TBChap 006

Chapter 06
Understanding and Reaching Global Consumers and Markets
Multiple Choice Questions
1. Why did Dell, Inc., embark on a global growth initiative?
A.
B.
C.
D.
E.
U.S. sales had decreased.

Dell was recently purchased by Lenovo, a major Chinese competitor.
There was too much competition in Dell's direct-to-consumer marketing channel.
There were fewer restrictions in computer technology outside the United States.
Emerging economies offered significant growth potential.
2. In what way is Dell's expansion into the global arena a departure from its prior
marketing practices?
A. All Dell products were manufactured in the countries within which they were sold.
B. Dell sold its products to emerging markets using the telephone and Internet sales
strategy that was so successful in the United States.
C. Dell opened shop-within-a-shop counters in selected retailers in India so shoppers
could experience the products.
D. Dell sold only laptops in China whereas it sold both desktops and laptops in India
due to trade restrictions in China.
E. Dell designed and distributed the same products globally to take advantage of
economies of scale.
6-1
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McGraw-Hill Education.
3. Dell established its company primarily with direct telephone-and Internet-based

sales. In terms of Dell's global expansion strategy, which of the following statements
is most accurate?
A. Dell sells its computers via word of mouth, which is the most powerful method for
consumer electronics.
B. Dell partners with each country's largest department stores and sells its computers
in the small appliance department.
C. Dell issues its own credit card through multinational banks, making it possible for
customers who would not normally qualify for credit to do so.
D. Dell distributes its products through individual sales associates who reach out to
customers with a first-hand experience at their doorsteps.
E. Dell maintains the exact same U.S. strategies that brought it this far because it
sees no reason to mess with success.
4. Five trends in the past decade have significantly influenced the landscape of global
marketing. One of them is
A. an increase in most countries' GDPs coupled with an increased degree of consumer

ethnocentrism.
B. a significant increase in economic protectionism and a decline in free trade.
C. a more aggressive attitude toward initiating international tariffs and quota
systems.
D. a decrease in most countries' GDPs and a renewal of nationalism.
E. a decline in economic protectionism by individual countries.
A. the rise of economic integration and free trade among nations.

B. an increase in economic protectionism and a decline in free trade.
C. a more aggressive attitude towards initiating international tariffs and quota
systems.
E. an increase in most countries' GDPs coupled with an increased degree of consumer
ethnocentrism.
6-2
A. an increase in economic protectionism and a decline in free trade.

B. a more aggressive attitude towards initiating international tariffs and quota
systems.
C. global competition among global companies for global customers.
ethnocentrism.
A. an increase in economic protectionism and a decline free trade.

systems.
C. a decrease in most countries' GDPs and a renewal of nationalism.
D. the emergence of networked global marketspace.
ethnocentrism.

systems.
D. the growing prevalence of economic espionage.
ethnocentrism.
9. The practice of shielding one or more sectors of a country's economy from foreign
competition through the use of tariffs or quotas is referred to as
A.
B.
C.
D.
E.
domestic imperialism.
protectionism.
blocked competition.
import taxation.
trade restriction.
6-3
10. Protectionism refers to
A. the practice of purchasing products exclusively from a domestic market in order to

shore up a nation's economy.
B. the use of tariffs, quotas, and boycotts with the express intention of putting foreign
competitors out of business.
C. the practice of shielding one or more sectors of a country's economy from foreign
competition through the use of tariffs or quotas.
D. a form of domestic imperialism that holds that only those products manufactured
within one's home nation are of sufficient quality to warrant purchase.
E. the practice of purchasing products exclusively from a foreign developing country
in order to develop its industries and economic infrastructure.
11. The argument for protectionism is that it
A.
protects a nation's political security.
B. encourages economic reliance on foreign countries.
C. inhibits the development of domestic industries.
D. creates opportunities for the outsourcing of domestic jobs.
E. creates a more favorable environment for a global economy.
12. Those in favor of protectionism argue that it
A.
helps reduce tariffs and quotas.
B. encourages the development of domestic industries.
C. encourages economic reliance on foreign countries.
D. creates opportunities for the outsourcing of domestic jobs.
E. creates a more favorable environment for a global economy.
13. Recently, the United States imposed a 35% tariff on Chinese tire imports in hopes of
sustaining U.S. jobs in tire manufacturing. This addition of tariffs is an example of
A.
B.
C.
D.
E.
imposing the rule of eminent domain.

increasing ethnocentrism.
enhancing domestic imperialism.
increasing protectionism.
slowing countertrade.
6-4
14. Beginning January 1, 2005, China lifted the import quotas and lowered tariffs on
automobiles. This removal of the quotas and the lowering of tariffs is an example of
A.
B.
C.
D.
E.
relaxing the rule of eminent domain.

reducing ethnocentrism.
reducing protectionism.
enhancing countertrade.
15. Which of the following issues raises concerns about the ethics of protectionism?
A. Competitive advantage grows out of continuous improvement.

B. Small firms succeed in foreign niche markets.
C. Tariffs have declined from an average of 40 percent to less than 5 percent.
D. Regional trade agreements provide preferential treatment for member nations.
E. Pan-European marketing strategies are possible due to greater uniformity in
packaging standards.
Figure 6-1
6-5
16. The question mark in Figure 6-1 above which results from the imposition of tariffs and
quotas is referred to as
A.
B.
C.
D.
E.
protectionism.
import taxation.
trade restriction.
17. The question mark in Figure 6-1 above leads to which of the following as a result of
the imposition of tariffs and quotas?
A.
B.
C.
D.
E.
an increase world trade

a decrease world trade
a limit on exports
a limit on import
countertrade
18. Government taxes on products or services entering a country that primarily serve to
raise prices on imports are referred to as
A.
B.
C.
D.
E.
tariffs.
quotas.
WTO taxes.
foreign excise taxes.
trade subsidies.
19. Tariffs refer to
A. government payments to companies or industries that primarily serve to create

competitive advantage for domestic products.
B. government taxes on products or services entering a country that primarily serve
to raise prices on imports.
C. a restriction placed on the amount of a product allowed to enter or leave a
country.
D. a minimum requirement for the purchase between two or more nations of products
or services.
E. a refusal to purchase or exchange products or services with another nation unless
certain financial or ideological requirements have been satisfied.
6-6
20. The U.S. Rice Millers' Association claims that if the Japanese rice market were opened
to imports by lowering __________, lower prices would save Japanese consumers $6
billion annually and the United States would gain a large share of the Japanese rice
market.
A.
B.
C.
D.
E.
boycotts
quotas
sanctions
tariffs
subsidies
21. The __________ imposed on imported bananas by European Union countries cost
consumers $2 billion a year in higher prices.
A.
B.
C.
D.
E.
boycotts
quotas
sanctions
subsidies
tariffs
22. U.S. citizens pay $5 billion more annually for shoes and Japanese citizens pay $6
billion more for rice than the actual cost of the products because
A. both countries have suffered major financial crises due a severe trade imbalance.
B. both countries have imposed tariffs on imported goods to protect their domestic
markets.
C. both countries have imposed limits on the quantity of these goods that can leave
their respective domestic markets.
D. both products are considered essentials and as a result are more heavily taxed.
E. these products were purchased at a lower price from nations that currently are
under governmental sanctions.
23. Recently, the Japanese government, under pressure from its domestic farm lobby,
slapped government taxes on mushrooms, leeks, and the reeds used in tatami mats
that were being imported from China. These taxes Japan levied are referred to as
A.
B.
C.
D.
E.
WTO taxes.
quotas.
tariffs.
excise taxes.
subsidies.
6-7
24. If you wanted to set up a business importing amber jewelry from Latvia to the United
States, you would have to plan on paying the U.S. Customs Service roughly 20
percent of the value of the product as a(n) __________.
A.
B.
C.
D.
E.
bribe
tariff
subsidy
excise tax
quota
25. Whirlpool recently asked the United States to impose __________ on washing machine
imports made by LG Electronics and Samsung Electronics, both South Korean
companies, to raise the price of these products. Whirlpool accused these companies
of selling below fair market value and receiving anticompetitive export subsidies from
their governments, both of which could jeopardize American jobs.
A.
B.
C.
D.
E.
boycotts
quotas
sanctions
tariffs
embargoes
26. President Bill Clinton attempted to protect American firms from foreign competition
by placing a government tax on Japanese automobiles imported to the United States.
President Clinton's goal was to raise the price on Japanese imports, thereby
encouraging American consumers to purchase American-made automobiles. The tax
the President threatened to impose is an example of a __________.
A.
B.
C.
D.
E.
boycott
quota
tariff
sanction
subsidy
27. A restriction placed on the amount of a product allowed to enter or leave a country is
referred to as a
A.
B.
C.
D.
E.
quota.
tariff.
GATT tax.
subsidy.
excise tax.
6-8
28. A quota refers to
A. a government tax on products or services entering a country that primarily serves

to raise prices on imports.
B. government payments to companies or industries that serve to lower costs and
provide a competitive advantage to domestic industries.
country.
D. a minimum requirement for the purchase of specific products or services between
two nations.
E. a refusal to purchase or exchange products or services with another nation unless
certain financial or ideological requirements have been satisfied.
29. The world's largest manufacturer of peppermint candy canes was located in Albany,
Georgia, until it could no longer afford to buy the sugar needed for its operation. It
moved its manufacturing business to Mexico where there are no restrictions (like
those that existed in the United States) on the amount of sugar that can be brought
into the nation. The business moved to Mexico because of a(n) __________ established
by the U.S. government.
A.
B.
C.
D.
E.
tariff
trade imbalance
excise tax
subsidy
quota
30. Russia currently has a limit on pork of 400,000 metric tons annually that can be
imported from any country. This restriction would be considered a
A.
B.
C.
D.
E.
tariff.
trade imbalance.
excise tax.
quota.
subsidy.
31. An institution that sets rules governing trade between its members through a panel
of trade experts who decide on trade disputes between members and issue binding
decisions is referred to as the __________.
A.
B.
C.
D.
E.
League of Nations
World Trade Organization (WTO)
Association for Commerce Equity (ACE)
United Nations Board of Trade (UNBT)
Global Better Business Bureau (BBB-G)
6-9
32. The World Trade Organization (WTO) refers to
A. the world's largest banking institution responsible for establishing and maintaining
equitable exchange rates for all member nations.
B. the world's largest licensing institution responsible for the certification of products
distributed to a global market.
C. an institution that sets rules governing trade between its members through panels
of trade experts who decide on trade disputes between members and issue
binding decisions.
D. a multinational trade organization composed of the world's wealthiest nations
whose primary purpose is to aid in the economic growth of developing nations.
E. a multinational trade organization comprised of the world's wealthiest nations
whose primary purpose is to promote free trade economies.
33. There are __________ World Trade Organization countries, including the United States,
which account for more than 90 percent of world trade.
A.
B.
C.
D.
E.
37
52
97
113
159
34. Which of the following statements about the World Trade Organization (WTO) is most
accurate?
A. The WTO acts as an agent in trade negotiations between its members and the
remainder of the world.
B. The 179 member countries of the WTO account for less than 25 percent of world
trade.
C. The WTO was formed by the major industrialized nations in 1995 to address trade
issues.
D. The WTO uses panels of trade experts who can issue non-binding
recommendations.
E.
The WTO was formed by the United Nations.
6-10
accurate?
A. The World Trade Organization is a temporary institution.

B. The 168 member countries of the WTO account for less than 25 percent of world
trade.
C. The WTO sets rules governing trade between its members and the rest of the
world.
recommendations.
E. The WTO was formed by the major industrialized nations of the world.
accurate?
A. The World Trade Organization was formed in 2008 to response to the global
recession.
B. By mid-2013, there were 159 WTO member countries, including the United States,
which account for more than 90 percent of world trade.
C. The WTO sets rules governing trade between member and nonmember countries
of the world.
recommendations.
E.
accurate?
A. The WTO is an institution that sets rules governing trade between its members.
B. The WTO acts as an agent in trade negotiations between its members and the
C. The 183 member countries of the WTO account for approximately 55 percent of
world trade.
D. The WTO uses panels of trade experts who issue non-binding recommendations.
E.
6-11
accurate?
A. The World Trade Organization was formed in 2008 in response to the global
recession.
B. The 12 member countries of the WTO account for approximately 55 percent of
world trade.
C. The WTO acts as an agent in licensing negotiations between its members and the
D. The WTO uses panels of trade experts who can issue binding decisions.
E.
39. The European Union (EU) in early 2015 consisted of 28 countries with more than 500
million consumers. The EU has eliminated most barriers to the free flow of products,
capital, and labor across its borders. Which of the following countries is NOT a
member of the EU?
A.
B.
C.
D.
E.
Latvia
Greece
Ireland
Switzerland
England
40. The European Union is an economic and political union of __________ member
countries that have eliminated most barriers to the free flow of products, services,
capital, and labor across their borders.
A.
B.
C.
D.
E.
17
20
28
30
37
41. To eliminate the need to continually monitor currency exchange rates, 16 of the
countries in the European Union (EU) have adopted a common currency, which is
called the __________.
A.
B.
C.
D.
E.
pound
franc
euro
mark
dollar
6-12
42. To eliminate the need to continually monitor currency exchange rates, __________ of
the countries in the European Union (EU) have adopted a common currency called
the euro.
A.
B.
C.
D.
E.
11
16
20
28
32
43. The European Union (EU) has been beneficial to electronic commerce because it is no
longer necessary to
A. use multiple languages when settling accounts for purchases made across
borders.
B. continually monitor currency exchange rates among participating nations.
C. trade with the former Eastern European communist countries.
D.
obey international e-trade regulations.
E. use the American dollar as the economic standard.
44. The EU has benefited firms in its member nations because
A. it provides a safe haven in times of world economic crises.

B. there is a common language advantage among EU consumers.
C. most companies within the EU are engaging in strategic global partnerships.
D. there is now a legally binding code of economic conduct.
E. firms do not need to market their products and services on a nation-by-nation
basis.
45. The EU has benefited its member nations because firms do not need to market their
products and services on a nation-by-nation basis; most tariffs that affect pricing
practices have been removed, and
A. there is a legally binding code of economic conduct.

B.
there is immunity against world recessions.
C. there are fewer regulatory restrictions on transportation, advertising, and
promotion.
D. there is a common language advantage among EU consumers.
E. most companies within the EU are engaging in strategic global partnerships.
6-13
46. Pan-European marketing strategies are possible because
A. there is a legally binding code of economic conduct.

B. there are effective countermeasures for protectionism.
promotion.
47. The North American Free Trade Agreement was designed to encourage free trade
between
A. North America, Central America, and South America.

B.
the United States and the European Union.
C. member countries originally from NATO (North Atlantic Treaty Organization).
D.
the United States, Canada, and Mexico.
E. North America and the Commonwealth of Independent States.
48. CAFTA-DR, a comprehensive free trade agreement between Costa Rica, the
Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and __________.
A.
B.
C.
D.
E.
the United States

Panama
Belize
Cuba
Mexico
49. When firms originate, produce, and market their products and services worldwide, it
is referred to as __________.
A.
B.
C.
D.
E.
acculturation
free trade
global branding
global competition
transactional exchange
6-14
50. Global competition exists when
A. a firm produces and markets its products domestically rather than globally.
B. firms originate, produce, and market their products and services worldwide.
C. two firms from two different countries compete for market share in a single
domestic market.
D. two or more firms from different nations combine their resources to market
products in a single domestic market.
E. the firm from one nation dominates the market for its product in every nation.
51. Coca-Cola has operations in all but three nations in the world and Pepsi-Cola is now
available in more than 160 countries and territories, making the soft drink industry an
example of
A.
B.
C.
D.
E.
global competition.
acculturation.
free trade.
global branding.
transactional exchange.
52. In terms of the global marketplace, there are three primary types of companies:
__________ firms, multinational firms, and transnational firms.
A.
B.
C.
D.
E.
worldwide
conglomerate
intercontinental
international
cosmopolitan
international firms, __________ firms, and transnational firms.
A.
B.
C.
D.
E.
large-scale
conglomerate
intercontinental
cosmopolitan
multinational
6-15
international firms, multinational firms, and __________ firms.
A.
B.
C.
D.
E.
multiethnic
transnational
multidomestic
ethnocentric
meganational
55. The administrative, marketing, and manufacturing operations that many international
firms, multinational firms, and transnational firms have around the world are often
called
A.
B.
C.
D.
E.
divisions.
outlets.
departments.
markets.
holding companies.
international firms, multinational firms, and transnational firms. The key factor that
distinguishes one from another is
A.
B.
C.
D.
E.
the firm's financial capacity to take risks.

the willingness and ability to embrace diversity and cultural differences.
the firm's orientation toward and strategy for global markets and marketing.
the relative position of the product or service in terms of its life cycle.
the relative size of the firm both in financial terms and in production capacity.
57. A(n) __________ firm engages in trade and marketing in different countries as an
extension of the marketing strategy in its home country.
A.
B.
C.
D.
E.
multidomestic
meganational
international
multinational
transnational
6-16
58. Generally speaking, a(n) __________ firm markets its existing products and services in
other countries the same way it does in its home country.
A.
B.
C.
D.
E.
meganational
international
multinational
transnational
intranational
59. Mars, America's second-largest candy company, began doing business in Russia in
the late 1980s. The Snickers bar is one of the top selling candies in Russia and is
marketed in much the same way as it is in the United States. What type of global
company is Mars?
A.
B.
C.
D.
E.
an international firm
a multidomestic firm
a transnational firm
a meganational firm
a multinational firm
60. A firm that views the world as consisting of unique parts and markets to each part
differently is referred to as a(n)
A.
B.
C.
D.
E.
meganational firm.
extranational firm.
international firm.
multinational firm.
transnational firm.
61. Unilever markets its Snuggle fabric softener differently to different parts of the world.
Unilever is a(n) __________ firm.
A.
B.
C.
D.
E.
ethnocentric
multinational
transnational
global
international
6-17
62. A multidomestic marketing strategy refers to
A. the strategy of transnational firms that employ the practice of standardizing

marketing activities when there are cultural similarities and adapting them when
cultures differ.
B. the strategy used by firms that use the same product variations, brand names, and
advertising programs for every country in which they do business.
C. the strategy used by firms that have as many different product variations, brand
names, and advertising programs as countries in which they do business.
D. the strategy of seeking out already established firms in other nations and selling
them the rights to manufacture and distribute the firm's products.
E. the strategy currently used by most U.S. domestic firms that when entering a new
international market, these firms offer only those products that require the least
amount of product adaptation.
63. Companies that use a(n) __________ marketing strategy have as many different
product variations, brand names, and advertising programs as countries in which
they do business.
A.
B.
C.
D.
E.
ethnocentric
multidomestic
transnational
global
international
64. Lever Europe, a division of Unilever, markets its Snuggle fabric softener in the United
States. But in 10 European countries, it uses seven brand names, including
Kuschelweich in German, Coccolino in Italy, and Mimosin in France. These products
also have different packages, different advertising programs, and occasionally
different formulas. From this information, we can assume that Lever Europe uses a(n)
__________ marketing strategy.
A.
B.
C.
D.
E.
ethnocentric
transnational
global
international
multidomestic
6-18
65. U.S. appliance manufacturers find that different customs about shopping must be
used to determine local product design. For instance, people in Northern Europe shop
only once a week, so they need bigger refrigerators than Southern Europeans, who
shop daily. Furthermore, Northern Europeans insist that freezers should be on the top
just as firmly as Southern Europeans want them on the bottom. Based on this, U.S.
appliance manufacturers would be more likely successful if they used a(n) __________
marketing strategy.
A.
B.
C.
D.
E.
global
multidomestic
transnational
meganational
international
66. Disney employed a(n) __________ marketing strategy for its Disneyland Paris,
particularly when it came to the eateries in the park. These restaurants featured
recipes that were revised for local tastes, alcoholic beverages (not permitted in
previous parks), and increased outdoor seating.
A.
B.
C.
D.
E.
global
transnational
multidomestic
meganational
international
67. A(n) __________ firm views the world as one market and emphasizes cultural
similarities across countries or universal consumer needs and wants more than
differences.
A.
B.
C.
D.
E.
transcontinental
multidomestic
international
multinational
transnational
68. The strategy transnational firms employ that standardizes marketing activities when
there are cultural similarities and adapts them when cultures differ is referred to as
a(n)
A.
B.
C.
D.
E.
global marketing strategy.

integrated marketing strategy.
transnational marketing strategy.
meganational marketing strategy.
international marketing strategy.
6-19
69. A global marketing strategy refers to
A. the strategy used by multinational firms that have as many different product
variations, brand names, and advertising programs as countries in which they do
business.
B. the strategy of transnational firms not to employ adaptive marketing techniques
when there are cultural differences, but to redirect their marketing resources
towards customer education.
C. the strategy of transnational firms that employ the practice of standardizing
marketing activities when there are cultural similarities and adapting them when
cultures differ.
D. the global strategy of seeking out already established firms in other nations and
selling them the rights to manufacture and distribute the firm's products through a
host nation's local businesses.
E. the strategy currently used by most U.S. domestic firms that when entering a new
international market, these firms offer only those products that require the least
amount of product adaptation.
70. Which of the following types of firms would be most likely to use a global marketing
strategy?
A.
B.
C.
D.
E.
multidomestic
multinational
multicountry
transnational
transborder
71. A brand marketed under the same name in multiple countries with similar and
centrally coordinated marketing programs is referred to as a(n)
A.
B.
C.
D.
E.
transnational brand.
international brand.
multinational brand.
global brand.
meganational brand.
6-20
72. A global brand refers to
A. two or more domestic products that coincidentally share the same brand name but
represent two completely unrelated products.
B. two or more international products that coincidentally share the same brand name
but represent two completely unrelated products.
C. a brand marketed under the same name in multiple countries with similar and
centrally coordinated marketing programs.
D. a brand that is essentially the same but that has had minor adaptations made to
meet the more specific needs of different nations.
E. a brand marketed under different names in multiple countries with similar and
73. Which of the following statements regarding global brands is most accurate?
A. A global brand has dispersed marketing centers, each of which is responsible for a
specific region.
B. A global brand is marketed under the same name in multiple countries.
C. A global brand alters the brand name for each dialect in a geographical region.
D. A global brand delivers multiple benefits to the GDP of each country.
E. A global brand is a collaborative effort among several different transnational firms.
74. Which of the following statements about global brands is most accurate?
A. A global brand has centrally coordinated marketing programs.

B. A global brand is marketed under different names but uses identical ads for all
markets.
C. A global brand alters the product formulation or service for each geographical
region.
D. A global brand delivers multiple benefits based on the GDP of each country.
E. A global brand is a collaborative effort among several different national firms.
75. A global brand is a brand marketed under the same name in multiple countries with
similar and centrally coordinated marketing programs. However, adaptations of
global brands are made
A. only if required by government regulations in the host market.

B. only in its initial introduction into a market and only until the brand is recognized.
C. by domestic competitors causing brand confusion.
D. only when necessary to better connect the brand to consumers in different
markets.
E.
when there is a serious drop in market share.
6-21
76. Thirteen- to nineteen-year-olds in Europe, North America, South America, and the
industrialized nations of Asia
A. are more similar than different regarding their purchase behaviors.

B. are becoming more similar, but still differ significantly in terms of fashion and
design.
C. are rebelling against the Americanization of fashion and culture.
D. have very different tastes in fashions and music.
E. are more influenced by Asian culture than European culture.
77. The appreciation of fashion, music, and a desire for novelty and trendier designs and
images
A. are preferences found more in American teenagers than in most other cultures
around the world.
B. actually begin at age 10, but begin to decline significantly as students enter high
school.
C. ironically are found more for teenagers who cannot afford to make those purchases
than for those who can.
D. are preferences of teenagers around the world regardless of whether they live.
E. are often established early among European teens and they typically linger well
into adulthood.
78. Based on a study of 6,500 teens in 26 countries, when asked what country had the
most influence on their attitudes and purchase behavior, 54 percent of teens from
the United States, 87 percent of those from Latin America, 80 percent of the
Europeans, and 80 percent of those from Asia named
A.
B.
C.
D.
E.
the United States.

