Ch. 5

A U.S. executive had no idea the Japanese go through a very elaborate ritual when exchanging business cards. When he arrived at a meeting in Tokyo, he sat down and tossed some of his business cards across the table at a group of stunned Japanese businesspeople. Due to the U.S. executive's rudeness, the multimillion dollar deal failed. The U.S. executive overlooked the importance of which environmental factor? a. culture b. demographics c. natural resources d. economic development e. political structure

A

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. a. demographic b. lifestyle c. natural d. cultural e. economic

A

A(n) _____ is a limit on the amount of a specific product that can enter a country. a. quota b. tariff c. boycott d. exchange control e. transfer limit

A

Apple Inc. has partnerships with wireless carriers in Japan, Spain and a handful of other European countries. Apple Inc works with suppliers and retailers worldwide. This means that Apple is a _____. a. multinational corporation b. worldwide competitor c. marketplace competitor d. domestic corporation e. foreign investor

A

Claiborne Inc. produces leather accessories for motorcycle riders and is in stage one of creating their global business. This means that they: a. operate in one country and sell to others b. have set up a foreign subsidiary c. operate an entire line of business in another country d. have top executives and core corporate functions in different countries e. they operate in every country in the world

A

Consumers purchasing an automobile in Hong Kong must pay a 100% tax on it. This tax is imposed by the government on all automobiles entering the country and is called a(n): a. tariff b. quota c. license d. boycott e. exchange control

A

Defeet International creates its apparel in North Carolina and sells it domestically and abroad. The company is in which stage of global business? a. Stage one b. Stage two c. Stage three d. Stage four e. Stage five

A

In China, August 15 is "the Chinese Saint Valentine's Day" in memory of two ancient lovers who were separated by a goddess and only allowed to meet once a year on that date. Flower and candy sales typically increase that day as they do on February 14 in the United States. This would be an important part of the international _____ environment for a flower wholesaler or a confectionery company. a. cultural b. legal c. economic d. technological e. natural

A

Negotiations (such as GATT or the Uruguay Round) between countries that are made to stimulate global exchange and remove barriers are called _____ agreements. a. trade b. joint venture c. CRM d. exchange e. licensing

A

The _____ is an intermediary in the global market who assumes all risks and sells globally for its own account. The domestic manufacturer usually treats it like a domestic customer. a. buyer for export b. export agent c. joint venturer d. contract manufacturer e. market group

A

The _____ is the most ambitious global trade agreement ever negotiated; the agreement has reduced tariffs by one-third worldwide. a. Uruguay Round b. Mercosur c. GATT d. NAFTA e. Maastricht Treaty

A

The _____ of trade negotiations created the _____, which replaces GATT. This trade agreement dramatically lowers trade barriers worldwide. a. Uruguay Round; World Trade Organization b. Doha Round; European Union c. Doha Round; NAFTA d. Paraguay Round; South American Free Trade Agreement e. Mercosur; European Union

A

The primary reason large U.S. companies send U.S. jobs abroad is because labor costs are higher here in the United States. They are engaging in _____. a. outsourcing b. global trade c. multinational employee searches d. employee export e. global employment

A

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. a. demographic b. political c. cultural d. educational e. country resource

A

The North American Free Trade Agreement (NAFTA) did all of the following EXCEPT: a. created the world's largest free-trade zone including Canada, the United States, and Mexico b. substantially reduced economic growth in Mexico c. allowed U.S. and Canadian financial-services companies to own subsidiaries in Mexico d. removed many tariffs and duties so that Mexico, Canada, and the United States can trade more freely e. expanded opportunities for U.S. businesses in Mexico

B

A company that is capital-intensive: a. has an altered fiscal strategy for overseas operations b. spends more on equipment than on labor c. makes better use of benchmarking than other types of business d. creates employment monopolies e. must engage in countertrading due to restrictive foreign legislature

