IBA 350 Exam 2
A firm can reduce its marketing and advertising costs substantially by focusing on numerous national brands instead of a single global brand. True or False?
False
Obtaining economic development incentives from host-or home-country governments increases the cost of trade and investment barriers. True or False?
False
Firms that want to become globally competitive must seek simultaneously three strategic objectives-efficiency, flexibility, and learning. True or False?
True
________ is the seizure of company assets with compensation. A. Arbitration B. Confiscation C. Expropriation D. Conciliation E. Nationalization
C. Expropriation
Buyer receptiveness differs as a function of ________. A. product quality B. media expenses C. culture and language D. lobbying
C. culture and language
Which of the following characterizes extraterritoriality? A. Applying home-country laws to persons outside national borders B. Revealing significant information about a firm's financial condition C. Restricting the amount of net income firms can remit to home countries D. Limiting foreign investment that may affect national security E. Requiring foreign investors to seek joint ventures with local firms
A. Applying home-country laws to persons outside national borders
Which legal system is based on a comprehensive structure where laws are clearly written, accessible, and divided into three categories: commercial, civil, and criminal? A. Civil law B. Mixed system C. Rule of law D. Religious law E. Common law
A. Civil law
Which one of the following involves reducing or removing barriers to trade, establishing shared external barriers, and permitting the unrestricted movement of goods, services, and factors of production within participating countries? A. Common market B. Unrestricted trade location C. Customs union D. Economic union E. Foreign trade zone
A. Common market
Which of the following comprise the largest group of countries and include Bangladesh and Zaire? A. Developing economies B. Transition economies C. Centrally planned economies D. Advanced economies E. Emerging economies
A. Developing economies
In which of the following does a firm sell its products directly to customers to avoid the use of intermediaries? A. Direct marketing B. Outsourcing C. Franchising D. Indirect marketing E. Licensing
A. Direct marketing
In order to become globally competitive, your company is making changes in its manufacturing process to make it more standardized and significantly cheaper. For which of Bartlett and Ghoshal's objectives is your company striving with these changes? A. Efficiency B. Flexibility C. Decentralization D. Local responsiveness E. Learning
A. Efficiency
What kind of government seizure compensates foreign-owned businesses? A. Expropriation B. Boycott C. Destabilization D. Confiscation E. Embargo
A. Expropriation
Which type of government intervention encourages foreign companies to enter a host-country market? A. Investment incentives B. Countervailing duties C. Dumping D. Tariffs E. Currency controls
A. Investment incentives
Which of the following is a strategy managers can employ to manage country risk? A. Maintaining a strict adherence to ethical behavior B. Engaging in questionable practices that are not specifically outlawed C. Using a SIG to lobby for special favors D. Seeking a loan from the World Bank E. Using bribes to develop international business
A. Maintaining a strict adherence to ethical behavior
Which of the following BEST describes the role of an intermediary? A. Moving products through a distribution channel to a retailer B. Creating a sales outlet in a domestic market C. Establishing marketing subsidiaries in target markets D. Establishing business overseas using FDI E. Exporting products abroad
A. Moving products through a distribution channel to a retailer
Which challenge of emerging markets is associated with corruption and weak legal frameworks that discourage business investments? A. Political instability B. Lack of physical infrastructure C. Lack of qualified local partners D. Dominance of family conglomerates E. Excessive bureaucracy
A. Political instability
Which one of the following is a collection of official organizations that create a government, including legislative groups, political parties, lobbying groups, and trade unions? A. Political system B. Mixed system C. Legal system D. Civil law E. Common law
A. Political system
________ pertains to national economic policies that restrict free trade and protect domestic industries from foreign competition. A. Protectionism B. A quota C. A tariff D. A custom E. A nontariff trade barrier
A. Protectionism
________ involves countries establishing agreements with one another for the purpose of minimizing obstacles concerning trade and business ventures. A. Regional economic integration B. Centralized economic planning C. Investment motivation D. The General Agreement on Tariffs and Trade E. A foreign trade zone
A. Regional economic integration
________ is a quality of executive management that provides inspirational guidance and motivation to personnel, leading the firm to a better future. A. Visionary leadership B. Organizational structure C. Strategy D. Organizational culture E. Organizational process
A. visionary leadership
Which of the following coordinates economic, social, and cultural affairs among Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates? A. The Gulf Cooperation Council (GCC) B. European Free Trade Association C. Asia Pacific Economic Cooperation (APEC) D. The Australia and New Zealand Closer Economic Relations Agreement (CER) E. Association of Southeast Asian Nations (ASEAN)
A. The Gulf Cooperation Council (GCC)
If you are a business looking for a foreign market in which to sell goods, what does economic freedom in a country mean to your business? A. The government will support foreign business by enacting laws that decrease import quotas. B. The government will increase tariffs. C. The government will support foreign business by enacting laws that increase export controls. D. The government will enact laws that limit the amount of currency that can be taken out of the country. E. The government will pass legislation that increases protectionism.
A. The government will support foreign business by enacting laws that decrease import quotas.
Which of the following is TRUE about global teams? A. To develop global strategies, the team should include culturally diverse managers whose business activities span the globe. B. Operational global teams identify or implement initiatives that enhance the long-term direction of the firm in its global industry. C. Strategic global teams focus on the efficient and effective operation of the business across the whole network. D. It is a locally distributed group of employees charged with specific problem solving that affects company operations at the domestic scale.
