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MKT 515 Week 11 Final Exam Strayer

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Chapter 9 Through 19
Chapter 9
Multiple Choice
1. In global market entry, all of the following are entry decisions that must be made
by
management before entering an international market EXCEPT:
a.
b.
c.
d.
e.

decide on the time of entry.


decide on the target product/market.
decide on the goals of the target markets.
decide on the mode of entry.
decide on the target budget.

2. When marketers are making the decision to enter an international market or not,
the
first step is generally to:
a.
b.
c.
d.
e.

decide on the target budget.


decide on the target product/market.
decide on the goals of the target markets.
decide on the mode of entry.
decide on the time of entry.

3. When marketers are making the decision to enter an international market or not,
the
final step in the decision process is generally to:
a.
b.
c.
d.
e.

decide on a control system to monitor the performance of the entered market.


decide on the target product/market.
decide on the goals of the target markets.
decide on the mode of entry.
decide on the time of entry.

4. Which of the following most accurately describes the first step in the market entry
decision process?

a.
b.
c.
d.
e.

Decide on the goals of the target markets.


Decide on the mode of entry.
Decide on the time of entry.
Decide on the target product/market.
Decide on the marketing mix plan.

5. Which of the following is a step in the market entry decision process?


a.
b.
c.
d.
e.

Forecast a corporate budget.


Conduct a marketing audit.
Decide on a mode of entry.
Review transportation strengths.
Analyze domestic demand.

6. To identify market opportunities for a given product or service, the international


marketer usually starts off with a large pool of candidate countries. To narrow
down
this pool, the company will typically do a(n) _______________________.
a.
b.
c.
d.
e.

internal audit.
external audit.
cross-border budget.
preliminary screen.
econometric analysis.

7. The goals of a preliminary screen to determine market opportunities are to


minimize
mistakes of ignoring countries that offer viable opportunities for the product and:
a.
b.
c.
d.
e.

offending local governments.


offending local cultures.
offending local merchants.
violating local advertising laws.
not wasting time on countries that offer little or no potential.

8. The four-step procedure that can be employed for the initial screening process
includes all of the following EXCEPT:
a.
b.
c.
d.
e.

select indicators and data selection.


analyze parallel strengths and weaknesses of the market.
determine the importances of country indicators.
rate the countries in the pool on each indicator.
compute the overall scores for each country.

9. When Colgate-Palmolive sees prospects in countries with purchasing power as a

major driver behind market opportunities and Coca-Cola looks at per capita
income
and the number of minutes that it would take someone to work to be able to afford
a
Coca-Cola product, they are following which of the following steps of the initial
screening process for market entry?
a.
b.
c.
d.
e.

indicator and data selection.


analyze parallel strengths and weaknesses of the market.
determine the importances of country indicators.
rate the countries in the pool on each indicator.
compute overall scores for each country.

10. A four-step procedure that can be employed for the initial screening process
includes
the following EXCEPT:
a.
b.
c.
d.
e.

select indicators and collect data.


determine importance of country indicators.
hire outside consultants to do a marketing audit.
rate the countries in the pool on each indicator.
compute overall score for each country.

11. When Coca-Cola looks at per capita income and the number of minutes that it
would
take for somebody to work to be able to afford a Coca-Cola product, the company
is
following which of the following steps of the initial screening process for
market entry?
a.
b.
c.
d.
e.

indicator and data selection.


analyze parallel strengths and weaknesses of the market.
determine the importances of country indicators.
rate the countries in the pool on each indicator.
compute overall scores for each country.

12. Wrigley, the U.S. chewing gum manufacturer, has not been interested in most
Latin
American markets because many of the local governments imposed ownership
restrictions. This would be an example of ________________ in markets.
a.
b.
c.
d.
e.

finding opportunities
weeding out
cross-fertilization
demand conflict
unfairness

13. One method of assessing whether a company should enter a foreign market or not
is
to use an opportunity matrix. To use such a matrix, the marketer should assess
high,
moderate, and low opportunities as measured on business and political risk and
___________________ scales or cells.
a.
b.
c.
d.
e.

demand
financial constraints
market opportunities
market sensitivity
distance from home market

14. All of the following are major external criteria for making a decision as to a mode
of
entry into a foreign market EXCEPT:
a.
b.
c.
d.
e.

company leadership.
market size and growth.
need for control.
government regulations.
local infrastructure.

15. The key determinant in the market entry choice decisions is the:
a.
b.
c.
d.
e.

risk.
local infrastructure.
flexibility.
internal resources and assets.
market size and growth potential.

16. In the mode of entry, many companies see liaison office as a low-cost
___________________.
a.
b.
c.
d.
e.

joint venture
export management company
listening post
contract exporter
alliance post

17. The ____________________ of a market refers to the countrys distribution


system,
transportation network, and communication system.
a. demographic environment

b.
c.
d.
e.

infrastructure
logistical
physical distribution
physical infrastructure

18. Markets can be classified in four types of countries based on their respective
market
attractiveness. All of the following are part of the classification scheme EXCEPT:
a.
b.
c.
d.
e.

platform countries.
emerging countries.
low-tech countries.
growth countries.
maturing and established countries.

19. Markets can be classified in four types of countries based on their respective
market
attractiveness. Which of the following of those types can be used to gather
intelligence and establish a network?
a.
b.
c.
d.
e.

platform countries.
emerging countries.
maturing and established countries.
growth countries.
none of the above.

20. Markets can be classified in four types of countries based on their respective
market
attractiveness. Hong Kong and Singapore would fall into which of the types listed
below (where the purpose would be to gather intelligence and establish a
network)?
a.
b.
c.
d.
e.

platform countries.
emerging countries.
maturing and established countries.
growth countries.
none of the above.

21. Markets can be classified in four types of countries based on their respective
market
attractiveness. Which of the following of those types can be used to build up an
initial presence (such as through a liaison office)?
a. platform countries.
b. emerging countries.
c. maturing and established countries.

d. growth countries.
e. none of the above
22. Markets can be classified in four types of countries based on their respective
market
attractiveness. Vietnam and the Philippines would fall into which of the types
listed
below (where the purpose would be to build up an initial presence such as through
a
liaison office)?
a.
b.
c.
d.
e.

platform countries.
emerging countries.
maturing and established countries.
growth countries.
none of the above.

23. Markets can be classified in four types of countries based on their respective
market
attractiveness. Which of the following countries would most likely be listed as a
maturing/established market?
a.
b.
c.
d.
e.

China.
Burma.
India.
Taiwan.
China.

24. Markets can be classified in four types of countries based on their respective
market
attractiveness. Which of the following countries would most likely be listed as an
established/maturing market?
a.
b.
c.
d.
e.

China.
the Philippines.
India.
Vietnam.
Japan.

25. Markets can be classified in four types of countries based on their respective
market
attractiveness. Which of the following countries would most likely be listed as
a growth country?
a. Hong Kong.
b. Vietnam.

c. China.
d. Taiwan.
e. Japan.
26. A _________________________ perspective argues that the desirable governance
structure (high- versus low-control mode) will depend on the comparative
transaction
costs (the costs of running an operation).
a.
b.
c.
d.
e.

demand-delivery
just-in-time management
management-by-objectives
quantity-cost allocation
transaction-cost analysis

27. From a transaction-cost analysis perspective, market failure typically happens


when
transaction-specific assets become _________________ and therefore more highcontrol situations are needed.
a.
b.
c.
d.
e.

optional
valuable
expendable
less-valuable
weaker

28. Most companies start their international expansion with _________________.


a.
b.
c.
d.
e.

exporting
joint ventures
licensing
franchising.
contract manufacturing.

29. In the area of exporting, a middleman could be an


__________________________.
a.
b.
c.
d.
e.

export outsourcing company


export management company
export production company
export specialist company
export manufacturing company

30. Companies that plan to engage in exporting have a choice between indirect,
_________________, and direct exporting.

a.
b.
c.
d.
e.

licensing
parallel
cooperative
venture
summation

31. _______________________ means that the firm uses a middleman based in its
home
market to do the exporting.
a.
b.
c.
d.
e.

Licensing
Contract manufacturing
Cooperative exporting
Venture exporting
Indirect exporting

32. ___________________ offers several advantages. Chief among these


are the firm gets instant foreign market expertise, very little risk is involved, and
no major resource commitments are required.
a.
b.
c.
d.
e.

Licensing
Parallel exporting
Cooperative exporting
Direct exporting
Indirect exporting

33. ___________________ has disadvantages. Chief among these are that the
company
has little or no control over the way their product is marketed in a foreign country,
lack of adequate sales support (among other support variables) can lead to poor
sales,
and bad decisions made by an intermediary can damage the corporate image.
a.
b.
c.
d.
e.

Licensing
Parallel exporting
Cooperative exporting
Direct exporting
Indirect exporting

34. ______________________ means that the firm enters into an agreement


with another firm (local or foreign) where the partner will use its distribution
network
to sell the exporters goods.
a. Licensing

b.
c.
d.
e.

Parallel exporting
Cooperative exporting
Venture exporting
Indirect exporting

35. ______________________ means that the company sets up its own


export organization within the company and relies on a middleman based in a
foreign market (foreign distributor).
a.
b.
c.
d.
e.

Licensing
Parallel exporting
Cooperative exporting
Direct exporting
Indirect exporting

36. Cooperative exporting is also called:


a.
b.
c.
d.
e.

specialist exporting.
lean exporting.
long-range exporting.
backward exporting.
piggyback exporting.

37. One of the most popular forms of cooperative exporting is _________________.


With this method, the company uses the overseas distribution network of another
company (local or foreign) for selling its goods in the foreign market.
a.
b.
c.
d.
e.

parallel exporting.
venture exporting.
piggyback exporting.
make-or-buy exporting.
foreign export management exporting.

38. One of the main advantages of direct exporting over indirect exporting is that the
exporter has more:
a.
b.
c.
d.
e.

leverage.
risk.
control over its operations.
budget.
leadership.

39. ___________________ is a contractual strategy where the firm offers some


proprietary assets to a foreign company in exchange for royalty fees.

a.
b.
c.
d.
e.

Licensing
Parallel exporting
Cooperative exporting
Direct exporting
Indirect exporting

40. The Oriental Land Company in Japan owns Tokyo Disneyland. This would be
an example of an international _________________ agreement between the
Oriental Land Company (owner) and Disneyland (receives royalties).
a.
b.
c.
d.
e.

licensing
parallel exporting
cooperative exporting
direct exporting
indirect exporting

41. Benefits of licensing include:


a.
b.
c.
d.
e.

not very demanding on company resources.


always protected against copying or technical theft.
always a strong partner relationship.
low profits, therefore, low taxes.
licensee is always enthusiastic.

42. Nurturing a future competitor is the biggest danger in ___________________.


a.
b.
c.
d.
e.

licensing
parallel exporting
cooperative exporting
direct exporting
indirect exporting

43. One of the most popular entry modes in the international marketplace for service
firms is:
a.
b.
c.
d.
e.

licensing.
franchising.
cooperative exporting.
direct exporting.
indirect exporting.

44. According to the textbook, in franchising, companies can capitalize on a


_______________________________.
a. cheap business formula.

b.
c.
d.
e.

expensive business formula.


winning business formula.
parallel business formula.
hybrid business formula.

45. One of the most popular franchise plans used in international marketing is
____________________ where the franchiser gives the franchise to a local
entrepreneur who in turn sells local franchises within a territory.
a.
b.
c.
d.
e.

sales franchise
master franchise
strategic franchise
cross-country franchise
border-territory franchise

46. In ____________________, the company arranges with a local manufacturer to


manufacture parts of the product or even the entire product. The marketing of the
product, however, is still the responsibility of the international firm.
a.
b.
c.
d.
e.

licensing
franchising
cooperative exporting
contract manufacturing
indirect exporting

47. ___________________ are(is) the prime motivation behind contract


manufacturing.
a.
b.
c.
d.
e.

Advertising cooperation
Leadership
Cost savings
Profit expansion
Desire to be part of a cartel

48. Like licensing and franchising, nurturing a future competitor is one of the biggest
dangers in ___________________.
a.
b.
c.
d.
e.

contract manufacturing.
parallel exporting.
cooperative exporting.
using an export management company.
indirect exporting.

49. In contract manufacturing, because of nurture-a-future competitor threat, many


companies prefer to make ___________________ or products that involve

proprietary design features in-house.


a.
b.
c.
d.
e.

just-in-time items
under-value items
low-value items
high-value items
none of the bove

50. With a __________________, the foreign company agrees to share equity and
other
resources with other partners to establish a new entity in the target country.
a.
b.
c.
d.
e.

contract manufacturing agreement


parallel exporting agreement
cooperative exporting agreement
export management company
joint venture

51. A major advantage of joint ventures, as compared to lesser forms of resource


commitment such as licensing, is:
a.
b.
c.
d.
e.

the return potential.


infrastructure enhancement.
expansion of stockholders.
division of leadership.
an increase in ethical standards.

52. All of the following are considered benefits of forming joint ventures EXCEPT:
a.
b.
c.
d.
e.

greater return potential.


shared profits instead of shared royalties.
more control over operations.
increased cost controls.
synergies.

53. With respect to joint ventures, the ________________ argument is illustrated by


not only shared capital and risk but possible contributions brought in by the local
partner in land, raw materials, expertise on the local environment, and access to
local distribution networks.
a.
b.
c.
d.
e.

demand
parallel management
consensus management
domestication
synergy

54. Lack of trust and mutual conflicts can often turn ______________ into
partnerships
doomed to failure.
a.
b.
c.
d.
e.

contract manufacturing agreements


parallel exporting agreements
cooperative exporting agreements
export management companies
joint ventures

55. One of the problems with joint ventures is ________________ between partners.
An
example would be when one partner wants to stress reduction of political and
economic controls on decision-making and the other partner wants to accept
technology and capital but precludes foreign authority infringement on sovereignty
and ideology.
a.
b.
c.
d.
e.

conflicting purchasing objectives


conflicting process objectives
control objectives
budget objectives
staffing objectives

56. There are no magic ingredients to foster the stability of joint ventures, however,
all
of the following are good guidelines EXCEPT:
a.
b.
c.
d.
e.

pick a partner with which control can be maintained.


pick the right partner.
establish clear objectives from the beginning.
bridge cultural gaps.
get top management commitment and respect.

57. _____________________ come about when multinational companies prefer to


enter
new markets with 100 percent ownership.
a.
b.
c.
d.
e.

Contract manufacturing agreements


Parallel exporting agreements
Cooperative exporting agreements
Wholly owned subsidiaries
Joint ventures

58. When a multinational company chooses to invest in foreign markets with wholly
owned subsidiaries, these subsidiaries may be acquisitions or _______________

operations.
a.
b.
c.
d.
e.

joint venture
strategic alliance
greenfield
franchise
piggyback

59. A _________________ operation (with respect to wholly owned subsidiaries) is


one
which is started from scratch.
a.
b.
c.
d.
e.

joint venture
strategic alliance
greenfield
franchise
piggyback

60. Wholly owned subsidiaries give MNCs _______________ of their operations.


a.
b.
c.
d.
e.

almost no control
partial control
moderate control
full control
strategic control only

61. Advantages of wholly owned subsidiaries include all of the following EXCEPT:
a.
b.
c.
d.
e.

full control.
control of profits.
own processes.
control government relationships.
can often be set quicker that other forms of investment.

62. One of the chief disadvantages of a wholly owned subsidiary is that:


a.
b.
c.
d.
e.

it is often perceived as a threat to cultural or economic sovereignty.


it is often perceived as generating low profits.
it is often perceived as having problems in supply lines.
it is often perceived as being more expensive
it is often perceived as a threat to the local media for promotion.

63. One way to address hostility to foreign acquisitions in the host country is by
______________ the firms presence in the foreign market by hiring local
managers,

sourcing locally, and developing local brands.


a.
b.
c.
d.
e.

regionalizing
localizing
socializing
acculturating
emphasizing the self-reference criterion (SRC)

64. Companies that enter via wholly owned subsidiaries are sometimes perceived as a
threat to the culture and/or economic sovereignty of the____________________.
a.
b.
c.
d.
e.

host country.
home country.
buffer country.
greenfield country.
high-tech country.

65. The chief reason that some firms choose acquisitions (or mergers) to enter a
foreign
market is that they can:
a.
b.
c.
d.
e.

receive greater tax relief.


receive greater profits.
reduce debt.
increase stock price.
enter the market more quickly.

66. When contrasted with greenfield operations, _________________ provide(s) a


rapid
means to get access to the local market.
a.
b.
c.
d.
e.

licensing
exporting
contract manufacturing
acquisitions
joint ventures

67. __________________ are described as a coalition of two or more organizations to


achieve strategically significant goals that are mutually beneficial.
a.
b.
c.
d.
e.

Joint ventures
Strategic alliances
Greenfield operations
Franchises
Piggyback arrangements

68. The partnership established by Coca-Cola and Nestle to market ready-to-drink


coffees
and teas under the Nescafe and Nestea brand names is an example of which of the
following:
a.
b.
c.
d.
e.

strategic alliance.
contract manufacturing.
licensing.
wholly owned subsidiary.
exporting.

69. All of the following are illustrations of the four generic reasons for forming
strategic alliances EXCEPT:
a.
b.
c.
d.
e.

offense.
defense.
catch-up.
remain.
restructure.

70. The underlying goal of _________________ in creating a strategic alliance is to


sustain the firms leadership position by learning new skills, getting access to new
markets and developing new technologies.
a.
b.
c.
d.
e.

offense
defense
catch-up
remain
restructure

71. The strategic alliance strategy of ______________ might be enacted when the
firm
has an established leadership position but that only plays a peripheral role in the
companys business portfolio.
a.
b.
c.
d.
e.

offense
defense
catch-up
remain
restructure

72. When a firm uses a strategic alliance as a vehicle to rejuvenate a business that is
not core and in which it has no leadership position, it is probably using a
________________ strategy.

a. defend
b. catch up
c. restructure
d. remain
e. none of the above
73. Decisions to exit or divest a foreign market may have all the following reasons
EXCEPT:
a.
b.
c.
d.
e.

sustained losses.
volatility.
premature entry.
ethical reasons.
new market.

74. Risks of exiting a foreign market may lead to all the following EXCEPT:
a.
b.
c.
d.
e.

fixed costs of exit.


disposition of assets.
short-term opportunities.
signal to other markets.
long-term opportunities.

True/False

Short Answer

75. The first step in the process of entering a foreign market is to decide on the
_____________________.
76. Preliminary screening is an accepted method of reducing the number of
candidates
for market entry.
77. As an example of a preliminary screening process in assessing international
market
opportunities, Colgate-Palmolive uses assessments of whether people bath
regularly
or not as a critical factor in deciding whether to enter a market or not.
78. To identify market opportunities for a given product (or service), the international
marketer usually starts off with a large pool of candidate cities.
79. Colgate-Palmolive views per capita purchasing power as a major driver

behind market opportunities.


80. _________________ countries (with respect to market attractiveness) can be used
to
gather intelligence and establish a network.
81. An example of a platform country is India.
82. An example of a growth country is China.
83. An example of an emerging country (with respect to market attractiveness) is
the Philippines.
84. Corporate objectives have no influence in choosing entry modes.
85. From the transaction cost analysis, market failure typically happens when
transaction-specific assets become valuable.
86. When going abroad most companies start their international expansion with
_______________.
87. Piggyback exporting is when two different transportation modes (such as truck
and
rail) are combined.
88. Under ___________ exporting, a firm sets up its own export department and sells
its
products via a middleman located in the foreign market.
89. In a master franchise, the franchiser gives a master franchise to a local
entrepreneur,
who will, in turn, sell local franchises within a territory.
90. Contract manufacturing is also known as outsourcing.
91. In a cooperative joint venture, the partners agree to raise capital in proportion to
the equity stakes agreed upon.

92. Ownership strategies in foreign markets can take two forms: acquisitions and
____________________.
93. There four generic reasons for forming strategic alliances are defense, catch-up,
remain, and __________________.
94. Strategic alliances between strong and weak partners often work because of the
synergy and learning that can take place between mentor and subordinate.
95. Stable alliances have the commitment and support of the top of the parents
organizations.
96. Exiting a country often involves substantial fixed cost.
Essay
97. List the steps in the global market entry decision process. Which of the steps is
probably the most important in the overall success of the foreign venture? Justify
your answer.
98. Explain what is meant by the concept of a liaison office and why some firms
prefer to use this technique to enter markets.
99. Briefly, explain the concept of licensing in a foreign market. In addition, cite the
benefits and drawbacks of licensing. Be specific in your responses.
100. Briefly explain the concept of joint venture. Additionally, give the benefits and
drawbacks of entering into a joint venture.
101. Provide an assessment of strategic alliances. What are they used for, what are
the characteristics of those that generally succeed, and what are the general types? Be
sure to be specific in your answers.
Chapter 10
Multiple Choice
1. Ikea, the Swedish furniture chain, insists that all its stores carry the basic product

line with little room for adaptation to local tastes. If research of the U.S. market
showed that Americans preferred larger beds than their Swedish counterparts,
which
of the following strategies would be advisable to Ikea?
a.
b.
c.
d.
e.

standardization.
new product development.
adaptation.
withdraw from market.
lower prices to encourage attitude change.

2. In the Australian market, rather than manufacturing disposable diapers, Procter &
Gamble decided to import them since the size of the market did not warrant local
manufacturing according to P&G. Unfortunately, by using packaging designed for
the Asian region with non-English labeling, P&G alienated its customers in
Australia. This is an example of improper:
a.
b.
c.
d.
e.

global policy decisions.


pricing decisions.
brand policy decisions.
product policy decisions.
company policy decisions.

3. Even though other combination alternatives can be devised, companies generally


can
pursue three global product strategies to penetrate foreign markets. These
strategies
are to extend the home-grown product/communication strategies, adapt their
strategy
to the local marketplace, and:
a.
b.
c.
d.
e.

invent new products for foreign customers.


concentrate on services.
apply for permission to copy domestic products.
concentrate on image adjustment.
focus on secondary issues (such as warranties).

4. In the area of global product policy, companies can pursue three strategies to
penetrate
foreign markets. The strategies include:
a.
b.
c.
d.
e.

extension, adaptation, and invention.


extension, adaptation, and prevention.
extension, adaptation, and creation.
extension, adaptation, and placement.
extension, adaptation, and balancing.

5. Which of the following is NOT one of the strategic options available to the
marketing
planner, considering various product policies that could be devised for the
international marketplace?
a.
b.
c.
d.
e.

product and communication extension--dual extension.


communication extension--mono extension.
product extension--communications adaptation.
product adaptation--communications extension.
product and communications adaptation--dual adaptation.

6. If a company were to follow a strategy of product and communication extension


(dual extension) in a foreign market, an example of a product category that would
fit this strategy would be _________________________.
a.
b.
c.
d.
e.

personal care items


motorscooters
gasoline
clothing
hand-powered washing machines

7. If a company were to follow a strategy of product adaptation-communications


extension in a foreign market, an example of a product category that would
fit this strategy would be __________________.
a.
b.
c.
d.
e.

soft drinks
motorscooters
shampoo
clothing
hand-powered washing machines

8. If a company were to follow a strategy of product extension-communications


adaptation in a foreign market, an example of a product category that would
fit this strategy would be __________________.
a.
b.
c.
d.
e.

soft drinks
gum
shampoo
clothing
hand-powered washing machines

9. If a company were to follow a strategy of product and communications


adaptation (dual adaptation) in a foreign market, an example of a product category
that

would fit this strategy would be __________________.


a.
b.
c.
d.
e.

soft drinks
motorscooters
gasoline
diet aids
hand-powered washing machines

10. If a company is an early entrant in the global arena and possesses little
in the way of resources, they will probably chose _____________________ as a
method of entry.
a.
b.
c.
d.
e.

product and communication extension--dual extension


product invention
product extension--communications adaptation
product adaptation--communications extension
product and communications adaptation--dual adaptation

11. As a strategy, ____________________ will work when the company targets a


global segment with similar needs.
a.
b.
c.
d.
e.

product and communication extension--dual extension


product invention
product extension--communications adaptation
product adaptation--communications extension
product and communications adaptation--dual adaptation

12. The biggest advantage of a product and communication extension--dual extension


policy is:
a.
b.
c.
d.
e.

it is easy for management to understand.


it offers substantial savings because of economies of scale.
it passes most legal tests.
it is service oriented.
it will usually not violate cultural taboos.

13. Due to differences in the cultural or competitive environment, a company may


choose
the _______________________ strategy if it wishes to keep its product economies
scale intact but customize its communications.
a. product and communication extension--dual extension
b. product invention
c. product extension--communications adaptation

d. product adaptation--communications extension


e. product and communications adaptation--dual adaptation
14. When the Wrigley chewing gum company markets its basic products abroad, it
keeps
its well-known brands but customizes promotional approaches in individual
countries. Which of the following strategies best describes the strategy that
Wrigley is following?
a.
b.
c.
d.
e.

product and communication extension--dual extension


product invention
product extension--communications adaptation
product adaptation--communications extension
product and communications adaptation--dual adaptation

15. Many companies add brands to their portfolio via acquisitions of local companies.
When the local brand is retained but incorporated into the existing communications
strategy, the strategy can be described as being one of:
a.
b.
c.
d.
e.

product and communication extension--dual extension.


product invention.
product extension--communications adaptation.
product adaptation--communications extension.
product and communications adaptation--dual adaptation.

16. Differences in both the cultural and physical environment across countries call for
a
_________________________ strategy.
a.
b.
c.
d.
e.

product and communication extension--dual extension


product invention
product extension--communications adaptation
product adaptation--communications extension
product and communications adaptation--dual adaptation

17. Because of differences in preferences in flavors and government regulations


regarding the marketing of diet products, Slim-Fast normally uses which of the
following strategies?
a.
b.
c.
d.
e.

product and communication extension--dual extension


product invention
product extension--communications adaptation
product adaptation--communications extension
product and communications adaptation--dual adaptation

18. Genuinely global marketers try to figure out how to create products with a global
scope rather than just for a single country. The mindset is to zero in on global
opportunities. The strategy that best describes this approach is called:
a.
b.
c.
d.
e.

product and communication extension--dual extension.


product invention.
product extension--communications adaptation.
product adaptation--communications extension.
product and communications adaptation--dual adaptation.

19. Black & Decker is a good example of a company that adopts the
_______________
approach to global expansion. The company aims to bring out new products that
cater to common needs and opportunities around the world.
a.
b.
c.
d.
e.

product and communication extension--dual extension


product invention
product extension--communications adaptation
product adaptation--communications extension
product and communications adaptation--dual adaptation

20. __________________ means offering a uniform product on a regional or


worldwide basis (only minor alterations are made to meet local standards).
a.
b.
c.
d.
e.

Customization
Standardization
Miniaturization
Assimilation
Marginalization

21. The primary advantage to using a standardization approach to marketing a product


in the international arena is:
a.
b.
c.
d.
e.

minimization of costs (which can be passed on to customers).


more profit.
less service complaints.
less product returns.
standard budgets.

22. Standardization of product has a __________________ orientation (lower costs


via
mass production).
a. market-driven
b. service-driven
c. budget-driven

d. promotion-driven
e. product-driven
23. ____________________ is leveraging cross-border differences in needs and
wants
of the firms target customers.
a.
b.
c.
d.
e.

Customization
Standardization
Proliferation
Expansion
Synthesizing

24. Customization of product has a ______________________ orientation (increase


customer satisfaction by adapting products to the local needs).
a.
b.
c.
d.
e.

market-driven
service-driven
budget-driven
promotion-driven
product-driven

25. All of the following are factors that favor a globalized product strategy EXCEPT:
a.
b.
c.
d.
e.

common customer needs.


global customers.
scale economies.
time-to-market.
rising strength of the Latin American markets.

26. Many product categories show a gradual but steady ____________________


in consumer preferences.
a.
b.
c.
d.
e.

slowdown.
difficulties
convergence.
divergence.
rising strength of the Latin American markets.

27. During the last decade, car buyers in the Triad markets (Japan, the United States,
and
Europe) have increasingly begun to have the same outlook and preferences in cars.
Which of the following factors that favor globalization of product, would most
accurately be associated with this trend?

a.
b.
c.
d.
e.

common customer needs.


global customers.
scale economies.
time-to-market.
Europe 1992 and other Regional Market Agreements.

28. _____________________ means shortening the time to bring new product


projects to
the market.
a.
b.
c.
d.
e.

Delivery-to-market
Orientation-to-market
Time-to-market
Extension-to-market
Perfection-to-market

29. One attempt to combine the strengths of standardization and customization of


products is to deal with both issues as functions of product design. The
_______________ approach consists of developing a range of product parts that
can be used worldwide. The parts can be assembled into numerous product
configurations.
a.
b.
c.
d.
e.

core-product
uniform commercial code
die-casting
modular
Nexus

30. In a ______________________, scale economies flow from the mass production


of
more-or-less standard product components at a few manufacturing sites.
a.
b.
c.
d.
e.

convergence approach
divergence
linear approach
forecasting approach
modular approach

31. One attempt to combine the strengths of standardization and customization of


products is to deal with both issues as functions of product design. The
_______________ approach consists of developing a mostly uniform coreproduct/platform and then adding attachments that match local market needs.
a. core-product

b.
c.
d.
e.

uniform commercial code


die-casting
modular
PRIZM

32. With respect to product design strategies, the ___________________ approach is


very popular with the French carmaker Renault. They use common core-products
but customize them in each market (such as making stronger heaters for the Nordic
market).
a.
b.
c.
d.
e.

core-product
uniform commercial code
die-casting
modular
PRIZM

33. One of the disadvantages that a global marketer may have is


___________________.
This would occur when too much standardization stifles initiative and
experimentation
at the local level.
a.
b.
c.
d.
e.

overcustomization
micro-managing
technocracy
group think
overstandardization

34. One of the pitfalls that a global marketer can run into is _____________. This
would occur when too much adaptation to the local market occurs and the brand
becomes vulnerable to losing its unique foreigness.
a.
b.
c.
d.
e.

overcustomization
micro-managing
technocracy
group think
overstandardization

35. Adoption rates of new products are affected by:


a. population homogeneity
b. proportion of women in the labor force
c. cosmopolitanism
d. mobility
e. all of the above

36. In general, the rate of adoption of new products (in foreign markets) is driven by
individual differences, personal influences, and:
a.
b.
c.
d.
e.

fashion.
trends.
cash on hand.
product characteristics.
promotion characteristics.

37. In general, the adoption of new products is driven by factors such as:
a.
b.
c.
d.
e.

individual differences.
personal influences.
product characteristics.
all of the above.
none of the above.

38. ___________________ are always eager to experiment with new ideas and
products.
a.
b.
c.
d.
e.

Early adopters.
Early majority.
Late majority.
Laggards.
Prior adopters.

39. Which of the following would NOT be one of the five key product characteristics
that contribute to its acceptance?
a.
b.
c.
d.
e.

low service maintenance.


relative advantage.
compatibility.
complexity.
trialability.

40. To what extent does the new product offer more perceived value to potential
adopters
than exiting alternatives, would be a question that best fits with which of the
following
key product characteristics acceptance categories?
a.
b.
c.
d.
e.

observability.
relative advantage.
compatibility.
complexity.
trialability.

41. Is the product consistent with exiting values and attitudes of the individuals in the
social system, would be a question that best fits with which of the following
key product characteristics acceptance categories?
a.
b.
c.
d.
e.

observability.
relative advantage.
compatibility.
complexity.
trialability.

