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MKT 515 Week 11 Final Exam – Strayer University New

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Chapter 9 Through 19

Chapter 9

Multiple Choice

1. In global market entry, all of the following are entry decisions that must be made by
management before entering an international market EXCEPT:

a. decide on the time of entry.
b. decide on the target product/market.
c. decide on the goals of the target markets.
d. decide on the mode of entry.
e. decide on the target budget.

2. When marketers are making the decision to enter an international market or not, the
first step is generally to:

a. decide on the target budget.
b. decide on the target product/market.
c. decide on the goals of the target markets.
d. decide on the mode of entry.
e. decide on the time of entry.

3. When marketers are making the decision to enter an international market or not, the
final step in the decision process is generally to:

a. decide on a control system to monitor the performance of the entered market.
b. decide on the target product/market.
c. decide on the goals of the target markets.
d. decide on the mode of entry.
e. decide on the time of entry.

4. Which of the following most accurately describes the first step in the market entry
decision process?

a. Decide on the goals of the target markets.
b. Decide on the mode of entry.
c. Decide on the time of entry.
d. Decide on the target product/market.
e. Decide on the marketing mix plan.

5. Which of the following is a step in the market entry decision process?

a. Forecast a corporate budget.
b. Conduct a marketing audit.
c. Decide on a mode of entry.
d. Review transportation strengths.
e. Analyze domestic demand.

6. To identify market opportunities for a given product or service, the international
marketer usually starts off with a large pool of candidate countries. To narrow down
this pool, the company will typically do a(n) _______________________.

a. internal audit.
b. external audit.
c. cross-border budget.
d. preliminary screen.
e. econometric analysis.

7. The goals of a preliminary screen to determine market opportunities are to minimize
mistakes of ignoring countries that offer viable opportunities for the product and:

a. offending local governments.
b. offending local cultures.
c. offending local merchants.
d. violating local advertising laws.
e. not wasting time on countries that offer little or no potential.

8. The four-step procedure that can be employed for the initial screening process
includes all of the following EXCEPT:

a. select indicators and data selection.
b. analyze parallel strengths and weaknesses of the market.
c. determine the importances of country indicators.
d. rate the countries in the pool on each indicator.
e. compute the overall scores for each country.

9. When Colgate-Palmolive sees prospects in countries with purchasing power as a
major driver behind market opportunities and Coca-Cola looks at per capita income
and the number of minutes that it would take someone to work to be able to afford a
Coca-Cola product, they are following which of the following steps of the initial
screening process for market entry?

a. indicator and data selection.
b. analyze parallel strengths and weaknesses of the market.
c. determine the importances of country indicators.
d. rate the countries in the pool on each indicator.
e. compute overall scores for each country.

10. A four-step procedure that can be employed for the initial screening process includes
the following EXCEPT:

a. select indicators and collect data.
b. determine importance of country indicators.
c. hire outside consultants to do a marketing audit.
d. rate the countries in the pool on each indicator.
e. compute overall score for each country.

11. When Coca-Cola looks at per capita income and the number of minutes that it would
take for somebody to work to be able to afford a Coca-Cola product, the company is
following which of the following steps of the initial screening process for
market entry?

a. indicator and data selection.
b. analyze parallel strengths and weaknesses of the market.
c. determine the importances of country indicators.
d. rate the countries in the pool on each indicator.
e. compute overall scores for each country.

12. Wrigley, the U.S. chewing gum manufacturer, has not been interested in most Latin
American markets because many of the local governments imposed ownership
restrictions. This would be an example of ________________ in markets.

a. finding opportunities
b. “weeding out”
c. cross-fertilization
d. demand conflict
e. unfairness

13. One method of assessing whether a company should enter a foreign market or not is
to use an opportunity matrix. To use such a matrix, the marketer should assess high,
moderate, and low opportunities as measured on business and political risk and
___________________ scales or cells.

a. demand
b. financial constraints
c. market opportunities
d. market sensitivity
e. distance from home market

14. All of the following are major external criteria for making a decision as to a mode of
entry into a foreign market EXCEPT:

a. company leadership.
b. market size and growth.
c. need for control.
d. government regulations.
e. local infrastructure.

15. The key determinant in the market entry choice decisions is the:

a. risk.
b. local infrastructure.
c. flexibility.
d. internal resources and assets.
e. market size and growth potential.

16. In the mode of entry, many companies see liaison office as a low-cost
___________________.

a. joint venture
b. export management company
c. listening post
d. contract exporter
e. alliance post

17. The ____________________ of a market refers to the country’s distribution system,
transportation network, and communication system.

a. demographic environment
b. infrastructure
c. logistical
d. physical distribution
e. physical infrastructure

18. Markets can be classified in four types of countries based on their respective market
attractiveness. All of the following are part of the classification scheme EXCEPT:

a. platform countries.
b. emerging countries.
c. low-tech countries.
d. growth countries.
e. maturing and established countries.

19. Markets can be classified in four types of countries based on their respective market
attractiveness. Which of the following of those types can be used to gather
intelligence and establish a network?

a. platform countries.
b. emerging countries.
c. maturing and established countries.
d. growth countries.
e. none of the above.

20. Markets can be classified in four types of countries based on their respective market
attractiveness. Hong Kong and Singapore would fall into which of the types listed
below (where the purpose would be to gather intelligence and establish a network)?

a. platform countries.
b. emerging countries.
c. maturing and established countries.
d. growth countries.
e. none of the above.

21. Markets can be classified in four types of countries based on their respective market
attractiveness. Which of the following of those types can be used to build up an
initial presence (such as through a liaison office)?

a. platform countries.
b. emerging countries.
c. maturing and established countries.
d. growth countries.
e. none of the above

22. Markets can be classified in four types of countries based on their respective market
attractiveness. Vietnam and the Philippines would fall into which of the types listed
below (where the purpose would be to build up an initial presence such as through a
liaison office)?

a. platform countries.
b. emerging countries.
c. maturing and established countries.
d. growth countries.
e. none of the above.

23. Markets can be classified in four types of countries based on their respective market
attractiveness. Which of the following countries would most likely be listed as a
maturing/established market?

a. China.
b. Burma.
c. India.
d. Taiwan.
e. China.

24. Markets can be classified in four types of countries based on their respective market
attractiveness. Which of the following countries would most likely be listed as an
established/maturing market?

a. China.
b. the Philippines.
c. India.
d. Vietnam.
e. Japan.

25. Markets can be classified in four types of countries based on their respective market
attractiveness. Which of the following countries would most likely be listed as
a growth country?

a. Hong Kong.
b. Vietnam.
c. China.
d. Taiwan.
e. Japan.

26. A _________________________ perspective argues that the desirable governance
structure (high- versus low-control mode) will depend on the comparative transaction
costs (the costs of running an operation).

a. demand-delivery
b. just-in-time management
c. management-by-objectives
d. quantity-cost allocation
e. transaction-cost analysis

27. From a transaction-cost analysis perspective, market failure typically happens when
transaction-specific assets become _________________ and therefore more high-
control situations are needed.

a. optional
b. valuable
c. expendable
d. less-valuable
e. weaker

28. Most companies start their international expansion with _________________.

a. exporting
b. joint ventures
c. licensing
d. franchising.
e. contract manufacturing.

29. In the area of exporting, a middleman could be an __________________________.

a. export outsourcing company
b. export management company
c. export production company
d. export specialist company
e. export manufacturing company

30. Companies that plan to engage in exporting have a choice between indirect,
_________________, and direct exporting.

a. licensing
b. parallel
c. cooperative
d. venture
e. summation

31. _______________________ means that the firm uses a middleman based in its home
market to do the exporting.

a. Licensing
b. Contract manufacturing
c. Cooperative exporting
d. Venture exporting
e. Indirect exporting

32. ___________________ offers several advantages. Chief among these
are the firm gets instant foreign market expertise, very little risk is involved, and
no major resource commitments are required.

a. Licensing
b. Parallel exporting
c. Cooperative exporting
d. Direct exporting
e. Indirect exporting

33. ___________________ has disadvantages. Chief among these are that the company
has little or no control over the way their product is marketed in a foreign country,
lack of adequate sales support (among other support variables) can lead to poor sales,
and bad decisions made by an intermediary can damage the corporate image.

a. Licensing
b. Parallel exporting
c. Cooperative exporting
d. Direct exporting
e. Indirect exporting

34. ______________________ means that the firm enters into an agreement
with another firm (local or foreign) where the partner will use its distribution network
to sell the exporter’s goods.

a. Licensing
b. Parallel exporting
c. Cooperative exporting
d. Venture exporting
e. Indirect exporting

35. ______________________ means that the company sets up its own
export organization within the company and relies on a middleman based in a
foreign market (foreign distributor).

a. Licensing
b. Parallel exporting
c. Cooperative exporting
d. Direct exporting
e. Indirect exporting

36. Cooperative exporting is also called:

a. specialist exporting.
b. lean exporting.
c. long-range exporting.
d. backward exporting.
e. piggyback exporting.

37. One of the most popular forms of cooperative exporting is _________________.
With this method, the company uses the overseas distribution network of another
company (local or foreign) for selling its goods in the foreign market.

a. parallel exporting.
b. venture exporting.
c. piggyback exporting.
d. make-or-buy exporting.
e. foreign export management exporting.

38. One of the main advantages of direct exporting over indirect exporting is that the
exporter has more:

a. leverage.
b. risk.
c. control over its operations.
d. budget.
e. leadership.

39. ___________________ is a contractual strategy where the firm offers some
proprietary assets to a foreign company in exchange for royalty fees.

a. Licensing
b. Parallel exporting
c. Cooperative exporting
d. Direct exporting
e. Indirect exporting

40. The Oriental Land Company in Japan owns Tokyo Disneyland. This would be
an example of an international _________________ agreement between the
Oriental Land Company (owner) and Disneyland (receives royalties).

a. licensing
b. parallel exporting
c. cooperative exporting
d. direct exporting
e. indirect exporting

41. Benefits of licensing include:

a. not very demanding on company resources.
b. always protected against copying or technical theft.
c. always a strong partner relationship.
d. low profits, therefore, low taxes.
e. licensee is always enthusiastic.

42. Nurturing a future competitor is the biggest danger in ___________________.

a. licensing
b. parallel exporting
c. cooperative exporting
d. direct exporting
e. indirect exporting

43. One of the most popular entry modes in the international marketplace for service
firms is:

a. licensing.
b. franchising.
c. cooperative exporting.
d. direct exporting.
e. indirect exporting.

44. According to the textbook, in franchising, companies can capitalize on a _______________________________.

a. cheap business formula.
b. expensive business formula.
c. winning business formula.
d. parallel business formula.
e. hybrid business formula.

45. One of the most popular franchise plans used in international marketing is
____________________ where the franchiser gives the franchise to a local
entrepreneur who in turn sells local franchises within a territory.

a. sales franchise
b. master franchise
c. strategic franchise
d. cross-country franchise
e. border-territory franchise

46. In ____________________, the company arranges with a local manufacturer to
manufacture parts of the product or even the entire product. The marketing of the
product, however, is still the responsibility of the international firm.

a. licensing
b. franchising
c. cooperative exporting
d. contract manufacturing
e. indirect exporting

47. ___________________ are(is) the prime motivation behind contract manufacturing.

a. Advertising cooperation
b. Leadership
c. Cost savings
d. Profit expansion
e. Desire to be part of a cartel

48. Like licensing and franchising, nurturing a future competitor is one of the biggest
dangers in ___________________.

a. contract manufacturing.
b. parallel exporting.
c. cooperative exporting.
d. using an export management company.
e. indirect exporting.

49. In contract manufacturing, because of “nurture-a-future competitor” threat, many
companies prefer to make ___________________ or products that involve
proprietary design features in-house.

a. just-in-time items
b. under-value items
c. low-value items
d. high-value items
e. none of the bove

50. With a __________________, the foreign company agrees to share equity and other
resources with other partners to establish a new entity in the target country.

a. contract manufacturing agreement
b. parallel exporting agreement
c. cooperative exporting agreement
d. export management company
e. joint venture

51. A major advantage of joint ventures, as compared to lesser forms of resource
commitment such as licensing, is:

a. the return potential.
b. infrastructure enhancement.
c. expansion of stockholders.
d. division of leadership.
e. an increase in ethical standards.

52. All of the following are considered benefits of forming joint ventures EXCEPT:

a. greater return potential.
b. shared profits instead of shared royalties.
c. more control over operations.
d. increased cost controls.
e. synergies.

53. With respect to joint ventures, the ________________ argument is illustrated by
not only shared capital and risk but possible contributions brought in by the local
partner in land, raw materials, expertise on the local environment, and access to
local distribution networks.

a. demand
b. parallel management
c. consensus management
d. domestication
e. synergy

54. Lack of trust and mutual conflicts can often turn ______________ into partnerships
doomed to failure.

a. contract manufacturing agreements
b. parallel exporting agreements
c. cooperative exporting agreements
d. export management companies
e. joint ventures

55. One of the problems with joint ventures is ________________ between partners. An
example would be when one partner wants to stress reduction of political and
economic controls on decision-making and the other partner wants to accept
technology and capital but precludes foreign authority infringement on sovereignty
and ideology.

a. conflicting purchasing objectives
b. conflicting process objectives
c. control objectives
d. budget objectives
e. staffing objectives

56. There are no magic ingredients to foster the stability of joint ventures, however, all
of the following are good guidelines EXCEPT:

a. pick a partner with which control can be maintained.
b. pick the right partner.
c. establish clear objectives from the beginning.
d. bridge cultural gaps.
e. get top management commitment and respect.

57. _____________________ come about when multinational companies prefer to enter
new markets with 100 percent ownership.

a. Contract manufacturing agreements
b. Parallel exporting agreements
c. Cooperative exporting agreements
d. Wholly owned subsidiaries
e. Joint ventures

58. When a multinational company chooses to invest in foreign markets with wholly
owned subsidiaries, these subsidiaries may be acquisitions or _______________
operations.

a. joint venture
b. strategic alliance
c. greenfield
d. franchise
e. piggyback

59. A _________________ operation (with respect to wholly owned subsidiaries) is one
which is started from scratch.

a. joint venture
b. strategic alliance
c. greenfield
d. franchise
e. piggyback

60. Wholly owned subsidiaries give MNCs _______________ of their operations.

a. almost no control
b. partial control
c. moderate control
d. full control
e. strategic control only

61. Advantages of wholly owned subsidiaries include all of the following EXCEPT:

a. full control.
b. control of profits.
c. own processes.
d. control government relationships.
e. can often be set quicker that other forms of investment.

62. One of the chief disadvantages of a wholly owned subsidiary is that:

a. it is often perceived as a threat to cultural or economic sovereignty.
b. it is often perceived as generating low profits.
c. it is often perceived as having problems in supply lines.
d. it is often perceived as being more expensive
e. it is often perceived as a threat to the local media for promotion.

63. One way to address hostility to foreign acquisitions in the host country is by
______________ the firm’s presence in the foreign market by hiring local managers,
sourcing locally, and developing local brands.

a. regionalizing
b. localizing
c. socializing
d. acculturating
e. emphasizing the self-reference criterion (SRC)

64. Companies that enter via wholly owned subsidiaries are sometimes perceived as a
threat to the culture and/or economic sovereignty of the____________________.

a. host country.
b. home country.
c. buffer country.
d. greenfield country.
e. high-tech country.

65. The chief reason that some firms choose acquisitions (or mergers) to enter a foreign
market is that they can:

a. receive greater tax relief.
b. receive greater profits.
c. reduce debt.
d. increase stock price.
e. enter the market more quickly.

66. When contrasted with greenfield operations, _________________ provide(s) a rapid
means to get access to the local market.

a. licensing
b. exporting
c. contract manufacturing
d. acquisitions
e. joint ventures

67. __________________ are described as a coalition of two or more organizations to
achieve strategically significant goals that are mutually beneficial.

a. Joint ventures
b. Strategic alliances
c. Greenfield operations
d. Franchises
e. Piggyback arrangements

68. The partnership established by Coca-Cola and Nestle to market ready-to-drink coffees
and teas under the Nescafe and Nestea brand names is an example of which of the
following:

a. strategic alliance.
b. contract manufacturing.
c. licensing.
d. wholly owned subsidiary.
e. exporting.

69. All of the following are illustrations of the four generic reasons for forming
strategic alliances EXCEPT:

a. offense.
b. defense.
c. catch-up.
d. remain.
e. restructure.

70. The underlying goal of _________________ in creating a strategic alliance is to
sustain the firm’s leadership position by learning new skills, getting access to new
markets and developing new technologies.

a. offense
b. defense
c. catch-up
d. remain
e. restructure

71. The strategic alliance strategy of ______________ might be enacted when the firm
has an established leadership position but that only plays a peripheral role in the
company’s business portfolio.

a. offense
b. defense
c. catch-up
d. remain
e. restructure

72. When a firm uses a strategic alliance as a vehicle to rejuvenate a business that is
not core and in which it has no leadership position, it is probably using a
________________ strategy.

a. defend
b. catch up
c. restructure
d. remain
e. none of the above

73. Decisions to exit or divest a foreign market may have all the following reasons
EXCEPT:

a. sustained losses.
b. volatility.
c. premature entry.
d. ethical reasons.
e. new market.

74. Risks of exiting a foreign market may lead to all the following EXCEPT:

a. fixed costs of exit.
b. disposition of assets.
c. short-term opportunities.
d. signal to other markets.
e. long-term opportunities.

True/False Short Answer

75. The first step in the process of entering a foreign market is to decide on the
_____________________.

76. Preliminary screening is an accepted method of reducing the number of candidates
for market entry.

77. As an example of a preliminary screening process in assessing international market
opportunities, Colgate-Palmolive uses assessments of whether people bath regularly
or not as a critical factor in deciding whether to enter a market or not.

78. To identify market opportunities for a given product (or service), the international
marketer usually starts off with a large pool of candidate cities.

79. Colgate-Palmolive views per capita purchasing power as a major driver
behind market opportunities.

80. _________________ countries (with respect to market attractiveness) can be used to
gather intelligence and establish a network.

81. An example of a platform country is India.

82. An example of a growth country is China.

83. An example of an emerging country (with respect to market attractiveness) is
the Philippines.

84. Corporate objectives have no influence in choosing entry modes.

85. From the transaction cost analysis, market failure typically happens when
transaction-specific assets become valuable.

86. When going abroad most companies start their international expansion with
_______________.

87. Piggyback exporting is when two different transportation modes (such as truck and
rail) are combined.

88. Under ___________ exporting, a firm sets up its own export department and sells its
products via a middleman located in the foreign market.

89. In a master franchise, the franchiser gives a master franchise to a local entrepreneur,
who will, in turn, sell local franchises within a territory.

90. Contract manufacturing is also known as outsourcing.

91. In a cooperative joint venture, the partners agree to raise capital in proportion to the equity stakes agreed upon.

92. Ownership strategies in foreign markets can take two forms: acquisitions and
____________________.

93. There four generic reasons for forming strategic alliances are defense, catch-up,
remain, and __________________.

94. Strategic alliances between strong and weak partners often work because of the
synergy and learning that can take place between mentor and subordinate.

95. Stable alliances have the commitment and support of the top of the parents’
organizations.

96. Exiting a country often involves substantial fixed cost.

Essay

97. List the steps in the global market entry decision process. Which of the steps is probably the most important in the overall success of the foreign venture? Justify your answer.

98. Explain what is meant by the concept of a liaison office and why some firms prefer to use this technique to enter markets.

99. Briefly, explain the concept of licensing in a foreign market. In addition, cite the benefits and drawbacks of licensing. Be specific in your responses.

100. Briefly explain the concept of joint venture. Additionally, give the benefits and drawbacks of entering into a joint venture.

101. Provide an assessment of strategic alliances. What are they used for, what are the characteristics of those that generally succeed, and what are the general types? Be sure to be specific in your answers.

Chapter 10

Multiple Choice

1. Ikea, the Swedish furniture chain, insists that all its stores carry the basic product
line with little room for adaptation to local tastes. If research of the U.S. market
showed that Americans preferred larger beds than their Swedish counterparts, which
of the following strategies would be advisable to Ikea?

a. standardization.
b. new product development.
c. adaptation.
d. withdraw from market.
e. lower prices to encourage attitude change.

2. In the Australian market, rather than manufacturing disposable diapers, Procter & Gamble decided to import them since the size of the market did not warrant local
manufacturing according to P&G. Unfortunately, by using packaging designed for the Asian region with non-English labeling, P&G alienated its customers in Australia. This is an example of improper:

a. global policy decisions.
b. pricing decisions.
c. brand policy decisions.
d. product policy decisions.
e. company policy decisions.

3. Even though other combination alternatives can be devised, companies generally can
pursue three global product strategies to penetrate foreign markets. These strategies
are to extend the home-grown product/communication strategies, adapt their strategy
to the local marketplace, and:

a. invent new products for foreign customers.
b. concentrate on services.
c. apply for permission to copy domestic products.
d. concentrate on image adjustment.
e. focus on secondary issues (such as warranties).

4. In the area of global product policy, companies can pursue three strategies to penetrate
foreign markets. The strategies include:

a. extension, adaptation, and invention.
b. extension, adaptation, and prevention.
c. extension, adaptation, and creation.
d. extension, adaptation, and placement.
e. extension, adaptation, and balancing.

5. Which of the following is NOT one of the strategic options available to the marketing
planner, considering various product policies that could be devised for the
international marketplace?

a. product and communication extension–dual extension.
b. communication extension–mono extension.
c. product extension–communications adaptation.
d. product adaptation–communications extension.
e. product and communications adaptation–dual adaptation.

6. If a company were to follow a strategy of product and communication extension
(dual extension) in a foreign market, an example of a product category that would
fit this strategy would be _________________________.

a. personal care items
b. motorscooters
c. gasoline
d. clothing
e. hand-powered washing machines

7. If a company were to follow a strategy of product adaptation-communications
extension in a foreign market, an example of a product category that would
fit this strategy would be __________________.

a. soft drinks
b. motorscooters
c. shampoo
d. clothing
e. hand-powered washing machines

8. If a company were to follow a strategy of product extension-communications
adaptation in a foreign market, an example of a product category that would
fit this strategy would be __________________.

a. soft drinks
b. gum
c. shampoo
d. clothing
e. hand-powered washing machines

9. If a company were to follow a strategy of product and communications
adaptation (dual adaptation) in a foreign market, an example of a product category that
would fit this strategy would be __________________.

a. soft drinks
b. motorscooters
c. gasoline
d. diet aids
e. hand-powered washing machines

10. If a company is an early entrant in the global arena and possesses little
in the way of resources, they will probably chose _____________________ as a
method of entry.

a. product and communication extension–dual extension
b. product invention
c. product extension–communications adaptation
d. product adaptation–communications extension
e. product and communications adaptation–dual adaptation

11. As a strategy, ____________________ will work when the company targets a
“global” segment with similar needs.

a. product and communication extension–dual extension
b. product invention
c. product extension–communications adaptation
d. product adaptation–communications extension
e. product and communications adaptation–dual adaptation

12. The biggest advantage of a product and communication extension–dual extension
policy is:

a. it is easy for management to understand.
b. it offers substantial savings because of economies of scale.
c. it passes most legal tests.
d. it is service oriented.
e. it will usually not violate cultural taboos.

13. Due to differences in the cultural or competitive environment, a company may choose
the _______________________ strategy if it wishes to keep its product economies
scale intact but customize its communications.

a. product and communication extension–dual extension
b. product invention
c. product extension–communications adaptation
d. product adaptation–communications extension
e. product and communications adaptation–dual adaptation

14. When the Wrigley chewing gum company markets its basic products abroad, it keeps
its well-known brands but customizes promotional approaches in individual
countries. Which of the following strategies best describes the strategy that
Wrigley is following?

a. product and communication extension–dual extension
b. product invention
c. product extension–communications adaptation
d. product adaptation–communications extension
e. product and communications adaptation–dual adaptation

15. Many companies add brands to their portfolio via acquisitions of local companies.
When the local brand is retained but incorporated into the existing communications
strategy, the strategy can be described as being one of:

a. product and communication extension–dual extension.
b. product invention.
c. product extension–communications adaptation.
d. product adaptation–communications extension.
e. product and communications adaptation–dual adaptation.

16. Differences in both the cultural and physical environment across countries call for a
_________________________ strategy.

a. product and communication extension–dual extension
b. product invention
c. product extension–communications adaptation
d. product adaptation–communications extension
e. product and communications adaptation–dual adaptation

17. Because of differences in preferences in flavors and government regulations
regarding the marketing of diet products, Slim-Fast normally uses which of the
following strategies?

a. product and communication extension–dual extension
b. product invention
c. product extension–communications adaptation
d. product adaptation–communications extension
e. product and communications adaptation–dual adaptation

18. Genuinely global marketers try to figure out how to create products with a global
scope rather than just for a single country. The mindset is to zero in on global
opportunities. The strategy that best describes this approach is called:

a. product and communication extension–dual extension.
b. product invention.
c. product extension–communications adaptation.
d. product adaptation–communications extension.
e. product and communications adaptation–dual adaptation.

19. Black & Decker is a good example of a company that adopts the _______________
approach to global expansion. The company aims to bring out new products that
cater to common needs and opportunities around the world.

a. product and communication extension–dual extension
b. product invention
c. product extension–communications adaptation
d. product adaptation–communications extension
e. product and communications adaptation–dual adaptation

20. __________________ means offering a uniform product on a regional or
worldwide basis (only minor alterations are made to meet local standards).

a. Customization
b. Standardization
c. Miniaturization
d. Assimilation
e. Marginalization

21. The primary advantage to using a standardization approach to marketing a product
in the international arena is:

a. minimization of costs (which can be passed on to customers).
b. more profit.
c. less service complaints.
d. less product returns.
e. standard budgets.

22. Standardization of product has a __________________ orientation (lower costs via
mass production).

a. market-driven
b. service-driven
c. budget-driven
d. promotion-driven
e. product-driven

23. ____________________ is leveraging cross-border differences in needs and wants
of the firm’s target customers.

a. Customization
b. Standardization
c. Proliferation
d. Expansion
e. Synthesizing

24. Customization of product has a ______________________ orientation (increase
customer satisfaction by adapting products to the local needs).

a. market-driven
b. service-driven
c. budget-driven
d. promotion-driven
e. product-driven

25. All of the following are factors that favor a globalized product strategy EXCEPT:

a. common customer needs.
b. global customers.
c. scale economies.
d. time-to-market.
e. rising strength of the Latin American markets.

26. Many product categories show a gradual but steady ____________________
in consumer preferences.

a. slowdown.
b. difficulties
c. convergence.
d. divergence.
e. rising strength of the Latin American markets.

27. During the last decade, car buyers in the Triad markets (Japan, the United States, and
Europe) have increasingly begun to have the same outlook and preferences in cars.
Which of the following factors that favor globalization of product, would most
accurately be associated with this trend?

a. common customer needs.
b. global customers.
c. scale economies.
d. time-to-market.
e. Europe 1992 and other Regional Market Agreements.

28. _____________________ means shortening the time to bring new product projects to
the market.

a. Delivery-to-market
b. Orientation-to-market
c. Time-to-market
d. Extension-to-market
e. Perfection-to-market

29. One attempt to combine the strengths of standardization and customization of
products is to deal with both issues as functions of product design. The
_______________ approach consists of developing a range of product parts that
can be used worldwide. The parts can be assembled into numerous product
configurations.

a. core-product
b. uniform commercial code
c. die-casting
d. modular
e. Nexus

30. In a ______________________, scale economies flow from the mass production of
more-or-less standard product components at a few manufacturing sites.

a. convergence approach
b. divergence
c. linear approach
d. forecasting approach
e. modular approach

31. One attempt to combine the strengths of standardization and customization of
products is to deal with both issues as functions of product design. The
_______________ approach consists of developing a mostly uniform core-
product/platform and then adding attachments that match local market needs.

a. core-product
b. uniform commercial code
c. die-casting
d. modular
e. PRIZM

32. With respect to product design strategies, the ___________________ approach is
very popular with the French carmaker Renault. They use common core-products
but customize them in each market (such as making stronger heaters for the Nordic
market).

a. core-product
b. uniform commercial code
c. die-casting
d. modular
e. PRIZM

33. One of the disadvantages that a global marketer may have is ___________________.
This would occur when too much standardization stifles initiative and experimentation
at the local level.

a. overcustomization
b. micro-managing
c. technocracy
d. group think
e. overstandardization

34. One of the pitfalls that a global marketer can run into is _____________. This
would occur when too much adaptation to the local market occurs and the brand
becomes vulnerable to losing its unique foreigness.

a. overcustomization
b. micro-managing
c. technocracy
d. group think
e. overstandardization

35. Adoption rates of new products are affected by:
a. population homogeneity
b. proportion of women in the labor force
c. cosmopolitanism
d. mobility
e. all of the above

36. In general, the rate of adoption of new products (in foreign markets) is driven by
individual differences, personal influences, and:

a. fashion.
b. trends.
c. cash on hand.
d. product characteristics.
e. promotion characteristics.

37. In general, the adoption of new products is driven by factors such as:

a. individual differences.
b. personal influences.
c. product characteristics.
d. all of the above.
e. none of the above.

38. ___________________ are always eager to experiment with new ideas and products.

a. Early adopters.
b. Early majority.
c. Late majority.
d. Laggards.
e. Prior adopters.

39. Which of the following would NOT be one of the five key product characteristics
that contribute to its acceptance?

a. low service maintenance.
b. relative advantage.
c. compatibility.
d. complexity.
e. trialability.

40. To what extent does the new product offer more perceived value to potential adopters
than exiting alternatives, would be a question that best fits with which of the following
key product characteristics acceptance categories?

a. observability.
b. relative advantage.
c. compatibility.
d. complexity.
e. trialability.

41. Is the product consistent with exiting values and attitudes of the individuals in the
social system, would be a question that best fits with which of the following
key product characteristics acceptance categories?

a. observability.
b. relative advantage.
c. compatibility.
d. complexity.
e. trialability.

42. Is the product easy to understand or use, would be a question that best fits with which
of the following key product characteristics acceptance categories?

a. observability.
b. relative advantage.
c. compatibility.
d. complexity.
e. trialability.

43. The adoption rate for new products in countries with a ________________
population is usually faster than in countries with a highly diverse culture.

a. heterogeneous
b. complex
c. diverse
d. homogeneous
e. polycentric

44. The adoption rate for a new product in countries with a homogeneous population
is usually faster than in countries with a highly diverse culture. Which of the
following countries would probably have the fastest adoption based on the
information provided above?

a. Ireland.
b. United States.
c. Japan.
d. United Kingdom.
e. France.

45. With respect to adoption rates in the international marketplace, it appears to be
generally true that adoption rates are higher in ______________ countries than in
____________ countries.

a. lead/lag
b. lag/lead
c. lead/middle adopters
d. lag/middle adopters
e. lead/opinion-lead

46. A _________________ country is where a product is first introduced.

a. lag
b. low-profile
c. lead
d. high-profile
e. fast

47. A _________________ country is where a product is entered after initial introduction
has taken place.

a. lag
b. low-profile
c. lead
d. high-profile
e. fast

48. _______________________ are people who look beyond their immediate social
surroundings and are not local in their opinions.

a. Domestics
b. Introverts
c. Negotiators
d. Cosmopolitans
e. Regionalists

49. All of the following are factors that affect product penetration in the European market
(according to a recent survey), EXCEPT:

a. cosmopolitanism.
b. number of locals in the market.
c. mobility.
d. percentage of children in the labor force.
e. percentage of women in the labor force.

50. A recent study examined the difference of six products in 31 developing and
developed countries across the world. A key finding was that ___________________
tend to experience a far slower adoption rate than developed countries.

a. European countries
b. global countries
c. advanced countries
d. developed countries
e. emerging market countries

51. All of the following are steps in the new product development process EXCEPT:

a. identification of new product ideas.
b. budget development.
c. screening.
d. concept testing.
e. test marketing.

52. Which of the following are among the best sources for finding new product ideas?

a. company, customers, competition, and collaborators.
b. trade magazines, television, and the internet.
c. government statistics, demographic charts, and psychological profiles.
d. reverse engineering, industrial spying, and out-of-date patents.
e. rumors, stories, and intuition.

53. Once new product ideas have been identified, the next logical step is to have
the ideas _______________.

a. modeled
b. budgeted
c. screened
d. concept tested
e. test marketed

54. ______________ is part of a formal scoring model in screening new products.

a. New Prod
b. ExProd
c. YProd
d. ZProd
e. none of the above

55. Conjoint analysis is also referred to as _____________________.

a. geometric analysis
b. trade-off analysis
c. meta analysis
d. longitudinal analysis
e. metric analysis

56. A sophisticated method (sometimes called trade-off analysis) for measuring
consumer preferences for product concepts is called:

a. chi-square.
b. correlation analysis.
c. focus groups.
d. regression analysis.
e. conjoint analysis.

57. The starting premise of _______________ is that people make trade-offs between
the different product attributes when they evaluate alternatives (or brands) from
which they pick a choice.

a. chi-square
b. correlation analysis
c. focus groups
d. regression analysis
e. conjoint analysis

58. If a consumer considered four attributes to be important in the purchase of a TV, by
using ________________ the researcher might be able to determine the trade-offs
between the different product attributes (such as purchase price or number of channels
that could be received) when the consumer evaluated the alternatives for eventual
purchase.

a. chi-square
b. correlation analysis
c. focus groups
d. regression analysis
e. conjoint analysis

59. A(n) ________________ is essentially a field experiment where the new product is
marketed in a select set of cities to assess its sales potential and scores of other
performance measures.

a. attitude screen
b. product model
c. product concept
d. test market
e. focus concept

60. Testing objectives, testing marketing mixes, making projections of sales volume,
and analyzing potential competitive marketing mixes are all reasons to conduct:

a. attitude screens.
b. product models.
c. product concepts.
d. test markets.
e. focus concepts.

61. One alternative to the test market is the _____________________.

a. thought panel
b. laboratory test market
c. internet exposure technique
d. preferred patron experiment
e. use of break-even analysis

62. If prospective customers are contacted and shown commercials for the new
product and existing brands (then asked to state attitudes and preferences of what
they have seen), then the marketing research entity will probably have conducted
a(n) __________________ instead of a full test market.

a. thought panel
b. laboratory test market
c. internet exposure technique
d. preferred patron experiment
e. break-even analysis

63. A common technique to avoid a global test market is to make global sales projections
based on product performance in a ________________ market.

a. lag
b. middle adopter
c. lead
d. opinionated
e. innovative

64. Timing is a very important element in any new product launch. One of the strategies
is described as being the ________________ where there is a phased rollout. In this
approach the product uses a trickle down approach.

a. sprinkler method
b. shotgun method
c. rifle method
d. dribble method
e. waterfall method

65. Timing is a very important element in any new product launch. One of the strategies
is described as being the ________________. This method often involves introducing
the new product in the company’s home market and then moving to other advanced
markets. Finally, less advanced markets are exposed to the product.

a. sprinkler method
b. shotgun method
c. rifle method
d. dribble method
e. waterfall method

66. The prime motive for the waterfall model (in introducing new products on a global
scale) is that the customization of the product for the foreign market is:
a. impractical.
b. very expensive.
c. time consuming.
d. promotionally limited.
e. not supported by top management.

67. Timing is a very important element in any new product launch. One of the strategies
is described as being the ________________ where there is a simultaneous
introduction of products in other markets of the world.

a. sprinkler method
b. shotgun method
c. rifle method
d. dribble method
e. waterfall method

68. A phased rollout is less demanding on the company resources whereas
____________________ are not always acceptable.

a. sprinkler rollouts
b. shotgun rollouts
c. staggered rollouts
d. dribble rollouts
e. waterfall rollouts

69. The chief reason for a company choosing the sprinkler method of new product
introduction is to off-set:

a. rising costs.
b. unstable labor.
c. competitive preemption.
d. government control.
e. shoddy promotions.

70. The waterfall strategy of sequential entry is preferable over the sprinkler model
when all of the following conditions exist EXCEPT:

a. the lifecycle of the product is relatively long.
b. high costs of entry are present.
c. very weak local competitors.
d. anticipation of fast growth.
e. no real competitors.

71. The waterfall strategy of sequential entry is preferable over the sprinkler model
when:

a. the lifecycle of the product is relatively short.
b. there are low costs of entry into the market.
c. there are many competitors.
d. there are weak local competitors.
e. fast growth is anticipated.

72. The sprinkler strategy of one to two entries (globally) is preferable over the
waterfall model when all of the following conditions exist EXCEPT:

a. the lifecycle of the product is relatively short.
b. there are low costs of entry into the market.
c. there are many competitors.
d. very weak local competitors.
e. anticipation of fast growth.

73. The sprinkler strategy of one to two entries (globally) is preferable over the
waterfall model when:

a. the lifecycle of the product is relatively long.
b. high costs of entry are present.
c. very weak local competitors exist.
d. fast growth is anticipated.
e. no real competitors exist.

74. Truly global innovators are called:

a. metanational innovators.
b. delta innovators.
c. beta innovators.
d. gamma innovators.
e. none of the above.

75. To harvest the benefits of metanational innovators, a company must pursue three
things:

a. Prospecting, assessing, and mobilizing.
b. Prospecting, assessing, and delivering.
c. Prospecting, assessing, and running.
d. Prospecting, assessing, and planning.
e. none of the above.

True/False Short Answer

76. Companies can pursue three global strategies to penetrate foreign markets. The
strategies are: extension, adaptation, and___________________.

77. Early market entrants often choose dual extension (product and communication
extension) as a strategy to enter markets with new products.

78. The biggest savings to the company when following a strategy of dual extension
is in economies of scale.

79. Because of their universally known products, the Wrigley chewing gum company can
use product adaptation-communications extension strategies effectively.

80. Local market circumstances do not favor the case of product adaptation.

81. Many companies add brands to their product portfolio via acquisitions of local brands.

82. Differences in both the cultural and physical environment across countries call for
a ________________________ strategy.

83. _________________ means offering a uniform product on a regional or worldwide
basis.

84. The goal of standardization is to minimize competition.

85. ____________________ leverages cross-border differences in needs and wants of
the firm’s target customers.

86. Five forces favor a globalized product strategy. These include: common customer
needs, global customers, scale economies, time to market, and__________________.

87. Overstandardization is a risk of the core-product approach to introducing new
products in the world market.

88. In general, the adoption of new products is driven by individual differences, personal
influences, and product characteristics.

89. With respect to categories of consumers that adopt new products, the __________
category is eager to experiment with new ideas or products.

90. The lead country is where the product is introduced first.

91. In marketing, new product ideas do not come from the company, customers,
competition, and collaborators.

92. In these days, many MNCs create organizational structures to foster global product
development.

93. Conjoint analysis is also called tradeoff analysis.

94. In the area of a global product launch strategy, two strategic options available are:
waterfall strategy and _________________________.

95. The waterfall model is also called staggered roll-out.

96. A truly global innovators are called metanational innovators.

Essay

97. List the strategic options available to the firm considering global expansion in the product area. Detail the conditions that make the strategic option favorable. Be sure to detail your answer.

98. List the forces that now favor a globalized product design strategy.

99. There are strategic options that allow firms to modify their product while keeping most of the benefits of following a uniform product policy. Explain the differences between the modular and core-product approaches.

100. Test marketing is considered a critical step in new product development in most Western countries. Comment on test marketing. Also, outline some of the shortcomings of test marketing?

101. In marketing, timing is crucial. In new product development it might be even more crucial given the risk of the venture. Explain the waterfall and sprinkler approaches to introducing a new product to the market. When is the waterfall method preferred over the sprinkler method? Be sure to be specific as to your comments on these two strategic options.

Chapter 11

Multiple Choice

1. The German company Henkel is always customizing its brand portfolio, positioning, and product formulations. The two main challenges that the company faces are:

a. global brand and beta line management.
b. global brand and quality line management.
c. global brand and modular line management.
d. global brand and hybrid line management.
e. global brand and product line management.

Difficulty: (3) Knowledge: (A) Page: 361

2. A ____________ is a name, term, sign, symbol, or combination of them which is
intended to identify the goods and services of one seller or group of sellers and to
differentiate them from those of competitors.

a. trademark
b. patent
c. signature
d. figure
e. brand

Difficulty: (1) Knowledge: (F) Page: 362

3. Linked to the brand name is a collection of assets and liabilities called ____________.

a. the trademark
b. the patent
c. knowledge
d. proprietary investments
e. brand equity

Difficulty: (2) Knowledge: (F) Page: 362

4. Brand-name awareness, perceived quality, and other associations invoked by the
brand name in the customer’s mind are all illustrations of the concept called
_______________.

a. brand color
b. brand equity
c. brand warranty
d. local brand value
e. brand mark

Difficulty: (3) Knowledge: (F) Page: 362

5. “How do we strike a balance between a global brand that shuns cultural barriers and
one that allows for local requirements” is an illustration of a question that needs to be
asked when building up and managing _________________ in a multinational setting.

a. proprietary investments
b. brand equity
c. brand warranty
d. local brand name
e. brand mark

Difficulty: (3) Knowledge: (A) Page: 362

6. All of the following are questions that must be asked when building up and managing
brand equity in a multinational setting EXCEPT:

a. How do we strike a balance between a global brand that shuns cultural barriers and
one that allows for local requirements?
b. What aspects of service are too expensive to be included in the brand warranty?
c. What aspects of brand policy can be adapted to global use?
d. Which brands are destined to become “global” mega-brands?
e. How do you execute the changeover from a local to a global brand?

Difficulty: (3) Knowledge: (F) Page: 362

7. A key strategic issue that appears on international marketers’ agendas is whether there should be a ________________________.

a. national brand
b. country brand
c. regional brand
d. local brand
e. global brand

Difficulty: (1) Knowledge: (F) Page: 362

8. A truly ________________ is one that has a consistent identity with consumers across
the world.

a. private brand
b. public brand
c. global brand
d. local brand
e. government brand

Difficulty: (2) Knowledge: (A) Page: 362

9. The most obvious reason for having a global brand would be to take advantage of:

a. power promotions.
b. a large labor and selling force.
c. economies of scale.
d. coordinated logistics.
e. corporate vision.

Difficulty: (1) Knowledge: (F) Page: 363

10. In 2008, which of the following brands was ranked the number one brand in the
world?

a. Disney
b. Coca-Cola
c. GE
d. Nokia
e. IBM

Difficulty: (2) Knowledge: (A) Page: 363, Exhibit 11-1

11. In 2008, which of the following auto brands was ranked number one in the global
auto industry?

a. BMW
b. Mercedes
c. GM
d. Ford
e. Toyota

Difficulty: (1) Knowledge: (A) Page: 363, Exhibit 11-1

12. In 2008, which of the following brands was ranked number one in the world among
the high-tech companies?

a. Microsoft.
b. IBM.
c. Intel.
d. Hewlett Packard.
e. Dell.

Difficulty: (1) Knowledge: (A) Page: 363, Exhibit 11-1
13. Marlboro quickly became the leading cigarette brand in Hong Kong when it
positioned itself as being the leading brand in the United States. This strategy is
attributed to Marlboro as being a:

a. global brand.
b. geo brand.
c. regional brand.
d. country brand.
e. local brand.

Difficulty: (1) Knowledge: (A) Page: 364

14. A desire to reflect its American roots motivated Disney to change the name for its
Paris themepark from Euro Disney to __________________.

a. Disneyland Village
b. Disneyland Park
c. Disneyland Paris
d. Disneyland Europe
e. Disneyland France

Difficulty: (2) Knowledge: (F) Page: 364

15. Brand equity for global brands varies greatly from country to country. All of the
following factors contribute to the variation EXCEPT:

a. competitive climate.
b. marketing support.
c. cultural receptivity to brands.
d. literacy.
e. product category penetration.

Difficulty: (2) Knowledge: (F) Pages: 365-66

16. Brand equity for global brands varies greatly from country to country. All of the
following factors contribute to the variation EXCEPT:

a. history.
b. competitive climate.
c. marketing support.
d. cultural receptivity to brands.
e. brand equity scale.

Difficulty: (3) Knowledge: (F) Pages: 365-66

17. ____________________ often justify(ies) local branding instead of global branding.

a. Domestic barriers
b. Regulatory barriers
c. Cultural barriers
d. Social barriers
e. Religious barriers

Difficulty: (3) Knowledge: (A) Page: 366

18. Mecca Cola is a new soft drink that was launched by a ____________________
entrepreneur to cash in on anti-America sentiments in Europe.

a. Irish
b. English
c. Dutch
d. German
e. French

Difficulty: (3) Knowledge: (F) Page: 367

19. The following four branding strategies are available to markets EXCEPT:

a. solo branding.
b. hallmark branding.
c. family(umbrella) branding.
d. Extension branding.
e. horizontal branding.

Difficulty: (2) Knowledge: (A) Pages: 367-68

20. In international marketing, a firm’s global brand structure is shaped by the following
three types of factors:

a. firm-based drivers, product-market derivers, and the manufacturing dynamics.
b. firm-based drivers, hi-tech derivers, and Web dynamics.
c. firm-based drivers, product-market derivers, and market dynamics.
d. firm-based drivers, product-market derivers, Internet dynamics.
e. none of the above

Difficulty: (3) Knowledge: (F) Page: 368

21. Brand architecture guides the dynamics of the firm’s brand __________________:

a. portfolio.
b. color.
c. basket.
d. Web
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 368

22. According to Nestle’s Branding Tree, the company has four types of brands in its
global operations EXCEPT:

a. plain brands.
b. local brands.
c. regional brands.
d. worldwide strategic brands.
e. worldwide corporate brands.

Difficulty: (3) Knowledge: (A) Page: 370, Exhibit 11-4

23. With respect to a brand name changeover strategy, the _________________ strategy
ties the new global brand name to the existing local brand name. After a transition
period, the old name is dropped.

a. transparent forewarning
b. summary axing
c. fade-in/fade-out
d. pyramid focusing
e. parallel dimension

Difficulty: (1) Knowledge: (F) Page: 371

24. Euro Disney eventually becoming Disneyland is an example:

a. transparent forewarning.
b. summary axing.
c. fade-in/fade-out.
d. pyramid focusing.
e. parallel dimension.

Difficulty: (2) Knowledge: (A) Page: 371

25. With respect to a brand name changeover strategy, the _________________ strategy
alerts customers about the brand name change (via communications such as in-store
displays).

a. transparent forewarning
b. summary axing
c. fade-in/fade-out
d. pyramid focusing
e. parallel dimension

Difficulty: (2) Knowledge: (F) Page: 371

26. When Mars candy company took over Raider candy products and used the theme
line “Now Raider becomes Twix, for it is Twix everywhere in the world,” the
company used the ________________________ strategy for changing brand names.

a. transparent forewarning
b. summary axing
c. fade-in/fade-out
d. pyramid focusing
e. parallel dimension

Difficulty: (3) Knowledge: (A) Page: 372

27. With respect to a brand name changeover strategy, the __________________ strategy
where the company simply drops the old brand name and immediately replaces it
with the global name.
a. transparent forewarning
b. summary axing
c. fade-in/fade-out
d. pyramid focusing
e. parallel dimension

Difficulty: (2) Knowledge: (F) Page: 372

28. Global product line mix options could be:

a. an extension of the home country product line
b. a subset of the home country product line
c. a mix of local and home country
d. localized only
e. all of the above

Difficulty: (2) Knowledge: (F) Page: 374

29. _________________ is a system where a single banner brand is used worldwide,
often with a sub-brand name, for almost the entire product mix of the company.

a. Domestic branding
b. National branding
c. Manufacturer’s branding
d. Store branding or private labeling
e. Umbrella (corporate) branding

Difficulty: (2) Knowledge: (F) Page: 367

30. All of the following are brand areas that might need protection EXCEPT:

a. the name itself.
b. the slogan.
c. the jingle.
d. visual imagery.
e. the size of the logo.

Difficulty: (1) Knowledge: (F) Page: 378

31. McDonald’s golden arches are part of the famous brand. Which of the following
elements best describes that element of the brand that should be protected (according
to the example provided)?

a. the name itself.
b. the slogan.
c. the jingle.
d. visual imagery.
e. the size of the logo.

Difficulty: (1) Knowledge: (A) Page: 378

32. Most companies sell a wide assortment of products. The assortment is usually
described on the dimensions of ______________________ of the product mix.

a. width and scale
b. width and timing
c. width and ingredients
d. width and length
e. scale and length

Difficulty: (1) Knowledge: (F) Page: 374

33. The ______________ of the product assortment refers to the collection of different
product lines marketed by the firm.

a. length
b. width
c. horizontal scale
d. vertical scale
e. consistency

Difficulty: (2) Knowledge: (F) Page: 374

34. The ______________ of the product assortment refers to the number of items that
the company sells within a given product line.

a. length
b. width
c. horizontal scale
d. vertical scale
e. consistency

Difficulty: (2) Knowledge: (F) Page: 374

35. When comparing the product mix in the company’s host and home markets, all of
the following are possible scenarios EXCEPT:

a. an extension of the domestic line.
b. an extension of a joint venture or strategic alliance.
c. a subset of the home market’s product line.
d. a mixture of local and nonlocal product lines.
e. a completely localized product line.

Difficulty: (2) Knowledge: (F) Page: 374

36. Small firms with narrow product assortment will normally choose which of the
following strategies when attempting to enter an international market?

a. an extension of the domestic line.
b. an extension of a joint venture or strategic alliance.
c. a subset of the home market’s product line.
d. a mixture of local and nonlocal product lines.
e. a completely localized product line.

Difficulty: (2) Knowledge: (A) Page: 374

37. Blistex, a tiny U.S. company that makes primarily lip-care products, has a very
limited range of product lines that are marketed to foreign markets. Blistex would
probably choose which of the following strategies for entering foreign markets?

a. an extension of the domestic line.
b. an extension of a joint venture or strategic alliance.
c. a subset of the home market’s product line.
d. a mixture of local and nonlocal product lines.
e. a completely localized product line.

Difficulty: (3) Knowledge: (A) Page: 374

38. All of the following are drivers that impact the composition of a firm’s international
product line EXCEPT:

a. customer service and warranty requirements.
b. customer preferences.
c. competitive climate.
d. organizational structure.
e. history.

Difficulty: (3) Knowledge: (F) Pages: 374-77

39. The __________________ procedure uses a product line as a listening post for the
new foreign market to see what product items work best.

a. drop/add matrix
b. ship and shop approach
c. probing and learning approach
d. seal and deal approach
e. push down approach

Difficulty: (2) Knowledge: (F) Page: 378

40. Product lines can be categorized as:

a. Core product, niche items, seasonal products, and filler products
b. Core product, niche items, seasonal products, and filter products
c. Core product, niche items, seasonal products, and final products
d. Core product, niche items, seasonal products, and flimsy products
e. None of the above

Difficulty: (3) Knowledge: (F) Page: 378

41. A good place to start is to analyze each individual country’s product portfolio on the
basis of a sales turnover basis. Product lines can be categorized by all the following
ways EXCEPT:

a. core products.
b. cultural products.
c. niche items.
d. seasonal products.
e. filler products.

Difficulty: (2) Knowledge: (F) Page: 378

42. With respect to product categories analyzed on the basis of sales turnover, a
_____________ product is one where the item represents the bulk of the subsidiary’s
sales volume.

a. core product
b. cultural product
c. niche item
d. seasonal product
e. filler product

Difficulty: (1) Knowledge: (F) Page: 378

43. With respect to product categories analyzed on the basis of sales turnover, a
_____________ product is one where the product appeals to a small segment of the
population (which might grow in time).

a. core product
b. cultural product
c. niche item
d. seasonal product
e. filler product

Difficulty: (2) Knowledge: (F) Page: 378

44. With respect to product categories analyzed on the basis of sales turnover, a
_____________ product is one where the product has most of its sales during limited
times during the year.

a. core product
b. cultural product
c. niche item
d. seasonal product
e. filler product

Difficulty: (1) Knowledge: (F) Page: 378

45. With respect to product categories analyzed on the basis of sales turnover, a
_____________ product is one where the product is only a small portion of the
subsidiary’s overall sales. These even might be “dead-weight” items.

a. core product
b. cultural product
c. niche item
d. seasonal product
e. filler product

Difficulty: (1) Knowledge: (F) Page: 378

46. Brand piracy might cause which outcomes?

a. revenue losses to the company
b. price increases by the MNC to identify the goods as genuine
c. better diffusion of the brand
d. consumer danger from poor quality fakes
e. both A and D

Difficulty: (2) Knowledge: (F) Pages: 378-79

47. All of the following are strategic options available to international marketers to stop
product piracy EXCEPT:

a. joint ventures.
b. lobbying activities.
c. legal action.
d. product policy options.
e. communication options.

Difficulty: (2) Knowledge: (F) Pages: 380-82

48. Pirated products tend to be of ______________ quality.

a. good
b. poor
c. high
d. special
e. none of the above

Difficulty: (1) Knowledge: (F) Page: 379

49. Trying to obtain sanctions against countries that tolerate product piracy would be an
example of which of the following strategic options available to international
marketers trying to stop product piracy?

a. joint ventures.
b. lobbying activities.
c. legal action.
d. product policy options.
e. communication options.

Difficulty: (2) Knowledge: (A) Page: 380

50. Intellectual property rights violations have been a major problem in China.
Which of the following strategic options could be available to international marketers
in the area of product piracy?

a. customs.
b. lobbying activities.
c. legal action.
d. product policy options.
e. all of the above.

Difficulty: (3) Knowledge: (A) Page: 380

51. LVMH, the owner of wide variety of upscale liquor brands, redesigned its bottles to
make it more difficult for copycatters to reuse LVMH bottles for their own brews.
This would be an example of which of the following strategic options in product
piracy:

a. product policy options.
b. lobbying activities.
c. legal action.
d. hybrid options.
e. communication options.

Difficulty: (2) Knowledge: (A) Page: 381

52. Yamaha decided to combat China’s counterfeiters by launching new motorcycle
models at a similar price as fake products. This would be an example of which of the
following strategic options in product piracy:

a. joint ventures.
b. lobbying activities.
c. legal action.
d. product policy options.
e. communication options.

Difficulty: (2) Knowledge: (A) Page: 381

53. When international marketers warn consumers about the ramifications of accepting or
buying counterfeit merchandise, this would be an example of which of the following
strategic options available to international marketers trying to stop product piracy?

a. joint ventures.
b. lobbying activities.
c. legal action.
d. product policy options.
e. communication options.

Difficulty: (1) Knowledge: (A) Page: 382

54. Holding cultural stereotypes about countries as an important source in assessing the
value of a product is an example of:

a. the country of origin (COO) effect.
b. nationalism.
c. racial bias.
d. social sensitivity.
e. xenophobia.

Difficulty: (3) Knowledge: (A) Page: 383

55. The “Made In” label as an important source of assessing the value of a product is an
example of:

a. regionalism
b. nationalism.
c. materialism
d. social sensitivity.
e. the country of origin (COO) effect.

Difficulty: (1) Knowledge: (A) Page: 383

56. Find the general statement about the country of origin (COO) effect listed below that
is NOT true.

a. COO effects are not flexible.
b. consumers prefer domestic products over imports.
c. the critical factor appears to be the place of manufacture rather than the location of
the company’s headquarters.
d. COO effects do not change very much over time.
e. demographics make a difference.

Difficulty: (2) Knowledge: (F) Pages: 383-84

57. All of the following statements about the country of origin effect (COO) are true
EXCEPT:

a. COO effects are restricted to Europe.
b. Asian consumers prefer domestic products over imports.
c. the critical factor appears to be the place of manufacture rather than the location of
the company’s headquarters.
d. COO effects do not change very much over time.
e. psychographics make a difference.

Difficulty: (2) Knowledge: (F) Pages: 383-84

58. If the country of origin (COO) effect is anticipated to be negative, a company can
follow all of the following strategies to offset the effect EXCEPT:

a. select a brand name that disguises the country of origin.
b. select a local brand name.
c. select a high prestigious price.
d. try to explain any negative government policy that might influence buyers.
e. select a relatively low price.
385-86-48

59. One of the major challenges faced by international marketers of services is:

a. protectionism.
b. high costs.
c. patent infringement.
d. piracy.
e. low profits.

Difficulty: (2) Knowledge: (F) Page: 386

60. The need for direct customer interface in providing services means that service
providers must often have ____________________.

a. a warranty
b. a command of the local language
c. a local presence
d. low profit expectation
e. an inside government contact

Difficulty: (2) Knowledge: (F) Page: 386

61. Regarding opportunities in the global service industries, some of the _________
rules have been extended to the international services trade under the new WTO regime.

a. World Bank
b. International Monetary Fund
c. United Nations
d. GATT (General Agreements on Tariffs and Trade)
e. none of the above

Difficulty: (3) Knowledge: (A) Page: 386

62. A major strength of global service firms is that their _________________.

a. local know-how
b. global know-how
c. regional know-how
d. high-tech know-how
e. political know-how

Difficulty: (1) Knowledge: (A) Page: 388

63. Global service firms often benefits from:

a. scale economies.
b. weight economies.
c. hybrid economies.
d. perfect economies.
e. visible economies.

Difficulty: (2) Knowledge: (A) Page: 388

64. To bridge cultural gaps between the home and host market, service companies often
customize the product to the local market. This can be done by spotting
_________________________.

a. environmental opportunities
b. funding opportunities
c. regional opportunities
d. cultural opportunities
e. political opportunities

Difficulty: (3) Knowledge: (A) Page: 388

True/False Short Answer

65. A ______________ is a name, term, sign, symbol, or combination of them which is
intended to identify the goods and services of one seller or group of sellers and to
differentiate them from those of competitors.

66. Brand name awareness, perceived quality, and other associations invoked by the
brand name in the customer’s mind can be described as being part of brand
equity.

67. A good example of a global brand name is Microsoft.

68. One of the chief reasons for having a global brand is economies of scale.

69. The number one brand in the world in market value is IBM.

Difficulty: (1) Knowledge: (A) Page: 363, Exhibit 11-1

70. Interbrand’s most valuable brands list is dominated by American brands.

Difficulty: (2) Knowledge: (F) Page: 363, Exhibit 11-1

71. One of the reasons for pursuing a global brand as part of product policy is what might be called a prestige factor.

Difficulty: (1) Knowledge: (F) Page: 364

72. Euro Disney changed its name to Disneyland Europe.

Difficulty: (2) Knowledge: (A) Page: 364

73. Brand equity is usually consistent from country to country.

Difficulty: (2) Knowledge: (F) Page: 365

74. In solo branding, each brand stands on its own with a product or brand manager
running it.

Difficulty: (1) Knowledge: (A) Page: 367

75. Family (umbrella) branding is a not hierarchy of brands that may use the company’s
corporate brand.

Difficulty: (2) Knowledge: (F) Page: 367

76. With respect to brand name changeover strategies, a ____________ strategy consists
of somehow tying the global brand name to the local name. Eventually, the local
brand is phased out.

77. With respect to brand name changeover strategies, a ________________ strategy
consists of alerting the consumer about an impending brand name change and then
changing the brand name to the global brand name.

78. If a company simply drops the old brand name and immediately replaces it with the
global name, it is called summary axing.

79. Companies should monitor the marketplace’s response to the brand-name change
with marketing research.

Difficulty: (2) Knowledge: (F) Page: 372

80. Pirated products tend to be of high quality.

Difficulty: (1) Knowledge: (A) Page: 379

81. Country of origin (COO) effects have been shown to be unstable over time.

Difficulty: (2) Knowledge: (F) Page: 383

82. Country of origin (COO) influences are particularly strong among the elderly.

Difficulty: (3) Knowledge: (F) Page: 383

83. Country of origin (COO) effects depend on the product category.

Difficulty: (1) Knowledge: (A) Page: 383

84. Country-image stereotypes cannot hurt a company.

Difficulty: (1) Knowledge: (A) Page: 385

85. In international marketing, trade barriers to service marketers tend to be much more
cumbersome than physical products.

Difficulty: (2) Knowledge: (A) Page: 386

86. Demand for premium quality services expands with increases in consumers’ age.

Difficulty: (2) Knowledge: (A) Page: 387

Essay

87. Deciding to move toward global branding is a difficult decision. This must often be considered with respect to the globalization versus localization issue. What are the questions that might be useful in reaching a decision as to pursue globalization over localization?

88. When the case for a transition from a local to a global (or regional) brand name is made, the firm needs to decide on how to implement the changeover in practice. Comment on the strategies that might be available for doing this and the considerations that might steer the manager toward one of the strategies.

89. Describe the strategies that might be used by multinational corporations to cope with the growing threat of product piracy. What are your feelings about purchasing pirated products? Give a brief illustration.

90. Comment on how you perceive the marketing of services on a global basis to be different from marketing tangible goods. Think about the difficulties that might be present with marketing services.

Chapter 12

Multiple Choice

1. ________________ is the only marketing mix instrument that creates revenues.

a. Product
b. Price
c. Place
d. Promotion
e. People

Difficulty: (1) Knowledge: (F) Page: 395

2. A company’s pricing policy is a highly ____________________ process based on
inputs from various departments.

a. under-functional
b. low-functional
c. geo-functional
d. bi-functional
e. cross-functional

Difficulty: (2) Knowledge: (F) Page: 395

3. All of the following are drivers that govern global pricing decisions EXCEPT:

a. company
b. customers
c. controls
d. competition
e. channels

Difficulty: (1) Knowledge: (F) Page: 396

4. In many countries, multinationals’ pricing decisions are impacted by:

a. break-even analysis
b. regression functions
c. supply and service curves
d. government policies
e. business ethics

Difficulty: (2) Knowledge: (F) Page: 396

5. When developing a pricing strategy for its global markets, one of the first steps that
a company must go through is to decide:

a. what the actual price should be.
b. how high or low to price.
c. how much money will the price bring in.
d. what it wants to accomplish with its strategy.
e. what form of controls will regulate price.

Difficulty: (3) Knowledge: (F) Page: 396

6. The most important pricing objectives of companies doing business in the United
States (including foreign-based firms) are(is) to:

a. achieve a satisfactory return on investment.
b. maintain market share.
c. meet a specified profit goal.
d. all of the above.
e. none of the above.

Difficulty: (3) Knowledge: (F) Page: 397

7. According to a recent research, all of the following are examples of important pricing
objectives EXCEPT:

a. drive competition out of business.
b. to achieve a satisfactory return on investment.
c. maintain market share.
d. expand market share.
e. to meet a specified profit goal.

Difficulty: (2) Knowledge: (A) Page: 397

8. When New Balance, the U.S.-based maker of high-tech running shoes, sells its shoes
in France as haute couture items rather than simply athletic shoes, this is an
example of:

a. country objectives.
b. company objectives.
c. consumer objectives.
d. monopoly objectives.
e. none of the above.

Difficulty: (2) Knowledge: (A) Page: 397

9. When making pricing decisions, ______________ set(s) the floor.

a. profits
b. costs
c. demand
d. supply
e. service

Difficulty: (1) Knowledge: (F) Page: 397

10. ______________ costs change with sales volume.

a. Demand
b. Supply
c. Derived
d. Fixed
e. Variable

Difficulty: (1) Knowledge: (F) Page: 397

11. _________________ costs do not vary with sales volume changes.

a. Demand
b. Supply
c. Derived
d. Fixed
e. Variable

Difficulty: (1) Knowledge: (F) Page: 397

12. In the international marketplace, _________________ pricing adds international
costs and a mark-up to the domestic manufacturing cost.

a. dynamic incremental pricing
b. export price
c. import price
d. cost-plus price
e. target-return price

Difficulty: (3) Knowledge: (F) Page: 397

13. In the international marketplace, ________________ pricing arrives at a price after
removing domestic fixed costs. Only variable export costs generated by the exporting
effort and a portion of the overhead load should be recuperated by the pricing effort
(according to this method).

a. dynamic incremental pricing
b. export price
c. import price
d. cost-plus price
e. target-return price

Difficulty: (3) Knowledge: (F) Page: 397

14. Examples of exporting-related ____________________ include manufacturing costs,
shipping expenses, insurance, and overseas promotional costs.

a. incremental costs
b. demand costs
c. fixed costs
d. target costs
e. service costs

Difficulty: (2) Knowledge: (F) Page: 397

15. One of the risks of dynamic incremental pricing (in the case where the export list
price is far below the domestic price) that ______________ can be triggered in the
export market.

a. high profit potential
b. dumping charges or accusations
c. falling profits
d. falling quality
e. falling service

Difficulty: (2) Knowledge: (A) Page: 397

16. When demand is highly price sensitive, the company needs to consider how it can
_________________ from a global perspective.

a. raise prices
b. lower prices
c. lower service
d. raise quality
e. reduce costs

Difficulty: (1) Knowledge: (F) Page: 397

17. Customers’ _________________ is a key consideration in pricing decisions.

a. location
b. buying power
c. decision power
d. thinking power
e. none of the above

Difficulty: (1) Knowledge: (F) Page: 398

18. Countries with low per-capita income are more __________________ than in
developed countries.

a. promotion sensitive
b. price sensitive
c. need sensitive
d. demand sensitive
e. service sensitive

Difficulty: (3) Knowledge: (F) Page: 398

19. One alternative for successful marketing to the price sensitive low per-capita income
market is to produce a ________________ product or lower product quality.

a. downsized
b. upgraded
c. synthetic
d. copy
e. parallel

Difficulty: (2) Knowledge: (F) Page: 398

20. According to textbook, ________________ by and large charges the same price
worldwide.

a. Starbucks
b. IBM
c. Coca-Cola
d. Toyota
e. BMW

Difficulty: (2) Knowledge: (A) Page: 398

21. According to the text, once brand loyalty has been established, _____________ will
play less of a role as a purchase criterion.

a. promotion
b. service
c. product
d. price
e. place

Difficulty: (3) Knowledge: (F) Page: 398

22. Differences in the competitive situation across countries will usually lead to:

a. cross-border price differentials.
b. local price differentials.
c. domestic price differentials.
d. intra-company price differentials.
e. company-based price differentials.

Difficulty: (1) Knowledge: (F) Page: 398

23. Once brand loyalty has been established, price will play less of a role as a
purchase criterion, and the firm may be able to institute a ________________
strategy.

a. demand-based
b. premium pricing
c. elastic pricing
d. promotion-related pricing
e. sensitivity-based

Difficulty: (2) Knowledge: (A) Page: 398

24. All of the following are reasons that competitive situations vary from country to
country (with respect to the competitive environment) EXCEPT:

a. the number of competitors varies from country to country.
b. the nature of competition changes.
c. the presence of counterfeit products.
d. the presence of gray markets.
e. the competitive position of a firm changes from one country to another.

Difficulty: (3) Knowledge: (A) Pages: 398-99

25. An example of nonprice competition that is faced in some markets is:

a. retailer sales.
b. discounts.
c. coupons.
d. advertising.
e. cents-off deals.

Difficulty: (2) Knowledge: (A) Page: 400

26. Wide gaps in the price sensitivity between countries for the same product may
create conditions that promote _________________ markets.

a. backward
b. gray
c. white
d. demand
e. forward

Difficulty: (3) Knowledge: (A) Page: 401

27. Large cross-country price gaps open up arbitrage opportunities that lead to
_________________ imports from low-price countries to high-price ones.

a. black market
b. white market
c. zero market
d. smuggled
e. parallel

Difficulty: (2) Knowledge: (F) Page: 401

28. Sales tax rates, tariffs, and price controls are all examples of _______________ that
can have a direct or indirect impact on the pricing policies of a firm in the
international marketplace.

a. sales volume policies
b. price policies
c. government policies
d. restrictions
e. punishments

Difficulty: (2) Knowledge: (A) Page: 402

29. Huge government deficits are examples of a(n) ________________ impact on
pricing decisions.

a. direct
b. indirect
c. artificial
d. planned
e. uncontrollable

Difficulty: (2) Knowledge: (A) Page: 402

30. Inflation in an economy is an example of a(n) ________________ impact on pricing
decisions.

a. direct
b. indirect
c. artificial
d. planned
e. uncontrollable

Difficulty: (2) Knowledge: (F) Page: 402

31. To cover the incremental costs (such as shipping), the final foreign retail price will
often be much higher than the domestic retail price. This phenomenon is known as
______________________.

a. inflation.
b. the price deflator.
c. price escalation.
d. price sensitivity.
e. global arbitrage.

Difficulty: (2) Knowledge: (F) Page: 402

32. There are two ways to deal with the price escalation phenomenon. One of these
methods is to cut the export price. The other is to:

a. change the promotion strategy.
b. position the product as a (super) premium brand.
c. position the product as a lower quality brand.
d. reduce retailer margins.
e. reduce distances that the good must be shipped.

Difficulty: (3) Knowledge: (A) Page: 402

33. Which of the following would be a good option to follow if lowering the export price
were the firm’s objective?

a. rearrange the distribution channel.
b. change the promotion.
c. change the warranty provisions.
d. give more of the product in the package as an incentive to purchase.
e. study the demand curve.

Difficulty: (3) Knowledge: (A) Page: 402-3

34. All of the following are options that might be followed if the firm wished to lower
its export price on a product EXCEPT:

a. rearrange the distribution channel.
b. eliminate costly features (or make them optional).
c. downsize the product.
d. expand the warranty categories to give incentive for higher quality.
e. assemble or manufacture the product in foreign markets.

Difficulty: (2) Knowledge: (F) Pages: 402-3

35. If a firm decide to penetrate the Japanese consumer market through direct marketing
(such as catalog or telemarketing sales). Which of the following strategies best
describes this option for lowering the price of an exported product?

a. rearrange the distribution channel.
b. eliminate costly features (or make them optional).
c. downsize the product.
d. expand the warranty categories to give incentive for higher quality.
e. assemble or manufacture the product in foreign markets.

Difficulty: (2) Knowledge: (A) Pages: 402-3

36. When the U.S. levied a 10 percent tax on plus-$30,000 luxury cars, Land Rover
changed the weight of Range Rover models so they could be classed as a truck and
thereby avoid the luxury status, the company was attempting to follow which of the
price strategies listed below for lowering the price of an exported product?

a. rearrange the distribution channel.
b. eliminate costly features (or make them optional).
c. downsize the product.
d. adapt the product to escape tariffs or tax levies.
e. assemble or manufacture the product in foreign markets.

Difficulty: (1) Knowledge: (A) Page: 403

37. LEGO, the Danish toymaker, rather than worrying about finding ways to lower the
price of its product in foreign markets has chosen (most LEGO sets are sold from
$6-$223) to adopt a __________________ strategy position.

a. demand-based
b. premium pricing
c. elastic pricing
d. promotion-related pricing
e. sensitivity-based

Difficulty: (1) Knowledge: (A) Page: 403

38. When McDonald’s first opened their restaurants in Russia in 1990, the Big Mac meal
cost 6 rubles. Three years later, the same meal cost 1,100 rubles. This would be an
example of how:

a. demand can change.
b. how premium pricing can damage a product.
c. price elasticity works.
d. inflation can damage a market.
e. service is what matter the most to the average customer.

Difficulty: (1) Knowledge: (A) Page: 403

39. All of the alternatives listed below are ways to safeguard against inflation EXCEPT:

a. modify components, ingredients, parts and/or packaging materials.
b. source materials from low-cost suppliers.
c. lengthen credit terms.
d. include escalator clauses in long-term contracts.
e. quote prices in a stable currency.

Difficulty: (3) Knowledge: (F) Page: 404

40. ___________ inflation also mandates rapid inventory turnarounds.

a. High
b. Low
c. Visible
d. Hyper
e. Slow

Difficulty: (2) Knowledge: (F) Page: 404

41. To combat hyperinflation, many governments occasionally impose ______________
controls.

a. commodity
b. inflation
c. margin
d. discount
e. price

Difficulty: (1) Knowledge: (F) Page: 404

42. According to lessons learned in Brazil’s hyperinflationary economy, McDonald’s
will deal with Russia’s runaway inflation by using all of the following tools
EXCEPT:

a. emphasize cash flow management.
b. control of raw materials.
c. institute sales and price setting strategies.
d. hedge for potentially substantial distortions in the exchange rate.
e. make loans to local franchise investors to bring them past hard times.

Difficulty: (2) Knowledge: (A) Page: 404

43. Firms faced with price controls can take any of the following strategies EXCEPT:

a. shift the target segment or markets.
b. launch new products or variants of existing products.
c. negotiate with the government.
d. predict the incidence of price controls.
e. have the home government bring pressure on the host government.

Difficulty: (3) Knowledge: (F) Pages: 404-5

44. When a manufacturer of breakfast cereals for humans shifts production to a
chicken feed product to overcome the effects of price controls, the firm would be
following which of the strategies outlined below?

a. adapt the product line.
b. shift target segments or market.
c. negotiate with the government.
d. launch a variant of an existing product.
e. predict the incidence of price controls.

Difficulty: (2) Knowledge: (A) Page: 405

45. If a company that is threatened with price controls diversifies into product lines that
are relatively free of price controls, the firm would be following which of the
following strategies?

a. adapt the product line.
b. shift target segments or market.
c. negotiate with the government.
d. launch a variant of an existing product.
e. predict the incidence of price controls.

Difficulty: (2) Knowledge: (A) Page: 405

46. The most drastic reaction to government-imposed price controls is to:

a. adapt the product line.
b. shift target segments or market.
c. negotiate with the government.
d. launch a variant of an existing product.
e. leave the country.

Difficulty: (1) Knowledge: (A) Page: 405

47. One of the main reasons for staying in a country that has government-imposed
price controls to deal with hyperinflation is:

a. the government might not let you out.
b. when the danger is over you cannot get back in.
c. you gain experience for other markets with similar problems.
d. you do not want to loose face.
e. you do not want to show weakness to your competition.

Difficulty: (2) Knowledge: (A) Page: 405

48. ___________________ reflect how much one currency is worth in terms of
another currency.

a. Interest rates
b. Credit rates
c. Bond rates
d. Inflation rates
e. Exchange rates

Difficulty: (2) Knowledge: (F) Page: 405

49. All of the following are exporter strategies when the domestic currency is weak
EXCEPT:
a. stress price benefits.
b. engage in nonprice competition by improving quality, delivery, and aftersale
service.
c. expand the product line and add more.
d. shift sourcing and manufacturing to domestic market.
e. exploit export opportunities in all markets.

Difficulty: (3) Knowledge: (F) Page: 406, Exhibit 12-4

50. Which of the following are exporter strategies when the domestic currency is
strong?

a. stress price benefits.
b. engage in nonprice competition by improving quality, delivery, and aftersale
service.
c. expand the product line and add more.
d. shift sourcing and manufacturing to domestic market.
e. exploit export opportunities in all markets.

Difficulty: (3) Knowledge: (F) Page: 406, Exhibit 12-4

51. All of the following are considered to be exporter strategies when the domestic
currency is strong EXCEPT:

a. conduct conventional cash-for-goods trade.
b. engage in nonprice competition by improving quality, delivery, and aftersale
service.
c. improve productivity and engage in vigorous cost reduction.
d. shift sourcing and manufacturing overseas.
e. give priority to exports to relatively strong-currency countries.

Difficulty: (3) Knowledge: (F) Page: 406, Exhibit 12-4

52. Which of the following are considered to be exporter strategies when the domestic
currency is weak?

a. conduct conventional cash-for-goods trade.
b. engage in nonprice competition by improving quality, delivery, and aftersale
service.
c. improve productivity and engage in vigorous cost reduction.
d. shift sourcing and manufacturing overseas.
e. give priority to exports to relatively strong-currency countries.

Difficulty: (3) Knowledge: (F) Page: 406, Exhibit 12-4

53. Two major issues confronting international marketers result from currency
movement. The first of these is in which currency do we quote our prices? The
second is:

a. how much of the loss or gain (because of pass through) should be passed to
consumers?
b. how much should we invest in the local currency?
c. how much should we invest in our own currency?
d. what role should the central bank play in currency movement?
e. should we trust international arbitrage as a means of settling currency value?

Difficulty: (3) Knowledge: (A) Page: 406

54. A weakening of the U.S. dollar relative to the Japanese yen has the effect of:

a. strengthening the Japanese position in the United States.
b. strengthening the U.S. position in Japan.
c. weakening the dollar in Europe.
d. strengthening the yen in Europe.
e. all positions remain unchanged.

Difficulty: (2) Knowledge: (A) Page: 406

55. A strengthening of the U.S. dollar relative to the Japanese yen has the effect of:

a. strengthening the Japanese position in the United States.
b. strengthening the U.S. position in Japan.
c. weakening the dollar in Europe.
d. strengthening the yen in Europe.
e. all positions remain unchanged.

Difficulty: (2) Knowledge: (A) Page: 406

56. One of the ways that a weakening of the U.S. dollar relative to the Japanese yen
may not necessarily be a benefit to a U.S. firm is that:

a. the government may not allow the pass through.
b. the government might erect tariff barriers.
c. Japanese parts might become more expensive and when imported for inclusion into
an exported product, prices might actually rise.
d. other currencies might be the ones actually traded.
e. costs can be cut in other ways.

Difficulty: (2) Knowledge: (A) Page: 406

57. When considering the currency pass-through phenomenon, all of the following
factors give an indication as to the appropriate action EXCEPT:

a. the customer’s price sensitivity.
b. government actions.
c. the impact of dollar appreciation on the firm’s cost structure.
d. the impact of dollar depreciation on the firm’s cost structure.
e. the amount of competition in the export market.

Difficulty: (2) Knowledge: (A) Page: 407

58. When exporters lower their mark-ups in a more price-conscious export market than
in a price-sensitive market, with respect to exchange rate movements this is called
______________________.

a. local-currency price stability (LCPS)
b. pricing-to-market (PTM)
c. transfer pricing
d. countertrade pricing
e. demand mark-up pricing

Difficulty: (3) Knowledge: (F) Page: 408

59. When an exporter uses the _______________________ method, the effect can be
negative. Frequent adjustments of prices in response to currency movements will
distress local channels and customers.

a. local-currency price stability (LCPS)
b. pricing-to-market (PTM)
c. transfer pricing
d. countertrade pricing
e. demand mark-up pricing

Difficulty: (3) Knowledge: (A) Page: 408

60. _____________________ is a special form of pricing where mark-ups are adjusted
to stabilize prices in the buyer’s currency. This method helps to create stability in the
local currency.

a. Local-currency price stability (LCPS)
b. Pricing-to-market (PTM)
c. Transfer pricing
d. Countertrade pricing
e. Demand mark-up pricing

Difficulty: (1) Knowledge: (A) Page: 408

61. With respect to currency quotation when preparing for buying and selling
transactions, buyers and sellers generally prefer to quote in:
a. a world currency.
b. the seller’s currency.
c. the buyer’s currency.
d. their own currency.
e. the dollar.

Difficulty: (2) Knowledge: (A) Page: 409

62. When sales take place between related entities of the same company, ___________
is often used.

a. local-currency price stability (LCPS)
b. pricing-to-market (PTM)
c. transfer pricing
d. countertrade pricing
e. demand mark-up pricing

Difficulty: (2) Knowledge: (A) Page: 409

63. Transfer pricing decisions in an international context need to balance off the
interests of a broad range of stakeholders. All of the following would be examples
of those stakeholders EXCEPT:

a. the parent company.
b. the competition.
c. local country managers.
d. host government(s).
e. the domestic government.

Difficulty: (2) Knowledge: (F) Page: 409

64. There are a series of key drivers behind transfer pricing decisions. The most
important of these drivers is thought to be:

a. competition in the foreign country.
b. economic conditions in the foreign country.
c. price controls.
d. exchange controls.
e. market conditions in the foreign country.

Difficulty: (3) Knowledge: (F) Page: 409

65. __________________ uses the market mechanism as a cue for setting transfer prices.

a. Local-currency price stability (LCPS) pricing
b. Pricing-to-market (PTM)
c. Market-based pricing
d. Countertrade pricing
e. Nonmarket-based pricing

Difficulty: (2) Knowledge: (F) Page: 410

66. __________________ (as a form of market-based pricing) basically dictates that
the company charges the price that any buyer outside the company would pay (as
if the transaction occurred between two unrelated entities).

a. Local-currency price stability (LCPS) pricing
b. Pricing-to-market (PTM)
c. Arm’s length pricing
d. Countertrade pricing
e. Nonmarket-based pricing

Difficulty: (2) Knowledge: (F) Page: 410

67. ___________________ simply adds a mark-up to the cost of the goods.

a. Demand-based pricing
b. Negotiated pricing
c. Cost-based pricing
d. Markup-based pricing
e. Target return pricing

Difficulty: (2) Knowledge: (F) Page: 411

68. To conduct ________________, conflicts between country affiliates are resolved
through mutual discussion of the transfer pricing problems.

a. demand-based pricing
b. negotiated pricing
c. cost-based pricing
d. markup-based pricing
e. target return pricing

Difficulty: (1) Knowledge: (F) Page: 411

69. In the area of transfer pricing, experts suggest to set transfer prices that are as close as
possible to the _________________________________.

a. Balanced Arm’s Length Standard
b. Building Arm’s Length Standard
c. Best Arm’s Length Standard
d. Branding Arm’s Length Standard
e. Basic Arm’s Length Standard

Difficulty: (3) Knowledge: (F) Page: 411

70. ______________ occurs when imports are being sold at an “unfair” price.

a. Price fixing
b. Dumping
c. Gray marketing
d. Countertrade
e. Predatory pricing

Difficulty: (1) Knowledge: (F) Page: 412

71. To reduce exposure and risk of antidumping actions, the exporter can follow any of
the following marketing strategies EXCEPT:

a. trading-up
b. service enhancement
c. distribution
d. government intervention
e. communications

Difficulty: (2) Knowledge: (F) Page: 413

72. In the area of price coordination, the following considerations matter EXCEPT:

a. nature of customer.
b. amount of product differentiation.
c. nature of channels.
d. nature of competition.
e. role of the World Bank.

Difficulty: (1) Knowledge: (F) Pages: 414-15

73. In international marketing, purchasers often demand _____________________ from
their suppliers.

a. uniform-pricing contracts
b. diverse-pricing contracts
c. bilateral-pricing contracts
d. global-pricing contracts
e. local-pricing contracts

Difficulty: (3) Knowledge: (F) Page: 415

74. ___________________ is an umbrella term used to describe unconventional trade-
financing transactions that involve some form of noncash compensation.

a. Local-currency price stability (LCPS)
b. Pricing-to-market (PTM)
c. Arm’s length pricing
d. Countertrade
e. Nonmarket-based pricing

Difficulty: (2) Knowledge: (F) Page: 418

75. Countertrade transactions include the following options EXCEPT:

a. simple barter.
b. switch trading.
c. geo trading.
d. countertrade pricing.
e. clearing agreements.

Difficulty: (2) Knowledge: (A) Page: 419

76. In a(n) _______________, no third party is involved to carry out the transaction.

a. clearing agreement
b. offset
c. buyback arrangement
d. switch trading
e. simple barter

Difficulty: (1) Knowledge: (F) Page: 419

True/False Short Answer

77. According to the textbook, factors that impact global pricing decisions include
company, customers, competition, technology.

Difficulty: (2) Knowledge: (F) Page: 396

78. Cost differentials do not lead to wide price gaps.

Difficulty: (1) Knowledge: (F) Page: 397

79. In gray markets, products marketed in low-priced countries are shipped and resold
by unauthorized channels in high-priced markets.

Difficulty: (2) Knowledge: (F) Page: 401

80. Government policies do not have any impact on pricing decisions.

Difficulty: (1) Knowledge: (A) Page: 402

81. To cover the incremental costs of doing business in a foreign market, the final
foreign retail price will often be much higher than the domestic retail price.
This is called price _________________.

82. To combat hyperinflation, governments occasionally impose price controls.

Difficulty: (2) Knowledge: (F) Page: 404

83. One of the courses of action that a company can follow when faced with price
controls is to adapt the product line.

Difficulty: (2) Knowledge: (F) Page: 404

84. A stronger U.S. dollar undermines the competitive position of American exports.

Difficulty: (2) Knowledge: (F) Page: 406

85. An exporter strategy when faced with a weak domestic currency would be to
engage in nonprice competition by improving quality, delivery, and aftersale
service.

Difficulty: (2) Knowledge: (F) Page: 406, Exhibit 12-4

86. If an exporter were to stress price benefits, the exporter would probably be facing
a domestic currency that was perceived as being weak.

Difficulty: (2) Knowledge: (F) Page: 406, Exhibit 12-4

87. LCPS stands for:

88. In the area of international pricing, sellers and buyers usually prefer a quote in their domestic currency.

Difficulty: (2) Knowledge: (F) Page: 409

89. When sales transactions occur between related entities of the same company,
________________ pricing often occurs.

90. In arm’s-length prices, a firm uses the market mechanism as a cue for setting transfer
prices.

Difficulty: (2) Knowledge: (F) Page: 410

91. Cost-based pricing simply adds a mark-up to the cost of goods.

Difficulty: (1) Knowledge: (F) Page: 411

92. Negotiated transfer pricing is another form of nonmarket-based pricing.

Difficulty: (2) Knowledge: (F) Page: 411

93. Government-imposed market constraints favor nonmarket-based transfer pricing
methods.

Difficulty: (3) Knowledge: (F) Page: 411

94. In transfer pricing, BALS stands for:

95. Multinationals do not need to take antidumping laws into account when determining
their global pricing strategy.

Difficulty: (3) Knowledge: (F) Page: 412

96. VER is an acronym for:

97. Global pricing contract (GPCs) are demanded by governments.

Difficulty: (2) Knowledge: (F) Page: 415

98. Several multinationals doing business in the European Union harmonize their prices
to narrow price gaps between different member states..

Difficulty: (2) Knowledge: (F) Page: 415

99. When sales transactions occur in some form of compensation other than money
(such as trading corn for whiskey), the two trading companies are engaged in
________________.

100. In switch trading, a third party is involved which uses the credits to buy goods from
the deficit country.

Difficulty: (1) Knowledge: (F) Page: 419

101. Countertrade purchase is not the most popular form of countertrade.

Difficulty: (3) Knowledge: (F) Page: 419

Essay

102. In international marketing, price escalation can be a serious problem. To offset these difficulties marketers must be prepared to creatively meet the price escalation challenge. List the various ways that marketers might attack this problem.

103. Setting prices in a floating exchange rate world pose unique problems. Comment on how a company might react to floating exchange rates. What considerations are probably the most important for the decision maker to consider?

104. What is transfer pricing? Comment on the stakeholders and key drivers that impact the decision maker faced with transfer pricing.

105. Antidumping measures are very popular with most of the governments of industrialized nations. What measures might exporters consider to hedge themselves against antidumping procedures? Which method do you think is probably the best? Justify your answer.

106. Discuss the motives behind countertrade and the guidelines for making countertrade successful.

Chapter 13

Multiple Choice

1. In international marketing, advertising to some extent is a _________________
phenomenon.

a. cultural
b. social
c. general
d. static
e. global

Difficulty: (1) Knowledge: (F) Page: 427

2. ___________________ is one of most formidable barriers that international advertisers need to surmount.

a. Politics
b. Technology
c. Translation
d. Language
e. None of the above

Difficulty: (2) Knowledge: (F) Page: 427

3. In international marketing, numerous promotional efforts misfire because of
____________________ -related problems.

a. politics
b. technology
c. transfer
d. transaction
e. language

Difficulty: (2) Knowledge: (F) Page: 427

4. Translation errors include:

a. simple carelessness.
b. multiple-meaning words.
c. idioms.
d. all of the above.
e. none of the above.

Difficulty: (2) Knowledge: (F) Page: 427

5. All of the following are language barriers that can be identified as typical international
translation errors EXCEPT:

a. simple carelessness.
b. idioms.
c. local slang.
d. multiple-meaning words.
e. incorrect grammar.

Difficulty: (3) Knowledge: (F) Page: 427

6. To solve language-related barriers, companies in international markets should use
__________________ advertising agencies.

a. local
b. regional
c. global
d. transnational
e. domestic

Difficulty: (1) Knowledge: (F) Page: 428

7. In an advertising message, the original slogan was “Body by Fisher.” The translation
in a foreign market was “Corpse by Fisher.” This would be an example of which of
the following constraints on international promotion?

a. language barriers.
b. advertising regulations.
c. cultural constraints.
d. local attitudes toward advertising.
e. poor media infrastructure.

Difficulty: (1) Knowledge: (A) Page: 428

8. In an advertising message, the original slogan was “Body by Fisher.” The translation
in a foreign market was “Corpse by Fisher.” This would be an example of which of
the following types of translation errors?

a. simple carelessness.
b. idioms.
c. local slang.
d. multiple-meaning words.
e. incorrect grammar.

Difficulty: (2) Knowledge: (A) Page: 428

9. In an advertising message, the original slogan was “When I used this shirt, I felt
good.” The translation in a foreign market was “Until I used this shirt, I felt good.”
This would be an example of which of the following types of translation errors?

a. simple carelessness.
b. idioms.
c. local slang.
d. multiple-meaning words.
e. incorrect grammar.

Difficulty: (2) Knowledge: (A) Page: 428

10. In Britain, one U.S. advertiser ran a campaign that centered around the slogan
“You can use no finer napkin at your dinner table.” In Britain, some people use
the word “napkin” for the word “diapers.” This would be an example of which of
the following types of translation errors?

a. simple carelessness.
b. idioms.
c. local slang.
d. multiple-meaning words.
e. incorrect grammar.

Difficulty: (2) Knowledge: (A) Page: 428

11. In Spanish, five different words can be used for the word “tires” (cauchos, cubiertas,
gomas, llantas, and neumaticos). Obviously, this might present problems in
advertising. This would be an example of which of the following types of translation
errors?

a. simple carelessness.
b. idioms.
c. local slang.
d. multiple-meaning words.
e. incorrect grammar.

Difficulty: (1) Knowledge: (A) Page: 429, Exhibit 13-1

12. Given that so many errors can occur with translation and misunderstanding of
advertising in the foreign market, which of the following is probably the easiest
solution to the problem?

a. involve ad agencies from the company’s domestic environment.
b. involve ad agencies from the host country’s environment.
c. check with government officials.
d. employ foreign language specialists for all markets.
e. don’t worry about it, the problem usually corrects itself.

Difficulty: (3) Knowledge: (F) Page: 428

13. All of the following are strategies for dealing with translation problems in a foreign
market EXCEPT:

a. involve ad agencies from the host country’s environment.
b. don’t translate the message for the foreign market.
c. add foreign language subtitles.
d. use voice-overs that use foreign slang.
e. check with foreign officials.

Difficulty: (3) Knowledge: (F) Pages: 428-9

14. Many of the trickiest promotional issues occur in the domain of
_________________.

a. environment
b. money
c. technology
d. business
e. religion

Difficulty: (2 Knowledge: (F) Page: 429

15. Of the barriers that face a foreign company when attempting to promote products in
a foreign market, ___________________ are arguably the biggest stumbling block
to successful advertising in the foreign market.

a. language barriers
b. advertising regulations
c. cultural constraints or barriers
d. local attitudes toward advertising
e. poor media infrastructure

Difficulty: (2) Knowledge: (F) Page: 429

16. When considering barriers that are faced by international marketers attempting to
successfully advertise in foreign markets, cultural constraints can pose huge
difficulties. The trickiest problem within this category is usually posed by:

a. the government.
b. trade unions.
c. environmental rights groups.
d. women.
e. the host country’s religion(s).

Difficulty: (3) Knowledge: (F) Page: 430

17. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Dutch researcher
Geert Hofstede. All of the following are dimensions of a value system used in
the cultural classification scheme EXCEPT:

a. power distance.
b. possessions.
c. uncertainty avoidance.
d. individualism.
e. masculinity.

Difficulty: (2) Knowledge: (F) Page: 430

18. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Dutch researcher
Geert Hofstede. One dimension refers to the degree of inequality that is seen as
acceptable within the country. This dimension would best be described as:

a. power distance.
b. long-termism.
c. uncertainty avoidance.
d. individualism.
e. masculinity.

Difficulty: (2) Knowledge: (F) Page: 430

19. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Dutch researcher
Geert Hofstede. One dimension refers to the extent that people within the culture
prefer structured situations with clear cut rules and little ambiguity. This dimension
would best be described as:

a. power distance.
b. long-termism.
c. uncertainty avoidance.
d. individualism.
e. masculinity.

Difficulty: (2) Knowledge: (F) Page: 430

20. If ads in a foreign country stress performance, success, and completion, they would
probably be focusing on which of the following cultural classification schemes as a
way to reach a segment of the population where this dimension was high or
important.

a. power distance.
b. long-termism.
c. uncertainty avoidance.
d. individualism.
e. masculinity.

Difficulty: (2) Knowledge: (A) Page: 430

21. With respect to budget forms for advertising, the _______________ method simply
sets the overall advertising budget based on either past or expected sales revenue.

a. percentage of sales
b. competitive parity
c. all-you-can-afford
d. objective-and-task
e. marginal increment

Difficulty: (1) Knowledge: (F) Page: 431

22. The primary appeal of the percentage of sales method of allocating an advertising
budget is its:

a. popularity.
b. accounting good sense.
c. control feature.
d. simplicity.
e. accuracy.

