Marketing The Core 7th Edition By Kerin - Test Bank

Marketing The Core 7th Edition By Kerin – Test Bank

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Sample Questions Are Posted Below

Chapter 06

Test Bank

Why has Amazon been aggressively pursuing the Indian market since 2013?
U.S. sales had begun to decrease.
Amazon believed it would be inexpensive to begin operations in India.
There was no competition to speak of for Amazon’s e-commerce channel in India.
There were fewer restrictions in retailing in India.
E. The India market offered significant growth potential.

AACSB: Diversity

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Blooms: Understand

Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 2 Medium

Topic: Marketing Globalization

Feedback: E-commerce industry analysts generally agree that India represents the last major e-commerce opportunity in the world. They expect that Indian e-commerce revenue could reach $137 billion by 2020, more than 10 times the 2013 level of $13 billion.

All of the following are challenges faced by Amazon in its expansion into India except which?
Low rates of credit and debit card usage among Indian consumers, and many without bank accounts
Well-financed and capable domestic competitors in India
C. Political instability and social unrest in India
Underdeveloped technology requiring financial and technological investment in a localized cloud computing platform for India
Strict trade regulations that prevent direct sales to Indian consumers

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Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 2 Medium

Topic: Marketing Globalization

Feedback: Foreign companies, like Amazon, are prohibited from selling products directly to Indian consumers. Barely 60 percent of Indian consumers have bank accounts, and only 12 percent have credit or debit cards. Amazon faces well-financed and capable domestic e-commerce competitors in India, including Flipkart, Snapdeal, and Tata. Amazon has found it necessary to expand its cloud computing platform in India in 2016 to improve its service for Indian customers. Political and social unrest were not cited in the text as challenges.

Which of the following statements about the dynamics of world trade is most accurate?
Manufactured products and commodities account for only 25 percent of world trade.
Services such as telecommunications, transportation, and banking accounts are not included in calculations of world trade.
The United States has replaced China as the biggest country in terms of world trade.
All nations participate equally in world trade.
E. Dollar value of world trade has more than doubled in the past decade.

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Blooms: Understand

Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: All nations do not participate equally in world trade. Manufactured goods account for 75 percent of world trade, with service industries accounting for 25%. World trade has more than doubled in the past decade.

Which of the following statements about the dynamics of world trade is most accurate?
As the largest international importer and exporter, the U.S. accounts for 65 percent of world trade.
World trade is calculated to include only the exchange of money for products or services.
An estimated 35 percent of world trade involves countertrade.
D. China, the United States, and Germany far outpace other countries in terms of imports and exports.
Because of the European Union, European intratrade no longer counted in calculations of world trade.

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Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: The United States, China, and Germany are the leaders in global merchandise trade by a wide margin. China exports more manufactured products and commodities than it imports. The United States imports more manufactured products and commodities than it exports. Not all trade involves the exchange of money for products or services. An estimated 10% to 15% of world trade involves countertrade.

Which of the following countries is the world’s leading exporter?
United States
B. China
India
Germany
Japan

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Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: The United States, China, Japan, Western Europe, and Canada together account for more than two-thirds of world trade in manufactured products and commodities. China is the world’s leading exporter, followed by the United States and Germany. See Figure 6-1.

Which of the following countries is the world’s leading importer?
A. United States
China
India
Germany
Japan

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Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: The United States, China, Japan, Western Europe, and Canada together account for more than two-thirds of world trade in manufactured products and commodities. The U.S. is the world’s leading importer, followed by China and Germany. See Figure 6-1.

All nations and regions of the world do not participate equally in world trade. World trade flows reflect
the influences of culture and language.
the differences among industries, countries, and regions.
C. interdependencies among industries, countries, and regions.
the challenges of currency and exchange imbalances.
the increasing importance of services verses products.

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Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: All nations and regions of the world do not participate equally in world trade. World trade flows reflect interdependencies among industries, countries, and regions. These flows manifest themselves in country, company, industry, and regional exports and imports.

A country’s imports
stimulate the imports of other countries.
have no effect on its exports.
have no relationship with its balance of trade.
D. affect its exports and exports affect its imports.
over time will decrease its overall economic activity.

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Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: A global perspective on world trade views exports and imports as complementary economic flows: A country’s imports affect its exports and exports affect its imports. Every nation’s imports arise from the exports of other nations.

The complementary nature of economic flows internationally, whereby imports stimulate exports and vice versa, is called ________ and is one argument for free trade among nations.
the balance of trade
countertrade
exchange trade
D. the trade feedback effect
global market trading

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Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Text term definition—trade feedback effect.

The trade feedback effect is one argument for
decreasing a nation’s exports.
B. free trade agreements.
increased tariffs and quotas.
international trade associations.
decreasing a nation’s imports.

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Blooms: Understand

Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: A global perspective on world trade views exports and imports as complementary economic flows: A country’s imports affect its exports and exports affect its imports. This phenomenon is called the trade feedback effect and is one argument for free trade among nations.

Countertrade refers to
the illegal agreement of one country to buy products exclusively from another.
the legal agreement of one country to buy and sell certain products exclusively from one another.
C. the practice of using barter rather than money for making global sales.
the sale of industrial goods from a brick and mortar outlet rather than directly from the manufacturer.
the use of foreign currency in making global purchases to minimize risk from currency fluctuation.

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Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—countertrade.

An estimated 10 to 15 percent of world trade involves __________, the practice of using barter rather than money for making global sales.
tariffs
B. countertrade
the balance of trade
trade feedback
market trading

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Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—countertrade.

Volvo of North America delivered automobiles to the Siberian police force when Siberia had no cash to pay for them. It accepted payment in oil, which it then sold for cash to pay for media advertising in the United States. This transaction is an example of
a quota.
B.
balance of trade.
competitive advantage.
a trade feedback effect.

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Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: Countertrade is the practice of using barter rather than money for making global sales; in this case, exchanging police cars for oil.

The Malaysian government recently exchanged 20,000 tons of rice for an equivalent amount of Philippine corn. This transaction is an example of a
A.
competitive advantage.
balance of trade.
quota.
trade feedback.

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Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: Countertrade is the practice of using barter rather than money for making global sales; in this case, exchanging rice for corn.

Recipco and Tradaq are both companies that connect international companies who want to barter the products they make for the products they need without using cash or credit. Recipco and Tradaq assist international companies in making
A.
quota exchanges.
trading exchanges.
balances of trade.
WTO trade arrangements.

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Blooms: Apply

Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: Countertrade is the practice of using barter rather than money for making global sales. Recipco and Tradaq assist companies in bartering the products they make for products they need.

The monetary value of all products and services produced in a country during one year is referred to as the
balance of trade.
B. gross domestic product.
national monetary reserve.
monetary national balance.
annual national product.

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Blooms: Remember

Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Text term definition—gross domestic product.

Gross domestic product refers to
the monetary value of all products and services produced by a single manufacturer during one year.
the monetary value of all domestic exports of a nation during one year.
C. the monetary value of all products and services produced in a country during one year.
the monetary value of all domestic imports of a nation during one year.
the difference between all domestic exports and imports for any nation during the course of one fiscal year.

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Blooms: Remember

Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Text term definition—gross domestic product.

The balance of trade is the
A. difference between the monetary value of a nation’s exports and imports.
sum of the monetary value of a nation’s exports and imports.
monetary value of a nation’s exports divided by its imports.
surplus that occurs when nations engage in exporting.
state of equilibrium when two neighboring nations participate in countertrade.

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Blooms: Remember

Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Key term definition—balance of trade.

When a country’s exports exceed its imports,
it incurs a deficit in its balance of trade.
the result is the trade feedback effect.
it will try to rebalance its overall economy.
it will attempt to engage in a trade war.
E. it incurs a surplus in its balance of trade.

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Blooms: Understand

Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: The difference between the monetary value of a nation’s exports and imports is called the balance of trade. When a country’s exports exceed its imports, it incurs a surplus in its balance of trade. When imports exceed exports, a deficit results.

When a nation’s nation’s imports exceed its exports, it incurs a __________ in its balance of trade.
countertrade
trade feedback effect
C. deficit
surplus
tariff

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Blooms: Understand

Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Which of the following statements about the relationship between the imports into the United States and the exports from the United States during the last 30 years is most accurate?
Exports from the United States have declined, while import levels have remained about constant.
The volume of both imports and exports has consistently decreased.
Imports into the United States and exports have been about equal, indicating balanced trade.
Exports have exceeded imports, indicating a continuing balance of trade surplus.
E. Imports have exceeded exports, indicating a continuing balance of trade deficit.

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Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Two important things have happened in U.S. exports and imports over the past 30 years. First, imports have exceeded exports each year, indicating that the United States has a continuing balance of trade deficit. Second, the volume of both exports and imports has increased dramatically.

The four largest importers of U.S. products and services are
Japan, Germany, China, and Canada.
B. Canada, Mexico, China, and Japan.
China, Brazil, Japan, and Germany.
Mexico, Canada, Brazil, and China.
England, Canada, Australia, and New Zealand.

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Blooms: Understand

Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: The four largest exporters to the United States are Canada, Mexico, China, and Japan. These countries purchase approximately two-thirds of U.S. exports.

Five trends in the past decade have significantly influenced the landscape of global marketing. One of them is
an increase in most countries’ GDP coupled with an increased degree of consumer ethnocentrism.
a significant increase in economic protectionism and a decline in free trade.
a more aggressive attitude toward initiating international tariffs and quota systems.
a decrease in most countries’ GDP and a renewal of nationalism.
E. a decline in economic protectionism by individual countries.

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Five trends in the past decade have significantly influenced the landscape of global marketing: (1) the decline of economic protectionism by individual countries, (2) the rise of economic integration and free trade among nations, (3) global competition among global companies for global customers, (4) the emergence of networked global marketspace, and (5) the growing prevalence of economic espionage.

Five trends in the past decade have significantly influenced the landscape of global marketing. One of them is
A. the emergence of a networked global marketspace.
an increase in economic protectionism and a decline in free trade.
a more aggressive attitude toward initiating international tariffs and quota systems.
a sharp decline in economic espionage.
a gradual dissolution of unpopular trade agreements.

AACSB: Diversity

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

The practice of shielding one or more sectors of a country’s economy from foreign competition through the use of tariffs or quotas is referred to as
domestic imperialism.
B.
blocked competition.
import taxation.
trade restriction.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—protectionism.

Arguments in favor of protectionism include that it
helps reduce tariffs and quotas.
B. encourages the development of domestic industries.
encourages economic reliance on foreign countries.
creates opportunities for the outsourcing of domestic jobs.
creates a more favorable environment for a global economy.

AACSB: Diversity

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Protectionism is the practice of shielding one or more sectors of a country’s economy from foreign competition through the use of tariffs or quotas. The argument for protectionism is that it limits the outsourcing of jobs, protects a nation’s political security, discourages economic dependency on other countries, and encourages the development of domestic industries.

Recently, the United States imposed a 35% tariff on Chinese tire imports in hopes of sustaining U.S. jobs in tire manufacturing. This addition of tariffs is an example of
imposing the rule of eminent domain.
increasing ethnocentrism.
enhancing domestic imperialism.
D. increasing protectionism.
slowing countertrade.

AACSB: Knowledge Application

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Blooms: Apply

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: Protectionism is the practice of shielding one or more sectors of a country’s economy from foreign competition through the use of tariffs or quotas. By adding the tariff, the United States is adding a protectionism measure for the U.S. tire industry.

Which of the following issues raises concerns about the ethics of protectionism?
Competitive advantage grows out of continuous improvement.
Small firms succeed in foreign niche markets.
Tariffs have declined from an average of 40 percent to less than 5 percent.
D. Regional trade agreements may provide preferential treatment for member nations.
Pan-European marketing strategies are possible due to greater uniformity in packaging standards.

AACSB: Ethics

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Of the statements above, the possibility of preferential treatment is most likely to suggest an ethical consideration. See Making Responsible Decisions in the text.

Government taxes on products or services entering a country that primarily serve to raise prices on imports are referred to as
A.
quotas.
WTO taxes.
foreign excise taxes.
trade subsidies.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—tariffs.

Tariffs refer to
government payments to companies or industries that primarily serve to create competitive advantage for domestic products.
B. government taxes on products or services entering a country that primarily serve to raise prices on imports.
a restriction placed on the amount of a product allowed to enter or leave a country.
a minimum requirement for the purchase between two or more nations of products or services.
a refusal to purchase or exchange products or services with another nation unless certain financial or ideological requirements have been satisfied.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—tariffs.