A. To develop global strategies, the team should include culturally diverse managers whose business activities span the globe.
Which of the following best characterizes the purpose of a global marketing strategy? A. a plan of action the firm develops for foreign markets that guides managerial decision making on: how to position itself and its offerings and which customer segments to target. B. helps managers check high employee turnover C. provides managers with demographic data D. guides firms on hiring highly skilled resources
A. a plan of action the firm develops for foreign markets that guides managerial decision making on: how to position itself and its offerings and which customer segments to target.
Strategy is ________. A. a planned set of actions that managers employ to make the best use of the firm's resources and core competencies to gain competitive advantage and accomplish organizational objectives B. the pattern of shared values, behavioral norms, systems, policies, and procedures that employees learn and adopt C. a quality of executive management that provides inspirational guidance and motivation to personnel, leading the firm to a better future D. the procurement of selected value-chain activities, including production of intermediate goods or finished products, from independent suppliers
A. a planned set of actions that managers employ to make the best use of the firm's resources and core competencies to gain competitive advantage and accomplish organizational objectives
Purevelon, a manufacturer of soaps and beauty products, controls all business decisions globally from its headquarters in Kansas City, Missouri. Purevelon has a__________. A. centralized structure B. geographic area structure C. transnational strategy D. multidomestic approach E. decentralized structure
A. centralized structure
Companies help address poverty around the world in many ways. If a foreign firm in an emerging market modernizes local roads and bridges and creates jobs for workers in the community, the firm is ________. A. encouraging economic growth B. engaging in global sourcing C. engaging in microfinancing activities D. partnering with family conglomerates E. customizing products to meet local needs
A. encouraging economic growth
Regional integration enables member countries to gain bargaining power in world affairs by ________. A. establishing a stronger political position as a united bloc B. attracting direct investment from outside the bloc C. enhancing the productivity of member countries D. helping member country firms to achieve economies of scale E. expanding the market size of member country firms
A. establishing a stronger political position as a united bloc
Which one of the following provides the most control over foreign operations? A. Foreign direct investment B. Franchising C. Exporting D. Countertrade E. Licensing
A. foreign direct investment
A(n) ________ is an arrangement in which management of the firm's international operations is organized by activity, such as production and marketing. A. functional structure B. product structure C. geographical area structure D. international division structure E. global matrix structure
A. functional structure
The ________ refers to an approach in which a firm views international business as separate from, and secondary to, its domestic business. A. home replication strategy B. multinational strategy C. transnational strategy D. global strategy E. multidomestic strategy
A. home replication strategy
Which of the following is an advantage of a multidomestic strategy? A. minimal pressure on headquarters staff B. low operating costs C. minimum redundancy D. standardized organizational culture
A. minimal pressure on headquarters staff
The managerial routines, behaviors, and mechanisms that allow a firm to function as intended are known as ________. A. organizational processes B. organizational structure C. organizational culture D. organizational designs
A. organizational processes
Pricing of products exchanged among different parts of the same corporate business, located in different countries, is called ________. A. transfer pricing B. gray market activity C. international price escalation D. rigid cost-plus pricing E. value-added tax
A. transfer pricing
Which of the following observations would stimulate investment in an emerging market? A. Africa's cell phone market has opened the door to many related industries. B. Foreign firms must deal with significant corruption in Russia. C. Weak patent laws and counterfeiting characterize the Chinese market. D. Political instability is often found in emerging markets. E. Government intervention in the business environment is common in emerging markets.
A. Africa's cell phone market has opened the door to many related industries.
How does a foreign firm benefit from partnering with a family conglomerate? A. A firm can seek out local lobby groups to deal with infrastructure issues. B. A foreign firm can form close relationships with the local government. C. A foreign firm can increase the capital requirements needed for international transactions. D. A foreign firm can use standardized products. E. A foreign firm can achieve economies of scale and avoid customizing products.
B. A foreign firm can form close relationships with the local government.
Which of the following is TRUE with regard to a global positioning strategy? A. Internationalizing firms rarely aim for a global positioning strategy. B. A global positioning strategy reduces international marketing costs. C. More often than not, global positioning dilutes brand equity in the international market. D. A global positioning strategy does not address the shared expectations of a global customer market segment.
B. A global positioning strategy reduces international marketing costs.
Which of the following statements about the General Agreement on Tariffs and Trade (GATT) is FALSE? A. The GATT introduced the concept of normal trade relations with trading partners. B. According to the GATT, a trade concession to one country did not become a concession to all countries. C. The GATT was the first attempt to reduce trade barriers globally. D. The GATT was succeeded by the World Trade Organization (WTO). E. Under GATT, nations agreed to extend tariff reductions outlined in a treaty with a trading partner to all other countries.
