Chapter 5—Developing a Global Vision
TRUE/FALSE
1. Having a global vision means management recognizes and reacts to international marketing
opportunities, is aware of threats from foreign competitors in all markets.
2. Global trade has reached about $11 trillion a year.
3. About 85 percent of U.S. companies export their products to other countries on a regular basis.
4. The falling U.S. dollar makes the possibility of manufacturing in the United States more attractive than
in the past.
5. Multinational companies typically begin the development of their global business with direct
investment and continue using this strategy throughout the company’s life span.
6. Global marketing standardization assumes markets throughout the world are becoming more alike.
7. The same environmental factors that operate in the domestic market also exist internationally. These
factors (culture, economic development, political and legal structure, demographics, and natural
resources) should be examined regardless of the country.
8. Even if all parties to a global business transaction are fluent in a common language, other cultural
factors could interfere with the communication process.
9. While some countries have elements of both capitalism and socialism, most nations are at one political
extreme or the other.
10. According to research done by the World Bank, countries with the greatest amount of business
regulation foster the strongest economies.
11. The U.S. government limits the amount of sugar cane that is imported into the country. This is an
example of a quota.
12. The U.S. government prohibits the importation of Havana cigars because of political differences with
Cuba. This is an example of an import exchange control.
13. To protect its local vodka industry, Russia allows foreign manufacturers to have only one percent of
the Russian vodka market. This is an example of using tariffs to control foreign competition.
14. The Uruguay Round of trade negotiations dramatically increased trade barriers worldwide.
15. NAFTA is the New American Foreign Trade Amendment, which allows for balanced trade with the
European Union (EU).
16. GATT, NAFTA, and the EU are all examples of market groupings.
17. Vast differences in natural resources created international dependence and huge shifts of wealth.
18. Even though it is not actively involved in global marketing, Hennessey Enterprises, a U.S.-based
business, agreed to sell two thousand of its stress-reducing products to a distribution company in
Norway. This would be an example of direct investment.
19. Licensing agreements reduce the risk for manufacturers and sometimes even remove the requirement
for a manufacturer to produce its own product.
20. The major disadvantage of licensing agreements is that international companies cannot maintain
control over their licensees.
21. U.S.-based Procter & Gamble and Italian-based Fater agreed to produce and market diapers for the
European market. This is an example of a joint franchise.
22. The form of global organization that provides the highest potential for return on investment as well as
the highest level of risk is contract manufacturing.
23. Global marketing research is not any more difficult than domestic marketing research.
24. If a country’s currency appreciates, more of that currency will be needed to buy another country’s
currency.
25. The rules, regulations, and habits used for bricks-and-mortar stores tend to restrain and limit the
success of those retailers engaged in e-commerce.
MULTIPLE CHOICE
1. Individuals and organizations utilizing a global vision to effectively market goods and services across
the world are engaged in:
a.
international selling schemes
b.
borderless commerce
c.
global marketing standardization
d.
global logistics
e.
global marketing
2. Basketball is played nearly everywhere in the world and is an easily understood sport. The National
Basketball Association (NBA) finals reached more than 600 million televisions in 195 countries. From
this information, you should be able to infer that the NBA is:
a.
developing international selling schemes
b.
implementing standard international marketing
c.
implementing global marketing standardization
d.
supplementing its foreign vision
e.
practicing global marketing
3. Sawyer Components manufactures high-cost, customized roller parts for paper mills and is expanding
into China because of the opportunity for significant growth in this developing country. The owner
uses effective global strategies and is aware of threats from foreign competitors. This illustrates that
the owner has a global:
a.
advantage
b.
imperative
c.
vision
d.
outsource
e.
introspection
4. Gillette gets about two-thirds of its revenue from its international divisions. This shows that:
a.
U.S. citizens are shaving less
b.
their market share should increase
c.
more men and women need to shave
d.
sales need to be increased domestically
e.
adopting a global vision can pay off
5. All of the following statements about global marketing are true EXCEPT:
a.
