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Name:
Class:
Date:
chapter 8
Indicate whether the statement is true or false.
1. A successful implementation of a straight extension strategy creates universal recognition of a product for
consumers from country to country.
a.
True
b.
False
2. International direct investment does not provide a competitive advantage because of its high risk potential and
high involvement characteristics.
a.
True
b.
False
3. Multinationals often employ huge foreign workforces relative to their American staffs.
a.
True
b.
False
4. The recently ratified Treaty of Lisbon enables the EU to enter into international agreements as a political
entity.
a.
True
b.
False
5. A global marketing strategy works well for products with strong, universal appeal and for high-tech brands
and luxury products.
a.
True
b.
False
6. A simple and inexpensive way for first-time exporters to reach foreign customers is to sell their products to
an export trading company.
a.
True
b.
False
7. The United States is an attractive market to foreign marketers as it does not require foreign companies to pay
corporate taxes.
a.
True
b.
False
8. A nation’s size, per capita income, and stage of economic development determine its prospects as a host for
international business expansion.
a.
True
b.
False
9. Acquiring an existing firm in a country where the company wants to do business is a form of international
direct investment.
a.
True
b.
False
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chapter 8
10. Modifying the control panel of a washing machine to accommodate for those cultures that read from right to
left would be considered a form of product invention.
a.
True
b.
False
11. The Foreign Corrupt Practices Act makes it illegal to bribe a foreign official in an attempt to solicit new or
repeat sales abroad.
a.
True
b.
False
12. Nearly 80 percent of Americans today work in the service sector.
a.
True
b.
False
13. The Export Trading Company Act of 1982 seeks to make it easier for foreign buyers to connect with U.S.
exporters.
a.
True
b.
False
14. The two largest trading partners of the United States are Canada and Mexico.
a.
True
b.
False
15. Nearly four of every five dollars in the United State’s gross domestic product comes from services such as
banking, entertainment, business and technical services, retailing, and communications.
a.
True
b.
False
16. The CAFTA-DR is a trade agreement among the United States, Central American nations, and the
Dominican Republic.
a.
True
b.
False
17. A multidomestic marketing approach brings the advantage of economies of scale to production and
marketing activities.
a.
True
b.
False
18. Administrative barriers are more subtle than tariffs.
a.
True
b.
False
19. Many marketing experts believe that most products require multidomestic marketing strategies to give them
a realistic global marketing appeal.
a.
True
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chapter 8
b.
False
20. The World Trade Organization oversees GATT agreements, serves as a forum for trade negotiations, and
mediates trade disputes.
a.
True
b.
False
21. The United States is the world’s largest exporter of goods and services followed by China.
a.
True
b.
False
22. Walmart is the world’s largest private employer and the largest retailer.
a.
True
b.
False
23. Governments use import quotas to protect domestic industry and employment and preserve foreign
exchange.
a.
True
b.
False
24. Licensing is an attractive entry strategy for small firms as it does not involve capital outlays.
a.
True
b.
False
25. Licensing is advantageous compared to exporting as it provides access to local partner’s distribution
channels and also protection from legal barriers.
a.
True
b.
False
26. The NAFTA has succeeded in achieving political integration among its member nations: the United States,
Canada, and Mexico.
a.
True
b.
False
27. Global marketing is rapidly becoming a necessity for most U.S. companies.
a.
True
b.
False
28. The term “exchange rate” refers to the price of one nation’s currency in terms of another country’s currency.
a.
True
b.
False
29. Manufacturers control marketing and distribution of their products while selling them through an export-
trading company.
a.
True
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b.
False
30. An offset agreement combines a small firm with a major international company where the small firm
essentially serves as a subcontractor on a large foreign project.
a.
True
b.
False
31. The labor conditions in a country are part of its political environment.
a.
True
b.
False
32. The Russian currency is considered a hard currency.
a.
True
b.
False
33. Dumping is the practice of selling a large volume of product into a foreign market at prices lower than its
own domestic market.
a.
True
b.
False
34. Experts are of the opinion that CAFTA’s economic impact is likely to be relatively large compared with
NAFTA.
a.
True
b.
False
35. A company that changes its product’s package size, price, and promotional message to meet the local
market’s taste is using a straight extension marketing strategy.
a.
True
b.
False
36. The largest operating multinational economic community in the world is the FTAA, linking 34 countries and
800 million people in the Western Hemisphere.
a.
True
b.
False
37. The customs taxes are uniform among all member nations of the European Union.
a.
True
b.
False
38. Pizza Hut franchises stores in areas with Arab and Indian populations. To accommodate dietary differences,
the traditional American recipes are modified. Consequently, the advertising, packaging, and promotional
message will change. Marketers refer to these changes as dual adaptation.
a.
True
b.
False
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chapter 8
39. Companies often adapt their pricing strategy from one foreign market to another and modify pricing when
market conditions change.
a.
True
b.
False
40. A major drawback to a global marketing strategy is its high cost of implementation.
a.
True
b.
False
41. A noticeable trend toward multinational economic integration has developed since the end of World War II.
a.
True
b.
False
42. Contractual agreements are less flexible compared to exporting strategies.
a.
True
b.
False
43. A multidomestic marketing strategy can be used by a firm in all of its domestic and foreign markets without
any modifications.
a.
True
b.
False
44. Use of straight extension strategy as part of global marketing strategy permits economies of scale in
production and marketing.
a.
True
b.
False
45. The most common reasons cited by marketers for going global include new customers in emerging markets
and reduced trade barriers.
a.
True
b.
False
46. Foreign marketers regard America as an inviting market because of its large population and high levels of
discretionary income.
a.
True
b.
False
47. Revenue tariffs are usually higher than protective tariffs.
a.
True
b.
False
48. Currencies that are considered to be soft currencies can be readily converted to other currencies such as the
dollar, euro, or yen.
a.
True
b.
False
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49. Embargoes impose a complete ban on the import of specific products from a particular country.
a.
True
b.
False
50. A customs union seeks to reconcile all government regulations affecting trade.
a.
True
b.
False
51. U.S. imports mainly include crude oil, machines, consumer electronics, and passenger cars.
a.
True
b.
