Chapter 9 MKTG

multinational enterprises

businesses that manufacture and market products in two or more countries

Dumping

selling products in a foreign country at lower prices than those charged in the producing country

Quota

A limit placed on the quantities of a product that can be imported

comparative advantage

the ability to produce a good at a lower opportunity cost than another producer

import tariff

A duty levied by a nation on goods bought outside its borders and brought into the country

balance of trade

the difference between a country's total exports and total imports

per capita GDP

Gross Domestic Product per person

World Trade Organization (WTO)

International organization derived from the General Agreement on Tariffs and Trade (GATT) that promotes it free trade around the world.

contract manufacturing

a joint venture in which a company contracts with manufacturers in a foreign market to produce its product or provide its service

Association of Southeast Asian Nations (ASEAN)

a trade alliance that promotes trade and economic integration among member nations in Southeast Asia

Which of the following is true about NAFTA? a) It remains politically controversial. b) It will increase the total output of goods and services to foreign markets. c) It will decrease the total number of jobs in the United States. d) It eliminated all tariffs on goods traded between the United States, Canada, and Mexico. e) It will reduce the number of illegal aliens in the United States.

a) It remains politically controversial.

Swiss-based Nestlé has taken a global approach to marketing its chocolate products. Which of the following is most easily standardized? a) Product b) Promotion c) Distribution d) Advertising e) Price

a) Product

Asia-Pacific Economic Cooperation (APEC)

an international trade alliance that promotes open trade and economic and technical cooperation among member nations

Embargo

an official ban on trade or other commercial activity with a particular country.

What is the greatest advantage to an organization of having a subsidiary in a foreign nation? a) Avoidance of all U.S. laws b) Increase in cross-cultural approaches to management that allows subsidiaries to develop their own identity c) Increased trend toward nationalistic marketing approaches d) Greater amount of standardization of the marketing mix e) Greater amount of security from government nationalization and other anticompetitive measures

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

advantages are:

climate, geography, skills/size of labor force

absolute advantage

countries should specialize in producing what their good at

In relation to international marketing, which of the following best describes direct ownership? a) A company owns its own manufacturing facilities. b) A company forms an alliance with a similar company in a foreign country. c) Foreign companies contract with manufacturers in other countries. d) A company owns subsidiaries or facilities in foreign countries. e) Two companies from different nations have interests in each other's facilities.

d) A company owns subsidiaries or facilities in foreign countries.

____ 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. a) The self-reference criterion b) Global ethics c) Economic relativism d) Cultural relativism e) Moral relativism

d) Cultural relativism

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? a) Exporting b) Joint venture c) Limited exporting d) Direct ownership e) Licensing

d) Direct ownership

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? a) Branding b) Product characteristics c) Packaging d) Labeling e) Advertising

e) Advertising

Merchantlism

export = good import = bad sometimes may be good for a country to import

Smoot-Hawley Tariff Act

legislation passed in 1930 that established very high tariffs. Its objective was to reduce imports and stimulate the domestic economy, but it resulted only in retaliatory tariffs by other nations

Customization

making products to meet a particular customer's needs or wants Customization views countries as being very different that need unique strategies.

exchange controls

regulations that restrict the amount of currency that can be bought or sold

Franchising

selling to a foreign organization the rights to use a brand name and operating know-how in return for a lump-sum payment and a share of the profits

Licensing

the legal process whereby a licensor allows another firm to use its manufacturing process, trademarks, patents, trade secrets, or other proprietary knowledge

Globilization

the process by which businesses or other organizations develop international influence or start operating on an international scale. Globalization tries to use the same strategy worldwide.

trading company

a firm that buys goods in one country and sells them to buyers in another country

The World Trade Organization accomplishes all of the following except a) educating companies about international trade rules. b) lending money to businesses interested in developing international markets. c) serving as a forum for trade negotiations. d) helping settle trade disputes. e) providing legal ground rules for international commerce.

b) lending money to businesses interested in developing international markets.

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? a) Brand name b) Package c) Media allocation d) Labels e) Product characteristics

c) Media allocation

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 a) a joint venture. b) contract manufacturing. c) direct licensing. d) franchising. e) a strategic alliance.

d) franchising.

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) a) strategic alliance. b) national marketer. c) international proprietorship. d) multinational enterprise. e) limited exporter.

d) 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) a) strategic alliance. b) joint venture. c) export-driven corporation. d) multinational enterprise. e) trading company.

d) multinational enterprise.

Sometimes business partnerships are formed between traditional rivals competing for market share in the same product class. These partnerships are known as a) trading companies. b) contract manufacturers. c) joint ventures. d) strategic alliances. e) licenses.

d) strategic alliances.

