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Indicate whether the statement is true or false.
1. A subsidiary operating in a foreign country may have important tax, tariff, and other operating advantages over a
licensing agreement or a joint venture.
a. True
b. False
2. In determining the size of the market for consumer products, the international marketer will probably be very interested
in per capita GDP figures.
a. True
b. False
3. An embargo occurs when a government suspends trade with a particular country.
a. True
b. False
4. A trading company provides a link between buyers and sellers in different countries.
a. True
b. False
5. Globalization of marketing involves developing marketing strategies as though the entire world (or major regions of it)
were a single entity.
a. True
b. False
6. Government restrictions on the amount of a particular currency that can be bought or sold are known as import controls.
a. True
b. False
7. The greatest danger in becoming involved in direct ownership in international marketing is political uncertainty.
a. True
b. False
8. NAFTA eventually eliminates all tariffs on goods produced and traded between the United States, Mexico, and Brazil.
a. True
b. False
9. Firms that use an international division structure are often organized domestically on the basis of functions or product
divisions, whereas the international division is organized on the basis of geography.
a. True
b. False
10. Media allocation, retail outlets, and price are among the easiest marketing mix variables to standardize.
a. True
b. False
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11. The job of the export agent is to bring together buyers and sellers from different countries.
a. True
b. False
12. The study of the cultural environment is unnecessary in the foreign market because foreign consumers will accept
anything that American marketers have to sell.
a. True
b. False
13. Because of continuing disputes and inconsistencies among the administrations of member states, it will be many years
before the European Union truly becomes one deregulated market.
a. True
b. False
14. A multinational enterprise is a firm that has operations or subsidiaries located in many countries.
a. True
b. False
15. Cultural relativism is the unconscious reference to one’s own cultural values, experiences, and knowledge when
traveling in other countries.
a. True
b. False
16. A positive balance of trade is considered good because it means that U.S. dollars are supporting foreign economies at
the expense of U.S. companies and workers.
a. True
b. False
17. The joint venture approach has little appeal to industries involved in extraction of natural resources.
a. True
b. False
18. Customers that travel the globe expect to be able to buy the same product in most of the world’s more than 200
countries.
a. True
b. False
19. The U.S. and Japanese economies are more integrated than are the U.S. and Canadian economies.
a. True
b. False
20. Opportunities for international marketers are limited to industrial nations with the highest incomes.
a. True
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b. False
21. Exporting, licensing and franchising, trading companies, contract manufacturing, and joint ventures are preferred
modes of international market entry for firms with an export department structure.
a. True
b. False
22. Brand name, product characteristics, packaging, and media allocation are among the easiest marketing mix variables
to standardize around the world.
a. True
b. False
23. The unification of Europe permits virtually free trade among the member nations of the European Union.
a. True
b. False
24. Under a licensing arrangement, the licensee pays commissions or royalties on sales or supplies used in manufacturing.
a. True
b. False
25. NAFTA simplifies country-of-origin rules, hindering Japan’s use of Mexico as a staging ground for further penetration
into U.S. markets.
a. True
b. False
26. GATT was based on negotiations between member countries to reduce worldwide tariffs and increase international
trade.
a. True
b. False
27. A quota is the suspension, by a government, of trade in a particular product.
a. True
b. False
28. Regardless of the extent to which a firm chooses to globalize its marketing strategy, extensive environmental analysis
and marketing research are necessary to understand the needs and desires of the target market(s) and successfully
implement the chosen marketing strategy.
a. True
b. False
29. Contract manufacturing occurs when a firm pays a commission or royalties on sales or supplies used in
manufacturing.
a. True
b. False
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30. Firms with internationally integrated structures are the least likely to engage in direct ownership activities
internationally.
a. True
b. False
31. While NAFTA eliminates many tariffs immediately, the tariffs on more sensitive goods, such as glassware, footwear,
and some fruits and vegetables, will be phased out over a 15-year period.
a. True
b. False
32. Domestic marketing involves marketing strategies aimed at markets within the home country.
a. True
b. False
33. U.S. marketers may engage in bribery to compete with foreign firms.
a. True
b. False
34. Two-thirds of the world’s total purchasing power is outside the United States.
a. True
b. False
35. Franchising is an arrangement whereby a franchisee grants a franchiser the right to market its product, using its name,
logo, methods of operation, advertising, products, and other elements of the franchising company’s business, in return for
a financial commitment and an agreement to conduct business in accordance with the franchisee’s standard of operations.
