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This review is based on chapter 12 of Global Business Today by Charles W. L. Hill, 7th edition. Terms in this set (63)A firm contemplating foreign expansion must make three decisions: (1) which __________ ___ __________, (2) __________ to enter the markets, and (3) on what _________. Markets to enter, when, scale The costs and risks associated with doing business in a foreign country are typically lower in __________ advanced and politically stable ___________ nations. Economically, democratic The benefit-cost-risk trade-off is likely to be most favorable in politically stable developed and developing nations that have __________ ___________ systems, and where there is not a dramatic upsurge in either __________ rates or __________-__________ debt. Free market, inflation, private-sector True/False: If an international business can offer a product that has not been widely available in a market and that satisfies an unmet need, the value of that product to consumers is likely to be much lower. False Definition: Entry is early when a firm enters a foreign market before other foreign firms and late when a firm enters after other international businesses have established themselves. Timing of entry Definition: Advantages accruing to the first to enter a market. First-mover advantages Definition: Disadvantages associated with entering a foreign market before other international businesses. First-mover disadvantages Definition: Costs that an early entrant has to bear that a later entrant can avoid, such as the time and effort in learning the rules, failure due to ignorance, and the liability of being a foreigner. Pioneering costs One first-mover advantage is the ability to preempt rivals and capture __________ by establishing a strong brand name. Demand One first-mover advantage is the ability to build __________ volume in that country and ride down the ___________ curve ahead of rivals, giving the early entrant a cost advantage. Sales, experience One first-mover advantage is the ability of early entrants to create _________ __________ that tie customers into their products or services. Switching costs Pioneering costs include: (a) the costs of business _________ if the firm, due to its ignorance of the foreign environment, makes major mistakes, (b) the costs of ___________ and establishing a product offering, including the costs of __________ customers; and (c) the costs associated with a change in __________ that invalidate prior assumptions about the best business model in a country. Failure, promoting, educating, regulations True/False: Research confirms that the probability of firm survival increases if an international business enters a national market after several other foreigns firms have already done so. True True/False: Entering a market on a large scale involves rapid entry. True _________-scale entrants are more likely to be able to capture first-move advantages. Large _________-scale entry allows a firm to learn about a foreign market while limiting the firm's exposure to that market. Small Small-scale entry ___________ the risks associated with a subsequent large-scale entry. Reduces Christopher ___________ and Sumantra ___________ argue that companies based in developing nations should use the entry of foreign multinationals as an opportunity to _________ from these competitors by benchmarking their operations and performance against them. Bartlett, Ghoshal, learn Christopher ___________ and Sumantra ___________ argue that companies based in developing nations can differentiate itself from a foreign multinational by focusing on market _________ that the multinational ignores or is unable to serve effectively. Bartlett, Ghoshal, niches
Firms can use six different modes to enter foreign markets: (1) ___________, (2) __________ projects, (3) __________, (4) ____________, (5) establishing ____________ __________ with a host-country firm, or (6) setting up a _______, ____________ __________ subsidiary within the host country. Exporting, turnkey, licensing, franchising, joint ventures, new, wholly owned Definition: Sale of products produced in one country to resident of another country. Exporting Exporting has two main advantages: (1) It avoids the substantial costs of establishing ____________ operations in the host country, and (2) Exporting may help a firm achieve ____________ curve and ____________ economies. Manufacturing, experience, location Exporting has many drawbacks: (1) It may not be appropriate if _________-_________ locations for manufacturing can be found abroad; (2) It has high _________ costs, especially for bulk products; (3) _________ barriers can make exporting uneconomical. Lower-cost, transportation, tariff Though exporting has high transportation costs, one way of getting around this is to manufacture _________ products regionally. Bulk The way around exporting's problems is to set up __________ ___________ subsidiaries in foreign nations to handle local marketing, sales, and services. Wholly owned Definition: A project in which a firm agrees to set up an operating plant for a foreign client and hand over the "key" when the plant is fully operational. Turnkey project _________ _________ are most common in the chemical, pharmaceutical, petroleum refining, and metal refining industries, all of which use complex, expensive production technologies. Turnkey projects True/False: The main advantages to turnkey projects is that they are a way of earning great economic returns from a valuable asset, and that they can be less risky than conventional FDI. True There are three disadvantages to turnkey projects: (1) A firm will have no ________-________ interest in the foreign country; (2) A firm may inadvertently create a _________; and (3) If the firm's process technology is a source of competitive advantage, selling this technology through a turnkey project is selling competitive advantage to _________. Long-term, competitor, competitors Definition: Occurs when a firm licenses the rights to produce its product, its production processes, or its brand name or trademark to another firm; in return, the licensor collects a royalty fee from the licensee. Licensing The advantages of licensing are that (a) the firm does not have to bear the ____________ costs and risks associated with opening a foreign market; (b) the firm is able to get around foreign ___________ to investment; and (c) allows firms to use intangible property in business without developing ____________ itself. Development, barriers, applications Licensing has three main disadvantages: (1) It does not give a