Deck 16: The Global Marketplace

Question 1

Japanese and Asian business people find fast, tough face-to-face bargaining ________.

A)normal
B)offensive
C)annoying
D)silly
E)necessary

Answer 1

B

Question 2

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, 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 most likely has a(n)________ economy.

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

Answer 2

B

Question 3

Which of the following statements is true of industrial economies?

A)They export their goods to other types of economies for raw materials.
B)They have a declining middle class population.
C)They depend on agriculture as the primary revenue generator.
D)They do not trade goods amongst themselves.
E)They consume most of their output and barter the rest for simple goods and services.

Answer 3

A

Question 4

Which of the following is true of free trade zones?

A)They are groups of nations organized to work toward common goals.
B)They were formed to increase trade barriers between member nations.
C)They were formed to mediate global trade disputes.
D)They require member countries to establish one currency.
E)They tend to improve imports and hinder exports.

Question 5

An emerging economy is one which ________.

A)imports large amounts of finished textiles and automobiles
B)offers few market opportunities for imported goods
C)consumes all or most of its output
D)needs few imports of raw textile materials and steel
E)has a rapid growth in manufacturing

Question 6

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

A)It promoted short-term global trade growth.
B)It increased the world's merchandise tariffs by 50 percent.
C)It reduced the influence of the WTO in agriculture.
D)It toughened the international protection of intellectual property.
E)It consisted of discussions that lasted for two years.

Question 7

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

A)These economies are major exporters of agricultural products.
B)These economies are poor markets for large equipment and trucks.
C)These economies are major exporters of manufactured goods, services, and investment funds.
D)These economies are rich in one or more resources but poor in other ways.
E)These economies consume most of their output and barter the rest.

Question 8

Which of the following is true of the World Trade Organization (WTO)?
A)It was replaced by the GATT in 1995.

A)It was replaced by the GATT in 1995.
C)It lacks the power to impose international trade sanctions.
D)It restricts the maximum number of member nations to 100.
E)It mediates global trade disputes.

Question 9

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

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

Question 10

Restrictive product standards are ________.

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

Question 11

Which of the following best characterizes a global firm?

A)A global firm typically operates from one country.
B)A global firm engages in joint partnerships overseas.
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.

Question 12

Which type of economy consumes most of its output and barters the rest for simple goods and services?

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

Question 13

Which of the following is an example of a nontariff trade barrier?

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

Question 14

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)a majority of the produced outputs is exported
D)manufactured goods form a majority of the exports
E)a vast majority of people engage in simple agriculture

Question 15

One purpose of a quota is to ________.

A)protect local employment
B)provide competition to local industry
C)eliminate trade barriers between nations
D)increase the amount of foreign imports
E)increase the amount of foreign exchange

Question 16

Which of the following established a free trade zone between the United States, Mexico, and Canada?

A)Union of South American Nations
B)European Union
C)North American Free Trade Agreement
D)Central American Free Trade Agreement
E)Latin American Free Trade Association

Question 17

Which type of economy consists mostly of households with very low family incomes?

A)post-industrial
B)developed
C)emerging
D)industrial
E)subsistence

Question 18

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. The country's industrial structure is referred to as a(n)________ economy.

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

Question 19

A tax on an imported product designed to raise revenue or protect domestic firms is referred to as a(n)________.

A)exchange
B)excise
C)fine
D)quota
E)tariff

Question 20

What type of transactions do most international trade involve?

A)cash
B)cheques
C)credit
D)IOUs
E)virtual banking accounts

Question 21

Pizzaria, a renowned restaurant in Italy, enters into an agreement with Ruth's Pizza House in the United States to operate a chain of restaurants. Ruth's will provide capital for running the chain and Pizzaria will contribute its world-renowned expertise on consumer tastes. In this case, Pizzaria enters a foreign market through ________.

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

Question 22

________ is a method of going global in which a 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 23

Providing a host-country partner the right to use a company's manufacturing process, trademark, patent, trade secret, or other item of value is referred to as ________.

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

Question 24

Which of the following is a type of joint venture?

A)direct exporting
B)management contracting
C)direct investment
D)retailing
E)wholesaling

Question 25

Valdo, a cosmetic firm located in the United States, markets its products in Asian and European countries through independent international distributors. In this case, Valdo has entered international markets through ________.

