MKTG 2201 Chapter 15

T/F: As the weakened global economy has slowed, many companies are shifting their sights to include a new target — the so-called "bottom of the economic pyramid."

True

T/F: Barter involves the direct exchange of goods and services.

True

T/F: Global branding and standardization result in reduced costs from economies of scale.

True

T/F: Global companies recruit management from many countries, buy components and supplies where they cost the least, and invest where the expected returns are greatest.

True

T/F: Management contracting is an unwise choice if a domestic firm can make greater profits by undertaking a whole venture.

True

T/F: Most international companies strive to adapt global brands to local needs.

True

T/F: Often, companies form joint ownership ventures to merge their complementary strengths in developing a global marketing opportunity.

True

T/F: Regardless of how companies go about pricing their products, their foreign prices will most likely be higher than their domestic prices for comparable products

True

T/F: Retailing practices among countries can vary widely.

True

T/F: Tariffs and duties are often used to force favorable trade behaviors from other nations.

True

T/F: The Internet is forcing companies toward more standardized international pricing.

True

T/F: To overcome the problem of price escalation when selling to less-affluent consumers in developing countries, many companies make simpler or smaller versions of their products that can be sold at lower prices.

True

T/F: Companies that export goods to one country cannot have a subsidiary in another country because of international trade agreements.

False

T/F: Foreign-based production facilities offer many advantages to an investing company if the foreign market is small.

False

T/F: In the global value delivery network, the second link between the sellers and the final buyers moves products from points of production to the borders of countries within which they are sold.

False

T/F: Management contracting consists of one company joining forces with foreign investors to create a local business in which they share possession and control.

False

T/F: Most of the retailing in the United States is done by small, independent retailers.

False

T/F: Price escalation is caused by transportation costs, tariffs, importer margin, wholesaler margin, and retailer margin. As a result, foreign prices are typically lower than domestic prices for comparable products.

False

T/F: Similar consumer needs around the world suggest that a strategy of adapted global marketing is appropriate for most international firms.

False

T/F: Straight product extension into international markets is often successful.

False

T/F: The European Union restricts trade opportunities to European firms.

False

T/F: The two economic factors that reflect a country's attractiveness as a market are its industrial structure and import/export ratio.

False

T/F: A multinational company may face nontariff trade barriers that include biases against its bids, restrictive product standards, or excessive host-country regulations.

True

Which of the following is most likely a benefit of joint ownership? A) It allows a firm to gain the financial and managerial resources that it may otherwise lack. B) It is the simplest way for a domestic company to enter a foreign market. C) It minimizes the need to build a new manufacturing facility in the foreign market. D) It allows one firm to acquire complete ownership of the other firm in the venture. E) It provides significant economies of scale for both the local firm and the foreign investor

A) It allows a firm to gain the financial and managerial resources that it may otherwise lack.

Which of the following is a drawback of management contracting? A) It prevents a company from setting up its own operations for a period of time. B) It is a high-risk method of getting into a foreign market. C) It yields income to the contracting firm only much later in the process. D) It does not provide the option of buying shares in the managed company later on. E) It requires a domestic firm to export its products to a foreign company.

A) It prevents a company from setting up its own operations for a period of time.

Which of the following is true of economic communities? A) They are groups of nations organized to work toward common goals. B) They were formed to increase trade barriers between member nations. C) They were formed to mediate global trade disputes. D) They require member countries to establish one currency. E) They tend to improve imports and hinder exports.

A) They are groups of nations organized to work toward common goals.

Which of the following statements is true of industrial economies? A) They export their goods to other types of economies for raw materials. B) They have a declining middle class population. C) They depend on agriculture as the primary revenue generator. D) They do not trade goods amongst themselves. E) They consume most of their output and barter the rest for simple goods and services.

A) They export their goods to other types of economies for raw materials.

Which of the following is most likely true about a global organization? A) Worldwide policies are planned by top corporate management. B) Global operating units report to international division chiefs. C) Executive training is restricted to domestic operations. D) Employees are recruited exclusively from the home country. E) It considers itself a national marketer that sells abroad.

A) Worldwide policies are planned by top corporate management.

