Deck 18: Managing Marketing in the Global Economy

Question 1

When innovation at Siemens enables the company to offer solutions that can make generation of hydroelectricity more environment-friendly,the company will want to reap the benefits of being the first to introduce such a product across countries.In this case,which of the following approaches is likely to be the best approach to entering foreign markets?

A) the rifle approach
B) the continuous approach
C) the born global approach
D) the sprinkler approach
E) the waterfall approach

Answer 1

C

Question 2

In a sprinkler approach to international expansion,________.

A) countries are entered when competition is limited
B) countries are gradually entered sequentially
C) countries in which the supply of raw material is greatest are entered first
D) countries in which the demand for the product is greatest are entered first
E) many countries are entered simultaneously

Answer 2

E

Question 3

Once a firm decides to enter the international market,what is the next step in the decision-making process?

A) deciding on the marketing organization
B) deciding on the marketing program
C) deciding how to enter the market
D) deciding how to adapt the product to the new market
E) deciding which markets to enter

Answer 3

E

Question 4

In a waterfall approach to international expansion,________.

A) firms enter countries gradually in a sequence
B) firms enter those countries first where the demand for the product is greatest
C) countries are entered based upon the availability of government subsidies
D) firms enter those countries first where the supply of raw material is greatest
E) countries are entered based upon ease of entry

Question 5

What is a global firm?

A) A firm that operates in one country and exports its goods and services to foreign countries.
B) A firm that operates in more than one country and has a sales and marketing staff in those countries.
C) A firm that operates in more than one country and captures R&D, production, logistical, marketing, and financial advantages not available to purely domestic competitors.
D) A firm that sells its products and services across the world but restricts manufacturing to the home country.
E) A firm that operates in more than one country but restricts the sale of its products to the home country.

Question 6

Which of the following can induce a firm to expand into the international arena?

A) Consumer preferences in the domestic market vary widely.
B) Average income level of domestic consumers is high.
C) The firm operates in an industry that caters to the mass market.
D) The firm finds that the domestic market is almost saturated.
E) The firm is yet to achieve economies of scale even though the domestic market has potential.

Question 7

Which of the following is the first stage of the internationalization process that can induce firms to enter the international arena?

A) no regular export activities
B) export via independent representatives (agents)
C) establishment of one or more sales subsidiaries
D) establishment of production facilities abroad
E) adoption of a flexible exchange rate regime

Question 8

Companies typically start their international foray with ________,which involve(s)working through independent intermediaries who sell their products abroad.

A) indirect exporting
B) licensing
C) franchising
D) direct exporting
E) joint ventures

Question 9

A2Z Inc.is a producer of a wide variety of consumer goods in Brazil.It has successfully captured a huge share of the domestic market and has been able to create a very strong brand.It is now considering a foray into foreign markets.Its board of directors decide to first try out some of its products in the neighboring country of Argentina.A2Z plans to eventually expand its presence in other countries,after they analyze the impact of their entry into the Argentine market.A2Z Inc.is following a ________.

A) born global approach
B) waterfall approach
C) sprinkler approach
D) franchisee approach
E) shotgun approach

Question 10

Which of the following modes of entry into a foreign market involves the maximum commitment and risk?

A) franchising
B) direct investment
C) joint ventures
D) licensing
E) direct exporting

Question 11

Indirect exports have two advantages for a firm: they involve less investment and ________.

A) less paperwork
B) less intrusion by the government
C) less risk
D) less competition
E) less customer suits

Question 12

When first-mover advantage is crucial and a high degree of competitive intensity prevails,the ________ approach is better.

A) waterfall
B) born global
C) rifle
D) sprinkler
E) franchisee

Question 13

A2Z Inc.is a producer of a huge variety of consumer goods,from soaps to shower gels,and shampoos to detergents.It is a market leader in the United States and is planning to tap the immense potential in the emerging markets.Market research,however,indicates that the Brazilian culture and society are substantially different from their American counterparts.If the company wants to target the masses,which of the following options is most likely to succeed?

A) A2Z can use a price skimming strategy to increase market share.
B) The company's existing strategies in the U.S. will work just as well in Brazil.
C) A2Z can introduce smaller "sachets" of shampoos and detergents that are priced lower.
D) The company can introduce large family packs of shampoos and soaps even if they are priced higher than competitors.
E) A2Z can use a predatory pricing strategy to capture the market.

Question 14

Which of the following can cause a firm to choose joint ventures as a mode of expansion into foreign markets?

