Global Retail Strategy and Market Entry Modes: Insights from Costco’s Expansion | 50+ MCQs Answer
What was the nature of global retail expansion before 2000?
A) Aggressive in Africa
B) Limited to Europe and North America
C) Dominated by online platforms
D) Focused on franchising
Answer: B
Which of the following was a common entry mode used before 2000?
A) Franchising
B) Export
C) JV and WOS
D) Licensing
Answer: C
Costco used which entry strategy in its initial global expansion before 2000?
A) WOS only
B) Exporting
C) Franchising
D) Joint Ventures
Answer: D
Which report highlighted emerging markets with retail potential after 2000?
A) WTO Global Report
B) ATK’s GRDI Report
C) World Bank Retail Index
D) UNCTAD Report
Answer: B
What is the primary advantage of a wholly owned subsidiary (WOS)?
A) High local adaptation
B) Full strategic control
C) Minimal investment
D) Cultural immersion
Answer: B
Which of the following is a disadvantage of WOS?
A) Decision-making speed
B) Local understanding
C) High capital investment
D) Supply chain independence
Answer: C
Why might a company avoid WOS in new markets?
A) It requires partnerships
B) It offers less control
C) It's not allowed legally
D) It needs high initial investment
Answer: D
Joint ventures help in:
A) Reducing profit margins
B) Faster market penetration
C) Retaining full control
D) Avoiding government regulations
Answer: B
One key disadvantage of joint ventures is:
A) Lack of supply chain access
B) Brand dilution
C) Decision-making conflicts
D) High capital investment
Answer: C
Licensing is suitable when:
A) The company wants full control
B) Investment capacity is low
C) Local understanding is crucial
D) Speed of execution is irrelevant
Answer: B
What is a major risk associated with licensing?
A) Full ownership
B) Brand dilution
C) Supply chain issues
D) Cultural clashes
Answer: B
Acquisition offers:
A) The slowest entry strategy
B) No autonomy
C) Quick access and decision-making
D) Minimal risk
Answer: C
Costco used licensing as an entry strategy in:
A) Mexico
B) Japan
C) South Korea
D) Spain
Answer: C
In Taiwan, Costco entered through:
A) Acquisition
B) Franchising
C) Licensing
D) Joint Venture
Answer: D
Costco’s operations in the UK and Mexico started as:
A) Franchises
B) WOS
C) Joint Ventures
D) Licensing agreements
Answer: C
Over time, Costco converted its operations in the UK and Mexico to:
A) Licensing
B) Franchises
C) Wholly Owned Subsidiaries
D) Strategic Alliances
Answer: C
Countries where Costco directly used WOS include:
A) Australia and Spain
B) Taiwan and Korea
C) Ireland and France
D) Mexico and UK
Answer: A
Which of the following determines Costco’s future mode of entry?
A) Social media presence
B) Local regulatory support
C) Product pricing
D) Warehouse size
Answer: B
Which of the following is a core advantage of Acquisition?
A) Low investment
B) Minimal integration required
C) Fast market access with full control
D) Complete reliance on the partner
Answer: C
Which factor is a barrier in Joint Ventures?
A) Local customization
B) Cultural clashes
C) Brand popularity
D) Tech innovation
Answer: B
In Licensing, which party operates the business?
A) The original brand
B) A government entity
C) The licensee
D) A franchisee
Answer: C
A strategic limitation of WOS is:
A) Limited brand identity
B) Poor supply chain
C) Lower flexibility
D) Slow market penetration
Answer: D
Costco entered Ireland and France in which year?
A) 2015
B) 2017
C) 2019
D) 2020
Answer: B
Licensing is best suited for:
A) High-risk markets
B) Fully developed nations
C) Low-investment, high-potential markets
D) Countries with strict ownership rules
Answer: C
A firm entering a market through JV shares:
A) Brand ownership
B) Tech patents
C) Infrastructure and profits
D) Warehouse assets only
Answer: C
Before 2000, where did most global retail expansion occur?
A) Africa
B) North America, Europe, and some Asian countries
C) South America
D) Middle East
Answer: B
What major trend occurred after 2000 in the global retail industry?
A) Decrease in transnational retailers
B) Stagnation of new markets
C) Expansion into emerging markets
D) Focus only on existing regions
Answer: C
Which report suggested 28 emerging markets with retail potential?
A) McKinsey Retail Outlook
B) ATK’s Global Retail Competitiveness Index
C) GRDI by ATK
D) World Bank Market Entry Study
Answer: C
Costco entered how many new countries post-2000?
A) 1
B) 3
C) 2
D) 6
Answer: C
The term 'transnational retailers' refers to:
A) Online-only retailers
B) Regional companies
C) Global retail players operating across multiple countries
D) Localized boutique stores
Answer: C
Government support before 2000 was in the form of:
A) Funding retailers
B) Imposing tariffs
C) Relaxing regulations
D) Nationalizing retail chains
Answer: C
What key feature characterized global retail competition in the last two decades?
A) Limited growth
B) Focus on domestic markets
C) Dynamic and competitive global expansion
D) Trade restrictions
Answer: C
Which factor did NOT support global retail expansion post-2000?
A) Improved tech
B) Strong global supply chains
C) Decreased consumer demand
D) Policy reforms
Answer: C
Which countries did Costco expand into in 2017?
A) India and Brazil
B) Ireland and France
C) China and Vietnam
D) Netherlands and Italy
Answer: B
Which of the following best describes the global retail market today?
A) Static
B) Highly regulated
C) Highly competitive and evolving
D) Monopolistic
Answer: C
WOS stands for:
A) World Organizational Strategy
B) Wholly Owned Subsidiary
C) Wholesale Owned Strategy
D) Wide Operations Subsidiary
Answer: B
Which of the following is NOT an advantage of WOS?