Japan.
the United Kingdom.
France.
China.
79. Consumer groups living in many countries or regions of the world that have similar
needs or seek similar features and benefits from products or services are referred to
as
A.
B.
C.
D.
E.
transnational consumers.
meganational consumers.
international consumers.
multinational consumers.
global consumers.
6-22
80. Global consumers refer to
A. all potential consumers for any and all products or services regardless of cultural,
ethnic, or national origins.
B. customers within a nation who consider the entire world a single marketplace.
C. consumer groups living in many countries or regions of the world who have similar
needs or seek similar features and benefits from products or services.
D. consumer groups living in many countries or regions of the world that have similar
needs but seek customized features and benefits from products or services that
reflect their individual cultures.
E. multinational organizations whose products incorporate raw materials, assembly,
and distribution contributions from multiple nations before they are marketed.
81. Around the world, middle-class, youth, and elite markets that consume similar
assortments of products and services, regardless of geographic location, are referred
to as
A.
B.
C.
D.
E.
global consumers.
82. The use of __________ as a tool for exchanging goods, services, and information on a
global scale is one of the trends that has affected world trade.
A.
B.
C.
D.
E.
buying centers
Internet technology
language translators
tariff and quota policies
multinational marketing strategies
83. Which of the following statements about the emergence of a networked global
marketspace is most accurate?
A. Marketspace creates an unfair competitive environment for emerging nations.

B. More business-to-consumer marketing is done on the Internet than business-tobusiness marketing.
C. The most active participants in the networked global marketspace are companies
in developing nations.
D. All business in the networked global marketspace is conducted in English.
E. The chief advantage of the global marketspace over the traditional bricks-andmortar stores for customers is the ability to shop anywhere, at any time, and at a
lower cost.
6-23
84. The clandestine collection of trade secrets or proprietary information about a

company's competitors is referred to as
A.
B.
C.
D.
E.
trade piracy.
transnational fraud.
economic espionage.
competitive duplicity.
transnational espionage.
85. Economic espionage is the clandestine collection of trade secrets or __________.
A.
B.
C.
D.
E.
government economic information

industrial intelligence
government weapons information
banking lists
proprietary information about competitors
86. The estimated cost of economic espionage to firms in the United States is estimated
to be
A.
B.
C.
D.
E.
$10 billion per year.

exceeding $1 trillion per year.
87. The Economic Espionage Act
A. allows the World Court in The Hague to adjudicate trade disputes on behalf of
United Nations' members and requires the home country to impose any penalties.
B. imposes a personal fine on a convicted U.S. citizen of up to $10 million.
C. targets espionage activities that are commonplace in any industry that holds
governmental contracts.
D. makes the theft of trade secrets by foreign entities a federal crime in the U.S.
E. is well-intended in theory, but is virtually impossible to enforce.
6-24
88. The prescribed penalty for agents of foreign governments found guilty of economic
espionage is
A. up to 15 years in prison and fines up to $500,000.

B. life in prison with the possibility of parole after 25 years.
C.
25 years in prison and a $10 million fine.
D.
permanent expulsion from the United States.
E. 30 years in prison and fines proportional to the damage caused.
89. The prescribed penalty for individuals found guilty of the theft of trade secrets is
A. up to 25 years in prison and fines up to $10 million.

B. life in prison with chance of parole after 25 years.
C. expulsion from the United States and/or revocation of citizenship.
D. 30 years in prison and fines to be determined by the courts.
E. up to 15 years in prison and fines up to $500,000.
90. Cross-cultural analysis refers to the study of
A. the subgroups within the larger, or national, culture with unique values, ideas, and
attitudes.
B. the set of values, ideas, and attitudes that are learned and shared among the
consumers of a country.
C. the similarities and differences among consumers in two or more nations or
societies.
D. the buying behaviors within a given nation to identify similarities and differences
among individuals.
E. the buying behaviors within a given nation that links a person's actions to the
cultural group with which he or she identify most.
91. The study of similarities and differences among consumers in two or more nations or
societies is referred to as __________.
A.
B.
C.
D.
E.
market synthesis
cross-cultural analysis
international sociographics
transnational anthropology
multicultural ethnocentrism
6-25
92. For the marketer, a thorough __________ involves an understanding of and an

appreciation for the values, customs, symbols, and language of other societies.
A.
B.
C.
D.
E.
market synthesis
international sociographic study
anthropological examination
ethnocentrism assessment
93. A thorough cross-cultural analysis involves an understanding of and an appreciation

of all of the following EXCEPT:
A.
B.
C.
D.
E.
economics.
symbols.
values.
languages.
customs.
94. Personally or socially preferable modes of conduct or states of existence that tend to
persist over time are referred to as __________.
A.
B.
C.
D.
E.
customs
ethics
values
culture
beliefs
95. Values refer to
A. personally or socially held core beliefs that are consistent within a given culture.
B. the beliefs that dictate a person's behavior, which are often derived from a
religious code of conduct.
C. personally or socially preferable modes of conduct or states of existence that tend
to persist over time.
D. the innate sense of what a person considers to be right or wrong in terms of his or
her own conduct when dealing with others.
E. those personality traits regarding honesty and integrity that have been passed
down from generation to generation.
6-26
96. The reverence that Japan shows towards its elderly is an example of that nation's
__________.
A.
B.
C.
D.
E.
values
beliefs
customs
religion
cultural diversity
97. Which of the following examples best demonstrates a company's appreciation of

another country's values?
A. American companies in Germany encouraging the use of all types of credit cards.
B. In Brazil, American companies are extremely careful to keep to a strict agenda and
time schedule, even though an informal structure is preferred.
C. Bath products are advertised by portraying intimate scenes between husbands and
wives in countries where personal privacy is important.
D. McDonald's restaurants in India serve a full line of products except for hamburgers
made from beef.
E. Vogue Italia publishing a feature with a model wearing "slave earrings," which it
said were "worn by women of color during the slave trade."
98. Which of the following examples best demonstrates a company's appreciation for
A. A German company allows customers to make large purchases using lay-away

(paying small amounts until the item is paid for and delivered).
B. In Brazil, an appliance maintenance firm schedules service appointments allowing
only 15 minutes of leeway for missed calls or no shows.
C. In Japan, a spa owner created special exercise classes for husbands and wives.
D. In India, a popular hamburger chain separated its dining area by color for people
who wanted to eat beef and those who did not.
E. Calvin Klein reduced the number of outdoor advertising placements showing
scantily clad models in countries with predominantly Muslim populations.
6-27
99. Almost all countries have some division of social class (upper, middle, and lower).
The determining factor for the assignment to one of these classes may differ from
country to country. For example, in the United States, the primary determining factor
is occupation; in India, it is birthright; in China, it is geographical region and
education; and in Singapore, it is income. These differences are best explained in
terms of a country's
A.
B.
C.
D.
E.
semiotics.
legal system.
ethnocentricity.
religion.
values.
100 What is considered normal and expected about the way people do things in a specific
.
country is referred to as __________.
A.
B.
C.
D.
E.
morals
ethics
values
customs
beliefs
101 Customs refer to

.
A. what is considered normal and expected about the way people do things in a
specific country.
B. those actions or activities within a community that are unique or distinctly
different from any other group.
C. actions or behaviors that are repeated over time and carry a specific meaning to a
unique group, nationality, or ethnicity.
D. traditions among a group of people, a nation, or ethnicity that affect their
purchase behaviors.
E. what would be considered unusual or unexpected, and even unacceptable, about
the way people do things in a specific country.
6-28
102 3M Company executives were perplexed when the company's Scotch-Brite floor.
cleaning product initially produced lukewarm sales in the Philippines. A Filipino
employee explained that consumers generally clean floors by pushing coconut shells
around with their feet. 3M changed the shape of the pad to a foot and sales soared.
3M changed its product in response to a Filipino __________.
A.
B.
C.
D.
E.
custom
value
demographic pattern
belief
idiosyncrasy
103 KFC in Japan sells tempura crispy strips. In northern England, it stresses gravy and
.
potatoes. In Thailand, it offers fresh rice. In Holland, instead of potatoes, KFC offers
customers a potato and onion croquette. In France, KFC sells pastries alongside its
chicken. These examples illustrate that KFC exhibits an appreciation for the
__________ of other societies.
A.
B.
C.
D.
E.
demographics
symbols
sensitivities
customs
values
104 Which of the following statements about bribery is most accurate?

.
A. Bribes, kickbacks, and payoffs offered to entice someone to commit an illegal or
improper act are deemed corrupt in some cultures but not in others.
B. The world's major exporting nations have agreed to treat bribery of foreign
government officials as a violation of trade agreements.
C. Bribes paid to foreign companies is in some cases a tax-deductible expense in the
U.S.
D. It is a crime for U.S. corporations to bribe an official of a foreign government or
political party unless pre-approved by the Federal Trade Commission.
E. It is illegal for a U.S. corporation to bribe an official of a foreign government or
political party to obtain or retain business in a foreign country.
6-29
105 The Foreign Corrupt Practices Act

.
A. makes it a crime for U.S. corporations to bribe an official of a foreign government
or political party to obtain or retain business in a foreign country.
B. has different levels of punishment based upon the wealth of the host nation.
C. regulates only the behavior of U.S. businesses conducting business within the
United States.
D. makes the theft of trade secrets by foreign entities a federal crime in the United
States.
E. is a unilateral agreement the United States made with several developing nations.
106 The law, amended by the International Anti-Dumping and Fair Competition Act, that
.
makes it a crime for U.S. corporations to bribe an official of a foreign government or
political party to obtain or retain business in a foreign country, is referred to as the
A.
B.
C.
D.
E.
International Law for Egalitarian Ethics Act.

International Fair Practices Act.
Law of International Equity Act.
International Law of Ethical Business Practices Act.
Foreign Corrupt Practices Act.
107 Cultural symbols refer to

.
A. ideas that can be protected by international copyrights.
B. ideas that cannot be expressed by words or characters.
C. things that represent values that exist solely within a nation.
D.
things that represent ideas and concepts.
E.
words that represent pictures or designs.
108 Cultural symbols are things that
.
A.
B.
C.
D.
E.
can be protected by international copyrights.

cannot be expressed by words or characters.
represent values that exist solely within a nation.
represent words through the use of pictures or designs.
represent ideas and concepts.
6-30
109 The representations of ideas and concepts to which different cultures often attach
.
different meanings are referred to as
A.
B.
C.
D.
E.
universal symbols.
cultural symbols.
symbolic concepts.
ideological representations.
cultural representations.
110 A field of study that examines the correspondence between symbols and their role in
.
the assignment of meaning for people is referred to as
A.
B.
C.
D.
E.
back translation.
symbiotics.
semiotics.
symbolic linguistics.
cross-cultural analysis.
111 Semiotics refers to

.
A. a field of study in marketing linguistics that identifies the connotative meanings
behind words in order to create the most effective product or brand names.
B. a field of study in marketing linguistics that identifies the connotative meanings
behind words in order to create the most effective advertising messages.
C. a field of study that examines the correspondence between symbols and their role
in the assignment of meaning for people.
D. a field of linguistics that translates words into internationally recognized symbols
to help companies carry their product message across international boundaries.
E. the practice where a translated word or phrase is retranslated into the original
language by a different interpreter to catch errors.
112 A researcher studying the fact that in some nations black is a sign of mourning while
.
in others white is a sign of mourning would be studying
A.
B.
C.
D.
E.
semiotics.
semantics.
semaphorics.
cultural symbolism.
cultural linguistics.
6-31
113 By skillfully using __________, global marketers can tie positive meanings to their
.
products, services, and brands to enhance their attractiveness to consumers.
A.
B.
C.
D.
E.
cultural symbols
visual icons
trademarks
brand names
ethnic emblems
114 Tiffany & Company knows that Japanese are superstitious about the number 4. As a
.
result, Tiffany sells its fine glassware and china in sets of five, not four, in Japan.
Tiffany has used its knowledge of __________ to avoid connecting its products with the
number 4.
A.
B.
C.
D.
E.
trademarks
visual icons
cultural symbols
brand names
ethnic emblems
Parthenon Photo
6-32
115 The Parthenon, shown in the photo above, evokes strong feelings from consumers in
.
Greece and is referred to as the "holy rock." Coca Cola marketers did not respect that
this __________, when used in a marketing campaign by replacing the columns with
Coke bottles, would arouse such an angry response in that country.
A.
B.
C.
D.
E.
cultural symbol
anthropomorphic code
back translation
semantic representation
civil analysis
116 Canada has two official languages, which are

.
A.
B.
C.
D.
E.
English and Japanese.

English and Spanish.
English and French.
English and Italian.
English and German.
117 Even though there are hundreds of different languages and dialects, the three major
.
languages used in global diplomacy and commerce are
A.
B.
C.
D.
E.
English, Japanese, and Chinese.

English, French, and Spanish.
Japanese, Spanish, and French.
Japanese, Spanish, and English.
Spanish, English, and Chinese.
118 The practice where a translated word or phrase is retranslated into the original
.
language by a different interpreter to catch errors is referred to as
A.
B.
C.
D.
E.
locution.
heuristics.
transliteration.
back translation.
cross-cultural paraphrasing.
6-33
119 If you were responsible for marketing communications at a company that

.
manufactures office supplies and had to provide product literature to be distributed
in France, you would be wise to use __________, whereby you have someone to
translate your literature from American English into French, and then have someone
else in France translate the French into American English.
A.
B.
C.
D.
E.
back talk
back translation
double talk
double entendre
double indemnity
120 A Tokyo shopkeeper would have been wise to use __________ to verify the accuracy of
.
the new sign in English he purchased for his dry cleaning business. The sign read,
"Drop your pants here for best results," which he did not know had another
suggestive meaning to native speakers.
A.
B.
C.
D.
E.
cultural symbolism
dialect transformation
semantic analysis
linguistic exchange
back translation
121 A New York carwash owner wanted to open a carwash in Quebec, Canada. He hired a
.
U.S. translator to create signage for the new venture and to design some simple
advertising. It was not until the business was opened that he learned that he should
have used __________. His French signs actually said "car bath" instead of "car wash."
A.
B.
C.
D.
E.
Esperanto
back translation
semiotics
semantic symbolism
linguistic exchange
6-34
Kit Kat Bar Photo

122 Consider the Kit Kat bar photo above. Kit Kat bars are marketed by Nestl worldwide.
.
Kit Kat is pronounced "kitto katsu" in Japanese, which roughly translates to "surely
win." Japanese teens eat Kit Kat bars for good luck, particularly when taking crucial
school exams. This positive result might have been eliminated had the company
used __________ and felt it necessary to use a name without an additional meaning.
A.
B.
C.
D.
E.
intentional transliteration
semantic symbolism
back translation
semantic analysis
linguistic exchange
123 Since global marketing is affected by economic considerations, a scan of the global
.
marketplace should include which of the following factors?
A.
B.
C.
D.
E.
an analysis of cultural diversity within the country under consideration

regulatory constraints regarding contracts, mergers, and partnerships
an assessment of language differences including dialect variation
political and ideological differences between the countries involved
an assessment of the economic infrastructure in the involved countries
.
A.
B.
C.
D.
E.

measurement of consumer income in different countries
6-35
.
A.
B.
C.
D.
E.
recognition of a country's currency exchange rates

126 A country's communications, transportation, financial, and distribution systems are

.
considered to be its
A.
B.
C.
D.
E.
capital improvements.
fixed-asset base.
economic infrastructure.
geopolitical wealth.
asset wealth.
127 Economic infrastructure refers to

.
A.
a nation's military-industrial complex.
B.
a country's governmental services.
C.
the people and the wealth of a nation.
D. a country's communications, transportation, financial, and distribution systems.
E. all of a country's natural resources, whether or not they are currently being
exploited.
128 Two-thirds of the commercial transactions in Russia involve non-monetary forms of
.
payment due to limits in formal operating procedures among financial institutions
and even limits on the notion of private property there. These would best be
described as constraints in the country's __________.
A.
B.
C.
D.
E.
capital infrastructure
political infrastructure
economic infrastructure
geopolitical system
financial exchange system
6-36
129 Although Russia now has a free economy, there are still some problems with its
.
financial and legal systems as well as with the notion of
A.
B.
C.
D.
E.
private property.
product promotion.
paid advertising.
community property.
foreign exchange rates.
130 In Latvia, only one six-lane highway exists, connecting Riga, its capitol, with Moscow.
.
Otherwise, the roads are two-lane and many are made of cobblestones or bricks. This
limits the speed with which deliveries can be made and requires that delivery trucks
be quite small. The road network in Latvia is an example of problems with a
country's
A.
B.
C.
D.
E.
fixed-asset base.
asset wealth.
131 A global marketer selling consumer products and services must also consider what
.
the average per capita or __________ is among a country's consumers and how the
income is distributed to determine a nation's purchasing power.
A.
B.
C.
D.
E.
buying capacity
currency exchange risk
purchasing power
household income
cost of living
132 A country's income distribution is important because it gives a more reliable picture
.
of a country's __________.
A.
B.
C.
D.
E.
consumer tastes
taxable income
purchasing power
discretionary income
cost of living
6-37
133 Foreign countries with very low per capita incomes may still be attractive markets for
.
some goods. To get a more reliable picture of a country's purchasing power, a
country's __________ must also be considered.
A.
B.
C.
D.
E.
total income
total area
geographical location
culture
income distribution
134 Generally, as the proportion of middle-income households in a country __________, the

.
__________ a nation's purchasing power.
A.
increases; greater
B.
increases; lesser
C.
decreases; greater
D.
levels off; greater
E. There is no relationship between middle-income households and a nation's
purchasing power.
135 Generally, as the proportion of middle-income households in a country __________, the
.
nation's purchasing power increases.
A.
B.
C.
D.
E.
decreases
increases
levels off
reaches 33 percent of the total population
136 Generally, as the proportion of middle-income households in a country increases, the

.
nation's purchasing power __________.
A.
B.
C.
D.
E.
levels off
decreases
increases
becomes less of an economic priority
becomes progressively unstable
6-38
137 The price of one country's currency expressed in terms of another country's currency
.
is referred to as the
A.
B.
C.
D.
E.
balance of price.
currency exchange rate.
money conversion factor.
balance of payments.
transfer payment.
138 A currency exchange rate refers to

.
A. the unit equivalency of all international currency.
B. the ratio of a nation's basic unit of currency relative to the price of silver.
C. the ratio of a nation's basic unit of currency relative to the price of gold.
D. the price of one country's currency expressed in terms of another country's
currency.
E. the unit of wealth (gold, oil, diamonds, etc.) upon which a nation bases its national
currency.
139 Fluctuations in the __________ among the world's currencies have direct impact on the
.
sales and profits made by global companies.
A.
B.
C.
D.
E.
production costs
transportation
reciprocity
exchange rates
140 When foreign currencies can buy more U.S. dollars,

.
A. U.S. products are more expensive to foreign customers.
B. U.S. products are more expensive to U.S. customers.
C. U.S. products are less expensive to foreign customers.
D. economists consider it an indicator of an impending long-term economic upturn.
E. American consumers will buy in large quantities and stockpile in fear of an
impending economic crisis.
6-39
141 Which of the following statements concerning currency exchange rates is most
.
accurate?
A. Fluctuations in exchange rates among the world's currencies are of critical

importance in global marketing.
B. Fluctuations in exchange rates among the world's currencies occur, but
multinational companies are insulated from the affects because of direct
investment.
C. Exchange rate fluctuations are relatively rare, but when they occur, their effects
are minimal.
D. Exchange rate fluctuations are now almost nonexistent due in great part to the
stability of the euro.
E. Exchange rate fluctuations may affect the financial sector but rarely reach the
consumer.
142 Chrysler Corporation wanted to sell its Jeeps in Japan. The car was priced in U.S.
.
dollars at about $19,000, but when it reached the Japanese car showrooms, its price
was over 31,000 Japanese yen, and the Japanese could not afford to buy it. Its price
was set without regard for the
A.
B.
C.
D.
E.
balance of price.
reciprocity price.
balance of trade.
143 The political and regulatory climate for marketing in a country or region of the world
.
means not only identifying the current environment but also determining how
A.
it conducts its macrofinancing.
B.
its citizens budget their money.
C. long a favorable or unfavorable climate will last.
D. the country's stocks are performing on the stock exchange.
E. its population ranks in size compared to other countries.
144 An assessment of a country's or region's political-regulatory climate includes an
.
analysis of its political stability and __________.
A.
B.
C.
D.
E.
stock market performance
trade regulations
cultural diversity
currency exchange rates
6-40
145 Trade among nations or regions depends on political stability. In recent times, billions
.
of dollars have been lost in __________ and __________ as a result of internal political
strife, terrorism, and war.
A.
B.
C.
D.
E.
Russia; Poland
France; Spain
China; Japan
the Middle East; Africa
Germany; the United Kingdom
146 The PRS group maintains a website that can be used to determine
.
A. changing demographic and psychographic data for each country in the registry.
B. a country's political risk ratings using multiple databases of country-specific
information.
C. the tariffs of each country and their relative effect on product and services sales.
D. the rankings of American products relative to domestic equivalents in each
country.
E. changing social trends within different segments of the economy.
147 Japanese car safety rules effectively require all automobile replacement parts to be
.
Japanese and the country has about 11,000 other rules that specify how other goods
are to be made and marketed. These rules often function as __________.
A.
B.
C.
D.
E.
trade barriers
universal codes
binding requirements
targets for bribery
148 A firm's profit potential and control over marketing activities __________ as it moves
.
from exporting to direct investment as a global market-entry strategy.
A.
B.
C.
D.
E.
becomes more stable

increases
levels off
decreases
becomes more unpredictable
6-41
149 Once a company has decided to enter the global marketplace, it must select a means
.
of market entry. Four general options exist: (1) __________; (2) licensing; (3) joint
venture; and (4) direct investment.
A.
B.
C.
D.
E.
exporting
accreditation
countertrading
cooperative
franchising
.
of market entry. Four general options exist: (1) exporting; (2) __________; (3) joint
venture; and (4) direct investment.
A.
B.
C.
D.
E.
macrofinancing
microfinancing
franchising
licensing
collateral venture
.
of market entry. Four general options exist: (1) exporting; (2) licensing; (3) __________;
and (4) direct investment.
A.
B.
C.
D.
E.
franchising
joint venture
cooperative
multiparty initiative
mutual investment
.
of market entry. Four general options exist: (1) exporting; (2) licensing; (3) joint
venture; and (4) __________.
A.
B.
C.
D.
E.
franchising
microfinancing
unilateral venture
cooperative
direct investment
6-42
153 A firm's profit potential and control over marketing activities increases as it moves
.
from exporting to direct investment as a global market-entry strategy. But so does
the firm's
A.
B.
C.
D.
E.
likelihood of long-term success.

financial commitment and risk.
vulnerability to political changes and doctrines.
need for a more educated workforce.
need for a larger workforce.
154 As a firm changes its global market-entry strategy from exporting to direct
.
investment, all of the following increase EXCEPT:
A.
B.
C.
D.
E.
marketing control.
risk.
divestiture.
profit potential.
financial commitment.
Figure 6-3
6-43
155 According to Figure 6-3 above, point A would most likely represent what option for
.
entering the global marketplace?
A.
B.
C.
D.
E.
joint venture
licensing
exporting
direct investment
franchise
156 According to Figure 6-3 above, point B would most likely represent what option for
.
A.
B.
C.
D.
E.
exporting
joint venture
direct investment
franchising
licensing
157 According to Figure 6-3 above, point C would most likely represent what option for
.
A.
B.
C.
D.
E.
exporting
joint venture
direct investment
licensing
franchising
158 According to Figure 6-3 above, point D would most likely represent what option for
.
A.
B.
C.
D.
E.
exporting
joint venture
direct investment
franchising
licensing
6-44
159 According to Figure 6-3 above, points A and D would most likely represent __________
.
and __________ options respectively for entering the global marketplace.
A.
B.
C.
D.
E.
joint venture; licensing

licensing; exporting
licensing; joint venture
direct investment; licensing
exporting; direct investment
160 According to Figure 6-3 above, points B and C would most likely represent __________
.
and __________ options respectively for entering the global marketplace.
A.
B.
C.
D.
E.
exporting; licensing
joint venture; direct investment
exporting; joint venture
161 A global market-entry strategy in which a company produces goods in one country
.
and sells them in another country is referred to as __________.
A.
B.
C.
D.
E.
exporting
direct investment
countertrade
licensing
multinational marketing
162 Exporting refers to a global market-entry strategy

.
A. in which a company will sell its products in international markets but not in its own
domestic market.
B. in which a company produces goods in one country and sells them in another
country.
C. in which a company will manufacture its product in several countries at the same
time using different brand names and slight product modifications.
D. in which a company will manufacture products specifically designed for nondomestic markets, but will sell those products to distributors who take title and
resell the products to different companies around the world.
E. whereby a product is made in one country, assembled in a second country, and
ultimately marketed to a third country.
6-45
163 What market entry option allows a company to make the least number of changes in
.
terms of its product, its organization, and even its corporate goals?
A.
B.
C.
D.
E.
exporting
licensing
joint venture
direct investment
franchising
164 Indirect exporting refers to