Difficulty: (2) Knowledge: (F) Page: 431

23. If an advertiser does not want to “rock the boat” and desires to sustain a minimum
“share of voice” they will probably choose which of the following advertising
budget forms?

a. percentage of sales
b. competitive parity
c. all-you-can-afford
d. objective-and-task
e. marginal increment

Difficulty: (2) Knowledge: (F) Page: 432

24. The most popular of the budget methods (in fact, two-thirds of respondents in a
survey said they had used the method) is the _________________ method.

a. percentage of sales
b. competitive parity
c. all-you-can-afford
d. objective-and-task
e. marginal increment

Difficulty: (2) Knowledge: (F) Page: 433

25. If an advertiser spells out the goals of their communication strategy and determines
what they would like to accomplish with advertising and then plans a budget
accordingly, they are probably using the ______________ method of budgeting.

a. percentage of sales
b. competitive parity
c. all-you-can-afford
d. objective-and-task
e. marginal increment

Difficulty: (1) Knowledge: (A) Page: 433

26. If an advertiser uses field experiments (such as systematically manipulating the
spending amount in different areas within the country to measure the impact of
advertising on the brand’s awareness, sales volume, and market share) to adjust
budget expenditures, they are probably using the ______________ method of
budgeting for advertising expense.

a. percentage of sales
b. competitive parity
c. all-you-can-afford
d. objective-and-task
e. marginal increment

Difficulty: (2) Knowledge: (A) Page: 433

27. A good case can be made for standardizing an ad campaign in the international
marketplace. All of the following would be good, justifiable reasons for
standardization EXCEPT:

a. scale economics.
b. consistent image.
c. government regulation.
d. global consumer segments.
e. creative talent.

Difficulty: (2) Knowledge: (A) Page: 435-37

28. Message consistency (an advertising standardization issue) matters a great deal in
markets with extensive media overlap or for goods that are sold to “cosmopolitan”
customers who travel the globe. The best example of a product or service that fits the
above is:

a. beer.
b. banking.
c. a beef product.
d. an automobile.
e. cosmetics.

Difficulty: (3) Knowledge: (A) Page: 439

29. In the domain of advertising, __________________ means that marketers encourage
their affiliates to adopt, or at least consider, advertising ideas that have proven
successful in other markets. Which of the following standardization benefits applies?

a. scale economics
b. consistent image
c. cross-fertilization
d. global consumer segments
e. creative talent

Difficulty: (2) Knowledge: (A) Page: 439

30. Nestle used an ad for Taster’s Choice coffee originally developed in the U.K. as its campaign in the U.S., with some minor changes to reflect actors and speech. This would be an example of which of the following reasons for using standardization in the foreign market?

a. scale economics
b. consistent image
c. cross-fertilization
d. global consumer segments
e. creative talent

Difficulty: (2) Knowledge: (A) Page: 439

31. Research from an advertising agency survey indicates that the number one reason
for standardizing multinational advertising was to:

a. take advantage of demographics.
b. take advantage of cultural similarities between the countries.
c. capitalize on the fact that the product was standardized.
d. make full use of a proven successful idea.
e. create a single brand image in all markets.

Difficulty: (3) Knowledge: (A) Page: 435

32. All of the following are barriers to standardization in international advertising
EXCEPT:

a. cultural differences.
b. budget.
c. advertising regulations.
d. differences in the degree of market development.
e. the “Not Invented Here” syndrome.

Difficulty: (2) Knowledge: (A) Page: Pages: 437-38

33. As an illustration of a barrier to advertising standardization, Ray-Ban had to re-shoot
a sunglasses commercial for Malaysia because the original version had Caucasian
actors. In Malaysia, ads featuring Caucasians are not allowed. This example would
be an example of which of the following barriers to standardization of international
advertising?

a. cultural differences.
b. budget.
c. advertising regulations.
d. differences in the degree of market development.
e. the “Not Invented Here” syndrome.

Difficulty: (2) Knowledge: (A) Pages: 437-38

34. In the area of “Not-Invented-Here” (NIH) syndrome, stonewalling attempts at
standardization may come from ________________ subsidiaries/advertising
agencies.

a. local
b. regional
c. global
d. transnational
e. multinational

Difficulty: (2) Knowledge: (F) Page: 438

35. In the ________________ approach, every country subsidiary follows its own course
developing its own ads based on what it thinks works best in its market.

a. host country
b. home country
c. foreign
d. laissez faire
e. polycentric

Difficulty: (1) Knowledge: (F) Page: 438

36. There are a variety of formats for creating international advertising. With _________
advertising, the creative strategy is highly centralized. Universal copy is developed
for all markets.

a. export
b. import
c. prototype (pattern)
d. concept cooperation
e. psychological

Difficulty: (2) Knowledge: (F) Page: 438

37. There are a variety of formats for creating international advertising. With _________
advertising, guidelines are given to local affiliates concerning the execution of the
advertising. The guidelines are then conveyed via manuals or tapes.

a. export
b. import
c. prototype (pattern)
d. concept cooperation
e. psychological

Difficulty: (2) Knowledge: (F) Page: 439

38. With prototype standardization, ____________________ spell out guidelines on the
positioning theme.

a. competitors
b. governments
c. advertising mangers
d. headquarters
e. CEOs

Difficulty: (3) Knowledge: (F) Page: 439

39. With __________________ advertising, guidelines are given to the local affiliates
concerning the execution of the advertising.

a. geotype
b. prototype
c. modulartype
d. export
e. psychological

Difficulty: (3) Knowledge: (A) Page: 439

40. Another term to describe the portfolio of media choices (and variations within those
choices) is called:

a. media decision making.
b. media super structure.
c. media infrastructure.
d. media bias.
e. media method.

Difficulty: (1) Knowledge: (F) Page: 440

41. High cost-per-thousand (CPMs) are found in areas that have a high per capita
__________.

a. LMP
b. ZNP
c. MMP
d. GNP
e. PPP

Difficulty: (3) Knowledge: (F) Page: 442

42. Recent developments in the global media landscape include the following EXCEPT:

a. growing commercialization and deregulation of mass media.
b. shift from radio and print to TV advertising.
c. rise of global and regional media.
d. growing spread of interactive marketing.
e. growing importance of high definition television.

Difficulty: (2) Knowledge: (F) Pages: 442-43

43. All of the following can be characterized as being significant trends or developments
in the international media landscape EXCEPT:

a. growing commercialization and deregulation of mass media.
b. shift from radio and print to TV advertising.
c. rise of global and regional media.
d. growing importance of state controlled advertising.
e. improved monitoring.

Difficulty: (2) Knowledge: (F) Pages: 442-43

44. Infomercial marketers now have access to over one-half of Japanese consumers.
Which of the following trends would be most representative or closely associated
with the above fact?

a. growing commercialization and deregulation of mass media.
b. shift from radio and print to TV advertising.
c. rise of global and regional media.
d. growing spread of interactive marketing.
e. improved monitoring.

Difficulty: (2) Knowledge: (A) Page: 443

45. To promote the Xbox video program, Microsoft gave away two million DVDs with an interactive commercial. This is an example of which of the following trends?

a. growing commercialization and deregulation of mass media.
b. shift from radio and print to TV advertising.
c. rise of global and regional media.
d. growing spread of interactive marketing.
e. improved monitoring.

Difficulty: (3) Knowledge: (A) Page: 443

46. Ad regulations governing the advertising of cigarettes would probably fall under
which of the following advertising regulation categories?

a. advertising of “vice products” and pharmaceuticals.
b. comparative advertising.
c. content of advertising messages.
d. advertising targeting children.
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 445

47. If advertisers disparage their competition in an advertisement, the regulation category
that would govern this practice would probably be:

a. advertising of “vice products” and pharmaceuticals.
b. comparative advertising.
c. content of advertising messages.
d. advertising targeting children.
e. all of the above.

Difficulty: (1) Knowledge: (F) Page: 445

48. Given that advertising regulations not only govern advertising in foreign markets but
can also create difficulties, how can marketers cope? All of the following are
valid suggestions EXCEPT:

a. keep track of regulations and pending legislation.
b. challenge regulations in court.
c. adapt the marketing mix strategy.
d. try to circumvent the regulation by using local advertisers.
e. lobby for favorable regulations or results.

Difficulty: (2) Knowledge: (F) Pages: 446-47

49. When screening ad agencies, all of the following criteria might be used EXCEPT:

a. market coverage.
b. cost of agency talent and expense.
c. quality of coverage.
d. expertise with developing a central international campaign.
e. scope and quality of support services.

50. _________________ refer(s) to a collection of short-term incentive tools that lead to
quicker and/or larger sales of a particular product by consumers or the trade.

a. Advertising
b. Sales promotion
c. Internet marketing
d. Promotion
e. Publicity

Difficulty: (1) Knowledge: (F) Page: 449

51. Sampling, price-offs, coupons, sweepstakes, bonus packs, and trade allowances are
all examples of ____________________.

a. advertising
b. sales promotion
c. direct marketing
d. public relations
e. publicity

Difficulty: (2) Knowledge: (A) Page: 449

52. All of the following explain the local nature of sales promotion for the multinational
corporation EXCEPT:

a. economic development.
b. market maturity.
c. cultural perceptions.
d. trade structure.
e. new product development.

Difficulty: (3) Knowledge: (F) Pages: 449-50

53. If promotional dollars are aimed at the end-user, then the strategy is described as
being a ______________ strategy.

a. push
b. pull
c. conventional
d. vertical
e. horizontal

Difficulty: (1) Knowledge: (A) Page: 450

54. If promotional dollars are aimed at the middlemen, then the strategy is described as
being a ______________ strategy.

a. push
b. pull
c. conventional
d. vertical
e. horizontal

Difficulty: (1) Knowledge: (A) Page: 450

55. If promotional dollars are aimed at the trade or distributor, then the strategy is
described as being a ______________ strategy.

a. push
b. pull
c. conventional
d. vertical
e. horizontal

Difficulty: (1) Knowledge: (A) Page: 450

56. Procter & Gamble has attempted to cut back on _____________ strategy incentives
by introducing every-day-low-pricing.

a. push
b. pull
c. conventional
d. vertical
e. horizontal

Difficulty: (1) Knowledge: (A) Page: 450

57. Adidas, the German sportswear maker, paid a hefty $80 million to $100 million in
cash and services for sponsorship of the 2008 Beijing Summer Olympics. This is an
example of _________________________.

a. event sponsorship
b. sales sponsorship
c. trade shows
d. publicity
e. public relations

Difficulty: (1) Knowledge: (F) Page: 452

58. Although, Coca-Cola was the official sponsor of the 2002 World Cup Soccer, Pepsi
managed to sign up some of the biggest soccer celebrities, including England’s soccer
star David Beckham. In event sponsorship, this is an example of ________________.

a. guerilla marketing
b. ambush marketing
c. passive marketing
d. active marketing
e. cooperative marketing

Difficulty: (3) Knowledge: (F) Page: 452

59. All of the following are risks associated with event sponsorship EXCEPT:

a. nonsponsors can come in.
b. too many sponsorships might be sold.
c. there might be clutter among the sponsors and their messages.
d. the sponsorship might be too expensive for the number of people that show up.
e. adequate protection of the sponsorship.

Difficulty: (3) Knowledge: (F) Page: 452
60. Trade shows are also called _______________________.

a. trade marts
b. trade markets
c. trade fairs
d. trade expos
e. trade circles

Difficulty: (1) Knowledge: (F) Page: 453

61. Trade shows in Europe:

a. are about more than just business.
b. are exactly the same as in the U.S.
c. never serve refreshments or meals.
d. might be much larger than American shows.
e. both A and D

Difficulty: (1) Knowledge: (F) Page: 454

62. Which of the following does NOT describe mobile marketing?

a. It refers to ads on the sides of trucks and buses.
b. Mobile marketing cannot interact with consumers.
c. It fosters top-of-mind brand awareness.
d. It increases customer involvement.
e. Both A and B

Difficulty: (1) Knowledge: (F) Page: 453

63. In a modern sense, the goal of many MNCs is to pursue a(n)________________
program. In this program, coordination of all communication vehicles would take
place. Key ideas would be communicated in a unified manner.

a. vertical communications
b. horizontal communications
c. integrated marketing communications
d. global communications
e. synergistic communications

Difficulty: (2) Knowledge: (F) Page: 458

64. The goal of ________________________________ is to coordinate mass
advertising, sponsorships, sales promotions, packaging, point-of-purchase displays,
and so forth.

a. integrated marketing communications
b. integrated horizontal communications
c. integrated vertical communications
d. global communications
e. synergistic communications

Difficulty: (2) Knowledge: (F) Page: 458

65. A __________________________________ program goes one step further since it is
a system of active promotional management that strategically coordinates global
communications in all of its component parts both horizontally (country-level) and
vertically (promotion tools).

a. vertical communications
b. horizontal communications
c. globally integrated marketing communications
d. global communications
e. synergistic communications

Difficulty: (3) Knowledge: (F) Page: 458

True/False Short Answer

66. Language is not a major barrier in international advertising.

Difficulty: (1) Knowledge: (F) Page: 427

67. One can identify three different types of _______________________: simple carelessness, multiple-meaning words, and idioms.

68. Language barriers can occur through translation problems. The most common of
these translation difficulties are due to ____________________ , multiple-meaning
words, and idioms.

69. Language barriers can occur through translation problems. If the original slogan
was “Body by Fisher” and the translation was “Corpse by Fisher,” the problem with
translation was probably due to a problem idiom.

Difficulty: (2) Knowledge: (A) Page: 428

70. Idioms that use slang from one country to another may inadvertently lead to
embarrassing meanings in the host country.

Difficulty: (1) Knowledge: (F) Page: 428

71. One obvious cure for misinterpreted meanings of advertising slogans in foreign
countries is to reduce the usage of slogans.

Difficulty: (2) Knowledge: (F) Page: 428

72. With respect to advertising, probably the trickiest of the cultural barriers centers
around the host country’s religion.

Difficulty: (2) Knowledge: (F) Page: 429

73. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Geert Hofstede.
The value system construct that refers to the degree of inequality that is seen as
acceptable within the country is called ________________.

74. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Geert Hofstede. One
of these constructs is called power distance. Research has shown that ads that
position products or services as status symbols are most likely to be effective in
countries with large power distance.

Difficulty: (2) Knowledge: (A) Page: 430

75. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Geert Hofstede.
The value system construct that refers to the extent that people within the culture
prefer structured situations with clear-cut rules and little ambiguity is called
__________________.

76. Ad campaigns that center around the hard-sell approach (such as testimonials) are
advisable for cultures with high uncertainty avoidance such as the United States.

Difficulty: (2) Knowledge: (A) Page: 430

77. In the percentage of sales method, the overall advertising budget is based on either
past or expected sales revenues.

Difficulty: (1) Knowledge: (F) Page: 431

78. Viral marketing involves the selling of disease-causing agents.

79. With respect to budget forms that can be used in advertising, the ________________
method simply sets the overall advertising budget as a percentage of sales.

80. In the competitive parity rule, advertisers do not use competitors’ advertising spending as a benchmark.

Difficulty: (1) Knowledge: (A) Page: 431

81. With respect to budget forms that can be used in advertising, the _____________
method uses competition’s spending as a benchmark and provides the measure of
the optimal spending amount.

82. The most popular budgeting rule is the objective-and-task method.

Difficulty: (1) Knowledge: (F) Page: 433

83. In the domain of advertising, ___________________ means that marketers
encourage their affiliates to adopt, or at least consider, advertising ideas that have
proven successful in other markets.

84. “Not-Invented-Here” (NIH) syndrome does not come from local subsidiaries.

Difficulty: (3) Knowledge: (F) Page: 438

85. With export advertising, the creative strategy is highly centralized.

Difficulty: (3) Knowledge: (F) Page: 438

86. With prototype standardization, headquarters spell out guidelines on the positioning
themes and brand identity.

Difficulty: (2) Knowledge: (F) Page: 439

87. Shift from TV and print to radio advertising is becoming a big reality.

Difficulty: (1) Knowledge: (F) Pages: 442-43

88. Most firms do not rely heavily on the expertise of an advertising agency.

Difficulty: (1) Knowledge: (F) Page: 447

89. Sponsorship is one of the fastest growing promotion tools.

Difficulty: (2) Knowledge: (F) Page: 451

90. The goal of many MNCs is to avoid an integrated marketing communications
approach.

Difficulty: (2) Knowledge: (F) Page: 458

Essay

91. List and discuss the major challenges faced by international advertisers.

92. What situations are conducive to localization of advertising from the viewpoint of the international advertiser?

93. How should marketers cope with advertising regulations?

94. How do you choose an advertising agency overseas?

Chapter 14

Multiple Choice

1. Unlike the United States where customers visit car dealers, a majority of cars are sold
by door-to-door salespeople in _________________.

a. India.
b. Pakistan.
c. Japan.
d. Ireland.
e. Mongolia.

Difficulty: (2) Knowledge: (A) Page: 421

2. All of the following are tasks of the average salesperson EXCEPT:

a. take orders.
b. deliver products.
c. repair products.
d. educate consumers.
e. provide technical knowledge.

Difficulty: (1) Knowledge: (F) Page: 422

3. The salesperson can best be described as being the ______________ for the company.

a. support mechanism
b. front line
c. mouthpiece
d. promoter
e. educator

Difficulty: (2) Knowledge: (F) Page: 422

4. The salesforce management process starts with setting:

a. objectives and strategy.
b. objectives and manufacturing.
c. objectives and marketing.
d. objectives and operations.
e. objectives and raw material.

Difficulty: (3) Knowledge: (F) Page: 423

5. When researchers try to put the word international into sales management and
personal selling, clarification is needed. ____________________ considerations
include issues that analyze more than one country’s assets, strengths, and situations,
or that deal directly with cross-border coordination.

a. International product
b. International strategy
c. International mix
d. Intercultural
e. Global society

Difficulty: (1) Knowledge: (F) Page: 423

6. All of the following are examples of international sales strategy issues EXCEPT:

a. sales force skill availability.
b. selling style differences.
c. country image.
d. expatriate recruiting.
e. centralized training.

Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1

7. Which of the following is an example of an issue that is addressed by intercultural
issues with the foreign country?

a. sales force skill availability.
b. selling style differences.
c. country image.
d. expatriate recruiting.
e. centralized training.

Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1

8. All of the following are examples of intercultural issues with the foreign country
EXCEPT:

a. motivation.
b. cultural sensitivity.
c. ethical standards.
d. relationship building.
e. home to host communications.

Difficulty: (2) Knowledge: (F) Page: 423, Exhibit 14-1

9. Which of the following is an example of an issue faced by international sales
strategy?

a. motivation.
b. cultural sensitivity.
c. ethical standards.
d. relationship building.
e. home to host communications.

Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1

10. Sales force skill availability, company image, expatriate recruiting, and centralized
training are issues relevant to ________________________ considerations.

a. international product
b. international sales strategy
c. international mix
d. intercultural issues with the foreign country
e. global society

Difficulty: (2) Knowledge: (F) Page: 423, Exhibit 14-1

11. Motivation, cultural sensitivity, ethical standards, fairness, and relationship building
are issues relevant to _______________________ considerations.

a. international product
b. international sales strategy
c. international mix
d. intercultural issues with the foreign country
e. global society

Difficulty: (1) Knowledge: (F) Page: 423, Exhibit 14-1

12. In the sales management “process,” the first step is where the manager:

a. sets objectives and strategy.
b. determines goals and purposes.
c. recruits.
d. trains.
e. supervises.

Difficulty: (2) Knowledge: (F) Page: 423

13. A key decision that a marketer must make with respect to international marketing is
_______________________. This decision limits and defines key underlying aspects
of its future sales force management.

a. which market to enter
b. how much to spend in a market
c. how to enter the market
d. how far should a market be entered
e. how long to stay in a market

Difficulty: (3) Knowledge: (A) Page: 423

14. The _________________ in(into) a market will determine how large the sales force
needs to be and will influence how much training it will require.

a. form of marketing
b. form of entry
c. form of promotion
d. form of commission
e. form of management

Difficulty: (2) Knowledge: (F) Page: 423

15. How large a sales force needs to be, how much training the sales force will need,
whether the sales force is predominately local or foreign, and the manner of
compensation are all issues influenced by the __________________ in(into) a
market.

a. form of marketing
b. form of entry
c. form of promotion
d. form of commission
e. form of management

Difficulty: (2) Knowledge: (F) Page: 423

16. With respect to sales and sales management, the entry method into a market is also
called the ____________________________.

a. zone process
b. level of migration
c. level of expatriation
d. level of complexity
e. level of integration

Difficulty: (3) Knowledge: (F) Page: 424

17. With respect to sales and sales management entry into a foreign market, _________
integration refers to greater ownership and control of the distribution channel.
a. vertical
b. horizontal
c. forward
d. backward
e. dual

Difficulty: (2) Knowledge: (A) Page: 424

18. If a company begins its foreign sales by exporting through a merchant distributor who
takes title to the product and performs all the necessary foreign sales functions, this
would be a form of ________________ integration.

a. vertical
b. horizontal
c. forward
d. backward
e. dual

Difficulty: (3) Knowledge: (A) Page: 424

19. If a company begins its foreign sales by exporting through merchant distributors and
then purchases a foreign sales subsidiary and locates product warehouses abroad, this
would be a form of _____________________ integration.

a. vertical
b. horizontal
c. forward
d. backward
e. dual

Difficulty: (3) Knowledge: (A) Page: 424

20. Selling through an Export Management Company (EMC) or an Export Trading
Company (ETC) is considered a _____________ involvement approach to
international sales.

a. low
b. middle
c. high
d. backward
e. parallel

Difficulty: (1) Knowledge: (F) Page: 424

21. _____________________ serves the needs of their clients in entering a market or
sourcing goods from a market. They are characterized by their “service” nature and
efforts to interact with and meet the needs of the exporter client.

a. A foreign franchise
b. An Export Trading Company
c. An Export Management Company
d. A Noraizi agent
e. A bulk-breaker

Difficulty: (2) Knowledge: (F) Page: 424

22. Which of the following degrees of involvement would probably be in use when
Export Management Companies, Export Trading Companies, or direct exporting
are being used by the firm?

a. limited foreign involvement and visibility
b. local management and sales force
c. expatriate management and local sales force (mixed)
d. heavy to complete expatriate sales force
e. maximum global control and world wide ownership

Difficulty: (1) Knowledge: (A) Page: 425

23. Which of the following degrees of involvement would probably be in use when
piggybacking and selling through chains are used by the firm?

a. limited foreign involvement and visibility
b. local management and sales force
c. expatriate management and local sales force (mixed)
d. heavy to complete expatriate sales force
e. maximum global control and world wide ownership

Difficulty: (2) Knowledge: (A) Page: 425

24. Many ______________________ use EMCs services mainly to test the international
arena.

a. contract manufacturers
b. franchisees
c. experienced exporters
d. inexperienced exporters
e. none of the above

Difficulty: (1) Knowledge: (A) Page: 425

25. If the company describes its situation as being concerned with a contract for sales
from the U.S., no sales force or representatives abroad, and little or no control over
the foreign marketing process, the firm will probably use which form of involvement
listed below?

a. limited foreign involvement and visibility
b. local management and sales force
c. expatriate management and local sales force (mixed)
d. heavy to complete expatriate sales force
e. maximum global control and world wide ownership

Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2

26. If the company uses expatriates to oversee sales regions and lead training, the firm
will probably use which form of involvement listed below?

a. limited foreign involvement and visibility
b. local management and sales force
c. expatriate management and local sales force (mixed)
d. heavy to complete expatriate sales force
e. maximum global control and world wide ownership

Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2

27. _____________________ is usually a large conglomerate that imports, exports,
countertrade, invests, and manufactures in the global arena.

a. A foreign franchise
b. An Export Trading Company
c. An Export Management Company
d. A Noraizi agent
e. A bulk-breaker

Difficulty: (2) Knowledge: (F) Page: 425

28. Sogoshosha (such as Mitsubishi, Mitsui, Sumitomo, and Marubeni) are the Japanese
equivalents of _______________________.

a. a foreign franchise
b. an Export Trading Company
c. an Export Management Company
d. a dealer network
e. a bulk-breaker

Difficulty: (2) Knowledge: (A) Page: 425

29. If a company follows a _______________ involvement path, it normally gives
up the ability to motivate and monitor the sales force and to train them to better serve
the customer.

a. low
b. middle
c. high
d. backward
e. parallel

Difficulty: (1) Knowledge: (F) Page: 425

30. When a company has the ____________________ involvement approach, the
company (because it uses either host country employees or expatriates) must face
the foreign culture and intercultural communication can become an issue that must
be dealt with through training.

a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level

Difficulty: (2) Knowledge: (A) Page: 426

31. Which of the following forms of company sales involvement generally have the
lowest involvement of expatriates?

a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level

Difficulty: (2) Knowledge: (A) Page: 426

32. Which of the following forms of company sales involvement generally have the
highest involvement of expatriates?

a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level

Difficulty: (2) Knowledge: (A) Page: 426

33. When a company has a _________________ involvement approach, the company
substantially controls the foreign distribution channels.
a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level

Difficulty: (1) Knowledge: (F) Page: 426

34. As an example of a company that has the _______________________ involvement
approach, the company will generally own warehouses where goods are stored and/or
own outlets where products are sold.
a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level

Difficulty: (2) Knowledge: (A) Page: 426

35. Which of the following statements MOST accurately describes the state of
international selling?

a. At the level of personal selling there is little true international selling.
b. International selling is a function of the degree of involvement.
c. Because of the global nature of business today, global selling transcends
international boundaries.
d. International selling will never work.
e. International selling is tightly monitored by most governments because of the
potential for funds outflow.

Difficulty: (3) Knowledge: (F) Page: 427

36. Which of the following statements MOST accurately describes the state of
international selling?

a. Despite growing “international sales,” salespeople typically work only in one
region.
b. International selling is a function of the degree of involvement.
c. Because of the global nature of business today, global selling transcends
international boundaries.
d. International selling will never work.
e. International selling is tightly monitored by most governments because of the
potential for funds outflow.

Difficulty: (3) Knowledge: (F) Page: 427

37. Personal selling is predominantly a _________________ activity.

a. psychological
b. ethnic
c. tribal
d. group
e. personal

Difficulty: (1) Knowledge: (F) Page: 427

38. A _________________ occurs when we group people (from what might appear
to us as very similar cultures) together in perhaps an inappropriate manner because
those people consider themselves to be different.

a. cultural assimilation
b. cultural harmony
c. cultural generalization
d. cultural syncopation
e. cultural similarity

Difficulty: (2) Knowledge: (F) Page: 428

39. Germans are typically viewed as scientifically exacting and industrious people.
However, the typical German manufacturing work week is only thirty hours and
the workers jealously guard their free time and show little interest in working
overtime. This would be an example of the dangers of ____________________.

a. cultural onomonopea
b. cultural adiaphoria
c. cultural generalization
d. cultural syncopation
e. cultural similarity

Difficulty: (2) Knowledge: (A) Page: 428

40. If a marketing manager were to mistakenly group South Koreans and Japanese
together (either as a market or by business and labor practices), this would be an
example of a _________________ problem.

a. cultural onomonopea
b. cultural adiaphoria
c. cultural generalization
d. cultural syncopation
e. cultural similarity

Difficulty: (2) Knowledge: (A) Page: 428

41. The differences between the cultures of companies in two countries are
based more on the ingrained cultural values of the ___________________.

a. consumers
b. governments
c. board of directors
d. CEOs
e. employees

Difficulty: (2) Knowledge: (A) Page: 428

42. One popular tool for characterizing people that addresses their cognitive styles is
the ____________________.

a. Kelsey-Ciebold scale.
b. Johns-Hopkins initial perception scale.
c. Majors-Hawkins Cognitive Indicator.
d. Myers-Briggs Type Indicator.
e. Spaniel test.

Difficulty: (2) Knowledge: (F) Page: 431

43. The ________________ classifies people on four personal dimensions. These are
extrovert versus introvert, sensing versus intuitive, thinking versus feeling, and
judging versus perceiving.

a. Hartman profile
b. Myers-Briggs Type Indicator
c. Majors-Hawkins Cognitive Indicator
d. Spaniel test for concepts
e. Freudian fantasy test

Difficulty: (2) Knowledge: (F) Page: 431

44. According to the Myers-Briggs Type Indicator test, the _____________ tends to
rely on the environment for guidance, be action-oriented, sociable, and communicate
with ease and frankness.

a. extrovert
b. introvert
c. sensing person
d. intuitive person
e. thinking person

Difficulty: (2) Knowledge: (F) Page: 431, Exhibit 14-4

45. According to the Myers-Briggs Type Indicator test, the _____________ tends to
show a greater concern with concepts and ideas than with external events, relative
detachment, and enjoyment of solitude and privacy over companionship.

a. extrovert
b. introvert
c. sensing person
d. intuitive person
e. thinking person

Difficulty: (2) Knowledge: (F) Page: 431, Exhibit 14-4

46. According to the Myers-Briggs Type Indicator test, the _____________ tends to
focus on immediate experience, become more realistic and practical, and develop
skills such as acute powers of observation and memory for details.

a. extrovert
b. introvert
c. sensing person
d. intuitive person
e. thinking person

Difficulty: (3) Knowledge: (F) Page: 431, Exhibit 14-4

47. According to the Myers-Briggs Type Indicator test, the _____________ tends to
value the possibility and meaning more than immediate experience, and become
more imaginative, theoretical, abstract, and future oriented.
a. extrovert
b. introvert
c. sensing person
d. intuitive person
e. thinking person

Difficulty: (3) Knowledge: (F) Page: 431, Exhibit 14-4

48. All of the following are steps in the sales force management process EXCEPT:

a. setting sales force objectives.
b. designing sales force strategy.
c. recruiting and selecting salespeople.
d. commission system management.
e. supervising salespeople.

Difficulty: (2) Knowledge: (F) Page: 433

49. The first step in the sales force management process is best described as being:

a. designing sales force strategy.
b. setting sales force objectives.
c. recruiting and selecting salespeople.
d. commission system management.
e. supervising salespeople.

Difficulty: (2) Knowledge: (F) Page: 433

50. The __________________ states explicitly what the sales force will be asked to do.

a. sales force strategy
b. sales force objectives
c. sales force training procedures
d. sales force recruiting procedures
e. sales force evaluation procedures

Difficulty: (2) Knowledge: (F) Page: 433

51. Setting sales force objectives internationally will not only depend on the company
goals but will also depend on:

a. the training procedures.
b. the recruiting procedures.
c. the evaluation procedures.
d. an analysis of the culture and the values of the country it is entering.
e. management standards for excellence.

Difficulty: (2) Knowledge: (F) Page: 434

52. __________________ addresses the structure, size, and compensation of the sales
force.

a. Sales force objectives
b. Sales force goals
c. Sales force strategy
d. Sales force policy
e. Sales force vision

Difficulty: (2) Knowledge: (F) Page: 434

53. With respect to sales force structure, the ____________________ sales force has
each salesperson responsible for a particular area (reporting up the line to regional
sales managers).

a. territorial
b. product
c. customer
d. matrix
e. “open plan”

Difficulty: (1) Knowledge: (F) Page: 434

54. With respect to sales force structure, the ______________________ sales force has
each salesperson sell only one product or product line (even when selling to a single
customer).

a. territorial
b. product
c. customer
d. matrix
e. “open plan”

Difficulty: (1) Knowledge: (F) Pages: 434-35

55. With respect to the functions of sales force strategy, the ______________ refers to
and determines the physical positioning and responsibilities of each salesperson.

a. size
b. structure
c. compensation procedure
d. modeling procedure
e. evaluation procedure

Difficulty: (1) Knowledge: (F) Page: 434

56. In order to ensure a globally consistent sales strategy, a company will likely:
a. conduct sales training on a country-by-country basis.
b. train the sales managers in the headquarters country and send them abroad.
c. bring all employees to the headquarters country for training, then send them
to their home markets.
d. hire professional sales trainers to travel abroad to train employees.
e. none of the above

Difficulty: (2) Knowledge: (a) Page: 436

57. Difficulties in setting compensation packages for global salesforces include:
a. unions may restrict wage options.
b. some cultures are not motivated to work harder regardless of monetary
incentives.
c. local firms may protest that the MNC is stealing the best talent with wages
out of line with local standards.
d. culture may dictate that people of the same rank should not be compensated
differently regardless of performance.
e. all of the above

Difficulty: (2) Knowledge: (F) Page: 446

58. Ethics for international sales reps:
a. are the same regardless of country.
b. can be taught and are no longer a problem once training has taken place.
c. don’t matter—reps should do what the home culture expects.
d. demand clear corporate policies to help reps avoid problems.
e. should be ignored until a complaint is made, then the guilty should be punished.

Difficulty: (2) Knowledge: (A) Page: 438

59. Evaluations of sales performance should be ________.
a. cumulative
b. exhaustive
c. quantitative
d. qualitative
e. both C and D

Difficulty: (2) Knowledge: (F) Page: 438

60. ____________________ the sales force means directing and motivating the sales
force to fulfill the company’s objectives and providing the resources to allow them
to do so.

a. Recruiting
b. Training
c. Evaluating
d. Supervising
e. Compensating

Difficulty: (2) Knowledge: (F) Page: 436

61. With respect to rewarding salespeople, _________________ reinforces the negative
image of the salesperson benefiting from the sale, with no regard for the purchaser’s
well-being.

a. the salary system
b. the commission system
c. the motivation system
d. the retainer system
e. the hourly wage system

Difficulty: (2) Knowledge: (F) Page: 437

62. With respect to evaluating salespeople, _________________ evaluations can be
in the form of comparisons of sales, of sales percents, or increases in sales.

a. parametric
b. qualitative
c. quantitative
d. nonparametric
e. decisional

Difficulty: (2) Knowledge: (F) Page: 438

63. Stages of the negotiation process include the following EXCEPT:

a. non-task sounding.
b. task-related information exchange.
c. foreign travel.
d. persuasion.
e. concessions and agreements.

Difficulty: (2) Knowledge: (F) Page: 439

64. In international marketing, negotiation strategies include the following EXCEPT:

a. employ an outsourcing consultant.
b. employ an agent or advisor.
c. involve a mediator.
d. induce the counterpart to follow one’s own negotiation script.
e. Adapt the counterpart’s negotiation script.

Difficulty: (3) Knowledge: (F) Page: 439

65. ___________________ are home country personnel sent overseas to manage local
operations in the foreign market.

a. Managers
b. International personnel
c. Group managers
d. Expatriates
e. Foreign managers

Difficulty: (1) Knowledge: (F) Page: 443

66. All of the following are advantages that expatriates have over foreign nationals as
managers of MNCs, EXCEPT:

a. more intelligence.
b. better communication.
c. better understanding of office politics.
d. develops better future managers.
e. better relationships with the home office.

Difficulty: (2) Knowledge: (F) Page: 444

67. All of the following are disadvantages of using expatriates over foreign nationals as
managers, EXCEPT:

a. cross-cultural training.
b. motivation.
c. honesty.
d. compensation.
e. family discord.

Difficulty: (2) Knowledge: (F) Pages: 443-44

68. The general trend among U.S. multinationals has been a decreasing use of
______________ managers overseas and an increasing reliance on ____________
foreign talent since the 1990s.

a. global, local
b. international, local
c. European, local
d. expatriate, local
e. Asian, local

Difficulty: (3) Knowledge: (A) Page: 443

69. The single most compelling reason that most expatriates return home early from
their tour of duty abroad is:

a. motivation.
b. salary.
c. health.
d. fear of the foreign environment.
e. family discord.

Difficulty: (2) Knowledge: (F) Page: 447

70. Expatica’s Relocation Services’ 2008 survey provided the following recommendations regarding reducing attrition rates EXCEPT:

a. membership in top private business clubs.
b. chances to use international experience.
c. a choice of positions upon return.
d. recognition.
e. repatriation career support.

Difficulty: (2) Knowledge: (F) Page: 448

True/False Short Answer

71. Unlike the United States, the majority of cars sold in Japan are sold door-to-door.

Difficulty: (2) Knowledge: (A) Page: 421

72. The salesperson is not the front line for the company.

Difficulty: (1) Knowledge: (F) Page: 422

73. Sales people do not sell services.

Difficulty: (1) Knowledge: (A) Page: 422

74. When considering international sales management issues, ________________
considerations are issues that analyze more than one country’s assets, strengths, and
situations, or that deal directly with cross-border coordination.

75. Sales force skill availability, country image, and expatriate recruiting are all issues
that are relevant as intercultural issues with the foreign country.

Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1

76. Motivation, cultural sensitivity, ethical standards, and fairness are all issues that are
relevant as intercultural issues with the foreign country.

Difficulty: (2) Knowledge: (F) Page: 423, Exhibit 14-1

77. The question of how to enter the market is central to marketing.

Difficulty: (1) Knowledge: (F) Page: 423

78. Backward integration refers to greater ownership and control of the distribution
channel.

Difficulty: (3) Knowledge: (F) Page: 423

79. If a firm has limited foreign involvement and visibility, a correct choice for them to
use in entering a foreign country would be to develop an expatriate sales force.

Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2

80. If a firm has limited foreign involvement and visibility, a correct choice for them to
use in entering a foreign country would be to enter into an arrangement with an
Export Management Company.

Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2

81. The term sogoshosha in Japan describes an Export Trading Company.

Difficulty: (2) Knowledge: (A) Page: Page: 425

82. Personal selling is predominantly a group activity.

Difficulty: (1) Knowledge: (F) Page: 427

83. At the level of personal selling there is little true international selling.

84. Equating Korean and Japanese consumers and business practices to be the same just
because they are in geographic proximity to one another would be a mistake often
made because of _______________________.

85. Myers-Briggs-Type Indicator (MBTI) is a tool for addressing people’s cognitive
styles.

Difficulty: (3) Knowledge: (F) Page: 431

86. One of the dimensions of Myers-Briggs-Type Indicator (MBTI) include ethnocentric
behavior:

Difficulty: (1) Knowledge: (F) Page: 431

87. The first step in the process of sales force management starts with recruiting and
selecting salespeople.

Difficulty: (1) Knowledge: (F) Page: 434

88. The size of the salesforce depends on the sales structure.

89. In the negotiation process, nontask soundings do not include activities that are used to
establish a rapport among the parties involved.

90. ______________ are home country personnel sent overseas to manage local
operations in the foreign market.

91. Negotiations practices do not vary enormously across cultures.

Difficulty: (2) Knowledge: (F) Page: 439

92. Expatriate involvement in international sales has been on the rise since the 1990s.

Difficulty: (2) Knowledge: (F) Page: 443

93. Once the expatriate is overseas, training becomes more difficult.

Difficulty: (3) Knowledge: (F) Page: 445

94. Cross-cultural training is on the decline in recent years.

Difficulty: (2) Knowledge: (F) Page: 445

95. Repatriation is the return of the expatriate employee from overseas.

Difficulty: (1) Knowledge: (F) Page: 446

96. Expatriates do not face a long list of difficulties upon returning home.

Difficulty: (2) Knowledge: (F) Page: 448

Essay

97. It has been said that selling is the world over. However, there are differences between the way that domestic and international selling efforts occur and are managed. Comment on these differences.

98. Considering various types of entry formats into the international arena, under what circumstances might it be advisable for the company to attempt a traveling global salesforce?

99. Considering the four major categories of the Myers-Briggs Type Indicator, which of the categories (or combination of categories) best describes you? Explain why.

100. Not all United States sales methods or systems can automatically be exported abroad. Considering the information provided by research on different cultural dimensions, why might it be difficult to adopt a U.S.-style commission system for salespeople in such countries as Japan or Mexico. Be sure to remember how these two countries might rank on the five cultural dimension scales.

101. Why do most firms still consider expatriates to be a valuable extension of their company? What are the advantages and disadvantages of using expatriates?

Chapter 15

Multiple Choice

1. In global logistics and distribution, Coca-Cola’s success relies largely on its global
distribution arm, ______________________, the world’s largest bottler group.

a. Coca-Cola Enterprises
b. Coca-Cola Network
c. Coca-Cola Web
d. Coca-Cola Team
e. Coca-Cola Trucking Co.

Difficulty: (2) Knowledge: (F) Page: 452

2. According to the textbook, which of the following famous business thinkers
characterized logistics as being “the darkest continent of business?”

a. Philip Kotler.
b. Stephen Covey.
c. Michael E. Porter.
d. Peter Drucker.
e. Tom Peters.

Difficulty: (3) Knowledge: (F) Page: 452

3. As firms start operating on a global basis, ___________________ need to manage the shipping of raw materials, components, and supplies among various manufacturing sites at the most economical and reliable rates.

a. human resource managers
b. logistics managers
c. operations managers
d. outsourcing managers
e. information technology managers

Difficulty: (2) Knowledge: (F) Page: 452

4. In 2011, the total logistics cost represented about 8.5 percent of the GDP, or $1 trillion in the _________________.

a. U.S.
b. Ireland
c. Portugal
d. Belgium
e. Romania

Difficulty: (1) Knowledge: (F) Page: 452

5. In 2012, in the U.S., the total logistics cost was ______ percent of the U.S. GDP.

a. 1
b. 3
c. 5.5
d. 8.5
e. 10.5

Difficulty: (2 Knowledge: (F) Page: 452

6. __________________ transportation refers to the seamless transfer of goods from
one mode of transportation (such as an aircraft) to another (such as a ship) and
vice versa without the hassle of unpacking and repackaging of goods to suit the
dimensions of the mode of transportation being used.

a. Bi-polar
b. Bi-modal
c. Intercontinental
d. Dual-basic
e. Intermodal

Difficulty: (2) Knowledge: (F) Page: 452

7. __________________ refers to the means of keeping continuous tabs on the exact
location of the goods being shipped in the logistics chain.

a. Data processing
b. Messaging service
c. Tracking technology
d. Computerized messaging
e. Hybrid technology

Difficulty: (2) Knowledge: (F) Page: 452

8. With electronic tracking technology, shippers are able to quickly react to any
disruption in the shipments because the shipper knows where exactly the goods are
in real time and:

a. labor can be adjusted accordingly.
b. the alternative means can be quickly mobilized should problems develop.
c. costs can always be evaluated.
d. losses are rare.
e. customer service is now at a premium.

Difficulty: (1) Knowledge: (A) Page: 452

9. ________________ is defined as the design and management of a system that directs
and controls the flows of materials into, through and out of the firm across national
boundaries to achieve its corporate objectives at a minimum total cost.

a. Global goods flow
b. Global distribution
c. Global logistics
d. Global wholesaling
e. Global shipping

Difficulty: (2) Knowledge: (F) Page: 453

10. Global logistics encompasses:

a. advertising and personal selling.
b. purchasing and manufacturing.
c. materials management and trucking.
d. materials management and physical distribution.
e. pricing and manufacturing.

Difficulty: (2) Knowledge: (A) Page: 453

11. ___________________ refers to the inflow of raw materials, parts, and supplies in
and through the firm.

a. Global logistics
b. Physical distribution
c. Materials management
d. Purchasing processes
e. Global distribution

Difficulty: (2) Knowledge: (F) Page: 453

12. The global logistics process begins with which of the following?

a. materials management
b. processing and assembly
c. physical distribution
d. raw materials, components, and supplies
e. finished products ready for shipment

Difficulty: (2) Knowledge: (F) Page: 453

13. When raw materials, components, and supplies are converted or manipulated for
processing and assembly by the firm, the process is monitored and controlled by
the ________________________ function of the firm.

a. physical distribution
b. purchasing
c. intermodal transportation
d. materials handling
e. materials management

Difficulty: (3) Knowledge: (A) Page: 453

14. _______________________ refers to the movement of the firm’s finished products
to its customers, consisting of transportation, warehousing, inventory, customer
service/order entry, and admission.

a. Physical distribution
b. Purchasing
c. Intermodal transportation
d. Global logistics
e. Materials management

Difficulty: (2) Knowledge: (F) Page: 453

15. All of the following are activities that occur during physical distribution EXCEPT:

a. transportation.
b. warehousing.
c. inventory.
d. order entry.
e. promotion and advertising.

Difficulty: (1) Knowledge: (A) Page: 453, Exhibit 15-1

16. With respect to distribution costs, a geographically large country such as the United
States will normally incur more ______________________ costs than in smaller
countries.

a. transportation, insurance, and inventory
b. warehousing, customer service/order entry, and general administration
c. transportation and inventory
d. materials handling
e. warehousing and transportation

Difficulty: (3) Knowledge: (A) Page: 453

17. Which of the following factors contribute significantly to the increased complexity
and cost of global logistics as compared to domestic logistics?

a. domestic intermediaries
b. service
c. purchasing
d. exchange rate fluctuation
e. materials handling

Difficulty: (1) Knowledge: (F) Page: 455

18. All of the following factors contributed significantly to the increased complexity and
cost of global logistics as compared to domestic logistics EXCEPT:

a. exchange rate fluctuation.
b. distance.
c. domestic intermediaries.
d. foreign intermediaries.
e. negotiations with government officials and distributors.

Difficulty: (2) Knowledge: (F) Page: 455

19. Recently the U.S. dollar depreciated while the Japanese yen soared in value. Honda
found that it was much cheaper to ship its Accord models to Europe from its Ohio
plant than from Japan. This could most accurately be classed as a move made
because of problems or opportunities with:

a. distance.
b. logistics.
c. exchange rate fluctuations.
d. foreign intermediaries.
e. domestic intermediaries.

Difficulty: (1) Knowledge: (A) Page: 455

20. The bulk of international trade is handled by ________________________.

a. ocean shipping
b. air transport
c. trucking services
d. railroads
e. inland waterways

Difficulty: (1) Knowledge: (A) Page: 455

21. The most important factors in determining an optimal mode of transportation for
foreign markets are the value-to-volume ratio, perishability of the product, and:

a. the cost of transportation.
b. intermodal ratio.
c. total cost ratio to inventory and warehousing expense.
d. the cost of insurance.
e. the distance to speed relationship.

Difficulty: (2) Knowledge: (F) Page: 456

22. All of the following are important factors in determining an optimal mode of
transportation to be used in foreign markets EXCEPT:
a. the cost of transportation.
b. the value-to-volume ratio.
c. the perishability of the product.
d. obsolescence along the product life cycle.
e. the cost of insurance.

Difficulty: (3) Knowledge: (F) Pages: 456

23. The _________________ is determined by how much value is added to the materials
used in the product.

a. perishability of the product
b. cost of transportation
c. the cost of insurance
d. the value-to-volume ratio
e. the intermodal ratio

Difficulty: (1) Knowledge: (F) Page: 456

24. The ________________ of the product refers to the quality degradation over time
and/or product obsolescence along the product life cycle.

a. perishability
b. cost of transportation
c. cost of insurance
d. value-to-volume ratio
e. intermodal ratio

Difficulty: (1) Knowledge: (F) Page: 456

25. All of the following are viable options for shipping products internationally on a
global basis (anywhere in the world) EXCEPT:

a. ocean shipping.
b. air freight.
c. cargo liner service.
d. truck.
e. intermodal transportation.

Difficulty: (2) Knowledge: (A) Page: 456

26. The primary forms of ocean shipping include all of the following EXCEPT:

a. liner service.
b. bulk shipping.
c. tanker shipping.
d. irregular runs.
e. FedEx surface.

Difficulty: (1) Knowledge: (A) Page: 456

27. If a product were to be categorized as being heavy, bulky, and nonperishable,
probably the best form of global shipping would be:

a. ocean shipping.
b. air freight.
c. truck.
d. rail.
e. barge.

Difficulty: (1) Knowledge: (F) Page: 456

28. If a company wished to ship semiconductor chips abroad, they would probably
choose:

a. ocean shipping.
b. air freight.
c. truck.
d. rail.
e. barge.

Difficulty: (1) Knowledge: (A) Page: 457

29. Research has shown that if Nike or Reebok were to be transporting their footwear
from plants in Asia to the United States, they would probably choose which of the
following transportation modes?

a. ocean shipping
b. air freight
c. truck
d. rail
e. barge

Difficulty: (2) Knowledge: (A) Page: 458

30. The traditional logistics strategy involves ____________________ based on
forecasting and inventory speculation.

a. supply and demand
b. anticipatory demand management
c. inventory volume equations
d. purchasing ratios
e. microeconomic principles

Difficulty: (2) Knowledge: (F) Page: 458

31. Information technology, electronic data interchange, and intermodal transportation
have made ____________________ a reality in physical distribution.

a. low cost transportation
b. a “no returns” policy
c. ultimate distribution service
d. just-in-time delivery
e. accurate purchasing management

Difficulty: (2) Knowledge: (F) Page: 458

32. Multinational corporations can use ________________ as a strategic tool in dealing
with currency fluctuations and as a hedge against inflation.

a. buying power
b. just-in-time management
c. just-in-time delivery
d. purchasing management
e. inventory

Difficulty: (3) Knowledge: (F) Page: 458

33. By increasing ___________________ before imminent depreciation of a currency
instead of holding cash, the firm may reduce its exposure to currency depreciation
losses.

a. buying power
b. plant and equipment
c. trucks
d. materials handling equipment (such as forklifts)
e. inventory

Difficulty: (2) Knowledge: (F) Page: 458

34. ___________ inventories also provide a hedge against inflation because the value of
the goods/parts held in inventory remains the same compared to the buying power of
local currency.

a. High-tech
b. Low-tech
c. High
d. Low
e. None of the above

Difficulty: (3) Knowledge: (A) Page: 458

35. __________________ refers to coordinating production and distribution across
geographic boundaries.

a. Rationalization
b. Utility management
c. Physical distribution management
d. Logistic integration
e. Logistic modeling

Difficulty: (2) Knowledge: (F) Page: 459

36. _________________ means reducing resources to achieve more efficient and
cost-effective operations.

a. Rationalization
b. Utility management
c. Physical distribution management
d. Logistic integration
e. Logistic modeling

Difficulty: (2) Knowledge: (F) Page: 459

37. Another profound change in the last decade is the proliferation of _______________.

a. IT warehouses
b. e-commerce
c. information technology
d. global shipping traffic
e. global air traffic

Difficulty: (2) Knowledge: (F) Page: 459

38. 3PL stands for:

a. third-party logistics.
b. third-power logistics.
c. third-peer logistics.
d. third-production logistics.
e. none of the above.

Difficulty: (1) Knowledge: (F) Page: 461

39. The largest third-party logistics sector is the value-added ________________ and
_________________ industry.

a. warehousing, purchasing
b. warehousing, manufacturing
c. warehousing, distribution
d. warehousing, painting
e. none of the above

Difficulty: (2) Knowledge: (F) Page: 461

40. The trend toward third-party logistics is a result of the _____________ and the
_____________.

a. Internet, enterprise resource planning
b. Internet, technology simulations
c. Internet, customer relationship management
d. Internet, Intranet
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 462

41. The Internet and Intranet facilitate __________________________.

a. parallel delivery.
b. cheap delivery.
c. expensive delivery.
d. forward-time delivery.
e. on-time delivery.

Difficulty: (1) Knowledge: (F) Page: 462

42. _________________ influences decisions regarding what activities and
technologies a company should concentrate its investment and managerial
resources in (in relation to its competitors in the industry).
a. Relative advantage
b. Absolute cost advantage
c. Comparative advantage
d. Competitive advantage
e. Sourcing advantage

Difficulty: (2) Knowledge: (F) Page: 464

43. __________________ affects the company’s decision about where to source and
market, based on lower cost of labor and other resources in one country relative to
another.

a. Relative advantage
b. Absolute cost advantage
c. Comparative advantage
d. Competitive advantage
e. Sourcing advantage

Difficulty: (2) Knowledge: (F) Page: 464

44. Some distribution companies even find that the best way to be successful is to create a
distribution ________________.

a. alliances
b. mergers
c. acquisitions
d. consortia
e. joint ventures

Difficulty: (3) Knowledge: (F) Page: 463

45. Sourcing strategy includes two basic choices. One of these is intra-firm sourcing
and the other is __________________.

a. importing
b. outsourcing
c. in-sourcing
d. matrix manipulation
e. horizontal integration

Difficulty: (1) Knowledge: (F) Page: 465

46. As a type of intra-firm sourcing, _____________________ is when a company
procures major components in-house by producing them domestically.

a. domestic in-house sourcing
b. offshore subsidiary sourcing
c. domestic purchasing arrangement
d. offshore outsourcing (offshore sourcing)
e. export management company

Difficulty: (2) Knowledge: (F) Page: 465

47. As a type of intra-firm sourcing, _____________________ is when a company
procures major components from its foreign subsidiary.

a. domestic in-house sourcing
b. offshore subsidiary sourcing
c. domestic purchasing arrangement
d. offshore outsourcing (offshore sourcing)
e. export management company

Difficulty: (1) Knowledge: (F) Page: 465

48. As a type of outsourcing, _____________________ is when a company
buys major components from independent suppliers at home.

a. domestic in-house sourcing
b. offshore subsidiary sourcing
c. a domestic purchasing arrangement
d. offshore outsourcing (offshore sourcing)
e. export management company

Difficulty: (2) Knowledge: (F) Pages: 466

49. As a type of outsourcing, _____________________ is when a company
buys major components from independent suppliers overseas.

a. domestic in-house sourcing
b. offshore subsidiary sourcing
c. a domestic purchasing arrangement
d. offshore outsourcing (offshore sourcing)
e. export management company

Difficulty: (1) Knowledge: (F) Page: 466

50. Covisint is probably the largest global online ________ procurement system.

a. C2B
b. B2B
c. B2G
d. C2C
e. B2C

Difficulty: (2) Knowledge: (F) Page: 466-67

51. Typical B2B procurement systems rely on _______________ that emphasize the
lowest bids on a global basis.

a. promotions
b. selling
c. manufacturing
d. auctions
e. production

Difficulty: (2) Knowledge: (F) Page: 469

52. Companies that outsource to the extent that they adopt a “designer role” in
global competition (i.e., offer innovations in product design without investing
in manufacturing process technology) have been described by some as being:

a. vertical corporations.
b. horizontal corporations.
c. hollow corporations.
d. supply and demand corporations.
e. monopoly manufacturers.

Difficulty: (3) Knowledge: (F) Page: 468

53. A __________________ is an area that is located within a nation, but is considered
outside of the customs territory of the nation.

a. border zone
b. red zone district
c. warehouse district
d. dock facility
e. free trade zone

Difficulty: (1) Knowledge: (F) Page: 472

54. In the United States, a free trade zone is officially called a __________________.

a. Maquiladora operation
b. border zone
c. red zone district
d. Foreign Trade Zone
e. Channel Zone

Difficulty: (2) Knowledge: (F) Page: 473

55. All of the following are benefits of using a free trade zone EXCEPT:

a. duty deferral and elimination.
b. lower tariff rates.
c. no government interference in intelligence gathering activities.
d. exchange rate hedging.
e. “Made in U.S.A.” designation.

Difficulty: (1) Knowledge: (F) Page: 473, Exhibit 15-4

56. Duty deferral and elimination, lower tariff rates, exchange rate hedging, and a
“Made in U.S.A.” designation are all benefits of using a __________________.

a. Maquiladora operation
b. border zone
c. red zone district
d. Foreign Trade Zone
e. Channel Zone

Difficulty: (2) Knowledge: (F) Page: 473, Exhibit 15-4

57. At the macro-level, benefits of using a free trade zone include all of the following
EXCEPT:

a. increased investment and employment.
b. more revenue through increased local taxes.
c. obtaining a beachhead in a foreign market without being in the mainstream
distribution process.
d. the ability to reassemble large shipments into different groupings.
e. no duties on labor.

Difficulty: (3) Knowledge: (A) Page: 473, Exhibit 15-4

58. Japan has established trade zones to increase __________________.

a. maquiladora operations
b. assembly operations
c. imports
d. exports
e. none of the above

Difficulty: (3) Knowledge: (F) Page: 474

59. Various governments have established ____________________________.

a. export processing circles.
b. export processing groups.
c. export processing clans.
d. export processing networks.
e. export processing zones.

Difficulty: (3) Knowledge: (A) Page: 474

60. _________________________ usually provide tax- and duty-free treatment of
production facilities whose output is meant to be exported.

a. Gray products processing zones
b. High-tech processing zones
c. Maquiladora processing zones
d. Export processing zones
e. Import processing zones

Difficulty: (2) Knowledge: (F) Page: 474

61. To show the increasing power of retailers in today’s business world, the traditional
supply chain that was once powered by the manufacturer has been turned around.
Distribution today is characterized as being ____________ in nature.

a. push
b. pull
c. vertical shove
d. horizontal slant
e. parallelism

Difficulty: (2) Knowledge: (F) Page: 480

62. Which of the following should a company NOT do with a channel partner?

a. seek companies with good contacts
b. treat companies as short-term partners
c. withhold information from the distribution partner
d. allow the distribution partner to make marketing strategy decisions
e. all of the above

Difficulty: (3) Knowledge: (A) Page: 476-77

63. If a retail firm sells a product under its own store name it is called a:

a. unique brand.
b. vertical brand.
c. horizontal brand.
d. store brand or private label.
e. hybrid label.

Difficulty: (1) Knowledge: (F) Page: 479

64. When Heinz sells its soup products to grocery store chains and allows them to
put their own store names on the product, the product is being sold as a:

a. domestic brand.
b. national brand.
c. manufacturers brand.
d. store brand or private label.
e. service label.

Difficulty: (1) Knowledge: (A) Page: 479

65. In which of the following countries are store brands marginal players because of
loyalty to national or manufacturer brands?

a. United States.
b. United Kingdom.
c. Japan.
d. France.
e. Canada.

Difficulty: (3) Knowledge: (A) Page: 480

66. All of the following are factors that have explained the success of private labels
in recent years EXCEPT:

a. better packaging decoration.
b. improved quality of private-label products.
c. development of premium private-label brands.
d. expansion into new product categories.
e. internationalization of retail chains.

Difficulty: (2) Knowledge: (F) Page: 480

67. As a branding strategy, _______________ is especially attractive to MNCs that
face well-entrenched incumbent brands in the markets they plan to enter. (This
overcomes the problem of shelf-space denial.)

a. domestic branding
b. national branding
c. manufacturers branding
d. store branding or private labeling
e. service labeling

Difficulty: (1) Knowledge: (F) Page: 480

68. The traditional supply chain powered by manufacturer push is becoming a:

a. demand chain driven by logistics.
b. demand chain driven by advertising.
c. service chain driven by customer service.
d. service chain driven by response time.
e. demand chain driven by customer pull.

Difficulty: (1) Knowledge: (F) Page: 480

69. With respect to strategies available to the business unit, a ____________ strategy
appears to be more effective than a __________ strategy in emerging markets.

a. service/product
b. product/service
c. push/pull
d. pull/push
e. pull/parallel

Difficulty: (2) Knowledge: (A) Page: 480

70. On-time retail information management carries two distinct advantages which are:

a. reduced inventory and accounting information at the retail level.
b. reduced inventory and market information at the retail level.
c. reduced inventory and manufacturing information at the retail level.
d. reduced inventory and production information at the retail level.
e. reduced inventory and outsourcing information at the retail level.

Difficulty: (3) Knowledge: (A) Page: 481

71. Industrialized countries tend to have a lower distribution outlet density than the
_______________________.

a. regional markets
b. global markets
c. world markets
d. submerging markets
e. emerging markets

Difficulty: (2) Knowledge: (A) Page: 482

72. The Large Scale Retail Store Law (LSRSL) in _______________ helped to protect
small retail stores.

a. Singapore
b. Pakistan
c. Indonesia
d. Japan
e. South Korea

Difficulty: (2) Knowledge: (A) Page: 483

73. In _________________, store hours are limited and stores do not open on Sundays.

a. Germany
b. USA
c. Mexico
d. Brazil
e. UK

Difficulty: (2) Knowledge: (A) Page: 485

74. _______________ is the fastest growing Internet market in Asia.

a. China
b. India
c. Indonesia
d. Hong Kong
e. South Korea

Difficulty: (2) Knowledge: (A) Page: 486

75. The Mexican version of the free trade zone is called the _________________.

a. Maquiladora operation or industry
b. border zone
c. red zone district
d. Foreign Trade Zone
e. Channel Zone

Difficulty: (2) Knowledge: (F) Page: 489

76. In Mexico another name for the Maquiladora operation or industry is the:

a. in-bond or twin-plant program.
b. bonded warehouse.
c. border zone.
d. cross border zone.
e. indentured zone.

Difficulty: (2) Knowledge: (F) Page: 489

77. In Mexico, the free trade zone program (also called the in-bond or twin-plant
program) is called the _____________________________.

a. Maquiladora operation or industry
b. border zone
c. red zone district
d. Foreign Trade Zone
e. Channel Zone

Difficulty: (2) Knowledge: (A) Page: 489

78. Mexico allows duty-free imports of machinery and equipment for manufacturing
as well as components for further processing and assembly, as long as at least 80
percent of the plant’s output is exported. This is called a _______________
industry.

a. moonlighting
b. cross border
c. gray market
d. TRW
e. Maquiladora

Difficulty: (2) Knowledge: (A) Page: 489

79. Mexico’s border industrialization program was developed in __________.

a. 1945
b. 1955
c. 1965
d. 1975
e. 1985

Difficulty: (3) Knowledge: (F) Page: 489

80. Mexico permits _______ percent foreign ownership of the maquiladora plants in the
designated maquiladora zone.

a. 25
b. 50
c. 75
d. 90
e. 100

Difficulty: (2) Knowledge: (F) Page: 489

81. Mexico is an attractive location for ____________ intensive assembly.

a. capital
b. labor
c. technology
d. repair
e. service

Difficulty: (1) Knowledge: (A) Page: 489

True/False Short Answer

82. When Peter Drucker described logistics as “the darkest continent of business” he
probably meant it is was ________________________.

83. In 2008, in the United States, total logistical cost is estimated to be about 20 percent of the country’s GDP.

84. Global logistics encompasses materials management only.

Difficulty: (1) Knowledge: (F) Page: 453

85. _________________ transportation refers to the seamless transfer of goods from one
mode of transport to another and vice versa without the hassle of unpacking and
repackaging.

86. Materials management does not include the inflow of raw material, parts, and supplies through the firm.

Difficulty: (2) Knowledge: (F) Page: 453

87. ________________ is defined as the design and management of a system that
directs and controls the flows of materials into, through and out of the firm across
national boundaries to achieve its corporate objectives at a minimum total cost.

88. Global logistics, unlike domestic logistics, does not put emphasis on physical
distribution.

Difficulty: (2) Knowledge: (F) Page: 453

89. ___________________ refers to the inflow of raw materials, parts, and supplies
in and through the firm.

90. ___________________ refers to the movement of the firm’s finished products
to its customers, consisting of transportation, warehousing, inventory,
customer service/order entry, and administration.

91. Materials management refers to the movement of the firm’s finished products
to its customers, consisting of transportation, warehousing, inventory,
customer service/order entry, and administration.

92. Physical distribution refers to the inflow of raw materials, parts, and supplies
in and through the firm.

93. The bulk of international trade is handled by airlines.

94. The inventory-to-volume ratio is determined by how much value is added to materials
used in the product.

95. Air freight represents more than 40 percent of the value of goods shipped in
international commerce.

96. Ocean shipping is used extensively for the transport of heavy perishable cargoes.

97. In intermodal transportation, only one type of transportation is employed.

98. Rationalization means reducing resources to achieve more efficient and cost-effective operations.

Difficulty: (1) Knowledge: (A) Page: 459

99. ____________________ refers to coordinating production and distribution
across geographic boundaries.

100. In global logistics and distribution, 3PL stands for:

101. A ___________________ is an area that is located within a nation, but is
considered outside of the customs territory of the nation.

102. The Mexican version of a free trade zone is called the ___________________.

103. Wal-Mart is the largest retailer in the world.

104. LSRSL stands for:

105. In China, basket shopping is still considered the norm for most consumers.

Difficulty: (2) Knowledge: (A) Page: 485

106. An agent intermediary takes title to goods.

Difficulty: (1) Knowledge: (F) Page: 475

107. A merchant intermediary does not take title to goods.

Difficulty: (1) Knowledge: (F) Page: 475

108. In Japan, private brands are very popular.

Difficulty: (2) Knowledge: (F) Page: 480

Essay

109. Explain what the terms global logistics, materials management, and physical distribution mean. Describe the various operations and procedures encompassed by these terms.

110. The global logistics manager must understand the specific properties of the different modes of transportation in order to use them optimally. What are the most important factors in determining an optimal mode of transportation? List and briefly describe each of the factors.

111. Explain the role that so called “third-party logistics” (3PL) companies play in contemporary international trade. Cite the advantages of using third-party companies in the trade process.

112. Explain the role of the free trade zone in modern trade. Explain the free trade zone’s relationship and benefit to global logistics.

113. In which parts of the world are private labels popular? Why? What factors might explain this?

114. Explain the concept and function of the Maquiladora operation or industry in Mexico.

Chapter 16

Multiple Choice

1. ___________________ is the most popular way for many companies to become
international.

a. Exporting
b. Importing
c. Licensing
d. Contract manufacturing
e. None of the above

Difficulty: (2) Knowledge: (F) Page: 491

2. _______________ is usually the first entry mode of entry used by many companies.

a. Exporting
b. Importing
c. Licensing
d. Contract manufacturing
e. None of the above

Difficulty: (1) Knowledge: (F) Page: 491

3. In 2011, an estimated _______________ American jobs depended on international trade and export expansion.

a. 1 million
b. 8 million
c. 10 million
d. 15 million
e. 20 million

Difficulty: (3) Knowledge: (F) Page: 492

4. In 2011, exports represented about __________ percent of the U.S. GDP.

a. 5 percent
b. 8 percent
c. 9 percent
d. 10 percent
e. 14 percent

Difficulty: (3) Knowledge: (F) Page: 492

5. For a firm beginning exports for the first time, the first step is to use available
___________________.

a. primary data
b. secondary data
c. tertiary data
d. Internet data
e. intranet data

Difficulty: (2) Knowledge: (F) Page: 492

6. As an aid to expanding information about world trade, increasingly, international
marketing information is available in the form of ____________________.

a. CD-ROMs
b. electronic encyclopedias
c. electronic databases
d. CIA reports
e. government intelligence reports

Difficulty: (2) Knowledge: (F) Page: 492

7. Which of the following countries is the largest participant in database growth?

a. United Kingdom
b. Germany
c. Japan
d. France
e. United States

Difficulty: (1) Knowledge: (A) Page: 492

8. Approximately how many databases (that can be used to help with international
trade) are available online in the world?

a. 1,000
b. 3,000
c. 4,000
d. 5,000
e. 6,000

Difficulty: (3) Knowledge: (F) Page: 492

9. Conducting export research on China and Russia would best be done by:

a. doing database research.
b. doing on-line searches.
c. doing field work.
d. using existing government facts and figures.
e. using data supplied by trade missions.

Difficulty: (2) Knowledge: (A) Page: 493

10. The identification of an appropriate overseas market and an appropriate segment
involves grouping by all of the following criteria EXCEPT:

a. socioeconomic characteristics.
b. political and legal characteristics.
c. consumer variables.
d. service variables.
e. financial conditions.

Difficulty: (2) Knowledge: (F) Page: 493

11. When attempting to identify an appropriate overseas market and an appropriate
segment, socioeconomic variables should be considered. All of the following
are socioeconomic variables that should be considered EXCEPT:

a. demographics.
b. economic.
c. geographic.
d. econometrics.
e. climatic characteristics.

Difficulty: (2) Knowledge: (F) Page: 493

12. When attempting to identify an appropriate overseas market and an appropriate
segment, consumer variables should be considered. All of the following
are consumer variables that should be considered EXCEPT:

a. service quality.
b. purchase frequency.
c. lifestyle.
d. preferences.
e. purchase behavior.

Difficulty: (2) Knowledge: (F) Page: 493

13. To get an idea of market segments in a foreign country, the marketer can first
group regions within countries across the world by macroeconomic variables.
An illustration of one of these macroeconomic variables would be:

a. level of industrial development.
b. purchase preferences.
c. services sought.
d. lifestyles.
e. purchase frequency.

Difficulty: (2) Knowledge: (A) Page: 493

14. Data for grouping along macroeconomic criteria are available from international
agencies such as:

a. the International Court of Justice
b. the World Court.
c. the World Bank.
d. the National Geographic Society.
e. the World Economic Council.

Difficulty: (2) Knowledge: (F) Page: 494

15. The easiest product to sell abroad with respect to logistics is a(n) _____________
product.

a. differentiated
b. semi-standardized
c. clustered
d. gray market
e. standardized

Difficulty: (1) Knowledge: (F) Page: 494

16. _________________ exporting involves the use of independent U.S. middlemen
to market the firm’s products overseas.

a. Direct
b. Indirect
c. Parallel
d. Synchronized
e. Dual

Difficulty: (2) Knowledge: (F) Page: 495

17. When independent U.S. middlemen market a firm’s goods in an overseas market,
they are called ______________________. They market through their own network
of foreign distributors and their own sales force.

a. exporters
b. export specialists
c. export representatives
d. distribution specialists
e. parallel exporters

Difficulty: (2) Knowledge: (F) Page: 495

18. The CEM stands for:

a. cash export manager.
b. customs export manager.
c. charismatic export manager.
d. combination export manager.
e. collective export manager.

Difficulty: (2) Knowledge: (F) Page: 495

19. The _________________ acts as the export department to a small exporter or a
large producer with small overseas sales.

a. combination export manager (CEM)
b. export merchant
c. export commission house
d. piggyback exporter
e. trading company

Difficulty: (2) Knowledge: (F) Page: 495

20. The Japanese trading companies are known as:

a. keiretsus
b. chaebols
c. sogonets
d. sogoshoshas
e. akimonos

Difficulty: (3) Knowledge: (F) Page: 495

21. In order to expand their exporting activities, many Japanese firms rely on giant
general trading companies known as _________________________.

a. keiretsus
b. chaebols
c. sogonets
d. sogoshoshas
e. akimonos

Difficulty: (3) Knowledge: (F) Page: 495

22. All of the following are common types of export representatives in the United
States EXCEPT:

a. combination export manager (CEM).
b. export merchant.
c. export commission house.
d. export consortium.
e. the trading company.

Difficulty: (3) Knowledge: (F) Page: 495

23. The _________________ buys and sells on their own accounts and assumes all the
responsibilities of exporting a product. Manufacturers do not control sales activities.

a. combination export manager (CEM)
b. export merchant
c. export commission house
d. piggyback exporter
e. trading company

Difficulty: (2) Knowledge: (F) Page: 495

24. The _____________________ is someone who brings together an overseas buyer
and a U.S. manufacturer for the purpose of an export sale and earns a commission
for establishing a contact that results in a sale.

a. combination export manager (CEM)
b. export broker
c. export commission house
d. piggyback exporter
e. trading company

Difficulty: (2) Knowledge: (F) Page: 495

25. A(n) ____________________ places orders on behalf of its foreign clients
with U.S. manufacturers and acts as a finder for its client to get the best buy.

a. combination export manager (CEM)
b. export broker
c. export commission house
d. piggyback exporter
e. trading company

Difficulty: (2) Knowledge: (F) Page: 495

26. ___________________ are large, foreign organizations engaged in exporting and
importing. They buy on their own account and export the goods to their home
country.

a. Combination export manager (CEM)
b. Export broker
c. Export commission house
d. Piggyback exporter
e. Trading companies

Difficulty: (2) Knowledge: (F) Page: 495

27. A(n) ___________________ refers to the practice where U.S. firms that have an
established export department assume, under a cooperative agreement, the
responsibility of exporting the products of other U.S. companies.

a. combination export manager (CEM)
b. export broker
c. export commission house
d. piggyback exporter
e. trading company

Difficulty: (2) Knowledge: (F) Page: 496

28. Which of the following is an example of a large trading company?

a. IBM.
b. General Motors.
c. Mitsui.
d. Volvo.
e. Wal-Mart.

Difficulty: (1) Knowledge: (A) Page: 496

29. _________________ exporting occurs when a manufacturer or exporter sells directly
to an importer or buyer located in a foreign market.

a. Direct
b. Indirect
c. Parallel
d. Synchronized
e. Dual

Difficulty: (2) Knowledge: (F) Page: 496

30. With respect to direct exporting, the primary difference between a foreign sales
subsidiary and a foreign sales branch is that the foreign sales branch:

a. is larger.
b. is smaller.
c. is not a separate legal entity.
d. uses home country managers.
e. does not pay taxes.

Difficulty: (2) Knowledge: (A) Page: 497

31. The following characteristics (high set-up costs, higher credit risks, and higher
customer loyalty) apply to which of the following forms of exporting?

a. direct
b. indirect
c. parallel
d. synchronized
e. dual

Difficulty: (2) Knowledge: (A) Page: 497, Exhibit 16-2

32. In the U.S., ______________________ allows exporters to file export information at
no cost over the Internet.

a. Auxiliary Export System
b. Amended Export System
c. Automated Export System
d. Alliance Export System
e. none of the above

Difficulty: (3) Knowledge: (F) Page: 497

33. All exports from the United States (except to Canada and U.S. territories) require
a(n) _____________________.

a. letter of credit.
b. letter of ownership.
c. letter for transportation permission.
d. export license.
e. social security number.

Difficulty: (2) Knowledge: (A) Page: 498

34. The second pillar of the export transaction is the logistics of the export transaction.
Included in this transaction are all of the following EXCEPT:

a. a bill of lading.
b. the terms of sale.
c. the payment.
d. a dispute mechanism.
e. monitoring of the shipment and delivery of the goods.

Difficulty: (3) Knowledge: (F) Page: 499

35. A(n) _________________________ is a contract between the exporter and the
shipper indicating that the shipper has accepted responsibility for the goods and
will provide transportation in return for payment.

a. bill of disclosure
b. term of sale
c. payment statement
d. transportation invoice
e. bill of lading

Difficulty: (2) Knowledge: (F) Page: 499

36. A(n) _______________________ is a bill for the goods stating basic information
about the transaction, including a description of the merchandise, total cost of the
goods sold, addresses of the buyer and seller, and delivery and payment.

a. bill of disclosure
b. term of sale
c. payment statement
d. commercial invoice
e. bill of lading

Difficulty: (2) Knowledge: (F) Page: 499

37. When the exporter quotes a price for the goods, including charges for delivery
of the goods alongside a vessel at a port (the seller covers all costs of unloading and
wharfage at the shipment port and the buyer covers all other charges to get the goods
to the buyer), this form of terms of shipment is called:

a. ex-works.
b. free alongside ship (FAS).
c. free on board (FOB).
d. cost and freight (CFR).
e. Cost, Insurance, and Freight (CIF).

Difficulty: (3) Knowledge: (A) Page: 501, Exhibit 16-4

38. INCOTERMS 2000 which went into effect from January 1, 2000 and is an acronym
for ____________________________, are the internationally accepted standard
definitions for the terms of sale by the International Chamber of Commerce.

a. Industrial Commercial Terms
b. Insurance Commercial Terms
c. Irrevocable Commercial Terms
d. International Commercial Terms
e. none of the above

Difficulty: (3) Knowledge: (F) Page: 501

39. When the exporter quotes a price for the goods, including charges for delivery
of the goods alongside a vessel at a port (the seller covers all costs of unloading and
wharfage plus loading the goods on the vessel and the buyer covers all other charges
to get the goods to the buyer), this form of terms of shipment is called:

a. ex-works.
b. free alongside ship (FAS).
c. free on board (FOB).
d. cost and freight (CFR).
e. Cost, Insurance, and Freight (CIF).

Difficulty: (3) Knowledge: (A) Page: 501, Exhibit 16-4

40. All of the following are possible payment terms for goods exported to another nation
EXCEPT:

a. advance payment
b. third party draft.
c. confirmed irrevocable letter of credit.
d. unconfirmed irrevocable letter of credit
e. open account

Difficulty: (3) Knowledge: (F) Page: 502, Exhibit 16-5

41. A(n) __________________ is a payment form where a shipment is held by the
importer until the merchandise has been sold, at which time payment is made to the
exporter.

a. cash with order
b. confirmed irrevocable letter of credit
c. sight draft
d. time draft
e. consignment

Difficulty: (1) Knowledge: (F) Page: 502, Exhibit 16-5

42. A(n) _______________________ is a payment form where a cash payment occurs
when the order is placed.

a. cash with order
b. confirmed irrevocable letter of credit
c. sight draft
d. time draft
e. consignment

Difficulty: (1) Knowledge: (F) Page: 502, Exhibit 16-5

43. A(n) ________________________ is a payment form where a draft is so drawn as to
be payable on presentation to the drawee (usually the buyer).

a. cash with order
b. third party draft
c. confirmed irrevocable letter of credit
d. sight draft
e. time draft

Difficulty: (2) Knowledge: (F) Page: 502, Exhibit 16-5

44. The terms of payment between the exporter and importer are a matter of negotiation
and depend on a variety of factors. All of the following might be on that list of
factors EXCEPT:

a. the buyer’s credit standing.
b. the seller’s reputation.
c. the amount of the sale transaction.
d. the risks associated with the type of merchandise to be shipped.
e. the usual practice in the trade.

Difficulty: (2) Knowledge: (F) Page: 500

45. _______________ risk is the risk that the importer will not pay or fail to pay on the
agreed terms.

a. Credit
b. Exchange
c. Transfer
d. Importer
e. Exporter

Difficulty: (1) Knowledge: (F) Page: 500

46. ___________________ risk exists when the sale is in the importer’s currency and
that currency depreciates in terms of the dollar, leaving the exporter with a lesser
number of dollars.

a. Foreign credit
b. Foreign exchange
c. Foreign transfer
d. Foreign payment
e. Foreign delivery

Difficulty: (1) Knowledge: (F) Page: 500

47. ___________________ risk refers to the chances that payment will not be made
due to the importer’s inability to obtain U.S. dollars and transfer them to the
exporter.

a. Credit
b. Exchange
c. Transfer
d. Importer
e. Exporter

Difficulty: (1) Knowledge: (F) Page: 500

48. A confirmed irrevocable letter of credit is issued by the ____________ bank and
confirmed by a bank usually in the ____________ country.

a. importer’s, exporter’s
b. exporter’s, importer’s
c. investment, exporter’s
d. government’s, exporter’s
e. none of the above

Difficulty: (3) Knowledge: (F) Page: 502, Exhibit 16-5

49. A shipment that is held by the importer until the merchandise has been sold is called:

a. advance payment.
b. confirmed irrevocable letter of credit.
c. unconfirmed irrevocable letter of credit.
d. open account.
e. consignment.

Difficulty: (2) Knowledge: (F) Page: 502, Exhibit 16-5

50. The Japan External Trade Organization (JETRO) which helps foreign businesses to
export to Japan is affiliated with Japan’s _____________________________.

a. Ministry of Business, Trade, and Industry
b. Ministry of Economy, Trade, and Industry
c. Ministry of Economy, Trade, and Technology
d. Ministry of Economy, Trade, and Logistics
e. Ministry of Economy, Trade, and Agriculture

Difficulty: (3) Knowledge: (F) Page: 504

51. The Ex-Im Bank is described as being a:

a. bank that lends exclusively to importers.
b. new name for the old “World Bank.”
c. federally supported bank whose mission is to thwart communism by making
loans to anti-communist nations and exporters.
d. federally supported bank whose mission is to support exporters with necessary
credit.
e. bank which is not in existence yet. The concept still awaits Congressional
approval.

Difficulty: (2) Knowledge: (F) Page: 505

52. The main emphasis of the Ex-Im Bank’s lending practices today is in the area of:

a. loans to Japan.
b. loans to Taiwan.
c. loans to Mexico.
d. loans for prior bankrupt countries.
e. project finance (such as infrastructure projects—roads, dams, etc.).

Difficulty: (2) Knowledge: (A) Page: 505

53. Ex-Im Bank is not an aid or development agency, but a_____________________
corporation.

a. state
b. domestic
c. regional
d. private
e. government

Difficulty: (2) Knowledge: (A) Page: 505

54. Ex-Im Bank has two major programs in place which include:

a. Project Finance Division and Working Capital Program.
b. Project Finance Division and Working Capital Business Program.
c. Project Finance Division and Working Capital Export Program.
d. Project Finance Division and Working Capital Guarantee Program.
e. Project Finance Division and Working Capital Infrastructure Program.

Difficulty: (1) Knowledge: (A) Page: 505

55. One of the biggest advantages the United States has in importing is that U.S.
companies can:

a. order unlimited amounts of goods.
b. always sell what they order abroad.
c. be assured that the government will support their trade efforts.
d. pay in U.S. dollars–a currency accepted everywhere.
e. always turn a profit with the goods they buy because of market demand.

Difficulty: (3) Knowledge: (A) Page: 508

56. Since most world trade is done in dollars, the U.S. importer does not usually need to
_____________ foreign exchange transactions.

a. capitalize
b. hedge
c. capitate
d. survey
e. monitor

Difficulty: (1) Knowledge: (F) Page: 508

57. All of the following are activities that an importer would normally go through in
order to complete the purchase process. Which of the items listed below does not
logically fit?

a. Find a bank in the exporter’s country to handle financial transactions.
b. Establish a letter of credit to smooth the process.
c. Decide on the mode of transfer of goods.
d. Always use an export or import middleman to expedite the process.
e. Check compliance with national laws.

Difficulty: (2) Knowledge: (A) Page: 510

58. When a shipment reaches the United States, the consignee (usually the importer) will
file ______________ with the port director at the port of entry.

a. visas
b. product passports
c. bills of landing
d. bills of shipping
e. entry documents

Difficulty: (2) Knowledge: (F) Page: 510

59. With respect to shipments entering the United States, a(n) __________ is a guarantee
by someone that the duties and any potential penalties will be paid to the customs
of the importing country.

a. line of credit
b. transfer
c. bond
d. permit
e. tariff

Difficulty: (1) Knowledge: (F) Page: 510

60. Merchandise arriving from Canada and Mexico, trade fair goods, and perishable
goods and shipments assigned to the U.S. government almost always utilize the
____________________ to enable fast delivery after arrival.

a. quick release form
b. quick permit form
c. Customs form 7200
d. Special Permit for Immediate Delivery
e. block and load release form

Difficulty: (2) Knowledge: (A) Page: 511

61. If goods enter a ________________, they can be re-exported anytime (up to five
years) without payment of duty.

a. holding pen
b. corporate security zone
c. bonded warehouse
d. wharf zone
e. parallel import zone

Difficulty: (2) Knowledge: (F) Page: 511

62. When import duties are paid, the _________________ duty is a percentage of the
value of the merchandise.

a. ad valorem
b. specific
c. compound
d. nontariff
e. import

Difficulty: (1) Knowledge: (F) Page: 511

63. When import duties are paid, the _________________ duty is a specified amount
of the per unit weight or other quantity of the merchandise.

a. ad valorem
b. specific
c. compound
d. nontariff
e. import

Difficulty: (2) Knowledge: (F) Page: 511

64. When import duties are paid, the _________________ duty is a combination of a
specified amount of the per unit weight or other quantity of the merchandise plus
an ad valorem rate.

a. bonded
b. corkage
c. compound
d. nontariff
e. import

Difficulty: (1) Knowledge: (F) Page: 511

65. _________________ duties are assessed on imported merchandise sold to
importers in the United States at a price that is less than the fair market value.

a. Ad valorem
b. Specific
c. Compound
d. Nontariff
e. Antidumping

Difficulty: (1) Knowledge: (F) Page: 511

66. ______________________ duties are duties that are assessed to counter the
effects of subsidies provided by foreign governments to goods that are exported
to the United States.

a. Ad valorem
b. Specific
c. Compound
d. Countervailing
e. Antidumping

Difficulty: (1) Knowledge: (F) Page: 511

67. ________________ channels refer to the legal export/import transaction involving
genuine products into a country by intermediaries other than the authorized
distributors.

a. Black market
b. Gray market
c. Positioned
d. Zoned
e. Red zone

Difficulty: (2) Knowledge: (F) Page: 512

68. Another name for gray market channels is _________________.

a. positioned imports
b. concentric marketing
c. strategic entry imports
d. parallel imports
e. sidebar hedging

Difficulty: (2) Knowledge: (A) Page: 512

69. Brand reputation is a critical element in _________________ products.

a. gray
b. black
c. furniture
d. smuggled
e. none of the above

Difficulty: (1) Knowledge: (A) Page: 512

70. All of the following conditions lend to the development of gray markets EXCEPT:

a. currency fluctuations.
b. differences in market demand.
c. legal differences.
d. opportunistic behavior.
e. foreign trade outlets.

Difficulty: (3) Knowledge: (A) Page: 513

True/False Short Answer

71. Exporting is the first mode of foreign entry used by many companies.

Difficulty: (1) Knowledge: (F) Page: 491

72. Exports represent about 4 percent of the U.S. gross domestic product (GDP).

Difficulty: (3)Knowledge: (F) Page: 492

73. For a firm beginning exports for the first time, the first step is to use available primary data.

Difficulty: (1) Knowledge: (F) Page: 492

74. The World Bank publishes the World Development Report.

Difficulty: (2) Knowledge: (F) Page: 494

75. A standardized product is not the easiest to sell abroad.

Difficulty: (1) Knowledge: (F) Page: 494

76. _________________ exporting involves using independent U.S. middlemen to
market the firm’s products overseas.

77. The combination export manager (CEM) acts as the import department to a small
importer.

Difficulty: (2) Knowledge: (F) Page: 495

78. Piggyback exporting refers to the practice where U.S. firms that have an established
export department assume, under a cooperative agreement, the responsibility of
exporting the products of other U.S. companies.

Difficulty: (2) Knowledge: (F) Page: 495

79. In the U.S., the Automated Export System (AES) enables exporters to file import
information at no cost over the Internet.

Difficulty: (1) Knowledge: (F) Page: 497

80. Exports from the United States do not require an export license.

Difficulty: (1) Knowledge: (F) Page: 498

81. A bill of lading is a contract between the exporter and the shipper indicating that the
shipper has accepted responsibility for the goods and will provide transportation in
return for payment.

Difficulty: (1) Knowledge: (F) Page: 499

82. INCOTERMS is an acronym for _____________________________________.

83. FOB is an acronym for ______________________.

84. Exchange risk is the risk that the importer will not pay or fail to pay on the agreed
terms.
Difficulty: (2) Knowledge: (F) Page: 502

85. A confirmed irrevocable letter of credit is issued by the importer’s bank and
confirmed by a bank usually in the exporter’s country.

Difficulty: (3) Knowledge: (F) Page: 502

86. The Japan External Trade Organization (JETRO) is affiliated with the U.S.
department of Commerce.

Difficulty: (1) Knowledge: (F) Page: 504

87. The World Bank is a federally supported bank whose mission is to support the Ex-Im
Bank.

Difficulty: (1) Knowledge: (F) Page: 505

88. The American Export Trading Company act was passed in 1982.

Difficulty: (2) Knowledge: (F) Page: 506

89. More than 90 percent of the world’s trade is denominated in U.S. dollars.

Difficulty: (2) Knowledge: (F) Page: 508

90. With respect to importing fees, a(n) ______________ duty is a percentage of the
value of the merchandise.

91. Antidumping duties are assessed on imported merchandise sold to importers in
the United States at a price that is less than the fair market value.

Difficulty: (2) Knowledge: (F) Page: 511

92. Gray market channels are also known as parallel imports.

Difficulty: (1) Knowledge: (F) Page: 512

93. Three conditions are necessary for gray markets to develop. The conditions include:
(a) Availability of products in other markets, (b) limited trade barriers, and (c)
_______________________.

94. Gray marketing is an illegal trade transaction.

95. Smuggling and black market activities are illegal global markets.

Essay

96. Indicate the factors that a prospective exporter might examine to choose an export market.

97. Describe the direct and indirect channels of distribution that are available to exporters. As part of the description process, indicate any conditions or advantages that might be present in these channels.

98. Pick three (3) of the options available to exporters when it comes to terms of payment. Explain each of the options available based on your choice.

99. Describe the role the U.S. government plays in maintaining and fostering export activities. Demonstrate this role with specific examples of activities that the government might undertake.

100. Describe gray markets. Explain how they develop. Describe your feelings about buying from a gray market.

Chapter 17

Multiple Choice

1. The capstone of a company’s global marketing activities is its ____________________________.

a. strategic marketing plan.
b. strategic marketing design.
c. strategic marketing circle.
d. strategic marketing products.
e. strategic marketing processes.

Difficulty: (2) Knowledge: (F) Page: 575

2. The content of a global strategic marketing plan covers the following four areas
EXCEPT:

a. a market situation analysis.
b. objectives.
c. strategies.
d. regional analysis.
e. action plans.

Difficulty: (2) Knowledge: (F) Page: 576

3. The first step of a global strategic marketing plan starts with:

a. market situation analysis.
b. actions plans.
c. strategies.
d. global ranking.
e. objectives.

Difficulty: (1) Knowledge: (F) Page: 576

4. Top-down strategic planning is based on a _____________________ approach.

a. decentralized
b. centralized
c. regional
d. globalized
e. local

Difficulty: (2) Knowledge: (F) Page: 576

5. A bottom-up planning approach starts with the ______________ subsidiaries.

a. local
b. global
c. transnational
d. manufacturing
e. high-tech

Difficulty: (2) Knowledge: (F) Page: 576

6. A recent survey of large multinational corporations found that pure ______________
planning was most popular (used by 66 percent of the companies surveyed).

a. bottom-up
b. top-down
c. strategic
d. long-term
e. short-term

Difficulty: (3) Knowledge: (F) Page: 576

7. A series of key criteria impact global organizations and their organizational designs.
All of the following would be major environmental influences on the organizational
design decision and structure EXCEPT:

a. competitive environment.
b. rate of environmental change.
c. product diversity.
d. regional trading blocs.
e. nature of customers.

Difficulty: (2) Knowledge: (F) Pages: 577-78

8. As international sales grow, the organizational structure will evolve to mirror the
growing importance of the firm’s _________________ activities.

a. local
b. regional
c. global
d. strategic
e. manufacturing

Difficulty: (1) Knowledge: (F) Page: 578

9. A series of key criteria impact global organizations and their organizational designs.
All of the following would be major firm-specific factors on the organizational
design decision and structure EXCEPT:

a. strategic importance of international business.
b. product diversity.
c. company heritage.
d. regional trading blocs.
e. quality of local managerial skills.

Difficulty: (3) Knowledge: (F) Page: 578

10. Which of the following would be considered a key environmental factor that
influences
global organization design decisions and structure?

a. strategic importance of international business.
b. product diversity.
c. company heritage.
d. regional trading blocs.
e. quality of local managerial skills.

Difficulty: (3) Knowledge: (F) Page: 578

11. In the area of global organizational design, the major firm-specific factors include the
following EXCEPT:

a. local customers.
b. strategic importance of international business.
c. product diversity.
d. company heritage.
e. quality of local managerial skills.

Difficulty: (3) Knowledge: (A) Page: 578

12. Typically, when overseas sales account for a very small fraction of the company’s
overall sales revenues, ____________________ can easily handle the firm’s
global activities.

a. complex organizational structures
b. network organizational structures
c. simple organizational structures
d. a virtual system
e. a matrix system

Difficulty: (1) Knowledge: (A) Page: 579

13. All of the following are examples of the principal designs that firms can adopt to
organize their global activities EXCEPT:

a. an international division.
b. a city division.
c. a product-based structure.
d. a geographic structure.
e. a matrix structure.

Difficulty: (2) Knowledge: (F) Pages: 578-79

14. Under the _____________________ design of global activities organization, the
company basically has two entities (the domestic division and the international
division).

a. international division
b. cryptic division
c. product-based structure
d. geographic structure
e. matrix structure

Difficulty: (1) Knowledge: (A) Page: 578

15. Under the _____________________ design of global activities organization, the
company is organized along its various product divisions.

a. international division
b. cryptic division
c. product-based structure
d. geographic structure
e. matrix structure

Difficulty: (1) Knowledge: (A) Page: 578

16. Under the _____________________ design of global activities organization, the
company is configured along areas such as countries, regions, or some combination
of these two levels.

a. international division
b. cryptic division
c. product-based structure
d. geographic structure
e. matrix structure

Difficulty: (1) Knowledge: (A) Page: 578

17. Under the _____________________ design of global activities organization, the
company uses the option of integrating two approaches so there is a dual chain of
command.

a. international division
b. cryptic division
c. product-based structure
d. geographic structure
e. matrix structure

Difficulty: (1) Knowledge: (A) Page: 579

18. Most companies that engage in global marketing will initially start off by establishing
a(n):

a. city division.
b. country division.
c. international division.
d. export department.
e. export commission manager.

