Deck 15: The Global Marketplace

Question 1

Which of the following is true of a global firm?

A)A global firm typically operates from one country.
B)A global firm has lesser advantages than purely domestic competitors.
C)A global firm sees the world as many different markets.
D)A global firm maximizes the importance of national boundaries.
E)A global firm manufactures and markets goods wherever it can do the best job.

Answer 1

E

Question 2

Which of the following statements is true of industrial economies?

A)Industrial economies export their goods to other types of economies for raw materials.
B)Industrial economies create a new rich class and small but growing middle class.
C)The vast majority of people in industrial economies engage in simple agriculture.
D)Industrial economies are rich in one or more resources but poor in other ways.
E)Industrial economies consume most of their output and barter the rest for simple goods and services.

Answer 2

A

Question 3

Japan is a major exporter of manufactured goods,services,and investment funds.Japan also exports its goods to other types of economies for raw materials and semifinished goods.Japan has a(n)________ economy.

A)industrializing
B)emerging
C)industrial
D)raw material exporting
E)subsistence

Answer 3

C

Question 4

Which of the following is true of raw material exporting economies?

A)In raw material exporting economies, the vast majority of people engage in simple agriculture.
B)Raw material exporting economies typically create a new rich class.
C)Raw material exporting economies are major exporters of manufactured goods, services, and investment funds.
D)Raw material exporting economies are rich in one or more resources but poor in other ways.
E)Raw material exporting economies consume most of their output and barter the rest.

Question 5

Restrictive product standards is an example of ________.

A)tariffs
B)excise
C)quotas
D)nontariff trade barriers
E)exchange controls

Question 6

________ involves the least change in the company's product lines,organization,investments,or mission.

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

Question 7

A subsistence economy is one in which ________.

A)much of the revenue comes from exporting one or more natural resources
B)fast growth in manufacturing results in overall economic growth
C)more import of raw materials is required
D)manufactured goods form a major part of exports
E)a vast majority of people engage in simple agriculture

Question 8

An emerging economy is one in which ________.

A)the country imports large amounts of finished textiles and automobiles
B)the vast majority of people engage in simple agriculture
C)the country is rich in one or more resources but poor in other ways
D)there are very few imports of raw textile materials and steel
E)fast growth in manufacturing results in rapid overall economic growth

Question 9

Which of the following is true of exporting?

A)Exporting is the most complex way to enter a foreign market.
B)Exporting usually offers more control over pricing.
C)Exporting typically requires products to be modified for the foreign market.
D)Exporting involves the least change in the company's product lines.
E)Exporting involves a huge investment.

Question 10

The purpose of a quota is to ________.

A)protect local employment
B)provide competition to local industry
C)force favorable trade behaviors from other nations
D)use the available foreign exchange
E)free up the exchange rate

Question 11

An emerging economy is also known as a(n)________ economy.

A)industrializing
B)industrial
C)subsistence
D)raw material exporting
E)barter

Question 12

Which of the following is true of the World Trade Organization (WTO)?

A)The WTO was replaced by the GATT in 1995.
B)The WTO strengthens tariffs and other international trade barriers.
C)The WTO's actions have not been very productive.
D)The WTO restricts the maximum number of member nations to 100.
E)The WTO mediates global trade disputes.

Question 13

Which of the following types of economies consumes most of its output and barters the rest for simple goods and services?

A)industrial economy
B)industrializing economy
C)subsistence economy
D)emerging economy
E)raw material exporting economy

Question 14

The similarity between an industrializing economy and an industrial economy is that both ________.

A)offer few market opportunities
B)create a new rich class and a small but growing middle class
C)have equal number of low-, middle-, and high-income groups
D)are rich markets only for finished goods
E)are importers of raw materials

Question 15

Which of the following is true of free trade zones?

A)Free trade zones are groups of nations organized to work toward common goals in the regulation of international trade.
B)Free trade zones were replaced by the World Trade Organization.
C)Free trade zones mediate global trade disputes.
D)Free trade zones are established only among the United States, Mexico, and Canada.
E)Free trade zones are countries that barter their output for simple goods and services.

Question 16

Which of the following is true of the Uruguay Round of the WTO?

A)The Uruguay Round promoted short-term global trade growth.
B)The Uruguay Round further reduced the world's remaining merchandise tariffs by 50 percent.
C)The Uruguay Round did not protect intellectual property.
D)The Uruguay Round toughened the international protection of copyrights and patents.
E)The Uruguay Round began in late 2001 and concluded in 2005.

Question 17

The ________ replaced GATT in 1995 and now oversees the original GATT provisions.

