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Indicate whether the statement is true or false.
1. A noticeable trend toward multinational economic integration has developed since the end of World War II.
a. True
b. False
2. International direct investment does not provide a competitive advantage because of its high risk potential and
high involvement characteristics.
a. True
b. False
3. Pizza Hut franchises stores in areas with Arab and Indian populations. To accommodate dietary differences,
the traditional American recipes are modified. Consequently, the advertising, packaging, and promotional
message will change. Marketers refer to these changes as dual adaptation.
a. True
b. False
4. Subcontracting with a local company provides protection from import duties.
a. True
b. False
5. Subcontracting is a type of contractual agreement that assigns the production of goods or services to local or
smaller firms.
a. True
b. False
6. The three basic strategies for entering foreign markets are exporting, contractual agreements, and
international direct investment.
a. True
b. False
7. A successful implementation of a straight extension strategy creates universal recognition of a product for
consumers from country to country.
a. True
b. False
8. The two largest trading partners of the United States are Canada and Mexico.
a. True
b. False
9. Manufacturers control marketing and distribution of their products while selling them through an export-
trading company.
a. True
b. False
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10. NAFTA has succeeded in achieving political integration among its member nations: the United States,
Canada, and Mexico.
a. True
b. False
11. A company that changes its product’s package size, price, and promotional message to meet the local
market’s taste is using a straight extension marketing strategy.
a. True
b. False
12. Quotas on imports and export subsidies are different forms of tariffs.
a. True
b. False
13. Foreign licensing agreements are valid for a specified time period after which they need to be revised or
renewed.
a. True
b. False
14. Nearly four of every five dollars in the United States’ gross domestic product comes from services such as
banking, entertainment, business and technical services, retailing, and communications.
a. True
b. False
15. A nation’s basic system of transportation networks, communication systems, and energy facilities is referred
to as its infrastructure.
a. True
b. False
16. Manufactured goods account for the largest share of U.S. production output today.
a. True
b. False
17. The ability to adapt products to local preferences and culture is the key to success in foreign markets.
a. True
b. False
18. Franchising is a low-risk way to enter a foreign market as it offers a proven concept.
a. True
b. False
19. Licensing is an attractive entry strategy for small firms as it does not involve capital outlays.
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a. True
b. False
20. A manufacturing firm retains more control over the export process when it deals with an export-trading
company rather than dealing with an export-management company.
a. True
b. False
21. An export-trading company provides the first-time exporter with expertise in locating foreign buyers and
ensuring that its goods meet local labeling and testing laws.
a. True
b. False
22. Firms often use more than one strategy to enter into foreign markets.
a. True
b. False
23. An importer is a firm that sells goods manufactured domestically in foreign markets.
a. True
b. False
24. Establishing a free-trade area is the simplest way to achieve multinational economic integration.
a. True
b. False
25. Licensing is advantageous compared to exporting as it provides access to local partner’s distribution
channels and also protection from legal barriers.
a. True
b. False
26. The recently ratified Treaty of Lisbon enables the European Union to enter into international agreements as
a political entity.
a. True
b. False
27. A nation’s size, per-capita income, and stage of economic development determine its prospects as a host for
international business expansion.
a. True
b. False
28. One concern about franchising is that poor service or quality from the foreign partner could damage the
brand.
a. True
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b. False
29. A franchisee receives the right to sell the franchiser’s products and to use the franchiser’s name as well as a
variety of marketing, management, and other services.
a. True
b. False
30. Acquiring an existing firm in a country where the company wants to do business is a form of international
direct investment.
a. True
b. False
31. The labor conditions in a country are part of its political environment.
a. True
b. False
32. Global marketing is rapidly becoming a necessity for most U.S. companies.
a. True
b. False
33. Modifying the control panel of a washing machine to accommodate for those cultures that read from right to
left would be considered a form of product invention.
a. True
b. False
34. Walmart is the world’s largest private employer and the largest retailer.
a. True
b. False
35. The term “exchange rate” refers to the price of one nation’s currency in terms of another country’s currency.
a. True
b. False
36. Joint ventures can be troublesome due to language and culture differences.
a. True
b. False
37. Contractual agreements are less flexible compared to exporting strategies.
a. True
b. False
38. Outboard motors that are sold in the United States primarily as recreational products may be sold in a
foreign country as basic transportation equipment. Such a practice is an example of product adaptation.
