chapter 15

Question 1

Companies often enter global markets ________.
A) if shareholders demand higher levels of risk
B) when management is looking for a challenge
C) to retaliate against foreign competitors
D) when their government is unstable
E) when they have saturated domestic markets

Answer 1

E) when they have saturated domestic markets

Question 2

Which of these sentences best describes global trade since 1990?
A) Global trade has been shrinking as a percentage of GDP.
B) Global trade has grown from about $3.5 trillion to $25 trillion.
C) Most countries have adopted protectionist policies.
D) Global trade makes up an insignificant percentage of worldwide GDP.
E) Global trade now represents about 35% of worldwide GDP.

Answer 2

B) Global trade has grown from about $3.5 trillion to $25 trillion.

Question 3

________ is the process of marketing products and services within and across multiple countries.
A) Exporting
B) Market integration
C) Global marketing
D) Globalization
E) International segmentation

Answer 3

C) Global marketing

Question 4

A(n) ________operates in more than one country and gains marketing, production, research and development, and financial advantages that are not available to purely domestic competitors.
A) segmented firm
B) importer
C) exporter
D) global company
E) international competitor

Answer 4

D) global company

Question 5

Which of these steps in NOT one involved in the global marketing process?
A) deciding on the global marketing organization
B) deciding on the global marketing program
C) deciding how to produce salable goods
D) understanding the global marketing context
E) deciding how to enter global markets

Answer 5

C) deciding how to produce salable goods

Question 6

Part of step two of the global marketing process is deciding ________.
A) how much money to spend on going global
B) who will lead the global effort
C) on the global marketing program
D) how to enter global markets
E) which markets to enter

Answer 6

E) which markets to enter

Question 7

A tax on an imported product designed to raise revenue or protect domestic firms is referred to as a(n) ________.
A) exchange
B) excise
C) fine
D) quota
E) tariff

Answer 7

E) tariff

Question 8

A country may place a limit on the volume of imported citrus fruit that is allowed. This is an example of a(n) ________.
A) quota
B) tariff
C) customs duty
D) fine
E) excise duty

Answer 8

A) quota

Question 9

Which of the following is an example of a nontariff trade barrier?
A) a sales tax
B) customs duty
C) host-country regulations
D) excise duty
E) import taxes

Answer 9

C) host-country regulations

Question 10

Walmart’s decision to suspend its planned expansion into India’s huge but fragmented retail market due to obstacles put in place by the host nation to protect its mom-and-pop retailers is an example of ________.
A) tariffs
B) excise duties
C) quotas
D) nontariff trade barriers
E) exchange controls

Answer 10

D) nontariff trade barriers

Question 11

Which of the following is true of the World Trade Organization (WTO)?
A) It was replaced by the GATT in 1995.
B) It increases tariffs and other international trade barriers.
C) It lacks the power to impose international trade sanctions.
D) It restricts the maximum number of member nations to 100.
E) It mediates global trade disputes.

Answer 11

E) It mediates global trade disputes.

Question 12

Which of the following describes the WTO?
A) It lacks the capability to mediate global trade disputes.
B) It increased the world’s merchandise tariffs by 45 percent.
C) It reduced the influence of the WTO in agriculture.
D) It imposes international trade sanctions.
E) It increased international trade barriers.

Answer 12

D) It imposes international trade sanctions.

Question 13

Which of the following is true of economic communities?
A) They are groups of nations organized to work toward common goals.
B) They were formed to increase trade barriers between member nations.
C) They were formed to mediate global trade disputes.
D) They require member countries to establish one currency.
E) They tend to improve imports and hinder exports.

Answer 13

A) They are groups of nations organized to work toward common goals.

Question 14

) In 1994, the North American Free Trade Agreement established a free trade zone among the United States, Mexico, and Canada. This agreement was replaced in July 2020 by the ________.
A) Union of South American Nations
B) European Union
C) United States-Mexico-Canada Agreement
D) Central American Free Trade Agreement
E) Latin American Free Trade Association

Answer 14

C) United States-Mexico-Canada Agreement

Question 15

A country’s ________ shapes its product and service needs, income levels, and employment levels.
A) legal system
B) political system
C) consumer reaction scale
D) subsistence economy
E) level of industrial development

Answer 15

E) level of industrial development

Question 16

Which type of economy consumes most of its output and barters the rest for simple goods and services?
A) industrial economy
B) developed economy
C) subsistence economy
D) emerging economy
E) service economy

Answer 16

C) subsistence economy

Question 17

Which of the following is true of industrialized nations?
A) Industrialized nations do not have a growing middle class.
B) Industrialized nations are poor markets for large equipment and trucks.
C) Industrialized nations consist mostly of low-income households.
D) Industrialized nations have low-, medium-, and high-income households.
E) These economies consume most of their output and barter the rest.