A) Full control
B) Quick decision-making
C) Lower investment
D) Swift change management
Answer: C
A major disadvantage of WOS is:
A) Partner conflicts
B) Cultural misfit
C) High capital investment
D) Lack of brand control
Answer: C
In a Joint Venture, a company:
A) Operates independently
B) Partners with a local firm
C) Avoids sharing control
D) Gains no local insight
Answer: B
Licensing allows firms to:
A) Avoid sharing profits
B) Control operations directly
C) Use their brand with lower investment
D) Ensure strict cultural integration
Answer: C
Which mode offers the most autonomy?
A) JV
B) Licensing
C) WOS
D) Acquisition
Answer: C
A drawback of licensing is:
A) Full ownership risks
B) Brand dilution
C) High operational costs
D) Partner conflict
Answer: B
Which mode involves acquiring an existing local business?
A) WOS
B) Acquisition
C) JV
D) Franchise
Answer: B
Acquisition offers:
A) Long-term brand erosion
B) Slow market entry
C) Faster market penetration
D) Little control
Answer: C
Which mode has the lowest risk but also the lowest control?
A) JV
B) Acquisition
C) Licensing
D) WOS
Answer: C
Costco entered South Korea using:
A) JV
B) Licensing
C) Acquisition
D) WOS
Answer: B
Costco used JV to enter:
A) Canada
B) Spain
C) Taiwan
D) Japan
Answer: C
Which countries transitioned from JV to WOS for Costco?
A) Taiwan and Korea
B) Mexico and UK
C) France and Ireland
D) Australia and Japan
Answer: B
WOS mode was used in:
A) South Korea and Taiwan
B) Canada, Japan, Australia, Spain
C) UK and Mexico only
D) France and Ireland
Answer: B
Why did Costco enter fewer countries after 2000?
A) Focus on stabilization
B) Poor performance
C) Shift in leadership
D) Market saturation
Answer: A
Costco entered which countries in 2017?
A) India and China
B) Ireland and France
C) Australia and Spain
D) South Korea and Japan
Answer: B
Costco's entry strategy in Mexico was initially:
A) Licensing
B) Acquisition
C) JV
D) Direct retail
Answer: C
What influenced Costco’s entry decisions?
A) Tech trends only
B) Local regulations and conditions
C) Currency rates
D) Employee size
Answer: B
In which country did Costco use WOS directly from entry?
A) UK
B) South Korea
C) Spain
D) Taiwan
Answer: C
Future entry mode decisions for Costco depend on:
A) Global trade wars
B) Local government support
C) Social media reach
D) Competitor exit
Answer: B
Which of the following regions saw major retail expansion before 2000?
A) Africa
B) South America
C) North America and EU
D) Middle East
Answer: C
What significant shift occurred in the global retail industry after 2000?
A) Decline in retail players
B) Increased expansion into emerging markets
C) Decrease in JVs
D) Elimination of wholly owned subsidiaries
Answer: B
What did the GRDI report by ATK suggest post-2000?
A) JVs are no longer useful
B) WOS is the only viable mode
C) 28 emerging markets have high retail potential
D) Costco should exit Asian markets
Answer: C
How many new countries did Costco enter after 2000?
A) 10
B) 0
C) 2
D) 6
Answer: C
Which entry mode allows 100% equity and full control?
A) Licensing
B) Joint Venture
C) Acquisition
D) Wholly Owned Subsidiary (WOS)
Answer: D
Which is an advantage of WOS?
A) Shared investment
B) Cultural clash risk
C) Full control and decision-making speed
D) Lower investment
Answer: C
A disadvantage of WOS includes:
A) Low cap investment
B) High local understanding
C) Lower risk
D) High capital requirement
Answer: D
Why do companies opt for JVs in foreign markets?
A) Full control
B) No risk of cultural clashes
C) Quick market penetration and local understanding
D) 100% profit retention
Answer: C
What is a major risk with Joint Ventures?
A) High investment cost
B) Lack of local support
C) Conflict with partner and alignment issues
D) Full ownership responsibilities
Answer: C
Which mode provides the least control to the foreign firm?
A) Acquisition
B) Licensing
C) JV
D) WOS
Answer: B
What entry mode did Costco use in South Korea?
A) WOS
B) JV
C) Licensing
D) Acquisition
Answer: C
Costco’s entry mode in Taiwan was:
A) Licensing
B) Acquisition
C) JV
D) WOS
Answer: C
Which of the following countries began as a JV and later became WOS for Costco?
A) Taiwan and Japan
B) UK and Mexico
C) South Korea and Australia
D) France and Ireland
Answer: B
Which countries did Costco enter using WOS directly?
A) Taiwan and Korea
B) UK and Mexico
C) Canada, Japan, Australia, Spain
D) France and Ireland
Answer: C
What factors will influence Costco’s future mode of entry?
A) Technology trends
B) Local regulations and support
C) Internet penetration
D) Number of competitors
Answer: B
Which mode allows quickest market access but at high integration risk?
A) Licensing
B) JV
C) WOS
D) Acquisition
Answer: D
A major disadvantage of Licensing includes:
A) High capital investment
B) High autonomy
C) Brand dilution risk
D) Swift decision making
Answer: C
Why might WOS not be preferred in culturally distant markets?
A) Too much local autonomy
B) High risk of quick returns
C) Lack of local understanding
D) Too many partners involved
Answer: C
What is one benefit of partnering with local firms through JV?
A) Full control over pricing
B) Easier market exit
C) Leverage local infrastructure and supply chain
D) No risk of culture clash
Answer: C
Which factor is common to both JV and Acquisition?
A) Local partner knowledge
B) 100% equity control
C) Brand control retention
D) Low market acceptance
Answer: A