A) excellent managerial resources
B) lack of sufficient finances
C) lack of redtapism in the host country
D) preferences of target consumers in the host country
E) psychic proximity of the host country

Question 15

Zodiac Inc.is one of the leading producers of designer bags in its country.The company is considering shifting some of its production to India.Which of the following could have prompted this move?

A) People in India prefer imported designer bags.
B) Zodiac can target a niche market of high-profile consumers who have a high income.
C) Zodiac can improve its market share if it can offer better prices than its competitors.
D) People in the home country have an ethnocentric approach.
E) Market research indicates that Indian consumers have a low per-capita income.

Question 16

Which of the following is true about direct investment as a mode of international expansion?

A) It allows a firm to retain full control over its investment.
B) It yields the lower returns than joint ventures.
C) It involves the least amount of risk.
D) It involves the least cost.
E) It does not allow the firm to diversify.

Question 17

Identify a benefit of using joint ventures to enter a foreign market.

A) It entails minimum risk.
B) It provides access to an established distribution network in the host country.
C) It yields the highest returns.
D) It retains full control of its investment in the host country.
E) It is the best strategy for countries with psychic proximity.

Question 18

Which of the following statements is true about licensing?

A) It is one of the most complex ways to engage in international marketing.
B) The licensor gains entry into the new market at low risk.
C) The licensee has no access to proprietary information.
D) The licensee receives a fee or royalty.
E) The only benefit for a licensee is the production expertise it gains.

Question 19

Which of the following is a risk that firms must consider prior to expanding abroad?

A) The domestic consumers prefer low-priced products.
B) The market in the foreign country may be too similar to the domestic market.
C) Consumers in the foreign country are very particular about the quality of the goods they consume.
D) The foreign country has very low pollution control standards.
E) The foreign country's business culture may be too different from the domestic country.

Question 20

WayToGrow Inc.is one of the most popular brand of toys in its home market.The company decides to expand its business abroad and its board of directors feel that instead of trying to establish its presence all at once in multiple markets,it is better to expand one country at a time.This would limit their risk and allow them to analyze customer response,after which they could expand to other similar countries.WayToGrow is following a ________.

A) shotgun approach
B) continuous approach
C) born global approach
D) sprinkler approach
E) waterfall approach

Question 21

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

A) product communications
B) market development
C) dual adaptation
D) diversification
E) communication adaptation

Question 22

Whirlpool took a 53% stake in the Dutch electronics group Phillips' home appliances business to leapfrog into the European market.This is an example of a ________.

A) straight extension
B) joint venture
C) contract manufacturing agreement
D) licensing agreement
E) franchising agreement

Question 23

Trends Inc.produces and markets casual wear for men and women.The company wants to be a global brand and is planning to enter a few chosen markets across Europe and Asia.To accommodate the differences in purchasing power and costs of shipping goods to the retailers,the company has decided to use cost-based pricing in each country.In order to ensure that this strategy is successful,Trends must first make sure that ________.

A) all the countries it is planning to enter have similar laws and regulations
B) competing offerings in the different markets are not priced lower
C) all competitors follow cost-based pricing
D) its marketing communication targets rival firms in the respective markets to prove its superiority
E) its transfer prices are high

Question 24

The problem with setting a uniform global price for a product is that ________.

A) it allows intermediaries in low-price countries to reship their products to high-price countries
B) the company would earn the same profits everywhere, regardless of the cost structure
C) this strategy can price the product out of the market in countries where costs are high
D) this strategy makes the price too high in poor countries and not high enough in rich countries
E) it is ineffective for products that are homogeneous

Question 25

Which of the following is most likely to be successful when introduced in foreign markets as a straight extension?

A) laundry detergent
B) khaki pants
C) dessert mixes
D) digital camera
E) condensed soup

Question 26

If a company adapts or changes both the product and the communications,the company engages in a process called ________.

A) straight extension
B) product reinvention
C) product adaptation
D) dual adaptation
E) full adaptation

Question 27

For the launch of "Trema," your company's new pocket organizer that can also be used as a cell phone,the CMO has decided that the product can be launched in international markets without any changes in its features or the marketing strategy.This introduction can be described as a ________.

A) dual adaptation
B) straight extension
C) product adaptation
D) forward invention
E) backward invention

Question 28

Your firm has decided to enter the international market with your product called "Trema," a new pocket organizer that can also be used as a cell phone.While discussing the marketing plans,your CMO decides that no changes will be necessary in either the marketing mix or the product for export.What form of marketing strategy is the CMO advocating?