A)International Labor Organization
B)World Trade Organization
C)International Monetary Fund
D)World Bank
E)European Union

Question 18

A country in South America has large reserves of copper and tin.Mining forms the pillar of its economy.A major part of its revenue is generated from exporting these resources.This country is poor in many other ways.It is a good market for large equipment,tools and supplies,and trucks.Since there are many foreign residents in this country and a wealthy upper class,it is also a market for luxury goods.This country has a(n)________ economy.

A)subsistence
B)raw material exporting
C)emerging
D)industrializing
E)industrial

Question 19

Which of the following is an example of nontariff trade barriers?

A)sales tax
B)customs
C)host-country regulations
D)excise duty
E)import quota

Question 20

Which of the following most closely describes indirect exporting?

A)In indirect exporting, products are usually modified for the export market.
B)Indirect exporting involves a large investment.
C)Indirect exporting works through independent international marketing intermediaries.
D)Indirect exporting requires an overseas marketing organization or network.
E)The risks involved in indirect exporting are higher than those of direct exporting.

Question 21

Which of the following is an advantage of management contracting?

A)Management contracting involves the least change in the company's product lines.
B)The company can set up its own operations simultaneously.
C)Management contracting is the simplest way to enter a foreign market.
D)Management contracting yields income from the beginning.
E)Management contracting gives the contracting firm an option to buy some shares in the managed company immediately.

Question 22

Which of the following is a benefit of contract manufacturing?

A)The home company keeps full control over the manufacturing process.
B)Contract manufacturing helps the company make greater profits on manufacturing.
C)Contract manufacturing gives the company a chance to start faster, with less risk.
D)There is development of foreign-based manufacturing facilities.
E)Contract manufacturing does not require an overseas marketing organization or network.

Question 23

Which of the following is a type of joint venture?

A)exporting
B)management contracting
C)direct investment
D)Greenfield investment
E)acquisition

Question 24

Which of the following is true of a joint ownership?

A)The domestic firm exports management services rather than products.
B)Whereas local firms like to reinvest earnings for growth, many U.S. firms often prefer to take out these earnings.
C)Whereas U.S. firms emphasize the role of marketing, local investors may rely on selling.
D)The domestic company sells its trademark and patent for a fee or royalty.
E)The domestic company is in total possession and control of the business.

Question 25

________ is a method of entering a foreign market by associating with foreign companies to produce or market products or services.

A)Joint venturing
B)Indirect exporting
C)Direct investment
D)Greenfield investment
E)Direct exporting

Question 26

Which of the following is a disadvantage of licensing?

A)The company gains entry into a foreign market at a high risk.
B)It takes a lot of time for the licensee to gain production expertise and name.
C)Licensing is a complex way for a manufacturer to enter international marketing.
D)When the contract ends, the firm may find that it has created a competitor in the licensee.
E)The licensee does not have the power to buy the company's trade secret.

Question 27

Which of the following is an advantage of licensing?

A)Licensing is the most economical method of going global.
B)The firm has equal control over the licensee as it would over its own operations.
C)The licensee gains a name without having to start from scratch.
D)If the licensee is successful, the firm earns more profits than it would do on its own.
E)The firm does not have the risk of creating a future competitor in the form of the licensee once the contract ends.

Question 28

Kimlee,a company based in China,is a global leader in manufacturing and marketing noodles.It recognizes the immense demand for noodles in the Australian market.Wanley,a producer of noodles in Australia,has a deeper understanding of the Australian market.Kimlee believes that together,each can accomplish more than either could alone.Hence,both the companies decide to form a new business venture in which they share possession and control.Which method of entering a foreign market has Kimlee chosen?

A)licensing
B)contract manufacturing
C)direct investment
D)joint ownership
E)management contracting

Question 29

The difference between exporting and joint venturing is that joint venturing involves ________.

A)lesser risk
B)production of goods mainly in the home country
C)lesser changes in a company's product lines
D)association with a host country partner to sell abroad
E)lesser investment

Question 30

Licensing is a type of ________.

A)contract manufacturing
B)Greenfield investment
C)direct investment
D)management contracting
E)joint venture

Question 31

The difference between direct and indirect exporting is that indirect exporting involves ________.

A)higher risks
B)self-handling of exports
C)greater investment
D)change in a company's product lines
E)lesser returns

Question 32

________ ventures consist of one company collaborating with foreign investors to create a local business in which they share possession and control.

A)Licensing
B)Direct investment
C)Contract manufacturing
D)Management contracting
E)Joint ownership

Question 33

________ is a method of entering a foreign market by developing foreign-based assembly or manufacturing facilities.

A)Exporting
B)Direct investment
C)Licensing
D)Indirect exporting
E)Management contracting

Question 34

Which of the following is a drawback of management contracting?

A)Management contracting prevents the company from setting up its own operations for a period of time.
B)Management contracting is a high-risk method of getting into a foreign market.
C)Management contracting yields income much later on in the process.
D)Management contracting does not provide the option of buying shares in the managed company.
E)The domestic firm lacks the management know-how.

