80. A special form of licensing in which one company grants another company the right to market its
product in accordance with its standards in exchange for a financial commitment is called
a.
a joint venture.
b.
contract manufacturing.
c.
direct licensing.
d.
franchising.
e.
a strategic alliance.
81. Tony & Guy is a global hairdressing and education business headquartered in England. It has recently
opened salons in Mongolia, adding to its numerous salons worldwide. Tony & Guy allows foreign
businesspeople to use its name, logo, methods of operation, advertising, and products. In exchange,
Tony & Guy receives a financial commitment and an agreement to conduct business in accordance
with its standard of operations. Tony & Guy is engaging in
a.
contract manufacturing.
b.
licensing.
c.
franchising.
d.
exporting.
e.
direct investment.
82. Franchising offers all the following benefits for franchisers except
a.
franchise agreements require a certain standard of behavior from franchisees, which helps
protect the franchise name.
b.
franchisers can retain control of their name while increasing global penetration of their
products.
c.
the franchisee’s revenue stream is fairly consistent because franchisers pay fixed fees and
royalties.
d.
the franchiser’s revenue stream is fairly consistent because franchisees pay fixed fees and
royalties.
e.
franchisers do not have to put up a large capital investment.
83. Which of the following would be a benefit to a franchiser, such as Jiffy Lube, in expanding into
international marketing?
a.
There are no risks involved with allowing a foreign franchisee.
b.
The franchiser does not have to put up a large capital investment.
c.
The franchiser does not have to share its name or operational procedures.
d.
The franchisee only pays a set fee every month to the franchiser.
e.
An equal partnership is formed between the franchiser and franchisee.
84. Which of the following describes a company hiring a foreign firm to produce a designated volume of
its product to specification?
a.
Licensing
b.
Contract manufacturing
c.
Exporting
d.
Importing
e.
Direct investment
85. If The Limited Company relies on hiring a foreign textile manufacturer to produce a designated
amount of clothing for its Express, Limited, and other stores, it is using
a.
exporting.
b.
franchising.
c.
contract manufacturing.
d.
a joint venture.
e.
licensing.
86. Some hospitals in the United States find that their need for radiologists to read X-rays is volatile
during the evening and early morning hours, especially between 2:00 and 6:00 am. This is because the
number of emergency room visits needing X-rays is usually lower than those required during daytime
operating hours. There is a recent trend where hospitals in the United States are contracting
radiologists from countries such as Australia to read the electronically-transmitted X-rays during the
evening and early morning hours. This is an example of
a.
outsourcing.
b.
licensing.
c.
franchising.
d.
contract manufacturing.
e.
contract sourcing.
87. A business partnership between a domestic firm and a foreign firm is known as
a.
a joint venture.
b.
an international partnership.
c.
a multinational enterprise.
d.
licensing.
e.
exporting.
88. The Cooper Tire & Rubber Company has been searching for less expensive raw materials for
manufacturing its bicycle tires. Cooper has found that there are less expensive sources in the country
of Indonesia, but it needs to form a partnership with the government of Indonesia in order to gain
access to the country’s rubber. What type of partnership will need to be formed?
a.
a multinational enterprise
b.
a contract manufacturing arrangement
c.
a strategic alliance
d.
a franchise
e.
a joint venture
89. The Swatch Group is the parent company of the most successful wristwatch of all time, the Swatch.
Headquartered in Switzerland, The Swatch Group recently entered into a partnership with a company
in France to make the packaging materials for all of its Swatch lines. What type of partnership
agreement does this situation most likely represent?
a.
Trading company
b.
Licensing arrangement
c.
Strategic alliance
d.
Joint venture
e.
Direct ownership arrangement
90. Sometimes business partnerships are formed between traditional rivals competing for market share in
the same product class. These partnerships are known as
a.
trading companies.
b.
contract manufacturers.
c.
joint ventures.
d.
strategic alliances.
e.
licenses.
