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Exam 13: Selecting and Managing Entry Modes

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Question 41

Multiple Choice

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________ is a countertrade whereby one company sells to another its obligation to make a purchase in a given country.

A) Franchising
B) Joint venture
C) Switch trading
D) Barter

E) B) and C)
F) C) and D)

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Question 42

Multiple Choice

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Which of the following steps of the strategy development process for exports involves establishing relationships with potential local distributors?

A) identification of a potential market
B) match market needs to the company's abilities
C) initiation of meetings
D) commitment of resources

E) A) and B)
F) A) and C)

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Question 43

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Low tariffs and high quota limits encourage market entry by means of investment.

Which of the following occurs when a company sells its products to intermediaries who then resell to buyers in a target market?

Scenario: Sports Stuff Inc. Herb Graham is vice president of Sports Stuff Inc.,a business that develops,manufactures,and markets sports products.The company is looking to expand its operations into the European market.Herb believes that if the company expands its product line to include products reflecting sports that are popular in Europe,the company will achieve success there. -Herb knows that much of the success his company enjoys is due to the patents and copyrights that protect the company's products.If Sports Stuff chooses an entry mode in which it grants another firm the right to use its intangible property for a specified period of time,it would be engaging in ________.

Which of the following refers to a contract between the exporter and shipper that specifies merchandise destination and shipping costs?

A confirmed letter of credit is guaranteed by both the exporter's bank in the country of export and the importer's bank in the country of import.

Which of the following financing methods entails the greatest risk for importers?

Scenario: Sports Stuff Inc. Herb Graham is vice president of Sports Stuff Inc.,a business that develops,manufactures,and markets sports products.The company is looking to expand its operations into the European market.Herb believes that if the company expands its product line to include products reflecting sports that are popular in Europe,the company will achieve success there. -Herb has been exploring another type of entry mode that requires ongoing assistance on the part of one firm,often in the form of start-up capital,management training,or location advice.Herb is most likely considering ________.

Countertrade provides a way for firms to trade either by using a small amount of hard currency or even none at all.

Export/import financing in which an exporter ships merchandise and later bills the importer for its value is called ________.

Advance payment is commonly used for export/import financing when ________.

Scenario: Sports Stuff Inc. Herb Graham is vice president of Sports Stuff Inc.,a business that develops,manufactures,and markets sports products.The company is looking to expand its operations into the European market.Herb believes that if the company expands its product line to include products reflecting sports that are popular in Europe,the company will achieve success there. -The board of directors of Sports Stuff is concerned with the firm's lack of experience in foreign markets.To minimize this problem,Herb recommends that the firm create a ________ with a local partner.

Why would an exporter use a sales representative or a distributor? Why would the exporter be reluctant to offer an open account payment method?

Products for which there are fewer substitutes can more easily absorb higher shipping and production costs.

Scenario: Wang's Techno Toys Ann Wang has been successfully running Wang's Techno Toys that sells high-tech toys in the domestic market.Continually increasing and stiff competition at home has now forced Wang's Techno Toys to enter international markets through direct exports. -In some countries,people exchange electronic goods for Techno Toys instead of paying money for them.This practice is known as ________.

Which of the following refers to the exchange of goods or services directly for other goods or services without the use of money?

Which of the following is an investment entry mode?

Buyback is defined as ________.

Which of the following is a contractual entry mode in which one company supplies another with intangible property and other assistance over an extended period?