Chapter 5—Developing a Global Vision
TRUE/FALSE
1. Having a global vision means management recognizes and reacts to international marketing
opportunities, uses effective global marketing strategies, and is aware of threats from foreign
competitors in all markets.
2. Global trade has climbed to about $200 billion a year.
3. About 85 percent of U.S. companies export their products to other countries on a regular basis.
4. The falling U.S. dollar makes the possibility of manufacturing in the United States more attractive than
in the past.
5. Globalization deserves credit for helping lift many nations out of poverty and for improving standards
of living of low-wage families.
6. Multinational companies typically begin the development of their global business with direct
investment and continue using this strategy throughout the company’s life span.
7. If a country’s currency appreciates, more of that currency will be needed to buy another country’s
currency.
8. The price of one country’s currency in terms of another country’s currency is called the conversion
price.
9. Global marketing standardization presumes that the markets throughout the world are becoming more
alike.
10. The same environmental factors that operate in the domestic market also exist internationally. These
factors (culture, economic, political structure and actions, demographic makeup, and natural resources)
should be examined regardless of the country.
11. In general, average family incomes are higher in more developed countries than in the less developed
countries.
12. While some countries have elements of both capitalism and socialism, most nations are at one political
extreme or the other.
13. According to research done by the World Bank, countries with the greatest amount of business
regulation foster the strongest economies.
14. The U.S. government limits the amount of sugar cane that is imported into the country. This is an
example of a tariff.
15. The U.S. government prohibits the importation of Havana cigars because of political differences with
Cuba. This is an example of a boycott.
16. The Uruguay Round of trade negotiations dramatically increased trade barriers worldwide.
17. NAFTA is the New American Foreign Trade Amendment, which allows for balanced trade with the
European Union (EU).
18. The European Union Commission and the courts have come under widespread criticism for
“rubber-stamping” or approving most business deals involving U.S. multinationals.
19. The Group of Twenty is the largest free trade agreement in the world.
20. Even though it is not actively involved in global marketing, Hennessey Enterprises, a U.S.-based
business, agreed to sell two thousand of its stress-reducing products to a distribution company in
Norway. This would be an example of direct investment.
21. Licensing agreements reduce the risk for manufacturers and sometimes even remove the requirement
for a manufacturer to produce its own product.
22. Private-label manufacturing by a foreign country is called franchising.
23. U.S.-based Procter & Gamble and Italian-based Fater agreed to produce and market diapers for the
European market. This is an example of a joint venture.
24. The form of global organization that provides the highest potential for return on investment as well as
the highest level of risk is contract manufacturing.
25. Global marketing research is not any more difficult than domestic marketing research.
26. Suppose a Chinese firm makes computer chips at $4.00 per chip but sells the chips for $2.00 in
American markets. American producers of computer chips cannot supply chips at the low rates that the
Chinese firm is supplying them. The Chinese firm is engaging in dumping.
27. In the context of global marketing, product invention can be taken to mean either creating a new
product for a market or drastically changing an existing product.
28. Marketers typically target lower-income consumers when they enter global markets.
29. The rules, regulations, and habits used for brick-and-mortar stores tend to restrain and limit the success
of those retailers engaged in e-commerce.
MULTIPLE CHOICE
1. Individuals and organizations utilizing a global vision to effectively market goods and services across
the world are engaged in:
a.
international selling schemes
b.
borderless commerce
c.
global marketing standardization
d.
global logistics
e.
global marketing
2. Basketball is played nearly everywhere in the world and is an easily understood sport. The National
Basketball Association (NBA) finals reached more than 600 million televisions in 195 countries. From
this information, you should be able to infer that the NBA is:
a.
developing international selling schemes
b.
implementing standard international marketing
c.
implementing global marketing standardization
d.
supplementing its foreign vision
e.
practicing global marketing
3. All of the following statements about global marketing are true EXCEPT:
a.
Marketing to target markets throughout the world has become an imperative for business.
b.
Often a U.S. firm’s toughest domestic competition comes from foreign companies.
c.
Marketing managers must develop a global vision not only to recognize and react to
international marketing opportunities but also to remain competitive at home.
d.
Adopting a global vision can be lucrative for a company, and global marketing can offset
weak domestic performance.
e.
Foreign competitors have not gained significant market share in the U.S.
4. Sawyer Components manufactures high-cost, customized roller parts for paper mills and is expanding
into China because of the opportunity for significant growth in this developing country. The owner
uses effective global strategies and is aware of threats from foreign competitors. This illustrates that
the owner has a global:
a.
advantage
b.
imperative
c.
vision
d.
outsource
e.
introspection
5. H. J. Heinz, the ketchup company, gets over half of its revenue from international sales. This shows
that:
a.
