Deck 8: Reaching Global Markets

Question 1

What is the effect of NAFTA on the international trade of United States and Canada?

Answer 1

The North American Free Trade Agreement (NAFTA), implemented in 1994, effectively merged Canada, Mexico, and the United States into one market of nearly 460 million consumers. NAFTA virtually eliminated all tariffs on goods produced and traded among Canada, Mexico, and the United States to create a free trade area. The estimated annual output for this trade alliance is more than $17 trillion. NAFTA makes it easier for U.S. businesses to invest in Mexico and Canada; provides protection for intellectual property (of special interest to high- technology and entertainment industries); expands trade by requiring equal treatment of U.S. firms in both countries; and simplifies country-of-origin rules, hindering China and Japan's use of Mexico as a staging ground for further penetration into U.S. markets.
Canada's more than 34 million consumers are relatively affluent, with a per capita GDP of $40,500. Canada is the single largest trading partner of the United States, which in turn supports millions of U.S. jobs. NAFTA has also enabled additional trade between Canada and Mexico. Mexico is Canada's fifth largest export market and third largest import market. With a per capita GDP of $14,700, Mexico's more than 114 million consumers are less affluent than Canadian consumers.

Question 2

If Germany, in an attempt to bolster the sales of its own auto manufacturers, decided to limit the number of automobiles that could be brought in from other countries, Germany would be using a(n) .

A) embargo
B) boycott
C) exchange control
D) import tariff
E) quota

Answer 2

E

Question 3

Before the 1990s, most firms entered international markets:

A) globally and quickly.
B) incrementally and slowly.
C) incrementally and quickly.
D) domestically and slowly.
E) regionally and quickly.

Answer 3

B

Question 4

Describe how economic forces affect marketing strategies.

Question 5

Describe the difficulties encountered in standardizing the marketing mix globally.

Question 6

The forces that affect foreign markets may differ dramatically from those affecting domestic markets. This makes a careful a critical part of a successful international marketing strategy.

A) political analysis
B) regulatory analysis
C) social audit
D) environmental analysis
E) marketing analysis

Question 7

In China, the price of imported Scotch is $30 per glass as opposed to Scotch from China which is $3. Which of the following do you think accounts for the difference in price?

A) Exchange control
B) Balance of trade
C) Import tariff
D) Embargo
E) Export tariff

Question 8

What are the effects of technological forces on international marketing? What opportunities exist in the global marketplace that marketers can exploit with regard to technology?

Question 9

When a glove manufacturer in China is allowed to sell only a certain number of plastic gloves into Japan, that firm is facing a(n) .

A) export tariff
B) embargo
C) restrictive product standard
D) quota
E) balance of trade restriction

Question 10

When Starbucks decided to expand into the international markets of India, Japan, and Argentina, its management realized that there would be significant differences in the standards of living, credit, buying power, and income distribution in those countries. Starbucks is currently examining the forces in its environmental analysis.

A) economic
B) cultural
C) ethical
D) technological
E) legal

Question 11

In what ways can businesses become involved in international marketing activities?

Question 12

What marketing and ethical problems can bribes create in international marketing transactions?

Question 13

How do globalized marketing strategies differ from customized marketing strategies?

Question 14

If Italy limits the number of coach bags that can be imported during a period of one-year, since coach bags are made in New York, USA. This would be an example of a(n) .

A) exchange control limit
B) embargo
C) quota
D) import tariff
E) supply limit

Question 15

According to the text, are small technology-based firms operating in international markets within two years of their establishment and realizing as much as 70 percent of their sales outside the domestic home market.

A) "natural globals"
B) "multinational corporations"
C) "born globals"
D) "born multinationals"
E) "multinational enterprises"

Question 16

Approximately two-thirds of the world's is outside of the United States.

A) selling power
B) marketing strategy
C) purchasing power
D) technical expertise
E) fast food consumption

Question 17

Describe the cultural and social forces that affect international marketing strategy.

Question 18

In what ways can a nation restrict the flow of imported goods?

Question 19

Which of the following is often used to raise revenue for a country and/or to protect domestic products?

