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Global Marketing, 9e, GE (Keegan)
Chapter 6 Global Information Systems and Market Research
1) Japan is Coach's second largest market, representing about 20% of global sales. All of the
following statements are true regarding the market for Coach's products compared to that in
America except:
A) Japanese consumers are enormously brand-centric.
B) Japanese consumers are not as brand loyal as American consumers.
C) American women tend to carry two or three brands while their Japanese counterparts tend to
carry as many as five.
D) The company's $500 handbags are especially popular with young women.
E) Coach has to work on improving its brand image in Japan.
Answer: E
Difficulty: 2: Moderate
Chapter LO: 6.1: Discuss the roles of information technology, management information
systems, and big data in a global company’s decision-making processes.
AACSB: Application of knowledge
2) The music industry's use of big data shows how information about buyer behavior and the
overall business environment is vital to effective managerial decision making. All of the factors
listed below facilitate decision making for music industry except:
A) Musicians can interact with fans via social networks.
B) Big data allows record executives and band managers to find patterns and discern market
trends.
C) Big data allows executives to see what factors "move the needle" across a variety of metrics.
D) Data analytics permit record company executives to overlay information about an
artist's appearance on a TV show.
E) Big data helps in increasing revenues from paid downloads.
Answer: E
3) One of the key advantages of an EDI (Electronic Data Interchange) system is:
A) it allows easy access to all company data to vendors.
B) its transaction formats are universal.
C) it allows third-party transmission connections to company data.
D) it saves both time and money by using different languages.
E) vendors receive orders by voice mail.
Answer: B
Difficulty: 1: Easy
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4) An system allows a company's business units to submit orders, issue invoices, and
conduct business electronically with other company units as well as outside companies.
A) Internet
B) intranet
C) ECR
D) EDI
E) EPOS
Answer: D
5) An is a company's private data network, accessible only by authorized persons

inside the organization.
A) EDI
B) Internet
C) intranet
D) EPOS
E) ECR
Answer: C
6) Which of the following is an IT tool designed specifically to help retailers work more closely
with vendors on stock replenishment?
A) BOLD
B) ECR
C) data warehouse
D) projection
E) EDI
Answer: B
7) Which of the following can be defined as a business philosophy that values two-way
communication between a company and individual customers?
A) ECR
B) CRM
C) EDI
D) EPOS
E) BOLD
Answer: B
8) CRM tools allow companies such as Credit Suisse, AT&T, Hewlett-Packard and others to
determine:
A) warranty of products sold to consumers.
B) amount paid by consumers in different countries.
C) which customers are most valuable.
D) the use of credit cards for payment.
E) the use of laptop computers by customers.
Answer: C
9) One challenge of using CRM is:

A) integrating data into customer relationship.
B) knowing amount paid by consumers in different countries.
C) understanding which customers are most valuable.
D) assessing the use of credit cards for payment.
E) knowing the use of laptop computers by customers.
Answer: A
10) Direct sensory perception provides a vital background for the information that comes
from human and documentary sources since:
A) it provides secondhand information.
B) it is easy and the most economical way of collecting data.
C) it means firsthand seeing, feeling, hearing, smelling, and tasting.
D) it involves reading and reviewing documents.
E) top executives are involved in getting firsthand
information. Answer: C
Difficulty: 3: Challenging
11) CRM tools does not help companies in determining:

A) warranty of products sold to consumers.
B) amount paid by consumers in different countries.
C) which customers are very demanding.
D) the use of credit cards for payment.
E) the use of laptop computers by customers.
Answer: C
12) Although big data and big data analytics have long been the province of astronomers,
meteorologists, and other members of the scientific community, it is only recently that big
data collection and analysis has been used in business situations.
Answer: TRUE
Difficulty: 1: Easy
13) Netflix knows, for example, that twenty-something males have viewing habits that many
people would associate with 70-year-old females, and vice versa.
Answer: TRUE
Difficulty: 1: Easy
14) The Intranet is a private network that allows authorized company personnel or outsiders to
share information electronically in a secure fashion without generating mountains of paper.
Answer: FALSE
Difficulty: 1: Easy
15) By combining household information with weekly purchase behavior data, Tesco is able
to tailor promotions to specific customer segments.
Answer: TRUE
16) EDI links with vendors to enable retailers to improve inventory management and restock
hot-selling products in a timely, cost-effective manner.
Answer: TRUE
17) To prevent the most value-conscious shoppers from defecting to Walmart, Tesco mined its
database to identify Clubcard users who buy the lowest-priced grocery items.
Answer: TRUE
18) CRM tools allow companies like American Express, Dell, Sharp, and Sony to determine
which customers are most valuable and to react in a timely manner with customized products and
service offerings that closely match customer needs.
Answer: TRUE
19) Retailers are increasingly using a technique known as efficient consumer response (ECR) in
an effort to work more closely with vendors on stock replenishment.
Answer: TRUE
20) Every "touch point" provides important data about consumers.

