Marketing Defined Explained Applied 2nd Edition by Michael P Levens – Test Bank

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Marketing Defined, Explained, Applied, 2e (Levens)

Chapter 5   Global Marketing

 

1) ________ is the outcome of cultures intermingling, sharing experiences, news, and commerce.

  1. A) Extraterritoriality
  2. B) Nationalization
  3. C) Privatization
  4. D) Sustainability
  5. E) Globalization

Answer:  E

Diff: 1             Page Ref: 53

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-1

 

2) ________ includes all marketing activities conducted at an international level by individuals or businesses.

  1. A) Global marketing
  2. B) Extraterritoriality
  3. C) Industrialization
  4. D) Multinationalism
  5. E) Nationalized marketing

Answer:  A

Diff: 1             Page Ref: 53

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-1

 

3) Which of the following is considered a BRIC country?

  1. A) Italy
  2. B) Indonesia
  3. C) Chile
  4. D) China
  5. E) Canada

Answer:  D

Diff: 2             Page Ref: 53

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-1

 

 

4) BRIC countries are driving forces behind globalization because of their ________.

  1. A) steadily weakening exchange rates
  2. B) relatively inexpensive labor markets
  3. C) well-established upper classes
  4. D) unregulated stock markets
  5. E) strategic geographic locations

Answer:  B

Diff: 2             Page Ref: 53

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-1

5) Which of the following is NOT a benefit a company would be likely to expect from engaging in global trade?

  1. A) scale economies
  2. B) access to lower cost materials
  3. C) access to new consumer markets
  4. D) protection from the regulations of foreign governments
  5. E) access to foreign investment incentives

Answer:  D

Diff: 2             Page Ref: 53

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-1

 

6) Extensive customization of a product offered in different international markets can defeat which of the following benefits of global trade?

  1. A) lowered production costs
  2. B) access to less expensive labor
  3. C) access to less expensive materials
  4. D) access to new consumer markets
  5. E) ability to offset domestic economic cycles

Answer:  A

Diff: 2             Page Ref: 54

Skill:  Concept

Objective:  5-1

 

 

7) A company with no investment outside its home country other than the direct purchase of products and services is referred to as a(n) ________ company.

  1. A) international
  2. B) outsourced
  3. C) offshored
  4. D) multinational
  5. E) global

Answer:  A

Diff: 2             Page Ref: 55

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

8) A company with assets and operations in more than one country and that concentrates on penetrating multiple countries with a minimally customized marketing mix is referred to as a(n) ________ company.

  1. A) international
  2. B) outsourced
  3. C) offshored
  4. D) multinational
  5. E) global

Answer:  E

Diff: 2             Page Ref: 55

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

9) Economies are typically classified by the country’s ________.

  1. A) gross domestic product (GDP)
  2. B) purchasing power parity (PPP)
  3. C) non-tariff barriers (NTBs)
  4. D) privatization
  5. E) nationalization

Answer:  A

Diff: 1             Page Ref: 55

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

 

10) Which of the following has the largest total GDP?

  1. A) China
  2. B) Japan
  3. C) the United States
  4. D) Chile
  5. E) the European Union

Answer:  E

Diff: 3             Page Ref: 55

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

11) Which of the following is generally reported at purchasing power parity (PPP)?

  1. A) gross domestic product (GDP)
  2. B) an exchange control
  3. C) a trade surplus
  4. D) a trade deficit
  5. E) a non-tariff barrier

Answer:  A

Diff: 2             Page Ref: 55

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

12) A(n) ________ is a group of countries that has agreed to lower tariff barriers and promote trade among members.

  1. A) trade union
  2. B) privatized organization
  3. C) economic community
  4. D) joint venture
  5. E) global network

Answer:  C

Diff: 2             Page Ref: 55

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

 

13) The euro is the currency used by ________.

  1. A) NAFTA
  2. B) CAFTA-DR
  3. C) the EU
  4. D) the WTO
  5. E) ACFTA

Answer:  C

Diff: 2             Page Ref: 56

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

14) NAFTA is a(n) ________.

  1. A) South American economic community
  2. B) common market for eastern and southern Africa
  3. C) economic community that includes India, Brazil, and China
  4. D) trade agreement that includes Canada, Mexico, and the United States
  5. E) regulatory branch of the World Trade Organization

Answer:  D

Diff: 2             Page Ref: 56

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

15) Which of the following statements about the World Trade Organization (WTO) is true?