U.S. citizens are using less ketchup
b.
their market share should increase
c.
Heinz needs to abandon the U.S. market
d.
sales need to be increased domestically
e.
adopting a global vision can pay off
6. Which of the following statements about the impact of international business on the U.S. economy is
NOT true?
a.
America exports over $1.7 trillion in goods and services each year.
b.
Almost one-third of U.S. corporate profits come from international trade and foreign
investment.
c.
Every U.S. state has realized net employment gains directly attributed to foreign trade.
d.
Exports create jobs for over 50 million Americans.
e.
The U.S. exports about 20 percent of its industrial production.
7. The total market value of all final goods and services produced in a country for a given time period is
called:
a.
the exchange rate
b.
gross domestic product (GDP)
c.
the trade balance
d.
gross national product (GNP)
e.
gross operating surplus (GOS)
8. The primary reason large U.S. companies send U.S. jobs abroad is because labor costs are higher here
in the United States. They are engaging in _____.
a.
outsourcing
b.
global trade
c.
multinational employee searches
d.
employee export
e.
global employment
9. Many people fear world trade because it:
a.
will inevitably lead to inflation
b.
will cause living standards to increase at a slower rate
c.
causes some people to lose their jobs as production shifts abroad
d.
has brought entire nations out of poverty
e.
has increased per capita income for some countries
10. Which of the following factors make the possibility of manufacturing in the United States more
attractive than in the past?
a.
Wages in China are rising 10 to 15 percent a year.
b.
In recent years, the value of the U.S. dollar has fallen against the Chinese yuan.
c.
Shipping costs have risen dramatically across the globe.
d.
All of the above.
e.
None of the above.
11. Globalization:
a.
relies on strong government regulations to keep down prices
b.
promotes economic freedom and increases living standards
c.
tends to dry up the flow of foreign capital in less developed countries
d.
has made it easier for governments to abuse the freedom and property of their citizens
e.
has kept wages low in developing countries around the world
12. A(n) _____ is a company that is heavily engaged in international trade and moves its resources, goods,
services, and skills across national boundaries.
a.
international facilitator
b.
global trader
c.
multinational corporation
d.
exporting company
e.
international merchant
13. When European demand for a certain solvent declined, Dow Chemical instructed its German plant to
switch to manufacturing a chemical that had been imported from Louisiana and Texas. Dow Chemical
would be best described as a(n):
a.
global enterprise
b.
global trader
c.
cultural marketer
d.
exporting company
e.
multinational corporation
14. Apple Inc. has partnerships with wireless carriers in Japan, Spain and a handful of other European
countries. Apple Inc works with suppliers and retailers worldwide. This means that Apple is a:
a.
multinational corporation
b.
worldwide competitor
c.
marketplace competitor
d.
domestic corporation
e.
foreign investor
15. Otis Elevators has entered into a strategic alliance with a company in France from which it gets its
elevator door systems. It has a similar agreement with a manufacturer in Japan that provides it with
special motor drives. A manufacturer in Spain has worked closely with Otis to create small geared
parts necessary for the manufacture of elevators. The component parts are assembled at its plant in the
United States. Otis elevators can be found in buildings all over the world. Otis Elevators is an example
of a(n):
a.
cultural marketer
b.
global trader
c.
multinational corporation
d.
exporting company
e.
global enterprise
16. Which of the following statements about multinational firms is true?
a.
Multinationals typically do not change their methods of reaching their global markets if
they are successful with their initial strategy.
b.
Multinationals are defined as companies heavily engaged in exporting and importing.
c.
All multinationals must enter the fourth stage of globalization before they are fully
internationalized.
d.
Multinationals often develop their global businesses in stages.
e.
The five stages of globalization closely mirror the five stages of the product life cycle.
17. The Patton Awning company produces tents, tarps, awning, and other canvas products. The firm is in
stage one of creating its global business. This means that they:
a.
operate in one country and sell to others
b.
have set up a foreign subsidiary
c.
operate an entire line of business in another country
d.
have top executives and core corporate functions in different countries
e.
they operate in every country in the world
18. Defeet International creates its apparel in North Carolina and sells it domestically and abroad. The
company is in which stage of global business?
a.
Stage one
b.
Stage two
c.
Stage three
d.
Stage four
e.
Stage five
19. In which stage do multicultural companies operate when they set up foreign subsidiaries to handle
sales in one country?
a.