Marketing to target markets throughout the world has become an imperative for business.
b.
Often a U.S. firm’s toughest domestic competition comes from foreign companies.
c.
Marketing managers must develop a global vision not only to recognize and react to
international marketing opportunities but also to remain competitive at home.
d.
Adopting a global vision can be lucrative for a company, and global marketing can offset
weak domestic performance.
e.
Foreign competitors have not gained significant market share in the U.S.
6. The primary reason large U.S. companies send U.S. jobs abroad is because labor costs are higher here
in the United States. They are engaging in _____.
a.
outsourcing
b.
global trade
c.
multinational employee searches
d.
employee export
e.
global employment
7. Forty million jobs may be shipped out of the country in the next decade or two according to Alan
Blinder, former Federal Reserve Chairman. The key factor in this phenomenon is _____.
a.
cultural changes
b.
the adoption of English worldwide
c.
communications technology
d.
competition
e.
more global flights
8. Many people fear world trade because it:
a.
will inevitably lead to inflation
b.
will cause living standards to increase at a slower rate
c.
causes some people to lose their jobs as production shifts abroad
d.
has brought entire nations out of poverty
e.
has increased per capita income for some countries
9. A(n) _____ is a company that is heavily engaged in global trade and moves its resources, goods,
services, and skills across national boundaries.
a.
international facilitator
b.
global trader
c.
multinational corporation
d.
exporting company
e.
international merchant
10. Which of the following statements about multinational firms is true?
a.
Multinationals typically do not change their methods of reaching their global markets if
they are successful with their initial strategy.
b.
Multinationals are defined as companies heavily engaged in exporting and importing.
c.
All multinationals must enter the fourth stage of globalization before they are fully
internationalized.
d.
Multinationals often develop their global businesses in stages.
e.
The five stages of globalization closely mirror the five stages of the product life cycle.
11. When European demand for a certain solvent declined, Dow Chemical instructed its German plant to
switch to manufacturing a chemical that had been imported from Louisiana and Texas. Dow Chemical
would be best described as a(n):
a.
global enterprise
b.
global trader
c.
cultural marketer
d.
exporting company
e.
multinational corporation
12. Apple Inc. has partnerships with wireless carriers in Japan, Spain and a handful of other European
countries. Apple Inc works with suppliers and retailers worldwide. This means that Apple is a _____.
a.
multinational corporation
b.
worldwide competitor
c.
marketplace competitor
d.
domestic corporation
e.
foreign investor
13. Otis Elevators has entered into a strategic alliance with a company in France from which it gets its
elevator door systems. It has a similar agreement with a manufacturer in Japan that provides it with
special motor drives. A manufacturer in Spain has worked closely with Otis to create small geared
parts necessary for the manufacture of elevators. The component parts are assembled at its plant in the
United States. Otis elevators can be found in buildings all over the world. Otis Elevators is an example
of a(n):
a.
cultural marketer
b.
global trader
c.
multinational corporation
d.
exporting company
e.
global enterprise
14. Claiborne Inc. produces leather accessories for motorcycle riders and is in stage one of creating their
global business. This means that they:
a.
operate in one country and sell to others
b.
have set up a foreign subsidiary
c.
operate an entire line of business in another country
d.
have top executives and core corporate functions in different countries
e.
they operate in every country in the world
15. Defeet International creates its apparel in North Carolina and sells it domestically and abroad. The
company is in which stage of global business?
a.
Stage one
b.
Stage two
c.
Stage three
d.
Stage four
e.
Stage five
16. In which stage do multicultural companies operate when they set up foreign subsidiaries to handle
sales in one country?
a.
Stage one
b.
Stage two
c.
Stage three
d.
Stage four
e.
Stage five
17. Cooley Manufacturing is a multinational company selling plumbing components around the world.
This company has progressed to the point that it operates an entire of line of business in several other
countries. Which stage of multinational business does this represent?
a.