Answer: TRUE
21) Big data can be used in collecting information about buyer behavior and the overall business
environment, which is vital in making effective managerial decisions. Giving reasons illustrate
how this can be accomplished.
Answer: When researching a market, seeking a solution to any problem, or trying to answer
key questions, marketers must know where to go to obtain information. They must also know
what subject areas to investigate and what information to look for, the different ways to acquire
information, and the various types of analyses that will yield important insights and
understanding. With the availability of big data, marketers have a well of market information
available via information technology, such as the Internet. A few keystrokes can yield literally
hundreds of articles, research findings, and Web sites that offer a wealth of information about
marketing-related issues. Even so, marketers must do their homework if they are to make the
most of modern information technology. First, they need to understand the importance of
information technology and marketing information systems as strategic assets. Second, they
should have a general understanding of the formal market research process. Finally, they should
know how to manage the marketing information collection system and the marketing research
effort.
AACSB: Reflective thinking
22) Global competition intensifies the need for effective MIS and business intelligence that are
accessible throughout the company. How can IT provide valuable tools in fulfilling this need as
well as conducting global marketing research?
Answer: There are different IT programs that can provide valuable tools for marketing. EDI
(Electronic data interchange) links with vendors to enable retailers to improve inventory
management and restock popular products in a timely, cost-effective manner. Also, effective
consumer response (ECR) is another program which allows management to work more closely
with vendors on stock replenishment. ECR systems utilize electronic point of sale (EPOS) data
gathered by checkout scanners that help retailers identify product sales patterns as well as record
consumer preferences separated by geographical areas. All these tools are also helpful in
improving the ability of businesses to target consumers and increase loyalty. Customer
relationship management (CRM) is another method by which a relationship is developed with
the customer. It helps in determining which customers are most valuable and to react in a timely
manner with customized product and service offerings that closely match customer needs. It
also makes employees more productive and enhances corporate profitability. It also benefits
customers by providing value-added products and services. Data warehouses store a company's
CRM system as well as other IT systems. These data warehouses can provide multiple uses such
as helping retailers with multiple store locations fine-tune their product assortments. In addition
to the Internet, an intranet can be a valuable tool, which can connect individuals within a
company on a private basis.
23) Although environmental scanning is a vital source of information, research has shown that
headquarters executives of global companies obtain as much as two-thirds of the information
they need from:
A) government publications.
B) professional publications.
C) trade publications.
D) census data.
E) personal sources.
Answer: E
Chapter LO: 6.2: Describe the various sources of market information, including direct
perception.
24) Which of the following environmental factors may require marketers to adjust their
approach to conducting international as opposed to domestic marketing research?
A) Researchers must be prepared for new parameters of doing business.
B) Company personnel must come to grips with a new set of culture-based assumptions about
conducting business.
C) Research may help reduce psychological overload.
D) Researchers may have to broaden the definition of competitors to include
competitive pressures not present in the domestic market.
E) All of the above
Answer: E
perception.
25) A vice president of a shoe company was in India to assess the market. He found that many
people in the southern part of India were walking bare footed. This can be indicative of either
the fact that there is a potential market for shoes or there is no market for shoes in that part of the
world. To formally confirm one instinct or the other the vice president should:
A) establish an office to start manufacturing shoes in India.
B) give free shoe samples to a selected group of customers.
C) conduct research to find potential and actual customers.
D) find out if that is true for other Asian countries.
E) give up the idea of doing business in India.
Answer: C
perception.
26) Direct sensory perception provides a vital background for the information that comes
from human and documentary sources.
Answer: TRUE
perception.
27) The term "Safe Harbor" agreement applies to privacy issues pertaining to the companies
that wish to transfer data to the United States from Europe.
Answer: TRUE
perception.
28) Market research is the project-specific, systematic gathering of data and is the activity
that links the consumer, customer, and public to the marketer through information.
Answer: TRUE
perception.
29) Africa represents a huge untapped market for shoes since most people walk barefoot. Thus, it
will be easy to alter entrenched consumer behavior pattern if shoes are available.
Answer: FALSE
perception.
30) What are the secondary sources of data and how do these sources differ from primary
sources? Give examples of sources from which secondary data can be obtained.
Answer: A low-cost approach to market research and data collection begins with desk research.
There are a lot of secondary sources which are a good place to start. Data from census bureaus;
government and private agencies; trade associations; chamber of commerce; published reports;
academic institutions; and public libraries are not only extensive but can provide valuable
information in a very cost-effective manner. All of these are considered as secondary sources
since the data already exist and is not based on the research conducted by the company. Data
obtained by conducting research by the company is considered as a primary source. This may
also include the company's unpublished reports and other financial data. Other secondary sources
include the U.S. Government's National Trade Data Base (NTDB), an online resource from the
Department of Commerce. Similarly, there are other data which are published by almost all of
the federal government agencies. Most countries compile data related to the gross national
product (GNP), gross domestic product (GDP), consumption, investment, government
expenditures, price levels, and import/export expenditures. Demographic data are available from
the United Nations' agencies as well as other international agencies. The Statistical Yearbook of
the United Nations contains global data on agriculture, mining, manufacturing, construction,
energy production consumption, internal and external trade, health, housing, education and lots
of other services. Similar data are collected by the U.S. Central intelligence Agency which
publishes the World Fact book. Other sources are the World Bank and the International
Monetary Fund. The Economist and Financial Times regularly compile comprehensive surveys
of regional and country markets and include them in their publications. Data from many of these
sources are generally available in both print and electronic forms. There are also different
country Web sites which also provide some useful information. Syndicated studies published by
private research companies are another source of secondary data and information.
perception.
AACSB: Analytical thinking
31) The first step in formulating and conducting research is to:
A) define the problem.
B) collect information.
C) select unit of analysis.
D) examine data availability.
E) design research.
Answer: B
Chapter LO: 6.3: Identify the individual steps in the traditional market research process and
explain some of the ways global marketers adapt them.
32) When Mattel first introduced Barbie in Japan, managers assumed that Japanese girls would
find the doll's design just as appealing as American girls did. This may be due to:
A) Barbie's physical features such as long legs and blonde hair.
B) Barbie being a symbol of American lifestyle.
C) the SRC tendency on the part of American managers.
D) the SRC tendency on the part of Japanese consumers.
E) the limited competition for dolls in Japan.
Answer: C
33) Which of the following lists some of the steps in the market research process in the
correct order?
A) determine information requirement→problem definition→choose unit of analysis→examine
data availability→assess value of research
B) problem definition→assess value of research→determine information requirement→choose
unit of analysis→examine data availability
C) examine data availability→problem definition→choose unit of analysis→assess value
of research→determine information requirement
D) choose unit of analysis→assess value of research→problem definition→determine
information requirement→examine data availability
E) examine data availability→assess the value of research→problem
definition→presentation Answer: A
34) Anyone undertaking a market research project should understand that the first step is:
A) setting the budget.
B) determining the methodology to use.
C) deciding who will see the final report.
D) defining the problem.
E) determining the information
requirement. Answer: E
35) For consumer products, qualitative research is especially well suited to:
A) get close to the consumer.
B) describe the cultural context of consumer behavior.
C) identify core brand equity.
D) identify what people really feel.
E) all of the above
Answer: E
36) The unit of analysis can be a single country or region; however, for all market-entry
decisions data are not required.
A) specific city
B) statewide
C) provincial
D) district wise
E) country wide
Answer: E
Difficulty: 1: Easy
37) The U.S. government's most comprehensive source of world trade data is:
A) National Trade Data Base (NTDB).
B) Census Bureau.
C) Bureau of Economic Analysis.
D) Eurostat.
E) Gross Domestic Product (GDP).
Answer: A
Difficulty: 1: Easy
38) According to the Global Market Research Reports, data for Chinese markets are available
for:
A) cosmetics.
B) online music.
C) whiskies.
D) luxury goods.
E) pharmaceutical.
Answer: A
39) Potential markets can be subdivided into:

