Chapter 9—Reaching Global Markets
ESSAY
1. Describe the cultural and social forces that affect international marketing strategy.
2. In what ways can a nation restrict the flow of imported goods?
3. Describe how economic and technological forces affect marketing strategies.
4. What marketing and ethical problems can bribes create in international marketing transactions?
5. What effects are technological forces having on international marketing? What opportunities exist in
the global marketplace that marketers can exploit with regard to technology?
6. What effect is NAFTA having on the international trade of the following countries: United States,
Canada, Mexico, and Japan?
7. Explain why the mode of entry into an international market is a major issue for managers to consider.
8. In what ways can businesses become involved in international marketing activities?
9. How do globalized marketing strategies differ from customized marketing strategies? What are the
implications of each for marketing managers?
10. Describe the difficulties encountered in standardizing the marketing mix globally.
MULTIPLE CHOICE
11. Before the 1990s, most firms entered international markets
a.
globally and quickly.
b.
incrementally and slowly.
c.
incrementally and quickly.
d.
domestically and slowly.
e.
regionally and quickly.
12. According to your text, ____ are small technology-based firms operating in international markets
within two years of their establishment and realizing as much as 70 percent of their sales outside the
domestic home market.
a.
“natural globals”
b.
“multinational corporations”
c.
“born globals”
d.
“born multinationals”
e.
“multinational enterprises”
13. Approximately ____ of the world’s purchasing power is outside of the United States.
a.
1/10
b.
1/3
c.
2/3
d.
1/2
e.
9/10
14. The forces that affect foreign markets may differ dramatically from those affecting domestic markets.
This makes a careful ____ a critical part of a successful international marketing strategy.
a.
political analysis
b.
regulatory analysis
c.
social audit
d.
environmental analysis
e.
marketing analysis
15. When Starbucks decided to expand into the international markets of India, Japan, and Argentina,
management realized that there would be significant differences in the standards of living, credit,
buying power, and income distribution in those countries. Starbucks is currently examining the ____
forces in its environmental analysis.
a.
economic
b.
cultural
c.
ethical
d.
technological
e.
legal
16. In China, the price of imported Scotch is $30 per glass as opposed to Scotch from China which is $3.
Which of the following do you think accounts for the difference in price?
a.
Exchange control
b.
Balance of trade
c.
Import tariff
d.
Embargo
e.
Export tariff
17. Which of the following is often used to raise revenue for a country and/or to protect domestic
products?
a.
Quota
b.
Warning label
c.
Embargo
d.
Import tariff
e.
Exchange control
18. If Tasmania levied a duty on all goods purchased from the United States and other countries outside its
borders that were brought into Tasmania, its businesses and citizens would be paying a(n)
a.
embargo.
b.
import tariff.
c.
travelers’ tax.
d.
export tax.
e.
foreign duty.
19. If Germany, in an attempt to bolster the sales of its own auto manufacturers, decided to limit the
number of automobiles that could be brought in from other countries, Germany would be using a(n)
a.
embargo.
b.
boycott.
c.
exchange control.
d.
import tariff.
e.
quota.
20. Italy currently limits the number of Coach bags that can be imported during a one-year period, since
Coach bags are made in New York, USA. This is an example of a(an) ____
a.
exchange control limit.
b.
embargo.
c.
quota.
d.
import tariff.
e.
supply limit.
21. When a glove manufacturer in China is allowed to sell only a certain number of plastic gloves into
Japan, that firm is facing a(n)
a.
tariff.
b.
embargo.
c.
restrictive product standard.
d.
quota.
e.
balance of trade restriction.
22. The United States’ prohibition against importing cigars from Cuba is an example of a(n)
a.
health control.
b.
quota.
c.
embargo.
d.
exchange control.
e.
import control.
23. Government restrictions on the amount of a particular country’s currency that can be bought or sold are
known as
a.
embargoes.
b.
quotas.
c.
exchange controls.
d.
import controls.
e.
balance of trade controls.
24. ____ can force businesspeople to buy and sell foreign products through a central agency, such as a
central bank.
a.
Embargoes
b.
Export tariffs
c.
Quotas
d.
Import tariffs
e.
Exchange controls
25. Which of the following is used to help maintain a more favorable balance of trade by a country?
a.
Limiting imports
b.
Limiting exports
c.
Establishing exchange controls
d.
Increasing gross domestic product
e.
Changing political systems
26. The ____ is the difference in value between a nation’s exports and its imports.
a.
net trade value
b.
export/import ratio
c.
gross domestic product
d.
balance of payments
e.
balance of trade
27. The gross domestic product is
a.
a measure of the profit made by all firms in a nation.
b.
the average annual earnings per person in a nation.
c.
a measure of the types of products produced by a nation.
d.
an overall measure of a nation’s economic standing.
e.
a ratio of domestic products to products produced in foreign countries.
