MKT 515 Week 5 Midterm Exam – Strayer University NEW

MKT/515 Week 5 Midterm Exam – Strayer NEW

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Chapter 1 Through 8

Chapter 1

Multiple Choice

1. In global business, products have been traded across borders throughout recorded civilizations, extending back beyond the ________________ that once connected
East with West.

a. The Marco Polo Road
b. The Roman Road
c. The Pioneer Road
d. The International Road
e. The Silk Road

2. The Silk Road once helped connect:

a. Turkey to Rome.
b. Iran to Rome.
c. Bombay to Rome.
d. Beijing to Rome.
e. Xian to Rome.

3. Saturation of domestic markets in the industrialized parts of the world has forced many companies to look for marketing opportunities beyond their _______________.

a. local borders.
b. national borders.
c. regional borders.
d. Complex borders.
e. transnational borders.

4. ____________ revolution has brought profound changes in the world.

a. Wal-Mart
b. CNN
c. MTV
d. Internet
e. Shipping

5. B2B stands for:

a. bubble-to-business
b. business-to-business
c. buyer-to-business
d. best-to-business
e. Best Buy-to-business

6. Toyota’s new strategy is to de-Japanize its business and make the ________ market its major corporate priority.

a. U.S.
b. Germany
c. England
d. Indonesia
e. none of the above

7. The term global epitomizes both the competitive pressure and expanding:

a. basic opportunities.
b. social opportunities.
c. physical opportunities
d. market opportunities.
e. bottom opportunities.

8. In global marketing, competitive pressure can also come from _____________ at home.

a. competitors
b. conglomerates
c. groups
d. locals
e. regionals

9. When a country’s per capita income is below $10,000, consumers spend most of their income on:

a. food and other necessities.
b. higher education.
c. electronic appliances.
d. buying houses.
e. foreign travel.

10. In the consumption process, people around the world with per capita income of $20,000 and above have a pretty good _________________:

a. physical power.
b. political power.
c. purchasing power.
d. consumption power.
e. psychological power.

11. According to the textbook, the process of globalization does not suffocate _________________, but rather liberates them from the ideological conformity of nationalism.

a. glocal cultures
b. regional cultures
c. Asian cultures
d. dynamic cultures
e. local cultures

12. ____________________ consists of exports and imports between a country and the rest of the world.

a. Regional reach
b. Competition
c. International trade
d. International business
e. Regional investment

13. _____________________ consists of exports and imports between a country and the rest of the world and foreign production.

a. Regional reach
b. Competition
c. International trade
d. International business
e. Regional investment

14. Although it is not widely known, foreign production constitutes a much larger portion
of international business than __________________________________.

a. international trade
b. regional business
c. local business
d. domestic business
e. transnational business

15. The extensive international penetration of U.S. and other companies has been referred
to as ____________________.

a. local reach
b. regional reach
c. political reach
d. social reach
e. global reach

16. In today’s global marketing, international trade and foreign production are increasingly managed on a __________________.

a. vertical basis
b. horizontal basis
c. global basis
d. regional basis
e. local basis

17. Multinational companies (MNCs) are increasingly managing the international trade
flow within themselves. This phenomenon is called _________________.

a. intrafirm trade
b. interfirm trade
c. bi-national trade
d. poly-national
e. geo-national

18. According to the text, ____________________ of the world trade is managed one
way or another by MNCs.

a. one-third
b. two-thirds
c. one-fourths
d. two-fourths
e. three-fourths

19. _____________ is essentially a creative corporate activity involving the planning and
execution of the conception, pricing, promotion, and distribution of ideas, products,
and services in an exchange that not only satisfy customers’ present needs but also
anticipates and creates their future needs at a profit.

a. Selling
b. Sourcing
c. Manufacturing
d. Human resources
e. Marketing

20. Marketing includes the entire company’s:

a. quality orientation.
b. market orientation.
c. cost orientation.
d. production orientation.
e. demand orientation.

21. Companies often develop different marketing strategies depending on the degree
of experience and:

a. the cost of capital in international markets.
b. the span of control of management.
c. their consumer concept.
d. the nature of operations in international markets.
e. the corporate focus.

22. Responding to changes in the market and competitive environments by moving
forward in a ______________ manner waits for others to formulate strategies before
making decisions.

a. proactive
b. deductive
c. constructive
d. reactive
e. participative

23. Responding to changes in the market and competitive environments by moving
forward in a ________________ manner anticipates changes and then formulates
strategies.
a. proactive
b. deductive
c. constructive
d. reactive
e. participative

24. Five types of marketing that have led to the evolution of global marketing are domestic marketing, export marketing, international marketing, _________________, and global marketing.

a. multinational marketing
b. consumer marketing
c. gray marketing
d. expansion marketing
e. import marketing

25. There are five identifiable stages in the evolution of marketing across national
boundaries. The first stage is:

a. global marketing.
b. international marketing.
c. export marketing.
d. direct marketing.
e. domestic marketing.

26. When a company focuses solely on its domestic market, this strategy is characterized
as one employing:

a. global marketing.
b. international marketing.
c. domestic marketing.
d. indirect marketing.
e. direct marketing.

27. Domestic marketing strategy is characterized as a strategy that is developed based on
information about domestic customer needs and wants, economic, technological, and
political environments at home, and ____________________.

a. taxes
b. customer habits
c. geography
d. culture
e. industry trends

28. Domestic marketers tend to be ________________.

a. ethnocentric
b. biocentric
c. polycentric
d. geocentric
e. localcentric

29. Export marketing consists of:

a. indirect and direct exporting.
b. indirect and longitudinal exporting.
c. indirect and passive exporting.
d. indirect and active exporting.
e. indirect and aggressive exporting.

30. U.S. automobile and consumer electronics manufacturers in the 1960s and 1970s are
examples of a(an):

a. multicentric orientation.
b. polycentric orientation.
c. ethnocentric orientation.
d. bicentric orientation.
e. egocentric orientation.

31. The ________________ stage begins with unsolicited orders from foreign customers.

a. export marketing
b. domestic marketing
c. indirect marketing
d. international marketing
e. multinational marketing

32. Some companies progress from export marketing to a more involved stage of
internationalization once:

a. managers can speak a foreign language.
b. management is willing to commit adequate resources to export activities.
c. the companies stock increases.
d. the metric system becomes standard.
e. new management has been hired.

33. Export marketers still tend to take a(n) ____________ approach to foreign markets.

a. geocentric
b. polycentric
c. ethnocentric
d. dualcentric
e. regiocentric

34. Once export marketing becomes an integral part of a company’s marketing activity,
it will begin to seek new directions for growth and international expansion. This stage is called
________________________.

a. exporting.
b. green marketing.
c. multinational marketing.
d. global marketing.
e. international marketing.

35. A unique feature of international marketing is its ________________ orientation with
emphasis on product and promotional adaptation in foreign markets.

a. geocentric
b. regiocentric
c. ethnocentric
d. polycentric
e. egocentric

36. As a company’s market share in a number of countries reaches a certain point, it
becomes important for the company to defend its position vis-à-vis local
competition. This is an example of _____________________ orientation.

a. geocentric
b. regiocentric
c. ethnocentric
d. egocentric
e. polycentric

37. In a polycentric orientation, marketers begin to _________________ products to local
conditions.

a. standardize
b. regulate
c. adapt
d. centralize
e. subsidize

38. If international marketing is taken to the extreme, a company may establish an
independent foreign subsidiary in each and every foreign market and have each of
the subsidiaries operate independently of each other without any measurable
headquarters control. This special case is called:

a. multinational marketing.
b. export marketing.
c. international marketing.
d. multidomestic marketing.
e. resource-based marketing.

39. When management of a company comes to realize the benefit of economies of scale
in product development, manufacturing, and marketing by consolidating some of its
activities on a regional basis, the company is ready to move into the _____________
stage of marketing.

a. multinational
b. customization
c. global
d. international
e. polycentric

40. If a company were to standardize its product groups within a region (for instance,
Western Europe), the company would be characterized as taking a ___________
orientation to its planning activities.

a. bicentric
b. polycentric
c. geocentric
d. concentric
e. regiocentric

41. General Motors has a regional subsidiary, Opel headquartered in Germany, to market
both GM and Opel cars with a strong European distinction. This would be an
example of ________________ marketing.

a. multinational
b. global
c. transnational
d. international
e. domestic

42. Global marketing strategy realizes that ___________________ leads to higher costs.

a. operational fragmentation
b. standardization
c. production ISO standards
d. market promotion
e. high technology robots

43. Global marketing refers to all of the marketing activities except:

a. bi-national efforts.
b. standardization efforts.
c. coordination across markets.
d. global integration.
e. none of the above.

44. Black & Decker, a U.S. hand tool manufacturer, adopted a(n) __________________
perspective by standardizing and streamlining components such as motors and rotors
while maintaining a wide range of product lines creating a universal image for its
products.

a. international marketing
b. global marketing
c. multinational marketing
d. export marketing
e. concentric marketing

45. Marketing executives should have a thorough understanding of not only the availability of various resources but also emerging consumer and societal needs on a ____________________.

a. cluster basis
b. local basis
c. global basis
d. regional basis
e. none of the above

46. Which of the following geography or climate issues affects global marketing?

a. geothermal power in Iceland
b. tropical heat in Bangalore , India
c. sugar cane crops in Brazil
d. wet snow in Scandinavia
e. none of the above

Appendix to Chapter 1

47. Comparative advantage theory was first presented by:

a. David Ricardo.
b. John Stuart Mill.
c. Michael Porter.
d. Milton Friedman.
e. Adam Smith.

48. ___________________ theory states that a country can gain from engaging in trade
even if it has an absolute advantage or disadvantage.

a. Constructive advantage
b. Comparative advantage
c. Concentric advantage
d. Supply and demand
e. Relative cost advantage

49. Even if the United States is more efficient in the production of everything than China,
both countries will benefit from their bilateral trade by specializing in what each
country can produce relatively more efficiently. This statement is an example of
which economic theory?

a. relative cost advantage
b. supply and demand
c. concentric advantage
d. comparative advantage
e. constructive advantage

50. The _________________ argument says that two countries cannot engage in trade if
one country has a(an) ___________________ over the other country. Note: the phrase
will fit in both blanks.

a. absolute advantage
b. regional advantage
c. supply chain advantage
d. comparative advantage
e. global advantage

51. The term that describes a price of one good in terms of another is called:

a. comparative terms of trade.
b. regional terms of trade.
c. factor endowment theory.
d. global terms of trade.
e. commodity terms of trade.

52. An actual exchange rate between two countries is affected by consumer demands and
_______________________ in the two countries.

a. money supply situations
b. political alliances
c. the deficit
d. the Federal Reserve
e. the factor formula

53. Which of the following is a principle of international trade?

a. Japanese workers are more productive than any other workers in the world.
b. Countries benefit from international trade.
c. Manufacturers must be forced into international trade.
d. Specialization is bad for international trade.
e. Exchange rates are determined by the World Bank.

54. Which of the following is a principle of international trade?

a. German workers will not work without Union representation.
b. International trade hurts many countries since it is basically unfair to developing
nations.
c. International trade increases worldwide production by specialization.
d. Exchange rates are determined by the Hague Convention.
e. Bribery drives up prices in world trade.

55. Which of the following is a principle of international trade?

a. United States workers rebel against productivity programs.
b. Outsourcing must be used to succeed in international trade.
c. The United Nations will settle all trade disputes.
d. Exchange rates are determined primarily by traded goods.
e. Gray markets make third world countries more efficient.

56. In general, a capital-abundant country (such as the United States) tends to specialize
in capital-intensive industry and export capital-intensive products, and import labor-
intensive products. This statement is an illustration of the ____________________
of comparative advantage.

a. commodity terms of trade theory
b. supply and demand theory
c. diminishing returns theory
d. factor-sourcing theory
e. factor endowment theory

57. In general, a labor-abundant country (such as China) tends to specialize in labor-
intensive industry and export labor-intensive products, and imports capital-intensive
products. This statement is an illustration of the ____________________________
of comparative advantage.

a. commodity terms of trade theory
b. supply and demand theory
c. factor-sourcing theory
d. factor endowment theory
e. relative advantage theory

58. To encourage improved standards of living among workers, governments should
encourage investment in ______________________ industries.

a. high value added per worker
b. capital intensive
c. labor intensive
d. skill-intensive
e. strength-intensive

59. Suppose that you are a strategic planner for Nike. You observe that shoe
manufacturing is extremely labor-intensive, while shoe designing is becoming
increasingly skill-intensive. If you advise to open a manufacturing-assembly plant
in Vietnam, your decision is an illustration of _____________________ thinking.

a. relative advantage
b. absolute advantage
c. comparative advantage
d. production advantage
e. exploitation advantage

60. When a company such as Nike has product designing and development and special
material development conducted in the United States and has manufacturing
operations in labor-abundant countries like China, the company is using
______________________ strategy.

a. relative advantage
b. absolute advantage
c. production advantage
d. comparative advantage
e. geometric advantage

61. When a company such as Nike wishes to pursue a comparative advantage strategy, it
would have product designing and development and special material development
conducted in the United States and _________________ operations conducted in
labor-abundant countries like China or Brazil.

a. manufacturing
b. custom painting
c. testing
d. inventory
e. promotion

62. The comparative advantage theory is useful in explaining _____________________
between countries that have very different factor endowments.

a. cost advantages
b. resource allocations
c. promotional expenses
d. intra-industry trade
e. inter-industry trade

63. An example of ____________________ competition is when BMW exports its sports
cars to Japan, while Honda exports its competing models to Germany.

a. inter-industry
b. between-industry
c. intra-industry
d. superficial
e. conglomerate

64. The __________________________ addresses the following questions: Why and
how does competition tend to evolve over time and across national boundaries in the
same industry? How does a company develop its marketing strategy in the presence
of competitors at home and abroad?

a. international complexity theory
b. international technology theory
c. international chaos theory
d. international game theory
e. international product cycle theory

65. A large domestic market such as in the United States makes it possible for U.S.
companies to enjoy _________________ in mass production and mass marketing,
enabling them to become lower cost producers than their competition in foreign
countries.

a. monopoly power
b. preference similarity
c. economies of scale
d. competitive advantage
e. duopoly power

66. When Nestle`, a Swiss food company, enjoys economies of scale by considering
European, U.S., and Japanese markets together as its primary market it is using the
_________________________ argument.

a. economies of scale
b. market expansion
c. market contraction
d. technology power
e. economies of scope

67. Technological innovation can provide an innovative company a competitive
advantage, or _____________________ over its competitors both at home and
abroad.

a. power gap
b. preference gap
c. technological gap
d. economic gap
e. life cycle gap

68. Preference similarity explains why:

a. monopoly power has grown tremendously.
b. low cost producers can still enjoy economies of scale.
c. profits are at an all time high in the industrialized world.
d. intra-industry trade has grown tremendously among the industrialized countries
with similar income levels.
e. comparative advantage theory works best in third world countries.

69. One of the key underlying assumptions in the international product cycle theory is
that:

a. “What goes around, comes around.”
b. “Necessity is the mother of invention.”
c. “If it ain’t broke, don’t fix it.”
d. “You get what you pay for.”
e. “If something can go wrong, it usually will.”

70. Historically, _______________ companies developed and introduced many products
that were labor- and time-saving or responded to high-income consumer needs,
including dishwashers, microwave owens, automatic washers, and dryers, PCs, and so
on:

a. Indian
b. Turkish
c. Irish
d. U.S.
e. Mexican

71. The following statement characterizes which country’s orientation to introducing
products to their mass market: Innovate on material- and capital-saving products
and processes to meet their local consumer’s needs and lifestyle orientation (such
as small and no-frill automobiles and recyclable products).

a. Japan.
b. Western Europe.
c. Canada.
d. Mexico.
e. United States.

72. The following statement characterizes which country’s orientation to introducing
products to their mass market: Developing and marketing products that not only
conserve material and capital but also space to address their consumer’s acute
concern about space limitation.

a. Japan.
b. Western Europe.
c. Mexico.
d. Canada.
e. United States.

73. With respect to the international product cycle theory, which stage’s orientation is
primarily domestic in nature?

a. Growth.
b. Maturity.
c. Saturation.
d. Introduction.
e. Decline.

74. In the __________________ stage of the international product cycle theory, U.S.
companies typically increase exports to Europe and Japan as those foreign markets expand.

a. introduction
b. saturation
c. growth
d. maturity
e. decline

75. In the ________________ stage of the international product cycle theory, U.S.
companies which have carved out market share in Europe and Japan by exporting
decide to make a direct investment in production in those markets to protect their
market position there.

a. introduction
b. saturation
c. growth
d. decline
e. maturity

76. In the _________________ stage of the international product cycle theory , the
United States eventually begins to import what was once a U.S. innovation.

a. introduction
b. saturation
c. growth
d. decline
e. maturity

77. A company’s proprietary expertise that makes it different its competitors and helps to maintain its competitive advantage can be discussed under the following theory:

a. internalization or technological theory.
b. Internalization or transaction cost theory.
c. Internalization or regional cost theory.
d. Internalization or transnational theory.
e. Internalization or traditional cost theory.

78. Appropriability regime helps companies retain their _______________ advantage:

a. dynamic
b. external
c. internal
d. social
e. technological

79. Dominant design is synonymous with ________________________.

a. dynamic design.
b. external design.
c. internal design.
d. complex design.
e. standard design.

True/False Short Answer

80. The Silk Road once connected Shanghai (China) to Istanbul (Turkey) on land.

81. The drive for globalization continues to be promoted through more free trade.

82. The saturation of domestic markets in the industrialized economies has forced many companies to look for marketing opportunities beyond their national borders.

83. Triad regions of the world encompass North America, Western Europe and Africa.

84. Compared to business-to-consumer (B2C) e-commerce, business-to-business (B2B) e-commerce is smaller.

85. The term global epitomizes both competitive pressure and the expanding market opportunities all over the world.

86. International trade consists of exports only.

87. International business consists of international trade and foreign production.

88. An example of intra-firm trade would be when Honda’s U.S. plant ships parts back to Japan to be placed in cars which are then sold in Japan and the United States.

89. Intrafirm trade makes trade statistics more complex to interpret because of trade
transactions taking place between affiliated companies within the same corporate
system, transcending national boundaries.