A)joint ownership
B)joint venturing
C)indirect exporting
D)direct investment
E)franchising

Question 26

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

A)higher risks
B)self-handling of exports
C)greater returns
D)more product alterations
E)less investment

Question 27

Operating domestically only is ________.

A)easier and safer
B)very restricting for growth
C)uncompetitive
D)unsustainable
E)best for every company

Question 28

Which of the following is true about joint venturing?

A)Management contracting is highly risky for the domestic firm.
B)Contract manufacturing gives significant control to the domestic firm.
C)Licensing is a highly complex method for entering global markets.
D)A host country partner is necessary for selling or marketing products.
E)Companies are required to invest in the construction of foreign-based facilities.

Question 29

Under management contracting, a domestic firm ________.

A)adopts management know-how from a foreign company
B)manufactures the products of a foreign company
C)exports its products to a foreign company
D)provides financial capital to a foreign company
E)exports management services to a foreign company

Question 30

Which of the following is most likely a benefit of contract manufacturing?

A)Investing companies have complete control over the foreign manufacturer's processes.
B)Investing companies gain significant profits from handling the manufacturing of products.
C)Investing companies that are new entrants in international markets get a chance to start faster.
D)Investing companies provide new jobs in their home countries by developing manufacturing facilities.
E)Investing companies do not require the services of an overseas marketing organization or network.

Question 31

Which of the following is an advantage of licensing?

A)The licensee is not required to invest money in the business.
B)The licensor has more control over the licensee than it does in its own operations.
C)The licensee gains recognition without having to develop a product from scratch.
D)The licensor earns profits without having to share its intellectual property with anyone.
E)The licensor faces no threats of competition from the licensee after the contract ends.

Question 32

Social critics worry that large American internationals aren't just globalizing their brands, they are ________.

A)causing the prices to rise
B)changing the original American products
C)Americanizing the world's cultures
D)inflating the brand
E)repositioning the brand

Question 33

________ 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)Importing
E)Direct exporting

Question 34

Which of the following is true of exporting?

A)It is the most complex way to enter a foreign market.
B)It involves the association of companies with host country partners.
C)It typically requires products to be extensively modified for the foreign market.
D)It involves the least change in a company's product lines.
E)It involves a huge investment if done through independent international distributors.

Question 35

Which of the following is a disadvantage of licensing?

A)The licensing 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)The licensor potentially creates a competitor in the form of the licensee.
E)The licensee is restricted from gaining knowledge about the licensor's intellectual property.

Question 36

Which of the following is most likely a drawback of contract manufacturing?

A)There are low chances of quickly starting the process.
B)There is decreased control over the manufacturing process.
C)There are significant political and economic risks involved.
D)There is little opportunity of later forming a partnership.
E)There is no possibility of buying out the local manufacturer.

Question 37

Montano Boutiques promotes its brand in new international markets by providing rights to local boutiques to use its patented designs and brand name. In this case, Montano Boutiques' market-entering strategy is referred to as ________.

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

Question 38

The simplest way to enter a foreign market is through ________.

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

Question 39

According to the most recent Millward Brown Optimor brand value survey of global consumer brands, 17 of the top 20 brands were ________.

A)Canadian
B)Swedish
C)Dutch
D)British
E)American

Question 40

Which of the following is an advantage of management contracting?

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

Question 41

What is the most likely disadvantage of direct investment for an investing company?

A)weak relationships with local distributors
B)minimal investment control
C)product standardization requirements
D)devalued currency risks
E)excessive freight charges

Question 42

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 43

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

A)It involves additional product development costs.
B)It involves changing the product to meet local requirements.
C)It requires planning a new promotional strategy to promote the product.
D)It can be costly in the long run if products fail to satisfy consumers.
E)It requires making changes in the manufacturing process.

Question 44

________ consists of creating something new to meet the needs of consumers in a given country.

A)Product adaptation
B)Straight product extension
C)Undifferentiated marketing
D)Product invention
E)Standardized manufacturing

Question 45

________ 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 46

Compared to standardized global marketing, adapted global marketing ________.

A)uses the same marketing mix elements in all target markets
B)lowers marketing costs by using home country sales teams
C)modifies marketing strategies to meet local needs
D)maintains uniformity across all markets
E)results in greater brand power

Question 47

Which of the following is a drawback of management contracting?

A)It prevents a company from setting up its own operations for a period of time.
B)It is a high-risk method of getting into a foreign market.
C)It yields income to the contracting firm only much later in the process.
D)It does not provide the option of buying shares in the managed company later on.
E)It requires a domestic firm to export its products to a foreign company.