42. Is the product easy to understand or use, would be a question that best fits with
which
of the following key product characteristics acceptance categories?
a.
b.
c.
d.
e.

observability.
relative advantage.
compatibility.
complexity.
trialability.

43. The adoption rate for new products in countries with a ________________
population is usually faster than in countries with a highly diverse culture.
a.
b.
c.
d.
e.

heterogeneous
complex
diverse
homogeneous
polycentric

44. The adoption rate for a new product in countries with a homogeneous population
is usually faster than in countries with a highly diverse culture. Which of the
following countries would probably have the fastest adoption based on the
information provided above?
a.
b.
c.
d.
e.

Ireland.
United States.
Japan.
United Kingdom.
France.

45. With respect to adoption rates in the international marketplace, it appears to be


generally true that adoption rates are higher in ______________ countries than in
____________ countries.

a.
b.
c.
d.
e.

lead/lag
lag/lead
lead/middle adopters
lag/middle adopters
lead/opinion-lead

46. A _________________ country is where a product is first introduced.


a.
b.
c.
d.
e.

lag
low-profile
lead
high-profile
fast

47. A _________________ country is where a product is entered after initial


introduction
has taken place.
a.
b.
c.
d.
e.

lag
low-profile
lead
high-profile
fast

48. _______________________ are people who look beyond their immediate social
surroundings and are not local in their opinions.
a.
b.
c.
d.
e.

Domestics
Introverts
Negotiators
Cosmopolitans
Regionalists

49. All of the following are factors that affect product penetration in the European
market
(according to a recent survey), EXCEPT:
a.
b.
c.
d.
e.

cosmopolitanism.
number of locals in the market.
mobility.
percentage of children in the labor force.
percentage of women in the labor force.

50. A recent study examined the difference of six products in 31 developing and

developed countries across the world. A key finding was that


___________________
tend to experience a far slower adoption rate than developed countries.
a.
b.
c.
d.
e.

European countries
global countries
advanced countries
developed countries
emerging market countries

51. All of the following are steps in the new product development process EXCEPT:
a.
b.
c.
d.
e.

identification of new product ideas.


budget development.
screening.
concept testing.
test marketing.

52. Which of the following are among the best sources for finding new product ideas?
a.
b.
c.
d.
e.

company, customers, competition, and collaborators.


trade magazines, television, and the internet.
government statistics, demographic charts, and psychological profiles.
reverse engineering, industrial spying, and out-of-date patents.
rumors, stories, and intuition.

53. Once new product ideas have been identified, the next logical step is to have
the ideas _______________.
a.
b.
c.
d.
e.

modeled
budgeted
screened
concept tested
test marketed

54. ______________ is part of a formal scoring model in screening new products.


a.
b.
c.
d.
e.

New Prod
ExProd
YProd
ZProd
none of the above

55. Conjoint analysis is also referred to as _____________________.

a.
b.
c.
d.
e.

geometric analysis
trade-off analysis
meta analysis
longitudinal analysis
metric analysis

56. A sophisticated method (sometimes called trade-off analysis) for measuring


consumer preferences for product concepts is called:
a.
b.
c.
d.
e.

chi-square.
correlation analysis.
focus groups.
regression analysis.
conjoint analysis.

57. The starting premise of _______________ is that people make trade-offs between
the different product attributes when they evaluate alternatives (or brands) from
which they pick a choice.
a.
b.
c.
d.
e.

chi-square
correlation analysis
focus groups
regression analysis
conjoint analysis

58. If a consumer considered four attributes to be important in the purchase of a TV,


by
using ________________ the researcher might be able to determine the trade-offs
between the different product attributes (such as purchase price or number of
channels
that could be received) when the consumer evaluated the alternatives for eventual
purchase.
a.
b.
c.
d.
e.

chi-square
correlation analysis
focus groups
regression analysis
conjoint analysis

59. A(n) ________________ is essentially a field experiment where the new product
is
marketed in a select set of cities to assess its sales potential and scores of other
performance measures.
a. attitude screen
b. product model

c. product concept
d. test market
e. focus concept
60. Testing objectives, testing marketing mixes, making projections of sales volume,
and analyzing potential competitive marketing mixes are all reasons to conduct:
a.
b.
c.
d.
e.

attitude screens.
product models.
product concepts.
test markets.
focus concepts.

61. One alternative to the test market is the _____________________.


a.
b.
c.
d.
e.

thought panel
laboratory test market
internet exposure technique
preferred patron experiment
use of break-even analysis

62. If prospective customers are contacted and shown commercials for the new
product and existing brands (then asked to state attitudes and preferences of what
they have seen), then the marketing research entity will probably have conducted
a(n) __________________ instead of a full test market.
a.
b.
c.
d.
e.

thought panel
laboratory test market
internet exposure technique
preferred patron experiment
break-even analysis

63. A common technique to avoid a global test market is to make global sales
projections
based on product performance in a ________________ market.
a.
b.
c.
d.
e.

lag
middle adopter
lead
opinionated
innovative

64. Timing is a very important element in any new product launch. One of the
strategies

is described as being the ________________ where there is a phased rollout. In


this
approach the product uses a trickle down approach.
a.
b.
c.
d.
e.

sprinkler method
shotgun method
rifle method
dribble method
waterfall method

65. Timing is a very important element in any new product launch. One of the
strategies
is described as being the ________________. This method often involves
introducing
the new product in the companys home market and then moving to other advanced
markets. Finally, less advanced markets are exposed to the product.
a.
b.
c.
d.
e.

sprinkler method
shotgun method
rifle method
dribble method
waterfall method

66. The prime motive for the waterfall model (in introducing new products on a
global
scale) is that the customization of the product for the foreign market is:
a. impractical.
b. very expensive.
c. time consuming.
d. promotionally limited.
e. not supported by top management.
67. Timing is a very important element in any new product launch. One of the
strategies
is described as being the ________________ where there is a simultaneous
introduction of products in other markets of the world.
a.
b.
c.
d.
e.

sprinkler method
shotgun method
rifle method
dribble method
waterfall method

68. A phased rollout is less demanding on the company resources whereas


____________________ are not always acceptable.

a.
b.
c.
d.
e.

sprinkler rollouts
shotgun rollouts
staggered rollouts
dribble rollouts
waterfall rollouts

69. The chief reason for a company choosing the sprinkler method of new product
introduction is to off-set:
a.
b.
c.
d.
e.

rising costs.
unstable labor.
competitive preemption.
government control.
shoddy promotions.

70. The waterfall strategy of sequential entry is preferable over the sprinkler model
when all of the following conditions exist EXCEPT:
a.
b.
c.
d.
e.

the lifecycle of the product is relatively long.


high costs of entry are present.
very weak local competitors.
anticipation of fast growth.
no real competitors.

71. The waterfall strategy of sequential entry is preferable over the sprinkler model
when:
a.
b.
c.
d.
e.

the lifecycle of the product is relatively short.


there are low costs of entry into the market.
there are many competitors.
there are weak local competitors.
fast growth is anticipated.

72. The sprinkler strategy of one to two entries (globally) is preferable over the
waterfall model when all of the following conditions exist EXCEPT:
a.
b.
c.
d.
e.

the lifecycle of the product is relatively short.


there are low costs of entry into the market.
there are many competitors.
very weak local competitors.
anticipation of fast growth.

73. The sprinkler strategy of one to two entries (globally) is preferable over the
waterfall model when:

a.
b.
c.
d.
e.

the lifecycle of the product is relatively long.


high costs of entry are present.
very weak local competitors exist.
fast growth is anticipated.
no real competitors exist.

74. Truly global innovators are called:


a.
b.
c.
d.
e.

metanational innovators.
delta innovators.
beta innovators.
gamma innovators.
none of the above.

75. To harvest the benefits of metanational innovators, a company must pursue three
things:
a.
b.
c.
d.
e.

Prospecting, assessing, and mobilizing.


Prospecting, assessing, and delivering.
Prospecting, assessing, and running.
Prospecting, assessing, and planning.
none of the above.

True/False

Short Answer

76. Companies can pursue three global strategies to penetrate foreign markets. The
strategies are: extension, adaptation, and___________________.
77. Early market entrants often choose dual extension (product and communication
extension) as a strategy to enter markets with new products.
78. The biggest savings to the company when following a strategy of dual extension
is in economies of scale.
79. Because of their universally known products, the Wrigley chewing gum company
can
use product adaptation-communications extension strategies effectively.
80. Local market circumstances do not favor the case of product adaptation.

81. Many companies add brands to their product portfolio via acquisitions of local
brands.
82. Differences in both the cultural and physical environment across countries call for
a ________________________ strategy.
83. _________________ means offering a uniform product on a regional or
worldwide
basis.
84. The goal of standardization is to minimize competition.
85. ____________________ leverages cross-border differences in needs and wants
of
the firms target customers.
86. Five forces favor a globalized product strategy. These include: common customer
needs, global customers, scale economies, time to market,
and__________________.
87. Overstandardization is a risk of the core-product approach to introducing new
products in the world market.
88. In general, the adoption of new products is driven by individual differences,
personal
influences, and product characteristics.
89. With respect to categories of consumers that adopt new products, the __________
category is eager to experiment with new ideas or products.
90. The lead country is where the product is introduced first.
91. In marketing, new product ideas do not come from the company, customers,
competition, and collaborators.
92. In these days, many MNCs create organizational structures to foster global
product
development.

93. Conjoint analysis is also called tradeoff analysis.


94. In the area of a global product launch strategy, two strategic options available are:
waterfall strategy and _________________________.
95. The waterfall model is also called staggered roll-out.
96. A truly global innovators are called metanational innovators.
Essay
97. List the strategic options available to the firm considering global expansion in the
product area. Detail the conditions that make the strategic option favorable. Be sure
to detail your answer.
98. List the forces that now favor a globalized product design strategy.
99. There are strategic options that allow firms to modify their product while keeping
most of the benefits of following a uniform product policy. Explain the differences
between the modular and core-product approaches.
100. Test marketing is considered a critical step in new product development in most
Western countries. Comment on test marketing. Also, outline some of the
shortcomings of test marketing?
101. In marketing, timing is crucial. In new product development it might be even
more crucial given the risk of the venture. Explain the waterfall and sprinkler
approaches to introducing a new product to the market. When is the waterfall method
preferred over the sprinkler method? Be sure to be specific as to your comments on
these two strategic options.
Chapter 11
Multiple Choice
1. The German company Henkel is always customizing its brand portfolio,
positioning, and product formulations. The two main challenges that the company
faces are:

a.
b.
c.
d.
e.

global brand and beta line management.


global brand and quality line management.
global brand and modular line management.
global brand and hybrid line management.
global brand and product line management.

Difficulty: (3) Knowledge: (A) Page: 361


2. A ____________ is a name, term, sign, symbol, or combination of them which is
intended to identify the goods and services of one seller or group of sellers and to
differentiate them from those of competitors.
a.
b.
c.
d.
e.

trademark
patent
signature
figure
brand

Difficulty: (1) Knowledge: (F) Page: 362


3. Linked to the brand name is a collection of assets and liabilities called
____________.
a.
b.
c.
d.
e.

the trademark
the patent
knowledge
proprietary investments
brand equity

Difficulty: (2) Knowledge: (F) Page: 362


4. Brand-name awareness, perceived quality, and other associations invoked by the
brand name in the customers mind are all illustrations of the concept called
_______________.
a.
b.
c.
d.
e.

brand color
brand equity
brand warranty
local brand value
brand mark

Difficulty: (3) Knowledge: (F) Page: 362


5. How do we strike a balance between a global brand that shuns cultural barriers
and
one that allows for local requirements is an illustration of a question that needs to
be
asked when building up and managing _________________ in a multinational
setting.

a.
b.
c.
d.
e.

proprietary investments
brand equity
brand warranty
local brand name
brand mark

Difficulty: (3) Knowledge: (A) Page: 362


6. All of the following are questions that must be asked when building up and
managing
brand equity in a multinational setting EXCEPT:
a. How do we strike a balance between a global brand that shuns cultural barriers
and
one that allows for local requirements?
b. What aspects of service are too expensive to be included in the brand warranty?
c. What aspects of brand policy can be adapted to global use?
d. Which brands are destined to become global mega-brands?
e. How do you execute the changeover from a local to a global brand?
Difficulty: (3) Knowledge: (F) Page: 362
7. A key strategic issue that appears on international marketers agendas is whether
there should be a ________________________.
a.
b.
c.
d.
e.

national brand
country brand
regional brand
local brand
global brand

Difficulty: (1) Knowledge: (F) Page: 362


8. A truly ________________ is one that has a consistent identity with consumers
across
the world.
a.
b.
c.
d.
e.

private brand
public brand
global brand
local brand
government brand

Difficulty: (2) Knowledge: (A) Page: 362


9. The most obvious reason for having a global brand would be to take advantage of:
a. power promotions.
b. a large labor and selling force.
c. economies of scale.

d. coordinated logistics.
e. corporate vision.
Difficulty: (1) Knowledge: (F) Page: 363
10. In 2008, which of the following brands was ranked the number one brand in the
world?
a.
b.
c.
d.
e.

Disney
Coca-Cola
GE
Nokia
IBM

Difficulty: (2) Knowledge: (A) Page: 363, Exhibit 11-1


11. In 2008, which of the following auto brands was ranked number one in the global
auto industry?
a.
b.
c.
d.
e.

BMW
Mercedes
GM
Ford
Toyota

Difficulty: (1) Knowledge: (A) Page: 363, Exhibit 11-1


12. In 2008, which of the following brands was ranked number one in the world
among
the high-tech companies?
a.
b.
c.
d.
e.

Microsoft.
IBM.
Intel.
Hewlett Packard.
Dell.

Difficulty: (1) Knowledge: (A) Page: 363, Exhibit 11-1


13. Marlboro quickly became the leading cigarette brand in Hong Kong when it
positioned itself as being the leading brand in the United States. This strategy is
attributed to Marlboro as being a:
a.
b.
c.
d.
e.

global brand.
geo brand.
regional brand.
country brand.
local brand.

Difficulty: (1) Knowledge: (A) Page: 364

14. A desire to reflect its American roots motivated Disney to change the name for its
Paris themepark from Euro Disney to __________________.
a.
b.
c.
d.
e.

Disneyland Village
Disneyland Park
Disneyland Paris
Disneyland Europe
Disneyland France

Difficulty: (2) Knowledge: (F) Page: 364


15. Brand equity for global brands varies greatly from country to country. All of the
following factors contribute to the variation EXCEPT:
a.
b.
c.
d.
e.

competitive climate.
marketing support.
cultural receptivity to brands.
literacy.
product category penetration.

Difficulty: (2) Knowledge: (F) Pages: 365-66


16. Brand equity for global brands varies greatly from country to country. All of the
following factors contribute to the variation EXCEPT:
a.
b.
c.
d.
e.

history.
competitive climate.
marketing support.
cultural receptivity to brands.
brand equity scale.

Difficulty: (3) Knowledge: (F) Pages: 365-66


17. ____________________ often justify(ies) local branding instead of global
branding.
a.
b.
c.
d.
e.

Domestic barriers
Regulatory barriers
Cultural barriers
Social barriers
Religious barriers

Difficulty: (3) Knowledge: (A) Page: 366


18. Mecca Cola is a new soft drink that was launched by a ____________________
entrepreneur to cash in on anti-America sentiments in Europe.
a. Irish
b. English
c. Dutch

d. German
e. French
Difficulty: (3) Knowledge: (F) Page: 367
19. The following four branding strategies are available to markets EXCEPT:
a.
b.
c.
d.
e.

solo branding.
hallmark branding.
family(umbrella) branding.
Extension branding.
horizontal branding.

Difficulty: (2) Knowledge: (A) Pages: 367-68


20. In international marketing, a firms global brand structure is shaped by the
following
three types of factors:
a. firm-based drivers, product-market derivers, and the manufacturing dynamics.
b. firm-based drivers, hi-tech derivers, and Web dynamics.
c. firm-based drivers, product-market derivers, and market dynamics.
d. firm-based drivers, product-market derivers, Internet dynamics.
e. none of the above
Difficulty: (3) Knowledge: (F) Page: 368
21. Brand architecture guides the dynamics of the firms brand __________________:
a.
b.
c.
d.
e.

portfolio.
color.
basket.
Web
none of the above.

Difficulty: (1) Knowledge: (A) Page: 368


22. According to Nestles Branding Tree, the company has four types of brands in its
global operations EXCEPT:
a.
b.
c.
d.
e.

plain brands.
local brands.
regional brands.
worldwide strategic brands.
worldwide corporate brands.

Difficulty: (3) Knowledge: (A) Page: 370, Exhibit 11-4


23. With respect to a brand name changeover strategy, the _________________
strategy

ties the new global brand name to the existing local brand name. After a transition
period, the old name is dropped.
a.
b.
c.
d.
e.

transparent forewarning
summary axing
fade-in/fade-out
pyramid focusing
parallel dimension

Difficulty: (1) Knowledge: (F) Page: 371


24. Euro Disney eventually becoming Disneyland is an example:
a.
b.
c.
d.
e.

transparent forewarning.
summary axing.
fade-in/fade-out.
pyramid focusing.
parallel dimension.

Difficulty: (2) Knowledge: (A) Page: 371


25. With respect to a brand name changeover strategy, the _________________
strategy
alerts customers about the brand name change (via communications such as instore
displays).
a.
b.
c.
d.
e.

transparent forewarning
summary axing
fade-in/fade-out
pyramid focusing
parallel dimension

Difficulty: (2) Knowledge: (F) Page: 371


26. When Mars candy company took over Raider candy products and used the theme
line Now Raider becomes Twix, for it is Twix everywhere in the world, the
company used the ________________________ strategy for changing brand
names.
a.
b.
c.
d.
e.

transparent forewarning
summary axing
fade-in/fade-out
pyramid focusing
parallel dimension

Difficulty: (3) Knowledge: (A) Page: 372


27. With respect to a brand name changeover strategy, the __________________
strategy

where the company simply drops the old brand name and immediately replaces it
with the global name.
a. transparent forewarning
b. summary axing
c. fade-in/fade-out
d. pyramid focusing
e. parallel dimension
Difficulty: (2) Knowledge: (F) Page: 372
28. Global product line mix options could be:
a.
b.
c.
d.
e.

an extension of the home country product line


a subset of the home country product line
a mix of local and home country
localized only
all of the above

Difficulty: (2) Knowledge: (F) Page: 374


29. _________________ is a system where a single banner brand is used worldwide,
often with a sub-brand name, for almost the entire product mix of the company.
a.
b.
c.
d.
e.

Domestic branding
National branding
Manufacturers branding
Store branding or private labeling
Umbrella (corporate) branding

Difficulty: (2) Knowledge: (F) Page: 367


30. All of the following are brand areas that might need protection EXCEPT:
a.
b.
c.
d.
e.

the name itself.


the slogan.
the jingle.
visual imagery.
the size of the logo.

Difficulty: (1) Knowledge: (F) Page: 378


31. McDonalds golden arches are part of the famous brand. Which of the following
elements best describes that element of the brand that should be protected
(according
to the example provided)?
a.
b.
c.
d.

the name itself.


the slogan.
the jingle.
visual imagery.

e. the size of the logo.


Difficulty: (1) Knowledge: (A) Page: 378
32. Most companies sell a wide assortment of products. The assortment is usually
described on the dimensions of ______________________ of the product mix.
a.
b.
c.
d.
e.

width and scale


width and timing
width and ingredients
width and length
scale and length

Difficulty: (1) Knowledge: (F) Page: 374


33. The ______________ of the product assortment refers to the collection of
different
product lines marketed by the firm.
a.
b.
c.
d.
e.

length
width
horizontal scale
vertical scale
consistency

Difficulty: (2) Knowledge: (F) Page: 374


34. The ______________ of the product assortment refers to the number of items that
the company sells within a given product line.
a.
b.
c.
d.
e.

length
width
horizontal scale
vertical scale
consistency

Difficulty: (2) Knowledge: (F) Page: 374


35. When comparing the product mix in the companys host and home markets, all of
the following are possible scenarios EXCEPT:
a.
b.
c.
d.
e.

an extension of the domestic line.


an extension of a joint venture or strategic alliance.
a subset of the home markets product line.
a mixture of local and nonlocal product lines.
a completely localized product line.

Difficulty: (2) Knowledge: (F) Page: 374


36. Small firms with narrow product assortment will normally choose which of the

following strategies when attempting to enter an international market?


a.
b.
c.
d.
e.

an extension of the domestic line.


an extension of a joint venture or strategic alliance.
a subset of the home markets product line.
a mixture of local and nonlocal product lines.
a completely localized product line.

Difficulty: (2) Knowledge: (A) Page: 374


37. Blistex, a tiny U.S. company that makes primarily lip-care products, has a very
limited range of product lines that are marketed to foreign markets. Blistex would
probably choose which of the following strategies for entering foreign markets?
a.
b.
c.
d.
e.

an extension of the domestic line.


an extension of a joint venture or strategic alliance.
a subset of the home markets product line.
a mixture of local and nonlocal product lines.
a completely localized product line.

Difficulty: (3) Knowledge: (A) Page: 374


38. All of the following are drivers that impact the composition of a firms
international
product line EXCEPT:
a.
b.
c.
d.
e.

customer service and warranty requirements.


customer preferences.
competitive climate.
organizational structure.
history.

Difficulty: (3) Knowledge: (F) Pages: 374-77


39. The __________________ procedure uses a product line as a listening post for the
new foreign market to see what product items work best.
a.
b.
c.
d.
e.

drop/add matrix
ship and shop approach
probing and learning approach
seal and deal approach
push down approach

Difficulty: (2) Knowledge: (F) Page: 378


40. Product lines can be categorized as:
a. Core product, niche items, seasonal products, and filler products
b. Core product, niche items, seasonal products, and filter products
c. Core product, niche items, seasonal products, and final products

d. Core product, niche items, seasonal products, and flimsy products


e. None of the above
Difficulty: (3) Knowledge: (F) Page: 378
41. A good place to start is to analyze each individual countrys product portfolio on
the
basis of a sales turnover basis. Product lines can be categorized by all the
following
ways EXCEPT:
a.
b.
c.
d.
e.

core products.
cultural products.
niche items.
seasonal products.
filler products.

Difficulty: (2) Knowledge: (F) Page: 378


42. With respect to product categories analyzed on the basis of sales turnover, a
_____________ product is one where the item represents the bulk of the
subsidiarys
sales volume.
a.
b.
c.
d.
e.

core product
cultural product
niche item
seasonal product
filler product

Difficulty: (1) Knowledge: (F) Page: 378


43. With respect to product categories analyzed on the basis of sales turnover, a
_____________ product is one where the product appeals to a small segment of
the
population (which might grow in time).
a.
b.
c.
d.
e.

core product
cultural product
niche item
seasonal product
filler product

Difficulty: (2) Knowledge: (F) Page: 378


44. With respect to product categories analyzed on the basis of sales turnover, a
_____________ product is one where the product has most of its sales during
limited
times during the year.

a.
b.
c.
d.
e.

core product
cultural product
niche item
seasonal product
filler product

Difficulty: (1) Knowledge: (F) Page: 378


45. With respect to product categories analyzed on the basis of sales turnover, a
_____________ product is one where the product is only a small portion of the
subsidiarys overall sales. These even might be dead-weight items.
a.
b.
c.
d.
e.

core product
cultural product
niche item
seasonal product
filler product

Difficulty: (1) Knowledge: (F) Page: 378


46. Brand piracy might cause which outcomes?
a.
b.
c.
d.
e.

revenue losses to the company


price increases by the MNC to identify the goods as genuine
better diffusion of the brand
consumer danger from poor quality fakes
both A and D

Difficulty: (2) Knowledge: (F) Pages: 378-79


47. All of the following are strategic options available to international marketers to
stop
product piracy EXCEPT:
a.
b.
c.
d.
e.

joint ventures.
lobbying activities.
legal action.
product policy options.
communication options.

Difficulty: (2) Knowledge: (F) Pages: 380-82


48. Pirated products tend to be of ______________ quality.
a.
b.
c.
d.
e.

good
poor
high
special
none of the above

Difficulty: (1) Knowledge: (F) Page: 379


49. Trying to obtain sanctions against countries that tolerate product piracy would be
an
example of which of the following strategic options available to international
marketers trying to stop product piracy?
a.
b.
c.
d.
e.

joint ventures.
lobbying activities.
legal action.
product policy options.
communication options.

Difficulty: (2) Knowledge: (A) Page: 380


50. Intellectual property rights violations have been a major problem in China.
Which of the following strategic options could be available to international
marketers
in the area of product piracy?
a.
b.
c.
d.
e.

customs.
lobbying activities.
legal action.
product policy options.
all of the above.

Difficulty: (3) Knowledge: (A) Page: 380


51. LVMH, the owner of wide variety of upscale liquor brands, redesigned its bottles
to
make it more difficult for copycatters to reuse LVMH bottles for their own brews.
This would be an example of which of the following strategic options in product
piracy:
a.
b.
c.
d.
e.

product policy options.


lobbying activities.
legal action.
hybrid options.
communication options.

Difficulty: (2) Knowledge: (A) Page: 381


52. Yamaha decided to combat Chinas counterfeiters by launching new motorcycle
models at a similar price as fake products. This would be an example of which of
the
following strategic options in product piracy:
a. joint ventures.
b. lobbying activities.
c. legal action.

d. product policy options.


e. communication options.
Difficulty: (2) Knowledge: (A) Page: 381
53. When international marketers warn consumers about the ramifications of
accepting or
buying counterfeit merchandise, this would be an example of which of the
following
strategic options available to international marketers trying to stop product piracy?
a.
b.
c.
d.
e.

joint ventures.
lobbying activities.
legal action.
product policy options.
communication options.

Difficulty: (1) Knowledge: (A) Page: 382


54. Holding cultural stereotypes about countries as an important source in assessing
the
value of a product is an example of:
a.
b.
c.
d.
e.

the country of origin (COO) effect.


nationalism.
racial bias.
social sensitivity.
xenophobia.

Difficulty: (3) Knowledge: (A) Page: 383


55. The Made In label as an important source of assessing the value of a product is
an
example of:
a.
b.
c.
d.
e.

regionalism
nationalism.
materialism
social sensitivity.
the country of origin (COO) effect.

Difficulty: (1) Knowledge: (A) Page: 383


56. Find the general statement about the country of origin (COO) effect listed below
that
is NOT true.
a. COO effects are not flexible.
b. consumers prefer domestic products over imports.

c. the critical factor appears to be the place of manufacture rather than the location
of
the companys headquarters.
d. COO effects do not change very much over time.
e. demographics make a difference.
Difficulty: (2) Knowledge: (F) Pages: 383-84
57. All of the following statements about the country of origin effect (COO) are true
EXCEPT:
a. COO effects are restricted to Europe.
b. Asian consumers prefer domestic products over imports.
c. the critical factor appears to be the place of manufacture rather than the location
of
the companys headquarters.
d. COO effects do not change very much over time.
e. psychographics make a difference.
Difficulty: (2) Knowledge: (F) Pages: 383-84
58. If the country of origin (COO) effect is anticipated to be negative, a company can
follow all of the following strategies to offset the effect EXCEPT:
a. select a brand name that disguises the country of origin.
b. select a local brand name.
c. select a high prestigious price.
d. try to explain any negative government policy that might influence buyers.
e. select a relatively low price.
385-86-48
59. One of the major challenges faced by international marketers of services is:
a.
b.
c.
d.
e.

protectionism.
high costs.
patent infringement.
piracy.
low profits.

Difficulty: (2) Knowledge: (F) Page: 386


60. The need for direct customer interface in providing services means that service
providers must often have ____________________.
a.
b.
c.
d.
e.

a warranty
a command of the local language
a local presence
low profit expectation
an inside government contact

Difficulty: (2) Knowledge: (F) Page: 386


61. Regarding opportunities in the global service industries, some of the _________
rules have been extended to the international services trade under the new WTO
regime.
a.
b.
c.
d.
e.

World Bank
International Monetary Fund
United Nations
GATT (General Agreements on Tariffs and Trade)
none of the above

Difficulty: (3) Knowledge: (A) Page: 386


62. A major strength of global service firms is that their _________________.
a.
b.
c.
d.
e.

local know-how
global know-how
regional know-how
high-tech know-how
political know-how

Difficulty: (1) Knowledge: (A) Page: 388


63. Global service firms often benefits from:
a.
b.
c.
d.
e.

scale economies.
weight economies.
hybrid economies.
perfect economies.
visible economies.

Difficulty: (2) Knowledge: (A) Page: 388


64. To bridge cultural gaps between the home and host market, service companies
often
customize the product to the local market. This can be done by spotting
_________________________.
a.
b.
c.
d.
e.

environmental opportunities
funding opportunities
regional opportunities
cultural opportunities
political opportunities

Difficulty: (3) Knowledge: (A) Page: 388


True/False

Short Answer

65. A ______________ is a name, term, sign, symbol, or combination of them which


is
intended to identify the goods and services of one seller or group of sellers and to
differentiate them from those of competitors.
66. Brand name awareness, perceived quality, and other associations invoked by the
brand name in the customers mind can be described as being part of brand
equity.
67. A good example of a global brand name is Microsoft.
68. One of the chief reasons for having a global brand is economies of scale.
69. The number one brand in the world in market value is IBM.
Difficulty: (1) Knowledge: (A) Page: 363, Exhibit 11-1
70. Interbrands most valuable brands list is dominated by American brands.
Difficulty: (2) Knowledge: (F) Page: 363, Exhibit 11-1
71. One of the reasons for pursuing a global brand as part of product policy is what
might be called a prestige factor.
Difficulty: (1) Knowledge: (F) Page: 364
72. Euro Disney changed its name to Disneyland Europe.
Difficulty: (2) Knowledge: (A) Page: 364
73. Brand equity is usually consistent from country to country.
Difficulty: (2) Knowledge: (F) Page: 365
74. In solo branding, each brand stands on its own with a product or brand manager
running it.
Difficulty: (1) Knowledge: (A) Page: 367
75. Family (umbrella) branding is a not hierarchy of brands that may use the
companys
corporate brand.
Difficulty: (2) Knowledge: (F) Page: 367

76. With respect to brand name changeover strategies, a ____________ strategy


consists
of somehow tying the global brand name to the local name. Eventually, the local
brand is phased out.
77. With respect to brand name changeover strategies, a ________________ strategy
consists of alerting the consumer about an impending brand name change and then
changing the brand name to the global brand name.
78. If a company simply drops the old brand name and immediately replaces it with
the
global name, it is called summary axing.
79. Companies should monitor the marketplaces response to the brand-name change
with marketing research.
Difficulty: (2) Knowledge: (F) Page: 372
80. Pirated products tend to be of high quality.
Difficulty: (1) Knowledge: (A) Page: 379
81. Country of origin (COO) effects have been shown to be unstable over time.
Difficulty: (2) Knowledge: (F) Page: 383
82. Country of origin (COO) influences are particularly strong among the elderly.
Difficulty: (3) Knowledge: (F) Page: 383
83. Country of origin (COO) effects depend on the product category.
Difficulty: (1) Knowledge: (A) Page: 383
84. Country-image stereotypes cannot hurt a company.
Difficulty: (1) Knowledge: (A)

Page: 385

85. In international marketing, trade barriers to service marketers tend to be much


more
cumbersome than physical products.
Difficulty: (2) Knowledge: (A)

Page: 386

86. Demand for premium quality services expands with increases in consumers age.
Difficulty: (2) Knowledge: (A) Page: 387

Essay
87. Deciding to move toward global branding is a difficult decision. This must often
be considered with respect to the globalization versus localization issue. What are the
questions that might be useful in reaching a decision as to pursue globalization over
localization?
88. When the case for a transition from a local to a global (or regional) brand name is
made, the firm needs to decide on how to implement the changeover in practice.
Comment on the strategies that might be available for doing this and the
considerations that might steer the manager toward one of the strategies.