Question 35

In management contracting,the domestic firm ________.

A)exports both management services and products
B)provides both management services and capital
C)manages the exports of products
D)provides only capital to the foreign company
E)exports management services rather than products

Question 36

Leonards,a leading French garment manufacturing company,is looking for ways to go global.Penny,a designer from California,wishes to open a fashion boutique in the neighborhood,and gain production expertise and name without having to invest significantly.She learns about Leonards' global expansion plans,and buys the right to use its manufacturing process for a royalty fee.This allows it to gain entry into a foreign market at little risk.Leonards has used the ________ method of entering a foreign market.

A)licensing
B)exporting
C)joint ownership
D)contract manufacturing
E)management contracting

Question 37

Pizza House,a leading Italian restaurant,recently opened a new restaurant in New York called Papa James.The property is locally owned,but Pizza House operates the restaurant with its world-renowned culinary expertise.Pizza House has used the ________ method of entering the foreign market.

A)contract manufacturing
B)management contracting
C)licensing
D)joint ownership
E)direct investment

Question 38

Which of the following is a benefit of joint ownership?

A)The companies merge their complementary strengths to develop a global marketing opportunity.
B)Joint ownership is the simplest way to enter a foreign market.
C)The risks involved are lesser as compared to those in exporting.
D)The partners typically agree over investment, marketing, and other policies.
E)Joint ownership involves lesser change in the company's organization and investments as compared to other forms of joint venturing.

Question 39

________ is a method of going global in which the company makes agreements with producers in the foreign market to produce its product or provide its service.

A)Contract manufacturing
B)Direct investment
C)Acquisition
D)Exporting
E)Management contracting

Question 40

Which of the following is a drawback of contract manufacturing?

A)The chances of quickly starting the process are very low.
B)There is decreased control over the manufacturing process.
C)The risks involved are relatively high.
D)There is little opportunity of forming a partnership.
E)The scope of buying out the local manufacturer is limited.

Question 41

A firm normally gets into international marketing by ________.

A)establishing an export department
B)simply shipping out its goods
C)organizing an international division
D)establishing a global organization
E)acquiring a foreign company

Question 42

Which of the following is a major disadvantage of direct investment for the domestic company?

A)The returns are lesser as compared to exporting.
B)Generally, the firm finds it difficult to develop a deeper relationship with the government or customers.
C)The firm eventually loses control over the investment.
D)The firm faces many risks such as falling markets or government changes.
E)Due to a lack of control, the firm is unable to develop marketing policies that serve its long-term international objectives.

Question 43

In managing their international marketing activities,most companies first organize a(n)________.

A)international subsidiary
B)international division
C)geographical organization
D)world product group
E)export department

Question 44

Lemon N' Honey is a juice manufacturing company in the U.S.It exports its products to Australia,licenses to China,has a joint ownership venture in France,and owns a subsidiary in Brazil.It will eventually create a(n)________ to handle all its worldwide activities.

A)international division
B)truly global organization
C)value delivery network
D)export department
E)domestic division

Question 45

Compared to adapted global marketing,standardized global marketing ________.

A)involves adjusting the marketing mix elements to target markets
B)results in more costs
C)produces a larger market share
D)usually results in higher returns
E)basically uses the same marketing strategy approach worldwide

Question 46

Which of the following is true of communication adaptation for a company entering a foreign market?

A)Language adjustments are considered unimportant.
B)Cultural differences are seen as a negligible necessity in the process.
C)A strategy of fully modifying advertising messages to local markets is used.
D)As media availability is similar across countries, media need not be adapted internationally.
E)A standardized advertising theme is used as consumer needs around the world are becoming more similar.

Question 47

Kola,a leading soft drink manufacturer,has recently forayed into the Middle East markets.Based on its research that Middle East consumers prefer sweeter drinks,it is manufacturing soft drinks with extra sugar to meet the local requirements.Kola is using the ________ strategy to market its product.

A)communication adaptation
B)product pioneering
C)straight product extension
D)product invention
E)product adaptation

Question 48

________ are a type of operating unit under an international division that are responsible for their own sales and profits.

A)World product groups
B)Geographical organizations
C)International subsidiaries
D)Global organizations
E)Export departments

Question 49

Which of the following is true of geographical organizations?

A)Geographical organizations are operating units under the export department.
B)Geographical organizations are usually formed if the company is simply shipping out its goods.
C)Geographical organizations are managed by multiple country managers, each responsible for the whole organization's sales and profits.
D)Geographical organizations are inadequate if the firm moves into joint ventures or direct investments.
E)Geographical organizations are managed by country managers responsible for salespeople, distributors, and licensees in their respective countries.

