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FIN 534 Homework Set 5 – Latest Version

FIN 534 Homework Set 5 – Latest Version

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Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in the course shell. This homework assignment is worth 100 points.

Use the following information for Questions 1 and 2:

Boehm Corporation has had stable earnings growth of 8% a year for the past 10 years and in 2013 Boehm paid dividends of $2.6 million on net income of $9.8 million. However, in 2014 earnings are expected to jump to $12.6 million, and Boehm plans to invest $7.3 million in a plant expansion. This one-time unusual earnings growth won’t be maintained, though, and after 2014 Boehm will return to its previous 8% earnings growth rate. Its target debt ratio is 35%.

Calculate Boehm’s total dividends for 2014 under each of the following policies:

1. (a) Its 2014 dividend payment is set to force dividends to grow at the long-run growth rate in earnings.

(b) It continues the 2013 dividend payout ratio.

2. (a) It uses a pure residual policy with all distributions in the form of dividends (35% of the $7.3 million investment is financed with debt).

(b) It employs a regular-dividend-plus-extras policy, with the regular dividend being based on the long-run growth rate and the extra dividend being set according to the residual policy.

Use the following information for Questions 3 and 4:

Schweser Satellites Inc. produces satellite earth stations that sell for $100,000 each. The firm’s fixed costs, F, are $2 million, 50 earth stations are produced and sold each year, profits total $500,000, and the firm’s assets (all equity financed) are $5 million. The firm estimates that it can change its production process, adding $4 million to investment and $500,000 to fixed operating costs. This change will (1) reduce variable costs per unit by $10,000 and (2) increase output by 20 units, but (3) the sales price on all units will have to be lowered to $95,000 to permit sales of the additional output. The firm has tax loss

carryforwards that render its tax rate zero, its cost of equity is 16%, and it uses no debt.

3. What is the incremental profit? To get a rough idea of the project’s profitability, what is the project’s expected rate of return for the next year (defined as the incremental profit divided by the investment)? Should the firm make the investment? Why or why not?

4. Would the firm’s break-even point increase or decrease if it made the change?

FIN 534 Homework Set 4 – Latest Version

FIN 534 Homework Set 4 – Latest Version

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Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in the course shell. This homework assignment is worth 100 points.

Use the following information for Questions 1 through 3:

Assume you are presented with the following mutually exclusive investments whose expected net cash flows are as follows:

EXPECTED NET CASH FLOWS:
Year Project A Project B
0 −$400 −$650
1 −528 210
2 −219 210
3 −150 210
4 1,100 210
5 820 210
6 990 210
7 −325 210

1. (a) What is each project’s IRR?

(b) If each project’s cost of capital were 10%, which project, if either, should be selected? If the cost of capital were 17%, what would be the proper choice?

2. (a) What is each project’s MIRR at the cost of capital of 10%? At 17%? (Hint: Consider Period 7 as the end of Project B’s life.)

3. What is the crossover rate, and what is its significance?

Use the following information for Question 4:

The staff of Porter Manufacturing has estimated the following net after-tax cash flows and probabilities for a new manufacturing process:

Line 0 gives the cost of the process, Lines 1 through 5 give operating cash flows, and Line 5* contains the estimated salvage values. Porter’s cost of capital for an average-risk project is 10%.

Net After-Tax Cash Flows
Year P = 0.2 P = 0.6 P = 0.2
0 −$100,000 −$100,000 −$100,000
1 20,000 30,000 40,000
2 20,000 30,000 40,000
3 20,000 30,000 40,000
4 20,000 30,000 40,000
5 20,000 30,000 40,000
5* 0 20,000 30,000

4. Assume that the project has average risk. Find the project’s expected NPV. (Hint: Use expected values for the net cash flow in each year.)

FIN 534 Homework Set 3 – Latest Version

FIN 534 Homework Set 3 – Latest Version

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Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in the course shell. This homework assignment is worth 100 points.

Use the following information for questions 1 through 4:

The Goodman Industries’ and Landry Incorporated’s stock prices and dividends, along with the Market

Index, are shown below. Stock prices are reported for December 31 of each year, and dividends reflect those paid during the year. The market data are adjusted to include dividends.

Goodman Industries Landry Incorporated Market Index
Year Stock Price Dividend Stock Price Dividend Includes Dividends
2013 $25.88 $1.73 $73.13 $4.50 17495.97
2012 22.13 1.59 78.45 4.35 13178.55
2011 24.75 1.50 73.13 4.13 13019.97
2010 16.13 1.43 85.88 3.75 9651.05
2009 17.06 1.35 90.00 3.38 8403.42
2008 11.44 1.28 83.63 3.00 7058.96

1. Use the data given to calculate annual returns for Goodman, Landry, and the Market Index, and then calculate average annual returns for the two stocks and the index. (Hint: Remember, returns are calculated by subtracting the beginning price from the ending price to get the capital gain or loss, adding the dividend to the capital gain or loss, and then dividing the result by the beginning price. Assume that dividends are already included in the index. Also, you cannot calculate the rate of return for 2008 because you do not have 2007 data.)

2. Calculate the standard deviations of the returns for Goodman, Landry, and the Market Index. (Hint: Use the sample standard deviation formula given in the chapter, which corresponds to the STDEV function in Excel.)

3. What dividends do you expect for Goodman Industries stock over the next 3 years if you expect the dividend to grow at the rate of 5% per year for the next 3 years? In other words, calculate D1, D2, and D3. Note that D0 = $1.50.

4. Assume that Goodman Industries’ stock has a required return of 13%. You will use this required return rate to discount the dividends calculated earlier. If you plan to buy the stock, hold it for 3 years, and then sell it for $27.05, what is the most you should pay for it?

FIN 534 Homework Set 2 – Latest Version

FIN 534 Homework Set 2 – Latest Version

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Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in the course shell. This homework assignment is worth 100 points.

Assume that you are nearing graduation and have applied for a job with a local bank. The bank’s evaluation process requires you to take an examination that covers several financial analysis techniques.
Use the following information for Questions 1 through 2:

1. What is the present value of the following uneven cash flow stream −$50, $100, $75, and $50 at the end of Years 0 through 3? The appropriate interest rate is 10%, compounded annually.

2. Suppose that on January 1 you deposit $100 in an account that pays a nominal (or quoted) interest rate of 11.33463%, with interest added (compounded) daily. How much will you have in your account on October 1, or 9 months later?

Use the following information for Questions 3 and 4:

A firm issues a 10-year, $1,000 par value bond with a 10% annual coupon and a required rate of return is 10%.

3. What is the yield to maturity on a 10-year, 9% annual coupon, $1,000 par value bond that sells for $887.00? That sells for $1,134.20? What does a bond selling at a discount or at a premium tell you about the relationship between rd and the bond’s coupon rate?

4. What are the total return, the current yield, and the capital gains yield for the discount bond in Question #3 at $887.00? At $1,134.20? (Assume the bond is held to maturity and the company does not default on the bond.)

FIN 534 Homework Set 1 – Latest Version

FIN 534 – Homework Set 1 – Latest Version

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Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in the course shell. This homework assignment is worth 100 points.

Use the following information for Questions 1 through 4:

Assume that you recently graduated and have just reported to work as an investment advisor at the one of the firms on Wall Street. You have been presented and asked to review the following Income

Statement and Balance Sheets of one of the firm’s clients. Your boss has developed the following set of questions you must answer.

Income Statements and Balance Sheet

Balance Sheet 2012 2013 2014

Cash $9,000 $7,282 $14,000

Short-term investments 48,600 20,000 71,632

Accounts receivable 351,200 632,160 878,000

Inventories 715,200 1,287,360 1,716,480

Total current assets $1,124,000 $1,946,802 $2,680,112

Gross fixed assets 491,000 1,202,950 1,220,000

Less: Accumulated depreciation 146,200 263,160 383,160

Net fixed assets $344,800 $939,790 $836,840

Total assets $1,468,800 $2,886,592 $3,516,952

Liabilities and Equity

Accounts payable $145,600 $324,000 $359,800

Notes payable 200,000 720,000 300,000

Accruals 136,000 284,960 380,000

Total current liabilities $481,600 $1,328,960 $1,039,800

Long-term debt 323,432 1,000,000 500,000

Common stock (100,000 460,000 460,000 1,680,936
shares)

Retained earnings 203,768 97,632 296,216

Total equity $663,768 $557,632 $1,977,152

Total liabilities and equity $1,468,800 $2,886,592 $3,516,952

Income Statements 2012 2013 2014

Sales $3,432,000 $5,834,400 $7,035,600

Cost of goods sold except depr. 2,864,000 4,980,000 5,800,000

Depreciation and amortization 18,900 116,960 120,000

Other expenses 340,000 720,000 612,960

Total operating costs $3,222,900 $5,816,960 $6,532,960

EBIT $209,100 $17,440 $502,640

Interest expense 62,500 176,000 80,000

EBT $146,600 ($158,560) $422,640

Taxes (40%) 58,640 -63,424 169,056

Net income $87,960 ($95,136) $253,584

Other Data 2012 2013 2014

Stock price $8.50 $6.00 $12.17

Shares outstanding 100,000 100,000 250,000

EPS $0.88 ($0.95) $1.104

DPS $0.22 0.11 0.22

Tax rate 40% 40% 40%

Book value per share $6.64 $5.58 $7.909

Lease payments $40,000 $40,000 $40,000

Ratio Analysis 2012 2013 Industry
Average

Current 2.3 1.5 2.7

Quick 0.8 0.5 1.0

Inventory turnover 4 4 6.1

Days sales outstanding 37.3 39.6 32.0

Fixed assets turnover 10 6.2 7.0

Total assets turnover 2.3 2 2.5

Debt ratio 35.60% 59.60% 32.0%

Liabilities-to-assets ratio 54.80% 80.70% 50.0%

TIE 3.3 0.1 6.2

EBITDA coverage 2.6 0.8 8.0

Profit margin 2.60% −1.6% 3.6%

Basic earning power 14.20% 0.60% 17.8%

ROA 6.00% −3.3% 9.0%

ROE 13.30% −17.1% 17.9%

Price/Earnings (P/E) 9.7 −6.3 16.2

Price/Cash flow 8 27.5 7.6

Market/Book 1.3 1.1 2.9

1. 1. What is the free cash flow for 2014?

1. 2. Suppose Congress changed the tax laws so that Berndt’s depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow?

1. 3. Calculate the 2014 current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company’s liquidity position in 2013?

1. 4. Use the extended DuPont equation to provide a summary and overview of company’s financial condition as projected for 2014. What are the firm’s major strengths and weaknesses?

ACC 557 Week 1 Discussion Question – New

ACC 557 Week 1 Discussion Question – Strayer New

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Week 1 Discussion
“General Accounting Principles” Please respond to the following:
• Watch the video titled, “Bookkeeping” (5 min 46 s) from the lynda.com video series Accounting Fundamentals with Kay Stice and Jim Stice athttp://www.lynda.com/Business-Accounting-tutorials/Bookkeeping/158665/176132-4.html?org=strayer.edu. Next, consider the following statement: “Bookkeeping and accounting are the same.” In terms of your role in the provision of financial services, present data to support the accuracy of this statement and support your position.
• Watch the video titled “The Basic Accounting Equation” https://www.youtube.com/watch?v=cLG7K6Sq9K4 (6 min 33 s). Next, analyze the accounting equation as a concept that underpins the work of professional accountants and how an understanding of the equation can impact business decision making.

MKT 515 Week 11 Final Exam – Strayer University New

MKT/515 Week 11 Final Exam – Strayer New

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Chapter 9 Through 19

Chapter 9

Multiple Choice

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

28. Most companies start their international expansion with _________________.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

36. Cooperative exporting is also called:

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

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

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

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

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

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

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

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

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

41. Benefits of licensing include:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

True/False Short Answer

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

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

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

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

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

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

81. An example of a platform country is India.

82. An example of a growth country is China.

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

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

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

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

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

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

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

90. Contract manufacturing is also known as outsourcing.

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

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

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

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

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

96. Exiting a country often involves substantial fixed cost.

Essay

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

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

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

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

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

Chapter 10

Multiple Choice

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

55. Conjoint analysis is also referred to as _____________________.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

74. Truly global innovators are called:

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

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

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

True/False Short Answer

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

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

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

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

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

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

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

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

84. The goal of standardization is to minimize competition.

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

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

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

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

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

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

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

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

93. Conjoint analysis is also called tradeoff analysis.

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

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

96. A truly global innovators are called metanational innovators.

Essay

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

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

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

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

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

Chapter 11

Multiple Choice

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

24. Euro Disney eventually becoming Disneyland is an example:

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

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

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

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

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

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

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

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

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

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

28. Global product line mix options could be:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

40. Product lines can be categorized as:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

46. Brand piracy might cause which outcomes?

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

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

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

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

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

48. Pirated products tend to be of ______________ quality.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

63. Global service firms often benefits from:

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

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

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

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

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

True/False Short Answer

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

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

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

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

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

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

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

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

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

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

72. Euro Disney changed its name to Disneyland Europe.

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

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

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

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

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

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

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

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

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

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

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

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

80. Pirated products tend to be of high quality.

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

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

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

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

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

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

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

84. Country-image stereotypes cannot hurt a company.

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

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

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

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

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

Essay

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

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

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

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

Chapter 12

Multiple Choice

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

10. ______________ costs change with sales volume.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

40. ___________ inflation also mandates rapid inventory turnarounds.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

75. Countertrade transactions include the following options EXCEPT:

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

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

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

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

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

True/False Short Answer

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

87. LCPS stands for:

88. In the area of international pricing, sellers and buyers usually prefer a quote in their domestic currency.

Difficulty: (2) Knowledge: (F) Page: 409

89. When sales transactions occur between related entities of the same company,
________________ pricing often occurs.

90. In arm’s-length prices, a firm uses the market mechanism as a cue for setting transfer
prices.

Difficulty: (2) Knowledge: (F) Page: 410

91. Cost-based pricing simply adds a mark-up to the cost of goods.

Difficulty: (1) Knowledge: (F) Page: 411

92. Negotiated transfer pricing is another form of nonmarket-based pricing.

Difficulty: (2) Knowledge: (F) Page: 411

93. Government-imposed market constraints favor nonmarket-based transfer pricing
methods.

Difficulty: (3) Knowledge: (F) Page: 411

94. In transfer pricing, BALS stands for:

95. Multinationals do not need to take antidumping laws into account when determining
their global pricing strategy.

Difficulty: (3) Knowledge: (F) Page: 412

96. VER is an acronym for:

97. Global pricing contract (GPCs) are demanded by governments.

Difficulty: (2) Knowledge: (F) Page: 415

98. Several multinationals doing business in the European Union harmonize their prices
to narrow price gaps between different member states..

Difficulty: (2) Knowledge: (F) Page: 415

99. When sales transactions occur in some form of compensation other than money
(such as trading corn for whiskey), the two trading companies are engaged in
________________.

100. In switch trading, a third party is involved which uses the credits to buy goods from
the deficit country.

Difficulty: (1) Knowledge: (F) Page: 419

101. Countertrade purchase is not the most popular form of countertrade.

Difficulty: (3) Knowledge: (F) Page: 419

Essay

102. In international marketing, price escalation can be a serious problem. To offset these difficulties marketers must be prepared to creatively meet the price escalation challenge. List the various ways that marketers might attack this problem.

103. Setting prices in a floating exchange rate world pose unique problems. Comment on how a company might react to floating exchange rates. What considerations are probably the most important for the decision maker to consider?

104. What is transfer pricing? Comment on the stakeholders and key drivers that impact the decision maker faced with transfer pricing.

105. Antidumping measures are very popular with most of the governments of industrialized nations. What measures might exporters consider to hedge themselves against antidumping procedures? Which method do you think is probably the best? Justify your answer.

106. Discuss the motives behind countertrade and the guidelines for making countertrade successful.

Chapter 13

Multiple Choice

1. In international marketing, advertising to some extent is a _________________
phenomenon.

a. cultural
b. social
c. general
d. static
e. global

Difficulty: (1) Knowledge: (F) Page: 427

2. ___________________ is one of most formidable barriers that international advertisers need to surmount.

a. Politics
b. Technology
c. Translation
d. Language
e. None of the above

Difficulty: (2) Knowledge: (F) Page: 427

3. In international marketing, numerous promotional efforts misfire because of
____________________ -related problems.

a. politics
b. technology
c. transfer
d. transaction
e. language

Difficulty: (2) Knowledge: (F) Page: 427

4. Translation errors include:

a. simple carelessness.
b. multiple-meaning words.
c. idioms.
d. all of the above.
e. none of the above.

Difficulty: (2) Knowledge: (F) Page: 427

5. All of the following are language barriers that can be identified as typical international
translation errors EXCEPT:

a. simple carelessness.
b. idioms.
c. local slang.
d. multiple-meaning words.
e. incorrect grammar.

Difficulty: (3) Knowledge: (F) Page: 427

6. To solve language-related barriers, companies in international markets should use
__________________ advertising agencies.

a. local
b. regional
c. global
d. transnational
e. domestic

Difficulty: (1) Knowledge: (F) Page: 428

7. In an advertising message, the original slogan was “Body by Fisher.” The translation
in a foreign market was “Corpse by Fisher.” This would be an example of which of
the following constraints on international promotion?

a. language barriers.
b. advertising regulations.
c. cultural constraints.
d. local attitudes toward advertising.
e. poor media infrastructure.

Difficulty: (1) Knowledge: (A) Page: 428

8. In an advertising message, the original slogan was “Body by Fisher.” The translation
in a foreign market was “Corpse by Fisher.” This would be an example of which of
the following types of translation errors?

a. simple carelessness.
b. idioms.
c. local slang.
d. multiple-meaning words.
e. incorrect grammar.

Difficulty: (2) Knowledge: (A) Page: 428

9. In an advertising message, the original slogan was “When I used this shirt, I felt
good.” The translation in a foreign market was “Until I used this shirt, I felt good.”
This would be an example of which of the following types of translation errors?

a. simple carelessness.
b. idioms.
c. local slang.
d. multiple-meaning words.
e. incorrect grammar.

Difficulty: (2) Knowledge: (A) Page: 428

10. In Britain, one U.S. advertiser ran a campaign that centered around the slogan
“You can use no finer napkin at your dinner table.” In Britain, some people use
the word “napkin” for the word “diapers.” This would be an example of which of
the following types of translation errors?

a. simple carelessness.
b. idioms.
c. local slang.
d. multiple-meaning words.
e. incorrect grammar.

Difficulty: (2) Knowledge: (A) Page: 428

11. In Spanish, five different words can be used for the word “tires” (cauchos, cubiertas,
gomas, llantas, and neumaticos). Obviously, this might present problems in
advertising. This would be an example of which of the following types of translation
errors?

a. simple carelessness.
b. idioms.
c. local slang.
d. multiple-meaning words.
e. incorrect grammar.

Difficulty: (1) Knowledge: (A) Page: 429, Exhibit 13-1

12. Given that so many errors can occur with translation and misunderstanding of
advertising in the foreign market, which of the following is probably the easiest
solution to the problem?

a. involve ad agencies from the company’s domestic environment.
b. involve ad agencies from the host country’s environment.
c. check with government officials.
d. employ foreign language specialists for all markets.
e. don’t worry about it, the problem usually corrects itself.

Difficulty: (3) Knowledge: (F) Page: 428

13. All of the following are strategies for dealing with translation problems in a foreign
market EXCEPT:

a. involve ad agencies from the host country’s environment.
b. don’t translate the message for the foreign market.
c. add foreign language subtitles.
d. use voice-overs that use foreign slang.
e. check with foreign officials.

Difficulty: (3) Knowledge: (F) Pages: 428-9

14. Many of the trickiest promotional issues occur in the domain of
_________________.

a. environment
b. money
c. technology
d. business
e. religion

Difficulty: (2 Knowledge: (F) Page: 429

15. Of the barriers that face a foreign company when attempting to promote products in
a foreign market, ___________________ are arguably the biggest stumbling block
to successful advertising in the foreign market.

a. language barriers
b. advertising regulations
c. cultural constraints or barriers
d. local attitudes toward advertising
e. poor media infrastructure

Difficulty: (2) Knowledge: (F) Page: 429

16. When considering barriers that are faced by international marketers attempting to
successfully advertise in foreign markets, cultural constraints can pose huge
difficulties. The trickiest problem within this category is usually posed by:

a. the government.
b. trade unions.
c. environmental rights groups.
d. women.
e. the host country’s religion(s).

Difficulty: (3) Knowledge: (F) Page: 430

17. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Dutch researcher
Geert Hofstede. All of the following are dimensions of a value system used in
the cultural classification scheme EXCEPT:

a. power distance.
b. possessions.
c. uncertainty avoidance.
d. individualism.
e. masculinity.

Difficulty: (2) Knowledge: (F) Page: 430

18. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Dutch researcher
Geert Hofstede. One dimension refers to the degree of inequality that is seen as
acceptable within the country. This dimension would best be described as:

a. power distance.
b. long-termism.
c. uncertainty avoidance.
d. individualism.
e. masculinity.

Difficulty: (2) Knowledge: (F) Page: 430

19. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Dutch researcher
Geert Hofstede. One dimension refers to the extent that people within the culture
prefer structured situations with clear cut rules and little ambiguity. This dimension
would best be described as:

a. power distance.
b. long-termism.
c. uncertainty avoidance.
d. individualism.
e. masculinity.

Difficulty: (2) Knowledge: (F) Page: 430

20. If ads in a foreign country stress performance, success, and completion, they would
probably be focusing on which of the following cultural classification schemes as a
way to reach a segment of the population where this dimension was high or
important.

a. power distance.
b. long-termism.
c. uncertainty avoidance.
d. individualism.
e. masculinity.

Difficulty: (2) Knowledge: (A) Page: 430

21. With respect to budget forms for advertising, the _______________ method simply
sets the overall advertising budget based on either past or expected sales revenue.

a. percentage of sales
b. competitive parity
c. all-you-can-afford
d. objective-and-task
e. marginal increment

Difficulty: (1) Knowledge: (F) Page: 431

22. The primary appeal of the percentage of sales method of allocating an advertising
budget is its:

a. popularity.
b. accounting good sense.
c. control feature.
d. simplicity.
e. accuracy.

Difficulty: (2) Knowledge: (F) Page: 431

23. If an advertiser does not want to “rock the boat” and desires to sustain a minimum
“share of voice” they will probably choose which of the following advertising
budget forms?

a. percentage of sales
b. competitive parity
c. all-you-can-afford
d. objective-and-task
e. marginal increment

Difficulty: (2) Knowledge: (F) Page: 432

24. The most popular of the budget methods (in fact, two-thirds of respondents in a
survey said they had used the method) is the _________________ method.

a. percentage of sales
b. competitive parity
c. all-you-can-afford
d. objective-and-task
e. marginal increment

Difficulty: (2) Knowledge: (F) Page: 433

25. If an advertiser spells out the goals of their communication strategy and determines
what they would like to accomplish with advertising and then plans a budget
accordingly, they are probably using the ______________ method of budgeting.

a. percentage of sales
b. competitive parity
c. all-you-can-afford
d. objective-and-task
e. marginal increment

Difficulty: (1) Knowledge: (A) Page: 433

26. If an advertiser uses field experiments (such as systematically manipulating the
spending amount in different areas within the country to measure the impact of
advertising on the brand’s awareness, sales volume, and market share) to adjust
budget expenditures, they are probably using the ______________ method of
budgeting for advertising expense.

a. percentage of sales
b. competitive parity
c. all-you-can-afford
d. objective-and-task
e. marginal increment

Difficulty: (2) Knowledge: (A) Page: 433

27. A good case can be made for standardizing an ad campaign in the international
marketplace. All of the following would be good, justifiable reasons for
standardization EXCEPT:

a. scale economics.
b. consistent image.
c. government regulation.
d. global consumer segments.
e. creative talent.

Difficulty: (2) Knowledge: (A) Page: 435-37

28. Message consistency (an advertising standardization issue) matters a great deal in
markets with extensive media overlap or for goods that are sold to “cosmopolitan”
customers who travel the globe. The best example of a product or service that fits the
above is:

a. beer.
b. banking.
c. a beef product.
d. an automobile.
e. cosmetics.

Difficulty: (3) Knowledge: (A) Page: 439

29. In the domain of advertising, __________________ means that marketers encourage
their affiliates to adopt, or at least consider, advertising ideas that have proven
successful in other markets. Which of the following standardization benefits applies?

a. scale economics
b. consistent image
c. cross-fertilization
d. global consumer segments
e. creative talent

Difficulty: (2) Knowledge: (A) Page: 439

30. Nestle used an ad for Taster’s Choice coffee originally developed in the U.K. as its campaign in the U.S., with some minor changes to reflect actors and speech. This would be an example of which of the following reasons for using standardization in the foreign market?

a. scale economics
b. consistent image
c. cross-fertilization
d. global consumer segments
e. creative talent

Difficulty: (2) Knowledge: (A) Page: 439

31. Research from an advertising agency survey indicates that the number one reason
for standardizing multinational advertising was to:

a. take advantage of demographics.
b. take advantage of cultural similarities between the countries.
c. capitalize on the fact that the product was standardized.
d. make full use of a proven successful idea.
e. create a single brand image in all markets.

Difficulty: (3) Knowledge: (A) Page: 435

32. All of the following are barriers to standardization in international advertising
EXCEPT:

a. cultural differences.
b. budget.
c. advertising regulations.
d. differences in the degree of market development.
e. the “Not Invented Here” syndrome.

Difficulty: (2) Knowledge: (A) Page: Pages: 437-38

33. As an illustration of a barrier to advertising standardization, Ray-Ban had to re-shoot
a sunglasses commercial for Malaysia because the original version had Caucasian
actors. In Malaysia, ads featuring Caucasians are not allowed. This example would
be an example of which of the following barriers to standardization of international
advertising?

a. cultural differences.
b. budget.
c. advertising regulations.
d. differences in the degree of market development.
e. the “Not Invented Here” syndrome.

Difficulty: (2) Knowledge: (A) Pages: 437-38

34. In the area of “Not-Invented-Here” (NIH) syndrome, stonewalling attempts at
standardization may come from ________________ subsidiaries/advertising
agencies.

a. local
b. regional
c. global
d. transnational
e. multinational

Difficulty: (2) Knowledge: (F) Page: 438

35. In the ________________ approach, every country subsidiary follows its own course
developing its own ads based on what it thinks works best in its market.

a. host country
b. home country
c. foreign
d. laissez faire
e. polycentric

Difficulty: (1) Knowledge: (F) Page: 438

36. There are a variety of formats for creating international advertising. With _________
advertising, the creative strategy is highly centralized. Universal copy is developed
for all markets.

a. export
b. import
c. prototype (pattern)
d. concept cooperation
e. psychological

Difficulty: (2) Knowledge: (F) Page: 438

37. There are a variety of formats for creating international advertising. With _________
advertising, guidelines are given to local affiliates concerning the execution of the
advertising. The guidelines are then conveyed via manuals or tapes.

a. export
b. import
c. prototype (pattern)
d. concept cooperation
e. psychological

Difficulty: (2) Knowledge: (F) Page: 439

38. With prototype standardization, ____________________ spell out guidelines on the
positioning theme.

a. competitors
b. governments
c. advertising mangers
d. headquarters
e. CEOs

Difficulty: (3) Knowledge: (F) Page: 439

39. With __________________ advertising, guidelines are given to the local affiliates
concerning the execution of the advertising.

a. geotype
b. prototype
c. modulartype
d. export
e. psychological

Difficulty: (3) Knowledge: (A) Page: 439

40. Another term to describe the portfolio of media choices (and variations within those
choices) is called:

a. media decision making.
b. media super structure.
c. media infrastructure.
d. media bias.
e. media method.

Difficulty: (1) Knowledge: (F) Page: 440

41. High cost-per-thousand (CPMs) are found in areas that have a high per capita
__________.

a. LMP
b. ZNP
c. MMP
d. GNP
e. PPP

Difficulty: (3) Knowledge: (F) Page: 442

42. Recent developments in the global media landscape include the following EXCEPT:

a. growing commercialization and deregulation of mass media.
b. shift from radio and print to TV advertising.
c. rise of global and regional media.
d. growing spread of interactive marketing.
e. growing importance of high definition television.

Difficulty: (2) Knowledge: (F) Pages: 442-43

43. All of the following can be characterized as being significant trends or developments
in the international media landscape EXCEPT:

a. growing commercialization and deregulation of mass media.
b. shift from radio and print to TV advertising.
c. rise of global and regional media.
d. growing importance of state controlled advertising.
e. improved monitoring.

Difficulty: (2) Knowledge: (F) Pages: 442-43

44. Infomercial marketers now have access to over one-half of Japanese consumers.
Which of the following trends would be most representative or closely associated
with the above fact?

a. growing commercialization and deregulation of mass media.
b. shift from radio and print to TV advertising.
c. rise of global and regional media.
d. growing spread of interactive marketing.
e. improved monitoring.

Difficulty: (2) Knowledge: (A) Page: 443

45. To promote the Xbox video program, Microsoft gave away two million DVDs with an interactive commercial. This is an example of which of the following trends?

a. growing commercialization and deregulation of mass media.
b. shift from radio and print to TV advertising.
c. rise of global and regional media.
d. growing spread of interactive marketing.
e. improved monitoring.

Difficulty: (3) Knowledge: (A) Page: 443

46. Ad regulations governing the advertising of cigarettes would probably fall under
which of the following advertising regulation categories?

a. advertising of “vice products” and pharmaceuticals.
b. comparative advertising.
c. content of advertising messages.
d. advertising targeting children.
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 445

47. If advertisers disparage their competition in an advertisement, the regulation category
that would govern this practice would probably be:

a. advertising of “vice products” and pharmaceuticals.
b. comparative advertising.
c. content of advertising messages.
d. advertising targeting children.
e. all of the above.

Difficulty: (1) Knowledge: (F) Page: 445

48. Given that advertising regulations not only govern advertising in foreign markets but
can also create difficulties, how can marketers cope? All of the following are
valid suggestions EXCEPT:

a. keep track of regulations and pending legislation.
b. challenge regulations in court.
c. adapt the marketing mix strategy.
d. try to circumvent the regulation by using local advertisers.
e. lobby for favorable regulations or results.

Difficulty: (2) Knowledge: (F) Pages: 446-47

49. When screening ad agencies, all of the following criteria might be used EXCEPT:

a. market coverage.
b. cost of agency talent and expense.
c. quality of coverage.
d. expertise with developing a central international campaign.
e. scope and quality of support services.

50. _________________ refer(s) to a collection of short-term incentive tools that lead to
quicker and/or larger sales of a particular product by consumers or the trade.

a. Advertising
b. Sales promotion
c. Internet marketing
d. Promotion
e. Publicity

Difficulty: (1) Knowledge: (F) Page: 449

51. Sampling, price-offs, coupons, sweepstakes, bonus packs, and trade allowances are
all examples of ____________________.

a. advertising
b. sales promotion
c. direct marketing
d. public relations
e. publicity

Difficulty: (2) Knowledge: (A) Page: 449

52. All of the following explain the local nature of sales promotion for the multinational
corporation EXCEPT:

a. economic development.
b. market maturity.
c. cultural perceptions.
d. trade structure.
e. new product development.

Difficulty: (3) Knowledge: (F) Pages: 449-50

53. If promotional dollars are aimed at the end-user, then the strategy is described as
being a ______________ strategy.

a. push
b. pull
c. conventional
d. vertical
e. horizontal

Difficulty: (1) Knowledge: (A) Page: 450

54. If promotional dollars are aimed at the middlemen, then the strategy is described as
being a ______________ strategy.

a. push
b. pull
c. conventional
d. vertical
e. horizontal

Difficulty: (1) Knowledge: (A) Page: 450

55. If promotional dollars are aimed at the trade or distributor, then the strategy is
described as being a ______________ strategy.

a. push
b. pull
c. conventional
d. vertical
e. horizontal

Difficulty: (1) Knowledge: (A) Page: 450

56. Procter & Gamble has attempted to cut back on _____________ strategy incentives
by introducing every-day-low-pricing.

a. push
b. pull
c. conventional
d. vertical
e. horizontal

Difficulty: (1) Knowledge: (A) Page: 450

57. Adidas, the German sportswear maker, paid a hefty $80 million to $100 million in
cash and services for sponsorship of the 2008 Beijing Summer Olympics. This is an
example of _________________________.

a. event sponsorship
b. sales sponsorship
c. trade shows
d. publicity
e. public relations

Difficulty: (1) Knowledge: (F) Page: 452

58. Although, Coca-Cola was the official sponsor of the 2002 World Cup Soccer, Pepsi
managed to sign up some of the biggest soccer celebrities, including England’s soccer
star David Beckham. In event sponsorship, this is an example of ________________.

a. guerilla marketing
b. ambush marketing
c. passive marketing
d. active marketing
e. cooperative marketing

Difficulty: (3) Knowledge: (F) Page: 452

59. All of the following are risks associated with event sponsorship EXCEPT:

a. nonsponsors can come in.
b. too many sponsorships might be sold.
c. there might be clutter among the sponsors and their messages.
d. the sponsorship might be too expensive for the number of people that show up.
e. adequate protection of the sponsorship.

Difficulty: (3) Knowledge: (F) Page: 452
60. Trade shows are also called _______________________.

a. trade marts
b. trade markets
c. trade fairs
d. trade expos
e. trade circles

Difficulty: (1) Knowledge: (F) Page: 453

61. Trade shows in Europe:

a. are about more than just business.
b. are exactly the same as in the U.S.
c. never serve refreshments or meals.
d. might be much larger than American shows.
e. both A and D

Difficulty: (1) Knowledge: (F) Page: 454

62. Which of the following does NOT describe mobile marketing?

a. It refers to ads on the sides of trucks and buses.
b. Mobile marketing cannot interact with consumers.
c. It fosters top-of-mind brand awareness.
d. It increases customer involvement.
e. Both A and B

Difficulty: (1) Knowledge: (F) Page: 453

63. In a modern sense, the goal of many MNCs is to pursue a(n)________________
program. In this program, coordination of all communication vehicles would take
place. Key ideas would be communicated in a unified manner.

a. vertical communications
b. horizontal communications
c. integrated marketing communications
d. global communications
e. synergistic communications

Difficulty: (2) Knowledge: (F) Page: 458

64. The goal of ________________________________ is to coordinate mass
advertising, sponsorships, sales promotions, packaging, point-of-purchase displays,
and so forth.

a. integrated marketing communications
b. integrated horizontal communications
c. integrated vertical communications
d. global communications
e. synergistic communications

Difficulty: (2) Knowledge: (F) Page: 458

65. A __________________________________ program goes one step further since it is
a system of active promotional management that strategically coordinates global
communications in all of its component parts both horizontally (country-level) and
vertically (promotion tools).

a. vertical communications
b. horizontal communications
c. globally integrated marketing communications
d. global communications
e. synergistic communications

Difficulty: (3) Knowledge: (F) Page: 458

True/False Short Answer

66. Language is not a major barrier in international advertising.

Difficulty: (1) Knowledge: (F) Page: 427

67. One can identify three different types of _______________________: simple carelessness, multiple-meaning words, and idioms.

68. Language barriers can occur through translation problems. The most common of
these translation difficulties are due to ____________________ , multiple-meaning
words, and idioms.

69. Language barriers can occur through translation problems. If the original slogan
was “Body by Fisher” and the translation was “Corpse by Fisher,” the problem with
translation was probably due to a problem idiom.

Difficulty: (2) Knowledge: (A) Page: 428

70. Idioms that use slang from one country to another may inadvertently lead to
embarrassing meanings in the host country.

Difficulty: (1) Knowledge: (F) Page: 428

71. One obvious cure for misinterpreted meanings of advertising slogans in foreign
countries is to reduce the usage of slogans.

Difficulty: (2) Knowledge: (F) Page: 428

72. With respect to advertising, probably the trickiest of the cultural barriers centers
around the host country’s religion.

Difficulty: (2) Knowledge: (F) Page: 429

73. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Geert Hofstede.
The value system construct that refers to the degree of inequality that is seen as
acceptable within the country is called ________________.

74. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Geert Hofstede. One
of these constructs is called power distance. Research has shown that ads that
position products or services as status symbols are most likely to be effective in
countries with large power distance.

Difficulty: (2) Knowledge: (A) Page: 430

75. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Geert Hofstede.
The value system construct that refers to the extent that people within the culture
prefer structured situations with clear-cut rules and little ambiguity is called
__________________.

76. Ad campaigns that center around the hard-sell approach (such as testimonials) are
advisable for cultures with high uncertainty avoidance such as the United States.

Difficulty: (2) Knowledge: (A) Page: 430

77. In the percentage of sales method, the overall advertising budget is based on either
past or expected sales revenues.

Difficulty: (1) Knowledge: (F) Page: 431

78. Viral marketing involves the selling of disease-causing agents.

79. With respect to budget forms that can be used in advertising, the ________________
method simply sets the overall advertising budget as a percentage of sales.

80. In the competitive parity rule, advertisers do not use competitors’ advertising spending as a benchmark.

Difficulty: (1) Knowledge: (A) Page: 431

81. With respect to budget forms that can be used in advertising, the _____________
method uses competition’s spending as a benchmark and provides the measure of
the optimal spending amount.

82. The most popular budgeting rule is the objective-and-task method.

Difficulty: (1) Knowledge: (F) Page: 433

83. In the domain of advertising, ___________________ means that marketers
encourage their affiliates to adopt, or at least consider, advertising ideas that have
proven successful in other markets.

84. “Not-Invented-Here” (NIH) syndrome does not come from local subsidiaries.

Difficulty: (3) Knowledge: (F) Page: 438

85. With export advertising, the creative strategy is highly centralized.

Difficulty: (3) Knowledge: (F) Page: 438

86. With prototype standardization, headquarters spell out guidelines on the positioning
themes and brand identity.

Difficulty: (2) Knowledge: (F) Page: 439

87. Shift from TV and print to radio advertising is becoming a big reality.

Difficulty: (1) Knowledge: (F) Pages: 442-43

88. Most firms do not rely heavily on the expertise of an advertising agency.

Difficulty: (1) Knowledge: (F) Page: 447

89. Sponsorship is one of the fastest growing promotion tools.

Difficulty: (2) Knowledge: (F) Page: 451

90. The goal of many MNCs is to avoid an integrated marketing communications
approach.

Difficulty: (2) Knowledge: (F) Page: 458

Essay

91. List and discuss the major challenges faced by international advertisers.

92. What situations are conducive to localization of advertising from the viewpoint of the international advertiser?

93. How should marketers cope with advertising regulations?

94. How do you choose an advertising agency overseas?

Chapter 14

Multiple Choice

1. Unlike the United States where customers visit car dealers, a majority of cars are sold
by door-to-door salespeople in _________________.

a. India.
b. Pakistan.
c. Japan.
d. Ireland.
e. Mongolia.

Difficulty: (2) Knowledge: (A) Page: 421

2. All of the following are tasks of the average salesperson EXCEPT:

a. take orders.
b. deliver products.
c. repair products.
d. educate consumers.
e. provide technical knowledge.

Difficulty: (1) Knowledge: (F) Page: 422

3. The salesperson can best be described as being the ______________ for the company.

a. support mechanism
b. front line
c. mouthpiece
d. promoter
e. educator

Difficulty: (2) Knowledge: (F) Page: 422

4. The salesforce management process starts with setting:

a. objectives and strategy.
b. objectives and manufacturing.
c. objectives and marketing.
d. objectives and operations.
e. objectives and raw material.

Difficulty: (3) Knowledge: (F) Page: 423

5. When researchers try to put the word international into sales management and
personal selling, clarification is needed. ____________________ considerations
include issues that analyze more than one country’s assets, strengths, and situations,
or that deal directly with cross-border coordination.

a. International product
b. International strategy
c. International mix
d. Intercultural
e. Global society

Difficulty: (1) Knowledge: (F) Page: 423

6. All of the following are examples of international sales strategy issues EXCEPT:

a. sales force skill availability.
b. selling style differences.
c. country image.
d. expatriate recruiting.
e. centralized training.

Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1

7. Which of the following is an example of an issue that is addressed by intercultural
issues with the foreign country?

a. sales force skill availability.
b. selling style differences.
c. country image.
d. expatriate recruiting.
e. centralized training.

Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1

8. All of the following are examples of intercultural issues with the foreign country
EXCEPT:

a. motivation.
b. cultural sensitivity.
c. ethical standards.
d. relationship building.
e. home to host communications.

Difficulty: (2) Knowledge: (F) Page: 423, Exhibit 14-1

9. Which of the following is an example of an issue faced by international sales
strategy?

a. motivation.
b. cultural sensitivity.
c. ethical standards.
d. relationship building.
e. home to host communications.

Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1

10. Sales force skill availability, company image, expatriate recruiting, and centralized
training are issues relevant to ________________________ considerations.

a. international product
b. international sales strategy
c. international mix
d. intercultural issues with the foreign country
e. global society

Difficulty: (2) Knowledge: (F) Page: 423, Exhibit 14-1

11. Motivation, cultural sensitivity, ethical standards, fairness, and relationship building
are issues relevant to _______________________ considerations.

a. international product
b. international sales strategy
c. international mix
d. intercultural issues with the foreign country
e. global society

Difficulty: (1) Knowledge: (F) Page: 423, Exhibit 14-1

12. In the sales management “process,” the first step is where the manager:

a. sets objectives and strategy.
b. determines goals and purposes.
c. recruits.
d. trains.
e. supervises.

Difficulty: (2) Knowledge: (F) Page: 423

13. A key decision that a marketer must make with respect to international marketing is
_______________________. This decision limits and defines key underlying aspects
of its future sales force management.

a. which market to enter
b. how much to spend in a market
c. how to enter the market
d. how far should a market be entered
e. how long to stay in a market

Difficulty: (3) Knowledge: (A) Page: 423

14. The _________________ in(into) a market will determine how large the sales force
needs to be and will influence how much training it will require.

a. form of marketing
b. form of entry
c. form of promotion
d. form of commission
e. form of management

Difficulty: (2) Knowledge: (F) Page: 423

15. How large a sales force needs to be, how much training the sales force will need,
whether the sales force is predominately local or foreign, and the manner of
compensation are all issues influenced by the __________________ in(into) a
market.

a. form of marketing
b. form of entry
c. form of promotion
d. form of commission
e. form of management

Difficulty: (2) Knowledge: (F) Page: 423

16. With respect to sales and sales management, the entry method into a market is also
called the ____________________________.

a. zone process
b. level of migration
c. level of expatriation
d. level of complexity
e. level of integration

Difficulty: (3) Knowledge: (F) Page: 424

17. With respect to sales and sales management entry into a foreign market, _________
integration refers to greater ownership and control of the distribution channel.
a. vertical
b. horizontal
c. forward
d. backward
e. dual

Difficulty: (2) Knowledge: (A) Page: 424

18. If a company begins its foreign sales by exporting through a merchant distributor who
takes title to the product and performs all the necessary foreign sales functions, this
would be a form of ________________ integration.

a. vertical
b. horizontal
c. forward
d. backward
e. dual

Difficulty: (3) Knowledge: (A) Page: 424

19. If a company begins its foreign sales by exporting through merchant distributors and
then purchases a foreign sales subsidiary and locates product warehouses abroad, this
would be a form of _____________________ integration.

a. vertical
b. horizontal
c. forward
d. backward
e. dual

Difficulty: (3) Knowledge: (A) Page: 424

20. Selling through an Export Management Company (EMC) or an Export Trading
Company (ETC) is considered a _____________ involvement approach to
international sales.

a. low
b. middle
c. high
d. backward
e. parallel

Difficulty: (1) Knowledge: (F) Page: 424

21. _____________________ serves the needs of their clients in entering a market or
sourcing goods from a market. They are characterized by their “service” nature and
efforts to interact with and meet the needs of the exporter client.

a. A foreign franchise
b. An Export Trading Company
c. An Export Management Company
d. A Noraizi agent
e. A bulk-breaker

Difficulty: (2) Knowledge: (F) Page: 424

22. Which of the following degrees of involvement would probably be in use when
Export Management Companies, Export Trading Companies, or direct exporting
are being used by the firm?

a. limited foreign involvement and visibility
b. local management and sales force
c. expatriate management and local sales force (mixed)
d. heavy to complete expatriate sales force
e. maximum global control and world wide ownership

Difficulty: (1) Knowledge: (A) Page: 425

23. Which of the following degrees of involvement would probably be in use when
piggybacking and selling through chains are used by the firm?

a. limited foreign involvement and visibility
b. local management and sales force
c. expatriate management and local sales force (mixed)
d. heavy to complete expatriate sales force
e. maximum global control and world wide ownership

Difficulty: (2) Knowledge: (A) Page: 425

24. Many ______________________ use EMCs services mainly to test the international
arena.

a. contract manufacturers
b. franchisees
c. experienced exporters
d. inexperienced exporters
e. none of the above

Difficulty: (1) Knowledge: (A) Page: 425

25. If the company describes its situation as being concerned with a contract for sales
from the U.S., no sales force or representatives abroad, and little or no control over
the foreign marketing process, the firm will probably use which form of involvement
listed below?

a. limited foreign involvement and visibility
b. local management and sales force
c. expatriate management and local sales force (mixed)
d. heavy to complete expatriate sales force
e. maximum global control and world wide ownership

Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2

26. If the company uses expatriates to oversee sales regions and lead training, the firm
will probably use which form of involvement listed below?

a. limited foreign involvement and visibility
b. local management and sales force
c. expatriate management and local sales force (mixed)
d. heavy to complete expatriate sales force
e. maximum global control and world wide ownership

Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2

27. _____________________ is usually a large conglomerate that imports, exports,
countertrade, invests, and manufactures in the global arena.

a. A foreign franchise
b. An Export Trading Company
c. An Export Management Company
d. A Noraizi agent
e. A bulk-breaker

Difficulty: (2) Knowledge: (F) Page: 425

28. Sogoshosha (such as Mitsubishi, Mitsui, Sumitomo, and Marubeni) are the Japanese
equivalents of _______________________.

a. a foreign franchise
b. an Export Trading Company
c. an Export Management Company
d. a dealer network
e. a bulk-breaker

Difficulty: (2) Knowledge: (A) Page: 425

29. If a company follows a _______________ involvement path, it normally gives
up the ability to motivate and monitor the sales force and to train them to better serve
the customer.

a. low
b. middle
c. high
d. backward
e. parallel

Difficulty: (1) Knowledge: (F) Page: 425

30. When a company has the ____________________ involvement approach, the
company (because it uses either host country employees or expatriates) must face
the foreign culture and intercultural communication can become an issue that must
be dealt with through training.

a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level

Difficulty: (2) Knowledge: (A) Page: 426

31. Which of the following forms of company sales involvement generally have the
lowest involvement of expatriates?

a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level

Difficulty: (2) Knowledge: (A) Page: 426

32. Which of the following forms of company sales involvement generally have the
highest involvement of expatriates?

a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level

Difficulty: (2) Knowledge: (A) Page: 426

33. When a company has a _________________ involvement approach, the company
substantially controls the foreign distribution channels.
a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level

Difficulty: (1) Knowledge: (F) Page: 426

34. As an example of a company that has the _______________________ involvement
approach, the company will generally own warehouses where goods are stored and/or
own outlets where products are sold.
a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level

Difficulty: (2) Knowledge: (A) Page: 426

35. Which of the following statements MOST accurately describes the state of
international selling?

a. At the level of personal selling there is little true international selling.
b. International selling is a function of the degree of involvement.
c. Because of the global nature of business today, global selling transcends
international boundaries.
d. International selling will never work.
e. International selling is tightly monitored by most governments because of the
potential for funds outflow.

Difficulty: (3) Knowledge: (F) Page: 427

36. Which of the following statements MOST accurately describes the state of
international selling?

a. Despite growing “international sales,” salespeople typically work only in one
region.
b. International selling is a function of the degree of involvement.
c. Because of the global nature of business today, global selling transcends
international boundaries.
d. International selling will never work.
e. International selling is tightly monitored by most governments because of the
potential for funds outflow.

Difficulty: (3) Knowledge: (F) Page: 427

37. Personal selling is predominantly a _________________ activity.

a. psychological
b. ethnic
c. tribal
d. group
e. personal

Difficulty: (1) Knowledge: (F) Page: 427

38. A _________________ occurs when we group people (from what might appear
to us as very similar cultures) together in perhaps an inappropriate manner because
those people consider themselves to be different.

a. cultural assimilation
b. cultural harmony
c. cultural generalization
d. cultural syncopation
e. cultural similarity

Difficulty: (2) Knowledge: (F) Page: 428

39. Germans are typically viewed as scientifically exacting and industrious people.
However, the typical German manufacturing work week is only thirty hours and
the workers jealously guard their free time and show little interest in working
overtime. This would be an example of the dangers of ____________________.

a. cultural onomonopea
b. cultural adiaphoria
c. cultural generalization
d. cultural syncopation
e. cultural similarity

Difficulty: (2) Knowledge: (A) Page: 428

40. If a marketing manager were to mistakenly group South Koreans and Japanese
together (either as a market or by business and labor practices), this would be an
example of a _________________ problem.

a. cultural onomonopea
b. cultural adiaphoria
c. cultural generalization
d. cultural syncopation
e. cultural similarity

Difficulty: (2) Knowledge: (A) Page: 428

41. The differences between the cultures of companies in two countries are
based more on the ingrained cultural values of the ___________________.

a. consumers
b. governments
c. board of directors
d. CEOs
e. employees

Difficulty: (2) Knowledge: (A) Page: 428

42. One popular tool for characterizing people that addresses their cognitive styles is
the ____________________.

a. Kelsey-Ciebold scale.
b. Johns-Hopkins initial perception scale.
c. Majors-Hawkins Cognitive Indicator.
d. Myers-Briggs Type Indicator.
e. Spaniel test.