A) Quota
B) Warning label
C) Embargo
D) Import tariff
E) Exchange control

Question 20

If Tasmania levied a duty on all goods purchased from the United States and other countries outside its borders that were brought into Tasmania, its businesses and citizens would be paying a(n) .

A) embargo
B) import tariff
C) travelers' tax
D) export tax
E) excise tax

Question 21

When products are introduced into one nation from another, acceptance is far more likely:

A) if prices are set very low.
B) when bribes are paid to local officials to aid distribution.
C) if there are many differences between the two cultures.
D) if the country of origin has a positive image in consumers' minds.
E) when retailers are given incentives to push the products.

Question 22

The Mont Blanc Company plans to export expensive consumer gift items to Germany. The best overall economic measure of market potential would be Germany's .

A) gross domestic product
B) gross domestic product per capita
C) gross national product
D) balance of trade
E) unemployment rate

Question 23

Many companies choose to standardize their across national boundaries to maintain a consistent and well- integrated corporate culture.

A) technology
B) ethical behavior
C) language
D) dress code
E) products

Question 24

In considering the viability of potential international markets for Pepsi products, PepsiCo is advised to take into account , which provides insight into market potential.

A) gross domestic product per capita
B) gross domestic product
C) the quantity of exports
D) the quantity of imports
E) total consumer income

Question 25

In many developing countries around the world, technology is enabling opportunities to "leapfrog" existing technology. Which of the following best describes this statement?

A) These countries are able to forgo current technological advances in order to wait for even better technology to be developed.
B) More advanced technology is reaching these countries even though they lack technological infrastructures.
C) Technological advances are often offered at prices considerably lower than in well-developed countries.
D) The technology in developing countries is rapidly surpassing the technology in well-developed countries.
E) Advances in technology have made international marketing much easier in developing countries.

Question 26

If a certain country considered handshakes in business transactions to be taboo and preferred to use nodding, this would be an example of differences in forces.

A) cultural
B) political
C) sales
D) sociological
E) regulatory

Question 27

The is the difference in value between a nation's exports and its imports.

A) net trade value
B) export/import ratio
C) gross domestic product
D) balance of payments
E) balance of trade

Question 28

refers to the idea that morality varies from one culture to another and that business practices are therefore differentially defined as right or wrong by particular cultures.

A) The self-reference criterion
B) Global ethics
C) Economic relativism
D) Cultural relativism
E) Moral relativism

Question 29

The unconscious reference to one's own cultural values, experiences, and knowledge when encountering new and different cultures is known as:

A) the "when-in-Rome" approach.
B) the Fraedrich Principle.
C) cultural relativism.
D) the ethnocentric reference.
E) the self-reference criterion.

Question 30

Marketers of computer software, music CDs, and books are particularly affected by cultural differences in:

A) socioeconomic status of citizens.
B) advances in technology.
C) differences in cross-cultural exchange behavior.
D) ethical codes of conduct for businesses.
E) standards regarding intellectual property.

Question 31

The country with the highest GDP is:

A) Japan.
B) the United Kingdom.
C) Brazil.
D) the United States.
E) China.

Question 32

The United States' prohibition against importing cigars from Cuba is an example of a(n) .

A) health control
B) quota
C) embargo
D) exchange control
E) import control

Question 33

Caterpillar, maker of large construction equipment in the U.S., would like to better understand factors that would affect its ability to export its products to various countries. Which of the following forces determine how trade barriers affect Caterpillar's marketing efforts?

A) Political and legal
B) Sociocultural
C) Industrial and Technological
D) Competitive
E) Ethical and social responsibility

Question 34

Which of the following is used to help maintain a more favorable balance of trade by a country?

A) Limiting imports
B) Limiting exports
C) Establishing exchange controls
D) Increasing gross domestic product
E) Changing political systems

Question 35

Special-interest groups and regulatory bodies are forces that must be taken into account in international marketing.

A) socioeconomic
B) technological
C) economic
D) social and ethical
E) political and legal

Question 36

can force businesspeople to buy and sell foreign products through a central agency, such as a central bank.