False
52. Exchange control regulates international trade by controlling access to foreign currencies.
a.
True
b.
False
53. The Organization of Petroleum Exporting Countries (OPEC) is a collective export organization.
a.
True
b.
False
54. The ability to adapt products to local preferences and culture is the key to success in foreign markets.
a.
True
b.
False
55. An importer is a firm that sells goods manufactured domestically in foreign markets.
a.
True
b.
False
56. Countertrading can be utilized by a country as a way to control its balance-of-trade problems.
a.
True
b.
False
57. The General Agreement on Tariffs and Trade included services under international trading rules.
a.
True
b.
False
58. Foreign licensing agreements are valid for a specified time period after which they need to be revised or
renewed.
a.
True
b.
False
59. In a countertrade, products of one country are exchanged for products of another instead of cash.
a.
True
b.
False
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60. Franchising is a low risk way to enter a foreign market as it offers a proven concept.
a.
True
b.
False
61. The WTO makes binding decisions in mediating disputes and reduces trade barriers.
a.
True
b.
False
62. Manufactured goods account for the lion’s share of U.S. production output today.
a.
True
b.
False
63. A franchisee receives the right to sell the franchiser’s products and to use the franchiser’s name as well as a
variety of marketing, management, and other services.
a.
True
b.
False
64. The product invention strategy helps a firm take advantage of unique foreign market opportunities.
a.
True
b.
False
65. Quotas on imports and export subsidies are different forms of tariffs.
a.
True
b.
False
66. The ISO 9000 series sets standards for operations that minimize harm to the environment.
a.
True
b.
False
67. A manufacturing firm retains more control over the export process when it deals with an export trading
company rather than dealing with an export management company.
a.
True
b.
False
68. A nation’s basic system of transportation networks, communication systems, and energy facilities is referred
to as its infrastructure.
a.
True
b.
False
69. Globalization helps firms to gain benefits such as new insights into consumer behavior and alternative
distribution strategies.
a.
True
b.
False
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70. An export trading company provides the first-time exporter with expertise in locating foreign buyers and
ensuring that its goods meet local labeling and testing laws.
a.
True
b.
False
71. Subcontracting is a type of contractual agreement that assigns the production of goods or services to local or
smaller firms.
a.
True
b.
False
72. Some of the largest direct investments by foreign companies in the United States have occurred in the
automobile industry.
a.
True
b.
False
73. In the United States it is mandatory for firms to inform the customers if the food is grown using genetically
modified organisms.
a.
True
b.
False
74. Firms often use more than one strategy to enter into foreign markets.
a.
True
b.
False
75. Establishing a free trade area is the simplest way to achieve multinational economic integration.
a.
True
b.
False
76. Subcontracting with a local company provides protection from import duties.
a.
True
b.
False
77. A multinational corporation is a firm with significant operations and marketing activities outside its home
country.
a.
True
b.
False
78. The United States leads the world in retailing and service exports.
a.
True
b.
False
79. Outboard motors that are sold in the United States primarily as recreational products may be sold in a
foreign country as basic transportation equipment. Such a practice is an example of product adaptation.
a.
True
b.
False
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80. The three basic strategies for entering foreign markets are import/export, contractual agreements, and
international direct investment.
a.
True
b.
False
81. Forming a joint venture is the best way to enter into foreign markets that are regarded as developing
economies.
a.
True
b.
False
82. Revenue tariffs are designed to raise funds for the importing government.
a.
True
b.
False
Indicate the answer choice that best completes the statement or answers the question.
83. U.S. firms claiming that dumping threatens to hurt their business can file a complaint with the:
a.
United States Commercial Service.
b.
U.S. International Trade Commission (ITC).
c.
Office of the United States Trade Representative.
d.
United States Agency for International Development.
84. A global marketing strategy differs from a multidomestic marketing strategy in that the global marketing
strategy:
a.
does not bring the advantage of economies of scale to production and marketing activities.
b.
is a standardized marketing mix that can be used in all markets with minimal modifications.
c.
is tailored to meet the specific needs of the target markets in each nation.
d.
is ideal for highly differentiated products or products that are designed on the basis of local
preferences.
85. Jiffy peanut butter is a favorite brand and is owned by the J.M. Smucker Company since 2001 when it was
purchased from Procter and Gamble. The J.M. Smucker Company believes that peanut butter is universally
enjoyed across the globe and does not make any modifications to its marketing strategy when exporting to
international markets. Thus, the Jiffy packaging, product line and commercials are standardized with the
exception of providing translation in the local country's dominant dialect. The J.M. Smucker Company is
utilizing ________ strategy for Jiffy peanut butter.
a.
global marketing
b.
multidomestic marketing
c.
holistic marketing
d.
dominant marketing
86. Which of the following terms refers to an arrangement according to which a small firm teams with a major
international company and serves as a subcontractor on a foreign project?
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chapter 8
a.
International trade mentorship
b.
Trade facilitation
c.
An offset agreement
d.
A mutual trade agreement
87. _____ is a contractual arrangement in which a wholesaler or retailer agrees to meet the operating
requirements of a manufacturer.
a.
Direct investment
b.
Franchising
c.
Value engineering
d.
Business process reengineering
88. A multidomestic marketing strategy indicates that a firm:
a.
customizes its marketing decisions to effectively reach individual marketplaces.
b.
disregards the principles of market segmentation.
c.
considers all foreign countries to have equally competitive situations with respect to its industry.
d.
employs universal promotional messages for marketing its products.
89. Which of the following international market entry strategies is most likely to offer a competitive advantage
to the firms and is characterized by high levels of involvement and high risk potential?
a.
Franchising
b.
Sole sourcing
c.
Foreign licensing
d.
International direct investment
90. _____ are trade barriers designed to raise the retail price of an imported product to match or exceed that of a
similar domestic product.
a.
Subsidies
b.
Revenue tariffs
c.
Protective tariffs
d.
Import quotas
91. _____ is a form of exporting in which a firm barters products rather than selling them for cash.
a.
Subcontracting
b.
Free trade
c.
Countertrade
d.