Answer 17

D) Industrialized nations have low-, medium-, and high-income households.

Question 18

Many companies have shifted their sights to the so-called ________, the vast untapped market consisting of the world’s poorest consumers.
A) developing economies
B) “bottom of the pyramid”
C) “emerging economies”
D) “developed economies”
E) industrial economies

Answer 18

B) “bottom of the pyramid”

Question 19

An emerging market economy is one which ________.
A) imports large amounts of finished textiles and automobiles
B) offers few market opportunities for imported goods
C) consumes all or most of its output
D) exports major quantities of manufactured goods
E) is experiencing rapid economic growth

Answer 19

E) is experiencing rapid economic growth

Question 20

________ economies are major exporters of manufactured goods, services, and investment funds.
A) Dominant
B) Developed
C) Subsistence
D) Agricultural
E) Emerging

Answer 20

B) Developed

Question 21

Japan is a major exporter of manufactured goods, services, and investment funds. Japan also exports its goods to other types of economies for raw materials and semi-finished goods. This is an example of a(n) ________ economy.
A) agricultural
B) emerging
C) developed
D) barter
E) subsistence

Answer 21

C) developed

Question 22

Which of the following statements is true of developed economies?
A) They export their goods to other types of economies for raw materials.
B) They have a declining middle-class population.
C) They depend on agriculture as the primary revenue generator.
D) They do not trade goods amongst themselves.
E) They consume most of their output and barter the rest for simple goods and services.

Answer 22

A) They export their goods to other types of economies for raw materials.

Question 23

Which type of economy consists mostly of households with very low family incomes?
A) post-industrial
B) developed
C) emerging
D) industrial
E) subsistence

Answer 23

E) subsistence

Question 24

) The ________ framework is a useful tool for analyzing the forces that might impact marketing decisions in various global environments.
A) POLITY
B) Bottom of the Pyramid
C) PESTLE
D) BRICS
E) MENA

Answer 24

C) PESTLE

Question 25

Which of these is NOT a component of the PESTLE framework?
A) Sociocultural
B) Technological
C) Political
D) Environmental
E) Engagement

Answer 25

E) Engagement

Question 26

Which of these is NOT a benefit of staying solely in the domestic market?
A) Domestic firms can avoid the complexities of cultural barriers.
B) Global expansion can provide better growth opportunities.
C) Operating domestically is easier and safer.
D) Concentrating on one market creates a sense of focus and discipline.
E) Most local businesses only need their local and regional markets.

Answer 26

B) Global expansion can provide better growth opportunities.

Question 27

Most companies ________ when they enter global markets.
A) start small
B) go all in
C) start with about 10 countries
D) start with emerging market countries
E) enter EU countries

Answer 27

A) start small

Question 28

Which of these is an economic indicator of market potential?
A) currency controls
B) labor restrictions
C) income distribution
D) environmental regulations
E) social norms

Answer 28

C) income distribution

Question 29

Which of these is a political indicator of market potential?
A) currency controls
B) national priorities
C) income distribution
D) environmental regulations
E) social norms

Answer 29

B) national priorities

Question 30

Which of these is a sociocultural indicator of market potential?
A) currency controls
B) national priorities
C) income distribution
D) environmental regulations
E) business norms

Answer 30

E) business norms

Question 31

The simplest way to enter a foreign market is through ________.
A) joint ownership
B) exporting
C) direct investment
D) licensing
E) contract manufacturing

Answer 31

B) exporting

Question 32

Which of the following is true of exporting?
A) It is the most complex way to enter a foreign market.
B) It involves the association of companies with host country partners.
C) It typically requires products to be extensively modified for the foreign market.
D) It involves the least change in a company’s product lines.
E) It involves a huge investment if done through independent international distributors.