.
A. offering the right to a trademark, patent, trade secret, or similarly valued item of
intellectual property in return for a royalty or fee.
B. selling a firm's domestically produced products in a foreign country without
interference by that government.
C. contracting with a foreign firm to manufacture products according to stated
specifications.
D. avoiding the use of additional parties when a firm sells its domestically produced
products in another country.
E. selling a firm's domestically produced products in a foreign country through an
intermediary.
165 When a firm sells its domestically produced products in a foreign country through an
.
intermediary, it is referred to as
A.
B.
C.
D.
E.
direct exporting.
indirect exporting.
licensing.
franchising.
foreign assembly.
166 Indirect exporting occurs when a firm sells its domestically produced products in a
.
foreign country
A.
B.
C.
D.
E.
in violation of a quota.
without paying import tariffs.
without paying export duties.
through a joint venture.
through an intermediary.
6-46
167 What type of exporting has the least amount of commitment and risk but will
.
probably return the least profit?
A.
B.
C.
D.
E.
direct
indirect
licensing
joint
unilateral
168 A small Canadian winery located in British Columbia has developed a superior tasting
.
wine. It has no overseas contacts but wants to get its wine on the shelves in selected
Asian and European markets where growth has been substantial in the last two
years. What type of exporting option would best suit this company?
A.
B.
C.
D.
E.
direct exporting
licensing
indirect exporting
joint venture
cooperative partnership
169 The U.S. motorcycle manufacturer Harley-Davidson uses intermediaries to sell its
.
motorcycles in numerous nations outside the United States. Harley-Davidson uses
A.
B.
C.
D.
E.
direct exporting.
licensing.
contract manufacturing.
indirect exporting.
foreign assembly.
170 Fran Wilson Creative Cosmetics attributes its success to a top-quality product,
.
effective advertising, and a novel __________ strategy.
A.
B.
C.
D.
E.
joint venture
licensing
franchising
indirect export
direct investment
6-47
171 To avoid competing with Japanese firms through their traditional channel of
.
distribution, Fran Wilson Creative Cosmetics Moodmatcher lip coloring is sold in
which type of retail venue?
A.
B.
C.
D.
E.
grocery stores
flower shops
beauty salons
department stores
gift stores
172 Direct exporting refers to

.
A. offering the right to a trademark, patent, trade secret, or similarly valued items of
B. contracting with a foreign firm to manufacture products according to certain
specifications.
C. when a foreign country and a local firm invest together to create a local business.
D. using additional parties when a firm sells its domestically produced goods in
another country.
E. when a firm sells its domestically produced goods in a foreign country without
intermediaries.
173 What global market-entry strategy involves slightly more risk than indirect exporting
.
for a company but also opens the door to increased profits?
A.
B.
C.
D.
E.
direct exporting
licensing
cooperative
joint venture
direct investment
174 Most companies become involved in direct exporting when

.
A. foreign governments believe that they will benefit the most from allowing the
entry of direct exports.
B. emerging markets in foreign countries become economically viable.
C. they believe their volume of sales will be sufficiently large and easy to obtain so
that they do not require intermediaries.
D. the domestic market becomes saturated with competing products and services.
E. evolving technologies in foreign countries come online.
6-48
175 The prominent global market-entry strategy among small- and medium-sized
.
companies is
A.
B.
C.
D.
E.
direct exporting.
direct franchising.
licensing.
joint venture.
direct investment.
176 When a U.S. airplane manufacturer sells its airplanes to business executives in
.
Germany without using intermediaries, it is referred to as
A.
B.
C.
D.
E.
direct exporting.
indirect exporting.
licensing.
foreign manufacturing.
foreign assembly.
177 Licensing refers to

.
specifications.
C. when a foreign country and a local firm invest together to create a local business.
D. having a company handle its own exports directly without intermediaries.
E. exporting through an intermediary, which often has the knowledge and means to
succeed in selling a firm's product abroad.
178 Offering the right to a trademark, patent, trade secret, or similarly valued items of
.
intellectual property in return for a royalty or fee is referred to as
A.
B.
C.
D.
E.
direct exporting.
indirect exporting.
licensing.
outside branding.
6-49
179 Which of the following is an advantage inherent in the use of licensing?

.
A.
B.
C.
D.
E.
The licensor retains control of its product.

The licensor is protected from creating a potential competitor.
It provides an exemption from domestic trade regulations.
There is an increase in potential profit compared with direct investment.
The licensee gains information about the dynamics of the market.
180 All of the following are advantages of licensing EXCEPT:

.
A. the foreign country gains employment by having the product manufactured
locally.
B. the licensee gains information that allows it to start with a competitive advantage.
C. the low risk to the company granting the license.
D. the licensor's brand name can never be harmed as a result of the licensee.
E.
the capital-free entry into a foreign country.
181 Which of the following is a disadvantage associated with licensing?
.
A. The licensee pays lower wages and sells at lower prices.
B.
The licensor may create its own competition.
C. The foreign government dislikes it because it does not increase local employment.
D. This is the most expensive and risky method for global expansion.
E. The firm's brand does not get international exposure.
182 Which form of entry into a global market makes a firm the most vulnerable to harm
.
regarding its brand name or reputation?
A.
B.
C.
D.
E.
direct exporting
indirect exporting
licensing
direct investment
joint venture
183 All of the following are disadvantages of licensing EXCEPT:

.
A. the licensor reduces its potential profits gained from product sales.
B. the foreign country gains employment by having the product manufactured
locally.
C.
the licensor forgoes control of its product.
D. should the licensee prove to be a poor choice, the name or reputation of the
company may be harmed.
E. the licensor may be creating its own competition.
6-50
184 Tricon was the restaurant division of PepsiCo until it was spun off in 1997. Since then,
.
Tricon has opened 6,000 KFC restaurants abroad. It has 158 restaurants in Indonesia
and more than 500 restaurants in China. All are locally owned and each owner pays a
fee to Tricon. Tricon is engaged in
A.
B.
C.
D.
E.
licensing.
direct exporting.
indirect exporting.
foreign assembly.
185 Select Service Partner (SSP) Group has operations in 30 countries involving food and
.
beverage establishments, often in transit hubs like airports and railway stations. SSP
also operates Starbucks locations in airports in Finland, Sweden, and Norway. SSP
pays Starbucks a royalty based on sales as well as a fee for each store. In these
instances, Starbucks is engaged in
A.
B.
C.
D.
E.
direct exporting.
indirect exporting.
foreign assembly.
licensing.
186 A form of low-risk and capital-free entry into international markets that includes local
.
manufacturing is referred to as
A.
B.
C.
D.
E.
indirect exporting.
direct ownership.
joint ventures.
licensing.
direct exporting.
187 One variation of licensing is referred to as

.
A.
B.
C.
D.
E.
direct investment.
joint ventures.
direct exporting.
franchising.
dual adaptation.
6-51
188 Yum! Brands, the restaurant division of PepsiCo, has 12,600 KFC restaurants abroad,
.
with more than 3,700 restaurants in China. Many of the latter are locally owned and
subject to a contractual agreement that allows the owners to operate the business
under the established KFC brand name and according to specific rules. Yum! Brands
is engaged in
A.
B.
C.
D.
E.
contract assembly.
a joint venture.
a partnership.
franchising.
189 Yogen Frz is a successful chain of frozen yogurt shops originating in Canada.
.
Archeology Investments has an agreement with the Canadian firm that grants rights
to its company to open and operate Yogen Frz shops in Dubai, Oman, Qatar,
Bahrain, and Kuwait. Yogen Frz is engaged in
A.
B.
C.
D.
E.
dual adaptation.
a joint venture.
direct exporting.
indirect exporting.
franchising.
190 A joint venture refers to

.
specifications.
C. when a foreign company and a local firm invest together to create a local
business.
D. having a company handle its own exports directly, but using intermediaries for
importing.
E. exporting through an intermediary, which often has the knowledge and means to
succeed in selling a firm's products abroad.
6-52
191 A global market-entry strategy in which a foreign company and a local firm invest
.
together to create a local business in order to share ownership, control, and profits of
the new company is referred to as
A.
B.
C.
D.
E.
licensing.
a joint venture.
direct exporting.
contract assembly.
dual adaptation.
192 PepsiCo and __________ entered into a joint venture to market Frito-Lay's, Cheetos,
.
Ruffles, and Doritos in Israel.
A.
B.
C.
D.
E.
The Strauss Group

Ericsson
General Mills
Hebrew National
CGCT
193 The __________ arrangement between Ericsson, a Swedish telecommunications firm,

.
and CGCT, a French switch maker, enabled them together to beat out AT&T for a
$100 million French contract.
A.
B.
C.
D.
E.
franchising
licensing
joint venture
direct investment
exporting
194 A disadvantage of a joint venture arrangement when entering a new global market is
.
that
A. intermediaries have the potential to harm the brand.

B. the firm entering the foreign market must pay royalties to the other firm.
C. one of the companies forgoes control over its product.
D. the two companies may disagree about policies.
E. this method is likely to provide the fewest subsidies from the host country's
government.
6-53
195 Starbucks and Tata Global Beverage have together formed Starbuck Coffee A Tata
.
Alliance in order to bring Starbucks to India. The global market-entry strategy is
known as
A.
B.
C.
D.
E.
franchising.
a joint venture.
licensing.
direct investment.
exporting.
196 Direct investment in international marketing refers to

.
specifications.
C. a national market-entry strategy that entails a foreign company and a local firm
investing together to create a local business.
D. having a company handle its own exports directly, without intermediaries.
E. a global market-entry strategy that entails a domestic firm actually investing in
and owning a foreign subsidiary or division.
197 A global market-entry strategy that entails a domestic firm actually investing in and
.
owning a foreign subsidiary or division is referred to as
A.
B.
C.
D.
E.
licensing.
local assembly.
a joint venture.
direct investment.
local manufacturing.
198 When Nestl actually owns a subsidiary or division in a foreign country, such as when
.
it established its own ice cream manufacturing operation in China, this global market
entry strategy is known as __________ and represents the greatest commitment a
company can make to international sales.
A.
B.
C.
D.
E.
licensing
local assembly
a joint venture
direct investment
local manufacturing
6-54
199 Which form of entry into a foreign market requires the greatest commitment?
.
A.
B.
C.
D.
E.
direct exporting
direct investment
joint venture
licensing
indirect exporting
200 One advantage of direct investment when entering a new global market is that
.
B. the firm entering the foreign market does not have to pay royalties to the
government.
C.
the company forgoes control over its product.
D. the firm gains and uses a better understanding of local market conditions.
government.
201 One disadvantage of direct investment when entering a new global market is that
.
B. the firm entering the foreign market must pay royalties to the government.
C.
D.
the financial commitments involved.
E. this method is likely to provide the fewest cost savings relative to the other global
market-entry options.
202 Both Honda and Toyota have plants in the United States that use American labor.
.
This illustrates Honda's and Toyota's use of
A.
B.
C.
D.
E.
direct exporting.
direct investment.
joint venture.
licensing.
indirect exporting.
6-55
203 Yum! Brands, the parent company of KFC, has pursued an aggressive growth strategy
.
in China. There are now than 3,700 restaurants in 650 Chinese cities, and KFC has a
40% market share of the entire fast-food industry there. Yum! Brands China owns and
directly manages about 90% of its Chinese stores, so it appears that the company
prefers __________ in this market.
A.
B.
C.
D.
E.
licensing
local assembly
a joint venture
direct investment
local manufacturing
204 Global companies have five strategies for matching products and their promotion
.
efforts to global markets. The strategy of selling virtually the same product in other
countries is referred to as
A.
B.
C.
D.
E.
product adaptation.
product invention.
brand adaptation.
product extension.
product integration.
205 As a general rule, __________ seems to work best when the consumer target market
.
for the product is alike across countries and cultures - that is, consumers share the
same desires, needs, and use for the product.
A.
B.
C.
D.
E.
product adaptation
product extension
product integration
product invention
product customization
206 Coca-Cola, Gillette razors, and Nike apparel and shoes are being sold in the same
.
form in many countries. This is an example of which type of global marketing product
and promotion strategy?
A.
B.
C.
D.
E.
product adaptation
product extension
product integration
product invention
6-56
207 GlaxoSmithKline plc. of Great Britain makes Breathe-Right nasal strips. It sells the
.
same product in many countries because customers all over the world will use them
in the same way. This is an example of which type of global marketing product and
promotion strategy?
A.
B.
C.
D.
E.
product extension
product adaptation
product invention
product integration
.
efforts to global markets. Changing a product in some way to make it more
appropriate for a country's climate or preferences is an example of which type of
global marketing product and promotion strategy?
A.
B.
C.
D.
E.
product extension
product adaptation
product invention
product integration
209 Frito-Lay produces and markets potato chips in Russia that have seafood flavor. This
.
is an example of which type of global marketing product/promotion strategy?
A.
B.
C.
D.
E.
product adaptation
product integration
product invention
product extension
210 KFC in Japan altered the sweetness of its coleslaw to appeal to Japanese tastes. This
.
is an example of which type of global marketing product and promotion strategy?
A.
B.
C.
D.
E.
product extension
product adaptation
product invention
product integration
6-57
.
efforts to global markets. Designing a product to serve the unmet needs of a foreign
nation is which type of global marketing product and promotion strategy?
A.
B.
C.
D.
E.
product extension
product adaptation
product invention
product integration
212 KFC has added many offerings to its menus in China to appeal to local tastes,
.
including the "Dragon Twister," which is a chicken wrap with Peking-duck sauce. This
is an example of which type of global marketing product and promotion strategy?
A.
B.
C.
D.
E.
product extension
product adaptation
product invention
product integration
213 Even though Exxon adapts its gasoline blends for different countries based on
.
climate, the promotion message is unchanged. The wording of that slogan is
"__________."
A.
B.
C.
D.
E.
Put a Tiger in Your Tank

Put the Pedal to the Metal
Buy American Fuel
Keep America Driving
Power to the Pistons
214 Nescafe coffee is marketed using different coffee blends and promotional campaigns
.
to match consumer preferences in different countries. For example, Nescafe
generally emphasizes the taste, aroma, and warmth of shared moments in its
advertising around the world. However, in Thailand, Nescaf is advertised as a way
to relax from the pressures of daily life. This is an example of which type of global
marketing product/promotion strategy?
A.
B.
C.
D.
E.
product extension
product adaptation
dual adaptation
dual integration
6-58
Figure 6-4
.
efforts to global markets. According to Figure 6-4 above, A refers to which type of
strategy?
A.
B.
C.
D.
E.
product extension strategy

communication adaptation strategy
product adaptation strategy
dual adaptation strategy
product invention strategy
.
efforts to global markets. According to Figure 6-4 above, B refers to which type of
strategy?
A.
B.
C.
D.
E.

.
efforts to global markets. According to Figure 6-4 above, C refers to which type of
strategy?
A.
B.
C.
D.
E.

6-59
.
efforts to global markets. According to Figure 6-4 above, D refers to which type of
strategy?
A.
B.
C.
D.
E.

.
efforts to global markets. According to Figure 6-4 above, E refers to which type of
strategy?
A.
B.
C.
D.
E.

Figure 6-5
220 Figure 6-5 above outlines the distribution channels through which a product
.
manufactured in one country must travel to reach its destination in another country.
Box A represents the
A.
B.
C.
D.
E.
seller.
seller's international marketing headquarters.
channels between nations.
channels within the foreign nation.
final customer.
6-60
.
B represents the
A.
B.
C.
D.
E.
channels within foreign nations.

political forces.
final consumer.
.
C represents the
A.
B.
C.
D.
E.
seller.
final consumer.
.
Which letter in the figure would identify intermediaries used to move the product
from one country to another?
A.
B.
C.
D.
E.
A
B
C
D
E
.
Channels within a foreign nation can be very long or surprisingly short. Which letter
in the figure represents these channels?
A.
B.
C.
D.
E.
A
B
C
D
E
6-61
.
E represents the
A.
B.
C.
D.
E.
seller.
final consumer.
.
Channels of distribution in global marketing are often long and complex. Box A
represents the __________ and Box B identifies the __________.
A.
seller; exporter
B. seller; seller's international marketing headquarters
C. seller international marketing headquarters; channels between nations
D. channels between nations; channels within foreign nation
E.
channels within foreign nation; foreign retailer
227 When a firm sells a product in a foreign country below its domestic price or below its
.
actual cost, the practice is referred to as
A.
B.
C.
D.
E.
loss-leader pricing.
surplus marketing.
dumping.
second-market pricing.
entrepreneurial pricing.
228 In international trade, dumping refers to

.
A. illegally disposing of unusable or damaged goods to avoid paying removal fees
and/or taxes.
B. a firm selling damaged or unsalable goods below their original production cost.
C. a firm selling quality goods at significantly lower prices for the primary purpose of
reducing inventory to make room for seasonal goods.
D. a firm selling quality goods at significantly lower prices for the primary purpose of
reducing inventory to make room for newer or more expensive models.
E. a firm selling a product in a foreign country below its domestic price or below its
actual cost.
6-62
229 Eastman Kodak accused Japanese rival Fuji Photo Film of selling photographic paper
.
in the United States for 25 percent below what it charges in Japan. In other words,
Eastman Kodak accused Fuji of __________.
A.
B.
C.
D.
E.
tariff avoidance
countertrade
surplus marketing
dumping
underbidding
230 The U.S. Commerce Department imposed additional duties of 31 percent to 250
.
percent on imported photovoltaic products imported by Chinese solar manufacturers
after ruling that they sold them below cost. The Commerce Department took this
action in response to what it saw as __________.
A.
B.
C.
D.
E.
tariff avoidance
countertrade
surplus marketing
underbidding
dumping
231 A situation where products are bought in a lower-priced country from a

.
manufacturer's authorized reseller, shipped to higher-priced countries, and then sold
through unauthorized retailers below the manufacturer's suggested retail price is
referred to as __________.
A.
B.
C.
D.
E.
the black market

a gray market
dumping
a globalized market
parallel exporting
232 A gray market refers to

.
A. the segment of products specifically designed for the need of older buyers.
B. a once active and powerful market that is rapidly becoming the bottom of the
barrel.
C. a situation where products are sold through unauthorized channels of distribution.
D. a pricing structure that is based upon haggling that is considered acceptable in
some countries but not others.
E. the willingness of one party to accept gifts in exchange for better prices or price
allowances.
6-63
233 Another term for a gray market is

.
A.
B.
C.
D.
E.
equivalent exporting.
back-channel market.
mature marketing.
parallel importing.
transparent market.
234 The Japanese manufacture tractors for rice paddies. They are smaller than most U.S.
.
tractors and perfect for a weekend farmer who wants to tend to a small garden. The
tractors are not sold in the United States through any authorized channels, yet they
are available in the U.S. at prices below the manufacturer's suggested retail price.
These Japanese tractors are being sold
A.
B.
C.
D.
E.
through the gray market.

under the table.
over the counter.
with bypassed global channels.
by breaking the distribution monopoly.
235 Before Apple's iPhone 5 was officially for sale in China, it was being sold there. These
.
phones were purchased in the United States and Australia, and then resold by
unauthorized vendors in China for between $1,700 and $2,000. These products are
considered to be part of
A.
B.
C.
D.
E.
under the counter sales.

over the counter sales.
the gray market.
integrated global channels.
breaking the distribution monopoly.
236 Mary Kay, Inc. can be classified as which type of company when marketing its
.
products around the world?
A.
B.
C.
D.
E.
multinational firm
transnational firm
international firm
global marketing firm
multidomestic firm
6-64
237 Since 1963, Mary Kay, Inc.'s guiding principle has been based on __________.
.
A.
the Consumer Bill of Rights
B.
the Golden Rule
C.
caveat emptor
D. the American Marketing Association Statement of Ethics
E. maximizing profits so long as the firm stays within the rules
238 What global market-entry strategy did Mary Kay use when it entered India?
.
A.
B.
C.
D.
E.
direct importing
licensing
indirect exporting
joint venture
direct exporting
Short Answer Questions
239 Give at least one argument for and one argument against protectionism.
.
240 Play devil's advocate. Select any American industry and argue persuasively why
.
protectionism is not only patriotic, it is absolutely essential for survival.
6-65
241 "A signal that the world's trading nations are committed to open markets - and will
.
resist protectionism - would inject confidence and energy into our markets," says the
U.S. Trade Representative. Discuss this statement.
242 If your primary motive was to raise prices on imports, would you use tariffs or
.
quotas? Why would you want to do this?
243 Describe the World Trade Organization (WTO) and its purpose.
.
6-66
244 In recent years, a number of countries with similar economic goals have formed
.
transnational trade groups or signed trade agreements for the purpose of promoting
free trade. Describe the three discussed in the textbook.
245 Three types of companies populate and compete in the global marketplace. Identify
.
and describe each type.
246 Identify and describe the factors a company should consider in order to do a
.
thorough cross-cultural analysis. In your answer, define cross-cultural analysis.
6-67
247 Why is it a wise idea for global marketers use back translation? Provide an example
.
to support your answer.
248 Global marketing is also affected by economic considerations. Identify the three
.
steps that should be performed when scanning the global marketplace.
249 What is meant by the term economic infrastructure and how can this affect a firm's
.
plans to enter a global market?
6-68
250 Define a currency exchange rate and discuss its importance to global companies.
.
251 What are the market entry strategy options available to a company seeking to enter
.
the global marketplace? How do they relate to each other in terms of profit potential,
risk, financial commitment required, and marketing control?
252 Explain the difference between indirect exporting and direct exporting. What are the
.
advantages and disadvantages of each approach?
6-69
253 Explain the difference between joint venture and direct investment market entry
.
strategies. What are the advantages and disadvantages of each approach?
254 Define licensing, cite its advantages and disadvantages, and explain what
.
franchising is.
255 What are the product and promotion strategies available to a company seeking to
.
enter the global marketplace? How do they relate to each other in terms of the same
or adapted product and promotion?
6-70
256 Describe the elements in a global channel of distribution.

.
257 Explain the difference between dumping and parallel importing.

.
6-71
Chapter 06 Understanding and Reaching Global Consumers and

Markets Answer Key
Multiple Choice Questions
1.
Why did Dell, Inc., embark on a global growth initiative?
(p. 134
)
A.
U.S. sales had decreased.
B. Dell was recently purchased by Lenovo, a major Chinese competitor.
C. There was too much competition in Dell's direct-to-consumer marketing
channel.
D. There were fewer restrictions in computer technology outside the United
States.
E. Emerging economies offered significant growth potential.
Dell's global initiative focused on emerging economies in Asia, Africa, and Latin
America. Compared with mature economies in North America and Western Europe,
emerging economies offered significant growth potential, according to Michael
Dell, Dell's founder and CEO.
AACSB: Diversity
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 06-03 Name and describe the alternative approaches companies use to enter global
markets.
Level of Difficulty: 2 Medium
Topic: Chapter Opener: Dell
6-72
2.
(p. 134
)
In what way is Dell's expansion into the global arena a departure from its prior
marketing practices?
A. All Dell products were manufactured in the countries within which they were
sold.
B. Dell sold its products to emerging markets using the telephone and Internet
sales strategy that was so successful in the United States.
C. Dell opened shop-within-a-shop counters in selected retailers in India so
shoppers could experience the products.
D. Dell sold only laptops in China whereas it sold both desktops and laptops in
India due to trade restrictions in China.
E. Dell designed and distributed the same products globally to take advantage of
economies of scale.
Dell's global initiative is bold in its departure from prior product development
practices and change to its sales and distribution strategy. It is now designing
products to meet the specific needs of emerging country customers. Moreover,
Dell opened shop-within-a-shop in selected retailers and 60 exclusive Dell stores in
India by 2013. Other initiatives included a new advertising campaign that featured
Indian entrepreneurs endorsing its products.
AACSB: Diversity
Blooms: Understand
Learning Objective: 06-04 Explain the distinction between standardization and customization when companies
craft worldwide marketing programs.
6-73
3.
(p. 134
)
Dell established its company primarily with direct telephone-and Internet-based

sales. In terms of Dell's global expansion strategy, which of the following
statements is most accurate?
A. Dell sells its computers via word of mouth, which is the most powerful method
for consumer electronics.
B. Dell partners with each country's largest department stores and sells its
computers in the small appliance department.
C. Dell issues its own credit card through multinational banks, making it possible
for customers who would not normally qualify for credit to do so.
D. Dell distributes its products through individual sales associates who reach out
to customers with a first-hand experience at their doorsteps.
E. Dell maintains the exact same U.S. strategies that brought it this far because it
sees no reason to mess with success.
In emerging economies, customers prefer to see, touch, and use a personal
computer before they buy. In response, Dell used individual sales affiliates who
reached out to customers in person and gave them a first-hand product experience
at their doorstep.
AACSB: Diversity
Blooms: Understand
6-74
4.
(p. 136
)
Five trends in the past decade have significantly influenced the landscape of global
A. an increase in most countries' GDPs coupled with an increased degree of

consumer ethnocentrism.
B. a significant increase in economic protectionism and a decline in free trade.
C. a more aggressive attitude toward initiating international tariffs and quota
systems.
E. a decline in economic protectionism by individual countries.
marketing: (1) the decline of economic protectionism by individual countries; (2)
the rise of economic integration and free trade among nations; (3) global
competition among global companies for global customers; (4) the emergence of
networked global marketspace; and (5) growing prevalence of economic
espionage.
AACSB: Diversity
Blooms: Understand
Learning Objective: 06-01 Identify the major trends that have influenced world trade and global marketing.
Topic: Trends in world trades
5.
(p. 136
)
A. the rise of economic integration and free trade among nations.