Question 48

Which of the following is an advantage of direct investment?

A)Direct investment involves fewer risks than joint ownership.
B)Direct investment ensures that a firm is shielded from market changes.
C)Direct investment allows a firm to keep full control over the investment.
D)Direct investment involves minimal financial or time expenditures.
E)Direct investment protects the firm from currency devaluation.

Question 49

Through which of the following routes do firms generally get into international marketing?

A)buying shares of an international company
B)shipping products to foreign customers
C)organizing an international division
D)establishing a joint venture
E)acquiring a foreign firm

Question 50

In a global value delivery network, the second link moves company products to ________.

A)distribution centres
B)wholesalers
C)market entry points
D)points of production
E)final buyers

Question 51

Botsford, a U.S. firm, builds automotive transmissions in its manufacturing facility in Taiwan to capitalize on the availability of cheap labor. Botsford's involvement in foreign markets is most likely through ________.

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

Question 52

Which of the following is true of joint ownership?

A)The domestic firm exports management services rather than products.
B)Foreign investors gain complete possession and control over the local firm.
C)The arrangement is mandatory for businesses to enter some foreign markets.
D)A domestic company seldom needs a host country partner to enter into the market.
E)The domestic company loses its title of ownership to foreign investors in the arrangement.

Question 53

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

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

Question 54

Which of the following is most likely a benefit of joint ownership?

A)It allows a firm to gain the financial and managerial resources that it may otherwise lack.
B)It is the simplest way for a domestic company to enter a foreign market.
C)It minimizes the need to build a new manufacturing facility in the foreign market.
D)It allows one firm to acquire complete ownership of the other firm in the venture.
E)It provides significant economies of scale for both the local firm and the foreign investor.

Question 55

________ 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 56

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

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

Question 57

Kimlee, a food manufacturer based in China, recognizes the immense demand for noodles in the Australian market. Kimlee forms a new business venture to manufacture instant noodles and decides to share possession and control of the new business with a local food processing company. In this case, Kimlee has entered a foreign market through ________.

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

Question 58

When companies fully adapt their advertising messages to local markets, they follow a strategy of ________.

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

Question 59

In managing their international marketing activities, most companies first ________.

A)organize an import department
B)create an international division
C)initiate foreign direct investment
D)form a domestic subsidiary
E)organize an export department

Question 60

Compared to adapted global marketing, standardized global marketing ________.

A)adjusts promotional efforts to address cultural differences in target markets
B)results in additional marketing and manufacturing costs
C)relies on social media to develop customer relationships
D)usually results in diluted brand power over time
E)uses the same marketing mix worldwide

Question 61

Excessive host-country regulations are an example of tariffs.

Question 62

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

Question 63

Which of the following is true of international divisions that are structured as geographical organizations?

A)Geographical organizations are operating units under the export department.
B)Geographical organizations are usually formed to implement whole-channel supply chains.
C)Geographical organizations are managed by product managers, each responsible for different product groups.
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 64

Income distribution generally remains constant across different types of economies.

Question 65

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

Question 66

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

Question 67

Which of the following is an international division organized based on different merchandise categories?

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

Question 68

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

Question 69

Foreign businesses can face nontariff trade barriers restricting product standards.

Question 70

Often, companies form joint ownership ventures to merge their complementary strengths in developing a global marketing opportunity.

Question 71

A country's industrial structure is an economic factor that reflects its attractiveness as a market.

Question 72

________ are international divisions responsible for the sales and profits of their own operating units.

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

Question 73

Foreign-based production facilities offer many advantages to an investing company if the foreign market is small.

Question 74

Which of the following is most likely true about a global organization?

A)Worldwide policies are planned by top corporate management.
B)Global operating units report to international division chiefs.
C)Executive training is restricted to domestic operations.
D)Employees are recruited exclusively from the home country.
E)It considers itself a national marketer that sells abroad.

Question 75

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

Question 76

Barter involves the direct exchange of goods and services.

Question 77

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

A)international division
B)domestic market
C)value delivery network
D)export department
E)domestic division

Question 78

The European Union restricts trade opportunities to European firms.

Question 79

Management contracting is an unwise choice if a domestic firm can make greater profits by undertaking a whole venture.

Question 80

Similar consumer needs around the world suggest that a strategy of adapted global marketing is appropriate for most international firms.