A) Embargoes
B) Export tariffs
C) Quotas
D) Import tariffs
E) Exchange controls

Question 37

The Foreign Corrupt Practices Act of 1977 makes it illegal for U.S. firms to:

A) attempt to make large payments or bribes to influence policy decisions of foreign governments.
B) offer foreign businesses any type of incentive for purchasing their company's products and services.
C) change their ethical standards when dealing with foreign firms.
D) give even small tips or gifts in countries where such gifts are customary business practices.
E) introduce any type of corruption into foreign businesses that have higher ethical standards than those of the U.S. firm.

Question 38

The gross domestic product is:

A) a measure of the profit made by all firms in a nation.
B) the average annual expenditure per organization in a nation.
C) a measure of the types of products produced by a nation.
D) an overall measure of a nation's economic standing.
E) a ratio of domestic products to products produced in foreign countries.

Question 39

Which of the following is true about reaching global markets?

A) Under the Foreign Corrupt Practices Act of 1977, it is legal for U.S. firms to attempt to make bribes to influence policy decisions of foreign governments.
B) A government's attitude toward cooperation with importers has little impact on marketing to that country.
C) Differences in ethical standards can affect marketing efforts.
D) Bribes and payoffs are considered unethical in all countries and cultures.
E) Bribes and payoffs are supported by U.S. trade policies under certain conditions.

Question 40

Government restrictions on the amount of a particular country's currency that can be bought or sold are known as _____.

A) embargoes
B) quotas
C) exchange controls
D) import controls
E) balance of trade controls

Question 41

The term dumping refers to the sale of:

A) products in foreign markets that cannot be sold in the United States.
B) products in foreign markets at prices above those charged in the United States.
C) all discontinued U.S. products in foreign countries.
D) products in foreign countries at unfairly low prices.
E) products in foreign markets that cannot pass safety standards in the United States.

Question 42

If a newly formed country wanted to increase its international trade and reduce worldwide tariffs, it would most likely try to become a part of .

A) NAFTA
B) WTO
C) MERCOSUR
D) APEC
E) EU

Question 43

Which of the following is not true of NAFTA?

A) The NAFTA effectively merged Canada, Mexico, and the United States into one market.
B) The NAFTA restricts trade by requiring equal treatment of U.S. firms in Brazil and Canada.
C) It will provide additional opportunities for the United States in long-term affiliations with other countries in the Western hemisphere.
D) It is controversial.
E) Many U.S. businesses who engage in outsourcing are looking toward Mexico as a less costly alternative than China.

Question 44

If Hyundai, a Korean automobile manufacturing firm, started selling its cars at unfairly low prices to Germany, Hyundai would be engaging in .

A) quota-enforcing
B) embargoing
C) shoveling
D) dumping
E) dipping

Question 45

Another name for the European Union is .

A) the Common Market
B) the European Market
C) the Euro
D) NAFTA
E) AECO

Question 46

The World Trade Organization accomplishes all of the following except:

A) educating companies about international trade rules and regulations.
B) lending money to firms interested in developing international markets.
C) serving as a forum for trade negotiations.
D) helping settle international trade disputes.
E) providing legal ground rules for international commerce.

Question 47

Which of the following alliances/agreements is the United States not a part of?

A) NAFTA
B) APEC
C) GATT
D) WTO
E) MERCOSUR

Question 48

Which of the following trade alliances differs from others in its commitment to facilitating business and its practice of allowing the private sector to participate in a wide range of activities?

A) NAFTA
B) EU
C) MERCOSUR
D) WTO
E) APEC

Question 49

One of the effects of NAFTA is the simplification of country-of-origin rules. This will likely hinder the international trade activities of .

A) Canada
B) Japan
C) Brazil
D) Cuba
E) Panama

Question 50

Which of the following agreements provides a forum for tariff negotiations, reducing trade restrictions, resolution of international trade problems, and ground rules for international trade?

A) The World Trade Organization
B) The North American Free Trade Agreement
C) The Latin American Free Trade Agreement
D) The European Union Free Trade Agreement
E) The Association of Southeast Asian Nations

Question 51

The unification of Europe through the European Union (EU):

A) produced the largest single market in the world.
B) calls for greater customization of products and attention to regulations and restrictions of European countries.
C) means that members of the EU have become more heterogeneous in their needs and wants.
D) required the countries to be segmented into many different markets.
E) was established to promote trade among its members.

