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Global Marketing, 9e (Keegan) Chapter 9 Global Market Entry Strategies: Licensing, Investment, and Strategic Alliances 1) For Starbucks and other companies whose business models include a service component, it is not recommended that they use one of the following methods for going global. A) joint ventures B) licensing C) 100-percent ownership D) exporting E) franchising Answer: D

2) For Walt Disney Company, the best mode for going global is by: A) joint ventures. B) licensing. C) 100-percent ownership. D) exporting. E) franchising. Answer: B 3) One of the advantages of licensing is: A) licensees have limited control. B) licensees have considerable autonomy. C) license agreements have short life. D) licensees can develop similar products. E) licensees have considerable leverage. Answer: B

4) Licensing as a market entry mode has several disadvantages and opportunity costs, which does not include: A) limited market control. B) agreement may have short life. C) leveraging and exploiting by licensee. D) similar product or technology development by licensee. E) adaptations by licensee to fit local tastes.

Answer: E 1 Copyright © 2017 Pearson Education, Inc.

5) ________ represents a market entry strategy whereby one company permits a foreign company to make use of its patents, know-how, technology, company name, or other intangible assets in return for a royalty payment. A) A joint venture B) One-hundred-percent ownership C) Licensing D) Exporting E) A Global strategic alliance

Answer: C 6) ________ provides technical specifications to a subcontractor or local manufacturer, who then oversees production. A) A joint venture B) Contract manufacturing C) Licensing D) Exporting E) A Global strategic alliance Answer: B 7) In order to prevent a licensor-competitor from gaining unilateral benefit, licensing agreements should provide for: A) contract manufacturing. B) franchising. C) cross licensing. D) strategic decision making. E) adaptation for local tastes. Answer: C 8) The advantages of "contract manufacturing" include all of the following except: A) access to technical specifications by subcontractors. B) access to technical specifications by local manufacturers. C) a licensing firm can specialize in product marketing. D) limited commitment of financial resources. E) considerable commitment of management resources. Answer: E

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9) Pollo Campero, a chicken restaurant chain based in Central America, is using the following method for expanding operations in the United States: A) joint ventures. B) licensing. C) exporting. D) franchising. E) acquisition. Answer: D 10) Would-be franchisors ask all of the following questions except one before expanding overseas: A) How tough is the local competition? B) Does the government respect trademark and copyrights? C) Can profits be easily repatriated? D) Can products be easily counterfeited? E) Is commercial space available?

Answer: D 11) The specialty retailing industry, as well as the fast-food industry, favors ________ for global growth. A) licensing B) investment C) franchising D) joint ventures E) strategic alliances

Answer: C 12) The agreements that allow McDonald's franchisees around the globe to use McDonald's trademarked name and menu items represent, in essence, which form of market entry? A) joint ventures B) franchising C) 100% ownership D) exporting E) acquisition Answer: B

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13) McDonald's success in franchising in global markets can be attributed to several factors which do not include: A) a well known global brand name. B) a business system that can be easily replicated. C) local market knowledge. D) cross licensing. E) granting franchisees leeway to tailor menu offerings to suit local tastes. Answer: D 29) Honda has invested $550 million in building an assembly plant in Greensburg, Indiana; IKEA spent nearly $2 billion to open stores in Russia; and South Korea's LG Electronics purchased a 58% stake in Zenith Electronics. All of these are examples of: A) acquisition. B) licensing. C) franchising. D) FDI. E) exporting.

Answer: D 30) Strictly speaking, a (n) ________ is an entry strategy for a single target country in which the partners share ownership of a newly created business entity. A) acquisition B) licensing C) franchising D) joint venture E) exporting Answer: D

31) Disadvantages of joint venturing can include all of the following except: A) joint venture partners must share rewards as well as risks. B) joint ventures allow partners to achieve synergy. C) joint ventures can have the potential for conflict between partners. D) a dynamic joint venture partner can evolve into a strong competitor. E) a company incurs very significant costs by joint venturing. Answer: B

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32) The strategy to use joint ventures has several advantages which do not include: A) risk sharing. B) reduced financial risk. C) reward sharing. D) achieve synergy. E) the only way to enter a country or region. Answer: C 33) Which of the following does not fit into the sequence of experiences Anheuser-Busch had in Japan? A) Anheuser-Busch first entered Japan by means of a licensing agreement with Suntory, the smallest brewery in Japan. B) Anheuser-Busch created a joint venture with Kirin Brewery, the market leader. C) Anheuser-Busch dissolved the joint venture with Kirin Brewery. D) Anheuser-Busch entered into a joint venture with Kirin Brewery. E) Anheuser-Busch reverted to a licensing agreement with Kirin Brewery.