B. an increase in economic protectionism and a decline in free trade.
C. a more aggressive attitude towards initiating international tariffs and quota
systems.
E. an increase in most countries' GDPs coupled with an increased degree of
espionage.
AACSB: Diversity
Blooms: Understand
6-75

6.
(p. 136
)
A. an increase in economic protectionism and a decline in free trade.

systems.
C. global competition among global companies for global customers.
espionage.
AACSB: Diversity
Blooms: Understand
7.
(p. 136
)

systems.
D.
the emergence of networked global marketspace.
espionage.
AACSB: Diversity
6-76

Blooms: Understand
8.
(p. 136
)

systems.
D.
the growing prevalence of economic espionage.
espionage.
AACSB: Diversity
Blooms: Understand
9.
(p. 136
)
The practice of shielding one or more sectors of a country's economy from foreign
competition through the use of tariffs or quotas is referred to as
A.
B.
C.
D.
E.
protectionism.
import taxation.
trade restriction.
Key term definition - protectionism.
AACSB: Diversity
Blooms: Remember
Level of Difficulty: 1 Easy
Topic: Protectionism
6-77
10.
Protectionism refers to
(p. 136
)
A. the practice of purchasing products exclusively from a domestic market in order

to shore up a nation's economy.
B. the use of tariffs, quotas, and boycotts with the express intention of putting
foreign competitors out of business.
C. the practice of shielding one or more sectors of a country's economy from
foreign competition through the use of tariffs or quotas.
D. a form of domestic imperialism that holds that only those products
manufactured within one's home nation are of sufficient quality to warrant
purchase.
E. the practice of purchasing products exclusively from a foreign developing
country in order to develop its industries and economic infrastructure.
Key term definition - protectionism.
AACSB: Diversity
Blooms: Remember
11.
The argument for protectionism is that it
(p. 136
)
A.
B.
C.
D.
E.
protects a nation's political security.

encourages economic reliance on foreign countries.
inhibits the development of domestic industries.
creates opportunities for the outsourcing of domestic jobs.
creates a more favorable environment for a global economy.
Protectionism is the practice of shielding one or more sectors of a country's

economy from foreign competition through the use of tariffs or quotas. The
argument for protectionism is that it limits the outsourcing of jobs, protects a
nation's political security, discourages economic dependency on other countries,
and encourages the development of domestic industries.
AACSB: Diversity
Blooms: Understand
6-78
12.
Those in favor of protectionism argue that it
(p. 136
)
A.
B.
C.
D.
E.
helps reduce tariffs and quotas.

encourages the development of domestic industries.
encourages economic reliance on foreign countries.
creates opportunities for the outsourcing of domestic jobs.
creates a more favorable environment for a global economy.

economy from foreign competition through the use of tariffs or quotas. The
argument for protectionism is that it limits the outsourcing of jobs, protects a
nation's political security, discourages economic dependency on other countries,
and encourages the development of domestic industries.
AACSB: Diversity
Blooms: Understand
13.
(p. 136
)
Recently, the United States imposed a 35% tariff on Chinese tire imports in hopes
of sustaining U.S. jobs in tire manufacturing. This addition of tariffs is an example
of
A.
B.
C.
D.
E.
imposing the rule of eminent domain.

increasing ethnocentrism.
increasing protectionism.
slowing countertrade.

economy from foreign competition through the use of tariffs or quotas. By adding
the tariff, the United States is adding a protectionism measure for the U.S. tire
industry.
AACSB: Knowledge Application

Blooms: Apply
Level of Difficulty: 3 Hard
6-79
14.
(p. 136
)
Beginning January 1, 2005, China lifted the import quotas and lowered tariffs on
automobiles. This removal of the quotas and the lowering of tariffs is an example
of
A.
B.
C.
D.
E.
relaxing the rule of eminent domain.

reducing ethnocentrism.
reducing protectionism.
enhancing countertrade.

economy from foreign competition through the use of tariffs or quotas. By
removing the quotas and lowering tariffs, China is reducing protectionism of the
automobile industry in China.

Blooms: Apply
15.
Which of the following issues raises concerns about the ethics of protectionism?
(p. 137
)
A. Competitive advantage grows out of continuous improvement.

B.
Small firms succeed in foreign niche markets.
C. Tariffs have declined from an average of 40 percent to less than 5 percent.
D. Regional trade agreements provide preferential treatment for member nations.
E. Pan-European marketing strategies are possible due to greater uniformity in
packaging standards.
Of the statements above, the possibility of preferential treatment is most likely to
suggest an ethical consideration.
AACSB: Ethics
Blooms: Understand
Topic: Making responsible decisions
6-80
Figure 6-1
16.
(p. 136
)
The question mark in Figure 6-1 above which results from the imposition of tariffs
and quotas is referred to as
A.
B.
C.
D.
E.
protectionism.
import taxation.
trade restriction.
Key term definition - protectionism. Protectionism hinders world trade through

tariff and quota policies of individual countries. Tariffs increase prices and quotas
limit supply, which ultimately leads to a decrease in world trade. See Figure 6-1.
AACSB: Diversity
Blooms: Remember
6-81
17.
(p. 136
)
The question mark in Figure 6-1 above leads to which of the following as a result of
the imposition of tariffs and quotas?
A.
B.
C.
D.
E.
an increase world trade

a decrease world trade
a limit on exports
a limit on import
countertrade
Protectionism hinders world trade through tariff and quota policies of individual
countries. Tariffs increase prices and quotas limit supply, which ultimately leads to
a decrease in world trade. See Figure 6-1.
AACSB: Diversity
Blooms: Understand
18.
(p. 136
)
Government taxes on products or services entering a country that primarily serve

to raise prices on imports are referred to as
A.
B.
C.
D.
E.
tariffs.
quotas.
WTO taxes.
foreign excise taxes.
trade subsidies.
Key term definition - tariffs.
AACSB: Diversity
Blooms: Remember
Topic: Tariffs
6-82
19.
Tariffs refer to
(p. 136
)
A. government payments to companies or industries that primarily serve to create

competitive advantage for domestic products.
B. government taxes on products or services entering a country that primarily
serve to raise prices on imports.
country.
D. a minimum requirement for the purchase between two or more nations of
products or services.
E. a refusal to purchase or exchange products or services with another nation
unless certain financial or ideological requirements have been satisfied.
Key term definition - tariffs.
AACSB: Diversity
Blooms: Remember
Topic: Tariffs
20.
(p. 136
)
The U.S. Rice Millers' Association claims that if the Japanese rice market were
opened to imports by lowering __________, lower prices would save Japanese
consumers $6 billion annually and the United States would gain a large share of
the Japanese rice market.
A.
B.
C.
D.
E.
boycotts
quotas
sanctions
tariffs
subsidies
Tariffs are government taxes on products or services entering a country that

primarily serve to raise prices on imports.
AACSB: Diversity
Blooms: Understand
Topic: Tariffs
6-83
21.
(p. 136
)
The __________ imposed on imported bananas by European Union countries cost

consumers $2 billion a year in higher prices.
A.
B.
C.
D.
E.
boycotts
quotas
sanctions
subsidies
tariffs

AACSB: Diversity
Blooms: Understand
Topic: Tariffs
22.
(p. 136
)
U.S. citizens pay $5 billion more annually for shoes and Japanese citizens pay $6
billion more for rice than the actual cost of the products because
A. both countries have suffered major financial crises due a severe trade
imbalance.
B. both countries have imposed tariffs on imported goods to protect their
domestic markets.
C. both countries have imposed limits on the quantity of these goods that can
leave their respective domestic markets.
D. both products are considered essentials and as a result are more heavily taxed.
E. these products were purchased at a lower price from nations that currently are
under governmental sanctions.
AACSB: Diversity
Blooms: Understand
Topic: Tariffs
6-84
23.
(p. 136
)
Recently, the Japanese government, under pressure from its domestic farm lobby,
slapped government taxes on mushrooms, leeks, and the reeds used in tatami
mats that were being imported from China. These taxes Japan levied are referred
to as
A.
B.
C.
D.
E.
WTO taxes.
quotas.
tariffs.
excise taxes.
subsidies.


Blooms: Apply
Topic: Tariffs
24.
(p. 136
)
If you wanted to set up a business importing amber jewelry from Latvia to the
United States, you would have to plan on paying the U.S. Customs Service roughly
20 percent of the value of the product as a(n) __________.
A.
B.
C.
D.
E.
bribe
tariff
subsidy
excise tax
quota


Blooms: Apply
Topic: Tariffs
6-85
25.
(p. 136
)
Whirlpool recently asked the United States to impose __________ on washing

machine imports made by LG Electronics and Samsung Electronics, both South
Korean companies, to raise the price of these products. Whirlpool accused these
companies of selling below fair market value and receiving anticompetitive export
subsidies from their governments, both of which could jeopardize American jobs.
A.
B.
C.
D.
E.
boycotts
quotas
sanctions
tariffs
embargoes


Blooms: Apply
Topic: Tariffs
26.
(p. 136
)
President Bill Clinton attempted to protect American firms from foreign competition
by placing a government tax on Japanese automobiles imported to the United
States. President Clinton's goal was to raise the price on Japanese imports, thereby
encouraging American consumers to purchase American-made automobiles. The
tax the President threatened to impose is an example of a __________.
A.
B.
C.
D.
E.
boycott
quota
tariff
sanction
subsidy


Blooms: Apply
Topic: Tariffs
6-86
27.
(p. 137
)
A restriction placed on the amount of a product allowed to enter or leave a country

is referred to as a
A.
B.
C.
D.
E.
quota.
tariff.
GATT tax.
subsidy.
excise tax.
Key term definition - quota.
AACSB: Diversity
Blooms: Remember
Topic: Quota
28.
A quota refers to
(p. 137
)
A. a government tax on products or services entering a country that primarily

serves to raise prices on imports.
B. government payments to companies or industries that serve to lower costs and
provide a competitive advantage to domestic industries.
country.
D. a minimum requirement for the purchase of specific products or services
between two nations.
E. a refusal to purchase or exchange products or services with another nation
unless certain financial or ideological requirements have been satisfied.
Key term definition - quota.
AACSB: Diversity
Blooms: Remember
Topic: Quota
6-87
29.
(p. 137
)
The world's largest manufacturer of peppermint candy canes was located in

Albany, Georgia, until it could no longer afford to buy the sugar needed for its
operation. It moved its manufacturing business to Mexico where there are no
restrictions (like those that existed in the United States) on the amount of sugar
that can be brought into the nation. The business moved to Mexico because of a(n)
__________ established by the U.S. government.
A.
B.
C.
D.
E.
tariff
trade imbalance
excise tax
subsidy
quota
A quota is a restriction placed on the amount of a product allowed to enter or

leave a country. In this case, the U.S. government caused domestically grown
sugar to be priced higher than sugar on the world market due to its protectionist
policies on sugar.

Blooms: Apply
Topic: Quota
30.
(p. 137
)
Russia currently has a limit on pork of 400,000 metric tons annually that can be
imported from any country. This restriction would be considered a
A.
B.
C.
D.
E.
tariff.
trade imbalance.
excise tax.
quota.
subsidy.
A quota is a restriction placed on the amount of a product allowed to enter or

leave a country. In this case, the Russian government has protectionist quota
policies restricting the amount of pork imports.

Blooms: Apply
Topic: Quota
6-88
31.
(p. 137
)
An institution that sets rules governing trade between its members through a
panel of trade experts who decide on trade disputes between members and issue
binding decisions is referred to as the __________.
A.
B.
C.
D.
E.
League of Nations
World Trade Organization (WTO)
Association for Commerce Equity (ACE)
United Nations Board of Trade (UNBT)
Global Better Business Bureau (BBB-G)
Key term definition - World Trade Organization (WTO).
AACSB: Diversity
Blooms: Remember
Topic: World Trade Organization
32.
The World Trade Organization (WTO) refers to
(p. 137
)
A. the world's largest banking institution responsible for establishing and

maintaining equitable exchange rates for all member nations.
B. the world's largest licensing institution responsible for the certification of
products distributed to a global market.
C. an institution that sets rules governing trade between its members through
panels of trade experts who decide on trade disputes between members and
issue binding decisions.
D. a multinational trade organization composed of the world's wealthiest nations
whose primary purpose is to aid in the economic growth of developing nations.
E. a multinational trade organization comprised of the world's wealthiest nations
whose primary purpose is to promote free trade economies.
Key term definition - World Trade Organization (WTO).
AACSB: Diversity
Blooms: Remember
6-89
33.
(p. 137
)
There are __________ World Trade Organization countries, including the United
States, which account for more than 90 percent of world trade.
A.
B.
C.
D.
E.
37
52
97
113
159
The World Trade Organization (WTO) was formed in 1995 to address a broad array
of world trade issues. By mid-2013, there were 159 WTO member countries,
including the United States, which account for more than 90 percent of world
trade.
AACSB: Diversity
Blooms: Remember
34.
(p. 137
)
Which of the following statements about the World Trade Organization (WTO) is
most accurate?
A. The WTO acts as an agent in trade negotiations between its members and the
B. The 179 member countries of the WTO account for less than 25 percent of
world trade.
C. The WTO was formed by the major industrialized nations in 1995 to address
trade issues.
recommendations.
E.
The major industrialized nations of the world formed the WTO in 1995 to address
world trade issues. By mid-2013, there were 159 WTO member countries, including
the United States, which account for more than 90 percent of world trade. The
WTO is a permanent institution that sets rules governing trade between its
members through panels of trade experts who decide on trade disputes between
members and issue binding decisions.
AACSB: Diversity
Blooms: Understand
6-90
35.
(p. 137
)
most accurate?
A. The World Trade Organization is a temporary institution.

B. The 168 member countries of the WTO account for less than 25 percent of
world trade.
C. The WTO sets rules governing trade between its members and the rest of the
world.
recommendations.
E. The WTO was formed by the major industrialized nations of the world.
world trade issues. The 153 WTO member countries account for more than 90
percent of world trade. The WTO is a permanent institution that sets rules
governing trade between its members through panels of trade experts who decide
on trade disputes between members and issue binding decisions.
AACSB: Diversity
Blooms: Understand
36.
(p. 137
)
most accurate?
A. The World Trade Organization was formed in 2008 to response to the global
recession.
B. By mid-2013, there were 159 WTO member countries, including the United
States, which account for more than 90 percent of world trade.
C. The WTO sets rules governing trade between member and nonmember
countries of the world.
recommendations.
E.
AACSB: Diversity
6-91

Blooms: Understand
37.
(p. 137
)
most accurate?
A. The WTO is an institution that sets rules governing trade between its members.
B. The WTO acts as an agent in trade negotiations between its members and the
C. The 183 member countries of the WTO account for approximately 55 percent of
world trade.
D. The WTO uses panels of trade experts who issue non-binding
recommendations.
E.
AACSB: Diversity
Blooms: Understand
6-92
38.
(p. 137
)
most accurate?
A. The World Trade Organization was formed in 2008 in response to the global
recession.
B. The 12 member countries of the WTO account for approximately 55 percent of
world trade.
C. The WTO acts as an agent in licensing negotiations between its members and
the remainder of the world.
D. The WTO uses panels of trade experts who can issue binding decisions.
E.
AACSB: Diversity
Blooms: Understand
39.
(p. 138
)
The European Union (EU) in early 2015 consisted of 28 countries with more than
500 million consumers. The EU has eliminated most barriers to the free flow of
products, capital, and labor across its borders. Which of the following countries is
NOT a member of the EU?
A.
B.
C.
D.
E.
Latvia
Greece
Ireland
Switzerland
England
Switzerland is not one of the 28 countries in the EU (as of 2015). See Figure 6-2.
AACSB: Diversity
Blooms: Remember
Topic: European Union
6-93
40.
(p. 137
)
The European Union is an economic and political union of __________ member

countries that have eliminated most barriers to the free flow of products, services,
capital, and labor across their borders.
A.
B.
C.
D.
E.
17
20
28
30
37
The European Union as of 2015 consisted of 28 countries that have eliminated

most barriers to the free flow of products, services, capital, and labor across their
borders.
AACSB: Diversity
Blooms: Remember
41.
(p. 138
)
To eliminate the need to continually monitor currency exchange rates, 16 of the

called the __________.
A.
B.
C.
D.
E.
pound
franc
euro
mark
dollar

called the euro.
AACSB: Diversity
Blooms: Remember
Topic: Euro
6-94
42.
(p. 138
)
To eliminate the need to continually monitor currency exchange rates, __________ of

the countries in the European Union (EU) have adopted a common currency called
the euro.
A.
B.
C.
D.
E.
11
16
20
28
32

called the euro.
AACSB: Diversity
Blooms: Remember
Topic: Euro
43.
(p. 138
)
The European Union (EU) has been beneficial to electronic commerce because it is
no longer necessary to
A. use multiple languages when settling accounts for purchases made across
borders.
B. continually monitor currency exchange rates among participating nations.
C. trade with the former Eastern European communist countries.
D.
obey international e-trade regulations.
E.
use the American dollar as the economic standard.
One benefit of the EU was the adoption of the euro, which has been a boon to the
electronic commerce in the EU by eliminating the need to continually monitor
currency exchange rates.
AACSB: Diversity
Blooms: Understand
6-95
44.
The EU has benefited firms in its member nations because
(p. 138
)
A. it provides a safe haven in times of world economic crises.

B. there is a common language advantage among EU consumers.
C. most companies within the EU are engaging in strategic global partnerships.
D. there is now a legally binding code of economic conduct.
E. firms do not need to market their products and services on a nation-by-nation
basis.
The EU has benefited marketers because firms do not need to market their
products and services on a nation-by-nation basis. Rather, pan-European
marketing strategies are possible due to greater uniformity in product and
packaging standards; fewer regulatory restrictions on transportation, advertising,
and promotion imposed by countries; and removal of most tariffs that affect
pricing practices.
AACSB: Diversity
Blooms: Understand
45.
(p. 138
)
The EU has benefited its member nations because firms do not need to market
their products and services on a nation-by-nation basis; most tariffs that affect
pricing practices have been removed, and
A.
there is a legally binding code of economic conduct.
B.
there is immunity against world recessions.
promotion.
and promotion imposed by countries; and removal of most tariffs that affect
pricing practices.
AACSB: Diversity
Blooms: Understand
6-96
46.
Pan-European marketing strategies are possible because
(p. 138
)
A.
there is a legally binding code of economic conduct.
B.
there are effective countermeasures for protectionism.
promotion.
and promotion; and removal of most tariffs that affect pricing practices. Also,
European wide distribution from fewer locations is now feasible given open
borders.
AACSB: Diversity
Blooms: Understand
47.
(p. 138
)
The North American Free Trade Agreement was designed to encourage free trade
between
A.
North America, Central America, and South America.
B.
the United States and the European Union.
C. member countries originally from NATO (North Atlantic Treaty Organization).
D.
the United States, Canada, and Mexico.
E. North America and the Commonwealth of Independent States.
The North American Free Trade Agreement lifted many trade barriers between
Canada, Mexico, and the United States and created a marketplace with more than
450 million consumers.
AACSB: Diversity
Blooms: Remember
Topic: North American Free Trade Agreement
6-97
48.
(p. 139
)
CAFTA-DR, a comprehensive free trade agreement between Costa Rica, the

Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and
__________.
A.
B.
C.
D.
E.
the United States

Panama
Belize
Cuba
Mexico
CAFTA-DR is a comprehensive free trade agreement among Costa Rica, the

Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the U.S.
AACSB: Diversity
Blooms: Understand
Topic: CAFTA-DR
49.
(p. 169
)
When firms originate, produce, and market their products and services worldwide,
it is referred to as __________.
A.
B.
C.
D.
E.
acculturation
free trade
global branding
global competition
transactional exchange
Key term definition - global competition.
AACSB: Diversity
Blooms: Remember
Topic: Global competition
6-98
50.
Global competition exists when
(p. 139
)
A. a firm produces and markets its products domestically rather than globally.
B. firms originate, produce, and market their products and services worldwide.
C. two firms from two different countries compete for market share in a single
domestic market.
D. two or more firms from different nations combine their resources to market
products in a single domestic market.
E. the firm from one nation dominates the market for its product in every nation.
Key term definition - global competition.
AACSB: Diversity
Blooms: Remember
51.
(p. 139
)
Coca-Cola has operations in all but three nations in the world and Pepsi-Cola is
now available in more than 160 countries and territories, making the soft drink
industry an example of
A.
B.
C.
D.
E.
global competition.
acculturation.
free trade.
global branding.
transactional exchange.
Global competition exists when firms originate, produce, and market their products
and services worldwide. Pepsi-Cola, now available in more than 160 countries and
territories, accounts for a quarter of all soft drinks sold internationally. Coca-Cola is
sold in every country except Burma, North Korea, and Cuba.

Blooms: Apply
6-99
52.
(p. 140
)
In terms of the global marketplace, there are three primary types of companies:
__________ firms, multinational firms, and transnational firms.
A.
B.
C.
D.
E.
worldwide
conglomerate
intercontinental
international
cosmopolitan
Three types of companies compete in the global marketplace: international firms,

multinational firms, and transnational firms.
AACSB: Diversity
Blooms: Remember
Topic: Global companies
53.
(p. 140
)
international firms, __________ firms, and transnational firms.
A.
B.
C.
D.
E.
large-scale
conglomerate
intercontinental
cosmopolitan
multinational

AACSB: Diversity
Blooms: Remember
6-100
54.
(p. 140
)
international firms, multinational firms, and __________ firms.
A.
B.
C.
D.
E.
multiethnic
transnational
multidomestic
ethnocentric
meganational

AACSB: Diversity
Blooms: Remember
55.
(p. 140
)
The administrative, marketing, and manufacturing operations that many

international firms, multinational firms, and transnational firms have around the
world are often called
A.
B.
C.
D.
E.
divisions.
outlets.
departments.
markets.
holding companies.
Text term definition - divisions or subsidiaries.
AACSB: Diversity
Blooms: Remember
6-101
56.
(p. 140
)
international firms, multinational firms, and transnational firms. The key factor that
distinguishes one from another is
A.
B.
C.
D.
E.
the firm's financial capacity to take risks.

the willingness and ability to embrace diversity and cultural differences.
the firm's orientation toward and strategy for global markets and marketing.
the relative position of the product or service in terms of its life cycle.
the relative size of the firm both in financial terms and in production capacity.
The three types of companies populate and compete in the global marketplace
are: (1) international firms; (2) multinational firms; and (3) transnational firms. A
firm's orientation and strategy for global markets and marketing defines the type
of company it is or attempts to be.
AACSB: Diversity
Blooms: Understand
57.
(p. 140
)
A(n) __________ firm engages in trade and marketing in different countries as an

extension of the marketing strategy in its home country.
A.
B.
C.
D.
E.
multidomestic
meganational
international
multinational
transnational
Text term definition - international firm.
AACSB: Diversity
Blooms: Remember
Topic: International firm
6-102
58.
(p. 140
)
Generally speaking, a(n) __________ firm markets its existing products and services
in other countries the same way it does in its home country.
A.
B.
C.
D.
E.
meganational
international
multinational
transnational
intranational
International firms market their existing products and services in other countries
the same way they do in their home country.
AACSB: Diversity
Blooms: Understand
59.
(p. 140
)
Mars, America's second-largest candy company, began doing business in Russia in

the late 1980s. The Snickers bar is one of the top selling candies in Russia and is
marketed in much the same way as it is in the United States. What type of global
company is Mars?
A.
B.
C.
D.
E.
an international firm
a multidomestic firm
a transnational firm
a meganational firm
a multinational firm
International firms engage in trade and marketing in different countries as an

extension of the marketing strategy in their home country.