Difficulty: (2) Knowledge: (F) Page: 431

43. The ________________ classifies people on four personal dimensions. These are
extrovert versus introvert, sensing versus intuitive, thinking versus feeling, and
judging versus perceiving.

a. Hartman profile
b. Myers-Briggs Type Indicator
c. Majors-Hawkins Cognitive Indicator
d. Spaniel test for concepts
e. Freudian fantasy test

Difficulty: (2) Knowledge: (F) Page: 431

44. According to the Myers-Briggs Type Indicator test, the _____________ tends to
rely on the environment for guidance, be action-oriented, sociable, and communicate
with ease and frankness.

a. extrovert
b. introvert
c. sensing person
d. intuitive person
e. thinking person

Difficulty: (2) Knowledge: (F) Page: 431, Exhibit 14-4

45. According to the Myers-Briggs Type Indicator test, the _____________ tends to
show a greater concern with concepts and ideas than with external events, relative
detachment, and enjoyment of solitude and privacy over companionship.

a. extrovert
b. introvert
c. sensing person
d. intuitive person
e. thinking person

Difficulty: (2) Knowledge: (F) Page: 431, Exhibit 14-4

46. According to the Myers-Briggs Type Indicator test, the _____________ tends to
focus on immediate experience, become more realistic and practical, and develop
skills such as acute powers of observation and memory for details.

a. extrovert
b. introvert
c. sensing person
d. intuitive person
e. thinking person

Difficulty: (3) Knowledge: (F) Page: 431, Exhibit 14-4

47. According to the Myers-Briggs Type Indicator test, the _____________ tends to
value the possibility and meaning more than immediate experience, and become
more imaginative, theoretical, abstract, and future oriented.
a. extrovert
b. introvert
c. sensing person
d. intuitive person
e. thinking person

Difficulty: (3) Knowledge: (F) Page: 431, Exhibit 14-4

48. All of the following are steps in the sales force management process EXCEPT:

a. setting sales force objectives.
b. designing sales force strategy.
c. recruiting and selecting salespeople.
d. commission system management.
e. supervising salespeople.

Difficulty: (2) Knowledge: (F) Page: 433

49. The first step in the sales force management process is best described as being:

a. designing sales force strategy.
b. setting sales force objectives.
c. recruiting and selecting salespeople.
d. commission system management.
e. supervising salespeople.

Difficulty: (2) Knowledge: (F) Page: 433

50. The __________________ states explicitly what the sales force will be asked to do.

a. sales force strategy
b. sales force objectives
c. sales force training procedures
d. sales force recruiting procedures
e. sales force evaluation procedures

Difficulty: (2) Knowledge: (F) Page: 433

51. Setting sales force objectives internationally will not only depend on the company
goals but will also depend on:

a. the training procedures.
b. the recruiting procedures.
c. the evaluation procedures.
d. an analysis of the culture and the values of the country it is entering.
e. management standards for excellence.

Difficulty: (2) Knowledge: (F) Page: 434

52. __________________ addresses the structure, size, and compensation of the sales
force.

a. Sales force objectives
b. Sales force goals
c. Sales force strategy
d. Sales force policy
e. Sales force vision

Difficulty: (2) Knowledge: (F) Page: 434

53. With respect to sales force structure, the ____________________ sales force has
each salesperson responsible for a particular area (reporting up the line to regional
sales managers).

a. territorial
b. product
c. customer
d. matrix
e. “open plan”

Difficulty: (1) Knowledge: (F) Page: 434

54. With respect to sales force structure, the ______________________ sales force has
each salesperson sell only one product or product line (even when selling to a single
customer).

a. territorial
b. product
c. customer
d. matrix
e. “open plan”

Difficulty: (1) Knowledge: (F) Pages: 434-35

55. With respect to the functions of sales force strategy, the ______________ refers to
and determines the physical positioning and responsibilities of each salesperson.

a. size
b. structure
c. compensation procedure
d. modeling procedure
e. evaluation procedure

Difficulty: (1) Knowledge: (F) Page: 434

56. In order to ensure a globally consistent sales strategy, a company will likely:
a. conduct sales training on a country-by-country basis.
b. train the sales managers in the headquarters country and send them abroad.
c. bring all employees to the headquarters country for training, then send them
to their home markets.
d. hire professional sales trainers to travel abroad to train employees.
e. none of the above

Difficulty: (2) Knowledge: (a) Page: 436

57. Difficulties in setting compensation packages for global salesforces include:
a. unions may restrict wage options.
b. some cultures are not motivated to work harder regardless of monetary
incentives.
c. local firms may protest that the MNC is stealing the best talent with wages
out of line with local standards.
d. culture may dictate that people of the same rank should not be compensated
differently regardless of performance.
e. all of the above

Difficulty: (2) Knowledge: (F) Page: 446

58. Ethics for international sales reps:
a. are the same regardless of country.
b. can be taught and are no longer a problem once training has taken place.
c. don’t matter—reps should do what the home culture expects.
d. demand clear corporate policies to help reps avoid problems.
e. should be ignored until a complaint is made, then the guilty should be punished.

Difficulty: (2) Knowledge: (A) Page: 438

59. Evaluations of sales performance should be ________.
a. cumulative
b. exhaustive
c. quantitative
d. qualitative
e. both C and D

Difficulty: (2) Knowledge: (F) Page: 438

60. ____________________ the sales force means directing and motivating the sales
force to fulfill the company’s objectives and providing the resources to allow them
to do so.

a. Recruiting
b. Training
c. Evaluating
d. Supervising
e. Compensating

Difficulty: (2) Knowledge: (F) Page: 436

61. With respect to rewarding salespeople, _________________ reinforces the negative
image of the salesperson benefiting from the sale, with no regard for the purchaser’s
well-being.

a. the salary system
b. the commission system
c. the motivation system
d. the retainer system
e. the hourly wage system

Difficulty: (2) Knowledge: (F) Page: 437

62. With respect to evaluating salespeople, _________________ evaluations can be
in the form of comparisons of sales, of sales percents, or increases in sales.

a. parametric
b. qualitative
c. quantitative
d. nonparametric
e. decisional

Difficulty: (2) Knowledge: (F) Page: 438

63. Stages of the negotiation process include the following EXCEPT:

a. non-task sounding.
b. task-related information exchange.
c. foreign travel.
d. persuasion.
e. concessions and agreements.

Difficulty: (2) Knowledge: (F) Page: 439

64. In international marketing, negotiation strategies include the following EXCEPT:

a. employ an outsourcing consultant.
b. employ an agent or advisor.
c. involve a mediator.
d. induce the counterpart to follow one’s own negotiation script.
e. Adapt the counterpart’s negotiation script.

Difficulty: (3) Knowledge: (F) Page: 439

65. ___________________ are home country personnel sent overseas to manage local
operations in the foreign market.

a. Managers
b. International personnel
c. Group managers
d. Expatriates
e. Foreign managers

Difficulty: (1) Knowledge: (F) Page: 443

66. All of the following are advantages that expatriates have over foreign nationals as
managers of MNCs, EXCEPT:

a. more intelligence.
b. better communication.
c. better understanding of office politics.
d. develops better future managers.
e. better relationships with the home office.

Difficulty: (2) Knowledge: (F) Page: 444

67. All of the following are disadvantages of using expatriates over foreign nationals as
managers, EXCEPT:

a. cross-cultural training.
b. motivation.
c. honesty.
d. compensation.
e. family discord.

Difficulty: (2) Knowledge: (F) Pages: 443-44

68. The general trend among U.S. multinationals has been a decreasing use of
______________ managers overseas and an increasing reliance on ____________
foreign talent since the 1990s.

a. global, local
b. international, local
c. European, local
d. expatriate, local
e. Asian, local

Difficulty: (3) Knowledge: (A) Page: 443

69. The single most compelling reason that most expatriates return home early from
their tour of duty abroad is:

a. motivation.
b. salary.
c. health.
d. fear of the foreign environment.
e. family discord.

Difficulty: (2) Knowledge: (F) Page: 447

70. Expatica’s Relocation Services’ 2008 survey provided the following recommendations regarding reducing attrition rates EXCEPT:

a. membership in top private business clubs.
b. chances to use international experience.
c. a choice of positions upon return.
d. recognition.
e. repatriation career support.

Difficulty: (2) Knowledge: (F) Page: 448

True/False Short Answer

71. Unlike the United States, the majority of cars sold in Japan are sold door-to-door.

Difficulty: (2) Knowledge: (A) Page: 421

72. The salesperson is not the front line for the company.

Difficulty: (1) Knowledge: (F) Page: 422

73. Sales people do not sell services.

Difficulty: (1) Knowledge: (A) Page: 422

74. When considering international sales management issues, ________________
considerations are issues that analyze more than one country’s assets, strengths, and
situations, or that deal directly with cross-border coordination.

75. Sales force skill availability, country image, and expatriate recruiting are all issues
that are relevant as intercultural issues with the foreign country.

Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1

76. Motivation, cultural sensitivity, ethical standards, and fairness are all issues that are
relevant as intercultural issues with the foreign country.

Difficulty: (2) Knowledge: (F) Page: 423, Exhibit 14-1

77. The question of how to enter the market is central to marketing.

Difficulty: (1) Knowledge: (F) Page: 423

78. Backward integration refers to greater ownership and control of the distribution
channel.

Difficulty: (3) Knowledge: (F) Page: 423

79. If a firm has limited foreign involvement and visibility, a correct choice for them to
use in entering a foreign country would be to develop an expatriate sales force.

Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2

80. If a firm has limited foreign involvement and visibility, a correct choice for them to
use in entering a foreign country would be to enter into an arrangement with an
Export Management Company.

Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2

81. The term sogoshosha in Japan describes an Export Trading Company.

Difficulty: (2) Knowledge: (A) Page: Page: 425

82. Personal selling is predominantly a group activity.

Difficulty: (1) Knowledge: (F) Page: 427

83. At the level of personal selling there is little true international selling.

84. Equating Korean and Japanese consumers and business practices to be the same just
because they are in geographic proximity to one another would be a mistake often
made because of _______________________.

85. Myers-Briggs-Type Indicator (MBTI) is a tool for addressing people’s cognitive
styles.

Difficulty: (3) Knowledge: (F) Page: 431

86. One of the dimensions of Myers-Briggs-Type Indicator (MBTI) include ethnocentric
behavior:

Difficulty: (1) Knowledge: (F) Page: 431

87. The first step in the process of sales force management starts with recruiting and
selecting salespeople.

Difficulty: (1) Knowledge: (F) Page: 434

88. The size of the salesforce depends on the sales structure.

89. In the negotiation process, nontask soundings do not include activities that are used to
establish a rapport among the parties involved.

90. ______________ are home country personnel sent overseas to manage local
operations in the foreign market.

91. Negotiations practices do not vary enormously across cultures.

Difficulty: (2) Knowledge: (F) Page: 439

92. Expatriate involvement in international sales has been on the rise since the 1990s.

Difficulty: (2) Knowledge: (F) Page: 443

93. Once the expatriate is overseas, training becomes more difficult.

Difficulty: (3) Knowledge: (F) Page: 445

94. Cross-cultural training is on the decline in recent years.

Difficulty: (2) Knowledge: (F) Page: 445

95. Repatriation is the return of the expatriate employee from overseas.

Difficulty: (1) Knowledge: (F) Page: 446

96. Expatriates do not face a long list of difficulties upon returning home.

Difficulty: (2) Knowledge: (F) Page: 448

Essay

97. It has been said that selling is the world over. However, there are differences between the way that domestic and international selling efforts occur and are managed. Comment on these differences.

98. Considering various types of entry formats into the international arena, under what circumstances might it be advisable for the company to attempt a traveling global salesforce?

99. Considering the four major categories of the Myers-Briggs Type Indicator, which of the categories (or combination of categories) best describes you? Explain why.

100. Not all United States sales methods or systems can automatically be exported abroad. Considering the information provided by research on different cultural dimensions, why might it be difficult to adopt a U.S.-style commission system for salespeople in such countries as Japan or Mexico. Be sure to remember how these two countries might rank on the five cultural dimension scales.

101. Why do most firms still consider expatriates to be a valuable extension of their company? What are the advantages and disadvantages of using expatriates?

Chapter 15

Multiple Choice

1. In global logistics and distribution, Coca-Cola’s success relies largely on its global
distribution arm, ______________________, the world’s largest bottler group.

a. Coca-Cola Enterprises
b. Coca-Cola Network
c. Coca-Cola Web
d. Coca-Cola Team
e. Coca-Cola Trucking Co.

Difficulty: (2) Knowledge: (F) Page: 452

2. According to the textbook, which of the following famous business thinkers
characterized logistics as being “the darkest continent of business?”

a. Philip Kotler.
b. Stephen Covey.
c. Michael E. Porter.
d. Peter Drucker.
e. Tom Peters.

Difficulty: (3) Knowledge: (F) Page: 452

3. As firms start operating on a global basis, ___________________ need to manage the shipping of raw materials, components, and supplies among various manufacturing sites at the most economical and reliable rates.

a. human resource managers
b. logistics managers
c. operations managers
d. outsourcing managers
e. information technology managers

Difficulty: (2) Knowledge: (F) Page: 452

4. In 2011, the total logistics cost represented about 8.5 percent of the GDP, or $1 trillion in the _________________.

a. U.S.
b. Ireland
c. Portugal
d. Belgium
e. Romania

Difficulty: (1) Knowledge: (F) Page: 452

5. In 2012, in the U.S., the total logistics cost was ______ percent of the U.S. GDP.

a. 1
b. 3
c. 5.5
d. 8.5
e. 10.5

Difficulty: (2 Knowledge: (F) Page: 452

6. __________________ transportation refers to the seamless transfer of goods from
one mode of transportation (such as an aircraft) to another (such as a ship) and
vice versa without the hassle of unpacking and repackaging of goods to suit the
dimensions of the mode of transportation being used.

a. Bi-polar
b. Bi-modal
c. Intercontinental
d. Dual-basic
e. Intermodal

Difficulty: (2) Knowledge: (F) Page: 452

7. __________________ refers to the means of keeping continuous tabs on the exact
location of the goods being shipped in the logistics chain.

a. Data processing
b. Messaging service
c. Tracking technology
d. Computerized messaging
e. Hybrid technology

Difficulty: (2) Knowledge: (F) Page: 452

8. With electronic tracking technology, shippers are able to quickly react to any
disruption in the shipments because the shipper knows where exactly the goods are
in real time and:

a. labor can be adjusted accordingly.
b. the alternative means can be quickly mobilized should problems develop.
c. costs can always be evaluated.
d. losses are rare.
e. customer service is now at a premium.

Difficulty: (1) Knowledge: (A) Page: 452

9. ________________ is defined as the design and management of a system that directs
and controls the flows of materials into, through and out of the firm across national
boundaries to achieve its corporate objectives at a minimum total cost.

a. Global goods flow
b. Global distribution
c. Global logistics
d. Global wholesaling
e. Global shipping

Difficulty: (2) Knowledge: (F) Page: 453

10. Global logistics encompasses:

a. advertising and personal selling.
b. purchasing and manufacturing.
c. materials management and trucking.
d. materials management and physical distribution.
e. pricing and manufacturing.

Difficulty: (2) Knowledge: (A) Page: 453

11. ___________________ refers to the inflow of raw materials, parts, and supplies in
and through the firm.

a. Global logistics
b. Physical distribution
c. Materials management
d. Purchasing processes
e. Global distribution

Difficulty: (2) Knowledge: (F) Page: 453

12. The global logistics process begins with which of the following?

a. materials management
b. processing and assembly
c. physical distribution
d. raw materials, components, and supplies
e. finished products ready for shipment

Difficulty: (2) Knowledge: (F) Page: 453

13. When raw materials, components, and supplies are converted or manipulated for
processing and assembly by the firm, the process is monitored and controlled by
the ________________________ function of the firm.

a. physical distribution
b. purchasing
c. intermodal transportation
d. materials handling
e. materials management

Difficulty: (3) Knowledge: (A) Page: 453

14. _______________________ refers to the movement of the firm’s finished products
to its customers, consisting of transportation, warehousing, inventory, customer
service/order entry, and admission.

a. Physical distribution
b. Purchasing
c. Intermodal transportation
d. Global logistics
e. Materials management

Difficulty: (2) Knowledge: (F) Page: 453

15. All of the following are activities that occur during physical distribution EXCEPT:

a. transportation.
b. warehousing.
c. inventory.
d. order entry.
e. promotion and advertising.

Difficulty: (1) Knowledge: (A) Page: 453, Exhibit 15-1

16. With respect to distribution costs, a geographically large country such as the United
States will normally incur more ______________________ costs than in smaller
countries.

a. transportation, insurance, and inventory
b. warehousing, customer service/order entry, and general administration
c. transportation and inventory
d. materials handling
e. warehousing and transportation

Difficulty: (3) Knowledge: (A) Page: 453

17. Which of the following factors contribute significantly to the increased complexity
and cost of global logistics as compared to domestic logistics?

a. domestic intermediaries
b. service
c. purchasing
d. exchange rate fluctuation
e. materials handling

Difficulty: (1) Knowledge: (F) Page: 455

18. All of the following factors contributed significantly to the increased complexity and
cost of global logistics as compared to domestic logistics EXCEPT:

a. exchange rate fluctuation.
b. distance.
c. domestic intermediaries.
d. foreign intermediaries.
e. negotiations with government officials and distributors.

Difficulty: (2) Knowledge: (F) Page: 455

19. Recently the U.S. dollar depreciated while the Japanese yen soared in value. Honda
found that it was much cheaper to ship its Accord models to Europe from its Ohio
plant than from Japan. This could most accurately be classed as a move made
because of problems or opportunities with:

a. distance.
b. logistics.
c. exchange rate fluctuations.
d. foreign intermediaries.
e. domestic intermediaries.

Difficulty: (1) Knowledge: (A) Page: 455

20. The bulk of international trade is handled by ________________________.

a. ocean shipping
b. air transport
c. trucking services
d. railroads
e. inland waterways

Difficulty: (1) Knowledge: (A) Page: 455

21. The most important factors in determining an optimal mode of transportation for
foreign markets are the value-to-volume ratio, perishability of the product, and:

a. the cost of transportation.
b. intermodal ratio.
c. total cost ratio to inventory and warehousing expense.
d. the cost of insurance.
e. the distance to speed relationship.

Difficulty: (2) Knowledge: (F) Page: 456

22. All of the following are important factors in determining an optimal mode of
transportation to be used in foreign markets EXCEPT:
a. the cost of transportation.
b. the value-to-volume ratio.
c. the perishability of the product.
d. obsolescence along the product life cycle.
e. the cost of insurance.

Difficulty: (3) Knowledge: (F) Pages: 456

23. The _________________ is determined by how much value is added to the materials
used in the product.

a. perishability of the product
b. cost of transportation
c. the cost of insurance
d. the value-to-volume ratio
e. the intermodal ratio

Difficulty: (1) Knowledge: (F) Page: 456

24. The ________________ of the product refers to the quality degradation over time
and/or product obsolescence along the product life cycle.

a. perishability
b. cost of transportation
c. cost of insurance
d. value-to-volume ratio
e. intermodal ratio

Difficulty: (1) Knowledge: (F) Page: 456

25. All of the following are viable options for shipping products internationally on a
global basis (anywhere in the world) EXCEPT:

a. ocean shipping.
b. air freight.
c. cargo liner service.
d. truck.
e. intermodal transportation.

Difficulty: (2) Knowledge: (A) Page: 456

26. The primary forms of ocean shipping include all of the following EXCEPT:

a. liner service.
b. bulk shipping.
c. tanker shipping.
d. irregular runs.
e. FedEx surface.

Difficulty: (1) Knowledge: (A) Page: 456

27. If a product were to be categorized as being heavy, bulky, and nonperishable,
probably the best form of global shipping would be:

a. ocean shipping.
b. air freight.
c. truck.
d. rail.
e. barge.

Difficulty: (1) Knowledge: (F) Page: 456

28. If a company wished to ship semiconductor chips abroad, they would probably
choose:

a. ocean shipping.
b. air freight.
c. truck.
d. rail.
e. barge.

Difficulty: (1) Knowledge: (A) Page: 457

29. Research has shown that if Nike or Reebok were to be transporting their footwear
from plants in Asia to the United States, they would probably choose which of the
following transportation modes?

a. ocean shipping
b. air freight
c. truck
d. rail
e. barge

Difficulty: (2) Knowledge: (A) Page: 458

30. The traditional logistics strategy involves ____________________ based on
forecasting and inventory speculation.

a. supply and demand
b. anticipatory demand management
c. inventory volume equations
d. purchasing ratios
e. microeconomic principles

Difficulty: (2) Knowledge: (F) Page: 458

31. Information technology, electronic data interchange, and intermodal transportation
have made ____________________ a reality in physical distribution.

a. low cost transportation
b. a “no returns” policy
c. ultimate distribution service
d. just-in-time delivery
e. accurate purchasing management

Difficulty: (2) Knowledge: (F) Page: 458

32. Multinational corporations can use ________________ as a strategic tool in dealing
with currency fluctuations and as a hedge against inflation.

a. buying power
b. just-in-time management
c. just-in-time delivery
d. purchasing management
e. inventory

Difficulty: (3) Knowledge: (F) Page: 458

33. By increasing ___________________ before imminent depreciation of a currency
instead of holding cash, the firm may reduce its exposure to currency depreciation
losses.

a. buying power
b. plant and equipment
c. trucks
d. materials handling equipment (such as forklifts)
e. inventory

Difficulty: (2) Knowledge: (F) Page: 458

34. ___________ inventories also provide a hedge against inflation because the value of
the goods/parts held in inventory remains the same compared to the buying power of
local currency.

a. High-tech
b. Low-tech
c. High
d. Low
e. None of the above

Difficulty: (3) Knowledge: (A) Page: 458

35. __________________ refers to coordinating production and distribution across
geographic boundaries.

a. Rationalization
b. Utility management
c. Physical distribution management
d. Logistic integration
e. Logistic modeling

Difficulty: (2) Knowledge: (F) Page: 459

36. _________________ means reducing resources to achieve more efficient and
cost-effective operations.

a. Rationalization
b. Utility management
c. Physical distribution management
d. Logistic integration
e. Logistic modeling

Difficulty: (2) Knowledge: (F) Page: 459

37. Another profound change in the last decade is the proliferation of _______________.

a. IT warehouses
b. e-commerce
c. information technology
d. global shipping traffic
e. global air traffic

Difficulty: (2) Knowledge: (F) Page: 459

38. 3PL stands for:

a. third-party logistics.
b. third-power logistics.
c. third-peer logistics.
d. third-production logistics.
e. none of the above.

Difficulty: (1) Knowledge: (F) Page: 461

39. The largest third-party logistics sector is the value-added ________________ and
_________________ industry.

a. warehousing, purchasing
b. warehousing, manufacturing
c. warehousing, distribution
d. warehousing, painting
e. none of the above

Difficulty: (2) Knowledge: (F) Page: 461

40. The trend toward third-party logistics is a result of the _____________ and the
_____________.

a. Internet, enterprise resource planning
b. Internet, technology simulations
c. Internet, customer relationship management
d. Internet, Intranet
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 462

41. The Internet and Intranet facilitate __________________________.

a. parallel delivery.
b. cheap delivery.
c. expensive delivery.
d. forward-time delivery.
e. on-time delivery.

Difficulty: (1) Knowledge: (F) Page: 462

42. _________________ influences decisions regarding what activities and
technologies a company should concentrate its investment and managerial
resources in (in relation to its competitors in the industry).
a. Relative advantage
b. Absolute cost advantage
c. Comparative advantage
d. Competitive advantage
e. Sourcing advantage

Difficulty: (2) Knowledge: (F) Page: 464

43. __________________ affects the company’s decision about where to source and
market, based on lower cost of labor and other resources in one country relative to
another.

a. Relative advantage
b. Absolute cost advantage
c. Comparative advantage
d. Competitive advantage
e. Sourcing advantage

Difficulty: (2) Knowledge: (F) Page: 464

44. Some distribution companies even find that the best way to be successful is to create a
distribution ________________.

a. alliances
b. mergers
c. acquisitions
d. consortia
e. joint ventures

Difficulty: (3) Knowledge: (F) Page: 463

45. Sourcing strategy includes two basic choices. One of these is intra-firm sourcing
and the other is __________________.

a. importing
b. outsourcing
c. in-sourcing
d. matrix manipulation
e. horizontal integration

Difficulty: (1) Knowledge: (F) Page: 465

46. As a type of intra-firm sourcing, _____________________ is when a company
procures major components in-house by producing them domestically.

a. domestic in-house sourcing
b. offshore subsidiary sourcing
c. domestic purchasing arrangement
d. offshore outsourcing (offshore sourcing)
e. export management company

Difficulty: (2) Knowledge: (F) Page: 465

47. As a type of intra-firm sourcing, _____________________ is when a company
procures major components from its foreign subsidiary.

a. domestic in-house sourcing
b. offshore subsidiary sourcing
c. domestic purchasing arrangement
d. offshore outsourcing (offshore sourcing)
e. export management company

Difficulty: (1) Knowledge: (F) Page: 465

48. As a type of outsourcing, _____________________ is when a company
buys major components from independent suppliers at home.

a. domestic in-house sourcing
b. offshore subsidiary sourcing
c. a domestic purchasing arrangement
d. offshore outsourcing (offshore sourcing)
e. export management company

Difficulty: (2) Knowledge: (F) Pages: 466

49. As a type of outsourcing, _____________________ is when a company
buys major components from independent suppliers overseas.

a. domestic in-house sourcing
b. offshore subsidiary sourcing
c. a domestic purchasing arrangement
d. offshore outsourcing (offshore sourcing)
e. export management company

Difficulty: (1) Knowledge: (F) Page: 466

50. Covisint is probably the largest global online ________ procurement system.

a. C2B
b. B2B
c. B2G
d. C2C
e. B2C

Difficulty: (2) Knowledge: (F) Page: 466-67

51. Typical B2B procurement systems rely on _______________ that emphasize the
lowest bids on a global basis.

a. promotions
b. selling
c. manufacturing
d. auctions
e. production

Difficulty: (2) Knowledge: (F) Page: 469

52. Companies that outsource to the extent that they adopt a “designer role” in
global competition (i.e., offer innovations in product design without investing
in manufacturing process technology) have been described by some as being:

a. vertical corporations.
b. horizontal corporations.
c. hollow corporations.
d. supply and demand corporations.
e. monopoly manufacturers.

Difficulty: (3) Knowledge: (F) Page: 468

53. A __________________ is an area that is located within a nation, but is considered
outside of the customs territory of the nation.

a. border zone
b. red zone district
c. warehouse district
d. dock facility
e. free trade zone

Difficulty: (1) Knowledge: (F) Page: 472

54. In the United States, a free trade zone is officially called a __________________.

a. Maquiladora operation
b. border zone
c. red zone district
d. Foreign Trade Zone
e. Channel Zone

Difficulty: (2) Knowledge: (F) Page: 473

55. All of the following are benefits of using a free trade zone EXCEPT:

a. duty deferral and elimination.
b. lower tariff rates.
c. no government interference in intelligence gathering activities.
d. exchange rate hedging.
e. “Made in U.S.A.” designation.

Difficulty: (1) Knowledge: (F) Page: 473, Exhibit 15-4

56. Duty deferral and elimination, lower tariff rates, exchange rate hedging, and a
“Made in U.S.A.” designation are all benefits of using a __________________.

a. Maquiladora operation
b. border zone
c. red zone district
d. Foreign Trade Zone
e. Channel Zone

Difficulty: (2) Knowledge: (F) Page: 473, Exhibit 15-4

57. At the macro-level, benefits of using a free trade zone include all of the following
EXCEPT:

a. increased investment and employment.
b. more revenue through increased local taxes.
c. obtaining a beachhead in a foreign market without being in the mainstream
distribution process.
d. the ability to reassemble large shipments into different groupings.
e. no duties on labor.

Difficulty: (3) Knowledge: (A) Page: 473, Exhibit 15-4

58. Japan has established trade zones to increase __________________.

a. maquiladora operations
b. assembly operations
c. imports
d. exports
e. none of the above

Difficulty: (3) Knowledge: (F) Page: 474

59. Various governments have established ____________________________.

a. export processing circles.
b. export processing groups.
c. export processing clans.
d. export processing networks.
e. export processing zones.

Difficulty: (3) Knowledge: (A) Page: 474

60. _________________________ usually provide tax- and duty-free treatment of
production facilities whose output is meant to be exported.

a. Gray products processing zones
b. High-tech processing zones
c. Maquiladora processing zones
d. Export processing zones
e. Import processing zones

Difficulty: (2) Knowledge: (F) Page: 474

61. To show the increasing power of retailers in today’s business world, the traditional
supply chain that was once powered by the manufacturer has been turned around.
Distribution today is characterized as being ____________ in nature.

a. push
b. pull
c. vertical shove
d. horizontal slant
e. parallelism

Difficulty: (2) Knowledge: (F) Page: 480

62. Which of the following should a company NOT do with a channel partner?

a. seek companies with good contacts
b. treat companies as short-term partners
c. withhold information from the distribution partner
d. allow the distribution partner to make marketing strategy decisions
e. all of the above

Difficulty: (3) Knowledge: (A) Page: 476-77

63. If a retail firm sells a product under its own store name it is called a:

a. unique brand.
b. vertical brand.
c. horizontal brand.
d. store brand or private label.
e. hybrid label.

Difficulty: (1) Knowledge: (F) Page: 479

64. When Heinz sells its soup products to grocery store chains and allows them to
put their own store names on the product, the product is being sold as a:

a. domestic brand.
b. national brand.
c. manufacturers brand.
d. store brand or private label.
e. service label.

Difficulty: (1) Knowledge: (A) Page: 479

65. In which of the following countries are store brands marginal players because of
loyalty to national or manufacturer brands?

a. United States.
b. United Kingdom.
c. Japan.
d. France.
e. Canada.

Difficulty: (3) Knowledge: (A) Page: 480

66. All of the following are factors that have explained the success of private labels
in recent years EXCEPT:

a. better packaging decoration.
b. improved quality of private-label products.
c. development of premium private-label brands.
d. expansion into new product categories.
e. internationalization of retail chains.

Difficulty: (2) Knowledge: (F) Page: 480

67. As a branding strategy, _______________ is especially attractive to MNCs that
face well-entrenched incumbent brands in the markets they plan to enter. (This
overcomes the problem of shelf-space denial.)

a. domestic branding
b. national branding
c. manufacturers branding
d. store branding or private labeling
e. service labeling

Difficulty: (1) Knowledge: (F) Page: 480

68. The traditional supply chain powered by manufacturer push is becoming a:

a. demand chain driven by logistics.
b. demand chain driven by advertising.
c. service chain driven by customer service.
d. service chain driven by response time.
e. demand chain driven by customer pull.

Difficulty: (1) Knowledge: (F) Page: 480

69. With respect to strategies available to the business unit, a ____________ strategy
appears to be more effective than a __________ strategy in emerging markets.

a. service/product
b. product/service
c. push/pull
d. pull/push
e. pull/parallel

Difficulty: (2) Knowledge: (A) Page: 480

70. On-time retail information management carries two distinct advantages which are:

a. reduced inventory and accounting information at the retail level.
b. reduced inventory and market information at the retail level.
c. reduced inventory and manufacturing information at the retail level.
d. reduced inventory and production information at the retail level.
e. reduced inventory and outsourcing information at the retail level.

Difficulty: (3) Knowledge: (A) Page: 481

71. Industrialized countries tend to have a lower distribution outlet density than the
_______________________.

a. regional markets
b. global markets
c. world markets
d. submerging markets
e. emerging markets

Difficulty: (2) Knowledge: (A) Page: 482

72. The Large Scale Retail Store Law (LSRSL) in _______________ helped to protect
small retail stores.

a. Singapore
b. Pakistan
c. Indonesia
d. Japan
e. South Korea

Difficulty: (2) Knowledge: (A) Page: 483

73. In _________________, store hours are limited and stores do not open on Sundays.

a. Germany
b. USA
c. Mexico
d. Brazil
e. UK

Difficulty: (2) Knowledge: (A) Page: 485

74. _______________ is the fastest growing Internet market in Asia.

a. China
b. India
c. Indonesia
d. Hong Kong
e. South Korea

Difficulty: (2) Knowledge: (A) Page: 486

75. The Mexican version of the free trade zone is called the _________________.

a. Maquiladora operation or industry
b. border zone
c. red zone district
d. Foreign Trade Zone
e. Channel Zone

Difficulty: (2) Knowledge: (F) Page: 489

76. In Mexico another name for the Maquiladora operation or industry is the:

a. in-bond or twin-plant program.
b. bonded warehouse.
c. border zone.
d. cross border zone.
e. indentured zone.

Difficulty: (2) Knowledge: (F) Page: 489

77. In Mexico, the free trade zone program (also called the in-bond or twin-plant
program) is called the _____________________________.

a. Maquiladora operation or industry
b. border zone
c. red zone district
d. Foreign Trade Zone
e. Channel Zone

Difficulty: (2) Knowledge: (A) Page: 489

78. Mexico allows duty-free imports of machinery and equipment for manufacturing
as well as components for further processing and assembly, as long as at least 80
percent of the plant’s output is exported. This is called a _______________
industry.

a. moonlighting
b. cross border
c. gray market
d. TRW
e. Maquiladora

Difficulty: (2) Knowledge: (A) Page: 489

79. Mexico’s border industrialization program was developed in __________.

a. 1945
b. 1955
c. 1965
d. 1975
e. 1985

Difficulty: (3) Knowledge: (F) Page: 489

80. Mexico permits _______ percent foreign ownership of the maquiladora plants in the
designated maquiladora zone.

a. 25
b. 50
c. 75
d. 90
e. 100

Difficulty: (2) Knowledge: (F) Page: 489

81. Mexico is an attractive location for ____________ intensive assembly.

a. capital
b. labor
c. technology
d. repair
e. service

Difficulty: (1) Knowledge: (A) Page: 489

True/False Short Answer

82. When Peter Drucker described logistics as “the darkest continent of business” he
probably meant it is was ________________________.

83. In 2008, in the United States, total logistical cost is estimated to be about 20 percent of the country’s GDP.

84. Global logistics encompasses materials management only.

Difficulty: (1) Knowledge: (F) Page: 453

85. _________________ transportation refers to the seamless transfer of goods from one
mode of transport to another and vice versa without the hassle of unpacking and
repackaging.

86. Materials management does not include the inflow of raw material, parts, and supplies through the firm.

Difficulty: (2) Knowledge: (F) Page: 453

87. ________________ is defined as the design and management of a system that
directs and controls the flows of materials into, through and out of the firm across
national boundaries to achieve its corporate objectives at a minimum total cost.

88. Global logistics, unlike domestic logistics, does not put emphasis on physical
distribution.

Difficulty: (2) Knowledge: (F) Page: 453

89. ___________________ refers to the inflow of raw materials, parts, and supplies
in and through the firm.

90. ___________________ refers to the movement of the firm’s finished products
to its customers, consisting of transportation, warehousing, inventory,
customer service/order entry, and administration.

91. Materials management refers to the movement of the firm’s finished products
to its customers, consisting of transportation, warehousing, inventory,
customer service/order entry, and administration.

92. Physical distribution refers to the inflow of raw materials, parts, and supplies
in and through the firm.

93. The bulk of international trade is handled by airlines.

94. The inventory-to-volume ratio is determined by how much value is added to materials
used in the product.

95. Air freight represents more than 40 percent of the value of goods shipped in
international commerce.

96. Ocean shipping is used extensively for the transport of heavy perishable cargoes.

97. In intermodal transportation, only one type of transportation is employed.

98. Rationalization means reducing resources to achieve more efficient and cost-effective operations.

Difficulty: (1) Knowledge: (A) Page: 459

99. ____________________ refers to coordinating production and distribution
across geographic boundaries.

100. In global logistics and distribution, 3PL stands for:

101. A ___________________ is an area that is located within a nation, but is
considered outside of the customs territory of the nation.

102. The Mexican version of a free trade zone is called the ___________________.

103. Wal-Mart is the largest retailer in the world.

104. LSRSL stands for:

105. In China, basket shopping is still considered the norm for most consumers.

Difficulty: (2) Knowledge: (A) Page: 485

106. An agent intermediary takes title to goods.

Difficulty: (1) Knowledge: (F) Page: 475

107. A merchant intermediary does not take title to goods.

Difficulty: (1) Knowledge: (F) Page: 475

108. In Japan, private brands are very popular.

Difficulty: (2) Knowledge: (F) Page: 480

Essay

109. Explain what the terms global logistics, materials management, and physical distribution mean. Describe the various operations and procedures encompassed by these terms.

110. The global logistics manager must understand the specific properties of the different modes of transportation in order to use them optimally. What are the most important factors in determining an optimal mode of transportation? List and briefly describe each of the factors.

111. Explain the role that so called “third-party logistics” (3PL) companies play in contemporary international trade. Cite the advantages of using third-party companies in the trade process.

112. Explain the role of the free trade zone in modern trade. Explain the free trade zone’s relationship and benefit to global logistics.

113. In which parts of the world are private labels popular? Why? What factors might explain this?

114. Explain the concept and function of the Maquiladora operation or industry in Mexico.

Chapter 16

Multiple Choice

1. ___________________ is the most popular way for many companies to become
international.

a. Exporting
b. Importing
c. Licensing
d. Contract manufacturing
e. None of the above

Difficulty: (2) Knowledge: (F) Page: 491

2. _______________ is usually the first entry mode of entry used by many companies.

a. Exporting
b. Importing
c. Licensing
d. Contract manufacturing
e. None of the above

Difficulty: (1) Knowledge: (F) Page: 491

3. In 2011, an estimated _______________ American jobs depended on international trade and export expansion.

a. 1 million
b. 8 million
c. 10 million
d. 15 million
e. 20 million

Difficulty: (3) Knowledge: (F) Page: 492

4. In 2011, exports represented about __________ percent of the U.S. GDP.

a. 5 percent
b. 8 percent
c. 9 percent
d. 10 percent
e. 14 percent

Difficulty: (3) Knowledge: (F) Page: 492

5. For a firm beginning exports for the first time, the first step is to use available
___________________.

a. primary data
b. secondary data
c. tertiary data
d. Internet data
e. intranet data

Difficulty: (2) Knowledge: (F) Page: 492

6. As an aid to expanding information about world trade, increasingly, international
marketing information is available in the form of ____________________.

a. CD-ROMs
b. electronic encyclopedias
c. electronic databases
d. CIA reports
e. government intelligence reports

Difficulty: (2) Knowledge: (F) Page: 492

7. Which of the following countries is the largest participant in database growth?

a. United Kingdom
b. Germany
c. Japan
d. France
e. United States

Difficulty: (1) Knowledge: (A) Page: 492

8. Approximately how many databases (that can be used to help with international
trade) are available online in the world?

a. 1,000
b. 3,000
c. 4,000
d. 5,000
e. 6,000

Difficulty: (3) Knowledge: (F) Page: 492

9. Conducting export research on China and Russia would best be done by:

a. doing database research.
b. doing on-line searches.
c. doing field work.
d. using existing government facts and figures.
e. using data supplied by trade missions.

Difficulty: (2) Knowledge: (A) Page: 493

10. The identification of an appropriate overseas market and an appropriate segment
involves grouping by all of the following criteria EXCEPT:

a. socioeconomic characteristics.
b. political and legal characteristics.
c. consumer variables.
d. service variables.
e. financial conditions.

Difficulty: (2) Knowledge: (F) Page: 493

11. When attempting to identify an appropriate overseas market and an appropriate
segment, socioeconomic variables should be considered. All of the following
are socioeconomic variables that should be considered EXCEPT:

a. demographics.
b. economic.
c. geographic.
d. econometrics.
e. climatic characteristics.

Difficulty: (2) Knowledge: (F) Page: 493

12. When attempting to identify an appropriate overseas market and an appropriate
segment, consumer variables should be considered. All of the following
are consumer variables that should be considered EXCEPT:

a. service quality.
b. purchase frequency.
c. lifestyle.
d. preferences.
e. purchase behavior.

Difficulty: (2) Knowledge: (F) Page: 493

13. To get an idea of market segments in a foreign country, the marketer can first
group regions within countries across the world by macroeconomic variables.
An illustration of one of these macroeconomic variables would be:

a. level of industrial development.
b. purchase preferences.
c. services sought.
d. lifestyles.
e. purchase frequency.

Difficulty: (2) Knowledge: (A) Page: 493

14. Data for grouping along macroeconomic criteria are available from international
agencies such as:

a. the International Court of Justice
b. the World Court.
c. the World Bank.
d. the National Geographic Society.
e. the World Economic Council.

Difficulty: (2) Knowledge: (F) Page: 494

15. The easiest product to sell abroad with respect to logistics is a(n) _____________
product.

a. differentiated
b. semi-standardized
c. clustered
d. gray market
e. standardized

Difficulty: (1) Knowledge: (F) Page: 494

16. _________________ exporting involves the use of independent U.S. middlemen
to market the firm’s products overseas.

a. Direct
b. Indirect
c. Parallel
d. Synchronized
e. Dual

Difficulty: (2) Knowledge: (F) Page: 495

17. When independent U.S. middlemen market a firm’s goods in an overseas market,
they are called ______________________. They market through their own network
of foreign distributors and their own sales force.

a. exporters
b. export specialists
c. export representatives
d. distribution specialists
e. parallel exporters

Difficulty: (2) Knowledge: (F) Page: 495

18. The CEM stands for:

a. cash export manager.
b. customs export manager.
c. charismatic export manager.
d. combination export manager.
e. collective export manager.

Difficulty: (2) Knowledge: (F) Page: 495

19. The _________________ acts as the export department to a small exporter or a
large producer with small overseas sales.

a. combination export manager (CEM)
b. export merchant
c. export commission house
d. piggyback exporter
e. trading company

Difficulty: (2) Knowledge: (F) Page: 495

20. The Japanese trading companies are known as:

a. keiretsus
b. chaebols
c. sogonets
d. sogoshoshas
e. akimonos

Difficulty: (3) Knowledge: (F) Page: 495

21. In order to expand their exporting activities, many Japanese firms rely on giant
general trading companies known as _________________________.

a. keiretsus
b. chaebols
c. sogonets
d. sogoshoshas
e. akimonos

Difficulty: (3) Knowledge: (F) Page: 495

22. All of the following are common types of export representatives in the United
States EXCEPT:

a. combination export manager (CEM).
b. export merchant.
c. export commission house.
d. export consortium.
e. the trading company.

Difficulty: (3) Knowledge: (F) Page: 495

23. The _________________ buys and sells on their own accounts and assumes all the
responsibilities of exporting a product. Manufacturers do not control sales activities.

a. combination export manager (CEM)
b. export merchant
c. export commission house
d. piggyback exporter
e. trading company

Difficulty: (2) Knowledge: (F) Page: 495

24. The _____________________ is someone who brings together an overseas buyer
and a U.S. manufacturer for the purpose of an export sale and earns a commission
for establishing a contact that results in a sale.

a. combination export manager (CEM)
b. export broker
c. export commission house
d. piggyback exporter
e. trading company

Difficulty: (2) Knowledge: (F) Page: 495

25. A(n) ____________________ places orders on behalf of its foreign clients
with U.S. manufacturers and acts as a finder for its client to get the best buy.

a. combination export manager (CEM)
b. export broker
c. export commission house
d. piggyback exporter
e. trading company

Difficulty: (2) Knowledge: (F) Page: 495

26. ___________________ are large, foreign organizations engaged in exporting and
importing. They buy on their own account and export the goods to their home
country.

a. Combination export manager (CEM)
b. Export broker
c. Export commission house
d. Piggyback exporter
e. Trading companies

Difficulty: (2) Knowledge: (F) Page: 495

27. A(n) ___________________ refers to the practice where U.S. firms that have an
established export department assume, under a cooperative agreement, the
responsibility of exporting the products of other U.S. companies.

a. combination export manager (CEM)
b. export broker
c. export commission house
d. piggyback exporter
e. trading company

Difficulty: (2) Knowledge: (F) Page: 496

28. Which of the following is an example of a large trading company?

a. IBM.
b. General Motors.
c. Mitsui.
d. Volvo.
e. Wal-Mart.

Difficulty: (1) Knowledge: (A) Page: 496

29. _________________ exporting occurs when a manufacturer or exporter sells directly
to an importer or buyer located in a foreign market.

a. Direct
b. Indirect
c. Parallel
d. Synchronized
e. Dual

Difficulty: (2) Knowledge: (F) Page: 496

30. With respect to direct exporting, the primary difference between a foreign sales
subsidiary and a foreign sales branch is that the foreign sales branch:

a. is larger.
b. is smaller.
c. is not a separate legal entity.
d. uses home country managers.
e. does not pay taxes.

Difficulty: (2) Knowledge: (A) Page: 497

31. The following characteristics (high set-up costs, higher credit risks, and higher
customer loyalty) apply to which of the following forms of exporting?

a. direct
b. indirect
c. parallel
d. synchronized
e. dual

Difficulty: (2) Knowledge: (A) Page: 497, Exhibit 16-2

32. In the U.S., ______________________ allows exporters to file export information at
no cost over the Internet.

a. Auxiliary Export System
b. Amended Export System
c. Automated Export System
d. Alliance Export System
e. none of the above

Difficulty: (3) Knowledge: (F) Page: 497

33. All exports from the United States (except to Canada and U.S. territories) require
a(n) _____________________.

a. letter of credit.
b. letter of ownership.
c. letter for transportation permission.
d. export license.
e. social security number.

Difficulty: (2) Knowledge: (A) Page: 498

34. The second pillar of the export transaction is the logistics of the export transaction.
Included in this transaction are all of the following EXCEPT:

a. a bill of lading.
b. the terms of sale.
c. the payment.
d. a dispute mechanism.
e. monitoring of the shipment and delivery of the goods.

Difficulty: (3) Knowledge: (F) Page: 499

35. A(n) _________________________ is a contract between the exporter and the
shipper indicating that the shipper has accepted responsibility for the goods and
will provide transportation in return for payment.

a. bill of disclosure
b. term of sale
c. payment statement
d. transportation invoice
e. bill of lading

Difficulty: (2) Knowledge: (F) Page: 499

36. A(n) _______________________ is a bill for the goods stating basic information
about the transaction, including a description of the merchandise, total cost of the
goods sold, addresses of the buyer and seller, and delivery and payment.

a. bill of disclosure
b. term of sale
c. payment statement
d. commercial invoice
e. bill of lading

Difficulty: (2) Knowledge: (F) Page: 499

37. When the exporter quotes a price for the goods, including charges for delivery
of the goods alongside a vessel at a port (the seller covers all costs of unloading and
wharfage at the shipment port and the buyer covers all other charges to get the goods
to the buyer), this form of terms of shipment is called:

a. ex-works.
b. free alongside ship (FAS).
c. free on board (FOB).
d. cost and freight (CFR).
e. Cost, Insurance, and Freight (CIF).

Difficulty: (3) Knowledge: (A) Page: 501, Exhibit 16-4

38. INCOTERMS 2000 which went into effect from January 1, 2000 and is an acronym
for ____________________________, are the internationally accepted standard
definitions for the terms of sale by the International Chamber of Commerce.

a. Industrial Commercial Terms
b. Insurance Commercial Terms
c. Irrevocable Commercial Terms
d. International Commercial Terms
e. none of the above

Difficulty: (3) Knowledge: (F) Page: 501

39. When the exporter quotes a price for the goods, including charges for delivery
of the goods alongside a vessel at a port (the seller covers all costs of unloading and
wharfage plus loading the goods on the vessel and the buyer covers all other charges
to get the goods to the buyer), this form of terms of shipment is called:

a. ex-works.
b. free alongside ship (FAS).
c. free on board (FOB).
d. cost and freight (CFR).
e. Cost, Insurance, and Freight (CIF).

Difficulty: (3) Knowledge: (A) Page: 501, Exhibit 16-4

40. All of the following are possible payment terms for goods exported to another nation
EXCEPT:

a. advance payment
b. third party draft.
c. confirmed irrevocable letter of credit.
d. unconfirmed irrevocable letter of credit
e. open account

Difficulty: (3) Knowledge: (F) Page: 502, Exhibit 16-5

41. A(n) __________________ is a payment form where a shipment is held by the
importer until the merchandise has been sold, at which time payment is made to the
exporter.

a. cash with order
b. confirmed irrevocable letter of credit
c. sight draft
d. time draft
e. consignment

Difficulty: (1) Knowledge: (F) Page: 502, Exhibit 16-5

42. A(n) _______________________ is a payment form where a cash payment occurs
when the order is placed.

a. cash with order
b. confirmed irrevocable letter of credit
c. sight draft
d. time draft
e. consignment

Difficulty: (1) Knowledge: (F) Page: 502, Exhibit 16-5

43. A(n) ________________________ is a payment form where a draft is so drawn as to
be payable on presentation to the drawee (usually the buyer).

a. cash with order
b. third party draft
c. confirmed irrevocable letter of credit
d. sight draft
e. time draft

Difficulty: (2) Knowledge: (F) Page: 502, Exhibit 16-5

44. The terms of payment between the exporter and importer are a matter of negotiation
and depend on a variety of factors. All of the following might be on that list of
factors EXCEPT:

a. the buyer’s credit standing.
b. the seller’s reputation.
c. the amount of the sale transaction.
d. the risks associated with the type of merchandise to be shipped.
e. the usual practice in the trade.

Difficulty: (2) Knowledge: (F) Page: 500

45. _______________ risk is the risk that the importer will not pay or fail to pay on the
agreed terms.

a. Credit
b. Exchange
c. Transfer
d. Importer
e. Exporter

Difficulty: (1) Knowledge: (F) Page: 500

46. ___________________ risk exists when the sale is in the importer’s currency and
that currency depreciates in terms of the dollar, leaving the exporter with a lesser
number of dollars.

a. Foreign credit
b. Foreign exchange
c. Foreign transfer
d. Foreign payment
e. Foreign delivery

Difficulty: (1) Knowledge: (F) Page: 500

47. ___________________ risk refers to the chances that payment will not be made
due to the importer’s inability to obtain U.S. dollars and transfer them to the
exporter.

a. Credit
b. Exchange
c. Transfer
d. Importer
e. Exporter

Difficulty: (1) Knowledge: (F) Page: 500

48. A confirmed irrevocable letter of credit is issued by the ____________ bank and
confirmed by a bank usually in the ____________ country.

a. importer’s, exporter’s
b. exporter’s, importer’s
c. investment, exporter’s
d. government’s, exporter’s
e. none of the above

Difficulty: (3) Knowledge: (F) Page: 502, Exhibit 16-5

49. A shipment that is held by the importer until the merchandise has been sold is called:

a. advance payment.
b. confirmed irrevocable letter of credit.
c. unconfirmed irrevocable letter of credit.
d. open account.
e. consignment.

Difficulty: (2) Knowledge: (F) Page: 502, Exhibit 16-5

50. The Japan External Trade Organization (JETRO) which helps foreign businesses to
export to Japan is affiliated with Japan’s _____________________________.

a. Ministry of Business, Trade, and Industry
b. Ministry of Economy, Trade, and Industry
c. Ministry of Economy, Trade, and Technology
d. Ministry of Economy, Trade, and Logistics
e. Ministry of Economy, Trade, and Agriculture

Difficulty: (3) Knowledge: (F) Page: 504

51. The Ex-Im Bank is described as being a:

a. bank that lends exclusively to importers.
b. new name for the old “World Bank.”
c. federally supported bank whose mission is to thwart communism by making
loans to anti-communist nations and exporters.
d. federally supported bank whose mission is to support exporters with necessary
credit.
e. bank which is not in existence yet. The concept still awaits Congressional
approval.