The U.S. Rice Millers’ Association claims that if the Japanese rice market were opened to imports by lowering __________, lower prices would save Japanese consumers $6 billion annually and the United States would gain a large share of the Japanese rice market.
boycotts
quotas
sanctions
D. tariffs
subsidies

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Tariffs are government taxes on products or services entering a country that primarily serve to raise prices on imports.

The __________ imposed on imported bananas by European Union countries cost consumers $2 billion a year in higher prices.
boycotts
quotas
sanctions
subsidies
E. tariffs

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Tariffs are government taxes on products or services entering a country that primarily serve to raise prices on imports.

U.S. citizens pay $5 billion more annually for shoes and Japanese citizens pay $6 billion more for rice than the actual cost of the products because
both countries have suffered major financial crises due to a severe trade imbalance.
B. both countries have imposed tariffs on imported goods to protect their domestic markets.
both countries have imposed limits on the quantity of these goods that can leave their respective domestic markets.
both products are considered essentials and as a result are more heavily taxed.
these products were purchased at a lower price from nations that currently are under governmental sanctions.

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Tariffs are government taxes on products or services entering a country that primarily serve to raise prices on imports.

Recently, the Japanese government, under pressure from its domestic farm lobby, slapped government taxes on mushrooms, leeks, and the reeds used in tatami mats that were being imported from China. These taxes Japan levied are referred to as
WTO taxes.
quotas.
C.
excise taxes.
subsidies.

AACSB: Knowledge Application

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Blooms: Apply

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: Tariffs are government taxes on products or services entering a country that primarily serve to raise prices on imports.

If you wanted to set up a business importing amber jewelry from Latvia to the United States, you would have to plan on paying the U.S. Customs Service a government tax of roughly 11 percent of the value of the product as
a bribe.
B. a tariff.
a subsidy.
an excise tax.
a quota.

AACSB: Knowledge Application

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Blooms: Apply

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: Tariffs are government taxes on products or services entering a country that primarily serve to raise prices on imports.

Whirlpool asked the United States to impose __________ on washing machine imports made by LG Electronics and Samsung Electronics, both South Korean companies, to raise the price of these products. Whirlpool accused these companies of selling below fair market value and receiving anticompetitive export subsidies from their governments, both of which could jeopardize American jobs.
boycotts
quotas
sanctions
D. tariffs
embargoes

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: Tariffs are government taxes on products or services entering a country that primarily serve to raise prices on imports.

A restriction placed on the amount of a product allowed to enter or leave a country is referred to as a
A.
tariff.
GATT tax.
subsidy.
excise tax.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—quota.

A quota refers to
a government tax on products or services entering a country that primarily serves to raise prices on imports.
government payments to companies or industries that serve to lower costs and provide a competitive advantage to domestic industries.
C. a restriction placed on the amount of a product allowed to enter or leave a country.
a minimum requirement for the purchase of specific products or services between two nations.
a refusal to purchase or exchange products or services with another nation unless certain financial or ideological requirements have been satisfied.

AACSB: Diversity

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—quota.

The world’s largest manufacturer of peppermint candy canes was located in Albany, Georgia, until it could no longer afford to buy the sugar needed for its operation. It moved its manufacturing business to Mexico where there are no restrictions (like those that exist in the United States) on the amount of sugar that can be brought into the nation. The business moved to Mexico because of __________ established by the U.S. government.
a tariff
a trade imbalance
an excise tax
a subsidy
E. a quota

AACSB: Knowledge Application

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Blooms: Apply

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: A quota is a restriction placed on the amount of a product allowed to enter or leave a country. In this case, the U.S. government caused domestically grown sugar to be priced higher than sugar on the world market due to its protectionist policies on sugar.

Russia currently has a limit on pork of 400,000 metric tons annually that can be imported from any country. This restriction would be considered a
tariff.
trade imbalance.
excise tax.
D.
subsidy.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: A quota is a restriction placed on the amount of a product allowed to enter or leave a country. In this case, the Russian government has protectionist quota policies restricting the amount of pork imports.

An institution that sets rules governing trade between its members through a panel of trade experts who decide on trade disputes between members and issue binding decisions is referred to as the
League of Nations.
B. World Trade Organization (WTO).
Association for Commerce Equity (ACE).
United Nations Board of Trade (UNBT).
Global Better Business Bureau (BBB-G).

AACSB: Diversity

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Trade Agreements, Monetary Unions, and International Organizations

Feedback: Key term definition—World Trade Organization (WTO).

The World Trade Organization (WTO) refers to
the world’s largest banking institution responsible for establishing and maintaining equitable exchange rates for all member nations.
the world’s largest licensing institution responsible for the certification of products distributed to a global market.
C. an institution that sets rules governing trade between its members through panels of trade experts who decide on trade disputes between members and issue binding decisions.
a multinational trade organization composed of the world’s wealthiest nations whose primary purpose is to aid in the economic growth of developing nations.
a multinational trade organization comprised of the world’s wealthiest nations whose primary purpose is to promote free trade economies.

AACSB: Diversity

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Trade Agreements, Monetary Unions, and International Organizations

Feedback: Key term definition—World Trade Organization (WTO).

There are __________ World Trade Organization countries, including the United States, which account for more than 90 percent of world trade.
37
52
97
113
E. 162

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Trade Agreements, Monetary Unions, and International Organizations

Feedback: The World Trade Organization (WTO) was formed in 1995 to address a broad array of world trade issues. There are 162 WTO member countries, including the United States, which account for more than 90 percent of world trade.

Which of the following statements about the World Trade Organization (WTO) is most accurate?
The WTO acts as an agent in trade negotiations between its members and the remainder of the world.
The 179 member countries of the WTO account for less than 25 percent of world trade.
C. The WTO was formed by the major industrialized nations in 1995 to address trade issues.
The WTO uses panels of trade experts who can issue nonbinding recommendations.
The WTO was formed by the United Nations.

AACSB: Diversity

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Trade Agreements, Monetary Unions, and International Organizations

Feedback: The major industrialized nations of the world formed the WTO in 1995 to address an array of world trade issues. There are 162 WTO member countries, including the United States, which account for more than 90 percent of world trade. The WTO is a permanent institution that sets rules governing trade between its members through panels of trade experts who decide on trade disputes between members and issue binding decisions.

Which of the following statements about the World Trade Organization (WTO) is most accurate?
The World Trade Organization is a temporary institution.
The 28 member countries of the WTO account for less than 25 percent of world trade.
The WTO sets rules governing trade between its members and the rest of the world.
The WTO uses panels of trade experts who can issue only nonbinding recommendations.
E. The WTO was formed by the major industrialized nations of the world.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Trade Agreements, Monetary Unions, and International Organizations

Feedback: The major industrialized nations of the world formed the WTO in 1995 to address an array of world trade issues. The 162 WTO member countries, including the United States, account for more than 90 percent of world trade. The WTO is a permanent institution that sets rules governing trade between its members through panels of trade experts who decide on trade disputes between members and issue binding decisions.

The European Union (EU) in early 2017 consisted of 28 countries with more than 500 million consumers. The EU has eliminated most barriers to the free flow of products, capital, and labor across its borders. Which of the following countries is not a member of the EU?
Latvia
Greece
Ireland
D. Switzerland
England

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Trade Agreements, Monetary Unions, and International Organizations

Feedback: Switzerland is not one of the 28 countries in the EU (as of early 2017). See Figure 6-3.

The European Union is an economic and political union of __________ member countries that have eliminated most barriers to the free flow of products, services, capital, and labor across their borders.
17
20
C. 28
30
37

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Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Trade Agreements, Monetary Unions, and International Organizations

Feedback: The European Union as of 2017 consisted of 28 countries that have eliminated most barriers to the free flow of products, services, capital, and labor across their borders.

To eliminate the need to continually monitor currency exchange rates, 16 of the countries in the European Union (EU) have adopted a common currency, which is called the
pound.
franc.
C.
mark.
dollar.

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Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Trade Agreements, Monetary Unions, and International Organizations

Feedback: To eliminate the need to continually monitor currency exchange rates, 16 of the countries in the European Union (EU) have adopted a common currency, which is called the euro.

To eliminate the need to continually monitor currency exchange rates, __________ of the countries in the European Union (EU) have adopted a common currency called the euro.
11
B. 16
20
28
32

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Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Trade Agreements, Monetary Unions, and International Organizations

Feedback: To eliminate the need to continually monitor currency exchange rates, 16 of the countries in the European Union (EU) have adopted a common currency, which is called the euro.

The European Union (EU) has been beneficial to electronic commerce because it is no longer necessary to
use multiple languages when settling accounts for purchases made across borders.
B. continually monitor currency exchange rates among participating nations.
trade with the former Eastern European communist countries.
obey international e-trade regulations.
use the American dollar as the economic standard.

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Trade Agreements, Monetary Unions, and International Organizations

Feedback: One benefit of the EU was the adoption of the euro, which has been a boon to the electronic commerce in the EU by eliminating the need to continually monitor currency exchange rates.

The EU has benefited firms in its member nations because
it provides a safe haven in times of world economic crises.
there is a common language advantage among EU consumers.
most companies within the EU are engaging in strategic global partnerships.
there is now a legally binding code of economic conduct.
E. firms do not need to market their products and services on a nation-by-nation basis.

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Trade Agreements, Monetary Unions, and International Organizations

Feedback: The EU has benefited marketers because firms do not need to market their products and services on a nation-by-nation basis. Rather, pan-European marketing strategies are possible due to greater uniformity in product and packaging standards; fewer regulatory restrictions on transportation, advertising, and promotion imposed by countries; and removal of most tariffs that affect pricing practices.

The EU has benefited its member nations because firms do not need to market their products and services on a nation-by-nation basis; most tariffs that affect pricing practices have been removed; and
there is a legally binding code of economic conduct.
there is immunity against world recessions.
C. there are fewer regulatory restrictions on transportation, advertising, and promotion.
there is a common language advantage among EU consumers.
most companies within the EU are engaging in strategic global partnerships.

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Trade Agreements, Monetary Unions, and International Organizations

The North American Free Trade Agreement was designed to encourage free trade between
North America, Central America, and South America.
the United States and the European Union.
member countries originally from NATO (North Atlantic Treaty Organization).
D. the United States, Canada, and Mexico.
the United States, Canada, and the United Kingdom.

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Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Trade Agreements, Monetary Unions, and International Organizations

Feedback: The North American Free Trade Agreement lifted many trade barriers between Canada, Mexico, and the United States and created a marketplace with more than 475 million consumers.

When firms originate, produce, and market their products and services worldwide, it is referred to as
acculturation.
free trade.
global branding.
D. global competition.
transactional exchange.

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Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Trade Agreements, Monetary Unions, and International Organizations

Feedback: Key term definition—global competition.

Global competition exists when
a firm produces and markets its products domestically rather than internationally.
B. firms originate, produce, and market their products and services worldwide.
two firms from two different countries compete for market share in a single domestic market.
two or more firms from different nations combine their resources to market products in a single domestic market.
the firm from one nation dominates the market for its product in every nation.

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Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Key term definition—global competition.

Coca-Cola has operations in all but two nations in the world and Pepsi-Cola is now available in about 200 countries and territories, making the soft drink industry an example of
A. global competition.
acculturation.
free trade.
global branding.
transactional exchange.

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Blooms: Apply

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 3 Hard

Topic: Marketing Globalization

Feedback: Global competition exists when firms originate, produce, and market their products and services worldwide. Pepsi-Cola, now available in about 200 countries and territories, accounts for a quarter of all soft drinks sold internationally. Coca-Cola is sold in every country except North Korea and Cuba.

In terms of the global marketplace, there are three primary types of companies: __________ firms, multinational firms, and transnational firms.
worldwide
conglomerate
intercontinental
D. international
cosmopolitan

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Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Three types of companies compete in the global marketplace: international firms, multinational firms, and transnational firms.

The administrative, marketing, and manufacturing operations that many international firms, multinational firms, and transnational firms have around the world are often called
A.
outlets.
departments.
markets.
holding companies.

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Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Text term definition—divisions or subsidiaries.

In terms of the global marketplace, there are three primary types of companies: international firms, multinational firms, and transnational firms. The key factor that distinguishes one from another is
the firm’s financial capacity to take risks.
the willingness and ability to use diversity and cultural differences as a positive in its marketing efforts.
C. the firm’s level of customization in marketing efforts as strategy for individual global markets.
the relative position of the product or service in terms of its life cycle.
the relative size of the firm both in financial terms and in production capacity.