Blooms: Apply
6-103
60.
(p. 140
)
A firm that views the world as consisting of unique parts and markets to each part
differently is referred to as a(n)
A.
B.
C.
D.
E.
meganational firm.
extranational firm.
international firm.
multinational firm.
transnational firm.
Text term definition - multinational firm.
AACSB: Diversity
Blooms: Remember
Topic: Multinational firm
61.
(p. 140
)
Unilever markets its Snuggle fabric softener differently to different parts of the
world. Unilever is a(n) __________ firm.
A.
B.
C.
D.
E.
ethnocentric
multinational
transnational
global
international
A multinational firm views the world as consisting of unique parts and markets to
each part differently.

Blooms: Apply
Topic: Multinational firm
6-104
62.
A multidomestic marketing strategy refers to
(p. 140
)
A. the strategy of transnational firms that employ the practice of standardizing

marketing activities when there are cultural similarities and adapting them
when cultures differ.
B. the strategy used by firms that use the same product variations, brand names,
and advertising programs for every country in which they do business.
C. the strategy used by firms that have as many different product variations,
brand names, and advertising programs as countries in which they do business.
D. the strategy of seeking out already established firms in other nations and
selling them the rights to manufacture and distribute the firm's products.
E. the strategy currently used by most U.S. domestic firms that when entering a
new international market, these firms offer only those products that require the
least amount of product adaptation.
Key term definition - multidomestic marketing strategy.
AACSB: Diversity
Blooms: Remember
Topic: Multidomestic marketing strategy
63.
(p. 140
)
Companies that use a(n) __________ marketing strategy have as many different
product variations, brand names, and advertising programs as countries in which
they do business.
A.
B.
C.
D.
E.
ethnocentric
multidomestic
transnational
global
international
Firms that have as many different product variations, brand names, and
advertising programs as countries in which they do business use a multidomestic
marketing strategy.
AACSB: Diversity
Blooms: Remember
6-105
64.
(p. 140
)
Lever Europe, a division of Unilever, markets its Snuggle fabric softener in the
United States. But in 10 European countries, it uses seven brand names, including
Kuschelweich in German, Coccolino in Italy, and Mimosin in France. These products
also have different packages, different advertising programs, and occasionally
different formulas. From this information, we can assume that Lever Europe uses
a(n) __________ marketing strategy.
A.
B.
C.
D.
E.
ethnocentric
transnational
global
international
multidomestic
Firms that have as many different product variations, brand names, and
advertising programs as countries in which they do business use a multidomestic
marketing strategy.

Blooms: Apply
65.
(p. 140
)
U.S. appliance manufacturers find that different customs about shopping must be
used to determine local product design. For instance, people in Northern Europe
shop only once a week, so they need bigger refrigerators than Southern
Europeans, who shop daily. Furthermore, Northern Europeans insist that freezers
should be on the top just as firmly as Southern Europeans want them on the
bottom. Based on this, U.S. appliance manufacturers would be more likely
successful if they used a(n) __________ marketing strategy.
A.
B.
C.
D.
E.
global
multidomestic
transnational
meganational
international
Companies that use a multidomestic marketing strategy have as many different

product variations as countries in which they do business.

Blooms: Apply
6-106
66.
(p. 140
)
Disney employed a(n) __________ marketing strategy for its Disneyland Paris,
particularly when it came to the eateries in the park. These restaurants featured
recipes that were revised for local tastes, alcoholic beverages (not permitted in
previous parks), and increased outdoor seating.
A.
B.
C.
D.
E.
global
transnational
multidomestic
meganational
international
Companies that use a multidomestic marketing strategy have as many different

product variations as countries in which they do business.

Blooms: Apply
67.
(p. 140
)
A(n) __________ firm views the world as one market and emphasizes cultural
similarities across countries or universal consumer needs and wants more than
differences.
A.
B.
C.
D.
E.
transcontinental
multidomestic
international
multinational
transnational
Text term definition - transnational firm.
AACSB: Diversity
Blooms: Remember
Topic: Transnational firm
6-107
68.
(p. 140
)
The strategy transnational firms employ that standardizes marketing activities

when there are cultural similarities and adapts them when cultures differ is
referred to as a(n)
A.
B.
C.
D.
E.
global marketing strategy.

integrated marketing strategy.
transnational marketing strategy.
meganational marketing strategy.
international marketing strategy.
Key term definition - global marketing strategy.
AACSB: Diversity
Blooms: Remember
Topic: Global marketing strategy
69.
A global marketing strategy refers to
(p. 140
)
A. the strategy used by multinational firms that have as many different product
variations, brand names, and advertising programs as countries in which they
do business.
B. the strategy of transnational firms not to employ adaptive marketing
techniques when there are cultural differences, but to redirect their marketing
resources towards customer education.
C. the strategy of transnational firms that employ the practice of standardizing
marketing activities when there are cultural similarities and adapting them
when cultures differ.
D. the global strategy of seeking out already established firms in other nations and
selling them the rights to manufacture and distribute the firm's products
through a host nation's local businesses.
E. the strategy currently used by most U.S. domestic firms that when entering a
new international market, these firms offer only those products that require the
least amount of product adaptation.
Key term definition - global marketing strategy.
AACSB: Diversity
Blooms: Remember
6-108
70.
(p. 140
)
Which of the following types of firms would be most likely to use a global
marketing strategy?
A.
B.
C.
D.
E.
multidomestic
multinational
multicountry
transnational
transborder
Transnational marketers employ a global marketing strategy - the practice of

standardizing marketing activities when there are cultural similarities and adapting
them when cultures differ.
AACSB: Diversity
Blooms: Understand
71.
(p. 140
)
A brand marketed under the same name in multiple countries with similar and
centrally coordinated marketing programs is referred to as a(n)
A.
B.
C.
D.
E.
transnational brand.
international brand.
multinational brand.
global brand.
meganational brand.
Key term definition - global brand.
AACSB: Diversity
Blooms: Remember
Topic: Global brand
6-109
72.
A global brand refers to
(p. 140
)
A. two or more domestic products that coincidentally share the same brand name
but represent two completely unrelated products.
B. two or more international products that coincidentally share the same brand
name but represent two completely unrelated products.
C. a brand marketed under the same name in multiple countries with similar and
D. a brand that is essentially the same but that has had minor adaptations made
to meet the more specific needs of different nations.
E. a brand marketed under different names in multiple countries with similar and
Key term definition - global brand.
AACSB: Diversity
Blooms: Remember
Topic: Global brand
73.
Which of the following statements regarding global brands is most accurate?
(p. 140
)
A. A global brand has dispersed marketing centers, each of which is responsible

for a specific region.
B. A global brand is marketed under the same name in multiple countries.
C. A global brand alters the brand name for each dialect in a geographical region.
D. A global brand delivers multiple benefits to the GDP of each country.
E. A global brand is a collaborative effort among several different transnational
firms.
A global brand is a brand marketed under the same name in multiple countries
with similar and centrally coordinated marketing programs. Global brands have the
same product formulation or service concept, deliver the same benefits to
consumers, and use consistent advertising across multiple countries and cultures.
Global brands are sometimes tailored to specific cultures or countries.
AACSB: Diversity
Blooms: Understand
Topic: Global brand
6-110
74.
Which of the following statements about global brands is most accurate?
(p. 140
)
A. A global brand has centrally coordinated marketing programs.

B. A global brand is marketed under different names but uses identical ads for all
markets.
C. A global brand alters the product formulation or service for each geographical
region.
D. A global brand delivers multiple benefits based on the GDP of each country.
E. A global brand is a collaborative effort among several different national firms.
Global brands are sometimes tailored to specific cultures or countries.
AACSB: Diversity
Blooms: Understand
Topic: Global brand
75.
(p. 140
)
with similar and centrally coordinated marketing programs. However, adaptations
of global brands are made
A. only if required by government regulations in the host market.

B. only in its initial introduction into a market and only until the brand is
recognized.
C.
by domestic competitors causing brand confusion.
D. only when necessary to better connect the brand to consumers in different
markets.
E.
when there is a serious drop in market share.
Global brands are sometimes tailored to specific cultures or countries only when
necessary to better connect the brand to consumers in different markets.
AACSB: Diversity
Blooms: Understand
6-111
Topic: Global brand
76.
(p. 141
)
Thirteen- to nineteen-year-olds in Europe, North America, South America, and the

industrialized nations of Asia
A. are more similar than different regarding their purchase behaviors.

B. are becoming more similar, but still differ significantly in terms of fashion and
design.
C. are rebelling against the Americanization of fashion and culture.
D.
have very different tastes in fashions and music.
E. are more influenced by Asian culture than European culture.
The similarity among teens in Europe, North America, South America, and the
industrialized nations of Asia is greater than their differences. A global study of
middle-class teenagers' rooms in 25 industrialized countries indicated it was
difficult, if not impossible, to tell where in the world the rooms are located.
AACSB: Diversity
Blooms: Understand
Topic: Marketing matters
77.
(p. 141
)
The appreciation of fashion, music, and a desire for novelty and trendier designs
and images
A. are preferences found more in American teenagers than in most other cultures
around the world.
B. actually begin at age 10, but begin to decline significantly as students enter
high school.
C. ironically are found more for teenagers who cannot afford to make those
purchases than for those who can.
D. are preferences of teenagers around the world regardless of whether they live.
E. are often established early among European teens and they typically linger well
into adulthood.
Teenagers around the world appreciate fashion and music, and desire novelty and
trendier designs and images.
AACSB: Diversity
Blooms: Understand
6-112
78.
(p. 141
)
Based on a study of 6,500 teens in 26 countries, when asked what country had the
most influence on their attitudes and purchase behavior, 54 percent of teens from
the United States, 87 percent of those from Latin America, 80 percent of the
Europeans, and 80 percent of those from Asia named
A.
B.
C.
D.
E.
the United States.

Japan.
the United Kingdom.
France.
China.
The study showed that the United States was the country that had the most
influence on these teens.
AACSB: Diversity
Blooms: Understand
79.
(p. 140
-141)
Consumer groups living in many countries or regions of the world that have similar
needs or seek similar features and benefits from products or services are referred
to as
A.
B.
C.
D.
E.
global consumers.
Key term definition - global consumers.
AACSB: Diversity
Blooms: Remember
Topic: Global consumers
6-113
80.
Global consumers refer to
(p. 140
-141)
A. all potential consumers for any and all products or services regardless of
cultural, ethnic, or national origins.
B. customers within a nation who consider the entire world a single marketplace.
C. consumer groups living in many countries or regions of the world who have
similar needs or seek similar features and benefits from products or services.
D. consumer groups living in many countries or regions of the world that have
similar needs but seek customized features and benefits from products or
services that reflect their individual cultures.
E. multinational organizations whose products incorporate raw materials,
assembly, and distribution contributions from multiple nations before they are
marketed.
Key term definition - global consumers.
AACSB: Diversity
Blooms: Remember
81.
(p. 141
)
Around the world, middle-class, youth, and elite markets that consume similar
assortments of products and services, regardless of geographic location, are
referred to as
A.
B.
C.
D.
E.
global consumers.
Global consumers consist of consumer groups living in many countries or regions

of the world who have similar needs or seek similar features and benefits from
products or services. Evidence suggests the presence of a global middle-income
class, a youth market, and an elite segment, each consuming or using a common
assortment of products and services, regardless of geographic location.
AACSB: Diversity
Blooms: Understand
6-114
82.
(p. 141
)
The use of __________ as a tool for exchanging goods, services, and information on
a global scale is one of the trends that has affected world trade.
A.
B.
C.
D.
E.
buying centers
Internet technology
language translators
tariff and quota policies
multinational marketing strategies
The use of Internet technology as a tool for exchanging goods, services, and
information on a global scale is the fourth trend affecting world trade.
AACSB: Diversity
Blooms: Understand
Topic: Networked global marketspace
83.
(p. 141
)
Which of the following statements about the emergence of a networked global

marketspace is most accurate?
A. Marketspace creates an unfair competitive environment for emerging nations.

B. More business-to-consumer marketing is done on the Internet than business-tobusiness marketing.
C. The most active participants in the networked global marketspace are
companies in developing nations.
D. All business in the networked global marketspace is conducted in English.
E. The chief advantage of the global marketspace over the traditional bricks-andmortar stores for customers is the ability to shop anywhere, at any time, and at
a lower cost.
The promise of a networked global marketspace is that it enables the exchange of
goods, services, and information from companies anywhere to customers
anywhere at any time and at a lower cost. This promise has become a reality for
buyers and sellers in industrialized countries that possess the telecommunications
infrastructure necessary to support Internet technology.
AACSB: Diversity
Blooms: Understand
Topic: Networked global marketspace
6-115
84.
(p. 142
)
The clandestine collection of trade secrets or proprietary information about a

company's competitors is referred to as
A.
B.
C.
D.
E.
trade piracy.
transnational fraud.
economic espionage.
competitive duplicity.
transnational espionage.
Key term definition - economic espionage.
AACSB: Diversity
Blooms: Remember
Topic: Economic espionage
85.
Economic espionage is the clandestine collection of trade secrets or __________.
(p. 142
)
A.
B.
C.
D.
E.
government economic information

industrial intelligence
government weapons information
banking lists
proprietary information about competitors
Key term definition - economic espionage.
AACSB: Diversity
Blooms: Remember
6-116
86.
(p. 142
)
The estimated cost of economic espionage to firms in the United States is

estimated to be
A.
B.
C.
D.
E.

exceeding $1 trillion per year.
It is estimated that economic espionage costs U.S. firms $250 billion per year.
AACSB: Diversity
Blooms: Remember
87.
The Economic Espionage Act
(p. 142
)
A. allows the World Court in The Hague to adjudicate trade disputes on behalf of
United Nations' members and requires the home country to impose any
penalties.
B. imposes a personal fine on a convicted U.S. citizen of up to $10 million.
C. targets espionage activities that are commonplace in any industry that holds
governmental contracts.
D. makes the theft of trade secrets by foreign entities a federal crime in the U.S.
E. is well-intended in theory, but is virtually impossible to enforce.
Key term definition - Economic Espionage Act (1996).
AACSB: Diversity
Blooms: Remember
Topic: Economic Espionage Act
6-117
88.
(p. 142
)
The prescribed penalty for agents of foreign governments found guilty of economic
espionage is
A.
B.
C.
D.
E.
up to 15 years in prison and fines up to $500,000.

life in prison with the possibility of parole after 25 years.
25 years in prison and a $10 million fine.
permanent expulsion from the United States.
30 years in prison and fines proportional to the damage caused.
The Economic Espionage Act (1996) makes the theft of trade secrets by foreign
entities a federal crime in the United States. This act prescribes prison sentences
of up to 15 years and fines up to $500,000 for individuals. Agents of foreign
governments found guilty of economic espionage face a 25-year prison sentence
and a $10 million fine.
AACSB: Diversity
Blooms: Remember
89.
The prescribed penalty for individuals found guilty of the theft of trade secrets is
(p. 142
)
A.
B.
C.
D.
E.
up to 25 years in prison and fines up to $10 million.

life in prison with chance of parole after 25 years.
expulsion from the United States and/or revocation of citizenship.
30 years in prison and fines to be determined by the courts.
up to 15 years in prison and fines up to $500,000.
The Economic Espionage Act (1996) makes the theft of trade secrets by foreign
entities a federal crime in the United States. This act prescribes prison sentences
of up to 15 years and fines up to $500,000 for individuals. Agents of foreign
governments found guilty of economic espionage face a 25-year prison sentence
and a $10 million fine.
AACSB: Diversity
Blooms: Remember
6-118
90.
Cross-cultural analysis refers to the study of
(p. 143
)
A. the subgroups within the larger, or national, culture with unique values, ideas,
and attitudes.
B. the set of values, ideas, and attitudes that are learned and shared among the
consumers of a country.
C. the similarities and differences among consumers in two or more nations or
societies.
D. the buying behaviors within a given nation to identify similarities and
differences among individuals.
E. the buying behaviors within a given nation that links a person's actions to the
cultural group with which he or she identify most.
Key term definition - cross-cultural analysis.
AACSB: Diversity
Blooms: Remember
Learning Objective: 06-02 Identify the environmental forces that shape global marketing efforts.
Topic: Cross-cultural analysis
91.
(p. 143
)
The study of similarities and differences among consumers in two or more nations
or societies is referred to as __________.
A.
B.
C.
D.
E.
market synthesis
international sociographics
transnational anthropology
multicultural ethnocentrism
Key term definition - cross-cultural analysis.
AACSB: Diversity
Blooms: Remember
6-119
92.
(p. 143
)
For the marketer, a thorough __________ involves an understanding of and an

A.
B.
C.
D.
E.
market synthesis
international sociographic study
anthropological examination
ethnocentrism assessment
Marketers must be sensitive to the cultural underpinnings of different societies if

they are to initiate and consummate mutually beneficial exchange relationships
with global consumers. A necessary step in this process is cross-cultural analysis,
which involves the study of similarities and differences among consumers in two or
more nations or societies. A thorough cross-cultural analysis involves an
understanding of the values, customs, symbols, and language of other societies.
AACSB: Diversity
Blooms: Understand
93.
(p. 143
)
A thorough cross-cultural analysis involves an understanding of and an

appreciation of all of the following EXCEPT:
A.
B.
C.
D.
E.
economics.
symbols.
values.
languages.
customs.
A thorough cross-cultural analysis involves an understanding of and an

AACSB: Diversity
Blooms: Understand
6-120
94.
(p. 143
)
Personally or socially preferable modes of conduct or states of existence that tend

to persist over time are referred to as __________.
A.
B.
C.
D.
E.
customs
ethics
values
culture
beliefs
Key term definition - values.
AACSB: Diversity
Blooms: Remember
Topic: Values
95.
Values refer to
(p. 143
)
A. personally or socially held core beliefs that are consistent within a given
culture.
B. the beliefs that dictate a person's behavior, which are often derived from a
religious code of conduct.
C. personally or socially preferable modes of conduct or states of existence that
tend to persist over time.
D. the innate sense of what a person considers to be right or wrong in terms of his
or her own conduct when dealing with others.
E. those personality traits regarding honesty and integrity that have been passed
down from generation to generation.
Key term definition - values.
AACSB: Diversity
Blooms: Remember
Topic: Values
6-121
96.
(p. 143
)
The reverence that Japan shows towards its elderly is an example of that nation's
__________.
A.
B.
C.
D.
E.
values
beliefs
customs
religion
cultural diversity
A country's values are personally or socially preferable modes of conduct or states

of existence that are enduring, such as the behavior of one generation toward
another in Japan.

Blooms: Apply
Topic: Values
97.
(p. 143
)
Which of the following examples best demonstrates a company's appreciation of

A. American companies in Germany encouraging the use of all types of credit

cards.
B. In Brazil, American companies are extremely careful to keep to a strict agenda
and time schedule, even though an informal structure is preferred.
C. Bath products are advertised by portraying intimate scenes between husbands
and wives in countries where personal privacy is important.
D. McDonald's restaurants in India serve a full line of products except for
hamburgers made from beef.
E. Vogue Italia publishing a feature with a model wearing "slave earrings," which it
said were "worn by women of color during the slave trade."
In terms of cultural values, Germans are not comfortable with using unnecessary
credit, many countries are more comfortable with a more personalized informal
structure, and some cultures are more considerate of personal privacy. Since 85
percent of the Indian population considers the cow to be sacred, McDonald's is
showing consideration for the country's values by not selling beef.

Blooms: Apply
Topic: Values
6-122
98.
(p. 143
)
Which of the following examples best demonstrates a company's appreciation for

A. A German company allows customers to make large purchases using lay-away

(paying small amounts until the item is paid for and delivered).
B. In Brazil, an appliance maintenance firm schedules service appointments
allowing only 15 minutes of leeway for missed calls or no shows.
C. In Japan, a spa owner created special exercise classes for husbands and wives.
D. In India, a popular hamburger chain separated its dining area by color for
people who wanted to eat beef and those who did not.
E. Calvin Klein reduced the number of outdoor advertising placements showing
scantily clad models in countries with predominantly Muslim populations.
Modesty is an important value within Muslim cultures, so Calvin Klein's efforts are
an example of being sensitive to that value.

Blooms: Apply
Topic: Values
99.
(p. 143
)
Almost all countries have some division of social class (upper, middle, and lower).
The determining factor for the assignment to one of these classes may differ from
country to country. For example, in the United States, the primary determining
factor is occupation; in India, it is birthright; in China, it is geographical region and
education; and in Singapore, it is income. These differences are best explained in
terms of a country's
A.
B.
C.
D.
E.
semiotics.
legal system.
ethnocentricity.
religion.
values.
A country's values are personally or socially preferable modes of conduct or states

of existence that tend to persist over time.

Blooms: Apply
Topic: Values
6-123
100. What is considered normal and expected about the way people do things in a
(p. 143 specific country is referred to as __________.
)
A.
B.
C.
D.
E.
morals
ethics
values
customs
beliefs
Key term definition - customs.
AACSB: Diversity
Blooms: Remember
Topic: Customs
101. Customs refer to

(p. 143
)
A. what is considered normal and expected about the way people do things in a
specific country.
B. those actions or activities within a community that are unique or distinctly
different from any other group.
C. actions or behaviors that are repeated over time and carry a specific meaning
to a unique group, nationality, or ethnicity.
D. traditions among a group of people, a nation, or ethnicity that affect their
purchase behaviors.
E. what would be considered unusual or unexpected, and even unacceptable,
about the way people do things in a specific country.
Key term definition - customs.
AACSB: Diversity
Blooms: Remember
Topic: Customs
6-124
102. 3M Company executives were perplexed when the company's Scotch-Brite floor(p. 143 cleaning product initially produced lukewarm sales in the Philippines. A Filipino
)
employee explained that consumers generally clean floors by pushing coconut
shells around with their feet. 3M changed the shape of the pad to a foot and sales
soared. 3M changed its product in response to a Filipino __________.
A.
B.
C.
D.
E.
custom
value
demographic pattern
belief
idiosyncrasy
Customs are the norms and expectations about the way people do things in a
specific country. Since consumers in the Philippines clean floors with their feet, 3M
adapted the shape of its floor-cleaning product to the custom.

Blooms: Apply
Topic: Customs
103. KFC in Japan sells tempura crispy strips. In northern England, it stresses gravy and
(p. 143 potatoes. In Thailand, it offers fresh rice. In Holland, instead of potatoes, KFC offers
)
customers a potato and onion croquette. In France, KFC sells pastries alongside its
chicken. These examples illustrate that KFC exhibits an appreciation for the
__________ of other societies.
A.
B.
C.
D.
E.
demographics
symbols
sensitivities
customs
values
Customs are what are considered normal and expected about the way people do
things (including what they eat) in a specific country. KFC serves food that suits
the customary tastes of its target markets in each of the countries listed.

Blooms: Apply
Topic: Customs
6-125
104. Which of the following statements about bribery is most accurate?

(p. 143
)
A. Bribes, kickbacks, and payoffs offered to entice someone to commit an illegal or

improper act are deemed corrupt in some cultures but not in others.
B. The world's major exporting nations have agreed to treat bribery of foreign
government officials as a violation of trade agreements.
C. Bribes paid to foreign companies is in some cases a tax-deductible expense in
the U.S.
D. It is a crime for U.S. corporations to bribe an official of a foreign government or
political party unless pre-approved by the Federal Trade Commission.
E. It is illegal for a U.S. corporation to bribe an official of a foreign government or
political party to obtain or retain business in a foreign country.
Bribes, kickbacks, and payoffs offered to entice someone to commit an illegal or
improper act on behalf of the giver for economic gain are considered corrupt in
any culture. The prevalence of it globally has led to an agreement among the
world's major exporting nations to make bribery of foreign government officials a
criminal offense. It is illegal for a U.S. corporation to bribe an official of a foreign
government or political party to obtain or retain business in a foreign country.
AACSB: Diversity
Blooms: Understand
Topic: Bribery
105. The Foreign Corrupt Practices Act

(p. 143
)
A. makes it a crime for U.S. corporations to bribe an official of a foreign

government or political party to obtain or retain business in a foreign country.
B. has different levels of punishment based upon the wealth of the host nation.
C. regulates only the behavior of U.S. businesses conducting business within the
United States.
D. makes the theft of trade secrets by foreign entities a federal crime in the United
States.
E. is a unilateral agreement the United States made with several developing
nations.
Key term definition - Foreign Corrupt Practices Act.
AACSB: Diversity
Blooms: Remember
Topic: Foreign Corrupt Practices Act
6-126
106. The law, amended by the International Anti-Dumping and Fair Competition Act,
(p. 143 that makes it a crime for U.S. corporations to bribe an official of a foreign
)
government or political party to obtain or retain business in a foreign country, is
referred to as the
A.
B.
C.
D.
E.
International Law for Egalitarian Ethics Act.

