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Indicate whether the statement is true or false.
1. Given the United States’ current balance of trade, if more U.S. firms that export their goods, the country’s balance of
trade will improve.
a. True
b. False
2. The Group of Twenty (G-20) was founded in 1945, one year after the creation of the World Bank, to promote trade
through financial cooperation and eliminate trade barriers in the process.
a. True
b. False
3. All countries follow a similar set of customs and traditions that determine business practices and influence negotiations
with foreign customers.
a. True
b. False
4. Joint ventures prevent a local firm from acquiring managerial skills and new technology.
a. True
b. False
5. Globalization expands economic freedom, spurs competition, and lowers the productivity and living standards of
people in countries that open themselves to the global marketplace.
a. True
b. False
6. Opening an e-commerce site on the Internet makes it difficult for a company to gain profit in the international
marketplace.
a. True
b. False
7. In North Korea, a company wishing to buy goods abroad must first obtain a foreign currency exchange from the control
agency.
a. True
b. False
8. The four Ps of global marketing strategy are product, place, promotion, and price.
a. True
b. False
9. Using a capital-intensive technology refers to spending less money for equipment than labor in the production process.
a. True
b. False
10. The final step in creating a marketing mix is developing a thorough understanding of the global target market.
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a. True
b. False
11. Solving promotional and product problems does not guarantee global marketing success
a. True
b. False
12. Generally, complex and sophisticated industries are found in developed countries, and more basic industries are found
in less developed nations.
a. True
b. False
13. Traditionally, companies utilizing a multidomestic strategy enable individual subsidiaries to compete independently in
domestic markets.
a. True
b. False
14. Governments use boycotts to exclude companies from countries with which they have a political dispute.
a. True
b. False
15. Average family incomes are higher in more developed countries than in less developed countries.
a. True
b. False
16. Dumping has led to significant disagreements among countries and diverse views about its harmfulness.
a. True
b. False
17. A global marketer or a firm considering global marketing must consider the external environment.
a. True
b. False
18. If a country can boost exports and limit imports, then fewer jobs are created and there is more competition for local
businesses.
a. True
b. False
19. The ability of multinationals to tap financial, physical, and human resources from all over the world and combine
them economically and profitably can benefit any country.
a. True
b. False
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20. The International Monetary Fund (IMF) makes short-term loans to member nations that are unable to meet their
budgetary expenses.
a. True
b. False
21. Global marketing is a one-way street whereby only U.S. companies sell their wares and services throughout the world.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
22. An intermediary in the global market that assumes all ownership risks and sells globally for its own account is called
_________.
a. a buyer for export
b. an export broker
c. an export agent
d. a direct exporter
23. Which of the following is a characteristic of market grouping?
a. It occurs when government efforts stifle imports or investment by foreign corporations.
b. It occurs when several countries agree to work together to form a common trade area.
c. It occurs when a trade agreement dramatically lowers trade barriers across the world.
d. It occurs when a domestic firm joins with a foreign company to create a new entity.
24. The legal process whereby a company allows another firm to use its manufacturing process, trademarks, patents, trade
secrets, or other proprietary knowledge is ______________.
a. licensing
b. contract manufacturing
c. joint venture
d. direct foreign investment
25. Which of the following is true about the European Union (EU)?
a. All consumer and industrial goods exported to EU countries are no longer subject to tariffs.
b. European Union (EU) is a trade agreement instituted in 2005 that includes Costa Rica, the Dominican Republic,
El Salvador, Guatemala, Honduras, Nicaragua, and the United States.
c. European Union (EU) does not maintain a common trade policy with outside nations and a regional development
policy.
d. European Union (EU) is one of the world’s most important free trade zones. It has member countries such as
Austria, Belgium, Bulgaria, the Czech Republic, Denmark, France, and so on, and it guarantees the freedom of movement
of people, goods, services, and capital between member states.
26. Fresnas Corp., a company that designs in its New York headquarters and had manufactured apparel in Malaysia, now
practices inshoring. Given this information, which of the following is most likely to be true of Fresnas Corp.?
a. It keeps its research team in close proximity to its domestic manufacturers.
b. It faces increased shipping and transportation costs.
c. It outsources its manufacturing jobs to other countries.
d. It outputs a lot of production.
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27. A business that requires a greater expenditure for equipment than for labor is called:
a. capital intensive.
b. labor intensive.
c. market intensive.
d. production intensive.
28. Currency markets operate under a system of _____, which is a system in which the prices of different currencies move
up or down based on the demand for and the supply of each currency.
a. countertrade
b. floating exchange rates
c. dumping
d. contract manufacturing
29. Which of the following correctly defines the role of an export broker?
a. An export broker is an intermediary who plays the traditional broker’s role by bringing buyer and seller together.
b. An export broker is an intermediary who acts like a manufacturer’s agent for the exporter; the export agent lives
in the foreign market.
c. An export broker is an intermediary in the global market that assumes all ownership risks and sells globally for its
own account.
d. An export broker is an intermediary who sells domestically produced products to buyers in other countries.