91. Nuhitzu believes it has the technological expertise to produce communication systems that will be
leaders around the globe. Boston Electronics is widely regarded as having excellent management
systems and superior marketing programs. To utilize these strengths, the two firms might form a(n)
____ to work together on a worldwide basis.
a.
licensing agreement
b.
export trading company
c.
joint agreement
d.
strategic alliance
e.
multinational enterprise
92. Toshiba Electronics is very interested in taking advantage of business opportunities in India but does
not have access to India’s market. Toshiba has the patent on a low-cost, quality computer system that
could assist small businesses in India. Sony Computer, Toshiba’s competitor, is experienced in India’s
small business market but does not have a computer comparable to Toshiba’s. If Toshiba and Sony
work together to utilize these strengths to seize this opportunity in India, what type of business
structure would they likely use?
a.
Trading company
b.
Strategic alliance
c.
Licensing
d.
Direct ownership
e.
Exporting
93. What is the primary distinction between a joint venture and a strategic alliance in international
marketing?
a.
Strategic alliances are only formed between companies from well-developed countries
whereas joint ventures are between companies from economically-diverse countries.
b.
A joint venture involves only two companies whereas a strategic alliance is formed
between three or more companies.
c.
A strategic alliance is formed by companies who have traditionally been rivals, which is
not the case with a joint venture.
d.
A joint venture is formed between companies with dissimilar product offerings while a
strategic alliance is formed between companies with similar product offerings.
e.
A joint venture is simply a financial investment in a foreign firm while a strategic alliance
involves more than just financial support.
94. The Ford Motor Company has entered into an alliance with Yves Saint Laurent, a maker of clothing
and one of the most successful fashion houses in the world. Yves Saint Laurent is headquartered in
France. Ford will use Yves Saint Laurent designs and color traditions in its production of luxury
models of the company’s Expedition SUV and Lincoln vehicles. The Yves Saint Laurent elements
will appear in the interior and body paint color. This alliance would most likely be classified as
a.
a strategic alliance.
b.
a joint venture.
c.
a global direct ownership.
d.
a multinational enterprise.
e.
contract manufacturing.
95. Once a company makes a long-term commitment to a foreign market that has a promising political and
economic environment, which of the following options then emerges as a possibility?
a.
Exporting
b.
Joint venture
c.
Limited exporting
d.
Direct ownership
e.
Licensing
96. In relation to international marketing, which of the following best describes direct ownership?
a.
A company owns its own manufacturing facilities.
b.
A company forms an alliance with a similar company in a foreign country.
c.
Foreign companies contract with manufacturers in other countries.
d.
A company owns subsidiaries or facilities in foreign countries.
e.
Two companies from different nations have interests in each other’s facilities.
97. IKEA, a Swedish retailer of contemporary furniture, operates several stores in various Scandinavian
countries, as well as in the United States and Canada. Which of the following describes IKEA’s level
of commitment to international marketing?
a.
Licensing
b.
Direct ownership
c.
Exporting
d.
A trading company
e.
A joint venture
98. Firms that have operations or subsidiaries located in many countries are referred to as
a.
multinational enterprises.
b.
strategic alliances.
c.
joint ventures.
d.
international marketers.
e.
export alliances.
99. Southern Tier Industries has operations in more than 30 foreign countries. The headquarters in Atlanta
controls the entire organization while offering subsidiaries the freedom necessary to achieve success in
local markets. Southern Tier Industries is an example of a(n)
a.
strategic alliance.
b.
joint venture.
c.
export-driven corporation.
d.
multinational enterprise.
e.
trading company.
100. The Samsung Group sells several different product lines around the world through home appliance and
electronics stores. Samsung appliances and electronics have been historically made in Korea, where
the company is headquartered. Recently, Samsung has been investigating the possibility of buying
land and building a production plant in Tennessee, in the United States. Samsung is now operating as
a(an) ______; however, if the plant is built in Tennessee, it will be operating as a(an) ______.
a.
exporter; strategic alliance.
b.
limited exporter; national marketer.
c.
limited exporter; international proprietorship.
d.
exporter; multinational enterprise.
e.
exporter; global franchise.