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Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Marketing Globalization

Feedback: The three types of companies that populate and compete in the global marketplace are (1) international firms, (2) multinational firms, and (3) transnational firms. A firm’s orientation and strategy for global markets and marketing defines the type of company it is or attempts to be.

A(n) __________ firm engages in trade and marketing in different countries as an extension of the marketing strategy in its home country.
multidomestic
meganational
C. international
multinational
transnational

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Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Text term definition—international firm.

Generally speaking, __________ firm markets its existing products and services in other countries the same way it does in its home country.
a meganational
B. an international
a multinational
a transnational
an intranational

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Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: International Firm

Topic: Marketing Globalization

Feedback: International firms market their existing products and services in other countries the same way they do in their home country.

Mars, America’s second-largest candy company, began doing business in Russia in the late 1980s. The Snickers bar is one of the top-selling candies in Russia and is marketed in much the same way as it is in the United States. What type of global company is Mars?
A. an international firm
a multidomestic firm
a transnational firm
a meganational firm
a multinational firm

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Blooms: Apply

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 3 Hard

Topic: Marketing Globalization

Feedback: International firms engage in trade and marketing in different countries as an extension of the marketing strategy in their home country.

A firm that views the world as consisting of unique parts and markets to each part differently is referred to as
a meganational firm.
an extranational firm.
an international firm.
D. a multinational firm.
a transnational firm.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Text term definition—multinational firm.

A multidomestic marketing strategy refers to
the strategy of transnational firms that employ the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ.
the strategy used by firms that use the same product variations, brand names, and advertising programs for every country in which they do business.
C. the strategy used by firms that have as many different product variations, brand names, and advertising programs as countries in which they do business.
the strategy of seeking out already established firms in other nations and selling them the rights to manufacture and distribute the firm’s products.
the strategy currently used by most U.S. domestic firms that when entering a new international market, these firms offer only those products that require the least amount of product adaptation.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Key term definition—multidomestic marketing strategy.

Companies that use __________ marketing strategy have as many different product variations, brand names, and advertising programs as countries in which they do business.
an ethnocentric
B. a multidomestic
a transnational
a global
an international

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Firms that have as many different product variations, brand names, and advertising programs as countries in which they do business use a multidomestic marketing strategy.

Lever Europe, a division of Unilever, markets its Snuggle fabric softener in the United States. But in 10 European countries, it uses seven brand names, including Kuschelweich in German, Coccolino in Italy, and Mimosin in France. These products also have different packages, different advertising programs, and occasionally different formulas. From this information, we can assume that Lever Europe uses __________ marketing strategy.
an ethnocentric
a transnational
a global
an international
E. a multidomestic

AACSB: Knowledge Application

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Blooms: Apply

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 3 Hard

Topic: Marketing Globalization

Feedback: Firms that have as many different product variations, brand names, and advertising programs as countries in which they do business use a multidomestic marketing strategy.

U.S. appliance manufacturers find that different customs about shopping must be used to determine local product design. For instance, people in Northern Europe shop only once a week, so they need bigger refrigerators than Southern Europeans, who shop daily. Furthermore, Northern Europeans insist that freezers should be on the top just as firmly as Southern Europeans want them on the bottom. Based on this, U.S. appliance manufacturers would more likely be successful if they used __________ marketing strategy.
a global
B. a multidomestic
a transnational
a meganational
an international

AACSB: Knowledge Application

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Blooms: Apply

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 3 Hard

Topic: Marketing Globalization

Feedback: A multinational firm views the world as consisting of unique parts and markets to each part differently. Multinationals use a multidomestic marketing strategy, which means that they have as many different product variations, brand names, and advertising programs as countries in which they do business.

Disney employed __________ marketing strategy for its Disneyland Paris, particularly when it came to the eateries in the park. These restaurants featured recipes that were revised for local tastes, alcoholic beverages (not permitted in previous parks), and increased outdoor seating.
a global
a transnational
C. a multidomestic
a meganational
an international

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 3 Hard

Topic: Marketing Globalization

Feedback: Companies that use a multidomestic marketing strategy have as many different product variations as countries in which they do business.

A(n) __________ firm views the world as one market and emphasizes cultural similarities across countries or universal consumer needs and wants more than differences.
transcontinental
multidomestic
international
multinational
E. transnational

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Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Text term definition—transnational firm.

The strategy transnational firms employ that standardizes marketing activities when there are cultural similarities and adapts them when cultures differ is referred to as
A. a global marketing strategy.
an integrated marketing strategy.
a transnational marketing strategy.
a meganational marketing strategy.
an international marketing strategy.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Key term definition—global marketing strategy.

A global marketing strategy refers to
the strategy used by multinational firms that have as many different product variations, brand names, and advertising programs as countries in which they do business.
the strategy of transnational firms not to employ adaptive marketing techniques when there are cultural differences, but to redirect their marketing resources toward customer education.
C. the strategy of transnational firms that employ the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ.
the global strategy of seeking out already established firms in other nations and selling them the rights to manufacture and distribute the firm’s products through a host nation’s local businesses.
the strategy currently used by most U.S. domestic firms that when entering a new international market, these firms offer only those products that require the least amount of product adaptation.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Key term definition—global marketing strategy.

Which of the following types of firms would be most likely to use a global marketing strategy?
multidomestic
multinational
multicountry
D. transnational
transborder

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Marketing Globalization

Feedback: Transnational marketers employ a global marketing strategy—the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ.

A brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs is referred to as
a transnational brand.
an international brand.
a multinational brand.
D. a global brand.
a meganational brand.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Key term definition—global brand.

A global brand refers to
two or more domestic products that coincidentally share the same brand name but represent two completely unrelated products.
two or more international products that coincidentally share the same brand name but represent two completely unrelated products.
C. a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs.
a brand that is essentially the same but that has had minor adaptations made to meet the more specific needs of different nations.
a brand marketed under different names in multiple countries with similar and centrally coordinated marketing programs.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Key term definition—global brand.

Which of the following statements about global brands is most accurate?
A. A global brand has centrally coordinated marketing programs.
A global brand is marketed under different names but uses identical ads for all markets.
A global brand alters the product formulation or service for each geographical region.
A global brand delivers multiple benefits based on the GDP of each country.
A global brand is a collaborative effort among several different national firms.

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Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Marketing Globalization

Feedback: A global brand is a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs. Global brands have the same product formulation or service concept, deliver the same benefits to consumers, and use consistent advertising across multiple countries and cultures. Global brands are sometimes tailored to specific cultures or countries.

A global brand is a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs. However, adaptations of global brands are made
only if required by government regulations in the host market.
only in its initial introduction into a market and only until the brand is recognized.
by domestic competitors causing brand confusion.
D. only when necessary to better connect the brand to consumers in different markets.
when there is a serious drop in market share.

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Marketing Globalization

Consumer groups living in many countries or regions of the world that have similar needs or seek similar features and benefits from products or services are referred to as
transnational consumers.
meganational consumers.
international consumers.
multinational consumers.
E. global consumers.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Key term definition—global consumers.

Global consumers refers to
all potential consumers for any and all products or services regardless of cultural, ethnic, or national origins.
customers within a nation who consider the entire world a single marketplace.
C. consumer groups living in many countries or regions of the world who have similar needs or seek similar features and benefits from products or services.
consumer groups living in many countries or regions of the world that have similar needs but seek customized features and benefits from products or services that reflect their individual cultures.
multinational organizations whose products incorporate raw materials, assembly, and distribution contributions from multiple nations before they are marketed.

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Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Key term definition—global consumers.

Around the world, middle-class, youth, and elite markets that consume similar assortments of products and services, regardless of geographic location, are referred to as
transnational consumers.
meganational consumers.
international consumers.
multinational consumers.
E. global consumers.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Marketing Globalization

Feedback: Global consumers consist of consumer groups living in many countries or regions of the world who have similar needs or seek similar features and benefits from products or services. Evidence suggests the presence of a global middle-income class, a youth market, and an elite segment, each consuming or using a common assortment of products and services, regardless of geographic location.

Thirteen- to nineteen-year-olds in Europe, North and South America, and the industrialized nations of Asia
A. are more similar than different regarding their purchase behaviors.
are becoming more similar, but still differ significantly in terms of fashion and design.
are rebelling against the Americanization of fashion and culture.
have very different tastes in fashions and music.
are more influenced by Asian culture than European culture.

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Marketing Globalization

Feedback: The similarity among teens in Europe, North and South America, and the industrialized nations of Asia is greater than their differences. A global study of middle-class teenagers’ rooms in 25 industrialized countries indicated it was difficult, if not impossible, to tell where in the world the rooms are located. See Marketing Matters in the text.

The appreciation of fashion and music, and a desire for novelty and trendier designs and images
are preferences found more in American teenagers than in most other cultures around the world.
actually begin at age 10, but begin to decline significantly as students enter high school.
ironically are found more frequently among teenagers who cannot afford to make those purchases than for those who can.
D. are preferences of teenagers around the world regardless of where they live.
are often established early among European teens and they typically linger well into adulthood.

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Marketing Globalization

Feedback: Teenagers around the world appreciate fashion and music, and desire novelty and trendier designs and images. See Marketing Matters in the text.

Based on a study of 6,500 teens in 26 countries, when asked what country had the most influence on their attitudes and purchase behavior, 54 percent of teens from the United States, 87 percent of those from Latin America, 80 percent of the Europeans, and 80 percent of those from Asia named
A. the United States.
Japan.
the United Kingdom.
France.
China.

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Marketing Globalization

Feedback: The study showed that the United States was the country that had the most influence on these teens. See Marketing Matters in the text.

The use of __________ as a tool for exchanging goods, services, and information on a global scale is one of the trends that has affected world trade.
buying centers
B. Internet technology
language translators
tariff and quota policies
multinational marketing strategies

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Marketing Globalization

Feedback: The use of Internet technology as a tool for exchanging goods, services, and information on a global scale is the fourth trend affecting world trade.

Which of the following statements about the emergence of a networked global marketspace is most accurate?
Marketspace creates an unfair competitive environment for emerging nations.
More business-to-consumer marketing is done on the Internet than business-to-business marketing.
The most active participants in the networked global marketspace are companies in developing nations.
All business in the networked global marketspace is conducted in English.
E. A networked global marketspace enables the exchange of products, services, and information from sellers anywhere to buyers anywhere at any time and at a lower cost.

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Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Marketing Globalization

Feedback: The promise of a networked global marketspace is that it enables the exchange of products, services, and information from sellers anywhere to buyers anywhere at any time and at a lower cost.

The clandestine collection of trade secrets or proprietary information about a company’s competitors is referred to as
trade piracy.
transnational fraud.
C. economic espionage.
competitive duplicity.
transnational intelligence.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Key term definition—economic espionage.

Economic espionage is the clandestine collection of trade secrets or
government economic information.
industrial intelligence.
government weapons information.
banking lists.
E. proprietary information about competitors.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Key term definition—economic espionage.

The estimated cost of economic espionage to firms in the United States is estimated to be
$10 billion per year.
B. $250 billion per year.
$750 billion per year.
$900 billion per year.
exceeding $1 trillion per year.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: It is estimated that economic espionage costs U.S. firms $250 billion per year.

The Economic Espionage Act
allows the World Court in The Hague to adjudicate trade disputes on behalf of UN members and requires the home country to impose any penalties.
imposes a personal fine on a convicted U.S. citizen of up to $10 million.
targets espionage activities that are commonplace in any industry that holds governmental contracts.
D. makes the theft of trade secrets by foreign entities a federal crime in the United States.
is well-intended in theory, but is virtually impossible to enforce.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: Text term definition—Economic Espionage Act (1996).

The prescribed penalty for agents of foreign governments found guilty of economic espionage is
up to 5 years in prison and fines up to $100,000.
expulsion from the WTO (World Trade Organization).
C. 25 years in prison and a $10 million fine.
permanent expulsion from the United States.
30 years in prison and fines proportional to the damage caused.

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Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Feedback: The Economic Espionage Act (1996) makes the theft of trade secrets by foreign entities a federal crime in the United States. This act prescribes prison sentences of up to 15 years and fines up to $500,000 for individuals. Agents of foreign governments found guilty of economic espionage face a 25-year prison sentence and a $10 million fine.

Cross-cultural analysis refers to the study of
the subgroups within the larger, or national, culture with unique values, ideas, and attitudes.
the set of values, ideas, and attitudes that are learned and shared among the consumers of a country.
C. the similarities and differences among consumers in two or more nations or societies.
the buying behaviors within a given nation to identify similarities and differences among individuals.
the buying behaviors within a given nation that link a person’s actions to the cultural group with which he or she identifies most.

