Chap 011
Chap 011
Chap 011
True / False Questions 1. (p. 306) A recent study of North American and European corporations indicated that the need to stay cost competitive was the most important external issue. TRUE
2. (p. 306) Multinational companies confronted by global competition for expaning markets are changing their strategies and altering their organizational structures. TRUE
3. (p. 306) Multinational companies need to make comprehensive decisions regarding key strategic choices such as concentration versus dispersion in order to enhance their competitiveness and to capitalize on global marketplace opportunities. TRUE
4. (p. 306) The big question in global marketing management today is "standardization versus adaptation." FALSE
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5. (p. 308) With respect to globalism, only in America can international market requirements be an afterthought. TRUE
Difficulty: Moderate Type: Comprehension
6. (p. 308) To be a success in the marketplace today, the best companies will focus on country as the primary segmentation variable. FALSE
7. (p. 309) The "Nestl way" is to dominate its markets. One of the ways Nestl does this is to decentralize with respect to foreign markets. TRUE
8. (p. 312) Tactical planning is essentially long term, incorporating generalized goals for the enterprise as a whole. FALSE
9. (p. 312) Strategic planning is conducted at the highest levels of management and deals with product, capital, and research, and long-term and short-term goals of the company. TRUE
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10. (p. 315, Exhibit 11.1) The first phase of the international planning process is to adapt the marketing mix to target markets. FALSE
Difficulty: Moderate Type: Knowledge
11. (p. 315, Exhibit 11.1) The third phase of the international planning process is to develop the marketing plan. In this phase budgets and action programs are devised. TRUE
12. (p. 316) In the second phase of the international planning process, the results of the analysis frequently indicates that the marketing mix would require such a drastic adaptation that a decision not to enter a particular market is made. TRUE
13. (p. 317) With respect to the international planning process, the marketing plan begins with a situation analysis and culminates in the selection of an entry mode and a specific action program for the market. TRUE
14. (p. 320) With indirect exporting the company sells to a customer in another country. FALSE
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15. (p. 320) Ralph Means' company has decided that it would like to export products to Japan. In order to do this, Mr. Means will sell his company's products to a Japanese distributor who in turn will sell (export) the products to the Japanese consumers. This form of exportation is called indirect exporting. TRUE
Difficulty: Moderate Type: Application
16. (p. 321) Patent rights, trademark rights, and the rights to use technological processes are granted in foreign licensing. TRUE
18. (p. 321) One of the types of franchise agreements used in international marketing is licensing. TRUE
19. (p. 323) A business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective is called a strategic international alliance (SIA). TRUE
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20. (p. 323-324) One reason businesses enter strategic international alliances (SIAs) is the cost of entering a new market "from scratch." FALSE
Difficulty: Moderate Type: Comprehension
21. (p. 326, Exhibit 11.3) Building a strategic international alliance (SIA) takes several steps to be successful. The first step in building strategic alliances is called "dating." TRUE
22. (p. 325) Mike Jordan's company has just entered into an agreement with a German firm that will create a separate legal entity. This new firm will be allowed to conduct business and actively compete in the European Union's various markets. A good description of the new company would be a "joint venture." TRUE
23. (p. 327) The primary reason for using an international joint venture in China is that it is the only form of business that is allowed to make a profit. FALSE
24. (p. 327) Ten high tech companies joined together to make a concentrated business effort in China. By joining together, the various companies were able enter the Chinese market for the first time. A good name for this type of arrangement would be a consortium (consortia). TRUE
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25. (p. 328-329) Korea's Samsung invested some $500 million to build television tube plants in Tijuana, Mexico. This form of international business is aptly named international licensing. FALSE
Difficulty: Moderate Type: Application
26. (p. 328-329) A hallmark of global companies today is the establishment of manufacturing operations throughout the world. This is a characteristic of what is called direct foreign investment. TRUE
27. (p. 331, Exhibit 11.4) An advantage of a matrix organization structure in international business is that it permits management to respond to the conflicts that arise among functional activity, product, and geography. TRUE
Multiple Choice Questions 28. (p. 306) A recent study of North American and European corporations indicated that the need to __________________ was considered to be the most important external issue affecting their marketing strategies. A. gain access to the Chinese market B. avoid competition among themselves C. reduce international exposure D. stay cost competitive E. overcome management resistance
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29. (p. 306) With respect to global marketing management, the argument for managing in international arena for the 1990s was framed as: A. standardization versus adaptation. B. globalization versus localization. C. global integration versus local responsiveness. D. capitalism versus socialism/communism. E. buy now versus buy later.
