1. One Disadvantage of licensing as a mode of entry into foreign markets is that
ID: 1106328 • Letter: 1
Question
1. One Disadvantage of licensing as a mode of entry into foreign markets is that
A) It is uneconomical due to the high transportation costs. B) It can cause the firm to quickly lose control over its technology. C) It is the most costly method of serving a foreign market from a capital investment standpoint. D) It is very risky due to the threat of tariff barriers by the host-country goverment. E) It can lead to problems with local marketing agents.
2. A disadvantage of franchising as a mode of entry into foreign markets is that it
A) Can make quality control difficult. B) Is very risky due to the threat of tariff barriers by the host-country goverment. C) is uneconomical due to the high transportation costs. D) Can carry high development risks. E) is the most costly method of serving a foreign market from a capital investment standpoint.
3. Generally, the most costly method of serving a foreign market from a capital investment standpoint is through
A) Wholly owned subsidiaries. B) Exporting. C) Licensing. D) Joint ventures. E) Turnkey contracts
4. Which of the following refers to the reductions in unit cost achieved by producing a large volume of a product?
A) Purchasing power parity. B) Transition effects. C) economies of scale. D) Learning effects. E) Lead strategy.
5. Which strategy should firms pursue when they are trying to simultaneously achieve low costs through location economies, economies scale, and learning effects, differentiate their product offering across geograaphic markets to account for local differentiates, and foster a multidirectional flow of skills between different subsidiaries in the firms global network of operations?
A) Transnational B) Domestic C) Global standardization D) Localization E) Universal
Explanation / Answer
1. Licensing does not give a firm control over manufacturing, marketing, technology and strategy.
Hence the correct option is b
2. a drawbacks of franchising as a mode of entry into foreign markets is that it can make quality control difficult.
Hence the correct option is a
3. wholly-owned subsidiaries are most costly method of serving a foreign market from a capital investment standpoint. If a firm, having doing this bear full costs and risks of operating overseas operations.
Hence the correct option is a
4. the correct option is c
An economy of scale is reduction in unit cost achieved by producing a large volume of a product.
5. the correct option is a Transitional
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