International Marketing Entry Modes Quiz
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Questions and Answers

What type of entry mode allows for quick changes with minimal cost?

  • Direct indirect investment
  • Intermediate modes (correct)
  • Export modes
  • Hierarchical modes

What type of entry mode provides the highest level of control in international marketing?

  • Joint venture
  • Wholly-owned subsidiary (correct)
  • Contract manufacture
  • Franchising

Which of the following is an example of a hierarchical mode of entry?

  • Wholly-owned subsidiary (correct)
  • Export management companies
  • Trading companies
  • Piggyback operations

Which of the following entry modes is characterized by medium control?

<p>Export management companies (A)</p> Signup and view all the answers

What do export management companies fall under in terms of entry modes?

<p>Export modes (C)</p> Signup and view all the answers

Which entry mode requires the most direct control over operations?

<p>Wholly-owned subsidiary (B)</p> Signup and view all the answers

What entry mode would likely involve the least control for a firm?

<p>Direct exporting (B)</p> Signup and view all the answers

Which of the following is a hierarchical mode of entry that offers high control?

<p>Company acquisition (B)</p> Signup and view all the answers

What is a primary characteristic of export modes?

<p>Minimal initial market commitment (D)</p> Signup and view all the answers

Which entry mode combines two firms for a specific project, reflecting medium control?

<p>Joint venture (B)</p> Signup and view all the answers

Which entry mode allows for maximum control by the firm?

<p>Wholly-owned subsidiary (A)</p> Signup and view all the answers

What is a common characteristic of intermediate modes of foreign market entry?

<p>Shared control with local partners (C)</p> Signup and view all the answers

Which entry mode is least likely to involve significant risk dissemination for the firm?

<p>Wholly-owned subsidiary (B)</p> Signup and view all the answers

Which option is an example of an export mode of market entry?

<p>Export management company (A)</p> Signup and view all the answers

In which entry mode would a firm's know-how be most vulnerable to expropriation?

<p>Joint venture (B)</p> Signup and view all the answers

What defines hierarchical modes in foreign market entry?

<p>Direct investment such as a wholly-owned subsidiary (B)</p> Signup and view all the answers

Which entry mode requires a higher level of resource commitment?

<p>Strategic alliances (A), Joint ventures (B)</p> Signup and view all the answers

What is an example of an export mode in foreign market entry?

<p>Using a sales force (D)</p> Signup and view all the answers

Which of the following represents an intermediate mode of market entry?

<p>Franchising or licensing agreements (C)</p> Signup and view all the answers

What characterizes export modes in terms of resource commitment?

<p>Generally entail low resource commitment (D)</p> Signup and view all the answers

What does the term 'entry mode' refer to in a foreign market context?

<p>The chosen method for placing products or services in a market (C)</p> Signup and view all the answers

Which type of entry mode involves direct sales from the home country to customers in a foreign country?

<p>Export modes (B)</p> Signup and view all the answers

Which of the following is NOT a primary type of entry mode?

<p>Franchise modes (B)</p> Signup and view all the answers

Hierarchical modes typically involve which aspect of foreign entry?

<p>Establishing foreign subsidiaries or joint ventures (C)</p> Signup and view all the answers

What is one of the key resources a company may choose to place in a foreign market?

<p>Human skills and technology (B)</p> Signup and view all the answers

What are the modes categorized under Hierarchical Modes?

<p>Wholly-owned subsidiary, Company acquisition, Assembly operations (C)</p> Signup and view all the answers

Which of the following is NOT considered an Intermediate Mode?

<p>Company acquisition (B)</p> Signup and view all the answers

Which level of involvement utilizes Direct Exporting?

<p>Export management companies (B)</p> Signup and view all the answers

What does a joint venture exemplify in terms of market entry?

<p>Intermediate Mode (A)</p> Signup and view all the answers

Which of the following is a characteristic of Indirect Exporting?

<p>Utilizes trading companies or export management companies (B)</p> Signup and view all the answers

What role does the retail chain serve in the export mode of market entry?

<p>It acts as an intermediary for sales and distribution. (B)</p> Signup and view all the answers

Which of the following best describes a joint venture in the intermediate mode?

<p>A partnership with a local company. (D)</p> Signup and view all the answers

In hierarchical modes, what is the purpose of internal transfer prices?