a. True
b. False
36. Customs and taboos are culture-bound and should be taken into consideration when products are marketed in a foreign
environment.
a. True
b. False
37. The World Trade Organization was an important outcome of the unification of Europe.
a. True
b. False
38. When products are introduced from one nation into another, acceptance is more likely if the two cultures are different.
a. True
b. False
39. It is impossible for a subsidiary to develop a local identity because it seldom employs personnel from the country
within which it operates.
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b. False
40. Importing is the sale of products to foreign markets.
a. True
b. False
41. International marketing is defined as marketing activities performed across national boundaries.
a. True
b. False
42. Cultural differences do not affect marketing negotiations and decision-making behavior.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
43. The gross domestic product is
a. a measure of the profit made by all firms in a nation.
b. the average annual earnings per person in a nation.
c. a measure of the types of products produced by a nation.
d. an overall measure of a nation’s economic standing.
e. a ratio of domestic products to products produced in foreign countries.
44. In relation to international marketing, which of the following best describes direct ownership?
a. A company owns its own manufacturing facilities.
b. A company forms an alliance with a similar company in a foreign country.
c. Foreign companies contract with manufacturers in other countries.
d. A company owns subsidiaries or facilities in foreign countries.
e. Two companies from different nations have interests in each other’s facilities.
45. The Samsung Group sells several different product lines around the world through home appliance and electronics
stores. Samsung appliances and electronics have been historically made in Korea, where the company is headquartered.
Recently, Samsung has been investigating the possibility of buying land and building a production plant in Tennessee, in
the United States. Samsung is now operating as a(an) ______; however, if the plant is built in Tennessee, it will be
operating as a(an) ______.
a. exporter; strategic alliance.
b. limited exporter; national marketer.
c. limited exporter; international proprietorship.
d. exporter; multinational enterprise.
e. exporter; global franchise.
46. Which of the following alliances/agreements is the United States not a part of?
a. NAFTA
b. APEC
c. GATT
d. WTO
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e. MERCOSUR
47. The ______________ of marketing suggests that firms should adopt marketing strategies as though the entire world
was one single marketplace. These firms would then market ___________ products using the same marketing mix
everywhere in the world.
a. internationalization; customized
b. globalization; customized
c. flexibility; standardized
d. globalization; standardized
e. international vision; custom
48. The global technology company, Apple, received negative publicity related to allegations that its workforce at a
________ plant in China was overworking the employees who worked as many as 15 hours a day in poor factory
conditions. Apple and other companies that participate in China’s manufacturing industry have hired inspectors to ensure
the contracted agreements are being followed and worker safety and rights are protected.
a. contract manufacturing
b. trading companies
c. licensing
d. direct ownership
49. Because firms have different resources and core competencies, their international marketing strategies will also be
different. Nevertheless, any firm seeking to be successful in international markets must establish the right organizational
structure for its core competencies and resources. Which of the following is a valid international organizational structure?
a. Geographic area structure
b. Non-Domestic structure
c. Domicile structure
d. Sales department structure
e. Overseas operations structure
50. When products are introduced into one nation from another, acceptance is far more likely
a. if prices are set very low.
b. when bribes are paid to local officials to aid distribution.
c. if there are similarities between the two cultures.
d. if packaging is adjusted to match local preferences.
e. when retailers are given incentives to push the products.
51. The Cooper Tire & Rubber Company has been searching for less expensive raw materials for manufacturing its
bicycle tires. Cooper has found that there are less expensive sources in the country of Indonesia, but it needs to form a
partnership with the government of Indonesia in order to gain access to the country’s rubber. What type of partnership will
need to be formed?
a. a multinational enterprise
b. a contract manufacturing arrangement
c. a strategic alliance
d. a franchise
e. a joint venture
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52. If Caterpillar wished to reach the market in Malaysia but was leery of a direct investment in the country, it might
provide a Malaysian operation with the knowledge to produce and market its products in exchange for a commission. This
type of arrangement is called
a. licensing.
b. exporting.
c. a strategic alliance.
d. a joint venture.
e. contract manufacturing.