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a. True
b. False
39. A company that needs to utilize the marketing expertise of a local company when expanding abroad should
consider subcontracting.
a. True
b. False
40. Administrative barriers are more subtle than tariffs.
a. True
b. False
41. One disadvantage of an acquisition is that you may not acquire knowledge about foreign markets that would
help build a competitive advantage.
a. True
b. False
42. The product invention strategy helps a firm take advantage of unique foreign market opportunities.
a. True
b. False
43. The WTO makes binding decisions in mediating disputes and reduces trade barriers.
a. True
b. False
44. A simple and inexpensive way for first-time exporters to reach foreign customers is to sell their products to
an export-trading company.
a. True
b. False
45. U.S. imports mainly include crude oil, machines, consumer electronics, and passenger cars.
a. True
b. False
46. Use of straight extension strategy as part of global marketing strategy permits economies of scale in
production and marketing.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
47. Lincoln Financial has seen increased business in its European market over the last two years. Business in
France and Germany has accounted for 15% of their sales and executives expect this number to rise with
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possible sales from other European countries. The CEO feels it is time to expand in Europe but wants to retain
complete control over European operations as financial planning needs of Europeans are different than those of
Americans. The CEO is also willing to invest a significant amount of capital in the expansion as he feels it will
be recouped quickly. Lincoln Financial’s best option for a market entry strategy is:
a. a joint venture.
b. subcontracting.
c. franchising.
d. an international division.
48. _____ is a contractual arrangement in which a wholesaler or retailer agrees to meet the operating
requirements of a manufacturer.
a. Direct investment
b. Franchising
c. Value engineering
d. Business process reengineering
49. Global trade can be divided into two categories:
a. importing and exporting.
b. franchising and exporting.
c. retail and online.
d. manufacturing and service.
50. A consumer food product company is looking to quickly and firmly establish a presence in a new market.
What is the best market entry strategy?
a. Acquisition
b. Joint venture
c. Licensing
d. Subcontracting
51. A small, U.S. electronics firm learned the dangers of ______ as a market entry strategy. The factory in
China that was producing its goods had terrible working conditions.
a. licensing
b. subcontracting
c. a joint venture
d. an acquisition
52. When a group of nations agree to buy and sell goods among themselves by abolishing tariffs and trade
restrictions, the nations have created a _____.
a. customary market
b. cooperation council
c. political union
d. free-trade area
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53. The activities of the World Trade Organization thus far have focused on dispute resolution rather than
reducing trade barriers as:
a. the main aim of this organization is to increase the level of production in the developing nations.
b. the differences between the developed and developing nations have created a major roadblock to its
progress.
c. the organization does not have the authority to make binding decisions on trade policies and trade
barriers.
d. the organization is attempting to increase profit levels for developed nations.
54. Cameron is a leather artisan who creates custom satchels, hand bags, and computer briefcases for customers
across the globe. He posts photos of his work on Instagram, uses Twitter to share fashion trends, and has a
virtual store on Etsy. Which factor has made it possible for Cameron to become an international marketer?
a. The Internet
b. Cameron’s creativity
c. Cameron’s ability to tweet catchy posts using Twitter
d. Consumer’s desire to purchase custom products
55. The North American Free Trade Agreement (NAFTA) is a trade accord that removes trade barriers among:
a. countries in Western hemisphere and North, Central, and South America.
b. Canada, Mexico, and the United States.
c. the United States, the Dominican Republic, and Central American nations.
d. the United States and the European Union.