B. According to the GATT, a trade concession to one country did not become a concession to all countries.
What is the benefit of environmental scanning? A. Reducing research and development costs B. Assessing potential threats to the firm C. Evaluating accounting practices D. Improving intellectual property protection E. Forming a regional trading bloc
B. Assessing potential threats to the firm
________ refers to an international business transaction in which full or partial payments are made in kind rather than in cash. A. Global sourcing B. Countertrade C. Importing D. Global procurement E. Exporting
B. Countertrade
Which of the following are environmental conditions that influence a firm's product development? A. Internal distribution factors B. Cultural and financial factors C. International marketing communication factors D. Global branding factors E. Target customer segments and positioning factors
B. Cultural and financial factors
A firm most likely opts for global integration in order to take advantage of which of the following factors? A. Responsiveness to local competitors B. Economies of scale C. Leveraged natural resources D. Adaptation to different distribution channels E. Customized products
B. Economies of scale
Which of the following refers to reducing the cost of a firm's global activities? A. Strategy B. Efficiency C. Functional structure D. Visionary leadership E. Transnational strategy
B. Efficiency
Which one of the following officially bans imports from and exports to a specific country in an attempt to impose a political punishment? A. Confiscation B. Embargo C. Sanction D. Nationalization E. Boycott
B. Embargo
________ include countries that have attained significant modernization, industrialization, and rapid economic growth since the 1980s. A. Developed economies B. Emerging economies C. Developing markets D. Advanced economies E. Centrally planned economies
B. Emerging economies
Which of the following statements about local responsiveness is FALSE? A. Businesses take the local culture into consideration for transactions. B. Firms prefer to pay for many product variations for individual markets despite the sharp increase in costs. C. Companies adhere to local customer preferences. D. Firms adjust their practices to meet the specific needs of each country. E. Firms adjust to the local competitive environment.
B. Firms prefer to pay for many product variations for individual markets despite the sharp increase in costs.
Which statement about free trade zones (FTZs) is TRUE? A. FTZs can impose import tariffs on parts, components, or finished products. B. Firms use FTZs to manage inventory of parts, components, or finished products. C. Firms cannot use FTZs to manage inventory of parts, components, or finished products. D. Products in a FTZ are subject to duties, taxes, or quotas until they enter non-FTZ commercial territory. E. FTZs exist in fewer than 75 countries in the world.
B. Firms use FTZs to manage inventory of parts, components, or finished products.
Which of the following primarily focuses on ensuring the reduction of tariffs among certain countries and settling trade disagreements? A. European Union B. General Agreement on Tariffs and Trade C. United Nations D. Smoot-Hawley Tariff Act E. World Bank
B. General Agreement on Tariffs and Trade
________ is the process of bringing together an organization's value-chain activities across different countries to realize global efficiency and synergy to benefit from similarities between countries. A. Global sourcing B. Global integration C. Visionary leadership D. Countertrade E. Local responsiveness
B. Global integration
Why is the middle class used to determine market potential? A. Middle-class households in emerging markets buy only simple necessities. B. Middle-class individuals are politically and environmentally active. C. Middle-class households in emerging markets have little disposable income. D. The middle class makes up a very small proportion of households in advanced economies. E. Middle-class consumers cannot find professional jobs.
B. Middle-class individuals are politically and environmentally active
Many Middle Eastern countries practice both civil law and Islamic law. In this case, under which legal system are these countries ultimately categorized? A. Religious law B. Mixed system C. Rule of law D. Common law E. Mixed economy
B. Mixed system
Which of the following statements about NAFTA is TRUE? A. NAFTA does not offer dispute settlement in areas of investment, unfair pricing, labor issues, and the environment. B. NAFTA allowed member-country firms to submit bids for government contracts in the three signing countries (Canada, Mexico, and the United States). C. NAFTA implemented tariffs for products and services traded in the bloc. D. NAFTA decreased market access among Canada, Mexico, and the United States. E. NAFTA caused a reduction in U.S. exports to Canada and Mexico.
B. NAFTA allowed member-country firms to submit bids for government contracts in the three signing countries (Canada, Mexico, and the United States).
Which of the following is a risk associated with emerging markets? A. Political stability that is associated with transparency B. Political instability that is associated with weak legal frameworks C. National laws that protect intellectual property D. Administrative rules that facilitate business activities E. Tax incentives that attract foreign investment
B. Political instability that is associated with weak legal frameworks
Which of the following describes a legal system with clear rules that are publicly disclosed, enforced fairly, and respected by individuals, organizations, and the government? A. Religious law B. Rule of law C. Common law D. Civil law E. Mixed system
B. Rule of law
In emerging markets, why do successful firms develop close community relationships? A. To collaborate with family conglomerates B. To better understand local conditions, and earn customer respect and loyalty C. To challenge developing market rivals D. To target political systems in developing markets E. To locate quality and accessible business partners
B. To better understand local conditions, and earn customer respect and loyalty
The strength of a global brand is measured by ________. A. brand standardization B. brand equity C. a global marketing strategy D. global positioning E. market segmentation
B. brand equity
In a(n) ________, the headquarters of a company has significant authority and control over the company's global activities. A. export department B. centralized approach C. global approach D. international division structure E. decentralized approach
B. centralized approach
Global branding increases a firm's ________ in international markets. A. global sourcing B. competitive advantage C. product quality D. adaptation E. low-cost strategy
B. competitive advantage
Which of the following trends supports improving economic conditions in Africa? A. the growing importance of the public sector in Africa B. direct investment from abroad C. the rising cultural affinity toward goods manufactured in the West D. the gradual liquidation of the mining industry
B. direct investment from abroad
Contractual relations usually take the form of ______, in which an organization allows an international partner to use its intellectual property in return for royalties. A. countertrade B. licensing or franchising C. exporting D. wholly owned subsidiaries E. equity joint venture
B. licensing or franchising