B

Cardiac Science, a U.S. manufacturer of defibrillators, heart monitoring devices, and other medical related devices, sells 85 percent of its products outside the United States. It sells basically the same product to a hospital in London, Tokyo, Pretoria, or Sydney. It uses the same promotional tactics in all of its markets. Cardiac Science: a. is not concerned about media and messages used for international promotional efforts b. uses global marketing standardization c. assumes cultural uniformity and lifestyle differences occur across cultural settings d. desires technological receptivity from country to country e. assumes language acceptance in each country

B

Carlos Hernandez owns a company in Miami that purchases products from U.S. manufacturers for export to several countries in Central and South America. Carlos is a(n): a. licensing agent b. buyer for export c. export broker d. export agent e. export importer

B

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: a. ethical system b. culture c. ethnocentrism d. national personality e. socialization

B

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? a. buyer for export b. export broker c. license agent d. import agent e. export agent

B

In which stage do multicultural companies operate when they set up foreign subsidiaries to handle sales in one country? a. Stage one b. Stage two c. Stage three d. Stage four e. Stage five

B

International Marketing, Inc. is a company located in Brazil and assists businesses that export products to Brazil. This company helps with financing, shipping, and any aspect of marketing a product from another country in Brazil. This company is an example of a(n): a. agent broker b. export agent c. export broker d. buyer for export e. import broker

B

Muslim countries are receptive to most Disney products, but they have asked Disney not to include Piglet when it sells its Winnie the Pooh characters because Muslims (as a part of their religious beliefs) contend that pork in any form is unclean. This is an example of a _____ factor that directly affects Disney's global operation. a. political structure b. cultural c. technological d. competitive e. natural resource

B

Since 1953, the United States has limited the amount of raw peanuts that can be imported to 1.7 million pounds a year. This is only about one-tenth of 1 percent of all domestic edible peanut consumption in the United States. This limitation is an example of a(n): a. natural resource barrier b. quota c. tariff d. exchange control e. boycott

B

The United States is selling more domestically produced products in other countries than any other country in the world. This means the United States is the world leader in: a. quota making b. exporting c. tariff trading d. dumping e. licensing

B

The Victorinox Swiss Army Knife is found all over the world. It is manufactured and marketed similarly to all consumers. Victorinox uses a(n) _____. a. ethnocentric strategy b. global marketing standardization approach c. synergistic approach to globalization d. cultural marketing strategy e. traditional approach to marketing

B

The fact that Russia's inflation rate has increased 15.1% since May of 2007 would be an important _____ factor for a company that wanted to do business in that country. a. legal b. economic c. culture d. technological e. natural

B

Which method of entering the global marketplace would be most risky? a. licensing b. direct investment c. contract manufacturing d. joint ventures e. exporting

B

Which of the following is an important cultural factor that should be considered by global marketers? a. competitive synergy b. language c. natural resources d. technology sensitivity e. level of economic development

B

With a _____, a firm produces standardized products to be sold the same way all over the world. a. traditional marketing strategy b. global marketing standardization approach c. product extension approach d. culturally based marketing strategy e. synergistic approach to marketing

B

_____ 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. a. A joint venture b. Divestment c. Licensing d. A principal-agent agreement e. A contract manufacturing arrangement

C

A tax levied on the goods entering a country is called a(n): a. license b. quota c. boycott d. exchange control e. tariff

E

A(n) _____ is a global intermediary that brings the buyer and seller together. a. buyer for export b. export agent c. license agent d. import agent e. export broker

E

All of the following are countries included in the Central America Free Trade Agreement (CAFTA) EXCEPT: a. United States b. Nicaragua c. El Salvador d. Guatemala e. Mexico

E

About 85 percent of U.S. companies export their products to other countries on a regular basis.

F

According to research done by the World Bank, countries with the greatest amount of business regulation foster the strongest economies.

F

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.

F

GATT, NAFTA, and the EU are all examples of market groupings.

F

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

F

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

F

Multinational companies typically begin the development of their global business with direct investment and continue using this strategy throughout the company's life span.