<p>To establish prices for products moved within the company. (B)</p> Signup and view all the answers

What distinguishes the foreign sales subsidiary in hierarchical modes?

<p>It is a fully-owned branch of the company. (C)</p> Signup and view all the answers

What is the primary function of an agent/importer in export modes?

<p>To facilitate sales and distribution on behalf of the company. (C)</p> Signup and view all the answers

In what aspect do export modes primarily differ from hierarchical modes?

<p>The use of internal transfer prices. (C)</p> Signup and view all the answers

Which of the following is not a characteristic of export modes?

<p>Relies solely on direct sales. (A)</p> Signup and view all the answers

What is a key feature of intermediate modes in the market entry process?

<p>Formation of partnerships with locals through joint ventures. (C)</p> Signup and view all the answers

Flashcards

Foreign Entry Mode

The way a company enters a new foreign market by selling its products or services to customers in that market.

Exporting

Directly selling goods or services to customers in a foreign market without the use of intermediaries.

Indirect Exporting

Using intermediaries or partners to assist in the export process, such as distributors, agents, or trading companies.

Intermediate Modes

Involves a greater commitment to the foreign market, such as joint ventures or strategic alliances.

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Hierarchical Modes

Full control over operations in a foreign market, such as setting up a wholly owned subsidiary or engaging in foreign direct investment.

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Export Modes

The most basic market entry mode where a company sells its products or services to customers in a new market through intermediaries, such as agents, importers or distributors.

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Agent/Importer/Distributor

An intermediary who acts on behalf of a company to facilitate sales and distribution in a new market.

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Joint Venture

A legal partnership between two or more companies to achieve a common goal in a new market.

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Foreign Sales Subsidiary

A subsidiary fully owned by a company located in a foreign market.

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Internal Transfer Prices

Prices set internally for products moved between different parts of the same company, even if they are in different countries.

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Border Prices

This refers to the price of a product when it crosses international borders.

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Know-how Expropriation Risk

The likelihood of an exporting company's valuable knowledge being stolen by a foreign partner due to a lack of control.

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Control Dissemination Risk

The level of control a company is willing to relinquish in exchange for a foreign market presence. Each entry mode offers varying levels of control.

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Control in International Marketing

A company's level of authority over operational and strategic decision-making regarding its international marketing efforts.

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Wholly-owned subsidiary

A strategy where a company directly invests in a foreign market and establishes a fully owned subsidiary. This provides complete control over operations but also carries significant risk and investment.

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Franchising/Licensing

This involves a company granting another company the right to use its intellectual property, such as a brand, technology or manufacturing process, in exchange for royalties.

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Export Management Company

A company that acts as an intermediary between exporters and customers in a foreign market. They handle all aspects of exporting, including finding buyers, handling logistics, and handling payments.

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Company acquisition

A foreign market entry mode where a company acquires an existing company in a foreign market. It gains access to existing infrastructure, brand recognition, and local expertise.

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Assembly operations

A foreign market entry mode where a company contracts with a foreign manufacturer to assemble products in their facilities. The company provides components and designs, while the foreign company manages production.

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Strategic alliance

A foreign market entry mode where companies cooperate in a foreign market without necessarily pooling resources or equity. They may share information, technology, or marketing efforts to achieve strategic goals.

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Flexibility in foreign market entry

How easily a company can change its market entry strategy, especially when facing changing circumstances.

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Resource Commitment

The financial, physical, and human resources a company commits to a foreign market.

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Hierarchical Modes (Direct Investment)

A company invests directly in a foreign market by setting up a wholly owned subsidiary or acquiring an existing company.

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Intermediate Modes (Contract)

A company collaborates with a foreign partner to enter a new market, sharing resources and risks.

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Study Notes

Foreign Market Entry Modes

  • Entry mode is an institutional arrangement for the entry of a company's products or services into a new foreign market
  • It refers to the chosen method for placing a company's products, technology, human skills, management, or other resources into a foreign country
  • The main types are:
    • Export modes
    • Intermediate modes
    • Hierarchical modes

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Description

Test your knowledge on different entry modes in international marketing. This quiz covers various aspects from control levels to examples of hierarchical and export modes. Perfect for students and professionals looking to enhance their understanding of market entry strategies.

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