53. The Ford Motor Company has entered into an alliance with Yves Saint Laurent, a maker of clothing and one of the
most successful fashion houses in the world. Yves Saint Laurent is headquartered in France. Ford will use Yves Saint
Laurent designs and color traditions in its production of luxury models of the company’s Expedition SUV and Lincoln
vehicles. The Yves Saint Laurent elements will appear in the interior and body paint color. This alliance would most likely
be classified as
a. a strategic alliance.
b. a joint venture.
c. a global direct ownership.
d. a multinational enterprise.
e. contract manufacturing.
54. Sociocultural forces in international markets keep marketer busy trying to understand local preferences, tastes,
customs and idioms. The marketer’s failure to understand these forces almost certainly leads to failures in the marketing
strategies used. Which one of the following statements about the sociocultural forces in international markets is true?
a. Cultural differences do not affect marketing negotiations and decision-making behavior.
b. Buyers’ perceptions of other countries do not influence product adoption and use.
c. Cultural differences do not have significant effects on marketing activities.
d. Transferring marketing logos, trademarks and symbols is usually an easy process when entering international
markets.
e. Product acceptance in an international market is more likely if similarities exist between buyer and seller cultures.
55. The international marketplace offers a new set of challenges for the marketer to navigate. There are multiple forces
that must be overcome if the firm’s marketing strategies are to be successful in international markets. For example, some
countries have import tariffs and quotas that restrict the flow of foreign products into their domestic markets. This is an
example of which of the following environmental forces present in international markets?
a. Political, Legal and Regulatory Forces
b. Sociocultural Forces
c. Ethical and Social Responsibility Forces
d. Competitive Forces
e. Economic Forces
56. The United States’ prohibition against importing cigars from Cuba is an example of a(n)
a. health control.
b. quota.
c. embargo.
d. exchange control.
e. import control.
57. At the heart of the ____ are agreements that provide legal ground rules for international commerce and trade policy.
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a. United Nations
b. GATT
c. MERCOSUR
d. WTO
e. APEC
58. If Tasmania levied a duty on all goods purchased from the United States and other countries outside its borders that
were brought into Tasmania, its businesses and citizens would be paying a(n)
a. embargo.
b. import tariff.
c. travelers’ tax.
d. export tax.
e. foreign duty.
59. When a glove manufacturer in China is allowed to sell only a certain number of plastic gloves to Japan, that firm is
facing a(n)
a. tariff.
b. embargo.
c. restrictive product standard.
d. quota.
e. balance of trade restriction.
60. A business partnership between a domestic firm and a foreign firm is known as
a. a joint venture.
b. an international partnership.
c. a multinational enterprise.
d. licensing.
e. exporting.
61. Which of the following trade alliances differs from others in its commitment to facilitating business and its practice of
allowing the private sector to participate in a wide range of activities?
a. NAFTA
b. EU
c. MERCOSUR
d. WTO
e. APEC
62. The unconscious reference to one’s own cultural values, experiences, and knowledge when encountering new and
different cultures is known as
a. the “when-in-Rome” approach.
b. the Fraedrich Principle.
c. cultural relativism.
d. the self-reference principle.
e. he self-reference criterion.
63. China is the world’s largest beer producer and consumer and represents a significant opportunity for American craft
breweries. An increasing number of consumers in China—especially middle-class residents prefer imported beers due to
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their higher quality, flavor options, and enhanced food safety. In stores, restaurants, and bars, the price of an imported
beer would be $2 to $4 per liter and vary from 100%–200% more expensive than Chinese domestic mass-produced beers.
Part of the price difference is related to the ______ that are imposed on imported beers which raised the price of the
product and affect trade. American craft breweries must realize that China is simply attempting to protect its local beer
market at the expense of foreign firms competing in China.
a. import tariff
b. quotas
c. embargoes
d. exchange controls
64. Solar Sports is excited about expanding their export opportunities to Cuba since the United States has renewed trade
relations with Cuba and plans to utilize a _______ which links buyers and sellers in different countries but is not involved
in manufacturing and does not own assets related to manufacturing.
a. trading company
b. contract manufacturing
c. licensing
d. outsourcing
65. The term dumping refers to the sale of
a. products sold in foreign markets that cannot be sold in the United States.
b. products sold in foreign markets at prices above those charged in the United States.
c. all discontinued U.S. products in foreign countries.
d. products sold in foreign countries at unfairly low prices.
e. products sold in foreign markets that cannot pass safety standards in the United States.