101. Japan’s Sony Corporation is a prime example of a multinational enterprise. With this in mind, which of
the following would most accurately characterize Sony’s operations?
a.
It follows a strategy of market globalization.
b.
It has operations or subsidiaries in many different countries.
c.
It places most of its emphasis on profits generated in foreign countries.
d.
It would not expect its foreign operations to share the same goals as the parent firm.
e.
It does not concern itself with differences in markets around the world.
102. What is the greatest advantage to an organization of having a subsidiary in a foreign nation?
a.
Avoidance of all U.S. laws
b.
Increase in cross-cultural approaches to management that allows subsidiaries to develop
their own identity
c.
Increased trend toward nationalistic marketing approaches
d.
Greater amount of standardization of the marketing mix
e.
Greater amount of security from government nationalization and other anticompetitive
measures
103. A subsidiary in a foreign country generally operates under
a.
the laws of the parent company’s home country.
b.
foreign management in order to develop a local identity.
c.
strict management control from the home country’s executives.
d.
the regulations set forth by the International Trade Agreement.
e.
a team of managers from the distant parent company.
104. Exporting, licensing, and using trading companies are preferred modes of international market entry
for firms with a(n) ____ structure.
a.
international division
b.
internationally integrated
c.
export department
d.
geographic area
e.
matrix
105. Which of the following centralizes all of the responsibility for international operations?
a.
Product division structures
b.
Export department structures
c.
Internationally integrated structures
d.
International division structures
e.
Global matrix structures
106. Which of the following is most likely to engage in direct ownership activities internationally?
a.
Internationally integrated structures
b.
International division structures
c.
Export department structures
d.
Import department structures
e.
Outsourcing structures
107. Northeastern University and Penn State University both offer online MBA programs that are available
to students around the world. This is an example of
a.
globalization.
b.
customization.
c.
licensing.
d.
nationalization.
e.
regionalization.
108. When asked where Laser Tools, Inc., markets its products, company president and founder Roger
Helms says that “the world is just one big market.” He feels anyone not taking this stance is
systematically passing up profitable business. Helms’s international marketing strategy is best
described as
a.
customization of marketing.
b.
globalization of marketing.
c.
limited exporting.
d.
full-scale international marketing.
e.
export agenting.
109. Organizations that employ standardized products, promotion campaigns, and prices for all markets are
practicing what is known as
a.
customization.
b.
internationalization.
c.
globalization.
d.
regionalization.
e.
nationalization.
110. Selling products that are not in demand in all world markets, such as hand-powered washing machines
for use in countries where electricity is not universally available, represents an international marketing
strategy focusing on
a.
internationalization.
b.
culturalization.
c.
nationalization.
d.
globalization.
e.
customization.
111. Both Nike and Adidas standardize many of their shoe models and colors worldwide, which is an
example of _______.
a.
globalization.
b.
customization.
c.
nationalization.
d.
culturalization.
e.
internationalization.
112. Levi Strauss markets its denim jeans in many countries and develops its marketing strategy as if the
world were a single market. This approach to selling a standardized product in all countries represents
which type of international marketing?
a.
Exporting
b.
Accidental exporting
c.
Limited exporting
d.
Licensing
e.
Globalization of markets
113. Globalization of markets requires developing marketing strategies as if the world were one market.
Which of the following marketing mix variables is most difficult to standardize for globalization?
a.
Brand name
b.
Package
c.
Media allocation
d.
Labels
e.
Product characteristics
114. Swiss-based Nestlé has taken a global approach to marketing its chocolate products. Which of the
following is most easily standardized?
a.
Product
b.
Promotion
c.
Distribution
d.
Advertising
e.
Price
115. When the makers of Red Bull, an energy drink, decided to go international with their marketing effort,
a global approach was adopted. With which of the following factors did Red Bull most likely
experience difficulty as the firm applied a global strategy for marketing?
a.
Branding
b.
Product characteristics
c.
Packaging
d.
Labeling
e.
Advertising
Scenario 9.1
Use the following to answer the questions.
