MKTG 351: Test 2 Review - Chapter 9

True/False: Globalization of marketing involves developing marketing strategies as though the entire world (or major regions of it) were a single entity.

True

True/False: In determining the size of the market for consumer products, the international marketer will probably be very interested in per capita GDP figures.

True

True/False: International marketing is defined as marketing activities performed across national boundaries.

True

True/False: Refusing to give payoffs and bribes in some foreign countries may put a marketer at a competitive disadvantage.

True

True/False: NAFTA business licensing requirements have been increased.

False

True/False: NAFTA eventually eliminates all tariffs on goods produced and traded between the United States, Mexico, and Brazil.

False

True/False: The World Trade Organization was an important outcome of the unification of Europe.

False

True/False: The joint venture approach has little appeal to industries involved in extraction of natural resources.

False

True/False: Brand name, product characteristics, packaging, and media allocation are among the easiest marketing mix variables to standardize around the world.

False

True/False: Contract manufacturing occurs when a firm pays a commission or royalties on sales or supplies used in manufacturing.

False

Approximately ____ of the world's purchasing power is outside of the United States.

2/3

In relation to international marketing, which of the following best describes direct ownership?

A company owns subsidiaries or facilities in foreign countries.

What is the primary distinction between a joint venture and a strategic alliance in international marketing?

A strategic alliance is formed by companies who have traditionally been rivals, which is not the case with a joint venture.

Which of the following trade alliances differs from others in its commitment to facilitating business and its practice of allowing the private sector to participate in a wide range of activities?

APEC

By 2009, NAFTA will create a totally free trade area between the United States,

Canada, and Mexico.

Many marketers claim that ____ will become the world's largest market.

China

Which of the following describes a company hiring a foreign firm to produce a designated volume of its product to specification?

Contract manufacturing

Johnston Chemicals' president is very excited about the possibility of the firm's British subsidiary having access to customers in the entire EU. He realizes that it will be some time before this area truly becomes one market, primarily because of differences in which of the following?

Cultural factors

____ refers to the idea that morality varies from one culture to another and that business practices are therefore differentially defined as right or wrong by particular cultures.

Cultural relativism

IKEA, a Swedish retailer of contemporary furniture, operates several stores in various Scandinavian countries, as well as in the United States and Canada. Which of the following describes IKEA's level of commitment to international marketing?

Direct ownership

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

Domestic marketing, limited exporting, international marketing, globalized marketing

___________ can force businesspeople to buy and sell foreign products through a central agency, such as a central bank.

Exchange controls.

______ bring together buyers and sellers from different countries and collect a commission for arranging sales.

Export agents

True/False: A positive balance of trade is considered good because it means that U.S. dollars are supporting foreign economies at the expense of U.S. companies and workers.

False

True/False: Importing is the sale of products to foreign markets.

False

Levi Strauss markets its denim jeans in many countries and develops its marketing strategy as if the world were a single market. This approach to selling a standardized product in all countries represents which type of international marketing?

Globalization of markets

If Tasmania levied a duty on all goods purchased from the United States and other countries outside its borders that were brought into Tasmania, its businesses and citizens would be paying a(n)

Import tariff

Which of the following is often used to raise revenue for a country and/or to protect domestic products?

Import tariff

Which of the following centralizes all of the responsibility for international operations?

International division structures

Which of the following is most likely to engage in direct ownership activities internationally?

Internationally integrated structures

Japan's Sony Corporation is a prime example of a multinational enterprise. With this in mind, which of the following would most accurately characterize Sony's operations?

It has operations or subsidiaries in many different countries.

One of the effects of NAFTA is the simplification of country-of-origin rules. This will likely hinder the international trade activities of

Japan

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

Licensing

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

Licensing

Which of the following is used to help maintain a more favorable balance of trade by a country?

Limiting imports

Globalization of markets requires developing marketing strategies as if the world were one market. Which of the following marketing mix variables is most difficult to standardize for globalization?

Media allocation

In many developing countries around the world, technology is enabling opportunities to "leapfrog" existing technology. What does this mean?

More advanced technology is reaching these countries even though they lack technological infrastructures.

The agreement between the United States, Canada, and Mexico that merges these three countries into one marketplace is called

NAFTA.

Wal-Mart is currently expanding its stores into Canada and Mexico. This expansion is being facilitated by the

North American Free Trade Agreement.

Swiss-based Nestlé has taken a global approach to marketing its chocolate products. Which of the following is most easily standardized?

