MKT 505 Midterm and Final Exam – New

MKT 505 Exam Midterm and Final Exam – Strayer New
MKT 505 Midterm + Final Exam Solution
Click On The Link Below To Purchase
Instant Download
http://www.budapp.net/MKT-505-Exam-Midterm-and-Final-Exam-Strayer-New-MKT505MFE.htm

 

We have all assignments, discussions and exams for MKT 505 and other classes

MKT505 Midterm + Final Exam Solved
Chapter 1-17

Global Marketing, 7e (Keegan/Green)
Chapter 1 Introduction to Global Marketing

1) With rapid global market expansion, McDonald’s identity as the quintessential American fast-food restaurant is becoming blurred.
Answer:
Diff: 1 Page Ref: 3
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

2) An organization that engages in global marketing focuses its resources and competencies on global market opportunities and threats.
Answer:
Diff: 1 Page Ref: 4
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

3) Starbucks is building on its loyalty card and rewards program in the United States with a smartphone app that enables customers to pay for purchases electronically. This is an example of Market Penetration.
Answer:
Diff: 2 Page Ref: 4
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

4) Starbucks is entering India via an alliance with the Tata Group. The next phase will likely involve opening Starbucks outlets in Tata’s upscale Taj Hotels in India. These are examples of Market Penetration.
Answer:
Diff: 2 Page Ref: 4
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking

5) The perceived value equation can be represented as Value = Price/Benefits.
Answer:
Diff: 1 Page Ref: 5
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

6) The transformation of formerly local or national industries into global ones is a part of a broader economic process of globalization.
Answer:
Diff: 1 Page Ref: 6
AACSB: Reflective Thinking
Objective: 8
Question Type: Application

7) If Nestlé decides not to market biscuits (cookies) in the United States due to competitive reasons, it is considered as a lack of strategic focus and missed opportunity.
Answer:
Diff: 2 Page Ref: 7
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

8) Value, competitive advantage, and the focus required to achieve them are universal in their relevance and should guide global marketing efforts in any part of the world.
Answer:
Diff: 2 Page Ref: 8
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

9) The discipline of marketing is universal, and such marketing practices do not vary from country to country.
Answer:
Diff: 1 Page Ref: 8
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

10) The way a company addresses recognition of the extent to which programs can be expanded worldwide and adaptations required to do so is a reflection of its global marketing strategy.
Answer:
Diff: 2 Page Ref: 8
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
11) Nike dropped their well known tag line “Just do it” in advertising women’s clothing in Europe and replaced it by the slogan “Here I am” since college-age women in Europe are not as competitive about sports as men are.
Answer:
Diff: 2 Page Ref: 10
AACSB: Analytic Skills
Objective: 3
Question Type: Critical thinking

12) Nations referred to as MINTs, which hold great potential marketing opportunities, are Mexico, India, Nigeria, and Turkey.
Answer:
Diff: 2 Page Ref: 12
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

13) Global localization means that a successful global marketer must have the ability to think locally and act globally.
Answer:
Diff: 2 Page Ref: 12
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

14) The Coca-Cola Company supports its Coke, Fanta, and PowerAde brands with marketing mix elements that are both global and local.
Answer:
Diff: 2 Page Ref: 12
AACSB: Analytic Skills
Objective: 3
Question Type: Application

15) McDonald’s global marketing strategy is based primarily on local marketing mix elements.
Answer:
Diff: 2 Page Ref: 13
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
16) McDonald’s home delivery of burgers in India is an example of unusual standardized global marketing practice.
Answer:
Diff: 2 Page Ref: 14
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

17) Harley-Davidson’s motorcycles competitive advantage is based in part on its “Made in the USA” positioning.
Answer:
Diff: 2 Page Ref: 14
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

18) Gap is a global brand, but recently the company has struggled to connect with customers in the United States.
Answer:
Diff: 2 Page Ref: 15
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

19) Wal-Mart is the largest corporation, based on revenues, according to the Fortune 500 Global ranking for 2011.
Answer:
Diff: 1 Page Ref: 16
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

20) Examining the size of individual product markets, measured in terms of annual sales, provides another perspective on global marketing’s importance.
Answer:
Diff: 2 Page Ref: 16
AACSB: Reflective Thinking
Objective: 4
Question Type: Application
21) The form and substance of a company’s response to global market opportunities depend greatly on management’s assumptions or beliefs about the nature of the world.
Answer:
Diff: 3 Page Ref: 16
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

22) Ethnocentric companies that conduct business outside the home country adhere to the notion that the products that succeed in the home country are superior.
Answer:
Diff: 3 Page Ref: 17
AACSB: Analytic Skills
Objective: 3
Question Type: Definitional

23) Today, ethnocentrism is one of the major internal weaknesses that must be overcome if a company is to transform itself into an effective global competitor.
Answer:
Diff: 2 Page Ref: 17
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

24) The term “polycentric” describes management’s belief or assumption that each country in which a company does business is unique.
Answer:
Diff: 2 Page Ref: 18
AACSB: Analytic Skills
Objective: 3
Question Type: Definitional

25) Unilever’s Rexona deodorant brand had 30 different package designs and 48 different formulations. This is an example of ethnocentrism.
Answer:
Diff: 1 Page Ref: 18
AACSB: Reflective Thinking
Objective: 3
Question Type: Application
26) A U.S. company that focuses on the countries included in the North American Free Trade Agreement (NAFTA) has a regiocentric orientation.
Answer:
Diff: 3 Page Ref: 18
AACSB: Analytic Skills
Objective: 3
Question Type: Application

27) A European company that focuses its attention on Europe can be considered to have regiocentric orientation.
Answer:
Diff: 2 Page Ref: 18
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

28) A company with a geocentric orientation views the world as a potential market and strives to develop integrated global strategies.
Answer:
Diff: 1 Page Ref: 18
AACSB: Dynamics of Global Economy
Objective: 3
Question Type: Synthesis

29) Geocentric orientation represents true global marketing since it views the entire world as a potential market and develops global strategy.
Answer:
Diff: 3 Page Ref: 18
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

30) An ethnocentric management orientation is preferable to a geocentric orientation.
Answer:
Diff: 2 Page Ref: 20
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

31) When a company establishes a site on the Internet, it automatically becomes global.
Answer:
Diff: 2 Page Ref: 19
AACSB: Use of IT
Objective: 3
Question Type: Definitional
32) The pressure for globalization is intense when new products require major investments and long periods of development time.
Answer:
Diff: 2 Page Ref: 21
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

33) The economic growth has reduced resistance that might otherwise have developed in response to the entry of foreign firms into domestic economies.
Answer:
Diff: 3 Page Ref: 23
AACSB: Dynamics of Global Economy
Objective: 5
Question Type: Definitional

34) In the context of global marketing, leverage means some type of advantage that a company enjoys by virtue of the fact that it has experience in its home country.
Answer:
Diff: 3 Page Ref: 24
AACSB: Analytic Skills
Objective: 5
Question Type: Definitional

35) Companies that cannot formulate or successfully implement a coherent global strategy may lose their independence.
Answer:
Diff: 3 Page Ref: 25
AACSB: Analytic Skills
Objective: 6
Question Type: Definitional

36) A company that is nearsighted and ethnocentric will not expand geographically.
Answer:
Diff: 2 Page Ref: 25
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional
37) The term globaphobia is sometimes used to describe an attitude of hostility toward trade agreements, global brands or company policies that appear to result in hardship for some individuals or countries while benefiting others.
Answer:
Diff: 3 Page Ref: 26
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

38) Nontariff barriers (NTBs) are monetary restrictions on cross-border trade.
Answer:
Diff: 2 Page Ref: 26
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

39) When management moves to integrate and coordinate activities on a regional basis, the decision reflects an ethnocentric orientation.
Answer:
Diff: 2 Page Ref: 28
AACSB: Analytic Skills
Objective: 5
Question Type: Definitional

40) The dynamic interplay of several driving and restraining forces shapes the importance of global marketing.
Answer:
Diff: 2 Page Ref: 28
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

41) When you call United Airlines for a reservation on a toll free number and get a response from an operator in Mumbai, this is an example of:
A) anti-globalization.
B) global marketplace.
C) multilingual expression.
D) discrimination.
E) E-ticketing.
Answer:
Diff: 2 Page Ref: 4
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional
42) Slumdog Millionaire, a movie which received several awards and an Oscar in 2009, was filmed on a location in and around:
A) London.
B) San Francisco.
C) Cancun.
D) Mumbai.
E) Moscow.
Answer:
Diff: 1 Page Ref: 3
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

43) A fundamental difference between regular marketing and global marketing is:
A) the lack of marketing mix.
B) the scope of activities.
C) the lack of strategic planning.
D) the focus on resources.
E) the lack of communication.
Answer:
Diff: 2 Page Ref: 4
AACSB: Analytic Skills
Objective: 3
Question Type: Definitional

44) Starbucks is building on its loyalty card and rewards program in the United States with a smartphone app that enables customers to pay for purchases electronically. The app displays a bar code that the barista can scan. This is an example of:
A) Market Penetration.
B) Market Development.
C) Market Diversification.
D) Product Development.
E) Global Marketing.
Answer:
Diff: 2 Page Ref: 4
AACSB: Use of IT
Objective: 1
Question Type: Definitional
45) Starbucks is entering India via an alliance with the Tata Group. Phase one calls for sourcing coffee beans in India and marketing them at Starbucks stores throughout the world. This is an example of:
A) Market Penetration.
B) Market Development.
C) Market Diversification.
D) Product Development.
E) Regular Marketing.
Answer:
Diff: 2 Page Ref: 4
AACSB: Analytic Skills
Objective: 1
Question Type: Critical thinking

46) The essence of marketing worldwide is to surpass the competition in creating perceived value, which can be represented as:
A) Value = Price/Benefits
B) Value = Benefits/Price
C) Value = Benefits x Price
D) Value = Benefits – Price
E) Value = Benefits + Price
Answer:
Diff: 2 Page Ref: 5
AACSB: Analytic Skills
Objective: 1
Question Type: Definitional

47) Renault and its rivals are racing to offer middle-class consumers a new value proposition by selling cars for the equivalent of $10,000 or less. On the heels of Renault’s success with Dacia Logan comes the $2,500 Nano from India’s Tata Motors. This illustrates that:
A) consumers are looking for low price irrespective of quality.
B) Renault is overcharging for their cars compared to their competitors.
C) higher product development costs are a driving force behind globalization.
D) market success depends on reaching a threshold of acceptable quality for consumers.
E) cars are not very popular in emerging markets like India.
Answer:
Diff: 2 Page Ref: 6
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking
48) According to Michael Porter, a global industry is one in which ________ can be achieved by integrating and leveraging operations on a worldwide scale.
A) marketing mix
B) competitive advantage
C) cross border infiltration
D) ration analysis
E) production capability
Answer:
Diff: 2 Page Ref: 7
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

49) The former chairman of Nestlé recently told an interviewer: “We are food and beverages. We are not running bicycle shops. Even in food we are not in all fields. There are certain areas we do not touch. Also, we have no soft drinks because I have said we either buy Coca-Cola or we leave it alone.” What strategic marketing principle does the chairman’s comment emphasize most specifically?
A) customer value
B) competitive advantage
C) focus on specific food and beverages
D) myopia
E) policy of dealing only with Swiss businesses
Answer:
Diff: 2 Page Ref: 7
AACSB: Reflective Thinking
Objective: 1
Question Type: Synthesis

50) Nike recently adopted the slogan “Here I am” for its pan-European clothing advertising targeting women. The decision to drop the famous “Just do it” tag line was based on the research indicating that:
A) the famous slogan did not have accurate translation in European languages.
B) Europeans do not like tag lines that portray American thinking.
C) college-age women in Europe are not as competitive about sports as men are.
D) the old slogan conveys superiority of men over women.
E) European women want to differentiate themselves from men.
Answer:
Diff: 2 Page Ref: 9
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Application
51) The decision to enter one or more particular markets outside the home country depends on all of the mentioned factors except:
A) company’s resources.
B) company’s age.
C) company’s managerial mind-set.
D) nature of opportunities.
E) threats.
Answer:
Diff: 2 Page Ref: 10
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

52) Two decades ago, professor Ted Levitt wrote a classic Harvard Business Review article titled “The Globalization of Markets.” Which of the following statements about the author and the article is accurate?
A) Levitt urged companies to adopt products on a country-by-country basis.
B) There was universal agreement about his thesis that the world is becoming homogeneous.
C) Levitt urged companies to develop standardized products that could be marketed worldwide with little adaptation.
D) Levitt warned of the coming backlash against globalization.
E) Levitt did not recommend developing standardized products.
Answer:
Diff: 2 Page Ref: 11
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis

53) Coca-Cola achieved success in the Japanese market primarily by:
A) standardization of marketing mix elements.
B) global localization.
C) vending machine operations.
D) selecting market mix options.
E) homogenization.
Answer:
Diff: 2 Page Ref: 11
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking
54) A company that engages in global marketing:
A) pursues a “one size fits all” strategy by creating identical products for homogeneous markets.
B) customizes special products for each world country or region.
C) creates both standardized and localized products.
D) nurtures an ethnocentric management orientation.
E) uses localized products only.
Answer:
Diff: 2 Page Ref: 12
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

55) Statements that illustrate the success of global marketing include all of the following except:
A) the Coca-Cola company supports its Coke brand by utilizing global and local marketing mix.
B) Apple is synonymous with cutting-edge innovation and high-tech design.
C) Italy’s Benetton utilizes marketing as a knee-jerk reaction to world marketing needs.
D) the backbone of Caterpillar’s global success is its network of dealers.
E) Germany’s reputation for engineering and manufacturing provides a competitive advantage.
Answer:
Diff: 2 Page Ref: 13
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis

56) McDonald’s serves McAloo Tikki Burger in India, McRice Burger in Malaysia, McOZ Burger in Australia, Kiwi Burger in New Zealand, and McHuevo Burger in Uruguay and McSamurai Burger in Thailand. These menu variations are examples of:
A) a combination of global and local marketing mix elements.
B) a reflection of failure of US menu items in those countries.
C) a deviation from successful marketing practices.
D) a replacement of standard menu names with fancy names.
E) a selection of menu items that can be sold eventually in U.S. markets.
Answer:
Diff: 2 Page Ref: 14
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking
57) All of the following correctly states McDonald’s approach to standardization and adaptation of the marketing mix except:
A) McDonald’s standardizes some product elements and adapts others.
B) McDonald’s standardizes some place elements and adapts others.
C) McDonald’s standardizes some promotion elements and adapts others.
D) McDonald’s standardizes some price elements and adapts others.
E) McDonald’s standardizes all product elements.
Answer:
Diff: 1 Page Ref: 14
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

58) Examples of effective global marketing by McDonald’s include both standardized and localized marketing mix elements. Which of the following does NOT represent a localized element?
A) It serves McAloo tikki potato burger in India.
B) It uses advertising slogan “I’m lovin’ it.”
C) It operates themed dining cars on the Swiss national rail system.
D) It has home delivery service in India.
E) It has slang nicknames such as MakDo in Philippines and McDo in France.
Answer:
Diff: 2 Page Ref: 14
AACSB: Multicultural and Diversity
Objective: 6
Question Type: Critical thinking

59) As of 2010, Gap operated 2,500 stores in the United States and more than 500 stores internationally. The company sources most of its clothing from apparel factories in Honduras, the Philippines, India, and other low-wage countries. If Gap would like to open more stores in Japan, primary consideration should include:
A) industry conditions.
B) sources of competitive advantage.
C) the condition of the apparel market worldwide.
D) demand in Japan for U.S. style garments.
E) all of the above
Answer:
Diff: 2 Page Ref: 14
AACSB: Analytic Skills
Objective: 4
Question Type: Application

60) Measured by national income, the United States represents the world’s largest single market for goods and services. Roughly what percentage of world income is found outside the U.S.?
A) 25%
B) 50%
C) 75%
D) 95%
E) 35%
Answer:
Diff: 2 Page Ref: 15
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

61) Even though Germany is the largest single-country market in Europe, what percent of the world market potential for German companies is outside Germany?
A) 40%
B) 55%
C) 74%
D) 94%
E) 85%
Answer:
Diff: 2 Page Ref: 16
AACSB: Analytic Skills
Objective: 4
Question Type: Critical thinking

62) According to the Fortune global 500 companies for 2011, the largest corporation based on revenue is:
A) Exxon Mobil.
B) Toyota Motors.
C) Wal-Mart stores.
D) General Electric.
E) Citigroup.
Answer:
Diff: 2 Page Ref: 16
AACSB: Analytic Skills
Objective: 4
Question Type: Application

63) Based on 2011 rankings of Fortune Global 500 companies, the world’s most valuable car company is:
A) GM.
B) Daimler AG.
C) Toyota.
D) Ford.
E) Chrysler.
Answer:
Diff: 2 Page Ref: 16
AACSB: Analytic Skills
Objective: 4
Question Type: Critical thinking

64) Based on the size of the market in U.S. dollars, the leading consumer products are:
A) cell phones.
B) bottled water.
C) cigarettes.
D) video games.
E) recorded music.
Answer:
Diff: 3 Page Ref: 16
AACSB: Analytic Skills
Objective: 4
Question Type: Application

65) Based on the size of the market in US dollars, the second highest consumer products are:
A) luxury goods.
B) cell phones.
C) cigarettes.
D) bottled water.
E) recorded music.
Answer:
Diff: 3 Page Ref: 16
AACSB: Analytic Skills
Objective: 4
Question Type: Application
66) Based on the total annual units sold in the worldwide market, the leading product category is:
A) flat-panel TV sets.
B) cigarettes.
C) cell phone handsets.
D) cars and light trucks.
E) HDTV sets.
Answer:
Diff: 3 Page Ref: 16
AACSB: Analytic Skills
Objective: 4
Question Type: Application

67) A person who assumes that his or her home country is superior to the rest of the world is said to have:
A) ethnocentric orientation.
B) polycentric orientation.
C) regiocentric orientation.
D) geocentric orientation.
E) no correct answer
Answer:
Diff: 2 Page Ref: 17
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

68) The cell phone divisions of Toshiba, Sharp, and other Japanese companies prospered by focusing on the domestic market. When handset sales in Japan slowed a few years ago, the Japanese companies realized that Nokia, Motorola, and Samsung already dominated key world markets. Atsutoshi Nishida, president of Toshiba, noted, “We were thinking only about Japan. We really missed our chance.” This example illustrates:
A) geocentric orientation.
B) regiocentric orientation.
C) polycentric orientation.
D) ethnocentric orientation.
E) poor globalization orientation.
Answer:
Diff: 2 Page Ref: 17
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional
69) Unilever, the Anglo-Dutch consumer products company, at one time had 30 different package designs and 48 different formulations for its Rexona deodorant brand. This is an example of:
A) ethnocentric orientation.
B) polycentric orientation.
C) regiocentric orientation.
D) geocentric orientation.
E) transnational orientation.
Answer:
Diff: 2 Page Ref: 18
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

70) Transnational companies, such as Toyota and Honda, have characteristic features that include:
A) being in both global markets and utilizing global supply chains.
B) characterized by a mind-set of being “stateless.”
C) using both localized and standardized elements in marketing programs.
D) decisions made on the basis of ongoing research.
E) all of the above
Answer:
Diff: 3 Page Ref: 19
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

71) Nestlé, Unilever, GlaxoSmithKline, and Royal Philips Electronics can be considered transnational companies on the basis of:
A) sales outside the home country to total sales.
B) assets outside the home country to total assets.
C) employees outside the home country to total employees.
D) headquartered in a relatively small home-country market.
E) all of the above
Answer:
Diff: 3 Page Ref: 19
AACSB: Analytic Skills
Objective: 6
Question Type: Application
72) A number of multilateral trade agreements have accelerated the pace of global integration which include:
A) NAFTA.
B) GATT.
C) WTO.
D) EU.
E) all of the above
Answer:
Diff: 1 Page Ref: 20
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

73) Pfizer, Merck, Novartis, and other pharmaceutical companies have little choice but to engage in global marketing since:
A) there is little demand for their products in home countries.
B) their research centers are located overseas.
C) no single market is large enough to recover costs incurred in research.
D) there is more demand overseas for their products.
E) technology is not available in home countries.
Answer:
Diff: 2 Page Ref: 22
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

74) In a recent book, Daniel Yergin and Joseph Stanislaw wrote “It is the greatest sale in the history of the world. Governments are getting out of businesses by disposing of what amounts to trillions of dollars of assets. Everything is going  from steel plants and phone companies …. to hotels, restaurants, and nightclubs.” This is an indication of:
A) the fact that governments can make more money by selling assets.
B) privatization is becoming a driving force for global marketing.
C) these businesses are considered as closed markets.
D) foreign companies are competing with governments.
E) there is less demand for these type of companies.
Answer:
Diff: 2 Page Ref: 23
AACSB: Analytic Skills
Objective: 6
Question Type: Definitional
75) When a country like China is experiencing rapid economic growth, policymakers are likely to:
A) look more favorably on outsiders.
B) look less favorably on outsiders.
C) experience more resistance toward outsiders.
D) feel threatened by outsiders.
E) no correct answer
Answer:
Diff: 2 Page Ref: 23
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

76) H.F. Iskander, general manager of Chevron’s Kuwait office, stated “Chevron is pumping oil in different locations all over the world … there isn’t a rock we haven’t drilled through. We centralize all that knowledge at our headquarters, analyze it, sort it out, and that enables us to solve any oil-drilling problem anywhere.” From the global marketing point of view this is an example of a global company:
A) that is hungry to exploit natural resources.
B) that is trying to be first to explore oil.
C) that it is trying to solve world problems.
D) that gains leverage through experience transfers.
E) that does not have easy access to information.
Answer:
Diff: 2 Page Ref: 24
AACSB: Reflective Thinking
Objective: 6
Question Type: Synthesis

77) Japan’s giant Matsushita Electric Company achieved scale economies by exporting VCRs, televisions, and other consumer electronics products throughout the world from world-scale factories in Japan. This is an example of the fact that:
A) scale economies were a cornerstone of Japanese success in the 1970s and 1980s.
B) leverage from scale economies is not limited to manufacturing.
C) a global company can achieve the same economies on a global scale.
D) the larger scale of the global company also creates opportunities to improve corporate staff competence and quality.
E) all of the above
Answer:
Diff: 2 Page Ref: 24
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional
78) Despite the impact of the driving forces, several restraining forces may slow a company’s efforts to engage in global marketing. These restraining forces may include all of the following except:
A) management myopia.
B) national controls.
C) opposition to globalization.
D) newcomers from emerging markets.
E) organizational culture.
Answer:
Diff: 2 Page Ref: 25
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

79) In the United States, some people believe that globalization has depressed the wages of American workers and resulted in the loss of both blue-collar and white-collar jobs. This is an example of:
A) discrimination.
B) domination.
C) globaphobia.
D) management myopia.
E) economic crisis.
Answer:
Diff: 2 Page Ref: 26
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

80) McDonald’s restaurants are found in more than 118 countries. To ensure high levels of consistency and quality, the company’s far-flung restaurant system incorporates many standardized elements (e.g. restaurant design, burgers/fries/soft drinks as basic menu offerings). However, McDonald’s also prides itself on sourcing many of its food inputs (e.g. potatoes and dairy products) in individual host countries. McDonald’s strives to be locally responsiveit creates new menu items specifically designed with local eating customs and preferences in mind. Typically, McDonald’s forms joint ventures with local partners, a tactic that ensures that a local “face” is associated with the company. Finally, McDonald’s has been in many country markets long enough that a new generation of consumers has grown up with McDonald’s and are not aware of the company’s U.S. origins. On the basis of this summary, what is the highest stage of corporate development that McDonald’s arguably has achieved?
A) international
B) multinational
C) global
D) transnational
E) myopic
Answer:
Diff: 3 Page Ref: 30-31
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis

81) What is “global marketing” and how does it differ from “regular marketing”? Giving examples of at least one major corporation, explain these differences.
Answer:

82) What is meant by competitive advantage? Explain, giving examples as to how globalization presents companies with unprecedented opportunities to reconfigure themselves.
Answer:

83) What are the dimensions of global marketing strategy (GMS) that pertain to marketing management? Explain in detail giving examples.
Answer:

84) Describe how the global marketing strategy is different when compared to that of single country marketing.
Answer:

85) The Coca-Cola Company has convincingly demonstrated that the ability to think globally and act locally can be a source of competitive advantage. Justify this statement using examples.
Answer:

86) Using McDonald’s as an example, show how effective global marketing can be successfully achieved.
Answer:

87) The form and substance of a company’s response to global market opportunities depend greatly on management’s assumptions or beliefs. What is meant by this statement?
Answer:

88) How do ethnocentric orientations of a company differ from polycentric orientations? Give examples of how companies react under both orientations.
Answer:

89) Global marketing does not necessarily mean operating everywhere since there are forces affecting global integration and global marketing. Justify this statement using examples based on the world economic trends.
Answer:

90) List and briefly describe the forces affecting local integration and global marketing.
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 2 The Global Economic Environment

1) The history of twentieth-century world economic thought has been called a “battle of ideas.”
Answer:
Diff: 1 Page Ref: 34
AACSB: Dynamics of Global Economy
Objective: 1
Question Type: Definitional

2) The Cold War decades that followed World War II saw the East and the West jockeying for geopolitical advantage.
Answer:
Diff: 2 Page Ref: 35
AACSB: Dynamics of Global Economy
Objective: 1
Question Type: Definitional

3) People or organizations with needs and wants and the willingness and ability to buy or sell represent the definition of a market.
Answer:
Diff: 1 Page Ref: 35
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

4) During the past two decades production has become “uncoupled” from employment.
Answer:
Diff: 2 Page Ref: 36
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

5) Gross domestic product (GDP), a measure of a nation’s economic activity, is calculated by adding consumer spending (C), investment spending (I), government purchases (G), and net exports (NX).
Answer:
Diff: 2 Page Ref: 36
AACSB: Analytic Skills
Objective: 1
Question Type: Definitional
6) Kleptocracy refers to rampant corruption and bribery.
Answer:
Diff: 2 Page Ref: 37
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

7) Despite talk of creating a Silicon-Valley-type development in suburban Moscow, some observers have begun asking whether it is time to take the “R” out of BRIC.
Answer:
Diff: 2 Page Ref: 37
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

8) The lack of employment as seen in the recent times is indicative of the fact that manufacturing is in decline.
Answer:
Diff: 1 Page Ref: 38
AACSB: Dynamics of Global Economy
Objective: 1
Question Type: Definitional

9) Due to globalization, it is easier to categorize economic systems within the confines of a four-cell matrix.
Answer:
Diff: 2 Page Ref: 39
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

10) Today, market capitalism is widely practiced around the world, most notably in North America and the European Union.
Answer:
Diff: 2 Page Ref: 39
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

11) In centrally planned socialism economic systems, the state allocates resources, whereas production resources are privately owned.
Answer:
Diff: 1 Page Ref: 40
AACSB: Dynamics of Global Economy
Objective: 2
Question Type: Definitional
12) In centrally planned socialism economic systems, since demand typically exceeds supply, the elements of the marketing mix are not used as strategic variables.
Answer:
Diff: 2 Page Ref: 40-41
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

13) In Sweden, where the government controls two-thirds of all expenditures, resource allocation is more “market” oriented than “command” oriented.
Answer:
Diff: 1 Page Ref: 41
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

14) According to the 2011 Index of Economic Freedom compiled by the Heritage Foundation, Hong Kong is ranked as having the highest degree of economic freedom.
Answer:
Diff: 1 Page Ref: 42
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

15) One positive note about daily life in Venezuela is that the government subsidizes gasoline production, therefore 5 gallons of gas costs only 25 cents!
Answer:
Diff: 1 Page Ref: 43
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

16) As per the listings of the 2011 Index of Economic Freedom by the Heritage Foundation, there is a high correlation between the degree of economic freedom and the extent to which a nation’s mixed economy is heavily market-oriented.
Answer:
Diff: 2 Page Ref: 43
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
17) The World Bank has developed a four-category classification system for stages of marketing development which uses GDP as a base.
Answer:
Diff: 3 Page Ref: 45
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

18) The World Bank has developed a four-category classification system for stages of marketing development which uses per capita gross national income (GNI) as a base.
Answer:
Diff: 2 Page Ref: 45
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

19) About 13% of the world population is included into the low-income economic countries category as per the World Bank classification system.
Answer:
Diff: 2 Page Ref: 45
AACSB: Analytic Skills
Objective: 3
Question Type: Definitional

20) Although Bangladesh is categorized in the low-income countries, they have genuine market opportunities, particularly in the garment industry.
Answer:
Diff: 2 Page Ref: 46
AACSB: Analytic Skills
Objective: 3
Question Type: Definitional

21) The United Nations designates 50 countries in the bottom ranks of the low-income category as least-developed countries (LDCs); the term is sometimes used to indicate a contrast with developing countries and developed countries.
Answer:
Diff: 2 Page Ref: 46
AACSB: Analytic Skills
Objective: 3
Question Type: Definitional
22) Upper-middle-income countries, also known as industrializing or developing countries, are those that achieve the highest rates of economic growth and are also collectively referred to as Newly Incoming Economies or NIEs.
Answer:
Diff: 2 Page Ref: 47
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

23) With per capita GNI of $10,150, Venezuela is classified as an upper-middle-income country.
Answer:
Diff: 2 Page Ref: 48
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

24) According to C.K. Prahalad and A. Hammond, the poor often pay higher prices for many goods, and so there is an opportunity for efficient competitors to realize attractive margins by offering quality and low prices.
Answer:
Diff: 2 Page Ref: 49
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

25) The Coca-Cola Company recently began to address dietary and health needs in low-income countries by developing Vitango, a beverage product that can help fight anemia, blindness, and other ailments related to malnutrition.
Answer:
Diff: 2 Page Ref: 50
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

26) Global companies can also contribute to economic development by finding creative ways to preserve old-growth forests and other resources while creating economic opportunities for local inhabitants.
Answer:
Diff: 3 Page Ref: 50
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking
27) With the exception of a few oil-rich nations, the countries in the high-income category reached their present income level through a process of sustained economic growth.
Answer:
Diff: 2 Page Ref: 51
AACSB: Dynamics of Global Economy
Objective: 3
Question Type: Definitional

28) A distinction between industrial and postindustrial countries is that the postindustrial countries exhibit an orientation toward the future and stress the importance of interpersonal relationships in the functioning of society.
Answer:
Diff: 2 Page Ref: 51
AACSB: Dynamics of Global Economy
Objective: 3
Question Type: Definitional

29) The thirty nations that belong to the OECD, who believe in market-allocation economic systems and pluralistic democracy, addressed the vexing problem of bribery by requiring members to cooperate when pursuing bribery allegations.
Answer:
Diff: 3 Page Ref: 52
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

30) The CEO of Otis Elevators says they measure elevator populations in countries as units installed per thousand people. According to this, China is about half an elevator per thousand people.
Answer:
Diff: 1 Page Ref: 54
AACSB: Analytic Skills
Objective: 3
Question Type: Critical thinking

31) In China, saturation levels of private motor vehicles and personal computers (PCs) are quite high.
Answer:
Diff: 2 Page Ref: 54
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis
32) The “balance of payments” is a record of all economic transactions between the residents of a country and the rest of the world.
Answer:
Diff: 2 Page Ref: 54
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

33) A country with a positive current account balance has a trade deficit; that is, the outflow of money to pay for imports exceeds the inflow of money for sales of exports.
Answer:
Diff: 2 Page Ref: 55
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

34) The United States regularly posts deficits in both the current account and the trade balance in goods.
Answer:
Diff: 2 Page Ref: 55
AACSB: Reflective Thinking
Objective: 4
Question Type: Synthesis

35) China offsets its trade surpluses with an outflow of capital, while the United States offsets its trade deficit with an inflow of capital.
Answer:
Diff: 2 Page Ref: 55
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

36) The foreign exchange market consists literally of a buyer’s and a seller’s market where currencies are traded for both spot and future delivery on a continuous basis. The forward market is for immediate delivery and the spot market is for future delivery.
Answer:
Diff: 2 Page Ref: 57
AACSB: Dynamics of Global Economy
Objective: 6
Question Type: Critical thinking

37) In the broadest sense, a stronger Chinese currency, renminbi, should help rebalance the global economy.
Answer:
Diff: 2 Page Ref: 57
AACSB: Analytic Skills
Objective: 6
Question Type: Application

38) A country’s currency would be overvalued if the Big Mac price (converted to dollars) is lower than the U.S. price.
Answer:
Diff: 1 Page Ref: 58
AACSB: Reflective Thinking
Objective: 6
Question Type: Application

39) Hedging exchange rate exposure involves establishing an offsetting currency position such that the loss or gain of one currency position is offset by a corresponding gain or loss in some other currency.
Answer:
Diff: 2 Page Ref: 59
AACSB: Analytic Skills
Objective: 6
Question Type: Critical thinking

40) A call option in foreign currency gives the buyer the right, not the obligation, to sell a specified number of foreign currency units at a fixed price, up to the option’s expiration date.
Answer:
Diff: 2 Page Ref: 60
AACSB: Analytic Skills
Objective: 6
Question Type: Definitional
41) During the past two decades, the world economic environment has become increasingly dynamic. To achieve success, executives and marketers must take into account all of the following realities except:
A) capital movements have replaced trade as the driving force of the world economy.
B) production has become “uncoupled” from employment.
C) the world economy dominates the scene.
D) the struggle between capitalism and socialism continues.
E) the growth of e-commerce diminishes the importance of national barriers.
Answer:
Diff: 2 Page Ref: 36
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

42) That Russia is being transformed by economic change can be witnessed in all of the following observations except:
A) affluent Russians can shop at boutiques that offer Versace.
B) per capita gross national income in Russia is only $9370.
C) the banking system in Russia is robust.
D) Russian shoppers spend an estimated $4 billion each year on luxury goods.
E) the Russian government lifted all currency controls.
Answer:
Diff: 2 Page Ref: 37
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

43) Market capitalism is an economic system in which:
A) individuals and firms allocate resources and production resources that are privately owned.
B) the state has broad powers to serve the public interest as it sees fit.
C) market resource allocation is commanded by both private and state ownership.
D) there is no correlation between economic freedom and a nation’s economy.
E) market-oriented economies function in an identical manner.
Answer:
Diff: 1 Page Ref: 39
AACSB: Analytic Skills
Objective: 2
Question Type: Definitional
44) One of the distinguishing features of a Centrally Planned Capitalism economic system is:
A) all production resources are privately owned.
B) the state has broad powers to serve the public interest as it sees fit.
C) command resource allocation is utilized extensively in a private resource ownership environment.
D) market allocation policies are permitted within an environment of state ownership.
E) none of the above
Answer:
Diff: 3 Page Ref: 40
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

45) The Swedish government has significant holdings in key business sectors and has a hybrid economic system that incorporates:
A) market capitalism and centrally planned socialism.
B) centrally planned socialism and market socialism.
C) centrally planned socialism and capitalism.
D) market socialism and market capitalism.
E) market capitalism and socialistic capitalism.
Answer:
Diff: 2 Page Ref: 41
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

46) The Washington, D.C.-based Heritage Foundation survey consists of over 175 countries ranked by degree of economic freedom. The key economic variables considered for this ranking includes all of the following except:
A) taxation policy.
B) government consumption of economic output.
C) percent foreign ownership.
D) banking policy.
E) wage and price control.
Answer:
Diff: 3 Page Ref: 43
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis
47) Singapore banned the import, manufacture, and sales of chewing gum in the country since wads of gum were making a mess on sidewalks, buses, and subway trains. Violators are subject to severe penalties, and before buying a pack consumers must register their names and addresses. This, according to author William Greider, demonstrates that Singapore’s government:
A) is harshly autocratic.
B) administers a paranoid control over Singaporeans.
C) administers a paranoid control over press and politics.
D) runs an effective welfare state.
E) all of the above
Answer:
Diff: 1 Page Ref: 43
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking

48) Low-income countries have a GNI per capita of less than $996. The general characteristics shared by countries at this income level include all of the following except:
A) high literacy rates.
B) high birth rates.
C) heavy reliance on foreign aid.
D) political unrest.
E) high agricultural population.
Answer:
Diff: 1 Page Ref: 45
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

49) The greatest percentage of world GDP is in the following income group countries:
A) high-income countries.
B) upper-middle-income countries.
C) lower-middle-income countries.
D) low-income countries.
E) BRIC countries.
Answer:
Diff: 3 Page Ref: 45
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
50) The majority of the world’s population is included in the following economic category:
A) high-income countries.
B) upper-middle-income countries.
C) lower-middle-income countries.
D) low-income countries.
E) lower-upper income countries.
Answer:
Diff: 2 Page Ref: 45
AACSB: Analytic Skills
Objective: 3
Question Type: Synthesis

51) Upper-middle-income countries, also known as industrializing or developing countries, are those with GNI per capita ranging from:
A) $996 to $3,945
B) $3,946 to $12,195
C) $12,196 or higher
D) less than $995
E) no correct answer
Answer:
Diff: 2 Page Ref: 45
AACSB: Analytic Skills
Objective: 3
Question Type: Critical thinking

52) The general characteristics shared by low-income countries do not include:
A) high birth rates.
B) low literacy rates.
C) concentration in Africa south of the Sahara.
D) heavy reliance on foreign aid.
E) lack of genuine market opportunities.
Answer:
Diff: 3 Page Ref: 45
AACSB: Analytic Skills
Objective: 3
Question Type: Definitional

53) Global marketers should take note of the fact that almost half of the world’s population is located in:
A) low-income countries.
B) lower-middle income countries.
C) upper-middle income countries.
D) high-income countries.
E) higher-middle income countries.
Answer:
Diff: 1 Page Ref: 45
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

54) The United Nations designates 50 countries in the bottom ranks of the low-income category named as:
A) Low-income countries.
B) Lower-middle-income countries.
C) BRIC countries.
D) Developing countries.
E) LDCs (least-developed countries).
Answer:
Diff: 2 Page Ref: 46
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

55) Upper-Middle-income countries are also know as:
A) Industrializing countries.
B) BRIC countries.
C) Stabilized countries.
D) Manufacturing countries.
E) Agricultural countries.
Answer:
Diff: 1 Page Ref: 47
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
56) Upper-middle-income countries that achieve the highest rates of economic growth are sometimes referred to collectively as:
A) LDCs.
B) BEMs.
C) BRICs.
D) NIEs.
E) BOPs.
Answer:
Diff: 1 Page Ref: 47
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

57) Which of the following nations fall in the lower-middle-income category?
A) Burundi
B) Bangladesh
C) China
D) Venezuela
E) none of the above
Answer:
Diff: 1 Page Ref: 47
AACSB: Dynamics of Global Economy
Objective: 3
Question Type: Definitional

58) Nike produces only a small portion of its output in China, but when the firm refers to China as a “two-billion-foot market,” it is referring to the fact that:
A) the Chinese do not wear shoes.
B) the Chinese shoe market is very competitive.
C) China can develop its own shoe market.
D) it will take a long time for China to develop future market.
E) China is a potential future market.
Answer:
Diff: 2 Page Ref: 49
AACSB: Reflective Thinking
Objective: 3
Question Type: Application
59) According to the authors of the Harvard Business Review article, “Serving the World’s Poor, Profitably”, which of the following is a mistaken assumption that global companies might have about the BOP (bottom of the pyramid)?
A) The poor have no money.
B) The poor are too concerned with fulfilling basic needs to “waste” money on nonessential goods.
C) People in BOP markets will be criticized for exploiting the poor.
D) People in BOP markets cannot use advanced technology.
E) all of the above are mistaken assumptions discussed by the authors
Answer:
Diff: 2 Page Ref: 49-50
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking

60) Pursuing alternative sources of energy, such as wind and solar power, is important due to the fact that:
A) people in developing countries are more conscious about the environment.
B) global marketers are more interested in publicizing environmental issues.
C) it is easy to develop solar power in many parts of the world.
D) heavy reliance on fossil fuels contributes to global warming.
E) people worldwide can afford to buy power generated from wind and solar.
Answer:
Diff: 2 Page Ref: 50
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis

61) Which two companies are sourcing product components from small-scale enterprises, which in turn are helping preserve old-growth forests as well as economic opportunities in Brazil?
A) Ford Motor Company and Armani
B) DaimlerAG and Hermes
C) General Motors and Hugo Boss
D) Volkswagen and Coach
E) Coca-Cola and Nestlé
Answer:
Diff: 3 Page Ref: 50
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
62) Product and market opportunities in a postindustrial society are more heavily dependent upon new products and innovations than in industrial societies. An example of this would be:
A) Nestlé marketing Bono brand cookies in Brazil.
B) Coca-Cola company developing a beverage Vintago in low-income countries.
C) New e-commerce markets for interactive forms of electronic communication.
D) Hermes creating handbags called Amazonia.
E) India’s Suzlon Energy using wind-driven turbines.
Answer:
Diff: 3 Page Ref: 51
AACSB: Use of IT
Objective: 3
Question Type: Application

63) Which country is the only country classified as an emerging market among the high-income countries by influential stock market indexes?
A) United States
B) South Korea
C) Britain
D) Italy
E) Malaysia
Answer:
Diff: 3 Page Ref: 51
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

64) The Organization for Economic Cooperation and Development (OECD) is comprised of:
A) the 30 high-income countries.
B) countries that believe in market-allocation economic systems.
C) pluralistic democracies.
D) countries that demonstrate progress toward economic reform.
E) All of the above statements are applicable.
Answer:
Diff: 3 Page Ref: 51-52
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
65) The term “Expanded Triad” includes all of the following countries or regions except:
A) Japan
B) United States
C) Canada
D) Mexico
E) Russia
Answer:
Diff: 1 Page Ref: 52
AACSB: Dynamics of Global Economy
Objective: 3
Question Type: Definitional

66) Recently, the Organization for Economic Cooperation and Development (OECD) has become more focused on global issues as seen by:
A) addressing the vexing problem of bribery.
B) requiring members to cooperate when pursuing bribery allegations.
C) helping members candidly assess their own economic policies.
D) member nations working together in committees to review social policies.
E) all of the above
Answer:
Diff: 1 Page Ref: 52
AACSB: Dynamics of Global Economy
Objective: 4
Question Type: Critical thinking

67) Which of the following is true about the Triad?
A) Triad countries account for approximately one-third of world income and one- third of world population.
B) Triad countries account for approximately 75% of world income as measured by GNP.
C) Triad countries are those in which consumer products, industrial products, and the services sector each contribute one-third to GDP.
D) Triad countries account for approximately 25% of world income as measured by GNP.
E) Triad countries account for approximately 50% of world income as measured by the World Bank.
Answer:
Diff: 2 Page Ref: 52
AACSB: Reflective Thinking
Objective: 4
Question Type: Application
68) When the world’s leaders meet to discuss policy issues, non-governmental organizations (NGOs):
A) are included in meetings.
B) often take advantage of the opportunity to make their voices heard.
C) sign final documents.
D) provide educational materials.
E) are excluded from meetings.
Answer:
Diff: 1 Page Ref: 53
AACSB: Dynamics of Global Economy
Objective: 3
Question Type: Application

69) The “balance of payments” is a record of all economic transactions between the residents of a country and the rest of the world. It is divided into the current and capital accounts. Current accounts include all of the following except:
A) balance on goods.
B) portfolio investments.
C) balance on services.
D) goods imports.
E) goods exports.
Answer:
Diff: 3 Page Ref: 54
AACSB: Analytic Skills
Objective: 4
Question Type: Critical thinking

70) Measuring elevator populations in countries measured as units installed per thousand people gives an estimate of the market for elevators. That China has about one half an elevator per thousand people is indicative of:
A) low product saturation level.
B) high product saturation level.
C) high population level.
D) high technological level.
E) low technological level.
Answer:
Diff: 2 Page Ref: 54
AACSB: Analytic Skills
Objective: 4
Question Type: Synthesis
71) The United States’ growing trade deficit reflects a number of factors which exclude:
A) increased imports from China.
B) a seemingly insatiable consumer demand for imported goods.
C) the enormous cost of military operations in the Middle East.
D) the services trade surplus.
E) record goods sales to developing countries.
Answer:
Diff: 3 Page Ref: 55
AACSB: Dynamics of Global Economy
Objective: 4
Question Type: Critical thinking

72) The fastest-growing sector of world trade includes:
A) travel and entertainment.
B) accounting and legal services.
C) royalties and license fees.
D) engineering services.
E) all of the above
Answer:
Diff: 1 Page Ref: 56
AACSB: Dynamics of Global Economy
Objective: 4
Question Type: Application

73) Devaluation can result from government action or an economic crisis. In August 1998, the Russian economy imploded. As a result all of the following listed events happened except:
A) the ruble plunged in value.
B) the government defaulted on on its foreign debt obligation.
C) many Russians faced wage cuts and layoffs.
D) Russia’s economy did not recover from the impact.
E) savings were wiped out as banks collapsed.
Answer:
Diff: 3 Page Ref: 57
AACSB: Dynamics of Global Economy
Objective: 6
Question Type: Critical thinking
74) To the extent that a country sells more goods and services abroad than it buys, there will be:
A) a greater demand for its currency.
B) a surplus production of goods and services.
C) a scarcity of goods and services within the country.
D) a need for revaluation of its currency.
E) time for fluctuating its currency.
Answer:
Diff: 2 Page Ref: 57
AACSB: Dynamics of Global Economy
Objective: 6
Question Type: Definitional

75) Between the year 2001 and 2006, China bought more than $250 billion in U.S. Treasury bonds. Such purchases:
A) ensures that China’s currency is relatively weak compared to the U.S. dollar.
B) indicate that China is not sure of its economic viability.
C) show that the currency exchange rate is unpredictable.
D) predict that yuan will be devalued in the near future.
E) indicate that China’s currency is stronger than the U.S. dollar.
Answer:
Diff: 3 Page Ref: 58
AACSB: Analytic Skills
Objective: 6
Question Type: Application

76) The Big Mac Index shows that the price of Big Mac in China converted from the local currency, yuan, to be $2.18, whereas its price in the United States is $3.73. This shows that:
A) the Big Mac is more popular in China than in the United States.
B) the Big Mac is less expensive in the United States than in China.
C) the Chinese yuan is overvalued when compared to US $.
D) the Chinese yuan is undervalued against the US $.
E) beef is less expensive in China than in the United States.
Answer:
Diff: 3 Page Ref: 58
AACSB: Analytic Skills
Objective: 6
Question Type: Critical thinking

77) One Friday a few years ago, the Big Mac Index suggested that the yen was overvalued relative to the dollar by 70%. When currency markets opened on the following Monday, anyone using the Big Mac Index would conclude that yen was only 20% overvalued relative to the dollar. What is the most likely explanation for this?
A) Japan’s Central Bank acted to prop up the yen.
B) Inflation in Japan suddenly spiked upward.
C) McDonald’s headquarters stopped hedging.
D) McDonald’s Japan reduced the yen price of a Big Mac.
E) McDonald’s Japan increased the yen price of a Big Mac.
Answer:
Diff: 3 Page Ref: 58
AACSB: Analytic Skills
Objective: 6
Question Type: Critical thinking

78) If an American tourist in Tokyo pays more in dollars for the same amount of yen that she bought last week, then:
A) a Japanese tourist in San Francisco pays more in yen for the same amount of dollars that she bought the week before.
B) the dollar has depreciated relative to the yen.
C) the yen has depreciated relative to the dollar.
D) the dollar has appreciated relative to the yen.
E) the dollar and yen both remained same in value.
Answer:
Diff: 2 Page Ref: 58
AACSB: Analytic Skills
Objective: 6
Question Type: Critical thinking

79) Porsche relies on currency hedging rather than price increases in order to:
A) boost pretax profits on sales of its automobiles.
B) balance the relative value of the dollar compared to the euro.
C) protect all earnings from foreign-exchange movements.
D) generate about 45% of its sales in the United States.
E) A, B & C
Answer:
Diff: 3 Page Ref: 59
AACSB: Analytic Skills
Objective: 6
Question Type: Critical thinking

80) When countries or regions experience currency and/or economic stress, all of the following events can take place except:
A) increased exposure to certain risks.
B) new profit opportunities.
C) lower local currency financing costs.
D) bad debts occur.
E) cancellation of aircraft equipment sales.
Answer:
Diff: 1 Page Ref: 59
AACSB: Dynamics of Global Economy
Objective: 6
Question Type: Critical thinking

81) The world economic environment is changing very rapidly and has become increasingly competitive. In order to achieve success, based on author William Greider’s analysis, what are the realities that executives and marketers should take into account in such a dynamic environment?
Answer:

82) Traditionally economists identified four main types of economic systems. However, due to globalization it is harder to categorize the systems narrowly. What will be more robust descriptive criteria that can be used for classification?
Answer:

83) What are the distinguishing features between Centrally Planned Socialism and Centrally Planned Capitalism? Give examples of countries which follow these systems.
Answer:

84) A decade ago, a number of countries in Central Europe, Latin America, and Asia were expected to experience rapid economic growth. Today much attention is focused on opportunities in Brazil, Russia, India, and China. Give reasons for this shift using an example of a manufacturer.
Answer:

85) The newly independent countries of the former Soviet Union present an interesting situation: income is declining, and there is considerable economic hardship. The potential for disruption is certainly high. Are they problem cases, or are they attractive opportunities with good potential for moving out of the low-income category?
Answer:

86) Authors Prahalad and Hammond have identified several assumptions and misconceptions about the “bottom of the pyramid” (BOP). Explain these assumptions, giving examples.
Answer:

87) Some people believe that marketing is relevant only in affluent, industrialized countries, whereas others believe that the role of marketing is to identify people’s needs and wants worldwide, irrespective of the economy. Giving examples of companies involved in energy conservation and technology, support the latter argument.
Answer:

88) The table below is taken from the Big Mac Index. After reviewing it, answer the questions listed below.