56. Which of the following firms is ranked as the world’s largest company in terms of annual sales?
a. General Electric
b. ExxonMobil
c. Walmart
d. Royal Dutch Shell
57. Honda, a Japanese firm, builds a factory in Alabama to make minivans to be marketed in the United States.
Which of the following strategies of entering into a foreign market is best represented by this example?
a. Subcontracting
b. Franchising
c. International direct investment
d. Licensing
58. VB Group, a South African firm, is a leading supplier of African agricultural products to the world. It buys
products from the domestic producers and resells them in international markets. The company maintains
complete control over the marketing and distribution of the products in the foreign markets. VB Group is an
example of a(n) _____.
a. subcontractor
b. export-trading company
c. export-management company
d. franchisee
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59. _____ are the taxes levied on imported goods.
a. Excise duties
b. Import quotas
c. Subsidies
d. Tariffs
60. A publisher of children’s picture books is a family business that has decided to export their products to
foreign bookstores. The family members expect to be very involved in all the company’s decisions. Which
model of first-time exporting would best fit this family business?
a. An offset agreement with a major international company
b. An export-management company
c. An export-trading company
d. A subcontractor on a large foreign project
e. Direct investing in a bookstore in another country
61. An investment group has decided to buy an international franchise of a nationally known custom clothing
chain. The group members are convinced that the franchise’s headquarters has balanced their standard practices
with local customer preferences. Which characteristic of the custom clothing operation would be the best
evidence of incorporating cultural considerations?
a. The clothing has a range of prices for everyday items and for special occasions.
b. Changing booth arrangements allow for separate accommodations for men and women.
c. Local stores carry appropriate amounts of body-covering clothing required by different religious beliefs.
d. The ambiance of the store allows for respectful family and group conversations.
e. The staff members can speak many different local languages to serve customers.
62. Alumna, a ceramics-manufacturing company in Denmark, is trying to market its products in Bulgaria. The
company has assigned the production of its goods to a local company in Bulgaria to take advantage of the low
labor costs and also to avoid the import duties on the products. In this case, the strategy used by Alumna for
entering foreign markets is an example of _____.
a. subcontracting
b. licensing
c. sole sourcing
d. exporting
63. Which of the following is true regarding the North American Free Trade Agreement (NAFTA)?
a. The member nations of the NAFTA have agreed to create a trade bloc similar to that of the European
Union.
b. The major aim of the NAFTA is to increase the level of literacy among the United States, Mexico, and
Canada.
c. NAFTA has been successful in creating the Free Trade Area of the Americas, the world’s largest free-
trade zone.
d. The member nations of NAFTA focus mainly on economic cooperation rather than on political
integration.
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64. When KFC expanded to China, the company opened locations in smaller cities because other fast food
restaurants, like McDonald’s, were expanding to the bigger cities. KFC was considering the international _____
environment when it made this decision.
a. political–legal
b. competitive
c. social–cultural
d. economic
65. Liberty Production is a small company that produces flags and other patriotic-themed items such as
banners. Historically, they have focused on the United States market but recently recognized they could
enhance sales by creating patriotic items for other countries. They would like to keep their expenses low as
they expand internationally and have reached an agreement with a company that will purchase the merchandise
and resell the items to international customers. Liberty Production will not have any control over marketing or
distribution activities but they appreciate the simplicity of this business model. Liberty Production is most
likely utilizing a(n) ________ to expand their global footprint.
a. export-trading company (ETC)
b. export-management company (EMC)
c. foreign licensing
d. subcontracting
66. A company has recently instituted a political risk assessment (PRA) unit that keeps track of situations of
international unrest. Which advantage does the new PRA unit offer?
a. The PRA pays attention to international events through following social media.
b. The PRA checks the legal situation to see whether charges can be filed against vandals.
c. The PRA collects statistics about the frequency and severity of ongoing events.
d. The PRA evaluates the specific risks to the company’s employees and facilities.
e. The PRA promotes peaceful interventions so that business processes are not interrupted.
67. _____ is a contractual agreement that grants marketers in other countries the right to distribute a firm’s
merchandise or to use its trademark, patent, or process in a specified geographic area.
a. Value engineering
b. Sole sourcing
c. Offset agreement
d. Foreign licensing
68. Despite being the world’s largest retailer, Walmart did not succeed in Germany. German customers were not
accustomed to greeters at store entries, could find lower prices on groceries in local stores, and the employment
of grocery baggers was unappealing to German’s who were used to self-service formats. Walmart failed to fully
understand the international _________ environment.
a. economic
b. political–legal
c. competitive
d. technological
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69. Nations with low per-capita incomes are usually good markets for:
a. automobiles and electronics.
b. expensive industrial machinery.
c. agricultural hand tools.
d. luxury goods.
