Quiz 18 Rationale for global expansion and modes of entry

Based on an optimal mix of costs, skills, and PESTEL factors, companies now freely locate business functions anywhere in the world.

Which of the following is an observable feature in the globalization 3.0 stage?

The world's market economies are becoming more integrated.

As a result of globalization, the:

Acquisitions.

Which of the following is not included within the types of strategic alliances?

Franchising

Which of the following mode of entry comparatively requires the lowest levels of investment and control?

Exporting

Which of the following foreign entry modes primarily involves producing goods in the firm's host country to sell in another?

it underestimates its liability of foreignness when entering the Zevar market.

Silca Electronics Inc. is a consumer-electronics company based in the country of Pelo. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself successfully in the country of Zevar, and uses its low-cost

strategy to do so. However, due to the additional costs associated with training, coordinating across geographic distances, and other costs associated with doing business in an unfamiliar cultural and economic environment, Silca Electronics Inc. incurs huge financial losses in Zevar. In this scenario, Silca Electronics Inc.'s failure to establish itself successfully in Zevar occurs most likely because:

By establishing the North American Free Trade Agreement (NAFTA)

How has the administrative and political distance between Canada, Mexico, and the United States been reduced?

Segar, where people speak English and have a low standard of living

Zeda is a country of English-speaking people and has a very profitable economy. Which of the following countries is most likely to be the closest to Zeda in terms of cultural distance?

There will be gains in social welfare and living standards across the globe.

How will an increase in coordinated economic and political integration between countries affect the world economy?

multinational enterprise

Jane is the CEO of a clothing brand, Diva Rule Inc., which has retail stores and production units in five different countries. The firm's shareholders ensure the proper management of Diva Rule Inc. through their appointed board of directors. In this scenario, Diva Rule Inc. is most likely a _____.

Acquisitions

Which of the following is not included within the types of strategic alliances?

Exporting

Which of the following modes of entering a foreign market allows the lowest level of control?

They reduce a firm's exposure to loss of reputation.

Which of the following is the most likely advantage of using foreign acquisitions or greenfield plants as a foreign entry mode?

of an abundance of well-educated, English-speaking young people

India has been able to carve out a competitive advantage in business process outsourcing (BPO) primarily because:

it draws from multiple, equally important research facilities located throughout the world.

A firm is said to be pursuing a polycentric innovation strategy when:

there is a well-functioning capital market in the host country.

The administrative and political distance between two trading countries reduces when:

A firm that extracts and exports iron ore

For which of the following companies will geographic distance be the most relevant factor in deciding whether or not to trade with a target country?

Multinational enterprises (MNEs) began to create smaller, self-contained replicas of themselves in a few key countries.

Which of the following is a feature of the globalization 2.0 stage?

Greenfield operation

Lucar Steels Inc. has decided to enter into a foreign market by setting up its own production facilities and distribution channels from scratch. This will allow it to have strong control over all of its business activities. What is the foreign entry mode most likely opted by Lucar Steels Inc.?

intellectual property exposure

Japanese and European engineering companies entered China to participate in building the world's largest network of high-speed trains worth billions of dollars. Companies such as Kawasaki Heavy Industries (Japan), Siemens (Germany), and Alstom (France) were joint-venture partners with domestic Chinese companies. These firms now allege that the Chinese partners built on the Japanese and European partners' advanced technology to create their own, next-generation high-speed trains. This example best highlights the _____ that firms can experience when expanding overseas.

Wealthy countries engage in relatively more cross-border trade than poorer ones.

Which of the following statements is true with regard to international trade between countries?