90. Marketing is much broader than selling.

91. Domestic marketers tend to be geocentric.

92. When a company forms independent foreign subsidiaries in each and every market,
this type of international marketing is known as ______________________.

93. Regiocentric approach encourages standardized product planning within a region.

Appendix to Chapter 1

94. David Ricardo developed the comparative advantage theory 180 years ago.

95. If a country has an absolute advantage (with respect to trade) over another country,
there is no reason to trade.

96. Assume that the United States can make computers better than any other country.
Also assume that China can make rubber shoes better than any other country. Then
in this example it may be said that the United States has a _______________
advantage in making computers and China has a ________________ advantage in
making rubber shoes. Note: one term can be used in both blanks.

97. One rule of the ___________________ theory of comparative advantage is that
that a capital-abundant country (e.g., the United States) tends to specialize in
capital-intensive industry and export capital-intensive products (personal computers)
and import labor-intensive products (desks).

98. Countries normally do not benefit from international trade.

99. One of the key underlying assumptions in the international product cycle theory is
that “necessity is the mother of invention.”

100. The international product cycle theory consists of three stages: Introduction, growth, and decline.

101. International product cycle theory explains that companies do not invest abroad
reactively once their foreign market position are threatened by local competitors.

102. A company’s expertise can be channeled through three routes to seek competitive advantage: appropriability regime, dominant design, and geocentric capability.

103. Dominant design leads to a “regional design”.

Essay

104. Explain the differences between international trade and international business.
How does the United States typically participate in international business?

105. Explain intra-firm trade. Give an example to illustrate your answer.

106. Explain the primary differences between international marketing and global
marketing.

Appendix to Chapter 1

107. Explain the general and associated concepts of comparative advantage theory.

108. Explain the international product cycle theory. Be sure to describe the stages that
a product might pass through.

Chapter 2

Multiple Choice

1. In 2012, the GDP of the United States was ____________.

a. $500 billion.
b. $800 billion.
c. $1 trillion.
d. $8 trillion.
e. $16 trillion.

2. Global economy is becoming more ____________________.

a. regional.
b. local.
c. isolated.
d. transnational.
e. intertwined.

3. In general, the larger the country’s domestic economy, the less dependent it tends
to be on exports and imports relative to its ________________.

a. gross domestic product (GDP).
b. gross domestic income.
c. gross domestic spending.
d. gross domestic capital.
e. global domestic knowledge.

4. When firms invest in manufacturing and distribution facilities outside their home countries, they add the stock of _________________________________.

a. global direct investment.
b. regional direct investment.
c. local direct investment.
d. foreign direct investment (FDI).
e. none of the above.

5. __________________ refers to investment in foreign countries that are withdrawable
at short notice (such as investment in foreign stocks and bonds).

a. Direct investment
b. Economic investment
c. International investment
d. Demand investment
e. Portfolio investment

6. An example of portfolio investment (or indirect investment) in foreign markets is:

a. production facilities.
b. computers.
c. stocks and bonds.
d. buildings.
e. manufacturing facilities.

7. The ________________ volume of international trade in currencies exceeds the
annual value of the trade in goods and services.

a. daily
b. weekly
c. monthly
d. annual
e. none of the above

8. Trading in foreign currencies has an effect on world trade. For example, a rise in
the value of the local currency due to daily flows vis-à-vis other currencies makes
exports:

a. less expensive.
b. more expensive.
c. come under government control.
d. parallel with imports.
e. be banned.

9. Country competitiveness is not a _____________ thing.

a. fixed
b. moving
c. temporary
d. dynamic
e. none of the above

10. The World Economic Forum’s Global Competitiveness Report placed
two Asian Tigers (Taiwan and Singapore) among the world’s top ______
economies (along with the Finland, United States, Sweden, Denmark, Iceland,
Switzerland, Norway, and Australia).

a. five
b. ten
c. twenty
d. twenty-five
e. thirty

11. In the country competitiveness report in 2008/09, three of the top ten countries are from _________________ countries.

a. South American
b. African
c. Asian
d. Nordic
e. None of the

12. According to the textbook, Japan was expected to be ranked number _______ on the 2005 Country Innovativeness Ranking.

a. one
b. two
c. three
d. four
e. five

13. The United States was ranked number _______ on the 2005 Country
Innovativeness Ranking.

a. one
b. two
c. four
d. five
e. six

14. Triad regions of the world include:

a. North America, Western Europe and Africa
b. North America, Western Europe and Japan
c. North America, Western Europe and Asia
d. North America, Western Europe and South America
e. North America, Western Europe and China

15. BEMs stand for:

a. Big Electronic Markets
b. Big Efficient Market
c. Big Effective Markets
d. Big Emerging Markets
e. None of the above

16. China’s average growth rate in GDP has been over:

a. 2 percent
b. 4 percent
c. 6 percent
d. 8 percent
e. 9 percent

17. India’s average growth rate in GDP has been over:

a. 3 percent
b. 5 percent
c. 7 percent
d. 9 percent
e. 10 percent

18. Which country consistently achieves the highest growth rates in GDP?

a. United States
b. Germany
c. Japan
d. Vietnam
e. China

19. Which of the following countries is NOT on the list of top 10 exporters?

a. Korea
b. Mexico
c. China
d. United States
e. Both a and b

20. Which nation is the world’s largest exporter?

a. United States
b. China
c. Netherlands
d. Germany
e. Japan

21. With which country does the U.S. have the largest trade deficit?

a. Germany
b. Japan
c. Canada
d. India
e. China

22. Why did Nokia lose market share in China?

a. Products were outdated
b. Products were too technical
c. Local producers appeared with a cheaper, adequate phone
d. Japan took away their market share
e. None of the above

23. Future trade flows are likely to move how?

a. Among the Triad nations
b. Between the Triad nations and the BEMs
c. Among the BEMs
d. Between the Triad nations and the developing world
e. None of the above

24. Which of the following countries is not considered to be a big emerging market?
a. Mexico
b. Brazil
c. Russia
d. India
e. China

25. Which of the top 10 countries in competitiveness does NOT suffer from a lack of natural resources?
a. Japan
b. Netherlands
c. Switzerland
d. Denmark
e. Canada

26. Which country has shown the most progress in competitiveness since 2005?
a. Hong Kong
b. Belgium
c. Germany
d. Switzerland
e. Japan

27. New centers of innovative activity include which countries?

a. Ireland
b. Israel
c. Singapore
d. Taiwan
e. All of the above

28. The International Trade Organization (ITO) was formed after:

a. World War I.
b. World War II.
c. the Korean war.
d. the Vietnam war
e. None of the above.

29. The main operating principle of the General Agreements of Tariffs and Trade
(GATT) was the concept of normal trade relations (NTR) status, formerly known as:

a. Early Favored Nation status.
b. Most Favored Nation status.
c. Late Favored Nation status.
d. the World Trade status.
e. the Best Nation status.

30. When GATT was successful in lowering tariff barriers to world trade, many nations
created:

a. cartels.
b. keiretsus.
c. joint ventures.
d. nontariff barriers.
e. boycotts.

31. The World Trade Organization was created in the eighth round of the GATT talks –
called the ________________________ that lasted from 1986 to 1994.

a. Brussels Round
b. Paris Round
c. Morocco Round
d. Paraguay Round
e. none of the above

32. The World Trade Organization (WTO) was created in the _____________ of GATT
talks—called the Uruguay Round.

a. fifth round
b. sixth round
c. seventh round
d. eighth round
e. ninth round

33. Perhaps the most important accomplishment of the latest GATT round was the
establishment of:

a. the World Trade Organization (WTO).
b. the Asian Development Bank.
c. the World Bank.
d. the International Monetary Fund (IMF).
e. the International Finance Corp. (IFC).

34. The World Trade Organization (WTO) took effect on:

a. January 1, 1994
b. January 1, 1995
c. January 1, 1996
d. January 1, 1997
e. January 1, 1998

35. As of March 2, 2013, the World Trade Organization (WTO) has _________
member countries.

a. 123
b. 135
c. 142
d. 159
e. 180

36. The World Trade Organization’s (WTO) ninth round of trade talks which were
launched in November 2001 is called:

a. the Doha Round.
b. the Seattle Round.
c. the Geneva Round
d. the New York Round.
e. the London Round.

37. Doha’s Development Agenda (Doha Round) includes new trade talks—an actions
program to resolve developing countries’ complaints about the implementation of
Uruguay Round agreements, and an accord on ____________________________.

a. Trade Related Aspects of Intellectual Property Rights
b. Services Related Aspects of Intellectual Property Rights
c. Regional Related Aspects of Intellectual Property Rights
d. Local Related Aspects of Intellectual Property Rights
e. National Related Aspects of Intellectual Property Rights

38. One of the differences between WTO and GATT is that WTO’s dispute settlement
mechanism is:

a. inferior.
b. faster and more automatic.
c. very limited.
d. controlled by the World Bank.
e. controlled by the negotiation section of the United Nations.

39. In December 1999, WTO launched what would have become the beginning of a
___________ round of negotiations inaugurated in Seattle, Washington.

a. fifth
b. sixth
c. seventh
d. eighth
e. ninth

40. The WTO Work Program on _____________________ is in the process of defining
the trade-related aspects of ___________________ that would fall under the
parameters of WTO mandates.

a. business commerce
b. electronic commerce
c. equity commerce
d. network commerce
e. network commerce

41. With respect to intellectual property rights, an example of an information-related
product is:

a. computer hardware.
b. an automobile.
c. computer software.
d. jewelry.
e. a new drilling bit.

42. ____________________ are highly interested in putting strong international
intellectual property laws in place:

a. Developing nations
b. Developed nations
c. Asian countries
d. European countries
e. African countries

43. One hurdle that used to protect information from being acquired easily was that it
was unfungible. Unfungible means:

a. information contained viruses.
b. information was expensive.
c. information could only be processed with proper equipment.
d. information was not for the uninformed.
e. it was difficult to replace one item with another.

44. One way around having your intellectual property copied (such as software) because
of easy access is to sell:

a. demos.
b. to new markets.
c. to governments.
d. upgrades or ancillary products.
e. only to a chosen few.

45. UNCITRAL stands for:

a. United Nations Commission on International Trade Law.
b. United Nations Commission on International Trade Limits.
c. United Nations Commission on International Technical Law.
d. United Nations Commission on International Technical Trade.
e. None of the above.

46. An evolving trend in international economic activity is the formation of:

a. multinational advertising agencies.
b. multinational insurance agencies.
c. multinational trading blocs.
d. multinational purchasing agencies.
e. multinational courts.

47. The universal reason for forming trading blocs is to:

a. bypass tariff restrictions.
b. bypass legal restrictions.
c. bypass government controls.
d. ensure the economic growth and benefit of the participating countries.
e. make competition suffer.

48. Which of the following is an example of an international trading bloc?

a. World Trade Organization.
b. GATT.
c. the World Court in the Hague.
d. NAFTA.
e. United Nations

49. NAFTA is the free trade area among the United States, Mexico, and
______________.

a. Canada
b. Argentina
c. Panama
d. Columbia
e. Brazil

50. A ___________________ is a formal agreement among two or more countries to
reduce or eliminate customs duties and nontariff trade barriers among partner
countries.

a. trade union
b. regional cooperative
c. customs union
d. common market
e. free trade area

51. An example of a free trade area would be:

a. the European Union.
b. the Soviet Union.
c. the United Kingdom.
d. NAFTA.
e. the United Nations.

52. The Free Trade Areas of the Americas (FTAA) was proposed in
__________________.

a. December 1994.
b. December 1995.
c. December 1996.
d. December 1997.
e. December 1998.

53. When members of a free trade area add common external tariffs to the provisions of
the free trade agreement, the free trade area becomes a:

a. cartel.
b. common market.
c. monetary union.
d. political union.
e. customs union.

54. One difference between a customs union and a free trade area is that the customs
union:

a. adds external tariffs to nonmember countries.
b. adds higher taxes to its consumers.
c. refuses to import from nonmember nations.
d. demands that a common currency be used among members.
e. requires that member countries align themselves politically.

55. A ________________ eliminates all tariffs and barriers to trade among members,
adopts a common set of external tariffs on nonmembers, and removes all restrictions
on the flow of capital and labor among member nations.

a. regional market
b. common market
c. monetary market
d. political market
e. customs market

56. The primary difference between a common market and a customs union is that the
common market:

a. adopts a common set of external tariffs on nonmembers.
b. eliminates all tariffs.
c. eliminates all trade barriers.
d. removes all restrictions on the flow of capital and labor among member nations.
e. the number of countries involved.

57. The effect of a monetary union is that members:

a. can buy goods from one another.
b. refuse to buy goods from nonmembers.
c. switch to a common currency and a central bank.
d. give up all sovereignty.
e. no longer recognize national boundaries.

58. The new European currency, the euro, began its circulation in January ________.

a. 1998.
b. 1999.
c. 2000.
d. 2001
e. 2002.

59. The Maastricht Treaty succeeded the:

a. Treaty of Brussels.
b. Treaty of Rome.
c. Treaty of Geneva.
d. Treaty of Paris.
e. Treaty of Vienna.

60. A monetary union represents the ____________ level of integration with a single
common currency among politically independent countries.

a. first
b. second
c. third
d. fourth
e. fifth

61. The Maastricht Treaty is a(n):

a. economic union.
b. development union.
c. transnational union.
d. political union.
e. national union.

62. The last step of the possible integration forms is the:

a. cartel.
b. common market.
c. monetary union.
d. political union.
e. customs union.

63. The principle goal of a political union is that it:

a. can buy goods from one another.
b. can refuse to buy goods from nonmembers.
c. can switch to a common currency and a central bank.
d. gives up all sovereignty among individual members.
e. no longer recognizes national boundaries.

64. Researchers have reported that multinationals have not been as great a threat to
countries’ national sovereignty because multinationals have yet to solve the
problem of:

a. demand.
b. size.
c. war.
d. religious conflict.
e. language differences.

65. The U.S. government defines the multinational company for statistical purposes as
a company that owns or controls ______________ or more of the voting securities, or
the equivalent, of at least one foreign business enterprise.

a. five percent
b. ten percent
c. fifteen percent
d. twenty percent
e. twenty-five percent

66. The sovereignty of _______________ will perhaps continue to weaken due to
multinationals and the increasing integration of economies.

a. cities
b. nations
c. regions
d. trading blocs
e. none of the above

67. MNCs that become global at their first inception are called:

a. born last firms.
b. born first firms.
c. born again firms.
d. born global firms.
e. none of the above

True/False Short Answers

68. GATT’s successor is the World Trade Organization (WTO).

69. Today, countries have become economically independent.

70. In 2008/2009 Country Competitiveness Report, 5 of the top 10 countries are Asian countries.

71. The Triad Regions of the world (North America, Western Europe, and Japan) were the major economies in most of the 20th century.

72. The world’s largest exporting country is China.

73. The world’s largest importing country is the U.S.

74. FDI in services is controlled by U.S. firms.

75. The main operating principle of the General Agreements of Tariffs and Trade (GATT)
is the concept of the Highly Favored Nation status (HFN).

76. The Uruguay Round set up an international body called the World Trade Organization
(WTO).

77. As of March 2, 2013, the World Trade Organization (WTO) had 159 member
countries.

78. Doha Round paved the way for China and Singapore to get full membership in the
WTO.

79. The World Trade Organization (WTO) is a global institutional proponent of free trade.

80. Over the Internet, any piece of electronically represented intellectual property can be
instantly copied anywhere in the world.

81. One consequence of fungible content, information products, and electronic networks
is an additional assault on the power of national governments to regulate international
commerce.

82. In the U.S., the Federal Trade Commission (FTC) is in charge of cases where entities
are trying to mislead the public and commit fraud.

83. Regulating international e-commerce does not require cross-border cooperation.

84. NAFTA is the free trade area among Canada, the United States, and Chile.

85. A free trade area (FTA) is a formal agreement among two or more countries to
reduce or eliminate customs duties and nontariff trade barriers among partner
countries.

86. Regarding regional integration, South American markets are still less open than those
of East Asia.

87. FTAA stands for Free Trade Area of the Americas.

88. A common market eliminates all tariffs and other barriers to trade among members of
the common market.

89. The 1993’s Maastricht Treaty succeeded the Treaty of Brussels.

90.A common market and a monetary union are basically the same thing.

91. A monetary union represents the fourth level of integration with a single common
currency among politically independent countries.

92. Currently, Britain and France remain the principal opponents of ceding any part of the
sovereignty of the nation-state to any future political union in Europe.

93. The U.S. government defines the multinational corporation for statistical purposes as
a company that owns or controls 60 percent or more of the voting securities, or the
equivalent of at least one foreign business enterprise.

94. Any start-up firm becoming global at its first inception is called as ‘born again firm’.

Essay

95. The world marketplace is shrinking and changing. One of the vehicles that has been instrumental in this change is the General Agreement on Tariffs and Trade (GATT). Explain what GATT is and how it has affected international business.

96. To improve on GATT the WTO was established. Explain what the WTO is, how it is different from GATT, and what specific functions the WTO is expected to perform.

97. Some of the greatest challenges in trade in the next century will come in the areas of information technology and intellectual property. Describe these challenges, the mechanisms that are in place to protect one’s intellectual property, and how trade in general will be affected.

98. It has been suggested that cooperative inter-relationships between countries (regional groupings) can be classified into five broad categories. Briefly summarize and describe each of these categories and indicate differences that may be present.

Chapter 3

Multiple Choice

1. When international transactions occur, _______________ is the monetary mechanism
that allows the transfer of funds from one nation to another.

a. foreign exchange
b. regional exchange
c. international exchange
d. global exchange
e. local exchange

2. The adoption of the _________ as a common currency in the European Union in 1999
signifies a major change in the global financial environment.

a. euro
b. lira
c. pound sterling
d. French franc
e. Swiss franc

3. The U.S. trade deficit has pushed the value of the U.S. dollar _______________.

a. forward
b. backward.
c. inward3
d. upward.
e. downward.

4. In 1944, the Bretton Woods (New Hampshire) Conference took place to establish the:

a. international marketing system.
b. international logistics system.
c. international monetary system.
d. international banking system.
e. international monetary system.