________ is a method of going global in which a company makes agreements with producers in the foreign market to produce its product or provide its service. A) Contract manufacturing B) Direct investment C) Acquisition D) Exporting E) Management contracting

A. contract manufacturing

Lemon N' Honey is a juice manufacturing company in the United States. It exports its products to Australia, licenses to China, has a joint ownership venture in France, and owns a subsidiary in Brazil. The firm will most likely need to create a(n) ________ to handle all its worldwide activities. A) international division B) domestic market C) value delivery network D) export department E) domestic division

A. international division

________ is a method of entering a foreign market by associating with foreign companies to produce or market products or services. A) Joint venturing B) Indirect exporting C) Direct investment D) Importing E) Direct exporting

A. joint venturing

The Bread Company promotes its brand in new international markets by providing rights to local bakeries and bistros to use its recipes and brand name. In this case, The Bread Company's market-entry strategy is referred to as ________. A) licensing B) exporting C) joint ownership D) contract manufacturing E) management contracting

A. licensing

To overcome this problem when selling to less-affluent consumers in developing countries, many companies make simpler or smaller versions of their products that can be sold at lower prices. Others have introduced new, more affordable brands for global markets. This is known as a(n) ________ problem. A) price escalation B) demand escalation C) inflation D) skimming price E) deflation

A. price escalation

A country may place a limit on the volume of imported citrus fruit that is allowed. This is an example of a(n) ________. A) quota B) tariff C) customs duty D) fine E) excise duty

A. quota

A country in South America has large reserves of copper and tin. Mining forms the pillar of its economy. A major part of its revenue is generated from exporting these resources. This country is poor in many other ways. It is a good market for large equipment, tools, supplies, and trucks. Since there are many foreign residents in this country and a wealthy upper class, it is also a market for luxury goods. This country most likely has a(n) ________ economy. A) subsistence B) raw material exporting C) emerging D) developed E) industrial

B. raw material exporting

Which of the following is most likely a drawback of contract manufacturing? A) There are low chances of quickly starting the process. B) There is decreased control over the manufacturing process. C) There are significant political and economic risks involved. D) There is little opportunity of later forming a partnership. E) There is no possibility of buying out the local manufacturer.

B. There is decreased control over the manufacturing process.

Which of the following is a type of joint venture? A) direct exporting B) contract manufacturing C) direct investment D) retailing E) wholesaling

B. contract manufacturing

In addition to joint ownership ventures in China, Intel has made substantial outlays in its own manufacturing and research facilities there. This is an example of ________. A) exporting B) direct investment C) licensing D) indirect exporting E) management contracting

B. direct investment

The simplest way to enter a foreign market is through ________. A) joint ownership B) exporting C) direct investment D) licensing E) contract manufacturing

B. exporting

________ economies are major exporters of manufactured goods, services, and investment funds. A) Industrializing B) Industrial C) Subsistence D) Raw material exporting E) Emerging

B. industrial

It is common that a multinational company eventually creates ________ or subsidiaries to handle all of its international activity. A) export departments B) international divisions C) geographical organizations D) world product groups E) global organizations

B. international divisions

The Dance Company, a renowned dance studio in Manhattan, enters into an agreement with La Danza in Spain to operate several dance studios. La Danza will provide capital for running the dance studios and The Dance Company will contribute its world-renowned expertise about the art of dance. In this case, The Dance Company enters a foreign market through ________. A) contract manufacturing B) management contracting C) licensing D) joint ownership E) direct investment

B. management contracting

The ________ established a free trade zone among the United States, Mexico, and Canada. A) Union of South American Nations B) European Union C) North American Free Trade Agreement D) Central American Free Trade Agreement E) Latin American Free Trade Association

C) North American Free Trade Agreement

Chips of Joy, a leading chocolate chip cookie manufacturer, has decided to use the same marketing strategy approaches and marketing mix worldwide for all of its brands. The only change that will be made is language translation on the various packaging. Chips of Joy is using a(n) ________ marketing strategy. A) collective global B) standardized global C) adapted global D) joint global E) direct global

B. standardized global

________ means marketing a product in a foreign market without making any changes to the product. A) Product adaptation B) Straight product extension C) Communication extension D) Product invention E) Communication adaptation

B. straight product extension

Which of the following is an international division organized based on different merchandise categories? A) global organization B) world product group C) geographical organization D) export department E) international subsidiary

B. world product group

Which of the following is an advantage of direct investment? A) Direct investment involves fewer risks than joint ownership. B) Direct investment ensures that a firm is shielded from market changes. C) Direct investment allows a firm to keep full control over the investment. D) Direct investment involves minimal financial or time expenditures. E) Direct investment protects the firm from currency devaluation.

C) Direct investment allows a firm to keep full control over the investment.

Which of the following is an advantage of licensing? A) The licensee is not required to invest money in the business. B) The licensor has more control over the licensee than it does in its own operations. C) The licensee gains recognition without having to develop a product from scratch. D) The licensor earns profits without having to share its intellectual property with anyone. E) The licensor faces no threats of competition from the licensee after the contract ends.

C) The licensee gains recognition without having to develop a product from scratch.