Country Big Mac Prices
in U.S. dollars or local currency Official Exchange Rate (-)/(+)
Under/Over
Valuation against $, %
United States $3.73
China Yuan 14.5 6.65/$1
Norway Kroner 45 6.25/$1
Thailand Baht 70 32.3/$1
Mexico Peso 32 12.8/$1

What is meant by PPP? According to this table, which is the most overvalued and undervalued currency? Fill the last column showing under or over valuation of local currencies. Give reasons for your answer. What is the primary drawback of this index? How can this be used?
Answer:

89) What is “Economic exposure,” and how does it impact companies like Nestlé, Daimler AG, Royal Dutch Shell, and Astra Zeneca? Assess the impact of a weaker dollar on the financial performance of these corporations.
Answer:

90) Porsche relies on currency hedging rather than price increases to boost pretax profits on sales of its automobiles. What is the advantage of doing this, and how does hedging work?
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 3 Regional Market Characteristics and Preferential Trade Agreements

1) Greece exports very little, and its economy is only one-tenth the size of Germany.
Answer:
Diff: 1 Page Ref: 67
AACSB: Dynamics of Global Economy
Objective: 1
Question Type: Definitional

2) GATT (General Agreement on Tariffs and Trade) itself had no enforcement power, and the losing party in a dispute was entitled to ignore the ruling.
Answer:
Diff: 2 Page Ref: 68
AACSB: Dynamics of Global Economy
Objective: 2
Question Type: Application

3) Since GATT did not have enforcement power, and the process of dealing with disputes sometimes stretched on for years, some critics referred to it as General Agreement to Talk and Talk.
Answer:
Diff: 1 Page Ref: 75
AACSB: Dynamics of Global Economy
Objective: 2
Question Type: Definitional

4) The WTO promotes free trade on a global basis.
Answer:
Diff: 1 Page Ref: 68
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

5) It is customary for countries to notify the WTO when they enter into preferential trade agreements.
Answer:
Diff: 2 Page Ref: 69
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
6) A preferential trade agreement is a mechanism that confirms special treatment on select trading partners, thereby at times discriminating against other trading partners.
Answer:
Diff: 2 Page Ref: 76
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

7) The ultimate goal of a free trade agreement is to have standardized duties on goods that cross borders between the partners.
Answer:
Diff: 2 Page Ref: 69
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

8) A free trade area represents the most fully developed form of preferential trade agreement among nations.
Answer:
Diff: 2 Page Ref: 69
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

9) About 50% of global trade takes place among nations linked by free trade areas.
Answer:
Diff: 2 Page Ref: 69
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

10) In October 2011, the United States Congress finally ratified the long-delayed free trade areas with South Korea, Panama, and Colombia.
Answer:
Diff: 1 Page Ref: 69
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

11) A Customs Union represents the most fully developed form of preferential trade agreement among nations.
Answer:
Diff: 1 Page Ref: 69
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
12) In addition to eliminating internal barriers to trade, members of a customs union agree to the establishment of common external tariffs.
Answer:
Diff: 2 Page Ref: 69
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

13) In a Common Market there are no internal barriers to trade, and it allows for free movement of factors of production such as labor and capital.
Answer:
Diff: 2 Page Ref: 69
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

14) Under Economic Union, a doctor or lawyer qualified in one country can practice in another member country.
Answer:
Diff: 1 Page Ref: 69
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

15) Economic Union stands at the top of the pyramid in the hierarchy of Preferential Trade Agreements.
Answer:
Diff: 2 Page Ref: 71
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

16) In spite of NAFTA creating a free trade area, Mexican avocado growers can only ship their fruit to the United States during the winter months, and only to states in the northeast subject to a quota of $30 million worth of avocados per year.
Answer:
Diff: 3 Page Ref: 72
AACSB: Reflective Thinking
Objective: 3
Question Type: Application
17) NAFTA ensures that any product for sale in the U.S., Mexico, and Canada bearing a certificate of origin qualifies for tariff reduction.
Answer:
Diff: 2 Page Ref: 72
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

18) The allure of the Latin American market has been its considerable size and huge resource base.
Answer:
Diff: 1 Page Ref: 74
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

19) El Salvador, Honduras, Guatemala, Nicaragua, Costa Rica, and Panama are all members of the Central American Integration System.
Answer:
Diff: 2 Page Ref: 74
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

20) Implementation of the Central American Free Trade Agreement with the United States created a free trade area known as DR-CAFTA.
Answer:
Diff: 2 Page Ref: 75
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

21) Despite trade agreements, attempts to achieve integration in Central America have been described as uncoordinated, inefficient, and costly. There are still tariffs on imports of sugar, coffee, and alcoholic beverages.
Answer:
Diff: 2 Page Ref: 76
AACSB: Reflective Thinking
Objective: 4
Question Type: Application
22) Blessed with a location near the equator, Ecuador’s cut-flower industry generates hundreds of millions of dollars in sales each year.
Answer:
Diff: 3 Page Ref: 77
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

23) Competing ideologies in South America help explain why intraregional trade is yielding more benefits.
Answer:
Diff: 2 Page Ref: 77
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

24) Mercosur or the Common Market of the South resulted from a treaty signed by four countries: Argentina, Brazil, Paraguay, and Venezuela.
Answer:
Diff: 3 Page Ref: 77
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

25) The EU is Mercosur’s number one trading partner although Germany and France are opposed to such an agreement.
Answer:
Diff: 2 Page Ref: 78
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

26) Chile decided to become only an associate member of Mercosur since full membership would have required raising external tariffs.
Answer:
Diff: 2 Page Ref: 78
AACSB: Reflective Thinking
Objective: 4
Question Type: Application
27) CARICOM’s main objective has been to achieve a deepening of economic integration by means of a Caribbean common market.
Answer:
Diff: 2 Page Ref: 80
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

28) Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand were the original six members of the Association of Southeast Asian Nations referred to as ASEAN-6.
Answer:
Diff: 2 Page Ref: 81
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

29) ASEAN’s leaders are working to establish a fully integrated, single-market ASEAN Economic Community by 2015.
Answer:
Diff: 1 Page Ref: 82
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

30) Since 2010 there is a formal establishment of a new China/ASEAN Free Trade Agreement.
Answer:
Diff: 2 Page Ref: 83
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

31) ASEAN’s goal is to strengthen intra-regional trade relationships so members do not have to trade with China.
Answer:
Diff: 2 Page Ref: 83
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

32) Repeat visits, extended socialization with distributors, and mastering the keiretsu system are all essential for being successful in Japanese markets.
Answer:
Diff: 2 Page Ref: 83
AACSB: Reflective Thinking
Objective: 5
Question Type: Synthesis
33) The objective of the EU member countries is to harmonize national laws and regulations so that goods, services, people, and eventually money can flow freely across national boundaries.
Answer:
Diff: 2 Page Ref: 84
AACSB: Dynamics of Global Economy
Objective: 6
Question Type: Critical thinking

34) In May 1998, eleven charter members of the eurozone were chosen, which included Greece.
Answer:
Diff: 2 Page Ref: 84
AACSB: Reflective Thinking
Objective: 6
Question Type: Critical thinking

35) The Vatican City uses the euro although it is not a part of the European Union.
Answer:
Diff: 2 Page Ref: 86
AACSB: Reflective Thinking
Objective: 6
Question Type: Application

36) Coca-Cola had to delay launching its Powerade sports drink in Europe due to the lack of uniform food safety laws in the European Union.
Answer:
Diff: 2 Page Ref: 87
AACSB: Reflective Thinking
Objective: 6
Question Type: Critical thinking

37) Markets in Central and Eastern Europe are not eager to embrace well-known global brands such as McDonald’s, 3M International, and Philips Electronics.
Answer:
Diff: 2 Page Ref: 87
AACSB: Reflective Thinking
Objective: 6
Question Type: Application

38) Movements such as “the Arab Spring” have forced some of the regional leaders to make economic and political concessions.
Answer:
Diff: 2 Page Ref: 88-89
AACSB: Reflective Thinking
Objective: 7
Question Type: Synthesis
39) The six countries in the Gulf Cooperation Council (GCC) hold about 45% of the world’s known oil reserves, but production is only about 18% of world oil output.
Answer:
Diff: 1 Page Ref: 89
AACSB: Dynamics of Global Economy
Objective: 7
Question Type: Critical thinking

40) Saudi Arabia, a major oil-producing nation, posted current-account deficits since they must import most of the goods and services.
Answer:
Diff: 2 Page Ref: 89
AACSB: Reflective Thinking
Objective: 7
Question Type: Application

41) Greece is not the only European country that is in economic crisis. All of the following countries are facing problems in that region except:
A) Ireland.
B) Spain.
C) Italy.
D) Portugal.
E) Greece.
Answer:
Diff: 2 Page Ref: 67
AACSB: Dynamics of Global Economy
Objective: 1
Question Type: Application

42) The World Trade Organization, which came into existence on January 1, 1995, is the successor of another organization with the abbreviation:
A) DSB.
B) GATT.
C) FTAA.
D) NAFTA.
E) ASEAN.
Answer:
Diff: 1 Page Ref: 68
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional
43) Which form of regional cooperation agreement, when fully implemented, entails creation of a unified central bank, the use of a single currency, and common policies on agriculture, social services and welfare?
A) Free trade area
B) Customs union
C) Common market
D) Economic union
E) Dispute settlement body
Answer:
Diff: 2 Page Ref: 70
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

44) The form of economic cooperation that calls for 1) eliminating internal barriers to trade and 2) establishing common external barriers is known as a(n) ________.
A) Free trade area
B) Economic union
C) Customs union
D) Free trade area
E) Common market
Answer:
Diff: 2 Page Ref: 69
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

45) Arrange the following in order from lowest to highest level of economic integration.
A) customs union→economic union→free trade area→common market
B) economic union→customs union→common market→free trade area
C) common market→free trade area→economic union→customs union
D) free trade area→customs union→common market→economic union
E) common market→economic union→customs union→free trade area
Answer:
Diff: 3 Page Ref: 70
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking
46) As a result of CFTA, the U.S. automakers participate in the Canadian auto market, thereby benefiting due to:
A) greater economies of scale.
B) decreased production costs.
C) reduced competition.
D) ease of exporting automobiles.
E) creating a continental demand.
Answer:
Diff: 2 Page Ref: 71
AACSB: Dynamics of Global Economy
Objective: 2
Question Type: Application

47) The form of economic cooperation that calls for countries to eliminate all internal barriers to trade among themselves even while maintaining independent trade policies vis-à-vis third countries is known as a(n) ________.
A) Economic union
B) Customs union
C) Free trade area
D) Common market
E) none of the above
Answer:
Diff: 2 Page Ref: 71
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

48) NAFTA creates a free trade area in North America. However, Mexican avocado growers:
A) cannot hire illegal immigrants.
B) can only ship avocados to the U.S. in winter months.
C) have no quotas for the quantity of avocados shipped to the U.S.
D) cannot impose tariffs of their own.
E) none of the above
Answer:
Diff: 2 Page Ref: 71-72
AACSB: Reflective Thinking
Objective: 3
Question Type: Application
49) Agricultural subsidies and quotas that developed outside the multilateral framework under GATT remained a divisive issue because:
A) affluent countries protect and subsidize farm production.
B) home-market consumers pay lower prices.
C) surplus agricultural output is sold abroad at high prices.
D) agricultural land became scarce in some countries.
E) American farmers did not participate in export.
Answer:
Diff: 3 Page Ref: 79
AACSB: Analytic Skills
Objective: 2
Question Type: Definitional

50) NAFTA creates a free trade area, as opposed to a customs union or a common market, due to the fact that:
A) the agreement does not leave the door open for discretionary protectionism.
B) the governments of all three nations decided to eliminate tariffs.
C) the issue of illegal immigration from Mexico to the United States is resolved.
D) restrictions are imposed on the use of goods, services, and investments.
E) restrictions are imposed on labor movements among members.
Answer:
Diff: 3 Page Ref: 80-81
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

51) The most important preferential trading arrangements in Latin America do not include:
A) SICA.
B) the Andean Community.
C) CARICOM.
D) Mercosur.
E) BRIC.
Answer:
Diff: 2 Page Ref: 80-81
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
52) The highest level in the pyramid of hierarchy of Preferential Trade Agreements consists of:
A) free trade area.
B) customs union.
C) common market.
D) European Union.
E) economic union.
Answer:
Diff: 3 Page Ref: 71
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

53) Which member of the Central American Integration System has both the largest economy and the largest population?
A) El Salvador
B) Honduras
C) Guatemala
D) Nicaragua
E) Costa Rica
Answer:
Diff: 2 Page Ref: 73
AACSB: Analytic Skills
Objective: 4
Question Type: Critical thinking

54) Implementation of the Central American Free Trade Agreement with the United States created a free trade area known as DR-CAFTA that includes all SICA members except:
A) Honduras.
B) Guatemala.
C) Nicaragua.
D) Panama.
E) Costa Rica.
Answer:
Diff: 2 Page Ref: 75
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
55) About 70% of Ecuador’s flower harvest is exported to:
A) Bolivia.
B) United States.
C) Colombia.
D) Peru.
E) Venezuela.
Answer:
Diff: 2 Page Ref: 77
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

56) Argentina provides a good example of how a country can emerge from an economic crisis as a stronger global competitor. An example of emergency measures implemented by Argentina include:
A) Argentina reduced the duties on consumer goods.
B) Argentina devalued its currency for exports and capital transactions.
C) Argentina added tariffs on imported wines.
D) Argentina adopted the U.S. dollar as official currency.
E) Argentina added tariffs on wine produced within the country.
Answer:
Diff: 2 Page Ref: 78
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

57) The English-speaking CARICOM members in the eastern Caribbean are concerned with defending their privileged trading position with:
A) Russia.
B) China.
C) United States.
D) United Kingdom.
E) Australia.
Answer:
Diff: 3 Page Ref: 80-81
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
58) The original six members of the ASEAN (Association of Southeast Asian Nations) included all of the following countries except:
A) Singapore.
B) Thailand.
C) India.
D) Philippines.
E) Brunei.
Answer:
Diff: 2 Page Ref: 81
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

59) There are barriers in Japan for global marketers in terms of attitudes as well as laws. Barriers include all of the following except:
A) any organization wishing to compete in Japan must be committed to providing top-quality products and services.
B) repeat visits and extended socialization with distributors.
C) goods marketed should have a semblance of western products and services.
D) marketers must master the keiretsu system of tightly knit corporate alliances.
E) trust has to be built before conducting successful business.
Answer:
Diff: 2 Page Ref: 83
AACSB: Multicultural and Diversity
Objective: 5
Question Type: Synthesis

60) Which of the following ASEAN countries ranks number one in terms of two-way trade with the United States?
A) Brunei
B) Malaysia
C) Singapore
D) Thailand
E) Vietnam
Answer:
Diff: 2 Page Ref: 83
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional
61) The Maastricht Treaty called for:
A) the creation of an Asia Free Trade Area (AFTA).
B) the creation of an economic and monetary union (EMU) in Europe.
C) Chile’s acceptance into Mercosur.
D) the purchase of CDs and tapes from distributors in Europe.
E) the creation of the seven-nation European Free Trade Association (EFTA).
Answer:
Diff: 2 Page Ref: 84
AACSB: Dynamics of Global Economy
Objective: 6
Question Type: Definitional

62) The introduction of the euro by EU resulted in multifaceted advantages which include:
A) elimination of costs associated with currency conversion.
B) fixed exchange rate worldwide.
C) elimination of paper currency and coins.
D) withdrawal of French Francs from circulation.
E) a choice for using local or European currency.
Answer:
Diff: 1 Page Ref: 84-85
AACSB: Dynamics of Global Economy
Objective: 6
Question Type: Definitional

63) The non-EU member which uses the euro as its currency is:
A) Estonia.
B) Kosovo.
C) Montenegro.
D) Vatican City.
E) San Marino.
Answer:
Diff: 2 Page Ref: 86
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

64) The new country that joined the EU on January 01, 2011 is:
A) Slovakia.
B) Estonia.
C) Bulgaria.
D) Slovenia.
E) Cyprus.
Answer:
Diff: 1 Page Ref: 86
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

65) Markets of Central and Eastern Europe present interesting opportunities and challenges. Companies such as 3M International, McDonald’s, Philips Electronics, and Henkel are moving into the region for all of the following reasons except:
A) the region is an important new source of growth.
B) that the first company to penetrate a country market often emerges as leader.
C) wage rates are much lower than those in Spain, Portugal, and Greece.
D) the region offers attractive locations for low-cost manufacturing.
E) core products and Western brand names need changes to meet consumer demands.
Answer:
Diff: 3 Page Ref: 87
AACSB: Analytic Skills
Objective: 6
Question Type: Application

66) Management strategic options pertaining to products that are facilitated by a single European market include:
A) standardized packaging and labeling.
B) consolidated production.
C) shift from brand to benefit segmentation.
D) seeking marketing economies.
E) all of the above
Answer:
Diff: 2 Page Ref: 87
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

67) Because they are in transition, the markets of Central and Eastern Europe present interesting opportunities and challenges which include:
A) new source of growth.
B) first mover advantage.
C) exporting as an entry mode.
D) lower wage rate.
E) all of the above.
Answer:
Diff: 3 Page Ref: 87
AACSB: Analytic Skills
Objective: 6
Question Type: Definitional

68) The enlargement of the EU has impacted marketing strategies in the eurozone countries by:
A) making it difficult to export food products from one country to another.
B) increasing the cost of production since the euro replaced local currency.
C) shifting products from one market to another in the event of shortages.
D) reduced tariffs and quotas for products imported from non-EU members.
E) having less flexibility in the placement of factories.
Answer:
Diff: 3 Page Ref: 87
AACSB: Reflective Thinking
Objective: 6
Question Type: Critical thinking

69) The markets of Central and Eastern Europe present interesting opportunities and offer attractive locations for low-cost manufacturing due to:
A) their location being close to the sea.
B) the cultural similarities.
C) wage rates being lower than in Spain, Portugal and Greece.
D) strict laws and regulations.
E) prohibitive tariffs and export restrictions.
Answer:
Diff: 2 Page Ref: 87
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional
70) With the global economic crisis as a backdrop, the first-ever Happiness Congress was held in:
A) Sweden.
B) Austria.
C) Spain.
D) Italy.
E) Greece.
Answer:
Diff: 1 Page Ref: 88
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

71) Political and social instability in the Middle Eastern region can primarily be attributed to:
A) desert conditions and lack of agricultural land.
B) cultural differences among nations.
C) a wide gap between rich and poor nations due to oil revenues.
D) lack of water purification facilities.
E) absence of Western corporations.
Answer:
Diff: 2 Page Ref: 88
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional

72) The Gulf Cooperation Council (GCC) includes all of the following countries except:
A) Kuwait.
B) Saudi Arabia.
C) Iraq.
D) Bahrain.
E) Oman.
Answer:
Diff: 2 Page Ref: 89
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional
73) The member of the Gulf Cooperation Council (GCC) with the largest economy and population size is:
A) Bahrain.
B) Kuwait.
C) Oman.
D) Qatar.
E) Saudi Arabia.
Answer:
Diff: 2 Page Ref: 89
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional

74) In spite of having about 45% of the world’s known oil reserves, Saudi Arabia and other Middle Eastern countries post current-account deficits, largely because:
A) of poor accounting practices.
B) of vast economic diversification.
C) they must import most of the goods and services.
D) most of the oil is exported.
E) new businesses are being developed.
Answer:
Diff: 2 Page Ref: 89
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional

75) The Middle East and North Africa are sometimes viewed as a regional entity referred to as:
A) GCC.
B) AMU.
C) MENA.
D) ACC.
E) ECOWAS.
Answer:
Diff: 1 Page Ref: 91
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional
76) In recent years, the economy of selected countries in ECOWAS has improved except in:
A) Ivory Coast.
B) Ghana.
C) Benin.
D) Sierra Leone.
E) Nigeria.
Answer:
Diff: 2 Page Ref: 92
AACSB: Reflective Thinking
Objective: 8
Question Type: Definitional

77) In order to form a free trade area, South Africa has been in discussion with:
A) Swaziland.
B) EU.
C) Namibia.
D) Angola.
E) Japan.
Answer:
Diff: 2 Page Ref: 93
AACSB: Reflective Thinking
Objective: 8
Question Type: Application

78) The highest GNI per capita in the South African Development Community was found in ________.
A) Botswana
B) Angola
C) Malawi
D) Seychelles
E) South Africa
Answer:
Diff: 2 Page Ref: 93
AACSB: Analytic Skills
Objective: 8
Question Type: Synthesis

79) In 2007, the United States and South Korea completed preliminary negotiations to establish the world’s largest bilateral trade agreement which impacted all of the following except:
A) reduction of tariffs on 90% of product categories.
B) reduction of tariffs boosts exports from the United States.
C) a boon for Hyundai, Samsung, LG, and other South Korean industry leaders.
D) General motors, Ford, and Chrysler and other U.S. companies stand to benefit.
E) reduction of beef quota sold by the United States to Korea.
Answer:
Diff: 2 Page Ref: 97
AACSB: Dynamics of Global Economy
Objective: 5
Question Type: Critical thinking

80) The reason why Greece, Ireland, Portugal, and Spain sometimes are referred to as the eurozone’s “peripheral countries” is:
A) that all have tourist attractions.
B) that they are situated in the peripheral parts of Europe.
C) that they all rank lower than their EU neighbors in terms of infrastructure.
D) that they are riding on the way of technology boom.
E) that they are all marred by sex scandals.
Answer:
Diff: 2 Page Ref: 96
AACSB: Dynamics of Global Economy
Objective: 6
Question Type: Application
81) Why do some critics refer to GATT as the “General Agreement to Talk and Talk” and how does its successor, WTO, provide a better forum for trade agreements?
Answer:

82) A laptop manufactured in Canada and imported by Chile would not be subjected to duty. If the same laptop was manufactured in the USA and exported to Chile, it will have to pay duty. In order to avoid duty, can the manufacturer in the USA send the computer via Canada?
Answer:

83) Why does NAFTA create a free trade area as opposed to a customs union or a common market? Explain the difference giving examples.
Answer:

84) Historically, most of the Latin American nations have witnessed decades of slow or no growth, crippling inflation, increasing foreign debt, protectionism, the bloated government payrolls, money laundering problems, and currency fluctuations. What measures are now being taken by countries in that region that will begin the process of economic transformations?
Answer:

85) Although the ASEAN countries are geographically close, they have historically been divided in many respects. Elaborate on this statement and highlight the important economic development of member countries within ASEAN. How does Singapore represent a special case within the ASEAN nations?
Answer:

86) According to experts, mastering the Japanese market is considered to be a very difficult task. However, with the lucrative market in Japan, it is imperative to understand the intricacies in order to be successful in business. What are some of the factors that need to be considered by corporations that would like to conduct business in Japan?
Answer:

87) The formation and enlargement of the European Union have wide everlasting impact on marketing strategies and marketing mix. Discuss this giving examples from member nations.
Answer:

88) McDonalds, Philips Electronics, 3 M International and many other similar well known global corporations are operating in Central and Eastern Europe. Some countries in the region are still recovering from decades of command economies. What makes the region so attractive for global business corporations?
Answer:

89) With the increase in oil prices, many of the Middle Eastern countries will find a hefty windfall income. Also, with greater involvement of world powers in the Middle Eastern region, there are certain unprecedented opportunities. What are some of the marketing issues that should be taken into consideration?
Answer:

90) Why are Greece, Ireland, Italy, Portugal, and Spain sometimes referred to as the eurozone’s “peripheral countries”? Discuss each country’s impact on the euro’s survival.
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 4 Social and Cultural Environments

1) FIFA, the Federation internationale de Football Association, is launching a new global fashion brand in order to build and maintain awareness as well as interest in soccer in the years between World Cup matches.
Answer:
Diff: 1 Page Ref: 101
AACSB: Dynamics of Global Economy
Objective: 1
Question Type: Application

2) The cultural environment of global marketing has a big impact on FIFA (Federation internationale de Football Association).
Answer:
Diff: 2 Page Ref: 101
AACSB: Dynamics of Global Economy
Objective: 1
Question Type: Application

3) Although “culture shock” is a normal human reaction to the new and unknown, successful global marketers strive to comprehend human experience from the global point of view.
Answer:
Diff: 2 Page Ref: 101
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Definitional

4) Culture includes both conscious and unconscious values, idea, attitudes, and symbols that shape human behavior and that are confined to one generation.
Answer:
Diff: 2 Page Ref: 102
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Definitional

5) Food taboos, language, marriage, medicine, music, dancing, courtship, body adornment, religious rituals, and residence rules are all examples of “cultural universals.”
Answer:
Diff: 2 Page Ref: 102
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Definitional

6) As cultural information and imagery flow freely across borders via satellite TV, the Internet, and similar communication channels, new global consumer cultures are emerging.
Answer:
Diff: 2 Page Ref: 102
AACSB: Communication
Objective: 1
Question Type: Application

7) When marketers refer to “fast-food culture”, or “credit-card culture” they are referring to a cosmopolitan culture which is comprised of various segments of the population which are interconnected by information technology.
Answer:
Diff: 2 Page Ref: 102
AACSB: Use of IT
Objective: 1
Question Type: Definitional

8) A “value” is an organized pattern of knowledge that an individual holds to be true about the world.
Answer:
Diff: 1 Page Ref: 103
AACSB: Ethical Reasoning
Objective: 1
Question Type: Application

9) In Indonesia, home of the world’s largest Muslim population, KFC uses Ramadan-themed outdoor advertising to encourage Indonesians to come to the restaurants at buka puasa, the end of each day’s fast.
Answer:
Diff: 2 Page Ref: 103
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Definitional

10) “Mecca Cola” and “Qibla Cola” are brand names given to Coca-Cola for effective marketing in Muslim countries.
Answer:
Diff: 2 Page Ref: 103
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Definitional
11) Hindus do not eat beef, which means that McDonald’s does not serve hamburgers in India.
Answer:
Diff: 2 Page Ref: 103
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Definitional

12) Aesthetic elements that are attractive, appealing, and in good taste are perceived as decent and accepted universally.
Answer:
Diff: 3 Page Ref: 104
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

13) In the United States bridal gowns are white in color whereas in many countries they are red in color. White is considered as a color of mourning in many Asian countries.
Answer:
Diff: 3 Page Ref: 104
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Application

14) Gray color is associated with high quality and expensive in the United States, whereas it is considered inexpensive in China and Japan.
Answer:
Diff: 2 Page Ref: 104
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

15) Music represents a “transculture” that cannot be identified with any particular nation since rhythm is a universal aspect of music.
Answer:
Diff: 3 Page Ref: 104
AACSB: Reflective Thinking
Objective: 1
Question Type: Synthesis

16) As a component of abstract (as opposed to physical) culture, many forms of music exhibit the same “think global, act local” paradox that is at the heart of global marketing.
Answer:
Diff: 2 Page Ref: 104
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Critical thinking
17) In order to convey the sense of the country of origin it is advisable to use the same background music in broadcast commercials in all parts of the world.
Answer:
Diff: 2 Page Ref: 106
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Application

18) In China, authorities have the power to dictate which songs can be marketed and performed.
Answer:
Diff: 2 Page Ref: 106
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

19) Subway chains in India had to educate consumers about the benefits of the company’s sandwiches since Indians normally did not consume buns.
Answer:
Diff: 3 Page Ref: 106
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Application

20) Domino’s Pizza had to pull out of Italy because Italians perceived its products to be “too American.”
Answer:
Diff: 1 Page Ref: 106
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Application

21) Although some food preferences remain deeply embedded in culture,plenty of evidence suggests that global dietary preferences are converging.
Answer:
Diff: 2 Page Ref: 107
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Application

22) While McDonald’s continues to open new restaurants in France, the number of traditional bistros has declined by over 50%.
Answer:
Diff: 2 Page Ref: 107
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking
23) Both the spoken and unspoken aspects of language are included in the broader linguistic field of semiotics, which is the study of signs and their meanings.
Answer:
Diff: 3 Page Ref: 107
AACSB: Communication
Objective: 1
Question Type: Definitional

24) A number of authors, journalists, and food critics have chronicled a disturbing trend in the land of haute cuisinethe decline in France’s status as a culinary superpower.
Answer:
Diff: 2 Page Ref: 108
AACSB: Communication
Objective: 1
Question Type: Critical thinking

25) Since there is no letter which sounds like a “P” in Arabic, “Popeye’s” becomes “Bob eyes” and Pepsi sounds like “Bebsi.” This is an example of difference due to phonology.
Answer:
Diff: 2 Page Ref: 109
AACSB: Communication
Objective: 1
Question Type: Application

26) Diesel founder Renzo Rosso has asserted that his brand’s “Diesel” name is one of the few words which is pronounced the same in almost every language. To a linguist, this comment is best understood within the context of phonology.
Answer:
Diff: 1 Page Ref: 109
AACSB: Communication
Objective: 1
Question Type: Application

27) The phonetic pronunciation of the numerical sequence 8282 means “hurry up” in Korean.
Answer:
Diff: 2 Page Ref: 109
AACSB: Communication
Objective: 1
Question Type: Application

28) In China, it is bad luck to give a book, an umbrella, or a clock as a gift.
Answer:
Diff: 2 Page Ref: 109
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Application
29) Despite the fact that Sony is headquartered in Japan, the company makes it clear to job applicants in any part of the world that it does not consider English to be a “foreign language.”
Answer:
Diff: 2 Page Ref: 110
AACSB: Communication
Objective: 1
Question Type: Application

30) “McDonaldization of culture,” a term coined by Geert Hofstede, refers to the wide spread of McDonald’s restaurants in the world and its adverse impact on global culture.
Answer:
Diff: 1 Page Ref: 111
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Definitional

31) Americans typically want to “go it alone.” As a result, they may be outnumbered in a negotiation situation.
Answer:
Diff: 2 Page Ref: 111
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Synthesis

32) The president of an American company was interested in dealing with a company in Saudi Arabia. The Saudi CEO made it clear at the outset that the credentials in the documents have less credibility than personal trust and confidence. This shows that the Saudi Arabian culture is a high-context culture.
Answer:
Diff: 2 Page Ref: 112
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Definitional

33) If a potential Latin American customer insists on giving you a tour of the architectural highlights of his city prior to discussing business, it s a clue that you are doing business in a high-context culture.
Answer:
Diff: 2 Page Ref: 112
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Definitional
34) Competitive bidding is infrequent in a low-context culture.
Answer:
Diff: 1 Page Ref: 113
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Definitional

35) According to Hofstede’s research on cultural values, Japan and Austria ranked highest in masculinity.
Answer:
Diff: 2 Page Ref: 114
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Definitional

36) Long-term values include persistence (perseverance), defined as a general tenacity in the pursuit of a goal.
Answer:
Diff: 2 Page Ref: 115
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Definitional

37) The power distance dimension reflects the degree of trust among members of society. Thus the higher the power distance (PDI), the higher the level of trust.
Answer:
Diff: 2 Page Ref: 115
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Definitional

38) A sense of shame leads to sensitivity in social contacts within high-performing Asian countries such as Hong Kong, Taiwan, and Japan.
Answer:
Diff: 2 Page Ref: 115
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Definitional
39) Former Disney chairman Michael Eisner and other company executives were blinded by ethnocentrism. Avoiding the Self-Reference Criterion (SRC) requires a person to suspend assumptions based on prior experience and success and be prepared to acquire new knowledge about human behavior and motivation.
Answer:
Diff: 3 Page Ref: 118
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

40) According to Roger’s diffusion theory, most customers will not purchase expensive products without the “hands-on” experience marketers call “trial.”
Answer:
Diff: 2 Page Ref: 118-119
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

41) The cultural environment of a country is best defined by which characteristics?
A) standard of living and stage of economic development
B) production process and standards of measurement
C) attitudes, beliefs, and values
D) degree of nationalism and economic community membership
E) fast food culture and slow food culture
Answer:
Diff: 2 Page Ref: 101-102
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

42) Suppose you have a friend from India who is a lifelong vegetarian and who does not like McDonald’s because the company sells hamburgers in many countries. Which of the following describes your friend?
A) “vegetarianism” represents a value, “dislike McDonald’s” represents an attitude
B) “vegetarianism” represents an attitude, “dislike McDonald’s” represents a value
C) “vegetarianism” and “dislike McDonald’s” both represent an attitude
D) “vegetarianism” represents a value, “dislike McDonald’s” represents a belief
E) “vegetarianism” and “dislike McDonald’s” both represent values
Answer:
Diff: 2 Page Ref: 102-103
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Critical thinking
43) There is nothing inherently “good” or “bad” about any color of the spectrum and all associations and perceptions regarding color arise from culture. Which of the following statements is not true:
A) Red is a popular color in most parts of the world.
B) Red color is associated with “active,” “vibrant,” and “emotional.”
C) Red color is preferred in many countries since it is the color of blood.
D) Red color is highly preferred in some African countries.
E) Red color is tied to the traditions of viticulture and winemaking.
Answer:
Diff: 3 Page Ref: 104
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Critical thinking

44) Cultural influences are also quite apparent in food preparation and consumption patterns and habits. Domino’s Pizza, the world’s largest pizza-delivery company, pulled out of Italy because:
A) tomato sauce was too bold and competed with Italian products.
B) people did not like to eat at home.
C) Italians perceived its products to be “too American.”
D) Italians wanted more toppings on thick crust.
E) Italians did not like anyone else to use the name pizza.
Answer:
Diff: 2 Page Ref: 106-107
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Application

45) While some food preferences remain deeply embedded in culture, there is plenty of evidence that global dietary preferences are converging. Examples of such a change can be predicted from:
A) the popularity of Domino’s Pizza in Italy.
B) the preference for local hamburgers from a local chain, Jollibee’s, in Philippines.
C) the growing number of McDonald’s restaurants globally.
D) the increased sales of soups and noodles in Thailand.
E) popularity of Chinese foods in Taiwan.
Answer:
Diff: 2 Page Ref: 108
AACSB: Reflective Thinking
Objective: 1
Question Type: Application
46) American Nancy McKinstry recently became the new CEO at Dutch publisher Wolters Kluwer. As Ms. McKinstry noted, she had to drop the word “aggressive” in describing her strategic plan to company managers. She said, “I learned that the word has a negative connotation to a lot of Europeans. I was coming across too hard, too much of a results-driven American to the people. I needed to get on board so I started describing our strategy as ‘decisive’ and that made all the difference.” Which of the following grammar topics is the critical element in this passage?
A) syntax
B) semantics
C) morphology
D) phonology
E) semiotics
Answer:
Diff: 2 Page Ref: 107-108
AACSB: Communication
Objective: 3
Question Type: Application

47) An intern from the United Kingdom was working in an American software company during summers. One day her boss gave her a memo asking her to post it, with the intention of having it put on the bulletin board. To her boss’s surprise the letter was mailed by the intern since the word “post” means “mail” in British English. In communication terms this error can be attributed due to:
A) syntax.
B) phonology.
C) morphology.
D) semantics.
E) semiotics.
Answer:
Diff: 2 Page Ref: 107-108
AACSB: Communication
Objective: 3
Question Type: Application
48) When the Coca-Cola Company was developing its new Dasani bottled water brand, linguists helped guide the naming process. For example, the recurring “a” was chosen because it has a soothing sound. In linguistics, issues pertaining to letters and sounds are matter of:
A) syntax.
B) semantics.
C) phonology.
D) semiotics.
E) semantics.
Answer:
Diff: 2 Page Ref: 107-108
AACSB: Communication
Objective: 3
Question Type: Application

49) Giving business cards with the left hand in Malaysia, showing soles of shoes to a host in Saudi Arabia, and winking one eye in India are all considered impolite interpersonal communication due to the fact that:
A) in Middle Eastern countries it is customary to take off shoes at the door.
B) it is difficult to notice when one winks eyes since there are many people in India.
C) people pick up nonverbal cues and understand intuitively without being told.
D) these actions distract people from hearing at meetings.
E) people are not aware of Western ways of doing business.
Answer:
Diff: 3 Page Ref: 110-111
AACSB: Communication
Objective: 4
Question Type: Application

50) A vice-president of an American software company introduced himself to a group of Korean partners and added “you may just call me John.” Although this verbal cue shows the underlying reality that Americans have a high value on informality and equality, it needs adaptation due to the reason that:
A) John is not a very popular name in Korea.
B) it is difficult to translate John in Korean language.
C) customs, hierarchies, and class structure of Korean culture have to be respected.
D) Korean culture requires that first and last name be used in addressing guests.
E) it is not appropriate to disclose nicknames in business meetings.
Answer:
Diff: 2 Page Ref: 110-111
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Application
51) A characteristic of a low-context culture which is prevalent in United States, Switzerland, and Germany is:
A) less information is contained in verbal communication.
B) major emphasis on a person’s values and position in society.
C) messages are explicit and specific.
D) a person’s word is his or her bond.
E) negotiations are long and protracted.
Answer:
Diff: 2 Page Ref: 112-113
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Application

52) In high-context cultures, time is:
A) monochronic.
B) polychronic.
C) linear.
D) short.
E) common.
Answer:
Diff: 2 Page Ref: 112-113
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Application

53) According to Geert Hofstede, which of the following is a key cultural dimension that helps account for rapid economic growth in Asia?
A) power distance
B) individualist/collectivist
C) feminine/masculine
D) uncertainty avoidance
E) long-term orientation
Answer:
Diff: 2 Page Ref: 113-115
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Application
54) Two countries that outrank the others in uncertainty avoidance are:
A) Austria and Belgium.
B) Japan and Hong Kong.
C) Greece and Portugal.
D) Denmark and Finland.
E) Ireland and Italy.
Answer:
Diff: 3 Page Ref: 114-115
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Application

55) Which is not considered as a long-term value?
A) persistence
B) sense of shame
C) thrift
D) ordering relationships
E) search for truth
Answer:
Diff: 3 Page Ref: 114-115
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Application

56) The power distance dimension reflects the degree of trust among members of society. Thus, the higher the power distance (PDI) the:
A) greater is uncertainty avoidance.
B) lower is the level of trust.
C) higher is tolerance for ambiguity.
D) greater is male dominance.
E) lower is the harmony.
Answer:
Diff: 3 Page Ref: 116
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Application
57) Danes generally are not afraid of taking chances; they are comfortable doing things that are not carefully thought out or planned. Denmark’s “flexicurity” policy combines free labor markets with adjustable welfare benefits. This is an example of the application of Hofstede’s typology under the values which highlight:
A) Future Orientation.
B) Uncertainty Avoidance.
C) Gender Differentiation.
D) Power Distance.
E) Individualism/Collectivism.
Answer:
Diff: 2 Page Ref: 116
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Application

58) European consumers have faced a number of food-related issues, including an outbreak of hoof-and-mouth disease and continuing concerns over mad cow disease. As a result, many are skeptical about GMOs (genetically-modified organisms) and the benefits of eating food products that incorporate genetically-engineered ingredients. As one French citizen noted recently, “We have a very risk-averse society that has been completely traumatized by food scares.” Thinking about this situation in terms of Hofstede’s cultural values framework, one might reasonably interpret this remark to indicate that France ranks relatively high in:
A) Power Distance.
B) Short-term Orientation.
C) Masculinity.
D) Uncertainty Avoidance.
E) Individualism.
Answer:
Diff: 3 Page Ref: 116
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking

59) Procter & Gamble’s introduction of All-Temperature Cheer laundry detergent in Japan was a flop at first. The problem was that Japanese women wash clothes in cold water– either tap water or leftover bath water–so they don’t care about all-temperature washing (which is a big selling point in the U.S.). Also, Cheer was first introduced in Japan at a time when the market for fabric softeners in Japan was rapidly expanding. However, when Japanese housewives added lots of fabric softener to the water, Cheer didn’t produce many suds (Americans don’t use as much fabric softener). P&G reformulated the product so it wouldn’t be affected by fabric softeners, and ads for Cheer in Japan pledged superior cleaning in cold water, not all temperatures. Which of the following might have helped P&G avoid the initial problems with Cheer?
A) Maslow’s hierarchy
B) high vs. low context culture
C) diffusion of innovation
D) self-reference criterion
E) polycentric orientation
Answer:
Diff: 3 Page Ref: 117-118
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking

60) The Walt Disney Company’s decision to build a theme park in France provides an excellent vehicle to understanding SRC (Self-Reference Criterion). All of the statements listed below portray this meaning except:
A) Disney executives believed there is virtually unlimited demand for American cultural exports.
B) French are sensitive about American cultural imperialism.
C) Consuming wine with the midday meal is a long-established custom which was not realized by Disney executives.
D) Disney executives were blinded by their prior success and ethnocentrism.
E) The SRC can be a powerful negative force in global business.
Answer:
Diff: 2 Page Ref: 118
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking
61) Which of the following best sums up the experience of Walt Disney Company executives when creating Disney’s theme park in Paris?
A) They were guided by the “think global, act local” principle.
B) They fell victim to the self-reference criterion.
C) They exhibited a geocentric management orientation.
D) They miscalculated the rate of diffusion of innovations in Europe.
E) They had an unbiased perception of existing culture in Europe.
Answer:
Diff: 3 Page Ref: 118
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking

62) The lesson that SRC (Self-Reference Criterion) teaches can be summarized as:
A) a person’s perception of market needs is framed by others cultural experience.
B) perceptual blockage and distortion about cultures are hard to reduce.
C) unbiased perception is a vital and critical skill in global marketing.
D) unconscious reference to one’s cultural values is critical in global marketing.
E) prior success and ethnocentrism can override the SRC.
Answer:
Diff: 3 Page Ref: 118
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking

63) When Walt Disney company’s executives were planning to build a theme park in France, they firmly believed that the success of McDonald’s and Coke as well as their success in Tokyo Disneyland ensures the runaway success of their plans. Disney policies prohibit sale or consumption of alcohol inside the theme parks which they also implemented in France. This proved to be a failure since consuming wine with the midday meal is a long-established custom in France. This is a classical example of:
A) the “think global, act local” principle.
B) being victim to the self-reference criterion.
C) a geocentric management orientation.
D) miscalculation of the rate of diffusion of innovations in Europe.
E) an unbiased perception of existing culture in Europe.
Answer:
Diff: 3 Page Ref: 118
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking
64) One of the basic elements of sociologist Everett Roger’s Diffusion theory is the concept of an “adoption process.” The first step in this adoption process is:
A) interest.
B) evaluation.
C) trial.
D) adoption.
E) awareness.
Answer:
Diff: 2 Page Ref: 118-119
AACSB: Multicultural and Diversity
Objective: 4
Question Type: Definitional

65) Which of the following shows the correct order of the product adoption process?
A) evaluation→trial→awareness→interest→adoption
B) trial→interest→evaluation→awareness→adoption
C) interest→awareness→adoption→trial→evaluation
D) awareness→interest→evaluation→trial→adoption
E) adoption→evaluation→trial→interest→awareness
Answer:
Diff: 2 Page Ref: 118-119
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

66) Which of the following can negatively influence the rate of diffusion of an innovation?
A) substantial relative advantage
B) high compatibility
C) high complexity
D) divisibility
E) high level of communicability
Answer:
Diff: 2 Page Ref: 119
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
67) That floppy disks are being dumped in favor of USB mass storage devices can be attributed to which characteristics of innovation?
A) compatibility
B) relative advantage
C) divisibility
D) communicability
E) complexity
Answer:
Diff: 2 Page Ref: 119
AACSB: Reflective Thinking
Objective: 4
Question Type: Synthesis

68) To speed adoption of a new product, the marketing team should:
A) ensure that features and benefits can be communicated or demonstrated.
B) design the maximum amount of complexity into the product.
C) discourage limited use on a “trial” basis.
D) attempt to make a clean break with existing customer values.
E) rely heavily on word-of-mouth marketing.
Answer:
Diff: 2 Page Ref: 119
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

69) In the 1990s, Philips Electronics developed a new consumer electronics product called the Digital Compact Cassette player. DCC allowed users to record and playback in a new digital format; DCC was also designed to play the older, analog cassette tapes that many people own. This latter feature reflects which of the following characteristics of innovations?
A) relative advantage
B) communicability
C) compatibility
D) complexity
E) divisibility
Answer:
Diff: 2 Page Ref: 119
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
70) Together, innovators and early adopters make up about ________ of the potential market for a new product.
A) 16.0%
B) 26.0%
C) 34.0%
D) 46.0%
E) 13.5%
Answer:
Diff: 2 Page Ref: 120
AACSB: Analytic Skills
Objective: 4
Question Type: Definitional

71) If a marketing manager plans to enter the newly industrializing countries (NICs) or other Asia markets with a product that has proved to be successful in the home market, the product’s diffusion processes are likely to be:
A) negligible since consumers will take time to assess the relative advantage.
B) much slower than in the home market.
C) much faster than in the home market.
D) similar to that in the home market.
E) less compatible in the Asian market.
Answer:
Diff: 2 Page Ref: 120-121
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

72) A few years ago, Philips Electronics developed a new consumer electronics product called the Digital Compact Cassette player. DCC did more than allow users to record and playback in a new digital format; DCC was also designed to play the older, analog cassette tapes that many people own. However, die-hard audio buffs were the only ones to buy DCC and Philips ultimately discontinued the product. Which of the following statements based on adopter categories describes this?
A) early adopters bought, but innovators didn’t
B) innovators bought, but early adopters didn’t
C) innovators bought, and everyone else was a laggard
D) early majority bought, but late majority didn’t
E) DCC was a laggard
Answer:
Diff: 2 Page Ref: 120-121
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking
73) Adopter categories are classifications of individuals within a market on the basis of their innovativeness. Recently Apple introduced the iPhone for which people waited in long lines before the doors opened. According to experts these 2.5% of people who bought the iPhone are categorized as:
A) early adopters.
B) innovators.
C) early majority.
D) late majority.
E) laggards.
Answer:
Diff: 2 Page Ref: 120-121
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

74) Which of the following is true about the innovation diffusion process in Asia?
A) Japan has a high-context culture with a relatively homogeneous population.
B) Because risk avoidance is a cultural value, there are fewer innovators in Asia than in the United States.
C) Once innovators in Asia have tried a product, early adopters and the early majority quickly follow suit.
D) After a new product has achieved success in one Asian market, it is likely to be adopted in other Asian markets at an even faster rate.
E) all of the above are true
Answer:
Diff: 2 Page Ref: 120-121
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

75) Comparing and contrasting the diffusion of innovations in Western countries and in Asia, one can say that:
A) the process occurs in an identical manner in both regions.
B) in Asia, the adoption process begins more slowly but ramps up more rapidly than it does in Western countries.
C) in Western countries, the adoption process begins more slowly but ramps up more rapidly than it does in Asia.
D) the diffusion of innovation framework is applicable in the West but not in Asia.
E) the diffusion of innovation framework is applicable in Asia but not in the West.
Answer:
Diff: 3 Page Ref: 120-121
AACSB: Analytic Skills
Objective: 4
Question Type: Synthesis
76) Which of the following is arranged starting with the highest level of environmental sensitivity and ending with the lowest level?
A) food→computers→integrated circuits
B) integrated circuits→food→computers
C) integrated circuits→computers→food
D) computers→food→integrated circuits
E) none of the above
Answer:
Diff: 1 Page Ref: 121-122
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

77) The ________ the level of environmental sensitivity for a given product, the ________ the need for managers to address country-specific economic, regulatory, technological, social and cultural environmental conditions.
A) greater; greater
B) lower; greater
C) greater; lower
D) lower; lower
E) stronger; greater
Answer:
Diff: 2 Page Ref: 121-122
AACSB: Reflective Thinking
Objective: 5
Question Type: Critical thinking

78) Which of the following is true about “coffee culture” in England?
A) Starbucks has been unsuccessful in its attempt to change the Brits’ preference for tea.
B) American entrepreneurs found success in England with the Seattle Coffee Company which Starbucks later acquired.
C) Starbucks succeeded in England only after changing the company’s name to Seattle Coffee Company.
D) Starbucks-style coffee shops have been a flop because tea culture is too deeply engrained.
E) Starbucks has been successful in England since it started selling beer.
Answer:
Diff: 2 Page Ref: 122-123
AACSB: Reflective Thinking
Objective: 5
Question Type: Critical thinking
79) Despite the fact that the American team advanced to the semi-finals in South Africa, the game is much more popular in other parts of the world. There is an effort to make soccer popular in the United States, and many fashion brands are interesting in marketing their products which pertain to soccer and other sports. Considering this aspect which of the following statements is incorrect:
A) In the United States, 2010 World Cup merchandise such as T-shirts was available at Wal-Mart.
B) FIFA is the only global marketer seeking revenue growth by boosting soccer’s popularity in America.
C) Yves Saint Laurent designer was selling merchandise with soccer related embossed emblems.
D) The fall 2010 collection of designer clothes included “FIFA Hertiage Tees” with logos on shirts.
E) FIFA has chosen Total Apparel Group (TAG) to boost soccer’s visibility and popularity among Americans.
Answer:
Diff: 2 Page Ref: 124
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

80) Disney is hoping to appeal to India’s family-oriented middle-class consumers; the core themes include “believe in yourself, express yourself, and celebrate your family.” Disney is also using cable television for its program in a number of local languages and dialects. This is an example of:
A) capitalizing on astrological beliefs of Indians.
B) a first step in introducing U.S. programs in emerging markets.
C) attracting families to theme parks in India.
D) emphasizing the role of families in emerging markets.
E) adapting to cultural differences and going native in emerging markets.
Answer:
Diff: 2 Page Ref: 125
AACSB: Multicultural and Diversity
Objective: 5
Question Type: Application

81) There are considerable differences and similarities among world cultures. This makes the task of the global marketer much more difficult. Giving examples, show what factors have to be taken into account when planning marketing strategy for different parts of the world.
Answer:

82) London’s Sunday Times reported that Mecca-Cola has become the drink which has come to be seen as “politically preferable” to Pepsi or Coke in many Muslim countries. Also, Danish products were boycotted in many Islamic countries in protest of an offensive cartoon that was printed in Danish newspapers. Considering these two examples, show how religion can have an impact on marketing.
Answer:

83) Giving examples, show how technology is providing interesting new opportunities for exploiting linguistics in the name of marketing.
Answer:

84) The diversity of cultures around the world is also reflected in languages and communication. When KFC translated its slogan “Finger Licking Good” it became “Eat your fingers” in Chinese; similarly “Pepsi is for Generations” became “your grandparents will come out of the grave to drink Pepsi.” Studies showing how linguists have divided the study of spoken or verbal language demonstrates how verbal and non-verbal communication can have an impact on marketing around the world.
Answer:

85) What are some of the salient characteristics and differences between high- and low-context cultures?
Answer:

