Global Marketing Management, 8e (Keegan)
Chapter 8 Global Entry and Expansion Strategies
1) Before doing any business internationally, a company must look at the conditions in a
potential country to analyze what the advantages, disadvantages, and costs will be and whether it
is worth the risk.
2) Political risk is directly proportional to a country’s stage of economic development.
3) Labor costs include the cost of workers at every level.
4) In capital-intensive industries, wage levels are often a large percentage of costs associated
with a product.
5) Advanced global companies generally pursue cheap labor for manufacturing locations.
6) The use of computer controls and technology has increased the cost of labor.
7) The greater the distance between the product source and the target market, the lower the
transportation costs.
8) Exchange-rate fluctuations have little effect on the attractiveness of a potential target market.
9) When a country’s currency fluctuates drastically, a company with productive capacity in other
locations can maintain its competitive advantage by shifting production.
10) If a company’s export products are similar to products manufactured inside the target market,
the exported target gains competitive advantage.
11) Global marketers typically take domestic products as they are and sell it to international
customers.
12) A domestic company can go global simply by responding to an unsolicited order.
13) Export selling involves extensive tailoring of various elements of the marketing mix to
global market requirements.
14) Export marketing involves tailoring various elements of the marketing mix to global
marketing requirements.
15) A company that engages in export marketing uses an extension approach to pricing, ensuring
that product prices in export markets are the same as prices in the home-country market.
16) Most companies handle export operations in-house.
17) The extent of a company’s in-country presence in a target market has no impact on perceived
customer value.
18) The costs of maintaining a global staff in an overseas market is cheaper compared to
domestic sales.
19) Licensing is a contractual arrangement whereby one company makes an asset available to
another company in exchange for some form of compensation.
20) Licensees can become direct competitors to licensors.
21) Franchising is a contractual agreement where one company sells the rights to its brand, logo,
and business model to another company.
22) Licensing is a more extensive form of participation in foreign markets than joint ventures.
23) One advantage of a joint venture is that it may be the only way to enter a country if local
laws prohibit foreign ownership.
24) With foreign direct investment, the owner has a passive role without significant influence or
management control.
25) The most extensive form of participation in global markets is 100 percent ownership of a
foreign subsidiary.
26) Companies can expand seeking new country markets for already identified market segments.
27) The stages of development for a transnational company are: domestic, international,
multinational, global, and transnational.
28) One of the strengths of the transnational company is that it combines the strengths of each of
the preceding stages in an integrated network which leverages worldwide learning and
experience.
29) Research and development becomes centralized when a company becomes transnational.
30) A multinational company would be self-sufficient, decentralized, and have its key assets
dispersed.
31) How do organizations assess the political risks of an international investment?
A) The higher a country’s income, the higher the political risks.
B) The more a country is transparent, the more it is risk-free.
C) The lower the income of per capita, the lower the risks.
D) The more a country allows imports, the higher the risks.
32) How can an organization gain market access in a new country that limits imports?
A) by establishing a production facility within the country
B) by locating a production source outside the market
C) by forming a partnership with a local distribution company
D) by establishing a local supply chain system in the neighboring country
33) While deciding a location for a manufacturing base, which of the following can be directly
determined by organizations based on the foreign exchange rate of a country’s currency?
A) potential competition
B) product fit
C) demands for a product
D) costs of production
34) Agents differ from distributors in that agents ________.
A) do not assist in invoice collection
B) do not take title to the goods
C) add channel value where thousands of customers are involved
D) pay directly to exporters
35) Which of the following is true of distributors?
A) They take title to the goods.
B) They cannot add their margins to the sales.
C) They cannot resell to the trade.
D) They allow direct representation to the exporter.
36) Mckelvey Inc., a U.S. – based cosmetics manufacturer, promotes its products using the same
price value, composition, and advertisements irrespective of the target market location. In this
case, the company is utilizing ________.
A) contract manufacturing
B) export marketing
C) intermediary selling
D) export selling
37) Which of the following is the typical first step for a company that is going global?
A) licensing
B) direct exporting
C) inshoring
D) outsourcing
38) Which of the following is true of licensing as a form of global market entry?
A) A company can expand its market reach with almost no capital or marketing costs.
B) It allows a licensor to directly involve in the overseas market and user’s needs.
C) It can restrict the growth of domestic competitors in an overseas market.
D) A company’s resources cannot be exploited by another company.
39) ________ refers to a marketing strategy where companies do not manufacture any of their
product’s components.
A) Product sourcing
B) Product differentiation
C) Joint venture
D) Export marketing
40) Escobar, a global enterprise selling athletic shoes, procures its shoes through contract
manufacturing agreements with producers in developing nations. It uses its expertise in
distribution and sales to promote these products. In this case, the marketing strategy used by the
company is referred to as ________.
A) franchising
B) direct investment
C) product sourcing
D) joint venture
41) A ________ is referred as the collaboration between two or more firms on a specific project
to serve one or more markets.
A) franchise
B) direct investment
C) portfolio
D) joint venture
42) Which of the following market entry strategies allows an organization 100 percent ownership
of its foreign subsidiaries?
A) franchising
B) direct investment
C) product sourcing
D) joint venture
43) Which of the following is the first stage of development of a transnational corporation?
A) global
B) international
C) domestic
D) multinational
44) Which of the following kinds of marketing orientation is a domestic company most likely to
have?
A) polycentric
B) ethnocentric
C) regiocentric
D) geocentric
45) How is the location of a manufacturing base dependent on foreign exchange rate of a
country’s currency?
46) Explain the criteria to be assessed when selecting a potential target market for export?