Chapter 12
_____ refers to a partnership of two or more participating companies that have joined forces to create a separate legal entity to facilitate doing business in a country where none of the participants are currently active. A. A consortium B. A franchise pact C. A license arrangement D. Indirect exporting E. Direct foreign investment
A. A consortium (1) They typically involve a large number of participants and (2) they frequently operate in a country or market in which none of the participants are currently active.
The first step in the international planning process is to adapt the marketing mix to target markets.
FALSE A critical first step in the international planning process is deciding in which existing country market to make a market investment.
To be a success in the global marketplace today, the best companies will focus on country as the primary segmentation variable.
FALSE As global markets continue to homogenize and diversify simultaneously, the best companies will avoid the trap of focusing on country as the primary segmentation variable.
Age and gender have been the most obvious international market segmentation variables, particularly for Americans.
FALSE Country has been the most obvious segmentation variable, particularly for Americans
If a product is culturally sensitive, then decisions related to the product are more likely to be centralized
FALSE If a product is culturally sensitive, the decisions are more likely to be decentralized.
In the 1970s, the market segmentation argument in global marketing was framed as "global integration versus local responsiveness."
FALSE In the 1970s, the market segmentation argument was framed as "standardization versus adaptation." In the 1980s, it was "globalization versus localization," and in the 1990s, it was "global integration versus local responsiveness."
Joint ventures are similar in structure and organization to minority holdings by a multinational company (MNC) in a local firm.
FALSE A joint venture is different from other types of strategic alliances or collaborative relationships in that a joint venture is a partnership of two or more participating companies that have joined forces to create a separate legal entity. Joint ventures are different from minority holdings by an MNC in a local firm.
MedUmbrella Inc. provides a broad and diverse range of services for the healthcare industry. It also manufactures a wide variety of hospital equipment. It wants to experience rapid growth and intends to have an organizational structure to better face global competition. Which of the following organizational structures will suit MedUmbrella best? A. A global product division structure B. A geographical division structure C. A matrix structure D. A pyramid structure E. A hierarchical structure
A. A global product division structure Companies that adopt the global product division structure are generally experiencing rapid growth and have broad, diverse product lines.
The answers to which of the following questions is generated in Phase 2 of the international marketing process? A. Are there identifiable market segments that allow for common marketing mix tactics across countries? B. Have objectives and goals been established? C. Have all budgets been determined within the constraints of resources? D. Are pre-existing channels of distribution in the new market mature enough to support the proposed expansion? E. Have responsibilities been established for implementation and control?
A. Are there identifiable market segments that allow for common marketing mix tactics across countries? The answers to three major questions are generated in Phase 2 of the international marketing process: a) Are there identifiable market segments that allow for common marketing mix tactics across countries? b) Which cultural/environmental adaptations are necessary for successful acceptance of the marketing mix? c) Will adaptation costs allow profitable market entry?
Which of these aspects of international marketing is analyzed in Phase 1 of the international planning process? A. Company character B. Product adaptation C. Advertising D. Situation analysis E. Budget
A. Company character A critical first step in the international planning process is deciding in which existing country market to make a market investment. A company's strengths and weaknesses, including the characteristics of its home country, products, philosophies, modes of operation, and objectives must be matched with a country's constraining factors and market potential. Refer to Exhibit 12.1-International Planning Process.
Which of these aspects of international marketing are analyzed in Phase 1 of the international planning process? A. Home-country constraints B. Budgets C. Situation analysis D. Promotions E. Product adaptations
A. Home-country constraints Company character, home-country constraints, and host-country constraints are analyzed in the first phase of the international planning process
Which of the following primary relationship activities in building strategic alliances involves seeing the reality in possibilities of an alliance, creating a shared vision from being together, and involving trusted senior managers? A. Imaging B. Committing C. Interfacing D. Dating E. Initiating
A. Imaging The second relationship activity in building a strategic alliance is labeled as imaging. It involves seeing the reality in possibilities of an alliance, creating a shared vision from being together, and involving trusted senior managers. Refer to Exhibit 12.3-Building Strategic Alliances.
Which of the following is true about tactical planning? A. It is designed to address questions that relate to advertising and marketing. B. It specifically deals with a company's products, capital, and research at a global level. C. It is conducted at the highest levels of management. D. It excludes plans that are made at the local level. E. It is most commonly referred to as corporate planning.