A) latent and parallel markets.
B) existing and incipient markets.
C) latent and incipient markets.
D) existing and latent markets.
E) incipient and existing markets.
Answer: C
40) Marketers must be aware of the impact of SRC and other cultural assumptions since:
A) it can have several positive effects on market planning.
B) it enhances management's willingness to pursue market research.
C) it can help ensure that the research effort is designed with minimal home-country bias.
D) it can help ensure that the research effort is designed with minimal second-country bias.
E) All of the above are correct.
Answer: E
41) Which of the following is not true of secondary data about global markets?
A) It was not gathered specifically for the research project at hand.
B) It is often so expensive that small companies can't afford to use it.
C) It can be accessed quickly.
D) A great deal is available from government agencies.
E) It cannot be retrieved online.
Answer: B
42) Harley-Davidson celebrated its 110th anniversary in 2013. The company grew impressively
during its century of operations. All of the following mentioned facts regarding the company are
true except:
A) the company's international success came after years of neglecting overseas markets.
B) the company reacted swiftly to a growing threat from Japanese manufacturers.
C) early on, the company used an export-selling approach.
D) early on, it had an underdeveloped dealer network.
E) after the 1980s, they recruited dealers in the important Japanese
markets. Answer: B
43) Which of the following correctly reflects marketing expert David Arnold's
recommendations for companies engaged in global market research?
A) use multiple indicators
B) develop customized measures specific to an industry or product
C) conduct comparative assessments in neighboring countries
D) observation should be weighted more heavily than statements of purchase intention
E) all of the above
Answer: E
44) Which of the following is not recommended by expert David Arnold for companies
engaged in global market research?
A) use multiple indicators
B) develop customized measures specific to an industry or product
C) conduct comparative assessments in neighboring countries
D) observation should be weighted more heavily than statements of purchase intention
E) assess a particular market in isolation
Answer: E
45) For consumer products, qualitative research is especially well suited to accomplish all of the
following tasks except:
A) provide consumer understanding.
B) describe the social and cultural context of consumer behavior.
C) identify core brand equity and brands.
D) assess consumer spending trends.
E) what consumers really feel.
Answer: D
46) The decision by Toyota executives to introduce the Sienna minivan in the U.S. market
was based on their study of a(n) market.
A) existing
B) latent
C) parallel
D) incipient
E) global
Answer: A
47) The international marketing manager of an office furniture company ordered a research
report on global telecommunications equipment sales. The report noted that, in the early 1990s,
AT&T was awarded a $4 billion contract to provide communication network products and
services in Saudi Arabia. The manager took this as a cue to put Saudi Arabia on her information
agenda, reasoning that office furniture sales would increase as the country's telephone system
was improved. As described here, the marketing manager is viewing Saudi Arabia as a(n):
A) latent market.
B) incipient market.
C) cluster market.
D) existing market.
E) primary market.
Answer: B
48) Predicting economic and income growth rates is particularly important when researching
which type of market?
A) existing markets
B) latent markets
C) parallel markets
D) incipient markets
E) local markets
Answer: D
49) When a survey questionnaire in English is translated into Korean for use in South Korea
and then translated back into English to check its accuracy, it is described as:
A) incipient translation.
B) comparative translation.
C) native translation.
D) parallel translation.
E) back translation.
Answer: E
50) Tools that can be used for collecting primary data include:
A) survey research and interviews.
B) consumer panels and observation.
C) focus groups and survey research.
D) interviews and observation.
E) all of the above
Answer: E
51) When a trained person is recording the items selected in a grocery cart or basket, the research
method is known as:
A) observation.
B) survey research.
C) focus study.
D) secondary data collection.
E) personal interviews.
Answer: A
52) Emerging markets present a number of challenges to anyone conducting market
research, which includes all of the following except:
A) underdeveloped technology infrastructure.
B) geographic issues.
C) data-gathering methodologies.
D) privacy issues.
E) lack of field teams.
Answer: E
53) A marketer of breakfast cereals might send researchers to preselected households at 6

