Question 1

"Going abroad" on the Internet does not pose any special challenges for a firm.

Accepted Answer

Going abroad on the Internet can pose several challenges for a firm, such as language and cultural barriers, different laws and regulations, and differences in consumer behavior and preferences.

Question 2

Domestic based export merchants buy the manufacturer's products and then sell them abroad.

Accepted Answer

Domestic based export merchants purchase goods from manufacturers within their own country and then export them to other countries for sale.

Question 3

There are several variations of a licensing agreement. One of these that gives the licensee a complete brand concept and operating system is called franchising.

Accepted Answer

This is correct. Franchising provides the licensee with a complete brand concept and operating system, along with ongoing support and guidance from the franchisor.

Question 4

Cooperative organizations carry on exporting activities on behalf of several producers and are partly under their administrative control.

Accepted Answer

Cooperative organizations work on behalf of several producers and are controlled by them to a certain extent. This enables small producers to pool their resources together and have greater bargaining power in the export market.

Question 5

Indirect export has two advantages. First, it involves less investment and second it involves less risk.

Accepted Answer

Indirect export involves selling goods to an intermediary or a third-party company that helps in exporting the goods to the target market. As the intermediary takes care of the export process, the company doesn't need to make substantial investments in infrastructure, research, or marketing activities. Also, the intermediary assumes the risk of the export process, such as customs clearance or payment issues, which reduces the risk for the company. Therefore, both advantages are true, making option A the correct answer.

Question 6

Product invention consist of creating something new. It can take two forms. Backward invention is reintroducing earlier product forms that are well adapted to a foreign country's needs.

Accepted Answer

Backward invention involves reintroducing earlier product forms that are well adapted to a foreign country's needs. This is considered a form of product invention that involves creating something new by looking back at earlier successful product forms.

Question 7

Global marketers know that buyers hold distinct attitudes and beliefs about brands or products from different countries. These country-of-origin perceptions do not affect consumer decision making directly or indirectly.

Accepted Answer

Country-of-origin perceptions can affect consumer decision making both directly and indirectly. For example, consumers may have a preference for certain products or brands from a particular country or may associate certain attributes with products from a specific country. These perceptions can influence their purchasing decisions directly or indirectly through the impact on their attitudes and beliefs towards the product. Therefore, it is important for global marketers to understand and manage country-of-origin perceptions to effectively reach and appeal to their target audience.

Question 8

Product adaptation involves altering the product to meet local conditions or preferences.

Accepted Answer

Product adaptation is the process of modifying a product to meet the needs and preferences of a local market. This may include changes to the product's design, packaging, branding, or features to make it more appealing and relevant to consumers in a particular country or region. This strategy is often used by companies that operate in global markets where cultural, economic, or regulatory differences require them to tailor their products to local demand.

Question 9

In contract manufacturing, the firm hires local manufacturers to product the product.

Accepted Answer

In contract manufacturing, a company hires a third-party manufacturer to produce a product on their behalf. This third-party manufacturer may be located locally or internationally.

Question 10

Export-management companies agree to manage a company's export activities for a fee.

Accepted Answer

Export-management companies (EMCs) are specialized firms that offer a range of services to businesses to help facilitate their export activities, such as market research, finding buyers and distributors, negotiating trade agreements, and managing shipping logistics. In exchange for their services, EMCs typically charge a fee or a commission based on the value of goods exported.

Question 11

Management contracts offers foreign owners the opportunity to manage businesses for a fee.

Accepted Answer

Management contracts are agreements where foreign owners pay a fee to a third-party manager to operate and manage their business. Therefore, the statement is true.

Question 12

Straight extension means introducing the product in the foreign market without any changes to the brand.

Accepted Answer

Straight extension refers to the practice of introducing a product in a foreign market without making any changes to the brand or product.

Question 13

Forward invention is creating a new product to meet a need in another country.

Accepted Answer

Forward invention is a strategy where a company creates a new product to meet the needs of a foreign market. It involves identifying an unmet need in a country and developing a product to address that need.

Question 14

Companies can run the same marketing communications programs as used in the home market or change them for each local market, a process called communication adaptation.

Accepted Answer

Companies can choose to run the same marketing communications programs in all markets or adapt them to suit the local market's needs and preferences. This process is called communication adaptation.

Question 15

Foreign investors may join with local investors to create a joint venture company in which they share ownership and control.

Accepted Answer

This is true. Foreign investors and local investors can come together to form a joint venture company, in which they share ownership and control. This can be a way for foreign investors to enter a new market while benefiting from the local knowledge and experience of the local investors.

Question 16

In licensing, the licensor issues a license to a foreign company to use an item of value for a fee or royalty.

Accepted Answer

This statement correctly defines licensing, where the owner of a valuable item grants permission to a foreign company to use it in exchange for a financial consideration.

Question 17

If the company adapts both the product and the communications, the company engages in dual adaptation.

Accepted Answer

Dual adaptation refers to the process of adapting both the product and the communication strategy to suit the needs of the target market. Therefore, the statement is true.

Question 18

The ultimate form of foreign investment is direct ownership of foreign-based assembly or manufacturing facilities.

Accepted Answer

Direct ownership of foreign-based assembly or manufacturing facilities allows the investor to have full control over the operations and profit potential of the facility. This is considered the ultimate form of foreign investment as it involves a significant commitment of resources and capital.

Question 19

Domestic-based export agents seek and negotiate foreign purchases and are paid a straight salary.

Accepted Answer

Domestic-based export agents typically work on commission rather than a straight salary. The commission is usually a percentage of the value of the exports they facilitate.

Question 20

The use of a domestic-based export department or division, overseas sales branch or subsidiary, traveling export sales representatives, and foreign-based distributors or agents are all examples of how a company can carry on direct exporting on their own.

Accepted Answer

These are all examples of direct exporting, where the company handles the exporting process on their own instead of using intermediaries such as trading companies or export management companies.

Quiz 21: Tapping into Global Markets