Market Entry Strategies

Question 1

What does IP stand for in licensing?

Answer 1

Intellectual Property.

Question 2

What are the pros of a letter of credit?

Answer 2

Risk-free, ensures payment through banks, builds trust.

Question 3

What is a distributor agreement?

Answer 3

A contract allowing a foreign firm to resell products in a defined territory.

Question 4

What is a key factor in determining if franchising is a viable entry method?

Answer 4

Whether the business model is easily replicable and standardized.

Question 5

What does “business format franchising” include?

Answer 5

Full systems – branding, training, sales, marketing, operations.

Question 6

What is a cross-border acquisition?

Answer 6

Buying an existing firm in the foreign market.

Question 7

How can firms minimize the risks of international expansion?

Answer 7

Start with low-risk entry modes like exporting or licensing.

Question 8

What are the cons of a letter of credit?

Answer 8

Complex paperwork, strict protocols.

Question 9

What is the function of a Bill of Lading?

Answer 9

It serves as a receipt and title for goods being shipped.

Question 10

What are two common types of Incoterms?

Answer 10

FOB (Free On Board), CIF (Cost, Insurance, and Freight).

Question 11

What are key factors when selecting a foreign market?

Answer 11

Economic environment, political/legal stability, social preferences, infrastructure, competition, trade barriers.

Question 12

What does a JV partner typically contribute?

Answer 12

Assets, expertise, networks, or market knowledge.

Question 13

What U.S. organizations help with exporting?

Answer 13

U.S. Commercial Service, Ex-Im Bank, SBA.

Question 14

What is one benefit of exporting for seasonal products?

Answer 14

It helps stabilize revenue throughout the year.

Question 15

Why is the Letter of Credit considered the safest payment method?

Answer 15

Because it guarantees payment if the seller meets specific terms.

Question 16

What is a disadvantage of acquisitions?

Answer 16

Cultural clashes, integration issues, and higher upfront cost.

Question 17

What is a Greenfield investment?

Answer 17

Establishing a new operation from scratch in a foreign market.

Question 18

What is trademark licensing?

Answer 18

Granting permission to use brand names, logos, etc., for a fee.

Question 19

How is franchising different from licensing?

Answer 19

Franchising involves a full business system, while licensing focuses on IP.

Question 20

What is a Certificate of Origin?

Answer 20

A document declaring where a product was manufactured, often used for tariffs.

Question 21

What is the role of Incoterms in a contract?

Answer 21

Define responsibility, risk transfer, and cost allocation between buyer and seller.

Question 22

What is a major advantage of acquisitions in FDI?

Answer 22

Immediate access to market, infrastructure, and customers.

Question 23

Why might a firm expand internationally?

Answer 23

To increase revenue, reduce dependence on one market, and tap unmet demand.

Question 24

When might a joint venture be attractive?

Answer 24

When each partner contributes unique skills or assets to a shared goal.

Question 25

What is the main drawback of “Cash in Advance”?

Answer 25

It's risky for buyers, which may reduce interest or sales.

Question 26

What export support tool helps reduce political and commercial risks?

Answer 26

Export Credit Insurance from Ex-Im Bank.

Question 27

What is know-how licensing?

Answer 27

Providing technical or managerial knowledge to another firm.

Question 28

What is franchising?

Answer 28

Giving another business the right to operate under your business model and brand in exchange for fees.

Question 29

What are Incoterms?

Answer 29

Standard international terms that define buyer and seller responsibilities in shipping and insurance.

Question 30

Why might certain products be hard to export?

Answer 30

Due to bulkiness, fragility, perishability, or legal restrictions.

Question 31

What is exporting?

Answer 31

Selling goods produced in one country to another country.

Question 32

What kind of IP could a food company like KWKLPC license?

Answer 32

Brand name, recipe formulation, logo/trademark.

Question 33

What are some internal consequences of starting to export?

Answer 33

Reallocation of resources, new processes, compliance needs, logistics upgrades.

Question 34

Why might a firm prefer exporting over FDI?

Answer 34

Lower risk, lower investment, more flexibility.

Question 35

What are the three key types of FDI entry modes?

Answer 35

Greenfield investment, acquisition, and joint venture.

Question 36

What is a common reason companies don’t export?

Answer 36

Lack of knowledge about procedures and foreign market demand.

Question 37

What is a joint venture (JV)?

Answer 37

A partnership where two or more firms create a new independent business entity.

Question 38

What are common Incoterms used in global trade?

Answer 38

EXW, FOB, CIF, DDP, etc.

Question 39

What is a market entry strategy?

Answer 39

The method a firm uses to enter a new international market.

Question 40

What is licensing?

Answer 40

Allowing another firm to use your intellectual property in exchange for royalties.

Question 41

What are the disadvantages of exporting?

Answer 41

Sensitive to tariffs/exchange rates, less market learning, logistical complexity.

Question 42

Why do many firms hesitate to export?

Answer 42

Lack of knowledge, comfort with domestic market, fear of risk or complexity.

Question 43

What’s a common concern when exporting food items?

Answer 43

Regulatory compliance and maintaining the cold chain for perishables.

Question 44

What are common types of licensing?

Answer 44

Trademark, copyright, know-how.

Question 45

What is the primary risk of licensing?

Answer 45

Loss of control over brand and quality in foreign markets.

Question 46

What are some export-related documents?

Answer 46

Bill of Lading, Commercial Invoice, Certificate of Origin, Insurance Certificate, Packing List, EEI.

Question 47

What are the advantages of exporting?

Answer 47

Low risk, flexible, boosts revenue, diversifies markets, economies of scale.

Question 48

What is intermodal transportation?

Answer 48

Shipping using multiple transport modes (e.g. rail, truck, ship) without handling the cargo.

Question 49

What is one way to test foreign demand before committing?

Answer 49

Start with small export batches or trial licensing arrangements.

Question 50

What are some internal changes a firm might need when starting exports?

Answer 50

New staffing, compliance systems, logistics planning, and international marketing.

Question 51

What factors influence the choice of market entry strategy?

Answer 51

Control, resource commitment, flexibility, and risk.

Question 52

What is one reason why exporting can increase profitability?

Answer 52

Foreign markets may offer higher price margins than domestic ones.

Question 53

What is the purpose of trade shows for exporters?

Answer 53

Find buyers, distributors, and learn about market trends.

Question 54

What are the main types of market entry strategies?

Answer 54

Exporting, Licensing, Franchising, Greenfield Investment, Acquisition, Joint Venture.

Question 55

What are the 3 main international payment methods?

Answer 55

Cash in Advance, Open Account, Letter of Credit.

Question 56

What support does the U.S. Commercial Service offer exporters?

Answer 56

Market research, trade counseling, and matchmaking with foreign buyers.

Question 57

What does the term “cold chain” refer to?

Answer 57

A temperature-controlled supply chain for perishable goods.

Question 58

Why was franchising not feasible for Key West Key Lime Pie Company?

Answer 58

They didn't have a replicable retail format (like a pie parlor concept).

Question 59

What is the most common royalty percentage in licensing deals?

Answer 59

2%–5% of gross sales.