Franchising
92. Cameron is a leather artisan who creates custom satchels, hand bags, and computer briefcases for customers
across the globe. He posts photos of his work on Instagram, uses Twitter to share fashion trends, and has
virtual store on Etsy. Which factor has made it possible for Cameron to become an international marketer?
a.
the Internet
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b.
Cameron's creativity
c.
Cameron's ability to Tweet catchy posts using Twitter
d.
Consumer's desire to purchase custom products
93. The United States is the world’s largest exporter of _____.
a.
services
b.
crude oil
c.
consumer electronics
d.
passenger cars
94. _____ is a contractual agreement that grants marketers in other countries the right to distribute a firm’s
merchandise or to use its trademark, patent, or process in a specified geographic area.
a.
Value engineering
b.
Sole sourcing
c.
Offset agreement
d.
Foreign licensing
95. Which of the following organizations was established as an outcome of GATT?
a.
NAFTA
b.
EU
c.
WTO
d.
FTAA
96. A marketing campaign for a vegetarian restaurant in China uncovers two facts: 1) eating meat is seen as a
sign of prosperity in China; 2) only an estimated 5 percent of the Chinese are vegetarians. Which interpretation
of these facts should be incorporated into the marketing campaign?
a.
Cook vegetarian food to look like meat so that customers feel prosperous.
b.
Calculate that China has over 1.2 billion citizens, so the vegetarian 5 percent yields 60 million
potential customers.
c.
Recognize that vegetarian customers will not be considered as prosperous as their neighbors.
d.
Price vegetarian restaurant food at a discount so that customers feel prosperous.
e.
Identify which Chinese communities already have successful vegetarian restaurants.
97. The Italian government imposed duties on products imported from Canada such as automobiles and
consumer electronics to raise their prices in the local market and to protect the local companies from
competition. This type of trade barrier being used by the Italian government is an example of a(n) _____.
a.
embargo
b.
protective tariff
c.
import quota
d.
revenue tariff
98. Which of the following U.S. laws makes it illegal to bribe a foreign official in an attempt to solicit new or
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repeat sales abroad?
a.
The Securities Exchange Act
b.
The Foreign Corrupt Practices Act
c.
The Export Trading Company Act
d.
The North American Free Trade Agreement
99. The _____ is a form of multinational economic integration that seeks to reconcile all government regulations
affecting trade.
a.
common market
b.
customary union
c.
free-trade area
d.
cooperation council
100. When a firm uses a standardized marketing mix with minimal modifications in all of its domestic and
foreign markets, it is known as a _____ marketing strategy.
a.
lateral entry
b.
unipolar
c.
global
d.
multidomestic
101. Britney and Sam will be getting married in Bermuda and have started planning their destination wedding.
They would like to serve wine and champagne before the wedding in their suite for their friends and family and
thought they might bring 4 to 6 bottles of their favorite California wine. However, they were discussing this
with the on-site wedding planner and she told them that they were allowed to enter the country with 1 bottle of
wine each and any additional bottles would incur a charge of $10.63. What is the term for the additional charge
that Bermuda could charge Britney and Sam for the additional bottles of wine?
a.
tariff
b.
import quota
c.
trade embargo
d.
export quota
102. Tru-Shine is a cleaning company in the United States that offers various cleaning products and services.
After gaining popularity in the United States, the company decided to expand its business in other North
American nations. The company entered into an agreement with some local cleaning companies in Canada
where the local companies would sell its products and services under the same trade name. Tru-Shine also
agreed to provide the training and necessary equipments and supplies to the local companies. In this example,
the strategy used by Tru-Shine for entering foreign markets is an example of _____.
a.
sole sourcing
b.
value engineering
c.
franchising
d.
direct investment
103. Which of the following is one of the major policy initiatives of the WTO?
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a.
Increasing the average level of education worldwide
b.
Liberalizing world financial services
c.
Promoting and protecting the environment
d.
Regulating automobile production by less-advanced nations
104. D. J. International, a firm based in North America, is a leader in international sales and exports. The
company is not directly involved in the purchase and selling of goods but helps firms find customers for their
products in global markets. It also helps the companies handle all the legal formalities in foreign markets and
provides guidance regarding the local labeling and testing laws. D. J. International can be regarded as a(n):
a.
export-management company.
b.
export-trading company.
c.
franchisee.
d.
subcontractor.
105. Little Princess, a California based company, is a creator of dolls and other toys for girls. The company is
mainly involved in designing new toys and developing their prototypes. It has signed an agreement with some
local toy manufacturers in Europe and North America to manufacture and distribute their toys in the local
markets. These contracts are for a specified time period and permit the foreign marketer to distribute goods in a
specified geographic area. Which of the following strategies is being used by Little Princess to enter foreign
markets?
a.
Exporting
b.
Direct Investment
c.
Foreign licensing
d.
Sole sourcing
106. VB Group, a South African firm, is a leading supplier of African agricultural products to the world. It buys
products from the domestic producers and resells them in international markets. The company maintains
complete control over the marketing and distribution of the products in the foreign markets. VB Group is an
example of a(n) _____.
a.
subcontractor
b.
export-trading company
c.
export-management company
d.
franchisee
107. The goal of the EU, a multinational economic community, is to:
a.
liberalize the world financial services, telecommunications, and maritime markets.
b.
help American workers, farmers, and small businesses thrive and grow.
c.
remove all barriers to free trade among its members, and standardization of currencies and
regulations.
d.
extend free trade benefits to most nations around the world.
108. A(n) _____ buys products from domestic producers and resells them abroad.
a.
outsourcing firm
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b.
export-trading company
c.
export-management company
d.
offset marketer
109. The _____ is a proposed free-trade area stretching the length of the entire Western Hemisphere and
designed to extend free trade benefits to additional nations in North, Central, and South America.
a.
NAFTA
b.
EU
c.
FTAA
d.
CAFTA-DR
110. The board of directors of a foreign electric automobile manufacturer is deciding if they should establish
production facilities in the United States. The directors have data about other car companies' assembly facilities
in the United States. Other than having local manufacturing, which benefit would be the most convincing reason
for the board to follow the lead of other companies?
a.
presence of so many competitors to encourage innovation
b.
resilience to deal with the high risk of locating in America
c.
ability to control their own distribution channels
d.
some U.S. states do not have car assembly facilities
e.
automobiles can always be exported throughout the world
111. Honda, a Japanese firm, builds a factory in Alabama to make minivans to be marketed in the United States.
Which of the following strategies of entering into a foreign market is best represented by this example?
a.
