Ch. 3 (Strategies for Reaching Global Markets)

Question 1

rank the strategies for global markets on a scale of least to most amount of commitment, control, risk, and profit (first 3)

Answer 1

licensing, exporting, franchising,

Question 2

rank the strategies for global markets on a scale of least to most amount of commitment, control, risk, and profit (last 3.5)

Answer 2

contract manufacturing, international joint ventures and strategic alliances and lastly, foreign direct investment

Question 3

describe licensing

Answer 3

a firm (the licensor) may decide to compete in a global market by licensing the right to manufacture its product or use its trademark to a foreign company (the licensee) for a fee (royalty)

Question 4

describe exporting

Answer 4

the simplest way of going international is to export your goods and services. success in exporting often leads to licensing with a foreign company to produce the product locally to better serve the local market

Question 5

describe franchising

Answer 5

an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or services to others in a given territory

Question 6

describe contract manufacturing

Answer 6

involves foreign company’s production of private label goods to which a domestic company then attaches its own brand name or trademark

Question 7

contract manufacturing enables …

Answer 7

a company to experiment in a new market without incurring heavy start-up costs such as a manufacturing plant

Question 8

describe joint venture

Answer 8

a partnership in which two or more companies (often from different countries) join to undertake a major project or to form a new company

Question 9

describe strategic alliance

Answer 9

a long term partnership between two or more companies established to help each company build competitive market advantages

Question 10

describe the difference between a strategic alliance and a joint venture

Answer 10

unlike joint ventures, strategic alliances do not typically involve sharing costs, risks, management or even profits

Question 11

describe foreign direct investment (FDI)

Answer 11

buying permanent property and businesses in foreign nation

Question 12

FDI provides benefits to Canadian firms though …

Answer 12

the transfer of knowledge, technology and skills, and increased trade related to investment, all of which contribute to productivity growth and competitiveness