UCF GEB 3375 Exam 2 Review Questions With 100% Correct

What is *market screening*? - A modified version of environmental scanning in which the firm identifies desirable markets by eliminating the less desirable ones. What is the *Basic Needs Potential*? - A modified version of environmental scanning in which the firm identifies desirable markets by eliminating the less desirable ones. An example of *basic needs potential*? - The basic need potential of some goods is dependent on various physical forces, such as climate, topography, and natural resources. If the firm produces air conditioners, the analyst will look for countries with warm climates. What is the second screening, *Financial and Economic Forces*? - After the initial screening, the analyst will have a much smaller list of prospects. Then a second screening based on the financial and economic forces further reduces the list of potential markets. What is a *Market Indicator*? - Economic data used to measure relative market strength of countries or geographic areas. What is an example of *Market Indicator*? - an analyst might develop an index of ecommerce potential for Latin America by collecting and ranking data of the sort found in Table 12.1 and Table 12.2 so that the countries in the region could be compared. What are *Market Factors*? - Economic data that correlate highly with market demand for a product. What is *Political and Legal Forces*? - The elements of the political and legal forces that can eliminate a market from further consideration or make it more attractive are many. What is *licensing*? - A contractual arrangement in which one firm grants access to its patents, trade secrets, or technology to another for a fee.What is *franchising*? - A form of licensing in which one firm contracts with another to operate a business under an established name according to specific rules. Responsibilities of licensee? - The licensee generally pays a fixed sum when signing the licensing agreement and then a royalty of 2 to 5 percent of sales over the life of the contract (five to seven years with an option for renewal is one common way to structure such agreements). Advantage/ disadvantage of licensing? - Advantages: - Low Investment - Low Involvement - Low effort - Low-cost initial entry strategy Disadvantages: - Performance depends on the foreign licensee - Licencor has limited control over its asset - Runs risk of creating future competitor What is *Trademark Licensing*? - Involves a firm granting another firm permission to use its *proprietary names, characters, or logos* for a specified period of time in exchange for a royalty. What is *Copyright Licensing*? - Gives the owner the exclusive right to reproduce art, music, literature, software, etc., as well as prepare derivative works, or distribute copies. What is *Know-How Licensing*? - Involves a contract in which the local firm provides technological or management knowledge about how to design, manufacture, or deliver a product or a service. What is a*Greenfield Investment*? - The establishment of new facilities from the ground up. Start from scratch.What is a *Joint-Venture*? - A cooperative effort among two or more organizations that share a common interest in a business undertaking. What entry strategies could OTSC use? - Exporting, Licensing, Wholly Owned Subsidiary, Joint Venture. What entry strategies should OTSC not use? - Franchising. What is *Indirect Exporting*? - Contracting with an intermediary in the firm's home country to perform all export functions, often an export management or trading company. What is *Direct Exporting* - Contracting with intermediaries in the foreign market such as distributors or agents, to perform export functions. They perform downstream value-chain activities in the target market. What is a *Company-Owned Foreign Subsidiary*? - Similar to direct exporting except the exporter owns the foreign intermediation operation' the most advanced option. What are the advantages of exporting? - *Increase overall sales volume, improve market share, and generate profit margins* that are often more favorable than in the domestic market. *Economies of Scale* *Leverage Capabilities* What are the disadvantages of exporting? - *Requires firm to acquire new capabilities and redirect organizational resources.* *Sensitive to tariffs and other trade barriers*What is the *Commercial Invoice*? - Actual demand for payment issued by the exporter when a sale is concluded. What is the *Bill of Lading*? - Basic contract between exporter and shipper. Authorizes the shipping company to transport the goods to the buyer's destination.