Subcontracting
b.
Franchising
c.
International direct investment
d.
Licensing
112. An online ice cream confection company planned to introduce their products to an international audience,
including developing countries, from the beginning. Their original decision was to use the same products and
the same promotion strategy for all countries. Which aspect of establishing the business will cause the most
concern in developing countries?
a.
calorie counts that change radically from flavor to flavor
b.
advertising tied to increased sales with warmer outdoor temperatures
c.
pricing strategy due to differing availability of raw ingredients
d.
foolproof physical distribution using unrated transportation systems
e.
differing levels of interest in sweet-tasting desserts in different cultures
113. Cremant Cellars is a family-owned winery located in the Loire region of France. Cremant is a sparkling
wine and the winery owners are interested in gaining access to markets outside of France as a way to generate
alternative sources of revenue. The owner, Jacques has met with several firms and decided to work with Export
Partners, a firm that has expertise in obtaining business with alcohol distributors across Europe as well as Asia
and the Untied States. Export Partners will also provide assistance in managing the necessary paperwork,
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complying with local laws and regulations regarding proper labeling and food/beverage testing. Export Partners
is most likely serving as a(n) ___________ to assist Cremant Cellars with their international expansion.
a.
export management company (EMC)
b.
export trading company (ETC)
c.
subcontractor
d.
franchisor
114. An organization that provides first-time exporters with expertise in locating foreign buyers, handling
paperwork, and conforming to local labeling and testing laws is called a(n):
a.
export facilitator.
b.
export-trading company.
c.
trade assistance corporation.
d.
export-management company.
115. _____ are trade restrictions that limit the number of units of products in certain categories that can cross a
country’s boundary for resale.
a.
Protective tariffs
b.
Embargoes
c.
Import quotas
d.
Subsidies
116. The trade agreement among the United States, Central American nations, and the Dominican Republic is
called _____.
a.
NAFTA
b.
EFTA
c.
FTAA
d.
CAFTA-DR
117. The practice of selling a product in a foreign market at a price lower than it commands in the producer’s
domestic market is called _____.
a.
global sourcing
b.
dumping
c.
sole sourcing
d.
value engineering
118. Many American fast food sellers have engaged in product adaptation, changing their menus to accommodate
consumer tastes in countries like India and Japan. Other Western firms doing business abroad have engaged in promotion
adaptation. Which of the following factors would most likely prompt a firm to use the latter strategy?
a.
Varying literacy rates
b.
Currency fluctuations
c.
Poor channels of distribution
d.
Price competition
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119. Nations with low per-capita incomes are usually good markets for:
a.
automobiles and electronics.
b.
expensive industrial machinery.
c.
agricultural hand tools.
d.
luxury goods.
120. Liberty Production is a small company which produces flags and other patriotic-themed items such as
banners. Historically, they have focused on the United States market but recently recognized they could
enhance sales by creating patriotic items for other countries. They would like to keep their expenses low as the
expand internationally and have reached an agreement with a company who will purchase the merchandise and
resell the items to international customers. Liberty Production will not have any control over marketing or
distribution activities but they appreciate the simplicity of this business model. Liberty Production is most
likely utilizing a(n) ________ to expand their global footprint.
a.
export trading company (ETC)
b.
export-management company (EMC)
c.
foreign licencing
d.
subcontracting
121. As your women's clothing firm expands abroad, you are arguing for a global marketing strategy. However, a more
seasoned coworker easily counters your weakest argument. Which point does he counter?
a.
It will bring the advantage of economies of scale to our marketing activities.
b.
It will reinforce the image of our clothing brand everywhere.
c.
It will overcome cultural and geographic differences in what women wear.
d.
It will be cheaper than other approaches to implement.
e.
It will enable you to define a standard marketing mix.
122. _____ is a form of global marketing that involves a continuous effort in marketing a firm’s merchandise to
customers in other countries.
a.
Business process reengineering
b.
Exporting
c.
Sole sourcing
d.
Social referencing
123. The European Union’s Treaty of Lisbon is designed to further streamline operations and enable the EU to
enter into international agreements as a(n) _____.
a.
common market
b.
political entity
c.
customs union
d.
economic union
124. A CEO of a family-owned garden equipment company had long championed countertrade as a way to gain
access to foreign markets. Starting more than two decades ago, the firm traded its tools for landscape products
made in the former Soviet Union. What is likely to be the method of trade used between the company and
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a.
continuing to use countertrade with its history of success
b.
changing to normal exporting of the garden tools to Russia
c.
changing to routine importing of the garden tools into the United States
d.
subcontracting production to a Russian-owned facility
e.
licensing their garden tools to a Russian manufacturer
125. Developing a completely new product to take advantage of a unique foreign opportunity is called product:
a.
prototyping.
b.
commercialization.
c.
invention.
d.
origination.
126. China has been scrutinized for exporting shrimp into the United States at extremely low prices. The United
States inspectors suspect that China is selling the shrimp at extremely low prices - possibly even lower than
what Chinese consumers might pay. This practice is known as _______.
a.
dumping
b.
exchange control
c.
flooding
d.
pushing
127. Which of the following is an advantage of implementing a one-product, one message approach to
international marketing?
a.
enhanced recognition of the company's brand
b.
higher marketing expenses
c.
increased adoption of the brand
d.
reduced competitive threats
128. A child care organization's CEO is looking to use her experience to expand operations into India. Her
interest was sparked by Indian parents saying, "We have nothing like this back home." Which action would be a
prudent way to enter that global market?
a.
Talk to more Indian parents about how they see the business opportunity shaping up.
b.
Share enthusiasm with investors to get an idea of funding possibilities.
c.
Set up a website serving the online preschool education market for Indian children.
d.
Invest as a partner in a child care facility in India to pilot Western concepts.
e.
Create a brand new preschool curriculum that could be exported to other countries.