A.M. to watch families go about their morning routines. The client could also assign a
researcher to accompany family members to the grocery store to record their behavior under
actual shopping conditions. This type of research method is considered as:
A) focus group.
B) invasion of privacy.
C) consumer panel study.
D) factor analysis.
E) observation.
Answer: E
54) When the Coca-Cola Company convened focus groups in Europe and Asia to assess potential
market acceptance of a contoured aluminum soft drink can, it was attempting to collect
data.
A) primary
B) secondary
C) incipient
D) quantitative
E) MIS
Answer: A
55) Manufacturers of Splenda, a low-calorie sugar substitute, wanted to arrange a focus group
to find out its use in different markets. Open-ended questions were used in order to secure the
unconscious attitudes and biases held by the subjects. This type of technique is known as:
A) scaling technique.
B) qualitative technique.
C) projective technique.
D) reactivity technique.
E) MDS technique.
Answer: C
56) In Singapore, Coca-Cola wanted to develop an advertisement program. They selected a

group of teenagers and a trained moderator facilitated discussion asking questions related to
brand's image, advertisement, social trends, TV watching habits, and snack usage. This type
of research is called:
A) survey research.
B) observational studies.
C) comparison studies.
D) focus group research.
E) experimental research.
Answer: D
57) In Mexico City, only 55-60% of the population owns a telephone. The number drops to less
than 50% in Guadalajara and Monterey, and 35% or lower in other cities. This will complicate
the task of market researchers hoping to use a telephone survey to obtain a of the
Mexican population.
A) probability sample
B) convenience sample
C) secondary sample
D) focus group sample
E) quota sample
Answer: A
58) Market research should focus on finding out how a potential customer can be changed
into an actual customer.
Answer: TRUE
59) Mattel toys thought that Barbie would be as popular in Japan as it is in the United States.
This assumption was due to the self-reference criterion (SRC).
Answer: TRUE
60) Companies wishing to minimize the cost and effort associated with market research should
start by collecting and analyzing primary data.
Answer: FALSE
61) If a market researcher would like to know how much the typical Nigerian consumer
spends on soft drinks, the information can be obtained from GNP or GDP.
Answer: FALSE
62) If Avon would like to sell cosmetics in India, a good estimate can be achieved by researching
the average wage of an office secretary.
Answer: TRUE
63) A latent market is, in essence, an undiscovered market

segment. Answer: TRUE
64) Traditional market research is the most effective means for identifying latent
markets. Answer: FALSE
65) Culture shapes attitudes and values in a way that directly affects people's willingness to
respond to interviewer questions.
Answer: TRUE
66) An "incipient market" is a market that will emerge if a particular economic,