5. In the 1960s, the _______________ was the reserve currency, convertible to gold
under the Bretton Woods Agreement.

a. Australian dollar
b. Canadian dollar
c. U.S. dollar
d. Hong Kong dollar
e. None of the above

6. The acronym IMF stands for:

a. the International Marketing Fund.
b. the International Methods Fund.
c. the International Monetary Fund.
d. the International Mutual Fund.
e. the International Masters Fund.

7. The __________________________________ was established at Bretton Woods.

a. Global Monetary Fund
b. European Monetary Fund
c. International Monetary Fund (IMF)
d. Asian Monetary Fund
e. None of the above

8. All of the following are purposes of the International Monetary Fund (IMF)
EXCEPT:

a. To promote international monetary cooperation through a permanent
institution.
b. To facilitate the expansion and balanced growth of international trade.
c. To develop a world currency by 2010.
d. To promote exchange stability.
e. To give confidence to members by making the general resources of the fund
temporarily available to them under adequate safeguards.

9. To an extent, the International Monetary Fund served as an _____________________.

a. International legal bank.
b. International central bank.
c. International liability bank.
d. International claims bank.
e. None of the above

10. In 1969, the IMF created ____________________________, which are special
account entries on the IMF books designed to provide additional liquidity to support
growing world trade.

a. special drawing rights (SDRs)
b. special legal rights
c. special finance rights
d. special management rights
e. special equity rights

11. The IMF’s SDR stands for:

a. special legal rights.
b. special financial rights.
c. special drawing rights.
d. special manufacturing rights.
e. special distribution rights.

12. Participating nations may use SDRs as a source of currency in a _________ transaction.

a. soft
b. hard
c. simple
d. future
e. spot

13. The value of SDRs is determined by a weighted average of a basket of four
currencies:

a. the U.S. dollar, the Japanese yen, the euro, and the Swiss franc.
b. the U.S. dollar, the Japanese yen, the euro, and the French franc.
c. the U.S. dollar, the Japanese yen, the euro, and the British pound.
d. the U.S. dollar, the Japanese yen, the euro, and the Italian lira.
e. none of the above.

14. One creation of the Bretton Woods Agreement was the International Bank for
Reconstruction and Development, known as ________________.

a. the Merchant Bank.
b. the Monetary Bank.
c. the World Bank.
d. the European Bank.
e. none of the above.

15. The World Bank was initially intended for:

a. financing postwar reconstruction and development in Japan.
b. financing postwar reconstruction and development in France.
c. financing postwar reconstruction and development in Italy.
d. financing postwar reconstruction and development in Russia.
e. financing postwar reconstruction and development in Europe.

16. Exchange rate stability cannot be imposed by adoption of ______________________
and official intervention in the foreign exchange markets.

a. pegged exchange rates
b. pegged value rates
c. pegged equity rates
d. pegged volume rates
e. pegged finance rates

17. _____________ float is the closest approximation to perfect competition, because
there is no government intervention and because billions of units of currency are
being traded by buyers and sellers.

a. Managed (clean)
b. Managed (dirty)
c. Vertical
d. Free (clean)
e. Horizontal

18. ______________ float allows for a limited amount of government intervention to
soften sudden swings in the value of a currency.

a. Free (dirty)
b. Free (clean)
c. Restricted
d. Profit
e. Managed

19. Currencies of many _____________________ are pegged (or fixed) to one of the
major currencies or to a basket of major currencies?

a. regional countries
b. developed countries
c. emerging markets
d. developing countries
e. none of the above

20. Today, the global economy is increasingly dominated by three major currency
blocs. They are:

a. the U.S. dollar, the French franc, and the Japanese yen.
b. the U.S. dollar, the Spanish peso, and the Japanese yen.
c. the U.S. dollar, the British pound, and the Japanese yen.
d. the U.S. dollar, the British pound, and the German mark.
e. the U.S. dollar, the Japanese yen, and the euro.

21. The Japanese yen has increasingly become a regional transaction currency in
_____________.

a. Eastern Europe.
b. Asia.
c. North America.
d. Africa.
e. none of the above.

22. ________________ refers to the exchange of one country’s money for that of
another country.

a. Foreign reserve
b. Foreign dilution
c. Foreign exchange
d. Foreign float
e. Foreign control

23. One of the most fundamental determinants of the exchange rate is ______________
whereby the exchange rate between the currencies of two countries is in equilibrium
when it equates the prices of a basket of goods and services in both countries.

a. free float
b. free float (dirty)
c. managed float
d. purchasing power parity (PPP)
e. absolute cost advantage

24. The Big Mac Index is published by:

a. The Economist
b. Business Week
c. The Wall Street Journal
d. The New York Times
e. Fortune Magazine

25. Actual exchange rates can be very different from the expected rates forecasted by
economists. Many interrelated factors influence the value of a floating currency.
The three most important fundamental factors are the nation’s balance of payments
situation, world political events, and:

a. the world inflation rate.
b. the country’s currency value.
c. the nation’s inflation rate relative to its trading partners.
d. the tax structure of the nation.
e. the supply of gold that the nation holds.

26. Factors that might influence foreign exchange rates with respect to political factors
would include election year or leadership change and:

a. money supply.
b. balance of payments.
c. exchange rate control as imposed by a government.
d. size of the military.
e. amount of armed conflict in the world.

27. The problem with tight exchange controls is that often they promote a
_________________________.

a. black market
b. white market
c. flat market
d. slim market
e. regular market

28. Many countries attempt to maintain a lower value for their currency to encourage
________________.

a. black marketing
b. grey marketing
c. outsourcing
d. exports
e. imports

29. If payment on a transaction is to be made immediately, the purchaser has no choice
other than to buy foreign exchange on:

a. the spot market.
b. the forward market.
c. a hedge.
d. a future date invoice.
e. an exchange rate pass-through.

30. If payment for goods is to be made at some future date, the purchaser has the option
of buying foreign exchange on the ________________ for delivery at some future
date.

a. black market
b. gray market
c. forward market
d. exchange rate pass-through market
e. commodities market

31. When a buyer locks in an exchange rate and avoids the risk of currency fluctuations,
it is called:

a. the spot market.
b. the gray market.
c. vertical purchasing.
d. hedging.
e. factoring.

32. Protecting oneself against potential loss is called:

a. hedging.
b. factoring.
c. risk analysis.
d. portfolio reduction strategy.
e. devaluing.

33. Forward currency markets typically exist for the ______________ currencies.

a. Asian
b. weakest
c. strongest
d. convertible
e. flat

34. The extent to which a foreign company changes dollar prices of its products in the
U.S. market as a result of exchange rate fluctuations is called:

a. hedging.
b. exchange rate pass-through.
c. a target exchange rate.
d. factoring.
e. inflation-proofing.

35. The __________________ of a nation summarizes all the transactions that have
taken place between its residents and the residents of other countries over a specified
time period (usually a month, quarter or a year).

a. target exchange rate
b. portfolio acquisition
c. balance of payments
d. debt accumulation
e. exchange inflation

36. With respect to a balance of payments between nations calculation, transactions are
recorded in three categories. These are the current account, the capital account,
and the:

a. goods inventory.
b. cost of goods sold.
c. manufacturer’s inventory.
d. capital goods.
e. official reserves.

37. With respect to balance of payments calculation, when a German tourist visits the
United States and spends money on meals and lodging, it is a(n) ___________ to the
U.S. trade in services balance.

a. debit
b. credit
c. convertible
d. exchange interest factor
e. non-entity

38. Balance of payments between nations is based on which of the following principles
of accounting?

a. Debit only.
b. Credit only.
c. Factor analysis.
d. First in, last out.
e. Double entry accounting.

39. Double entry accounting, with respect to calculation of balance of payments
calculation, means:

a. the balance of payments statement must always balance.
b. the balance of payments statement will always favor the larger nation.
c. the balance of payments statement will always favor the smaller nation.
d. the balance of payments statement will never be in complete balance.
e. the balance of payments statement will rarely be accurate.

40. The government entity which prepares the balance of payments statement in the
United States is:

a. the Federal Reserve.
b. the Internal Revenue Service.
c. the Customs Department.
d. the Department of Commerce.
e. the Federal Communications Commission.

41. The balance of payments in goods account or ____________ shows trade in
currently produced goods as well as unilateral transfers of merchandise.

a. current account balance
b. capital account
c. trade balance
d. direct investments
e. portfolio investment

42. The balance of payments in ______________ shows trade in currently
produced goods and services, as well as unilateral transfers of merchandise.

a. current account balance
b. capital account
c. trade balance
d. direct investments
e. portfolio investment

43. The balance of payments in _____________ summarizes financial transactions with
respect to short and long term accounts.

a. current account balance
b. capital account
c. trade balance
d. direct investments
e. portfolio investment

44. ___________________ are those investments in enterprises or properties that are
effectively controlled by residents of another country.

a. Current account balance
b. Capital account
c. Trade balance
d. Direct investments
e. Portfolio investment

45. ___________________ includes all long-term investments that do not give the
investors effective control over the investment. Such transactions typically involve
the purchase of stocks or bonds of foreign investors for investment.

a. Current account balance
b. Capital account
c. Trade balance
d. Direct investments
e. Portfolio investment

46. Everyone knows that the United States regularly runs a deficit in merchandise trade.
In which of the following categories does the United States regularly run a surplus?

a. Services.
b. Automobiles.
c. China.
d. Fashion footwear.
e. Machine tools (such as a drill press).

47. According to the theory of international trade and balance of payments, a surplus or
deficit in a country’s basic balance should be:

a. always weighted toward the deficit side.
b. always weighted toward the surplus side.
c. self correcting.
d. continually out of balance.
e. only brought into balance by government tariff action.

48. The mechanisms (according to the theory of international trade and balance of
payments) for producing self-correction in out-of-balance accounts is accomplished
through:

a. internal market adjustments.
b. external market adjustments.
c. internal and external market adjustments.
d. governmental control.
e. governmental tariff and nontariff barriers.

49. The external market adjustment concerns __________________ or a nation’s
currency and its value with respect to the currencies of other nations.

a. exchange rates
b. budget rates
c. bond rates
d. security rates
e. countertrade rates

50. The ___________________________ refers to the movement of prices and incomes
in a country.

a. external market adjustment
b. internal market adjustments
c. linear market adjustment
d. upward market adjustment
e. downward market adjustment

51. In 1994, _______________ devaluation of its currency triggered the Asian financial
crisis.

a. China’s
b. Japan’s
c. Indonesia’s
d. India’s
e. Hong Kong’s

52. Because of the Asian financial crisis, Thailand lost almost _______ percent of its
baht’s purchasing power in dollar terms in 1997.

a. 30
b. 40
c. 50
d. 60
e. 80

53. Because of the Asian financial crisis, South Korean currency lost ______ percent
against the U.S. dollar in 1997.

a. 30
b. 40
c. 50
d. 60
e. 80

54. Increased demand for Asian _____________ has helped the region rebound quickly
from the 1997 currency crisis.

a. exports
b. imports
c. commodities
d. fruit
e. cars

55. In April 2002, Argentina’s currency had lost nearly ________ percent of its value.

a. 20
b. 40
c. 50
d. 60
e. 70

56. Argentina’s currency woes are attributed to its own ______________ policy.

a. social
b. political
c. global
d. exchange
e. monetary

57. In the area of “change the product mix,” corporate response to the recession could be to push relatively _________________ product lines while deemphasizing _______________ lines.

a. expensive, inexpensive
b. imported, exported
c. smaller, larger
d. inexpensive, expensive
e. high-tech, low-tech

58. The EMS stands for:

a. European Monetary System.
b. European Mobile System.
c. European Market System.
d. European Management System.
e. European Manufacturing System.

59. In January 1999, ________ European countries surrendered their rights to issue
their own money.

a. five
b. eight
c. ten
d. eleven
e. twelve

60. The ERM stands for:

a. European Region Mechanism.
b. European Rate Mechanism.
c. European Research Mechanism.
d. European Railroad Mechanism.
e. none of the above.

61. The European Monetary System (EMS) was established in the late:

a. 1950s.
b. 1960s.
c. 1970s.
d. 1980s.
e. 1990s.

62. The European Central Bank is headquartered in:

a. Frankfurt.
b. Paris.
c. Rome.
d. Geneva.
e. London.

63. According to the text, EMU will have a strategic impact on companies’ following operations EXCEPT:

a. price transparency.
b. supply chains.
c. hiring practices.
d. new opportunities for small and medium-sized companies.
e. intensified competitive pressures.

64. According to the text, the euro will have a major boon for __________________.

a. small and medium-sized companies.
b. large companies.
c. German companies.
d. Italian companies.
e. French companies.

65. According to the text, the euro will also help companies to streamline their ____________________.

a. small business chains.
b. North American chains.
c. quality chains.
d. HR chains.
e. supply chains.

True/False Short Answer

66. Foreign exchange is not the monetary mechanism that allows the transfer of funds
from one nation to another.

67. The adoption of the euro in the European Union took place in 1990.

68. Each country has its own currency through which it expresses the value of its products.

69. The Bretton Woods conference recommended that each nation should not be at liberty
to use its macroeconomic policies for full employment.

70. Negotiations to establish the postwar (World War II) international monetary system
took place at Bretton Woods, New Hampshire.

71. In the 1960s, the United States began to experience sequential balance of payments
deficits.

72. Because of its use in international commerce, the dollar has remained strong
throughout the 1980s and 1990s.

73. One of the functions of the International Monetary Fund (IMF) was to monitor
problems that a country might experience in maintaining equilibrium in its balance
of payments. By agreement, countries would need permission from the IMF to
alter their peg if the initial par value was to be adjusted by more than 10%.

74. Special Drawing Rights (SDRs) are special account entries on the World Bank books.

75. The IMF does not promote exchange stability to maintain orderly exchange
arrangements among members.

76. The value of SDRs is determined by a weighted average of a basket of four
currencies which are: the U.S. dollar, the Japanese yen, the euro, and
_________________.

77. To expand services for countries in monetary difficulties, the IMF created Special
Drawing Rights (SDRs).

78. Another creation of the Bretton Woods Agreement was the International Bank for
Reconstruction and Development, known as:

79. ______________ float allows for a limited amount of government intervention to
soften sudden swings in the value of a currency.

80. Today, the global economy is increasingly dominated by three major currency
blocs which include the U.S. dollar, the Japanese yen, and the euro.

81. Foreign exchange refers to the exchange of one country’s money for that of
another country.

82. One of the most fundamental determinates of the exchange rate is purchasing power
places.

83. The Economist publishes a PPP study every year based on McDonald’s Big Mac
hamburger. This index is called the Big Mac Induction.

84. If payment on a transaction is to be made immediately, the purchaser has no choice
other than to buy foreign exchange on ________________________.

85. Protecting oneself against potential loss is called _________________.

86. The extent to which a foreign company changes dollar prices of its products in the
U.S. market as a result of exchange rate fluctuations is called exchange rate pass-
through.

87. The U.S. Department of Commerce prepares the balance of payments statement in the
United States.

88. The balance of payments on goods shows trade in currently produced goods.

89. According to the theory of international trade and balance of payments, a surplus or
deficit in a country’s basic balance should not be self-correcting.

90. In 1994, China’s devaluation of its currency triggered the Asian financial
crisis.

91. Thailand lost almost 60 percent of its baht’s purchasing power in dollar terms in
1997.

92. Two economies which were severely affected by the South American financial
crisis are Argentina and Chile.

93. The European Monetary System (EMS) was established in the late 1950s.

94. The European Central Bank is headquartered in Paris, France.

95. In Europe, EU regulations do not cross national boundaries.

Essay

96. Explain the primary roles played by the International Monetary Fund and the World Bank.

97. Explain the concept of managed float.

98. Explain how knowledge of the spot and forward exchange rate market helps international marketers to be successful in the global arena.

99. Explain what exchange rate pass-through is and what difficulties might be incurred with its successful application.

100. List and briefly describe the four types of balance of payments measures.

101. Discuss the Asian Financial Crisis and its implications for international marketing. What kinds of strategies are recommended in the text to deal with the crisis:

102. Discuss the Euro and its implications for international marketing.

Chapter 4

Multiple Choice

1. In marketing, buyer behavior and consumer needs are largely driven by _______________________.

a. health norms.
b. economic norms.
c. political norms.
d. cultural norms.
e. social norms.

2. In today’s world, ______________________ often provides pride and self-esteem to
its citizens.

a. cultural heritage
b. fashion
c. styles
d. business activities
e. infrastructure

3 . From a global marketing perspective, the cultural environment matters for two main
reasons. First, cultural forces are a major factor in shaping a company’s global
marketing mix program. The second reason is:

a. cultural analysis is expensive.
b. cultural analysis often pinpoints market opportunities.
c. cultural analysis is difficult.
d. accurate cultural analysis is next to impossible.
e. cultural analysis is required by many host governments.

4. From a global marketing perspective, the cultural environment matters. The most
important reason is that cultural forces are major factors in shaping a company’s
global:

a. sales territories.
b. vision.
c. competitive response.
d. marketing mix program.
e. global ethics program.

5. Companies that ignore cultural needs often:

a. lose permission to export.
b. lose permission to import.
c. have more lawsuits.
d. lose more salespeople.
e. lose a competitive edge.

6. From the consumption point of view, ____________ homes have less space than most
Europeans or American houses.

a. Japanese
b. Turkish
c. Australians
d. Indonesian
e. Pakistani

7. Several Japanese diaper makers were able to steal market share away from Proctor &
Gamble by selling diapers that were much ______________ than the ones marketed
by P&G, thereby better meeting the desires of Japanese mothers (Japanese homes
have less space than most Europeans or American houses).

a. colorful
b. expensive
c. bulkier
d. thinner
e. rougher

8. Since China has around 300 million children, they are often treated as:

a. little emperors and empresses.
b. super children.
c. smart children.
d. a tax burden.
e. food liability.

9. One reason Chinese parents treat their children as little “emperors and empresses” is
that:

a. they have no choice since it is mandated by Chinese law.
b. China has a one child per couple (without penalties) birth control policy.
c. advertising has influenced parents.
d. children are cared for by Grandparents.
e. China pays parents to have children.

10. Children in China impact consumption patterns in all of the following ways
EXCEPT:

a. spending power.
b. special nature of one child families.
c. pester power.
d. change agents.
e. legacy due to inherited wealth.

