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17 Questions

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International Business: Entry Modes

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Questions and Answers

What is a potential downside of licensing as an international collaborative entry mode?

Creation of a potential competitor in the licensee (correct)

Lack of control over the licensee

Higher risk of exposure to economic instability

Difficulty in accessing markets with low entry barriers

What is a characteristic of franchising as an international collaborative entry mode?

Lower level of business know-how sharing

Lower risk of market penetration

Higher level of marketing expertise required

Higher level of control over the franchisee (correct)

What type of alliance involves one firm handling marketing or distribution for another?

Consortia

Joint venturing

International strategic alliance (correct)

Contract manufacturing

What is a characteristic of consortia as an international collaborative entry mode?

Creates a monopoly effect Signup and view all the answers

What is the primary goal of international collaborative entry modes?

To access markets that may be closed or have high entry barriers Signup and view all the answers

What is the main difference between international strategic alliances and joint venturing?

Level of equity ownership Signup and view all the answers

What is one of the reasons a company might consider going international?

To reduce its dependency on a single market Signup and view all the answers

Which of the following is a motivator for a firm to go international?

To seek profit Signup and view all the answers

What might a company do to amortize the high costs of developing new products or processes?

Enter new markets to amortize the costs Signup and view all the answers

Why might a company follow its customers who are expanding abroad?

To retain its customer base Signup and view all the answers

What is one of the benefits of going international?

Achieving economies of scale or scope in production and/or marketing Signup and view all the answers

What is the main characteristic of a Wholly Owned Subsidiary?

A foreign company with full control and high risk Signup and view all the answers

What is the primary difference between a Wholly Owned Subsidiary and a Branch Office?

Level of control and autonomy Signup and view all the answers

Why might a company choose to engage in a joint venture?

Due to governmental pressure or mutually beneficial commercial considerations Signup and view all the answers

What is a common characteristic of foreign direct investment entry modes?

High levels of risk and long-term commitment Signup and view all the answers

What is the primary advantage of a Wholly Owned Subsidiary over a Joint Venture?

Greater control and autonomy Signup and view all the answers

What is a Branch Office typically used for?

Sales, marketing, and showroom activities Signup and view all the answers