30. Which of the following correctly defines balance of payments?
a. The difference between the value of a country’s exports and the value of its imports over a given period
b. The difference between a country’s total payments to other countries and its total receipts from other countries
c. Total market value of all final goods and services produced in a country for a given time period
d. Total income estimated from returning production jobs to the United States
31. Which of the following countries has the highest gross domestic product?
a. Belwick, whose market value of final goods is $100 billion and market value of final services is $50 billion for two
years
b. Sparanthea, whose market value of intermediate goods is $200 billion and market value of intermediate services is
$50 billion for a quarter year
c. Zaneland, whose market value of final goods is $120 billion and market value of intermediate goods is $20 billion
for a year
d. Acquardica, whose market value of final goods is $170 billion and market value of final services is $90 billion for
a year
32. A(n) _____ is an intermediary who brings a buyer and a seller together.
a. licensor
b. export broker
c. contract manufacturer
d. export merchant
33. A company is doomed to failure in a foreign country if it _____.
a. does not understand the foreign country’s culture
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b. focuses on translating product names to the foreign country’s language
c. varies its marketing mix according to the foreign customers
d. pays attention to the foreign country’s demographics
34. A form of trade in which all or part of the payment for goods or services is in the form of other goods or services is
called __________.
a. countertrade
b. global trade
c. domestic trade
d. dumping
35. A tax levied on the goods entering a country is called:
a. tariff.
b. quota.
c. exchange control.
d. market control.
36. _____ is a trade agreement that has dramatically lowered trade barriers worldwide and that led to the creation of the
World Trade Organization.
a. The European Agreement
b. General Agreement on Tariffs and Trade
c. The North American Free Trade Agreement
d. The Uruguay Round
37. Which of the following is true about joint ventures?
a. A joint venture is a risky way of entering a global market.
b. Joint ventures are usually the only way a government will allow a foreign company to enter its country.
c. Joint ventures enable the local firm or government to acquire managerial skills and new technology.
d. All of the above
38. Which of the following is NOT correct regarding the practice of inshoring?
a. Rapid consumer product innovation has led to the need to keep production experts in close proximity so that they
can work together.
b. Expanding development and manufacturing timelines have contributed to inshoring.
c. Increased fuel and transportation costs associated with long-distance shipping has given impetus to inshoring.
d. Rising wages in the developing world have made U.S. rates more competitive.
39. Which of the following statements is true of third-stage multinational companies?
a. They sell products only in one country.
b. Their top executives and core corporate functions are in different countries.
c. They operate an entire line of business in another country.
d. They set up foreign subsidiaries to handle sales in one country.
40. Which of the following is a difference between a joint venture and contract manufacturing?
a. A joint venture is formed when a domestic firm buys part of a foreign company to create a new entity, while firms
choose contract manufacturing to avoid being involved in licensing.
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b. A joint venture is formed when a domestic firm broadens its global marketing base without investment, while in
contract manufacturing; a licensor allows another firm to use its manufacturing process.
c. A joint venture is formed when several countries agree to work together to form a common trade area, while
contract manufacturing occurs when government efforts stifle investment by foreign corporations.
d. A joint venture is formed when an agreement to stimulate international trade is made, while contract
manufacturing occurs when a tax is levied on the goods entering a country.
41. A company that is heavily engaged in global trade, beyond exporting and importing, is called ___________.
a. a regional firm
b. a multinational corporation
c. a capital intensive firm
d. an export agent
42. Which of the following could be a motive for a company going global?
a. It can earn additional profits.
b. It has a unique product or technological advantage not available to other international competitors.
c. Management may have exclusive market information about foreign customers.
d. All of the above
43. _____ is the largest Latin American trade agreement, and it includes Argentina, Bolivia, Brazil, Chile, Colombia,
Ecuador, Paraguay, Peru, Uruguay, and Venezuela.
a. Mercosur
b. General Agreement on Tariffs and Trade (GATT)
c. The Uruguay Round
d. The North American Free Trade Agreement (NAFTA)
44. Which of the following identifies a difference between a boycott and a quota?
a. A boycott sets a limit on the amount of goods entering a country, whereas a quota is a tax levied on goods
entering a country.
b. A boycott is the revenue received from international trade, whereas a quota is the revenue received from domestic
trade.
c. A boycott is used to include all foreign competition, whereas a quota is used by governments to exclude
companies from countries with which they have a political dispute.
d. A boycott is the exclusion of all products from certain countries or companies, whereas a quota is a means of
protection from foreign competition.