Difficulty: (2) Knowledge: (F) Page: 505

52. The main emphasis of the Ex-Im Bank’s lending practices today is in the area of:

a. loans to Japan.
b. loans to Taiwan.
c. loans to Mexico.
d. loans for prior bankrupt countries.
e. project finance (such as infrastructure projects—roads, dams, etc.).

Difficulty: (2) Knowledge: (A) Page: 505

53. Ex-Im Bank is not an aid or development agency, but a_____________________
corporation.

a. state
b. domestic
c. regional
d. private
e. government

Difficulty: (2) Knowledge: (A) Page: 505

54. Ex-Im Bank has two major programs in place which include:

a. Project Finance Division and Working Capital Program.
b. Project Finance Division and Working Capital Business Program.
c. Project Finance Division and Working Capital Export Program.
d. Project Finance Division and Working Capital Guarantee Program.
e. Project Finance Division and Working Capital Infrastructure Program.

Difficulty: (1) Knowledge: (A) Page: 505

55. One of the biggest advantages the United States has in importing is that U.S.
companies can:

a. order unlimited amounts of goods.
b. always sell what they order abroad.
c. be assured that the government will support their trade efforts.
d. pay in U.S. dollars–a currency accepted everywhere.
e. always turn a profit with the goods they buy because of market demand.

Difficulty: (3) Knowledge: (A) Page: 508

56. Since most world trade is done in dollars, the U.S. importer does not usually need to
_____________ foreign exchange transactions.

a. capitalize
b. hedge
c. capitate
d. survey
e. monitor

Difficulty: (1) Knowledge: (F) Page: 508

57. All of the following are activities that an importer would normally go through in
order to complete the purchase process. Which of the items listed below does not
logically fit?

a. Find a bank in the exporter’s country to handle financial transactions.
b. Establish a letter of credit to smooth the process.
c. Decide on the mode of transfer of goods.
d. Always use an export or import middleman to expedite the process.
e. Check compliance with national laws.

Difficulty: (2) Knowledge: (A) Page: 510

58. When a shipment reaches the United States, the consignee (usually the importer) will
file ______________ with the port director at the port of entry.

a. visas
b. product passports
c. bills of landing
d. bills of shipping
e. entry documents

Difficulty: (2) Knowledge: (F) Page: 510

59. With respect to shipments entering the United States, a(n) __________ is a guarantee
by someone that the duties and any potential penalties will be paid to the customs
of the importing country.

a. line of credit
b. transfer
c. bond
d. permit
e. tariff

Difficulty: (1) Knowledge: (F) Page: 510

60. Merchandise arriving from Canada and Mexico, trade fair goods, and perishable
goods and shipments assigned to the U.S. government almost always utilize the
____________________ to enable fast delivery after arrival.

a. quick release form
b. quick permit form
c. Customs form 7200
d. Special Permit for Immediate Delivery
e. block and load release form

Difficulty: (2) Knowledge: (A) Page: 511

61. If goods enter a ________________, they can be re-exported anytime (up to five
years) without payment of duty.

a. holding pen
b. corporate security zone
c. bonded warehouse
d. wharf zone
e. parallel import zone

Difficulty: (2) Knowledge: (F) Page: 511

62. When import duties are paid, the _________________ duty is a percentage of the
value of the merchandise.

a. ad valorem
b. specific
c. compound
d. nontariff
e. import

Difficulty: (1) Knowledge: (F) Page: 511

63. When import duties are paid, the _________________ duty is a specified amount
of the per unit weight or other quantity of the merchandise.

a. ad valorem
b. specific
c. compound
d. nontariff
e. import

Difficulty: (2) Knowledge: (F) Page: 511

64. When import duties are paid, the _________________ duty is a combination of a
specified amount of the per unit weight or other quantity of the merchandise plus
an ad valorem rate.

a. bonded
b. corkage
c. compound
d. nontariff
e. import

Difficulty: (1) Knowledge: (F) Page: 511

65. _________________ duties are assessed on imported merchandise sold to
importers in the United States at a price that is less than the fair market value.

a. Ad valorem
b. Specific
c. Compound
d. Nontariff
e. Antidumping

Difficulty: (1) Knowledge: (F) Page: 511

66. ______________________ duties are duties that are assessed to counter the
effects of subsidies provided by foreign governments to goods that are exported
to the United States.

a. Ad valorem
b. Specific
c. Compound
d. Countervailing
e. Antidumping

Difficulty: (1) Knowledge: (F) Page: 511

67. ________________ channels refer to the legal export/import transaction involving
genuine products into a country by intermediaries other than the authorized
distributors.

a. Black market
b. Gray market
c. Positioned
d. Zoned
e. Red zone

Difficulty: (2) Knowledge: (F) Page: 512

68. Another name for gray market channels is _________________.

a. positioned imports
b. concentric marketing
c. strategic entry imports
d. parallel imports
e. sidebar hedging

Difficulty: (2) Knowledge: (A) Page: 512

69. Brand reputation is a critical element in _________________ products.

a. gray
b. black
c. furniture
d. smuggled
e. none of the above

Difficulty: (1) Knowledge: (A) Page: 512

70. All of the following conditions lend to the development of gray markets EXCEPT:

a. currency fluctuations.
b. differences in market demand.
c. legal differences.
d. opportunistic behavior.
e. foreign trade outlets.

Difficulty: (3) Knowledge: (A) Page: 513

True/False Short Answer

71. Exporting is the first mode of foreign entry used by many companies.

Difficulty: (1) Knowledge: (F) Page: 491

72. Exports represent about 4 percent of the U.S. gross domestic product (GDP).

Difficulty: (3)Knowledge: (F) Page: 492

73. For a firm beginning exports for the first time, the first step is to use available primary data.

Difficulty: (1) Knowledge: (F) Page: 492

74. The World Bank publishes the World Development Report.

Difficulty: (2) Knowledge: (F) Page: 494

75. A standardized product is not the easiest to sell abroad.

Difficulty: (1) Knowledge: (F) Page: 494

76. _________________ exporting involves using independent U.S. middlemen to
market the firm’s products overseas.

77. The combination export manager (CEM) acts as the import department to a small
importer.

Difficulty: (2) Knowledge: (F) Page: 495

78. Piggyback exporting refers to the practice where U.S. firms that have an established
export department assume, under a cooperative agreement, the responsibility of
exporting the products of other U.S. companies.

Difficulty: (2) Knowledge: (F) Page: 495

79. In the U.S., the Automated Export System (AES) enables exporters to file import
information at no cost over the Internet.

Difficulty: (1) Knowledge: (F) Page: 497

80. Exports from the United States do not require an export license.

Difficulty: (1) Knowledge: (F) Page: 498

81. A bill of lading is a contract between the exporter and the shipper indicating that the
shipper has accepted responsibility for the goods and will provide transportation in
return for payment.

Difficulty: (1) Knowledge: (F) Page: 499

82. INCOTERMS is an acronym for _____________________________________.

83. FOB is an acronym for ______________________.

84. Exchange risk is the risk that the importer will not pay or fail to pay on the agreed
terms.
Difficulty: (2) Knowledge: (F) Page: 502

85. A confirmed irrevocable letter of credit is issued by the importer’s bank and
confirmed by a bank usually in the exporter’s country.

Difficulty: (3) Knowledge: (F) Page: 502

86. The Japan External Trade Organization (JETRO) is affiliated with the U.S.
department of Commerce.

Difficulty: (1) Knowledge: (F) Page: 504

87. The World Bank is a federally supported bank whose mission is to support the Ex-Im
Bank.

Difficulty: (1) Knowledge: (F) Page: 505

88. The American Export Trading Company act was passed in 1982.

Difficulty: (2) Knowledge: (F) Page: 506

89. More than 90 percent of the world’s trade is denominated in U.S. dollars.

Difficulty: (2) Knowledge: (F) Page: 508

90. With respect to importing fees, a(n) ______________ duty is a percentage of the
value of the merchandise.

91. Antidumping duties are assessed on imported merchandise sold to importers in
the United States at a price that is less than the fair market value.

Difficulty: (2) Knowledge: (F) Page: 511

92. Gray market channels are also known as parallel imports.

Difficulty: (1) Knowledge: (F) Page: 512

93. Three conditions are necessary for gray markets to develop. The conditions include:
(a) Availability of products in other markets, (b) limited trade barriers, and (c)
_______________________.

94. Gray marketing is an illegal trade transaction.

95. Smuggling and black market activities are illegal global markets.

Essay

96. Indicate the factors that a prospective exporter might examine to choose an export market.

97. Describe the direct and indirect channels of distribution that are available to exporters. As part of the description process, indicate any conditions or advantages that might be present in these channels.

98. Pick three (3) of the options available to exporters when it comes to terms of payment. Explain each of the options available based on your choice.

99. Describe the role the U.S. government plays in maintaining and fostering export activities. Demonstrate this role with specific examples of activities that the government might undertake.

100. Describe gray markets. Explain how they develop. Describe your feelings about buying from a gray market.

Chapter 17

Multiple Choice

1. The capstone of a company’s global marketing activities is its ____________________________.

a. strategic marketing plan.
b. strategic marketing design.
c. strategic marketing circle.
d. strategic marketing products.
e. strategic marketing processes.

Difficulty: (2) Knowledge: (F) Page: 575

2. The content of a global strategic marketing plan covers the following four areas
EXCEPT:

a. a market situation analysis.
b. objectives.
c. strategies.
d. regional analysis.
e. action plans.

Difficulty: (2) Knowledge: (F) Page: 576

3. The first step of a global strategic marketing plan starts with:

a. market situation analysis.
b. actions plans.
c. strategies.
d. global ranking.
e. objectives.

Difficulty: (1) Knowledge: (F) Page: 576

4. Top-down strategic planning is based on a _____________________ approach.

a. decentralized
b. centralized
c. regional
d. globalized
e. local

Difficulty: (2) Knowledge: (F) Page: 576

5. A bottom-up planning approach starts with the ______________ subsidiaries.

a. local
b. global
c. transnational
d. manufacturing
e. high-tech

Difficulty: (2) Knowledge: (F) Page: 576

6. A recent survey of large multinational corporations found that pure ______________
planning was most popular (used by 66 percent of the companies surveyed).

a. bottom-up
b. top-down
c. strategic
d. long-term
e. short-term

Difficulty: (3) Knowledge: (F) Page: 576

7. A series of key criteria impact global organizations and their organizational designs.
All of the following would be major environmental influences on the organizational
design decision and structure EXCEPT:

a. competitive environment.
b. rate of environmental change.
c. product diversity.
d. regional trading blocs.
e. nature of customers.

Difficulty: (2) Knowledge: (F) Pages: 577-78

8. As international sales grow, the organizational structure will evolve to mirror the
growing importance of the firm’s _________________ activities.

a. local
b. regional
c. global
d. strategic
e. manufacturing

Difficulty: (1) Knowledge: (F) Page: 578

9. A series of key criteria impact global organizations and their organizational designs.
All of the following would be major firm-specific factors on the organizational
design decision and structure EXCEPT:

a. strategic importance of international business.
b. product diversity.
c. company heritage.
d. regional trading blocs.
e. quality of local managerial skills.

Difficulty: (3) Knowledge: (F) Page: 578

10. Which of the following would be considered a key environmental factor that
influences
global organization design decisions and structure?

a. strategic importance of international business.
b. product diversity.
c. company heritage.
d. regional trading blocs.
e. quality of local managerial skills.

Difficulty: (3) Knowledge: (F) Page: 578

11. In the area of global organizational design, the major firm-specific factors include the
following EXCEPT:

a. local customers.
b. strategic importance of international business.
c. product diversity.
d. company heritage.
e. quality of local managerial skills.

Difficulty: (3) Knowledge: (A) Page: 578

12. Typically, when overseas sales account for a very small fraction of the company’s
overall sales revenues, ____________________ can easily handle the firm’s
global activities.

a. complex organizational structures
b. network organizational structures
c. simple organizational structures
d. a virtual system
e. a matrix system

Difficulty: (1) Knowledge: (A) Page: 579

13. All of the following are examples of the principal designs that firms can adopt to
organize their global activities EXCEPT:

a. an international division.
b. a city division.
c. a product-based structure.
d. a geographic structure.
e. a matrix structure.

Difficulty: (2) Knowledge: (F) Pages: 578-79

14. Under the _____________________ design of global activities organization, the
company basically has two entities (the domestic division and the international
division).

a. international division
b. cryptic division
c. product-based structure
d. geographic structure
e. matrix structure

Difficulty: (1) Knowledge: (A) Page: 578

15. Under the _____________________ design of global activities organization, the
company is organized along its various product divisions.

a. international division
b. cryptic division
c. product-based structure
d. geographic structure
e. matrix structure

Difficulty: (1) Knowledge: (A) Page: 578

16. Under the _____________________ design of global activities organization, the
company is configured along areas such as countries, regions, or some combination
of these two levels.

a. international division
b. cryptic division
c. product-based structure
d. geographic structure
e. matrix structure

Difficulty: (1) Knowledge: (A) Page: 578

17. Under the _____________________ design of global activities organization, the
company uses the option of integrating two approaches so there is a dual chain of
command.

a. international division
b. cryptic division
c. product-based structure
d. geographic structure
e. matrix structure

Difficulty: (1) Knowledge: (A) Page: 579

18. Most companies that engage in global marketing will initially start off by establishing
a(n):

a. city division.
b. country division.
c. international division.
d. export department.
e. export commission manager.

Difficulty: (2) Knowledge: (F) Page: 579

19. Which of the following organizational structures is most appropriate for the company
whose product line is not too diverse and does not require a large amount of
adaptation to the local country needs?

a. international division
b. cryptic division
c. global product division structure
d. geographic structure
e. matrix structure

Difficulty: (2) Knowledge: (A) Page: 579

20. Which of the following organizational structures is most appropriate for the high-tech
company with highly complex products or MNCs with a very diversified product
portfolio?

a. international division
b. cryptic division
c. global product division structure
d. geographic structure
e. matrix structure

Difficulty: (2) Knowledge: (A) Page: 579

21. If a high-tech company organizes itself by breaking into business networks, radio
communications, public telecommunications, components, and microwave systems,
which of the following organizational structures would probably be in use?

a. international division
b. global product division structure
c. global network solutions
d. geographic structure
e. matrix structure

Difficulty: (3) Knowledge: (A) Page: 579

22. All of the following are benefits of the global product division structure EXCEPT:

a. large degree of flexibility in terms of cross-country resource allocation.
b. large degree of flexibility in terms of cross-country strategic planning.
c. scale economics.
d. facilitates a global focus.
e. easy communication and coordination among the various product divisions
without duplication of effort.

Difficulty: (2) Knowledge: (F) Page: 579

23. Which of the following areas are very difficult for a global product division to
accomplish (therefore, this area is a shortcoming)?

a. large degree of flexibility in terms of cross-country resource allocation.
b. large degree of flexibility in terms of cross-country strategic planning.
c. scale economics.
d. facilitates a global focus.
e. easy communication and coordination among the various product divisions
without duplication of effort.

Difficulty: (3) Knowledge: (A) Page: 580

24. All of the following are problems with country-based subsidiaries EXCEPT:

a. they are too costly.
b. they have coordination problems with corporate headquarters.
c. cross-fertilization is hindered.
d. local market conditions go unnoticed.
e. a not-invented-here mentality exists.

Difficulty: (3) Knowledge: (F) Page: 580

25. All of the following are profiles that are suggested for the twenty-first century
country manager EXCEPT:

a. the trader.
b. the power broker.
c. the builder.
d. the ambassador.
e. the cabinet member.

Difficulty: (3) Knowledge: (F) Pages: 581-82

26. As a profile of a twenty-first century country manager, _________________
establishes a beachhead in a new market or heads a recently acquired local distributor.
They should have an entrepreneurial spirit.

a. the trader
b. the representative
c. the builder
d. the ambassador
e. the cabinet member

Difficulty: (2) Knowledge: (A) Page: 581

27. As a profile of a twenty-first century country manager, _________________
is a team player with profit and loss responsibility for a small- to medium-sized
country. Team-manship is key here.
a. the trader
b. the representative
c. the builder
d. the ambassador
e. the cabinet member

Difficulty: (2) Knowledge: (A) Page: 582

28. As a profile of a twenty-first century country manager, _________________
develops local markets. They are entrepreneurs who are willing to be part of regional
global strategy teams.

a. the trader
b. the representative
c. the builder
d. the ambassador
e. the cabinet member

Difficulty: (2) Knowledge: (A) Page: 582

29. As a profile of a twenty-first century country manager, _________________
is in charge of large and/or strategic markets. Prime responsibilities include handling
government relations and integrating acquisitions and strategic alliances.

a. the trader
b. the power broker
c. the builder
d. the ambassador
e. the cabinet member

Difficulty: (2) Knowledge: (A) Page: 582

30. With respect to regional structures, a recent survey found that all of the following
roles were performed EXCEPT:

a. scouting.
b. liberating.
c. strategic simulation.
d. signaling commitment.
e. pooling resources.

Difficulty: (3) Knowledge: (F) Page: 583

31. The _________________ structure of organization explicitly recognizes the
multidimensional nature of global strategic decision making.

a. international division
b. customer division
c. global product division
d. geographic
e. matrix

Difficulty: (2) Knowledge: (F) Page: 583

32. The primary advantages of the matrix structure for organizing is that they represent
the growing complexities of the global market arena and:

a. it fosters team spirit and cooperation among managers.
b. it secures higher profits.
c. it does not duplicate efforts.
d. it has smooth and accurate communications.
e. it has clear lines of communication with no confusion.

Difficulty: (2) Knowledge: (F) Page: 584

33. All of the following are considered to advantages of the matrix structure of
organizing EXCEPT:

a. it fosters team spirit.
b. it fosters cooperation among managers.
c. it does not duplicate efforts.
d. it causes managers to think globally.
e. it causes managers to think globally but act locally.

Difficulty: (3) Knowledge: (F) Page: 584

34. Which of the following would be considered a disadvantage or drawback of the
matrix structure of organizing?

a. it does not foster team spirit.
b. it does not foster cooperation among managers.
c. it duplicates efforts and can cause confusion.
d. it prohibits managers from thinking globally.
e. it causes managers to think locally only.

Difficulty: (2) Knowledge: (A) Page: 584

35. All of the following are disadvantages or drawbacks of the matrix structure of
organizing EXCEPT:

a. dual reporting leads to conflicts and confusion.
b. dual profit responsibilities lead to conflicts and confusion.
c. bureaucratic bloat.
d. power clashes can occur.
e. managers think globally and act locally.

Difficulty: (1) Knowledge: (A) Page: 584

36. The __________________ is one solution that has been suggested to cope with the
shortcomings associated with the classical hierarchical organization structures.

a. international division
b. global network
c. global product division
d. geographic
e. matrix

Difficulty: (2) Knowledge: (F) Page: 585

37. The __________________ model is an attempt to reconcile the tension between
the need for local responsiveness and the wish to be an integrated whole.

a. international division
b. global network
c. global product division
d. geographic
e. matrix

Difficulty: (2) Knowledge: (F) Page: 585

38. Asea Brown Boveri (ABB), the Swiss-Swedish engineering company is an example
of ______________________.

a. local networking
b. regional networking
c. global networking
d. domestic networking
e. high-tech networking

Difficulty: (2) Knowledge: (F) Page: 586

39. The networked global organization is sometimes referred to as
_____________________.

a. international.
b. multinational.
c. transnational.
d. local-national.
e. quasi-national.

Difficulty: (3) Knowledge: (A) Page: 585

40. In the area of global branding strategies, the following options are used EXCEPT:

a. global branding committee.
b. brand champion.
c. global brand manager.
d. informal, ad-hoc branding meetings.
e. network meetings.

Difficulty: (2) Knowledge: (F) Pages: 26-27

41. In the process of global brand management, if a company decides against a formal
structure, it might still find it worthwhile to have an informal mechanism. This
usually takes the form of a(n) ______________ branding meeting.

a. ad-hoc
b. temporary
c. longitudinal
d. outside
e. domestic

Difficulty: (2) Knowledge: (F) Page: 587

42. Global branding committees are usually made up of ________________
executives.

a. matrix
b. network
c. medium-line
d. top-line
e. bottom-line

Difficulty: (2) Knowledge: (F) Page: 587

43. A ______________________ is a top-line executive (sometimes CEO) who
serves as the brand’s advocate.

a. brand champion
b. product champion
c. local champion
d. corporate champion
e. high-tech champion

Difficulty: (1) Knowledge: (F) Page: 587

44. Global brand manager positions are created when top management lacks
___________________ expertise:

a. high-tech
b. human resources
c. operational
d. manufacturing
e. marketing

Difficulty: (1) Knowledge: (F) Page: 587

45. Several management theorists have made an attempt to come up with the “right”
fit between the MNC’s environment (internal and external) and the organizational
setup. One popular model examines the relationship between organizational
structure, _____________________, and the importance of foreign sales to the
company (as a share of total sales).

a. product prices
b. domestic services
c. foreign product deliveries
d. foreign product diversity
e. purchasing habits

Difficulty: (3) Knowledge: (F) Page: 589, Exhibit 17-6

46. The Stopford and Wells model shows the relationship between the:

a. organizational structure, foreign product diversity and domestic sales.
b. organizational structure, foreign product diversity and local sales.
c. organizational structure, foreign product diversity and the importance of foreign
sales.
d. organizational structure, foreign product diversity and regional sales.
e. organizational structure, foreign product diversity and high-tech sales.

Difficulty: (3) Knowledge: (F) Page: 589, Exhibit 17-6

47. According to the Stopford and Wells model, when companies first explore the global
marketplace, they start off with a(n) ___________________________.

a. local division
b. regional division
c. international division
d. global division
e. none of the above

Difficulty: (2) Knowledge: (F) Page: 589, Exhibit 17-6

48. According to the Stopford and Wells model, as foreign sales expand without an
increase in the firm’s foreign product assortment diversity, the company will most
likely switch to a __________________________ structure.

a. host-country area
b. home-country area
c. global area
d. geographic area
e. local area

Difficulty: (3) Knowledge: (F) Page: 589, Exhibit 17-6

49. A(n) ____________________ can be described as being where country and
regional managers look at strategic issues from multiple perspectives.

a. glocal mindset
b. global mindset
c. local mindset
d. regional mindset
e. country mindset

Difficulty: (1) Knowledge: (F) Page: 590

50. To make global marketing strategies work, companies need to establish a(n)
____________________.

a. career system.
b. development system.
c. control system.
d. appeals system.
e. listening system.

Difficulty: (1) Knowledge: (F) Page: 590

51. The main purpose of a _____________ is to ensure that the behaviors of the
various parties within the organization are in line with the company’s strategic
goals.

a. career system
b. development system
c. control system
d. appeals system
e. listening system

Difficulty: (1) Knowledge: (F) Page: 590

52. All of the following are parts (or basic building blocks) of a formal control system
EXCEPT:

a. the establishment of performance standards.
b. the measurement and evaluation of performance against standards.
c. the analysis and correction of deviation from standards.
d. perfection training.
e. none of the above.

Difficulty: (1) Knowledge: (F) Page: 590-91

53. Formal control systems are also called ________________ control systems.

a. administrative
b. conductive
c. selective
d. bureaucratic
e. strategic

Difficulty: (2) Knowledge: (F) Page: 590

54. The first step in any control process should be to:

a. clearly establish rewards and punishments.
b. set standards (metrics).
c. set controls.
d. set monitoring mechanisms.
e. establish who the controller is.

Difficulty: (1) Knowledge: (F) Page: 590

55. The two types of standards are behavior and ____________________________.

a. outcome-based.
b. performance-based.
c. intellectual-based.
d. strategic-based.
e. structural-based.

Difficulty: (2) Knowledge: (F) Page: 590

56. Although proper reward systems are crucial to motivate subsidiary managers, a
recent study has shown that the key role played is by the presence of ____________.

a. strong leadership
b. bonuses
c. perks
d. due process
e. nondiscrimination

Difficulty: (3) Knowledge: (F) Page: 591

57. The two most common forms of informal control are human resource development
and _________________.

a. manufacturing
b. production
c. network structure
d. strategic control
e. corporate culture

Difficulty: (3) Knowledge: (F) Page: 591

58. Corporate cultures can be clan-based or ___________________.

a. market based
b. leader based
c. employee based
d. symbol based
e. tradition based

Difficulty: (3) Knowledge: (F) Page: 591

59. The __________________ form of corporate culture is distinguished by an
embodiment of a long socialization process; strong, power norms; and a
defined set of internalized controls.

a. market based
b. leader based
c. employee based
d. clan based
e. tradition based

Difficulty: (2) Knowledge: (A) Page: 591

60. The _________________ form of corporate culture is distinguished by norms that
are loose or absent; socialization processes are limited; and control systems are purely
based on performance measures.

a. market based
b. leader based
c. employee based
d. clan based
e. tradition based

Difficulty: (2) Knowledge: (A) Page: 591

61. To shape a shared vision, cultural values primarily demand which of the following
properties?

a. easy to understand in only one way and written in English.
b. have clarity, continuity, and consistency.
c. have symbolism, sex-appeal, and sensitivity.
d. be dynamic, demanding, and declarative.
e. be global, gifted, and guiding.

Difficulty: (2) Knowledge: (A) Page: 592

62. The company’s management programs are another major ________________ control
tools.

a. informal
b. formal
c. simple
d. dynamic
e. complex

Difficulty: (1) Knowledge: (A) Page: 592

True/False Short Answer

63. The capstone of a company’s global marketing activities is its strategic marketing plan.

Difficulty: (1) Knowledge: (F) Page: 575

64. The first step of a global strategic marketing plan starts with market situation analysis.

Difficulty: (2) Knowledge: (F) Page: 576

65. The content of a global strategic marketing plan covers four areas which include:
market situation analysis, objectives, strategies, and ____________________.

66. Companies with substantial product diversity tend to go for a global geographic
division configuration.

Difficulty: (2) Knowledge: (F) Page: 579

67. The charter of the international division is to develop and coordinate the firm’s global
operations.

Difficulty: (3) Knowledge: (F) Page: 579

68. The global product structure is most appropriate for companies whose product line
is not too diverse and does not need a large amount of adaptation to local country
needs.

Difficulty: (2) Knowledge: (A) Page: 579

69. Under the ________________ design, the company configures its organization
along geographic areas.

70. Country-focused organizations can be very good forms of structure because they
tend to be less costly than other forms.

Difficulty: (3) Knowledge: (F) Page: 580

71. Under the __________________ design, the company integrates two approaches and
has a dual chain of command.

72. Some corporate strategy experts believe that in the twenty-first century, the role of the
country manager will be minimal.

Difficulty: (2) Knowledge: (F) Page: 581

73. The ___________________ type of manager is characterized as being in charge of
large and/or strategic markets. They also handle government relations.

74. With respect to organizational forms, the matrix structure explicitly recognizes the
multidimensional nature of global strategic decision making.

Difficulty: (1) Knowledge: (F) Page: 583

75. The matrix structure explicitly recognizes the multidimensional nature of global
strategic decision making.

Difficulty: (2) Knowledge: (A) Page: 583

76. Matrix structure can be a bureaucratic bloat.

Difficulty: (2) Knowledge: (A) Page: 583

77. The network global organization is sometimes also referred to as an “ethnocentric”
organization.

Difficulty: (1) Knowledge: (F) Page: 585

78. Asea Brown Boveri is a prime example of networking.

Difficulty: (2) Knowledge: (F) Page: 585

79. A brand champion is not a top-line executive.

Difficulty: (3) Knowledge: (F) Page: 587

80. The Stopford-Wells international structural stages model shows the relationship
between the MNCs’ networks and their overseas productivity.

Difficulty: (3) Knowledge: (A) Page: 589

81. The concept of a glocal mind-set encourages looking at strategic issues from multiple
perspectives.

Difficulty: (3) Knowledge: (A) Page: 590

82. The first step in the control process is to set standards.

Difficulty: (1) Knowledge: (F) Page: 590

83. Clan cultures embody a long socialization process, strong powerful norms, and a
defined set of internalized controls.

Difficulty: (2) Knowledge: (F) Page: 591

84. In market cultures, norms are always very strong.

Difficulty: (3) Knowledge: (F) Page: 591

85. The company’s management programs are another major formal control tools.

Difficulty: (2) Knowledge: (F) Page: 592

Essay

86. List and briefly discuss the key criteria that impact global organizational design.

87. List and briefly describe the principal organizational design options that firms can use to organize their global activities. Cite the advantages and disadvantages of each form.

88. Describe the five profiles that country managers might need to fit to be able to lead their organizations into the challenges of the twenty-first century.

89. Explain how a global networked organization might differ from a matrix organizational structure. To answer this question, review the characteristics of both structures carefully.

90. Although some feel country managers are obsolete, most companies believe they are essential to the firm. What reasons make country managers more important than ever? What roles will they play?

Chapter 18

Multiple Choice

1. Emerging markets can be found in which of the following areas?

a. Africa
b. Asia
c. Latin America
d. Eastern Europe
e. All of the above

Difficulty: (1) Knowledge: (F) Page: 597

2. Emerging markets refer to:

a. countries that used to be called “less developed countries.”
b. countries that were previously called “Third World.”
c. countries that lacked convertible currency.
d. countries that were communist.
e. both a and b

3. Which of the following is NOT a category of emerging markets?

a. developed countries
b. advanced emerging
c. secondary emerging
d. frontier countries
e. both a and d

4. Which of these does not describe the BRIC nations?

a. They consist of Brazil, Russia, India and China.
b. They have large populations.
c. They constitute almost 15 percent of world GDP.
d. They are developed countries.
e. All have growing economies.

5. The BRIC nations:

a. are all rich in natural resources.
b. are small countries with high income economies
c. are expected to surpass the GDP of the G7 nations within 20 years.
d. constitute a trade bloc.
e. none of the above

6. The Next Eleven:

a. is a George Clooney movie sequel.
b. consists of a diverse group of emerging markets.
c. constitute their own trade bloc.
d. are all located in Asia.
e. none of the above

7. Which of the following nations is NOT a member of the Next Eleven?

a. Malaysia
b. Indonesia
c. Egypt
d. Mexico
e. Nigeria

Difficulty: (2) Knowledge: (F) Page: 599

8. What event caused severe setbacks to many emerging markets?

a. global warming
b. China’s rise as a global superpower
c. losses in the World Cup soccer matches
d. the Asian financial crisis
e. EU focus on North Africa as a trading partner

9. Emigrant workers from emerging markets:

a. are a nuisance to the countries they work in.
b. deplete the economy of their home country.
c. are almost always unskilled workers.
d. form local communities abroad that can be leveraged.
e. travel only within their own continent.

Difficulty: (2) Knowledge: (A) Page: 599

10. Which country has the greatest number of mobile phone subscribers per 100 inhabitants?

a. Italy
b. Russia
c. Germany
d. United Kingdom
e. Nigeria

Difficulty: (1) Knowledge: (F) Page: 601, Exhibit 18-2

11. After China, the country with the largest shopping malls in the world is:

a. United States
b. Philippines
c. Turkey
d. Canada
e. Malaysia

Difficulty: (1) Knowledge: (F) Page: 602, Exhibit 18-3

12. Because emerging markets have underdeveloped infrastructure:

a. they cannot afford the best products from MNCs.
b. they can leapfrog old technology.
c. they are more eager to adopt new products.
d. R&D efforts are centered in these markets to generate new ideas.
e. distribution channels will be easier to set up.

Difficulty: (2) Knowledge: (A) Page: 600

13. Emerging markets:

a. cannot afford the most modern products.
b. are innovative in service offerings.
c. embrace new products quickly.
d. have low time-to-takeoff for new products.
e. all of the above

Difficulty: (2) Knowledge: (A) Page: 605

14. Global competitors:

a. are not headquartered in emerging markets.
b. duel for market share in emerging markets but only consist of MNCs from developed countries.
c. come only from the BRIC nations.
d. may emerge from any nation to challenge established MNCs.
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 607

15. Significant companies from emerging markets are leaders in which of these industries?

a. smart phones
b. computers
c. beer
d. cars
e. all of the above

Difficulty: (2) Knowledge: (F) Page: 604

16. Acer, the world leader in laptop manufacturing and design, is based in which country?

a. South Korea
b. Taiwan
c. China
d. Japan
e. Singapore

Difficulty: (2) Knowledge: (F) Pages: 604

17. Jollibee competes in which industry around the world?

a. theme parks
b. entertainment
c. fast food
d. children’s clothing
e. shoes

Difficulty: (2) Knowledge: (F) Page: 603

18. Jollibee is a major international player that has its headquarters in ________.

a. Malaysia
b. Indonesia
c. China
d. Philippines
e. India

Difficulty: (2) Knowledge: (F) Page: 604

19. Which of the following brands has NOT been bought by firms in emerging markets?

a. Miller beer
b. Jaguar
c. IBM PC
d. Ferrari
e. Budweiser

Difficulty: (2) Knowledge: (F) Page: 604

20. One strategy used by the new champions to succeed in major markets is:

a. reviving old technology to save money.
b. copying the same model as MNCs from developed markets but with cheaper items.
c. employing the latest technology.
d. training staff in foreign companies first.
e. both a and d

Difficulty: (2) Knowledge: (A) Pages: 604-6

21. Emerging market champions:

a. avoid new technology because it is too expensive.
b. use a combination of old technology and cheap labor for a competitive advantage.
c. leapfrog to the newest technologies to offer quality products.
d. copy MNC products to avoid problems with product development.
e. try to avoid innovation.

Difficulty: (2) Knowledge: (A) Page: 605

22. Rapid scale-up of new champions:

a. doesn’t occur because capital is in short supply.
b. can be done by absorbing smaller rivals.
c. is achieved by investing more than smaller rivals.
d. both b and c
e. can only be done with the help of outside loans from such as the World Bank.

Difficulty: (2) Knowledge: (A) Page: 606

23. When would emerging market companies use a dodge strategy?

a. when its assets are transferable
b. when there is little pressure to globalize
c. when industry pressure is high
d. when assets are only valuable in the home market
e. both c and d

Difficulty: (3) Knowledge: (A) Page: 606

24. An emerging market company would be a defender when:

a. its assets are transferable.
b. there is little pressure to globalize.
c. industry pressure is high.
d. assets are only valuable in the home market.
e. both b and d

Difficulty: (3) Knowledge: (A) Pages: 606-7

25. When competing with the new champions from emerging markets, MNCs:

a. should give up—the new champions have cheaper labor and the latest technology.
b. can ignore the new champions—they are only effective in emerging markets.
c. should focus on the high end of the market and leave the rest to the local companies.
d. buy out local rivals and use them to challenge the new champion in the home market.
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 608

26. MNCs are being threatened by new champions from the emerging markets. Which of the following strategies is NOT recommended for them?

a. Continue to use low cost sourcing in emerging markets.
b. Sell only goods developed by home country R&D in emerging markets.
c. Ignore emerging market branding strategies as being too elementary.
d. Do not invest in the mass markets of emerging economies as they will never amount to much revenue.
e. All of the above are not suggested.

Difficulty: (2) Knowledge: (A) Page: 608

27. Companies from the emerging markets are proving to be surprising challengers to older, larger MNCs. Which of the following would you recommend as an MNC strategic response?

a. Invest in growing mass markets of developing countries.
b. Partner with companies from the emerging markets.
c. Buy out smaller rival firms in the emerging markets.
d. Consider developing countries as more than just manufacturing sites.
e. All of the above

Difficulty: (2) Knowledge: (A) Page: 608

28. BOP stands for:

a. a type of music common to developing countries.
b. bottom of the pyramid.
c. bottom of the pile.
d. boost our profits.
e. none of the above

Difficulty: (1) Knowledge: (F) Page: 608

29. Some people are optimistic about the BOP as a market segment. This is because:

a. they are hopeless romantics and can’t face reality.
b. there is a great deal of untapped money in the BOP.
c. BOP is critical for long term growth of the company.
d. the BOP needs help and would welcome input from outsiders.
e. only b and c

Difficulty: (3) Knowledge: (A) Page: 609

30. Despite its dismal financial condition, the BOP has support as a viable market segment. This is because:

a. Wal-Mart concentrated in a similar area in the U.S. and became a world player.
b. incomes are expected to rise over time and this segment could become brand loyal.
c. challenges faced here could be the basis for new and innovative products.
d. the BOP is a source of cheap labor.
e. both b and c

Difficulty: (3) Knowledge: (A) Page: 609

31. The BOP:

a. constitutes a majority of the world’s population.
b. generates $2 an hour in wages.
c. is found mostly in the western hemisphere.
d. does not offer opportunities for MNCs.
e. is a viable market for only small firms with very cheap products.

Difficulty: (2) Knowledge: (A) Pages: 608-9

32. Bottom of the pyramid means:

a. lower class Egyptians.
b. the lowest level of consumer involvement with your product.
c. the lowest satisfaction level of Maslow’s hierarchy.
d. people earning less than $2 per day.
e. the first step toward $1 million on a game show.

Difficulty: (1) Knowledge: (F) Page: 608

33. Compared to developed countries, segments in emerging markets are:

a. enormous.
b. much more coarse and difficult to define.
c. harder to reach because media options are not as well developed.
d. less wealthy.
e. all of the above

Difficulty: (3) Knowledge: (A) Page: 610

34. Hindustan Unilever pursued the following strategy to expand its market share in India.

a. retained the low unit price concept only for shampoo
b. focused its efforts on the BOP masses
c. emphasized local R&D efforts
d. concentrated on the urban population for sales
e. offered a wide variety of brands to tightly segment the market

Difficulty: (3) Knowledge: (F) Page: 610, Global Perspective 18-1

35. Hindustan Lever decided that its product line should include:

a. only products for the rich, so it could charge a premium.
b. products for all three major segments: affluent, middle income, and low income.
c. low income only, to capture the entire lower end as loyal customers for the future.
d. only the middle income, as they were ignored by other firms.
e. both the middle and upper income groups, as profit margins were viable there.

Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1

36. Social marketing—in the form of new product development and/or aiding development:

a. is not practiced by emerging market companies.
b. is a waste of time—the population won’t be exposed to the messages and is unlikely to follow directions.
c. can expand market opportunities for the firm.
d. builds goodwill that can be leveraged into greater profits.
e. both c and d

Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1

37. What best describes the outcome of early entry into emerging markets?

a. It can be lucrative, especially for huge markets like China and India.
b. It is likely to fail because the markets don’t or can’t appreciate the product.
c. It will probably face few direct competitors.
d. Products will be too expensive for local consumers.
e. None of the above

Difficulty: (2) Knowledge: (A) Page: 611

38. There are many reasons why a company might prefer to be a follower in a new market, not a first entrant. Which of these is NOT one of those reasons?

a. reduced profits because the market is already gone
b. fewer pitfalls as the follower can see the mistakes of the first-mover
c. better developed marketing channels
d. competitive response from other MNCs and local competitors
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 611

39. Why is being a first-mover attractive in emerging markets?

a. Pent-up demand may lead to high initial sales.
b. Governments are eager to offer concessions to first-movers.
c. Early entrants get best access to key marketing resources.
d. Marketing dollars generate higher productivity.
e. All of the above

Difficulty: (2) Knowledge: (A) Page: 611

40. What approach should smaller firms take in emerging markets?

a. Be a follower so you don’t make costly mistakes.
b. Be a first-mover—to the victor go the spoils.
c. Be a first-mover to outmaneuver larger firms eyeing the same market.
d. Avoid the markets altogether—they take too much time and effort to develop compared to the pay-off for a small firm.
e. Merge with a local company.

Difficulty: (3) Knowledge: (A) Page: 611

41. The risks of entering emerging markets:

a. are financial, but only in terms of getting paid promptly and in full.
b. are financial, but include both currency volatility and getting paid.
c. are marketing related only—we wouldn’t enter a country where we couldn’t get paid.
d. are marketing and currency volatility driven.
e. cover the enter spectrum of marketing and financial risks.

Difficulty: (2) Knowledge: (A) Page: 612

42. Entry strategies for emerging markets include _______.

a. export
b. licensing
c. joint venture
d. direct investment
e. all of the above

Difficulty: (1) Knowledge: (A) Page: 612

43. The preferred entry mode(s) for emerging markets:

a. include(s) both licensing and minority joint venture.
b. seek(s) to adapt products to ensure the capture of the market.
c. involve(s) direct investment to close the market to local challengers and later MNCs.
d. focus (focuses) on marketing instead of sales.
e. both a and b

Difficulty: (2) Knowledge: (A) Page: 612

44. Which of the following is not a common risk when entering emerging markets?

a. product piracy
b. enforcing property rights
c. well-developed marketing infrastructure
d. antitrust laws
e. government intervention

Difficulty: (2) Knowledge: (A) Page: 612

45. When MNCs enter an emerging market, they are likely to:

a. share product secrets with the new country.
b. insist on tight corporate control.
c. take a high risk approach to increase the chance for greater rewards.
d. emphasize sales as a measure of success.
e. both b and d

Difficulty: (2) Knowledge: (A) Page: 612

46. Product policies that have been pursued when entering emerging markets include:

a. no adaptation—the risks and expense are too great.
b. selling a narrow range of premium goods.
c. pursuing backward innovation.
d. anchoring the product entry with products near the end of their life cycle in the home market.
e. all of the above

Difficulty: (3) Knowledge: (A) Page: 613

47. Probably the least effective product design option is:

a. no adaptation—sell what we already make.
b. to sell our normal products at premium prices.
c. to sell a stripped down version of a normal good.
d. to extend the product life cycle by selling obsolete goods abroad.
e. All of the above are equally effective.

Difficulty: (2) Knowledge: (A) Page: 613

48. Backward innovation and selling obsolete goods:

a. run a risk of consumer backlash in emerging markets.
b. could save the company money on product development.
c. should not be used because cutting edge products are most highly favored in emerging markets.
d. are entirely different approaches to entering a market.
e. a, b and c are all reasonable answers

Difficulty: (3) Knowledge: (A) Page: 613

49. Common features that products must have to be successful in emerging markets include:

a. the very latest designs.
b. the widest variety of options.
c. ruggedness.
d. high quality.
e. warranties.

Difficulty: (3) Knowledge: (A) Page: 613

50. Companies have used which of the following methods to enhance product acceptance in emerging markets?

a. washing machines that can restart after a power outage
b. changing detergent formulae to use more water
c. selling a top-end water purifier in India for greater assurance of pure water
d. lowering quality to keep prices low
e. all of the above

Difficulty: (2) Knowledge: (A) Page: 613

51. When designing a product for emerging markets, companies should consider which of the following?

a. low price, ruggedness, and low quality
b. low price, inconsistent quality, and ability to run without electricity
c. high price, consistent quality, and a warranty
d. low incomes, unreliable power supplies, and scarce resources
e. low price, back-up power supplies, and a warranty

Difficulty: (2) Knowledge: (A) Page: 613

52. A manually operated sewing machine would:

a. be a backward innovation.
b. be an example of a product life cycle extension.
c. be rejected in emerging markets as not being modern enough.
d. be too difficult to operate.
e. likely have the idea copied as soon as it hit the market.

Difficulty: (3) Knowledge: (A) Page: 613

53. Brand strategies proven to succeed in emerging markets include:

a. pursuing only the wealthy—they don’t require product or price changes.
b. aiming brands at various market segments with different formulae and prices.
c. focusing on the emerging middle class for its growing buying power and eventual loyalty.
d. purchasing a local brand as part of the product offering.
e. both b and d

Difficulty: (3) Knowledge: (A) Page: 613

54. Which of the following is MOST likely to be used when packaging for emerging markets?

a. large packages to cater to the bigger families common in these countries
b. large packages because an entire village will share the product
c. smaller packages at lower price points
d. large packages with individual wrappers so merchants can resell in smaller quantities
e. both c and d

Difficulty: (3) Knowledge: (A) Pages: 614-15

55. Package design in emerging markets can largely ignore the feature of ________.

a. sturdiness
b. heat resistance
c. freshness
d. sustainability
e. none of the above

Difficulty: (1) Knowledge: (A) Page: 614-15

56. Because of the climate and sales conditions of many emerging markets, packages should:

a. come frozen so freshness and safety are ensured.
b. be made of the cheapest materials to save money.
c. be sold with reusable containers.
d. allow people to see and smell the product before buying.
e. all of the above

Difficulty: (2) Knowledge: (A) Page: 614-15

57. A package characteristic with perhaps greater significance in emerging markets than developed countries is ________.

a. refrigeration
b. sustainability
c. safety
d. variety of sizes
e. metal containers

Difficulty: (3) Knowledge: (A) Page: 615

58. The pricing strategy most likely to succeed in emerging markets is:

a. very low prices that everyone can afford—large volume makes up for low margins.
b. premium pricing only—establish the image of quality and save money on not having to adapt the product for local sale.
c. cater to the growing middle class and raise prices as income goes up.
d. saturate all price points with different products and make money at all levels.
e. All of the above are equally viable.

Difficulty: (2) Knowledge: (A) Page: 615

59. Why is distribution considered to be the biggest challenge when entering an emerging market?

a. It isn’t—pricing is.
b. It isn’t—product adaptation is.
c. Distribution infrastructure is too complex to navigate.
d. The country’s land mass is a deterrent.
e. All of the above

Difficulty: (2) Knowledge: (A) Page: 616

60. Which of the following is NOT a reason why distribution is difficult in emerging markets?

a. Local and rural areas can both be easily reached.
b. Shopping malls and supermarkets are on the rise in emerging markets.
c. Traditional retailers can be hard to work with.
d. Operating capital of retailers may be lacking.
e. Local brands are difficult to displace on the shelves.

Difficulty: (2) Knowledge: (A) Page: 616

61. P&G succeeded in Russia by:

a. using door to door sales reps.
b. direct export to a single large distributor in Moscow.
c. partnering with EU firms that already had a presence in Russia.
d. developing its own distributor network in exchange for exclusivity.
e. none of the above—Unilever is the dominant player in Russia.

Difficulty: (2) Knowledge: (F) Page: 617

62. When managing distributors in emerging markets, MNCs should:

a. pick partners with extensive local product-market knowledge.
b. choose partners with excellent English-speaking skills.
c. focus on entrepreneurs to build local good-will.
d. only enter markets with a company-owned distributor network.
e. select distributors who are competent working with MNCs.

Difficulty: (2) Knowledge: (A) Page: 618

63. Direct selling in emerging markets:

a. is attractive because of the rapid growth of internet sales.
b. often works best in a B2B setting.
c. is valuable in countries where face-to-face sales are common.
d. both b and c
e. none of the above—direct selling should be avoided as too difficult to supervise.

Difficulty: (2) Knowledge: (A) Page: 618

64. Emerging market distributors seeking exclusive territories should:

a. be told yes, on a temporary basis.
b. be denied, because this policy retards rapid market development.
c. be ignored—we will set up a company-owned distribution network.
d. be told no territories exist—everyone can sell everywhere, and the winner gets the final contract.
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 619

65. Communication challenges include:

a. raising brand awareness.
b. educating customers about product use and benefits.
c. creating brand image.
d. gaining loyalty.
e. all of the above

Difficulty: (2) Knowledge: (F) Page: 619

66. Push strategies:

a. are less viable in emerging markets than pull strategies.
b. are never used in emerging markets because channels are in disarray.
c. work well in many countries because of the enormous channel power of distributors.
d. result in the MNC being cheated because channel members keep the incentives for themselves.
e. never reach consumers.

Difficulty: (2) Knowledge: (A) Page: 619

67. Which of the following is a reason why a push strategy would succeed in emerging markets?

a. more frequent shopping than in developed countries
b. heavy reliance on retailer recommendations about brands
c. significant distributor power
d. numerous opportunities for brand switching
e. all of the above

Difficulty: (2) Knowledge: (A) Page: 619

68. Why might pull strategies aimed at consumers in emerging markets NOT be very successful?

a. They don’t understand the message about the product.
b. Coupons may be stolen and never reach the consumer for redemption.
c. Mass media are less effective in the emerging nations.
d. All of the above apply.
e. None of the above apply—emerging market consumers love coupons.

Difficulty: (3) Knowledge: (A) Page: 619

True/False Short Answer

69. Emerging markets are not a tempting target for MNCs.

Difficulty: (1) Knowledge: (F) Page: 597

70. The most busy McDonald’s in the world is in Peking.

Difficulty: (1) Knowledge: (F) Page: 597

71. The bulk of the revenues from some MNCs come from emerging markets.

Difficulty: (1) Knowledge: (F) Page: 598

72. Transition economies are those that are moving from very poor to more developed.

Difficulty: (1) Knowledge: (F) Page: 598

73. Iran is one of the BRIC nations.

Difficulty: (1) Knowledge: (F) Page: 598

74. BRIC stands for “big, rich, independent countries”.

Difficulty: (1) Knowledge: (F) Page: 598

75. Remittances from foreign workers are important to emerging market economies.

Difficulty: (1) Knowledge: (F) Page: 599

76. Most of the world’s largest shopping malls are in Asia.

Difficulty: (1) Knowledge: (F) Page: 602, Exhibit 18-3

77. No companies from emerging market countries have made it to the Fortune Global 500 list.

Difficulty: (1) Knowledge: (F) Page: 603

78. Most of the largest banks in the world are from the United States.

Difficulty: (1) Knowledge: (F) Page: 603

79. Product piracy is not a problem in China.

Difficulty: (1) Knowledge: (F) Page: 604

80. Products from emerging markets only compete as low-end challengers to established brands.

Difficulty: (2) Knowledge: (A) Page: 604

81. MNCs cannot use products developed in emerging markets because the quality standards are too low to be transferred to MNC home markets.

Difficulty: (2) Knowledge: (A) Page: 608

82. India is experiencing changes in its income pattern from pyramid to diamond.

Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1

83. Hindustan Unilever is a major corporation based in Pakistan.

Difficulty: (2) Knowledge: (F) Page: 610, Global Perspective 18-1

84. Social marketing in the Third World is a waste of time and money.

Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1

85. Risk levels of entering emerging markets are higher than those for developed countries.

Difficulty: (1) Knowledge: (A) Page: 612

86. Backward innovation and selling obsolete goods are different names for the same product strategy.

Difficulty: (2) Knowledge: (F) Page: 613

87. The most common packaging choice for emerging markets is a smaller package.

Difficulty: (1) Knowledge: (A) Page: 614

88. Frugal engineering means making very cheap, low quality products so you can get the most profit.

Difficulty: (1) Knowledge: (A) Page: 615

89. Local autonomy should always be granted to distributors because they know the market better than the MNC.

Difficulty: (2) Knowledge: (A) Page: 619

90. Push strategies are more likely to be successful in emerging markets than pull strategies.

Difficulty: (2) Knowledge: (A) Page: 619

91. Billboards can be effective in reaching both rich and poor consumers in emerging markets.

Difficulty: (2) Knowledge: (A) Page: 619

Essay

92. Describe the characteristics that define emerging markets.

93. Despite coming from humble origins and lacking much of the resources of the major global firms, many companies from emerging markets are serious challengers in world markets. What strategies do they employ to enable them to succeed?