89. Describe the strategies that might be used by multinational corporations to cope
with the growing threat of product piracy. What are your feelings about purchasing
pirated products? Give a brief illustration.
90. Comment on how you perceive the marketing of services on a global basis to be
different from marketing tangible goods. Think about the difficulties that might be
present with marketing services.
Chapter 12
Multiple Choice
1. ________________ is the only marketing mix instrument that creates revenues.
a.
b.
c.
d.
e.

Product
Price
Place
Promotion
People

Difficulty: (1) Knowledge: (F) Page: 395


2. A companys pricing policy is a highly ____________________ process based on
inputs from various departments.
a.
b.
c.
d.
e.

under-functional
low-functional
geo-functional
bi-functional
cross-functional

Difficulty: (2) Knowledge: (F) Page: 395


3. All of the following are drivers that govern global pricing decisions EXCEPT:
a.
b.
c.
d.
e.

company
customers
controls
competition
channels

Difficulty: (1) Knowledge: (F) Page: 396


4. In many countries, multinationals pricing decisions are impacted by:
a.
b.
c.
d.
e.

break-even analysis
regression functions
supply and service curves
government policies
business ethics

Difficulty: (2) Knowledge: (F) Page: 396


5. When developing a pricing strategy for its global markets, one of the first steps
that
a company must go through is to decide:
a.
b.
c.
d.
e.

what the actual price should be.


how high or low to price.
how much money will the price bring in.
what it wants to accomplish with its strategy.
what form of controls will regulate price.

Difficulty: (3) Knowledge: (F) Page: 396


6. The most important pricing objectives of companies doing business in the United
States (including foreign-based firms) are(is) to:
a.
b.
c.
d.
e.

achieve a satisfactory return on investment.


maintain market share.
meet a specified profit goal.
all of the above.
none of the above.

Difficulty: (3) Knowledge: (F) Page: 397


7. According to a recent research, all of the following are examples of important
pricing
objectives EXCEPT:

a.
b.
c.
d.
e.

drive competition out of business.


to achieve a satisfactory return on investment.
maintain market share.
expand market share.
to meet a specified profit goal.

Difficulty: (2) Knowledge: (A) Page: 397


8. When New Balance, the U.S.-based maker of high-tech running shoes, sells its
shoes
in France as haute couture items rather than simply athletic shoes, this is an
example of:
a.
b.
c.
d.
e.

country objectives.
company objectives.
consumer objectives.
monopoly objectives.
none of the above.

Difficulty: (2) Knowledge: (A) Page: 397


9. When making pricing decisions, ______________ set(s) the floor.
a.
b.
c.
d.
e.

profits
costs
demand
supply
service

Difficulty: (1) Knowledge: (F) Page: 397


10. ______________ costs change with sales volume.
a.
b.
c.
d.
e.

Demand
Supply
Derived
Fixed
Variable

Difficulty: (1) Knowledge: (F) Page: 397


11. _________________ costs do not vary with sales volume changes.
a.
b.
c.
d.
e.

Demand
Supply
Derived
Fixed
Variable

Difficulty: (1) Knowledge: (F) Page: 397

12. In the international marketplace, _________________ pricing adds international


costs and a mark-up to the domestic manufacturing cost.
a.
b.
c.
d.
e.

dynamic incremental pricing


export price
import price
cost-plus price
target-return price

Difficulty: (3) Knowledge: (F) Page: 397


13. In the international marketplace, ________________ pricing arrives at a price
after
removing domestic fixed costs. Only variable export costs generated by the
exporting
effort and a portion of the overhead load should be recuperated by the pricing
effort
(according to this method).
a.
b.
c.
d.
e.

dynamic incremental pricing


export price
import price
cost-plus price
target-return price

Difficulty: (3) Knowledge: (F) Page: 397


14. Examples of exporting-related ____________________ include manufacturing
costs,
shipping expenses, insurance, and overseas promotional costs.
a.
b.
c.
d.
e.

incremental costs
demand costs
fixed costs
target costs
service costs

Difficulty: (2) Knowledge: (F) Page: 397


15. One of the risks of dynamic incremental pricing (in the case where the export list
price is far below the domestic price) that ______________ can be triggered in the
export market.
a.
b.
c.
d.
e.

high profit potential


dumping charges or accusations
falling profits
falling quality
falling service

Difficulty: (2) Knowledge: (A) Page: 397


16. When demand is highly price sensitive, the company needs to consider how it can
_________________ from a global perspective.
a.
b.
c.
d.
e.

raise prices
lower prices
lower service
raise quality
reduce costs

Difficulty: (1) Knowledge: (F) Page: 397


17. Customers _________________ is a key consideration in pricing decisions.
a.
b.
c.
d.
e.

location
buying power
decision power
thinking power
none of the above

Difficulty: (1) Knowledge: (F) Page: 398


18. Countries with low per-capita income are more __________________ than in
developed countries.
a.
b.
c.
d.
e.

promotion sensitive
price sensitive
need sensitive
demand sensitive
service sensitive

Difficulty: (3) Knowledge: (F) Page: 398


19. One alternative for successful marketing to the price sensitive low per-capita
income
market is to produce a ________________ product or lower product quality.
a.
b.
c.
d.
e.

downsized
upgraded
synthetic
copy
parallel

Difficulty: (2) Knowledge: (F) Page: 398


20. According to textbook, ________________ by and large charges the same price
worldwide.
a. Starbucks

b.
c.
d.
e.

IBM
Coca-Cola
Toyota
BMW

Difficulty: (2) Knowledge: (A) Page: 398


21. According to the text, once brand loyalty has been established, _____________
will
play less of a role as a purchase criterion.
a.
b.
c.
d.
e.

promotion
service
product
price
place

Difficulty: (3) Knowledge: (F) Page: 398


22. Differences in the competitive situation across countries will usually lead to:
a.
b.
c.
d.
e.

cross-border price differentials.


local price differentials.
domestic price differentials.
intra-company price differentials.
company-based price differentials.

Difficulty: (1) Knowledge: (F) Page: 398


23. Once brand loyalty has been established, price will play less of a role as a
purchase criterion, and the firm may be able to institute a ________________
strategy.
a.
b.
c.
d.
e.

demand-based
premium pricing
elastic pricing
promotion-related pricing
sensitivity-based

Difficulty: (2) Knowledge: (A) Page: 398


24. All of the following are reasons that competitive situations vary from country to
country (with respect to the competitive environment) EXCEPT:
a.
b.
c.
d.
e.

the number of competitors varies from country to country.


the nature of competition changes.
the presence of counterfeit products.
the presence of gray markets.
the competitive position of a firm changes from one country to another.

Difficulty: (3) Knowledge: (A) Pages: 398-99


25. An example of nonprice competition that is faced in some markets is:
a.
b.
c.
d.
e.

retailer sales.
discounts.
coupons.
advertising.
cents-off deals.

Difficulty: (2) Knowledge: (A) Page: 400


26. Wide gaps in the price sensitivity between countries for the same product may
create conditions that promote _________________ markets.
a.
b.
c.
d.
e.

backward
gray
white
demand
forward

Difficulty: (3) Knowledge: (A) Page: 401


27. Large cross-country price gaps open up arbitrage opportunities that lead to
_________________ imports from low-price countries to high-price ones.
a.
b.
c.
d.
e.

black market
white market
zero market
smuggled
parallel

Difficulty: (2) Knowledge: (F) Page: 401


28. Sales tax rates, tariffs, and price controls are all examples of _______________
that
can have a direct or indirect impact on the pricing policies of a firm in the
international marketplace.
a.
b.
c.
d.
e.

sales volume policies


price policies
government policies
restrictions
punishments

Difficulty: (2) Knowledge: (A) Page: 402


29. Huge government deficits are examples of a(n) ________________ impact on
pricing decisions.

a.
b.
c.
d.
e.

direct
indirect
artificial
planned
uncontrollable

Difficulty: (2) Knowledge: (A) Page: 402


30. Inflation in an economy is an example of a(n) ________________ impact on
pricing
decisions.
a.
b.
c.
d.
e.

direct
indirect
artificial
planned
uncontrollable

Difficulty: (2) Knowledge: (F) Page: 402


31. To cover the incremental costs (such as shipping), the final foreign retail price will
often be much higher than the domestic retail price. This phenomenon is known as
______________________.
a.
b.
c.
d.
e.

inflation.
the price deflator.
price escalation.
price sensitivity.
global arbitrage.

Difficulty: (2) Knowledge: (F) Page: 402


32. There are two ways to deal with the price escalation phenomenon. One of these
methods is to cut the export price. The other is to:
a.
b.
c.
d.
e.

change the promotion strategy.


position the product as a (super) premium brand.
position the product as a lower quality brand.
reduce retailer margins.
reduce distances that the good must be shipped.

Difficulty: (3) Knowledge: (A) Page: 402


33. Which of the following would be a good option to follow if lowering the export
price
were the firms objective?
a. rearrange the distribution channel.
b. change the promotion.
c. change the warranty provisions.

d. give more of the product in the package as an incentive to purchase.


e. study the demand curve.
Difficulty: (3) Knowledge: (A) Page: 402-3
34. All of the following are options that might be followed if the firm wished to lower
its export price on a product EXCEPT:
a.
b.
c.
d.
e.

rearrange the distribution channel.


eliminate costly features (or make them optional).
downsize the product.
expand the warranty categories to give incentive for higher quality.
assemble or manufacture the product in foreign markets.

Difficulty: (2) Knowledge: (F) Pages: 402-3


35. If a firm decide to penetrate the Japanese consumer market through direct
marketing
(such as catalog or telemarketing sales). Which of the following strategies best
describes this option for lowering the price of an exported product?
a.
b.
c.
d.
e.

rearrange the distribution channel.


eliminate costly features (or make them optional).
downsize the product.
expand the warranty categories to give incentive for higher quality.
assemble or manufacture the product in foreign markets.

Difficulty: (2) Knowledge: (A) Pages: 402-3


36. When the U.S. levied a 10 percent tax on plus-$30,000 luxury cars, Land Rover
changed the weight of Range Rover models so they could be classed as a truck and
thereby avoid the luxury status, the company was attempting to follow which of
the
price strategies listed below for lowering the price of an exported product?
a.
b.
c.
d.
e.

rearrange the distribution channel.


eliminate costly features (or make them optional).
downsize the product.
adapt the product to escape tariffs or tax levies.
assemble or manufacture the product in foreign markets.

Difficulty: (1) Knowledge: (A) Page: 403


37. LEGO, the Danish toymaker, rather than worrying about finding ways to lower
the
price of its product in foreign markets has chosen (most LEGO sets are sold from
$6-$223) to adopt a __________________ strategy position.
a. demand-based
b. premium pricing

c. elastic pricing
d. promotion-related pricing
e. sensitivity-based
Difficulty: (1) Knowledge: (A) Page: 403
38. When McDonalds first opened their restaurants in Russia in 1990, the Big Mac
meal
cost 6 rubles. Three years later, the same meal cost 1,100 rubles. This would be
an
example of how:
a.
b.
c.
d.
e.

demand can change.


how premium pricing can damage a product.
price elasticity works.
inflation can damage a market.
service is what matter the most to the average customer.

Difficulty: (1) Knowledge: (A) Page: 403


39. All of the alternatives listed below are ways to safeguard against inflation
EXCEPT:
a.
b.
c.
d.
e.

modify components, ingredients, parts and/or packaging materials.


source materials from low-cost suppliers.
lengthen credit terms.
include escalator clauses in long-term contracts.
quote prices in a stable currency.

Difficulty: (3) Knowledge: (F) Page: 404


40. ___________ inflation also mandates rapid inventory turnarounds.
a.
b.
c.
d.
e.

High
Low
Visible
Hyper
Slow

Difficulty: (2) Knowledge: (F) Page: 404


41. To combat hyperinflation, many governments occasionally impose
______________
controls.
a.
b.
c.
d.
e.

commodity
inflation
margin
discount
price

Difficulty: (1) Knowledge: (F) Page: 404


42. According to lessons learned in Brazils hyperinflationary economy, McDonalds
will deal with Russias runaway inflation by using all of the following tools
EXCEPT:
a.
b.
c.
d.
e.

emphasize cash flow management.


control of raw materials.
institute sales and price setting strategies.
hedge for potentially substantial distortions in the exchange rate.
make loans to local franchise investors to bring them past hard times.

Difficulty: (2) Knowledge: (A) Page: 404


43. Firms faced with price controls can take any of the following strategies EXCEPT:
a.
b.
c.
d.
e.

shift the target segment or markets.


launch new products or variants of existing products.
negotiate with the government.
predict the incidence of price controls.
have the home government bring pressure on the host government.

Difficulty: (3) Knowledge: (F) Pages: 404-5


44. When a manufacturer of breakfast cereals for humans shifts production to a
chicken feed product to overcome the effects of price controls, the firm would be
following which of the strategies outlined below?
a.
b.
c.
d.
e.

adapt the product line.


shift target segments or market.
negotiate with the government.
launch a variant of an existing product.
predict the incidence of price controls.

Difficulty: (2) Knowledge: (A) Page: 405


45. If a company that is threatened with price controls diversifies into product lines
that
are relatively free of price controls, the firm would be following which of the
following strategies?
a.
b.
c.
d.
e.

adapt the product line.


shift target segments or market.
negotiate with the government.
launch a variant of an existing product.
predict the incidence of price controls.

Difficulty: (2) Knowledge: (A) Page: 405

46. The most drastic reaction to government-imposed price controls is to:


a.
b.
c.
d.
e.

adapt the product line.


shift target segments or market.
negotiate with the government.
launch a variant of an existing product.
leave the country.

Difficulty: (1) Knowledge: (A) Page: 405


47. One of the main reasons for staying in a country that has government-imposed
price controls to deal with hyperinflation is:
a.
b.
c.
d.
e.

the government might not let you out.


when the danger is over you cannot get back in.
you gain experience for other markets with similar problems.
you do not want to loose face.
you do not want to show weakness to your competition.

Difficulty: (2) Knowledge: (A) Page: 405


48. ___________________ reflect how much one currency is worth in terms of
another currency.
a.
b.
c.
d.
e.

Interest rates
Credit rates
Bond rates
Inflation rates
Exchange rates

Difficulty: (2) Knowledge: (F) Page: 405


49. All of the following are exporter strategies when the domestic currency is weak
EXCEPT:
a. stress price benefits.
b. engage in nonprice competition by improving quality, delivery, and aftersale
service.
c. expand the product line and add more.
d. shift sourcing and manufacturing to domestic market.
e. exploit export opportunities in all markets.
Difficulty: (3) Knowledge: (F) Page: 406, Exhibit 12-4
50. Which of the following are exporter strategies when the domestic currency is
strong?
a. stress price benefits.
b. engage in nonprice competition by improving quality, delivery, and aftersale
service.
c. expand the product line and add more.

d. shift sourcing and manufacturing to domestic market.


e. exploit export opportunities in all markets.
Difficulty: (3) Knowledge: (F) Page: 406, Exhibit 12-4
51. All of the following are considered to be exporter strategies when the domestic
currency is strong EXCEPT:
a. conduct conventional cash-for-goods trade.
b. engage in nonprice competition by improving quality, delivery, and aftersale
service.
c. improve productivity and engage in vigorous cost reduction.
d. shift sourcing and manufacturing overseas.
e. give priority to exports to relatively strong-currency countries.
Difficulty: (3) Knowledge: (F) Page: 406, Exhibit 12-4
52. Which of the following are considered to be exporter strategies when the domestic
currency is weak?
a. conduct conventional cash-for-goods trade.
b. engage in nonprice competition by improving quality, delivery, and aftersale
service.
c. improve productivity and engage in vigorous cost reduction.
d. shift sourcing and manufacturing overseas.
e. give priority to exports to relatively strong-currency countries.
Difficulty: (3) Knowledge: (F) Page: 406, Exhibit 12-4
53. Two major issues confronting international marketers result from currency
movement. The first of these is in which currency do we quote our prices? The
second is:
a. how much of the loss or gain (because of pass through) should be passed to
consumers?
b. how much should we invest in the local currency?
c. how much should we invest in our own currency?
d. what role should the central bank play in currency movement?
e. should we trust international arbitrage as a means of settling currency value?
Difficulty: (3) Knowledge: (A) Page: 406
54. A weakening of the U.S. dollar relative to the Japanese yen has the effect of:
a.
b.
c.
d.
e.

strengthening the Japanese position in the United States.


strengthening the U.S. position in Japan.
weakening the dollar in Europe.
strengthening the yen in Europe.
all positions remain unchanged.

Difficulty: (2) Knowledge: (A) Page: 406


55. A strengthening of the U.S. dollar relative to the Japanese yen has the effect of:
a.
b.
c.
d.
e.

strengthening the Japanese position in the United States.


strengthening the U.S. position in Japan.
weakening the dollar in Europe.
strengthening the yen in Europe.
all positions remain unchanged.

Difficulty: (2) Knowledge: (A) Page: 406


56. One of the ways that a weakening of the U.S. dollar relative to the Japanese yen
may not necessarily be a benefit to a U.S. firm is that:
a. the government may not allow the pass through.
b. the government might erect tariff barriers.
c. Japanese parts might become more expensive and when imported for inclusion
into
an exported product, prices might actually rise.
d. other currencies might be the ones actually traded.
e. costs can be cut in other ways.
Difficulty: (2) Knowledge: (A) Page: 406
57. When considering the currency pass-through phenomenon, all of the following
factors give an indication as to the appropriate action EXCEPT:
a.
b.
c.
d.
e.

the customers price sensitivity.


government actions.
the impact of dollar appreciation on the firms cost structure.
the impact of dollar depreciation on the firms cost structure.
the amount of competition in the export market.

Difficulty: (2) Knowledge: (A) Page: 407


58. When exporters lower their mark-ups in a more price-conscious export market
than
in a price-sensitive market, with respect to exchange rate movements this is called
______________________.
a.
b.
c.
d.
e.

local-currency price stability (LCPS)


pricing-to-market (PTM)
transfer pricing
countertrade pricing
demand mark-up pricing

Difficulty: (3) Knowledge: (F) Page: 408


59. When an exporter uses the _______________________ method, the effect can be

negative. Frequent adjustments of prices in response to currency movements will


distress local channels and customers.
a.
b.
c.
d.
e.

local-currency price stability (LCPS)


pricing-to-market (PTM)
transfer pricing
countertrade pricing
demand mark-up pricing

Difficulty: (3) Knowledge: (A) Page: 408


60. _____________________ is a special form of pricing where mark-ups are
adjusted
to stabilize prices in the buyers currency. This method helps to create stability in
the
local currency.
a.
b.
c.
d.
e.

Local-currency price stability (LCPS)


Pricing-to-market (PTM)
Transfer pricing
Countertrade pricing
Demand mark-up pricing

Difficulty: (1) Knowledge: (A) Page: 408


61. With respect to currency quotation when preparing for buying and selling
transactions, buyers and sellers generally prefer to quote in:
a. a world currency.
b. the sellers currency.
c. the buyers currency.
d. their own currency.
e. the dollar.
Difficulty: (2) Knowledge: (A) Page: 409
62. When sales take place between related entities of the same company,
___________
is often used.
a.
b.
c.
d.
e.

local-currency price stability (LCPS)


pricing-to-market (PTM)
transfer pricing
countertrade pricing
demand mark-up pricing

Difficulty: (2) Knowledge: (A) Page: 409


63. Transfer pricing decisions in an international context need to balance off the
interests of a broad range of stakeholders. All of the following would be examples
of those stakeholders EXCEPT:

a.
b.
c.
d.
e.

the parent company.


the competition.
local country managers.
host government(s).
the domestic government.

Difficulty: (2) Knowledge: (F) Page: 409


64. There are a series of key drivers behind transfer pricing decisions. The most
important of these drivers is thought to be:
a.
b.
c.
d.
e.

competition in the foreign country.


economic conditions in the foreign country.
price controls.
exchange controls.
market conditions in the foreign country.

Difficulty: (3) Knowledge: (F) Page: 409


65. __________________ uses the market mechanism as a cue for setting transfer
prices.
a.
b.
c.
d.
e.

Local-currency price stability (LCPS) pricing


Pricing-to-market (PTM)
Market-based pricing
Countertrade pricing
Nonmarket-based pricing

Difficulty: (2) Knowledge: (F) Page: 410


66. __________________ (as a form of market-based pricing) basically dictates that
the company charges the price that any buyer outside the company would pay (as
if the transaction occurred between two unrelated entities).
a.
b.
c.
d.
e.

Local-currency price stability (LCPS) pricing


Pricing-to-market (PTM)
Arms length pricing
Countertrade pricing
Nonmarket-based pricing

Difficulty: (2) Knowledge: (F) Page: 410


67. ___________________ simply adds a mark-up to the cost of the goods.
a.
b.
c.
d.
e.

Demand-based pricing
Negotiated pricing
Cost-based pricing
Markup-based pricing
Target return pricing

Difficulty: (2) Knowledge: (F) Page: 411


68. To conduct ________________, conflicts between country affiliates are resolved
through mutual discussion of the transfer pricing problems.
a.
b.
c.
d.
e.

demand-based pricing
negotiated pricing
cost-based pricing
markup-based pricing
target return pricing

Difficulty: (1) Knowledge: (F) Page: 411


69. In the area of transfer pricing, experts suggest to set transfer prices that are as
close as
possible to the _________________________________.
a.
b.
c.
d.
e.

Balanced Arms Length Standard


Building Arms Length Standard
Best Arms Length Standard
Branding Arms Length Standard
Basic Arms Length Standard

Difficulty: (3) Knowledge: (F) Page: 411


70. ______________ occurs when imports are being sold at an unfair price.
a.
b.
c.
d.
e.

Price fixing
Dumping
Gray marketing
Countertrade
Predatory pricing

Difficulty: (1) Knowledge: (F) Page: 412


71. To reduce exposure and risk of antidumping actions, the exporter can follow any
of
the following marketing strategies EXCEPT:
a.
b.
c.
d.
e.

trading-up
service enhancement
distribution
government intervention
communications

Difficulty: (2) Knowledge: (F) Page: 413


72. In the area of price coordination, the following considerations matter EXCEPT:

a.
b.
c.
d.
e.

nature of customer.
amount of product differentiation.
nature of channels.
nature of competition.
role of the World Bank.

Difficulty: (1) Knowledge: (F) Pages: 414-15


73. In international marketing, purchasers often demand _____________________
from
their suppliers.
a.
b.
c.
d.
e.

uniform-pricing contracts
diverse-pricing contracts
bilateral-pricing contracts
global-pricing contracts
local-pricing contracts

Difficulty: (3) Knowledge: (F) Page: 415


74. ___________________ is an umbrella term used to describe unconventional
tradefinancing transactions that involve some form of noncash compensation.
a.
b.
c.
d.
e.

Local-currency price stability (LCPS)


Pricing-to-market (PTM)
Arms length pricing
Countertrade
Nonmarket-based pricing

Difficulty: (2) Knowledge: (F) Page: 418


75. Countertrade transactions include the following options EXCEPT:
a.
b.
c.
d.
e.

simple barter.
switch trading.
geo trading.
countertrade pricing.
clearing agreements.

Difficulty: (2) Knowledge: (A) Page: 419


76. In a(n) _______________, no third party is involved to carry out the transaction.
a.
b.
c.
d.
e.

clearing agreement
offset
buyback arrangement
switch trading
simple barter

Difficulty: (1) Knowledge: (F) Page: 419


True/False

Short Answer

77. According to the textbook, factors that impact global pricing decisions include
company, customers, competition, technology.
Difficulty: (2) Knowledge: (F) Page: 396
78. Cost differentials do not lead to wide price gaps.
Difficulty: (1) Knowledge: (F) Page: 397
79. In gray markets, products marketed in low-priced countries are shipped and
resold
by unauthorized channels in high-priced markets.
Difficulty: (2) Knowledge: (F) Page: 401
80. Government policies do not have any impact on pricing decisions.
Difficulty: (1) Knowledge: (A) Page: 402
81. To cover the incremental costs of doing business in a foreign market, the final
foreign retail price will often be much higher than the domestic retail price.
This is called price _________________.
82. To combat hyperinflation, governments occasionally impose price controls.
Difficulty: (2) Knowledge: (F) Page: 404
83. One of the courses of action that a company can follow when faced with price
controls is to adapt the product line.
Difficulty: (2) Knowledge: (F) Page: 404
84. A stronger U.S. dollar undermines the competitive position of American exports.
Difficulty: (2) Knowledge: (F) Page: 406
85. An exporter strategy when faced with a weak domestic currency would be to
engage in nonprice competition by improving quality, delivery, and aftersale
service.
Difficulty: (2) Knowledge: (F) Page: 406, Exhibit 12-4
86. If an exporter were to stress price benefits, the exporter would probably be facing
a domestic currency that was perceived as being weak.

Difficulty: (2) Knowledge: (F) Page: 406, Exhibit 12-4


87. LCPS stands for:
88. In the area of international pricing, sellers and buyers usually prefer a quote in
their domestic currency.
Difficulty: (2) Knowledge: (F) Page: 409
89. When sales transactions occur between related entities of the same company,
________________ pricing often occurs.
90. In arms-length prices, a firm uses the market mechanism as a cue for setting
transfer
prices.
Difficulty: (2) Knowledge: (F) Page: 410
91. Cost-based pricing simply adds a mark-up to the cost of goods.
Difficulty: (1) Knowledge: (F) Page: 411
92. Negotiated transfer pricing is another form of nonmarket-based pricing.
Difficulty: (2) Knowledge: (F) Page: 411
93. Government-imposed market constraints favor nonmarket-based transfer pricing
methods.
Difficulty: (3) Knowledge: (F) Page: 411
94. In transfer pricing, BALS stands for:
95. Multinationals do not need to take antidumping laws into account when
determining
their global pricing strategy.
Difficulty: (3) Knowledge: (F) Page: 412
96. VER is an acronym for:
97. Global pricing contract (GPCs) are demanded by governments.
Difficulty: (2) Knowledge: (F) Page: 415

98. Several multinationals doing business in the European Union harmonize their
prices
to narrow price gaps between different member states..
Difficulty: (2) Knowledge: (F) Page: 415
99. When sales transactions occur in some form of compensation other than money
(such as trading corn for whiskey), the two trading companies are engaged in
________________.
100. In switch trading, a third party is involved which uses the credits to buy goods
from
the deficit country.
Difficulty: (1) Knowledge: (F) Page: 419
101. Countertrade purchase is not the most popular form of countertrade.
Difficulty: (3) Knowledge: (F) Page: 419
Essay
102. In international marketing, price escalation can be a serious problem. To offset
these difficulties marketers must be prepared to creatively meet the price escalation
challenge. List the various ways that marketers might attack this problem.
103. Setting prices in a floating exchange rate world pose unique problems.
Comment on how a company might react to floating exchange rates. What
considerations are probably the most important for the decision maker to consider?

104. What is transfer pricing? Comment on the stakeholders and key drivers that
impact the decision maker faced with transfer pricing.
105. Antidumping measures are very popular with most of the governments of
industrialized nations. What measures might exporters consider to hedge themselves
against antidumping procedures? Which method do you think is probably the best?
Justify your answer.
106. Discuss the motives behind countertrade and the guidelines for making
countertrade successful.

Chapter 13

Multiple Choice
1. In international marketing, advertising to some extent is a _________________
phenomenon.
a.
b.
c.
d.
e.

cultural
social
general
static
global

Difficulty: (1) Knowledge: (F) Page: 427


2. ___________________ is one of most formidable barriers that international
advertisers need to surmount.
a. Politics
b. Technology
c. Translation
d. Language
e. None of the above
Difficulty: (2) Knowledge: (F) Page: 427
3. In international marketing, numerous promotional efforts misfire because of
____________________ -related problems.
a. politics
b. technology
c. transfer
d. transaction
e. language
Difficulty: (2) Knowledge: (F) Page: 427
4. Translation errors include:
a. simple carelessness.
b. multiple-meaning words.
c. idioms.
d. all of the above.
e. none of the above.
Difficulty: (2) Knowledge: (F) Page: 427

5. All of the following are language barriers that can be identified as typical
international
translation errors EXCEPT:
a.
b.
c.
d.
e.

simple carelessness.
idioms.
local slang.
multiple-meaning words.
incorrect grammar.

Difficulty: (3) Knowledge: (F) Page: 427


6. To solve language-related barriers, companies in international markets should use
__________________ advertising agencies.
a.
b.
c.
d.
e.

local
regional
global
transnational
domestic

Difficulty: (1) Knowledge: (F) Page: 428


7. In an advertising message, the original slogan was Body by Fisher. The
translation
in a foreign market was Corpse by Fisher. This would be an example of which
of
the following constraints on international promotion?
a.
b.
c.
d.
e.

language barriers.
advertising regulations.
cultural constraints.
local attitudes toward advertising.
poor media infrastructure.

Difficulty: (1) Knowledge: (A) Page: 428


8. In an advertising message, the original slogan was Body by Fisher. The
translation
in a foreign market was Corpse by Fisher. This would be an example of which
of
the following types of translation errors?
a.
b.
c.
d.
e.

simple carelessness.
idioms.
local slang.
multiple-meaning words.
incorrect grammar.

Difficulty: (2) Knowledge: (A) Page: 428

9. In an advertising message, the original slogan was When I used this shirt, I felt
good. The translation in a foreign market was Until I used this shirt, I felt
good.
This would be an example of which of the following types of translation errors?
a.
b.
c.
d.
e.

simple carelessness.
idioms.
local slang.
multiple-meaning words.
incorrect grammar.

Difficulty: (2) Knowledge: (A) Page: 428


10. In Britain, one U.S. advertiser ran a campaign that centered around the slogan
You can use no finer napkin at your dinner table. In Britain, some people use
the word napkin for the word diapers. This would be an example of which of
the following types of translation errors?
a.
b.
c.
d.
e.

simple carelessness.
idioms.
local slang.
multiple-meaning words.
incorrect grammar.

Difficulty: (2) Knowledge: (A) Page: 428


11. In Spanish, five different words can be used for the word tires (cauchos,
cubiertas,
gomas, llantas, and neumaticos). Obviously, this might present problems in
advertising. This would be an example of which of the following types of
translation
errors?
a.
b.
c.
d.
e.

simple carelessness.
idioms.
local slang.
multiple-meaning words.
incorrect grammar.

Difficulty: (1) Knowledge: (A) Page: 429, Exhibit 13-1


12. Given that so many errors can occur with translation and misunderstanding of
advertising in the foreign market, which of the following is probably the easiest
solution to the problem?
a.
b.
c.
d.

involve ad agencies from the companys domestic environment.


involve ad agencies from the host countrys environment.
check with government officials.
employ foreign language specialists for all markets.

e. dont worry about it, the problem usually corrects itself.


Difficulty: (3) Knowledge: (F) Page: 428
13. All of the following are strategies for dealing with translation problems in a
foreign
market EXCEPT:
a.
b.
c.
d.
e.

involve ad agencies from the host countrys environment.


dont translate the message for the foreign market.
add foreign language subtitles.
use voice-overs that use foreign slang.
check with foreign officials.

