Chapter 12 - Entering Foreign Markets

Question 1

Has a influence on the nature of competition in a market; requires anticipation of how exiting or potential competitors will react to large-scale entry.

Answer 1

Significant Scale

Question 2

Is more likely to capture first-mover advantage and pre-empt demand, gain scale economies, and create switching costs.

Answer 2

Large-scale Entry

Question 3

Helps learn about a foreign market by collecting information and understanding the rules of the game.

Answer 3

Small-scale Entry

Question 4

6 different modes to enter foreign markets:

Answer 4

1) Exporting
2) Turnkey Projects
3) Licensing
4) Franchising
5) Joint venture with a host-country firm
6) Wholly owned subsidiary in the host country

Question 5

Designing, constructing and starting up a technologically complex business as in wherein a contractor handles all details of a project for a foreign client.

Answer 5

Turnkey Project

Question 6

An arrangement where a licensor grants the rights to intangible property to another entity for a specified period, and in return, the licensor receives a royalty fee from the licensee.

Answer 6

Licensing

Question 7

Includes patents, inventions, formulas, processes, designs, copyrights, and trademarks.

Answer 7

Intangible Property

Question 8

A specialized form of licensing in which a franchiser not only sells intangible property to a franchisee, but also insists that the franchisee agrees to abide by strict rules as to how the business is conducted.

Answer 8

Franchising

Question 9

Often assists franchisee to run the business on an ongoing basis.

Answer 9

Franchiser

Question 10

Wholly owned subsidiary or joint venture with a local firm that oversees operations of franchisees in the country or region including quality control and operations

Answer 10

Master Franchisee

Question 11

Establishing a firm that is jointly owned by two or more otherwise independent firms.

Answer 11

Joint Venture

Question 12

2 types of joint ventures

Answer 12

1) Co-operative Joint Ventures
2) Equity Joint Ventures

Question 13

The parties involved may operate as separate legal entities and bear liabilities independently rather than as a single entity.

Answer 13

Co-operative Joint Ventures

Question 14

The partners share ownership of a jointly held subsidiary.

Answer 14

Equity Joint Ventures

Question 15

A firm owning 100 percent of stock of the company established in a foreign country.

Answer 15

Wholly-Owned Subsidiaries

Question 16

Building from ground up by setting up a new operation in the host country.

Answer 16

Greenfield Venture