A. It is designed to address questions that relate to advertising and marketing. Tactical planning, or market planning, pertains to specific actions and to the allocation of resources used to implement strategic planning goals in specific markets. Tactical plans are made at the local level and address marketing and advertising questions.
Which of the following forms of business relationships lets a company grant patent rights, trademark rights, and the rights to use technological processes to another company in a foreign country? A. Licensing B. Exporting arrangements C. Joint ventures D. Consortia E. Strategic alliances
A. Licensing Patent rights, trademark rights, and the rights to use technological processes are granted in foreign licensing.
A direct sales force may be required in a foreign country particularly for _____. A. big ticket industrial products B. low-technology products C. personal care products D. nonmechanical goods E. traditional hand-made goods
A. big ticket industrial products Particularly for high-technology and big ticket industrial products, a direct sales force may be required in a foreign country.
Companies that adopt the _____ structure are generally experiencing rapid growth and have broad, diverse product lines. A. global product division B. pyramid C. hierarchical D. geographical division E. matrix organization
A. global product division Companies that adopt the global product division structure are generally experiencing rapid growth and have broad, diverse product lines.
With respect to global marketing management, the argument for market segmentation in the 1980s was framed as _____. A. globalization versus localization B. standardization versus adaptation C. adaptation versus one-to-one marketing D. globalization versus one-to-one marketing E. standardization versus localization
A. globalization versus localization. In the 1970s, the market segmentation argument was framed as "standardization versus adaptation." In the 1980s, it was "globalization versus localization," and in the 1990s, it was "global integration versus local responsiveness."
If a company were to focus on market planning that involved specific actions and allocation of resources, the company would most likely be using _____ planning. A. tactical B. strategic C. corporate D. operational E. synergistic
A. tactical Tactical planning, or market planning, pertains to specific actions and to the allocation of resources used to implement strategic planning goals in specific markets.
A joint venture is different from a consortium in that a joint venture: A. usually operates in a country in which the participants are already present. B. typically involves a large number of participants. C. restricts the right to hold an equity position by its major partners. D. does not involve the creation of a separate legal entity. E. is formed mainly for executing short-term projects.
A. usually operates in a country in which the participants are already present. Four characteristics define joint ventures (JVs): (1) JVs are established, separate, legal entities; (2) they acknowledge intent by the partners to share in the management of the JV; (3) they are partnerships between legally incorporated entities, such as companies, chartered organizations, or governments, and not between individuals; and (4) equity positions are held by each of the partners. Consortia are similar to joint ventures and could be classified as such except for two unique characteristics: (1) They typically involve a large number of participants and (2) they frequently operate in a country or market in which none of the participants is currently active.
Around the Asia Pacific Rim, where U.S. companies face unfamiliar legal and cultural barriers, it is preferable to buy an existing business than to enter into a joint venture.
FALSE Around the Asia Pacific Rim, where U.S. companies face unfamiliar legal and cultural barriers, joint ventures are preferred to buying existing businesses.
Devonaile Inc. is a small-scale apparel manufacturer in Florida. Devonaile and other similar firms from Florida collaborate and form a separate company in India as none of the participants in this collaboration have active operations in the Indian market. The newly created firm primarily manufactures apparel suited to the tastes and preferences of the Indian customers. Identify the type of foreign market-entry approach depicted in this scenario. A. A franchising agreement B. A consortium C. A licensing agreement D. Direct exporting E. Indirect exporting
B. A consortium Consortia are similar to joint ventures and could be classified as such except for two unique characteristics: (1) They typically involve a large number of participants and (2) they frequently operate in a country or market in which none of the participants is currently active. Consortia are developed to pool financial and managerial resources and to lessen risks.
Which of the following relationship skills is necessary during the imaging activity of building a strategic alliance? A. Good relationship self-awareness B. Creating intimacy C. Trust building D. Partnering E. Commitment
B. Creating intimacy Seeing the reality in possibilities, creating a shared vision from being together, and involving trusted senior managers are actions taken during the imaging stage of building a strategic alliance. These actions require the key relationship skill of creating intimacy. Refer to Exhibit 12.3-Building Strategic Alliances.
