According to studies by Rugman and Verbeke, most of the 500 largest companies in the world are global.

41.

According to studies by Rugman and Verbeke, most of the 500 largest companies in the world are global.    FALSE Extensive analysis of the distribution data of sales across different countries and regions led Alan Rugman and Alain Verbeke to conclude that there is a strong case to be made that most companies today are regional or biregional, not global.

AACSB: Analytic Blooms: Understand Learning Objective: 07-06 The difference between regional companies and truly global companies. Level of Difficulty: 2 Medium Topic: Achieving Competitive Advantage in Global Markets

42.

Trading blocs and free trade zones promote the rise of international expansion.    FALSE Another reason for regional expansion is the rise of the trading blocs and free trade zones. A number of regional agreements have been created that facilitate the growth of business within these regions by easing trade restrictions, and taxes and tariffs.

AACSB: Analytic Blooms: Understand Learning Objective: 07-06 The difference between regional companies and truly global companies. Level of Difficulty: 2 Medium Topic: Achieving Competitive Advantage in Global Markets

43.

A franchise generally expires after a few years, whereas a license is designed to last into perpetuity.    FALSE Licensing enables a company to receive a royalty or fee in exchange for the right to use its trademark, patent, trade secret, or other valuable items of intellectual property. Franchising contracts generally include a broader range of factors in an operation and have a longer time period during which the agreement is in effect.

AACSB: Analytic Blooms: Remember Learning Objective: 07-07 The four basic types of entry strategies and the relative benefits and risks associated with each of them. Level of Difficulty: 1 Easy Topic: Entry Modes of International Expansion

44.	Typically, joint ventures involve less control and risk than franchising.    FALSE A joint venture has a higher degree of ownership (both investment and risk) and control than does franchising.

AACSB: Analytic Blooms: Remember Learning Objective: 07-07 The four basic types of entry strategies and the relative benefits and risks associated with each of them. Level of Difficulty: 1 Easy Topic: Entry Modes of International Expansion

45.

Typically, the least risky method of entry into a foreign market is through the establishment of a wholly owned foreign subsidiary so that the parent organization can maintain a high level of control.    FALSE Establishing a wholly owned subsidiary is the most expensive and risky of the various entry modes. However, it can also yield the highest returns. In addition, it provides the multinational company with the greatest degree of control of all activities, including manufacturing, marketing, distribution, and technology development. Wholly owned subsidiaries are most appropriate where a firm already has the appropriate knowledge and capabilities that it can leverage rather easily through multiple locations.

AACSB: Analytic Blooms: Understand Learning Objective: 07-07 The four basic types of entry strategies and the relative benefits and risks associated with each of them. Level of Difficulty: 2 Medium Topic: Entry Modes of International Expansion

46.	Exporting is an expensive way to enter foreign markets.    FALSE Exporting is a relatively inexpensive way to enter foreign markets, but it is not without significant downsides.

AACSB: Analytic Blooms: Understand Learning Objective: 07-07 The four basic types of entry strategies and the relative benefits and risks associated with each of them. Level of Difficulty: 2 Medium Topic: Entry Modes of International Expansion

47.

When considering the exporting decision, companies should consider that the ability to tailor their products to meet local market needs typically is very limited.    TRUE Exporting is a relatively inexpensive way to enter foreign markets, but it is not without significant downsides. The ability to tailor company products to meet local market needs typically is very limited.

AACSB: Analytic Blooms: Understand Learning Objective: 07-07 The four basic types of entry strategies and the relative benefits and risks associated with each of them. Level of Difficulty: 2 Medium Topic: Entry Modes of International Expansion

48.

When considering the export decision, firms should not partner with local distributors because many foreign markets are nationally regulated.    FALSE Exporting consists of producing goods in one country to sell in another. The entry strategy enables a firm to invest the least amount of resources in terms of its product, its organization, and its overall corporate strategy. Because many foreign markets are nationally regulated and dominated by networks of local intermediaries, firms need to partner with local distributors to benefit from their valuable expertise and knowledge of their own markets.

AACSB: Analytic Blooms: Understand Learning Objective: 07-07 The four basic types of entry strategies and the relative benefits and risks associated with each of them. Level of Difficulty: 2 Medium Topic: Entry Modes of International Expansion

49.

PepsiCo successfully captured the Indian market by using a joint venture strategy.    TRUE What explains Pepsi's success in India? Coke pulled out of the market in 1977 after new government regulations forced it to partner with an Indian company and share its secret formula. In contrast, Pepsi formed a joint venture in 1988 with two Indian companies and introduced products under the Lehar brand. (Lehar Pepsi was introduced in 1990.) With no real international competition, Pepsi became the catch-all for anything that was bottled, fizzy, and from abroad.

AACSB: Analytic Blooms: Understand Learning Objective: 07-07 The four basic types of entry strategies and the relative benefits and risks associated with each of them. Level of Difficulty: 2 Medium Topic: Entry Modes of International Expansion