Page 122 - DMGT545_INTERNATIONAL_BUSINESS

Unit 6: Modes of Entering International Business

6.9 review Questions notes

1. What kinds of companies stand to gain the most from entering into strategic alliances with
potential competitors? Why?
2. Discuss how the need for control over foreign operations varies with firms’ strategies and
core competencies? What are the implications for the choice of entry-mode?
3. Whose interests should be the paramount concern of government trade policy (the interests
of producers, business and their employees) or those of consumers?
4. Discuss the merits and demerits of the following strategies to enter international business:
(i) Licensing, (ii) Strategic Alliance, and (iii) Joint Venture.
5. A small Canadian firm that has developed some valuable new medical products using
its unique biotechnology know-how is trying to decide how best to serve the European
Community market. Its choices are:
(a) Manufacture the product at home and let foreign sales agents handle marketing.
(b) Manufacture the products at home and set up a wholly owned subsidiary in Europe
to handle marketing.
(c) Enter into a strategic alliance with a large European pharmaceutical firm. The product
would be manufactured in Europe by the 50/50 joint venture and marketed by the
European firm.
The cost of investment in manufacturing facilities will be a major one for the Canadian
firm, but is not outside its reach. If these are the firm’s only options, which one would you
advise it to choose? Why?
6. What do you mean by strategic alliance? Also explain the various benefits of strategic
alliance.
7. Describe the various goals of strategic alliance.
8. What do you mean by merger and acquisition? Give some example of merger and
acquisition.
9. Describe the various disadvantages of strategic alliance.
10. What are the advantages and disadvantages of foreign direct investments?

answers: self assessment

1. Experience curve, location economies
2. Turnkey

3. Core competencies
4. Tariff
5. Licensing
6. Technological know-how; management know-how;

7. Management know-how
8. True
9. True
10. False

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