At which phase of the international planning process would a marketing manager conduct situation analysis and make decisions involving objectives and goals, budgets, and action programs? A. Adapting the marketing mix to target markets B. Developing the marketing plan C. Matching company and country needs D. Implementation and control E. Defining company objectives and resources
B. Developing the marketing plan Phase 3 of the international planning process involves developing the marketing plan. At this stage, a marketing manager conducts situation analysis and makes decisions regarding objectives and goals, strategy and tactics, mode of entry, budgets, and action programs. Refer to Exhibit 12.1-International Planning Process.
Analysis of which of the following factors is carried out in Phase 2 of the international planning process? A. Company character B. Distribution C. Situation analysis D. Budgets E. Standards
B. Distribution Incorrect decisions at this point lead to products inappropriate for the intended market or costly mistakes in pricing, advertising, and promotion. Refer to Exhibit 12.1-International Planning Process.
Big Donuts has already reviewed its objectives and capabilities, established the screening criteria for reviewing potential foreign markets, and examined a series of environmental factors for the markets in which it plans to operate. What should Big Donuts do next as it proceeds with the international planning process? A. Match the company to a country's needs. B. Evaluate the marketing mix to target markets. C. Modify the company's position to communication objectives. D. Develop a marketing plan. E. Implement and control information obtained in the initial examination.
B. Evaluate the marketing mix to target markets
Pots and Pans Inc., a large U.S. kitchenware distributor, sells its inventory twice a year to CookWell Corp., a kitchenware retailer in the United States. CookWell, in turn, sells those products through its retail stores in Vietnam and Thailand. Which of the following is Pots and Pans most likely engaged in? A. Franchising B. Indirect exporting C. A consortium D. Direct foreign investment E. A joint venture
B. Indirect exporting Pots and Pans Inc. is engaged in indirect exporting. Indirect exporting usually means that a company sells to a buyer (importer or distributor) in the home country, which in turn exports the product.
Which of the following primary relationship activities in building strategic alliances involves bringing key executives into action and creating trust through face-to-face time? A. Dating B. Initiating C. Committing D. Imaging E. Interfacing
B. Initiating The third relationship activity in building a strategic alliance is labeled as initiating. It involves bringing key executives into action and creating trust through face-to-face time. Refer to Exhibit 12.3-Building Strategic Alliances.
Which of the following is true about strategic planning? A. It is conducted at the lowest levels of management. B. It deals with a company's products and capital. C. It excludes the research component of a company. D. It is designed to solely address marketing and advertising questions at the local level. E. It is most commonly referred to as market planning.
B. It deals with a company's products and capital. International corporate planning is essentially long term, incorporating generalized goals for an enterprise as a whole. Strategic planning is conducted at the highest levels of management and deals with products, capital, research, and the long- and short-term goals of a company. Tactical planning, or market planning, pertains to specific actions and to the allocation of resources used to implement strategic planning goals in specific markets. Tactical plans are made at the local level and address marketing and advertising questions.
Analysis of which of the following factors is carried out in Phase 2 of the international planning process? A. Company character B. Pricing C. Situation analysis D. Budgets E. Standards
B. Pricing The primary goal of Phase 2 is to decide on a marketing mix—product, price, promotion, and distribution—adjusted to the cultural constraints imposed by the uncontrollable elements of the environment that effectively achieves corporate objectives and goals. Incorrect decisions at this point lead to products inappropriate for the intended market or costly mistakes in pricing, advertising, and promotion. Refer to Exhibit 12.1-International Planning Process.
Analysis of which of the following factors is carried out in Phase 2 of the international planning process? A. Host-country constraints B. Product adaptation C. Company character D. Situation analysis E. Budgets
B. Product adaptation The primary goal of Phase 2 of the international planning process is to decide on a marketing mix adjusted to the cultural constraints imposed by the uncontrollable elements of the environment that effectively achieves corporate objectives and goals
Which of the following is true of franchising? A. It provides an effective blending of skill decentralization and operational centralization. B. The franchisee provides market knowledge, capital, and personal involvement in management. C. Foreign laws and regulations are usually hostile toward franchising. D. It is an important form of horizontal market integration. E. The franchiser has little control on marketing of the products at the point of final sale.
B. The franchisee provides market knowledge, capital, and personal involvement in management. Franchising is a rapidly growing form of licensing in which the franchiser provides a standard package of products, systems, and management services, and the franchisee provides market knowledge, capital, and personal involvement in management. The combination of skills permits flexibility in dealing with local market conditions and yet provides the parent firm with a reasonable degree of control. The franchiser can follow through on marketing of the products to the point of final sale. It is an important form of vertical market integration. Potentially, the franchise system provides an effective blending of skill centralization and operational decentralization. Foreign laws and regulations are friendly toward franchising because it tends to foster local ownership, operations, and employment.