Difficulty: (2) Knowledge: (F) Page: 579

19. Which of the following organizational structures is most appropriate for the company
whose product line is not too diverse and does not require a large amount of
adaptation to the local country needs?

a. international division
b. cryptic division
c. global product division structure
d. geographic structure
e. matrix structure

Difficulty: (2) Knowledge: (A) Page: 579

20. Which of the following organizational structures is most appropriate for the high-tech
company with highly complex products or MNCs with a very diversified product
portfolio?

a. international division
b. cryptic division
c. global product division structure
d. geographic structure
e. matrix structure

Difficulty: (2) Knowledge: (A) Page: 579

21. If a high-tech company organizes itself by breaking into business networks, radio
communications, public telecommunications, components, and microwave systems,
which of the following organizational structures would probably be in use?

a. international division
b. global product division structure
c. global network solutions
d. geographic structure
e. matrix structure

Difficulty: (3) Knowledge: (A) Page: 579

22. All of the following are benefits of the global product division structure EXCEPT:

a. large degree of flexibility in terms of cross-country resource allocation.
b. large degree of flexibility in terms of cross-country strategic planning.
c. scale economics.
d. facilitates a global focus.
e. easy communication and coordination among the various product divisions
without duplication of effort.

Difficulty: (2) Knowledge: (F) Page: 579

23. Which of the following areas are very difficult for a global product division to
accomplish (therefore, this area is a shortcoming)?

a. large degree of flexibility in terms of cross-country resource allocation.
b. large degree of flexibility in terms of cross-country strategic planning.
c. scale economics.
d. facilitates a global focus.
e. easy communication and coordination among the various product divisions
without duplication of effort.

Difficulty: (3) Knowledge: (A) Page: 580

24. All of the following are problems with country-based subsidiaries EXCEPT:

a. they are too costly.
b. they have coordination problems with corporate headquarters.
c. cross-fertilization is hindered.
d. local market conditions go unnoticed.
e. a not-invented-here mentality exists.

Difficulty: (3) Knowledge: (F) Page: 580

25. All of the following are profiles that are suggested for the twenty-first century
country manager EXCEPT:

a. the trader.
b. the power broker.
c. the builder.
d. the ambassador.
e. the cabinet member.

Difficulty: (3) Knowledge: (F) Pages: 581-82

26. As a profile of a twenty-first century country manager, _________________
establishes a beachhead in a new market or heads a recently acquired local distributor.
They should have an entrepreneurial spirit.

a. the trader
b. the representative
c. the builder
d. the ambassador
e. the cabinet member

Difficulty: (2) Knowledge: (A) Page: 581

27. As a profile of a twenty-first century country manager, _________________
is a team player with profit and loss responsibility for a small- to medium-sized
country. Team-manship is key here.
a. the trader
b. the representative
c. the builder
d. the ambassador
e. the cabinet member

Difficulty: (2) Knowledge: (A) Page: 582

28. As a profile of a twenty-first century country manager, _________________
develops local markets. They are entrepreneurs who are willing to be part of regional
global strategy teams.

a. the trader
b. the representative
c. the builder
d. the ambassador
e. the cabinet member

Difficulty: (2) Knowledge: (A) Page: 582

29. As a profile of a twenty-first century country manager, _________________
is in charge of large and/or strategic markets. Prime responsibilities include handling
government relations and integrating acquisitions and strategic alliances.

a. the trader
b. the power broker
c. the builder
d. the ambassador
e. the cabinet member

Difficulty: (2) Knowledge: (A) Page: 582

30. With respect to regional structures, a recent survey found that all of the following
roles were performed EXCEPT:

a. scouting.
b. liberating.
c. strategic simulation.
d. signaling commitment.
e. pooling resources.

Difficulty: (3) Knowledge: (F) Page: 583

31. The _________________ structure of organization explicitly recognizes the
multidimensional nature of global strategic decision making.

a. international division
b. customer division
c. global product division
d. geographic
e. matrix

Difficulty: (2) Knowledge: (F) Page: 583

32. The primary advantages of the matrix structure for organizing is that they represent
the growing complexities of the global market arena and:

a. it fosters team spirit and cooperation among managers.
b. it secures higher profits.
c. it does not duplicate efforts.
d. it has smooth and accurate communications.
e. it has clear lines of communication with no confusion.

Difficulty: (2) Knowledge: (F) Page: 584

33. All of the following are considered to advantages of the matrix structure of
organizing EXCEPT:

a. it fosters team spirit.
b. it fosters cooperation among managers.
c. it does not duplicate efforts.
d. it causes managers to think globally.
e. it causes managers to think globally but act locally.

Difficulty: (3) Knowledge: (F) Page: 584

34. Which of the following would be considered a disadvantage or drawback of the
matrix structure of organizing?

a. it does not foster team spirit.
b. it does not foster cooperation among managers.
c. it duplicates efforts and can cause confusion.
d. it prohibits managers from thinking globally.
e. it causes managers to think locally only.

Difficulty: (2) Knowledge: (A) Page: 584

35. All of the following are disadvantages or drawbacks of the matrix structure of
organizing EXCEPT:

a. dual reporting leads to conflicts and confusion.
b. dual profit responsibilities lead to conflicts and confusion.
c. bureaucratic bloat.
d. power clashes can occur.
e. managers think globally and act locally.

Difficulty: (1) Knowledge: (A) Page: 584

36. The __________________ is one solution that has been suggested to cope with the
shortcomings associated with the classical hierarchical organization structures.

a. international division
b. global network
c. global product division
d. geographic
e. matrix

Difficulty: (2) Knowledge: (F) Page: 585

37. The __________________ model is an attempt to reconcile the tension between
the need for local responsiveness and the wish to be an integrated whole.

a. international division
b. global network
c. global product division
d. geographic
e. matrix

Difficulty: (2) Knowledge: (F) Page: 585

38. Asea Brown Boveri (ABB), the Swiss-Swedish engineering company is an example
of ______________________.

a. local networking
b. regional networking
c. global networking
d. domestic networking
e. high-tech networking

Difficulty: (2) Knowledge: (F) Page: 586

39. The networked global organization is sometimes referred to as
_____________________.

a. international.
b. multinational.
c. transnational.
d. local-national.
e. quasi-national.

Difficulty: (3) Knowledge: (A) Page: 585

40. In the area of global branding strategies, the following options are used EXCEPT:

a. global branding committee.
b. brand champion.
c. global brand manager.
d. informal, ad-hoc branding meetings.
e. network meetings.

Difficulty: (2) Knowledge: (F) Pages: 26-27

41. In the process of global brand management, if a company decides against a formal
structure, it might still find it worthwhile to have an informal mechanism. This
usually takes the form of a(n) ______________ branding meeting.

a. ad-hoc
b. temporary
c. longitudinal
d. outside
e. domestic

Difficulty: (2) Knowledge: (F) Page: 587

42. Global branding committees are usually made up of ________________
executives.

a. matrix
b. network
c. medium-line
d. top-line
e. bottom-line

Difficulty: (2) Knowledge: (F) Page: 587

43. A ______________________ is a top-line executive (sometimes CEO) who
serves as the brand’s advocate.

a. brand champion
b. product champion
c. local champion
d. corporate champion
e. high-tech champion

Difficulty: (1) Knowledge: (F) Page: 587

44. Global brand manager positions are created when top management lacks
___________________ expertise:

a. high-tech
b. human resources
c. operational
d. manufacturing
e. marketing

Difficulty: (1) Knowledge: (F) Page: 587

45. Several management theorists have made an attempt to come up with the “right”
fit between the MNC’s environment (internal and external) and the organizational
setup. One popular model examines the relationship between organizational
structure, _____________________, and the importance of foreign sales to the
company (as a share of total sales).

a. product prices
b. domestic services
c. foreign product deliveries
d. foreign product diversity
e. purchasing habits

Difficulty: (3) Knowledge: (F) Page: 589, Exhibit 17-6

46. The Stopford and Wells model shows the relationship between the:

a. organizational structure, foreign product diversity and domestic sales.
b. organizational structure, foreign product diversity and local sales.
c. organizational structure, foreign product diversity and the importance of foreign
sales.
d. organizational structure, foreign product diversity and regional sales.
e. organizational structure, foreign product diversity and high-tech sales.

Difficulty: (3) Knowledge: (F) Page: 589, Exhibit 17-6

47. According to the Stopford and Wells model, when companies first explore the global
marketplace, they start off with a(n) ___________________________.

a. local division
b. regional division
c. international division
d. global division
e. none of the above

Difficulty: (2) Knowledge: (F) Page: 589, Exhibit 17-6

48. According to the Stopford and Wells model, as foreign sales expand without an
increase in the firm’s foreign product assortment diversity, the company will most
likely switch to a __________________________ structure.

a. host-country area
b. home-country area
c. global area
d. geographic area
e. local area

Difficulty: (3) Knowledge: (F) Page: 589, Exhibit 17-6

49. A(n) ____________________ can be described as being where country and
regional managers look at strategic issues from multiple perspectives.

a. glocal mindset
b. global mindset
c. local mindset
d. regional mindset
e. country mindset

Difficulty: (1) Knowledge: (F) Page: 590

50. To make global marketing strategies work, companies need to establish a(n)
____________________.

a. career system.
b. development system.
c. control system.
d. appeals system.
e. listening system.

Difficulty: (1) Knowledge: (F) Page: 590

51. The main purpose of a _____________ is to ensure that the behaviors of the
various parties within the organization are in line with the company’s strategic
goals.

a. career system
b. development system
c. control system
d. appeals system
e. listening system

Difficulty: (1) Knowledge: (F) Page: 590

52. All of the following are parts (or basic building blocks) of a formal control system
EXCEPT:

a. the establishment of performance standards.
b. the measurement and evaluation of performance against standards.
c. the analysis and correction of deviation from standards.
d. perfection training.
e. none of the above.

Difficulty: (1) Knowledge: (F) Page: 590-91

53. Formal control systems are also called ________________ control systems.

a. administrative
b. conductive
c. selective
d. bureaucratic
e. strategic

Difficulty: (2) Knowledge: (F) Page: 590

54. The first step in any control process should be to:

a. clearly establish rewards and punishments.
b. set standards (metrics).
c. set controls.
d. set monitoring mechanisms.
e. establish who the controller is.

Difficulty: (1) Knowledge: (F) Page: 590

55. The two types of standards are behavior and ____________________________.

a. outcome-based.
b. performance-based.
c. intellectual-based.
d. strategic-based.
e. structural-based.

Difficulty: (2) Knowledge: (F) Page: 590

56. Although proper reward systems are crucial to motivate subsidiary managers, a
recent study has shown that the key role played is by the presence of ____________.

a. strong leadership
b. bonuses
c. perks
d. due process
e. nondiscrimination

Difficulty: (3) Knowledge: (F) Page: 591

57. The two most common forms of informal control are human resource development
and _________________.

a. manufacturing
b. production
c. network structure
d. strategic control
e. corporate culture

Difficulty: (3) Knowledge: (F) Page: 591

58. Corporate cultures can be clan-based or ___________________.

a. market based
b. leader based
c. employee based
d. symbol based
e. tradition based

Difficulty: (3) Knowledge: (F) Page: 591

59. The __________________ form of corporate culture is distinguished by an
embodiment of a long socialization process; strong, power norms; and a
defined set of internalized controls.

a. market based
b. leader based
c. employee based
d. clan based
e. tradition based

Difficulty: (2) Knowledge: (A) Page: 591

60. The _________________ form of corporate culture is distinguished by norms that
are loose or absent; socialization processes are limited; and control systems are purely
based on performance measures.

a. market based
b. leader based
c. employee based
d. clan based
e. tradition based

Difficulty: (2) Knowledge: (A) Page: 591

61. To shape a shared vision, cultural values primarily demand which of the following
properties?

a. easy to understand in only one way and written in English.
b. have clarity, continuity, and consistency.
c. have symbolism, sex-appeal, and sensitivity.
d. be dynamic, demanding, and declarative.
e. be global, gifted, and guiding.

Difficulty: (2) Knowledge: (A) Page: 592

62. The company’s management programs are another major ________________ control
tools.

a. informal
b. formal
c. simple
d. dynamic
e. complex

Difficulty: (1) Knowledge: (A) Page: 592

True/False Short Answer

63. The capstone of a company’s global marketing activities is its strategic marketing plan.

Difficulty: (1) Knowledge: (F) Page: 575

64. The first step of a global strategic marketing plan starts with market situation analysis.

Difficulty: (2) Knowledge: (F) Page: 576

65. The content of a global strategic marketing plan covers four areas which include:
market situation analysis, objectives, strategies, and ____________________.

66. Companies with substantial product diversity tend to go for a global geographic
division configuration.

Difficulty: (2) Knowledge: (F) Page: 579

67. The charter of the international division is to develop and coordinate the firm’s global
operations.

Difficulty: (3) Knowledge: (F) Page: 579

68. The global product structure is most appropriate for companies whose product line
is not too diverse and does not need a large amount of adaptation to local country
needs.

Difficulty: (2) Knowledge: (A) Page: 579

69. Under the ________________ design, the company configures its organization
along geographic areas.

70. Country-focused organizations can be very good forms of structure because they
tend to be less costly than other forms.

Difficulty: (3) Knowledge: (F) Page: 580

71. Under the __________________ design, the company integrates two approaches and
has a dual chain of command.

72. Some corporate strategy experts believe that in the twenty-first century, the role of the
country manager will be minimal.

Difficulty: (2) Knowledge: (F) Page: 581

73. The ___________________ type of manager is characterized as being in charge of
large and/or strategic markets. They also handle government relations.

74. With respect to organizational forms, the matrix structure explicitly recognizes the
multidimensional nature of global strategic decision making.

Difficulty: (1) Knowledge: (F) Page: 583

75. The matrix structure explicitly recognizes the multidimensional nature of global
strategic decision making.

Difficulty: (2) Knowledge: (A) Page: 583

76. Matrix structure can be a bureaucratic bloat.

Difficulty: (2) Knowledge: (A) Page: 583

77. The network global organization is sometimes also referred to as an “ethnocentric”
organization.

Difficulty: (1) Knowledge: (F) Page: 585

78. Asea Brown Boveri is a prime example of networking.

Difficulty: (2) Knowledge: (F) Page: 585

79. A brand champion is not a top-line executive.

Difficulty: (3) Knowledge: (F) Page: 587

80. The Stopford-Wells international structural stages model shows the relationship
between the MNCs’ networks and their overseas productivity.

Difficulty: (3) Knowledge: (A) Page: 589

81. The concept of a glocal mind-set encourages looking at strategic issues from multiple
perspectives.

Difficulty: (3) Knowledge: (A) Page: 590

82. The first step in the control process is to set standards.

Difficulty: (1) Knowledge: (F) Page: 590

83. Clan cultures embody a long socialization process, strong powerful norms, and a
defined set of internalized controls.

Difficulty: (2) Knowledge: (F) Page: 591

84. In market cultures, norms are always very strong.

Difficulty: (3) Knowledge: (F) Page: 591

85. The company’s management programs are another major formal control tools.

Difficulty: (2) Knowledge: (F) Page: 592

Essay

86. List and briefly discuss the key criteria that impact global organizational design.

87. List and briefly describe the principal organizational design options that firms can use to organize their global activities. Cite the advantages and disadvantages of each form.

88. Describe the five profiles that country managers might need to fit to be able to lead their organizations into the challenges of the twenty-first century.

89. Explain how a global networked organization might differ from a matrix organizational structure. To answer this question, review the characteristics of both structures carefully.

90. Although some feel country managers are obsolete, most companies believe they are essential to the firm. What reasons make country managers more important than ever? What roles will they play?

Chapter 18

Multiple Choice

1. Emerging markets can be found in which of the following areas?

a. Africa
b. Asia
c. Latin America
d. Eastern Europe
e. All of the above

Difficulty: (1) Knowledge: (F) Page: 597

2. Emerging markets refer to:

a. countries that used to be called “less developed countries.”
b. countries that were previously called “Third World.”
c. countries that lacked convertible currency.
d. countries that were communist.
e. both a and b

3. Which of the following is NOT a category of emerging markets?

a. developed countries
b. advanced emerging
c. secondary emerging
d. frontier countries
e. both a and d

4. Which of these does not describe the BRIC nations?

a. They consist of Brazil, Russia, India and China.
b. They have large populations.
c. They constitute almost 15 percent of world GDP.
d. They are developed countries.
e. All have growing economies.

5. The BRIC nations:

a. are all rich in natural resources.
b. are small countries with high income economies
c. are expected to surpass the GDP of the G7 nations within 20 years.
d. constitute a trade bloc.
e. none of the above

6. The Next Eleven:

a. is a George Clooney movie sequel.
b. consists of a diverse group of emerging markets.
c. constitute their own trade bloc.
d. are all located in Asia.
e. none of the above

7. Which of the following nations is NOT a member of the Next Eleven?

a. Malaysia
b. Indonesia
c. Egypt
d. Mexico
e. Nigeria

Difficulty: (2) Knowledge: (F) Page: 599

8. What event caused severe setbacks to many emerging markets?

a. global warming
b. China’s rise as a global superpower
c. losses in the World Cup soccer matches
d. the Asian financial crisis
e. EU focus on North Africa as a trading partner

9. Emigrant workers from emerging markets:

a. are a nuisance to the countries they work in.
b. deplete the economy of their home country.
c. are almost always unskilled workers.
d. form local communities abroad that can be leveraged.
e. travel only within their own continent.

Difficulty: (2) Knowledge: (A) Page: 599

10. Which country has the greatest number of mobile phone subscribers per 100 inhabitants?

a. Italy
b. Russia
c. Germany
d. United Kingdom
e. Nigeria

Difficulty: (1) Knowledge: (F) Page: 601, Exhibit 18-2

11. After China, the country with the largest shopping malls in the world is:

a. United States
b. Philippines
c. Turkey
d. Canada
e. Malaysia

Difficulty: (1) Knowledge: (F) Page: 602, Exhibit 18-3

12. Because emerging markets have underdeveloped infrastructure:

a. they cannot afford the best products from MNCs.
b. they can leapfrog old technology.
c. they are more eager to adopt new products.
d. R&D efforts are centered in these markets to generate new ideas.
e. distribution channels will be easier to set up.

Difficulty: (2) Knowledge: (A) Page: 600

13. Emerging markets:

a. cannot afford the most modern products.
b. are innovative in service offerings.
c. embrace new products quickly.
d. have low time-to-takeoff for new products.
e. all of the above

Difficulty: (2) Knowledge: (A) Page: 605

14. Global competitors:

a. are not headquartered in emerging markets.
b. duel for market share in emerging markets but only consist of MNCs from developed countries.
c. come only from the BRIC nations.
d. may emerge from any nation to challenge established MNCs.
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 607

15. Significant companies from emerging markets are leaders in which of these industries?

a. smart phones
b. computers
c. beer
d. cars
e. all of the above

Difficulty: (2) Knowledge: (F) Page: 604

16. Acer, the world leader in laptop manufacturing and design, is based in which country?

a. South Korea
b. Taiwan
c. China
d. Japan
e. Singapore

Difficulty: (2) Knowledge: (F) Pages: 604

17. Jollibee competes in which industry around the world?

a. theme parks
b. entertainment
c. fast food
d. children’s clothing
e. shoes

Difficulty: (2) Knowledge: (F) Page: 603

18. Jollibee is a major international player that has its headquarters in ________.

a. Malaysia
b. Indonesia
c. China
d. Philippines
e. India

Difficulty: (2) Knowledge: (F) Page: 604

19. Which of the following brands has NOT been bought by firms in emerging markets?

a. Miller beer
b. Jaguar
c. IBM PC
d. Ferrari
e. Budweiser

Difficulty: (2) Knowledge: (F) Page: 604

20. One strategy used by the new champions to succeed in major markets is:

a. reviving old technology to save money.
b. copying the same model as MNCs from developed markets but with cheaper items.
c. employing the latest technology.
d. training staff in foreign companies first.
e. both a and d

Difficulty: (2) Knowledge: (A) Pages: 604-6

21. Emerging market champions:

a. avoid new technology because it is too expensive.
b. use a combination of old technology and cheap labor for a competitive advantage.
c. leapfrog to the newest technologies to offer quality products.
d. copy MNC products to avoid problems with product development.
e. try to avoid innovation.

Difficulty: (2) Knowledge: (A) Page: 605

22. Rapid scale-up of new champions:

a. doesn’t occur because capital is in short supply.
b. can be done by absorbing smaller rivals.
c. is achieved by investing more than smaller rivals.
d. both b and c
e. can only be done with the help of outside loans from such as the World Bank.

Difficulty: (2) Knowledge: (A) Page: 606

23. When would emerging market companies use a dodge strategy?

a. when its assets are transferable
b. when there is little pressure to globalize
c. when industry pressure is high
d. when assets are only valuable in the home market
e. both c and d

Difficulty: (3) Knowledge: (A) Page: 606

24. An emerging market company would be a defender when:

a. its assets are transferable.
b. there is little pressure to globalize.
c. industry pressure is high.
d. assets are only valuable in the home market.
e. both b and d

Difficulty: (3) Knowledge: (A) Pages: 606-7

25. When competing with the new champions from emerging markets, MNCs:

a. should give up—the new champions have cheaper labor and the latest technology.
b. can ignore the new champions—they are only effective in emerging markets.
c. should focus on the high end of the market and leave the rest to the local companies.
d. buy out local rivals and use them to challenge the new champion in the home market.
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 608

26. MNCs are being threatened by new champions from the emerging markets. Which of the following strategies is NOT recommended for them?

a. Continue to use low cost sourcing in emerging markets.
b. Sell only goods developed by home country R&D in emerging markets.
c. Ignore emerging market branding strategies as being too elementary.
d. Do not invest in the mass markets of emerging economies as they will never amount to much revenue.
e. All of the above are not suggested.

Difficulty: (2) Knowledge: (A) Page: 608

27. Companies from the emerging markets are proving to be surprising challengers to older, larger MNCs. Which of the following would you recommend as an MNC strategic response?

a. Invest in growing mass markets of developing countries.
b. Partner with companies from the emerging markets.
c. Buy out smaller rival firms in the emerging markets.
d. Consider developing countries as more than just manufacturing sites.
e. All of the above

Difficulty: (2) Knowledge: (A) Page: 608

28. BOP stands for:

a. a type of music common to developing countries.
b. bottom of the pyramid.
c. bottom of the pile.
d. boost our profits.
e. none of the above

Difficulty: (1) Knowledge: (F) Page: 608

29. Some people are optimistic about the BOP as a market segment. This is because:

a. they are hopeless romantics and can’t face reality.
b. there is a great deal of untapped money in the BOP.
c. BOP is critical for long term growth of the company.
d. the BOP needs help and would welcome input from outsiders.
e. only b and c

Difficulty: (3) Knowledge: (A) Page: 609

30. Despite its dismal financial condition, the BOP has support as a viable market segment. This is because:

a. Wal-Mart concentrated in a similar area in the U.S. and became a world player.
b. incomes are expected to rise over time and this segment could become brand loyal.
c. challenges faced here could be the basis for new and innovative products.
d. the BOP is a source of cheap labor.
e. both b and c

Difficulty: (3) Knowledge: (A) Page: 609

31. The BOP:

a. constitutes a majority of the world’s population.
b. generates $2 an hour in wages.
c. is found mostly in the western hemisphere.
d. does not offer opportunities for MNCs.
e. is a viable market for only small firms with very cheap products.

Difficulty: (2) Knowledge: (A) Pages: 608-9

32. Bottom of the pyramid means:

a. lower class Egyptians.
b. the lowest level of consumer involvement with your product.
c. the lowest satisfaction level of Maslow’s hierarchy.
d. people earning less than $2 per day.
e. the first step toward $1 million on a game show.

Difficulty: (1) Knowledge: (F) Page: 608

33. Compared to developed countries, segments in emerging markets are:

a. enormous.
b. much more coarse and difficult to define.
c. harder to reach because media options are not as well developed.
d. less wealthy.
e. all of the above

Difficulty: (3) Knowledge: (A) Page: 610

34. Hindustan Unilever pursued the following strategy to expand its market share in India.

a. retained the low unit price concept only for shampoo
b. focused its efforts on the BOP masses
c. emphasized local R&D efforts
d. concentrated on the urban population for sales
e. offered a wide variety of brands to tightly segment the market

Difficulty: (3) Knowledge: (F) Page: 610, Global Perspective 18-1

35. Hindustan Lever decided that its product line should include:

a. only products for the rich, so it could charge a premium.
b. products for all three major segments: affluent, middle income, and low income.
c. low income only, to capture the entire lower end as loyal customers for the future.
d. only the middle income, as they were ignored by other firms.
e. both the middle and upper income groups, as profit margins were viable there.

Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1

36. Social marketing—in the form of new product development and/or aiding development:

a. is not practiced by emerging market companies.
b. is a waste of time—the population won’t be exposed to the messages and is unlikely to follow directions.
c. can expand market opportunities for the firm.
d. builds goodwill that can be leveraged into greater profits.
e. both c and d

Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1

37. What best describes the outcome of early entry into emerging markets?

a. It can be lucrative, especially for huge markets like China and India.
b. It is likely to fail because the markets don’t or can’t appreciate the product.
c. It will probably face few direct competitors.
d. Products will be too expensive for local consumers.
e. None of the above

Difficulty: (2) Knowledge: (A) Page: 611

38. There are many reasons why a company might prefer to be a follower in a new market, not a first entrant. Which of these is NOT one of those reasons?

a. reduced profits because the market is already gone
b. fewer pitfalls as the follower can see the mistakes of the first-mover
c. better developed marketing channels
d. competitive response from other MNCs and local competitors
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 611

39. Why is being a first-mover attractive in emerging markets?

a. Pent-up demand may lead to high initial sales.
b. Governments are eager to offer concessions to first-movers.
c. Early entrants get best access to key marketing resources.
d. Marketing dollars generate higher productivity.
e. All of the above

Difficulty: (2) Knowledge: (A) Page: 611

40. What approach should smaller firms take in emerging markets?

a. Be a follower so you don’t make costly mistakes.
b. Be a first-mover—to the victor go the spoils.
c. Be a first-mover to outmaneuver larger firms eyeing the same market.
d. Avoid the markets altogether—they take too much time and effort to develop compared to the pay-off for a small firm.
e. Merge with a local company.

Difficulty: (3) Knowledge: (A) Page: 611

41. The risks of entering emerging markets:

a. are financial, but only in terms of getting paid promptly and in full.
b. are financial, but include both currency volatility and getting paid.
c. are marketing related only—we wouldn’t enter a country where we couldn’t get paid.
d. are marketing and currency volatility driven.
e. cover the enter spectrum of marketing and financial risks.

Difficulty: (2) Knowledge: (A) Page: 612

42. Entry strategies for emerging markets include _______.

a. export
b. licensing
c. joint venture
d. direct investment
e. all of the above

Difficulty: (1) Knowledge: (A) Page: 612

43. The preferred entry mode(s) for emerging markets:

a. include(s) both licensing and minority joint venture.
b. seek(s) to adapt products to ensure the capture of the market.
c. involve(s) direct investment to close the market to local challengers and later MNCs.
d. focus (focuses) on marketing instead of sales.
e. both a and b

Difficulty: (2) Knowledge: (A) Page: 612

44. Which of the following is not a common risk when entering emerging markets?

a. product piracy
b. enforcing property rights
c. well-developed marketing infrastructure
d. antitrust laws
e. government intervention

Difficulty: (2) Knowledge: (A) Page: 612

45. When MNCs enter an emerging market, they are likely to:

a. share product secrets with the new country.
b. insist on tight corporate control.
c. take a high risk approach to increase the chance for greater rewards.
d. emphasize sales as a measure of success.
e. both b and d

Difficulty: (2) Knowledge: (A) Page: 612

46. Product policies that have been pursued when entering emerging markets include:

a. no adaptation—the risks and expense are too great.
b. selling a narrow range of premium goods.
c. pursuing backward innovation.
d. anchoring the product entry with products near the end of their life cycle in the home market.
e. all of the above

Difficulty: (3) Knowledge: (A) Page: 613

47. Probably the least effective product design option is:

a. no adaptation—sell what we already make.
b. to sell our normal products at premium prices.
c. to sell a stripped down version of a normal good.
d. to extend the product life cycle by selling obsolete goods abroad.
e. All of the above are equally effective.

Difficulty: (2) Knowledge: (A) Page: 613

48. Backward innovation and selling obsolete goods:

a. run a risk of consumer backlash in emerging markets.
b. could save the company money on product development.
c. should not be used because cutting edge products are most highly favored in emerging markets.
d. are entirely different approaches to entering a market.
e. a, b and c are all reasonable answers

Difficulty: (3) Knowledge: (A) Page: 613

49. Common features that products must have to be successful in emerging markets include:

a. the very latest designs.
b. the widest variety of options.
c. ruggedness.
d. high quality.
e. warranties.

Difficulty: (3) Knowledge: (A) Page: 613

50. Companies have used which of the following methods to enhance product acceptance in emerging markets?

a. washing machines that can restart after a power outage
b. changing detergent formulae to use more water
c. selling a top-end water purifier in India for greater assurance of pure water
d. lowering quality to keep prices low
e. all of the above

Difficulty: (2) Knowledge: (A) Page: 613

51. When designing a product for emerging markets, companies should consider which of the following?

a. low price, ruggedness, and low quality
b. low price, inconsistent quality, and ability to run without electricity
c. high price, consistent quality, and a warranty
d. low incomes, unreliable power supplies, and scarce resources
e. low price, back-up power supplies, and a warranty

Difficulty: (2) Knowledge: (A) Page: 613

52. A manually operated sewing machine would:

a. be a backward innovation.
b. be an example of a product life cycle extension.
c. be rejected in emerging markets as not being modern enough.
d. be too difficult to operate.
e. likely have the idea copied as soon as it hit the market.

Difficulty: (3) Knowledge: (A) Page: 613

53. Brand strategies proven to succeed in emerging markets include:

a. pursuing only the wealthy—they don’t require product or price changes.
b. aiming brands at various market segments with different formulae and prices.
c. focusing on the emerging middle class for its growing buying power and eventual loyalty.
d. purchasing a local brand as part of the product offering.
e. both b and d

Difficulty: (3) Knowledge: (A) Page: 613

54. Which of the following is MOST likely to be used when packaging for emerging markets?

a. large packages to cater to the bigger families common in these countries
b. large packages because an entire village will share the product
c. smaller packages at lower price points
d. large packages with individual wrappers so merchants can resell in smaller quantities
e. both c and d

Difficulty: (3) Knowledge: (A) Pages: 614-15

55. Package design in emerging markets can largely ignore the feature of ________.

a. sturdiness
b. heat resistance
c. freshness
d. sustainability
e. none of the above

Difficulty: (1) Knowledge: (A) Page: 614-15

56. Because of the climate and sales conditions of many emerging markets, packages should:

a. come frozen so freshness and safety are ensured.
b. be made of the cheapest materials to save money.
c. be sold with reusable containers.
d. allow people to see and smell the product before buying.
e. all of the above

Difficulty: (2) Knowledge: (A) Page: 614-15

57. A package characteristic with perhaps greater significance in emerging markets than developed countries is ________.

a. refrigeration
b. sustainability
c. safety
d. variety of sizes
e. metal containers

Difficulty: (3) Knowledge: (A) Page: 615

58. The pricing strategy most likely to succeed in emerging markets is:

a. very low prices that everyone can afford—large volume makes up for low margins.
b. premium pricing only—establish the image of quality and save money on not having to adapt the product for local sale.
c. cater to the growing middle class and raise prices as income goes up.
d. saturate all price points with different products and make money at all levels.
e. All of the above are equally viable.

Difficulty: (2) Knowledge: (A) Page: 615

59. Why is distribution considered to be the biggest challenge when entering an emerging market?

a. It isn’t—pricing is.
b. It isn’t—product adaptation is.
c. Distribution infrastructure is too complex to navigate.
d. The country’s land mass is a deterrent.
e. All of the above

Difficulty: (2) Knowledge: (A) Page: 616

60. Which of the following is NOT a reason why distribution is difficult in emerging markets?

a. Local and rural areas can both be easily reached.
b. Shopping malls and supermarkets are on the rise in emerging markets.
c. Traditional retailers can be hard to work with.
d. Operating capital of retailers may be lacking.
e. Local brands are difficult to displace on the shelves.

Difficulty: (2) Knowledge: (A) Page: 616

61. P&G succeeded in Russia by:

a. using door to door sales reps.
b. direct export to a single large distributor in Moscow.
c. partnering with EU firms that already had a presence in Russia.
d. developing its own distributor network in exchange for exclusivity.
e. none of the above—Unilever is the dominant player in Russia.

Difficulty: (2) Knowledge: (F) Page: 617

62. When managing distributors in emerging markets, MNCs should:

a. pick partners with extensive local product-market knowledge.
b. choose partners with excellent English-speaking skills.
c. focus on entrepreneurs to build local good-will.
d. only enter markets with a company-owned distributor network.
e. select distributors who are competent working with MNCs.

Difficulty: (2) Knowledge: (A) Page: 618

63. Direct selling in emerging markets:

a. is attractive because of the rapid growth of internet sales.
b. often works best in a B2B setting.
c. is valuable in countries where face-to-face sales are common.
d. both b and c
e. none of the above—direct selling should be avoided as too difficult to supervise.

Difficulty: (2) Knowledge: (A) Page: 618

64. Emerging market distributors seeking exclusive territories should:

a. be told yes, on a temporary basis.
b. be denied, because this policy retards rapid market development.
c. be ignored—we will set up a company-owned distribution network.
d. be told no territories exist—everyone can sell everywhere, and the winner gets the final contract.
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 619

65. Communication challenges include:

a. raising brand awareness.
b. educating customers about product use and benefits.
c. creating brand image.
d. gaining loyalty.
e. all of the above

Difficulty: (2) Knowledge: (F) Page: 619

66. Push strategies:

a. are less viable in emerging markets than pull strategies.
b. are never used in emerging markets because channels are in disarray.
c. work well in many countries because of the enormous channel power of distributors.
d. result in the MNC being cheated because channel members keep the incentives for themselves.
e. never reach consumers.

Difficulty: (2) Knowledge: (A) Page: 619

67. Which of the following is a reason why a push strategy would succeed in emerging markets?

a. more frequent shopping than in developed countries
b. heavy reliance on retailer recommendations about brands
c. significant distributor power
d. numerous opportunities for brand switching
e. all of the above

Difficulty: (2) Knowledge: (A) Page: 619

68. Why might pull strategies aimed at consumers in emerging markets NOT be very successful?

a. They don’t understand the message about the product.
b. Coupons may be stolen and never reach the consumer for redemption.
c. Mass media are less effective in the emerging nations.
d. All of the above apply.
e. None of the above apply—emerging market consumers love coupons.

Difficulty: (3) Knowledge: (A) Page: 619

True/False Short Answer

69. Emerging markets are not a tempting target for MNCs.

Difficulty: (1) Knowledge: (F) Page: 597

70. The most busy McDonald’s in the world is in Peking.

Difficulty: (1) Knowledge: (F) Page: 597

71. The bulk of the revenues from some MNCs come from emerging markets.

Difficulty: (1) Knowledge: (F) Page: 598

72. Transition economies are those that are moving from very poor to more developed.

Difficulty: (1) Knowledge: (F) Page: 598

73. Iran is one of the BRIC nations.

Difficulty: (1) Knowledge: (F) Page: 598

74. BRIC stands for “big, rich, independent countries”.

Difficulty: (1) Knowledge: (F) Page: 598

75. Remittances from foreign workers are important to emerging market economies.

Difficulty: (1) Knowledge: (F) Page: 599

76. Most of the world’s largest shopping malls are in Asia.

Difficulty: (1) Knowledge: (F) Page: 602, Exhibit 18-3

77. No companies from emerging market countries have made it to the Fortune Global 500 list.

Difficulty: (1) Knowledge: (F) Page: 603

78. Most of the largest banks in the world are from the United States.

Difficulty: (1) Knowledge: (F) Page: 603

79. Product piracy is not a problem in China.

Difficulty: (1) Knowledge: (F) Page: 604

80. Products from emerging markets only compete as low-end challengers to established brands.

Difficulty: (2) Knowledge: (A) Page: 604

81. MNCs cannot use products developed in emerging markets because the quality standards are too low to be transferred to MNC home markets.

Difficulty: (2) Knowledge: (A) Page: 608

82. India is experiencing changes in its income pattern from pyramid to diamond.

Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1

83. Hindustan Unilever is a major corporation based in Pakistan.

Difficulty: (2) Knowledge: (F) Page: 610, Global Perspective 18-1

84. Social marketing in the Third World is a waste of time and money.

Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1

85. Risk levels of entering emerging markets are higher than those for developed countries.

Difficulty: (1) Knowledge: (A) Page: 612

86. Backward innovation and selling obsolete goods are different names for the same product strategy.

Difficulty: (2) Knowledge: (F) Page: 613

87. The most common packaging choice for emerging markets is a smaller package.

Difficulty: (1) Knowledge: (A) Page: 614

88. Frugal engineering means making very cheap, low quality products so you can get the most profit.

Difficulty: (1) Knowledge: (A) Page: 615

89. Local autonomy should always be granted to distributors because they know the market better than the MNC.

Difficulty: (2) Knowledge: (A) Page: 619

90. Push strategies are more likely to be successful in emerging markets than pull strategies.

Difficulty: (2) Knowledge: (A) Page: 619

91. Billboards can be effective in reaching both rich and poor consumers in emerging markets.

Difficulty: (2) Knowledge: (A) Page: 619

Essay

92. Describe the characteristics that define emerging markets.

93. Despite coming from humble origins and lacking much of the resources of the major global firms, many companies from emerging markets are serious challengers in world markets. What strategies do they employ to enable them to succeed?

94. What are the strategic options for emerging market firms in global marketing? Under what conditions would each be suggested?

95. There are some commonly held beliefs about marketing mix strategy that have been proven to be less than optimal. Identify some of these.

96. Describe the communication challenges faced when entering emerging markets.

Chapter 19

Multiple Choice

1. According to the text, the Web clearly provides a unique _______________ and
______________ channel to marketers across the globe.

a. distribution, higher education
b. distribution, production
c. distribution, network
d. distribution, communication
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 626

2. According to this textbook, compared to the U.S., Europe as a future Internet
market will be:
a. better, because virtual retailers have a competitive advantage over traditional
stores.
b. worse because there are so many languages.
c. better because delivery is faster.
d. worse because Europe has less well developed Internet infrastructure.
e. both A and C

Difficulty: (2) Knowledge: (A) Page: 626

3. Although the Internet has become a global phenomenon, it first originated in (the):

a. Italy.
b. Japan.
c. U.S.A.
d. Belgium.
e. Singapore.

Difficulty: (1) Knowledge: (F) Page: 627

4. In 2005, the worldwide Internet population surpassed 1 billion.

a. 1 billion
b. 2 billion
c. 3 billion
d. 4 billion
e. 5 billion

Difficulty: (2) Knowledge: (F) Page: 627

5. The country with the most Internet users is:
a. United States
b. Japan
c. India
d. China
e. none of the above

Difficulty: (2) Knowledge: (F) Page: 627, Exhibit 19-1

6. The country with the highest penetration rate of Internet users is:
a. United States
b. Japan
c. South Korea
d. United Kingdom
e. Canada

Difficulty: (2) Knowledge: (F) Page: 627, Exhibit 19-1

7. The majority of the Internet users now live outside of ________________ speaking
countries.

a. English
b. French
c. Arabic
d. German
e. Spanish

Difficulty: (1) Knowledge: (F) Page: 628

8. Which of the following is NOT a barrier to Internet marketing?

a. language
b. culture
c. infrastructure
d. access charges
e. none of the above

Difficulty: (2) Knowledge: (F) Page: 627

9. The barriers to global e-commerce are:

a. language barriers.
b. cultural barriers.
c. infrastructure.
d. all of the above.
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 627

10. The structural barriers to global e-commerce include the following EXCEPT:
a. language barriers.
b. cultural barriers.
c. infrastructure.
d. knowledge barriers.
e. roaming charges.

Difficulty: (1) Knowledge: (A) Page: 630-31

11. Which of these languages is NOT in the top three on Internet sites?

a. Hindu
b. Chinese
c. Spanish
d. German
e. Both a and d

Difficulty: (2) Knowledge: (F) Page: 628

12. Using only English on a website:

a. is doomed to fail.
b. is ethnocentric.
c. works in some industries like aerospace.
d. limits your market.
e. both c and d

Difficulty: (3) Knowledge: (A) Page: 628

13. In global e-commerce, Web site localization services have created the need for more:

a. translators.
b. copy writers.
c. media specialists.
d. network specialists.
e. knowledge experts.

Difficulty: (2) Knowledge: (A) Page: 628

14. Companies that wish to make their Web sites international by translating the
information and content into other languages have two alternatives that may include:

a. hire a firm or a person doing the translation.
b. use a software having the translation function.
c. use only English.
d. both a and b
e. both b and c

Difficulty: (2) Knowledge: (A) Page: 628

15. Which of these would NOT be a barrier to Internet marketing?

a. preference for face-to-face business transactions
b. lack of familiarity with credit cards
c. strict Internet security measures
d. website wording, logos, and colors
e. patriotism

Difficulty: (2) Knowledge: (F) Pages: 628-9

16. In the Asia-Pacific region, B2B e-commerce activities are facing obstacles which
could hinder the growth of the Internet. These obstacles include:

a. doing business on a face-to-face basis.
b. cultivating relationships and secrecy issues.
c. reluctance to share information.
d. all of the above are obstacles.
e. none of the above are obstacles.

Difficulty: (1) Knowledge: (A) Pages: 628-9

17. In many countries, businesspeople prefer to do business on a________________.

a. virtual basis.
b. simple basis.
c. complex basis.
d. face-to-face basis.
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 628

18. E-readiness for Brazil, India, Russia and China is:

a. unknown—they won’t answer the surveys.
b. excellent—their relative backwardness lets them jump ahead with the latest
technology.
c. middle of the pack because their economies are growing rapidly.
d. very low.
e. none of the above

Difficulty: (2) Knowledge: (F) Page: 631

19. ISP is an acronym for:

a. Internet strategies provider.
b. Internet standards provider.
c. Internet service provider.
d. Internet system provider.
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 629

20. In many European markets, consumers are reluctant to surf the Web because of:

a. high telecommunication charges.
b. low per capita income.
c. government rules and regulations.
d. distribution costs.
e. limited training and education.

Difficulty: (2)Knowledge: (F) Page: 632

21. In many countries, the cost of going online can be reduced by:

a. government deregulations.
b. increased competition.
c. new access alternatives.
d. all of the above.
e. none of the above.

Difficulty: (2) Knowledge: (A) Page: 632

22. In Japan, access to the web was previously dominated by ______________________, the Japanese telecom firm, which charges sky-high fees.

a. British Telecom.
b. Toyota.
c. Nippon Telephone & Telegraph (NTT).
d. Seven-Eleven Japan.
e. AT&T.

Difficulty: (1) Knowledge: (A) Page: 632

23. In the Internet world, there are many unsolved issues. For example, e-commerce is global but the national laws are mostly ________________.

a. local
b. regional
c. political
d. religious
e. secular

Difficulty: (1) Knowledge: (A) Page: 632

24. At the global level, a new nongovernmental body has been established to resolve domain disputes. The name of this body is:

a. Internet Corporation for Domain Names (ICDN).
b. Internet Corporation for Assigned Names (ICAN).
c. Internet Corporation for Assigned Names and Numbers (ICANN).
d. Internet Corporation for Networks (ICN).
e. Internet Corporation for Domain Disputes (ICDD).

Difficulty: (3) Knowledge: (F) Page: 633

25. In the area of global marketing, the Internet offers two major benefits to companies that may be interested in selling their products worldwide. The two benefits include:

a. cost/efficiency savings and accessibility (connectivity).
b. cost/efficiency savings and brand image.
c. cost/efficiency savings and product standardization.
d. cost/efficiency savings and high quality intelligence.
e. cost/efficiency savings and product image.

Difficulty: (3) Knowledge: (A) Page: 633

26. According to the text, regarding the profile of Internet buyers, differences across countries are mainly due to two factors which are:

a. access charges and availability of computer programmers.
b. access charges and availability of outsourcing.
c. access charges and availability of entertainment options.
d. access charges and availability of CNN.
e. access charges and availability of AOL.
.
Difficulty: (3) Knowledge: (A) Page: 634

27. At the core of any global Web marketing strategy is the conflict between local responsiveness and _______________________.

a. local integration
b. regional integration
c. transnational integration
d. polycentric integration
e. global integration
.
Difficulty: (3) Knowledge: (A) Page: 637

28. In the product policy area, the Internet can help build:

a. regional brands.
b. food brands only.
c. global brands.
d. high-tech brands.
e. tangible brands.
.
Difficulty: (2) Knowledge: (A) Page: 641

29. Marketing of services differs from tangible goods in four areas:

a. intangibility, simultaneity, heterogeneity, and perishability.
b. intangibility, simultaneity, heterogeneity, and collectivity.
c. intangibility, simultaneity, heterogeneity, and connectivity.
d. intangibility, simultaneity, heterogeneity, and believability.
e. intangibility, simultaneity, heterogeneity, and credibility.

Difficulty: (2) Knowledge: (A) Page: 643

30. India Yahoo! is different from normal portals because is has:

a. no online auctions.
b. astrology.
c. no online shopping.
d. real estate.
e. cricket.

Difficulty: (2) Knowledge: (F) Page: 642

31. In some countries, customers might resent having the human element removed from
the service encounter because of:

a. cultural factors.
b. national factors.
c. technology factors.
d. consumption factors.
e. international factors.

Difficulty: (2) Knowledge: (A) Page: 644

32. In international marketing, a Web site gives service marketers the ability to offer _________ hour service to customers worldwide.

a. 10
b. 15
c. 20
d. 22
e. 24

Difficulty: (1) Knowledge: (F) Page: 644

33. Because of the Internet, many MNCs’ pricing decisions are less _____________.

a. national
b. flexible
c. creative
d. rigid
e. vertical

Difficulty: (3) Knowledge: (A) Page: 644

34. In the area of pricing, the Internet facilitates:

a. work transparency.
b. price transparency.
c. profit transparency.
d. channel transparency.
e. none of the above is true.

Difficulty: (2) Knowledge: (A) Page: 644

35. For global marketers, the Web could affect the firm’s high margins because of:

a. profit transparency.
b. channel transparency.
c. price transparency.
d. channel captaincy.
e. knowledge transparency.

Difficulty: (2) Knowledge: (A) Page: 644

36. In Internet marketing, consumers often are aware of low prices because of the availability of brand and pricing information. This is a result of:

a. profit transparency.
b. knowledge transparency.
c. labor transparency.
d. profit transparency.
e. price transparency.

Difficulty: (2) Knowledge: (A) Page: 644

37. To deal with price transparency issues in Internet marketing, companies can use methods such as:

a. cutting prices in high-price countries.
b. localizing the products.
c. refusal to handle orders from overseas.
d. All of the above methods can be used.
e. None of the above methods are used.

Difficulty: (3) Knowledge: (A) Page: 645

38. In many industries, connectivity means that existing channels/distributors can be bypassed by connecting:

a. buyers and suppliers.
b. buyers and governments.
c. buyers and software companies.
d. buyers and advertisers.
e. buyers and media companies.

Difficulty: (1) Knowledge: (A) Page: 645

39. Manufacturers who plan to add the Internet to their existing international channels should be aware of two possibilities:

a. replacement effect and international effect.
b. replacement effect and complementary effect.
c. complementary effect and managerial effect.
d. complementary effect and adaptation effect.
e. replacement effect and quality effect.

Difficulty: (1) Knowledge: (A) Page: 645

40. In international distribution, replacement effect can:

a. cannibalize existing distribution channels.
b. delete existing distribution channels.
c. replace existing distribution channels.
d. downsize existing distribution channels.
e. add more distribution channels

Difficulty: (2) Knowledge: (A) Page: 645

41. In international distribution, complementary effect can:

a. expand the overall business.
b. cannibalize existing distribution channels.
c. materialize the overall business.
d. downsize existing distribution channels.
e. none of the above.

Difficulty: (2) Knowledge: (A) Pages: 645-6

42. Click-and-mortar retailers are defined as:

a. those large retail chains trying to compete by pursuing no Web site presence.
b. those large retail chains trying to compete by making alliances and joint ventures.
c. those large retail chains trying to compete by going international.
d. those large retail chains trying to compete by hiring Web specialists.
e. those large retail chains trying to compete by setting up a Web site presence.

Difficulty: (2) Knowledge: (A) Page: 647

43. Click-and-mortar chains provide one advantage where:

a. products cannot be returned to the local stores.
b. products can be returned to the local stores.
c. click-and mortar stores have no Web sites.
d. All of the above.
e. None of the above.

Difficulty: (1) Knowledge: (A) Page: 647

44. In international marketing, many well-known brands in pure web retailing (e-trade, Amazon.com) still have limited ________________________ expertise.

a. local
b. international
c. regional
d. economic
e. political

Difficulty: (1) Knowledge: (A) Page: 648

45. Success of an e-tailing model will depend on three factors which include:

a. consumer behavior, cost structure, and networks.
b. consumer behavior, cost structure, and government policies.
c. consumer behavior, cost structure, and logistics.
d. consumer behavior, cost structure, and human resources.
e. consumer behavior, cost structure, and manufacturing.

Difficulty: (2) Knowledge: (A) Page: 648

46. According to Jupiter Research, online advertising spending is expected to grow to around ____________ in the U.S. by 2009.

a. $10 billion
b. $16 billion
c. $20 billion
d. $30 billion
e. $35 billion

Difficulty: (3) Knowledge: (F) Page: 648

47. The Internet offers advantages to international advertisers which include:

a. global reach.
b. interactivity.
c. precise information
d. all of the above.
e. none of the above.

Difficulty: (2) Knowledge: (A) Pages: 648-9

48. In Internet advertising, by clicking on the banner ad, users can be taken to the:

a. internet’s databank.
b. advertiser’s web site.
c. Netscape’s site.
d. Yahoo’s site.
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 649

49. According to the text, the ultimate success of an online campaign depends on the following factors EXCEPT:

a. the nature of the product.
b. the targeting.
c. choice of the site.
d. execution of the ad.
e. hiring an efficient CEO.

Difficulty: (2) Knowledge: (A) Page: 650

50. Although Internet advertising is growing at a very rapid pace, many advertisers are skeptical about its potential as a global promotion tool because of (the):

a. annoyance factor.
b. audience measurement.
c. click-thru rates.
d. high access and/or phone charges
e. all of the above.
.
Difficulty: (1) Knowledge: (A) Page: 650

51. International marketers who plan on using the Web as an advertising tool should familiarize themselves with:

a. advertising regulations and restrictions in foreign markets.
b. search engines.
c. distribution channels.
d. digital networks.
e. digital suppliers.

Difficulty: (2) Knowledge: (A) Page: 650

52. Keyword search advertising allows the company to have a link to its Web site when
people are looking for ________________________ -related information.

a. people
b. market
c. product
d. country
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 649

53. In Internet advertising, microsites are created to promote ____________________
brands.

a. hybrid
b. individual
c. complex
d. global
e. none of the above

Difficulty: (1) Knowledge: (A) Page: 649

54. The ultimate success of an online campaign hinges on four factors which include:

a. nature of the product, the target, choice of site, and color
b. nature of the product, the target, choice of site, and graphics
c. nature of the product, the target, choice of site, and banners
d. nature of the product, the target, choice of site, and execution of the ad
e. none of the above

Difficulty: (3) Knowledge: (A) Page: 650

55. Online campaigns would work for __________________________________.

a. high involvement goods.
b. low involvement goods.
c. vertical involvement goods
d. horizontal involvement goods
e. none o the above

Difficulty: (2) Knowledge: (A) Page: 650

True/False Short Answer

56. Small and medium-size companies (SMEs) are also participating in the area of e-commerce and Internet-related opportunities.

Difficulty: (1) Knowledge: (A) Page: 626

57. Internet usage worldwide is not growing.

Difficulty: (1) Knowledge: (A) Page: 627

58. ISP is an acronym for Internet Standards Provider.

Difficulty: (2) Knowledge: (A) Page: 629

59. Knowledge barrier is not one of the barriers in Internet-related activities.

Difficulty: (1) Knowledge: (A) Page: 628

60. In many European markets, consumers are reluctant to spend time surfing the Web
because of higher telecommunication charges.

Difficulty: (2) Knowledge: (F) Page: 632

61. There are many unsolved issues in the Internet. For example, e-commerce is global
but the national laws are mostly transnational.

Difficulty: (1) Knowledge: (A) Page: 632

62. The Internet has leveled the playing field between large and small firms in global
competition.

63. Asians have the most favorable attitude toward Internet shopping.

64. The Internet is not helping companies to create global brands.

Difficulty: (3) Knowledge: (A) Page: 634

65. Google is the #1 search engine throughout the world.

66. Consumer co-creation involves customers in value creation.

67. Mass customization is not the major plus of the Web.

Difficulty: (1) Knowledge: (A) Page: 644

68. Web sites enable companies to manage perishability.

Difficulty: (1) Knowledge: (A) Page: 644

69. In international marketing, a Web site gives service marketers the ability to offer 24 hour service to customers worldwide.

Difficulty: (1) Knowledge: (F) Page: 644

70. For global marketers, the Web could affect the firm’s high margins because of price transparency.

Difficulty: (2) Knowledge: (A) Page: 644

71. In many industries, connectivity means that existing channels can be bypassed by
connecting buyers and suppliers directly.

Difficulty: (1) Knowledge: (A) Page: 645

72. In international distribution, replacement effect does not cannibalize existing distribution channels.

Difficulty: (2) Knowledge: (A) Page: 645

73. It is estimated that most of the Internet advertising spending will be spent in Japan.

Difficulty: (1) Knowledge: (A) Page: 648

74. Banner advertising is not used in Internet advertising.

Difficulty: (1) Knowledge: (A) Page: 648

75. Keyword search advertising allows the company to have a link to its competitors.

Difficulty: (2) Knowledge: (A) Page: 649

76. Microsites are used to promote a particular brand.

Difficulty: (2) Knowledge: (A) Page: 649

77. Online campaigns would work for high-involvement goods whose buyers engage in
product research and price comparisons.

Difficulty: (3) Knowledge: (A) Page: 650

Essay

78. Describe briefly the history of the Internet. Which nations are becoming prominent among Internet users? How does their growth compare with the Internet readiness shown in Exhibit 19-2?

79. Although global e-commerce is expected to increase, it has encountered obstacles and structural barriers. Discuss these structural barriers.

80. Discuss some of the ramifications of the Internet for global marketing strategies. Also explain some of the challenges faced by international marketers in the areas of global branding and Internet-based new products.

MKT 515 Week 11 Final Exam – Strayer University New

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Chapter 9 Through 19

Chapter 9

Multiple Choice

1. In global market entry, all of the following are entry decisions that must be made by
management before entering an international market EXCEPT:

a. decide on the time of entry.
b. decide on the target product/market.
c. decide on the goals of the target markets.
d. decide on the mode of entry.
e. decide on the target budget.

2. When marketers are making the decision to enter an international market or not, the
first step is generally to:

a. decide on the target budget.
b. decide on the target product/market.
c. decide on the goals of the target markets.
d. decide on the mode of entry.
e. decide on the time of entry.

3. When marketers are making the decision to enter an international market or not, the
final step in the decision process is generally to:

a. decide on a control system to monitor the performance of the entered market.
b. decide on the target product/market.
c. decide on the goals of the target markets.
d. decide on the mode of entry.
e. decide on the time of entry.

4. Which of the following most accurately describes the first step in the market entry
decision process?

a. Decide on the goals of the target markets.
b. Decide on the mode of entry.
c. Decide on the time of entry.
d. Decide on the target product/market.
e. Decide on the marketing mix plan.

5. Which of the following is a step in the market entry decision process?

a. Forecast a corporate budget.
b. Conduct a marketing audit.
c. Decide on a mode of entry.
d. Review transportation strengths.
e. Analyze domestic demand.

6. To identify market opportunities for a given product or service, the international
marketer usually starts off with a large pool of candidate countries. To narrow down
this pool, the company will typically do a(n) _______________________.

a. internal audit.
b. external audit.
c. cross-border budget.
d. preliminary screen.
e. econometric analysis.

7. The goals of a preliminary screen to determine market opportunities are to minimize
mistakes of ignoring countries that offer viable opportunities for the product and:

a. offending local governments.
b. offending local cultures.
c. offending local merchants.
d. violating local advertising laws.
e. not wasting time on countries that offer little or no potential.

8. The four-step procedure that can be employed for the initial screening process
includes all of the following EXCEPT:

a. select indicators and data selection.
b. analyze parallel strengths and weaknesses of the market.
c. determine the importances of country indicators.
d. rate the countries in the pool on each indicator.
e. compute the overall scores for each country.

9. When Colgate-Palmolive sees prospects in countries with purchasing power as a
major driver behind market opportunities and Coca-Cola looks at per capita income
and the number of minutes that it would take someone to work to be able to afford a
Coca-Cola product, they are following which of the following steps of the initial
screening process for market entry?

a. indicator and data selection.
b. analyze parallel strengths and weaknesses of the market.
c. determine the importances of country indicators.
d. rate the countries in the pool on each indicator.
e. compute overall scores for each country.

10. A four-step procedure that can be employed for the initial screening process includes
the following EXCEPT:

a. select indicators and collect data.
b. determine importance of country indicators.
c. hire outside consultants to do a marketing audit.
d. rate the countries in the pool on each indicator.
e. compute overall score for each country.

11. When Coca-Cola looks at per capita income and the number of minutes that it would
take for somebody to work to be able to afford a Coca-Cola product, the company is
following which of the following steps of the initial screening process for
market entry?

a. indicator and data selection.
b. analyze parallel strengths and weaknesses of the market.
c. determine the importances of country indicators.
d. rate the countries in the pool on each indicator.
e. compute overall scores for each country.

12. Wrigley, the U.S. chewing gum manufacturer, has not been interested in most Latin
American markets because many of the local governments imposed ownership
restrictions. This would be an example of ________________ in markets.

a. finding opportunities
b. “weeding out”
c. cross-fertilization
d. demand conflict
e. unfairness

13. One method of assessing whether a company should enter a foreign market or not is
to use an opportunity matrix. To use such a matrix, the marketer should assess high,
moderate, and low opportunities as measured on business and political risk and
___________________ scales or cells.

a. demand
b. financial constraints
c. market opportunities
d. market sensitivity
e. distance from home market

14. All of the following are major external criteria for making a decision as to a mode of
entry into a foreign market EXCEPT:

a. company leadership.
b. market size and growth.
c. need for control.
d. government regulations.
e. local infrastructure.

15. The key determinant in the market entry choice decisions is the:

a. risk.
b. local infrastructure.
c. flexibility.
d. internal resources and assets.
e. market size and growth potential.

16. In the mode of entry, many companies see liaison office as a low-cost
___________________.

a. joint venture
b. export management company
c. listening post
d. contract exporter
e. alliance post

17. The ____________________ of a market refers to the country’s distribution system,
transportation network, and communication system.

a. demographic environment
b. infrastructure
c. logistical
d. physical distribution
e. physical infrastructure

18. Markets can be classified in four types of countries based on their respective market
attractiveness. All of the following are part of the classification scheme EXCEPT:

a. platform countries.
b. emerging countries.
c. low-tech countries.
d. growth countries.
e. maturing and established countries.

19. Markets can be classified in four types of countries based on their respective market
attractiveness. Which of the following of those types can be used to gather
intelligence and establish a network?

a. platform countries.
b. emerging countries.
c. maturing and established countries.
d. growth countries.
e. none of the above.

20. Markets can be classified in four types of countries based on their respective market
attractiveness. Hong Kong and Singapore would fall into which of the types listed
below (where the purpose would be to gather intelligence and establish a network)?

a. platform countries.
b. emerging countries.
c. maturing and established countries.
d. growth countries.
e. none of the above.

21. Markets can be classified in four types of countries based on their respective market
attractiveness. Which of the following of those types can be used to build up an
initial presence (such as through a liaison office)?

a. platform countries.
b. emerging countries.
c. maturing and established countries.
d. growth countries.
e. none of the above

22. Markets can be classified in four types of countries based on their respective market
attractiveness. Vietnam and the Philippines would fall into which of the types listed
below (where the purpose would be to build up an initial presence such as through a
liaison office)?

a. platform countries.
b. emerging countries.
c. maturing and established countries.
d. growth countries.
e. none of the above.

23. Markets can be classified in four types of countries based on their respective market
attractiveness. Which of the following countries would most likely be listed as a
maturing/established market?

a. China.
b. Burma.
c. India.
d. Taiwan.
e. China.

24. Markets can be classified in four types of countries based on their respective market
attractiveness. Which of the following countries would most likely be listed as an
established/maturing market?

a. China.
b. the Philippines.
c. India.
d. Vietnam.
e. Japan.

25. Markets can be classified in four types of countries based on their respective market
attractiveness. Which of the following countries would most likely be listed as
a growth country?

a. Hong Kong.
b. Vietnam.
c. China.
d. Taiwan.
e. Japan.

26. A _________________________ perspective argues that the desirable governance
structure (high- versus low-control mode) will depend on the comparative transaction
costs (the costs of running an operation).

a. demand-delivery
b. just-in-time management
c. management-by-objectives
d. quantity-cost allocation
e. transaction-cost analysis

27. From a transaction-cost analysis perspective, market failure typically happens when
transaction-specific assets become _________________ and therefore more high-
control situations are needed.

a. optional
b. valuable
c. expendable
d. less-valuable
e. weaker

28. Most companies start their international expansion with _________________.

a. exporting
b. joint ventures
c. licensing
d. franchising.
e. contract manufacturing.

29. In the area of exporting, a middleman could be an __________________________.

a. export outsourcing company
b. export management company
c. export production company
d. export specialist company
e. export manufacturing company

30. Companies that plan to engage in exporting have a choice between indirect,
_________________, and direct exporting.

a. licensing
b. parallel
c. cooperative
d. venture
e. summation

31. _______________________ means that the firm uses a middleman based in its home
market to do the exporting.

a. Licensing
b. Contract manufacturing
c. Cooperative exporting
d. Venture exporting
e. Indirect exporting

32. ___________________ offers several advantages. Chief among these
are the firm gets instant foreign market expertise, very little risk is involved, and
no major resource commitments are required.

a. Licensing
b. Parallel exporting
c. Cooperative exporting
d. Direct exporting
e. Indirect exporting

33. ___________________ has disadvantages. Chief among these are that the company
has little or no control over the way their product is marketed in a foreign country,
lack of adequate sales support (among other support variables) can lead to poor sales,
and bad decisions made by an intermediary can damage the corporate image.

a. Licensing
b. Parallel exporting
c. Cooperative exporting
d. Direct exporting
e. Indirect exporting

34. ______________________ means that the firm enters into an agreement
with another firm (local or foreign) where the partner will use its distribution network
to sell the exporter’s goods.

a. Licensing
b. Parallel exporting
c. Cooperative exporting
d. Venture exporting
e. Indirect exporting

35. ______________________ means that the company sets up its own
export organization within the company and relies on a middleman based in a
foreign market (foreign distributor).

a. Licensing
b. Parallel exporting
c. Cooperative exporting
d. Direct exporting
e. Indirect exporting

36. Cooperative exporting is also called:

a. specialist exporting.
b. lean exporting.
c. long-range exporting.
d. backward exporting.
e. piggyback exporting.

37. One of the most popular forms of cooperative exporting is _________________.
With this method, the company uses the overseas distribution network of another
company (local or foreign) for selling its goods in the foreign market.

a. parallel exporting.
b. venture exporting.
c. piggyback exporting.
d. make-or-buy exporting.
e. foreign export management exporting.

38. One of the main advantages of direct exporting over indirect exporting is that the
exporter has more:

a. leverage.
b. risk.
c. control over its operations.
d. budget.
e. leadership.

39. ___________________ is a contractual strategy where the firm offers some
proprietary assets to a foreign company in exchange for royalty fees.

a. Licensing
b. Parallel exporting
c. Cooperative exporting
d. Direct exporting
e. Indirect exporting

40. The Oriental Land Company in Japan owns Tokyo Disneyland. This would be
an example of an international _________________ agreement between the
Oriental Land Company (owner) and Disneyland (receives royalties).

a. licensing
b. parallel exporting
c. cooperative exporting
d. direct exporting
e. indirect exporting

41. Benefits of licensing include:

a. not very demanding on company resources.
b. always protected against copying or technical theft.
c. always a strong partner relationship.
d. low profits, therefore, low taxes.
e. licensee is always enthusiastic.

42. Nurturing a future competitor is the biggest danger in ___________________.

a. licensing
b. parallel exporting
c. cooperative exporting
d. direct exporting
e. indirect exporting

43. One of the most popular entry modes in the international marketplace for service
firms is:

a. licensing.
b. franchising.
c. cooperative exporting.
d. direct exporting.
e. indirect exporting.

44. According to the textbook, in franchising, companies can capitalize on a _______________________________.

a. cheap business formula.
b. expensive business formula.
c. winning business formula.
d. parallel business formula.
e. hybrid business formula.

45. One of the most popular franchise plans used in international marketing is
____________________ where the franchiser gives the franchise to a local
entrepreneur who in turn sells local franchises within a territory.

a. sales franchise
b. master franchise
c. strategic franchise
d. cross-country franchise
e. border-territory franchise

46. In ____________________, the company arranges with a local manufacturer to
manufacture parts of the product or even the entire product. The marketing of the
product, however, is still the responsibility of the international firm.

a. licensing
b. franchising
c. cooperative exporting
d. contract manufacturing
e. indirect exporting

47. ___________________ are(is) the prime motivation behind contract manufacturing.

a. Advertising cooperation
b. Leadership
c. Cost savings
d. Profit expansion
e. Desire to be part of a cartel

48. Like licensing and franchising, nurturing a future competitor is one of the biggest
dangers in ___________________.

a. contract manufacturing.
b. parallel exporting.
c. cooperative exporting.
d. using an export management company.
e. indirect exporting.

49. In contract manufacturing, because of “nurture-a-future competitor” threat, many
companies prefer to make ___________________ or products that involve
proprietary design features in-house.

a. just-in-time items
b. under-value items
c. low-value items
d. high-value items
e. none of the bove

50. With a __________________, the foreign company agrees to share equity and other
resources with other partners to establish a new entity in the target country.

a. contract manufacturing agreement
b. parallel exporting agreement
c. cooperative exporting agreement
d. export management company
e. joint venture

51. A major advantage of joint ventures, as compared to lesser forms of resource
commitment such as licensing, is:

a. the return potential.
b. infrastructure enhancement.
c. expansion of stockholders.
d. division of leadership.
e. an increase in ethical standards.

52. All of the following are considered benefits of forming joint ventures EXCEPT:

a. greater return potential.
b. shared profits instead of shared royalties.
c. more control over operations.
d. increased cost controls.
e. synergies.

53. With respect to joint ventures, the ________________ argument is illustrated by
not only shared capital and risk but possible contributions brought in by the local
partner in land, raw materials, expertise on the local environment, and access to
local distribution networks.

a. demand
b. parallel management
c. consensus management
d. domestication
e. synergy

54. Lack of trust and mutual conflicts can often turn ______________ into partnerships
doomed to failure.

a. contract manufacturing agreements
b. parallel exporting agreements
c. cooperative exporting agreements
d. export management companies
e. joint ventures

55. One of the problems with joint ventures is ________________ between partners. An
example would be when one partner wants to stress reduction of political and
economic controls on decision-making and the other partner wants to accept
technology and capital but precludes foreign authority infringement on sovereignty
and ideology.

a. conflicting purchasing objectives
b. conflicting process objectives
c. control objectives
d. budget objectives
e. staffing objectives

56. There are no magic ingredients to foster the stability of joint ventures, however, all
of the following are good guidelines EXCEPT:

a. pick a partner with which control can be maintained.
b. pick the right partner.
c. establish clear objectives from the beginning.
d. bridge cultural gaps.
e. get top management commitment and respect.

57. _____________________ come about when multinational companies prefer to enter
new markets with 100 percent ownership.

a. Contract manufacturing agreements
b. Parallel exporting agreements
c. Cooperative exporting agreements
d. Wholly owned subsidiaries
e. Joint ventures

58. When a multinational company chooses to invest in foreign markets with wholly
owned subsidiaries, these subsidiaries may be acquisitions or _______________
operations.

a. joint venture
b. strategic alliance
c. greenfield
d. franchise
e. piggyback

59. A _________________ operation (with respect to wholly owned subsidiaries) is one
which is started from scratch.

a. joint venture
b. strategic alliance
c. greenfield
d. franchise
e. piggyback

60. Wholly owned subsidiaries give MNCs _______________ of their operations.

a. almost no control
b. partial control
c. moderate control
d. full control
e. strategic control only

61. Advantages of wholly owned subsidiaries include all of the following EXCEPT:

a. full control.
b. control of profits.
c. own processes.
d. control government relationships.
e. can often be set quicker that other forms of investment.

62. One of the chief disadvantages of a wholly owned subsidiary is that:

a. it is often perceived as a threat to cultural or economic sovereignty.
b. it is often perceived as generating low profits.
c. it is often perceived as having problems in supply lines.
d. it is often perceived as being more expensive
e. it is often perceived as a threat to the local media for promotion.

63. One way to address hostility to foreign acquisitions in the host country is by
______________ the firm’s presence in the foreign market by hiring local managers,
sourcing locally, and developing local brands.

a. regionalizing
b. localizing
c. socializing
d. acculturating
e. emphasizing the self-reference criterion (SRC)

64. Companies that enter via wholly owned subsidiaries are sometimes perceived as a
threat to the culture and/or economic sovereignty of the____________________.

a. host country.
b. home country.
c. buffer country.
d. greenfield country.
e. high-tech country.

65. The chief reason that some firms choose acquisitions (or mergers) to enter a foreign
market is that they can:

a. receive greater tax relief.
b. receive greater profits.
c. reduce debt.
d. increase stock price.
e. enter the market more quickly.

66. When contrasted with greenfield operations, _________________ provide(s) a rapid
means to get access to the local market.

a. licensing
b. exporting
c. contract manufacturing
d. acquisitions
e. joint ventures

67. __________________ are described as a coalition of two or more organizations to
achieve strategically significant goals that are mutually beneficial.

a. Joint ventures
b. Strategic alliances
c. Greenfield operations
d. Franchises
e. Piggyback arrangements

68. The partnership established by Coca-Cola and Nestle to market ready-to-drink coffees
and teas under the Nescafe and Nestea brand names is an example of which of the
following:

a. strategic alliance.
b. contract manufacturing.
c. licensing.
d. wholly owned subsidiary.
e. exporting.

69. All of the following are illustrations of the four generic reasons for forming
strategic alliances EXCEPT:

a. offense.
b. defense.
c. catch-up.
d. remain.
e. restructure.

70. The underlying goal of _________________ in creating a strategic alliance is to
sustain the firm’s leadership position by learning new skills, getting access to new
markets and developing new technologies.

a. offense
b. defense
c. catch-up
d. remain
e. restructure

71. The strategic alliance strategy of ______________ might be enacted when the firm
has an established leadership position but that only plays a peripheral role in the
company’s business portfolio.

a. offense
b. defense
c. catch-up
d. remain
e. restructure

72. When a firm uses a strategic alliance as a vehicle to rejuvenate a business that is
not core and in which it has no leadership position, it is probably using a
________________ strategy.

a. defend
b. catch up
c. restructure
d. remain
e. none of the above

73. Decisions to exit or divest a foreign market may have all the following reasons
EXCEPT:

a. sustained losses.
b. volatility.
c. premature entry.
d. ethical reasons.
e. new market.

74. Risks of exiting a foreign market may lead to all the following EXCEPT:

a. fixed costs of exit.
b. disposition of assets.
c. short-term opportunities.
d. signal to other markets.
e. long-term opportunities.

True/False Short Answer

75. The first step in the process of entering a foreign market is to decide on the
_____________________.

76. Preliminary screening is an accepted method of reducing the number of candidates
for market entry.

77. As an example of a preliminary screening process in assessing international market
opportunities, Colgate-Palmolive uses assessments of whether people bath regularly
or not as a critical factor in deciding whether to enter a market or not.

78. To identify market opportunities for a given product (or service), the international
marketer usually starts off with a large pool of candidate cities.

79. Colgate-Palmolive views per capita purchasing power as a major driver
behind market opportunities.

80. _________________ countries (with respect to market attractiveness) can be used to
gather intelligence and establish a network.

81. An example of a platform country is India.

82. An example of a growth country is China.

83. An example of an emerging country (with respect to market attractiveness) is
the Philippines.

84. Corporate objectives have no influence in choosing entry modes.

85. From the transaction cost analysis, market failure typically happens when
transaction-specific assets become valuable.

86. When going abroad most companies start their international expansion with
_______________.

87. Piggyback exporting is when two different transportation modes (such as truck and
rail) are combined.

88. Under ___________ exporting, a firm sets up its own export department and sells its
products via a middleman located in the foreign market.

89. In a master franchise, the franchiser gives a master franchise to a local entrepreneur,
who will, in turn, sell local franchises within a territory.

90. Contract manufacturing is also known as outsourcing.

91. In a cooperative joint venture, the partners agree to raise capital in proportion to the equity stakes agreed upon.

92. Ownership strategies in foreign markets can take two forms: acquisitions and
____________________.

93. There four generic reasons for forming strategic alliances are defense, catch-up,
remain, and __________________.

94. Strategic alliances between strong and weak partners often work because of the
synergy and learning that can take place between mentor and subordinate.

95. Stable alliances have the commitment and support of the top of the parents’
organizations.

96. Exiting a country often involves substantial fixed cost.

Essay

97. List the steps in the global market entry decision process. Which of the steps is probably the most important in the overall success of the foreign venture? Justify your answer.

98. Explain what is meant by the concept of a liaison office and why some firms prefer to use this technique to enter markets.

99. Briefly, explain the concept of licensing in a foreign market. In addition, cite the benefits and drawbacks of licensing. Be specific in your responses.

100. Briefly explain the concept of joint venture. Additionally, give the benefits and drawbacks of entering into a joint venture.

101. Provide an assessment of strategic alliances. What are they used for, what are the characteristics of those that generally succeed, and what are the general types? Be sure to be specific in your answers.

Chapter 10

Multiple Choice

1. Ikea, the Swedish furniture chain, insists that all its stores carry the basic product
line with little room for adaptation to local tastes. If research of the U.S. market
showed that Americans preferred larger beds than their Swedish counterparts, which
of the following strategies would be advisable to Ikea?

a. standardization.
b. new product development.
c. adaptation.
d. withdraw from market.
e. lower prices to encourage attitude change.

2. In the Australian market, rather than manufacturing disposable diapers, Procter & Gamble decided to import them since the size of the market did not warrant local
manufacturing according to P&G. Unfortunately, by using packaging designed for the Asian region with non-English labeling, P&G alienated its customers in Australia. This is an example of improper:

a. global policy decisions.
b. pricing decisions.
c. brand policy decisions.
d. product policy decisions.
e. company policy decisions.

3. Even though other combination alternatives can be devised, companies generally can
pursue three global product strategies to penetrate foreign markets. These strategies
are to extend the home-grown product/communication strategies, adapt their strategy
to the local marketplace, and:

a. invent new products for foreign customers.
b. concentrate on services.
c. apply for permission to copy domestic products.
d. concentrate on image adjustment.
e. focus on secondary issues (such as warranties).

4. In the area of global product policy, companies can pursue three strategies to penetrate
foreign markets. The strategies include:

a. extension, adaptation, and invention.
b. extension, adaptation, and prevention.
c. extension, adaptation, and creation.
d. extension, adaptation, and placement.
e. extension, adaptation, and balancing.

5. Which of the following is NOT one of the strategic options available to the marketing
planner, considering various product policies that could be devised for the
international marketplace?

a. product and communication extension–dual extension.
b. communication extension–mono extension.
c. product extension–communications adaptation.
d. product adaptation–communications extension.
e. product and communications adaptation–dual adaptation.

6. If a company were to follow a strategy of product and communication extension
(dual extension) in a foreign market, an example of a product category that would
fit this strategy would be _________________________.

a. personal care items
b. motorscooters
c. gasoline
d. clothing
e. hand-powered washing machines

7. If a company were to follow a strategy of product adaptation-communications
extension in a foreign market, an example of a product category that would
fit this strategy would be __________________.

a. soft drinks
b. motorscooters
c. shampoo
d. clothing
e. hand-powered washing machines

8. If a company were to follow a strategy of product extension-communications
adaptation in a foreign market, an example of a product category that would
fit this strategy would be __________________.

a. soft drinks
b. gum
c. shampoo
d. clothing
e. hand-powered washing machines

9. If a company were to follow a strategy of product and communications
adaptation (dual adaptation) in a foreign market, an example of a product category that
would fit this strategy would be __________________.

a. soft drinks
b. motorscooters
c. gasoline
d. diet aids
e. hand-powered washing machines

10. If a company is an early entrant in the global arena and possesses little
in the way of resources, they will probably chose _____________________ as a
method of entry.

a. product and communication extension–dual extension
b. product invention
c. product extension–communications adaptation
d. product adaptation–communications extension
e. product and communications adaptation–dual adaptation

11. As a strategy, ____________________ will work when the company targets a
“global” segment with similar needs.

a. product and communication extension–dual extension
b. product invention
c. product extension–communications adaptation
d. product adaptation–communications extension
e. product and communications adaptation–dual adaptation

12. The biggest advantage of a product and communication extension–dual extension
policy is:

a. it is easy for management to understand.
b. it offers substantial savings because of economies of scale.
c. it passes most legal tests.
d. it is service oriented.
e. it will usually not violate cultural taboos.

13. Due to differences in the cultural or competitive environment, a company may choose
the _______________________ strategy if it wishes to keep its product economies
scale intact but customize its communications.

a. product and communication extension–dual extension
b. product invention
c. product extension–communications adaptation
d. product adaptation–communications extension
e. product and communications adaptation–dual adaptation

14. When the Wrigley chewing gum company markets its basic products abroad, it keeps
its well-known brands but customizes promotional approaches in individual
countries. Which of the following strategies best describes the strategy that
Wrigley is following?

a. product and communication extension–dual extension
b. product invention
c. product extension–communications adaptation
d. product adaptation–communications extension
e. product and communications adaptation–dual adaptation

15. Many companies add brands to their portfolio via acquisitions of local companies.
When the local brand is retained but incorporated into the existing communications
strategy, the strategy can be described as being one of:

a. product and communication extension–dual extension.
b. product invention.
c. product extension–communications adaptation.
d. product adaptation–communications extension.
e. product and communications adaptation–dual adaptation.

16. Differences in both the cultural and physical environment across countries call for a
_________________________ strategy.

a. product and communication extension–dual extension
b. product invention
c. product extension–communications adaptation
d. product adaptation–communications extension
e. product and communications adaptation–dual adaptation

17. Because of differences in preferences in flavors and government regulations
regarding the marketing of diet products, Slim-Fast normally uses which of the
following strategies?

a. product and communication extension–dual extension
b. product invention
c. product extension–communications adaptation
d. product adaptation–communications extension
e. product and communications adaptation–dual adaptation

18. Genuinely global marketers try to figure out how to create products with a global
scope rather than just for a single country. The mindset is to zero in on global
opportunities. The strategy that best describes this approach is called:

a. product and communication extension–dual extension.
b. product invention.
c. product extension–communications adaptation.
d. product adaptation–communications extension.
e. product and communications adaptation–dual adaptation.

19. Black & Decker is a good example of a company that adopts the _______________
approach to global expansion. The company aims to bring out new products that
cater to common needs and opportunities around the world.

a. product and communication extension–dual extension
b. product invention
c. product extension–communications adaptation
d. product adaptation–communications extension
e. product and communications adaptation–dual adaptation

20. __________________ means offering a uniform product on a regional or
worldwide basis (only minor alterations are made to meet local standards).

a. Customization
b. Standardization
c. Miniaturization
d. Assimilation
e. Marginalization

21. The primary advantage to using a standardization approach to marketing a product
in the international arena is:

a. minimization of costs (which can be passed on to customers).
b. more profit.
c. less service complaints.
d. less product returns.
e. standard budgets.

22. Standardization of product has a __________________ orientation (lower costs via
mass production).

a. market-driven
b. service-driven
c. budget-driven
d. promotion-driven
e. product-driven

23. ____________________ is leveraging cross-border differences in needs and wants
of the firm’s target customers.

a. Customization
b. Standardization
c. Proliferation
d. Expansion
e. Synthesizing

24. Customization of product has a ______________________ orientation (increase
customer satisfaction by adapting products to the local needs).

a. market-driven
b. service-driven
c. budget-driven
d. promotion-driven
e. product-driven

25. All of the following are factors that favor a globalized product strategy EXCEPT:

a. common customer needs.
b. global customers.
c. scale economies.
d. time-to-market.
e. rising strength of the Latin American markets.

26. Many product categories show a gradual but steady ____________________
in consumer preferences.

a. slowdown.
b. difficulties
c. convergence.
d. divergence.
e. rising strength of the Latin American markets.

27. During the last decade, car buyers in the Triad markets (Japan, the United States, and
Europe) have increasingly begun to have the same outlook and preferences in cars.
Which of the following factors that favor globalization of product, would most
accurately be associated with this trend?

a. common customer needs.
b. global customers.
c. scale economies.
d. time-to-market.
e. Europe 1992 and other Regional Market Agreements.

28. _____________________ means shortening the time to bring new product projects to
the market.

a. Delivery-to-market
b. Orientation-to-market
c. Time-to-market
d. Extension-to-market
e. Perfection-to-market

29. One attempt to combine the strengths of standardization and customization of
products is to deal with both issues as functions of product design. The
_______________ approach consists of developing a range of product parts that
can be used worldwide. The parts can be assembled into numerous product
configurations.

a. core-product
b. uniform commercial code
c. die-casting
d. modular
e. Nexus

30. In a ______________________, scale economies flow from the mass production of
more-or-less standard product components at a few manufacturing sites.

a. convergence approach
b. divergence
c. linear approach
d. forecasting approach
e. modular approach

31. One attempt to combine the strengths of standardization and customization of
products is to deal with both issues as functions of product design. The
_______________ approach consists of developing a mostly uniform core-
product/platform and then adding attachments that match local market needs.

a. core-product
b. uniform commercial code
c. die-casting
d. modular
e. PRIZM

32. With respect to product design strategies, the ___________________ approach is
very popular with the French carmaker Renault. They use common core-products
but customize them in each market (such as making stronger heaters for the Nordic
market).

a. core-product
b. uniform commercial code
c. die-casting
d. modular
e. PRIZM

33. One of the disadvantages that a global marketer may have is ___________________.
This would occur when too much standardization stifles initiative and experimentation
at the local level.

a. overcustomization
b. micro-managing
c. technocracy
d. group think
e. overstandardization

34. One of the pitfalls that a global marketer can run into is _____________. This
would occur when too much adaptation to the local market occurs and the brand
becomes vulnerable to losing its unique foreigness.

a. overcustomization
b. micro-managing
c. technocracy
d. group think
e. overstandardization

35. Adoption rates of new products are affected by:
a. population homogeneity
b. proportion of women in the labor force
c. cosmopolitanism
d. mobility
e. all of the above

36. In general, the rate of adoption of new products (in foreign markets) is driven by
individual differences, personal influences, and:

a. fashion.
b. trends.
c. cash on hand.
d. product characteristics.
e. promotion characteristics.

37. In general, the adoption of new products is driven by factors such as:

a. individual differences.
b. personal influences.
c. product characteristics.
d. all of the above.
e. none of the above.

38. ___________________ are always eager to experiment with new ideas and products.

a. Early adopters.
b. Early majority.
c. Late majority.
d. Laggards.
e. Prior adopters.

39. Which of the following would NOT be one of the five key product characteristics
that contribute to its acceptance?

a. low service maintenance.
b. relative advantage.
c. compatibility.
d. complexity.
e. trialability.

40. To what extent does the new product offer more perceived value to potential adopters
than exiting alternatives, would be a question that best fits with which of the following
key product characteristics acceptance categories?

a. observability.
b. relative advantage.
c. compatibility.
d. complexity.
e. trialability.

41. Is the product consistent with exiting values and attitudes of the individuals in the
social system, would be a question that best fits with which of the following
key product characteristics acceptance categories?

a. observability.
b. relative advantage.
c. compatibility.
d. complexity.
e. trialability.

42. Is the product easy to understand or use, would be a question that best fits with which
of the following key product characteristics acceptance categories?

a. observability.
b. relative advantage.
c. compatibility.
d. complexity.
e. trialability.

43. The adoption rate for new products in countries with a ________________
population is usually faster than in countries with a highly diverse culture.

a. heterogeneous
b. complex
c. diverse
d. homogeneous
e. polycentric

44. The adoption rate for a new product in countries with a homogeneous population
is usually faster than in countries with a highly diverse culture. Which of the
following countries would probably have the fastest adoption based on the
information provided above?

a. Ireland.
b. United States.
c. Japan.
d. United Kingdom.
e. France.

45. With respect to adoption rates in the international marketplace, it appears to be
generally true that adoption rates are higher in ______________ countries than in
____________ countries.

a. lead/lag
b. lag/lead
c. lead/middle adopters
d. lag/middle adopters
e. lead/opinion-lead

46. A _________________ country is where a product is first introduced.

a. lag
b. low-profile
c. lead
d. high-profile
e. fast

47. A _________________ country is where a product is entered after initial introduction
has taken place.

a. lag
b. low-profile
c. lead
d. high-profile
e. fast

48. _______________________ are people who look beyond their immediate social
surroundings and are not local in their opinions.

a. Domestics
b. Introverts
c. Negotiators
d. Cosmopolitans
e. Regionalists

49. All of the following are factors that affect product penetration in the European market
(according to a recent survey), EXCEPT:

a. cosmopolitanism.
b. number of locals in the market.
c. mobility.
d. percentage of children in the labor force.
e. percentage of women in the labor force.

50. A recent study examined the difference of six products in 31 developing and
developed countries across the world. A key finding was that ___________________
tend to experience a far slower adoption rate than developed countries.

a. European countries
b. global countries
c. advanced countries
d. developed countries
e. emerging market countries

51. All of the following are steps in the new product development process EXCEPT:

a. identification of new product ideas.
b. budget development.
c. screening.
d. concept testing.
e. test marketing.

52. Which of the following are among the best sources for finding new product ideas?

a. company, customers, competition, and collaborators.
b. trade magazines, television, and the internet.
c. government statistics, demographic charts, and psychological profiles.
d. reverse engineering, industrial spying, and out-of-date patents.
e. rumors, stories, and intuition.

53. Once new product ideas have been identified, the next logical step is to have
the ideas _______________.

a. modeled
b. budgeted
c. screened
d. concept tested
e. test marketed

54. ______________ is part of a formal scoring model in screening new products.

a. New Prod
b. ExProd
c. YProd
d. ZProd
e. none of the above

55. Conjoint analysis is also referred to as _____________________.

a. geometric analysis
b. trade-off analysis
c. meta analysis
d. longitudinal analysis
e. metric analysis

56. A sophisticated method (sometimes called trade-off analysis) for measuring
consumer preferences for product concepts is called:

a. chi-square.
b. correlation analysis.
c. focus groups.
d. regression analysis.
e. conjoint analysis.

57. The starting premise of _______________ is that people make trade-offs between
the different product attributes when they evaluate alternatives (or brands) from
which they pick a choice.

a. chi-square
b. correlation analysis
c. focus groups
d. regression analysis
e. conjoint analysis

58. If a consumer considered four attributes to be important in the purchase of a TV, by
using ________________ the researcher might be able to determine the trade-offs
between the different product attributes (such as purchase price or number of channels
that could be received) when the consumer evaluated the alternatives for eventual
purchase.

a. chi-square
b. correlation analysis
c. focus groups
d. regression analysis
e. conjoint analysis

59. A(n) ________________ is essentially a field experiment where the new product is
marketed in a select set of cities to assess its sales potential and scores of other
performance measures.

a. attitude screen
b. product model
c. product concept
d. test market
e. focus concept

60. Testing objectives, testing marketing mixes, making projections of sales volume,
and analyzing potential competitive marketing mixes are all reasons to conduct:

a. attitude screens.
b. product models.
c. product concepts.
d. test markets.
e. focus concepts.

61. One alternative to the test market is the _____________________.

a. thought panel
b. laboratory test market
c. internet exposure technique
d. preferred patron experiment
e. use of break-even analysis

62. If prospective customers are contacted and shown commercials for the new
product and existing brands (then asked to state attitudes and preferences of what
they have seen), then the marketing research entity will probably have conducted
a(n) __________________ instead of a full test market.

a. thought panel
b. laboratory test market
c. internet exposure technique
d. preferred patron experiment
e. break-even analysis

63. A common technique to avoid a global test market is to make global sales projections
based on product performance in a ________________ market.

a. lag
b. middle adopter
c. lead
d. opinionated
e. innovative

64. Timing is a very important element in any new product launch. One of the strategies
is described as being the ________________ where there is a phased rollout. In this
approach the product uses a trickle down approach.

a. sprinkler method
b. shotgun method
c. rifle method
d. dribble method
e. waterfall method

65. Timing is a very important element in any new product launch. One of the strategies
is described as being the ________________. This method often involves introducing
the new product in the company’s home market and then moving to other advanced
markets. Finally, less advanced markets are exposed to the product.

a. sprinkler method
b. shotgun method
c. rifle method
d. dribble method
e. waterfall method

66. The prime motive for the waterfall model (in introducing new products on a global
scale) is that the customization of the product for the foreign market is:
a. impractical.
b. very expensive.
c. time consuming.
d. promotionally limited.
e. not supported by top management.

67. Timing is a very important element in any new product launch. One of the strategies
is described as being the ________________ where there is a simultaneous
introduction of products in other markets of the world.

a. sprinkler method
b. shotgun method
c. rifle method
d. dribble method
e. waterfall method

68. A phased rollout is less demanding on the company resources whereas
____________________ are not always acceptable.

a. sprinkler rollouts
b. shotgun rollouts
c. staggered rollouts
d. dribble rollouts
e. waterfall rollouts

69. The chief reason for a company choosing the sprinkler method of new product
introduction is to off-set:

a. rising costs.
b. unstable labor.
c. competitive preemption.
d. government control.
e. shoddy promotions.

70. The waterfall strategy of sequential entry is preferable over the sprinkler model
when all of the following conditions exist EXCEPT:

a. the lifecycle of the product is relatively long.
b. high costs of entry are present.
c. very weak local competitors.
d. anticipation of fast growth.
e. no real competitors.

71. The waterfall strategy of sequential entry is preferable over the sprinkler model
when:

a. the lifecycle of the product is relatively short.
b. there are low costs of entry into the market.
c. there are many competitors.
d. there are weak local competitors.
e. fast growth is anticipated.

72. The sprinkler strategy of one to two entries (globally) is preferable over the
waterfall model when all of the following conditions exist EXCEPT:

a. the lifecycle of the product is relatively short.
b. there are low costs of entry into the market.
c. there are many competitors.
d. very weak local competitors.
e. anticipation of fast growth.

73. The sprinkler strategy of one to two entries (globally) is preferable over the
waterfall model when:

a. the lifecycle of the product is relatively long.
b. high costs of entry are present.
c. very weak local competitors exist.
d. fast growth is anticipated.
e. no real competitors exist.

74. Truly global innovators are called:

a. metanational innovators.
b. delta innovators.
c. beta innovators.
d. gamma innovators.
e. none of the above.

75. To harvest the benefits of metanational innovators, a company must pursue three
things:

a. Prospecting, assessing, and mobilizing.
b. Prospecting, assessing, and delivering.
c. Prospecting, assessing, and running.
d. Prospecting, assessing, and planning.
e. none of the above.

True/False Short Answer

76. Companies can pursue three global strategies to penetrate foreign markets. The
strategies are: extension, adaptation, and___________________.

77. Early market entrants often choose dual extension (product and communication
extension) as a strategy to enter markets with new products.

78. The biggest savings to the company when following a strategy of dual extension
is in economies of scale.

79. Because of their universally known products, the Wrigley chewing gum company can
use product adaptation-communications extension strategies effectively.

80. Local market circumstances do not favor the case of product adaptation.

81. Many companies add brands to their product portfolio via acquisitions of local brands.

82. Differences in both the cultural and physical environment across countries call for
a ________________________ strategy.

83. _________________ means offering a uniform product on a regional or worldwide
basis.

84. The goal of standardization is to minimize competition.

85. ____________________ leverages cross-border differences in needs and wants of
the firm’s target customers.

86. Five forces favor a globalized product strategy. These include: common customer
needs, global customers, scale economies, time to market, and__________________.

87. Overstandardization is a risk of the core-product approach to introducing new
products in the world market.

88. In general, the adoption of new products is driven by individual differences, personal
influences, and product characteristics.

89. With respect to categories of consumers that adopt new products, the __________
category is eager to experiment with new ideas or products.

90. The lead country is where the product is introduced first.

91. In marketing, new product ideas do not come from the company, customers,
competition, and collaborators.

92. In these days, many MNCs create organizational structures to foster global product
development.

93. Conjoint analysis is also called tradeoff analysis.

94. In the area of a global product launch strategy, two strategic options available are:
waterfall strategy and _________________________.

95. The waterfall model is also called staggered roll-out.

96. A truly global innovators are called metanational innovators.

Essay

97. List the strategic options available to the firm considering global expansion in the product area. Detail the conditions that make the strategic option favorable. Be sure to detail your answer.

