Question 1

The Grummond Group buys air conditioner components in industrialized countries and sells them to business customers in developing countries where the air conditioners are assembled. Grummond is most likely classified as a(n)

Accepted Answer

Grummond Group is involved in buying and selling products across borders without any involvement in the production process. This makes it a trading company.

Question 2

High Plains Furnishings, a furniture manufacturer in southern Montana, markets its furniture products in markets within the United States. It has also found several niche target markets in Finland, Chile, and Argentina. High Plains Furnishings is engaging in

Accepted Answer

The answer of High Plains Furnishings, a furniture manufacturer in...

Question 3

When the American company Exxon purchases crude oil from Saudi Arabia, it is engaging in

Accepted Answer

When Exxon purchases crude oil from Saudi Arabia, it is engaging in importing, as it is buying goods from a foreign country and bringing them into the United States. Licensing would involve an agreement to use someone else's intellectual property, such as a patent or trademark. Free trade is a policy that encourages international trade without government interference, while exporting involves selling goods to foreign countries. Dumping refers to the practice of selling goods in a foreign country at a lower price than what they are sold for in the home country in order to gain market share.

Question 4

A company not involved in manufacturing that brings together buyers and sellers in different countries is usually referred to as a

Accepted Answer

A trading company does not manufacture products but instead acts as an intermediary between buyers and sellers in different countries, facilitating the exchange of goods and services.

Question 5

If Caterpillar wished to reach the market in Malaysia but was leery of a direct investment in the country, it might provide a Malaysian operation with the knowledge to produce and market its products in exchange for a commission. This type of arrangement is called

Accepted Answer

The arrangement described is a licensing agreement, where the licensor (Caterpillar) provides the licensee (the Malaysian operation) with the knowledge to produce and market its products in exchange for a commission. This allows Caterpillar to enter the Malaysian market without investing directly in the country.

Question 6

A large farming cooperative that focuses on the production of fruits and vegetables uses a business that sells the farmers' products in foreign countries and also provides consulting, insurance, legal assistance, and warehousing to the cooperative. This business would most likely be called a(n)

Accepted Answer

The business is described as selling the farmers' products in foreign countries, which is characteristic of a trading company that facilitates international trade. Additionally, the fact that the business provides additional services such as consulting, insurance, legal assistance, and warehousing suggests that it operates as a larger entity, such as a trading company, rather than a specialized wholesaler or licensor.

Question 7

When a firm's products sell in foreign countries with little or no effort to obtain foreign sales, the firm is engaging in

Accepted Answer

The answer of When a firm's products sell in foreign...

Question 8

What level of commitment in international marketing may be most attractive when the political and economic stability of a foreign country is questionable?

Accepted Answer

The answer of What level of commitment in international marketing...

Question 9

A special form of licensing in which one company grants another company the right to market its product in accordance with its standards in exchange for a financial commitment is called

Accepted Answer

The special form of licensing described in the question is franchising. In a franchise agreement, the franchisor grants the franchisee the right to use its brand name and business model in exchange for a financial commitment, while maintaining certain standards and guidelines for the franchisee to follow.

Question 10

Questor Corporation owns the Spalding brand name but does not produce a single golf club or tennis ball. This arrangement is an example of what type of involvement level for international marketing?

Accepted Answer

Questor Corporation is licensing the Spalding brand name to companies that produce golf clubs and tennis balls.

Question 11

Henderson Synthetics is a producer of chemical products aimed at increasing agricultural yield per acre. Henderson Synthetics' management believes that several of the firm's products could have sizable markets in other countries, however, it is costly to obtain market research to confirm this. If Henderson Synthetics wanted to temporarily "try out" these international markets with a minimal level of commitment and cost, it should use

Accepted Answer

Exporting is the best option because it allows Henderson Synthetics to temporarily "try out" international markets with minimal commitment and cost. Exporting involves selling products to foreign markets without having a physical presence or investment in that country, which makes it a low-risk option for testing the waters in different markets. Other options such as contract manufacturing, joint ventures, licensing, or subsidiaries involve a higher level of investment and commitment which may not be suitable for Henderson Synthetics' temporary goals.

Question 12

Which of the following lists the levels of involvement in global marketing from the lowest to the highest?

Accepted Answer

The levels of involvement in global marketing are typically listed in order from least to greatest involvement starting with domestic marketing, followed by limited exporting, then international marketing, and finally globalized marketing. The correct list in this order is: Domestic marketing, limited exporting, international marketing, and globalized marketing. Only option E follows this order.

Question 13

The role of export agents is to

Accepted Answer

Export agents act as intermediaries between buyers and sellers from different countries, facilitating sales and earning a commission for their services. They do not purchase products themselves nor do they help firms make direct investments or arrange licensing agreements. While they may provide information to domestic firms about exporting opportunities, this is not their primary role.

Question 14

How does using an exporting intermediary limit the risk involved with global marketing?

Accepted Answer

Using an exporting intermediary limits risk because the company has no direct investment in the foreign country. The intermediary assumes financial and legal risks, and guarantees that the products will be a good fit for the target market. This approach is less risky than direct investment or joint ventures.

Question 15

The World Trade Organization accomplishes all of the following except

Accepted Answer

The World Trade Organization does not lend money to businesses interested in developing international markets. Its main functions include educating companies about international trade rules, serving as a forum for trade negotiations, helping settle trade disputes, and providing legal ground rules for international commerce.

Question 16

The extent of Raytheon's participation in global business is selling the batteries it manufactures to companies in Spain. In this case, Raytheon is a(n)

Accepted Answer

Raytheon is exporting the batteries it manufactures to companies in Spain, making it an exporter.

Question 17

If Hyundai, a Korean automobile manufacturing firm, started selling its cars at unfairly low prices to Germany, Hyundai would be engaging in

Accepted Answer

If Hyundai is selling its cars at unfairly low prices, it would be engaging in dumping. Dumping is a practice where a company exports goods to another country at a price lower than the price charged in its home country. This is often done to gain market share and drive out competition in the importing country.

Question 18

The purchase of products from a foreign source is called

Accepted Answer

Importing refers to the purchase of products from a foreign source.

Question 19

At the heart of the ____ are agreements that provide legal ground rules for international commerce and trade policy.

Accepted Answer

The WTO (World Trade Organization) is an intergovernmental organization that regulates international trade. It replaced GATT (General Agreement on Tariffs and Trade) and is responsible for enforcing trade agreements, resolving disputes, and negotiating new trade deals. The WTO's agreements provide legal ground rules for international commerce and trade policy.

Question 20

A(n) ____ is an organization that links buyers and sellers in different countries but is not involved in manufacturing.

Accepted Answer

A trading company is an intermediary that connects buyers and sellers in different countries, often by acting as a purchasing agent for foreign businesses looking to import goods or services. Trading companies typically don't manufacture their own products, but they can facilitate transactions between manufacturers and their customers. Exporters, on the other hand, are companies that produce and sell goods or services in one country and then ship them to customers in other countries. Joint ventures and strategic alliances involve two or more companies forming a partnership to achieve specific business goals, while a licensee is a company that has been granted the right to use another company's intellectual property, such as patents or trademarks.

Quiz 9: Reaching Global Markets