A) distributive marketing mix
B) leveraged marketing mix
C) adapted marketing mix
D) engineering-driven marketing mix
E) standardized marketing mix

Question 29

In an attempt to tailor its products to suit the requirements of consumers in India,LG introduced the aero-comfort system.A remote control is programed to regulate both the air-conditioning and the ceiling fan.Consumers can switch off the AC and increase the ceiling fan's flow once the desired temperature is achieved.This not only increases convenience,but also cuts down electricity charges.LG's aero comfort system is an example of which of the following?

A) backward invention
B) dual invention
C) country version product
D) straight extension
E) communication adaptation

Question 30

Backward invention occurs when a firm ________.

A) creates a new product to meet a need in another country
B) reintroduces earlier product forms adapted to suit another country's needs
C) invents products that are similar to competing offerings
D) takes an existing product into a new market
E) produces its own raw materials

Question 31

A market survey by LG revealed that Indians preferred not to mix vegetarian and non-vegetarian food items.Hence,LG refrigerators in India include a special convertible box with separate compartments to store and control the temperature of vegetarian and non-vegetarian food.This is an example of customizing ________ to local needs.

A) advertising media
B) product features
C) packaging
D) brand name
E) labeling

Question 32

Straight extension of the product means ________.

A) introducing the product to the foreign market without any changes to the product
B) introducing the product to the foreign market with minor changes to the product
C) introducing the product to the foreign market with major changes to the product
D) introducing a customized product to the foreign market with a new marketing strategy
E) introducing a customized product to the foreign market with an existing marketing strategy

Question 33

A Gucci bag sells for $120 in Italy and $240 in the United States due to the differences in the costs of distributing the product in the two countries.This phenomenon is called a(n)________.

A) opportunity cost problem
B) market pricing problem
C) tactical pricing problem
D) price escalation problem
E) transfer pricing problem

Question 34

Product adaptation involves ________.

A) altering the product to meet local preferences with no change in communication strategy
B) altering the product to meet minimum acceptable standards
C) altering both the product and the communication strategy to meet local preferences
D) altering neither the product nor the communication strategy while entering a new market
E) developing a new product and adapting the communication strategy to enter a new market

Question 35

Forward invention is ________.

A) creating a new product to meet a need in another country
B) creating a new product to meet the need in the home country
C) inventing products that are superior to competing offerings
D) taking an existing product into a new market
E) inventing something that as yet has no "market"

Question 36

A Canadian software company decides to buy majority stakes in a Chinese firm producing software.The company even adds to its Chinese production capacity.Which of the following could be a potential disadvantage of this direct investment?

A) The Canadian firm will find it difficult to achieve economies of scale.
B) This is the least financially rewarding mode of international expansion.
C) The Canadian firm will have very limited control on its Chinese investment.
D) The Canadian firm will be subject to the piracy problems in China.
E) The Canadian firm will be subject to a higher cost of production in China.

Question 37

When companies are setting prices in different countries,the problem with setting a market-based price in each country is that ________.

A) it allows intermediaries in low-price countries to reship their products to high-price countries
B) the company would earn the same profits everywhere, regardless of the cost structure
C) this strategy might price the product out of the market in countries where costs are high
D) this strategy would make the price too high in poor countries and not high enough in rich countries
E) it prevents the company from differentiating its products

Question 38

Your firm has decided to enter the international market with your product called "Trema," a combination of a pocket organizer and cell phone.Even though the product has been a huge success in the home country,market research suggests some changes may be required before it can be introduced in Europe.Your CMO is of the opinion that the product requires certain extra features and the product will also have to be marketed differently.Your CMO is advocating ________.

A) product invention
B) dual adaptation
C) straight extension
D) forward adaptation
E) product standardization

Question 39

Finnish cellular phone giant,Nokia,customized its 6100 series mobile phone for every major market in which it is present.In Asia,for example,the series came with a higher ring volume so that it could be heard on the crowded Asian streets.This is an example of ________.

A) straight extension
B) forward invention
C) regional version
D) city version
E) country version

Question 40

In an adapted marketing mix,the company ________.

A) ensures that uniform practices are adopted across countries
B) focuses more on brand image than consumer preferences
C) ignores differences in the legal environment
D) ensures the lowest cost marketing program is adopted
E) tailors the marketing programs to each target market

Question 41

The New Zealand Way program was an initiative by the government of New Zealand to raise awareness and attract tourists by showing the dramatic landscapes featured in "The Lord of the Rings" film trilogy.This is an example of a government trying to strengthen its ________.

A) country-of-origin perceptions
B) international subsidiaries
C) internationalization
D) contract manufacturing
E) distributor relationships

Question 42

Forward invention refers to reintroducing earlier product forms that are well adapted to a foreign country's needs.

Question 43

Product adaptation not only involves altering the product to meet local preferences,but also calls for a change in the communication strategy.

