Chapter 2: An Overview of the International Marketing Environment
TRUE/FALSE
1. A weak dollar makes American goods and services more competitive in foreign markets.
2. More than half of the 100 biggest economies in the world are now corporations, not nations.
3. The top 100 companies in the world control about 20 percent of foreign assets.
4. Firms from industrialized countries and their representative governments dominate the world economy
by allocating resources worldwide based on local population needs.
5. According to the Rostow model, each stage of economic development is a function of productivity,
economic exchange, technological improvements, and income.
6. Countries in the “traditional society” stage of economic development are characterized by an economic
structure that is dominated by technology.
7. During “drive–to–maturity” stage of the Rostow Modernization model, growth becomes the norm and
improvements in production lead to the emergence of leading sectors.
8. Modern technology is fully adopted in all economic activity and new leading sectors emerge in the
“drive to maturity” stage of the Rostow Modernization model.
9. The Marxist-Leninist model of economic development still constitutes a dominant development
philosophy in some developing countries.
10. The Rostow model is a competing alternative for developing nations seeking to avoid domination by
advanced market capitalist economies.
11. The Marxist-Leninist (Maoist) model endorses a collective orientation, one adopted by the more
traditional developing countries.
12. The Marxist-Leninist (Maoist) model competes with market-oriented capitalist philosophies.
13. China is currently in the communist stage of development.
14. Under communism, all means of production and private property are under state ownership and/or
cooperative ownership.
15. Under older Western classification, socialist countries used to be referred to as Second World.
16. Historically, the informal and frequently used classification in the West has referred to highly
industrialized, high-income countries as the First World, to Islamic countries as the Second World, and
to developing countries as the Third World.
17. High-income countries present challenges to international firms because their markets are the most
competitive.
18. High-income countries are highly industrialized counties which have well developed industrial and
service sectors.
19. In contrast to high-income countries, low-income countries do not present opportunities for firms
operating in the areas of infrastructure development.
20. Upper middle income countries have rapidly developing economies, and especially in urban areas,
they have an infrastructure that is on par with that of developed countries.
21. Lower middle income countries comprise the transition economies of Central and Eastern Europe:
Estonia, Hungary, Latvia, Lithuania, Poland, and the Russian Federation, among others..
22. According to the World Bank, countries considered upper middle income have a GNI per capita of
US$3,466 to US$10,725.
23. Countries with emerging markets present great potential to international firms due to their
technological growth.
24. Countries, by permitting international trade and by entering into international agreements, limit their
sovereignty.
25. Ethnic diversity creates an opportunity for international marketers through the promotion of trust and
cooperation.
26. Italy has had the same government since World War II resulting in political stability and lowered risk
for international firms.
27. Internal diversity and incongruent interests are elements of political risk within a country.
28. The expression of nationalist sentiment in a country where the company is operating could constitute a
cause for concern to the international company.
29. In more developed countries, substantial ethnic conflict still exists, not just between the established
ethnicities but also between the new immigrants and long-established nationals.
30. Consumer ethnocentrism is the belief that buying foreign goods will put local companies out of
business.
31. Political instability can lead to protectionist measures on the part of the host-country government,
whereas nationalism and claims to national sovereignty can lead to the failure of the economy.
32. During downturns in the local economy, governments are unlikely to control foreign investment
through taxation.
33. Expropriation refers to the seizing of company assets and/or investors’s assets without any
compensation.
34. International law regards nationalization as an illegal activity taken by some governments that force
domestication.
35. Domestication occurs when the local government requires a gradual transfer of ownership and
management to locals.
36. The U.S. government, through the Overseas Private Investment Corporation (OPIC) offers insurance
policies that protect companies against expropriation, nationalization, or confiscation by foreign
governments.
37. U. S. companies must abide by international trade laws and host country laws when operating in
foreign countries, but do not need to consider home-country laws.
38. Common law refers to comprehensive written laws that specify what constitutes legal behavior.
39. It is unnecessary to include a jurisdictional clause in international contracts since jurisdiction is always
established in the country of operation.
40. Losses attributed to the violation of intellectual property rights are estimated to be $60 million a year.
41. Design copying, which is illegal, involves using a popular design without the trademark.
42. Trade secrets are not protected by law.
43. Countries that join the World Trade Organization must also sign on to the TRIPS agreement
(Trade-Related Aspects of Intellectual-Property Rights).