129. Technology presents challenges for global marketers that extend beyond the Internet and other
telecommunications innovations. A major technological issue involving food marketers is _____.
a.
value engineering
b.
reverse engineering
c.
genetic reengineering
d.
business process reengineering
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130. The Organization of Petroleum Exporting Countries (OPEC) is a marketing organization:
a.
that seeks to control prices through collective action.
b.
regulated by NAFTA and the EU.
c.
that uses countertrade to obtain valuable foreign investments.
d.
formed to address the growing competition from Venezuela and North Sea crude exploration.
131. In the 1800s, more than 90 percent of Americans worked in _____ industry.
a.
shipping
b.
automobile
c.
service
d.
farming
132. It was recently announced that Russia wants to buy 80,000 tonnes of natural rubber and an amount of rice,
while Thailand is interested in purchasing Russian-made helicopters to be used in fighting bushfires. No cash is
expected to be utilized - just the exchange of goods. A working group from both countries will discuss details
of the deal, such as the exact amount of products involved. This is an example of _________.
a.
countertrade
b.
export cooperation
c.
global exchange
d.
international subsidy trading
133. Which of the following internationally recognized standards sets requirements for operations that minimize
harm to the environment?
a.
ISO 9000 series
b.
ISO 8000 series
c.
ISO 10000 series
d.
ISO 14000 series
134. The _____ is a trade bloc that establishes a free-trade area and a uniform tariff for trade with nonmember
nations.
a.
common market
b.
common area of administration
c.
customs union
d.
cooperation council
135. Which of the following is one of the reasons that leads to low levels of risk for foreign marketers in the
United States?
a.
Low labor costs
b.
Membership of NAFTA
c.
Lack of government regulations
d.
Political stability
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136. The fluctuation in exchange rates results in:
a.
a country employing additional tariffs and quotas on imports to manage fluctuations.
b.
a nation’s currency becoming more or less valuable compared with those of other nations.
c.
the possibility of an economy reaching short-run equilibrium at levels below or above full
employment.
d.
a relatively rapid economic growth and periods of relative stagnation or decline.
137. Exchange control is an administrative barrier to international trade that:
a.
puts a complete ban on the import of specified products.
b.
supports domestic industry through grants of money or research support.
c.
requires companies that export to sell foreign currencies to the central bank or other foreign agency,
and importers to buy foreign currencies from the same organization.
d.
limits the number of units of products in certain categories that can cross a country’s border for
resale.
138. A regional business association has asked you to participate in a panel discussion about NAFTA. Your company has
benefited greatly from this accord, so you plan to strongly defend it. However, you must prepare to counter common
criticisms of NAFTA, including:
a.
It may encourage dumping of United States goods into Canada.
b.
It may cause the loss of United States jobs to cheap labor in Mexico.
c.
It is leading to controversial political integration among the member nations.
d.
It includes an unwieldy number of member nations.
e.
It has not been in existence long enough to have an effect.
139. Which of the following industries has seen a steady growth in the United States in the recent years with
nearly 80 percent of Americans now working in it?
a.
Agriculture
b.
Manufacturing
c.
Service
d.
Automobile
140. Which of the following industries makes the largest contribution to the United State’s gross domestic
product?
a.
Automobile industry
b.
Service industry
c.
Oil industry
d.
Manufacturing industry
141. Which of the following factors is most likely to be included in political environment?
a.
Inflation levels in different countries
b.
Labor conditions in different countries
c.
Exchange rate fluctuations in a country
d.
Level of natural resources in a country
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142. A group of ceramic artists think that their artwork would be successful in another country. Nothing similar
is available in the target country. They have a lot of marketing collateral from their successful efforts in the
United States, but most of their home country business comes from word of mouth. Which global strategy is the
best pathway for them to adopt?
a.
making a direct investment to collaborate with another art-connected business
b.
reusing their current original marketing collateral in the new country
c.
starting the word-of-mouth effort by dedicating a website to their products
d.
selling their artwork to an export-trading company in the new country
e.
starting a publicity tour of art and craft galleries in the new country
143. Vietnam has restricted the amount of cement, fertilizer, and fuel that can enter its borders from outside
countries to protect its domestic industries and also to protect workers from being laid-off. This form of trade
restriction is an example of a(n) _____.
a.
embargo
b.
protective tariff
c.
subsidy
d.
import quota
144. An investment group has decided to buy an international franchise of a nationally known custom clothing
chain. The group members are convinced that the franchise's headquarters has balanced their standard practices
with local customer preferences. Which characteristic of the custom clothing operation would be the best
evidence of incorporating cultural considerations?
a.
The clothing has a range of prices for everyday items and for special occasions.
b.
Changing booth arrangements allow for separate accommodations for men and women.
c.
Local stores carry appropriate amounts of body-covering clothing required by different religious
beliefs.
d.
The ambiance of the store allows for respectful family and group conversations.
e.
The staff members can speak many different local languages to serve customers.
145. The Republic of Eastern Africa imposes a duty on imported goods to pay for government expenditure. This
is best described as a(n) _____.
a.
protective tariff
b.
revenue tariff
c.
import quota
d.
subsidy
146. Which of the following products forms a major part of U.S imports?
a.
Agricultural products
b.
Iron ore
c.
Medical equipments
d.
Crude oil
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147. A company with a large amount of intellectual property plans to expand into Europe. Their marketing team
is working to protect all the company-owned trademarks across many countries. Which benefit of European
Union membership will streamline this process?
a.
The Treaty of Lisbon allows the EU to enter into international agreements.
b.
The common currency (the euro) simplifies payments between member countries.
c.
The EU Community Trademark eliminates separate registration with each country.
d.
The standardization of eco-labels certifies environmental production friendliness.
e.
Uniform customs taxes and postal systems speed transportation of products.
148. Trade between U.S. companies and their subsidiaries or between U.S. subsidiaries of foreign-owned firms
is referred to as:
a.
multilateral trade.
b.
mutual trade.
c.
related party trade.
d.
bilateral trade.