Stage one
b.
Stage two
c.
Stage three
d.
Stage four
e.
Stage five
18. Which of the following is a criticism of multinational corporations?
a.
multinationals sometimes support reactionary and oppressive regimes
b.
multinationals require excessive employment information
c.
countertrading
d.
the transference of labor-intensive technology
e.
multinationals do not do enough to standardize their marketing mixes
19. A company that is capital-intensive:
a.
has an altered fiscal strategy for overseas operations
b.
spends more on equipment than on labor
c.
makes better use of benchmarking than other types of business
d.
creates employment monopolies
e.
must engage in countertrading due to restrictive foreign legislature
20. With a _____, a firm produces standardized products to be sold the same way all over the world.
a.
traditional marketing strategy
b.
global marketing standardization approach
c.
product extension approach
d.
culturally based marketing strategy
e.
synergistic approach to marketing
21. Global marketing standardization:
a.
is becoming less popular with the large multinationals
b.
encourages product, packaging, and advertising variations for each nation or local market
c.
actually raises production costs
d.
presumes markets throughout the world are becoming more alike
e.
is more popular with consumer products than with industrial goods
22. The Victorinox Swiss Army Knife is found all over the world. It is manufactured and marketed
similarly to all consumers. Victorinox uses a(n) _____.
a.
ethnocentric strategy
b.
global marketing standardization approach
c.
synergistic approach to globalization
d.
cultural marketing strategy
e.
traditional approach to marketing
23. Cardiac Science, a U.S. manufacturer of defibrillators, heart monitoring devices, and other medical
related devices, sells 85 percent of its products outside the United States. It sells basically the same
product to a hospital in London, Tokyo, Pretoria, or Sydney. It uses the same promotional tactics in all
of its markets. Cardiac Science:
a.
is not concerned about media and messages used for international promotional efforts
b.
uses global marketing standardization
c.
assumes cultural uniformity and lifestyle differences occur across cultural settings
d.
desires technological receptivity from country to country
e.
assumes language acceptance in each country
24. A business thinking of expanding into global markets needs to examine all of the following external
environments EXCEPT:
a.
culture
b.
political structure and actions
c.
its marketing mix
d.
natural resources
e.
demographic makeup
25. Central to any society is a common set of values shared by its citizens that determines what is socially
acceptable. Marketers refer to these values collectively as a country’s:
a.
ethical system
b.
culture
c.
ethnocentrism
d.
national personality
e.
socialization
26. A soft drink manufacturer who was thinking of investing in a bottling plant in the Czech Republic
should know the nation is proud of the fact it is among the world’s biggest beer drinkers. Czechs
consume an average of one-half liter of beer a day for every man, woman, and child in the country.
The _____ environment of this country could very easily prevent the soft drink bottling company from
succeeding.
a.
demographic
b.
economic
c.
cultural
d.
political
e.
technological
27. Muslim countries are receptive to most Disney products, but they have asked Disney not to include
Piglet when it sells its Winnie the Pooh characters because Muslims (as a part of their religious beliefs)
contend that pork in any form is unclean. This is an example of a _____ factor that directly affects
Disney’s global operation.
a.
political structure
b.
cultural
c.
technological
d.
competitive
e.
natural resource
28. Which of the following is an important cultural factor that should be considered by global marketers?
a.
competitive synergy
b.
language
c.
natural resources
d.
technology sensitivity
e.
level of economic development
29. In China, August 15 is “the Chinese Saint Valentine’s Day” in memory of two ancient lovers who were
separated by a goddess and only allowed to meet once a year on that date. Flower and candy sales
typically increase that day as they do on February 14 in the United States. This would be an important
part of the international _____ environment for a flower wholesaler or a confectionery company.
a.
cultural
b.
legal
c.
economic
d.
technological
e.
natural
30. When IKEA, the Swedish home furnishings retailer, first entered the Japanese market, it failed. It was
more successful in its second try because it was aware of the need to adapt its furnishings to fit the
smaller Japanese homes. The _____ environment had the greatest influence on IKEA’s first failure in
Japan.