Answer: D 34) As a general rule, the Chinese government allows foreign companies to participate in its market only if those companies agree to establish operations with local Chinese enterprises. Which market entry mode would be the appropriate choice under these circumstances? A) acquisition B) licensing C) joint venture D) exporting E) franchising Answer: C 35) The president of a Mexican company recently remarked, "Business in Mexico is done on a consensus basis, very genteel and sometimes slow by U.S. standards." A few months later, the Mexican company and its U.S. joint venture partner parted company. Judging by the president's remark, one important reason for the "divorce" was: A) failure of one partner to live up to the terms of the contract. B) cultural differences. C) the cancellation of NAFTA. D) the U.S. government's insistence on quick negotiations. E) the language barrier.

Answer: B 5 Copyright © 2017 Pearson Education, Inc.

36) Toyota learned many things from its partnership with GM, however American managers involved in the venture complained that: A) Toyota learned many things about the U.S. supply system. B) Toyota learned about the U.S. transport system. C) Toyota learned about managing American workers. D) Toyota did not apply manufacturing expertise at GM plant. E) Toyota applied its expertise at its Camry plant. Answer: D 37) GM executives are looking for a joint venture with AvtoVAZ, the largest carmaker in: A) Germany. B) Lithuania. C) Russia. D) Kazakhstan. E) Turkey. Answer: C 38) In a joint venture with Russian manufacturer AvtoVAZ, GM executives were planning to have a stripped-down reengineered car based on its Opel model. However, the market research revealed that a "Made-in-Russia" car would only be acceptable if: A) it has a German name. B) it sported a very low sticker price. C) it has an American name. D) it has a very high sticker price. E) it has a Russian name.

Answer: B 39) The Russian market for imported premium vehicles is exploding as the number of households that can afford luxury products exhibit rapid growth. The luxury cars include all of the following except: A) Porsche. B) Lexus. C) BMW. D) Rolls-Royce. E) Infiniti. Answer: B

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40) Ford Motor Company (United States) has a 50-50 joint venture to build Ford Fiestas with: A) Toyota (Japan). B) Shanghai Automotive Industry (China). C) BMW (Germany). D) Mahindra & Mahindra (India). E) Mazda (Japan). Answer: D 41) Which automaker currently has a joint venture with Hindustan Motors (India)? A) Volkswagen B) Ford C) GM D) Renault E) Mazda Answer: C 42) Ford and Mazda have market entry and expansion in a relationship known as: A) joint venture. B) licensorship. C) franchising. D) contract manufacturing. E) none of the above Answer: A 43) Which of the following currently owns a 70 percent stake in Skoda, the Czech automaker? A) GM B) Volkswagen C) Ford D) DaimlerChrysler E) Renault Answer: B 44) Which automaker owns an equity stake in Japan's Nissan Motor? A) GM B) Volkswagen C) Ford D) DaimlerChrysler E) Renault Answer: E 7 Copyright © 2017 Pearson Education, Inc.

45) Tata Motors (India) acquired the following auto company: A) Volkswagen AG (Germany). B) Volvo (Sweden). C) Jaguar (UK). D) Toyota (Japan). E) Hyundai (South Korea). Answer: C 46) Avon Products uses ________ to enter developing markets. A) franchising and licensing B) joint venture and licensing C) acquisition and franchising D) licensing and franchising E) acquisition and joint ventures Answer: E 66) A competitive business environment is now characterized by all of the following characteristics except: A) unprecedented degrees of turbulence. B) dynamism. C) unpredictability. D) inadaptability. E) environmental responsiveness. Answer: D 67) Which of the following is not a characteristic of global strategic partnership? A) Participants maintain independence outside the framework of alliance. B) Participants share benefits of the alliance. C) Participants share control over the performance of the assigned tasks. D) Participants make ongoing contributions in technology, products, and other areas. E) Participants agree not to compete in areas unrelated to the alliance. Answer: E 68) Which of the following is not a characteristic of global strategic alliances? A) Participants maintain independence outside the framework of alliance. B) Participants share benefits as well as control. C) Participants make ongoing contributions in technology, products, and other areas. D) Participants focus on an individual country market. E) Participants share benefits of the alliance. Answer: D 8 Copyright © 2017 Pearson Education, Inc.