International Fair Practices Act.
Law of International Equity Act.
International Law of Ethical Business Practices Act.
Foreign Corrupt Practices Act.
Key term definition - Foreign Corrupt Practices Act.
AACSB: Diversity
Blooms: Remember
Topic: Foreign Corrupt Practices Act
107. Cultural symbols refer to

(p. 144
)
A.
B.
C.
D.
E.
ideas that can be protected by international copyrights.

ideas that cannot be expressed by words or characters.
things that represent values that exist solely within a nation.
things that represent ideas and concepts.
words that represent pictures or designs.
Key term definition - cultural symbols.
AACSB: Diversity
Blooms: Remember
Topic: Cultural symbols
6-127
108. Cultural symbols are things that

(p. 144
)
A.
B.
C.
D.
E.
can be protected by international copyrights.

cannot be expressed by words or characters.
represent values that exist solely within a nation.
represent words through the use of pictures or designs.
represent ideas and concepts.
AACSB: Diversity
Blooms: Remember
109. The representations of ideas and concepts to which different cultures often attach
(p. 144 different meanings are referred to as
)
A.
B.
C.
D.
E.
universal symbols.
cultural symbols.
symbolic concepts.
ideological representations.
cultural representations.
AACSB: Diversity
Blooms: Remember
6-128
110. A field of study that examines the correspondence between symbols and their role
(p. 144 in the assignment of meaning for people is referred to as
)
A.
B.
C.
D.
E.
back translation.
symbiotics.
semiotics.
symbolic linguistics.
cross-cultural analysis.
Key term definition - semiotics.
AACSB: Diversity
Blooms: Remember
Topic: Semiotics
111. Semiotics refers to

(p. 144
)
A. a field of study in marketing linguistics that identifies the connotative meanings

behind words in order to create the most effective product or brand names.
B. a field of study in marketing linguistics that identifies the connotative meanings
behind words in order to create the most effective advertising messages.
C. a field of study that examines the correspondence between symbols and their
role in the assignment of meaning for people.
D. a field of linguistics that translates words into internationally recognized
symbols to help companies carry their product message across international
boundaries.
E. the practice where a translated word or phrase is retranslated into the original
language by a different interpreter to catch errors.
Key term definition - semiotics.
AACSB: Diversity
Blooms: Remember
Topic: Semiotics
6-129
112. A researcher studying the fact that in some nations black is a sign of mourning
(p. 144 while in others white is a sign of mourning would be studying
)
A.
B.
C.
D.
E.
semiotics.
semantics.
semaphorics.
cultural symbolism.
cultural linguistics.
So important is the role of symbols that a field of study, called semiotics, has
emerged, which examines the correspondence between symbols and their role in
the assignment of meaning for people. The colors black and white are symbols
with different meanings in different cultures.

Blooms: Apply
Topic: Semiotics
113. By skillfully using __________, global marketers can tie positive meanings to their
(p. 144 products, services, and brands to enhance their attractiveness to consumers.
)
A.
B.
C.
D.
E.
cultural symbols
visual icons
trademarks
brand names
ethnic emblems
Cultural symbols are things that represent ideas and concepts. By cleverly using
cultural symbols, global marketers can tie positive symbolism to their products,
services, and brands to enhance their attractiveness to consumers.
AACSB: Diversity
Blooms: Understand
6-130
114. Tiffany & Company knows that Japanese are superstitious about the number 4. As
(p. 144 a result, Tiffany sells its fine glassware and china in sets of five, not four, in Japan.
)
Tiffany has used its knowledge of __________ to avoid connecting its products with
the number 4.
A.
B.
C.
D.
E.
trademarks
visual icons
cultural symbols
brand names
ethnic emblems
The Japanese are superstitious about the number 4, so to avoid a connection to

this cultural symbol, Tiffany sells its products in sets of five, not four.
AACSB: Diversity
Blooms: Understand
Parthenon Photo
6-131
115. The Parthenon, shown in the photo above, evokes strong feelings from consumers
(p. 144 in Greece and is referred to as the "holy rock." Coca Cola marketers did not respect
)
that this __________, when used in a marketing campaign by replacing the columns
with Coke bottles, would arouse such an angry response in that country.
A.
B.
C.
D.
E.
cultural symbol
anthropomorphic code
back translation
semantic representation
civil analysis
Cultural symbols are things that represent ideas and concepts in a specific culture.
Symbols and symbolism play an important role in cross-cultural analysis because
different cultures attach different meanings to things.
AACSB: Diversity
Blooms: Understand
116. Canada has two official languages, which are

(p. 144
)
A.
B.
C.
D.
E.
English and Japanese.

English and Spanish.
English and French.
English and Italian.
English and German.
Canada has two official languages - English and French.
AACSB: Diversity
Blooms: Remember
Topic: Language
6-132
117. Even though there are hundreds of different languages and dialects, the three
(p. 144 major languages used in global diplomacy and commerce are
)
A.
B.
C.
D.
E.
English, Japanese, and Chinese.

English, French, and Spanish.
Japanese, Spanish, and French.
Japanese, Spanish, and English.
Spanish, English, and Chinese.
English, French, and Spanish are the principal languages used in global diplomacy
and commerce. However, the best language in which to communicate with
consumers is their own.
AACSB: Diversity
Blooms: Understand
Topic: Language
118. The practice where a translated word or phrase is retranslated into the original
(p. 144 language by a different interpreter to catch errors is referred to as
)
A.
B.
C.
D.
E.
locution.
heuristics.
transliteration.
back translation.
cross-cultural paraphrasing.
Key term definition - back translation.
AACSB: Diversity
Blooms: Understand
Topic: Back translation
6-133
119. If you were responsible for marketing communications at a company that

(p. 144 manufactures office supplies and had to provide product literature to be
)
distributed in France, you would be wise to use __________, whereby you have
someone to translate your literature from American English into French, and then
have someone else in France translate the French into American English.
A.
B.
C.
D.
E.
back talk
back translation
double talk
double entendre
double indemnity
Back translation is retranslating a word or phrase into the original language using
a different interpreter to catch errors. By having the literature translated into
French and then back into English, you will be sure the literature conveys the
intended meaning.

Blooms: Apply
120. A Tokyo shopkeeper would have been wise to use __________ to verify the accuracy
(p. 144 of the new sign in English he purchased for his dry cleaning business. The sign
)
read, "Drop your pants here for best results," which he did not know had another
suggestive meaning to native speakers.
A.
B.
C.
D.
E.
cultural symbolism
dialect transformation
semantic analysis
linguistic exchange
back translation
Back translation is retranslating a word or phrase into the original language by a

different interpreter to catch errors.

Blooms: Apply
6-134
121. A New York carwash owner wanted to open a carwash in Quebec, Canada. He hired
(p. 144 a U.S. translator to create signage for the new venture and to design some simple
)
advertising. It was not until the business was opened that he learned that he
should have used __________. His French signs actually said "car bath" instead of
"car wash."
A.
B.
C.
D.
E.
Esperanto
back translation
semiotics
semantic symbolism
linguistic exchange
Back translation is retranslating a word or phrase into the original language by a

different interpreter to catch errors.

Blooms: Apply
Kit Kat Bar Photo
6-135
122. Consider the Kit Kat bar photo above. Kit Kat bars are marketed by Nestl
(p. 145 worldwide. Kit Kat is pronounced "kitto katsu" in Japanese, which roughly
)
translates to "surely win." Japanese teens eat Kit Kat bars for good luck,
particularly when taking crucial school exams. This positive result might have been
eliminated had the company used __________ and felt it necessary to use a name
without an additional meaning.
A.
B.
C.
D.
E.
intentional transliteration
semantic symbolism
back translation
semantic analysis
linguistic exchange
Experienced global marketers use back translation, in which a translated word or

phrase is retranslated into the original language by a different interpreter to catch
errors. Nevertheless, unintended translations can produce favorable results.
Consider Kit Kat bars marketed by Nestl worldwide. Kit Kat is pronounced "kitto
katsu" in Japanese, which roughly translates to "surely win."

Blooms: Apply
123. Since global marketing is affected by economic considerations, a scan of the global
(p. 145 marketplace should include which of the following factors?
)
A.
B.
C.
D.
E.

an assessment of the economic infrastructure in the involved countries
A scan of the global marketplace should include: (1) an assessment of the

economic infrastructure in these countries; (2) measurement of consumer income
in different countries; and (3) recognition of a country's currency exchange rates.
AACSB: Diversity
Blooms: Understand
Topic: Economic considerations
6-136
)
A. an analysis of cultural diversity within the country under consideration

B. regulatory constraints regarding contracts, mergers, and partnerships
C. measurement of consumer income in different countries
D. an assessment of language differences including dialect variation
E. political and ideological differences between the countries involved
AACSB: Diversity
Blooms: Understand
)
A.
B.
C.
D.
E.
recognition of a country's currency exchange rates


AACSB: Diversity
Blooms: Understand
6-137
126. A country's communications, transportation, financial, and distribution systems are

(p. 145 considered to be its
)
A.
B.
C.
D.
E.
fixed-asset base.
asset wealth.
Text term definition - economic infrastructure.
AACSB: Diversity
Blooms: Remember
Topic: Economic infrastructure
127. Economic infrastructure refers to

(p. 145
)
A.
a nation's military-industrial complex.
B.
a country's governmental services.
C.
the people and the wealth of a nation.
D. a country's communications, transportation, financial, and distribution systems.
E. all of a country's natural resources, whether or not they are currently being
exploited.
Text term definition - economic infrastructure.
AACSB: Diversity
Blooms: Remember
6-138
128. Two-thirds of the commercial transactions in Russia involve non-monetary forms of

(p. 146 payment due to limits in formal operating procedures among financial institutions
)
and even limits on the notion of private property there. These would best be
described as constraints in the country's __________.
A.
B.
C.
D.
E.
capital infrastructure
political infrastructure
geopolitical system
financial exchange system
Communications, transportation systems, financial services, as well as distribution

systems contribute to a nation's economic infrastructure.
AACSB: Diversity
Blooms: Understand
129. Although Russia now has a free economy, there are still some problems with its
(p. 146 financial and legal systems as well as with the notion of
)
A.
B.
C.
D.
E.
private property.
product promotion.
paid advertising.
community property.
foreign exchange rates.
When entering a foreign market, even the financial and legal system can cause
problems. In Russia and elsewhere, formal operating procedure among financial
institutions and the notion of private property are still limited.
AACSB: Diversity
Blooms: Understand
6-139
130. In Latvia, only one six-lane highway exists, connecting Riga, its capitol, with
(p. 146 Moscow. Otherwise, the roads are two-lane and many are made of cobblestones or
)
bricks. This limits the speed with which deliveries can be made and requires that
delivery trucks be quite small. The road network in Latvia is an example of
problems with a country's
A.
B.
C.
D.
E.
fixed-asset base.
asset wealth.
Communications, transportation systems, financial services, as well as distribution

systems contribute to a nation's economic infrastructure.

Blooms: Apply
131. A global marketer selling consumer products and services must also consider what
(p. 146 the average per capita or __________ is among a country's consumers and how the
)
income is distributed to determine a nation's purchasing power.
A.
B.
C.
D.
E.
buying capacity
currency exchange risk
purchasing power
household income
cost of living
A global marketer selling consumer products and services must also consider what
the average per capita or household income is among a country's consumers and
how the income is distributed to determine a nation's purchasing power.
AACSB: Diversity
Blooms: Understand
Topic: Consumer income
6-140
132. A country's income distribution is important because it gives a more reliable

(p. 146 picture of a country's __________.
)
A.
B.
C.
D.
E.
consumer tastes
taxable income
purchasing power
discretionary income
cost of living
A country's income distribution is important because it gives a more reliable

picture of a country's purchasing power.
AACSB: Diversity
Blooms: Understand
133. Foreign countries with very low per capita incomes may still be attractive markets
(p. 146 for some goods. To get a more reliable picture of a country's purchasing power, a
)
country's __________ must also be considered.
A.
B.
C.
D.
E.
total income
total area
geographical location
culture
income distribution
A country's income distribution is important because it gives a more reliable

picture of a country's purchasing power. Generally, as the proportion of middleincome households in a country increases, the greater a nation's purchasing power
tends to be.

Blooms: Apply
6-141
134. Generally, as the proportion of middle-income households in a country __________,

(p. 146 the __________ a nation's purchasing power.
)
A.
increases; greater
B.
increases; lesser
C.
decreases; greater
D.
levels off; greater
E. There is no relationship between middle-income households and a nation's
purchasing power.
Generally, as the proportion of middle-income households in a country increases,
the greater a nation's purchasing power tends to be.
AACSB: Diversity
Blooms: Understand
135. Generally, as the proportion of middle-income households in a country __________,

(p. 146 the nation's purchasing power increases.
)
A.
B.
C.
D.
E.
decreases
increases
levels off

AACSB: Diversity
Blooms: Understand
6-142
136. Generally, as the proportion of middle-income households in a country increases,

(p. 146 the nation's purchasing power __________.
)
A.
B.
C.
D.
E.
levels off
decreases
increases
becomes less of an economic priority
becomes progressively unstable

AACSB: Diversity
Blooms: Understand
137. The price of one country's currency expressed in terms of another country's
(p. 147 currency is referred to as the
)
A.
B.
C.
D.
E.
balance of price.
money conversion factor.
transfer payment.
Key term definition - currency exchange rate.
AACSB: Diversity
Blooms: Remember
Topic: Currency exchange rate
6-143
138. A currency exchange rate refers to

(p. 147
)
A.
the unit equivalency of all international currency.
B. the ratio of a nation's basic unit of currency relative to the price of silver.
C. the ratio of a nation's basic unit of currency relative to the price of gold.
D. the price of one country's currency expressed in terms of another country's
currency.
E. the unit of wealth (gold, oil, diamonds, etc.) upon which a nation bases its
national currency.
Key term definition - currency exchange rate.
AACSB: Diversity
Blooms: Remember
139. Fluctuations in the __________ among the world's currencies have direct impact on
(p. 147 the sales and profits made by global companies.
)
A.
B.
C.
D.
E.
production costs
transportation
reciprocity
exchange rates
A currency exchange rate is the price of one country's currency expressed in terms
of another country's currency, such as the U.S. dollar expressed in Brazilian reals.
Fluctuations in exchange rates among the world's currencies have direct impact on
the sales and profits made by global companies.
AACSB: Diversity
Blooms: Understand
6-144
140. When foreign currencies can buy more U.S. dollars,

(p. 147
)
A. U.S. products are more expensive to foreign customers.

B.
U.S. products are more expensive to U.S. customers.
C. U.S. products are less expensive to foreign customers.
D. economists consider it an indicator of an impending long-term economic
upturn.
E. American consumers will buy in large quantities and stockpile in fear of an
impending economic crisis.
Exchange rate fluctuations affect the sales and profits made by global companies.
When foreign currencies can buy more U.S. dollars, U.S. products are less
expensive for the foreign customer.
AACSB: Diversity
Blooms: Understand
141. Which of the following statements concerning currency exchange rates is most
(p. 147 accurate?
)
A. Fluctuations in exchange rates among the world's currencies are of critical

importance in global marketing.
B. Fluctuations in exchange rates among the world's currencies occur, but
multinational companies are insulated from the affects because of direct
investment.
C. Exchange rate fluctuations are relatively rare, but when they occur, their effects
are minimal.
D. Exchange rate fluctuations are now almost nonexistent due in great part to the
stability of the euro.
E. Exchange rate fluctuations may affect the financial sector but rarely reach the
consumer.
Fluctuations in exchange rates among the world's currencies can affect everyone
from international tourists to global companies. For example, when the U.S. dollar
is "strong" against the euro, it takes fewer dollars to purchase goods in the EU. As
a result, more U.S. tourists will travel to Europe. This is great news for Europe's
travel industry, but bad news for European consumers who want to buy U.S.
goods, as they will have to pay more for them.
AACSB: Diversity
Blooms: Understand
6-145

142. Chrysler Corporation wanted to sell its Jeeps in Japan. The car was priced in U.S.
(p. 147 dollars at about $19,000, but when it reached the Japanese car showrooms, its
)
price was over 31,000 Japanese yen, and the Japanese could not afford to buy it.
Its price was set without regard for the
A.
B.
C.
D.
E.
balance of price.
reciprocity price.
balance of trade.
A currency exchange rate is the price of one country's currency expressed in terms
of another country's currency.

Blooms: Apply
143. The political and regulatory climate for marketing in a country or region of the
(p. 148 world means not only identifying the current environment but also determining
)
how
A.
B.
C.
D.
E.
it conducts its macrofinancing.

its citizens budget their money.
long a favorable or unfavorable climate will last.
the country's stocks are performing on the stock exchange.
its population ranks in size compared to other countries.
The political and regulatory climate for marketing in a country or region of the
world means not only identifying the current climate but also determining how
long a favorable or unfavorable climate will last.
AACSB: Diversity
Blooms: Remember
Topic: Regulatory climate
6-146
144. An assessment of a country's or region's political-regulatory climate includes an

(p. 148 analysis of its political stability and __________.
)
A.
B.
C.
D.
E.
stock market performance
trade regulations
cultural diversity
currency exchange rates
An assessment of a country's or region's political-regulatory climate includes an

analysis of its political stability and trade regulations.
AACSB: Diversity
Blooms: Understand
Topic: Regulatory climate
145. Trade among nations or regions depends on political stability. In recent times,
(p. 148 billions of dollars have been lost in __________ and __________ as a result of internal
)
political strife, terrorism, and war.
A.
B.
C.
D.
E.
Russia; Poland
France; Spain
China; Japan
the Middle East; Africa
Germany; the United Kingdom
Billions of dollars have been lost in the Middle East and Africa, which encourages
careful selection of politically stable countries and regions of the world for trade.
AACSB: Diversity
Blooms: Remember
Topic: Political stability
6-147
146. The PRS group maintains a website that can be used to determine
(p. 148
)
A. changing demographic and psychographic data for each country in the registry.
B. a country's political risk ratings using multiple databases of country-specific
information.
C. the tariffs of each country and their relative effect on product and services
sales.
D. the rankings of American products relative to domestic equivalents in each
country.
E. changing social trends within different segments of the economy.
The focus of the PRS group is on maintaining multiple databases of countryspecific information, including political risk ratings. These can be used to
determine the relative favorability of various business climates.
AACSB: Diversity
Blooms: Understand
Topic: Marketing insight
147. Japanese car safety rules effectively require all automobile replacement parts to be
(p. 180 Japanese and the country has about 11,000 other rules that specify how other
)
goods are to be made and marketed. These rules often function as __________.
A.
B.
C.
D.
E.
trade barriers
universal codes
binding requirements
targets for bribery
Countries have a variety of rules that govern business practices within their
borders. These rules often serve as trade barriers, including this Japanese
regulations.
AACSB: Diversity
Blooms: Understand
Topic: Trade regulations
6-148
148. A firm's profit potential and control over marketing activities __________ as it moves
(p. 148 from exporting to direct investment as a global market-entry strategy.
)
A.
B.
C.
D.
E.
becomes more stable

increases
levels off
decreases
becomes more unpredictable
A firm's profit potential and control over marketing activities increases as it moves
from exporting to direct investment as a global market-entry strategy. But so does
the firm's financial commitment, risk, marketing control, and profit potential. Firms
often engage in exporting, licensing, and joint ventures before pursuing a direct
investment strategy. See Figure 6-3.
AACSB: Diversity
Blooms: Remember
markets.
Topic: Global market entry strategies
149. Once a company has decided to enter the global marketplace, it must select a
(p. 148 means of market entry. Four general options exist: (1) __________; (2) licensing; (3)
)
joint venture; and (4) direct investment.
A.
B.
C.
D.
E.
exporting
accreditation
countertrading
cooperative
franchising
Four general options exist: (1) exporting; (2) licensing; (3) joint venture; and (4)
direct investment. See Figure 6-3.
AACSB: Diversity
Blooms: Remember
markets.
6-149
(p. 148 means of market entry. Four general options exist: (1) exporting; (2) __________; (3)
)
joint venture; and (4) direct investment.
A.
B.
C.
D.
E.
macrofinancing
microfinancing
franchising
licensing
collateral venture
AACSB: Diversity
Blooms: Remember
markets.
(p. 148 means of market entry. Four general options exist: (1) exporting; (2) licensing; (3)
)
__________; and (4) direct investment.
A.
B.
C.
D.
E.
franchising
joint venture
cooperative
multiparty initiative
mutual investment
AACSB: Diversity
Blooms: Remember
markets.
6-150
(p. 148 means of market entry. Four general options exist: (1) exporting; (2) licensing; (3)
)
joint venture; and (4) __________.
A.
B.
C.
D.
E.
franchising
microfinancing
unilateral venture
cooperative
direct investment
AACSB: Diversity
Blooms: Remember
markets.
153. A firm's profit potential and control over marketing activities increases as it moves
(p. 148 from exporting to direct investment as a global market-entry strategy. But so does
)
the firm's
A.
B.
C.
D.
E.
likelihood of long-term success.

financial commitment and risk.
vulnerability to political changes and doctrines.
need for a more educated workforce.
need for a larger workforce.
from exporting to direct investment as a global market-entry strategy. But, so does
AACSB: Diversity
Blooms: Understand
markets.
6-151
154. As a firm changes its global market-entry strategy from exporting to direct
(p. 148 investment, all of the following increase EXCEPT:
)
A.
B.
C.
D.
E.
marketing control.
risk.
divestiture.
profit potential.
financial commitment.
from exporting to direct investment as a global market-entry strategy. But, so does
AACSB: Diversity
Blooms: Understand
markets.
Figure 6-3
6-152
155. According to Figure 6-3 above, point A would most likely represent what option for
(p. 149 entering the global marketplace?
)
A.
B.
C.
D.
E.
joint venture
licensing
exporting
direct investment
franchise
From least risk to greatest risk, the options for entering the global marketplace
are: (A) exporting; (B) licensing; (C) joint venture; and (D) direct investment. See
Figure 6-3.
AACSB: Diversity
Blooms: Understand
markets.
156. According to Figure 6-3 above, point B would most likely represent what option for
)
A.
B.
C.
D.
E.
exporting
joint venture
direct investment
franchising
licensing
Figure 6-3.
AACSB: Diversity
Blooms: Understand
markets.
6-153
157. According to Figure 6-3 above, point C would most likely represent what option for
)
A.
B.
C.
D.
E.
exporting
joint venture
direct investment
licensing
franchising
Figure 6-3.
AACSB: Diversity
Blooms: Understand
markets.
158. According to Figure 6-3 above, point D would most likely represent what option for
)
A.
B.
C.
D.
E.
exporting
joint venture
direct investment
franchising
licensing
Figure 6-3.
AACSB: Diversity
Blooms: Understand
markets.
6-154
159. According to Figure 6-3 above, points A and D would most likely represent
(p. 149 __________ and __________ options respectively for entering the global marketplace.
)
A.
B.
C.
D.
E.
joint venture; licensing

licensing; exporting
direct investment; licensing
Figure 6-3.
AACSB: Diversity
Blooms: Understand
markets.
160. According to Figure 6-3 above, points B and C would most likely represent
(p. 149 __________ and __________ options respectively for entering the global marketplace.
)
A.
B.
C.
D.
E.
exporting; licensing
joint venture; direct investment
exporting; joint venture
Figure 6-3.
AACSB: Diversity
Blooms: Understand
markets.
6-155
161. A global market-entry strategy in which a company produces goods in one country
(p. 148 and sells them in another country is referred to as __________.
)
A.
B.
C.
D.
E.
exporting
direct investment
countertrade
licensing
multinational marketing
Key term definition - exporting.
AACSB: Diversity
Blooms: Remember
markets.
Topic: Exporting
162. Exporting refers to a global market-entry strategy

(p. 148
)
A. in which a company will sell its products in international markets but not in its
own domestic market.
B. in which a company produces goods in one country and sells them in another
country.
C. in which a company will manufacture its product in several countries at the
same time using different brand names and slight product modifications.
D. in which a company will manufacture products specifically designed for nondomestic markets, but will sell those products to distributors who take title and
resell the products to different companies around the world.
E. whereby a product is made in one country, assembled in a second country, and
ultimately marketed to a third country.
Key term definition - exporting.
AACSB: Diversity
Blooms: Remember
markets.
Topic: Exporting
6-156
163. What market entry option allows a company to make the least number of changes
(p. 148 in terms of its product, its organization, and even its corporate goals?
)
A.
B.
C.
D.
E.
exporting
licensing
joint venture
direct investment
franchising
Exporting allows a company to make the least number of changes in terms of its
product, its organization, and even its corporate goals.
AACSB: Diversity
Blooms: Remember
markets.
Topic: Exporting
164. Indirect exporting refers to

(p. 148
)
A. offering the right to a trademark, patent, trade secret, or similarly valued item
of intellectual property in return for a royalty or fee.
B. selling a firm's domestically produced products in a foreign country without
interference by that government.
C. contracting with a foreign firm to manufacture products according to stated
specifications.
D. avoiding the use of additional parties when a firm sells its domestically
produced products in another country.
E. selling a firm's domestically produced products in a foreign country through an
intermediary.
Text term definition - indirect exporting.
AACSB: Diversity
Blooms: Remember
markets.
Topic: Indirect exporting
6-157
165. When a firm sells its domestically produced products in a foreign country through
(p. 148 an intermediary, it is referred to as
)
A.
B.
C.
D.
E.
direct exporting.
indirect exporting.
licensing.
franchising.
foreign assembly.
AACSB: Diversity
Blooms: Remember
markets.
166. Indirect exporting occurs when a firm sells its domestically produced products in a
(p. 148 foreign country
)
A.
B.
C.
D.
E.
in violation of a quota.
without paying import tariffs.
without paying export duties.
through a joint venture.
through an intermediary.
AACSB: Diversity
Blooms: Remember
markets.
6-158
167. What type of exporting has the least amount of commitment and risk but will
(p. 148 probably return the least profit?
-149)
A.
B.
C.
D.
E.
direct
indirect
licensing
joint
unilateral
Indirect exporting has the least amount of commitment and risk but will probably
return the least profit.
AACSB: Diversity
Blooms: Understand
markets.
168. A small Canadian winery located in British Columbia has developed a superior
(p. 149 tasting wine. It has no overseas contacts but wants to get its wine on the shelves
)
in selected Asian and European markets where growth has been substantial in the
last two years. What type of exporting option would best suit this company?
A.
B.
C.
D.
E.
direct exporting
licensing
indirect exporting
joint venture
cooperative partnership
Indirect exporting is ideal for a company that has no overseas contacts but wants
to market abroad.