86) Hofstede considers culture as “the collective programming of the mind,” which makes it necessary to look at the attitudes, beliefs, and values. Giving an example of a country, explain how these attributes are so important.
Answer:

87) Applying Hofstede’s typology, show how Power Distance and Gender Differentiation can influence the marketing of products and services in different countries.
Answer:

88) Reference to one’s own cultural values or self-reference criterion (SRC) can create a cultural myopia. It can consciously or unconsciously create considerable problems for marketing professionals. Using Walt Disney’s decision to build a theme park in France, address the problem, following a systematic framework.
Answer:

89) One of the basic elements of Roger’s diffusion theory is the concept of adoption process which deals with the mental stages through which an individual passes from the time of his or her first knowledge of an innovation to the time of product adoption or purchase. Briefly describe these stages given examples of Apples iPhone.
Answer:

90) There are specific characteristics of innovations that affect which innovations are adopted. Define those characteristics giving examples of products or services.
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 5 The Political, Legal, and Regulatory Environments

1) When Barack Obama was sworn in as the president of the United States, he inherited a situation that had confounded his predecessors for half a century. America’s complex relationship with Cuba illustrates the impact the political, legal, and regulatory environments can have on international trade and global marketing activities.
Answer:
Diff: 2 Page Ref: 126
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

2) Many governments in developing countries exercise control over their nations’ economic development by passing protectionist laws and regulations.
Answer:
Diff: 2 Page Ref: 128
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

3) Political risk is the possibility of a change in a country’s political environment or government policy that would positively affect a company’s ability to operate effectively and profitably.
Answer:
Diff: 2 Page Ref: 129
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

4) The political maneuverings of the Russian government create a high level of political risk.
Answer:
Diff: 2 Page Ref: 130
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

5) Companies cannot purchase insurance to offset potential risks arising from the political environment of a country.
Answer:
Diff: 2 Page Ref: 132
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

6) In China, import duties have dropped since the country joined the WTO.
Answer:
Diff: 1 Page Ref: 132
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

7) Some foreign companies reduce earnings by making loans to U.S. affiliates rather than using direct investment to finance U.S. activities. This is known as “earnings stripping.”
Answer:
Diff: 2 Page Ref: 132
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

8) If a foreign company is taken over by the host country government, and some form of compensation is paid, “confiscation” has occurred.
Answer:
Diff: 2 Page Ref: 134
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

9) If a foreign company is taken over by the host country government, and some form of compensation is paid, “expropriation” has occurred.
Answer:
Diff: 2 Page Ref: 134
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

10) If a foreign country decides to take over banking business from private banks to benefit public and pays adequate payment, then it is referred to as nationalization.
Answer:
Diff: 2 Page Ref: 134
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

11) Nationalization, expropriation, and confiscation are approved by international law as a legitimate exercise of government power as long as the act satisfies a “public purpose.”
Answer:
Diff: 2 Page Ref: 134
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

12) When a foreign country expropriates an American corporation, the U.S. court can get involved in arbitration.
Answer:
Diff: 2 Page Ref: 134
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

13) A “civil-law country” is one in which the legal system reflects the structural concepts and principles of the Roman Empire in the sixth century.
Answer:
Diff: 2 Page Ref: 136
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

14) Louisiana is the only state that has not fully adopted the Uniform Commercial Code (UCC) since its laws are heavily influenced by the French civil code.
Answer:
Diff: 3 Page Ref: 136
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

15) India, Pakistan, Malaysia, Korea, and Japan have common-law jurisdictions.
Answer:
Diff: 2 Page Ref: 137
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

16) “Sharia” and “haram” are important concepts in civil-code laws, which are commonly practiced in Middle Eastern countries.
Answer:
Diff: 2 Page Ref: 137
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Definitional

17) The requirement that all restaurants declare that the meat is “halal” is based on Islamic Laws.
Answer:
Diff: 2 Page Ref: 137
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Definitional

18) If a foreign company only has a sign board in any state in the United States, then that company is subject to the jurisdiction of U.S. courts.
Answer:
Diff: 2 Page Ref: 138
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

19) A trademark gives the inventor of a product the exclusive legal right to make, use, and sell an invention for a specific period of time.
Answer:
Diff: 2 Page Ref: 138-139
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

20) To establish ownership of a written, recorded, performed, or filmed creative work, it is necessary to apply for and be granted a patent.
Answer:
Diff: 2 Page Ref: 138-139
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

21) Patents and trademarks that are registered in the United States are protected in all countries of the world.
Answer:
Diff: 2 Page Ref: 138-139
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

22) A patent holder retains all rights for the life of the patent even if the product is not produced or sold.
Answer:
Diff: 1 Page Ref: 138-139
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
23) A U.S. company wishing to obtain foreign patent rights must apply to the Paris Union within one year of filing in the United States or risk a permanent loss of patent rights abroad.
Answer:
Diff: 2 Page Ref: 141-142
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

24) In order to fight piracy in China, Budweiser beer cans have fluted edges that are difficult to manufacture.
Answer:
Diff: 2 Page Ref: 141
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

25) A key issue is global patent protection for software. Although copyright law protects the computer code, it does not apply to the idea embodied in the software.
Answer:
Diff: 2 Page Ref: 142
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

26) Japan has recently promised to speed up patent examinations, eliminate challenges to patent submissions, and allow patent applications to be filed in English.
Answer:
Diff: 2 Page Ref: 142
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

27) Pressures of global competition have resulted in decreased incidences of price-fixing and collusion among companies.
Answer:
Diff: 2 Page Ref: 143
AACSB: Reflective Thinking
Objective: 3
Question Type: Application
28) A recent rash of antitrust actions brought in the United States against foreign companies has raised concerns that the United States is violating international law as well as the sovereignty of other nations.
Answer:
Diff: 2 Page Ref: 143
AACSB: Analytic Skills
Objective: 3
Question Type: Critical thinking

29) Microsoft is subject to U.S. antitrust laws no matter what country it is doing business in.
Answer:
Diff: 2 Page Ref: 143
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

30) In Saudi Arabia, the Communication and Information Technology Commission (CITC) was ready to restrict BlackBerry services citing security concerns since the location of RIM (Research in Motion) servers were in Canada.
Answer:
Diff: 2 Page Ref: 145
AACSB: Use of IT
Objective: 3
Question Type: Application

31) In 2009, Etisalat, a telecommunications company in the United Arab Emirates (UAE) urged BlackBerry users to download a software upgrade; it turned out the upgrade contained spyware.
Answer:
Diff: 2 Page Ref: 145
AACSB: Use of IT
Objective: 3
Question Type: Application

32) Formation of a cartel like OPEC, consisting of oil-producing companies, would most likely be illegal in the United States.
Answer:
Diff: 2 Page Ref: 146
AACSB: Reflective Thinking
Objective: 3
Question Type: Application
33) Licensing is a potentially dangerous action: It may be instrumental in creating a competitor.
Answer:
Diff: 2 Page Ref: 147
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

34) A company hoping to protect its trade secrets from being stolen by a foreign company can seek relief under the TRIPs agreement if both companies do business in GATT signatory countries.
Answer:
Diff: 2 Page Ref: 147
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

35) Denmark ranks highest in bribery as listed by the Corruption Perceptions Index (CPI) by Transparency International in 2010.
Answer:
Diff: 2 Page Ref: 148
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

36) If an American businessperson pays a Russian customs agent a $20 cash “processing fee” to avoid delay in leaving Russia, the American has violated the Foreign Corrupt Practices Act (FCPA).
Answer:
Diff: 2 Page Ref: 148
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

37) Under the Alternative Fines Act, fines imposed on individuals may not be paid by their employer or principal.
Answer:
Diff: 2 Page Ref: 149
AACSB: Reflective Thinking
Objective: 3
Question Type: Application
38) In emerging countries, journalists may themselves become targets if they criticize the rich or powerful.
Answer:
Diff: 2 Page Ref: 149
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

39) The United Nations Conference on International Trade Law (UNCITRAL) has also been a significant force in the area of arbitration.
Answer:
Diff: 2 Page Ref: 152
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

40) The European Court of Justice, based in Luxembourg, is the European Union’s highest legal authority.
Answer:
Diff: 2 Page Ref: 154
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

41) Any company doing business outside the home country should first carefully study the ________ in the target country.
A) political culture
B) nationalization
C) political risk
D) jurisdiction
E) sovereignty
Answer:
Diff: 2 Page Ref: 137
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional
42) Categories of political risk listed by EIU (The Economist Intelligence Unit) includes all of the following except:
A) war.
B) political turmoil.
C) bureaucracy.
D) corruption.
E) crime.
Answer:
Diff: 2 Page Ref: 130
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

43) What do value added taxes (VAT) encourage in countries such as China?
A) They make trademarks and copyrights more valuable.
B) They result in cross-border shopping and smuggling.
C) They make it harder to bribe officials.
D) They protect companies from antitrust scrutiny.
E) Global companies refrain from offering bribes.
Answer:
Diff: 2 Page Ref: 132
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

44) After Fidel Castro took power in Cuba in 1959, his government seized control of American property without paying compensation. Coca-Cola, DuPont, Texaco, and dozens of other American companies have filed claims against Cuba seeking financial settlements. Which of the following terms most specifically describes the action Castro took against these companies?
A) nationalization
B) confiscation
C) expropriation
D) internationalization
E) deportation
Answer:
Diff: 2 Page Ref: 134
AACSB: Analytic Skills
Objective: 1
Question Type: Critical thinking
45) Located in The Hague, the International Court of Justice (ICJ) is the judicial arm of the:
A) United States.
B) European Union.
C) United Nations.
D) Netherlands.
E) United Kingdom.
Answer:
Diff: 2 Page Ref: 135
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

46) What type of international disputes would be taken before the International Court of Justice?
A) disputes between two nations
B) disputes between two companies
C) disputes between a company and a nation
D) disputes between a citizen of one country and a company from a different country
E) disputes between profit and non-profit organizations
Answer:
Diff: 2 Page Ref: 135-136
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

47) What happens if a nation has allowed a case against it to be brought before the ICJ (International Court of Justice?
A) American Arbitration Association can be sought for justice.
B) UN Conference on International Trade Law can be approached.
C) International Chamber of Commerce will be another source for seeking justice.
D) European Court of Justice can be approached if the country is in the European Union.
E) The plaintiff nation can seek recourse through the UN Security Council.
Answer:
Diff: 2 Page Ref: 136
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
48) The Uniform Commercial Code (UCC) is fully adopted by all U.S. states except:
A) Virginia.
B) North Dakota.
C) Wisconsin.
D) Louisiana.
E) Montana.
Answer:
Diff: 2 Page Ref: 136
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

49) Which of the following is not a common-law country?
A) India
B) Pakistan
C) Malaysia
D) Korea
E) Singapore
Answer:
Diff: 1 Page Ref: 136
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

50) In West Africa, Burkina Faso, the Ivory Coast and Senegal are former French colonies, while Nigeria, Sierra Leone, and Ghana are former British colonies. Based on this information, which of the following would be correct?
A) Burkina Faso, the Ivory Coast and Senegal are civil-code countries, while Nigeria, Sierra Leone, and Ghana are common-law countries
B) Burkina Faso, the Ivory Coast and Senegal are common-law countries, while Nigeria, Sierra Leone, and Ghana are civil-code countries.
C) In West Africa, Ivory Coast and Senegal are the only common-law countries
D) All the West African nations mentioned above are likely to be civil-code countries.
E) All the West African nations mentioned above are likely to be common-law countries
Answer:
Diff: 3 Page Ref: 136-137
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
51) Islamic law is a comprehensive code based in part on:
A) Anglo-Saxon common law.
B) Roman law and the Napoleonic Code.
C) the Uniform Commercial Code.
D) the Koran.
E) the French Civil Code.
Answer:
Diff: 2 Page Ref: 137
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

52) Any Western country doing business in Malaysia or the Middle East should have understanding of:
A) the French Civil Code.
B) Anglo-Saxon common law.
C) Islamic law.
D) the Uniform Commercial Code.
E) Roman law and the Napoleonic Code.
Answer:
Diff: 2 Page Ref: 137
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

53) In a recent case, Revlon sued United Overseas Limited (UOL) in U.S. District Court for the Southern District of New York for breach of contract. UOL countered by asking the court to dismiss the claim since they are not operating in that area. Revlon cited the presence of a UOL sign above the entrance to the offices of a New York company in which UOL had a 50-percent ownership. The court dismissed UOL’s claim. This is an issue related with:
A) jurisdiction.
B) antitrust.
C) dilution of equity.
D) bribery and corruption.
E) intellectual property.
Answer:
Diff: 2 Page Ref: 138
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
54) Engineers at a company in a developing country study an American computer chip design, copy it, and produce identical chips that are then sold to local computer makers. What form of intellectual property has been wrongly appropriated?
A) patent
B) copyright
C) trademark
D) trade secrets
E) technological
Answer:
Diff: 2 Page Ref: 138
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

55) Counterfeiting is:
A) the use of a formal legal document for illegal purposes.
B) the ownership of a written, recorded, performed or filmed creative work.
C) the unauthorized copying or production of a product.
D) the use of a product name that has different meaning than the original brand.
E) the use of a distinctive mark of a brand that is no longer producing the original brand.
Answer:
Diff: 2 Page Ref: 138
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

56) In many parts of the world, sales of unauthorized videos of Hollywood movies cost the movie studios billions of dollars. When illegal copies of movies are made, what form of intellectual property has been wrongly appropriated?
A) patent
B) copyright
C) trademark
D) trade secrets
E) down loading
Answer:
Diff: 2 Page Ref: 138-139
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
57) Which of the following would constitute a copyright violation?
A) manufacturing and selling illegal videocassette copies of “Spiderman 2”
B) manufacturing and selling illegal copies of Levi “501” jeans
C) printing and selling illegal copies of Harry Potter books
D) A, B, and C are copyright violations
E) A and B are copyright violations
Answer:
Diff: 2 Page Ref: 138-139
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

58) In 2005, representatives from several wine regions in the United States and the EU signed a Joint Declaration to Protect Wine Place & Origin. In addition, a Wine Accord signed by the United States and EU bans the:
A) use of alcohol in public places.
B) purchase of wine from country of origin.
C) misuse of 16 place names by marketers of wine products that do not originate in those places.
D) misuse of labels which does not include the origin of ingredients.
E) use of word “champagne” on wine made in the United States.
Answer:
Diff: 3 Page Ref: 139
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis

59) Harley-Davidson has applied for federal protection of an unusual form of intellectual property; the “soul-pleasing rumble” produced by its motorcycles. What type of protection is Harley-Davidson seeking?
A) copyright
B) trademark
C) license
D) patent
E) trade dress
Answer:
Diff: 2 Page Ref: 138-139
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
60) Only Sony can use the “Walkman” name on its line of personal stereos. This is because:
A) Sony has a patent on the Walkman.
B) “Walkman” is a registered Sony trademark.
C) Sony has copyrighted the Walkman name.
D) Sony’s trade secrets are protected by international law.
E) Sony has an international business license.
Answer:
Diff: 2 Page Ref: 138-139
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

61) In order to fight piracy in China, Budweiser Beer’s approach includes:
A) printing labels in Chinese.
B) changing color of beer cans.
C) beer cans in China have fluted edges.
D) printing labels both in Chinese and English.
E) making beer very cheap in price in China.
Answer:
Diff: 2 Page Ref: 141
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

62) Which of the following statements is correct?
A) The Paris Convention protects patents, the Berne Convention protects copyrights.
B) The Paris Convention protects copyrights, the Berne Convention protects patents.
C) The Berne Convention and Paris Convention are different names for the same thing.
D) Neither the Berne Convention nor the Paris Convention is concerned with intellectual property.
E) The International Union for the Protection of Literary and Artistic Property is different from the Berne Convention.
Answer:
Diff: 2 Page Ref: 141-142
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
63) Which of the following is true about protection of computer software?
A) Copyright laws protect both the actual code and the idea embodied in the code.
B) Patent laws protect both the actual code and the idea embodied in the code.
C) Patent laws protect the actual code, while copyright laws protect the idea.
D) Copyright laws protect the actual code, while patent laws protect the idea.
E) License protects both the actual code and the idea embodied in the code.
Answer:
Diff: 2 Page Ref: 142
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

64) The company receiving the most U.S. patents for the year 2009 is:
A) Microsoft.
B) Panasonic.
C) IBM.
D) Toshiba.
E) Intel.
Answer:
Diff: 2 Page Ref: 142
AACSB: Analytic Skills
Objective: 3
Question Type: Synthesis

65) Which of the following is true about revised U.S. patent laws?
A) Patents are valid for 17 years after the patent is granted.
B) Patents are valid for 17 years after the patent is filed.
C) Patents are valid for 20 years after the patent is granted.
D) Patents are valid for 20 years after the filing date of the application.
E) Patents are valid as long as the product is manufactured.
Answer:
Diff: 2 Page Ref: 142
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
66) As part of their alliance relationship, Northwest Airlines and KLM Royal Dutch set air fare prices jointly and coordinate flight schedules. Normally, such behavior would be considered harmful to competition, but the U.S. government has granted the two airlines special exemptions from laws concerning:
A) intellectual property.
B) antitrust.
C) jurisdiction.
D) licensing.
E) arbitration.
Answer:
Diff: 2 Page Ref: 143-146
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

67) The European Commission has jurisdiction over European-based companies as well as non-European ones that generate significant revenues in Europe. If Microsoft applies in Europe, the Commission has a right to all of the following except:
A) it can block a proposed merger.
B) it can block a proposed joint venture.
C) it can approve with minor modifications.
D) it can demand substantial concessions before granting approval.
E) it can refer serious matters to the UN Security Council.
Answer:
Diff: 1 Page Ref: 144
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

68) A proposed merger between two Swiss-based global pharmaceutical companies, Ciba-Geigy AG and Sandoz AG, would be subject to review by regulators from which of the following?
A) European Commission
B) UN Conference on International Trade Law
C) International Chamber of Commerce
D) International Court of Justice
E) none of the above
Answer:
Diff: 2 Page Ref: 144-145
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional
69) Which of the following actions were approved both by the Antitrust Review in the EU as well as in the United States?
A) acquisition of Honeywell (U.S.) by GE (U.S.)
B) joint venture between music businesses of EMI group (Great Britain) and Time Warner (U.S.)
C) merger of Sony Music (Japan) and BMG (Germany)
D) merger of WorldCom (U.S.) and MCI (U.S.)
E) British Airways (U.K.) and American Airlines (U.S.)
Answer:
Diff: 3 Page Ref: 145
AACSB: Analytic Skills
Objective: 4
Question Type: Critical thinking

70) Consten, a French company, had exclusive rights to import and distribute German Grundig’s electronic products into France. One of the competitors started bringing “parallel imports” into France illegally, importing Grundig product bought from a foreign supplier. Which of the following does not represent an action taken by different legal bodies?
A) Consten’s complaint was upheld by two French courts.
B) The Paris Court of Appeals suspended the judgment of the French courts.
C) The Paris Court of Appeal’s judgment was based on pending a ruling by the European Commission.
D) The European Commission ruled against Consten on the grounds that territorial protection proved to be damaging to the Common Market.
E) The European Commission ruled that German Grundig was in violation of the laws of the Common Market.
Answer:
Diff: 3 Page Ref: 146
AACSB: Analytic Skills
Objective: 5
Question Type: Synthesis

71) OPEC can be considered as a “cartel” which is a group of separate companies that collectively:
A) sets prices, controls output, or takes other actions to maximize profits.
B) dictates how other countries should use their products.
C) produces more products in order to beat the competition.
D) conducts activities that are considered illegal in United States.
E) works on forming a union against management of other companies.
Answer:
Diff: 2 Page Ref: 146
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
72) Which of the following best describes the legal basis for protection of trade secrets, patents, and copyrights in the United States?
A) Trade secrets, patents, and copyrights are protected by federal statutes.
B) Trade secrets, patents, and copyrights are protected by state law.
C) Trade secrets are protected by state law, while patents and copyrights are protected by federal statutes.
D) Trade secrets are protected by federal statutes, while patents and copyrights are protected by state law.
E) Trade secrets, patents, and copyrights are not protected by any laws.
Answer:
Diff: 2 Page Ref: 146-147
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

73) The U.S. Justice Department objected to a recent patent license agreement between S.C. Johnson & Sons and Bayer AG. The antitrust unit at the Justice department objected to:
A) the duration of the license.
B) the amount of royalties Johnson agreed to pay.
C) Bayer’s attempts to circumvent FDA policies.
D) the exclusive nature of the license agreement.
E) the hostile arrangement between Bayer and Johnson.
Answer:
Diff: 2 Page Ref: 146-147
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

74) According to the Transparency International’s Corruption Perceptions Index scores for 2010, the country which was listed as most corrupt was:
A) Iraq.
B) Uzbekistan.
C) Chad.
D) Afghanistan.
E) Somalia.
Answer:
Diff: 2 Page Ref: 148
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
75) The following criminal penalties may be imposed for violations of the FCPA’S (Foreign Corrupt Practices Act) antibribery provisions except:
A) corporations are subject to a fine of up to $2,000,000.
B) officers, directors, stockholders, employees, and agents are subject to a fine up to $100,000.
C) fines imposed on individuals can be paid by their employer or principal.
D) the fines may be much higher, up to twice the benefit sought by the defendant.
E) in addition to fines, there may be imprisonment for up to five years.
Answer:
Diff: 3 Page Ref: 149
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

76) When companies operate abroad in the absence of home-country legal constraints, the best choice for ethical conduct would be:
A) to ignore bribery and act as if it does not exist.
B) to maintain home-country ethics worldwide with no adaptations.
C) to abandon any attempt to maintain company ethics.
D) to have a product that is clearly superior to that of the competition.
E) to adapt in varying degrees to local customs and practices.
Answer:
Diff: 2 Page Ref: 149-150
AACSB: Reflective Thinking
Objective: 4
Question Type: Synthesis

77) The United States has more lawyers than any other country in the world and is arguably the most litigious nation on earth. This is a reflection of:
A) the lack of class action lawsuits.
B) the low-context nature of the American culture.
C) the lack of spirit of confrontational competitiveness.
D) the fact that lawyers cannot undertake cases on contingency fee basis.
E) the fact that conflicts arise more in the United States.
Answer:
Diff: 2 Page Ref: 150-151
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
78) Which of the following is true of the arbitration framework created by the New York Convention?
A) Signatory countries can require parties to an arbitration agreement to actually use arbitration.
B) Signatory countries recognize and can enforce arbitration judgments.
C) There are limited grounds for appealing arbitration decisions.
D) The grounds that are recognized are different than the typical appeals that are permitted in a court of law.
E) all of the above
Answer:
Diff: 3 Page Ref: 151-152
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

79) A company stands a better chance of having an international arbitration award upheld if its home-country government has signed:
A) the Paris Convention.
B) the Prague Convention.
C) the New York Convention.
D) the Vienna Convention.
E) the Geneva Convention.
Answer:
Diff: 2 Page Ref: 151-152
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

80) Italy recently introduced the Reguzzoni-Versace Law which is intended to regulate trade in textiles, leather, and footwear. All of the following statements pertaining to the law are correct except:
A) at least four stages of production should occur in Italy for the product to be labeled as “Made in Italy.”
B) the countries in which the remaining production stages took place must be identified.
C) Brussels objected on grounds that the law conflicts with restrictions provided by the European Union.
D) EU regulators view the law as “protectionist.”
E) the law is more stringent than the existing laws where only one production stage has to occur in the country of origin.
Answer:
Diff: 3 Page Ref: 154
AACSB: Analytic Skills
Objective: 5
Question Type: Synthesis
81) The ultimate threat a foreign government can pose toward a company is seizing assets. South Korea nationalized Kia, the nation’s number three automaker, in the wake of the Asian currency crisis. How does this nationalization differ from expropriation and confiscation?
Answer:

82) In Malaysia and Saudi Arabia, it is common to see that restaurants have signs declaring that all food is “Halal.” Also, it is seen that courts handle marriages, divorces, distribution of family assets, and business practices by the “Sharia.” What are these tenets and how do they have an impact on international business.
Answer:

83) What are the differences between a patent, trademark, and a copyright? What is meant by counterfeiting?
Answer:

84) When a company invents a product or service, it should have a right to defend its creativity with intellectual patents. However, there are some countries like Italy and China where piracy and copyright violations are common. How can a corporation prevent this by having some built-in measures in products and services?
Answer:

85) Nippon Paper Industries was found guilty in a U.S. court of conspiring with other Japanese companies to raise fax paper prices in the United States under the antitrust laws. What are the implications of such a law, and how does it affect international business?
Answer:

86) For years, Coca-Cola corporation did not enter India since the government wanted some kind of disclosure of their trade secrets. Why are the trade secrets so important, and what happens if a licensee or a government gains access to the licensor’s trade secret?
Answer:

87) In the United States, the Foreign Corrupt Practices Act (FCPA) is a legacy of the Watergate scandal during Richard Nixon’s presidency. Administered by the Department of Justice and the Securities and Exchange Commission, the act is concerned with disclosure and prohibition. What is this law concerned with, and why is it a subject of criticism by many?
Answer:

88) What should a U.S. company do if competitors are willing to offer a bribe for business in a foreign country?
Answer:

89) Some firms and lawyers inexperienced in the practice of international commercial arbitration consider arbitration clauses in a contract as “any other clause.” This can be a gross misunderstanding of the clauses. Why are these clauses different and so significant?
Answer:

90) In most of the European Union countries, the influence of regulatory agencies is pervasive. What steps will be necessary of a corporation to protect business interest and advance new programs?
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 6 Global Information Systems and Market Research

1) One component of a firm’s MIS is a business intelligence (BI) network that helps managers make decisions; one of its major objectives is to enable manipulation of the data obtained by interactive access.
Answer:
Diff: 1 Page Ref: 161-162
AACSB: Use of IT
Objective: 1
Question Type: Definitional

2) An intranet is a private network that allows authorized company personnel or outsiders to share information electronically in a secure fashion.
Answer:
Diff: 2 Page Ref: 162
AACSB: Use of IT
Objective: 1
Question Type: Definitional

3) EDI links with vendors to enable retailers to improve inventory management and restock hot-selling products in a timely, cost-effective manner.
Answer:
Diff: 2 Page Ref: 162
AACSB: Use of IT
Objective: 1
Question Type: Definitional

4) ECR is a joint initiative by members of the supply chain to work towards improving and optimizing aspects of the supply chain to benefit managers.
Answer:
Diff: 2 Page Ref: 163
AACSB: Use of IT
Objective: 1
Question Type: Definitional

5) To prevent the most value-conscious shoppers from defecting to Wal-Mart, Tesco mined its database to identify Clubcard users who buy the lowest-priced grocery items.
Answer:
Diff: 2 Page Ref: 163
AACSB: Use of IT
Objective: 1
Question Type: Application
6) CRM tools allow companies like American Express, Dell, Sharp, and Sony to determine which customers are most valuable and to react in a timely manner with customized products and service offerings that closely match customer needs.
Answer:
Diff: 2 Page Ref: 164
AACSB: Use of IT
Objective: 1
Question Type: Application

7) In the EU, companies that use CRM to collect data about individual consumers must satisfy the regulations in each of the member countries.
Answer:
Diff: 2 Page Ref: 164
AACSB: Use of IT
Objective: 1
Question Type: Application

8) The term “Safe Harbor” agreement applies to privacy issues pertaining to the companies that wish to transfer data to the United States from Europe.
Answer:
Diff: 2 Page Ref: 164
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

9) Direct sensory perception such as seeing, feeling, hearing, smelling, or tasting is the best way to know what is going on in a country rather than taking information from secondary sources.
Answer:
Diff: 2 Page Ref: 166
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

10) Market research is the project-specific, systematic gathering of data and is the activity that links the consumer, customer, and public to the marketer through information.
Answer:
Diff: 2 Page Ref: 167
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
11) Market research can be conducted by designing and implementing a study with in-house staff.
Answer:
Diff: 2 Page Ref: 168
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

12) Africa represents a huge untapped market for shoes since most people walk barefoot. Thus, it will be easy to alter entrenched consumer behavior pattern if shoes are available.
Answer:
Diff: 2 Page Ref: 169
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis

13) Market research should focus on finding out how a potential customer can be changed into an actual customer.
Answer:
Diff: 2 Page Ref: 169
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

14) Mattel toys thought that Barbie would be as popular in Japan as it is the United States. This assumption was due to the self-reference criterion (SRC).
Answer:
Diff: 2 Page Ref: 169
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

15) An awareness of SRC can help ensure that the research effort is designed with minimal home-country or second-country bias.
Answer:
Diff: 2 Page Ref: 169
AACSB: Reflective Thinking
Objective: 3
Question Type: Application
16) By definition, secondary data is data gathered from country markets that rank as “secondary” in terms of income and population figures.
Answer:
Diff: 2 Page Ref: 170
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

17) Companies wishing to minimize the cost and effort associated with market research should start by collecting and analyzing primary data.
Answer:
Diff: 2 Page Ref: 170
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

18) A top priority of Chief Executive Keith Wandell is to diversify the Harley-Davidson customer base by targeting female riders in key markets such as Japan.
Answer:
Diff: 2 Page Ref: 171
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

19) The U.S. Central Intelligence Agency publishes “The World Factbook” which contains very useful global marketing information.
Answer:
Diff: 1 Page Ref: 172
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

20) Industrial growth patterns generally reveal consumption patterns, which in turn can be helpful in knowing production patterns that can be used in assessing market opportunities.
Answer:
Diff: 2 Page Ref: 172
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
21) If a market researcher would like to know how much the typical Nigerian consumer spends on soft drinks, the information can be obtained from GNP or GDP.
Answer:
Diff: 2 Page Ref: 172
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

22) The relatively low profit potential in smaller markets justifies only modest expenditures for marketing research.
Answer:
Diff: 2 Page Ref: 173
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

23) It may be necessary to use inexpensive survey research that sacrifices some elegance or statistical rigor to achieve results within the constraints of the small market research budget.
Answer:
Diff: 2 Page Ref: 173
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

24) If Avon would like to sell cosmetics in India, a good estimate can be achieved by researching the average wage of an office secretary.
Answer:
Diff: 2 Page Ref: 173
AACSB: Analytic Skills
Objective: 3
Question Type: Synthesis

25) Triangulation is a useful method in global market research where data is collected from three different sources within the same country.
Answer:
Diff: 2 Page Ref: 173
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking
26) Price sensitivity or purchase intention should be weighted more heavily than the observations of purchasing patterns and related behavior.
Answer:
Diff: 2 Page Ref: 173
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

27) Toyota’s decision to launch the new Sienna minivan in the United States reflects the company’s understanding of latent and incipient markets.
Answer:
Diff: 2 Page Ref: 174
AACSB: Reflective Thinking
Objective: 4
Question Type: Synthesis

28) Red Bull energy drink manufacturer, Dietrich Mateschitz, hired a market research firm to assess the market potential for the drink. In the tests, consumers reacted negatively to the taste, the logo, and the brand name. The company ignored the research completely.
Answer:
Diff: 2 Page Ref: 175
AACSB: Analytic Skills
Objective: 4
Question Type: Critical thinking

29) An “incipient market” is a market that will emerge if a particular economic, demographic, political, or sociocultural trend continues in a country.
Answer:
Diff: 2 Page Ref: 175
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

30) Volkswagen, Peugeot, Chrysler, and other global automakers have established manufacturing operations in China since they consider it to be an incipient market.
Answer:
Diff: 2 Page Ref: 176
AACSB: Analytic Skills
Objective: 4
Question Type: Application
31) It will be convenient to do a telephone survey in rural areas in China since, according to the Ministry of Information Industry reports, 40% of households have at least one fixed-line telephone.
Answer:
Diff: 2 Page Ref: 176
AACSB: Analytic Skills
Objective: 4
Question Type: Synthesis

32) “Back translation” is a technique used to ensure that currency conversion is performed correctly when financial statements of foreign subsidiaries are consolidated with financial statements at headquarters.
Answer:
Diff: 2 Page Ref: 176
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

33) “Back translation” is a technique whereby a survey or other document that has been translated is returned (i.e. “sent back”) to the translator for corrections.
Answer:
Diff: 2 Page Ref: 176
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

34) Wealthy respondents in Brazil are unlikely to answer questions about personal finance.
Answer:
Diff: 2 Page Ref: 178
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

35) A marketer of breakfast cereals might send researchers to preselected households at 6 a.m. to watch families go about their morning routines
Answer:
Diff: 2 Page Ref: 178
AACSB: Analytic Skills
Objective: 4
Question Type: Application

36) When using a “projective technique,” the researcher presents close-ended or ambiguous stimuli to a subject in a focus group
Answer:
Diff: 2 Page Ref: 179
AACSB: Analytic Skills
Objective: 4
Question Type: Application

37) In global marketing research, it is important to establish scalar equivalence when obtaining information from different countries.
Answer:
Diff: 2 Page Ref: 180
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

38) In global marketing research, the results of a nonprobability sample can be projected with statistical reliability.
Answer:
Diff: 2 Page Ref: 180
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

39) If interaction between two variables is desired, factor analysis can be used to transform large amounts of data into manageable units.
Answer:
Diff: 2 Page Ref: 181
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

40) Cadbury, the British confectionary company, estimates that the chocolate market in India is worth about $465 million per yer compared to annual sales of $4.89 billion in Britain, which has one-tenth of the population in India.
Answer:
Diff: 2 Page Ref: 184
AACSB: Reflective Thinking
Objective: 5
Question Type: Synthesis

41) Japan is Coach’s second largest market, representing about 20% of global sales. All of the following statements are true regarding the market for Coach’s products compared to that in America except:
A) Japanese consumers are enormously brand-centric.
B) Japanese consumers are not as brand loyal as American consumers.
C) American women tend to carry two or three brands while their Japanese counterparts tend to carry as many as five.
D) The company’s $500 handbags are especially popular with young women.
E) Coach has to work on improving its brand image in Japan.
Answer:
Diff: 2 Page Ref: 160
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

42) One of the key advantages of an EDI (Electronic Data Interchange) system is:
A) it allows easy access to all company data to vendors.
B) its transaction formats are universal.
C) it allows third-party transmission connections to company data.
D) it saves both time and money by using different languages.
E) vendors receive orders by voice mail.
Answer:
Diff: 2 Page Ref: 162
AACSB: Use of IT
Objective: 1
Question Type: Definitional

43) A(n) ________ system allows a company’s business units to submit orders, issue invoices, and conduct business electronically with other company units as well as outside companies.
A) Internet
B) Intranet
C) ECR
D) EDI
E) EPOS
Answer:
Diff: 2 Page Ref: 162-163
AACSB: Use of IT
Objective: 1
Question Type: Definitional

44) A(n) ________ is a company’s private data network, accessible only by authorized persons inside the organization.
A) EDI
B) internet
C) intranet
D) EPOS
E) ECR
Answer:
Diff: 1 Page Ref: 162-163
AACSB: Use of IT
Objective: 1
Question Type: Definitional

45) Which of the following is an IT tool designed specifically to help retailers work more closely with vendors on stock replenishment?
A) BOLD
B) ECR
C) data warehouse
D) projection
E) EDI
Answer:
Diff: 1 Page Ref: 162-163
AACSB: Use of IT
Objective: 1
Question Type: Definitional

46) Which of the following can be defined as a business philosophy that values two-way communication between a company and individual customers?
A) ECR
B) CRM
C) EDI
D) EPOS
E) BOLD
Answer:
Diff: 2 Page Ref: 162-163
AACSB: Use of IT
Objective: 1
Question Type: Definitional

47) CRM tools allow companies such as Credit Suisse, AT&T , Hewlett-Packard and others to determine:
A) warranty of products sold to consumers.
B) amount paid by consumers in different countries.
C) which customers are most valuable.
D) the use of credit cards for payment.
E) the use of laptop computers by customers.
Answer:
Diff: 3 Page Ref: 164
AACSB: Use of IT
Objective: 1
Question Type: Definitional

48) Direct sensory perception provides a vital background for the information that comes from human and documentary sources since:
A) it provides secondhand information.
B) it is easy and the most economical way of collecting data.
C) it means firsthand seeing, feeling, hearing, smelling, and tasting.
D) it involves reading and reviewing documents.
E) top executives are involved in getting firsthand information.
Answer:
Diff: 3 Page Ref: 166-167
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

49) Which of the following environmental factors may require marketers to adjust their approach to conducting international as opposed to domestic marketing research?
A) Researchers must be prepared for new parameters of doing business.
B) Company personnel must come to grips with a new set of culture-based assumptions about conducting business.
C) Research may help reduce psychological overload.
D) Researchers may have to broaden the definition of competitors to include competitive pressures not present in the domestic market.
E) all of the above
Answer:
Diff: 3 Page Ref: 176-177
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

50) A vice-president of a shoe company was in India to assess the market. He found that many people in the southern part of India were walking bare footed. This can be indicative of either the fact that there is a potential market for shoes or there is no market for shoes in that part of the world. To formally confirm one instinct or the other the vice-president should:
A) establish an office to start manufacturing shoes in India.
B) give free shoe samples to a selected group of customers.
C) conduct research to find the potential and actual customers.
D) find out if that is true for other Asian countries.
E) give up the idea of doing business in India.
Answer:
Diff: 2 Page Ref: 168-169
AACSB: Analytic Skills
Objective: 3
Question Type: Application

51) When Mattel first introduced Barbie in Japan, managers assumed that Japanese girls would find the doll’s design just as appealing as American girls did. This may be due to:
A) Barbie’s physical features such as long legs and blonde hair.
B) Barbie being a symbol of American lifestyle.
C) the SRC tendency on the part of American managers.
D) the SRC tendency on the part of Japanese consumers.
E) the limited competition for dolls in Japan.
Answer:
Diff: 2 Page Ref: 169
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

52) Which of the following lists some of the steps in the market research process in the correct order?
A) determine information requirement→problem definition→choose unit of analysis→examine data availability→assess value of research
B) problem definition→assess value of research→determine information requirement→choose unit of analysis→examine data availability
C) examine data availability→problem definition→choose unit of analysis→assess value of research→determine information requirement
D) choose unit of analysis→assess value of research→problem definition→determine information requirement→examine data availability
E) examine data availability→assess the value of research→problem definition→presentation
Answer:
Diff: 2 Page Ref: 168-174
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

53) Anyone undertaking a market research project should understand that the first step is:
A) setting the budget.
B) determining the methodology to use.
C) deciding who will see the final report.
D) defining the problem.
E) determining the information requirement.
Answer:
Diff: 2 Page Ref: 168-169
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

54) For consumer products, qualitative research is especially well suited to:
A) get close to the consumer.
B) describe the cultural context of consumer behavior.
C) identify core brand equity.
D) identify what people really feel.
E) all of the above
Answer:
Diff: 2 Page Ref: 173-174
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

55) Potential markets can be subdivided into:
A) latent and parallel markets.
B) existing and incipient markets.
C) latent and incipient markets.
D) existing and latent markets.
E) incipient and existing markets.
Answer:
Diff: 2 Page Ref: 174-175
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
56) Marketers must be aware of the impact of SRC and other cultural assumptions since:
A) it can have several positive effects on market planning.
B) it enhances management’s willingness to pursue market research.
C) it can help ensure that the research effort is designed with minimal home-country bias.
D) it can help ensure that the research effort is designed with minimal second-country bias.
E) All of the above are correct.
Answer:
Diff: 2 Page Ref: 176
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

57) Which of the following is not true of secondary data about global markets?
A) It was not gathered specifically for the research project at hand.
B) It is often so expensive that small companies can’t afford to use it.
C) It can be accessed quickly.
D) A great deal is available from government agencies.
E) It cannot be retrieved online.
Answer:
Diff: 1 Page Ref: 170-171
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

58) Harley-Davidson celebrates its 110th anniversary in 2013. The company has grown impressively during its century of operations. All of the following mentioned facts regarding the company are true except:
A) the company’s international success came after years of neglecting overseas markets.
B) the company reacted swiftly to a growing threat from Japanese manufacturers.
C) early on, the company used an export-selling approach.
D) early on, it had an underdeveloped dealer network.
E) after the 1980s, they recruited dealers in the important Japanese markets.
Answer:
Diff: 2 Page Ref: 171
AACSB: Reflective Thinking
Objective: 4
Question Type: Synthesis
59) Which of the following correctly reflects marketing expert David Arnold’s recommendations for companies engaged in global market research?
A) use multiple indicators
B) develop customized measures specific to an industry or product
C) conduct comparative assessments in neighboring countries
D) observation should be weighted more heavily than statements of purchase intention
E) all of the above
Answer:
Diff: 2 Page Ref: 173-174
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

60) The decision by Toyota executives to introduce the Sienna minivan in the U.S. market was based on their study of a(n) ________ market.
A) existing
B) latent
C) parallel
D) incipient
E) global
Answer:
Diff: 2 Page Ref: 174
AACSB: Analytic Skills
Objective: 4
Question Type: Application

61) The international marketing manager of an office furniture company ordered a research report on global telecommunications equipment sales. The report noted that, in the early 1990s, AT&T was awarded a $4 billion contract to provide communication network products and services in Saudi Arabia. The manager took this as a cue to put Saudi Arabia on her information agenda, reasoning that office furniture sales would increase as the country’s telephone system was improved. As described here, the marketing manager is viewing Saudi Arabia as a(n):
A) latent market.
B) incipient market.
C) cluster market.
D) existing market.
E) primary market.
Answer:
Diff: 2 Page Ref: 175
AACSB: Reflective Thinking
Objective: 4
Question Type: Synthesis
62) Predicting economic and income growth rates is particularly important when researching which type of market?
A) existing markets
B) latent markets
C) parallel markets
D) incipient markets
E) local markets
Answer:
Diff: 3 Page Ref: 175
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

63) When a survey questionnaire in English is translated into Korean for use in South Korea and then translated back into English to check its accuracy it is described as:
A) incipient translation.
B) comparative translation.
C) native translation.
D) parallel translation.
E) back translation.
Answer:
Diff: 2 Page Ref: 176
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

64) Tools that can be used for collecting primary data include:
A) survey research and interviews.
B) consumer panels and observation.
C) focus groups and survey research.
D) interviews and observation.
E) all of the above
Answer:
Diff: 1 Page Ref: 176-178
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
65) When a trained person is recording the items selected in a grocery cart or basket, the research method is known as:
A) observation.
B) survey research.
C) focus study.
D) secondary data collection.
E) personal interviews.
Answer:
Diff: 2 Page Ref: 176-179
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

66) A marketer of breakfast cereals might send researchers to preselected households at 6 A.M. to watch families go about their morning routines. The client could also assign a researcher to accompany family members to the grocery store to record their behavior under actual shopping conditions. This type of research method is considered as:
A) focus group.
B) invasion of privacy.
C) consumer panel study.
D) factor analysis.
E) observation.
Answer:
Diff: 2 Page Ref: 178
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

67) When the Coca-Cola Company convened focus groups in Europe and Asia to assess potential market acceptance of a contoured aluminum soft drink can, it was attempting to collect ________ data.
A) primary
B) secondary
C) incipient
D) quantitative
E) MIS
Answer:
Diff: 2 Page Ref: 179
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
68) Manufacturers of Splenda, a low-calorie sugar, wanted to arrange a focus group to find out its use in different markets. Open-ended questions were used in order to secure the unconscious attitudes and biases held by the subjects. This type of technique is known as:
A) scaling technique.
B) qualitative technique.
C) projective technique.
D) reactivity technique.
E) MDS technique.
Answer:
Diff: 3 Page Ref: 179
AACSB: Analytic Skills
Objective: 4
Question Type: Critical thinking

69) In Singapore, Coca-Cola wanted to develop an advertisement program. They selected a group of teenagers in a room, and a trained moderator facilitated discussion asking questions on brand’s image, advertisement, social trends, TV watching habits, and snack usage. This type of research is called:
A) survey research.
B) observational studies.
C) comparison studies.
D) focus group research.
E) experimental research.
Answer:
Diff: 2 Page Ref: 179
AACSB: Analytic Skills
Objective: 4
Question Type: Definitional

70) In Mexico City, only 55-60% of the population owns a telephone. The number drops to less than 50% in Guadalajara and Monterey, and 35% or lower in other cities. This will complicate the task of market researchers hoping to use a telephone survey to obtain a ________ of the Mexican population.
A) probability sample
B) convenience sample
C) secondary sample
D) focus group sample
E) quota sample
Answer:
Diff: 2 Page Ref: 180
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
71) Suppose Apple has collected extensive survey data about its new iPhone, and respondents have rated it on twenty different features and benefits. Now researchers want to reduce the amount of data to a few underlying dimensions. Which data analysis technique should the researchers use?
A) analogy
B) conjoint analysis
C) factor analysis
D) multidimensional scaling
E) cluster analysis
Answer:
Diff: 2 Page Ref: 181-182
AACSB: Analytic Skills
Objective: 4
Question Type: Synthesis

72) One study of adult involvement in household tasks revealed greater similarities between the UK and the U.S. compared with France, Belgium, and French Canada. Thus, the U.S. and UK were “twins” based on common language. This study is an example of:
A) market latency.
B) conjoint analysis.
C) factor analysis.
D) multidimensional scaling.
E) cluster analysis.
Answer:
Diff: 3 Page Ref: 182
AACSB: Analytic Skills
Objective: 4
Question Type: Synthesis

73) When consumers have difficulty in verbalizing their perceptions, and there are different alternative brands of toothpaste, what is the best method of judging them in terms of similarity?
A) cluster analysis
B) MDS
C) dependence techniques
D) factor loading
E) focus group
Answer:
Diff: 3 Page Ref: 182-183
AACSB: Analytic Skills
Objective: 4
Question Type: Synthesis
74) Campbell is the world’s largest soup company, commanding about 80% of the U.S. canned soup market. However, the company has a presence in only 6% of the world’s soup markets. Russians eat 32 billion servings of soup each year, and the Chinese consume 300 billion! By contrast, Americans eat 15 billion servings each year. Sensing a huge opportunity, Campbell has dispatched teams to observe Russian and Chines habits. This type of interpretation and decision is based on:
A) demand pattern analysis.
B) income elastic analysis.
C) time series displacement.
D) polycentrism.
E) comparative analysis.
Answer:
Diff: 2 Page Ref: 184-185
AACSB: Reflective Thinking
Objective: 5
Question Type: Critical thinking

75) A market researcher who uses multidimensional scaling (MDS) will:
A) attempt to estimate market size by analogy.
B) ask respondents to rate a particular product or brand in terms of multiple characteristics or attributes.
C) ask respondents to evaluate product or brand pairs in terms of similarity.
D) attempt to determine the combination of product features that create the greatest utility for consumers.
E) conduct a focus group.
Answer:
Diff: 3 Page Ref: 182-185
AACSB: Analytic Skills
Objective: 4
Question Type: Critical thinking
76) In India, only about 10% of men who shave use Gillette razors. Worldwide, 50% of male shavers use Gillette products. To achieve greater penetration in India, Gillette rolled out a no-frills brand that costs 15 rupeesabout 34 cents. The Gillette Guard has a lighter handle that is cheaper to produce. It also lacks the lubrication strip found in Gillette’s more expensive razors, and replacement blades cost only 5 rupees (11 cents). This use of data and process are described as:
A) demand pattern analysis.
B) income elastic analysis.
C) factor analysis.
D) market estimation by analogy.
E) multidimensional scaling.
Answer:
Diff: 2 Page Ref: 185
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

77) According to David Arnold, there are four possible approaches to forecasting by analogy, which does not include which of the following?
A) Data is available on a comparable product in the same country.
B) Data is available on the same product in a comparable country.
C) Data is available on the same product from an dependent distributor in a neighboring country.
D) Data is available about a comparable company in the same country.
E) Data is available on the same product in every country.
Answer:
Diff: 2 Page Ref: 185
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

78) Which of the following is true about etic and emic approaches to country analysis?
A) The etic and emic approaches are identical.
B) An emic approach studies a culture from within; etic analysis is “from the outside.”
C) An emic approach studies a culture “from the outside”; etic analysis studies a culture from within.
D) The emic/etic distinction is not useful in cultural studies.
E) The emic/etic approaches cannot be applied to Asian countries
Answer:
Diff: 2 Page Ref: 186
AACSB: Analytic Skills
Objective: 5
Question Type: Critical thinking
79) A market research study of soft drink consumption and distribution in Hungary commissioned by an American company indicated that soft drinks were available in drugstores. However, Western-style drugstores do not exist in Hungary. This illustrates an important issue in global marketing research, namely:
A) inflated data.
B) using convenience samples.
C) market estimation by analogy.
D) comparability of data.
E) using multiple dimensional scaling.
Answer:
Diff: 3 Page Ref: 184-185
AACSB: Analytic Skills
Objective: 5
Question Type: Critical thinking

80) Whirlpool conducts usability studies that provide insight into the ways consumers interact with its products. In one study in an emerging market, engineers and designers stood behind a two-way mirror and watched as a volunteer put groceries away in a Kenmore Elite refrigerator. The Whirlpool team recorded a variety of data, such as the amount of time required for the volunteer to finish the task and the number of features used. The basis of this research study was based on the fact that:
A) listening to customers is only possible in America.
B) data collected in the U.S. should be applicable in other countries.
C) consumers in different countries prefer different types of features.
D) in China, it will be difficult to find enough space in homes to put refrigerator.
E) in India, refrigerators are seldom used by customers.
Answer:
Diff: 3 Page Ref: 200-201
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking

81) Global competition intensifies the need for effective MIS and business intelligence that are accessible throughout the company. How can IT provide valuable tools in in fulfilling this need as well as conducting global marketing research?
Answer:

82) Authors Michael Czinkota and Ilka Ronkainen identified four specific environmental factors that may require international research efforts to be conducted differently than domestic research. Describe those factors to outline the differences.
Answer:

83) The vice presidents of finance and marketing of a cosmetic company were traveling around the world to estimate the market potential for their products. They came to a busy metropolitan area in India and noticed that most of the women were not using mascara and false eyelashes. The vice president of finance said, “There is no evidence of any market for our products and let us not waste time.” However the vice president of marketing remarked, “We have a great opportunity to market our products.” What is meant by this, and how will you suggest testing the instinct of either vice president?
Answer:

84) Many of the fast food operations are entering markets in Middle Eastern countries. In the United States, breakfast items are very popular and are responsible for a bulk of profit from sales, primarily through drive-in customers. However, to their dismay, managers found that there was practically no demand for breakfast items. Firstly, due to hot weather conditions, people sleep late and wake up late. Secondly, they do not eat burgers, and sausage or bacon is prohibited food. Also, drive-in business is not popular since people go to work at different periods of time. Explain the possible reason(s) behind such a decision and account for its/their failure.
Answer:

85) What are the secondary sources of data and how do these sources differ from primary sources? Give examples of sources from which secondary data can be obtained.
Answer:

86) Discuss the guidelines submitted by David Arnold pertaining to the importance of data gathering for market research. Indicate the rationale behind each guideline.
Answer:

87) Grey China Advertising agency gathers a wealth of information about attitudes and buying patterns of the Chinese in its Grey China Base Annual Consumer Study. Recent findings point to growing concerns about the future, Westernization of grocery purchases, growing market saturation, increasingly discerning customers and a rise in consumer willingness to try new products. These data can be very inconsistent since conflicting findings were reported by different agencies. For example, data gathered by Euromonitor International estimates soft-drink consumption at 23 billion liters in China, while Coca- Cola’s in-house marketing research team places the figure at 39 billion liters. Similar differences were noted in other data published by different agencies. What is the best approach in such situations so that finite decisions can be made? What are the differences between latent and incipient markets?
Answer:

88) How can observational studies and focus groups be used in marketing research? What are the different methods by which these studies are conducted?
Answer:

89) What are “interdependence techniques” in the analysis of data? What type of measurement is possible with this technique, and what are different methods that are used in marketing research?
Answer:

90) What is meant by Comparative Analysis and Market Estimation by Analogy? How can these be helpful in marketing research?
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 7 Segmentation, Targeting, and Positioning

1) “Frugal Engineering” and “Reverse Innovation” are some of the terms that GE, Proctor & Gamble, Siemens, and Unilever are using to describe efforts to penetrate more deeply into emerging markets.
Answer:
Diff: 1 Page Ref: 192
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

2) Global market segmentation is based on the premise that companies should attempt to identify consumers in different countries who share similar needs and desires.
Answer:
Diff: 2 Page Ref: 194
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

3) Sushi, Falafel, Tandoori Chicken or Pizza are in demand in many parts of the world. This phenomenon can be due to pluralization of consumption and segment simultaneity.
Answer:
Diff: 2 Page Ref: 194
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Definitional

4) The fact that significant numbers of pizza-loving consumers are found in many countries indicates that they are eating the exact same thing in all parts of the world.
Answer:
Diff: 1 Page Ref: 194
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Application

5) Global marketers must determine whether a standardized or an adapted marketing mix is required to best serve the wants and needs of the consumers.
Answer:
Diff: 2 Page Ref: 195
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

6) The process of global market segmentation begins with the choice of one or more variables to use as a basis for grouping customers.
Answer:
Diff: 2 Page Ref: 195
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

7) A fact found by demographic segmentation is that by the year 2030, 20% of the U.S. population or 70 million will be 65 years old or older.
Answer:
Diff: 2 Page Ref: 195
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

8) For some consumer products such as cigarettes, soft drinks, and candy that have a low per-unit cost, income is often a more valuable segmentation variable than population.
Answer:
Diff: 2 Page Ref: 196
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

9) About two-thirds of world GNI is generated in the Triad countries, whereas only about 12% of the world’s population is located in those countries.
Answer:
Diff: 2 Page Ref: 196
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

10) The United States ranks number one among nations in terms of both per capita income and in terms of income adjusted for purchasing power for the year 2009.
Answer:
Diff: 2 Page Ref: 196
AACSB: Analytic Skills
Objective: 1
Question Type: Definitional
11) Ideally, GDP and other measures of national income converted to U.S. dollars should be calculated on the basis of purchasing power parities or through direct comparisons of actual prices for a given product.
Answer:
Diff: 2 Page Ref: 196
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

12) In industrialized countries, a significant portion of national income is the value of goods and services that would be free in a poor country.
Answer:
Diff: 2 Page Ref: 197
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

13) In 2009, the 10 most populous countries in the world account for just under 50% of world income; whereas the 10 most populous countries in the world account for roughly 60% of the world’s population.
Answer:
Diff: 2 Page Ref: 197
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

14) The concentration of income in the high-income and large-population countries means that a company can be “global” by targeting buyers in 10 or fewer countries.
Answer:
Diff: 2 Page Ref: 197
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

15) Using averages alone, it is possible to underestimate a market’s potential, for example, fast-growing, higher-income segments are present both in India and China.
Answer:
Diff: 2 Page Ref: 198
AACSB: Reflective Thinking
Objective: 1
Question Type: Application
16) The vast majority of India’s population comprises a “bullock cart” segment whose households lack most comforts but typically own a television.
Answer:
Diff: 2 Page Ref: 199
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

17) A psychographic study showed that Porsche buyers could be divided into several distinct categories, one consisting of “Top Guns” who buy Porsches and expect to be noticed.
Answer:
Diff: 2 Page Ref: 201
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

18) Categories such as “successful idealists” and “affluent materialists” can be used to describe psychographic segments.
Answer:
Diff: 2 Page Ref: 201-202
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

19) Sometimes it is preferable to market to a particular age group rather than a mind-set; in such an instance psychographic studies can help marketers arrive at a deeper understanding of consumer behavior than is possible with traditional segmentation variables.
Answer:
Diff: 2 Page Ref: 201
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

20) For behavior segmentation, marketers use the 80/20 rule when assessing the consumers’ usage rate, which means that 20% of the company’s revenues or profits are accounted for by 80% of the firm’s products or customers.
Answer:
Diff: 2 Page Ref: 202
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
21) Global benefit segmentation is based on a marketer’s understanding of the problem a product solves, the benefit it offers, or the issue it addresses, regardless of geography.
Answer:
Diff: 2 Page Ref: 204
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

22) Pareto’s Law suggests that 80% of a company’s revenues or profits are account for by 20% of a firm’s products or customers.
Answer:
Diff: 2 Page Ref: 204
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

23) America’s Hispanic population shares a common language, and so in ethnic segmentation they can be grouped as one segment.
Answer:
Diff: 2 Page Ref: 205
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking

24) Marketers must understand that many Hispanic Americans live in two worlds; although they identify strongly with the United States, there is also a sense of pride associated with brands that connect to their heritage.
Answer:
Diff: 2 Page Ref: 205
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Synthesis

25) When assessing potential country target markets, management should rely heavily on its network of contacts as a primary criterion for targeting.
Answer:
Diff: 2 Page Ref: 206
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
26) About 1.3 million cars are sold each year in India; in absolute terms, this is a relatively small number.
Answer:
Diff: 2 Page Ref: 206
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

27) India is the world’s fastest growing cell phone market with the industry expanding at a rate of 50% annually with 5 million new subscribers added every month. This is an indication of continued private-sector growth.
Answer:
Diff: 2 Page Ref: 206
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

28) One of the advantages of targeting a market segment globally is that although the segment in a single-country market might be small, even a narrow segment can be served profitably if the segment exists in several countries.
Answer:
Diff: 2 Page Ref: 207
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

29) In China, only about 1% of the population currently owns a credit card. Thus Visa is targeting persons with a monthly salary equivalent to $300 or more.
Answer:
Diff: 1 Page Ref: 207
AACSB: Dynamics of Global Economy
Objective: 5
Question Type: Application

30) Germany’s DHL tried to enter the U.S. package-delivery market in 2003; to achieve scale, DHL acquired Airborne Express. However they could not compete with entrenched incumbents FedEx and UPS. This is an example of incorrect position and product mix.
Answer:
Diff: 2 Page Ref: 208
AACSB: Reflective Thinking
Objective: 5
Question Type: Application
31) In India, refrigeration is not widely available and this restricts many foreign companies from marketing items that need refrigeration. This can be considered as one of the “enabling conditions” that needs to be considered in a marketing model.
Answer:
Diff: 2 Page Ref: 210
AACSB: Analytic Skills
Objective: 5
Question Type: Application

32) When making a decision about market entry timing, a company’s management team should understand that the first-mover always becomes the market leader.
Answer:
Diff: 2 Page Ref: 210
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

33) One of the first-mover disadvantages is that a late-mover competitor may reap benefit from the investments made in marketing and establishing in a country.
Answer:
Diff: 2 Page Ref: 210
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

34) BMW’s slogan “the ultimate driving machine,” is an example of an attribute or benefit which has proven successful in their positioning strategy.
Answer:
Diff: 2 Page Ref: 211-212
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

35) Standardized global marketing is analogous to mass marketing in a single country and is also known as differentiated target marketing.
Answer:
Diff: 1 Page Ref: 212
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional
36) Differentiated global marketing represents a more ambitious approach than concentrated target marketing.
Answer:
Diff: 2 Page Ref: 213
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

37) There is a significant difference between the “mass market” and the “premium market.” In the premium market customers are looking for a good deal whereas in the mass market customers are looking for a product that fulfills their expectations.
Answer:
Diff: 2 Page Ref: 213
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

38) IKEA, the home furnishings retailer based in Sweden, wraps itself in the Swedish flag — literally, since inside and out, their stores are decorated in the national colors of blue and yellow. This is an example of local consumer culture positioning.
Answer:
Diff: 2 Page Ref: 214-215
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

39) Benetton uses the slogan “United Colors of Benetton” to position itself as a brand concerned with the unity of humankind. This type of strategy is referred to as GCCP (global consumer culture positioning).
Answer:
Diff: 2 Page Ref: 214-215
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

40) Lack of scale and a shortage of capital are just two of the problems associated with reaching the world’s poor. Prices can also be a problem. There is an ample evidence that world’s best known global marketers recognize this. For example, Adidas has developed a sneaker priced at one euro that it hopes to sell in Bangladesh.
Answer:
Diff: 2 Page Ref: 221
AACSB: Reflective Thinking
Objective: 5
Question Type: Critical thinking

41) The efforts of global companies to reach low-income consumers in emerging markets highlight the importance of skillful global market segmentation and targeting. Market segmentation represents:
A) targeting prospective customers.
B) finding customers who can respond to advertisement.
C) promoting products and services internationally.
D) identifying customers who can help in promoting products.
E) an effort to identify and categorize customers based on common characteristics.
Answer:
Diff: 2 Page Ref: 193
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

42) When identifying global market segments, a fundamental guiding principle should be the need to determine:
A) shared demographic characteristics.
B) similar languages.
C) similar needs and buying behavior.
D) similar ethnic backgrounds.
E) similar geographic regions.
Answer:
Diff: 2 Page Ref: 193
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

43) One writer suggested that some themes are universal and could be used in advertising around the globe. Examples of this theme include all of the following except:
A) the desire to be beautiful.
B) the desire to be healthy.
C) the desire to be free of pain.
D) the desire to copy others.
E) the love of mother and child.
Answer:
Diff: 2 Page Ref: 193
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

44) Global marketing authority Theodore Levitt has noted that many ethnic and regional foodssushi, for exampleare enjoying popularity in many countries of the world. This observation is known as:
A) the pluralization of consumption.
B) the ethnicitization of consumption.
C) the democratization of consumption.
D) the sophistication of consumption.
E) the domestication of consumption.
Answer:
Diff: 2 Page Ref: 194
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

45) A. Coskun Samli had developed a useful approach to global market segmentation that compares and contrasts “conventional” versus “unconventional” wisdom. An example of unconventional wisdom is:
A) since per capita income in India is about $1,180, assuming that all Indians have low incomes.
B) assuming that consumers in Europe and Latin America are interested in World Cup soccer whereas Americans are not.
C) assuming that there is a presence of a higher-income middle-class segment in India.
D) assuming that the potential Indian customer base for a McDonald’s is larger than the size of entire developed countries.
E) assuming that there is no running water and electricity in India.
Answer:
Diff: 3 Page Ref: 194
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

46) The process of global market segmentation begins with the choice of one or more variables to use as a basis for grouping customers. All of the following are variables that are commonly used except:
A) demographics.
B) polycentrics.
C) behavioral characteristics.
D) benefits sought.
E) psychographics.
Answer:
Diff: 2 Page Ref: 195
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

47) Based on 2009 projections, the top ten nations ranked by per capita income do not include:
A) United States.
B) Japan.
C) Russia.
D) Spain.
E) Italy.
Answer:
Diff: 3 Page Ref: 196
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking

48) Ericsson, IKEA, Saab, and other companies based in Sweden have looked beyond their borders for significant growth market because:
A) Sweden has high total annual income.
B) Sweden has low total annual income.
C) Sweden has a smaller population.
D) Sweden is land locked geographically.
E) Sweden has relaxed export policies.
Answer:
Diff: 3 Page Ref: 197
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

49) The concentration of income in the high-income and large-population countries means that a company can be “global” by targeting buyers in:
A) just 50 countries.
B) just 20 countries.
C) just 10 or fewer countries.
D) just 30 countries.
E) none of the above
Answer:
Diff: 3 Page Ref: 197
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking
50) A global segment is referred to as “global elite” which includes:
A) people between the ages of 12 and 19.
B) affluent, well-traveled persons.
C) graying population.
D) technology professionals.
E) persons having power.
Answer:
Diff: 3 Page Ref: 200
AACSB: Analytic Skills
Objective: 2
Question Type: Definitional

51) McDonald’s operates in over 118 countries; however, 80% of its restaurants are located in nine countries which does not include the following country market:
A) Australia.
B) Brazil.
C) Germany.
D) India.
E) Japan.
Answer:
Diff: 2 Page Ref: 200
AACSB: Analytic Skills
Objective: 2
Question Type: Application

52) Psychographic segmentation involves grouping people in terms of their:
A) combined household income.
B) age and income.
C) attitudes, values and lifestyle.
D) psychological well being.
E) gender.
Answer:
Diff: 2 Page Ref: 201-202
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
53) Porsche AG uses the label “Top Guns” to describe one segment of its customers, namely those who care about power and control and who expect to be noticed. Such a profile would be based on which type of segmentation?
A) demographic
B) occupational
C) psychographic
D) behavioral
E) gender
Answer:
Diff: 2 Page Ref: 201-202
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

54) In the study entitled “The Euroconsumer: Marketing Myth or Cultural Certainty?” the researchers identified four lifestyle groups. The group that represent mainstream European consumers was labeled as:
A) Successful Idealists.
B) Affluent Materialists.
C) Young Professionals.
D) Trendy Teens.
E) Disaffected Survivors.
Answer:
Diff: 3 Page Ref: 202
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis

55) Sony’s U.S. Consumer segments included all of the following except:
A) Affluent.
B) Zoomers.
C) SoHo.
D) Gen Y.
E) Fashionists.
Answer:
Diff: 3 Page Ref: 202
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis
56) “Usage rates” and “user status” are important criteria for which segmentation variable?
A) demographic
B) occupational
C) psychographic
D) behavioral
E) benefit
Answer:
Diff: 2 Page Ref: 202
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

57) Campbell Soup is making significant inroads into Japan’s $500 million soup market as time-pressed homemakers place a premium on convenience. This type of consumer segmentation by Campbell Soup is referred to as:
A) demographic.
B) occupational.
C) psychographic.
D) benefit.
E) behavioral.
Answer:
Diff: 2 Page Ref: 204
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

58) Diageo PLC, V&S Vin & Spirit AB, and Seagram and other marketers know that Russians consume a great deal of vodka. This type of market segmentation can be classified as:
A) demographic.
B) behavioral.
C) psychographic.
D) occupational.
E) benefit.
Answer:
Diff: 2 Page Ref: 202-204
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
59) Several years ago, the DMBB agency created a single-country psychographic profile that includes segment labels such as “Cossacks” and “kuptsy.” What country does the survey cover?
A) India
B) Japan
C) Russia
D) China
E) Vietnam
Answer:
Diff: 2 Page Ref: 203
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Application

60) In response to increasing worldwide concerns about obesity, diabetes, and other food-related health issues, some of the world’s largest food companies are developing new products. Nestle and Groupe Danone SA have developed several health-foods which include all of the following except:
A) Souvenaid.
B) Activa.
C) NutriChoice.
D) Nutraceuticals.
E) Medical Foods.
Answer:
Diff: 2 Page Ref: 204
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

61) Procter & Gamble has identified a group of consumers in Europe who are willing to pay premium prices for pet food that will improve the health of their pets. This is an example of ________ segmentation:
A) demographic
B) psychographic
C) ethnic
D) behavioral
E) benefit
Answer:
Diff: 2 Page Ref: 204
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
62) Three Mexican retailersFamso, Grupo Gigant SA, and Grupo Commercial Chedraui SA have opened stores in the United States. This is an indication of:
A) U.S. retailers were lagging behind in collecting demographic information.
B) the Mexican retailers provide better products than American stores.
C) the Hispanic American segments represent a great opportunity for marketers.
D) American businesses cannot compete with Mexican retailers.
E) the Mexican retailers would like to compete with businesses like Best Buy and Circuit City.
Answer:
Diff: 2 Page Ref: 205
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Application

63) Which of the following is true about efforts by automakers to target the Hispanic segment in the United States?
A) Honda, Toyota, Ford, and GM all began targeting the segment years ago.
B) Honda and Toyota began targeting the segment years ago; Ford and GM launched their efforts more recently.
C) Ford and GM began targeting the segment years ago; Honda and Toyota launched their efforts more recently.
D) Only Ford and GM are targeting the Hispanic segment.
E) none of the above
Answer:
Diff: 2 Page Ref: 205
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Application

64) Which of the following criteria should marketers use when assessing opportunity in global target markets?
A) current size of the segment
B) anticipated growth potential
C) competition
D) compatibility with company’s overall objectives
E) all of the above
Answer:
Diff: 2 Page Ref: 208-209
AACSB: Reflective Thinking
Objective: 3
Question Type: Application
65) Global automakers are targeting the U.S. market with SUVs. All of the following SUVs are assembled or manufactured in the listed country except:
A) Porsche in Germany.
B) Honda in Japan.
C) Volkswagen in Slovakia.
D) Kia in India.
E) Mercedes-Benz in the United States.
Answer:
Diff: 2 Page Ref: 207
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis

66) Managers must decide how well a company’s product fits the country market by asking the following questions except:
A) Will adaptation be required?
B) Will import restriction drive up the product price?
C) Is it advisable to source locally?
D) Will strong home currency have an adverse impact on product price?
E) Will it be possible to neglect home-country regulations?
Answer:
Diff: 2 Page Ref: 208
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

67) The feasibility of targeting a particular market segment can be negatively impacted by various factors which does not include:
A) regulatory hurdles.
B) cultural barriers.
C) lack of distribution system.
D) time required to establish business.
E) surplus demand.
Answer:
Diff: 2 Page Ref: 208-209
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
68) The basis for global marketing expert David Arnold’s framework for screening intercountry comparisons include:
A) demographic data.
B) “top-down” segmentation analysis.
C) “bottom-up” segmentation analysis.
D) income level.
E) population data.
Answer:
Diff: 2 Page Ref: 209
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

69) Basic criteria that marketers should keep in mind while assessing opportunities in global markets include all of the following except:
A) current size of the market segment.
B) anticipated growth potential of the market.
C) compatibility with company’s overall objectives.
D) competition in the market.
E) securing first mover advantage.
Answer:
Diff: 3 Page Ref: 210
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

70) Companies like Coca-Cola had the first-mover advantage since they were the first company to enter a global market. However, there are also first-mover disadvantages which include:
A) best chance of becoming world leader.
B) advantage in adapting to the local culture.
C) lead in advertising and promotion exposure.
D) gain business experience.
E) substantial investments in marketing.
Answer:
Diff: 2 Page Ref: 210
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
71) The Swatch Group markets watches in all price ranges, from the Swatch brand at the low end to luxury brands such as Longines, Blancpain, and Breguet. Which target market strategy does this illustrate?
A) standardized global marketing
B) concentrated global marketing
C) differentiated global marketing
D) psychographic global marketing
E) none of the above
Answer:
Diff: 2 Page Ref: 213
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

72) Positioning refers to the act of:
A) determining on what points on the globe to target.
B) ensuring a choice retail shelf location.
C) differentiating a brand in customer’s mind.
D) formulating a private label strategy.
E) formulating a companion product.
Answer:
Diff: 2 Page Ref: 213-214
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

73) For years, ads for Volvo automobiles stressed safety features and protection in the event of a crash. Thus, Volvo automobiles developed a reputation based on which positioning strategy?
A) use/user
B) attribute/benefit
C) competition
D) high touch
E) quality/price
Answer:
Diff: 2 Page Ref: 214
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional
74) Ads by BMW advertise it as the “ultimate driving machine” which is described as positioning based on:
A) high touch.
B) use/user.
C) attribute/benefit.
D) competition.
E) quality/price.
Answer:
Diff: 2 Page Ref: 214
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

75) Some of Body Shop’s recent advertising has emphasized the difference between the company’s principles and those of “mainstream” cosmetics companies on such issues as animal testing. As described here, Body Shop’s ads illustrate positioning by ________.
A) competition
B) niche
C) quality/price
D) attribute/benefit
E) culture
Answer:
Diff: 2 Page Ref: 215-216
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

76) Which of the following is generally true about the marketing of high-touch products such as fine china and crystal?
A) It relies equally on specialized information and image.
B) It relies less on image and more on specialized information.
C) It relies less on specialized information and more on image.
D) Neither image nor specialized information is relevant to the marketing of high-touch products.
E) It relies partially on specialized information and partially on image.
Answer:
Diff: 2 Page Ref: 216-217
AACSB: Reflective Thinking
Objective: 5
Question Type: Application
77) Consumers shopping for high-touch products such as fine perfume are generally energized by ________ motives.
A) emotional
B) rational
C) both emotional and rational
D) neither emotional nor rational
E) high tech
Answer:
Diff: 2 Page Ref: 216-217
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

78) When a marketer understands that a product satisfies a buyer’s rational criteria while also evoking an emotional response, the marketer should:
A) only target consumers in high-income countries.
B) utilize a multitiered targeting strategy rather than a concentrated strategy.
C) commission psychographic segmentation studies to augment demographic data.
D) create advertising that reflects a bipolar, high-tech and high-touch approach.
E) follow normal targeting strategy.
Answer:
Diff: 2 Page Ref: 217
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

79) Which of the following is true of advertising for the Heineken and Foster’s brands in the United States?
A) Both Heineken and Foster’s utilize the GCCP strategy.
B) Both Heineken and Foster’s utilize the FCCP strategy.
C) Heineken utilizes the GCCP strategy; Foster’s utilizes the FCCP strategy.
D) Heineken utilizes the FCCP strategy; Foster’s utilizes the GCCP strategy.
E) Heineken utilizes the LCCP strategy; Foster’s utilizes the GCCP strategy.
Answer:
Diff: 2 Page Ref: 217
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional
80) The world’s best-known cosmetics companies are setting their sights on a lucrative new market segment: the emerging middle classes in countries such as Brazil, Russia, India, and China. However these companies have to understand:
A) that women’s preferences in those countries are almost similar.
B) that Chinese consumers are not willing to invest in beauty products.
C) what beauty means to Chinese women.
D) that working Indian women prefer only local brands.
E) cosmetics are preferred mostly by the top end of the market in China.
Answer:
Diff: 3 Page Ref: 222
AACSB: Reflective Thinking
Objective: 5
Question Type: Critical thinking

81) What is psychographic segmentation, and how do marketers use it in targeting different world markets?
Answer:

82) Due to globalization “it is a small world after all.” Also, vast scale migration of populations due to various reasons, including opportunities, has created large segments of ethnic population. Considering these facts, highlight the ethnic segmentation and its importance.
Answer:

83) What are some of the pitfalls in assessing market potential and choosing target markets or segments?
Answer:

84) In India, 60 million middle-class men and women earn more than $275 per month. The segment is growing rapidly and is expected to increase to 73 million by 2010. Young consumers are buying international brands and the economy is strong. India is also the world’s fastest growing cell phone market. The industry is expanding at a rate of 50% annually, with 5 million new subscribers added every month. Still, barriers originating in the political and regulatory environments have shackled private-sector growth. Considering all of the above-mentioned aspects, is the market segment large enough for a company to utilize the opportunity and make a profit? Does it have enough potential for future growth to make it attractive for any company to pursue a long-term strategy?
Answer

85) Assume that the market segment is judged to be large enough, and the strong competitors are either absent or deemed to be vulnerable, then is it safe to enter the country? Justify your answer by giving reasons.
Answer:

86) Discuss the basics of a framework for selecting target markets highlighting the salient features of David Arnold’s framework.
Answer:

87) After evaluating the identified segments, decisions have to be made whether to pursue a particular opportunity or not. Assuming the decision is made to proceed, an appropriate targeting strategy must be developed. Explain the basic categories of target marketing strategies and how they can be implemented.
Answer:

88) The world’s best-known cosmetics companies are setting sights on a lucrative new market segment: the emerging middle classes in countries such as Brazil, Russia, India, and China. What understandings and factors should be considered by these companies to be successful in markets in those countries?
Answer:

89) Colgate Total toothpaste is positioned as the brand that addresses all aspects of oral health. Such positioning is very important from the business point of view. How does positioning help in deciding on a marketing strategy? What are the differences between using “attribute or benefit” and “quality and price” as positioning strategy?
Answer:

90) What are the major differences between global, foreign, and local consumer culture positioning? Why are these differences significant? Give examples of how companies are trying to lure customers using these positioning strategies.
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 8 Importing, Exporting, and Sourcing

1) In response to the ongoing economic crisis, U.S. President Barack Obama created a National Export initiative and established the President’s Export Council.
Answer:
Diff: 2 Page Ref: 225
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

2) The terms “export selling” and “export marketing” are interchangeable.
Answer:
Diff: 1 Page Ref: 225
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

3) “Export selling” involves tailoring various elements of the marketing mix to global market requirements.
Answer:
Diff: 1 Page Ref: 225-226
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

4) Export marketing requires an understanding of the target market environment.
Answer:
Diff: 2 Page Ref: 226
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

5) After the research effort has zeroed in on potential markets, there is no substitute for a personal visit to size up the market firsthand and begin the development of an actual export marketing program.
Answer:
Diff: 2 Page Ref: 226
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional
6) Milan is widely regarded as the design capitol of the world. The year 2011 marked the 50th anniversary of the “Milan Furniture Fair,” the world’s largest furniture and home furnishings trade fair.
Answer:
Diff: 2 Page Ref: 226
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

7) Research has shown that exporting is essentially a developmental process that can be divided into several stages.
Answer:
Diff: 2 Page Ref: 227
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

8) It was found by research that even the most experienced exporters express lack of confidence in their knowledge about shipping arrangements, payment procedures, and regulations.
Answer:
Diff: 2 Page Ref: 228
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

9) Representatives of the apparel, footwear, and textile industries in may countries are deeply concerned about the impact increased trade with China will have on these sectors.
Answer:
Diff: 2 Page Ref: 228
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

10) The four tigers—Singapore, South Korea, Taiwan and Hong Kong—learned from the Japanese experience and built strong export-based economies of their own.
Answer:
Diff: 2 Page Ref: 228
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking
11) Potential export problems include packaging, government red tape, warehousing, advertising, and trade restrictions.
Answer:
Diff: 2 Page Ref: 228
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

12) The WTO recently ruled that America’s foreign sales corporation (FSC) law was acceptable to signatory countries.
Answer:
Diff: 2 Page Ref: 229
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

13) The Common Agricultural Policy (CAP) determines the level of subsidies granted to farmers in Latin America.
Answer:
Diff: 2 Page Ref: 230
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

14) In an effort to facilitate exports, countries are designating certain areas as “free trade zones” (FTZ) or “special economic zones” (SEZ).
Answer:
Diff: 2 Page Ref: 230
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

15) Tariffs can be thought of as the “three R’s” of global business: rules, rigor, and regulations of individual countries.
Answer:
Diff: 2 Page Ref: 230
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
16) The Harmonized Tariff System (HTS) is currently the dominant system for determining tariffs.
Answer:
Diff: 2 Page Ref: 230
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

17) Under the HTS, only U.S. exports valued at more than $2,500 are counted in export statistics.
Answer:
Diff: 2 Page Ref: 230
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

18) The Harmonized Tariff System (HTS) has eliminated virtually all problems associated with assigning tariff classifications to new products.
Answer:
Diff: 2 Page Ref: 230-231
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

19) According to the recent import regulations in the United States, action figures that represent non-human creatures such as monsters or robots are categorized as toys and qualified for lower duties than human figures that are classified as dolls.
Answer:
Diff: 2 Page Ref: 232
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

20) A nontariff barrier (NTB) is a hidden trade barrier which is a deterrent or obstacle to the sale of products in a foreign market.
Answer:
Diff: 2 Page Ref: 232
AACSB: Reflective Thinking
Objective: 4
Question Type: Application
21) The Buy American Act of 1933, which stipulates that U.S. federal agencies must buy articles produced in the United States unless domestically produced goods are not available, is an example of discriminatory procurement policies.
Answer:
Diff: 2 Page Ref: 232
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

22) The Fly American Act is an example of a nontariff barrier.
Answer:
Diff: 1 Page Ref: 232
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

23) According to a speech given by President Barack Obama, in many ways we can measure America’s bottom line by looking at Caterpillar’s bottom line.
Answer:
Diff: 2 Page Ref: 233
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

24) In 2005, the U.S. Commerce Department determined that wooden bedroom furniture from China was being dumped, that is, sold less than fair value. Tariffs ranging from 1% to more than 200% was imposed.
Answer:
Diff: 2 Page Ref: 234
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

25) When Honda’s U.S. manufacturing subsidiaries purchase parts from Japan, customs authorities in the United States have the right to scrutinize the transfer price to make sure it is a fair reflection of market value.
Answer:
Diff: 2 Page Ref: 236
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional
26) An ad valorem duty is expressed as a percentage of the value of goods.
Answer:
Diff: 2 Page Ref: 236
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

27) CVDs are duties imposed on imported videodiscs.
Answer:
Diff: 2 Page Ref: 237
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

28) Foreign purchasing agents are also referred to as jobbers.
Answer:
Diff: 2 Page Ref: 237
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

29) “Piggyback exporter,” “cooperative exporter,” and “export vendor” are all terms used to describe an export broker.
Answer:
Diff: 1 Page Ref: 237
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

30) The cooperative exporters are sometimes referred to as “mother hen.”
Answer:
Diff: 2 Page Ref: 238
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

31) In an export/import transaction requiring a letter of credit (L/C), the exporter’s (seller’s) bank can be known as the “advising” bank, the “confirming” bank, or both.
Answer:
Diff: 2 Page Ref: 240-241
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional
32) When a letter of credit is used in an import/export transaction, the payment obligation lies with the importer’s bank rather than the importer itself.
Answer:
Diff: 2 Page Ref: 240-241
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional

33) Goods that are sold on open account are paid for before delivery.
Answer:
Diff: 2 Page Ref: 242
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional

34) The Customs Trade Partnership Against Terrorism (C-TPAT) recognizes that U.S. Customs and Border Protection (CBP) is responsible for screening import cargo transactions.
Answer:
Diff: 1 Page Ref: 243
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional

35) Duty drawback refers to refunds of duties paid on imports that are processed or incorporated into other goods and then reexported.
Answer:
Diff: 2 Page Ref: 243
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional

36) Outsourcing means shifting undesirable jobs or work assignments to another company to cut costs. When the outsourced work moves to another country, the terms “global outsourcing” or “offshoring” are used.
Answer:
Diff: 2 Page Ref: 243-244
AACSB: Reflective Thinking
Objective: 8
Question Type: Definitional

37) One of the keys to the success of The Swatch Group’s Swatch watch brand has been manufacturing in low-wage Asian countries.
Answer:
Diff: 2 Page Ref: 245
AACSB: Reflective Thinking
Objective: 8
Question Type: Application

38) Comedies such as Outsourced that traffic in parodies and satires of cultural stereotypes are popular in India.
Answer:
Diff: 2 Page Ref: 246
AACSB: Multicultural and Diversity
Objective: 8
Question Type: Critical thinking

39) Dell Computer recently rerouted some of its call center jobs back to the United States after complaints from key business customers that Indian tech support workers were offering scripted responses and having difficulty answering complex problems.
Answer:
Diff: 2 Page Ref: 247
AACSB: Reflective Thinking
Objective: 8
Question Type: Synthesis

40) In deciding where to source a product or locate a manufacturing activity, a manager must take into account foreign exchange rate trends in various parts of the world.
Answer:
Diff: 2 Page Ref: 248
AACSB: Reflective Thinking
Objective: 8
Question Type: Application

41) Export marketing does not require:
A) an understanding of the target market environment.
B) the use of marketing research.
C) identification of market potential.
D) a selling approach.
E) any decisions concerning product design.
Answer:
Diff: 2 Page Ref: 226
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

42) Which of the following is not true about a personal visit to size up the market firsthand and begin the development of an actual export-marketing program?
A) Confirm assumptions regarding market potential.
B) Contradict assumptions regarding market potential.
C) Gather additional data to help make decisions.
D) Develop a marketing plan in cooperation with local agents.
E) To have face-to-face meeting and avoid going to trade shows.
Answer:
Diff: 2 Page Ref: 226
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

43) The possible arrangements of the responsibilities for handling exports include all of the following except:
A) as a part-time activity performed by domestic employees.
B) through an export partner affiliated with the domestic marketing structure.
C) through an export department within an international division.
D) through an export department that is independent of the domestic marketing structure.
E) through an export department of an embassy in foreign country.
Answer:
Diff: 2 Page Ref: 227
AACSB: Reflective Thinking
Objective: 6
Question Type: Application

44) According to percent market share of top ten apparel exporting countries to the United States, which country ranked as number one in 2010?
A) Taiwan
B) China
C) Mexico
D) India
E) Honduras
Answer:
Diff: 2 Page Ref: 228
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

45) The Ministry of International Trade and Industry (MITI) has helped devise export strategies for companies in:
A) Singapore.
B) South Korea.
C) Taiwan.
D) Hong Kong.
E) Japan.
Answer:
Diff: 2 Page Ref: 228
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

46) Which of the following was a major U.S. tax incentive for exporters that the WTO recently ruled was an illegal subsidy?
A) NTR
B) CVD
C) FSC
D) NTB
E) HTS
Answer:
Diff: 2 Page Ref: 229
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

47) The export and import process can entail red tape and bureaucratic delays. In an effort to facilitate exports, countries are designating certain areas as:
A) import control zones.
B) special tariff zones.
C) global business zones.
D) free trade zones.
E) duty free zones.
Answer:
Diff: 2 Page Ref: 230
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

48) Which of the following is described as the three R’s of global business: rules, rate schedules, and regulations?
A) quotas
B) tariffs
C) NTBs
D) NTR
E) duties
Answer:
Diff: 2 Page Ref: 230
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

49) Which of the following refers to a system of farm subsidies in Europe?
A) CVD
B) FSC
C) CAP
D) HTS
E) NTR
Answer:
Diff: 3 Page Ref: 230
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

50) Which of the following establishes classification numbers that must be used by importers and exporters?
A) NTR
B) CVD
C) FSC
D) NTB
E) HTS
Answer:
Diff: 3 Page Ref: 230
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
51) Restrictive administrative and technical regulations can create barriers to trade which may take all of the following forms except:
A) antidumping regulations.
B) product size regulations.
C) safety and health regulations.
D) common agricultural policies.
E) safety and pollution regulations.
Answer:
Diff: 2 Page Ref: 233
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

52) In an effort to attract assembly operations, Brazil allows certain product components to be imported at reduced tariff rates. This is an example of:
A) offsets.
B) preferential tariffs.
C) the effect of the Customs Valuation Code.
D) an EMC.
E) discriminatory procurement.
Answer:
Diff: 2 Page Ref: 236
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

53) A duty that represents a certain percentage of the value of a particular product is a(n):
A) specific duty.
B) ad valorem duty.
C) BTN duty.
D) “schedule B” duty.
E) antidumping duty.
Answer:
Diff: 2 Page Ref: 236
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional
54) The sale of merchandise in export markets at unfair prices is known as ________.
A) dumping.
B) countervailing.
C) tariff.
D) ad valorem.
E) transaction.
Answer:
Diff: 3 Page Ref: 237
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

55) Which of the following types of duties would be imposed on a company whose home-country government provided export subsidies?
A) ad valorem duty
B) countervailing duty
C) antidumping duty
D) specific duty
E) customs duty
Answer:
Diff: 2 Page Ref: 237
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

56) Sweden applies a system to certain categories of imported agricultural products which is referred to as:
A) temporary surcharges.
B) ad valorem duty.
C) variable import levies.
D) specific duty.
E) countervailing duty.
Answer:
Diff: 3 Page Ref: 237
AACSB: Reflective Thinking
Objective: 6
Question Type: Application
57) Which of the following is sometimes referred to as a “buyer for export” or an “export commission house” and operates on behalf of a buyer from a foreign country?
A) foreign purchasing agent
B) export broker
C) export merchant
D) export management company
E) freight forwarder
Answer:
Diff: 2 Page Ref: 237
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

58) Which of the following receives a fee for bringing together an exporter and a buyer in another country?
A) foreign purchasing agent
B) export broker
C) export merchant
D) export management company
E) freight forwarder
Answer:
Diff: 2 Page Ref: 237
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

59) ________ is a/an independent marketing intermediary that acts as the export department for two or more manufacturers whose product lines do not compete with each other.
A) Manufacturer’s export agent
B) Export commission representative
C) Export merchant
D) Export management company
E) Cooperative exporter
Answer:
Diff: 2 Page Ref: 238
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional
60) ________ are licensed specialists in traffic operations, customs clearance, and shipping tariffs and schedules. They can be considered as the travel agents for handling export goods.
A) Foreign purchasing agents
B) Export brokers
C) Export merchants
D) Freight forwarders
E) Cooperative exporters
Answer:
Diff: 2 Page Ref: 238
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

61) Direct representation, as opposed to representation by independent intermediaries for exporting in the market country, has several advantages which do not include:
A) facilitates control and communications.
B) allows decisions concerning program development and resource allocation.
C) benefits when a product is not yet established in a market.
D) ensures marketer’s interest and special efforts.
E) helps selling products directly to the consumer in the market country.
Answer:
Diff: 3 Page Ref: 239
AACSB: Reflective Thinking
Objective: 6
Question Type: Synthesis

62) Which of the following offers a company the best assurance of being paid for exported goods?
A) a letter of credit
B) a “piggyback” arrangement
C) a swap
D) an in-house export organization
E) a certified check
Answer:
Diff: 1 Page Ref: 240
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional
63) The international standard by which letters of credit (L/Cs) are interpreted is known as the ________ 500.
A) UCP
B) NTR
C) FSC
D) NTB
E) HTS
Answer:
Diff: 2 Page Ref: 240
AACSB: Reflective Thinking
Objective: 8
Question Type: Definitional

64) Which of the following documents represents title to goods in an export transaction?
A) bill of lading
B) invoice
C) packing list
D) certificate of origin
E) insurance certificates
Answer:
Diff: 2 Page Ref: 240-241
AACSB: Reflective Thinking
Objective: 8
Question Type: Definitional

65) An irrevocable letter of credit transfers the payment obligation for an export deal from the buyer to the buyer’s ________.
A) in-house export organization
B) bank
C) freight forwarder
D) credit union
E) checking account
Answer:
Diff: 1 Page Ref: 241
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional
66) Which set of documents generally represents the minimum documentation required to clear a shipment through customs?
A) packing list, commercial invoice
B) bill of exchange, commercial invoice
C) certificate of origin, bill of exchange
D) packing list, insurance certificate
E) letter of credit, commercial invoice
Answer:
Diff: 3 Page Ref: 241
AACSB: Analytic Skills
Objective: 7
Question Type: Definitional

67) Which of the following completely eliminates the risk of nonpayment by an importer or a bank in an international transaction?
A) documentary credit (letter of credit)
B) documentary collection
C) cash in advance
D) sales on open account
E) draft
Answer:
Diff: 2 Page Ref: 241
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional

68) Which of the following correctly states the role of banks in import/export transactions involving a letter of credit (L/C)?
A) The importer’s bank is the advising and/or confirming bank; the exporter’s bank is the issuing bank.
B) The exporter’s bank is the advising and/or confirming bank; the importer’s bank is the issuing bank.
C) The exporter’s bank is the advising, confirming, and issuing bank.
D) The importer’s bank is the advising, confirming, and issuing bank.
E) none of the above
Answer:
Diff: 3 Page Ref: 241-242
AACSB: Analytic Skills
Objective: 7
Question Type: Application
69) In which of the following forms of export financing does a bank assume a financial obligation?
A) with an L/C but not a documentary collection
B) with a documentary collection but not an L/C
C) neither an L/C nor a documentary collection requires a bank to assume financial obligation
D) with either an L/C or a collection letter
E) with both an L/C and a documentary collection
Answer:
Diff: 2 Page Ref: 241-242
AACSB: Analytic Skills
Objective: 7
Question Type: Definitional

70) Which of the following incorrectly states the role of banks in import/export transactions involving a letter of credit (L/C)?
A) The exporter’s bank is the advising and/or confirming bank.
B) The importer’s bank is the advising and/or confirming bank.
C) The importer’s bank is the advising, confirming, and issuing bank.
D) The exporter’s bank is the advising, confirming, and issuing bank.
E) The importer’s bank is neither advising nor confirming bank.
Answer:
Diff: 3 Page Ref: 241-242
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional

71) Which of the following arranges export financing payment methods in descending order starting with the most secure/reliable and ending with the least secure/reliable:
A) sales on open account→cash in advance→documentary credit (L/C) →documentary collection (draft)
B) documentary credit (L/C)→sales on open account→documentary collection (draft)→cash in advance
C) documentary collection (draft)→documentary credit (L/C)→cash in advance→sales on open account
D) cash in advance→documentary credit (L/C)→documentary collection (draft)→sales on open account
E) none of the above
Answer:
Diff: 3 Page Ref: 241-243
AACSB: Analytic Skills
Objective: 7
Question Type: Critical thinking
72) Which of the following financing methods would be used by an exporter that enjoys good relations with a buyer in a well-established market?
A) letter of credit
B) cash in advance
C) sales on open account
D) barter
E) arrival draft
Answer:
Diff: 2 Page Ref: 242-243
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional

73) Which of the following methods of financing would be used if the exporting and importing parties had a strong, long-standing relationship?
A) documentary credit (letter of credit)
B) documentary collection
C) cash in advance
D) sales on open account
E) bank draft
Answer:
Diff: 3 Page Ref: 242-243
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional

74) In the post-September 11 business environment in the United States, imports have come under increased security. One of the initiatives taken in the interest of national security is:
A) NAFTA.
B) C-TPAT.
C) WTO.
D) NTB.
E) FSC.
Answer:
Diff: 2 Page Ref: 243
AACSB: Reflective Thinking
Objective: 6
Question Type: Synthesis
75) The organizational decision to purchase production inputs, components, or finished goods from domestic or foreign producers is known as the ________ decision.
A) import/export
B) NTB
C) preferential
D) sourcing
E) security
Answer:
Diff: 1 Page Ref: 243
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

76) The chief executives of Swiss Swatch Group and Japanese Canon would like to:
A) outsource all of the manufacturing units overseas in order to save money.
B) outsource a majority of the manufacturing functions overseas.
C) retain a majority, if not all, of the manufacturing in their home country.
D) establish “call centers” in developing countries in order to save labor costs.
E) outsource a full line of new products only.
Answer:
Diff: 2 Page Ref: 245
AACSB: Reflective Thinking
Objective: 8
Question Type: Synthesis

77) If the dollar, the yen, or the euro becomes seriously overvalued, a company with a production capacity in other locations can achieve competitive advantage by:
A) buying different currencies before major fluctuations take place.
B) conducting transactions in different currencies of the world.
C) shifting production among different sites.
D) cutting down production and waiting until the currency rate is reasonable.
E) reducing production and labor force simultaneously.
Answer:
Diff: 2 Page Ref: 248-249
AACSB: Reflective Thinking
Objective: 8
Question Type: Critical thinking
78) A number of explanations have been offered for the low level of U.S. exports relative to other countries. All of the following can be considered as reasons for low level of exports except:
A) limited ambition by many American business owners.
B) lack of knowledge of market opportunities abroad.
C) perceived lack of necessary resources.
D) marketing to home-country users is easier than exporting.
E) a strong U.S. dollar translates into less affordable prices in export markets.
Answer:
Diff: 2 Page Ref: 251
AACSB: Reflective Thinking
Objective: 6
Question Type: Critical thinking

79) Officially, the EU tariffs on Chinese and Vietnamese shoe imports are known as ________.
A) Countervailing duties
B) Antidumping duties
C) Specific duties
D) Ad valorem duties
E) Temporary surcharges
Answer:
Diff: 2 Page Ref: 252
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis

80) The furniture industry has become one of the fastest-growing sectors of China’s economy. Furniture imports are flooding into the United States from China. This can be attributed to:
A) the quality of furniture is better than that made in Europe.
B) American tastes in décor have changed.
C) China’s low labor rates translate into reasonable prices for consumers.
D) China can survive tough competition.
E) replacement parts are readily available from China.
Answer:
Diff: 2 Page Ref: 247
AACSB: Analytic Skills
Objective: 8
Question Type: Critical thinking
81) In response to the ongoing economic crisis, U.S. President Barack Obama created a National Export Initiative and established the President’s Export Council. What is meant by export marketing and export selling?
Answer:

82) Governments in Japan, Singapore, South Korea and China have supported exports for years which have tremendously helped their economies. Since exporting is a very important component of a country’s business strategy, many government programs are offered that support exports. Describe ways by which governments can support exports.
Answer:

83) Governmental actions at times are designed to discourage imports and block market access. Why do governments want to curtail imports? Explain some of the barriers that are placed to discourage imports.
Answer:

84) Why does the tariff system vary from country to country? Explain, giving examples of tariffs imposed by the United States with particular emphasis on preferential tariffs. What are the conditions under which GATT allows the use of preferential tariffs?
Answer:

85) What are customs duties? How do they work in controlling imported goods? Discuss in light of the different categories of customs duties.
Answer:

86) What are the differences between antidumping and countervailing duties? Under what conditions are these duties imposed?
Answer

87) What are some of the entities that an exporter should be familiar with? Describe and explain the role played by each of these entities, separating those that have responsibilities from exporters from those that have no responsibilities from the exporters.
Answer:

88) An executive is undecided whether to rely on in-house or external export specialists/ intermediaries in the home country. He is leaning towards direct representation in a market. What are the benefits of going forth with direct representation?
Answer:

89) What is meant by “documentary credit?” How does “documentary collection” differ from “cash in advance” and “sales on open account”?
Answer:

90) Recently “Call Centers” have mushroomed in countries like India, China, and Philippines due to the outsourcing by many Western countries. What are the benefits and disadvantages to this method of sourcing? What factors should be taken into account when deciding to outsource?
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 9 Global Market Entry Strategies: Licensing, Investment, and Strategic Alliances

1) Starbucks had to close its small coffee cafe in Beijing’s Forbidden City in 2007 bowing to criticism that the present of a Western brand near the former imperial palace was disrespectful.
Answer:
Diff: 2 Page Ref: 254
AACSB: Reflective Thinking
Objective: 1
Question Type: Synthesis

2) Licensing is a contractual agreement whereby one company (the licensor) makes a legally protected asset available to another company (the licensee) in exchange for royalties, license fees, or some other form of compensation.
Answer:
Diff: 1 Page Ref: 256
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

3) Organizations as diverse as Disney, Caterpillar, and National Basketball Association make extensive use of licensing in overseas markets.
Answer:
Diff: 2 Page Ref: 256
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

4) The only costs in licensing are the signing agreement and policing its implementation.
Answer:
Diff: 2 Page Ref: 256
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

5) Apple’s failure to license its technology in the pre-Windows era arguably cost the company tens of billions of dollars.
Answer:
Diff: 2 Page Ref: 267
AACSB: Reflective Thinking
Objective: 1
Question Type: Application
6) Companies may find that the upfront easy money obtained from licensing turns out to be a very expensive source of revenue.
Answer:
Diff: 2 Page Ref: 257
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

7) Sony was the first company to manufacture and market a transistor radio.
Answer:
Diff: 2 Page Ref: 257
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

8) One of the advantages of a license arrangement is that it can create export market opportunities and open the door to a high-risk manufacturing relationship.
Answer:
Diff: 1 Page Ref: 257
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

9) Companies that use contract manufacturing provide technical specifitications to a sub-contractor or local manufacturer.
Answer:
Diff: 2 Page Ref: 257
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

10) Executives at Guatemala’s Pollo Campero SA knew how to spot a market entry opportunity by observing passengers flying to the United States from Guatemala City and San Salvador who often carried packages of the company’s spicy chicken on board the planes.
Answer:
Diff: 2 Page Ref: 258
AACSB: Analytic Skills
Objective: 3
Question Type: Critical thinking

11) Franchising is another variation of licensing strategy.
Answer:
Diff: 1 Page Ref: 258
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

12) Franchising is a variation of licensing strategy in which there is a contract between the parent company franchiser and a franchisee that allows the franchisee to operate a business developed by the franchiser in return for all rights for operations.
Answer:
Diff: 2 Page Ref: 258
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

13) In China, regulations require foreign franchisers to directly own two or more stores for a minimum of one year before franchising.
Answer:
Diff: 1 Page Ref: 259
AACSB: Analytic Skills
Objective: 2
Question Type: Application

14) McDonald’s has learned the wisdom of leveraging local market knowledge by granting franchisees considerable leeway to tailor restaurant interior designs and menu offerings to suit country-specific preferences and taste.
Answer:
Diff: 1 Page Ref: 259
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

15) Franchising in a global market is actually a market entry strategy that is typically executed with less localization than licensing.
Answer:
Diff: 2 Page Ref: 259
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

16) Foreign direct investment figures reflect investment flows out of the home country as companies invest in or acquire plants, equipment, or other assets.
Answer:
Diff: 2 Page Ref: 259
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
17) Foreign investment can take the form of minority or majority shares in joint ventures, minority or majority equity stakes in another company, or outright acquisition.
Answer:
Diff: 2 Page Ref: 259
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