98. List the forces that now favor a globalized product design strategy.

99. There are strategic options that allow firms to modify their product while keeping most of the benefits of following a uniform product policy. Explain the differences between the modular and core-product approaches.

100. Test marketing is considered a critical step in new product development in most Western countries. Comment on test marketing. Also, outline some of the shortcomings of test marketing?

101. In marketing, timing is crucial. In new product development it might be even more crucial given the risk of the venture. Explain the waterfall and sprinkler approaches to introducing a new product to the market. When is the waterfall method preferred over the sprinkler method? Be sure to be specific as to your comments on these two strategic options.

Chapter 11

Multiple Choice

1. The German company Henkel is always customizing its brand portfolio, positioning, and product formulations. The two main challenges that the company faces are:

a. global brand and beta line management.
b. global brand and quality line management.
c. global brand and modular line management.
d. global brand and hybrid line management.
e. global brand and product line management.

Difficulty: (3) Knowledge: (A) Page: 361

2. A ____________ is a name, term, sign, symbol, or combination of them which is
intended to identify the goods and services of one seller or group of sellers and to
differentiate them from those of competitors.

a. trademark
b. patent
c. signature
d. figure
e. brand

Difficulty: (1) Knowledge: (F) Page: 362

3. Linked to the brand name is a collection of assets and liabilities called ____________.

a. the trademark
b. the patent
c. knowledge
d. proprietary investments
e. brand equity

Difficulty: (2) Knowledge: (F) Page: 362

4. Brand-name awareness, perceived quality, and other associations invoked by the
brand name in the customer’s mind are all illustrations of the concept called
_______________.

a. brand color
b. brand equity
c. brand warranty
d. local brand value
e. brand mark

Difficulty: (3) Knowledge: (F) Page: 362

5. “How do we strike a balance between a global brand that shuns cultural barriers and
one that allows for local requirements” is an illustration of a question that needs to be
asked when building up and managing _________________ in a multinational setting.

a. proprietary investments
b. brand equity
c. brand warranty
d. local brand name
e. brand mark

Difficulty: (3) Knowledge: (A) Page: 362

6. All of the following are questions that must be asked when building up and managing
brand equity in a multinational setting EXCEPT:

a. How do we strike a balance between a global brand that shuns cultural barriers and
one that allows for local requirements?
b. What aspects of service are too expensive to be included in the brand warranty?
c. What aspects of brand policy can be adapted to global use?
d. Which brands are destined to become “global” mega-brands?
e. How do you execute the changeover from a local to a global brand?

Difficulty: (3) Knowledge: (F) Page: 362

7. A key strategic issue that appears on international marketers’ agendas is whether there should be a ________________________.

a. national brand
b. country brand
c. regional brand
d. local brand
e. global brand

Difficulty: (1) Knowledge: (F) Page: 362

8. A truly ________________ is one that has a consistent identity with consumers across
the world.

a. private brand
b. public brand
c. global brand
d. local brand
e. government brand

Difficulty: (2) Knowledge: (A) Page: 362

9. The most obvious reason for having a global brand would be to take advantage of:

a. power promotions.
b. a large labor and selling force.
c. economies of scale.
d. coordinated logistics.
e. corporate vision.

Difficulty: (1) Knowledge: (F) Page: 363

10. In 2008, which of the following brands was ranked the number one brand in the
world?

a. Disney
b. Coca-Cola
c. GE
d. Nokia
e. IBM

Difficulty: (2) Knowledge: (A) Page: 363, Exhibit 11-1

11. In 2008, which of the following auto brands was ranked number one in the global
auto industry?

a. BMW
b. Mercedes
c. GM
d. Ford
e. Toyota

Difficulty: (1) Knowledge: (A) Page: 363, Exhibit 11-1

12. In 2008, which of the following brands was ranked number one in the world among
the high-tech companies?

a. Microsoft.
b. IBM.
c. Intel.
d. Hewlett Packard.
e. Dell.

Difficulty: (1) Knowledge: (A) Page: 363, Exhibit 11-1
13. Marlboro quickly became the leading cigarette brand in Hong Kong when it
positioned itself as being the leading brand in the United States. This strategy is
attributed to Marlboro as being a:

a. global brand.
b. geo brand.
c. regional brand.
d. country brand.
e. local brand.

Difficulty: (1) Knowledge: (A) Page: 364

14. A desire to reflect its American roots motivated Disney to change the name for its
Paris themepark from Euro Disney to __________________.

a. Disneyland Village
b. Disneyland Park
c. Disneyland Paris
d. Disneyland Europe
e. Disneyland France

Difficulty: (2) Knowledge: (F) Page: 364

15. Brand equity for global brands varies greatly from country to country. All of the
following factors contribute to the variation EXCEPT:

a. competitive climate.
b. marketing support.
c. cultural receptivity to brands.
d. literacy.
e. product category penetration.

Difficulty: (2) Knowledge: (F) Pages: 365-66

16. Brand equity for global brands varies greatly from country to country. All of the
following factors contribute to the variation EXCEPT:

a. history.
b. competitive climate.
c. marketing support.
d. cultural receptivity to brands.
e. brand equity scale.

Difficulty: (3) Knowledge: (F) Pages: 365-66

17. ____________________ often justify(ies) local branding instead of global branding.

a. Domestic barriers
b. Regulatory barriers
c. Cultural barriers
d. Social barriers
e. Religious barriers

Difficulty: (3) Knowledge: (A) Page: 366

18. Mecca Cola is a new soft drink that was launched by a ____________________
entrepreneur to cash in on anti-America sentiments in Europe.

a. Irish
b. English
c. Dutch
d. German
e. French

Difficulty: (3) Knowledge: (F) Page: 367

19. The following four branding strategies are available to markets EXCEPT:

a. solo branding.
b. hallmark branding.
c. family(umbrella) branding.
d. Extension branding.
e. horizontal branding.

Difficulty: (2) Knowledge: (A) Pages: 367-68

20. In international marketing, a firm’s global brand structure is shaped by the following
three types of factors:

a. firm-based drivers, product-market derivers, and the manufacturing dynamics.
b. firm-based drivers, hi-tech derivers, and Web dynamics.
c. firm-based drivers, product-market derivers, and market dynamics.
d. firm-based drivers, product-market derivers, Internet dynamics.
e. none of the above

Difficulty: (3) Knowledge: (F) Page: 368

21. Brand architecture guides the dynamics of the firm’s brand __________________:

a. portfolio.
b. color.
c. basket.
d. Web
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 368

22. According to Nestle’s Branding Tree, the company has four types of brands in its
global operations EXCEPT:

a. plain brands.
b. local brands.
c. regional brands.
d. worldwide strategic brands.
e. worldwide corporate brands.

Difficulty: (3) Knowledge: (A) Page: 370, Exhibit 11-4

23. With respect to a brand name changeover strategy, the _________________ strategy
ties the new global brand name to the existing local brand name. After a transition
period, the old name is dropped.

a. transparent forewarning
b. summary axing
c. fade-in/fade-out
d. pyramid focusing
e. parallel dimension

Difficulty: (1) Knowledge: (F) Page: 371

24. Euro Disney eventually becoming Disneyland is an example:

a. transparent forewarning.
b. summary axing.
c. fade-in/fade-out.
d. pyramid focusing.
e. parallel dimension.

Difficulty: (2) Knowledge: (A) Page: 371

25. With respect to a brand name changeover strategy, the _________________ strategy
alerts customers about the brand name change (via communications such as in-store
displays).

a. transparent forewarning
b. summary axing
c. fade-in/fade-out
d. pyramid focusing
e. parallel dimension

Difficulty: (2) Knowledge: (F) Page: 371

26. When Mars candy company took over Raider candy products and used the theme
line “Now Raider becomes Twix, for it is Twix everywhere in the world,” the
company used the ________________________ strategy for changing brand names.

a. transparent forewarning
b. summary axing
c. fade-in/fade-out
d. pyramid focusing
e. parallel dimension

Difficulty: (3) Knowledge: (A) Page: 372

27. With respect to a brand name changeover strategy, the __________________ strategy
where the company simply drops the old brand name and immediately replaces it
with the global name.
a. transparent forewarning
b. summary axing
c. fade-in/fade-out
d. pyramid focusing
e. parallel dimension

Difficulty: (2) Knowledge: (F) Page: 372

28. Global product line mix options could be:

a. an extension of the home country product line
b. a subset of the home country product line
c. a mix of local and home country
d. localized only
e. all of the above

Difficulty: (2) Knowledge: (F) Page: 374

29. _________________ is a system where a single banner brand is used worldwide,
often with a sub-brand name, for almost the entire product mix of the company.

a. Domestic branding
b. National branding
c. Manufacturer’s branding
d. Store branding or private labeling
e. Umbrella (corporate) branding

Difficulty: (2) Knowledge: (F) Page: 367

30. All of the following are brand areas that might need protection EXCEPT:

a. the name itself.
b. the slogan.
c. the jingle.
d. visual imagery.
e. the size of the logo.

Difficulty: (1) Knowledge: (F) Page: 378

31. McDonald’s golden arches are part of the famous brand. Which of the following
elements best describes that element of the brand that should be protected (according
to the example provided)?

a. the name itself.
b. the slogan.
c. the jingle.
d. visual imagery.
e. the size of the logo.

Difficulty: (1) Knowledge: (A) Page: 378

32. Most companies sell a wide assortment of products. The assortment is usually
described on the dimensions of ______________________ of the product mix.

a. width and scale
b. width and timing
c. width and ingredients
d. width and length
e. scale and length

Difficulty: (1) Knowledge: (F) Page: 374

33. The ______________ of the product assortment refers to the collection of different
product lines marketed by the firm.

a. length
b. width
c. horizontal scale
d. vertical scale
e. consistency

Difficulty: (2) Knowledge: (F) Page: 374

34. The ______________ of the product assortment refers to the number of items that
the company sells within a given product line.

a. length
b. width
c. horizontal scale
d. vertical scale
e. consistency

Difficulty: (2) Knowledge: (F) Page: 374

35. When comparing the product mix in the company’s host and home markets, all of
the following are possible scenarios EXCEPT:

a. an extension of the domestic line.
b. an extension of a joint venture or strategic alliance.
c. a subset of the home market’s product line.
d. a mixture of local and nonlocal product lines.
e. a completely localized product line.

Difficulty: (2) Knowledge: (F) Page: 374

36. Small firms with narrow product assortment will normally choose which of the
following strategies when attempting to enter an international market?

a. an extension of the domestic line.
b. an extension of a joint venture or strategic alliance.
c. a subset of the home market’s product line.
d. a mixture of local and nonlocal product lines.
e. a completely localized product line.

Difficulty: (2) Knowledge: (A) Page: 374

37. Blistex, a tiny U.S. company that makes primarily lip-care products, has a very
limited range of product lines that are marketed to foreign markets. Blistex would
probably choose which of the following strategies for entering foreign markets?

a. an extension of the domestic line.
b. an extension of a joint venture or strategic alliance.
c. a subset of the home market’s product line.
d. a mixture of local and nonlocal product lines.
e. a completely localized product line.

Difficulty: (3) Knowledge: (A) Page: 374

38. All of the following are drivers that impact the composition of a firm’s international
product line EXCEPT:

a. customer service and warranty requirements.
b. customer preferences.
c. competitive climate.
d. organizational structure.
e. history.

Difficulty: (3) Knowledge: (F) Pages: 374-77

39. The __________________ procedure uses a product line as a listening post for the
new foreign market to see what product items work best.

a. drop/add matrix
b. ship and shop approach
c. probing and learning approach
d. seal and deal approach
e. push down approach

Difficulty: (2) Knowledge: (F) Page: 378

40. Product lines can be categorized as:

a. Core product, niche items, seasonal products, and filler products
b. Core product, niche items, seasonal products, and filter products
c. Core product, niche items, seasonal products, and final products
d. Core product, niche items, seasonal products, and flimsy products
e. None of the above

Difficulty: (3) Knowledge: (F) Page: 378

41. A good place to start is to analyze each individual country’s product portfolio on the
basis of a sales turnover basis. Product lines can be categorized by all the following
ways EXCEPT:

a. core products.
b. cultural products.
c. niche items.
d. seasonal products.
e. filler products.

Difficulty: (2) Knowledge: (F) Page: 378

42. With respect to product categories analyzed on the basis of sales turnover, a
_____________ product is one where the item represents the bulk of the subsidiary’s
sales volume.

a. core product
b. cultural product
c. niche item
d. seasonal product
e. filler product

Difficulty: (1) Knowledge: (F) Page: 378

43. With respect to product categories analyzed on the basis of sales turnover, a
_____________ product is one where the product appeals to a small segment of the
population (which might grow in time).

a. core product
b. cultural product
c. niche item
d. seasonal product
e. filler product

Difficulty: (2) Knowledge: (F) Page: 378

44. With respect to product categories analyzed on the basis of sales turnover, a
_____________ product is one where the product has most of its sales during limited
times during the year.

a. core product
b. cultural product
c. niche item
d. seasonal product
e. filler product

Difficulty: (1) Knowledge: (F) Page: 378

45. With respect to product categories analyzed on the basis of sales turnover, a
_____________ product is one where the product is only a small portion of the
subsidiary’s overall sales. These even might be “dead-weight” items.

a. core product
b. cultural product
c. niche item
d. seasonal product
e. filler product

Difficulty: (1) Knowledge: (F) Page: 378

46. Brand piracy might cause which outcomes?

a. revenue losses to the company
b. price increases by the MNC to identify the goods as genuine
c. better diffusion of the brand
d. consumer danger from poor quality fakes
e. both A and D

Difficulty: (2) Knowledge: (F) Pages: 378-79

47. All of the following are strategic options available to international marketers to stop
product piracy EXCEPT:

a. joint ventures.
b. lobbying activities.
c. legal action.
d. product policy options.
e. communication options.

Difficulty: (2) Knowledge: (F) Pages: 380-82

48. Pirated products tend to be of ______________ quality.

a. good
b. poor
c. high
d. special
e. none of the above

Difficulty: (1) Knowledge: (F) Page: 379

49. Trying to obtain sanctions against countries that tolerate product piracy would be an
example of which of the following strategic options available to international
marketers trying to stop product piracy?

a. joint ventures.
b. lobbying activities.
c. legal action.
d. product policy options.
e. communication options.

Difficulty: (2) Knowledge: (A) Page: 380

50. Intellectual property rights violations have been a major problem in China.
Which of the following strategic options could be available to international marketers
in the area of product piracy?

a. customs.
b. lobbying activities.
c. legal action.
d. product policy options.
e. all of the above.

Difficulty: (3) Knowledge: (A) Page: 380

51. LVMH, the owner of wide variety of upscale liquor brands, redesigned its bottles to
make it more difficult for copycatters to reuse LVMH bottles for their own brews.
This would be an example of which of the following strategic options in product
piracy:

a. product policy options.
b. lobbying activities.
c. legal action.
d. hybrid options.
e. communication options.

Difficulty: (2) Knowledge: (A) Page: 381

52. Yamaha decided to combat China’s counterfeiters by launching new motorcycle
models at a similar price as fake products. This would be an example of which of the
following strategic options in product piracy:

a. joint ventures.
b. lobbying activities.
c. legal action.
d. product policy options.
e. communication options.

Difficulty: (2) Knowledge: (A) Page: 381

53. When international marketers warn consumers about the ramifications of accepting or
buying counterfeit merchandise, this would be an example of which of the following
strategic options available to international marketers trying to stop product piracy?

a. joint ventures.
b. lobbying activities.
c. legal action.
d. product policy options.
e. communication options.

Difficulty: (1) Knowledge: (A) Page: 382

54. Holding cultural stereotypes about countries as an important source in assessing the
value of a product is an example of:

a. the country of origin (COO) effect.
b. nationalism.
c. racial bias.
d. social sensitivity.
e. xenophobia.

Difficulty: (3) Knowledge: (A) Page: 383

55. The “Made In” label as an important source of assessing the value of a product is an
example of:

a. regionalism
b. nationalism.
c. materialism
d. social sensitivity.
e. the country of origin (COO) effect.

Difficulty: (1) Knowledge: (A) Page: 383

56. Find the general statement about the country of origin (COO) effect listed below that
is NOT true.

a. COO effects are not flexible.
b. consumers prefer domestic products over imports.
c. the critical factor appears to be the place of manufacture rather than the location of
the company’s headquarters.
d. COO effects do not change very much over time.
e. demographics make a difference.

Difficulty: (2) Knowledge: (F) Pages: 383-84

57. All of the following statements about the country of origin effect (COO) are true
EXCEPT:

a. COO effects are restricted to Europe.
b. Asian consumers prefer domestic products over imports.
c. the critical factor appears to be the place of manufacture rather than the location of
the company’s headquarters.
d. COO effects do not change very much over time.
e. psychographics make a difference.

Difficulty: (2) Knowledge: (F) Pages: 383-84

58. If the country of origin (COO) effect is anticipated to be negative, a company can
follow all of the following strategies to offset the effect EXCEPT:

a. select a brand name that disguises the country of origin.
b. select a local brand name.
c. select a high prestigious price.
d. try to explain any negative government policy that might influence buyers.
e. select a relatively low price.
385-86-48

59. One of the major challenges faced by international marketers of services is:

a. protectionism.
b. high costs.
c. patent infringement.
d. piracy.
e. low profits.

Difficulty: (2) Knowledge: (F) Page: 386

60. The need for direct customer interface in providing services means that service
providers must often have ____________________.

a. a warranty
b. a command of the local language
c. a local presence
d. low profit expectation
e. an inside government contact

Difficulty: (2) Knowledge: (F) Page: 386

61. Regarding opportunities in the global service industries, some of the _________
rules have been extended to the international services trade under the new WTO regime.

a. World Bank
b. International Monetary Fund
c. United Nations
d. GATT (General Agreements on Tariffs and Trade)
e. none of the above

Difficulty: (3) Knowledge: (A) Page: 386

62. A major strength of global service firms is that their _________________.

a. local know-how
b. global know-how
c. regional know-how
d. high-tech know-how
e. political know-how

Difficulty: (1) Knowledge: (A) Page: 388

63. Global service firms often benefits from:

a. scale economies.
b. weight economies.
c. hybrid economies.
d. perfect economies.
e. visible economies.

Difficulty: (2) Knowledge: (A) Page: 388

64. To bridge cultural gaps between the home and host market, service companies often
customize the product to the local market. This can be done by spotting
_________________________.

a. environmental opportunities
b. funding opportunities
c. regional opportunities
d. cultural opportunities
e. political opportunities

Difficulty: (3) Knowledge: (A) Page: 388

True/False Short Answer

65. A ______________ is a name, term, sign, symbol, or combination of them which is
intended to identify the goods and services of one seller or group of sellers and to
differentiate them from those of competitors.

66. Brand name awareness, perceived quality, and other associations invoked by the
brand name in the customer’s mind can be described as being part of brand
equity.

67. A good example of a global brand name is Microsoft.

68. One of the chief reasons for having a global brand is economies of scale.

69. The number one brand in the world in market value is IBM.

Difficulty: (1) Knowledge: (A) Page: 363, Exhibit 11-1

70. Interbrand’s most valuable brands list is dominated by American brands.

Difficulty: (2) Knowledge: (F) Page: 363, Exhibit 11-1

71. One of the reasons for pursuing a global brand as part of product policy is what might be called a prestige factor.

Difficulty: (1) Knowledge: (F) Page: 364

72. Euro Disney changed its name to Disneyland Europe.

Difficulty: (2) Knowledge: (A) Page: 364

73. Brand equity is usually consistent from country to country.

Difficulty: (2) Knowledge: (F) Page: 365

74. In solo branding, each brand stands on its own with a product or brand manager
running it.

Difficulty: (1) Knowledge: (A) Page: 367

75. Family (umbrella) branding is a not hierarchy of brands that may use the company’s
corporate brand.

Difficulty: (2) Knowledge: (F) Page: 367

76. With respect to brand name changeover strategies, a ____________ strategy consists
of somehow tying the global brand name to the local name. Eventually, the local
brand is phased out.

77. With respect to brand name changeover strategies, a ________________ strategy
consists of alerting the consumer about an impending brand name change and then
changing the brand name to the global brand name.

78. If a company simply drops the old brand name and immediately replaces it with the
global name, it is called summary axing.

79. Companies should monitor the marketplace’s response to the brand-name change
with marketing research.

Difficulty: (2) Knowledge: (F) Page: 372

80. Pirated products tend to be of high quality.

Difficulty: (1) Knowledge: (A) Page: 379

81. Country of origin (COO) effects have been shown to be unstable over time.

Difficulty: (2) Knowledge: (F) Page: 383

82. Country of origin (COO) influences are particularly strong among the elderly.

Difficulty: (3) Knowledge: (F) Page: 383

83. Country of origin (COO) effects depend on the product category.

Difficulty: (1) Knowledge: (A) Page: 383

84. Country-image stereotypes cannot hurt a company.

Difficulty: (1) Knowledge: (A) Page: 385

85. In international marketing, trade barriers to service marketers tend to be much more
cumbersome than physical products.

Difficulty: (2) Knowledge: (A) Page: 386

86. Demand for premium quality services expands with increases in consumers’ age.

Difficulty: (2) Knowledge: (A) Page: 387

Essay

87. Deciding to move toward global branding is a difficult decision. This must often be considered with respect to the globalization versus localization issue. What are the questions that might be useful in reaching a decision as to pursue globalization over localization?

88. When the case for a transition from a local to a global (or regional) brand name is made, the firm needs to decide on how to implement the changeover in practice. Comment on the strategies that might be available for doing this and the considerations that might steer the manager toward one of the strategies.

89. Describe the strategies that might be used by multinational corporations to cope with the growing threat of product piracy. What are your feelings about purchasing pirated products? Give a brief illustration.

90. Comment on how you perceive the marketing of services on a global basis to be different from marketing tangible goods. Think about the difficulties that might be present with marketing services.

Chapter 12

Multiple Choice

1. ________________ is the only marketing mix instrument that creates revenues.

a. Product
b. Price
c. Place
d. Promotion
e. People

Difficulty: (1) Knowledge: (F) Page: 395

2. A company’s pricing policy is a highly ____________________ process based on
inputs from various departments.

a. under-functional
b. low-functional
c. geo-functional
d. bi-functional
e. cross-functional

Difficulty: (2) Knowledge: (F) Page: 395

3. All of the following are drivers that govern global pricing decisions EXCEPT:

a. company
b. customers
c. controls
d. competition
e. channels

Difficulty: (1) Knowledge: (F) Page: 396

4. In many countries, multinationals’ pricing decisions are impacted by:

a. break-even analysis
b. regression functions
c. supply and service curves
d. government policies
e. business ethics

Difficulty: (2) Knowledge: (F) Page: 396

5. When developing a pricing strategy for its global markets, one of the first steps that
a company must go through is to decide:

a. what the actual price should be.
b. how high or low to price.
c. how much money will the price bring in.
d. what it wants to accomplish with its strategy.
e. what form of controls will regulate price.

Difficulty: (3) Knowledge: (F) Page: 396

6. The most important pricing objectives of companies doing business in the United
States (including foreign-based firms) are(is) to:

a. achieve a satisfactory return on investment.
b. maintain market share.
c. meet a specified profit goal.
d. all of the above.
e. none of the above.

Difficulty: (3) Knowledge: (F) Page: 397

7. According to a recent research, all of the following are examples of important pricing
objectives EXCEPT:

a. drive competition out of business.
b. to achieve a satisfactory return on investment.
c. maintain market share.
d. expand market share.
e. to meet a specified profit goal.

Difficulty: (2) Knowledge: (A) Page: 397

8. When New Balance, the U.S.-based maker of high-tech running shoes, sells its shoes
in France as haute couture items rather than simply athletic shoes, this is an
example of:

a. country objectives.
b. company objectives.
c. consumer objectives.
d. monopoly objectives.
e. none of the above.

Difficulty: (2) Knowledge: (A) Page: 397

9. When making pricing decisions, ______________ set(s) the floor.

a. profits
b. costs
c. demand
d. supply
e. service

Difficulty: (1) Knowledge: (F) Page: 397

10. ______________ costs change with sales volume.

a. Demand
b. Supply
c. Derived
d. Fixed
e. Variable

Difficulty: (1) Knowledge: (F) Page: 397

11. _________________ costs do not vary with sales volume changes.

a. Demand
b. Supply
c. Derived
d. Fixed
e. Variable

Difficulty: (1) Knowledge: (F) Page: 397

12. In the international marketplace, _________________ pricing adds international
costs and a mark-up to the domestic manufacturing cost.

a. dynamic incremental pricing
b. export price
c. import price
d. cost-plus price
e. target-return price

Difficulty: (3) Knowledge: (F) Page: 397

13. In the international marketplace, ________________ pricing arrives at a price after
removing domestic fixed costs. Only variable export costs generated by the exporting
effort and a portion of the overhead load should be recuperated by the pricing effort
(according to this method).

a. dynamic incremental pricing
b. export price
c. import price
d. cost-plus price
e. target-return price

Difficulty: (3) Knowledge: (F) Page: 397

14. Examples of exporting-related ____________________ include manufacturing costs,
shipping expenses, insurance, and overseas promotional costs.

a. incremental costs
b. demand costs
c. fixed costs
d. target costs
e. service costs

Difficulty: (2) Knowledge: (F) Page: 397

15. One of the risks of dynamic incremental pricing (in the case where the export list
price is far below the domestic price) that ______________ can be triggered in the
export market.

a. high profit potential
b. dumping charges or accusations
c. falling profits
d. falling quality
e. falling service

Difficulty: (2) Knowledge: (A) Page: 397

16. When demand is highly price sensitive, the company needs to consider how it can
_________________ from a global perspective.

a. raise prices
b. lower prices
c. lower service
d. raise quality
e. reduce costs

Difficulty: (1) Knowledge: (F) Page: 397

17. Customers’ _________________ is a key consideration in pricing decisions.

a. location
b. buying power
c. decision power
d. thinking power
e. none of the above

Difficulty: (1) Knowledge: (F) Page: 398

18. Countries with low per-capita income are more __________________ than in
developed countries.

a. promotion sensitive
b. price sensitive
c. need sensitive
d. demand sensitive
e. service sensitive

Difficulty: (3) Knowledge: (F) Page: 398

19. One alternative for successful marketing to the price sensitive low per-capita income
market is to produce a ________________ product or lower product quality.

a. downsized
b. upgraded
c. synthetic
d. copy
e. parallel

Difficulty: (2) Knowledge: (F) Page: 398

20. According to textbook, ________________ by and large charges the same price
worldwide.

a. Starbucks
b. IBM
c. Coca-Cola
d. Toyota
e. BMW

Difficulty: (2) Knowledge: (A) Page: 398

21. According to the text, once brand loyalty has been established, _____________ will
play less of a role as a purchase criterion.

a. promotion
b. service
c. product
d. price
e. place

Difficulty: (3) Knowledge: (F) Page: 398

22. Differences in the competitive situation across countries will usually lead to:

a. cross-border price differentials.
b. local price differentials.
c. domestic price differentials.
d. intra-company price differentials.
e. company-based price differentials.

Difficulty: (1) Knowledge: (F) Page: 398

23. Once brand loyalty has been established, price will play less of a role as a
purchase criterion, and the firm may be able to institute a ________________
strategy.

a. demand-based
b. premium pricing
c. elastic pricing
d. promotion-related pricing
e. sensitivity-based

Difficulty: (2) Knowledge: (A) Page: 398

24. All of the following are reasons that competitive situations vary from country to
country (with respect to the competitive environment) EXCEPT:

a. the number of competitors varies from country to country.
b. the nature of competition changes.
c. the presence of counterfeit products.
d. the presence of gray markets.
e. the competitive position of a firm changes from one country to another.

Difficulty: (3) Knowledge: (A) Pages: 398-99

25. An example of nonprice competition that is faced in some markets is:

a. retailer sales.
b. discounts.
c. coupons.
d. advertising.
e. cents-off deals.

Difficulty: (2) Knowledge: (A) Page: 400

26. Wide gaps in the price sensitivity between countries for the same product may
create conditions that promote _________________ markets.

a. backward
b. gray
c. white
d. demand
e. forward

Difficulty: (3) Knowledge: (A) Page: 401

27. Large cross-country price gaps open up arbitrage opportunities that lead to
_________________ imports from low-price countries to high-price ones.

a. black market
b. white market
c. zero market
d. smuggled
e. parallel

Difficulty: (2) Knowledge: (F) Page: 401

28. Sales tax rates, tariffs, and price controls are all examples of _______________ that
can have a direct or indirect impact on the pricing policies of a firm in the
international marketplace.

a. sales volume policies
b. price policies
c. government policies
d. restrictions
e. punishments

Difficulty: (2) Knowledge: (A) Page: 402

29. Huge government deficits are examples of a(n) ________________ impact on
pricing decisions.

a. direct
b. indirect
c. artificial
d. planned
e. uncontrollable

Difficulty: (2) Knowledge: (A) Page: 402

30. Inflation in an economy is an example of a(n) ________________ impact on pricing
decisions.

a. direct
b. indirect
c. artificial
d. planned
e. uncontrollable

Difficulty: (2) Knowledge: (F) Page: 402

31. To cover the incremental costs (such as shipping), the final foreign retail price will
often be much higher than the domestic retail price. This phenomenon is known as
______________________.

a. inflation.
b. the price deflator.
c. price escalation.
d. price sensitivity.
e. global arbitrage.

Difficulty: (2) Knowledge: (F) Page: 402

32. There are two ways to deal with the price escalation phenomenon. One of these
methods is to cut the export price. The other is to:

a. change the promotion strategy.
b. position the product as a (super) premium brand.
c. position the product as a lower quality brand.
d. reduce retailer margins.
e. reduce distances that the good must be shipped.

Difficulty: (3) Knowledge: (A) Page: 402

33. Which of the following would be a good option to follow if lowering the export price
were the firm’s objective?

a. rearrange the distribution channel.
b. change the promotion.
c. change the warranty provisions.
d. give more of the product in the package as an incentive to purchase.
e. study the demand curve.

Difficulty: (3) Knowledge: (A) Page: 402-3

34. All of the following are options that might be followed if the firm wished to lower
its export price on a product EXCEPT:

a. rearrange the distribution channel.
b. eliminate costly features (or make them optional).
c. downsize the product.
d. expand the warranty categories to give incentive for higher quality.
e. assemble or manufacture the product in foreign markets.

Difficulty: (2) Knowledge: (F) Pages: 402-3

35. If a firm decide to penetrate the Japanese consumer market through direct marketing
(such as catalog or telemarketing sales). Which of the following strategies best
describes this option for lowering the price of an exported product?

a. rearrange the distribution channel.
b. eliminate costly features (or make them optional).
c. downsize the product.
d. expand the warranty categories to give incentive for higher quality.
e. assemble or manufacture the product in foreign markets.

Difficulty: (2) Knowledge: (A) Pages: 402-3

36. When the U.S. levied a 10 percent tax on plus-$30,000 luxury cars, Land Rover
changed the weight of Range Rover models so they could be classed as a truck and
thereby avoid the luxury status, the company was attempting to follow which of the
price strategies listed below for lowering the price of an exported product?

a. rearrange the distribution channel.
b. eliminate costly features (or make them optional).
c. downsize the product.
d. adapt the product to escape tariffs or tax levies.
e. assemble or manufacture the product in foreign markets.

Difficulty: (1) Knowledge: (A) Page: 403

37. LEGO, the Danish toymaker, rather than worrying about finding ways to lower the
price of its product in foreign markets has chosen (most LEGO sets are sold from
$6-$223) to adopt a __________________ strategy position.

a. demand-based
b. premium pricing
c. elastic pricing
d. promotion-related pricing
e. sensitivity-based

Difficulty: (1) Knowledge: (A) Page: 403

38. When McDonald’s first opened their restaurants in Russia in 1990, the Big Mac meal
cost 6 rubles. Three years later, the same meal cost 1,100 rubles. This would be an
example of how:

a. demand can change.
b. how premium pricing can damage a product.
c. price elasticity works.
d. inflation can damage a market.
e. service is what matter the most to the average customer.

Difficulty: (1) Knowledge: (A) Page: 403

39. All of the alternatives listed below are ways to safeguard against inflation EXCEPT:

a. modify components, ingredients, parts and/or packaging materials.
b. source materials from low-cost suppliers.
c. lengthen credit terms.
d. include escalator clauses in long-term contracts.
e. quote prices in a stable currency.

Difficulty: (3) Knowledge: (F) Page: 404

40. ___________ inflation also mandates rapid inventory turnarounds.

a. High
b. Low
c. Visible
d. Hyper
e. Slow

Difficulty: (2) Knowledge: (F) Page: 404

41. To combat hyperinflation, many governments occasionally impose ______________
controls.

a. commodity
b. inflation
c. margin
d. discount
e. price

Difficulty: (1) Knowledge: (F) Page: 404

42. According to lessons learned in Brazil’s hyperinflationary economy, McDonald’s
will deal with Russia’s runaway inflation by using all of the following tools
EXCEPT:

a. emphasize cash flow management.
b. control of raw materials.
c. institute sales and price setting strategies.
d. hedge for potentially substantial distortions in the exchange rate.
e. make loans to local franchise investors to bring them past hard times.

Difficulty: (2) Knowledge: (A) Page: 404

43. Firms faced with price controls can take any of the following strategies EXCEPT:

a. shift the target segment or markets.
b. launch new products or variants of existing products.
c. negotiate with the government.
d. predict the incidence of price controls.
e. have the home government bring pressure on the host government.

Difficulty: (3) Knowledge: (F) Pages: 404-5

44. When a manufacturer of breakfast cereals for humans shifts production to a
chicken feed product to overcome the effects of price controls, the firm would be
following which of the strategies outlined below?

a. adapt the product line.
b. shift target segments or market.
c. negotiate with the government.
d. launch a variant of an existing product.
e. predict the incidence of price controls.

Difficulty: (2) Knowledge: (A) Page: 405

45. If a company that is threatened with price controls diversifies into product lines that
are relatively free of price controls, the firm would be following which of the
following strategies?

a. adapt the product line.
b. shift target segments or market.
c. negotiate with the government.
d. launch a variant of an existing product.
e. predict the incidence of price controls.

Difficulty: (2) Knowledge: (A) Page: 405

46. The most drastic reaction to government-imposed price controls is to:

a. adapt the product line.
b. shift target segments or market.
c. negotiate with the government.
d. launch a variant of an existing product.
e. leave the country.

Difficulty: (1) Knowledge: (A) Page: 405

47. One of the main reasons for staying in a country that has government-imposed
price controls to deal with hyperinflation is:

a. the government might not let you out.
b. when the danger is over you cannot get back in.
c. you gain experience for other markets with similar problems.
d. you do not want to loose face.
e. you do not want to show weakness to your competition.

Difficulty: (2) Knowledge: (A) Page: 405

48. ___________________ reflect how much one currency is worth in terms of
another currency.

a. Interest rates
b. Credit rates
c. Bond rates
d. Inflation rates
e. Exchange rates

Difficulty: (2) Knowledge: (F) Page: 405

49. All of the following are exporter strategies when the domestic currency is weak
EXCEPT:
a. stress price benefits.
b. engage in nonprice competition by improving quality, delivery, and aftersale
service.
c. expand the product line and add more.
d. shift sourcing and manufacturing to domestic market.
e. exploit export opportunities in all markets.

Difficulty: (3) Knowledge: (F) Page: 406, Exhibit 12-4

50. Which of the following are exporter strategies when the domestic currency is
strong?

a. stress price benefits.
b. engage in nonprice competition by improving quality, delivery, and aftersale
service.
c. expand the product line and add more.
d. shift sourcing and manufacturing to domestic market.
e. exploit export opportunities in all markets.

Difficulty: (3) Knowledge: (F) Page: 406, Exhibit 12-4

51. All of the following are considered to be exporter strategies when the domestic
currency is strong EXCEPT:

a. conduct conventional cash-for-goods trade.
b. engage in nonprice competition by improving quality, delivery, and aftersale
service.
c. improve productivity and engage in vigorous cost reduction.
d. shift sourcing and manufacturing overseas.
e. give priority to exports to relatively strong-currency countries.

Difficulty: (3) Knowledge: (F) Page: 406, Exhibit 12-4

52. Which of the following are considered to be exporter strategies when the domestic
currency is weak?

a. conduct conventional cash-for-goods trade.
b. engage in nonprice competition by improving quality, delivery, and aftersale
service.
c. improve productivity and engage in vigorous cost reduction.
d. shift sourcing and manufacturing overseas.
e. give priority to exports to relatively strong-currency countries.

Difficulty: (3) Knowledge: (F) Page: 406, Exhibit 12-4

53. Two major issues confronting international marketers result from currency
movement. The first of these is in which currency do we quote our prices? The
second is:

a. how much of the loss or gain (because of pass through) should be passed to
consumers?
b. how much should we invest in the local currency?
c. how much should we invest in our own currency?
d. what role should the central bank play in currency movement?
e. should we trust international arbitrage as a means of settling currency value?

Difficulty: (3) Knowledge: (A) Page: 406

54. A weakening of the U.S. dollar relative to the Japanese yen has the effect of:

a. strengthening the Japanese position in the United States.
b. strengthening the U.S. position in Japan.
c. weakening the dollar in Europe.
d. strengthening the yen in Europe.
e. all positions remain unchanged.

Difficulty: (2) Knowledge: (A) Page: 406

55. A strengthening of the U.S. dollar relative to the Japanese yen has the effect of:

a. strengthening the Japanese position in the United States.
b. strengthening the U.S. position in Japan.
c. weakening the dollar in Europe.
d. strengthening the yen in Europe.
e. all positions remain unchanged.

Difficulty: (2) Knowledge: (A) Page: 406

56. One of the ways that a weakening of the U.S. dollar relative to the Japanese yen
may not necessarily be a benefit to a U.S. firm is that:

a. the government may not allow the pass through.
b. the government might erect tariff barriers.
c. Japanese parts might become more expensive and when imported for inclusion into
an exported product, prices might actually rise.
d. other currencies might be the ones actually traded.
e. costs can be cut in other ways.

Difficulty: (2) Knowledge: (A) Page: 406

57. When considering the currency pass-through phenomenon, all of the following
factors give an indication as to the appropriate action EXCEPT:

a. the customer’s price sensitivity.
b. government actions.
c. the impact of dollar appreciation on the firm’s cost structure.
d. the impact of dollar depreciation on the firm’s cost structure.
e. the amount of competition in the export market.

Difficulty: (2) Knowledge: (A) Page: 407

58. When exporters lower their mark-ups in a more price-conscious export market than
in a price-sensitive market, with respect to exchange rate movements this is called
______________________.

a. local-currency price stability (LCPS)
b. pricing-to-market (PTM)
c. transfer pricing
d. countertrade pricing
e. demand mark-up pricing

Difficulty: (3) Knowledge: (F) Page: 408

59. When an exporter uses the _______________________ method, the effect can be
negative. Frequent adjustments of prices in response to currency movements will
distress local channels and customers.

a. local-currency price stability (LCPS)
b. pricing-to-market (PTM)
c. transfer pricing
d. countertrade pricing
e. demand mark-up pricing

Difficulty: (3) Knowledge: (A) Page: 408

60. _____________________ is a special form of pricing where mark-ups are adjusted
to stabilize prices in the buyer’s currency. This method helps to create stability in the
local currency.

a. Local-currency price stability (LCPS)
b. Pricing-to-market (PTM)
c. Transfer pricing
d. Countertrade pricing
e. Demand mark-up pricing

Difficulty: (1) Knowledge: (A) Page: 408

61. With respect to currency quotation when preparing for buying and selling
transactions, buyers and sellers generally prefer to quote in:
a. a world currency.
b. the seller’s currency.
c. the buyer’s currency.
d. their own currency.
e. the dollar.

Difficulty: (2) Knowledge: (A) Page: 409

62. When sales take place between related entities of the same company, ___________
is often used.

a. local-currency price stability (LCPS)
b. pricing-to-market (PTM)
c. transfer pricing
d. countertrade pricing
e. demand mark-up pricing

Difficulty: (2) Knowledge: (A) Page: 409

63. Transfer pricing decisions in an international context need to balance off the
interests of a broad range of stakeholders. All of the following would be examples
of those stakeholders EXCEPT:

a. the parent company.
b. the competition.
c. local country managers.
d. host government(s).
e. the domestic government.

Difficulty: (2) Knowledge: (F) Page: 409

64. There are a series of key drivers behind transfer pricing decisions. The most
important of these drivers is thought to be:

a. competition in the foreign country.
b. economic conditions in the foreign country.
c. price controls.
d. exchange controls.
e. market conditions in the foreign country.

Difficulty: (3) Knowledge: (F) Page: 409

65. __________________ uses the market mechanism as a cue for setting transfer prices.

a. Local-currency price stability (LCPS) pricing
b. Pricing-to-market (PTM)
c. Market-based pricing
d. Countertrade pricing
e. Nonmarket-based pricing

Difficulty: (2) Knowledge: (F) Page: 410

66. __________________ (as a form of market-based pricing) basically dictates that
the company charges the price that any buyer outside the company would pay (as
if the transaction occurred between two unrelated entities).

a. Local-currency price stability (LCPS) pricing
b. Pricing-to-market (PTM)
c. Arm’s length pricing
d. Countertrade pricing
e. Nonmarket-based pricing

Difficulty: (2) Knowledge: (F) Page: 410

67. ___________________ simply adds a mark-up to the cost of the goods.

a. Demand-based pricing
b. Negotiated pricing
c. Cost-based pricing
d. Markup-based pricing
e. Target return pricing

Difficulty: (2) Knowledge: (F) Page: 411

68. To conduct ________________, conflicts between country affiliates are resolved
through mutual discussion of the transfer pricing problems.

a. demand-based pricing
b. negotiated pricing
c. cost-based pricing
d. markup-based pricing
e. target return pricing

Difficulty: (1) Knowledge: (F) Page: 411

69. In the area of transfer pricing, experts suggest to set transfer prices that are as close as
possible to the _________________________________.

a. Balanced Arm’s Length Standard
b. Building Arm’s Length Standard
c. Best Arm’s Length Standard
d. Branding Arm’s Length Standard
e. Basic Arm’s Length Standard

Difficulty: (3) Knowledge: (F) Page: 411

70. ______________ occurs when imports are being sold at an “unfair” price.

a. Price fixing
b. Dumping
c. Gray marketing
d. Countertrade
e. Predatory pricing

Difficulty: (1) Knowledge: (F) Page: 412

71. To reduce exposure and risk of antidumping actions, the exporter can follow any of
the following marketing strategies EXCEPT:

a. trading-up
b. service enhancement
c. distribution
d. government intervention
e. communications

Difficulty: (2) Knowledge: (F) Page: 413

72. In the area of price coordination, the following considerations matter EXCEPT:

a. nature of customer.
b. amount of product differentiation.
c. nature of channels.
d. nature of competition.
e. role of the World Bank.

Difficulty: (1) Knowledge: (F) Pages: 414-15

73. In international marketing, purchasers often demand _____________________ from
their suppliers.

a. uniform-pricing contracts
b. diverse-pricing contracts
c. bilateral-pricing contracts
d. global-pricing contracts
e. local-pricing contracts

Difficulty: (3) Knowledge: (F) Page: 415

74. ___________________ is an umbrella term used to describe unconventional trade-
financing transactions that involve some form of noncash compensation.

a. Local-currency price stability (LCPS)
b. Pricing-to-market (PTM)
c. Arm’s length pricing
d. Countertrade
e. Nonmarket-based pricing

Difficulty: (2) Knowledge: (F) Page: 418

75. Countertrade transactions include the following options EXCEPT:

a. simple barter.
b. switch trading.
c. geo trading.
d. countertrade pricing.
e. clearing agreements.

Difficulty: (2) Knowledge: (A) Page: 419

76. In a(n) _______________, no third party is involved to carry out the transaction.

a. clearing agreement
b. offset
c. buyback arrangement
d. switch trading
e. simple barter

Difficulty: (1) Knowledge: (F) Page: 419

True/False Short Answer

77. According to the textbook, factors that impact global pricing decisions include
company, customers, competition, technology.

Difficulty: (2) Knowledge: (F) Page: 396

78. Cost differentials do not lead to wide price gaps.

Difficulty: (1) Knowledge: (F) Page: 397

79. In gray markets, products marketed in low-priced countries are shipped and resold
by unauthorized channels in high-priced markets.

Difficulty: (2) Knowledge: (F) Page: 401

80. Government policies do not have any impact on pricing decisions.

Difficulty: (1) Knowledge: (A) Page: 402

81. To cover the incremental costs of doing business in a foreign market, the final
foreign retail price will often be much higher than the domestic retail price.
This is called price _________________.

82. To combat hyperinflation, governments occasionally impose price controls.

Difficulty: (2) Knowledge: (F) Page: 404

83. One of the courses of action that a company can follow when faced with price
controls is to adapt the product line.

Difficulty: (2) Knowledge: (F) Page: 404

84. A stronger U.S. dollar undermines the competitive position of American exports.

Difficulty: (2) Knowledge: (F) Page: 406

85. An exporter strategy when faced with a weak domestic currency would be to
engage in nonprice competition by improving quality, delivery, and aftersale
service.

Difficulty: (2) Knowledge: (F) Page: 406, Exhibit 12-4

86. If an exporter were to stress price benefits, the exporter would probably be facing
a domestic currency that was perceived as being weak.

Difficulty: (2) Knowledge: (F) Page: 406, Exhibit 12-4

87. LCPS stands for:

88. In the area of international pricing, sellers and buyers usually prefer a quote in their domestic currency.

Difficulty: (2) Knowledge: (F) Page: 409

89. When sales transactions occur between related entities of the same company,
________________ pricing often occurs.

90. In arm’s-length prices, a firm uses the market mechanism as a cue for setting transfer
prices.

Difficulty: (2) Knowledge: (F) Page: 410

91. Cost-based pricing simply adds a mark-up to the cost of goods.

Difficulty: (1) Knowledge: (F) Page: 411

92. Negotiated transfer pricing is another form of nonmarket-based pricing.

Difficulty: (2) Knowledge: (F) Page: 411

93. Government-imposed market constraints favor nonmarket-based transfer pricing
methods.

Difficulty: (3) Knowledge: (F) Page: 411

94. In transfer pricing, BALS stands for:

95. Multinationals do not need to take antidumping laws into account when determining
their global pricing strategy.

Difficulty: (3) Knowledge: (F) Page: 412

96. VER is an acronym for:

97. Global pricing contract (GPCs) are demanded by governments.

Difficulty: (2) Knowledge: (F) Page: 415

98. Several multinationals doing business in the European Union harmonize their prices
to narrow price gaps between different member states..

Difficulty: (2) Knowledge: (F) Page: 415

99. When sales transactions occur in some form of compensation other than money
(such as trading corn for whiskey), the two trading companies are engaged in
________________.

100. In switch trading, a third party is involved which uses the credits to buy goods from
the deficit country.

Difficulty: (1) Knowledge: (F) Page: 419

101. Countertrade purchase is not the most popular form of countertrade.

Difficulty: (3) Knowledge: (F) Page: 419

Essay

102. In international marketing, price escalation can be a serious problem. To offset these difficulties marketers must be prepared to creatively meet the price escalation challenge. List the various ways that marketers might attack this problem.

103. Setting prices in a floating exchange rate world pose unique problems. Comment on how a company might react to floating exchange rates. What considerations are probably the most important for the decision maker to consider?

104. What is transfer pricing? Comment on the stakeholders and key drivers that impact the decision maker faced with transfer pricing.

105. Antidumping measures are very popular with most of the governments of industrialized nations. What measures might exporters consider to hedge themselves against antidumping procedures? Which method do you think is probably the best? Justify your answer.

106. Discuss the motives behind countertrade and the guidelines for making countertrade successful.

Chapter 13

Multiple Choice

1. In international marketing, advertising to some extent is a _________________
phenomenon.

a. cultural
b. social
c. general
d. static
e. global

Difficulty: (1) Knowledge: (F) Page: 427

2. ___________________ is one of most formidable barriers that international advertisers need to surmount.

a. Politics
b. Technology
c. Translation
d. Language
e. None of the above

Difficulty: (2) Knowledge: (F) Page: 427

3. In international marketing, numerous promotional efforts misfire because of
____________________ -related problems.

a. politics
b. technology
c. transfer
d. transaction
e. language

Difficulty: (2) Knowledge: (F) Page: 427

4. Translation errors include:

a. simple carelessness.
b. multiple-meaning words.
c. idioms.
d. all of the above.
e. none of the above.

Difficulty: (2) Knowledge: (F) Page: 427

5. All of the following are language barriers that can be identified as typical international
translation errors EXCEPT:

a. simple carelessness.
b. idioms.
c. local slang.
d. multiple-meaning words.
e. incorrect grammar.

Difficulty: (3) Knowledge: (F) Page: 427

6. To solve language-related barriers, companies in international markets should use
__________________ advertising agencies.

a. local
b. regional
c. global
d. transnational
e. domestic

Difficulty: (1) Knowledge: (F) Page: 428

7. In an advertising message, the original slogan was “Body by Fisher.” The translation
in a foreign market was “Corpse by Fisher.” This would be an example of which of
the following constraints on international promotion?

a. language barriers.
b. advertising regulations.
c. cultural constraints.
d. local attitudes toward advertising.
e. poor media infrastructure.

Difficulty: (1) Knowledge: (A) Page: 428

8. In an advertising message, the original slogan was “Body by Fisher.” The translation
in a foreign market was “Corpse by Fisher.” This would be an example of which of
the following types of translation errors?

a. simple carelessness.
b. idioms.
c. local slang.
d. multiple-meaning words.
e. incorrect grammar.

Difficulty: (2) Knowledge: (A) Page: 428

9. In an advertising message, the original slogan was “When I used this shirt, I felt
good.” The translation in a foreign market was “Until I used this shirt, I felt good.”
This would be an example of which of the following types of translation errors?

a. simple carelessness.
b. idioms.
c. local slang.
d. multiple-meaning words.
e. incorrect grammar.

Difficulty: (2) Knowledge: (A) Page: 428

10. In Britain, one U.S. advertiser ran a campaign that centered around the slogan
“You can use no finer napkin at your dinner table.” In Britain, some people use
the word “napkin” for the word “diapers.” This would be an example of which of
the following types of translation errors?

a. simple carelessness.
b. idioms.
c. local slang.
d. multiple-meaning words.
e. incorrect grammar.

Difficulty: (2) Knowledge: (A) Page: 428

11. In Spanish, five different words can be used for the word “tires” (cauchos, cubiertas,
gomas, llantas, and neumaticos). Obviously, this might present problems in
advertising. This would be an example of which of the following types of translation
errors?

a. simple carelessness.
b. idioms.
c. local slang.
d. multiple-meaning words.
e. incorrect grammar.

Difficulty: (1) Knowledge: (A) Page: 429, Exhibit 13-1

12. Given that so many errors can occur with translation and misunderstanding of
advertising in the foreign market, which of the following is probably the easiest
solution to the problem?

a. involve ad agencies from the company’s domestic environment.
b. involve ad agencies from the host country’s environment.
c. check with government officials.
d. employ foreign language specialists for all markets.
e. don’t worry about it, the problem usually corrects itself.

Difficulty: (3) Knowledge: (F) Page: 428

13. All of the following are strategies for dealing with translation problems in a foreign
market EXCEPT:

a. involve ad agencies from the host country’s environment.
b. don’t translate the message for the foreign market.
c. add foreign language subtitles.
d. use voice-overs that use foreign slang.
e. check with foreign officials.

Difficulty: (3) Knowledge: (F) Pages: 428-9

14. Many of the trickiest promotional issues occur in the domain of
_________________.

a. environment
b. money
c. technology
d. business
e. religion

Difficulty: (2 Knowledge: (F) Page: 429

15. Of the barriers that face a foreign company when attempting to promote products in
a foreign market, ___________________ are arguably the biggest stumbling block
to successful advertising in the foreign market.

a. language barriers
b. advertising regulations
c. cultural constraints or barriers
d. local attitudes toward advertising
e. poor media infrastructure

Difficulty: (2) Knowledge: (F) Page: 429

16. When considering barriers that are faced by international marketers attempting to
successfully advertise in foreign markets, cultural constraints can pose huge
difficulties. The trickiest problem within this category is usually posed by:

a. the government.
b. trade unions.
c. environmental rights groups.
d. women.
e. the host country’s religion(s).

Difficulty: (3) Knowledge: (F) Page: 430

17. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Dutch researcher
Geert Hofstede. All of the following are dimensions of a value system used in
the cultural classification scheme EXCEPT:

a. power distance.
b. possessions.
c. uncertainty avoidance.
d. individualism.
e. masculinity.

Difficulty: (2) Knowledge: (F) Page: 430

18. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Dutch researcher
Geert Hofstede. One dimension refers to the degree of inequality that is seen as
acceptable within the country. This dimension would best be described as:

a. power distance.
b. long-termism.
c. uncertainty avoidance.
d. individualism.
e. masculinity.

Difficulty: (2) Knowledge: (F) Page: 430

19. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Dutch researcher
Geert Hofstede. One dimension refers to the extent that people within the culture
prefer structured situations with clear cut rules and little ambiguity. This dimension
would best be described as:

a. power distance.
b. long-termism.
c. uncertainty avoidance.
d. individualism.
e. masculinity.

Difficulty: (2) Knowledge: (F) Page: 430

20. If ads in a foreign country stress performance, success, and completion, they would
probably be focusing on which of the following cultural classification schemes as a
way to reach a segment of the population where this dimension was high or
important.

a. power distance.
b. long-termism.
c. uncertainty avoidance.
d. individualism.
e. masculinity.

Difficulty: (2) Knowledge: (A) Page: 430

21. With respect to budget forms for advertising, the _______________ method simply
sets the overall advertising budget based on either past or expected sales revenue.

a. percentage of sales
b. competitive parity
c. all-you-can-afford
d. objective-and-task
e. marginal increment

Difficulty: (1) Knowledge: (F) Page: 431

22. The primary appeal of the percentage of sales method of allocating an advertising
budget is its:

a. popularity.
b. accounting good sense.
c. control feature.
d. simplicity.
e. accuracy.

Difficulty: (2) Knowledge: (F) Page: 431

23. If an advertiser does not want to “rock the boat” and desires to sustain a minimum
“share of voice” they will probably choose which of the following advertising
budget forms?

a. percentage of sales
b. competitive parity
c. all-you-can-afford
d. objective-and-task
e. marginal increment

Difficulty: (2) Knowledge: (F) Page: 432

24. The most popular of the budget methods (in fact, two-thirds of respondents in a
survey said they had used the method) is the _________________ method.

a. percentage of sales
b. competitive parity
c. all-you-can-afford
d. objective-and-task
e. marginal increment

Difficulty: (2) Knowledge: (F) Page: 433

25. If an advertiser spells out the goals of their communication strategy and determines
what they would like to accomplish with advertising and then plans a budget
accordingly, they are probably using the ______________ method of budgeting.

a. percentage of sales
b. competitive parity
c. all-you-can-afford
d. objective-and-task
e. marginal increment

Difficulty: (1) Knowledge: (A) Page: 433

26. If an advertiser uses field experiments (such as systematically manipulating the
spending amount in different areas within the country to measure the impact of
advertising on the brand’s awareness, sales volume, and market share) to adjust
budget expenditures, they are probably using the ______________ method of
budgeting for advertising expense.

a. percentage of sales
b. competitive parity
c. all-you-can-afford
d. objective-and-task
e. marginal increment

Difficulty: (2) Knowledge: (A) Page: 433

27. A good case can be made for standardizing an ad campaign in the international
marketplace. All of the following would be good, justifiable reasons for
standardization EXCEPT:

a. scale economics.
b. consistent image.
c. government regulation.
d. global consumer segments.
e. creative talent.

Difficulty: (2) Knowledge: (A) Page: 435-37

28. Message consistency (an advertising standardization issue) matters a great deal in
markets with extensive media overlap or for goods that are sold to “cosmopolitan”
customers who travel the globe. The best example of a product or service that fits the
above is:

a. beer.
b. banking.
c. a beef product.
d. an automobile.
e. cosmetics.

Difficulty: (3) Knowledge: (A) Page: 439

29. In the domain of advertising, __________________ means that marketers encourage
their affiliates to adopt, or at least consider, advertising ideas that have proven
successful in other markets. Which of the following standardization benefits applies?

a. scale economics
b. consistent image
c. cross-fertilization
d. global consumer segments
e. creative talent

Difficulty: (2) Knowledge: (A) Page: 439

30. Nestle used an ad for Taster’s Choice coffee originally developed in the U.K. as its campaign in the U.S., with some minor changes to reflect actors and speech. This would be an example of which of the following reasons for using standardization in the foreign market?

a. scale economics
b. consistent image
c. cross-fertilization
d. global consumer segments
e. creative talent

Difficulty: (2) Knowledge: (A) Page: 439

31. Research from an advertising agency survey indicates that the number one reason
for standardizing multinational advertising was to:

a. take advantage of demographics.
b. take advantage of cultural similarities between the countries.
c. capitalize on the fact that the product was standardized.
d. make full use of a proven successful idea.
e. create a single brand image in all markets.

Difficulty: (3) Knowledge: (A) Page: 435

32. All of the following are barriers to standardization in international advertising
EXCEPT:

a. cultural differences.
b. budget.
c. advertising regulations.
d. differences in the degree of market development.
e. the “Not Invented Here” syndrome.

Difficulty: (2) Knowledge: (A) Page: Pages: 437-38

33. As an illustration of a barrier to advertising standardization, Ray-Ban had to re-shoot
a sunglasses commercial for Malaysia because the original version had Caucasian
actors. In Malaysia, ads featuring Caucasians are not allowed. This example would
be an example of which of the following barriers to standardization of international
advertising?

a. cultural differences.
b. budget.
c. advertising regulations.
d. differences in the degree of market development.
e. the “Not Invented Here” syndrome.

Difficulty: (2) Knowledge: (A) Pages: 437-38

34. In the area of “Not-Invented-Here” (NIH) syndrome, stonewalling attempts at
standardization may come from ________________ subsidiaries/advertising
agencies.

a. local
b. regional
c. global
d. transnational
e. multinational

Difficulty: (2) Knowledge: (F) Page: 438

35. In the ________________ approach, every country subsidiary follows its own course
developing its own ads based on what it thinks works best in its market.

a. host country
b. home country
c. foreign
d. laissez faire
e. polycentric

Difficulty: (1) Knowledge: (F) Page: 438

36. There are a variety of formats for creating international advertising. With _________
advertising, the creative strategy is highly centralized. Universal copy is developed
for all markets.

a. export
b. import
c. prototype (pattern)
d. concept cooperation
e. psychological

Difficulty: (2) Knowledge: (F) Page: 438

37. There are a variety of formats for creating international advertising. With _________
advertising, guidelines are given to local affiliates concerning the execution of the
advertising. The guidelines are then conveyed via manuals or tapes.

a. export
b. import
c. prototype (pattern)
d. concept cooperation
e. psychological

Difficulty: (2) Knowledge: (F) Page: 439

38. With prototype standardization, ____________________ spell out guidelines on the
positioning theme.

a. competitors
b. governments
c. advertising mangers
d. headquarters
e. CEOs

Difficulty: (3) Knowledge: (F) Page: 439

39. With __________________ advertising, guidelines are given to the local affiliates
concerning the execution of the advertising.

a. geotype
b. prototype
c. modulartype
d. export
e. psychological

Difficulty: (3) Knowledge: (A) Page: 439

40. Another term to describe the portfolio of media choices (and variations within those
choices) is called:

a. media decision making.
b. media super structure.
c. media infrastructure.
d. media bias.
e. media method.

Difficulty: (1) Knowledge: (F) Page: 440

41. High cost-per-thousand (CPMs) are found in areas that have a high per capita
__________.

a. LMP
b. ZNP
c. MMP
d. GNP
e. PPP

Difficulty: (3) Knowledge: (F) Page: 442

42. Recent developments in the global media landscape include the following EXCEPT:

a. growing commercialization and deregulation of mass media.
b. shift from radio and print to TV advertising.
c. rise of global and regional media.
d. growing spread of interactive marketing.
e. growing importance of high definition television.

Difficulty: (2) Knowledge: (F) Pages: 442-43

43. All of the following can be characterized as being significant trends or developments
in the international media landscape EXCEPT:

a. growing commercialization and deregulation of mass media.
b. shift from radio and print to TV advertising.
c. rise of global and regional media.
d. growing importance of state controlled advertising.
e. improved monitoring.

Difficulty: (2) Knowledge: (F) Pages: 442-43

44. Infomercial marketers now have access to over one-half of Japanese consumers.
Which of the following trends would be most representative or closely associated
with the above fact?

a. growing commercialization and deregulation of mass media.
b. shift from radio and print to TV advertising.
c. rise of global and regional media.
d. growing spread of interactive marketing.
e. improved monitoring.

Difficulty: (2) Knowledge: (A) Page: 443

45. To promote the Xbox video program, Microsoft gave away two million DVDs with an interactive commercial. This is an example of which of the following trends?

a. growing commercialization and deregulation of mass media.
b. shift from radio and print to TV advertising.
c. rise of global and regional media.
d. growing spread of interactive marketing.
e. improved monitoring.

Difficulty: (3) Knowledge: (A) Page: 443

46. Ad regulations governing the advertising of cigarettes would probably fall under
which of the following advertising regulation categories?

a. advertising of “vice products” and pharmaceuticals.
b. comparative advertising.
c. content of advertising messages.
d. advertising targeting children.
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 445

47. If advertisers disparage their competition in an advertisement, the regulation category
that would govern this practice would probably be:

a. advertising of “vice products” and pharmaceuticals.
b. comparative advertising.
c. content of advertising messages.
d. advertising targeting children.
e. all of the above.

Difficulty: (1) Knowledge: (F) Page: 445

48. Given that advertising regulations not only govern advertising in foreign markets but
can also create difficulties, how can marketers cope? All of the following are
valid suggestions EXCEPT:

a. keep track of regulations and pending legislation.
b. challenge regulations in court.
c. adapt the marketing mix strategy.
d. try to circumvent the regulation by using local advertisers.
e. lobby for favorable regulations or results.

Difficulty: (2) Knowledge: (F) Pages: 446-47

49. When screening ad agencies, all of the following criteria might be used EXCEPT:

a. market coverage.
b. cost of agency talent and expense.
c. quality of coverage.
d. expertise with developing a central international campaign.
e. scope and quality of support services.

50. _________________ refer(s) to a collection of short-term incentive tools that lead to
quicker and/or larger sales of a particular product by consumers or the trade.

a. Advertising
b. Sales promotion
c. Internet marketing
d. Promotion
e. Publicity

Difficulty: (1) Knowledge: (F) Page: 449

51. Sampling, price-offs, coupons, sweepstakes, bonus packs, and trade allowances are
all examples of ____________________.

a. advertising
b. sales promotion
c. direct marketing
d. public relations
e. publicity

Difficulty: (2) Knowledge: (A) Page: 449

52. All of the following explain the local nature of sales promotion for the multinational
corporation EXCEPT:

a. economic development.
b. market maturity.
c. cultural perceptions.
d. trade structure.
e. new product development.

Difficulty: (3) Knowledge: (F) Pages: 449-50

53. If promotional dollars are aimed at the end-user, then the strategy is described as
being a ______________ strategy.

a. push
b. pull
c. conventional
d. vertical
e. horizontal

Difficulty: (1) Knowledge: (A) Page: 450

54. If promotional dollars are aimed at the middlemen, then the strategy is described as
being a ______________ strategy.

a. push
b. pull
c. conventional
d. vertical
e. horizontal

Difficulty: (1) Knowledge: (A) Page: 450

55. If promotional dollars are aimed at the trade or distributor, then the strategy is
described as being a ______________ strategy.

a. push
b. pull
c. conventional
d. vertical
e. horizontal

Difficulty: (1) Knowledge: (A) Page: 450

56. Procter & Gamble has attempted to cut back on _____________ strategy incentives
by introducing every-day-low-pricing.

a. push
b. pull
c. conventional
d. vertical
e. horizontal

Difficulty: (1) Knowledge: (A) Page: 450

57. Adidas, the German sportswear maker, paid a hefty $80 million to $100 million in
cash and services for sponsorship of the 2008 Beijing Summer Olympics. This is an
example of _________________________.

a. event sponsorship
b. sales sponsorship
c. trade shows
d. publicity
e. public relations

Difficulty: (1) Knowledge: (F) Page: 452

58. Although, Coca-Cola was the official sponsor of the 2002 World Cup Soccer, Pepsi
managed to sign up some of the biggest soccer celebrities, including England’s soccer
star David Beckham. In event sponsorship, this is an example of ________________.

a. guerilla marketing
b. ambush marketing
c. passive marketing
d. active marketing
e. cooperative marketing

Difficulty: (3) Knowledge: (F) Page: 452

59. All of the following are risks associated with event sponsorship EXCEPT:

a. nonsponsors can come in.
b. too many sponsorships might be sold.
c. there might be clutter among the sponsors and their messages.
d. the sponsorship might be too expensive for the number of people that show up.
e. adequate protection of the sponsorship.

Difficulty: (3) Knowledge: (F) Page: 452
60. Trade shows are also called _______________________.

a. trade marts
b. trade markets
c. trade fairs
d. trade expos
e. trade circles

Difficulty: (1) Knowledge: (F) Page: 453

61. Trade shows in Europe:

a. are about more than just business.
b. are exactly the same as in the U.S.
c. never serve refreshments or meals.
d. might be much larger than American shows.
e. both A and D

Difficulty: (1) Knowledge: (F) Page: 454

62. Which of the following does NOT describe mobile marketing?

a. It refers to ads on the sides of trucks and buses.
b. Mobile marketing cannot interact with consumers.
c. It fosters top-of-mind brand awareness.
d. It increases customer involvement.
e. Both A and B

Difficulty: (1) Knowledge: (F) Page: 453

63. In a modern sense, the goal of many MNCs is to pursue a(n)________________
program. In this program, coordination of all communication vehicles would take
place. Key ideas would be communicated in a unified manner.

a. vertical communications
b. horizontal communications
c. integrated marketing communications
d. global communications
e. synergistic communications

Difficulty: (2) Knowledge: (F) Page: 458

64. The goal of ________________________________ is to coordinate mass
advertising, sponsorships, sales promotions, packaging, point-of-purchase displays,
and so forth.

a. integrated marketing communications
b. integrated horizontal communications
c. integrated vertical communications
d. global communications
e. synergistic communications

Difficulty: (2) Knowledge: (F) Page: 458

65. A __________________________________ program goes one step further since it is
a system of active promotional management that strategically coordinates global
communications in all of its component parts both horizontally (country-level) and
vertically (promotion tools).

a. vertical communications
b. horizontal communications
c. globally integrated marketing communications
d. global communications
e. synergistic communications

Difficulty: (3) Knowledge: (F) Page: 458

True/False Short Answer

66. Language is not a major barrier in international advertising.

Difficulty: (1) Knowledge: (F) Page: 427

67. One can identify three different types of _______________________: simple carelessness, multiple-meaning words, and idioms.

68. Language barriers can occur through translation problems. The most common of
these translation difficulties are due to ____________________ , multiple-meaning
words, and idioms.

69. Language barriers can occur through translation problems. If the original slogan
was “Body by Fisher” and the translation was “Corpse by Fisher,” the problem with
translation was probably due to a problem idiom.

Difficulty: (2) Knowledge: (A) Page: 428

70. Idioms that use slang from one country to another may inadvertently lead to
embarrassing meanings in the host country.

Difficulty: (1) Knowledge: (F) Page: 428

71. One obvious cure for misinterpreted meanings of advertising slogans in foreign
countries is to reduce the usage of slogans.

Difficulty: (2) Knowledge: (F) Page: 428

72. With respect to advertising, probably the trickiest of the cultural barriers centers
around the host country’s religion.

Difficulty: (2) Knowledge: (F) Page: 429

73. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Geert Hofstede.
The value system construct that refers to the degree of inequality that is seen as
acceptable within the country is called ________________.

74. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Geert Hofstede. One
of these constructs is called power distance. Research has shown that ads that
position products or services as status symbols are most likely to be effective in
countries with large power distance.

Difficulty: (2) Knowledge: (A) Page: 430

75. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Geert Hofstede.
The value system construct that refers to the extent that people within the culture
prefer structured situations with clear-cut rules and little ambiguity is called
__________________.

76. Ad campaigns that center around the hard-sell approach (such as testimonials) are
advisable for cultures with high uncertainty avoidance such as the United States.

Difficulty: (2) Knowledge: (A) Page: 430

77. In the percentage of sales method, the overall advertising budget is based on either
past or expected sales revenues.

Difficulty: (1) Knowledge: (F) Page: 431

78. Viral marketing involves the selling of disease-causing agents.

79. With respect to budget forms that can be used in advertising, the ________________
method simply sets the overall advertising budget as a percentage of sales.

80. In the competitive parity rule, advertisers do not use competitors’ advertising spending as a benchmark.

Difficulty: (1) Knowledge: (A) Page: 431

81. With respect to budget forms that can be used in advertising, the _____________
method uses competition’s spending as a benchmark and provides the measure of
the optimal spending amount.

82. The most popular budgeting rule is the objective-and-task method.

Difficulty: (1) Knowledge: (F) Page: 433

83. In the domain of advertising, ___________________ means that marketers
encourage their affiliates to adopt, or at least consider, advertising ideas that have
proven successful in other markets.

84. “Not-Invented-Here” (NIH) syndrome does not come from local subsidiaries.

Difficulty: (3) Knowledge: (F) Page: 438

85. With export advertising, the creative strategy is highly centralized.

Difficulty: (3) Knowledge: (F) Page: 438

86. With prototype standardization, headquarters spell out guidelines on the positioning
themes and brand identity.

Difficulty: (2) Knowledge: (F) Page: 439

87. Shift from TV and print to radio advertising is becoming a big reality.

Difficulty: (1) Knowledge: (F) Pages: 442-43

88. Most firms do not rely heavily on the expertise of an advertising agency.

Difficulty: (1) Knowledge: (F) Page: 447

89. Sponsorship is one of the fastest growing promotion tools.

Difficulty: (2) Knowledge: (F) Page: 451

90. The goal of many MNCs is to avoid an integrated marketing communications
approach.

Difficulty: (2) Knowledge: (F) Page: 458

Essay

91. List and discuss the major challenges faced by international advertisers.

92. What situations are conducive to localization of advertising from the viewpoint of the international advertiser?

93. How should marketers cope with advertising regulations?

94. How do you choose an advertising agency overseas?

Chapter 14

Multiple Choice

1. Unlike the United States where customers visit car dealers, a majority of cars are sold
by door-to-door salespeople in _________________.

a. India.
b. Pakistan.
c. Japan.
d. Ireland.
e. Mongolia.

Difficulty: (2) Knowledge: (A) Page: 421

2. All of the following are tasks of the average salesperson EXCEPT:

a. take orders.
b. deliver products.
c. repair products.
d. educate consumers.
e. provide technical knowledge.

Difficulty: (1) Knowledge: (F) Page: 422

3. The salesperson can best be described as being the ______________ for the company.

a. support mechanism
b. front line
c. mouthpiece
d. promoter
e. educator

Difficulty: (2) Knowledge: (F) Page: 422

4. The salesforce management process starts with setting:

a. objectives and strategy.
b. objectives and manufacturing.
c. objectives and marketing.
d. objectives and operations.
e. objectives and raw material.

Difficulty: (3) Knowledge: (F) Page: 423

5. When researchers try to put the word international into sales management and
personal selling, clarification is needed. ____________________ considerations
include issues that analyze more than one country’s assets, strengths, and situations,
or that deal directly with cross-border coordination.

a. International product
b. International strategy
c. International mix
d. Intercultural
e. Global society

Difficulty: (1) Knowledge: (F) Page: 423

6. All of the following are examples of international sales strategy issues EXCEPT:

a. sales force skill availability.
b. selling style differences.
c. country image.
d. expatriate recruiting.
e. centralized training.

Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1

7. Which of the following is an example of an issue that is addressed by intercultural
issues with the foreign country?

a. sales force skill availability.
b. selling style differences.
c. country image.
d. expatriate recruiting.
e. centralized training.

Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1

8. All of the following are examples of intercultural issues with the foreign country
EXCEPT:

a. motivation.
b. cultural sensitivity.
c. ethical standards.
d. relationship building.
e. home to host communications.

Difficulty: (2) Knowledge: (F) Page: 423, Exhibit 14-1

9. Which of the following is an example of an issue faced by international sales
strategy?

a. motivation.
b. cultural sensitivity.
c. ethical standards.
d. relationship building.
e. home to host communications.

Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1

10. Sales force skill availability, company image, expatriate recruiting, and centralized
training are issues relevant to ________________________ considerations.

a. international product
b. international sales strategy
c. international mix
d. intercultural issues with the foreign country
e. global society

Difficulty: (2) Knowledge: (F) Page: 423, Exhibit 14-1

11. Motivation, cultural sensitivity, ethical standards, fairness, and relationship building
are issues relevant to _______________________ considerations.

a. international product
b. international sales strategy
c. international mix
d. intercultural issues with the foreign country
e. global society

Difficulty: (1) Knowledge: (F) Page: 423, Exhibit 14-1

12. In the sales management “process,” the first step is where the manager:

a. sets objectives and strategy.
b. determines goals and purposes.
c. recruits.
d. trains.
e. supervises.

Difficulty: (2) Knowledge: (F) Page: 423

13. A key decision that a marketer must make with respect to international marketing is
_______________________. This decision limits and defines key underlying aspects
of its future sales force management.

a. which market to enter
b. how much to spend in a market
c. how to enter the market
d. how far should a market be entered
e. how long to stay in a market

Difficulty: (3) Knowledge: (A) Page: 423

14. The _________________ in(into) a market will determine how large the sales force
needs to be and will influence how much training it will require.

a. form of marketing
b. form of entry
c. form of promotion
d. form of commission
e. form of management

Difficulty: (2) Knowledge: (F) Page: 423

15. How large a sales force needs to be, how much training the sales force will need,
whether the sales force is predominately local or foreign, and the manner of
compensation are all issues influenced by the __________________ in(into) a
market.

a. form of marketing
b. form of entry
c. form of promotion
d. form of commission
e. form of management

Difficulty: (2) Knowledge: (F) Page: 423

16. With respect to sales and sales management, the entry method into a market is also
called the ____________________________.

a. zone process
b. level of migration
c. level of expatriation
d. level of complexity
e. level of integration

Difficulty: (3) Knowledge: (F) Page: 424

17. With respect to sales and sales management entry into a foreign market, _________
integration refers to greater ownership and control of the distribution channel.
a. vertical
b. horizontal
c. forward
d. backward
e. dual

Difficulty: (2) Knowledge: (A) Page: 424

18. If a company begins its foreign sales by exporting through a merchant distributor who
takes title to the product and performs all the necessary foreign sales functions, this
would be a form of ________________ integration.

a. vertical
b. horizontal
c. forward
d. backward
e. dual

Difficulty: (3) Knowledge: (A) Page: 424

19. If a company begins its foreign sales by exporting through merchant distributors and
then purchases a foreign sales subsidiary and locates product warehouses abroad, this
would be a form of _____________________ integration.

a. vertical
b. horizontal
c. forward
d. backward
e. dual

Difficulty: (3) Knowledge: (A) Page: 424

20. Selling through an Export Management Company (EMC) or an Export Trading
Company (ETC) is considered a _____________ involvement approach to
international sales.

a. low
b. middle
c. high
d. backward
e. parallel

Difficulty: (1) Knowledge: (F) Page: 424

21. _____________________ serves the needs of their clients in entering a market or
sourcing goods from a market. They are characterized by their “service” nature and
efforts to interact with and meet the needs of the exporter client.

a. A foreign franchise
b. An Export Trading Company
c. An Export Management Company
d. A Noraizi agent
e. A bulk-breaker

Difficulty: (2) Knowledge: (F) Page: 424

22. Which of the following degrees of involvement would probably be in use when
Export Management Companies, Export Trading Companies, or direct exporting
are being used by the firm?

a. limited foreign involvement and visibility
b. local management and sales force
c. expatriate management and local sales force (mixed)
d. heavy to complete expatriate sales force
e. maximum global control and world wide ownership

Difficulty: (1) Knowledge: (A) Page: 425

23. Which of the following degrees of involvement would probably be in use when
piggybacking and selling through chains are used by the firm?

a. limited foreign involvement and visibility
b. local management and sales force
c. expatriate management and local sales force (mixed)
d. heavy to complete expatriate sales force
e. maximum global control and world wide ownership

Difficulty: (2) Knowledge: (A) Page: 425

24. Many ______________________ use EMCs services mainly to test the international
arena.

a. contract manufacturers
b. franchisees
c. experienced exporters
d. inexperienced exporters
e. none of the above

Difficulty: (1) Knowledge: (A) Page: 425

25. If the company describes its situation as being concerned with a contract for sales
from the U.S., no sales force or representatives abroad, and little or no control over
the foreign marketing process, the firm will probably use which form of involvement
listed below?

a. limited foreign involvement and visibility
b. local management and sales force
c. expatriate management and local sales force (mixed)
d. heavy to complete expatriate sales force
e. maximum global control and world wide ownership

Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2

26. If the company uses expatriates to oversee sales regions and lead training, the firm
will probably use which form of involvement listed below?

a. limited foreign involvement and visibility
b. local management and sales force
c. expatriate management and local sales force (mixed)
d. heavy to complete expatriate sales force
e. maximum global control and world wide ownership

Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2

27. _____________________ is usually a large conglomerate that imports, exports,
countertrade, invests, and manufactures in the global arena.

a. A foreign franchise
b. An Export Trading Company
c. An Export Management Company
d. A Noraizi agent
e. A bulk-breaker

Difficulty: (2) Knowledge: (F) Page: 425

28. Sogoshosha (such as Mitsubishi, Mitsui, Sumitomo, and Marubeni) are the Japanese
equivalents of _______________________.

a. a foreign franchise
b. an Export Trading Company
c. an Export Management Company
d. a dealer network
e. a bulk-breaker

Difficulty: (2) Knowledge: (A) Page: 425

29. If a company follows a _______________ involvement path, it normally gives
up the ability to motivate and monitor the sales force and to train them to better serve
the customer.

a. low
b. middle
c. high
d. backward
e. parallel

Difficulty: (1) Knowledge: (F) Page: 425

30. When a company has the ____________________ involvement approach, the
company (because it uses either host country employees or expatriates) must face
the foreign culture and intercultural communication can become an issue that must
be dealt with through training.

a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level

Difficulty: (2) Knowledge: (A) Page: 426

31. Which of the following forms of company sales involvement generally have the
lowest involvement of expatriates?

a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level

Difficulty: (2) Knowledge: (A) Page: 426

32. Which of the following forms of company sales involvement generally have the
highest involvement of expatriates?

a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level

Difficulty: (2) Knowledge: (A) Page: 426

33. When a company has a _________________ involvement approach, the company
substantially controls the foreign distribution channels.
a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level

Difficulty: (1) Knowledge: (F) Page: 426

34. As an example of a company that has the _______________________ involvement
approach, the company will generally own warehouses where goods are stored and/or
own outlets where products are sold.
a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level

Difficulty: (2) Knowledge: (A) Page: 426

35. Which of the following statements MOST accurately describes the state of
international selling?

a. At the level of personal selling there is little true international selling.
b. International selling is a function of the degree of involvement.
c. Because of the global nature of business today, global selling transcends
international boundaries.
d. International selling will never work.
e. International selling is tightly monitored by most governments because of the
potential for funds outflow.

Difficulty: (3) Knowledge: (F) Page: 427

36. Which of the following statements MOST accurately describes the state of
international selling?

a. Despite growing “international sales,” salespeople typically work only in one
region.
b. International selling is a function of the degree of involvement.
c. Because of the global nature of business today, global selling transcends
international boundaries.
d. International selling will never work.
e. International selling is tightly monitored by most governments because of the
potential for funds outflow.

Difficulty: (3) Knowledge: (F) Page: 427

37. Personal selling is predominantly a _________________ activity.

a. psychological
b. ethnic
c. tribal
d. group
e. personal

Difficulty: (1) Knowledge: (F) Page: 427

38. A _________________ occurs when we group people (from what might appear
to us as very similar cultures) together in perhaps an inappropriate manner because
those people consider themselves to be different.

a. cultural assimilation
b. cultural harmony
c. cultural generalization
d. cultural syncopation
e. cultural similarity

Difficulty: (2) Knowledge: (F) Page: 428

39. Germans are typically viewed as scientifically exacting and industrious people.
However, the typical German manufacturing work week is only thirty hours and
the workers jealously guard their free time and show little interest in working
overtime. This would be an example of the dangers of ____________________.

a. cultural onomonopea
b. cultural adiaphoria
c. cultural generalization
d. cultural syncopation
e. cultural similarity

Difficulty: (2) Knowledge: (A) Page: 428

40. If a marketing manager were to mistakenly group South Koreans and Japanese
together (either as a market or by business and labor practices), this would be an
example of a _________________ problem.

a. cultural onomonopea
b. cultural adiaphoria
c. cultural generalization
d. cultural syncopation
e. cultural similarity

Difficulty: (2) Knowledge: (A) Page: 428

41. The differences between the cultures of companies in two countries are
based more on the ingrained cultural values of the ___________________.

a. consumers
b. governments
c. board of directors
d. CEOs
e. employees

Difficulty: (2) Knowledge: (A) Page: 428

42. One popular tool for characterizing people that addresses their cognitive styles is
the ____________________.

a. Kelsey-Ciebold scale.
b. Johns-Hopkins initial perception scale.
c. Majors-Hawkins Cognitive Indicator.
d. Myers-Briggs Type Indicator.
e. Spaniel test.

Difficulty: (2) Knowledge: (F) Page: 431

43. The ________________ classifies people on four personal dimensions. These are
extrovert versus introvert, sensing versus intuitive, thinking versus feeling, and
judging versus perceiving.

a. Hartman profile
b. Myers-Briggs Type Indicator
c. Majors-Hawkins Cognitive Indicator
d. Spaniel test for concepts
e. Freudian fantasy test

Difficulty: (2) Knowledge: (F) Page: 431

44. According to the Myers-Briggs Type Indicator test, the _____________ tends to
rely on the environment for guidance, be action-oriented, sociable, and communicate
with ease and frankness.

a. extrovert
b. introvert
c. sensing person
d. intuitive person
e. thinking person

Difficulty: (2) Knowledge: (F) Page: 431, Exhibit 14-4

45. According to the Myers-Briggs Type Indicator test, the _____________ tends to
show a greater concern with concepts and ideas than with external events, relative
detachment, and enjoyment of solitude and privacy over companionship.

a. extrovert
b. introvert
c. sensing person
d. intuitive person
e. thinking person

Difficulty: (2) Knowledge: (F) Page: 431, Exhibit 14-4

46. According to the Myers-Briggs Type Indicator test, the _____________ tends to
focus on immediate experience, become more realistic and practical, and develop
skills such as acute powers of observation and memory for details.

a. extrovert
b. introvert
c. sensing person
d. intuitive person
e. thinking person

Difficulty: (3) Knowledge: (F) Page: 431, Exhibit 14-4

47. According to the Myers-Briggs Type Indicator test, the _____________ tends to
value the possibility and meaning more than immediate experience, and become
more imaginative, theoretical, abstract, and future oriented.
a. extrovert
b. introvert
c. sensing person
d. intuitive person
e. thinking person

Difficulty: (3) Knowledge: (F) Page: 431, Exhibit 14-4

48. All of the following are steps in the sales force management process EXCEPT:

a. setting sales force objectives.
b. designing sales force strategy.
c. recruiting and selecting salespeople.
d. commission system management.
e. supervising salespeople.

Difficulty: (2) Knowledge: (F) Page: 433

49. The first step in the sales force management process is best described as being:

a. designing sales force strategy.
b. setting sales force objectives.
c. recruiting and selecting salespeople.
d. commission system management.
e. supervising salespeople.

Difficulty: (2) Knowledge: (F) Page: 433

50. The __________________ states explicitly what the sales force will be asked to do.

a. sales force strategy
b. sales force objectives
c. sales force training procedures
d. sales force recruiting procedures
e. sales force evaluation procedures

Difficulty: (2) Knowledge: (F) Page: 433

51. Setting sales force objectives internationally will not only depend on the company
goals but will also depend on:

a. the training procedures.
b. the recruiting procedures.
c. the evaluation procedures.
d. an analysis of the culture and the values of the country it is entering.
e. management standards for excellence.

Difficulty: (2) Knowledge: (F) Page: 434

52. __________________ addresses the structure, size, and compensation of the sales
force.

a. Sales force objectives
b. Sales force goals
c. Sales force strategy
d. Sales force policy
e. Sales force vision

Difficulty: (2) Knowledge: (F) Page: 434

53. With respect to sales force structure, the ____________________ sales force has
each salesperson responsible for a particular area (reporting up the line to regional
sales managers).

a. territorial
b. product
c. customer
d. matrix
e. “open plan”

Difficulty: (1) Knowledge: (F) Page: 434

54. With respect to sales force structure, the ______________________ sales force has
each salesperson sell only one product or product line (even when selling to a single
customer).

a. territorial
b. product
c. customer
d. matrix
e. “open plan”

Difficulty: (1) Knowledge: (F) Pages: 434-35

55. With respect to the functions of sales force strategy, the ______________ refers to
and determines the physical positioning and responsibilities of each salesperson.

a. size
b. structure
c. compensation procedure
d. modeling procedure
e. evaluation procedure

Difficulty: (1) Knowledge: (F) Page: 434

56. In order to ensure a globally consistent sales strategy, a company will likely:
a. conduct sales training on a country-by-country basis.
b. train the sales managers in the headquarters country and send them abroad.
c. bring all employees to the headquarters country for training, then send them
to their home markets.
d. hire professional sales trainers to travel abroad to train employees.
e. none of the above

Difficulty: (2) Knowledge: (a) Page: 436

57. Difficulties in setting compensation packages for global salesforces include:
a. unions may restrict wage options.
b. some cultures are not motivated to work harder regardless of monetary
incentives.
c. local firms may protest that the MNC is stealing the best talent with wages
out of line with local standards.
d. culture may dictate that people of the same rank should not be compensated
differently regardless of performance.
e. all of the above

Difficulty: (2) Knowledge: (F) Page: 446

58. Ethics for international sales reps:
a. are the same regardless of country.
b. can be taught and are no longer a problem once training has taken place.
c. don’t matter—reps should do what the home culture expects.
d. demand clear corporate policies to help reps avoid problems.
e. should be ignored until a complaint is made, then the guilty should be punished.

Difficulty: (2) Knowledge: (A) Page: 438

59. Evaluations of sales performance should be ________.
a. cumulative
b. exhaustive
c. quantitative
d. qualitative
e. both C and D

Difficulty: (2) Knowledge: (F) Page: 438

60. ____________________ the sales force means directing and motivating the sales
force to fulfill the company’s objectives and providing the resources to allow them
to do so.

a. Recruiting
b. Training
c. Evaluating
d. Supervising
e. Compensating

Difficulty: (2) Knowledge: (F) Page: 436

61. With respect to rewarding salespeople, _________________ reinforces the negative
image of the salesperson benefiting from the sale, with no regard for the purchaser’s
well-being.

a. the salary system
b. the commission system
c. the motivation system
d. the retainer system
e. the hourly wage system

Difficulty: (2) Knowledge: (F) Page: 437

62. With respect to evaluating salespeople, _________________ evaluations can be
in the form of comparisons of sales, of sales percents, or increases in sales.

a. parametric
b. qualitative
c. quantitative
d. nonparametric
e. decisional

Difficulty: (2) Knowledge: (F) Page: 438

63. Stages of the negotiation process include the following EXCEPT:

a. non-task sounding.
b. task-related information exchange.
c. foreign travel.
d. persuasion.
e. concessions and agreements.

Difficulty: (2) Knowledge: (F) Page: 439

64. In international marketing, negotiation strategies include the following EXCEPT:

a. employ an outsourcing consultant.
b. employ an agent or advisor.
c. involve a mediator.
d. induce the counterpart to follow one’s own negotiation script.
e. Adapt the counterpart’s negotiation script.

Difficulty: (3) Knowledge: (F) Page: 439

65. ___________________ are home country personnel sent overseas to manage local
operations in the foreign market.

a. Managers
b. International personnel
c. Group managers
d. Expatriates
e. Foreign managers

Difficulty: (1) Knowledge: (F) Page: 443

66. All of the following are advantages that expatriates have over foreign nationals as
managers of MNCs, EXCEPT:

a. more intelligence.
b. better communication.
c. better understanding of office politics.
d. develops better future managers.
e. better relationships with the home office.

Difficulty: (2) Knowledge: (F) Page: 444

67. All of the following are disadvantages of using expatriates over foreign nationals as
managers, EXCEPT:

a. cross-cultural training.
b. motivation.
c. honesty.
d. compensation.
e. family discord.

Difficulty: (2) Knowledge: (F) Pages: 443-44

68. The general trend among U.S. multinationals has been a decreasing use of
______________ managers overseas and an increasing reliance on ____________
foreign talent since the 1990s.

a. global, local
b. international, local
c. European, local
d. expatriate, local
e. Asian, local

Difficulty: (3) Knowledge: (A) Page: 443

69. The single most compelling reason that most expatriates return home early from
their tour of duty abroad is:

a. motivation.
b. salary.
c. health.
d. fear of the foreign environment.
e. family discord.

Difficulty: (2) Knowledge: (F) Page: 447

70. Expatica’s Relocation Services’ 2008 survey provided the following recommendations regarding reducing attrition rates EXCEPT:

a. membership in top private business clubs.
b. chances to use international experience.
c. a choice of positions upon return.
d. recognition.
e. repatriation career support.

Difficulty: (2) Knowledge: (F) Page: 448

True/False Short Answer

71. Unlike the United States, the majority of cars sold in Japan are sold door-to-door.

Difficulty: (2) Knowledge: (A) Page: 421

72. The salesperson is not the front line for the company.

Difficulty: (1) Knowledge: (F) Page: 422

73. Sales people do not sell services.

Difficulty: (1) Knowledge: (A) Page: 422

74. When considering international sales management issues, ________________
considerations are issues that analyze more than one country’s assets, strengths, and
situations, or that deal directly with cross-border coordination.

75. Sales force skill availability, country image, and expatriate recruiting are all issues
that are relevant as intercultural issues with the foreign country.

Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1

76. Motivation, cultural sensitivity, ethical standards, and fairness are all issues that are
relevant as intercultural issues with the foreign country.

Difficulty: (2) Knowledge: (F) Page: 423, Exhibit 14-1

77. The question of how to enter the market is central to marketing.

Difficulty: (1) Knowledge: (F) Page: 423

78. Backward integration refers to greater ownership and control of the distribution
channel.

Difficulty: (3) Knowledge: (F) Page: 423

79. If a firm has limited foreign involvement and visibility, a correct choice for them to
use in entering a foreign country would be to develop an expatriate sales force.

Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2

80. If a firm has limited foreign involvement and visibility, a correct choice for them to
use in entering a foreign country would be to enter into an arrangement with an
Export Management Company.

Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2

81. The term sogoshosha in Japan describes an Export Trading Company.

Difficulty: (2) Knowledge: (A) Page: Page: 425

82. Personal selling is predominantly a group activity.

Difficulty: (1) Knowledge: (F) Page: 427

83. At the level of personal selling there is little true international selling.

84. Equating Korean and Japanese consumers and business practices to be the same just
because they are in geographic proximity to one another would be a mistake often
made because of _______________________.

85. Myers-Briggs-Type Indicator (MBTI) is a tool for addressing people’s cognitive
styles.

Difficulty: (3) Knowledge: (F) Page: 431

86. One of the dimensions of Myers-Briggs-Type Indicator (MBTI) include ethnocentric
behavior:

Difficulty: (1) Knowledge: (F) Page: 431

87. The first step in the process of sales force management starts with recruiting and
selecting salespeople.

Difficulty: (1) Knowledge: (F) Page: 434

88. The size of the salesforce depends on the sales structure.

89. In the negotiation process, nontask soundings do not include activities that are used to
establish a rapport among the parties involved.

90. ______________ are home country personnel sent overseas to manage local
operations in the foreign market.

91. Negotiations practices do not vary enormously across cultures.

Difficulty: (2) Knowledge: (F) Page: 439

92. Expatriate involvement in international sales has been on the rise since the 1990s.

Difficulty: (2) Knowledge: (F) Page: 443

93. Once the expatriate is overseas, training becomes more difficult.

Difficulty: (3) Knowledge: (F) Page: 445

94. Cross-cultural training is on the decline in recent years.

Difficulty: (2) Knowledge: (F) Page: 445

95. Repatriation is the return of the expatriate employee from overseas.

Difficulty: (1) Knowledge: (F) Page: 446

96. Expatriates do not face a long list of difficulties upon returning home.

Difficulty: (2) Knowledge: (F) Page: 448

Essay

97. It has been said that selling is the world over. However, there are differences between the way that domestic and international selling efforts occur and are managed. Comment on these differences.

