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 the 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 engages 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.”
106. Refer to Scenario 8.1. Harley-Davidson’s practice of having establishments 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
107. Refer to Scenario 8.1. One of Harley-Davidson’s largest international markets is in Japan where American brands
are highly sought after. This is an example of _____ impacting the market.
a. international forces
b. economic forces
c. domestic forces
d. cultural forces
e. environmental forces
Chapter 8 – Reaching Global Markets
108. Refer to Scenario 8.1. If Harley-Davidson were to suddenly find its inventory building up in Japan, it might reduce
inventory by selling the bikes at below cost prices. This practice is known as _____.
a. price skimming
b. shoveling
c. dumping
d. differential pricing
e. inventory compensation
109. 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
c. Joint venture
d. Direct ownership
e. Exporting
Chapter 8 – Reaching Global Markets
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 chicken 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, 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.
110. Refer to Scenario 8.2. KFC’s establishment of international production/processing facilities is an example of _____.
a. direct ownership
b. franchising
c. strategic alliance
d. outsourcing
e. contract manufacturing
111. 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 customization.
d. a strategy to gain competitive advantage.
e. internationalizing the franchise.
Chapter 8 – Reaching Global Markets
112. 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” and 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.
e. exchange controls.
113. 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. APEC
Chapter 8 – Reaching Global Markets
114. International marketing is defined as marketing activities performed across national boundaries.
a. True
b. False
115. Two-thirds of the world’s total purchasing power is outside the United States.
a. True
b. False
116. 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
Chapter 8 – Reaching Global Markets
117. An embargo occurs when a government suspends trade with a particular country.
a. True
b. False
118. A quota is the suspension, by a government, of trade in a particular product.
a. True
b. False
119. 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
Chapter 8 – Reaching Global Markets
120. Government restrictions on the amount of a particular currency that can be bought or sold are known as import
controls.
a. True
b. False
121. 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
122. Opportunities for international marketers are limited to industrial nations with the highest incomes.
a. True
b. False
Chapter 8 – Reaching Global Markets
123. U.S. marketers may engage in bribery to compete with foreign firms.
a. True
b. False
124. 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
125. Customs and taboos are culture-bound and should be taken into consideration when products are marketed in a
foreign environment.
a. True
b. False
Chapter 8 – Reaching Global Markets
126. Cultural differences do not affect marketing negotiations and decision-making behavior.
a. True
b. False
127. When products are introduced from one nation into another, acceptance is more likely if the two cultures are
different.
a. True
b. False
128. Cultural relativism is the unconscious reference to one’s own cultural values, experiences, and knowledge when
traveling in other countries.
a. True
b. False
Chapter 8 – Reaching Global Markets
129. NAFTA eventually eliminates all tariffs on goods produced and traded between the United States, Mexico, and
Brazil.
a. True
b. False
130. 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
131. The unification of Europe permits virtually free trade among the member nations of the European Union.
a. True
b. False
Chapter 8 – Reaching Global Markets
132. The U.S. and Japanese economies are more integrated than are the U.S. and Canadian economies.
a. True
b. False
133. GATT is based on negotiations between member countries to reduce worldwide tariffs and increase international
trade.
a. True
b. False
134. The World Trade Organization was an important outcome of the unification of Europe.
a. True
b. False
Chapter 8 – Reaching Global Markets
135. Domestic marketing involves marketing strategies aimed at markets within the home country.
a. True
b. False
136. Importing is the sale of products to foreign markets.
a. True
b. False
137. The job of the export agent is to bring together buyers and sellers from different countries.
a. True
b. False
Chapter 8 – Reaching Global Markets
138. A trading company provides a link between buyers and sellers in different countries.
a. True
b. False
139. Under a licensing arrangement, the licensee pays commissions or royalties on sales or supplies used in
manufacturing.
a. True
b. False
140. 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
Chapter 8 – Reaching Global Markets
141. Contract manufacturing occurs when a firm pays a commission or royalties on sales or supplies used in
manufacturing.
a. True
b. False
142. The joint venture approach has little appeal to industries involved in extraction of natural resources.
a. True
b. False
143. A multinational enterprise is a firm that has operations or subsidiaries located in many countries.
a. True
b. False
Chapter 8 – Reaching Global Markets
144. It is impossible for a foreign subsidiary to develop a local identity because it seldom employs personnel from the
country within which it operates.
a. True
b. False
145. The greatest danger in becoming involved in direct ownership in international marketing is political uncertainty.
a. True
b. False
146. 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
Chapter 8 – Reaching Global Markets
147. 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
148. Media allocation, retail outlets, and price are among the easiest marketing mix variables to standardize.
a. True
b. False
149. Brand name, product characteristics, packaging, and labeling are among the easiest marketing mix variables to
standardize around the world.
a. True
b. False
Chapter 8 – Reaching Global Markets
150. 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
Chapter 8 – Reaching Global Markets