Which type of country risk produced by a governmental system involves threats or use of force or violence in order to attain some kind of political goal? A. Sanctions B. Government seizure of company assets C. Terrorism D. Boycott against a business E. Embargo
C. terrorism
Purchasing power parity (PPP) adjusts prices to ________. A. help procure products and services from suppliers or subsidiaries that operate abroad B. reflect the goods consumers can buy, as well as account for their currency and standard of living C. take into account emerging markets that have recently doubled in share of world imports D. demonstrate how much of a good one can buy in a particular currency, such as the U.S. dollar E. show how much income is held by an economy's middle class compared with its size
B. reflect the goods consumers can buy, as well as account for their currency and standard of living
Products that have universal specifications are the best candidates for __________ of its marketing program. A. outsourcing B. standardization C. global sourcing D. adaption E. customization
B. standardization
An international supermarket chain is opening stores in foreign markets. Which adaptation could be made to accommodate national preferences? A. Adjusting the distribution chain B. Stocking local produce C. Using standardized promotions D. Using advertisements written in English E. Adjusting prices for living standards
B. stocking local produce
Financing or other resources that a government grants to a firm or group of firms, to ensure their survival or success is referred to as a ___________. A. quota B. subsidy C. premium D. grant
B. subsidy
Adaptation is defined as ________. A. the firm's efforts to minimize employee attrition by rewarding performance B. the firm's efforts to modify one or more elements of its international marketing program to accommodate specific customer requirements in a particular market C. the firm's efforts to make its marketing program elements uniform, with a view to targeting entire regions, or even the global marketplace, with the same product or service D. the firm's attempt at altering its organizational structure to facilitate internationalization
B. the firm's efforts to modify one or more elements of its international marketing program to accommodate specific customer requirements in a particular market
Outsourcing occurs when companies ________. A. develop from emerging markets into global competitors B. use independent suppliers to complete value-chain activities C. target the fast-growing middle class of emerging markets D. transfer state-owned holdings to private concerns E. procure products or services from suppliers located abroad
B. use independent suppliers to complete value-chain activities
Which of the following characterizes extraterritoriality? A. Limiting foreign investment that may affect national security B. Revealing significant information about a firm's financial condition C. Applying home-country laws to persons outside national borders D. Requiring foreign investors to seek joint ventures with local firms E. Restricting the amount of net income firms can remit to home countries
C. Applying home-country laws to persons outside national borders
________ is a governmental system that attempts to control most aspects of its citizens' conduct both publicly and privately, including their values and beliefs. A. Democracy B. A market economy C. Authoritarianism D. Socialism E. A mixed system
C. Authoritarism
Which of the following refers to the number of distributors and other intermediaries involved in getting the product from the manufacture to the customer? A. Global sourcing B. Global account management C. Channel length D. Positioning E. Standardization
C. Channel length
Which term refers to exported goods being priced lower than their typical value whether in home-country markets or foreign markets? A. Nontariff trade barriers B. Subsidizing C. Dumping D. Export controls E. Countervailing duties
C. Dumping
Which of the following is a regional trade organization? A. World Bank B. Stockholm Chamber of Commerce C. European Union (EU) D. International Monetary Fund E. United Nations Conference on Trade and Development (UNCTAD)
C. European Union (EU)
Which of the following describes the Foreign Corrupt Practices Act (FCPA)? A. Companies with securities listed in the United States are exempt from U.S. accounting provisions. B. Foreign firms can make payments to American firms while doing business in the United States. C. Firms are prohibited from offering bribes to foreign firms to obtain business. D. Bribes are an accepted way of doing business overseas. E. FCPA criminal and civil penalties are minimal.
C. Firms are prohibited from offering bribes to foreign firms to obtain business.
Which of the following primarily focuses on ensuring the reduction of tariffs among certain countries and settling trade disagreements? A. European Union B. United Nations C. General Agreement on Tariffs and Trade D. Smoot-Hawley Tariff Act E. World Bank
C. General Agreement on Tariffs and Trade
________ is defined as the coordination of a firm's worldwide value-chain activities to obtain synergy, efficiency, and cross-fertilization. A. Global sourcing B. Globalization C. Global integration D. Local responsiveness E. Collaboration
C. Global integration
________ refers to the procurement of products or services from independent suppliers or company-owned subsidiaries located abroad for consumption in the home country or a third country. A. A new global challenger B. Privatization C. Global sourcing D. A developing economy E. Outsourcing
C. Global sourcing
________ refer(s) to the legal importation of genuine products into a country by intermediaries other than authorized distributors (also known as parallel imports). A. Market segmentation B. International price escalation C. Gray market activity D. Tariffs E. Adaptation
C. Gray market activity
A large cosmetics company is looking to break into international markets. What strategy should the company pursue to achieve this goal? A. It should establish an inexpensive distribution chain. B. It should spend as much on advertising as possible. C. It should develop a global brand. D. It should imitate its competitors' strategy. E. It should have various national brands.
C. It should develop a global brand
________ occurs when one party files a lawsuit against another. A. Arbitration B. Mediation C. Litigation D. Conciliation E. Reconciliation
C. Litigation
Which of the following determine(s) the nature of international marketing communications? A. Distribution chains B. Gray market activity C. Media availability and quality D. Transfer pricing E. Promotional activity
C. Media availability and quality
In which of the following approaches does an organization give a lot of autonomy to its subsidiaries to manage the business? A. Home replication strategy B. Transnational strategy C. Multidomestic strategy D. Global strategy E. Countertrade strategy
C. Multidomestic strategy
Members of ________ benefited the most from the maquiladora program. A. EFTA B. MERCOSUR C. NAFTA D. EU
C. NAFTA
Which one of the following is true of political and legal environments in international business? A. Gradual change in a country's political and legal environments poses a greater risk to firms than does sudden change. B. In disputes between local and foreign firms, governments protect foreign interests. C. Political and legal systems are interdependent. D. Country risk is present only in some countries and only during times of political change and upheaval. E. The political and legal systems in a country are usually fixed and unchanging.
