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GMS 522 Final Exam Questions and Answers
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GMS 522 Final Exam Questions and Answers
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GMS 522 Final Exam Questions andAnswers
Internationalization - Answer --defined as the process by which firms become more
engaged in international markets.
-the process involves varying degrees of financial and other resource commitments to
foreign markets and of course, various degrees of risk
Mode of Entry - Answer -central to the process of internationalization is the selection of
an entry mode. These range from low commitment modes such as exporting high
commitment modes such as foreign direct investment
Motivation - Answer -the motivation for internationalization may either be proactive (firm
wants to) or reactive (firm has little choice)
Uppsala or U model - Answer -the firm first expands to a psychically close market and
having become familiar with that market, will target slightly more distant markets.
experiential knowledge is the major driver of its pattern of internationalization. The
Uppsala model has been criticized for its linear approach to the internationalization
process
Dunnings OLI framework - Answer -firms expand abroad to capitalize on ownership,
location and internalization advantages
Advantages of Dunnings OLI framework - Answer --ownership of foreign assets will
confer on the firm a competitive advantage in the foreign market which is not enjoyed by
competing firms that do not own such assets
-location confers advantages in terms of tax or other investment incentives offered by
the gov't of the host country or a more favorable industrial relations climate for the firm's
operations
-internalization of firm-specific advantages such as proprietary technology confers
benefits to the firm over alternatives such as licensing
Springboard or latecomer perspective - Answer -emerging market firms internationalize
in order to overcome limitations inherent in their home-country environment, such as
small market size, institutional immaturity or a relatively unsophisticated consumer
base. To accomplish this firms aggressively acquire strategic assets from MNCs in
developed countries
,Systematic four-step process - Answer -1)Macro segmentation
2)Preliminary screening
3)Secondary screening
4)Final security selection
Macro Segmentation - Answer --develop segmentation criteria
-apply to group countries
Preliminary screening - Answer --develop additional criteria
-apply to reduce the # of candidate countries
Secondary screening - Answer --firm assesses its own capabilities relative to the market
Final security selection - Answer --conduct site visit
Selecting Foreign Markets - Answer -the end result of the process is the selection of
one country from the universe of potential candidates by a process of elimination
International consumer segmentation - Answer -consumers in cross-national segments
may have more in common with their counterparts in other countries than they do with
citizen of their own countries. If this is the case a two-stage model may be appropriate
in which segmentation is undertaken at both the country and consumer levels
Country Level Screening - Answer -macro-segmentation based on overall market
attractiveness
Consumer level screening - Answer -micro-segmentation based on personal and
societal values
Types of Entry modes - Answer --export
-intermediate
-hierarchical
Export Modes - Answer -low risk-low return modes which provide limited control for the
exporting firm
Intermediate Modes - Answer -modes which provide for the sharing of the risks and
rewards of market entry commensurate with the share of ownership of each partner
Hierarchical Modes - Answer -modes in which firm has complete control of the operation
but also exposure to a higher level of risk
Exporting - Answer -involves the manufacture of a product in one country and its sale in
one or more foreign countries
Two forms of exporting - Answer --direct
, -indirect
Direct Exporting - Answer -exporters transact with an intermediary based in the foreign
market
Indirect Exporting - Answer -exporter transacts with an intermediary based in its home
country. This intermediary takes responsibility for getting the exporter's product into
foreign country. Domestic transaction from standpoint of the exporter
Advantages to exporting - Answer --requires little by way of managerial skills or
knowledge of the foreign market
-carries with it minimal risk for the firm
-does not involve significant costs for the firm
Disadvantages to exporting - Answer --lower returns relative to other entry modes
-little control over how the product is positioned and sold in the foreign market
-little opportunity to develop a deep understanding of the foreign market
Types of Intermediaries - Answer --export buying agents
-export import broker
-export management company
-trading firms
-distributors
-agents
Export buying agents - Answer -these agents are resident in the country of the
manufacturer but work on behalf of a foreign buyer
Export-import broker - Answer -brokers bring buyer and seller together. They are
specialist firms and have deep expertise in a relatively narrow range of product
categories
Export management company - Answer -These are domestic firms which act on behalf
of a # of non-competing exporters .Take title to the production they handle and market
them internationally for their own account or they may act as agents
Trading firms - Answer -find buyers in foreign markets and negotiate distribution
arrangements for other companies. Trade financing and foreign exchange transaction
are also within their scope of activities
Distributors - Answer -independent firms based in the foreign country and are not
affiliated with the manufacturer. They purchase products from the manufacturer and
take responsibility for marketing them in the target foreign country
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