Question 1

How could an export merchant benefit a company like Wilson Creative Cosmetics of New York that wants to operate in foreign markets?

Accepted Answer

An export merchant handles the complexities of selling in foreign markets, allowing the producer to focus on production with minimal time and effort spent on export logistics.

Question 2

Why might a company like Automated Logic Corporation, a manufacturer of high-tech building automation systems, decide NOT to use an export agent as it tries to find foreign buyers for its systems?

Accepted Answer

Using an export agent means the company would have less control over the sales process and how its products are marketed and sold in foreign markets.

Question 3

Export agents:

Accepted Answer

Export agents can be involved in various aspects of the export process, including marketing, financing, and logistics, and they can be located in either the exporter's home country or the destination country.

Question 4

Operating a company sales branch enables the company to:

Accepted Answer

A sales branch is a company-owned facility that sells the company's products or services. It allows the company to control its sales efforts more completely than if it were using independent distributors or agents.

Question 5

When Company A grants Company B the right to use its production processes, patents, and trademarks for a fee or royalty payment, it is:

Accepted Answer

Licensing is the correct term for when a company (Company A) grants another company (Company B) the right to use its production processes, patents, and trademarks in exchange for a fee or royalty payment. This arrangement allows Company B to utilize Company A's intellectual property for its own business purposes.

Question 6

Mercedes-Benz has been given the right to use the Swatch watch brand name for its new Swatchmobile, a micro-compact car that is just over 8 feet long and capable of holding two people and one overnight bag. Mercedes-Benz paid a fee to Swatch for the use of its name and hopes the popularity of the Swatch watch will give the midget car instant brand recognition. This is an example of:

Accepted Answer

Mercedes-Benz paid a fee to Swatch for the use of its brand name, which is a typical arrangement in licensing agreements where one company allows another to use its brand, logo, or technology in exchange for a fee.

Question 7

Amer Group, the world's number one manufacturer of tennis racquets and Alpine skis, has been given the right by Phillip Morris to produce and market the Phillip Morris cigarette brands in Finland. This is an example of:

Accepted Answer

This is an example of licensing, where Phillip Morris grants Amer Group the rights to produce and market its cigarette brands in Finland, allowing Amer Group to use the brand name, trademarks, or technology owned by Phillip Morris.

Question 8

Kidsports International granted Tokyo's Urban Planning Development the right to build a fitness and play center bearing the Kidsports name and logo. In this way Kidsports can increase world recognition of its service without having to increase its total investment. This is an example of:

Accepted Answer

This is an example of licensing, where Kidsports International allows another company to use its name and logo to operate a business, without Kidsports having to invest further in the new location.

Question 9

Fruit-of-the-Loom does not own any overseas manufacturing plants, but it lends its name to 45 consumer products that are manufactured and sold in Japan. For permitting the Japanese manufacturer to use the Fruit-of-the-Loom brand name, the U.S. company receives one percent of the Japanese firm's gross sales. Fruit-of-the-Loom used _____ to enter the Japanese market.

Accepted Answer

Fruit-of-the-Loom entered the Japanese market through licensing, which involves allowing another company to use its brand name in exchange for a fee or a percentage of sales, in this case, one percent of the Japanese firm's gross sales.

Question 10

Why would a company like the Michelin Company, a French tire manufacturer, decide NOT to use foreign licensing?

Accepted Answer

Licensing can lead to the transfer of valuable knowledge and expertise to the licensee, who might later use this knowledge to compete against the licensor. In the case of a company like Michelin, which possesses specialized technology and expertise in tire manufacturing, this risk of creating future competitors could be a significant concern, deterring them from choosing foreign licensing as a mode of international expansion.

Question 11

Contract manufacturing:

Accepted Answer

Contract manufacturing involves a company hiring a foreign firm to produce a specified volume of the firm's product to specification; the final product carries the domestic firm's label. This does not necessarily involve the total integration of operations, acquiring production facilities, establishing joint ventures, or forming cartels.

Question 12

An American marketer arranged for a foreign company to produce products that the American firm will sell in the producer's country. This process is called:

Accepted Answer

Contract manufacturing is when a company arranges for a product to be produced by a foreign company and then sells the product in the producer's country. This allows the company to take advantage of the producer's manufacturing capabilities without having to invest in new facilities.

Question 13

A firm wanting to operate in a country but wishing to avoid its exchange restrictions, import quotas, or prohibitive tariffs could enter the market by using:

Accepted Answer

The answer of A firm wanting to operate in a...

Question 14

The production companies for Adidas-Salomon AG are not located in Europe where the company is headquartered. The plants, owned by Adidas-Solomon AG, are located in Indonesia, Thailand, and China where the cost of labor is much lower. For Adidas-Salomon AG, this is an example of:

Accepted Answer

Adidas-Salomon AG owning production plants in Indonesia, Thailand, and China represents direct investment, as the company has invested in foreign countries by establishing physical assets and operations there.

Question 15

Anheuser-Busch purchased 27 percent of China's Tsingtao brewery because China is the world's second-largest beer market after the U.S. Anheuser-Busch used _____ to compete in the Chinese market.

Accepted Answer

Anheuser-Busch's purchase of a 27 percent stake in Tsingtao brewery represents a direct investment, as they acquired a significant ownership interest in a foreign company to compete in the Chinese market.

Question 16

In international marketing, a _____ is a partnership arrangement in which the foreign operation is owned in part by a domestic company and in part by a foreign company.

Accepted Answer

A joint venture is a business arrangement where two or more parties agree to pool their resources for the purpose of accomplishing a specific task. In the context of international marketing, this often involves a domestic company partnering with a foreign company to operate in the foreign country, with ownership and profits shared among the partners.

Question 17

For an American firm engaged in international marketing, a joint venture:

Accepted Answer

A joint venture is a strategic alliance where two or more parties, typically businesses, form a partnership to share markets, intellectual property, assets, knowledge, and, of course, profits. In the context of an American firm engaged in international marketing, a joint venture often involves a partnership between the American firm and a foreign company to undertake a particular business endeavor, combining resources to achieve mutual benefits. This allows both firms to access new markets, share risks and costs, and combine their expertise.

Question 18

When Wal-Mart signed an agreement with Citic, a Chinese utilities and financial group, so the retail giant could open new stores in China, it was an example of a _____ because both companies would own the new retail venture.

Accepted Answer

A joint venture occurs when two or more parties come together to undertake a specific business project, in this case, opening new stores in China, with both parties sharing ownership, returns, risks, and governance.

Question 19

An American construction company wants to bid on a job in Saudi Arabia. It has found that it will need to join operations with an Arabic construction company if it wants to gain local support among those people who will be determining who gets the construction job. The American company will need to enter into a _____ with the Arabic company.

Accepted Answer

A joint venture is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task, in this case, a construction job. This structure is often used for international projects to combine local knowledge with foreign expertise.

Question 20

The Home Shopping Network (HSN) plans to market up to 30 products on a range of European TV outlets--both satellite and cable. It will be joined in this project by Sweden's TV-Shop. HSN brings products and consumer knowledge to the partnership. TV-Shop provides technical equipment as well as an existing customer base. HSN and TV-Shop have formed a:

Accepted Answer

A joint venture is formed when two or more parties come together to undertake a specific business project, sharing resources, risks, and rewards. In this case, HSN and TV-Shop are collaborating to market products on European TV outlets, with each contributing different resources to the partnership.

Quiz 3: Global Markets and Marketing