C. Political and legal systems are interdependent.
Which of the following includes organizations like NAFTA, the EU, and ASEAN? A. Competing firms B. Governments C. Regional trade organizations D. Special interest groups E. International organizations
C. Regional trade organizations
Which of the following statements BEST describes the European Union (EU)? A. Multiple currencies make trade easier for firms doing business within the EU. B. Labor and capital are unable to move freely among the EU members. C. Trade among the EU members takes place unobstructed. D. The EU is a political union with the same laws throughout. E. Eleven EU countries belong to a monetary union that uses the pound.
C. Trade among the EU members takes place unobstructed.
Which of the following is a key risk associated with global branding? A. Decreasing first-mover advantages in marketing new products B. Decreasing the efficiency of marketing campaigns C. Violating host-country laws and regulations D. Increasing global advertising costs E. Reducing international recognition
C. Violating host-country laws and regulations
A global brand can best be defined as ________. A. a brand that uses a variety of marketing campaigns in different markets B. a brand that focuses on a single generational group within a country C. a brand whose positioning, advertising strategy, look, and personality are standardized worldwide D. a brand with a complicated value-chain
C. a brand whose positioning, advertising strategy, look, and personality are standardized worldwide
Due to the larger market size of an economic bloc, member country firms are able to reduce their product prices because they can ________. A. gain political support B. implement a different organizational structure C. attain economies of scale D. seek investments from external sources E. impose duties on block members
C. attain economies of scale
Which of the following activities would be considered last by a manager while developing strategies? A. analyzing the particular challenges that confront the firm B. examining the firm's specific strengths and weaknesses C. deciding how best to contend with competitors D. analyzing the particular opportunities for the firm
C. deciding how best to contend with competitors
Low-income countries like Bangladesh and Nicaragua are categorized as ________ because they have limited industrialization and stagnant economies. A. advanced economies B. transition economies C. developing economies D. centrally planned economies E. emerging economies
C. developing economies
A large and highly diversified company that is privately owned is known as a(n) ________. A. emerging competitor B. global sourcing company C. family conglomerate D. new global challenger E. outsourcing company
C. family conglomerate
________ enables an MNE to accommodate various country-specific challenges and opportunities. A. Technical know-how B. Efficiency C. Flexibility D. A home replication strategy E. A strong organizational culture
C. flexibility
________ means serving a key international customer in a consistent and standardized manner, regardless of where in the world it operates. A. Positioning B. Marketing promotion C. Global account management D. Global retailing E. Product adaptation
C. global account management
The World Bank, the World Trade Organization, and the United Nations Conference on Trade and Development are examples of ________. A. regional trade organizations B. governments C. international organizations D. competing firms E. special interest groups
C. international organizations
A ________ depends on the interactions of supply and demand in order to determine prices for products and services. A. socialist society B. totalitarian economy C. market economy D. command economy E. mixed economy
C. market economy
A company that breaks down its customer population based on variables such as level of economic development, common language, and geography to best serve customer needs is performing ________. A. market positioning B. product standardization C. market segmentation D. product adaptation E. branding
C. market segmentation
The new global challengers have become formidable competitors primarily because ________. A. of instant brand recognition B. of superior market research and customer service C. of the easy availability of low-cost labor, skilled workforces, government support, and family conglomerates D. of substantial government funding, high wages, and value-chain diversification
C. of the easy availability of low-cost labor, skilled workforces, government support, and family conglomerates
A(n) ________ is a group of official organizations that create a government. A. market economy B. common law C. political system D. legal system E. extraterritoriality
C. political system
The advantage of standardized advertising worldwide is that it ________. A. encourages consumers to request product samples B. increases cultural sensitivity C. reduces promotional costs for firms D. increases direct marketing sales E. utilizes local writers and actors
C. reduces promotional costs for firms
What causes international prices to rise? A. Factories located near markets B. A lack of significant disposable income C. Tariffs, taxes, and markups by foreign intermediaries D. Low-cost labor E. Local regulations
C. tariffs, taxes, and markups by foreign intermediaries
________ have high per-capita revenues, very competitive businesses, and strong infrastructures. They include Australia, Canada, and New Zealand. A. Transition economies B. Developing economies C. Emerging economies D. Advanced economies E. Centrally planned economies
D. Advanced economies
________ is a governmental system that attempts to control most aspects of its citizens' conduct both publicly and privately, including their values and beliefs. A. A mixed system B. A market economy C. Democracy D. Authoritarianism E. Socialism
D. Authoritarianism
Which of the following statements BEST describes socialism? A. Capital and wealth should be vested in the hands of individuals. B. Wealth should be used primarily for profit rather than as a means of production. C. The government controls the attitudes, values, and beliefs of the citizens. D. Collective welfare outweighs individual welfare. E. Emphasis is placed on individual accomplishment and innovations.