98. Considering various types of entry formats into the international arena, under what circumstances might it be advisable for the company to attempt a traveling global salesforce?

99. Considering the four major categories of the Myers-Briggs Type Indicator, which of the categories (or combination of categories) best describes you? Explain why.

100. Not all United States sales methods or systems can automatically be exported abroad. Considering the information provided by research on different cultural dimensions, why might it be difficult to adopt a U.S.-style commission system for salespeople in such countries as Japan or Mexico. Be sure to remember how these two countries might rank on the five cultural dimension scales.

101. Why do most firms still consider expatriates to be a valuable extension of their company? What are the advantages and disadvantages of using expatriates?

Chapter 15

Multiple Choice

1. In global logistics and distribution, Coca-Cola’s success relies largely on its global
distribution arm, ______________________, the world’s largest bottler group.

a. Coca-Cola Enterprises
b. Coca-Cola Network
c. Coca-Cola Web
d. Coca-Cola Team
e. Coca-Cola Trucking Co.

Difficulty: (2) Knowledge: (F) Page: 452

2. According to the textbook, which of the following famous business thinkers
characterized logistics as being “the darkest continent of business?”

a. Philip Kotler.
b. Stephen Covey.
c. Michael E. Porter.
d. Peter Drucker.
e. Tom Peters.

Difficulty: (3) Knowledge: (F) Page: 452

3. As firms start operating on a global basis, ___________________ need to manage the shipping of raw materials, components, and supplies among various manufacturing sites at the most economical and reliable rates.

a. human resource managers
b. logistics managers
c. operations managers
d. outsourcing managers
e. information technology managers

Difficulty: (2) Knowledge: (F) Page: 452

4. In 2011, the total logistics cost represented about 8.5 percent of the GDP, or $1 trillion in the _________________.

a. U.S.
b. Ireland
c. Portugal
d. Belgium
e. Romania

Difficulty: (1) Knowledge: (F) Page: 452

5. In 2012, in the U.S., the total logistics cost was ______ percent of the U.S. GDP.

a. 1
b. 3
c. 5.5
d. 8.5
e. 10.5

Difficulty: (2 Knowledge: (F) Page: 452

6. __________________ transportation refers to the seamless transfer of goods from
one mode of transportation (such as an aircraft) to another (such as a ship) and
vice versa without the hassle of unpacking and repackaging of goods to suit the
dimensions of the mode of transportation being used.

a. Bi-polar
b. Bi-modal
c. Intercontinental
d. Dual-basic
e. Intermodal

Difficulty: (2) Knowledge: (F) Page: 452

7. __________________ refers to the means of keeping continuous tabs on the exact
location of the goods being shipped in the logistics chain.

a. Data processing
b. Messaging service
c. Tracking technology
d. Computerized messaging
e. Hybrid technology

Difficulty: (2) Knowledge: (F) Page: 452

8. With electronic tracking technology, shippers are able to quickly react to any
disruption in the shipments because the shipper knows where exactly the goods are
in real time and:

a. labor can be adjusted accordingly.
b. the alternative means can be quickly mobilized should problems develop.
c. costs can always be evaluated.
d. losses are rare.
e. customer service is now at a premium.

Difficulty: (1) Knowledge: (A) Page: 452

9. ________________ is defined as the design and management of a system that directs
and controls the flows of materials into, through and out of the firm across national
boundaries to achieve its corporate objectives at a minimum total cost.

a. Global goods flow
b. Global distribution
c. Global logistics
d. Global wholesaling
e. Global shipping

Difficulty: (2) Knowledge: (F) Page: 453

10. Global logistics encompasses:

a. advertising and personal selling.
b. purchasing and manufacturing.
c. materials management and trucking.
d. materials management and physical distribution.
e. pricing and manufacturing.

Difficulty: (2) Knowledge: (A) Page: 453

11. ___________________ refers to the inflow of raw materials, parts, and supplies in
and through the firm.

a. Global logistics
b. Physical distribution
c. Materials management
d. Purchasing processes
e. Global distribution

Difficulty: (2) Knowledge: (F) Page: 453

12. The global logistics process begins with which of the following?

a. materials management
b. processing and assembly
c. physical distribution
d. raw materials, components, and supplies
e. finished products ready for shipment

Difficulty: (2) Knowledge: (F) Page: 453

13. When raw materials, components, and supplies are converted or manipulated for
processing and assembly by the firm, the process is monitored and controlled by
the ________________________ function of the firm.

a. physical distribution
b. purchasing
c. intermodal transportation
d. materials handling
e. materials management

Difficulty: (3) Knowledge: (A) Page: 453

14. _______________________ refers to the movement of the firm’s finished products
to its customers, consisting of transportation, warehousing, inventory, customer
service/order entry, and admission.

a. Physical distribution
b. Purchasing
c. Intermodal transportation
d. Global logistics
e. Materials management

Difficulty: (2) Knowledge: (F) Page: 453

15. All of the following are activities that occur during physical distribution EXCEPT:

a. transportation.
b. warehousing.
c. inventory.
d. order entry.
e. promotion and advertising.

Difficulty: (1) Knowledge: (A) Page: 453, Exhibit 15-1

16. With respect to distribution costs, a geographically large country such as the United
States will normally incur more ______________________ costs than in smaller
countries.

a. transportation, insurance, and inventory
b. warehousing, customer service/order entry, and general administration
c. transportation and inventory
d. materials handling
e. warehousing and transportation

Difficulty: (3) Knowledge: (A) Page: 453

17. Which of the following factors contribute significantly to the increased complexity
and cost of global logistics as compared to domestic logistics?

a. domestic intermediaries
b. service
c. purchasing
d. exchange rate fluctuation
e. materials handling

Difficulty: (1) Knowledge: (F) Page: 455

18. All of the following factors contributed significantly to the increased complexity and
cost of global logistics as compared to domestic logistics EXCEPT:

a. exchange rate fluctuation.
b. distance.
c. domestic intermediaries.
d. foreign intermediaries.
e. negotiations with government officials and distributors.

Difficulty: (2) Knowledge: (F) Page: 455

19. Recently the U.S. dollar depreciated while the Japanese yen soared in value. Honda
found that it was much cheaper to ship its Accord models to Europe from its Ohio
plant than from Japan. This could most accurately be classed as a move made
because of problems or opportunities with:

a. distance.
b. logistics.
c. exchange rate fluctuations.
d. foreign intermediaries.
e. domestic intermediaries.

Difficulty: (1) Knowledge: (A) Page: 455

20. The bulk of international trade is handled by ________________________.

a. ocean shipping
b. air transport
c. trucking services
d. railroads
e. inland waterways

Difficulty: (1) Knowledge: (A) Page: 455

21. The most important factors in determining an optimal mode of transportation for
foreign markets are the value-to-volume ratio, perishability of the product, and:

a. the cost of transportation.
b. intermodal ratio.
c. total cost ratio to inventory and warehousing expense.
d. the cost of insurance.
e. the distance to speed relationship.

Difficulty: (2) Knowledge: (F) Page: 456

22. All of the following are important factors in determining an optimal mode of
transportation to be used in foreign markets EXCEPT:
a. the cost of transportation.
b. the value-to-volume ratio.
c. the perishability of the product.
d. obsolescence along the product life cycle.
e. the cost of insurance.

Difficulty: (3) Knowledge: (F) Pages: 456

23. The _________________ is determined by how much value is added to the materials
used in the product.

a. perishability of the product
b. cost of transportation
c. the cost of insurance
d. the value-to-volume ratio
e. the intermodal ratio

Difficulty: (1) Knowledge: (F) Page: 456

24. The ________________ of the product refers to the quality degradation over time
and/or product obsolescence along the product life cycle.

a. perishability
b. cost of transportation
c. cost of insurance
d. value-to-volume ratio
e. intermodal ratio

Difficulty: (1) Knowledge: (F) Page: 456

25. All of the following are viable options for shipping products internationally on a
global basis (anywhere in the world) EXCEPT:

a. ocean shipping.
b. air freight.
c. cargo liner service.
d. truck.
e. intermodal transportation.

Difficulty: (2) Knowledge: (A) Page: 456

26. The primary forms of ocean shipping include all of the following EXCEPT:

a. liner service.
b. bulk shipping.
c. tanker shipping.
d. irregular runs.
e. FedEx surface.

Difficulty: (1) Knowledge: (A) Page: 456

27. If a product were to be categorized as being heavy, bulky, and nonperishable,
probably the best form of global shipping would be:

a. ocean shipping.
b. air freight.
c. truck.
d. rail.
e. barge.

Difficulty: (1) Knowledge: (F) Page: 456

28. If a company wished to ship semiconductor chips abroad, they would probably
choose:

a. ocean shipping.
b. air freight.
c. truck.
d. rail.
e. barge.

Difficulty: (1) Knowledge: (A) Page: 457

29. Research has shown that if Nike or Reebok were to be transporting their footwear
from plants in Asia to the United States, they would probably choose which of the
following transportation modes?

a. ocean shipping
b. air freight
c. truck
d. rail
e. barge

Difficulty: (2) Knowledge: (A) Page: 458

30. The traditional logistics strategy involves ____________________ based on
forecasting and inventory speculation.

a. supply and demand
b. anticipatory demand management
c. inventory volume equations
d. purchasing ratios
e. microeconomic principles

Difficulty: (2) Knowledge: (F) Page: 458

31. Information technology, electronic data interchange, and intermodal transportation
have made ____________________ a reality in physical distribution.

a. low cost transportation
b. a “no returns” policy
c. ultimate distribution service
d. just-in-time delivery
e. accurate purchasing management

Difficulty: (2) Knowledge: (F) Page: 458

32. Multinational corporations can use ________________ as a strategic tool in dealing
with currency fluctuations and as a hedge against inflation.

a. buying power
b. just-in-time management
c. just-in-time delivery
d. purchasing management
e. inventory

Difficulty: (3) Knowledge: (F) Page: 458

33. By increasing ___________________ before imminent depreciation of a currency
instead of holding cash, the firm may reduce its exposure to currency depreciation
losses.

a. buying power
b. plant and equipment
c. trucks
d. materials handling equipment (such as forklifts)
e. inventory

Difficulty: (2) Knowledge: (F) Page: 458

34. ___________ inventories also provide a hedge against inflation because the value of
the goods/parts held in inventory remains the same compared to the buying power of
local currency.

a. High-tech
b. Low-tech
c. High
d. Low
e. None of the above

Difficulty: (3) Knowledge: (A) Page: 458

35. __________________ refers to coordinating production and distribution across
geographic boundaries.

a. Rationalization
b. Utility management
c. Physical distribution management
d. Logistic integration
e. Logistic modeling

Difficulty: (2) Knowledge: (F) Page: 459

36. _________________ means reducing resources to achieve more efficient and
cost-effective operations.

a. Rationalization
b. Utility management
c. Physical distribution management
d. Logistic integration
e. Logistic modeling

Difficulty: (2) Knowledge: (F) Page: 459

37. Another profound change in the last decade is the proliferation of _______________.

a. IT warehouses
b. e-commerce
c. information technology
d. global shipping traffic
e. global air traffic

Difficulty: (2) Knowledge: (F) Page: 459

38. 3PL stands for:

a. third-party logistics.
b. third-power logistics.
c. third-peer logistics.
d. third-production logistics.
e. none of the above.

Difficulty: (1) Knowledge: (F) Page: 461

39. The largest third-party logistics sector is the value-added ________________ and
_________________ industry.

a. warehousing, purchasing
b. warehousing, manufacturing
c. warehousing, distribution
d. warehousing, painting
e. none of the above

Difficulty: (2) Knowledge: (F) Page: 461

40. The trend toward third-party logistics is a result of the _____________ and the
_____________.

a. Internet, enterprise resource planning
b. Internet, technology simulations
c. Internet, customer relationship management
d. Internet, Intranet
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 462

41. The Internet and Intranet facilitate __________________________.

a. parallel delivery.
b. cheap delivery.
c. expensive delivery.
d. forward-time delivery.
e. on-time delivery.

Difficulty: (1) Knowledge: (F) Page: 462

42. _________________ influences decisions regarding what activities and
technologies a company should concentrate its investment and managerial
resources in (in relation to its competitors in the industry).
a. Relative advantage
b. Absolute cost advantage
c. Comparative advantage
d. Competitive advantage
e. Sourcing advantage

Difficulty: (2) Knowledge: (F) Page: 464

43. __________________ affects the company’s decision about where to source and
market, based on lower cost of labor and other resources in one country relative to
another.

a. Relative advantage
b. Absolute cost advantage
c. Comparative advantage
d. Competitive advantage
e. Sourcing advantage

Difficulty: (2) Knowledge: (F) Page: 464

44. Some distribution companies even find that the best way to be successful is to create a
distribution ________________.

a. alliances
b. mergers
c. acquisitions
d. consortia
e. joint ventures

Difficulty: (3) Knowledge: (F) Page: 463

45. Sourcing strategy includes two basic choices. One of these is intra-firm sourcing
and the other is __________________.

a. importing
b. outsourcing
c. in-sourcing
d. matrix manipulation
e. horizontal integration

Difficulty: (1) Knowledge: (F) Page: 465

46. As a type of intra-firm sourcing, _____________________ is when a company
procures major components in-house by producing them domestically.

a. domestic in-house sourcing
b. offshore subsidiary sourcing
c. domestic purchasing arrangement
d. offshore outsourcing (offshore sourcing)
e. export management company

Difficulty: (2) Knowledge: (F) Page: 465

47. As a type of intra-firm sourcing, _____________________ is when a company
procures major components from its foreign subsidiary.

a. domestic in-house sourcing
b. offshore subsidiary sourcing
c. domestic purchasing arrangement
d. offshore outsourcing (offshore sourcing)
e. export management company

Difficulty: (1) Knowledge: (F) Page: 465

48. As a type of outsourcing, _____________________ is when a company
buys major components from independent suppliers at home.

a. domestic in-house sourcing
b. offshore subsidiary sourcing
c. a domestic purchasing arrangement
d. offshore outsourcing (offshore sourcing)
e. export management company

Difficulty: (2) Knowledge: (F) Pages: 466

49. As a type of outsourcing, _____________________ is when a company
buys major components from independent suppliers overseas.

a. domestic in-house sourcing
b. offshore subsidiary sourcing
c. a domestic purchasing arrangement
d. offshore outsourcing (offshore sourcing)
e. export management company

Difficulty: (1) Knowledge: (F) Page: 466

50. Covisint is probably the largest global online ________ procurement system.

a. C2B
b. B2B
c. B2G
d. C2C
e. B2C

Difficulty: (2) Knowledge: (F) Page: 466-67

51. Typical B2B procurement systems rely on _______________ that emphasize the
lowest bids on a global basis.

a. promotions
b. selling
c. manufacturing
d. auctions
e. production

Difficulty: (2) Knowledge: (F) Page: 469

52. Companies that outsource to the extent that they adopt a “designer role” in
global competition (i.e., offer innovations in product design without investing
in manufacturing process technology) have been described by some as being:

a. vertical corporations.
b. horizontal corporations.
c. hollow corporations.
d. supply and demand corporations.
e. monopoly manufacturers.

Difficulty: (3) Knowledge: (F) Page: 468

53. A __________________ is an area that is located within a nation, but is considered
outside of the customs territory of the nation.

a. border zone
b. red zone district
c. warehouse district
d. dock facility
e. free trade zone

Difficulty: (1) Knowledge: (F) Page: 472

54. In the United States, a free trade zone is officially called a __________________.

a. Maquiladora operation
b. border zone
c. red zone district
d. Foreign Trade Zone
e. Channel Zone

Difficulty: (2) Knowledge: (F) Page: 473

55. All of the following are benefits of using a free trade zone EXCEPT:

a. duty deferral and elimination.
b. lower tariff rates.
c. no government interference in intelligence gathering activities.
d. exchange rate hedging.
e. “Made in U.S.A.” designation.

Difficulty: (1) Knowledge: (F) Page: 473, Exhibit 15-4

56. Duty deferral and elimination, lower tariff rates, exchange rate hedging, and a
“Made in U.S.A.” designation are all benefits of using a __________________.

a. Maquiladora operation
b. border zone
c. red zone district
d. Foreign Trade Zone
e. Channel Zone

Difficulty: (2) Knowledge: (F) Page: 473, Exhibit 15-4

57. At the macro-level, benefits of using a free trade zone include all of the following
EXCEPT:

a. increased investment and employment.
b. more revenue through increased local taxes.
c. obtaining a beachhead in a foreign market without being in the mainstream
distribution process.
d. the ability to reassemble large shipments into different groupings.
e. no duties on labor.

Difficulty: (3) Knowledge: (A) Page: 473, Exhibit 15-4

58. Japan has established trade zones to increase __________________.

a. maquiladora operations
b. assembly operations
c. imports
d. exports
e. none of the above

Difficulty: (3) Knowledge: (F) Page: 474

59. Various governments have established ____________________________.

a. export processing circles.
b. export processing groups.
c. export processing clans.
d. export processing networks.
e. export processing zones.

Difficulty: (3) Knowledge: (A) Page: 474

60. _________________________ usually provide tax- and duty-free treatment of
production facilities whose output is meant to be exported.

a. Gray products processing zones
b. High-tech processing zones
c. Maquiladora processing zones
d. Export processing zones
e. Import processing zones

Difficulty: (2) Knowledge: (F) Page: 474

61. To show the increasing power of retailers in today’s business world, the traditional
supply chain that was once powered by the manufacturer has been turned around.
Distribution today is characterized as being ____________ in nature.

a. push
b. pull
c. vertical shove
d. horizontal slant
e. parallelism

Difficulty: (2) Knowledge: (F) Page: 480

62. Which of the following should a company NOT do with a channel partner?

a. seek companies with good contacts
b. treat companies as short-term partners
c. withhold information from the distribution partner
d. allow the distribution partner to make marketing strategy decisions
e. all of the above

Difficulty: (3) Knowledge: (A) Page: 476-77

63. If a retail firm sells a product under its own store name it is called a:

a. unique brand.
b. vertical brand.
c. horizontal brand.
d. store brand or private label.
e. hybrid label.

Difficulty: (1) Knowledge: (F) Page: 479

64. When Heinz sells its soup products to grocery store chains and allows them to
put their own store names on the product, the product is being sold as a:

a. domestic brand.
b. national brand.
c. manufacturers brand.
d. store brand or private label.
e. service label.

Difficulty: (1) Knowledge: (A) Page: 479

65. In which of the following countries are store brands marginal players because of
loyalty to national or manufacturer brands?

a. United States.
b. United Kingdom.
c. Japan.
d. France.
e. Canada.

Difficulty: (3) Knowledge: (A) Page: 480

66. All of the following are factors that have explained the success of private labels
in recent years EXCEPT:

a. better packaging decoration.
b. improved quality of private-label products.
c. development of premium private-label brands.
d. expansion into new product categories.
e. internationalization of retail chains.

Difficulty: (2) Knowledge: (F) Page: 480

67. As a branding strategy, _______________ is especially attractive to MNCs that
face well-entrenched incumbent brands in the markets they plan to enter. (This
overcomes the problem of shelf-space denial.)

a. domestic branding
b. national branding
c. manufacturers branding
d. store branding or private labeling
e. service labeling

Difficulty: (1) Knowledge: (F) Page: 480

68. The traditional supply chain powered by manufacturer push is becoming a:

a. demand chain driven by logistics.
b. demand chain driven by advertising.
c. service chain driven by customer service.
d. service chain driven by response time.
e. demand chain driven by customer pull.

Difficulty: (1) Knowledge: (F) Page: 480

69. With respect to strategies available to the business unit, a ____________ strategy
appears to be more effective than a __________ strategy in emerging markets.

a. service/product
b. product/service
c. push/pull
d. pull/push
e. pull/parallel

Difficulty: (2) Knowledge: (A) Page: 480

70. On-time retail information management carries two distinct advantages which are:

a. reduced inventory and accounting information at the retail level.
b. reduced inventory and market information at the retail level.
c. reduced inventory and manufacturing information at the retail level.
d. reduced inventory and production information at the retail level.
e. reduced inventory and outsourcing information at the retail level.

Difficulty: (3) Knowledge: (A) Page: 481

71. Industrialized countries tend to have a lower distribution outlet density than the
_______________________.

a. regional markets
b. global markets
c. world markets
d. submerging markets
e. emerging markets

Difficulty: (2) Knowledge: (A) Page: 482

72. The Large Scale Retail Store Law (LSRSL) in _______________ helped to protect
small retail stores.

a. Singapore
b. Pakistan
c. Indonesia
d. Japan
e. South Korea

Difficulty: (2) Knowledge: (A) Page: 483

73. In _________________, store hours are limited and stores do not open on Sundays.

a. Germany
b. USA
c. Mexico
d. Brazil
e. UK

Difficulty: (2) Knowledge: (A) Page: 485

74. _______________ is the fastest growing Internet market in Asia.

a. China
b. India
c. Indonesia
d. Hong Kong
e. South Korea

Difficulty: (2) Knowledge: (A) Page: 486

75. The Mexican version of the free trade zone is called the _________________.

a. Maquiladora operation or industry
b. border zone
c. red zone district
d. Foreign Trade Zone
e. Channel Zone

Difficulty: (2) Knowledge: (F) Page: 489

76. In Mexico another name for the Maquiladora operation or industry is the:

a. in-bond or twin-plant program.
b. bonded warehouse.
c. border zone.
d. cross border zone.
e. indentured zone.

Difficulty: (2) Knowledge: (F) Page: 489

77. In Mexico, the free trade zone program (also called the in-bond or twin-plant
program) is called the _____________________________.

a. Maquiladora operation or industry
b. border zone
c. red zone district
d. Foreign Trade Zone
e. Channel Zone

Difficulty: (2) Knowledge: (A) Page: 489

78. Mexico allows duty-free imports of machinery and equipment for manufacturing
as well as components for further processing and assembly, as long as at least 80
percent of the plant’s output is exported. This is called a _______________
industry.

a. moonlighting
b. cross border
c. gray market
d. TRW
e. Maquiladora

Difficulty: (2) Knowledge: (A) Page: 489

79. Mexico’s border industrialization program was developed in __________.

a. 1945
b. 1955
c. 1965
d. 1975
e. 1985

Difficulty: (3) Knowledge: (F) Page: 489

80. Mexico permits _______ percent foreign ownership of the maquiladora plants in the
designated maquiladora zone.

a. 25
b. 50
c. 75
d. 90
e. 100

Difficulty: (2) Knowledge: (F) Page: 489

81. Mexico is an attractive location for ____________ intensive assembly.

a. capital
b. labor
c. technology
d. repair
e. service

Difficulty: (1) Knowledge: (A) Page: 489

True/False Short Answer

82. When Peter Drucker described logistics as “the darkest continent of business” he
probably meant it is was ________________________.

83. In 2008, in the United States, total logistical cost is estimated to be about 20 percent of the country’s GDP.

84. Global logistics encompasses materials management only.

Difficulty: (1) Knowledge: (F) Page: 453

85. _________________ transportation refers to the seamless transfer of goods from one
mode of transport to another and vice versa without the hassle of unpacking and
repackaging.

86. Materials management does not include the inflow of raw material, parts, and supplies through the firm.

Difficulty: (2) Knowledge: (F) Page: 453

87. ________________ is defined as the design and management of a system that
directs and controls the flows of materials into, through and out of the firm across
national boundaries to achieve its corporate objectives at a minimum total cost.

88. Global logistics, unlike domestic logistics, does not put emphasis on physical
distribution.

Difficulty: (2) Knowledge: (F) Page: 453

89. ___________________ refers to the inflow of raw materials, parts, and supplies
in and through the firm.

90. ___________________ refers to the movement of the firm’s finished products
to its customers, consisting of transportation, warehousing, inventory,
customer service/order entry, and administration.

91. Materials management refers to the movement of the firm’s finished products
to its customers, consisting of transportation, warehousing, inventory,
customer service/order entry, and administration.

92. Physical distribution refers to the inflow of raw materials, parts, and supplies
in and through the firm.

93. The bulk of international trade is handled by airlines.

94. The inventory-to-volume ratio is determined by how much value is added to materials
used in the product.

95. Air freight represents more than 40 percent of the value of goods shipped in
international commerce.

96. Ocean shipping is used extensively for the transport of heavy perishable cargoes.

97. In intermodal transportation, only one type of transportation is employed.

98. Rationalization means reducing resources to achieve more efficient and cost-effective operations.

Difficulty: (1) Knowledge: (A) Page: 459

99. ____________________ refers to coordinating production and distribution
across geographic boundaries.

100. In global logistics and distribution, 3PL stands for:

101. A ___________________ is an area that is located within a nation, but is
considered outside of the customs territory of the nation.

102. The Mexican version of a free trade zone is called the ___________________.

103. Wal-Mart is the largest retailer in the world.

104. LSRSL stands for:

105. In China, basket shopping is still considered the norm for most consumers.

Difficulty: (2) Knowledge: (A) Page: 485

106. An agent intermediary takes title to goods.

Difficulty: (1) Knowledge: (F) Page: 475

107. A merchant intermediary does not take title to goods.

Difficulty: (1) Knowledge: (F) Page: 475

108. In Japan, private brands are very popular.

Difficulty: (2) Knowledge: (F) Page: 480

Essay

109. Explain what the terms global logistics, materials management, and physical distribution mean. Describe the various operations and procedures encompassed by these terms.

110. The global logistics manager must understand the specific properties of the different modes of transportation in order to use them optimally. What are the most important factors in determining an optimal mode of transportation? List and briefly describe each of the factors.

111. Explain the role that so called “third-party logistics” (3PL) companies play in contemporary international trade. Cite the advantages of using third-party companies in the trade process.

112. Explain the role of the free trade zone in modern trade. Explain the free trade zone’s relationship and benefit to global logistics.

113. In which parts of the world are private labels popular? Why? What factors might explain this?

114. Explain the concept and function of the Maquiladora operation or industry in Mexico.

Chapter 16

Multiple Choice

1. ___________________ is the most popular way for many companies to become
international.

a. Exporting
b. Importing
c. Licensing
d. Contract manufacturing
e. None of the above

Difficulty: (2) Knowledge: (F) Page: 491

2. _______________ is usually the first entry mode of entry used by many companies.

a. Exporting
b. Importing
c. Licensing
d. Contract manufacturing
e. None of the above

Difficulty: (1) Knowledge: (F) Page: 491

3. In 2011, an estimated _______________ American jobs depended on international trade and export expansion.

a. 1 million
b. 8 million
c. 10 million
d. 15 million
e. 20 million

Difficulty: (3) Knowledge: (F) Page: 492

4. In 2011, exports represented about __________ percent of the U.S. GDP.

a. 5 percent
b. 8 percent
c. 9 percent
d. 10 percent
e. 14 percent

Difficulty: (3) Knowledge: (F) Page: 492

5. For a firm beginning exports for the first time, the first step is to use available
___________________.

a. primary data
b. secondary data
c. tertiary data
d. Internet data
e. intranet data

Difficulty: (2) Knowledge: (F) Page: 492

6. As an aid to expanding information about world trade, increasingly, international
marketing information is available in the form of ____________________.

a. CD-ROMs
b. electronic encyclopedias
c. electronic databases
d. CIA reports
e. government intelligence reports

Difficulty: (2) Knowledge: (F) Page: 492

7. Which of the following countries is the largest participant in database growth?

a. United Kingdom
b. Germany
c. Japan
d. France
e. United States

Difficulty: (1) Knowledge: (A) Page: 492

8. Approximately how many databases (that can be used to help with international
trade) are available online in the world?

a. 1,000
b. 3,000
c. 4,000
d. 5,000
e. 6,000

Difficulty: (3) Knowledge: (F) Page: 492

9. Conducting export research on China and Russia would best be done by:

a. doing database research.
b. doing on-line searches.
c. doing field work.
d. using existing government facts and figures.
e. using data supplied by trade missions.

Difficulty: (2) Knowledge: (A) Page: 493

10. The identification of an appropriate overseas market and an appropriate segment
involves grouping by all of the following criteria EXCEPT:

a. socioeconomic characteristics.
b. political and legal characteristics.
c. consumer variables.
d. service variables.
e. financial conditions.

Difficulty: (2) Knowledge: (F) Page: 493

11. When attempting to identify an appropriate overseas market and an appropriate
segment, socioeconomic variables should be considered. All of the following
are socioeconomic variables that should be considered EXCEPT:

a. demographics.
b. economic.
c. geographic.
d. econometrics.
e. climatic characteristics.

Difficulty: (2) Knowledge: (F) Page: 493

12. When attempting to identify an appropriate overseas market and an appropriate
segment, consumer variables should be considered. All of the following
are consumer variables that should be considered EXCEPT:

a. service quality.
b. purchase frequency.
c. lifestyle.
d. preferences.
e. purchase behavior.

Difficulty: (2) Knowledge: (F) Page: 493

13. To get an idea of market segments in a foreign country, the marketer can first
group regions within countries across the world by macroeconomic variables.
An illustration of one of these macroeconomic variables would be:

a. level of industrial development.
b. purchase preferences.
c. services sought.
d. lifestyles.
e. purchase frequency.

Difficulty: (2) Knowledge: (A) Page: 493

14. Data for grouping along macroeconomic criteria are available from international
agencies such as:

a. the International Court of Justice
b. the World Court.
c. the World Bank.
d. the National Geographic Society.
e. the World Economic Council.

Difficulty: (2) Knowledge: (F) Page: 494

15. The easiest product to sell abroad with respect to logistics is a(n) _____________
product.

a. differentiated
b. semi-standardized
c. clustered
d. gray market
e. standardized

Difficulty: (1) Knowledge: (F) Page: 494

16. _________________ exporting involves the use of independent U.S. middlemen
to market the firm’s products overseas.

a. Direct
b. Indirect
c. Parallel
d. Synchronized
e. Dual

Difficulty: (2) Knowledge: (F) Page: 495

17. When independent U.S. middlemen market a firm’s goods in an overseas market,
they are called ______________________. They market through their own network
of foreign distributors and their own sales force.

a. exporters
b. export specialists
c. export representatives
d. distribution specialists
e. parallel exporters

Difficulty: (2) Knowledge: (F) Page: 495

18. The CEM stands for:

a. cash export manager.
b. customs export manager.
c. charismatic export manager.
d. combination export manager.
e. collective export manager.

Difficulty: (2) Knowledge: (F) Page: 495

19. The _________________ acts as the export department to a small exporter or a
large producer with small overseas sales.

a. combination export manager (CEM)
b. export merchant
c. export commission house
d. piggyback exporter
e. trading company

Difficulty: (2) Knowledge: (F) Page: 495

20. The Japanese trading companies are known as:

a. keiretsus
b. chaebols
c. sogonets
d. sogoshoshas
e. akimonos

Difficulty: (3) Knowledge: (F) Page: 495

21. In order to expand their exporting activities, many Japanese firms rely on giant
general trading companies known as _________________________.

a. keiretsus
b. chaebols
c. sogonets
d. sogoshoshas
e. akimonos

Difficulty: (3) Knowledge: (F) Page: 495

22. All of the following are common types of export representatives in the United
States EXCEPT:

a. combination export manager (CEM).
b. export merchant.
c. export commission house.
d. export consortium.
e. the trading company.

Difficulty: (3) Knowledge: (F) Page: 495

23. The _________________ buys and sells on their own accounts and assumes all the
responsibilities of exporting a product. Manufacturers do not control sales activities.

a. combination export manager (CEM)
b. export merchant
c. export commission house
d. piggyback exporter
e. trading company

Difficulty: (2) Knowledge: (F) Page: 495

24. The _____________________ is someone who brings together an overseas buyer
and a U.S. manufacturer for the purpose of an export sale and earns a commission
for establishing a contact that results in a sale.

a. combination export manager (CEM)
b. export broker
c. export commission house
d. piggyback exporter
e. trading company

Difficulty: (2) Knowledge: (F) Page: 495

25. A(n) ____________________ places orders on behalf of its foreign clients
with U.S. manufacturers and acts as a finder for its client to get the best buy.

a. combination export manager (CEM)
b. export broker
c. export commission house
d. piggyback exporter
e. trading company

Difficulty: (2) Knowledge: (F) Page: 495

26. ___________________ are large, foreign organizations engaged in exporting and
importing. They buy on their own account and export the goods to their home
country.

a. Combination export manager (CEM)
b. Export broker
c. Export commission house
d. Piggyback exporter
e. Trading companies

Difficulty: (2) Knowledge: (F) Page: 495

27. A(n) ___________________ refers to the practice where U.S. firms that have an
established export department assume, under a cooperative agreement, the
responsibility of exporting the products of other U.S. companies.

a. combination export manager (CEM)
b. export broker
c. export commission house
d. piggyback exporter
e. trading company

Difficulty: (2) Knowledge: (F) Page: 496

28. Which of the following is an example of a large trading company?

a. IBM.
b. General Motors.
c. Mitsui.
d. Volvo.
e. Wal-Mart.

Difficulty: (1) Knowledge: (A) Page: 496

29. _________________ exporting occurs when a manufacturer or exporter sells directly
to an importer or buyer located in a foreign market.

a. Direct
b. Indirect
c. Parallel
d. Synchronized
e. Dual

Difficulty: (2) Knowledge: (F) Page: 496

30. With respect to direct exporting, the primary difference between a foreign sales
subsidiary and a foreign sales branch is that the foreign sales branch:

a. is larger.
b. is smaller.
c. is not a separate legal entity.
d. uses home country managers.
e. does not pay taxes.

Difficulty: (2) Knowledge: (A) Page: 497

31. The following characteristics (high set-up costs, higher credit risks, and higher
customer loyalty) apply to which of the following forms of exporting?

a. direct
b. indirect
c. parallel
d. synchronized
e. dual

Difficulty: (2) Knowledge: (A) Page: 497, Exhibit 16-2

32. In the U.S., ______________________ allows exporters to file export information at
no cost over the Internet.

a. Auxiliary Export System
b. Amended Export System
c. Automated Export System
d. Alliance Export System
e. none of the above

Difficulty: (3) Knowledge: (F) Page: 497

33. All exports from the United States (except to Canada and U.S. territories) require
a(n) _____________________.

a. letter of credit.
b. letter of ownership.
c. letter for transportation permission.
d. export license.
e. social security number.

Difficulty: (2) Knowledge: (A) Page: 498

34. The second pillar of the export transaction is the logistics of the export transaction.
Included in this transaction are all of the following EXCEPT:

a. a bill of lading.
b. the terms of sale.
c. the payment.
d. a dispute mechanism.
e. monitoring of the shipment and delivery of the goods.

Difficulty: (3) Knowledge: (F) Page: 499

35. A(n) _________________________ is a contract between the exporter and the
shipper indicating that the shipper has accepted responsibility for the goods and
will provide transportation in return for payment.

a. bill of disclosure
b. term of sale
c. payment statement
d. transportation invoice
e. bill of lading

Difficulty: (2) Knowledge: (F) Page: 499

36. A(n) _______________________ is a bill for the goods stating basic information
about the transaction, including a description of the merchandise, total cost of the
goods sold, addresses of the buyer and seller, and delivery and payment.

a. bill of disclosure
b. term of sale
c. payment statement
d. commercial invoice
e. bill of lading

Difficulty: (2) Knowledge: (F) Page: 499

37. When the exporter quotes a price for the goods, including charges for delivery
of the goods alongside a vessel at a port (the seller covers all costs of unloading and
wharfage at the shipment port and the buyer covers all other charges to get the goods
to the buyer), this form of terms of shipment is called:

a. ex-works.
b. free alongside ship (FAS).
c. free on board (FOB).
d. cost and freight (CFR).
e. Cost, Insurance, and Freight (CIF).

Difficulty: (3) Knowledge: (A) Page: 501, Exhibit 16-4

38. INCOTERMS 2000 which went into effect from January 1, 2000 and is an acronym
for ____________________________, are the internationally accepted standard
definitions for the terms of sale by the International Chamber of Commerce.

a. Industrial Commercial Terms
b. Insurance Commercial Terms
c. Irrevocable Commercial Terms
d. International Commercial Terms
e. none of the above

Difficulty: (3) Knowledge: (F) Page: 501

39. When the exporter quotes a price for the goods, including charges for delivery
of the goods alongside a vessel at a port (the seller covers all costs of unloading and
wharfage plus loading the goods on the vessel and the buyer covers all other charges
to get the goods to the buyer), this form of terms of shipment is called:

a. ex-works.
b. free alongside ship (FAS).
c. free on board (FOB).
d. cost and freight (CFR).
e. Cost, Insurance, and Freight (CIF).

Difficulty: (3) Knowledge: (A) Page: 501, Exhibit 16-4

40. All of the following are possible payment terms for goods exported to another nation
EXCEPT:

a. advance payment
b. third party draft.
c. confirmed irrevocable letter of credit.
d. unconfirmed irrevocable letter of credit
e. open account

Difficulty: (3) Knowledge: (F) Page: 502, Exhibit 16-5

41. A(n) __________________ is a payment form where a shipment is held by the
importer until the merchandise has been sold, at which time payment is made to the
exporter.

a. cash with order
b. confirmed irrevocable letter of credit
c. sight draft
d. time draft
e. consignment

Difficulty: (1) Knowledge: (F) Page: 502, Exhibit 16-5

42. A(n) _______________________ is a payment form where a cash payment occurs
when the order is placed.

a. cash with order
b. confirmed irrevocable letter of credit
c. sight draft
d. time draft
e. consignment

Difficulty: (1) Knowledge: (F) Page: 502, Exhibit 16-5

43. A(n) ________________________ is a payment form where a draft is so drawn as to
be payable on presentation to the drawee (usually the buyer).

a. cash with order
b. third party draft
c. confirmed irrevocable letter of credit
d. sight draft
e. time draft

Difficulty: (2) Knowledge: (F) Page: 502, Exhibit 16-5

44. The terms of payment between the exporter and importer are a matter of negotiation
and depend on a variety of factors. All of the following might be on that list of
factors EXCEPT:

a. the buyer’s credit standing.
b. the seller’s reputation.
c. the amount of the sale transaction.
d. the risks associated with the type of merchandise to be shipped.
e. the usual practice in the trade.

Difficulty: (2) Knowledge: (F) Page: 500

45. _______________ risk is the risk that the importer will not pay or fail to pay on the
agreed terms.

a. Credit
b. Exchange
c. Transfer
d. Importer
e. Exporter

Difficulty: (1) Knowledge: (F) Page: 500

46. ___________________ risk exists when the sale is in the importer’s currency and
that currency depreciates in terms of the dollar, leaving the exporter with a lesser
number of dollars.

a. Foreign credit
b. Foreign exchange
c. Foreign transfer
d. Foreign payment
e. Foreign delivery

Difficulty: (1) Knowledge: (F) Page: 500

47. ___________________ risk refers to the chances that payment will not be made
due to the importer’s inability to obtain U.S. dollars and transfer them to the
exporter.

a. Credit
b. Exchange
c. Transfer
d. Importer
e. Exporter

Difficulty: (1) Knowledge: (F) Page: 500

48. A confirmed irrevocable letter of credit is issued by the ____________ bank and
confirmed by a bank usually in the ____________ country.

a. importer’s, exporter’s
b. exporter’s, importer’s
c. investment, exporter’s
d. government’s, exporter’s
e. none of the above

Difficulty: (3) Knowledge: (F) Page: 502, Exhibit 16-5

49. A shipment that is held by the importer until the merchandise has been sold is called:

a. advance payment.
b. confirmed irrevocable letter of credit.
c. unconfirmed irrevocable letter of credit.
d. open account.
e. consignment.

Difficulty: (2) Knowledge: (F) Page: 502, Exhibit 16-5

50. The Japan External Trade Organization (JETRO) which helps foreign businesses to
export to Japan is affiliated with Japan’s _____________________________.

a. Ministry of Business, Trade, and Industry
b. Ministry of Economy, Trade, and Industry
c. Ministry of Economy, Trade, and Technology
d. Ministry of Economy, Trade, and Logistics
e. Ministry of Economy, Trade, and Agriculture

Difficulty: (3) Knowledge: (F) Page: 504

51. The Ex-Im Bank is described as being a:

a. bank that lends exclusively to importers.
b. new name for the old “World Bank.”
c. federally supported bank whose mission is to thwart communism by making
loans to anti-communist nations and exporters.
d. federally supported bank whose mission is to support exporters with necessary
credit.
e. bank which is not in existence yet. The concept still awaits Congressional
approval.

Difficulty: (2) Knowledge: (F) Page: 505

52. The main emphasis of the Ex-Im Bank’s lending practices today is in the area of:

a. loans to Japan.
b. loans to Taiwan.
c. loans to Mexico.
d. loans for prior bankrupt countries.
e. project finance (such as infrastructure projects—roads, dams, etc.).

Difficulty: (2) Knowledge: (A) Page: 505

53. Ex-Im Bank is not an aid or development agency, but a_____________________
corporation.

a. state
b. domestic
c. regional
d. private
e. government

Difficulty: (2) Knowledge: (A) Page: 505

54. Ex-Im Bank has two major programs in place which include:

a. Project Finance Division and Working Capital Program.
b. Project Finance Division and Working Capital Business Program.
c. Project Finance Division and Working Capital Export Program.
d. Project Finance Division and Working Capital Guarantee Program.
e. Project Finance Division and Working Capital Infrastructure Program.

Difficulty: (1) Knowledge: (A) Page: 505

55. One of the biggest advantages the United States has in importing is that U.S.
companies can:

a. order unlimited amounts of goods.
b. always sell what they order abroad.
c. be assured that the government will support their trade efforts.
d. pay in U.S. dollars–a currency accepted everywhere.
e. always turn a profit with the goods they buy because of market demand.

Difficulty: (3) Knowledge: (A) Page: 508

56. Since most world trade is done in dollars, the U.S. importer does not usually need to
_____________ foreign exchange transactions.

a. capitalize
b. hedge
c. capitate
d. survey
e. monitor

Difficulty: (1) Knowledge: (F) Page: 508

57. All of the following are activities that an importer would normally go through in
order to complete the purchase process. Which of the items listed below does not
logically fit?

a. Find a bank in the exporter’s country to handle financial transactions.
b. Establish a letter of credit to smooth the process.
c. Decide on the mode of transfer of goods.
d. Always use an export or import middleman to expedite the process.
e. Check compliance with national laws.

Difficulty: (2) Knowledge: (A) Page: 510

58. When a shipment reaches the United States, the consignee (usually the importer) will
file ______________ with the port director at the port of entry.

a. visas
b. product passports
c. bills of landing
d. bills of shipping
e. entry documents

Difficulty: (2) Knowledge: (F) Page: 510

59. With respect to shipments entering the United States, a(n) __________ is a guarantee
by someone that the duties and any potential penalties will be paid to the customs
of the importing country.

a. line of credit
b. transfer
c. bond
d. permit
e. tariff

Difficulty: (1) Knowledge: (F) Page: 510

60. Merchandise arriving from Canada and Mexico, trade fair goods, and perishable
goods and shipments assigned to the U.S. government almost always utilize the
____________________ to enable fast delivery after arrival.

a. quick release form
b. quick permit form
c. Customs form 7200
d. Special Permit for Immediate Delivery
e. block and load release form

Difficulty: (2) Knowledge: (A) Page: 511

61. If goods enter a ________________, they can be re-exported anytime (up to five
years) without payment of duty.

a. holding pen
b. corporate security zone
c. bonded warehouse
d. wharf zone
e. parallel import zone

Difficulty: (2) Knowledge: (F) Page: 511

62. When import duties are paid, the _________________ duty is a percentage of the
value of the merchandise.

a. ad valorem
b. specific
c. compound
d. nontariff
e. import

Difficulty: (1) Knowledge: (F) Page: 511

63. When import duties are paid, the _________________ duty is a specified amount
of the per unit weight or other quantity of the merchandise.

a. ad valorem
b. specific
c. compound
d. nontariff
e. import

Difficulty: (2) Knowledge: (F) Page: 511

64. When import duties are paid, the _________________ duty is a combination of a
specified amount of the per unit weight or other quantity of the merchandise plus
an ad valorem rate.

a. bonded
b. corkage
c. compound
d. nontariff
e. import

Difficulty: (1) Knowledge: (F) Page: 511

65. _________________ duties are assessed on imported merchandise sold to
importers in the United States at a price that is less than the fair market value.

a. Ad valorem
b. Specific
c. Compound
d. Nontariff
e. Antidumping

Difficulty: (1) Knowledge: (F) Page: 511

66. ______________________ duties are duties that are assessed to counter the
effects of subsidies provided by foreign governments to goods that are exported
to the United States.

a. Ad valorem
b. Specific
c. Compound
d. Countervailing
e. Antidumping

Difficulty: (1) Knowledge: (F) Page: 511

67. ________________ channels refer to the legal export/import transaction involving
genuine products into a country by intermediaries other than the authorized
distributors.

a. Black market
b. Gray market
c. Positioned
d. Zoned
e. Red zone

Difficulty: (2) Knowledge: (F) Page: 512

68. Another name for gray market channels is _________________.

a. positioned imports
b. concentric marketing
c. strategic entry imports
d. parallel imports
e. sidebar hedging

Difficulty: (2) Knowledge: (A) Page: 512

69. Brand reputation is a critical element in _________________ products.

a. gray
b. black
c. furniture
d. smuggled
e. none of the above

Difficulty: (1) Knowledge: (A) Page: 512

70. All of the following conditions lend to the development of gray markets EXCEPT:

a. currency fluctuations.
b. differences in market demand.
c. legal differences.
d. opportunistic behavior.
e. foreign trade outlets.

Difficulty: (3) Knowledge: (A) Page: 513

True/False Short Answer

71. Exporting is the first mode of foreign entry used by many companies.

Difficulty: (1) Knowledge: (F) Page: 491

72. Exports represent about 4 percent of the U.S. gross domestic product (GDP).

Difficulty: (3)Knowledge: (F) Page: 492

73. For a firm beginning exports for the first time, the first step is to use available primary data.

Difficulty: (1) Knowledge: (F) Page: 492

74. The World Bank publishes the World Development Report.

Difficulty: (2) Knowledge: (F) Page: 494

75. A standardized product is not the easiest to sell abroad.

Difficulty: (1) Knowledge: (F) Page: 494

76. _________________ exporting involves using independent U.S. middlemen to
market the firm’s products overseas.

77. The combination export manager (CEM) acts as the import department to a small
importer.

Difficulty: (2) Knowledge: (F) Page: 495

78. Piggyback exporting refers to the practice where U.S. firms that have an established
export department assume, under a cooperative agreement, the responsibility of
exporting the products of other U.S. companies.

Difficulty: (2) Knowledge: (F) Page: 495

79. In the U.S., the Automated Export System (AES) enables exporters to file import
information at no cost over the Internet.

Difficulty: (1) Knowledge: (F) Page: 497

80. Exports from the United States do not require an export license.

Difficulty: (1) Knowledge: (F) Page: 498

81. A bill of lading is a contract between the exporter and the shipper indicating that the
shipper has accepted responsibility for the goods and will provide transportation in
return for payment.

Difficulty: (1) Knowledge: (F) Page: 499

82. INCOTERMS is an acronym for _____________________________________.

83. FOB is an acronym for ______________________.

84. Exchange risk is the risk that the importer will not pay or fail to pay on the agreed
terms.
Difficulty: (2) Knowledge: (F) Page: 502

85. A confirmed irrevocable letter of credit is issued by the importer’s bank and
confirmed by a bank usually in the exporter’s country.

Difficulty: (3) Knowledge: (F) Page: 502

86. The Japan External Trade Organization (JETRO) is affiliated with the U.S.
department of Commerce.

Difficulty: (1) Knowledge: (F) Page: 504

87. The World Bank is a federally supported bank whose mission is to support the Ex-Im
Bank.

Difficulty: (1) Knowledge: (F) Page: 505

88. The American Export Trading Company act was passed in 1982.

Difficulty: (2) Knowledge: (F) Page: 506

89. More than 90 percent of the world’s trade is denominated in U.S. dollars.

Difficulty: (2) Knowledge: (F) Page: 508

90. With respect to importing fees, a(n) ______________ duty is a percentage of the
value of the merchandise.

91. Antidumping duties are assessed on imported merchandise sold to importers in
the United States at a price that is less than the fair market value.

Difficulty: (2) Knowledge: (F) Page: 511

92. Gray market channels are also known as parallel imports.

Difficulty: (1) Knowledge: (F) Page: 512

93. Three conditions are necessary for gray markets to develop. The conditions include:
(a) Availability of products in other markets, (b) limited trade barriers, and (c)
_______________________.

94. Gray marketing is an illegal trade transaction.

95. Smuggling and black market activities are illegal global markets.

Essay

96. Indicate the factors that a prospective exporter might examine to choose an export market.

97. Describe the direct and indirect channels of distribution that are available to exporters. As part of the description process, indicate any conditions or advantages that might be present in these channels.

98. Pick three (3) of the options available to exporters when it comes to terms of payment. Explain each of the options available based on your choice.

99. Describe the role the U.S. government plays in maintaining and fostering export activities. Demonstrate this role with specific examples of activities that the government might undertake.

100. Describe gray markets. Explain how they develop. Describe your feelings about buying from a gray market.

Chapter 17

Multiple Choice

1. The capstone of a company’s global marketing activities is its ____________________________.

a. strategic marketing plan.
b. strategic marketing design.
c. strategic marketing circle.
d. strategic marketing products.
e. strategic marketing processes.

Difficulty: (2) Knowledge: (F) Page: 575

2. The content of a global strategic marketing plan covers the following four areas
EXCEPT:

a. a market situation analysis.
b. objectives.
c. strategies.
d. regional analysis.
e. action plans.

Difficulty: (2) Knowledge: (F) Page: 576

3. The first step of a global strategic marketing plan starts with:

a. market situation analysis.
b. actions plans.
c. strategies.
d. global ranking.
e. objectives.

Difficulty: (1) Knowledge: (F) Page: 576

4. Top-down strategic planning is based on a _____________________ approach.

a. decentralized
b. centralized
c. regional
d. globalized
e. local

Difficulty: (2) Knowledge: (F) Page: 576

5. A bottom-up planning approach starts with the ______________ subsidiaries.

a. local
b. global
c. transnational
d. manufacturing
e. high-tech

Difficulty: (2) Knowledge: (F) Page: 576

6. A recent survey of large multinational corporations found that pure ______________
planning was most popular (used by 66 percent of the companies surveyed).

a. bottom-up
b. top-down
c. strategic
d. long-term
e. short-term

Difficulty: (3) Knowledge: (F) Page: 576

7. A series of key criteria impact global organizations and their organizational designs.
All of the following would be major environmental influences on the organizational
design decision and structure EXCEPT:

a. competitive environment.
b. rate of environmental change.
c. product diversity.
d. regional trading blocs.
e. nature of customers.

Difficulty: (2) Knowledge: (F) Pages: 577-78

8. As international sales grow, the organizational structure will evolve to mirror the
growing importance of the firm’s _________________ activities.

a. local
b. regional
c. global
d. strategic
e. manufacturing

Difficulty: (1) Knowledge: (F) Page: 578

9. A series of key criteria impact global organizations and their organizational designs.
All of the following would be major firm-specific factors on the organizational
design decision and structure EXCEPT:

a. strategic importance of international business.
b. product diversity.
c. company heritage.
d. regional trading blocs.
e. quality of local managerial skills.

Difficulty: (3) Knowledge: (F) Page: 578

10. Which of the following would be considered a key environmental factor that
influences
global organization design decisions and structure?

a. strategic importance of international business.
b. product diversity.
c. company heritage.
d. regional trading blocs.
e. quality of local managerial skills.

Difficulty: (3) Knowledge: (F) Page: 578

11. In the area of global organizational design, the major firm-specific factors include the
following EXCEPT:

a. local customers.
b. strategic importance of international business.
c. product diversity.
d. company heritage.
e. quality of local managerial skills.

Difficulty: (3) Knowledge: (A) Page: 578

12. Typically, when overseas sales account for a very small fraction of the company’s
overall sales revenues, ____________________ can easily handle the firm’s
global activities.

a. complex organizational structures
b. network organizational structures
c. simple organizational structures
d. a virtual system
e. a matrix system

Difficulty: (1) Knowledge: (A) Page: 579

13. All of the following are examples of the principal designs that firms can adopt to
organize their global activities EXCEPT:

a. an international division.
b. a city division.
c. a product-based structure.
d. a geographic structure.
e. a matrix structure.

Difficulty: (2) Knowledge: (F) Pages: 578-79

14. Under the _____________________ design of global activities organization, the
company basically has two entities (the domestic division and the international
division).

a. international division
b. cryptic division
c. product-based structure
d. geographic structure
e. matrix structure

Difficulty: (1) Knowledge: (A) Page: 578

15. Under the _____________________ design of global activities organization, the
company is organized along its various product divisions.

a. international division
b. cryptic division
c. product-based structure
d. geographic structure
e. matrix structure

Difficulty: (1) Knowledge: (A) Page: 578

16. Under the _____________________ design of global activities organization, the
company is configured along areas such as countries, regions, or some combination
of these two levels.

a. international division
b. cryptic division
c. product-based structure
d. geographic structure
e. matrix structure

Difficulty: (1) Knowledge: (A) Page: 578

17. Under the _____________________ design of global activities organization, the
company uses the option of integrating two approaches so there is a dual chain of
command.

a. international division
b. cryptic division
c. product-based structure
d. geographic structure
e. matrix structure

Difficulty: (1) Knowledge: (A) Page: 579

18. Most companies that engage in global marketing will initially start off by establishing
a(n):

a. city division.
b. country division.
c. international division.
d. export department.
e. export commission manager.

Difficulty: (2) Knowledge: (F) Page: 579

19. Which of the following organizational structures is most appropriate for the company
whose product line is not too diverse and does not require a large amount of
adaptation to the local country needs?

a. international division
b. cryptic division
c. global product division structure
d. geographic structure
e. matrix structure

Difficulty: (2) Knowledge: (A) Page: 579

20. Which of the following organizational structures is most appropriate for the high-tech
company with highly complex products or MNCs with a very diversified product
portfolio?

a. international division
b. cryptic division
c. global product division structure
d. geographic structure
e. matrix structure

Difficulty: (2) Knowledge: (A) Page: 579

21. If a high-tech company organizes itself by breaking into business networks, radio
communications, public telecommunications, components, and microwave systems,
which of the following organizational structures would probably be in use?

a. international division
b. global product division structure
c. global network solutions
d. geographic structure
e. matrix structure

Difficulty: (3) Knowledge: (A) Page: 579

22. All of the following are benefits of the global product division structure EXCEPT:

a. large degree of flexibility in terms of cross-country resource allocation.
b. large degree of flexibility in terms of cross-country strategic planning.
c. scale economics.
d. facilitates a global focus.
e. easy communication and coordination among the various product divisions
without duplication of effort.

Difficulty: (2) Knowledge: (F) Page: 579

23. Which of the following areas are very difficult for a global product division to
accomplish (therefore, this area is a shortcoming)?

a. large degree of flexibility in terms of cross-country resource allocation.
b. large degree of flexibility in terms of cross-country strategic planning.
c. scale economics.
d. facilitates a global focus.
e. easy communication and coordination among the various product divisions
without duplication of effort.

Difficulty: (3) Knowledge: (A) Page: 580

24. All of the following are problems with country-based subsidiaries EXCEPT:

a. they are too costly.
b. they have coordination problems with corporate headquarters.
c. cross-fertilization is hindered.
d. local market conditions go unnoticed.
e. a not-invented-here mentality exists.

Difficulty: (3) Knowledge: (F) Page: 580

25. All of the following are profiles that are suggested for the twenty-first century
country manager EXCEPT:

a. the trader.
b. the power broker.
c. the builder.
d. the ambassador.
e. the cabinet member.

Difficulty: (3) Knowledge: (F) Pages: 581-82

26. As a profile of a twenty-first century country manager, _________________
establishes a beachhead in a new market or heads a recently acquired local distributor.
They should have an entrepreneurial spirit.

a. the trader
b. the representative
c. the builder
d. the ambassador
e. the cabinet member

Difficulty: (2) Knowledge: (A) Page: 581

27. As a profile of a twenty-first century country manager, _________________
is a team player with profit and loss responsibility for a small- to medium-sized
country. Team-manship is key here.
a. the trader
b. the representative
c. the builder
d. the ambassador
e. the cabinet member

Difficulty: (2) Knowledge: (A) Page: 582

28. As a profile of a twenty-first century country manager, _________________
develops local markets. They are entrepreneurs who are willing to be part of regional
global strategy teams.

a. the trader
b. the representative
c. the builder
d. the ambassador
e. the cabinet member

Difficulty: (2) Knowledge: (A) Page: 582

29. As a profile of a twenty-first century country manager, _________________
is in charge of large and/or strategic markets. Prime responsibilities include handling
government relations and integrating acquisitions and strategic alliances.

a. the trader
b. the power broker
c. the builder
d. the ambassador
e. the cabinet member

Difficulty: (2) Knowledge: (A) Page: 582

30. With respect to regional structures, a recent survey found that all of the following
roles were performed EXCEPT:

a. scouting.
b. liberating.
c. strategic simulation.
d. signaling commitment.
e. pooling resources.

Difficulty: (3) Knowledge: (F) Page: 583

31. The _________________ structure of organization explicitly recognizes the
multidimensional nature of global strategic decision making.

a. international division
b. customer division
c. global product division
d. geographic
e. matrix

Difficulty: (2) Knowledge: (F) Page: 583

32. The primary advantages of the matrix structure for organizing is that they represent
the growing complexities of the global market arena and:

a. it fosters team spirit and cooperation among managers.
b. it secures higher profits.
c. it does not duplicate efforts.
d. it has smooth and accurate communications.
e. it has clear lines of communication with no confusion.

Difficulty: (2) Knowledge: (F) Page: 584

33. All of the following are considered to advantages of the matrix structure of
organizing EXCEPT:

a. it fosters team spirit.
b. it fosters cooperation among managers.
c. it does not duplicate efforts.
d. it causes managers to think globally.
e. it causes managers to think globally but act locally.

Difficulty: (3) Knowledge: (F) Page: 584

34. Which of the following would be considered a disadvantage or drawback of the
matrix structure of organizing?

a. it does not foster team spirit.
b. it does not foster cooperation among managers.
c. it duplicates efforts and can cause confusion.
d. it prohibits managers from thinking globally.
e. it causes managers to think locally only.

Difficulty: (2) Knowledge: (A) Page: 584

35. All of the following are disadvantages or drawbacks of the matrix structure of
organizing EXCEPT:

a. dual reporting leads to conflicts and confusion.
b. dual profit responsibilities lead to conflicts and confusion.
c. bureaucratic bloat.
d. power clashes can occur.
e. managers think globally and act locally.

Difficulty: (1) Knowledge: (A) Page: 584

36. The __________________ is one solution that has been suggested to cope with the
shortcomings associated with the classical hierarchical organization structures.

a. international division
b. global network
c. global product division
d. geographic
e. matrix

Difficulty: (2) Knowledge: (F) Page: 585

37. The __________________ model is an attempt to reconcile the tension between
the need for local responsiveness and the wish to be an integrated whole.

a. international division
b. global network
c. global product division
d. geographic
e. matrix

Difficulty: (2) Knowledge: (F) Page: 585

38. Asea Brown Boveri (ABB), the Swiss-Swedish engineering company is an example
of ______________________.

a. local networking
b. regional networking
c. global networking
d. domestic networking
e. high-tech networking

Difficulty: (2) Knowledge: (F) Page: 586

39. The networked global organization is sometimes referred to as
_____________________.

a. international.
b. multinational.
c. transnational.
d. local-national.
e. quasi-national.

Difficulty: (3) Knowledge: (A) Page: 585

40. In the area of global branding strategies, the following options are used EXCEPT:

a. global branding committee.
b. brand champion.
c. global brand manager.
d. informal, ad-hoc branding meetings.
e. network meetings.

Difficulty: (2) Knowledge: (F) Pages: 26-27

41. In the process of global brand management, if a company decides against a formal
structure, it might still find it worthwhile to have an informal mechanism. This
usually takes the form of a(n) ______________ branding meeting.

a. ad-hoc
b. temporary
c. longitudinal
d. outside
e. domestic

Difficulty: (2) Knowledge: (F) Page: 587

42. Global branding committees are usually made up of ________________
executives.

a. matrix
b. network
c. medium-line
d. top-line
e. bottom-line

Difficulty: (2) Knowledge: (F) Page: 587

43. A ______________________ is a top-line executive (sometimes CEO) who
serves as the brand’s advocate.

a. brand champion
b. product champion
c. local champion
d. corporate champion
e. high-tech champion

Difficulty: (1) Knowledge: (F) Page: 587

44. Global brand manager positions are created when top management lacks
___________________ expertise:

a. high-tech
b. human resources
c. operational
d. manufacturing
e. marketing

Difficulty: (1) Knowledge: (F) Page: 587

45. Several management theorists have made an attempt to come up with the “right”
fit between the MNC’s environment (internal and external) and the organizational
setup. One popular model examines the relationship between organizational
structure, _____________________, and the importance of foreign sales to the
company (as a share of total sales).

a. product prices
b. domestic services
c. foreign product deliveries
d. foreign product diversity
e. purchasing habits

Difficulty: (3) Knowledge: (F) Page: 589, Exhibit 17-6

46. The Stopford and Wells model shows the relationship between the:

a. organizational structure, foreign product diversity and domestic sales.
b. organizational structure, foreign product diversity and local sales.
c. organizational structure, foreign product diversity and the importance of foreign
sales.
d. organizational structure, foreign product diversity and regional sales.
e. organizational structure, foreign product diversity and high-tech sales.

Difficulty: (3) Knowledge: (F) Page: 589, Exhibit 17-6

47. According to the Stopford and Wells model, when companies first explore the global
marketplace, they start off with a(n) ___________________________.

a. local division
b. regional division
c. international division
d. global division
e. none of the above

Difficulty: (2) Knowledge: (F) Page: 589, Exhibit 17-6

48. According to the Stopford and Wells model, as foreign sales expand without an
increase in the firm’s foreign product assortment diversity, the company will most
likely switch to a __________________________ structure.

a. host-country area
b. home-country area
c. global area
d. geographic area
e. local area

Difficulty: (3) Knowledge: (F) Page: 589, Exhibit 17-6

49. A(n) ____________________ can be described as being where country and
regional managers look at strategic issues from multiple perspectives.

a. glocal mindset
b. global mindset
c. local mindset
d. regional mindset
e. country mindset

Difficulty: (1) Knowledge: (F) Page: 590

50. To make global marketing strategies work, companies need to establish a(n)
____________________.

a. career system.
b. development system.
c. control system.
d. appeals system.
e. listening system.

Difficulty: (1) Knowledge: (F) Page: 590

51. The main purpose of a _____________ is to ensure that the behaviors of the
various parties within the organization are in line with the company’s strategic
goals.

a. career system
b. development system
c. control system
d. appeals system
e. listening system

Difficulty: (1) Knowledge: (F) Page: 590

52. All of the following are parts (or basic building blocks) of a formal control system
EXCEPT:

a. the establishment of performance standards.
b. the measurement and evaluation of performance against standards.
c. the analysis and correction of deviation from standards.
d. perfection training.
e. none of the above.

Difficulty: (1) Knowledge: (F) Page: 590-91

53. Formal control systems are also called ________________ control systems.

a. administrative
b. conductive
c. selective
d. bureaucratic
e. strategic

Difficulty: (2) Knowledge: (F) Page: 590

54. The first step in any control process should be to:

a. clearly establish rewards and punishments.
b. set standards (metrics).
c. set controls.
d. set monitoring mechanisms.
e. establish who the controller is.

Difficulty: (1) Knowledge: (F) Page: 590

55. The two types of standards are behavior and ____________________________.

a. outcome-based.
b. performance-based.
c. intellectual-based.
d. strategic-based.
e. structural-based.

Difficulty: (2) Knowledge: (F) Page: 590

56. Although proper reward systems are crucial to motivate subsidiary managers, a
recent study has shown that the key role played is by the presence of ____________.

a. strong leadership
b. bonuses
c. perks
d. due process
e. nondiscrimination

Difficulty: (3) Knowledge: (F) Page: 591

57. The two most common forms of informal control are human resource development
and _________________.

a. manufacturing
b. production
c. network structure
d. strategic control
e. corporate culture

Difficulty: (3) Knowledge: (F) Page: 591

58. Corporate cultures can be clan-based or ___________________.

a. market based
b. leader based
c. employee based
d. symbol based
e. tradition based

Difficulty: (3) Knowledge: (F) Page: 591

59. The __________________ form of corporate culture is distinguished by an
embodiment of a long socialization process; strong, power norms; and a
defined set of internalized controls.

a. market based
b. leader based
c. employee based
d. clan based
e. tradition based

Difficulty: (2) Knowledge: (A) Page: 591

60. The _________________ form of corporate culture is distinguished by norms that
are loose or absent; socialization processes are limited; and control systems are purely
based on performance measures.

a. market based
b. leader based
c. employee based
d. clan based
e. tradition based

Difficulty: (2) Knowledge: (A) Page: 591

61. To shape a shared vision, cultural values primarily demand which of the following
properties?

a. easy to understand in only one way and written in English.
b. have clarity, continuity, and consistency.
c. have symbolism, sex-appeal, and sensitivity.
d. be dynamic, demanding, and declarative.
e. be global, gifted, and guiding.

Difficulty: (2) Knowledge: (A) Page: 592

62. The company’s management programs are another major ________________ control
tools.

a. informal
b. formal
c. simple
d. dynamic
e. complex

Difficulty: (1) Knowledge: (A) Page: 592

True/False Short Answer

63. The capstone of a company’s global marketing activities is its strategic marketing plan.

Difficulty: (1) Knowledge: (F) Page: 575

64. The first step of a global strategic marketing plan starts with market situation analysis.

Difficulty: (2) Knowledge: (F) Page: 576

65. The content of a global strategic marketing plan covers four areas which include:
market situation analysis, objectives, strategies, and ____________________.

66. Companies with substantial product diversity tend to go for a global geographic
division configuration.

Difficulty: (2) Knowledge: (F) Page: 579

67. The charter of the international division is to develop and coordinate the firm’s global
operations.

Difficulty: (3) Knowledge: (F) Page: 579

68. The global product structure is most appropriate for companies whose product line
is not too diverse and does not need a large amount of adaptation to local country
needs.

Difficulty: (2) Knowledge: (A) Page: 579

69. Under the ________________ design, the company configures its organization
along geographic areas.

70. Country-focused organizations can be very good forms of structure because they
tend to be less costly than other forms.

Difficulty: (3) Knowledge: (F) Page: 580

71. Under the __________________ design, the company integrates two approaches and
has a dual chain of command.

72. Some corporate strategy experts believe that in the twenty-first century, the role of the
country manager will be minimal.

Difficulty: (2) Knowledge: (F) Page: 581

73. The ___________________ type of manager is characterized as being in charge of
large and/or strategic markets. They also handle government relations.

74. With respect to organizational forms, the matrix structure explicitly recognizes the
multidimensional nature of global strategic decision making.

Difficulty: (1) Knowledge: (F) Page: 583

75. The matrix structure explicitly recognizes the multidimensional nature of global
strategic decision making.

Difficulty: (2) Knowledge: (A) Page: 583

76. Matrix structure can be a bureaucratic bloat.

Difficulty: (2) Knowledge: (A) Page: 583

77. The network global organization is sometimes also referred to as an “ethnocentric”
organization.

Difficulty: (1) Knowledge: (F) Page: 585

78. Asea Brown Boveri is a prime example of networking.

Difficulty: (2) Knowledge: (F) Page: 585

79. A brand champion is not a top-line executive.

Difficulty: (3) Knowledge: (F) Page: 587

80. The Stopford-Wells international structural stages model shows the relationship
between the MNCs’ networks and their overseas productivity.

Difficulty: (3) Knowledge: (A) Page: 589

81. The concept of a glocal mind-set encourages looking at strategic issues from multiple
perspectives.

Difficulty: (3) Knowledge: (A) Page: 590

82. The first step in the control process is to set standards.

Difficulty: (1) Knowledge: (F) Page: 590

83. Clan cultures embody a long socialization process, strong powerful norms, and a
defined set of internalized controls.

Difficulty: (2) Knowledge: (F) Page: 591

84. In market cultures, norms are always very strong.

Difficulty: (3) Knowledge: (F) Page: 591

85. The company’s management programs are another major formal control tools.

Difficulty: (2) Knowledge: (F) Page: 592

Essay

86. List and briefly discuss the key criteria that impact global organizational design.

87. List and briefly describe the principal organizational design options that firms can use to organize their global activities. Cite the advantages and disadvantages of each form.

88. Describe the five profiles that country managers might need to fit to be able to lead their organizations into the challenges of the twenty-first century.

89. Explain how a global networked organization might differ from a matrix organizational structure. To answer this question, review the characteristics of both structures carefully.

90. Although some feel country managers are obsolete, most companies believe they are essential to the firm. What reasons make country managers more important than ever? What roles will they play?

Chapter 18

Multiple Choice

1. Emerging markets can be found in which of the following areas?

a. Africa
b. Asia
c. Latin America
d. Eastern Europe
e. All of the above

Difficulty: (1) Knowledge: (F) Page: 597

2. Emerging markets refer to:

a. countries that used to be called “less developed countries.”
b. countries that were previously called “Third World.”
c. countries that lacked convertible currency.
d. countries that were communist.
e. both a and b

3. Which of the following is NOT a category of emerging markets?

a. developed countries
b. advanced emerging
c. secondary emerging
d. frontier countries
e. both a and d

4. Which of these does not describe the BRIC nations?

a. They consist of Brazil, Russia, India and China.
b. They have large populations.
c. They constitute almost 15 percent of world GDP.
d. They are developed countries.
e. All have growing economies.

5. The BRIC nations:

a. are all rich in natural resources.
b. are small countries with high income economies
c. are expected to surpass the GDP of the G7 nations within 20 years.
d. constitute a trade bloc.
e. none of the above

6. The Next Eleven:

a. is a George Clooney movie sequel.
b. consists of a diverse group of emerging markets.
c. constitute their own trade bloc.
d. are all located in Asia.
e. none of the above

7. Which of the following nations is NOT a member of the Next Eleven?

a. Malaysia
b. Indonesia
c. Egypt
d. Mexico
e. Nigeria

Difficulty: (2) Knowledge: (F) Page: 599

8. What event caused severe setbacks to many emerging markets?

a. global warming
b. China’s rise as a global superpower
c. losses in the World Cup soccer matches
d. the Asian financial crisis
e. EU focus on North Africa as a trading partner

9. Emigrant workers from emerging markets:

a. are a nuisance to the countries they work in.
b. deplete the economy of their home country.
c. are almost always unskilled workers.
d. form local communities abroad that can be leveraged.
e. travel only within their own continent.

Difficulty: (2) Knowledge: (A) Page: 599

10. Which country has the greatest number of mobile phone subscribers per 100 inhabitants?

a. Italy
b. Russia
c. Germany
d. United Kingdom
e. Nigeria

Difficulty: (1) Knowledge: (F) Page: 601, Exhibit 18-2

11. After China, the country with the largest shopping malls in the world is:

a. United States
b. Philippines
c. Turkey
d. Canada
e. Malaysia

Difficulty: (1) Knowledge: (F) Page: 602, Exhibit 18-3

12. Because emerging markets have underdeveloped infrastructure:

a. they cannot afford the best products from MNCs.
b. they can leapfrog old technology.
c. they are more eager to adopt new products.
d. R&D efforts are centered in these markets to generate new ideas.
e. distribution channels will be easier to set up.

Difficulty: (2) Knowledge: (A) Page: 600

13. Emerging markets:

a. cannot afford the most modern products.
b. are innovative in service offerings.
c. embrace new products quickly.
d. have low time-to-takeoff for new products.
e. all of the above

Difficulty: (2) Knowledge: (A) Page: 605

14. Global competitors:

a. are not headquartered in emerging markets.
b. duel for market share in emerging markets but only consist of MNCs from developed countries.
c. come only from the BRIC nations.
d. may emerge from any nation to challenge established MNCs.
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 607

15. Significant companies from emerging markets are leaders in which of these industries?

a. smart phones
b. computers
c. beer
d. cars
e. all of the above

Difficulty: (2) Knowledge: (F) Page: 604

16. Acer, the world leader in laptop manufacturing and design, is based in which country?

a. South Korea
b. Taiwan
c. China
d. Japan
e. Singapore

Difficulty: (2) Knowledge: (F) Pages: 604

17. Jollibee competes in which industry around the world?

a. theme parks
b. entertainment
c. fast food
d. children’s clothing
e. shoes

Difficulty: (2) Knowledge: (F) Page: 603

18. Jollibee is a major international player that has its headquarters in ________.

a. Malaysia
b. Indonesia
c. China
d. Philippines
e. India

Difficulty: (2) Knowledge: (F) Page: 604

19. Which of the following brands has NOT been bought by firms in emerging markets?

a. Miller beer
b. Jaguar
c. IBM PC
d. Ferrari
e. Budweiser

Difficulty: (2) Knowledge: (F) Page: 604

20. One strategy used by the new champions to succeed in major markets is:

a. reviving old technology to save money.
b. copying the same model as MNCs from developed markets but with cheaper items.
c. employing the latest technology.
d. training staff in foreign companies first.
e. both a and d

Difficulty: (2) Knowledge: (A) Pages: 604-6

21. Emerging market champions:

a. avoid new technology because it is too expensive.
b. use a combination of old technology and cheap labor for a competitive advantage.
c. leapfrog to the newest technologies to offer quality products.
d. copy MNC products to avoid problems with product development.
e. try to avoid innovation.

Difficulty: (2) Knowledge: (A) Page: 605

22. Rapid scale-up of new champions:

a. doesn’t occur because capital is in short supply.
b. can be done by absorbing smaller rivals.
c. is achieved by investing more than smaller rivals.
d. both b and c
e. can only be done with the help of outside loans from such as the World Bank.

Difficulty: (2) Knowledge: (A) Page: 606

23. When would emerging market companies use a dodge strategy?

a. when its assets are transferable
b. when there is little pressure to globalize
c. when industry pressure is high
d. when assets are only valuable in the home market
e. both c and d

Difficulty: (3) Knowledge: (A) Page: 606

24. An emerging market company would be a defender when:

a. its assets are transferable.
b. there is little pressure to globalize.
c. industry pressure is high.
d. assets are only valuable in the home market.
e. both b and d

Difficulty: (3) Knowledge: (A) Pages: 606-7

25. When competing with the new champions from emerging markets, MNCs:

a. should give up—the new champions have cheaper labor and the latest technology.
b. can ignore the new champions—they are only effective in emerging markets.
c. should focus on the high end of the market and leave the rest to the local companies.
d. buy out local rivals and use them to challenge the new champion in the home market.
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 608

26. MNCs are being threatened by new champions from the emerging markets. Which of the following strategies is NOT recommended for them?

a. Continue to use low cost sourcing in emerging markets.
b. Sell only goods developed by home country R&D in emerging markets.
c. Ignore emerging market branding strategies as being too elementary.
d. Do not invest in the mass markets of emerging economies as they will never amount to much revenue.
e. All of the above are not suggested.

Difficulty: (2) Knowledge: (A) Page: 608

27. Companies from the emerging markets are proving to be surprising challengers to older, larger MNCs. Which of the following would you recommend as an MNC strategic response?

a. Invest in growing mass markets of developing countries.
b. Partner with companies from the emerging markets.
c. Buy out smaller rival firms in the emerging markets.
d. Consider developing countries as more than just manufacturing sites.
e. All of the above

Difficulty: (2) Knowledge: (A) Page: 608

28. BOP stands for:

a. a type of music common to developing countries.
b. bottom of the pyramid.
c. bottom of the pile.
d. boost our profits.
e. none of the above

Difficulty: (1) Knowledge: (F) Page: 608

29. Some people are optimistic about the BOP as a market segment. This is because:

a. they are hopeless romantics and can’t face reality.
b. there is a great deal of untapped money in the BOP.
c. BOP is critical for long term growth of the company.
d. the BOP needs help and would welcome input from outsiders.
e. only b and c

Difficulty: (3) Knowledge: (A) Page: 609

30. Despite its dismal financial condition, the BOP has support as a viable market segment. This is because:

a. Wal-Mart concentrated in a similar area in the U.S. and became a world player.
b. incomes are expected to rise over time and this segment could become brand loyal.
c. challenges faced here could be the basis for new and innovative products.
d. the BOP is a source of cheap labor.
e. both b and c

Difficulty: (3) Knowledge: (A) Page: 609

31. The BOP:

a. constitutes a majority of the world’s population.
b. generates $2 an hour in wages.
c. is found mostly in the western hemisphere.
d. does not offer opportunities for MNCs.
e. is a viable market for only small firms with very cheap products.

Difficulty: (2) Knowledge: (A) Pages: 608-9

32. Bottom of the pyramid means:

a. lower class Egyptians.
b. the lowest level of consumer involvement with your product.
c. the lowest satisfaction level of Maslow’s hierarchy.
d. people earning less than $2 per day.
e. the first step toward $1 million on a game show.

Difficulty: (1) Knowledge: (F) Page: 608

33. Compared to developed countries, segments in emerging markets are:

a. enormous.
b. much more coarse and difficult to define.
c. harder to reach because media options are not as well developed.
d. less wealthy.
e. all of the above

Difficulty: (3) Knowledge: (A) Page: 610

34. Hindustan Unilever pursued the following strategy to expand its market share in India.

a. retained the low unit price concept only for shampoo
b. focused its efforts on the BOP masses
c. emphasized local R&D efforts
d. concentrated on the urban population for sales
e. offered a wide variety of brands to tightly segment the market

Difficulty: (3) Knowledge: (F) Page: 610, Global Perspective 18-1

35. Hindustan Lever decided that its product line should include:

a. only products for the rich, so it could charge a premium.
b. products for all three major segments: affluent, middle income, and low income.
c. low income only, to capture the entire lower end as loyal customers for the future.
d. only the middle income, as they were ignored by other firms.
e. both the middle and upper income groups, as profit margins were viable there.

Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1

36. Social marketing—in the form of new product development and/or aiding development:

a. is not practiced by emerging market companies.
b. is a waste of time—the population won’t be exposed to the messages and is unlikely to follow directions.
c. can expand market opportunities for the firm.
d. builds goodwill that can be leveraged into greater profits.
e. both c and d

Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1

37. What best describes the outcome of early entry into emerging markets?

a. It can be lucrative, especially for huge markets like China and India.
b. It is likely to fail because the markets don’t or can’t appreciate the product.
c. It will probably face few direct competitors.
d. Products will be too expensive for local consumers.
e. None of the above

Difficulty: (2) Knowledge: (A) Page: 611

38. There are many reasons why a company might prefer to be a follower in a new market, not a first entrant. Which of these is NOT one of those reasons?

a. reduced profits because the market is already gone
b. fewer pitfalls as the follower can see the mistakes of the first-mover
c. better developed marketing channels
d. competitive response from other MNCs and local competitors
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 611

39. Why is being a first-mover attractive in emerging markets?

a. Pent-up demand may lead to high initial sales.
b. Governments are eager to offer concessions to first-movers.
c. Early entrants get best access to key marketing resources.
d. Marketing dollars generate higher productivity.
e. All of the above

Difficulty: (2) Knowledge: (A) Page: 611

40. What approach should smaller firms take in emerging markets?

a. Be a follower so you don’t make costly mistakes.
b. Be a first-mover—to the victor go the spoils.
c. Be a first-mover to outmaneuver larger firms eyeing the same market.
d. Avoid the markets altogether—they take too much time and effort to develop compared to the pay-off for a small firm.
e. Merge with a local company.

Difficulty: (3) Knowledge: (A) Page: 611

41. The risks of entering emerging markets:

a. are financial, but only in terms of getting paid promptly and in full.
b. are financial, but include both currency volatility and getting paid.
c. are marketing related only—we wouldn’t enter a country where we couldn’t get paid.
d. are marketing and currency volatility driven.
e. cover the enter spectrum of marketing and financial risks.

Difficulty: (2) Knowledge: (A) Page: 612

42. Entry strategies for emerging markets include _______.

a. export
b. licensing
c. joint venture
d. direct investment
e. all of the above

Difficulty: (1) Knowledge: (A) Page: 612

43. The preferred entry mode(s) for emerging markets:

a. include(s) both licensing and minority joint venture.
b. seek(s) to adapt products to ensure the capture of the market.
c. involve(s) direct investment to close the market to local challengers and later MNCs.
d. focus (focuses) on marketing instead of sales.
e. both a and b

Difficulty: (2) Knowledge: (A) Page: 612

44. Which of the following is not a common risk when entering emerging markets?

a. product piracy
b. enforcing property rights
c. well-developed marketing infrastructure
d. antitrust laws
e. government intervention

Difficulty: (2) Knowledge: (A) Page: 612

45. When MNCs enter an emerging market, they are likely to:

a. share product secrets with the new country.
b. insist on tight corporate control.
c. take a high risk approach to increase the chance for greater rewards.
d. emphasize sales as a measure of success.
e. both b and d

Difficulty: (2) Knowledge: (A) Page: 612

46. Product policies that have been pursued when entering emerging markets include:

a. no adaptation—the risks and expense are too great.
b. selling a narrow range of premium goods.
c. pursuing backward innovation.
d. anchoring the product entry with products near the end of their life cycle in the home market.
e. all of the above

Difficulty: (3) Knowledge: (A) Page: 613

47. Probably the least effective product design option is:

a. no adaptation—sell what we already make.
b. to sell our normal products at premium prices.
c. to sell a stripped down version of a normal good.
d. to extend the product life cycle by selling obsolete goods abroad.
e. All of the above are equally effective.

Difficulty: (2) Knowledge: (A) Page: 613

48. Backward innovation and selling obsolete goods:

a. run a risk of consumer backlash in emerging markets.
b. could save the company money on product development.
c. should not be used because cutting edge products are most highly favored in emerging markets.
d. are entirely different approaches to entering a market.
e. a, b and c are all reasonable answers

Difficulty: (3) Knowledge: (A) Page: 613

49. Common features that products must have to be successful in emerging markets include:

a. the very latest designs.
b. the widest variety of options.
c. ruggedness.
d. high quality.
e. warranties.

Difficulty: (3) Knowledge: (A) Page: 613

50. Companies have used which of the following methods to enhance product acceptance in emerging markets?

a. washing machines that can restart after a power outage
b. changing detergent formulae to use more water
c. selling a top-end water purifier in India for greater assurance of pure water
d. lowering quality to keep prices low
e. all of the above

Difficulty: (2) Knowledge: (A) Page: 613

51. When designing a product for emerging markets, companies should consider which of the following?

a. low price, ruggedness, and low quality
b. low price, inconsistent quality, and ability to run without electricity
c. high price, consistent quality, and a warranty
d. low incomes, unreliable power supplies, and scarce resources
e. low price, back-up power supplies, and a warranty

Difficulty: (2) Knowledge: (A) Page: 613

52. A manually operated sewing machine would:

a. be a backward innovation.
b. be an example of a product life cycle extension.
c. be rejected in emerging markets as not being modern enough.
d. be too difficult to operate.
e. likely have the idea copied as soon as it hit the market.

Difficulty: (3) Knowledge: (A) Page: 613

53. Brand strategies proven to succeed in emerging markets include:

a. pursuing only the wealthy—they don’t require product or price changes.
b. aiming brands at various market segments with different formulae and prices.
c. focusing on the emerging middle class for its growing buying power and eventual loyalty.
d. purchasing a local brand as part of the product offering.
e. both b and d

Difficulty: (3) Knowledge: (A) Page: 613

54. Which of the following is MOST likely to be used when packaging for emerging markets?

a. large packages to cater to the bigger families common in these countries
b. large packages because an entire village will share the product
c. smaller packages at lower price points
d. large packages with individual wrappers so merchants can resell in smaller quantities
e. both c and d

Difficulty: (3) Knowledge: (A) Pages: 614-15

55. Package design in emerging markets can largely ignore the feature of ________.

a. sturdiness
b. heat resistance
c. freshness
d. sustainability
e. none of the above

Difficulty: (1) Knowledge: (A) Page: 614-15

56. Because of the climate and sales conditions of many emerging markets, packages should:

a. come frozen so freshness and safety are ensured.
b. be made of the cheapest materials to save money.
c. be sold with reusable containers.
d. allow people to see and smell the product before buying.
e. all of the above

Difficulty: (2) Knowledge: (A) Page: 614-15

57. A package characteristic with perhaps greater significance in emerging markets than developed countries is ________.

a. refrigeration
b. sustainability
c. safety
d. variety of sizes
e. metal containers

Difficulty: (3) Knowledge: (A) Page: 615

58. The pricing strategy most likely to succeed in emerging markets is:

a. very low prices that everyone can afford—large volume makes up for low margins.
b. premium pricing only—establish the image of quality and save money on not having to adapt the product for local sale.
c. cater to the growing middle class and raise prices as income goes up.
d. saturate all price points with different products and make money at all levels.
e. All of the above are equally viable.

Difficulty: (2) Knowledge: (A) Page: 615

59. Why is distribution considered to be the biggest challenge when entering an emerging market?

a. It isn’t—pricing is.
b. It isn’t—product adaptation is.
c. Distribution infrastructure is too complex to navigate.
d. The country’s land mass is a deterrent.
e. All of the above

Difficulty: (2) Knowledge: (A) Page: 616

60. Which of the following is NOT a reason why distribution is difficult in emerging markets?

a. Local and rural areas can both be easily reached.
b. Shopping malls and supermarkets are on the rise in emerging markets.
c. Traditional retailers can be hard to work with.
d. Operating capital of retailers may be lacking.
e. Local brands are difficult to displace on the shelves.

Difficulty: (2) Knowledge: (A) Page: 616

61. P&G succeeded in Russia by:

a. using door to door sales reps.
b. direct export to a single large distributor in Moscow.
c. partnering with EU firms that already had a presence in Russia.
d. developing its own distributor network in exchange for exclusivity.
e. none of the above—Unilever is the dominant player in Russia.

Difficulty: (2) Knowledge: (F) Page: 617

62. When managing distributors in emerging markets, MNCs should:

a. pick partners with extensive local product-market knowledge.
b. choose partners with excellent English-speaking skills.
c. focus on entrepreneurs to build local good-will.
d. only enter markets with a company-owned distributor network.
e. select distributors who are competent working with MNCs.

Difficulty: (2) Knowledge: (A) Page: 618

63. Direct selling in emerging markets:

a. is attractive because of the rapid growth of internet sales.
b. often works best in a B2B setting.
c. is valuable in countries where face-to-face sales are common.
d. both b and c
e. none of the above—direct selling should be avoided as too difficult to supervise.

Difficulty: (2) Knowledge: (A) Page: 618

64. Emerging market distributors seeking exclusive territories should:

a. be told yes, on a temporary basis.
b. be denied, because this policy retards rapid market development.
c. be ignored—we will set up a company-owned distribution network.
d. be told no territories exist—everyone can sell everywhere, and the winner gets the final contract.
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 619

65. Communication challenges include:

a. raising brand awareness.
b. educating customers about product use and benefits.
c. creating brand image.
d. gaining loyalty.
e. all of the above

Difficulty: (2) Knowledge: (F) Page: 619

66. Push strategies:

a. are less viable in emerging markets than pull strategies.
b. are never used in emerging markets because channels are in disarray.
c. work well in many countries because of the enormous channel power of distributors.
d. result in the MNC being cheated because channel members keep the incentives for themselves.
e. never reach consumers.

Difficulty: (2) Knowledge: (A) Page: 619

67. Which of the following is a reason why a push strategy would succeed in emerging markets?

a. more frequent shopping than in developed countries
b. heavy reliance on retailer recommendations about brands
c. significant distributor power
d. numerous opportunities for brand switching
e. all of the above

Difficulty: (2) Knowledge: (A) Page: 619

68. Why might pull strategies aimed at consumers in emerging markets NOT be very successful?

a. They don’t understand the message about the product.
b. Coupons may be stolen and never reach the consumer for redemption.
c. Mass media are less effective in the emerging nations.
d. All of the above apply.
e. None of the above apply—emerging market consumers love coupons.

Difficulty: (3) Knowledge: (A) Page: 619

True/False Short Answer

69. Emerging markets are not a tempting target for MNCs.

Difficulty: (1) Knowledge: (F) Page: 597

70. The most busy McDonald’s in the world is in Peking.

Difficulty: (1) Knowledge: (F) Page: 597

71. The bulk of the revenues from some MNCs come from emerging markets.

Difficulty: (1) Knowledge: (F) Page: 598

72. Transition economies are those that are moving from very poor to more developed.

Difficulty: (1) Knowledge: (F) Page: 598

73. Iran is one of the BRIC nations.

Difficulty: (1) Knowledge: (F) Page: 598

74. BRIC stands for “big, rich, independent countries”.

Difficulty: (1) Knowledge: (F) Page: 598

75. Remittances from foreign workers are important to emerging market economies.

Difficulty: (1) Knowledge: (F) Page: 599

76. Most of the world’s largest shopping malls are in Asia.

Difficulty: (1) Knowledge: (F) Page: 602, Exhibit 18-3

77. No companies from emerging market countries have made it to the Fortune Global 500 list.

Difficulty: (1) Knowledge: (F) Page: 603

78. Most of the largest banks in the world are from the United States.

Difficulty: (1) Knowledge: (F) Page: 603

79. Product piracy is not a problem in China.

Difficulty: (1) Knowledge: (F) Page: 604

80. Products from emerging markets only compete as low-end challengers to established brands.

Difficulty: (2) Knowledge: (A) Page: 604

81. MNCs cannot use products developed in emerging markets because the quality standards are too low to be transferred to MNC home markets.

Difficulty: (2) Knowledge: (A) Page: 608

82. India is experiencing changes in its income pattern from pyramid to diamond.

Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1

83. Hindustan Unilever is a major corporation based in Pakistan.

Difficulty: (2) Knowledge: (F) Page: 610, Global Perspective 18-1

84. Social marketing in the Third World is a waste of time and money.

Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1

85. Risk levels of entering emerging markets are higher than those for developed countries.

Difficulty: (1) Knowledge: (A) Page: 612

86. Backward innovation and selling obsolete goods are different names for the same product strategy.

Difficulty: (2) Knowledge: (F) Page: 613

87. The most common packaging choice for emerging markets is a smaller package.

Difficulty: (1) Knowledge: (A) Page: 614

88. Frugal engineering means making very cheap, low quality products so you can get the most profit.

Difficulty: (1) Knowledge: (A) Page: 615

89. Local autonomy should always be granted to distributors because they know the market better than the MNC.

Difficulty: (2) Knowledge: (A) Page: 619

90. Push strategies are more likely to be successful in emerging markets than pull strategies.

Difficulty: (2) Knowledge: (A) Page: 619

91. Billboards can be effective in reaching both rich and poor consumers in emerging markets.

Difficulty: (2) Knowledge: (A) Page: 619

Essay

92. Describe the characteristics that define emerging markets.

93. Despite coming from humble origins and lacking much of the resources of the major global firms, many companies from emerging markets are serious challengers in world markets. What strategies do they employ to enable them to succeed?

94. What are the strategic options for emerging market firms in global marketing? Under what conditions would each be suggested?

95. There are some commonly held beliefs about marketing mix strategy that have been proven to be less than optimal. Identify some of these.

96. Describe the communication challenges faced when entering emerging markets.

Chapter 19

Multiple Choice

1. According to the text, the Web clearly provides a unique _______________ and
______________ channel to marketers across the globe.

a. distribution, higher education
b. distribution, production
c. distribution, network
d. distribution, communication
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 626

2. According to this textbook, compared to the U.S., Europe as a future Internet
market will be:
a. better, because virtual retailers have a competitive advantage over traditional
stores.
b. worse because there are so many languages.
c. better because delivery is faster.
d. worse because Europe has less well developed Internet infrastructure.
e. both A and C

Difficulty: (2) Knowledge: (A) Page: 626

3. Although the Internet has become a global phenomenon, it first originated in (the):

a. Italy.
b. Japan.
c. U.S.A.
d. Belgium.
e. Singapore.

Difficulty: (1) Knowledge: (F) Page: 627

4. In 2005, the worldwide Internet population surpassed 1 billion.

a. 1 billion
b. 2 billion
c. 3 billion
d. 4 billion
e. 5 billion

Difficulty: (2) Knowledge: (F) Page: 627

5. The country with the most Internet users is:
a. United States
b. Japan
c. India
d. China
e. none of the above

Difficulty: (2) Knowledge: (F) Page: 627, Exhibit 19-1

6. The country with the highest penetration rate of Internet users is:
a. United States
b. Japan
c. South Korea
d. United Kingdom
e. Canada

Difficulty: (2) Knowledge: (F) Page: 627, Exhibit 19-1

7. The majority of the Internet users now live outside of ________________ speaking
countries.

a. English
b. French
c. Arabic
d. German
e. Spanish

Difficulty: (1) Knowledge: (F) Page: 628

8. Which of the following is NOT a barrier to Internet marketing?

a. language
b. culture
c. infrastructure
d. access charges
e. none of the above

Difficulty: (2) Knowledge: (F) Page: 627

9. The barriers to global e-commerce are:

a. language barriers.
b. cultural barriers.
c. infrastructure.
d. all of the above.
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 627

10. The structural barriers to global e-commerce include the following EXCEPT:
a. language barriers.
b. cultural barriers.
c. infrastructure.
d. knowledge barriers.
e. roaming charges.

