Chapter 5

A(n) _____ is a law that compels a company earning foreign currency from its exports to sell it to a central bank rather than sending the money out of the country.

. exchange control

If a country's currency appreciates, more of that currency will be needed to buy another country's currency.

False If a country's currency appreciates, less of that currency is needed to buy another country's currency.

Currency markets operate under a system in which the prices of different currencies move up or down based on the demand for and supply of each currency. This practice is called:

. floating exchange rates.

Caterpillar, Inc. is the world's largest manufacturer of earthmoving and construction equipment. Kirovsky is a large Russian manufacturer of the same type of products. The two companies entered into a(n) _____ and created NEVAMASH, a new company.

. joint venture

Apple, Inc. has partnerships with wireless carriers in Japan, Spain, and a handful of other European countries. Apple works with suppliers and retailers worldwide. This means that Apple is a:

. multinational corporation

____ takes place when a foreign company produces goods to specification set by a domestic company, with the domestic firm's brand name affixed to the goods.

Contract manufacturing

The National Export Initiative's goal is to quadruple U.S. exports by 2050 and support 20,000 U.S. jobs.

False To increase U.S. exports, the federal government created the National Export Initiative (NEI). The NEI's goal is to double U.S. exports by 2017 and support 2 million U.S. jobs.

All of the following statements about global marketing are true EXCEPT:

Foreign competitors have not gained significant market share in the United States.

All of the following are countries included in the Dominican Republic-Central America Free Trade Agreement EXCEPT:

Mexico

According to the text, which of the following is an example of a product strategy that would be appropriate for a global marketing company to implement?

Product adaptation

Having a global vision means that management recognizes and reacts to international marketing opportunities, uses effective marketing strategies, and is aware of threats from foreign competitors in all markets.

True

Suppose a Chinese firm makes computer chips at $4.00 per chip but sells the chips for $2.00 in American markets. American producers of computer chips cannot supply chips at the low rates that the Chinese firm is supplying them. The Chinese firm is engaging in dumping.

True

A business thinking of expanding into global markets needs to examine all of the following external environments EXCEPT:

its marketing mix.

In the context of global marketing, product invention can be taken to mean either creating a new product for a market or drastically changing an existing product.

true

Belgian Beer brewer InBev bought Anheuser-Busch for $52 billion. This is an example of a(n):

. direct foreign investment

A U.S. executive had no idea that Germans tend to be very risk-averse. When the executive arrived at a meeting in Berlin, he simply stressed the price of his firm's products without emphasizing their bottom-line benefits, promoting the company's strong service support, or guaranteeing their effectiveness. As a result, the multi million dollar deal failed. The U.S. executive overlooked the importance of which environmental factor?

Culture

CNS, Inc. is the manufacturer of Breathe Right nasal strips, a spring-loaded adhesive device that sticks on your nose to open up the nasal passages. Since their introduction in the United States, Breathe Right strips have been used by athletes hoping to improve their performance through increased oxygen flow, snorers hoping for a sound night's sleep, and allergy and cold sufferers looking for relief from their stuffy noses. Because CNS is a small company, it initially had trouble promoting its product. Then San Francisco 49er Jerry Rice started regularly wearing them, and U.S. sales took off. Today, Breathe Right strips are marketed in more than 40 countries. When CNS decided to expand globally, its size made it look for a partner. It chose 3M because 3M already had a global market distribution system and because the Breathe Right strips complemented the 3M first aid product line. Refer to Breathe Right. How people value a sound night's sleep is an example of which element of the global environment?

Culture

Wataniya Mobile is offering cellular service in the Palestinian territories. It is only the second cell phone carrier in the region and is significant because it is owned by foreign companies and investors like the Qatari royal family and the Palestine Investment Fund. The new service is aimed at increasing cell phone penetration, which is only 35 percent, in this economically challenged area. It has not been easy for Wataniya, though. It took two years to gain the required license from Israel, which controls the Palestinian territories' airwaves and bandwidth required for the service. Even though Wataniya is allowed bandwidth, it has only received 3.8 megahertz of bandwidth from Israel, which is not enough for it to offer 3G mobile services that enable Web browsing and e-mail. Refer to Wataniya Mobile. Israel and the Palestinian territories have vastly different religious beliefs and are frequently at war. The differences between these two are attributed to which environmental factor?

Culture

___ is a global marketing strategy that requires active ownership (either a controlling interest or large minority interest) of a foreign company or overseas manufacturing or marketing facilities.

Direct foreign investment

___ is generally defined as the sale of an exported product at a price lower than that charged for the same or a like product in the home market of the exporter.