Answer 32

D) It involves the least change in a company’s product lines.

Question 33

Asiana, a fragrance manufacturer located in France, markets its products to the North American and Asian countries through independent distributors. In this case, Asiana has entered into international markets through ________.
A) joint ownership
B) joint venturing
C) indirect exporting
D) direct investment
E) franchising

Answer 33

C) indirect exporting

Question 34

The difference between direct and indirect exporting is that indirect exporting involves ________.
A) higher risks
B) self-handling of exports
C) greater returns
D) more product alterations
E) less investment

Answer 34

E) less investment

Question 35

________ is a method of entering a foreign market by associating with foreign companies to produce or market products or services.
A) Joint venturing
B) Indirect exporting
C) Direct investment
D) Importing
E) Direct exporting

Answer 35

A) joint venturing

Question 36

Which of the following is true about joint venturing?
A) Management contracting is highly risky for the domestic firm.
B) Contract manufacturing gives significant control to the domestic firm.
C) Licensing is a highly complex method for entering global markets.
D) A host country partner is necessary for selling or marketing products.
E) Companies are required to invest in the construction of foreign-based facilities.

Answer 36

D) A host country partner is necessary for selling or marketing products.

Question 37

Which of the following is a type of joint venture?
A) direct exporting
B) contract manufacturing
C) direct investment
D) retailing
E) wholesaling

Answer 37

B) contract manufacturing

Question 38

Providing a host-country partner the right to use a company’s manufacturing process, trademark, patent, trade secret, or other item of value is referred to as ________.
A) joint ownership
B) direct exporting
C) direct investment
D) management contracting
E) licensing

Answer 38

E) licensing

Question 39

Which of the following is an advantage of licensing?
A) The licensee is not required to invest money in the business.
B) The licensor has more control over the licensee than it does in its own operations.
C) The licensee gains recognition without having to develop a product from scratch.
D) The licensor earns profits without having to share its intellectual property with anyone.
E) The licensor faces no threats of competition from the licensee after the contract ends.

Answer 39

C) The licensee gains recognition without having to develop a product from scratch.

Question 40

The Bread Company promotes its brand in new international markets by providing rights to local bakeries and bistros to use its recipes and brand name. In this case, The Bread Company’s market-entry strategy is referred to as ________.
A) licensing
B) exporting
C) joint ownership
D) contract manufacturing
E) management contracting

Answer 40

A) licensing

Question 41

Which of the following is a disadvantage of licensing?
A) The licensing company gains entry into a foreign market at a high risk.
B) It takes a lot of time for the licensee to gain production expertise and name.
C) Licensing is a complex way for a manufacturer to enter international marketing.
D) The licensor potentially creates a competitor in the form of the licensee.
E) The licensee is restricted from gaining knowledge about the licensor’s intellectual property.

Answer 41

D) The licensor potentially creates a competitor in the form of the licensee.

Question 42

________ is a method of going global in which a company makes agreements with producers in the foreign market to produce its product or provide its service.
A) Contract manufacturing
B) Direct investment
C) Acquisition
D) Exporting
E) Management contracting

Answer 42

A) Contract manufacturing

Question 43

Which of the following is most likely a drawback of contract manufacturing?
A) There are low chances of quickly starting the process.
B) There is decreased control over the manufacturing process.
C) There are significant political and economic risks involved.
D) There is little opportunity of later forming a partnership.
E) There is no possibility of buying out the local manufacturer.

Answer 43

B) There is decreased control over the manufacturing process.

Question 44

PharmaCom serves millions of customers across several Asian countries with the assistance of several pharmaceutical manufacturing sites in China, Japan, and Korea. This is an example of ________.
A) licensing
B) exporting
C) joint ownership
D) contract manufacturing
E) management contracting

Answer 44

D

Question 45

Under management contracting, a domestic firm ________.
A) adopts management know-how from a foreign company
B) manufactures the products of a foreign company
C) exports its products to a foreign company
D) provides financial capital to a foreign company
E) exports management services to a foreign company

Answer 45

E) exports management services to a foreign company

Question 46

The Dance Company, a renowned dance studio in Manhattan, enters into an agreement with La Danza in Spain to operate several dance studios. La Danza will provide capital for running the dance studios and The Dance Company will contribute its world-renowned expertise about the art of dance. In this case, The Dance Company enters a foreign market through ________.
A) contract manufacturing
B) management contracting
C) licensing
D) joint ownership
E) direct investment

Answer 46

B) management contracting

Question 47

Which of the following is an advantage of management contracting?
A) It involves the fewest changes in a company’s product lines.
B) It allows a contracting firm to set up its own operations at the beginning of the contract.
C) It is the simplest way to enter a foreign market.
D) It yields income from the beginning of the contract.
E) It gives a contracting firm an option to buy shares in the managed company immediately.