66. The North American Free Trade Agreement (NAFTA) ___________ tariffs on goods produced in and traded between
Canada, Mexico and the United States.
a. doubled
b. tripled
c. introduced
d. eliminated
e. extended
67. Sometimes business partnerships are formed between traditional rivals competing for market share in the same
product class. These partnerships are known as
a. trading companies.
b. contract manufacturers.
c. joint ventures.
d. strategic alliances.
e. licenses.
68. According to your text, ____ are small technology-based firms operating in international markets almost immediately
after their establishment and realizing as much as 70 percent of their sales outside the domestic home market.
a. “natural globals”
b. “multinational corporations”
c. “born globals”
d. “born multinationals”
e. “multinational enterprises”
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69. If The Limited Company relies on hiring a foreign textile manufacturer to produce a designated amount of clothing for
its Express, Limited, and other stores, it is using
a. exporting.
b. franchising.
c. contract manufacturing.
d. a joint venture.
e. licensing.
70. Southern Tier Industries has operations in more than 30 foreign countries. The headquarters in Atlanta controls the
entire organization while offering subsidiaries the freedom necessary to achieve success in local markets. Southern Tier
Industries is an example of a(n)
a. strategic alliance.
b. joint venture.
c. export-driven corporation.
d. multinational enterprise.
e. trading company.
71. The internationally integrated structure is one type of organizational structure used by U.S. firms for their international
operations. Which of the following statements is true about internationally integrated structures?
a. There are five types of internationally integrated structures.
b. The international subsidiary is one type of internationally integrated structure.
c. The matrix structure is not a type of internationally integrated structure.
d. The product division structure is one type of internationally integrated structure.
e. The geographic area structure is not a type of internationally integrated structure.
Scenario 8.2
Use the following to answer the questions.
KFC opened its first franchised restaurant outside of North America in England in 1964. Now, over a billion KFC chicken
dinners are sold annually at more than 80 countries and territories around the world. KFC has established its own
processing plants in these countries to ensure the quality of its chickens and other food items. In the U.S., the menu at
KFC is usually the same in all restaurants, with only a very few additional items available in different regions. However,
when KFC first franchised into Asian countries, it added many unusual local delicacies to the menu items such as fried
octopus and squid. Additionally, the franchised stores in Asian countries display cooked food in “plates” near windows at
the front of the store. This is a tradition for many restaurants in these countries to offer the customer passing by a
preliminary view of their product.
72. Refer to Scenario 8.2. Which of the following alliances will KFC most likely utilize to guide its business transactions
in Japan and China?
a. WTO
b. MERCOSUR
c. FTAA
d. NAFTA
e. APECAPEC
73. Globalization of markets requires developing marketing strategies as if the world were one market. Which of the
following marketing mix variables is most difficult to standardize for globalization?
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a. Brand name
b. Package
c. Media allocation
d. Labels
e. Product characteristics
74. Exporting, licensing, and using trading companies are preferred modes of international market entry for firms with
a(n) ____ structure.
a. international division
b. internationally integrated
c. export department
d. geographic area
e. matrix
75. The Foreign Corrupt Practices Act of 1977 makes it illegal for U.S. firms to
a. attempt to make large payments or bribes to influence policy decisions of foreign governments.
b. offer foreign businesses any type of incentive for purchasing their company’s products and services.
c. change their ethical standards when dealing with foreign firms.
d. give even small tips or gifts in countries where such gifts are customary business practices.
e. introduce any type of corruption into foreign businesses that have higher ethical standards than those of the U.S.
firm.
Scenario 8.1
Use the following to answer the questions.