45. Which of the following eliminated the extensive loopholes of the General Agreement on Tariffs and Trade (GATT)?
a. The European Union (EU)
b. The World Trade Organization (WTO)
c. The North American Free Trade Agreement (NAFTA)
d. The International Monetary Fund (IMF)
46. Which of the following is true about the different stages of business development of a multinational corporation?
a. In the second stage, companies operate in one country and sell into others.
b. In the third stage, multinationals operate an entire line of business in another country.
c. The third stage has evolved primarily due to the Internet and involves mostly high-tech companies.
d. The top executives and core corporate functions of a multinational corporation operate in the same country.
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47. Which of the following is a tool that governments use to exclude companies from countries with which they have a
political dispute?
a. Exchange control
b. Market grouping
c. Boycott
d. Tariff
48. Which of the following statements is a characteristic of dumping?
a. It refers to exporter business trying to decrease an overseas market share
b. It refers to the sale of an exported product at a price lower than that charged for the same or a like product in the
“home” market of the exporter
c. It refers to a form of trade in which all or part of the payment for goods or services is in the form of other goods
or services.
d. It refers to a system in which prices of different currencies move up and down based on the demand for and the
supply of each currency
49. GE has been in the news lately for _____, or bringing back the production of GE appliances to its Louisville,
Kentucky plant from China.
a. inshoring
b. offshoring
c. insourcing
d. importing
50. Melrow Inc., a U.S. firm, suffers heavy losses and lays off many of its employees. To reduce its manufacturing costs,
it shifts its production units to another country where labor costs are less. In this scenario, Melrow Inc. is engaged in
_____.
a. licensing
b. outsourcing
c. franchising
d. inshoring
51. Which term refers to understanding international marketing opportunities, using effective global marketing strategies,
and knowing the threats from foreign competitors in all markets?
a. Global vision
b. Global marketing
c. Outsourcing
d. Inshoring
52. Which of the following statements is not correct about multinational companies
a. They possess and can transfer the most up-to–date technology.
b. Multinational companies employ a small proportion of the labor force with increasingly capital-intensive
technologies.
c. Multinationals may not substantially increase employment in developing nations.
d. Multinational companies have low income levels.
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53. Which statement correctly states the relationship between a country’s political structure and actions and businesses?
a. Regulation does not burden businesses or make it difficult for them operate.
b. International politics rarely affect business laws.
c. Government-owned industries and centralized planning tend to decrease as rights of private property increase.
d. Regulations do not help businesses grow and prosper.
54. Which term refers to the difference between the value of a country’s exports and the value of its imports over a given
period?
a. Balance of trade
b. Balance of payment
c. Gross domestic product
d. Gross national product
55. Which statement is true of natural resources in terms of global trade or a country’s economy?
a. The past decade has witnessed the discovery of an abundance of natural resources.
b. Petroleum is the only natural resource that affects international marketing.
c. Vast differences in natural resources result in minor shifts of wealth among countries.
d. Steep declines in the price of oil had a negative impact on America’s oil producers.
56. Which statement is true of global marketing standardization?
a. Consumers worldwide don’t want the same things.
b. Companies utilizing global marketing standardization have different foreign market segments with different
products.
c. The markets throughout the world are becoming more alike.
d. Companies must differentiate their offerings to satisfy different target markets.
57. Which term refers to the production of uniform products that can be sold the same way all over the world?
a. Global marketing standardization
b. Inshoring
c. Outsourcing
d. Global marketing differentiation
58. Which way of entering the global marketplace subjects a company to the highest risk, but offers the highest return?
a. Exporting
b. Contract manufacturing
c. Joint venture
d. Direct investment
59. Which of the following is true of outsourcing?
a. It reduces corporate growth.
b. It reduces productivity and revenue growth.
c. It faces production delays due to faulty parts.
d. It increases energy costs in the United States.
60. Dumping may result from all of the following exporter business strategies EXCEPT:
a. trying to increase an overseas market share.
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b. temporarily distributing products in overseas markets to offset slack demand in the home market.
c. increasing unit costs by exploiting large-scale production.
d. attempting to maintain stable prices during periods of exchange rate fluctuations.
61. Which of the following made several major changes in world trading practice?
a. The Uruguay Round
b. Mercosur
c. The North American Free Trade Agreement (NAFTA)
d. The International Monetary Fund (IMF)
62. Which of the following refers to private label manufacturing by a foreign company?
a. Licensing
b. Contract manufacturing
c. Joint venture
d. Direct foreign investment
63. Maria Apparel is a well-known apparel store. The owners of the store want the store to go global; hence, they have
opened a website. In this scenario, doing business online:
a. makes it difficult for Maria Apparel to access customers through the Internet.
b. frees Maria Apparel from old brick-and-mortar rules, regulations, and habits.
c. immediately puts Maria Apparel in the international marketplace.
d. stops Maria Apparel from selling products in its physical stores.
