MGT 302 Final Exam Questions and All
Correct Answers 2025-2026 Updated.
tacit knowledge - Answer is information that is intuitive and difficult to articulate or codify in
writing.
Codified Knowledge - Answer is information that can be easily captured in the form of text,
tables, or diagrams.
First Mover Advantages - Answer advantages accruing to the first to enter a market
Pioneering Costs - Answer Costs an early entrant bears that later entrants avoid, such as the
time and effort in learning the rules, failure due to ignorance, and the liability of being a
foreigner.
Externalities - Answer knowledge spillovers
Strategic Commitments - Answer have long-term impacts and are not easy to reverse, can
have important influence on the nature of competition in a market, are neither good nor bad.
ex: deciding to enter a foreign market on a significant scale.
Exporting - Answer the sale of products produced in one country to residents of another
country.
Exporting: Direct - Answer company conducts all phases of the sale and transfer of the
merchandise to a buyer
Advantages of Exporting (direct) - Answer 1. Avoids the costs of establishing manufacturing
operations in the host country
2. Minimizes risk and investment
3. Rapid speed of entry
4. May realize experience curve and location economies
,5. exchange rate risk
Exporting: Indirect - Answer firm hires the expertise of someone else to facilitate the
exchange for a fee
Advantages of Exporting (indirect) - Answer Increased sales with little effort, risk or
investment
Disadvantages of Exporting (indirect) - Answer 1. loss of control
2. lack of personal relationship
3. smaller profit margin
Turnkey Projects - Answer When a firm agrees to set up an operating plant for a foreign
client and then hand over the "keys" when the plant is fully operational.
Advantage of Turnkey - Answer Can earn a return on knowledge asset-Less risky than
conventional FDI
Disadvantage of Turnkey - Answer 1. arrangement does not create long-term interest in the
foreign country
2. may create a competitor
Licensing - Answer an arrangement in which the owner of an intellectual property (the
licensor) grants another firm (the licensee) the right to use that intellectual property in
exchange for payment.
Advantages of Licensing - Answer 1. Reduces costs and risks of establishing foreign
enterprise
2. Establishes a physical presence
3. Overcomes trade and investment barriers
4. Rapid speed of entry
5. Reduces exposure to political risk
Disadvantages of Licensing - Answer 1. difficult to maintain control over assets and know-
, 5. licensee earns the majority of the profit
6. monitoring costs
Cross-Licensing Agreements - Answer enable firms to hold each other hostage, which
reduces the probability that they will behave opportunistically towards each other. They do so
by licensing valuable intangible property to a foreign partner and in turn get royalty payments
and can request valuable know-how of the foreign firm. Most common in high-tech industries.
Opportunism - Answer is the practice of taking advantage of a situation to gain an
advantage.
Acting Opportunistically - Answer would be exploiting a relationship to get an unfair
advantage. It could include theft of technology or entering into a partnership only to learn
information to one day use against your partner as a competitor.
Franchising - Answer an arrangement in which one firm (the franchisor) allows another (the
franchisee) the right to use an entire business system in exchange for fees, royalties or other
forms of compensation.
Advantages of Franchising - Answer 1. Quick, low-cost entry into numerous locations
2. Reduces costs and risk of establishing enterprise
3. Expansion of name brand identification and market reach
4. Can leverage the franchisees' local knowledge
Disadvantages of Franchising - Answer 1. problems of assuring quality control and operating
standards
2. can tarnish franchisor's image
3. conflicts and disputes likely
4. may create future competitors
Master Franchise Agreements - Answer is a joint venture between the franchisee and a local
firm
ex: McDonalds, Subway, KFC.
Correct Answers 2025-2026 Updated.
tacit knowledge - Answer is information that is intuitive and difficult to articulate or codify in
writing.
Codified Knowledge - Answer is information that can be easily captured in the form of text,
tables, or diagrams.
First Mover Advantages - Answer advantages accruing to the first to enter a market
Pioneering Costs - Answer Costs an early entrant bears that later entrants avoid, such as the
time and effort in learning the rules, failure due to ignorance, and the liability of being a
foreigner.
Externalities - Answer knowledge spillovers
Strategic Commitments - Answer have long-term impacts and are not easy to reverse, can
have important influence on the nature of competition in a market, are neither good nor bad.
ex: deciding to enter a foreign market on a significant scale.
Exporting - Answer the sale of products produced in one country to residents of another
country.
Exporting: Direct - Answer company conducts all phases of the sale and transfer of the
merchandise to a buyer
Advantages of Exporting (direct) - Answer 1. Avoids the costs of establishing manufacturing
operations in the host country
2. Minimizes risk and investment
3. Rapid speed of entry
4. May realize experience curve and location economies
,5. exchange rate risk
Exporting: Indirect - Answer firm hires the expertise of someone else to facilitate the
exchange for a fee
Advantages of Exporting (indirect) - Answer Increased sales with little effort, risk or
investment
Disadvantages of Exporting (indirect) - Answer 1. loss of control
2. lack of personal relationship
3. smaller profit margin
Turnkey Projects - Answer When a firm agrees to set up an operating plant for a foreign
client and then hand over the "keys" when the plant is fully operational.
Advantage of Turnkey - Answer Can earn a return on knowledge asset-Less risky than
conventional FDI
Disadvantage of Turnkey - Answer 1. arrangement does not create long-term interest in the
foreign country
2. may create a competitor
Licensing - Answer an arrangement in which the owner of an intellectual property (the
licensor) grants another firm (the licensee) the right to use that intellectual property in
exchange for payment.
Advantages of Licensing - Answer 1. Reduces costs and risks of establishing foreign
enterprise
2. Establishes a physical presence
3. Overcomes trade and investment barriers
4. Rapid speed of entry
5. Reduces exposure to political risk
Disadvantages of Licensing - Answer 1. difficult to maintain control over assets and know-
, 5. licensee earns the majority of the profit
6. monitoring costs
Cross-Licensing Agreements - Answer enable firms to hold each other hostage, which
reduces the probability that they will behave opportunistically towards each other. They do so
by licensing valuable intangible property to a foreign partner and in turn get royalty payments
and can request valuable know-how of the foreign firm. Most common in high-tech industries.
Opportunism - Answer is the practice of taking advantage of a situation to gain an
advantage.
Acting Opportunistically - Answer would be exploiting a relationship to get an unfair
advantage. It could include theft of technology or entering into a partnership only to learn
information to one day use against your partner as a competitor.
Franchising - Answer an arrangement in which one firm (the franchisor) allows another (the
franchisee) the right to use an entire business system in exchange for fees, royalties or other
forms of compensation.
Advantages of Franchising - Answer 1. Quick, low-cost entry into numerous locations
2. Reduces costs and risk of establishing enterprise
3. Expansion of name brand identification and market reach
4. Can leverage the franchisees' local knowledge
Disadvantages of Franchising - Answer 1. problems of assuring quality control and operating
standards
2. can tarnish franchisor's image
3. conflicts and disputes likely
4. may create future competitors
Master Franchise Agreements - Answer is a joint venture between the franchisee and a local
firm
ex: McDonalds, Subway, KFC.