69) The terminology used to describe the new forms of cooperation strategies varies widely and the phrases used include all of the following except: A) collaborative agreements. B) strategic alliances. C) global strategic partnerships. D) strategic international alliances. E) Greenfield operations. Answer: E 70) GSPs (Global Strategic Partnerships) are attractive for several reasons which do not include: A) sharing high product development costs. B) sharing technological developments. C) securing access to national and regional markets. D) continuous transfer of technology between partners. E) focus on a single national market or a specific problem. Answer: E 71) Which of the following does not fit in with the factors that should be considered by companies forming GSPs? A) Partners are competitors to each other. B) Harmony is the most important measure of success. C) All employees and managers must understand where cooperation ends and competitive compromise begins. D) Learning from partners is critically important. E) none of the above Answer: E 72) Having partners from another country can have advantages which include all of the following except: A) reducing product development costs. B) securing technology. C) access to capital. D) shared risks. E) increased competition.

Answer: E

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73) An attribute which does not represent true global partnership is: A) achieving world leadership by differentiation. B) achieving a reciprocal relationship. C) relationship is organized vertical lines. D) continual transfer of resources. E) retaining national identities. Answer: C 74) "Corporate amnesia" in global partnership is a term which refers to: A) achieving world leadership by differentiation. B) short-term goals with no memory on how to compete. C) a relationship which is short lived. D) discontinuation of a partnership due to personal chemistry. E) losing national identity and ideology. Answer: B 75) "Discussion and consensus must be the norms. Partners must be viewed as equals." When applied to global strategic partnerships, this statement indicates the importance of which factor? A) mission B) strategy C) governance D) culture E) organization Answer: C 76) "Successful GSPs create win-win situations, where participants pursue objectives on the basis of mutual advantage." When applied to global strategic partnerships, this statement indicates the importance of which factor? A) mission B) strategy C) governance D) culture E) organization

Answer: A

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77) According to a 1991 report by McKinsey & Co., problems of alliances between Western and Japanese firms were related to all of the following factors except: A) objective levels of performance. B) a feeling of mutual disillusionment. C) difference in expectations. D) balance between partners. E) frictional loss. Answer: A 78) The success of CFM International (the strategic partnership between GE and Snecma) can be attributed to which of the following? A) compatibility of the partners B) capability of the partners C) commitment of the partners D) personal chemistry between executives E) all of the above

Answer: E 79) Critics warn that employees of a company that become reliant on an outside supplier for critical components will: A) encourage outsourcing B) become used to value-added components C) lose expertise and engineering skills D) use time for developing other skills E) look for employment with competitors Answer: C 80) Boeing developed the wide-bodied aircraft, the 777, with about ________ of the work subcontracted out to Mitsubishi, Fuji, and Kawasaki. A) 50% B) 25% C) 20% D) 60% E) 75% Answer: C

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81) A number of factors combine to make Russia an excellent location for an alliance which do not include: A) a well-educated workforce. B) quality is important to Russian consumers. C) abundance of supplies. D) potential for economic growth. E) potential for growth in service sector. Answer: C 92) Which of the following is not true of Japanese keiretsu? A) promotes risk sharing B) promotes long-term employment C) ensures low prices for Japanese consumers D) blocks foreign suppliers from the Japanese market E) relationships are cemented by bank ownership

Answer: C

93) Which of the following is true about Japanese keiretsu? A) Toyota is a vertical keiretsu, Mitsubishi is a horizontal keiretsu. B) Toyota is a horizontal keiretsu, Mitsubishi is a vertical keiretsu. C) Toyota and Mitsubishi are both horizontal keiretsu. D) Toyota and Mitsubishi are both vertical keiretsu. E) none of the above Answer: A

94) Another perspective on the future of cooperative strategies envisions the emergence of: A) mergers and acquisition. B) virtual corporations. C) franchising. D) joint ventures. E) keiretsu. Answer: B

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100) Saab markets two luxury car models, both prized by drivers for their "quirkiness." About 30 percent of Saab's sales come from the USA, with most of the rest from Western Europe. Which strategy does Saab appear to be using? A) country concentration/market segment concentration B) country diversification/market segment concentration C) country concentration/market segment diversification D) country diversification/market segment diversification E) none of the above Answer: A

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