18) A joint venture with a local partner represents a more extensive form of strategy that is similar to exporting and licensing.
Answer:
Diff: 2 Page Ref: 260-261
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

19) A lesson that can be learned from Anheuser-Busch’s experience in Japan is that it is better to give control to a local partner via a licensing agreement rather than making a major investment.
Answer:
Diff: 2 Page Ref: 261
AACSB: Analytic Skills
Objective: 3
Question Type: Critical thinking

20) The joint venture between Corning Glass and Mexican manufacturer Vitro failed primarily due to conflicts arising out of cultural differences.
Answer:
Diff: 2 Page Ref: 261
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

21) GM and South Korea’s Daewoo Group formed a joint venture which helped Daewoo improve its competitiveness. The venture was terminated since Daewoo prevented the import of GM cars to Korea.
Answer:
Diff: 2 Page Ref: 261
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking
22) In an alliance, one has to learn skills of the partner. For example, Toyota learned many new things from its partnership with GM.
Answer:
Diff: 2 Page Ref: 261
AACSB: Analytic Skills
Objective: 3
Question Type: Application

23) “Greenfield investment” is a phrase sometimes used interchangeably with the phrase “licensing agreement.”
Answer:
Diff: 2 Page Ref: 263-264
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

24) In 2008, the largest merger and acquisition deal in the pharmaceutical industry, Roche’s acquisition of Genentech, is an example of an equity stake.
Answer:
Diff: 2 Page Ref: 264
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

25) Companies may move from licensing or joint venture strategies to ownership in order to achieve faster expansion in a market, greater control, or higher profits.
Answer:
Diff: 2 Page Ref: 264
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

26) Monsanto and the German pharmaceutical company, Bayer AG, entered a joint venture in order to have subsidiaries in Japan.
Answer:
Diff: 2 Page Ref: 264
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis
27) If government restrictions prevent majority or 100-percent ownership by foreign companies, the investing company will have to settle for a minority equity stake.
Answer:
Diff: 2 Page Ref: 264
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

28) Japan’s Fuji Photo Film Company invested hundreds of millions of dollars in the United States after the U.S. government ruled that Fuji was guilty of dumping.
Answer:
Diff: 2 Page Ref: 264-265
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

29) Following its bankruptcy filing in 2009, GM divested itself of several non-core businesses and brands, including Saab.
Answer:
Diff: 2 Page Ref: 265
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

30) Avon Products uses both acquisition and joint ventures to enter developing markets.
Answer:
Diff: 2 Page Ref: 266
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

31) To succeed in global markets, firms can rely exclusively on the technological superiority or core competence which made them successful in the past.
Answer:
Diff: 2 Page Ref: 268
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

32) Sony entered into a strategic partnership with Samsung in order to produce flat-panel TV screens due to the high product development costs.
Answer:
Diff: 2 Page Ref: 270
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking
33) One of the disadvantages of global strategic partnerships is it may strengthen a competitor in another country thereby presenting a number of risks.
Answer:
Diff: 2 Page Ref: 269
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

34) The alliance between GE and Snecma got off to a strong start due to the personal chemistry between the top two executives of respective companies in spite of the differing views regarding governance, management, and organization.
Answer:
Diff: 2 Page Ref: 272
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

35) Asian cultures exhibit collectivist social values where cooperation and harmony are highly valued in both personal life and the business world. Therefore, it is not surprising that some of the Asia’s biggest companies, including Mitsubishi and Hyundai, pursue cooperation strategies.
Answer:
Diff: 2 Page Ref: 274
AACSB: Multicultural and Diversity
Objective: 4
Question Type: Critical thinking

36) Because “keiretsu” relationships are crossing the Pacific and directly affecting the American market, U.S. companies have reason to be concerned.
Answer:
Diff: 2 Page Ref: 277
AACSB: Multicultural and Diversity
Objective: 4
Question Type: Critical thinking

37) The South Korean government has recently abandoned the “chaebol” industry structure in favor of the “keiretsu” structure.
Answer:
Diff: 1 Page Ref: 278
AACSB: Multicultural and Diversity
Objective: 4
Question Type: Critical thinking
38) Prior to the economic crisis of 1997-1998, the south Korea’s “chaebol” had become bloated and heavily in debt.
Answer:
Diff: 2 Page Ref: 278
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

39) The virtual corporation will seem to be a single entity with vast capabilities but will really be the result of numerous collaborations assembled only when needed.
Answer:
Diff: 2 Page Ref: 279
AACSB: Reflective Thinking
Objective: 5
Question Type: Critical thinking

40) In a country and market concentration strategy, a company serves many markets in a few countries.
Answer:
Diff: 2 Page Ref: 279
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

41) For Starbucks and other companies whose business models include a service component, it is not recommended that they use this method for going global.
A) joint ventures
B) licensing
C) 100-percent ownership
D) exporting
E) franchising
Answer:
Diff: 2 Page Ref: 255
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional
42) Licensing as a market entry mode has several disadvantages and opportunity costs, which do not include:
A) limited market control.
B) agreement may have short life.
C) leveraging and exploiting by licensee.
D) similar product or technology development by licensee.
E) adaptations by licensee to fit local tastes.
Answer:
Diff: 2 Page Ref: 256
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

43) ________ represent(s) a market entry strategy whereby one company permits a foreign company to make use of its patents, know-how, technology, company name, or other intangible assets in return for a royalty payment.
A) Joint ventures
B) One-hundred-percent ownership
C) Licensing
D) Exporting
E) Global strategic alliances
Answer:
Diff: 2 Page Ref: 256
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

44) In order to prevent a licensor-competitor from gaining unilateral benefit, licensing agreements should provide for:
A) contract manufacturing.
B) franchising.
C) cross licensing.
D) strategic decision-making.
E) adaptation for local tastes.
Answer:
Diff: 2 Page Ref: 257
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
45) Pollo Campero, a chicken restaurant chain based in Central America, is using the following method for expanding operations in the United States.
A) joint ventures
B) licensing
C) exporting
D) franchising
E) acquisition
Answer:
Diff: 2 Page Ref: 258
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

46) In the mid-1980s, Apple Computer lost tens of billions of dollars by not using:
A) joint ventures.
B) licensing.
C) 100% ownership.
D) exporting.
E) global strategic alliances.
Answer:
Diff: 2 Page Ref: 257
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

47) The specialty retailing industry, as well as the fast-food industry, favors ________ for global growth.
A) licensing
B) investment
C) franchising
D) joint ventures
E) strategic alliances
Answer:
Diff: 2 Page Ref: 259
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
48) The agreements that allow McDonald’s franchisees around the globe to use McDonald’s trademarked name and menu items represent, in essence, which form of market entry?
A) joint ventures
B) franchising
C) 100% ownership
D) exporting
E) acquisition
Answer:
Diff: 2 Page Ref: 259
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

49) McDonald’s success in franchising in global markets can be attributed to several factors which do not include:
A) a well known global brand name.
B) a business system that can be easily replicated.
C) local market knowledge.
D) cross licensing.
E) granting franchisees leeway to tailor menu offerings to suit local tastes.
Answer:
Diff: 3 Page Ref: 25
AACSB: Analytic Skills
Objective: 2
Question Type: Definitional

50) Honda has invested $550 million in building an assembly plant in Greensburg, Indiana; IKEA spent nearly $2 billion to open stores in Russia; and South Korea’s LG Electronics purchased a 58% stake in Zenith Electronics. All of these are examples of:
A) acquisition.
B) licensing.
C) franchising.
D) FDI.
E) exporting.
Answer:
Diff: 2 Page Ref: 259
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

51) The disadvantages of joint venturing can include all of the following except:
A) Joint venture partners must share rewards as well as risks.
B) Joint ventures allow partners to achieve synergy.
C) Joint ventures can have the potential for conflict between partners.
D) A dynamic joint venture partner can evolve into a strong competitor.
E) A company incurs very significant costs by joint venturing.
Answer:
Diff: 2 Page Ref: 260-261
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis

52) The strategy to use joint ventures has several advantages which do not include:
A) risk sharing.
B) reduced financial risk.
C) reward sharing.
D) achieve synergy.
E) only way to enter a country or region.
Answer:
Diff: 2 Page Ref: 261
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking

53) Which of the following does not fit into the sequence of experiences Anheuser-Busch had in Japan?
A) Anheuser-Busch first entered Japan by means of a licensing agreement with Suntory, the smallest brewery in Japan.
B) Anheuser-Busch created a joint venture with Kirin Brewery, the market leader.
C) Anheuser-Busch dissolved the joint venture with Kirin Brewery.
D) Anheuser-Busch entered into a joint venture with Kirin Brewery.
E) Anheuser-Busch reverted to a licensing agreement with Kirin Brewery.
Answer:
Diff: 2 Page Ref: 261
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking
54) As a general rule, the Chinese government allows foreign companies to participate in its market only if those companies agree to establish operations with local Chinese enterprises. Which market entry mode would be the appropriate choice under these circumstances?
A) acquisition
B) licensing
C) joint venture
D) exporting
E) franchising
Answer:
Diff: 2 Page Ref: 261
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

55) The president of a Mexican company recently remarked, “Business in Mexico is done on a consensus basis, very genteel and sometimes slow by U.S. standards.” A few months later, the Mexican company and its U.S. joint venture partner parted company. Judging by the president’s remark, one important reason for the “divorce” was:
A) failure of one partner to live up to the terms of the contract.
B) cultural differences.
C) the cancellation of NAFTA.
D) the U.S. government’s insistence on quick negotiations.
E) the language barrier.
Answer:
Diff: 2 Page Ref: 261
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Critical thinking

56) GM executives are looking for a joint venture with AvtoVAZ, the largest carmaker in:
A) Germany.
B) Lithuania.
C) Russia.
D) Kazakhstan.
E) Turkey.
Answer:
Diff: 2 Page Ref: 262
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
57) In a joint venture with Russian manufacturer AvtoVAZ, GM executives were planning to have a stripped-down reengineered car based on its Opel model. However, the market research revealed that a “Made-in-Russia” car would only be acceptable if:
A) it has a German name.
B) it sported a very low sticker price.
C) it has an American name.
D) it has a very high sticker price.
E) it has a Russian name.
Answer:
Diff: 2 Page Ref: 262
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

58) Ford Motor Company (United States) has a 50-50 joint venture to build Ford Fiestas with:
A) Toyota (Japan).
B) Shanghai Automotive Industry (China).
C) BMW (Germany).
D) Mahindra & Mahindra (India).
E) Mazda (Japan).
Answer:
Diff: 2 Page Ref: 262
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis

59) Which automaker currently has a joint venture with Hindustan Motors (India)?
A) Volkswagen
B) Ford
C) GM
D) Renault
E) Mazda
Answer:
Diff: 3 Page Ref: 262
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking
60) Sony Ericsson is a ________ Sweden’s Telefonaktiebolaget LM and Japanese consumer electronics giant Sony Corporation.
A) joint venture between
B) licensor for
C) licensee for
D) franchisee for
E) franchisor for
Answer:
Diff: 2 Page Ref: 263
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

61) Which of the following currently owns a 70% stake in Skoda, the Czech automaker?
A) GM
B) Volkswagen
C) Ford
D) DaimlerChrysler
E) Renault
Answer:
Diff: 3 Page Ref: 265
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking

62) Which automaker owns an equity stake in Japan’s Nissan Motor?
A) GM
B) Volkswagen
C) Ford
D) DaimlerChrysler
E) Renault
Answer:
Diff: 3 Page Ref: 265
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking
63) Tata Motors (India) acquired the following auto company:
A) Volkswagen AG (Germany).
B) Volvo (Sweden).
C) Jaguar (UK).
D) Toyota (Japan).
E) Hyundai (South Korea).
Answer:
Diff: 2 Page Ref: 266
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis

64) Gerber’s woes in France illustrate some of the disadvantages of which market entry strategy?
A) joint ventures
B) licensing
C) 100% ownership
D) exporting
E) franchising
Answer:
Diff: 2 Page Ref: 267
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

65) Which of the following is not a characteristic of global strategic alliances?
A) Participants maintain independence outside the framework of alliance.
B) Participants share benefits of the alliance.
C) Participants share control over the performance of the assigned tasks.
D) Participants make ongoing contributions in technology, products, and other areas.
E) Participants agree not to compete in areas unrelated to the alliance.
Answer:
Diff: 2 Page Ref: 268
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

66) Which of the following is not a characteristic of global strategic alliances?
A) Participants maintain independence outside the framework of alliance.
B) Participants share benefits as well as control.
C) Participants make ongoing contributions in technology, products, and other areas.
D) Participants focus on an individual country market.
E) Participants share benefits of the alliance.
Answer:
Diff: 2 Page Ref: 268
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

67) The terminology used to describe the new forms of cooperation strategies varies widely and the phrases used include all of the following except:
A) collaborative agreements.
B) strategic alliances.
C) global strategic partnerships.
D) strategic international alliances.
E) Greenfield operations.
Answer:
Diff: 2 Page Ref: 268
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

68) GSPs (Global Strategic Partnerships) are attractive for several reasons which do not include:
A) sharing high product development costs.
B) sharing technological developments.
C) securing access to national and regional markets.
D) continuous transfer of technology between partners.
E) focus on a single national market or a specific problem.
Answer:
Diff: 2 Page Ref: 268-269
AACSB: Reflective Thinking
Objective: 3
Question Type: Application
69) Which of the following does not fit in with the factors that should be considered by companies forming GSPs?
A) Partners are competitors to each other.
B) Harmony is not the most important measure of success.
C) All employees and managers must understand where cooperation ends and competitive compromise begins.
D) Learning from partners is critically important.
E) none of the above
Answer:
Diff: 2 Page Ref: 268-271
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

70) “Discussion and consensus must be the norms. Partners must be viewed as equals.” When applied to global strategic partnerships, this statement indicates the importance of which factor?
A) mission
B) strategy
C) governance
D) culture
E) organization
Answer:
Diff: 2 Page Ref: 271
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

71) “Successful GSPs create win-win situations, where participants pursue objectives on the basis of mutual advantage.” When applied to global strategic partnerships, this statement indicates the importance of which factor?
A) mission
B) strategy
C) governance
D) culture
E) organization
Answer:
Diff: 2 Page Ref: 271
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking
72) According to a 1991 report by McKinsey & Co., problems of alliances between Western and Japanese firms were related to all of the following factors except:
A) objective levels of performance.
B) a feeling of mutual disillusionment.
C) difference in expectations.
D) balance between partners.
E) frictional loss.
Answer:
Diff: 3 Page Ref: 272
AACSB: Analytic Skills
Objective: 4
Question Type: Critical thinking

73) The success of CFM International (the strategic partnership between GE and Snecma) can be attributed to which of the following?
A) compatibility of the partners.
B) capability of the partners.
C) commitment of the partners.
D) personal chemistry between executives.
E) all of the above
Answer:
Diff: 2 Page Ref: 272-273
AACSB: Reflective Thinking
Objective: 4
Question Type: Synthesis

74) Boeing developed the wide-bodied aircraft, the 777, with about ________ of the work subcontracted out to Mitsubishi, Fuji, and Kawasaki.
A) 50%
B) 25%
C) 20%
D) 60%
E) 75%
Answer:
Diff: 3 Page Ref: 273
AACSB: Reflective Thinking
Objective: 4
Question Type: Synthesis
75) A number of factors combine to make Russia an excellent location for an alliance which do not include:
A) a well-educated workforce.
B) quality is important to Russian consumers.
C) abundance of supplies.
D) potential for economic growth.
E) potential for growth in service sector.
Answer:
Diff: 2 Page Ref: 274
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

76) Which of the following is not true of Japanese keiretsu?
A) promotes risk sharing
B) promotes long-term employment
C) ensures low prices for Japanese consumers
D) blocks foreign suppliers from the Japanese market
E) relationships are cemented by bank ownership
Answer:
Diff: 3 Page Ref: 274,276-277
AACSB: Multicultural and Diversity
Objective: 4
Question Type: Application

77) Which of the following is true about Japanese keiretsu?
A) Toyota is a vertical keiretsu, Mitsubishi is a horizontal keiretsu.
B) Toyota is a horizontal keiretsu, Mitsubishi is a vertical keiretsu.
C) Toyota and Mitsubishi are both horizontal keiretsu.
D) Toyota and Mitsubishi are both vertical keiretsu.
E) none of the above
Answer:
Diff: 3 Page Ref: 274,276-277
AACSB: Multicultural and Diversity
Objective: 4
Question Type: Application
78) Which of the following statements most accurately describes the extent to which GM and Toyota outsource components?
A) GM and Toyota each outsource approximately 50% of their components.
B) Toyota outsources about 50% of its components; GM outsources about 75%.
C) GM outsources about 50% of its components; Toyota outsources about 75%.
D) Neither GM nor Toyota outsources a significant proportion of its components.
E) GM and Toyota each outsource approximately 25% of their components.
Answer:
Diff: 3 Page Ref: 276
AACSB: Analytic Skills
Objective: 4
Question Type: Synthesis

79) Another perspective on the future of cooperative strategies envisions the emergence of:
A) mergers and acquisition.
B) virtual corporations.
C) franchising.
D) joint ventures.
E) keiretsu.
Answer:
Diff: 2 Page Ref: 278
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

80) Saab markets two luxury car models, both prized by drivers for their “quirkiness.” About 30% of Saab’s sales come from the USA, with most of the rest from Western Europe. Which strategy does Saab appear to be using?
A) country concentration/market segment concentration
B) country diversification/market segment concentration
C) country concentration/market segment diversification
D) country diversification/market segment diversification
E) none of the above
Answer:
Diff: 2 Page Ref: 279-280
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional
81) Walt Disney Company has successfully adapted licensing as a market entry mode in different countries. What are the advantages of using licensing as entry mode?
Answer:

82) Nike provides technical specifications to a subcontractor or local manufacturer for its products. What is this arrangement called and what are its major benefits and drawbacks?
Answer:

83) McDonald’s and other fast food restaurants have benefitted tremendously by using franchising as a mode of entry into different countries. What are the benefits of franchising and how does it differ from other modes of entry?
Answer:

84) Joint ventures are becoming very popular as entry mode into foreign markets. Why is this strategy so attractive to companies interested in entering other markets in the world?
Answer:

85) Companies like Anheuser-Busch, Corning Glass, and GM have learned a lot by using joint venture as a mode of entry into a foreign market. Some of their experiences are not very positive. What are the disadvantages of joint venturing?
Answer:

86) Why would any firm, whether global or otherwise, seek to collaborate with another firm, be it local or foreign?
Answer:

87) A true global strategic partnership is unique and different. Using the example of Sony’s strategic alliance with Samsung, discuss attributes that are needed for a fine working partnership.
Answer:

88) Why are alliances between Western companies and Asian competitors so different if not difficult? What are some of the concerns, and how can those be addressed?
Answer:

89) Japanese keiretsu is considered to be a strong cooperative strategy that will have an impact in global marketing. Describe what it is and how it can affect U.S. businesses.
Answer:

90) Companies are faced with the decision whether to expand by seeking new markets in existing countries or seeking new country markets for already identified and served market segments. Faced with these situations, what are the strategies that can be followed?
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 10 Brand and Product Decisions in Global Marketing

1) India’s Suzlon Energy has become a major player in the wind-turbine industry due to an inefficient and inconsistent power distribution system.
Answer:
Diff: 1 Page Ref: 284
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

2) Intangible product attributes includes a brand’s overall reputation or mystique.
Answer:
Diff: 2 Page Ref: 285
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

3) Brand equity is an example of a tangible product attribute.
Answer:
Diff: 2 Page Ref: 285
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

4) An express warranty is a written guarantee that assures the buyer that he or she is getting what he or she has paid for or that provides recourse in case a product’s performance falls short of expectations, in an express manner.
Answer:
Diff: 2 Page Ref: 286
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

5) Many industry experts agree that packaging must engage the senses, make an emotional connection, and enhance a consumer’s brand experience.
Answer:
Diff: 2 Page Ref: 286
AACSB: Reflective Thinking
Objective: 1
Question Type: Application
6) Coca-Cola’s latest packaging innovation is Fridge Pack, a long, slender carton that holds the equivalent of 12 cans of soda. This pack fits into refrigerator’s lower shelf and is convenient for use by global consumers.
Answer:
Diff: 2 Page Ref: 287
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

7) Nestle asked suppliers to find a type of glue to make the clicking sound louder when consumers snap open a tube of Smarties brand chocolate candies.
Answer:
Diff: 2 Page Ref: 287
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

8) In 2008, the United States enacted a country-of-origin labeling (COOL) law. The law requires supermarkets and other food retailers to display information that identifies the country that meat, poultry, and certain other food products come from.
Answer:
Diff: 1 Page Ref: 288
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

9) A brand is a complex bundle of images and experiences in the customer’s mind. It is a promise by a particular company about a particular product.
Answer:
Diff: 2 Page Ref: 289
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

10) A global brand has the same name and, in some instances, a similar image and positioning throughout the world.
Answer:
Diff: 2 Page Ref: 291
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
11) Global brand is synonymous with global product and is often used interchangeably.
Answer:
Diff: 2 Page Ref: 291
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

12) Global brands are symbols of cultural ideals, and as such, marketers can use global consumer culture positioning (GCCP) to communicate a brand’s global identity.
Answer:
Diff: 3 Page Ref: 292
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

13) The Sony Walkman is an example of combination or tiered branding, whereby a corporate name is combined with a product name.
Answer:
Diff: 2 Page Ref: 293
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

14) The “Intel Inside” campaign is an example of co-branding.
Answer:
Diff: 2 Page Ref: 293
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

15) The “Virgin” brand is a global brand with several brand extensions.
Answer:
Diff: 2 Page Ref: 293
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

16) Sony introduced Walkman first as “Soundabout.” Two months later it went on sale in the United Kingdom as “Stowaway” and then came out as “Walkman.” Thus, Sony managers found themselves losing sales because they had three different names for the same item.
Answer:
Diff: 1 Page Ref: 294
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking
17) According to the top brand rankings, Microsoft is the world’s most valuable brand.
Answer:
Diff: 1 Page Ref: 295
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

18) Robust economic growth and rising incomes mean that consumers in China, India, and other emerging markets can buy cell phones as status symbols.
Answer:
Diff: 2 Page Ref: 295
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

19) Coca-Cola, McDonald’s, Singapore Airlines, Mercedes-Benz, and Sony are a few of the companies that have transformed local products and brands into global ones.
Answer:
Diff: 2 Page Ref: 296
AACSB: Analytic Skills
Objective: 2
Question Type: Application

20) The basic human need to consume food and drink is not the same thing as wanting or preferring a Big Mac or a Coke.
Answer:
Diff: 2 Page Ref: 298
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

21) Marketers in Gillette’s Parker Pen subsidiary are confident that consumers in Malaysia and Singapore shopping for an upscale gift will buy the same Parker Pen as Americans shopping at Neiman Marcus.
Answer:
Diff: 2 Page Ref: 298
AACSB: Analytic Skills
Objective: 3
Question Type: Critical thinking
22) Recent research has confirmed that the levels in Maslow’s hierarchy are the same in the United States and Asia.
Answer:
Diff: 2 Page Ref: 298
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

23) In countries like India and Vietnam, and other emerging markets, amenities such as refrigerators, flush toilets, and cell phones are considered as status symbols.
Answer:
Diff: 2 Page Ref: 299
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Application

24) Recent research has suggested that in Asia, the highest level needs in Maslow’s hierarchy pertain to status.
Answer:
Diff: 2 Page Ref: 299
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

25) In Hellmut Schutte’s modified hierarchy to explain the needs and wants of Asian consumers, the last three levels are affiliation, admiration, and self actualization.
Answer:
Diff: 2 Page Ref: 299
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

26) Perceptions and attitudes about a product’s origins can be positive or negative. On the positive side, “German” is synonymous with quality engineering as “Italian” is with style.
Answer:
Diff: 2 Page Ref: 300
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
27) Studies conducted during the 1970s and 1980s indicated that the “made in the USA” image lost ground to the “made in Japan” image.
Answer:
Diff: 2 Page Ref: 300
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

28) Many consumers consider products with labels such as “Made in Bangladesh” and “Made in Brazil” to be of inferior quality and value
Answer:
Diff: 2 Page Ref: 301
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

29) For a country like Slovenia to enhance its image abroad is a very different matter than for China.
Answer:
Diff: 2 Page Ref: 301
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

30) In some product categories, foreign products have a substantial advantage over their domestic counterparts simply because of their “foreign-ness.”
Answer:
Diff: 2 Page Ref: 301
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

31) Scotland’s top export category is information technology.
Answer:
Diff: 2 Page Ref: 302
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

32) A company that has developed a successful local product or brand can implement an adaption strategy.
Answer:
Diff: 2 Page Ref: 302
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional
33) Due to the trend toward convergence, many product standards that remain on the books have been harmonized.
Answer:
Diff: 2 Page Ref: 302
AACSB: Reflective Thinking
Objective: 5
Question Type: Synthesis

34) Due to the European Commission’s regulation, McDonald’s cannot give away soft plastic toys with its Happy Meals in Europe.
Answer:
Diff: 2 Page Ref: 303
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

35) Microsoft’s Windows 7 operating system was launched in 2009 with the user-centric global advertising campaign keyed to the theme “I’m a PC, and Windows was my idea.” This is an example of the dual-extension strategy.
Answer:
Diff: 2 Page Ref: 304
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

36) Before executives at Ben & Jerry’s Homemade launched their ice cream in the United Kingdom, the company conducted extensive research to determine whether the package design effectively communicated the brand’s “super premium” position. This is an example of dual-extension strategy.
Answer:
Diff: 2 Page Ref: 306
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

37) When Kraft Foods launched Oreo brand cookies in China in 1996, they found that Oreo was too sweet for the Chinese palate, and the price was too high. Oreo reformulated a less-sweet chocolate-covered wafer and reduced its price. This strategy is referred to as product extension approach.
Answer:
Diff: 2 Page Ref: 307
AACSB: Reflective Thinking
Objective: 5
Question Type: Critical thinking
38) Products that fall under the dynamically continuous innovation category require more R & D expenditures.
Answer:
Diff: 2 Page Ref: 311
AACSB: Reflective Thinking
Objective: 6
Question Type: Synthesis

39) Sony created a new market when it introduced VCRs, which can be considered as an example of discontinuous innovations.
Answer:
Diff: 2 Page Ref: 310-311
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

40) Whenever a new product interacts with human, mechanical, or chemical elements, there is the potential for a surprising and unexpected incompatibility.
Answer:
Diff: 2 Page Ref: 313
AACSB: Reflective Thinking
Objective: 6
Question Type: Critical thinking

41) Generally speaking, which of the following statements is true concerning product attributes?
A) Tangible product attributes are more important than intangible ones.
B) Intangible product attributes are more important than tangible ones.
C) Both tangible and intangible product attributes are important.
D) Neither tangible nor intangible product attributes are important.
E) A product has more attributes than tangible and intangible ones.
Answer:
Diff: 2 Page Ref: 285-286
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional
42) An express warranty is a written guarantee that assures the buyer:
A) that he or she is getting what he or she desired.
B) that he or she will be able to get express response if any defects are found.
C) that he or she is getting what he or she has paid for.
D) that he or she will be able to contact the manufacturer whenever needed.
E) that he or she has limited time for filling out information required by the manufacturer.
Answer:
Diff: 2 Page Ref: 286
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

43) Packaging is an important consideration for products that are shipped to markets worldwide. Which of the following statement related to packaging is not true?
A) Nestle’s worldwide network of packaging teams contributes packaging improvement suggestions on a quarterly basis.
B) Japanese prefer plain soft colors on their packages.
C) The Aquafresh Ultimate tube was designed to stand vertically.
D) Coca-Cola had contour bottles in both glass and plastic versions in many countries.
E) Nestle asked suppliers to find a glue to make the clicking sound louder when a tube of Smarties brand chocolate candies are unwrapped.
Answer:
Diff: 2 Page Ref: 287
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

44) Coca-Cola’s distinctive contour bottle, which is sold in many countries, illustrates the point that:
A) the packaging strategies can vary by country and region.
B) the packaging helps in storing large sizes in refrigerators.
C) the packaging strategies do not change by country and region.
D) the packaging appeals only to Asian consumers.
E) the packaging helps in brand identification.
Answer:
Diff: 2 Page Ref: 287
AACSB: Reflective Thinking
Objective: 1
Question Type: Synthesis
45) The marketers of Corona beer achieved great success in the U.S. market by:
A) retaining the bottle design originally used in Mexico.
B) hiring Hispanic movie stars as endorsers.
C) distributing Corona in returnable bottles.
D) changing the brewing recipe to conform to American palates.
E) having the label in Spanish language.
Answer:
Diff: 2 Page Ref: 287
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

46) Regulators in different countries have proposed various regulations for product labeling. All of the following statements pertaining to such regulations are true except:
A) mandatory health warnings on tobacco products are required in most countries.
B) the American Automobile Labeling Act clarifies the country of origin as well as the final assembly point.
C) in 2008, the United States enacted a country of origin labeling (COOL) law.
D) the use of terms “light” and “natural” are allowed on labels only in the United States.
E) McDonald’s is posting nutrition information on all food packaging and wrappers in selected markets.
Answer:
Diff: 2 Page Ref: 288
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

47) Global marketers must understand the importance of visual aesthetics embodied in the color or shape of a product, label, or package. Which of the following statement is not true regarding the use of color in selected countries:
A) Yellow color on Caterpillar’s earthmoving equipment is acceptable worldwide.
B) Packaging aesthetics are particularly important to the Japanese.
C) White color is associated with death and bad luck in some Asian countries.
D) The red Marlboro color had to be changed in some Asian countries.
E) Chinese consider the red color to be lucky.
Answer:
Diff: 2 Page Ref: 288
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

48) As outlined by branding expert Kevin Keller, the benefits of strong brand equity include all of the following except:
A) greater loyalty.
B) more vulnerability to marketing actions.
C) less vulnerability to marketing crises.
D) more inelastic consumer response to price increases.
E) more elastic consumer response to price decreases.
Answer:
Diff: 2 Page Ref: 289
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

49) ________ represent(s) the cumulative added value of a company’s investment in the marketing of a brand over time.
A) Brand extensions
B) Co-branding
C) Brand image
D) Brand equity
E) Brand loyalty
Answer:
Diff: 2 Page Ref: 289-299
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

50) Which of the following statements is not an example of local products or brands?
A) Coca-Cola developed several branded drink products for Japan.
B) Coca-Cola markets Kinely brand bottled water in India.
C) BMW uses “the ultimate driving machine” slogan in India.
D) Diageo PLC markets Gordon’s Edge, a gin-based ready-to-drink beverage in the United Kingdom.
E) Coca-Cola developed a noncarbonated, ginseng-flavored beverage for Japan.
Answer:
Diff: 2 Page Ref: 290
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Critical thinking

51) Around the world, various brands of personal computers are sold with Pentium processors. This fact is often used as a selling point, with advertising that proclaims “Intel Inside.” Which branding concept does such advertising reflect?
A) brand equity
B) co-branding
C) brand image
D) brand extension
E) tiered branding
Answer:
Diff: 2 Page Ref: 293
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

52) British entrepreneur Richard Branson has built a global business empire by:
A) relying on brand extension.
B) being the first to use smart cards in major markets.
C) developing local brands.
D) avoiding consumer businesses with established leaders.
E) restricting the “Virgin” name only to airlines.
Answer:
Diff: 2 Page Ref: 293
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

53) Which of the following is not in the top five of the world’s most valuable brands according to a 2010 rankings?
A) Sony
B) Microsoft
C) Coca-Cola
D) GE
E) Nokia
Answer:
Diff: 2 Page Ref: 295
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis
54) Maslow’s hierarchy is applicable to global marketing because it can help explain how:
A) basic human needs can drive the development of global products.
B) “self-actualization” is the highest-order need in Japan as well as Western nations.
C) status needs in different countries can only be fulfilled with localized products.
D) “luxury badging” is irrelevant to companies marketing in Asia.
E) Asians differ from Westerners in their basic physiological needs.
Answer:
Diff: 2 Page Ref: 298
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

55) Alfred Zeien, former chairman of Gillette, once noted that his company’s Parker Pen unit does not have to develop a special model for Malaysia and Singapore because shoppers worldwide seek the same things when buying a gift that will serve the recipient as a status symbol. This insight relates to which level of Maslow’s hierarchy of needs?
A) physiological
B) safety
C) social
D) esteem
E) self-actualization
Answer:
Diff: 2 Page Ref: 298
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Application

56) Comparing the traditional formulation of Maslow’s hierarchy with the results of current research on the consumer needs and motivation in Asia, which of the following is correct?
A) The lowest 2 levels of the hierarchy are the same in the traditional and Asian versions.
B) The lowest 3 levels of the hierarchy are the same in the traditional and Asian versions.
C) The lowest 4 levels of the hierarchy are the same in the traditional and Asian versions.
D) The five levels in the traditional formulation apply equally in the West and in Asia.
E) The highest levels of the hierarchy are the same in the traditional and Asian versions.
Answer:
Diff: 3 Page Ref: 299
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Application
57) Which of the following is not one of the levels in the Asian version of Maslow’s hierarchy?
A) physiological
B) safety
C) affiliation
D) admiration
E) self-actualization
Answer:
Diff: 3 Page Ref: 299
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking

58) Which of the following could hinder the success of products labeled “Made in Bangladesh” or “Made in Thailand” in export markets?
A) negative country-of-origin bias
B) no possible quality/price positioning
C) low acceptance of private brands
D) lack of promotion in global markets
E) high product saturation levels in global markets
Answer:
Diff: 2 Page Ref: 300-301
AACSB: Multicultural and Diversity
Objective: 4
Question Type: Critical thinking

59) Generally speaking, which of the following product categories represents the best potential for extension into international markets without adaptation?
A) companion products
B) food products
C) industrial products
D) intangible products
E) non-alcoholic drinks
Answer:
Diff: 2 Page Ref: 304
AACSB: Reflective Thinking
Objective: 5
Question Type: Application
60) Dry soup mixes that have long been popular in Europe are marketed as sauces or dips in the U.S. This is an example of the ________ strategy.
A) product-communications extension
B) product extension-communications adaptation
C) product adaptation-communications extension
D) dual adaptation
E) product invention
Answer:
Diff: 2 Page Ref: 306
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

61) Targeting the 300 million farmers in India who still use plows harnessed to oxen, John Deere engineers created a line of relatively inexpensive, no-frills tractors. The Deere team then realized that the same equipment could be marketed to hobby farmers and acreage owners in the United States, a segment that they had previously overlooked. This is an example of ________ strategy.
A) product-communications extension
B) product extension-communications adaptation
C) product adaptation-communications extension
D) dual adaptation
E) product invention
Answer:
Diff: 2 Page Ref: 306
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

62) Prior to 2004, Nokia launched different cell phone products in different countries at different times. Nokia also used different advertising images and messages in different countries. Which approach to the world marketplace was Nokia using?
A) product-communications extension
B) product extension-communications adaptation
C) product adaptation-communications extension
D) product-communication adaptation
E) product invention
Answer:
Diff: 2 Page Ref: 307-308
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional
63) Before Ben & Jerry’s launched their ice cream in the United Kingdom, the company conducted extensive research to determine whether the package design was appropriate. The research indicated that British consumers perceived the colors differently than U.S. consumers. The package design was changed accordingly. This type of strategy can be defined as:
A) product-communications extension.
B) product extension-communications adaptation.
C) product adaptation-communications extension.
D) product-communication adaptation.
E) product invention.
Answer:
Diff: 2 Page Ref: 307-308
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

64) Campbell’s has been marketing soup in Japan for more than 40 years. Early on, Japanese consumers were not receptive to ads featuring the Campbell Kids and the “M’m M’m Good” slogan. This compelled Campbell’s to develop ads featuring a talking soup can known as “Mr. Campbell.” Campbell’s also developed soup varieties for Japan with fish as the main protein source and spices that reflect local preferences. As described here, which of the following strategies has Campbell’s used in Japan?
A) product-communications extension
B) product extension-communications adaptation
C) product adaptation-communications extension
D) product-communication adaptation
E) product invention
Answer:
Diff: 1 Page Ref: 307-308
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

65) To promote its Centrino wireless chip, Intel launched a global ad campaign that features different combinations of celebrities. These celebrities were chosen because they are widely recognized in the key world markets. This type of strategy is referred to as:
A) product-communications extension.
B) product extension-communications adaptation.
C) product adaptation-communications extension.
D) product-communication adaptation.
E) product invention.
Answer:
Diff: 2 Page Ref: 307-308
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional
66) Colgate’s Total is a new toothpaste brand whose formulation, imagery, and consumer appeal were designed from the beginning to translate across national boundaries. Which strategy did Colgate use with Total?
A) product-communications extension
B) product extension-communications adaptation
C) product adaptation-communications extension
D) dual adaptation
E) product innovation
Answer:
Diff: 2 Page Ref: 308
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

67) Hindustan Lever recently developed a hard candy flavored with natural fruit juice that it sells profitably in India for the equivalent of 1 cent per piece. This is Hindustan Lever’s first-ever candy product. What strategy is evident here?
A) product-communications extension
B) product extension-communications adaptation
C) product adaptation-communications extension
D) dual adaptation
E) product invention
Answer:
Diff: 2 Page Ref: 308-309
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

68) The formulation, imagery, and consumer appeal of Colgate’s Total brand toothpaste were designed to translate across national boundaries. This new global brand represents which type of product innovation?
A) discontinuous innovation
B) dynamically continuous innovation
C) continuous innovation
D) comparative innovation
E) dynamically discontinuous innovation
Answer:
Diff: 3 Page Ref: 311
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional
69) When introduced in the late 1970s, the VCR created new patterns of consumer behavior. For example, assuming the user could learn to set the timer, he or she could tape programs to watch at a later time. DVD, a playback only video system, was introduced in the late 1990s. DVD discs contain full-length movies with digital sound in a format that resembles conventional music compact discs. Which of the following most accurately describes the respective degree of newness of these two global products?
A) The VCR is a discontinuous innovation; the DVD is a dynamically continuous innovation.
B) The VCR is a dynamically continuous innovation; the DVD is a discontinuous innovation.
C) The VCR and DVD are both dynamically continuous innovations.
D) The VCR and DVD are both discontinuous innovations.
E) The VCR and DVD are both continuous innovations.
Answer:
Diff: 3 Page Ref: 311
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

70) The introduction of consumer VCRs in the late 1970s initiated a revolutionized in-home electronic entertainment. For example, assuming the user could learn to set the timer, he or she could tape programs to watch at a later time. The VCR’s popularity also gave rise to an entirely new retailing concept, the video rental store. What type of innovation did the consumer VCR represent?
A) a continuous innovation
B) a dynamically continuous innovation
C) a discontinuous innovation
D) a comparative innovation
E) none of the above
Answer:
Diff: 3 Page Ref: 311
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional
71) The Advanced Photo System (APS) created by Kodak and its partners combines traditional chemical photo processing with digital technology. One benefit of the system is that shutterbugs can choose 3 different print sizes. The APS would best be described as a:
A) continuous innovation.
B) dynamically continuous innovation.
C) discontinuous innovation.
D) platform-based innovation.
E) new and improved innovation.
Answer:
Diff: 3 Page Ref: 311
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

72) After four years of product development, Procter & Gamble recently introduced a new, improved disposable diaper. Pampers Rash Guard diapers are designed to prevent diaper rash and represent the first time a company has made a medical claim for its diapers. What kind of innovation do the new diapers represent?
A) platform-based innovation
B) dynamically continuous innovation
C) discontinuous innovation
D) continuous innovation
E) none of the above
Answer:
Diff: 2 Page Ref: 311
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

73) Procter & Gamble recently introduced Pampers Rash Guard. Rash Guard does not represent a new product per se; rather, the diapers are being marketed as an alternative to regular Pampers. What type of innovation do Pampers Rash Guard diapers represent?
A) a continuous innovation
B) a dynamically continuous innovation
C) a discontinuous innovation
D) a platform-based innovation
E) none of the above
Answer:
Diff: 2 Page Ref: 311
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional
74) Motorola’s failed Iridium venture was a global satellite telephone network designed to allow users to make or receive calls anywhere on the globe using handsets that are somewhat bigger than typical cellular phones. What type of innovation did Iridium represent?
A) a continuous innovation
B) a dynamically continuous innovation
C) a discontinuous innovation
D) a platform-based innovation
E) none of the above
Answer:
Diff: 3 Page Ref: 311
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

75) By definition, a ________ requires a large amount of learning on the part of users and typically creates new markets and consumption patterns.
A) continuous innovation
B) dynamically continuous innovation
C) discontinuous innovation
D) platform-based innovation
E) new and improved innovation
Answer:
Diff: 2 Page Ref: 311
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

76) In Chinese markets, Nike had a problem using the “Just Do It” attitude which was not found to be appropriate. Finally, Nike decided to use Chinese athletes in their promotion. This type of adaptation was needed due to:
A) Chinese do not wear running shoes.
B) ingrained Chinese values which respect authority.
C) Chinese athletes use Nike shoes.
D) “Just do it” in Chinese has a negative connotation.
E) parents do not want their children to see such ads.
Answer:
Diff: 2 Page Ref: 312-313
AACSB: Multicultural and Diversity
Objective: 6
Question Type: Critical thinking
77) Which of the following consumer products companies experienced a major product failure in Europe due to inadequate test marketing?
A) Procter & Gamble
B) Colgate
C) Kao
D) Unilever
E) Seagram
Answer:
Diff: 2 Page Ref: 312-313
AACSB: Reflective Thinking
Objective: 6
Question Type: Critical thinking

78) The corporate development team at Virgin evaluates more than a dozen proposals each day from outside and within the company. When assessing new-product ideas, they look for all of the following except:
A) synergy with existing Virgin products.
B) pricing and return on investment.
C) marketing opportunities.
D) if the idea “uses or abuses” the Virgin brand.
E) aesthetic attributes of competitors products.
Answer:
Diff: 2 Page Ref: 312-313
AACSB: Reflective Thinking
Objective: 6
Question Type: Critical thinking

79) In the summer of 2006, it was announced that the company’s Smart car would be offered for sale in the United States. Which global company was responsible for bringing the Smart car to market?
A) Swatch
B) Volkswagen
C) Nissan
D) Ford
E) DaimlerChrysler
Answer:
Diff: 2 Page Ref: 316-317
AACSB: Reflective Thinking
Objective: 6
Question Type: Critical thinking
80) Product problems initially made headlines in 2008 regarding a turbine blade manufactured by Suzlon and financed by John Deere. All of the following problems were encountered by Suzlon except:
A) wind energy cracked a turbine blade and broke off a tower in Illinois.
B) cracks were found on more than 60 blades on turbines run by Deere.
C) Suzlon was battling product reliability and durability problems.
D) Suzlon faced a cash crunch.
E) policymakers in many parts of the world supported Suzlon.
Answer:
Diff: 3 Page Ref: 315
AACSB: Reflective Thinking
Objective: 6
Question Type: Synthesis

81) It is reported that packaging aesthetics are important to Japanese. What are aesthetics and why are those important considerations in global product marketing?
Answer:

82) What are brands, and what are their functions in global marketing? How do brands develop their image, identity, and equity? Are global product and global brands the same?
Answer:

83) Coca-Cola has developed several branded drink products for sale only in Japan, including a noncarbonated ginseng-flavored beverage. Using this as an example, outline the differences between local brand and global brand, combination branding, communication-branding, and brand extensions.
Answer:

84) Describe the guidelines that can assist marketing managers in their efforts to establish global brand leadership.
Answer:

85) Maslow’s needs hierarchy provides a useful framework for understanding how and why local products and brands can be extended beyond home-country borders. How can needs hierarchy be used in global marketing?
Answer:

86) If a label on a product states “Made in Thailand,” and a similar product has a label “Made in Germany,” then why do consumers consider the latter to be better than the former? What different does a label make in the perception of a consumer?
Answer:

87) What are the differences between “product-communication extension” and “product extension-communication adaptation” as strategies?
Answer:

88) Explain the differences between “Product Adaptation-Communication Extension” and “Product-Communication Adaptation” strategies.
Answer:

89) What is the significance of innovation in global marketing? Describe different categories of innovation with examples.
Answer:

90) What factors should managers take into account in developing new products for international markets? What are the consequences for not adequately testing new products?
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 11 Pricing Decisions

1) Price floor and price ceiling are two basic factors which determine the boundaries within which prices should be set.
Answer:
Diff: 1 Page Ref: 319
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

2) Price can be used as a strategic variable to achieve specific goals, including ROI, profit, and rapid recovery of product development costs.
Answer:
Diff: 2 Page Ref: 320
AACSB: Analytic Skills
Objective: 2
Question Type: Definitional

3) The market skimming pricing strategy is a part of a deliberate attempt to reach a market segment that is willing to pay premium price for a particular brand or for a specialized or unique product.
Answer:
Diff: 2 Page Ref: 320
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

4) “Market skimming” is a strategy that uses low prices as a competitive weapon to gain market position.
Answer:
Diff: 2 Page Ref: 320
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

5) The skimming pricing strategy is appropriate in the mature phase of the product life cycle.
Answer:
Diff: 2 Page Ref: 321
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
6) When Apple introduced iPhone in the United States in the summer of 2007 with a sale price of $599, it used skimming pricing strategy.
Answer:
Diff: 2 Page Ref: 321
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

7) Price can be used as a competitive weapon to gain or maintain market position.
Answer:
Diff: 2 Page Ref: 322
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

8) A market penetration pricing strategy calls for setting price levels that are high enough to quickly build market share.
Answer:
Diff: 2 Page Ref: 322
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

9) Penetration prices often mean that the product may be sold at a loss for a certain period of time.
Answer:
Diff: 2 Page Ref: 322
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

10) Sony used penetration pricing when it launched the Walkman personal stereo in 1979.
Answer:
Diff: 2 Page Ref: 322
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
11) Hewlett-Packard is the world’s leading marketer of inkjet printers. H-P’s printers are priced very low and margins are slim; by contrast, the company enjoys healthy margins on sales of replacement ink cartridges. This approach is sometimes known as “razors and blades” pricing.
Answer:
Diff: 2 Page Ref: 322-323
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

12) Toyota, Sony, Olympus, and Komatsu are some of the well-known Japanese companies that use target costing, a process which is also known as “design to cost.”
Answer:
Diff: 3 Page Ref: 323
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

13) “Export price escalation” is the increase in the initial selling price of goods traded across borders.
Answer:
Diff: 3 Page Ref: 324
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

14) Companies using “rigid cost-plus pricing” set prices with adjustments to reflect market conditions outside the home country.
Answer:
Diff: 2 Page Ref: 325
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

15) Every commercial transaction is based on a contract of sale, and the trade terms in that contract specify the exact point at which the ownership of merchandise is transferred from the seller to the buyer and which party in the transactions pays which cost.
Answer:
Diff: 2 Page Ref: 325
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
16) Kraft recently signed an accord with the Rainforest Alliance to buy coffee beans that are certified as being produced with sustainable agricultural practices and then blend them into their mass-market brands.
Answer:
Diff: 3 Page Ref: 326
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

17) With a free on board (FOB) named port, the responsibility and liability of the seller ends at the docking point at the port.
Answer:
Diff: 2 Page Ref: 327
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

18) Several Incoterms are known as “C-Terms” or “main-carriage” terms.
Answer:
Diff: 2 Page Ref: 327
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

19) Suppose the Japanese yen is weak in relation to the U.S. dollar. Rather than stressing price benefits, Japanese companies exporting to the U.S. should emphasize quality improvements and after-sales service.
Answer:
Diff: 2 Page Ref: 330
AACSB: Analytic Skills
Objective: 4
Question Type: Critical thinking

20) Within the eurozone, “price transparency” means that buyers will be able to comparison shop easily because goods are priced in euros as opposed to marks, francs, or lira.
Answer:
Diff: 2 Page Ref: 332
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking
21) Spiraling commodities and raw material costs can put upward or downward pressure on prices for a variety of goods.
Answer:
Diff: 2 Page Ref: 332
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

22) In Brazil, where the inflation rate was high during the late 1980s, individual unit pricing rather than shelf pricing became the norm.
Answer:
Diff: 2 Page Ref: 333
AACSB: Analytic Skills
Objective: 4
Question Type: Critical thinking

23) Procter & Gamble encountered strict price controls in Venezuela in the late 1980s. This showed that when selective controls are imposed, foreign companies are more vulnerable to control than local ones.
Answer:
Diff: 2 Page Ref: 333
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

24) The United States and Germany recently completed an open-skies agreement that will allow Lufthansa to fly more routes within the United States.
Answer:
Diff: 2 Page Ref: 334
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

25) In the United States, Levi Strauss & Company is under price pressure due to stiff competition from Wrangler and Lee brands marketed by VF Corporation.
Answer:
Diff: 2 Page Ref: 334
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking
26) The Internet and globalization have forced policymakers in Germany to repeal some of the archaic laws.
Answer:
Diff: 1 Page Ref: 334
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

27) In some instances, deregulation represents a quid pro quo that will allow German companies wider access to other country markets.
Answer:
Diff: 2 Page Ref: 334
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

28) In the United States, Levi Strauss & Company has to face competitive behavior since J.C.Penney and Sears are both aggressively marketing their own brands.
Answer:
Diff: 2 Page Ref: 334
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

29) Toys “R” Us successfully targets the Japanese toy market by bypassing layers of distribution and adopting a warehouse style of selling similar to its U.S. approach.
Answer:
Diff: 2 Page Ref: 335
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

30) Price is a strategic variable, and hence pricing strategy should be developed using a rational, analytical approach, or an intuitive one.
Answer:
Diff: 2 Page Ref: 335
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

31) Levi’s non-U.S. sales represent about one-third of revenues but more than 50% of profits.
Answer:
Diff: 2 Page Ref: 335
AACSB: Reflective Thinking
Objective: 4
Question Type: Application
32) Marketers of domestically manufactured finished products may be forced to switch to offshore sourcing of certain components to keep costs and prices competitive.
Answer:
Diff: 2 Page Ref: 335
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

33) Dieter Zietsche, sales chief at Germany’s Mercedes-Benz, once said that, in setting prices, “We know what the customer wants, and he will have to pay for it.” This is an example of an ethnocentric pricing policy.
Answer:
Diff: 2 Page Ref: 336
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