Question 44

A waterfall approach to entering foreign markets is described as entering countries simultaneously.

Question 45

As a result of the ad campaigns depicting Brazil as a multicultural land of carnivals and beaches,any mention of the country makes people think of sun and sand.This is an example of ________.

A) anchoring effect
B) target market impact
C) regiocentrism
D) country-of-origin effect
E) cognitive dissonance

Question 46

Once a company decides to target a particular country,it must determine the best mode of entry.Its broad choices are indirect exporting,direct exporting,licensing,joint ventures,and direct investment.

Question 47

Which of the following is likely if the distribution channel for a product in the foreign country is long?

A) the foreign country buyers pay a high price
B) the consumer will pay arms-length price
C) the profit margin of the sellers increase
D) the intermediaries are motivated to reship the product to another country to earn higher profits
E) the seller can increase profit margins by charging a uniform price

Question 48

Global firms plan,operate,and coordinate their activities on a worldwide basis.

Question 49

A global firm is a firm that operates in more than one country and captures R&D,production,logistical,marketing,and financial advantages not available to purely domestic competitors.

Question 50

When the licensor provides the licensee with a complete brand concept and operating system,the arrangement is called contract manufacturing.

Question 51

Straight extension means using an established product's brand name for a new item in the same product category.

Question 52

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

Question 53

The main disadvantage of direct investment is that the firm loses access to the market in case the government of that country insists locally purchased goods have domestic content.

Question 54

As people in developing countries often prefer to buy in smaller quantities,________ is one of the most important functions of intermediaries in developing countries and helps perpetuate the long channels of distribution,which are a major obstacle to the expansion of retailing.

A) product adaptation
B) breaking bulk
C) diversification
D) transfer pricing
E) dual adaptation

Question 55

Indirect exports are characterized by high investment,and therefore high risk.

Question 56

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

Question 57

Companies enter the international market only when their domestic markets are saturated.

Question 58

Existence of gray markets lead to which of the following outcomes?

A) They make the distribution channel stronger.
B) They create a free-rider problem making legitimate distributors' investments in supporting a manufacturer's product less productive.
C) Goods sold in grey markets are always counterfeit.
D) Goods sold in grey markets come with standard product warranties.
E) Taxes imposed on grey market products are very high.

Question 59

Forces promoting national responsiveness include ________.

A) strong local preferences
B) homogeneous demand
C) strong global preferences
D) strong consumer liking towards foreign goods
E) capital-intensive production

Question 60

Communication adaptation occurs when companies change marketing communications for each local market.

Question 61

When companies sell on the Internet,price becomes transparent,and price differentiation between countries declines.

Question 62

Country-of-origin effects refer to the attitude anything produced by the home country is better than imported goods.

Question 63

The impact of country of origin is independent of the type of product.

Question 64

If Kellogg's offered different varieties of breakfast cereals in India as compared to Australia,and also positioned its products differently in the two countries,then Kellogg's would be engaging in dual adaptation.

Question 65

The use of media may require international adaptation because media availability varies from country to country.

Question 66

Explain how marketers are using the Web for international business.

Question 67

Most brands are adapted to some extent to reflect significant differences in consumer behavior,brand development,competitive forces,and the legal or political environment.Identify the five international product and communication strategies available to firms that expand their businesses to foreign countries.

Question 68

People are often ethnocentric and favorably predisposed to their own country's products,unless they come from a less developed country.

Question 69

What are the various risks that a company must consider before making a decision to enter foreign markets?

Question 70

Once a company decides to target a particular country,it must determine the best mode of entry.Each of its market entry strategies involves more commitment,risk,control,and profit potential.List these market entry strategies in order from low risk to high risk.

Question 71

Most companies would prefer to remain domestic if their domestic market were large enough.Yet several factors are drawing more and more companies into the international arena.List some of these factors.

Question 72

Name the three choices that companies have for setting prices in different countries.

Question 73

A firm normally gets into international marketing simply by shipping out its goods.

Question 74

As required levels of distribution increase,so do customer prices relative to the importer's price.

Question 75

Gray market activities harm distributor relations,tarnish the manufacturer's brand equity,and undermine the integrity of the distribution channel.

Question 76

Define a joint venture and list some of the advantages and disadvantages.

Question 77

Web-crawling technology searches for counterfeit storefronts and sales by detecting domain names similar to legitimate brands.

Question 78

Outline the major decisions that a firm must undergo in making a decision to market internationally.

Question 79

A company that is planning to go global must decide on how many countries to enter and how fast to expand.A company's entry strategy typically follows one of two possible approaches.What are those approaches?

Question 80

Explain the country-of-origin effect.