Product

Which of the following would be a benefit to a franchiser, such as Jiffy Lube, in expanding into international marketing?

The franchiser does not have to put up a large capital investment.

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

This approach involves limited risk because the company has no direct investment in the foreign country.

True/False: A multinational enterprise is a firm that has operations or subsidiaries located in many countries.

True

True/False: A trading company provides a link between buyers and sellers in different countries.

True

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

WTO

If a newly formed country wanted to increase its international trade and reduce worldwide tariffs, it would most likely try to become a part of

WTO

A business partnership between a domestic firm and a foreign firm is known as

a joint venture.

An alliance between Honda and Ford would most likely be classified as

a strategic alliance.

The gross domestic product is

an overall measure of a nation's economic standing.

The Foreign Corrupt Practices Act of 1977 makes it illegal for U.S. firms to

attempt to make large payments or bribes to influence policy decisions of foreign governments.

If The Limited Company relies on hiring a foreign textile manufacturer to produce a designated amount of clothing for its Express, Limited, and other stores, it is using

contract manufacturing.

Globalization of marketing involves

developing a set of marketing strategies for the entire world or major regions of the world.

Miller's Home Furnishings uses marketing strategies aimed at markets within the United States, its home country. Miller's engages in

domestic marketing.

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

dumping.

Differences in standards of living, credit, buying power, and income distribution are all examples of _____ forces that must be considered in international marketing efforts.

economic

The exchange rates of several European countries are linked together to a common currency, the

euro.

Government restrictions on the amount of a particular country's currency that can be bought or sold are known as

exchange controls.

Exporting, licensing, and using trading companies are preferred modes of international market entry for firms with a(n) ________ structure.

export department

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

exporter.

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

franchising.

In many countries, Wendy's allows foreign businesspeople to use its name, logo, methods of operation, advertising, and products. In exchange, Wendy's receives a financial commitment and an agreement to conduct business in accordance with its standard of operations. Wendy's is engaging in

franchising.

When asked where Laser Tools, Inc., markets its products, company president and founder Roger Helms says that "the world is just one big market." He feels anyone not taking this stance is systematically passing up profitable business. Helms's international marketing strategy is best described as

globalization of marketing.

Organizations that employ standardized products, promotion campaigns, and prices for all markets are practicing what is known as

globalization.

Standardizing many Nike and Adidas shoe models worldwide is an example of

globalization.

The Mont Blanc Company plans to export expensive consumer gift items to Germany. The best overall economic measure of market potential would be Germany's

gross domestic product per capita.

When products are introduced into one nation from another, acceptance is far more likely

if there are similarities between the two cultures.

A duty levied by a nation on goods bought outside its borders and brought inside is called a(n)

import tariff.

The purchase of products from a foreign source is called

importing.

Before the 1990s, most firms entered international markets

incrementally and slowly.

If a U.S. bicycle tire manufacturer has to form a partnership with the government of Indonesia in order to gain access to the country's rubber, a _____ has been formed.

joint venture

The World Trade Organization accomplishes all of the following except

lending money to businesses interested in developing international markets.

Nestlé Food Company is a Swiss-based company that operates several divisions in the United States and other countries. This classifies Nestlé as a(n)

multinational enterprise.

Southern Tier Industries has operations in more than 30 foreign countries. The headquarters in Atlanta controls the entire organization while offering subsidiaries the freedom necessary to achieve success in local markets. Southern Tier Industries is an example of a(n)

multinational enterprise.

Firms that have operations or subsidiaries located in many countries are referred to as

multinational enterprises.

The contracting of noncore operations or jobs from internal production within a business to an external entity that specializes in that operation is known as

outsourcing.

Another name for the European Union is

the Common Market.

The country with the highest GDP is

the United States.

Franchising offers all the following benefits for franchisers except

the franchisee's revenue stream is fairly consistent because franchisers pay fixed fees and royalties.

The unconscious reference to one's own cultural values, experiences, and knowledge when encountering new and different cultures is known as

the self-reference criterion.

A ___________ is an organization that links buyers and sellers in different countries but is not involved in manufacturing.

trading company

True/False: Because of continuing disputes and inconsistencies among the administrations of member states, it will be many years before the European Union truly becomes one deregulated market.

True

True/False: Customers that travel the globe expect to be able to buy the same product in most of the world's more than 200 countries.

True

True/False: Customs and taboos are culture-bound and should be taken into consideration when products are marketed in a foreign environment.

True

True/False: Domestic marketing involves marketing strategies aimed at markets within the home country.

