Question 1

A joint venture is:
A) a firm that provides only management skills, while others own the production and distribution facilities.
B) a firm selling the right to use some process, trademark, or other right for a fee.
C) a separate firm owned by a parent company.
D) a domestic firm entering into a partnership with a foreign firm.
E) a firm getting rid of surplus inventory.

Accepted Answer

Joint venture is a business arrangement in which two or more domestic or foreign companies join together to form a new company that operates as a separate legal entity. Therefore, option D, which defines joint venture as a domestic firm entering into a partnership with a foreign firm, is the most appropriate answer.

Question 2

World Tennis Ball Co. (WTB) makes tennis balls and sells them only in the U.S. Raul Fernandez, the firm's marketing manager, is comparing his firm's distribution with two major competitors. 1) WTB sells its products through four regional distributors who then sell to 22 sporting goods wholesalers. The wholesalers sell to a total of 7,000 retail outlets. From its website, WTB also sells directly to any customer who will purchase a minimum quantity of 24 tennis balls. WTB cooperates with members of its channel, but maintains some control through its economic power and leadership. It helps to direct the activities of the whole channel and tries to avoid or resolve channel conflicts.
2) American Tennis Ball (ATB) is a competitor that sells through two distributors-each with half the country. The distributors then sell through 6 sporting goods wholesalers, and they, in turn, sell to 1,000 retail outlets (split between two national sporting goods chains and two general merchandise stores). ATB and its channel make little effort to work together. However, because of a relatively low level of competition between the distributors, the wholesalers, or the retail stores, each member of the channel gives the product special attention.
3) National Tennis Ball (NTB) sells its products through only three tennis specialty wholesalers that sell only to tennis clubs. NTB actually owns the wholesale firms that handle its products. NTB's balls are only available at certain tennis clubs and NTB limits coverage to only one club in a particular geographic area.
Which of the following describes WTB's channel arrangements?
A) Intensive distribution
B) Corporate channel system
C) Exclusive distribution
D) Traditional channel system
E) Reverse channels

Accepted Answer

WTB's channel arrangement is described as intensive distribution because it sells through a large number of retail outlets and also directly to customers, aiming for widespread availability.

Question 3

In international markets, a firm can sell its management and marketing know-how while letting locals own the production and distribution facilities by using
A) licensing.
B) exporting.
C) joint venturing.
D) management contracting.
E) direct investment.

Accepted Answer

Management contracting allows a firm to sell its management expertise to a foreign company that owns the production and distribution facilities, without the firm having to invest directly in those facilities.

Question 4

Using the ______ approach to entering international markets gives a firm complete control of marketing strategy planning in the foreign market.
A) joint venture
B) management contracting
C) direct investment
D) licensing
E) exporting

Accepted Answer

Direct investment involves a firm establishing operations in a foreign market, giving them complete control over their marketing strategy planning in that market. Joint venture, management contracting, licensing, and exporting all involve varying degrees of sharing control or resources with local partners.

Question 5

In a licensing agreement, the licensee
A) makes no initial investment to get started.
B) does most of the marketing strategy planning for the markets it is licensed to serve.
C) has more control over marketing than other approaches for entering international markets.
D) assumes almost no risk in a foreign market.
E) does not pay any fee or royalties to the licensor.

Accepted Answer

The licensee is responsible for marketing strategy planning in the markets it is licensed to serve, while the licensor provides the product or technology.

Question 6

If Wilkinson were to sell Norelco the exclusive rights to produce and sell its brand of shavers in Japan for a 5 percent royalty on all sales, it would be using:
A) licensing.
B) joint venturing.
C) management contracting.
D) exporting.
E) direct investment.

Accepted Answer

Licensing is the transfer of the right to use a company's product or technology to another company in exchange for a fee or royalty. In this case, Wilkinson would be licensing its brand of shavers to Norelco for exclusive rights to sell in Japan in exchange for a 5 percent royalty on all sales.

Question 7

To minimize its own risks, the Boomtown Petroleum Corp. of Houston, Texas, operates a South American oil refinery that is owned by residents of that country. Boomtown is engaged in an activity known as:
A) management contracting.
B) a joint venture.
C) exporting.
D) licensing.
E) direct investment.

Accepted Answer

Management contracting involves a company (Boomtown Petroleum Corp.) managing operations for a facility (the South American oil refinery) that is owned by another party (residents of that country), without owning the facility itself. This arrangement allows the managing company to apply its expertise and brand while minimizing its investment risk.

Question 8

Worldwide Drilling, Inc. of Fort Worth, Texas, operates an oil well in Russia for its owners. Worldwide is involved in:
A) management contracting.
B) exporting.
C) a direct investment.
D) a joint venture.
E) licensing.