demographic, political, or sociocultural trend continues in a country.
Answer: TRUE
67) Describe guidelines that are recommended by David Arnold for data gathering and
explain their importance in marketing research.
Answer: The guidelines for data gathering can be explained by the following steps: (1) Use
multiple indicators rather than a single measure. This approach will decrease the level of
uncertainty for decision makers. This technique, known as triangulation, is equally useful in
global market research. (2) Individual companies should develop customized indicators specific
to the industry, product market, or business model. Such indicators should leverage a company's
previous experience in global markets. (3) Always conduct comparative assessments in multiple
markets. Do not assess a particular market in isolation. Comparative assessment enables
management to develop a "portfolio" approach in which alternative priorities and scenarios can
be developed. (4) Observations of purchasing patterns and other behavior should be weighted
more heavily than reports or opinions regarding purchase intention or price sensitivity.
Particularly in developing markets, it is difficult to accurately survey consumer
perceptions. Difficulty: 2: Moderate
68) Authors Michael Czinkota and Ilka Ronkainen identified four specific environmental factors
that may require international research efforts to be conducted differently than domestic research.
Describe those factors to outline the differences.
Answer: The four specific environmental factors that may require international research efforts
to be conducted differently than domestic research are: (1) Researchers must be prepared for new
parameters for doing business. The requirements and ways in which rules are applied may differ
from country to country. (2) A "cultural mega-shock" may occur as company personnel come to
grips with a new set of culture-based assumptions about conducting business. (3) A company
entering more than one new geographic market faces a burgeoning network of interacting factors.
Research may help prevent psychological overload in that case. (4) Company researchers may
have to broaden the definition of competitors in international markets to include competitive
pressures that would not be present in the domestic market.
69) If Coach, a luxury goods marketer, would like to study the consumer perceptions of
global luxury brands, what would be the best approach since there are several competitors?
Answer: Consumers may differentiate one designer brand from another in various ways, such
as how easy it is to purchase each brand, how visible each brand is, whether or not the brand
offers diffusion lines, etc. A study can be conducted to study the perceptual dimension of
"ubiquitous verses rare." A five-point similarity judgment scale of selected designer brands can
be developed. The responses achieved help marketers understand which brands in a particular
category are in direct competition with each other and which are not. The responses can be
analyzed using an MDS program; the perceptual mapping. The perceptual map will show the
differences such as between ubiquity and rarity; or exclusivity and accessibility. The position of
Coach, thus can be studied from the map. This type of study could help Coach to respond to
new industry realities, which include a shift in the perception of what constitutes luxury and the
increasing fragmentation of consumer tastes. Such a map will be helpful in knowing
up-and-coming fashion designer hoping to launch a new line.
70) Suppose Apple has collected extensive survey data about its new iPhone, and respondents
have rated it on 20 different features and benefits. Now researchers want to reduce the amount
of data to a few underlying dimensions. Which data analysis technique should the researchers
use?
A) analogy
B) conjoint analysis
C) factor analysis
D) multidimensional scaling
E) cluster analysis
Answer: C
Chapter LO: 6.4: Compare the way a multinational firm organizes the marketing
research effort with the way a global or transnational firm approaches the organizing issue.
71) One study of adult involvement in household tasks revealed greater similarities between
the United Kingdom and the United States compared with France, Belgium, and French
Canada. Thus, the United States and United Kingdom were "twins" based on common
language. This study is an example of:
A) market latency.
B) conjoint analysis.
C) factor analysis.
D) multidimensional scaling.
E) cluster analysis.
Answer: E
72) When consumers have difficulty in verbalizing their perceptions, and there are different
alternative brands of toothpaste, what is the best method of judging them in terms of similarity?
A) cluster analysis
B) MDS
C) dependence techniques
D) factor loading
E) focus group
Answer: B
73) Campbell is the world's largest soup company, commanding about 80% of the U.S. canned
soup market. However, the company has a presence in only 6% of the world's soup markets.
Russians eat 32 billion servings of soup each year, and the Chinese consume 300 billion! By
contrast, Americans eat 15 billion servings each year. Sensing a huge opportunity, Campbell has
dispatched teams to observe Russian and Chinese habits. This type of interpretation and decision
is based on:
A) demand pattern analysis.
B) income elastic analysis.
C) time series displacement.
D) polycentrism.
E) comparative analysis.
Answer: E
74) A market researcher who uses multidimensional scaling (MDS) will:

A) attempt to estimate market size by analogy.
B) ask respondents to rate a particular product or brand in terms of multiple characteristics or
attributes.
C) ask respondents to evaluate product or brand pairs in terms of similarity.
D) attempt to determine the combination of product features that create the greatest utility for
consumers.
E) conduct a focus group.
Answer: C
75) Red Bull energy drink manufacturer, Dietrich Mateschitz, hired a market research firm to
assess the market potential for the drink. In the tests, consumers reacted negatively to the taste,
the logo, and the brand name. The company ignored the research completely.
Answer: TRUE
76) During earlier days, Japanese women almost never used mascara because, by nature,
they have very straight, short and thin lashes. This was observed during a focus group study.
Answer: FALSE
77) Volkswagen, Peugeot, Chrysler, and other global automakers have established
manufacturing operations in China since they consider it to be an incipient market.
Answer: TRUE
Chapter LO: 6.4: Compare the way a multinational firm organizes the marketing research
effort with the way a global or transnational firm approaches the organizing issue.
78) It will be convenient to do a telephone survey in rural areas in China since, according to the
Ministry of Information Industry reports, 40% of households have at least one fixed-line
telephone.
Answer: FALSE
AACSB: Diverse and multicultural work environment
79) "Back translation" is a technique used to ensure that currency conversion is