True

The ___________ is the difference in value between a nation's exports and its imports.

balance of trade

The role of export agents is to

bring buyers and sellers from different countries together and collect a commission for arranging sales.

Harley-Davidson Motors manufactures all of its motorcycles in the U.S. at one of four sites. With a large number of its bikes sold in markets all around the world, it still retains the manufacturing close to the headquarters for several reasons, one being that its management wants to keep close watch on the quality of its products. However, for all the accessories, apparel, and other riding gear, Harley-Davidson contracts out to other manufacturers to produce the items with the Harley name and logo. Some of these items, particularly the apparel, are made in China. Lately, some members of the Harley Owners' Group (HOG) have been complaining to the company about this practice, citing that "everything Harley should be made in America". One of Harley-Davidson's largest international markets is in Japan, where American brands are highly sought after. This is an example of _______ impacting the market.

cultural forces

KFC opened its first franchised restaurant outside of North America in England in 1964. Now, over a billion KFC chicken dinners are sold annually at more than 80 countries and territories around the world. KFC has established its own processing plants in these countries to ensure the quality of its chickens and other food items. In the U.S., the menu at KFC is usually the same in all restaurants, with only a very few additional items available in different regions. However, when KFC first franchised into Asian countries, it added many unusual local delicacies to the menu -- items such as fried octopus and squid. Additionally, the franchised stores in Asian countries display cooked food in "plates" near windows at the front of the store. This is a tradition for many restaurants in these countries -- to offer the customer passing by a preliminary view of their product. Suppose that KFC's parent company experienced difficulty in opening its restaurants in China unless KFC was willing to pay the government a "bribe". If KFC were to resort to paying this bribe in China saying that "it's different doing business there" -- this would be an example of

cultural relativism.

Selling products that are not in demand in all world markets, such as hand-powered washing machines for use in countries where electricity is not universally available, represents an international marketing strategy focusing on

customization.

KFC opened its first franchised restaurant outside of North America in England in 1964. Now, over a billion KFC chicken dinners are sold annually at more than 80 countries and territories around the world. KFC has established its own processing plants in these countries to ensure the quality of its chickens and other food items. In the U.S., the menu at KFC is usually the same in all restaurants, with only a very few additional items available in different regions. However, when KFC first franchised into Asian countries, it added many unusual local delicacies to the menu -- items such as fried octopus and squid. Additionally, the franchised stores in Asian countries display cooked food in "plates" near windows at the front of the store. This is a tradition for many restaurants in these countries -- to offer the customer passing by a preliminary view of their product. KFC's establishment of international production/processing facilities is an example of

direct ownership.

According to your text, ____ are small technology-based firms operating in international markets within two years of their establishment and realizing as much as 70 percent of their sales outside the domestic home market.

"born globals"

The Common Market of the Southern Cone (MERCOSUR) includes countries from

South America.

KFC opened its first franchised restaurant outside of North America in England in 1964. Now, over a billion KFC chicken dinners are sold annually at more than 80 countries and territories around the world. KFC has established its own processing plants in these countries to ensure the quality of its chickens and other food items. In the U.S., the menu at KFC is usually the same in all restaurants, with only a very few additional items available in different regions. However, when KFC first franchised into Asian countries, it added many unusual local delicacies to the menu -- items such as fried octopus and squid. Additionally, the franchised stores in Asian countries display cooked food in "plates" near windows at the front of the store. This is a tradition for many restaurants in these countries -- to offer the customer passing by a preliminary view of their product. Which of the following alliances will KFC most likely utilize to guide its business transactions in Japan and China?

APEC

When Smithson Graphics decided to go international with its marketing effort, it adopted a global approach. Which factors did SG most likely experience difficulty as the firm applied a global strategy for marketing?

Advertising

Once a company makes a long-term commitment to a foreign market that has a promising political and economic environment, which of the following options then emerges as a possibility?

Direct ownership

True/False: Under a licensing arrangement, the licensee pays commissions or royalties on sales or supplies used in manufacturing.

True

True/False: Cultural differences do not affect marketing negotiations and decision-making behavior.

False

What is the greatest advantage to an organization of having a subsidiary in a foreign nation?

Increase in cross-cultural approaches to management that allows subsidiaries to develop their own identity

The trade alliance that includes Brazil, Argentina, Chile, and other countries is known as

MERCOSUR.

Which of the following countries has made the greatest inroads into other world markets?

Japan

Timex, a U.S. based watchmaker -- recently entered into a partnership agreement with the Australian government to make watches. What type of partnership agreement does this situation most likely represent?