Question 50

Compared to standardized global marketing,adapted global marketing ________.

A)uses the same marketing mix elements to target markets
B)involves reduced costs
C)produces a larger market share
D)maintains uniformity across all markets
E)results in lower returns

Question 51

Regardless of how companies go about pricing their products,their foreign prices probably will be higher than their domestic prices for comparable products.This is known as the ________ problem.

A)price escalation
B)demand escalation
C)inflation
D)skimming price
E)deflation

Question 52

Which of the following is a disadvantage of straight product extension?

A)Straight product extension involves additional product development costs.
B)The product needs to go through manufacturing changes to meet local requirements.
C)Straight product extension requires planning a new promotional strategy to promote the product.
D)Straight product extension can be costly in the long run if products fail to satisfy consumers.
E)Straight product extension has been disastrous in most cases.

Question 53

One of the disadvantages of adapted global marketing when compared to standardized global marketing is that ________.

A)adapted global marketing results in more costs
B)adapted global marketing produces a smaller market share
C)the returns are lesser
D)the strategies are not tailored to the needs of the target customers
E)products and marketing approaches remain the same worldwide

Question 54

Which of the following is an accurate statement about a truly global organization?

A)Executives are trained in worldwide operations, not just domestic or international operations.
B)Its operating units are divided into geographical organizations, world product groups, and international subsidiaries.
C)An export department is adequate to manage this organization.
D)A truly global organization is the first stage of international marketing activities.
E)A truly global organization considers itself as a national marketer who sells abroad.

Question 55

When selling to less-affluent consumers in developing countries,companies can overcome the price escalation problem by ________.

A)making better versions of their products with added features
B)standardizing their international prices
C)pricing at the same level across countries
D)introducing slow-moving products in emerging markets
E)making smaller versions of their products

Question 56

Which of the following is an advantage of direct investment?

A)Direct investment involves lower risk as compared to joint venturing.
B)Direct investment involves the least change in the company's investments and mission.
C)The firm keeps full control over the investment.
D)Direct investment involves minimum investment.
E)There is no risk of devalued or restricted currency.

Question 57

Product invention consists of ________.

A)marketing a product in a foreign market without making any changes to the product
B)taking the product as is and finding customers for it
C)modifying advertising messages to local markets
D)creating something new to meet the needs of consumers in a given country
E)upgrading the product to meet local requirements, conditions, or wants

Question 58

________ are operating units responsible for worldwide sales of collections of merchandise,which are similar in nature.

A)Delivery network product systems
B)World product groups
C)Geographical organizations
D)Export departments
E)Import divisions

Question 59

________ means marketing a product in a foreign market without making any changes to the product.

A)Product adaptation
B)Straight product extension
C)Dual adaptation
D)Product invention
E)Communication adaptation

Question 60

Which of the following is true of channels within nations?

A)Channels within nations takes into account the entire global supply chain and marketing channel.
B)Products are moved from points of production to the borders of countries within which they are sold.
C)Channels within nations designs and manages an effective global value delivery network.
D)Products are moved from their market entry points to the final consumers.
E)Channels within nations is the first point of delivery in the global value delivery network.

Question 61

Exporting is a market entry strategy that involves the least risk and control.

Question 62

Collectively,global brands account for the overwhelming majority of consumers' purchases.

Question 63

Management contracting consists of one company joining forces with foreign investors to create a local business in which they share possession and control.

Question 64

The four types of joint ventures are licensing,contract manufacturing,management contracting,and joint ownership.

Question 65

In a direct investment,a firm can improve its image in the host country because it creates jobs.

Question 66

The Internet is forcing companies toward more standardized international pricing.

Question 67

A company can overcome the price escalation problem by making simpler versions of its products.

Question 68

Direct investment involves lesser changes in the company's product lines,organization,investments,or mission as compared to exporting.

Question 69

A blocked currency is one whose removal from the country is restricted by the buyer's government.

Question 70

The United States has an industrial economy.

Question 71

One of the disadvantages of licensing is that the organization may find it has created a competitor.

Question 72

In an emerging economy,the vast majority of people engage in simple agriculture.

Question 73

Communication adaptation is a global communication strategy of fully adapting advertising messages to international markets.

Question 74

The European Union is a free trade zone.

Question 75

Regardless of how companies go about pricing their products,their foreign prices probably will be higher than their domestic prices for comparable products.

Question 76

Under licensing,a domestic firm provides its management know-how to a foreign company that supplies the capital.

Question 77

The first step in straight product extension is to market a product as is and find customers for it.

Question 78

Excessive host-country regulations are an example of tariffs.

Question 79

Global branding and standardization result in reduced costs from economies of scale.

Question 80

The General Agreement on Tariffs and Trade (GATT)established a free trade zone among the United States,Mexico,and Canada.