GMS 522 FINAL PART 1 EXAM
QUESTIONS WITH COMPLETE
SOLUTIONS
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
Agents - Answer-independent companies based in the foreign target country and
provide representation for the manufacturing firm. These intermediaries do not take title
to the products they handle
Licensing - Answer-one firm (the licensor) grants the right to use its intellectual property
to another firm (the licensee) in exchange for financial compensation referred to as a
royalty
Advantages for the licensor - Answer--no capital requirements
-does not require a deep understanding of the foreign market
-an effective strategy for circumventing the protectionist policies of host-country
governments
QUESTIONS WITH COMPLETE
SOLUTIONS
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
Agents - Answer-independent companies based in the foreign target country and
provide representation for the manufacturing firm. These intermediaries do not take title
to the products they handle
Licensing - Answer-one firm (the licensor) grants the right to use its intellectual property
to another firm (the licensee) in exchange for financial compensation referred to as a
royalty
Advantages for the licensor - Answer--no capital requirements
-does not require a deep understanding of the foreign market
-an effective strategy for circumventing the protectionist policies of host-country
governments