94. What are the strategic options for emerging market firms in global marketing? Under what conditions would each be suggested?

95. There are some commonly held beliefs about marketing mix strategy that have been proven to be less than optimal. Identify some of these.

96. Describe the communication challenges faced when entering emerging markets.

Chapter 19

Multiple Choice

1. According to the text, the Web clearly provides a unique _______________ and
______________ channel to marketers across the globe.

a. distribution, higher education
b. distribution, production
c. distribution, network
d. distribution, communication
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 626

2. According to this textbook, compared to the U.S., Europe as a future Internet
market will be:
a. better, because virtual retailers have a competitive advantage over traditional
stores.
b. worse because there are so many languages.
c. better because delivery is faster.
d. worse because Europe has less well developed Internet infrastructure.
e. both A and C

Difficulty: (2) Knowledge: (A) Page: 626

3. Although the Internet has become a global phenomenon, it first originated in (the):

a. Italy.
b. Japan.
c. U.S.A.
d. Belgium.
e. Singapore.

Difficulty: (1) Knowledge: (F) Page: 627

4. In 2005, the worldwide Internet population surpassed 1 billion.

a. 1 billion
b. 2 billion
c. 3 billion
d. 4 billion
e. 5 billion

Difficulty: (2) Knowledge: (F) Page: 627

5. The country with the most Internet users is:
a. United States
b. Japan
c. India
d. China
e. none of the above

Difficulty: (2) Knowledge: (F) Page: 627, Exhibit 19-1

6. The country with the highest penetration rate of Internet users is:
a. United States
b. Japan
c. South Korea
d. United Kingdom
e. Canada

Difficulty: (2) Knowledge: (F) Page: 627, Exhibit 19-1

7. The majority of the Internet users now live outside of ________________ speaking
countries.

a. English
b. French
c. Arabic
d. German
e. Spanish

Difficulty: (1) Knowledge: (F) Page: 628

8. Which of the following is NOT a barrier to Internet marketing?

a. language
b. culture
c. infrastructure
d. access charges
e. none of the above

Difficulty: (2) Knowledge: (F) Page: 627

9. The barriers to global e-commerce are:

a. language barriers.
b. cultural barriers.
c. infrastructure.
d. all of the above.
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 627

10. The structural barriers to global e-commerce include the following EXCEPT:
a. language barriers.
b. cultural barriers.
c. infrastructure.
d. knowledge barriers.
e. roaming charges.

Difficulty: (1) Knowledge: (A) Page: 630-31

11. Which of these languages is NOT in the top three on Internet sites?

a. Hindu
b. Chinese
c. Spanish
d. German
e. Both a and d

Difficulty: (2) Knowledge: (F) Page: 628

12. Using only English on a website:

a. is doomed to fail.
b. is ethnocentric.
c. works in some industries like aerospace.
d. limits your market.
e. both c and d

Difficulty: (3) Knowledge: (A) Page: 628

13. In global e-commerce, Web site localization services have created the need for more:

a. translators.
b. copy writers.
c. media specialists.
d. network specialists.
e. knowledge experts.

Difficulty: (2) Knowledge: (A) Page: 628

14. Companies that wish to make their Web sites international by translating the
information and content into other languages have two alternatives that may include:

a. hire a firm or a person doing the translation.
b. use a software having the translation function.
c. use only English.
d. both a and b
e. both b and c

Difficulty: (2) Knowledge: (A) Page: 628

15. Which of these would NOT be a barrier to Internet marketing?

a. preference for face-to-face business transactions
b. lack of familiarity with credit cards
c. strict Internet security measures
d. website wording, logos, and colors
e. patriotism

Difficulty: (2) Knowledge: (F) Pages: 628-9

16. In the Asia-Pacific region, B2B e-commerce activities are facing obstacles which
could hinder the growth of the Internet. These obstacles include:

a. doing business on a face-to-face basis.
b. cultivating relationships and secrecy issues.
c. reluctance to share information.
d. all of the above are obstacles.
e. none of the above are obstacles.

Difficulty: (1) Knowledge: (A) Pages: 628-9

17. In many countries, businesspeople prefer to do business on a________________.

a. virtual basis.
b. simple basis.
c. complex basis.
d. face-to-face basis.
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 628

18. E-readiness for Brazil, India, Russia and China is:

a. unknown—they won’t answer the surveys.
b. excellent—their relative backwardness lets them jump ahead with the latest
technology.
c. middle of the pack because their economies are growing rapidly.
d. very low.
e. none of the above

Difficulty: (2) Knowledge: (F) Page: 631

19. ISP is an acronym for:

a. Internet strategies provider.
b. Internet standards provider.
c. Internet service provider.
d. Internet system provider.
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 629

20. In many European markets, consumers are reluctant to surf the Web because of:

a. high telecommunication charges.
b. low per capita income.
c. government rules and regulations.
d. distribution costs.
e. limited training and education.

Difficulty: (2)Knowledge: (F) Page: 632

21. In many countries, the cost of going online can be reduced by:

a. government deregulations.
b. increased competition.
c. new access alternatives.
d. all of the above.
e. none of the above.

Difficulty: (2) Knowledge: (A) Page: 632

22. In Japan, access to the web was previously dominated by ______________________, the Japanese telecom firm, which charges sky-high fees.

a. British Telecom.
b. Toyota.
c. Nippon Telephone & Telegraph (NTT).
d. Seven-Eleven Japan.
e. AT&T.

Difficulty: (1) Knowledge: (A) Page: 632

23. In the Internet world, there are many unsolved issues. For example, e-commerce is global but the national laws are mostly ________________.

a. local
b. regional
c. political
d. religious
e. secular

Difficulty: (1) Knowledge: (A) Page: 632

24. At the global level, a new nongovernmental body has been established to resolve domain disputes. The name of this body is:

a. Internet Corporation for Domain Names (ICDN).
b. Internet Corporation for Assigned Names (ICAN).
c. Internet Corporation for Assigned Names and Numbers (ICANN).
d. Internet Corporation for Networks (ICN).
e. Internet Corporation for Domain Disputes (ICDD).

Difficulty: (3) Knowledge: (F) Page: 633

25. In the area of global marketing, the Internet offers two major benefits to companies that may be interested in selling their products worldwide. The two benefits include:

a. cost/efficiency savings and accessibility (connectivity).
b. cost/efficiency savings and brand image.
c. cost/efficiency savings and product standardization.
d. cost/efficiency savings and high quality intelligence.
e. cost/efficiency savings and product image.

Difficulty: (3) Knowledge: (A) Page: 633

26. According to the text, regarding the profile of Internet buyers, differences across countries are mainly due to two factors which are:

a. access charges and availability of computer programmers.
b. access charges and availability of outsourcing.
c. access charges and availability of entertainment options.
d. access charges and availability of CNN.
e. access charges and availability of AOL.
.
Difficulty: (3) Knowledge: (A) Page: 634

27. At the core of any global Web marketing strategy is the conflict between local responsiveness and _______________________.

a. local integration
b. regional integration
c. transnational integration
d. polycentric integration
e. global integration
.
Difficulty: (3) Knowledge: (A) Page: 637

28. In the product policy area, the Internet can help build:

a. regional brands.
b. food brands only.
c. global brands.
d. high-tech brands.
e. tangible brands.
.
Difficulty: (2) Knowledge: (A) Page: 641

29. Marketing of services differs from tangible goods in four areas:

a. intangibility, simultaneity, heterogeneity, and perishability.
b. intangibility, simultaneity, heterogeneity, and collectivity.
c. intangibility, simultaneity, heterogeneity, and connectivity.
d. intangibility, simultaneity, heterogeneity, and believability.
e. intangibility, simultaneity, heterogeneity, and credibility.

Difficulty: (2) Knowledge: (A) Page: 643

30. India Yahoo! is different from normal portals because is has:

a. no online auctions.
b. astrology.
c. no online shopping.
d. real estate.
e. cricket.

Difficulty: (2) Knowledge: (F) Page: 642

31. In some countries, customers might resent having the human element removed from
the service encounter because of:

a. cultural factors.
b. national factors.
c. technology factors.
d. consumption factors.
e. international factors.

Difficulty: (2) Knowledge: (A) Page: 644

32. In international marketing, a Web site gives service marketers the ability to offer _________ hour service to customers worldwide.

a. 10
b. 15
c. 20
d. 22
e. 24

Difficulty: (1) Knowledge: (F) Page: 644

33. Because of the Internet, many MNCs’ pricing decisions are less _____________.

a. national
b. flexible
c. creative
d. rigid
e. vertical

Difficulty: (3) Knowledge: (A) Page: 644

34. In the area of pricing, the Internet facilitates:

a. work transparency.
b. price transparency.
c. profit transparency.
d. channel transparency.
e. none of the above is true.

Difficulty: (2) Knowledge: (A) Page: 644

35. For global marketers, the Web could affect the firm’s high margins because of:

a. profit transparency.
b. channel transparency.
c. price transparency.
d. channel captaincy.
e. knowledge transparency.

Difficulty: (2) Knowledge: (A) Page: 644

36. In Internet marketing, consumers often are aware of low prices because of the availability of brand and pricing information. This is a result of:

a. profit transparency.
b. knowledge transparency.
c. labor transparency.
d. profit transparency.
e. price transparency.

Difficulty: (2) Knowledge: (A) Page: 644

37. To deal with price transparency issues in Internet marketing, companies can use methods such as:

a. cutting prices in high-price countries.
b. localizing the products.
c. refusal to handle orders from overseas.
d. All of the above methods can be used.
e. None of the above methods are used.

Difficulty: (3) Knowledge: (A) Page: 645

38. In many industries, connectivity means that existing channels/distributors can be bypassed by connecting:

a. buyers and suppliers.
b. buyers and governments.
c. buyers and software companies.
d. buyers and advertisers.
e. buyers and media companies.

Difficulty: (1) Knowledge: (A) Page: 645

39. Manufacturers who plan to add the Internet to their existing international channels should be aware of two possibilities:

a. replacement effect and international effect.
b. replacement effect and complementary effect.
c. complementary effect and managerial effect.
d. complementary effect and adaptation effect.
e. replacement effect and quality effect.

Difficulty: (1) Knowledge: (A) Page: 645

40. In international distribution, replacement effect can:

a. cannibalize existing distribution channels.
b. delete existing distribution channels.
c. replace existing distribution channels.
d. downsize existing distribution channels.
e. add more distribution channels

Difficulty: (2) Knowledge: (A) Page: 645

41. In international distribution, complementary effect can:

a. expand the overall business.
b. cannibalize existing distribution channels.
c. materialize the overall business.
d. downsize existing distribution channels.
e. none of the above.

Difficulty: (2) Knowledge: (A) Pages: 645-6

42. Click-and-mortar retailers are defined as:

a. those large retail chains trying to compete by pursuing no Web site presence.
b. those large retail chains trying to compete by making alliances and joint ventures.
c. those large retail chains trying to compete by going international.
d. those large retail chains trying to compete by hiring Web specialists.
e. those large retail chains trying to compete by setting up a Web site presence.

Difficulty: (2) Knowledge: (A) Page: 647

43. Click-and-mortar chains provide one advantage where:

a. products cannot be returned to the local stores.
b. products can be returned to the local stores.
c. click-and mortar stores have no Web sites.
d. All of the above.
e. None of the above.

Difficulty: (1) Knowledge: (A) Page: 647

44. In international marketing, many well-known brands in pure web retailing (e-trade, Amazon.com) still have limited ________________________ expertise.

a. local
b. international
c. regional
d. economic
e. political

Difficulty: (1) Knowledge: (A) Page: 648

45. Success of an e-tailing model will depend on three factors which include:

a. consumer behavior, cost structure, and networks.
b. consumer behavior, cost structure, and government policies.
c. consumer behavior, cost structure, and logistics.
d. consumer behavior, cost structure, and human resources.
e. consumer behavior, cost structure, and manufacturing.

Difficulty: (2) Knowledge: (A) Page: 648

46. According to Jupiter Research, online advertising spending is expected to grow to around ____________ in the U.S. by 2009.

a. $10 billion
b. $16 billion
c. $20 billion
d. $30 billion
e. $35 billion

Difficulty: (3) Knowledge: (F) Page: 648

47. The Internet offers advantages to international advertisers which include:

a. global reach.
b. interactivity.
c. precise information
d. all of the above.
e. none of the above.

Difficulty: (2) Knowledge: (A) Pages: 648-9

48. In Internet advertising, by clicking on the banner ad, users can be taken to the:

a. internet’s databank.
b. advertiser’s web site.
c. Netscape’s site.
d. Yahoo’s site.
e. none of the above.

Difficulty: (1) Knowledge: (A) Page: 649

49. According to the text, the ultimate success of an online campaign depends on the following factors EXCEPT:

a. the nature of the product.
b. the targeting.
c. choice of the site.
d. execution of the ad.
e. hiring an efficient CEO.

Difficulty: (2) Knowledge: (A) Page: 650

50. Although Internet advertising is growing at a very rapid pace, many advertisers are skeptical about its potential as a global promotion tool because of (the):

a. annoyance factor.
b. audience measurement.
c. click-thru rates.
d. high access and/or phone charges
e. all of the above.
.
Difficulty: (1) Knowledge: (A) Page: 650

51. International marketers who plan on using the Web as an advertising tool should familiarize themselves with:

a. advertising regulations and restrictions in foreign markets.
b. search engines.
c. distribution channels.
d. digital networks.
e. digital suppliers.

Difficulty: (2) Knowledge: (A) Page: 650

52. Keyword search advertising allows the company to have a link to its Web site when
people are looking for ________________________ -related information.

a. people
b. market
c. product
d. country
e. none of the above

Difficulty: (2) Knowledge: (A) Page: 649

53. In Internet advertising, microsites are created to promote ____________________
brands.

a. hybrid
b. individual
c. complex
d. global
e. none of the above

Difficulty: (1) Knowledge: (A) Page: 649

54. The ultimate success of an online campaign hinges on four factors which include:

a. nature of the product, the target, choice of site, and color
b. nature of the product, the target, choice of site, and graphics
c. nature of the product, the target, choice of site, and banners
d. nature of the product, the target, choice of site, and execution of the ad
e. none of the above

Difficulty: (3) Knowledge: (A) Page: 650

55. Online campaigns would work for __________________________________.

a. high involvement goods.
b. low involvement goods.
c. vertical involvement goods
d. horizontal involvement goods
e. none o the above

Difficulty: (2) Knowledge: (A) Page: 650

True/False Short Answer

56. Small and medium-size companies (SMEs) are also participating in the area of e-commerce and Internet-related opportunities.

Difficulty: (1) Knowledge: (A) Page: 626

57. Internet usage worldwide is not growing.

Difficulty: (1) Knowledge: (A) Page: 627

58. ISP is an acronym for Internet Standards Provider.

Difficulty: (2) Knowledge: (A) Page: 629

59. Knowledge barrier is not one of the barriers in Internet-related activities.

Difficulty: (1) Knowledge: (A) Page: 628

60. In many European markets, consumers are reluctant to spend time surfing the Web
because of higher telecommunication charges.

Difficulty: (2) Knowledge: (F) Page: 632

61. There are many unsolved issues in the Internet. For example, e-commerce is global
but the national laws are mostly transnational.

Difficulty: (1) Knowledge: (A) Page: 632

62. The Internet has leveled the playing field between large and small firms in global
competition.

63. Asians have the most favorable attitude toward Internet shopping.

64. The Internet is not helping companies to create global brands.

Difficulty: (3) Knowledge: (A) Page: 634

65. Google is the #1 search engine throughout the world.

66. Consumer co-creation involves customers in value creation.

67. Mass customization is not the major plus of the Web.

Difficulty: (1) Knowledge: (A) Page: 644

68. Web sites enable companies to manage perishability.

Difficulty: (1) Knowledge: (A) Page: 644

69. In international marketing, a Web site gives service marketers the ability to offer 24 hour service to customers worldwide.

Difficulty: (1) Knowledge: (F) Page: 644

70. For global marketers, the Web could affect the firm’s high margins because of price transparency.

Difficulty: (2) Knowledge: (A) Page: 644

71. In many industries, connectivity means that existing channels can be bypassed by
connecting buyers and suppliers directly.

Difficulty: (1) Knowledge: (A) Page: 645

72. In international distribution, replacement effect does not cannibalize existing distribution channels.

Difficulty: (2) Knowledge: (A) Page: 645

73. It is estimated that most of the Internet advertising spending will be spent in Japan.

Difficulty: (1) Knowledge: (A) Page: 648

74. Banner advertising is not used in Internet advertising.

Difficulty: (1) Knowledge: (A) Page: 648

75. Keyword search advertising allows the company to have a link to its competitors.

Difficulty: (2) Knowledge: (A) Page: 649

76. Microsites are used to promote a particular brand.

Difficulty: (2) Knowledge: (A) Page: 649

77. Online campaigns would work for high-involvement goods whose buyers engage in
product research and price comparisons.

Difficulty: (3) Knowledge: (A) Page: 650

Essay

78. Describe briefly the history of the Internet. Which nations are becoming prominent among Internet users? How does their growth compare with the Internet readiness shown in Exhibit 19-2?

79. Although global e-commerce is expected to increase, it has encountered obstacles and structural barriers. Discuss these structural barriers.

80. Discuss some of the ramifications of the Internet for global marketing strategies. Also explain some of the challenges faced by international marketers in the areas of global branding and Internet-based new products.

MKT 500 Week 11 Discussion Question – Strayer University New

MKT/500 Week 11 Discussion Question

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“Reflection” Please respond to the following:
• Reflecting on the past ten (10) weeks, specify what you believe are the two (2) most important concepts you have learned in this course.
• Predict two (2) ways you will be able to apply these concepts to your current job and career in the future. Give your opinion on the manner in which this course’s learning outcomes contribute to the MBA curriculum. Provide a rationale for your response.

MGT 510 Midterm and Final Exam – Strayer University NEW

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Chapters 1 Through 15

Chapter 1 Multinational Management in a Changing World

MULTIPLE CHOICE

1. Businesses of all sizes are increasingly looking for global opportunities because
a. Trade barriers are falling.
b. Money is flowing more freely across countries.
c. The world is becoming one interconnected economy.
d. All of the above.

AACSB Analytic, Strategy

PTS: 1

2. Globalization is
a. The trend of businesses expanding beyond their domestic boundaries.
b. Increasing average temperature over the globe.
c. The increased use of global satellite communication systems.
d. A strategy of developing unique products for each nation in the world.

AACSB Reflective thinking, Environmental influence

PTS: 1

3. Which of the following would not be considered a basic source of globalization?
a. Similar customer needs
b. Falling of trade barriers
c. Advances in communication technology
d. Differentiation among countries

AACSB Reflective Thinking, Environmental influence

PTS: 1

4. Multinational management is
a. A strategy of developing similar strategies for different countries.
b. The trend of business expanding beyond local boundaries.
c. The formulation and design of management systems to successfully take advantage of international opportunities and respond to international threats.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

5. According to the text, the multinational company
a. Is required to be a public corporation.
b. Is any company that engages in any business function across borders.
c. Must sell overseas to be a true multinational.
d. Must be large.

AACSB Reflective thinking, Strategy

PTS: 1

6. Which of the following is not a classification of economic systems noted in the text?
a. Domestic economies
b. Transition economies
c. LDCs
d. Emerging markets

AACSB Reflective thinking, Environmental influence

PTS: 1

7. Transition economies are
a. Mature economies with substantial per capita GDP and international trade.
b. Led by Hong Kong, Singapore, South Korea, and Taiwan.
c. Countries changing from government-controlled or communistic economies to a more free market capitalism.
d. None of the above

AACSB Reflective thinking, Environmental influence

PTS: 1

8. Emerging markets include
a. OECD countries.
b. Brazil, China, Russia, India.
c. Korea, Japan and USA.
d. Hungary, Poland, Slovakia.

AACSB Reflective thinking, Environmental influence

PTS: 1

9. Developing economies are
a. Mature economies with substantial per capita GDP and international trade.
b. Hong Kong, Singapore, and Taiwan.
c. Countries in the process of changing their economies from government-controlled to a more free market capitalism.
d. None of the above

AACSB Reflective thinking, Environmental influence

PTS: 1

10. Emerging markets are defined as those that are:
a. Growing rapidly.
b. Transitioning from a communist-controlled economy to capitalism.
c. Seen to have impact only sporadically.
d. Enjoying a mature economy.

AACSB Reflective thinking, Environmental influence

PTS: 1

11. Major regional trade agreements include all of the following EXCEPT
a. EU.
b. NAFTA.
c. APEC.
d. PROTEC.

AACSB Reflective thinking, Legal responsibilities

PTS: 1

12. The economic agreement that links the US, Canada, and Mexico in an economic bloc that allows freer exchange of goods and services is known as the
a. EU.
b. OPEC.
c. APEC.
d. None of the above

AACSB Reflective thinking, Legal responsibilities

PTS: 1

13. The World Trade Organization:
a. Is a major trading company.
b. Succeeded the GATT agreements.
c. Collects duties for member countries.
d. Is a consulting group for companies who wish to engage in international trade.

AACSB Reflective thinking, Legal responsibilities

PTS: 1

14. Examples of developed economies would include:
a. The U.S. and Japan.
b. Hungary and Poland.
c. Argentina and Brazil.
d. Hong Kong and Singapore.

AACSB Reflective thinking, Creation of value

PTS: 1

15. According to your text, FDI means
a. Foreign development initiatives.
b. Various investment policies of the U.S. government.
c. A foreign company has an ownership position in a company in another country.
d. A type of international negotiation strategy.

AACSB Reflective thinking, Legal responsibilities

PTS: 1

16. The two forms of risk discussed in the text include
a. Exchange rate risk and corruption risk.
b. Business risk and social risk.
c. Sales risk and employment risk.
d. Economic and political risk.

AACSB Reflective thinking, Environmental influence

PTS: 1

17. Economic risks discussed in the text include
a. Anything a government might do or not do that might adversely affect a company.
b. The likelihood of losing money if one invests in stocks.
c. Exchange and interest rates.
d. Expropriating of foreign firms by the local government without any compensation.

AACSB Reflective thinking, Environmental influence

PTS: 1

18. Anything that a government might do to affect a multinational adversely is known as
a. Exchange rate risk.
b. Business risk.
c. Sales risk.
d. Political risk.

AACSB Reflective thinking, Leadership

PTS: 1

19.. A global product or service is
a. Adapted for each country’s unique needs.
b. A similar product or service for all customers throughout the world.
c. A product or service that requires bilingual customers.
d. Products developed for use outside the country.

AACSB Reflective thinking, Creation of value

PTS: 1

20. Which of the following statements about the Internet and Information Technology is true?
a. The Internet is benefiting companies worldwide.
b. Electronic communications does not allow companies to communicate with locations around the world.
c. Information technology is not encouraging a borderless financial market.
d. Information technology does not allow the sharing of information around the world.

AACSB Technology, Information technology

PTS: 1

21. The free market reforms in emerging countries are creating a potential group of
a. new competitors.
b. old competitors.
c. subsidized firms.
d. government companies.

AACSB Analytic, Environmental influence

PTS: 1

22. Which of the following statements is true about privatization?
a. Developing nations have the highest rate of privatization.
b. The leading privatizers in the world do not face competition.
c. Privatization is the sale of private business to government investors.
d. Privatization is absent in transition economies.

AACSB Analytic, Legal responsibilities

PTS: 1

23. Global customers:
a. Search for government-controlled enterprises.
b. Provide reduced government trade protection.
c. Search the world for their supplies without regard to national boundaries.
d. Encourage large firms to sell to them.

AACSB Reflective thinking, Strategy

PTS: 1

24. Global trade has this important effect on developing new competitors.
a. It facilitates the transfer of technology, allowing former assemblers to become creators.
b. It facilitates the transfer of knowledge, allowing former builders to become assemblers.
c. It reduces competition.
d. It reduces rivalry.

AACSB Reflective thinking, Creation of value

PTS: 1

25. Global standards for products
a. Are virtually impossible in technical industries.
b. Refer to having one product standard for all countries.
c. Puts companies at a strategic disadvantage.
d. All of the above

AACSB Reflective thinking, Creation of value

PTS: 1

26. According to the experts cited in your text, the next generation of global managers will need all of the following, EXCEPT:
a. Emotional intelligence
b. The ability to work with people from different cultural backgrounds
c. Poor negotiation skills
d. A local mindset

AACSB Reflective thinking, Leadership

PTS: 1

27. A global mindset requires managers to think globally but
a. act locally.
b. have emotional intelligence.
c. understand national cultures.
d. need accomplished negotiation skills.

AACSB Reflective thinking, Leadership

PTS: 1

28. The strategic approach to multinational management
a. Involves the development of one strategy for all countries.
b. Focuses on the skills and aptitudes that the next generation of global managers will need.
c. Is concerned with developing strategies that deal with operating in more than one country and culture.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

29. Which of the following statements about globalization is false?
a. Globalization is a simple evolutionary process.
b. Not all economies of the world are benefiting equally from globalization.
c. Terrorism, wars and SARS has limited and even reversed the effects of globalization.
d. All of the above statements are false.

AACSB Reflective thinking, Environmental influence

PTS: 1

30. Aggressive multinational companies from emerging markets are
a. expanding beyond their own borders.
b. staying within their own national borders.
c. help transition from a communist to a capitalist system.
d. unable to compete with western companies.

AACSB Reflective thinking, Strategy

PTS: 1

31. The set of technical standards developed by the International Organization for Standardization are known as
a. ISO 92.
b. ISO 14000.
c. ISO 9001: 2000.
d. None of the above

AACSB Reflective thinking, Legal responsibilities

PTS: 1

32. One of the major reasons why global companies seek to develop standard products is because
a. A standard product allows the company to save money because the same product can be sold anywhere.
b. A company can be more responsive to local cultural conditions.
c. It allows the company to invest more in research and development.
d. All of the above

AACSB Reflective thinking, Creation of value

PTS: 1

33. Emerging markets are
a. Located mostly in Africa and South America.
b. Similar to developed economies.
c. Those countries between developed and developing countries that present tremendous opportunities.
d. have free trade areas.

AACSB Reflective thinking, Environmental influence

PTS: 1

34. Which of the following statements regarding the European Union is true?
a. The European Union no longer exists.
b. The European Union includes Venezuela.
c. The European Union has a common currency.
d. All of the above are true.

AACSB Reflective thinking, Environmental influence

PTS: 1

35. Future trends indicate that _____ matters more than size of the company.

a. location
b. price
c. flexibility
d. a high standard

AACSB Reflective thinking, Strategy

PTS: 1

36. According to the text, all of the following includes factors that will shape the future business environment EXCEPT
a. Blurring of industry barriers.
b. Finding your niche.
c. Ability to find cheap labor.
d. Emphasis on innovation and the learning organization.

AACSB Reflective thinking, Strategy

PTS: 1

37. The best definition of multinational management includes which of these factors:
a. The formulation of strategies and management systems.
b. Designed to take advantage of international opportunities.
c. And to respond to international threats.
d. All of the above.

AACSB Reflective thinking, Strategy

PTS: 1

38. Multinational companies are defined by all of these factors EXCEPT:
a. Engaging in business beyond its domestic borders.
b. They may be of any size.
c. They may be corporations.
d. They must be public corporations.

AACSB Reflective thinking, Strategy

PTS: 1

39. The largest company in the world is:
a. Wal-Mart Stores.
b. BP.
c. Royal Dutch Shell.
d. Chevron.

AACSB Reflective thinking, Strategy

PTS: 1

40. The European Union consists of:
a. 25 member nations, with the 26th scheduled to become a member in 2013.
b. 26 member nations, with the 27th scheduled to become a member in 2013.
c. 27 member nations, with the 28th scheduled to become a member in 2013.
d. 25 member nations, with no others scheduled to become a member in 2013.

AACSB Reflective thinking, Strategy

PTS: 1

ESSAY

1. Discuss how any company can become a multinational company. What are some of the options available to companies that allow them to use international markets and locations competitively?

2. Discuss some reasons why reductions in world trade barriers are driving the world toward a global economy.

3. Discuss at least two major forces that are driving the world toward a global economy.

4. How is the Internet and Information technology helping companies deal with a global economy? How is the Internet and Information technology helping small companies and even companies from poorer nations?

5. What is corporate social responsibility? Why are firms trying to become socially responsible?

6. Discuss the differences between foreign trade and foreign direct investment.

7. What are some of the reasons why globalization and free trade are being criticized? Do you think that free trade is helping all countries? Why or why not?

8. Look at the information on the world’s leading exporters discussed in the text. Do you think these trends will continue in the future? Why?

9. Discuss the characteristics of a next generation of multinational managers. How can you develop those characteristics through education and experience?

10. Why should multinational management be studied? What are some of the elements of a strategic approach to multinational management?

Chapter 2 Culture and Multinational Management

MULTIPLE CHOICE

1. All the following is true about culture EXCEPT
a. Culture is the shared belief, norms, and values that guide everyday life of a group.
b. Culture is passed from generation to generation through norms, values, and beliefs.
c. Culture is always directly observable.
d. Culture is very pervasive in societies.

AACSB Reflective thinking, Individual dynamics

PTS: 1

2. The correct definitions of the levels of culture include all of these EXCEPT:
a. The national culture, dominant within the political boundaries of a nation-state.
b. The business culture, unique to each business.
c. The organizational culture, shared by members of an organization.
d. The occupational culture, shared by those in the same occupation.

AACSB Analytic, Individual dynamics

PTS: 1

3. Cultural values:
a. Represent our understandings about what is true.
b. Prescribe and proscribe behavior.
c. Tell us what is good and beautiful and what are legitimate goals in life.
d. Provide solutions to problems of adaptation to the environment.

AACSB Analytic, Individual dynamics

PTS: 1

4. All of the following are dimensions of Hofstede’s Model of National Culture EXCEPT:
a. Power avoidance.
b. Uncertainty avoidance.
c. Masculinity.
d. Long-term orientation.

AACSB Analytic, Individual dynamics

PTS: 1

5. International management may be influenced by which of the following levels of culture?
a. National
b. Business
c. Organization
d. All of the above

AACSB Analytic, Individual dynamics

PTS: 1

6. Aspects of the business culture in China include all of these EXCEPT:
a. Business moves more slowly.
b. One should respect Chinese business etiquette.
c. It is important to praise individuals who excelled.
d. The Chinese value harmony and order.

AACSB Analytic, Individual dynamics

PTS: 1

7. Organizational culture refers to the
a. Set of important understandings that members of an organization share.
b. Expected ways of behaving for people in the same occupational group.
c. Values and beliefs pertaining to doing business with a specific company.
d. None of the above

AACSB Reflective thinking, Individual dynamics

PTS: 1

8. Occupational cultures
a. Are the norms, values, beliefs, and expected ways of behaving for people in the same occupational group.
b. Are the set of important understandings that members of an organization share.
c. Are norms, values, and beliefs that pertain to all aspects of doing business in a country.
d. Are the dominant cultures within a country.

AACSB Reflective thinking, Individual dynamics

PTS: 1

9. Some people believe that the norms, values, and beliefs of their own culture represent the only correct ways of dealing with the world. This is called
a. High power distance.
b. Stereotyping.
c. Androgyny.
d. Ethnocentrism.

AACSB Reflective thinking, Individual dynamics

PTS: 1

10. Cultural relativism represents
a. The belief that all cultures are valid and ethical responses to the problems of living.
b. The belief that some cultures are relatively better than others.
c. The belief that your own culture is the best.
d. The degree of similarity between business and national cultures.

AACSB Reflective thinking, Individual dynamics

PTS: 1

11. A new expatriate manager located in India reports to you that all of her subordinate local managers lack initiative and will only do what she tells them to do. You realize that most Indian managers expect superiors to tell them what to do. You advise her of this, but also caution the new manager to avoid:
a. Rationalization.
b. Stereotyping.
c. Uncertainty avoidance.
d. Ethnocentrism.

AACSB Reflective thinking, Individual dynamics

PTS: 1

12. On which of Hofstede’s value dimensions does the U.S. rank highest?
a. Masculinity
b. Individualism
c. Patriotism
d. Power distance

AACSB Reflective thinking, Individual dynamics

PTS: 1

13. High power distance countries have norms, values, and beliefs such as
a. It is best to exercise power privately.
b. Everyone has a place, some are high and some are low.
c. A leader should develop his or her subordinates.
d. Leaders are made and not born.

AACSB Reflective thinking, Leadership principles

PTS: 1

14. Countries high on uncertainty avoidance have norms, values, and beliefs such as
a. Debates help you find the truth.
b. Deviant people should be tolerated.
c. Lack of rules in the workplace is good.
d. Experts and authorities are usually correct.

AACSB Reflective thinking, Individual dynamics

PTS: 1

15. Which of the following best describes U.S. culture with regard to individualism?
a. Lower than many European nations
b. Highest observed so far
c. About the same as Japan
d. Slightly above average

AACSB Reflective thinking, Individual dynamics

PTS: 1

16. An emphasis on leadership styles that appeal to duty and commitment to group goals are found primarily in countries with
a. Low masculinity.
b. Low uncertainty avoidance.
c. Short term orientations.
d. High collectivisim (low individualism).

AACSB Reflective thinking, Leadership principles

PTS: 1

17. Training for conformity and obedience, with valuations based on compliance and trustworthiness characterize countries with
a. Low power distance.
b. High power distance.
c. High individualism.
d. Short term orientations.

AACSB Reflective thinking, Individual dynamics

PTS: 1

18. Cultures with high power distance values probably have
a. Participative leadership.
b. Decentralized decision making.
c. Large wage differences between management and workers.
d. Managers selected by educational achievement.

AACSB Analytic, Individual dynamics

PTS: 1

19. Seniority tends to dominate evaluation and promotion in
a. Short term oriented cultures.
b. Cultures high on uncertainty avoidance and low on individualism.
c. Ethnocentric cultures.
d. Doing rather than being cultures.

AACSB Reflective thinking, Individual dynamics

PTS: 1

20. People from ________ countries would probably feel most comfortable with an autocratic (theory X) task- directed style of leadership.
a. High masculinity
b. High power distance
c. High uncertainty avoidance
d. All of the above

AACSB Reflective thinking, Individual dynamics

PTS: 1

21. A culture which has dominant values of success, money, and material things is probably
a. Low on power distance.
b. Low on individualism.
c. High on masculinity.
d. High on long term orientation.

AACSB Analytic, Individual dynamics

PTS: 1

22. In countries that rank high on Hofstede’s masculinity index
a. People prefer a short working day to get home to their families.
b. People feel more comfortable in small organizations.
c. Theory X management is rejected strongly.
d. Work is central to life and job recognition is very important.

AACSB Reflective thinking, Individual dynamics

PTS: 1

23. In a universalistic culture, the right way to treat people is based on
a. Personal relationships.
b. Principles of harmony within the group.
c. Abstract principles such as rules of law and religion.
d. Accepting the use of emotions.

AACSB Reflective thinking, Individual dynamics

PTS: 1

24. Which of the 7d cultural dimensions represents the extent to which an individual’s personal life is involved in his/her work relationships?
a. Neutral versus affective
b. Achievement versus ascription
c. Time orientation
d. Specific versus diffuse

AACSB Analytic, Individual dynamics

PTS: 1

25. The achievement versus ascription dimension addresses
a. The extent to which an individual’s life is involved with work.
b. The manner by which a society gives status.
c. The way a culture deals with the past, present, and future.
d. The belief people have in controlling their fate.

AACSB Reflective thinking, Individual dynamics

PTS: 1

26. Expressions of anger, laughter, gesturing, and emotional outbursts are considered acceptable in
a. Specific cultures.
b. Diffuse cultures.
c. Neutral cultures.
d. Affective cultures.

AACSB Analytic, Individual dynamics

PTS: 1

27. Which of the following statements is true regarding a future oriented society?
a. Managers and workers do not necessarily believe that hard work can lead to future success.
b. People believe they can control nature.
c. Organizational change is considered necessary and beneficial.
d. Individuals cannot influence the future.

AACSB Analytic, Individual dynamics

PTS: 1

28. In countries where it is believed that nature dominates people,
a. Managers are less likely to be fatalistic.
b. Managers emphasize planning and scheduling.
c. Managers actively try to change situations.
d. Managers believe that they must accept situations rather than changing them.

AACSB Analytic, Individual dynamics

PTS: 1

29. The ability to interact effectively in multiple cultures is known as
a. Trustworthiness.
b. Cultural intelligence.
c. Cultural relativism.
d. None of the above

AACSB Reflective thinking, Individual dynamics

PTS: 1

30. Discussing cultural paradoxes, the text indicates that although the US scores very high on individualism, it also has the highest percentage of
a. unmotivated population.
b. uncaring seniors.
c. homeless people.
d. charity giving in the world.

AACSB Analytic, Individual dynamics

PTS: 1

31. A cultural paradox is defined as:
a. Group situations define cultural prescriptions.
b. Individual situations define cultural prescriptions.
c. Group situations contradict cultural prescriptions.
d. Individual situations contradict cultural prescriptions.

AACSB Reflective thinking, Individual dynamics

PTS: 1

32. When hiring for managerial jobs in high power distance countries, preference is generally given to individuals
a. having a high social class or a degree from an elite university.
b. from all social classes.
c. based on their qualifications and skills.
d. All of the above

AACSB Analytic, Individual dynamics

PTS: 1

33. The range of feelings outwardly expressed in society refers to the cultural dimension of ________.
a. Uncertainty avoidance
b. Universalism vs. particularism
c. Neutral vs. affective
d. Diffuse vs. specific

AACSB Reflective thinking, Individual dynamics

PTS: 1

34. Preference for involvement in multiple areas of personal and work life simultaneously are more likely in
a. Specific cultures.
b. Diffuse cultures.
c. Neutral cultures.
d. Affective cultures.

AACSB Analytic, Individual dynamics

PTS: 1

35. Which of the following cultural dimensions is NOT included in Hofstede’s model of national culture?
a. Power distance
b. Individualism
c. Masculinity
d. Neutrality

AACSB Reflective thinking, Individual dynamics

PTS: 1

36. US firms often outsource customer service to workers in a foreign country. To minimize difficulties, such workers receive cross-cultural training which may include:
a. Training workers to reduce or eliminate an accent.
b. Educating workers regarding US culture.
c. Requiring workers to speak only English while on duty.
d. All of the above

AACSB Reflective thinking, Individual dynamics

PTS: 1

37. Which of the following cultural dimension represents the extent to which individuals are expected to be fair, altruistic, caring and generous?
a. Performance orientation
b. Individualism
c. Humane orientation
d. Power distance

AACSB Reflective thinking, Individual dynamics

PTS: 1

38. According to the text, which of the following two dimensions are not considered by Hofstede and is unique to the GLOBE cultural dimensions framework?
a. Power distance and humane orientation
b. Long-term orientation and uncertainty avoidance
c. Masculinity and Individualism
d. Humane orientation and performance orientation

AACSB Reflective thinking, Individual dynamics

PTS: 1

39. Cultural paradoxes represent
a. Cases where situations in reality seem to contradict cultural prescriptions.
b. The assumption that all people within a culture behave, feel and act the same.
c. The belief that a person’s culture is superior.
d. The belief that one’s culture is inferior.

AACSB Reflective thinking, Individual dynamics

PTS: 1

40. According to research discussed in the text, which of the following may help managers become more culturally intelligent?
a. Exposure to new cultural experiences in other countries
b. Learning to trust each people from individualistic cultures
c. Having a short term orientation
d. All of the above are true

AACSB Reflective thinking, Individual dynamics

PTS: 1

ESSAY

1. Define national culture, business culture, occupational, and organizational culture.

2. Describe three management implications of high individualism versus collectivism (low individualism).

3. What are country clusters? Explain with an example.

4. What are cultural paradoxes? Give one example.

5. Describe some characteristics of cultures high on power distance. Compare the management implications with cultures low on power distance.

6. Describe some characteristics of cultures high on collectivism. Compare the management implications with cultures low on collectivism.

7. Describe some characteristics of cultures high on masculinity. Compare the management implications with cultures low on masculinity.

8. Discuss four of the 7d cultural dimensions. What are some implications of these dimensions for international management?

9. Why do the rankings on some cultural dimensions such as individualism differ between the 7d and Hofstede models?

10. Discuss the GLOBE cultural framework. How is this cultural framework different from Hofstede’s framework?

Chapter 3 The Institutional Context of Multinational Management

MULTIPLE CHOICE

1. The national context of a society is made up of
a. The national and business cultures of that society.
b. The social institutions of that society.
c. The national cultures and social institutions of that society.
d. The national cultures of that society.

AACSB Reflective thinking, Environmental influence

PTS: 1

2. A complex of positions, roles, norms, and values organizing relatively stable patterns of human resources to sustain viable social structures refers to which of the following?
a. Entrepreneurship
b. Social institutions
c. Comparative advantage
d. Strategy of the multinational company

AACSB Reflective thinking, Environmental influence

PTS: 1

3. According to the model discussed in the text, the national context does which of the following?
a. Creates a resource pool
b. Influences the business environment and helps create induced factor conditions
c. Does not influence the business environment
d. Does not help create induced factor conditions

AACSB Reflective thinking, Environmental influence

PTS: 1

4. An economic system where production activities are decentralized to private owners who carry out these activities to make a profit is known as a
a. Capitalist economy.
b. Command economy.
c. Socialist economy.
d. Mixed economy.

AACSB Reflective thinking, Environmental influence

PTS: 1

5. Which of the following statements is NOT TRUE regarding the experiences countries go through as they undertake market transitions from socialism to a more market based economy?
a. Drastic measures have to be taken to turn around formerly inefficient companies.
b. Managers’ thinking have to be changed so that they can understand management functions.
c. Financial systems have to be left unregulated to accurately reflect market prices.
d. More workers have to be hired as companies find that they are understaffed.

AACSB Reflective thinking, Environmental influence

PTS: 1

6. A society that is characterized by dominance of the manufacturing or secondary sectors is a/an
a. Industrial society.
b. Pre-industrial society.
c. Post-industrial society.
d. Market society.

AACSB Reflective thinking, Environmental influence

PTS: 1

7. Which of the following statements is TRUE regarding post-industrial societies?
a. Post-industrial societies are characterized by the dominance of manufacturing sectors.
b. Post-industrial societies tend to favor economic achievement.
c. Post-industrial societies tend to emphasize quality of life over economic achievement.
d. All of the above are true.

AACSB Reflective thinking, Environmental influence

PTS: 1

8. Which of the following are key social institutions that are the most likely to influence the business environment of a country?
a. Economic system
b. Level of industrialization
c. Religion
d. All of the above

AACSB Reflective thinking, Environmental influence

PTS: 1

9. Which of the following systems encourage the pursuit of collective goals such as social equality and solidarity?
a. Economic system
b. Market economy
c. Command economy
d. Capitalist economy

AACSB Reflective thinking, Environmental influence

PTS: 1

10. According to the text, which of the following statements regarding workers in formerly socialist economies is NOT TRUE?
a. Workers in formerly socialist economies are very trusting of each other
b. Workers in formerly socialist economies are generally reluctant to cooperate and work with each other
c. Workers in formerly socialist economies tend to favor personal relationships as key to success as opposed to their work performance
d. All of the above are true

AACSB Reflective thinking, Environmental influence

PTS: 1

11. Which of the following societies tend to determine occupations based on ascription (family background) and social status?
a. Industrial societies
b. Postindustrial societies
c. Socialist societies
d. Pre industrial societies

AACSB Reflective thinking, Environmental influence

PTS: 1

12. Which of the following four religions are practiced by 71% of the world’s population?
a. Jainism, Hinduism, Islam and Christianity
b. Hinduism, Christianity, Islam, and Sikhism
c. Christianity, Hinduism, Islam and Buddhism
d. Judaism, Christianity, Buddhism, and Islam

AACSB Reflective thinking, Environmental influence

PTS: 1

13. Which of the following religions is most practiced around the world?
a. Christianity
b. Buddhism
c. Hinduism
d. Islam

AACSB Reflective thinking, Environmental influence

PTS: 1

14. Which of the following religions has strict gender roles and also prohibits multinationals from paying or receiving interest on transactions?
a. Islam
b. Buddhism
c. Christianity
d. Jainism

AACSB Reflective thinking, Environmental influence

PTS: 1

15. Which religion is considered to be timeless and eternal as it not based on a single founder or event?
a. Jainism
b. Christianity
c. Hinduism
d. None of the above

AACSB Reflective thinking, Environmental influence

PTS: 1

16. Which of the following religions is based on the idea that craving and desires produce suffering but that it also possible to reach a stage where there is no longer any suffering?
a. Christianity
b. Judaism
c. Hinduism
d. Buddhism

AACSB Reflective thinking, Environmental influence

PTS: 1

17. The cultural and economic changes that occur because of how production is organized and distributed in society refers to which concept?
a. religion
b. education
c. industrialization
d. dominant economic type

AACSB Reflective thinking, Environmental influence

PTS: 1

18. In industrial societies, occupational placement is based on universalistic criteria such as
a. Age.
b. Religion.
c. Ascription.
d. Achievement.

AACSB Reflective thinking, Environmental influence

PTS: 1

19. A multinational manager carefully considers the list of festivals that are celebrated in a country in order to allow for holidays for his/her employees. Which social institution is most likely being considered here?
a. Industrialization
b. Market transition
c. Education
d. Religion

AACSB Analytic, Environmental influence

PTS: 1

20. Pre industrial societies tend to have
a. Poor infrastructure and support.
b. Adequate infrastructure.
c. Favorable business conditions.
d. Government support.

AACSB Reflective thinking, Environmental influence

PTS: 1

21. An increased emphasis on quality of life over achievement oriented norms is typical of
a. Pre-industrial societies.
b. Industrial societies.
c. Post-industrial societies.
d. None of the above

AACSB Reflective thinking, Environmental influence

PTS: 1

22. A multinational Human Resource Manager’s decision to promote an individual results in wide discontent in the foreign subsidiary. The manager finds that although the promoted individual’s performance is exemplary, most employees feel that the promotion should have gone to another individual who comes from an important family. The foreign subsidiary is most likely located in a/an
a. Industrial society.
b. Pre-industrial society.
c. Capitalist society.
d. Post-industrial society.

AACSB Reflective thinking, Environmental influence

PTS: 1

23. In which of the following societies would people most likely prefer non-monetary incentives?
a. Industrial society
b. Pre-industrial society
c. Post-industrial society
d. None of the above

AACSB Reflective thinking, Motivation concepts

PTS: 1

24. High rankings on the materialist index of some countries (e.g., Hungary, India, Brazil) suggest that individuals in these countries are
a. Favor non material incentives.
b. Achievement oriented.
c. Motivated by non-monetary rewards.
d. Hinduism.

AACSB Reflective thinking, Environmental influence

PTS: 1

25. When industrialization is inwardly oriented, local industries are promoted to satisfy the
a. Need to export.
b. Local population.
c. Requirements of multinational companies.
d. Domestic market and preserve foreign exchange.

AACSB Analytic, Environmental influence

PTS: 1

26. When industrialization is outward oriented, foreign exchange is
a. Encouraged and exporting is promoted.
b. Discouraged and exporting is not favored.
c. Not welcomed.
d. Used to fund governments in power.

AACSB Reflective thinking, Environmental influence

PTS: 1

27. The famous German Sociologist, Max Weber, argued that the Protestant work ethic
a. Led to the emergence of capitalism in Western Europe.
b. Led to the decline of capitalism in Western Europe.
c. Led to an acute distaste for the accumulation of wealth.
d. Led to the rise of socialism in Eastern Europe.

AACSB Analytic, Environmental influence

PTS: 1

28. One important issue relevant to multinationals, is the extent to which educational systems encourage students to
a. Be innovative and creative.
b. To expect a more ethical atmosphere.
c. Passively accept what is taught.
d. None of the above

AACSB Reflective thinking, Environmental influence

PTS: 1

29. When multinationals pay low wages or use child labor, they often receive
a. Support and praise.
b. Imprisonment.
c. Negative publicity.
d. Social responsibility.

AACSB Reflective thinking, Environmental influence

PTS: 1

30. According to the text, all of the following statements regarding education and educational systems around the world are TRUE except
a. Universal education enrolment is a goal of most countries.
b. Educational levels give an indication of the skill and productivity in any society.
c. The focus of educational systems around the world are fairly similar in terms of whether these systems emphasize academic or vocational aspects.
d. All of the above statements are true.

AACSB Analytic, Environmental influence

PTS: 1

31. The educational attainment scores
a. Are fairly similar for most countries.
b. Give an idea of the abundance of engineers for research and development purposes.
c. Reflect the mean years of schooling of people in any society.
d. All of the above are true of educational attainment scores.

AACSB Reflective thinking, Environmental influence

PTS: 1

32. Which of the following is not an implication of educational systems as they apply to multinationals?
a. Educational level gives an indication of the skill and productivity of workers in any society.
b. Educational systems have implications for how labor force issues are approached and policies implemented.
c. Educational levels can be gauged to give an idea of what multinationals can expect.
d. All of the above are true

AACSB Analytic, Environmental influence

PTS: 1

33. In societies with high social inequality, resources are controlled by
a. A majority of people.
b. Very few people.
c. The Government.
d. Religious institutions.

AACSB Reflective thinking, Environmental influence

PTS: 1

34. When a society expects that while men should work outside, and women ideally stay at home, this exhibits which of the following features?
a. Need for domestic products
b. Open societies
c. Growing levels of industrialization and economic development
d. Strict division of society by gender

AACSB Reflective thinking, Environmental influence

PTS: 1

35. Postindustrial societies are typically characterized by the dominance of
a. Service and manufacturing sectors.
b. Service sectors.
c. Manufacturing sectors.
d. Agricultural sectors.