Question 52

Which of the following is true about Europe?.

A) All European countries use a common currency, the euro, except for France, which uses its own currency.
B) All European countries use a common currency, the euro, except for England, which uses its own currency.
C) All European countries use a common currency, the dollar, except for Greece, which uses its own currency.
D) All European countries use a common currency, the euro, except for Germany, which uses its own currency.
E) All European countries use a common currency, the euro, except for Austria, which uses its own currency.

Question 53

The trade alliance that includes Brazil, Argentina, Uruguay, and other countries is known as .

A) OPEC
B) APEC
C) MERCOSUR
D) NAFTA
E) the Common Market

Question 54

If Walmart plans to expand its stores to Canada and Mexico. This expansion would be facilitated by the .

A) European Union
B) North American Free Trade Agreement
C) Pacific Rim Unification Act
D) International Retail Alliance Association
E) Latin American Free Trade Association

Question 55

At the heart of the are agreements that provide legal ground rules for international commerce and trade policy.

A) United Nations
B) ASEAN
C) MERCOSUR
D) WTO
E) APEC

Question 56

The agreement between the United States, Canada, and Mexico that merges these three countries into one marketplace is called .

A) EU
B) MERCOSUR
C) APEC
D) NAFTA
E) GATT

Question 57

Johnston Chemicals' president is very excited about the possibility of the firm's British subsidiary having access to customers in the entire EU. He realizes that it will be some time before this area truly becomes one market, primarily because of differences in:

A) available advertising media.
B) cultural factors.
C) legal challenges.
D) technological advances.
E) economic environmental factors.

Question 58

Maquiladoras are:

A) exchange controls from central banks in Latin American countries.
B) production facilities set up in Mexico.
C) import-export agents of the Mexican government.
D) global marketing programs established in Latin American countries.
E) freight forwarders from Mexico.

Question 59

The Common Market of the Southern Cone (MERCOSUR) includes:

A) countries from southern Africa.
B) both India and Indonesia.
C) Australia and New Zealand.
D) countries in South America.
E) southern China and India.

Question 60

Which of the following is true about NAFTA?

A) The NAFTA effectively merged Canada, Brazil, and the United States into one market.
B) It will increase the total output of goods and services to foreign markets.
C) It will decrease the total number of jobs in the United States.
D) It eliminated virtually all tariffs on goods traded between the United States, Canada, and Mexico.
E) It will reduce the number of illegal aliens in the United States.

Question 61

When the American company Exxon purchases crude oil from Saudi Arabia, it is engaging in

A) licensing.
B) importing.
C) free trade.
D) exporting.
E) dumping.

Question 62

A business partnership between a domestic firm and a foreign firm is known as .

A) a joint venture
B) outsourcing
C) a multinational enterprise
D) licensing
E) exporting

Question 63

Franchising offers all the following benefits for franchisers except:

A) franchise agreements require a certain standard of behavior from franchisees, which helps protect the franchise name.
B) franchisers can retain control of their name while increasing global penetration of their products.
C) the franchisee's revenue stream is fairly consistent because franchisers pay fixed fees and royalties.
D) the franchiser's revenue stream is fairly consistent because franchisees pay fixed fees and royalties.
E) franchisers do not have to put up a large capital investment.

Question 64

Tony & Guy is a global hairdressing and education business headquartered in England. It has recently opened salons in Mongolia, adding to its numerous salons worldwide. Tony & Guy allows foreign businesspeople to use its name, logo, methods of operation, advertising, and products. In exchange, Tony & Guy receives a financial commitment and an agreement to conduct business in accordance with its standard of operations. Tony & Guy is engaging in .

A) contract manufacturing
B) licensing
C) franchising
D) exporting
E) direct investment

Question 65

If The Limited Company relies on hiring a foreign textile manufacturer to produce a designated amount of clothing for its Express, Limited, and other stores, it is using .

A) exporting
B) franchising
C) contract manufacturing
D) direct investment
E) licensing

Question 66

Henderson Synthetics is a producer of chemical products aimed at increasing agricultural yield per acre. Henderson Synthetics' management believes that several of the firm's products could have sizable markets in other countries; however, it is costly to obtain market research to confirm this. If Henderson Synthetics wanted to temporarily "try out" these international markets with a minimal level of commitment and cost, it should use .