149. Alumna, a ceramics manufacturing company in Denmark, is trying to market its products in Bulgaria. The
company has assigned the production of its goods to a local company in Bulgaria to take advantage of the low
labor costs and also to avoid the import duties on the products. In this case, the strategy used by Alumna for
entering foreign markets is an example of _____.
a.
subcontracting
b.
licensing
c.
sole sourcing
d.
exporting
150. Which agreement was negotiated between the United States and the Dominican Republic and various
Central American nations?
a.
CAFTA-DR
b.
United Central American/Dominican Treaty
c.
FTAA
d.
NAFTA
151. The basic purpose of revenue tariffs is to:
a.
stabilize the prices of imported goods.
b.
raise the retail price of imported products to match or exceed those of similar domestic products.
c.
counter the effects of protective tariffs on the domestic market.
d.
raise funds for the importing government.
152. The _____ serves as a forum for trade negotiations, and mediates trade disputes between countries
throughout the world.
a.
FTAA
b.
GATT
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c.
EU
d.
WTO
153. Jason’s Petrochems is a firm that brings in chemical intermediates such as organic fertilizers and organic
solvents from different countries and processes them in its labs before selling it in its domestic market. The firm
also uses these chemical intermediaries in the production of its various fertilizers and solvents. Jason’s
Petrochems can be regarded as a(n) _____.
a.
EMC contractor
b.
licensee
c.
franchisee
d.
importer
154. Thousands of country representatives have attended the Public Forum of the World Trade Organization
(WTO) since it was launched in 2001. Which topic would be unlikely to be put on the agenda for the meeting?
a.
mandatory sustainability standards
b.
public-private partnerships
c.
job creation
d.
infrastructure development
e.
role of innovation and intellectual property
155. _____ is the most frequently spoken language in the world.
a.
English
b.
Spanish
c.
Mandarin
d.
Hindi
156. Which of the following actions generally helps marketers encounter new products, new approaches to
distribution, or clever new promotional ideas?
a.
Globalization
b.
Developing core values
c.
Market penetration
d.
Product standardization
157. The agreements that set terms for various aspects of commercial relations with other countries such as the
right to conduct business in the treaty partner’s domestic market are called _____.
a.
treaty of establishment, commerce and navigation
b.
free trade agreements
c.
trade and investment framework agreements
d.
friendship, commerce, and navigation treaties
158. Which of the following trade barriers puts a complete ban on the import of specified products?
a.
Import quota
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b.
Embargo
c.
Revenue tariff
d.
Subsidy
159. The Russian government imposed a ban on the wines imported from Georgia, claiming that heavy metals
and pesticides were found in their products. The government also claimed that the wine samples did not comply
with their sanitary standards. This is an example of a(n) _____.
a.
revenue tariff
b.
embargo
c.
import quota
d.
exchange control
160. Which of the following statements is true about the European Union (EU)?
a.
The EU has adopted a common currency.
b.
The EU meets to determine trade restrictions.
c.
The EU only allows free trade of certain products among member nations.
d.
The pound is the currency utilized by members of the EU.
161. The ISO certification ensures that a company’s goods, services, and operations meet established quality
levels. Here ISO stands for _____.
a.
Industrial Specifications Organization
b.
International Organization for Standardization
c.
Intermediary Services Organization
d.
Industrial Organization for Services
162. Governments try to protect the private domestic industries by providing them financial support. Which of
the following trade barriers refers to such financial support?
a.
Embargo
b.
Protective tariff
c.
Subsidy
d.
Import quota
163. A nation’s size, per-capita income, and stage of economic development determine its prospects as a host for
_____.
a.
regional economic integration
b.
international business expansion
c.
free trade association
d.
public private partnership
164. A business school instructor talks about a "generally favorable attitude toward foreign investment." Which
factor is most likely to be an obstacle to the American attitude toward foreign investment’s being totally
favorable?
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a.
less criticism by regular and social media outlets
b.
longer-lasting products with more attractive features
c.
large advertising budgets that attract undue attention
d.
need for bilingual employees to explain the products
e.
competition from foreign products for U.S. consumers
165. In addition to agricultural products and manufactured goods, the United States is also the world’s largest
exporter of:
a.
computers and its accessories.
b.
crude oil.
c.
consumer electronics.
d.
retailing.
166. _____ are the taxes levied on imported goods.
a.
Excise duties
b.
Import quotas
c.
Subsidies
d.
Tariffs
167. Which of the following is true regarding the North American Free Trade Agreement (NAFTA)?
a.
The member nations of the NAFTA have agreed to create a trade bloc similar to that of the European
Union.
b.
The major aim of the NAFTA is to increase the level of literacy among the United States, Mexico,
and Canada.
c.
NAFTA has been successful in creating the Free Trade Area of the Americas, the world’s largest free
trade zone.
d.
The member nations of NAFTA focus mainly on economic cooperation rather than on political
integration.
168. Which of the following methods is most likely to counter for the negative effects of dumping?
a.
Controlling access to foreign currencies
b.
Imposing protective tariffs
c.
Imposing excise duty
d.
Appealing to the BIS
169. An international company chose to go with a global marketing strategy in a new location, planning to
exactly duplicate the company’s previous success in its home country. The venture was not a success. While it
enjoyed economies of scale, the marketing campaign did not engage new customers. Which information is
essential to create a new and successful marketing campaign?
a.
factors that led to successful efforts in the company’s home country
b.
input from employees who were laid off due to the business's failure
c.
negative comments made on social media by the company’s limited number of visitors
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d.
information from doing a rotating promotional effort that changes with the four seasons
e.
specific details about the unique needs of potential customers in the new location
170. When a group of nations agree to buy and sell goods among themselves by abolishing tariffs and trade
restrictions, the nations have created a _____.
a.
customary market
b.
cooperation council
c.
political union
d.
free-trade area
171. A strategy for going global through contractual agreements in which the production of goods or services is
assigned to local companies is termed as _____.
a.
sole sourcing
b.
a differentiation strategy
c.
an offset strategy
d.
subcontracting
172. A nation’s basic system of transportation networks, communication systems, and energy facilities form a
part of its _____ environment.
a.
social
b.
political
c.
legal
d.
economic
173. General Electric, with their business units throughout the world, can best be described as a:
a.
multidomestic exporter.
b.
multinational corporation.
c.
domestic corporation.
d.
multilateral licenser.