AACSB Reflective thinking, Environmental influence

PTS: 1

36. The degree to which people have privileged access to resources and positions within societies is
a. An indication of social inequality.
b. The same around the world.
c. Has no implications for multinationals.
d. All of the above

AACSB Reflective thinking, Environmental influence

PTS: 1

37. Which of the following statements about the GINI index is FALSE?
a. The GINI index represents the extent of inequality in people’s income within a society
b. Ranges from 0 to 100
c. Is scaled so that 0 represents no inequality while 100 represents perfect inequality
d. Is scaled so that 100 represents no inequality while 0 represents perfect inequality

AACSB Reflective thinking, Environmental influence

PTS: 1

38. The movement from a socialist economy to a free market economy is also known as which of the following?
a. Market transition
b. Dominant economic type
c. Rapid industrialization
d. Government regulation

AACSB Analytic, Environmental influence

PTS: 1

39. The index of economic freedom may be used by multinationals to understand the nature of
a. market transitions
b. national culture
c. national context
d. governmental intervention

AACSB Reflective thinking, Environmental influence

PTS: 1

40. Which of the following has important implications for multinationals?
a. Religion
b. Education and economic systems
c. Industrialization and inequality
d. All of the above

AACSB Reflective thinking, Environmental influence

PTS: 1

ESSAY

1. Define social institutions. How do social institutions affect individuals and organizations?

2. Define national context. Explain how national context influences organizations.

3. What are the three major types of economic systems? What are the effects of economic systems on how organizations are structured in societies?

4. What are some implications of the market transitions that many formerly communist societies are experiencing? What are some major challenges facing multinationals as they try to motivate workers in these transition economies?

5. Compare and contrast pre-industrial, industrial and post-industrial societies. Discuss the implications for multinationals of any one of these three types of economies.

6. What are some major philosophies of each of the world’s major religions? Pick two religions and discuss how they affect the business environment.

7. How does the educational system influence the business environment in any country?

8. What is social inequality? What implications does social inequality have for multinationals?

Chapter 4
Managing Ethical and Social Responsibility Challenges in Multinational Companies

MULTIPLE CHOICE

1. International business ethics
a. Present problems similar to domestic business ethics.
b. Pertain to the rules and values that determine actions that companies should follow when dealing with other companies.
c. Pertain to those unique ethical problems faced by managers conducting business across countries.
d. None of the above

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

2. Which of the following statements is NOT TRUE regarding social responsibility?
a. Social responsibility is not linked with business ethics.
b. Refers to the idea that businesses have certain responsibilities to society beyond making profits.
c. Means that a company has to take into consideration various stakeholders when making decisions.
d. Is concerned with the ethical consequences of policies and procedures of the company as an organization.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

3. The ethical philosophies that consider actions as good or bad regardless of their outcomes are
a. The teleological ethical theories.
b. Utilitarianism.
c. Deontological theories of ethics.
d. None of the above

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

4. Utilitarianism, as a form of ethical philosophy,
a. Argues that what is good or moral comes from acts that produce the greatest good for the greatest number of people.
b. Argues that actions by themselves have a good or bad morality regardless of their consequences.
c. Is one form of deontological ethical theory.
d. Is a moral language proposed by Donaldson.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

5. Which of the following statements are true about teleological ethical theories?
a. The morality of an act comes from its consequences.
b. Utilitarianism is one of the most popular teleological theory.
c. Actions by themselves have a good or bad morality regardless of their consequences.
d. All of the above are true.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

6. Stealing a loaf of bread to feed a hungry family can be justified by which ethical theory?
a. Social responsibility ethical theory
b. Deontological ethical theory
c. Moral languages
d. Utilitarianism

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

7. Moral languages
a. Are a form of deontological ethical theory.
b. Focus on the consequences of actions rather than their worth.
c. Describe the ways people think about general issues.
d. Are used to explain ethical choices.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

8. Moral languages include all of the following EXCEPT
a. Virtue and vice.
b. Self-control.
c. Avoiding harm.
d. Being ethical.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

9. Multinationals that provide fair wages to their local employees are following which type of moral language?
a. Avoiding harm
b. Ethical behavior
c. Rights and duties
d. Social contract

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

10. According to the text, the United Nations Declaration of Human Rights is an example of which of the following?
a. Convenient imperialism
b. Transnational ethics
c. European codes
d. Moral language

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

11. Written ethical codes may include which of the following?
a. Contracts
b. International laws
c. Laws of a country
d. All of the above

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

12. Which of the following statements about bribes or questionable payments are true?
a. Bribes to expedite government actions or to gain business advantages are common in international business.
b. Most countries have formal laws forbidding bribes or questionable payments.
c. Enforceability of ethics varies in different countries.
d. All of the above

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

13. The reason to know provisions of the FCPA is that it
a. Is the easiest to enforce and observe.
b. Probably encourages foreign bribery.
c. Is a tricky component for US companies.
d. Emphasizes the reasonable person concept.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

14. According to the FCPA, U.S. managers are criminally liable
a. Only for bribes that they pay directly to a foreign official.
b. Only for bribes paid in the U.S. and not in other countries where it is common practice in business dealings.
c. For all bribes by employees or agents of the U.S. company even if the U.S. managers do not know about them.
d. For bribes paid by foreign agents, if managers know about them.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

15. Which of the following payments would the Foreign Corrupt Practices Act allow?
a. Payments made under duress to avoid injury or violence
b. Small payments to encourage officials to do their legitimate and routine jobs
c. Payments that are considered lawful in the country
d. All of the above are allowed

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

16. Ethical dilemmas are usually
a. Easy to resolve.
b. Clear and unambiguous.
c. Unclear and ambiguous.
d. Removed with a formal code of ethics.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

17. Proscriptive rules in codes of conduct:
a. Tell multinational companies or managers what they should do.
b. Are forms of moral language.
c. Tell multinational companies or managers what they cannot do.
d. All of the above

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

18. Ethical convergence
a. Is similar to ethical relativism.
b. Refers to basic universal moral principles.
c. Is a form of ethical universalism.
d. Refers to the growing pressures for multinational companies to follow the same rules in managing ethical behavior and social responsibility.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

19. Pressures for ethical convergence include all of the following EXCEPT
a. The growth of international trade and trading blocs.
b. Increased interaction between foreign trading partners.
c. The need to have unique norms and values to manage their employees differently.
d. All of the above are true

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

20. Prescriptive rules in codes of conduct
a. Tell multinational companies or managers what they should do.
b. Are forms of moral language.
c. Tell multinational companies or managers what they cannot do.
d. All of the above

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

21. Ethical relativism
a. Argues that one should impose the home country’s ethical system everywhere.
b. Implies that ethics are relative to the type of philosophy used.
c. Means that each society’s view of ethics must be considered legitimate.
d. Means that the same ethical principles are universal.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

22. The argument that there are basic moral principles that transcend cultural and national boundaries is supported by
a. Ethical relativism.
b. Moral languages.
c. Ethical universalism.
d. None of the above

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

23. When companies use the logic of ethical relativism to behave any way they please, this is known as
a. Prescriptive ethical management.
b. Proscriptive ethical management.
c. Convenient relativism.
d. Universal ethics applications.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

24. When companies use the logic of moral universalism and impose their views on the rest of the world, ________________ occurs.
a. Ethical divergence
b. Ethical convenience
c. Cultural imperialism
d. None of the above

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

25. The form of analysis where the prime interest is what is the best decision for a company’s profit is
a. Legal analysis.
b. Ethical analysis.
c. Social responsibility analysis.
d. None of the above

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

26. In an economic analysis
a. The manager considers the best decision for a company’s profits.
b. The manager focuses on meeting the laws of a country.
c. The manager goes beyond profits and analyzes the ethical consequences of decisions.
d. None of the above

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

27. When facing an ethical question, the manager who uses legal analysis criteria
a. Is primarily interested in the decision that is best for the company’s profits.
b. Focuses on only meeting the laws of the country in which the company is operating.
c. Focuses on meeting the needs of other constituents beyond stakeholders.
d. Focuses on doing the right things.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

28. In an ethical analysis of a problem, a manager must
a. Focus on meeting the laws of the country in which the company is operating.
b. Focus on what is the best decision for a company’s profits.
c. Focus on the decisions with the best consequences.
d. None of the above

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

29. The first duty of a multinational manager faced with a decision is
a. To consider whether the decision makes business sense.
b. To consider whether the decision meets the legal standard in the country.
c. To consider whether the decision is ethical.
d. To refer to the written codes of ethics.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

30. Ethical decision making of multinational managers preferably should
a. Be based solely on home country ethical principles.
b. Go beyond legal constraints and respect the local cultural norms.
c. Be primarily profitable for the multinational.
d. None of the above

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

31. A multinational manager decides that it would be unethical to close a foreign plant as employees in that plant are not being treated with dignity. Which ethical theory is the manager using to reach that conclusion?
a. Teleological ethical theory
b. Utilitarian ethical theory
c. Deontological ethical theory
d. None of the above

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

32. A multinational manager decides to allow hiring of children for a foreign plant as such practices are accepted in the country. Which ethical principle is she basing her decision on?
a. Ethical universalism
b. Convenient ethical universalism
c. Ethical relativism
d. None of the above

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

33. A multinational manager is considering closing a plant in China as wages have increased considerably in China. The manager considers the implications of laying off people and closing the plant on the profits of the company. Which form of analysis is the manager doing?
a. Legal analysis
b. Profit making analysis
c. Ethical analysis
d. None of the above

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

34. Which act was proposed by the Securities Exchange Commission in reaction to the accounting scandals at companies like Enron and Worldcom?
a. Sarbanes-Oxley
b. WTO
c. Corruption Perception Index
d. The Ethisphere Institute

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

35. Which of the following statements regarding the Foreign Corrupt Practices Act (FCPA) is NOT TRUE?
a. Bribes or payments made under duress to avoid injury or violence are acceptable.
b. Small payments to encourage officials to do their legitimate and routine jobs are acceptable.
c. Payments or gifts to foreign government officials for the sake of gaining or retaining business are acceptable.
d. In an unstable political environment, payments made to local officials to avoid harassment of employees are acceptable.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

36. Which of the following statements is TRUE regarding cultural relativism as an approach in international business ethics?
a. What is right or wrong depends on the culture.
b. A guide for what is legal and appropriate is the local culture.
c. Companies should follow the moral norms of the local culture.
d. All of the above statements are true.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

37. Deontological ethical theories
a. Argue that the morality of an act comes from this consequences.
b. Would provide justification for closing a plant and laying off workers to reduce costs.
c. Is most typically represented by cost and benefit analyses.
d. Argue that actions by themselves have a good or bad morality irrespective of the consequences.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

38. According to the text, which of the following is NOT a consequence of corruption?
a. Companies typically make up the bribe by increasing the contract price.
b. Companies use poorer quality materials to make up for the bribe.
c. Companies devote some of the bribe to socially responsible causes.
d. Corruption can also result in collusions among firms.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

39. The world seems to be moving towards transnational ethics because:
a. Globalization dramatically increases contact among people from different ethical and cultural systems.
b. This contact creates pressure for the development of new transnational agreements regarding business practices.
c. International trade and trading blocs such as the EU and NAFTA are growing.
d. All of these reasons.

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

40. Which of the following ethical dilemmas is addressed by the Sarbanes Oxley Act?
a. Competition
b. Auditor responsibility and independence
c. Sourcing of cheap labor
d. Company strategy

AACSB Ethics, Ethical responsibilities in organizations and societies

PTS: 1

ESSAY

1. Discuss some of the issues that make international business ethics more complex than domestic business ethics.

2. Do laws always reflect a community’s ethics? Give an example to explain your answer.

3. Discuss the difference between teleological and deontological theories of ethics. Give examples of how an international manager might appeal to either type of theory when faced with the opportunity to offer a bribe.

4. How do social institutions and culture affect the practice of business ethics in different countries?

5. Compare and contrast ethical relativism and ethical universalism. What are some of the dangers of adopting either ethical relativism or ethical universalism when making decisions?

6. Describe the U.S. FCPA, what makes it challenging for U.S. firms, and how they deal with that challenge.

7. What are moral languages? How can moral languages help multinational become more ethical?

8. Discuss some of the pressures for ethical convergence. What are some implications for multinational management?

9. Compare and contrast prescriptive codes of ethics with proscriptive codes.

Chapter 5
Strategic Management in the Multinational Company: Content and Formulation

MULTIPLE CHOICE

1. Generic strategies
a. Occur when a company can outmatch its rivals in attracting and maintaining its customers.
b. Represent basic ways that domestic and multinational companies keep and achieve competitive advantage.
c. Are all based on finding ways to provide superior value to the customer.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

2. Which of the following is a primary generic strategy?
a. Cross country subsidizing
b. Low Cost
c. Competitive pricing
d. Critical success factors

AACSB Reflective thinking, Strategy

PTS: 1

3. Differentiation leads to higher profits by
a. Charging a higher price than competitors.
b. Offering the customer better value.
c. Offering a product with more features and quality.
d. All of the above

AACSB Reflective thinking, Strategy

PTS: 1

4. A low cost strategy leads to higher profits by
a. Charging a higher price than competitors.
b. Offering the customer products with more features.
c. The cost savings that firms achieve.
d. Adding unique features to products.

AACSB Reflective thinking, Strategy

PTS: 1

5. __________ strategies achieve higher profits by charging higher prices.
a. Low cost
b. Differentiation
c. Competitive advantage
d. Generic

AACSB Reflective thinking, Strategy

PTS: 1

6. The value chain
a. Represents a generic strategy.
b. Represents all the activities that a firm uses to market and deliver its products.
c. Represents all the activities that a firm uses to design, produce, market, deliver, and support its products.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

7. Upstream activities in the value chain are concerned, in part, with
a. The primary activities.
b. The support activities.
c. Input logistics.
d. After market service.

AACSB Reflective thinking, Strategy

PTS: 1

8. Support activities include
a. Research and development.
b. Service repair.
c. Output logistics.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

9. Sales and dealing with distribution channels refer to _________ activities in the value chain.
a. Upstream
b. Support
c. Secondary
d. Downstream

AACSB Reflective thinking, Strategy

PTS: 1

10. Capabilities that lead to competitive advantage must be
a. Valuable, rare, and easy to copy.
b. Fairly substitutable.
c. Valuable, rare, and hard to copy.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

11. Competitive strategies
a. Are examples of basic generic strategies.
b. Are moves multinationals and other companies use to defeat competitors.
c. Can be low cost or differentiation.
d. All of the above

AACSB Reflective thinking, Strategy

PTS: 1

12. Offensive strategies
a. Are examples of basic generic strategies.
b. Are direct targeting/attacking of rivals.
c. Are attempts to reduce the risk of being attacked.
d. Are used to convince other firms to seek other targets.

AACSB Reflective thinking, Strategy

PTS: 1

13. Defensive strategies include
a. Direct attacks, end-run offensive, and acquisitions.
b. The generic strategies.
c. Counter-parries.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

14. Strategies used to attempt to reduce the risk of being attacked are
a. Defensive competitive strategies.
b. Offensive competitive strategies.
c. Generic strategies.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

15. Counter-parry
a. Is an example of an offensive strategy.
b. Is an example of a generic strategy.
c. Is fending off a competitor’s attack in one country by attacking the competitor in another country.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

16. Corporate level strategies
a. Are similar to the generic strategies.
b. Pertain to the operation of corporate divisions.
c. Are concerned with how single business companies choose strategies.
d. Are concerned with how companies choose their mixtures of different businesses.

AACSB Reflective thinking, Strategy

PTS: 1

17. Business level strategies
a. Include only the generic strategies.
b. Pertain to the operation of multiple businesses.
c. Are concerned with how single business companies choose strategies.
d. Are concerned with how companies choose their mixtures of different businesses.

AACSB Reflective thinking, Strategy

PTS: 1

18. In related diversification
a. Companies acquire businesses in any country.
b. Companies acquire businesses in any industry.
c. Companies acquire businesses that are similar in some way to their core business.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

19. Acquisition of mixtures of businesses in any industry is
a. Low cost strategy.
b. Unrelated diversification.
c. Related diversification.
d. A business level strategy.

AACSB Reflective thinking, Strategy

PTS: 1

20. This is considered to be a popular and controversial way to address internal cost inefficiencies.
a. Insourcing
b. Outsourcing
c. Related diversification
d. Unrelated diversification

AACSB Reflective thinking, Strategy

PTS: 1

21. Market size, ease of entry and exit, and economies of scale are all examples of
a. Defensive strategies.
b. Key success factors.
c. Dominant economic characteristics.
d. Differentiation.

AACSB Reflective thinking, Strategy

PTS: 1

22. Key success factors are
a. Examples of defensive strategies.
b. Important characteristics of a company or its product that lead to success in an industry.
c. Similar to generic strategies.
d. The economic characteristics of countries that lead to success.

AACSB Reflective thinking, Strategy

PTS: 1

23. The acronym SWOT stands for
a. Strategies with organizational timelines.
b. Selection, withdrawal, opportunities, and timeliness.
c. Strengths, weakness, opportunities, and threats.
d. Strategies, winning, organizations, and tender offers.

AACSB Reflective thinking, Strategy

PTS: 1

24. A strength is
a. A favorable condition in a company’s environment.
b. Distinctive capability, resource, skill, or other advantage that a company has vis-à-vis its competitors.
c. Represented by changes in the economic conditions in an industry.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

25. Weaknesses are
a. Lack of distinctive capabilities, resource, and skills that leads to competitive disadvantage compared to competitors.
b. Unfavorable conditions in a firm’s environment.
c. Relevant to both the internal and external environment of companies.
d. All of the above

AACSB Reflective thinking, Strategy

PTS: 1

26. BMW and Mercedes view their Japanese rivals moves into the upscale car market as a/an
a. Strength.
b. Weakness.
c. Opportunity.
d. Threat.

AACSB Reflective thinking, Strategy

PTS: 1

27. Matrix analyses
a. Help assess business portfolios.
b. Divide businesses into successes and failures.
c. Are less complicated for the multinational company.
d. All of the above

AACSB Reflective thinking, Strategy

PTS: 1

28. In the BCG Matrix, cash cows are
a. Businesses in a slow-growth industry where the company has a strong market share position.
b. Businesses in a fast growing industry where the company has a strong market share position.
c. Businesses in a slow-growth industry where the company has a weak market share position.
d. Businesses in a fast growing industry where the company has a weak market share position.

AACSB Reflective thinking, Strategy

PTS: 1

29. In the BCG matrix, the appropriate strategy for dogs should be
a. Invest and Expand.
b. Defend and Harvest.
c. Divest.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

30. In the BCG Matrix, Defend and Harvest are the most popular strategies for
a. Stars.
b. Dogs.
c. Cash cows.
d. Problem children.

AACSB Reflective thinking, Strategy

PTS: 1

31. Competitive advantage
a. Represent the basic ways that companies can provide superior value to customers.
b. Is one of the basic strategies.
c. Occurs when a company can outmatch its rivals in attracting and maintaining its customers.
d. Is best achieved using a low cost strategy.

AACSB Reflective thinking, Strategy

PTS: 1

32. The GE Portfolio matrix
a. Is the same as the Boston Consulting Group matrix.
b. Contains four cells based on industry and business strength.
c. Can be used to assess business level strategies.
d. Contains nine cells based on industry strength and business competitive position.

AACSB Reflective thinking, Strategy

PTS: 1

33. Capabilities
a. Are the inputs into a company’s production or service processes.
b. Are early activities in the value chain such as R&D and dealing with suppliers.
c. Are similar to distinctive competencies.
d. Represent the ability of companies to assemble and coordinate their resources in ways that lead to lower costs of differentiated outputs.

AACSB Reflective thinking, Strategy

PTS: 1

34. Favorable conditions in a firm’s external environment are known as
a. Strengths.
b. Capabilities.
c. Opportunities.
d. Distinctive competencies.

AACSB Reflective thinking, Strategy

PTS: 1

35. Which of the following more likely represents a threat to a multinational company like Toyota?
a. Higher prices charged by Toyota’s competitors.
b. Lower interest rates around the world that makes cars more affordable.
c. Toyota’s bad image among teenagers.
d. Kia and Hyundai’s entry in markets traditionally dominated by Toyota.

AACSB Reflective thinking, Strategy

PTS: 1

36. A company that has a limited product range, and sells to certain buyers in some geographical areas is said to have which of the following?
a. Broad competitive scope
b. Narrow competitive scope
c. Lack of competition
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

37. Porter’s five forces help a multinational manager understand
a. The key success factors in an industry.
b. How to assess the attractiveness of the industries a company is involved in.
c. How to assess its unrelated diversification efforts.
d. The trends in its industry.

AACSB Reflective thinking, Strategy

PTS: 1

38. Which of the following forces is NOT one of the forces considered in Porter’s five forces analysis?
a. Degree of competition among existing competitors
b. Degree of governmental regulation in the industry
c. Threat of new entrants in the industry
d. Bargaining power of buyers in the industry

AACSB Reflective thinking, Strategy

PTS: 1

39. The degree to which competitors are confronted with alternatives for their products is referred to as which force in Porter’s five forces?
a. Threat of new entrants
b. Bargaining power of buyers
c. Degree of competition
d. None of the above

AACSB Analytic, Strategy

PTS: 1

40. The national context affects strategy through which of the following processes?
a. Encourage or discourage certain forms of businesses and strategies in each country
b. Factor conditions play a role in shaping each country’s unique resource base
c. Determine which resources are used, how they are used and which are developed
d. All of the above

AACSB Reflective thinking, Environmental influence

PTS: 1

ESSAY

1. Describe the low cost strategy as compared to the differentiation strategy.

2. Regarding low cost and differentiation strategies, when is each strategy appropriate?

3. Compare and contrast defensive and offensive strategies. Discuss when a multinational can use offensive strategies in one country and defensive strategies in another.

4. What is the value chain? How can an understanding of the value chain help a company be more successful in its generic strategy?

5. What is related diversification? When would you expect related diversification to be more profitable than unrelated diversification?

6. What is sustainable competitive advantage? What are some essential characteristics of company capabilities that can lead to sustainable competitive advantage?

7. Describe the SWOT analysis. Why is a SWOT analysis more complex for a multinational than for a domestic company?

8. Discuss some of the major issues a multinational manager needs to take into consideration when conducting an industry analysis.

9. What are key success factors? Discuss some KSFs that are most likely to vary by national context.

10. Discuss each of Porter’s five forces model. What information can a multinational obtain from Porter’s five forces industry analysis?

Chapter 6 Multinational and Entry-Mode Strategies: Content and Formulation

MULTIPLE CHOICE

1. According to the text, a fundamental dilemma faced by all multinationals is
a. The form of competitive strategy they should use.
b. How much they emphasize responding to differences in all the markets they operate.
c. How to fight their rivals.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

2. Responding to differences in the markets in all the countries in which a company operates is
a. The global-local dilemma.
b. The best strategy for success for a multinational.
c. The local-responsiveness solution.
d. The global solution.

AACSB Reflective thinking, Strategy

PTS: 1

3. The global solution to the global-local dilemma refers to
a. Conducting business similarly around the world.
b. Responding to differences in the global markets in which a company operates.
c. Customization of products to regional but not country differences.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

4. Conducting business similarly throughout the world, and locating company units wherever there is high quality and low cost is
a. The global-local dilemma.
b. The global integration solution.
c. The local responsiveness solution.
d. The multidomestic solution.

AACSB Reflective thinking, Strategy

PTS: 1

5. A multidomestic company gives strategic priority to
a. Providing a low cost product to local customers.
b. Adapting a product or service to local needs.
c. Having multiple locations for sources its raw materials.
d. Controlling the strategic options of local companies.

AACSB Reflective thinking, Strategy

PTS: 1

6. Which strategy attempts to balance advantages from three other multinational strategies?
a. Regional
b. Multidomestic
c. Transnational
d. International

AACSB Reflective thinking, Strategy

PTS: 1

7. Dispersing value-chain activities anywhere in the world where the company can do them best or cheapest refers to seeking
a. The global-local dilemma.
b. Comparative advantage of nations.
c. Competitive advantage of firms.
d. Locations advantages.

AACSB Reflective thinking, Strategy

PTS: 1

8. Comparative advantage is
a. Similar to competitive advantage.
b. A local responsiveness solution.
c. Where the company can produce the cheapest.
d. Advantages of nations over other nations.

AACSB Reflective thinking, Strategy

PTS: 1

9. Comparative advantages are
a. Cost or quality advantages particular to a nation.
b. Similar to competitive advantages.
c. Emphasized through multidomestic strategies.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

10. Selling global products and using similar marketing techniques worldwide is an example of a
a. Transnational strategy.
b. International strategy.
c. Multidomestic strategy.
d. Regional strategy.

AACSB Reflective thinking, Strategy

PTS: 1

11. A regional strategy refers to
a. Managing raw-material sourcing, production, marketing, and support activities within a particular region.
b. Selling global products and using similar marketing techniques worldwide.
c. Dispersing value-chain activities anywhere in the world where the company can do them best or cheapest.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

12. Global companies usually seek to
a. Provide unique products for all countries of the world.
b. Take advantage of different factor costs among countries.
c. Manufacture their products in every country.
d. Focus only on downstream activities in the value chain.

AACSB Reflective thinking, Strategy

PTS: 1

13. Common customer needs, global sources of raw material, and favorable trade policies all lead to
a. An increased focus on local markets.
b. More use of the multidomestic strategy.
c. More use of the local solution to the global-local dilemma.
d. A greater likelihood that companies select global strategies.

AACSB Reflective thinking, Strategy

PTS: 1

14. Having one set of products for North American countries and another set of products for Europe illustrates which strategy?
a. Multidomestic
b. Regional
c. Transnational
d. Global

AACSB Reflective thinking, Strategy

PTS: 1

15. Globalization drivers
a. Fall into four categories: market, costs, governments, and competition.
b. Are conditions in an industry that favor transnational or international strategies over multidomestic or regional strategies.
c. Indicate the degree of globalization of an industry.
d. All of the above

AACSB Reflective thinking, Strategy

PTS: 1

16. Asking diagnostic questions such as are there economies of scale, are there cheaper sources of raw materials, are there global sources of low-cost raw materials provide information regarding which globalization driver?
a. Global markets
b. Costs
c. Competition
d. Governments

AACSB Reflective thinking, Strategy

PTS: 1

17. Entry-mode strategies
a. Include multidomestic and transnational strategies.
b. Are options multinationals have to enter foreign markets and countries.
c. Are only processes by which firms fill overseas orders like domestic orders.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

18. Using intermediaries or go-between firms to provide the knowledge and contacts necessary to sell overseas is usually associated with
a. Direct exporting.
b. Franchising.
c. Indirect exporting.
d. Licensing.

AACSB Reflective thinking, Strategy

PTS: 1

19. A company that treats and fills overseas orders like domestic orders is an example of a
a. Indirect exporter.
b. Export management company.
c. Aggressive exporter.
d. Passive exporter.

AACSB Reflective thinking, Strategy

PTS: 1

20. International franchising
a. Is a comprehensive licensing agreement where the franchisor grants to the franchisee the use of a whole business operation.
b. When multinationals make a project fully operational and train local managers and workers before the owner takes control.
c. The use of intermediaries or go-between firms to provide the knowledge and contacts necessary to sell overseas is.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

21. When multinationals make a project fully operational and train local managers and workers before the owner takes control, they are using which entry-mode strategy?
a. Licensing
b. Franchising
c. Turnkey
d. Direct export

AACSB Reflective thinking, Strategy

PTS: 1

22. When a firm from another country has an equity (or ownership) position in a separate company, it is engaging in
a. An international cooperative alliance.
b. A turnkey operation.
c. A contract manufacturer.
d. FDI.

AACSB Reflective thinking, Strategy

PTS: 1

23. Foreign direct investment
a. Is an entry-mode strategy.
b. Means that a multinational owns, in part or in whole, an operation in another country.
c. Symbolizes the highest rate of internationalization.
d. All of the above

AACSB Reflective thinking, Strategy

PTS: 1

24. Major drawbacks of licensing include
a. The risk of losing the capital investment.
b. The risk of the local government changing international trade policies.
c. The loss of control and the possibility of creating a new competitor.
d. All of the above

AACSB Reflective thinking, Strategy

PTS: 1

25. Companies should license if
a. They want to control all aspects of operation.
b. Their product is older or a soon-to-be replaced technology.
c. They have the necessary resources to export or invest directly.
d. There are no tariffs or quotas.

AACSB Reflective thinking, Strategy

PTS: 1

26. If a company seeks a strategic alliance with another firm, it is a
a. Low cost strategy.
b. Franchising agreement.
c. Competitive agreement.
d. Cooperative agreement.

AACSB Reflective thinking, Strategy

PTS: 1

27. Advantages of foreign direct investment include
a. Increased capital investment.
b. Greater control of product and marketing strategy.
c. Greater exposure to financial risks.
d. The lower costs of using expatriates managers.

AACSB Reflective thinking, Strategy

PTS: 1

28. If management believes that it must control foreign sales, customer credit, and the eventual sale of the product, then the company should choose which of the following entry-mode strategies?
a. Indirect exporting
b. Licensing
c. Direct exporting
d. Franchising

AACSB Reflective thinking, Strategy

PTS: 1

29. When deciding on an entry-mode strategy, cultural distance is
a. The physical distance between two countries.
b. Not the distance between an organization’s culture and the local national culture.
c. Similar to the geographic distance.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

30. As entry-mode strategies, direct and indirect exporting have
a. High levels of control and low levels of risk.
b. Similar levels of risk and control as FDI.
c. Low levels of risk and control.
d. Are among the most risky.

AACSB Reflective thinking, Strategy

PTS: 1

31. Which of the following strategies gives top priority to seeking location advantages and to gaining operation efficiencies from worldwide operation?
a. Multidomestic strategy
b. Regional strategy
c. Transnational strategy
d. International strategy

AACSB Reflective thinking, Strategy

PTS: 1

32. If strategists in a firm believe that centralizing key activities such as R&D is necessary to reduce coordination costs and to achieve economies of scale, they are more likely to choose
a. An international strategy.
b. A transnational strategy.
c. A local strategy.
d. None of the above

AACSB Analytic, Strategy

PTS: 1

33. What dictates the choice of a multinational entry-mode strategy?
a. Strategic competition
b. Strategic reason to be in the market
c. Companies want to share risks and costs of developing technology
d. Companies want to achieve economies of scale

AACSB Reflective thinking, Strategy

PTS: 1

34. If a company believes that it needs to control foreign sales, customer credit, and sale of product to the customer, it is more likely to choose
a. Indirect exporting.
b. Rely on foreign intermediaries for export purposes.
c. Direct exporting.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

35. To deal with political risk, various private and government agencies offer
a. Insurance.
b. Assurance.
c. Investment.
d. All of the above are true.

AACSB Reflective thinking, Strategy

PTS: 1

36. A company pursuing a regional strategy
a. Has worldwide products and a worldwide value chain.
b. Sells the same product using only minor modification in marketing and product offerings.
c. Is similar to a company pursuing an international strategy.
d. Attempt to gain location advantages of more global transnational combined with some of the local-adaptation advantages of the multidomestic company.

AACSB Reflective thinking, Strategy

PTS: 1

37. Which of the following statements regarding exporting is FALSE?
a. Exporting is the easiest of entry-mode strategies.
b. Export can be of the passive form where overseas orders are treated like domestic orders.
c. Export can be indirect where companies rely on intermediaries to sell overseas.
d. Because it is the easiest form of going international, exports are not as important to the US economy.

AACSB Reflective thinking, Strategy

PTS: 1

38. Foreign direct investment
a. Exists when two or more firms have an ownership position in a separate company.
b. Requires at least three separate companies to combine resources.
c. Exists when two or more companies agree to cooperate in any value-chain activity.
d. The above statements are all true for equity international joint ventures.

AACSB Reflective thinking, Strategy

PTS: 1

39. Which of the following refers to the negative impact of political decisions or events on a multinational’s profitability?
a. Economic risk
b. Local government risk
c. Political risk
d. Control risk

AACSB Reflective thinking, Strategy

PTS: 1

40. Which of the following is NOT a factor considered when assessing political risk?
a. The durability of the political system
b. The role of the government, unions and the media in political stability
c. The profitability
d. The reliability of the rule of law

AACSB Reflective thinking, Strategy

PTS: 1

ESSAY

1. Describe the global-local dilemma. When is each solution most appropriate?

2. What are globalization drivers?

3. Discuss the conditions when a transnational or international firm is likely to outcompete a multidomestic or regional strategist. Contrast this with the opposite situation where the multidomestic is most likely to be successful.

4. Contrast the transnational and international strategies in their approach to location advantages.

5. You work for a small company that has an innovative low-cost production method for laser disks. A Japanese firm approaches your CEO to license the technology. The CEO asks you to write a report detailing the risks and potential benefits of this deal. What will you include in the report and why?

6. You work for a small company that has an innovative low-cost production method for laser disks that allow it to produce at very low cost. A Belgian firm approaches your CEO and offers to export your disks to Belgium for a commission. The CEO asks you to write a report detailing the risks and potential benefits of this deal. What will you include in your report and why

7. Under what conditions would a regional strategy be best for a multinational? Explain.

8. Discuss some key issues to consider when choosing an entry-mode strategy.

9. Discuss some general strategic considerations regarding multinational strategy when choosing a entry-mode strategy.

10. What is political risk? Discuss some of the aspects of political risk assessment. How can multinationals use political risk assessment?

Chapter 7 Small Businesses and International Entrepreneurship:
Overcoming Barriers and Finding Opportunities

MULTIPLE CHOICE

1. Small businesses differ from large businesses when going international primarily in
a. The available participation strategies.
b. The strategies they can use to go international.
c. Their founder’s or entrepreneur’s influence.
d. The available multinational strategies.

AACSB Reflective thinking, Creation of value

PTS: 1

2. Definitions of small businesses discussed in the text include the following EXCEPT
a. Number of employees.
b. Sales revenue.
c. Industry.
d. Type of product or service.

AACSB Reflective thinking, Creation of value

PTS: 1

3. An entrepreneur
a. Creates new ventures that seek profit and growth.
b. Is seldom the primary force behind a company’s decision to go international.
c. Can accurately predict the risks and uncertainties of his/her ventures.
d. Faces less uncertainty than a multinational.

AACSB Reflective thinking, Creation of value

PTS: 1

4. When a company sets up a sales branch in a foreign country, it is at what stage of the internationalization of the small entrepreneurial business?
a. Stage 1
b. Stage 2
c. Stage 3
d. Stage 4

AACSB Reflective thinking, Creation of value

PTS: 1

5. During the second stage (Export Management) of the small business model of internationalization, the company
a. Fills international orders only.
b. Specifically seeks export sales.
c. Seeks increased sales from licensing.
d. Sets up a local sales office in another country.

AACSB Reflective thinking, Creation of value

PTS: 1

6. A global start-up is
a. A company that goes global from day one of its life.
b. A company that starts a global strategy after exporting.
c. A company that skips the first stage of the Small Business Model of Internationalization.
d. None of the above

AACSB Reflective thinking, Creation of value

PTS: 1

7. One of the major advantages of being involved in Stage 5 (Production Abroad) of the stages of internationalization for small businesses is that it
a. Allows the company to cut the costs of direct investment.
b. Allows the company to avoid developing a globally integrated network.
c. Allows the company to gain local advantages such as product adaptation or production effectiveness.
d. Almost insures that the company will survive and prosper.

AACSB Reflective thinking, Creation of value

PTS: 1

8. Global start-ups occur when
a. Companies have consistent licensing agreements.
b. Companies start exporting as soon as they receive their first order.
c. Companies begin as multinationals.
d. Companies move rapidly through the stages of internationalization.

AACSB Reflective thinking, Creation of value

PTS: 1

9. Which of the following has helped to level the playing field for small businesses wanting to go international?
a. Technology and e-commerce
b. Sources of venture capital
c. Having a headquarters located near a major customer
d. The existence of trade shows

AACSB Reflective thinking, Creation of value

PTS: 1

10. The liabilities of size for small businesses imply that
a. Small businesses can grow as a result of going international.
b. Being small often means it may be more difficult to obtain necessary resources.
c. Small size creates only limited liability.
d. Small and new businesses can only succeed by exporting.

AACSB Reflective thinking, Creation of value

PTS: 1

11. Small business barriers to internationalization include all of the following EXCEPT
a. Small size means limited financial and personnel resources for international operations.
b. Top managers with limited international experience.
c. Positive attitudes of top managers about becoming multinationals.
d. Lack of sufficient scale to produce goods or services as efficiently as large companies.

AACSB Reflective thinking, Creation of value

PTS: 1

12. Although large businesses have more resources, small businesses have the advantage of:
a. size.
b. time.
c. speed.
d. a global culture.

AACSB Reflective thinking, Creation of value

PTS: 1

13. A small business global culture occurs when
a. Small businesses face global competition.
b. Key decision makers view competition as more domestic than global.
c. Organizations have managerial and worker values that view strategic opportunities as global and not just domestic.
d. Managers give priority to the relevance of national boundaries when conducting international business.

AACSB Reflective thinking, Creation of value

PTS: 1

14. The development of a global culture is affected by all of the following characteristics of the key decision makers EXCEPT
a. Ability to perform well at the domestic level.
b. International experience.
c. Perceived psychological distance to foreign markets.
d. Overall attitudes toward international strategies.

AACSB Reflective thinking, Creation of value

PTS: 1

15. All of the following are true about small business CEOs EXCEPT
a. Opening new markets is often the personal responsibility of the CEO.
b. They want to take a break from the daily management of their businesses by going overseas.
c. New international ventures may threaten their family life.
d. Their attitudes towards internationalization is a major factor in international success.

AACSB Reflective thinking, Creation of value

PTS: 1

16. Small businesses can potentially have more advantages than larger businesses in the global economy because
a. Small companies can change quickly to take advantage of opportunities in new markets.
b. Larger companies have more slack resources to absorb risk.
c. Small companies require a lot of travel from their CEOs.
d. Small companies have more access to resources.

AACSB Reflective thinking, Creation of value

PTS: 1

17. The small business advantage refers to
a. The energy and creativity entrepreneurs can put in their multinational operations.
b. The ease by which small companies can become global start-ups.
c. The speed by which entrepreneurs can react to changing conditions and capture significant sales before larger companies can react.
d. The number of venture capitalists willing to invest in successful small businesses.

AACSB Reflective thinking, Creation of value

PTS: 1

18. It is now easier to overcome the barriers to small business internationalization because of all of the following reasons EXCEPT
a. There are more government programs that support small business exporting and sales.
b. Trade agreements (such as NAFTA) are making international trade less complex.
c. Larger organizations are increasingly more willing to share their global expertise with smaller ones.
d. There is a wealth of information regarding international opportunities such as those available on the World Wide Web.

AACSB Reflective thinking, Creation of value

PTS: 1

19. Which of the following is not one of the questions to consider when a small business decides to go international?
a. Do we have a global product or service?
b. Do we have partners with which to go international?
c. Do we have the managerial, organizational, and financial resources to go international?
d. Is there a profitable market for our products or service?

AACSB Reflective thinking, Creation of value

PTS: 1

20. A strategic competitive advantage for breaking into the established pattern of commercial activity is a/an
a. Low cost strategy.
b. Differentiation Strategy.
c. Entry wedge.
d. Participation strategy.

AACSB Reflective thinking, Creation of value

PTS: 1

21. According to the text, which of the following participation strategies do small businesses emphasize?
a. Importing
b. Licensing
c. Foreign direct investment
d. Exporting

AACSB Reflective thinking, Creation of value

PTS: 1

22. The more common techniques of making international contacts used by small businesses include all of the following EXCEPT
a. Trade shows.
b. Seeking advice from foreign companies.
c. Government sponsored trade missions.
d. Catalogue expositions.

AACSB Reflective thinking, Creation of value

PTS: 1

23. An entry wedge is
a. A strategic competitive advantage for breaking into the established pattern of commercial activity.
b. A competitive opening in an industry.
c. A strategy used by only new companies.
d. None of the above

AACSB Reflective thinking, Creation of value

PTS: 1

24. First mover advantages occur when
a. A company can begin business as a global start-up.
b. A company adopts global strategies faster than competitors.
c. Company moves quickly into a new venture and establishes the business before other firms can react.
d. A company changes production technology.

AACSB Reflective thinking, Creation of value

PTS: 1

25. Technological leadership, as a source of first mover advantage refers to
a. A company beginning business as a global start-up.
b. A company that adopts global strategies faster than competitors.
c. A company that moves quickly into a new venture.
d. A company that is the first to use a new technology.

AACSB Reflective thinking, Creation of value

PTS: 1

26. First mover advantage includes all of the following EXCEPT
a. Technological leadership.
b. First access to natural and other resources.
c. Better ability to forecast market conditions.
d. Switching costs.

AACSB Reflective thinking, Creation of value

PTS: 1

27. Copycat businesses
a. Follow the “me too” strategy.
b. Adapt existing products or services to attract customers.
c. Find a niche or slight innovation to gain market share from existing businesses.
d. All of the above

AACSB Reflective thinking, Creation of value

PTS: 1

28. Successful strategies for copy cats include all of the following EXCEPT
a. Being the first to change to a new standard.
b. Transferring the location.
c. Seeking abandoned or ignored market.
d. Selling products at a global level.

AACSB Reflective thinking, Creation of value

PTS: 1

29. Future Tech International sells high tech products in Latin America, a market traditionally ignored by many high tech companies. What successful copycat strategy does this move represent?
a. Acquiring existing businesses
b. Becoming a dedicated distributor
c. Seeking abandoned or ignored markets
d. Being the first to change to a new standard

AACSB Reflective thinking, Creation of value

PTS: 1

30. Switching costs are
a. Expenses involved when a customer switches to a competitor’s product.
b. Forms of copycat strategies.
c. The costs incurred by a company when adopting a global standard.
d. None of the above

AACSB Reflective thinking, Creation of value

PTS: 1

31. The United Nations and Organization for Economic Cooperation and Development
a. Defines a small business as those having less than 500 employees.
b. Defines a small business as those with less than 100 employees.
c. Defines a small business based on industry and sales revenue.
d. All of the above

AACSB Reflective thinking, Creation of value

PTS: 1

32. When a small business uses significant resources to seek increased sales from exporting, it is what stage of internationalization?
a. Stage 1 – Passive exporting
b. Stage 2 – Export management
c. Stage 3 – Export department
d. Stage 4 – Sales branch

AACSB Reflective thinking, Creation of value

PTS: 1

33. International sales intensity represents
a. A significant size barrier to internationalization.
b. The amount of international sales as a proportion of total sales.
c. The amount of local sales as a proportion of international sales.
d. Is more relevant for larger businesses.

AACSB Reflective thinking, Creation of value

PTS: 1

34. All of the following are first mover advantages EXCEPT
a. First mover advantages gives the company first access to natural resources.
b. First mover advantages gives the company first access to social resources.
c. First mover advantages reduce switching costs.
d. All of the above are first mover advantages.

AACSB Reflective thinking, Creation of value

PTS: 1

35. The discovery, evaluation and exploitation of market opportunities refers to which of the following?
a. Entrepreneurship
b. International entrepreneurship
c. Small business
d. International opportunities

AACSB Reflective thinking, Creation of value

PTS: 1

36. Which of the following statements about small businesses in the US is FALSE?
a. Small businesses represent about 99.7% of all employing firms.
b. Small businesses generate about 15% of all new jobs annually.
c. Small businesses employ almost 41% of all high tech workers.
d. Small businesses represent almost 97% of identified exporters.

AACSB Reflective thinking, Creation of value

PTS: 1

37. When demand for a small business is so high in a foreign country that it justifies setting up a local branch, which of the following stages of internationalization is the small business at?
a. Export management
b. Passive exporting
c. Production abroad
d. None of the above

AACSB Reflective thinking, Creation of value

PTS: 1

38. A multinational manager is studying the data on total entrepreneurial activity ratings by country. She is most likely doing this in order to
a. Assess the level of entrepreneurship in a country.
b. Understand available industries.
c. Assess small business failure.
d. Understand opportunities for new ventures.

AACSB Analytic, Creation of value

PTS: 1

39. Many multinationals rely on the support and assistance provided by which of the following when entering a new country?
a. Customers
b. Entrepreneurs and small businesses
c. World Bank
d. Trade Shows

AACSB Reflective thinking, Creation of value

PTS: 1

40. Which of the following is NOT a common customer contact technique used by small firms to get find customers?
a. Trade shows
b. Industry advisory boards
c. Government sponsored trade missions
d. Catalog expositions

AACSB Reflective thinking, Creation of value

PTS: 1

ESSAY

1. Why are small businesses important for most economies?

2. What are the advantages of a small business going international through incremental stages rather than as a global start-up?

3. Describe the Small Business Stage Model.

4. Discuss some of the advantages that the Internet can offer small businesses when going international.

5. Identify two or three small business barriers to internationalization. If you were a recently hired manager of a small business facing great opportunities in a foreign market, how would you go about overcoming these barriers.

6. Imagine a small business manager asks you, a recent business college graduate, to help her decide whether she should enter the export market. What questions would you ask her and why?

7. How do small businesses and entrepreneurs affect national economic growth and development? Explain why multinationals consider entrepreneurship levels in the country when making their location choices.

8. Discuss ways that a small business manager can make the contacts necessary to implement an exporting strategy.

9. Consider three of the suggested strategic moves for copycat businesses. Which of these strategies might be most successful when expanding into the international market as opposed to the domestic market?

10. What is the first mover advantage? What are the most common sources of first mover advantages? How can a small business benefit from first mover advantage?

Chapter 8 Organizational Design for Multinational Companies

MULTIPLE CHOICE

1. The manner in which organizations structure subunits and use coordination and control mechanisms to achieve their strategic goals is the
a. Organizational structure.
b. Organizational culture.
c. Degree of formalization.
d. Organizational design.

AACSB Reflective thinking, Strategy

PTS: 1

2. The functional structure is considered most efficient when
a. An organization gets too large.
b. When customers need special functions.
c. When the organization is in the mature phase of the life cycle.
d. When organizations have few products.

AACSB Reflective thinking, Strategy

PTS: 1

3. All of the following statements are true about the functional structure EXCEPT
a. In the functional structure, departments perform separate business functions such as marketing or manufacturing.
b. The functional structure is the simplest of organizations.
c. In small organizations, the functional structure is the least efficient of all structures.
d. Because functional subunits are separated from each other, coordination among the units can be difficult.

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4. One of the major reasons why companies choose a functional structure is because
a. It allows adapting products to country tastes.
b. It enables responding to the needs of different types of customers.
c. It helps balance the strategy with the organization design.
d. It helps achieve efficiency.

AACSB Reflective thinking, Strategy

PTS: 1

5. All of the following statements are true about product structures EXCEPT
a. The product structure is the most efficient of all structures.
b. Product organizations must still perform some functional tasks of a business.
c. The structure builds a department or subunit around a product .
d. Managers choose product structures when they believe that a product or a group of products is sufficiently unique to require focused efforts on one type of product or service.

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PTS: 1

6. The least efficient of the following structural options is
a. Product structure.
b. Functional structure.
c. Vertical structure.
d. Graphic structure.

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PTS: 1

7. Organizations that are designed with mixtures of structures that are the best to implement their strategies are
a. Product structures.
b. Geographic structures.
c. Hybrid structures.
d. Functional structures.

AACSB Reflective thinking, Strategy

PTS: 1

8. When exports become a significant percentage of company sales and a company wishes greater control over its export operations, managers often create a separate
a. Export department.
b. Functional department.
c. Product department.
d. Liaison office.

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9. The structure adopted by companies in the early stage of internationalization is usually
a. Replica.
b. Network.
c. Export department.
d. Transnational subsidiary.

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10. The type of subsidiary that supports a multinational firm strategy based on location advantages is a/an
a. Export department.
b. Minireplica subsidiary.
c. Transnational subsidiary.
d. International division.

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11. The minireplica subsidiary
a. Copies the structure and strategy of companies located in the same country.
b. Mostly copies the structure and strategy of the parent company.
c. Replicates only minor parts of the parent’s production technology.
d. Copies the structure of small foreign firms.

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12. Transnational subsidiaries
a. Look pretty much like a domestic division of the parent company.
b. Often have different structures and functions in each location.
c. Exist near the border to facilitate exporting.
d. Serve mostly to coordinate international currency exchange.

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13. The international division differs from the export department in that
a. The international division is usually larger and has greater responsibilities.
b. The international division has more extensive staff with international expertise.
c. Top management expects the staff of the international division to perform functions such as negotiating licensing and joint venture agreements, translating promotional material, or providing expertise on different national cultures and social institutions.
d. All of the above are true.

AACSB Reflective thinking, Strategy

PTS: 1

14. Which of the following are considered to be the structural building blocks for running a multinational?
a. International division
b. Metanational
c. Mini replica
d. Foreign subsidiaries

AACSB Reflective thinking, Strategy

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15. Adopting strategies that include both concerns for local adaptation needs and concern for the economic and product development benefits of globalization is possible with the
a. Worldwide product structure.
b. Worldwide geographic structure.
c. Hybrid structure.
d. None of the above

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16. The worldwide geographic structure is usually considered best to implement a _____ strategy.
a. Multidomestic or regional
b. Transnational
c. International
d. Indirect exporting

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17. The worldwide product structure is usually considered best to implement a/an _____ strategy.
a. Multidomestic or regional
b. Transnational
c. International
d. Indirect exporting

AACSB Reflective thinking, Strategy

PTS: 1

18. The most balanced structural solution to the national responsiveness versus global efficiency dilemma is
a. The transnational network structure.
b. The worldwide product structure.
c. Worldwide geographic structure.
d. The matrix structure.

AACSB Reflective thinking, Strategy

PTS: 1

19. All of the following statements are true about the worldwide matrix structure EXCEPT
a. To balance the benefits produced by geographic and product structures and to coordinate a mixture of product and geographic subunits, some multinationals create a worldwide matrix structure.
b. Unlike most hybrid organizations, the worldwide matrix structure is a symmetrical organization.
c. It has unequal lines of authority for product groups and for geographic divisions.
d. The matrix structure works well only when there are near equal demands from the environment for local adaptation and for product standardization with its associated economies of scale.

AACSB Reflective thinking, Strategy

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20. Which of the following structures best support strategies that emphasize global products and rationalization?
a. The functional structure
b. The matrix structure
c. The geographic structure
d. The product structure

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21. A __________ helps link the organization horizontally.
a. Control system
b. Coordination system
c. Cultural system
d. Centralized operations

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22. The type of vertical control mechanism most often associated with a profit center is
a. Bureaucratic.
b. Output.
c. Cultural.
d. Decision making.

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23. The type of control system favored by the transnational is
a. Bureaucratic.
b. Output.
c. Cultural.
d. Decision making.

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24. _________ mean/means that management locates subsidiaries anywhere in the world where they can benefit the company.
a. Dispersed subunits
b. Specialized operations
c. Interdependent relationships
d. None of the above

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25. __________ help link the organization vertically, up and down the organizational hierarchy.
a. Coordination systems
b. Dispersed subunits
c. Control systems
d. Subunits

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26. Output control systems
a. Focus on managing behaviors, not outcomes, within the organization.
b. Represent the level in the organizational hierarchy where managers have the authority to make decisions.
c. Assess the performance of a unit based on results, not on the processes used to achieve those results.
d. Use the organizational culture to control the output and attitudes of employees.