a.
demographic
b.
economic
c.
cultural
d.
political
e.
technological
31. A U.S. executive had no idea the Japanese go through a very elaborate ritual when exchanging
business cards. When he arrived at a meeting in Tokyo, he sat down and tossed some of his business
cards across the table at a group of stunned Japanese businesspeople. Due to the U.S. executive’s
rudeness, the multimillion dollar deal failed. The U.S. executive overlooked the importance of which
environmental factor?
a.
culture
b.
demographics
c.
natural resources
d.
economic development
e.
political structure
32. Who are the richest people in the world?
a.
Americans
b.
Chinese
c.
British
d.
French
e.
Luxembourgers
33. The fact that Russia’s inflation rate has increased 15.1% since May of 2007 would be an important
_____ factor for a company that wanted to do business in that country.
a.
legal
b.
economic
c.
culture
d.
technological
e.
natural
34. Which of the following statements about the political environment is true?
a.
A recession is part of the political environment.
b.
A country is either socialistic or capitalistic, but never both.
c.
The countries with the least across-the-board regulations and political structures foster the
strongest economies.
d.
The European Union is purely an economic arrangement and has no political impact on
marketing.
e.
All of these statements about the political environment are true.
35. When a company or industry is taken over by the government, it has been:
a.
unionized
b.
boycotted
c.
exchanged
d.
patronized
e.
nationalized
36. A tax levied on the goods entering a country is called a(n):
a.
license
b.
quota
c.
boycott
d.
exchange control
e.
tariff
37. Consumers purchasing an automobile in Hong Kong must pay a 100% tax on it. This tax is imposed
by the government on all automobiles entering the country and is called a(n):
a.
tariff
b.
quota
c.
license
d.
boycott
e.
exchange control
38. A(n) _____ is a limit on the amount of a specific product that can enter a country.
a.
quota
b.
tariff
c.
boycott
d.
exchange control
e.
transfer limit
39. Since 1953, the United States has limited the amount of raw peanuts that can be imported to 1.7
million pounds a year. This is only about one-tenth of 1 percent of all domestic edible peanut
consumption in the United States. This limitation is an example of a(n):
a.
natural resource barrier
b.
quota
c.
tariff
d.
exchange control
e.
boycott
40. An exclusion of all products from certain countries or companies by a government or group is called
a(n):
a.
expropriation
b.
quota
c.
tariff
d.
exchange control
e.
boycott
41. In 1764, the British Sugar and Currency Acts created such economic difficulty in the American
colonies that soon-to-be Americans refused to buy British goods in protest. This refusal marked one of
the first examples of the use of the:
a.
transfer limit
b.
quota
c.
tariff
d.
exchange control
e.
boycott
42. A(n) _____ is a law that compels a company earning foreign currency from its exports to sell it to a
central bank rather than sending the money out of the country.
a.
tariff
b.
quota
c.
fiscal prerequisite
d.
exchange control
e.
transfer barrier
43. _____ are trade alliances in which several countries agree to work together to form a common trade
area that enhances trade opportunities among those countries.
a.
Boycotts
b.
Regional unifications
c.
Market groupings
d.
Free trade nations
e.
Expropriation members
44. _____ is a trade agreement that includes Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador,
Paraguay, Peru, and Uruguay. This agreement eliminated the tariffs among these trading partners.
a.
NAFTA
b.
Maastricht
c.
WTO
d.
GATT
e.
Mercosur
45. Negotiations (such as GATT or the Uruguay Round) between countries that are made to stimulate
global exchange and remove barriers are called _____ agreements.
a.
trade
b.
joint venture
c.
CRM
d.
exchange
e.
licensing
46. With respect to global business, MFN stands for:
a.
multi-functional norm
b.
multinational foreign network
c.
main foreign network
d.
most favored nation
e.
multi-foreign nation
47. The _____ is the most ambitious global trade agreement ever negotiated; the agreement has reduced
tariffs by one-third worldwide.
a.
