Marketing Management, 14e (Kotler/Keller)
Chapter 21 Tapping into Global Markets
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 the
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) “BRIC” is an acronym for ________.
A) Brazil, Russia, India, and China
B) Bolivia, Russia, Indonesia, and China
C) Brazil, Russia, Indonesia, and China
D) Bolivia, Russia, India, and Canada
E) Bolivia, Russia, Indonesia, and Canada
14) 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.
15) Which of the following causes a difference between marketing in the developed countries
and marketing in the developing countries?
A) The cost of production varies substantially between the developed and the developing world.
B) The disparity between the rich and the poor in the developing world is reducing.
C) There are substantial cultural differences between the developed and the developing world.
D) Marketing in developing countries is far more expensive than in the developed world.
E) The developing countries have more trade barriers in place than the developed countries.
16) Regional economic integration is defined as the creation of trading agreements between
________.
A) a firm and its suppliers and distributors
B) firms targeting the same market
C) individual firms in an industry
D) related industries
E) blocs of countries
17) ________ is one of the world’s largest single markets, with 25 member countries, a common
currency, and more than 454 million consumers.
A) NAFTA
B) MERCOSUR
C) The European Union
D) APEC
E) ASEAN
18) Which of the following countries is a member of ASEAN?
A) Indonesia
B) Japan
C) United States
D) India
E) Brazil
19) Many U.S. firms prefer to sell in Canada, England, and Australia—rather than in larger
markets such as Germany and France—because they feel more comfortable with the languages,
laws, and culture, which reflect the ________ between these countries and the United States.
A) self-serving bias
B) coincident development
C) psychic proximity
D) cognitive dissonance
E) backward invention
20) NAFTA is a free trade zone comprising of which of the following countries?
A) Canada, Mexico, and South America
B) Canada, Mexico, and Peru
C) Mexico, South America, and the United States
D) Canada, Mexico, and the United States
E) Canada, Japan, and the United States
21) MERCOSUR is a free trade zone linking which of the following countries?
A) Mexico, Japan, Brazil, Paraguay, and Venezuela
B) Mexico, Canada, and the United States
C) Brazil, Argentina, Paraguay, and Venezuela
D) Canada, Brazil, and the United States
E) Brazil, Argentina, Paraguay, Uruguay, and Venezuela
22) While choosing countries to invest in, companies sometimes choose psychic proximity to
their own country. Psychic proximity can best be defined as ________.
A) countries in which the company feels comfortable with the language, laws, and culture
B) countries that are located close
C) countries that the home country’s management team have visited
D) countries that have no trade barriers
E) countries with good infrastructure and stable political environment
23) 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
24) Domestic-based export merchants ________.
A) buy manufacturers’ products and then sell them abroad
B) manage a company’s export activities for a fee
C) buy foreign products and sell them in the domestic country
D) seek and negotiate foreign purchases
E) carry on exporting activities on behalf of several producers
25) Domestic-based export agents perform a valuable service for companies seeking to enter
foreign markets. The primary function of these agents is to ________.
A) carry on exporting activities on behalf of several producers
B) buy the manufacturer’s products and then sell them abroad
C) buy foreign products and sell them in the domestic country
D) seek and negotiate foreign purchases for a commission
E) produce and export products to foreign countries
26) Companies typically start their international foray with ________, which involves working
through independent intermediaries who sell their products abroad.
A) indirect exporting
B) licensing
C) franchising
D) direct exporting
E) joint ventures
27) 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
28) James Franks lives in Miami. He buys local products from manufacturers in Miami and other
parts of Florida and sells them abroad, mainly to Caribbean nations. Mr. Franks is a(n)
________.
A) domestic-based export merchant
B) domestic-based export agent
C) cooperative agent
D) export-management agent
E) direct exporting agent
29) Nash & Associates is a firm that takes care of all export procedures on behalf of its clients. In
exchange for a fee, the firm acts as the liaison between domestic manufacturers and prospective
foreign buyers. It has access to established distribution networks in other countries that domestic
small-scale producers are unlikely to have, and facilitates communication between foreign
importers and domestic producers. Nash & Associates is most likely a(n) ________.