AACSB Reflective thinking, Strategy

PTS: 1

27. Which of the following types of control system uses budgets, statistical reports, standard operating procedures, and centralized decision making to manage organizational processes?
a. Profit center
b. Bureaucratic control system
c. Decision-making control
d. Cultural control system

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28. A permanent unit of the organization designed to focus the efforts of different subunits on particular problems is a
a. Task force.
b. Full-time integrator.
c. Liaison.
d. Team.

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29. Temporary groups created to solve a particular organizational problem such as entering a new market are
a. Teams.
b. Liaisons.
c. Taskforces.
d. Full time integrators.

AACSB Reflective thinking, Strategy

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30. Which of the following is NOT true regarding the use of control options by most multinationals?
a. Most multinationals use several types of coordination mechanisms.
b. Multinationals with export departments have very high need for coordination.
c. Matrix and transnational structures have very high needs for coordination.
d. For transnational networks, teams are increasingly virtual with members seldom meeting face-to-face.

AACSB Reflective thinking, Strategy

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31. All of the following are TRUE about product structures EXCEPT
a. Product structure organizations must still perform functional tasks of a business.
b. In product structures, functional areas are concentrated in separate subunits.
c. Product structures are required when products or service are sufficiently unique to require different functional support.
d. All of the above are true.

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32. Subunits of a multinational company located in other countries than the parent company’s headquarters is known as
a. Functional divisions.
b. Foreign functional divisions.
c. Foreign subsidiaries.
d. International minireplica.

AACSB Reflective thinking, Strategy

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33. The basic issue (s) that need to be considered for organizational design are
a. Division of work.
b. Coordination.
c. Control.
d. All of the above

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34. A large, entrepreneurial multinational that is able to tap into hidden pockets of innovation, technology, and market know-how scattered around the world, especially in emerging markets is known as
a. A transnational.
b. A minireplica subsidiary.
c. A metanational.
d. A foreign subsidiary.

AACSB Reflective thinking, Strategy

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35. Which of the following control systems uses the organizational culture to control behaviors and attitudes of employees?
a. Cultural control systems
b. Decision-making control systems
c. Bureaucratic control systems
d. Output control systems

AACSB Reflective thinking, Strategy

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36. Which of the following is NOT one of the questions asked when designing an organization?
a. How should work be divided among the organization’s subunits?
b. How should the work be coordinated among the various subunits?
c. How should the work of the various subunits be controlled?
d. How many subunits should the multinational have?

AACSB Reflective thinking, Strategy

PTS: 1

37. Which of the following control systems focuses on managing behaviors of employees rather than outcomes?
a. Bureaucratic control systems
b. Budgets and standard operating procedures
c. Cultural control systems
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

38. Which of the following represents the strongest coordination mechanism?
a. Task forces
b. Teams
c. Liaison roles
d. Direct contact

AACSB Reflective thinking, Strategy

PTS: 1

39. Knowledge that usually resides within employees and is dependent on the organization’s culture and context is
a. Explicit knowledge.
b. Knowledge management.
c. Tacit knowledge.
d. None of the above

AACSB Reflective thinking, Strategy

PTS: 1

40. Which of the following statements regarding explicit knowledge is FALSE?
a. Explicit knowledge can be easily codified.
b. Explicit knowledge can be found in records and other information repositories.
c. Explicit knowledge can be easily transferred from employee to employee.
d. Explicit knowledge usually resides within employees and is dependent on the organization’s context and culture.

AACSB Reflective thinking, Strategy

PTS: 1

ESSAY

1. Discuss some of the advantages of a functional structure over the product or geographic structure. When is it necessary to adopt a geographic or product structure?

2. What are some advantages of a worldwide product structure over a worldwide geographic structure? What type of company would most likely choose each type?

3. What are hybrid structures? What are the costs and benefits of having a hybrid structure?

4. Describe the use of export management as a design structure to go international. When does it become necessary to use an international division? What are some of the problems associated with international divisions?

5. What is a minireplica subsidiary? How is a minireplica subsidiary different from a transnational subsidiary?

6. Compare and contrast bureaucratic control with output control.

7. What is cultural control? Why is it the favored control mechanism for transnational-network structures?

8. Describe some functions of coordination mechanisms. Pick two coordination systems and describe how they work.

9. What are control systems? Pick two control systems and describe how they work.

10. What is the transnational-network structure? Discuss some costs and benefits of having a transnational network structure. Under what situation would a transnational-network be appropriate?

11. What is knowledge management? Distinguish between the types of knowledge.

Chapter 9 International Strategic Alliances: Management and Design

MULTIPLE CHOICE

1. There are several issues to consider in picking a partner for a strategic alliance. One of these is
a. Go for the biggest partner possible because they have the most assets.
b. Seek strategic complementarity.
c. Make sure your partner will be dependent on you and not vice versa.
d. All of the above

AACSB Reflective thinking, Group dynamics

PTS: 1

2. According to the text, all of the following are true about strategic alliances EXCEPT
a. They are inherently unstable and provide significant management challenges.
b. Estimates of failure rates range from 30 to 60 percent.
c. They are among the most popular choice to go international.
d. They are used mostly as a means to share technology.

AACSB Reflective thinking, Group dynamics

PTS: 1

3. The most important decision in setting up a strategic alliance is usually about
a. Working out the proportions of ownership.
b. Decision on the proper management structure.
c. Developing a detailed contract.
d. Selecting the right partner.

AACSB Reflective thinking, Group dynamics

PTS: 1

4. In operations alliances, multinational companies
a. Use research and development to merge different technical skills.
b. Share the risk of developing new or costly technology.
c. Gain access to new markets.
d. Combine manufacturing to reach a profitable volume of activity.

AACSB Reflective thinking, Group dynamics

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5. The anchor partner in a strategic alliance refers to
a. A partner that is very stable and anchors the relationship.
b. The strongest partner in the relationship.
c. The partner who initiates the relationship.
d. A partner that fails to deliver their share of funding.

AACSB Reflective thinking, Group dynamics

PTS: 1

6. The best level of dependency recommended for a strategic alliance is
a. Balanced.
b. Home country dominated.
c. Host country dominated.
d. It does not matter if there are more than two companies.

AACSB Reflective thinking, Group dynamics

PTS: 1

7. The elephant-and-the-ant complex refers to
a. Difficulties that come with two different size organizations in a strategic alliance.
b. Problems that arise when one side feels inferior to the other.
c. Strategic alliances between developed and developing countries.
d. An unbalanced management structure.

AACSB Reflective thinking, Group dynamics

PTS: 1

8. An agreement not legally binding between companies to cooperate on any value-chain activity is a (an)
a. Formal international cooperative alliance.
b. International joint venture.
c. Informal international joint venture.
d. International cooperative alliance.

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9. When a large number of companies form a joint venture, the international joint venture is a
a. Multi-partner joint venture.
b. Consortium.
c. Informal cooperative alliance.
d. Equity joint venture.

AACSB Reflective thinking, Group dynamics

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10. All of the following are typically part of a negotiated joint venture agreement EXCEPT
a. Management loyalty.
b. Equity contributions.
c. Provisions for dissolving the IJV.
d. Contracts for the IJV.

AACSB Reflective thinking, Group dynamics

PTS: 1

11. In the split control management structure
a. Companies share all decision making.
b. Managers of the strategic alliance split from and act independently from their parent companies.
c. Partners divide decision making control by functional areas.
d. Each company takes a turn providing the operational managers.

AACSB Reflective thinking, Group dynamics

PTS: 1

12. In the independent control management structure
a. Strategic alliance managers have nearly complete autonomy for operational decisions.
b. Partners act independently of each other except when necessary.
c. Partners focus only on their special areas of expertise.
d. None of the above

AACSB Reflective thinking, Group dynamics

PTS: 1

13. When partners share strategic decision making but make decisions independently at the functional level (e.g., marketing, production), they are using which of the following management structures?
a. Dominant partner
b. Independent management structure
c. Rotating management
d. Split-control management structure

AACSB Reflective thinking, Group dynamics

PTS: 1

14. If partners have similar technologies or know-how and they contribute this knowledge equally to the alliance, they prefer
a. A shared management structure.
b. A split management structure.
c. A dominant management structure.
d. A rotating management structure.

AACSB Reflective thinking, Group dynamics

PTS: 1

15. Strategic alliance partners prefer a dominant management structure
a. If partners have similar technologies or know-how and they contribute this knowledge equally to the alliance.
b. If partners have different technologies or know-how and they contribute this knowledge equally to the alliance.
c. If partners have different technologies or know-how and they contribute this knowledge differently to the alliance.
d. If the alliance has more strategic importance to one partner.

AACSB Reflective thinking, Group dynamics

PTS: 1

16. Which management structure is popular in developing countries?
a. Dominant
b. Shared
c. Split
d. Rotating

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17. As their management team gains more expertise, mature joint ventures move to what type of structure?
a. Independent
b. Interdependent
c. Local partner dominance
d. Shared

AACSB Reflective thinking, Group dynamics

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18. Equity in a strategic alliance implies
a. Labor skills.
b. Ownership.
c. Domination.
d. None of the above

AACSB Analytic, Group dynamics

PTS: 1

19. Suggested ways to build and sustain commitment in strategic alliances include
a. Go slowly.
b. Be the dominant partner.
c. Keep your goals secret so your partner does not get nervous about your intentions.
d. Use extensive written documentation.

AACSB Reflective thinking, Group dynamics

PTS: 1

20. When applied to a strategic alliance relationship, the concept of trust includes
a. Confidence that the partner will deliver.
b. Confidence that the partner will behave with good will.
c. Confidence that the partner will engage in fair exchange.
d. All of the above

AACSB Reflective thinking, Group dynamics

PTS: 1

21. The confidence that the partner will behave with goodwill and trust is
a. Commitment.
b. Credibility trust.
c. Benevolent trust.
d. Calculative commitment.

AACSB Reflective thinking, Group dynamics

PTS: 1

22. Trust in strategic alliance relationships
a. Usually builds in cycles.
b. Either exists at the beginning of the relationship or will never be there.
c. Can really only evolve with partners from similar cultures.
d. Can never exist in high technology relationships since the risk of losing the technology is too great.

AACSB Reflective thinking, Group dynamics

PTS: 1

23. In strategic alliance relationships, high levels of trust often
a. Retard organizational functioning due to excessive emotional reactions.
b. Cause excessive loyalty to the strategic alliance.
c. Are irrelevant if the strategic alliance is projected to have a high financial return.
d. Facilitate the exchange of tacit knowledge.

AACSB Reflective thinking, Group dynamics

PTS: 1

24. The best method of assessing strategic alliance performance is
a. Total sales revenue.
b. ROI.
c. ROA.
d. There is no one best method.

AACSB Reflective thinking, Group dynamics

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25. Indirect strategic benefits for entering a strategic alliance include
a. Immediate improved performance on profit ratios.
b. Learning a new market.
c. Developing management loyalty.
d. None of the above

AACSB Reflective thinking, Group dynamics

PTS: 1

26. __________ means that companies rely on each other to contribute to the relationship.
a. Shared management
b. Balanced management
c. The norm of reciprocity
d. Mutual dependency

AACSB Reflective thinking, Group dynamics

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27. Contracts for strategic alliances may include _____________ if the relationship dissolves before the negotiated time.
a. Penalties for early termination of the contract by each side
b. Restrictions on future business growth
c. A promise to try future joint ventures
d. All of the above

AACSB Reflective thinking, Group dynamics

PTS: 1

28. In dealing with cross-cultural communication in a strategic alliance, managers should expect
a. Communication difficulties to disappear when operational managers are fluent in each other’s language.
b. Slower communication and more errors.
c. No communication problems if all managers were educated in the US.
d. No communication difficulties if all parties agree on a common language of the strategic alliance.

AACSB Analytic, Group dynamics

PTS: 1

29. Understanding a new market and developing a new technology may be used as performance criteria for which of the following?
a. Organizational learning
b. Management processes
c. Competitive advantage
d. Commitment

AACSB Reflective thinking, Group dynamics

PTS: 1

30. Strategic complementarity in a strategic alliance means that
a. Both sides must have similar strategic objectives for the strategic alliance to succeed.
b. Objectives can be different if they are not in conflict.
c. Cultural differences must be dealt with first.
d. Parent companies must leave the strategic alliance management to develop their own strategic goals.

AACSB Reflective thinking, Group dynamics

PTS: 1

31. Which of the following type of strategic alliances allows the multinational to combine manufacturing or assembly activities to achieve a profitable volume of activity?
a. Operations alliances
b. Output alliances
c. Upstream-downstream alliances
d. Marketing alliances

AACSB Reflective thinking, Group dynamics

PTS: 1

32. All of the following are true about international joint venture (IJV) EXCEPT
a. An IJV is a separate legal entity owned by parent companies from different countries.
b. IJVs can have more than two partners.
c. IJVs require that companies have equal ownership to form the venture.
d. IJVs require legal contracts that bind partners.

AACSB Reflective thinking, Group dynamics

PTS: 1

33. If strategic alliance partners have different technologies or know-how and they contribute this knowledge equally, they often prefer
a. Shared management structure.
b. Dominant management structure.
c. Split management structure.
d. Rotating management structure.

AACSB Reflective thinking, Group dynamics

PTS: 1

34. The psychological identification with a relationship in a strategic alliance and the pride of association with the partner and the alliance is known as
a. Calculative commitment.
b. Credibility trust.
c. Benevolent trust.
d. Attitudinal commitment.

AACSB Reflective thinking, Group dynamics

PTS: 1

35. The confidence that a strategic alliance partner has the intent and ability to meet their obligations and make their promised contribution to a strategic alliance is known as
a. Credibility trust.
b. Benevolent trust.
c. Calculative trust.
d. Attitudinal trust.

AACSB Reflective thinking, Group dynamics

PTS: 1

36. According to the text, which of the following is NOT a key criterion used in picking an alliance partner?
a. Pick a partner who provides strategic complementarity.
b. Pick a partner who provides financial security.
c. Pick a partner who has complementary skills.
d. Pick a partner who provides the right level of mutual dependency.

AACSB Reflective thinking, Group dynamics

PTS: 1

37. According to the text, which of the following DOES NOT represent a form of strategic alliance?
a. Informal cooperative alliances
b. Formal cooperative alliances
c. International joint ventures
d. Informal partnerships

AACSB Reflective thinking, Group dynamics

PTS: 1

38. Which of the following statements regarding international joint ventures is FALSE?
a. International joint ventures usually have two or more partners.
b. International joint ventures are usually not legally binding.
c. International joint ventures with a large number of partners are known as consortiums.
d. Companies do not need equal ownership to form an international joint venture.

AACSB Reflective thinking, Group dynamics

PTS: 1

39. The confidence that a partner has the intent and ability to meet its obligations and make its promised contribution to the strategic alliance is known as
a. Calculative trust.
b. Calculative commitment.
c. Credibility trust.
d. Benevolent trust.

AACSB Reflective thinking, Group dynamics

PTS: 1

40. Which of the following describes the situation where companies stay in a strategic alliance despite strong evidence that the alliance won’t work?
a. Calculative commitment
b. Credibility commitment
c. Attitudinal commitment
d. Escalation of commitment

AACSB Reflective thinking, Group dynamics

PTS: 1

ESSAY

1. What are the characteristics of a good partner in a strategic alliance? Why do these partner traits help make a strategic alliance successful?

2. What are some of the common value chain links companies use to gain strategic benefits from alliances? Pick two of these links and describe some of the benefits partners gain from pursuing these links.

3. Under what conditions should a firm choose one of the various management structures available for a strategic alliance?

4. What are the different kinds of commitment needed in a strategic alliance? Explain.

5. What are some of the difficulties of assessing IJV or ICA performance? How do these differ for companies with different strategic goals?

6. What are the different management structures possible for strategic alliances? Pick two of these management structures and discuss when they are most appropriate.

7. Compare and contrast the three main types of strategic alliances.

8. Discuss some of the things multinational managers can do to build and sustain trust and commitment.

9. If an alliance fails to meet strategic goals, what two options do top managers have to choose from to resolve the situation? How can an alliance be improved?

Chapter 10 Multinational e-Commerce: Strategies and Structures

MULTIPLE CHOICE

1. Ebay is a prime example of which form of e-commerce?
a. Business to business transactions (B2B)
b. Business to consumer transactions (B2C)
c. Consumer to business transactions (C2B)
d. Consumer to consumer transactions (C2C)

AACSB Technology, Information technologies

PTS: 1

2. An Internet host that allows users to send encrypted data so that those outside the connection cannot see the information is a
a. A secure server.
b. An internet host.
c. A computer that has its own Internet Protocol address.
d. A computer that has its own World Wide Web address.

AACSB Technology, Information technologies

PTS: 1

3. Secure servers and internet hosts are two indicators of the
a. Internet infrastructure.
b. Web influence.
c. global presence of e-commerce.
d. Internet security.

AACSB Technology, Information technologies

PTS: 1

4. Traditional internet metrics do not quantify the use of new internet devices and features, including:
a. Smart phones.
b. Cloud-computing.
c. Social networking.
d. All of the above.

AACSB Technology, Information technologies

PTS: 1

5. Companies such as manufacturers that sell directly to consumers (Dell), and companies that provide online shipping services (FedEx, UPS) are all examples of which of the following?
a. Web customers
b. B2B
c. C2B
d. B2C

AACSB Technology, Information technologies

PTS: 1

6. Which of the following is NOT one of the necessary steps to ensure a successful E-Commerce strategy?
a. Building on current business models and experimenting with new e-commerce models
b. Allocating resources to the e-commerce business
c. Making sure that the entire firm is prepared to embrace the e-commerce model
d. Training all upper level management in computer programming

AACSB Technology, Information technologies

PTS: 1

7. The brick and mortar part of the company refers to
a. The degree of interaction between traditional business operations and the company’s e-commerce system.
b. The company’s traditional business operations.
c. The company’s management information systems.
d. The extent of computer use in the company.

AACSB Technology, Information technologies

PTS: 1

8. Independent operations between the brick and mortar part of a company and its e-commerce system offer which of the following benefits?
a. The independent operation can move faster and be more entrepreneurial when freed from corporate bureaucracy and it can seek funding from deep pockets of venture capitalists.
b. The independent operation can benefit from cross-promotion of shared products, shared customer information, increased large-quantity purchase leverage, and economies of scale by using the same distribution channels.
c. The brick and mortar part of the company can transfer learning to the e-commerce system of the company.
d. Independent operations can facilitate synergy between the brick and mortar part and the e-commerce system.

AACSB Technology, Information technologies

PTS: 1

9. According to the text, which of the following is NOT one of the management challenges companies will face as they develop their e-commerce businesses?
a. Attracting, retaining, and developing employees in the e-commerce unit
b. Deciding which e-commerce functions to outsource
c. Finding funds to develop the e-commerce business
d. Finding ways to provide individuals with growth opportunities and job fulfillment to encourage employee retention in the e-commerce business

AACSB Technology, Information technologies

PTS: 1

10. Which of the following strategies is a pure e-business least likely to be concerned with when facing e-commerce challenges?
a. Developing information and management systems to respond to rapid growth
b. Attracting and retaining e-commerce-capable talent
c. Altering HR programs to suit the different skill requirements of e-commerce employees
d. Maintaining rapid decision making, creativity, innovation, and flexibility

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11. Which of the following statements regarding globalizing through the Internet is not true?
a. A company that globalizes through the Internet does not have to be concerned with the global-local dilemma.
b. A company that globalizes through the Internet still faces the same challenges that a brick and mortar company faces.
c. A company that globalizes through the internet must still address the traditional problems of multinational business (i.e., currencies, local laws, infrastructure for delivery).
d. A company that globalizes through the Internet must still decide whether to go global or to require localization to national or regional levels.

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12. According to the text, which of the following areas is not one of the areas that e-commerce companies work in?
a. Moving bits or computerized information
b. Moving money in payment flows
c. Providing Internet services
d. Moving physical products

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13. Which of the following businesses poses the highest degree of difficulty in e-commerce?
a. Portals and infomediaries
b. Businesses such as Travelocity, and those that sell digital music, and software
c. Businesses that rely on a physical infrastructure
d. Brick and mortar companies

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14. According to the text, the degree of difficulty in conducting global e-commerce businesses is primarily dependent on
a. The financial requirements.
b. The availability of management talent.
c. The infrastructure requirements.
d. The telecommunications infrastructure requirements.

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15. Which of the following types of companies are more likely to face challenges when they decide to enter the international market through the Internet?
a. Large multinational firms that already have an existing global presence.
b. Large multinationals firms that already have existing international operations.
c. Smaller firms and firms new to international commerce.
d. Small firms that already have an existing global presence.

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16. The major opportunities of e-commerce globalization include all of the following EXCEPT
a. Cost reduction.
b. Efficiencies.
c. Speed of access and convenience.
d. Access to new sources of financing.

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17. Which of the following is NOT one of the major threats to e-commerce globalization?
a. Cost of site construction, maintenance and upgrades
b. Cost of training in top managers in computer programming
c. Easily copied e-commerce models
d. Traditional cross-border transaction and other cross-cultural complexities

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18. According to the text, which of the following is NOT one of the factors to take in consideration when picking a country to start an e-business?
a. Internet population of at least 5%
b. Countries with market inefficiencies, such as formerly state-controlled markets
c. Countries that participates in at least one free trade agreement
d. Countries that have remarkable education systems

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19. According to the text, where is the greatest potential for e-commerce businesses?
a. North America
b. The European Union
c. South America
d. Asia

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20. Which of the following statements does not accurately describe the most likely form of organizing a multinational e-business?
a. A multinational e-business is three-tiered mixing global and local functions.
b. Corporate headquarters of the business provides the vision, strategy and leadership that drive the marketing of products worldwide.
c. Local subsidiaries of the business take charge of the functions better done locally in each country.
d. Corporate headquarters of the business provides the vision, strategy and leadership and also takes charge of the local strategies in each country.

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21. Which of the following is not one of the necessary electronic capabilities required for successful online presence?
a. Software to process pricing in multiple currencies
b. Ability to provide support in English in the various service centers
c. Systems that check regulatory compliance with local and international laws
d. Fraud protection

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22. E-commerce enablers are
a. Software that provide electronic payment models in addition to credit cards.
b. Systems that calculate and show purchase information on international shipping, duties, and local taxes such as VAT.
c. Companies that provide services and software that translate Web sites, calculate shipping, value-added taxes, duties, and other charges unique to each country.
d. Equity partners in multinational businesses.

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23. Multinational e-commerce enablers exist because
a. Many companies including very large ones, do not have the internal resources or abilities to conduct all e-commerce functions.
b. There is a shortage of employees with e-commerce skills.
c. It is extremely difficult for a brick and mortar company to develop an e-commerce strategy.
d. It is more beneficial to have a strategic partner when conducting multinational e-commerce.

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24. MNC’s face rising pressures to maintain the __________ of their customers.
a. Data
b. Privacy
c. Support
d. Repeat business

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25. Cost reduction, technology and efficiencies are considered to be the ________ of e-commerce.
a. Attractions
b. Challenges
c. Deterrents
d. Keys

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26. Which of the following is not true regarding e-commerce?
a. Refers to the selling of goods and services over the Internet
b. Includes products that are delivered offline such as UPS shipping a book purchased through Amazon.com
c. Does not include goods and services delivered online, such as downloaded computer software
d. Includes goods and services delivered online, such as downloaded computer software

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27. Which of the following statements is NOT true regarding Business-to-Business transactions (B2B)?
a. B2B is not as important as business-to-consumer (B2C) e-commerce businesses.
b. B2B allows instant information sharing between business customers and suppliers.
c. B2B allows suppliers to know what their customers want and allows businesses to know price, availability and product characteristics immediately.
d. B2B transactions make up more than 70 % of all current e-commerce business.

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28. Channel conflicts, cost of site construction and maintenance are considered to be _____ of e-commerce.
a. Attractions
b. Challenges or deterrents
c. Linking services
d. Supporting software

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29. Which of the following services is not provided by e-commerce enablers?
a. Services and software that translate Websites
b. Software that calculate shipping, value-added, and duties
c. Receiving customers purchased goods and storing, packaging, and shipping to the customer
d. Training programs to understand the local culture

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30. E-commerce potential is substantial in South America because
a. Of the Mercosur trade group.
b. Of trade with the U.S.
c. Because of the demographic characteristics.
d. Of the ASEAN trade group.

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31. Price comparison websites which searches online stores around the world to provide price comparisons and shipping and delivery information represents which form of e-commerce?
a. B2B (business-to-business)
b. B2C (business-to-consumer)
c. C2C (consumer-to-consumer)
d. C2B (consumer-to-business)

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32. Which of the following is NOT one of the ways to modify a website to make it global?
a. All company websites should first show the corporate website in the home country.
b. Provide a prominent list of languages used by the company’s web site
c. Provide the firm’s privacy statements in all local languages
d. Provide a culturally-sensitive website

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33. Which of the following is NOT a benefit of integrated brick-and-mortar and internet businesses?
a. The integrated operation can benefit from shared customer information.
b. The integrated operation can move faster and be more entrepreneurial.
c. The integrated operation can benefit from cross-promotion of shared products.
d. The integrated operation can benefit from economies of scale by using the small distribution channels.

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34. Which of the following does NOT represent a necessary component of the ideal multinational e-business?
a. Corporate headquarters which represents the global core in charge of providing a common vision and strategy
b. Managers at headquarters having worldwide responsibility for their shared functional areas responsibility
c. Local subsidiaries which actually deliver the goods and also taking charge of functions best done locally
d. All of the above are necessary aspects of the multinational e-business

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35. The internet has enabled the emergence of a new form of multinational, known as
a. Internet Service Providers.
b. Virtual enablers.
c. Internet businesses.
d. Born-globals.

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36. The retail sale of toys from the Wal-Mart website represents which form of transaction?
a. B2C
b. B2B
c. C2C
d. C2B

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37. Having systems in place to ensure that collected information is accurate and reliable represents which form of information security?
a. Confidentiality
b. Availability
c. Integrity
d. Authentication

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38. Confidentiality
a. Is ensuring that collected information is available to authorized users.
b. Is ensuring that collected private information is protected and safeguarded.
c. Is ensuring the privacy of online shoppers.
d. Is ensuring that systems are in place to ensure that only legitimate individuals are using systems.

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39. Southeast Asian countries represent opportunities for e-commerce growth due to
a. Spanish language websites.
b. Membership in ASEAN.
c. Global demand.
d. Internet economy.

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40. A new trend is that multinationals are using _______________ to their advantage.
a. Tall hierarchical web structures
b. Tacit knowledge
c. User Generated Content
d. None of the above

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ESSAY

1. What is e-commerce? What are the main types of e-commerce transactions? Discuss some of the reasons why B2B transactions make up a significant percentage of current e-commerce business?

2. Discuss some of the basic steps to building a successful e-commerce strategy.

3. What is a brick and mortar part of a company? What are some benefits of integrating the brick and mortar part of an organization with their Internet business? Why do some companies such as Barnes and Nobles still choose to have their Internet division operate independently from their brick and mortar part?

4. What are some of the major factors a company needs to take into consideration when setting up a global e-business? Why do companies with already established international brick and mortar units have an advantage in setting up global e-business compared to firms with no international presence?

5. What are some of the major factors to take into consideration when picking a country for setting up an e-commerce business? Why do trading blocks such as Mercosur, ASEAN, and the European Union present significant potential for e-commerce businesses?

6. Discuss the three-tiered ideal organizational structure of a multinational e-corporation. What are some of the essential functions served by the headquarters of the multinational e-corporation? Why should company headquarters not be responsible for local strategies?

7. What are e-commerce enablers? Why are e-commerce enablers becoming increasingly popular? Discuss some of the essential services provided by e-commerce enablers.

8. Discuss some of the technical capabilities that are needed for multinational e-commerce.

9. Discuss some of the major problems companies face when they try to globalize their Web sites. What can companies do to face these challenges?

10. What is e-commerce security? Discuss the four key aspects of information security. What can a multinational do to ensure that its e-commerce system is secure?

Chapter 11 International Human Resource Management

MULTIPLE CHOICE

1. The process by which companies choose people to fill vacant position is
a. Recruitment.
b. Compensation.
c. Selection.
d. Training and development.

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2. Inpatriates are
a. Employees who come from a different country where he/she is working.
b. Expatriate workers who come from neither the host nor the home country.
c. Local workers who come from the host country where the unit is located.
d. Employees from foreign country who work in the country where the parent company is located.

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3. Home country nationals are
a. Expatriate employees who come from the parent’s home country.
b. Employees who come from a different country where he/she is working.
c. Expatriate employees which come from the parent’s home country.
d. Employees from foreign country who work in the country where the host company is located.

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4. Expatriates are
a. Local workers who come from the host country where the unit is located.
b. Employees who come from a different country from where he or she is working.
c. The more talented local managers.
d. None of the above

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5. Expatriate workers who come from neither the host nor home country are
a. Host country nationals.
b. Parent country nationals.
c. Neither country nationals.
d. Third country nationals.

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6. One reason for US expatriate managers failure is
a. Personality of the manager.
b. Lack of technical proficiency.
c. Lack of motivation.
d. All of the above choices.

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7. All of the following are benefits that companies obtain by using expatriates EXCEPT
a. Receiving important strategic information.
b. Increased coordination and control of international operations.
c. Timely information on the local markets.
d. Reduced turnover for key international managers.

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8. All of the following are benefits of international assignments EXCEPT
a. International assignments help managers acquire skills necessary to develop successful strategies in a global context.
b. Expatriate assignments help a company coordinate and control operations dispersed geographically and culturally.
c. International assignments provide companies access to preferential quotas and duties.
d. Global assignments provide important strategic information.

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9. International cadre are
a. A group of managers who specialize in international careers.
b. Managers who are hired on a temporary basis to solve international problems.
c. Experts on international operations who work as part of the headquarters staff.
d. A group in charge of training managers for expatriate assignments.

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10. Key expatriate success factors include all of the following EXCEPT
a. Professional or technical skill.
b. Experience in at least two cultures different from the assignment country.
c. Stress tolerance.
d. Favorable family situation.

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11. A person with good relational abilities has
a. The capacity to adapt to strange situations.
b. The flexibility to modify their behavior.
c. A sensitivity to cultural norms and values.
d. All of the above

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12. Evidence on training for international assignments suggests
a. Cross-cultural training reduces expatriate failure rates.
b. Cross-cultural training makes people feel more comfortable but there are no bottom line effects on performance.
c. US firms invest the most in this activity.
d. It only beneficial for long term assignments.

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13. Which of the following is NOT true regarding low training rigor?
a. Low training rigor usually includes briefings concerning company operations.
b. Low training rigor usually lasts for a short period.
c. Low training rigor usually includes lectures and videos on the local culture.
d. Low training usually lasts over two months.

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14. Which of the following is NOT one of the issues that make expatriate performance appraisals difficult?
a. Unreliable data
b. Refusal of host company to provide performance information regarding expatriate
c. Time differences and distance separation
d. Complex and volatile environments

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15. Suggestions to improve expatriate performance appraisals include
a. Using the same standards as the home country to improve fairness.
b. Giving up on performance appraisal since they often fail in the international setting.
c. Evaluation only at the end of the assignment since it takes a long time to learn about another culture.
d. Using multiple evaluators with varying periods of evaluation.

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16. The main objective of the balance sheet approach to international compensation is
a. To match home and host county purchasing power.
b. To make sure you reward international managers for their hardship.
c. To save costs in inexpensive countries.
d. To provide headquarters’ accountants with consistent information on salaries.

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17. Adjusting wages to local lifestyles and costs of living refers to which expatriate compensation system?
a. The balance-sheet method
b. The host-based compensation system
c. The global pay system
d. The headquarters-based compensation system

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18. The use of worldwide job evaluations, performance appraisals methods, and salary scales to determine pay is the
a. The global pay system.
b. The balance sheet approach.
c. The multi-local pay system.
d. The headquarters-based system.

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19. Experts on repatriation suggest
a. That managers will experience no problems if they return to their home cultures.
b. Reverse culture shock can occur regarding national and organizational culture.
c. There are difficult problems with repatriation but few solutions at this time.
d. People may feel uncomfortable for a while but work performance will not suffer.

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20. Difficulties that managers face in coming back to their home countries and reconnecting with their home organizations is known as the
a. Repatriation problem.
b. Reverse culture shock.
c. Low home re-adaptation index.
d. Expatriation problem.

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21. According to the text, which of the following is NOT one of the strategies used to allow successful repatriation of expatriates?
a. Provide a strategic purpose for the repatriation
b. Allow the expatriate to return when he/she is ready to do so
c. Provide training and preparation for the return
d. Establish a team to aid the expatriate

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22. Studies of women expatriates suggest that all of the following statements are true about international assignments in traditional cultures EXCEPT
a. Women typically do not succeed in expatriate assignments.
b. Women have some challenges in international assignments.
c. Women have some advantages in international assignments.
d. Opportunities for women expatriates are expected to grow in global companies.

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23. The text suggests several strategies that US women may use to succeed in traditional cultures. These include
a. Emphasize nationality, not gender.
b. Develop close contact with local government officials.
c. Not being overly aggressive in negotiation.
d. Proving that women can also be successful at international assignments.

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24. All of the following explain why there may be more international assignments for women in the future EXCEPT
a. Legal and social pressures for equal opportunity in North America.
b. Acute shortage of men willing to take international assignments.
c. Globalization creates opportunities to hire skilled women from any country.
d. More federal funds to train women for international assignments.

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25. Companies with a global HRM orientation
a. Usually provide significant extra pay for expatriate assignments.
b. Evaluate their managers by headquarters’ country standards.
c. Focus primarily on language training as preparation for expatriate assignments.
d. Use similar pay and benefit packages for all international assignments.

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26. Companies with ethnocentric HRM orientations
a. Use similar pay and benefit packages worldwide.
b. Select home country nationals for key positions.
c. Emphasize extensive training in the company culture before allowing a manager to go international.
d. Often use international experience as a technical qualification for high level management.

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27. Host country nationals may have limited career development in a company with a (an)
a. Ethnocentric, Regio or polycentric HRM orientation.
b. Only an ethnocentric HRM orientation.
c. Regiocentric or global HRM orientation.
d. Only a polycentric HRM orientation.

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28. Using more local managers to reduce the costs of training expatriate managers is a benefit usually associated with
a. A global HRM orientation.
b. A polycentric or regiocentric HRM orientation.
c. An ethnocentric HRM orientation.
d. A geocentric orientation.

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29. Companies with a multi-local strategy are most likely to have a
a. A global HRM orientation.
b. A polycentric HRM orientation.
c. Either a ethnocentric or regiocentric HRM orientation.
d. A geocentric orientation.

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30. Extra money paid to expatriates for particularly difficult posting due to issues such as high risk or poor living conditions is known as
a. Foreign service premiums.
b. Hardship allowance.
c. Relocation allowances.
d. Home-leave allowances.

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31. Which of the following statements is NOT TRUE regarding women expatriates compared to male expatriates?
a. Women expatriates have more difficulty being taken seriously early in their careers.
b. Women expatriates have more pressures to balance work and family compared to male expatriates.
c. Women expatriates have poorer relational and communication skills than male expatriates.
d. Women expatriates have more pressures to worry about their spouses than male expatriates.

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32. Which of the following is NOT one of the strategies discussed in the text to help repatriation of expatriates?
a. Provide a strategic purpose for the repatriation
b. Establish a team to help with the repatriation
c. Provide support for the expatriate and family on reentry
d. Provide vacation to help the expatriate get readjusted at home

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33. The two aspects to consider when evaluating the possibility of hiring expatriates are the high cost and
a. Skills in multinational management.
b. High success rate.
c. High failure rate.
d. None of the above

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34. All of the following are possible steps that can be taken by multinationals to remove barriers faced by female expatriates EXCEPT
a. Provide opportunities for interpersonal networks with other female expatriates.
b. Provide mentors.
c. Identify and remove sources of barriers.
d. Provide more appropriate performance appraisal systems for female expatriates.

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35. International Human Resource Management
a. Is no different from domestic HRM.
b. Is the application of HRM to international settings.
c. Is the orientation to hiring international employees.
d. Is the selection and compensation of expatriates.

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36. Third-country nationals are
a. Workers who come from the host-country where the unit is located.
b. Foreign workers who work in a country where the parent company is located.
c. Workers who come from neither the host nor the host-country.
d. None of the above

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37. Employees who are sent on frequent but short-term international assignments are known as
a. Flexpatriates.
b. Inpatriates.
c. Shortpatriates.
d. Expatriates.

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38. Which of the following statements about flexpatriates is FALSE?
a. Flexpatriates are those workers who travel on short notice for shorter duration.
b. Flexpatriate assignments usually last longer than expatriate assignments.
c. Flexpatriates provide flexibility as the company can send someone on numerous and much shorter duration assignments.
d. All of the above are true.

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39. Which of the following best describes emotional intelligence, one of the factors key to the success of an expatriate?
a. The ability to adapt to new and strange situations
b. The motivation to accept international assignments
c. The ability to being aware of oneself and to understand and relate to others
d. None of the above

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40. Which of the following factors is not necessarily included in an expatriate’s compensation package?
a. Local market cost of living
b. Housing
c. Adjustments for taxes
d. All of the above are included in an expatriate’s compensation package

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ESSAY

1. Identify the components of HRM and describe how they differ for IHRM.

2. Describe the types of nationals employed by multinational firms. Explain when each type would be used.

3. Discuss and contrast the four IHRM orientations. Describe how each can support a multinational strategy.

4. Contrast the positive and negative issues for using short term flexpatriates and international cadre members as expatriate managers. Consider both the organization’s perspective and the career implications for the individual manager.

5. Discuss the options available for expatriate compensation. Consider how these options might be used for a transnational and a multidomestic company.

6. Discuss how multinational companies can deal with the repatriation problem. Why is it necessary to deal with this issue?

7. What are some advantages women have in expatriate positions? Discuss some challenges that are faced by women in international assignments.

8. Discuss any three of the key expatriate success factors and their implications for selection.

Chapter 12 HRM in the Local Context: Knowing When and How to Adapt

MULTIPLE CHOICE

1. Differences in HRM policies and practices among countries stem from
a. Education and training of the labor force.
b. Laws and cultural expectations for selection practices.
c. Laws and traditions regarding labor practices.
d. All of the above

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2. An enduring system of relationships among people, such as education or the political system represent which aspect of the national context of a country?
a. National culture
b. Business culture
c. Social institutions
d. Managerial culture

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3. An abundant level of iron ore deposits in a country represents which of the following?
a. Country institutions
b. Natural factor conditions
c. Induced factor conditions
d. Resource pool

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PTS: 1

4. Which recruitment strategy do US managers see as most effective?
a. Newspaper and online advertising
b. College or university recruiting
c. Employee referrals
d. Personal contacts

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PTS: 1

5. The US belief in the benefits of open and public advertising reflects the
a. US individualistic cultural values.
b. US preference for in-group members.
c. US collectivist cultural values.
d. US preference for hiring friends and relatives.

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6. All of the following are true about US selection practices EXCEPT
a. US selection practices focus on individual achievements and not on group affiliations.
b. US selection practices favor hiring of relatives and friends.
c. The aim of the typical US selection practice is to gather information of a candidate’s job qualifications.
d. US selection practices are governed by laws and regulations.

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7. Selection in collectivist cultures
a. Favors performance-related backgrounds and qualifications.
b. Is similar to US selection practices.
c. Gives preference to the in-group members.
d. Gives preference to individuals with technical skills.

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8. Managerial selection and recruitment in Korea and Japan are dominated by
a. High school and university ties.
b. Club membership.
c. Performance-related backgrounds and qualifications.
d. All of the above

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9. Backdoor recruitment in collectivist cultures may not always be used by foreign multinationals because
a. Such procedures will not work as well as newspaper advertisements.
b. The multinationals may not have access to the appropriate contacts.
c. It is almost always better to use expatriates in these situations.
d. They prefer to rely on internal job postings.

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10. The practice of recruiting friends or relatives of those already employed is which form of recruiting?
a. Front gate recruiting
b. Walk-ins
c. Backdoor recruiting
d. Internal recruiting

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11. All of the following are true about US training and development practices EXCEPT
a. The most popular training topics are management development and computer training.
b. Most training programs reach a majority of the workers.
c. Because of global competition, demand for training will increase.
d. There are increased pressures on businesses to supplement basic educational training.

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12. The dual-system in Germany refers to
a. The combination of selection and recruitment in one process.
b. The unification of management practices from Eastern and Western Germany.
c. The combination of in-house apprenticeship training with part-time vocational school training.
d. Academic preparation at the high school level.

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13. A study of compensation practices in ten countries revealed that
a. Pay incentives are important.
b. Pay should be contingent on group performance.
c. Incentives should be significant amount of pay.
d. All the above are true

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14. The Japanese system of life-time or permanent employment
a. Applies more to workers than to managers.
b. Is easier to implement in smaller Japanese companies.
c. Is likely to produce a satisfied and less motivated Japanese workforce.
d. Applies equally to men and women.

AACSB Analytic, HRM

PTS: 1

15. According to a study of ten countries on nine compensation practices
a. There was universal consensus on all nine as being necessary.
b. There was universal consensus on eight as being necessary.
c. There was universal consensus that seniority considerations are necessary.
d. None of the above are true

AACSB Reflective thinking, HRM

PTS: 1

16. All of the following are true about the US performance appraisal system EXCEPT
a. It represents cultural values that espouse links among individual rights, duties, and rewards.
b. It attempts to be rational, logical, and legal.
c. It focuses primarily on the ability to function well in groups.
d. Research shows that it works well in all national contexts.

AACSB Reflective thinking, HRM

PTS: 1

17. Which of the following is most true about the typical US compensation system?
a. Most companies take into account external and internal factors to determine compensation.
b. Most companies develop formal and systematic policies to determine compensation levels.
c. Raises in pay are determined mostly by merit.
d. All of the above are true.

AACSB Reflective thinking, HRM

PTS: 1

18. Which of the following describes one potential way a Japanese supervisor can communicate negative feedback for poor work performance to his/her subordinate?
a. By simply ignoring the subordinate
b. With formal appraisal systems
c. By discussing the poor performance openly
d. By providing the negative feedback in writing

AACSB Reflective thinking, HRM

PTS: 1

19. Japanese compensation systems base pay raises mostly on
a. Marital status and family size.
b. Seniority.
c. Merit.
d. Position.

AACSB Reflective thinking, HRM

PTS: 1

20. Patterns of labor relations in countries are affected by
a. Cultural factors.
b. Historical factors such as the level of technology development.
c. Ideological reasons.
d. All of the above

AACSB Reflective thinking, HRM

PTS: 1

21. Union membership density refers to
a. The number of unions in any country.
b. The proportion of workers who belong to unions in a country.
c. The proportion of white collar workers/professional who belong to unions in a country.
d. The proportion of unions to companies in a country.

AACSB Reflective thinking, HRM

PTS: 1

22. All of the following are true about unions in England, Germany, France, and the U.S. EXCEPT
a. British unions developed with strong government interference.
b. German unions developed in harmony with the government and corporations.
c. French unions started much later and developed more slowly than did British or German unions.
d. US union membership has declined significantly since the 1940s.

AACSB Reflective thinking, HRM

PTS: 1

23. An organization of all people from a company regardless of occupation or location is a (an)
a. Craft union.
b. Enterprise union.
c. Ideological union.
d. Industrial union.

AACSB Reflective thinking, HRM

PTS: 1

24. A craft union
a. Represents one occupational group in one company.
b. Represents all people in one organization regardless of occupation or location.
c. Represents all workers based on some particular ideology.
d. Represents one occupational group such as plumbers.

AACSB Reflective thinking, HRM

PTS: 1

25. A union representing one occupational group in one company is
a. An enterprise union.
b. A craft union.
c. A local union.
d. A trade union.

AACSB Reflective thinking, HRM

PTS: 1

26. Which of the following is FALSE about recruitment and selection processes in collectivist cultures?
a. Companies prefer to hire directly out of school.
b. There is a preference for family and friends.
c. Personal information is considered important for selection.
d. Technical skills are considered crucial for selection.

AACSB Reflective thinking, HRM

PTS: 1

27. The group of employees, found in Germany, that shares plant-level responsibility with managers over issues such as working conditions is
a. An enterprise union.
b. A craft union.
c. A works council.
d. An ideological union.

AACSB Reflective thinking, HRM

PTS: 1

28. Major components of the legal requirements for a US performance appraisal system include
a. Evaluations must relate clearly to the job.
b. Evaluations are not required when all workers are the same gender.
c. All testing must be quantitative.
d. Older workers need not have performance appraisals.

AACSB Reflective thinking, HRM

PTS: 1

29. In most collectivist cultures, performance appraisals
a. Follow similar patterns to the US legal requirements.
b. Are often communicated subtly, such as by a manager ignoring a worker.
c. Favor and open and honest dialogue regarding performance.
d. Are more formal than in individualistic cultures.

AACSB Reflective thinking, HRM

PTS: 1

30. The practice in Germany, whereby management surrenders a traditionally reserved share of control to workers refers to
a. Co-determination.
b. Co-selection.
c. Veto power.
d. Joint planning.

AACSB Reflective thinking, HRM

PTS: 1

31. All of the following statements regarding Induced-factor conditions resources are true EXCEPT
a. Induced-factor conditions resources arise from cultural and institutional pressures.
b. Good examples of induced factor conditions are the high cultural value placed on education in many Asian societies creating a well-trained workforce.
c. Induced-factor conditions include those resources that occur naturally such as coal and gas reserves.
d. All of the above are true.

AACSB Reflective thinking, HRM

PTS: 1

32. Which of the following is not one of the factors affecting national differences in human resource management as discussed in the text?
a. Types of jobs favored by applicants
b. Education and training of the labor pool
c. Laws and cultural expectations regarding fair wages and promotion criteria
d. All of the above are factors

AACSB Reflective thinking, HRM

PTS: 1

33. Which of the following is NOT one of the factors determining the resource pool of a country as discussed in the text?
a. The quantity, quality, and accessibility of raw material
b. The quantity, quality and cost of personnel available
c. The training and development system available
d. The cost and amount of capital available to firms

AACSB Reflective thinking, HRM

PTS: 1

34. Which of the following is NOT one of the recruitment steps?
a. Managers determine the jobs that are available.
b. Managers determine the types of skills and people that are necessary for these jobs.
c. Managers generate a pool of applicants for the job.
d. Managers choose a person who fits the job.

AACSB Reflective thinking, HRM

PTS: 1

35. All people in a particular industry, regardless of occupational group is most likely represented by
a. An enterprise union.
b. A local union.
c. A craft union.
d. An industry union.

AACSB Reflective thinking, HRM

PTS: 1

36. Which of the following statements regarding selection in collectivistic cultures is FALSE?
a. In selecting employees, employers prefer trustworthiness and loyalty.
b. Older male recruits are usually preferred because they can be easily molded to fit the company’s culture.
c. Selection often relies on referrals from family or friends.
d. All of the above are TRUE.

AACSB Reflective thinking, HRM

PTS: 1

37. The measure that considers the proportion of workers who belong to unions is known as
a. Union-membership scope.
b. Craft union density.
c. Union-membership density.
d. Trade union density.

AACSB Reflective thinking, HRM

PTS: 1

38. A union representing all workers belonging to one religious orientation in a company is known as
a. An ideological union.
b. A craft union.
c. A local union.
d. An ideological union.

AACSB Reflective thinking, HRM

PTS: 1

39. Which of the following statements about management development in the U.S. is false?
a. Management development in the U.S. is the responsibility of the firm rather than the individual.
b. U.S. companies can rely on senior-level managers to identify promising candidates for management development and training.
c. U.S. companies rely on direct assessment approaches such as assessment centers to identify individuals with managerial potential.
d. All of the above is true.

AACSB Reflective thinking, HRM

PTS: 1

40. Which of the following statements regarding union membership is FALSE?
a. Union membership in the U.S. has stayed the same over the past 30 years.
b. In many major industrialized countries, union membership is still greater than 50%.
c. South Africa has doubled in size in union membership.
d. Europe still has a high proportion of workers who are union members.

AACSB Reflective thinking, HRM

PTS: 1

ESSAY

1. Describe and discuss the major factors in the national context that affect a nation’s HRM practices.

2. What are some of the recruitment strategies used by U.S. companies? Why is open and public advertisements seen as the most effective recruitment strategies? Why would such strategies not work in more collectivist cultures?

3. Some U.S. politicians have called for the development of a German-type apprenticeship training system in the U.S. If you were a manager of a U.S. Fortune 500 multinational company, how would you respond to this proposal and why? What are the current challenges facing the German system now?

4. You have been given the assignment to set up a training program for first level managers in a formerly government-owned eastern European company. How would you go about developing a curriculum? Why?

5. Compare and contrast the appraisal and compensation systems in the U.S. and more collectivist culture nations. Discuss legal and cultural problems that multinational managers might face using a collectivist approach to these systems in the U.S. and using a U.S. approach in more collectivist cultures.

6. Contrast the different types of unions and discuss the challenges each type may pose to a multinational manager.

7. Define and describe union membership density as it has been historically and is now. Why is it important to multinational managers?

8. How is feedback on performance given in collectivist societies, especially for managers?

Chapter 13 International Negotiation and Cross-Cultural Communication

MULTIPLE CHOICE

1. International negotiation
a. Is the process of making business deals across national and cultural boundaries.
b. Is less complex than domestic negotiation.
c. Can be successful regardless of ease of communication.
d. All of the above

AACSB Communication, Leadership principles

PTS: 1

2. All of the following are true about international negotiation EXCEPT
a. International negotiations are more complex than domestic negotiations.
b. Differences in national cultures and differences in political, legal, and economic systems often separate potential business partners.
c. Most successful international negotiators use their home country negotiation styles.
d. All of the above are true.

AACSB Communication, Leadership principles

PTS: 1

3. The Whorf hypothesis
a. Suggests that language determines the nature of culture.
b. Suggests that nonverbal communication determines cultural patterns.
c. Culture comes first and requires the development of certain concepts and thus certain words.
d. None of the above

AACSB Communication, Leadership principles

PTS: 1

4. High context languages
a. Are languages in which people state things directly and explicitly.
b. Include most northern European languages including German, English, and the Scandinavian languages.
c. Are languages in which people state things indirectly and implicitly.
d. Are languages where the words provide most of the meaning.

AACSB Communication, Leadership principles

PTS: 1

5. Languages in which people state things directly and explicitly where the words provide most of the meaning are
a. Moral languages.
b. High context languages.
c. Low context languages.
d. None of the above

AACSB Communication, Leadership principles

PTS: 1

6. Which of the following statements is true regarding high context languages?
a. Most Northern European languages, including German, English, and the Scandinavian languages are high context languages.
b. Words provide most of the meaning in high context languages.
c. In high context languages, what is left unsaid is often as important as what is said.
d. All of the above are true.