Uruguay Round
b.
Mercosur
c.
GATT
d.
NAFTA
e.
Maastricht Treaty
48. The _____ of trade negotiations created the _____, which replaces GATT. This trade agreement
dramatically lowers trade barriers worldwide.
a.
Uruguay Round; World Trade Organization
b.
Doha Round; European Union
c.
Doha Round; NAFTA
d.
Paraguay Round; South American Free Trade Agreement
e.
Mercosur; European Union
49. Which of the following is the latest round of World Trade Organization (WTO)?
a.
Mercosur covenant
b.
CAFTA Alliance
c.
Doha Round
d.
Uruguay Round
e.
WTO Round
50. The North American Free Trade Agreement (NAFTA) did all of the following EXCEPT:
a.
created the world’s largest free-trade zone including Canada, the United States, and
Mexico
b.
substantially reduced economic growth in Mexico
c.
allowed U.S. and Canadian financial-services companies to own subsidiaries in Mexico
d.
removed many tariffs and duties so that Mexico, Canada, and the United States can trade
more freely
e.
expanded opportunities for U.S. businesses in Mexico
51. All of the following are countries included in the Central America Free Trade Agreement (CAFTA)
EXCEPT:
a.
United States
b.
Nicaragua
c.
El Salvador
d.
Guatemala
e.
Mexico
52. The goal of the Central America Free Trade Agreement (CAFTA) is to:
a.
create free-trade agreements between the United States and other industrialized nations
b.
eliminate all protectionism
c.
raise prosperity levels in all industrializing nations
d.
establish a free trade agreement between the United States and certain Latin American
countries
e.
make sure all nations achieve the economic and technological development of a takeover
economy or better
53. Which of the following statements about the European Union (EU) is true?
a.
The EU creates a single Europroduct for a generic Euroconsumer.
b.
The EU removes all internal trade barriers and standardizes regulations in European
countries for easier trade.
c.
The EU can correctly be called the “United States of Europe” because all European voters
have agreed to these changes.
d.
The existence of the EU eliminates protectionist movements by United Europe against the
Japanese and the United States.
e.
The European Union is the largest economy in the world.
54. Who offers low-interest loans to developing nations?
a.
World Bank
b.
International Monetary Fund
c.
Federal Reserve
d.
International Reserve
e.
United Nations
55. When developing countries began encouraging foreign investors and imports, companies like Black &
Decker and Pillsbury offered a wide array of products to countries throughout the world. Because of
enormous populations in developing countries, these companies predicted a potential for strong annual
sales. However, in addition to total population, companies must not overlook _____ factors such as
distribution of people within a country and household incomes.
a.
demographic
b.
political
c.
cultural
d.
educational
e.
country resource
56. A multinational company that makes a labor-intensive product would be interested in the _____
makeup of countries. Factors such as median age, gender, and literacy rates would determine the
success of its global expansion.
a.
demographic
b.
lifestyle
c.
natural
d.
cultural
e.
economic
57. Zambia is internationally recognized as the world’s second leading producer of cobalt, which is used
to make high-speed and high-temperature cutting tools and dyes. A company that wanted to
manufacture tools for shaping steel would be most attracted to which element of the Zambian
environment?
a.
culture
b.
legal
c.
economic
d.
technological
e.
natural resources
58. Vast differences in natural resources create all of the following EXCEPT:
a.
potential for military intervention
b.
shifts in wealth between nations
c.
inflation and recession
d.
global dependencies
e.
export opportunities for countries with no natural resources
59. Which method of entering the global marketplace would be LEAST risky?
a.
exporting
b.
licensing
c.
contract manufacturing
d.
joint ventures
e.
direct investment
60. Which method of entering the global marketplace would be most risky?
a.
licensing
b.
direct investment
c.
contract manufacturing
d.
joint ventures
e.
exporting