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Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—cross-cultural analysis.

The study of similarities and differences among consumers in two or more nations or societies is referred to as
market synthesis.
B. cross-cultural analysis.
international sociographics.
transnational anthropology.
multicultural ethnocentrism.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—cross-cultural analysis.

For the marketer, a thorough __________ involves an understanding of and an appreciation for the values, customs, symbols, and language of other societies.
market synthesis
international sociographic study
anthropological examination
D. cross-cultural analysis
ethnocentrism assessment

AACSB: Diversity

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Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Marketers must be sensitive to the cultural underpinnings of different societies if they are to initiate and consummate mutually beneficial exchange relationships with global consumers. A necessary step in this process is cross-cultural analysis, which involves the study of similarities and differences among consumers in two or more nations or societies. A thorough cross-cultural analysis involves an understanding of the values, customs, symbols, and language of other societies.

A thorough cross-cultural analysis involves an understanding of and an appreciation of all of the following except which?
A. economics
symbols
values
languages
customs

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: A thorough cross-cultural analysis involves an understanding of and an appreciation for the values, customs, symbols, and language of other societies.

Personally or socially preferable modes of conduct or states of existence that tend to persist over time are referred to as
customs.
ethics.
C.
culture.
beliefs.

AACSB: Diversity

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Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—values.

Values refer to
personally or socially held core beliefs that are consistent within a given culture.
the beliefs that dictate a person’s behavior, which are often derived from a religious code of conduct.
C. personally or socially preferable modes of conduct or states of existence that tend to persist over time.
the innate sense of what a person considers to be right or wrong in terms of his or her own conduct when dealing with others.
those personality traits regarding honesty and integrity that have been passed down from generation to generation.

AACSB: Diversity

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Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—values.

The reverence that Japan shows toward its elderly is an example of that nation’s
A.
beliefs.
customs.
religion.
cultural diversity.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: A country’s values are personally or socially preferable modes of conduct or states of existence that are enduring, such as the behavior of one generation toward another in Japan.

Which of the following examples best demonstrates a company’s appreciation of another country’s values?
American companies in Germany encourage the use of all types of credit cards.
In Brazil, American companies are extremely careful to keep to a strict agenda and time schedule, even though an informal structure is preferred.
Bath products are advertised by portraying intimate scenes between husbands and wives in countries where personal privacy is important.
D. McDonald’s restaurants in India sell the Maharaja Mac rather than beef products.
Vogue Italia published a feature with a model wearing “slave earrings,” which it said were “worn by women of color during the slave trade.”

AACSB: Knowledge Application

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Blooms: Apply

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: In terms of cultural values, Germans are not comfortable with using unnecessary credit, many countries are more comfortable with a more personalized informal structure, and some cultures are more considerate of personal privacy. Since 85 percent of the Indian population considers the cow to be sacred, McDonald’s is showing consideration for the country’s values by not selling beef in India.

Which of the following examples best demonstrates a company’s appreciation for another country’s values?
A German company allows customers to make large purchases using layaway (paying small amounts until the item is paid for and delivered).
In Brazil, an appliance maintenance firm schedules service appointments allowing only 15 minutes of leeway for missed calls or no shows.
In Japan, a spa owner created special exercise classes for husbands and wives.
In India, a popular hamburger chain separated its dining area by color for people who wanted to eat beef and those who did not.
E. Calvin Klein reduced the number of outdoor advertising placements showing scantily clad models in countries with predominantly Muslim populations.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: Modesty is an important value within Muslim cultures, so Calvin Klein’s efforts are an example of being sensitive to that value.

Almost all countries have some division of social class (upper, middle, and lower). The determining factor for the assignment to one of these classes may differ from country to country. For example, in the United States, the primary determining factor is occupation; in India, it is birthright; in China, it is geographical region and education; and in Singapore, it is income. These differences are best explained in terms of a country’s
semiotics.
legal system.
ethnocentricity.
religion.
E.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: A country’s values are personally or socially preferable modes of conduct or states of existence that tend to persist over time.

What is considered normal and expected about the way people do things in a specific country is referred to as
morals.
ethics.
values.
D.
beliefs.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—customs.

Customs refer to
A. what is considered normal and expected about the way people do things in a specific country.
those actions or activities within a community that are unique or distinctly different from any other group.
actions or behaviors that are repeated over time and carry a specific meaning to a unique group, nationality, or ethnicity.
traditions among a group of people, a nation, or ethnicity that affect their purchase behaviors.
what would be considered unusual or unexpected, and even unacceptable, about the way people do things in a specific country.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—customs.

In Japan, women give men chocolates on Valentine’s Day. This is an example of
A. a custom.
a value.
a demographic pattern.
a belief.
an idiosyncrasy.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Customs are the norms and expectations about the way people do things in a specific country. Clearly customs can vary significantly from country to country. Consider that Japanese women give Japanese men chocolates on Valentine’s Day.

3M Company executives were perplexed when the company’s Scotch-Brite floor-cleaning product initially produced lukewarm sales in the Philippines. A Filipino employee explained that consumers generally clean floors by pushing coconut shells around with their feet. 3M changed the shape of the pad to a foot and sales soared. 3M changed its product in response to a Filipino
A.
value.
demographic pattern.
belief.
idiosyncrasy.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: Customs are the norms and expectations about the way people do things in a specific country. Clearly customs can vary significantly from country to country. Since consumers in the Philippines clean floors with their feet, 3M adapted the shape of its floor-cleaning product to the custom.

KFC in Japan sells tempura crispy strips. In northern England, it stresses gravy and potatoes. In Thailand, it offers fresh rice. In Holland, instead of potatoes, KFC offers customers a potato and onion croquette. In France, KFC sells pastries alongside its chicken. These examples illustrate that KFC exhibits an appreciation for the __________ of other societies.
demographics
symbols
sensitivities
D. customs
values

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: Customs are what are considered normal and expected about the way people do things (including what they eat) in a specific country. KFC serves food that suits the customary tastes of its target markets in each of the countries listed.

Which of the following statements about bribery is most accurate?
Bribes, kickbacks, and payoffs offered to entice someone to commit an illegal or improper act are deemed corrupt in some cultures but not in others.
The world’s major exporting nations have agreed to treat bribery of foreign government officials as a violation of trade agreements.
Bribes paid to foreign companies are in some cases a tax-deductible expense in the United States.
It is a crime for U.S. corporations to bribe an official of a foreign government or political party unless preapproved by the Federal Trade Commission.
E. It is illegal for a U.S. corporation to bribe an official of a foreign government or political party to obtain or retain business in a foreign country.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Bribes, kickbacks, and payoffs offered to entice someone to commit an illegal or improper act on behalf of the giver for economic gain are considered corrupt in any culture. The prevalence of it globally has led to an agreement among the world’s major exporting nations to make bribery of foreign government officials a criminal offense. It is illegal for a U.S. corporation to bribe an official of a foreign government or political party to obtain or retain business in a foreign country.

The Foreign Corrupt Practices Act
A. makes it a crime for U.S. corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country.
has different levels of punishment based upon the wealth of the host nation.
regulates only the behavior of U.S. businesses conducting business within the United States.
makes the theft of trade secrets by foreign entities a federal crime in the United States.
is a unilateral agreement the United States made with several developing nations.

AACSB: Diversity

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Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—Foreign Corrupt Practices Act (1997).

The law, as amended by the International Anti-Dumping and Fair Competition Act, that makes it a crime for U.S. corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country, is referred to as the
International Law for Egalitarian Ethics Act.
International Fair Practices Act.
Law of International Equity Act.
International Law of Ethical Business Practices Act.
E. Foreign Corrupt Practices Act.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—Foreign Corrupt Practices Act (1997).

Cultural symbols refer to
ideas that can be protected by international copyrights.
ideas that cannot be expressed by words or characters.
things that represent values that exist solely within a nation.
D. things that represent ideas and concepts.
words that represent pictures or designs.

AACSB: Diversity

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Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—cultural symbols.

Because different cultures often attach different meanings to things, these representations of ideas are referred to as
accepted symbols.
B. cultural symbols.
symbolic concepts.
ideological representations.
cultural representations.

AACSB: Diversity

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Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—cultural symbols.

A field of study that examines the correspondence between symbols and their role in the assignment of meaning for people is referred to as
back translation.
symbiotics.
C.
symbolic linguistics.
cross-cultural analysis.

AACSB: Diversity

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Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Text term definition—semiotics.

Semiotics refers to
a field of study in marketing linguistics that identifies the connotative meanings behind words in order to create the most effective product or brand names.
a field of study in marketing linguistics that identifies the connotative meanings behind words in order to create the most effective advertising messages.
C. a field of study that examines the correspondence between symbols and their role in the assignment of meaning for people.
a field of linguistics that translates words into internationally recognized symbols to help companies carry their product message across international boundaries.
the practice where a translated word or phrase is retranslated into the original language by a different interpreter to catch errors.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Text term definition—semiotics.

A researcher studying the fact that in some nations black is a sign of mourning while in others white is a sign of mourning would be studying
A.
semantics.
semaphorics.
cultural symbolism.
cultural linguistics.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: So important is the role of symbols that a field of study, called semiotics, has emerged, which examines the correspondence between symbols and their role in the assignment of meaning for people. The colors black and white are symbols with different meanings in different cultures.

By skillfully using __________, global marketers can tie positive meanings to their products, services, and brands to enhance their attractiveness to consumers.
A. cultural symbols
visual icons
trademarks
brand names
ethnic emblems

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Cultural symbols are things that represent ideas and concepts. By cleverly using cultural symbols, global marketers can tie positive symbolism to their products, services, and brands to enhance their attractiveness to consumers.

Tiffany & Co. knows that Japanese are superstitious about the number four. As a result, Tiffany sells its fine glassware and china in sets of five, not four, in Japan. Tiffany uses its knowledge of __________ to avoid connecting its products with the number four.
trademarks
visual icons
C. cultural symbols
brand names
ethnic emblems

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: The Japanese are superstitious about the number four, so to avoid a connection to this cultural symbol, Tiffany sells its products in sets of five, not four.

The Parthenon evokes strong feelings from consumers in Greece and is referred to as the “holy rock.” Coca-Cola marketers did not expect that this __________, when used in a marketing campaign that replaced the columns with Coke bottles, would arouse such an angry response in that country.
A. cultural symbol
anthropomorphic code
back translation
semantic representation
civil analysis

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Cultural symbols are things that represent ideas and concepts in a specific culture. Symbols and symbolism play an important role in cross-cultural analysis because different cultures attach different meanings to things.

Canada has two official languages, which are
English and Japanese.
English and Spanish.
C. English and French.
English and Italian.
English and German.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Canada has two official languages—English and French.

Even though there are hundreds of different languages and dialects, the three major languages used in global diplomacy and commerce are
English, Japanese, and Chinese.
B. English, French, and Spanish.
Japanese, Spanish, and French.
Japanese, Spanish, and English.
Spanish, English, and Chinese.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: English, French, and Spanish are the principal languages used in global diplomacy and commerce. However, the best language in which to communicate with consumers is their own.

The practice where a translated word or phrase is retranslated into the original language by a different interpreter to catch errors is referred to as
locution.
heuristics.
transliteration.
D. back translation.
cross-cultural paraphrasing.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Key term definition—back translation.

If you were responsible for marketing communications at a company that manufactures office supplies and had to provide product literature to be distributed in France, you would be wise to use __________, whereby you have someone translate your literature from American English into French, and then have a second fluent French speaker translate the French into American English.
back talk
B. back translation
double talk
double entendre
double indemnity

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: Back translation is retranslating a word or phrase into the original language by a different interpreter to catch errors. By having the literature translated into French and then back into English, you will be sure the literature conveys the intended meaning.

A Tokyo shopkeeper would have been wise to use __________ to verify the accuracy of the new sign in English he purchased for his dry cleaning business. The sign read, “Drop your pants here for best results,” which he did not know had another suggestive meaning to native speakers.
cultural symbolism
dialect transformation
semantic analysis
linguistic exchange
E. back translation

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: Back translation is retranslating a word or phrase into the original language by a different interpreter to catch errors.

A New York car wash owner wanted to open a car wash in Quebec, Canada. He hired a U.S. translator to create signage for the new venture and to design some simple advertising. It was not until the business was opened that he realized he should have used __________. His French signs actually said “car bath” instead of “car wash.”
Esperanto
B. back translation
semiotics
semantic symbolism
linguistic exchange

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: Back translation is retranslating a word or phrase into the original language by a different interpreter to catch errors.