Difficulty: Hard Type: Comprehension
30. (p. 306) In the 1970s international marketers framed their management emphasis in foreign markets as a question of: A. standardization versus adaptation. B. globalization versus localization. C. global integration versus local responsiveness. D. capitalism versus socialism/communism. E. buy now versus buy later.
31. (p. 306) In order to enhance their competitiveness and to capitalize on global marketplace opportunities comprehensive decisions need to be made by multinational companies regarding key strategic choices such as: integration vs independence, concentration vs dispersion, and _________. A. import vs export B. direct sales vs franchising C. standardization vs adaptation D. political vs legal E. international vs global
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32. (p. 313-314) The text cites studies that report firms committed to international marketing gain competitive advantages from __________. A. delaying entry into specific regions B. an extensive advertising campaign C. developing relationships in specific regions D. clustering operations in specific regions E. using central regional warehouses
Difficulty: Easy Type: Comprehension
33. (p. 314) Competition and the ease of global communications is forcing managers around the world to __________. A. expand global advertising B. respond quickly to competitive threats C. make greater commitments to global marketing D. increase customer access to their companies E. extend product and service warranty periods
34. (p. 307-308) The statement, "Only in America can international market requirements be an afterthought" is an example of American __________________. A. ethnocentrism B. marketing myopia C. fear of European dominance D. concern for international customers E. profit-taking
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35. (p. 308) The ideal market segment size, if customer satisfaction is the goal, is: A. one. B. a small group such as 10-15. C. local such as a small city of 10,000. D. regional such as a state or territory. E. the world.
Difficulty: Moderate Type: Application
36. (p. 309) Nestl focuses on dominating markets in the world arena. The company has four primary points in its highly successful international strategy. Which of the following would not be among those four points? A. think and plan long term B. decentralize C. stick to what you know D. standardize so that all becomes one E. adapt to local tastes
37. (p. 309-310) Which of the following companies has been known for its ability to adapt to local needs and wants in the international marketplace since its inception in 1866? A. Kodak. B. C.W. Post. C. R.J. Reynolds Tobacco D. Ralston Purina E. Nestl
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38. (p. 310) When large market segments can be identified, __________________ can be important competitive advantages of global companies. A. profits B. product differentiation C. strategic alliances in global cartels D. economies of scale in production and marketing E. relational static differentials
Difficulty: Easy Type: Comprehension
39. (p. 310) All of the following are benefits of global marketing EXCEPT: A. access to the toughest customers. B. economies of scale. C. transfer of experience and know-how. D. financial benefits. E. international travel benefits.
40. (p. 311) International planning must blend the changing parameters of external country environments with ____________________________. A. tactical, strategic operatives B. corporate objectives and capabilities C. operational, production constraints D. regional variation in personnel marketing capacities E. macroeconomic potential
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41. (p. 312) International corporate planning is essentially: A. short term. B. operational. C. tactical. D. long term. E. regional.
Difficulty: Easy Type: Comprehension
42. (p. 312) Strategic planning is conducted at the ______________ levels of management and deals with products, capital, and research. A. operational B. tactical C. internal D. highest E. secondary
43. (p. 312) If a company were to focus on market planning that involved specific actions and allocations of resources, the company would be using _____________ to carry out plans. A. tactical planning B. strategic planning C. corporate planning D. long term planning E. synergistic planning
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44. (p. 312) A major advantage to a multinational corporation (MNC) involved in planning is the: A. assurance of making a profit. B. discipline imposed by the process. C. ability to explain the process to all employees. D. ability to circumvent governmental barriers by using the process. E. unification of cultural differences.