Stage one
b.
Stage two
c.
Stage three
d.
Stage four
e.
Stage five
20. Cooley Manufacturing is a multinational company selling plumbing components around the world.
This company has progressed to the point that it operates an entire of line of business in several other
countries. Which stage of multinational business does this represent?
a.
Stage one
b.
Stage two
c.
Stage three
d.
Stage four
e.
Stage five
21. Which of the following is a criticism of multinational corporations?
a.
Multinationals sometimes support reactionary and oppressive regimes.
b.
Multinationals require excessive employment information.
c.
Multinationals often engage in countertrading.
d.
Multinationalism is responsible for the transference of labor-intensive technology.
e.
Multinationals do not do enough to standardize their marketing mixes.
22. A company that is capital-intensive:
a.
has an altered fiscal strategy for overseas operations
b.
spends more on equipment than on labor
c.
makes better use of benchmarking than other types of business
d.
creates employment monopolies
e.
must engage in countertrading due to restrictive foreign legislature
23. Suppose three months ago the dollar price of a yen was $0.012. Today the dollar price of one yen is
$0.018. If you are in the market for a brand new Honda automobile today, you will find that:
a.
the price of the auto will be much less than it was three months ago
b.
you will have trouble purchasing an auto because the dealership cannot keep up with the
high demand
c.
it will be impossible to obtain financing for the new auto
d.
you will have to pay more for the auto than you would have paid three months ago
e.
the trade-in value of your old vehicle will be much less than it would have been three
months ago
24. With a _____, a firm produces standardized products to be sold the same way all over the world.
a.
traditional marketing strategy
b.
global marketing standardization approach
c.
product extension approach
d.
culturally based marketing strategy
e.
synergistic approach to marketing
25. Global marketing standardization:
a.
is becoming less popular with the large multinationals
b.
encourages product, packaging, and advertising variations for each nation or local market
c.
actually raises production costs
d.
presumes markets throughout the world are becoming more alike
e.
is more popular with consumer products than with industrial goods
26. The Victorinox Swiss Army Knife is found all over the world. It is manufactured and marketed
similarly to all consumers. Victorinox uses a(n):
a.
ethnocentric strategy
b.
global marketing standardization approach
c.
synergistic approach to globalization
d.
cultural marketing strategy
e.
traditional approach to marketing
27. When multinational firms enable individual subsidiaries to compete independently in domestic
nations, they are engaged in:
a.
global marketing standardization
b.
multidomestic strategy
c.
product extension
d.
technological receptivity
e.
marketing hegemony
28. A business thinking of expanding into global markets needs to examine all of the following external
environments EXCEPT:
a.
culture
b.
political structure and actions
c.
its marketing mix
d.
natural resources
e.
demographic makeup
29. Central to any society is a common set of values shared by its citizens that determines what is socially
acceptable. Marketers refer to these values collectively as a country’s:
a.
ethical system
b.
culture
c.
ethnocentrism
d.
national personality
e.
socialization
30. A soft drink manufacturer who was thinking of investing in a bottling plant in the Czech Republic
should know the nation is proud of the fact it is among the world’s biggest beer drinkers. Czechs
consume an average of one-half liter of beer a day for every man, woman, and child in the country.
The _____ environment of this country could very easily prevent the soft drink bottling company from
succeeding.
a.
demographic
b.
economic
c.
cultural
d.
political
e.
technological
31. Muslim countries are receptive to most Disney products, but they have asked Disney not to include
Piglet when it sells its Winnie the Pooh characters because Muslims (as a part of their religious beliefs)
contend that pork in any form is unclean. This is an example of a _____ factor that directly affects
Disney’s global operation.
a.
political structure
b.
cultural
c.
technological
d.
competitive
e.
natural resource
32. Which of the following is an important cultural factor that should be considered by global marketers?
a.
Competitive synergy
b.
Language
c.
Natural resources
d.
Technology sensitivity
e.
Level of economic development
33. American firms should never try to do business in Europe in August because they will find that
everyone has gone on vacation. Today, all European countries have laws requiring companies to
provide employees with vacations of at least four to five weeks. This would be an important part of the
European _____ environment that any multinational firm doing business there needs to be aware of.
a.
cultural
b.
political
c.
economic
d.
technological
e.
natural
34. When IKEA, the Swedish home furnishings retailer, first entered the Japanese market, it failed. It was
more successful in its second try because it was aware of the need to adapt its furnishings to fit the
smaller Japanese homes. The _____ environment had the greatest influence on IKEA‘s first failure in
Japan.
a.
demographic
b.
economic
c.
cultural
d.
political
e.
technological
35. A U.S. executive had no idea the Germans tend to be very risk-averse. When he arrived at a meeting in
Berlin, he simply stressed the price of his firm’s products without emphasizing their bottom-line
benefits, promoting the company’s strong service support, or guaranteeing their effectiveness. As a
result, the multimillion dollar deal failed. The U.S. executive overlooked the importance of which
environmental factor?
a.