Compared to standardized global marketing, adapted global marketing ________. A) uses the same marketing mix elements in all target markets B) lowers marketing costs by using home country sales teams C) modifies marketing strategies to meet local needs D) maintains uniformity across all markets E) results in greater brand power

C) modifies marketing strategies to meet local needs

When adapting advertising messages, media may also need to be adapted internationally because media availability and regulations vary from country to country. This illustrates ________. A) communication extension B) product invention C) communication adaptation D) straight product extension E) product adaptation

C. communication adaptation

Which of the following is an example of a nontariff trade barrier? A) a sales tax B) customs duty C) a host-country regulation D) excise duty E) an import quota

C. host country regulation

Asiana, a fragrance manufacturer located in France, markets its products to the North American and Asian countries through independent distributors. In this case, Asiana has entered into international markets through ________. A) joint ownership B) joint venturing C) indirect exporting D) direct investment E) franchising

C. indirect exporting

Japan is a major exporter of manufactured goods, services, and investment funds. Japan also exports its goods to other types of economies for raw materials and semi-finished goods. This is an example of a(n) ________ economy. A) agricultural B) emerging C) industrial D) raw material exporting E) subsistence

C. industrial

Companies often form ________ ventures to merge their complementary strengths in developing a global marketing opportunity. A) licensing B) direct investment C) joint ownership D) management contracting E) contract manufacturing

C. joint ownership

PharmaCom serves millions of customers across several Asian countries with the assistance of several pharmaceutical manufacturing sites in China, Japan, and Korea. This is an example of ________. A) licensing B) exporting C) joint ownership D) contract manufacturing E) management contracting

C. joint ownership

Which type of economy consumes most of its output and barters the rest for simple goods and services? A) industrial economy B) developed economy C) subsistence economy D) emerging economy E) raw material exporting economy

C. subsistence economy

Which of the following is a disadvantage of straight product extension? A) It involves additional product development costs. B) It involves changing the product to meet local requirements. C) It requires planning a new promotional strategy to promote the product. D) It can be costly in the long run if products fail to satisfy consumers in specific global markets. E) It requires making changes in the manufacturing process.

D) It can be costly in the long run if products fail to satisfy consumers in specific global markets.

Which of the following is true of exporting? A) It is the most complex way to enter a foreign market. B) It involves the association of companies with host country partners. C) It typically requires products to be extensively modified for the foreign market. D) It involves the least change in a company's product lines. E) It involves a huge investment if done through independent international distributors.

D) It involves the least change in a company's product lines.

Which of the following is true of the Uruguay Round of the WTO? A) It promoted short-term global trade growth. B) It increased the world's merchandise tariffs by 50 percent. C) It reduced the influence of the WTO in agriculture. D) It toughened the international protection of intellectual property. E) It consisted of discussions that lasted for two years.

D) It toughened the international protection of intellectual property.

Which of the following is an advantage of management contracting? A) It involves the fewest changes in a company's product lines. B) It allows a contracting firm to set up its own operations at the beginning of the contract. C) It is the simplest way to enter a foreign market. D) It yields income from the beginning of the contract. E) It gives a contracting firm an option to buy shares in the managed company immediately

D) It yields income from the beginning of the contract.

Which of the following is a disadvantage of licensing? A) The licensing company gains entry into a foreign market at a high risk. B) It takes a lot of time for the licensee to gain production expertise and name. C) Licensing is a complex way for a manufacturer to enter international marketing. D) The licensor potentially creates a competitor in the form of the licensee. E) The licensee is restricted from gaining knowledge about the licensor's intellectual property.

D) The licensor potentially creates a competitor in the form of the licensee.

Which of the following is true of raw material exporting economies? A) These economies are major exporters of agricultural products. B) These economies are poor markets for large equipment and trucks. C) These economies are major exporters of manufactured goods, services, and investment funds. D) These economies are rich in one or more natural resources but poor in other ways. E) These economies consume most of their output and barter the rest.

D) These economies are rich in one or more natural resources but poor in other ways.

Which of the following is true about joint venturing? A) Management contracting is highly risky for the domestic firm. B) Contract manufacturing gives significant control to the domestic firm. C) Licensing is a highly complex method for entering global markets. D) A host country partner is necessary for selling or marketing products. E) Companies are required to invest in the construction of foreign-based facilities.

D. A host country partner is necessary for selling or marketing products.

What is the most likely disadvantage of direct investment for an investing company? A) weak relationships with local distributors B) minimal investment control C) product standardization requirements D) devalued currency risks E) excessive freight charges

D. devalued currency risks

Many organizations no longer have a clearly defined home market. Nor do they have home-office staffs. Instead, multicultural managers operate out of facilities located all around the world, bringing diverse cultural perspectives to their brands and operations. They are truly ________. A) world product groups B) geographical organizations C) international subsidiaries D) global organizations E) export departments