Kit Kat bars are marketed by Nestlé worldwide. Kit Kat is pronounced “kitto katsu” in Japanese, which roughly translates to “surely win.” Japanese teens eat Kit Kat bars for good luck, particularly when taking crucial school exams. This positive result might have been missed had the company used __________ and felt it necessary to use a name without an additional meaning.
intentional transliteration
semantic symbolism
C. back translation
semantic analysis
linguistic exchange

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: Experienced global marketers use back translation, in which a translated word or phrase is retranslated into the original language by a different interpreter to catch errors. Nevertheless, unintended translations can produce favorable results. Consider Kit Kat bars marketed by Nestlé worldwide. Kit Kat is pronounced “kitto katsu” in Japanese, which roughly translates to “surely win.”

Since global marketing is affected by economic considerations, a scan of the global marketplace should include which of the following factors?
an analysis of cultural diversity within the country under consideration
regulatory constraints regarding contracts, mergers, and partnerships
C. measurement of consumer income in different countries
an assessment of language differences including dialect variation
political and ideological differences between the countries involved

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: A scan of the global marketplace should include (1) an assessment of the economic infrastructure in these countries, (2) measurement of consumer income in different countries, and (3) recognition of a country’s currency exchange rates.

A country’s communications, transportation, financial, and distribution systems are considered to be its
capital improvements.
fixed-asset base.
C. economic infrastructure.
geopolitical wealth.
asset wealth.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Text term definition—economic infrastructure.

Economic infrastructure refers to
a nation’s military-industrial complex.
a country’s governmental services.
the people and the wealth of a nation.
D. a country’s communications, transportation, financial, and distribution systems.
all of a country’s natural resources, whether or not they are currently being exploited.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Text term definition—economic infrastructure.

Two-thirds of the commercial transactions in Russia involve nonmonetary forms of payment due to limits in formal operating procedures among financial institutions and even limits on the notion of private property there. These would best be described as constraints in the country’s
capital infrastructure.
political infrastructure.
C. economic infrastructure.
geopolitical system.
financial exchange system.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Communications, transportation systems, financial services, as well as distribution systems contribute to a nation’s economic infrastructure.

In Latvia, only one six-lane highway exists, connecting Riga, its capital, with Moscow. Otherwise, the roads are two lanes and many are made of cobblestones or bricks. This limits the speed with which deliveries can be made and requires that delivery trucks be quite small. The road network in Latvia is an example of problems with a country’s
capital improvements.
fixed-asset base.
geopolitical wealth.
asset wealth.
E. economic infrastructure.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: Communications, transportation systems, financial services, as well as distribution systems contribute to a nation’s economic infrastructure.

A global marketer selling consumer products should consider what the __________ is among a country’s consumers and how income is distributed to determine a nation’s purchasing power to understand the nation’s purchasing power.
buying capacity
currency exchange risk
tariff
D. per capita income
cost of living

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: A global marketer selling consumer products and services must consider what the average per capita or household income is among a country’s consumers and how the income is distributed to determine a nation’s purchasing power.

A country’s income distribution is important because it gives a more reliable picture of a country’s ________ than just per capita income alone.
consumer tastes
taxable income
C. purchasing power
discretionary income
cost of living

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: A country’s income distribution is important because it gives a more reliable picture of a country’s purchasing power.

Foreign countries with very low per capita incomes may still be attractive markets for some goods. To get a more reliable picture of a country’s purchasing power, a country’s __________ must also be considered.
total income
total area
geographical location
culture
E. income distribution

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: A country’s income distribution is important because it gives a more reliable picture of a country’s purchasing power. Generally, as the proportion of middle-income households in a country increases, the greater a nation’s purchasing capability tends to be.

Which of the following is an important indicator of a nation’s increasing purchasing power?
A. a growing proportion of middle-income households
declining per capita income
stable household incomes
stable incomes for the wealthiest consumers
a large gap developing or persisting between top incomes and lowest incomes

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Generally, as the proportion of middle-income households in a country increases, the greater a nation’s purchasing capability tends to be.

Generally, as the proportion of middle-income households in a country increases, the nation’s purchasing power
levels off.
decreases.
C.
becomes less of an economic priority.
becomes progressively unstable.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Generally, as the proportion of middle-income households in a country increases, the greater a nation’s purchasing capability tends to be.

The price of one country’s currency expressed in terms of another country’s currency is referred to as the
balance of price.
B. currency exchange rate.
money conversion factor.
balance of payments.
transfer payment.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—currency exchange rate.

Currency exchange rate refers to
the unit equivalency of all international currency.
the ratio of a nation’s basic unit of currency relative to the price of silver.
the ratio of a nation’s basic unit of currency relative to the price of gold.
D. the price of one country’s currency expressed in terms of another country’s currency.
the unit of wealth (gold, oil, diamonds, etc.) upon which a nation bases its national currency.

AACSB: Diversity

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Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Key term definition—currency exchange rate.

Fluctuations in the __________ among the world’s currencies have direct impact on the sales and profits made by global companies.
production costs
transportation
reciprocity
economic infrastructure
E. exchange rates

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: A currency exchange rate is the price of one country’s currency expressed in terms of another country’s currency, such as the U.S. dollar expressed in Japanese yen, euros, or Swiss francs. Exchange rate fluctuations affect the sales and profits made by global companies.

When foreign currencies can buy more U.S. dollars,
U.S. products are more expensive to foreign customers.
U.S. products are more expensive to U.S. customers.
C.S. products are less expensive to foreign customers.
economists consider it an indicator of an impending long-term economic upturn.
American consumers will buy in large quantities and stockpile in fear of an impending economic crisis.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Exchange rate fluctuations affect the sales and profits made by global companies. When foreign currencies can buy more U.S. dollars, U.S. products are less expensive for the foreign customer.

Which of the following statements concerning currency exchange rates is most accurate?
A. Fluctuations in exchange rates among the world’s currencies are of critical importance in global marketing.
Fluctuations in exchange rates among the world’s currencies occur, but multinational companies are insulated from the effects because of direct investment.
Exchange rate fluctuations are relatively rare, but when they occur, their effects are minimal.
Exchange rate fluctuations are now almost nonexistent due in great part to the stability of the euro.
Exchange rate fluctuations may affect the financial sector but rarely reach the consumer.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Fluctuations in exchange rates among the world’s currencies are of critical importance in global marketing. Such fluctuations affect everyone, from international tourists to global companies.

Chrysler Corp. wanted to sell its Jeeps in Japan. The car was priced in U.S. dollars at about $19,000, but when it reached the Japanese car showrooms, its price was over 3,100,000 Japanese yen, and the Japanese could not afford to buy it. Its price was set without regard for the
balance of price.
B. currency exchange rate.
reciprocity price.
balance of payments.
balance of trade.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

Feedback: A currency exchange rate is the price of one country’s currency expressed in terms of another country’s currency.

Assessing the political and regulatory climate for marketing in a country or region of the world means not only identifying the current environment but also determining how
it conducts its macrofinancing.
its citizens budget their money.
C. long a favorable or unfavorable climate will last.
the country’s stocks are performing on the stock exchange.
its population ranks in size compared to other countries.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Assessing the political and regulatory climate for marketing in a country or region of the world means not only identifying the current climate but also determining how long a favorable or unfavorable climate will last.

An assessment of a country’s or region’s political-regulatory climate includes an analysis of its political stability and
economic infrastructure.
stock market performance.
C. trade regulations.
cultural diversity.
currency exchange rates.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: An assessment of a country’s or region’s political-regulatory climate includes an analysis of its political stability and trade regulations.

Trade among nations or regions depends on political stability. In recent times, billions of dollars have been lost in __________ and __________ as a result of internal political strife, terrorism, and war.
Russia; Poland
France; Spain
China; Japan
D. the Middle East; Africa
Germany; the United Kingdom

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 1 Easy

Topic: Global Environmental Forces

Feedback: Trade among nations or regions depends on political stability. Billions of dollars in trade have been lost in the Middle East and Africa as a result of internal political strife, terrorism, and war. Losses such as these encourage careful selection of politically stable countries and regions of the world for trade.

The PRS Group maintains a website that can be used to determine
changing demographic and psychographic data for each country in the registry.
B. a country’s political risk ratings that are useful in comparing global marketing locations.
the tariffs of each country and their relative effect on product and services sales.
the rankings of American products relative to domestic equivalents in each country.
changing social trends within different segments of the economy.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Marketing managers monitor political stability using a variety of measures and often track country risk ratings supplied by agencies such as the PRS Group, Inc. PRS Group maintains multiple databases of country-specific information and projections, including country political risk ratings for 100 countries.

In addition to about 11,000 trade regulations that specify how goods are to be made and marketed, Japanese car safety rules effectively require all automobile replacement parts to be Japanese. Rules like these often function as
economic infrastructure.
B. trade barriers.
universal codes.
binding requirements.
targets for bribery.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Feedback: Countries have a variety of rules that govern business practices within their borders. These rules often serve as trade barriers.

A firm’s profit potential and control over marketing activities __________ as it moves from exporting to direct investment as a global market entry strategy.
becomes more stable
B. increases
levels off
decreases
becomes more unpredictable

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: A firm’s profit potential and control over marketing activities increases as it moves from exporting to direct investment as a global market entry strategy. But so does the firm’s financial commitment, risk, marketing control, and profit potential. Firms often engage in exporting, licensing, and joint ventures before pursuing a direct investment strategy. See Figure 6-4.

Once a company has decided to enter the global marketplace, it must select a means of market entry. One of the four general options is
A.
accreditation.
countertrading.
cooperative.
franchising.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Four general options exist: (1) exporting, (2) licensing, (3) joint venture, and (4) direct investment. See Figure 6-4.

Once a company has decided to enter the global marketplace, it must select a means of market entry. One of the four general options is
franchising.
B. joint venture.
cooperative.
multiparty initiative.
mutual investment.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Four general options exist: (1) exporting, (2) licensing, (3) joint venture, and (4) direct investment. See Figure 6-4.

A global market entry strategy in which a company produces goods in one country and sells them in another country is referred to as
A.
direct investment.
countertrade.
licensing.
multinational marketing.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Key term definition—exporting.

Exporting refers to a global market entry strategy
in which a company will sell its products in international markets but not in its own domestic market.
B. in which a company produces goods in one country and sells them in another country.
in which a company will manufacture its product in several countries at the same time using different brand names and slight product modifications.
in which a company will manufacture products specifically designed for nondomestic markets, but will sell those products to distributors that take title and resell the products to different companies around the world.
whereby a product is made in one country, assembled in a second country, and ultimately marketed to a third country.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Key term definition—exporting.

What global market entry strategy allows a company to make the least number of changes in terms of its product, its organization, and even its corporate goals?
A. exporting
licensing
joint venture
direct investment
franchising

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Exporting allows a company to make the least number of changes in terms of its product, its organization, and even its corporate goals.

Indirect exporting refers to
offering the right to a trademark, patent, trade secret, or similarly valued item of intellectual property in return for a royalty or fee.
selling a firm’s domestically produced products in a foreign country without interference by that government.
contracting with a foreign firm to manufacture products according to stated specifications.
avoiding the use of additional parties when a firm sells its domestically produced products in another country.
E. selling a firm’s domestically produced products in a foreign country through an intermediary.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Text term definition—indirect exporting.

When a firm sells its domestically produced products in a foreign country through an intermediary, it is referred to as
direct exporting.
B. indirect exporting.
licensing.
franchising.
foreign assembly.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Text term definition—indirect exporting.

In indirect exporting, a firm sells its domestically produced products in a foreign country
in violation of a quota.
without paying import tariffs.
without paying export duties.
through a joint venture.
E. through an intermediary.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Text term definition—indirect exporting.

What type of exporting has the least amount of commitment and risk but will probably return the least profit?
direct
B. indirect
licensing
joint
unilateral

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Feedback: Indirect exporting has the least amount of commitment and risk but will probably return the least profit.

A small Canadian winery located in British Columbia has developed a superior wine. It has no overseas contacts but wants to get its wine on the shelves in selected Asian and European markets where growth has been substantial in the past two years. What type of exporting option would best suit this company?
direct exporting
licensing
C. indirect exporting
joint venture
cooperative partnership

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 3 Hard

Topic: Market Entry Strategies

Feedback: Indirect exporting is ideal for a company that has no overseas contacts but wants to market abroad.

The U.S. motorcycle manufacturer Harley-Davidson uses intermediaries to sell its motorcycles in numerous nations outside the United States. Harley-Davidson uses
direct exporting.
licensing.
contract manufacturing.
D. indirect exporting.
foreign assembly.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 3 Hard

Topic: Market Entry Strategies

Feedback: Indirect exporting occurs when a firm sells its domestically produced goods in a foreign country through an intermediary.