In the context of foreign market entry, _____ serve as a means of transfer of knowledge rather than equity. A. consortia B. contractual agreements C. strategic alliances D. foreign direct investments E. joint ventures
B. contractual agreements Contractual agreements serve as a means of transfer of knowledge rather than equity.
In the context of foreign market entry, _____ requires no equity investment and thus has a low risk, low rate of return, and little control. A. licensing B. indirect exporting C. a strategic alliance D. a joint venture E. franchising
B. indirect exporting Indirect exporting requires no equity investment and thus has a low risk, low rate of return, and little control.
In the context of global marketing management, international marketers framed the argument toward market segmentation during the 1970s as _____. A. global integration versus one-to-one marketing B. standardization versus adaptation C. adaptation versus one-to-one marketing D. global integration versus local responsiveness E. standardization versus local responsiveness
B. standardization versus adaptation
A consortium is different from a joint venture in that a consortium: A. usually operates in a country in which the participants are already active. B. typically involves a large number of participants. C. restricts the right to hold an equity position by its major partners. D. does not involve the creation of a separate legal entity. E. is formed mainly for executing short-term projects.
B. typically involves a large number of participants. Four characteristics define joint ventures (JVs): (1) JVs are established, separate, legal entities; (2) they acknowledge intent by the partners to share in the management of the JV; (3) they are partnerships between legally incorporated entities, such as companies, chartered organizations, or governments, and not between individuals; and (4) equity positions are held by each of the partners. Consortia are similar to joint ventures and could be classified as such except for two unique characteristics: (1) They typically involve a large number of participants and (2) they frequently operate in a country or market in which none of the participants is currently active.
Which of the following actions does the marketing plan in Phase 3 of the international planning process begin with? A. Creating a management performance guide B. Evaluating host-country constraints C. Conducting a situation analysis D. Evaluating home-country constraints E. Exploring the distribution options
C. Conducting a situation analysis In Phase 3 of the planning process, a marketing plan is developed for the target market—whether it is a single country or a global market set. The marketing plan begins with a situation analysis and culminates in the selection of an entry mode and a specific action program for the market.
Pizza Hearth is in the process of deciding on the mode of entry into countries of Eastern Europe. Which phase of the international planning process is Pizza Hearth currently in? A. Preliminary analysis B. Defining market segment C. Developing the marketing plan D. Implementation and control E. Standardization of the marketing mix
C. Developing the marketing plan
Pots and Pans Inc., a large U.S. kitchenware distributor, takes a selection of its inventory twice a year to Vietnam and sells it to CookWell Corp., a large Vietnam-based kitchen retailer. CookWell, in turn, sells those products through its retail stores in Vietnam and Thailand. Which of the following best describes the alternative market-entry strategy that Pots and Pans is engaged in? A. Franchising B. Licensing C. Direct exporting D. A joint venture E. Direct foreign investment
C. Direct exporting In this scenario, Pots and Pans Inc. is engaged in direct exporting. With direct exporting, a company sells to a customer in another country. This method is the most common approach employed by companies taking their first international step because the risks of financial loss can be minimized.
Which of the following is true of franchising? A. It is an important form of horizontal market integration. B. The franchiser has little control on marketing of the products at the point of final sale. C. Foreign laws and regulations are friendly toward franchising. D. It provides an effective blending of skill decentralization and operational centralization. E. The franchiser provides market knowledge, capital, and personal involvement in management.
C. Foreign laws and regulations are friendly toward franchising. Franchising is a rapidly growing form of licensing in which the franchiser provides a standard package of products, systems, and management services, and the franchisee provides market knowledge, capital, and personal involvement in management. The combination of skills permits flexibility in dealing with local market conditions and yet provides the parent firm with a reasonable degree of control. The franchiser can follow through on marketing of the products to the point of final sale. It is an important form of vertical market integration. Potentially, the franchise system provides an effective blending of skill centralization and operational decentralization. Foreign laws and regulations are friendly toward franchising because it tends to foster local ownership, operations, and employment.
