Entrepreneurship and Effective Small Business Management, 11e, Global Edition
(Scarborough)
Chapter 12 Global Marketing Strategies
1) ________ is (are) said to link trading partners, whether they are giant corporations or single
individuals with a small business.
A) Technology
B) Better management
C) Higher salaries
D) Smaller organizations
2) Expanding a small business into international markets:
A) guarantees its success in the marketplace.
B) makes it a member of GATT automatically.
C) often helps it to grow faster and better survive competition.
D) leads to business failure for companies under $100 million in annual revenue.
3) Becoming a global business depends on instilling a global culture throughout the organization
that permeates:
A) a little of what the company does.
B) some of what the company does.
C) a lot of what the company does.
D) everything of what the company does.
4) As with any new venture, the entrepreneur needs to ask, and answer, all of the following
questions about the business except:
A) Is there a profitable market in which our firm has the potential to be successful for an
extended period of time?
B) Does our firm have the specific resources, skills and commitment to succeed in this venture?
C) Are there pressures domestically that are forcing the firm to seek global opportunities?
D) Are we able to efficiently travel to, from, and within our global market?
5) Which of the following is true about global competition?
A) There is less of a focus on quality and more of a focus on price internationally.
B) It makes companies more customer-focused.
C) It is largely the domain of small businesses due to their flexibility.
D) It tends to shorten the life cycle of a product or service.
6) The reality of “going global” is that the entrepreneur must understand the needs of the:
A) suppliers.
B) government.
C) customers.
D) employees.
7) The first step to becoming a truly global company is to:
A) establish an export program.
B) find a joint venture partner.
C) begin to think globally, taking on a global attitude toward a business.
D) hire motivated, multilingual managers.
8) A small business owner needs to consider several questions before launching an international
venture, such as:
A) Do we have the correct multinational management in place?
B) Can we find an appropriate international partner for this venture?
C) What non-tariff barriers do we have to be prepared to overcome?
D) Are we sensitive to the cultural differences of conducting international business?
9) The type of companies that are an important channel of foreign distribution for small
companies just getting started in international trade or for those lacking the resources to assign
their own people to foreign markets are referred to as:
A) export management companies.
B) joint ventures.
C) sole proprietorships.
D) export trading companies.
10) Often joint ventures fail because the entrepreneur didn’t:
A) define at the outset important issues such as each party’s contributions and responsibilities,
the distribution of earnings, the expected life of the relationship, and the circumstances under
which the parties can terminate the relationship.
B) understand in depth their partner’s reasons and objectives for joining the venture.
C) select a partner who shares their company’s values and standards of conduct.
D) All of the above
11) ________ is the primary market for U.S. franchisers.
A) South America
B) Europe
C) Mexico
D) The Caribbean
12) ________ involves a transaction in which a company selling goods in a foreign country
agrees to promote investment and trade in that country.
A) Countertrade
B) Export
C) Import
D) Bartering
13) Small businesses go global:
A) for very different reasons than large businesses do.
B) through joint ventures with large companies.
C) when they realize their success and survival depends on them going global.
D) often between their fifth and seventh year of existence as a domestic company.
14) The simplest and least expensive way to conduct international business is through:
A) foreign licensees.
B) a Web site.
C) joint ventures.
D) trade intermediaries.
15) A relatively easy way of getting into international marketing is through ________ who act as
distributors in foreign countries for domestic companies of all sizes.
A) foreign licensees
B) international franchises
C) joint ventures
D) export trading companies
16) A(n) ________ is a business that buys and sells products in a number of countries, offering a
range of services—importing, exporting, shipping, distributing, and others—to their clients.
A) foreign joint venture
B) export trading company
C) foreign licensee
D) resident buying office
17) An export trading company is:
A) a government-owned or business-owned facility set up in a foreign country to buy products
that are made there.
B) a firm in an overseas distribution network selling noncompetitive products made by other
firms.
C) formed by an agreement by which a licenser gives a foreign licensee the right to use a patent,
trademark, copyright, technology, and products in return for a percentage of the licensee’s sales
or profits.
D) a business that buys and sells products in many countries, either in its own name, or as an
agent for its buyer-seller clients.
AACSB: Analytic Skills
18) ________ is (are) one of the trading intermediaries a small company can use to enter the
global marketplace.
A) Export merchants
B) Joint ventures
C) International franchising
D) Establishing international locations
19) A(n) ________ is a government- or privately-owned company established in a foreign
country for the purpose of buying goods made there.
A) export trading company
B) resident buying office
C) foreign distributor
D) export merchants
20) A resident buying office is:
A) a business that buys and sells products in many countries, either in its own name, or as an
agent for its buyer-seller clients.
B) a firm in an overseas distribution network selling noncompetitive products made by other
firms.
C) a government-owned or business-owned facility set up in a foreign country to buy products
that are made there.