Difficulty: (3) Knowledge: (F) Pages: 428-9


14. Many of the trickiest promotional issues occur in the domain of
_________________.
a.
b.
c.
d.
e.

environment
money
technology
business
religion

Difficulty: (2 Knowledge: (F) Page: 429


15. Of the barriers that face a foreign company when attempting to promote products
in
a foreign market, ___________________ are arguably the biggest stumbling
block
to successful advertising in the foreign market.
a.
b.
c.
d.
e.

language barriers
advertising regulations
cultural constraints or barriers
local attitudes toward advertising
poor media infrastructure

Difficulty: (2) Knowledge: (F) Page: 429


16. When considering barriers that are faced by international marketers attempting to
successfully advertise in foreign markets, cultural constraints can pose huge
difficulties. The trickiest problem within this category is usually posed by:
a.
b.
c.
d.
e.

the government.
trade unions.
environmental rights groups.
women.
the host countrys religion(s).

Difficulty: (3) Knowledge: (F) Page: 430


17. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Dutch researcher
Geert Hofstede. All of the following are dimensions of a value system used in
the cultural classification scheme EXCEPT:
a.
b.
c.
d.
e.

power distance.
possessions.
uncertainty avoidance.
individualism.
masculinity.

Difficulty: (2) Knowledge: (F) Page: 430


18. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Dutch researcher
Geert Hofstede. One dimension refers to the degree of inequality that is seen as
acceptable within the country. This dimension would best be described as:
a.
b.
c.
d.
e.

power distance.
long-termism.
uncertainty avoidance.
individualism.
masculinity.

Difficulty: (2) Knowledge: (F) Page: 430


19. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Dutch researcher
Geert Hofstede. One dimension refers to the extent that people within the culture
prefer structured situations with clear cut rules and little ambiguity. This
dimension
would best be described as:
a.
b.
c.
d.
e.

power distance.
long-termism.
uncertainty avoidance.
individualism.
masculinity.

Difficulty: (2) Knowledge: (F) Page: 430


20. If ads in a foreign country stress performance, success, and completion, they
would
probably be focusing on which of the following cultural classification schemes as
a
way to reach a segment of the population where this dimension was high or
important.

a.
b.
c.
d.
e.

power distance.
long-termism.
uncertainty avoidance.
individualism.
masculinity.

Difficulty: (2) Knowledge: (A) Page: 430


21. With respect to budget forms for advertising, the _______________ method
simply
sets the overall advertising budget based on either past or expected sales revenue.
a.
b.
c.
d.
e.

percentage of sales
competitive parity
all-you-can-afford
objective-and-task
marginal increment

Difficulty: (1) Knowledge: (F) Page: 431


22. The primary appeal of the percentage of sales method of allocating an advertising
budget is its:
a.
b.
c.
d.
e.

popularity.
accounting good sense.
control feature.
simplicity.
accuracy.

Difficulty: (2) Knowledge: (F) Page: 431


23. If an advertiser does not want to rock the boat and desires to sustain a minimum
share of voice they will probably choose which of the following advertising
budget forms?
a.
b.
c.
d.
e.

percentage of sales
competitive parity
all-you-can-afford
objective-and-task
marginal increment

Difficulty: (2) Knowledge: (F) Page: 432


24. The most popular of the budget methods (in fact, two-thirds of respondents in a
survey said they had used the method) is the _________________ method.
a. percentage of sales
b. competitive parity
c. all-you-can-afford

d. objective-and-task
e. marginal increment
Difficulty: (2) Knowledge: (F) Page: 433
25. If an advertiser spells out the goals of their communication strategy and
determines
what they would like to accomplish with advertising and then plans a budget
accordingly, they are probably using the ______________ method of budgeting.
a.
b.
c.
d.
e.

percentage of sales
competitive parity
all-you-can-afford
objective-and-task
marginal increment

Difficulty: (1) Knowledge: (A) Page: 433


26. If an advertiser uses field experiments (such as systematically manipulating the
spending amount in different areas within the country to measure the impact of
advertising on the brands awareness, sales volume, and market share) to adjust
budget expenditures, they are probably using the ______________ method of
budgeting for advertising expense.
a.
b.
c.
d.
e.

percentage of sales
competitive parity
all-you-can-afford
objective-and-task
marginal increment

Difficulty: (2) Knowledge: (A) Page: 433


27. A good case can be made for standardizing an ad campaign in the international
marketplace. All of the following would be good, justifiable reasons for
standardization EXCEPT:
a.
b.
c.
d.
e.

scale economics.
consistent image.
government regulation.
global consumer segments.
creative talent.

Difficulty: (2) Knowledge: (A) Page: 435-37


28. Message consistency (an advertising standardization issue) matters a great deal in
markets with extensive media overlap or for goods that are sold to cosmopolitan
customers who travel the globe. The best example of a product or service that fits
the
above is:

a.
b.
c.
d.
e.

beer.
banking.
a beef product.
an automobile.
cosmetics.

Difficulty: (3) Knowledge: (A) Page: 439


29. In the domain of advertising, __________________ means that marketers
encourage
their affiliates to adopt, or at least consider, advertising ideas that have proven
successful in other markets. Which of the following standardization benefits
applies?
a.
b.
c.
d.
e.

scale economics
consistent image
cross-fertilization
global consumer segments
creative talent

Difficulty: (2) Knowledge: (A) Page: 439


30. Nestle used an ad for Tasters Choice coffee originally developed in the U.K. as its
campaign in the U.S., with some minor changes to reflect actors and speech. This
would be an example of which of the following reasons for using standardization in
the foreign market?
a.
b.
c.
d.
e.

scale economics
consistent image
cross-fertilization
global consumer segments
creative talent

Difficulty: (2) Knowledge: (A) Page: 439


31. Research from an advertising agency survey indicates that the number one reason
for standardizing multinational advertising was to:
a.
b.
c.
d.
e.

take advantage of demographics.


take advantage of cultural similarities between the countries.
capitalize on the fact that the product was standardized.
make full use of a proven successful idea.
create a single brand image in all markets.

Difficulty: (3) Knowledge: (A) Page: 435


32. All of the following are barriers to standardization in international advertising
EXCEPT:
a. cultural differences.

b.
c.
d.
e.

budget.
advertising regulations.
differences in the degree of market development.
the Not Invented Here syndrome.

Difficulty: (2) Knowledge: (A) Page: Pages: 437-38


33. As an illustration of a barrier to advertising standardization, Ray-Ban had to reshoot
a sunglasses commercial for Malaysia because the original version had Caucasian
actors. In Malaysia, ads featuring Caucasians are not allowed. This example
would
be an example of which of the following barriers to standardization of international
advertising?
a.
b.
c.
d.
e.

cultural differences.
budget.
advertising regulations.
differences in the degree of market development.
the Not Invented Here syndrome.

Difficulty: (2) Knowledge: (A) Pages: 437-38


34. In the area of Not-Invented-Here (NIH) syndrome, stonewalling attempts at
standardization may come from ________________ subsidiaries/advertising
agencies.
a.
b.
c.
d.
e.

local
regional
global
transnational
multinational

Difficulty: (2) Knowledge: (F) Page: 438


35. In the ________________ approach, every country subsidiary follows its own
course
developing its own ads based on what it thinks works best in its market.
a.
b.
c.
d.
e.

host country
home country
foreign
laissez faire
polycentric

Difficulty: (1) Knowledge: (F) Page: 438


36. There are a variety of formats for creating international advertising. With
_________

advertising, the creative strategy is highly centralized. Universal copy is


developed
for all markets.
a.
b.
c.
d.
e.

export
import
prototype (pattern)
concept cooperation
psychological

Difficulty: (2) Knowledge: (F) Page: 438


37. There are a variety of formats for creating international advertising. With
_________
advertising, guidelines are given to local affiliates concerning the execution of the
advertising. The guidelines are then conveyed via manuals or tapes.
a.
b.
c.
d.
e.

export
import
prototype (pattern)
concept cooperation
psychological

Difficulty: (2) Knowledge: (F) Page: 439


38. With prototype standardization, ____________________ spell out guidelines on
the
positioning theme.
a.
b.
c.
d.
e.

competitors
governments
advertising mangers
headquarters
CEOs

Difficulty: (3) Knowledge: (F) Page: 439


39. With __________________ advertising, guidelines are given to the local
affiliates
concerning the execution of the advertising.
a.
b.
c.
d.
e.

geotype
prototype
modulartype
export
psychological

Difficulty: (3) Knowledge: (A) Page: 439

40. Another term to describe the portfolio of media choices (and variations within
those
choices) is called:
a.
b.
c.
d.
e.

media decision making.


media super structure.
media infrastructure.
media bias.
media method.

Difficulty: (1) Knowledge: (F) Page: 440


41. High cost-per-thousand (CPMs) are found in areas that have a high per capita
__________.
a.
b.
c.
d.
e.

LMP
ZNP
MMP
GNP
PPP

Difficulty: (3) Knowledge: (F) Page: 442


42. Recent developments in the global media landscape include the following
EXCEPT:
a.
b.
c.
d.
e.

growing commercialization and deregulation of mass media.


shift from radio and print to TV advertising.
rise of global and regional media.
growing spread of interactive marketing.
growing importance of high definition television.

Difficulty: (2) Knowledge: (F) Pages: 442-43


43. All of the following can be characterized as being significant trends or
developments
in the international media landscape EXCEPT:
a.
b.
c.
d.
e.

growing commercialization and deregulation of mass media.


shift from radio and print to TV advertising.
rise of global and regional media.
growing importance of state controlled advertising.
improved monitoring.

Difficulty: (2) Knowledge: (F) Pages: 442-43


44. Infomercial marketers now have access to over one-half of Japanese consumers.
Which of the following trends would be most representative or closely associated
with the above fact?

a.
b.
c.
d.
e.

growing commercialization and deregulation of mass media.


shift from radio and print to TV advertising.
rise of global and regional media.
growing spread of interactive marketing.
improved monitoring.

Difficulty: (2) Knowledge: (A) Page: 443


45. To promote the Xbox video program, Microsoft gave away two million DVDs
with an interactive commercial. This is an example of which of the following trends?
a.
b.
c.
d.
e.

growing commercialization and deregulation of mass media.


shift from radio and print to TV advertising.
rise of global and regional media.
growing spread of interactive marketing.
improved monitoring.

Difficulty: (3) Knowledge: (A) Page: 443


46. Ad regulations governing the advertising of cigarettes would probably fall under
which of the following advertising regulation categories?
a.
b.
c.
d.
e.

advertising of vice products and pharmaceuticals.


comparative advertising.
content of advertising messages.
advertising targeting children.
none of the above.

Difficulty: (1) Knowledge: (A) Page: 445


47. If advertisers disparage their competition in an advertisement, the regulation
category
that would govern this practice would probably be:
a.
b.
c.
d.
e.

advertising of vice products and pharmaceuticals.


comparative advertising.
content of advertising messages.
advertising targeting children.
all of the above.

Difficulty: (1) Knowledge: (F) Page: 445


48. Given that advertising regulations not only govern advertising in foreign markets
but
can also create difficulties, how can marketers cope? All of the following are
valid suggestions EXCEPT:
a. keep track of regulations and pending legislation.
b. challenge regulations in court.
c. adapt the marketing mix strategy.

d. try to circumvent the regulation by using local advertisers.


e. lobby for favorable regulations or results.
Difficulty: (2) Knowledge: (F) Pages: 446-47
49. When screening ad agencies, all of the following criteria might be used EXCEPT:
a.
b.
c.
d.
e.

market coverage.
cost of agency talent and expense.
quality of coverage.
expertise with developing a central international campaign.
scope and quality of support services.

50. _________________ refer(s) to a collection of short-term incentive tools that


lead to
quicker and/or larger sales of a particular product by consumers or the trade.
a.
b.
c.
d.
e.

Advertising
Sales promotion
Internet marketing
Promotion
Publicity

Difficulty: (1) Knowledge: (F) Page: 449


51. Sampling, price-offs, coupons, sweepstakes, bonus packs, and trade allowances
are
all examples of ____________________.
a.
b.
c.
d.
e.

advertising
sales promotion
direct marketing
public relations
publicity

Difficulty: (2) Knowledge: (A) Page: 449


52. All of the following explain the local nature of sales promotion for the
multinational
corporation EXCEPT:
a.
b.
c.
d.
e.

economic development.
market maturity.
cultural perceptions.
trade structure.
new product development.

Difficulty: (3) Knowledge: (F) Pages: 449-50

53. If promotional dollars are aimed at the end-user, then the strategy is described as
being a ______________ strategy.
a.
b.
c.
d.
e.

push
pull
conventional
vertical
horizontal

Difficulty: (1) Knowledge: (A) Page: 450


54. If promotional dollars are aimed at the middlemen, then the strategy is described
as
being a ______________ strategy.
a.
b.
c.
d.
e.

push
pull
conventional
vertical
horizontal

Difficulty: (1) Knowledge: (A) Page: 450


55. If promotional dollars are aimed at the trade or distributor, then the strategy is
described as being a ______________ strategy.
a.
b.
c.
d.
e.

push
pull
conventional
vertical
horizontal

Difficulty: (1) Knowledge: (A) Page: 450


56. Procter & Gamble has attempted to cut back on _____________ strategy
incentives
by introducing every-day-low-pricing.
a.
b.
c.
d.
e.

push
pull
conventional
vertical
horizontal

Difficulty: (1) Knowledge: (A) Page: 450


57. Adidas, the German sportswear maker, paid a hefty $80 million to $100 million in
cash and services for sponsorship of the 2008 Beijing Summer Olympics. This is
an
example of _________________________.

a.
b.
c.
d.
e.

event sponsorship
sales sponsorship
trade shows
publicity
public relations

Difficulty: (1) Knowledge: (F) Page: 452


58. Although, Coca-Cola was the official sponsor of the 2002 World Cup Soccer,
Pepsi
managed to sign up some of the biggest soccer celebrities, including Englands
soccer
star David Beckham. In event sponsorship, this is an example of
________________.
a.
b.
c.
d.
e.

guerilla marketing
ambush marketing
passive marketing
active marketing
cooperative marketing

Difficulty: (3) Knowledge: (F) Page: 452


59. All of the following are risks associated with event sponsorship EXCEPT:
a.
b.
c.
d.
e.

nonsponsors can come in.


too many sponsorships might be sold.
there might be clutter among the sponsors and their messages.
the sponsorship might be too expensive for the number of people that show up.
adequate protection of the sponsorship.

Difficulty: (3) Knowledge: (F) Page: 452


60. Trade shows are also called _______________________.
a.
b.
c.
d.
e.

trade marts
trade markets
trade fairs
trade expos
trade circles

Difficulty: (1) Knowledge: (F) Page: 453


61. Trade shows in Europe:
a.
b.
c.
d.
e.

are about more than just business.


are exactly the same as in the U.S.
never serve refreshments or meals.
might be much larger than American shows.
both A and D

Difficulty: (1) Knowledge: (F) Page: 454


62. Which of the following does NOT describe mobile marketing?
a.
b.
c.
d.
e.

It refers to ads on the sides of trucks and buses.


Mobile marketing cannot interact with consumers.
It fosters top-of-mind brand awareness.
It increases customer involvement.
Both A and B

Difficulty: (1) Knowledge: (F) Page: 453


63. In a modern sense, the goal of many MNCs is to pursue a(n)________________
program. In this program, coordination of all communication vehicles would take
place. Key ideas would be communicated in a unified manner.
a.
b.
c.
d.
e.

vertical communications
horizontal communications
integrated marketing communications
global communications
synergistic communications

Difficulty: (2) Knowledge: (F) Page: 458


64. The goal of ________________________________ is to coordinate mass
advertising, sponsorships, sales promotions, packaging, point-of-purchase
displays,
and so forth.
a.
b.
c.
d.
e.

integrated marketing communications


integrated horizontal communications
integrated vertical communications
global communications
synergistic communications

Difficulty: (2) Knowledge: (F) Page: 458


65. A __________________________________ program goes one step further since
it is
a system of active promotional management that strategically coordinates global
communications in all of its component parts both horizontally (country-level) and
vertically (promotion tools).
a.
b.
c.
d.
e.

vertical communications
horizontal communications
globally integrated marketing communications
global communications
synergistic communications

Difficulty: (3) Knowledge: (F) Page: 458


True/False

Short Answer

66. Language is not a major barrier in international advertising.


Difficulty: (1) Knowledge: (F) Page: 427
67. One can identify three different types of _______________________: simple
carelessness, multiple-meaning words, and idioms.
68. Language barriers can occur through translation problems. The most common of
these translation difficulties are due to ____________________ , multiple-meaning
words, and idioms.
69. Language barriers can occur through translation problems. If the original slogan
was Body by Fisher and the translation was Corpse by Fisher, the problem
with
translation was probably due to a problem idiom.
Difficulty: (2) Knowledge: (A) Page: 428
70. Idioms that use slang from one country to another may inadvertently lead to
embarrassing meanings in the host country.
Difficulty: (1) Knowledge: (F) Page: 428
71. One obvious cure for misinterpreted meanings of advertising slogans in foreign
countries is to reduce the usage of slogans.
Difficulty: (2) Knowledge: (F) Page: 428
72. With respect to advertising, probably the trickiest of the cultural barriers centers
around the host countrys religion.
Difficulty: (2) Knowledge: (F) Page: 429
73. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Geert Hofstede.
The value system construct that refers to the degree of inequality that is seen as
acceptable within the country is called ________________.
74. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Geert Hofstede. One
of these constructs is called power distance. Research has shown that ads that
position products or services as status symbols are most likely to be effective in

countries with large power distance.


Difficulty: (2) Knowledge: (A) Page: 430
75. One framework that helps with studying the influence of culture on global
advertising is the cultural classification scheme developed by Geert Hofstede.
The value system construct that refers to the extent that people within the culture
prefer structured situations with clear-cut rules and little ambiguity is called
__________________.
76. Ad campaigns that center around the hard-sell approach (such as testimonials) are
advisable for cultures with high uncertainty avoidance such as the United States.
Difficulty: (2) Knowledge: (A) Page: 430
77. In the percentage of sales method, the overall advertising budget is based on either
past or expected sales revenues.
Difficulty: (1) Knowledge: (F) Page: 431
78. Viral marketing involves the selling of disease-causing agents.
79. With respect to budget forms that can be used in advertising, the
________________
method simply sets the overall advertising budget as a percentage of sales.
80. In the competitive parity rule, advertisers do not use competitors advertising
spending as a benchmark.
Difficulty: (1) Knowledge: (A) Page: 431
81. With respect to budget forms that can be used in advertising, the _____________
method uses competitions spending as a benchmark and provides the measure of
the optimal spending amount.
82. The most popular budgeting rule is the objective-and-task method.
Difficulty: (1) Knowledge: (F) Page: 433
83. In the domain of advertising, ___________________ means that marketers
encourage their affiliates to adopt, or at least consider, advertising ideas that have
proven successful in other markets.
84. Not-Invented-Here (NIH) syndrome does not come from local subsidiaries.

Difficulty: (3) Knowledge: (F) Page: 438


85. With export advertising, the creative strategy is highly centralized.
Difficulty: (3) Knowledge: (F) Page: 438
86. With prototype standardization, headquarters spell out guidelines on the
positioning
themes and brand identity.
Difficulty: (2) Knowledge: (F) Page: 439
87. Shift from TV and print to radio advertising is becoming a big reality.
Difficulty: (1) Knowledge: (F) Pages: 442-43
88. Most firms do not rely heavily on the expertise of an advertising agency.
Difficulty: (1) Knowledge: (F) Page: 447
89. Sponsorship is one of the fastest growing promotion tools.
Difficulty: (2) Knowledge: (F) Page: 451
90. The goal of many MNCs is to avoid an integrated marketing communications
approach.
Difficulty: (2) Knowledge: (F) Page: 458
Essay
91. List and discuss the major challenges faced by international advertisers.
92. What situations are conducive to localization of advertising from the viewpoint of
the international advertiser?
93. How should marketers cope with advertising regulations?
94. How do you choose an advertising agency overseas?

Chapter 14
Multiple Choice

1. Unlike the United States where customers visit car dealers, a majority of cars are
sold
by door-to-door salespeople in _________________.
a.
b.
c.
d.
e.

India.
Pakistan.
Japan.
Ireland.
Mongolia.

Difficulty: (2) Knowledge: (A) Page: 421


2. All of the following are tasks of the average salesperson EXCEPT:
a.
b.
c.
d.
e.

take orders.
deliver products.
repair products.
educate consumers.
provide technical knowledge.

Difficulty: (1) Knowledge: (F) Page: 422


3. The salesperson can best be described as being the ______________ for the
company.
a.
b.
c.
d.
e.

support mechanism
front line
mouthpiece
promoter
educator

Difficulty: (2) Knowledge: (F) Page: 422


4. The salesforce management process starts with setting:
a.
b.
c.
d.
e.

objectives and strategy.


objectives and manufacturing.
objectives and marketing.
objectives and operations.
objectives and raw material.

Difficulty: (3) Knowledge: (F) Page: 423


5. When researchers try to put the word international into sales management and
personal selling, clarification is needed. ____________________ considerations
include issues that analyze more than one countrys assets, strengths, and
situations,
or that deal directly with cross-border coordination.

a.
b.
c.
d.
e.

International product
International strategy
International mix
Intercultural
Global society

Difficulty: (1) Knowledge: (F) Page: 423


6. All of the following are examples of international sales strategy issues EXCEPT:
a.
b.
c.
d.
e.

sales force skill availability.


selling style differences.
country image.
expatriate recruiting.
centralized training.

Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1


7. Which of the following is an example of an issue that is addressed by intercultural
issues with the foreign country?
a.
b.
c.
d.
e.

sales force skill availability.


selling style differences.
country image.
expatriate recruiting.
centralized training.

Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1


8. All of the following are examples of intercultural issues with the foreign country
EXCEPT:
a.
b.
c.
d.
e.

motivation.
cultural sensitivity.
ethical standards.
relationship building.
home to host communications.

Difficulty: (2) Knowledge: (F) Page: 423, Exhibit 14-1


9. Which of the following is an example of an issue faced by international sales
strategy?
a.
b.
c.
d.
e.

motivation.
cultural sensitivity.
ethical standards.
relationship building.
home to host communications.

Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1

10. Sales force skill availability, company image, expatriate recruiting, and centralized
training are issues relevant to ________________________ considerations.
a.
b.
c.
d.
e.

international product
international sales strategy
international mix
intercultural issues with the foreign country
global society

Difficulty: (2) Knowledge: (F) Page: 423, Exhibit 14-1


11. Motivation, cultural sensitivity, ethical standards, fairness, and relationship
building
are issues relevant to _______________________ considerations.
a.
b.
c.
d.
e.

international product
international sales strategy
international mix
intercultural issues with the foreign country
global society

Difficulty: (1) Knowledge: (F) Page: 423, Exhibit 14-1


12. In the sales management process, the first step is where the manager:
a.
b.
c.
d.
e.

sets objectives and strategy.


determines goals and purposes.
recruits.
trains.
supervises.

Difficulty: (2) Knowledge: (F) Page: 423


13. A key decision that a marketer must make with respect to international marketing
is
_______________________. This decision limits and defines key underlying
aspects
of its future sales force management.
a.
b.
c.
d.
e.

which market to enter


how much to spend in a market
how to enter the market
how far should a market be entered
how long to stay in a market

Difficulty: (3) Knowledge: (A) Page: 423


14. The _________________ in(into) a market will determine how large the sales
force

needs to be and will influence how much training it will require.


a.
b.
c.
d.
e.

form of marketing
form of entry
form of promotion
form of commission
form of management

Difficulty: (2) Knowledge: (F) Page: 423


15. How large a sales force needs to be, how much training the sales force will need,
whether the sales force is predominately local or foreign, and the manner of
compensation are all issues influenced by the __________________ in(into) a
market.
a.
b.
c.
d.
e.

form of marketing
form of entry
form of promotion
form of commission
form of management

Difficulty: (2) Knowledge: (F) Page: 423


16. With respect to sales and sales management, the entry method into a market is also
called the ____________________________.
a.
b.
c.
d.
e.

zone process
level of migration
level of expatriation
level of complexity
level of integration

Difficulty: (3) Knowledge: (F) Page: 424


17. With respect to sales and sales management entry into a foreign market,
_________
integration refers to greater ownership and control of the distribution channel.
a. vertical
b. horizontal
c. forward
d. backward
e. dual
Difficulty: (2) Knowledge: (A) Page: 424
18. If a company begins its foreign sales by exporting through a merchant distributor
who
takes title to the product and performs all the necessary foreign sales functions, this
would be a form of ________________ integration.

a.
b.
c.
d.
e.

vertical
horizontal
forward
backward
dual

Difficulty: (3) Knowledge: (A) Page: 424


19. If a company begins its foreign sales by exporting through merchant distributors
and
then purchases a foreign sales subsidiary and locates product warehouses abroad,
this
would be a form of _____________________ integration.
a.
b.
c.
d.
e.

vertical
horizontal
forward
backward
dual

Difficulty: (3) Knowledge: (A) Page: 424


20. Selling through an Export Management Company (EMC) or an Export Trading
Company (ETC) is considered a _____________ involvement approach to
international sales.
a.
b.
c.
d.
e.

low
middle
high
backward
parallel

Difficulty: (1) Knowledge: (F) Page: 424


21. _____________________ serves the needs of their clients in entering a market or
sourcing goods from a market. They are characterized by their service nature
and
efforts to interact with and meet the needs of the exporter client.
a.
b.
c.
d.
e.

A foreign franchise
An Export Trading Company
An Export Management Company
A Noraizi agent
A bulk-breaker

Difficulty: (2) Knowledge: (F) Page: 424


22. Which of the following degrees of involvement would probably be in use when
Export Management Companies, Export Trading Companies, or direct exporting
are being used by the firm?

a.
b.
c.
d.
e.

limited foreign involvement and visibility


local management and sales force
expatriate management and local sales force (mixed)
heavy to complete expatriate sales force
maximum global control and world wide ownership

Difficulty: (1) Knowledge: (A) Page: 425


23. Which of the following degrees of involvement would probably be in use when
piggybacking and selling through chains are used by the firm?
a.
b.
c.
d.
e.

limited foreign involvement and visibility


local management and sales force
expatriate management and local sales force (mixed)
heavy to complete expatriate sales force
maximum global control and world wide ownership

Difficulty: (2) Knowledge: (A) Page: 425


24. Many ______________________ use EMCs services mainly to test the
international
arena.
a.
b.
c.
d.
e.

contract manufacturers
franchisees
experienced exporters
inexperienced exporters
none of the above

Difficulty: (1) Knowledge: (A) Page: 425


25. If the company describes its situation as being concerned with a contract for sales
from the U.S., no sales force or representatives abroad, and little or no control over
the foreign marketing process, the firm will probably use which form of
involvement
listed below?
a.
b.
c.
d.
e.

limited foreign involvement and visibility


local management and sales force
expatriate management and local sales force (mixed)
heavy to complete expatriate sales force
maximum global control and world wide ownership

Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2


26. If the company uses expatriates to oversee sales regions and lead training, the firm
will probably use which form of involvement listed below?
a. limited foreign involvement and visibility

b.
c.
d.
e.

local management and sales force


expatriate management and local sales force (mixed)
heavy to complete expatriate sales force
maximum global control and world wide ownership

Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2


27. _____________________ is usually a large conglomerate that imports, exports,
countertrade, invests, and manufactures in the global arena.
a.
b.
c.
d.
e.

A foreign franchise
An Export Trading Company
An Export Management Company
A Noraizi agent
A bulk-breaker

Difficulty: (2) Knowledge: (F) Page: 425


28. Sogoshosha (such as Mitsubishi, Mitsui, Sumitomo, and Marubeni) are the
Japanese
equivalents of _______________________.
a.
b.
c.
d.
e.

a foreign franchise
an Export Trading Company
an Export Management Company
a dealer network
a bulk-breaker

Difficulty: (2) Knowledge: (A) Page: 425


29. If a company follows a _______________ involvement path, it normally gives
up the ability to motivate and monitor the sales force and to train them to better
serve
the customer.
a.
b.
c.
d.
e.

low
middle
high
backward
parallel

Difficulty: (1) Knowledge: (F) Page: 425


30. When a company has the ____________________ involvement approach, the
company (because it uses either host country employees or expatriates) must face
the foreign culture and intercultural communication can become an issue that must
be dealt with through training.
a. low-level
b. mid-level

c. high-level
d. backward level
e. parallel level
Difficulty: (2) Knowledge: (A) Page: 426
31. Which of the following forms of company sales involvement generally have the
lowest involvement of expatriates?
a.
b.
c.
d.
e.

low-level
mid-level
high-level
backward level
parallel level

Difficulty: (2) Knowledge: (A) Page: 426


32. Which of the following forms of company sales involvement generally have the
highest involvement of expatriates?
a.
b.
c.
d.
e.

low-level
mid-level
high-level
backward level
parallel level

Difficulty: (2) Knowledge: (A) Page: 426


33. When a company has a _________________ involvement approach, the company
substantially controls the foreign distribution channels.
a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level
Difficulty: (1) Knowledge: (F) Page: 426
34. As an example of a company that has the _______________________
involvement
approach, the company will generally own warehouses where goods are stored
and/or
own outlets where products are sold.
a. low-level
b. mid-level
c. high-level
d. backward level
e. parallel level
Difficulty: (2) Knowledge: (A) Page: 426

35. Which of the following statements MOST accurately describes the state of
international selling?
a. At the level of personal selling there is little true international selling.
b. International selling is a function of the degree of involvement.
c. Because of the global nature of business today, global selling transcends
international boundaries.
d. International selling will never work.
e. International selling is tightly monitored by most governments because of the
potential for funds outflow.
Difficulty: (3) Knowledge: (F) Page: 427
36. Which of the following statements MOST accurately describes the state of
international selling?
a. Despite growing international sales, salespeople typically work only in one
region.
b. International selling is a function of the degree of involvement.
c. Because of the global nature of business today, global selling transcends
international boundaries.
d. International selling will never work.
e. International selling is tightly monitored by most governments because of the
potential for funds outflow.
Difficulty: (3) Knowledge: (F) Page: 427
37. Personal selling is predominantly a _________________ activity.
a.
b.
c.
d.
e.

psychological
ethnic
tribal
group
personal

Difficulty: (1) Knowledge: (F) Page: 427


38. A _________________ occurs when we group people (from what might appear
to us as very similar cultures) together in perhaps an inappropriate manner
because
those people consider themselves to be different.
a.
b.
c.
d.
e.

cultural assimilation
cultural harmony
cultural generalization
cultural syncopation
cultural similarity

Difficulty: (2) Knowledge: (F) Page: 428


39. Germans are typically viewed as scientifically exacting and industrious people.
However, the typical German manufacturing work week is only thirty hours and
the workers jealously guard their free time and show little interest in working
overtime. This would be an example of the dangers of ____________________.
a.
b.
c.
d.
e.

cultural onomonopea
cultural adiaphoria
cultural generalization
cultural syncopation
cultural similarity

Difficulty: (2) Knowledge: (A) Page: 428


40. If a marketing manager were to mistakenly group South Koreans and Japanese
together (either as a market or by business and labor practices), this would be an
example of a _________________ problem.
a.
b.
c.
d.
e.

cultural onomonopea
cultural adiaphoria
cultural generalization
cultural syncopation
cultural similarity

Difficulty: (2) Knowledge: (A) Page: 428


41. The differences between the cultures of companies in two countries are
based more on the ingrained cultural values of the ___________________.
a.
b.
c.
d.
e.

consumers
governments
board of directors
CEOs
employees

Difficulty: (2) Knowledge: (A) Page: 428


42. One popular tool for characterizing people that addresses their cognitive styles is
the ____________________.
a.
b.
c.
d.
e.