performed correctly when financial statements of foreign subsidiaries are consolidated
with financial statements at headquarters.
Answer: FALSE
80) "Back translation" is a technique whereby a survey or other document that has
been translated is returned (i.e. "sent back") to the translator for corrections.
Answer: FALSE
81) It is difficult to obtain a representative sample in Brazil since the technological infrastructure
for gathering market data is minimal.
Answer: TRUE
AACSB: Information technology
82) A marketer of breakfast cereals might send researchers to preselected households at 6 a.m. to
watch families go about their morning routines.
Answer: TRUE
83) When using a "projective technique," the researcher presents close-ended or ambiguous
stimuli to a subject in a focus group.
Answer: FALSE
84) Many of the fast food operations are entering markets in Middle Eastern countries. In the
United States, breakfast items are very popular and are responsible for a majority of the profit
from sales, primarily from drive-in customers. However, to their dismay, managers found that
there was practically no demand for breakfast items. Firstly, due to hot weather conditions,
people sleep late and wake up late. Secondly, they do not eat burgers, and sausage or bacon is
prohibited. Also, drive-in business is not popular since people go to work at different periods of
time. Explain the reasons why these facts were not discovered by marketing research.
Answer: When conducting research in a foreign country one has to be free from any kind of
bias or prejudice as possible. A person's home-country values and beliefs may consciously or
unconsciously influence the assessment of a foreign culture or country. This is referred to as
SRC (self-reference criterion). The SRC tendency underscores the importance of understanding
the cultural environments of global markets. As in the above case, assumptions based on
home-country marketing success turned out to be wrong when applied in a Middle Eastern
country. A marketing program that is successful in one country does not guarantee success in
another country. Thus, marketers must be aware of the SRC and its impact. Such awareness can
have several positive effects. It can enhance management's willingness to conduct market
research in the first place. Also, an awareness of SRC can help in ensuring the validity of
research with minimal home-country or second-country bias. In other words, the research will
have potentially useful results which managers will be able to accept and implement.
85) Grey China Advertising agency gathers a wealth of information about attitudes and buying
patterns of the Chinese in its Grey China Base Annual Consumer Study. Recent findings point
to growing concerns about the future, Westernization of grocery purchases, growing market
saturation, increasingly discerning customers and a rise in consumer willingness to try new
products. These data can be very inconsistent since conflicting findings were reported by
different agencies. For example, data gathered by Euromonitor International estimates soft-drink
consumption at 23 billion liters in China, while Coca-Cola's in-house marketing research team
places the figure at 39 billion liters. Similar differences were noted in other data published by
different agencies. What is the best approach in such situations so that finite decisions can be
made? What are the differences between latent and incipient markets?
Answer: These types of discrepancies are expected due to the research methodology, design,
analyses, and scores of other factors. In such situations, and in countries where such data are not
available, researchers must first estimate the market size, the level of demand, or the rate of
product purchase or consumption. A second research objective in existing markets may be
assessment of the company's overall competitiveness in terms of product appeal, price,
distribution, and promotional coverage and effectiveness. Researchers may be able to find out
special aspects or weaknesses in competitors' way of doing business. Unserved market segments
may also be discovered. In some instances, there is no existing market to research. Such potential
markets can be further subdivided into latent and incipient markets. A latent market is, in essence,
an undiscovered market segment. It is a market in which demand would materialize if an
appropriate product or service were made available. In a latent market, demand is zero before the
product is offered. An incipient market is a market that will emerge if a particular economic,
demographic, political, or socio-cultural trend continues. A company is not likely to achieve
satisfactory results if it offers a product in an incipient market before the trends have taken roots.
After the trends have had a chance to unfold, the incipient market will become latent and, later,
an existing market.
86) How can observational studies and focus groups be used in marketing research? What are
the different methods by which these studies are conducted?
Answer: In the observation method, one or more trained observers or a mechanical device
watch and record the behavior of actual or prospective buyers. The research results are used to
guide marketing managers in their decision making. For example, observations are done as to
how male or female customers open the door of cars and sit. This simple act can be of
tremendous help in designing the doors of cars and the adjustment of seats. Similarly, observing
how consumers are picking items in a grocery store or observing the items in shopping carts can
give better understanding of the actual purchase behavior of consumers. It should be noted that
since consumers are unaware of being watched, actual behavior can be recorded and interpreted.
Marketers can also observe the eating behavior by observation or the plate wastages after dinner
to assess food preferences of consumers. Companies using observation as a research
methodology must be sensitive to public concerns about privacy issues, particularly if the
subjects know that they are being watched. In focus group research, a trained moderator
facilitates discussion of a product concept, a brand's image and personality, advertisement, social
trends, or other related topic with a group comprised of 6 to 10 people. Selection of focus group
participants has to be done very carefully since the number of participants is very limited. They
should also meet the criteria which closely fit the overall population under study. Usually focus
group meetings are conducted in a special equipment room in an undisturbed environment. The
questions are carefully framed and answers are solicited from all participants in an organized
manner. Recordings are made of the entire process and analyzed after the conclusion of the
session. A one-way mirror or a video screening is simultaneously conducted where focus group
participants are being watched. Also the trained moderator is connected by earphones with others
including business managers, so that appropriate instant questions may be prompted to be used in
discussion. Focus group research yields qualitative data that does not lend itself to statistical
projection. Such data are extremely valuable in the exploratory phase of a project and are
typically used in conjunction with data gathered via observation and other methods.
87) In India, only about 10% of men who shave use Gillette razors. Worldwide, 50% of
male shavers use Gillette products. To achieve greater penetration in India, Gillette rolled
out a
no-frills brand that costs 15 rupee-----about 34 cents. The Gillette Guard has a lighter handle that
is cheaper to produce. It also lacks the lubrication strip found in Gillette's more expensive razors,