Difficulty: Easy Type: Comprehension
45. (p. 312) The planning process is a primary medium of organizational: A. greed. B. localization. C. learning. D. power structure. E. culture.
46. (p. 314) All of the following are decisions that the foreign marketer must make when entering a foreign market EXCEPT: A. what products to develop. B. in which markets should business be conducted. C. what should be the level of resource commitment. D. should the organization have a mission statement or not. E. allocating effort and resources among countries.
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47. (p. 315, Exhibit 11.1) All of the following are actual phases in the international planning process EXCEPT: A. adapting the marketing mix to target markets. B. developing the marketing plan. C. establish the organizational design of the corporate parent. D. implementation and control. E. matching company and country needs
Difficulty: Moderate Type: Comprehension
48. (p. 315, Exhibit 11.1) Which of the following would be considered to be the first phase in the international planning process? A. adapting the marketing mix to target markets B. developing the marketing plan C. matching company and country needs D. implementation and control E. defining company objectives and resources
49. (p. 315, Exhibit 11.1) Which of the following would be subjects analyzed or explored in the first phase of the international planning process? A. company character B. product adaptation C. advertising D. situation analysis E. budgets
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50. (p. 315, Exhibit 11.1) Which of the following would be subjects analyzed or explored in the second phase of the international planning process? A. company character B. product adaptation C. situation analysis D. budgets E. standards
Difficulty: Hard Type: Comprehension
51. (p. 315, Exhibit 11.1) During which of the following international planning phases would the marketer make decisions that involved the situation analysis, objectives and goals, budgets, and action programs? A. adapting the marketing mix to target markets B. developing the marketing plan C. matching company and country needs D. implementation and control E. defining company objectives and resources
52. (p. 315, Exhibit 11.1) All of the following are subjects that would be explored in the first phase of the international planning process (preliminary analysis and screening) EXCEPT: A. company character. B. home-country constraints. C. geography. D. host-country constraints. E. selecting the mode of entry.
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53. (p. 316) The primary goal of Phase 2 of the international planning process is to: A. perform a preliminary analysis of a country. B. perform a screen of the environment. C. decide on a marketing mix adjusted to the cultural constraints. D. perform a situation analysis for the country that has been selected for entry. E. implement specific plans.
Difficulty: Moderate Type: Comprehension
54. (p. 315, Exhibit 11.1) Kodak has already examined a series of environmental factors, reviewed its company's character, and established screening criteria. Which of the following would be the next step that the company should undertake as it proceeds with the international planning process? A. match the company to countries B. adapt the market mix to target markets C. adapt the company's position to communication objectives D. develop a marketing plan E. implement and control information obtained in the initial examination
55. (p. 316) When a company conducts Phase 2 of the international planning process, one of the questions generated in this phase is: A. are there identifiable market segments that allow for common marketing mix tactics across countries? B. have objectives and goals been established? C. have all budgets been determined within the constraints of resources? D. have action programs begun? E. have responsibilities been established for implementation and control?
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56. (p. 316) Which of the following is a question that is not likely be generated by Phase 2 of the international planning process? A. are there identifiable market segments that allow for common marketing mix tactics across countries? B. which cultural adaptations are necessary for successful acceptance of the marketing mix? C. will adaptation costs allow profitable market entry? D. which environmental adaptations are necessary for successful acceptance of the marketing mix? E. which country market to make a market investment?
Difficulty: Hard Type: Comprehension
57. (p. 315, Exhibit 11.1) Phase 3 of the international planning process, begins with: A. the creation of a management performance guide. B. the selection of an action program. C. conducting a situation analysis. D. developing a list of home-country constraints. E. exploration of the distribution option including logistics and channels.