34) When subsidiary country managers are given broad discretion to set prices in their markets, a polycentric pricing strategy is in evidence.
Answer:
Diff: 2 Page Ref: 336
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

35) In “geocentric pricing” approach, a company fixes a single price worldwide and allows subsidiaries or local distributors to make independent pricing decisions.
Answer:
Diff: 2 Page Ref: 337
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

36) The terms “parallel importing” and “gray marketing” mean the same thing.
Answer:
Diff: 2 Page Ref: 337-338
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

37) A global company that uses market skimming as a pricing strategy is likely to invite charges of “dumping” by competitors in host-country markets.
Answer:
Diff: 2 Page Ref: 339
AACSB: Reflective Thinking
Objective: 7
Question Type: Critical thinking

38) According to current GATT standards, governments cannot penalize foreign companies for dumping if the export price of a given product differs from the domestic price by less than 2%.
Answer:
Diff: 2 Page Ref: 339
AACSB: Reflective Thinking
Objective: 7
Question Type: Application

39) Transfer pricing is a term that applies to transactions between different divisions or units of the same company.
Answer:
Diff: 2 Page Ref: 341
AACSB: Reflective Thinking
Objective: 9
Question Type: Definitional

40) To win sales in important markets such as China, global companies can face demands for offsets even when transactions do not involve military procurement.
Answer:
Diff: 3 Page Ref: 344
AACSB: Reflective Thinking
Objective: 10
Question Type: Application

41) For years, Mercedes-Benz utilized a ________ pricing strategy; however, this created an opportunity for Toyota to introduce its luxury Lexus line and undercut Mercedes.
A) gray market
B) skimming
C) penetration
D) market holding
E) cost-based
Answer:
Diff: 2 Page Ref: 320
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

42) If the manufacturer of a sophisticated new consumer electronics product determines that many target consumers qualify as “innovators” and “early adopters” with relatively inelastic demand curves, the company should use the ________ pricing strategy:
A) gray market
B) skimming
C) penetration
D) market holding
E) cost-based
Answer:
Diff: 3 Page Ref: 320
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

43) Excelsior Corp. launches a new hand-held personal digital assistant (PDA) for busy corporate executives. The initial retail price is set at $699. One year later, in an effort to reach a broader market, the price is lowered to $299. Which of the following describes the pricing strategies used by Excelsior Corp?
A) skimming strategy followed by penetration strategy
B) penetration strategy followed by cost-based strategy
C) penetration strategy followed by skimming strategy
D) penetration strategy only
E) skimming strategy only
Answer:
Diff: 2 Page Ref: 321-322
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis

44) A market ________ pricing strategy calls for setting price levels that are low enough to quickly build market share.
A) gray marketing
B) skimming
C) penetration
D) market holding
E) cost-based
Answer:
Diff: 2 Page Ref: 322
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

45) In India, consumers do not like to be locked in to long-term contracts, and Apple distributes its iPhone exclusively through stores operated by Airtel, an India carrier, and Vodaphone. This is an example of:
A) gray market.
B) price bundling.
C) market skimming.
D) razors and blades.
E) cost-based.
Answer:
Diff: 2 Page Ref: 322
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

46) A firm without much export experience uses the rigid cost-based pricing method. Which of the following considerations is the exporter ignoring?
A) Is the price competitive in view of local market conditions?
B) Does the price reflect the product’s quality?
C) Will authorities in export markets view the price as reasonable or exploitative?
D) Does the price take antidumping laws into consideration?
E) all of the above
Answer:
Diff: 2 Page Ref: 324-325
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis

47) Which pricing strategy has the advantage of being simple to calculate but has the disadvantage of ignoring demand and competitive conditions?
A) gray marketing
B) skimming
C) penetration
D) market holding
E) cost-based
Answer:
Diff: 2 Page Ref: 325
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

48) All of the following activities must be performed when goods cross international boundaries except:
A) obtaining currency permit, if required.
B) packaging the goods for export.
C) using cost-based pricing method.
D) arranging for ocean freight and preparation.
E) obtaining marine insurance and certificate of the policy.
Answer:
Diff: 3 Page Ref: 325
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

49) A manufacturer attempting to set prices for its products in export markets must realize that CIF, VAT, and distributor markup all lead to:
A) currency devaluations.
B) dumping charges.
C) market skimming.
D) price escalation.
E) market penetration.
Answer:
Diff: 2 Page Ref: 325-327
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

50) If a distributor’s margins are based on the “landed” price of an import shipment, they will be based on:
A) ex-works price.
B) transportation costs.
C) insurance costs.
D) VAT.
E) all of the above
Answer:
Diff: 2 Page Ref: 325-328
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking
51) Which of the following does not contribute to price escalation in global marketing?
A) shipping and insurance charges
B) value added taxes (VAT)
C) different Incoterms as incentives
D) duties and tariffs
E) fluctuating exchange rates
Answer:
Diff: 2 Page Ref: 329
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

52) In July 2001, the euro’s value relative to the dollar was about €1.00 = $0.85. By November 2009, the euro had strengthened to €1.00 = $1.48. In February 2012, one euro was equal to $1.33. All other things being equal, if a European-based global company wants to preserve margins for goods exported to the U.S. market, the company should:
A) raise prices in dollars.
B) switch to cost-based pricing.
C) adopt a policy of market penetration pricing.
D) reduce prices in dollars.
E) use skimming pricing.
Answer:
Diff: 3 Page Ref: 330-332
AACSB: Analytic Skills
Objective: 4
Question Type: Synthesis

53) Which of the following would not be used by an exporter with a weak home-country currency?
A) Expand product line and add more costly features.
B) Speed repatriation of foreign-earned income.
C) Buy advertising, insurance, and other services in home-country market.
D) Shift sourcing outside home-country market.
E) Exploit marketing opportunities in all markets.
Answer:
Diff: 2 Page Ref: 330-332
AACSB: Reflective Thinking
Objective: 4
Question Type: Synthesis
54) Suppose a company selling in various country markets makes statements such as “we know what the customer wants, and he or she will have to pay for it.” This is an indication of a(n) ________ approach to setting prices.
A) ethnocentric
B) polycentric
C) regiocentric
D) geocentric
E) adaptation
Answer:
Diff: 2 Page Ref: 335-336
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

55) All of the listed advantages are for “Extension or Ethnocentric” pricing strategy except:
A) it does not respond to the competitive and market conditions of each national market.
B) it calls for the per-unit price of an item to be same all over the world.
C) it is extremely simple since it does not require information on market condition.
D) it does not require competitive conditions for implementation.
E) the importer must absorb freight and import duties.
Answer:
Diff: 2 Page Ref: 335-336
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

56) If company managers decide to set the export price for a particular product at an amount equivalent to the home-country price, they would be using which approach to pricing?
A) ethnocentric
B) polycentric
C) regiocentric
D) geocentric
E) extension pricing
Answer:
Diff: 2 Page Ref: 335-336
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional
57) Which of the following would not be taken into account by a company using an ethnocentric approach to pricing decisions?
A) the possibility of implementing a penetration strategy
B) profitable price points that could be tied to local sourcing as opposed to home-country sourcing
C) integration of price with other marketing mix elements
D) factors unique to individual country markets
E) none of the above would be taken into account by a company using ethnocentric pricing
Answer:
Diff: 2 Page Ref: 335-336
AACSB: Reflective Thinking
Objective: 5
Question Type: Critical thinking

58) According to a recent study of European industrial exporters, companies that utilized independent distributors would be most likely to utilize:
A) ethnocentric pricing.
B) polycentric pricing.
C) regiocentric pricing.
D) geocentric pricing.
E) extension pricing.
Answer:
Diff: 2 Page Ref: 336
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

59) Which automaker was described as using an ethnocentric approach to setting prices in the United States?
A) Toyota
B) Nissan
C) Volkswagen
D) Mercedes
E) Lexus
Answer:
Diff: 3 Page Ref: 336
AACSB: Reflective Thinking
Objective: 5
Question Type: Synthesis
60) The unauthorized distribution of trademarked goods to exploit price differentials in world markets is known as:
A) market skimming.
B) black marketing.
C) gray marketing.
D) dumping.
E) licensing.
Answer:
Diff: 2 Page Ref: 337
AACSB: Reflective Thinking
Objective: 6
Question Type: Definitional

61) When Tag Heuer, a marketer of luxury watches, takes out newspaper ads urging consumers to purchase Tag Heuer products from authorized dealers only, the company is most likely attempting to combat the ________ problem.
A) countertrade
B) market holding
C) price escalation
D) gray market
E) market skimming
Answer:
Diff: 2 Page Ref: 337-338
AACSB: Analytic Skills
Objective: 6
Question Type: Application

62) If a company sells products in export markets at prices that are below fair market value and that can harm producers in the export market, that company may be accused of:
A) market skimming.
B) using offsets.
C) pursuing artificially high margins.
D) dumping.
E) gray marketing.
Answer:
Diff: 2 Page Ref: 339
AACSB: Reflective Thinking
Objective: 7
Question Type: Definitional
63) In the Uruguay round of GATT negotiations, many countries took issue with the U.S. system of laws, in part because historically the U.S. Commerce Department almost always ruled in favor of the U.S. company that filed the complaint. This was related to the laws pertaining to:
A) black marketing.
B) market skimming.
C) gray marketing.
D) dumping.
E) licensing.
Answer:
Diff: 2 Page Ref: 339-340
AACSB: Reflective Thinking
Objective: 7
Question Type: Application

64) ________ occurs when a manufacturer conspires with wholesalers or retailers to ensure certain retail prices are maintained.
A) Horizontal price fixing
B) Dumping
C) Vertical price fixing
D) Gray marketing
E) Black marketing
Answer:
Diff: 2 Page Ref: 340
AACSB: Reflective Thinking
Objective: 8
Question Type: Definitional

65) Germany’s Bayer Group was fined millions of dollars to settle a lawsuit alleging it had conspired with ArcherDanielsMidland and other global companies to set prices for an enzyme used in animal feeds. What was the issue in this lawsuit?
A) price skimming
B) market penetration
C) price bundling
D) price fixing
E) dumping
Answer:
Diff: 2 Page Ref: 340
AACSB: Reflective Thinking
Objective: 8
Question Type: Definitional
66) Nintendo was fined nearly $150 million after it was determined that the video game company had colluded with European distributors. The distributors in countries with lower retail prices had agreed not to sell to retailers in countries with high prices. This is a classic example of:
A) price skimming.
B) market penetration.
C) price bundling.
D) price fixing.
E) transfer pricing.
Answer:
Diff: 2 Page Ref: 340
AACSB: Reflective Thinking
Objective: 8
Question Type: Synthesis

67) “Cost-based,” “market-based,” and “negotiated” are three approaches to:
A) dumping.
B) gray marketing.
C) transfer pricing.
D) price skimming.
E) counter trade.
Answer:
Diff: 1 Page Ref: 341
AACSB: Dynamics of Global Economy
Objective: 9
Question Type: Critical thinking

68) Joseph Quinlan, chief marketing strategist at Bank of America, estimated that about 25% of U.S. merchandise exports represent shipments by American companies to their foreign affiliates and subsidiaries. This situation underscores the importance of ________ in global marketing.
A) dumping
B) gray marketing
C) transfer pricing
D) price skimming
E) price fixing
Answer:
Diff: 2 Page Ref: 341
AACSB: Reflective Thinking
Objective: 9
Question Type: Definitional
69) Which of the following companies would be most likely to use some form of countertrade when selling its products in developing countries?
A) Procter & Gamble
B) Bell Helicopter Textron
C) Nokia
D) Mercedes-Benz
E) Coca-Cola
Answer:
Diff: 3 Page Ref: 342
AACSB: Analytic Skills
Objective: 10
Question Type: Critical thinking

70) Which of the following is true about proper use of the term “countertrade”?
A) The term “countertrade” is interchangeable with “offsets.”
B) The term “countertrade” is interchangeable with “barter.”
C) The term “countertrade” is interchangeable with “counterpurchase.”
D) “Countertrade” is a blanket term that refers to several different types of business transactions.
E) The term “countertrade” is interchangeable with “dumping.”
Answer:
Diff: 2 Page Ref: 342-344
AACSB: Reflective Thinking
Objective: 10
Question Type: Definitional

71) The most general term for the global phenomenon involving reciprocal business interactions between parties in various countries is known as:
A) switch trading.
B) barter.
C) offset.
D) compensation trading.
E) countertrade.
Answer:
Diff: 2 Page Ref: 342-344
AACSB: Reflective Thinking
Objective: 10
Question Type: Definitional
72) One of the highest profile companies, PepsiCo, which has done business in the Soviet and post-Soviet market for decades, has used this form of countertrade:
A) switch trading.
B) barter.
C) offset.
D) compensation trading.
E) counterpurchase.
Answer:
Diff: 2 Page Ref: 343
AACSB: Reflective Thinking
Objective: 10
Question Type: Application

73) The direct exchange of goods or services between parties in lieu of monetary payment is known as:
A) barter.
B) switch trading.
C) offset.
D) compensation trading.
E) counterpurchase.
Answer:
Diff: 2 Page Ref: 343
AACSB: Reflective Thinking
Objective: 10
Question Type: Application

74) Which of the following forms of countertrade does not require use of money or credit between parties?
A) barter
B) switch trading
C) offset
D) compensation trading
E) none of the above
Answer:
Diff: 2 Page Ref: 343
AACSB: Reflective Thinking
Objective: 10
Question Type: Definitional
75) Which type of countertrade arrangement is required by governments seeking to reduce the budgetary impact of expenditures for defense or telecommunications?
A) barter
B) switch trading
C) offset
D) compensation trading
E) none of the above
Answer:
Diff: 2 Page Ref: 344
AACSB: Reflective Thinking
Objective: 10
Question Type: Definitional

76) To win a contract to supply the United Kingdom with AWACS military aircraft, Boeing agreed to purchase products from the UK whose value was equivalent to 130% of the contract. This type of pricing arrangement, which is common when the customer is a foreign government and the product has military applications, is known as:
A) barter.
B) switch trading.
C) compensation trading.
D) offset.
E) dumping.
Answer:
Diff: 3 Page Ref: 344
AACSB: Reflective Thinking
Objective: 10
Question Type: Definitional

77) Suppose that World Corp. signs a contract to build a lumber processing plant in Siberia. If World Corp. signs a second contract agreeing to take partial payment for the plant in the form of lumber products produced at the plant, it is engaging in:
A) barter.
B) switch trading.
C) offset.
D) compensation trading.
E) a hybrid countertrade arrangement.
Answer:
Diff: 3 Page Ref: 344-345
AACSB: Reflective Thinking
Objective: 10
Question Type: Application

78) When one of the parties to a barter transaction is not willing to accept the goods included in the transaction, that party is likely to utilize the services of a:
A) switch trader.
B) Foreign Trade Organization.
C) Foreign Sales Corporation.
D) Mittelstand owner.
E) broker.
Answer:
Diff: 3 Page Ref: 345
AACSB: Reflective Thinking
Objective: 10
Question Type: Definitional

79) Despite the high expenses associated with operating elegant stores and purchasing advertising space in upscale magazines, the premium retail prices that luxury goods like Louis Vuitton command translate into handsome profits. The Louis Vuitton brand alone accounts for 60% of LVMH’s operating profit. On the other hand, Louis Vuitton spends $10 million annually battling:
A) EU regulations.
B) counterfeiters in countries such as Turkey, South Korea, & Italy.
C) competitors in European countries.
D) suppliers of needed materials.
E) export freight and taxes.
Answer:
Diff: 2 Page Ref: 348
AACSB: Analytic Skills
Objective: 1
Question Type: Synthesis

80) Luxury good marketers found a new way to combat gray market imports into the United States. In March 1995, the U.S. Supreme Court let stand an appeals court ruling prohibiting a discount drugstore chain from selling Givenchy perfume without permission. The distinctive packaging of the perfume is also protected by the U.S. Copyright law. The ruling implies that:
A) Givenchy can only be sold in copyrighted packages.
B) Costco and Wal-Mart will no longer be able to sell Givenchy.
C) Costco and Wal-Mart will be able to sell Givenchy with authorization.
D) gray marketers will be able to market with authorization.
E) discount drugstores cannot market a product resembling Givenchy’s perfumes.
Answer:
Diff: 2 Page Ref: 337-338
AACSB: Analytic Skills
Objective: 6
Question Type: Critical thinking
81) How can price be used as a strategic variable to achieve specific financial goals? Under what conditions should skimming or penetration pricing be adapted as strategies?
Answer:

82) A working knowledge of Incoterms can be a source of competitive advantage to anyone seeking an entry-level job in global marketing. What are “Incoterms,” and how are they classified? How are Incoterms applied in global marketing?
Answer:

83) The currency fluctuations in global markets have a big impact on international transactions. What actions can be adapted if the domestic currency is strong?
Answer:

84) If a Lexus car is priced in U.S. dollars and sold at the dollar converted price in Indian rupees, what sorts of problems can be expected? What is the difference between ethnocentric, polycentric and geocentric pricing?
Answer:

85) Suppose that a book publisher sells a textbook for $150 each to its domestic distributor. The same publisher sells the same edition of the textbook to a distributor in Thailand for $85 since the affordable prices by Thai students may be much less than in the domestic market. The textbook finds its way back into the domestic market since the Thai distributor sold it back to another marketer who sells in the domestic market for $85. What is this type of pricing known as, and what are the consequences of such transactions to global marketers, if any?
Answer:

86) GATT and the U.S. Congress have both defined “dumping.” What is the difference in their definitions? Why is dumping a major issue in global marketing?
Answer:

87) The European Commission recently fined Nintendo nearly $150 million after it was determined that the video game company had colluded with European distributors to fix prices. Why is price fixing not considered a good practice? What are different kinds of price fixings?
Answer:

88) Toyota buys on a regular basis from its subsidiaries. How is the pricing of different products handled? What is the significance of such transactions in global marketing?
Answer:

89) Why is compensation trading also called a “buyback?” How does it differ from switch trading?
Answer:

90) In recent years, in light of the technological developments, many exporters have been forced to finance international transactions by taking full or partial payment in some form other than money. A number of alternative forms of payments known as countertrade are widely used. How does a countertrade transaction work? How do barter transactions differ from offset?
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 12 Global Marketing Channels and Physical Distribution

1) Despite the fact that Tesco is the largest supermarket chain in the United Kingdom, it lags behind retailing giants Wal-Mart and Carrefour in terms of global presence.
Answer:
Diff: 1 Page Ref: 350
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

2) Distribution channels are systems that link manufacturers to customers.
Answer:
Diff: 2 Page Ref: 352
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

3) E-bay pioneered a form of online commerce known as p-to-p or peer-to-peer marketing whereby individual consumers market products to another individual.
Answer:
Diff: 2 Page Ref: 353
AACSB: Use of IT
Objective: 1
Question Type: Definitional

4) E-bay assists large companies such as Disney and IBM in setting up online “storefronts” to sell items for fixed prices in addition to conducing b-to-c auctions.
Answer:
Diff: 2 Page Ref: 353
AACSB: Use of IT
Objective: 1
Question Type: Application

5) Nestlé is using an innovative approach to distribution in Brazil with a program of door-to-door selling in high-income neighborhoods.
Answer:
Diff: 2 Page Ref: 353
AACSB: Reflective Thinking
Objective: 1
Question Type: Application
6) In Japan, the biggest barrier facing U.S. auto manufacturers is that half the cars that are sold each year are sold door-to-door.
Answer:
Diff: 2 Page Ref: 353
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

7) Distribution channels for automobiles in Japan and the United States are similar in that most car buyers in both countries visit dealerships before making a purchase.
Answer:
Diff: 2 Page Ref: 353
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

8) The close long-term relationships between auto salespersons and the Japanese people can be considered as a consumer version of the keiretsu system.
Answer:
Diff: 2 Page Ref: 353
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

9) Apple operates more than 300 retail stores in the United States, Canada, Japan, and the United Kingdom. Many stores feature a signature glass staircase that Apple cofounder and former CEO Steve Jobs helped design.
Answer:
Diff: 2 Page Ref: 354
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

10) Nokia and Motorola are among the cell phone marketers that have opened branded stores in London and Moscow.
Answer:
Diff: 2 Page Ref: 354
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional
11) In Mexico, Proctor & Gamble operates stores serving single-use quantities at a relatively high per-use cost, which are known as “high-frequency” stores.
Answer:
Diff: 2 Page Ref: 355
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

12) In Asia, Western luxury goods marketers have long relied on independent distributors such as Hong Kong-based Fairton, whose local market knowledge and networks of stores are keys to success.
Answer:
Diff: 2 Page Ref: 356
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

13) Kodak adopted a direct involvement approach in Japan by utilizing independent agents, distributors and retailers.
Answer:
Diff: 2 Page Ref: 356
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

14) Channel strategy in a global marketing program must fit the company’s competitive position and overall marketing objectives in each national market.
Answer:
Diff: 2 Page Ref: 356
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

15) According to Harvard professor David Arnold, one of the guidelines for choosing a channel intermediary by a company is to select distributors rather than them selecting the company.
Answer:
Diff: 2 Page Ref: 357
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
16) When utilizing the services of a local independent distributor, management is well advised to treat the distributor as a temporary market-entry vehicle.
Answer:
Diff: 2 Page Ref: 357
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

17) When utilizing the services of a local independent distributor, management is well advised to yield control of marketing strategy to the distributor.
Answer:
Diff: 2 Page Ref: 357
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

18) An exporter that is new to a particular market would do well to choose a middleman with a reputation for “cherry picking” products.
Answer:
Diff: 2 Page Ref: 358
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

19) When Carrefour, Tesco, or Wal-Mart set up shop in developing countries, they provide customers with access to more products and lower prices than were available previously. This is an example of global retailing.
Answer:
Diff: 1 Page Ref: 358-359
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

20) Based on 2010 sales figures, Carrefour is the largest hypermarket in France.
Answer:
Diff: 2 Page Ref: 359
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking

21) Organized retail is a term that is used to describe the modern, branded chain stores.
Answer:
Diff: 2 Page Ref: 359
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
22) Nakumatt is a local supermarket chain in Kenya which provides an aspirational space that appeals to everyone.
Answer:
Diff: 2 Page Ref: 359
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

23) When Carrefour, Tesco, and Wal-Mart set up shop in developing countries, they provide customers with access to more products but higher prices than were available previously.
Answer:
Diff: 2 Page Ref: 359
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

24) Laura Ashley, The Body Shop, Victoria’s Secret, Starbucks, the Disney Store and Gap are examples of global retail operators that can be classified as specialty retailers since they offer less variety than department stores.
Answer:
Diff: 2 Page Ref: 360
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

25) Hypermarkets are a hybrid retailing format combining the discounter, supermarket, and warehouse club approaches under a single roof.
Answer:
Diff: 2 Page Ref: 362
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

26) Toys “R” Us, Home Depot, and IKEA are referred to as “category killers” in the retailing industry.
Answer:
Diff: 2 Page Ref: 362
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
27) British retailer Marks & Spencer is a good example of a category killer.
Answer:
Diff: 2 Page Ref: 362
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

28) Retailers that sell a tightly focused selection of goods at rock-bottom prices are known as hard discounters.
Answer:
Diff: 2 Page Ref: 362
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

29) Three of the world’s five largest malls are in Asia.
Answer:
Diff: 2 Page Ref: 362-363
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

30) Outlet stores are retail operations that allow companies with well-known consumer brands to dispose of excess inventory, out-of-date merchandise, or factory seconds.
Answer:
Diff: 2 Page Ref: 363-364
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

31) That Wal-Mart pulled out of Germany and South Korea is an example of unsuccessful cross-border retailing initiatives.
Answer:
Diff: 2 Page Ref: 365
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

32) Organic growth occurs when a company uses its own resources to open a store on a greenfield site.
Answer:
Diff: 2 Page Ref: 368
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
33) The key to a successful franchise operation is the ability to transfer company know-how to new markets.
Answer:
Diff: 1 Page Ref: 368
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

34) A global retailer seeks to expand in a country that, in the opinion of management, is both culturally distant and difficult to enter. The retailer would be well advised to use a joint venture strategy.
Answer:
Diff: 1 Page Ref: 369
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

35) When British entrepreneur Richard Branson opened the first Virgin Megastore in Japan, he did so by establishing a joint venture with the Marui retailing chain. This represents an appropriate market-entry approach for a global retailer.
Answer:
Diff: 3 Page Ref: 369
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

36) A company or activity that is somewhat removed from the final customer is said to be upstream in the value chain.
Answer:
Diff: 2 Page Ref: 370
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

37) By definition, a retailer that caters to the general public would be “downstream” in an industry’s supply chain.
Answer:
Diff: 2 Page Ref: 370
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
38) Due to political upheaval in the Middle East, in spring 2011, Procter & Gamble was forced to briefly close plants in Egypt that supply products for South Africa.
Answer:
Diff: 2 Page Ref: 371
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

39) Water transportation is rated “low” in reliability since approximately 200 freighters sink due to bad weather or other factors.
Answer:
Diff: 2 Page Ref: 374
AACSB: Reflective Thinking
Objective: 4
Question Type: Synthesis

40) The term “logistics” management describes the integration of activities necessary to ensure the efficient flow of raw materials, in-process inventory, and finished goods from producers to customers.
Answer:
Diff: 2 Page Ref: 377
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

41) Marketing channels exist to create utility for customers. The major categories of channel utility include all of the following except:
A) place utility.
B) price utility.
C) information utility.
D) form utility.
E) time utility.
Answer:
Diff: 2 Page Ref: 351
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

42) Coca-Cola Company’s global marketing leadership position is based in part on its ability to put Coke “within an arm’s reach of desire”; in other words, it is the ability to create:
A) place utility.
B) time utility.
C) form utility.
D) information utility.
E) all of the above
Answer:
Diff: 1 Page Ref: 351
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

43) Some wine importers insist on shipping their wines in refrigerated containers to protect the wines from being damaged by high temperatures. Such importers are creating which kind of utility?
A) place utility
B) time utility
C) form utility
D) information utility
E) worker utility
Answer:
Diff: 2 Page Ref: 351
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

44) Which of the following most accurately describes the relative length of consumer and industrial distribution channels?
A) Consumer channels tend to be longer (consist of more intermediaries) than industrial channels.
B) Industrial channels tend to be longer (consist of more intermediaries) than consumer channels.
C) Both consumer and industrial channels tend to be long (consist of several intermediaries).
D) Both consumer and industrial channels tend to be short (consist of few intermediaries).
E) Consumer channels tend to be shorter (consist of few intermediaries) than the industrial channels.
Answer:
Diff: 2 Page Ref: 352-353
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking
45) Peer-to-peer (p-to-p) marketing uses distribution channels through:
A) business-to-consumers.
B) electronic commerce.
C) business-to-business.
D) door-to-door.
E) manufacturer-to-wholesalers.
Answer:
Diff: 2 Page Ref: 353
AACSB: Use of IT
Objective: 1
Question Type: Definitional

46) eBay was a pioneer in a form of online marketing known as:
A) b-to-c.
B) b-to-b.
C) p-to-p.
D) d-to-d.
E) c-to-b.
Answer:
Diff: 2 Page Ref: 353
AACSB: Use of IT
Objective: 1
Question Type: Definitional

47) Which country has the biggest market for Amway?
A) Romania
B) Ukraine
C) China
D) Russia
E) India
Answer:
Diff: 2 Page Ref: 353
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking
48) Sales representatives in which Japanese industry cultivate close, long-term relations with customers by selling door-to-door?
A) consumer electronics
B) pharmaceuticals
C) automobiles
D) soft drinks
E) groceries
Answer:
Diff: 2 Page Ref: 353
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis

49) What solution did Andersen Consulting provide to the Moscow Bread Company to solve the problem of stale bread?
A) Deliver the bread frozen.
B) Package the bread in plastic bags.
C) MBC should convert a paperless office to cut red tape.
D) Deliver the bread sliced rather than in whole loaf form.
E) Use paper packaging for bread.
Answer:
Diff: 2 Page Ref: 354-355
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

50) In exchange for a pledge to carry at least 40 different Procter & Gamble products, participating stores receive regular visits from P & G representatives who tidy and arrange display areas. This motivational program is referred to as:
A) “buy-in-bulk store” program.
B) “high-frequency”store program.
C) “mom-and-pop” store program.
D) “shop operators” program.
E) “golden store” program.
Answer:
Diff: 3 Page Ref: 355
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional
51) The retail environment in developing countries presents challenges for marketing nonperishable items. In Mexico, Proctor & Gamble, Unilever, Colgate-Palmolive, and other global consumer product companies use ________ for their products:
A) door-to-door selling
B) buy-in-bulk selling
C) mom-and-pop stores
D) franchised stores
E) manufacturer-owned stores
Answer:
Diff: 2 Page Ref: 355
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

52) Which personal computer company began life as a b-to-b marketer and then began marketing direct to the home PC market?
A) Hewlett-Packard
B) Compaq
C) Dell
D) Acer
E) Sony
Answer:
Diff: 1 Page Ref: 356
AACSB: Use of IT
Objective: 2
Question Type: Synthesis

53) Which of the following is an appropriate guideline for companies selecting independent distributors in international markets?
A) Select distributorsdon’t let them select you.
B) Look for distributors capable of developing markets.
C) Treat local distributors as long-term partners.
D) Maintain control over marketing strategy from day one.
E) All of the above are appropriate guidelines.
Answer:
Diff: 2 Page Ref: 357-358
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
54) Which of the following is not an appropriate guideline for companies selecting independent distributors in international markets?
A) Select distributorsdon’t let them select you.
B) Look for distributors capable of developing markets.
C) Give local distributors control over marketing strategy.
D) Treat local distributors as long-term partners.
E) All of the above are appropriate guidelines.
Answer:
Diff: 3 Page Ref: 357-358
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

55) By definition, ________ feature a narrow but deep merchandise mix and high levels of service.
A) department stores
B) specialty retailers
C) supermarkets
D) convenience stores
E) discount stores
Answer:
Diff: 2 Page Ref: 358-364
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

56) Which of the following does not qualify as a “category killer?”
A) Victoria’s Secret
B) IKEA
C) Home Depot
D) Circuit City
E) Toys “R” Us
Answer:
Diff: 2 Page Ref: 358-364
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking
57) Which of the following is the largest retailer in the world in terms of annual sales according to the top five global retailers, 2010?
A) Sears
B) Metro
C) Kmart
D) Carrefour
E) Wal-Mart
Answer:
Diff: 1 Page Ref: 359
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

58) Wal-Mart’s international division currently generates only 25% of company sales, but the world’s biggest retailer is staking its claim in:
A) Mexico.
B) Germany.
C) China.
D) Malaysia.
E) Turkey.
Answer:
Diff: 2 Page Ref: 361
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking

59) Which European retailer proved unsuccessful in its cross-border initiatives on New York’s fashionable Fifth Avenue?
A) Virgin Group
B) Marks & Spencer
C) Carrefour
D) Galeries Lafayette
E) Louis Vuitton
Answer:
Diff: 3 Page Ref: 365
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis

60) Which of the following correctly characterizes the retailing strategy shared by Toys “R” Us and Virgin Megastores?
A) few product categories, own-label focus
B) few product categories, manufacturer brand focus
C) many product categories, own-label focus
D) many product categories, manufacturer brand focus
E) none of the above
Answer:
Diff: 2 Page Ref: 367
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis

61) Which of the following categories best describes the approach of Britain’s Marks & Spencer to global retailing?
A) few product categories, own-label focus
B) few product categories, manufacturer brand focus
C) many product categories, own-label focus
D) many product categories, manufacturer brand focus
E) none of the above
Answer:
Diff: 2 Page Ref: 367
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis

62) Which of the following correctly characterizes the retailing strategy of Benetton, IKEA, and Gap?
A) few product categories, own-label focus
B) few product categories, manufacturer brand focus
C) many product categories, own-label focus
D) many product categories, manufacturer brand focus
E) none of the above
Answer:
Diff: 2 Page Ref: 367-368
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

63) When Wal-Mart Stores first expanded into Mexico, management established a joint venture with the country’s largest retailer. Judging by the approach Wal-Mart used, management must have viewed Mexico as:
A) culturally close and easy to enter.
B) culturally distant and easy to enter.
C) culturally close and difficult to enter.
D) culturally distant and difficult to enter.
E) culturally difficult and easy to enter.
Answer:
Diff: 1 Page Ref: 367-368
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

64) Which approach to retail expansion is most appropriate when targeting a country that management considers both culturally close and easy to enter?
A) organic growth
B) chain acquisition
C) franchise
D) joint venture
E) own-label focus
Answer:
Diff: 2 Page Ref: 368
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

65) When British entrepreneur Richard Branson established the first Virgin Megastore in France, he invested a great deal of money to develop a retail space on the famous Champs-Elysées. Judging by the approach Branson used, he and his management team must have viewed France as:
A) culturally close and easy to enter.
B) culturally distant and easy to enter.
C) culturally close and difficult to enter.
D) culturally distant and difficult to enter.
E) culturally difficult and easy to enter.
Answer:
Diff: 2 Page Ref: 368
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

66) When British entrepreneur Richard Branson established the first Virgin Megastore in Japan, he established a joint venture with the Marui retailing chain. Judging by the approach Branson used, he and his management team must have viewed Japan as:
A) culturally close and easy to enter.
B) culturally distant and easy to enter.
C) culturally close and difficult to enter.
D) culturally distant and difficult to enter.
E) culturally difficult and easy to enter.
Answer:
Diff: 2 Page Ref: 368
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

67) When single brand-retailers such as Benetton, Nike, Pizza Hut, Reebok, and Subway first entered the Indian retail market, they were required to use:
A) mom-and-pop type stores.
B) cramped stores.
C) local vendor operated stores.
D) franchised stores.
E) departmental stores.
Answer:
Diff: 3 Page Ref: 368
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

68) Which approach to global retail expansion involves “greenfield” investment using a company’s own financial resources to build a new store from the ground up?
A) chain acquisition
B) organic growth
C) franchise
D) joint venture
E) own-label focus
Answer:
Diff: 2 Page Ref: 369
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

69) Physical distribution and logistics are concerned with all but one the following.
A) order processing
B) warehousing
C) inventory management
D) transportation
E) designing in-store displays
Answer:
Diff: 2 Page Ref: 370-371
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

70) Order processing, warehousing, and inventory management are all functions pertaining to:
A) a polycentric orientation.
B) physical distribution and logistics.
C) sales promotion.
D) personal selling.
E) chain acquisition.
Answer:
Diff: 2 Page Ref: 370-371
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

71) If a commodity raw material comes from Africa, gets refined in Asia, then shipped to South America for finishing, and finally transported to the Middle East and then sold around the worldthis represents a similar process used for products marketed by:
A) Exxon.
B) McDonald’s.
C) Caterpillar.
D) IKEA.
E) Sears.
Answer:
Diff: 3 Page Ref: 371
AACSB: Analytic Skills
Objective: 3
Question Type: Synthesis
72) Inventory management is:
A) determining what type of warehouse to manage.
B) establishing an inventory channel.
C) managing physical distribution of products.
D) purchasing products.
E) ensuring cost control.
Answer:
Diff: 2 Page Ref: 372
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

73) An important new tool for inventory management is:
A) ODW.
B) RFID.
C) LEGO.
D) VUCA.
E) EPOS.
Answer:
Diff: 2 Page Ref: 372
AACSB: Use of IT
Objective: 4
Question Type: Definitional

74) Which of the following transportation modes ranks lowest in capability?
A) truck
B) railroad
C) Internet
D) air
E) water
Answer:
Diff: 1 Page Ref: 374
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
75) “Containerization” refers to a company’s:
A) designing attractive product packaging that will help a product “sell itself.”
B) use of computer technology to keep a lid on (“contain”) distribution costs.
C) use of refrigerated warehouses for perishable products.
D) use of standard-sized shipping boxes that can be transported in various ways.
E) method of shipment by using oval size steel containers to fit different commodities.
Answer:
Diff: 2 Page Ref: 376
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

76) When a company uses intermodal or multimodal transportation, it is:
A) using multiple channels.
B) using land and water shipping.
C) shipping via more than one railroad line.
D) using the services of both UPS and FedEx.
E) using different size containers for shipment.
Answer:
Diff: 2 Page Ref: 376-377
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

77) A French winery packs its wine in a 40-foot container that is trucked to a port and then loaded onto an ocean-going vessel. This is an example of:
A) intermodal transportation.
B) inventory control.
C) hypermarketing.
D) “cherry picking” a product.
E) containerization.
Answer:
Diff: 2 Page Ref: 376-377
AACSB: Reflective Thinking
Objective: 4
Question Type: Application
78) A freighter loaded with 40-foot shipping containers leaves a port in Europe and sails to New York, where the containers are transferred to railroad cars and transported to the West coast. At the port of San Francisco, the containers are loaded onto another freighter bound for Japan. The term that best describes this situation is:
A) intermodal transportation.
B) inventory management.
C) greenfield investment.
D) hypermarketing.
E) containerization.
Answer:
Diff: 2 Page Ref: 376-377
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

79) At the end of 2011, a shake-up was announced in the Fresh & Easy management ranks with the intent of reorganizing the commercial and marketing units into a single team. This announcement was made by:
A) Marks & Spencer.
B) Tesco.
C) Laura Ashley.
D) Calvin Klein.
E) J.C. Penney.
Answer:
Diff: 2 Page Ref: 379
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis

80) The world’s most global retailer today in the hypermarket segment is:
A) J.C.Penney.
B) Tesco.
C) Wal-Mart.
D) Carrefour.
E) K-Mart.
Answer:
Diff: 2 Page Ref: 391
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis
81) Nestlé in Brazil is using door-to-door selling to reach low-income neighborhoods; Dell computers provide home delivery for its products; Avon is using sales representatives and other companies are using different methods to reach consumers. Describe different channels that can be used for reaching the customers.
Answer:

82) Dell’s rise to a leading position in the global PC industry was based on Michael Dell’s decision to bypass conventional channels by selling direct and by customizing computers. Discuss the importance of channel innovation, giving examples of piggyback marketing in emerging markets.
Answer:

which has a network of direct sales representatives in over 100 countries. Several of Mattel’s toy lines are being marketed in China by local Avon representatives. In Australia, New Zealand, Brazil,
83) Companies entering emerging markets for the first time must exercise particular care in choosing a channel intermediary. Generally, a local distributor is required. What are some of the guidelines that should be considered in selecting a distributor in order to avoid any problems?
Answer:

84) How do specialty retailers differ from “hypermarkets,” “supercenters,” and “convenience stores”? Why are some businesses called “category killers”?
Answer:

85) The Indian economy is growing rapidly, and many global businesses are looking toward moving into India. What types of challenges would global retailers be confronted with if they plan on going to India?
Answer:

86) What are global retail categories? Describe these categories giving examples.
Answer:

87) What are the market entry expansion strategies which are available to retailers that wish to cross borders? Describe these strategies in detail.
Answer:

88) Distribution channels around the world are highly differentiated. However these differences cannot be explained just by culture and income level of the existing market. What is the different between organic growth and franchising?
Answer:

89) An export administrator, Beth Dorrell, notes, “A commodity raw material from Africa can be refined in Asia, then shipped to South America to be incorporated into a component of a final product that is produced in the Middle East and then sold around the world. In light of this statement, describe supply chain, value chain, and logistics. List and briefly describe the most important distribution activities.
Answer

90) In 2006, there was a big controversy in the United States after a British company, Peninsular & Oriental Steam Navigation, was acquired by Dubai Ports World. This controversy clearly outlined some of the challenges in the global marketplace. Using this as an example, discuss the challenges that confront a global marketplace.
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 13 Global Marketing Communications Decisions I: Advertising and Public Relations

1) In April 2010, 30,000 barrels of oil leaked from the stricken well belonging to BP. BP is the oil company that had earlier implemented an ecology-themed corporate identity campaign under the theme “Beyond Petroleum.”
Answer:
Diff: 2 Page Ref: 382
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

2) McDonald’s “I’m lovin’ it” and De Beers “A diamond is forever” are themes which are good examples of global advertising.
Answer:
Diff: 2 Page Ref: 384
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

3) The globalization of coffee culture has created market opportunities for companies such as Starbucks.
Answer:
Diff: 2 Page Ref: 384
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

4) The potential for effective global advertising decreases as companies recognize and embrace new concepts such as “product cultures.”
Answer:
Diff: 2 Page Ref: 384
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

5) According to data published by Advertising Age in 2009, Proctor & Gamble ranks # 1 in worldwide advertisement spending.
Answer:
Diff: 2 Page Ref: 385
AACSB: Reflective Thinking
Objective: 1
Question Type: Synthesis

6) The “extension versus adaptation” debate is essentially a debate over “standardized versus localized” advertising.
Answer:
Diff: 2 Page Ref: 386-387
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

7) Recently, global companies have embraced a technique known as “pattern advertising” which is analogous to the concept of global product platforms.
Answer:
Diff: 2 Page Ref: 387
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

8) The “localized” versus “standardized” debate pertaining to global advertising has finally been resolved in favor of standardization.
Answer:
Diff: 2 Page Ref: 387
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

9) As a practical matter, marketing managers may choose to run both global and local ads rather than adopt an “either/or” stance.
Answer:
Diff: 2 Page Ref: 388
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

10) Standardized print campaigns can be used for industrial products or for technology- oriented consumer products such as Apple iPhone and iPad.
Answer:
Diff: 3 Page Ref: 389
AACSB: Reflective Thinking
Objective: 1
Question Type: Application
11) According to the worldwide revenue figures for 2010, Omnicom Group is the world’s largest advertising organization.
Answer:
Diff: 2 Page Ref: 389
AACSB: Analytic Skills
Objective: 2
Question Type: Definitional

12) If the product needs a strong local identification, it would be best to select an international agency.
Answer:
Diff: 2 Page Ref: 389
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

13) Despite an unmistakable trend toward using global advertising agencies to support global marketing efforts, companies with geocentric orientations will adapt to the global market requirements and select the best agency or agencies accordingly.
Answer:
Diff: 3 Page Ref: 391
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

14) Western advertising agencies still find markets such as China and Japan to be very complex, as Asian agencies find it just as difficult to establish local agency presence in Western markets.
Answer:
Diff: 2 Page Ref: 391
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

15) A German agency devised McDonald’s “I’m lovin’ it” tagline.
Answer:
Diff: 2 Page Ref: 392
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
16) In 1994, the Chinese government banned tobacco advertising from television, radio, newspaper, magazine, and cinema ads.
Answer:
Diff: 2 Page Ref: 392
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

17) In the advertising industry, “creative strategy” is a statement of what a particular message or campaign will say.
Answer:
Diff: 2 Page Ref: 393
AACSB: Analytic Skills
Objective: 2
Question Type: Definitional

18) The advertising agencies can be thought of as “idea factories.”
Answer:
Diff: 1 Page Ref: 393
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

19) Some of the world’s most memorable advertising campaigns originate from “big” ideas with an unlimited number of new executions. Such a campaign is said to have “legs.”
Answer:
Diff: 1 Page Ref: 393
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

20) When creating global advertising, it is important to remember that the “advertising appeal” should be based on the agency’s understanding of the target audience’s buying motives.
Answer:
Diff: 2 Page Ref: 393
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

21) The way a product’s appeal or proposition is presented is called the “creative execution.”
Answer:
Diff: 2 Page Ref: 393
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
22) Revlon has used a French producer to develop television commercials in English and Spanish for use in international markets.
Answer:
Diff: 2 Page Ref: 394
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

23) Copywriters are specialists who check advertisements to see that they meet copyright regulations in different countries.
Answer:
Diff: 2 Page Ref: 395
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

24) The challenge of encoding and decoding slogans and taglines in different national and cultural contexts can lead to unintentional errors.
Answer:
Diff: 1 Page Ref: 395
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Application

25) In China, McDonald’s is careful not to advertise prices with multiple occurrences of the number four since, in Cantonese, the pronunciation of the word four sounds similar to that of the word death.
Answer:
Diff: 2 Page Ref: 395
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Application

26) In China, a humorous TV ad showing a student humiliating a teacher in the classroom would be an effective execution for a soft drink brand.
Answer:
Diff: 2 Page Ref: 396-397
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Synthesis
27) In Japan, intimate scenes between men and women are in bad taste, and in Saudi Arabia such ads are outlawed.
Answer:
Diff: 2 Page Ref: 396-397
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Synthesis

28) Ads that strike viewers in some countries as humorous or irritating may not necessarily be perceived that way by viewers in other countries.
Answer:
Diff: 2 Page Ref: 396-397
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Synthesis

29) Partial nudity and same-sex couples are frequently seen in ads in Latin America and Europe.
Answer:
Diff: 2 Page Ref: 397
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis

30) In Germany, expenditures for newspaper advertising are greater than those for television advertising.
Answer:
Diff: 2 Page Ref: 399
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis

31) The U.S. online advertising market is much bigger than Europe’s.
Answer:
Diff: 2 Page Ref: 399
AACSB: Use of IT
Objective: 3
Question Type: Synthesis

32) Many companies utilize corporate advertising which, despite the name, is generally considered part of the PR function.
Answer:
Diff: 2 Page Ref: 400-401
AACSB: Reflective Thinking
Objective: 5
Question Type: Application
33) Benetton’s striking print and outdoor advantage campaigns keyed to the “United Colors of Benetton” generated both controversy and wide media attention.
Answer:
Diff: 1 Page Ref: 401
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

34) Publicity is similar to advertising in that companies pay the media for placement of stories and news items.
Answer:
Diff: 2 Page Ref: 401
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

35) Image advertising is used by global companies to present themselves as good corporate citizens in foreign countries.
Answer:
Diff: 2 Page Ref: 402
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

36) Advocacy advertising enhances the public’s perception of a company, creates goodwill, or announces a major change.
Answer:
Diff: 3 Page Ref: 403
AACSB: Reflective Thinking
Objective: 5
Question Type: Critical thinking

37) “United Colors of Benetton” generated both controversy and wide media attention, which executives consider as an opportunity to generate publicity.
Answer:
Diff: 2 Page Ref: 403
AACSB: Reflective Thinking
Objective: 5
Question Type: Application
38) Consumer products companies typically use advocacy advertising to give the public reasons to buy their products.
Answer:
Diff: 2 Page Ref: 403
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

39) Any company that is increasing its activities outside the home country can utilize PR personnel as boundary spanners between the company and employees, unions, stockholders, customers, the media, financial analysts, governments, or suppliers.
Answer:
Diff: 2 Page Ref: 403
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

40) A company that is ethnocentric in its approach to PR will not extend home-country PR activities into host countries.
Answer:
Diff: 2 Page Ref: 405
AACSB: Multicultural and Diversity
Objective: 5
Question Type: Critical thinking

41) As companies recognize and embrace new concepts such as the globalization of coffee culture, the potential for effective global advertising:
A) decreases.
B) increases.
C) remains the same.
D) becomes evident.
E) is ignored.
Answer:
Diff: 2 Page Ref: 384
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional
42) A ________ company possesses a critical marketing advantage with respect to marketing communications.
A) domestic
B) local
C) global
D) glocal
E) multinational
Answer:
Diff: 2 Page Ref: 384
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

43) Which of the following product category/company pairings best illustrates the concept of “product cultures”?
A) earth-moving equipment/Caterpillar
B) personal hygiene/Procter & Gamble
C) coffee bars/Starbucks
D) batteries/Duracell
E) automobiles/Ford
Answer:
Diff: 2 Page Ref: 384
AACSB: Reflective Thinking
Objective: 1
Question Type: Synthesis

44) Landor Associates, a company specializing in brand identity and design, recently determined that ________ has the number one brand-awareness and esteem position in the United States, number two in Japan, and number six in Europe.
A) McDonald’s
B) Toyota
C) Sony
D) Pepsi
E) Coke
Answer:
Diff: 2 Page Ref: 395
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis
45) Which company ranks number one in terms of worldwide ad spending for the year 2009?
A) General Motors
B) Philip Morris
C) Unilever
D) Procter & Gamble
E) Coca-Cola
Answer:
Diff: 1 Page Ref: 385
AACSB: Analytic Skills
Objective: 2
Question Type: Synthesis

46) Which company ranks number one in terms of ad spending in Europe (2009)?
A) General Motors
B) Philip Morris
C) Unilever
D) Procter & Gamble
E) Coca-Cola
Answer:
Diff: 2 Page Ref: 385
AACSB: Analytic Skills
Objective: 2
Question Type: Synthesis

47) What do Unilever and Procter & Gamble have in common?
A) Revenues at both companies have been hurt by regulations concerning tobacco advertising and promotion.
B) Both companies utilize extension approaches to advertising.
C) Both companies rank high in terms of non-U.S. ad spending.
D) Both companies use a great deal of corporate advertising.
E) Both companies use the same advertising agency.
Answer:
Diff: 2 Page Ref: 385
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis
48) A company’s efforts to effectively communicate with customers is very important. All of the following are major difficulties which can compromise an organization’s attempt to communicate with customers except:
A) the message does not reach the intended recipient.
B) the message reaches the intended recipient but is misunderstood.
C) the message reaches the intended recipient and is understood, but the recipient may fail to take action.
D) the message is distorted by noise.
E) the message is only in one language.
Answer:
Diff: 2 Page Ref: 386
AACSB: Communication
Objective: 2
Question Type: Application

49) ________ is the phrase global marketers use to describe ads with common design elements into which localized elements are inserted for individual country markets.
A) “Pattern advertising”
B) “Template advertising”
C) “Cookie-cutter advertising”
D) “Model advertising”
E) “Stereotype advertising”
Answer:
Diff: 2 Page Ref: 387
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

50) In the language of global marketing, ________ is the phrase used to describe advertising that represents a middle ground between 100% standardization and 100% localization.
A) “stereotype advertising”
B) “template advertising”
C) “cookie-cutter advertising”
D) “compromise advertising”
E) “pattern advertising”
Answer:
Diff: 2 Page Ref: 387
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

51) When the subheads and body copy of an advertisement are localized, not simply translated, is an example of:
A) local advertising.
B) global advertising.
C) pattern advertising.
D) advocacy advertising.
E) stereotype advertising.
Answer:
Diff: 2 Page Ref: 387
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

