QUESTION Licensing increases the risk of losing control over a firm’s proprietary technological know-how Indicate whether the statement is true or false. ANSWER TRUE If a firm’s competitive advantage (its core competence) is based on control over proprietary technological knowhow, licensing and joint-venture arrangements should be avoided if possible to minimize the risk of […]
QUESTION Which of the following is a risk of entering developing nations like India and China on a large scale? A. Lower potential for long-term rewards B. Absence of prior foreign entrants C. Lack of control over quality D. Fear of rapid imitation of technology E. High management turnover ANSWER B
QUESTION Acquiring firms often overpay for the assets of the acquired firms. Indicate whether the statement is true or false. ANSWER TRUE Acquisitions fail for several reasons. First, the acquiring firms often overpay for the assets of the acquired firm. The price of the target firm can get bid up if more than one […]
QUESTION In international business, an advantage of being a late entrant in a foreign market is the ability to: A. create switching costs that tie customers into products or services. B. capture demand by establishing a strong brand name. C. build sales volume and ride down the experience curve before early entrants. D. ride on […]
QUESTION When an international firm makes an acquisition in a foreign market, it acquires valuable intangible as well as tangible assets Indicate whether the statement is true or false. ANSWER TRUE When an international firm makes an acquisition in a foreign market, it not only acquires a set of tangible assets, such as factories, […]
QUESTION Which of the following types of entry into a foreign market allows a firm to learn about the foreign market while limiting the firm’s exposure to that market? A. Early entry B. Small-scale entry C. Large-scale entry D. Late entry E. Rapid entry ANSWER B
QUESTION According to David Ravenscraft and Mike Scherer’s study, many acquisitions destroy rather than create value. Indicate whether the statement is true or false. ANSWER TRUE In a seminal study of the post-acquisition performance of acquired companies, David Ravenscraft and Mike Scherer concluded that, on average, the profits and market shares of acquired companies […]
QUESTION Which of the following is a disadvantage of large-scale entry into a foreign market? A. Decrease in a firm’s exposure to the foreign market B. Difficulty attracting customers and distributors for the product C. Inability to build rapid market-share irrespective of the scale of entry D. Limited product acceptance due to the avoidance of […]
QUESTION An advantage of establishing a greenfield venture in a foreign country is that it gives the firm a much greater ability to build the kind of subsidiary company that it wants Indicate whether the statement is true or false. ANSWER TRUE The big advantage of establishing a greenfield venture in a foreign country […]
QUESTION Which of the following is a reason why a relatively poor country may be an attractive target for inward investment? A. Rapid economic growth B. Political instability C. Currency depreciation D. High cost of living E. Less developed infrastructure ANSWER A