58. (p. 317) John Deere Tractor Company has just completed a marketing plan for entering South Africa. Included in this plan is the establishment of what is to be done, by whom, how it will be done, and when. Which of the following phases of the international planning process has John Deere planners just completed? A. Phase 1 B. Phase 2 C. Phase 3 D. Phase 4 E. Phase 5
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59. (p. 317, 315, Exhibit 11.1) If Phase 3 of the international planning process is successfully completed, which of the following will generally occur next in the planning process cycle? A. an objectives and goals phase. B. a budget phase. C. an action program(s) phase. D. an implementation and control phase. E. a communication phase where advertising and promotion are emphasized.
Difficulty: Moderate Type: Knowledge
60. (p. 319, Exhibit 11.2) Which of the following is the simplest and cheapest method to enter a foreign market? A. exporting B. importing C. the Internet D. licensing E. franchising
61. (p. 319) If a company would "just like to get its feet wet" in the international marketing arena, which of the following methods is generally used? A. modest exporting B. importing C. licensing D. franchising E. direct selling
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62. (p. 319, Exhibit 11.2) A company has four different modes of foreign market entry. Which of the following WOULD NOT be among those modes? A. exporting B. nonequity importing C. contractual agreements D. strategic alliances E. direct foreign investment
Difficulty: Easy Type: Comprehension
63. (p. 319, Exhibit 11.2) Which of the following modes of foreign market entry requires the most amount of equity and, therefore, the most risk? A. exporting B. importing C. contractual agreements D. strategic alliances E. direct foreign investment
64. (p. 320) With __________ exporting, the company sells to a customer in another country. A. direct B. indirect C. multiple layers D. parallel E. synergistic
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65. (p. 320) With ____________ exporting, the company usually sells to a buyer (importer or distributor) in the home country who in turn exports the product. A. direct B. indirect C. multiple layers D. parallel E. synergistic
Difficulty: Moderate Type: Knowledge
66. (p. 320) Crate and Barrel (a large U.S. kitchen ware distributor) sells its inventory twice a year to a large trading company in Vietnam. Basically, Crate and Barrel is in the exporting business with Vietnam as its market. Which of the following forms of exporting best describes what Crate and Barrel is doing? A. direct exporting B. indirect exporting C. multiple layer exporting D. parallel exporting E. synergistic exporting
67. (p. 320-321) The Internet has proven to be a viable exporting alternative for most markets. However, the European Union approach to ______________ is great cause for concern. A. selling dot.com names B. spam C. taxing Internet sales D. controlling search engines E. regulating dot.com country of residence
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68. (p. 321) For which of the following products is it advisable that a company have a direct sales force in the country where sales are to occur? A. big ticket industrial products B. computer accessories C. automobiles D. cosmetics E. none of the above
Difficulty: Easy Type: Application
69. (p. 321) _______________________ are long-term, nonequity associations between a company and another in a foreign market. A. Direct sales B. Direct exporting C. Indirect exporting D. Contractual agreements E. Joint ventures
70. (p. 321) Contractual agreements serve as a means of transfer of __________ rather than _______. A. equity; knowledge B. knowledge; equity C. money; profit D. organizational design; organizational theory E. commercial advantage; economic power
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71. (p. 321) Patent rights, trademark rights, and the rights to use technological processes are granted in foreign: A. direct exporting. B. indirect exporting. C. strategic alliances. D. licensing. E. Internet dot.com source sites.
Difficulty: Moderate Type: Comprehension
72. (p. 321-322) Kwok Winn is looking to open a new business in his native Singapore. He has decided on a form of licensing that provides him with a standard package of products, systems, and management services in order to sell fast food to local residents. Which of the following best describes the form of business that Mr. Winn has chosen? A. direct sales B. exporting C. importing D. strategic alliance E. franchising
73. (p. 323) A(n) _____________________ is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective. A. direct sales group B. contractual exploration C. Internet importing Web site D. strategic international alliance E. franchising organization
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74. (p. 323-324) Which of the following industries would likely have the most visible strategic international alliances? A. computers B. airlines C. retail food stores D. shoe manufacturing E. athletic equipment
Difficulty: Hard Type: Application
75. (p. 326, Exhibit 11.3) The first relationship activity in building a strategic alliance where senior executives leverage their personal networks is labeled as: A. imaging. B. initiating. C. interfacing. D. dating. E. committing.