Which of the following is not true of NAFTA? a) The agreement has a long adjustment phase-in time period. b) Increased competition should lead to a more efficient market. c) It will provide additional opportunities for the United States in long-term affiliations with other countries in the Western hemisphere. d) It is controversial. e) Business licensing requirements have been increased.

e) Business licensing requirements have been increased.

European Union (EU)

(syn Common Market) an economic association established in 1957 by a number of Western European countries to promote free trade among its members

direct ownership

A method of entering an international market in which a domestic firm actively manages a foreign company or overseas facilities.

North American Free Trade Agreement (NAFTA)

Agreement that created a free-trade area among the United States, Canada, and Mexico. (1992)

Common market of the southern cone

An alliance that promotes the free circulation of goods, services, and production factors, and has a common external tariff and commercial policy among member nations in South America

DR-CAFTA (Dominican Republic-Central America Free Trade Agreement)

An international agreement that eliminated tariffs, reduced nontariff barriers, and facilitated investment among the U.S., Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic.

Thomas Friedman, "The World is Flat"

Berlin Wall Netscape Workflow Software/Email Phone/iPod/PDA/IM/VoIP Berlin Wall

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 a) contract manufacturing. b) licensing. c) franchising. d) exporting. e) direct investment.

c) franchising.

Organizations that employ standardized products, promotion campaigns, and prices for all markets are practicing what is known as a) customization. b) internationalization. c) globalization. d) regionalization. e) nationalization.

c) globalization.

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 a) exporting. b) franchising. c) contract manufacturing. d) a joint venture. e) licensing.

c) contract manufacturing.

Franchising offers all the following benefits for franchisers except a) franchise agreements require a certain standard of behavior from franchisees, which helps protect the franchise name. b) franchisers can retain control of their name while increasing global penetration of their products. c) the franchisee's revenue stream is fairly consistent because franchisers pay fixed fees and royalties. d) the franchiser's revenue stream is fairly consistent because franchisees pay fixed fees and royalties. e) franchisers do not have to put up a large capital investment.

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

Which of the following lists the levels of involvement in global marketing from the lowest to the highest? a) International marketing, limited exporting, domestic marketing, globalized marketing b) Limited exporting, domestic marketing, globalized marketing, international marketing c) Globalized marketing, international marketing, limited exporting, domestic marketing d) Domestic marketing, globalized marketing, international marketing, limited exporting e) Domestic marketing, limited exporting, international marketing, globalized marketing

e) Domestic marketing, limited exporting, international marketing, globalized marketing

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? a) Exporting b) Trading c) Joint venture d) Strategic alliance e) Licensing

e) Licensing

What level of commitment in international marketing may be most attractive when the political and economic stability of a foreign country is questionable? a) Joint ventures b) Direct ownership c) Exporting d) Limited exporting e) Licensing

e) Licensing

How does using an exporting intermediary limit the risk involved with global marketing? a) Most exporting intermediaries assume all financial risks on behalf of their clients. b) Exporting intermediaries are not subject to the same laws as companies, and therefore limit the legal risk involved. c) Using an exporting intermediary restricts a company to being involved with joint ventures and not direct ownership. d) Exporting intermediaries guarantee that the products a company is selling will be a good fit for the foreign markets they are entering. e) This approach involves limited risk because the company has no direct investment in the foreign country.

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

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 a) licensing. b) exporting. c) a strategic alliance. d) a joint venture. e) contract manufacturing.

a) licensing.

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 a) outsourcing. b) licensing. c) franchising. d) contract manufacturing. e) contract sourcing.

a) outsourcing.

What is the primary distinction between a joint venture and a strategic alliance in international marketing? a) Strategic alliances are only formed between companies from well-developed countries whereas joint ventures are between companies from economically-diverse countries. b) A joint venture involves only two companies whereas a strategic alliance is formed between three or more companies. c) A strategic alliance is formed by companies who have traditionally been rivals, which is not the case with a joint venture. d) A joint venture is formed between companies with dissimilar product offerings while a strategic alliance is formed between companies with similar product offerings. e) A joint venture is simply a financial investment in a foreign firm while a strategic alliance involves more than just financial support.

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

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? a) Trading company b) Licensing arrangement c) Strategic alliance d) Joint venture e) Direct ownership arrangement

d) Joint venture

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 a) internationalization. b) culturalization. c) nationalization. d) globalization. e) customization.

e) customization.

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. a) multinational enterprise b) contract manufacturing arrangement c) strategic alliance d) franchise e) joint venture

e) joint venture

Special interest groups and regulatory bodies are ______ forces that must be taken into account in international marketing. a) socioeconomic b) technological c) economic d) social and ethical e) political and legal

e) political and legal