and replacement blades cost only 5 rupees (11 cents). This use of data and process are described
as:
A) demand pattern analysis.
B) income elastic analysis.
C) factor analysis.
D) market estimation by analogy.
E) multidimensional scaling.
Answer: D
Chapter LO: 6.5: Explain how information's role as a strategic asset affects the structure of
global corporations.
88) According to David Arnold, there are four possible approaches to forecasting by
analogy, which does not include which of the following?
A) Data is available on a comparable product in the same country.
B) Data is available on the same product in a comparable country.
C) Data is available on the same product from a dependent distributor in a neighboring country.
D) Data is available about a comparable company in the same country.
E) Data is available on the same product in every country.
Answer: E
89) Which of the following is true about etic and emic approaches to country analysis?
A) The etic and emic approaches are identical.
B) An emic approach studies a culture from within; etic analysis is "from the outside."
C) An emic approach studies a culture "from the outside"; etic analysis studies a culture from
within.
D) The emic/etic distinction is not useful in cultural studies.
E) The emic/etic approaches cannot be applied to Asian countries.
Answer: B
90) A market research study of soft drink consumption and distribution in Hungary
commissioned by an American company indicated that soft drinks were available in drugstores.
However, Western-style drugstores do not exist in Hungary. This illustrates an important issue in
global marketing research, namely:
A) inflated data.
B) using convenience samples.
C) market estimation by analogy.
D) comparability of data.
E) using multiple dimensional scaling.
Answer: D
91) Whirlpool conducts usability studies that provide insight into the ways consumers interact
with its products. In one study in an emerging market, engineers and designers stood behind a
two-way mirror and watched as a volunteer put groceries away in a Kenmore Elite refrigerator.
The Whirlpool team recorded a variety of data, such as the amount of time required for the
volunteer to finish the task and the number of features used. The basis of this research study
was based on the fact that:
A) listening to customers is only possible in America.
B) data collected in the United States should be applicable in other countries.
C) consumers in different countries prefer different types of features.
D) in China, it will be difficult to find enough space in homes to put a refrigerator.
E) in India, refrigerators are seldom used by customers.
Answer: C
92) In global marketing research, it is important to establish scalar equivalence when obtaining
information from different countries.
Answer: TRUE
93) In global marketing research, the results of a nonprobability sample can be projected
with statistical reliability.
Answer: FALSE
29
94) If interaction between two variables is desired, factor analysis can be used to transform
large amounts of data into manageable units.
Answer: FALSE
95) When research shows that Burberry and Ferragamo are perceived as the most similar by
consumers while Coach and Dior are the farthest apart, researchers can interpret the results to
show which brands are in direct competition.
Answer: TRUE
96) What are "interdependence techniques" in the analysis of data? What type of measurement is
possible with this technique, and what are different methods that are used in marketing research?
Answer: Interdependence techniques show the interaction between variables and are comprised
of factor analysis, cluster analysis, and multidimensional scaling (MDS). Factor analysis can be
used to transform large amounts of data into manageable units. Specialized statistical programs
can reduce or group the data by distilling out certain meaningful factors. These factors are
selected by the program on the basis of attitudes and perceptions that can be closely aligned from
a multitude of survey responses.
Factor analysis is useful in psychographic segmentation studies. It can also be used to create
perceptual maps.
Cluster analysis allows the researcher to group variables into clusters that maximize
within-group similarities and between-group differences. Cluster analysis shares some
characteristics of factor analysis in that it does not classify variables as dependent or independent.
It can also be used in psychographic segmentation. It is well suited to global marketing research
because similarities and differences can be established between local, national, and regional
markets of the world. Cluster analysis can also be used to perform benefit segmentation and
identify new product opportunities.
MDS is another technique for creating perceptual maps. When the researcher is using MDS, the
respondent is given the task of comparing products or brands, one pair at a time, and judging
them in terms of similarity. The researcher then infers the dimensions that underlie the
judgments. MDS is particularly useful when there are many alternatives from which to choose
and when consumers may have difficulty verbalizing their perceptions. To create a well-defined
spatial map, a minimum of eight products or brands should be used.
97) What is meant by Comparative Analysis and Market Estimation by Analogy? How can
these be helpful in marketing research?
Answer: In global marketing research, it may be necessary to conduct comparisons of market
potential and marketing performance in different countries or regional markets at the same point
in time. This analysis can be intra-company or cross-national comparison. There may be
differences even under similar conditions from one country to another. For example, catalog
sales in the United States represent about 3% of overall retail sales. By comparison, catalog
sales in Germany account for 5.8% of overall sales. This suggests that there is a catalog
marketing opportunity in Germany. Sometimes data may not be available for a particular
country or regional market. In such cases it is sometimes possible to draw an analogy. In other
words the comparison is based on partial resemblance since data are not available. Time-series
displacement is an analogy technique based on the assumption that an analogy between markets
exists in different time periods. The time displacement method requires a marketer to estimate
when two markets are at similar stages of development.
Chapter LO: 6.5: Explain how information's role as a strategic asset affects the structure
of global corporations.
98) What is the difference between emic and etic analysis? Explain with examples as to
how these analyses can be used in marketing research.
Answer: Emic analysis is similar to ethnography in that it attempts to study a culture from
within, using its own system of meanings and values. Etic analysis is "from the outside"; in
other words, it is a more detached perspective that is often used in comparative or multi-country
studies. In a particular research study, an etic scale would entail using the same set of items
across all countries. This approach enhances comparability, but some precision is lost. By
contrast, an emic study would be tailored to fit a particular country; inferences about
cross-cultural similarities based on emic research have to be made subjectively. A good
compromise is to use a survey instrument that incorporates elements of both types of analysis. It
is likely that the marketing director will end up with a number of marketing programs tailored
to clusters of countries that exhibit within-group similarities.
Chapter LO: 6.5: Explain how information's role as a strategic asset affects the structure
of global corporations.