11. Within a given culture, consumption processes can be described via a sequence of
stages. All of the following describe those stages EXCEPT:

a. access.
b. buying behavior.
c. racial characteristics
d. consumption characteristics.
e. disposal.

12. Asking the question “Does the consumer have physical and/or economic access to
the product/service?” is an indication of which stage of consumption processes
(as influenced by culture)?

a. buying behavior.
b. consumption characteristics.
c. disposal.
d. access.
e. acceleration.

13. Asking the question “How is the decision to buy made by the consumers in the
Foreign market?” is an indication of which stage of consumption processes (as
influenced by culture)?

a. buying behavior.
b. consumption characteristics.
c. disposal.
d. access.
e. acceleration.

14. In global marketing, cultural forces shape the company’s ______________ mix.

a. visibility
b. growth
c. management
d. marketing
e. fashion

15. According to the text, culture is:

a. learned, interrelated and shared.
b. learned, interrelated and mixed.
c. learned, interrelated and empty.
d. learned, interrelated and passive.
e. learned, interrelated and static.

16. All of the following are unique features of culture EXCEPT:

a. it is learned.
b. it is inherited genetically.
c. elements are interrelated with one another.
d. it is shared.
e. it is compelling.

17. A culture can be defined by national borders (especially when the country is
isolated by natural barriers). An example would be:

a. the United States.
b. Canada.
c. Mexico.
d. Taiwan.
e. Germany.

18. Below is a list of elements from culture that matter to international marketers. Pick
the item that is likely to matter the least in doing business with a foreign culture.

a. material life.
b. political party affiliation.
c. language.
d. religion.
e. education.

19. ____________________ primarily refers to the technologies that are used to produce,
distribute, and consume goods and services within society.

a. Material life
b. Political party affiliation
c. Language
d. Values
e. Education

20. Selling different sizes of soft drinks in foreign cultures is an example of which
component of culture?

a. material life.
b. social interaction.
c. language.
d. values.
e. education.

21. Poor transportation and distribution infrastructure in many developing countries
would be examples of:

a. investment requirements.
b. technology gaps tied to material life.
c. governmental corruption that must be dealt with.
d. government ineptitude.
e. different value systems.

22. ________________ is often described as the most important element that sets
human beings apart from animals.

a. Materialism
b. Destruction
c. Life styles
d. Language
e. Computer skills

23. As a communication medium, language has two components: spoken language and
_________________ language.

a. business
b. commercial
c. slang
d. silent
e. electronic

24. _______________________ refers to the complex of nonverbal communication
mechanisms that people use to get a message across.

a. Spoken language
b. Slang language
c. Silent language
d. Harmonious language
e. Electronic language

25. Edward Hall identified five distinctive types of silent languages that are:

a. space, material possessions, friendship patterns, time, and travel.
b. space, material possessions, friendship patterns, time, and technology.
c. space, material possessions, friendship patterns, time, and computers.
d. space, material possessions, friendship patterns, time, and vacations.
e. space, material possessions, friendship patterns, time, and agreements.

26. Careless translation of advertising slogans or product labels leads to:

a. language blunders.
b. high cost.
c. government regulation.
d. imprisonment of offending parties.
e. preference of domestic products.

27. A technique such as ________________________ is used to sort out the differences when translating a company’s documents into other languages.

a. common translation
b. forward translation
c. back translation
d. value translation
e. abstract translation

28. Probably the most critical expression of social interactions is the concept of:

a. silent language.
b. gestures.
c. kinship.
d. reference groups.
e. cultural homogeneity.

29. A Los Angeles radio contest targeting Hispanic families offered two tickets to
Disneyland. The contest failed because the station forgot about the effect of
______________________ on the Hispanic culture.

a. cultural homogeneity
b. nuclear family
c. reference groups
d. social class
e. extended family

30. The consumer research literature identifies three kinds of reference groups:

a. membership groups, anticipatory groups, and local groups.
b. membership groups, anticipatory groups, and global groups.
c. membership groups, anticipatory groups, and legal groups.
d. membership groups, anticipatory groups, and dissociative groups.
e. membership groups, anticipatory groups, and friendship groups.

31. Membership groups are those groups that:

a. require dues.
b. exclude people.
c. are exclusive.
d. people belong to.
e. people would like to be a part of.

32. _______________ refers to the ideas and perceptions that a culture upholds in
terms of beauty and good taste.

a. Aesthetics
b. Cybernetics
c. Techno-graphics
d. Poly-graphics
e. Geographics

33. According to the text, religions embrace three elements:

a. lifestyle, a standardized organization, and moral rules of good behavior.
b. travel, a standardized organization, and moral rules of good behavior.
c. discussion, a standardized organization, and moral rules of good behavior.
d. explanation, a standardized organization, and moral rules of good behavior.
e. interaction, a standardized organization, and moral rules of good behavior.

34. An example of a religious taboo that might affect a company’s marketing mix is:

a. failing to say rosary.
b. going uncovered into a church.
c. including pork and/or beef as menu options in a restaurant.
d. offering to sell food on Saturday.
e. not closing the restaurant before dark.

35. All of the following would be issues to consider when marketing in an Islamic
framework EXCEPT:

a. not mixing men and women in focus groups.
b. advertising censors.
c. “excessive profits” should be turned over to stockholders.
d. do not manufacture products made from pigs.
e. special fasts during holidays.

36. Taking fasting habits into account when designing a company’s marketing mix
would be an essential in which of the following cultural environments?

a. Baptist.
b. Catholic.
c. Islamic.
d. Atheist.
e. Lutheran.

37. If your company were to employ male salespeople and they needed to get access to
female shoppers, which of the following countries would this become the most
difficult?

a. United States.
b. Japan.
c. China.
d. Saudi Arabia.
e. Israel.

38. In numerous Asian countries, the ancient ____________ philosophy feng shui (wind-
water) plays an important role in the design and placement of corporate buildings
and retail space.

a. Chinese
b. Japanese
c. Indonesian
d. Singaporean
e. Indian

39. __________________ drive(s) the holiday calendar in many countries.

a. Culture
b. Religion
c. Government tax assessors
d. Reference groups
e. Family units

40. The role of women in society is sometimes largely driven by local _____________.

a. religion.
b. politics.
c. government.
d. environment.
e. geography.

41. In which of the following countries would an ad campaign emphasizing that more
shaving is good have difficulty being accepted?

a. United States.
b. Russia.
c. Japan.
d. Norway.
e. Iran.

42. Two facets of education matter to international marketers. They are the
_________________________ of education.

a. cost and location
b. level and quality
c. cost and quantity
d. cost and availability
e. level and cost

43. ______________ systems tend to be deeply rooted and are found to be intrinsic to a
person’s identity and inner self.

a. Family
b. School
c. College
d. Personality
e. Value

44. ____________________ shape(s) people’s norms and standards. In addition,
people’s attitudes towards objects and behavioral codes are also influenced.

a. Value systems
b. Cultural philosophy
c. Reference groups
d. Family extension
e. Government involvement

45. Local attitudes toward foreign cultures will drive the product
___________________________.

a. positioning and human resources decisions.
b. positioning and logistics decisions.
c. positioning and travel decisions.
d. positioning and profit decisions.
e. positioning and design decisions.

46. _______________ classifications allow the marketing manager to see how much
overlap is possible between the marketing programs to be implemented in different
markets.

a. Business
b. Cultural
c. Political
d. Government
e. Natural

47. In many countries, goods with _______________ roots are strongly valued.

a. Swiss
b. Italian
c. American
d. Russian
e. South African

48. In terms of culture, the Walloons in French-speaking _______________have much
more in common with the French than with the Flemish of Northern ____________.

a. Germany.
b. Switzerland.
c. Italy.
d. Belgium.
e. Luxembourg.

49. ____________ is a high-context culture.

a. China
b. United States
c. Germany
d. Ireland
e. Italy

50. The anthropologist Edwards Hall makes a distinction between so-called ____________________________.

a. high-context and bright-context cultures.
b. high-context and low-profile cultures.
c. high-context and dry-context cultures.
d. high-context and low-context cultures.
e. high-context and medium-context cultures.

51. “What is left unsaid is as important as what is said” would be an example of what
form of culture?

a. agrarian.
b. low context.
c. intellectual.
d. high context.
e. northern European.

52. In the field of advertising, campaigns that were developed with a high-context
culture in mind are likely to be less effective when used in _______________
cultures, and vice versa.

a. high-context.
b. low-context.
c. medium-context.
d. dry-context.
e. hot-context.

53. Research indicates that there is a greater preference for luxury goods in
_________________ cultures than in other forms.

a. feminine
b. low context
c. intellectual
d. masculine
e. high context

54. ___________________ developed a highly useful cultural classification scheme.

a. Gary Hamel
b. Peter Drucker
c. Michael Porter
d. Geert Hofstede
e. Charles Handy

55. Geert Hofstede’s cultural classification scheme was based on a large-scale research
project which used 60 ________________ subsidiaries worldwide.

a. IBM
b. Hewlett Packard
c. Dell Computer
d. Motorola
e. Texas Instruments

56. Which of the following is NOT one of Hofstede’s cultural classification dimensions?

a. power distance
b. uncertainty avoidance
c. individualism
d. romanticism
e. masculinity

57. With respect to Hofstede’s cultural classification scheme, ______________ refers
to the degree of inequality which people of a country view acceptable.

a. power distance
b. uncertainty avoidance
c. individualism
d. masculinity
e. long-termism

58. An example of a high power distance country would be:

a. Germany
b. Britain
c. United States
d. Canada
e. Mexico

59. With respect to Hofstede’s cultural classification scheme, ______________ refers
to the extent to which people in a given culture prefer structured situations with clear
rules over unstructured ones.

a. power distance
b. uncertainty avoidance
c. individualism
d. masculinity
e. long-termism

60. An example of a high uncertainty avoidance country would be:

a. Germany.
b. Britain.
c. United States.
d. Canada.
e. Japan.

61. With respect to Hofstede’s cultural classification scheme, ______________ refers
to the extent to which people in a given culture prefer to act as individuals rather than
group members.

a. power distance
b. uncertainty avoidance
c. individualism
d. masculinity
e. long-termism

62. With respect to Hofstede’s cultural classification scheme, ______________ refers
to the extent to which people in a given culture label their society male or female
based on value characteristics of the two genders.

a. power distance
b. uncertainty avoidance
c. individualism
d. masculinity
e. long-termism

63. With respect to Hofstede’s cultural classification scheme, cultures where people favor
values such as solidarity, preserving the environment, and quality of life are more
______________.

a. feminine
b. masculine
c. collectivist
d. individualist
e. none of the above

64. In collectivist societies, the interests of the ____________ take center stage.

a. individual
b. company
c. group
d. businessman
e. city

65. An example of a short-term focus country (with respect to long-termism) would be:

a. Hong Kong.
b. Britain.
c. China.
d. Thailand.
e. Japan.

66. The GLOBE is an acronym for:

a. Global Leadership and Outstanding Behavior Effectiveness.
b. Global Leadership and Organizational Business Effectiveness.
c. Global Leadership and Outsourcing Behavior Effectiveness.
d. Global Leadership and Organizational Behavior Effectiveness.
f. Global Limited Organizational Behavior Effectiveness.

67. The GLOBE researchers developed a scale of _________cultural dimensions.

a. seven
b. eight
c. nine
d. ten
e. eleven

68. In addition to Hofstede’s first dimensions (uncertainty avoidance, power distance, and
collectivism), the GLOBE project included the following additional cultural
dimensions except:

a. collectivism II.
b. European management techniques.
c. assertiveness.
d. performance orientation.
e. humane orientation.

69. Another cultural classification scheme, the World Value Survey (WVS), which
assesses people’s values and beliefs in 78 countries, was organized by the
____________________________.

a. Harvard University.
b. University of Michigan.
c. University of Pennsylvania.
d. London Business School.
e. Princeton University.

70. A term “SRC” which was coined by J. A. Lee (cultural anthropologist) stands for:

a. strategic-reference criterion.
b. standard-reference criterion.
c. simple-reference criterion.
d. self-reference criterion.
e. none of the above.

71. _______________________ refers to people’s unconscious tendency to resort to
their own cultural experience and value systems to interpret a given business
situation.

a. Cultural morals
b. Cultural ethics
c. Self-Reference Criterion (SRC)
d. Monocultural
e. Global culture

72. Ethnocentrism is the belief that one’s own culture is:

a. superior to another culture.
b. inferior to another culture.
c. more racial pure than another culture.
d. exports more than another culture.
e. has a more rich and colorful history than any other country in the world.

73. Intensive foreign-language training is one of the more common tools to promote
__________________________.

a. educational sensitivity
b. travel sensitivity
c. cultural sensitivity
d. planning sensitivity
e. daily sensitivity

74. Certain products are obviously more culture-bound than other products. In particular,
_______________________ products tend to be very culture-bound.

a. industrial
b. agricultural
c. chemicals and industrial supplies
d. food, beverages, and clothing
e. none of the above

75. Prices in the U.S. often end in 9 or 5. Those in China:

a. end in the auspicious number 3.
b. do not end in 4 because it connotes death.
c. end in 5 or 9 like the U.S..
d. end in 8.
e. have no pattern whatsoever.

76. A model of organizational culture scheme includes the following four types
EXCEPT:

a. clan.
b. hierarchy.
c. market.
d. adhocracy.
e. nations.

77. The acronym GAM stands for:

a. global application management.
b. global action management.
c. global arts management.
d. global account management.
e. none of the above.

78. In the implementation of effective global account management (GAM), the following
factors count EXCEPT the following:

a. role of the global account management team.
b. seek global outsourcing.
c. make incentive structures realistic.
d. pick the right global account managers.
e. create a strong support network.

79. The acronym CRM stands for:

a. customer relationship mapping.
b. customer reliance management.
c. computer relationship management.
d. criteria relationship management
e. customer relationship management.

80. __________________________ plays a critical role in the development and quality
of a customer relationship management.

a. United Nations
b. Geocentric organization
c. Customer database
d. Training and development
e. Outsourcing

81. Which of the following colors have universal meanings globally?
a. white
b. blue
c. green
d. black
e. only a, b and c

82. Guanxi is:
a. a large city in southern China
b. a fiery pork dish
c. a nice saying like “gesundheit”
d. connections
e. a golf country club in Shanghai

83. Distribution strategies may have to change from the U.S. model by:
a. going to a traditional store instead of home delivery
b. not smiling at customers
c. going to direct selling instead of mail order
d. delivery service for fast food restaurants instead of just sit-down eating
e. all of the above

84. Promotion strategies can be most challenging globally. Changes for a U.S.-style ad might include:
a. translation into another language
b. lots of explanatory copy
c. pictures and few or no words except the brand name
d. appeals for large groups rather than individuals
e. all of the above

True/False Short Answer

85. In a given country, cultural heritage often provides pride and self-esteem to its citizens.

86. Within a given culture, consumption processes can be described via a sequence of
four stages: access, buying behavior, consumption characteristics, and planning.

87. ________________ is a learned, shared, compelling, interrelated set of symbols
whose meanings provide a set of orientations for members of society.

88. Culture can be biologically transmitted via the genes.

89. Cultures may be defined by national borders.

90. Most nations do not contain different subgroups (subcultures) within their borders.

91. ________________ primarily refers to the technologies that are used to produce,
distribute, and consume goods and services within a society.

92. _________________ is often described as the most important element that sets
human beings apart from animals.

93. Silent language refers to the thoughts that humans have within their minds.

94. Gestures, grimaces, body language, and eye contact are all examples of __________
language.

95. Probably the most crucial expression of social interactions is the concept of kinship.

96. Religion does not play a central role in many societies.

97. ________________ refers to a community’s set of beliefs that relate to a reality that
cannot be verified empirically.

98. The two facets of education that matter the most to the business planner are the
level and the quality of education.

99. Low-context cultures do not put the most emphasis on the written or spoken word.

100. Because of its affluence, the United States is a typical example of a high-context
culture.

101. A management guru Michael Porter developed the cultural classification scheme.

102. An example of a high power distance country would be the United States.

103. The project GLOBE stands for Global Law and Organizational Behavior
Effectiveness.

104. The World Value Survey (WVS) was conducted by the University of Michigan.

105. Clan cultures do not stress cohesiveness, participation, and teamwork.

106. The coordination of the management of customer accounts across national boundaries is called as global action management.

Essay

107. According to the textbook, within a given culture, consumption processes can be described via a sequence of four stages. List and describe each stage. Your description can use the form of indicating questions that might be asked at each stage.

108. Language is one of the cultural elements that affect the way marketers do business in foreign markets. Explain how language can complicate the task of the global marketer. In addition, identify the differences between spoken and silent language.

109. Social interactions are extremely important in the process of international marketing. One aspect of the social interaction process is the role of the reference group. Explain this importance and identify the chief forms of reference groups.

110. Explain and comment on high- and low-context cultures. Give examples of each.

111. List the primary components of Geert Hofstede’s cultural classification scheme for classifying cultures. Define each component. Comment on the effect that these various elements might play on marketing products internationally.

112. Explain and discuss some of the guidelines for managing and implementing successful global account management (GAM) and customer relationship management (CRM) programs.

Chapter 5

Multiple Choice

1. International marketers cannot afford to be __________________ as they interact with
a multitude of political and legal systems, including their own at home.

a. geocentric
b. ethnocentric
c. polycentric
d. multicentric
e. none of the above

2. The government in each country determines which industries will receive:

a. protection in the country and which will face open competition.
b. benefits.
c. penalties.
d. monopolies.
e. special protection from the armed services.

3. When marketing executives do business across national boundaries, where do they
primarily face regulations and laws?

a. at home.
b. in the foreign country.
c. both at home and in the foreign country.
d. at the World Court in the Hague.
e. at the United Nations (which controls the oversight of international business).

4. A(n) _____________ country refers to a country the parent company is based in
and operates from.

a. origin
b. domestic
c. host
d. home
e. plural

5. A(n) ____________________ country refers to a country in which foreign companies
are allowed to do business in accordance with its government policies and within its
laws.

a. foreign trade zone
b. domestic
c. origin
d. home
e. host

6. What type of political events are executives most concerned with in host countries?

a. major political upheavals.
b. day-to-day low-key events that produce a fairly significant change in policy.
c. property seizures.
d. terrorist strikes.
e. labor strikes.