GHB Corp. is a manufacturer of consumer goods. It intends to sell its products in Vietnam as it is looking to enter into Asian markets. It does not want to make any equity investment and is keen on minimizing any risk of loss in the foreign market. It is also willing to settle for a low rate of return. Which of the following types of foreign market-entry strategies is GHB most likely to follow? A. Direct foreign investment B. Joint Venture C. Indirect exporting D. Strategic alliance E. Licensing
C. Indirect exporting In this case, GHB Corp. is most likely to follow indirect exporting. The amount of equity required by a company to use different modes affects the risk, return, and control that it will have in each mode. Indirect exporting requires no equity investment and thus has a low risk, low rate of return, and little control.
Which of the following primary relationship activities in building strategic alliances involves facilitating the creation of personal relationships at many levels, traveling to partner facilities and engaging in technical conversations, and blending social and business time? A. Imaging B. Initiating C. Interfacing D. Dating E. Committing
C. Interfacing The fourth relationship activity in building a strategic alliance is labeled as interfacing. It involves facilitating the creation of personal relationships at many levels, traveling to partner facilities and engaging in technical conversations, and blending social and business time. Refer to Exhibit 12.3-Building Strategic Alliances.
Which of the following is the first phase in the international planning process? A. Adapting the marketing mix to target markets B. Developing the marketing plan C. Matching company and country needs D. Implementation and control E. Defining market segments
C. Matching company and country needs Whether a company is new to international marketing or heavily involved, an evaluation of potential markets is the first step in the planning process. A critical first step in the international planning process is deciding in which existing country market to make a market investment. Refer to Exhibit 12.1-International Planning Process.
Harry Johnson Tractor Corp. has just completed a marketing plan for entering South Africa. Included in this plan are budgets and sales and profit expectations. Which of the following phases of the international planning process has Harry Johnson Tractor just completed? A. Phase 1 B. Phase 2 C. Phase 3 D. Phase 4 E. Phase 5
C. Phase 3 In this case, Harry Johnson Tractor Corp. has just completed Phase 3 of the international planning process. In Phase 3 of the international planning process, a marketing plan is developed for the target market—whether it is a single country or a global market set. The marketing plan begins with a situation analysis and culminates in the selection of an entry mode and a specific action program for the market. The marketing plan includes budgets and sales and profit expectations.
Which of the following relationship skills is necessary during the initiating activity of building a strategic alliance? A. Commitment B. Partnering C. Trust building D. Creating intimacy E. Good relationship self-awareness
C. Trust building The third relationship activity in building a strategic alliance is labeled as initiating. It involves bringing key executives into action and creating trust through face-to-face time. These actions require the key relationship skill of trust building. Refer to Exhibit 12.3-Building Strategic Alliances.
Simon and his team draft a plan for their organization, MG Corp. They primarily establish the overall goals that MG should accomplish in the next 25 years. In this case, Simon and his team are most likely engaged in _____ planning. A. tactical B. market C. corporate D. strategic E. personnel
C. corporate International corporate planning is essentially long term, incorporating generalized goals for an enterprise as a whole.
The primary goal of Phase 2 of the international planning process is to: A. perform a preliminary analysis of a country. B. perform a screening of the environment. C. decide on a marketing mix according to the market segments. D. perform a situation analysis for the country that has been selected for expansion. E. implement action plans and measure performance.
C. decide on a marketing mix according to the market segments.
Which of the following is the last step in the international planning process? A. Defining target markets and adapting the marketing mix accordingly B. Matching company and country needs C. Adapting the marketing mix according to market segments D. Implementation and control E. Developing the marketing plan
D. Implementation and control All marketing plans require coordination and control during the period of implementation. Implementation and control constitute the last step in the international planning process
Analysis of which of the following factors is carried out in Phase 2 of the international planning process? A. Company character B. Budgets C. Situation analysis D. Advertising E. Standards
D. Advertising
Which of the following is true about international corporate planning? A. It predominantly deals with a company's products, capital, and research. B. It only addresses marketing and advertising questions. C. It refers to the plans that are made at the local level. D. It incorporates generalized goals for an enterprise as a whole. E. It solely deals with the tactical issues of marketing.
D. It incorporates generalized goals for an enterprise as a whole. International corporate planning is essentially long term, incorporating generalized goals for an enterprise as a whole. Strategic planning is conducted at the highest levels of management and deals with products, capital, research, and the long- and short-term goals of the company. Tactical planning, or market planning, pertains to specific actions and to the allocation of resources used to implement strategic planning goals in specific markets. Tactical plans are made at the local level and address marketing and advertising questions.
