A Framework for Marketing Management, 5e (Kotler)
Chapter 18 Managing Marketing in the Global Economy
1) What is a global firm?
A) A firm that operates in one country and exports its goods and services to foreign countries.
B) A firm that operates in more than one country and has a sales and marketing staff in those
countries.
C) A firm that operates in more than one country and captures R&D, production, logistical,
marketing, and financial advantages not available to purely domestic competitors.
D) A firm that sells its products and services across the world but restricts manufacturing to the
home country.
E) A firm that operates in more than one country but restricts the sale of its products to the home
country.
2) Which of the following can induce a firm to expand into the international arena?
A) Consumer preferences in the domestic market vary widely.
B) Average income level of domestic consumers is high.
C) The firm operates in an industry that caters to the mass market.
D) The firm finds that the domestic market is almost saturated.
E) The firm is yet to achieve economies of scale even though the domestic market has potential.
3) Zodiac Inc. is one of the leading producers of designer bags in its country. The company is
considering shifting some of its production to India. Which of the following could have
prompted this move?
A) People in India prefer imported designer bags.
B) Zodiac can target a niche market of high-profile consumers who have a high income.
C) Zodiac can improve its market share if it can offer better prices than its competitors.
D) People in the home country have an ethnocentric approach.
E) Market research indicates that Indian consumers have a low per-capita income.
4) Which of the following is a risk that firms must consider prior to expanding abroad?
A) The domestic consumers prefer low-priced products.
B) The market in the foreign country may be too similar to the domestic market.
C) Consumers in the foreign country are very particular about the quality of the goods they
consume.
D) The foreign country has very low pollution control standards.
E) The foreign country’s business culture may be too different from the domestic country.
5) Which of the following is the first stage of the internationalization process that can induce
firms to enter the international arena?
A) no regular export activities
B) export via independent representatives (agents)
C) establishment of one or more sales subsidiaries
D) establishment of production facilities abroad
E) adoption of a flexible exchange rate regime
6) Once a firm decides to enter the international market, what is the next step in the decision–
making process?
A) deciding on the marketing organization
B) deciding on the marketing program
C) deciding how to enter the market
D) deciding how to adapt the product to the new market
E) deciding which markets to enter
7) WayToGrow Inc. is one of the most popular brand of toys in its home market. The company
decides to expand its business abroad and its board of directors feel that instead of trying to
establish its presence all at once in multiple markets, it is better to expand one country at a time.
This would limit their risk and allow them to analyze customer response, after which they could
expand to other similar countries. WayToGrow is following a ________.
A) shotgun approach
B) continuous approach
C) born global approach
D) sprinkler approach
E) waterfall approach
8) When innovation at Siemens enables the company to offer solutions that can make generation
of hydroelectricity more environment-friendly, the company will want to reap the benefits of
being the first to introduce such a product across countries. In this case, which of the following
approaches is likely to be the best approach to entering foreign markets?
A) the rifle approach
B) the continuous approach
C) the born global approach
D) the sprinkler approach
E) the waterfall approach
9) A2Z Inc. is a producer of a wide variety of consumer goods in Brazil. It has successfully
captured a huge share of the domestic market and has been able to create a very strong brand. It
is now considering a foray into foreign markets. Its board of directors decide to first try out some
of its products in the neighboring country of Argentina. A2Z plans to eventually expand its
presence in other countries, after they analyze the impact of their entry into the Argentine
market. A2Z Inc. is following a ________.
A) born global approach
B) waterfall approach
C) sprinkler approach
D) franchisee approach
E) shotgun approach
10) In a waterfall approach to international expansion, ________.
A) firms enter countries gradually in a sequence
B) firms enter those countries first where the demand for the product is greatest
C) countries are entered based upon the availability of government subsidies
D) firms enter those countries first where the supply of raw material is greatest
E) countries are entered based upon ease of entry
11) In a sprinkler approach to international expansion, ________.
A) countries are entered when competition is limited
B) countries are gradually entered sequentially
C) countries in which the supply of raw material is greatest are entered first
D) countries in which the demand for the product is greatest are entered first
E) many countries are entered simultaneously
12) When first-mover advantage is crucial and a high degree of competitive intensity prevails,
the ________ approach is better.
A) waterfall
B) born global
C) rifle
D) sprinkler
E) franchisee
13) A2Z Inc. is a producer of a huge variety of consumer goods, from soaps to shower gels, and
shampoos to detergents. It is a market leader in the United States and is planning to tap the
immense potential in the emerging markets. Market research, however, indicates that the
Brazilian culture and society are substantially different from their American counterparts. If the
company wants to target the masses, which of the following options is most likely to succeed?
A) A2Z can use a price skimming strategy to increase market share.
B) The company’s existing strategies in the U.S. will work just as well in Brazil.
C) A2Z can introduce smaller “sachets” of shampoos and detergents that are priced lower.
D) The company can introduce large family packs of shampoos and soaps even if they are priced
higher than competitors.
E) A2Z can use a predatory pricing strategy to capture the market.
14) Which of the following modes of entry into a foreign market involves the maximum
commitment and risk?
A) franchising
B) direct investment
C) joint ventures
D) licensing
E) direct exporting
15) Companies typically start their international foray with ________, which involve(s) working
through independent intermediaries who sell their products abroad.
A) indirect exporting
B) licensing
C) franchising
D) direct exporting
E) joint ventures
16) Indirect exports have two advantages for a firm: they involve less investment and ________.
A) less paperwork
B) less intrusion by the government
C) less risk
D) less competition
E) less customer suits
17) Which of the following statements is true about licensing?
A) It is one of the most complex ways to engage in international marketing.
B) The licensor gains entry into the new market at low risk.
C) The licensee has no access to proprietary information.
