Chapter 10 - Entering Foreign Markets

Question 1

Liability of foreigness

Answer 1

the disadvantage that foreign firms experience in host countries due to to their non-native status

Question 3

Location Specific Advantage

Answer 3

the benefits a firm reaps from the feature specific to a place

Question 4

Firm’s strategic goals

Answer 4

1. Natural resource seeking
2. Market seeking
3. Efficiency seeking
4. Innovation seeking

Question 5

First-mover advantages

Answer 5

benefits that firms experience when they enter the market first

• properitary, technological leadership
• Pre-emption of scarce resources
• Establishment of entry barriers for late entrants
• Avoidance of clash with dominant firms at home
• Relationships with key stakeholders such as governments

Question 6

Late-mover advantages

Answer 6

benefits that accrue to firms that enter the market later and that early entrants do not enjoy

• opportunity to free ride on first mover investment
• Resolution of technological and market uncertainty
• First mover’s difficulty to adapt to market changes

Question 7

Non-equity mode of entry

Answer 7

a mode of entry that reflects relatively smaller commitments to overseas markets

e.g. lincensing, leasing, and frnachising

Question 8

Equity mode of entry

Answer 8

indicates a relatively larger, harder-to-reverse commitment

e.g.joint ventures, wholly owned subsidiaries