Joint venture

Which of the following alliances/agreements is the United States not a part of?

MERCOSUR

True/False: The greatest danger in becoming involved in direct ownership in international marketing is political uncertainty.

True

Caterpillar would like to better understand factors that would affect its ability to market construction equipment in various countries. Which of the following forces determine how trade barriers affect Caterpillar's marketing efforts?

Political and legal

True/False: The job of the export agent is to bring together buyers and sellers from different countries.

True

Toshiba Electronics is very interested in taking advantage of business opportunities in India but does not have access to India's market. Toshiba has the patent on a low-cost, quality computer system that could assist small businesses in India. Sony Computer, Toshiba's competitor, is experienced in India's small business market but does not have a computer comparable to Toshiba's. If Toshiba and Sony work together to utilize these strengths to seize this opportunity in India, what type of business structure would they likely use?

Strategic alliance

Which of the following agreements provides a forum for tariff negotiations, reducing trade restrictions, resolution of international trade problems, and ground rules for international trade?

The World Trade Organization

True/False: The unification of Europe permits virtually free trade among the member nations of the European Union.

True

True/False: A subsidiary operating in a foreign country may have important tax, tariff, and other operating advantages over a licensing agreement or a joint venture.

True

True/False: An embargo occurs when a government suspends trade with a particular country.

True

True/False: As project sizes increase in the face of global competition and firms attempt to spread the huge costs of technological innovation, there is a stronger impetus to form joint ventures.

True

True/False: NAFTA remains politically controversial.

True

True/False: While NAFTA eliminates many tariffs immediately, the tariffs on more sensitive goods, such as glassware, footwear, and some fruits and vegetables, will be phased out over a 15-year period.

True

KFC opened its first franchised restaurant outside of North America in England in 1964. Now, over a billion KFC chicken dinners are sold annually at more than 80 countries and territories around the world. KFC has established its own processing plants in these countries to ensure the quality of its chickens and other food items. In the U.S., the menu at KFC is usually the same in all restaurants, with only a very few additional items available in different regions. However, when KFC first franchised into Asian countries, it added many unusual local delicacies to the menu -- items such as fried octopus and squid. Additionally, the franchised stores in Asian countries display cooked food in "plates" near windows at the front of the store. This is a tradition for many restaurants in these countries -- to offer the customer passing by a preliminary view of their product. The practice of offering fried octopus and squid at Asian KFC's is best described as

a strategy of some customization.

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

licensing.

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

limited exporting.

In considering the viability of potential international markets for Pepsi products, PepsiCo is advised to take into account __________, which provides insight into market potential.

per capita gross domestic product

The unification of Europe through the European Union (EU)

permits virtually free trade among the member nations of the EU.

Special interest groups and regulatory bodies are ______ forces that must be taken into account in international marketing.

political and legal

The term dumping refers to the sale of

products sold in foreign countries at unfairly low prices.

A limit on the amount of goods an importing country will accept for certain product categories during a specified time period is called a(n)

quota

If Germany, in an attempt to bolster the sales of its own auto manufacturers, decided to limit the number of automobiles that could be brought in from other countries, Germany would be using a(n)

quota

When a glove manufacturer in China is allowed to sell only a certain number of plastic gloves into Japan, that firm is facing a(n)

quota

Marketers of computer software, music CDs, and books are particularly affected by cultural differences in

standards regarding intellectual property.

Nuhitzu believes it has the technological expertise to produce communication systems that will be leaders around the globe. Boston Electronics is widely regarded as having excellent management systems and superior marketing programs. To utilize these strengths, the two firms might form a(n) ___________ to work together on a worldwide basis.

strategic alliance

Sometimes business partnerships are formed between traditional rivals competing for market share in the same product class. These partnerships are known as

strategic alliances.

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

trading company.

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

trading company.

True/False: The passage of NAFTA was agreeable to all parties.

False

True/False: NAFTA simplifies country-of-origin rules, hindering Japan's use of Mexico as a staging ground for further penetration into U.S. markets.

False

True/False: Opportunities for international marketers are limited to industrial nations with the highest incomes.

False

True/False: The U.S. and Japanese economies are more integrated than are the U.S. and Canadian economies.

False

True/False: Regardless of the extent to which a firm chooses to globalize its marketing strategy, extensive environmental analysis and marketing research are necessary to understand the needs and desires of the target market(s) and successfully implement the chosen marketing strategy.