Answer 47

D) It yields income from the beginning of the contract.

Question 48

Which of the following is a drawback of management contracting?
A) It prevents a company from setting up its own operations for a period of time.
B) It is a high-risk method of getting into a foreign market.
C) It yields income to the contracting firm only much later in the process.
D) It does not provide the option of buying shares in the managed company later on.
E) It requires a domestic firm to export its products to a foreign company.

Answer 48

A) It prevents a company from setting up its own operations for a period of time.

Question 49

________ ventures consist of one company collaborating with foreign investors to create a local business in which they share possession and control.
A) Licensing
B) Direct investment
C) Contract manufacturing
D) Management contracting
E) Joint ownership

Answer 49

E) Joint ownership

Question 50

Companies often form ________ ventures to merge their complementary strengths in developing a global marketing opportunity.
A) licensing
B) direct investment
C) joint ownership
D) management contracting
E) contract manufacturing

Answer 50

C) joint ownership

Question 51

Kimlee, a food manufacturer based in China, recognizes the immense demand for noodles in the Australian market. Kimlee forms a new business venture to manufacture instant noodles and decides to share possession and control of the new business with a local food processing company. In this case, Kimlee has entered a foreign market through ________.
A) licensing
B) contract manufacturing
C) direct investment
D) joint ownership
E) management contracting

Answer 51

D) joint ownership

Question 52

Which of the following is most likely a benefit of joint ownership?
A) It allows a firm to gain the financial and managerial resources that it may otherwise lack.
B) It is the simplest way for a domestic company to enter a foreign market.
C) It minimizes the need to build a new manufacturing facility in the foreign market.
D) It allows one firm to acquire complete ownership of the other firm in the venture.
E) It provides significant economies of scale for both the local firm and the foreign investor.

Answer 52

A) It allows a firm to gain the financial and managerial resources that it may otherwise lack.

Question 53

In addition to joint ownership ventures in China, Intel has made substantial outlays in its own manufacturing and research facilities there. This is an example of ________.
A) exporting
B) direct investment
C) licensing
D) indirect exporting
E) management contracting

Answer 53

B) direct investment

Question 54

Which of the following is an advantage of direct investment?
A) Direct investment involves fewer risks than joint ownership.
B) Direct investment ensures that a firm is shielded from market changes.
C) Direct investment allows a firm to keep full control over the investment.
D) Direct investment involves minimal financial or time expenditures.
E) Direct investment protects the firm from currency devaluation.

Answer 54

C) Direct investment allows a firm to keep full control over the investment.

Question 55

What is the most likely disadvantage of direct investment for an investing company?
A) weak relationships with local distributors
B) minimal investment control
C) product standardization requirements
D) devalued currency risks
E) excessive freight charges

Answer 55

D) devalued currency risks

Question 56

Chips of Joy, a leading chocolate chip cookie manufacturer, has decided to use the same marketing strategy and marketing mix worldwide for all of its brands. The only change that will be made is language translation on the various packaging. Chips of Joy is using a(n) ________ marketing strategy.
A) collective global
B) standardized global
C) adapted global
D) joint global
E) direct global

Answer 56

B) standardized global

Question 57

Compared to adapted global marketing, standardized global marketing ________.
A) adjusts promotional efforts to address cultural differences in target markets
B) results in additional marketing and manufacturing costs
C) relies on social media to develop customer relationships
D) usually results in diluted brand power over time
E) uses the same marketing mix worldwide

Answer 57

E) uses the same marketing mix worldwide

Question 58

Compared to standardized global marketing, adapted global marketing ________.
A) uses the same marketing mix elements in all target markets
B) lowers marketing costs by using home country sales teams
C) modifies marketing strategies to meet local needs
D) maintains uniformity across all markets
E) results in greater brand power