Which of the following is true about international corporate planning? A. It only addresses marketing and advertising questions. B. It specifically deals with a company's products, capital, and research. C. It predominantly deals with the tactical issues of marketing. D. It is essentially long term in nature. E. It refers to the plans that are made at the local level.
D. It is essentially long term in nature. International corporate planning is essentially long term, incorporating generalized goals for an enterprise as a whole. Strategic planning is conducted at the highest levels of management and deals with products, capital, research, and the long- and short-term goals of the company. Tactical planning, or market planning, pertains to specific actions and to the allocation of resources used to implement strategic planning goals in specific markets. Tactical plans are made at the local level and address marketing and advertising questions.
Which of the following refers to two or more participating companies joining forces to create a separate legal entity to facilitate doing business in the international arena? A. Indirect exporting B. Franchise C. License arrangement D. Joint venture E. Direct investment agreement
D. Joint venture A joint venture is different from other types of strategic alliances or collaborative relationships in that a joint venture is a partnership of two or more participating companies that have joined forces to create a separate legal entity.
Harry Johnson Tractor Corp. wishes to expand its presence in Eastern Europe. Toward that end, it has selected the countries where it will market its products. It has also selected a mode of entry. It is now in the process of implementing specific plans. Which of the following phases of the international planning process is Harry Johnson Tractor Corp. currently in? A. Phase 1 B. Phase 2 C. Phase 3 D. Phase 4 E. Phase 5
D. Phase 4 In this case, Harry Johnson Tractor Corp. is currently in Phase 4 of the international planning process. A "go" decision in Phase 3 triggers Phase 4 of the international planning process. Phase 4 involves implementation of specific plans and anticipation of successful marketing.
39. _____ planning is conducted at the highest levels of management and deals with products, capital, research, and the long- and short-term goals of a company. A. Market B. Tactical C. Single-use D. Strategic E. Personnel
D. Strategic Strategic planning is conducted at the highest levels of management and deals with products, capital, research, and the long- and short-term goals of a company.
Which of the following is most likely to occur in the international planning process once a "go" decision in Phase 3 has been taken? A. The objectives and goals phase B. The budget phase C. The action-program(s) phase D. The implementation and control phase E. The communication phase
D. The implementation and control phase A "go" decision in Phase 3 of the international planning process triggers implementation of specific plans and anticipation of successful marketing.
In the context of foreign market entry, _____ are long-term, nonequity associations between a company and another in a foreign market. A. consortia B. exporting arrangements C. direct foreign investments D. contractual agreements E. joint ventures
D. contractual agreements Contractual agreements are long-term, nonequity associations between a company and another in a foreign market.
The first relationship activity in building a strategic alliance, where senior executives leverage their personal networks is labeled as _____. A. imaging B. initiating C. committing D. dating E. interfacing
D. dating The first relationship activity in building a strategic alliance is labeled as dating. It involves senior executives leveraging personal networks and wondering how to respond to inquiries and how to seek out possibilities. Refer to Exhibit 12.3-Building Strategic Alliances.
In the context of foreign market entry strategies, the advantages of _____ are most apparent when capital is scarce, import restrictions forbid other means of entry, a country is sensitive to foreign ownership, or patents and trademarks must be protected against cancellation for nonuse. A. consortia B. exporting arrangements C. strategic alliances D. licensing E. joint ventures
D. licensing The advantages of licensing are most apparent when capital is scarce, import restrictions forbid other means of entry, a country is sensitive to foreign ownership, or patents and trademarks must be protected against cancellation for nonuse.
In the context of foreign market entry, a _____ is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective without forming a separate legal entity. A. direct sales group B. consortium arrangement C. franchising arrangement D. strategic international alliance E. joint venture
D. strategic international alliance A strategic international alliance (SIA) is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective.
Which of the following modes of foreign market entry requires the most amount of equity and therefore, creates the greatest risk? A. Exporting B. Joint venture C. Contractual agreement D. Strategic alliance E. Direct foreign investment
E. Direct foreign investment Direct foreign investment requires the most equity of the four modes of foreign market entry and creates the greatest risk while offering the most control and the potential highest return.