U.S.-based Fran Wilson Creative Cosmetics attributes its success in Japan to a top-quality product, effective advertising, and a novel __________ strategy, in which it uses Japanese distributors to reach beauty salons rather than department stores.
joint venture
licensing
franchising
D. indirect export
direct investment

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Feedback: Fran Wilson Creative Cosmetics does not sell to department stores. Rather, the company sells its Moodmatcher lipstick through a network of Japanese distributors that reach Japan’s 40,000 beauty salons—its novel indirect export strategy.

Direct exporting refers to
offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual property in return for a royalty or fee.
contracting with a foreign firm to manufacture products according to certain specifications.
a foreign country and a local firm investing together to create a local business.
using additional parties when a firm sells its domestically produced goods in another country.
E. a firm selling its domestically produced goods in a foreign country without intermediaries.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Text term definition—direct exporting.

What global market entry strategy involves slightly more risk than indirect exporting for a company but also opens the door to increased profits?
A. direct exporting
licensing
cooperative
joint venture
direct investment

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Direct exporting involves slightly more risk than indirect exporting for a company but also more opportunity for profit.

Most companies become involved in direct exporting when
foreign governments believe that they will benefit the most from allowing the entry of direct exports.
emerging markets in foreign countries become economically viable.
C. they believe their volume of sales will be sufficiently large and easy to obtain so that they do not require intermediaries.
the domestic market becomes saturated with competing products and services.
evolving technologies in foreign countries come online.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Feedback: Most companies become involved in direct exporting when they believe their volume of sales will be sufficiently large and easy to obtain so that they do not require intermediaries.

The prominent global market entry strategy among small- and medium-sized companies is
A. direct exporting.
direct franchising.
licensing.
joint venture.
direct investment.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Direct exporting is the prominent global market entry strategy among small- and medium-sized companies. Ninety-seven percent of U.S. firms exporting products have fewer than 500 employees but account for about 33 percent of total U.S. merchandise exports.

When a U.S. airplane manufacturer sells its airplanes to a company in Germany without using intermediaries, it is referred to as
A. direct exporting.
indirect exporting.
licensing.
foreign manufacturing.
foreign assembly.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 3 Hard

Topic: Market Entry Strategies

Feedback: Direct exporting is when a firm sells its domestically produced goods in a foreign country without intermediaries.

Licensing refers to
A. offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual property in return for a royalty or fee.
contracting with a foreign firm to manufacture products according to certain specifications.
when a foreign country and a local firm invest together to create a local business.
having a company handle its own exports directly without intermediaries.
exporting through an intermediary, which often has the knowledge and means to succeed in selling a firm’s product abroad.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Text term definition—licensing.

Offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual property in return for a royalty or fee is referred to as
direct exporting.
indirect exporting.
C.
contract manufacturing.
outside branding.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Text term definition—licensing.

Which of the following is an advantage inherent in the use of licensing?
The licensor retains control of its product.
The licensor is protected from creating a potential competitor.
It provides an exemption from domestic trade regulations.
There is an increase in potential profit compared with direct investment.
E. The licensee gains information that can help it start with a competitive advantage.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Feedback: With licensing, the advantages to the company granting the license are low risk and a capital-free entry into a foreign country. The licensee gains information that allows it to start with a competitive advantage, and the foreign country gains employment by having the product manufactured locally.

All of the following are advantages of licensing except which?
the foreign country gains employment by having the product manufactured locally
the licensee gains information that allows it to start with a competitive advantage
the lower risk to the company granting the license compared to direct investment
D. the licensor’s ability to protect its brand name from harm
the capital-free entry into a foreign country

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Feedback: Under licensing, a company offers the right to a trademark, patent, trade secret, or other similarly valued item of intellectual property in return for a royalty or a fee. The advantages to the company granting the license are low risk and a capital-free entry into a foreign country. The licensee gains information that allows it to start with a competitive advantage, and the foreign country gains employment by having the product manufactured locally. However, should the licensee prove to be a poor choice, the name or reputation of the company may be harmed.

Which of the following is a disadvantage associated with licensing?
The licensee pays lower wages and sells at lower prices.
B. The licensor may create its own competition.
The foreign government dislikes it because it does not increase local employment.
This is the most expensive and risky method for global expansion.
The firm’s brand does not get international exposure.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Feedback: There are some serious drawbacks to licensing. The licensor forgoes control of its product and reduces the potential profits gained from it. In addition, while the relationship lasts, the licensor may be creating its own competition.

Which form of entry into a global market makes a firm the most vulnerable to harm regarding its brand name or reputation?
direct exporting
indirect exporting
C. licensing
direct investment
joint venture

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Feedback: There are some serious drawbacks to licensing. The licensor forgoes control of its product and reduces the potential profits. In addition, it may even be creating its own competition. Finally, should the licensee prove to be a poor choice, the brand name or reputation of the licensor may be harmed.

Select Service Partner (SSP) Group has operations in 30 countries involving food and beverage establishments, often in transit hubs such as airports and railway stations. SSP also operates Starbucks locations in airports in Finland, Sweden, and Norway. SSP pays Starbucks a royalty based on sales, as well as a fee for each store. In these instances, Starbucks is engaged in
direct exporting.
indirect exporting.
contract manufacturing.
foreign assembly.
E.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 3 Hard

Topic: Market Entry Strategies

A form of low-risk and capital-free entry into international markets that includes local manufacturing is referred to as
indirect exporting.
direct ownership.
joint ventures.
D.
direct exporting.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Feedback: The advantages to the company granting the license are low risk and a capital-free entry into a foreign country.

One variation of licensing is referred to as
direct investment.
joint ventures.
direct exporting.
D.
dual adaptation.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: A variation of licensing is franchising. Franchising is one of the fastest growing market entry strategies. More than 75,000 franchises of U.S. firms are located in countries throughout the world.

Yum! Brands, the restaurant division of PepsiCo, has 12,600 KFC restaurants abroad, with more than 3,700 restaurants in China. Many of the latter are locally owned and subject to a contractual agreement that allows the owners to operate the business under the established KFC brand name and according to specific rules. Yum! Brands is engaged in
contract assembly.
a joint venture.
contract manufacturing.
a partnership.
E.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 3 Hard

Topic: Market Entry Strategies

Feedback: Franchising is a type of licensing.

Yogen Früz is a successful chain of frozen yogurt shops originating in Canada. Archeology Investments has an agreement with the Canadian firm that grants rights to its company to open and operate Yogen Früz shops in Dubai, Oman, Qatar, Bahrain, and Kuwait. Yogen Früz is engaged in
dual adaptation.
a joint venture.
direct exporting.
indirect exporting.
E.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 3 Hard

Topic: Market Entry Strategies

Feedback: Franchising is a type of licensing.

Joint venture refers to
offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual property in return for a royalty or fee.
contracting with a foreign firm to manufacture products according to certain specifications.
C. when a foreign company and a local firm invest together to create a local business.
having a company handle its own exports directly, but using intermediaries for importing.
exporting through an intermediary, which often has the knowledge and means to succeed in selling a firm’s products abroad.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Key term definition—joint venture.

A global market entry strategy in which a foreign company and a local firm invest together to create a local business in order to share ownership, control, and profits of the new company is referred to as
licensing.
B. a joint venture.
direct exporting.
contract assembly.
dual adaptation.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Key term definition—joint venture.

PepsiCo and The Strauss Group have together formed an Israeli business to market Frito-Lay’s Cheetos, Ruffles, and Doritos in Israel. This global market entry strategy is known as
franchising.
B. a joint venture.
licensing.
direct investment.
exporting.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Feedback: The Strauss Group has a joint venture with PepsiCo to market Frito-Lay’s Cheetos, Doritos, and other snacks in Israel.

The __________ arrangement between Ericsson, a Swedish telecommunications firm, and CGCT, a French switch maker, enabled them together to beat out AT&T for a $100 million French contract.
franchising
protectionism
C. joint venture
direct investment
exporting

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Feedback: A joint venture between Ericsson, a Swedish telecommunications firm, and CGCT, a French switch maker, enabled them together to beat out AT&T for a $100 million French contract. Ericsson’s money and technology combined with CGCT’s knowledge of the French market made it possible.

A disadvantage of a joint venture arrangement when entering a new global market is that
intermediaries have the potential to harm the brand.
the firm entering the foreign market must pay royalties to the other firm.
one of the companies forgoes control over its product.
D. the two companies may disagree about policies.
this method is likely to provide the fewest subsidies from the host country’s government.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Feedback: The disadvantages arise when the two companies disagree about policies or courses of action for their joint venture or when governmental bureaucracy bogs down the effort.

Starbucks and Tata Global Beverage have together formed Tata Starbucks Private Limited in order to bring Starbucks to India. The global market entry strategy is known as
franchising.
B. a joint venture.
licensing.
direct investment.
exporting.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 3 Hard

Topic: Market Entry Strategies

Feedback: When a foreign company and a local firm invest together to create a local business, it is called a joint venture. These two companies share the ownership, control, and profits of the new company.

Direct investment in international marketing refers to
offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual property in return for a royalty or fee.
contracting with a foreign firm to manufacture products according to certain specifications.
a national market entry strategy that entails a foreign company and a local firm investing together to create a local business.
having a company handle its own exports directly, without intermediaries.
E. a global market entry strategy that entails a domestic firm actually investing in and owning a foreign subsidiary or division.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Text term definition—direct investment.

A global market entry strategy that entails a domestic firm actually investing in and owning a foreign subsidiary or division is referred to as
licensing.
local assembly.
a joint venture.
D. direct investment.
local manufacturing.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Market Entry Strategies

Feedback: Text term definition—direct investment.

When Nestlé actually owns a subsidiary or division in a foreign country, such as its own ice cream manufacturing operation in China, this global market entry strategy is known as __________ and represents the greatest commitment a company can make to international sales.
licensing
local assembly
a joint venture
D. direct investment
local manufacturing

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Feedback: The biggest commitment a company can make when entering the global market is direct investment, which entails a domestic firm actually investing in and owning a foreign subsidiary or division.

Which form of entry into a foreign market requires the greatest commitment?
direct exporting
B. direct investment
joint venture
licensing
indirect exporting

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

One advantage of direct investment when entering a new global market is that
intermediaries have the potential to harm the brand.
the firm entering the foreign market does not have to pay royalties to the government.
the company forgoes control over its product.
D. the firm gains and uses a better understanding of local market conditions.
this method is likely to provide the fewest subsidies from the host country’s government.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

One disadvantage of direct investment when entering a new global market is
intermediaries have the potential to harm the brand.
the firm entering the foreign market must pay royalties to the government.
the company forgoes control over its product.
D. the financial commitments involved.
this method is likely to provide the fewest cost savings relative to the other global market entry options.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Feedback: The advantages to direct investment include cost savings, better understanding of local market conditions, and fewer local restrictions. Firms entering foreign markets using direct investment believe that these advantages outweigh the financial commitments and risks involved. However, sometimes they don’t. U.S.-based Target Stores entered Canada in 2013 only to withdraw in 2015 after sizable operating losses and an investment of $5.7 billion.

Both Honda and Toyota have plants in the United States that use American labor. This illustrates Honda’s and Toyota’s use of
direct exporting.
B. direct investment.
joint venture.
licensing.
indirect exporting.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 3 Hard

Topic: Market Entry Strategies

Feedback: Direct investment entails a domestic firm actually investing in and owning a foreign subsidiary or division. Honda and Toyota are domestic firms (to Japan) that own a foreign (U.S.) subsidiary or division.

Yum! Brands, the parent company of KFC, has pursued an aggressive growth strategy in China. There are now more than 3,700 restaurants in 650 Chinese cities, and KFC has a 40 percent market share of the entire fast-food industry there. Yum! Brands China owns and directly manages about 90 percent of its Chinese stores, so it appears that the company prefers __________ in this market.
licensing
local assembly
a joint venture
D. direct investment
local manufacturing

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 3 Hard

Topic: Market Entry Strategies

Global companies have five strategies for matching products and their promotion efforts to global markets. The strategy of selling virtually the same product in other countries is referred to as
product adaptation.
product invention.
brand adaptation.
D. product extension.
product integration.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 1 Easy

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Text term definition—product extension. See Figure 6-5.