Blooms: Apply
markets.
6-159
169. The U.S. motorcycle manufacturer Harley-Davidson uses intermediaries to sell its
(p. 149 motorcycles in numerous nations outside the United States. Harley-Davidson uses
)
A.
B.
C.
D.
E.
direct exporting.
licensing.
indirect exporting.
foreign assembly.
Indirect exporting occurs when a firm sells its domestically produced goods in a
foreign country through an intermediary.

Blooms: Apply
markets.
170. Fran Wilson Creative Cosmetics attributes its success to a top-quality product,
(p. 149 effective advertising, and a novel __________ strategy.
)
A.
B.
C.
D.
E.
joint venture
licensing
franchising
indirect export
direct investment
Fran Wilson Creative Cosmetics does not sell to department stores. Rather, the
company sells its Moodmatcher lipstick through a network of Japanese distributors
that reach Japan's 40,000 beauty salons - its novel indirect export strategy.
AACSB: Diversity
Blooms: Remember
markets.
6-160
171. To avoid competing with Japanese firms through their traditional channel of
(p. 149 distribution, Fran Wilson Creative Cosmetics Moodmatcher lip coloring is sold in
)
which type of retail venue?
A.
B.
C.
D.
E.
grocery stores
flower shops
beauty salons
department stores
gift stores
Fran Wilson Creative Cosmetics does not sell to department stores. Rather, the
company sells its Moodmatcher lipstick through a network of Japanese distributors
that reach Japan's 40,000 beauty salons.
AACSB: Diversity
Blooms: Understand
markets.
172. Direct exporting refers to

(p. 150
)
A. offering the right to a trademark, patent, trade secret, or similarly valued items
specifications.
C. when a foreign country and a local firm invest together to create a local
business.
D. using additional parties when a firm sells its domestically produced goods in
another country.
E. when a firm sells its domestically produced goods in a foreign country without
intermediaries.
Text term definition - direct exporting.
AACSB: Diversity
Blooms: Remember
markets.
Topic: Direct exporting
6-161
173. What global market-entry strategy involves slightly more risk than indirect
(p. 150 exporting for a company but also opens the door to increased profits?
)
A.
B.
C.
D.
E.
direct exporting
licensing
cooperative
joint venture
direct investment
Direct exporting involves slightly more risk than indirect exporting for a company
but also more opportunity for profit.
AACSB: Diversity
Blooms: Remember
markets.
174. Most companies become involved in direct exporting when

(p. 150
)
A. foreign governments believe that they will benefit the most from allowing the
entry of direct exports.
B. emerging markets in foreign countries become economically viable.
C. they believe their volume of sales will be sufficiently large and easy to obtain so
D. the domestic market becomes saturated with competing products and services.
E.
evolving technologies in foreign countries come online.
Most companies become involved in direct exporting when they believe their
volume of sales will be sufficiently large and easy to obtain so that they do not
require intermediaries.
AACSB: Diversity
Blooms: Understand
markets.
6-162
175. The prominent global market-entry strategy among small- and medium-sized
(p. 150 companies is
)
A.
B.
C.
D.
E.
direct exporting.
direct franchising.
licensing.
joint venture.
direct investment.
Direct exporting is the prominent global market-entry strategy among small- and
medium-sized companies. Sixty percent of U.S. firms exporting products have
fewer than 500 employees but account for about 34 percent of total U.S.
merchandise exports.
AACSB: Diversity
Blooms: Remember
markets.
176. When a U.S. airplane manufacturer sells its airplanes to business executives in
(p. 150 Germany without using intermediaries, it is referred to as
)
A.
B.
C.
D.
E.
direct exporting.
indirect exporting.
licensing.
foreign manufacturing.
foreign assembly.
Direct exporting is when a firm sells its domestically produced goods in a foreign
country without intermediaries.

Blooms: Apply
markets.
6-163
177. Licensing refers to

(p. 150
)
specifications.
C. when a foreign country and a local firm invest together to create a local
business.
D. having a company handle its own exports directly without intermediaries.
E. exporting through an intermediary, which often has the knowledge and means
to succeed in selling a firm's product abroad.
Text term definition - licensing.
AACSB: Diversity
Blooms: Remember
markets.
Topic: Licensing
178. Offering the right to a trademark, patent, trade secret, or similarly valued items of
(p. 150 intellectual property in return for a royalty or fee is referred to as
)
A.
B.
C.
D.
E.
direct exporting.
indirect exporting.
licensing.
outside branding.
Text term definition - licensing.
AACSB: Diversity
Blooms: Remember
markets.
Topic: Licensing
6-164
179. Which of the following is an advantage inherent in the use of licensing?

(p. 150
)
A.
The licensor retains control of its product.
B. The licensor is protected from creating a potential competitor.
C. It provides an exemption from domestic trade regulations.
D. There is an increase in potential profit compared with direct investment.
E. The licensee gains information about the dynamics of the market.
The licensee gains information that allows it to start with a competitive advantage,
and the foreign country gains employment by having the product manufactured
locally.
AACSB: Diversity
Blooms: Understand
markets.
Topic: Licensing
180. All of the following are advantages of licensing EXCEPT:

(p. 150
)
A. the foreign country gains employment by having the product manufactured

locally.
B. the licensee gains information that allows it to start with a competitive
advantage.
C.
the low risk to the company granting the license.
D. the licensor's brand name can never be harmed as a result of the licensee.
E.
the capital-free entry into a foreign country.
Under licensing, a company offers the right to a trademark, patent, trade secret, or
other valued item in exchange for a royalty or fee. The advantages to the licensing
global market-entry strategy are: (1) the low risk to the company granting the
license; (2) the capital-free entry into a foreign country; (3) the licensee gains
information that allows it to start with a competitive advantage; and (4) the foreign
country gains employment by having the product manufactured locally. A
disadvantage is that, should the licensee prove to be a poor choice, the name or
reputation of the company may be harmed.
AACSB: Diversity
Blooms: Understand
markets.
Topic: Licensing
6-165
181. Which of the following is a disadvantage associated with licensing?

(p. 150
)
A. The licensee pays lower wages and sells at lower prices.

B.
The licensor may create its own competition.
C. The foreign government dislikes it because it does not increase local
employment.
D. This is the most expensive and risky method for global expansion.
E.
The firm's brand does not get international exposure.
The licensing firm may create its own competition, as some licensees are able to
modify the product somehow and enter the market with product and marketing
knowledge gained at the expense of the company that got them started.
AACSB: Diversity
Blooms: Understand
markets.
Topic: Licensing
182. Which form of entry into a global market makes a firm the most vulnerable to harm
(p. 150 regarding its brand name or reputation?
)
A.
B.
C.
D.
E.
direct exporting
indirect exporting
licensing
direct investment
joint venture
There are some serious drawbacks to licensing. The licensor forgoes control of its
product and reduces the potential profits. In addition, it may even be creating its
own competition. Finally, should the licensee prove to be a poor choice, the brand
name or reputation of the licensor may be harmed.
AACSB: Diversity
Blooms: Understand
markets.
Topic: Licensing
6-166
183. All of the following are disadvantages of licensing EXCEPT:

(p. 150
)
A. the licensor reduces its potential profits gained from product sales.
B. the foreign country gains employment by having the product manufactured
locally.
C.
the licensor forgoes control of its product.
D. should the licensee prove to be a poor choice, the name or reputation of the
company may be harmed.
E.
the licensor may be creating its own competition.
There are some serious drawbacks to licensing: (1) the licensor forgoes control of
its product; (2) the licensor reduces its potential profits gained from it; (3) the
licensor may be creating its own competition: and (4) should the licensee prove to
be a poor choice, the name or reputation of the company may be harmed. One
advantage is that the foreign country gains employment by having the product
manufactured locally.
AACSB: Diversity
Blooms: Understand
markets.
Topic: Licensing
184. Tricon was the restaurant division of PepsiCo until it was spun off in 1997. Since
(p. 150 then, Tricon has opened 6,000 KFC restaurants abroad. It has 158 restaurants in
)
Indonesia and more than 500 restaurants in China. All are locally owned and each
owner pays a fee to Tricon. Tricon is engaged in
A.
B.
C.
D.
E.
licensing.
direct exporting.
indirect exporting.
foreign assembly.
Tricon has given the local restaurant owners the benefit of its patents, trade
secrets, etc., and the owners pay Tricon a licensing fee.

Blooms: Apply
markets.
Topic: Licensing
6-167
185. Select Service Partner (SSP) Group has operations in 30 countries involving food
(p. 150 and beverage establishments, often in transit hubs like airports and railway
)
stations. SSP also operates Starbucks locations in airports in Finland, Sweden, and
Norway. SSP pays Starbucks a royalty based on sales as well as a fee for each
store. In these instances, Starbucks is engaged in
A.
B.
C.
D.
E.
direct exporting.
indirect exporting.
foreign assembly.
licensing.
Under licensing, a company offers the right to a trademark, patent, trade secret, or
other similarly valued item of intellectual property in return for a royalty or a fee.
This is an example of franchising, which is a variation of licensing.

Blooms: Apply
markets.
Topic: Licensing
186. A form of low-risk and capital-free entry into international markets that includes
(p. 150 local manufacturing is referred to as
)
A.
B.
C.
D.
E.
indirect exporting.
direct ownership.
joint ventures.
licensing.
direct exporting.
The advantages to the company granting the license are low risk and a capital-free
entry into a foreign country.
AACSB: Diversity
Blooms: Understand
markets.
Topic: Licensing
6-168
187. One variation of licensing is referred to as

(p. 150
)
A.
B.
C.
D.
E.
direct investment.
joint ventures.
direct exporting.
franchising.
dual adaptation.
A variation of licensing is franchising. Franchising is one of the fastest growing

market-entry strategies. More than 75,000 franchises of U.S. firms are located in
countries throughout the world.
AACSB: Diversity
Blooms: Remember
markets.
Topic: Franchising
188. Yum! Brands, the restaurant division of PepsiCo, has 12,600 KFC restaurants
(p. 150 abroad, with more than 3,700 restaurants in China. Many of the latter are locally
)
owned and subject to a contractual agreement that allows the owners to operate
the business under the established KFC brand name and according to specific
rules. Yum! Brands is engaged in
A.
B.
C.
D.
E.
contract assembly.
a joint venture.
a partnership.
franchising.
Franchising is a type of licensing.

Blooms: Apply
markets.
Topic: Franchising
6-169
189. Yogen Frz is a successful chain of frozen yogurt shops originating in Canada.
(p. 150 Archeology Investments has an agreement with the Canadian firm that grants
)
rights to its company to open and operate Yogen Frz shops in Dubai, Oman,
Qatar, Bahrain, and Kuwait. Yogen Frz is engaged in
A.
B.
C.
D.
E.
dual adaptation.
a joint venture.
direct exporting.
indirect exporting.
franchising.
Franchising is a type of licensing.

Blooms: Apply
markets.
Topic: Franchising
190. A joint venture refers to

(p. 150
)
specifications.
C. when a foreign company and a local firm invest together to create a local
business.
D. having a company handle its own exports directly, but using intermediaries for
importing.
E. exporting through an intermediary, which often has the knowledge and means
to succeed in selling a firm's products abroad.
Key term definition - joint venture.
AACSB: Diversity
Blooms: Remember
markets.
Topic: Joint venture
6-170
191. A global market-entry strategy in which a foreign company and a local firm invest
(p. 150 together to create a local business in order to share ownership, control, and profits
)
of the new company is referred to as
A.
B.
C.
D.
E.
licensing.
a joint venture.
direct exporting.
contract assembly.
dual adaptation.
Key term definition - joint venture.
AACSB: Diversity
Blooms: Remember
markets.
192. PepsiCo and __________ entered into a joint venture to market Frito-Lay's, Cheetos,
(p. 150 Ruffles, and Doritos in Israel.
)
A.
B.
C.
D.
E.
The Strauss Group

Ericsson
General Mills
Hebrew National
CGCT
The Strauss Group has a joint venture with PepsiCo to market Frito-Lay's Cheetos,
Ruffles, Doritos, and other snacks in Israel.
AACSB: Diversity
Blooms: Remember
markets.
6-171
193. The __________ arrangement between Ericsson, a Swedish telecommunications

(p. 150 firm, and CGCT, a French switch maker, enabled them together to beat out AT&T
)
for a $100 million French contract.
A.
B.
C.
D.
E.
franchising
licensing
joint venture
direct investment
exporting
A joint venture between Ericsson, a Swedish telecommunications firm, and CGCT, a

French switch maker, enabled them together to beat out AT&T for a $100 million
French contract. Ericsson's money and technology combined with CGCT's
knowledge of the French market made it possible.
AACSB: Diversity
Blooms: Understand
markets.
194. A disadvantage of a joint venture arrangement when entering a new global market
(p. 151 is that
)
A.
intermediaries have the potential to harm the brand.
B. the firm entering the foreign market must pay royalties to the other firm.
C.
one of the companies forgoes control over its product.
D.
the two companies may disagree about policies.
government.
The disadvantages arise when the two companies disagree about policies or
courses of action for their joint venture or when governmental bureaucracy bogs
down the effort.
AACSB: Diversity
Blooms: Understand
markets.
6-172
195. Starbucks and Tata Global Beverage have together formed Starbuck Coffee A Tata
(p. 150 Alliance in order to bring Starbucks to India. The global market-entry strategy is
)
known as
A.
B.
C.
D.
E.
franchising.
a joint venture.
licensing.
direct investment.
exporting.
When a foreign company and a local firm invest together to create a local
business, it is called a joint venture. These two companies share the ownership,
control, and profits of the new company.

Blooms: Apply
markets.
196. Direct investment in international marketing refers to

(p. 151
)
specifications.
C. a national market-entry strategy that entails a foreign company and a local firm
investing together to create a local business.
D. having a company handle its own exports directly, without intermediaries.
E. a global market-entry strategy that entails a domestic firm actually investing in
and owning a foreign subsidiary or division.
Key term definition - direct investment.
AACSB: Diversity
Blooms: Remember
markets.
Topic: Direct investment
6-173
197. A global market-entry strategy that entails a domestic firm actually investing in
(p. 151 and owning a foreign subsidiary or division is referred to as
)
A.
B.
C.
D.
E.
licensing.
local assembly.
a joint venture.
direct investment.
local manufacturing.
Key term definition - direct investment.
AACSB: Diversity
Blooms: Remember
markets.
198. When Nestl actually owns a subsidiary or division in a foreign country, such as
(p. 151 when it established its own ice cream manufacturing operation in China, this
)
global market entry strategy is known as __________ and represents the greatest
commitment a company can make to international sales.
A.
B.
C.
D.
E.
licensing
local assembly
a joint venture
direct investment
local manufacturing
The biggest commitment a company can make when entering the global market is
direct investment, which entails a domestic firm actually investing in and owning a
foreign subsidiary or division.
AACSB: Diversity
Blooms: Understand
markets.
6-174
199. Which form of entry into a foreign market requires the greatest commitment?
(p. 151
)
A.
B.
C.
D.
E.
direct exporting
direct investment
joint venture
licensing
indirect exporting
AACSB: Diversity
Blooms: Understand
markets.
200. One advantage of direct investment when entering a new global market is that
(p. 151
)
A.
B. the firm entering the foreign market does not have to pay royalties to the
government.
C.
D. the firm gains and uses a better understanding of local market conditions.
government.
The advantages to direct investment include cost savings, better understanding of
local market conditions, and fewer local restrictions. Firms entering foreign
markets using direct investment believe that these advantages outweigh the
financial commitments and risks involved.
AACSB: Diversity
Blooms: Understand
markets.
6-175
201. One disadvantage of direct investment when entering a new global market is that
(p. 151
)
A.
B. the firm entering the foreign market must pay royalties to the government.
C.
D.
the financial commitments involved.
E. this method is likely to provide the fewest cost savings relative to the other
global market-entry options.
The advantages to direct investment include cost savings, better understanding of
local market conditions, and fewer local restrictions. Firms entering foreign
markets using direct investment believe that these advantages outweigh the
financial commitments and risks involved.
AACSB: Diversity
Blooms: Understand
markets.
202. Both Honda and Toyota have plants in the United States that use American labor.
(p. 151 This illustrates Honda's and Toyota's use of
)
A.
B.
C.
D.
E.
direct exporting.
direct investment.
joint venture.
licensing.
indirect exporting.
Direct investment entails a domestic firm actually investing in and owning a

foreign subsidiary or division. Honda and Toyota are domestic firms (to Japan) that
own a foreign (U.S.) subsidiary or division.

Blooms: Apply
markets.
6-176
203. Yum! Brands, the parent company of KFC, has pursued an aggressive growth
(p. 151 strategy in China. There are now than 3,700 restaurants in 650 Chinese cities, and
)
KFC has a 40% market share of the entire fast-food industry there. Yum! Brands
China owns and directly manages about 90% of its Chinese stores, so it appears
that the company prefers __________ in this market.
A.
B.
C.
D.
E.
licensing
local assembly
a joint venture
direct investment
local manufacturing

Blooms: Apply
markets.
204. Global companies have five strategies for matching products and their promotion
(p. 152 efforts to global markets. The strategy of selling virtually the same product in
)
other countries is referred to as
A.
B.
C.
D.
E.
product adaptation.
product invention.
brand adaptation.
product extension.
product integration.
Text term definition - product extension. See Figure 6-4.
AACSB: Diversity
Blooms: Remember
Topic: Product extension
6-177
205. As a general rule, __________ seems to work best when the consumer target market
(p. 152 for the product is alike across countries and cultures - that is, consumers share the
)
same desires, needs, and use for the product.
A.
B.
C.
D.
E.
product adaptation
product extension
product integration
product invention
Product extension seems to work best when the consumer target market for the
product is alike across countries and cultures. See Figure 6-4.
AACSB: Diversity
Blooms: Understand
206. Coca-Cola, Gillette razors, and Nike apparel and shoes are being sold in the same
(p. 152 form in many countries. This is an example of which type of global marketing
)
product and promotion strategy?
A.
B.
C.
D.
E.
product adaptation
product extension
product integration
product invention
Coca-Cola, Gillette, and Nike are using a product extension strategy - they are
selling virtually the same product in other countries. See Figure 6-4.

Blooms: Apply
6-178
207. GlaxoSmithKline plc. of Great Britain makes Breathe-Right nasal strips. It sells the
(p. 152 same product in many countries because customers all over the world will use
)
them in the same way. This is an example of which type of global marketing
product and promotion strategy?
A.
B.
C.
D.
E.
product extension
product adaptation
product invention
product integration
The product strategy of selling virtually the same product in other countries is a
product extension strategy. As a general rule, product extension seems to work
best when the consumer market target for the product is alike across countries
and cultures - that is, consumers share the same desires, needs, and uses for the
product. See Figure 6-4.

Blooms: Apply
(p. 152 efforts to global markets. Changing a product in some way to make it more
)
appropriate for a country's climate or preferences is an example of which type of
global marketing product and promotion strategy?
A.
B.
C.
D.
E.
product extension
product adaptation
product invention
product integration
Text term definition - product adaptation. See Figure 6-4.
AACSB: Diversity
Blooms: Remember
Topic: Product adaptation
6-179
209. Frito-Lay produces and markets potato chips in Russia that have seafood flavor.
(p. 152 This is an example of which type of global marketing product/promotion strategy?
)
A.
B.
C.
D.
E.
product adaptation
product integration
product invention
product extension
Changing a product in some way to make it more appropriate for a country's

climate or preferences is a product adaptation strategy. See Figure 6-4.
AACSB: Diversity
Blooms: Understand
210. KFC in Japan altered the sweetness of its coleslaw to appeal to Japanese tastes.
(p. 152 This is an example of which type of global marketing product and promotion
)
strategy?
A.
B.
C.
D.
E.
product extension
product adaptation
product invention
product integration
Changing a product in some way to make it more appropriate for a country's

climate or preferences is a product adaptation strategy. See Figure 6-4.

Blooms: Apply
6-180
(p. 152 efforts to global markets. Designing a product to serve the unmet needs of a
)
foreign nation is which type of global marketing product and promotion strategy?
A.
B.
C.
D.
E.
product extension
product adaptation
product invention
product integration
Text term definition - product invention. See Figure 6-4.
AACSB: Diversity
Blooms: Remember
Topic: Product invention
212. KFC has added many offerings to its menus in China to appeal to local tastes,
(p. 152 including the "Dragon Twister," which is a chicken wrap with Peking-duck sauce.
)
This is an example of which type of global marketing product and promotion
strategy?
A.
B.
C.
D.
E.
product extension
product adaptation
product invention
product integration
With product invention, companies invent totally new products designed to satisfy
common needs across countries. See Figure 6-6.

Blooms: Apply
Topic: Product invention
6-181
213. Even though Exxon adapts its gasoline blends for different countries based on
(p. 152 climate, the promotion message is unchanged. The wording of that slogan is
)
"__________."
A.
B.
C.
D.
E.
Put a Tiger in Your Tank

Put the Pedal to the Metal
Buy American Fuel
Keep America Driving
Power to the Pistons
Exxon's promotional message is "Put a Tiger in Your Tank."
AACSB: Analytical Thinking

Blooms: Understand
Topic: Promotional message
214. Nescafe coffee is marketed using different coffee blends and promotional
(p. 152 campaigns to match consumer preferences in different countries. For example,
)
Nescafe generally emphasizes the taste, aroma, and warmth of shared moments in
its advertising around the world. However, in Thailand, Nescaf is advertised as a
way to relax from the pressures of daily life. This is an example of which type of
global marketing product/promotion strategy?
A.
B.
C.
D.
E.
product extension
product adaptation
dual adaptation
dual integration
A dual adaptation strategy means modifying both the products and promotion
messages, which Nescaf has done in this example. See Figure 6-4.
AACSB: Diversity
Blooms: Understand
Topic: Dual adaptation
6-182
Figure 6-4
(p. 152 efforts to global markets. According to Figure 6-4 above, A refers to which type of
)
strategy?
A.
B.
C.
D.
E.

A product extension strategy (A) uses the same product and the same promotional
emphasis. See Figure 6-4.
AACSB: Diversity
Blooms: Understand
Topic: Product and promotion strategy
6-183
(p. 152 efforts to global markets. According to Figure 6-4 above, B refers to which type of
)
strategy?
A.
B.
C.
D.
E.

A product adaptation strategy (B) uses the same promotion but an adapted
product. See Figure 6-4.
AACSB: Diversity
Blooms: Understand
(p. 152 efforts to global markets. According to Figure 6-4 above, C refers to which type of
-153)
strategy?
A.
B.
C.
D.
E.