Difficulty: (1) Knowledge: (A) Page: 630-31

11. Which of these languages is NOT in the top three on Internet sites?

a. Hindu
b. Chinese
c. Spanish
d. German
e. Both a and d

Difficulty: (2) Knowledge: (F) Page: 628

12. Using only English on a website:

a. is doomed to fail.
b. is ethnocentric.
c. works in some industries like aerospace.
d. limits your market.
e. both c and d

Difficulty: (3) Knowledge: (A) Page: 628

13. In global e-commerce, Web site localization services have created the need for more:

a. translators.
b. copy writers.
c. media specialists.
d. network specialists.
e. knowledge experts.

Difficulty: (2) Knowledge: (A) Page: 628

14. Companies that wish to make their Web sites international by translating the
information and content into other languages have two alternatives that may include:

a. hire a firm or a person doing the translation.
b. use a software having the translation function.
c. use only English.
d. both a and b
e. both b and c

Difficulty: (2) Knowledge: (A) Page: 628

15. Which of these would NOT be a barrier to Internet marketing?

a. preference for face-to-face business transactions
b. lack of familiarity with credit cards
c. strict Internet security measures
d. website wording, logos, and colors
e. patriotism

Difficulty: (2) Knowledge: (F) Pages: 628-9

16. In the Asia-Pacific region, B2B e-commerce activities are facing obstacles which
could hinder the growth of the Internet. These obstacles include:

a. doing business on a face-to-face basis.
b. cultivating relationships and secrecy issues.
c. reluctance to share information.
d. all of the above are obstacles.
e. none of the above are obstacles.

Difficulty: (1) Knowledge: (A) Pages: 628-9

17. In many countries, businesspeople prefer to do business on a________________.

a. virtual basis.
b. simple basis.
c. complex basis.
d. face-to-face basis.
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 628

18. E-readiness for Brazil, India, Russia and China is:

a. unknown—they won’t answer the surveys.
b. excellent—their relative backwardness lets them jump ahead with the latest
technology.
c. middle of the pack because their economies are growing rapidly.
d. very low.
e. none of the above

Difficulty: (2) Knowledge: (F) Page: 631

19. ISP is an acronym for:

a. Internet strategies provider.
b. Internet standards provider.
c. Internet service provider.
d. Internet system provider.
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 629

20. In many European markets, consumers are reluctant to surf the Web because of:

a. high telecommunication charges.
b. low per capita income.
c. government rules and regulations.
d. distribution costs.
e. limited training and education.

Difficulty: (2)Knowledge: (F) Page: 632

21. In many countries, the cost of going online can be reduced by:

a. government deregulations.
b. increased competition.
c. new access alternatives.
d. all of the above.
e. none of the above.

Difficulty: (2) Knowledge: (A) Page: 632

22. In Japan, access to the web was previously dominated by ______________________, the Japanese telecom firm, which charges sky-high fees.

a. British Telecom.
b. Toyota.
c. Nippon Telephone & Telegraph (NTT).
d. Seven-Eleven Japan.
e. AT&T.

Difficulty: (1) Knowledge: (A) Page: 632

23. In the Internet world, there are many unsolved issues. For example, e-commerce is global but the national laws are mostly ________________.

a. local
b. regional
c. political
d. religious
e. secular

Difficulty: (1) Knowledge: (A) Page: 632

24. At the global level, a new nongovernmental body has been established to resolve domain disputes. The name of this body is:

a. Internet Corporation for Domain Names (ICDN).
b. Internet Corporation for Assigned Names (ICAN).
c. Internet Corporation for Assigned Names and Numbers (ICANN).
d. Internet Corporation for Networks (ICN).
e. Internet Corporation for Domain Disputes (ICDD).

Difficulty: (3) Knowledge: (F) Page: 633

25. In the area of global marketing, the Internet offers two major benefits to companies that may be interested in selling their products worldwide. The two benefits include:

a. cost/efficiency savings and accessibility (connectivity).
b. cost/efficiency savings and brand image.
c. cost/efficiency savings and product standardization.
d. cost/efficiency savings and high quality intelligence.
e. cost/efficiency savings and product image.

Difficulty: (3) Knowledge: (A) Page: 633

26. According to the text, regarding the profile of Internet buyers, differences across countries are mainly due to two factors which are:

a. access charges and availability of computer programmers.
b. access charges and availability of outsourcing.
c. access charges and availability of entertainment options.
d. access charges and availability of CNN.
e. access charges and availability of AOL.
.
Difficulty: (3) Knowledge: (A) Page: 634

27. At the core of any global Web marketing strategy is the conflict between local responsiveness and _______________________.

a. local integration
b. regional integration
c. transnational integration
d. polycentric integration
e. global integration
.
Difficulty: (3) Knowledge: (A) Page: 637

28. In the product policy area, the Internet can help build:

a. regional brands.
b. food brands only.
c. global brands.
d. high-tech brands.
e. tangible brands.
.
Difficulty: (2) Knowledge: (A) Page: 641

29. Marketing of services differs from tangible goods in four areas:

a. intangibility, simultaneity, heterogeneity, and perishability.
b. intangibility, simultaneity, heterogeneity, and collectivity.
c. intangibility, simultaneity, heterogeneity, and connectivity.
d. intangibility, simultaneity, heterogeneity, and believability.
e. intangibility, simultaneity, heterogeneity, and credibility.

Difficulty: (2) Knowledge: (A) Page: 643

30. India Yahoo! is different from normal portals because is has:

a. no online auctions.
b. astrology.
c. no online shopping.
d. real estate.
e. cricket.

Difficulty: (2) Knowledge: (F) Page: 642

31. In some countries, customers might resent having the human element removed from
the service encounter because of:

a. cultural factors.
b. national factors.
c. technology factors.
d. consumption factors.
e. international factors.

Difficulty: (2) Knowledge: (A) Page: 644

32. In international marketing, a Web site gives service marketers the ability to offer _________ hour service to customers worldwide.

a. 10
b. 15
c. 20
d. 22
e. 24

Difficulty: (1) Knowledge: (F) Page: 644

33. Because of the Internet, many MNCs’ pricing decisions are less _____________.

a. national
b. flexible
c. creative
d. rigid
e. vertical

Difficulty: (3) Knowledge: (A) Page: 644

34. In the area of pricing, the Internet facilitates:

a. work transparency.
b. price transparency.
c. profit transparency.
d. channel transparency.
e. none of the above is true.

Difficulty: (2) Knowledge: (A) Page: 644

35. For global marketers, the Web could affect the firm’s high margins because of:

a. profit transparency.
b. channel transparency.
c. price transparency.
d. channel captaincy.
e. knowledge transparency.

Difficulty: (2) Knowledge: (A) Page: 644

36. In Internet marketing, consumers often are aware of low prices because of the availability of brand and pricing information. This is a result of:

a. profit transparency.
b. knowledge transparency.
c. labor transparency.
d. profit transparency.
e. price transparency.

Difficulty: (2) Knowledge: (A) Page: 644

37. To deal with price transparency issues in Internet marketing, companies can use methods such as:

a. cutting prices in high-price countries.
b. localizing the products.
c. refusal to handle orders from overseas.
d. All of the above methods can be used.
e. None of the above methods are used.

Difficulty: (3) Knowledge: (A) Page: 645

38. In many industries, connectivity means that existing channels/distributors can be bypassed by connecting:

a. buyers and suppliers.
b. buyers and governments.
c. buyers and software companies.
d. buyers and advertisers.
e. buyers and media companies.

Difficulty: (1) Knowledge: (A) Page: 645

39. Manufacturers who plan to add the Internet to their existing international channels should be aware of two possibilities:

a. replacement effect and international effect.
b. replacement effect and complementary effect.
c. complementary effect and managerial effect.
d. complementary effect and adaptation effect.
e. replacement effect and quality effect.

Difficulty: (1) Knowledge: (A) Page: 645

40. In international distribution, replacement effect can:

a. cannibalize existing distribution channels.
b. delete existing distribution channels.
c. replace existing distribution channels.
d. downsize existing distribution channels.
e. add more distribution channels

Difficulty: (2) Knowledge: (A) Page: 645

41. In international distribution, complementary effect can:

a. expand the overall business.
b. cannibalize existing distribution channels.
c. materialize the overall business.
d. downsize existing distribution channels.
e. none of the above.

Difficulty: (2) Knowledge: (A) Pages: 645-6

42. Click-and-mortar retailers are defined as:

a. those large retail chains trying to compete by pursuing no Web site presence.
b. those large retail chains trying to compete by making alliances and joint ventures.
c. those large retail chains trying to compete by going international.
d. those large retail chains trying to compete by hiring Web specialists.
e. those large retail chains trying to compete by setting up a Web site presence.

Difficulty: (2) Knowledge: (A) Page: 647

43. Click-and-mortar chains provide one advantage where:

a. products cannot be returned to the local stores.
b. products can be returned to the local stores.
c. click-and mortar stores have no Web sites.
d. All of the above.
e. None of the above.

Difficulty: (1) Knowledge: (A) Page: 647

44. In international marketing, many well-known brands in pure web retailing (e-trade, Amazon.com) still have limited ________________________ expertise.

a. local
b. international
c. regional
d. economic
e. political

Difficulty: (1) Knowledge: (A) Page: 648

45. Success of an e-tailing model will depend on three factors which include:

a. consumer behavior, cost structure, and networks.
b. consumer behavior, cost structure, and government policies.
c. consumer behavior, cost structure, and logistics.
d. consumer behavior, cost structure, and human resources.
e. consumer behavior, cost structure, and manufacturing.

Difficulty: (2) Knowledge: (A) Page: 648

46. According to Jupiter Research, online advertising spending is expected to grow to around ____________ in the U.S. by 2009.

a. $10 billion
b. $16 billion
c. $20 billion
d. $30 billion
e. $35 billion

Difficulty: (3) Knowledge: (F) Page: 648

47. The Internet offers advantages to international advertisers which include:

a. global reach.
b. interactivity.
c. precise information
d. all of the above.
e. none of the above.

Difficulty: (2) Knowledge: (A) Pages: 648-9

48. In Internet advertising, by clicking on the banner ad, users can be taken to the:

a. internet’s databank.
b. advertiser’s web site.
c. Netscape’s site.
d. Yahoo’s site.
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 649

49. According to the text, the ultimate success of an online campaign depends on the following factors EXCEPT:

a. the nature of the product.
b. the targeting.
c. choice of the site.
d. execution of the ad.
e. hiring an efficient CEO.

Difficulty: (2) Knowledge: (A) Page: 650

50. Although Internet advertising is growing at a very rapid pace, many advertisers are skeptical about its potential as a global promotion tool because of (the):

a. annoyance factor.
b. audience measurement.
c. click-thru rates.
d. high access and/or phone charges
e. all of the above.
.
Difficulty: (1) Knowledge: (A) Page: 650

51. International marketers who plan on using the Web as an advertising tool should familiarize themselves with:

a. advertising regulations and restrictions in foreign markets.
b. search engines.
c. distribution channels.
d. digital networks.
e. digital suppliers.

Difficulty: (2) Knowledge: (A) Page: 650

52. Keyword search advertising allows the company to have a link to its Web site when
people are looking for ________________________ -related information.

a. people
b. market
c. product
d. country
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 649

53. In Internet advertising, microsites are created to promote ____________________
brands.

a. hybrid
b. individual
c. complex
d. global
e. none of the above

Difficulty: (1) Knowledge: (A) Page: 649

54. The ultimate success of an online campaign hinges on four factors which include:

a. nature of the product, the target, choice of site, and color
b. nature of the product, the target, choice of site, and graphics
c. nature of the product, the target, choice of site, and banners
d. nature of the product, the target, choice of site, and execution of the ad
e. none of the above

Difficulty: (3) Knowledge: (A) Page: 650

55. Online campaigns would work for __________________________________.

a. high involvement goods.
b. low involvement goods.
c. vertical involvement goods
d. horizontal involvement goods
e. none o the above

Difficulty: (2) Knowledge: (A) Page: 650

True/False Short Answer

56. Small and medium-size companies (SMEs) are also participating in the area of e-commerce and Internet-related opportunities.

Difficulty: (1) Knowledge: (A) Page: 626

57. Internet usage worldwide is not growing.

Difficulty: (1) Knowledge: (A) Page: 627

58. ISP is an acronym for Internet Standards Provider.

Difficulty: (2) Knowledge: (A) Page: 629

59. Knowledge barrier is not one of the barriers in Internet-related activities.

Difficulty: (1) Knowledge: (A) Page: 628

60. In many European markets, consumers are reluctant to spend time surfing the Web
because of higher telecommunication charges.

Difficulty: (2) Knowledge: (F) Page: 632

61. There are many unsolved issues in the Internet. For example, e-commerce is global
but the national laws are mostly transnational.

Difficulty: (1) Knowledge: (A) Page: 632

62. The Internet has leveled the playing field between large and small firms in global
competition.

63. Asians have the most favorable attitude toward Internet shopping.

64. The Internet is not helping companies to create global brands.

Difficulty: (3) Knowledge: (A) Page: 634

65. Google is the #1 search engine throughout the world.

66. Consumer co-creation involves customers in value creation.

67. Mass customization is not the major plus of the Web.

Difficulty: (1) Knowledge: (A) Page: 644

68. Web sites enable companies to manage perishability.

Difficulty: (1) Knowledge: (A) Page: 644

69. In international marketing, a Web site gives service marketers the ability to offer 24 hour service to customers worldwide.

Difficulty: (1) Knowledge: (F) Page: 644

70. For global marketers, the Web could affect the firm’s high margins because of price transparency.

Difficulty: (2) Knowledge: (A) Page: 644

71. In many industries, connectivity means that existing channels can be bypassed by
connecting buyers and suppliers directly.

Difficulty: (1) Knowledge: (A) Page: 645

72. In international distribution, replacement effect does not cannibalize existing distribution channels.

Difficulty: (2) Knowledge: (A) Page: 645

73. It is estimated that most of the Internet advertising spending will be spent in Japan.

Difficulty: (1) Knowledge: (A) Page: 648

74. Banner advertising is not used in Internet advertising.

Difficulty: (1) Knowledge: (A) Page: 648

75. Keyword search advertising allows the company to have a link to its competitors.

Difficulty: (2) Knowledge: (A) Page: 649

76. Microsites are used to promote a particular brand.

Difficulty: (2) Knowledge: (A) Page: 649

77. Online campaigns would work for high-involvement goods whose buyers engage in
product research and price comparisons.

Difficulty: (3) Knowledge: (A) Page: 650

Essay

78. Describe briefly the history of the Internet. Which nations are becoming prominent among Internet users? How does their growth compare with the Internet readiness shown in Exhibit 19-2?

79. Although global e-commerce is expected to increase, it has encountered obstacles and structural barriers. Discuss these structural barriers.

80. Discuss some of the ramifications of the Internet for global marketing strategies. Also explain some of the challenges faced by international marketers in the areas of global branding and Internet-based new products.

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Chapter 1 Through 8

Chapter 1

Multiple Choice

1. In global business, products have been traded across borders throughout recorded civilizations, extending back beyond the ________________ that once connected
East with West.

a. The Marco Polo Road
b. The Roman Road
c. The Pioneer Road
d. The International Road
e. The Silk Road

2. The Silk Road once helped connect:

a. Turkey to Rome.
b. Iran to Rome.
c. Bombay to Rome.
d. Beijing to Rome.
e. Xian to Rome.

3. Saturation of domestic markets in the industrialized parts of the world has forced many companies to look for marketing opportunities beyond their _______________.

a. local borders.
b. national borders.
c. regional borders.
d. Complex borders.
e. transnational borders.

4. ____________ revolution has brought profound changes in the world.

a. Wal-Mart
b. CNN
c. MTV
d. Internet
e. Shipping

5. B2B stands for:

a. bubble-to-business
b. business-to-business
c. buyer-to-business
d. best-to-business
e. Best Buy-to-business

6. Toyota’s new strategy is to de-Japanize its business and make the ________ market its major corporate priority.

a. U.S.
b. Germany
c. England
d. Indonesia
e. none of the above

7. The term global epitomizes both the competitive pressure and expanding:

a. basic opportunities.
b. social opportunities.
c. physical opportunities
d. market opportunities.
e. bottom opportunities.

8. In global marketing, competitive pressure can also come from _____________ at home.

a. competitors
b. conglomerates
c. groups
d. locals
e. regionals

9. When a country’s per capita income is below $10,000, consumers spend most of their income on:

a. food and other necessities.
b. higher education.
c. electronic appliances.
d. buying houses.
e. foreign travel.

10. In the consumption process, people around the world with per capita income of $20,000 and above have a pretty good _________________:

a. physical power.
b. political power.
c. purchasing power.
d. consumption power.
e. psychological power.

11. According to the textbook, the process of globalization does not suffocate _________________, but rather liberates them from the ideological conformity of nationalism.

a. glocal cultures
b. regional cultures
c. Asian cultures
d. dynamic cultures
e. local cultures

12. ____________________ consists of exports and imports between a country and the rest of the world.

a. Regional reach
b. Competition
c. International trade
d. International business
e. Regional investment

13. _____________________ consists of exports and imports between a country and the rest of the world and foreign production.

a. Regional reach
b. Competition
c. International trade
d. International business
e. Regional investment

14. Although it is not widely known, foreign production constitutes a much larger portion
of international business than __________________________________.

a. international trade
b. regional business
c. local business
d. domestic business
e. transnational business

15. The extensive international penetration of U.S. and other companies has been referred
to as ____________________.

a. local reach
b. regional reach
c. political reach
d. social reach
e. global reach

16. In today’s global marketing, international trade and foreign production are increasingly managed on a __________________.

a. vertical basis
b. horizontal basis
c. global basis
d. regional basis
e. local basis

17. Multinational companies (MNCs) are increasingly managing the international trade
flow within themselves. This phenomenon is called _________________.

a. intrafirm trade
b. interfirm trade
c. bi-national trade
d. poly-national
e. geo-national

18. According to the text, ____________________ of the world trade is managed one
way or another by MNCs.

a. one-third
b. two-thirds
c. one-fourths
d. two-fourths
e. three-fourths

19. _____________ is essentially a creative corporate activity involving the planning and
execution of the conception, pricing, promotion, and distribution of ideas, products,
and services in an exchange that not only satisfy customers’ present needs but also
anticipates and creates their future needs at a profit.

a. Selling
b. Sourcing
c. Manufacturing
d. Human resources
e. Marketing

20. Marketing includes the entire company’s:

a. quality orientation.
b. market orientation.
c. cost orientation.
d. production orientation.
e. demand orientation.

21. Companies often develop different marketing strategies depending on the degree
of experience and:

a. the cost of capital in international markets.
b. the span of control of management.
c. their consumer concept.
d. the nature of operations in international markets.
e. the corporate focus.

22. Responding to changes in the market and competitive environments by moving
forward in a ______________ manner waits for others to formulate strategies before
making decisions.

a. proactive
b. deductive
c. constructive
d. reactive
e. participative

23. Responding to changes in the market and competitive environments by moving
forward in a ________________ manner anticipates changes and then formulates
strategies.
a. proactive
b. deductive
c. constructive
d. reactive
e. participative

24. Five types of marketing that have led to the evolution of global marketing are domestic marketing, export marketing, international marketing, _________________, and global marketing.

a. multinational marketing
b. consumer marketing
c. gray marketing
d. expansion marketing
e. import marketing

25. There are five identifiable stages in the evolution of marketing across national
boundaries. The first stage is:

a. global marketing.
b. international marketing.
c. export marketing.
d. direct marketing.
e. domestic marketing.

26. When a company focuses solely on its domestic market, this strategy is characterized
as one employing:

a. global marketing.
b. international marketing.
c. domestic marketing.
d. indirect marketing.
e. direct marketing.

27. Domestic marketing strategy is characterized as a strategy that is developed based on
information about domestic customer needs and wants, economic, technological, and
political environments at home, and ____________________.

a. taxes
b. customer habits
c. geography
d. culture
e. industry trends

28. Domestic marketers tend to be ________________.

a. ethnocentric
b. biocentric
c. polycentric
d. geocentric
e. localcentric

29. Export marketing consists of:

a. indirect and direct exporting.
b. indirect and longitudinal exporting.
c. indirect and passive exporting.
d. indirect and active exporting.
e. indirect and aggressive exporting.

30. U.S. automobile and consumer electronics manufacturers in the 1960s and 1970s are
examples of a(an):

a. multicentric orientation.
b. polycentric orientation.
c. ethnocentric orientation.
d. bicentric orientation.
e. egocentric orientation.

31. The ________________ stage begins with unsolicited orders from foreign customers.

a. export marketing
b. domestic marketing
c. indirect marketing
d. international marketing
e. multinational marketing

32. Some companies progress from export marketing to a more involved stage of
internationalization once:

a. managers can speak a foreign language.
b. management is willing to commit adequate resources to export activities.
c. the companies stock increases.
d. the metric system becomes standard.
e. new management has been hired.

33. Export marketers still tend to take a(n) ____________ approach to foreign markets.

a. geocentric
b. polycentric
c. ethnocentric
d. dualcentric
e. regiocentric

34. Once export marketing becomes an integral part of a company’s marketing activity,
it will begin to seek new directions for growth and international expansion. This stage is called
________________________.

a. exporting.
b. green marketing.
c. multinational marketing.
d. global marketing.
e. international marketing.

35. A unique feature of international marketing is its ________________ orientation with
emphasis on product and promotional adaptation in foreign markets.

a. geocentric
b. regiocentric
c. ethnocentric
d. polycentric
e. egocentric

36. As a company’s market share in a number of countries reaches a certain point, it
becomes important for the company to defend its position vis-à-vis local
competition. This is an example of _____________________ orientation.

a. geocentric
b. regiocentric
c. ethnocentric
d. egocentric
e. polycentric

37. In a polycentric orientation, marketers begin to _________________ products to local
conditions.

a. standardize
b. regulate
c. adapt
d. centralize
e. subsidize

38. If international marketing is taken to the extreme, a company may establish an
independent foreign subsidiary in each and every foreign market and have each of
the subsidiaries operate independently of each other without any measurable
headquarters control. This special case is called:

a. multinational marketing.
b. export marketing.
c. international marketing.
d. multidomestic marketing.
e. resource-based marketing.

39. When management of a company comes to realize the benefit of economies of scale
in product development, manufacturing, and marketing by consolidating some of its
activities on a regional basis, the company is ready to move into the _____________
stage of marketing.

a. multinational
b. customization
c. global
d. international
e. polycentric

40. If a company were to standardize its product groups within a region (for instance,
Western Europe), the company would be characterized as taking a ___________
orientation to its planning activities.

a. bicentric
b. polycentric
c. geocentric
d. concentric
e. regiocentric

41. General Motors has a regional subsidiary, Opel headquartered in Germany, to market
both GM and Opel cars with a strong European distinction. This would be an
example of ________________ marketing.

a. multinational
b. global
c. transnational
d. international
e. domestic

42. Global marketing strategy realizes that ___________________ leads to higher costs.

a. operational fragmentation
b. standardization
c. production ISO standards
d. market promotion
e. high technology robots

43. Global marketing refers to all of the marketing activities except:

a. bi-national efforts.
b. standardization efforts.
c. coordination across markets.
d. global integration.
e. none of the above.

44. Black & Decker, a U.S. hand tool manufacturer, adopted a(n) __________________
perspective by standardizing and streamlining components such as motors and rotors
while maintaining a wide range of product lines creating a universal image for its
products.

a. international marketing
b. global marketing
c. multinational marketing
d. export marketing
e. concentric marketing

45. Marketing executives should have a thorough understanding of not only the availability of various resources but also emerging consumer and societal needs on a ____________________.

a. cluster basis
b. local basis
c. global basis
d. regional basis
e. none of the above

46. Which of the following geography or climate issues affects global marketing?

a. geothermal power in Iceland
b. tropical heat in Bangalore , India
c. sugar cane crops in Brazil
d. wet snow in Scandinavia
e. none of the above

Appendix to Chapter 1

47. Comparative advantage theory was first presented by:

a. David Ricardo.
b. John Stuart Mill.
c. Michael Porter.
d. Milton Friedman.
e. Adam Smith.

48. ___________________ theory states that a country can gain from engaging in trade
even if it has an absolute advantage or disadvantage.

a. Constructive advantage
b. Comparative advantage
c. Concentric advantage
d. Supply and demand
e. Relative cost advantage

49. Even if the United States is more efficient in the production of everything than China,
both countries will benefit from their bilateral trade by specializing in what each
country can produce relatively more efficiently. This statement is an example of
which economic theory?

a. relative cost advantage
b. supply and demand
c. concentric advantage
d. comparative advantage
e. constructive advantage

50. The _________________ argument says that two countries cannot engage in trade if
one country has a(an) ___________________ over the other country. Note: the phrase
will fit in both blanks.

a. absolute advantage
b. regional advantage
c. supply chain advantage
d. comparative advantage
e. global advantage

51. The term that describes a price of one good in terms of another is called:

a. comparative terms of trade.
b. regional terms of trade.
c. factor endowment theory.
d. global terms of trade.
e. commodity terms of trade.

52. An actual exchange rate between two countries is affected by consumer demands and
_______________________ in the two countries.

a. money supply situations
b. political alliances
c. the deficit
d. the Federal Reserve
e. the factor formula

53. Which of the following is a principle of international trade?

a. Japanese workers are more productive than any other workers in the world.
b. Countries benefit from international trade.
c. Manufacturers must be forced into international trade.
d. Specialization is bad for international trade.
e. Exchange rates are determined by the World Bank.

54. Which of the following is a principle of international trade?

a. German workers will not work without Union representation.
b. International trade hurts many countries since it is basically unfair to developing
nations.
c. International trade increases worldwide production by specialization.
d. Exchange rates are determined by the Hague Convention.
e. Bribery drives up prices in world trade.

55. Which of the following is a principle of international trade?

a. United States workers rebel against productivity programs.
b. Outsourcing must be used to succeed in international trade.
c. The United Nations will settle all trade disputes.
d. Exchange rates are determined primarily by traded goods.
e. Gray markets make third world countries more efficient.

56. In general, a capital-abundant country (such as the United States) tends to specialize
in capital-intensive industry and export capital-intensive products, and import labor-
intensive products. This statement is an illustration of the ____________________
of comparative advantage.

a. commodity terms of trade theory
b. supply and demand theory
c. diminishing returns theory
d. factor-sourcing theory
e. factor endowment theory

57. In general, a labor-abundant country (such as China) tends to specialize in labor-
intensive industry and export labor-intensive products, and imports capital-intensive
products. This statement is an illustration of the ____________________________
of comparative advantage.

a. commodity terms of trade theory
b. supply and demand theory
c. factor-sourcing theory
d. factor endowment theory
e. relative advantage theory

58. To encourage improved standards of living among workers, governments should
encourage investment in ______________________ industries.

a. high value added per worker
b. capital intensive
c. labor intensive
d. skill-intensive
e. strength-intensive

59. Suppose that you are a strategic planner for Nike. You observe that shoe
manufacturing is extremely labor-intensive, while shoe designing is becoming
increasingly skill-intensive. If you advise to open a manufacturing-assembly plant
in Vietnam, your decision is an illustration of _____________________ thinking.

a. relative advantage
b. absolute advantage
c. comparative advantage
d. production advantage
e. exploitation advantage

60. When a company such as Nike has product designing and development and special
material development conducted in the United States and has manufacturing
operations in labor-abundant countries like China, the company is using
______________________ strategy.

a. relative advantage
b. absolute advantage
c. production advantage
d. comparative advantage
e. geometric advantage

61. When a company such as Nike wishes to pursue a comparative advantage strategy, it
would have product designing and development and special material development
conducted in the United States and _________________ operations conducted in
labor-abundant countries like China or Brazil.

a. manufacturing
b. custom painting
c. testing
d. inventory
e. promotion

62. The comparative advantage theory is useful in explaining _____________________
between countries that have very different factor endowments.

a. cost advantages
b. resource allocations
c. promotional expenses
d. intra-industry trade
e. inter-industry trade

63. An example of ____________________ competition is when BMW exports its sports
cars to Japan, while Honda exports its competing models to Germany.

a. inter-industry
b. between-industry
c. intra-industry
d. superficial
e. conglomerate

64. The __________________________ addresses the following questions: Why and
how does competition tend to evolve over time and across national boundaries in the
same industry? How does a company develop its marketing strategy in the presence
of competitors at home and abroad?

a. international complexity theory
b. international technology theory
c. international chaos theory
d. international game theory
e. international product cycle theory

65. A large domestic market such as in the United States makes it possible for U.S.
companies to enjoy _________________ in mass production and mass marketing,
enabling them to become lower cost producers than their competition in foreign
countries.

a. monopoly power
b. preference similarity
c. economies of scale
d. competitive advantage
e. duopoly power

66. When Nestle`, a Swiss food company, enjoys economies of scale by considering
European, U.S., and Japanese markets together as its primary market it is using the
_________________________ argument.

a. economies of scale
b. market expansion
c. market contraction
d. technology power
e. economies of scope

67. Technological innovation can provide an innovative company a competitive
advantage, or _____________________ over its competitors both at home and
abroad.

a. power gap
b. preference gap
c. technological gap
d. economic gap
e. life cycle gap

68. Preference similarity explains why:

a. monopoly power has grown tremendously.
b. low cost producers can still enjoy economies of scale.
c. profits are at an all time high in the industrialized world.
d. intra-industry trade has grown tremendously among the industrialized countries
with similar income levels.
e. comparative advantage theory works best in third world countries.

69. One of the key underlying assumptions in the international product cycle theory is
that:

a. “What goes around, comes around.”
b. “Necessity is the mother of invention.”
c. “If it ain’t broke, don’t fix it.”
d. “You get what you pay for.”
e. “If something can go wrong, it usually will.”

70. Historically, _______________ companies developed and introduced many products
that were labor- and time-saving or responded to high-income consumer needs,
including dishwashers, microwave owens, automatic washers, and dryers, PCs, and so
on:

a. Indian
b. Turkish
c. Irish
d. U.S.
e. Mexican

71. The following statement characterizes which country’s orientation to introducing
products to their mass market: Innovate on material- and capital-saving products
and processes to meet their local consumer’s needs and lifestyle orientation (such
as small and no-frill automobiles and recyclable products).

a. Japan.
b. Western Europe.
c. Canada.
d. Mexico.
e. United States.

72. The following statement characterizes which country’s orientation to introducing
products to their mass market: Developing and marketing products that not only
conserve material and capital but also space to address their consumer’s acute
concern about space limitation.

a. Japan.
b. Western Europe.
c. Mexico.
d. Canada.
e. United States.

73. With respect to the international product cycle theory, which stage’s orientation is
primarily domestic in nature?

a. Growth.
b. Maturity.
c. Saturation.
d. Introduction.
e. Decline.

74. In the __________________ stage of the international product cycle theory, U.S.
companies typically increase exports to Europe and Japan as those foreign markets expand.

a. introduction
b. saturation
c. growth
d. maturity
e. decline

75. In the ________________ stage of the international product cycle theory, U.S.
companies which have carved out market share in Europe and Japan by exporting
decide to make a direct investment in production in those markets to protect their
market position there.

a. introduction
b. saturation
c. growth
d. decline
e. maturity

76. In the _________________ stage of the international product cycle theory , the
United States eventually begins to import what was once a U.S. innovation.

a. introduction
b. saturation
c. growth
d. decline
e. maturity

77. A company’s proprietary expertise that makes it different its competitors and helps to maintain its competitive advantage can be discussed under the following theory:

a. internalization or technological theory.
b. Internalization or transaction cost theory.
c. Internalization or regional cost theory.
d. Internalization or transnational theory.
e. Internalization or traditional cost theory.

78. Appropriability regime helps companies retain their _______________ advantage:

a. dynamic
b. external
c. internal
d. social
e. technological

79. Dominant design is synonymous with ________________________.

a. dynamic design.
b. external design.
c. internal design.
d. complex design.
e. standard design.

True/False Short Answer

80. The Silk Road once connected Shanghai (China) to Istanbul (Turkey) on land.

81. The drive for globalization continues to be promoted through more free trade.

82. The saturation of domestic markets in the industrialized economies has forced many companies to look for marketing opportunities beyond their national borders.

83. Triad regions of the world encompass North America, Western Europe and Africa.

84. Compared to business-to-consumer (B2C) e-commerce, business-to-business (B2B) e-commerce is smaller.

85. The term global epitomizes both competitive pressure and the expanding market opportunities all over the world.

86. International trade consists of exports only.

87. International business consists of international trade and foreign production.

88. An example of intra-firm trade would be when Honda’s U.S. plant ships parts back to Japan to be placed in cars which are then sold in Japan and the United States.

89. Intrafirm trade makes trade statistics more complex to interpret because of trade
transactions taking place between affiliated companies within the same corporate
system, transcending national boundaries.

90. Marketing is much broader than selling.

91. Domestic marketers tend to be geocentric.

92. When a company forms independent foreign subsidiaries in each and every market,
this type of international marketing is known as ______________________.

93. Regiocentric approach encourages standardized product planning within a region.

Appendix to Chapter 1

94. David Ricardo developed the comparative advantage theory 180 years ago.

95. If a country has an absolute advantage (with respect to trade) over another country,
there is no reason to trade.

96. Assume that the United States can make computers better than any other country.
Also assume that China can make rubber shoes better than any other country. Then
in this example it may be said that the United States has a _______________
advantage in making computers and China has a ________________ advantage in
making rubber shoes. Note: one term can be used in both blanks.

97. One rule of the ___________________ theory of comparative advantage is that
that a capital-abundant country (e.g., the United States) tends to specialize in
capital-intensive industry and export capital-intensive products (personal computers)
and import labor-intensive products (desks).

98. Countries normally do not benefit from international trade.

99. One of the key underlying assumptions in the international product cycle theory is
that “necessity is the mother of invention.”

100. The international product cycle theory consists of three stages: Introduction, growth, and decline.

101. International product cycle theory explains that companies do not invest abroad
reactively once their foreign market position are threatened by local competitors.

102. A company’s expertise can be channeled through three routes to seek competitive advantage: appropriability regime, dominant design, and geocentric capability.

103. Dominant design leads to a “regional design”.

Essay

104. Explain the differences between international trade and international business.
How does the United States typically participate in international business?

105. Explain intra-firm trade. Give an example to illustrate your answer.

106. Explain the primary differences between international marketing and global
marketing.

Appendix to Chapter 1

107. Explain the general and associated concepts of comparative advantage theory.

108. Explain the international product cycle theory. Be sure to describe the stages that
a product might pass through.

Chapter 2

Multiple Choice

1. In 2012, the GDP of the United States was ____________.

a. $500 billion.
b. $800 billion.
c. $1 trillion.
d. $8 trillion.
e. $16 trillion.

2. Global economy is becoming more ____________________.

a. regional.
b. local.
c. isolated.
d. transnational.
e. intertwined.

3. In general, the larger the country’s domestic economy, the less dependent it tends
to be on exports and imports relative to its ________________.

a. gross domestic product (GDP).
b. gross domestic income.
c. gross domestic spending.
d. gross domestic capital.
e. global domestic knowledge.

4. When firms invest in manufacturing and distribution facilities outside their home countries, they add the stock of _________________________________.

a. global direct investment.
b. regional direct investment.
c. local direct investment.
d. foreign direct investment (FDI).
e. none of the above.

5. __________________ refers to investment in foreign countries that are withdrawable
at short notice (such as investment in foreign stocks and bonds).

a. Direct investment
b. Economic investment
c. International investment
d. Demand investment
e. Portfolio investment

6. An example of portfolio investment (or indirect investment) in foreign markets is:

a. production facilities.
b. computers.
c. stocks and bonds.
d. buildings.
e. manufacturing facilities.

7. The ________________ volume of international trade in currencies exceeds the
annual value of the trade in goods and services.

a. daily
b. weekly
c. monthly
d. annual
e. none of the above

8. Trading in foreign currencies has an effect on world trade. For example, a rise in
the value of the local currency due to daily flows vis-à-vis other currencies makes
exports:

a. less expensive.
b. more expensive.
c. come under government control.
d. parallel with imports.
e. be banned.

9. Country competitiveness is not a _____________ thing.

a. fixed
b. moving
c. temporary
d. dynamic
e. none of the above

10. The World Economic Forum’s Global Competitiveness Report placed
two Asian Tigers (Taiwan and Singapore) among the world’s top ______
economies (along with the Finland, United States, Sweden, Denmark, Iceland,
Switzerland, Norway, and Australia).

a. five
b. ten
c. twenty
d. twenty-five
e. thirty

11. In the country competitiveness report in 2008/09, three of the top ten countries are from _________________ countries.

a. South American
b. African
c. Asian
d. Nordic
e. None of the

12. According to the textbook, Japan was expected to be ranked number _______ on the 2005 Country Innovativeness Ranking.

a. one
b. two
c. three
d. four
e. five

13. The United States was ranked number _______ on the 2005 Country
Innovativeness Ranking.

a. one
b. two
c. four
d. five
e. six

14. Triad regions of the world include:

a. North America, Western Europe and Africa
b. North America, Western Europe and Japan
c. North America, Western Europe and Asia
d. North America, Western Europe and South America
e. North America, Western Europe and China

15. BEMs stand for:

a. Big Electronic Markets
b. Big Efficient Market
c. Big Effective Markets
d. Big Emerging Markets
e. None of the above

16. China’s average growth rate in GDP has been over:

a. 2 percent
b. 4 percent
c. 6 percent
d. 8 percent
e. 9 percent

17. India’s average growth rate in GDP has been over:

a. 3 percent
b. 5 percent
c. 7 percent
d. 9 percent
e. 10 percent

18. Which country consistently achieves the highest growth rates in GDP?

a. United States
b. Germany
c. Japan
d. Vietnam
e. China

19. Which of the following countries is NOT on the list of top 10 exporters?

a. Korea
b. Mexico
c. China
d. United States
e. Both a and b

20. Which nation is the world’s largest exporter?

a. United States
b. China
c. Netherlands
d. Germany
e. Japan

21. With which country does the U.S. have the largest trade deficit?

a. Germany
b. Japan
c. Canada
d. India
e. China

22. Why did Nokia lose market share in China?

a. Products were outdated
b. Products were too technical
c. Local producers appeared with a cheaper, adequate phone
d. Japan took away their market share
e. None of the above

23. Future trade flows are likely to move how?

a. Among the Triad nations
b. Between the Triad nations and the BEMs
c. Among the BEMs
d. Between the Triad nations and the developing world
e. None of the above

24. Which of the following countries is not considered to be a big emerging market?
a. Mexico
b. Brazil
c. Russia
d. India
e. China

25. Which of the top 10 countries in competitiveness does NOT suffer from a lack of natural resources?
a. Japan
b. Netherlands
c. Switzerland
d. Denmark
e. Canada

26. Which country has shown the most progress in competitiveness since 2005?
a. Hong Kong
b. Belgium
c. Germany
d. Switzerland
e. Japan

27. New centers of innovative activity include which countries?

a. Ireland
b. Israel
c. Singapore
d. Taiwan
e. All of the above

28. The International Trade Organization (ITO) was formed after:

a. World War I.
b. World War II.
c. the Korean war.
d. the Vietnam war
e. None of the above.

29. The main operating principle of the General Agreements of Tariffs and Trade
(GATT) was the concept of normal trade relations (NTR) status, formerly known as:

a. Early Favored Nation status.
b. Most Favored Nation status.
c. Late Favored Nation status.
d. the World Trade status.
e. the Best Nation status.

30. When GATT was successful in lowering tariff barriers to world trade, many nations
created:

a. cartels.
b. keiretsus.
c. joint ventures.
d. nontariff barriers.
e. boycotts.

31. The World Trade Organization was created in the eighth round of the GATT talks –
called the ________________________ that lasted from 1986 to 1994.

a. Brussels Round
b. Paris Round
c. Morocco Round
d. Paraguay Round
e. none of the above

32. The World Trade Organization (WTO) was created in the _____________ of GATT
talks—called the Uruguay Round.

a. fifth round
b. sixth round
c. seventh round
d. eighth round
e. ninth round

33. Perhaps the most important accomplishment of the latest GATT round was the
establishment of:

a. the World Trade Organization (WTO).
b. the Asian Development Bank.
c. the World Bank.
d. the International Monetary Fund (IMF).
e. the International Finance Corp. (IFC).

34. The World Trade Organization (WTO) took effect on:

a. January 1, 1994
b. January 1, 1995
c. January 1, 1996
d. January 1, 1997
e. January 1, 1998

35. As of March 2, 2013, the World Trade Organization (WTO) has _________
member countries.

a. 123
b. 135
c. 142
d. 159
e. 180

36. The World Trade Organization’s (WTO) ninth round of trade talks which were
launched in November 2001 is called:

a. the Doha Round.
b. the Seattle Round.
c. the Geneva Round
d. the New York Round.
e. the London Round.

37. Doha’s Development Agenda (Doha Round) includes new trade talks—an actions
program to resolve developing countries’ complaints about the implementation of
Uruguay Round agreements, and an accord on ____________________________.

a. Trade Related Aspects of Intellectual Property Rights
b. Services Related Aspects of Intellectual Property Rights
c. Regional Related Aspects of Intellectual Property Rights
d. Local Related Aspects of Intellectual Property Rights
e. National Related Aspects of Intellectual Property Rights

38. One of the differences between WTO and GATT is that WTO’s dispute settlement
mechanism is:

a. inferior.
b. faster and more automatic.
c. very limited.
d. controlled by the World Bank.
e. controlled by the negotiation section of the United Nations.

39. In December 1999, WTO launched what would have become the beginning of a
___________ round of negotiations inaugurated in Seattle, Washington.

a. fifth
b. sixth
c. seventh
d. eighth
e. ninth

40. The WTO Work Program on _____________________ is in the process of defining
the trade-related aspects of ___________________ that would fall under the
parameters of WTO mandates.

a. business commerce
b. electronic commerce
c. equity commerce
d. network commerce
e. network commerce

41. With respect to intellectual property rights, an example of an information-related
product is:

a. computer hardware.
b. an automobile.
c. computer software.
d. jewelry.
e. a new drilling bit.

42. ____________________ are highly interested in putting strong international
intellectual property laws in place:

a. Developing nations
b. Developed nations
c. Asian countries
d. European countries
e. African countries

43. One hurdle that used to protect information from being acquired easily was that it
was unfungible. Unfungible means:

a. information contained viruses.
b. information was expensive.
c. information could only be processed with proper equipment.
d. information was not for the uninformed.
e. it was difficult to replace one item with another.

44. One way around having your intellectual property copied (such as software) because
of easy access is to sell:

a. demos.
b. to new markets.
c. to governments.
d. upgrades or ancillary products.
e. only to a chosen few.

45. UNCITRAL stands for:

a. United Nations Commission on International Trade Law.
b. United Nations Commission on International Trade Limits.
c. United Nations Commission on International Technical Law.
d. United Nations Commission on International Technical Trade.
e. None of the above.

46. An evolving trend in international economic activity is the formation of:

a. multinational advertising agencies.
b. multinational insurance agencies.
c. multinational trading blocs.
d. multinational purchasing agencies.
e. multinational courts.

47. The universal reason for forming trading blocs is to:

a. bypass tariff restrictions.
b. bypass legal restrictions.
c. bypass government controls.
d. ensure the economic growth and benefit of the participating countries.
e. make competition suffer.

48. Which of the following is an example of an international trading bloc?

a. World Trade Organization.
b. GATT.
c. the World Court in the Hague.
d. NAFTA.
e. United Nations

49. NAFTA is the free trade area among the United States, Mexico, and
______________.

a. Canada
b. Argentina
c. Panama
d. Columbia
e. Brazil

50. A ___________________ is a formal agreement among two or more countries to
reduce or eliminate customs duties and nontariff trade barriers among partner
countries.

a. trade union
b. regional cooperative
c. customs union
d. common market
e. free trade area

51. An example of a free trade area would be:

a. the European Union.
b. the Soviet Union.
c. the United Kingdom.
d. NAFTA.
e. the United Nations.

52. The Free Trade Areas of the Americas (FTAA) was proposed in
__________________.

a. December 1994.
b. December 1995.
c. December 1996.
d. December 1997.
e. December 1998.

53. When members of a free trade area add common external tariffs to the provisions of
the free trade agreement, the free trade area becomes a:

a. cartel.
b. common market.
c. monetary union.
d. political union.
e. customs union.

54. One difference between a customs union and a free trade area is that the customs
union:

a. adds external tariffs to nonmember countries.
b. adds higher taxes to its consumers.
c. refuses to import from nonmember nations.
d. demands that a common currency be used among members.
e. requires that member countries align themselves politically.

55. A ________________ eliminates all tariffs and barriers to trade among members,
adopts a common set of external tariffs on nonmembers, and removes all restrictions
on the flow of capital and labor among member nations.

a. regional market
b. common market
c. monetary market
d. political market
e. customs market

56. The primary difference between a common market and a customs union is that the
common market:

a. adopts a common set of external tariffs on nonmembers.
b. eliminates all tariffs.
c. eliminates all trade barriers.
d. removes all restrictions on the flow of capital and labor among member nations.
e. the number of countries involved.

57. The effect of a monetary union is that members:

a. can buy goods from one another.
b. refuse to buy goods from nonmembers.
c. switch to a common currency and a central bank.
d. give up all sovereignty.
e. no longer recognize national boundaries.

58. The new European currency, the euro, began its circulation in January ________.

a. 1998.
b. 1999.
c. 2000.
d. 2001
e. 2002.

59. The Maastricht Treaty succeeded the:

a. Treaty of Brussels.
b. Treaty of Rome.
c. Treaty of Geneva.
d. Treaty of Paris.
e. Treaty of Vienna.

60. A monetary union represents the ____________ level of integration with a single
common currency among politically independent countries.

a. first
b. second
c. third
d. fourth
e. fifth

61. The Maastricht Treaty is a(n):

a. economic union.
b. development union.
c. transnational union.
d. political union.
e. national union.

62. The last step of the possible integration forms is the:

a. cartel.
b. common market.
c. monetary union.
d. political union.
e. customs union.

63. The principle goal of a political union is that it:

a. can buy goods from one another.
b. can refuse to buy goods from nonmembers.
c. can switch to a common currency and a central bank.
d. gives up all sovereignty among individual members.
e. no longer recognizes national boundaries.

64. Researchers have reported that multinationals have not been as great a threat to
countries’ national sovereignty because multinationals have yet to solve the
problem of:

a. demand.
b. size.
c. war.
d. religious conflict.
e. language differences.

65. The U.S. government defines the multinational company for statistical purposes as
a company that owns or controls ______________ or more of the voting securities, or
the equivalent, of at least one foreign business enterprise.

a. five percent
b. ten percent
c. fifteen percent
d. twenty percent
e. twenty-five percent

66. The sovereignty of _______________ will perhaps continue to weaken due to
multinationals and the increasing integration of economies.

a. cities
b. nations
c. regions
d. trading blocs
e. none of the above

67. MNCs that become global at their first inception are called:

a. born last firms.
b. born first firms.
c. born again firms.
d. born global firms.
e. none of the above

True/False Short Answers

68. GATT’s successor is the World Trade Organization (WTO).

69. Today, countries have become economically independent.

70. In 2008/2009 Country Competitiveness Report, 5 of the top 10 countries are Asian countries.

71. The Triad Regions of the world (North America, Western Europe, and Japan) were the major economies in most of the 20th century.

72. The world’s largest exporting country is China.

73. The world’s largest importing country is the U.S.

74. FDI in services is controlled by U.S. firms.

75. The main operating principle of the General Agreements of Tariffs and Trade (GATT)
is the concept of the Highly Favored Nation status (HFN).

76. The Uruguay Round set up an international body called the World Trade Organization
(WTO).

77. As of March 2, 2013, the World Trade Organization (WTO) had 159 member
countries.

78. Doha Round paved the way for China and Singapore to get full membership in the
WTO.

79. The World Trade Organization (WTO) is a global institutional proponent of free trade.

80. Over the Internet, any piece of electronically represented intellectual property can be
instantly copied anywhere in the world.

81. One consequence of fungible content, information products, and electronic networks
is an additional assault on the power of national governments to regulate international
commerce.

82. In the U.S., the Federal Trade Commission (FTC) is in charge of cases where entities
are trying to mislead the public and commit fraud.

83. Regulating international e-commerce does not require cross-border cooperation.

84. NAFTA is the free trade area among Canada, the United States, and Chile.

85. A free trade area (FTA) is a formal agreement among two or more countries to
reduce or eliminate customs duties and nontariff trade barriers among partner
countries.

86. Regarding regional integration, South American markets are still less open than those
of East Asia.

87. FTAA stands for Free Trade Area of the Americas.

88. A common market eliminates all tariffs and other barriers to trade among members of
the common market.

89. The 1993’s Maastricht Treaty succeeded the Treaty of Brussels.

90.A common market and a monetary union are basically the same thing.

91. A monetary union represents the fourth level of integration with a single common
currency among politically independent countries.

92. Currently, Britain and France remain the principal opponents of ceding any part of the
sovereignty of the nation-state to any future political union in Europe.

93. The U.S. government defines the multinational corporation for statistical purposes as
a company that owns or controls 60 percent or more of the voting securities, or the
equivalent of at least one foreign business enterprise.

94. Any start-up firm becoming global at its first inception is called as ‘born again firm’.

Essay

95. The world marketplace is shrinking and changing. One of the vehicles that has been instrumental in this change is the General Agreement on Tariffs and Trade (GATT). Explain what GATT is and how it has affected international business.

96. To improve on GATT the WTO was established. Explain what the WTO is, how it is different from GATT, and what specific functions the WTO is expected to perform.

97. Some of the greatest challenges in trade in the next century will come in the areas of information technology and intellectual property. Describe these challenges, the mechanisms that are in place to protect one’s intellectual property, and how trade in general will be affected.

98. It has been suggested that cooperative inter-relationships between countries (regional groupings) can be classified into five broad categories. Briefly summarize and describe each of these categories and indicate differences that may be present.

Chapter 3

Multiple Choice

1. When international transactions occur, _______________ is the monetary mechanism
that allows the transfer of funds from one nation to another.

a. foreign exchange
b. regional exchange
c. international exchange
d. global exchange
e. local exchange

2. The adoption of the _________ as a common currency in the European Union in 1999
signifies a major change in the global financial environment.

a. euro
b. lira
c. pound sterling
d. French franc
e. Swiss franc

3. The U.S. trade deficit has pushed the value of the U.S. dollar _______________.

a. forward
b. backward.
c. inward3
d. upward.
e. downward.

4. In 1944, the Bretton Woods (New Hampshire) Conference took place to establish the:

a. international marketing system.
b. international logistics system.
c. international monetary system.
d. international banking system.
e. international monetary system.

5. In the 1960s, the _______________ was the reserve currency, convertible to gold
under the Bretton Woods Agreement.

a. Australian dollar
b. Canadian dollar
c. U.S. dollar
d. Hong Kong dollar
e. None of the above

6. The acronym IMF stands for:

a. the International Marketing Fund.
b. the International Methods Fund.
c. the International Monetary Fund.
d. the International Mutual Fund.
e. the International Masters Fund.

7. The __________________________________ was established at Bretton Woods.

a. Global Monetary Fund
b. European Monetary Fund
c. International Monetary Fund (IMF)
d. Asian Monetary Fund
e. None of the above

8. All of the following are purposes of the International Monetary Fund (IMF)
EXCEPT:

a. To promote international monetary cooperation through a permanent
institution.
b. To facilitate the expansion and balanced growth of international trade.
c. To develop a world currency by 2010.
d. To promote exchange stability.
e. To give confidence to members by making the general resources of the fund
temporarily available to them under adequate safeguards.

9. To an extent, the International Monetary Fund served as an _____________________.

a. International legal bank.
b. International central bank.
c. International liability bank.
d. International claims bank.
e. None of the above

10. In 1969, the IMF created ____________________________, which are special
account entries on the IMF books designed to provide additional liquidity to support
growing world trade.

a. special drawing rights (SDRs)
b. special legal rights
c. special finance rights
d. special management rights
e. special equity rights

11. The IMF’s SDR stands for:

a. special legal rights.
b. special financial rights.
c. special drawing rights.
d. special manufacturing rights.
e. special distribution rights.

12. Participating nations may use SDRs as a source of currency in a _________ transaction.

a. soft
b. hard
c. simple
d. future
e. spot

13. The value of SDRs is determined by a weighted average of a basket of four
currencies:

a. the U.S. dollar, the Japanese yen, the euro, and the Swiss franc.
b. the U.S. dollar, the Japanese yen, the euro, and the French franc.
c. the U.S. dollar, the Japanese yen, the euro, and the British pound.
d. the U.S. dollar, the Japanese yen, the euro, and the Italian lira.
e. none of the above.

14. One creation of the Bretton Woods Agreement was the International Bank for
Reconstruction and Development, known as ________________.

a. the Merchant Bank.
b. the Monetary Bank.
c. the World Bank.
d. the European Bank.
e. none of the above.

15. The World Bank was initially intended for:

a. financing postwar reconstruction and development in Japan.
b. financing postwar reconstruction and development in France.
c. financing postwar reconstruction and development in Italy.
d. financing postwar reconstruction and development in Russia.
e. financing postwar reconstruction and development in Europe.

16. Exchange rate stability cannot be imposed by adoption of ______________________
and official intervention in the foreign exchange markets.

a. pegged exchange rates
b. pegged value rates
c. pegged equity rates
d. pegged volume rates
e. pegged finance rates

17. _____________ float is the closest approximation to perfect competition, because
there is no government intervention and because billions of units of currency are
being traded by buyers and sellers.

a. Managed (clean)
b. Managed (dirty)
c. Vertical
d. Free (clean)
e. Horizontal

18. ______________ float allows for a limited amount of government intervention to
soften sudden swings in the value of a currency.

a. Free (dirty)
b. Free (clean)
c. Restricted
d. Profit
e. Managed

19. Currencies of many _____________________ are pegged (or fixed) to one of the
major currencies or to a basket of major currencies?

a. regional countries
b. developed countries
c. emerging markets
d. developing countries
e. none of the above

20. Today, the global economy is increasingly dominated by three major currency
blocs. They are:

a. the U.S. dollar, the French franc, and the Japanese yen.
b. the U.S. dollar, the Spanish peso, and the Japanese yen.
c. the U.S. dollar, the British pound, and the Japanese yen.
d. the U.S. dollar, the British pound, and the German mark.
e. the U.S. dollar, the Japanese yen, and the euro.

21. The Japanese yen has increasingly become a regional transaction currency in
_____________.

a. Eastern Europe.
b. Asia.
c. North America.
d. Africa.
e. none of the above.

22. ________________ refers to the exchange of one country’s money for that of
another country.

a. Foreign reserve
b. Foreign dilution
c. Foreign exchange
d. Foreign float
e. Foreign control

23. One of the most fundamental determinants of the exchange rate is ______________
whereby the exchange rate between the currencies of two countries is in equilibrium
when it equates the prices of a basket of goods and services in both countries.

a. free float
b. free float (dirty)
c. managed float
d. purchasing power parity (PPP)
e. absolute cost advantage

24. The Big Mac Index is published by:

a. The Economist
b. Business Week
c. The Wall Street Journal
d. The New York Times
e. Fortune Magazine

25. Actual exchange rates can be very different from the expected rates forecasted by
economists. Many interrelated factors influence the value of a floating currency.
The three most important fundamental factors are the nation’s balance of payments
situation, world political events, and:

a. the world inflation rate.
b. the country’s currency value.
c. the nation’s inflation rate relative to its trading partners.
d. the tax structure of the nation.
e. the supply of gold that the nation holds.

26. Factors that might influence foreign exchange rates with respect to political factors
would include election year or leadership change and:

a. money supply.
b. balance of payments.
c. exchange rate control as imposed by a government.
d. size of the military.
e. amount of armed conflict in the world.

27. The problem with tight exchange controls is that often they promote a
_________________________.

a. black market
b. white market
c. flat market
d. slim market
e. regular market

28. Many countries attempt to maintain a lower value for their currency to encourage
________________.

a. black marketing
b. grey marketing
c. outsourcing
d. exports
e. imports

29. If payment on a transaction is to be made immediately, the purchaser has no choice
other than to buy foreign exchange on:

a. the spot market.
b. the forward market.
c. a hedge.
d. a future date invoice.
e. an exchange rate pass-through.

30. If payment for goods is to be made at some future date, the purchaser has the option
of buying foreign exchange on the ________________ for delivery at some future
date.

a. black market
b. gray market
c. forward market
d. exchange rate pass-through market
e. commodities market

31. When a buyer locks in an exchange rate and avoids the risk of currency fluctuations,
it is called:

a. the spot market.
b. the gray market.
c. vertical purchasing.
d. hedging.
e. factoring.

32. Protecting oneself against potential loss is called:

a. hedging.
b. factoring.
c. risk analysis.
d. portfolio reduction strategy.
e. devaluing.

33. Forward currency markets typically exist for the ______________ currencies.

a. Asian
b. weakest
c. strongest
d. convertible
e. flat

34. The extent to which a foreign company changes dollar prices of its products in the
U.S. market as a result of exchange rate fluctuations is called:

a. hedging.
b. exchange rate pass-through.
c. a target exchange rate.
d. factoring.
e. inflation-proofing.

35. The __________________ of a nation summarizes all the transactions that have
taken place between its residents and the residents of other countries over a specified
time period (usually a month, quarter or a year).

a. target exchange rate
b. portfolio acquisition
c. balance of payments
d. debt accumulation
e. exchange inflation

36. With respect to a balance of payments between nations calculation, transactions are
recorded in three categories. These are the current account, the capital account,
and the:

a. goods inventory.
b. cost of goods sold.
c. manufacturer’s inventory.
d. capital goods.
e. official reserves.

37. With respect to balance of payments calculation, when a German tourist visits the
United States and spends money on meals and lodging, it is a(n) ___________ to the
U.S. trade in services balance.

a. debit
b. credit
c. convertible
d. exchange interest factor
e. non-entity

38. Balance of payments between nations is based on which of the following principles
of accounting?

a. Debit only.
b. Credit only.
c. Factor analysis.
d. First in, last out.
e. Double entry accounting.

39. Double entry accounting, with respect to calculation of balance of payments
calculation, means:

a. the balance of payments statement must always balance.
b. the balance of payments statement will always favor the larger nation.
c. the balance of payments statement will always favor the smaller nation.
d. the balance of payments statement will never be in complete balance.
e. the balance of payments statement will rarely be accurate.

40. The government entity which prepares the balance of payments statement in the
United States is:

a. the Federal Reserve.
b. the Internal Revenue Service.
c. the Customs Department.
d. the Department of Commerce.
e. the Federal Communications Commission.

41. The balance of payments in goods account or ____________ shows trade in
currently produced goods as well as unilateral transfers of merchandise.

a. current account balance
b. capital account
c. trade balance
d. direct investments
e. portfolio investment

42. The balance of payments in ______________ shows trade in currently
produced goods and services, as well as unilateral transfers of merchandise.

a. current account balance
b. capital account
c. trade balance
d. direct investments
e. portfolio investment

43. The balance of payments in _____________ summarizes financial transactions with
respect to short and long term accounts.

a. current account balance
b. capital account
c. trade balance
d. direct investments
e. portfolio investment

44. ___________________ are those investments in enterprises or properties that are
effectively controlled by residents of another country.

a. Current account balance
b. Capital account
c. Trade balance
d. Direct investments
e. Portfolio investment

45. ___________________ includes all long-term investments that do not give the
investors effective control over the investment. Such transactions typically involve
the purchase of stocks or bonds of foreign investors for investment.

a. Current account balance
b. Capital account
c. Trade balance
d. Direct investments
e. Portfolio investment

46. Everyone knows that the United States regularly runs a deficit in merchandise trade.
In which of the following categories does the United States regularly run a surplus?

a. Services.
b. Automobiles.
c. China.
d. Fashion footwear.
e. Machine tools (such as a drill press).

47. According to the theory of international trade and balance of payments, a surplus or
deficit in a country’s basic balance should be:

a. always weighted toward the deficit side.
b. always weighted toward the surplus side.
c. self correcting.
d. continually out of balance.
e. only brought into balance by government tariff action.

48. The mechanisms (according to the theory of international trade and balance of
payments) for producing self-correction in out-of-balance accounts is accomplished
through:

a. internal market adjustments.
b. external market adjustments.
c. internal and external market adjustments.
d. governmental control.
e. governmental tariff and nontariff barriers.

49. The external market adjustment concerns __________________ or a nation’s
currency and its value with respect to the currencies of other nations.

a. exchange rates
b. budget rates
c. bond rates
d. security rates
e. countertrade rates

50. The ___________________________ refers to the movement of prices and incomes
in a country.

a. external market adjustment
b. internal market adjustments
c. linear market adjustment
d. upward market adjustment
e. downward market adjustment

51. In 1994, _______________ devaluation of its currency triggered the Asian financial
crisis.

a. China’s
b. Japan’s
c. Indonesia’s
d. India’s
e. Hong Kong’s

52. Because of the Asian financial crisis, Thailand lost almost _______ percent of its
baht’s purchasing power in dollar terms in 1997.

a. 30
b. 40
c. 50
d. 60
e. 80

53. Because of the Asian financial crisis, South Korean currency lost ______ percent
against the U.S. dollar in 1997.

a. 30
b. 40
c. 50
d. 60
e. 80

54. Increased demand for Asian _____________ has helped the region rebound quickly
from the 1997 currency crisis.

a. exports
b. imports
c. commodities
d. fruit
e. cars

55. In April 2002, Argentina’s currency had lost nearly ________ percent of its value.

a. 20
b. 40
c. 50
d. 60
e. 70

56. Argentina’s currency woes are attributed to its own ______________ policy.

a. social
b. political
c. global
d. exchange
e. monetary

57. In the area of “change the product mix,” corporate response to the recession could be to push relatively _________________ product lines while deemphasizing _______________ lines.

a. expensive, inexpensive
b. imported, exported
c. smaller, larger
d. inexpensive, expensive
e. high-tech, low-tech

58. The EMS stands for:

a. European Monetary System.
b. European Mobile System.
c. European Market System.
d. European Management System.
e. European Manufacturing System.

59. In January 1999, ________ European countries surrendered their rights to issue
their own money.

a. five
b. eight
c. ten
d. eleven
e. twelve

60. The ERM stands for:

a. European Region Mechanism.
b. European Rate Mechanism.
c. European Research Mechanism.
d. European Railroad Mechanism.
e. none of the above.

61. The European Monetary System (EMS) was established in the late:

a. 1950s.
b. 1960s.
c. 1970s.
d. 1980s.
e. 1990s.

62. The European Central Bank is headquartered in:

a. Frankfurt.
b. Paris.
c. Rome.
d. Geneva.
e. London.

63. According to the text, EMU will have a strategic impact on companies’ following operations EXCEPT:

a. price transparency.
b. supply chains.
c. hiring practices.
d. new opportunities for small and medium-sized companies.
e. intensified competitive pressures.

64. According to the text, the euro will have a major boon for __________________.

a. small and medium-sized companies.
b. large companies.
c. German companies.
d. Italian companies.
e. French companies.

65. According to the text, the euro will also help companies to streamline their ____________________.

a. small business chains.
b. North American chains.
c. quality chains.
d. HR chains.
e. supply chains.

True/False Short Answer

66. Foreign exchange is not the monetary mechanism that allows the transfer of funds
from one nation to another.

67. The adoption of the euro in the European Union took place in 1990.

68. Each country has its own currency through which it expresses the value of its products.

69. The Bretton Woods conference recommended that each nation should not be at liberty
to use its macroeconomic policies for full employment.

70. Negotiations to establish the postwar (World War II) international monetary system
took place at Bretton Woods, New Hampshire.

71. In the 1960s, the United States began to experience sequential balance of payments
deficits.

72. Because of its use in international commerce, the dollar has remained strong
throughout the 1980s and 1990s.

73. One of the functions of the International Monetary Fund (IMF) was to monitor
problems that a country might experience in maintaining equilibrium in its balance
of payments. By agreement, countries would need permission from the IMF to
alter their peg if the initial par value was to be adjusted by more than 10%.

74. Special Drawing Rights (SDRs) are special account entries on the World Bank books.

75. The IMF does not promote exchange stability to maintain orderly exchange
arrangements among members.

76. The value of SDRs is determined by a weighted average of a basket of four
currencies which are: the U.S. dollar, the Japanese yen, the euro, and
_________________.

77. To expand services for countries in monetary difficulties, the IMF created Special
Drawing Rights (SDRs).

78. Another creation of the Bretton Woods Agreement was the International Bank for
Reconstruction and Development, known as:

79. ______________ float allows for a limited amount of government intervention to
soften sudden swings in the value of a currency.

80. Today, the global economy is increasingly dominated by three major currency
blocs which include the U.S. dollar, the Japanese yen, and the euro.

81. Foreign exchange refers to the exchange of one country’s money for that of
another country.

82. One of the most fundamental determinates of the exchange rate is purchasing power
places.

83. The Economist publishes a PPP study every year based on McDonald’s Big Mac
hamburger. This index is called the Big Mac Induction.

84. If payment on a transaction is to be made immediately, the purchaser has no choice
other than to buy foreign exchange on ________________________.

85. Protecting oneself against potential loss is called _________________.

86. The extent to which a foreign company changes dollar prices of its products in the
U.S. market as a result of exchange rate fluctuations is called exchange rate pass-
through.

87. The U.S. Department of Commerce prepares the balance of payments statement in the
United States.

88. The balance of payments on goods shows trade in currently produced goods.

89. According to the theory of international trade and balance of payments, a surplus or
deficit in a country’s basic balance should not be self-correcting.

90. In 1994, China’s devaluation of its currency triggered the Asian financial
crisis.

91. Thailand lost almost 60 percent of its baht’s purchasing power in dollar terms in
1997.

92. Two economies which were severely affected by the South American financial
crisis are Argentina and Chile.

93. The European Monetary System (EMS) was established in the late 1950s.

94. The European Central Bank is headquartered in Paris, France.

95. In Europe, EU regulations do not cross national boundaries.

Essay

96. Explain the primary roles played by the International Monetary Fund and the World Bank.

97. Explain the concept of managed float.

98. Explain how knowledge of the spot and forward exchange rate market helps international marketers to be successful in the global arena.

99. Explain what exchange rate pass-through is and what difficulties might be incurred with its successful application.

100. List and briefly describe the four types of balance of payments measures.

101. Discuss the Asian Financial Crisis and its implications for international marketing. What kinds of strategies are recommended in the text to deal with the crisis:

102. Discuss the Euro and its implications for international marketing.

Chapter 4

Multiple Choice

1. In marketing, buyer behavior and consumer needs are largely driven by _______________________.

a. health norms.
b. economic norms.
c. political norms.
d. cultural norms.
e. social norms.

2. In today’s world, ______________________ often provides pride and self-esteem to
its citizens.

a. cultural heritage
b. fashion
c. styles
d. business activities
e. infrastructure

3 . From a global marketing perspective, the cultural environment matters for two main
reasons. First, cultural forces are a major factor in shaping a company’s global
marketing mix program. The second reason is:

a. cultural analysis is expensive.
b. cultural analysis often pinpoints market opportunities.
c. cultural analysis is difficult.
d. accurate cultural analysis is next to impossible.
e. cultural analysis is required by many host governments.

4. From a global marketing perspective, the cultural environment matters. The most
important reason is that cultural forces are major factors in shaping a company’s
global:

a. sales territories.
b. vision.
c. competitive response.
d. marketing mix program.
e. global ethics program.

5. Companies that ignore cultural needs often:

a. lose permission to export.
b. lose permission to import.
c. have more lawsuits.
d. lose more salespeople.
e. lose a competitive edge.

6. From the consumption point of view, ____________ homes have less space than most
Europeans or American houses.

a. Japanese
b. Turkish
c. Australians
d. Indonesian
e. Pakistani

7. Several Japanese diaper makers were able to steal market share away from Proctor &
Gamble by selling diapers that were much ______________ than the ones marketed
by P&G, thereby better meeting the desires of Japanese mothers (Japanese homes
have less space than most Europeans or American houses).

a. colorful
b. expensive
c. bulkier
d. thinner
e. rougher

8. Since China has around 300 million children, they are often treated as:

a. little emperors and empresses.
b. super children.
c. smart children.
d. a tax burden.
e. food liability.

9. One reason Chinese parents treat their children as little “emperors and empresses” is
that:

a. they have no choice since it is mandated by Chinese law.
b. China has a one child per couple (without penalties) birth control policy.
c. advertising has influenced parents.
d. children are cared for by Grandparents.
e. China pays parents to have children.

10. Children in China impact consumption patterns in all of the following ways
EXCEPT:

a. spending power.
b. special nature of one child families.
c. pester power.
d. change agents.
e. legacy due to inherited wealth.

11. Within a given culture, consumption processes can be described via a sequence of
stages. All of the following describe those stages EXCEPT:

a. access.
b. buying behavior.
c. racial characteristics
d. consumption characteristics.
e. disposal.

12. Asking the question “Does the consumer have physical and/or economic access to
the product/service?” is an indication of which stage of consumption processes
(as influenced by culture)?

a. buying behavior.
b. consumption characteristics.
c. disposal.
d. access.
e. acceleration.

13. Asking the question “How is the decision to buy made by the consumers in the
Foreign market?” is an indication of which stage of consumption processes (as
influenced by culture)?

a. buying behavior.
b. consumption characteristics.
c. disposal.
d. access.
e. acceleration.

14. In global marketing, cultural forces shape the company’s ______________ mix.

a. visibility
b. growth
c. management
d. marketing
e. fashion

15. According to the text, culture is:

a. learned, interrelated and shared.
b. learned, interrelated and mixed.
c. learned, interrelated and empty.
d. learned, interrelated and passive.
e. learned, interrelated and static.

16. All of the following are unique features of culture EXCEPT:

a. it is learned.
b. it is inherited genetically.
c. elements are interrelated with one another.
d. it is shared.
e. it is compelling.

17. A culture can be defined by national borders (especially when the country is
isolated by natural barriers). An example would be:

a. the United States.
b. Canada.
c. Mexico.
d. Taiwan.
e. Germany.

18. Below is a list of elements from culture that matter to international marketers. Pick
the item that is likely to matter the least in doing business with a foreign culture.

a. material life.
b. political party affiliation.
c. language.
d. religion.
e. education.

19. ____________________ primarily refers to the technologies that are used to produce,
distribute, and consume goods and services within society.

a. Material life
b. Political party affiliation
c. Language
d. Values
e. Education

20. Selling different sizes of soft drinks in foreign cultures is an example of which
component of culture?

a. material life.
b. social interaction.
c. language.
d. values.
e. education.

21. Poor transportation and distribution infrastructure in many developing countries
would be examples of:

a. investment requirements.
b. technology gaps tied to material life.
c. governmental corruption that must be dealt with.
d. government ineptitude.
e. different value systems.

22. ________________ is often described as the most important element that sets
human beings apart from animals.

a. Materialism
b. Destruction
c. Life styles
d. Language
e. Computer skills

23. As a communication medium, language has two components: spoken language and
_________________ language.

a. business
b. commercial
c. slang
d. silent
e. electronic

24. _______________________ refers to the complex of nonverbal communication
mechanisms that people use to get a message across.

a. Spoken language
b. Slang language
c. Silent language
d. Harmonious language
e. Electronic language

25. Edward Hall identified five distinctive types of silent languages that are:

a. space, material possessions, friendship patterns, time, and travel.
b. space, material possessions, friendship patterns, time, and technology.
c. space, material possessions, friendship patterns, time, and computers.
d. space, material possessions, friendship patterns, time, and vacations.
e. space, material possessions, friendship patterns, time, and agreements.

26. Careless translation of advertising slogans or product labels leads to:

a. language blunders.
b. high cost.
c. government regulation.
d. imprisonment of offending parties.
e. preference of domestic products.

27. A technique such as ________________________ is used to sort out the differences when translating a company’s documents into other languages.

a. common translation
b. forward translation
c. back translation
d. value translation
e. abstract translation

28. Probably the most critical expression of social interactions is the concept of:

a. silent language.
b. gestures.
c. kinship.
d. reference groups.
e. cultural homogeneity.

29. A Los Angeles radio contest targeting Hispanic families offered two tickets to
Disneyland. The contest failed because the station forgot about the effect of
______________________ on the Hispanic culture.

a. cultural homogeneity
b. nuclear family
c. reference groups
d. social class
e. extended family

30. The consumer research literature identifies three kinds of reference groups:

a. membership groups, anticipatory groups, and local groups.
b. membership groups, anticipatory groups, and global groups.
c. membership groups, anticipatory groups, and legal groups.
d. membership groups, anticipatory groups, and dissociative groups.
e. membership groups, anticipatory groups, and friendship groups.

31. Membership groups are those groups that:

a. require dues.
b. exclude people.
c. are exclusive.
d. people belong to.
e. people would like to be a part of.

32. _______________ refers to the ideas and perceptions that a culture upholds in
terms of beauty and good taste.

a. Aesthetics
b. Cybernetics
c. Techno-graphics
d. Poly-graphics
e. Geographics

33. According to the text, religions embrace three elements:

a. lifestyle, a standardized organization, and moral rules of good behavior.
b. travel, a standardized organization, and moral rules of good behavior.
c. discussion, a standardized organization, and moral rules of good behavior.
d. explanation, a standardized organization, and moral rules of good behavior.
e. interaction, a standardized organization, and moral rules of good behavior.

34. An example of a religious taboo that might affect a company’s marketing mix is:

a. failing to say rosary.
b. going uncovered into a church.
c. including pork and/or beef as menu options in a restaurant.
d. offering to sell food on Saturday.
e. not closing the restaurant before dark.

35. All of the following would be issues to consider when marketing in an Islamic
framework EXCEPT:

a. not mixing men and women in focus groups.
b. advertising censors.
c. “excessive profits” should be turned over to stockholders.
d. do not manufacture products made from pigs.
e. special fasts during holidays.

36. Taking fasting habits into account when designing a company’s marketing mix
would be an essential in which of the following cultural environments?

a. Baptist.
b. Catholic.
c. Islamic.
d. Atheist.
e. Lutheran.

37. If your company were to employ male salespeople and they needed to get access to
female shoppers, which of the following countries would this become the most
difficult?

a. United States.
b. Japan.
c. China.
d. Saudi Arabia.
e. Israel.

38. In numerous Asian countries, the ancient ____________ philosophy feng shui (wind-
water) plays an important role in the design and placement of corporate buildings
and retail space.

a. Chinese
b. Japanese
c. Indonesian
d. Singaporean
e. Indian

39. __________________ drive(s) the holiday calendar in many countries.

a. Culture
b. Religion
c. Government tax assessors
d. Reference groups
e. Family units

40. The role of women in society is sometimes largely driven by local _____________.

a. religion.
b. politics.
c. government.
d. environment.
e. geography.

41. In which of the following countries would an ad campaign emphasizing that more
shaving is good have difficulty being accepted?

a. United States.
b. Russia.
c. Japan.
d. Norway.
e. Iran.

42. Two facets of education matter to international marketers. They are the
_________________________ of education.

a. cost and location
b. level and quality
c. cost and quantity
d. cost and availability
e. level and cost

43. ______________ systems tend to be deeply rooted and are found to be intrinsic to a
person’s identity and inner self.

a. Family
b. School
c. College
d. Personality
e. Value

44. ____________________ shape(s) people’s norms and standards. In addition,
people’s attitudes towards objects and behavioral codes are also influenced.

a. Value systems
b. Cultural philosophy
c. Reference groups
d. Family extension
e. Government involvement

45. Local attitudes toward foreign cultures will drive the product
___________________________.

a. positioning and human resources decisions.
b. positioning and logistics decisions.
c. positioning and travel decisions.
d. positioning and profit decisions.
e. positioning and design decisions.

46. _______________ classifications allow the marketing manager to see how much
overlap is possible between the marketing programs to be implemented in different
markets.

a. Business
b. Cultural
c. Political
d. Government
e. Natural

47. In many countries, goods with _______________ roots are strongly valued.

a. Swiss
b. Italian
c. American
d. Russian
e. South African

48. In terms of culture, the Walloons in French-speaking _______________have much
more in common with the French than with the Flemish of Northern ____________.

a. Germany.
b. Switzerland.
c. Italy.
d. Belgium.
e. Luxembourg.

49. ____________ is a high-context culture.

a. China
b. United States
c. Germany
d. Ireland
e. Italy

50. The anthropologist Edwards Hall makes a distinction between so-called ____________________________.

a. high-context and bright-context cultures.
b. high-context and low-profile cultures.
c. high-context and dry-context cultures.
d. high-context and low-context cultures.
e. high-context and medium-context cultures.

51. “What is left unsaid is as important as what is said” would be an example of what
form of culture?

a. agrarian.
b. low context.
c. intellectual.
d. high context.
e. northern European.

52. In the field of advertising, campaigns that were developed with a high-context
culture in mind are likely to be less effective when used in _______________
cultures, and vice versa.

a. high-context.
b. low-context.
c. medium-context.
d. dry-context.
e. hot-context.

53. Research indicates that there is a greater preference for luxury goods in
_________________ cultures than in other forms.

a. feminine
b. low context
c. intellectual
d. masculine
e. high context

54. ___________________ developed a highly useful cultural classification scheme.

a. Gary Hamel
b. Peter Drucker
c. Michael Porter
d. Geert Hofstede
e. Charles Handy

55. Geert Hofstede’s cultural classification scheme was based on a large-scale research
project which used 60 ________________ subsidiaries worldwide.

a. IBM
b. Hewlett Packard
c. Dell Computer
d. Motorola
e. Texas Instruments

56. Which of the following is NOT one of Hofstede’s cultural classification dimensions?

a. power distance
b. uncertainty avoidance
c. individualism
d. romanticism
e. masculinity

57. With respect to Hofstede’s cultural classification scheme, ______________ refers
to the degree of inequality which people of a country view acceptable.

a. power distance
b. uncertainty avoidance
c. individualism
d. masculinity
e. long-termism

58. An example of a high power distance country would be:

a. Germany
b. Britain
c. United States
d. Canada
e. Mexico

59. With respect to Hofstede’s cultural classification scheme, ______________ refers
to the extent to which people in a given culture prefer structured situations with clear
rules over unstructured ones.

a. power distance
b. uncertainty avoidance
c. individualism
d. masculinity
e. long-termism

60. An example of a high uncertainty avoidance country would be:

a. Germany.
b. Britain.
c. United States.
d. Canada.
e. Japan.

61. With respect to Hofstede’s cultural classification scheme, ______________ refers
to the extent to which people in a given culture prefer to act as individuals rather than
group members.

a. power distance
b. uncertainty avoidance
c. individualism
d. masculinity
e. long-termism

62. With respect to Hofstede’s cultural classification scheme, ______________ refers
to the extent to which people in a given culture label their society male or female
based on value characteristics of the two genders.

a. power distance
b. uncertainty avoidance
c. individualism
d. masculinity
e. long-termism

63. With respect to Hofstede’s cultural classification scheme, cultures where people favor
values such as solidarity, preserving the environment, and quality of life are more
______________.

a. feminine
b. masculine
c. collectivist
d. individualist
e. none of the above

64. In collectivist societies, the interests of the ____________ take center stage.

a. individual
b. company
c. group
d. businessman
e. city

65. An example of a short-term focus country (with respect to long-termism) would be:

a. Hong Kong.
b. Britain.
c. China.
d. Thailand.
e. Japan.

66. The GLOBE is an acronym for:

a. Global Leadership and Outstanding Behavior Effectiveness.
b. Global Leadership and Organizational Business Effectiveness.
c. Global Leadership and Outsourcing Behavior Effectiveness.
d. Global Leadership and Organizational Behavior Effectiveness.
f. Global Limited Organizational Behavior Effectiveness.

67. The GLOBE researchers developed a scale of _________cultural dimensions.

a. seven
b. eight
c. nine
d. ten
e. eleven

68. In addition to Hofstede’s first dimensions (uncertainty avoidance, power distance, and
collectivism), the GLOBE project included the following additional cultural
dimensions except:

a. collectivism II.
b. European management techniques.
c. assertiveness.
d. performance orientation.
e. humane orientation.

69. Another cultural classification scheme, the World Value Survey (WVS), which
assesses people’s values and beliefs in 78 countries, was organized by the
____________________________.

a. Harvard University.
b. University of Michigan.
c. University of Pennsylvania.
d. London Business School.
e. Princeton University.

70. A term “SRC” which was coined by J. A. Lee (cultural anthropologist) stands for:

a. strategic-reference criterion.
b. standard-reference criterion.
c. simple-reference criterion.
d. self-reference criterion.
e. none of the above.

71. _______________________ refers to people’s unconscious tendency to resort to
their own cultural experience and value systems to interpret a given business
situation.

a. Cultural morals
b. Cultural ethics
c. Self-Reference Criterion (SRC)
d. Monocultural
e. Global culture

72. Ethnocentrism is the belief that one’s own culture is:

a. superior to another culture.
b. inferior to another culture.
c. more racial pure than another culture.
d. exports more than another culture.
e. has a more rich and colorful history than any other country in the world.

73. Intensive foreign-language training is one of the more common tools to promote
__________________________.

a. educational sensitivity
b. travel sensitivity
c. cultural sensitivity
d. planning sensitivity
e. daily sensitivity

74. Certain products are obviously more culture-bound than other products. In particular,
_______________________ products tend to be very culture-bound.

a. industrial
b. agricultural
c. chemicals and industrial supplies
d. food, beverages, and clothing
e. none of the above

75. Prices in the U.S. often end in 9 or 5. Those in China:

a. end in the auspicious number 3.
b. do not end in 4 because it connotes death.
c. end in 5 or 9 like the U.S..
d. end in 8.
e. have no pattern whatsoever.

76. A model of organizational culture scheme includes the following four types
EXCEPT:

a. clan.
b. hierarchy.
c. market.
d. adhocracy.
e. nations.

77. The acronym GAM stands for:

a. global application management.
b. global action management.
c. global arts management.
d. global account management.
e. none of the above.

78. In the implementation of effective global account management (GAM), the following
factors count EXCEPT the following:

a. role of the global account management team.
b. seek global outsourcing.
c. make incentive structures realistic.
d. pick the right global account managers.
e. create a strong support network.

79. The acronym CRM stands for:

a. customer relationship mapping.
b. customer reliance management.
c. computer relationship management.
d. criteria relationship management
e. customer relationship management.

80. __________________________ plays a critical role in the development and quality
of a customer relationship management.

a. United Nations
b. Geocentric organization
c. Customer database
d. Training and development
e. Outsourcing

81. Which of the following colors have universal meanings globally?
a. white
b. blue
c. green
d. black
e. only a, b and c

82. Guanxi is:
a. a large city in southern China
b. a fiery pork dish
c. a nice saying like “gesundheit”
d. connections
e. a golf country club in Shanghai

83. Distribution strategies may have to change from the U.S. model by:
a. going to a traditional store instead of home delivery
b. not smiling at customers
c. going to direct selling instead of mail order
d. delivery service for fast food restaurants instead of just sit-down eating
e. all of the above

84. Promotion strategies can be most challenging globally. Changes for a U.S.-style ad might include:
a. translation into another language
b. lots of explanatory copy
c. pictures and few or no words except the brand name
d. appeals for large groups rather than individuals
e. all of the above

True/False Short Answer

85. In a given country, cultural heritage often provides pride and self-esteem to its citizens.

86. Within a given culture, consumption processes can be described via a sequence of
four stages: access, buying behavior, consumption characteristics, and planning.

87. ________________ is a learned, shared, compelling, interrelated set of symbols
whose meanings provide a set of orientations for members of society.

88. Culture can be biologically transmitted via the genes.

89. Cultures may be defined by national borders.

90. Most nations do not contain different subgroups (subcultures) within their borders.

91. ________________ primarily refers to the technologies that are used to produce,
distribute, and consume goods and services within a society.

92. _________________ is often described as the most important element that sets
human beings apart from animals.

93. Silent language refers to the thoughts that humans have within their minds.

94. Gestures, grimaces, body language, and eye contact are all examples of __________
language.

95. Probably the most crucial expression of social interactions is the concept of kinship.

96. Religion does not play a central role in many societies.

97. ________________ refers to a community’s set of beliefs that relate to a reality that
cannot be verified empirically.

98. The two facets of education that matter the most to the business planner are the
level and the quality of education.

99. Low-context cultures do not put the most emphasis on the written or spoken word.

100. Because of its affluence, the United States is a typical example of a high-context
culture.

101. A management guru Michael Porter developed the cultural classification scheme.

102. An example of a high power distance country would be the United States.

103. The project GLOBE stands for Global Law and Organizational Behavior
Effectiveness.

104. The World Value Survey (WVS) was conducted by the University of Michigan.

105. Clan cultures do not stress cohesiveness, participation, and teamwork.

106. The coordination of the management of customer accounts across national boundaries is called as global action management.

Essay

107. According to the textbook, within a given culture, consumption processes can be described via a sequence of four stages. List and describe each stage. Your description can use the form of indicating questions that might be asked at each stage.

108. Language is one of the cultural elements that affect the way marketers do business in foreign markets. Explain how language can complicate the task of the global marketer. In addition, identify the differences between spoken and silent language.

109. Social interactions are extremely important in the process of international marketing. One aspect of the social interaction process is the role of the reference group. Explain this importance and identify the chief forms of reference groups.

110. Explain and comment on high- and low-context cultures. Give examples of each.

111. List the primary components of Geert Hofstede’s cultural classification scheme for classifying cultures. Define each component. Comment on the effect that these various elements might play on marketing products internationally.

112. Explain and discuss some of the guidelines for managing and implementing successful global account management (GAM) and customer relationship management (CRM) programs.

Chapter 5

Multiple Choice

1. International marketers cannot afford to be __________________ as they interact with
a multitude of political and legal systems, including their own at home.

a. geocentric
b. ethnocentric
c. polycentric
d. multicentric
e. none of the above

2. The government in each country determines which industries will receive:

a. protection in the country and which will face open competition.
b. benefits.
c. penalties.
d. monopolies.
e. special protection from the armed services.

3. When marketing executives do business across national boundaries, where do they
primarily face regulations and laws?

a. at home.
b. in the foreign country.
c. both at home and in the foreign country.
d. at the World Court in the Hague.
e. at the United Nations (which controls the oversight of international business).

4. A(n) _____________ country refers to a country the parent company is based in
and operates from.

a. origin
b. domestic
c. host
d. home
e. plural

5. A(n) ____________________ country refers to a country in which foreign companies
are allowed to do business in accordance with its government policies and within its
laws.

a. foreign trade zone
b. domestic
c. origin
d. home
e. host

6. What type of political events are executives most concerned with in host countries?

a. major political upheavals.
b. day-to-day low-key events that produce a fairly significant change in policy.
c. property seizures.
d. terrorist strikes.
e. labor strikes.

7. As China continues to free its markets in response to global pressure, the
_________________ is (are) undermining its censorship policies.

a. travel policies
b. Internet
c. education policies
d. manufacturing locations
e. outsourcing policies

8. One way to characterize the nature of a government is by its __________________.

a. political ideology
b. ethnic ideology
b. regional ideology
c. business ideology
d. social ideology

9. The three main political ideologies are:
a. Communism, capitalism and globalism
b. Communism, capitalism and radicalism
c. Communism, capitalism and modernism
d. Communism, capitalism and Confucianism
e. Communism, capitalism and socialism

10. __________________ refers to an economic system in which free enterprise is
permitted and encouraged along with private ownership.

a. Socialism
b. Communism
c. Fascism
d. Capitalism
e. Planned economics

11. _______________ if unfettered, may result in excessive production and excessive
consumption, thereby causing social problems of great magnitude.

a. Socialism
b. Communism
c. Protected economies
d. Monopolies
e. Capitalism

12. ________________ is generally considered to be a system that falls in the middle
between largely independent systems and controlled economic systems.

a. Socialism
b. Communism
c. Neo-fascism
d. Capitalism
e. Monarchies

13. ______________ Institutional Revolutionary Party had controlled the country for 70
years.

a. Italy’s
b. Great Britain’s
c. India’s
d. Ireland’s
e. Mexico’s

14. An example of the dual-party system in operation is found in:

a. Mexico
b. Britain
c. India
d. Pakistan
e. Japan

15. Lack of political stability and continuity is usually a characteristic of which of the
following systems?

a. single party
b. dual party
c. multiple party
d. bi-cameral system
e. communist

16. Governments often decide to block trade. All of the following are reasons EXCEPT:

a. national security.
b. to protect the stock market.
c. to develop new industry.
d. to protect declining industries.
e. none of the above.

17. MITI stands for:

a. Ministry of International Travel & Industry.
b. Ministry of International Trade & Industry.
c. Ministry of International Tourism & Industry.
d. Ministry of International Testing & Industry.
e. Ministry of International Telegraph & Industry.

18. In the United States, ITA stands for:

a. International Training Administration.
b. International Testing Administration.
c. International Teaching Administration.
d. International Tourism Administration.
e. International Trade Administration.

19. In the United States, the __________________________ has a national network of
district offices in every state, offering export promotion assistance to local businesses.

a. Ministry of International Trade and Industry (MITI)
b. EXIM Bank
c. National Industrial Council (NIC)
d. International Trade Administration (ITA)
e. United Nations, Division of Commerce

20. A major objective of any state government wishing to support businesses that
will be exporting or relocating to the United States (specifically, within their
state) is:

a. job creation.
b. increasing the defense industry in their state.
c. gaining control of multinational corporations.
d. accumulating wealth.
e. opening more hotels/motels.

21. In Europe, Airbus Industries was established with joint government subsidies from the governments of __________________________________________________.

a. Britain, France, Germany, and Spain
b. Britain, France, Germany, and Sweden
c. Britain, France, Norway, and Spain
d. Britain, Finland, Germany, and Spain
e. Iceland, France, Germany, and Spain

22. An example of a direct government subsidy by the United States to meet foreign
competition would be:

a. Microsoft.
b. COMECON.
c. The Tennessee Valley Authority.
d. BART in California.
e. SEMATECH (Semiconductor Manufacturing Technology).

23. The ultimate government involvement in trade is when the government:

a. gives tax breaks to businesses.
b. itself is the customer.
c. prevents competition.
d. controls the foreign competition with tariffs.
e. allows domestic businesses to bribe in foreign countries so they can remain
competitive.

24. The United States government accounts for ____________ of the total U.S.
consumption.

a. a tenth
b. a third
c. a quarter
d. nearly sixty percent
e. nearly seventy percent

25. Trade controls can be broken into two categories—economic trade controls and:

a. covert trade controls.
b. political trade controls.
c. geophysical trade controls.
d. maritime trade controls.
e. most favored nation trade controls.

26. An example of an economic trade control would be a trade restraint instituted to:

a. protect local jobs.
b. embargo goods.
c. sanction trading in certain goods.
d. refrain from trading with communist Cuba.
e. freeze the assets of Iraq.

27. Weapons that might be used as economic trade controls to protect locally produced
goods against imports would be:

a. embargoes.
b. sanctions.
c. asset freezes.
d. tariffs and nontariff barriers.
e. confiscation.

28. ______________________ are country-based political trade controls.

a. Embargoes and sanctions
b. Nontariff barriers
c. Taxing imports
d. Taxing exports
e. Tariffs

29. The United States maintains an economic embargo on __________________.

a. Nicaragua
b. Mongolia
c. Hungary
d. Cuba
e. none of the above.

30. All of the following are considered forms of nontariff barriers EXCEPT:

a. government participation in trade.
b. customs and entry procedures.
c. product requirements.
d. countervailing duties.
e. quotas.

31. Embargoes and sanctions are ______________________ political trade controls.

a. locally-based
b. regionally-based
c. country-based
d. company-based
e. party-based

32. An example of a product-based trade control would be the:

a. quota.
b. countervailing duty.
c. export license requirement.
d. ownership control.
e. asset freezing.

33. Trade laws that harm other countries are likely to invoke _______________.

a. war
b. retaliation
c. domestication attempts
d. covert action
e. United Nations sanction

34. Which of the following countries has very few restrictions on foreign ownership of
corporations within its borders (domestic businesses)?

a. United States.
b. Russia.
c. Japan.
d. China.
e. Saudi Arabia.

35. Profit remittances and differential taxation and interest rates are illustrations of
which of the following types of control?

a. ownership control
b. incentive control
c. industry control
d. financial control
e. political control

36. According to the textbook, government policies drive the following economic
factors EXCEPT:

a. the cost of capital.
b. level of economic growth.
c. companies’ outsourcing strategies.
d. rates of inflation.
e. international exchange rates.