Accepted Answer

The answer of Worldwide Drilling, Inc. of Fort Worth, Texas,...

Question 9

If a firm's involvement in international marketing is limited to managing others' production facilities, it is using:
A) exporting.
B) licensing.
C) direct investment.
D) joint venturing.
E) management contracting.

Accepted Answer

The scenario describes management contracting, where the firm only manages the production facilities of others. This is a type of indirect investment that involves a contracting arrangement where the firm manages other parties' operations.

Question 10

A producer that enters into a licensing agreement with a foreign company to better reach foreign customers is most likely selling the rights to use its:
A) production facilities.
B) brand name.
C) channels of distribution.
D) sales force.
E) Any of these are equally likely.

Accepted Answer

By entering into a licensing agreement, the producer is most likely selling the rights to use its brand name in a foreign market. This allows the foreign company to use the producer's reputation and image to better reach foreign customers.

Question 11

Midwest Tools, Inc. of Indianapolis, Indiana owns a plant in Poland for manufacturing and selling machine tools in Europe. This type of international involvement is called:
A) management contracting.
B) licensing.
C) a joint venture.
D) a direct investment.
E) multichanneling.

Accepted Answer

Midwest Tools, Inc. has made a direct investment by owning a manufacturing plant in Poland for selling machine tools in Europe. Direct investment involves owning and controlling assets or operations in a foreign country.

Question 12

When Renault Motor Co. builds a new production facility in Venezuela and it is the sole owner of the facility, this is an example of a(n) _________ investment approach.
A) indirect
B) management contracting
C) joint venture
D) licensing
E) direct

Accepted Answer

Renault's sole ownership of the production facility in Venezuela indicates a direct investment approach, wherein the company has complete control over the operations and management of the facility.

Question 13

When the Rosco International chain of restaurants enters foreign markets, locals own the restaurant facilities, but look to Rosco to provide expertise in management and marketing. Rosco uses the _______ approach to enter international markets.
A) management contracting
B) direct investment
C) exporting
D) joint venture
E) licensing

Accepted Answer

The management contracting approach involves a local company owning and providing the facilities while a foreign company provides marketing and management expertise. This is exactly what Rosco is doing in foreign markets.

Question 14

If a producer agrees to enter into a management contracting arrangement with a zinc mining operation in Chile,
A) the company should be prepared to invest large amounts in mining facilities.
B) the company should be prepared to send people to Chile.
C) success will depend on how well the Chilean managers know what needs to be done.
D) the company must assume no political problems will arise, otherwise the risk is very high.
E) None of these alternatives is true.

Accepted Answer

In order to enter into a management contracting arrangement, the company will need to send people to Chile to manage the operations. While investing in mining facilities may be necessary, it is not necessarily a requirement for this type of arrangement. The success of the arrangement will depend on both the knowledge and experience of the Chilean managers and the company's ability to effectively manage the operation from a distance. Political risks are always present when operating in a foreign country, but cannot be assumed or ignored.

Question 15

Oceanside Tools, Inc. of Newport, Rhode Island has agreed to work with a Thai company to produce and sell chemicals in Thailand. The U.S. firm will provide technical and marketing know-how, while its Thai partner will provide knowledge of Thai markets and political connections. The partners will share the costs and profits 50/50. This type of international involvement is called:
A) direct investment.
B) management contracting.
C) licensing.
D) multinational marketing.
E) joint venturing.

Accepted Answer

This situation is an example of a joint venture, which involves two or more companies partnering together to pursue a specific business opportunity, sharing both the costs and the profits.

Question 16

World Tennis Ball Co. (WTB) makes tennis balls and sells them only in the U.S. Raul Fernandez, the firm's marketing manager, is comparing his firm's distribution with two major competitors. 1) WTB sells its products through four regional distributors who then sell to 22 sporting goods wholesalers. The wholesalers sell to a total of 7,000 retail outlets. From its website, WTB also sells directly to any customer who will purchase a minimum quantity of 24 tennis balls. WTB cooperates with members of its channel, but maintains some control through its economic power and leadership. It helps to direct the activities of the whole channel and tries to avoid or resolve channel conflicts.
2) American Tennis Ball (ATB) is a competitor that sells through two distributors-each with half the country. The distributors then sell through 6 sporting goods wholesalers, and they, in turn, sell to 1,000 retail outlets (split between two national sporting goods chains and two general merchandise stores). ATB and its channel make little effort to work together. However, because of a relatively low level of competition between the distributors, the wholesalers, or the retail stores, each member of the channel gives the product special attention.
3) National Tennis Ball (NTB) sells its products through only three tennis specialty wholesalers that sell only to tennis clubs. NTB actually owns the wholesale firms that handle its products. NTB's balls are only available at certain tennis clubs and NTB limits coverage to only one club in a particular geographic area.
Which of the following appears to best describe ATB's channel arrangements?
A) Intensive distribution
B) Exclusive distribution
C) Selective distribution
D) Global distribution
E) Direct distribution

Accepted Answer

ATB's channel arrangement is an example of selective distribution, as it uses few intermediaries and carefully selects which retail outlets are allowed to sell its products.