As a general rule, a product __________ strategy seems to work best when the consumer target market for the product is alike across countries and cultures—that is, consumers share the same desires, needs, and use for the product.
adaptation
B. extension
integration
invention
customization

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 2 Medium

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: As a general rule, product extension seems to work best when the consumer market target for the product is alike across countries and cultures—that is, consumers share the same desires, needs, and uses for the product. See Figure 6-5.

Harley-Davidson motorcycles, Gillette razors, and Nike apparel and shoes are being sold in the same form in many countries. This is an example of which type of global marketing product and promotion strategy?
product customization
product adaptation
C. product extension
product integration
product invention

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 2 Medium

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Harley-Davidson, Gillette, and Nike are using a product extension strategy—they are selling virtually the same product in other countries. As a general rule, product extension seems to work best when the consumer market target for the product is alike across countries and cultures—that is, consumers share the same desires, needs, and uses for the product. See Figure 6-5.

GlaxoSmithKline PLC of Great Britain makes Breathe-Right nasal strips. It sells the same product in many countries because customers all over the world will use them in the same way. This is an example of which type of global marketing product and promotion strategy?
product customization
B. product extension
product adaptation
product invention
product integration

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 3 Hard

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: The product strategy of selling virtually the same product in other countries is a product extension strategy. As a general rule, product extension seems to work best when the consumer market target for the product is alike across countries and cultures—that is, consumers share the same desires, needs, and uses for the product. See Figure 6-5.

Global companies have five strategies for matching products and their promotion efforts to global markets. Changing a product in some way to make it more appropriate for a country’s climate or preferences is an example of which type of global marketing product and promotion strategy?
product extension
product customization
C. product adaptation
product invention
product integration

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 1 Easy

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Text term definition—product adaptation. See Figure 6-5.

Frito-Lay produces and markets potato chips in Russia that have seafood flavor. This is an example of which type of global marketing product and promotion strategy?
A. product adaptation
product integration
product invention
product customization
product extension

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 2 Medium

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Changing a product in some way to make it more appropriate for consumer preferences or a country’s climate is a product adaptation strategy. See Figure 6-5.

KFC in Japan altered the sweetness of its coleslaw to appeal to Japanese tastes. This is an example of which type of global marketing product and promotion strategy?
product extension
B. product adaptation
product customization
product invention
product integration

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 3 Hard

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Changing a product in some way to make it more appropriate for consumer preferences or a country’s climate is a product adaptation strategy. See Figure 6-5.

Global companies have five strategies for matching products and their promotion efforts to global markets. Designing a product to serve the unmet needs of a foreign nation is which type of global marketing product and promotion strategy?
product extension
product customization
product adaptation
D. product invention
product integration

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 1 Easy

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Text term definition—product invention. See Figure 6-5.

Black & Decker launched the Snake Light flexible flashlight. Created to address a global need for portable lighting, the product became a best seller in North America, Europe, Latin America, and Australia. This is an example of which type of global marketing product and promotion strategy?
product extension
product customization
product adaptation
D. product invention
product integration

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 2 Medium

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: With product invention, companies invent totally new products designed to satisfy common needs across countries. See Figure 6-5.

KFC has created many offerings for its menus in China to appeal to local tastes, including the “Dragon Twister,” which is a chicken wrap with Peking-duck sauce. This is an example of which type of global marketing product and promotion strategy?
product extension
product customization
product adaptation
D. product invention
product integration

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 3 Hard

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: With product invention, companies invent totally new products designed to satisfy common needs across countries. See Figure 6-5.

Even though Exxon adapts its gasoline blends for different countries based on climate, the promotion message is unchanged: “Put a Tiger in Your Tank.” This type of global promotional strategy is known an
product extension.
product customization.
C. product adaptation.
dual adaptation.
dual integration.

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 2 Medium

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Even though Exxon adapts its gasoline blends for different countries based on climate, the promotion message is unchanged: “Put a Tiger in Your Tank.” Changing only the product in some way to make it more appropriate for consumer preferences or a country’s climate is a product adaptation strategy. See Figure 6-5.

Nescafé coffee is marketed using different coffee blends and promotional campaigns to match consumer preferences in different countries. For example, Nescafé generally emphasizes the taste, aroma, and warmth of shared moments in its advertising around the world. However, in Thailand, Nescafé is advertised as a way to relax from the pressures of daily life. This is an example of which type of global marketing product and promotion strategy?
product extension
product customization
product adaptation
D. dual adaptation
dual integration

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 2 Medium

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: A dual adaptation strategy means modifying both the products and promotion messages, which Nescafé has done in this example. See Figure 6-5.

Adding to the complexity of global distribution is the need for ________, in addition to the channels within a foreign nation.
parallel importing
channels between nations
C. communication adaptation
product adaptation
economic stability of the final consumer

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 2 Medium

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Figure 6-6 outlines global distribution channels. The seller at its headquarters is the starting point and is responsible for the successful distribution to the ultimate consumer. The second step is the seller’s international marketing headquarters. The third step represents the channels between nations. The fourth step represents the channels within a foreign nation. The final step represents the final or ultimate consumer. See Figure 6-6.

Consider the distribution channels through which a product manufactured in one country must travel to reach its destination in another country. The distribution channels can be considered to have been successful when the product reaches the
seller.
channels between nations.
seller’s international marketing headquarters.
D. final consumer.
channels within foreign nations.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 2 Medium

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Figure 6-6 outlines global distribution channels. While the first step involves the seller and its headquarters is the starting point, ultimately the distribution is successful when the product line reaches the final consumer. See Figure 6-6.

Consider the distribution channels through which a product manufactured in one country must travel to reach its destination in another country. Channels of distribution in global marketing are often long and complex. The availability and quality of retailers and wholesalers as well as transportation, communication, and warehousing facilities are often determined by
the seller and the exporter.
B. a country’s stage of economic development.
the seller’s international marketing headquarters and the channels between nations.
channels between nations and the channels within the foreign nation.
channels within the foreign nation and the foreign retailer.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 2 Medium

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Figure 6-6 outlines global distribution channels. Distribution is of critical importance in global marketing. The availability and quality of retailers and wholesalers as well as transportation, communication, and warehousing facilities are often determined by a country’s stage of economic development. See Figure 6-6.

When a firm sells a product in a foreign country below its domestic price or below its actual cost, the practice is referred to as
loss-leader pricing.
surplus marketing.
C.
second-market pricing.
entrepreneurial pricing.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 1 Easy

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Text term definition—dumping.

In international trade, dumping refers to
illegally disposing of unusable or damaged goods to avoid paying removal fees and/or taxes.
a firm selling damaged or unsalable goods below their original production cost.
a firm selling quality goods at significantly lower prices for the primary purpose of reducing inventory to make room for seasonal goods.
a firm selling quality goods at significantly lower prices for the primary purpose of reducing inventory to make room for newer or more expensive models.
E. a firm selling a product in a foreign country below its domestic price or below its actual cost.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 1 Easy

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Text term definition—dumping.

The U.S. Commerce Department imposed additional duties of 31 percent to 250 percent on imported photovoltaic products from Chinese solar manufacturers after ruling that they sold them below cost. The Commerce Department took this action in response to what it saw as
tariff avoidance.
countertrade.
surplus marketing.
underbidding.
E.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 3 Hard

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: A firm selling a product in a foreign country below its domestic price or below its actual cost is often accused of dumping.

A situation in which products are bought in a lower-priced country from a manufacturer’s authorized reseller, shipped to higher-priced countries, and then sold through unauthorized retailers below the manufacturer’s suggested retail price is referred to as
the black market.
B. a gray market.
dumping.
a globalized market.
parallel exporting.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 1 Easy

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Text term definition—gray market.

A gray market refers to
the segment of products specifically designed for the need of older buyers.
a once active and powerful market that is rapidly becoming the bottom of the barrel.
C. a situation where products are sold through unauthorized channels of distribution.
a pricing structure that is based upon haggling that is considered acceptable in some countries but not others.
the willingness of one party to accept gifts in exchange for better prices or price allowances.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 1 Easy

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Text term definition—gray market.

Another term for a gray market is
equivalent exporting.
back-channel market.
mature marketing.
D. parallel importing.
transparent market.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 1 Easy

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Text term definition—gray market or parallel importing.

The Japanese manufacture tractors for rice paddies. They are smaller than most U.S. tractors and perfect for a weekend farmer who wants to tend to a small garden. The tractors are not sold in the United States through any authorized channels, yet they are available in the United States at prices below the manufacturer’s suggested retail price. These Japanese tractors are being sold
A. through the gray market.
under the table.
over the counter.
with bypassed global channels.
by breaking the distribution monopoly.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 3 Hard

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Gray marketing is a situation where products are bought in a lower-priced country from a manufacturer’s authorized reseller, shipped to higher-priced countries, and sold through unauthorized channels of distribution below the manufacturer’s suggested retail price.

Before Apple’s iPhone 6 was officially for sale in China, it was being sold there. These phones were purchased in the United States, Hong Kong, and other markets, and then resold by unauthorized vendors in China for between $1,700 and $2,500. These products are considered to be part of
under-the-counter sales.
over-the-counter sales.
C. the gray market.
integrated global channels.
breaking the distribution monopoly.

AACSB: Knowledge Application

Accessibility: Keyboard Navigation

Blooms: Apply

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 3 Hard

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Gray marketing is a situation where products are sold through unauthorized channels of distribution.

Mary Kay, Inc., can be classified as which type of company when marketing its products around the world?
multinational firm
transnational firm
C. international firm
global marketing firm
multidomestic firm

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Marketing Globalization

Feedback: Mary Kay exhibits the structural characteristics of an international firm, one that engages in trade and marketing in different countries as an extension of the marketing strategy in its home country. Mary Kay markets its existing products and services in other countries the same way it does in its home country, the United States. See Video Case 7: Mary Kay, Inc.: Building a Brand in India.

Since 1963, the guiding principle of Mary Kay, Inc., has been based on
the Consumer Bill of Rights.
B. the Golden Rule.
caveat emptor.
the American Marketing Association Statement of Ethics.
maximizing profits so long as the firm stays within the rules.

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Remember

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 1 Easy

Topic: Alternative Marketing Mix Strategies for Global Marketing

Feedback: Mary Kay Ash’s founding principles were simple and time-tested, and they remain a fundamental company business philosophy. She adopted the Golden Rule as her guiding principle, determining the best course of action in virtually any situation could be easily discerned by “doing unto others as you would have them do unto you.” See Video Case 7: Mary Kay, Inc.: Building a Brand in India.

What global market entry strategy did Mary Kay use when it entered India?
direct importing
licensing
indirect exporting
joint venture
E. direct exporting

AACSB: Diversity

Accessibility: Keyboard Navigation

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Feedback: Mary Kay used an exporting global market entry strategy. Specifically, the company employed direct exporting since it used no intermediaries, relying instead on company-owned distribution centers and a direct sales force. See Video Case 7: Mary Kay, Inc.: Building a Brand in India.

One global perspective on world trade views exports and imports as complementary economic flows. Explain this concept.

A country’s imports affect its exports and exports affect its imports. Every nation’s imports arise from the exports of other nations. As the exports of one country increase, its national output and income rise, which in turn leads to an increase in the demand for imports. This nation’s greater demand for imports stimulates the exports of other countries. Increased demand for exports of other nations energizes their economic activity, resulting in higher national income, which stimulates their demand for imports. In short, imports affect exports and vice versa.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 2 Medium

Topic: Marketing Globalization

Explain the trade feedback effect.

Increased demand for exports of other nations energizes their economic activity, resulting in higher national income, which stimulates their demand for imports. In short, imports affect exports and vice versa. This phenomenon is called the trade feedback effect and is one argument for free trade among nations.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 2 Medium

Topic: Marketing Globalization

Explain the concept of countertrade, and discuss its importance.

Not all trade involves the exchange of money for products or services. In a world where 70 percent of all countries do not have convertible currencies or where government-owned enterprises lack sufficient cash or credit for imports, other means of payment are used. An estimated 10 to 15 percent of world trade involves countertrade, the practice of using barter rather than money for making global sales.

Countertrade is popular with many Eastern European nations, Russia, and Asian countries. For example, Daimler AG agreed to sell 30 trucks to Romania in exchange for 150 Romanian-made jeeps. Daimler then sold the jeeps in Ecuador in exchange for bananas, which it brought back to Germany and sold to a German supermarket chain in exchange for cash. When PepsiCo entered India, the Indian government stipulated that part of PepsiCo’s local profits had to be used to purchase tomatoes. This requirement worked for PepsiCo, which also owned Pizza Hut at the time.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Give at least one argument for and one argument against protectionism.