AACSB Communication, Leadership principles

PTS: 1

7. The degree of formal communication refers to
a. Whether people speak directly or indirectly.
b. Communication without words.
c. Communication through formal body movements.
d. None of the above

AACSB Communication, Leadership principles

PTS: 1

8. Nonverbal communication
a. Is part of face-to-face communication.
b. Occurs through such things as body posture, facial expression, hand gestures, and the use of personal space.
c. May also create (purposefully or not) situations that make a negotiator uncomfortable.
d. All of the above

AACSB Communication, Leadership principles

PTS: 1

9. Kinesics is
a. Communicating through body movements.
b. A form of verbal communication.
c. Focuses on how people use space to communicate.
d. The type of touching that is deemed appropriate in different cultures.

AACSB Communication, Leadership principles

PTS: 1

10. Proxemics
a. Refers to the use of body movements to communicate.
b. Represents the degree of formality in communication styles.
c. Means communicating with and without words.
d. Focuses on how people use space to communicate.

AACSB Communication, Leadership principles

PTS: 1

11. Touch
a. Is related to proxemics and is a basic form of human interaction.
b. Refers to communication through body movements.
c. Represents the degree of directness in communication.
d. Is similar to kinesics.

AACSB Communication, Leadership principles

PTS: 1

12. Attribution
a. Is the process by which we interpret the meaning and intent of spoken words or nonverbal exchanges.
b. Is communication through body movements.
c. Focuses on how people use space to communicate.
d. A form of verbal communication.

AACSB Communication, Leadership principles

PTS: 1

13. When communicating with nonnative speakers, which of the following would make communication harder and less accurate?
a. Strictly following basic rules of grammar
b. Using words that have numerous alternative meanings
c. Using slang
d. Using most common words with their most common meanings

AACSB Communication, Leadership principles

PTS: 1

14. Gathering of extensive information on the negotiation issues, on the setting in which the negotiation will take place, and on the firm and people involved occurs in which stage of the steps in international negotiation?
a. Preparation
b. Building the relationship
c. Persuasion
d. Concession

AACSB Communication, Leadership principles

PTS: 1

15. In the relationship building stage of the International Negotiation Process
a. The negotiator focuses seriously on business issues.
b. Usually takes place at the formal negotiation place.
c. Is not as important as the other steps.
d. None of the above

AACSB Communication, Leadership principles

PTS: 1

16. All of the following are true about the steps in the Negotiation Process EXCEPT
a. Although each international negotiation is unique and may combine two or more steps or repeat some, the negotiation process involves five steps leading to the final step, an agreement.
b. The negotiation steps include preparation, building the relationship, exchanging information and the first offer, persuasion, and the agreement.
c. Most experts agree that the process of international negotiation includes several steps.
d. All of the above are true.

AACSB Communication, Leadership principles

PTS: 1

17. At the __________ stage in the negotiation, both parties exchange the specifics of their needs for the agreement.
a. Exchanging Information and the First Offer
b. Building the relationship
c. Persuasion
d. Concession

AACSB Communication, Leadership principles

PTS: 1

18. All of the following are true about the Exchanging Information and the First Offer Step of the International Negotiation process EXCEPT
a. Both parties exchange information on their needs for the agreement.
b. Parties exchange information that is task-related.
c. Both sides usually present their final offer.
d. Both sides present offers that often differ from what they hope to achieve eventually.

AACSB Communication, Leadership principles

PTS: 1

19. In the _____ stage, each side in the negotiation attempts to get the other side to agree to its position.
a. Exchanging Information and the First Offer
b. Building the relationship
c. Persuasion
d. Concession

AACSB Communication, Leadership principles

PTS: 1

20. All of the following is true about the persuasion stage EXCEPT
a. Each side in the negotiation attempts to get the other side to agree to its position.
b. It is the heart of the negotiation processes.
c. Numerous tactics are available to international negotiators to persuade the other side.
d. The emphasis and mix of tactics do not vary by the cultural background of the negotiators.

AACSB Communication, Leadership principles

PTS: 1

21. Dirty Tricks in International Negotiations refer to
a. The most common tactics in international negotiations that people use to gain an upper hand.
b. Negotiation tactics that pressure opponents to accept unfair or undesirable agreements or concessions.
c. Face-to-face communication that is not oral.
d. None of the above

AACSB Communication, Leadership principles

PTS: 1

22. Deliberate deception, one example among some common ploys in international negotiations, refers to
a. Negotiators presenting flagrant untruths either in the facts they present or in their intentions for the negotiation.
b. Negotiators waiting to the last minute before the international negotiation team plans to go home.
c. Negotiators making an agreement then reveal that it must be approved by senior managers or the government.
d. One negotiator acting agreeable and friendly while his or her partner makes outrageous or unreasonable demands.

AACSB Communication, Leadership principles

PTS: 1

23. Negotiators who make an agreement and then reveal that it must be approved by senior managers or the government is an example of which type of dirty trick?
a. Escalating authority
b. Good guy, bad guy routine
c. You are wealthy and we are poor
d. Old friends

AACSB Communication, Leadership principles

PTS: 1

24. If negotiators are using deliberate deception as a dirty tricks, the best way to deal with the deception is
a. Not to make any concessions.
b. To ignore the ploy and focus on the agreement.
c. To not reveal your negotiation plans.
d. To point out directly what you believe is happening.

AACSB Communication, Leadership principles

PTS: 1

25. All of the following are true about the final agreement EXCEPT
a. The final agreement is the signed contract, agreeable to all sides.
b. Successful negotiations do not necessarily result in the final agreement.
c. The final agreement must be consistent with the chosen legal system or systems.
d. All of the above are true.

AACSB Communication, Leadership principles

PTS: 1

26. The sequential approach to concession-making
a. Is very popular in Asian cultures.
b. Is similar to the holistic approach.
c. Implies that concession making begins only after all participants discuss all issues.
d. Implies that negotiators expect each side to give and take on individual issues in sequence.

AACSB Communication, Leadership principles

PTS: 1

27. All of the following are true about the holistic concession-making approach EXCEPT
a. Is very popular in Asian cultures.
b. Each side makes very few, if any, concession during discussions of each point in potential agreement.
c. Implies that concession making begins only after all participants discuss all issues.
d. Implies that negotiators expect each side to give and take on individual issues in sequence.

AACSB Communication, Leadership principles

PTS: 1

28. In competitive negotiation
a. Negotiators seek out mutually satisfactory ground that is beneficial that allows both companies to win.
b. Competitive negotiators view the negotiation as a win-win game.
c. Competitive negotiators use dirty tricks and any plot that leads to their advantage.
d. Competitive negotiators search for possible win situations where the outcome of the negotiation is mutually satisfactory to both sides.

AACSB Communication, Leadership principles

PTS: 1

29. __________ negotiators search for possible win-win situations where the outcome of the negotiation is mutually satisfactory to both sides.
a. Problem-solving
b. Concession-making
c. Competitive
d. None of the above

AACSB Communication, Leadership principles

PTS: 1

30. All of the following are personal characteristics of the successful international negotiator EXCEPT
a. Be a competitive negotiator.
b. Can tolerate ambiguous situations.
c. Has stamina, good sense of humor.
d. Is flexible, creative, curious, and can empathize.

AACSB Communication, Leadership principles

PTS: 1

31. Olfactics
a. Is the use of smells as a means of nonverbal communication.
b. Refers to communication through eye contact or gazing.
c. Communication through the use of space.
d. Communication through body contact.

AACSB Communication, Leadership principles

PTS: 1

32. Communication through eye contact or gaze is known as
a. Proxemics.
b. Haptics.
c. Oculesics.
d. Olfactics.

AACSB Communication, Leadership principles

PTS: 1

33. Which of the following is NOT one of the suggestions for proper use of interpreters?
a. Spend time with the interpreter so that he/she can understand your accent.
b. Insist on minimization of interruptions and have the interpreter translate after you end each statement.
c. Go over technical and other complex issues with your interpreter.
d. Request that your interpreter apologizes for your inability to speak the local language.

AACSB Communication, Leadership principles

PTS: 1

34. Which phase of the negotiation process consists of an evaluation of the success of the completed negotiation?
a. The post relationship building phase
b. The agreement phase
c. The post agreement phase
d. The performance feedback phase

AACSB Communication, Leadership principles

PTS: 1

35. Which one of the following is NOT one of the personal success characteristics of successful international negotiators as discussed in the text?
a. Tolerance of ambiguity and curiosity
b. Focus on achieving negotiation goals without making concessions
c. Flexibility, creativity, and sense of humor
d. All of the above are personal success characteristics

AACSB Communication, Leadership principles

PTS: 1

36. Haptics
a. Refers to communication through body contact.
b. Refers to communication through smell.
c. Refers to communication through eye contact.
d. None of the above

AACSB Communication, Leadership principles

PTS: 1

37. Which of the following represents one possible solution to the “Old Friends” dirty trick?
a. Ignore the ploy and focus on mutual benefits.
b. Keep a psychological distance that reflects the true nature of the relationship.
c. Walk out of negotiations.
d. Reveal when you plan to leave negotiations.

AACSB Communication, Leadership principles

PTS: 1

38. Which of the following regarding proxemics is FALSE?
a. Proxemics focuses on how people use space to communicate.
b. North Americans are more comfortable with a personal bubble of space of 20 inches.
c. Latin and Arab cultures prefer closer spacing than North Americans.
d. North Americans prefer closer spacing than the Latin and Arab cultures.

AACSB Communication, Leadership principles

PTS: 1

39. Which of the following statements regarding interpreters is FALSE?
a. The interpreter’s role is to provide a simultaneous translation of a foreign language while a person is speaking.
b. Good interpreters have the technical knowledge and vocabulary to deal with such details common in business transactions.
c. Interpreters are not needed if some of the negotiators can understand both languages.
d. All of the above are true.

AACSB Communication, Leadership principles

PTS: 1

40. Which of the following statements regarding formal communication is FALSE?
a. U.S. Americans have the highest degree of formal communication.
b. Compared to the U.S., most other business cultures acknowledge rank and titles when addressing each other.
c. There is more formality of dress for both genders for most other cultures compared to the U.S.
d. All of the above are true.

AACSB Communication, Leadership principles

PTS: 1

ESSAY

1. Discuss the steps in the negotiation process. Which step is at the heart of the process and why?

2. Compare and contrast the two basic negotiation strategies. Which would you prefer to use, and why?

3. What is the difference between a high- and a low-context language? Discuss some of the potential problems a person with a low-context language may face when negotiating with people from a high-context language.

4. Provide an example of how nonverbal negotiation tactics may be interpreted differently by people of varying cultural backgrounds.

5. What is the Whorf hypothesis? Explain.

6. Identify some cultural differences in body movements (kinesics). How might these influence a negotiation session?

7. Identify and describe some common dirty tricks in international negotiation. What can be done to counteract these dirty tricks?

8. Describe several forms of nonverbal communication. If you were a negotiator, how might you prepare for differences in these forms?

9. What are interpreters? What can managers do to ensure appropriate use of interpreters?

Chapter 14 Motivation in Multinational Companies

MULTIPLE CHOICE

1. People’s expectations from work (such as work providing necessary income or work providing satisfactory experiences) refer to
a. Functions of work.
b. Work centrality.
c. Importance of work.
d. Work motivation.

AACSB Reflective thinking, Motivation concepts

PTS: 1

2. Conclusions from the World Values Survey and the European Values Survey on functions of work reveal that
a. People across the world assign the same degree of importance to work functions.
b. People across the world rate income as the most important work function.
c. People from different nations do not assign the same magnitude of importance to work functions.
d. Workers saw the most important function of work as providing contact with other people.

AACSB Reflective thinking, Motivation concepts

PTS: 1

3. The importance of work refers to
a. how central work is in an individual’s life.
b. The degree of obligations to work in the life of an individual.
c. The functions that work plays in people’s lives.
d. People’s expectations from work.

AACSB Reflective thinking, Motivation concepts

PTS: 1

4. The concept of work centrality refers to
a. The reasons why people work.
b. The degree of importance of work in the life of an individual.
c. The functions that work plays in people’s lives.
d. Goals that people hope to achieve from working.

AACSB Reflective thinking, Motivation concepts

PTS: 1

5. All the following are true about work centrality EXCEPT
a. High levels of work centrality may lead to dedicated workers and more effective organizations.
b. Higher levels of work centrality closely match average number of hours worked in a country.
c. High levels of work centrality in Japan have been physically and psychologically stressing to middle-aged managers.
d. It represents the function of work in an organizational culture.

AACSB Reflective thinking, Motivation concepts

PTS: 1

6. All of the following statements about work in different countries are true EXCEPT
a. Regardless of country, money has the highest priority for why people work.
b. All people hope to receive certain benefits from work.
c. In some societies, work is very central and absorbs more of a person’s life.
d. People from different countries have different goals for their jobs.

AACSB Reflective thinking, Motivation concepts

PTS: 1

7. Motivation refers to
a. A feeling of deficit or lacking.
b. Goal-directed behaviors to satisfy human needs.
c. The use of work to satisfy many needs.
d. Consequences of a person’s behavior that discourages the behavior.

AACSB Reflective thinking, Motivation concepts

PTS: 1

8. Reactions to a person’s behavior that encourage the person to continue the behavior is
a. Goal-directed behavior.
b. Punishment.
c. Reinforcement.
d. Need.

AACSB Reflective thinking, Motivation concepts

PTS: 1

9. The national context affect motivation through all of the following EXCEPT
a. Cultural values and norms.
b. Social institutions that lead to different types of organizations.
c. The existence of strong organizational cultures.
d. National differences in work centrality.

AACSB Reflective thinking, Motivation concepts

PTS: 1

10. Need theories of motivation are based on the assumption that
a. Motivation is a function of the individual’s beliefs of what happens if one works hard.
b. Motivation is a result of the outcomes of one’s past behaviors.
c. Motivation is a function of why people work.
d. People can satisfy basic human needs in the work setting.

AACSB Reflective thinking, Motivation concepts

PTS: 1

11. All of the following statements about Maslow’s hierarchy of needs are true EXCEPT
a. People have six basic type of needs.
b. People have basic needs that follow a hierarchy from lower level to higher level needs.
c. People first seek to satisfy lower level needs and then move to higher level needs.
d. All of the above are true.

AACSB Reflective thinking, Motivation concepts

PTS: 1

12. All of the following statements are true about hygiene factors EXCEPT
a. Hygiene factors bring people to neutral states of motivation.
b. Hygiene factors include good benefits and good working conditions.
c. Hygiene factors can motivate workers similarly to motivating factors.
d. Hygiene factors include those characteristics that allow people to fulfill lower level needs.

AACSB Reflective thinking, Motivation concepts

PTS: 1

13. Which of the following motivation theory suggests that only some people have the need to win in competitive situation or to exceed excellence standards?
a. Expectancy theory
b. Motivator-hygiene theory
c. Achievement-motivation theory
d. Reinforcement theory

AACSB Reflective thinking, Motivation concepts

PTS: 1

14. When applying need theories in a cross-national context, managers should
a. Ignore the differences in needs between nations and apply the models uniformly.
b. Take into consideration the particular needs that people seek to satisfy in different countries.
c. Give the same magnitude of importance to work needs and apply these motivational tools.
d. Understand work centrality and then provide the same rewards to satisfy needs.

AACSB Reflective thinking, Motivation concepts

PTS: 1

15. Which types of motivation theories explain motivation arising from satisfaction of needs and values combined with an individual’s beliefs regarding the work environment?
a. Needs theories
b. Work centrality theories
c. Process and reinforcement theories
d. Work functions theories

AACSB Reflective thinking, Motivation concepts

PTS: 1

16. Expectancy theory proposes that
a. Motivation is solely determined by the satisfaction of needs.
b. Motivation is determined by the workers’ perceptions of fairness at work.
c. Motivation is a result of an individual’s preferences and belief that his/her effort will lead to some valued results.
d. Motivation is a purely automatic process.

AACSB Reflective thinking, Motivation concepts

PTS: 1

17. In a cross-national context, expectancy theory prescribes that managers
a. Should specify the hierarchy of needs of workers.
b. Identify and eliminate potential sources of inequity at work.
c. Identify valued outcomes and convince workers that their efforts will lead to these outcomes.
d. Punish workers for not achieving organizational goals.

AACSB Reflective thinking, Motivation concepts

PTS: 1

18. The theory based on the idea that employees compare their inputs and outcomes to other persons in the work setting to determine if they are being fairly treated is
a. Needs difference theory.
b. Expectancy theory.
c. Equity theory.
d. Reinforcement theory.

AACSB Reflective thinking, Motivation concepts

PTS: 1

19. All of the following statements are true EXCEPT
a. Equity norms prevail in individualistic cultures.
b. Equality norms prevail over equity norms in collectivist cultures.
c. Equity norms prevail in collectivist cultures.
d. All of the above are true.

AACSB Reflective thinking, Motivation concepts

PTS: 1

20. Principles of goal-setting theory include all of the following EXCEPT
a. Set clear and specific goals.
b. Provide incentives to achieve goals.
c. Give feedback on goal attainment.
d. Assign do-your-best types of goals.

AACSB Reflective thinking, Motivation concepts

PTS: 1

21. Setting goals for work groups is recommended in
a. Individualistic cultures.
b. Collectivist cultures.
c. High power distance cultures.
d. Goal setting for groups works equally well in all cultural settings.

AACSB Reflective thinking, Motivation concepts

PTS: 1

22. All of the following are true about the operant-conditioning model EXCEPT
a. Behavior is a function of its consequences.
b. People will stop behaviors that have unpleasant consequences.
c. People will continue behaviors they like irrespective of the nature of consequence.
d. People will continue behaviors that have pleasant consequences.

AACSB Reflective thinking, Motivation concepts

PTS: 1

23. Which motivation theory proposes that if a pleasurable consequence follows a behavior, then the behavior will continue and if an unpleasant consequence follows a behavior, the behavior will stop?
a. Needs theory
b. Expectance theory
c. Equity theory
d. Reinforcement theory

AACSB Reflective thinking, Motivation concepts

PTS: 1

24. Applying reinforcement at a cross-national level is challenging because
a. It is hard to identify the organizational rewards that can be used as reinforcers.
b. It is hard to understand how work values influence potential rewards.
c. It is hard to know which type of reinforcer is more applicable in different cultures.
d. All of the above

AACSB Reflective thinking, Motivation concepts

PTS: 1

25. All of the following statements about the US job characteristics model are true EXCEPT
a. The model suggests that work is more motivating when managers enrich core job characteristics.
b. The model suggests that enriching job characteristics is motivating for all types of individuals.
c. The model assumes that one critical state for motivation to occur is if the worker believes his/her work to be meaningful.
d. The model assumes that only some people will respond well to enriched jobs.

AACSB Reflective thinking, Motivation concepts

PTS: 1

26. The sociotechnical systems approach to job design
a. Gives priority to the technical efficiency of workers.
b. Attempts to mesh both modern technology and social needs of workers.
c. Has no major differences with the US job characteristics model.
d. Focuses on designing each worker’s task for job enrichment.

AACSB Reflective thinking, Motivation concepts

PTS: 1

27. A crucial difference between the US job characteristics model and the European STS approach is
a. The US model focuses on core job characteristics, while the European model focuses on tasks.
b. The US model focuses on individuals, while the European model focuses on work teams.
c. The US model focuses on work teams, while the European model focuses on individuals.
d. There are no differences between the US job characteristics model and the European STS approach.

AACSB Reflective thinking, Motivation concepts

PTS: 1

28. Social loafing
a. Is the social process of sharing.
b. Occurs when people prefer to work in groups.
c. Means that everyone’s work is easier in groups.
d. Occurs when people put out less effort when working in groups.

AACSB Reflective thinking, Motivation concepts

PTS: 1

29. Some of the detrimental effects of social loafing can be reduced if
a. Individuals are held responsible for performance.
b. Groups are held responsible for performance.
c. The group leader is held responsible for performance.
d. None of the above

AACSB Reflective thinking, Motivation concepts

PTS: 1

30. In individualistic cultures, performance drops off with the use of teamwork because
a. Of social loafing.
b. Workers believe that the group will make up any slack in their personal efforts.
c. Workers do not feel responsible for group outcomes.
d. All of the above

AACSB Reflective thinking, Motivation concepts

PTS: 1

31. A manager gives bonuses to high performing foreign employees hoping that they will continue performing at a high level. This manager is using which motivational principle?
a. Extinction
b. Goal-directed
c. Reinforcement
d. Punishment

AACSB Analytic, Motivation concepts

PTS: 1

32. An expatriate finds that one of his subordinates regularly jokes about a minority group in the country. She decides to ignore the jokes hoping that the subordinate will eventually stop such jokes. Which aspect of reinforcement theory is she using?
a. Avoidance
b. Extinction
c. Punishment
d. Operant conditioning

AACSB Analytic, Motivation concepts

PTS: 1

33. Hygiene factors include
a. The size of desks and color of offices.
b. Interesting tasks in the job.
c. Challenges in the job.
d. All of the above

AACSB Reflective thinking, Motivation concepts

PTS: 1

34. Which of the following is NOT one of the reasons discussed to explain why people engage in social loafing in individualistic cultures?
a. When working in groups, people in individualistic cultures often feel less pressure to work and less responsible for work outcomes.
b. Workers in groups in individualistic cultures often believe that the group will make up any slack in their personal efforts.
c. People in individualistic cultures often give priority to their own work over the group.
d. All of the above are reasons to explain social loafing in individualistic cultures.

AACSB Reflective thinking, Motivation concepts

PTS: 1

35. Which of the following theories is NOT considered as one of the needs theories?
a. Equity theory
b. Achievement motivation theory
c. Maslow’s hierarchy of needs
d. Motivator-hygiene theory

AACSB Reflective thinking, Motivation concepts

PTS: 1

36. The need to maximize personal achievement refers to which type of need in Maslow’s hierarchy of needs
a. Physiological needs.
b. Self esteem needs.
c. Self actualization needs.
d. Security needs.

AACSB Reflective thinking, Motivation concepts

PTS: 1

37. Esteem needs refer to
a. Basic survival needs such as food, water and shelter.
b. Safety and avoidance of pain and life-threatening situations.
c. Being loved and having friendship.
d. Focus on respect and feelings of self-worth.

AACSB Reflective thinking, Motivation concepts

PTS: 1

38. According to the text, those who are underrewarded are likely to
a. Return their rewards.
b. Reduce their inputs.
c. Increase their inputs.
d. None of the above

AACSB Reflective thinking, Motivation concepts

PTS: 1

39. According to equity theory, equity conscious people are most likely those
a. Who behave consistently with equity theory.
b. Who are more likely to tolerate situations where they are underrewarded.
c. Are more likely to experience satisfaction if underrewarded.
d. None of the above

AACSB Analytic, Motivation concepts

PTS: 1

40. Which of the following refers to the aspect of a job where the person can complete a whole piece of work from beginning to end?
a. Feedback
b. Task significance
c. Task variety
d. Task identity

AACSB Reflective thinking, Motivation concepts

PTS: 1

ESSAY

1. Why is it necessary to understand the meaning of work in different cultures before planning work motivation strategies?

2. Compare and contrast the need theories of motivation to the process theories of motivation. How can these theories be applied in multinational management?

3. Describe Vroom’s Expectancy Theory. What are some implications for multinational management?

4. What are the three major principles of allocating rewards? Discuss how each principle works. Why is equality preferred in more collectivistic cultures while individualistic cultures favor equity?

5. Discuss some of the implications of the operant-conditioning model for multinational management.

6. Explain why performance drops off when teams are used in individualistic cultures. Explain the significance of social loafing in the process. How can social loafing be reduced?

7. Compare and contrast the Job Diagnostics Design Approach to the European Sociotechnical Systems Approach to job design.

8. Discuss equity theory. What are the implications for multinationals?

Chapter 15 Leadership and Management Behavior in Multinational Companies

MULTIPLE CHOICE

1. All the following statements are true about leadership EXCEPT
a. Leadership is influencing group members to achieve organizational goals.
b. Excellent leaders motivate their employees to achieve more than minimal organizational requirements.
c. Companies can achieve success with or without good leaders.
d. Leading in a multinational company is an even greater challenge than in a domestic one.

AACSB Reflective thinking, Leadership principles

PTS: 1

2. Some of the characteristics of the new breed of global leaders include
a. The skills and abilities to interact with and manage people from the diverse cultural backgrounds that populate their multinational companies.
b. Sufficiently flexible to operate comfortably in pluralistic cultural environments.
c. Knows at least one foreign language and understands the complexities of interaction with people from other cultures.
d. All of the above

AACSB Reflective thinking, Leadership principles

PTS: 1

3. Trait models of leadership
a. Evolved from the debate regarding whether leaders are born or made.
b. Focuses on the behaviors leaders use to manage their employees.
c. Assumes that different styles and different leaders are more appropriate for different situations.
d. Includes Maslow’s Hierarchy of Needs theory.

AACSB Reflective thinking, Leadership principles

PTS: 1

4. The idea that leaders are born with unique characteristics that make them different form ordinary people is the
a. Task centered leadership theory.
b. A contingency theory of leadership.
c. The great-person theory.
d. The leadership behaviors theory.

AACSB Reflective thinking, Leadership principles

PTS: 1

5. All of the following are true about trait leadership theories EXCEPT
a. Using trait theory, one can conclude that successful business, political, religious, and military leaders were born with unique characteristics that made them quite different from ordinary people.
b. Leadership theorists identified an exact list of leadership traits.
c. The great person theory of leadership assumes that leaders are born.
d. All of the above are true.

AACSB Reflective thinking, Leadership principles

PTS: 1

6. The type of leadership that includes behaviors that focus on completing tasks by initiating structure is known as
a. Task-centered leadership.
b. Person-centered leadership.
c. Autocratic leadership.
d. Democratic leadership.

AACSB Reflective thinking, Leadership principles

PTS: 1

7. Person-centered leaders
a. Focus on completing tasks by initiating structure.
b. Give specific directions to subordinates so that the subordinates can feel comfortable completing tasks.
c. Show a concern for subordinates’ feelings and taking subordinates’ ideas into account.
d. Make all major decisions themselves.

AACSB Reflective thinking, Leadership principles

PTS: 1

8. Leaders who do not allow employees to share in the decision- making are
a. Democratic leaders.
b. Autocratic leaders.
c. Participative leaders.
d. Consultative leaders.

AACSB Reflective thinking, Leadership principles

PTS: 1

9. The leadership style that falls midway between autocratic and democratic styles is the
a. Person-centered leader.
b. Subordinate-oriented leader.
c. Consultative leader.
d. Task-oriented leader.

AACSB Reflective thinking, Leadership principles

PTS: 1

10. All of the following are true about the Japanese Performance-Maintenance (PM) theory of leadership EXCEPT
a. The Performance-Maintenance (PM) theory of leadership represents a Japanese perspective on leadership.
b. PM theory has two dimensions, the performance function (P) and the maintenance function (M), which are the basic aspects of the theory.
c. The maintenance function (M) is similar to task-centered leadership.
d. PM theory suggests that groups perform best when both P and M are present.

AACSB Reflective thinking, Leadership principles

PTS: 1

11. Contingency theories
a. Look for leadership behaviors that work in all countries.
b. Focus on which leadership traits or behaviors define excellent in Japan.
c. Assume that different styles and different leaders are more appropriate for different situations.
d. None of the above

AACSB Reflective thinking, Leadership principles

PTS: 1

12. All of the following are true about Fiedler’s Leadership Effectiveness theory EXCEPT
a. Fiedler proposed that managers tend to be either task or person-centered leaders.
b. The success of leadership styles depends on three characteristics of the work situation.
c. Effective leadership occurs when the leadership style matches the situation.
d. Task-centered leadership works best in mixed conditions.

AACSB Reflective thinking, Leadership principles

PTS: 1

13. Path-Goal Theory
a. Is a popular US contingency theory.
b. Identifies four types of leadership styles that a manager might choose depending on the situation.
c. Key contingency or situational factors that determine the choice of the best leadership styles are: the nature of the subordinates and the characteristics of the subordinates’ tasks.
d. All of the above

AACSB Reflective thinking, Leadership principles

PTS: 1

14. Which of the following is NOT one of the leadership styles of the path-goal theory of leadership?
a. Directive style
b. Supportive style
c. Task-oriented style
d. Participative style

AACSB Reflective thinking, Leadership principles

PTS: 1

15. Consulting with subordinates, asking for suggestions, encouraging participation in decision making, represent which leadership style in path-goal theory?
a. Directive style
b. Supportive style
c. Participative style
d. Achievement-oriented style

AACSB Reflective thinking, Leadership principles

PTS: 1

16. Key leadership suggestions based on path-goal theory include all of the following EXCEPT
a. When subordinates have high achievement needs, successful leaders adopt the achievement-oriented style.
b. When subordinates with have high social needs, they respond best to the supportive leadership style.
c. When the subordinate’s job is unstructured, the theory suggests using a supportive style.
d. When the subordinate’s job is highly structured, the theory suggests using instrumentality.

AACSB Reflective thinking, Leadership principles

PTS: 1

17. The National Context Contingency Model of Leadership
a. Assumes that successful leaders need not modify their behaviors or develop particular leadership traits to succeed in different nations.
b. Includes two contingencies: the characteristics of subordinates and the nature of the work setting.
c. Includes factors related to the national culture and social institutions.
d. Only B and C are correct

AACSB Reflective thinking, Leadership principles

PTS: 1

18. All of the following are true about leadership traits in various national settings EXCEPT
a. People from different cultural backgrounds prefer certain traits.
b. In Germany, a desired leadership trait is modesty.
c. In France, leaders are considered different based on social class distinctions between cadres and non-cadres.
d. In the US, assertiveness is valued as a leadership trait.

AACSB Reflective thinking, Leadership principles

PTS: 1

19. U.S. managers’ favored influence tactics include the following EXCEPT
a. Assertiveness.
b. Reasoning.
c. Aggressiveness.
d. Bargaining.

AACSB Reflective thinking, Leadership principles

PTS: 1

20. Building support for ideas and networking and using friendships involve the use of which influence tactics?
a. Assertiveness
b. Friendliness
c. Sanctioning
d. Coalitions

AACSB Reflective thinking, Leadership principles

PTS: 1

21. All of the following statements regarding subordinates expectations in different countries are true EXCEPT
a. In counties with high power distance values, including many of the Latin and Asian countries, subordinates expect autocratic leadership.
b. In low power distance countries, such as Sweden and Norway, subordinates expect the leader to be more like them.
c. Weak masculinity norms often lead to the acceptance of more authoritarian leadership.
d. Strong uncertainty avoidance norms may cause subordinates to expect the leader to provide more detail in directions.

AACSB Reflective thinking, Leadership principles

PTS: 1

22. When managers use rewards or punishment to influence their subordinates, they are engaging in
a. Rewards oriented leadership.
b. Transformational leadership.
c. Transactional leadership.
d. Charismatic leadership.

AACSB Reflective thinking, Leadership principles

PTS: 1

23. Transformational leadership
a. Means that managers use rewards or punishments to influence their subordinates.
b. Is similar to transactional leadership.
c. Succeeds because subordinates respond to the leader with high levels of performance, personal devotion, and excitement.
d. Is one leadership style of Fieldler’s leadership theory.

AACSB Reflective thinking, Leadership principles

PTS: 1

24. Behaviors and characteristics of transformation leaders include the all of the following EXCEPT
a. Articulates a vision.
b. Breaks from the status quo.
c. Uses rewards or punishments to influence subordinates.
d. Provides goals and a plan.

AACSB Reflective thinking, Leadership principles

PTS: 1

25. The attribution approach to leadership
a. Emphasizes the leader’s attributions regarding the causes of subordinates’ behaviors.
b. Focuses on using rewards or punishments to influence the attributes of subordinates.
c. Is similar to the trait approach, except that it focuses on a person’s attributes.
d. Represents one key aspect of transformational leadership.

AACSB Reflective thinking, Leadership principles

PTS: 1

26. Explaining a person’s behavior based on factors outside the person and beyond the person’s control (e.g., natural disasters, illness, faulty equipment, etc.) is a/an
a. Internal attribution.
b. External attribution.
c. Fundamental attribution error.
d. Attribution effect.

AACSB Reflective thinking, Leadership principles

PTS: 1

27. According to the text, if a leader perceives the cause of a subordinate’s behavior based on an internal attribution, then most leaders will
a. Tend to correct or reward the worker.
b. Modify the work environment.
c. Do nothing.
d. Use transformational leadership.

AACSB Reflective thinking, Leadership principles

PTS: 1

28. The fundamental attribution error
a. Is a tendency for managers to believe that most people act because of internal motivations.
b. Is a tendency for managers to believe more often that people behave in certain ways because of outside factors, such as poor working conditions.
c. Occurs most often in Asian cultures.
d. Concerns primarily external attributions.

AACSB Reflective thinking, Leadership principles

PTS: 1

29. According to the text, all of the following statements about leadership styles in different cultures are true EXCEPT
a. In high power distance countries, leaders generally behave more autocratically.
b. In high uncertainty avoidance national cultures both leaders and subordinates often feel more comfortable when the leader initiates structure.
c. In low uncertainty avoidance countries leaders tell subordinates exactly what to do.
d. In high power distance countries, person-centered leadership works best in large groups.

AACSB Reflective thinking, Leadership principles

PTS: 1

30. The recommended leadership style for a country low on power distance and low on uncertainty avoidance is
a. The democrat – supportive, participative, and achievement.
b. The master – directive and supportive.
c. The professional- directive, supportive, and participative.
d. The boss- directive.

AACSB Reflective thinking, Leadership principles

PTS: 1

31. Which of the following statements is NOT TRUE regarding leadership in various cultures?
a. In countries with high power distance, subordinates expect leaders to be more like them.
b. Strong masculinity norms often lead to the acceptance of more authoritarian leaders.
c. In countries with high uncertainty avoidance, subordinates expect detail and directions to perform their tasks.
d. All of the above are true.

AACSB Reflective thinking, Leadership principles

PTS: 1

32. A multinational manager discovers that his leadership style is more effective when he displays visible sign of status (e.g chauffeur driven cars) and he behaves as an authoritarian leader. The manager is most likely leading in which of the following cultures?
a. A feminine culture
b. A high uncertainty avoidance culture
c. A low power distance culture
d. A high power distance culture

AACSB Analytic, Leadership principles

PTS: 1

33. Which of the following is NOT one of the behaviors/characteristics of transformational leader as discussed in the text?
a. Takes risk
b. Demonstrates high ethical and moral standards
c. Articulates a vision
d. All of the above applies to transformational leaders

AACSB Reflective thinking, Leadership principles

PTS: 1

34. An expatriate finds that if she gives specific directions to her subordinates, productivity is much higher. Which leader behavior is she displaying?
a. Consultative leader behavior
b. Democratic leader behavior
c. Task-centered leader behavior
d. Person-centered leader behavior

AACSB Reflective thinking, Leadership principles

PTS: 1

35. According to the Global Leadership and Organizational Behavior Effectiveness (GLOBE) study, which of the following leadership styles represents the leader who is modest and has a compassionate orientation?
a. Team-oriented leader
b. Self-protective leader
c. Participative leader
d. None of the above

AACSB Reflective thinking, Leadership principles

PTS: 1

36. Which statement regarding fundamental attribution errors is true?
a. In Western nations, people tend to make external attributions.
b. In Eastern nations, people tend to make internal attributions.
c. In Western nations, people tend to make internal attributions.
d. In Eastern nations, people tend to make external attributions.

AACSB Reflective thinking, Leadership principles

PTS: 1

37. According to the Global Leadership and Organizational Behavior (GLOBE) studies, which of the following leadership style characterizes a leader who is self-centered, status conscious and procedural?
a. The autonomous leader
b. The participative leader
c. The humane style leader
d. The self-protective leader

AACSB Reflective thinking, Leadership principles

PTS: 1

38. Which of the following statements regarding the autonomous leader is FALSE according to the Global Leadership and Organizational Behavior (GLOBE) studies?
a. Autonomous leaders are independent, individualistic and unique.
b. Autonomous leaders act in self-interested manner.
c. Germanic and Eastern European countries have the highest scores on autonomous leadership.
d. Autonomous leadership is seen as very effective in most cultures.

AACSB Reflective thinking, Leadership principles

PTS: 1

39. Which of the following examples characterize the use of assertiveness as an influence tactics?
a. Example behaviors include being friendly and humble.
b. Example behaviors include using logical arguments.
c. Example behaviors include using threats and punishments.
d. Example behaviors include being forceful and directive.

AACSB Reflective thinking, Leadership principles

PTS: 1

40. The recommended leadership style for a country high on power distance and low on uncertainty avoidance is
a. The boss – directive.
b. The professional – directive, supportive and participative.
c. The master – directive and supportive.
d. The democrat – supportive and participative.

AACSB Reflective thinking, Leadership principles

PTS: 1

ESSAY

1. Define leadership. How might people from different national cultures define leadership? What are the implications of these definitions for multinational leaders working in these countries?

2. Pick a national culture with which you are familiar. For this culture, identify leadership traits and behaviors that would be detrimental to organizational effectiveness.

3. From the perspective of the subordinates, discuss why culturally inappropriate leadership behaviors might be de-motivating.

4. Why do multinational managers need to understand subordinate expectations in order to lead effectively? Which leadership style works the best in countries with high power distance? Why?

5. Discuss five preferred influence tactics that U.S. managers favor. Discuss how these tactics might work in other countries.

6. Discuss whether transformational leadership qualities are culture free. That is, are transformational leaders similar regardless of cultural background or are there different types of transformational leaders for each cultural group?

7. What is attribution theory? How can leaders use attribution theory to help them be good leaders?

8. What is the fundamental attribution error? What are some implications for leadership in multinationals?

9. Compare and contrast U.S. and Japanese perspectives on leadership behavior.

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Chapter 1 Through 12
Chapter 1

WHAT IS RESEARCH?

Multiple-Choice Questions

*1. To be considered true research, a project must:
a. gather together a body of existing information and communicate it in a clear and
concise way.
b. uncover obscure or esoteric information and bring it to the consideration of the broader research community.
c. gather and interpret information in a systematic fashion so as to increase understanding of some phenomenon.
d. produce definitive conclusions regarding the subject of study.

**2. Which of the following examples illustrates research the way it is defined in your textbook?
a. Sally is writing a paper about the effects of the Harry Potter books on the reading habits of fourth graders in the United States and United Kingdom. She goes to a research library to find information to include in her paper.
b. Ian wants to know why the population of songbirds has declined in recent years in the Sutton Wilderness Area. He carefully collects soil and water samples, systematically surveys the entire area for predators, and then sits down to make sense of his findings.
c. Leonard is starting a woodworking business and is not sure how to calculate the cost of his labor so he can be both profitable and fair to the customers. He asks several established business owners how they calculate labor changes.
d. Bill is doing a report on the sonnets of Shakespeare. He carefully reads a number of sonnets and then carefully reads scholarly reviews of those same sonnets written by various Shakespeare scholars. He synthesizes all of this information in his report.

*3. Which of the following is defined as an organized body of concepts and principles intended to explain a particular phenomenon?
a. Theory
b. Inference
c. Hypothesis
d. Interpretation

*4. Which of the following is defined as a reasonable guess, or a logical supposition, for explaining the phenomenon under investigation?
a. Theory
b. Inference
c. Hypothesis
d. Interpretation
*5. The process of formal research begins with the identification of:
a. research hypotheses.
b. a feasible research plan.
c. available participants.
d. a research problem.

*6. The purpose of formal research is to:
a. prove or disprove the study hypotheses.
b. support or fail to support the study hypotheses.
c. identify alternative hypotheses.
d. move beyond the need for hypotheses.

*7. Assumptions come into play:
a. in regard to nearly every aspect of every research study.
b. in qualitative research but not in quantitative research.
c. when research is not well thought out.
d. rarely, if ever.

*8. Well-designed research manages to minimize or avoid:
a. assumptions.
b. predictions.
c. theory.
d. bias.

*9. Researchers ______ their phenomenon of interest on the basis of data analysis.
a. make inferences about
b. know facts about
c. define
d. identify

*10. A primary function of the methodology is to:
a. guide and control the acquisition of data.
b. extract meaning from the data that have been gathered.
c. both a and b
d. neither a nor b

*11. Three of the following come into play as the researcher analyzes the data. Which one does NOT?
a. The study hypothesis/hypotheses
b. Preferences for certain outcomes
c. The logical reasoning process
d. Assumptions

*12. A well-designed and well-conducted study:
a. answers questions of importance in the field.
b. raises questions of importance to the field.
c. answers some questions and raises other questions.

*13. Reading the professional literature in the field of interest:
a. will enhance an individual’s ability to design and conduct high-quality research.
b. will stifle creativity and constrain the individual to the status quo.
c. will make little difference to the quality and impact of the individual’s work.
d. is necessary only for the leaders in the field.

*14. One indication that a piece of information is of high quality is that the information:
a. is found on the Internet.
b. is found in a juried (or refereed) research report.
c. resulted from a project that received corporate funding.
d. is the firsthand account of a personal experience.

Essay Questions

15. Your chapter states: “Research is, by its nature, cyclical or, more exactly, helical.” Explain why “cyclical” is an appropriate description of the research process. Then explain why “helical” is a better description.

16. Describe an example of the word research being used inappropriately. Be clear about how your example deviates from the definition of research offered in the chapter.

17. Graduate professors like to insist that the completion of thesis or dissertation research is not merely an “academic exercise” or final hurdle to obtaining the desired degree. Explain at least one personal benefit that the individual derives from completing a high- quality thesis or dissertation. Then explain at least one societal benefit that follows from the individual’s completion of a high-quality thesis or dissertation.

18. In the most rigorous tests of hypotheses, the researcher sets out to fail to support the hypothesis. Why is the attempt to fail to support a more rigorous test of the hypothesis than an attempt to support it?

Chapter 2

TOOLS OF RESEARCH

Multiple-Choice Questions

*1. A ______ is a specific mechanism or strategy the researcher uses to collect,
manipulate, or interpret data.
a. research tool
b. research methodology
c. statistical test
d. theory

*2. Research methodology refers to:
a. the general approach the researcher takes to conducting a research project.
b. a specific device the researcher uses to collect data.
c. the specific theoretical basis of the research project.
d. the statistical tests to be employed in a research project.

**3. Sam wants to find high-quality research reports related to attribution theory that have been published in professional journals. Sam’s best approach would be to:
a. consult the library catalog.
b. consult an online or electronic database.
c. search the World Wide Web.
d. browse the shelves in the library.

**4. Sonya is a college freshman who has just been assigned her first research paper, and she doesn’t know how to get started finding information. Sonya should:
a. search the World Wide Web.
b. consult an online or electronic database.
c. consult a reference librarian.
d. browse the shelves in the library.

*5. ______ allows a researcher to receive news in an area of special interest and discuss that news with others.
a. A search engine
b. E-mail
c. A list server
d. A Web browser

*6. ______ allows researchers to personally correspond practically instantly with other users around the world.
a. A search engine
b. E-mail
c. A list server
d. A Web browser

**7. John wants to begin using e-mail. Which of the following steps is NOT necessary for John to get started as an email user?
a. Request an e-mail account
b. Obtain necessary software from the e-mail provider and load it onto a computer
c. Learn to use a Web browser to explore the Internet
d. Learn how to access and use the e-mail provider’s services

*8. Three of the following statements about measurement in the research setting are accurate. Which one is NOT accurate?
a. The purpose of measurement is to systematically limit the data in a way that makes it quantifiable.
b. Measurement is applied by researchers only to insubstantial phenomena.
c. Measurement is a tool that aids researchers in interpreting their observations.
d. Systematic measurement assists researchers in obtaining objectivity in their researcher.

*9. An ordinal scale of measurement:
a. assigns a name to a category.
b. is tied to an absolute zero.
c. incorporates equal units of measurement.
d. communicates greater than and less than relationships.

*10. An interval level of measurement:
a. assigns a name to a category.
b. communicates rank-order information.
c. incorporates equal units of measurement.
d. is tied to an absolute zero.

*11. A ratio scale of measurement:
a. assigns a name to a category.
b. communicates rank-order information.
c. is especially appropriate for opinion data.
d. is tied to an absolute zero.

**12. The main difference between an interval and a ratio scale is that only one of them:
a. includes an absolute zero.
b. uses equal units of measurement.
c. supports the use of statistical analyses.
d. is used in research with human subjects.
**13. Professor Harris is constructing a demographic questionnaire for use in a research project. One question asks students to report how politically conservative they are. It includes a 7-point scale where 1 is “not at all conservative” and 7 is “extremely conservative.” This is an example of a/an:
a. nominal scale.
b. ordinal scale.
c. interval scale.
d. ratio scale.

**14. Professor Harris is constructing a demographic questionnaire for use in a research project. One question asks students to report their highest level of education by choosing from these options: “some high school,” “completed high school,” “some college,” or “completed 4-year college degree.” This is an example of a/an:
a. nominal scale.
b. ordinal scale.
c. interval scale.
d. ratio scale.

**15. Professor Harris is constructing a demographic questionnaire for use in a research project. One question asks students to report their age in years. This is an example of a/an:
a. nominal scale.
b. ordinal scale.
c. interval scale.
d. ratio scale.

**16. Professor Harris is constructing a demographic questionnaire for use in a research project. One question asks students to report whether they are currently living in an “urban,” “suburban,” or “rural” setting. This is an example of a/an:
a. nominal scale.
b. ordinal scale.
c. interval scale.
d. ratio scale.

*17. ______ refers to whether a measurement tool actually measures what it is intended to measure.
a. Validity
b. Reliability
c. Accountability
d. Robustness

*18. ______ refers to how consistently a measurement tool will yield the same result when the phenomenon under investigation does not change.
a. Validity
b. Reliability
c. Replicability
d. Dependability

**19. Kade has spent the past month carefully observing a group of third graders on the playground during recess, taking note of how the students interact with one another. On the basis of these observations, Kade is drawing conclusions about the interaction styles of boys and girls. This is an example of:
a. hypothetical logic.
b. deductive logic.
c. inductive logic.
d. propositional logic.

**20. Kimberly knows that teenagers often do not make good decisions in areas where they have little knowledge. She also knows that most teens have little knowledge about human sexuality. Therefore, Kimberly believes that teens are likely to make poor decisions about sexual activity. This is an example of:
a. inductive logic.
b. propositional logic.
c. transductive logic.
d. deductive logic.

Essay Questions

21. In your opinion, what is the one greatest advantage to society of the information revolution? What is the one greatest disadvantage? Support your answer.

22. Near the end of Chapter 2 the authors of your textbook include a relatively lengthy section on writing the research report. Why is it important that research results are carefully written up and made available to the scientific community?

23. Do recent technological advances (e.g., the World Wide Web, electronic databases) assure that future research will be of higher quality, or of greater utility, than past research? Support your answer.

Chapter 3

THE PROBLEM: THE HEART OF THE RESEARCH PROCESS

Multiple-Choice Questions

*1. Research problems, as defined in your textbook:
a. are identified by experts in the field, and not typically knowable by novices.
b. clearly and completely specify important questions that are currently unanswered in a particular field of inquiry.
c. are broad, general statements about the incomplete state of understanding in a particular field of inquiry.
d. can be addressed by compiling and synthesizing existing information in a way that sheds light on the issue of interest.

*2. Basic research is:
a. research intended to enhance basic knowledge about the physical, biological, psychological, or social world or to shed light on historical, cultural, or aesthetic phenomena.
b. large scale research performed under contract with a governmental agency such as the National Science Foundation (NSF), National Institute of Mental Health (NIMH), etc.
c. informal research conducted locally by a small staff with a small budget, the purpose of which is to pave the way for larger research initiatives.
d. research intended to address issues that have immediate relevance to current practices, procedures, and policies.

*3. Applied research is:
a. research intended to enhance basic knowledge about the physical, biological, psychological, or social world or to shed light on historical, cultural, or aesthetic phenomena.
b. large-scale research performed under contract with a governmental agency such as the National Science Foundation (NSF), National Institute of Mental Health (NIMH), etc.
c. informal research conducted by a small staff with a small budget, the purpose of which is to shed light on a problem of local interest.
d. research intended to address issues that have immediate relevance to current practices, procedures, and policies.

**4. Which of the following represents a well-written basic research problem?
a. “Which general education course is more interesting, U.S. History or World Music?”
b. “How do business teams of six or fewer members compare to teams of more than six members in terms of productivity?”
c. “How does the organization of mathematical information in long-term memory differ between 3-year-olds and 13-year-olds?”
d. “What is the ratio of native-born students to international students on the campuses of major U.S. state universities?”

**5. Which of the following represents a well-written applied research problem?
a. “How does the organization of mathematical information in long-term memory differ between 3-year-olds and 13-year-olds?”
b. “How do business teams of six or fewer members compare to teams of more than six members in terms of productivity?”
c. “Which general education course is more interesting, U.S. History or World Music?”
d. “What is the ratio of native-born students to international students on the campuses of major U.S. state universities?”

**6. Three of the following questions lend themselves well to formal research. Which one does NOT?
a. “How does the organization of mathematical information in long-term memory differ between 3-year-olds and 13-year-olds?”
b. “How do business teams of six or fewer members compare to teams of more than six members in terms of productivity?”
c. “Does message medium, print versus television, impact the effectiveness of public service health messages?”
d. “Which general education course is more interesting, U.S. History or World Music?”

*7. Three of the following are characteristics of a well-written research problem. Which one is NOT?
a. The problem statement includes jargon associated with the field.
b. The problem statement clearly delimits the object(s) of study.
c. The problem statement identifies the important factors to be investigated in the study.
d. The problem statement explicitly identifies assumptions.

*8. A common weakness of research problems is that they:
a. delimit the object(s) of study.
b. constrain the variables to be investigated.
c. implicitly rest on common assumptions.
d. incorporate a number of subproblems.

**9. “What proportion of workers hired by selected factories in the state of Oklahoma between 1995 and 2000 held four-year college degrees?”
The chief weakness of this research problem is that:
a. it lacks clarity or completeness in the problem statement.
b. it implies only description of the data, not interpretation.
c. it does not lead to the creation/discovery of new information.
d. studying the question as stated is not feasible.

**10. “What do underemployed U.S. workers (i.e., those workers who are employed, but not in positions for which they have specialized training or expertise) identify as the primary reason for their inability to find suitable employment?”
The chief weakness of this research problem is that:
a. it lacks clarity or completeness in the problem statement.
b. it does not lead to the creation/discovery of new information.
c. it implies only description of the data, not interpretation.
d. studying the question as stated is not feasible.

