Chapter 12 – Foreign Entry Strategies

First mover advantages are only of concern in branded consumer goods industries.
1. True
2. False
The location decision of foreign entry decision is driven by costs of production at the site.
1. True
2. False
A joint venture is established by two or more parent firms.
1. True
2. False
Non-equity entry modes include licensing, management contracts, and exporting.
1. True
2. False
Companies engaging in brownfield acquisitions take over an existing firm and substantially transform its operations.
1. True
2. False
Companies imitating the strategies of their competitors are said to engage in ‘mimetic behaviour’.
1. True
2. False
High investment risk due to large capital commitment and long pay-back periods, yet no co-owner and integration risks, is associated with which entry mode?
1. Greenfield
2. Full acquisition
3. Joint venture
4. Partial acquisition
Which entry mode enables foreign investor to create a local operations in its own image without the need to incorporate existing structures or demands by local partners?
1. Greenfield
2. Joint venture
3. Full acquisition
4. Partial acquisition
Which statement about joint-ventures (JVs) is not correct?
1. A foreign investor could establish a JVs in form of a minority, majority or equal equity JV,
2. A joint ventures allows foreign investors to share costs and risks of an investment with a local partner
3. A 50-50 ownership arrangements is strongly discouraged because it creates ambiguities in decision making processes
4. A JV does not normally involve integrating and restructuring of an existing operation
Which of the following statements regarding institutional frameworks and foreign entry strategies is correct?
1. Regulatory institutions may prohibit certain types of operations or transactions
2. Institutional idiosyncrasies may increase the need for acquiring local knowledge
3. Lack of contract enforcement institutions may increase the costs of arm-length contracts
4. All of the above statements are correct
5. None of the above statements is correct
Which statement about first-mover advantages is correct?
1. Entering a market earlier that key competitors is an important way to build brand recognition
2. Being first in a market virtually assures gaining the largest market share once the demand picks up
3. Better relationships with the authorities is another common advantage of entering a country early
4. All of the above statements are correct
5. None of the above statements is correct
Partial acquisitions are difficult to manage from an acquirer’s perspective, however they have been observed frequently...
1. in the context of privatization processes
2. when previous owners have a continuing interest in the company
3. where acquirers wish to provide incentives for a founding entrepreneur to stay committed to the company after the take-over
4. All of the above situations
5. None of the above situations

Chapter 12 – Foreign Entry Strategies

Quiz