70. Nike is a global brand, selling the same athletic shoes in each country. The company’s advertisements
change in some countries, however. For example, Nike ran ads in China to change the perception that “running
is boring.” Nike is using:
a. a promotion adaptation strategy.
b. a dual adaptation strategy.
c. a product adaptation strategy.
d. a straight extension strategy.
71. A nation’s basic system of transportation networks, communication systems, and energy facilities form a part
of its _____ environment.
a. social
b. political
c. legal
d. economic
72. A(n) _____ buys products from domestic producers and resells them abroad.
a. outsourcing firm
b. export-trading company
c. export-management company
d. offset marketer
73. Developing a completely new product to take advantage of a unique foreign opportunity is called product:
a. prototyping.
b. commercialization.
c. invention.
d. origination.
74. Which of the following statements is true about the European Union (EU)?
a. The EU has adopted a common currency.
b. The EU meets to determine trade restrictions.
c. The EU only allows free trade of certain products among member nations.
d. The pound is the currency utilized by members of the EU.
75. A company may choose a ________ strategy to take advantage of economies of scale in marketing and
production.
a. product adaptation
b. straight extension
c. promotion adaptation
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d. dual adaptation
76. The goal of the European Union, a multinational economic community, is to:
a. liberalize the world financial services, telecommunications, and maritime markets.
b. help American workers, farmers, and small businesses thrive and grow.
c. remove all barriers to free trade among its members, and standardization of currencies and regulations.
d. extend free-trade benefits to most nations around the world.
77. Tru-Shine is a cleaning company in the United States that offers various cleaning products and services.
After gaining popularity in the United States, the company decided to expand its business in other North
American nations. The company entered into an agreement with some local cleaning companies in Canada
where the local companies would sell its products and services under the same trade name. Tru-Shine also
agreed to provide the training and necessary equipments and supplies to the local companies. In this example,
the strategy used by Tru-Shine for entering foreign markets is an example of _____.
a. sole sourcing
b. value engineering
c. franchising
d. direct investment
78. When expanding to the Indian market, McDonald’s understood that the cow was a sacred animal in the
Hindu religion – the largest religion in India. As a result, McDonald’s in India does not sell beef products, but
rather chicken, paneer, and veggie burgers. This is a result of the international:
a. political–legal environment.
b. economic environment.
c. social–cultural environment.
d. technological environment.
79. Indian company Godrej & Boyce developed a small, portable refrigerator for rural India. The refrigerator
uses batteries to run a cooling chip and fan, keeping food items cold. This is an example of:
a. promotion adaptation.
b. product adaptation.
c. straight extension.
d. product invention.
80. Subway restaurants operate in many countries including Germany, Puerto Rico, Spain, Australia, and Japan.
Menu items in other countries change to reflect local tastes. Promotions in some countries may focus on
educating the consumer about the Subway brand. Subway is utilizing a ______ strategy.
a. product adaptation.
b. dual adaptation.
c. promotion adaptation.
d. product invention.
81. A company looking to expand internationally with little risk would choose:
a. exporting.
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b. foreign licensing.
c. subcontracting.
d. joint ventures.
82. Danone, makers of Activia yogurt, launched a campaign in 55 countries featuring global pop star Shakira.
Her international appeal combined with the tagline, “feeling good starts from the inside” helped Danone have a
global impact. This is an example of:
a. a straight extension strategy.
b. a product adaptation strategy.
c. a dual adaptation strategy.
d. a promotion adaptation strategy.
83. _____ is a form of global marketing that involves a continuous effort in marketing a firm’s merchandise to
customers in other countries.
a. Business process reengineering
b. Exporting
c. Sole sourcing
d. Social referencing
84. The fluctuation in exchange rates results in:
a. a country employing additional tariffs and quotas on imports to manage fluctuations.
b. a nation’s currency becoming more or less valuable compared with those of other nations.
c. the possibility of an economy reaching short-run equilibrium at levels below or above full employment.
d. a relatively rapid economic growth and periods of relative stagnation or decline.