F

NAFTA is the New American Foreign Trade Amendment, which allows for balanced trade with the European Union (EU).

F

The U.S. government prohibits the importation of Havana cigars because of political differences with Cuba. This is an example of an import exchange control.

F

The Uruguay Round of trade negotiations dramatically increased trade barriers worldwide.

F

The form of global organization that provides the highest potential for return on investment as well as the highest level of risk is contract manufacturing.

F

The major disadvantage of licensing agreements is that international companies cannot maintain control over their licensees.

F

To protect its local vodka industry, Russia allows foreign manufacturers to have only one percent of the Russian vodka market. This is an example of using tariffs to control foreign competition.

F

U.S.-based Procter & Gamble and Italian-based Fater agreed to produce and market diapers for the European market. This is an example of a joint franchise.

F

While some countries have elements of both capitalism and socialism, most nations are at one political extreme or the other.

F

Which list correctly ranks the methods of entering the global marketplace in increasing order of risk? a. exporting, licensing and franchising, contract manufacturing, joint venture, and direct investment b. importing, contract manufacturing, licensing and franchising, joint venture, and direct investment c. licensing, franchising, contract manufacturing, joint venture, direct investment, and exporting d. franchising, contract manufacturing, joint venture, direct investment, importing, and licensing e. importing, contract manufacturing, joint venture, direct investment, and exporting

A

Which method of entering the global marketplace would be LEAST risky? a. exporting b. licensing c. contract manufacturing d. joint ventures e. direct investment

A

Which of the following is a criticism of multinational corporations? a. multinationals sometimes support reactionary and oppressive regimes b. multinationals require excessive employment information c. countertrading d. the transference of labor-intensive technology e. multinationals do not do enough to standardize their marketing mixes

A

Who offers low-interest loans to developing nations? a. World Bank b. International Monetary Fund c. Federal Reserve d. International Reserve e. United Nations

A

_____ 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. a. Export agents b. Export brokers c. Import broker d. Buyers for export e. Licensing agents

A

A business thinking of expanding into global markets needs to examine all of the following external environments EXCEPT: a. culture b. political structure and actions c. its marketing mix d. natural resources e. demographic makeup

C

A soft drink manufacturer who was 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. a. demographic b. economic c. cultural d. political e. technological

C

A(n) _____ is a company that is heavily engaged in global trade and moves its resources, goods, services, and skills across national boundaries. a. international facilitator b. global trader c. multinational corporation d. exporting company e. international merchant

C

Cooley Manufacturing is a multinational company selling plumbing components around the world. This company has progressed to the point that it operates an entire of line of business in several other countries. Which stage of multinational business does this represent? a. Stage one b. Stage two c. Stage three d. Stage four e. Stage five

C

Forty million jobs may be shipped out of the country in the next decade or two according to Alan Blinder, former Federal Reserve Chairman. The key factor in this phenomenon is _____. a. cultural changes b. the adoption of English worldwide c. communications technology d. competition e. more global flights

C

Franchising is a form of: a. contract marketing b. international exporting c. licensing d. direct exporting e. countertrading

C

Many people fear world trade because it: a. will inevitably lead to inflation b. will cause living standards to increase at a slower rate c. causes some people to lose their jobs as production shifts abroad d. has brought entire nations out of poverty e. has increased per capita income for some countries

C

Otis Elevators has entered into a strategic alliance with a company in France from which it gets its elevator door systems. It has a similar agreement with a manufacturer in Japan that provides it with special motor drives. A manufacturer in Spain has worked closely with Otis to create small geared parts necessary for the manufacture of elevators. The component parts are assembled at its plant in the United States. Otis elevators can be found in buildings all over the world. Otis Elevators is an example of a(n): a. cultural marketer b. global trader c. multinational corporation d. exporting company e. global enterprise