Harley-Davidson Motors manufactures all of its motorcycles in the U.S. at one of four sites. With a
large number of its bikes sold in markets all around the world, it still retains the manufacturing close to
the headquarters for several reasons, one being that its management wants to keep close watch on the
quality of its products. However, for all the accessories, apparel, and other riding gear, Harley–
Davidson contracts out to other manufacturers to produce the items with the Harley name and logo.
Some of these items, particularly the apparel, are made in China. Lately, some members of the Harley
Owners’ Group (HOG) have been complaining to the company about this practice, citing that
“everything Harley should be made in America”.
116. Refer to Scenario 9.1. Harley-Davidson’s practice of having manufacturers in China produce apparel
items with the Harley logo is an example of
a.
contract manufacturing
b.
globalization
c.
direct ownership
d.
joint venture
e.
exporting
117. Refer to Scenario 9.1. One of Harley-Davidson’s largest international markets is in Japan, where
American brands are highly sought after. This is an example of ____ impacting the market.
a.
international forces
b.
economic forces
c.
domestic forces
d.
cultural forces
e.
environmental forces
118. Refer to Scenario 9.1. If Harley-Davidson were to suddenly find its inventory building up in Japan, it
might reduce inventory by selling the bikes at below cost prices. This practice is known as
a.
price skimming.
b.
market penetration.
c.
dumping.
d.
differential pricing.
e.
inventory compensation.
119. Refer to Scenario 9.1. At what level of involvement in international marketing is Harley-Davidson
with regard to its bikes?
a.
Full-scale
b.
Globalization
c.
Joint venture
d.
Direct ownership
e.
Exporting
Scenario 9.2
Use the following to answer the questions.
KFC opened its first franchised restaurant outside of North America in England in 1964. Now, over a
billion KFC chicken dinners are sold annually at more than 80 countries and territories around the
world. KFC has established its own processing plants in these countries to ensure the quality of its
chickens and other food items. In the U.S., the menu at KFC is usually the same in all restaurants, with
only a very few additional items available in different regions. However, when KFC first franchised
into Asian countries, it added many unusual local delicacies to the menu⎯items such as fried octopus
and squid. Additionally, the franchised stores in Asian countries display cooked food in “plates” near
windows at the front of the store. This is a tradition for many restaurants in these countries⎯to offer
the customer passing by a preliminary view of their product.
120. Refer to Scenario 9.2. KFC’s establishment of international production/processing facilities is an
example of
a.
direct ownership.
b.
franchising.
c.
strategic alliance.
d.
outsourcing.
e.
a trading company.
121. Refer to Scenario 9.2. The practice of offering fried octopus and squid at Asian KFC’s is best described
as
a.
a strategy of standardization.
b.
a strategy of globalization.
c.
a strategy of some customization.
d.
competitive advantage.
e.
internationalizing the franchise.
122. Refer to Scenario 9.2. Suppose that KFC’s parent company experienced difficulty in opening its
restaurants in China unless KFC was willing to pay the government a “bribe”. If KFC were to resort to
paying this bribe in China saying that “it’s different doing business there”⎯this would be an example
of
a.
a licensing arrangement.
b.
the self-reference criterion.
c.
cultural relativism.
d.
balance of trade issues.
e.
exchange controls.
123. Refer to Scenario 9.2. Which of the following alliances will KFC most likely utilize to guide its
business transactions in Japan and China?
a.
WTO
b.
MERCOSUR
c.
FTAA
d.
NAFTA
e.
APEC
TRUE/FALSE
124. International marketing is defined as marketing activities performed across national boundaries.
125. Two-thirds of the world’s total purchasing power is outside the United States.
126. Customers that travel the globe expect to be able to buy the same product in most of the world’s more
than 200 countries.
127. An embargo occurs when a government suspends trade with a particular country.
128. A quota is the suspension, by a government, of trade in a particular product.
129. Government restrictions on the amount of a particular currency that can be bought or sold are known
as import controls.
130. A positive balance of trade is considered good because it means that U.S. dollars are supporting
foreign economies at the expense of U.S. companies and workers.
