Entry
  • Exporting (correct)
  • What is a key factor to consider when selecting a foreign entry mode according to the text?

  • Size of the headquarters
  • Social media presence
  • Number of employees
  • Proximity to domestic customers (correct)
  • In the context of foreign market entry, what does FDI stand for?

    <p>Foreign Direct Investment</p> Signup and view all the answers

    What aspect plays a crucial role in determining the desired level of control when selecting a foreign market entry mode?

    <p>Exposure to risks</p> Signup and view all the answers

    What should the decision between indirect exporting and direct exporting be based on?

    <p>Company goals and objectives</p> Signup and view all the answers

    When considering foreign market entry modes, why might changing from indirect to direct be difficult?

    <p>Cultural preferences for working directly with the manufacturer</p> Signup and view all the answers

    What does Foreign Direct Investment (FDI) involve?

    <p>Investing in a facility or asset in a foreign country</p> Signup and view all the answers

    Why might some companies avoid Foreign Direct Investment (FDI) as an entry mode?

    <p>Risk associated with FDI</p> Signup and view all the answers

    Which factor might lead a company to establish a Joint Venture (JV) or foreign subsidiary in a foreign market?

    <p>Requirement for more control/feedback</p> Signup and view all the answers

    What factor is emphasized when considering a company's first Foreign Direct Investment (FDI) or Direct Foreign Investment (DFI) experience?

    <p>Risk associated with the investment</p> Signup and view all the answers

    Why might a company find it difficult to move beyond exporting?

    <p>High transportation costs and market barriers</p> Signup and view all the answers

    What is one reason for a company to consider FDI?

    <p>High import barriers reducing market attractiveness</p> Signup and view all the answers

    In what situation might a company consider moving from exclusive contracts to non-exclusive?

    <p>Desire for stronger customer support</p> Signup and view all the answers

    What could make a product noncompetitive in foreign markets?

    <p>International cost escalators</p> Signup and view all the answers

    Why might a company prefer domestic production over exporting?

    <p>Preference for local production due to cost or quality reasons</p> Signup and view all the answers

    What can prevent exporting from being a viable long-term option in some foreign markets?

    <p>High transportation costs and local NTBs</p> Signup and view all the answers

    What is one of the potential reasons for the decline in foreign market entry?

    <p>Increased complacency</p> Signup and view all the answers

    In FDI manufacturing, what does the access to local infrastructure primarily include?

    <p>Local labor forces</p> Signup and view all the answers

    What type of products would justify overseas assembly or full manufacturing due to poor market success from import barriers?

    <p>Products with high value relative to the freight costs</p> Signup and view all the answers

    What is a key advantage of establishing a foreign sales office with a local director?

    <p>Improved local expertise</p> Signup and view all the answers

    What is one of the considerations for Overseas Distribution as an FDI option?

    <p>Market/cultural perception</p> Signup and view all the answers

    How can tariff/nontariff barriers impact the cost of materials in a foreign market?

    <p>Make imported materials more expensive than domestic materials</p> Signup and view all the answers

    What is an example of a nontariff barrier mentioned in the text?

    <p>Imposing quotas on imported goods</p> Signup and view all the answers

    What does Third Party Logistics (3PL) allow firms to do in the context of foreign market entry?

    <p>Outsource parts of the supply chain</p> Signup and view all the answers

    What is the purpose of tariff engineering as discussed in the text?

    <p>Change the structure of exports to reduce import duties</p> Signup and view all the answers

    Which factor is unlikely to influence a company's decision to pursue Overseas Distribution as an entry mode?

    <p>Market size</p> Signup and view all the answers

    When might a need for increased control in a foreign market materialize?

    <p>As the need arises for more involvement in the market</p> Signup and view all the answers

    In the context of reducing the impact of import barriers, what justifies overseas assembly or full manufacturing?

    <p>Poor market performance due to import barriers</p> Signup and view all the answers

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