Which of the following modes of foreign market entry offers the most control and the highest potential return for a company? A. Exporting B. Joint venture C. Contractual agreement D. Strategic alliance E. Direct foreign investment
E. Direct foreign investment Direct foreign investment requires the most equity of the four modes of foreign market entry and creates the greatest risk while offering the most control and the potential highest return.
Kwok Winn wants to open a new business in his own country, Singapore. He has decided on a form of licensing that will provide him with a standard package of products, systems, and management services in order to sell fast food to local residents. Which of the following best describes the form of business that Mr. Winn has chosen? A. Direct sales B. Indirect exporting C. Joint venture D. Strategic alliance E. Franchising
E. Franchising In this case, Mr. Winn has chosen to conduct his business through franchising. Franchising is a rapidly growing form of licensing in which the franchiser provides a standard package of products, systems, and management services, and the franchisee provides market knowledge, capital, and personal involvement in management.
Which of these aspects of international marketing are analyzed in Phase 1 of the international planning process? A. Budgets B. Promotions C. Product adaptations D. Action programs E. Host-country constraints
E. Host-country constraints
Which of the following organizational structures is the most extensive of those usually adopted by companies? A. Transnational structure B. Geographical division structure C. Region-specific structure D. Global product division structure E. Matrix structure
E. Matrix structure The matrix form—the most extensive of the three organizational structures—is popular with companies as they reorganize for global competition.
Which of the following companies has been known for its ability to adapt to local needs and wants in the international marketplace since its inception in 1866? A. Kodak B. General Foods C. R.J. Reynolds Tobacco D. Ralston Purina E. Nestlé
E. Nestlé Nestlé has been international almost from its start in 1866 as a maker of infant formula. Nestlé certainly hasn't been bothered by the debate on standardization versus adaptation. Its overall strategy can be summarized in four points: (1) think and plan long term, (2) decentralize, (3) stick to what you know, and (4) adapt to local tastes.
Which of the following relationship skills is necessary during the interfacing activity of building a strategic alliance? A. Trust building B. Creating intimacy C. Good relationship self-awareness D. Commitment E. Partnering
E. Partnering It involves facilitating the creation of personal relationships at many levels, traveling to partner facilities and engaging in technical conversations, and blending social and business time. These actions require the key relationship skill of partnering. Refer to Exhibit 12.3-Building Strategic Alliances.
Which of the following subjects is explored after developing information and selecting a country market in the international planning process? A. Company character B. The constraints of home country C. Geography D. Host-country constraints E. The mode of entry
E. The mode of entry With the information developed in the international planning process and a country market selected, the decision regarding the entry mode can be made. The choice of mode of entry is one of the more critical decisions for a firm because the choice will define the firm's operations and affect all future decisions in that market.
A Korean television manufacturer recently invested in a new television tube plant in Mexico. This form of international business is aptly named international licensing.
FALSE In this case, the Korean television manufacturer is engaged in direct foreign investment. In this type of investment, companies may invest locally to capitalize on low-cost labor, to avoid high import taxes, to reduce the high costs of transportation to market, to gain access to raw materials and technology, or as a means of gaining market entry.
With indirect exporting, a company sells to a customer in another country without the use of any intermediaries or distributors.
FALSE Indirect exporting usually means that a company sells to a buyer (importer or distributor) in the home country, which in turn exports the product.
Tactical planning is essentially long term, incorporating generalized goals for an enterprise as a whole.
FALSE International corporate planning is essentially long term, incorporating generalized goals for an enterprise as a whole.
In the context of foreign market entry, licensing is least suitable when capital is scarce.
FALSE The advantages of licensing are most apparent when capital is scarce, import restrictions forbid other means of entry, a country is sensitive to foreign ownership, or patents and trademarks must be protected against cancellation for nonuse.
An advantage of a matrix organization structure in international business is that it permits management to respond to the conflicts that arise among functional activity, product, and geography
TRUE A matrix structure permits management to respond to the conflicts that arise among functional activity, product, and geography.
Incorrect decisions taken in Phase 2 of the international planning process lead to products inappropriate for the intended market or costly mistakes in pricing, advertising, and promotion
TRUE A more detailed examination of the components of the marketing mix is the purpose of Phase 2 of the international planning process. Incorrect decisions at this point lead to products inappropriate for the intended market or costly mistakes in pricing, advertising, and promotion
A business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective is called a strategic international alliance (SIA).
TRUE A strategic international alliance (SIA) is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective.
From the marketing perspective, the ideal market segment size, if customer satisfaction is the goal, is one.