C

Sawyer Components manufactures high-cost, customized roller parts for paper mills and is expanding into China because of the opportunity for significant growth in this developing country. The owner uses effective global strategies and is aware of threats from foreign competitors. This illustrates that the owner has a global: a. advantage b. imperative c. vision d. outsource e. introspection

C

The role of a domestic company that sells to an export merchant (also called a buyer for export) is to: a. guide the marketing actions of the merchant as the goods are sold in foreign countries b. pay all transportation, warehousing, and marketing expenses c. sell the product to that merchant who resells the product in the foreign country without the aid or input of the original manufacturer d. broker a partnership agreement such as a joint venture e. dictate conditions of sale in foreign countries

C

When IKEA, the Swedish home furnishings retailer, first entered the Japanese market, it failed. It was more successful in its second try because it was aware of the need to adapt its furnishings to fit the smaller Japanese homes. The _____ environment had the greatest influence on IKEA's first failure in Japan. a. demographic b. economic c. cultural d. political e. technological

C

Which of the following is the latest round of World Trade Organization (WTO)? a. Mercosur covenant b. CAFTA Alliance c. Doha Round d. Uruguay Round e. WTO Round

C

Which of the following statements about the political environment is true? a. A recession is part of the political environment. b. A country is either socialistic or capitalistic, but never both. c. The countries with the least across-the-board regulations and political structures foster the strongest economies. d. The European Union is purely an economic arrangement and has no political impact on marketing. e. All of these statements about the political environment are true.

C

_____ 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. Boycotts b. Regional unifications c. Market groupings d. Free trade nations e. Expropriation members

C

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: a. using lawyers from both countries to write the licensing agreement. b. insisting that all licensees have a published code of ethics. c. having the licensee pay a fee for the use of the manufacturing process, trademark, patent, or other proprietary knowledge. d. locally registering patents and trademarks to the U.S. firm -- not the licensee. e. avoiding the use of any patents and trademarks.

D

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. a. tariff b. quota c. fiscal prerequisite d. exchange control e. transfer barrier

D

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: a. a joint venture b. exporting c. direct investment d. licensing e. capital-intensive manufacturing

D

Global marketing standardization: a. is becoming less popular with the large multinationals b. encourages product, packaging, and advertising variations for each nation or local market c. actually raises production costs d. presumes markets throughout the world are becoming more alike e. is more popular with consumer products than with industrial goods

D

The goal of the Central America Free Trade Agreement (CAFTA) is to: a. create free-trade agreements between the United States and other industrialized nations b. eliminate all protectionism c. raise prosperity levels in all industrializing nations d. establish a free trade agreement between the United States and certain Latin American countries e. make sure all nations achieve the economic and technological development of a takeover economy or better

D

Which of the following statements about multinational firms is true? a. Multinationals typically do not change their methods of reaching their global markets if they are successful with their initial strategy. b. Multinationals are defined as companies heavily engaged in exporting and importing. c. All multinationals must enter the fourth stage of globalization before they are fully internationalized. d. Multinationals often develop their global businesses in stages. e. The five stages of globalization closely mirror the five stages of the product life cycle.

D

With respect to global business, MFN stands for: a. multi-functional norm b. multinational foreign network c. main foreign network d. most favored nation e. multi-foreign nation

D

All of the following statements about global marketing are true EXCEPT: a. Marketing to target markets throughout the world has become an imperative for business. b. Often a U.S. firm's toughest domestic competition comes from foreign companies. c. Marketing managers must develop a global vision not only to recognize and react to international marketing opportunities but also to remain competitive at home. d. Adopting a global vision can be lucrative for a company, and global marketing can offset weak domestic performance. e. Foreign competitors have not gained significant market share in the U.S.

