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?

    <p>Creates a monopoly effect</p> Signup and view all the answers

    What is the primary goal of international collaborative entry modes?

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

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

    <p>Level of equity ownership</p> Signup and view all the answers

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

    <p>To reduce its dependency on a single market</p> Signup and view all the answers

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

    <p>To seek profit</p> Signup and view all the answers

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

    <p>Enter new markets to amortize the costs</p> Signup and view all the answers

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

    <p>To retain its customer base</p> Signup and view all the answers

    What is one of the benefits of going international?

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

    What is the main characteristic of a Wholly Owned Subsidiary?

    <p>A foreign company with full control and high risk</p> Signup and view all the answers

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

    <p>Level of control and autonomy</p> Signup and view all the answers

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

    <p>Due to governmental pressure or mutually beneficial commercial considerations</p> Signup and view all the answers

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

    <p>High levels of risk and long-term commitment</p> Signup and view all the answers

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

    <p>Greater control and autonomy</p> Signup and view all the answers

    What is a Branch Office typically used for?

    <p>Sales, marketing, and showroom activities</p> Signup and view all the answers

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