52) According to data published by Advertising Age (2010), which of the following is the largest global advertising organization based on worldwide revenues?
A) WPP Group
B) Interpublic Group
C) Omnicom Group
D) Dentsu Inc.
E) Havas
Answer:
Diff: 2 Page Ref: 389
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis

53) In selecting an advertising agency, all but one of the following issues should be taken into consideration.
A) company organization
B) national responsiveness
C) area coverage
D) buyer perception
E) franchise or company owned status
Answer:
Diff: 2 Page Ref: 391
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

54) Some of the world’s most memorable advertising campaigns have achieved success because they originate from an idea that is so big that the campaign offers opportunities for a seemingly unlimited number of new executions. Such a campaign is said to have:
A) “life.”
B) “legs.”
C) “love.”
D) “fun.”
E) “toes.”
Answer:
Diff: 2 Page Ref: 393
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

55) Tobacco companies in Central Europe face the prospect of tougher marketing and advertisement regulations due to:
A) the growing concern about health hazards associated with smoking.
B) a dislike of global brands crowding out local brands.
C) a desire to return to communist-era policies.
D) a desire to comply with EU entry requirements.
E) the pressure from neighboring countries.
Answer:
Diff: 2 Page Ref: 392
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

56) The advertising promise that captures the reason that people buy products is known as:
A) creative strategy.
B) the advertising appeal.
C) the selling proposition.
D) the creative execution.
E) the big idea.
Answer:
Diff: 2 Page Ref: 393
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

57) In many parts of the world, McDonald’s utilizes TV advertising that shows parents interacting with their happy children. Such advertising utilizes:
A) rational appeals.
B) emotional appeals.
C) SRC appeals.
D) melodramatic appeals.
E) localized appeal.
Answer:
Diff: 2 Page Ref: 393
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Application

58) The choice between demonstration, slice-of-life, straight sell, and other advertising forms is a matter of:
A) the creative strategy.
B) the advertising appeal.
C) the selling proposition.
D) the creative execution.
E) the big idea.
Answer:
Diff: 2 Page Ref: 393
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

59) A recent global campaign for IKEA, the Swedish home furnishings retailer, positioned houses as homes a place for love, memories, and laughter. This is a classic example of:
A) emotional appeal.
B) rational appeal.
C) selling proposition.
D) advertising appeal.
E) creative appeal.
Answer:
Diff: 3 Page Ref: 393
AACSB: Analytic Skills
Objective: 4
Question Type: Definitional

60) In advertising, a(n) ________ is an agent who chooses graphics, pictures, type styles, and other visual elements and has general responsibility for the overall look of an advertisement.
A) art director
B) copywriter
C) IMC manager
D) PR practitioner
E) stylist
Answer:
Diff: 2 Page Ref: 394
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

61) The words that are the spoken or written communication elements in advertisements are known as:
A) copy.
B) manuscript.
C) idea.
D) script.
E) writings.
Answer:
Diff: 3 Page Ref: 395
AACSB: Communication
Objective: 3
Question Type: Definitional

62) In Southern China, McDonald’s is careful not to advertise prices with multiple occurrences of the number four because:
A) prices ending in odd numbers are preferred in China.
B) there is no number four in the Chinese language.
C) the word four is pronounced similar to the word death in Cantonese.
D) multiple occurrences are considered as unlucky in China.
E) prices are not included on menus in China.
Answer:
Diff: 3 Page Ref: 395
AACSB: Multicultural and Diversity
Objective: 4
Question Type: Critical thinking
63) Which of the following is true about advertising expenditures in Germany and Brazil?
A) Television is the leading medium in both Germany and Brazil.
B) Newspapers are the leading medium in both Germany and Brazil.
C) Television is the leading medium in Brazil; newspapers are the leading medium in Germany.
D) Television is the leading medium in Germany; newspapers are the leading medium in Brazil.
E) Magazines are the leading medium in Brazil and Germany.
Answer:
Diff: 2 Page Ref: 399
AACSB: Multicultural and Diversity
Objective: 4
Question Type: Critical thinking

64) The United States and ________ are the two top-ranked countries in terms of ad spending across all measured media in 2010.
A) UK
B) France
C) Canada
D) Japan
E) Germany
Answer:
Diff: 1 Page Ref: 399
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

65) In which country are global marketers likely to encounter the most restrictions on advertising?
A) United States
B) Japan
C) Saudi Arabia
D) Russia
E) Germany
Answer:
Diff: 2 Page Ref: 400
AACSB: Multicultural and Diversity
Objective: 4
Question Type: Application
66) U.S. advertisements contain more ________ information, and are more likely to include comparative appeals than Arabic ads.
A) people
B) process
C) price
D) sex
E) context
Answer:
Diff: 2 Page Ref: 400
AACSB: Multicultural and Diversity
Objective: 4
Question Type: Critical thinking

67) Which promotional mix element is most closely associated with activities designed to foster goodwill and understanding with various constituents both inside and outside the company?
A) personal selling
B) advertising
C) public relations
D) sales promotion
E) publicity
Answer:
Diff: 2 Page Ref: 400
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

68) One task of the ________ department is to generate nonpaid forms of communication to foster goodwill among customers and others.
A) sales promotion
B) global marketing
C) headquarters
D) public relations
E) advertising
Answer:
Diff: 2 Page Ref: 400
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional
69) Generally speaking, a company has little control over media. To compensate for this lack of control, many companies utilize:
A) image advertising.
B) advocacy advertising.
C) corporate advertising.
D) TV advertising.
E) radio advertising.
Answer:
Diff: 2 Page Ref: 401-402
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

70) What do Ford Motor Company, Coca-Cola, Nike, and McDonald’s all have in common?
A) They are all consumer packaged-goods companies.
B) They all have foreign CEOs.
C) They have all received a great deal of negative publicity in recent years.
D) They all rely exclusively on TV advertising.
E) They spend more in advertising in foreign markets than home markets.
Answer:
Diff: 2 Page Ref: 402
AACSB: Reflective Thinking
Objective: 5
Question Type: Critical thinking

71) Which of the following marketing mix elements was at the heart of the problems Ford Motor Company and Bridgestone/Firestone faced in 2000?
A) pricing problems
B) distribution problems
C) sales promotion problems
D) public relations problems
E) advertising problems
Answer:
Diff: 2 Page Ref: 402
AACSB: Reflective Thinking
Objective: 5
Question Type: Critical thinking
72) In the summer of 1999, Coca-Cola faced a major marketing problem in Europe. Which of the following was at the heart of the problem?
A) pricing problems
B) advertising problems
C) sales promotion problems
D) public relations problems
E) distribution problems
Answer:
Diff: 2 Page Ref: 402
AACSB: Reflective Thinking
Objective: 5
Question Type: Critical thinking

73) Japan’s Fuji Photo Film asked its advertising agency to develop an advocacy campaign for the United States targeted to appeal both to Wal-Mart and to its customers. This is an example of ________.
A) local advertising
B) pattern advertising
C) global advertising
D) advocacy advertising
E) image advertising
Answer:
Diff: 2 Page Ref: 403
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

74) Hackers attacked the PlayStation online gaming network, thereby comprising user data in which country?
A) Japan
B) United States
C) Germany
D) Great Britain
E) China
Answer:
Diff: 2 Page Ref: 402
AACSB: Use of IT
Objective: 5
Question Type: Application
75) Even in the face of such tough and growing competition, Adidas still enjoys high brand loyalty among older Europeans. The company recruits young people and pays them to wear Adidas shoes in public. This is an example of:
A) local advertising.
B) pattern advertising.
C) global advertising.
D) advocacy advertising.
E) image advertising.
Answer:
Diff: 2 Page Ref: 402-403
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

76) Which of the following most accurately describes the state of global public relations (PR) today?
A) Expenditures on PR are dropping.
B) Expenditures on PR are increasing.
C) PR practices are standardized worldwide.
D) PR is not important in emerging markets like India.
E) Foreign investments are increasing.
Answer:
Diff: 2 Page Ref: 404
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

77) A company adopting a(n) ________ approach to worldwide PR activities gives the host-country practitioner maximum leeway to incorporate local customs and practices into the PR effort.
A) ethnocentric
B) regiocentric
C) local
D) polycentric
E) publicity
Answer:
Diff: 2 Page Ref: 405
AACSB: Analytic Skills
Objective: 5
Question Type: Critical thinking
78) China’s ongoing trade-related friction with the United States highlights the need for:
A) a better distribution system.
B) a better PR effort.
C) sales promotion.
D) a better transportation system.
E) pattern advertising.
Answer:
Diff: 2 Page Ref: 405
AACSB: Reflective Thinking
Objective: 5
Question Type: Critical thinking

79) A company that is ________ in its approach to public relations will extend home-country PR activities into host countries.
A) regiocentric
B) polycentric
C) ethnocentric
D) domestic
E) hostile
Answer:
Diff: 2 Page Ref: 405
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

80) In developing countries, such as Ghana, the best way to communicate with market segments may be through:
A) mass media.
B) written word.
C) magazine ads.
D) TV ads.
E) dance, songs, and storytelling.
Answer:
Diff: 2 Page Ref: 405
AACSB: Multicultural and Diversity
Objective: 5
Question Type: Application
81) A global company that has the ability to successfully transform a domestic campaign into a worldwide one or to create a new global campaign from the ground up, possesses a critical marketing advantage. Explain this statement in light of the global advertising.
Answer:

82) There is an ongoing debate between “standardization” versus “adaptation” pertaining to global advertising. Explain how different sides of the arguments fit into the global context.
Answer:

83) What issues must be considered in selecting an advertising agency for global advertising?
Answer:

84) Considering the fact that the “message” is at the heart of advertising, discuss how creative strategy and different types of appeals can be created in global advertising.
Answer:

85) Food is a product category most likely to exhibit cultural sensitivity. Using Heinz ketchup as an example, discuss how the company has used its advertising taking into account cultural sensitivities in different parts of the world.
Answer:

86) Much academic research has been devoted to the impact of culture on advertising. Researcher Tamotsu Kishii identified seven characteristics that distinguish between Japanese and American creative strategy. Briefly describe those characteristics.
Answer:

87) One of the issues facing advertisers is which medium or media to use when communicating with global target markets. Discuss how these media differ from country to country, giving examples.
Answer:

88) Because of its size and presence in more than 200 countries, the Coca-Cola Company is often the target of antiglobalization protests. Giving examples, show how negative publicity affects global marketers?
Answer:

89) Companies use corporate advertising; image advertising, and advocacy advertising from time to time. How are these advertising methods used and what are are the circumstances under which they are used?
Answer:

90) The ultimate test of an organization’s understanding of the power and importance of public relations occurs during a time of environmental turbulence. In light of this statement, explain the importance of public relations and show how it differs around the world.
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 14 Global Marketing Communications Decisions II: Sales Promotion, Personal Selling, and Special Forms of Marketing Communication

1) Expo 2010 in Shanghai, China was the biggest expo in the world, which was mounted at an expense of $55 billion.
Answer:
Diff: 2 Page Ref: 410
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Application

2) Expo 2010 in Shanghai, China was a critical marketing tool for global companies such as General Motors and Coca-Cola.
Answer:
Diff: 1 Page Ref: 411
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Application

3) Sales promotion programs can be designed to target consumers as well as distributors and retailers.
Answer:
Diff: 2 Page Ref: 411
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

4) A marketer of fine French cognac offers a fancy cigar ashtray to persons who correctly solve a crossword puzzle and mail it in. This is an example of a trade promotion.
Answer:
Diff: 2 Page Ref: 411
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

5) The Coca-Cola Company recently offered each McDonald’s UK franchisee several hundreds of gallons of free soft drink syrup if they agreed to serve only Coca-Cola beverages. This action is an example of a trade promotion.
Answer:
Diff: 2 Page Ref: 411
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional
6) Overall, sales promotion tools, such as coupons, are used less frequently as consumer products companies increase budget allocations for media advertising.
Answer:
Diff: 2 Page Ref: 411
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

7) Kashani and Quelch note that mergers and acquisitions have resulted in increased concentration in the retailing industry. One implication of this trend is increased reliance on centralized control of promotional program formulation.
Answer:
Diff: 3 Page Ref: 413
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

8) In a low-income country, free samples are likely to be a more effective promotional tool than coupons or on-pack premiums.
Answer:
Diff: 2 Page Ref: 413
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

9) When designing sales promotion programs, marketers should keep in mind that the most fundamental thing consumers want to do is try before they buy.
Answer:
Diff: 2 Page Ref: 413
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

10) Fifty years ago, Kikkoman brand soy sauce was unknown in the United States. The company used sampling and even today continues to make extensive use of shopper marketing as a communication tool.
Answer:
Diff: 2 Page Ref: 413-414
AACSB: Reflective Thinking
Objective: 1
Question Type: Application
11) Japanese consumers are avid users of yen-off coupons.
Answer:
Diff: 2 Page Ref: 416
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Application

12) In China, consumers are reluctant to buy full-sized packages of unfamiliar imported products. In such a marketing environment, sampling is an appropriate promotional strategy.
Answer:
Diff: 2 Page Ref: 414
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Application

13) As a sales promotion technique, couponing is equally popular in Malaysia and the United States.
Answer:
Diff: 2 Page Ref: 416
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Critical thinking

14) Compared with other marketing promotion techniques, sampling is more likely to result in actual product trial.
Answer:
Diff: 2 Page Ref: 414
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

15) “Point of use” product sampling is gaining in popularity among marketers.
Answer:
Diff: 2 Page Ref: 414
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

16) Social couponing is one of the hottest online sales promotion trends. It offers its followers deal-of-the-day coupons that are sponsored by local businesses.
Answer:
Diff: 1 Page Ref: 416
AACSB: Use of IT
Objective: 1
Question Type: Definitional
17) Groupon offers deal-of-the day to its loyal users and stimulates product trial by nonusers.
Answer:
Diff: 2 Page Ref: 417
AACSB: Use of IT
Objective: 1
Question Type: Definitional

18) A commitment to the marketing concept and a desire to serve as a problem solver when helping customers is part of a sales representative’s personal selling philosophy.
Answer:
Diff: 2 Page Ref: 417
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

19) When MCI Communications first entered Latin America, it utilized expatriate Americans despite the high cost of doing so.
Answer:
Diff: 2 Page Ref: 418
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

20) The Strategic/Consultative Selling Model consists of five interdependent steps, each with three prescriptions that can serve as a checklist for sales personnel.
Answer:
Diff: 2 Page Ref: 419
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

21) Relationship marketing, which stresses an approach on developing long-term relationships with customers, has been embraced by many U.S. companies.
Answer:
Diff: 2 Page Ref: 420
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

22) The U.S.-style “I’ll do whatever it takes to get your business” has proven to be a successful selling approach throughout the world.
Answer:
Diff: 2 Page Ref: 420
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Application
23) Building rapport and trust with customers is part of a sales representative’s relationship strategy.
Answer:
Diff: 2 Page Ref: 420
AACSB: Analytic Skills
Objective: 3
Question Type: Application

24) The final step in the 6-step sales presentation plan is closing the sale.
Answer:
Diff: 2 Page Ref: 421
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

25) In personal selling, the goal of negotiation should be to ensure that both the customer and the salesperson come away from the presentation as winners.
Answer:
Diff: 2 Page Ref: 422
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

26) Ethnocentric companies are likely to use an expatriate sales force in countries at all levels of economic development.
Answer:
Diff: 2 Page Ref: 423
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking

27) In companies where a polycentric management orientation prevails, host-country nationals will be used in most selling situations with the exception of high-tech products sold in developed countries.
Answer:
Diff: 3 Page Ref: 423
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking
28) A company with a regiocentric orientation is likely to utilize third-country nationals for its sales force in less developed countries.
Answer:
Diff: 3 Page Ref: 423
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking

29) “High cost” and “high turnover” are two disadvantages to using an expatriate sales force.
Answer:
Diff: 3 Page Ref: 424
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking

30) Sales agents are more expensive than full-time, in-country national sales representatives.
Answer:
Diff: 2 Page Ref: 425
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

31) Generally speaking, consumers view direct marketing as entailing a higher level of risk than traditional mass marketing.
Answer:
Diff: 2 Page Ref: 425-426
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

32) Direct marketing does not work well as a global marketing tool because it is not well suited to the task of addressing cultural differences among consumers.
Answer:
Diff: 1 Page Ref: 425-426
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

33) On a per capita basis, German consumers are world-leader mail-order shoppers.
Answer:
Diff: 2 Page Ref: 427
AACSB: Multicultural and Diversity
Objective: 4
Question Type: Critical thinking
34) Following the economic crisis in Asia, many companies in that region have turned to direct mail in order to save costs.
Answer:
Diff: 2 Page Ref: 427
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

35) In Hong Kong and Singapore, efficient postal services, highly educated populations, wide use of credit cards, and high per capita income are attracting the attention of catalog marketers.
Answer:
Diff: 1 Page Ref: 429
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

36) Industry observers expect the popularity of home shopping to decrease during next few years as interactive television technology is introduced into more households.
Answer:
Diff: 2 Page Ref: 431
AACSB: Use of IT
Objective: 5
Question Type: Application

37) France is leading in the rankings showing expenditures for outdoor advertising as percentage of total ad spending.
Answer:
Diff: 2 Page Ref: 431
AACSB: Reflective Thinking
Objective: 5
Question Type: Synthesis

38) Outdoor advertising is experiencing explosive growth in China.
Answer:
Diff: 2 Page Ref: 431
AACSB: Reflective Thinking
Objective: 5
Question Type: Application
39) As Coca-Cola company’s participation in World Cup soccer demonstrates, sponsorship can be an effective component of an IMC program.
Answer:
Diff: 2 Page Ref: 434
AACSB: Reflective Thinking
Objective: 5
Question Type: Critical thinking

40) In the case of product placement, the viewers are being marketed to subliminally without their consent.
Answer:
Diff: 2 Page Ref: 435
AACSB: Communication
Objective: 5
Question Type: Critical thinking

41) A marketer of fine French cognac offers fancy cigar ashtrays as prizes to consumers who correctly solve a crossword puzzle. Which of the following most accurately describes this offer?
A) price promotion
B) non-price promotion
C) trade sales promotion
D) sweepstakes promotion
E) sampling
Answer:
Diff: 2 Page Ref: 411
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

42) Which of the following is not an advantage of using sales promotions?
A) provides a tangible incentive to buyers
B) provides accountability to marketing managers
C) enables company to build its database
D) builds long-term brand awareness
E) develops relationship with customers
Answer:
Diff: 2 Page Ref: 411
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional
43) Masterfoods USA, a unit of Mars, Inc., invited consumers in 200 countries to their Global Color vote promotion. Participants were asked to vote whether a new M&M candy should be purple, aqua, or pink. Purple won. This is an example of:
A) promotion of different colors for marketing.
B) lack of interesting colors in current M& M candy.
C) people in different countries prefer different colors.
D) purple color is the most popular color worldwide.
E) sales promotion by global marketer.
Answer:
Diff: 2 Page Ref: 412
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

44) Which promotional technique is best suited to a situation in which a company wants consumers to actually try its product or service at no cost?
A) sampling
B) sweepstakes
C) couponing
D) free-standing inserts
E) personal selling
Answer:
Diff: 2 Page Ref: 413-414
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

45) Unilever hired a promotional marketing firm to pass out Lever 2000 hand wipes in food courts and petting zoos. This is an example of:
A) point-of-use sampling.
B) point-of-sale sampling.
C) point-of-dirt sampling.
D) point-of-event sampling.
E) point-of-work sampling.
Answer:
Diff: 2 Page Ref: 414
AACSB: Reflective Thinking
Objective: 1
Question Type: Application
46) Coupons are not a favorite promotion tool for use in:
A) the United Kingdom.
B) Belgium.
C) the United States.
D) Italy.
E) Malaysia.
Answer:
Diff: 2 Page Ref: 415-416
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Critical thinking

47) A box of Crest toothpaste contains a coupon entitling the buyer to save 50 cents when purchasing a Crest toothbrush. What type of sales promotion does this represent?
A) cross coupon
B) product placement coupon
C) trade promotion coupon
D) freestanding coupon
E) online coupon
Answer:
Diff: 2 Page Ref: 416
AACSB: Analytic Skills
Objective: 1
Question Type: Definitional

48) Social couponing is one of the hottest sales promotion trends today. This refers to:
A) sampling.
B) Groupons.
C) sweepstakes.
D) freestanding inserts.
E) personal selling.
Answer:
Diff: 2 Page Ref: 416
AACSB: Reflective Thinking
Objective: 1
Question Type: Application
49) Environmental issues and challenges faced by a company which is in the initial stages of implementing a personal selling strategy include all of the following except:
A) political risks.
B) regulatory hurdles.
C) product innovation.
D) currency fluctuations.
E) market unknowns.
Answer:
Diff: 2 Page Ref: 418-419
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

50) Which of the following is not one of the steps in the Strategic/Consultative Selling Model?
A) develop personal selling philosophy
B) develop relationship strategy
C) develop product strategy
D) develop ethnocentric policy
E) develop customer strategy
Answer:
Diff: 2 Page Ref: 419-420
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

51) Which of the following is not a step in the strategic/consultative selling model?
A) develop a marketing mix
B) develop a personal selling philosophy
C) develop a product strategy
D) develop a relationship strategy
E) develop a presentation strategy
Answer:
Diff: 2 Page Ref: 419-420
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking
52) Building a prospect base is typically part of which step of the strategic/consultative selling model?
A) development of a customer strategy
B) development of a personal selling philosophy
C) development of a product strategy
D) development of a relationship strategy
E) development of a presentation strategy
Answer:
Diff: 2 Page Ref: 419-420
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

53) In the six-step presentation plan, the first and last steps are respectively:
A) presentation; demonstration.
B) approach; close.
C) presentation; negotiation.
D) approach; presentation.
E) approach; servicing the sale.
Answer:
Diff: 2 Page Ref: 421
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis

54) A company in which an ethnocentric orientation prevails is likely to utilize primarily ________ in its sales force.
A) host-country nationals
B) third-country nationals
C) expatriates
D) agents of any nationality
E) agents of host country
Answer:
Diff: 2 Page Ref: 423-424
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking
55) A company with a polycentric orientation is likely to employ host-country nationals in all but which of the following selling situations?
A) selling high-tech products in developed countries
B) selling high-tech products in less-developed countries
C) selling low-tech products in developed countries
D) selling low-tech products in less-developed countries
E) none of the above
Answer:
Diff: 3 Page Ref: 423-424
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking

56) Which type of sales person is best suited to selling technologically-sophisticated products in developed countries?
A) expatriates
B) third-country nationals
C) host-country nationals
D) agents of any nationality
E) none of the above
Answer:
Diff: 3 Page Ref: 423-424
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking

57) Which of the following is a disadvantage of using an expatriate sales force?
A) superior product and company knowledge
B) capability to institute the acceptable practices
C) follow policies of the home office
D) enhanced promotion prospects
E) maintaining is very expensive
Answer:
Diff: 2 Page Ref: 424
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking
58) When a company must decide on the composition of its foreign sales force, which alternative is generally the most expensive?
A) expatriates
B) third-country nationals
C) host-country nationals
D) agents of any nationality
E) agents of host country
Answer:
Diff: 2 Page Ref: 424
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking

59) Other international personal selling approaches that fall somewhere between sales agents and full-time employee teams include all of the following except:
A) exclusive license arrangements.
B) contract manufacturing or production.
C) management-only agreements.
D) franchising.
E) joint ventures.
Answer:
Diff: 3 Page Ref: 425
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

60) Benefits for using sales agents includes all of the following except:
A) agents work under contract rather than as full-time employees.
B) agents are less expensive than full-time, in-country national sales representatives.
C) agents possess the same market knowledge as in-country nationals.
D) agents can eventually replace manufacturer’s sales agents.
E) agents possess the same cultural knowledge as in-country nationals.
Answer:
Diff: 3 Page Ref: 425
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking
61) Peppers and Rogers described different steps that are involved in one-to-one marketing. These steps include all of the following except:
A) identify.
B) differentiate.
C) interact.
D) evaluate.
E) customize.
Answer:
Diff: 3 Page Ref: 426
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

62) Which of the following is not characteristic of direct marketing?
A) A marketer relinquishes control of product when it is turned over to channel intermediaries.
B) Advertising serves to generate an immediate inquiry or purchase.
C) Repetition is used in individual advertisements.
D) The customer experiences high perceived risk.
E) Direct response advertising is used.
Answer:
Diff: 2 Page Ref: 426
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

63) Which of the following is not characteristic of mass marketing?
A) Product benefits do not typically include home delivery.
B) Advertising is used to generate an immediate inquiry or purchase.
C) Repetition of ads is the key to awareness and remembering.
D) The customer perceives relatively little risk.
E) Purchase action is deferred.
Answer:
Diff: 2 Page Ref: 426
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
64) Which of the following environmental characteristics affects use of direct marketing in Europe?
A) the European Commission’s concern about privacy
B) high postal rates in several European countries
C) industries in Europe are still developing complete mailing lists
D) linguistic, cultural, and regional diversity
E) all of the above
Answer:
Diff: 2 Page Ref: 426-427
AACSB: Multicultural and Diversity
Objective: 4
Question Type: Critical thinking

65) Which of the following is not a useful guideline for U.S.-based direct marketers wishing to reach global customers?
A) Do not treat prospects as though they are Americans.
B) Do not automatically assume that a direct-mail campaign that works in one country will work in another country.
C) Do not assume that all Europeans are similar in their tastes and wants.
D) Customers should be able to return products to an address in their local country market.
E) Focus on all countries included in the European Union.
Answer:
Diff: 2 Page Ref: 427
AACSB: Multicultural and Diversity
Objective: 4
Question Type: Critical thinking

66) Which country or region offers direct marketers the advantage of a well-developed mailing list industry?
A) United States
B) Japan
C) Western Europe
D) Latin America
E) South Korea
Answer:
Diff: 1 Page Ref: 427
AACSB: Reflective Thinking
Objective: 4
Question Type: Synthesis
67) The term magalog is used to describe which communication medium?
A) direct mail
B) Groupons
C) coupons
D) catalogs
E) infomercials
Answer:
Diff: 1 Page Ref: 427
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

68) Thomas Burke, an executive at Saatchi & Saatchi, is quoted as saying ________ are “the most powerful form of advertising ever created.”
A) corporate advocacy ads
B) infomercials
C) banner ads on the Internet
D) direct mail campaigns
E) catalog sales
Answer:
Diff: 2 Page Ref: 429
AACSB: Reflective Thinking
Objective: 5
Question Type: Application

69) Chinese direct-response television has learned that there are many obstacles that still need to be overcome, which include all of the following except:
A) consumers’ savings rate is very low.
B) limited number of private telephones.
C) low penetration of credit cards.
D) delivery logistics in Beijing.
E) delivery logistics in Shanghai.
Answer:
Diff: 2 Page Ref: 430
AACSB: Multicultural and Diversity
Objective: 5
Question Type: Critical thinking
70) Industry observers expect the popularity of home shopping to increase during the next few years due to:
A) the formation of European Union.
B) the economic development in India.
C) the introduction of interactive television.
D) the introduction of iPhone.
E) the introduction of TV shops.
Answer:
Diff: 2 Page Ref: 431
AACSB: Use of IT
Objective: 5
Question Type: Synthesis

71) Interactive television (ITV) allows viewers to see the ad in its entirety by pressing a remote button; to order products from home-shopping channels; or choose different camera angles, such as in sports events. Comments by James Pennefather, brand manager for Smirnoff, UK, based on comparison of traditional TV ads to ITV features included all of the following except:
A) “it allows viewers to interact with programming.”
B) “it is a lot more unproven.”
C) “it needs further testing.”
D) “it is a calculated risk.”
E) “it may or may not succeed.”
Answer:
Diff: 2 Page Ref: 431
AACSB: Reflective Thinking
Objective: 5
Question Type: Synthesis

72) Traditional support media include:
A) indoor posters.
B) billboards.
C) newspapers.
D) magazines.
E) catalogs.
Answer:
Diff: 2 Page Ref: 431-432
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional
73) A ban on billboards in Brazil meant they have to come down, and in addition, transit ads on buses and taxis were not allowed. Denied access to traditional outdoor advertising, companies devised a number of alternative ways to communicate with prospective customers. These ways included all of the following except:
A) Citibank used the color blue in much of its advertising.
B) ads were placed indoors in elevators.
C) ads were placed in rest rooms and other indoor traffic areas.
D) ads were placed on buses.
E) ads were placed using social media or online channels.
Answer:
Diff: 2 Page Ref: 432
AACSB: Reflective Thinking
Objective: 5
Question Type: Synthesis

74) Worldwide spending on outdoor advertising amounts to about ________ of total ad spending.
A) 1%
B) 2%
C) 4%
D) 6%
E) 10%
Answer:
Diff: 2 Page Ref: 433
AACSB: Reflective Thinking
Objective: 5
Question Type: Synthesis

75) Chinese authorities ratified the WHO’s Framework Convention on Tobacco Controls; which means:
A) Chinese TV can show tobacco ads only after midnight.
B) tobacco companies cannot show ads on TV but can sponsor sports events.
C) all forms of tobacco promotion and sponsorships will be phased out by the year 2010.
D) tobacco companies can use sponsorships of health and sporting events.
E) tobacco companies can sponsor China’s national soccer tournament after the year 2010.
Answer:
Diff: 2 Page Ref: 434
AACSB: Reflective Thinking
Objective: 5
Question Type: Synthesis
76) Product placement has reached the world of live theater and opera. The difference between product placement and other forms of promotion is:
A) ethical concerns are not taken into account.
B) viewers are being marketed to subliminally without their consent.
C) products are focused showing different angles.
D) prominent personalities add a message about the product.
E) sponsors are recognized for their contribution.
Answer:
Diff: 2 Page Ref: 434-435
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

77) In fall 2002, a new Broadway production of Puccini’s La Boheme was set in Paris circa 1957. The stage set included billboards for luxury pen maker Montblanc and Piper-Heidsieck champagne. This is an example of:
A) consumer sales promotion
B) sampling
C) product placement
D) trade sales promotion
E) global awareness
Answer:
Diff: 2 Page Ref: 435
AACSB: Reflective Thinking
Objective: 5
Question Type: Critical thinking

78) Celeste Atkinson is a lifestyle and entertainment manager for Audi, and her job is to create buzz by ensuring that vehicles such as the Audi A8L and the S8 sports sedan figure in paparazzi photos. This is referred to as:
A) lifestyle placement.
B) blockbuster placement.
C) promotion placement.
D) product placement.
E) photo placement.
Answer:
Diff: 2 Page Ref: 434
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional
79) The effective integration of products and brands with entertainment can be seen on the TV hit American Idol. This type of trend is referred to as:
A) advertising age.
B) traditional advertising.
C) global advertising.
D) branded entertainment.
E) image entertainment.
Answer:
Diff: 2 Page Ref: 435
AACSB: Reflective Thinking
Objective: 5
Question Type: Definitional

80) The management of a large manufacturer located in Mexico decided to improve productivity by investing a large sum of money. Vendors from different countries showed interest in getting involved. One such international manager of an American company reached Mexico without knowing who to contact. Finally, he contacted the Commercial Attaché at the American embassy. Realizing that the international manager had not done his homework, he advised him about business in Latin America. His advice included all of the following except:
A) business cannot be done in Mexico as in the States.
B) several contacts are important before talking business.
C) price is only one of the many things that is taken into consideration.
D) people are very proud of their Spanish blood as well as liberation from Spain.
E) talk about their history and Spanish origin.
Answer:
Diff: 2 Page Ref: 440
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Synthesis
81) Discuss what makes the use of sales promotion so effective and popular. Describe different types of sales promotions.
Answer:

82) The authors of one study noted that Nestlé and other large companies that once had a polycentric approach to consumer and trade sales promotions have redesigned their efforts. Based on a study by Kashani and Quelch, identify factors that contribute to more headquarters involvement in the sales promotions effort.
Answer:

83) A number of factors must be taken into account when determining the extent to which the promotions must be localized. List and describe those factors giving examples.
Answer:

84) Giving examples, show how sampling can be an effective sales promotion technique.
Answer:

85) Coupons are a favorite promotion tool of consumer packaged goods companies such as Proctor & Gamble and Unilever. How does the couponing work, and what are the advantages for using different types of coupons?
Answer

86) What are the issues and problems related to sales promotion in different parts of the world?
Answer:

87) The Strategic/Consultative Selling Model has gained wide acceptance in the United States. Describe briefly what the model consists of and how it can serve as a checklist for sales personnel.
Answer:

88) Basic issues for companies that sell globally are the composition of the sales force in terms of nationality. List choices that are available to companies for selecting a sales force. Outline advantages and disadvantages of each choice.
Answer:
89) Direct marketing and mass marketing are becoming a very popular method for communicating with consumers. Giving reasons for their worldwide popularity, show the differences between direct and mass marketing.
Answer:

90) It is expected that information technology will have a big role in promotions using innovative methods. Discuss how infomercials, teleshopping, and interactive television will change the way consumers shop in the near future.
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 15 Global Marketing and the Digital Revolution

1) According to a Ghanaian economist, George Ayittey, the Cheetah generation is composed of fast-moving citizens who do not accept corruption and who believe that democracy and transparency lead to better governance.
Answer:
Diff: 2 Page Ref: 442
AACSB: Multicultural and Diversity
Objective: 1
Question Type: Application

2) The market opportunity for the telecom sector in Africa is limited because the people are too poor, and it is too risky to do business there.
Answer:
Diff: 2 Page Ref: 442-443
AACSB: Use of IT
Objective: 1
Question Type: Application

3) The digital revolution is a paradigm shift resulting from technological advances that allow for the digitalization of analog sources of information, sounds, and images.
Answer:
Diff: 2 Page Ref: 443
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

4) The Internet’s origins can be traced back to an initiative by the Defense Advanced Research Projects Agency, which created a computer network for communication during war.
Answer:
Diff: 2 Page Ref: 444
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

5) Microsoft designed Bing, which provides a superior search experience for shopping, travel, and health related searches.
Answer:
Diff: 2 Page Ref: 445
AACSB: Use of IT
Objective: 1
Question Type: Definitional

6) According to a recent “digital opportunity index” published by the United Nations, South Korea leads the world in providing its citizens with access to information and communications technologies (ICT).
Answer:
Diff: 2 Page Ref: 446
AACSB: Use of IT
Objective: 1
Question Type: Definitional

7) Today, more than 2 billion people  nearly one-third of the world’s population — are using the Internet.
Answer:
Diff: 2 Page Ref: 447
AACSB: Use of IT
Objective: 1
Question Type: Application

8) According to a columnist, Jon Pareles, with the new millennium the Internet swallowed culture whole and delivered it back  cheaper, faster, and smaller — to everyone who can get online.
Answer:
Diff: 2 Page Ref: 447
AACSB: Use of IT
Objective: 1
Question Type: Application

9) The Chinese government, alarmed by the free flow of information across the Internet, closely monitors the content on Web sites that its citizens access.
Answer:
Diff: 2 Page Ref: 447
AACSB: Use of IT
Objective: 1
Question Type: Critical thinking

10) Recently, China, India, Brazil, and the EU have taken the position that since the Internet is global, no single country should be in control.
Answer:
Diff: 2 Page Ref: 447
AACSB: Use of IT
Objective: 1
Question Type: Application
11) The digital revolution is causing dramatic, disruptive changes in industry structures.
Answer:
Diff: 2 Page Ref: 447
AACSB: Use of IT
Objective: 1
Question Type: Definitional

12) “Convergence” is a term that describes a world in which the telecommunications, consumer electronics, computer, and entertainment industries are entering each others’ markets.
Answer:
Diff: 2 Page Ref: 447
AACSB: Use of IT
Objective: 1
Question Type: Definitional

13) Prior to the digital revolution, motion pictures, recorded music, and consumer electronics were separate
industries.
Answer:
Diff: 2 Page Ref: 447
AACSB: Use of IT
Objective: 1
Question Type: Critical thinking

14) Kodak has easily made the transition from industry leadership in chemical-based photography to industry leadership in digital photography.
Answer:
Diff: 2 Page Ref: 447
AACSB: Use of IT
Objective: 1
Question Type: Application

15) Ironically, Motorola, a key player in the cell phone business, could have been first to market with a cell phone camera.
Answer:
Diff: 2 Page Ref: 448
AACSB: Use of IT
Objective: 1
Question Type: Application
16) Although IBM tried to regain its position by creating its first PC, it was slow to recognize the growing demand for laptops.
Answer:
Diff: 2 Page Ref: 448
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

17) In 2010, annual sales of camera-equipped cell phones passed the 1 billion unit mark.
Answer:
Diff: 2 Page Ref: 448
AACSB: Use of IT
Objective: 1
Question Type: Application

18) According to innovation expert Clayton Christensen, the creation of the Internet represented a disruptive technology for Dell Computer.
Answer:
Diff: 2 Page Ref: 448-449
AACSB: Use of IT
Objective: 2
Question Type: Definitional

19) Some company executives become so committed to a current, profitable technology that they fail to provide adequate levels of investment in new, apparently riskier technologies.
Answer:
Diff: 2 Page Ref: 448-449
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

20) The value network for the personal computer industry is not different from the value network for mainframe computers.
Answer:
Diff: 2 Page Ref: 449
AACSB: Use of IT
Objective: 2
Question Type: Definitional

21) According to innovation expert Clayton Christensen, a sustaining technology is an incremental or radical innovation that improves product performance.
Answer:
Diff: 2 Page Ref: 449
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking
22) The industries’ dominant firms with reputations as well-managed firms lead in developing and/or adopting sustaining technologies.
Answer:
Diff: 2 Page Ref: 449
AACSB: Use of IT
Objective: 2
Question Type: Application

23) An innovation that is disrupting to one firm can be sustaining to another firm.
Answer:
Diff: 2 Page Ref: 449
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

24) Between 2003 and 2010, the number of Internet users in China increased from 68 million to 450 million. This makes China the world’s largest e-commerce market.
Answer:
Diff: 2 Page Ref: 450
AACSB: Use of IT
Objective: 3
Question Type: Application

25) Apple’s iTunes Music Store was a global transaction site effective day one of its launch.
Answer:
Diff: 2 Page Ref: 451
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

26) As Pandora CEO Joe Kennedy recently remarked, “The good news is that the Internet is global; however, the bad news is that copyright law is country by country.”
Answer:
Diff: 2 Page Ref: 451
AACSB: Use of IT
Objective: 3
Question Type: Application

27) Until recently, visitors to Web sites for most luxury goods purveyors were not given the opportunity to buy.
Answer:
Diff: 1 Page Ref: 452
AACSB: Use of IT
Objective: 3
Question Type: Application
28) An important trend in the use of information technology is “paid search advertising,” whereby companies pay to have their ads appear when users type certain search terms.
Answer:
Diff: 2 Page Ref: 453
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

29) To fully exploit the Internet’s potential, company executives must be willing to integrate interactive
media into their marketing mixes.
Answer:
Diff: 2 Page Ref: 453
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

30) Cybersquatting is the practice of registering a particular domain name for the express purpose of reselling it to the company that should rightfully use it.
Answer:
Diff: 2 Page Ref: 454
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

31) In Japan, consumers pay for online purchases at convenience stores (konbini).
Answer:
Diff: 2 Page Ref: 454
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Critical thinking

32) Localizing a Web site in native language can be done by translating a Web site from the home-country language.
Answer:
Diff: 2 Page Ref: 455
AACSB: Use of IT
Objective: 3
Question Type: Application
33) As the NBA’s Chinese site illustrates, it is enough to simply translate a Web site from the home-country
language into other languages.
Answer:
Diff: 2 Page Ref: 455
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

34) The EUs regulations for e-commerce are among the world’s most strict.
Answer:
Diff: 2 Page Ref: 455
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

35) Broadband allows Internet users to access streaming media such as streaming audios and videos.
Answer:
Diff: 2 Page Ref: 457
AACSB: Use of IT
Objective: 4
Question Type: Definitional

36) Streaming media represents a huge market opportunity for the video game industry.
Answer:
Diff: 2 Page Ref: 457
AACSB: Use of IT
Objective: 4
Question Type: Definitional

37) Gamers in different locations, even different countries, compete against each other using PCs, Xbox, or PlayStation consoles.
Answer:
Diff: 2 Page Ref: 457
AACSB: Use of IT
Objective: 4
Question Type: Definitional
38) Cloud computing means that archives — including music and movies files, photos, and documents  are stored on massive remote servers and data centers in addition to individual users’ computers.
Answer:
Diff: 2 Page Ref: 457
AACSB: Use of IT
Objective: 4
Question Type: Definitional

39) Google’s Chrome operating system, which has been described as “a new computing paradigm,” is designed to exploit the opportunities of cloud computing.
Answer:
Diff: 2 Page Ref: 457
AACSB: Use of IT
Objective: 4
Question Type: Critical thinking

40) Industry experts expect marketers to integrate SMS with communication via other digital channels, such as the Internet and e-mail.
Answer:
Diff: 2 Page Ref: 457
AACSB: Use of IT
Objective: 4
Question Type: Application

41) The integrated circuit and the concept of binary code permitted the development of the:
A) transistor.
B) radio.
C) personal computer.
D) smartphone.
E) SMS.
Answer:
Diff: 2 Page Ref: 444
AACSB: Use of IT
Objective: 1
Question Type: Application
42) In the 1950s, which company used transistor technology licensed from Bell Labs to develop the transistor radio?
A) Nokia
B) Sony
C) Panasonic
D) RCA
E) Sanyo
Answer:
Diff: 2 Page Ref: 444
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

43) Claude Shannon’s technical report led to his pioneer work for which he is regarded as the inventor of:
A) the transistor.
B) the spreadsheet.
C) the information theory.
D) the silicon chip.
E) the Internet.
Answer:
Diff: 2 Page Ref: 444
AACSB: Use of IT
Objective: 1
Question Type: Definitional

44) Robert Noyce and Jack Kilby are pioneers in the digital revolution. What contribution did they make?
A) They invented the transistor.
B) They invented the spreadsheet.
C) They invented the first digital computer.
D) They invented the silicon chip.
E) They invented the Internet.
Answer:
Diff: 2 Page Ref: 444
AACSB: Use of IT
Objective: 1
Question Type: Definitional

45) Which of the following digital revolution pioneers created a “network of networks” that is now known as the Internet?
A) Robert Noyce and Jack Kilby
B) Vincent Atanasoff and Clifford Berry
C) Vint Serf and Bob Kahn
D) Steve Jobs and Steve Wozniak
E) Tim Berners-Lee
Answer:
Diff: 2 Page Ref: 445
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

46) Which of the following pioneers of the digital revolution developed URL, http, and HTML, thus paving the way for the World Wide Web?
A) Robert Noyce and Jack Kilby
B) Vincent Atanasoff and Clifford Berry
C) Vint Serf and Bob Kahn
D) Steve Jobs and Steve Wozniak
E) Tim Berners-Lee
Answer:
Diff: 2 Page Ref: 445
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

47) ________ is the term that refers to the merging of different industries such as computers, photography, and motion pictures.
A) Value networks
B) Convergence
C) Disruptive technology
D) Telematics
E) Agnostic marketing
Answer:
Diff: 2 Page Ref: 447
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

48) A key player in the cell phone business who could have been first to market with a cell phone camera is:
A) Ericsson.
B) Samsung.
C) Motorola.
D) Sprint.
E) AT&T.
Answer:
Diff: 2 Page Ref: 447-448
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

49) According to the innovator’s dilemma:
A) the computing power of a microprocessor doubles every 18 months.
B) markets that don’t exist can’t be analyzed.
C) well-managed companies that listen and respond to needs of established customers may miss opportunities to innovate.
D) regulation of e-commerce activities will increase at a rate that is directly proportional to the growth of e-commerce revenues.
E) innovations are copied soon after they are discovered.
Answer:
Diff: 2 Page Ref: 448-449
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

50) Which of the following is not one of Clayton Christensen’s principles of disruptive innovation?
A) Companies depend on customers for resources.
B) Small markets don’t satisfy the growth needs of large companies.
C) Markets that don’t exist can’t be analyzed.
D) Technology supply may not equal market demand.
E) E-commerce activities can be divided into three categories.
Answer:
Diff: 2 Page Ref: 449
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

51) In every industry, companies are embedded in a(n) ________, which has a cost structure associated with it that dictates the margins needed to achieve profitability.
A) innovator’s dilemma
B) transaction
C) URL
D) value network
E) digital network
Answer:
Diff: 2 Page Ref: 449
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking

52) Which of the following principles of disruptive innovation pertains to the notion of agnostic marketing?
A) Companies depend on customers for resources.
B) Small markets don’t satisfy the growth needs of large companies.
C) Markets that don’t exist can’t be analyzed.
D) Technology supply may not equal market demand.
E) A company’s capabilities define its weaknesses.
Answer:
Diff: 2 Page Ref: 449
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking

53) “Small markets don’t solve the growth needs of large companies” and “markets that don’t exist can’t be analyzed” are two principles of disruptive innovation. These principles are integral to:
A) the five forces model.
B) the flagship model.
C) strategic intent.
D) the innovator’s dilemma.
E) the innovator’s dream.
Answer:
Diff: 2 Page Ref: 449
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
54) ________ are online retail operations that allow customers to purchase goods and services.
A) Promotion sites
B) Matrix sites
C) Transfer sites
D) Transaction sites
E) Content sites
Answer:
Diff: 2 Page Ref: 451
AACSB: Use of IT
Objective: 3
Question Type: Definitional

55) Web sites can be classified by purpose as represented by the term:
A) matrix sites.
B) international sites.
C) geographic sites.
D) promotion sites.
E) regional sites.
Answer:
Diff: 2 Page Ref: 451
AACSB: Use of IT
Objective: 3
Question Type: Definitional

56) Web sites that provide news and entertainment and support a company’s PR efforts are known as:
A) company sites.
B) transaction sites.
C) promotion sites.
D) content sites.
E) cyber sites.
Answer:
Diff: 2 Page Ref: 451
AACSB: Use of IT
Objective: 3
Question Type: Definitional
57) Amazon.com, the leading Internet bookseller, allows users to purchase books, CDs, and other products online. Amazon.com is primarily a ________ site:
A) promotion
B) content
C) transaction
D) execution
E) cyber
Answer:
Diff: 2 Page Ref: 451
AACSB: Use of IT
Objective: 3
Question Type: Definitional

58) Until recently, visitors to Web sites for most luxury goods purveyors were not given the opportunity to buy. The reason behind this was:
A) luxury goods purveyors did not like to use online promotions.
B) luxury goods purveyors strive to create a shopping experience.
C) global audience do not go online for luxury goods.
D) luxury goods purveyors prefer sending information on iPad.
E) luxury goods are purchased by rich people who do not shop online.
Answer:
Diff: 2 Page Ref: 452
AACSB: Use of IT
Objective: 3
Question Type: Critical thinking

59) Which is the top Interactive Agency based on 2010 Interactive Marketing Revenue?
A) OgilvyInteractive (WPP)
B) SapientNitro (Sapient Corp.)
C) Digitas (Publicis)
D) Razorfish (Publicis)
E) Wunderman (WPP)
Answer:
Diff: 2 Page Ref: 453
AACSB: Use of IT
Objective: 3
Question Type: Definitional
60) Digitas and SBI.Razorfish are:
A) popular Internet auction sites in Japan.
B) leading interactive media agencies.
C) European companies with highly rated Web sites.
D) competing standards for wireless connectivity.
E) popular digital media products.
Answer:
Diff: 2 Page Ref: 453
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

61) Which of the following is not a critical issue for a company whose management intends to engage in e-commerce?
A) privacy
B) credit card fraud in developing countries
C) ensuring that logos and other brand identity elements are consistent with local preferences
D) ensuring a company’s ASCII system supports a particular language
E) the availability of hot spots for Wi-Fi
Answer:
Diff: 2 Page Ref: 453-457
AACSB: Use of IT
Objective: 3
Question Type: Critical thinking

62) Although it is certainly possible for European consumers to browse Amazon.com’s U.S. site, they prefer a direct link to a site with a local domain name. All of the following are possible reasons for such behavior except:
A) the Web site of choice will be one that quotes prices in euros.
B) the Web site of choice will be that which offers a product selection tailored to local tastes.
C) the preference will be for the Web site which ships from local distribution points.
D) due to price fluctuations the preference will be for the Web site that quotes prices in U.S. dollars
E) the preference will be for sites that are in their own language.
Answer:
Diff: 2 Page Ref: 454
AACSB: Use of IT
Objective: 3
Question Type: Critical thinking
63) One of the problems with Web site sales is credit card fraud. All of the following countries are those where fraud is rampant except:
A) Indonesia.
B) Russia.
C) Croatia.
D) Malaysia.
E) Bosnia.
Answer:
Diff: 2 Page Ref: 454
AACSB: Use of IT
Objective: 3
Question Type: Application

64) The practice of registering a particular domain name for the express purpose of reselling it to the company that should rightfully use it is called:
A) gray market.
B) piracy.
C) copyright violation.
D) cybersquatting.
E) patent violation.
Answer:
Diff: 2 Page Ref: 454
AACSB: Use of IT
Objective: 3
Question Type: Definitional

65) The domain name for Amazon company in Germany is:
A) Amazon.co.ge.
B) Amazon.co.de.
C) Amazon.de.
D) Amazon.gy.
E) Amazon.gr.
Answer:
Diff: 2 Page Ref: 454
AACSB: Use of IT
Objective: 3
Question Type: Definitional
66) Ideally, each country-specific site should reflect all of the following except:
A) local culture.
B) language usage.
C) customs.
D) English translations.
E) aesthetic preferences.
Answer:
Diff: 2 Page Ref: 455
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

67) The country which boasts the world’s fastest average Internet speed is:
A) Russia.
B) China.
C) South Korea.
D) India.
E) Japan.
Answer:
Diff: 2 Page Ref: 456
AACSB: Reflective Thinking
Objective: 3
Question Type: Synthesis

68) A broadband communication system is one that has sufficient capacity to carry simultaneously which of the following?
A) multiple voice
B) data
C) video
D) music
E) all of the above
Answer:
Diff: 2 Page Ref: 456
AACSB: Use of IT
Objective: 4
Question Type: Application

