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MNE Entry Strategy Exam Questions and Answers Rated 100% What choice should be made based off the "relative long-term growth and profit potential"? - Answers The choice of market for an MNE to enter. What are the various modes of entering a foreign market? (and how many are there?) - Answers 1. ...

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  • October 24, 2024
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  • 2024/2025
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MNE Entry Strategy Exam Questions and Answers Rated 100%

What choice should be made based off the "relative long-term growth and profit potential"? - Answers
The choice of market for an MNE to enter.

What are the various modes of entering a foreign market? (and how many are there?) - Answers 1.
Exporting

2. Licensing

3.Franchising

4. Joint Ventures

5. Wholly owned subsidiaries

6. Acquisition

7. Turnkey Contracts

List the strategic alliances between potential or actual competitors. - Answers 1. Cross-shareholding
deals

2. Licensing arrangements

3. Formal Joint Ventures

4. Informal Cooperative arrangements

When deciding to enter a foreign market, what factors must you balance? - Answers The benefits, the
costs, and the risks associated with doing business in a country.

Long-term economic benefits are a function of which 3 factors with regards to basic MNE entry
decisions? - Answers 1. Size of the market (demographics)

2. Present wealth (purchasing power)

3. Future wealth of consumers (economic growth)



A country's capacity for growth tends to be greater in less developed nations. Additionally, costs and
risks are typically lower in advanced economies with stable politics.

What kind of country is ideal to invest in with regards to long-term economic benefits? - Answers The
"benefit-cost-risk" trade-off is likely more favourable in politically stable developed and developing
nations with a market-based economy. The key is to have no dramatic upsurges in either inflation or
private-sector debt.

, What are the different entry timings available to an MNE? - Answers Early: MNE enters a foreign market
before other foreign firms.



Late: MNE enters after other MNE firms have established themselves.

What is first-mover advantage?

Give 3 advantages. - Answers The ability to pre-empt rivals and capture demand by establishing a strong
brand name and customer satisfaction.



The ability to build sales volume in the country and ride down the experience curve ahead of rivals,
giving an early entrant a cost advantage over later entrants.



The ability to create switching costs that tie customers into the products or services.

What is first-mover disadvantage?

Give 4 disadvantages. - Answers Pioneering costs which arise when the foreign firm has to devote effort,
time and expense to learn the rules of the new market.



Liability with being the first foreign firm. More likely to fail than if you enter relatively soon after a few
other firms.



Pioneering cost of promoting and establishing a product offering to customers who may not know about
the product yet.



Early entrants face the risk of regulation change, which changes the prior assumptions about the
country.

Give a case study example of a first-mover. - Answers Uber. Didn't care for regulation and went in guns
blazing. They lost the Chinese market and faced considerable regulatory backlash in many European
capitals.

Large-scale entry vs Small-scale entry. What are the advantages and disadvantages of each? - Answers
LS: commitment of significant resources which implies rapid entry. This is a long-term strategy that is
difficult to reverse. However, makes it easier for a firm to attract customers who believe the firm is here

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