A communication adaptation strategy (C) uses the same product but adapts the
promotion. See Figure 6-4.
AACSB: Diversity
Blooms: Understand
6-184
(p. 152 efforts to global markets. According to Figure 6-4 above, D refers to which type of
-153)
strategy?
A.
B.
C.
D.
E.

A dual adaptation strategy (D) adapts both the product and the promotion. See
Figure 6-4.
AACSB: Diversity
Blooms: Understand
(p. 152 efforts to global markets. According to Figure 6-4 above, E refers to which type of
)
strategy?
A.
B.
C.
D.
E.

A product invention strategy (E) requires the invention of an entirely new product.
See Figure 6-4.
AACSB: Diversity
Blooms: Understand
Figure 6-5
6-185
220. Figure 6-5 above outlines the distribution channels through which a product
(p. 153 manufactured in one country must travel to reach its destination in another
)
country. Box A represents the
A.
B.
C.
D.
E.
seller.
channels within the foreign nation.
final customer.
Figure 6-5 above outlines global distribution channels. Box A represents the seller;
its headquarters is the starting point and is responsible for the successful
distribution to the ultimate consumer. B is the seller's international marketing
headquarters. C represents the channels between nations. D represents the
channels within a foreign nation. E represents the final or ultimate consumer. See
Figure 6-5.
AACSB: Diversity
Blooms: Understand
Topic: Distribution strategy
)
country. B represents the
A.
B.
C.
D.
E.

political forces.
final consumer.
Figure 6-5.
AACSB: Diversity
Blooms: Understand
6-186
)
country. C represents the
A.
B.
C.
D.
E.
seller.
final consumer.
Figure 6-5.
AACSB: Diversity
Blooms: Understand
)
country. Which letter in the figure would identify intermediaries used to move the
product from one country to another?
A.
B.
C.
D.
E.
A
B
C
D
E
C represents the channel between two nations, moving the product from one
country to another. Intermediaries include resident buyers in a foreign country,
independent merchant wholesalers who buy and sell the product, or agents who
bring buyers and sellers together. See Figure 6-5.
AACSB: Diversity
Blooms: Understand
6-187
)
country. Channels within a foreign nation can be very long or surprisingly short.
Which letter in the figure represents these channels?
A.
B.
C.
D.
E.
A
B
C
D
E
D represents channels within foreign nations. See Figure 6-5.
AACSB: Diversity
Blooms: Understand
)
country. E represents the
A.
B.
C.
D.
E.
seller.
final consumer.
its headquarters is the starting point. B is the seller's international marketing
Figure 6-5.
AACSB: Diversity
Blooms: Understand
6-188
)
country. Channels of distribution in global marketing are often long and complex.
Box A represents the __________ and Box B identifies the __________.
A.
seller; exporter
B.
seller; seller's international marketing headquarters
C. seller international marketing headquarters; channels between nations
D. channels between nations; channels within foreign nation
E.
channels within foreign nation; foreign retailer
its headquarters is the starting point. B is the seller's international marketing
Figure 6-5.
AACSB: Diversity
Blooms: Understand
227. When a firm sells a product in a foreign country below its domestic price or below
(p. 154 its actual cost, the practice is referred to as
)
A.
B.
C.
D.
E.
loss-leader pricing.
surplus marketing.
dumping.
second-market pricing.
entrepreneurial pricing.
Key term definition - dumping.
AACSB: Diversity
Blooms: Remember
Topic: Dumping
6-189
228. In international trade, dumping refers to

(p. 154
)
A. illegally disposing of unusable or damaged goods to avoid paying removal fees

and/or taxes.
B. a firm selling damaged or unsalable goods below their original production cost.
C. a firm selling quality goods at significantly lower prices for the primary purpose
of reducing inventory to make room for seasonal goods.
D. a firm selling quality goods at significantly lower prices for the primary purpose
of reducing inventory to make room for newer or more expensive models.
E. a firm selling a product in a foreign country below its domestic price or below its
actual cost.
Key term definition - dumping.
AACSB: Diversity
Blooms: Remember
Topic: Dumping
229. Eastman Kodak accused Japanese rival Fuji Photo Film of selling photographic
(p. 154 paper in the United States for 25 percent below what it charges in Japan. In other
)
words, Eastman Kodak accused Fuji of __________.
A.
B.
C.
D.
E.
tariff avoidance
countertrade
surplus marketing
dumping
underbidding
A firm selling a product in a foreign country below its domestic price or below its
actual cost is often accused of dumping.

Blooms: Apply
Topic: Dumping
6-190
230. The U.S. Commerce Department imposed additional duties of 31 percent to 250
(p. 154 percent on imported photovoltaic products imported by Chinese solar
)
manufacturers after ruling that they sold them below cost. The Commerce
Department took this action in response to what it saw as __________.
A.
B.
C.
D.
E.
tariff avoidance
countertrade
surplus marketing
underbidding
dumping
A firm selling a product in a foreign country below its domestic price or below its
actual cost is often accused of dumping.

Blooms: Apply
Topic: Dumping
231. A situation where products are bought in a lower-priced country from a

(p. 154 manufacturer's authorized reseller, shipped to higher-priced countries, and then
)
sold through unauthorized retailers below the manufacturer's suggested retail
price is referred to as __________.
A.
B.
C.
D.
E.
the black market

a gray market
dumping
a globalized market
parallel exporting
Key term definition - gray market.
AACSB: Diversity
Blooms: Remember
Topic: Gray market
6-191
232. A gray market refers to

(p. 154
)
A. the segment of products specifically designed for the need of older buyers.
B. a once active and powerful market that is rapidly becoming the bottom of the
barrel.
C. a situation where products are sold through unauthorized channels of
distribution.
D. a pricing structure that is based upon haggling that is considered acceptable in
some countries but not others.
E. the willingness of one party to accept gifts in exchange for better prices or price
allowances.
Key term definition - gray market.
AACSB: Diversity
Blooms: Remember
Topic: Gray market
233. Another term for a gray market is

(p. 154
)
A.
B.
C.
D.
E.
equivalent exporting.
back-channel market.
mature marketing.
parallel importing.
transparent market.
Key term definition - gray market or parallel importing.
AACSB: Diversity
Blooms: Remember
Topic: Gray market
6-192
234. The Japanese manufacture tractors for rice paddies. They are smaller than most
(p. 154 U.S. tractors and perfect for a weekend farmer who wants to tend to a small
)
garden. The tractors are not sold in the United States through any authorized
channels, yet they are available in the U.S. at prices below the manufacturer's
suggested retail price. These Japanese tractors are being sold
A.
B.
C.
D.
E.
through the gray market.

under the table.
over the counter.
with bypassed global channels.
by breaking the distribution monopoly.
Gray marketing is a situation where products are bought in a lower-priced country

from a manufacturer's authorized reseller, shipped to higher-priced countries, and
sold through unauthorized channels of distribution below the manufacturer's
suggested retail price.

Blooms: Apply
Topic: Gray market
235. Before Apple's iPhone 5 was officially for sale in China, it was being sold there.
(p. 154 These phones were purchased in the United States and Australia, and then resold
)
by unauthorized vendors in China for between $1,700 and $2,000. These products
are considered to be part of
A.
B.
C.
D.
E.
under the counter sales.

over the counter sales.
the gray market.
integrated global channels.
breaking the distribution monopoly.
Gray marketing is a situation where products are sold through unauthorized

channels of distribution.

Blooms: Apply
Topic: Gray market
6-193
236. Mary Kay, Inc. can be classified as which type of company when marketing its
(p. 156 products around the world?
)
A.
B.
C.
D.
E.
multinational firm
transnational firm
international firm
global marketing firm
multidomestic firm
Mary Kay exhibits the structural characteristics of an international firm, one that
engages in trade and marketing in different countries as an extension of the
marketing strategy in its home country. Mary Kay markets its existing products and
services in other countries the same way it does in its home country - the U.S.
AACSB: Diversity
Blooms: Understand
Topic: Video case: Mary Kay
237. Since 1963, Mary Kay, Inc.'s guiding principle has been based on __________.
(p. 156
)
A.
B.
C.
D.
E.
the Consumer Bill of Rights

the Golden Rule
caveat emptor
the American Marketing Association Statement of Ethics
maximizing profits so long as the firm stays within the rules
Mary Kay Ash's founding principles were simple, time-tested, and remain a
fundamental company business philosophy. She adopted the Golden Rule as her
guiding principle, determining the best course of action in virtually any situation
could be easily discerned by "doing unto others as you would have them do unto
you."
AACSB: Diversity
Blooms: Remember
markets.
Topic: Video case 7: Mary Kay
6-194
238. What global market-entry strategy did Mary Kay use when it entered India?
(p. 157
)
A.
B.
C.
D.
E.
direct importing
licensing
indirect exporting
joint venture
direct exporting
Mary Kay used an exporting global market-entry strategy. Specifically, the

company employed direct-exporting since it used no intermediaries, relying
instead on company-owned distribution centers and a direct sales force.
AACSB: Diversity
Blooms: Understand
markets.
Topic: Video case 7: Mary Kay
Short Answer Questions
239. Give at least one argument for and one argument against protectionism.
(p. 136
)
People who favor protectionism believe that it preserves jobs, protects a nation's
political security, discourages economic dependency on other countries, and
encourages domestic industry. Those who oppose protectionism believe that it
inhibits world trade and results in higher domestic prices on goods and services
produced by protected industries. While the decreased supply may raise prices,
the tariffs are a virtually certain way to do so.
AACSB: Diversity
Blooms: Understand
6-195
240. Play devil's advocate. Select any American industry and argue persuasively why
(p. 136 protectionism is not only patriotic, it is absolutely essential for survival.
)
A quality answer will provide at least three reasons (with examples!) specific to the
industry chosen, touching on such arguments as preserving jobs, protecting a
nation's political security, discouraging economic dependency on other countries,
or encouraging domestic industry.

Blooms: Apply
241. "A signal that the world's trading nations are committed to open markets - and will
(p. 136 resist protectionism - would inject confidence and energy into our markets," says
)
the U.S. Trade Representative. Discuss this statement.
This statement indicates that the U.S. Trade Representative is opposed to

protectionism. He/she believes it inhibits world trade and that it may result in
higher domestic prices on goods and services produced by protected industries.
Lower prices will increase consumer buying and increased consumer buying will
increase production. Increased production will lead to more jobs, higher profits,
and increased confidence.

Blooms: Apply
242. If your primary motive was to raise prices on imports, would you use tariffs or
(p. 136 quotas? Why would you want to do this?
-137)
If your primary motive was to raise prices on imports, then your choice would be
tariffs. Tariffs are government taxes on goods or services entering a country. They
help equalize price competition between foreign and domestic goods. Quotas are
restrictions placed on the amount of a product that may enter or leave a country.
See Figure 6-1.
AACSB: Diversity
Blooms: Understand
6-196
Topic: Tariffs and quotas
243. Describe the World Trade Organization (WTO) and its purpose.
(p. 137
)
The World Trade Organization (WTO) was formed in 1995 to address a broad array
of world trade issues. There are 159 WTO member countries including the United
States, which account for more than 90 percent of world trade. The WTO is a
permanent institution that sets rules governing trade between its members
through panels of trade experts, who decide on trade disputes between members
and issue binding decisions. The WTO reviews more than 200 disputes annually.
AACSB: Diversity
Blooms: Understand
244. In recent years, a number of countries with similar economic goals have formed
(p. 137 transnational trade groups or signed trade agreements for the purpose of
-139)
promoting free trade. Describe the three discussed in the textbook.
(1) The European Union (EU) 2013 consists of 28 countries with more than 500
million consumers. The EU has eliminated most barriers to the free flow of
products, services, capital, and labor across its borders. In addition, 16 countries
have adopted the euro, eliminating the need to continually monitor the currency
exchange rate. (2) The North American Free Trade Agreement (NAFTA) lifted many
trade barriers between Canada, Mexico, and the United States and created a
marketplace with more than 450 million consumers. (3) In 2006, a comprehensive
free trade agreement among Costa Rica, the Dominican Republic, El Salvador,
Guatemala, Honduras, Nicaragua, and the U.S. extended many NAFTA benefits to
Central American countries and the Dominican Republic. Called CAFTA-DR, this
agreement is viewed as a step toward a 34-country Free Trade Area of the
Americas for the Western Hemisphere.
AACSB: Diversity
Blooms: Understand
Topic: Economic integration
6-197
245. Three types of companies populate and compete in the global marketplace.
(p. 140 Identify and describe each type.
)
All three types of global companies employ people in different countries and many
have administrative, marketing, and manufacturing operations (often called
divisions or subsidiaries) around the world. However, a firm's orientation toward
and strategy for global markets and marketing defines the type of company it is or
attempts to be. The three are: (1) An international firm engages in trade and
marketing in different countries as an extension of the marketing strategy in its
home country. (2) A multinational firm views the world as consisting of unique
parts and markets to each part differently. (3) A transnational firm views the world
as one market and emphasizes cultural similarities across countries or universal
consumer needs more than differences.
AACSB: Diversity
Blooms: Remember
246. Identify and describe the factors a company should consider in order to do a
(p. 143 thorough cross-cultural analysis. In your answer, define cross-cultural analysis.
)
Cross-cultural analysis involves the study of similarities and differences among

consumers in two or more nations or societies. A thorough analysis should include
a study of a country's values, customs, symbols, and language. Values are the
personally or socially preferable modes of conduct or states of existence that tend
to persist over time. Customs are the norms and expectations about the way
people do things in a specific country. Cultural symbols are things that represent
ideas and concepts. It is important not to assume that all symbols have a universal
meaning. Language study should include more than a literal translation;
knowledge of nuances and idioms as well as an acknowledgment of dialects or
multiple national languages are important as well.
AACSB: Diversity
Blooms: Understand
6-198
247. Why is it a wise idea for global marketers use back translation? Provide an
(p. 145 example to support your answer.
)
Back translation is where a translated word or phrase is retranslated into the

original language by a different interpreter to catch errors. This will help prevent
unintended meanings from occurring in marketing plans. Examples from the
textbook of the unintended meanings of brand names are (1) IBM's "Solution for a
Small Planet" was translated in Japanese as "Answers Make People Smaller" and
(2) Kit Kat bars, which are marketed by Nestl worldwide. The brand name "Kit
Kat" is pronounced "kitto katsu" in Japanese, which roughly translates to "Surely
win." Japanese teens eat Kit Kat bars for good luck, particularly when taking crucial
school exam.
AACSB: Diversity
Blooms: Understand
248. Global marketing is also affected by economic considerations. Identify the three
(p. 145 steps that should be performed when scanning the global marketplace.
)
A scan of the global marketplace should include (1) an assessment of the

economic infrastructure in these countries, (2) measurement of consumer income
in different countries, and (3) recognition of a country's currency exchange rates.
AACSB: Diversity
Blooms: Understand
6-199
249. What is meant by the term economic infrastructure and how can this affect a firm's
(p. 145 plans to enter a global market?
-146)
Economic infrastructure is a country's communication, transportation, financial,

legal, and distribution systems. This represents a critical consideration in a
company's determination of whether it should try to market to a country's
consumers and organizations. You might have the best product in the world, but if
you are not able to physically reach your customer because the rains have washed
away the roads, you will not be successful. Similarly, if the financial payment
systems aren't developed (consumers lack credit cards; pay only in cash),
exchange relationships may be more limited.
AACSB: Diversity
Blooms: Understand
250. Define a currency exchange rate and discuss its importance to global companies.
(p. 147
)
Fluctuations in exchange rates among the world's currencies are of critical

importance in global marketing. A currency exchange rate is the price of one
country's currency expressed in terms of another country's currency, such as the
U.S. dollar expressed in Japanese yen, euros, or Swiss francs. Failure to consider
exchange rates when pricing products for global markets can have dire
consequences if a company sets the prices for its products without regard for how
they would convert into foreign currencies. This could lead to high prices, lost
sales, and forgone profits made by global companies. When foreign currencies can
buy more U.S. dollars, for example, U.S. products are less expensive for the foreign
customer. Severe and protracted fluctuations in a country's currency can affect
trade as well.
AACSB: Diversity
Blooms: Understand
6-200
251. What are the market entry strategy options available to a company seeking to
(p. 148 enter the global marketplace? How do they relate to each other in terms of profit
-151)
potential, risk, financial commitment required, and marketing control?
Once a company has decided to enter the global marketplace, it may select one of
four strategies: (1) exporting, which involves producing goods in one country and
selling them in another country; (2) licensing, where a company offers the right to
a trademark, patent, trade secret, or other similarly valued items of intellectual
property in return for a royalty or a fee; (3) joint venture, which involves a foreign
company and a local firm investing together to create a local business; and (4)
foreign subsidiary or division. The amount of financial commitment, risk, marketing
control, and profit potential increases as the firm moves from exporting to direct
investment. See Figure 6-5.
AACSB: Diversity
Blooms: Understand
markets.
252. Explain the difference between indirect exporting and direct exporting. What are
(p. 148 the advantages and disadvantages of each approach?
-150)
Indirect exporting is when a firm sells its domestically produced goods in a foreign
country through an intermediary. It has the least amount of commitment and risk
but will probably return the least profit. Indirect exporting is ideal for a company
that has no overseas contacts but wants to market abroad. The intermediary is
often a distributor that has the marketing know-how and resources necessary for
the effort to succeed. Direct exporting is when a firm sells its domestically
produced goods in a foreign country without intermediaries. Direct exporting
involves more risk than indirect exporting for the company but also opens the door
to increased profits. Most companies become involved in direct exporting when
they believe their volume of sales will be sufficiently large and easy to obtain so
AACSB: Diversity
Blooms: Understand
markets.
6-201
253. Explain the difference between joint venture and direct investment market entry
(p. 150 strategies. What are the advantages and disadvantages of each approach?
-151)
When a foreign company and a local firm invest together to create a local
business, it is called a joint venture. These two companies share ownership,
control, and profits of the new company. The advantages are twofold: First, one
company may not have the necessary financial, physical, or managerial resources
to enter a foreign market alone. Second, a government may require or strongly
encourage a joint venture before it allows a foreign company to enter its market.
The disadvantages arise when companies disagree about policies or courses of
action or when governmental bureaucracy bogs down the effort. Direct investment
entails a domestic firm actually investing in and owning a foreign subsidiary or
division. Advantages include cost savings, better understanding of local market
conditions, and fewer local restrictions. Disadvantages include increased financial
commitments and risks.
AACSB: Diversity
Blooms: Understand
markets.
6-202
254. Define licensing, cite its advantages and disadvantages, and explain what
(p. 150 franchising is.
)
Licensing offers the right to a company trademark, patent, trade secret, or other
similarly valued items of intellectual property in return for a royalty or a fee. The
advantages to the company granting the license are low risk and a capital-free
entry into a foreign country. The licensee gains information that allows it to start
with a competitive advantage and the foreign country gains employment by
having the product manufactured locally. However, the licensor forgoes control of
its product and reduces the potential profits gained from it. The licensor may be
creating its own competition. To offset this disadvantage, many companies strive
to stay innovative so that the licensee remains dependent on them. Additionally,
should the licensee prove to be a poor choice, the name or reputation of the
company may be harmed. Franchises include soft drink, motel, retailing, fast food,
and car rental operations, and a variety of business services. Two variations of
licensing, contract manufacturing and contract assembly, represent alternative
ways to produce a product within the foreign country. With contract manufacturing,
a U.S. company may contract with a foreign firm to manufacture products
according to stated specifications. The product is then sold in the foreign country
or exported back to the United States. With contract assembly, the U.S. company
may contract with a foreign firm to assemble (not manufacture) parts and
components that have been shipped to that country. In both cases, the advantage
to the foreign country is the employment of its people, and the U.S. firm benefits
from the lower wage rates in the foreign country. This practice has been an
economic boon to Taiwan where 55 percent of the world's notebook computers are
made. A third variation of licensing is franchising, which is a contractual
arrangement between a parent company (a franchisor like McDonald's) and an
individual or firm (a franchisee) that allows the franchisee to operate business
under an established name and according to specific rules.
AACSB: Diversity
Blooms: Understand
markets.
6-203
255. What are the product and promotion strategies available to a company seeking to
(p. 152 enter the global marketplace? How do they relate to each other in terms of the
-153)
same or adapted product and promotion?
There are five global marketing product and promotional strategies. (1) Sell the
same home country product using the same home country promotion in a foreign
country (product extension strategy). (2) Sell the same home country product
using an adapted promotion strategy in a foreign country (communication
adaptation strategy). (3) Sell an adapted home country product using the same
home country promotion in a foreign country (product adaptation strategy). (4)
Sell an adapted home country product using an adapted home country promotion
in a foreign country (dual adaptation strategy). (5) Create a new product for a
foreign market (product invention strategy). See Figure 6-4.
AACSB: Diversity
Blooms: Understand
256. Describe the elements in a global channel of distribution.

(p. 153
)
Figure 6-5 outlines the channel through which a product manufactured in one
country must travel to reach its destination in another country. The first step
involves the seller; its headquarters is the starting point and is responsible for the
successful distribution to the ultimate consumer. The next step is the channel
between two nations, moving the product from one country to another.
Intermediaries that can handle this responsibility include resident buyers in a
foreign country, independent merchant wholesalers who buy and sell the product,
or agents who bring buyers and sellers together. Once the product is in the foreign
nation, that country's distribution channels take over. These channels can be very
long or surprisingly short, depending on the product line. Ultimately, the products
reach the final or ultimate consumer. See Figure 6-5.
AACSB: Diversity
Blooms: Understand
6-204
257. Explain the difference between dumping and parallel importing.

(p. 154
)
Dumping is when a firm sells a product in a foreign country below its domestic
price or below its actual cost. Parallel importing, also known as gray marketing, is
when companies price their products very high in some countries but
competitively in others. Individuals then buy products in a lower-priced country
from an authorized retailer, ship them to higher-priced countries, and sell them
below the suggested retail price through unauthorized retailers.
AACSB: Diversity
Blooms: Understand
Topic: Pricing strategy
6-205

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Chapter 06

Understanding and Reaching Global Consumers and Markets

Multiple Choice Questions

1. Why did Dell, Inc., embark on a global growth initiative?

U.S. sales had decreased.

3. Dell established its company primarily with direct telephone-and Internet-based

A. an increase in most countries' GDPs coupled with an increased degree of consumer

A. the rise of economic integration and free trade among nations.

A. an increase in economic protectionism and a decline in free trade.

A. an increase in economic protectionism and a decline free trade.

A. an increase in economic protectionism and a decline free trade.

10. Protectionism refers to

A. the practice of purchasing products exclusively from a domestic market in order to

imposing the rule of eminent domain.

relaxing the rule of eminent domain.

A. Competitive advantage grows out of continuous improvement.

an increase world trade

19. Tariffs refer to

A. government payments to companies or industries that primarily serve to create

28. A quota refers to

A. a government tax on products or services entering a country that primarily serves

32. The World Trade Organization (WTO) refers to

A. The World Trade Organization is a temporary institution.

A. it provides a safe haven in times of world economic crises.

A. there is a legally binding code of economic conduct.

46. Pan-European marketing strategies are possible because

A. there is a legally binding code of economic conduct.

A. North America, Central America, and South America.

the United States

50. Global competition exists when

the firm's financial capacity to take risks.

62. A multidomestic marketing strategy refers to

A. the strategy of transnational firms that employ the practice of standardizing

global marketing strategy.

69. A global marketing strategy refers to

72. A global brand refers to

A. A global brand has centrally coordinated marketing programs.

A. only if required by government regulations in the host market.

A. are more similar than different regarding their purchase behaviors.

the United States.

80. Global consumers refer to

A. Marketspace creates an unfair competitive environment for emerging nations.

84. The clandestine collection of trade secrets or proprietary information about a

85. Economic espionage is the clandestine collection of trade secrets or __________.

government economic information

$10 billion per year.

87. The Economic Espionage Act

A. up to 15 years in prison and fines up to $500,000.

A. up to 25 years in prison and fines up to $10 million.

92. For the marketer, a thorough __________ involves an understanding of and an

93. A thorough cross-cultural analysis involves an understanding of and an appreciation

95. Values refer to

97. Which of the following examples best demonstrates a company's appreciation of

A. A German company allows customers to make large purchases using lay-away

101 Customs refer to

104 Which of the following statements about bribery is most accurate?

105 The Foreign Corrupt Practices Act

International Law for Egalitarian Ethics Act.

107 Cultural symbols refer to

can be protected by international copyrights.

111 Semiotics refers to

116 Canada has two official languages, which are

English and Japanese.