37. __________________ is an outright takeover of assets without compensation.

a. Expropriation
b. Confiscation
c. Domestication
d. Nationalization
e. None of the above

38. __________________ refers to a foreign government’s takeover of company assets
such as land and goods with compensation that tend to fall short of their market value.

a. Expropriation
b. Confiscation
c. Domestication
d. Nationalization
e. non of the above

39. __________________ refers to a foreign government’s takeover for the purpose of
making the industry a government-run industry.

a. Expropriation
b. Confiscation
c. Domestication
d. Nationalization
e. None of the above

40. To reduce the risk of expropriation or confiscation of company assets overseas, many
companies use __________________ with local companies.

a. joint ventures
b. strategic alliances
c. contract manufacturing
d. licensing
e. none of the above

41. To overcome the problems of expropriation, confiscation, and even nationalization,
many companies are now adopting a policy of ___________________ where the
company gradually turns over management and operational responsibilities as well as
ownership to local companies over time.

a. retaliation
b. boycott
c. sanction
d. domestication
e. profit sharing

42. Another name for domestication is _______________________.

a. repatriation policy
b. phase-out policy
c. phase-in policy
d. upward-bound policy
e. equity policy

43. According to the PRS Group’s 2005 International Country Risk Ratings, which of the
following country has the LOWEST risk rating?

a. Norway
b. Switzerland
c. Singapore
d. Finland
e. Somalia

44. According to the PRS Group’s 2005 International Country Risk Rating, which of the
following countries has the HIGHEST risk rating?

a. Norway
b. Switzerland
c. Singapore
d. Finland
e. Iraq

45. Recently the Russian subsidiary of PepsiCo needed to import bottling equipment
from the United States. However, the Russian government did not allow the
company to exchange rubles for dollars, so it exported Russian vodka to the
United States to earn enough dollars to import the needed equipment. This would be
an example of _____________________.

a. retaliation.
b. countertrade.
c. sanction.
d. domestication.
e. profit sharing.

46. __________________ involve(s) trading of products without involving direct
monetary payments.

a. Joint ventures
b. Strategic alliances
c. Contract manufacturing
d. Countertrade
e. Outsourcing

47. The Middle East crisis and the September 11 terrorist attacks on the United States
have caused tremendous concern about the future ____________________?

a. aluminum supply
b. oil supply
c. copper supply
d. food supply
e. none of the above

48. _________________________ provides the U.S. President a free hand and the power
to negotiate trade deals with other governments.

a. Fast-track reciprocal authority
b. Fast-track senate authority
c. Fast-track business authority
d. Fast-track trade authority
e. Slow-track trade authority

49. G-7 began during the economic crisis of the mid-____________.

a. 1950s.
b. 1960s.
c. 1970s.
d. 1980s.
e. 1990s.

50. All of the following are members of the G-7 (Group of Seven) EXCEPT:

a. Canada
b. Ireland
c. Germany
d. United States
e. Italy

51. The group consisting of the original G-7 and _________________ is known as G-8.

a. Singapore
b. Ireland
c. Russia
d. China
e. New Zealand

52. _________________ was founded in 1949 to stop the flow of Western technology
to the Soviet Union. Australia, Japan, and the NATO countries (except Ireland) are
members.

a. The NATO alliance
b. The Western bloc
c. The Eastern bloc
d. The G-7 (Group of Seven)
e. COCOM (The Coordinating Committee for Multilateral Controls)

53. _____________________ may be defined as that body of rules or laws that is
binding on states and other international persons in their mutual relations.

a. Legal systems
b. International law (or the “law of nations”)
c. Local law
d. Napoleonic code law
e. Civil law

54. International law represents __________________ among countries.

a. very loose arrangements
b. contractually binding agreements
c. gentlemen’s agreements
d. almost no control of law
e. the best and most recognized legal standards

55. International law comes from customs, national and international court decisions,
and:

a. tradition.
b. joint ventures.
c. strategic alliances.
d. cabals.
e. international treaties.

56. The International Court of Justice was established by the ____________________
to settle international conflicts between nations, not between individual parties and
companies.

a. United Nations
b. Asian Development Bank
c. International Labor Organization
d. International Monetary Fund
e. World Bank

57. ____________________ laws primarily govern behavior within a country and
also govern the resolution of international contractual disputes since foreign
subsidiaries and expatriate employees live within the legal bounds of their host
countries’ legal systems.

a. Global
b. Transnational
c. Multinational
d. Local and municipal
e. Bi-national

58. Legal issues facing a company affect:

a. pricing decisions.
b. packaging decisions.
c. product decisions.
d. all of the above.
e. none of the above.

59. ________________ systems base the interpretation of law on prior court rulings
(that is, legal precedents and customs of time).

a. Common law
b. Code law
c. Written law
d. Islamic law
e. Napoleonic law

60. A country that follows common law as its primary system is:

a. France.
b. the United States.
c. Iraq.
d. Egypt.
e. Mexico.

61. _________________ systems rely on statutes and codes for the interpretation of the
law. There is very little interpretation in this form of law.

a. Common law
b. Code (written) law
c. United Nation’s law
d. Germanic Confederation law
e. Spanish Constitutional law

62. The legal system that holds that law was established by God and a “natural law”
embodies all justice is represented by:

a. Common law.
b. Code (written) law.
c. Islamic law.
d. Germanic Confederation law.
e. Napoleonic law.

63. Civil laws regulating business contracts and transactions are usually called:

a. business law.
b. code law.
c. confederation law.
d. commercial law.
e. contract law.

64. All of the following countries believe that most disputes can be solved outside the
litigation system EXCEPT:

a. Brazil.
b. Japan.
c. China.
d. United States.
e. Taiwan.

65. The ____________________ (based in Geneva, Switzerland) has instituted a set of
process standards that has been subscribed to by the European Union.

a. International Standards Organization
b. International Production Standards Organization
c. Quality Council
d. Demming Committee
e. Baldridge Foundation

66. With the growing adoption of the __________ standards by firms worldwide, an
__________ certification has become an essential marketing tool for firms.

a. ISO 6000
b. ISO 7000
c. ISO 8000
d. ISO 9000
e. ISO 10000

67. The ISO 9000 standards served as a model for the _____________ series.

a. ISO 10000
b. ISO 11000
c. ISO 12000
d. ISO 14000
e. ISO 15000

68. ______________________ refers to ideas that are translated into tangible products,
writings, and so on, and that are protected by the state for a limited period of time
from unauthorized commercial exploitation.

a. A copyright
b. A trademark
c. A trade secret
d. Intellectual property
e. A patent

69. Which of the following countries has followed the rule of “first-to-invent” with respect to patent awards?

a. United States
b. Japan
c. Britain
d. Germany
e. Canada

70. The international treaty (convention) established in 1883 that explains international
protection rights of intellectual property (such as how long one has to file for
property protection in foreign countries) is called:

a. the Berne Convention.
b. the London Convention.
c. the Paris Convention.
d. the New York Convention.
e. the Rome Convention.

71. The ____________________ is the oldest and most comprehensive international
copyright treaty.

a. Berne Convention.
b. London Convention.
c. Paris Convention.
d. New York Convention.
e. Rome Convention.

72. The _____________________ specifically forbade every contract, combination, or
conspiracy to restrain free and open trade.

a. Sherman Act
b. Clayton Act
c. Federal Trade Commission Act
d. Foreign Corrupt Practices Act
e. Export Trading Company Act

73. The _______________ strengthened the U.S. antitrust arsenal by prohibiting trade
practices that were not covered in previous legislation. It outlawed exclusive
dealing and price discrimination.

a. Sherman Act
b. Clayton Act
c. Federal Trade Commission Act
d. Foreign Corrupt Practices Act
e. Export Trading Company Act

74. The __________________ encourages firms to join forces to improve their
export performance by exempting them from antitrust laws. This act was patterned
after similar legislation in Japan and Germany.

a. Sherman Act
b. Clayton Act
c. Federal Trade Commission Act
d. Foreign Corrupt Practices Act
e. Export Trading Company Act

75. The ____________________ was designed to prohibit the payment of any money
or anything of value to foreign officials, foreign political parties, or any candidate for
foreign political office for purposes of obtaining, retaining, or directing business.

a. Sherman Act
b. Clayton Act
c. Federal Trade Commission Act
d. Foreign Corrupt Practices Act
e. Export Trading Company Act

76. The ____________________ antitrust laws are applied not only to _______________
-member country companies but also to foreign companies as long as their corporate
action has antitrust implications within the _____________.

a. MERCOSUR.
b. European Union (EU).
c. European Free Trade Association (EFTA).
d. NAFTA
e. None of the above.

77. The ___________________________________ of 1977 was designed to prohibit the
payment of any money or anything of value to foreign officials, foreign political
parties, or any candidate for foreign political office for purposes of obtaining,
retaining, or directing business.

a. Foreign Illegal Practices Act
b. Foreign Corruption Issues Act
c. Foreign Corruption Law Act
d. Foreign Bribery Practices Act
e. Foreign Corrupt Practices Act

True/False Short Answer

78. A host country refers to a country the parent company is based in and
operates from.

79. A _______________ country is a country in which foreign companies are allowed
to do business in accordance with its government’s policies and its laws.

80. Under strict socialism, the government owns and manages all businesses and no
private ownership is allowed.

81. ________________ refers to an economic system in which free enterprise is
permitted and encouraged along with private ownership.

82. Both capitalistic and socialistic countries in which government planning and
ownership play a major role are also referred to as planned economies.

83. One of the problems with a multiple party governmental system is a lack of
political stability and continuity.

84. In the United States, the organization that seeks to help firms considering exports to
other countries is the International Trade Agency (ITA).

85. The U.S. government accounts for a ______________ of the total U.S. consumption.

86. The “buy domestic” policy orientation is not limited to the United States.

87. Trade controls can be broken into two categories – economic trade controls and
_____________________.

88. ___________________ restrict all trade with a nation for political purposes.

89. Export license requirements are supply-based trade controls.

90. The United States maintains an economic embargo on Nicaragua.

91. _______________ by a government is an outright takeover of a business’s assets
without compensation.

92. A _______________________ policy by a host government means that the foreign
company doing business within the country’s borders must gradually turn over
management and operational responsibilities as well as ownership to local companies
over time.

93. The Group of 7 (or G-7) is made up of France, Germany, Italy, England, Canada,
Japan, and the United States.

94. The Coordinating Committee for Multilateral Controls (COCOM) was founded after
the Cold War in the 1990s.

95. Treaties and international contracts do not represent formal agreements among nations or firms.

96. Common law systems base the interpretation of law on prior court rulings.

97. The Digital Millennium Copyright Act (DMCA) of 1998 was passed in Germany.

98. The Patent Law Treaty (PLT) was adopted in Frankfurt in June 2000.

99. The U.S. antitrust laws were originally and primarily aimed at domestic monopolies.

100. In the U.S., the Foreign Corrupt Practices Act (FCPA) was passed in 1990.

Essay

101. List and briefly characterize the three main reasons why governments often want to
block or restrict trade.

102. What are the two primary types of trade controls? Give a description and an example of each major type.

103. How do the macroeconomic policies of a host country affect a foreign
company’s operations?

104. International law is derived from three sources. Identify and compare these
sources.

105. Describe the various types of local legal systems. Describe how these differences
might affect a company that wishes to conduct international business.

Chapter 6

Multiple Choice

1. In international marketing, the global market research process includes:

a. Define the problem(s).
b. Develop a research design.
c. Determine the information needs.
d. Collect the data (secondary & primary).
e. All of the above.

2. To some degree, the procedures and methods that are followed to conduct global
marketing research are close to those in the standard ____________________.

a. domestic market.
b. transnational market.
c. global market.
d. European market.
e. Asian market.

3. All of the following are steps to be followed to conduct global market research
EXCEPT:

a. define the research problem(s).
b. develop software to integrate with the Internet databases.
c. determine information needs.
d. collect the data.
e. analyze the data and interpret the results.

4. There are six steps to follow in conducting global market research. The first step
is to:

a. develop the research design.
b. define the research problem.
c. determine information needs.
d. collect the data (secondary and primary).
e. analyze the data and interpret the results.

5. All of the following are major challenges that a global marketing researcher might
face EXCEPT:

a. argument over budget expenditures between international markets.
b. complexity of research design due to environmental differences.
c. lack and inaccuracy of secondary data.
d. time and cost requirements to collect primary data.
e. coordination of multicountry research efforts.

6. Any research starts off with a precise definition of the ______________________.

a. location problems.
b. sample problems.
c. data problems.
d. research problem(s).
e. none of the above.

7. In marketing research, once the problem has been identified it is translated into:

a. a secondary research search.
b. a primary research search.
c. specific research questions.
d. a sampling process.
e. a choice of scales to be used in measurement.

8. In global marketing research, the marketing research problem formulation is often
hindered by the _____________________ where a person’s habit is to fall back on
their own cultural norms and values.

a. gender bias
b. culture bias
c. proximity effect
d. global distance factor
e. self-reference criterion

9. ____________________ should be consulted at every step of the research process if
the study will effect their operations.

a. Transnational subsidiaries
b. European subsidiaries
c. Asian subsidiaries
d. Local subsidiaries
e. African subsidiaries

10. A major difficulty in formulating the research problem in the global marketing
research effort is the unfamiliarity with the ___________________.

a. foreign mass media
b. laws governing marketing research
c. foreign environment
d. domestic environment’s attitude toward foreign research
e. people who will actually conduct the research

11. In a foreign market, the _______________ survey is probably the most economical
way to gather preliminary information on target markets.

a. upper-middle class
b. omnibus
c. environmental
d. demographic specific
e. local distributor

12. A major disadvantage of the omnibus surveys is that:

a. it is usually culturally biased.
b. it is very expensive.
c. clients cannot incorporate their own questions in the survey.
d. the survey does not usually contain many consumer-related questions.
e. only a limited amount of company-relevant information is obtainable.

13. A(n ) ____________________ is particularly suitable when you need to ask a few
simple questions.

a. geometric survey
b. omnibus survey
c. simple survey
d. restricted survey
e. matrix survey

14. When market researchers find information that might be useful in their exploration
process to already be available (usually collected for some other purpose by other
data gathers), this type of information is called:

a. public information.
b. primary data.
c. unrestricted information.
d. secondary data.
e. used information.

15. When data is collected specifically for the purpose of the research study, it is called:

a. public information.
b. primary data.
c. unrestricted information.
d. secondary data.
e. used information.

16. The National Trade Data Bank (NTDB) which includes market research reports,
information on export opportunities, and market guides is maintained by the
____________________________.

a. U.S. Department of Commerce
b. U.S. Department of Education
c. U.S. Department of Energy
d. U.S. Department of Transportation
e. U.S. Treasury

17. The OECD is an acronym _______________________________________.

a. Organization for Economic Cooperation & Deregulation
b. Organization for Economic Cooperation & Development
c. Organization for Economic Cooperation & Datamation
d. Organization for Economic Cooperation & Distribution
e. Organization for Economic Cooperation & Demographics

18. Many countries have a network of government-sponsored commercial delegations
that provide valuable information to firms that desire to do business in that country.
One of the most noteworthy of these is found in ______________ and is called
_________________.

a. Britain; Britannia Net
b. Canada; Canada First
c. Japan; Japan External Trade Organization (JETRO)
d. the United States; Buy American
e. Mexico; the Mexican Organization of Commercial Enterprise (MOCE)

19. A recent form of secondary data sources is the syndicated datasets sold by market
research companies like A. C. Nielsen and Information Resources, Inc. One of the
ways that these firms acquire data in foreign markets and most developed countries
(especially in the retail environment) is to use:

a. observation.
b. telephone interviews.
c. direct mail.
d. expert opinion.
e. optical scanners tied to cash registers.

20. All of the following are major sources of problems for the market researcher wishing
to use secondary data obtained either about or from foreign markets EXCEPT:

a. government control of data for taxing purposes.
b. accuracy of data.
c. age of data.
d. reliability of data over time.
e. comparability of data.

21. Accuracy of data in foreign markets may be suspect. This is especially true if it
neglects to record significant commercial and non-commercial activity. One example
of data that is often not recorded (though it might be significant) is:

a. trade across national borders.
b. trade by mail.
c. smuggling activities.
d. trade carried by package shippers such as FedEx or UPS.
e. trade with foreign banks.

22. _______________________ reflects the degree to which a given concept has the
same meaning in different environments.

a. Functional equivalence
b. Conceptual equivalence
c. Demographic equivalence
d. Psychographic equivalence
e. Primary equivalence

23. Comparability might also be hindered by the lack of ___________________.
This refers to the degree to which similar activities or products in different countries
fulfill similar functions.

a. conceptual equivalence
b. functional factors
c. functional equivalence
d. lumping of data
e. comparison equivalence

24. The comparison of money-based indicators (e.g., income figures, consumer
expenditures, trade statistics) is hampered by the need to convert such figures into
a ____________________.

a. common currency
b. euro currency
c. euro dollar
d. Swiss franc
e. Italian lira

25. To avoid the difficulty of “lumping of data” encountered in conducting
international marketing research, all of the following questions should be asked
EXCEPT:

a. When were the data collected?
b. How were the data collected?
c. How much did it cost to collect the data?
d. Have the variables been redefined over time?
e. Who collected the data?

26. If a marketing researcher asks “who collected the data?” they would probably be
trying to overcome one of the major difficulties of collecting data in the international
marketplace. Which of the following best describes the effect that the researcher is
trying to overcome?

a. conceptual equivalence.
b. functional factors.
c. functional equivalence.
d. lumping of data.
e. comparison equivalence.

27. Primary research can be collected in several ways. One method that is excellent to
use when doing exploratory research is:

a. mail surveys.
b. telephone surveys.
c. mall intercept.
d. home interviews.
e. focus groups.

28. As a research technique, a ________________ is a loosely structured free-flowing
discussion among a small group of target customers facilitated by a professional
moderator.

a. mall intercept
b. contra-group design
c. Delphi-group
d. focus group
e. probe panel

29. All of the following are typical uses of the focus group research technique EXCEPT:

a. to generate information to guide the quantitative research projects.
b. to obtain data on unproductive or problem employees.
c. to reveal new product opportunities.
d. to test out new product concepts.
e. to test out new ad images.

30. Getting focus groups to work in certain societies (because of their view on group
dynamics and proper decorum) is difficult. Which of the following countries
would be most difficult for successful focus groups?

a. Japan
b. United States
c. Canada
d. Britain
e. Germany

31. Which of the following is not important to address in focus group research?
a. cultural sensitivity of the moderator
b. non-verbal cues
c. consensus answers
d. gender of the participants
e. gender of the moderator

32. _________________ are the most common vehicle to gather primary data.

a. Scanners
b. Focus groups
c. Questionnaires
d. Interviews
e. Cluster analysis

33. By far the most popular instrument to gather primary data is the:

a. mall intercept.
b. casual observation.
c. questionnaire.
d. optical scanner.
e. eye tracking camera used in psychology.

34. The astute marketing researcher must be aware of the need for conceptual and
functional equivalence in designing questionnaires for the international market.
In addition, it is also necessary to fulfill two additional criteria. They are:

a. time and cost evaluation.
b. translation and scalar equivalence.
c. translation and polar equivalence.
d. religious and bias equivalence.
e. polar and scalar equivalence.

35. Two procedures that can overcome problems with sloppy questionnaire translation
in conducting international marketing research is to provide for:

a. polar and psychographic translation.
b. lifestyle and psychographic translation.
c. back-translation and parallel translation.
d. forward-translation and parallel translation.
e. lifestyle and parallel translation.

36. ______________________ translation involves using multiple interpreters who
translate the same questionnaire independently.

a. Polar
b. Parallel
c. Back
d. Forward
e. Lifestyle

37. To make findings of cross-country market research projects meaningful, it is
paramount to pursue ________________ (where scores from subjects of different
countries should have the same meaning and interpretation).

a. time evaluation
b. scalar equivalence
c. polar equivalence
d. bias equivalence
e. focus equivalence

38. The purpose of ______________________ is to get scores from subjects of
different countries to have the same meaning and interpretation.

a. time evaluation
b. scalar equivalence
c. polar equivalence
d. bias equivalence
e. focus equivalence

39. Survey research in ______________________ is further hampered by low levels of
education.

a. developed countries
b. rich countries
c. developing countries
d. emerging markets
e. low-tech countries

40. With respect to asking scaled questions to determine the degree of agreement or
disagreement, in illiterate societies scaled questions often use:

a. numbers (such as 1-10).
b. letters (such as a-z).
c. use symbols (such as stars).
d. use degrees of smiling or funny faces (from happy to sad).
e. use number of animals (ownership demonstrated by one through seven goats or
cows).

41. With respect to conducting marketing research in countries that are unfamiliar with
survey research, it is advisable to avoid:

a. references to the government.
b. lengthy questionnaires or open-ended questions.
c. references to religion.
d. questioning females.
e. any scaled questions.

42. ___________________ is the only foolproof way to debug the questionnaire and
spot embarrassing mistakes.

a. Pre-testing
b. Post-testing
c. Using approved software
d. Using standard questionnaire formats
e. Having a linguist read the questionnaire

43. To collect data, the researcher has to draw a ____________ from the target
population.

a. group item
b. reference list
c. sample
d. quota
e. portion

44. A sampling plan centers around three issues: sampling unit, sample size, and
__________________.

a. demographic procedure
b. sampling procedure
c. psychographic procedure
d. geographic procedure
e. none of the above

45. Which of the following questions is most associated with the term “sampling unit?”

a. Who cannot be considered as a valid respondent?
b. How much will the survey cost?
c. What is our target population? Who should be surveyed?
d. How many people should be surveyed?
e. How should prospective respondents be chosen from the target population?

46. Which of the following questions is most associated with the term “sample size?”

a. Who cannot be considered as a valid respondent?
b. How much will the survey cost?
c. What is our target population?
d. How many people should be surveyed?
e. How should prospective respondents be chosen from the target population?

47. When drawing a sample, the researcher needs a __________________, that is,
listing of the target population (e.g., a telephone directory).

a. sampling mirror
b. sampling frame
c. sampling group
d. sampling questionnaire
e. sampling behavior

48. With respect to approved sampling theory, heterogeneous cultures (e.g., India)
demand ________________ samples than homogeneous cultures (e.g. South Korea).

a. bigger
b. smaller
c. less stratified
d. more randomized
e. less randomized

49. When preparing a sampling plan, the researcher needs to decide how to contact
prospective subjects for the survey. The most common choices are:

a. mail, telephone, and Internet.
b. mail, telephone, and optical scan.
c. mail, telephone, and personal interview.
d. observation, personal interview, and experimentation on a person-by- person basis.
e. observation, telephone, and personal interview.

50. Once collection of data in a research project begins, there can be many problems
with collection. A very common problem in the international arena is nonresponse
due to:

a. a reluctance to be photographed.
b. a reluctance to talking with strangers.
c. a reluctance to talking with officials or official pollsters.
d. a fear of government reprisals.
e. a fear of cultural conflict.

51. When conducting research, several biases may be present. The ___________ bias
is present when the respondent feels a desire to be polite toward the other person.

a. yea-or nay-saying
b. social desirability
c. gender
d. tradition
e. courtesy

52. The courtesy bias with respect to marketing research responses is fairly common in:

a. the United States.
b. France.
c. Germany.
d. Asia and the Middle East.
e. Mexico.

53. Besides traditional primary data collection methods, companies also rely on less
conventional methods such as ________________________.

a. geographic research
b. multigraphic research
c. psychographic research
d. ethnographic research
e. none of the above

54. All of the following are methods that can be fruitfully employed to assess the size of
the market for any given product EXCEPT:

a. analogy method.
b. Latin square.
c. trade audit.
d. chain ratio method.
e. cross-sectional regression analysis.

55. The procedure for the _______________ of assessing market size is to pick a country
that is at the same stage of economic development as the country of interest and for
which the market size is known. This country then becomes an indicator for the
market size of the country that is under question.

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

56. Suppose that a consumer electronics company wants to estimate the market size for
VCRs in Poland but does not have much information about that market. Instead, it
chooses Hungary (a country for which it does have information) and uses it as an
indicator for the market in Poland. This method of determining market size most
resembles which of the following methods?

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

57. One common problem with using the analogy method of determining market size
is:

a. cost.
b. language problems.
c. consumption patterns are not comparable across countries due to strong cultural
disparities.
d. different monetary units.
e. there be more men than women in one of the cultures.

58. An alternative way to derive market size estimates is based on local production and
import and export figures for the product of interest. This method is best described
as being a(the):

a. analogy method.
b. Latin square.
c. trade audit.
d. chain ratio method.
e. cross-sectional regression analysis.

59. The _______________ method of assessing market size begins with a rough base-
number as an estimate for the market size (such as the entire population for the
country) and systematically fine-tunes by applying a string of percentages (such as
birth rate) to come up with the most meaningful estimate possible.

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

60. If a company wishing to sell baby monitors (to help with infants that have trouble
breathing) wanted to estimate the size of their potential market in a developing
country for which little data was available, they could get the population size, examine
the number of births per year, focus on cities that had the highest birthrates, and
contact hospitals that had the most problems with SIDS (sudden infant death
syndrome). This logic most closely approximates which of the following methods
listed below?

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

61. One method for determining market size estimates takes the variable of interest (such
as market size) and relates it to a set of predictor variables (indicators closely related
to demand). This method would be best described as being which of the following?

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

62. If a researcher were to take ten Central and Eastern European countries where
per capita income and automobile ownership by per capita were known, trying to
find the overall picture of market size for the market could probably be done by
using which of the following methods?

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

63. Point-of-sale (POS) store scanners obtain sales movement data from
the _____________________ of retail outlets.

a. checkout scanner tapes
b. company headquarter
c. regional warehouses
d. international warehouses
e. none of the above

64. The emergence of _________________ data, coupled with rapid developments in
computer hardware and software has led to a revolution in market research.

a. the Internet
b. scanner
c. cost efficient
d. mail-in rebate
e. direct-feedback

65. Innovations in marketing decision support systems have spurred several major
developments in the marketing area. One of most dramatic has been:

a. the shift from mass to micro marketing.
b. the shift from a demand to a supply economy.
c. the fact that everyone now has a personal computer.
d. the overcrowding of the Internet.
e. home shopping on the Internet.

66. Scanning data are also increasingly used for ________________________.

a. sample management
b. electronic management
c. the Internet management
d. category management
c. supply management

67. With respect to standardization of research results, even when dealing with cross-
country marketing research, which of the following entities usually desires
standardization of data collection, sampling procedures, and survey instruments?

a. the local government
b. the local research agency
c. the local subsidiary
d. the home office
e. the home research agency

68. Two approaches are common in global marketing research:

a. Emic and ethic.
b. Emic and etic.
c. Emic and eco-centric.
d. Emic and geo-centric.
e. None of the above.

69. In the area of multicountry research coordination, the __________________
focuses on the peculiarities of each country.

a. coordination school
b. delegation school
c. etic school
d. planning school
e. emic school

70. In the area of multicountry research coordination, the __________________
focuses on the universal behavior and attitudinal traits.

a. coordination school
b. delegation school
c. etic school
d. planning school
e. emic school

71. In cross-cultural market research, the need for comparability favors the
___________________.

a. coordination school
b. delegation school
c. etic school
d. planning school
e. emic school

72. Internet surveys are becoming more popular in international research. Which of the following is NOT an advantage of such surveys?
a. larger sample sizes are easier to obtain
b. internet access in all countries
c. lower costs
d. anonymity
e. speedy response times

73. Which of the following would be problematic in using the Internet in global research?
a. obtaining a representative sample
b. download time for website pages
c. incorrect e-mail addresses
d. poor response rates
e. all of the above

74. One should be concerned about choosing a local agency for marketing research because:
a. local agencies understand cultural nuance better
b. they might lack the expertise for state-of-the art research
c. they may not be trustworthy with secrets
d. local agencies are relatively inexpensive
e. both b and c

True/False Short Answer

75. “Test, test, test” is a maxim that marketers should never forget.

76. Procedures and methods that are followed to conduct global marketing research
are very different from those used to conduct domestic research.

77. The first step in the marketing research process is described as
_________________________.

78. Any research effort starts off with a precise definition of who the marketer wants to
research.

79. Today researchers have found that sophisticated analytical tools will compensate for
inaccuracies in problem definition.

80. Local subsidiaries should not be consulted at every step of the research process.

81. To gain familiarity with a foreign environment, one can undertake an omnibus survey.

82. _____________ data are collected specifically for the purpose of the research study.

83. If a company were to go to JETRO (the Japanese External Trade Organization) for
data on exporting to Japan, they would be engaging in a _______________ data
search.

84. OECD stands for ________________________________________.

85. In the area of age of data, the frequency of census does not vary from country to
country.

86. With respect to comparability of data, ________________ equivalence refers to the
degree to which similar activities or products in different countries fulfill similar
functions.

87. Focus groups normally include 30-40 people.

88. A __________________ is a loosely structured free-flowing discussion among a
small group of target customers facilitated by a professional moderator.

89. One of the procedures used in practice to avoid sloppy translation of questionnaires
is forward-translation.

90. Using the “Funny Faces Scale” would be one way to overcome literacy problems
among developing countries in answering marketing research questionnaires.

91. Latin Americans tend to use the low end of the funny faces.

92. There are various methods for estimating market size. The _________________
method starts by picking a country that is at the same stage of economic development
as the country of interest and for which the market size is known.

93. The chain ratio method starts with a very rough base-number as an estimate for the
market size.

94. Cross-sectional regression analysis do not produce market size estimates.

95. In the area of multicountry research coordination, the __________________
focuses on the peculiarities of each country.

96. In the area of multicountry research coordination, the __________________
focuses on the universal behavior and attitudinal traits.

Essay

97. List the stages of the marketing research process. What is considered the most important step?

98. Discuss the function, purpose, limitations, and benefits of omnibus surveys.

99. What are the generally accepted problems associated with collecting and using secondary data research?

100. Discuss the major issues that a marketing researcher would want to consider for focus group discussions in an international market environment.

101. List the four primary methods of estimating market size. Discuss why market size estimates may differ depending on the method being used. How can such differences be reconciled? Which method do you think is the best? Explain your reasoning.

Chapter 7

Multiple Choice

1. Variation in customer needs is the primary reason for ____________________.

a. market segmentation.
b. product segmentation.
c. country segmentation.
d. quality segmentation.
e. sales segmentation.

2. The goal of market segmentation is to break down the market for a product or a
service into different groups of consumers so the firm can:

a. tailor its marketing mix to each individual segment.
b. make the sales job easier.
c. offer a customized product to every consumer.
d. offer a standard product to every consumer.
e. make more money.

3. Market segmentation is a logical outgrowth of:

a. the demand function.
b. the supply function.
c. efficiency in inventory control.
d. the marketing concept.
e. the product life cycle.

4. Which of the following is NOT a property that segments ideally should possess?

a. Identifiable.
b. Sizable.
c. Defensible.
d. Accessible.
e. Actionable.

5. With respect to properties that an international market segment should ideally possess,
the _________________ property is easily met for the target country when the
researcher examines socioeconomic variables (such as per capita income).

a. identifiable
b. sizable
c. defensible
d. accessible
e. actionable

6. With respect to properties that an international market segment should ideally possess,
the ____________________ property is important when the target country has
differences in the quality of the media infrastructure (such as the absence of
commercial television).

a. identifiable
b. sizable
c. stable
d. accessible
e. actionable

7. With respect to properties that an international market segment should ideally possess,
the ____________________ property is important (for market segmentation to
be meaningful) when effective marketing programs involving the 4 Ps can be
developed to evoke the desired response from the target segment.

a. measurable
b. sizable
c. responsive
d. accessible
e. actionable

8. ______________________ plays a major role in global marketing research.

a. Business segmentation
b. Quality segmentation
c. Firm segmentation
d. Country segmentation
e. Local segmentation

9. All of the following are reasons for international marketers to implement international
market segmentation EXCEPT:

a. country screening.
b. government mandate.
c. global market research.
d. positioning strategy.
e. entry decisions.

10. When market analysts examine indicators and classify countries into consideration
piles (based on some criteria) that are doing __________________________.

a. country screening
b. government research
c. global market research
d. positioning strategy
e. country quadrant positioning

11. Given the sheer number of countries in which many companies operate, doing
marketing research in each one of them is often inefficient. One approach to
reduce this problem is to narrow the list of those countries that might be examined by
grouping prospective markets into _____________________ countries.

a. financial categories for
b. clusters of homogeneous
c. clusters of heterogeneous
d. dissimilar qualifiers for
e. statistical tracts for

12. Cadbury-Schweppes was confident about launching Schweppes tonic water in
Brazil, given that the beverage had done well in culturally similar countries such
as Mexico. This would be an example of which of the following reasons why
international marketers implement international market segmentation?

a. country screening.
b. government mandate.
c. global market research.
d. positioning strategy.
e. entry decisions.

13. Cathay Pacific (a Hong Kong based airline carrier) recently wanted to increase
services to its Asian customers. It added a wide variety of Asian meals and
entertainment and introduced a new advertising slogan “The Heart of Asia.” This
would be an example of which of the following reasons why international marketers
implement international market segmentation?

a. country screening.
b. government mandate.
c. global market research.
d. positioning strategy.
e. entry decisions.

14. A persistent problem faced by international marketers is how to strike the balance
between standardization and customization. Using international marketing
segmentation to shed some light on this issue would be an example of which of the
following reasons why international marketers implement international market
segmentation?

a. country screening.
b. marketing mix policy.
c. global market research.
d. positioning strategy.
e. entry decisions.

15. A persistent problem faced by international marketers is how to strike the balance
between __________________________________.

a. standardization and generalization.
b. standardization and globalization.
c. standardization and customization.
d. standardization and positioning strategies.
e. standardization and marketing mix.

16. In a “country-as segment or aggregate segmentation,” countries are classified on a
______________ dimension or on a set of _____________dimensions.

a. single, multiple
b. single, three
c. single, five
d. single, eight
e. single, nine

17. In disaggregate international consumer segmentation, the focus is on
________consumer.

a. one
b. two
c. four
d. six
e. eight

18. Another name for universal segments is:

a. local.
b. regional.
c. transnational.
d. global.
e. multi-regional.

19. When Nokia used a global campaign to promote their new product (Nokia 900 Communicator) that combined phone, fax, e-mail, and Internet functions with the slogan “Everything. Everywhere,” they were appealing to a(n) ______________________ segment.

a. diverse
b. universal
c. combination
d. customized
e. international

20. When marketers use a(n) _________________ segment, they focus on local
segments that differ from country to country.

a. unique/diverse
b. universal
c. combination
d. customized
e. international

21. When Canon (a camera manufacturer) sold its AE-1 camera to young replacement
buyers in Japan and upscale first-time camera (35 mm single-lens reflex) buyers,
they were probably pursuing a(n) _________________________ segment policy.

a. diverse
b. universal
c. combination
d. customized
e. international

22. The first step in doing international market segmentation is deciding:

a. which criteria to use in the task.
b. which criteria to fund.
c. which customers must be evaluated.
d. how best to spend research funds.
e. none of the above.

23. According to Hakuhodo Inc., one of Japan’s biggest ad agencies, Asian women fall in to five categories. The following list contains which correct self-perceptions?

a. good students.
b. my big world.
c. thrifty shoppers.
d. family-oriented.
e. happy as I am.

24. ____________________ variables are among the most popular segmentation criteria:

a. Demographic
b. Geographic
c. Psychographic
d. Consumption
e. Lifestyle

25. Which of the following bases would probably be in use if a researcher were
examining population size, age structure, urbanization degree, and ethnic
composition?

a. psychographics.
b. socioeconomic variables.
c. culture.
d. political conditions.
e. demographics.

26. PPP is an acronym for:

a. people power parity.
b. purchasing power parity.
c. planning power parity.
d. purpose power parity.
e. positioning power parity.

27. All of the following are shortcomings of standard “per-capita income” segmentation
processes EXCEPT:

a. monetization of transactions within a country.
b. not knowing how much a household can buy.
c. gray and black sectors of the economy being accounted for.
d. income disparities.
e. a huge middle class.

28. __________________ sectors of the economy are transactions that arise outside the legitimate sector of a country’s economy.

a. Gray and black
b. Gray and white
c. Gray and blue
d. Gray and green
e. Gray and yellow

29. Another alternative to analyze buying power in a set of countries is via
_________________________.

a. demographic strata analysis
b. geographic strata analysis
c. psychographic strata analysis
d. socioeconomic strata analysis (SES)
e. none of the above

30. ___________________ publishes PPP statistics every year.

a. The World Bank
b. The International Monetary Fund
c. The World Trade Organization
d. The European Union
e. none of the above

31. The Human Development Index is published by the ____________________.

a. United Nations
b. World Bank
c. IMF
d. Asian Development Bank
e. African Development Bank

32. Behavior segmentation criteria includes the following criteria EXCEPT:

a. brand/supplier loyalty.
b. brand equity.
c. usage rate.
d. product penetration.
e. benefits sought.

33. Lifestyle segmentation is popular in __________________________.

a. manufacturing circles
b. finance circles
c. distribution circles
d. management circles
e. advertising circles

34. ______________________ is very popular in advertising circles.

a. Household segmentation
b. Lifestyle segmentation
c. Monetary segmentation
d. Fiscal segmentation
e. Economic segmentation

35. The Roper Consulting Valuescope study on lifestyle segmentation is based on the
following global values segments EXCEPT:

a. achievers.
b. traditionals.
c. power seekers.
d. nurturers.
e. hedonists.

36. According to the Roper Consulting Valuescope study on lifestyle segmentation,
_______________ are very concerned about social issues.

a. achievers
b. traditionals
c. nurturers
d. hedonists
e. none of the above

37. According to the Roper Consulting Valuescope study on lifestyle segmentation,
_______________ are very concerned about family and friends.

a. achievers
b. traditionals
c. nurturers
d. hedonists
e. none of the above

38. According to the Roper Consulting Valuescope study on lifestyle segmentation,
_______________ are very concerned about status.

a. achievers
b. traditionals
c. nurturers
d. hedonists
e. none of the above

39. According to the Roper Consulting Valuescope study on lifestyle segmentation,
_______________ are looking for new experiences.

a. achievers
b. traditionals
c. nurturers
d. hedonists
e. none of the above

40. Value-based segmentation schemes are not always ________________.

a. profitable
b. collectable
c. actionable
d. measurable
e. none of the above

41. ______________________ are not stable, since values typically change over time.

a. Value segments
b. Political segments
c. Economic segments
d. International segments
e. Global segments

42. According to the text, some marketing scholars refer to __________________ as
the fifth P (next to product, price, promotion, and place) because of its importance in
target marketing.

a. power
b. planning
c. positioning
d. purchasing
e. people

43. In the international market segmentation game, developing a positioning theme
involves the quest for a:

a. large segment.
b. profitable segment.
c. unique selling proposition (USP).
d. strong manager.
e. a friendly host government.

44. Within the arena of positioning strategy, the battle is for:

a. the mind of your target customer.
b. the high ground.
c. the new territory.
d. the competition’s heartland.
e. the best market share.

45. The formulation of positioning strategy includes the following EXCEPT:

a. identify the relevant set of competing products or brands.
b. determine current perceptions held by consumers about the products.
c. develop possible positioning themes.
d. develop a uniform positioning strategy for every brand in the company.
e. screen the positioning alternatives and select the most appealing one.

46. Two positioning strategies available to international marketers include:

a. uniform and computerized positioning strategies.
b. uniform and regional positioning strategies.
c. universal and localized positioning strategies.
d. uniform and localized positioning strategies.
e. none of the above.

47. According to the textbook, Samsung, a major South Korean consumer electronics
manufacturer, intended to take the world number-one position in all its main product
markets by 2005. If we apply the concept of international positioning strategies,
Samsung is seeking which of the following positioning strategies:

a. local positioning strategy.
b. regional positioning strategy.
c. ethnocentric positioning strategy.
d. polycentric positioning strategy.
e. uniform positioning strategy.

48. In the area of international positioning, ___________________ themes often run the
risk of being bland and not very inspired.

a. external
b. universal
c. internal
d. local
e. none of the above

49. The “global citizen” theme encourages:

a. local positioning.
b. regional positioning.
c. bi-lateral positioning.
d. universal positioning.
e. none of the above.

50. If the firm decides to opt for different segments on a country-by-country basis, the
norm is to also __________________ the positioning appeals.

a. externalize
b. localize
c. internalize
d. globalize
e. none of the above

51. Very rarely do ______________________ themes work globally.

a. positioning
b. psychograhic
c. demographic
d. geographic
e. segmentation

52. A special case where universal positioning clearly makes sense is the ___________.

a. regional citizen
b. global citizen
c. European citizen
d. Asian citizen
e. none of the above

53. Appeals that work in one culture do not necessarily work in others because of the
following reasons EXCEPT:

a. human resources.
b. cultural characteristics.
c. buying power.
d. competitive climate.
e. product life cycle stage.

54. Land Rover is an example of a brand where ________________ positioning is hard to
implement.

a. transnational
b. European
c. global
d. local
e. regional

55. Values tend to be:

a. material bound
b. culture bound
c. language bound
d. time bound
e. none of the above

56. GCCP stands for ___________________________.

a. global consumer culture protocol
b. global consumer culture positioning
c. global consumer culture planning
d. global consumer culture perception
e. global consumer culture psychology

57. FCCP stands for ___________________________.

a. foreign consumer culture positioning
b. fast consumer culture positioning
c. financial consumer culture positioning
d. French consumer culture positioning
e. none of the above

58. LCCP stands for ___________________________.

a. legal consumer culture positioning
b. longitudinal consumer culture positioning
c. local consumer culture positioning
d. labor consumer culture positioning
e. none of the above

59. A firm’s positioning strategy depends on the following factors EXCEPT:

a. strategic alliances.
b. target market.
c. product category.
d. positioning approach.
e. economic development.

60. In emerging markets that are still in an early stage of economic development, a ___________ approach might be more beneficial than ______________.

a. GCCP; UCCP
b. GCCP; NCCP
c. GCCP; XCCP
d. GCCP; LCCP
e. none of the above

61. Sometimes local brands fight it out with global brands by using a _____________
strategy.

a. GCCP
b. LCCP
c. FCCP or LCCP
d. GCCP or LCCP
e. GCCP or FCCP

APPENDIX

62. ________________ is an umbrella term that embraces a collection of statistical
procedures for dividing objects into groups.

a. The mean
b. The median
c. Cluster analysis
d. Correlation analysis
e. Regression analysis

63. With respect to comparing country segmentation (classifying countries into groups),
when only one segmentation tool is used, the researcher could:

a. simply compute the mean or median and split the countries into two groups.
b. simply compute chi-square and look for differences.
c. use cluster analysis.
d. use correlation analysis.
e. use nonparametric statistics.

64. If the researcher uses ____________________ to study relationships between
countries, they assume that there exists a relationship between a response variable
(Y) and one or more so-called predictor variables (X).

a. the mean
b. the median
c. cluster analysis
d. Latin square design analysis
e. regression analysis

65. Data in the European market was gathered on the penetration of microwave ovens.
The data collected consisted of three potential segmentation variables (income,
participation of women in the labor force, and per-capita consumption of frozen
foods). Which of the following methods would probably be used to obtain a
picture of the segments for microwave usage?

a. the mean
b. the median
c. random block design analysis
d. Latin square design analysis
e. regression analysis

66. The ____________ tells us whether or not predictor variable has a “significant”
(statistically speaking) relationship with the dependent variable.

a. a-ratio
b. b-ratio
c. t-ratio
d. m-ratio
e. n-ratio

67. The higher the _____value, the better the ability of your regression model to predict
your data.

a. R2
b. A2
c. G2
d. M2
e. N2

True/False Short Answer

68. Variation in customer needs is the primary motive for market segmentation.

69. The goal of market segmentation is to ensure profit for all product categories and
promote customization to meet customer needs.

70. The requirements for effective market segmentation in the domestic environment
are significantly different than those of the international environment.

71. The size of segments (in the international environment) based on cultural or
lifestyle indicators are typically easy to gauge and to factor into overall planning.

72. Environmental changes or shifting consumer preferences often force a firm to
rethink its positioning strategy.

73. In the past, marketers have almost always chosen the strategy of standardization over
the strategy of customization.

74. In a “country-as-segments or aggregate segmentation,” countries are classified only on
a single dimension.

75. Global segments are also called ________________ segments.

76. In most instances, there is no mixture of universal, regional, and country-specific market segments.

77. _________________ variables are among the most popular segmentation criteria.

78. Consumer wealth or a country level of economic development has no impact on consumption patterns.

79. Local brands do not enjoy a pioneering advantage by the fact of being the first one
in the market.

80. Emotional appeals (e.g. lifestyle positioning) are usually difficult to translate into a
universal theme.

81. GCCP stands for:

82. Sometimes local brands fight it out with global brands by using GCCP or LCCP.

83. _______________ is an umbrella term that embraces a collection of statistical
procedures for dividing objects into groups.

84. The ________ tells us whether or not predictor variable has a “significant”
(statistically speaking) relationship with the dependent variable.

85. The lower the R2 value, the better the ability of the regression model to predict
the data.

Essay

86. The requirements for effective market segmentation in a domestic marketing context also apply in international market segmentation. List and briefly describe the properties that these segments should ideally possess.

87. Discuss the major reasons why international marketers implement international market segmentation.

88. Comment on when marketers should pursue universal/global segments, regional segments, and unique/diverse segments.

89. Socioeconomic variables are among the most important bases to be considered when segmenting markets. Comment on the major issues that might be faced when making the decision on whether to use per capita GDP or GNP as a country segmentation criterion.

90. For many years researchers and academics believed that lifestyle segmentation (which was often a very successful technique in a home country’s domestic market) was a valid segmentation technique. However, recently doubts have been raised. Discuss the weaknesses of lifestyle based segmentation schemes. Think of applications when lifestyle segmentation might be the most appropriate.

Chapter 8

Multiple Choice

1. In today’s global business, country borders have become increasingly irrelevant. Of all
the forces chipping away at those boundaries, perhaps the most important is the
__________________________.

a. flow of competition
b. flow of power
c. flow of education
d. flow of intellectual capital
e. flow of information

2. People in India watching CNN and Star TV now know instantaneously what is
happening in the world. Such information access creates demand that would not have
existed before and it restricts the power of governments to influence consumer choice.
This would is an example of:

a. stable demand structure in the international marketplace.
b. the explosion of information technology that has changed global competition.
c. a growing travel industry.
d. how the Japanese are changing global competition.
e. how the government’s of the world distrust the mass media.

3. Geographical boundaries and distances have become less of a constraint in designing
strategies for the global market because of:

a. a stable demand structure in the international marketplace.
b. a growing travel industry.
c. the revived role of the United Nations.
d. the explosion of information technology that has changed global competition.
e. the expanding role of government in international trade.

4. Since the 1980s, the explosion of _________________ has forever changed the
nature of competition around the world. Geographical distance has become
increasingly less relevant in designing global strategy.

a. new product designs
b. genetic breakthroughs
c. information technology
d. fuel efficient automobiles
e. interest in the stock market

5. Real time management:
a. can allow companies to make better decisions.
b. will cause even greater problems if information is not shared.
c. has been made possible with breakthroughs in information technology.
d. is too expensive to be truly useful.
e. a, b and c are all correct.

6. In 1995, only 4 percent of Americans used the Internet every day. In July 2012, the
figure was ____________.

a. 48 percent
b. 58 percent
c. 68 percent
d. 78 percent
e. 88 percent

7. Which of these is NOT an advantage of online communication?
a. sales reps are in constant contact with their offices and customers
b. information can be transmitted instantly
c. sequential problem solution
d. customers can seek assistance 24/7 from around the globe
e. All of the above are pluses.

8. _______________ has become one of the largest Internet markets.

a. Ireland
b. China
c. Singapore
d. Taiwan
e. None of the above

9. Product diffusion times in this century have:
a. increased—there are more people in the world, so it takes longer.
b. stayed the same as in the 1900s.
c. decreased, but only in the developed nations.
d. decreased mostly for high tech products.
e. increased for all products because the choices are more numerous.

10. The chief executive officer of a firm can know the previous day’s sales down to a
penny because of the increased capacity of information technology. This leads to __________.

a. lags
b. real-time management
c. cyclical trends
d. confusion in strategic planning
e. None of the above

11. Top retailers such as Wal-Mart and Toys “R” Us get information from their stores
around the world every two hours via telecommunications. This would be an example
of ______________________ in action.

a. productivity management
b. trend management
c. a very costly procedure
d. management by objectives
e. real-time management

12. Ordering and purchasing components, which was once a cumbersome, time-
consuming process, is now done by _________________, reducing the time involved
in such transactions from weeks to days and eliminating a considerable amount of
paperwork.

a. Electronic Data Systems (EDS)
b. Purchasing International Network (PIN)
c. Electronic Data Interchange (EDI)
d. Global Buying Network (GBN)
e. Internet Buying Network (IBN)

13. Field representatives using laptop computers, faxes, and satellite uplinks to
communicate with the field and the home office are all examples of:

a. internet buying.
b. intranet buying.
c. extranet data exchange.
d. on-line communication.
e. nonpersonal communication.

14. An increasing number of multinational firms have begun to use internal Web
servers on the Internet to facilitate communications and transactions among
employees, suppliers, independent contractors, and distributors. This would be
an example of which of the following organizational forms?

a. vertical
b. horizontal
c. matrix
d. consensus
e. e-company

15. One of the major impacts of information technology is:

a. lengthened product life cycles.
b. dispersed product life cycles.
c. vertical product life cycles
d. horizontal product life cycles.
e. shorter product life cycles.

16. A contributing factor in the globalization of markets is the spread of __________
as the international language of international business.

a. German
b. English
c. French
d. Russian
e. Hindi

17. Because of its complexities, ____________________ development presents one of
the stiffest challenges for international managers.

a. local strategy
b. regional strategy
c. multidomestic strategy
d. transnational strategy
e. global strategy

18. Which of the following would NOT be one of the factors that has persuaded many
multinational firms to pursue true global strategies?

a. global industry.
b. competitive structure.
c. hypercompetition.
d. interdependency.
e. supply and demand.

19. ____________________ are defined as those industries where a firm’s competitive
position in one country is affected by its position in other countries, and vice versa.

a. Interdependent industries
b. Global industries
c. Transcontinental industries
d. Hypercompetitive industries
e. Multidomestic industries

20. By 2014, Honda boosted its North American production capacity by 40 percent. This
would be an example of a firm that sees itself as being in a(n):

a. hybrid industry.
b. global industry.
c. transcontinental industry.
d. supercompetitive industry.
e. expert industry.

21. Industry globalization forces include the following EXCEPT:

a. cost forces.
b. market forces.
c. social forces.
d. government forces.
e. competitive forces.

22. Market globalization forces include the following EXCEPT:

a. converging per capita incomes.
b. global customers and channels.
c. global advertising.
d. rich consumers in emerging markets.
e. manufacturing.

23. With respect to industry globalization forces, ________________ depend on the
nature of customer behavior and the structure of channels of distribution.

a. cost forces
b. competitive forces
c. quality forces
d. government forces
e. market forces

24. All of the following are examples of market forces EXCEPT:

a. common customer needs.
b. global customers and channels.
c. transferable marketing.
d. experience curves.
e. world brands.

25. Which of the following would be considered a market driver with respect to
industry globalization forces?

a. favorable logistics.
b. steep experience curves.
c. global economics of scale and scope.
d. global sourcing efficiencies.
e. lifestyle convergence.

26. Lead markets represent countries where innovations in particular industries are
prone to take place. All of the following are examples of lead countries EXCEPT:

a. the United States in computer software.
b. Japan in consumer electronics.
c. Germany for industrial control equipment.
d. France for fashion clothing and perfume.
e. Hong Kong for computer hardware.

27. Cost globalization forces include the following EXCEPT:

a. political parties of host countries.
b. global economies of scale and scope.
c. accelerating technology innovations.
d. shorter product life cycle.
e. high product development costs.

28. ___________________ depend on the economics of the business. These forces
particularly affect production location decisions.

a. Cost forces
b. Competitive forces
c. Quality forces
d. Government forces
e. Market forces

29. All of the following are examples of cost forces EXCEPT:

a. advances in transportation.
b. low labor costs in newly industrializing countries.
c. global economics of scale and scope.
d. flexible manufacturing.
e. transferable marketing.

30. Differences in country costs, high product development costs, and fast-changing
technology would all be examples of what kind of industry globalization forces?

a. cost forces
b. competitive forces
c. quality forces
d. government forces
e. market forces

31. Which of the following would NOT be considered a competitive driver with respect to industry globalization forces?

a. more countries as key battlegrounds
b. globalized financial markets
c. interdependence in some industries
d. establishment of world brands
e. increase in global strategic alliances

32. Government globalization forces include the following EXCEPT:

a. favorable trade policies.
b. industry deregulation.
c. privatization
d. electronic exchanges.
e. open market economies.

33. Import tariffs and quotas, nontariff barriers, export subsidies, and local content
requirements are all examples of which kind of industry globalization driver?

a. cost forces
b. competitive forces
c. quality forces
d. government forces
e. market forces

34. ___________________ raise the globalization potential of their industry and spur
the need for a response on the global strategy level.

a. Cost forces
b. Competitive forces
c. Quality forces
d. Government forces
e. Market forces

35. All of the following might be considered as being competitive globalization forces
EXCEPT:

a. high imports and exports.
b. compatible technical standards.
c. competitors from different continents and countries.
d. interdependent countries.
e. globalized competitors.

36. In a(an) ___________________ strategy, a firm manages its international activities
like a portfolio.

a. interdependent strategy
b. global strategy
c. transcontinental strategy
d. supercompetitive strategy
e. multidomestic strategy

37. In a(an) ______________________ strategy, a firm integrates the activities of a firm
on a worldwide basis to capture the linkages among countries and to treat the entire
world as a single, borderless market.

a. interdependent strategy
b. global strategy
c. transcontinental strategy
d. supercompetitive strategy
e. multidomestic strategy

38. Firms using a ______________ strategy focus exclusively on a highly
specialized segment of the market.

a. niche
b. supply
c. demand
d. regional
e. global

39. In global competition, ______________________ companies may be vulnerable to
large-scale operators
a. demand-oriented
b. niche-oriented
c. supply-oriented
d. technology-oriented
e. consumer-oriented

40. A company that uses flexible manufacturing, economies of scale, and perhaps limited product offerings is a _________.
a. loser
b. follower
c. cost leader
d. niche player
e. product differentiator

41. A company that wishes to challenge a cost leader would probably use:
a. lower prices.
b. better services.
c. superior quality.
d. a wider variety of more unique product offerings.
e. b, c and d are all correct.

42. Which of the following poses the threat of the most profound change to an industry?
a. government intervention
b. threat of substitute products
c. bargaining power of suppliers
d. hypercompetition
e. bargaining power of channel members

43. In today’s world, ________________________ also comes from suppliers and
customers, as well as substitute products or services.

a. indirect competition
b. hyper competition
c. unique competition
d. all of the above
e. none of the above

44. BMW of Germany and Volvo of Sweden are examples of companies using
a(n) ______________ strategy to achieve success.

a. product differentiation
b. cost leader
c. price leader
d. innovator
e. niche

45. Porsche and Saab maintain their competitive strengths in the high-power sports car
enthusiast category by following a(n) ___________________ strategy.

a. product differentiation
b. cost leader
c. price leader
d. innovator
e. niche

46. The multidimensional nature of competitive industry structure includes the following
EXCEPT:

a. chaebol.
b. bargaining power of suppliers.
c. threat of new entrants.
d. threat of substitute products.
e. bargaining power of buyers.

47. ________________________ determine the rivalry among existing firms.

a. New entrants to the market
b. The bargaining power of suppliers
c. The bargaining power of buyers
d. The threat of substitute products or services
e. Industry competitors

48. ________________________ can be deterred by strong entry barriers.

a. Potential new entrants to the market
b. The bargaining power of suppliers
c. The bargaining power of buyers
d. The threat of substitute products or services
e. Existing rivals or competitors

49. The strength of Intel as a dominant producer of microprocessors would be an example
of ______________________ in the PC industry.

a. strength of potential new entrants to the market
b. the bargaining power of suppliers
c. the bargaining power of buyers
d. the threat of substitute products or services
e. existing rivals or competitors

50. In a hypercompetitive environment, a firm competes on the basis of the following
factors EXCEPT:

a. suppliers.
b. know-how.
c. price.
d. quality.
e. timing.

51. The concept of creative destruction assumes continuous change. This
is a basic assumption behind the concept of __________________ , where
the firm’s focus is on disrupting the market.

a. low differentiation
b. cost leader
c. price leader
d. innovator
e. hypercompetition

52. In a(an) __________________ environment, a firm competes on the basis of price,
quality, timing and know-how, creating strongholds in the markets in which it
operates, and financial resources to outlast one’s competitors.

a. product differentiation
b. cost leader
c. price leader
d. innovator
e. hypercompetition

53. Estee Lauder has successfully responded to the needs of different market. This strategy is influenced by:

a. mail-focused approach.
b. linear-focused approach.
c. game-focused approach.
d. customer-focused approach.
e. Internet-focused approach.

54. Another aspect of global strategy is _________________________:

a. interdependency.
b. limited expansion.
c. backward expansion.
d. forward movement.
e. backward movement.

55. Which of the following support the action of being first-mover?
a. infrastructure is there for you to develop as you wish
b. cutting edge technology within the company
c. uncertainties of customer desires
d. once in, you can rest on your laurels as market leader
e. none of the above

56. What are some of the possible outcomes of interdependency?
a. reliance on other firms for supplies or technology
b. relocating in foreign markets because of government intervention
c. component standardization
d. technology intensity
e. all of the above

57. According to the textbook, benefits of global marketing strategy may include four
factors:

a. cost reduction, improved products, customer preference, and competitive advantage.
b. cost reduction, improved products, customer preference, and raw materials.
c. cost reduction, improved products, customer preference, and intellectual capital.
d. cost reduction, improved products, customer preference, and transportation.
e. none of the above.

58. Which of the following are ways that cost reduction can be achieved by following
a program of global marketing?

a. standardized packaging.
b. customized products.
c. using old products from one market for another.
d. hiring more workers.
e. eliminating warranties.

59. Traditionally, ___________________ has been concentrated in the headquarters
country of a global company.

a. hiring and firing
b. human resources
c. manufacturing
d. research and development
e. none of the above

60. One of the chief barriers or limits to global marketing is the:

a. lack of respect for foreigners.
b. diversity of local environments.
c. amount of poor people in the world.
d. desire for affluent markets.
e. government control of markets.

61. The textbook discusses four different ways of developing a global product policy, all of which are generally considered an effective means to streamline manufacturing EXCEPT:

a. core component standardization.
b. product design families.
c. universal product with all features.
d. universal product with different positioning.
e. local product with core components.

62. Successful ________________ policy requires development of universal products,
or products that demand no more than a cosmetic change for adaptation to
differing local needs and use conditions.

a. core product
b. global product
c. regional product
d. quality product
e. local product with core components

63. Which of the following is one of the four ways of developing a global product
policy to streamline manufacturing (thus lowering manufacturing cost without
sacrificing marketing flexibility)?

a. dynamic service packages
b. multiple source options
c. universal electrification of components
d. core component standardization
e. universal prices.

64. Toyota Motor Company offers several car models based on a similar family
design concept, ranging from Lexus models to Toyota Avalon, Camrys, and
Corollas. This is an example of:

a. brand design families.
b. high-tech design families.
c. hybrid design families.
d. unique design families.
e. product design families.

65. All of the following are examples of global product policies EXCEPT:

a. core component standardization.
b. core component miniaturization.
c. product design families.
d. universal product with all features.
e. universal product with different positioning.

66. Seiko, a Japanese watchmaker, offers a wide range of designs and models, but
they are based on only a handful of different operating mechanisms. This
would be an example of which of the global product policies listed below?

a. core component standardization
b. core component miniaturization
c. product design families
d. universal product with all features
e. universal product with different positioning

67. Electrolux, a Swedish appliance manufacturer, has adopted which of the
following product policies when offering different products under four different
brand names, but using the same basic designs?

a. core component standardization
b. core component miniaturization
c. product design families
d. universal product with all features
e. universal product with different positioning

68. In the area of universal product with different positioning, a
__________________ product can be developed with different market segments
in mind.

a. national
b. multinational
c. regional
d. local
e. universal

69. A key to pursuing a product policy of product design families (or product
design standardization) lies in:

a. good engineering.
b. quality control.
c. good die-casts.
d. standardization of components.
e. standardization of labor.

70. When Canon designed its AE-1 camera and newer models, it built in a common
set of features that were demanded by global customers. This would be an
example of which of the following product policies?

a. core components standardization
b. core components miniaturization
c. product design families
d. universal product with all features
e. universal product with different positioning

71. When a universal product is developed with different market segments in mind,
it is an example of which of the following product policies?

a. core components standardization
b. core components miniaturization
c. product design families
d. universal product with all features
e. universal product with different positioning

72. In recent years, Honda has begun to market the Honda Accord around the world
by positioning it differently from country to country. The car, however, is
almost identical no matter which market it is sold in. This would be an example
of which of the following product policy options?

a. core components standardization
b. core components miniaturization
c. product design families
d. universal product with all features
e. universal product with different positioning

73. One of the real sources of Japanese inspiration and competitiveness is that they
excel in the management of the _________________ interface.

a. production/quality
b. marketing/R&D
c. purchasing/marketing
d. purchasing/outsourcing
e. budget/manufacturing

74. Research has shown that the marketplace has become a virtual ____________
for Japanese companies to gain production and marketing experience, as well as
to perfect technology.

a. human laboratory
b. marketing laboratory
c. psychological laboratory
d. R&D laboratory
e. promotions laboratory

75. Regional strategies can be defined as the _________________________________
in pursuit of regional production, branding, and distribution advantages.

a. cross-subsidization of market share battles
b. cross-harmonization of market share battles
c. cross-miniaturization of market share battles
d. cross-globalization of market share battles
e. none of the above

76. Multinational firms using profit gained in a market where they have a strong
competitive position to beef up their competitive position in a weak market is referred
to as the:

a. cross-exploration of markets.
b. cross-harmonization of markets.
c. cross-homogenization of markets.
d. cross-subsidization of markets.
e. none of the above.

77. A ___________________ is where unique local competition is nurturing product and
service standards to be adopted by the rest of the world over time.

a. lead market
b. slow market
c. backward market
d. grey market
e. black market

78. Japanese consumers fond of high-tech gadgets may even set the world standard for
gas pumps that come equipped with online service that offer motorists access to
weather forecasts and traffic information. This is an EXAMPLE of a:

a. grey market.
b. slow market.
c. backward market.
d. lead market.
e. black market.

79. In many Big Emerging Markets (BEMs), the ________________ is being created
because of rising income, purchasing power, and quality standards.

a. upper-class
b. forward-class
c. younger-class
d. middle-class
e. older-class

80. Local competitors in BEMs can thwart MNCs’ inroads with:
a. superior technology products.
b. better service.
c. cheaper, more durable goods.
d. a combination of b and c.
e. none of the above—BEM companies are doomed to fail.

81. One particularly useful technique in analyzing a firm’s competitive position relative
to its competitors is referred to as SWOT which stands for:

a. Strengths, Weaknesses, Organization, Total value.
b. Strengths, Weaknesses, Operations, Training.
c. Strengths, Weaknesses, Opportunities, Total costs.
d. Strengths, Weaknesses, Opportunities, Transfers.
e. Strengths, Weaknesses, Opportunities, Threats.

82. Bajaj is an Indian ____________ manufacturer.

a. scooter
b. bicycle
c. steel
d. high-tech
e. shoe

84. Jollibee Foods, a family-owned fast food company is from:

a. South Korea
b. China
c. Japan
d. the Philippines
e. Singapore

85. ______________ factors can be looked at as strengths or weaknesses.

a. External factors
b. Company factors
c. Global factors
d. Internal factors
e. Service factors

86. ____________________ factors can be looked at as opportunities or threats.

a. External factors
b. Company factors
c. Global factors
d. Internal factors
e. Service factors

True/False Short Answer

87. On a competitive map, financial, trading, and industrial activities across national
boundaries have rendered political borders increasingly irrelevant.

88. Information access creates demand that would not have existed before and it restricts
the power of governments to influence consumer choice.

89. Carrefour is a Swiss company.

90. Because of the complexity of international competition and markets, real-time
management is not practical for the modern executive seeking new competitive
weapons with which to compete.

91. EDI stands for:

92. ______________ forces depend on the nature of customer behavior and the
structure of channels of distribution.

93. Some common market forces are global economies of scale and scope and a steep
experience curve.

94. Cost forces depend on the _____________ of the business.

95. Favorable trade policies, deregulation of industry, and common marketing
regulations are examples of __________________ globalization forces.

96. ___________________ forces raise the globalization potential of their industry and
spur the need for a response on the global strategy levels.

97. Competitive globalization forces do not raise the globalization potential of
their industry.

98. Firms using a niche strategy do not focus on highly specialized segments.

99. _________________ competitors determine the rivalry among existing firms.

100. Potential entrants may change the rule of competition but can be deterred through
_______________________.

101. Intel is an example of how the bargaining power of _____________ can change
the structure of industries.

102. The basic premise of hypercompetition is the Schumpeterian view that the secret to
success is coordination of competition by negotiation, cooperation, and alliance.

103. Global strategy can help achieve the firm four major benefits which include: cost
reduction, improved products and program effectiveness, enhanced customer
preference, and increased _______________________.

104. Owning a Web site on the Internet and marketing to consumers is another way to reduce costs of conducting global marketing

105. Regionalization can also be defined as cross-subsidization.

106. There is a huge middle-class being developed in Big Emerging Markets (BEMs).

107. Consumers in BEMs are not aware of global products and global standards.

108. SWOT stands for strengths, opportunities, weaknesses and technology.

Essay

109. Identify and briefly discuss the various factors/forces which determine the globalization of potential industries. Indicate common examples of each.

110. What does the term “hypercompetition” mean? What are the various arenas of competition covered by this concept?

111. Relate the concepts of interdependency and standardization to one another. Indicate the strategic implications of the terms.

112. Characterize global marketing strategy. Indicate how it is a separate and distinct form of strategy.

113. Describe the benefits and limitations of global marketing strategy.

MKT 515 Week 5 Midterm Exam – Strayer University NEW

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Chapter 1 Through 8

Chapter 1

Multiple Choice

1. In global business, products have been traded across borders throughout recorded civilizations, extending back beyond the ________________ that once connected
East with West.

a. The Marco Polo Road
b. The Roman Road
c. The Pioneer Road
d. The International Road
e. The Silk Road

2. The Silk Road once helped connect:

a. Turkey to Rome.
b. Iran to Rome.
c. Bombay to Rome.
d. Beijing to Rome.
e. Xian to Rome.

3. Saturation of domestic markets in the industrialized parts of the world has forced many companies to look for marketing opportunities beyond their _______________.

a. local borders.
b. national borders.
c. regional borders.
d. Complex borders.
e. transnational borders.

4. ____________ revolution has brought profound changes in the world.

a. Wal-Mart
b. CNN
c. MTV
d. Internet
e. Shipping

5. B2B stands for:

a. bubble-to-business
b. business-to-business
c. buyer-to-business
d. best-to-business
e. Best Buy-to-business

6. Toyota’s new strategy is to de-Japanize its business and make the ________ market its major corporate priority.

a. U.S.
b. Germany
c. England
d. Indonesia
e. none of the above

7. The term global epitomizes both the competitive pressure and expanding:

a. basic opportunities.
b. social opportunities.
c. physical opportunities
d. market opportunities.
e. bottom opportunities.

8. In global marketing, competitive pressure can also come from _____________ at home.

a. competitors
b. conglomerates
c. groups
d. locals
e. regionals

9. When a country’s per capita income is below $10,000, consumers spend most of their income on:

a. food and other necessities.
b. higher education.
c. electronic appliances.
d. buying houses.
e. foreign travel.

10. In the consumption process, people around the world with per capita income of $20,000 and above have a pretty good _________________:

a. physical power.
b. political power.
c. purchasing power.
d. consumption power.
e. psychological power.

11. According to the textbook, the process of globalization does not suffocate _________________, but rather liberates them from the ideological conformity of nationalism.

a. glocal cultures
b. regional cultures
c. Asian cultures
d. dynamic cultures
e. local cultures

12. ____________________ consists of exports and imports between a country and the rest of the world.

a. Regional reach
b. Competition
c. International trade
d. International business
e. Regional investment

13. _____________________ consists of exports and imports between a country and the rest of the world and foreign production.

a. Regional reach
b. Competition
c. International trade
d. International business
e. Regional investment

14. Although it is not widely known, foreign production constitutes a much larger portion
of international business than __________________________________.

a. international trade
b. regional business
c. local business
d. domestic business
e. transnational business

15. The extensive international penetration of U.S. and other companies has been referred
to as ____________________.

a. local reach
b. regional reach
c. political reach
d. social reach
e. global reach

16. In today’s global marketing, international trade and foreign production are increasingly managed on a __________________.

a. vertical basis
b. horizontal basis
c. global basis
d. regional basis
e. local basis

17. Multinational companies (MNCs) are increasingly managing the international trade
flow within themselves. This phenomenon is called _________________.

a. intrafirm trade
b. interfirm trade
c. bi-national trade
d. poly-national
e. geo-national

18. According to the text, ____________________ of the world trade is managed one
way or another by MNCs.

a. one-third
b. two-thirds
c. one-fourths
d. two-fourths
e. three-fourths

19. _____________ is essentially a creative corporate activity involving the planning and
execution of the conception, pricing, promotion, and distribution of ideas, products,
and services in an exchange that not only satisfy customers’ present needs but also
anticipates and creates their future needs at a profit.

a. Selling
b. Sourcing
c. Manufacturing
d. Human resources
e. Marketing

20. Marketing includes the entire company’s:

a. quality orientation.
b. market orientation.
c. cost orientation.
d. production orientation.
e. demand orientation.

21. Companies often develop different marketing strategies depending on the degree
of experience and:

a. the cost of capital in international markets.
b. the span of control of management.
c. their consumer concept.
d. the nature of operations in international markets.
e. the corporate focus.

22. Responding to changes in the market and competitive environments by moving
forward in a ______________ manner waits for others to formulate strategies before
making decisions.

a. proactive
b. deductive
c. constructive
d. reactive
e. participative

23. Responding to changes in the market and competitive environments by moving
forward in a ________________ manner anticipates changes and then formulates
strategies.
a. proactive
b. deductive
c. constructive
d. reactive
e. participative

24. Five types of marketing that have led to the evolution of global marketing are domestic marketing, export marketing, international marketing, _________________, and global marketing.

a. multinational marketing
b. consumer marketing
c. gray marketing
d. expansion marketing
e. import marketing

25. There are five identifiable stages in the evolution of marketing across national
boundaries. The first stage is:

a. global marketing.
b. international marketing.
c. export marketing.
d. direct marketing.
e. domestic marketing.

26. When a company focuses solely on its domestic market, this strategy is characterized
as one employing:

a. global marketing.
b. international marketing.
c. domestic marketing.
d. indirect marketing.
e. direct marketing.

27. Domestic marketing strategy is characterized as a strategy that is developed based on
information about domestic customer needs and wants, economic, technological, and
political environments at home, and ____________________.

a. taxes
b. customer habits
c. geography
d. culture
e. industry trends

28. Domestic marketers tend to be ________________.

a. ethnocentric
b. biocentric
c. polycentric
d. geocentric
e. localcentric

29. Export marketing consists of:

a. indirect and direct exporting.
b. indirect and longitudinal exporting.
c. indirect and passive exporting.
d. indirect and active exporting.
e. indirect and aggressive exporting.

30. U.S. automobile and consumer electronics manufacturers in the 1960s and 1970s are
examples of a(an):

a. multicentric orientation.
b. polycentric orientation.
c. ethnocentric orientation.
d. bicentric orientation.
e. egocentric orientation.

31. The ________________ stage begins with unsolicited orders from foreign customers.

a. export marketing
b. domestic marketing
c. indirect marketing
d. international marketing
e. multinational marketing

32. Some companies progress from export marketing to a more involved stage of
internationalization once:

a. managers can speak a foreign language.
b. management is willing to commit adequate resources to export activities.
c. the companies stock increases.
d. the metric system becomes standard.
e. new management has been hired.

33. Export marketers still tend to take a(n) ____________ approach to foreign markets.

a. geocentric
b. polycentric
c. ethnocentric
d. dualcentric
e. regiocentric

34. Once export marketing becomes an integral part of a company’s marketing activity,
it will begin to seek new directions for growth and international expansion. This stage is called
________________________.

a. exporting.
b. green marketing.
c. multinational marketing.
d. global marketing.
e. international marketing.

35. A unique feature of international marketing is its ________________ orientation with
emphasis on product and promotional adaptation in foreign markets.

a. geocentric
b. regiocentric
c. ethnocentric
d. polycentric
e. egocentric

36. As a company’s market share in a number of countries reaches a certain point, it
becomes important for the company to defend its position vis-à-vis local
competition. This is an example of _____________________ orientation.

a. geocentric
b. regiocentric
c. ethnocentric
d. egocentric
e. polycentric

37. In a polycentric orientation, marketers begin to _________________ products to local
conditions.

a. standardize
b. regulate
c. adapt
d. centralize
e. subsidize

38. If international marketing is taken to the extreme, a company may establish an
independent foreign subsidiary in each and every foreign market and have each of
the subsidiaries operate independently of each other without any measurable
headquarters control. This special case is called:

a. multinational marketing.
b. export marketing.
c. international marketing.
d. multidomestic marketing.
e. resource-based marketing.

39. When management of a company comes to realize the benefit of economies of scale
in product development, manufacturing, and marketing by consolidating some of its
activities on a regional basis, the company is ready to move into the _____________
stage of marketing.

a. multinational
b. customization
c. global
d. international
e. polycentric

40. If a company were to standardize its product groups within a region (for instance,
Western Europe), the company would be characterized as taking a ___________
orientation to its planning activities.

a. bicentric
b. polycentric
c. geocentric
d. concentric
e. regiocentric

41. General Motors has a regional subsidiary, Opel headquartered in Germany, to market
both GM and Opel cars with a strong European distinction. This would be an
example of ________________ marketing.

a. multinational
b. global
c. transnational
d. international
e. domestic

42. Global marketing strategy realizes that ___________________ leads to higher costs.

a. operational fragmentation
b. standardization
c. production ISO standards
d. market promotion
e. high technology robots

43. Global marketing refers to all of the marketing activities except:

a. bi-national efforts.
b. standardization efforts.
c. coordination across markets.
d. global integration.
e. none of the above.

44. Black & Decker, a U.S. hand tool manufacturer, adopted a(n) __________________
perspective by standardizing and streamlining components such as motors and rotors
while maintaining a wide range of product lines creating a universal image for its
products.

a. international marketing
b. global marketing
c. multinational marketing
d. export marketing
e. concentric marketing

45. Marketing executives should have a thorough understanding of not only the availability of various resources but also emerging consumer and societal needs on a ____________________.

a. cluster basis
b. local basis
c. global basis
d. regional basis
e. none of the above

46. Which of the following geography or climate issues affects global marketing?

a. geothermal power in Iceland
b. tropical heat in Bangalore , India
c. sugar cane crops in Brazil
d. wet snow in Scandinavia
e. none of the above

Appendix to Chapter 1

47. Comparative advantage theory was first presented by:

a. David Ricardo.
b. John Stuart Mill.
c. Michael Porter.
d. Milton Friedman.
e. Adam Smith.

48. ___________________ theory states that a country can gain from engaging in trade
even if it has an absolute advantage or disadvantage.

a. Constructive advantage
b. Comparative advantage
c. Concentric advantage
d. Supply and demand
e. Relative cost advantage

49. Even if the United States is more efficient in the production of everything than China,
both countries will benefit from their bilateral trade by specializing in what each
country can produce relatively more efficiently. This statement is an example of
which economic theory?

a. relative cost advantage
b. supply and demand
c. concentric advantage
d. comparative advantage
e. constructive advantage

50. The _________________ argument says that two countries cannot engage in trade if
one country has a(an) ___________________ over the other country. Note: the phrase
will fit in both blanks.

a. absolute advantage
b. regional advantage
c. supply chain advantage
d. comparative advantage
e. global advantage

51. The term that describes a price of one good in terms of another is called:

a. comparative terms of trade.
b. regional terms of trade.
c. factor endowment theory.
d. global terms of trade.
e. commodity terms of trade.

52. An actual exchange rate between two countries is affected by consumer demands and
_______________________ in the two countries.

a. money supply situations
b. political alliances
c. the deficit
d. the Federal Reserve
e. the factor formula

53. Which of the following is a principle of international trade?

a. Japanese workers are more productive than any other workers in the world.
b. Countries benefit from international trade.
c. Manufacturers must be forced into international trade.
d. Specialization is bad for international trade.
e. Exchange rates are determined by the World Bank.

54. Which of the following is a principle of international trade?

a. German workers will not work without Union representation.
b. International trade hurts many countries since it is basically unfair to developing
nations.
c. International trade increases worldwide production by specialization.
d. Exchange rates are determined by the Hague Convention.
e. Bribery drives up prices in world trade.

55. Which of the following is a principle of international trade?

a. United States workers rebel against productivity programs.
b. Outsourcing must be used to succeed in international trade.
c. The United Nations will settle all trade disputes.
d. Exchange rates are determined primarily by traded goods.
e. Gray markets make third world countries more efficient.

56. In general, a capital-abundant country (such as the United States) tends to specialize
in capital-intensive industry and export capital-intensive products, and import labor-
intensive products. This statement is an illustration of the ____________________
of comparative advantage.

a. commodity terms of trade theory
b. supply and demand theory
c. diminishing returns theory
d. factor-sourcing theory
e. factor endowment theory

57. In general, a labor-abundant country (such as China) tends to specialize in labor-
intensive industry and export labor-intensive products, and imports capital-intensive
products. This statement is an illustration of the ____________________________
of comparative advantage.

a. commodity terms of trade theory
b. supply and demand theory
c. factor-sourcing theory
d. factor endowment theory
e. relative advantage theory

58. To encourage improved standards of living among workers, governments should
encourage investment in ______________________ industries.

a. high value added per worker
b. capital intensive
c. labor intensive
d. skill-intensive
e. strength-intensive

59. Suppose that you are a strategic planner for Nike. You observe that shoe
manufacturing is extremely labor-intensive, while shoe designing is becoming
increasingly skill-intensive. If you advise to open a manufacturing-assembly plant
in Vietnam, your decision is an illustration of _____________________ thinking.

a. relative advantage
b. absolute advantage
c. comparative advantage
d. production advantage
e. exploitation advantage

60. When a company such as Nike has product designing and development and special
material development conducted in the United States and has manufacturing
operations in labor-abundant countries like China, the company is using
______________________ strategy.

a. relative advantage
b. absolute advantage
c. production advantage
d. comparative advantage
e. geometric advantage

61. When a company such as Nike wishes to pursue a comparative advantage strategy, it
would have product designing and development and special material development
conducted in the United States and _________________ operations conducted in
labor-abundant countries like China or Brazil.

a. manufacturing
b. custom painting
c. testing
d. inventory
e. promotion

62. The comparative advantage theory is useful in explaining _____________________
between countries that have very different factor endowments.

a. cost advantages
b. resource allocations
c. promotional expenses
d. intra-industry trade
e. inter-industry trade

63. An example of ____________________ competition is when BMW exports its sports
cars to Japan, while Honda exports its competing models to Germany.

a. inter-industry
b. between-industry
c. intra-industry
d. superficial
e. conglomerate

64. The __________________________ addresses the following questions: Why and
how does competition tend to evolve over time and across national boundaries in the
same industry? How does a company develop its marketing strategy in the presence
of competitors at home and abroad?

a. international complexity theory
b. international technology theory
c. international chaos theory
d. international game theory
e. international product cycle theory

65. A large domestic market such as in the United States makes it possible for U.S.
companies to enjoy _________________ in mass production and mass marketing,
enabling them to become lower cost producers than their competition in foreign
countries.

a. monopoly power
b. preference similarity
c. economies of scale
d. competitive advantage
e. duopoly power

66. When Nestle`, a Swiss food company, enjoys economies of scale by considering
European, U.S., and Japanese markets together as its primary market it is using the
_________________________ argument.

a. economies of scale
b. market expansion
c. market contraction
d. technology power
e. economies of scope

67. Technological innovation can provide an innovative company a competitive
advantage, or _____________________ over its competitors both at home and
abroad.

a. power gap
b. preference gap
c. technological gap
d. economic gap
e. life cycle gap

68. Preference similarity explains why:

a. monopoly power has grown tremendously.
b. low cost producers can still enjoy economies of scale.
c. profits are at an all time high in the industrialized world.
d. intra-industry trade has grown tremendously among the industrialized countries
with similar income levels.
e. comparative advantage theory works best in third world countries.

69. One of the key underlying assumptions in the international product cycle theory is
that:

a. “What goes around, comes around.”
b. “Necessity is the mother of invention.”
c. “If it ain’t broke, don’t fix it.”
d. “You get what you pay for.”
e. “If something can go wrong, it usually will.”

70. Historically, _______________ companies developed and introduced many products
that were labor- and time-saving or responded to high-income consumer needs,
including dishwashers, microwave owens, automatic washers, and dryers, PCs, and so
on:

a. Indian
b. Turkish
c. Irish
d. U.S.
e. Mexican

71. The following statement characterizes which country’s orientation to introducing
products to their mass market: Innovate on material- and capital-saving products
and processes to meet their local consumer’s needs and lifestyle orientation (such
as small and no-frill automobiles and recyclable products).

a. Japan.
b. Western Europe.
c. Canada.
d. Mexico.
e. United States.

72. The following statement characterizes which country’s orientation to introducing
products to their mass market: Developing and marketing products that not only
conserve material and capital but also space to address their consumer’s acute
concern about space limitation.

a. Japan.
b. Western Europe.
c. Mexico.
d. Canada.
e. United States.

73. With respect to the international product cycle theory, which stage’s orientation is
primarily domestic in nature?

a. Growth.
b. Maturity.
c. Saturation.
d. Introduction.
e. Decline.

74. In the __________________ stage of the international product cycle theory, U.S.
companies typically increase exports to Europe and Japan as those foreign markets expand.

a. introduction
b. saturation
c. growth
d. maturity
e. decline

75. In the ________________ stage of the international product cycle theory, U.S.
companies which have carved out market share in Europe and Japan by exporting
decide to make a direct investment in production in those markets to protect their
market position there.

a. introduction
b. saturation
c. growth
d. decline
e. maturity

76. In the _________________ stage of the international product cycle theory , the
United States eventually begins to import what was once a U.S. innovation.

a. introduction
b. saturation
c. growth
d. decline
e. maturity

77. A company’s proprietary expertise that makes it different its competitors and helps to maintain its competitive advantage can be discussed under the following theory:

a. internalization or technological theory.
b. Internalization or transaction cost theory.
c. Internalization or regional cost theory.
d. Internalization or transnational theory.
e. Internalization or traditional cost theory.

78. Appropriability regime helps companies retain their _______________ advantage:

a. dynamic
b. external
c. internal
d. social
e. technological

79. Dominant design is synonymous with ________________________.

a. dynamic design.
b. external design.
c. internal design.
d. complex design.
e. standard design.

True/False Short Answer

80. The Silk Road once connected Shanghai (China) to Istanbul (Turkey) on land.

81. The drive for globalization continues to be promoted through more free trade.

82. The saturation of domestic markets in the industrialized economies has forced many companies to look for marketing opportunities beyond their national borders.

83. Triad regions of the world encompass North America, Western Europe and Africa.

84. Compared to business-to-consumer (B2C) e-commerce, business-to-business (B2B) e-commerce is smaller.

85. The term global epitomizes both competitive pressure and the expanding market opportunities all over the world.

86. International trade consists of exports only.

87. International business consists of international trade and foreign production.

88. An example of intra-firm trade would be when Honda’s U.S. plant ships parts back to Japan to be placed in cars which are then sold in Japan and the United States.

89. Intrafirm trade makes trade statistics more complex to interpret because of trade
transactions taking place between affiliated companies within the same corporate
system, transcending national boundaries.

90. Marketing is much broader than selling.

91. Domestic marketers tend to be geocentric.

92. When a company forms independent foreign subsidiaries in each and every market,
this type of international marketing is known as ______________________.

93. Regiocentric approach encourages standardized product planning within a region.

Appendix to Chapter 1

94. David Ricardo developed the comparative advantage theory 180 years ago.

95. If a country has an absolute advantage (with respect to trade) over another country,
there is no reason to trade.

96. Assume that the United States can make computers better than any other country.
Also assume that China can make rubber shoes better than any other country. Then
in this example it may be said that the United States has a _______________
advantage in making computers and China has a ________________ advantage in
making rubber shoes. Note: one term can be used in both blanks.

97. One rule of the ___________________ theory of comparative advantage is that
that a capital-abundant country (e.g., the United States) tends to specialize in
capital-intensive industry and export capital-intensive products (personal computers)
and import labor-intensive products (desks).

98. Countries normally do not benefit from international trade.

99. One of the key underlying assumptions in the international product cycle theory is
that “necessity is the mother of invention.”

100. The international product cycle theory consists of three stages: Introduction, growth, and decline.

101. International product cycle theory explains that companies do not invest abroad
reactively once their foreign market position are threatened by local competitors.

102. A company’s expertise can be channeled through three routes to seek competitive advantage: appropriability regime, dominant design, and geocentric capability.

103. Dominant design leads to a “regional design”.

Essay

104. Explain the differences between international trade and international business.
How does the United States typically participate in international business?

105. Explain intra-firm trade. Give an example to illustrate your answer.

106. Explain the primary differences between international marketing and global
marketing.

Appendix to Chapter 1

107. Explain the general and associated concepts of comparative advantage theory.

108. Explain the international product cycle theory. Be sure to describe the stages that
a product might pass through.

Chapter 2

Multiple Choice

1. In 2012, the GDP of the United States was ____________.

a. $500 billion.
b. $800 billion.
c. $1 trillion.
d. $8 trillion.
e. $16 trillion.

2. Global economy is becoming more ____________________.

a. regional.
b. local.
c. isolated.
d. transnational.
e. intertwined.

3. In general, the larger the country’s domestic economy, the less dependent it tends
to be on exports and imports relative to its ________________.

a. gross domestic product (GDP).
b. gross domestic income.
c. gross domestic spending.
d. gross domestic capital.
e. global domestic knowledge.

4. When firms invest in manufacturing and distribution facilities outside their home countries, they add the stock of _________________________________.

a. global direct investment.
b. regional direct investment.
c. local direct investment.
d. foreign direct investment (FDI).
e. none of the above.

5. __________________ refers to investment in foreign countries that are withdrawable
at short notice (such as investment in foreign stocks and bonds).

a. Direct investment
b. Economic investment
c. International investment
d. Demand investment
e. Portfolio investment

6. An example of portfolio investment (or indirect investment) in foreign markets is:

a. production facilities.
b. computers.
c. stocks and bonds.
d. buildings.
e. manufacturing facilities.

7. The ________________ volume of international trade in currencies exceeds the
annual value of the trade in goods and services.

a. daily
b. weekly
c. monthly
d. annual
e. none of the above

8. Trading in foreign currencies has an effect on world trade. For example, a rise in
the value of the local currency due to daily flows vis-à-vis other currencies makes
exports:

a. less expensive.
b. more expensive.
c. come under government control.
d. parallel with imports.
e. be banned.

9. Country competitiveness is not a _____________ thing.

a. fixed
b. moving
c. temporary
d. dynamic
e. none of the above

10. The World Economic Forum’s Global Competitiveness Report placed
two Asian Tigers (Taiwan and Singapore) among the world’s top ______
economies (along with the Finland, United States, Sweden, Denmark, Iceland,
Switzerland, Norway, and Australia).

a. five
b. ten
c. twenty
d. twenty-five
e. thirty

11. In the country competitiveness report in 2008/09, three of the top ten countries are from _________________ countries.

a. South American
b. African
c. Asian
d. Nordic
e. None of the

12. According to the textbook, Japan was expected to be ranked number _______ on the 2005 Country Innovativeness Ranking.

a. one
b. two
c. three
d. four
e. five

13. The United States was ranked number _______ on the 2005 Country
Innovativeness Ranking.

a. one
b. two
c. four
d. five
e. six

14. Triad regions of the world include:

a. North America, Western Europe and Africa
b. North America, Western Europe and Japan
c. North America, Western Europe and Asia
d. North America, Western Europe and South America
e. North America, Western Europe and China

15. BEMs stand for:

a. Big Electronic Markets
b. Big Efficient Market
c. Big Effective Markets
d. Big Emerging Markets
e. None of the above

16. China’s average growth rate in GDP has been over:

a. 2 percent
b. 4 percent
c. 6 percent
d. 8 percent
e. 9 percent

17. India’s average growth rate in GDP has been over:

a. 3 percent
b. 5 percent
c. 7 percent
d. 9 percent
e. 10 percent

18. Which country consistently achieves the highest growth rates in GDP?

a. United States
b. Germany
c. Japan
d. Vietnam
e. China

19. Which of the following countries is NOT on the list of top 10 exporters?

a. Korea
b. Mexico
c. China
d. United States
e. Both a and b

20. Which nation is the world’s largest exporter?

a. United States
b. China
c. Netherlands
d. Germany
e. Japan

21. With which country does the U.S. have the largest trade deficit?

a. Germany
b. Japan
c. Canada
d. India
e. China

22. Why did Nokia lose market share in China?

a. Products were outdated
b. Products were too technical
c. Local producers appeared with a cheaper, adequate phone
d. Japan took away their market share
e. None of the above

23. Future trade flows are likely to move how?

a. Among the Triad nations
b. Between the Triad nations and the BEMs
c. Among the BEMs
d. Between the Triad nations and the developing world
e. None of the above

24. Which of the following countries is not considered to be a big emerging market?
a. Mexico
b. Brazil
c. Russia
d. India
e. China

25. Which of the top 10 countries in competitiveness does NOT suffer from a lack of natural resources?
a. Japan
b. Netherlands
c. Switzerland
d. Denmark
e. Canada

26. Which country has shown the most progress in competitiveness since 2005?
a. Hong Kong
b. Belgium
c. Germany
d. Switzerland
e. Japan

27. New centers of innovative activity include which countries?

a. Ireland
b. Israel
c. Singapore
d. Taiwan
e. All of the above

28. The International Trade Organization (ITO) was formed after:

a. World War I.
b. World War II.
c. the Korean war.
d. the Vietnam war
e. None of the above.

29. The main operating principle of the General Agreements of Tariffs and Trade
(GATT) was the concept of normal trade relations (NTR) status, formerly known as:

a. Early Favored Nation status.
b. Most Favored Nation status.
c. Late Favored Nation status.
d. the World Trade status.
e. the Best Nation status.

30. When GATT was successful in lowering tariff barriers to world trade, many nations
created:

a. cartels.
b. keiretsus.
c. joint ventures.
d. nontariff barriers.
e. boycotts.

31. The World Trade Organization was created in the eighth round of the GATT talks –
called the ________________________ that lasted from 1986 to 1994.

a. Brussels Round
b. Paris Round
c. Morocco Round
d. Paraguay Round
e. none of the above

32. The World Trade Organization (WTO) was created in the _____________ of GATT
talks—called the Uruguay Round.

a. fifth round
b. sixth round
c. seventh round
d. eighth round
e. ninth round

33. Perhaps the most important accomplishment of the latest GATT round was the
establishment of:

a. the World Trade Organization (WTO).
b. the Asian Development Bank.
c. the World Bank.
d. the International Monetary Fund (IMF).
e. the International Finance Corp. (IFC).

34. The World Trade Organization (WTO) took effect on:

a. January 1, 1994
b. January 1, 1995
c. January 1, 1996
d. January 1, 1997
e. January 1, 1998

35. As of March 2, 2013, the World Trade Organization (WTO) has _________
member countries.

a. 123
b. 135
c. 142
d. 159
e. 180

36. The World Trade Organization’s (WTO) ninth round of trade talks which were
launched in November 2001 is called:

a. the Doha Round.
b. the Seattle Round.
c. the Geneva Round
d. the New York Round.
e. the London Round.

37. Doha’s Development Agenda (Doha Round) includes new trade talks—an actions
program to resolve developing countries’ complaints about the implementation of
Uruguay Round agreements, and an accord on ____________________________.

a. Trade Related Aspects of Intellectual Property Rights
b. Services Related Aspects of Intellectual Property Rights
c. Regional Related Aspects of Intellectual Property Rights
d. Local Related Aspects of Intellectual Property Rights
e. National Related Aspects of Intellectual Property Rights

38. One of the differences between WTO and GATT is that WTO’s dispute settlement
mechanism is:

a. inferior.
b. faster and more automatic.
c. very limited.
d. controlled by the World Bank.
e. controlled by the negotiation section of the United Nations.