174. A toy company based in India is interested in exporting their products to the United States. Which of the
following is a reason why the U.S. is an attractive market for foreign companies?
a.
U.S. consumers have a high level of discretionary income
b.
The U.S. has a shrinking economy
c.
Conflict between the political parties has led to concerns about political stability
d.
U.S. consumers prefer purchasing imported products
175. The _____ is a major player in the international legal environment, which lends foreign exchange to
nations that require it to conduct international trade.
a.
Collective Security Treaty Organization (CSTO)
b.
International Monetary Fund (IMF)
c.
International Monetary Fund (IMF)
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d.
World Trade Organization (WTO)
176. Which of the following agreements has created opportunities for U.S. financial, legal, and accounting firms
by including services under international trading rules and has phased-out import quotas on textiles and clothing
from developing nations?
a.
The Treaty of Commerce and Navigation
b.
The Central American Free Trade Agreement-DR
c.
The General Agreement on Tariffs and Trade
d.
The North American Free Trade Agreement
177. Many of the eastern European currencies are considered as soft currencies because:
a.
they do not depreciate against other currencies.
b.
they cannot be readily converted into euros or dollars.
c.
they provide long-term stability in terms of its purchasing power.
d.
they serve as a reliable store of value.
178. A firm with significant operations and marketing activities outside its home country is referred to as a(n)
_____.
a.
monopoly
b.
active exporter
c.
multinational corporation
d.
overseas marketer
179. Related party trade is defined as the trade relationship between:
a.
countries with free trade agreements.
b.
member countries of a customs union.
c.
two companies in the same industry.
d.
a corporation and its overseas subsidiaries.
180. A company has recently instituted a political risk assessment (PRA) unit that keeps track of situations of
international unrest. Which advantage does the new PRA unit offer?
a.
The PRA pays attention to international events through following social media.
b.
The PRA checks the legal situation to see whether charges can be filed against vandals.
c.
The PRA collects statistics about the frequency and severity of ongoing events.
d.
The PRA evaluates the specific risks to the company's employees and facilities.
e.
The PRA promotes peaceful interventions so that business processes are not interrupted.
181. Which of the following firms is ranked as the world’s largest marketer in terms of annual sales?
a.
General Electric
b.
ExxonMobil
c.
Walmart
d.
Royal Dutch Shell
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182. Which of the following factors makes United States an attractive market for foreign companies?
a.
High excise duties and revenue tariffs
b.
Better profits due to reduced labor costs
c.
High levels of discretionary income
d.
Restrictions on international direct investment
183. Coca Cola is a worldwide manufacturer and distributor of carbonated beverages. A visit to its museum -
the World of Coca Cola in Atlanta, GA features a beverage lounge where visitors can sample beverages from
around the world. There are five tasting stations arranged geographically – Africa, Asia, Europe, Latin
America, and North America. Each station offers different beverages to sample that are unique to that region.
What aspect of achieving global marketing success do the variety of products by geographic region represent?
a.
the ability to adapt products to local preferences and culture
b.
the importance of packaging and avoiding colors that might have negative meanings
c.
the ability to segment the markets by region
d.
the importance of hiring local workers
184. Despite over a hundred million viewers every year watching the Super Bowl, the NFL worries it is nearing
market saturation in the U.S. So the NFL is scheduling regular-season games at London’s storied Wembley
Stadium. According to the information given in this case, which of the following marketing strategies is being
used by the NFL?
a.
Multidomestic marketing strategy
b.
Societal marketing strategy
c.
Global marketing strategy
d.
Vertically integrated marketing strategy
185. The North American Free Trade Agreement (NAFTA) is a trade accord that removes trade barriers among:
a.
countries in Western hemisphere and North, Central, and South America.
b.
Canada, Mexico, and the United States.
c.
The United States, Dominican Republic, and Central American nations.
d.
The United States and the European Union.
186. At an international company's staff meeting, a division manager introduces employees to the latest update
on the friendship, commerce, and navigation treaties (FCN) with other governments. She shows slides of
information from the U.S. Department of State's annual publication Treaties in Force. Which fact is evident
from the staff meeting information?
a.
The details of treaties are subject to change because the updates are published each year.
b.
The Department of State provides advice to individual businesses about FCN treaties.
c.
FCN treaties tell the outside world which countries are favored by the United States.
d.
The department that works with the legal environment for foreign divisions is chaotic.
e.
The company is looking to avoid being sued by the U.S. government.
187. The activities of the World Trade Organization thus far have focused on dispute resolution rather than
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reducing trade barriers as:
a.
the main aim of this organization is to increase the level of production in the developing nations.
b.
the differences between the developed and developing nations have created a major roadblock to its
progress.
c.
the organization does not have the authority to make binding decisions on trade policies and trade
barriers.
d.
the organization is attempting to increase profit levels for developed nations.
188. ISO 9000 standards of the International Organization for Standardization sets requirements for:
a.
quality in goods and services.
b.
production operations.
c.
worker compensation.
d.
operations that minimize harm to the environment.
189. A publisher of children's picture books is a family business that has decided to export their products to
foreign bookstores. The family members expect to be very involved in all the company's decisions. Which
model of first-time exporting would best fit this family business?
a.
an offset agreement with a major international company
b.
an export-management company
c.
an export-trading company
d.
a subcontractor on a large foreign project
e.
direct investing in a bookstore in another country
190. Louis Vuitton is a French fashion brand known for creating and marketing high-end hand bags and luggage
adorned with its highly recognizable logo. Louis Vuitton products are sold through their exclusive retail stores
across the world and they utilize advertising with very little or no copy - featuring their products in fashion
magazines. Since their ads focus on the products and only include the brand name, the _________ marketing
strategy is applied.
a.
global
b.
direct
c.
multidomestic
d.
one-nation
191. Which of the following has led to the success of Toyota, Honda and Kia Motors in the United States?
a.
production facilities in the United States
b.
limited access to distribution
c.
continued ability to import products
d.
low ocean shipping costs
Indicate one or more answer choices that best complete the statement or answer the question.