**11. “What is the correlation between an index of civic-mindedness and years of involvement in local organizations and charities among members of city councils of selected midsized cities in the northeastern United States?”
The chief weakness of this research problem is that:
a. it implies only description of the data, not interpretation.
b. it does not lead to the creation/discovery of new information.
c. it lacks clarity or completeness in the problem statement.
d. studying the question as stated is not feasible.

**12. “Among social workers in selected U.S. urban areas, are the personality characteristics of Need for Structure or In-Group Preference related to prejudicial social judgments about African Americans, Latino Americans, or Asian Americans?”
Which of the following is a well-stated subproblem that follows from this research problem?
a. Which group is more discriminated against by the public at large in each of the selected areas: African Americans, Latino Americans, or Asian Americans?
b. What is the most valid existing measure of In-Group Preference?
c. What is the relationship between an index of Need for Structure and an index of prejudice targeting attitudes about Asian Americans among the selected social workers?
d. Which analytic technique is best suited to addressing the research problem, multiple regression or path analysis?

*13. In regard to research questions and hypotheses, a high-quality research study will:
a. articulate only research questions, not hypotheses, so as not to constrain the possible findings.
b. articulate only hypotheses, not research questions, in order to preserve the scientific rigor of the investigation.
c. focus only on those questions that can support the correctness of current hypotheses or theoretical positions.
d. articulate either research questions or hypotheses depending on the nature of the study.

**14. Which of the following represents a null hypothesis?
a. Class A high school basketball teams who employ a sports psychologist will have a higher proportion of wins over the course of the season than comparable teams who do not employ a sports psychologist.
b. There will be no difference in rate of skill improvement between college gymnasts who practice meditation and those who do not.
c. Does incorporating relaxation exercises into the daily practice routine of college vocal majors enhance their performance confidence?
d. None of the above

**15. Which of the following represents a research hypothesis?
a. Class A high school basketball teams who employ a sports psychologist will have a higher proportion of wins over the course of the season than comparable teams who do not employ a sports psychologist.
b. There will be no difference in rate of skill improvement between college gymnasts who practice meditation and those who do not.
c. Does incorporating relaxation exercises into the daily practice routine of college vocal majors enhance their performance confidence?
d. None of the above

*16. The recommended order of tasks in preparing a research proposal is:
a. state the problem and subproblems, note the assumptions, note the delimitations, define the terms, note the research questions/hypotheses.
b. state the problem and subproblems, note the delimitations, note the research questions/hypotheses, note the assumptions, define the terms.
c. state the problem and subproblems, note the research questions/hypotheses, note the assumptions, define the terms, note the delimitations.
d. state the problem and subproblems, note the research questions/hypotheses, note the delimitations, define the terms, note the assumptions.

*17. Three of the following comprise the setting of the research problem. Which one does NOT?
a. A clear description of all measurement tools to be used in the research project
b. A clear statement of what the researcher will and will not do in the course of the study
c. A clear statement of the assumptions on which the research problem rests
d. A clear definition of all terms related to the research problem that might be misunderstood by a reader

Essay Questions

18. Why is it important that the researcher articulate, as clearly as possible, all assumptions that affect the research problem?

19. Your textbook authors recommend explicitly defining any term that might be misunderstood by someone reading the research proposal. If the research proposal is being written chiefly for use and review by researchers, why is such a step necessary?

20. Daphne has been a member of a research team studying interpersonal aggression among preschoolers for more than a year. In that time, her team has repeatedly employed a consistent set of techniques and procedures to study preschoolers as they interact in a number of settings. The procedures revolve around volunteer mothers bringing their children to the university child development lab for a “play session” that is the basis of the formal observations. Settings they have studied so far include: the university pre-school, affluent local day-care centers, and a pre-kindergarten program being offered in the neighborhood school district. All of these settings were fairly racially homogenous.

Daphne has just learned that a friend of a friend can help her gain research access, in the near future, to preschoolers in an unusually racially diverse though impoverished preschool setting. Daphne decides she has no time to prepare a formal research proposal before embarking on the study. “Besides,” she thinks, “this study should go just like all the others we’ve done.”

Is Daphne leaving herself open to problems in this situation, or is she safe moving ahead with no formal proposal, given how familiar she is with the study techniques and procedures?

Chapter 4

REVIEW OF THE RELATED LITERATURE

Multiple-Choice Questions

*1. Generally speaking, the best time to begin the literature review associated with a specific research project is:
a. after the research problem has been clearly articulated.
b. after the data have been collected, but before they are analyzed.
c. based on personal preference; there is no single best time.
d. before or during the formulation of the research problem.

*2. If you want to find information about books available in your local library, ______ will probably be your best resource.
a. the library catalog
b. government publications
c. an online database
d. the World Wide Web

*3. If you want to conduct a keyword or author search of research reports published in professional journals, ______ will probably be your best resource.
a. the library catalog
b. government publications
c. an online database
d. the World Wide Web

*4. If you want to find statistics on health care spending broken down by state, ______ will probably be your best resource.
a. the library catalog
b. government publications
c. an online database
d. the reference lists of important papers in your area

**5. If an important reference you want to include in your literature review is checked out to another library patron, you might:
a. obtain it through interlibrary loan.
b. obtain it by asking the library to recall the reference.
c. obtain it through an online document delivery service.
d. decide to make do without it.

**6. If an important recent research article that you want to include in your literature review is not owned by your library, you might:
a. cite it anyway for the benefit of the reader.
b. obtain it by asking the library to recall the reference.
c. obtain it through an online document delivery service.
d. decide to make do without it.

**7. If an important book that you want to include in your literature review is not owned by your library, your best move would probably be to:
a. obtain it through interlibrary loan.
b. obtain it by asking the library to recall the reference.
c. obtain it through an online document delivery service.
d. cite it anyway for the benefit of the reader.

*8. ______ is an example of a search engine.
a. Altavista
b. Books in Print
c. ERIC (Educational Resources Information Center)
d. Humanities Index

*9. ______ is an example of an electronic database.
a. Altavista
b. Books in Print
c. ERIC (Educational Resources Information Center)
d. Humanities Index

**10. Jane wants to search for information about the variety of attention disorders that are seen in childhood. Which of the following sets of keywords would best get Jane started on an effective and efficient search?
a. “attention disorders”
b. “ADHD,” “ADD,” and “children”
c. “disorders” and “children”
d. “attention disorders” and “children”

*11. If a researcher has completed a thorough search of the World Wide Web:
a. the literature search can be concluded.
b. it may also be fruitful to search an electronic database.
c. it may also be fruitful to search the Internet.
d. he/she will find largely redundant information on an electronic database.

*12. The main purpose of the review of the literature is to:
a. acknowledge the work of others by listing their findings prior to proposing your own project.
b. show how your study is superior to other work done in the area.
c. publicly demonstrate your mastery of the research literature in your area.
d. show how your study is related to, and extends, other work in the area.

*13. A well-structured literature review:
a. contains highly detailed descriptions of each work chosen for inclusion in the review.
b. begins with those studies most closely related to the research problem, then opens up to a broader perspective.
c. begins with broad/general information, then narrows the focus to those studies most closely related to the research problem.
d. contains general summaries of each work chosen for inclusion in the review.

*14. The review of the literature can be curtailed when:
a. you are no longer encountering new ideas or information.
b. all of the work done by top researchers in the area has been reviewed.
c. all published work related to a topic has been reviewed.
d. two to four weeks have been devoted to the search.

*15. A well-written literature review:
a. avoids evaluation or critique of the literature reviewed, so as not to bias the opinion of the reader.
b. emphasizes critique and synthesis of the work of others that is related to your own research problem.
c. avoids summarizing the work of others so that details of the original work are not lost in the reviewing process.
d. emphasizes detailed reporting of each piece of research included in the literature review.

*16. Typically, the literature review should:
a. include few or no works more than five years old to avoid having the work become prematurely obsolete.
b. be limited to work coming out of the very best labs and universities in the country.
c. give a broad overview of the area, without getting bogged down in the details of particular studies or theoretical perspectives.
d. emphasize how the studies being reviewed are related to the research problem under consideration.

Essay Questions

17. Describe three benefits of conducting a thorough review of existing literature before writing a research proposal.

18. Kirby is conducting a literature review in preparation for his study of “expectations regarding the sharing of financial and practical responsibilities among married and cohabiting couples in which both partners are between the ages of 20 and 29.” Conducting a keyword search on “couples” and “responsibility,” Kirby has generated a lengthy list of research articles. He decides to shorten the list of potential articles by eliminating all articles that were not published in prestigious research journals. He will include all the remaining articles in his literature review. What is your opinion of Kirby’s approach to selecting articles for the literature review? Explain.

19. You are reading a literature review written by a novice researcher in your field. You notice that the researcher seems to have relied heavily on the World Wide Web in preparing the literature review. Your hunch is supported when you glance at the reference page and find a long list of Internet addresses. What goes through your mind regarding the quality and adequacy of the literature review in this situation?

Chapter 5

PLANNING YOUR RESEARCH PROJECT

Multiple-Choice Questions

*1. A good research plan, according to your textbook, includes:
a. specific procedures and data sources, but does not lock the researcher into an analysis plan.
b. initial procedures and key data sources, but is also open to modification as the project progresses.
c. a specific plan regarding data sources and analyses, although information regarding the specific research sample is best left open.
d. includes specific sampling plan, procedures, data sources, and analysis plan.

*2. The basic format of the quantitative research process includes (in part), in chronological order:
a. pose the question, pose a hypothesis, search the literature, collect the data.
b. clearly state the research question, collect data, review the literature, write up the
findings.
c. review the literature, identify a question, collect data, analyze data.
d. pose a hypothesis, collect data, analyze data, review the literature.

*3. When considering general criteria for high-quality research projects, universality refers to the fact that:
a. the research design allows the researcher to control those factors that are central to the success of the project.
b. another researcher in the same field, using the same procedures under the same circumstances to research the same question, would obtain comparable results.
c. a well-designed research project could be carried out by any competent researcher; it does not rely on a specific individual.
d. the phenomena of interest must be quantified in some systematic way.

*4. When considering general criteria for high-quality research projects, replicability refers to the fact that:
a. the research design allows the researcher to control those factors that are central to the success of the project.
b. another researcher, using the same procedures under the same circumstances to research the same question, would obtain comparable results.
c. a well-designed research project could be carried out by a specific individual conducting research in the same field.
d. the phenomena of interest must be quantified in some systematic way.

*5. Three of the following accurately characterize data. Which one does NOT necessarily characterize data?
a. Data may be elusive.
b. Data can be volatile.
c. Data are ever changing.
d. Data reveal truth.

**6. Charlotte, an anthropologist, has been living in an Incan village for three years. During that time Charlotte has become expert in Incan weaving by observing and imitating the master weavers in the community. For Charlotte, observing weaving constitutes:
a. primary data.
b. secondary data.
c. informal data.
d. nonempirical data.

**7. Charlotte wrote a book about her experience as an anthropologist living in an Incan village for three years and becoming an expert weaver. Her book was widely read by other anthropologists, including Mira, who is an expert in Navaho weaving. For Mira, Charlotte’s book constitutes:
a. hearsay data.
b. secondary data.
c. informal data.
d. primary data.

**8. Sean, a high school wrestler, has agreed to participate in a study of cardiovascular conditioning. He is left somewhat confused when, at the first research session, he is asked to complete a questionnaire about commonly purchased grocery items. Sean’s confusion indicates a lack of ______ regarding the task.
a. construct validity
b. content validity
c. criterion validity
d. face validity

**9. A researcher decides to use a high school sample to test the relationship between her new measure of empathy and a well-established measure of interpersonal sensitivity. She finds that the two instruments are highly related, which supports the ______ of the new instrument.
a. predictive validity
b. content validity
c. criterion validity
d. face validity

**10. A researcher designed a new questionnaire to measure political conservatism. To test out his new instrument, he asks people leaving their polling place on election day to report their degree of political conservatism on a scale of 1 (low) to 10 (high) and then complete his questionnaire. Results show that people who identified themselves as political conservatives also had the highest scores on his questionnaire. This is an indication of the ______ of the new instrument.
a. criterion validity
b. content validity
c. face validity
d. predictive validity

**11. Dick and Jane are studying aggression among preschool children. Separately, they each watch a videotape of four children interacting in a playroom and then rate each child on the level of aggression displayed during the play session. They compare their completed ratings and are pleased to note they are highly similar. This is an example of ______ reliability.
a. interrater
b. internal consistency
c. equivalent form
d. test–retest

**12. Dr. Drive is testing a 10-question measure of achievement motivation. He notes that if his respondents agree with the first question, they tend to also agree with the other nine. Likewise, if his respondents disagree with the first question, they tend of disagree with the other nine. This is an indication of good ______ reliability.
a. interrater
b. internal consistency
c. equivalent form
d. test–retest

**13. Professor Pickle is studying civic-mindedness among senior citizens. She administers a survey of civic mindedness to a senior citizens group in early April, then again in early May. By comparing the two sets of scores, the professor can assess the ______ reliability of her measure of civic-mindedness.
a. interrater
b. internal consistency
c. equivalent form
d. test–retest

*14. Three of the following are associated with quantitative research methods. Which one is NOT?
a. The purpose is to explain or predict.
b. It is assumed that the findings will generalize to similar others.
c. Deductive reasoning is applied to data analysis and interpretation.
d. Statistical analyses are the primary source of findings.

*15. Three of the following are associated with qualitative research methods. Which one is NOT?
a. The purpose is to describe or explain.
b. No data are gathered as part of this approach.
c. Textual data are gathered from a small number of participants.
d. The study is context bound.

*16. Three of the following are techniques for strengthening the internal validity of a study. Which one is NOT?
a. Conduct the study in a controlled laboratory setting.
b. Conduct a double-blind experiment.
c. Make participants fully aware of your expected findings.
d. Build in opportunities for triangulation.

*17. Three of the following are techniques for strengthening the external validity of a study. Which one is NOT?
a. Conduct the study in a real-life setting.
b. Assure that you have a representative sample.
c. Replicate the study under a variety of relevant conditions.
d. Allow flexibility in procedures and instruments.

*18. Three of the following are techniques for strengthening the credibility or dependability of a qualitative study. Which one is NOT?
a. Spend extensive time in the field studying the phenomenon of interest.
b. Acquire rich and detailed descriptions of the phenomena being studied.
c. Exclude participants who have experiences or opinions that are very different from those of others in the study.
d. Ask participants to comment on the conclusions being drawn from the study.

*19. The requirement to keep information provided by research participants confidential applies:
a. to legal minors (children under the age of 18), but not adults.
b. only in cases where it is specifically requested by the participant.
c. to all persons under almost all conditions.
d. only in cases where participants divulge information that is potentially illegal.

*20. The altering of data is allowable:
a. when it is clear that the participant marked a response in error.
b. when the researcher suspects a participant of being careless.
c. when the researcher suspects a participant of misunderstanding the question.
d. under no circumstances.

**21. Dr. Davenport wants to conduct a study of whether high school students learn more efficiently while seated at a desk compared to in an easy chair. Participants will be seniors in local high school history classes. She hopes to publish her findings in the History Teacher Quarterly. Does Dr. Davenport need internal review board (IRB) approval for this study?
a. Yes
b. No
c. Only if the study is accepted for publication

**22. Dr. Davenport wants to conduct a study of whether high school students learn more efficiently while seated at a desk compared to in an easy chair. She knows there is a large research literature regarding similar influences on learning, and she wants to see if the findings hold true with a group of high school history students. Moreover, as a researcher she is uneasy with a lack of structure. You recommend that Dr. Davenport conduct a ______ study.
a. quantitative
b. qualitative

**23. Dr. Greenhill wants to know how it is that some early adolescents come to make a connection between their personal lifestyle and environmental problems, while others don’t. Furthermore, among those who see the connection, why do some become committed to environmentalism while others do not? Dr. Greenwald looks forward to probing the thoughts of young teens on these issues and trying to see the questions and issues through “14-year-old eyes.” You recommend that Dr. Greenhill conduct a ______ study.
a. quantitative
b. qualitative

Essay Questions

24. Professor Parsnip wants to know more about the mental process students go through as they learn about research methods. She also wants to know which instructional methods are most effective for teaching research methods to her students. Assume that Professor Parsnip decides to take a qualitative approach to studying these questions. State a specific research question related to her general research problem that lends itself well to a qualitative research approach. Then explain why your question is better addressed using a qualitative, rather than a quantitative, methodology.

25. Professor Parsnip wants to know more about the mental process students go through as they learn about research methods. She also wants to know which instructional methods are most effective for teaching research methods to her students. Assume that Professor Parsnip decides to take a quantitative approach to studying these questions. State a specific research question related to her general research problem that lends itself well to a quantitative research approach. Then explain why your question is better addressed using a quantitative, rather than a qualitative, methodology.

26. Sometimes students believe that taking the time to prepare a complete and carefully designed research proposal is something to be preached, but not really practiced. Identify at least two different problems related to research design that are commonly encountered when doing research. For each problem, explain how a complete and detailed research proposal would help the researcher avoid the problem.

Chapter 6

WRITING THE RESEARCH PROPOSAL

Multiple-Choice Questions

*1. According to the textbook, the most effective research proposals:
a. are a brief outline of the study you intend to conduct without an excess of detail.
b. justify the study to be conducted by explaining how it will contribute to the professional literature.
c. are detailed and straightforward explanations of the research problem and methodology.
d. include an autobiographical section that explains how the researcher became interested in the research topic.

*2. A proposal for a quantitative study typically includes these elements in this order:
a. a statement of the problem, a review of the literature, an explanation of the means for collecting data, a description of how the study will be conducted.
b. a review of the literature, a statement of the problem, an explanation of the means for collecting data, a description of how the study will be conducted.
c. a review of the literature, a statement of the problem, a description of how the study will be conducted, an explanation of the means for collecting data.
d. a statement of the problem, an explanation of the means for collecting data, a review of the literature, a description of how the study will be conducted.

*3. A proposal for a qualitative study typically includes these elements in this order:
a. an explanation of how the findings will fit with the larger literature, a statement of the purpose of the study and its guiding questions, a management plan, an explanation of theoretical and methodological grounding.
b. a statement of the purpose of the study and its guiding questions, an explanation of how the findings will fit with the larger literature, an explanation of theoretical and methodological grounding, a management plan.
c. a statement of the purpose of the study and its guiding questions, an explanation of theoretical and methodological grounding, an explanation of how the findings will fit with the larger literature, a management plan.
d. a statement of the purpose of the study and its guiding questions, an explanation of theoretical and methodological grounding, a management plan, an explanation of how the findings will fit with the larger literature.

*4. Proposals for ______ studies include a methodology section.
a. qualitative
b. quantitative
c. both quantitative and qualitative
d. neither quantitative or qualitative

*5. In ______ research proposal(s), the review of literature comes late in the document in conjunction with interpretation of data.
a. both quantitative and qualitative
b. neither quantitative or qualitative
c. a quantitative
d. a qualitative

*6. In ______ research proposal(s), a specific research problem is clearly stated at the outset
of the proposal.
a. both quantitative and qualitative
b. neither quantitative or qualitative
c. a quantitative
d. a qualitative

*7. In ______ research proposal(s), a specific plan for how the data will be handled is clearly laid out in the document.
a. both quantitative and qualitative
b. neither quantitative or qualitative
c. a quantitative
d. a qualitative

*8. In ______ research proposal(s), specific hypotheses regarding findings are often stated.
a. both quantitative and qualitative
b. neither quantitative or qualitative
c. a quantitative
d. a qualitative

*9. In regard to the style you will use for headings and subheadings in the research proposal:
a. there are no special formatting requirements unless the document is a thesis or dissertation.
b. all disciplines recognize the major formal styles, so it is a matter of personal choice.
c. the writer is free to show creativity as long as s/he is consistent throughout the document.
d. disciplines often dictate the use of specific formal styles, so you must find out what the expectations are.

*10. Experienced writers of research proposals typically:
a. plan to make revisions to the first draft of the proposal.
b. do not need to make revisions to the first draft of the proposal.
c. make revisions to the first draft of the proposal only if they are requested by a
reviewer.
d. may need to edit the first draft of the proposal for typos, but not content.

*11. When writing the proposal, you should assume that the reader:
a. will know which data analytic techniques are appropriate for your study without a detailed explanation.
b. is an expert in the area you are addressing and will be familiar with common issues, variables, instruments, etc.
c. can discern for him/herself what the importance of the study is.
d. knows nothing about the proposed project, so all the details must be thoroughly explained.

*12. When explaining how the data are to be analyzed and interpreted:
a. it is best to provide only a general plan as things will probably change over the course of the study anyway.
b. it is best to be as detailed as possible so all contingencies related to analysis and interpretation can be anticipated.
c. it is impossible to be highly detailed until one has the actual data in hand.
d. an overly specific plan may bias the analyses or interpretation, impairing the validity of the study.

*13. Research proposals that ______ are commonly judged to be of higher quality than proposals that do not.
a. favor straightforward vocabulary
b. employ complex sentence structure
c. favor a highly esoteric vocabulary
d. rely on the reader to draw inferences

*14. Three of the following are elements in the proposal revision process. Which one is NOT?
a. Reconsider the feasibility of what you are proposing to do.
b. Carefully assess the logic and organization of the information in the document.
c. Avoid breaks of 24 hours or more as the material will get too “cold” in your mind.
d. Seek feedback from knowledgeable others.

**15. The research proposal is best thought of as:
a. a general and flexible outline of how the research problem is to be investigated.
b. “Plan A,” with the expectation that “Plan B” or even “Plan C” will become necessary as the study unfolds.
c. a detailed and firm contract between the researcher and others who are involved in the research project (participants, supervisors, funding agencies, etc.)
d. a document that is written for others (internal review boards, funding agencies) and is of little value to the researcher.

Essay Questions

16. In regard to quantitative research proposals, novice researchers often find it very challenging and tedious to explain in detail how the data will be analyzed and interpreted in their study. Explain why it is essential that the researcher not cut corners in this section of the proposal.

17. Issues of feasibility are central to a well-planned research project. Discuss how feasibility issues come into play when deciding on the sampling plan.

18. Issues of feasibility are central to a well-planned research project. Discuss how feasibility issues come into play when choosing the measurement instruments or techniques.

19. There are unique challenges associated with conducting research on data that are already in existence (e.g., historical research). Discuss some of these unique challenges, pointing out pitfalls the researcher should be careful to avoid.

Chapter 7

QUALITATIVE RESEARCH

Multiple-Choice Questions

*1. In qualitative research the ______ is the most important instrument.
a. questionnaire
b. behavior checklist
c. researcher
d. participant

*2. In qualitative research, the fact that the research methodology may be vaguely described or very general in nature at the outset of the study indicates:
a. a normal and acceptable practice.
b. that the study is poorly designed.
c. that the researcher is inexperienced.
d. a common but unprofessional practice.

*3. Qualitative studies typically serve three of the following purposes. Which purpose do they NOT serve?
a. description of situations, processes, relationships, etc.
b. interpretation of information in order to gain new understanding
c. determining the final truth about a situation or phenomenon
d. evaluation of existing policies, practices, etc.

*4. In ______, a body of material is systematically examined for patterns, themes, or biases.
a. case study
b. ethnography
c. grounded theory
d. content analysis

*5. In ______, a particular group of individuals is studied in depth over a defined period of time.
a. case study
b. ethnography
c. phenomenology
d. grounded theory

*6. In ______, the researcher studies the deep meaning an event or situation holds for other people.
a. phenomenology
b. ethnography
c. grounded theory
d. content analysis
*7. In ______, a particular individual, program, or event is studied in depth over a defined period of time.
a. case study
b. ethnography
c. phenomenology
d. grounded theory

**8. Carl Compost has been living and working on a communal organic farm for the past six months. He wants to understand the political, environmental, and social perspectives shared by the members of the commune. Dr. Compost is probably employing a/an ______ methodology.
a. case study
b. ethnographic
c. phenomenological
d. content analysis

**9. Daniel Daring is an emerging playwright whose works have begun to stir great passions in the major U.S. cities where they are staged. Researcher Eugenia Edge is “shadowing” Mr. Daring for six months in an attempt to understand the artistic process. Dr. Edge is probably employing a ______ methodology.
a. case study
b. grounded theory
c. phenomenological
d. content analysis

**10. Helen Heartwell flew to New York City a few weeks after the September 11, 2001, bombing of the World Trade Center. She wanted to know how the victims of the attack were making sense of what had happened to them. Dr. Heartwell is probably employing a/an ______ methodology.
a. case study
b. grounded theory
c. phenomenological
d. ethnographic

**11. Richard Relic is carefully examining writings from the time of the U.S. Civil War to determine how each side characterized the position of their opponent. Dr. Relic is probably employing a ______ methodology.
a. case study
b. grounded theory
c. phenomenological
d. content analysis

*12. The constant comparative method of data analysis is most associated with:
a. ethnography.
b. phenomenology.
c. grounded theory.
d. content analysis.

*13. The technique of participant observation is most associated with:
a. case study.
b. ethnography.
c. grounded theory.
d. content analysis.

*14. ______ is most useful in situations where current theory regarding the subject of investigation is inadequate or nonexistent.
a. Case study
b. Ethnography
c. Grounded theory
d. Phenomenology

*15. When conducting observations to be used as data in a qualitative study, it is:
a. always necessary to obtain informed consent from those being observed.
b. not necessary to obtain informed consent if the observations are being conducted in a public place.
c. not necessary to obtain informed consent if the observer is in full view of those being observed.
d. only necessary to obtain informed consent if the study will be published.

*16. If you interview two people about the same event and their stories diverge at certain points, you can conclude that:
a. at least one of the interviewees is not being fully honest with you.
b. at least one of the participants was not paying attention to what was going on.
c. they didn’t really both witness the same event.
d. the meaning people draw from an event can vary from person to person.

*17. Three of the following are techniques that strengthen the objectivity of a qualitative study. Which one is NOT?
a. The researcher should intentionally look for evidence that contradicts his/her hunches or hypotheses.
b. The researcher should collect two or more different kinds of data (e.g., observations and interviews).
c. The researcher should acknowledge personal biases or presumptions in the research report.
d. The researcher should rely as much as possible on a single well-informed respondent.

Essay Questions

18. A goal of qualitative research is to uncover the “multiple truths” that characterize any complex phenomenon or situation. What does the term “multiple truths” refer to in this usage?

19. A fundamental pitfall in qualitative research is to confuse the actual observations with the interpretation of the observations. Why is it important that these two things remain distinctly separate?

20. Dr. D is conducting an interview with Amber, who works as a cocktail waitress. Here is an excerpt:

Dr. D: What shift do you typically work?
Amber: Night. I come in a around 7:00 p.m. and work until 2:00 a.m.
Dr. D: Cocktail waitressing has a bad reputation. How bad is it to work here?
Amber: Not so bad. Most of our customers are pretty nice guys. They’re
regulars and they don’t drink too much and get out of control. In fact, if
one customer is giving me a hard time, another often steps in and helps out.
Dr. D: As the evening progresses, the men give you more and more problems,
don’t they? What do you do about that?
Amber: I ignore it as long as I can. I get the manager to step in if they don’t
straighten up.

Do you notice any problems with the interviewing technique of Dr. D? Describe the problems you see in the excerpts and then explain what Dr. D should do differently.

Chapter 8

HISTORICAL RESEARCH

Multiple-Choice Questions

*1. Historical research is chiefly concerned with:
a. the study of history.
b. the meaning of past events.
c. creating an accurate chronology of past events.
d. determining an “official” interpretation of a historical event.

*2. Historical research may include:
a. qualitative, but not quantitative, methods.
b. quantitative, but not qualitative, methods.
c. both qualitative and quantitative methods.
d. neither qualitative or quantitative methods.

**3. To a historical researcher studying the lives of women pioneers in the late 1880s, letters written by Rebecca Adams, a pioneer woman on the Nebraska plains, to her sister in Philadelphia represent:
a. primary data.
b. secondary data.

**4. To a historical researcher studying the lives of women pioneers in the late 1880s, letters written by Deloris Adams of Philadelphia, describing the life of her sister, Rebecca Adams, a pioneer woman on the Nebraska plains, represent:
a. primary data.
b. secondary data.

**5. Professor McGrath is studying the history of African Americans in Oklahoma. Three of the following are primary data sources for Professor McGrath. Which one is NOT?
a. Census reports from the all-Black town of Taft
b. Photographs of Taft
c. Diaries of a school teacher in one of the first integrated schools in Taft
d. Articles from the Taft newspaper published in the late 19th century

*6. In historical research, bias:
a. generally does not exist to a problematic degree.
b. is less of a problem than in other forms of research.
c. is impossible for the researcher to detect.
d. can be used as an advantage to the researcher.

*7. In regard to bias in historical research, the researcher:
a. must be vigilant in regard to bias in secondary data, but it is not a problem with primary data.
b. must be vigilant in regard to bias in primary data, but it is not a problem with secondary data.
c. must be vigilant in regard to bias in both primary and secondary data.
d. can assume that the various biases will cancel each other out without special steps being taken by the researcher.

**8. Perry Prose is in possession of a letter allegedly written by President Theodore Roosevelt during his time in office. He has taken the letter to a number of experts, who have examined the paper, ink, handwriting, and content of the letter in an attempt to establish its authenticity. Dr. Prose is attempting to establish ______ regarding the validity of the letter.
a. external evidence
b. internal evidence

**9. Fran Freedom is trying to determine what the phrase “with liberty and justice for all” from the Pledge of Allegiance meant at the time it was penned. She suspects there were actually some limits on “all.” Dr. Freedom is attempting to establish ______ regarding the validity of the letter.
a. external evidence
b. internal evidence

**10. The information to the right is an example of:
a. ex post facto research.
b. a historiography.
c. a historic method.
d. a chronology.

*11. ______ is/are an appropriate focus of historical research.
a. Concepts
b. Ideas
c. People
d. all of the above

*12. Historical researchers can count on authoritative sources such as the Anglo-Saxon Chronology or the Cambridge Ancient History as accurate and complete accounts of history.
a. True
b. False

*13. In writing a historical research report, it is best to:
a. avoid mentioning alternative interpretations of events proposed by other scholars.
b. leave most of the interpretation of data to the reader rather than impose your own
point of view.
c. point out the weaknesses in the arguments or assertions you are making.
d. discuss the weaknesses, but not the strengths, of arguments put forth by other
scholars.

*14. A historical research report may differ from other research reports in that presentation of data and interpretation of data:
a. are confined to separate sections of the paper.
b. may not be included.
c. may be intertwined in a technical style of scientific writing.
d. may be intertwined in a flowing narrative style.

Essay Questions

15. One of the most challenging aspects of conducting historical research is systematically organizing the hundreds or thousands of notes that are collected in the course of the research project. Describe one method for handling this organizational challenge, including mention of both the strengths and weaknesses of the approach.

16. Conducting rigorous historical research involves more than reading historical documents, taking notes, and organizing those notes. Explain.

17. The authors recommend that chronological data be arrayed in a time line as part of the interpretative process. What type of information can be revealed by this technique?

18. The authors recommend that chronological data be plotted on a map as part of the interpretative process. What type of information can be revealed by this technique?

Chapter 9

DESCRIPTIVE RESEARCH

Multiple-Choice Questions

*1. Observational research, as a form of descriptive research,
a. focuses on rich narrative description of the phenomenon of interest.
b. involves counting or rating of behavior in as objective a manner as possible.
c. relies on open-ended techniques that can respond to the evolving situation.
d. allows the researcher to gather behavioral data in a relatively quick and easy
manner.

*2. Three of the following procedures or techniques are integral to observational research. Which one is NOT?
a. Pilot studies are used to test instruments and procedures.
b. Observers are carefully trained to follow specific criteria when recording the
observation data.
c. Multiple observers may independently rate the same behavior.
d. Observation instruments are intentionally general so as not to constrain the
observer.

*3. Correlational research allows the researcher to answer questions such as:
a. what is the relationship between Variable A and Variable B?
b. does change in Variable A cause change in Variable B?
c. is there a significant difference between scores on Variable A and scores on Variable B?
d. does change in Variable B causes change in Variable A?

**4. The scatterplot to the right indicates a ______ relationship between Variable A and Variable B.
a. weak
b. moderate
c. strong
d. indeterminate

**5. A researcher wishes to study developmental changes in people’s preference for action movies. The researcher locates 50 people at each of the following ages: 15, 20, 25, 30, 35, 40, 45, and 50 years. She asks them to rate their preference for action movies in relation to other sorts of movies. This is an example of a ______ design.
a. longitudinal
b. nested
c. cross-sectional
d. panel

**6. A researcher wishes to study developmental changes in the music people prefer to listen to. The researcher locates 50 people who are about 20 years old. She sends these people a questionnaire every year for the next 10 years asking about the types of music they prefer to listen to. This is an example of a ______ design.
a. longitudinal
b. nested
c. cross-sectional
d. panel

*7. Among survey methods, _____ generally generate the highest response rate, and ______ generally generate the lowest response rate.
a. face-to-face interviews; telephone interviews
b. telephone interviews; questionnaires
c. face-to-face interviews; questionnaires
d. questionnaires; telephone interviews

*8. Advantages of questionnaires include all of the following EXCEPT:
a. large numbers of people can be contacted for a relatively low cost.
b. data can be gathered from a large number of people in a relatively short period of
time.
c. participants may feel more confident about their anonymity and therefore respond more honestly.
d. because questions are in written form, they are less likely to be misunderstood by respondents.

*9. Regarding the length of questionnaires to be used in survey research, which of the following statements is most accurate?
a. Including a large number of items on the survey assures that you will get useful data for all of your trouble.
b. Keeping the survey short makes it more likely people will be willing to complete it.
c. A relatively lengthy survey communicates your seriousness about the research endeavor so people will be more willing to complete it.
d. Shorter surveys produce data that are ambiguous and therefore not useful.

**10. “How unhappy are you with your current salary?”
This question violates which rule of good survey writing?
a. It is not quantifiable.
b. It makes an unwarranted assumption.
c. It fails to keep the respondent’s task simple.
d. It uses technical language that may not be known to all.

*11. The typical return rate for a survey mailed to strangers is about:
a. 80%
b. 65%
c. 50%
d. 35%

*12. In descriptive research, the researcher typically studies a______, then draws conclusions about the______.
a. sample; population
b. population; sample
c. sample; sample
d. population; population

**13. Polly Petunia is Chief Horticulturalist for the Southwest region, encompassing Arizona, New Mexico, and Texas. She wants to survey amateur gardeners in her region to determine what, if any, water conservation practices they employ in their home gardening. Polly sends her survey to 150 randomly selected gardeners in each state. Polly is using:
a. purposive sampling.
b. proportional stratified sampling.
c. systematic sampling.
d. stratified random sampling.

**14. Paul Pollster, a political psychologist, wants to determine whether rates of voter participation in his home state vary between rural, urban, and suburban voters. He notes that there are more rural voters than suburban or urban voters in the state. Paul should use ______ in this study.
a. simple random sampling
b. cluster sampling
c. proportional stratified sampling
d. systematic sampling

**15. Simon Cinema wants to know what the audience thought of tonight’s advanced screening of a heralded psychological thriller called “I Can’t Sleep.” He and his research assistants stand outside the theatre exit and ask every fifth person leaving the theatre to answer several questions about their impression of the movie. Simon is using:
a. systematic sampling.
b. stratified random sampling.
c. convenience sampling.
d. purposive sampling.

**16. Danny Drive wants to know the relationship between intrinsic motivation and course grade among math students. He contacts a local professor who teaches several general education math classes and asks about the possibility of gathering data in her classes. Danny is using:
a. simple random sampling.
b. cluster sampling.
c. convenience sampling.
d. systematic sampling

**17. Edward Ethics is studying public opinion regarding prayer in public schools. He plans to gather survey data from a number of churches on Sunday mornings. He also wants to include a number of people who are not associated with an organized religion in his sample. Edward is using:
a. stratified random sampling.
b. cluster sampling.
c. convenience sampling.
d. purposive sampling.

Essay Questions

18. Your chapter identifies several weaknesses related to survey data. Note one of these weaknesses and discuss the associated problems and possible ways to minimize them.

19. In writing the cover letter to accompany a mailed survey, novice researchers often stress the immediacy of their need for the data. Is this the best approach to take in the cover letter? If not, what do you recommend instead?

20. The authors of your textbook suggest that sampling bias is virtually unavoidable and that it is important to disclose and discuss possible sources of bias in the study report. Do you agree? Explain your position.

Chapter 10

EXPERIMENTAL AND EX POST FACTO DESIGNS

Multiple-Choice Questions

*1. Experimental research differs from descriptive research in that it:
a. is less sensitive to sampling bias.
b. employs statistical analyses.
c. attempts to determine causality.
d. is conducted in a laboratory.

*2. In experimental design, the variable that is manipulated is the:
a. dependent variable.
b. independent variable.
c. confounding variable.
d. constant.

*3. In experimental design, the variable that reflects the outcome of the treatment is the:
a. dependent variable.
b. independent variable.
c. confounding variable.
d. constant.

**4. “There will be gender differences in degree of mood elevation seen in depressed clients after receiving cognitive-behavioral therapy.”
In this hypothesis, gender is the:
a. dependent variable.
b. independent variable.
c. confounding variable.
d. constant.

**5. “There will be differences in degree of mood elevation seen in depressed clients after receiving either cognitive-behavioral or psychoanalytic therapy.”
In this hypothesis, mood elevation is the:
a. dependent variable.
b. independent variable.
c. confounding variable.
d. constant.

**6. “There will be differences in degree of mood elevation seen in depressed clients after receiving either cognitive-behavioral or psychoanalytic therapy.”
In this hypothesis, type of therapy is the:
a. dependent variable.
b. confounding variable.
c. independent variable.
d. constant.

**7. “There will be differences in degree of mood elevation seen in depressed clients after receiving either cognitive-behavioral or psychoanalytic therapy.”
During a test of this hypothesis, it was discovered that some of the participants lived with family members and others lived alone. This variable, living situation, is a/an _____.
a. independent variable.
b. dependent variable.
c. constant.
d. confounding variable.

**8. Dr. Dow Jones wants to know whether a problem-based approach to teaching economics will result in higher academic performance than his traditional method. Of the six sections of Economics 101 at his university, Dr. Jones randomly assigns three sections to the traditional method and three sections to the problem-based method. At the end of the semester, all students complete the same final exam. In this design, students studying under the traditional method constitute the:
a. placebo group.
b. treatment group.
c. sample.
d. control group.

**9. Dr. Dow Jones wants to know whether a problem-based approach to teaching economics will result in higher academic performance than his traditional method. Of the six sections of Economics 101 at his university, Dr. Jones randomly assigns three sections to the traditional method and three sections to the problem-based method. At the end of semester all students complete the same final exam. In this design, students studying under the problem-based method constitute the:
a. placebo group.
b. treatment group.
c. sample.
d. control group.

**10. Dr. Dow Jones wants to know whether a problem-based approach to teaching economics will result in higher academic performance than his traditional method. Of the six sections of Economics 101 at his university, Dr. Jones randomly assigns three sections to the traditional method and three sections to the problem-based method for Unit 1 of the course. Then all sections switch instructional method for Unit 2. He plans to compare the performance of the two groups of sections on their Unit 1 and Unit 2 exams. This study employs a ______ design.
a. within subjects (repeated measures)
b. quasi-experimental
c. true experimental
d. ex post facto

**11. Penny Poodle wanted to know which dog obedience training program was more effective: Puppy Pride, the approach she has been using for many years, or Doggie Do-Right, a new approach. Penny convinced 50 human companions of untrained dogs to participate in her study. The dogs and their humans were randomly assigned to complete the Puppy Pride or Doggie Do-Right course. At the end of the training programs, all of the dogs were scored on their level of obedience on a standardized dog obedience checklist (scores could range from 10 to 100). In this study, ______ is the dependent variable.
a. Doggie Do-Right
b. type of dog training program
c. score on the dog obedience checklist
d. obedience training versus no training

**12. Penny Poodle wanted to know which dog obedience training program was more effective: Puppy Pride, the approach she has been using for any years, or Doggie Do-Right, a new approach. Penny convinced 50 human companions of untrained dogs to participate in her study. The dogs and their humans were randomly assigned to complete the Puppy Pride or Doggie Do-Right course. At the end of the training programs, all of the dogs were scored on their level of obedience on a standardized dog obedience checklist (scores could range from 10 to 100). In this study, ______ is the independent variable.
a. Doggie Do-Right
b. type of dog training program
c. score on the dog obedience checklist
d. obedience training versus no training

**13. Penny Poodle wanted to know which dog obedience training program was more effective: Puppy Pride, the approach she has been using for any years, or Doggie Do-Right, a new approach. Penny convinced 50 human companions of untrained dogs to participate in her study. The dogs and their humans were randomly assigned to complete the Puppy Pride or Doggie Do-Right course. At the end of the training programs, all of the dogs were scored on their level of obedience on a standardized dog obedience checklist (scores could range from 10 to 100). This study employed a/an ______ design.
a. one-shot experimental
b. ex post facto
c. posttest-only control group design
d. within subjects

**14. Dr. Robbins wants to know if there are different opinions regarding the value of public school education between Native Americans who have at least one relative who attended Indian Boarding School and Native Americans who have no family experience with Indian Boarding School. Dr. Robbins contacts 35 Native American participants in each group. He wants each group to include younger as well as older adults, and a mix of male and female participants. He asks each person to complete a survey about their attitudes toward public education. In this study, _____ is the independent variable.
a. score on the “attitude toward public schools” measure
b. experience with Indian boarding school
c. gender of participant
d. age of participant

**15. Dr. Robbins wants to know if there are different opinions regarding the value of public school education between Native Americans who have at least one relative who attended Indian Boarding School and Native Americans who have no family experience with Indian Boarding School. Dr. Robbins contacts 35 Native American participants in each group. He wants each group to include younger as well as older adults, and a mix of male and female participants. He asks each person to complete a survey about their attitudes toward public education. In this study, _____ is the dependent variable.
a. score on the “attitude toward public schools” measure
b. experience with Indian boarding school
c. gender of participant
d. age of participant

**16. Dr. Robbins wants to know if there are different opinions regarding the value of public school education between Native Americans who have at least one relative who attended Indian Boarding School and Native Americans who have no family experience with Indian Boarding School. Dr. Robbins contacts 35 Native American participants in each group. He wants each group to include younger as well as older adults, and a mix of male and female participants. He asks each person to complete a survey about their attitudes toward public education. This study employs a/an ______ design.
a. pre-experimental
b. factorial
c. true experimental
d. ex post facto

*17. Three of the following are examples of true experimental designs. Which one is NOT?
a. Multiple baseline design
b. Solomon four-group design
c. Within subjects design
d. Pretest–posttest control group design

*18. Three of the following are examples of quasi-experimental designs. Which one is NOT?
a. Nonrandomized pretest–posttest control group design
b. Control group time-series design
c. Single-subjects design
d. One-shot experimental design

*19. A meta-analysis is used when:
a. the researcher wishes to analyze the analyses of a number of existing studies.
b. there is little existing literature to use as a launching pad for a new study.
c. the researcher has no access to sophisticated statistical techniques.
d. several researchers jointly conduct a large-scale study.

Essay Questions

20. A researcher is studying the effectiveness of two different resident adolescent drug treatment programs. Program A is used at Summerhill adolescent facility. Program B is used at Winterdale adolescent facility. Because random assignment to treatments is not possible in this situation, what can the researcher do to minimize possible effects of sample bias?

21. Factorial designs allow researchers to study the effects of more than one independent variable simultaneously. Why is this advantageous? What information can factorial designs yield that nonfactorial designs cannot?

Chapter 11

STRATEGIES FOR ANALYZING QUANTITATIVE DATA

Multiple-Choice Questions

*1. How are inferential statistics different from descriptive statistics?
a. Descriptive statistics allow one to draw inferences from the sample to a target population.
b. Descriptive statistics verify the accuracy of the inferential statistics.
c. Inferential statistics describe the results of a study.
d. Inferential statistics allow one to draw inferences from the sample to a target population.

*2. ____ are characteristics of samples, wheras _______ are characteristics of populations.
a. Concepts; statistics
b. Parameters; statistics
c. Statistics; parameters
d. Parameters; estimations

*3. In a normal distribution, what percentage of scores falls between one standard deviation below the mean and one standard deviation above the mean?
a. 16%
b. 50%
c. 68%
d. 90%

*4. Dorothy has been surveying the Munchkins to determine their level of life satisfaction. The possible scores on the life satisfaction questionnaire range from 0 to 100. If Dorothy decides to statistically compare the male and female Munchkins on their level of satisfaction, she should use a _______ test.
a. parametric
b. nonparametric

**5. Here is a set of scores: 5, 3, 7, 3, 6, 2, 5, 3. The mean of this set of scores is ______.
a. 3
b. 4
c. 4.25
d. 4.5

**6. Here is a set of scores: 5, 3, 7, 3, 6, 2, 5, 3. The median of this set of scores is ______.
a. 2
b. 3
c. 4
d. 4.5
**7. Here is a set of scores: 5, 3, 7, 3, 6, 2, 5, 3. The mode of this set of scores is ______.
a. 3
b. 4
c. 4.22
d. 4.5

*8. The measure(s) of central tendency that is/are appropriate for use with nominal data is/are:
a. the median only.
b. the mode only.
c. the median and the mean.
d. the median and the mode.

*9. When summarizing ordinal data, the ______ is the most useful measure of central tendency.
a. arithmetic mean
b. mode
c. median
d. geometric mean

*10. When reporting growth data, the ______ is the most useful measure of central tendency.
a. arithmetic mean
b. mode
c. median
d. geometric mean

*11. When the ____ is the measure of central tendency, the _____ is the most appropriate and informative measure of dispersion.
a. median; standard deviation
b. median; interquartile range
c. mean; interquartile range
d. mean; range

**12. An exam was given to two sections of the same course. In Section 1, the exam mean was 51 and the standard deviation was 7. In Section 2, the exam mean was 51 and the standard deviation was 13. Which of the following conclusions is accurate?
a. Section 1 did better on the exam than Section 2.
b. Section 1 scores were more variable than Section 2.
c. Section 1 scores were less variable than Section 2.
d. Section 1 did less well on the exam than Section 2.

*13. The z-score, or standard score, allows the research to determine:
a. how far a target individual’s score is from the group mean.
b. what percentage of individuals in the sample scored above the target individual.
c. the mean for the population based on the mean for the sample.
d. what percentage of individuals in the sample scored below the target individual.
*14. The percentile rank allows the researcher to determine:
a. how far a target individual’s score is from the group mean.
b. what percentage of individuals in the sample scored above the target individual.
c. the mean for the population based on the mean for the sample.
d. what percentage of individuals in the sample scored below the target individual.

**15. Danzell is a purchasing agent for a major grocery store chain. He has noticed over the years that the higher the outdoor temperature, the more likely people are to buy fresh fruit. Based on Danzell’s observations, we would say there is ______ relationship between outdoor temperature and buying of fresh fruit.
a. a positive
b. a negative
c. a causal
d. no

**16. Frank Fitness found a correlation coefficient of –.74 between hours of strenuous exercise each week and a standard measure of body mass. He interprets this to mean that there is a ______ and ______ relationship between hours of strenuous exercise and body mass.
a. strong; positive
b. strong; negative
c. weak; positive
d. weak; negative

*17. Three of the following factors are associated with a relatively small standard error of the mean. Which one is NOT?
a. Sample size is relatively large.
b. Sample standard deviation is relatively small.
c. The variance in the sample is relatively large.
d. The sample is highly representative of the population.

**18. Seamus has determined that there is a 95% chance that the number of people visiting the Blarney Stone in the month of June will be between 1,760 and 2,025. This is a/an ______ estimate.
a. point
b. interval

*19. Statistical hypothesis testing involves testing the:
a. research hypothesis.
b. probability level.
c. significance level.
d. null hypothesis.

**20. On the basis of statistical findings, Ron determines that the differences between males and females on a test of spatial reasoning are not due merely to chance. If, in fact, there are no gender differences in the population, Ron will have made a:
a. Type I error.
b. Type II error.

**21. On the basis of statistical findings, Becky determines that the difference between males and females on a test of abstract mathematical reasoning is merely due to chance. If, in fact, there are gender differences in the population, Becky will have made a:
a. Type I error.
b. Type II error.

Essay Questions

22. A medical researcher is concerned about mistakenly concluding that a new medication is effective when it really is not. What type of error is the researcher concerned about making (Type I or Type II)? Describe what the researcher might do to decrease the likelihood of making that type of error. Discuss ramifications of your suggested approach for other types of error in the study.

23. Note several steps researchers can take to optimize the power of their statistical tests.

24. After completing planned analyses, the researcher must interpret the results of statistical tests. Note several steps that are involved in such interpretation.

Chapter 12

TECHNICAL DETAILS: STYLE, FORMAT, AND ORGANIZATION
OF THE RESEARCH REPORT

Multiple-Choice Questions

*1. When writing the research report, the findings of statistical analyses are typically reported in the ______ section.
a. review of literature
b. method
c. results
d. discussion

*2. When writing the research report, the descriptions of instruments used for data gathering are typically included in the ______ section.
a. introduction
b. method
c. results
d. discussion

*3. When writing the research report, the interpretation of study findings is typically included in the ______ section.
a. introduction
b. method
c. results
d. discussion

*4. When writing the research report, the research problem is typically described in the ______ section.
a. introduction
b. review of literature
c. method
d. results

*5. When writing the research report, information regarding the study design is typically included in the ______ section.
a. introduction
b. review of literature
c. method
d. results

*6. The reference list is included in the:
a. front matter.
b. end matter.
c. appendices.
d. body of the report.

*7. Copies of the survey instruments are included in the:
a. front matter.
b. end matter.
c. appendices.
d. body of the report.

*8. The abstract is included in the:
a. front matter.
b. end matter.
c. appendices.
d. body of the report.

*9. In a quantitative study, the description of participants (subjects) is included in the:
a. front matter.
b. end matter.
c. appendices.
d. method section.

*10. The acknowledgments are included in the:
a. front matter.
b. end matter.
c. appendices.
d. body of the report.

**11. “Johnson eliminated three interviews from the data set due to noncompliance on the part of the respondents.”
This sentence is an example of:
a. active voice.
b. passive voice.

**12. “The third subscale was dropped from further consideration due to problems with internal consistency.”
This sentence is an example of:
a. active voice.
b. passive voice.

*13. The style manual of the American Psychological Association (APA) suggests that ____ tense be used when writing the method section and ______ tense be used when presenting conclusions.
a. present; present
b. past; past
c. present; past
d. past; present

Essay Questions

14. Throughout your textbook the authors return to the importance of interpreting the findings of a research project. Explain why this is an essential element in a high-quality research report.

15. Imagine that you just completed a research project in which the data failed to support your chief hypothesis. Why might this have happened? Discuss several possibilities.