  1. A) The WTO is a branch of the U.S. government.
  2. B) Only countries that belong to established economic communities are granted membership in the WTO.
  3. C) Only developed nations are granted membership to the WTO.
  4. D) The WTO’s main function is to help least developed countries grow their economies.
  5. E) The WTO is the most powerful international organization dealing with the global rules of trade between nations.

Answer:  E

Diff: 3             Page Ref: 56

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

16) When a government adopts ________, it enforces rules on foreign firms in order to give local companies an advantage over global competitors.

  1. A) trade agreements
  2. B) balances of trade
  3. C) trade deficits
  4. D) trade surpluses
  5. E) trade barriers

Answer:  E

Diff: 2             Page Ref: 56

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

17) A(n) ________ is a limit on the amount of product that can be imported into a country.

  1. A) tariff
  2. B) exchange control
  3. C) quota
  4. D) barter
  5. E) franchise

Answer:  C

Diff: 1             Page Ref: 56

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

18) A(n) ________ is a schedule of duties or fees applied to goods or services from foreign countries.

  1. A) tariff
  2. B) exchange control
  3. C) quota
  4. D) barter
  5. E) franchise

Answer:  A

Diff: 1             Page Ref: 56

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

 

19) Many countries outlaw ________, a practice in which a company prices its products lower than they are priced at home or lower than the cost to make the product.

  1. A) indirect exporting
  2. B) counterfeiting
  3. C) bribery
  4. D) dumping
  5. E) countertrading

Answer:  D

Diff: 1             Page Ref: 56

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

20) A(n) ________ is a government ban or restriction on the amount of a specific currency that is permitted to be traded or purchased.

  1. A) tariff
  2. B) exchange control
  3. C) quota
  4. D) barter
  5. E) franchise

Answer:  B

Diff: 1             Page Ref: 56

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

21) When the value of a country’s exports exceeds the value of its imports, the country has a(n) ________.

  1. A) industrial economy
  2. B) exchange control
  3. C) trade surplus
  4. D) trade deficit
  5. E) post-industrial economy

Answer:  C

Diff: 1             Page Ref: 56

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

 

22) When the value of a country’s imports exceeds the value of its exports, the country has a(n) ________.

  1. A) industrial economy
  2. B) exchange control
  3. C) trade surplus
  4. D) trade deficit
  5. E) post-industrial economy

Answer:  D

Diff: 1             Page Ref: 56

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

23) Marketers need to understand the ________ factors of a country from two perspectives: the country’s overall level of industrialization and its income distribution.

  1. A) political
  2. B) cultural
  3. C) economic
  4. D) legal
  5. E) natural

Answer:  C

Diff: 1             Page Ref: 57

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

24) In most cases, which of the following is true about a subsistence economy?

  1. A) It has an agrarian society.
  2. B) It is by definition landlocked.
  3. C) It has a viable middle class.
  4. D) It has high literacy levels.
  5. E) It has an advanced economic infrastructure.

Answer:  A

Diff: 2             Page Ref: 57

Skill:  Concept

Objective:  5-2

 

 

25) Which of the following best describes a country that is actively engaged in international trade and has robust manufacturing, service, and financial sectors ?

  1. A) subsistence economy
  2. B) raw materials exporting economy
  3. C) industrializing economy
  4. D) industrial economy
  5. E) free-trade economy

Answer:  D

Diff: 2             Page Ref: 57

Skill:  Concept

Objective:  5-2

 

26) Which of the following is most characteristic of a post-industrial economy?

  1. A) Service and information sectors are the primary sources of economic growth.
  2. B) The market for consumer goods present little growth potential.
  3. C) The nation has an economy based on agriculture.
  4. D) Many people rely on bartering for basic goods and services.
  5. E) The country has an economy based on exporting raw materials.

Answer:  A

Diff: 2             Page Ref: 57

Skill:  Concept

Objective:  5-2

27) Which of the following are usually referred to as developing countries?

  1. A) subsistence economies and raw materials exporting economies
  2. B) raw materials exporting economies and industrializing economies
  3. C) raw materials exporting economies and industrial economies
  4. D) industrial economies and industrializing economies
  5. E) industrial economies and post-industrial economies

Answer:  B

Diff: 3             Page Ref: 57

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

28) Nationalization occurs when a government ________.