Harley-Davidson Motors manufactures all of its motorcycles in the U.S. at one of four sites. With a large number of its
bikes sold in markets all around the world, it still retains the manufacturing close to the headquarters for several reasons,
one being that its management wants to keep close watch on the quality of its products. However, for all the accessories,
apparel, and other riding gear, Harley-Davidson contracts out to other manufacturers to produce the items with the Harley
name and logo. Some of these items, particularly the apparel, are made in China. Lately, some members of the Harley
Owners’ Group (HOG) have been complaining to the company about this practice, citing that “everything Harley should
be made in America”.
76. Refer to Scenario 8.1. Harley-Davidson’s practice of having manufacturers in China produce apparel items with the
Harley logo is an example of
a. contract manufacturing
b. globalization
c. direct ownership
d. joint venture
e. exporting
77. Johnston Chemicals’ president is very excited about the possibility of the firm’s British subsidiary having access to
customers in the entire EU. He realizes that it will be some time before this area truly becomes one market, primarily
because of differences in which of the following?
a. Available advertising media
b. Cultural factors
c. Legal challenges
d. Technological advances
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e. Economic environmental factors
78. In China, the price of imported Scotch is $30 per glass as opposed to Scotch from China which is $3. Which of the
following do you think accounts for the difference in price?
a. Exchange control
b. Balance of trade
c. Import tariff
d. Embargo
e. Export tariff
79. A large farming cooperative that focuses on the production of fruits and vegetables uses a business that sells the
farmers’ products in foreign countries and also provides consulting, insurance, legal assistance, and warehousing to the
cooperative. This business would most likely be called a(n)
a. trading company.
b. export specialist.
c. contract wholesaler.
d. licensor.
e. strategic partner.
80. If Hyundai, a Korean automobile manufacturing firm, started selling its cars at unfairly low prices to Germany,
Hyundai would be engaging in
a. quota-enforcing.
b. embargoing.
c. shoveling.
d. dumping.
e. dipping.
81. If a newly formed country wanted to increase its international trade and reduce worldwide tariffs, it would most likely
try to become a part of
a. NAFTA.
b. WTO.
c. MERCOSUR.
d. APEC.
e. EU.
82. What is the greatest advantage to an organization of having a subsidiary in a foreign nation?
a. Avoidance of all U.S. laws
b. Increase in cross-cultural approaches to management that allows subsidiaries to develop their own identity
c. Increased trend toward nationalistic marketing approaches
d. Greater amount of standardization of the marketing mix
e. Greater amount of security from government nationalization and other anticompetitive measures
83. The trade agreement that links Mexico, Canada and Unites States into one economic market is called which one of the
following?
a. European Union
b. MERCOSUR
c. Central American Free Trade Agreement
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d. APEC
e. NAFTA
84. Another name for the European Union is
a. the Common Market.
b. the European Market.
c. the Euro.
d. NAFTA.
e. AECO.
85. A company not involved in manufacturing that brings together buyers and sellers in different countries is usually
referred to as a
a. franchise.
b. contract manufacturer.
c. strategic intermediary.
d. trading company.
e. joint venture.
86. Franchising offers all the following benefits for franchisers except
a. franchise agreements require a certain standard of behavior from franchisees, which helps protect the franchise
name.
b. franchisers can retain control of their name while increasing global penetration of their products.
c. the franchisee’s revenue stream is fairly consistent because franchisers pay fixed fees and royalties.
d. the franchiser’s revenue stream is fairly consistent because franchisees pay fixed fees and royalties.
e. franchisers do not have to put up a large capital investment.
87. Swiss-based Nestlé has taken a global approach to marketing its chocolate products. Which of the following is most
easily standardized?
a. Product
b. Promotion
c. Distribution
d. Advertising
e. Price
88. Northeastern University and Penn State University both offer online MBA programs that are available to students
around the world. This is an example of
a. globalization.
b. customization.
c. licensing.
d. nationalization.
e. regionalization.
89. Nuhitzu believes it has the technological expertise to produce communication systems that will be leaders around the
globe. Boston Electronics is widely regarded as having excellent management systems and superior marketing programs.