7. As China continues to free its markets in response to global pressure, the
_________________ is (are) undermining its censorship policies.

a. travel policies
b. Internet
c. education policies
d. manufacturing locations
e. outsourcing policies

8. One way to characterize the nature of a government is by its __________________.

a. political ideology
b. ethnic ideology
b. regional ideology
c. business ideology
d. social ideology

9. The three main political ideologies are:
a. Communism, capitalism and globalism
b. Communism, capitalism and radicalism
c. Communism, capitalism and modernism
d. Communism, capitalism and Confucianism
e. Communism, capitalism and socialism

10. __________________ refers to an economic system in which free enterprise is
permitted and encouraged along with private ownership.

a. Socialism
b. Communism
c. Fascism
d. Capitalism
e. Planned economics

11. _______________ if unfettered, may result in excessive production and excessive
consumption, thereby causing social problems of great magnitude.

a. Socialism
b. Communism
c. Protected economies
d. Monopolies
e. Capitalism

12. ________________ is generally considered to be a system that falls in the middle
between largely independent systems and controlled economic systems.

a. Socialism
b. Communism
c. Neo-fascism
d. Capitalism
e. Monarchies

13. ______________ Institutional Revolutionary Party had controlled the country for 70
years.

a. Italy’s
b. Great Britain’s
c. India’s
d. Ireland’s
e. Mexico’s

14. An example of the dual-party system in operation is found in:

a. Mexico
b. Britain
c. India
d. Pakistan
e. Japan

15. Lack of political stability and continuity is usually a characteristic of which of the
following systems?

a. single party
b. dual party
c. multiple party
d. bi-cameral system
e. communist

16. Governments often decide to block trade. All of the following are reasons EXCEPT:

a. national security.
b. to protect the stock market.
c. to develop new industry.
d. to protect declining industries.
e. none of the above.

17. MITI stands for:

a. Ministry of International Travel & Industry.
b. Ministry of International Trade & Industry.
c. Ministry of International Tourism & Industry.
d. Ministry of International Testing & Industry.
e. Ministry of International Telegraph & Industry.

18. In the United States, ITA stands for:

a. International Training Administration.
b. International Testing Administration.
c. International Teaching Administration.
d. International Tourism Administration.
e. International Trade Administration.

19. In the United States, the __________________________ has a national network of
district offices in every state, offering export promotion assistance to local businesses.

a. Ministry of International Trade and Industry (MITI)
b. EXIM Bank
c. National Industrial Council (NIC)
d. International Trade Administration (ITA)
e. United Nations, Division of Commerce

20. A major objective of any state government wishing to support businesses that
will be exporting or relocating to the United States (specifically, within their
state) is:

a. job creation.
b. increasing the defense industry in their state.
c. gaining control of multinational corporations.
d. accumulating wealth.
e. opening more hotels/motels.

21. In Europe, Airbus Industries was established with joint government subsidies from the governments of __________________________________________________.

a. Britain, France, Germany, and Spain
b. Britain, France, Germany, and Sweden
c. Britain, France, Norway, and Spain
d. Britain, Finland, Germany, and Spain
e. Iceland, France, Germany, and Spain

22. An example of a direct government subsidy by the United States to meet foreign
competition would be:

a. Microsoft.
b. COMECON.
c. The Tennessee Valley Authority.
d. BART in California.
e. SEMATECH (Semiconductor Manufacturing Technology).

23. The ultimate government involvement in trade is when the government:

a. gives tax breaks to businesses.
b. itself is the customer.
c. prevents competition.
d. controls the foreign competition with tariffs.
e. allows domestic businesses to bribe in foreign countries so they can remain
competitive.

24. The United States government accounts for ____________ of the total U.S.
consumption.

a. a tenth
b. a third
c. a quarter
d. nearly sixty percent
e. nearly seventy percent

25. Trade controls can be broken into two categories—economic trade controls and:

a. covert trade controls.
b. political trade controls.
c. geophysical trade controls.
d. maritime trade controls.
e. most favored nation trade controls.

26. An example of an economic trade control would be a trade restraint instituted to:

a. protect local jobs.
b. embargo goods.
c. sanction trading in certain goods.
d. refrain from trading with communist Cuba.
e. freeze the assets of Iraq.

27. Weapons that might be used as economic trade controls to protect locally produced
goods against imports would be:

a. embargoes.
b. sanctions.
c. asset freezes.
d. tariffs and nontariff barriers.
e. confiscation.

28. ______________________ are country-based political trade controls.

a. Embargoes and sanctions
b. Nontariff barriers
c. Taxing imports
d. Taxing exports
e. Tariffs

29. The United States maintains an economic embargo on __________________.

a. Nicaragua
b. Mongolia
c. Hungary
d. Cuba
e. none of the above.

30. All of the following are considered forms of nontariff barriers EXCEPT:

a. government participation in trade.
b. customs and entry procedures.
c. product requirements.
d. countervailing duties.
e. quotas.

31. Embargoes and sanctions are ______________________ political trade controls.

a. locally-based
b. regionally-based
c. country-based
d. company-based
e. party-based

32. An example of a product-based trade control would be the:

a. quota.
b. countervailing duty.
c. export license requirement.
d. ownership control.
e. asset freezing.

33. Trade laws that harm other countries are likely to invoke _______________.

a. war
b. retaliation
c. domestication attempts
d. covert action
e. United Nations sanction

34. Which of the following countries has very few restrictions on foreign ownership of
corporations within its borders (domestic businesses)?

a. United States.
b. Russia.
c. Japan.
d. China.
e. Saudi Arabia.

35. Profit remittances and differential taxation and interest rates are illustrations of
which of the following types of control?

a. ownership control
b. incentive control
c. industry control
d. financial control
e. political control

36. According to the textbook, government policies drive the following economic
factors EXCEPT:

a. the cost of capital.
b. level of economic growth.
c. companies’ outsourcing strategies.
d. rates of inflation.
e. international exchange rates.

37. __________________ is an outright takeover of assets without compensation.

a. Expropriation
b. Confiscation
c. Domestication
d. Nationalization
e. None of the above

38. __________________ refers to a foreign government’s takeover of company assets
such as land and goods with compensation that tend to fall short of their market value.

a. Expropriation
b. Confiscation
c. Domestication
d. Nationalization
e. non of the above

39. __________________ refers to a foreign government’s takeover for the purpose of
making the industry a government-run industry.

a. Expropriation
b. Confiscation
c. Domestication
d. Nationalization
e. None of the above

40. To reduce the risk of expropriation or confiscation of company assets overseas, many
companies use __________________ with local companies.

a. joint ventures
b. strategic alliances
c. contract manufacturing
d. licensing
e. none of the above

41. To overcome the problems of expropriation, confiscation, and even nationalization,
many companies are now adopting a policy of ___________________ where the
company gradually turns over management and operational responsibilities as well as
ownership to local companies over time.

a. retaliation
b. boycott
c. sanction
d. domestication
e. profit sharing

42. Another name for domestication is _______________________.

a. repatriation policy
b. phase-out policy
c. phase-in policy
d. upward-bound policy
e. equity policy

43. According to the PRS Group’s 2005 International Country Risk Ratings, which of the
following country has the LOWEST risk rating?

a. Norway
b. Switzerland
c. Singapore
d. Finland
e. Somalia

44. According to the PRS Group’s 2005 International Country Risk Rating, which of the
following countries has the HIGHEST risk rating?

a. Norway
b. Switzerland
c. Singapore
d. Finland
e. Iraq

45. Recently the Russian subsidiary of PepsiCo needed to import bottling equipment
from the United States. However, the Russian government did not allow the
company to exchange rubles for dollars, so it exported Russian vodka to the
United States to earn enough dollars to import the needed equipment. This would be
an example of _____________________.

a. retaliation.
b. countertrade.
c. sanction.
d. domestication.
e. profit sharing.

46. __________________ involve(s) trading of products without involving direct
monetary payments.

a. Joint ventures
b. Strategic alliances
c. Contract manufacturing
d. Countertrade
e. Outsourcing

47. The Middle East crisis and the September 11 terrorist attacks on the United States
have caused tremendous concern about the future ____________________?

a. aluminum supply
b. oil supply
c. copper supply
d. food supply
e. none of the above

48. _________________________ provides the U.S. President a free hand and the power
to negotiate trade deals with other governments.

a. Fast-track reciprocal authority
b. Fast-track senate authority
c. Fast-track business authority
d. Fast-track trade authority
e. Slow-track trade authority

49. G-7 began during the economic crisis of the mid-____________.

a. 1950s.
b. 1960s.
c. 1970s.
d. 1980s.
e. 1990s.

50. All of the following are members of the G-7 (Group of Seven) EXCEPT:

a. Canada
b. Ireland
c. Germany
d. United States
e. Italy

51. The group consisting of the original G-7 and _________________ is known as G-8.

a. Singapore
b. Ireland
c. Russia
d. China
e. New Zealand

52. _________________ was founded in 1949 to stop the flow of Western technology
to the Soviet Union. Australia, Japan, and the NATO countries (except Ireland) are
members.

a. The NATO alliance
b. The Western bloc
c. The Eastern bloc
d. The G-7 (Group of Seven)
e. COCOM (The Coordinating Committee for Multilateral Controls)

53. _____________________ may be defined as that body of rules or laws that is
binding on states and other international persons in their mutual relations.

a. Legal systems
b. International law (or the “law of nations”)
c. Local law
d. Napoleonic code law
e. Civil law

54. International law represents __________________ among countries.

a. very loose arrangements
b. contractually binding agreements
c. gentlemen’s agreements
d. almost no control of law
e. the best and most recognized legal standards

55. International law comes from customs, national and international court decisions,
and:

a. tradition.
b. joint ventures.
c. strategic alliances.
d. cabals.
e. international treaties.

56. The International Court of Justice was established by the ____________________
to settle international conflicts between nations, not between individual parties and
companies.

a. United Nations
b. Asian Development Bank
c. International Labor Organization
d. International Monetary Fund
e. World Bank

57. ____________________ laws primarily govern behavior within a country and
also govern the resolution of international contractual disputes since foreign
subsidiaries and expatriate employees live within the legal bounds of their host
countries’ legal systems.

a. Global
b. Transnational
c. Multinational
d. Local and municipal
e. Bi-national

58. Legal issues facing a company affect:

a. pricing decisions.
b. packaging decisions.
c. product decisions.
d. all of the above.
e. none of the above.

59. ________________ systems base the interpretation of law on prior court rulings
(that is, legal precedents and customs of time).

a. Common law
b. Code law
c. Written law
d. Islamic law
e. Napoleonic law

60. A country that follows common law as its primary system is:

a. France.
b. the United States.
c. Iraq.
d. Egypt.
e. Mexico.

61. _________________ systems rely on statutes and codes for the interpretation of the
law. There is very little interpretation in this form of law.

a. Common law
b. Code (written) law
c. United Nation’s law
d. Germanic Confederation law
e. Spanish Constitutional law

62. The legal system that holds that law was established by God and a “natural law”
embodies all justice is represented by:

a. Common law.
b. Code (written) law.
c. Islamic law.
d. Germanic Confederation law.
e. Napoleonic law.

63. Civil laws regulating business contracts and transactions are usually called:

a. business law.
b. code law.
c. confederation law.
d. commercial law.
e. contract law.

64. All of the following countries believe that most disputes can be solved outside the
litigation system EXCEPT:

a. Brazil.
b. Japan.
c. China.
d. United States.
e. Taiwan.

65. The ____________________ (based in Geneva, Switzerland) has instituted a set of
process standards that has been subscribed to by the European Union.

a. International Standards Organization
b. International Production Standards Organization
c. Quality Council
d. Demming Committee
e. Baldridge Foundation

66. With the growing adoption of the __________ standards by firms worldwide, an
__________ certification has become an essential marketing tool for firms.

a. ISO 6000
b. ISO 7000
c. ISO 8000
d. ISO 9000
e. ISO 10000

67. The ISO 9000 standards served as a model for the _____________ series.

a. ISO 10000
b. ISO 11000
c. ISO 12000
d. ISO 14000
e. ISO 15000

68. ______________________ refers to ideas that are translated into tangible products,
writings, and so on, and that are protected by the state for a limited period of time
from unauthorized commercial exploitation.

a. A copyright
b. A trademark
c. A trade secret
d. Intellectual property
e. A patent

69. Which of the following countries has followed the rule of “first-to-invent” with respect to patent awards?

a. United States
b. Japan
c. Britain
d. Germany
e. Canada

70. The international treaty (convention) established in 1883 that explains international
protection rights of intellectual property (such as how long one has to file for
property protection in foreign countries) is called:

a. the Berne Convention.
b. the London Convention.
c. the Paris Convention.
d. the New York Convention.
e. the Rome Convention.

71. The ____________________ is the oldest and most comprehensive international
copyright treaty.

a. Berne Convention.
b. London Convention.
c. Paris Convention.
d. New York Convention.
e. Rome Convention.

72. The _____________________ specifically forbade every contract, combination, or
conspiracy to restrain free and open trade.

a. Sherman Act
b. Clayton Act
c. Federal Trade Commission Act
d. Foreign Corrupt Practices Act
e. Export Trading Company Act

73. The _______________ strengthened the U.S. antitrust arsenal by prohibiting trade
practices that were not covered in previous legislation. It outlawed exclusive
dealing and price discrimination.

a. Sherman Act
b. Clayton Act
c. Federal Trade Commission Act
d. Foreign Corrupt Practices Act
e. Export Trading Company Act

74. The __________________ encourages firms to join forces to improve their
export performance by exempting them from antitrust laws. This act was patterned
after similar legislation in Japan and Germany.

a. Sherman Act
b. Clayton Act
c. Federal Trade Commission Act
d. Foreign Corrupt Practices Act
e. Export Trading Company Act

75. The ____________________ was designed to prohibit the payment of any money
or anything of value to foreign officials, foreign political parties, or any candidate for
foreign political office for purposes of obtaining, retaining, or directing business.

a. Sherman Act
b. Clayton Act
c. Federal Trade Commission Act
d. Foreign Corrupt Practices Act
e. Export Trading Company Act

76. The ____________________ antitrust laws are applied not only to _______________
-member country companies but also to foreign companies as long as their corporate
action has antitrust implications within the _____________.

a. MERCOSUR.
b. European Union (EU).
c. European Free Trade Association (EFTA).
d. NAFTA
e. None of the above.

77. The ___________________________________ of 1977 was designed to prohibit the
payment of any money or anything of value to foreign officials, foreign political
parties, or any candidate for foreign political office for purposes of obtaining,
retaining, or directing business.

a. Foreign Illegal Practices Act
b. Foreign Corruption Issues Act
c. Foreign Corruption Law Act
d. Foreign Bribery Practices Act
e. Foreign Corrupt Practices Act

True/False Short Answer

78. A host country refers to a country the parent company is based in and
operates from.

79. A _______________ country is a country in which foreign companies are allowed
to do business in accordance with its government’s policies and its laws.

80. Under strict socialism, the government owns and manages all businesses and no
private ownership is allowed.

81. ________________ refers to an economic system in which free enterprise is
permitted and encouraged along with private ownership.

82. Both capitalistic and socialistic countries in which government planning and
ownership play a major role are also referred to as planned economies.

83. One of the problems with a multiple party governmental system is a lack of
political stability and continuity.

84. In the United States, the organization that seeks to help firms considering exports to
other countries is the International Trade Agency (ITA).

85. The U.S. government accounts for a ______________ of the total U.S. consumption.

86. The “buy domestic” policy orientation is not limited to the United States.

87. Trade controls can be broken into two categories – economic trade controls and
_____________________.

88. ___________________ restrict all trade with a nation for political purposes.

89. Export license requirements are supply-based trade controls.

90. The United States maintains an economic embargo on Nicaragua.

91. _______________ by a government is an outright takeover of a business’s assets
without compensation.

92. A _______________________ policy by a host government means that the foreign
company doing business within the country’s borders must gradually turn over
management and operational responsibilities as well as ownership to local companies
over time.

93. The Group of 7 (or G-7) is made up of France, Germany, Italy, England, Canada,
Japan, and the United States.

94. The Coordinating Committee for Multilateral Controls (COCOM) was founded after
the Cold War in the 1990s.

95. Treaties and international contracts do not represent formal agreements among nations or firms.

96. Common law systems base the interpretation of law on prior court rulings.

97. The Digital Millennium Copyright Act (DMCA) of 1998 was passed in Germany.

98. The Patent Law Treaty (PLT) was adopted in Frankfurt in June 2000.

99. The U.S. antitrust laws were originally and primarily aimed at domestic monopolies.

100. In the U.S., the Foreign Corrupt Practices Act (FCPA) was passed in 1990.

Essay

101. List and briefly characterize the three main reasons why governments often want to
block or restrict trade.

102. What are the two primary types of trade controls? Give a description and an example of each major type.

103. How do the macroeconomic policies of a host country affect a foreign
company’s operations?

104. International law is derived from three sources. Identify and compare these
sources.

105. Describe the various types of local legal systems. Describe how these differences
might affect a company that wishes to conduct international business.

Chapter 6

Multiple Choice

1. In international marketing, the global market research process includes:

a. Define the problem(s).
b. Develop a research design.
c. Determine the information needs.
d. Collect the data (secondary & primary).
e. All of the above.

2. To some degree, the procedures and methods that are followed to conduct global
marketing research are close to those in the standard ____________________.

a. domestic market.
b. transnational market.
c. global market.
d. European market.
e. Asian market.

3. All of the following are steps to be followed to conduct global market research
EXCEPT:

a. define the research problem(s).
b. develop software to integrate with the Internet databases.
c. determine information needs.
d. collect the data.
e. analyze the data and interpret the results.

4. There are six steps to follow in conducting global market research. The first step
is to:

a. develop the research design.
b. define the research problem.
c. determine information needs.
d. collect the data (secondary and primary).
e. analyze the data and interpret the results.

5. All of the following are major challenges that a global marketing researcher might
face EXCEPT:

a. argument over budget expenditures between international markets.
b. complexity of research design due to environmental differences.
c. lack and inaccuracy of secondary data.
d. time and cost requirements to collect primary data.
e. coordination of multicountry research efforts.