  1. A) transfers government functions to the private sector in order to create new business opportunities
  2. B) reimburses a foreign company that has lost facilities due to natural causes
  3. C) refuses to allow its businesses to engage in exporting
  4. D) takes control or ownership of private property
  5. E) imports more than it exports

Answer:  D

Diff: 1             Page Ref: 57

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

29) In a ________, a legislature selects the head of government according to party strength as expressed in elections.

  1. A) limited democracy
  2. B) monarchy
  3. C) limited monarchy
  4. D) totalitarian state
  5. E) parliamentary democracy

Answer:  E

Diff: 1             Page Ref: 58

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

30) Which of the following is the form of government that seeks to control not only all political and economic matters, but also the attitudes, values, and beliefs of its population?

  1. A) limited democracy
  2. B) monarchy
  3. C) limited monarchy
  4. D) totalitarianism
  5. E) parliamentary democracy

Answer:  D

Diff: 1             Page Ref: 58

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

31) The power or right of a legal or political entity to exercise its authority over a specific geographic area is referred to as ________.

  1. A) jurisdiction
  2. B) extraterritoriality
  3. C) power parity
  4. D) exchange control
  5. E) nationalization

Answer:  A

Diff: 1             Page Ref: 58

AACSB:  Ethical understanding and reasoning abilities

Skill:  Concept

Objective:  5-2

 

 

32) Which of the following holds certain individuals, such as diplomats, accountable to the laws of their home country while exempting them from the laws of a foreign country in which they are operating?

  1. A) jurisdiction
  2. B) extraterritoriality
  3. C) power parity
  4. D) exchange control
  5. E) privatization

Answer:  B

Diff: 1             Page Ref: 58

AACSB:  Ethical understanding and reasoning abilities

Skill:  Concept

Objective:  5-2

 

33) ________ occurs when someone voluntarily offers payment or something of financial value to get an illegal advantage.

  1. A) Privatization
  2. B) Counterfeiting
  3. C) Bribery
  4. D) Jurisdiction
  5. E) Countertrade

Answer:  C

Diff: 1             Page Ref: 58

AACSB:  Ethical understanding and reasoning abilities

Skill:  Concept

Objective:  5-2

34) The unauthorized copying of products, packaging, or other intellectual property of a registered brand is called ________.

  1. A) privatization
  2. B) counterfeiting
  3. C) bribery
  4. D) dumping
  5. E) countertrade

Answer:  B

Diff: 1             Page Ref: 58

AACSB:  Ethical understanding and reasoning abilities

Skill:  Concept

Objective:  5-2

 

 

35) Trading firms that work out elaborate deals in which they trade or barter their products with one another or even supply goods in return for tax breaks from the local government are using ________.

  1. A) bribery
  2. B) privatization
  3. C) zero-sum games
  4. D) countertrade
  5. E) dumping strategies

Answer:  D

Diff: 2             Page Ref: 58

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

36) In a culture that values ________, people tend to subordinate their personal goals to those of a stable group, family, or team.

  1. A) collectivism
  2. B) individualism
  3. C) long-term goals
  4. D) short-term goals
  5. E) ethnocentrism

Answer:  A

Diff: 2             Page Ref: 59

AACSB:  Multicultural and diversity understanding

Skill:  Concept

Objective:  5-2

37) In a culture that values ________, people tend to have less formal relationships and stress the prominence of individual rights over group rights.

  1. A) collectivism
  2. B) individualism
  3. C) long-term goals
  4. D) short-term goals
  5. E) ethnocentrism

Answer:  B

Diff: 2             Page Ref: 59

AACSB:  Multicultural and diversity understanding

Skill:  Concept

Objective:  5-2

 

 

38) Which of the following cultural values refers to how comfortable individuals are with participating in decision making regardless of their position?

  1. A) uncertainty avoidance
  2. B) power distance
  3. C) individualism versus collectivism
  4. D) masculinity versus femininity
  5. E) long-term versus short-term orientation

Answer:  B

Diff: 2             Page Ref: 59

AACSB:  Multicultural and diversity understanding

Skill:  Concept

Objective:  5-2

 

39) Which of the following is the first step a firm should take when deciding whether or not to go global?

  1. A) Develop marketing mix strategies for foreign markets.
  2. B) Analyze whether it is in the firm’s best interest to focus on the domestic market or to expand to international markets.
  3. C) Identify the most attractive global markets for the firm’s products.
  4. D) Select a market-entry strategy that fits the firm’s desired level of commitment.
  5. E) Identify potential partners in international markets.