Culture
b.
Demographics
c.
Natural resources
d.
Economic development
e.
Political structure
36. Who are the richest people in the world?
a.
Americans
b.
Chinese
c.
British
d.
French
e.
Luxembourgers
37. The fact that Russia’s inflation rate has increased 15.1 percent since May of 2007 would be an
important _____ factor for a company that wanted to do business in that country.
a.
legal
b.
economic
c.
culture
d.
technological
e.
natural
38. Compared to India, China:
a.
is a world leader in software
b.
has extremely poor logistics
c.
has developed world-class information-technology services
d.
has a very low level of income disparity
e.
is much stronger in mass manufacturing
39. Which of the following statements about the political environment is true?
a.
A recession is part of the political environment.
b.
A country is either socialistic or capitalistic, but never both.
c.
The countries with the least across-the-board regulations and political structures foster the
strongest economies.
d.
The European Union is purely an economic arrangement and has no political impact on
marketing.
e.
All of these statements about the political environment are true.
40. When a company or industry is taken over by the government, it has been:
a.
unionized
b.
boycotted
c.
exchanged
d.
patronized
e.
nationalized
41. A tax levied on the goods entering a country is called a(n):
a.
license
b.
quota
c.
boycott
d.
exchange control
e.
tariff
42. Consumers purchasing an automobile in Hong Kong must pay a 100 percent tax on it. This tax is
imposed by the government on all automobiles entering the country and is called a(n):
a.
tariff
b.
quota
c.
license
d.
boycott
e.
exchange control
43. A(n) _____ is a limit on the amount of a specific product that can enter a country.
a.
quota
b.
tariff
c.
boycott
d.
exchange control
e.
transfer limit
44. Since 1953, the United States has limited the amount of raw peanuts that can be imported to 1.7
million pounds a year. This is only about one-tenth of 1 percent of all domestic edible peanut
consumption in the United States. This limitation is an example of a(n):
a.
natural resource barrier
b.
quota
c.
tariff
d.
exchange control
e.
boycott
45. An exclusion of all products from certain countries or companies by a government or group is called
a(n):
a.
expropriation
b.
quota
c.
tariff
d.
exchange control
e.
boycott
46. Several Arab nations refuse to allow Coca-Cola products to be sold within their borders because of the
company’s distributorships in Israel. This is an example of a:
a.
transfer limit
b.
quota
c.
tariff
d.
exchange control
e.
boycott
47. A(n) _____ is a law that compels a company earning foreign exchange from its exports to sell it to a
control agency, usually a central bank.
a.
tariff
b.
quota
c.
fiscal prerequisite
d.
exchange control
e.
transfer barrier
48. _____ are trade alliances in which several countries agree to work together to form a common trade
area that enhances trade opportunities among those countries.
a.
Boycotts
b.
Regional unifications
c.
Market groupings
d.
Free trade nations
e.
Expropriation members
49. _____ is a trade agreement that includes Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador,
Paraguay, Peru, and Uruguay. This agreement eliminated the tariffs among these trading partners.
a.
NAFTA
b.
Maastricht
c.
WTO
d.
GATT
e.
Mercosur
50. Negotiations (such as GATT or the Uruguay Round) between countries that are made to stimulate
global exchange and remove barriers are called _____ agreements.
a.
trade
b.
joint venture
c.
CRM
d.
exchange
e.
licensing
51. With respect to global business, MFN stands for:
a.
multi-functional norm
b.
multinational foreign network
c.
main foreign network
d.
most favored nation
e.
multi-foreign nation
52. The _____ is the most ambitious global trade agreement ever negotiated; the agreement has reduced
tariffs by one-third worldwide.
a.
Uruguay Round
b.
Mercosur
c.
GATT
d.
NAFTA
e.
Maastricht Treaty
53. The _____ of trade negotiations created the _____, which replaces GATT. This trade agreement
dramatically lowers trade barriers worldwide.
a.
Uruguay Round; World Trade Organization
b.
Doha Round; European Union
c.
Doha Round; NAFTA
d.
Paraguay Round; South American Free Trade Agreement
e.
Mercosur; European Union