QUESTION Which of the following modes of entry is suitable for service firms where the risk of losing control over the management skills or technological know-how is not much of a concern, and where the firms’ valuable asset is their brand name? A. Exporting B. Franchising C. Licensing D. Turnkey projects E. Cross-licensing ANSWER […]
QUESTION Which of the following is a reason why firms often overpay for the assets of an acquired firm? A. Studies supporting the rise of failed companies post acquisitions B. Evidence of high management turnover post acquisitions C. The success rate of acquisitions exceeding that of failures D. Interest of more than one party in […]
QUESTION Which of the following postulates that top managers typically overestimate their ability to create value from an acquisition? A. Bandwagon effect B. Fisher effect C. Hubris hypothesis D. International Fisher effect E. Learning effect ANSWER C
QUESTION Which of the following is an advantage of acquisitions as a means of entering foreign markets? A. They are quick to execute and help firms to rapidly build their presence in the target foreign market. B. It is much easier to change the culture of an existing organization than build a new organization. C. […]
QUESTION How can a wholly owned subsidiary be established in a foreign market? A. Through a turnkey operation with a local partner B. Through franchising C. By acquiring an established firm in the host nation D. By exporting E. Through a licensing agreement ANSWER C
QUESTION Why do firms pursuing global standardization or transnational strategies tend to prefer establishing wholly owned subsidiaries? A. It gives firms sound knowledge of the local markets, culture, and the political environment. B. It helps protect competitive advantages based on technology. C. It allows firms to use the profits generated in one market to improve […]
QUESTION What triggers the conflict of interest over strategy and goals in joint ventures? A. Local partner’s knowledge of host country’s competitive conditions B. Giving control of core technology to the foreign partner C. Shifts in relative bargaining power of venture partners D. Trying to realize location and experience curve economies E. Risk of being […]
QUESTION What gives a firm tight control for coordinating a globally dispersed value chain? A. Signing joint-venture agreements B. Installing manufacturing units in locations with optimal factor conditions C. Setting up wholly owned marketing subsidiaries D. Establishing a greenfield venture E. Using foreign marketing agents ANSWER C
QUESTION Which of the following is an advantage of joint ventures as a mode of entry into foreign markets? A. The foreign firm benefits from a local partner’s knowledge of the host country. B. The foreign firm can protect its technology from being appropriated by its local partner. C. There is less cause for friction […]
QUESTION Why do acquisitions fail sometimes? A. There is a clash between the cultures of the acquiring and acquired firm. B. Acquisitions take a long time to execute. C. Acquisitions are easily preempted by making greenfield investments. D. The revenue and profit stream generated by an acquisition’s resources is usually unknown. E. Losses produced by […]