firm tight ___________ over manufacturing, marketing, and strategy; (2) It does not allow a firm to coordinate strategic moves across countries by using __________ from one country to support attacks on another; and (3) Firms are less able to maintain control over their ____________ know-how within the framework of a licensing agreement. Control, profits, technological There are a couple ways to minimize the risk of licensing: (1) Entering into a _________-__________ agreement with a foreign firm, and (2) Linking an agreement to license know-how with the formation of a __________ ___________. Cross-licensing, joint venture Franchising tends to involve __________-term commitments than licensing. Longer Definition: A specialized form of licensing in which the franchiser sells intangible property to the franchisee and insists on rules to conduct the business. Franchising A franchiser typically receives a __________ payment that amounts to some percentage of the franchisee's revenues. Royalty The main advantage of franchising is that the firm is relieved of many of the _________ and __________ of opening a foreign market on its own. Costs, risks The disadvantages of franchising are (a) it may inhibit the firm's ability to take profits out of one country to support competitive ___________ in another, and (b) it may inhibit the firm's ability to control the ___________ created by the franchisee. Attacks, quality Franchising can sometime inhibit a firm's ability to control the quality of the product upheld by the franchisee. One way around this disadvantage is to set up a ___________ in each country in which the firm expands. Subsidiary Definition: Establishing a firm that is jointly owned by two or more otherwise independent firms. Joint venture The main advantages of a joint venture are: (1) A firm benefits from a _________ _________'s knowledge of the host country's competitive conditions, culture, language, etc.; (2) When the development costs and/or risks of opening a foreign market are high, a firm might gain by __________ these costs with a local partner; and (3) In many countries, __________ considerations make joint ventures the only feasible entry mode. Local partner, sharing, political Joint ventures have major disadvantages: (1) A firm risks giving control of its ___________ to its partner; (2) A firm doesn't have the tight ____________ over subsidiaries that it needs to realize experience curve or location economies; (3) A firm doesn't have the tight control over a subsidiary that it needs for a coordinated __________ ___________ against rivals; and (4) They can lead to conflicts between the investing firms if their __________ change or they disagree on what the ___________ should be. Technology, control, global attack, goals, strategy Sometimes a joint venture can be risky because a firm risks giving control of its technology to its partner. This risk can be minimized if the firm holds __________ ownership in the venture or "_________ _________" from a partner technology that is central to the core competence of the firm. Majority, walls off True/False: Sometimes a joint venture can be risky because a firm risks a conflict over the strategy. These conflicts often end in the dissolution of the venture. True Definition: A subsidiary in which the firm owns 100% of the stock. Wholly owned subsidiary The advantages of wholly owned subsidiaries: (1) When a firm's competitive advantage is based on technological competence, this method of entry reduces the risk of losing __________ over that competence; (2) A firm has tight control over operations in different __________; and (3) This method of entry may be __________ if a firm is trying to realize location and experience curve economies. Control, countries, required Disadvantages of wholly owned subsidiaries: (1) It is a __________ method of serving a foreign market from a capital investment standpoint; and (2) The problems with trying to marry __________ corporate cultures. Costly, divergent True/False: If a firm's competitive advantage is based on control over proprietary technological know-how, licensing and joint-venture arrangements are the best methods of entry into a foreign market. False Licensing technological know-how has two main advantages: (1) By licensing it to ___________, a firm may deter them from developing their own technology; and (2) A firm can establish its technology as the ___________ design in the industry. Competitors, dominant Licensing a technology can be risky; however, it can be a good entry method if the technological advancement is only ____________ and it expects a rapid imitation of the technology by competitors. Transitory True/False: For service firms, the risk of losing control over management skills to franchisees or joint-venture partners is not great. True The __________ the pressures for cost reductions are, the more likely a firm will want to pursue some combination of exporting and wholly owned subsidiaries. Greater True/False: Firms pursuing global standardization or transnational strategies tend to avoid establishing wholly owned subsidiaries. False
Advantages of acquisitions: (1) They are __________ to execute; (2) In many cases, firms make acquisitions to preempt their __________; and (3) Acquisitions are less __________ than greenfield ventures. Quick, competitors, risky When a firm makes an acquisition in a foreign market, it acquires ___________ assets like factories, logistics systems, and customer service systems, and ___________ assets like a brand name and manager knowledge. Tangible, intangible Acquisitions fail for several reasons: (1) Acquiring firms often __________ for the assets of the acquired firm; (2) There is a clash between the _________ of the acquiring and acquired firm; (3) Attempts to realize synergies by integrating the acquired and acquiring entities take _________ than forecast; and (4) Sometimes firms have inadequate pre-acquisition __________. Overpay, cultures, longer, screening Sometimes firms overpay for acquisitions because the price of the target firm can get bid up if ________ _________ _________ firm is interested in its purchase, and the management of the acquiring firm could be too __________ about the value of the acquisition. More than one, optimistic The ___________ ____________ postulates that top managers typically overestimate their ability to create value from an acquisition, primarily because rising to the top of a corporation has given them an exaggerated sense of their own capabilities. Hubris hypothesis True/False: After an acquisition, many acquired companies experience high management turnover.