Kelsey-Ciebold scale.
Johns-Hopkins initial perception scale.
Majors-Hawkins Cognitive Indicator.
Myers-Briggs Type Indicator.
Spaniel test.

Difficulty: (2) Knowledge: (F) Page: 431


43. The ________________ classifies people on four personal dimensions. These are

extrovert versus introvert, sensing versus intuitive, thinking versus feeling, and
judging versus perceiving.
a.
b.
c.
d.
e.

Hartman profile
Myers-Briggs Type Indicator
Majors-Hawkins Cognitive Indicator
Spaniel test for concepts
Freudian fantasy test

Difficulty: (2) Knowledge: (F) Page: 431


44. According to the Myers-Briggs Type Indicator test, the _____________ tends to
rely on the environment for guidance, be action-oriented, sociable, and
communicate
with ease and frankness.
a.
b.
c.
d.
e.

extrovert
introvert
sensing person
intuitive person
thinking person

Difficulty: (2) Knowledge: (F) Page: 431, Exhibit 14-4


45. According to the Myers-Briggs Type Indicator test, the _____________ tends to
show a greater concern with concepts and ideas than with external events, relative
detachment, and enjoyment of solitude and privacy over companionship.
a.
b.
c.
d.
e.

extrovert
introvert
sensing person
intuitive person
thinking person

Difficulty: (2) Knowledge: (F) Page: 431, Exhibit 14-4


46. According to the Myers-Briggs Type Indicator test, the _____________ tends to
focus on immediate experience, become more realistic and practical, and develop
skills such as acute powers of observation and memory for details.
a.
b.
c.
d.
e.

extrovert
introvert
sensing person
intuitive person
thinking person

Difficulty: (3) Knowledge: (F) Page: 431, Exhibit 14-4


47. According to the Myers-Briggs Type Indicator test, the _____________ tends to
value the possibility and meaning more than immediate experience, and become

more imaginative, theoretical, abstract, and future oriented.


a. extrovert
b. introvert
c. sensing person
d. intuitive person
e. thinking person
Difficulty: (3) Knowledge: (F) Page: 431, Exhibit 14-4
48. All of the following are steps in the sales force management process EXCEPT:
a.
b.
c.
d.
e.

setting sales force objectives.


designing sales force strategy.
recruiting and selecting salespeople.
commission system management.
supervising salespeople.

Difficulty: (2) Knowledge: (F) Page: 433


49. The first step in the sales force management process is best described as being:
a.
b.
c.
d.
e.

designing sales force strategy.


setting sales force objectives.
recruiting and selecting salespeople.
commission system management.
supervising salespeople.

Difficulty: (2) Knowledge: (F) Page: 433


50. The __________________ states explicitly what the sales force will be asked to
do.
a.
b.
c.
d.
e.

sales force strategy


sales force objectives
sales force training procedures
sales force recruiting procedures
sales force evaluation procedures

Difficulty: (2) Knowledge: (F) Page: 433


51. Setting sales force objectives internationally will not only depend on the company
goals but will also depend on:
a.
b.
c.
d.
e.

the training procedures.


the recruiting procedures.
the evaluation procedures.
an analysis of the culture and the values of the country it is entering.
management standards for excellence.

Difficulty: (2) Knowledge: (F) Page: 434

52. __________________ addresses the structure, size, and compensation of the sales
force.
a.
b.
c.
d.
e.

Sales force objectives


Sales force goals
Sales force strategy
Sales force policy
Sales force vision

Difficulty: (2) Knowledge: (F) Page: 434


53. With respect to sales force structure, the ____________________ sales force has
each salesperson responsible for a particular area (reporting up the line to regional
sales managers).
a.
b.
c.
d.
e.

territorial
product
customer
matrix
open plan

Difficulty: (1) Knowledge: (F) Page: 434


54. With respect to sales force structure, the ______________________ sales force
has
each salesperson sell only one product or product line (even when selling to a
single
customer).
a.
b.
c.
d.
e.

territorial
product
customer
matrix
open plan

Difficulty: (1) Knowledge: (F) Pages: 434-35


55. With respect to the functions of sales force strategy, the ______________ refers to
and determines the physical positioning and responsibilities of each salesperson.
a.
b.
c.
d.
e.

size
structure
compensation procedure
modeling procedure
evaluation procedure

Difficulty: (1) Knowledge: (F) Page: 434


56. In order to ensure a globally consistent sales strategy, a company will likely:

a. conduct sales training on a country-by-country basis.


b. train the sales managers in the headquarters country and send them abroad.
c. bring all employees to the headquarters country for training, then send them
to their home markets.
d. hire professional sales trainers to travel abroad to train employees.
e. none of the above
Difficulty: (2) Knowledge: (a) Page: 436
57. Difficulties in setting compensation packages for global salesforces include:
a. unions may restrict wage options.
b. some cultures are not motivated to work harder regardless of monetary
incentives.
c. local firms may protest that the MNC is stealing the best talent with wages
out of line with local standards.
d. culture may dictate that people of the same rank should not be compensated
differently regardless of performance.
e. all of the above
Difficulty: (2) Knowledge: (F) Page: 446
58. Ethics for international sales reps:
a. are the same regardless of country.
b. can be taught and are no longer a problem once training has taken place.
c. dont matterreps should do what the home culture expects.
d. demand clear corporate policies to help reps avoid problems.
e. should be ignored until a complaint is made, then the guilty should be
punished.
Difficulty: (2) Knowledge: (A) Page: 438
59. Evaluations of sales performance should be ________.
a. cumulative
b. exhaustive
c. quantitative
d. qualitative
e. both C and D
Difficulty: (2) Knowledge: (F) Page: 438
60. ____________________ the sales force means directing and motivating the sales
force to fulfill the companys objectives and providing the resources to allow them
to do so.
a.
b.
c.
d.
e.

Recruiting
Training
Evaluating
Supervising
Compensating

Difficulty: (2) Knowledge: (F) Page: 436


61. With respect to rewarding salespeople, _________________ reinforces the
negative
image of the salesperson benefiting from the sale, with no regard for the
purchasers
well-being.
a.
b.
c.
d.
e.

the salary system


the commission system
the motivation system
the retainer system
the hourly wage system

Difficulty: (2) Knowledge: (F) Page: 437


62. With respect to evaluating salespeople, _________________ evaluations can be
in the form of comparisons of sales, of sales percents, or increases in sales.
a.
b.
c.
d.
e.

parametric
qualitative
quantitative
nonparametric
decisional

Difficulty: (2) Knowledge: (F) Page: 438


63. Stages of the negotiation process include the following EXCEPT:
a.
b.
c.
d.
e.

non-task sounding.
task-related information exchange.
foreign travel.
persuasion.
concessions and agreements.

Difficulty: (2) Knowledge: (F) Page: 439


64. In international marketing, negotiation strategies include the following EXCEPT:
a.
b.
c.
d.
e.

employ an outsourcing consultant.


employ an agent or advisor.
involve a mediator.
induce the counterpart to follow ones own negotiation script.
Adapt the counterparts negotiation script.

Difficulty: (3) Knowledge: (F) Page: 439


65. ___________________ are home country personnel sent overseas to manage local
operations in the foreign market.

a.
b.
c.
d.
e.

Managers
International personnel
Group managers
Expatriates
Foreign managers

Difficulty: (1) Knowledge: (F) Page: 443


66. All of the following are advantages that expatriates have over foreign nationals as
managers of MNCs, EXCEPT:
a.
b.
c.
d.
e.

more intelligence.
better communication.
better understanding of office politics.
develops better future managers.
better relationships with the home office.

Difficulty: (2) Knowledge: (F) Page: 444


67. All of the following are disadvantages of using expatriates over foreign nationals
as
managers, EXCEPT:
a.
b.
c.
d.
e.

cross-cultural training.
motivation.
honesty.
compensation.
family discord.

Difficulty: (2) Knowledge: (F) Pages: 443-44


68. The general trend among U.S. multinationals has been a decreasing use of
______________ managers overseas and an increasing reliance on ____________
foreign talent since the 1990s.
a.
b.
c.
d.
e.

global, local
international, local
European, local
expatriate, local
Asian, local

Difficulty: (3) Knowledge: (A) Page: 443


69. The single most compelling reason that most expatriates return home early from
their tour of duty abroad is:
a.
b.
c.
d.

motivation.
salary.
health.
fear of the foreign environment.

e. family discord.
Difficulty: (2) Knowledge: (F) Page: 447
70. Expaticas Relocation Services 2008 survey provided the following
recommendations regarding reducing attrition rates EXCEPT:
a.
b.
c.
d.
e.

membership in top private business clubs.


chances to use international experience.
a choice of positions upon return.
recognition.
repatriation career support.

Difficulty: (2) Knowledge: (F) Page: 448


True/False

Short Answer

71. Unlike the United States, the majority of cars sold in Japan are sold door-to-door.
Difficulty: (2) Knowledge: (A) Page: 421
72. The salesperson is not the front line for the company.
Difficulty: (1) Knowledge: (F) Page: 422
73. Sales people do not sell services.
Difficulty: (1) Knowledge: (A) Page: 422
74. When considering international sales management issues, ________________
considerations are issues that analyze more than one countrys assets, strengths,
and
situations, or that deal directly with cross-border coordination.
75. Sales force skill availability, country image, and expatriate recruiting are all
issues
that are relevant as intercultural issues with the foreign country.
Difficulty: (3) Knowledge: (F) Page: 423, Exhibit 14-1
76. Motivation, cultural sensitivity, ethical standards, and fairness are all issues that
are
relevant as intercultural issues with the foreign country.
Difficulty: (2) Knowledge: (F) Page: 423, Exhibit 14-1
77. The question of how to enter the market is central to marketing.

Difficulty: (1) Knowledge: (F) Page: 423


78. Backward integration refers to greater ownership and control of the distribution
channel.
Difficulty: (3) Knowledge: (F) Page: 423
79. If a firm has limited foreign involvement and visibility, a correct choice for them
to
use in entering a foreign country would be to develop an expatriate sales force.
Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2
80. If a firm has limited foreign involvement and visibility, a correct choice for them
to
use in entering a foreign country would be to enter into an arrangement with an
Export Management Company.
Difficulty: (2) Knowledge: (A) Page: 424, Exhibit 14-2
81. The term sogoshosha in Japan describes an Export Trading Company.
Difficulty: (2) Knowledge: (A) Page: Page: 425
82. Personal selling is predominantly a group activity.
Difficulty: (1) Knowledge: (F) Page: 427
83. At the level of personal selling there is little true international selling.
84. Equating Korean and Japanese consumers and business practices to be the same
just
because they are in geographic proximity to one another would be a mistake often
made because of _______________________.
85. Myers-Briggs-Type Indicator (MBTI) is a tool for addressing peoples cognitive
styles.
Difficulty: (3) Knowledge: (F) Page: 431
86. One of the dimensions of Myers-Briggs-Type Indicator (MBTI) include
ethnocentric
behavior:
Difficulty: (1) Knowledge: (F) Page: 431
87. The first step in the process of sales force management starts with recruiting and
selecting salespeople.

Difficulty: (1) Knowledge: (F) Page: 434


88. The size of the salesforce depends on the sales structure.
89. In the negotiation process, nontask soundings do not include activities that are
used to
establish a rapport among the parties involved.
90. ______________ are home country personnel sent overseas to manage local
operations in the foreign market.
91. Negotiations practices do not vary enormously across cultures.
Difficulty: (2) Knowledge: (F) Page: 439
92. Expatriate involvement in international sales has been on the rise since the 1990s.
Difficulty: (2) Knowledge: (F) Page: 443
93. Once the expatriate is overseas, training becomes more difficult.
Difficulty: (3) Knowledge: (F) Page: 445
94. Cross-cultural training is on the decline in recent years.
Difficulty: (2) Knowledge: (F) Page: 445
95. Repatriation is the return of the expatriate employee from overseas.
Difficulty: (1) Knowledge: (F) Page: 446
96. Expatriates do not face a long list of difficulties upon returning home.
Difficulty: (2) Knowledge: (F) Page: 448
Essay
97. It has been said that selling is the world over. However, there are differences
between the way that domestic and international selling efforts occur and are
managed. Comment on these differences.
98. Considering various types of entry formats into the international arena, under
what circumstances might it be advisable for the company to attempt a traveling
global salesforce?

99. Considering the four major categories of the Myers-Briggs Type Indicator, which
of the categories (or combination of categories) best describes you? Explain why.
100. Not all United States sales methods or systems can automatically be exported
abroad. Considering the information provided by research on different cultural
dimensions, why might it be difficult to adopt a U.S.-style commission system for
salespeople in such countries as Japan or Mexico. Be sure to remember how these
two countries might rank on the five cultural dimension scales.
101. Why do most firms still consider expatriates to be a valuable extension of their
company? What are the advantages and disadvantages of using expatriates?
Chapter 15
Multiple Choice
1. In global logistics and distribution, Coca-Colas success relies largely on its global
distribution arm, ______________________, the worlds largest bottler group.
a.
b.
c.
d.
e.

Coca-Cola Enterprises
Coca-Cola Network
Coca-Cola Web
Coca-Cola Team
Coca-Cola Trucking Co.

Difficulty: (2) Knowledge: (F) Page: 452


2. According to the textbook, which of the following famous business thinkers
characterized logistics as being the darkest continent of business?
a.
b.
c.
d.
e.

Philip Kotler.
Stephen Covey.
Michael E. Porter.
Peter Drucker.
Tom Peters.

Difficulty: (3) Knowledge: (F) Page: 452


3. As firms start operating on a global basis, ___________________ need to manage
the shipping of raw materials, components, and supplies among various
manufacturing sites at the most economical and reliable rates.
a. human resource managers
b. logistics managers

c. operations managers
d. outsourcing managers
e. information technology managers
Difficulty: (2) Knowledge: (F) Page: 452
4. In 2011, the total logistics cost represented about 8.5 percent of the GDP, or $1
trillion in the _________________.
a.
b.
c.
d.
e.

U.S.
Ireland
Portugal
Belgium
Romania

Difficulty: (1) Knowledge: (F) Page: 452


5. In 2012, in the U.S., the total logistics cost was ______ percent of the U.S. GDP.
a.
b.
c.
d.
e.

1
3
5.5
8.5
10.5

Difficulty: (2 Knowledge: (F) Page: 452


6. __________________ transportation refers to the seamless transfer of goods from
one mode of transportation (such as an aircraft) to another (such as a ship) and
vice versa without the hassle of unpacking and repackaging of goods to suit the
dimensions of the mode of transportation being used.
a.
b.
c.
d.
e.

Bi-polar
Bi-modal
Intercontinental
Dual-basic
Intermodal

Difficulty: (2) Knowledge: (F) Page: 452


7. __________________ refers to the means of keeping continuous tabs on the exact
location of the goods being shipped in the logistics chain.
a.
b.
c.
d.
e.

Data processing
Messaging service
Tracking technology
Computerized messaging
Hybrid technology

Difficulty: (2) Knowledge: (F) Page: 452

8. With electronic tracking technology, shippers are able to quickly react to any
disruption in the shipments because the shipper knows where exactly the goods are
in real time and:
a.
b.
c.
d.
e.

labor can be adjusted accordingly.


the alternative means can be quickly mobilized should problems develop.
costs can always be evaluated.
losses are rare.
customer service is now at a premium.

Difficulty: (1) Knowledge: (A) Page: 452


9. ________________ is defined as the design and management of a system that
directs
and controls the flows of materials into, through and out of the firm across national
boundaries to achieve its corporate objectives at a minimum total cost.
a.
b.
c.
d.
e.

Global goods flow


Global distribution
Global logistics
Global wholesaling
Global shipping

Difficulty: (2) Knowledge: (F) Page: 453


10. Global logistics encompasses:
a.
b.
c.
d.
e.

advertising and personal selling.


purchasing and manufacturing.
materials management and trucking.
materials management and physical distribution.
pricing and manufacturing.

Difficulty: (2) Knowledge: (A) Page: 453


11. ___________________ refers to the inflow of raw materials, parts, and supplies in
and through the firm.
a.
b.
c.
d.
e.

Global logistics
Physical distribution
Materials management
Purchasing processes
Global distribution

Difficulty: (2) Knowledge: (F) Page: 453


12. The global logistics process begins with which of the following?
a. materials management

b.
c.
d.
e.

processing and assembly


physical distribution
raw materials, components, and supplies
finished products ready for shipment

Difficulty: (2) Knowledge: (F) Page: 453


13. When raw materials, components, and supplies are converted or manipulated for
processing and assembly by the firm, the process is monitored and controlled by
the ________________________ function of the firm.
a.
b.
c.
d.
e.

physical distribution
purchasing
intermodal transportation
materials handling
materials management

Difficulty: (3) Knowledge: (A) Page: 453


14. _______________________ refers to the movement of the firms finished
products
to its customers, consisting of transportation, warehousing, inventory, customer
service/order entry, and admission.
a.
b.
c.
d.
e.

Physical distribution
Purchasing
Intermodal transportation
Global logistics
Materials management

Difficulty: (2) Knowledge: (F) Page: 453


15. All of the following are activities that occur during physical distribution EXCEPT:
a.
b.
c.
d.
e.

transportation.
warehousing.
inventory.
order entry.
promotion and advertising.

Difficulty: (1) Knowledge: (A) Page: 453, Exhibit 15-1


16. With respect to distribution costs, a geographically large country such as the
United
States will normally incur more ______________________ costs than in smaller
countries.
a. transportation, insurance, and inventory
b. warehousing, customer service/order entry, and general administration
c. transportation and inventory

d. materials handling
e. warehousing and transportation
Difficulty: (3) Knowledge: (A) Page: 453
17. Which of the following factors contribute significantly to the increased
complexity
and cost of global logistics as compared to domestic logistics?
a.
b.
c.
d.
e.

domestic intermediaries
service
purchasing
exchange rate fluctuation
materials handling

Difficulty: (1) Knowledge: (F) Page: 455


18. All of the following factors contributed significantly to the increased complexity
and
cost of global logistics as compared to domestic logistics EXCEPT:
a.
b.
c.
d.
e.

exchange rate fluctuation.


distance.
domestic intermediaries.
foreign intermediaries.
negotiations with government officials and distributors.

Difficulty: (2) Knowledge: (F) Page: 455


19. Recently the U.S. dollar depreciated while the Japanese yen soared in value.
Honda
found that it was much cheaper to ship its Accord models to Europe from its Ohio
plant than from Japan. This could most accurately be classed as a move made
because of problems or opportunities with:
a.
b.
c.
d.
e.

distance.
logistics.
exchange rate fluctuations.
foreign intermediaries.
domestic intermediaries.

Difficulty: (1) Knowledge: (A) Page: 455


20. The bulk of international trade is handled by ________________________.
a.
b.
c.
d.
e.

ocean shipping
air transport
trucking services
railroads
inland waterways

Difficulty: (1) Knowledge: (A) Page: 455


21. The most important factors in determining an optimal mode of transportation for
foreign markets are the value-to-volume ratio, perishability of the product, and:
a.
b.
c.
d.
e.

the cost of transportation.


intermodal ratio.
total cost ratio to inventory and warehousing expense.
the cost of insurance.
the distance to speed relationship.

Difficulty: (2) Knowledge: (F) Page: 456


22. All of the following are important factors in determining an optimal mode of
transportation to be used in foreign markets EXCEPT:
a. the cost of transportation.
b. the value-to-volume ratio.
c. the perishability of the product.
d. obsolescence along the product life cycle.
e. the cost of insurance.
Difficulty: (3) Knowledge: (F) Pages: 456
23. The _________________ is determined by how much value is added to the
materials
used in the product.
a.
b.
c.
d.
e.

perishability of the product


cost of transportation
the cost of insurance
the value-to-volume ratio
the intermodal ratio

Difficulty: (1) Knowledge: (F) Page: 456


24. The ________________ of the product refers to the quality degradation over time
and/or product obsolescence along the product life cycle.
a.
b.
c.
d.
e.

perishability
cost of transportation
cost of insurance
value-to-volume ratio
intermodal ratio

Difficulty: (1) Knowledge: (F) Page: 456


25. All of the following are viable options for shipping products internationally on a
global basis (anywhere in the world) EXCEPT:

a.
b.
c.
d.
e.

ocean shipping.
air freight.
cargo liner service.
truck.
intermodal transportation.

Difficulty: (2) Knowledge: (A) Page: 456


26. The primary forms of ocean shipping include all of the following EXCEPT:
a.
b.
c.
d.
e.

liner service.
bulk shipping.
tanker shipping.
irregular runs.
FedEx surface.

Difficulty: (1) Knowledge: (A) Page: 456


27. If a product were to be categorized as being heavy, bulky, and nonperishable,
probably the best form of global shipping would be:
a.
b.
c.
d.
e.

ocean shipping.
air freight.
truck.
rail.
barge.

Difficulty: (1) Knowledge: (F) Page: 456


28. If a company wished to ship semiconductor chips abroad, they would probably
choose:
a.
b.
c.
d.
e.

ocean shipping.
air freight.
truck.
rail.
barge.

Difficulty: (1) Knowledge: (A) Page: 457


29. Research has shown that if Nike or Reebok were to be transporting their footwear
from plants in Asia to the United States, they would probably choose which of the
following transportation modes?
a.
b.
c.
d.
e.

ocean shipping
air freight
truck
rail
barge

Difficulty: (2) Knowledge: (A) Page: 458


30. The traditional logistics strategy involves ____________________ based on
forecasting and inventory speculation.
a.
b.
c.
d.
e.

supply and demand


anticipatory demand management
inventory volume equations
purchasing ratios
microeconomic principles

Difficulty: (2) Knowledge: (F) Page: 458


31. Information technology, electronic data interchange, and intermodal transportation
have made ____________________ a reality in physical distribution.
a.
b.
c.
d.
e.

low cost transportation


a no returns policy
ultimate distribution service
just-in-time delivery
accurate purchasing management

Difficulty: (2) Knowledge: (F) Page: 458


32. Multinational corporations can use ________________ as a strategic tool in
dealing
with currency fluctuations and as a hedge against inflation.
a.
b.
c.
d.
e.

buying power
just-in-time management
just-in-time delivery
purchasing management
inventory

Difficulty: (3) Knowledge: (F) Page: 458


33. By increasing ___________________ before imminent depreciation of a currency
instead of holding cash, the firm may reduce its exposure to currency depreciation
losses.
a.
b.
c.
d.
e.

buying power
plant and equipment
trucks
materials handling equipment (such as forklifts)
inventory

Difficulty: (2) Knowledge: (F) Page: 458


34. ___________ inventories also provide a hedge against inflation because the value
of

the goods/parts held in inventory remains the same compared to the buying power
of
local currency.
a.
b.
c.
d.
e.

High-tech
Low-tech
High
Low
None of the above

Difficulty: (3) Knowledge: (A) Page: 458


35. __________________ refers to coordinating production and distribution across
geographic boundaries.
a.
b.
c.
d.
e.

Rationalization
Utility management
Physical distribution management
Logistic integration
Logistic modeling

Difficulty: (2) Knowledge: (F) Page: 459


36. _________________ means reducing resources to achieve more efficient and
cost-effective operations.
a.
b.
c.
d.
e.

Rationalization
Utility management
Physical distribution management
Logistic integration
Logistic modeling

Difficulty: (2) Knowledge: (F) Page: 459


37. Another profound change in the last decade is the proliferation of
_______________.
a.
b.
c.
d.
e.

IT warehouses
e-commerce
information technology
global shipping traffic
global air traffic

Difficulty: (2) Knowledge: (F) Page: 459


38. 3PL stands for:
a. third-party logistics.
b. third-power logistics.
c. third-peer logistics.

d. third-production logistics.
e. none of the above.
Difficulty: (1) Knowledge: (F) Page: 461
39. The largest third-party logistics sector is the value-added ________________ and
_________________ industry.
a.
b.
c.
d.
e.

warehousing, purchasing
warehousing, manufacturing
warehousing, distribution
warehousing, painting
none of the above

Difficulty: (2) Knowledge: (F) Page: 461


40. The trend toward third-party logistics is a result of the _____________ and the
_____________.
a.
b.
c.
d.
e.

Internet, enterprise resource planning


Internet, technology simulations
Internet, customer relationship management
Internet, Intranet
none of the above

Difficulty: (2) Knowledge: (A) Page: 462


41. The Internet and Intranet facilitate __________________________.
a.
b.
c.
d.
e.

parallel delivery.
cheap delivery.
expensive delivery.
forward-time delivery.
on-time delivery.

Difficulty: (1) Knowledge: (F) Page: 462


42. _________________ influences decisions regarding what activities and
technologies a company should concentrate its investment and managerial
resources in (in relation to its competitors in the industry).
a. Relative advantage
b. Absolute cost advantage
c. Comparative advantage
d. Competitive advantage
e. Sourcing advantage
Difficulty: (2) Knowledge: (F) Page: 464
43. __________________ affects the companys decision about where to source and
market, based on lower cost of labor and other resources in one country relative to

another.
a.
b.
c.
d.
e.

Relative advantage
Absolute cost advantage
Comparative advantage
Competitive advantage
Sourcing advantage

Difficulty: (2) Knowledge: (F) Page: 464


44. Some distribution companies even find that the best way to be successful is to
create a
distribution ________________.
a.
b.
c.
d.
e.

alliances
mergers
acquisitions
consortia
joint ventures

Difficulty: (3) Knowledge: (F) Page: 463


45. Sourcing strategy includes two basic choices. One of these is intra-firm sourcing
and the other is __________________.
a.
b.
c.
d.
e.

importing
outsourcing
in-sourcing
matrix manipulation
horizontal integration

Difficulty: (1) Knowledge: (F) Page: 465


46. As a type of intra-firm sourcing, _____________________ is when a company
procures major components in-house by producing them domestically.
a.
b.
c.
d.
e.

domestic in-house sourcing


offshore subsidiary sourcing
domestic purchasing arrangement
offshore outsourcing (offshore sourcing)
export management company

Difficulty: (2) Knowledge: (F) Page: 465


47. As a type of intra-firm sourcing, _____________________ is when a company
procures major components from its foreign subsidiary.
a. domestic in-house sourcing
b. offshore subsidiary sourcing
c. domestic purchasing arrangement

d. offshore outsourcing (offshore sourcing)


e. export management company
Difficulty: (1) Knowledge: (F) Page: 465
48. As a type of outsourcing, _____________________ is when a company
buys major components from independent suppliers at home.
a.
b.
c.
d.
e.

domestic in-house sourcing


offshore subsidiary sourcing
a domestic purchasing arrangement
offshore outsourcing (offshore sourcing)
export management company

Difficulty: (2) Knowledge: (F) Pages: 466


49. As a type of outsourcing, _____________________ is when a company
buys major components from independent suppliers overseas.
a.
b.
c.
d.
e.

domestic in-house sourcing


offshore subsidiary sourcing
a domestic purchasing arrangement
offshore outsourcing (offshore sourcing)
export management company

Difficulty: (1) Knowledge: (F) Page: 466


50. Covisint is probably the largest global online ________ procurement system.
a.
b.
c.
d.
e.

C2B
B2B
B2G
C2C
B2C

Difficulty: (2) Knowledge: (F) Page: 466-67


51. Typical B2B procurement systems rely on _______________ that emphasize the
lowest bids on a global basis.
a.
b.
c.
d.
e.

promotions
selling
manufacturing
auctions
production

Difficulty: (2) Knowledge: (F) Page: 469


52. Companies that outsource to the extent that they adopt a designer role in
global competition (i.e., offer innovations in product design without investing

in manufacturing process technology) have been described by some as being:


a.
b.
c.
d.
e.

vertical corporations.
horizontal corporations.
hollow corporations.
supply and demand corporations.
monopoly manufacturers.

Difficulty: (3) Knowledge: (F) Page: 468


53. A __________________ is an area that is located within a nation, but is
considered
outside of the customs territory of the nation.
a.
b.
c.
d.
e.

border zone
red zone district
warehouse district
dock facility
free trade zone

Difficulty: (1) Knowledge: (F) Page: 472


54. In the United States, a free trade zone is officially called a __________________.
a.
b.
c.
d.
e.

Maquiladora operation
border zone
red zone district
Foreign Trade Zone
Channel Zone

Difficulty: (2) Knowledge: (F) Page: 473


55. All of the following are benefits of using a free trade zone EXCEPT:
a.
b.
c.
d.
e.

duty deferral and elimination.


lower tariff rates.
no government interference in intelligence gathering activities.
exchange rate hedging.
Made in U.S.A. designation.

Difficulty: (1) Knowledge: (F) Page: 473, Exhibit 15-4


56. Duty deferral and elimination, lower tariff rates, exchange rate hedging, and a
Made in U.S.A. designation are all benefits of using a __________________.
a.
b.
c.
d.
e.

Maquiladora operation
border zone
red zone district
Foreign Trade Zone
Channel Zone

Difficulty: (2) Knowledge: (F) Page: 473, Exhibit 15-4


57. At the macro-level, benefits of using a free trade zone include all of the following
EXCEPT:
a. increased investment and employment.
b. more revenue through increased local taxes.
c. obtaining a beachhead in a foreign market without being in the mainstream
distribution process.
d. the ability to reassemble large shipments into different groupings.
e. no duties on labor.
Difficulty: (3) Knowledge: (A) Page: 473, Exhibit 15-4
58. Japan has established trade zones to increase __________________.
a.
b.
c.
d.
e.

maquiladora operations
assembly operations
imports
exports
none of the above

Difficulty: (3) Knowledge: (F) Page: 474


59. Various governments have established ____________________________.
a. export processing circles.
b. export processing groups.
c. export processing clans.
d. export processing networks.
e. export processing zones.
Difficulty: (3) Knowledge: (A) Page: 474
60. _________________________ usually provide tax- and duty-free treatment of
production facilities whose output is meant to be exported.
a.
b.
c.
d.
e.

Gray products processing zones


High-tech processing zones
Maquiladora processing zones
Export processing zones
Import processing zones

Difficulty: (2) Knowledge: (F) Page: 474


61. To show the increasing power of retailers in todays business world, the traditional
supply chain that was once powered by the manufacturer has been turned around.
Distribution today is characterized as being ____________ in nature.

a.
b.
c.
d.
e.

push
pull
vertical shove
horizontal slant
parallelism

Difficulty: (2) Knowledge: (F) Page: 480


62. Which of the following should a company NOT do with a channel partner?
a.
b.
c.
d.
e.

seek companies with good contacts


treat companies as short-term partners
withhold information from the distribution partner
allow the distribution partner to make marketing strategy decisions
all of the above

Difficulty: (3) Knowledge: (A) Page: 476-77


63. If a retail firm sells a product under its own store name it is called a:
a.
b.
c.
d.
e.

unique brand.
vertical brand.
horizontal brand.
store brand or private label.
hybrid label.

Difficulty: (1) Knowledge: (F) Page: 479


64. When Heinz sells its soup products to grocery store chains and allows them to
put their own store names on the product, the product is being sold as a:
a.
b.
c.
d.
e.

domestic brand.
national brand.
manufacturers brand.
store brand or private label.
service label.