192. As the CEO of a corporation with customers in every part of the globe, you hope to see more of the world's nations
become members of the WTO. This would benefit firms like yours because the World Trade Organization:
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a.
Serves as a forum for trade negotiations
b.
Mediates trade disputes
c.
Makes non-binding but highly respected decisions
d.
Provides technical assistance to developing countries
e.
Monitors national trade policies
193. As your cheese exporting company expands around the globe, you are prepared to deal with potential revenue tariffs,
protective tariffs, and even embargoes. However, an industry colleague reminds you of other potential trade barriers you
have overlooked. These include:
a.
Special permits required to import dairy foods
b.
Detailed inspection requirements that could delay your cheese deliveries
c.
Quotas on American-made cheeses
d.
Common markets for cheese
194. Several countries on the African continent are disadvantaged by both low per-capita incomes and substandard
communications infrastructures. These countries are likely to be poor markets for _____ but good markets for ____.
a.
cars, bicycles
b.
recreational boats, fishing rods
c.
cell phones, landline phones
d.
restaurant supplies, kitchen tools
e.
currency exchange, currency investment
195. You are nervous about expanding your company into China because of recent trade barriers in that country.
Specifically, you worry about:
a.
Subsidies
b.
Complex regulations
c.
Embargoes on American-made goods
d.
Currency promotion
e.
Customs union
196. You work for a Middle Eastern firm that has just decided to sell jewelry to the United States market. This decision
was motivated by several accurate considerations, including:
a.
Size of the United States market for jewelry
b.
High levels of discretionary income in the United States
c.
Political stability in the United States
d.
Few foreign competitors
197. Global Consultants Inc. offers advice to small businesses considering international expansion. Its experts point out
the potential advantages of going global, including
a.
Gaining new insights into consumer behavior.
b.
Accessing alternative distribution strategies.
c.
Reducing the number of competitors.
d.
Facing less price competition.
198. You work for an American wine importer. In choosing which brands to import, you consider different vineyards':
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a.
Ability to maintain quality
b.
Flexibility in filling orders of varying sizes
c.
Response time in filling orders
d.
Appeal to American wine drinkers
e.
Participation in offset agreements
Match each item with the correct statement below.
a.
exporting
b.
WTO
c.
infrastructure
d.
exchange rate
e.
tariff
f.
import quota
g.
dumping
h.
ISO certification
i.
foreign licensing
j.
multinational corporation
k.
global marketing strategy
l.
multidomestic marketing strategy
m.
countertrade
n.
related party trade
o.
exchange control
p.
customs union
q.
CAFTA-DR
r.
importer
s.
embargo
t.
franchise
199. Trade between U.S. subsidiaries of foreign owned firms and their parent companies is referred to as _____.
200. A nation’s basic system of transportation networks, communications systems, and energy facilities is
known as its _____.
201. A(n) _____ is the price of one nation’s currency in terms of another nation’s currency.
202. A(n) _____ is an internationally recognized standard that ensures that a company’s goods, services, and
operations meet established quality levels.
203. The tax levied on imported goods is called a(n) _____.
204. A(n) _____ is a trade restriction that limits the number of goods that can enter a country for resale.
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205. A(n) _____ is a form of trade restriction that imposes a complete ban on the import of specified products.
206. _____ is a method used to regulate international trade among importing organizations by controlling access
to foreign currencies.
207. The practice of selling a product in a foreign market at a price lower than what it receives in the producer’s
domestic market is known as _____.
208. A(n) _____ establishes a free-trade area plus a uniform tariff for trade with nonmember nations.
209. The _____ is an organization that makes binding decisions in mediating disputes, and reducing trade
barriers.
210. The _____ is an agreement that includes the United States, the Dominican Republic and the Central
American nations.
211. A firm that brings in goods produced abroad to sell domestically or to be used as components in its
products is called a(n) _____.
212. _____ is a form of global marketing that involves continuous efforts in marketing a firm’s merchandise to
customers in other countries.
213. A(n) _____ is a contractual agreement in which a wholesaler or retailer agrees to meet the operational
requirements of a manufacturer.
214. _____ is an agreement that grants foreign marketers the right to distribute a firm’s merchandise, or to use
its trademark, patent, or process in a specified geographic area.
215. A firm which has significant operations and marketing activities outside its home country is referred to as
a(n) _____.
216. A standardized marketing mix with minimal modifications that a firm uses in all of its domestic and foreign
markets is called a(n) _____.
217. A(n) _____ applies market segmentation to foreign markets by tailoring the firm’s marketing mix to match
specific target markets in each nation.
218. _____ is a form of exporting whereby goods and services are bartered rather than sold for cash.
219. Why is global marketing important for a nation and its marketers?
220. What are FCN treaties?
221. What is importing? What are the factors that marketers need to consider while making import decisions?
222. What are the different ways to achieve multinational economic integration? Why are some nations not keen
on entering into free trade?
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223. What is a multinational corporation? How have these organizations evolved?
224. What is countertrade? Why would a country choose to countertrade?
225. Differentiate between a global marketing strategy and a multidomestic marketing strategy. Give examples
for each.
226. List out the factors that make United States an attractive market for foreign companies.
227. Differentiate between revenue tariffs and protective tariffs. Give an example for each.
228. What is exporting? List out the various alternatives available for the first-time exporters to enter foreign
markets.
229. What is foreign licensing? What advantages does it offer over exporting and direct investment?
230. Describe the World Trade Organization (WTO). Discuss its role and policies in regulating trade barriers.
231. Discuss the ISO certification.
232. What is the European Union? What are its goals?
233. What are the economic factors that determine a nation’s prospect as a host for international business
expansion?
234. What is international direct investment? What are the different forms of direct investment?
235. What are the different product and promotion strategies that can be used by global marketers?
236. How has the economy in the United States changed in the recent years?
237. What is a franchise? What advantages does this strategy offer to international marketers?
238. Discuss the NAFTA, CAFTA-DR, and FTAA.
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Answer Key
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Class:
Date:
chapter 8
Name:
Class:
Date:
chapter 8
Name:
Class:
Date:
chapter 8
Name:
Class:
Date:
chapter 8