28. The country with the highest GDP is
a.
Japan.
b.
the United Kingdom.
c.
Brazil.
d.
the United States.
e.
China.
29. In considering the viability of potential international markets for Pepsi products, PepsiCo is advised to
take into account ____, which provides insight into market potential.
a.
per capita gross domestic product
b.
gross domestic product
c.
the quantity of exports
d.
the quantity of imports
e.
total consumer income
30. The Mont Blanc Company plans to export expensive consumer gift items to Germany. The best overall
economic measure of market potential would be Germany’s
a.
gross domestic product.
b.
gross domestic product per capita.
c.
gross national product.
d.
balance of trade.
e.
unemployment rate.
31. Caterpillar, maker of large construction equipment in the U.S., would like to better understand factors
that would affect its ability to export its products to various countries. Which of the following forces
determine how trade barriers affect Caterpillar’s marketing efforts?
a.
Political and legal
b.
Economic
c.
Industrial and Technological
d.
Technological and Legal
e.
Economic and political
32. Special interest groups and regulatory bodies are ____ forces that must be taken into account in
international marketing.
a.
socioeconomic
b.
technological
c.
economic
d.
social and ethical
e.
political and legal
33. Select the true statement.
a.
Legislation regulating marketing in many foreign countries is being eased.
b.
A government’s attitude toward cooperation with importers has little impact on marketing
to that country.
c.
Refusing to give payoffs and bribes in some foreign countries may put a marketer at a
competitive disadvantage.
d.
Bribes and payoffs are considered unethical in all countries and cultures.
e.
Bribes and payoffs are supported by U.S. trade policies under certain conditions.
34. The Foreign Corrupt Practices Act of 1977 makes it illegal for U.S. firms to
a.
attempt to make large payments or bribes to influence policy decisions of foreign
governments.
b.
offer foreign businesses any type of incentive for purchasing their company’s products and
services.
c.
change their ethical standards when dealing with foreign firms.
d.
give even small tips or gifts in countries where such gifts are customary business practices.
e.
introduce any type of corruption into foreign businesses that have higher ethical standards
than those of the U.S. firm.
35. If a certain country considered handshakes in business transactions to be taboo and preferred to use
nodding, this would be an example of differences in ____ forces.
a.
cultural
b.
political
c.
sales
d.
sociological
e.
regulatory
36. When products are introduced into one nation from another, acceptance is far more likely
a.
if prices are set very low.
b.
when bribes are paid to local officials to aid distribution.
c.
if there are similarities between the two cultures.
d.
if packaging is adjusted to match local preferences.
e.
when retailers are given incentives to push the products.
37. Marketers of computer software, music CDs, and books are particularly affected by cultural
differences in
a.
socioeconomic status of citizens.
b.
advances in technology.
c.
differences in cross-cultural exchange behavior.
d.
ethical codes of conduct for businesses.
e.
standards regarding intellectual property.
38. Many companies choose to standardize their ____ across national boundaries to maintain a consistent
and well-integrated corporate culture.
a.
technology
b.
ethical behavior
c.
language
d.
dress code
e.
products
39. In many developing countries around the world, technology is enabling opportunities to “leapfrog”
existing technology. What does this mean?
a.
These countries are able to forgo current technological advances in order to wait for even
better technology to be developed.
b.
More advanced technology is reaching these countries even though they lack technological
infrastructures.
c.
Technological advances are often offered at prices considerably lower than in well-
developed countries.
d.
The technology in developing countries is rapidly surpassing the technology in well-
developed countries.
e.
The existing technological infrastructures in these countries are rapidly being replaced by
newer, more advanced technology.
40. The unconscious reference to one’s own cultural values, experiences, and knowledge when
encountering new and different cultures is known as
a.
the “when-in-Rome” approach.
b.
the Fraedrich Principle.
c.
cultural relativism.
d.
the self-reference principle.
e.
the self-reference criterion.
41. ____ refers to the idea that morality varies from one culture to another and that business practices are
therefore differentially defined as right or wrong by particular cultures.
a.
The self-reference criterion
b.
Global ethics
c.
Economic relativism
d.
Cultural relativism
e.
Moral relativism
42. Maquiladoras are
a.
exchange controls from central banks in Latin American countries.
b.
production facilities in north-central Mexican states.
c.
import-export agents of the Mexican government.
d.
global marketing programs established in Latin American countries.
e.
freight forwarders from Mexico.
43. The agreement between the United States, Canada, and Mexico that merges these three countries into
one marketplace is called
a.
EU.
b.
MERCOSUR.
c.
APEC.
d.
NAFTA.
e.
GATT.
44. Walmart is currently expanding its stores into Canada and Mexico. This expansion is being facilitated
by the
a.
European Union.
b.
North American Free Trade Agreement.
c.