Answer:  B

Diff: 2             Page Ref: 61

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-3

40) Which of the following factors would most likely push a company to decide NOT to pursue a global marketing strategy?

  1. A) The company’s home market is stagnant.
  2. B) The company would have to redesign its products.
  3. C) The company needs to counterattack international competitors in its home markets.
  4. D) Foreign markets present higher profit opportunities.
  5. E) Global competitors have offered similar products.

Answer:  B

Diff: 3             Page Ref: 61

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-3

 

 

41) The method of entering a foreign market that presents the least amount of risk for a company is ________.

  1. A) joint venturing
  2. B) direct investment
  3. C) exporting
  4. D) joint ownership
  5. E) contract manufacturing

Answer:  C

Diff: 2             Page Ref: 62

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-3

 

42) Firms that wish to use indirect exporting go through ________ who understand the local market.

  1. A) direct investors
  2. B) franchisees
  3. C) intermediaries
  4. D) franchisors
  5. E) contract manufacturers

Answer:  C

Diff: 2             Page Ref: 62

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-3

43) Through ________, a partner firm in the foreign market buys the right to use a company’s manufacturing process, patent, or brand.

  1. A) indirect exporting
  2. B) licensing
  3. C) contract manufacturing
  4. D) direct investment
  5. E) joint ownership

Answer:  B

Diff: 1             Page Ref: 62

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-3

 

 

44) ________ ventures occur when a company joins forces with foreign investors to create a local business of its own.

  1. A) Joint ownership
  2. B) Licensing
  3. C) Contract manufacturing
  4. D) Franchising
  5. E) Indirect exporting

Answer:  A

Diff: 1             Page Ref: 62

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-3

 

45) ________ involves entering a foreign market by establishing foreign-based manufacturing facilities.

  1. A) Exporting
  2. B) Direct investment
  3. C) Joint venturing
  4. D) Contract manufacturing
  5. E) Direct exporting

Answer:  B

Diff: 2             Page Ref: 62

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-3

46) Lower costs in the form of cheaper labor or raw materials and the opportunity to gain better first-hand knowledge of the wants and needs of consumers in the local market are factors that would likely lead a company to ________ in a foreign market.

  1. A) use direct exporting
  2. B) begin licensing
  3. C) begin franchising
  4. D) use indirect exporting
  5. E) make a direct investment

Answer:  E

Diff: 2             Page Ref: 62

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-3

 

 

47) Franchising is a form of ________.

  1. A) importing
  2. B) contract manufacturing
  3. C) licensing
  4. D) joint venture
  5. E) direct investment

Answer:  C

Diff: 2             Page Ref: 62

Skill:  Concept

Objective:  5-3

 

48) Through ________, a local firm purchases the right to use a company’s processes and brands in a service business.

  1. A) indirect exporting
  2. B) contract manufacturing
  3. C) joint ownership
  4. D) franchising
  5. E) direct investment

Answer:  D

Diff: 1             Page Ref: 62

Skill:  Concept

Objective:  5-3

 

49) Profit opportunities are greatest for marketers that use a(n) ________ strategy.

  1. A) indirect exporting
  2. B) contract manufacturing
  3. C) joint ownership
  4. D) franchising
  5. E) direct investment

Answer:  E

Diff: 2             Page Ref: 62

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-3

50) Which of the following is the distinguishing characteristic of a born global company?

  1. A) the speed at which the company becomes active in global markets
  2. B) the company’s preference for entering countries with different languages and commercial practices
  3. C) the company’s preference for using direct investment as a market entry strategy
  4. D) the size of the company
  5. E) the company’s ability to overcome trade barriers

Answer:  A

Diff: 2             Page Ref: 63

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-3

51) U.S. sugar import quotas have existed for more than fifty years and preserve about half of the U.S. sugar market for domestic producers. Why does the United States continue to have these quotas?

  1. A) to reduce competition for its domestic sugar industry
  2. B) to increase the cost of sugar
  3. C) to control the supply and demand for sugar
  4. D) to support a mass market for sugar
  5. E) to improve the promotion of sugar

Answer:  A

Diff: 2             Page Ref: 56

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-2

 

52) In February 2000, the United States imposed a tax on imported steel in an effort to protect about 5,000 U.S. jobs. Another name for this levied tax is a(n) ________.