Difficulty: (1) Knowledge: (A) Page: 479


65. In which of the following countries are store brands marginal players because of
loyalty to national or manufacturer brands?
a.
b.
c.
d.
e.

United States.
United Kingdom.
Japan.
France.
Canada.

Difficulty: (3) Knowledge: (A) Page: 480

66. All of the following are factors that have explained the success of private labels
in recent years EXCEPT:
a.
b.
c.
d.
e.

better packaging decoration.


improved quality of private-label products.
development of premium private-label brands.
expansion into new product categories.
internationalization of retail chains.

Difficulty: (2) Knowledge: (F) Page: 480


67. As a branding strategy, _______________ is especially attractive to MNCs that
face well-entrenched incumbent brands in the markets they plan to enter. (This
overcomes the problem of shelf-space denial.)
a.
b.
c.
d.
e.

domestic branding
national branding
manufacturers branding
store branding or private labeling
service labeling

Difficulty: (1) Knowledge: (F) Page: 480


68. The traditional supply chain powered by manufacturer push is becoming a:
a.
b.
c.
d.
e.

demand chain driven by logistics.


demand chain driven by advertising.
service chain driven by customer service.
service chain driven by response time.
demand chain driven by customer pull.

Difficulty: (1) Knowledge: (F) Page: 480


69. With respect to strategies available to the business unit, a ____________ strategy
appears to be more effective than a __________ strategy in emerging markets.
a.
b.
c.
d.
e.

service/product
product/service
push/pull
pull/push
pull/parallel

Difficulty: (2) Knowledge: (A) Page: 480


70. On-time retail information management carries two distinct advantages which are:
a.
b.
c.
d.

reduced inventory and accounting information at the retail level.


reduced inventory and market information at the retail level.
reduced inventory and manufacturing information at the retail level.
reduced inventory and production information at the retail level.

e. reduced inventory and outsourcing information at the retail level.


Difficulty: (3) Knowledge: (A) Page: 481
71. Industrialized countries tend to have a lower distribution outlet density than the
_______________________.
a.
b.
c.
d.
e.

regional markets
global markets
world markets
submerging markets
emerging markets

Difficulty: (2) Knowledge: (A) Page: 482


72. The Large Scale Retail Store Law (LSRSL) in _______________ helped to
protect
small retail stores.
a.
b.
c.
d.
e.

Singapore
Pakistan
Indonesia
Japan
South Korea

Difficulty: (2) Knowledge: (A) Page: 483


73. In _________________, store hours are limited and stores do not open on
Sundays.
a.
b.
c.
d.
e.

Germany
USA
Mexico
Brazil
UK

Difficulty: (2) Knowledge: (A) Page: 485


74. _______________ is the fastest growing Internet market in Asia.
a.
b.
c.
d.
e.

China
India
Indonesia
Hong Kong
South Korea

Difficulty: (2) Knowledge: (A) Page: 486


75. The Mexican version of the free trade zone is called the _________________.

a.
b.
c.
d.
e.

Maquiladora operation or industry


border zone
red zone district
Foreign Trade Zone
Channel Zone

Difficulty: (2) Knowledge: (F) Page: 489


76. In Mexico another name for the Maquiladora operation or industry is the:
a.
b.
c.
d.
e.

in-bond or twin-plant program.


bonded warehouse.
border zone.
cross border zone.
indentured zone.

Difficulty: (2) Knowledge: (F) Page: 489


77. In Mexico, the free trade zone program (also called the in-bond or twin-plant
program) is called the _____________________________.
a.
b.
c.
d.
e.

Maquiladora operation or industry


border zone
red zone district
Foreign Trade Zone
Channel Zone

Difficulty: (2) Knowledge: (A) Page: 489


78. Mexico allows duty-free imports of machinery and equipment for manufacturing
as well as components for further processing and assembly, as long as at least 80
percent of the plants output is exported. This is called a _______________
industry.
a.
b.
c.
d.
e.

moonlighting
cross border
gray market
TRW
Maquiladora

Difficulty: (2) Knowledge: (A) Page: 489


79. Mexicos border industrialization program was developed in __________.
a.
b.
c.
d.
e.

1945
1955
1965
1975
1985

Difficulty: (3) Knowledge: (F) Page: 489


80. Mexico permits _______ percent foreign ownership of the maquiladora plants in
the
designated maquiladora zone.
a.
b.
c.
d.
e.

25
50
75
90
100

Difficulty: (2) Knowledge: (F) Page: 489


81. Mexico is an attractive location for ____________ intensive assembly.
a.
b.
c.
d.
e.

capital
labor
technology
repair
service

Difficulty: (1) Knowledge: (A) Page: 489


True/False

Short Answer

82. When Peter Drucker described logistics as the darkest continent of business he
probably meant it is was ________________________.
83. In 2008, in the United States, total logistical cost is estimated to be about 20
percent of the countrys GDP.
84. Global logistics encompasses materials management only.
Difficulty: (1) Knowledge: (F) Page: 453
85. _________________ transportation refers to the seamless transfer of goods from
one
mode of transport to another and vice versa without the hassle of unpacking and
repackaging.
86. Materials management does not include the inflow of raw material, parts, and
supplies through the firm.
Difficulty: (2) Knowledge: (F) Page: 453
87. ________________ is defined as the design and management of a system that

directs and controls the flows of materials into, through and out of the firm across
national boundaries to achieve its corporate objectives at a minimum total cost.
88. Global logistics, unlike domestic logistics, does not put emphasis on physical
distribution.
Difficulty: (2) Knowledge: (F) Page: 453
89. ___________________ refers to the inflow of raw materials, parts, and supplies
in and through the firm.
90. ___________________ refers to the movement of the firms finished products
to its customers, consisting of transportation, warehousing, inventory,
customer service/order entry, and administration.
91. Materials management refers to the movement of the firms finished products
to its customers, consisting of transportation, warehousing, inventory,
customer service/order entry, and administration.
92. Physical distribution refers to the inflow of raw materials, parts, and supplies
in and through the firm.
93. The bulk of international trade is handled by airlines.
94. The inventory-to-volume ratio is determined by how much value is added to
materials
used in the product.
95. Air freight represents more than 40 percent of the value of goods shipped in
international commerce.
96. Ocean shipping is used extensively for the transport of heavy perishable cargoes.
97. In intermodal transportation, only one type of transportation is employed.
98. Rationalization means reducing resources to achieve more efficient and costeffective operations.
Difficulty: (1) Knowledge: (A) Page: 459

99. ____________________ refers to coordinating production and distribution


across geographic boundaries.
100. In global logistics and distribution, 3PL stands for:
101. A ___________________ is an area that is located within a nation, but is
considered outside of the customs territory of the nation.
102. The Mexican version of a free trade zone is called the ___________________.
103. Wal-Mart is the largest retailer in the world.
104. LSRSL stands for:
105. In China, basket shopping is still considered the norm for most consumers.
Difficulty: (2) Knowledge: (A) Page: 485
106. An agent intermediary takes title to goods.
Difficulty: (1) Knowledge: (F) Page: 475
107. A merchant intermediary does not take title to goods.
Difficulty: (1) Knowledge: (F) Page: 475
108. In Japan, private brands are very popular.
Difficulty: (2) Knowledge: (F) Page: 480
Essay
109. Explain what the terms global logistics, materials management, and physical
distribution mean. Describe the various operations and procedures encompassed by
these terms.

110. The global logistics manager must understand the specific properties of the
different modes of transportation in order to use them optimally. What are the most
important factors in determining an optimal mode of transportation? List and briefly
describe each of the factors.

111. Explain the role that so called third-party logistics (3PL) companies play in
contemporary international trade. Cite the advantages of using third-party companies
in the trade process.
112. Explain the role of the free trade zone in modern trade. Explain the free trade
zones relationship and benefit to global logistics.
113. In which parts of the world are private labels popular? Why? What factors
might explain this?

114. Explain the concept and function of the Maquiladora operation or industry in
Mexico.

Chapter 16
Multiple Choice
1. ___________________ is the most popular way for many companies to become
international.
a.
b.
c.
d.
e.

Exporting
Importing
Licensing
Contract manufacturing
None of the above

Difficulty: (2) Knowledge: (F) Page: 491


2. _______________ is usually the first entry mode of entry used by many
companies.
a.
b.
c.
d.
e.

Exporting
Importing
Licensing
Contract manufacturing
None of the above

Difficulty: (1) Knowledge: (F) Page: 491


3. In 2011, an estimated _______________ American jobs depended on international
trade and export expansion.

a.
b.
c.
d.
e.

1 million
8 million
10 million
15 million
20 million

Difficulty: (3) Knowledge: (F) Page: 492


4. In 2011, exports represented about __________ percent of the U.S. GDP.
a.
b.
c.
d.
e.

5 percent
8 percent
9 percent
10 percent
14 percent

Difficulty: (3) Knowledge: (F) Page: 492


5. For a firm beginning exports for the first time, the first step is to use available
___________________.
a.
b.
c.
d.
e.

primary data
secondary data
tertiary data
Internet data
intranet data

Difficulty: (2) Knowledge: (F) Page: 492


6. As an aid to expanding information about world trade, increasingly, international
marketing information is available in the form of ____________________.
a.
b.
c.
d.
e.

CD-ROMs
electronic encyclopedias
electronic databases
CIA reports
government intelligence reports

Difficulty: (2) Knowledge: (F) Page: 492


7. Which of the following countries is the largest participant in database growth?
a.
b.
c.
d.
e.

United Kingdom
Germany
Japan
France
United States

Difficulty: (1) Knowledge: (A) Page: 492

8. Approximately how many databases (that can be used to help with international
trade) are available online in the world?
a.
b.
c.
d.
e.

1,000
3,000
4,000
5,000
6,000

Difficulty: (3) Knowledge: (F) Page: 492


9. Conducting export research on China and Russia would best be done by:
a.
b.
c.
d.
e.

doing database research.


doing on-line searches.
doing field work.
using existing government facts and figures.
using data supplied by trade missions.

Difficulty: (2) Knowledge: (A) Page: 493


10. The identification of an appropriate overseas market and an appropriate segment
involves grouping by all of the following criteria EXCEPT:
a.
b.
c.
d.
e.

socioeconomic characteristics.
political and legal characteristics.
consumer variables.
service variables.
financial conditions.

Difficulty: (2) Knowledge: (F) Page: 493


11. When attempting to identify an appropriate overseas market and an appropriate
segment, socioeconomic variables should be considered. All of the following
are socioeconomic variables that should be considered EXCEPT:
a.
b.
c.
d.
e.

demographics.
economic.
geographic.
econometrics.
climatic characteristics.

Difficulty: (2) Knowledge: (F) Page: 493


12. When attempting to identify an appropriate overseas market and an appropriate
segment, consumer variables should be considered. All of the following
are consumer variables that should be considered EXCEPT:
a. service quality.

b.
c.
d.
e.

purchase frequency.
lifestyle.
preferences.
purchase behavior.

Difficulty: (2) Knowledge: (F) Page: 493


13. To get an idea of market segments in a foreign country, the marketer can first
group regions within countries across the world by macroeconomic variables.
An illustration of one of these macroeconomic variables would be:
a.
b.
c.
d.
e.

level of industrial development.


purchase preferences.
services sought.
lifestyles.
purchase frequency.

Difficulty: (2) Knowledge: (A) Page: 493


14. Data for grouping along macroeconomic criteria are available from international
agencies such as:
a.
b.
c.
d.
e.

the International Court of Justice


the World Court.
the World Bank.
the National Geographic Society.
the World Economic Council.

Difficulty: (2) Knowledge: (F) Page: 494


15. The easiest product to sell abroad with respect to logistics is a(n) _____________
product.
a.
b.
c.
d.
e.

differentiated
semi-standardized
clustered
gray market
standardized

Difficulty: (1) Knowledge: (F) Page: 494


16. _________________ exporting involves the use of independent U.S. middlemen
to market the firms products overseas.
a.
b.
c.
d.
e.

Direct
Indirect
Parallel
Synchronized
Dual

Difficulty: (2) Knowledge: (F) Page: 495


17. When independent U.S. middlemen market a firms goods in an overseas market,
they are called ______________________. They market through their own
network
of foreign distributors and their own sales force.
a.
b.
c.
d.
e.

exporters
export specialists
export representatives
distribution specialists
parallel exporters

Difficulty: (2) Knowledge: (F) Page: 495


18. The CEM stands for:
a.
b.
c.
d.
e.

cash export manager.


customs export manager.
charismatic export manager.
combination export manager.
collective export manager.

Difficulty: (2) Knowledge: (F) Page: 495


19. The _________________ acts as the export department to a small exporter or a
large producer with small overseas sales.
a.
b.
c.
d.
e.

combination export manager (CEM)


export merchant
export commission house
piggyback exporter
trading company

Difficulty: (2) Knowledge: (F) Page: 495


20. The Japanese trading companies are known as:
a.
b.
c.
d.
e.

keiretsus
chaebols
sogonets
sogoshoshas
akimonos

Difficulty: (3) Knowledge: (F) Page: 495


21. In order to expand their exporting activities, many Japanese firms rely on giant
general trading companies known as _________________________.
a. keiretsus

b.
c.
d.
e.

chaebols
sogonets
sogoshoshas
akimonos

Difficulty: (3) Knowledge: (F) Page: 495


22. All of the following are common types of export representatives in the United
States EXCEPT:
a.
b.
c.
d.
e.

combination export manager (CEM).


export merchant.
export commission house.
export consortium.
the trading company.

Difficulty: (3) Knowledge: (F) Page: 495


23. The _________________ buys and sells on their own accounts and assumes all
the
responsibilities of exporting a product. Manufacturers do not control sales
activities.
a.
b.
c.
d.
e.

combination export manager (CEM)


export merchant
export commission house
piggyback exporter
trading company

Difficulty: (2) Knowledge: (F) Page: 495


24. The _____________________ is someone who brings together an overseas buyer
and a U.S. manufacturer for the purpose of an export sale and earns a commission
for establishing a contact that results in a sale.
a.
b.
c.
d.
e.

combination export manager (CEM)


export broker
export commission house
piggyback exporter
trading company

Difficulty: (2) Knowledge: (F) Page: 495


25. A(n) ____________________ places orders on behalf of its foreign clients
with U.S. manufacturers and acts as a finder for its client to get the best buy.
a.
b.
c.
d.

combination export manager (CEM)


export broker
export commission house
piggyback exporter

e. trading company
Difficulty: (2) Knowledge: (F) Page: 495
26. ___________________ are large, foreign organizations engaged in exporting and
importing. They buy on their own account and export the goods to their home
country.
a.
b.
c.
d.
e.

Combination export manager (CEM)


Export broker
Export commission house
Piggyback exporter
Trading companies

Difficulty: (2) Knowledge: (F) Page: 495


27. A(n) ___________________ refers to the practice where U.S. firms that have an
established export department assume, under a cooperative agreement, the
responsibility of exporting the products of other U.S. companies.
a.
b.
c.
d.
e.

combination export manager (CEM)


export broker
export commission house
piggyback exporter
trading company

Difficulty: (2) Knowledge: (F) Page: 496


28. Which of the following is an example of a large trading company?
a.
b.
c.
d.
e.

IBM.
General Motors.
Mitsui.
Volvo.
Wal-Mart.

Difficulty: (1) Knowledge: (A) Page: 496


29. _________________ exporting occurs when a manufacturer or exporter sells
directly
to an importer or buyer located in a foreign market.
a.
b.
c.
d.
e.

Direct
Indirect
Parallel
Synchronized
Dual

Difficulty: (2) Knowledge: (F) Page: 496

30. With respect to direct exporting, the primary difference between a foreign sales
subsidiary and a foreign sales branch is that the foreign sales branch:
a.
b.
c.
d.
e.

is larger.
is smaller.
is not a separate legal entity.
uses home country managers.
does not pay taxes.

Difficulty: (2) Knowledge: (A) Page: 497


31. The following characteristics (high set-up costs, higher credit risks, and higher
customer loyalty) apply to which of the following forms of exporting?
a.
b.
c.
d.
e.

direct
indirect
parallel
synchronized
dual

Difficulty: (2) Knowledge: (A) Page: 497, Exhibit 16-2


32. In the U.S., ______________________ allows exporters to file export information
at
no cost over the Internet.
a.
b.
c.
d.
e.

Auxiliary Export System


Amended Export System
Automated Export System
Alliance Export System
none of the above

Difficulty: (3) Knowledge: (F) Page: 497


33. All exports from the United States (except to Canada and U.S. territories) require
a(n) _____________________.
a.
b.
c.
d.
e.

letter of credit.
letter of ownership.
letter for transportation permission.
export license.
social security number.

Difficulty: (2) Knowledge: (A) Page: 498


34. The second pillar of the export transaction is the logistics of the export
transaction.
Included in this transaction are all of the following EXCEPT:
a. a bill of lading.

b.
c.
d.
e.

the terms of sale.


the payment.
a dispute mechanism.
monitoring of the shipment and delivery of the goods.

Difficulty: (3) Knowledge: (F) Page: 499


35. A(n) _________________________ is a contract between the exporter and the
shipper indicating that the shipper has accepted responsibility for the goods and
will provide transportation in return for payment.
a.
b.
c.
d.
e.

bill of disclosure
term of sale
payment statement
transportation invoice
bill of lading

Difficulty: (2) Knowledge: (F) Page: 499


36. A(n) _______________________ is a bill for the goods stating basic information
about the transaction, including a description of the merchandise, total cost of the
goods sold, addresses of the buyer and seller, and delivery and payment.
a.
b.
c.
d.
e.

bill of disclosure
term of sale
payment statement
commercial invoice
bill of lading

Difficulty: (2) Knowledge: (F) Page: 499


37. When the exporter quotes a price for the goods, including charges for delivery
of the goods alongside a vessel at a port (the seller covers all costs of unloading
and
wharfage at the shipment port and the buyer covers all other charges to get the
goods
to the buyer), this form of terms of shipment is called:
a.
b.
c.
d.
e.

ex-works.
free alongside ship (FAS).
free on board (FOB).
cost and freight (CFR).
Cost, Insurance, and Freight (CIF).

Difficulty: (3) Knowledge: (A) Page: 501, Exhibit 16-4


38. INCOTERMS 2000 which went into effect from January 1, 2000 and is an
acronym
for ____________________________, are the internationally accepted standard
definitions for the terms of sale by the International Chamber of Commerce.

a.
b.
c.
d.
e.

Industrial Commercial Terms


Insurance Commercial Terms
Irrevocable Commercial Terms
International Commercial Terms
none of the above

Difficulty: (3) Knowledge: (F) Page: 501


39. When the exporter quotes a price for the goods, including charges for delivery
of the goods alongside a vessel at a port (the seller covers all costs of unloading
and
wharfage plus loading the goods on the vessel and the buyer covers all other
charges
to get the goods to the buyer), this form of terms of shipment is called:
a.
b.
c.
d.
e.

ex-works.
free alongside ship (FAS).
free on board (FOB).
cost and freight (CFR).
Cost, Insurance, and Freight (CIF).

Difficulty: (3) Knowledge: (A) Page: 501, Exhibit 16-4


40. All of the following are possible payment terms for goods exported to another
nation
EXCEPT:
a.
b.
c.
d.
e.

advance payment
third party draft.
confirmed irrevocable letter of credit.
unconfirmed irrevocable letter of credit
open account

Difficulty: (3) Knowledge: (F) Page: 502, Exhibit 16-5


41. A(n) __________________ is a payment form where a shipment is held by the
importer until the merchandise has been sold, at which time payment is made to
the
exporter.
a.
b.
c.
d.
e.

cash with order


confirmed irrevocable letter of credit
sight draft
time draft
consignment

Difficulty: (1) Knowledge: (F) Page: 502, Exhibit 16-5

42. A(n) _______________________ is a payment form where a cash payment occurs


when the order is placed.
a.
b.
c.
d.
e.

cash with order


confirmed irrevocable letter of credit
sight draft
time draft
consignment

Difficulty: (1) Knowledge: (F) Page: 502, Exhibit 16-5


43. A(n) ________________________ is a payment form where a draft is so drawn as
to
be payable on presentation to the drawee (usually the buyer).
a.
b.
c.
d.
e.

cash with order


third party draft
confirmed irrevocable letter of credit
sight draft
time draft

Difficulty: (2) Knowledge: (F) Page: 502, Exhibit 16-5


44. The terms of payment between the exporter and importer are a matter of
negotiation
and depend on a variety of factors. All of the following might be on that list of
factors EXCEPT:
a.
b.
c.
d.
e.

the buyers credit standing.


the sellers reputation.
the amount of the sale transaction.
the risks associated with the type of merchandise to be shipped.
the usual practice in the trade.

Difficulty: (2) Knowledge: (F) Page: 500


45. _______________ risk is the risk that the importer will not pay or fail to pay on
the
agreed terms.
a.
b.
c.
d.
e.

Credit
Exchange
Transfer
Importer
Exporter

Difficulty: (1) Knowledge: (F) Page: 500


46. ___________________ risk exists when the sale is in the importers currency and
that currency depreciates in terms of the dollar, leaving the exporter with a lesser

number of dollars.
a.
b.
c.
d.
e.

Foreign credit
Foreign exchange
Foreign transfer
Foreign payment
Foreign delivery

Difficulty: (1) Knowledge: (F) Page: 500


47. ___________________ risk refers to the chances that payment will not be made
due to the importers inability to obtain U.S. dollars and transfer them to the
exporter.
a.
b.
c.
d.
e.

Credit
Exchange
Transfer
Importer
Exporter

Difficulty: (1) Knowledge: (F) Page: 500


48. A confirmed irrevocable letter of credit is issued by the ____________ bank and
confirmed by a bank usually in the ____________ country.
a.
b.
c.
d.
e.

importers, exporters
exporters, importers
investment, exporters
governments, exporters
none of the above

Difficulty: (3) Knowledge: (F) Page: 502, Exhibit 16-5


49. A shipment that is held by the importer until the merchandise has been sold is
called:
a.
b.
c.
d.
e.

advance payment.
confirmed irrevocable letter of credit.
unconfirmed irrevocable letter of credit.
open account.
consignment.

Difficulty: (2) Knowledge: (F) Page: 502, Exhibit 16-5


50. The Japan External Trade Organization (JETRO) which helps foreign businesses
to
export to Japan is affiliated with Japans _____________________________.
a. Ministry of Business, Trade, and Industry
b. Ministry of Economy, Trade, and Industry

c. Ministry of Economy, Trade, and Technology


d. Ministry of Economy, Trade, and Logistics
e. Ministry of Economy, Trade, and Agriculture
Difficulty: (3) Knowledge: (F) Page: 504
51. The Ex-Im Bank is described as being a:
a. bank that lends exclusively to importers.
b. new name for the old World Bank.
c. federally supported bank whose mission is to thwart communism by making
loans to anti-communist nations and exporters.
d. federally supported bank whose mission is to support exporters with necessary
credit.
e. bank which is not in existence yet. The concept still awaits Congressional
approval.
Difficulty: (2) Knowledge: (F) Page: 505
52. The main emphasis of the Ex-Im Banks lending practices today is in the area of:
a.
b.
c.
d.
e.

loans to Japan.
loans to Taiwan.
loans to Mexico.
loans for prior bankrupt countries.
project finance (such as infrastructure projects---roads, dams, etc.).

Difficulty: (2) Knowledge: (A) Page: 505


53. Ex-Im Bank is not an aid or development agency, but a_____________________
corporation.
a.
b.
c.
d.
e.

state
domestic
regional
private
government

Difficulty: (2) Knowledge: (A) Page: 505


54. Ex-Im Bank has two major programs in place which include:
a.
b.
c.
d.
e.

Project Finance Division and Working Capital Program.


Project Finance Division and Working Capital Business Program.
Project Finance Division and Working Capital Export Program.
Project Finance Division and Working Capital Guarantee Program.
Project Finance Division and Working Capital Infrastructure Program.

Difficulty: (1) Knowledge: (A) Page: 505

55. One of the biggest advantages the United States has in importing is that U.S.
companies can:
a.
b.
c.
d.
e.

order unlimited amounts of goods.


always sell what they order abroad.
be assured that the government will support their trade efforts.
pay in U.S. dollars--a currency accepted everywhere.
always turn a profit with the goods they buy because of market demand.

Difficulty: (3) Knowledge: (A) Page: 508


56. Since most world trade is done in dollars, the U.S. importer does not usually need
to
_____________ foreign exchange transactions.
a.
b.
c.
d.
e.

capitalize
hedge
capitate
survey
monitor

Difficulty: (1) Knowledge: (F) Page: 508


57. All of the following are activities that an importer would normally go through in
order to complete the purchase process. Which of the items listed below does not
logically fit?
a.
b.
c.
d.
e.

Find a bank in the exporters country to handle financial transactions.


Establish a letter of credit to smooth the process.
Decide on the mode of transfer of goods.
Always use an export or import middleman to expedite the process.
Check compliance with national laws.

Difficulty: (2) Knowledge: (A) Page: 510


58. When a shipment reaches the United States, the consignee (usually the importer)
will
file ______________ with the port director at the port of entry.
a.
b.
c.
d.
e.

visas
product passports
bills of landing
bills of shipping
entry documents

Difficulty: (2) Knowledge: (F) Page: 510


59. With respect to shipments entering the United States, a(n) __________ is a
guarantee
by someone that the duties and any potential penalties will be paid to the customs

of the importing country.


a.
b.
c.
d.
e.

line of credit
transfer
bond
permit
tariff

Difficulty: (1) Knowledge: (F) Page: 510


60. Merchandise arriving from Canada and Mexico, trade fair goods, and perishable
goods and shipments assigned to the U.S. government almost always utilize the
____________________ to enable fast delivery after arrival.
a.
b.
c.
d.
e.

quick release form


quick permit form
Customs form 7200
Special Permit for Immediate Delivery
block and load release form

Difficulty: (2) Knowledge: (A) Page: 511


61. If goods enter a ________________, they can be re-exported anytime (up to five
years) without payment of duty.
a.
b.
c.
d.
e.

holding pen
corporate security zone
bonded warehouse
wharf zone
parallel import zone

Difficulty: (2) Knowledge: (F) Page: 511


62. When import duties are paid, the _________________ duty is a percentage of the
value of the merchandise.
a.
b.
c.
d.
e.

ad valorem
specific
compound
nontariff
import

Difficulty: (1) Knowledge: (F) Page: 511


63. When import duties are paid, the _________________ duty is a specified amount
of the per unit weight or other quantity of the merchandise.
a. ad valorem
b. specific
c. compound

d. nontariff
e. import
Difficulty: (2) Knowledge: (F) Page: 511
64. When import duties are paid, the _________________ duty is a combination of a
specified amount of the per unit weight or other quantity of the merchandise plus
an ad valorem rate.
a.
b.
c.
d.
e.

bonded
corkage
compound
nontariff
import

Difficulty: (1) Knowledge: (F) Page: 511


65. _________________ duties are assessed on imported merchandise sold to
importers in the United States at a price that is less than the fair market value.
a.
b.
c.
d.
e.

Ad valorem
Specific
Compound
Nontariff
Antidumping

Difficulty: (1) Knowledge: (F) Page: 511


66. ______________________ duties are duties that are assessed to counter the
effects of subsidies provided by foreign governments to goods that are exported
to the United States.
a.
b.
c.
d.
e.

Ad valorem
Specific
Compound
Countervailing
Antidumping

Difficulty: (1) Knowledge: (F) Page: 511


67. ________________ channels refer to the legal export/import transaction involving
genuine products into a country by intermediaries other than the authorized
distributors.
a.
b.
c.
d.
e.

Black market
Gray market
Positioned
Zoned
Red zone

Difficulty: (2) Knowledge: (F) Page: 512


68. Another name for gray market channels is _________________.
a.
b.
c.
d.
e.

positioned imports
concentric marketing
strategic entry imports
parallel imports
sidebar hedging

Difficulty: (2) Knowledge: (A) Page: 512


69. Brand reputation is a critical element in _________________ products.
a.
b.
c.
d.
e.

gray
black
furniture
smuggled
none of the above

Difficulty: (1) Knowledge: (A) Page: 512


70. All of the following conditions lend to the development of gray markets EXCEPT:
a.
b.
c.
d.
e.

currency fluctuations.
differences in market demand.
legal differences.
opportunistic behavior.
foreign trade outlets.

Difficulty: (3) Knowledge: (A) Page: 513


True/False

Short Answer

71. Exporting is the first mode of foreign entry used by many companies.
Difficulty: (1) Knowledge: (F) Page: 491
72. Exports represent about 4 percent of the U.S. gross domestic product (GDP).
Difficulty: (3)Knowledge: (F) Page: 492
73. For a firm beginning exports for the first time, the first step is to use available
primary data.
Difficulty: (1) Knowledge: (F) Page: 492
74. The World Bank publishes the World Development Report.

Difficulty: (2) Knowledge: (F) Page: 494


75. A standardized product is not the easiest to sell abroad.
Difficulty: (1) Knowledge: (F) Page: 494
76. _________________ exporting involves using independent U.S. middlemen to
market the firms products overseas.
77. The combination export manager (CEM) acts as the import department to a small
importer.
Difficulty: (2) Knowledge: (F) Page: 495
78. Piggyback exporting refers to the practice where U.S. firms that have an
established
export department assume, under a cooperative agreement, the responsibility of
exporting the products of other U.S. companies.
Difficulty: (2) Knowledge: (F) Page: 495
79. In the U.S., the Automated Export System (AES) enables exporters to file import
information at no cost over the Internet.
Difficulty: (1) Knowledge: (F) Page: 497
80. Exports from the United States do not require an export license.
Difficulty: (1) Knowledge: (F) Page: 498
81. A bill of lading is a contract between the exporter and the shipper indicating that
the
shipper has accepted responsibility for the goods and will provide transportation in
return for payment.
Difficulty: (1) Knowledge: (F) Page: 499
82. INCOTERMS is an acronym for _____________________________________.
83. FOB is an acronym for ______________________.
84. Exchange risk is the risk that the importer will not pay or fail to pay on the agreed
terms.
Difficulty: (2) Knowledge: (F) Page: 502
85. A confirmed irrevocable letter of credit is issued by the importers bank and
confirmed by a bank usually in the exporters country.

Difficulty: (3) Knowledge: (F) Page: 502


86. The Japan External Trade Organization (JETRO) is affiliated with the U.S.
department of Commerce.
Difficulty: (1) Knowledge: (F) Page: 504
87. The World Bank is a federally supported bank whose mission is to support the ExIm
Bank.
Difficulty: (1) Knowledge: (F) Page: 505
88. The American Export Trading Company act was passed in 1982.
Difficulty: (2) Knowledge: (F) Page: 506
89. More than 90 percent of the worlds trade is denominated in U.S. dollars.
Difficulty: (2) Knowledge: (F) Page: 508
90. With respect to importing fees, a(n) ______________ duty is a percentage of the
value of the merchandise.
91. Antidumping duties are assessed on imported merchandise sold to importers in
the United States at a price that is less than the fair market value.
Difficulty: (2) Knowledge: (F) Page: 511
92. Gray market channels are also known as parallel imports.
Difficulty: (1) Knowledge: (F) Page: 512
93. Three conditions are necessary for gray markets to develop. The conditions
include:
(a) Availability of products in other markets, (b) limited trade barriers, and (c)
_______________________.
94. Gray marketing is an illegal trade transaction.
95. Smuggling and black market activities are illegal global markets.