D. Collective welfare outweighs individual welfare.
Which of the following represents a method of negotiation in which the objective is to settle any disagreements in a pleasant manner? A. Confiscation B. Arbitration C. Litigation D. Conciliation E. Nationalization
D. Conciliation
Which of the following represents a method of negotiation in which the objective is to settle any disagreements in a pleasant manner? A. Confiscation B. Arbitration C. Nationalization D. Conciliation E. Litigation
D. Concilition
Which term defines the business transactions where payments are made in kind instead of in cash? A. Global sourcing B. Home replication C. Exporting D. Countertrade E. Importing
D. Countertrade
________ imposes limitations on the expenditure or outflow of tangible currency from a certain nation or on the influx of foreign currencies. A. A quota B. A nontariff trade barrier C. A countervailing duty D. Currency control E. Export control
D. Currency control
Which term refers to a company's ability to lower the cost of operation throughout its value chain? A. Organizational culture B. Learning C. Flexibility D. Efficiency E. Strategy
D. Efficiency
________ include countries that have attained significant modernization, industrialization, and rapid economic growth since the 1980s. A. Centrally planned economies B. Developed economies C. Developing markets D. Emerging economies E. Advanced economies
D. Emerging economies
Which of the following represents a low-control strategy? A. Licensing B. Equity joint ventures C. Franchising D. Exporting E. Foreign direct investment
D. Exporting
A specific region that is located within a nation is treated as if it were outside the nation's borders. This region is designated to receive imported products that are not subject to tariffs and that are intended for assembly and subsequent re-export. Which term best describes this region? A. Free trade area B. Economic union C. Common market D. Foreign trade zone E. Regional economic integration
D. Foreign trade zone
Which of the following is a stage of regional integration in which member countries decide to remove tariffs and other barriers to trade within the bloc, but maintain trade barriers with nonmember countries? A. Customs union B. Common market C. Foreign trade zone D. Free trade area E. Economic union
D. Free trade area
Raul works for an Argentinian company that buys goods from China and sells them in Argentina. What internationalization strategy is Raul's company using? A. Global strategy B. Exporting C. Licensing D. Global sourcing E. Franchising
D. Global sourcing
An international technology company is deciding how to utilize its advertising budget for the year. Which of the following is the best option? A. Spend the budget on television and print ads B. Use the same campaign as in their home country C. Focus on Internet and radio ads D. Hire a global advertising agency E. Spend the budget on transit ads
D. Hire a global advertising agency
In which of the following industries have Brazil's manufacturing firms enjoyed considerable success producing for foreign clients? A. Personal computers B. Diamonds and mining C. Textile machinery D. Iron ore and processed food E. Cars and consumer electronics
D. Iron ore and processed food
Why would a nation choose to be a member of an economic bloc? A. An economic bloc imposes restrictions on labor. B. An economic bloc imposes restrictions on the cross-border flow of products. C. Nations can pursue economic integration by reducing tariffs. D. It is easier to reach an agreement on free trade with a few nations rather than with numerous countries. E. A nation can then become part of the World Trade Organization.
D. It is easier to reach an agreement on free trade with a few nations rather than with numerous countries.
A huge MNE was the victim of creeping expropriation from a foreign government. Why is creeping expropriation ethically wrong? A. It takes effect after the MNE improves product distribution throughout the country. B. It takes place when MNEs decide to invest. C. It goes into effect while the MNE is planning to expand its operations in a country. D. It occurs after an MNE makes large investments in a country's property and facilities. E. It occurs before the MNE agrees to move its operations overseas.
D. It occurs after an MNE makes large investments in a country's property and facilities.
Which term refers to understanding and administering laws, regulations, and rules that are used to establish standards for conduct? A. Totalitarianism B. Democracy C. Mixed economy D. Legal system E. Political system
D. Legal system
Which of the following identifies the reporting relationships in an organization? A. Organizational culture B. Home replication strategy C. Visionary leadership D. Organizational structure E. Local responsiveness
D. Organizational structure
Which term refers to acquiring certain value-chain activities, including the production of finished products from independent suppliers? A. Privatization B. Purchasing power C. Conglomeration D. Outsourcing E. Microfinancing
D. Outsourcing
________ is the transfer of industries from state ownership to non-public entities. A. Modernization B. Outsourcing C. Targeting D. Privatization E. Global sourcing
D. Privatization
Which term refers to cost alterations that indicate the amount of products that customers are able to purchase in their own country, using their own monetary system, in accordance with their own standard of living? A. Outsourcing B. Tenders C. Disposable income D. Purchasing power parity E. Gross domestic product
D. Purchasing power parity
________ refers to a legal system where rules are clarified, publicly revealed, justly applied, and valued by all. A. Civil law B. Common law C. A mixed system D. Rule of law E. Religious law
D. Rule of law
What does a multidomestic industry have in common with local responsiveness? A. They both focus solely on domestic sales. B. They both utilize centralized decision making. C. They both incorporate all of the elements of a firm's value-chain activities. D. They both make decisions on a country-to-country basis. E. They both deal with product competition.