44. Multinationals seeking TRIPS’ (Trade-Related Aspects of Intellectual-Property Rights) protection
around the world still depend on each country’s patent office to grant those rights and their judicial,
customs and police services to enforce them.
45. Antitrust laws of home and host countries are designed to prevent international anti-competitive
activities, such as the creation of monopolies and cartels.
46. The U.S. Foreign Corrupt Practices Act makes it illegal for companies and their representatives to
bribe government officials and other politicians or candidate to political office.
47. High population growth in spite of limited natural resources has led to famine and precipitated
conflict.
MULTIPLE CHOICE
1. Multinational companies
a.
Account for two thirds of the world trade
b.
Have great economic weight: half of the 100 biggest economies are corporations, not
nations
c.
Control about 20 percent of foreign assets
d.
All of the above
2. A weak dollar ….
a.
Makes American goods and services more competitive in foreign markets
b.
Keeps jobs at home in the U.S.
c.
Decreases the trade deficit
d.
All of the above
3. In the Rostow Modernization Model, which stage is characterized by an economic structure that is
dominated by agriculture?
a.
Primitive society
c.
Take-off
b.
Traditional society
d.
Capitalist society
4. Which stage of the Rostow Modernization model is characterized by increased productivity in
agriculture, and modern manufacturing emergence?
a.
Primitive society
c.
Transitional society
b.
Traditional society
d.
High mass consumption
5. During which stage of the Rostow Modernization model does growth become the norm and
improvements in production lead to the emergence of leading sectors?
a.
Traditional society
c.
Take-off
b.
Transitional Society
d.
Drive to maturity
6. During the “take–off” stage of the Rostow Modernization model,
a.
Growth becomes the norm
b.
Improvements in production lead to emergence of leading sectors
c.
Income rises across the board
d.
All of the above
7. During which stage of the Rostow Modernization model is modern technology fully adopted in all
economic activity?
a.
Traditional society
c.
Drive to maturity
b.
Take-off
d.
Socialist society
8. The Rostow model is
a.
A competing alternative for developing nations seeking to avoid domination by advanced
market capitalist economies
b.
Endorses a collective orientation
c.
Fuels anticolonial and anti-imperialist sentiments
d.
Addresses the technology adoption rate in its analysis
9. The Marxist-Leninist (Maoist) model
a.
Is a competing alternative for developing nations seeking to avoid domination by
advanced economies.
b.
Endorses a collective orientation
c.
Competes with market-oriented capitalism
d.
All of the above
10. Under communism
a.
All means and production are under state ownership
b.
All property is under state ownership
c.
The state allocates resources to sectors as needed and to individuals according to their
needs.
d.
All of the above
11. Communism
a.
Develops the “new man”
b.
Is characterized by a non-materialistic society
c.
Creates a society where there is no need for private property
d.
All of the above
12. Which of the following is not a trait of a high-income country?
a.
Consumers with the highest per capita income
b.
Markets are in the maturity stage
c.
Competition is intense
d.
Consumers have not established their preferences
13. ____ are highly industrialized countries which have strong industrial and service sectors.
a.
High-income countries
c.
Low-income countries
b.
Emerging countries
d.
Second world countries
14. Low income countries
a.
Have rapidly developing economies
b.
Are primarily agrarian
c.
Have an infrastructure that is on par with that of developed countries
d.
Have a GNI per capita of US$3,466 to US$10,725.
15. These countries have a GNI per capita of US$3,466 to US$10,725.
a.
High-income countries
c.
Upper middle-income countries
b.
Low-income countries
d.
Lower middle-income countries
16. Emerging markets are attractive to international firms due to their:
a.
Rapid rate of technological growth
c.
Slow rate of inflation
b.
Rapid rate of economic growth
d.
Rapid population growth
17. ____ are countries with rapid development and present the greatest potential for international trade and
expansion.
a.
High-income countries
c.
Low-income countries
b.
Middle-income
d.
Expanding countries
18. Which type of country is characterized as primarily agrarian, with low per capita income levels?
a.
High-income countries
c.
Low-income countries
b.
Emerging countries
d.
First world countries
19. Which type of country is an important opportunity for firms operating in the areas of infrastructure
development?
a.
High-income countries
c.
Upper middle-income countries
b.
Low-income countries
d.
Lower middle-income countries