People who favor protectionism believe that it preserves jobs, protects a nation’s political security, discourages economic dependency on other countries, and encourages domestic industry. Those who oppose protectionism believe that it inhibits world trade and results in higher domestic prices on goods and services produced by protected industries. While the decreased supply may raise prices, the tariffs are a virtually certain way to do so.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Play devil’s advocate. Select any American industry and argue persuasively why protectionism is not only patriotic, it is absolutely essential for survival.

A quality answer will provide at least three reasons (with examples) specific to the industry chosen, touching on such arguments as preserving jobs, protecting a nation’s political security, discouraging economic dependency on other countries, or encouraging domestic industry.

AACSB: Knowledge Application

Blooms: Apply

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

“A signal that the world’s trading nations are committed to open markets—and will resist protectionism—would inject confidence and energy into our markets,” says the Office of the U.S. Trade Representative. Discuss this statement.

This statement indicates that the U.S. Trade Representative is opposed to protectionism, believing it inhibits world trade and that it may result in higher domestic prices on goods and services produced by protected industries. Lower prices will increase consumer buying and increased consumer buying will increase production. Increased production will lead to more jobs, higher profits, and increased confidence.

AACSB: Knowledge Application

Blooms: Apply

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 3 Hard

Topic: Global Environmental Forces

If your primary motive was to raise prices on imports, would you use tariffs or quotas? Why would you want to do this?

If your primary motive was to raise prices on imports, then your choice would be tariffs. Tariffs are government taxes on goods or services entering a country. They help equalize price competition between foreign and domestic goods. Quotas are restrictions placed on the amount of a product that may enter or leave a country. See Figure 6-2.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces and Quotas

Describe the World Trade Organization (WTO) and its purpose.

The World Trade Organization (WTO) was formed in 1995 to address a broad array of world trade issues. There are 160 WTO member countries, including the United States, which account for more than 90 percent of world trade. The WTO is a permanent institution that sets rules governing trade between its members through panels of trade experts, who decide on trade disputes between members and issue binding decisions. The WTO reviews more than 200 disputes annually.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Trade Agreements, Monetary Unions, and International Organizations

In recent years, a number of countries with similar economic goals have formed transnational trade groups or signed trade agreements for the purpose of promoting free trade. Describe the two discussed in the textbook.

(1) In 2015 the European Union (EU) consisted of 28 countries with more than 500 million consumers. The EU has eliminated most barriers to the free flow of products, services, capital, and labor across its borders. In addition, 16 countries have adopted the euro, eliminating the need to continually monitor the currency exchange rate. (2) The North American Free Trade Agreement (NAFTA) lifted many trade barriers between Canada, Mexico, and the United States and created a marketplace with more than 475 million consumers.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 2 Medium

Topic: Trade Agreements, Monetary Unions, and International Organizations

Three types of companies populate and compete in the global marketplace. Identify and describe each type.

All three types of global companies employ people in different countries and many have administrative, marketing, and manufacturing operations (often called divisions or subsidiaries) around the world. However, a firm’s orientation toward and strategy for global markets and marketing defines the type of company it is or attempts to be. The three are: (1) An international firm engages in trade and marketing in different countries as an extension of the marketing strategy in its home country. (2) A multinational firm views the world as consisting of unique parts and markets to each part differently. (3) A transnational firm views the world as one market and emphasizes cultural similarities across countries or universal consumer needs more than differences.

AACSB: Diversity

Blooms: Remember

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing.

Level of Difficulty: 1 Easy

Topic: Marketing Globalization

Identify and describe the factors a company should consider in order to do a thorough cross-cultural analysis. In your answer, define cross-cultural analysis.

Cross-cultural analysis involves the study of similarities and differences among consumers in two or more nations or societies. A thorough analysis should include a study of a country’s values, customs, symbols, and language. Values are the personally or socially preferable modes of conduct or states of existence that tend to persist over time. Customs are what is considered normal and expected about the way people do things in a specific country. Cultural symbols are things that represent ideas and concepts. It is important not to assume that all symbols have a universal meaning. Language study should include more than a literal translation; knowledge of nuances and idioms as well as an acknowledgment of dialects or multiple national languages are important as well.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Why is it wise for global marketers to use back translation? Provide an example to support your answer.

Back translation refers to a translated word or phrase being retranslated into the original language by a different interpreter to catch errors. This will help prevent unintended meanings from occurring in marketing plans. Examples from the textbook of the unintended meanings of brand names are (1) IBM’s “Solution for a Small Planet” was translated in Japanese as “Answers that make people smaller” and (2) Kit Kat bars, which are marketed by Nestlé worldwide. The brand name “Kit Kat” is pronounced “kitto katsu” in Japanese, which roughly translates to “Surely win.” Japanese teens eat Kit Kat bars for good luck, particularly when taking crucial school exams.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Global marketing is affected by economic considerations. Identify the three steps that should be performed when scanning the global marketplace.

A scan of the global marketplace should include (1) an assessment of the economic infrastructure in the countries, (2) measurement of consumer income in different countries, and (3) recognition of a country’s currency exchange rates.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

What is meant by the term economic infrastructure and how can this affect a firm’s plans to enter a global market?

Economic infrastructure is a country’s communication, transportation, financial, and distribution systems. This represents a critical consideration in a company’s determination of whether it should try to market to a country’s consumers and organizations. You might have the best product in the world, but if you are not able to physically reach your customer because the rains have washed away the roads, you will not be successful. Communication infrastructures in countries differ. In developing countries, they may be limited or antiquated compared with that of developed countries. Similarly, if the financial payment systems aren’t developed (consumers lack credit cards; pay only in cash), exchange relationships may be more limited.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

Define a currency exchange rate and discuss its importance to global companies.

Fluctuations in exchange rates among the world’s currencies are of critical importance in global marketing. A currency exchange rate is the price of one country’s currency expressed in terms of another country’s currency, such as the U.S. dollar expressed in Japanese yen, euros, or Swiss francs. Failure to consider exchange rates when pricing products for global markets can have dire consequences if a company sets the prices for its products without regard for how they would convert into foreign currencies. This could lead to high prices, lost sales, and forgone profits made by global companies. When foreign currencies can buy more U.S. dollars, for example, U.S. products are less expensive for the foreign customer. Exchange rate fluctuations in a country’s currency can affect sales and profits made by global companies as well.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts.

Level of Difficulty: 2 Medium

Topic: Global Environmental Forces

What are the market entry strategy options available to a company seeking to enter the global marketplace? How do they relate to each other in terms of profit potential, risk, financial commitment required, and marketing control?

Once a company has decided to enter the global marketplace, it may select one of four strategies: (1) exporting, which involves producing goods in one country and selling them in another country; (2) licensing, where a company offers the right to a trademark, patent, trade secret, or other similarly valued items of intellectual property in return for a royalty or a fee; (3) joint venture, which involves a foreign company and a local firm investing together to create a local business; and (4) direct investment, which entails a domestic firm actually investing in and owning a foreign subsidiary or division. The amount of financial commitment, risk, marketing control, and profit potential increases as the firm moves from exporting to direct investment. See Figure 6-4.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Explain the difference between indirect exporting and direct exporting. What are the advantages and disadvantages of each approach?

Indirect exporting refers to a firm selling its domestically produced goods in a foreign country through an intermediary. It has the least amount of commitment and risk but will probably return the least profit. Indirect exporting is ideal for a company that has no overseas contacts but wants to market abroad. The intermediary is often a distributor that has the marketing know-how and resources necessary for the effort to succeed. Direct exporting refers to a firm selling its domestically produced goods in a foreign country without intermediaries. Direct exporting involves more risk than indirect exporting for the company but also opens the door to increased profits. Most companies become involved in direct exporting when they believe their volume of sales will be sufficiently large and easy to obtain so that they do not require intermediaries.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Explain the difference between joint venture and direct investment market entry strategies. What are the advantages and disadvantages of each approach?

When a foreign company and a local firm invest together to create a local business, it is called a joint venture. These two companies share ownership, control, and profits of the new company. The advantages are twofold: First, one company may not have the necessary financial, physical, or managerial resources to enter a foreign market alone. Second, a government may require or strongly encourage a joint venture before it allows a foreign company to enter its market. The disadvantages arise when companies disagree about policies or courses of action or when governmental bureaucracy bogs down the effort. Direct investment entails a domestic firm actually investing in and owning a foreign subsidiary or division. Advantages include cost savings, better understanding of local market conditions, and fewer local restrictions. Disadvantages include increased financial commitments and risks.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

Define licensing, cite its advantages and disadvantages, and explain what franchising is.

Licensing offers the right to a company trademark, patent, trade secret, or other similarly valued items of intellectual property in return for a royalty or a fee. The advantages to the company granting the license are low risk and a capital-free entry into a foreign country. The licensee gains information that allows it to start with a competitive advantage and the foreign country gains employment by having the product manufactured locally. However, the licensor forgoes control of its product and reduces the potential profits gained from it. The licensor may be creating its own competition. To offset this disadvantage, many companies strive to stay innovative so that the licensee remains dependent on them. Additionally, should the licensee prove to be a poor choice, the name or reputation of the company may be harmed. A variation of licensing is franchising. Franchises include soft drink, motel, retailing, fast-food, and car rental operations, and a variety of business services.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Market Entry Strategies

What are the product and promotion strategies available to a company seeking to enter the global marketplace? How do they relate to each other in terms of the same or adapted product and promotion?

There are five global marketing product and promotional strategies. (1) Sell the same home country product using the same home country promotion in a foreign country (product extension strategy). (2) Sell the same home country product using an adapted promotion strategy in a foreign country (communication adaptation strategy). (3) Sell an adapted home country product using the same home country promotion in a foreign country (product adaptation strategy). (4) Sell an adapted home country product using an adapted home country promotion in a foreign country (dual adaptation strategy). (5) Create a new product for a foreign market (product invention strategy). See Figure 6-5.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 2 Medium

Topic: Alternative Marketing Mix Strategies for Global Marketing

Describe the elements in a global channel of distribution.

Figure 6-6 outlines the channel through which a product manufactured in one country must travel to reach its destination in another country. The first step involves the seller; its headquarters is the starting point and is responsible for the successful distribution to the ultimate consumer. The next step is the channel between two nations, moving the product from one country to another. Intermediaries that can handle this responsibility include resident buyers in a foreign country, independent merchant wholesalers that buy and sell the product, or agents that bring buyers and sellers together. Once the product is in the foreign nation, that country’s distribution channels take over. These channels can be very long or surprisingly short, depending on the product line. Ultimately, the products reach the final or ultimate consumer. See Figure 6-6.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

Level of Difficulty: 2 Medium

Topic: Alternative Marketing Mix Strategies for Global Marketing

Explain the difference between dumping and parallel importing.

Dumping refers to a firm selling a product in a foreign country below its domestic price or below its actual cost. Parallel importing, also known as gray marketing, refers to companies pricing their products very high in some countries but competitively in others. Individuals then buy products in a lower-priced country from an authorized retailer, ship them to higher-priced countries, and sell them below the suggested retail price through unauthorized retailers.

AACSB: Diversity

Blooms: Understand

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets.

Level of Difficulty: 2 Medium

Topic: Alternative Marketing Mix Strategies for Global Marketing

Category # of Questions

AACSB: Analytical Thinking 1

AACSB: Diversity 188

AACSB: Ethics 1

AACSB: Knowledge Application 44

Accessibility: Keyboard Navigation 212

Blooms: Apply 45

Blooms: Remember 90

Blooms: Understand 99

Learning Objective: 06-01 Describe the nature and scope of world trade from a global perspective. 25

Learning Objective: 06-02 Identify the major trends that have influenced world trade and global marketing. 75

Learning Objective: 06-03 Identify the environmental forces that shape global marketing efforts. 60

Learning Objective: 06-04 Name and describe the alternative approaches companies use to enter global markets. 49

Learning Objective: 06-05 Explain the distinction between standardization and customization when companies craft worldwide marketing programs. 25

Level of Difficulty: 1 Easy 88

Level of Difficulty: 2 Medium 101

Level of Difficulty: 3 Hard 45

Topic: Alternative Marketing Mix Strategies for Global Marketing 27

Topic: Global Environmental Forces 101

Topic: Global Environmental Forces and Quotas 1

Topic: International Firm 1

Topic: Market Entry Strategies 48

Topic: Marketing Globalization 41

Topic: Trade Agreements, Monetary Unions, and International Organizations 16

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Marketing The Core 7th Edition By Kerin - Test Bank

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