76. (p. 326, Exhibit 11.3) __________ is the relationship skill necessary during the imaging activity stage of building a strategic alliance. A. Good relationship self-awareness B. Creating intimacy C. Trust building D. Partnering E. Commitment
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77. (p. 325) A ___________ occurs when two or more participating companies join forces to create a separate legal entity to facilitate doing business in the international arena. A. consortium B. franchise C. license arrangement D. joint venture E. direct investment
Difficulty: Moderate Type: Knowledge
78. (p. 325-326) All of the following are considered to be important factors associated with joint ventures EXCEPT: A. JVs are normally between individuals rather than organizations. B. JVs are established, separate, legal entities. C. they acknowledge intent by the partners to share in the management of the JV. D. they are partnerships between legally incorporated entities such as companies, chartered organizations, or governments. E. equity positions are held by each of the partners.
79. (p. 327) One of the differences between consortia and joint ventures is that consortia typically: A. makes more money than a JV. B. operates in a country or market in which none of the participants is currently active. C. operates in only one market at a time. D. are associated with academic partners. E. operates in low visibility markets.
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80. (p. 331, Exhibit 11.4) Which of the following organizational forms is becoming increasing popular by companies that are attempting to reorganize for global competition? A. product form B. geographical form C. tall organizations D. pyramid structures E. matrix form
Difficulty: Moderate Type: Comprehension
Fill in the Blank Questions 81. (p. 306) In the 1970s the argument in international business was framed as ____________. standardization versus adaptation
82. (p. 314) The trend is toward steadily increasing __________ of trade agreements, trade, and company strategies. globalization
83. (p. 306) In order to enhance their competitiveness and to capitalize on global marketplace opportunities comprehensive decisions need to be made by multinational companies regarding key strategic choices such as: integration vs independence, concentration vs dispersion, and _________. standardization vs adaptation
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84. (p. 314) Competition and the ease of __________ is forcing managers around the world to make greater commitments to global marketing. global communications
Difficulty: Moderate Type: Comprehension
85. (p. 306) In the 1980's the argument in international business was __________________. globalization versus localization
86. (p. 312) _________ planning is essentially long term, incorporating generalized goals for the enterprise as a whole. Corporate
87. (p. 312) __________ planning is conducted at the highest levels of management and deals with products, capital, and research, and long- and short-term goals of the company. Strategic
88. (p. 312) Another name for tactical planning is _______ planning. market
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89. (p. 315, Exhibit 11.1) The final phase of the international planning process is called as ___________ and ____________. implementation--control
Difficulty: Easy Type: Comprehension
90. (p. 315, Exhibit 11.1) In Phase 2 of the international planning process, the marketer adapts the marketing mix to _________ markets. target
91. (p. 319, Exhibit 11.2) A company has four different modes of foreign market entry from which to select. They are __________, _____________, _____________, and _____________. exporting; contractual agreements; strategic alliances; direct foreign investment
92. (p. 320) With _________ exporting the company sells to a customer in another country. direct
93. (p. 320) With ___________ exporting the company sells to a buyer in the home country who in turn exports the product. indirect
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94. (p. 321) Contractual agreements are long-term, __________ associations between a company and another in a foreign market. nonequity
Difficulty: Hard Type: Knowledge
95. (p. 321) If domestic business would like to acquire the patent rights of a foreign firm so business can be conducted in the domestic business's local market, the domestic business would need to engage in ____________ to use the patent rights legally. licensing
96. (p. 321-322) If a company sought to buy a standard package of products, services, and management services to open a fast food business, the company would be involved in a business format called ______________. franchising
97. (p. 323) SIA is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective. In the above example, SIA stands for _________ ___________ _____________. strategic international alliance
98. (p. 328-329) Because of the high equity requirement, _____ __________ ___________ is probably the most risky of the four market entry modes. direct foreign investment
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99. (p. 330) ___________ structures of organizational design work best when a close relationship with national and local governments is important. Geographic
Difficulty: Hard Type: Comprehension
100. (p. 331) Considerations of where decisions will be made, by whom, and by which method constitutes a major element of organizational strategy. These decisions fall in the realm of what is called __________ of decision. locus
Essay Questions 101. (p. 310-312) Briefly, explain the benefits of global marketing.