Essay

96. Indicate the factors that a prospective exporter might examine to choose an export
market.
97. Describe the direct and indirect channels of distribution that are available to
exporters. As part of the description process, indicate any conditions or advantages
that might be present in these channels.
98. Pick three (3) of the options available to exporters when it comes to terms of
payment. Explain each of the options available based on your choice.
99. Describe the role the U.S. government plays in maintaining and fostering export
activities. Demonstrate this role with specific examples of activities that the
government might undertake.
100. Describe gray markets. Explain how they develop. Describe your feelings about
buying from a gray market.
Chapter 17
Multiple Choice
1. The capstone of a companys global marketing activities is its
____________________________.
a.
b.
c.
d.
e.

strategic marketing plan.


strategic marketing design.
strategic marketing circle.
strategic marketing products.
strategic marketing processes.

Difficulty: (2) Knowledge: (F) Page: 575


2. The content of a global strategic marketing plan covers the following four areas
EXCEPT:
a.
b.
c.
d.
e.

a market situation analysis.


objectives.
strategies.
regional analysis.
action plans.

Difficulty: (2) Knowledge: (F) Page: 576


3. The first step of a global strategic marketing plan starts with:

a.
b.
c.
d.
e.

market situation analysis.


actions plans.
strategies.
global ranking.
objectives.

Difficulty: (1) Knowledge: (F) Page: 576


4. Top-down strategic planning is based on a _____________________ approach.
a.
b.
c.
d.
e.

decentralized
centralized
regional
globalized
local

Difficulty: (2) Knowledge: (F) Page: 576


5. A bottom-up planning approach starts with the ______________ subsidiaries.
a.
b.
c.
d.
e.

local
global
transnational
manufacturing
high-tech

Difficulty: (2) Knowledge: (F) Page: 576


6. A recent survey of large multinational corporations found that pure
______________
planning was most popular (used by 66 percent of the companies surveyed).
a.
b.
c.
d.
e.

bottom-up
top-down
strategic
long-term
short-term

Difficulty: (3) Knowledge: (F) Page: 576


7. A series of key criteria impact global organizations and their organizational
designs.
All of the following would be major environmental influences on the
organizational
design decision and structure EXCEPT:
a.
b.
c.
d.

competitive environment.
rate of environmental change.
product diversity.
regional trading blocs.

e. nature of customers.
Difficulty: (2) Knowledge: (F) Pages: 577-78
8. As international sales grow, the organizational structure will evolve to mirror the
growing importance of the firms _________________ activities.
a.
b.
c.
d.
e.

local
regional
global
strategic
manufacturing

Difficulty: (1) Knowledge: (F) Page: 578


9. A series of key criteria impact global organizations and their organizational designs.
All of the following would be major firm-specific factors on the organizational
design decision and structure EXCEPT:
a.
b.
c.
d.
e.

strategic importance of international business.


product diversity.
company heritage.
regional trading blocs.
quality of local managerial skills.

Difficulty: (3) Knowledge: (F) Page: 578


10. Which of the following would be considered a key environmental factor that
influences
global organization design decisions and structure?
a.
b.
c.
d.
e.

strategic importance of international business.


product diversity.
company heritage.
regional trading blocs.
quality of local managerial skills.

Difficulty: (3) Knowledge: (F) Page: 578


11. In the area of global organizational design, the major firm-specific factors include
the
following EXCEPT:
a.
b.
c.
d.
e.

local customers.
strategic importance of international business.
product diversity.
company heritage.
quality of local managerial skills.

Difficulty: (3) Knowledge: (A) Page: 578

12. Typically, when overseas sales account for a very small fraction of the companys
overall sales revenues, ____________________ can easily handle the firms
global activities.
a.
b.
c.
d.
e.

complex organizational structures


network organizational structures
simple organizational structures
a virtual system
a matrix system

Difficulty: (1) Knowledge: (A) Page: 579


13. All of the following are examples of the principal designs that firms can adopt to
organize their global activities EXCEPT:
a.
b.
c.
d.
e.

an international division.
a city division.
a product-based structure.
a geographic structure.
a matrix structure.

Difficulty: (2) Knowledge: (F) Pages: 578-79


14. Under the _____________________ design of global activities organization, the
company basically has two entities (the domestic division and the international
division).
a.
b.
c.
d.
e.

international division
cryptic division
product-based structure
geographic structure
matrix structure

Difficulty: (1) Knowledge: (A) Page: 578


15. Under the _____________________ design of global activities organization, the
company is organized along its various product divisions.
a.
b.
c.
d.
e.

international division
cryptic division
product-based structure
geographic structure
matrix structure

Difficulty: (1) Knowledge: (A) Page: 578


16. Under the _____________________ design of global activities organization, the
company is configured along areas such as countries, regions, or some
combination

of these two levels.


a.
b.
c.
d.
e.

international division
cryptic division
product-based structure
geographic structure
matrix structure

Difficulty: (1) Knowledge: (A) Page: 578


17. Under the _____________________ design of global activities organization, the
company uses the option of integrating two approaches so there is a dual chain of
command.
a.
b.
c.
d.
e.

international division
cryptic division
product-based structure
geographic structure
matrix structure

Difficulty: (1) Knowledge: (A) Page: 579


18. Most companies that engage in global marketing will initially start off by
establishing
a(n):
a.
b.
c.
d.
e.

city division.
country division.
international division.
export department.
export commission manager.

Difficulty: (2) Knowledge: (F) Page: 579


19. Which of the following organizational structures is most appropriate for the
company
whose product line is not too diverse and does not require a large amount of
adaptation to the local country needs?
a.
b.
c.
d.
e.

international division
cryptic division
global product division structure
geographic structure
matrix structure

Difficulty: (2) Knowledge: (A) Page: 579


20. Which of the following organizational structures is most appropriate for the hightech
company with highly complex products or MNCs with a very diversified product

portfolio?
a.
b.
c.
d.
e.

international division
cryptic division
global product division structure
geographic structure
matrix structure

Difficulty: (2) Knowledge: (A) Page: 579


21. If a high-tech company organizes itself by breaking into business networks, radio
communications, public telecommunications, components, and microwave
systems,
which of the following organizational structures would probably be in use?
a.
b.
c.
d.
e.

international division
global product division structure
global network solutions
geographic structure
matrix structure

Difficulty: (3) Knowledge: (A) Page: 579


22. All of the following are benefits of the global product division structure EXCEPT:
a.
b.
c.
d.
e.

large degree of flexibility in terms of cross-country resource allocation.


large degree of flexibility in terms of cross-country strategic planning.
scale economics.
facilitates a global focus.
easy communication and coordination among the various product divisions
without duplication of effort.

Difficulty: (2) Knowledge: (F) Page: 579


23. Which of the following areas are very difficult for a global product division to
accomplish (therefore, this area is a shortcoming)?
a.
b.
c.
d.
e.

large degree of flexibility in terms of cross-country resource allocation.


large degree of flexibility in terms of cross-country strategic planning.
scale economics.
facilitates a global focus.
easy communication and coordination among the various product divisions
without duplication of effort.

Difficulty: (3) Knowledge: (A) Page: 580


24. All of the following are problems with country-based subsidiaries EXCEPT:
a. they are too costly.
b. they have coordination problems with corporate headquarters.

c. cross-fertilization is hindered.
d. local market conditions go unnoticed.
e. a not-invented-here mentality exists.
Difficulty: (3) Knowledge: (F) Page: 580
25. All of the following are profiles that are suggested for the twenty-first century
country manager EXCEPT:
a.
b.
c.
d.
e.

the trader.
the power broker.
the builder.
the ambassador.
the cabinet member.

Difficulty: (3) Knowledge: (F) Pages: 581-82


26. As a profile of a twenty-first century country manager, _________________
establishes a beachhead in a new market or heads a recently acquired local
distributor.
They should have an entrepreneurial spirit.
a.
b.
c.
d.
e.

the trader
the representative
the builder
the ambassador
the cabinet member

Difficulty: (2) Knowledge: (A) Page: 581


27. As a profile of a twenty-first century country manager, _________________
is a team player with profit and loss responsibility for a small- to medium-sized
country. Team-manship is key here.
a. the trader
b. the representative
c. the builder
d. the ambassador
e. the cabinet member
Difficulty: (2) Knowledge: (A) Page: 582
28. As a profile of a twenty-first century country manager, _________________
develops local markets. They are entrepreneurs who are willing to be part of
regional
global strategy teams.
a.
b.
c.
d.

the trader
the representative
the builder
the ambassador

e. the cabinet member


Difficulty: (2) Knowledge: (A) Page: 582
29. As a profile of a twenty-first century country manager, _________________
is in charge of large and/or strategic markets. Prime responsibilities include
handling
government relations and integrating acquisitions and strategic alliances.
a.
b.
c.
d.
e.

the trader
the power broker
the builder
the ambassador
the cabinet member

Difficulty: (2) Knowledge: (A) Page: 582


30. With respect to regional structures, a recent survey found that all of the following
roles were performed EXCEPT:
a.
b.
c.
d.
e.

scouting.
liberating.
strategic simulation.
signaling commitment.
pooling resources.

Difficulty: (3) Knowledge: (F) Page: 583


31. The _________________ structure of organization explicitly recognizes the
multidimensional nature of global strategic decision making.
a.
b.
c.
d.
e.

international division
customer division
global product division
geographic
matrix

Difficulty: (2) Knowledge: (F) Page: 583


32. The primary advantages of the matrix structure for organizing is that they
represent
the growing complexities of the global market arena and:
a.
b.
c.
d.
e.

it fosters team spirit and cooperation among managers.


it secures higher profits.
it does not duplicate efforts.
it has smooth and accurate communications.
it has clear lines of communication with no confusion.

Difficulty: (2) Knowledge: (F) Page: 584

33. All of the following are considered to advantages of the matrix structure of
organizing EXCEPT:
a.
b.
c.
d.
e.

it fosters team spirit.


it fosters cooperation among managers.
it does not duplicate efforts.
it causes managers to think globally.
it causes managers to think globally but act locally.

Difficulty: (3) Knowledge: (F) Page: 584


34. Which of the following would be considered a disadvantage or drawback of the
matrix structure of organizing?
a.
b.
c.
d.
e.

it does not foster team spirit.


it does not foster cooperation among managers.
it duplicates efforts and can cause confusion.
it prohibits managers from thinking globally.
it causes managers to think locally only.

Difficulty: (2) Knowledge: (A) Page: 584


35. All of the following are disadvantages or drawbacks of the matrix structure of
organizing EXCEPT:
a.
b.
c.
d.
e.

dual reporting leads to conflicts and confusion.


dual profit responsibilities lead to conflicts and confusion.
bureaucratic bloat.
power clashes can occur.
managers think globally and act locally.

Difficulty: (1) Knowledge: (A) Page: 584


36. The __________________ is one solution that has been suggested to cope with
the
shortcomings associated with the classical hierarchical organization structures.
a.
b.
c.
d.
e.

international division
global network
global product division
geographic
matrix

Difficulty: (2) Knowledge: (F) Page: 585


37. The __________________ model is an attempt to reconcile the tension between
the need for local responsiveness and the wish to be an integrated whole.
a. international division

b.
c.
d.
e.

global network
global product division
geographic
matrix

Difficulty: (2) Knowledge: (F) Page: 585


38. Asea Brown Boveri (ABB), the Swiss-Swedish engineering company is an
example
of ______________________.
a.
b.
c.
d.
e.

local networking
regional networking
global networking
domestic networking
high-tech networking

Difficulty: (2) Knowledge: (F) Page: 586


39. The networked global organization is sometimes referred to as
_____________________.
a.
b.
c.
d.
e.

international.
multinational.
transnational.
local-national.
quasi-national.

Difficulty: (3) Knowledge: (A) Page: 585


40. In the area of global branding strategies, the following options are used
EXCEPT:
a.
b.
c.
d.
e.

global branding committee.


brand champion.
global brand manager.
informal, ad-hoc branding meetings.
network meetings.

Difficulty: (2) Knowledge: (F) Pages: 26-27


41. In the process of global brand management, if a company decides against a formal
structure, it might still find it worthwhile to have an informal mechanism. This
usually takes the form of a(n) ______________ branding meeting.
a.
b.
c.
d.

ad-hoc
temporary
longitudinal
outside

e. domestic
Difficulty: (2) Knowledge: (F) Page: 587
42. Global branding committees are usually made up of ________________
executives.
a.
b.
c.
d.
e.

matrix
network
medium-line
top-line
bottom-line

Difficulty: (2) Knowledge: (F) Page: 587


43. A ______________________ is a top-line executive (sometimes CEO) who
serves as the brands advocate.
a.
b.
c.
d.
e.

brand champion
product champion
local champion
corporate champion
high-tech champion

Difficulty: (1) Knowledge: (F) Page: 587


44. Global brand manager positions are created when top management lacks
___________________ expertise:
a.
b.
c.
d.
e.

high-tech
human resources
operational
manufacturing
marketing

Difficulty: (1) Knowledge: (F) Page: 587


45. Several management theorists have made an attempt to come up with the right
fit between the MNCs environment (internal and external) and the organizational
setup. One popular model examines the relationship between organizational
structure, _____________________, and the importance of foreign sales to the
company (as a share of total sales).
a.
b.
c.
d.
e.

product prices
domestic services
foreign product deliveries
foreign product diversity
purchasing habits

Difficulty: (3) Knowledge: (F) Page: 589, Exhibit 17-6


46. The Stopford and Wells model shows the relationship between the:
a. organizational structure, foreign product diversity and domestic sales.
b. organizational structure, foreign product diversity and local sales.
c. organizational structure, foreign product diversity and the importance of
foreign
sales.
d. organizational structure, foreign product diversity and regional sales.
e. organizational structure, foreign product diversity and high-tech sales.
Difficulty: (3) Knowledge: (F) Page: 589, Exhibit 17-6
47. According to the Stopford and Wells model, when companies first explore the
global
marketplace, they start off with a(n) ___________________________.
a.
b.
c.
d.
e.

local division
regional division
international division
global division
none of the above

Difficulty: (2) Knowledge: (F) Page: 589, Exhibit 17-6


48. According to the Stopford and Wells model, as foreign sales expand without an
increase in the firms foreign product assortment diversity, the company will most
likely switch to a __________________________ structure.
a.
b.
c.
d.
e.

host-country area
home-country area
global area
geographic area
local area

Difficulty: (3) Knowledge: (F) Page: 589, Exhibit 17-6


49. A(n) ____________________ can be described as being where country and
regional managers look at strategic issues from multiple perspectives.
a.
b.
c.
d.
e.

glocal mindset
global mindset
local mindset
regional mindset
country mindset

Difficulty: (1) Knowledge: (F) Page: 590

50. To make global marketing strategies work, companies need to establish a(n)
____________________.
a.
b.
c.
d.
e.

career system.
development system.
control system.
appeals system.
listening system.

Difficulty: (1) Knowledge: (F) Page: 590


51. The main purpose of a _____________ is to ensure that the behaviors of the
various parties within the organization are in line with the companys strategic
goals.
a.
b.
c.
d.
e.

career system
development system
control system
appeals system
listening system

Difficulty: (1) Knowledge: (F) Page: 590


52. All of the following are parts (or basic building blocks) of a formal control system
EXCEPT:
a.
b.
c.
d.
e.

the establishment of performance standards.


the measurement and evaluation of performance against standards.
the analysis and correction of deviation from standards.
perfection training.
none of the above.

Difficulty: (1) Knowledge: (F) Page: 590-91


53. Formal control systems are also called ________________ control systems.
a.
b.
c.
d.
e.

administrative
conductive
selective
bureaucratic
strategic

Difficulty: (2) Knowledge: (F) Page: 590


54. The first step in any control process should be to:
a.
b.
c.
d.

clearly establish rewards and punishments.


set standards (metrics).
set controls.
set monitoring mechanisms.

e. establish who the controller is.


Difficulty: (1) Knowledge: (F) Page: 590
55. The two types of standards are behavior and ____________________________.
a.
b.
c.
d.
e.

outcome-based.
performance-based.
intellectual-based.
strategic-based.
structural-based.

Difficulty: (2) Knowledge: (F) Page: 590


56. Although proper reward systems are crucial to motivate subsidiary managers, a
recent study has shown that the key role played is by the presence of
____________.
a.
b.
c.
d.
e.

strong leadership
bonuses
perks
due process
nondiscrimination

Difficulty: (3) Knowledge: (F) Page: 591


57. The two most common forms of informal control are human resource
development
and _________________.
a.
b.
c.
d.
e.

manufacturing
production
network structure
strategic control
corporate culture

Difficulty: (3) Knowledge: (F) Page: 591


58. Corporate cultures can be clan-based or ___________________.
a.
b.
c.
d.
e.

market based
leader based
employee based
symbol based
tradition based

Difficulty: (3) Knowledge: (F) Page: 591


59. The __________________ form of corporate culture is distinguished by an
embodiment of a long socialization process; strong, power norms; and a

defined set of internalized controls.


a.
b.
c.
d.
e.

market based
leader based
employee based
clan based
tradition based

Difficulty: (2) Knowledge: (A) Page: 591


60. The _________________ form of corporate culture is distinguished by norms that
are loose or absent; socialization processes are limited; and control systems are
purely
based on performance measures.
a.
b.
c.
d.
e.

market based
leader based
employee based
clan based
tradition based

Difficulty: (2) Knowledge: (A) Page: 591


61. To shape a shared vision, cultural values primarily demand which of the following
properties?
a.
b.
c.
d.
e.

easy to understand in only one way and written in English.


have clarity, continuity, and consistency.
have symbolism, sex-appeal, and sensitivity.
be dynamic, demanding, and declarative.
be global, gifted, and guiding.

Difficulty: (2) Knowledge: (A) Page: 592


62. The companys management programs are another major ________________
control
tools.
a.
b.
c.
d.
e.

informal
formal
simple
dynamic
complex

Difficulty: (1) Knowledge: (A) Page: 592


True/False

Short Answer

63. The capstone of a companys global marketing activities is its strategic marketing
plan.
Difficulty: (1) Knowledge: (F) Page: 575
64. The first step of a global strategic marketing plan starts with market situation
analysis.
Difficulty: (2) Knowledge: (F) Page: 576
65. The content of a global strategic marketing plan covers four areas which include:
market situation analysis, objectives, strategies, and ____________________.
66. Companies with substantial product diversity tend to go for a global geographic
division configuration.
Difficulty: (2) Knowledge: (F) Page: 579
67. The charter of the international division is to develop and coordinate the firms
global
operations.
Difficulty: (3) Knowledge: (F) Page: 579
68. The global product structure is most appropriate for companies whose product line
is not too diverse and does not need a large amount of adaptation to local country
needs.
Difficulty: (2) Knowledge: (A) Page: 579
69. Under the ________________ design, the company configures its organization
along geographic areas.
70. Country-focused organizations can be very good forms of structure because they
tend to be less costly than other forms.
Difficulty: (3) Knowledge: (F) Page: 580
71. Under the __________________ design, the company integrates two approaches
and
has a dual chain of command.
72. Some corporate strategy experts believe that in the twenty-first century, the role of
the
country manager will be minimal.
Difficulty: (2) Knowledge: (F) Page: 581

73. The ___________________ type of manager is characterized as being in charge of


large and/or strategic markets. They also handle government relations.
74. With respect to organizational forms, the matrix structure explicitly recognizes the
multidimensional nature of global strategic decision making.
Difficulty: (1) Knowledge: (F) Page: 583
75. The matrix structure explicitly recognizes the multidimensional nature of global
strategic decision making.
Difficulty: (2) Knowledge: (A) Page: 583
76. Matrix structure can be a bureaucratic bloat.
Difficulty: (2) Knowledge: (A) Page: 583
77. The network global organization is sometimes also referred to as an
ethnocentric
organization.
Difficulty: (1) Knowledge: (F) Page: 585
78. Asea Brown Boveri is a prime example of networking.
Difficulty: (2) Knowledge: (F) Page: 585
79. A brand champion is not a top-line executive.
Difficulty: (3) Knowledge: (F) Page: 587
80. The Stopford-Wells international structural stages model shows the relationship
between the MNCs networks and their overseas productivity.
Difficulty: (3) Knowledge: (A) Page: 589
81. The concept of a glocal mind-set encourages looking at strategic issues from
multiple
perspectives.
Difficulty: (3) Knowledge: (A) Page: 590
82. The first step in the control process is to set standards.
Difficulty: (1) Knowledge: (F) Page: 590
83. Clan cultures embody a long socialization process, strong powerful norms, and a
defined set of internalized controls.

Difficulty: (2) Knowledge: (F) Page: 591


84. In market cultures, norms are always very strong.
Difficulty: (3) Knowledge: (F) Page: 591
85. The companys management programs are another major formal control tools.
Difficulty: (2) Knowledge: (F) Page: 592
Essay
86. List and briefly discuss the key criteria that impact global organizational design.

87. List and briefly describe the principal organizational design options that firms can
use to organize their global activities. Cite the advantages and disadvantages of each
form.

88. Describe the five profiles that country managers might need to fit to be able to
lead their organizations into the challenges of the twenty-first century.

89. Explain how a global networked organization might differ from a matrix
organizational structure. To answer this question, review the characteristics of both
structures carefully.
90. Although some feel country managers are obsolete, most companies believe they
are essential to the firm. What reasons make country managers more important than
ever? What roles will they play?
Chapter 18
Multiple Choice
1. Emerging markets can be found in which of the following areas?
a.
b.
c.
d.
e.

Africa
Asia
Latin America
Eastern Europe
All of the above

Difficulty: (1) Knowledge: (F) Page: 597


2. Emerging markets refer to:
a.
b.
c.
d.
e.

countries that used to be called less developed countries.


countries that were previously called Third World.
countries that lacked convertible currency.
countries that were communist.
both a and b

3. Which of the following is NOT a category of emerging markets?


a.
b.
c.
d.
e.

developed countries
advanced emerging
secondary emerging
frontier countries
both a and d

4. Which of these does not describe the BRIC nations?


a.
b.
c.
d.
e.

They consist of Brazil, Russia, India and China.


They have large populations.
They constitute almost 15 percent of world GDP.
They are developed countries.
All have growing economies.

5. The BRIC nations:


a.
b.
c.
d.
e.

are all rich in natural resources.


are small countries with high income economies
are expected to surpass the GDP of the G7 nations within 20 years.
constitute a trade bloc.
none of the above

6. The Next Eleven:


a.
b.
c.
d.
e.

is a George Clooney movie sequel.


consists of a diverse group of emerging markets.
constitute their own trade bloc.
are all located in Asia.
none of the above

7. Which of the following nations is NOT a member of the Next Eleven?


a.
b.
c.
d.
e.

Malaysia
Indonesia
Egypt
Mexico
Nigeria

Difficulty: (2) Knowledge: (F) Page: 599


8. What event caused severe setbacks to many emerging markets?
a.
b.
c.
d.
e.

global warming
Chinas rise as a global superpower
losses in the World Cup soccer matches
the Asian financial crisis
EU focus on North Africa as a trading partner

9. Emigrant workers from emerging markets:


a.
b.
c.
d.
e.

are a nuisance to the countries they work in.


deplete the economy of their home country.
are almost always unskilled workers.
form local communities abroad that can be leveraged.
travel only within their own continent.

Difficulty: (2) Knowledge: (A) Page: 599


10. Which country has the greatest number of mobile phone subscribers per 100
inhabitants?
a.
b.
c.
d.
e.

Italy
Russia
Germany
United Kingdom
Nigeria

Difficulty: (1) Knowledge: (F) Page: 601, Exhibit 18-2


11. After China, the country with the largest shopping malls in the world is:
a.
b.
c.
d.
e.

United States
Philippines
Turkey
Canada
Malaysia

Difficulty: (1) Knowledge: (F) Page: 602, Exhibit 18-3


12. Because emerging markets have underdeveloped infrastructure:
a.
b.
c.
d.
e.

they cannot afford the best products from MNCs.


they can leapfrog old technology.
they are more eager to adopt new products.
R&D efforts are centered in these markets to generate new ideas.
distribution channels will be easier to set up.

Difficulty: (2) Knowledge: (A) Page: 600

13. Emerging markets:


a.
b.
c.
d.
e.

cannot afford the most modern products.


are innovative in service offerings.
embrace new products quickly.
have low time-to-takeoff for new products.
all of the above

Difficulty: (2) Knowledge: (A) Page: 605


14. Global competitors:
a. are not headquartered in emerging markets.
b. duel for market share in emerging markets but only consist of MNCs from
developed countries.
c. come only from the BRIC nations.
d. may emerge from any nation to challenge established MNCs.
e. none of the above
Difficulty: (2) Knowledge: (A) Page: 607
15. Significant companies from emerging markets are leaders in which of these
industries?
a.
b.
c.
d.
e.

smart phones
computers
beer
cars
all of the above

Difficulty: (2) Knowledge: (F) Page: 604


16. Acer, the world leader in laptop manufacturing and design, is based in which
country?
a.
b.
c.
d.
e.

South Korea
Taiwan
China
Japan
Singapore

Difficulty: (2) Knowledge: (F) Pages: 604

17. Jollibee competes in which industry around the world?


a.
b.
c.
d.
e.

theme parks
entertainment
fast food
childrens clothing
shoes

Difficulty: (2) Knowledge: (F) Page: 603


18. Jollibee is a major international player that has its headquarters in ________.
a.
b.
c.
d.
e.

Malaysia
Indonesia
China
Philippines
India

Difficulty: (2) Knowledge: (F) Page: 604


19. Which of the following brands has NOT been bought by firms in emerging
markets?
a.
b.
c.
d.
e.

Miller beer
Jaguar
IBM PC
Ferrari
Budweiser

Difficulty: (2) Knowledge: (F) Page: 604


20. One strategy used by the new champions to succeed in major markets is:
a. reviving old technology to save money.
b. copying the same model as MNCs from developed markets but with cheaper
items.
c. employing the latest technology.
d. training staff in foreign companies first.
e. both a and d
Difficulty: (2) Knowledge: (A) Pages: 604-6

21. Emerging market champions:


a. avoid new technology because it is too expensive.
b. use a combination of old technology and cheap labor for a competitive
advantage.
c. leapfrog to the newest technologies to offer quality products.
d. copy MNC products to avoid problems with product development.
e. try to avoid innovation.
Difficulty: (2) Knowledge: (A) Page: 605
22. Rapid scale-up of new champions:
a.
b.
c.
d.
e.

doesnt occur because capital is in short supply.


can be done by absorbing smaller rivals.
is achieved by investing more than smaller rivals.
both b and c
can only be done with the help of outside loans from such as the World Bank.

Difficulty: (2) Knowledge: (A) Page: 606


23. When would emerging market companies use a dodge strategy?
a.
b.
c.
d.
e.

when its assets are transferable


when there is little pressure to globalize
when industry pressure is high
when assets are only valuable in the home market
both c and d

Difficulty: (3) Knowledge: (A) Page: 606


24. An emerging market company would be a defender when:
a.
b.
c.
d.
e.

its assets are transferable.


there is little pressure to globalize.
industry pressure is high.
assets are only valuable in the home market.
both b and d

Difficulty: (3) Knowledge: (A) Pages: 606-7

25. When competing with the new champions from emerging markets, MNCs:
a. should give upthe new champions have cheaper labor and the latest
technology.
b. can ignore the new championsthey are only effective in emerging markets.
c. should focus on the high end of the market and leave the rest to the local
companies.
d. buy out local rivals and use them to challenge the new champion in the home
market.
e. none of the above
Difficulty: (2) Knowledge: (A) Page: 608
26. MNCs are being threatened by new champions from the emerging markets.
Which of the following strategies is NOT recommended for them?
a.
b.
c.
d.

Continue to use low cost sourcing in emerging markets.


Sell only goods developed by home country R&D in emerging markets.
Ignore emerging market branding strategies as being too elementary.
Do not invest in the mass markets of emerging economies as they will never
amount to much revenue.
e. All of the above are not suggested.
Difficulty: (2) Knowledge: (A) Page: 608
27. Companies from the emerging markets are proving to be surprising challengers to
older, larger MNCs. Which of the following would you recommend as an MNC
strategic response?
a.
b.
c.
d.
e.

Invest in growing mass markets of developing countries.


Partner with companies from the emerging markets.
Buy out smaller rival firms in the emerging markets.
Consider developing countries as more than just manufacturing sites.
All of the above

Difficulty: (2) Knowledge: (A) Page: 608


28. BOP stands for:
a.
b.
c.
d.
e.

a type of music common to developing countries.


bottom of the pyramid.
bottom of the pile.
boost our profits.
none of the above

Difficulty: (1) Knowledge: (F) Page: 608

29. Some people are optimistic about the BOP as a market segment. This is because:
a.
b.
c.
d.
e.

they are hopeless romantics and cant face reality.


there is a great deal of untapped money in the BOP.
BOP is critical for long term growth of the company.
the BOP needs help and would welcome input from outsiders.
only b and c

Difficulty: (3) Knowledge: (A) Page: 609


30. Despite its dismal financial condition, the BOP has support as a viable market
segment. This is because:
a. Wal-Mart concentrated in a similar area in the U.S. and became a world player.
b. incomes are expected to rise over time and this segment could become brand
loyal.
c. challenges faced here could be the basis for new and innovative products.
d. the BOP is a source of cheap labor.
e. both b and c
Difficulty: (3) Knowledge: (A) Page: 609
31. The BOP:
a.
b.
c.
d.
e.

constitutes a majority of the worlds population.


generates $2 an hour in wages.
is found mostly in the western hemisphere.
does not offer opportunities for MNCs.
is a viable market for only small firms with very cheap products.

Difficulty: (2) Knowledge: (A) Pages: 608-9


32. Bottom of the pyramid means:
a.
b.
c.
d.
e.

lower class Egyptians.


the lowest level of consumer involvement with your product.
the lowest satisfaction level of Maslows hierarchy.
people earning less than $2 per day.
the first step toward $1 million on a game show.

Difficulty: (1) Knowledge: (F) Page: 608

33. Compared to developed countries, segments in emerging markets are:


a.
b.
c.
d.
e.

enormous.
much more coarse and difficult to define.
harder to reach because media options are not as well developed.
less wealthy.
all of the above

Difficulty: (3) Knowledge: (A) Page: 610


34. Hindustan Unilever pursued the following strategy to expand its market share in
India.
a.
b.
c.
d.
e.

retained the low unit price concept only for shampoo


focused its efforts on the BOP masses
emphasized local R&D efforts
concentrated on the urban population for sales
offered a wide variety of brands to tightly segment the market

Difficulty: (3) Knowledge: (F) Page: 610, Global Perspective 18-1


35. Hindustan Lever decided that its product line should include:
a. only products for the rich, so it could charge a premium.
b. products for all three major segments: affluent, middle income, and low
income.
c. low income only, to capture the entire lower end as loyal customers for the
future.
d. only the middle income, as they were ignored by other firms.
e. both the middle and upper income groups, as profit margins were viable there.
Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1
36. Social marketingin the form of new product development and/or aiding
development:
a. is not practiced by emerging market companies.
b. is a waste of timethe population wont be exposed to the messages and is
unlikely to follow directions.
c. can expand market opportunities for the firm.
d. builds goodwill that can be leveraged into greater profits.
e. both c and d
Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1

37. What best describes the outcome of early entry into emerging markets?
a.
b.
c.
d.
e.

It can be lucrative, especially for huge markets like China and India.
It is likely to fail because the markets dont or cant appreciate the product.
It will probably face few direct competitors.
Products will be too expensive for local consumers.
None of the above

Difficulty: (2) Knowledge: (A) Page: 611


38. There are many reasons why a company might prefer to be a follower in a new
market, not a first entrant. Which of these is NOT one of those reasons?
a.
b.
c.
d.
e.

reduced profits because the market is already gone


fewer pitfalls as the follower can see the mistakes of the first-mover
better developed marketing channels
competitive response from other MNCs and local competitors
none of the above

Difficulty: (2) Knowledge: (A) Page: 611


39. Why is being a first-mover attractive in emerging markets?
a.
b.
c.
d.
e.

Pent-up demand may lead to high initial sales.