D) The licensee receives a fee or royalty.
E) The only benefit for a licensee is the production expertise it gains.
18) Which of the following can cause a firm to choose joint ventures as a mode of expansion into
foreign markets?
A) excellent managerial resources
B) lack of sufficient finances
C) lack of redtapism in the host country
D) preferences of target consumers in the host country
E) psychic proximity of the host country
19) Identify a benefit of using joint ventures to enter a foreign market.
A) It entails minimum risk.
B) It provides access to an established distribution network in the host country.
C) It yields the highest returns.
D) It retains full control of its investment in the host country.
E) It is the best strategy for countries with psychic proximity.
20) Which of the following is true about direct investment as a mode of international expansion?
A) It allows a firm to retain full control over its investment.
B) It yields the lower returns than joint ventures.
C) It involves the least amount of risk.
D) It involves the least cost.
E) It does not allow the firm to diversify.
21) A Canadian software company decides to buy majority stakes in a Chinese firm producing
software. The company even adds to its Chinese production capacity. Which of the following
could be a potential disadvantage of this direct investment?
A) The Canadian firm will find it difficult to achieve economies of scale.
B) This is the least financially rewarding mode of international expansion.
C) The Canadian firm will have very limited control on its Chinese investment.
D) The Canadian firm will be subject to the piracy problems in China.
E) The Canadian firm will be subject to a higher cost of production in China.
22) Whirlpool took a 53% stake in the Dutch electronics group Phillips’ home appliances
business to leapfrog into the European market. This is an example of a ________.
A) straight extension
B) joint venture
C) contract manufacturing agreement
D) licensing agreement
E) franchising agreement
23) Your firm has decided to enter the international market with your product called “Trema,” a
new pocket organizer that can also be used as a cell phone. While discussing the marketing
plans, your CMO decides that no changes will be necessary in either the marketing mix or the
product for export. What form of marketing strategy is the CMO advocating?
A) distributive marketing mix
B) leveraged marketing mix
C) adapted marketing mix
D) engineering-driven marketing mix
E) standardized marketing mix
24) In an adapted marketing mix, the company ________.
A) ensures that uniform practices are adopted across countries
B) focuses more on brand image than consumer preferences
C) ignores differences in the legal environment
D) ensures the lowest cost marketing program is adopted
E) tailors the marketing programs to each target market
25) A market survey by LG revealed that Indians preferred not to mix vegetarian and non-
vegetarian food items. Hence, LG refrigerators in India include a special convertible box with
separate compartments to store and control the temperature of vegetarian and non-vegetarian
food. This is an example of customizing ________ to local needs.
A) advertising media
B) product features
C) packaging
D) brand name
E) labeling
26) Straight extension of the product means ________.
A) introducing the product to the foreign market without any changes to the product
B) introducing the product to the foreign market with minor changes to the product
C) introducing the product to the foreign market with major changes to the product
D) introducing a customized product to the foreign market with a new marketing strategy
E) introducing a customized product to the foreign market with an existing marketing strategy
27) Which of the following is most likely to be successful when introduced in foreign markets as
a straight extension?
A) laundry detergent
B) khaki pants
C) dessert mixes
D) digital camera
E) condensed soup
28) For the launch of “Trema,” your company’s new pocket organizer that can also be used as a
cell phone, the CMO has decided that the product can be launched in international markets
without any changes in its features or the marketing strategy. This introduction can be described
as a ________.
A) dual adaptation
B) straight extension
C) product adaptation
D) forward invention
E) backward invention
10
29) Finnish cellular phone giant, Nokia, customized its 6100 series mobile phone for every major
market in which it is present. In Asia, for example, the series came with a higher ring volume so
that it could be heard on the crowded Asian streets. This is an example of ________.
A) straight extension
B) forward invention
C) regional version
D) city version
E) country version
30) In an attempt to tailor its products to suit the requirements of consumers in India, LG
introduced the aero-comfort system. A remote control is programed to regulate both the air-
conditioning and the ceiling fan. Consumers can switch off the AC and increase the ceiling fan’s
flow once the desired temperature is achieved. This not only increases convenience, but also cuts
down electricity charges. LG’s aero comfort system is an example of which of the following?
A) backward invention
B) dual invention
C) country version product
D) straight extension
E) communication adaptation
31) Your firm has decided to enter the international market with your product called “Trema,” a
combination of a pocket organizer and cell phone. Even though the product has been a huge
success in the home country, market research suggests some changes may be required before it
can be introduced in Europe. Your CMO is of the opinion that the product requires certain extra
features and the product will also have to be marketed differently. Your CMO is advocating
________.
A) product invention
B) dual adaptation
C) straight extension
D) forward adaptation
E) product standardization
32) Product adaptation involves ________.
A) altering the product to meet local preferences with no change in communication strategy
B) altering the product to meet minimum acceptable standards
C) altering both the product and the communication strategy to meet local preferences
D) altering neither the product nor the communication strategy while entering a new market
E) developing a new product and adapting the communication strategy to enter a new market
33) Backward invention occurs when a firm ________.
A) creates a new product to meet a need in another country
B) reintroduces earlier product forms adapted to suit another country’s needs
C) invents products that are similar to competing offerings
D) takes an existing product into a new market
E) produces its own raw materials
34) Forward invention is ________.
A) creating a new product to meet a need in another country
B) creating a new product to meet the need in the home country
C) inventing products that are superior to competing offerings
D) taking an existing product into a new market
E) inventing something that as yet has no “market”
35) Companies can run the same marketing communications programs as used in the home
market or change them for each local market, a process called ________.
A) product communications
B) market development
C) dual adaptation
D) diversification
E) communication adaptation
36) If a company adapts or changes both the product and the communications, the company