6. Any research starts off with a precise definition of the ______________________.

a. location problems.
b. sample problems.
c. data problems.
d. research problem(s).
e. none of the above.

7. In marketing research, once the problem has been identified it is translated into:

a. a secondary research search.
b. a primary research search.
c. specific research questions.
d. a sampling process.
e. a choice of scales to be used in measurement.

8. In global marketing research, the marketing research problem formulation is often
hindered by the _____________________ where a person’s habit is to fall back on
their own cultural norms and values.

a. gender bias
b. culture bias
c. proximity effect
d. global distance factor
e. self-reference criterion

9. ____________________ should be consulted at every step of the research process if
the study will effect their operations.

a. Transnational subsidiaries
b. European subsidiaries
c. Asian subsidiaries
d. Local subsidiaries
e. African subsidiaries

10. A major difficulty in formulating the research problem in the global marketing
research effort is the unfamiliarity with the ___________________.

a. foreign mass media
b. laws governing marketing research
c. foreign environment
d. domestic environment’s attitude toward foreign research
e. people who will actually conduct the research

11. In a foreign market, the _______________ survey is probably the most economical
way to gather preliminary information on target markets.

a. upper-middle class
b. omnibus
c. environmental
d. demographic specific
e. local distributor

12. A major disadvantage of the omnibus surveys is that:

a. it is usually culturally biased.
b. it is very expensive.
c. clients cannot incorporate their own questions in the survey.
d. the survey does not usually contain many consumer-related questions.
e. only a limited amount of company-relevant information is obtainable.

13. A(n ) ____________________ is particularly suitable when you need to ask a few
simple questions.

a. geometric survey
b. omnibus survey
c. simple survey
d. restricted survey
e. matrix survey

14. When market researchers find information that might be useful in their exploration
process to already be available (usually collected for some other purpose by other
data gathers), this type of information is called:

a. public information.
b. primary data.
c. unrestricted information.
d. secondary data.
e. used information.

15. When data is collected specifically for the purpose of the research study, it is called:

a. public information.
b. primary data.
c. unrestricted information.
d. secondary data.
e. used information.

16. The National Trade Data Bank (NTDB) which includes market research reports,
information on export opportunities, and market guides is maintained by the
____________________________.

a. U.S. Department of Commerce
b. U.S. Department of Education
c. U.S. Department of Energy
d. U.S. Department of Transportation
e. U.S. Treasury

17. The OECD is an acronym _______________________________________.

a. Organization for Economic Cooperation & Deregulation
b. Organization for Economic Cooperation & Development
c. Organization for Economic Cooperation & Datamation
d. Organization for Economic Cooperation & Distribution
e. Organization for Economic Cooperation & Demographics

18. Many countries have a network of government-sponsored commercial delegations
that provide valuable information to firms that desire to do business in that country.
One of the most noteworthy of these is found in ______________ and is called
_________________.

a. Britain; Britannia Net
b. Canada; Canada First
c. Japan; Japan External Trade Organization (JETRO)
d. the United States; Buy American
e. Mexico; the Mexican Organization of Commercial Enterprise (MOCE)

19. A recent form of secondary data sources is the syndicated datasets sold by market
research companies like A. C. Nielsen and Information Resources, Inc. One of the
ways that these firms acquire data in foreign markets and most developed countries
(especially in the retail environment) is to use:

a. observation.
b. telephone interviews.
c. direct mail.
d. expert opinion.
e. optical scanners tied to cash registers.

20. All of the following are major sources of problems for the market researcher wishing
to use secondary data obtained either about or from foreign markets EXCEPT:

a. government control of data for taxing purposes.
b. accuracy of data.
c. age of data.
d. reliability of data over time.
e. comparability of data.

21. Accuracy of data in foreign markets may be suspect. This is especially true if it
neglects to record significant commercial and non-commercial activity. One example
of data that is often not recorded (though it might be significant) is:

a. trade across national borders.
b. trade by mail.
c. smuggling activities.
d. trade carried by package shippers such as FedEx or UPS.
e. trade with foreign banks.

22. _______________________ reflects the degree to which a given concept has the
same meaning in different environments.

a. Functional equivalence
b. Conceptual equivalence
c. Demographic equivalence
d. Psychographic equivalence
e. Primary equivalence

23. Comparability might also be hindered by the lack of ___________________.
This refers to the degree to which similar activities or products in different countries
fulfill similar functions.

a. conceptual equivalence
b. functional factors
c. functional equivalence
d. lumping of data
e. comparison equivalence

24. The comparison of money-based indicators (e.g., income figures, consumer
expenditures, trade statistics) is hampered by the need to convert such figures into
a ____________________.

a. common currency
b. euro currency
c. euro dollar
d. Swiss franc
e. Italian lira

25. To avoid the difficulty of “lumping of data” encountered in conducting
international marketing research, all of the following questions should be asked
EXCEPT:

a. When were the data collected?
b. How were the data collected?
c. How much did it cost to collect the data?
d. Have the variables been redefined over time?
e. Who collected the data?

26. If a marketing researcher asks “who collected the data?” they would probably be
trying to overcome one of the major difficulties of collecting data in the international
marketplace. Which of the following best describes the effect that the researcher is
trying to overcome?

a. conceptual equivalence.
b. functional factors.
c. functional equivalence.
d. lumping of data.
e. comparison equivalence.

27. Primary research can be collected in several ways. One method that is excellent to
use when doing exploratory research is:

a. mail surveys.
b. telephone surveys.
c. mall intercept.
d. home interviews.
e. focus groups.

28. As a research technique, a ________________ is a loosely structured free-flowing
discussion among a small group of target customers facilitated by a professional
moderator.

a. mall intercept
b. contra-group design
c. Delphi-group
d. focus group
e. probe panel

29. All of the following are typical uses of the focus group research technique EXCEPT:

a. to generate information to guide the quantitative research projects.
b. to obtain data on unproductive or problem employees.
c. to reveal new product opportunities.
d. to test out new product concepts.
e. to test out new ad images.

30. Getting focus groups to work in certain societies (because of their view on group
dynamics and proper decorum) is difficult. Which of the following countries
would be most difficult for successful focus groups?

a. Japan
b. United States
c. Canada
d. Britain
e. Germany

31. Which of the following is not important to address in focus group research?
a. cultural sensitivity of the moderator
b. non-verbal cues
c. consensus answers
d. gender of the participants
e. gender of the moderator

32. _________________ are the most common vehicle to gather primary data.

a. Scanners
b. Focus groups
c. Questionnaires
d. Interviews
e. Cluster analysis

33. By far the most popular instrument to gather primary data is the:

a. mall intercept.
b. casual observation.
c. questionnaire.
d. optical scanner.
e. eye tracking camera used in psychology.

34. The astute marketing researcher must be aware of the need for conceptual and
functional equivalence in designing questionnaires for the international market.
In addition, it is also necessary to fulfill two additional criteria. They are:

a. time and cost evaluation.
b. translation and scalar equivalence.
c. translation and polar equivalence.
d. religious and bias equivalence.
e. polar and scalar equivalence.

35. Two procedures that can overcome problems with sloppy questionnaire translation
in conducting international marketing research is to provide for:

a. polar and psychographic translation.
b. lifestyle and psychographic translation.
c. back-translation and parallel translation.
d. forward-translation and parallel translation.
e. lifestyle and parallel translation.

36. ______________________ translation involves using multiple interpreters who
translate the same questionnaire independently.

a. Polar
b. Parallel
c. Back
d. Forward
e. Lifestyle

37. To make findings of cross-country market research projects meaningful, it is
paramount to pursue ________________ (where scores from subjects of different
countries should have the same meaning and interpretation).

a. time evaluation
b. scalar equivalence
c. polar equivalence
d. bias equivalence
e. focus equivalence

38. The purpose of ______________________ is to get scores from subjects of
different countries to have the same meaning and interpretation.

a. time evaluation
b. scalar equivalence
c. polar equivalence
d. bias equivalence
e. focus equivalence

39. Survey research in ______________________ is further hampered by low levels of
education.

a. developed countries
b. rich countries
c. developing countries
d. emerging markets
e. low-tech countries

40. With respect to asking scaled questions to determine the degree of agreement or
disagreement, in illiterate societies scaled questions often use:

a. numbers (such as 1-10).
b. letters (such as a-z).
c. use symbols (such as stars).
d. use degrees of smiling or funny faces (from happy to sad).
e. use number of animals (ownership demonstrated by one through seven goats or
cows).

41. With respect to conducting marketing research in countries that are unfamiliar with
survey research, it is advisable to avoid:

a. references to the government.
b. lengthy questionnaires or open-ended questions.
c. references to religion.
d. questioning females.
e. any scaled questions.

42. ___________________ is the only foolproof way to debug the questionnaire and
spot embarrassing mistakes.

a. Pre-testing
b. Post-testing
c. Using approved software
d. Using standard questionnaire formats
e. Having a linguist read the questionnaire

43. To collect data, the researcher has to draw a ____________ from the target
population.

a. group item
b. reference list
c. sample
d. quota
e. portion

44. A sampling plan centers around three issues: sampling unit, sample size, and
__________________.

a. demographic procedure
b. sampling procedure
c. psychographic procedure
d. geographic procedure
e. none of the above

45. Which of the following questions is most associated with the term “sampling unit?”

a. Who cannot be considered as a valid respondent?
b. How much will the survey cost?
c. What is our target population? Who should be surveyed?
d. How many people should be surveyed?
e. How should prospective respondents be chosen from the target population?

46. Which of the following questions is most associated with the term “sample size?”

a. Who cannot be considered as a valid respondent?
b. How much will the survey cost?
c. What is our target population?
d. How many people should be surveyed?
e. How should prospective respondents be chosen from the target population?

47. When drawing a sample, the researcher needs a __________________, that is,
listing of the target population (e.g., a telephone directory).

a. sampling mirror
b. sampling frame
c. sampling group
d. sampling questionnaire
e. sampling behavior

48. With respect to approved sampling theory, heterogeneous cultures (e.g., India)
demand ________________ samples than homogeneous cultures (e.g. South Korea).

a. bigger
b. smaller
c. less stratified
d. more randomized
e. less randomized

49. When preparing a sampling plan, the researcher needs to decide how to contact
prospective subjects for the survey. The most common choices are:

a. mail, telephone, and Internet.
b. mail, telephone, and optical scan.
c. mail, telephone, and personal interview.
d. observation, personal interview, and experimentation on a person-by- person basis.
e. observation, telephone, and personal interview.

50. Once collection of data in a research project begins, there can be many problems
with collection. A very common problem in the international arena is nonresponse
due to:

a. a reluctance to be photographed.
b. a reluctance to talking with strangers.
c. a reluctance to talking with officials or official pollsters.
d. a fear of government reprisals.
e. a fear of cultural conflict.

51. When conducting research, several biases may be present. The ___________ bias
is present when the respondent feels a desire to be polite toward the other person.

a. yea-or nay-saying
b. social desirability
c. gender
d. tradition
e. courtesy

52. The courtesy bias with respect to marketing research responses is fairly common in:

a. the United States.
b. France.
c. Germany.
d. Asia and the Middle East.
e. Mexico.

53. Besides traditional primary data collection methods, companies also rely on less
conventional methods such as ________________________.

a. geographic research
b. multigraphic research
c. psychographic research
d. ethnographic research
e. none of the above

54. All of the following are methods that can be fruitfully employed to assess the size of
the market for any given product EXCEPT:

a. analogy method.
b. Latin square.
c. trade audit.
d. chain ratio method.
e. cross-sectional regression analysis.

55. The procedure for the _______________ of assessing market size is to pick a country
that is at the same stage of economic development as the country of interest and for
which the market size is known. This country then becomes an indicator for the
market size of the country that is under question.

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

56. Suppose that a consumer electronics company wants to estimate the market size for
VCRs in Poland but does not have much information about that market. Instead, it
chooses Hungary (a country for which it does have information) and uses it as an
indicator for the market in Poland. This method of determining market size most
resembles which of the following methods?

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

57. One common problem with using the analogy method of determining market size
is:

a. cost.
b. language problems.
c. consumption patterns are not comparable across countries due to strong cultural
disparities.
d. different monetary units.
e. there be more men than women in one of the cultures.

58. An alternative way to derive market size estimates is based on local production and
import and export figures for the product of interest. This method is best described
as being a(the):

a. analogy method.
b. Latin square.
c. trade audit.
d. chain ratio method.
e. cross-sectional regression analysis.

59. The _______________ method of assessing market size begins with a rough base-
number as an estimate for the market size (such as the entire population for the
country) and systematically fine-tunes by applying a string of percentages (such as
birth rate) to come up with the most meaningful estimate possible.

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

60. If a company wishing to sell baby monitors (to help with infants that have trouble
breathing) wanted to estimate the size of their potential market in a developing
country for which little data was available, they could get the population size, examine
the number of births per year, focus on cities that had the highest birthrates, and
contact hospitals that had the most problems with SIDS (sudden infant death
syndrome). This logic most closely approximates which of the following methods
listed below?

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

61. One method for determining market size estimates takes the variable of interest (such
as market size) and relates it to a set of predictor variables (indicators closely related
to demand). This method would be best described as being which of the following?

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

62. If a researcher were to take ten Central and Eastern European countries where
per capita income and automobile ownership by per capita were known, trying to
find the overall picture of market size for the market could probably be done by
using which of the following methods?

a. analogy method
b. Latin square
c. trade audit
d. chain ratio method
e. cross-sectional regression analysis

63. Point-of-sale (POS) store scanners obtain sales movement data from
the _____________________ of retail outlets.

a. checkout scanner tapes
b. company headquarter
c. regional warehouses
d. international warehouses
e. none of the above

64. The emergence of _________________ data, coupled with rapid developments in
computer hardware and software has led to a revolution in market research.

a. the Internet
b. scanner
c. cost efficient
d. mail-in rebate
e. direct-feedback

65. Innovations in marketing decision support systems have spurred several major
developments in the marketing area. One of most dramatic has been:

a. the shift from mass to micro marketing.
b. the shift from a demand to a supply economy.
c. the fact that everyone now has a personal computer.
d. the overcrowding of the Internet.
e. home shopping on the Internet.

66. Scanning data are also increasingly used for ________________________.

a. sample management
b. electronic management
c. the Internet management
d. category management
c. supply management

67. With respect to standardization of research results, even when dealing with cross-
country marketing research, which of the following entities usually desires
standardization of data collection, sampling procedures, and survey instruments?

a. the local government
b. the local research agency
c. the local subsidiary
d. the home office
e. the home research agency

68. Two approaches are common in global marketing research:

a. Emic and ethic.
b. Emic and etic.
c. Emic and eco-centric.
d. Emic and geo-centric.
e. None of the above.

69. In the area of multicountry research coordination, the __________________
focuses on the peculiarities of each country.

a. coordination school
b. delegation school
c. etic school
d. planning school
e. emic school

70. In the area of multicountry research coordination, the __________________
focuses on the universal behavior and attitudinal traits.

a. coordination school
b. delegation school
c. etic school
d. planning school
e. emic school

71. In cross-cultural market research, the need for comparability favors the
___________________.

a. coordination school
b. delegation school
c. etic school
d. planning school
e. emic school

72. Internet surveys are becoming more popular in international research. Which of the following is NOT an advantage of such surveys?
a. larger sample sizes are easier to obtain
b. internet access in all countries
c. lower costs
d. anonymity
e. speedy response times

73. Which of the following would be problematic in using the Internet in global research?
a. obtaining a representative sample
b. download time for website pages
c. incorrect e-mail addresses
d. poor response rates
e. all of the above

74. One should be concerned about choosing a local agency for marketing research because:
a. local agencies understand cultural nuance better
b. they might lack the expertise for state-of-the art research
c. they may not be trustworthy with secrets
d. local agencies are relatively inexpensive
e. both b and c

True/False Short Answer

75. “Test, test, test” is a maxim that marketers should never forget.

76. Procedures and methods that are followed to conduct global marketing research
are very different from those used to conduct domestic research.

77. The first step in the marketing research process is described as
_________________________.

78. Any research effort starts off with a precise definition of who the marketer wants to
research.

79. Today researchers have found that sophisticated analytical tools will compensate for
inaccuracies in problem definition.

80. Local subsidiaries should not be consulted at every step of the research process.

81. To gain familiarity with a foreign environment, one can undertake an omnibus survey.

82. _____________ data are collected specifically for the purpose of the research study.

83. If a company were to go to JETRO (the Japanese External Trade Organization) for
data on exporting to Japan, they would be engaging in a _______________ data
search.

84. OECD stands for ________________________________________.

85. In the area of age of data, the frequency of census does not vary from country to
country.

86. With respect to comparability of data, ________________ equivalence refers to the
degree to which similar activities or products in different countries fulfill similar
functions.

87. Focus groups normally include 30-40 people.

88. A __________________ is a loosely structured free-flowing discussion among a
small group of target customers facilitated by a professional moderator.

89. One of the procedures used in practice to avoid sloppy translation of questionnaires
is forward-translation.

90. Using the “Funny Faces Scale” would be one way to overcome literacy problems
among developing countries in answering marketing research questionnaires.

91. Latin Americans tend to use the low end of the funny faces.

92. There are various methods for estimating market size. The _________________
method starts by picking a country that is at the same stage of economic development
as the country of interest and for which the market size is known.

93. The chain ratio method starts with a very rough base-number as an estimate for the
market size.

94. Cross-sectional regression analysis do not produce market size estimates.

95. In the area of multicountry research coordination, the __________________
focuses on the peculiarities of each country.

96. In the area of multicountry research coordination, the __________________
focuses on the universal behavior and attitudinal traits.

Essay

97. List the stages of the marketing research process. What is considered the most important step?

98. Discuss the function, purpose, limitations, and benefits of omnibus surveys.

99. What are the generally accepted problems associated with collecting and using secondary data research?

100. Discuss the major issues that a marketing researcher would want to consider for focus group discussions in an international market environment.

101. List the four primary methods of estimating market size. Discuss why market size estimates may differ depending on the method being used. How can such differences be reconciled? Which method do you think is the best? Explain your reasoning.

Chapter 7

Multiple Choice

1. Variation in customer needs is the primary reason for ____________________.

a. market segmentation.
b. product segmentation.
c. country segmentation.
d. quality segmentation.
e. sales segmentation.

