Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 1
Indicate whether the statement is true or false.
1. Opening an e-commerce site on the Internet makes it difficult for a company to gain recognition in the international
marketplace.
a. True
b. False
2. Of all the types of managers, managers of global social media campaigns are the ones who need not be aware of the
cultures of the countries in which they operate.
a. True
b. False
3. Global marketing refers to marketing that targets markets throughout the world.
a. True
b. False
4. Average family incomes are higher in the more developed countries than in the less developed countries.
a. True
b. False
5. The surge in global trade in recent years has added to strains and charges for all forms of transport.
a. True
b. False
6. In the context of distribution, ocean shipping is faster than airfreight.
a. True
b. False
7. Firms that want to become involved in licensing or to become heavily involved in global marketing may engage in
contract manufacturing.
a. True
b. False
8. Franchising is a form of exporting.
a. True
b. False
9. In the context of direct foreign investment, direct investors have the lowest potential reward and the lowest potential
risk.
a. True
b. False
10. Caused by shifting birthrate trends, a demographic dividend often leads to rising labor costs.
a. True
b. False
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 2
11. Since Facebook, YouTube, and other social media are popular around the world, firms both large and small have
embraced social media marketing.
a. True
b. False
12. A multidomestic strategy occurs when multinational firms enable individual subsidiaries to compete independently in
domestic markets.
a. True
b. False
13. When a company invests in a foreign firm and holds active ownership of the firm, then the company is said to be in a
joint venture with the foreign firm.
a. True
b. False
14. A company that is heavily engaged in international trade, beyond exporting and importing, is called a multinational
corporation.
a. True
b. False
15. The four Ps of global marketing strategy are product, place, promotion, and price.
a. True
b. False
16. The final step in creating a marketing mix is developing a thorough understanding of the global target market.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
17. Maria Apparel is a well-known apparel store. The owners of the store want the store to go global; hence, they have
opened a Web site. Given this information, which of the following statements is true?
a. It will be difficult for Maria Apparel to go global through Internet.
b. Maria Apparel is free from old brick-and-mortar rules, regulations, and habits.
c. Opening a Web site immediately puts Maria Apparel in the international marketplace.
d. Maria Apparel will stop selling products in its physical stores.
18. Tech-Fi is a technology solutions company in Seattle. In order to recover from heavy losses, the company moves its
telecommunication department to India. In India, the company hires new employees as it can pay them less than its
employees in Seattle. In this scenario, Tech-Fi is engaged in _____.
a. licensing
b. outsourcing
c. franchising
d. inshoring
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 3
19. Which of the following statements is true of a company that is in the second stage of global business?
a. It maintains a virtual executive suite.
b. It sets up foreign subsidiaries to handle sales in one country.
c. It runs business entirely through the Internet.
d. It has its entire operations in its home country.
20. A difference between inshoring and outsourcing is that inshoring:
a. provides higher corporate growth than outsourcing.
b. provides higher revenue growth than outsourcing.
c. reduces the productivity of a firm.
d. involves long-distance shipping and, hence, high transportation costs.
21. Fresnas Corp., a company that designs and manufactures apparels, practices inshoring. Given this information, which
of the following is most likely to be true of Fresnas Corp.?
a. It keeps its research team in close proximity.
b. It faces increased shipping and transportation costs.
c. It outsources its manufacturing jobs to other countries.
d. It faces a lot of time delays and communication issues.
22. Sinesia is a country that has minimal sources of potable water. Given this information, which of the following is most
likely to happen?
a. Sinesia's international marketing will not be affected because petroleum is the only factor that affects international
marketing.
b. Sinesia will remain as an importer of foodstuffs.
c. Sinesia will be an attractive target for military intervention.
d. Sinesia's wealth will be equal to that of the countries with rich sources of water.
23. Which of the following is a reason for practicing outsourcing in the U.S.?
a. Increased corporate growth
b. Chances of production delays
c. Rising wages in the developing world
d. Improperly designed parts and products
24. Unlike in joint ventures, in contract manufacturing, _____.
a. a domestic firm need not invest in overseas plants and equipment.
b. a domestic firm buys part of a foreign company.
c. a domestic firm joins with a foreign company to create a new entity.
d. a domestic firm does not agree on management strategies and policies.
25. D'Costas, an authentic Sparanthean restaurant, has many branches all over the world. The taste and quality of the food
served is same across all its branches. Based on this information, D'Costas is most likely following the strategy of _____.
a. global marketing localization
b. product adaptation
c. product adaptation
d. global marketing standardization
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 4
26. Which of the following is a difference between product invention and product adaptation?
a. Product invention involves altering the promotional strategies for a product, while product adaptation does not
involve altering such strategies.
b. Product invention takes the marketing mix into consideration, while product adaptation does not take it into
consideration.
c. Product invention involves drastically changing an existing product, while product adaptation involves slightly
altering a basic product.
d. Product invention applies only to products that are sold in local markets, while product adaptation applies to
products all around the world.
27. Rainbow Stationery is a popular stationery store. To access the global consumer base, it launched its Web site. Given
this information, which of the following statements is true?
a. Rainbow Stationery will have to pay higher taxes on its online sales.
b. The store will have to pay lower taxes on its online sales.
c. The Web site will immediately put Rainbow Stationery in the international marketplace.
d. Rainbow Stationery will have to stop selling products in its physical stores.
28. Which of the following companies is in the first stage of global business?
a. Time-On, which manufactures watches and clocks in Pennsylvania and sells them to other countries
b. InKed, which is based in Louisiana and has established several subsidiaries to manage its business in another
country
c. GoodWill, which is based in the United States and has launched a new line of business in a neighboring country
d. Go Skip, which operates online retail stores around the world
29. _____ refers to the exclusion of all products from certain countries or companies.
a. Tariff
b. License
c. Boycott
d. Quota
30. _____ occurs when several countries agree to work together to form a common trade area that enhances trade
opportunities.
a. Dumping
b. Market grouping
c. Joint venture
d. Direct foreign investment
31. Unlike firms that are in the second stage of global business, third-stage multinational companies:
a. sell products only in one country.
b. have their top executives and core corporate functions in different countries.
c. operate an entire line of business in another country.
d. set up foreign subsidiaries to handle sales in one country.
32. Which of the following is a factor that drives the popularity of imports in the U.S.?
a. Lower wages compared to other countries that have high average wages
b. Higher number of employees in the countries from where goods are imported
c. Higher prices of products in the countries from where the goods are imported
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 5
d. Lower capacity of the equipment used for production in the exporting countries
33. Dash Suits is a garment manufacturing company based in Kunta. It gets more than half of its business from foreign
sales. It has always been the best garment producer in the world. Given this information, which of the following
statements is true of Dash Suits?
a. The company is oblivious to the threats posed by multinational companies in Kunta.
b. The company outsources the production of fabrics to other countries.
c. The company is the only garment manufacturing company in Kunta.
d. The company has successfully blurred geographic and political barriers.
34. During the Uruguay Round, _____ replaced the General Agreement on Tariffs and Trade (GATT).
a. the European Union (EU)
b. the World Trade Organization (WTO)
c. the North American Free Trade Agreement (NAFTA)
d. the International Monetary Fund (IMF)
35. The owners of an animal shelter in Utopia want to spread their operations to different countries around the world. To
do so, they must:
a. start a new Web page, announcing the expansion.
b. engage in straight barter with foreign governments.
c. lend their service license to other animal shelters in Utopia.
d. countertrade with other animal shelters in other countries.
36. _____ was founded in 1945, one year after the creation of the World Bank, to promote trade through financial
cooperation and eliminate trade barriers in the process.
a. The European Union (EU)
b. The World Trade Organization (WTO)
c. The North American Free Trade Agreement (NAFTA)
d. The International Monetary Fund (IMF)
37. Which of the following companies is in the first stage of global business?
a. D Feet Corp., which manufactures footwear in a small town in Lucitona and sells the footwear to several countries
around the world
b. Laelle Inc., which is based in Euphonia and has set up several subsidiaries to manage its business in another
country
c. Fournotts Bros., which is based in Datford and opens a new line of business in a neighboring country
d. Rues and West Inc., which operates online shopping sites around the world
38. Currency markets operate under a system of _____ in which the prices of different currencies move up or down based
on the demand for and the supply of each currency.
a. countertrade
b. floating exchange rates
c. dumping
d. contract manufacturing
39. In _____, all or part of the payment for goods or services is in the form of other goods or services.
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 6
a. countertrade
b. price fixing
c. dumping
d. product adaptation
40. The owners of Fashion Spell, an apparel store based in the town of Lumberne, want to expand the store's business all
over the world. In this case, which of the following strategies can help the owners of Fashion Spell achieve their
objectives?
a. Opening a Web page
b. Being sensitive to the culture of citizens in Lumberne
c. Acting as an export broker
d. Countertrading with foreign companies
41. _____ is the sale of an exported product at a price lower than that charged for the same or a like product in the "home"
market of the exporter.
a. Exporting
b. Dumping
c. Boycotting
d. Contract manufacturing
42. Dippy, a company that manufactures toys, practices inshoring. Given this information, which of the following
statements is most likely to be true of Dippy?
a. It sources its production jobs to other countries.
b. It keeps its logistics experts in close proximity.
c. It features slow product innovation.
d. It faces increased fuel and transportation costs.
43. Connesia is a country that has a very warm climate. It also has a scarcity of water. Given this information, which of
the following is most likely true?
a. Connesia's image in the international market is unlikely to be affected because petroleum is the only factor that
affects international marketing.
b. Connesia is likely to depend on other countries for importing foodstuffs.
c. Connesia is likely to be an attractive target for military intervention.
d. Connesia is likely to export oil to other countries.
44. Which of the following countries has the highest gross domestic product?
a. Candell, with a market value of goods of $ 150 billion and final service value of $70 billion in 2016
b. Tech G, with an intermediate goods value of $250 billion and intermediate service value of $70 billion in 2016
c. Dan D, with a final goods value of $160 billion and intermediate goods value of $30 billion in 2016
d. Popsy, with a final goods value is $200 billion and final service value of $100 billion in 2016
45. The management of Irving Inc., an apparel company based in Letonia, decides to expand the company's operations to
several other countries. Given this information, which of the following strategies can be adopted by the management to
succeed in the foreign environment?
a. It can sell the same clothes it sells in its home country in the other countries too.
b. It can modify its Web site according to the foreign countries' culture.
c. It can limit personal selling to buyers in the foreign country.
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 7
d. It can solely rely on free translation software to translate slogans and instructions.
46. Roll Over, a restaurant famous for its wraps and rolls, has outlets all over the country. The dishes they serve taste the
same at every outlet. In this case, Roll Over is most likely following the strategy of _____.
a. global marketing standardization
b. product adaptation
c. customization
d. localized global marketing
47. Nessca Motors, a well-known company based in Nebolina, manufactures engines. Its management recently signed a
joint venture with Singletone Inc., a company based in Trinitia. Given this information, which of the following statements
will most likely be true?
a. The government of Trinitia will restrict Nessca Motors entry to the country.
b. Nessca Motors and Singletone Inc. will switch to contract manufacturing as the next step.
c. Nessca Motors may buy a part of Singletone Inc.
d. Singletone Inc. will pay royalty to Nessca Motors.
48. Which of the following is a similarity between export brokers and export agents?
a. Both act as hired purchasing agents for foreign customers operating in the exporter's home market.
b. Both live in foreign countries and assist in international trade.
c. Both assume all risks associated with selling a manufacturer's product in the international market.
d. Both allow manufacturers to retain title for products.
49. Orbed, a manufacturer of precious stones and jewelry, decides to expand its business to other neighboring countries.
After an extensive research, it lists the countries where the dominant population is below the poverty line and decides not
to enter the markets in these countries. In this scenario, Orbed is assessing the _____ of the countries.
a. political structure
b. natural resources
c. legal environment
d. demographic makeup
50. A U.S. licensor will be most successful in maintaining effective control over licensees and preventing them from
voiding the licensor's contract by:
a. using lawyers from both countries to write the licensing agreement.
b. insisting that all licensees have a published code of ethics.
c. receiving all the revenue earned by the licensees.
d. locally registering patents and trademarks to the U.S. firm and not to the licensees.
51. Which of the following is a difference between a quota and a boycott?
a. A boycott is a limit on the amount of goods entering a country, whereas a quota is a tax levied on goods entering a
country.
b. A boycott is the revenue received from international trade, whereas a quota is the revenue received from domestic
trade.
c. A boycott is used to include all foreign competition, whereas a quota is used by governments to exclude
companies from countries with which they have a political dispute.
d. A boycott is the exclusion of all products from certain countries or companies, whereas a quota is a means of
protection from foreign competition.
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 8
52. Yuncen Foods is a food manufacturer based in Lumberne. It gets over half of its revenue from international sales. It
has been consistently ranked as the best foods manufacturer in the world. Given this information, which of the following
statements is true of Yuncen Foods?
a. The company is overlooking the threats posed by foreign companies in Lumberne.
b. Packing of frozen foods are outsourced to other countries.
c. The company is not competitive in its home country.
d. Geographic and political barriers are irrelevant to the company's business decisions.
53. Which of the following statements is true of globalization?
a. It expands economic freedom and increases the living standards of people.
b. It increases prices and decreases product and service quality.
c. It has curbed the growth of middle class in developing countries.
d. It leads to monopoly of domestic producers.
54. Which of the following countries has the highest gross domestic product?
a. Belwick, whose goods’ market value is $100 billion and final service value is $50 billion in two years
b. Sparanthea, whose intermediate goods value is $200 billion and intermediate service value is $50 billion in a
quarter
c. Zaneland, whose final goods value is $120 billion and intermediate goods value is $20 billion
d. Acquardica, whose final goods value is $170 billion and final service value is $90 billion
55. A(n) _____ is a limit on the amount of a specific product that can enter a country.
a. quota
b. tariff
c. excise duty
d. exchange control
56. The management of Vimonland Theme Park sells the proprietary rights of all the park rides to an investment company
to operate one of its franchise in a foreign country. The investment company gains most of the profits from the newly
established theme park while paying the management of Vimonland Theme Park a percentage of its revenue as royalties.
In this case, Vimonland Theme Park is a _____.
a. licensor
b. buyer for export
c. contract manufacturer
d. licensee
57. Aztic Inc., a manufacturer of sports goods, plans to expand its operations to various other countries. During market
research, it avoids countries where the dominant population is mostly rural. In this case, Aztic Inc. is assessing the _____
of the countries.
a. political structure
b. natural resources
c. legal environment
d. demographic makeup
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 9
58. Khokho's Coffee House was the first company to introduce flavored coffee in the global market. It sells coffee in
several different flavors, such as blueberry, cinnamon, and cranberry, based on the flavors preferred in each country. In
this scenario, Khokho's Coffee House is involved in _____.
a. product invention
b. promotion adaptation
c. global marketing standardization
d. product adaptation
59. Tristie Gadgets, a popular company in Webbingham, manufactures customized cell phones and laptops. Its
management recently signed a joint venture with Double Scoop, a company based in Stratahoma. In this scenario, which
of the following statements is most likely to be true?
a. The government of Webbingham will lose the right to impose taxes on Double Scoop.
b. Tristie Gadgets and Double Scoop will switch to contract manufacturing as their next step.
c. Tristie Gadgets may buy a part of Double Scoop.
d. Double Scoop will pay royalty to Tristie Gadgets.
60. Wool-Derful is the first company to introduce woolen socks that can be worn as gloves as well. The company calls
this revolutionary accessory a slove. It is manufactured in different colors, designs, and sizes, and it is sold in countries
around the world. This best illustrates _____.
a. product adaptation
b. promotion adaptation
c. product invention
d. global marketing standardization
61. Cherry Ferry, a popular dessert café, has many branches around the world. The quality of the desserts at Cherry
Ferry's many outlets has remained the same over the years. In this case, Cherry Ferry is most likely following the strategy
of _____.
a. localized global marketing
b. product adaptation
c. customization
d. global marketing standardization
62. Poppies is the first company to introduce bubblegum filled candies. It sells bubblegum candies in many flavors such as
lime, green apple, and pineapple based on the popular flavor of each country. This best illustrates _____.
a. product invention
b. promotion adaptation
c. global marketing standardization
d. cannibalization
63. Which of the following is a disadvantage of outsourcing?
a. It reduces corporate growth.
b. It reduces productivity and revenue growth.
c. It causes production delays.
d. It increases energy costs in the U.S.
64. _____ is the largest Latin American trade agreement that includes Argentina, Bolivia, Brazil, Chile, Colombia,
Ecuador, Paraguay, Peru, Uruguay, and Venezuela.
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 10
a. Mercosur
b. General Agreement on Tariffs and Trade (GATT)
c. The Uruguay Round
d. The North American Free Trade Agreement (NAFTA)
65. A(n) _____ is an intermediary who brings a buyer and a seller together.
a. licenser
b. export broker
c. contract manufacturer
d. export merchant
66. _____ is a trade agreement that has dramatically lowered trade barriers worldwide and led to the creation of the
World Trade Organization.
a. The European Union
b. The General Agreement on Tariffs and Trade
c. The North American Free Trade Agreement
d. The Uruguay Round
67. In a direct foreign investment, which of the following statements is true of direct investors?
a. They do not have controlling interest of a firm in direct foreign investment.
b. They possess the lowest potential risk.
c. They have the highest potential reward.
d. They have low minority interest in the foreign firm.
68. In the context of external environment, which of the following is true of natural resources?
a. Steep declines in the price of oil in 2014 and 2015 had a positive impact on America's oil producers.
b. Petroleum is the only natural resource that affects international marketing.
c. Vast differences in natural resources result in minor shifts of wealth among countries.
d. The past decade has witnessed shortage of natural resources.
69. Small businesses are hesitant to involve in global business because it:
a. limits the access to advanced technologies in less developed countries.
b. slows down the rate at which people's living standards increase.
c. involves various trade laws or tariffs.
d. empowers governments to abuse the freedom and property of their citizens.
70. Which of the following is a similarity between joint ventures and licensing agreements?
a. Both involve joining with a foreign company to create a new entity.
b. Both depend heavily on contract manufacturing.
c. Both are free from government interference.
d. Both are free from risks.
71. A company is doomed to failure in a foreign country if it _____.
a. does not understand the foreign country's culture
b. excessively focuses on translating product names to the foreign country's language
c. varies its marketing mix according to the foreign customers
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 11
d. pays attention to the foreign country's demographics
72. Melrow Inc., a U.S. firm, suffers heavy losses and lays off many of its employees. As a measure to reduce its
manufacturing costs, it shifts its production units to another country where labor costs are less. In this scenario, Melrow
Inc. is engaged in _____.
a. licensing
b. outsourcing
c. franchising
d. inshoring
73. The management of Steering Inc., an automobile accessory manufacturing company based in Kush Town, decides to
expand its operations to several foreign countries. In this scenario, which of the following strategies can be adopted by the
management to succeed in the foreign environment?
a. It must limit itself to improving its internal environment.
b. It can modify its Web site to suit the requirements of the foreign countries' culture.
c. It can limit personal selling to buyers in the foreign country.
d. It can solely rely on free translation software to translate slogans and instructions.
74. Why do firms that enter into foreign trade need to adhere to the principles of the marketing mix?
75. Write a note on the economic factors that influence the external business environment.
76. Explain the legal structures that affect international trade.
77. Discuss exports in the U.S.
78. Explain the four stages of multinational corporations.
79. Explain franchising.
80. Explain the major role played by the Internet and social media in global marketing.
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 12
Answer Key
1. False
2. False
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 13
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 14
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 15
Name:
Class:
Date:
chapter 5
Copyright Cengage Learning. Powered by Cognero.
Page 16