Governments are eager to offer concessions to first-movers.
Early entrants get best access to key marketing resources.
Marketing dollars generate higher productivity.
All of the above

Difficulty: (2) Knowledge: (A) Page: 611


40. What approach should smaller firms take in emerging markets?
a.
b.
c.
d.

Be a follower so you dont make costly mistakes.


Be a first-moverto the victor go the spoils.
Be a first-mover to outmaneuver larger firms eyeing the same market.
Avoid the markets altogetherthey take too much time and effort to develop
compared to the pay-off for a small firm.
e. Merge with a local company.
Difficulty: (3) Knowledge: (A) Page: 611

41. The risks of entering emerging markets:


a. are financial, but only in terms of getting paid promptly and in full.
b. are financial, but include both currency volatility and getting paid.
c. are marketing related onlywe wouldnt enter a country where we couldnt
get paid.
d. are marketing and currency volatility driven.
e. cover the enter spectrum of marketing and financial risks.
Difficulty: (2) Knowledge: (A) Page: 612
42. Entry strategies for emerging markets include _______.
a.
b.
c.
d.
e.

export
licensing
joint venture
direct investment
all of the above

Difficulty: (1) Knowledge: (A) Page: 612


43. The preferred entry mode(s) for emerging markets:
a. include(s) both licensing and minority joint venture.
b. seek(s) to adapt products to ensure the capture of the market.
c. involve(s) direct investment to close the market to local challengers and later
MNCs.
d. focus (focuses) on marketing instead of sales.
e. both a and b
Difficulty: (2) Knowledge: (A) Page: 612
44. Which of the following is not a common risk when entering emerging markets?
a.
b.
c.
d.
e.

product piracy
enforcing property rights
well-developed marketing infrastructure
antitrust laws
government intervention

Difficulty: (2) Knowledge: (A) Page: 612

45. When MNCs enter an emerging market, they are likely to:
a.
b.
c.
d.
e.

share product secrets with the new country.


insist on tight corporate control.
take a high risk approach to increase the chance for greater rewards.
emphasize sales as a measure of success.
both b and d

Difficulty: (2) Knowledge: (A) Page: 612


46. Product policies that have been pursued when entering emerging markets include:
a.
b.
c.
d.

no adaptationthe risks and expense are too great.


selling a narrow range of premium goods.
pursuing backward innovation.
anchoring the product entry with products near the end of their life cycle in the
home market.
e. all of the above
Difficulty: (3) Knowledge: (A) Page: 613
47. Probably the least effective product design option is:
a.
b.
c.
d.
e.

no adaptationsell what we already make.


to sell our normal products at premium prices.
to sell a stripped down version of a normal good.
to extend the product life cycle by selling obsolete goods abroad.
All of the above are equally effective.

Difficulty: (2) Knowledge: (A) Page: 613


48. Backward innovation and selling obsolete goods:
a. run a risk of consumer backlash in emerging markets.
b. could save the company money on product development.
c. should not be used because cutting edge products are most highly favored in
emerging markets.
d. are entirely different approaches to entering a market.
e. a, b and c are all reasonable answers
Difficulty: (3) Knowledge: (A) Page: 613

49. Common features that products must have to be successful in emerging markets
include:
a.
b.
c.
d.
e.

the very latest designs.


the widest variety of options.
ruggedness.
high quality.
warranties.

Difficulty: (3) Knowledge: (A) Page: 613


50. Companies have used which of the following methods to enhance product
acceptance in emerging markets?
a.
b.
c.
d.
e.

washing machines that can restart after a power outage


changing detergent formulae to use more water
selling a top-end water purifier in India for greater assurance of pure water
lowering quality to keep prices low
all of the above

Difficulty: (2) Knowledge: (A) Page: 613


51. When designing a product for emerging markets, companies should consider
which of the following?
a.
b.
c.
d.
e.

low price, ruggedness, and low quality


low price, inconsistent quality, and ability to run without electricity
high price, consistent quality, and a warranty
low incomes, unreliable power supplies, and scarce resources
low price, back-up power supplies, and a warranty

Difficulty: (2) Knowledge: (A) Page: 613


52. A manually operated sewing machine would:
a.
b.
c.
d.
e.

be a backward innovation.
be an example of a product life cycle extension.
be rejected in emerging markets as not being modern enough.
be too difficult to operate.
likely have the idea copied as soon as it hit the market.

Difficulty: (3) Knowledge: (A) Page: 613

53. Brand strategies proven to succeed in emerging markets include:


a. pursuing only the wealthythey dont require product or price changes.
b. aiming brands at various market segments with different formulae and prices.
c. focusing on the emerging middle class for its growing buying power and
eventual loyalty.
d. purchasing a local brand as part of the product offering.
e. both b and d
Difficulty: (3) Knowledge: (A) Page: 613
54. Which of the following is MOST likely to be used when packaging for emerging
markets?
a.
b.
c.
d.

large packages to cater to the bigger families common in these countries


large packages because an entire village will share the product
smaller packages at lower price points
large packages with individual wrappers so merchants can resell in smaller
quantities
e. both c and d
Difficulty: (3) Knowledge: (A) Pages: 614-15
55. Package design in emerging markets can largely ignore the feature of ________.
a.
b.
c.
d.
e.

sturdiness
heat resistance
freshness
sustainability
none of the above

Difficulty: (1) Knowledge: (A) Page: 614-15


56. Because of the climate and sales conditions of many emerging markets, packages
should:
a.
b.
c.
d.
e.

come frozen so freshness and safety are ensured.


be made of the cheapest materials to save money.
be sold with reusable containers.
allow people to see and smell the product before buying.
all of the above

Difficulty: (2) Knowledge: (A) Page: 614-15

57. A package characteristic with perhaps greater significance in emerging markets


than developed countries is ________.
a.
b.
c.
d.
e.

refrigeration
sustainability
safety
variety of sizes
metal containers

Difficulty: (3) Knowledge: (A) Page: 615


58. The pricing strategy most likely to succeed in emerging markets is:
a. very low prices that everyone can affordlarge volume makes up for low
margins.
b. premium pricing onlyestablish the image of quality and save money on not
having to adapt the product for local sale.
c. cater to the growing middle class and raise prices as income goes up.
d. saturate all price points with different products and make money at all levels.
e. All of the above are equally viable.
Difficulty: (2) Knowledge: (A) Page: 615
59. Why is distribution considered to be the biggest challenge when entering an
emerging market?
a.
b.
c.
d.
e.

It isntpricing is.
It isntproduct adaptation is.
Distribution infrastructure is too complex to navigate.
The countrys land mass is a deterrent.
All of the above

Difficulty: (2) Knowledge: (A) Page: 616


60. Which of the following is NOT a reason why distribution is difficult in emerging
markets?
a.
b.
c.
d.
e.

Local and rural areas can both be easily reached.


Shopping malls and supermarkets are on the rise in emerging markets.
Traditional retailers can be hard to work with.
Operating capital of retailers may be lacking.
Local brands are difficult to displace on the shelves.

Difficulty: (2) Knowledge: (A) Page: 616

61. P&G succeeded in Russia by:


a.
b.
c.
d.
e.

using door to door sales reps.


direct export to a single large distributor in Moscow.
partnering with EU firms that already had a presence in Russia.
developing its own distributor network in exchange for exclusivity.
none of the aboveUnilever is the dominant player in Russia.

Difficulty: (2) Knowledge: (F) Page: 617


62. When managing distributors in emerging markets, MNCs should:
a.
b.
c.
d.
e.

pick partners with extensive local product-market knowledge.


choose partners with excellent English-speaking skills.
focus on entrepreneurs to build local good-will.
only enter markets with a company-owned distributor network.
select distributors who are competent working with MNCs.

Difficulty: (2) Knowledge: (A) Page: 618


63. Direct selling in emerging markets:
a.
b.
c.
d.
e.

is attractive because of the rapid growth of internet sales.


often works best in a B2B setting.
is valuable in countries where face-to-face sales are common.
both b and c
none of the abovedirect selling should be avoided as too difficult to
supervise.

Difficulty: (2) Knowledge: (A) Page: 618


64. Emerging market distributors seeking exclusive territories should:
a.
b.
c.
d.

be told yes, on a temporary basis.


be denied, because this policy retards rapid market development.
be ignoredwe will set up a company-owned distribution network.
be told no territories existeveryone can sell everywhere, and the winner gets
the final contract.
e. none of the above
Difficulty: (2) Knowledge: (A) Page: 619

65. Communication challenges include:


a.
b.
c.
d.
e.

raising brand awareness.


educating customers about product use and benefits.
creating brand image.
gaining loyalty.
all of the above

Difficulty: (2) Knowledge: (F) Page: 619


66. Push strategies:
a. are less viable in emerging markets than pull strategies.
b. are never used in emerging markets because channels are in disarray.
c. work well in many countries because of the enormous channel power of
distributors.
d. result in the MNC being cheated because channel members keep the incentives
for themselves.
e. never reach consumers.
Difficulty: (2) Knowledge: (A) Page: 619
67. Which of the following is a reason why a push strategy would succeed in
emerging markets?
a.
b.
c.
d.
e.

more frequent shopping than in developed countries


heavy reliance on retailer recommendations about brands
significant distributor power
numerous opportunities for brand switching
all of the above

Difficulty: (2) Knowledge: (A) Page: 619


68. Why might pull strategies aimed at consumers in emerging markets NOT be very
successful?
a.
b.
c.
d.
e.

They dont understand the message about the product.


Coupons may be stolen and never reach the consumer for redemption.
Mass media are less effective in the emerging nations.
All of the above apply.
None of the above applyemerging market consumers love coupons.

Difficulty: (3) Knowledge: (A) Page: 619


True/False

Short Answer

69. Emerging markets are not a tempting target for MNCs.


Difficulty: (1) Knowledge: (F) Page: 597

70. The most busy McDonalds in the world is in Peking.


Difficulty: (1) Knowledge: (F) Page: 597
71. The bulk of the revenues from some MNCs come from emerging markets.
Difficulty: (1) Knowledge: (F) Page: 598
72. Transition economies are those that are moving from very poor to more
developed.
Difficulty: (1) Knowledge: (F) Page: 598
73. Iran is one of the BRIC nations.
Difficulty: (1) Knowledge: (F) Page: 598
74. BRIC stands for big, rich, independent countries.
Difficulty: (1) Knowledge: (F) Page: 598
75. Remittances from foreign workers are important to emerging market economies.
Difficulty: (1) Knowledge: (F) Page: 599
76. Most of the worlds largest shopping malls are in Asia.
Difficulty: (1) Knowledge: (F) Page: 602, Exhibit 18-3
77. No companies from emerging market countries have made it to the Fortune
Global 500 list.
Difficulty: (1) Knowledge: (F) Page: 603
78. Most of the largest banks in the world are from the United States.
Difficulty: (1) Knowledge: (F) Page: 603
79. Product piracy is not a problem in China.
Difficulty: (1) Knowledge: (F) Page: 604
80. Products from emerging markets only compete as low-end challengers to
established brands.
Difficulty: (2) Knowledge: (A) Page: 604
81. MNCs cannot use products developed in emerging markets because the quality
standards are too low to be transferred to MNC home markets.

Difficulty: (2) Knowledge: (A) Page: 608


82. India is experiencing changes in its income pattern from pyramid to diamond.
Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1
83. Hindustan Unilever is a major corporation based in Pakistan.
Difficulty: (2) Knowledge: (F) Page: 610, Global Perspective 18-1
84. Social marketing in the Third World is a waste of time and money.
Difficulty: (2) Knowledge: (A) Page: 610, Global Perspective 18-1
85. Risk levels of entering emerging markets are higher than those for developed
countries.
Difficulty: (1) Knowledge: (A) Page: 612
86. Backward innovation and selling obsolete goods are different names for the same
product strategy.
Difficulty: (2) Knowledge: (F) Page: 613
87. The most common packaging choice for emerging markets is a smaller package.
Difficulty: (1) Knowledge: (A) Page: 614
88. Frugal engineering means making very cheap, low quality products so you can
get the most profit.
Difficulty: (1) Knowledge: (A) Page: 615
89. Local autonomy should always be granted to distributors because they know the
market better than the MNC.
Difficulty: (2) Knowledge: (A) Page: 619
90. Push strategies are more likely to be successful in emerging markets than pull
strategies.
Difficulty: (2) Knowledge: (A) Page: 619
91. Billboards can be effective in reaching both rich and poor consumers in emerging
markets.
Difficulty: (2) Knowledge: (A) Page: 619

Essay
92. Describe the characteristics that define emerging markets.
93. Despite coming from humble origins and lacking much of the resources of the
major global firms, many companies from emerging markets are serious challengers
in world markets. What strategies do they employ to enable them to succeed?

94. What are the strategic options for emerging market firms in global marketing?
Under what conditions would each be suggested?
95. There are some commonly held beliefs about marketing mix strategy that have
been proven to be less than optimal. Identify some of these.
96. Describe the communication challenges faced when entering emerging markets.

Chapter 19
Multiple Choice
1. According to the text, the Web clearly provides a unique _______________ and
______________ channel to marketers across the globe.
a.
b.
c.
d.
e.

distribution, higher education


distribution, production
distribution, network
distribution, communication
none of the above

Difficulty: (2) Knowledge: (A) Page: 626


2. According to this textbook, compared to the U.S., Europe as a future Internet
market will be:
a. better, because virtual retailers have a competitive advantage over traditional
stores.
b. worse because there are so many languages.
c. better because delivery is faster.
d. worse because Europe has less well developed Internet infrastructure.
e. both A and C
Difficulty: (2) Knowledge: (A) Page: 626
3. Although the Internet has become a global phenomenon, it first originated in (the):
a.
b.
c.
d.
e.

Italy.
Japan.
U.S.A.
Belgium.
Singapore.

Difficulty: (1) Knowledge: (F) Page: 627


4. In 2005, the worldwide Internet population surpassed 1 billion.

a.
b.
c.
d.
e.

1 billion
2 billion
3 billion
4 billion
5 billion

Difficulty: (2) Knowledge: (F) Page: 627


5. The country with the most Internet users is:
a. United States
b. Japan
c. India
d. China
e. none of the above
Difficulty: (2) Knowledge: (F) Page: 627, Exhibit 19-1
6. The country with the highest penetration rate of Internet users is:
a. United States
b. Japan
c. South Korea
d. United Kingdom
e. Canada
Difficulty: (2) Knowledge: (F) Page: 627, Exhibit 19-1
7. The majority of the Internet users now live outside of ________________
speaking
countries.
a.
b.
c.
d.
e.

English
French
Arabic
German
Spanish

Difficulty: (1) Knowledge: (F) Page: 628


8. Which of the following is NOT a barrier to Internet marketing?
a.
b.
c.
d.
e.

language
culture
infrastructure
access charges
none of the above

Difficulty: (2) Knowledge: (F) Page: 627


9. The barriers to global e-commerce are:

a.
b.
c.
d.
e.

language barriers.
cultural barriers.
infrastructure.
all of the above.
none of the above.

Difficulty: (1) Knowledge: (A) Page: 627


10. The structural barriers to global e-commerce include the following EXCEPT:
a. language barriers.
b. cultural barriers.
c. infrastructure.
d. knowledge barriers.
e. roaming charges.
Difficulty: (1) Knowledge: (A) Page: 630-31
11. Which of these languages is NOT in the top three on Internet sites?
a.
b.
c.
d.
e.

Hindu
Chinese
Spanish
German
Both a and d

Difficulty: (2) Knowledge: (F) Page: 628


12. Using only English on a website:
a.
b.
c.
d.
e.

is doomed to fail.
is ethnocentric.
works in some industries like aerospace.
limits your market.
both c and d

Difficulty: (3) Knowledge: (A) Page: 628


13. In global e-commerce, Web site localization services have created the need for
more:
a.
b.
c.
d.
e.

translators.
copy writers.
media specialists.
network specialists.
knowledge experts.

Difficulty: (2) Knowledge: (A) Page: 628


14. Companies that wish to make their Web sites international by translating the

information and content into other languages have two alternatives that may
include:
a.
b.
c.
d.
e.

hire a firm or a person doing the translation.


use a software having the translation function.
use only English.
both a and b
both b and c

Difficulty: (2) Knowledge: (A) Page: 628


15. Which of these would NOT be a barrier to Internet marketing?
a.
b.
c.
d.
e.

preference for face-to-face business transactions


lack of familiarity with credit cards
strict Internet security measures
website wording, logos, and colors
patriotism

Difficulty: (2) Knowledge: (F) Pages: 628-9


16. In the Asia-Pacific region, B2B e-commerce activities are facing obstacles which
could hinder the growth of the Internet. These obstacles include:
a.
b.
c.
d.
e.

doing business on a face-to-face basis.


cultivating relationships and secrecy issues.
reluctance to share information.
all of the above are obstacles.
none of the above are obstacles.

Difficulty: (1) Knowledge: (A) Pages: 628-9


17. In many countries, businesspeople prefer to do business on a________________.
a.
b.
c.
d.
e.

virtual basis.
simple basis.
complex basis.
face-to-face basis.
none of the above.

Difficulty: (1) Knowledge: (A) Page: 628


18. E-readiness for Brazil, India, Russia and China is:
a. unknownthey wont answer the surveys.
b. excellenttheir relative backwardness lets them jump ahead with the latest
technology.
c. middle of the pack because their economies are growing rapidly.
d. very low.

e. none of the above


Difficulty: (2) Knowledge: (F) Page: 631
19. ISP is an acronym for:
a.
b.
c.
d.
e.

Internet strategies provider.


Internet standards provider.
Internet service provider.
Internet system provider.
none of the above.

Difficulty: (1) Knowledge: (A) Page: 629


20. In many European markets, consumers are reluctant to surf the Web because of:
a.
b.
c.
d.
e.

high telecommunication charges.


low per capita income.
government rules and regulations.
distribution costs.
limited training and education.

Difficulty: (2)Knowledge: (F) Page: 632


21. In many countries, the cost of going online can be reduced by:
a.
b.
c.
d.
e.

government deregulations.
increased competition.
new access alternatives.
all of the above.
none of the above.

Difficulty: (2) Knowledge: (A) Page: 632


22. In Japan, access to the web was previously dominated by
______________________, the Japanese telecom firm, which charges sky-high
fees.
a.
b.
c.
d.
e.

British Telecom.
Toyota.
Nippon Telephone & Telegraph (NTT).
Seven-Eleven Japan.
AT&T.

Difficulty: (1) Knowledge: (A) Page: 632


23. In the Internet world, there are many unsolved issues. For example, e-commerce
is global but the national laws are mostly ________________.
a. local

b.
c.
d.
e.

regional
political
religious
secular

Difficulty: (1) Knowledge: (A) Page: 632


24. At the global level, a new nongovernmental body has been established to resolve
domain disputes. The name of this body is:
a.
b.
c.
d.
e.

Internet Corporation for Domain Names (ICDN).


Internet Corporation for Assigned Names (ICAN).
Internet Corporation for Assigned Names and Numbers (ICANN).
Internet Corporation for Networks (ICN).
Internet Corporation for Domain Disputes (ICDD).

Difficulty: (3) Knowledge: (F) Page: 633


25. In the area of global marketing, the Internet offers two major benefits to
companies that may be interested in selling their products worldwide. The two
benefits include:
a.
b.
c.
d.
e.

cost/efficiency savings and accessibility (connectivity).


cost/efficiency savings and brand image.
cost/efficiency savings and product standardization.
cost/efficiency savings and high quality intelligence.
cost/efficiency savings and product image.

Difficulty: (3) Knowledge: (A) Page: 633


26. According to the text, regarding the profile of Internet buyers, differences across
countries are mainly due to two factors which are:
a. access charges and availability of computer programmers.
b. access charges and availability of outsourcing.
c. access charges and availability of entertainment options.
d. access charges and availability of CNN.
e. access charges and availability of AOL.
.
Difficulty: (3) Knowledge: (A) Page: 634
27. At the core of any global Web marketing strategy is the conflict between local
responsiveness and _______________________.
a.
b.
c.
d.
e.
.

local integration
regional integration
transnational integration
polycentric integration
global integration

Difficulty: (3) Knowledge: (A) Page: 637


28. In the product policy area, the Internet can help build:
a. regional brands.
b. food brands only.
c. global brands.
d. high-tech brands.
e. tangible brands.
.
Difficulty: (2) Knowledge: (A) Page: 641
29. Marketing of services differs from tangible goods in four areas:
a.
b.
c.
d.
e.

intangibility, simultaneity, heterogeneity, and perishability.


intangibility, simultaneity, heterogeneity, and collectivity.
intangibility, simultaneity, heterogeneity, and connectivity.
intangibility, simultaneity, heterogeneity, and believability.
intangibility, simultaneity, heterogeneity, and credibility.

Difficulty: (2) Knowledge: (A) Page: 643


30. India Yahoo! is different from normal portals because is has:
a.
b.
c.
d.
e.

no online auctions.
astrology.
no online shopping.
real estate.
cricket.

Difficulty: (2) Knowledge: (F) Page: 642


31. In some countries, customers might resent having the human element removed
from
the service encounter because of:
a.
b.
c.
d.
e.

cultural factors.
national factors.
technology factors.
consumption factors.
international factors.

Difficulty: (2) Knowledge: (A) Page: 644


32. In international marketing, a Web site gives service marketers the ability to offer
_________ hour service to customers worldwide.
a. 10
b. 15
c. 20

d. 22
e. 24
Difficulty: (1) Knowledge: (F) Page: 644
33. Because of the Internet, many MNCs pricing decisions are less _____________.
50
51 a. national
b. flexible
c. creative
d. rigid
e. vertical
Difficulty: (3) Knowledge: (A) Page: 644
34. In the area of pricing, the Internet facilitates:
a.
b.
c.
d.
e.

work transparency.
price transparency.
profit transparency.
channel transparency.
none of the above is true.

Difficulty: (2) Knowledge: (A) Page: 644


35. For global marketers, the Web could affect the firms high margins because of:
a.
b.
c.
d.
e.

profit transparency.
channel transparency.
price transparency.
channel captaincy.
knowledge transparency.

Difficulty: (2) Knowledge: (A) Page: 644


36. In Internet marketing, consumers often are aware of low prices because of the
availability of brand and pricing information. This is a result of:
a.
b.
c.
d.
e.

profit transparency.
knowledge transparency.
labor transparency.
profit transparency.
price transparency.

Difficulty: (2) Knowledge: (A) Page: 644


37. To deal with price transparency issues in Internet marketing, companies can use
methods such as:
a. cutting prices in high-price countries.

b.
c.
d.
e.

localizing the products.


refusal to handle orders from overseas.
All of the above methods can be used.
None of the above methods are used.

Difficulty: (3) Knowledge: (A) Page: 645


38. In many industries, connectivity means that existing channels/distributors can be
bypassed by connecting:
a.
b.
c.
d.
e.

buyers and suppliers.


buyers and governments.
buyers and software companies.
buyers and advertisers.
buyers and media companies.

Difficulty: (1) Knowledge: (A) Page: 645


39. Manufacturers who plan to add the Internet to their existing international
channels should be aware of two possibilities:
a.
b.
c.
d.
e.

replacement effect and international effect.


replacement effect and complementary effect.
complementary effect and managerial effect.
complementary effect and adaptation effect.
replacement effect and quality effect.

Difficulty: (1) Knowledge: (A) Page: 645


40. In international distribution, replacement effect can:
a.
b.
c.
d.
e.

cannibalize existing distribution channels.


delete existing distribution channels.
replace existing distribution channels.
downsize existing distribution channels.
add more distribution channels

Difficulty: (2) Knowledge: (A) Page: 645


41. In international distribution, complementary effect can:
a.
b.
c.
d.
e.

expand the overall business.


cannibalize existing distribution channels.
materialize the overall business.
downsize existing distribution channels.
none of the above.

Difficulty: (2) Knowledge: (A) Pages: 645-6


42. Click-and-mortar retailers are defined as:

a. those large retail chains trying to compete by pursuing no Web site presence.
b. those large retail chains trying to compete by making alliances and joint
ventures.
c. those large retail chains trying to compete by going international.
d. those large retail chains trying to compete by hiring Web specialists.
e. those large retail chains trying to compete by setting up a Web site presence.
Difficulty: (2) Knowledge: (A) Page: 647
43. Click-and-mortar chains provide one advantage where:
a.
b.
c.
d.
e.

products cannot be returned to the local stores.


products can be returned to the local stores.
click-and mortar stores have no Web sites.
All of the above.
None of the above.

Difficulty: (1) Knowledge: (A) Page: 647


44. In international marketing, many well-known brands in pure web retailing (etrade, Amazon.com) still have limited ________________________ expertise.
a.
b.
c.
d.
e.

local
international
regional
economic
political

Difficulty: (1) Knowledge: (A) Page: 648


45. Success of an e-tailing model will depend on three factors which include:
a.
b.
c.
d.
e.

consumer behavior, cost structure, and networks.


consumer behavior, cost structure, and government policies.
consumer behavior, cost structure, and logistics.
consumer behavior, cost structure, and human resources.
consumer behavior, cost structure, and manufacturing.

Difficulty: (2) Knowledge: (A) Page: 648


46. According to Jupiter Research, online advertising spending is expected to grow to
around ____________ in the U.S. by 2009.
a.
b.
c.
d.
e.

$10 billion
$16 billion
$20 billion
$30 billion
$35 billion

Difficulty: (3) Knowledge: (F) Page: 648


47. The Internet offers advantages to international advertisers which include:
a.
b.
c.
d.
e.

global reach.
interactivity.
precise information
all of the above.
none of the above.

Difficulty: (2) Knowledge: (A) Pages: 648-9


48. In Internet advertising, by clicking on the banner ad, users can be taken to the:
a.
b.
c.
d.
e.

internets databank.
advertisers web site.
Netscapes site.
Yahoos site.
none of the above.

Difficulty: (1) Knowledge: (A) Page: 649


49. According to the text, the ultimate success of an online campaign depends on the
following factors EXCEPT:
a.
b.
c.
d.
e.

the nature of the product.


the targeting.
choice of the site.
execution of the ad.
hiring an efficient CEO.

Difficulty: (2) Knowledge: (A) Page: 650


50. Although Internet advertising is growing at a very rapid pace, many advertisers
are skeptical about its potential as a global promotion tool because of (the):
a.
b.
c.
d.
e.

annoyance factor.
audience measurement.
click-thru rates.
high access and/or phone charges
all of the above.

.
Difficulty: (1) Knowledge: (A) Page: 650
51. International marketers who plan on using the Web as an advertising tool should
familiarize themselves with:
a. advertising regulations and restrictions in foreign markets.
b. search engines.
c. distribution channels.

d. digital networks.
e. digital suppliers.
Difficulty: (2) Knowledge: (A) Page: 650
52. Keyword search advertising allows the company to have a link to its Web site
when
people are looking for ________________________ -related information.
a.
b.
c.
d.
e.

people
market
product
country
none of the above

Difficulty: (2) Knowledge: (A) Page: 649


53. In Internet advertising, microsites are created to promote
____________________
brands.
a.
b.
c.
d.
e.

hybrid
individual
complex
global
none of the above

Difficulty: (1) Knowledge: (A) Page: 649


54. The ultimate success of an online campaign hinges on four factors which include:
a.
b.
c.
d.
e.

nature of the product, the target, choice of site, and color


nature of the product, the target, choice of site, and graphics
nature of the product, the target, choice of site, and banners
nature of the product, the target, choice of site, and execution of the ad
none of the above

Difficulty: (3) Knowledge: (A) Page: 650


55. Online campaigns would work for __________________________________.
a.
b.
c.
d.
e.

high involvement goods.


low involvement goods.
vertical involvement goods
horizontal involvement goods
none o the above

Difficulty: (2) Knowledge: (A) Page: 650

True/False

Short Answer

56. Small and medium-size companies (SMEs) are also participating in the area of ecommerce and Internet-related opportunities.
Difficulty: (1) Knowledge: (A) Page: 626
57. Internet usage worldwide is not growing.
Difficulty: (1) Knowledge: (A) Page: 627
58. ISP is an acronym for Internet Standards Provider.
Difficulty: (2) Knowledge: (A) Page: 629
59. Knowledge barrier is not one of the barriers in Internet-related activities.
Difficulty: (1) Knowledge: (A) Page: 628
60. In many European markets, consumers are reluctant to spend time surfing the
Web
because of higher telecommunication charges.
Difficulty: (2) Knowledge: (F) Page: 632
61. There are many unsolved issues in the Internet. For example, e-commerce is
global
but the national laws are mostly transnational.
Difficulty: (1) Knowledge: (A) Page: 632
62. The Internet has leveled the playing field between large and small firms in global
competition.
63. Asians have the most favorable attitude toward Internet shopping.
64. The Internet is not helping companies to create global brands.
Difficulty: (3) Knowledge: (A) Page: 634
65. Google is the #1 search engine throughout the world.
66. Consumer co-creation involves customers in value creation.

67. Mass customization is not the major plus of the Web.


Difficulty: (1) Knowledge: (A) Page: 644
68. Web sites enable companies to manage perishability.
Difficulty: (1) Knowledge: (A) Page: 644
69. In international marketing, a Web site gives service marketers the ability to offer
24 hour service to customers worldwide.
Difficulty: (1) Knowledge: (F) Page: 644
70. For global marketers, the Web could affect the firms high margins because of
price transparency.
Difficulty: (2) Knowledge: (A) Page: 644
71. In many industries, connectivity means that existing channels can be bypassed by
connecting buyers and suppliers directly.
Difficulty: (1) Knowledge: (A) Page: 645
72. In international distribution, replacement effect does not cannibalize existing
distribution channels.
Difficulty: (2) Knowledge: (A) Page: 645
73. It is estimated that most of the Internet advertising spending will be spent in
Japan.
Difficulty: (1) Knowledge: (A) Page: 648
74. Banner advertising is not used in Internet advertising.
Difficulty: (1) Knowledge: (A) Page: 648
75. Keyword search advertising allows the company to have a link to its competitors.
Difficulty: (2) Knowledge: (A) Page: 649
76. Microsites are used to promote a particular brand.
Difficulty: (2) Knowledge: (A) Page: 649
77. Online campaigns would work for high-involvement goods whose buyers engage
in
product research and price comparisons.

Difficulty: (3) Knowledge: (A) Page: 650


Essay
78. Describe briefly the history of the Internet. Which nations are becoming
prominent among Internet users? How does their growth compare with the Internet
readiness shown in Exhibit 19-2?

79. Although global e-commerce is expected to increase, it has encountered obstacles


and structural barriers. Discuss these structural barriers.
80. Discuss some of the ramifications of the Internet for global marketing strategies.
Also explain some of the challenges faced by international marketers in the areas of
global branding and Internet-based new products.