  1. A) embargo
  2. B) balance of trade
  3. C) tariff
  4. D) quota
  5. E) exchange control

Answer:  C

Diff: 2             Page Ref: 56

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-2

53) Kyrgyzstan is a small, poor, mountainous country with a predominantly agricultural economy. Cotton, wool, and meat are the main agricultural products and exports. Fifty-one percent of the population lives in poverty. Kyrgyzstan is an example of a(n) ________.

  1. A) BRIC country
  2. B) subsistence economy
  3. C) industrializing country
  4. D) raw materials exporting economy
  5. E) post-industrial economy

Answer:  B

Diff: 2             Page Ref: 57

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-2

 

 

54) Which of the following is the best example of nationalization?

  1. A) In 1940, the city of New York purchased the bankrupt Brooklyn-Manhattan Transit rail lines.
  2. B) In 1979, Great Britain made a partial sale of British Petroleum to private investors.
  3. C) A private company contracts to manage all of a city’s waste management.
  4. D) A country’s economic policy calls for a balance of trade.
  5. E) A developing country receives a loan from the International Monetary Fund.

Answer:  A

Diff: 2             Page Ref: 57

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-2

 

55) Azerbaijan imported wheat from Romania in exchange for crude oil and Vietnam exchanged rice for Philippine fertilizer and coconuts. Both scenarios are examples of which of the following?

  1. A) convertible trade
  2. B) tarriffs
  3. C) quotas
  4. D) protectionism
  5. E) countertrade

Answer:  E

Diff: 2             Page Ref: 58

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-2

56) Members of management at Growing Green, a company that markets organic and environmentally friendly gardening and landscaping supplies and equipment, are evaluating the benefits and disadvantages of indirect exporting, direct exporting, and licensing. In which stage of the global marketing process is Growing Green?

  1. A) deciding whether to go global
  2. B) deciding which markets to enter
  3. C) deciding how to enter the market
  4. D) deciding on the global marketing program
  5. E) deciding on the global marketing organization

Answer:  C

Diff: 2             Page Ref: 61

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-3

 

 

57) Which of the following market entry strategies requires the lowest level of investment from a company?

  1. A) indirect exporting
  2. B) direct exporting
  3. C) joint venture
  4. D) joint ownership
  5. E) direct investment

Answer:  A

Diff: 2             Page Ref: 62

AACSB:  Analytic skills

Skill:  Application

Objective:  5-3

 

58) Think Ink is a growing company that sells a variety of inks for home and business printers. Management at Think Ink has decided to open a sales branch overseas to handle sales and distribution abroad. Think Ink is engaging in ________.

  1. A) indirect exporting
  2. B) direct exporting
  3. C) licensing
  4. D) joint ownership
  5. E) management contracting

Answer:  B

Diff: 2             Page Ref: 62

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-3

59) Coca-Cola markets globally by making ________ with bottlers around the world for a fee or royalty and then supplying them with the syrups needed to produce Coca-Cola products.

  1. A) contract manufacturing agreements
  2. B) joint manufacturing agreements
  3. C) licensing agreements
  4. D) joint ownerships agreements
  5. E) direct investments

Answer:  C

Diff: 2             Page Ref: 62

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-3

 

 

60) Sears opened up department stores in Mexico and Spain, where it found qualified local manufacturers to produce many of the product it sells. This type of joint venture is known as ________.

  1. A) joint ownership
  2. B) licensing
  3. C) management contracting
  4. D) indirect exporting
  5. E) contract manufacturing

Answer:  E

Diff: 2             Page Ref: 62

AACSB:  Analytic skills

Skill:  Application

Objective:  5-3

 

61) The Tim Hortons chain accounts for more than half of all the donut and coffee stores in Canada. The chain’s red-and-white store banners are fixtures in many Canadian communities. In 2001, the first Tim Hortons appeared in the United States through a contractual agreement allowing an independent operation to adopt Tim Hortons’ entire way of doing business. This agreement is an example of a(n)________.

  1. A) direct investment
  2. B) franchise
  3. C) contract manufacturer
  4. D) joint ownership
  5. E) joint venture

Answer:  B

Diff: 2             Page Ref: 62

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-3

62) When considering the marketing mix in international marketing, advocates of ________ would be most likely to focus on the similarities among cultures and argue that basic needs and wants are the same everywhere.

  1. A) nationalization
  2. B) standardization
  3. C) privatization
  4. D) jurisdiction
  5. E) extraterritoriality

Answer:  B

Diff: 2             Page Ref: 62

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-3

 

 

Refer to the passage below to answer the following questions.