69) As a result of the digital revolution, a variety of companies in all parts of the world are developing a new generation of products, services, and technologies; which include all of the following except:
A) broadband network.
B) mobile commerce.
C) wireless connectivity.
D) smart cell phones.
E) landline connectivity.
Answer:
Diff: 1 Page Ref: 456
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

70) Broadband offers companies the telecommunication capability to do all of the following except:
A) streaming audio.
B) streaming video.
C) streaming media.
D) streaming sales.
E) compressed video.
Answer:
Diff: 2 Page Ref: 456
AACSB: Use of IT
Objective: 4
Question Type: Application

71) Streaming media represents a huge market opportunity for all of the following except:
A) video game industry.
B) online gaming.
C) game publishers.
D) Internet portals.
E) telematics.
Answer:
Diff: 2 Page Ref: 457
AACSB: Use of IT
Objective: 4
Question Type: Application
72) “Cloud computing” is different from currently available technologies in all of the following aspects except:
A) it is performed “in the cloud.”
B) applications are delivered through Web browser.
C) it is installed in the computer’s hard drive.
D) computer files can be accessed remotely.
E) archives are stored on massive remote servers.
Answer:
Diff: 2 Page Ref: 457
AACSB: Use of IT
Objective: 4
Question Type: Critical thinking

73) The term “m-commerce” is used to describe:
A) the use of Internet in commerce.
B) the use of web.com in commerce.
C) the use of credit cards in commerce.
D) the use of money in commerce.
E) the use of cell phones in commerce.
Answer:
Diff: 2 Page Ref: 458
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

74) ________ -commerce is one of the significant marketing opportunities made possible by the digital revolution.
A) Multinational
B) Mobile
C) Multisegment
D) Marginal-cost
E) Multilingual
Answer:
Diff: 2 Page Ref: 458
AACSB: Use of IT
Objective: 4
Question Type: Definitional
75) Wi-Fi, or wireless fidelity, permits laptop and PDA users to establish high-speed wireless connections to the Internet via:
A) infrared rays.
B) magnetic rays.
C) hot spots.
D) laptop warriors.
E) modem.
Answer:
Diff: 2 Page Ref: 458
AACSB: Use of IT
Objective: 4
Question Type: Definitional

76) Smartphones that are equipped with global positioning system can determine the users’ exact geographic position. This capability has created new opportunity for marketers by using all of the following innovative means except:
A) text messages can be sent to smartphone users who are in the vicinity.
B) offering special deals to smartphone users who happen to be in the vicinity.
C) promoting mobile campaign which will reach smartphone users.
D) obtaining demographic information through the smartphone users.
E) locate smartphone users for delivering products or services.
Answer:
Diff: 2 Page Ref: 459
AACSB: Use of IT
Objective: 4
Question Type: Critical thinking

77) Bluetooth mobile communication technology has all of the following advantages over Wi-Fi except one:
A) Bluetooth is well suited for use with cell phones.
B) Bluetooth works over shorter distances than Wi-Fi.
C) Bluetooth consumes less power than Wi-Fi.
D) Bluetooth can handle data as well as voice.
E) Bluetooth technology has been incorporated into automobiles.
Answer:
Diff: 2 Page Ref: 459
AACSB: Use of IT
Objective: 4
Question Type: Critical thinking
78) Bluetooth is gaining popularity in Europe compared to Wi-Fi due to all but one of the following advantages:
A) less power consumption.
B) well suited to use with cell phones.
C) works over shorter distances.
D) can be used in automobiles.
E) can be incorporated into home appliances.
Answer:
Diff: 2 Page Ref: 459
AACSB: Use of IT
Objective: 4
Question Type: Application

79) BMW Assist and BMW Teleservices are using telematics system, which provides all of the following benefits except:
A) access to a wide range of information and services.
B) information about pricing.
C) help in booking hotel rooms.
D) help in restaurant reservation.
E) help in downloading music.
Answer:
Diff: 2 Page Ref: 460
AACSB: Use of IT
Objective: 4
Question Type: Application

80) Cloud-based music services are expected to have a major impact on the mobile music business. The
reason for their popularity includes all of the following except:
A) they are a hybrid between subscription and online store business.
B) this new approach addresses some of the shortcomings of the existing methods.
C) they offer users a music locker “in the cloud.”
D) music services can be purchased from a variety of mobile devices.
E) the pricing schemes for various services are simple.
Answer:
Diff: 2 Page Ref: 462
AACSB: Use of IT
Objective: 4
Question Type: Critical thinking
81) According to various statistics, South Korea leads the world in providing its citizens with access to information and communications technologies. Discuss how Korea could lead the world in technology and why the United States has taken a relatively slow start, particularly in spreading the broadband technology.
Answer:

82) The Internet’s powerful capabilities and increasing importance have resulted in a backlash that manifests itself in various ways. Giving examples, explain how this statement can be true.
Answer:

83) What is convergence? What kind of challenges does it present?
Answer:

84) Describe the principles developed by Christensen in order to help managers recognize the innovator’s dilemma and develop appropriate responses to environmental change.
Answer:

85) What is meant by e-commerce? How can the e-commerce activities be classified?
Answer:

86) What are some of the issues that need to be addressed when setting up for global e-commerce?
Answer:

87) How can Web sites be classified? Show how different companies fall under different categories.
Answer:

88) Singapore and Korea offer large sums of money to private citizens and business to pay for broadband equipment and consulting services. However, the spread of broadband is very slow in the United States. Giving reasons for slow movement in the United States, explain how broadband works?
Answer:

89) What is m-commerce, and what are some of the technological innovations that fall under this type of commerce?
Answer:

90) Why is “Cloud Computing” referred to as the next-generation computing? Considering the rapid changes that have taken place in technology, what is next on the horizon which will have an impact on global businesses?
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 16 Strategic Elements of Competitive Advantage

1) Volkswagen Auto Group of America markets both the VW and Audi nameplates in the United States. The VW brand has been hampered by perceptions of hit-and-miss quality.
Answer:
Diff: 2 Page Ref: 468
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

2) A useful way of gaining insight into competitors is through industry analysis.
Answer:
Diff: 2 Page Ref: 469
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

3) The essence of marketing strategy is successfully relating the strengths of an organization to its environment.
Answer:
Diff: 2 Page Ref: 469
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

4) Competition in an industry tends to drive rates of return on invested capital up towards the level of “perfect competition.”
Answer:
Diff: 2 Page Ref: 469
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

5) “Switching costs” are one of the barriers to entry in Porter’s five forces model.
Answer:
Diff: 2 Page Ref: 470
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional
6) Unique product attributes represent a barrier to industry entry known as differentiation.
Answer:
Diff: 2 Page Ref: 470
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

7) Product differentiation and brand loyalty “raise the bar” for would-be industry entrants who would be required to make substantial investments in research or advertising.
Answer:
Diff: 3 Page Ref: 470
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

8) Analyzed in terms of Porter’s five forces model, online music file sharing services represent a threat to the music industry in the form of a substitute product.
Answer:
Diff: 2 Page Ref: 471
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

9) In Michael Porter’s model, “buyers” refers to manufacturers (e.g., GM) and retailers (e.g. Wal-Mart), rather than consumers.
Answer:
Diff: 2 Page Ref: 471
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

10) If suppliers have enough leverage over industry firms, they can raise prices high enough to significantly influence the profitability of their organizational customers.
Answer:
Diff: 2 Page Ref: 471
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

11) Analyzed in terms of Porter’s five forces model, Wal-Mart’s ability to dictate terms to the music industry is one indication of the retail giant’s supplier power.
Answer:
Diff: 2 Page Ref: 472
AACSB: Reflective Thinking
Objective: 1
Question Type: Application
12) Microsoft and Intel are two companies that illustrate the concept of “bargaining power of suppliers” in Porter’s five forces model of industry competition.
Answer:
Diff: 2 Page Ref: 472
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

13) Rivalry among firms refers to all the actions taken by firms in the industry to improve their positions and gain advantage over each other.
Answer:
Diff: 2 Page Ref: 472
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

14) Michael Porter’s four generic strategies for achieving competitive advantage are product differentiation, price leadership, promotion power, and distribution efficiency.
Answer:
Diff: 2 Page Ref: 474
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

15) Michael Porter’s generic strategy framework is derived from the basic types of competitive advantage and the scope of the target market served.
Answer:
Diff: 2 Page Ref: 474
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

16) Cost leadership advantage is based on a firm’s position as the industry’s low-cost leader in a broad market.
Answer:
Diff: 2 Page Ref: 474
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
17) According to the generic strategy framework, cost leadership is a sustainable source of competitive advantage if barriers exist that prevent competitors from achieving the same low costs.
Answer:
Diff: 2 Page Ref: 474
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

18) Maytag has been called “the Rolls-Royce of washers and dryers,” and it can be said that it
has achieved a competitive advantage by means of differentiation.
Answer:
Diff: 2 Page Ref: 474
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

19) Michael Porter’s five forces model and Rugman and D’Cruz’s flagship model are both based on the concept of corporate individualism.
Answer:
Diff: 2 Page Ref: 477
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

20) Rugman and D’Cruz’s development of the flagship model was influenced by their study of Japanese keiretsu.
Answer:
Diff: 2 Page Ref: 477-478
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

21) Rugman and D’Cruz cite Benetton as an example of a flagship firm that excels at building partnerships.
Answer:
Diff: 2 Page Ref: 477-478
AACSB: Analytic Skills
Objective: 2
Question Type: Application
22) Key suppliers, key customers, and key consumers are all elements of a flagship company’s partner network.
Answer:
Diff: 2 Page Ref: 478
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

23) A major difference between the flagship model and Porter’s is that Porter’s is based on the notion of corporate individualism and individual business transactions.
Answer:
Diff: 2 Page Ref: 478
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

24) Benetton’s success in the global fashion industry illustrates the flagship model.
Answer:
Diff: 2 Page Ref: 478
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

25) The Komatsu-Caterpillar saga is just one example of how more than the pursuit of generic strategies can shape global competitive battles.
Answer:
Diff: 2 Page Ref: 479
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

26) The central concept of the strategic intent model of competitive advantage is an obsession of winning.
Answer:
Diff: 2 Page Ref: 479
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

27) The “layers of advantage” approach to global competitive innovation is based on using know-how developed by other companies.
Answer:
Diff: 3 Page Ref: 480
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
28) Intel’s focus on designing complex, expensive microprocessors for PCs enabled competitors to develop cheaper chip sets for non-PC electronics devices. In the strategic intent model of competitive advantage, this is an example of “loose bricks.”
Answer:
Diff: 3 Page Ref: 480
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

29) In the strategic intent model of competitive advantage, Canon’s successful entry into the photocopier market is an example of changing the rules of engagement.
Answer:
Diff: 3 Page Ref: 480-481
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

30) In 1989, Jollibee, the most popular fast-food operator in the Philippines, got an unexpected boost when the threat of a military coup prompted McDonald’s to temporarily suspend operations.
Answer:
Diff: 1 Page Ref: 481
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

31) “Active competition for demanding customers in the home market keeps companies under pressure to constantly innovate.” This statement is an integral part of Hamel and Prahalad’s concept of “strategic intent.”
Answer:
Diff: 2 Page Ref: 482
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

32) “Active competition for demanding customers in the home market keeps companies under pressure to constantly innovate.” This statement is consistent with Michael Porter’s thesis regarding the competitive advantage of nations.
Answer:
Diff: 2 Page Ref: 483
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
33) The strong rivalry in the U.S. market between Dell, Gateway, Hewlett-Packard, Apple, and other computer companies has helped make the United States a world leader in personal computers.
Answer:
Diff: 2 Page Ref: 485
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

34) According to Michael Porter, chance plays no role in determining the competitive advantage of nations.
Answer:
Diff: 2 Page Ref: 486
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

35) Research by Morgan Stanley indicates that the United States is home to more companies with global competitive advantage than any other country.
Answer:
Diff: 2 Page Ref: 487
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

36) According to Richard D’Aveni’s model of “hypercompetition,” successful companies are the ones that find sustainable competitive advantages.
Answer:
Diff: 2 Page Ref: 488
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

37) “Hypercompetition” is a term that describes a business environment of escalating rivalry characterized by rapid product innovation and short product life cycles.
Answer:
Diff: 2 Page Ref: 488
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
38) According to D’Aveni, in today’s business environment, short product life cycles, short product design cycles, new technologies, and globalization undermine market stability; thereby an acceleration of competitive forces takes place.
Answer:
Diff: 2 Page Ref: 488
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

39) The Swatch Group is the world’s second largest watchmaker. This shows that in the low-cost segment, brands compete on price and value.
Answer:
Diff: 2 Page Ref: 488
AACSB: Analytic Skills
Objective: 4
Question Type: Application

40) The digital revolution rendered Sony’s core competencies in analog audio technology obsolete.
Answer:
Diff: 2 Page Ref: 490
AACSB: Reflective Thinking
Objective: 4
Question Type: Application

41) According to Porter, the nature of the interaction between potential industry entrants, buyers, substitute products, suppliers, and rival firms determines:
A) whether or not the government will launch an antitrust investigation.
B) the industry’s profit potential in terms of long-run return on invested capital.
C) whether a country can generate a balance of payments surplus.
D) whether a country can create a comparative advantage in the production of differentiated products.
E) whether a country can generate income by innovation.
Answer:
Diff: 2 Page Ref: 469
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

42) Which of the following is not identified by Porter as one of the possible types of barriers to entry in an industry?
A) loose bricks
B) switching costs
C) economies of scale
D) product differentiation
E) access to distribution channels
Answer:
Diff: 2 Page Ref: 469-470
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

43) Jaguar produced so few cars that it couldn’t get volume discounts from components suppliers. Jaguar managers sometimes could not even determine the “fair” price for a particular part. In terms of Porter’s competitive forces framework, Jaguar’s strategic disadvantage stemmed from low:
A) buyer power.
B) supplier power.
C) threat of new entrants.
D) threat of substitute products.
E) access to distribution channels.
Answer:
Diff: 2 Page Ref: 471
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

44) In the tech world, about 90% of the world’s nearly one billion PCs run on Microsoft’s operating systems and 80% use Intel’s microprocessors. This represents which aspect of the Porter’s five forces model?
A) bargaining power of suppliers
B) bargaining power of buyers
C) threat of substitute products
D) rivalry among competitors
E) threat of new entrants
Answer:
Diff: 2 Page Ref: 471-472
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

45) Dell’s factories can assemble a complete PC in 3 minutes. With a build-to-order strategy at the heart of its business model, Dell’s sales staff maintains close ties with customers. This approach represents which aspect of the Porter’s five forces model?
A) rivalry among competitors
B) bargaining power of buyers
C) threat of substitute products
D) threat of new entrants
E) bargaining power of suppliers
Answer:
Diff: 2 Page Ref: 472-473
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

46) Wal-Mart refuses to stock CDs bearing parental advisory stickers for explicit lyrics or violent imagery. Recording artists who want their recordings available at Wal-Mart have the option of altering lyrics and song titles or deleting offending tracks. Likewise, artists are sometimes asked to change album cover art if Wal-Mart deems it offensive. Considering the elements of the five forces model this is an example of:
A) buyer power.
B) supplier power.
C) threat of new entrants.
D) threat of substitute products.
E) access to distribution channels.
Answer:
Diff: 2 Page Ref: 471
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking
47) Suppose you are a sales representative for Advanced Micro Devices (AMD) in Japan. You are trying to convince Toshiba to buy your company’s superfast Opteron microprocessor for its new laptop computer. Toshiba’s representative seems interested, but finally does not place an order. Confidentially, the representative tells you that he is afraid that Intel will withhold shipments of its Pentium 4 if he does business with AMD. Thinking about Intel’s role in this scenario, which of the following element of the five forces model is evident here?
A) barriers to entry
B) bargaining power of suppliers
C) bargaining power of buyers
D) threat of substitute products
E) threat of new entrants
Answer:
Diff: 2 Page Ref: 470-473
AACSB: Reflective Thinking
Objective: 1
Question Type: Critical thinking

48) Porter’s four generic strategies for achieving competitive advantage are:
A) price determination, cost leadership, product differentiation, distribution savings.
B) cost leadership, product differentiation, cost challenger, product challenger.
C) price leadership, product differentiation, price challenger, cost differentiation.
D) cost leadership, product differentiation, cost focus, focused differentiation.
E) cost leadership, product differentiation, consumer differentiation, focused differentiation.
Answer:
Diff: 2 Page Ref: 474
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

49) Francisco Martínez is CFO of Comercial Mexicana SA, a retail chain in Mexico. Commenting on Wal-Mart’s entry into Mexico, Mr. Martínez notes, “I buy 20,000 plastic toys, and Wal-Mart buys 20 million. Who do you think gets them cheaper?” Which strategic principles are evident in this comment?
A) Wal-Mart’s buyer power and cost leadership
B) Wal-Mart’s barriers to entry and differentiation
C) Wal-Mart’s loose bricks and switching costs
D) Wal-Mart’s focused differentiation and supplier power
E) Wal-Mart’s discount policies for customers
Answer:
Diff: 2 Page Ref: 474-475
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis
50) Gillette markets its flagship MACH3 razor in more than 100 countries around the world. The MACH3 is available virtually everywhere that consumers shop for personal-care products; because of its advanced 3-blade design, the MACH3 typically costs more than other wet-shaving systems. Which generic strategy is evident in Gillette’s global marketing effort of MACH3?
A) cost leadership
B) differentiation
C) cost focus
D) focused differentiation
E) consumer focus
Answer:
Diff: 2 Page Ref: 474-475
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

51) Maytag has been called “the Rolls-Royce of washers and dryers.” Maytag markets Neptune, a high-tech machine, at a substantially higher than regular washer prices. This is an example of:
A) cost leadership.
B) differentiation.
C) cost focus.
D) focused differentiation.
E) consumer focus.
Answer:
Diff: 2 Page Ref: 474-475
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

52) Germany’s Mittelstand companies have been extremely successful pursuing ________.
A) cost leadership
B) differentiation
C) cost focus
D) focused differentiation
E) cost differentiation
Answer:
Diff: 2 Page Ref: 476
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
53) Which of the following generic strategies best captures the way Harley-Davidson has achieved competitive advantage in the global motorcycle industry?
A) cost leadership
B) differentiation
C) cost focus
D) focused differentiation
E) cost differentiation
Answer:
Diff: 2 Page Ref: 476
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

54) Hundreds of small companies such as Martin-Logan and Mark Levinson compete in the high-end audiophile segment of the consumer electronics industry. If analyzed in terms of Porter’s generic strategies framework, such companies might be said to be pursuing competitive advantage via:
A) cost leadership.
B) differentiation.
C) cost focus.
D) focused differentiation.
E) consumer differentiation.
Answer:
Diff: 2 Page Ref: 476
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

55) Rugman and D’Cruz have developed an alternative framework to Porter’s five forces model. The framework, based on business networks, is called:
A) the differentiation model.
B) strategic intent.
C) the flagship model.
D) the hypercompetition model.
E) the Rugman & D’Cruz model.
Answer:
Diff: 2 Page Ref: 477-478
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
56) Which of the following is not an element of Rugman and D’Cruz’s flagship model?
A) key suppliers
B) key customers
C) key consumers
D) selected competitors
E) focused differentiation
Answer:
Diff: 2 Page Ref: 477-478
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

57) The flagship model is evident in the strategies of all but one of the following businesses.
A) Ford
B) Volkswagen
C) IKEA
D) Benetton
E) Microsoft
Answer:
Diff: 3 Page Ref: 477-478
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

58) The key to maintaining competitive advantage, according to Dr. W.E. Deming as well as your textbook authors, is:
A) being committed to constant improvement.
B) being first to market with all products.
C) outsourcing key components.
D) challenging all market leaders.
E) stressing low-price advantage in all areas.
Answer:
Diff: 2 Page Ref: 479
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis
59) Building layers of advantage, searching for loose bricks, changing the rules of competitive engagement, and collaborating are elements of the competitive advantage framework developed by:
A) W.E. Deming.
B) Hamel and Prahalad.
C) Porter.
D) Drucker.
E) D’Aveni.
Answer:
Diff: 2 Page Ref: 479-482
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

60) Building layers of advantage, searching for loose bricks, changing the rules of competitive engagement, and collaborating are elements of Hamel and Prahalad’s framework for:
A) quality advantage.
B) positioning.
C) competitive innovation.
D) marketing management.
E) innovation leadership.
Answer:
Diff: 3 Page Ref: 479-480
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

61) Intel’s focus on designing complex, expensive microprocessors for PCs enabled competitors to develop cheaper chip sets for non-PC electronics devices. In the strategic intent model of competitive advantage, this is an example of:
A) building layers of advantage.
B) loose bricks.
C) changing the rules of engagement.
D) collaborating.
E) none of the above
Answer:
Diff: 2 Page Ref: 480
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
62) In the terminology of the strategic intent framework for competitive advantage, a firm that establishes advantages in a number of different areas has:
A) attribute diversity.
B) marketing breadth.
C) comparative advantage.
D) layers of advantage.
E) a “double diamond.”
Answer:
Diff: 2 Page Ref: 480
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

63) Caterpillar’s attention was focused elsewhere when Komatsu made its first international entry into the Eastern European Market. Based on the strategic intent framework, this is an example of:
A) changing the rules.
B) collaborating.
C) comparative advantage.
D) layers of advantage.
E) loose bricks.
Answer:
Diff: 2 Page Ref: 480
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

64) When managers at Matsushita realized that cost advantages in TV production were often fleeting, they added quality and reliability advantages, thus establishing:
A) loose bricks.
B) a “double diamond.”
C) attribute diversity.
D) layers of advantage.
E) buyer power.
Answer:
Diff: 2 Page Ref: 480
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
65) An approach to competitive advantage that exploits weaknesses in competitors’ narrow-focus strategies is called a ________ strategy.
A) loose bricks
B) collaboration
C) layers of advantage
D) supplier power
E) generic
Answer:
Diff: 2 Page Ref: 480
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

66) When company management decides that it is unwilling to follow the “conventional wisdom” and instead finds a new way to gain competitive advantage, it might be said to be:
A) searching for loose bricks.
B) changing the rules of engagement.
C) collaborating.
D) building layers of advantage.
E) innovating.
Answer:
Diff: 2 Page Ref: 480-481
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

67) Jollibee operates some 1,500 restaurant locations in Philippines, more than McDonald’s. Even Jollibee’s marketing vice president concedes that McDonald’s provided the basic blueprint for their restaurants. However, at Jollibee, sweet and spicy flavors predominate in the burgers and chicken dishes, and their menu offerings are much more varied than competitors. This is an example of which component of competitive innovation?
A) collaboration
B) layers of advantage
C) loose bricks
D) generic
E) supplier power
Answer:
Diff: 2 Page Ref: 481
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking
68) Mitsubishi Heavy Industries Ltd. and other Japanese companies manufacture airplanes under license to U.S. firms and also work as subcontractors for aircraft parts and systems. This type of effort is known as:
A) searching for loose bricks.
B) collaborating.
C) building of layers of advantage.
D) changing the rules of engagement.
E) innovating.
Answer:
Diff: 2 Page Ref: 481-482
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

69) In the 1950s, Sony licensed the technology for the transistor from Bell Labs and proceeded to become the world’s leading manufacturer of portable radios. Which strategy was Sony using to gain competitive advantage?
A) collaboration
B) layers of advantage
C) changing the rules
D) loose bricks
E) engagement
Answer:
Diff: 2 Page Ref: 481-482
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

70) According to Michael Porter’s research on the competitive advantage of nations, human, physical, knowledge, capital, and infrastructure resources are all components of a country’s:
A) factor conditions.
B) demand conditions.
C) strategy, structure, and rivalry.
D) related and supporting industries.
E) global conditions.
Answer:
Diff: 2 Page Ref: 483-484
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
71) According to Michael Porter’s research on the competitive advantage of nations, Switzerland’s large synthetic dye industry and the success of the Swiss pharmaceuticals can be explained in terms of:
A) factor conditions.
B) demand conditions.
C) strategy, structure, and rivalry.
D) related and supporting industries.
E) formation of the European Union.
Answer:
Diff: 2 Page Ref: 485
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Definitional

72) The rivalry between Dell, Hewlett-Packard, Gateway, Compaq, and Apple forces all the players to undertake all of the following except:
A) develop new products.
B) improve existing products.
C) lower costs and prices.
D) develop new technologies.
E) change the rules of engagement.
Answer:
Diff: 2 Page Ref: 485-486
AACSB: Reflective Thinking
Objective: 4
Question Type: Synthesis

73) Chance events play a role in shaping the competitive environment. Chance events are occurrences which include all but one of the following:
A) major technological breakthroughs.
B) wars and their aftermath.
C) oil crisis.
D) currency fluctuations.
E) annual business meeting.
Answer:
Diff: 2 Page Ref: 486
AACSB: Reflective Thinking
Objective: 4
Question Type: Application
74) The ________ framework was developed by Professor Richard D’Aveni to describe a business environment in which no form of competitive advantage can be sustained for long because of escalating and accelerating competitive forces.
A) five forces model
B) generic strategies
C) strategic intent
D) hypercompetition
E) factor conditions
Answer:
Diff: 2 Page Ref: 487-488
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

75) In the global watch industry, the success of the Swatch brand resulted in a manufacturing renaissance for Switzerland. In the strategic framework known as hypercompetition, Swatch’s success is an example of interactions in which arena?
A) cost/quality
B) timing and know how
C) entry barriers
D) deep pockets
E) sporting events
Answer:
Diff: 2 Page Ref: 488
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

76) According to strategy expert Richard D’Aveni, the actions taken by Swatch in the global watch industry illustrate hypercompetitive dynamic maneuvering in which arena?
A) cost/quality
B) timing and know-how
C) entry barriers
D) deep pockets
E) Olympics
Answer:
Diff: 2 Page Ref: 488
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
77) Sony’s PlayStation 3 (PS3) has a powerful chip that provides new levels of realism; PS3 also contains a Blu-Ray DVD player. However, the less complex, less expensive Nintendo Wii has been outselling Sony’s game system by a margin of 3-to-1. Based on D’Aveni’s model this is reflective of:
A) cost/quality.
B) timing and know how.
C) entry barriers.
D) loose bricks.
E) deep pockets.
Answer:
Diff: 2 Page Ref: 488-489
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional

78) Which of the following is not one of the four arenas in which dynamic strategic interactions are played out in hypercompetitive industries?
A) cost/quality
B) timing and know-how
C) entry barriers
D) deep pockets
E) buyer and supplier power
Answer:
Diff: 2 Page Ref: 487-492
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

79) According to the hypercompetition model of competitive advantage, which of the following allows the firm to create an entirely new product or market?
A) know-how advantage
B) timing advantage
C) outflanking
D) switching costs
E) countermoves
Answer:
Diff: 2 Page Ref: 489
AACSB: Reflective Thinking
Objective: 4
Question Type: Definitional
80) The “double-diamond” approach to national competitive advantage is a conceptual framework associated with:
A) Michael Porter.
B) Gary Hamel and C.K. Prahalad.
C) Richard D’Aveni.
D) Alan Rugman.
E) Antonio Perez.
Answer:
Diff: 2 Page Ref: 492-493
AACSB: Reflective Thinking
Objective: 4
Question Type: Critical thinking

81) Michael E. Porter, a leading theorist of competitive strategy, developed a five forces model to explain competition in an industry. List these forces and describe the impact of the threat of new entrants.
Answer:

82) There have been considerable changes that have taken effect since Porter presented his theories. One such impact is due to the tremendous technological advancement. In light of these changes, examine what potential impact technology has on some of his theories.
Answer:

83) In addition to the five forces model of industry competition, Michael Porter has developed a framework of so-called generic business strategies. Explain these generic strategies, describing their aims and application.
Answer:

84) Describe how competitive advantage can be created via strategic intent, giving examples of successful approaches of competitors.
Answer:

85) What does the phrase factor condition refer to? How can these factors be inherited or created? Describe Porter’s categories of factor conditions.
Answer:
86) What are demand conditions? Why is the nature of home demand conditions for the firm’s or industry’s products and services important?
Answer:

87) The nature of firm strategy, structure, and rivalry is the final determinant of a nation’s diamond. What does this statement refer to? How does domestic rivalry differ from foreign rivalry? Please explain in detail.
Answer:

88) How do chance events play a role in shaping the competitive environment?
Answer:

89) What is hypercompetition? Briefly discuss conditions under which hypercompetition takes place.
Answer:

90) The irony and paradox of the hypercompetition framework is that, in order to achieve a sustainable advantage, companies must seek a series of “unsustainable” advantages. Explain this statement using dynamic strategic interaction sequence.
Answer:

Global Marketing, 7e (Keegan/Green)
Chapter 17 Leadership, Organization, and Corporate Social Responsibility

1) Unilever Group Chief Executive Patrick Cescau wanted to reconnect the company with its heritage of sustainability and concern for the environment. This and other values reflect Unilever’s philosophy of “doing well by doing good.”
Answer:
Diff: 2 Page Ref: 498
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

2) During his years as chief executive of GE, Jack Welch discovered that many employees resisted his ideas about the need to globalize the company.
Answer:
Diff: 2 Page Ref: 500
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

3) At companies with a global orientation, the best person for top executive positions is generally considered to be a person born in the headquarters country.
Answer:
Diff: 2 Page Ref: 518
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

4) Indra Nooyi, chair and chief executive of PepsiCo, is faced with rising commodity prices and weak demand for carbonated soft drinks internationally.
Answer:
Diff: 2 Page Ref: 501
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

5) In recent quarters, the strongest results have come from PepsiCo’s fast-growing international division. Snack sales are particularly strong in Mexico and Russia.
Answer:
Diff: 2 Page Ref: 501
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

6) Yong Nam, CEO of LG, recently stipulated that English would be required throughout the company. He explained that the speed of innovation that is required to compete in the world mandates that we must
have seamless communication.
Answer:
Diff: 2 Page Ref: 501
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

7) A Brazilian, Carlos Ghosn, an executive in the company, was required to move aggressively to cut costs and make drastic changes in Nissan’s structure.
Answer:
Diff: 3 Page Ref: 501
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

8) In the long run, an organization derives its global competitiveness from its ability to bring high-quality, low-cost products to market faster than its competitors.
Answer:
Diff: 2 Page Ref: 502
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

9) Nokia’s reversal of fortune at the hands of Apple and Google underscores the fact that today’s executives must rethink the concept of the corporation if they wish to operationalize the concept of core competencies.
Answer:
Diff: 2 Page Ref: 503
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

10) A key issue in global organization is how to achieve balance between autonomy and integration.
Answer:
Diff: 2 Page Ref: 503
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
11) As markets globalize, and as Japan opens its own market to more competition from overseas, more Japanese companies are likely to break from traditional organization patterns.
Answer:
Diff: 2 Page Ref: 504
AACSB: Dynamics of Global Economy
Objective: 2
Question Type: Critical thinking

12) A geographically dispersed company cannot limit its knowledge to product, function, and the home territory.
Answer:
Diff: 2 Page Ref: 505
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

13) According to Kenichi Ohmae’s view of the world, there are 30 regions with populations ranging from 5 million to 20 million people. Based on this, China would be viewed as several distinct regions.
Answer:
Diff: 2 Page Ref: 505
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

14) Frederick Taylor claimed that all managers had to see the world the same way.
Answer:
Diff: 2 Page Ref: 505
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

15) Successful companies, the real global winners, must have both good strategies and good execution.
Answer:
Diff: 1 Page Ref: 505
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
16) New forms of flexibility, efficiency, and responsiveness are required to meet the demands of globalizing markets.
Answer:
Diff: 2 Page Ref: 505
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

17) Management writers often use terms like silos, stovepipes, or chimneys to describe an organization in which
autonomous business units operate with their own agendas and a minimum of horizontal interdependence.
Answer:
Diff: 2 Page Ref: 506
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

18) A major disadvantage of a regional center is its cost.
Answer:
Diff: 2 Page Ref: 508
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

19) When business is conducted in a single region that is characterized by differences in economic, social,
geographical, and political conditions, there is both justification and need for a management center.
Answer:
Diff: 2 Page Ref: 508
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

20) McDonald’s organizational design integrates the international division and geographical structures with McDonald’s U.S. having five geographical operating divisions, and McDonald’s International having
four.
Answer:
Diff: 2 Page Ref: 509
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking
21) Both Gillette and Ericsson reorganized themselves into matrix organizations.
Answer:
Diff: 2 Page Ref: 510
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

22) There is general agreement that the matrix design is the single best organization structure for global marketing.
Answer:
Diff: 2 Page Ref: 510
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

23) The matrix organization requires fundamental changes in management behavior, organizational culture, and technical systems.
Answer:
Diff: 2 Page Ref: 511
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

24) The advantage of the mass producers lasted until the Japanese auto companies further revised the value chain and created lean production.
Answer:
Diff: 2 Page Ref: 513
AACSB: Reflective Thinking
Objective: 3
Question Type: Application

25) The Toyota Production system (TPS) is based on two concepts. The first one is Jidoka, which involves visualizing potential problems.
Answer:
Diff: 2 Page Ref: 514
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

26) Toyota Production system (TPS), as the Japanese company’s manufacturing methods are known, achieves efficiencies by following a lean production system.
Answer:
Diff: 2 Page Ref: 514
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
27) The differences between lean producers and U.S. mass producers in the way they deal with their respective dealers, distributors, and customers are as dramatic as the differences in the way they deal with their suppliers.
Answer:
Diff: 3 Page Ref: 515
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

28) Once a Japanese dealership gets a customer, it is absolutely determined to hang on to that customer for life.
Answer:
Diff: 3 Page Ref: 516
AACSB: Reflective Thinking
Objective: 2
Question Type: Synthesis

29) The U.S. mass producers focus on long-term income and return on investment, whereas Japanese see the process in terms of the short-term perspective.
Answer:
Diff: 3 Page Ref: 517
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

30) Today’s chief executive must have good understanding and respond to the concerns and interests of a variety of stakeholders.
Answer:
Diff: 2 Page Ref: 517
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional

31) A stakeholder is any group or individual that is affected by, or takes an interest in, the policies and practices adopted by an organization.
Answer:
Diff: 2 Page Ref: 517
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
32) Primary stockholders include top management, employees, customers, media, and persons holding stock in the company.
Answer:
Diff: 1 Page Ref: 517
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

33) Corporate social responsibility (CSR) refers to a company’s obligation to pursue goals and policies that are in a company’s best interest.
Answer:
Diff: 2 Page Ref: 517
AACSB: Ethical Reasoning
Objective: 4
Question Type: Definitional

34) Being socially responsible is not only the right thing to do; it can distinguish a company from its industry peers.
Answer:
Diff: 2 Page Ref: 518
AACSB: Ethical Reasoning
Objective: 4
Question Type: Application

35) The antiglobalization movement constitutes an important primary stakeholder for global companies.
Answer:
Diff: 2 Page Ref: 518
AACSB: Ethical Reasoning
Objective: 4
Question Type: Application

36) In developing countries, globalization’s opponents accuse companies of placing intellectual property rights ahead of human rights.
Answer:
Diff: 2 Page Ref: 519
AACSB: Ethical Reasoning
Objective: 4
Question Type: Synthesis
37) Timberland Company unveiled a “nutritional label” on its footwear boxes as a means of communicating its corporate social responsibility commitment to consumers.
Answer:
Diff: 2 Page Ref: 519
AACSB: Ethical Reasoning
Objective: 4
Question Type: Application

38) Nike came under fire from critics who alleged poor working conditions in the factories that make the company’s athletic shoes.
Answer:
Diff: 2 Page Ref: 521
AACSB: Ethical Reasoning
Objective: 4
Question Type: Application

39) Despite the fact that Starbucks is widely admired for forward-thinking management policies, Global Exchange pressed the company to further demonstrate its commitment to social responsibility by selling Fair Trade coffee.
Answer:
Diff: 2 Page Ref: 521
AACSB: Ethical Reasoning
Objective: 4
Question Type: Critical thinking

40) One of the Corporate Social Responsibility (CSR) initiatives by IKEA’s primary carpet supplier in India is to monitor subcontractors to ensure that they do not employ children.
Answer:
Diff: 2 Page Ref: 523
AACSB: Ethical Reasoning
Objective: 4
Question Type: Application

41) According to Carly Florina, former CEO of Hewlett-Packard, leadership is about:
A) hierarchy.
B) title.
C) status.
D) connecting.
E) bragging.
Answer:
Diff: 2 Page Ref: 499
AACSB: Reflective Thinking
Objective: 1
Question Type: Definitional
42) In addition to “selling” their visions, top management at both Whirlpool and GE face the formidable task of building:
A) their company stature.
B) physical layout and design.
C) a cadre of globally oriented managers.
D) a cadre of loyal customers.
E) access to distribution channels.
Answer:
Diff: 2 Page Ref: 500
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

43) Yong Nam, CEO of LG, recently stipulated that English would be required throughout the company. His reasons for this action included all of the following statements except:
A) the need to have seamless communication.
B) not to depend on a small group of people.
C) impede information sharing.
D) facilitate decision making.
E) utilizing everybody’s wisdom.
Answer:
Diff: 2 Page Ref: 501
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Application

44) The ability to speak foreign languages is one difference between managers born and raised in the United States and those born and raised elsewhere. Which is true and reflects the earlier statement?
A) There are 200 million Chinese children studying English.
B) There are 24 million American children studying Chinese.
C) There are 200 million Indian children studying Chinese.
D) Chinese managers study English as much as Chinese.
E) There are equal numbers of American and Chinese children studying English.
Answer:
Diff: 2 Page Ref: 501
AACSB: Multicultural and Diversity
Objective: 2
Question Type: Synthesis
45) Indra Nooyi, chairman and chief executive of PepsiCo, is faced with all of the following except:
A) rising prices for raw materials in the United States.
B) a weak demand for carbonated soft drinks in the United States.
C) a rapidly growing international division.
D) strong snack sales in Mexico and Russia.
E) a decrease in sales in the Middle East and Argentina.
Answer:
Diff: 2 Page Ref: 501
AACSB: Dynamics of Global Economy
Objective: 2
Question Type: Critical thinking

46) Marjorie Scardino is chief executive of:
A) Nissan Motor (Japan).
B) Pearson PLC (Great Britain).
C) Ford Motor Company (USA).
D) Pharmacia Corporation (USA).
E) Atlas Copco AB (Sweden).
Answer:
Diff: 2 Page Ref: 502
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

47) Which of the following has an American woman as the chief executive?
A) Nissan Motor (Japan)
B) Pearson PLC (Great Britain)
C) Ford Motor Company (USA)
D) Pharmacia Corporation (USA)
E) Atlas Copco AB (Sweden)
Answer:
Diff: 2 Page Ref: 502
AACSB: Reflective Thinking
Objective: 1
Question Type: Application
48) Brazilian Carlos Ghosn is chief executive of:
A) Nissan Motor (Japan).
B) Pearson PLC (Great Britain).
C) Ford Motor Company (USA).
D) Pharmacia Corporation (USA).
E) Atlas Copco AB (Sweden).
Answer:
Diff: 2 Page Ref: 502
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

49) Fred Hassan, a native of Pakistan, is chief executive of:
A) Nissan Motor (Japan).
B) Pearson PLC (Great Britain).
C) Ford Motor Company (USA).
D) Schering-Plough (USA).
E) Atlas Copco AB (Sweden).
Answer:
Diff: 2 Page Ref: 502
AACSB: Reflective Thinking
Objective: 1
Question Type: Application

50) According to Prahalad and Hamel, a core competence has all of the following characteristics except:
A) potential access to a wide variety of markets.
B) a significant contribution to perceived customer benefits.
C) it is easy for competitors to imitate.
D) benefits to customers.
E) it is difficult for competitors to imitate.
Answer:
Diff: 2 Page Ref: 502
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking
51) According to David Whitwam, former CEO of Whirlpool, one must create an organization whose people are:
A) adept at exchanging ideas.
B) absolutely free of the “not-invented here” syndrome.
C) constantly working together to identify best global opportunities.
D) working together to solve the biggest global problems.
E) able to adapt to systems across borders.
Answer:
Diff: 2 Page Ref: 504
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking

52) Which of the following is the best organization structure for global marketing?
A) international division structure
B) matrix
C) geographic structure
D) worldwide product division structure
E) There is no single “best” structure for global marketing.
Answer:
Diff: 2 Page Ref: 504
AACSB: Analytic Skills
Objective: 2
Question Type: Critical thinking

53) In today’s dynamic global competitive environment, organizations need to develop new forms of:
A) ethnocentrism and myopia.
B) flexibility, efficiency, and responsiveness.
C) export department structure.
D) self-reference criterion.
E) geographic structure.
Answer:
Diff: 2 Page Ref: 505
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
54) Which global marketing expert recommends an organization design based on a “global superstructure” that views the world in terms of 30 regions?
A) Paul Krugman
B) Kenichi Ohmae
C) Tom Peters
D) Michael Porter
E) Kazuo Inamori
Answer:
Diff: 2 Page Ref: 505
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

55) As a company’s initial international business involvement becomes too much for a single manager or export department to handle, the next step is typically to establish a(n):
A) matrix structure.
B) international division structure.
C) geographic structure.
D) worldwide product division structure.
E) regional management center.
Answer:
Diff: 2 Page Ref: 507
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

56) Which of the following does not contribute to the establishment of an international division?
A) top management commitment that justifies an organizational unit headed by a senior manager
B) complexity of international operations requires unit with authority to make its own decisions
C) Management recognizes the need for internal specialists.
D) Management lacks desire to scan the globe for opportunities and threats.
E) Pressure to assemble a staff that will take the responsibility to coordinate.
Answer:
Diff: 2 Page Ref: 507
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
57) A company with headquarters in the United States and operational units in the Netherlands, France, Italy, and Spain would be well advised to consider establishing a(n):
A) matrix structure.
B) international division structure.
C) geographic structure.
D) worldwide product division structure.
E) regional management center.
Answer:
Diff: 2 Page Ref: 508
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

58) A company with headquarters in Europe and operational units in Canada, the United States, and Mexico would be well advised to consider establishing a(n):
A) matrix structure.
B) international division structure.
C) geographic structure.
D) worldwide product division structure.
E) regional management center.
Answer:
Diff: 2 Page Ref: 508
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

59) The advantages that a regional management center can offer a company includes all of the following except:
A) pan-regional decision making.
B) coordinated regional planning.
C) considerable cost saving.
D) coordinated control.
E) coordinated decision making.
Answer:
Diff: 2 Page Ref: 509
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
60) One of the potential drawbacks of a regional management center is that:
A) pan-regional coordination efforts can suffer.
B) the cost can be prohibitive.
C) the company may lose its “insider” advantage.
D) regional management may take a one-sided approach when implementing corporate objectives.
E) there is a lack of coordinated decision making.
Answer:
Diff: 2 Page Ref: 509
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

61) Under the geographical and product division structures, for the company with French origins, France is:
A) the headquarter country market.
B) simply another geographic market.
C) European market.
D) divisional market.
E) product market.
Answer:
Diff: 2 Page Ref: 509
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

62) The organization design in which an employee reports to both a country manager and a functional manager is a(n):
A) matrix structure.
B) international division structure.
C) geographic structure.
D) worldwide product division structure.
E) regional management center.
Answer:
Diff: 2 Page Ref: 510
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional
63) Boeing has reorganized its commercial transport design and manufacturing engineers from functional lines into a matrix organization. This new design is expected to have all but one of the following benefits:
A) lower costs and quicken updates.
B) facilitate problem solving.
C) unite engineering and manufacturing processes.
D) provide customer contacts.
E) enhance product consistency.
Answer:
Diff: 2 Page Ref: 510
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

64) Which form of organization design is capable of integrating geographic knowledge, product knowledge, functional competencies, and customer knowledge?
A) matrix structure
B) international division structure
C) geographic structure
D) worldwide product division structure
E) regional management center
Answer:
Diff: 2 Page Ref: 511
AACSB: Reflective Thinking
Objective: 2
Question Type: Definitional

65) Having established that the matrix is appropriate, management can expect the matrix to integrate the following competency on a worldwide basis.
A) geographic knowledge
B) product knowledge and know-how
C) functional competence in finance, production and marketing
D) knowledge of customer or industry and its needs
E) all of the above are competencies
Answer:
Diff: 2 Page Ref: 511
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
66) Which global company has dissolved its matrix structure in order to achieve “greater speed and efficiency by further focusing and flattening the organization”?
A) Whirlpool
B) Levi Strauss
C) Pearson PLC
D) ABB
E) Gillette
Answer:
Diff: 2 Page Ref: 511
AACSB: Reflective Thinking
Objective: 2
Question Type: Critical thinking

67) The key to successful matrix management is ensuring that managers are able to:
A) adopt a matrix design.
B) adhere to matrix structure.
C) maintain technical systems.
D) resolve conflicts and achieve integration.
E) preserve existing organizational culture.
Answer:
Diff: 2 Page Ref: 511
AACSB: Reflective Thinking
Objective: 2
Question Type: Application

68) Which of the following does not belong in a list of mass production in automobile company such as Ford?
A) changing value chains
B) use of moving assembly line
C) organized production machinery
D) outsource from supplier specialists
E) each worker was able to do more than craft producers
Answer:
Diff: 2 Page Ref: 513
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
69) Which of the following does not describe the Toyota Production System (TPS)?
A) jidoka
B) ‘just-in-time’
C) fixed setup time
D) built-in quality
E) visualizing problems
Answer:
Diff: 2 Page Ref: 514
AACSB: Multicultural and Diversity
Objective: 3
Question Type: Application

70) Concepts such as “assembler value chains” and “downstream value chains” are associated with:
A) lean production.
B) the matrix structure.
C) polycentric organizational designs.
D) the global marketing audit.
E) traditional assembly designs.
Answer:
Diff: 2 Page Ref: 514-517
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

71) Which of the following is not the way U.S. auto mass producers operate?
A) greater labor content
B) less mechanization
C) less flexible mechanization
D) divide employees in discrete specialties
E) lack of employee teamwork
Answer:
Diff: 2 Page Ref: 515
AACSB: Reflective Thinking
Objective: 2
Question Type: Application
72) Which of the following assumptions does not belong in a list of characteristics of lean production?
A) labor is more costly than machines
B) set up time can be reduced
C) minimize inventory to cut costs, waste
D) maximize backwards integration
E) inspection to prevent defective production
Answer:
Diff: 2 Page Ref: 515
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

73) In contrast to the lean producers, U.S. mass producers typically maintain operations that involve all of the following except:
A) less mechanization.
B) greater labor direct content.
C) divide employees with no overlap.
D) limited quality control.
E) employee teamwork.
Answer:
Diff: 3 Page Ref: 515
AACSB: Reflective Thinking
Objective: 3
Question Type: Critical thinking

74) Primary stakeholders include all of the following except:
A) top management.
B) employees.
C) media.
D) suppliers.
E) customers.
Answer:
Diff: 2 Page Ref: 517
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional
75) Secondary shareholders include all of the following except:
A) media.
B) employees.
C) local community groups.
D) nongovernmental organizations.
E) general business community.
Answer:
Diff: 2 Page Ref: 517
AACSB: Reflective Thinking
Objective: 3
Question Type: Definitional

76) In developing countries, globalization’s opponents accuse companies of:
A) undermining local cultures.
B) placing intellectual property rights ahead of human rights.
C) promoting unhealthy diets and unsafe food technologies.
D) pursuing unsustainable consumption.
E) all of the above
Answer:
Diff: 2 Page Ref: 519
AACSB: Ethical Reasoning
Objective: 4
Question Type: Synthesis

77) The Timberland Company is best known for its popular hiking boots and work boots. It is a global mission-centered company. Timberland unveiled a sort of “nutritional label” on its footwear boxes as a means of:
A) showing the strength of work boots.
B) promoting the health benefit of walking.
C) communicating its CSR commitment.
D) showing the quality of materials used.
E) communicating the popularity of hiking boots.
Answer:
Diff: 2 Page Ref: 519
AACSB: Ethical Reasoning
Objective: 4
Question Type: Synthesis
78) In a socially responsible firm, employees perform all of the following except:
A) conduct business in an ethical manner.
B) pursue goals and policies that are in society’s best interest.
C) guided by moral principles.
D) distinguish between right and wrong.
E) develop their own core ideologies on moral principles.
Answer:
Diff: 2 Page Ref: 519-520
AACSB: Ethical Reasoning
Objective: 4
Question Type: Synthesis

79) Nike came under fire from critics who alleged poor working conditions in the factories that make the company’s athletic shoes. This is an example of the demand for:
A) labor unions.
B) equal opportunity employment.
C) higher wages.
D) standards for working conditions.
E) corporate social responsibility.
Answer:
Diff: 2 Page Ref: 521
AACSB: Ethical Reasoning
Objective: 4
Question Type: Synthesis

80) The universal concerns for global companies established by the United Nations Global Compact consist of the following three dimensions:
A) factor conditions, demand conditions, industry conditions.
B) human rights, animal rights, and the environment.
C) content domain, human conditions and animal rights.
D) human rights, labor, and the environment.
E) content domains, animal rights, and labor.
Answer:
Diff: 2 Page Ref: 521-522
AACSB: Ethical Reasoning
Objective: 4
Question Type: Synthesis
81) How important is the nationality of the top management position holder in global businesses?
Answer:

82) As a company’s international business grows, the need for having international divisions becomes evident. Explain how an international division structure works and what factors contribute to the establishment of an international division.
Answer:

83) What are Regional Management Centers? What are the advantages of having such centers in the management of global businesses?
Answer:

84) McDonald’s organizational design integrates the international division and geographical structures. How does the geographical and product division structure work in a global context?
Answer:

85) At Whirlpool, North American operations are organized in matrix form. What is the key to successful matrix management?
Answer:

86) After establishing that the organizational matrix is appropriate for a business, what should management expect as to the integration of basic competencies on a worldwide basis?
Answer:

87) What is a matrix organization? Describe giving examples.
Answer:

88) What are the assumptions about mass production compared to Toyota Production system?
Answer:

89) A joke among the Japanese says that the only way to escape from the salesperson is to leave the country. Explain this statement highlighting the differences between lean producers and U.S. mass producers.
Answer:

90) Leaders of global companies are facing the resistance to globalization in many countries. How should the executives handle the situation?
Answer: