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1. Using a capital-intensive technology refers to using less equipment than labor in the production process.
a.
True
b.
False
ANSWER:
False
2. The Group of Twenty (G-20) 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.
True
b.
False
ANSWER:
False
3. A company wishing to buy goods abroad must first obtain a foreign currency exchange from the control agency.
a.
True
b.
False
ANSWER:
True
4. The surge in global trade in recent years has added to strains and charges for all forms of transport.
a.
True
b.
False
ANSWER:
True
5. Joint ventures prevent a local firm from acquiring managerial skills and new technology.
a.
True
b.
False
ANSWER:
False
6. One important resource of foreign direct investment is personnel, especially managers.
a.
True
b.
False
ANSWER:
True
7. The final step in creating a marketing mix is developing a thorough understanding of the global target market.
a.
True
b.
False
ANSWER:
False
8. Of all the types of managers, the 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
ANSWER:
False
9. Global marketing is a one-way street whereby only U.S. companies sell their wares and services throughout the world.
a.
True
b.
False
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ANSWER:
False
10. Exporting is usually the most complicated and most risky method of global marketing.
a.
True
b.
False
ANSWER:
False
11. Average family incomes are higher in more developed countries than in less developed countries.
a.
True
b.
False
ANSWER:
True
12. In the context of distribution, ocean shipping is faster than airfreight.
a.
True
b.
False
ANSWER:
False
13. Traditionally, marketing-oriented multinational corporations enable individual subsidiaries to compete independently
in domestic markets.
a.
True
b.
False
ANSWER:
False
14. Because 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
ANSWER:
True
15. The four Ps of global marketing strategy are product, place, promotion, and price.
a.
True
b.
False
ANSWER:
True
16. 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
ANSWER:
False
17. The Uruguay Round replaced General Agreement on Tariffs and Trade (GATT) with _____.
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)
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ANSWER:
b
18. Sinesia is a country that has very few sources of potable water. Given this information, which of the following is most
likely to happen?
a.
Sinesia’s international marketing will remain unaffected because petroleum is the only factor that affects
international marketing.
b.
Sinesia will remain an importer of foodstuffs.
c.
Sinesia will become an attractive target for military intervention.
d.
Sinesia’s wealth will equal that of the countries with rich sources of water.
ANSWER:
b
19. 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.
ANSWER:
c
20. Which of the following is a characteristic of market grouping?
a.
It occurs when government efforts stifle imports or investment by foreign corporations.
b.
It occurs when several countries agree to work together to form a common trade area.
c.
It occurs when a trade agreement dramatically lowers trade barriers across the world.
d.
It occurs when a domestic firm joins with a foreign company to create a new entity.
ANSWER:
b
21. Small businesses are taking slow, hesitant steps into the global market because it:
a.
limits 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.
ANSWER:
c
22. Which of the following statements is a characteristic of dumping?
a.
It refers to the active ownership of a foreign company or of overseas manufacturing or marketing facilities.
b.
It refers to 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.
c.
It refers to a form of trade in which all or part of the payment for goods or services is in the form of other
goods or services.
d.
It refers to a system in which prices of different currencies move up and down based on the demand for and
the supply of each currency.
ANSWER:
b
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23. Melrow Inc., a U.S. firm, suffers heavy losses and lays off many of its employees. 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
ANSWER:
b
24. 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
ANSWER:
a
25. Which of the following countries has the highest gross domestic product?
a.
Belwick, whose market value of final goods is $100 billion and market value of final services is $50 billion for
two years
b.
Sparanthea, whose market value of intermediate goods is $200 billion and market value of intermediate
services is $50 billion for a quarter year
c.
Zaneland, whose market value of final goods is $120 billion and market value of intermediate goods is $20
billion for a year
d.
Acquardica, whose market value of final goods is $170 billion and market value of final services is $90 billion
for a year
ANSWER:
d
26. 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.
b.
It can modify its Web site according to the foreign countries’ cultures.
c.
It can limit personal selling to buyers in the foreign countries.
d.
It can solely rely on free translation software to translate slogans and instructions.
ANSWER:
b
27. Which of the following is a factor that drives the popularity of imports in the United States?
a.
Lower wages compared to that of other countries
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
d.
Lower capacity of the equipment used for production in the exporting countries
ANSWER:
a
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28. A company is doomed to failure in a foreign country if it _____.
a.
does not understand the foreign country’s culture
b.
focuses on translating product names to the foreign country’s language
c.
varies its marketing mix according to the foreign customers
d.
pays attention to the foreign country’s demographics
ANSWER:
a
29. Which of the following statements is true of the term boycott?
a.
It refers to a limit on the amount of a specific product that can enter a country.
b.
It refers to a tax levied on the goods entering a country.
c.
It refers to the exclusion of all products from certain countries or companies.
d.
It refers to an agreement to stimulate international trade.
ANSWER:
c
30. 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.
mass customization
d.
global marketing standardization
ANSWER:
d
31. 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 its business entirely through the Internet.
d.
It bases its entire operations in its home country.
ANSWER:
b
32. _____ is the largest Latin American trade agreement, and it includes Argentina, Bolivia, Brazil, Chile, Colombia,
Ecuador, Paraguay, Peru, Uruguay, and Venezuela.
a.
Mercosur
b.
General Agreement on Tariffs and Trade (GATT)
c.
The Uruguay Round
d.
The North American Free Trade Agreement (NAFTA)
ANSWER:
a
33. Which of the following is a difference between a joint venture and contract manufacturing?
a.
A joint venture is formed when a domestic firm buys part of a foreign company to create a new entity, while
firms choose contract manufacturing to avoid being involved in licensing.
b.
A joint venture is formed when a domestic firm broadens its global marketing base without investment, while
in contract manufacturing, a licensor allows another firm to use its manufacturing process.
c.
A joint venture is formed when several countries agree to work together to form a common trade area, while
contract manufacturing occurs when government efforts stifle investment by foreign corporations.
d.
A joint venture is formed when an agreement to stimulate international trade is made, while contract
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manufacturing occurs when a tax is levied on the goods entering a country.
ANSWER:
a
34. Which of the following is a reason for practicing outsourcing in the United States?
a.
Increased corporate growth
b.
Chances of increased production delays
c.
Rising wages in the developing world
d.
Improperly designed parts and products in foreign countries
ANSWER:
a
35. In a direct foreign investment, which of the following statements is true of the direct investors?
a.
They do not have a controlling interest in the firm.
b.
They possess the lowest potential risk.
c.
They have the highest potential reward.
d.
They have a small minority interest in the foreign firm.
ANSWER:
c
36. Which of the following 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.
ANSWER:
d
37. Which of the following statements is true in the context natural resources?
a.
The past decade has witnessed an abundance of natural resources.
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.
Steep declines in the price of oil had a negative impact on America‘s oil producers.
ANSWER:
d
38. Which of the following is true of outsourcing?
a.
It reduces corporate growth.
b.
It reduces productivity and revenue growth.
c.
It faces production delays due to faulty parts.
d.
It increases energy costs in the United States.
ANSWER:
c
39. _____ 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)
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b.
The World Trade Organization (WTO)
c.
The North American Free Trade Agreement (NAFTA)
d.
The International Monetary Fund (IMF)
ANSWER:
d
40. Aztic Inc., a manufacturer of sports goods, plans to expand its operations to various other countries. After 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
ANSWER:
d
41. 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. In this scenario, opening a Web site:
a.
makes it difficult for Maria Apparel to go global through the Internet.
b.
frees Maria Apparel from old brick-and-mortar rules, regulations, and habits.
c.
immediately puts Maria Apparel in the international marketplace.
d.
stops Maria Apparel from selling products in its physical stores.
ANSWER:
c
42. 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 food 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.
The packing of frozen foods is 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.
ANSWER:
d
43. Which of the following statements is true of the term quota?
a.
It refers to a limit on the amount of a specific product that can enter a country.
b.
It refers to the exclusion of all products from certain countries or companies.
c.
It refers to a tax levied on the goods entering a country.
d.
It refers to an agreement to stimulate international trade.
ANSWER:
a
44. Which of the following statements is a characteristic of countertrade?
a.
It refers to a form of trade in which all or part of the payment for goods or services is in the form of other
goods or services.
b.
It refers to 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.
c.
It refers to the active ownership of a foreign company or of overseas manufacturing or marketing facilities.
d.
It refers to a system in which prices of different currencies move up and down based on the demand for and
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the supply of each currency.
ANSWER:
a
45. 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 each country prefers. In this
scenario, Khokho’s Coffee House is involved in _____.
a.
product invention
b.
promotion adaptation
c.
global marketing standardization
d.
product adaptation
ANSWER:
a
46. 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’s 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.
ANSWER:
c
47. _____ is a trade agreement that has dramatically lowered trade barriers worldwide. It led to the creation of the World
Trade Organization.
a.
The European Agreement
b.
General Agreement on Tariffs and Trade
c.
The North American Free Trade Agreement
d.
The Uruguay Round
ANSWER:
d
48. A(n) _____ is an intermediary who brings a buyer and a seller together.
a.
licenser
b.
export broker
c.
contract manufacturer
d.
export merchant
ANSWER:
b
49. A U.S. licensor will be most successful at maintaining effective control over licensees and preventing them from
voiding the 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.
ANSWER:
d
50. Which of the following is a similarity between joint ventures and licensing agreements?
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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.
ANSWER:
a
51. 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 an 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.
ANSWER:
d
52. 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 an e-commerce site
b.
Standardizing sizing of apparels
c.
Acting as an export broker
d.
Countertrading with foreign companies
ANSWER:
a
53. Fresnas Corp., a company that designs and manufactures apparel, 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 production delays.
ANSWER:
a
54. Currency markets operate under a system of _____, which is a system 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
ANSWER:
b
55. Which of the following statements is true of third-stage multinational companies?
a.
They sell products only in one country.
b.
Their top executives and core corporate functions are in different countries.
c.
They operate an entire line of business in another country.
d.
They set up foreign subsidiaries to handle sales in one country.
ANSWER:
c
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56. 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 the middle class in developing countries.
d.
It leads to a monopoly of domestic producers.
ANSWER:
a
57. Which of the following statements is true of inshoring and outsourcing?
a.
Inshoring occurs when multinational firms enable individual subsidiaries to compete independently in
domestic markets, while outsourcing occurs when markets throughout the world become alike.
b.
Inshoring refers to a strategy of providing different product features, while outsourcing refers to a strategy of
using a global vision to effectively market goods and services across national boundaries.
c.
Inshoring occurs when several countries agree to work together to form a common trade area, while
outsourcing occurs when prices of different currencies ”float” up and down based on demand.
d.
Inshoring refers to a strategy of returning production jobs to the United States, while outsourcing refers to a
strategy of sending United States jobs to foreign countries.
ANSWER:
d
58. Explain the major role played by the Internet and social media in global marketing.
ANSWER:
Answers will vary. In many respects, going global is easier than it has ever been before. Opening an e-
commerce site on the Internet immediately puts a company in the international marketplace. Sophisticated
language translation software can make any site accessible to people around the world. Global shippers such
as UPS, FedEx, and DHL help solve international e-commerce distribution complexities. E4X Inc. offers
software to ease currency conversions by allowing customers to pay in the currency of their choice. E4X
collects the payment from the customer and then pays the site in U.S. dollars.Because Facebook, YouTube,
and other social media are popular around the world, firms both large and small have embraced social media
marketing. Managers of global social media campaigns must always be aware of the cultures of the countries
in which they operate.
59. Write a note on the economic factors that influence the external business environment.
ANSWER:
Answers will vary. One of the major factors in the external environment facing the global marketer is the
level of economic development in the countries where it operates. In general, complex and sophisticated
industries are found in developed countries, and more basic industries are found in less developed countries.
Larger incomes mean greater purchasing power and demand, not only for consumer goods and services, but
also for the machinery and workers required to produce consumer goods.
60. Why do firms that enter into foreign trade need to adhere to the principles of the marketing mix?
ANSWER:
Answers will vary. To succeed, firms seeking to enter into foreign trade must still adhere to the principles of
the marketing mix. Information gathered on foreign markets through research is the basis for the four Ps of
global marketing strategy: product, place (distribution), promotion, and price. Marketing managers who
understand the advantages and disadvantages of different ways of entering the global market and the effect of
the external environment on the firm’s marketing mix have a better chance of reaching their goals.
61. Discuss exports in the United States.
ANSWER:
Answers will vary. Although some countries depend more on international commerce than the United States
that the United States. exports are automobiles, agricultural goods, machines, airplanes, computers,
chemicals, and petroleum products. Services that the United States exports are primarily educational,
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financial, legal, licensing-, and travel-related. When a foreign tourist visits the United States, all the money
he or she spends while stateside is counted as a travel-related export. Traditionally, only very large
multinational companies have seriously attempted to compete worldwide. However, more and more small
and medium sized companies have begun pursuing international markets, and some are even beginning to
play a critical role in driving export growth. The U.S. government is working with these firms to expand
small business trade. The Export–Import bank of the United States, for example, helps thousands of small
businesses obtain financing to expand their export sales.
62. Explain the legal structures that affect international trade.
ANSWER:
Answers will vary. Many legal structures are designed to either encourage or limit trade:
• Tariff: It is a tax levied on the goods entering a country. Because a tariff is a tax, it will either reduce
the profits of the firms paying the tariff or raise prices to buyers, or both. Normally, a tariff raises
prices of the imported goods and makes it easier for domestic firms to compete.
• Quota: It is a limit on the amount of a specific product that can enter a country. Several U.S.
companies have sought quotas as a means of protection from foreign competition.
• Boycott: It is the exclusion of all products from certain countries or companies. Governments use
boycotts to exclude companies from countries with which they have a political dispute.
63. Explain franchising.
ANSWER:
Answers will vary. Franchising is a form of licensing that has grown rapidly in recent years. More than 400
U.S. franchisors operate more than 40,000 outlets in foreign countries, and more than half of all international
franchises are for fast-food restaurants and business services.
64. Explain the four stages in which multinational corporations develop their businesses.
ANSWER:
Answers will vary. A company that is heavily engaged in international trade, beyond exporting and
importing, is called a multinational corporation. A multinational corporation moves resources, goods,
services, and skills across national boundaries without regard to the country in which its headquarters is
located.Multinationals often develop their global business in stages. In the first stage, companies operate in
one country and sell into others. Second-stage multinationals set up foreign subsidiaries to handle sales in
one country. In the third stage, multinationals operate an entire line of business in another country. The
fourth stage has evolved primarily due to the Internet and involves mostly high-tech companies. For these
firms, the executive suite is virtual. Their top executives and core corporate functions are in different
countries, wherever the firms can gain a competitive edge through the availability of talent or capital, low
costs, or proximity to their most important customers.