True Screening a firm before an acquisition can help make sure the firm (1) does not ________ too much for the acquired unit, (2) does not uncover any nasty ________ after the acquisition, and (3) acquires a firm whose organization culture is not _________ to the acquiring firm. Pay, surprises, antagonistic The main advantage to establishing a __________ ___________ is that it gives the firm a much greater ability to build the kind of subsidiary company that it wants. Greenfield venture It is __________ to establish a set of operating routines in a new subsidiary than it is to convert the operating routines of an acquired unit. Easier True/False: Greenfield ventures are quicker to establish than acquisitions. False Students also viewedChapter 1670 terms kaitlin_lucas9 International Business Chapter 1576 terms Bradlee_Morgan International Business - Chapter 13104 terms brittanypriester re60 terms janetchavez100 Sets found in the same folderGlobal Business ch 1366 terms studywme Global Business ch 1423 terms studywme Global Business ch 1163 terms studywme Global Business Today 1519 terms rjpalmgren Other sets by this creatorMarket Research ch. 1626 terms studywme Market Research ch. 1548 terms studywme Market Research ch. 1433 terms studywme Market Research ch. 1329 terms studywme Verified questions
algebra Find the total deposit. $$ \scriptscriptstyle\begin{array}{l}\\ \qquad\text{Currency} \qquad \qquad \qquad \qquad \qquad \qquad \qquad \qquad\text{Coins} \\ \begin{array}{|r|r|r|r|r|r|r|r|r|l|} \hline \text { Tens } & \text { Fives } & \text { Ones } & \text { Half Dollars } & \text { Quarters } & \text { Dimes } & \text { Nickels } & \text { Pennies } & \text { Checks } & \text { Total } \\ \hline 32 & 9 & 15 & 9 & 32 & & & & 6.51 & \$ \\ \hline \end{array} \end{array} $$ Verified answer
question Listed is a series of experiments and associated random variables. In each case, identify the values that the random variable can assume and state whether the random variable is discrete or continuous. $$ \begin{matrix} \text{Experiment} & \text{Random Variable (x)}\\ \text{c. Audit 50 tax returns} & \text{Number of returns containing errors}\\ \end{matrix} $$ Verified answer
question An economist would like to estimate the $95 \%$ confidence interval for the average real estate taxes collected by a small town in California. In a prior analysis, the standard deviation of real estate taxes was reported as $\$ 1,580$. What is the minimum sample size required by the economist if he wants to restrict the margin of error to $\$ 500$ ? Verified answer
finance Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31, 2014: $$ \begin{array}{lr} \textbf{Customer}&\textbf{Amount}\\ \text{Shawn Brooke}&\$4,650\\ \text{Eve Denton}&5,180\\ \text{Art Malloy}&11,050\\ \text{Cassie Yost}&\underline{9,120}\\ \hspace{10pt}\text{Total}&\underline{\underline{\$30,000}}\\ \end{array} $$ a. Journalize the write-offs for 2014 under the direct write-off method. Verified answer Recommended textbook solutions
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What are the advantages of licensing?Some of the advantages of licensing include the following.. Income without overhead. ... . Potentially better marketing. ... . Enter foreign markets more easily. ... . Diffuse conflicts. ... . Risk of IP theft. ... . No guarantee of revenue. ... . Unintended competition. ... . Risk of diminished reputation.. Which of the following is an advantage of licensing quizlet?11) One of the advantages of licensing is that the profits generated from such agreements are typically higher than for FDI.
Which of the following is an advantage of licensing in relation to global business?One of the greatest advantages of licensing international business transactions is that a company can manufacture a proprietor's product for a fixed term in a specific market, in exchange for an amount of money.
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What are some advantages of licensing as a method of entering international business quizlet?
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