64. _____ was founded in 1945, one year after the creation of the World Bank, to promote trade through financial
cooperation and eliminate trade barriers in the process.
a. The European Union (EU)
b. The World Trade Organization (WTO)
c. The North American Free Trade Agreement (NAFTA)
d. The International Monetary Fund (IMF)
65. Which term describes a form of price discrimination that can potentially harm the importing nation’s competing
industries?
a. Countertrade
b. Trade barriers
c. Free trade
d. Dumping
66. Zenith, a popular restaurant chain, has many branches all over the world. The taste and quality of its food is the same
across all these branch restaurants. Based on this information, which of the following strategies does Zenith embrace?
a. Global marketing localization
b. Product adaptation
c. Mass customization
d. Global marketing standardization
67. Which of the following statements is correct about BRICS?
a. Outside of China, the brightest light among the BRICS is India.
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b. India is more dependent on exports than other BRICS country.
c. Politics do not play a role in the development of BRICS.
d. China is not one of the BRICS countries.
68. Companies at the fourth stage of developing their global business:
a. set up foreign subsidiaries to handle sales in one country.
b. operate in one country and sell into others.
c. operate an entire line of business in another country.
d. have their top executives and core corporate functions located in different countries.
69. A U.S. licensor will be most successful at maintaining effective control over licensees and preventing them from
voiding the contract by:
a. using lawyers from both countries to write the licensing agreement.
b. insisting that all licensees have a published code of ethics.
c. receiving all the revenue earned by the licensees.
d. locally registering patents and trademarks.
70. When a domestic firm buys part of a foreign company or joins with a foreign company to create a new entity, it is
called _____________.
a. licensing
b. contract manufacturing
c. a joint venture
d. a direct foreign investment
71. A __________ strategy occurs when multinational firms enable individual subsidiaries to compete independently in
domestic markets.
a. multidomestic
b. multinational
c. global
d. capital-intensive
72. Which of the following is correct regarding the benefit of globalization?
a. Decreases product and service quality
b. Hampers economic freedom
c. Access to global export markets and advanced technology
d. Crushing competition
73. Which of the following is/are the benefits of outsourcing?
a. Cost saving
b. Corporate growth
c. Increase in productivity and revenue growth
d. All of the above
74. Which of the following is a difference between product invention and product adaptation?
a. Product invention involves altering the promotional strategies for a product, while product adaptation does not
involve altering such strategies.
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b. Product invention takes the marketing mix into consideration, while product adaptation does not take it into
consideration.
c. Product invention involves drastically changing an existing product, while product adaptation involves slightly
altering a basic product.
d. Product invention applies only to products that are sold in local markets, while product adaptation applies to
products all around the world.
75. The Uruguay Round replaced the General Agreement on Tariffs and Trade (GATT) with _____.
a. the European Union (EU)
b. the World Trade Organization (WTO)
c. the North American Free Trade Agreement (NAFTA)
d. the International Monetary Fund (IMF)
76. Which of the following statements is a characteristic of countertrade?
a. It refers to a form of trade in which all or part of the payment for goods or services is in the form of other goods
or services.
b. It refers to the sale of an exported product at a price lower than that charged for the same or a like product in the
“home” market of the exporter.
c. It refers to the active ownership of a foreign company or of overseas manufacturing or marketing facilities.
d. It refers to a system in which prices of different currencies move up and down based on the demand for and the
supply of each currency.
77. Which of the following companies is in the first stage of developing a global business?
a. The Footwear Corp., which manufactures shoes and boots in a small town in Lucitona, sells its products to several
countries around the world.
b. Laelle Inc. is based in Euphonia and has set up several subsidiaries to manage its business in another country
c. Fournotts Bros., which is based in Datford, is opening a new line of business in a neighboring country.
d. Rues and West Inc. operated in Yucatan, is operating an entire line of business in another country.
78. The owners of Vogue, an apparel store based in California, want to expand the store’s business all over the world. In
this case, which of the following strategies can help the owners of Vogue achieve their objectives?
a. Opening an e-commerce site
b. Standardizing the size of apparel
c. Acting as an export broker
d. vending in physical stores.
79. Which of the following statements is true of a company that is in the second stage of developing a global business?
a. It maintains a virtual executive suite.
b. It sets up foreign subsidiaries to handle sales in one country.
c. It runs its business entirely through the Internet.
d. It bases its entire operations in its home country.
80. Which of the following statements is true of the term quota?
a. It refers to a limit on the amount of a specific product that can enter a country.
b. It refers to the exclusion of all products from certain countries or companies.
c. It refers to a tax levied on the goods entering a country.
d. It refers to an agreement to stimulate international trade.