E

An exclusion of all products from certain countries or companies by a government or group is called a(n): a. expropriation b. quota c. tariff d. exchange control e. boycott

E

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. developing international selling schemes b. implementing standard international marketing c. implementing global marketing standardization d. supplementing its foreign vision e. practicing global marketing

E

Gillette gets about two-thirds of its revenue from its international divisions. This shows that: a. U.S. citizens are shaving less b. their market share should increase c. more men and women need to shave d. sales need to be increased domestically e. adopting a global vision can pay off

E

In 1764, the British Sugar and Currency Acts created such economic difficulty in the American colonies that soon-to-be Americans refused to buy British goods in protest. This refusal marked one of the first examples of the use of the: a. transfer limit b. quota c. tariff d. exchange control e. boycott

E

Individuals and organizations utilizing a global vision to effectively market goods and services across the world are engaged in: a. international selling schemes b. borderless commerce c. global marketing standardization d. global logistics e. global marketing

E

Patch Products is an Australian company that has given permission to several Latin American companies to manufacture and market its patented Spanish/English children's frame tray puzzles. Because Patch uses licensing as its global marketing strategy, it: a. must only pay a minimal royalty to the licensed companies b. cannot control how the puzzles are manufactured c. has involved itself in the global marketing strategy that gives it the greatest amount of control d. cannot have any control over how the puzzles are promoted or distributed e. chose a method of global marketing that created minimal risk

E

Vast differences in natural resources create all of the following EXCEPT: a. potential for military intervention b. shifts in wealth between nations c. inflation and recession d. global dependencies e. export opportunities for countries with no natural resources

E

When European demand for a certain solvent declined, Dow Chemical instructed its German plant to switch to manufacturing a chemical that had been imported from Louisiana and Texas. Dow Chemical would be best described as a(n): a. global enterprise b. global trader c. cultural marketer d. exporting company e. multinational corporation

E

When Krispy Kreme decided to expand its operation internationally, it chose to first make its doughnuts available in Canada to minimize its risk. In accordance with the policy of risk minimization, the company sold the right to manufacture and sell its doughnuts to Canadians. In other words, Krispy Kreme used: a. contract manufacturing b. direct investment c. importing d. a strategic alliance e. licensing

E

When a company or industry is taken over by the government, it has been: a. unionized b. boycotted c. exchanged d. patronized e. nationalized

E

Which of the following statements about the European Union (EU) is true? a. The EU creates a single Europroduct for a generic Euroconsumer. b. The EU removes all internal trade barriers and standardizes regulations in European countries for easier trade. c. The EU can correctly be called the "United States of Europe" because all European voters have agreed to these changes. d. The existence of the EU eliminates protectionist movements by United Europe against the Japanese and the United States. e. The European Union is the largest economy in the world.

E

Who are the richest people in the world? a. Americans b. Chinese c. British d. French e. Luxembourgers

E

Zambia is internationally recognized as the world's second leading producer of cobalt, which is used to make high-speed and high-temperature cutting tools and dyes. A company that wanted to manufacture tools for shaping steel would be most attracted to which element of the Zambian environment? a. culture b. legal c. economic d. technological e. natural resources

E

_____ is a trade agreement that includes Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador, Paraguay, Peru, and Uruguay. This agreement eliminated the tariffs among these trading partners. a. NAFTA b. Maastricht c. WTO d. GATT e. Mercosur

E

Even if all parties to a global business transaction are fluent in a common language, other cultural factors could interfere with the communication process.

T

Global marketing standardization assumes markets throughout the world are becoming more alike.

T

Global trade has reached about $11 trillion a year.

T

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

T

Licensing agreements reduce the risk for manufacturers and sometimes even remove the requirement for a manufacturer to produce its own product.

T

The U.S. government limits the amount of sugar cane that is imported into the country. This is an example of a quota.

T

The falling U.S. dollar makes the possibility of manufacturing in the United States more attractive than in the past.

T

The rules, regulations, and habits used for bricks-and-mortar stores tend to restrain and limit the success of those retailers engaged in e-commerce.

T

The same environmental factors that operate in the domestic market also exist internationally. These factors (culture, economic development, political and legal structure, demographics, and natural resources) should be examined regardless of the country.

T

Vast differences in natural resources created international dependence and huge shifts of wealth.

T