 

Selman & Saks, a maker of men’s and women’s razors and electric hair trimmers, had little reason to become involved in the global arena. But after acquiring Wellman Enterprises, whose largest division engages in a licensing agreement with a German firm to produce women’s hosiery, managers at Selman & Saks wondered just whether a company-wide global focus would be more profitable after all.

Managers at Selman & Saks studied Wellman’s licensing agreement in great detail. Though seeing first-hand the benefits Wellman found with the licensing agreement, managers decided that Selman & Saks would target the French market merely via exporting.

With the assistance of a domestic export department, the Selman & Saks razors and hair trimmers entered France. For six months, sales were mediocre. But after that, sales suffered. Opinions varied among numerous managers as to the cause of the failure. “Who knows the local market better than people who live there?” was a comment heard throughout Selman & Saks. “Maybe we needed an alliance with a French firm, or a licensing agreement, before racing to get there.”

 

63) Based on the passage, Selman & Saks entered the French market to gain which of the following benefits of global trade?

  1. A) access to new consumer markets
  2. B) access to less expensive labor
  3. C) access to less expensive materials
  4. D) access to foreign investment incentives
  5. E) the ability to offset domestic economic cycles

Answer:  A

Diff: 2             Page Ref: 53

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-1

64) Which of the following best explains why Selman & Saks chose exporting as its entry method to the French market?

  1. A) Exporting offers the highest potential for profit.
  2. B) Exporting offers a lower risk level for the company.
  3. C) Indirect exporting is more expensive than direct exporting.
  4. D) Exporting offers the most savings through scale economies.
  5. E) Exporting offers greater access to less expensive labor and materials.

Answer:  B

Diff: 2             Page Ref: 62

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-3

 

 

65) If Selman & Saks allowed a French company to produce and market razors and trimmers carrying the company’s brand in exchange for a royalty, Selman & Saks would be using which market entry strategy?

  1. A) exporting
  2. B) franchising
  3. C) licensing
  4. D) contract manufacturing
  5. E) joint ownership

Answer:  C

Diff: 2             Page Ref: 62

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-3

 

66) A global firm can gain marketing, production, and financial advantages that are not available to purely domestic competitors.

Answer:  TRUE

Diff: 2             Page Ref: 53

Skill:  Concept

Objective:  5-1

 

67) BRIC countries accounted for more than one-third of world economic growth in the most recent decade.

Answer:  TRUE

Diff: 3             Page Ref: 53

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-1

 

68) Though the economies of the BRIC countries are significant, even combined they are unlikely to overtake the size and importance of the U.S. economy.

Answer:  FALSE

Diff: 3             Page Ref: 53

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-1

69) A glocal company is committed to using a combination of global and local marketing tactics in every foreign market it enters.

Answer:  FALSE

Diff: 2             Page Ref: 54

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-1

 

 

70) Offshoring is a type of outsourcing in which business activities are completed in another country.

Answer:  TRUE

Diff: 2             Page Ref: 55

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

71) The only member countries of the North American Free Trade Agreement (NAFTA) are the United States, Canada, and Mexico.

Answer:  TRUE

Diff: 2             Page Ref: 56

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

72) The main pursuit of the World Trade Organization (WTO) is to guarantee basic human rights in all markets.

Answer:  FALSE

Diff: 2             Page Ref: 56

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

73) An industrializing economy is characterized by increasing raw material exports and decreasing raw material imports.

Answer:  FALSE

Diff: 2             Page Ref: 57

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

 

74) A monarch, who usually reigns for life and by hereditary right, is the head of a parliamentary democracy.

Answer:  FALSE

Diff: 2             Page Ref: 58

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-2

75) Low masculinity societies have limited differentiation between genders.

Answer:  TRUE

Diff: 2             Page Ref: 59

AACSB:  Multicultural and diversity understanding

Skill:  Concept

Objective:  5-2

 

76) In developed markets such as the United States, it has become more difficult for high rates of GDP growth to be sustained.

Answer:  TRUE

Diff: 2             Page Ref: 61

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-3

 

77) Indirect exporting is a market entry strategy with low costs but higher risks.

Answer:  FALSE

Diff: 2             Page Ref: 62

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-3

 

78) Some host countries require foreign companies entering a market to make a direct investment in the country.

Answer:  TRUE

Diff: 2             Page Ref: 62

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-3

 

79) Global marketing strategies are intended to create efficiencies.