D. They both make decisions on a country-to-country basis
The root cause of gray market activity is ________. A. a firm's ability to control production and distribution costs B. a difference in price between national distributors C. the dominance of substandard products in local markets D. a significant difference in price of the same product between two countries
D. a significant difference in price of the same product between two countries
Governments impose defensive barriers to ________. A. promote national security B. protect workers C. safeguard industries D. all of the above
D. all of the above
In a(n) ________, barriers to trade within a participating country are reduced or eliminated, shared external barriers are established, and unrestricted movement of goods, services, and factors of production is permitted. A. unrestricted trade location B. overseas trade region C. free trade area D. common market E. customs union
D. common market
In international advertising, the receptiveness of the buyer to advertising changes is a function of ________. A. laws B. positioning C. market segmentation D. culture E. media availability
D. culture
Under which one of the following organizational structures are management and control highly decentralized to the level of individual regions? A. Product structure B. Functional structure C. International division structure D. Geographic area structure E. Global matrix structure
D. geographic area structure
Which type of strategy involves centralized coordination and control of different international operations? A. Countertrade strategy B. Home replication strategy C. Multidomestic strategy D. Global strategy E. Transnational strategy
D. global strategy
Emerging markets have become target markets because ________. A. in some product categories, there is little demand in emerging markets B. the shrinking middle class in emerging markets implies a lower demand for consumer products C. the largest emerging markets have reduced their share of world imports in the last few years D. governments in emerging economies attract sales of infrastructure-related products E. the majority of individuals in emerging economies live in poverty
D. governments in emerging economies attract sales of infrastructure-related products
Which of the following situations will discourage business activities of foreign firms in an emerging market? A. allowing foreign firms to access the country's energy resources B. using a strong legal framework and patent laws C. investing in a strong Internet infrastructure D. increasing the requirements for licenses, approvals, and paperwork
D. increasing the requirements for licenses, approvals, and paperwork
Regional integration leads to increased ________ by firms inside their economic bloc. A. isolation B. costs C. dumping D. internationalization E. localization
D. internationalization
Adaptation refers to ________ one or more elements of the firm's international marketing program. A. standardizing B. omitting C. enlarging D. modifying E. duplicating
D. modifying
A government policy or procedure that restricts trade through means such as quotas is known as a(n) ________. A. export control B. currency control C. import license D. nontariff trade barrier E. import control
D. nontariff trade barrier
Which of the following identifies the reporting relationships in an organization? A. Home replication strategy B. Local responsiveness C. Organizational culture D. Organizational structure E. Visionary leadership
D. organizational structure
________ represents cost alterations that indicate the amount of products that customers are able to purchase in their own country, using their own monetary system, in accordance with their standard of living. A. Privatization B. Outsourcing C. Tenders D. Purchasing power parity E. Offshoring
D. purchasing power parity
In Iran, systems are based on spiritual beliefs, ethical codes, and moral standards that are directed by a supreme being. Iran operates under ________. A. the rule of law B. a mixed system C. common law D. religious law E. civil law
D. religious law
Products that have universal specifications are the best candidates for __________ of its marketing program. A. outsourcing B. global sourcing C. customization D. standardization E. adaption
D. standardization
________ are taxes placed on imported goods that increase the final purchase price for consumers. A. Export controls B. Nontariff trade barriers C. Quotas D. Tariffs E. Subsidies
D. tariffs
Top managers who provide inspirational direction and motivation to employees in an attempt to take a company to a better future are exhibiting ________. A. flexibility B. discipline C. efficiency D. visionary leadership E. technical skills
D. visionary leadership
You work at an international company that is headquartered in California. Your company's R&D and manufacturing activities take place near the company headquarters. The managers at the California location are responsible for company operations worldwide, and they view the entire world as one large marketplace. As a result, your company sells the same products on six continents. Which of the following strategies is being used by your company? A. A home replication strategy B. A countertrade strategy C. A multidomestic strategy D. A transnational strategy E. A global strategy
E. A global strategy
Which of the following BEST describes a transition economy? A. A post-industrial country that has a high GDP. B. A post-industrial country that has a high per-capita income. C. State-owned industries that have shifted to private entities. D. A low-income country that has limited industrialization and low growth. E. A market that has evolved from being centrally planned to being more liberalized.
E. A market that has evolved from being centrally planned to being more liberalized.
________ is a process in which an unbiased third party listens to both sides of a case and makes a decision in favor of one party or the other, based on an impartial analysis of facts. A. Nationalization B. Conciliation C. Confiscation D. Litigation E. Arbitration
E. Arbitration
An American company that does business overseas has to be concerned about local events. Why should a company be concerned about political events and the legal environment in the country in which it does business? A. Initiatives developed by special interest groups could lead to the company experiencing supply chain issues. B. Changes in the legal environment might influence the government to encourage cross-border collaborations. C. Shifting priorities in political parties might cause unfavorable government interference with domestic firms. D. Unfavorable developments could lead to new conditions that require the company to protect its intellectual property. E. Changes in the political climate might influence government interference in business practices, putting the safety of the company's employees in jeopardy.
E. Changes in the political climate might influence government interference in business practices, putting the safety of the company's employees in jeopardy.