True

True/False: The degree of commitment to international marketing can range on a continuum from national or domestic orientation to a global orientation.

True

True/False: Two-thirds of the world's total purchasing power is outside the United States.

True

True/False: Government restrictions on the amount of a particular currency that can be bought or sold are known as import controls.

False

Harley-Davidson Motors manufactures all of its motorcycles in the U.S. at one of four sites. With a large number of its bikes sold in markets all around the world, it still retains the manufacturing close to the headquarters for several reasons, one being that its management wants to keep close watch on the quality of its products. However, for all the accessories, apparel, and other riding gear, Harley-Davidson contracts out to other manufacturers to produce the items with the Harley name and logo. Some of these items, particularly the apparel, are made in China. Lately, some members of the Harley Owners' Group (HOG) have been complaining to the company about this practice, citing that "everything Harley should be made in America". At what level of involvement in international marketing is Harley-Davidson with regard to its bikes?

Exporting

Harley-Davidson Motors manufactures all of its motorcycles in the U.S. at one of four sites. With a large number of its bikes sold in markets all around the world, it still retains the manufacturing close to the headquarters for several reasons, one being that its management wants to keep close watch on the quality of its products. However, for all the accessories, apparel, and other riding gear, Harley-Davidson contracts out to other manufacturers to produce the items with the Harley name and logo. Some of these items, particularly the apparel, are made in China. Lately, some members of the Harley Owners' Group (HOG) have been complaining to the company about this practice, citing that "everything Harley should be made in America". Harley-Davidson's practice of having manufacturers in China produce apparel items with the Harley logo is an example of

contract manufacturing

If a certain country considered handshakes in business transactions to be taboo and preferred to use nodding, this would be an example of differences in _____ forces.

cultural

Harley-Davidson Motors manufactures all of its motorcycles in the U.S. at one of four sites. With a large number of its bikes sold in markets all around the world, it still retains the manufacturing close to the headquarters for several reasons, one being that its management wants to keep close watch on the quality of its products. However, for all the accessories, apparel, and other riding gear, Harley-Davidson contracts out to other manufacturers to produce the items with the Harley name and logo. Some of these items, particularly the apparel, are made in China. Lately, some members of the Harley Owners' Group (HOG) have been complaining to the company about this practice, citing that "everything Harley should be made in America". If Harley-Davidson were to suddenly find its inventory building up in Japan, it might reduce inventory by selling the bikes at below cost prices. This practice is known as

dumping.

True/False: A quota is the suspension, by a government, of trade in a particular product.

False

True/False: Cultural relativism is the unconscious reference to one's own cultural values, experiences, and knowledge when traveling in other countries.

False

True/False: Exporting, licensing and franchising, trading companies, contract manufacturing, and joint ventures are preferred modes of international market entry for firms with an export department structure.

False

True/False: Firms with internationally integrated structures are the least likely to engage in direct ownership activities internationally.

False

True/False: Franchising is an arrangement whereby a franchisee grants a franchiser the right to market its product, using its name, logo, methods of operation, advertising, products, and other elements of the franchising company's business, in return for a financial commitment and an agreement to conduct business in accordance with the franchisee's standard of operations.

False

True/False: It is impossible for a subsidiary to develop a local identity because it seldom employs personnel from the country within which it operates.

False

True/False: Media allocation, retail outlets, and price are among the easiest marketing mix variables to standardize.

False

True/False: The study of the cultural environment is unnecessary in the foreign market because foreign consumers will accept anything that American marketers have to sell.

False

True/False: U.S. marketers may engage in bribery to compete with foreign firms.

False

True/False: When products are introduced from one nation into another, acceptance is more likely if the two cultures are different.

False

True/False: Firms that use an international division structure are often organized domestically on the basis of functions or product divisions, while the international division operates based on geography.

True

True/False: GATT is based on negotiations between member countries to reduce worldwide tariffs and increase international trade.

True

The United States' prohibition against importing cigars from Cuba is an example of a(n)

embargo

The environmental forces that affect foreign markets may differ dramatically from those affecting domestic markets. This makes a careful _______ a critical part of a successful international marketing strategy.

environmental analysis

Many companies choose to standardize their _____ across national boundaries to maintain a consistent and well-integrated corporate culture.

ethical behavior

Henderson Synthetics' management believes that several of the firm's products could have sizable markets in other countries. To maintain a low level of commitment with minimum effort and cost, Henderson should engage in international marketing through

exporting.

A subsidiary in a foreign country generally operates under

foreign management in order to develop a local identity.

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

importing.