Answer:  TRUE

Diff: 2             Page Ref: 62

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-3

 

80) Most businesses that operate globally tend to gravitate toward countries that are similar in language and commercial practices to their home country.

Answer:  TRUE

Diff: 2             Page Ref: 63

AACSB:  Dynamics of the global economy

Skill:  Concept

Objective:  5-3

81) In the United States, the service and information sectors of the economy account for most of the nation’s economic growth. Manufacturing makes an important but decreasing contribution to the economy. The United States is best classified as a post-industrial economy.

Answer:  TRUE

Diff: 2             Page Ref: 57

AACSB:  Dynamics of the global economy

Skill:  Application

Objective:  5-2

 

82) A retail Web site where consumers can purchase goods from producers is an example of a market.

Answer:  TRUE

Diff: 2             Page Ref: 61

AACSB:  Use of information technology

Skill:  Application

Objective:  5-3

 

83) Joint venturing has occurred when two or more U.S. companies jointly invest in distributing products to a foreign country.

Answer:  FALSE

Diff: 2             Page Ref: 62

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-3

 

84) Explain how extensive customization from market to market may cancel out some of the benefits of global trade for a company.

Answer:  One of the chief benefits of global trade is the efficiency obtained from scale economies; extensive customization will undo any of these gains, as the marketing mix changes from nation to nation.

Diff: 2             Page Ref: 54

AACSB:  Analytic skills

Skill:  Application

Objective:  5-1

 

85) Compare and contrast a multinational company and a global company.

Answer:  Both multinational and global companies maintain assets and operations in more than one country; however, a multinational company concentrates on adapting products and services to the specific needs of each country, while a global company concentrates on penetrating multiple countries with a minimally customized marketing mix.

Diff: 3             Page Ref: 55

AACSB:  Analytic skills

Skill:  Application

Objective:  5-2

86) Explain the distinction between outsourcing and offshoring.

Answer:  Outsourcing involves a business procuring some services from a third-party labor supplier; offshoring is outsourcing business activities to be completed in another country.

Diff: 2             Page Ref: 55

AACSB:  Analytic skills

Skill:  Application

Objective:  5-2

 

 

87) Eastman Kodak accused Japanese rival Fujifilm of selling color photographic paper in the United States for as little as a quarter of what it charges in Japan. What unethical and often illegal practice was Kodak accusing Fujifilm of implementing? Explain your answer.

Answer:  Eastman Kodak was accusing Fujifilm of the practice known as dumping, in which a company prices its products lower in the international markets than in its home country.

Diff: 2             Page Ref: 56

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-2

 

88) Explain why businesses tend to like the idea of privatization.

Answer:  Privatization stands to benefit private businesses, as a government creates new business opportunities by transferring government functions to the private sector.

Diff: 2             Page Ref: 57

AACSB:  Analytic skills

Skill:  Application

Objective:  5-2

 

89) What distinguishes a democracy from a parliamentary democracy?

Answer:  In both a democracy and a parliamentary democracy, the people elect representatives. In a parliamentary democracy, the representatives then select the government leaders based on party support as expressed in the election.

Diff: 2             Page Ref: 58

AACSB:  Analytic skills

Skill:  Application

Objective:  5-2

 

90) Briefly explain the cultural value of uncertainty avoidance.

Answer:  Uncertainty avoidance involves the desire to minimize uncertainty; people in low uncertainty avoidance cultures more easily accept change and take on risk than those in high uncertainty avoidance cultures.

Diff: 2             Page Ref: 59

AACSB:  Multicultural and diversity understanding

Skill:  Application

Objective:  5-2

91) Why are marketers exploring more opportunities in emerging markets?

Answer:  Marketers are looking to emerging markets such as the Middle East and Asia because these markets offer opportunities for growth not offered by the more slowly growing economies of developed markets.

Diff: 2             Page Ref: 61

AACSB:  Analytic skills

Skill:  Application

Objective:  5-3

 

 

92) Name three things that marketers need to balance when selecting a market entry strategy.

Answer:  Marketers should consider the balance of risk, cost, and profitability they are willing to accept before they select a market entry strategy.

Diff: 3             Page Ref: 62

AACSB:  Analytic skills

Skill:  Application

Objective:  5-3

 

93) What is a possible risk involved with licensing?

Answer:  A company has less control over a licensee than it would over its own production facilities; the licensee may use the brand or patent in a way the company does not approve of.

Diff: 3             Page Ref: 62

AACSB:  Reflective thinking skills

Skill:  Application

Objective:  5-3

 

94) Describe the factors that might draw a company into global trade.