Pacific Rim Unification Act.
d.
International Retail Alliance Association.
e.
Latin American Free Trade Association.
45. One of the effects of NAFTA is the simplification of country-of-origin rules. This will likely hinder
the international trade activities of
a.
Canada.
b.
Japan.
c.
Brazil.
d.
Cuba.
e.
Panama.
46. Which of the following is not true of NAFTA?
a.
The agreement has a long adjustment phase-in time period.
b.
Increased competition should lead to a more efficient market.
c.
It will provide additional opportunities for the United States in long-term affiliations with
other countries in the Western hemisphere.
d.
It is controversial.
e.
Business licensing requirements have been increased.
47. Which of the following is true about NAFTA?
a.
It remains politically controversial.
b.
It will increase the total output of goods and services to foreign markets.
c.
It will decrease the total number of jobs in the United States.
d.
It eliminated all tariffs on goods traded between the United States, Canada, and Mexico.
e.
It will reduce the number of illegal aliens in the United States.
48. Another name for the European Union is
a.
the Common Market.
b.
the European Market.
c.
the Euro.
d.
NAFTA.
e.
AECO.
49. The unification of Europe through the European Union (EU)
a.
produced the largest single market in the world.
b.
calls for greater customization of products and attention to regulations and restrictions of
European countries.
c.
means that members of the EU have become more heterogeneous in their needs and wants.
d.
required the countries to be segmented into many different markets.
e.
permits virtually free trade among the member nations of the EU.
50. All of the following European countries use a common currency, the _____, except for _____, which
uses its own currency.
a.
euro; France
b.
euro; England
c.
dollar; England
d.
euro; Germany
e.
euro; Austria
51. Johnston Chemicals’ president is very excited about the possibility of the firm’s British subsidiary
having access to customers in the entire EU. He realizes that it will be some time before this area truly
becomes one market, primarily because of differences in which of the following?
a.
Available advertising media
b.
Cultural factors
c.
Legal challenges
d.
Technological advances
e.
Economic environmental factors
52. The trade alliance that includes Brazil, Argentina, Chile, and other countries is known as
a.
OPEC.
b.
APEC.
c.
MERCOSUR.
d.
NAFTA.
e.
the Common Market.
53. Which of the following alliances/agreements is the United States not a part of?
a.
NAFTA
b.
APEC
c.
GATT
d.
WTO
e.
MERCOSUR
54. The Common Market of the Southern Cone (MERCOSUR) includes
a.
countries from southern Africa.
b.
both India and Indonesia.
c.
Australia and New Zealand.
d.
countries in South America.
e.
southern China and India.
55. Which of the following trade alliances differs from others in its commitment to facilitating business
and its practice of allowing the private sector to participate in a wide range of activities?
a.
NAFTA
b.
EU
c.
MERCOSUR
d.
WTO
e.
APEC
56. Which of the following countries has made the greatest inroads into other world markets?
a.
Indonesia
b.
Philippines
c.
Malaysia
d.
Japan
e.
China
57. Many marketers claim that ____ will become the world’s largest market.
a.
Japan
b.
the United States
c.
China
d.
Thailand
e.
India
58. Which of the following agreements provides a forum for tariff negotiations, reducing trade restrictions,
resolution of international trade problems, and ground rules for international trade?
a.
The World Trade Organization
b.
The North American Free Trade Agreement
c.
The Latin American Free Trade Agreement
d.
The European Union Free Trade Agreement
e.
The General Agreement on Tariffs and Trade
59. If a newly formed country wanted to increase its international trade and reduce worldwide tariffs, it
would most likely try to become a part of
a.
NAFTA.
b.
WTO.
c.
MERCOSUR.
d.
APEC.
e.
EU.
60. The term dumping refers to the sale of
a.
products sold in foreign markets that cannot be sold in the United States.
b.
products sold in foreign markets at prices above those charged in the United States.
c.
all discontinued U.S. products in foreign countries.
d.
products sold in foreign countries at unfairly low prices.
e.
products sold in foreign markets that cannot pass safety standards in the United States.
61. If Hyundai, a Korean automobile manufacturing firm, started selling its cars at unfairly low prices to
Germany, Hyundai would be engaging in
a.
quota-enforcing.
b.
embargoing.
c.
shoveling.
d.
dumping.
e.
dipping.
62. The World Trade Organization accomplishes all of the following except
a.
educating companies about international trade rules.
b.
lending money to businesses interested in developing international markets.
c.
serving as a forum for trade negotiations.
d.
helping settle trade disputes.
e.
providing legal ground rules for international commerce.
63. At the heart of the ____ are agreements that provide legal ground rules for international commerce and
trade policy.
a.
United Nations
b.
GATT
c.
MERCOSUR
d.
WTO
e.