Answer 58

C) modifies marketing strategies to meet local needs

Question 59

________ means marketing a product in a foreign market without making any changes to the product.
A) Product adaptation
B) Straight product extension
C) Communication extension
D) Product invention
E) Communication adaptation

Answer 59

B) Straight product extension

Question 60

Which of the following is a disadvantage of straight product extension?
A) It involves additional product development costs.
B) It involves changing the product to meet local requirements.
C) It requires planning a new promotional strategy to promote the product.
D) It can be costly in the long run if products fail to satisfy consumers in specific global markets.
E) It requires making changes in the manufacturing process.

Answer 60

D) It can be costly in the long run if products fail to satisfy consumers in specific global markets.

Question 61

Veggie Delight, a leading manufacturer of frozen vegetarian burgers, has recently entered the Middle East markets. Based on its research, consumers in the Middle East prefer spicier burgers than in the United States and other countries. So the company alters the ingredients in its burgers to meet the local preferences. In this scenario, Veggie Delight is using a(n) ________ strategy to market its product.
A) communication adaptation
B) undifferentiated marketing
C) straight product extension
D) product invention
E) product adaptation

Answer 61

E) product adaptation

Question 62

________ consists of creating something new to meet the needs of consumers in a given country.
A) Product adaptation
B) Straight product extension
C) Undifferentiated marketing
D) Product invention
E) Standardized manufacturing

Answer 62

D) Product invention

Question 63

When adapting advertising messages, media may also need to be adapted internationally because media availability and regulations vary from country to country. This illustrates ________.
A) communication extension
B) product invention
C) communication adaptation
D) straight product extension
E) product adaptation

Answer 63

C) communication adaptation

Question 64

To overcome ________ firms selling to less-affluent consumers in developing countries may make simpler or smaller versions of their products that can be sold at lower prices. Others have introduced new, more affordable brands for global markets.
A) price escalation
B) demand escalation
C) inflation
D) skimming price
E) deflation

Answer 64

A) price escalation

Question 65

In a global value delivery network, the first link, ________, moves company products from points of production to the borders of countries within which they are sold.
A) distribution centers
B) wholesalers
C) channels within nations
D) retailers
E) channels between nations

Answer 65

E) channels between nations

Question 66

In managing their international marketing activities, most companies first ________.
A) organize an import department
B) create an international division
C) initiate foreign direct investment
D) form a domestic subsidiary
E) organize an export department

Answer 66

E) organize an export department

Question 67

It is common that a multinational company eventually creates ________ or subsidiaries to handle all of its international activity.
A) export departments
B) global divisions
C) geographical organizations
D) world product groups
E) global organizations

Answer 67

B) global divisions

Question 68

Lemon N’ Honey is a juice manufacturing company in the United States. It exports its products to Australia, licenses to China, has a joint ownership venture in France, and owns a subsidiary in Brazil. The firm will most likely need to create a(n) ________ to handle all its worldwide activities.
A) global division
B) domestic market
C) value delivery network
D) export department
E) domestic division

Answer 68

A) global division

Question 69

Which of the following is true of global divisions that are structured as geographical organizations?
A) Geographical organizations are operating units under the export department.
B) Geographical organizations are usually formed to implement whole-channel supply chains.
C) Geographical organizations are managed by product managers, each responsible for different product groups.
D) Geographical organizations are inadequate if the firm moves into joint ventures or direct investments.
E) Geographical organizations are managed by country managers responsible for salespeople, distributors, and licensees in their respective countries.

Answer 69

E) Geographical organizations are managed by country managers responsible for salespeople, distributors, and licensees in their respective countries.

Question 70

Which of the following is a global division organized based on different merchandise categories?
A) global organization
B) world product group
C) geographical organization
D) export department
E) international subsidiary

Answer 70

B) world product group

Question 71

Many organizations no longer have a clearly defined home market. Nor do they have home-office staffs. Instead, multicultural managers operate out of facilities located all around the world, bringing diverse cultural perspectives to their brands and operations. They are truly ________.
A) world product groups
B) geographical organizations
C) international subsidiaries
D) global organizations
E) export departments

Answer 71

D) global organizations