D) formed by an agreement where a licenser gives a foreign licensee the right to use a patent,
trademark, copyright, technology, and products in return for a percentage of the licensee’s sales
or profits.
AACSB: Analytic Skills
21) Evie works for a domestic wholesaler who does business in foreign markets, buying goods
from domestic companies and selling them in foreign markets. Evie’s firm is a(n):
A) resident buying office.
B) export trading company.
C) foreign distributor.
D) export merchant.
22) ________ participating companies get antitrust immunity, allowing them to cooperate freely.
A) Foreign joint venture
B) Trade intermediary
C) Export venture
D) Export management company
23) In a(n) ________, a domestic small business forms an alliance with a company in the target
nation for the purpose of exporting to that market.
A) foreign joint venture
B) trade intermediary
C) domestic joint venture
D) export management company
24) The most important ingredient in the recipe for a successful joint venture is:
A) choosing the right country or region.
B) generating sufficient capital to pursue the venture.
C) choosing the right partner.
D) hiring efficient employees to carry out the venture.
25) The U.S. Commerce Department, the SBA, and the Trade Administration provide a number
of services. TOP—the trade opportunity program—is one and through it entrepreneurs can:
A) receive up-to-the minute pre-screened sales leads, including joint venture possibilities.
B) establish business relationships in major markets by helping them make networking contacts.
C) gain access to contact and product information for more than 82,000 foreign distributors.
D) place advertisements that will reach thousands of foreign customers.
26) If you can’t afford to invest in foreign facilities, don’t have time to even learn the foreign
market, but you are willing to give someone else the right to make and market your product for a
fee and royalties, your best bet for entering the foreign market is:
A) a foreign management company.
B) joint venturing.
C) foreign licensing.
D) international franchising.
27) Foreign licensing has its greatest potential in the licensing of:
A) products.
B) intangibles.
C) goods.
D) franchises.
28) Domino’s Pizza, McDonald’s, etc., in Japan and Europe are examples of:
A) foreign management companies.
B) joint venturing.
C) foreign licensing.
D) international franchising.
29) In international franchising, ________ is a “hot spot” for U.S. franchisers.
A) China
B) India
C) Europe
D) Both A and B
30) Countertrades have significant drawbacks, including:
A) getting goods that are of no direct use to the seller.
B) receiving currency that cannot be exchanged outside the foreign nation.
C) needing a trading intermediary to arrange the countertrade, thereby raising costs.
D) being limited in size to $100,000 per deal.
31) The first step an entrepreneur should take when starting an export business is to:
A) recognize that the tiniest companies and least experienced entrepreneurs have the potential.
B) research and pick target markets.
C) develop a distribution strategy.
D) find his/her customer.
32) To break into international markets the entrepreneur needs to take several steps including:
A) analyzing his/her commitment to the effort.
B) researching the markets and picking a target market.
C) developing a distribution strategy.
D) All of these
33) Candi is thinking through a number of management issues in making her exporting decision.
She is thinking about her company’s ________ capacity when she is thinking about how
exporting will affect meeting domestic orders, her pricing structure, collection process, and what
it will cost her for the company to make enough product for foreign export.
A) financial
B) management
C) production
D) marketing
34) The biggest barrier to small business exports is:
A) the lack of experience.
B) the lack of financing.
C) not understanding other cultures.
D) not having appropriate products for export.
35) ________ is the exchange of goods and services for other goods and services.
A) Countertrade
B) Export
C) Import
D) Bartering
36) When collecting for the sale of foreign goods, a small business will use a ________, an
agreement between their bank and the foreign buyer’s bank that guarantees payment.
A) bank draft
B) foreign sales agreement
C) tariff voucher
D) letter of credit
37) Sometimes, once established in international markets, businesses ________, despite the
frustrations of securing services, the significant capital investment involved, etc.
A) offer foreign licenses
B) sell international franchises
C) establish an international location
D) use trade intermediaries
38) Key to successfully establishing an international location is:
A) securing the necessary licenses to operate in the foreign country.
B) finding the right person to manage the international office.
C) making a substantial investment in personnel.
D) being able to speak the language of the foreign country.
39) Of the three domestic barriers exporters face, ________ is the biggest.
A) information
B) attitude
C) financing
D) language
40) John wants to expand into the foreign markets, but he can’t convince his partners. They feel
international markets are the domain of large corporations. John is facing which barrier to
international trade?
A) Financing
B) Political
C) Cultural
D) Attitude
41) An entrepreneur wants to move into international markets but can’t quite figure out how to
do it. He’s not clear on his target market or how to approach it but he knows he needs to “go
global.” This entrepreneur is experiencing which barrier to international trade?
A) Financing
B) Information
C) Cultural
D) Attitude
42) A type of non-tariff barrier to trade that consists of selling large quantities of products in
foreign countries below cost is referred to as:
A) dumping.
B) clearance selling.
C) bartering.
D) exporting.