To utilize these strengths, the two firms might form a(n) ____ to work together on a worldwide basis.
a. licensing agreement
b. export trading company
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c. joint agreement
d. strategic alliance
e. multinational enterprise
90. When Starbucks decided to expand into the international markets of India, Japan, and Argentina, management realized
that there would be significant differences in the standards of living, credit, buying power, and income distribution in
those countries. Starbucks is currently examining the ____ forces in its environmental analysis.
a. economic
b. cultural
c. ethical
d. technological
e. legal
91. Some hospitals in the United States find that their need for radiologists to read X-rays is volatile during the evening
and early morning hours, especially between 2:00 and 6:00 am. This is because the number of emergency room visits
needing X-rays is usually lower than those required during daytime operating hours. There is a recent trend where
hospitals in the United States are contracting radiologists from countries such as Australia to read the electronically-
transmitted X-rays during the evening and early morning hours. This is an example of
a. outsourcing.
b. licensing.
c. franchising.
d. contract manufacturing.
e. contract sourcing.
92. Firms that have operations or subsidiaries located in many countries are referred to as
a. multinational enterprises.
b. strategic alliances.
c. joint ventures.
d. international marketers.
e. export alliances.
93. What is the primary distinction between a joint venture and a strategic alliance in international marketing?
a. Strategic alliances are only formed between companies from well-developed countries whereas joint ventures are
between companies from economically-diverse countries.
b. A joint venture involves only two companies whereas a strategic alliance is formed between three or more
companies.
c. A joint venture is defined in scope, while a strategic alliance is typically represented by an agreement to work
together.
d. A joint venture is formed between companies with dissimilar product offerings while a strategic alliance is
formed between companies with similar product offerings.
e. A joint venture is simply a financial investment in a foreign firm while a strategic alliance involves more than just
financial support.
94. When the American company Exxon purchases crude oil from Saudi Arabia, it is engaging in
a. licensing.
b. importing.
c. free trade.
d. exporting.
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e. dumping.
Scenario 8.2
Use the following to answer the questions.
KFC opened its first franchised restaurant outside of North America in England in 1964. Now, over a billion KFC chicken
dinners are sold annually at more than 80 countries and territories around the world. KFC has established its own
processing plants in these countries to ensure the quality of its chickens and other food items. In the U.S., the menu at
KFC is usually the same in all restaurants, with only a very few additional items available in different regions. However,
when KFC first franchised into Asian countries, it added many unusual local delicacies to the menu items such as fried
octopus and squid. Additionally, the franchised stores in Asian countries display cooked food in “plates” near windows at
the front of the store. This is a tradition for many restaurants in these countries to offer the customer passing by a
preliminary view of their product.
95. Refer to Scenario 8.2. The practice of offering fried octopus and squid at Asian KFC’s is best described as
a. a strategy of standardization.
b. a strategy of globalization.
c. a strategy of some customization.
d. competitive advantage.
e. internationalizing the franchise.
96. Many companies choose to standardize their ____ across national boundaries to maintain a consistent and well-
integrated corporate culture.
a. technology
b. ethical behavior
c. language
d. dress code
e. products
97. Toyota Motor Company recently announced plans to build a new production facility in Mexico and will be able to
take advantage of reduced production costs related to wage rates in the local area. Toyota will sell the vehicles in Mexico
and will also export the Corolla model the plant produces around the world. The finished products costs will be based in
the Mexican peso which fluctuates but is generally considered to be weaker than the U.S. dollar or euro which will
provide Toyota with a price advantage in the export market. This is an example of the _______ force which affects
international marketing activities.
a. economic
b. competitive
c. sociocultural
d. political, legal, and regulatory
98. The trade alliance that includes Brazil, Argentina, Chile, and other countries is known as
a. OPEC.
b. APEC.
c. MERCOSUR.
d. NAFTA.
e. the Common Market.
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99. U.S. businesses are increasingly recognizing that international markets provide enormous opportunities for growth and
profit. ___________companies are entering international markets and quickly realizing as much as 70 percent of their
sales outside the domestic market within two years.
a. Joint venture
b. Born global
c. Internationally integrated
d. Export
e. Trading
100. Marketers of computer software, music CDs, and books are particularly affected by cultural differences in
a. socioeconomic status of citizens.
b. advances in technology.
c. differences in cross-cultural exchange behavior.
d. ethical codes of conduct for businesses.
e. standards regarding intellectual property.
101. The Mont Blanc Company plans to export expensive consumer gift items to Germany. The best overall economic
measure of market potential would be Germany’s
a. gross domestic product.
b. gross domestic product per capita.
c. gross national product.
d. balance of trade.
e. unemployment rate.
102. _____________ are companies that were started with the knowledge and resources to compete in a global
marketplace. They are usually small technology companies that quickly establish themselves in international markets.
They reach a point where as much as ________ percent of their sales come from locations outside the United States.
a. Multinationals; 80
b. International enterprises; 60
c. Global techs; 50
d. Global tigers; 75
e. Born globals; 70
Scenario 8.1
Use the following to answer the questions.
Harley-Davidson Motors manufactures all of its motorcycles in the U.S. at one of four sites. With a large number of its
bikes sold in markets all around the world, it still retains the manufacturing close to the headquarters for several reasons,
one being that its management wants to keep close watch on the quality of its products. However, for all the accessories,
apparel, and other riding gear, Harley-Davidson contracts out to other manufacturers to produce the items with the Harley
name and logo. Some of these items, particularly the apparel, are made in China. Lately, some members of the Harley
Owners’ Group (HOG) have been complaining to the company about this practice, citing that “everything Harley should
be made in America”.
103. Refer to Scenario 8.1. At what level of involvement in international marketing is Harley-Davidson with regard to its
bikes?
a. Full-scale
b. Globalization
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c. Joint venture
d. Direct ownership
e. Exporting
104. High Plains Furnishings, a furniture manufacturer in southern Montana, markets its furniture products in markets
within the United States. It has also found several niche target markets in Finland, Chile, and Argentina. High Plains
Furnishings is engaging in
a. domestic marketing and limited exporting.
b. localized marketing and domestic marketing.
c. globalized marketing.
d. domestic marketing and international exporting.
e. localized marketing and globalized marketing.
105. The agreement between the United States, Canada, and Mexico that merges these three countries into one
marketplace is called
a. EU.
b. MERCOSUR.
c. APEC.
d. NAFTA.
e. GATT.
106. A special form of licensing in which one company grants another company the right to market its product in
accordance with its standards in exchange for a financial commitment is called
a. a joint venture.
b. contract manufacturing.
c. direct licensing.
d. franchising.
e. a strategic alliance.
107. The unification of Europe through the European Union (EU)
a. produced the largest single market in the world.
b. calls for greater customization of products and attention to regulations and restrictions of European countries.
c. means that members of the EU have become more heterogeneous in their needs and wants.
d. required the countries to be segmented into many different markets.
e. permits virtually free trade among the member nations of the EU.
108. In considering the viability of potential international markets for Pepsi products, PepsiCo is advised to take into
account ____, which provides insight into market potential.
a. per capita gross domestic product
b. gross domestic product
c. the quantity of exports
d. the quantity of imports
e. total consumer income
109. Baxter Publishing sought to reduce expenditures related to the printing of books in its trade and educational market
and contracted with a printing company in China. However, the publishing company soon realized that China has weak
enforcement of intellectual property laws and that gray market books began appearing in the marketplace which greatly
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impacted Cengage’s profits. The company found that they had little recourse against the contract manufacturer and
learned a very difficult lesson in international marketing. This exemplifies the impact of _______ forces on international
business.
a. ethical and social responsibility
b. competitive
c. technological
d. political, legal, and regulatory
110. ____ can force businesspeople to buy and sell foreign products through a central agency, such as a central bank
a. Embargoes
b. Export tariffs
c. Quotas
d. Import tariffs
e. Exchange controls
Scenario 8.2
Use the following to answer the questions.
KFC opened its first franchised restaurant outside of North America in England in 1964. Now, over a billion KFC chicken
dinners are sold annually at more than 80 countries and territories around the world. KFC has established its own
processing plants in these countries to ensure the quality of its chickens and other food items. In the U.S., the menu at
KFC is usually the same in all restaurants, with only a very few additional items available in different regions. However,
when KFC first franchised into Asian countries, it added many unusual local delicacies to the menu items such as fried
octopus and squid. Additionally, the franchised stores in Asian countries display cooked food in “plates” near windows at
the front of the store. This is a tradition for many restaurants in these countries to offer the customer passing by a
preliminary view of their product.