APEC
64. When a firm’s products sell in foreign countries with little or no effort to obtain foreign sales, the firm
is engaging in
a.
international marketing.
b.
global marketing.
c.
limited exporting.
d.
product licensing.
e.
unplanned exporting.
65. High Plains Furnishings, a furniture manufacturer in southern Montana, markets its furniture products
in markets within the United States. It has also found several niche target markets in Finland, Chile,
and Argentina. High Plains Furnishings is engaging in
a.
domestic marketing and limited exporting.
b.
localized marketing and domestic marketing.
c.
globalized marketing.
d.
domestic marketing and international exporting.
e.
localized marketing and globalized marketing.
66. Which of the following lists the levels of involvement in global marketing from the lowest to the
highest?
a.
International marketing, limited exporting, domestic marketing, globalized marketing
b.
Limited exporting, domestic marketing, globalized marketing, international marketing
c.
Globalized marketing, international marketing, limited exporting, domestic marketing
d.
Domestic marketing, globalized marketing, international marketing, limited exporting
e.
Domestic marketing, limited exporting, international marketing, globalized marketing
67. The purchase of products from a foreign source is called
a.
exporting.
b.
dumping.
c.
importing.
d.
licensing.
e.
venturing.
68. When the American company Exxon purchases crude oil from Saudi Arabia, it is engaging in
a.
licensing.
b.
importing.
c.
free trade.
d.
exporting.
e.
dumping.
69. Henderson Synthetics is a producer of chemical products aimed at increasing agricultural yield per
acre. Henderson Synthetics’ management believes that several of the firm’s products could have
sizable markets in other countries, however, it is costly to obtain market research to confirm this. If
Henderson Synthetics wanted to temporarily “try out” these international markets with a minimal level
of commitment and cost, it should use
a.
contract manufacturing.
b.
exporting.
c.
joint ventures.
d.
licensing.
e.
subsidiaries.
70. The extent of Raytheon’s participation in global business is selling the batteries it manufactures to
companies in Spain. In this case, Raytheon is a(n)
a.
trading company.
b.
importer.
c.
exporter.
d.
franchiser.
e.
contract manufacturer.
71. The Grummond Group buys air conditioner components in industrialized countries and sells them to
business customers in developing countries where the air conditioners are assembled. Grummond is
most likely classified as a(n)
a.
trading company.
b.
strategic alliance.
c.
joint venture.
d.
licensee.
e.
exporter.
72. The role of export agents is to
a.
bring buyers and sellers from different countries together and collect a commission for
arranging sales.
b.
purchase products from different companies and sell them to foreign countries.
c.
help a firm to make direct investments in foreign countries.
d.
contact domestic firms about the opportunities available in exporting.
e.
arrange for licensing agreements between domestic and foreign firms.
73. How does using an exporting intermediary limit the risk involved with global marketing?
a.
Most exporting intermediaries assume all financial risks on behalf of their clients.
b.
Exporting intermediaries are not subject to the same laws as companies, and therefore
limit the legal risk involved.
c.
Using an exporting intermediary restricts a company to being involved with joint ventures
and not direct ownership.
d.
Exporting intermediaries guarantee that the products a company is selling will be a good
fit for the foreign markets they are entering.
e.
This approach involves limited risk because the company has no direct investment in the
foreign country.
74. A company not involved in manufacturing that brings together buyers and sellers in different countries
is usually referred to as a
a.
franchise.
b.
contract manufacturer.
c.
strategic intermediary.
d.
trading company.
e.
joint venture.
75. A large farming cooperative that focuses on the production of fruits and vegetables uses a business that
sells the farmers’ products in foreign countries and also provides consulting, insurance, legal
assistance, and warehousing to the cooperative. This business would most likely be called a(n)
a.
trading company.
b.
export specialist.
c.
contract wholesaler.
d.
licensor.
e.
strategic partner.
76. A(n) ____ is an organization that links buyers and sellers in different countries but is not involved in
manufacturing.
a.
trading company
b.
exporter
c.
joint venture
d.
strategic alliance
e.
licensee
77. Questor Corporation owns the Spalding brand name but does not produce a single golf club or tennis
ball. This arrangement is an example of what type of involvement level for international marketing?
a.
Exporting
b.
Trading
c.
Joint venture
d.
Strategic alliance
e.
Licensing
78. If Caterpillar wished to reach the market in Malaysia but was leery of a direct investment in the
country, it might provide a Malaysian operation with the knowledge to produce and market its
products in exchange for a commission. This type of arrangement is called
a.
licensing.
b.
exporting.
c.
a strategic alliance.
d.
a joint venture.
e.
contract manufacturing.
79. What level of commitment in international marketing may be most attractive when the political and
economic stability of a foreign country is questionable?
a.
Joint ventures
b.
Direct ownership
c.
Exporting
d.
Limited exporting
e.
Licensing