85. Which of the following products forms a major part of U.S. imports?
a. Agricultural products
b. Iron ore
c. Medical equipments
d. Crude oil
86. Little Princess, a California-based company, is a creator of dolls and other toys for girls. The company is
mainly involved in designing new toys and developing their prototypes. It has signed an agreement with some
local toy manufacturers in Europe and North America to manufacture and distribute their toys in the local
markets. These contracts are for a specified time period and permit the foreign marketer to distribute goods in a
specified geographic area. Which of the following strategies is being used by Little Princess to enter foreign
markets?
a. Exporting
b. Direct investment
c. Foreign licensing
d. Sole sourcing
87. The European Union’s Treaty of Lisbon is designed to further streamline operations and enable the European
Union to enter into international agreements as a(n) _____.
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a. common market
b. political entity
c. customs union
d. economic union
88. Which of the following is an advantage of implementing a one-product, one-message approach to
international marketing?
a. Enhanced recognition of the company’s brand
b. Higher marketing expenses
c. Increased adoption of the brand
d. Reduced competitive threats
89. A group of ceramic artists think that their artwork would be successful in another country. Nothing similar is
available in the target country. They have a lot of marketing collateral from their successful efforts in the United
States, but most of their home country business comes from word of mouth. Which global strategy is the best
pathway for them to adopt?
a. Making a direct investment to collaborate with another art-connected business
b. Reusing their current original marketing collateral in the new country
c. Starting the word-of-mouth effort by dedicating a website to their products
d. Selling their artwork to an export-trading company in the new country
e. Starting a publicity tour of art and craft galleries in the new country
90. A regional business association has asked you to participate in a panel discussion about NAFTA. Your company has
benefited greatly from this accord, so you plan to strongly defend it. However, you must prepare to counter common
criticisms of NAFTA, including:
a. It may encourage dumping of U.S. goods into Canada.
b. It may cause the loss of U.S. jobs to cheap labor in Mexico.
c. It is leading to controversial political integration among the member nations.
d. It includes an unwieldy number of member nations.
e. It has not been in existence long enough to have an effect.
91. Walmart has struggled to find success in a few foreign countries. Experts say Walmart ignores social–
cultural factors when attempting to expand to foreign locations. Perhaps Walmart should abandon their direct
investment approach and instead ______, which will require a significant investment, but provide Walmart with
a fully functioning organization in the foreign country.
a. acquire an existing company
b. franchise
c. export products
d. seek a joint venture
92. Which of the following factors is most likely to be included in the political environment?
a. Inflation levels in different countries
b. Labor conditions in different countries
c. Exchange rate fluctuations in a country
d. Level of natural resources in a country
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93. When expanding to China, KFC built warehouses and used its own fleet of trucks to distribute food items to
its locations. KFC was considering the international _________ environment.
a. political–legal
b. competitive
c. technological
d. economic
94. An international company chose to go with a global marketing strategy in a new location, planning to
exactly duplicate the company’s previous success in its home country. The venture was not a success. While it
enjoyed economies of scale, the marketing campaign did not engage new customers. Which information is
essential to create a new and successful marketing campaign?
a. Factors that led to successful efforts in the company’s home country
b. Input from employees who were laid off due to the business’s failure
c. Negative comments made on social media by the company’s limited number of visitors
d. Information from doing a rotating promotional effort that changes with the four seasons
e. Specific details about the unique needs of potential customers in the new location
95. Which of the following is one of the major policy initiatives of the WTO?
a. Increasing the average level of education worldwide
b. Liberalizing world financial services
c. Promoting and protecting the environment
d. Regulating automobile production by less-advanced nations
96. Crazy Crackerz is a very successful cracker and chip company known for its outrageous flavors. The
company is ready to sell their products abroad but knows their cracker and chip flavors may need to be
customized in each foreign market. Crazy Crackerz has a significant amount of money and resources to invest
in this foreign expansion. The company should:
a. create an international division.
b. export the product using a straight extension strategy.
c. license the company’s products.
d. enter into a joint venture with a foreign snack foods company.
97. The _____ serves as a forum for trade negotiations, and mediates trade disputes between countries
throughout the world.
a. FTAA
b. GATT
c. European Union
d. WTO
98. Which of the following industries makes the largest contribution to the United States’ gross domestic
product?
a. Automobile industry
b. Service industry