2. The goal of market segmentation is to break down the market for a product or a
service into different groups of consumers so the firm can:

a. tailor its marketing mix to each individual segment.
b. make the sales job easier.
c. offer a customized product to every consumer.
d. offer a standard product to every consumer.
e. make more money.

3. Market segmentation is a logical outgrowth of:

a. the demand function.
b. the supply function.
c. efficiency in inventory control.
d. the marketing concept.
e. the product life cycle.

4. Which of the following is NOT a property that segments ideally should possess?

a. Identifiable.
b. Sizable.
c. Defensible.
d. Accessible.
e. Actionable.

5. With respect to properties that an international market segment should ideally possess,
the _________________ property is easily met for the target country when the
researcher examines socioeconomic variables (such as per capita income).

a. identifiable
b. sizable
c. defensible
d. accessible
e. actionable

6. With respect to properties that an international market segment should ideally possess,
the ____________________ property is important when the target country has
differences in the quality of the media infrastructure (such as the absence of
commercial television).

a. identifiable
b. sizable
c. stable
d. accessible
e. actionable

7. With respect to properties that an international market segment should ideally possess,
the ____________________ property is important (for market segmentation to
be meaningful) when effective marketing programs involving the 4 Ps can be
developed to evoke the desired response from the target segment.

a. measurable
b. sizable
c. responsive
d. accessible
e. actionable

8. ______________________ plays a major role in global marketing research.

a. Business segmentation
b. Quality segmentation
c. Firm segmentation
d. Country segmentation
e. Local segmentation

9. All of the following are reasons for international marketers to implement international
market segmentation EXCEPT:

a. country screening.
b. government mandate.
c. global market research.
d. positioning strategy.
e. entry decisions.

10. When market analysts examine indicators and classify countries into consideration
piles (based on some criteria) that are doing __________________________.

a. country screening
b. government research
c. global market research
d. positioning strategy
e. country quadrant positioning

11. Given the sheer number of countries in which many companies operate, doing
marketing research in each one of them is often inefficient. One approach to
reduce this problem is to narrow the list of those countries that might be examined by
grouping prospective markets into _____________________ countries.

a. financial categories for
b. clusters of homogeneous
c. clusters of heterogeneous
d. dissimilar qualifiers for
e. statistical tracts for

12. Cadbury-Schweppes was confident about launching Schweppes tonic water in
Brazil, given that the beverage had done well in culturally similar countries such
as Mexico. This would be an example of which of the following reasons why
international marketers implement international market segmentation?

a. country screening.
b. government mandate.
c. global market research.
d. positioning strategy.
e. entry decisions.

13. Cathay Pacific (a Hong Kong based airline carrier) recently wanted to increase
services to its Asian customers. It added a wide variety of Asian meals and
entertainment and introduced a new advertising slogan “The Heart of Asia.” This
would be an example of which of the following reasons why international marketers
implement international market segmentation?

a. country screening.
b. government mandate.
c. global market research.
d. positioning strategy.
e. entry decisions.

14. A persistent problem faced by international marketers is how to strike the balance
between standardization and customization. Using international marketing
segmentation to shed some light on this issue would be an example of which of the
following reasons why international marketers implement international market
segmentation?

a. country screening.
b. marketing mix policy.
c. global market research.
d. positioning strategy.
e. entry decisions.

15. A persistent problem faced by international marketers is how to strike the balance
between __________________________________.

a. standardization and generalization.
b. standardization and globalization.
c. standardization and customization.
d. standardization and positioning strategies.
e. standardization and marketing mix.

16. In a “country-as segment or aggregate segmentation,” countries are classified on a
______________ dimension or on a set of _____________dimensions.

a. single, multiple
b. single, three
c. single, five
d. single, eight
e. single, nine

17. In disaggregate international consumer segmentation, the focus is on
________consumer.

a. one
b. two
c. four
d. six
e. eight

18. Another name for universal segments is:

a. local.
b. regional.
c. transnational.
d. global.
e. multi-regional.

19. When Nokia used a global campaign to promote their new product (Nokia 900 Communicator) that combined phone, fax, e-mail, and Internet functions with the slogan “Everything. Everywhere,” they were appealing to a(n) ______________________ segment.

a. diverse
b. universal
c. combination
d. customized
e. international

20. When marketers use a(n) _________________ segment, they focus on local
segments that differ from country to country.

a. unique/diverse
b. universal
c. combination
d. customized
e. international

21. When Canon (a camera manufacturer) sold its AE-1 camera to young replacement
buyers in Japan and upscale first-time camera (35 mm single-lens reflex) buyers,
they were probably pursuing a(n) _________________________ segment policy.

a. diverse
b. universal
c. combination
d. customized
e. international

22. The first step in doing international market segmentation is deciding:

a. which criteria to use in the task.
b. which criteria to fund.
c. which customers must be evaluated.
d. how best to spend research funds.
e. none of the above.

23. According to Hakuhodo Inc., one of Japan’s biggest ad agencies, Asian women fall in to five categories. The following list contains which correct self-perceptions?

a. good students.
b. my big world.
c. thrifty shoppers.
d. family-oriented.
e. happy as I am.

24. ____________________ variables are among the most popular segmentation criteria:

a. Demographic
b. Geographic
c. Psychographic
d. Consumption
e. Lifestyle

25. Which of the following bases would probably be in use if a researcher were
examining population size, age structure, urbanization degree, and ethnic
composition?

a. psychographics.
b. socioeconomic variables.
c. culture.
d. political conditions.
e. demographics.

26. PPP is an acronym for:

a. people power parity.
b. purchasing power parity.
c. planning power parity.
d. purpose power parity.
e. positioning power parity.

27. All of the following are shortcomings of standard “per-capita income” segmentation
processes EXCEPT:

a. monetization of transactions within a country.
b. not knowing how much a household can buy.
c. gray and black sectors of the economy being accounted for.
d. income disparities.
e. a huge middle class.

28. __________________ sectors of the economy are transactions that arise outside the legitimate sector of a country’s economy.

a. Gray and black
b. Gray and white
c. Gray and blue
d. Gray and green
e. Gray and yellow

29. Another alternative to analyze buying power in a set of countries is via
_________________________.

a. demographic strata analysis
b. geographic strata analysis
c. psychographic strata analysis
d. socioeconomic strata analysis (SES)
e. none of the above

30. ___________________ publishes PPP statistics every year.

a. The World Bank
b. The International Monetary Fund
c. The World Trade Organization
d. The European Union
e. none of the above

31. The Human Development Index is published by the ____________________.

a. United Nations
b. World Bank
c. IMF
d. Asian Development Bank
e. African Development Bank

32. Behavior segmentation criteria includes the following criteria EXCEPT:

a. brand/supplier loyalty.
b. brand equity.
c. usage rate.
d. product penetration.
e. benefits sought.

33. Lifestyle segmentation is popular in __________________________.

a. manufacturing circles
b. finance circles
c. distribution circles
d. management circles
e. advertising circles

34. ______________________ is very popular in advertising circles.

a. Household segmentation
b. Lifestyle segmentation
c. Monetary segmentation
d. Fiscal segmentation
e. Economic segmentation

35. The Roper Consulting Valuescope study on lifestyle segmentation is based on the
following global values segments EXCEPT:

a. achievers.
b. traditionals.
c. power seekers.
d. nurturers.
e. hedonists.

36. According to the Roper Consulting Valuescope study on lifestyle segmentation,
_______________ are very concerned about social issues.

a. achievers
b. traditionals
c. nurturers
d. hedonists
e. none of the above

37. According to the Roper Consulting Valuescope study on lifestyle segmentation,
_______________ are very concerned about family and friends.

a. achievers
b. traditionals
c. nurturers
d. hedonists
e. none of the above

38. According to the Roper Consulting Valuescope study on lifestyle segmentation,
_______________ are very concerned about status.

a. achievers
b. traditionals
c. nurturers
d. hedonists
e. none of the above

39. According to the Roper Consulting Valuescope study on lifestyle segmentation,
_______________ are looking for new experiences.

a. achievers
b. traditionals
c. nurturers
d. hedonists
e. none of the above

40. Value-based segmentation schemes are not always ________________.

a. profitable
b. collectable
c. actionable
d. measurable
e. none of the above

41. ______________________ are not stable, since values typically change over time.

a. Value segments
b. Political segments
c. Economic segments
d. International segments
e. Global segments

42. According to the text, some marketing scholars refer to __________________ as
the fifth P (next to product, price, promotion, and place) because of its importance in
target marketing.

a. power
b. planning
c. positioning
d. purchasing
e. people

43. In the international market segmentation game, developing a positioning theme
involves the quest for a:

a. large segment.
b. profitable segment.
c. unique selling proposition (USP).
d. strong manager.
e. a friendly host government.

44. Within the arena of positioning strategy, the battle is for:

a. the mind of your target customer.
b. the high ground.
c. the new territory.
d. the competition’s heartland.
e. the best market share.

45. The formulation of positioning strategy includes the following EXCEPT:

a. identify the relevant set of competing products or brands.
b. determine current perceptions held by consumers about the products.
c. develop possible positioning themes.
d. develop a uniform positioning strategy for every brand in the company.
e. screen the positioning alternatives and select the most appealing one.

46. Two positioning strategies available to international marketers include:

a. uniform and computerized positioning strategies.
b. uniform and regional positioning strategies.
c. universal and localized positioning strategies.
d. uniform and localized positioning strategies.
e. none of the above.

47. According to the textbook, Samsung, a major South Korean consumer electronics
manufacturer, intended to take the world number-one position in all its main product
markets by 2005. If we apply the concept of international positioning strategies,
Samsung is seeking which of the following positioning strategies:

a. local positioning strategy.
b. regional positioning strategy.
c. ethnocentric positioning strategy.
d. polycentric positioning strategy.
e. uniform positioning strategy.

48. In the area of international positioning, ___________________ themes often run the
risk of being bland and not very inspired.

a. external
b. universal
c. internal
d. local
e. none of the above

49. The “global citizen” theme encourages:

a. local positioning.
b. regional positioning.
c. bi-lateral positioning.
d. universal positioning.
e. none of the above.

50. If the firm decides to opt for different segments on a country-by-country basis, the
norm is to also __________________ the positioning appeals.

a. externalize
b. localize
c. internalize
d. globalize
e. none of the above

51. Very rarely do ______________________ themes work globally.

a. positioning
b. psychograhic
c. demographic
d. geographic
e. segmentation

52. A special case where universal positioning clearly makes sense is the ___________.

a. regional citizen
b. global citizen
c. European citizen
d. Asian citizen
e. none of the above

53. Appeals that work in one culture do not necessarily work in others because of the
following reasons EXCEPT:

a. human resources.
b. cultural characteristics.
c. buying power.
d. competitive climate.
e. product life cycle stage.

54. Land Rover is an example of a brand where ________________ positioning is hard to
implement.

a. transnational
b. European
c. global
d. local
e. regional

55. Values tend to be:

a. material bound
b. culture bound
c. language bound
d. time bound
e. none of the above

56. GCCP stands for ___________________________.

a. global consumer culture protocol
b. global consumer culture positioning
c. global consumer culture planning
d. global consumer culture perception
e. global consumer culture psychology

57. FCCP stands for ___________________________.

a. foreign consumer culture positioning
b. fast consumer culture positioning
c. financial consumer culture positioning
d. French consumer culture positioning
e. none of the above

58. LCCP stands for ___________________________.

a. legal consumer culture positioning
b. longitudinal consumer culture positioning
c. local consumer culture positioning
d. labor consumer culture positioning
e. none of the above

59. A firm’s positioning strategy depends on the following factors EXCEPT:

a. strategic alliances.
b. target market.
c. product category.
d. positioning approach.
e. economic development.

60. In emerging markets that are still in an early stage of economic development, a ___________ approach might be more beneficial than ______________.

a. GCCP; UCCP
b. GCCP; NCCP
c. GCCP; XCCP
d. GCCP; LCCP
e. none of the above

61. Sometimes local brands fight it out with global brands by using a _____________
strategy.

a. GCCP
b. LCCP
c. FCCP or LCCP
d. GCCP or LCCP
e. GCCP or FCCP

APPENDIX

62. ________________ is an umbrella term that embraces a collection of statistical
procedures for dividing objects into groups.

a. The mean
b. The median
c. Cluster analysis
d. Correlation analysis
e. Regression analysis

63. With respect to comparing country segmentation (classifying countries into groups),
when only one segmentation tool is used, the researcher could:

a. simply compute the mean or median and split the countries into two groups.
b. simply compute chi-square and look for differences.
c. use cluster analysis.
d. use correlation analysis.
e. use nonparametric statistics.

64. If the researcher uses ____________________ to study relationships between
countries, they assume that there exists a relationship between a response variable
(Y) and one or more so-called predictor variables (X).

a. the mean
b. the median
c. cluster analysis
d. Latin square design analysis
e. regression analysis

65. Data in the European market was gathered on the penetration of microwave ovens.
The data collected consisted of three potential segmentation variables (income,
participation of women in the labor force, and per-capita consumption of frozen
foods). Which of the following methods would probably be used to obtain a
picture of the segments for microwave usage?

a. the mean
b. the median
c. random block design analysis
d. Latin square design analysis
e. regression analysis

66. The ____________ tells us whether or not predictor variable has a “significant”
(statistically speaking) relationship with the dependent variable.

a. a-ratio
b. b-ratio
c. t-ratio
d. m-ratio
e. n-ratio

67. The higher the _____value, the better the ability of your regression model to predict
your data.

a. R2
b. A2
c. G2
d. M2
e. N2

True/False Short Answer

68. Variation in customer needs is the primary motive for market segmentation.

69. The goal of market segmentation is to ensure profit for all product categories and
promote customization to meet customer needs.

70. The requirements for effective market segmentation in the domestic environment
are significantly different than those of the international environment.

71. The size of segments (in the international environment) based on cultural or
lifestyle indicators are typically easy to gauge and to factor into overall planning.

72. Environmental changes or shifting consumer preferences often force a firm to
rethink its positioning strategy.

73. In the past, marketers have almost always chosen the strategy of standardization over
the strategy of customization.

74. In a “country-as-segments or aggregate segmentation,” countries are classified only on
a single dimension.

75. Global segments are also called ________________ segments.

76. In most instances, there is no mixture of universal, regional, and country-specific market segments.

77. _________________ variables are among the most popular segmentation criteria.

78. Consumer wealth or a country level of economic development has no impact on consumption patterns.

79. Local brands do not enjoy a pioneering advantage by the fact of being the first one
in the market.

80. Emotional appeals (e.g. lifestyle positioning) are usually difficult to translate into a
universal theme.

81. GCCP stands for:

82. Sometimes local brands fight it out with global brands by using GCCP or LCCP.

83. _______________ is an umbrella term that embraces a collection of statistical
procedures for dividing objects into groups.

84. The ________ tells us whether or not predictor variable has a “significant”
(statistically speaking) relationship with the dependent variable.

85. The lower the R2 value, the better the ability of the regression model to predict
the data.

Essay

86. The requirements for effective market segmentation in a domestic marketing context also apply in international market segmentation. List and briefly describe the properties that these segments should ideally possess.

87. Discuss the major reasons why international marketers implement international market segmentation.

88. Comment on when marketers should pursue universal/global segments, regional segments, and unique/diverse segments.

89. Socioeconomic variables are among the most important bases to be considered when segmenting markets. Comment on the major issues that might be faced when making the decision on whether to use per capita GDP or GNP as a country segmentation criterion.

90. For many years researchers and academics believed that lifestyle segmentation (which was often a very successful technique in a home country’s domestic market) was a valid segmentation technique. However, recently doubts have been raised. Discuss the weaknesses of lifestyle based segmentation schemes. Think of applications when lifestyle segmentation might be the most appropriate.

Chapter 8

Multiple Choice

1. In today’s global business, country borders have become increasingly irrelevant. Of all
the forces chipping away at those boundaries, perhaps the most important is the
__________________________.

a. flow of competition
b. flow of power
c. flow of education
d. flow of intellectual capital
e. flow of information

2. People in India watching CNN and Star TV now know instantaneously what is
happening in the world. Such information access creates demand that would not have
existed before and it restricts the power of governments to influence consumer choice.
This would is an example of:

a. stable demand structure in the international marketplace.
b. the explosion of information technology that has changed global competition.
c. a growing travel industry.
d. how the Japanese are changing global competition.
e. how the government’s of the world distrust the mass media.

3. Geographical boundaries and distances have become less of a constraint in designing
strategies for the global market because of:

a. a stable demand structure in the international marketplace.
b. a growing travel industry.
c. the revived role of the United Nations.
d. the explosion of information technology that has changed global competition.
e. the expanding role of government in international trade.

4. Since the 1980s, the explosion of _________________ has forever changed the
nature of competition around the world. Geographical distance has become
increasingly less relevant in designing global strategy.

a. new product designs
b. genetic breakthroughs
c. information technology
d. fuel efficient automobiles
e. interest in the stock market

5. Real time management:
a. can allow companies to make better decisions.
b. will cause even greater problems if information is not shared.
c. has been made possible with breakthroughs in information technology.
d. is too expensive to be truly useful.
e. a, b and c are all correct.

6. In 1995, only 4 percent of Americans used the Internet every day. In July 2012, the
figure was ____________.

a. 48 percent
b. 58 percent
c. 68 percent
d. 78 percent
e. 88 percent

7. Which of these is NOT an advantage of online communication?
a. sales reps are in constant contact with their offices and customers
b. information can be transmitted instantly
c. sequential problem solution
d. customers can seek assistance 24/7 from around the globe
e. All of the above are pluses.

8. _______________ has become one of the largest Internet markets.

a. Ireland
b. China
c. Singapore
d. Taiwan
e. None of the above

9. Product diffusion times in this century have:
a. increased—there are more people in the world, so it takes longer.
b. stayed the same as in the 1900s.
c. decreased, but only in the developed nations.
d. decreased mostly for high tech products.
e. increased for all products because the choices are more numerous.