What is the basis of civil law? A. Common law B. Rule of law C. Shariah law D. Tradition E. Codified rules
E. Codified rules
________ refers to the possibility of loss or adverse effects on company operations and profitability as a result of changes in a country's political and/or legal environment. A. Cross-border risk B. Social risk C. Financial risk D. International risk E. Country risk
E. Country risk
________ represent locations at the ports of entry in each country where government authorities inspect imported products and levy tariffs. A. Export trade zones B. Regional economic blocs C. Foreign trade zones D. Maquiladoras E. Customs
E. Customs
Which of the following is the world's most advanced and largest regional economic bloc? A. Association of Southeast Asian Nations B. North American Free Trade Agreement C. MERCOSUR D. Asia Pacific Economic Cooperation E. European Union
E. European Union
________ formulate best practices that the firm implements in all its units worldwide. A. Local managers B. Distributors C. Supply chain managers D. Cross-cultural teams E. Global new-product planning teams
E. Global new-product planning teams
Which of the following is an internal factor that affects international pricing? A. Customer expectations B. Competitor prices C. Competitor pricing D. Taxes and tariffs E. Management's market share expectations
E. Management's market share expectations
Which one of the following characteristics is related to economic freedoms? A. Fair electoral rights B. The right to establish political parties C. Freedom from total control by military forces D. Unrestricted and reasonable elections E. Market forces and the ability to easily implement commercial activities
E. Market forces and the ability to easily implement commercial activities
Which of the following was formed by three countries to increase market entrance, remove barriers to trade, establish investment standards, and encourage bidding on government contracts within the three countries participating in it? A. European Union (EU) B. Asia Pacific Economic Cooperation C. Association of Southeast Asian Nations D. MERCOSUR E. North American Free Trade Agreement (NAFTA)
E. North American Free Trade Agreement (NAFTA)
Which challenge of emerging markets is associated with corruption and weak legal frameworks that discourage business investments? A. Lack of qualified local partners B. Excessive bureaucracy C. Dominance of family conglomerates D. Lack of physical infrastructure E. Political instability
E. Political instability
Which one of the following is a major factor in the growth of global commerce and in rising incomes worldwide? A. Reducing investment incentives B. Increasing antidumping duties C. Increasing countervailing duties D. Reducing subsidies E. Reducing trade barriers
E. Reducing trade barriers
It has recently been found that special interest groups (SIGs) have unprecedented access to politicians through social events. Why should companies be concerned with the SIGs' access to government officials? A. SIGs limit intellectual property protection. B. SIGs exercise control over activities to prevent terrorism. C. SIGs do not represent small businesses. D. SIGs represent only one side of the political arena. E. SIGs influence elected officials who can change policy.
E. SIGs influence elected officials who can change policy.
The United States has implemented trade sanctions on Iran and Syria. What is the purpose of sanctions? A. The government confiscates property with no compensation. B. Consumers may refuse to patronize firms that behave badly. C. Sanctions show a voluntary refusal to engage in commercial dealings with a nation. D. Sanctions terminate contracts and create new laws that favor local firms. E. Sanctions punish unwanted activities by foreign countries.
E. Sanctions punish unwanted activities by foreign countries.
________ include establishments such as OPEC and OECD that work to improve the development of specific communities. A. International organizations B. Governments C. Regional trade organizations D. Competing firms E. Special interest groups
E. Special interest groups
In emerging markets, why do successful firms develop close community relationships? A. To locate quality and accessible business partners B. To target political systems in developing markets C. To challenge developing market rivals D. To collaborate with family conglomerates E. To better understand local conditions, and earn customer respect and loyalty
E. To better understand local conditions, and earn customer respect and loyalty
TDC Industries, a U.S. firm, has established operations in Germany, so TDC Industries has free trade access to ________of the EU market. A. a specific percentage B. none C. a limited part D. a large part E. all
E. all
Global branding increases a firm's ________ in international markets. A. product quality B. global sourcing C. adaptation D. low-cost strategy E. competitive advantage
E. competitive advantage
Which one of the following approaches affords significant independence and decision-making authority to the firm's subsidiaries around the world? A. Functional structure B. Transnational strategy C. Centralized structure D. Product structure E. Decentralized structure
E. decentralized structure
Regional integration enables member countries to gain bargaining power in world affairs by ________. A. helping member country firms to achieve economies of scale B. expanding the market size of member country firms C. attracting direct investment from outside the bloc D. enhancing the productivity of member countries E. establishing a stronger political position as a united bloc
E. establishing a stronger political position as a united bloc
Government intervention and trade barriers imposed by developed countries raise ______ for developing economies that supply them because tariffs are often disproportionately high. A. economic freedom levels B. quotas C. export controls D. subsidies E. ethical concerns
E. ethical concerns
Laetitia Luxury Bags produces high end, designer hand bags. The company keeps the number of distributors to a minimum to control the distribution channel. On a recent trip to Italy, Laetitia noticed that her hand bags were being sold in an upscale store. However, her company had only sold this particular hand bag in France. In this case, Laetitia experienced _____________ of her product. A. counterfeiting B. intellectual property violation C. global sourcing D. piracy E. gray market activity
E. gray market activity
A marketing strategy in which a firm creates a distinct impression in the customer's mind is called ________. A. brand equity B. global branding C. market segmentation D. a distribution strategy E. positioning
E. positioning
A coordinated approach to internationalization in which the firm strives to be relatively responsive to local needs while retaining sufficient central control of operations is a ________ strategy. A. multidomestic B. vision C. home replication D. global E. transnational
E. transnational
In the early stages of market research, managers examine three important statistics to estimate market potential: per-capita income, size of the middle class, and market potential indicators. True or False?
True
MNEs must set prices appropriate for local conditions. Many firms devise innovative products and packaging to keep prices low. True or False?
True
Political instability is associated with corruption and weak legal frameworks that discourage inward investment and the development of a reliable business environment. True or False?
True
Regional integration greatly increases the scale of the marketplace for firms inside the economic bloc. True or False?
True
Tariffs and most nontariff trade barriers impact importers by making products more expensive. True or False?
True
Increasingly, mainstream banks view microfinance as a source of future growth. True or False?
True