Question 17

Sunkist sells foreign companies the right to use the Sunkist brand on soft drinks and citrus juices sold outside the United States. Sunkist gets both an initial fee and a royalty on the sale of goods bearing its brand name. Sunkist is engaged in:
A) Exporting.
B) Management contracting.
C) Licensing.
D) Joint venturing.
E) None of these is a good answer.

Accepted Answer

Sunkist is engaged in licensing its brand name to foreign companies for use on their soft drinks and citrus juices, which is a form of licensing.

Question 18

Licensing, in international marketing,
A) refers to foreign intermediaries agreeing to sell products produced in this country.
B) requires a producer to pay a licensing fee to the country where it wants to sell its products.
C) increases the risk that a company's production facilities will be taken over by the foreign country.
D) means a company selling the right to use a process, trademark, patent, or other right for a fee or royalty.
E) None of these alternatives is correct.

Accepted Answer

Licensing refers to selling the right to use a process, trademark, patent, or other right for a fee or royalty. Option A refers to distribution and option B refers to tariffs or taxes. Option C is a potential risk with foreign investment, but not specifically related to licensing.

Question 19

In general, marketers that seek greater control over their marketing mixes in the international environment will:
A) hire more marketing managers.
B) invest more financial resources and take greater risks.
C) use intensive distribution.
D) choose to export or license.
E) set up traditional global channels.

Accepted Answer

To have greater control over their marketing mixes in the international environment, marketers will invest more financial resources and take greater risks. This may involve creating customized marketing strategies for each country or region, establishing local offices, and conducting market research to better understand local consumer behavior and preferences. Choosing to export or license may not necessarily provide greater control over the marketing mix, as the company may need to adjust its strategies to meet the requirements and preferences of the local licensee or distributor. Intensive distribution or setting up traditional global channels may also not necessarily provide greater control over the marketing mix, as the company may need to rely on intermediaries to reach its target market.

Question 20

Which of the following is the easiest way for a firm to enter foreign markets?
A) joint ventures
B) licensing
C) multinational bargaining
D) direct investment
E) management contracting

Accepted Answer

Licensing is the easiest way for a firm to enter foreign markets as it involves minimal investment and allows the firm to use its intellectual property or technology to generate revenue from license fees. Joint ventures, direct investment, and management contracting require more investment and resources, while multinational bargaining may involve negotiating with multiple governments and stakeholders.

Quiz 10: Place and Development of Channel Systems

A joint venture is:

In international markets, a firm can sell its management and marketing know-how while letting locals own the production and distribution facilities by using

Using the ______ approach to entering international markets gives a firm complete control of marketing strategy planning in the foreign market.

In a licensing agreement, the licensee

If Wilkinson were to sell Norelco the exclusive rights to produce and sell its brand of shavers in Japan for a 5 percent royalty on all sales, it would be using:

To minimize its own risks, the Boomtown Petroleum Corp. of Houston, Texas, operates a South American oil refinery that is owned by residents of that country. Boomtown is engaged in an activity known as:

Worldwide Drilling, Inc. of Fort Worth, Texas, operates an oil well in Russia for its owners. Worldwide is involved in:

If a firm's involvement in international marketing is limited to managing others' production facilities, it is using:

A producer that enters into a licensing agreement with a foreign company to better reach foreign customers is most likely selling the rights to use its:

Midwest Tools, Inc. of Indianapolis, Indiana owns a plant in Poland for manufacturing and selling machine tools in Europe. This type of international involvement is called:

When Renault Motor Co. builds a new production facility in Venezuela and it is the sole owner of the facility, this is an example of a(n) _________ investment approach.

When the Rosco International chain of restaurants enters foreign markets, locals own the restaurant facilities, but look to Rosco to provide expertise in management and marketing. Rosco uses the _______ approach to enter international markets.

If a producer agrees to enter into a management contracting arrangement with a zinc mining operation in Chile,

Sunkist sells foreign companies the right to use the Sunkist brand on soft drinks and citrus juices sold outside the United States. Sunkist gets both an initial fee and a royalty on the sale of goods bearing its brand name. Sunkist is engaged in:

Licensing, in international marketing,

In general, marketers that seek greater control over their marketing mixes in the international environment will:

Which of the following is the easiest way for a firm to enter foreign markets?