131. In determining the size of the market for consumer products, the international marketer will probably
be very interested in per capita GDP figures.
132. Opportunities for international marketers are limited to industrial nations with the highest incomes.
133. U.S. marketers may engage in bribery to compete with foreign firms.
134. The study of the cultural environment is unnecessary in the foreign market because foreign consumers
will accept anything that American marketers have to sell.
135. Customs and taboos are culture-bound and should be taken into consideration when products are
marketed in a foreign environment.
136. Cultural differences do not affect marketing negotiations and decision-making behavior.
137. When products are introduced from one nation into another, acceptance is more likely if the two
cultures are different.
138. Cultural relativism is the unconscious reference to one’s own cultural values, experiences, and
knowledge when traveling in other countries.
139. NAFTA eventually eliminates all tariffs on goods produced and traded between the United States,
Mexico, and Brazil.
140. NAFTA simplifies country-of-origin rules, hindering Japan’s use of Mexico as a staging ground for
further penetration into U.S. markets.
141. While NAFTA eliminates many tariffs immediately, the tariffs on more sensitive goods, such as
glassware, footwear, and some fruits and vegetables, will be phased out over a 15-year period.
142. The passage of NAFTA was agreeable to all parties.
143. The unification of Europe permits virtually free trade among the member nations of the European
Union.
144. Because of continuing disputes and inconsistencies among the administrations of member states, it will
be many years before the European Union truly becomes one deregulated market.
145. The U.S. and Japanese economies are more integrated than are the U.S. and Canadian economies.
146. GATT is based on negotiations between member countries to reduce worldwide tariffs and increase
international trade.
147. The World Trade Organization was an important outcome of the unification of Europe.
148. Domestic marketing involves marketing strategies aimed at markets within the home country.
149. Importing is the sale of products to foreign markets.
150. The job of the export agent is to bring together buyers and sellers from different countries.
151. A trading company provides a link between buyers and sellers in different countries.
152. Under a licensing arrangement, the licensee pays commissions or royalties on sales or supplies used in
manufacturing.
153. Franchising is an arrangement whereby a franchisee grants a franchiser the right to market its product,
using its name, logo, methods of operation, advertising, products, and other elements of the franchising
company’s business, in return for a financial commitment and an agreement to conduct business in
accordance with the franchisee’s standard of operations.
154. Contract manufacturing occurs when a firm pays a commission or royalties on sales or supplies used in
manufacturing.
155. The joint venture approach has little appeal to industries involved in extraction of natural resources.
156. As project sizes increase in the face of global competition and firms attempt to spread the huge costs
of technological innovation, there is a stronger impetus to form joint ventures.
157. A multinational enterprise is a firm that has operations or subsidiaries located in many countries.
158. It is impossible for a subsidiary to develop a local identity because it seldom employs personnel from
the country within which it operates.
159. The greatest danger in becoming involved in direct ownership in international marketing is political
uncertainty.
160. A subsidiary operating in a foreign country may have important tax, tariff, and other operating
advantages over a licensing agreement or a joint venture.
161. Exporting, licensing and franchising, trading companies, contract manufacturing, and joint ventures
are preferred modes of international market entry for firms with an export department structure.
162. Firms that use an international division structure are often organized domestically on the basis of
functions or product divisions, while the international division operates based on geography.
163. Firms with internationally integrated structures are the least likely to engage in direct ownership
activities internationally.
164. The degree of commitment to international marketing can range on a continuum from national or
domestic orientation to a global orientation.
165. Globalization of marketing involves developing marketing strategies as though the entire world (or
major regions of it) were a single entity.
166. Media allocation, retail outlets, and price are among the easiest marketing mix variables to standardize.
167. Brand name, product characteristics, packaging, and media allocation are among the easiest marketing
mix variables to standardize around the world.
168. Regardless of the extent to which a firm chooses to globalize its marketing strategy, extensive
environmental analysis and marketing research are necessary to understand the needs and desires of
the target market(s) and successfully implement the chosen marketing strategy.