43) Malcolm won a contract to provide nuts, bolts, and washers to a small African country’s
military. Unfortunately, neither his bankers nor venture capitalists would provide the loans
needed to buy the material to produce the order. The bank didn’t do international loans. Which
barrier to international trade is Malcolm experiencing?
A) Information
B) Cultural
C) Financing
D) Attitude
44) The tax that a government puts on products that are imported into a country is called a(n):
A) embargo.
B) tariff.
C) quota.
D) non-tariff barrier.
45) A quota is:
A) a duty, or tax, that a government puts on products that are imported into the country.
B) the maximum amount of a product that can be imported or exported.
C) a prohibition or suspension of foreign trade of specific imports or exports.
D) a law that a government uses to regulate products that are imported into the country.
46) An embargo is:
A) a duty, or tax, that a government puts on products that are imported into the country.
B) the maximum amount of a product that can be imported or exported.
C) a law that a government uses to regulate products that are imported into the country.
D) a prohibition or suspension of foreign trade of specific imports or exports.
47) The members of the European Community have limited the number of cars Japanese
automakers can export into the European market. This is an example of which type of trade
barrier?
A) Tariff
B) Quota
C) Embargo
D) Dumping
48) Political barriers that entrepreneurs face are:
A) government takeovers of private property.
B) attempts at coups to overthrow ruling parties.
C) violent acts against businesses and their employees such as kidnappings and bombings.
D) All of the above
49) An American executive went to a foreign country to sign a business contract. While there, he
found that there were numerous government regulations his company needed to meet before
closing the deal. This executive was experiencing which barrier to international trade?
A) Non-tariff
B) Political
C) Cultural
D) Domestic
50) Wanda is an American manager with a U.S. firm in Japan. Wanda is having difficulty
“conducting business.” When invited to play golf she attempts to talk business, but her Japanese
hosts gently refuse. When she meets a new corporate customer, she tries to get “right down to
business” to show respect for their time, but they insist on talking about non-business matters for
several meetings. Wanda is experiencing what international barrier to doing business?
A) Cultural
B) Political
C) Domestic
D) Non-tariff
51) The North American Free Trade Agreement:
A) brought Chile, Mexico, the United States, and Canada together as one market.
B) eliminated all tariffs among member nations, effective immediately, and raised them to
nonmembers.
C) benefits the trading relationship between Canada and the United States most.
D) created a unified market of 478.5 million people and $19.2 trillion in goods and services.
52) The North American Free Trade Agreement has which of the following provisions?
A) The immediate elimination of all tariff and quota barriers on all goods
B) The elimination of trade barriers among Canada, Mexico, and the United States
C) A lowering of safety and air quality standards
D) The formation of a North American Trade Organization
53) The path to success requires businesses to become ________ who see the world as their
market rather than just ________.
A) “exporters”; “insiders”
B) “insiders”; “exporters”
C) “importers”; “insiders”
D) “outsiders”; “exporters”
54) Which of the following refers to demographic/physical environment when screening a
country?
A) Population size, growth and density
B) System of government
C) Economic growth
D) Balance of payment
55) Which of the following refer to demographic / physical environment when screening a
country?
A) Urban and rural distribution
B) Climate and weather variations
C) Shipping distance & natural resources
D) All of the above
56) Currency: inflation rate, availability, controls, stability of exchange rate; Balance of
payments; Per capita income and distribution; Disposable income and expenditure patterns are
components of:
A) demographic/physical environment.
B) social/cultural environment.
C) economic environment.
D) market access.
57) Understanding the customer needs and desires is a component of:
A) demographic/physical environment.
B) social/cultural environment.
C) product potential.
D) market access.
58) Issues to be addressed before entering into a joint venture include:
A) What contributions will each party make?
B) Who will be responsible for making which decisions?
C) Under what circumstances can the parties terminate the relationship?
D) All of the above
59) Which type of international entry requires “prenuptial agreement”?
A) Foreign licensing
B) Foreign direct investment
C) Import/export
D) None of the above
60) A ________ is an agreement between an exporter’s bank and the foreign buyer’s bank that
guarantees payment to the exporter for a specific shipment of goods.
A) bank draft
B) letter of credit
C) COD
D) line of equity
61) A ________ is a document the seller draws on the buyer, requiring the buyer to pay the face
amount (the purchase price of the goods) either on sight (a sight draft) or on a specified date (a
time draft) once the goods are shipped.
A) bank draft
B) letter of credit
C) COD
D) line of equity
62) Which of the following is correct?
A) A tariff is a tax, or duty, that a government imposes on goods and services imported into that
country.
B) A quota is a tax, or duty, that a government imposes on goods and services imported into that
country.
C) A quota is a limit on the amount of a product imported into a country.
D) Both A and C
63) George is planning to export fabrics to the Bahamas. After investigating the trade rules, he
found that he can only export limited yards of fabrics to the Bahamas. This is an example of:
A) a tariff.
B) a quota.
C) an embargo.
D) dumping.