Dumping

_____ are foreign sales agents-distributors who live in a foreign country and represent a domestic company in sales situations. They perform the same functions as domestic manufacturers' agents who help with financing and shipping.

Export agents

DeLouis owns an agency that specializes in bringing international buyers in contact with U.S. companies to facilitate global trade. What type of intermediary is DeLouis?

Export broker

Even though it is not actively involved in global marketing, Hennessey Enterprises, a U.S.-based business, agreed to sell two thousand of its stress-reducing products to a distribution company in Norway. This would be an example of direct investment.

False

Global marketing research is not any more difficult than domestic marketing research.

False

Global trade has climbed to about $200 billion a year.

False

____ are trade alliances in which several countries agree to work together to form a common trade area that enhances trade opportunities among those countries.

a. Market groupings

Chinese don't like sweet cookies, and Kraft's Oreos were not selling well. Chinese consumers also thought the package was too expensive. Kraft introduced packages containing fewer Oreos at a reduced price and also created a "Chinese Oreo" consisting of four layers of crispy wafer filled with vanilla and chocolate cream, coated in chocolate. Which of the marketing mix strategies did Kraft use?

a. Product adaptation

Basketball is played nearly everywhere in the world and is an easily understood sport. The National Basketball Association (NBA) finals reached more than 600 million televisions in 195 countries. From this information, you should be able to infer that the NBA is:

a. practicing global marketing

H. J. Heinz, the ketchup company, gets over half of its revenue from international sales. This shows that:

adopting a global vision can pay off.

An exclusion of all products from certain countries or companies by a government or group is called a(n):

boycott.

____ is a legal process whereby a firm agrees to let another firm use its manufacturing process, trademarks, patents, trade secrets, or other proprietary knowledge in return for a fee or royalty.

c. Licensing

Many people fear world trade because it:

causes some people to lose their jobs as production shifts abroad.

A soft drink manufacturer thinking of investing in a bottling plant in the Czech Republic should know the nation is proud of the fact it is among the world's biggest beer drinkers. Czechs consume an average of one-half liter of beer a day for every man, woman, and child in the country. The _____ environment of this country could very easily prevent the soft drink bottling company from succeeding.

cultural

American firms should never try to do business in Europe in August because they will find that everyone has gone on vacation. Today, all European countries have laws requiring companies to provide employees with vacations of at least four to five weeks. This would be an important part of the European _____ environment that any multinational firm doing business there needs to be aware of.

cultural

Central to any society is a common set of values shared by its citizens that determines what is socially acceptable. Marketers refer to these values collectively as a country's

culture.

A(n) _____ is a global intermediary who brings the buyer and seller together.

d. export broker

A multinational company that makes a labor-intensive product would be interested in the _____ makeup of countries. Factors such as median age, gender, and literacy rates would determine the success of its global expansion.

demographic

When developing countries began encouraging foreign investors and imports, companies like Black & Decker and Pillsbury offered a wide array of products to countries throughout the world. Because of enormous populations in developing countries, these companies predicted a potential for strong annual sales. However, in addition to total population, companies must not overlook _____ factors such as distribution of people within a country and household incomes.

demographic

A(n) _____ is a limit on the amount of a specific product that can enter a country.

e. quota

Consumers purchasing an automobile in Hong Kong must pay a 100 percent tax on it. This tax is imposed by the government on all automobiles entering the country and is called a(n):

e. tariff.

Disney sells the rights for an investment company to run a Disneyland theme park in Tokyo. The investment company gains most of the profits from the enterprise while paying Disney a percentage in royalties. This is an example of:

licensing

Franchising is a form of:

licensing

A U.S. licensor can try to prevent a licensee from voiding its contract and using what it has learned to create a competitor by:

locally registering patents and trademarks to the U.S. firm, not to the licensee.

When multinational firms enable individual subsidiaries to compete independently in domestic nations, they are engaged in:

multi domestic strategy.

A(n) _____ is a company that is heavily engaged in global trade and moves its resources, goods, services, and skills across national boundaries.

multinational corporation

Global marketing standardization:

presumes markets throughout the world are becoming more alike.

AFLAC has had to ditch the AFLAC duck in its Japanese commercials because the Japanese consumer does not like to be yelled at. Since Japan is the source of about 70 percent of the insurance company's business, it had no trouble adopting a _____ strategy.

promotion adaptation

A company that is capital intensive:

spends more on equipment than on labor.

A tax levied on the goods entering a country is called a(n):

tariff.

Negotiations (such as GATT or the Uruguay Round) between countries that are made to stimulate global exchange and remove barriers are called _____ agreements.

trade