When large market segments can be identified, economies of scale in production and marketing can be important competitive advantages of global companies. Other benefits include: (a) a transfer of experience and know-how across countries through improved coordination and integration of marketing activities, (b) ensures access to the toughest customers, and (c) diversity of markets served carries with it additional financial benefits.
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102. (p. 311-313) Demonstrate the differences among corporate, strategic, and tactical planning. Corporate planning is essentially long term, incorporating generalized goals for the enterprise as a whole. Strategic planning is conducted at the highest levels of management and deals with products, capital, and research, and long- and short-term goals of the company. Tactical planning pertains to specific actions and to the allocation of resources used to implement strategic planning goals in specific markets. Tactical plans are made at the local level and address marketing and advertising questions.
103. (p. 315, Exhibit 11.1) List and briefly characterize the four phases of the international planning process.
The four phases are: (a) Phase 1--Preliminary analysis and screening (matching company/country needs); (b) Phase 2--Adapting the marketing mix to target markets; (c) Phase 3--Developing the marketing plan; and, (d) Phase 4--Implementation and control.
104. (p. 319, Exhibit 11.2) A company has four different modes of foreign market entry from which to select. List and briefly characterize each of these modes.
The modes are exporting, contractual agreements, strategic alliances, and direct foreign investment. Brief characterizations may be found on page 319 in Exhibit 11.2. More detailed descriptions of each mode may be found in the associated sections found on pages 318-330.
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105. (p. 32-322) Describe the two basic contractual agreements that most companies follow in their attempt to enter a foreign market. Contractual agreements generally involve the transfer of technology, processes, trademarks, or human skills. The two basic forms of contractual agreements are licensing and franchising. Licensing is associated with patent rights, trademark rights, and the rights to use technological processes in foreign markets. It is a favorite strategy for small and medium-sized companies. Franchising involves offering a standard package of products, systems, and management services.
A SIA is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective. SIAs are sought as a way to shore up weaknesses and increase competitive strengths.
107. (p. 325-328) Explain the differences between a joint venture and consortia.
A joint venture is differentiated from other types of strategic alliances or collaborative relationships in that a joint venture is a partnership of two or more participating companies that join forces to create a separate legal entity. Consortia are similar to joint ventures but have two distinguishing characteristics: (a) they typically involve a large number of participants and (b) they frequently operate in a country or market in which none of the participants is currently active.
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108. (p. 328-329) You have just been hired as a consultant by Apple Computer to advise them on how to enter the South African market. You have decided that direct foreign investment would be the best mode for Apple to follow at this point in time. Write a one-paragraph memo that outlines the benefits of direct foreign investment in a country. Companies that manufacture locally can capitalize on low-cost labor, avoid high import taxes, reduce the high cost of transportation to market, gain access to raw materials, and gain advantages by being perceived as making an investment in the market (as a way to gain entry).
109. (p. 331, Exhibit 11.4) With respect to organizational structures used in international marketing, companies are usually structured around one of three alternatives. Assuming that you were a consultant for AT&T who desired to create an organization that was able to merge your organization's expertise and skills with that of Sony's cell phone division so that your new joint venture could enter the Scandinavian market, which of the organizational structure alternatives would make most sense? Comment on why the structure might be a good one to use.
The three structures are product, geographic, and a matrix approach. Students could select any of the three options, however, the text suggests that the matrix form is preferable in today's market place. A matrix structure permits management to respond to the conflicts that arise between functional activity, product, and geography. Since the new venture will be a joint venture, the matrix structure might allow both of the companies to bring separate expertise to the table. Since a matrix structure encourages sharing of experience, resources, expertise, technology, and information, it seem to be a natural in this situation.
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