A) domestic-based export merchant
B) domestic-based export agent
C) cooperative organization
D) export-management company
E) direct exporter
30) ________ agree to manage a company’s export activities for a fee.
A) Cooperative organizations
B) Domestic-based export agents
C) Export-management companies
D) Domestic-based export merchants
E) Contract manufacturing organizations
31) After successfully exporting its products through export merchants, Boyes Inc. decides to
take control of its exports. It sets up its own unit in the home country that takes care of all
export-related activities. Boyes Inc. is most likely using ________.
A) foreign-based distributors or agents
B) domestic-based export department
C) export merchants in foreign countries
D) export-management companies
E) traveling export sales representatives
32) BestFoods Inc., a well-known producer of breakfast cereals, has decided to hire producers in
different countries so that the cereals marketed under their brand are locally produced in the
respective countries. This would not only appeal more to consumers who preferred domestically
produced goods, but would also create jobs in the host-country enhancing the brand’s image
further. This is an example of ________.
A) management contracting
B) franchising
C) greenfield venturing
D) contract manufacturing
E) straight extension
33) 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.
34) Hotel chains such as Hyatt sell a variation of the licensing agreement called ________ to the
owners of foreign hotels to manage these businesses for a fee.
A) greenfield venturing
B) management contracts
C) strategic alliance
D) indirect exporting
E) direct exporting
35) In which of the following modes of licensing does the firm hire local producers to produce
the product, giving the company less control over the manufacturing process?
A) contract manufacturing
B) management contracts
C) direct investment
D) joint venture production
E) greenfield venturing
36) A company can enter a foreign market through a ________, which is a complete form of
licensing in which the company offers a complete brand concept and operating system.
A) contract manufacturing
B) cooperative agreement
C) management contract
D) joint venture
E) franchising arrangement
37) 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
38) 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.
39) 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.
40) 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.
41) 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
42) 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
43) 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
44) A standardized marketing mix involves ________.
A) adopting the strategy that best fits a given target market
B) consistently using the communication and distribution channels that entail the lowest costs
C) adjusting the product to suit market preferences
D) changing the features of the product to accommodate the host country
E) changing only the communication message to suit the different target markets
45) Which of the following is one of Hofstede’s four cultural dimensions that differentiate
countries?
A) customer relationship management versus power distance
B) strategic management versus marketing management
C) weak versus strong uncertainty avoidance
D) total quality management versus JIT deliveries
E) marketing management versus customer relationships
46) In collectivist societies, ________.
A) all property is owned by the government
B) the self-worth of the individual is rooted more in the social system than in individual
achievement
C) the culture is dominated by the need to maintain low power distance and reduce income
inequality
D) the culture is dominated by a nurturing attitude as opposed to an assertive attitude
E) people are highly risk-averse
47) According to Hofstede, cultures with low power distance are ________.
A) collectivist
B) assertive
C) egalitarian
D) risk-averse
E) risk-tolerant
48) According to Hofstede, cultures with weak uncertainty avoidance are best described as
________.
A) collectivist
B) hierarchical
C) egalitarian
D) risk-averse
E) risk-tolerant
49) A risk averse attitude is associated with ________.
A) high uncertainty avoidance
B) high femininity
C) high power distance
D) high individualism
E) high collectivism
50) 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
51) 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 existing marketing strategy
52) 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
53) 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 described as
a ________.
A) dual adaptation
B) straight extension
C) product adaptation
D) forward invention
E) backward invention
54) 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 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
55) 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
56) 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
57) 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
58) 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
59) 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”
60) 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
61) If a company adapts or changes both the product and the communications, the company
engages in a process called ________.
A) straight extension
B) product reinvention
C) product adaptation
D) dual adaptation
E) full adaptation