D. global organizations

Kimlee, a food manufacturer based in China, recognizes the immense demand for noodles in the Australian market. Kimlee forms a new business venture to manufacture instant noodles and decides to share possession and control of the new business with a local food processing company. In this case, Kimlee has entered a foreign market through ________. A) licensing B) contract manufacturing C) direct investment D) joint ownership E) management contracting

D. joint ownership

Walmart's decision to suspend its planned expansion into India's huge but fragmented retail market due to obstacles put in place by the host nation to protect its mom-and-pop retailers is an example of ________. A) tariffs B) excise duties C) quotas D) nontariff trade barriers E) exchange controls

D. nontariff trade barriers

________ consists of creating something new to meet the needs of consumers in a given country. A) Product adaptation B) Straight product extension C) Undifferentiated marketing D) Product invention E) Standardized manufacturing

D. product invention

Which of the following is most likely true of a global firm? A) A global firm typically operates from one country. B) A global firm engages in joint partnerships overseas. C) A global firm sees the world as many different markets. D) A global firm maximizes the importance of national boundaries. E) A global firm manufactures and markets goods wherever it can do the best job.

E) A global firm manufactures and markets goods wherever it can do the best job.

Which of the following is true of international divisions that are structured as geographical organizations? A) Geographical organizations are operating units under the export department. B) Geographical organizations are usually formed to implement whole-channel supply chains. C) Geographical organizations are managed by product managers, each responsible for different product groups. D) Geographical organizations are inadequate if the firm moves into joint ventures or direct investments. E) Geographical organizations are managed by country managers responsible for salespeople, distributors, and licensees in their respective countries.

E) Geographical organizations are managed by country managers responsible for salespeople, distributors, and licensees in their respective countries.

Which of the following is true of the World Trade Organization (WTO)? A) It was replaced by the GATT in 1995. B) It increases tariffs and other international trade barriers. C) It lacks the power to impose international trade sanctions. D) It restricts the maximum number of member nations to 100. E) It mediates global trade disputes.

E) It mediates global trade disputes.

Under management contracting, a domestic firm ________. A) adopts management know-how from a foreign company B) manufactures the products of a foreign company C) exports its products to a foreign company D) provides financial capital to a foreign company E) exports management services to a foreign company

E) exports management services to a foreign company

Compared to adapted global marketing, standardized global marketing ________. A) adjusts promotional efforts to address cultural differences in target markets B) results in additional marketing and manufacturing costs C) relies on social media to develop customer relationships D) usually results in diluted brand power over time E) uses the same marketing mix worldwide

E) uses the same marketing mix worldwide

________ ventures consist of one company collaborating with foreign investors to create a local business in which they share possession and control. A) Licensing B) Direct investment C) Contract manufacturing D) Management contracting E) Joint ownership

E. Joint ownership

In a global value delivery network, the first link, ________, moves company products from points of production to the borders of countries within which they are sold. A) distribution centers B) wholesalers C) channels within nations D) retailers E) channels between nations

E. channels between nations

An emerging economy is one which ________. A) imports large amounts of finished textiles and automobiles B) offers few market opportunities for imported goods C) consumes all or most of its output D) needs few imports of raw textile materials and steel E) has a rapid growth in manufacturing

E. has a rapid growth in manufacturing

A country's ________ shapes its product and service needs, income levels, and employment levels. A) quotas B) tariffs C) raw material export economy D) subsistence economy E) industrial structure

E. industrial structure

The difference between direct and indirect exporting is that indirect exporting involves ________. A) higher risks B) self-handling of exports C) greater returns D) more product alterations E) less investment

E. less investment

Providing a host-country partner the right to use a company's manufacturing process, trademark, patent, trade secret, or other item of value is referred to as ________. A) joint ownership B) direct exporting C) direct investment D) management contracting E) licensing

E. licensing

In managing their international marketing activities, most companies first ________. A) organize an import department B) create an international division C) initiate foreign direct investment D) form a domestic subsidiary E) organize an export department

E. organize an export department

Veggie Delight, a leading manufacturer of frozen vegetarian burgers, has recently entered the Middle East markets. Based on its research, consumers in the Middle East prefer spicier burgers than in the United States and other countries. So the company alters the ingredients in its burgers to meet the local preferences. In this scenario, Veggie Delight is using a(n) ________ strategy to market its product. A) communication adaptation B) undifferentiated marketing C) straight product extension D) product invention E) product adaptation

E. product adaptation

Which type of economy consists mostly of households with very low family incomes? A) post-industrial B) developed C) emerging D) industrial E) subsistence

E. subsistence

A tax on an imported product designed to raise revenue or protect domestic firms is referred to as a(n) ________. A) exchange B) excise C) fine D) quota E) tariff

E. tariff

T/F: A blocked currency is one whose removal from the country is restricted by the buyer's government.

True

T/F: A joint venture involves a company entering foreign markets by partnering with foreign companies to produce or market a product or service.

True