A) contract manufacturing
B) export intermediaries
C) joint ventures
D) direct ownership
E) subsidiaries

Question 67

The purchase of products from a foreign source is called .

A) exporting
B) dumping
C) importing
D) licensing
E) venturing

Question 68

If Caterpillar wished to reach the market in Malaysia but was leery of a direct investment in the country, it might provide a Malaysian operation with the knowledge to produce and market its products in exchange for a commission. This type of arrangement is called .

A) licensing
B) exporting
C) a strategic alliance
D) a joint venture
E) contract manufacturing

Question 69

The Grummond Group buys air conditioner components in industrialized countries and sells them to business customers in developing countries where the air conditioners are assembled. Grummond is most likely classified as a(n) _.

A) trading company
B) strategic alliance
C) joint venture
D) licensee
E) exporter

Question 70

Which of the following describes a company hiring a foreign firm to produce a designated volume of its product to specification?

A) Licensing
B) Contract manufacturing
C) Exporting
D) Importing
E) Direct investment

Question 71

A special form of licensing in which one company grants another company the right to market its product in accordance with its standards in exchange for a financial commitment is known as .

A) a joint venture
B) contract manufacturing
C) direct licensing
D) franchising
E) a strategic alliance

Question 72

What level of commitment in international marketing may be most attractive when the political and economic stability of a foreign country is questionable?

A) Joint ventures
B) Direct ownership
C) Exporting
D) Limited exporting
E) Licensing

Question 73

The extent of Raytheon's participation in global business is selling the batteries it manufactures to companies in Spain. In this case, Raytheon is a(n) .

A) trading company
B) importer
C) exporter
D) franchiser
E) contract manufacturer

Question 74

Which of the following would be a benefit to a franchiser, such as Jiffy Lube, in expanding into international marketing?

A) There are no risks involved with allowing a foreign franchisee.
B) The franchiser does not have to put up a large capital investment.
C) The franchiser does not have to share its name or operational procedures.
D) The franchisee pays a set fee every month to the franchiser.
E) An equal partnership is formed between the franchiser and franchisee.

Question 75

The role of export agents is to:

A) bring buyers and sellers from different countries together and collect a commission for arranging sales.
B) purchase products from different companies and sell them to foreign countries.
C) help a firm to make direct investments in foreign countries.
D) contact domestic firms about the opportunities available in exporting.
E) arrange for licensing agreements between domestic and foreign firms.

Question 76

How does using an exporting intermediary limit the risk involved with global marketing?

A) Most exporting intermediaries assume all financial risks on behalf of their clients.
B) Exporting intermediaries are not subject to the same laws as companies, and therefore limit the legal risk involved.
C) Using an exporting intermediary restricts a company to being involved with joint ventures and not direct ownership.
D) Exporting intermediaries guarantee that the products a company is selling will be a good fit for the foreign markets they are entering.
E) Using exporting intermediaries involves limited risk because the company has no direct investment in the foreign country.

Question 77

A large farming cooperative that focuses on the production of fruits and vegetables uses a business that sells the farmers' products in foreign countries and also provides consulting, insurance, legal assistance, and warehousing to the cooperative. This business would most likely be called a(n) .

A) trading company
B) export specialist
C) contract wholesaler
D) licensor
E) strategic partner

Question 78

A company which is not involved in manufacturing but brings together buyers and sellers in different countries is usually referred to as a .

A) franchise
B) contract manufacturer
C) strategic intermediary
D) trading company
E) licensee

Question 79

The Cooper Tire & Rubber Company has been searching for less expensive raw materials for manufacturing its bicycle tires. Cooper has found that there are less expensive sources in the country of Indonesia, but it needs to form a partnership with the government of Indonesia in order to gain access to the country's rubber. What type of partnership will need to be formed?

A) A multinational enterprise
B) A contract manufacturing arrangement
C) A strategic alliance
D) A franchise
E) A joint venture

Question 80

Questor Corporation owns the Spalding brand name but does not produce a single golf club or tennis ball. This arrangement is an example of .

A) exporting
B) trading
C) joint venture
D) strategic alliance
E) licensing