10. The chief executive officer of a firm can know the previous day’s sales down to a
penny because of the increased capacity of information technology. This leads to __________.

a. lags
b. real-time management
c. cyclical trends
d. confusion in strategic planning
e. None of the above

11. Top retailers such as Wal-Mart and Toys “R” Us get information from their stores
around the world every two hours via telecommunications. This would be an example
of ______________________ in action.

a. productivity management
b. trend management
c. a very costly procedure
d. management by objectives
e. real-time management

12. Ordering and purchasing components, which was once a cumbersome, time-
consuming process, is now done by _________________, reducing the time involved
in such transactions from weeks to days and eliminating a considerable amount of
paperwork.

a. Electronic Data Systems (EDS)
b. Purchasing International Network (PIN)
c. Electronic Data Interchange (EDI)
d. Global Buying Network (GBN)
e. Internet Buying Network (IBN)

13. Field representatives using laptop computers, faxes, and satellite uplinks to
communicate with the field and the home office are all examples of:

a. internet buying.
b. intranet buying.
c. extranet data exchange.
d. on-line communication.
e. nonpersonal communication.

14. An increasing number of multinational firms have begun to use internal Web
servers on the Internet to facilitate communications and transactions among
employees, suppliers, independent contractors, and distributors. This would be
an example of which of the following organizational forms?

a. vertical
b. horizontal
c. matrix
d. consensus
e. e-company

15. One of the major impacts of information technology is:

a. lengthened product life cycles.
b. dispersed product life cycles.
c. vertical product life cycles
d. horizontal product life cycles.
e. shorter product life cycles.

16. A contributing factor in the globalization of markets is the spread of __________
as the international language of international business.

a. German
b. English
c. French
d. Russian
e. Hindi

17. Because of its complexities, ____________________ development presents one of
the stiffest challenges for international managers.

a. local strategy
b. regional strategy
c. multidomestic strategy
d. transnational strategy
e. global strategy

18. Which of the following would NOT be one of the factors that has persuaded many
multinational firms to pursue true global strategies?

a. global industry.
b. competitive structure.
c. hypercompetition.
d. interdependency.
e. supply and demand.

19. ____________________ are defined as those industries where a firm’s competitive
position in one country is affected by its position in other countries, and vice versa.

a. Interdependent industries
b. Global industries
c. Transcontinental industries
d. Hypercompetitive industries
e. Multidomestic industries

20. By 2014, Honda boosted its North American production capacity by 40 percent. This
would be an example of a firm that sees itself as being in a(n):

a. hybrid industry.
b. global industry.
c. transcontinental industry.
d. supercompetitive industry.
e. expert industry.

21. Industry globalization forces include the following EXCEPT:

a. cost forces.
b. market forces.
c. social forces.
d. government forces.
e. competitive forces.

22. Market globalization forces include the following EXCEPT:

a. converging per capita incomes.
b. global customers and channels.
c. global advertising.
d. rich consumers in emerging markets.
e. manufacturing.

23. With respect to industry globalization forces, ________________ depend on the
nature of customer behavior and the structure of channels of distribution.

a. cost forces
b. competitive forces
c. quality forces
d. government forces
e. market forces

24. All of the following are examples of market forces EXCEPT:

a. common customer needs.
b. global customers and channels.
c. transferable marketing.
d. experience curves.
e. world brands.

25. Which of the following would be considered a market driver with respect to
industry globalization forces?

a. favorable logistics.
b. steep experience curves.
c. global economics of scale and scope.
d. global sourcing efficiencies.
e. lifestyle convergence.

26. Lead markets represent countries where innovations in particular industries are
prone to take place. All of the following are examples of lead countries EXCEPT:

a. the United States in computer software.
b. Japan in consumer electronics.
c. Germany for industrial control equipment.
d. France for fashion clothing and perfume.
e. Hong Kong for computer hardware.

27. Cost globalization forces include the following EXCEPT:

a. political parties of host countries.
b. global economies of scale and scope.
c. accelerating technology innovations.
d. shorter product life cycle.
e. high product development costs.

28. ___________________ depend on the economics of the business. These forces
particularly affect production location decisions.

a. Cost forces
b. Competitive forces
c. Quality forces
d. Government forces
e. Market forces

29. All of the following are examples of cost forces EXCEPT:

a. advances in transportation.
b. low labor costs in newly industrializing countries.
c. global economics of scale and scope.
d. flexible manufacturing.
e. transferable marketing.

30. Differences in country costs, high product development costs, and fast-changing
technology would all be examples of what kind of industry globalization forces?

a. cost forces
b. competitive forces
c. quality forces
d. government forces
e. market forces

31. Which of the following would NOT be considered a competitive driver with respect to industry globalization forces?

a. more countries as key battlegrounds
b. globalized financial markets
c. interdependence in some industries
d. establishment of world brands
e. increase in global strategic alliances

32. Government globalization forces include the following EXCEPT:

a. favorable trade policies.
b. industry deregulation.
c. privatization
d. electronic exchanges.
e. open market economies.

33. Import tariffs and quotas, nontariff barriers, export subsidies, and local content
requirements are all examples of which kind of industry globalization driver?

a. cost forces
b. competitive forces
c. quality forces
d. government forces
e. market forces

34. ___________________ raise the globalization potential of their industry and spur
the need for a response on the global strategy level.

a. Cost forces
b. Competitive forces
c. Quality forces
d. Government forces
e. Market forces

35. All of the following might be considered as being competitive globalization forces
EXCEPT:

a. high imports and exports.
b. compatible technical standards.
c. competitors from different continents and countries.
d. interdependent countries.
e. globalized competitors.

36. In a(an) ___________________ strategy, a firm manages its international activities
like a portfolio.

a. interdependent strategy
b. global strategy
c. transcontinental strategy
d. supercompetitive strategy
e. multidomestic strategy

37. In a(an) ______________________ strategy, a firm integrates the activities of a firm
on a worldwide basis to capture the linkages among countries and to treat the entire
world as a single, borderless market.

a. interdependent strategy
b. global strategy
c. transcontinental strategy
d. supercompetitive strategy
e. multidomestic strategy

38. Firms using a ______________ strategy focus exclusively on a highly
specialized segment of the market.

a. niche
b. supply
c. demand
d. regional
e. global

39. In global competition, ______________________ companies may be vulnerable to
large-scale operators
a. demand-oriented
b. niche-oriented
c. supply-oriented
d. technology-oriented
e. consumer-oriented

40. A company that uses flexible manufacturing, economies of scale, and perhaps limited product offerings is a _________.
a. loser
b. follower
c. cost leader
d. niche player
e. product differentiator

41. A company that wishes to challenge a cost leader would probably use:
a. lower prices.
b. better services.
c. superior quality.
d. a wider variety of more unique product offerings.
e. b, c and d are all correct.

42. Which of the following poses the threat of the most profound change to an industry?
a. government intervention
b. threat of substitute products
c. bargaining power of suppliers
d. hypercompetition
e. bargaining power of channel members

43. In today’s world, ________________________ also comes from suppliers and
customers, as well as substitute products or services.

a. indirect competition
b. hyper competition
c. unique competition
d. all of the above
e. none of the above

44. BMW of Germany and Volvo of Sweden are examples of companies using
a(n) ______________ strategy to achieve success.

a. product differentiation
b. cost leader
c. price leader
d. innovator
e. niche

45. Porsche and Saab maintain their competitive strengths in the high-power sports car
enthusiast category by following a(n) ___________________ strategy.

a. product differentiation
b. cost leader
c. price leader
d. innovator
e. niche

46. The multidimensional nature of competitive industry structure includes the following
EXCEPT:

a. chaebol.
b. bargaining power of suppliers.
c. threat of new entrants.
d. threat of substitute products.
e. bargaining power of buyers.

47. ________________________ determine the rivalry among existing firms.

a. New entrants to the market
b. The bargaining power of suppliers
c. The bargaining power of buyers
d. The threat of substitute products or services
e. Industry competitors

48. ________________________ can be deterred by strong entry barriers.

a. Potential new entrants to the market
b. The bargaining power of suppliers
c. The bargaining power of buyers
d. The threat of substitute products or services
e. Existing rivals or competitors

49. The strength of Intel as a dominant producer of microprocessors would be an example
of ______________________ in the PC industry.

a. strength of potential new entrants to the market
b. the bargaining power of suppliers
c. the bargaining power of buyers
d. the threat of substitute products or services
e. existing rivals or competitors

50. In a hypercompetitive environment, a firm competes on the basis of the following
factors EXCEPT:

a. suppliers.
b. know-how.
c. price.
d. quality.
e. timing.

51. The concept of creative destruction assumes continuous change. This
is a basic assumption behind the concept of __________________ , where
the firm’s focus is on disrupting the market.

a. low differentiation
b. cost leader
c. price leader
d. innovator
e. hypercompetition

52. In a(an) __________________ environment, a firm competes on the basis of price,
quality, timing and know-how, creating strongholds in the markets in which it
operates, and financial resources to outlast one’s competitors.

a. product differentiation
b. cost leader
c. price leader
d. innovator
e. hypercompetition

53. Estee Lauder has successfully responded to the needs of different market. This strategy is influenced by:

a. mail-focused approach.
b. linear-focused approach.
c. game-focused approach.
d. customer-focused approach.
e. Internet-focused approach.

54. Another aspect of global strategy is _________________________:

a. interdependency.
b. limited expansion.
c. backward expansion.
d. forward movement.
e. backward movement.

55. Which of the following support the action of being first-mover?
a. infrastructure is there for you to develop as you wish
b. cutting edge technology within the company
c. uncertainties of customer desires
d. once in, you can rest on your laurels as market leader
e. none of the above

56. What are some of the possible outcomes of interdependency?
a. reliance on other firms for supplies or technology
b. relocating in foreign markets because of government intervention
c. component standardization
d. technology intensity
e. all of the above

57. According to the textbook, benefits of global marketing strategy may include four
factors:

a. cost reduction, improved products, customer preference, and competitive advantage.
b. cost reduction, improved products, customer preference, and raw materials.
c. cost reduction, improved products, customer preference, and intellectual capital.
d. cost reduction, improved products, customer preference, and transportation.
e. none of the above.

58. Which of the following are ways that cost reduction can be achieved by following
a program of global marketing?

a. standardized packaging.
b. customized products.
c. using old products from one market for another.
d. hiring more workers.
e. eliminating warranties.

59. Traditionally, ___________________ has been concentrated in the headquarters
country of a global company.

a. hiring and firing
b. human resources
c. manufacturing
d. research and development
e. none of the above

60. One of the chief barriers or limits to global marketing is the:

a. lack of respect for foreigners.
b. diversity of local environments.
c. amount of poor people in the world.
d. desire for affluent markets.
e. government control of markets.

61. The textbook discusses four different ways of developing a global product policy, all of which are generally considered an effective means to streamline manufacturing EXCEPT:

a. core component standardization.
b. product design families.
c. universal product with all features.
d. universal product with different positioning.
e. local product with core components.

62. Successful ________________ policy requires development of universal products,
or products that demand no more than a cosmetic change for adaptation to
differing local needs and use conditions.

a. core product
b. global product
c. regional product
d. quality product
e. local product with core components

63. Which of the following is one of the four ways of developing a global product
policy to streamline manufacturing (thus lowering manufacturing cost without
sacrificing marketing flexibility)?

a. dynamic service packages
b. multiple source options
c. universal electrification of components
d. core component standardization
e. universal prices.

64. Toyota Motor Company offers several car models based on a similar family
design concept, ranging from Lexus models to Toyota Avalon, Camrys, and
Corollas. This is an example of:

a. brand design families.
b. high-tech design families.
c. hybrid design families.
d. unique design families.
e. product design families.

65. All of the following are examples of global product policies EXCEPT:

a. core component standardization.
b. core component miniaturization.
c. product design families.
d. universal product with all features.
e. universal product with different positioning.

66. Seiko, a Japanese watchmaker, offers a wide range of designs and models, but
they are based on only a handful of different operating mechanisms. This
would be an example of which of the global product policies listed below?

a. core component standardization
b. core component miniaturization
c. product design families
d. universal product with all features
e. universal product with different positioning

67. Electrolux, a Swedish appliance manufacturer, has adopted which of the
following product policies when offering different products under four different
brand names, but using the same basic designs?

a. core component standardization
b. core component miniaturization
c. product design families
d. universal product with all features
e. universal product with different positioning

68. In the area of universal product with different positioning, a
__________________ product can be developed with different market segments
in mind.

a. national
b. multinational
c. regional
d. local
e. universal

69. A key to pursuing a product policy of product design families (or product
design standardization) lies in:

a. good engineering.
b. quality control.
c. good die-casts.
d. standardization of components.
e. standardization of labor.

70. When Canon designed its AE-1 camera and newer models, it built in a common
set of features that were demanded by global customers. This would be an
example of which of the following product policies?

a. core components standardization
b. core components miniaturization
c. product design families
d. universal product with all features
e. universal product with different positioning

71. When a universal product is developed with different market segments in mind,
it is an example of which of the following product policies?

a. core components standardization
b. core components miniaturization
c. product design families
d. universal product with all features
e. universal product with different positioning

72. In recent years, Honda has begun to market the Honda Accord around the world
by positioning it differently from country to country. The car, however, is
almost identical no matter which market it is sold in. This would be an example
of which of the following product policy options?

a. core components standardization
b. core components miniaturization
c. product design families
d. universal product with all features
e. universal product with different positioning

73. One of the real sources of Japanese inspiration and competitiveness is that they
excel in the management of the _________________ interface.

a. production/quality
b. marketing/R&D
c. purchasing/marketing
d. purchasing/outsourcing
e. budget/manufacturing

74. Research has shown that the marketplace has become a virtual ____________
for Japanese companies to gain production and marketing experience, as well as
to perfect technology.

a. human laboratory
b. marketing laboratory
c. psychological laboratory
d. R&D laboratory
e. promotions laboratory

75. Regional strategies can be defined as the _________________________________
in pursuit of regional production, branding, and distribution advantages.

a. cross-subsidization of market share battles
b. cross-harmonization of market share battles
c. cross-miniaturization of market share battles
d. cross-globalization of market share battles
e. none of the above

76. Multinational firms using profit gained in a market where they have a strong
competitive position to beef up their competitive position in a weak market is referred
to as the:

a. cross-exploration of markets.
b. cross-harmonization of markets.
c. cross-homogenization of markets.
d. cross-subsidization of markets.
e. none of the above.

77. A ___________________ is where unique local competition is nurturing product and
service standards to be adopted by the rest of the world over time.

a. lead market
b. slow market
c. backward market
d. grey market
e. black market

78. Japanese consumers fond of high-tech gadgets may even set the world standard for
gas pumps that come equipped with online service that offer motorists access to
weather forecasts and traffic information. This is an EXAMPLE of a:

a. grey market.
b. slow market.
c. backward market.
d. lead market.
e. black market.

79. In many Big Emerging Markets (BEMs), the ________________ is being created
because of rising income, purchasing power, and quality standards.

a. upper-class
b. forward-class
c. younger-class
d. middle-class
e. older-class

80. Local competitors in BEMs can thwart MNCs’ inroads with:
a. superior technology products.
b. better service.
c. cheaper, more durable goods.
d. a combination of b and c.
e. none of the above—BEM companies are doomed to fail.

81. One particularly useful technique in analyzing a firm’s competitive position relative
to its competitors is referred to as SWOT which stands for:

a. Strengths, Weaknesses, Organization, Total value.
b. Strengths, Weaknesses, Operations, Training.
c. Strengths, Weaknesses, Opportunities, Total costs.
d. Strengths, Weaknesses, Opportunities, Transfers.
e. Strengths, Weaknesses, Opportunities, Threats.

82. Bajaj is an Indian ____________ manufacturer.

a. scooter
b. bicycle
c. steel
d. high-tech
e. shoe

84. Jollibee Foods, a family-owned fast food company is from:

a. South Korea
b. China
c. Japan
d. the Philippines
e. Singapore

85. ______________ factors can be looked at as strengths or weaknesses.

a. External factors
b. Company factors
c. Global factors
d. Internal factors
e. Service factors

86. ____________________ factors can be looked at as opportunities or threats.

a. External factors
b. Company factors
c. Global factors
d. Internal factors
e. Service factors

True/False Short Answer

87. On a competitive map, financial, trading, and industrial activities across national
boundaries have rendered political borders increasingly irrelevant.

88. Information access creates demand that would not have existed before and it restricts
the power of governments to influence consumer choice.

89. Carrefour is a Swiss company.

90. Because of the complexity of international competition and markets, real-time
management is not practical for the modern executive seeking new competitive
weapons with which to compete.

91. EDI stands for:

92. ______________ forces depend on the nature of customer behavior and the
structure of channels of distribution.

93. Some common market forces are global economies of scale and scope and a steep
experience curve.

94. Cost forces depend on the _____________ of the business.

95. Favorable trade policies, deregulation of industry, and common marketing
regulations are examples of __________________ globalization forces.

96. ___________________ forces raise the globalization potential of their industry and
spur the need for a response on the global strategy levels.

97. Competitive globalization forces do not raise the globalization potential of
their industry.

98. Firms using a niche strategy do not focus on highly specialized segments.

99. _________________ competitors determine the rivalry among existing firms.

100. Potential entrants may change the rule of competition but can be deterred through
_______________________.

101. Intel is an example of how the bargaining power of _____________ can change
the structure of industries.

102. The basic premise of hypercompetition is the Schumpeterian view that the secret to
success is coordination of competition by negotiation, cooperation, and alliance.

103. Global strategy can help achieve the firm four major benefits which include: cost
reduction, improved products and program effectiveness, enhanced customer
preference, and increased _______________________.

104. Owning a Web site on the Internet and marketing to consumers is another way to reduce costs of conducting global marketing

105. Regionalization can also be defined as cross-subsidization.

106. There is a huge middle-class being developed in Big Emerging Markets (BEMs).

107. Consumers in BEMs are not aware of global products and global standards.

108. SWOT stands for strengths, opportunities, weaknesses and technology.

Essay

109. Identify and briefly discuss the various factors/forces which determine the globalization of potential industries. Indicate common examples of each.

110. What does the term “hypercompetition” mean? What are the various arenas of competition covered by this concept?

111. Relate the concepts of interdependency and standardization to one another. Indicate the strategic implications of the terms.

112. Characterize global marketing strategy. Indicate how it is a separate and distinct form of strategy.

113. Describe the benefits and limitations of global marketing strategy.