111. Refer to Scenario 8.2. Suppose that KFC’s parent company experienced difficulty in opening its restaurants in China
unless KFC was willing to pay the government a “bribe”. If KFC were to resort to paying this bribe in China saying that
“it’s different doing business there” this would be an example of
a. a licensing arrangement.
b. the self-reference criterion.
c. cultural relativism.
d. balance of trade issues.
e. exchange controls.
112. Which of the following is often used to raise revenue for a country and/or to protect domestic products?
a. Quota
b. Warning label
c. Embargo
d. Import tariff
e. Exchange control
113. Levi Strauss markets its denim jeans in many countries and develops its marketing strategy as if the world were a
single market. This approach to selling a standardized product in all countries represents which type of international
marketing?
a. Exporting
b. Accidental exporting
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c. Limited exporting
d. Licensing
e. Globalization of markets
114. A ______________ links buyers and sellers in different countries but it has no manufacturing capability. It most
important function is ___________ to products and moving them from the domestic country to the foreign country.
a. joint venture; adding customizations
b. foreign subsidiary; taking title
c. trading company; adding value
d. foreign subsidiary; adding value
e. trading company; taking title
115. Government restrictions on the amount of a particular country’s currency that can be bought or sold are known as
a. embargoes.
b. quotas.
c. exchange controls.
d. import controls.
e. balance of trade controls.
116. The Grummond Group buys air conditioner components in industrialized countries and sells them to business
customers in developing countries where the air conditioners are assembled. Grummond is most likely classified as a(n)
a. trading company.
b. strategic alliance.
c. joint venture.
d. licensee.
e. exporter.
117. The extent of Raytheon‘s participation in global business is selling the batteries it manufactures to companies in
Spain. In this case, Raytheon is a(n)
a. trading company.
b. importer.
c. exporter.
d. franchiser.
e. contract manufacturer.
118. Select the true statement.
a. Legislation regulating marketing in many foreign countries is being eased.
b. A government’s attitude toward cooperation with importers has little impact on marketing to that country.
c. Refusing to give payoffs and bribes in some foreign countries may put a marketer at a competitive disadvantage.
d. Bribes and payoffs are considered unethical in all countries and cultures.
e. Bribes and payoffs are supported by U.S. trade policies under certain conditions.
119. The Southern Common Market (MERCOSUR) includes
a. countries from southern Africa.
b. both India and Indonesia.
c. Australia and New Zealand.
d. countries in South America.
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e. southern China and India.
120. Which of the following centralizes all of the responsibility for international operations?
a. Product division structures
b. Export department structures
c. Internationally integrated structures
d. International division structures
e. Global matrix structures
121. When asked where Laser Tools, Inc., markets its products, company president and founder Roger Helms says that
“the world is just one big market.” He feels anyone not taking this stance is systematically passing up profitable business.
Helms’s international marketing strategy is best described as
a. customization of marketing.
b. globalization of marketing.
c. limited exporting.
d. full-scale international marketing.
e. export agenting.
122. If Germany, in an attempt to bolster the sales of its own auto manufacturers, decided to limit the number of
automobiles that could be brought in from other countries, Germany would be using a(n)
a. embargo.
b. boycott.
c. exchange control.
d. import tariff.
e. quota.
123. The forces that affect foreign markets may differ dramatically from those affecting domestic markets. This makes a
careful ____ a critical part of a successful international marketing strategy.
a. political analysis
b. regulatory analysis
c. social audit
d. environmental analysis
e. marketing analysis
124. Approximately ____ of the world’s purchasing power is outside of the United States.
a. 1/10
b. 1/3
c. 2/3
d. 1/2
e. 9/10
125. Signature Cycles creates sleek and modern bicycles for commuters and cycling enthusiasts using the latest materials
such as carbon fiber frames. Signature Cycles are relatively expensive but its urban customers routinely pay $800 to
$1,000 for the hand-crafted bicycles. The owners are considering expanding their company’s footprint outside the United
States and are considering opportunities to export its products to Canada and Mexico. They have learned that _______
eliminated virtually all tariffs on goods produced and traded among Canada, Mexico, and the United States.
a. NAFTA