By its very nature, licensing increases a firms ability to utilize a coordinated strategy

True / False Questions1.(p. 488)The long-run benefits of doing business in a country are a function of factors such asthe size ofthe market, the present wealth of consumers in that market and the likely futurewealth ofcustomers.

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Difficulty: Medium2.(p. 489)The costs and risks associated with doing business in a foreign country are typicallyhigh in aneconomically advanced and politically stable democratic nation.

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3.(p. 489)First-mover advantages are the advantages associated with entering a market early.

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Difficulty: Easy4.(p. 489)Costs that an early entrant has to bear that a later entrant can avoid are known as first-movercosts.

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Difficulty: Medium5.(p. 491)Large strategic commitments limit strategic flexibility.

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By its very nature, licensing increases a firms ability to utilize a coordinated strategy

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Intermediate Accounting: Reporting and Analysis

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Difficulty: Medium6.(p. 492)A small-scale entrant is more likely than a large-scale entrant to capture first-mover advantagesassociated with demand preemption, scale economies and switching costs.

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Difficulty: Medium7.(p. 492)Small-scale entry allows a firm to learn about a foreign market while limiting thefirm's exposureto that market.

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Difficulty: Medium8.(p. 493)Exporting is advantageous because it avoids the cost of establishing manufacturingoperations inthe host country and because it may help a firm achieve experience curve andlocationeconomies.

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Difficulty: Medium9.(p. 493)Exporting may not be appropriate if lower-cost locations for manufacturing the product can befound abroad.

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Difficulty: Easy10.(p. 495)In a turnkey project, the contractor agrees to handle every detail of the project for aforeign client.

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Difficulty: Easy11.(p. 496)An advantage of turnkey projects is that the firm that enters into a turnkey deal willhave no long-term interest in the foreign country.

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Difficulty: Medium12.(p. 496)Tangible property includes patents, designs, copyrights and trademarks.

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Difficulty: Easy13.(p. 497)Licensing increases a firm's ability to realize experience curve and locationeconomies byproducing its product in a centralized location.

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Difficulty: Medium14.(p. 497)By its very nature, licensing increases a firm's ability to utilize a coordinatedstrategy.

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Difficulty: Medium15.(p. 498)Franchising enables a firm to quickly build a global presence.

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Difficulty: Easy16.(p. 499)The most typical joint venture is a 25/75 venture.

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Difficulty: Medium17.(p. 499)An advantage of joint ventures with a local partner is the knowledge of the localenvironment thelocal partner contributes to the venture.

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Difficulty: Medium18.(p. 500)A wholly owned subsidiary limits a firm's control over operations in differentcountries.

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Difficulty: Medium19.(p. 501)Firms entering a market via a wholly owned subsidiary must bear all the costs andrisksassociated with the venture.

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What is the primary advantage of licensing?

What is the primary advantage of licensing? It helps a firm avoid the development costs associated with opening a foreign market.

What gives the firm a much greater ability to build the kind of subsidiary company that it wants?

Overpayment for assets of an acquired firm is one reason acquisitions fail. Evidence suggests that almost all acquisitions create rather than destroy value. The main advantage of greenfield investment is that it gives the firm a much greater ability to build the kind of subsidiary company that it wants.

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 type of entry allows a company to learn about the foreign market while limiting the firm's exposure to that market group of answer choices?

Small-scale entry allows a firm to learn about a foreign market while limiting the firm's exposure to that market. Small-scale entry is a way to gather information about a foreign market before deciding whether to enter on a significant scale and how best to enter.