TRUE As the information explosion allows marketers to segment markets ever more finely, it is only the manufacturing and/or finance managers in companies who argue for standardization for the sake of economies of scale. From the marketing perspective, customization is always best. The ideal market segment size, if customer satisfaction is the goal, is one.
Phase 3 of the international planning process involves developing a marketing plan and deciding budgets and profit expectations.
TRUE At the third stage of the international planning process, a marketing plan is developed for the target market—whether it is a single country or a global market set. The specific plan establishes what is to be done, by whom, how it is to be done, and when. Included are budgets and sales and profit expectations.
Exporting is a common market-entry approach for mature international companies with strong marketing and relational capabilities.
TRUE Exporting is a common market-entry approach for mature international companies with strong marketing and relational capabilities.
Franchising is a rapidly growing form of licensing in which a franchiser provides a standard package of products, systems, and management services, and a franchisee provides market knowledge, capital, and personal involvement in management.
TRUE Franchising is a rapidly growing form of licensing in which a franchiser provides a standard package of products, systems, and management services, and a franchisee provides market knowledge, capital, and personal involvement in management.
In Phase 2 of the international planning process, the results of an analysis frequently indicate that the marketing mix would require such drastic adaptation that a decision not to enter a particular market is made.
TRUE Frequently, the results of the analysis in Phase 2 of the international planning process indicate that the marketing mix will require such drastic adaptation that a decision not to enter a particular market is made. The primary goal of Phase 2 is to decide on a marketing mix adjusted to the cultural constraints imposed by the uncontrollable elements of the environment that effectively achieves corporate objectives and goals.
With respect to the international planning process, the marketing plan begins with a situation analysis and culminates in the selection of an entry mode and a specific action program for a market.
TRUE In the context of the international planning process, the marketing plan begins with a situation analysis and culminates in the selection of an entry mode and a specific action program for a market.
Ten high-technology companies joined forces to produce and market their products in China. By joining together, these companies were able to enter the Chinese market for the first time. A good name for this type of arrangement is a consortium.
TRUE In this case, the arrangement by the ten high-technology companies to produce and market their products together in the Chinese market is an example of a consortium. Consortia are similar to joint ventures and could be classified as such except for two unique characteristics: (1) They typically involve a large number of participants and (2) they frequently operate in a country or market in which none of the participants is currently active.
Patent rights, trademark rights, and the rights to use technological processes are granted in foreign licensing.
TRUE Patent rights, trademark rights, and the rights to use technological processes are granted in foreign licensing.
Spreading the portfolio of markets served brings important stability of revenues and operations to many global companies.
TRUE Spreading the portfolio of markets served brings important stability of revenues and operations to many global companies.
Strategic planning is conducted at the highest levels of management and deals with products, capital, research, and the long-and short-term goals of a company.
TRUE Strategic planning is conducted at the highest levels of management and deals with products, capital, research, and the long- and short-term goals of a company.
The amount of equity required by a company to use different modes of entry in a new market affects the risk, return, and control that it will have in each mode.
TRUE The amount of equity required by a company to use different modes of entry in a new market affects the risk, return, and control that it will have in each mode
Building a strategic international alliance (SIA) takes several steps to be successful. The first step in building strategic alliances is called dating.
TRUE The first step in building strategic alliances is called dating. Refer to Exhibit 12.3-Building Strategic Alliances.
A French company sells its products to a large retailer in France, who in turn sells the products all over Europe and Asia. This is an example of indirect exporting.
TRUE The goods of the French company being subsequently sold by the retailer in Europe and Asia is an example of indirect exporting. Indirect exporting usually means that the company sells to a buyer (importer or distributor) in the home country, which in turn exports the product.
The growth of free trade areas that are tariff-free among members but have a common tariff for non-members creates an opportunity that can be capitalized on by direct investment
TRUE The growth of free trade areas that are tariff-free among members but have a common tariff for non-members creates an opportunity that can be capitalized on by direct investment.
In the context of planning for global markets, the planning process is a primary medium of organizational learning.
TRUE The planning process is a primary medium of organizational learning.
Harry Jordan's company has just entered into an agreement with a German firm to create a separate legal entity. This new firm will be allowed to conduct business and actively compete in various European Union markets. A good description of the new company is a joint venture
True A joint venture is a partnership of two or more participating companies that have joined forces to create a separate legal entity.