Answer:  Any of several factors might draw a company into global trade. Foreign markets may present additional sales and profit opportunities. The company can gain economies of scale and gain access to less expensive labor and natural resources. By going global, the company will be more able to offset domestic economic cycles. Another financial benefit is the access to foreign investment incentives that may be presented to the company. Enhanced brand image and recognition in global markets are other incentives.

Diff: 3             Page Ref: 53

AACSB:  Analytic skills

Skill:  Application

Objective:  5-1

95) Is global marketing more challenging than single country marketing? In a brief essay, explain why or why not.

Answer:  Global marketing is more challenging than single country marketing because it is more complex. National, regional, and local differences should be expected in each market. For example, what constitutes a “fair price” will differ from nation to nation, so marketers must be prepared to adapt their pricing strategies. Each country will have different competitors, with different options available to consumers. Also, product attributes will likely have to be varied for each market to fit the different cultural preferences of consumers. Similarly, advertising and promotions need to be adapted to fit each culture and foreign language. Other major variations from foreign market to foreign market include the supply chain and distribution options. Adjusting for all of these variations is part of the task of global marketing.

Diff: 2             Page Ref: 53-54

AACSB:  Analytic skills

Skill:  Application

Objective:  5-1

 

 

96) Describe the function of an economic community and a trade agreement. Explain why they are relevant to marketers. Give two examples of important economic communities.

Answer:  When countries agree to take certain actions to manage resources of goods and services by lowering tariff barriers and promoting trade among members, they form an economic community. Trade agreements are treaties between countries creating a free trade area where business can be conducted without barriers. Trade agreements and economic communities are important to marketers because they set policies in such areas as environmental standards, foreign investment, intellectual property rights, and labor rights that influence strategic decisions for marketers in these regions. The European Union (EU) and the North American Free Trade Agreement (NAFTA) are two of the most powerful economic communities.

Diff: 3             Page Ref: 55-56

AACSB:  Analytic skills

Skill:  Application

Objective:  5-2

 

97) What are trade barriers and why might a government adopt them as a policy? Explain how three examples of trade barriers function.

Answer:  A country that has a policy of using trade barriers enforces rules on foreign firms in order to give home companies an advantage. Examples of barriers include tariffs, quotas, non-tariff barriers, and exchange controls. Tariffs are taxes on imported goods, making foreign goods more expensive and giving domestic goods a price advantage. Quotas are limits on the amount of product that can be imported into a country in order to reduce competition for domestic industries. Non-tariff barriers are non-price restrictions such as manufacturing or production requirements for products. Exchange controls are used to ban or limit the amount of a specific foreign currency that is permitted to be traded or purchased within a country.

Diff: 3             Page Ref: 56

AACSB:  Analytic skills

Skill:  Application

Objective:  5-2

98) Compare and contrast a raw material exporting economy to a subsistence economy.

Answer:  Both a raw material exporting economy and a subsistence economy are poor in many ways. In a subsistence economy, most people engage in simple agriculture and consume most of what they produce. Unlike a subsistence economy, a raw material exporting economy is rich in one or more natural resources that can be exported to generate revenues. People in a subsistence economy are likely to rely on barter for basic goods and services.

Diff: 2             Page Ref: 57

Skill:  Application

Objective:  5-3

 

 

99) Describe the four steps a firm should take when it is considering going global.

Answer:  Management first needs to examine whether it is in the firm’s best interest to focus exclusively on the home market or to move out into foreign markets. This is a “go” or “no go” decision. The second step, if the decision is “go,” is to determine which international markets are most attractive for the company. Some countries will hold greater opportunities than others. After attractive markets are identified, the third step is to determine which market-entry strategy, and thus which level of commitment, is best for the firm. Finally, management must consider marketing mix strategies for foreign markets.

Diff: 2             Page Ref: 61

AACSB:  Analytic skills

Skill:  Application

Objective:  5-3

 

100) How is joint venturing more risky and complex than merely exporting?

Answer:  With a joint venture, a company joins forces with another foreign company to produce or market products or services. With a joint venture, the company is not merely producing domestically and then shipping abroad; the company is working hand-in-hand with a foreign company toward a common purpose. Exporting requires a smaller financial commitment, and exporting relationships are easier to sever than joint ventures are.

Diff: 3             Page Ref: 62

AACSB:  Analytic skills

Skill:  Application

Objective:  5-3

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