39. In December 1999, WTO launched what would have become the beginning of a
___________ round of negotiations inaugurated in Seattle, Washington.

a. fifth
b. sixth
c. seventh
d. eighth
e. ninth

40. The WTO Work Program on _____________________ is in the process of defining
the trade-related aspects of ___________________ that would fall under the
parameters of WTO mandates.

a. business commerce
b. electronic commerce
c. equity commerce
d. network commerce
e. network commerce

41. With respect to intellectual property rights, an example of an information-related
product is:

a. computer hardware.
b. an automobile.
c. computer software.
d. jewelry.
e. a new drilling bit.

42. ____________________ are highly interested in putting strong international
intellectual property laws in place:

a. Developing nations
b. Developed nations
c. Asian countries
d. European countries
e. African countries

43. One hurdle that used to protect information from being acquired easily was that it
was unfungible. Unfungible means:

a. information contained viruses.
b. information was expensive.
c. information could only be processed with proper equipment.
d. information was not for the uninformed.
e. it was difficult to replace one item with another.

44. One way around having your intellectual property copied (such as software) because
of easy access is to sell:

a. demos.
b. to new markets.
c. to governments.
d. upgrades or ancillary products.
e. only to a chosen few.

45. UNCITRAL stands for:

a. United Nations Commission on International Trade Law.
b. United Nations Commission on International Trade Limits.
c. United Nations Commission on International Technical Law.
d. United Nations Commission on International Technical Trade.
e. None of the above.

46. An evolving trend in international economic activity is the formation of:

a. multinational advertising agencies.
b. multinational insurance agencies.
c. multinational trading blocs.
d. multinational purchasing agencies.
e. multinational courts.

47. The universal reason for forming trading blocs is to:

a. bypass tariff restrictions.
b. bypass legal restrictions.
c. bypass government controls.
d. ensure the economic growth and benefit of the participating countries.
e. make competition suffer.

48. Which of the following is an example of an international trading bloc?

a. World Trade Organization.
b. GATT.
c. the World Court in the Hague.
d. NAFTA.
e. United Nations

49. NAFTA is the free trade area among the United States, Mexico, and
______________.

a. Canada
b. Argentina
c. Panama
d. Columbia
e. Brazil

50. A ___________________ is a formal agreement among two or more countries to
reduce or eliminate customs duties and nontariff trade barriers among partner
countries.

a. trade union
b. regional cooperative
c. customs union
d. common market
e. free trade area

51. An example of a free trade area would be:

a. the European Union.
b. the Soviet Union.
c. the United Kingdom.
d. NAFTA.
e. the United Nations.

52. The Free Trade Areas of the Americas (FTAA) was proposed in
__________________.

a. December 1994.
b. December 1995.
c. December 1996.
d. December 1997.
e. December 1998.

53. When members of a free trade area add common external tariffs to the provisions of
the free trade agreement, the free trade area becomes a:

a. cartel.
b. common market.
c. monetary union.
d. political union.
e. customs union.

54. One difference between a customs union and a free trade area is that the customs
union:

a. adds external tariffs to nonmember countries.
b. adds higher taxes to its consumers.
c. refuses to import from nonmember nations.
d. demands that a common currency be used among members.
e. requires that member countries align themselves politically.

55. A ________________ eliminates all tariffs and barriers to trade among members,
adopts a common set of external tariffs on nonmembers, and removes all restrictions
on the flow of capital and labor among member nations.

a. regional market
b. common market
c. monetary market
d. political market
e. customs market

56. The primary difference between a common market and a customs union is that the
common market:

a. adopts a common set of external tariffs on nonmembers.
b. eliminates all tariffs.
c. eliminates all trade barriers.
d. removes all restrictions on the flow of capital and labor among member nations.
e. the number of countries involved.

57. The effect of a monetary union is that members:

a. can buy goods from one another.
b. refuse to buy goods from nonmembers.
c. switch to a common currency and a central bank.
d. give up all sovereignty.
e. no longer recognize national boundaries.

58. The new European currency, the euro, began its circulation in January ________.

a. 1998.
b. 1999.
c. 2000.
d. 2001
e. 2002.

59. The Maastricht Treaty succeeded the:

a. Treaty of Brussels.
b. Treaty of Rome.
c. Treaty of Geneva.
d. Treaty of Paris.
e. Treaty of Vienna.

60. A monetary union represents the ____________ level of integration with a single
common currency among politically independent countries.

a. first
b. second
c. third
d. fourth
e. fifth

61. The Maastricht Treaty is a(n):

a. economic union.
b. development union.
c. transnational union.
d. political union.
e. national union.

62. The last step of the possible integration forms is the:

a. cartel.
b. common market.
c. monetary union.
d. political union.
e. customs union.

63. The principle goal of a political union is that it:

a. can buy goods from one another.
b. can refuse to buy goods from nonmembers.
c. can switch to a common currency and a central bank.
d. gives up all sovereignty among individual members.
e. no longer recognizes national boundaries.

64. Researchers have reported that multinationals have not been as great a threat to
countries’ national sovereignty because multinationals have yet to solve the
problem of:

a. demand.
b. size.
c. war.
d. religious conflict.
e. language differences.

65. The U.S. government defines the multinational company for statistical purposes as
a company that owns or controls ______________ or more of the voting securities, or
the equivalent, of at least one foreign business enterprise.

a. five percent
b. ten percent
c. fifteen percent
d. twenty percent
e. twenty-five percent

66. The sovereignty of _______________ will perhaps continue to weaken due to
multinationals and the increasing integration of economies.

a. cities
b. nations
c. regions
d. trading blocs
e. none of the above

67. MNCs that become global at their first inception are called:

a. born last firms.
b. born first firms.
c. born again firms.
d. born global firms.
e. none of the above

True/False Short Answers

68. GATT’s successor is the World Trade Organization (WTO).

69. Today, countries have become economically independent.

70. In 2008/2009 Country Competitiveness Report, 5 of the top 10 countries are Asian countries.

71. The Triad Regions of the world (North America, Western Europe, and Japan) were the major economies in most of the 20th century.

72. The world’s largest exporting country is China.

73. The world’s largest importing country is the U.S.

74. FDI in services is controlled by U.S. firms.

75. The main operating principle of the General Agreements of Tariffs and Trade (GATT)
is the concept of the Highly Favored Nation status (HFN).

76. The Uruguay Round set up an international body called the World Trade Organization
(WTO).

77. As of March 2, 2013, the World Trade Organization (WTO) had 159 member
countries.

78. Doha Round paved the way for China and Singapore to get full membership in the
WTO.

79. The World Trade Organization (WTO) is a global institutional proponent of free trade.

80. Over the Internet, any piece of electronically represented intellectual property can be
instantly copied anywhere in the world.

81. One consequence of fungible content, information products, and electronic networks
is an additional assault on the power of national governments to regulate international
commerce.

82. In the U.S., the Federal Trade Commission (FTC) is in charge of cases where entities
are trying to mislead the public and commit fraud.

83. Regulating international e-commerce does not require cross-border cooperation.

84. NAFTA is the free trade area among Canada, the United States, and Chile.

85. A free trade area (FTA) is a formal agreement among two or more countries to
reduce or eliminate customs duties and nontariff trade barriers among partner
countries.

86. Regarding regional integration, South American markets are still less open than those
of East Asia.

87. FTAA stands for Free Trade Area of the Americas.

88. A common market eliminates all tariffs and other barriers to trade among members of
the common market.

89. The 1993’s Maastricht Treaty succeeded the Treaty of Brussels.

90.A common market and a monetary union are basically the same thing.

91. A monetary union represents the fourth level of integration with a single common
currency among politically independent countries.

92. Currently, Britain and France remain the principal opponents of ceding any part of the
sovereignty of the nation-state to any future political union in Europe.

93. The U.S. government defines the multinational corporation for statistical purposes as
a company that owns or controls 60 percent or more of the voting securities, or the
equivalent of at least one foreign business enterprise.

94. Any start-up firm becoming global at its first inception is called as ‘born again firm’.

Essay

95. The world marketplace is shrinking and changing. One of the vehicles that has been instrumental in this change is the General Agreement on Tariffs and Trade (GATT). Explain what GATT is and how it has affected international business.

96. To improve on GATT the WTO was established. Explain what the WTO is, how it is different from GATT, and what specific functions the WTO is expected to perform.

97. Some of the greatest challenges in trade in the next century will come in the areas of information technology and intellectual property. Describe these challenges, the mechanisms that are in place to protect one’s intellectual property, and how trade in general will be affected.

98. It has been suggested that cooperative inter-relationships between countries (regional groupings) can be classified into five broad categories. Briefly summarize and describe each of these categories and indicate differences that may be present.

Chapter 3

Multiple Choice

1. When international transactions occur, _______________ is the monetary mechanism
that allows the transfer of funds from one nation to another.

a. foreign exchange
b. regional exchange
c. international exchange
d. global exchange
e. local exchange

2. The adoption of the _________ as a common currency in the European Union in 1999
signifies a major change in the global financial environment.

a. euro
b. lira
c. pound sterling
d. French franc
e. Swiss franc

3. The U.S. trade deficit has pushed the value of the U.S. dollar _______________.

a. forward
b. backward.
c. inward3
d. upward.
e. downward.

4. In 1944, the Bretton Woods (New Hampshire) Conference took place to establish the:

a. international marketing system.
b. international logistics system.
c. international monetary system.
d. international banking system.
e. international monetary system.

5. In the 1960s, the _______________ was the reserve currency, convertible to gold
under the Bretton Woods Agreement.

a. Australian dollar
b. Canadian dollar
c. U.S. dollar
d. Hong Kong dollar
e. None of the above

6. The acronym IMF stands for:

a. the International Marketing Fund.
b. the International Methods Fund.
c. the International Monetary Fund.
d. the International Mutual Fund.
e. the International Masters Fund.

7. The __________________________________ was established at Bretton Woods.

a. Global Monetary Fund
b. European Monetary Fund
c. International Monetary Fund (IMF)
d. Asian Monetary Fund
e. None of the above

8. All of the following are purposes of the International Monetary Fund (IMF)
EXCEPT:

a. To promote international monetary cooperation through a permanent
institution.
b. To facilitate the expansion and balanced growth of international trade.
c. To develop a world currency by 2010.
d. To promote exchange stability.
e. To give confidence to members by making the general resources of the fund
temporarily available to them under adequate safeguards.

9. To an extent, the International Monetary Fund served as an _____________________.

a. International legal bank.
b. International central bank.
c. International liability bank.
d. International claims bank.
e. None of the above

10. In 1969, the IMF created ____________________________, which are special
account entries on the IMF books designed to provide additional liquidity to support
growing world trade.

a. special drawing rights (SDRs)
b. special legal rights
c. special finance rights
d. special management rights
e. special equity rights

11. The IMF’s SDR stands for:

a. special legal rights.
b. special financial rights.
c. special drawing rights.
d. special manufacturing rights.
e. special distribution rights.

12. Participating nations may use SDRs as a source of currency in a _________ transaction.

a. soft
b. hard
c. simple
d. future
e. spot

13. The value of SDRs is determined by a weighted average of a basket of four
currencies:

a. the U.S. dollar, the Japanese yen, the euro, and the Swiss franc.
b. the U.S. dollar, the Japanese yen, the euro, and the French franc.
c. the U.S. dollar, the Japanese yen, the euro, and the British pound.
d. the U.S. dollar, the Japanese yen, the euro, and the Italian lira.
e. none of the above.

14. One creation of the Bretton Woods Agreement was the International Bank for
Reconstruction and Development, known as ________________.

a. the Merchant Bank.
b. the Monetary Bank.
c. the World Bank.
d. the European Bank.
e. none of the above.

15. The World Bank was initially intended for:

a. financing postwar reconstruction and development in Japan.
b. financing postwar reconstruction and development in France.
c. financing postwar reconstruction and development in Italy.
d. financing postwar reconstruction and development in Russia.
e. financing postwar reconstruction and development in Europe.

16. Exchange rate stability cannot be imposed by adoption of ______________________
and official intervention in the foreign exchange markets.

a. pegged exchange rates
b. pegged value rates
c. pegged equity rates
d. pegged volume rates
e. pegged finance rates

17. _____________ float is the closest approximation to perfect competition, because
there is no government intervention and because billions of units of currency are
being traded by buyers and sellers.

a. Managed (clean)
b. Managed (dirty)
c. Vertical
d. Free (clean)
e. Horizontal

18. ______________ float allows for a limited amount of government intervention to
soften sudden swings in the value of a currency.

a. Free (dirty)
b. Free (clean)
c. Restricted
d. Profit
e. Managed

19. Currencies of many _____________________ are pegged (or fixed) to one of the
major currencies or to a basket of major currencies?

a. regional countries
b. developed countries
c. emerging markets
d. developing countries
e. none of the above

20. Today, the global economy is increasingly dominated by three major currency
blocs. They are:

a. the U.S. dollar, the French franc, and the Japanese yen.
b. the U.S. dollar, the Spanish peso, and the Japanese yen.
c. the U.S. dollar, the British pound, and the Japanese yen.
d. the U.S. dollar, the British pound, and the German mark.
e. the U.S. dollar, the Japanese yen, and the euro.

21. The Japanese yen has increasingly become a regional transaction currency in
_____________.

a. Eastern Europe.
b. Asia.
c. North America.
d. Africa.
e. none of the above.

22. ________________ refers to the exchange of one country’s money for that of
another country.

a. Foreign reserve
b. Foreign dilution
c. Foreign exchange
d. Foreign float
e. Foreign control

23. One of the most fundamental determinants of the exchange rate is ______________
whereby the exchange rate between the currencies of two countries is in equilibrium
when it equates the prices of a basket of goods and services in both countries.

a. free float
b. free float (dirty)
c. managed float
d. purchasing power parity (PPP)
e. absolute cost advantage

24. The Big Mac Index is published by:

a. The Economist
b. Business Week
c. The Wall Street Journal
d. The New York Times
e. Fortune Magazine

25. Actual exchange rates can be very different from the expected rates forecasted by
economists. Many interrelated factors influence the value of a floating currency.
The three most important fundamental factors are the nation’s balance of payments
situation, world political events, and:

a. the world inflation rate.
b. the country’s currency value.
c. the nation’s inflation rate relative to its trading partners.
d. the tax structure of the nation.
e. the supply of gold that the nation holds.

26. Factors that might influence foreign exchange rates with respect to political factors
would include election year or leadership change and:

a. money supply.
b. balance of payments.
c. exchange rate control as imposed by a government.
d. size of the military.
e. amount of armed conflict in the world.

27. The problem with tight exchange controls is that often they promote a
_________________________.

a. black market
b. white market
c. flat market
d. slim market
e. regular market

28. Many countries attempt to maintain a lower value for their currency to encourage
________________.

a. black marketing
b. grey marketing
c. outsourcing
d. exports
e. imports

29. If payment on a transaction is to be made immediately, the purchaser has no choice
other than to buy foreign exchange on:

a. the spot market.
b. the forward market.
c. a hedge.
d. a future date invoice.
e. an exchange rate pass-through.

30. If payment for goods is to be made at some future date, the purchaser has the option
of buying foreign exchange on the ________________ for delivery at some future
date.

a. black market
b. gray market
c. forward market
d. exchange rate pass-through market
e. commodities market

31. When a buyer locks in an exchange rate and avoids the risk of currency fluctuations,
it is called:

a. the spot market.
b. the gray market.
c. vertical purchasing.
d. hedging.
e. factoring.

32. Protecting oneself against potential loss is called:

a. hedging.
b. factoring.
c. risk analysis.
d. portfolio reduction strategy.
e. devaluing.

33. Forward currency markets typically exist for the ______________ currencies.

a. Asian
b. weakest
c. strongest
d. convertible
e. flat

34. The extent to which a foreign company changes dollar prices of its products in the
U.S. market as a result of exchange rate fluctuations is called:

a. hedging.
b. exchange rate pass-through.
c. a target exchange rate.
d. factoring.
e. inflation-proofing.

35. The __________________ of a nation summarizes all the transactions that have
taken place between its residents and the residents of other countries over a specified
time period (usually a month, quarter or a year).

a. target exchange rate
b. portfolio acquisition
c. balance of payments
d. debt accumulation
e. exchange inflation

36. With respect to a balance of payments between nations calculation, transactions are
recorded in three categories. These are the current account, the capital account,
and the:

a. goods inventory.
b. cost of goods sold.
c. manufacturer’s inventory.
d. capital goods.
e. official reserves.

37. With respect to balance of payments calculation, when a German tourist visits the
United States and spends money on meals and lodging, it is a(n) ___________ to the
U.S. trade in services balance.

a. debit
b. credit
c. convertible
d. exchange interest factor
e. non-entity

38. Balance of payments between nations is based on which of the following principles
of accounting?

a. Debit only.
b. Credit only.
c. Factor analysis.
d. First in, last out.
e. Double entry accounting.

39. Double entry accounting, with respect to calculation of balance of payments
calculation, means:

a. the balance of payments statement must always balance.
b. the balance of payments statement will always favor the larger nation.
c. the balance of payments statement will always favor the smaller nation.
d. the balance of payments statement will never be in complete balance.
e. the balance of payments statement will rarely be accurate.

40. The government entity which prepares the balance of payments statement in the
United States is:

a. the Federal Reserve.
b. the Internal Revenue Service.
c. the Customs Department.
d. the Department of Commerce.
e. the Federal Communications Commission.

41. The balance of payments in goods account or ____________ shows trade in
currently produced goods as well as unilateral transfers of merchandise.

a. current account balance
b. capital account
c. trade balance
d. direct investments
e. portfolio investment

42. The balance of payments in ______________ shows trade in currently
produced goods and services, as well as unilateral transfers of merchandise.

a. current account balance
b. capital account
c. trade balance
d. direct investments
e. portfolio investment

43. The balance of payments in _____________ summarizes financial transactions with
respect to short and long term accounts.

a. current account balance
b. capital account
c. trade balance
d. direct investments
e. portfolio investment

44. ___________________ are those investments in enterprises or properties that are
effectively controlled by residents of another country.

a. Current account balance
b. Capital account
c. Trade balance
d. Direct investments
e. Portfolio investment

45. ___________________ includes all long-term investments that do not give the
investors effective control over the investment. Such transactions typically involve
the purchase of stocks or bonds of foreign investors for investment.

a. Current account balance
b. Capital account
c. Trade balance
d. Direct investments
e. Portfolio investment

46. Everyone knows that the United States regularly runs a deficit in merchandise trade.
In which of the following categories does the United States regularly run a surplus?

a. Services.
b. Automobiles.
c. China.
d. Fashion footwear.
e. Machine tools (such as a drill press).

47. According to the theory of international trade and balance of payments, a surplus or
deficit in a country’s basic balance should be:

a. always weighted toward the deficit side.
b. always weighted toward the surplus side.
c. self correcting.
d. continually out of balance.
e. only brought into balance by government tariff action.

48. The mechanisms (according to the theory of international trade and balance of
payments) for producing self-correction in out-of-balance accounts is accomplished
through:

a. internal market adjustments.
b. external market adjustments.
c. internal and external market adjustments.
d. governmental control.
e. governmental tariff and nontariff barriers.

49. The external market adjustment concerns __________________ or a nation’s
currency and its value with respect to the currencies of other nations.

a. exchange rates
b. budget rates
c. bond rates
d. security rates
e. countertrade rates

50. The ___________________________ refers to the movement of prices and incomes
in a country.

a. external market adjustment
b. internal market adjustments
c. linear market adjustment
d. upward market adjustment
e. downward market adjustment

51. In 1994, _______________ devaluation of its currency triggered the Asian financial
crisis.

a. China’s
b. Japan’s
c. Indonesia’s
d. India’s
e. Hong Kong’s

52. Because of the Asian financial crisis, Thailand lost almost _______ percent of its
baht’s purchasing power in dollar terms in 1997.

a. 30
b. 40
c. 50
d. 60
e. 80

53. Because of the Asian financial crisis, South Korean currency lost ______ percent
against the U.S. dollar in 1997.

a. 30
b. 40
c. 50
d. 60
e. 80

54. Increased demand for Asian _____________ has helped the region rebound quickly
from the 1997 currency crisis.

a. exports
b. imports
c. commodities
d. fruit
e. cars

55. In April 2002, Argentina’s currency had lost nearly ________ percent of its value.

a. 20
b. 40
c. 50
d. 60
e. 70

56. Argentina’s currency woes are attributed to its own ______________ policy.

a. social
b. political
c. global
d. exchange
e. monetary

57. In the area of “change the product mix,” corporate response to the recession could be to push relatively _________________ product lines while deemphasizing _______________ lines.

a. expensive, inexpensive
b. imported, exported
c. smaller, larger
d. inexpensive, expensive
e. high-tech, low-tech

58. The EMS stands for:

a. European Monetary System.
b. European Mobile System.
c. European Market System.
d. European Management System.
e. European Manufacturing System.

59. In January 1999, ________ European countries surrendered their rights to issue
their own money.

a. five
b. eight
c. ten
d. eleven
e. twelve

60. The ERM stands for:

a. European Region Mechanism.
b. European Rate Mechanism.
c. European Research Mechanism.
d. European Railroad Mechanism.
e. none of the above.

61. The European Monetary System (EMS) was established in the late:

a. 1950s.
b. 1960s.
c. 1970s.
d. 1980s.
e. 1990s.

62. The European Central Bank is headquartered in:

a. Frankfurt.
b. Paris.
c. Rome.
d. Geneva.
e. London.

63. According to the text, EMU will have a strategic impact on companies’ following operations EXCEPT:

a. price transparency.
b. supply chains.
c. hiring practices.
d. new opportunities for small and medium-sized companies.
e. intensified competitive pressures.

64. According to the text, the euro will have a major boon for __________________.

a. small and medium-sized companies.
b. large companies.
c. German companies.
d. Italian companies.
e. French companies.

65. According to the text, the euro will also help companies to streamline their ____________________.

a. small business chains.
b. North American chains.
c. quality chains.
d. HR chains.
e. supply chains.

True/False Short Answer

66. Foreign exchange is not the monetary mechanism that allows the transfer of funds
from one nation to another.

67. The adoption of the euro in the European Union took place in 1990.

68. Each country has its own currency through which it expresses the value of its products.

69. The Bretton Woods conference recommended that each nation should not be at liberty
to use its macroeconomic policies for full employment.

70. Negotiations to establish the postwar (World War II) international monetary system
took place at Bretton Woods, New Hampshire.

71. In the 1960s, the United States began to experience sequential balance of payments
deficits.

72. Because of its use in international commerce, the dollar has remained strong
throughout the 1980s and 1990s.

73. One of the functions of the International Monetary Fund (IMF) was to monitor
problems that a country might experience in maintaining equilibrium in its balance
of payments. By agreement, countries would need permission from the IMF to
alter their peg if the initial par value was to be adjusted by more than 10%.

74. Special Drawing Rights (SDRs) are special account entries on the World Bank books.

75. The IMF does not promote exchange stability to maintain orderly exchange
arrangements among members.

76. The value of SDRs is determined by a weighted average of a basket of four
currencies which are: the U.S. dollar, the Japanese yen, the euro, and
_________________.

77. To expand services for countries in monetary difficulties, the IMF created Special
Drawing Rights (SDRs).

78. Another creation of the Bretton Woods Agreement was the International Bank for
Reconstruction and Development, known as:

79. ______________ float allows for a limited amount of government intervention to
soften sudden swings in the value of a currency.

80. Today, the global economy is increasingly dominated by three major currency
blocs which include the U.S. dollar, the Japanese yen, and the euro.

81. Foreign exchange refers to the exchange of one country’s money for that of
another country.

82. One of the most fundamental determinates of the exchange rate is purchasing power
places.

83. The Economist publishes a PPP study every year based on McDonald’s Big Mac
hamburger. This index is called the Big Mac Induction.

84. If payment on a transaction is to be made immediately, the purchaser has no choice
other than to buy foreign exchange on ________________________.

85. Protecting oneself against potential loss is called _________________.

86. The extent to which a foreign company changes dollar prices of its products in the
U.S. market as a result of exchange rate fluctuations is called exchange rate pass-
through.

87. The U.S. Department of Commerce prepares the balance of payments statement in the
United States.

88. The balance of payments on goods shows trade in currently produced goods.

89. According to the theory of international trade and balance of payments, a surplus or
deficit in a country’s basic balance should not be self-correcting.

90. In 1994, China’s devaluation of its currency triggered the Asian financial
crisis.

91. Thailand lost almost 60 percent of its baht’s purchasing power in dollar terms in
1997.

92. Two economies which were severely affected by the South American financial
crisis are Argentina and Chile.

93. The European Monetary System (EMS) was established in the late 1950s.

94. The European Central Bank is headquartered in Paris, France.

95. In Europe, EU regulations do not cross national boundaries.

Essay

96. Explain the primary roles played by the International Monetary Fund and the World Bank.

97. Explain the concept of managed float.

98. Explain how knowledge of the spot and forward exchange rate market helps international marketers to be successful in the global arena.

99. Explain what exchange rate pass-through is and what difficulties might be incurred with its successful application.

100. List and briefly describe the four types of balance of payments measures.

101. Discuss the Asian Financial Crisis and its implications for international marketing. What kinds of strategies are recommended in the text to deal with the crisis:

102. Discuss the Euro and its implications for international marketing.

Chapter 4

Multiple Choice

1. In marketing, buyer behavior and consumer needs are largely driven by _______________________.

a. health norms.
b. economic norms.
c. political norms.
d. cultural norms.
e. social norms.

2. In today’s world, ______________________ often provides pride and self-esteem to
its citizens.

a. cultural heritage
b. fashion
c. styles
d. business activities
e. infrastructure

3 . From a global marketing perspective, the cultural environment matters for two main
reasons. First, cultural forces are a major factor in shaping a company’s global
marketing mix program. The second reason is:

a. cultural analysis is expensive.
b. cultural analysis often pinpoints market opportunities.
c. cultural analysis is difficult.
d. accurate cultural analysis is next to impossible.
e. cultural analysis is required by many host governments.

4. From a global marketing perspective, the cultural environment matters. The most
important reason is that cultural forces are major factors in shaping a company’s
global:

a. sales territories.
b. vision.
c. competitive response.
d. marketing mix program.
e. global ethics program.

5. Companies that ignore cultural needs often:

a. lose permission to export.
b. lose permission to import.
c. have more lawsuits.
d. lose more salespeople.
e. lose a competitive edge.

6. From the consumption point of view, ____________ homes have less space than most
Europeans or American houses.

a. Japanese
b. Turkish
c. Australians
d. Indonesian
e. Pakistani

7. Several Japanese diaper makers were able to steal market share away from Proctor &
Gamble by selling diapers that were much ______________ than the ones marketed
by P&G, thereby better meeting the desires of Japanese mothers (Japanese homes
have less space than most Europeans or American houses).

a. colorful
b. expensive
c. bulkier
d. thinner
e. rougher

8. Since China has around 300 million children, they are often treated as:

a. little emperors and empresses.
b. super children.
c. smart children.
d. a tax burden.
e. food liability.

9. One reason Chinese parents treat their children as little “emperors and empresses” is
that:

a. they have no choice since it is mandated by Chinese law.
b. China has a one child per couple (without penalties) birth control policy.
c. advertising has influenced parents.
d. children are cared for by Grandparents.
e. China pays parents to have children.

10. Children in China impact consumption patterns in all of the following ways
EXCEPT:

a. spending power.
b. special nature of one child families.
c. pester power.
d. change agents.
e. legacy due to inherited wealth.

11. Within a given culture, consumption processes can be described via a sequence of
stages. All of the following describe those stages EXCEPT:

a. access.
b. buying behavior.
c. racial characteristics
d. consumption characteristics.
e. disposal.

12. Asking the question “Does the consumer have physical and/or economic access to
the product/service?” is an indication of which stage of consumption processes
(as influenced by culture)?

a. buying behavior.
b. consumption characteristics.
c. disposal.
d. access.
e. acceleration.

13. Asking the question “How is the decision to buy made by the consumers in the
Foreign market?” is an indication of which stage of consumption processes (as
influenced by culture)?

a. buying behavior.
b. consumption characteristics.
c. disposal.
d. access.
e. acceleration.

14. In global marketing, cultural forces shape the company’s ______________ mix.

a. visibility
b. growth
c. management
d. marketing
e. fashion

15. According to the text, culture is:

a. learned, interrelated and shared.
b. learned, interrelated and mixed.
c. learned, interrelated and empty.
d. learned, interrelated and passive.
e. learned, interrelated and static.

16. All of the following are unique features of culture EXCEPT:

a. it is learned.
b. it is inherited genetically.
c. elements are interrelated with one another.
d. it is shared.
e. it is compelling.

17. A culture can be defined by national borders (especially when the country is
isolated by natural barriers). An example would be:

a. the United States.
b. Canada.
c. Mexico.
d. Taiwan.
e. Germany.

18. Below is a list of elements from culture that matter to international marketers. Pick
the item that is likely to matter the least in doing business with a foreign culture.

a. material life.
b. political party affiliation.
c. language.
d. religion.
e. education.

19. ____________________ primarily refers to the technologies that are used to produce,
distribute, and consume goods and services within society.

a. Material life
b. Political party affiliation
c. Language
d. Values
e. Education

20. Selling different sizes of soft drinks in foreign cultures is an example of which
component of culture?

a. material life.
b. social interaction.
c. language.
d. values.
e. education.

21. Poor transportation and distribution infrastructure in many developing countries
would be examples of:

a. investment requirements.
b. technology gaps tied to material life.
c. governmental corruption that must be dealt with.
d. government ineptitude.
e. different value systems.

22. ________________ is often described as the most important element that sets
human beings apart from animals.

a. Materialism
b. Destruction
c. Life styles
d. Language
e. Computer skills

23. As a communication medium, language has two components: spoken language and
_________________ language.

a. business
b. commercial
c. slang
d. silent
e. electronic

24. _______________________ refers to the complex of nonverbal communication
mechanisms that people use to get a message across.

a. Spoken language
b. Slang language
c. Silent language
d. Harmonious language
e. Electronic language

25. Edward Hall identified five distinctive types of silent languages that are:

a. space, material possessions, friendship patterns, time, and travel.
b. space, material possessions, friendship patterns, time, and technology.
c. space, material possessions, friendship patterns, time, and computers.
d. space, material possessions, friendship patterns, time, and vacations.
e. space, material possessions, friendship patterns, time, and agreements.

26. Careless translation of advertising slogans or product labels leads to:

a. language blunders.
b. high cost.
c. government regulation.
d. imprisonment of offending parties.
e. preference of domestic products.

27. A technique such as ________________________ is used to sort out the differences when translating a company’s documents into other languages.

a. common translation
b. forward translation
c. back translation
d. value translation
e. abstract translation

28. Probably the most critical expression of social interactions is the concept of:

a. silent language.
b. gestures.
c. kinship.
d. reference groups.
e. cultural homogeneity.

29. A Los Angeles radio contest targeting Hispanic families offered two tickets to
Disneyland. The contest failed because the station forgot about the effect of
______________________ on the Hispanic culture.

a. cultural homogeneity
b. nuclear family
c. reference groups
d. social class
e. extended family

30. The consumer research literature identifies three kinds of reference groups:

a. membership groups, anticipatory groups, and local groups.
b. membership groups, anticipatory groups, and global groups.
c. membership groups, anticipatory groups, and legal groups.
d. membership groups, anticipatory groups, and dissociative groups.
e. membership groups, anticipatory groups, and friendship groups.

31. Membership groups are those groups that:

a. require dues.
b. exclude people.
c. are exclusive.
d. people belong to.
e. people would like to be a part of.

32. _______________ refers to the ideas and perceptions that a culture upholds in
terms of beauty and good taste.

a. Aesthetics
b. Cybernetics
c. Techno-graphics
d. Poly-graphics
e. Geographics

33. According to the text, religions embrace three elements:

a. lifestyle, a standardized organization, and moral rules of good behavior.
b. travel, a standardized organization, and moral rules of good behavior.
c. discussion, a standardized organization, and moral rules of good behavior.
d. explanation, a standardized organization, and moral rules of good behavior.
e. interaction, a standardized organization, and moral rules of good behavior.

34. An example of a religious taboo that might affect a company’s marketing mix is:

a. failing to say rosary.
b. going uncovered into a church.
c. including pork and/or beef as menu options in a restaurant.
d. offering to sell food on Saturday.
e. not closing the restaurant before dark.

35. All of the following would be issues to consider when marketing in an Islamic
framework EXCEPT:

a. not mixing men and women in focus groups.
b. advertising censors.
c. “excessive profits” should be turned over to stockholders.
d. do not manufacture products made from pigs.
e. special fasts during holidays.

36. Taking fasting habits into account when designing a company’s marketing mix
would be an essential in which of the following cultural environments?

a. Baptist.
b. Catholic.
c. Islamic.
d. Atheist.
e. Lutheran.

37. If your company were to employ male salespeople and they needed to get access to
female shoppers, which of the following countries would this become the most
difficult?

a. United States.
b. Japan.
c. China.
d. Saudi Arabia.
e. Israel.

38. In numerous Asian countries, the ancient ____________ philosophy feng shui (wind-
water) plays an important role in the design and placement of corporate buildings
and retail space.

a. Chinese
b. Japanese
c. Indonesian
d. Singaporean
e. Indian

39. __________________ drive(s) the holiday calendar in many countries.

a. Culture
b. Religion
c. Government tax assessors
d. Reference groups
e. Family units

40. The role of women in society is sometimes largely driven by local _____________.

a. religion.
b. politics.
c. government.
d. environment.
e. geography.

41. In which of the following countries would an ad campaign emphasizing that more
shaving is good have difficulty being accepted?

a. United States.
b. Russia.
c. Japan.
d. Norway.
e. Iran.

42. Two facets of education matter to international marketers. They are the
_________________________ of education.

a. cost and location
b. level and quality
c. cost and quantity
d. cost and availability
e. level and cost

43. ______________ systems tend to be deeply rooted and are found to be intrinsic to a
person’s identity and inner self.

a. Family
b. School
c. College
d. Personality
e. Value

44. ____________________ shape(s) people’s norms and standards. In addition,
people’s attitudes towards objects and behavioral codes are also influenced.

a. Value systems
b. Cultural philosophy
c. Reference groups
d. Family extension
e. Government involvement

45. Local attitudes toward foreign cultures will drive the product
___________________________.

a. positioning and human resources decisions.
b. positioning and logistics decisions.
c. positioning and travel decisions.
d. positioning and profit decisions.
e. positioning and design decisions.

46. _______________ classifications allow the marketing manager to see how much
overlap is possible between the marketing programs to be implemented in different
markets.

a. Business
b. Cultural
c. Political
d. Government
e. Natural

47. In many countries, goods with _______________ roots are strongly valued.

a. Swiss
b. Italian
c. American
d. Russian
e. South African

48. In terms of culture, the Walloons in French-speaking _______________have much
more in common with the French than with the Flemish of Northern ____________.

a. Germany.
b. Switzerland.
c. Italy.
d. Belgium.
e. Luxembourg.

49. ____________ is a high-context culture.

a. China
b. United States
c. Germany
d. Ireland
e. Italy

50. The anthropologist Edwards Hall makes a distinction between so-called ____________________________.

a. high-context and bright-context cultures.
b. high-context and low-profile cultures.
c. high-context and dry-context cultures.
d. high-context and low-context cultures.
e. high-context and medium-context cultures.

51. “What is left unsaid is as important as what is said” would be an example of what
form of culture?

a. agrarian.
b. low context.
c. intellectual.
d. high context.
e. northern European.

52. In the field of advertising, campaigns that were developed with a high-context
culture in mind are likely to be less effective when used in _______________
cultures, and vice versa.

a. high-context.
b. low-context.
c. medium-context.
d. dry-context.
e. hot-context.

53. Research indicates that there is a greater preference for luxury goods in
_________________ cultures than in other forms.

a. feminine
b. low context
c. intellectual
d. masculine
e. high context

54. ___________________ developed a highly useful cultural classification scheme.

a. Gary Hamel
b. Peter Drucker
c. Michael Porter
d. Geert Hofstede
e. Charles Handy

55. Geert Hofstede’s cultural classification scheme was based on a large-scale research
project which used 60 ________________ subsidiaries worldwide.

a. IBM
b. Hewlett Packard
c. Dell Computer
d. Motorola
e. Texas Instruments

56. Which of the following is NOT one of Hofstede’s cultural classification dimensions?

a. power distance
b. uncertainty avoidance
c. individualism
d. romanticism
e. masculinity

57. With respect to Hofstede’s cultural classification scheme, ______________ refers
to the degree of inequality which people of a country view acceptable.

a. power distance
b. uncertainty avoidance
c. individualism
d. masculinity
e. long-termism

58. An example of a high power distance country would be:

a. Germany
b. Britain
c. United States
d. Canada
e. Mexico

59. With respect to Hofstede’s cultural classification scheme, ______________ refers
to the extent to which people in a given culture prefer structured situations with clear
rules over unstructured ones.

a. power distance
b. uncertainty avoidance
c. individualism
d. masculinity
e. long-termism

60. An example of a high uncertainty avoidance country would be:

a. Germany.
b. Britain.
c. United States.
d. Canada.
e. Japan.

61. With respect to Hofstede’s cultural classification scheme, ______________ refers
to the extent to which people in a given culture prefer to act as individuals rather than
group members.

a. power distance
b. uncertainty avoidance
c. individualism
d. masculinity
e. long-termism

62. With respect to Hofstede’s cultural classification scheme, ______________ refers
to the extent to which people in a given culture label their society male or female
based on value characteristics of the two genders.

a. power distance
b. uncertainty avoidance
c. individualism
d. masculinity
e. long-termism

63. With respect to Hofstede’s cultural classification scheme, cultures where people favor
values such as solidarity, preserving the environment, and quality of life are more
______________.

a. feminine
b. masculine
c. collectivist
d. individualist
e. none of the above

64. In collectivist societies, the interests of the ____________ take center stage.

a. individual
b. company
c. group
d. businessman
e. city

65. An example of a short-term focus country (with respect to long-termism) would be:

a. Hong Kong.
b. Britain.
c. China.
d. Thailand.
e. Japan.

66. The GLOBE is an acronym for:

a. Global Leadership and Outstanding Behavior Effectiveness.
b. Global Leadership and Organizational Business Effectiveness.
c. Global Leadership and Outsourcing Behavior Effectiveness.
d. Global Leadership and Organizational Behavior Effectiveness.
f. Global Limited Organizational Behavior Effectiveness.

67. The GLOBE researchers developed a scale of _________cultural dimensions.

a. seven
b. eight
c. nine
d. ten
e. eleven

68. In addition to Hofstede’s first dimensions (uncertainty avoidance, power distance, and
collectivism), the GLOBE project included the following additional cultural
dimensions except:

a. collectivism II.
b. European management techniques.
c. assertiveness.
d. performance orientation.
e. humane orientation.

69. Another cultural classification scheme, the World Value Survey (WVS), which
assesses people’s values and beliefs in 78 countries, was organized by the
____________________________.

a. Harvard University.
b. University of Michigan.
c. University of Pennsylvania.
d. London Business School.
e. Princeton University.

70. A term “SRC” which was coined by J. A. Lee (cultural anthropologist) stands for:

a. strategic-reference criterion.
b. standard-reference criterion.
c. simple-reference criterion.
d. self-reference criterion.
e. none of the above.

71. _______________________ refers to people’s unconscious tendency to resort to
their own cultural experience and value systems to interpret a given business
situation.

a. Cultural morals
b. Cultural ethics
c. Self-Reference Criterion (SRC)
d. Monocultural
e. Global culture

72. Ethnocentrism is the belief that one’s own culture is:

a. superior to another culture.
b. inferior to another culture.
c. more racial pure than another culture.
d. exports more than another culture.
e. has a more rich and colorful history than any other country in the world.

73. Intensive foreign-language training is one of the more common tools to promote
__________________________.

a. educational sensitivity
b. travel sensitivity
c. cultural sensitivity
d. planning sensitivity
e. daily sensitivity

74. Certain products are obviously more culture-bound than other products. In particular,
_______________________ products tend to be very culture-bound.

a. industrial
b. agricultural
c. chemicals and industrial supplies
d. food, beverages, and clothing
e. none of the above

75. Prices in the U.S. often end in 9 or 5. Those in China:

a. end in the auspicious number 3.
b. do not end in 4 because it connotes death.
c. end in 5 or 9 like the U.S..
d. end in 8.
e. have no pattern whatsoever.

76. A model of organizational culture scheme includes the following four types
EXCEPT:

a. clan.
b. hierarchy.
c. market.
d. adhocracy.
e. nations.

77. The acronym GAM stands for:

a. global application management.
b. global action management.
c. global arts management.
d. global account management.
e. none of the above.

78. In the implementation of effective global account management (GAM), the following
factors count EXCEPT the following:

a. role of the global account management team.
b. seek global outsourcing.
c. make incentive structures realistic.
d. pick the right global account managers.
e. create a strong support network.

79. The acronym CRM stands for:

a. customer relationship mapping.
b. customer reliance management.
c. computer relationship management.
d. criteria relationship management
e. customer relationship management.

80. __________________________ plays a critical role in the development and quality
of a customer relationship management.

a. United Nations
b. Geocentric organization
c. Customer database
d. Training and development
e. Outsourcing

81. Which of the following colors have universal meanings globally?
a. white
b. blue
c. green
d. black
e. only a, b and c

82. Guanxi is:
a. a large city in southern China
b. a fiery pork dish
c. a nice saying like “gesundheit”
d. connections
e. a golf country club in Shanghai

83. Distribution strategies may have to change from the U.S. model by:
a. going to a traditional store instead of home delivery
b. not smiling at customers
c. going to direct selling instead of mail order
d. delivery service for fast food restaurants instead of just sit-down eating
e. all of the above

84. Promotion strategies can be most challenging globally. Changes for a U.S.-style ad might include:
a. translation into another language
b. lots of explanatory copy
c. pictures and few or no words except the brand name
d. appeals for large groups rather than individuals
e. all of the above

True/False Short Answer

85. In a given country, cultural heritage often provides pride and self-esteem to its citizens.

86. Within a given culture, consumption processes can be described via a sequence of
four stages: access, buying behavior, consumption characteristics, and planning.

87. ________________ is a learned, shared, compelling, interrelated set of symbols
whose meanings provide a set of orientations for members of society.

88. Culture can be biologically transmitted via the genes.

89. Cultures may be defined by national borders.

90. Most nations do not contain different subgroups (subcultures) within their borders.

91. ________________ primarily refers to the technologies that are used to produce,
distribute, and consume goods and services within a society.

92. _________________ is often described as the most important element that sets
human beings apart from animals.

93. Silent language refers to the thoughts that humans have within their minds.

94. Gestures, grimaces, body language, and eye contact are all examples of __________
language.

95. Probably the most crucial expression of social interactions is the concept of kinship.

96. Religion does not play a central role in many societies.

97. ________________ refers to a community’s set of beliefs that relate to a reality that
cannot be verified empirically.

98. The two facets of education that matter the most to the business planner are the
level and the quality of education.

99. Low-context cultures do not put the most emphasis on the written or spoken word.

100. Because of its affluence, the United States is a typical example of a high-context
culture.

101. A management guru Michael Porter developed the cultural classification scheme.

102. An example of a high power distance country would be the United States.

103. The project GLOBE stands for Global Law and Organizational Behavior
Effectiveness.

104. The World Value Survey (WVS) was conducted by the University of Michigan.

105. Clan cultures do not stress cohesiveness, participation, and teamwork.

106. The coordination of the management of customer accounts across national boundaries is called as global action management.

Essay

107. According to the textbook, within a given culture, consumption processes can be described via a sequence of four stages. List and describe each stage. Your description can use the form of indicating questions that might be asked at each stage.

108. Language is one of the cultural elements that affect the way marketers do business in foreign markets. Explain how language can complicate the task of the global marketer. In addition, identify the differences between spoken and silent language.

109. Social interactions are extremely important in the process of international marketing. One aspect of the social interaction process is the role of the reference group. Explain this importance and identify the chief forms of reference groups.

110. Explain and comment on high- and low-context cultures. Give examples of each.

111. List the primary components of Geert Hofstede’s cultural classification scheme for classifying cultures. Define each component. Comment on the effect that these various elements might play on marketing products internationally.

112. Explain and discuss some of the guidelines for managing and implementing successful global account management (GAM) and customer relationship management (CRM) programs.

Chapter 5

Multiple Choice

1. International marketers cannot afford to be __________________ as they interact with
a multitude of political and legal systems, including their own at home.

a. geocentric
b. ethnocentric
c. polycentric
d. multicentric
e. none of the above

2. The government in each country determines which industries will receive:

a. protection in the country and which will face open competition.
b. benefits.
c. penalties.
d. monopolies.
e. special protection from the armed services.

3. When marketing executives do business across national boundaries, where do they
primarily face regulations and laws?

a. at home.
b. in the foreign country.
c. both at home and in the foreign country.
d. at the World Court in the Hague.
e. at the United Nations (which controls the oversight of international business).

4. A(n) _____________ country refers to a country the parent company is based in
and operates from.

a. origin
b. domestic
c. host
d. home
e. plural

5. A(n) ____________________ country refers to a country in which foreign companies
are allowed to do business in accordance with its government policies and within its
laws.

a. foreign trade zone
b. domestic
c. origin
d. home
e. host

6. What type of political events are executives most concerned with in host countries?

a. major political upheavals.
b. day-to-day low-key events that produce a fairly significant change in policy.
c. property seizures.
d. terrorist strikes.
e. labor strikes.

7. As China continues to free its markets in response to global pressure, the
_________________ is (are) undermining its censorship policies.

a. travel policies
b. Internet
c. education policies
d. manufacturing locations
e. outsourcing policies

8. One way to characterize the nature of a government is by its __________________.

a. political ideology
b. ethnic ideology
b. regional ideology
c. business ideology
d. social ideology

9. The three main political ideologies are:
a. Communism, capitalism and globalism
b. Communism, capitalism and radicalism
c. Communism, capitalism and modernism
d. Communism, capitalism and Confucianism
e. Communism, capitalism and socialism

10. __________________ refers to an economic system in which free enterprise is
permitted and encouraged along with private ownership.

a. Socialism
b. Communism
c. Fascism
d. Capitalism
e. Planned economics

11. _______________ if unfettered, may result in excessive production and excessive
consumption, thereby causing social problems of great magnitude.

a. Socialism
b. Communism
c. Protected economies
d. Monopolies
e. Capitalism

12. ________________ is generally considered to be a system that falls in the middle
between largely independent systems and controlled economic systems.

a. Socialism
b. Communism
c. Neo-fascism
d. Capitalism
e. Monarchies

13. ______________ Institutional Revolutionary Party had controlled the country for 70
years.

a. Italy’s
b. Great Britain’s
c. India’s
d. Ireland’s
e. Mexico’s

14. An example of the dual-party system in operation is found in:

a. Mexico
b. Britain
c. India
d. Pakistan
e. Japan

15. Lack of political stability and continuity is usually a characteristic of which of the
following systems?

a. single party
b. dual party
c. multiple party
d. bi-cameral system
e. communist

16. Governments often decide to block trade. All of the following are reasons EXCEPT:

a. national security.
b. to protect the stock market.
c. to develop new industry.
d. to protect declining industries.
e. none of the above.

17. MITI stands for:

a. Ministry of International Travel & Industry.
b. Ministry of International Trade & Industry.
c. Ministry of International Tourism & Industry.
d. Ministry of International Testing & Industry.
e. Ministry of International Telegraph & Industry.

18. In the United States, ITA stands for:

a. International Training Administration.
b. International Testing Administration.
c. International Teaching Administration.
d. International Tourism Administration.
e. International Trade Administration.

19. In the United States, the __________________________ has a national network of
district offices in every state, offering export promotion assistance to local businesses.

a. Ministry of International Trade and Industry (MITI)
b. EXIM Bank
c. National Industrial Council (NIC)
d. International Trade Administration (ITA)
e. United Nations, Division of Commerce

20. A major objective of any state government wishing to support businesses that
will be exporting or relocating to the United States (specifically, within their
state) is:

a. job creation.
b. increasing the defense industry in their state.
c. gaining control of multinational corporations.
d. accumulating wealth.
e. opening more hotels/motels.

21. In Europe, Airbus Industries was established with joint government subsidies from the governments of __________________________________________________.

a. Britain, France, Germany, and Spain
b. Britain, France, Germany, and Sweden
c. Britain, France, Norway, and Spain
d. Britain, Finland, Germany, and Spain
e. Iceland, France, Germany, and Spain

22. An example of a direct government subsidy by the United States to meet foreign
competition would be:

a. Microsoft.
b. COMECON.
c. The Tennessee Valley Authority.
d. BART in California.
e. SEMATECH (Semiconductor Manufacturing Technology).

23. The ultimate government involvement in trade is when the government:

a. gives tax breaks to businesses.
b. itself is the customer.
c. prevents competition.
d. controls the foreign competition with tariffs.
e. allows domestic businesses to bribe in foreign countries so they can remain
competitive.

24. The United States government accounts for ____________ of the total U.S.
consumption.

a. a tenth
b. a third
c. a quarter
d. nearly sixty percent
e. nearly seventy percent

25. Trade controls can be broken into two categories—economic trade controls and:

a. covert trade controls.
b. political trade controls.
c. geophysical trade controls.
d. maritime trade controls.
e. most favored nation trade controls.

26. An example of an economic trade control would be a trade restraint instituted to:

a. protect local jobs.
b. embargo goods.
c. sanction trading in certain goods.
d. refrain from trading with communist Cuba.
e. freeze the assets of Iraq.

27. Weapons that might be used as economic trade controls to protect locally produced
goods against imports would be:

a. embargoes.
b. sanctions.
c. asset freezes.
d. tariffs and nontariff barriers.
e. confiscation.

28. ______________________ are country-based political trade controls.

a. Embargoes and sanctions
b. Nontariff barriers
c. Taxing imports
d. Taxing exports
e. Tariffs

29. The United States maintains an economic embargo on __________________.

a. Nicaragua
b. Mongolia
c. Hungary
d. Cuba
e. none of the above.

30. All of the following are considered forms of nontariff barriers EXCEPT:

a. government participation in trade.
b. customs and entry procedures.
c. product requirements.
d. countervailing duties.
e. quotas.

31. Embargoes and sanctions are ______________________ political trade controls.

a. locally-based
b. regionally-based
c. country-based
d. company-based
e. party-based

32. An example of a product-based trade control would be the:

a. quota.
b. countervailing duty.
c. export license requirement.
d. ownership control.
e. asset freezing.

33. Trade laws that harm other countries are likely to invoke _______________.

a. war
b. retaliation
c. domestication attempts
d. covert action
e. United Nations sanction

34. Which of the following countries has very few restrictions on foreign ownership of
corporations within its borders (domestic businesses)?

a. United States.
b. Russia.
c. Japan.
d. China.
e. Saudi Arabia.

35. Profit remittances and differential taxation and interest rates are illustrations of
which of the following types of control?

a. ownership control
b. incentive control
c. industry control
d. financial control
e. political control

36. According to the textbook, government policies drive the following economic
factors EXCEPT:

a. the cost of capital.
b. level of economic growth.
c. companies’ outsourcing strategies.
d. rates of inflation.
e. international exchange rates.

37. __________________ is an outright takeover of assets without compensation.

a. Expropriation
b. Confiscation
c. Domestication
d. Nationalization
e. None of the above

38. __________________ refers to a foreign government’s takeover of company assets
such as land and goods with compensation that tend to fall short of their market value.

a. Expropriation
b. Confiscation
c. Domestication
d. Nationalization
e. non of the above

39. __________________ refers to a foreign government’s takeover for the purpose of
making the industry a government-run industry.

a. Expropriation
b. Confiscation
c. Domestication
d. Nationalization
e. None of the above

40. To reduce the risk of expropriation or confiscation of company assets overseas, many
companies use __________________ with local companies.

a. joint ventures
b. strategic alliances
c. contract manufacturing
d. licensing
e. none of the above

41. To overcome the problems of expropriation, confiscation, and even nationalization,
many companies are now adopting a policy of ___________________ where the
company gradually turns over management and operational responsibilities as well as
ownership to local companies over time.

a. retaliation
b. boycott
c. sanction
d. domestication
e. profit sharing

42. Another name for domestication is _______________________.

a. repatriation policy
b. phase-out policy
c. phase-in policy
d. upward-bound policy
e. equity policy

43. According to the PRS Group’s 2005 International Country Risk Ratings, which of the
following country has the LOWEST risk rating?

a. Norway
b. Switzerland
c. Singapore
d. Finland
e. Somalia

44. According to the PRS Group’s 2005 International Country Risk Rating, which of the
following countries has the HIGHEST risk rating?

a. Norway
b. Switzerland
c. Singapore
d. Finland
e. Iraq

45. Recently the Russian subsidiary of PepsiCo needed to import bottling equipment
from the United States. However, the Russian government did not allow the
company to exchange rubles for dollars, so it exported Russian vodka to the
United States to earn enough dollars to import the needed equipment. This would be
an example of _____________________.

a. retaliation.
b. countertrade.
c. sanction.
d. domestication.
e. profit sharing.

46. __________________ involve(s) trading of products without involving direct
monetary payments.

a. Joint ventures
b. Strategic alliances
c. Contract manufacturing
d. Countertrade
e. Outsourcing

47. The Middle East crisis and the September 11 terrorist attacks on the United States
have caused tremendous concern about the future ____________________?

a. aluminum supply
b. oil supply
c. copper supply
d. food supply
e. none of the above

48. _________________________ provides the U.S. President a free hand and the power
to negotiate trade deals with other governments.

a. Fast-track reciprocal authority
b. Fast-track senate authority
c. Fast-track business authority
d. Fast-track trade authority
e. Slow-track trade authority

49. G-7 began during the economic crisis of the mid-____________.

a. 1950s.
b. 1960s.
c. 1970s.
d. 1980s.
e. 1990s.

50. All of the following are members of the G-7 (Group of Seven) EXCEPT:

a. Canada
b. Ireland
c. Germany
d. United States
e. Italy

51. The group consisting of the original G-7 and _________________ is known as G-8.

a. Singapore
b. Ireland
c. Russia
d. China
e. New Zealand

52. _________________ was founded in 1949 to stop the flow of Western technology
to the Soviet Union. Australia, Japan, and the NATO countries (except Ireland) are
members.

a. The NATO alliance
b. The Western bloc
c. The Eastern bloc
d. The G-7 (Group of Seven)
e. COCOM (The Coordinating Committee for Multilateral Controls)

53. _____________________ may be defined as that body of rules or laws that is
binding on states and other international persons in their mutual relations.

a. Legal systems
b. International law (or the “law of nations”)
c. Local law
d. Napoleonic code law
e. Civil law

54. International law represents __________________ among countries.

a. very loose arrangements
b. contractually binding agreements
c. gentlemen’s agreements
d. almost no control of law
e. the best and most recognized legal standards

55. International law comes from customs, national and international court decisions,
and:

a. tradition.
b. joint ventures.
c. strategic alliances.
d. cabals.
e. international treaties.

56. The International Court of Justice was established by the ____________________
to settle international conflicts between nations, not between individual parties and
companies.

a. United Nations
b. Asian Development Bank
c. International Labor Organization
d. International Monetary Fund
e. World Bank

57. ____________________ laws primarily govern behavior within a country and
also govern the resolution of international contractual disputes since foreign
subsidiaries and expatriate employees live within the legal bounds of their host
countries’ legal systems.

a. Global
b. Transnational
c. Multinational
d. Local and municipal
e. Bi-national

58. Legal issues facing a company affect:

a. pricing decisions.
b. packaging decisions.
c. product decisions.
d. all of the above.
e. none of the above.

59. ________________ systems base the interpretation of law on prior court rulings
(that is, legal precedents and customs of time).

a. Common law
b. Code law
c. Written law
d. Islamic law
e. Napoleonic law

60. A country that follows common law as its primary system is:

a. France.
b. the United States.
c. Iraq.
d. Egypt.
e. Mexico.

61. _________________ systems rely on statutes and codes for the interpretation of the
law. There is very little interpretation in this form of law.

a. Common law
b. Code (written) law
c. United Nation’s law
d. Germanic Confederation law
e. Spanish Constitutional law

62. The legal system that holds that law was established by God and a “natural law”
embodies all justice is represented by:

a. Common law.
b. Code (written) law.
c. Islamic law.
d. Germanic Confederation law.
e. Napoleonic law.

63. Civil laws regulating business contracts and transactions are usually called:

a. business law.
b. code law.
c. confederation law.
d. commercial law.
e. contract law.

64. All of the following countries believe that most disputes can be solved outside the
litigation system EXCEPT:

a. Brazil.
b. Japan.
c. China.
d. United States.
e. Taiwan.

65. The ____________________ (based in Geneva, Switzerland) has instituted a set of
process standards that has been subscribed to by the European Union.

a. International Standards Organization
b. International Production Standards Organization
c. Quality Council
d. Demming Committee
e. Baldridge Foundation

66. With the growing adoption of the __________ standards by firms worldwide, an
__________ certification has become an essential marketing tool for firms.

a. ISO 6000
b. ISO 7000
c. ISO 8000
d. ISO 9000
e. ISO 10000

67. The ISO 9000 standards served as a model for the _____________ series.

a. ISO 10000
b. ISO 11000
c. ISO 12000
d. ISO 14000
e. ISO 15000

68. ______________________ refers to ideas that are translated into tangible products,
writings, and so on, and that are protected by the state for a limited period of time
from unauthorized commercial exploitation.

a. A copyright
b. A trademark
c. A trade secret
d. Intellectual property
e. A patent

69. Which of the following countries has followed the rule of “first-to-invent” with respect to patent awards?

a. United States
b. Japan
c. Britain
d. Germany
e. Canada

70. The international treaty (convention) established in 1883 that explains international
protection rights of intellectual property (such as how long one has to file for
property protection in foreign countries) is called:

a. the Berne Convention.
b. the London Convention.
c. the Paris Convention.
d. the New York Convention.
e. the Rome Convention.

71. The ____________________ is the oldest and most comprehensive international
copyright treaty.

a. Berne Convention.
b. London Convention.
c. Paris Convention.
d. New York Convention.
e. Rome Convention.

72. The _____________________ specifically forbade every contract, combination, or
conspiracy to restrain free and open trade.

a. Sherman Act
b. Clayton Act
c. Federal Trade Commission Act
d. Foreign Corrupt Practices Act
e. Export Trading Company Act

73. The _______________ strengthened the U.S. antitrust arsenal by prohibiting trade
practices that were not covered in previous legislation. It outlawed exclusive
dealing and price discrimination.

a. Sherman Act
b. Clayton Act
c. Federal Trade Commission Act
d. Foreign Corrupt Practices Act
e. Export Trading Company Act

74. The __________________ encourages firms to join forces to improve their
export performance by exempting them from antitrust laws. This act was patterned
after similar legislation in Japan and Germany.

a. Sherman Act
b. Clayton Act
c. Federal Trade Commission Act
d. Foreign Corrupt Practices Act
e. Export Trading Company Act

75. The ____________________ was designed to prohibit the payment of any money
or anything of value to foreign officials, foreign political parties, or any candidate for
foreign political office for purposes of obtaining, retaining, or directing business.

a. Sherman Act
b. Clayton Act
c. Federal Trade Commission Act
d. Foreign Corrupt Practices Act
e. Export Trading Company Act

76. The ____________________ antitrust laws are applied not only to _______________
-member country companies but also to foreign companies as long as their corporate
action has antitrust implications within the _____________.

a. MERCOSUR.
b. European Union (EU).
c. European Free Trade Association (EFTA).
d. NAFTA
e. None of the above.

77. The ___________________________________ of 1977 was designed to prohibit the
payment of any money or anything of value to foreign officials, foreign political
parties, or any candidate for foreign political office for purposes of obtaining,
retaining, or directing business.

a. Foreign Illegal Practices Act
b. Foreign Corruption Issues Act
c. Foreign Corruption Law Act
d. Foreign Bribery Practices Act
e. Foreign Corrupt Practices Act

True/False Short Answer

78. A host country refers to a country the parent company is based in and
operates from.

79. A _______________ country is a country in which foreign companies are allowed
to do business in accordance with its government’s policies and its laws.

80. Under strict socialism, the government owns and manages all businesses and no
private ownership is allowed.

81. ________________ refers to an economic system in which free enterprise is
permitted and encouraged along with private ownership.

82. Both capitalistic and socialistic countries in which government planning and
ownership play a major role are also referred to as planned economies.

83. One of the problems with a multiple party governmental system is a lack of
political stability and continuity.

84. In the United States, the organization that seeks to help firms considering exports to
other countries is the International Trade Agency (ITA).

85. The U.S. government accounts for a ______________ of the total U.S. consumption.

86. The “buy domestic” policy orientation is not limited to the United States.

87. Trade controls can be broken into two categories – economic trade controls and
_____________________.

88. ___________________ restrict all trade with a nation for political purposes.

89. Export license requirements are supply-based trade controls.

90. The United States maintains an economic embargo on Nicaragua.

91. _______________ by a government is an outright takeover of a business’s assets
without compensation.

92. A _______________________ policy by a host government means that the foreign
company doing business within the country’s borders must gradually turn over
management and operational responsibilities as well as ownership to local companies
over time.

93. The Group of 7 (or G-7) is made up of France, Germany, Italy, England, Canada,
Japan, and the United States.

94. The Coordinating Committee for Multilateral Controls (COCOM) was founded after
the Cold War in the 1990s.

95. Treaties and international contracts do not represent formal agreements among nations or firms.

96. Common law systems base the interpretation of law on prior court rulings.

97. The Digital Millennium Copyright Act (DMCA) of 1998 was passed in Germany.

98. The Patent Law Treaty (PLT) was adopted in Frankfurt in June 2000.

99. The U.S. antitrust laws were originally and primarily aimed at domestic monopolies.

100. In the U.S., the Foreign Corrupt Practices Act (FCPA) was passed in 1990.

Essay

101. List and briefly characterize the three main reasons why governments often want to
block or restrict trade.

102. What are the two primary types of trade controls? Give a description and an example of each major type.

103. How do the macroeconomic policies of a host country affect a foreign
company’s operations?

104. International law is derived from three sources. Identify and compare these
sources.

105. Describe the various types of local legal systems. Describe how these differences
might affect a company that wishes to conduct international business.

Chapter 6

Multiple Choice

1. In international marketing, the global market research process includes:

a. Define the problem(s).
b. Develop a research design.
c. Determine the information needs.
d. Collect the data (secondary & primary).
e. All of the above.

2. To some degree, the procedures and methods that are followed to conduct global
marketing research are close to those in the standard ____________________.

a. domestic market.
b. transnational market.
c. global market.
d. European market.
e. Asian market.

3. All of the following are steps to be followed to conduct global market research
EXCEPT:

a. define the research problem(s).
b. develop software to integrate with the Internet databases.
c. determine information needs.
d. collect the data.
e. analyze the data and interpret the results.

4. There are six steps to follow in conducting global market research. The first step
is to:

a. develop the research design.
b. define the research problem.
c. determine information needs.
d. collect the data (secondary and primary).
e. analyze the data and interpret the results.

5. All of the following are major challenges that a global marketing researcher might
face EXCEPT:

a. argument over budget expenditures between international markets.
b. complexity of research design due to environmental differences.
c. lack and inaccuracy of secondary data.
d. time and cost requirements to collect primary data.
e. coordination of multicountry research efforts.

6. Any research starts off with a precise definition of the ______________________.

a. location problems.
b. sample problems.
c. data problems.
d. research problem(s).
e. none of the above.

7. In marketing research, once the problem has been identified it is translated into:

a. a secondary research search.
b. a primary research search.
c. specific research questions.
d. a sampling process.
e. a choice of scales to be used in measurement.

8. In global marketing research, the marketing research problem formulation is often
hindered by the _____________________ where a person’s habit is to fall back on
their own cultural norms and values.

a. gender bias
b. culture bias
c. proximity effect
d. global distance factor
e. self-reference criterion

9. ____________________ should be consulted at every step of the research process if
the study will effect their operations.

a. Transnational subsidiaries
b. European subsidiaries
c. Asian subsidiaries
d. Local subsidiaries
e. African subsidiaries

10. A major difficulty in formulating the research problem in the global marketing
research effort is the unfamiliarity with the ___________________.

a. foreign mass media
b. laws governing marketing research
c. foreign environment
d. domestic environment’s attitude toward foreign research
e. people who will actually conduct the research

11. In a foreign market, the _______________ survey is probably the most economical
way to gather preliminary information on target markets.

a. upper-middle class
b. omnibus
c. environmental
d. demographic specific
e. local distributor

12. A major disadvantage of the omnibus surveys is that:

a. it is usually culturally biased.
b. it is very expensive.
c. clients cannot incorporate their own questions in the survey.
d. the survey does not usually contain many consumer-related questions.
e. only a limited amount of company-relevant information is obtainable.

13. A(n ) ____________________ is particularly suitable when you need to ask a few
simple questions.

a. geometric survey
b. omnibus survey
c. simple survey
d. restricted survey
e. matrix survey

14. When market researchers find information that might be useful in their exploration
process to already be available (usually collected for some other purpose by other
data gathers), this type of information is called:

a. public information.
b. primary data.
c. unrestricted information.
d. secondary data.
e. used information.

15. When data is collected specifically for the purpose of the research study, it is called:

a. public information.
b. primary data.
c. unrestricted information.
d. secondary data.
e. used information.

16. The National Trade Data Bank (NTDB) which includes market research reports,
information on export opportunities, and market guides is maintained by the
____________________________.

a. U.S. Department of Commerce
b. U.S. Department of Education
c. U.S. Department of Energy
d. U.S. Department of Transportation
e. U.S. Treasury

17. The OECD is an acronym _______________________________________.

a. Organization for Economic Cooperation & Deregulation
b. Organization for Economic Cooperation & Development
c. Organization for Economic Cooperation & Datamation
d. Organization for Economic Cooperation & Distribution
e. Organization for Economic Cooperation & Demographics

18. Many countries have a network of government-sponsored commercial delegations
that provide valuable information to firms that desire to do business in that country.
One of the most noteworthy of these is found in ______________ and is called
_________________.

a. Britain; Britannia Net
b. Canada; Canada First
c. Japan; Japan External Trade Organization (JETRO)
d. the United States; Buy American
e. Mexico; the Mexican Organization of Commercial Enterprise (MOCE)

19. A recent form of secondary data sources is the syndicated datasets sold by market
research companies like A. C. Nielsen and Information Resources, Inc. One of the
ways that these firms acquire data in foreign markets and most developed countries
(especially in the retail environment) is to use:

a. observation.
b. telephone interviews.
c. direct mail.
d. expert opinion.
e. optical scanners tied to cash registers.

20. All of the following are major sources of problems for the market researcher wishing
to use secondary data obtained either about or from foreign markets EXCEPT:

a. government control of data for taxing purposes.
b. accuracy of data.
c. age of data.
d. reliability of data over time.
e. comparability of data.

21. Accuracy of data in foreign markets may be suspect. This is especially true if it
neglects to record significant commercial and non-commercial activity. One example
of data that is often not recorded (though it might be significant) is:

a. trade across national borders.
b. trade by mail.
c. smuggling activities.
d. trade carried by package shippers such as FedEx or UPS.
e. trade with foreign banks.

22. _______________________ reflects the degree to which a given concept has the
same meaning in different environments.

a. Functional equivalence
b. Conceptual equivalence
c. Demographic equivalence
d. Psychographic equivalence
e. Primary equivalence

23. Comparability might also be hindered by the lack of ___________________.
This refers to the degree to which similar activities or products in different countries
fulfill similar functions.

a. conceptual equivalence
b. functional factors
c. functional equivalence
d. lumping of data
e. comparison equivalence

24. The comparison of money-based indicators (e.g., income figures, consumer
expenditures, trade statistics) is hampered by the need to convert such figures into
a ____________________.

a. common currency
b. euro currency
c. euro dollar
d. Swiss franc
e. Italian lira

25. To avoid the difficulty of “lumping of data” encountered in conducting
international marketing research, all of the following questions should be asked
EXCEPT:

a. When were the data collected?
b. How were the data collected?
c. How much did it cost to collect the data?
d. Have the variables been redefined over time?
e. Who collected the data?

26. If a marketing researcher asks “who collected the data?” they would probably be
trying to overcome one of the major difficulties of collecting data in the international
marketplace. Which of the following best describes the effect that the researcher is
trying to overcome?

a. conceptual equivalence.
b. functional factors.
c. functional equivalence.
d. lumping of data.
e. comparison equivalence.

27. Primary research can be collected in several ways. One method that is excellent to
use when doing exploratory research is:

a. mail surveys.
b. telephone surveys.
c. mall intercept.
d. home interviews.
e. focus groups.

28. As a research technique, a ________________ is a loosely structured free-flowing
discussion among a small group of target customers facilitated by a professional
moderator.

a. mall intercept
b. contra-group design
c. Delphi-group
d. focus group
e. probe panel

29. All of the following are typical uses of the focus group research technique EXCEPT:

a. to generate information to guide the quantitative research projects.
b. to obtain data on unproductive or problem employees.
c. to reveal new product opportunities.
d. to test out new product concepts.
e. to test out new ad images.

30. Getting focus groups to work in certain societies (because of their view on group
dynamics and proper decorum) is difficult. Which of the following countries
would be most difficult for successful focus groups?

a. Japan
b. United States
c. Canada
d. Britain
e. Germany

31. Which of the following is not important to address in focus group research?
a. cultural sensitivity of the moderator
b. non-verbal cues
c. consensus answers
d. gender of the participants
e. gender of the moderator

32. _________________ are the most common vehicle to gather primary data.

a. Scanners
b. Focus groups
c. Questionnaires
d. Interviews
e. Cluster analysis

33. By far the most popular instrument to gather primary data is the:

a. mall intercept.
b. casual observation.
c. questionnaire.
d. optical scanner.
e. eye tracking camera used in psychology.

34. The astute marketing researcher must be aware of the need for conceptual and
functional equivalence in designing questionnaires for the international market.
In addition, it is also necessary to fulfill two additional criteria. They are:

a. time and cost evaluation.
b. translation and scalar equivalence.
c. translation and polar equivalence.
d. religious and bias equivalence.
e. polar and scalar equivalence.

35. Two procedures that can overcome problems with sloppy questionnaire translation
in conducting international marketing research is to provide for:

a. polar and psychographic translation.
b. lifestyle and psychographic translation.
c. back-translation and parallel translation.
d. forward-translation and parallel translation.
e. lifestyle and parallel translation.

36. ______________________ translation involves using multiple interpreters who
translate the same questionnaire independently.

a. Polar
b. Parallel
c. Back
d. Forward
e. Lifestyle

37. To make findings of cross-country market research projects meaningful, it is
paramount to pursue ________________ (where scores from subjects of different
countries should have the same meaning and interpretation).

a. time evaluation
b. scalar equivalence
c. polar equivalence
d. bias equivalence
e. focus equivalence

38. The purpose of ______________________ is to get scores from subjects of
different countries to have the same meaning and interpretation.

a. time evaluation
b. scalar equivalence
c. polar equivalence
d. bias equivalence
e. focus equivalence

39. Survey research in ______________________ is further hampered by low levels of
education.

a. developed countries
b. rich countries
c. developing countries
d. emerging markets
e. low-tech countries

40. With respect to asking scaled questions to determine the degree of agreement or
disagreement, in illiterate societies scaled questions often use:

a. numbers (such as 1-10).
b. letters (such as a-z).
c. use symbols (such as stars).
d. use degrees of smiling or funny faces (from happy to sad).
e. use number of animals (ownership demonstrated by one through seven goats or
cows).

41. With respect to conducting marketing research in countries that are unfamiliar with
survey research, it is advisable to avoid:

a. references to the government.
b. lengthy questionnaires or open-ended questions.
c. references to religion.
d. questioning females.
e. any scaled questions.

42. ___________________ is the only foolproof way to debug the questionnaire and
spot embarrassing mistakes.

a. Pre-testing
b. Post-testing
c. Using approved software
d. Using standard questionnaire formats
e. Having a linguist read the questionnaire

43. To collect data, the researcher has to draw a ____________ from the target
population.

a. group item
b. reference list
c. sample
d. quota
e. portion

44. A sampling plan centers around three issues: sampling unit, sample size, and
__________________.

a. demographic procedure
b. sampling procedure
c. psychographic procedure
d. geographic procedure
e. none of the above

45. Which of the following questions is most associated with the term “sampling unit?”

a. Who cannot be considered as a valid respondent?
b. How much will the survey cost?
c. What is our target population? Who should be surveyed?
d. How many people should be surveyed?
e. How should prospective respondents be chosen from the target population?

46. Which of the following questions is most associated with the term “sample size?”

a. Who cannot be considered as a valid respondent?
b. How much will the survey cost?
c. What is our target population?
d. How many people should be surveyed?
e. How should prospective respondents be chosen from the target population?

47. When drawing a sample, the researcher needs a __________________, that is,
listing of the target population (e.g., a telephone directory).

a. sampling mirror
b. sampling frame
c. sampling group
d. sampling questionnaire
e. sampling behavior

48. With respect to approved sampling theory, heterogeneous cultures (e.g., India)
demand ________________ samples than homogeneous cultures (e.g. South Korea).

a. bigger
b. smaller
c. less stratified
d. more randomized
e. less randomized

49. When preparing a sampling plan, the researcher needs to decide how to contact
prospective subjects for the survey. The most common choices are:

a. mail, telephone, and Internet.
b. mail, telephone, and optical scan.
c. mail, telephone, and personal interview.
d. observation, personal interview, and experimentation on a person-by- person basis.
e. observation, telephone, and personal interview.

50. Once collection of data in a research project begins, there can be many problems
with collection. A very common problem in the international arena is nonresponse
due to:

a. a reluctance to be photographed.
b. a reluctance to talking with strangers.
c. a reluctance to talking with officials or official pollsters.
d. a fear of government reprisals.
e. a fear of cultural conflict.

51. When conducting research, several biases may be present. The ___________ bias
is present when the respondent feels a desire to be polite toward the other person.

a. yea-or nay-saying
b. social desirability
c. gender
d. tradition
e. courtesy

52. The courtesy bias with respect to marketing research responses is fairly common in:

a. the United States.
b. France.
c. Germany.
d. Asia and the Middle East.
e. Mexico.

53. Besides traditional primary data collection methods, companies also rely on less
conventional methods such as ________________________.

a. geographic research
b. multigraphic research
c. psychographic research
d. ethnographic research
e. none of the above

54. All of the following are methods that can be fruitfully employed to assess the size of
the market for any given product EXCEPT:

a. analogy method.
b. Latin square.
c. trade audit.
d. chain ratio method.
e. cross-sectional regression analysis.

55. The procedure for the _______________ of assessing market size is to pick a country
that is at the same stage of economic development as the country of interest and for
which the market size is known. This country then becomes an indicator for the
market size of the country that is under question.

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

56. Suppose that a consumer electronics company wants to estimate the market size for
VCRs in Poland but does not have much information about that market. Instead, it
chooses Hungary (a country for which it does have information) and uses it as an
indicator for the market in Poland. This method of determining market size most
resembles which of the following methods?

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

57. One common problem with using the analogy method of determining market size
is:

a. cost.
b. language problems.
c. consumption patterns are not comparable across countries due to strong cultural
disparities.
d. different monetary units.
e. there be more men than women in one of the cultures.

58. An alternative way to derive market size estimates is based on local production and
import and export figures for the product of interest. This method is best described
as being a(the):

a. analogy method.
b. Latin square.
c. trade audit.
d. chain ratio method.
e. cross-sectional regression analysis.

59. The _______________ method of assessing market size begins with a rough base-
number as an estimate for the market size (such as the entire population for the
country) and systematically fine-tunes by applying a string of percentages (such as
birth rate) to come up with the most meaningful estimate possible.

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

60. If a company wishing to sell baby monitors (to help with infants that have trouble
breathing) wanted to estimate the size of their potential market in a developing
country for which little data was available, they could get the population size, examine
the number of births per year, focus on cities that had the highest birthrates, and
contact hospitals that had the most problems with SIDS (sudden infant death
syndrome). This logic most closely approximates which of the following methods
listed below?

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

61. One method for determining market size estimates takes the variable of interest (such
as market size) and relates it to a set of predictor variables (indicators closely related
to demand). This method would be best described as being which of the following?

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

62. If a researcher were to take ten Central and Eastern European countries where
per capita income and automobile ownership by per capita were known, trying to
find the overall picture of market size for the market could probably be done by
using which of the following methods?

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

63. Point-of-sale (POS) store scanners obtain sales movement data from
the _____________________ of retail outlets.

a. checkout scanner tapes
b. company headquarter
c. regional warehouses
d. international warehouses
e. none of the above

64. The emergence of _________________ data, coupled with rapid developments in
computer hardware and software has led to a revolution in market research.

a. the Internet
b. scanner
c. cost efficient
d. mail-in rebate
e. direct-feedback

65. Innovations in marketing decision support systems have spurred several major
developments in the marketing area. One of most dramatic has been:

a. the shift from mass to micro marketing.
b. the shift from a demand to a supply economy.
c. the fact that everyone now has a personal computer.
d. the overcrowding of the Internet.
e. home shopping on the Internet.

66. Scanning data are also increasingly used for ________________________.

a. sample management
b. electronic management
c. the Internet management
d. category management
c. supply management

67. With respect to standardization of research results, even when dealing with cross-
country marketing research, which of the following entities usually desires
standardization of data collection, sampling procedures, and survey instruments?

a. the local government
b. the local research agency
c. the local subsidiary
d. the home office
e. the home research agency

68. Two approaches are common in global marketing research:

a. Emic and ethic.
b. Emic and etic.
c. Emic and eco-centric.
d. Emic and geo-centric.
e. None of the above.

69. In the area of multicountry research coordination, the __________________
focuses on the peculiarities of each country.

a. coordination school
b. delegation school
c. etic school
d. planning school
e. emic school

70. In the area of multicountry research coordination, the __________________
focuses on the universal behavior and attitudinal traits.

a. coordination school
b. delegation school
c. etic school
d. planning school
e. emic school

71. In cross-cultural market research, the need for comparability favors the
___________________.

a. coordination school
b. delegation school
c. etic school
d. planning school
e. emic school

72. Internet surveys are becoming more popular in international research. Which of the following is NOT an advantage of such surveys?
a. larger sample sizes are easier to obtain
b. internet access in all countries
c. lower costs
d. anonymity
e. speedy response times

73. Which of the following would be problematic in using the Internet in global research?
a. obtaining a representative sample
b. download time for website pages
c. incorrect e-mail addresses
d. poor response rates
e. all of the above

74. One should be concerned about choosing a local agency for marketing research because:
a. local agencies understand cultural nuance better
b. they might lack the expertise for state-of-the art research
c. they may not be trustworthy with secrets
d. local agencies are relatively inexpensive
e. both b and c

True/False Short Answer

75. “Test, test, test” is a maxim that marketers should never forget.

76. Procedures and methods that are followed to conduct global marketing research
are very different from those used to conduct domestic research.

77. The first step in the marketing research process is described as
_________________________.

78. Any research effort starts off with a precise definition of who the marketer wants to
research.

79. Today researchers have found that sophisticated analytical tools will compensate for
inaccuracies in problem definition.

80. Local subsidiaries should not be consulted at every step of the research process.

81. To gain familiarity with a foreign environment, one can undertake an omnibus survey.

82. _____________ data are collected specifically for the purpose of the research study.

83. If a company were to go to JETRO (the Japanese External Trade Organization) for
data on exporting to Japan, they would be engaging in a _______________ data
search.

84. OECD stands for ________________________________________.

85. In the area of age of data, the frequency of census does not vary from country to
country.

86. With respect to comparability of data, ________________ equivalence refers to the
degree to which similar activities or products in different countries fulfill similar
functions.

87. Focus groups normally include 30-40 people.

88. A __________________ is a loosely structured free-flowing discussion among a
small group of target customers facilitated by a professional moderator.

89. One of the procedures used in practice to avoid sloppy translation of questionnaires
is forward-translation.

90. Using the “Funny Faces Scale” would be one way to overcome literacy problems
among developing countries in answering marketing research questionnaires.

91. Latin Americans tend to use the low end of the funny faces.

92. There are various methods for estimating market size. The _________________
method starts by picking a country that is at the same stage of economic development
as the country of interest and for which the market size is known.

93. The chain ratio method starts with a very rough base-number as an estimate for the
market size.

94. Cross-sectional regression analysis do not produce market size estimates.

95. In the area of multicountry research coordination, the __________________
focuses on the peculiarities of each country.

96. In the area of multicountry research coordination, the __________________
focuses on the universal behavior and attitudinal traits.

Essay

97. List the stages of the marketing research process. What is considered the most important step?

98. Discuss the function, purpose, limitations, and benefits of omnibus surveys.

99. What are the generally accepted problems associated with collecting and using secondary data research?

100. Discuss the major issues that a marketing researcher would want to consider for focus group discussions in an international market environment.

101. List the four primary methods of estimating market size. Discuss why market size estimates may differ depending on the method being used. How can such differences be reconciled? Which method do you think is the best? Explain your reasoning.

Chapter 7

Multiple Choice

1. Variation in customer needs is the primary reason for ____________________.

a. market segmentation.
b. product segmentation.
c. country segmentation.
d. quality segmentation.
e. sales segmentation.

2. The goal of market segmentation is to break down the market for a product or a
service into different groups of consumers so the firm can:

a. tailor its marketing mix to each individual segment.
b. make the sales job easier.
c. offer a customized product to every consumer.
d. offer a standard product to every consumer.
e. make more money.

3. Market segmentation is a logical outgrowth of:

a. the demand function.
b. the supply function.
c. efficiency in inventory control.
d. the marketing concept.
e. the product life cycle.

4. Which of the following is NOT a property that segments ideally should possess?

a. Identifiable.
b. Sizable.
c. Defensible.
d. Accessible.
e. Actionable.

5. With respect to properties that an international market segment should ideally possess,
the _________________ property is easily met for the target country when the
researcher examines socioeconomic variables (such as per capita income).

a. identifiable
b. sizable
c. defensible
d. accessible
e. actionable

6. With respect to properties that an international market segment should ideally possess,
the ____________________ property is important when the target country has
differences in the quality of the media infrastructure (such as the absence of
commercial television).

a. identifiable
b. sizable
c. stable
d. accessible
e. actionable

7. With respect to properties that an international market segment should ideally possess,
the ____________________ property is important (for market segmentation to
be meaningful) when effective marketing programs involving the 4 Ps can be
developed to evoke the desired response from the target segment.

a. measurable
b. sizable
c. responsive
d. accessible
e. actionable

8. ______________________ plays a major role in global marketing research.

a. Business segmentation
b. Quality segmentation
c. Firm segmentation
d. Country segmentation
e. Local segmentation

9. All of the following are reasons for international marketers to implement international
market segmentation EXCEPT:

a. country screening.
b. government mandate.
c. global market research.
d. positioning strategy.
e. entry decisions.

10. When market analysts examine indicators and classify countries into consideration
piles (based on some criteria) that are doing __________________________.

a. country screening
b. government research
c. global market research
d. positioning strategy
e. country quadrant positioning

11. Given the sheer number of countries in which many companies operate, doing
marketing research in each one of them is often inefficient. One approach to
reduce this problem is to narrow the list of those countries that might be examined by
grouping prospective markets into _____________________ countries.

a. financial categories for
b. clusters of homogeneous
c. clusters of heterogeneous
d. dissimilar qualifiers for
e. statistical tracts for

12. Cadbury-Schweppes was confident about launching Schweppes tonic water in
Brazil, given that the beverage had done well in culturally similar countries such
as Mexico. This would be an example of which of the following reasons why
international marketers implement international market segmentation?

a. country screening.
b. government mandate.
c. global market research.
d. positioning strategy.
e. entry decisions.

13. Cathay Pacific (a Hong Kong based airline carrier) recently wanted to increase
services to its Asian customers. It added a wide variety of Asian meals and
entertainment and introduced a new advertising slogan “The Heart of Asia.” This
would be an example of which of the following reasons why international marketers
implement international market segmentation?

a. country screening.
b. government mandate.
c. global market research.
d. positioning strategy.
e. entry decisions.

14. A persistent problem faced by international marketers is how to strike the balance
between standardization and customization. Using international marketing
segmentation to shed some light on this issue would be an example of which of the
following reasons why international marketers implement international market
segmentation?

a. country screening.
b. marketing mix policy.
c. global market research.
d. positioning strategy.
e. entry decisions.

15. A persistent problem faced by international marketers is how to strike the balance
between __________________________________.

a. standardization and generalization.
b. standardization and globalization.
c. standardization and customization.
d. standardization and positioning strategies.
e. standardization and marketing mix.

16. In a “country-as segment or aggregate segmentation,” countries are classified on a
______________ dimension or on a set of _____________dimensions.

a. single, multiple
b. single, three
c. single, five
d. single, eight
e. single, nine

17. In disaggregate international consumer segmentation, the focus is on
________consumer.

a. one
b. two
c. four
d. six
e. eight

18. Another name for universal segments is:

a. local.
b. regional.
c. transnational.
d. global.
e. multi-regional.

19. When Nokia used a global campaign to promote their new product (Nokia 900 Communicator) that combined phone, fax, e-mail, and Internet functions with the slogan “Everything. Everywhere,” they were appealing to a(n) ______________________ segment.

a. diverse
b. universal
c. combination
d. customized
e. international

20. When marketers use a(n) _________________ segment, they focus on local
segments that differ from country to country.

a. unique/diverse
b. universal
c. combination
d. customized
e. international

21. When Canon (a camera manufacturer) sold its AE-1 camera to young replacement
buyers in Japan and upscale first-time camera (35 mm single-lens reflex) buyers,
they were probably pursuing a(n) _________________________ segment policy.

a. diverse
b. universal
c. combination
d. customized
e. international

22. The first step in doing international market segmentation is deciding:

a. which criteria to use in the task.
b. which criteria to fund.
c. which customers must be evaluated.
d. how best to spend research funds.
e. none of the above.

23. According to Hakuhodo Inc., one of Japan’s biggest ad agencies, Asian women fall in to five categories. The following list contains which correct self-perceptions?

a. good students.
b. my big world.
c. thrifty shoppers.
d. family-oriented.
e. happy as I am.

24. ____________________ variables are among the most popular segmentation criteria:

a. Demographic
b. Geographic
c. Psychographic
d. Consumption
e. Lifestyle

25. Which of the following bases would probably be in use if a researcher were
examining population size, age structure, urbanization degree, and ethnic
composition?

a. psychographics.
b. socioeconomic variables.
c. culture.
d. political conditions.
e. demographics.

26. PPP is an acronym for:

a. people power parity.
b. purchasing power parity.
c. planning power parity.
d. purpose power parity.
e. positioning power parity.

27. All of the following are shortcomings of standard “per-capita income” segmentation
processes EXCEPT:

a. monetization of transactions within a country.
b. not knowing how much a household can buy.
c. gray and black sectors of the economy being accounted for.
d. income disparities.
e. a huge middle class.

28. __________________ sectors of the economy are transactions that arise outside the legitimate sector of a country’s economy.

a. Gray and black
b. Gray and white
c. Gray and blue
d. Gray and green
e. Gray and yellow

29. Another alternative to analyze buying power in a set of countries is via
_________________________.

a. demographic strata analysis
b. geographic strata analysis
c. psychographic strata analysis
d. socioeconomic strata analysis (SES)
e. none of the above

30. ___________________ publishes PPP statistics every year.

a. The World Bank
b. The International Monetary Fund
c. The World Trade Organization
d. The European Union
e. none of the above

31. The Human Development Index is published by the ____________________.

a. United Nations
b. World Bank
c. IMF
d. Asian Development Bank
e. African Development Bank

32. Behavior segmentation criteria includes the following criteria EXCEPT:

a. brand/supplier loyalty.
b. brand equity.
c. usage rate.
d. product penetration.
e. benefits sought.

33. Lifestyle segmentation is popular in __________________________.

a. manufacturing circles
b. finance circles
c. distribution circles
d. management circles
e. advertising circles

34. ______________________ is very popular in advertising circles.

a. Household segmentation
b. Lifestyle segmentation
c. Monetary segmentation
d. Fiscal segmentation
e. Economic segmentation

35. The Roper Consulting Valuescope study on lifestyle segmentation is based on the
following global values segments EXCEPT:

a. achievers.
b. traditionals.
c. power seekers.
d. nurturers.
e. hedonists.

36. According to the Roper Consulting Valuescope study on lifestyle segmentation,
_______________ are very concerned about social issues.

a. achievers
b. traditionals
c. nurturers
d. hedonists
e. none of the above

37. According to the Roper Consulting Valuescope study on lifestyle segmentation,
_______________ are very concerned about family and friends.

a. achievers
b. traditionals
c. nurturers
d. hedonists
e. none of the above

38. According to the Roper Consulting Valuescope study on lifestyle segmentation,
_______________ are very concerned about status.

a. achievers
b. traditionals
c. nurturers
d. hedonists
e. none of the above

39. According to the Roper Consulting Valuescope study on lifestyle segmentation,
_______________ are looking for new experiences.

a. achievers
b. traditionals
c. nurturers
d. hedonists
e. none of the above

40. Value-based segmentation schemes are not always ________________.

a. profitable
b. collectable
c. actionable
d. measurable
e. none of the above

41. ______________________ are not stable, since values typically change over time.

a. Value segments
b. Political segments
c. Economic segments
d. International segments
e. Global segments

42. According to the text, some marketing scholars refer to __________________ as
the fifth P (next to product, price, promotion, and place) because of its importance in
target marketing.

a. power
b. planning
c. positioning
d. purchasing
e. people

43. In the international market segmentation game, developing a positioning theme
involves the quest for a:

a. large segment.
b. profitable segment.
c. unique selling proposition (USP).
d. strong manager.
e. a friendly host government.

44. Within the arena of positioning strategy, the battle is for:

a. the mind of your target customer.
b. the high ground.
c. the new territory.
d. the competition’s heartland.
e. the best market share.

45. The formulation of positioning strategy includes the following EXCEPT:

a. identify the relevant set of competing products or brands.
b. determine current perceptions held by consumers about the products.
c. develop possible positioning themes.
d. develop a uniform positioning strategy for every brand in the company.
e. screen the positioning alternatives and select the most appealing one.

46. Two positioning strategies available to international marketers include:

a. uniform and computerized positioning strategies.
b. uniform and regional positioning strategies.
c. universal and localized positioning strategies.
d. uniform and localized positioning strategies.
e. none of the above.

47. According to the textbook, Samsung, a major South Korean consumer electronics
manufacturer, intended to take the world number-one position in all its main product
markets by 2005. If we apply the concept of international positioning strategies,
Samsung is seeking which of the following positioning strategies:

a. local positioning strategy.
b. regional positioning strategy.
c. ethnocentric positioning strategy.
d. polycentric positioning strategy.
e. uniform positioning strategy.

48. In the area of international positioning, ___________________ themes often run the
risk of being bland and not very inspired.

a. external
b. universal
c. internal
d. local
e. none of the above

49. The “global citizen” theme encourages:

a. local positioning.
b. regional positioning.
c. bi-lateral positioning.
d. universal positioning.
e. none of the above.

50. If the firm decides to opt for different segments on a country-by-country basis, the
norm is to also __________________ the positioning appeals.

a. externalize
b. localize
c. internalize
d. globalize
e. none of the above

51. Very rarely do ______________________ themes work globally.

a. positioning
b. psychograhic
c. demographic
d. geographic
e. segmentation

52. A special case where universal positioning clearly makes sense is the ___________.

a. regional citizen
b. global citizen
c. European citizen
d. Asian citizen
e. none of the above

53. Appeals that work in one culture do not necessarily work in others because of the
following reasons EXCEPT:

a. human resources.
b. cultural characteristics.
c. buying power.
d. competitive climate.
e. product life cycle stage.

54. Land Rover is an example of a brand where ________________ positioning is hard to
implement.

a. transnational
b. European
c. global
d. local
e. regional

55. Values tend to be:

a. material bound
b. culture bound
c. language bound
d. time bound
e. none of the above

56. GCCP stands for ___________________________.

a. global consumer culture protocol
b. global consumer culture positioning
c. global consumer culture planning
d. global consumer culture perception
e. global consumer culture psychology

57. FCCP stands for ___________________________.

a. foreign consumer culture positioning
b. fast consumer culture positioning
c. financial consumer culture positioning
d. French consumer culture positioning
e. none of the above

58. LCCP stands for ___________________________.

a. legal consumer culture positioning
b. longitudinal consumer culture positioning
c. local consumer culture positioning
d. labor consumer culture positioning
e. none of the above

59. A firm’s positioning strategy depends on the following factors EXCEPT:

a. strategic alliances.
b. target market.
c. product category.
d. positioning approach.
e. economic development.

60. In emerging markets that are still in an early stage of economic development, a ___________ approach might be more beneficial than ______________.

a. GCCP; UCCP
b. GCCP; NCCP
c. GCCP; XCCP
d. GCCP; LCCP
e. none of the above

61. Sometimes local brands fight