Chapter 7 Segmentation, Targeting, and Positioning
1) The trend showing popularity of ethnic or regional foods such as sushi, falafel, or pizza
worldwide is referred to as the , which provides an opportunity for marketers to pursue
one or more segments on a global scale.
A) segmentation of markets
B) popularity of segmentation
C) promotion of products and services
D) identification of consumers
E) pluralization of consumption
1
Answer: E
Chapter LO: 7.1: Identify the variables that global marketers can use to segment global
markets and give an example of each.
2) The efforts of global companies to reach low-income consumers in emerging markets

highlight the importance of skillful global market segmentation and targeting. Market
segmentation represents:
A) targeting prospective customers.
B) finding customers who can respond to advertisement.
C) promoting products and services internationally.
D) identifying customers who can help in promoting products.
E) identifying customers based on common characteristics.
Answer: E
3) When identifying global market segments, a fundamental guiding principle should be the need
to determine:
A) shared demographic characteristics.
B) similar languages.
C) similar needs and buying behavior.
D) similar ethnic backgrounds.
E) similar geographic regions.
Answer: C
2
4) Demographic segmentation is based on measurable characteristics of populations
which includes all of the following examples except:
A) Asia is home to 500 million consumers aged 16 and younger.
B) India has more than half of the population younger than 25.
C) Consumers that buy Porsches would like to be noticed.
D) The United States is home to 28.4 million foreign-born residents with combined income of
$ 233 billion.
E) In the EU, the number of consumers aged 16 and under is rapidly approaching consumers
aged 60.
Answer: C
5) Global marketing authority, Theodore Levitt, has noted that many ethnic and
regional foods–sushi, for example–are enjoying popularity in many countries of the
world. This observation is known as the:
A) pluralization of consumption.
B) ethnicitization of consumption.
C) democratization of consumption.
D) sophistication of consumption.
E) domestication of consumption.
Answer: A
6) A. Coskun Samli had developed a useful approach to global market segmentation that
compares and contrasts "conventional" versus "unconventional" wisdom. An example of
unconventional wisdom can be identified with one of the following assumptions:
A) Since per capita annual income in India is about $1,420, all Indians have low income.
B) Consumers in Europe and Latin America are interested in World Cup soccer whereas
Americans are not.
C) There is a presence of a higher-income, middle-class segment in India.
D) The potential customer base for McDonald's in India is greater than in any developed country.
E) There is no running water and electricity in India.
Answer: C
Chapter LO: 7.1: Identify the variables that global marketers can use to segment global markets
and give an example of each.
7) The process of global market segmentation begins with the choice of one or more variables
to use as a basis for grouping customers. All of the following are variables that are commonly
used except:
A) demographics.
B) polycentrics.
C) behavioral characteristics.
D) benefits sought.
E) psychographics.
Answer: B
8) Based on 2013 projections, the top 10 nations ranked by per capita income does not include:
A) Switzerland.
B) Qatar.
C) Russia.
D) Norway.
E) Australia.
Answer: C
Difficulty: 1: Easy
9) Ericsson, IKEA, Saab, and other companies based in Sweden have looked beyond their
borders for significant growth market because:
A) Sweden has high total annual income.
B) Sweden has low total annual income.
C) Sweden has a fairly small population.
D) Sweden is land locked geographically.
E) Sweden has relaxed export policies.
Answer: C
10) The concentration of income in the high-income and large-population countries means that a
company can be "global" by targeting buyers in:
A) just 50 countries.
B) just 20 countries.
C) just 10 or fewer countries.
D) just 30 countries.
E) none of the above
Answer: C
11) A global segment is referred to as "global elite," which includes:

A) people between the ages of 12 and 19.
B) affluent, well-traveled persons.
C) the graying population.
D) technology professionals.
E) persons having power.
Answer: B
12) In 2013, the 10 most populous countries in the world accounted for just over
percent of the world income.
A) 20
B) 30
C) 40
D) 50
E) 60
Answer: E
13) McDonald's operates in over 118 countries; however, 80% of its restaurants are located
in nine countries which does not include the following country market:
A) Australia.
B) Brazil.
C) Germany.
D) India.
E) Japan.
Answer: D
14) The concentration of wealth in a handful of industrialized countries has significant

implications for global marketers. After segmenting in terms of a single demographic
variable–income– a company can reach the most affluent markets which does not include:
A) half of the EU nations
B) all of North America
C) Canada and Mexico
D) 90 percent of the world's population
E) Japan.
Answer: D
15) A global segment is referred to as "global teens" which includes:

A) people between the ages of 12 and 19.
C) young, global travelers.
Answer: A
16) A global segment is referred to as "global teens" which includes:
A) people with shared interest in fashions.
C) movie stars.
Answer: A
17) Psychographic segmentation involves grouping people in terms of their:

A) combined household income.
B) age and income.
C) attitudes, values, and lifestyle.
D) psychological well being.
E) gender.
Answer: C
18) Porsche AG uses the label "Top Guns" to describe one segment of its customers, namely
those who care about power and control and who expect to be noticed. Such a profile would be
based on which type of segmentation?
A) demographic
B) occupational
C) psychographic
D) behavioral
E) gender
Answer: C
19) SRI International developed Values and Lifestyles (VALS). Such a consumer profile
would be helpful for which type of segmentation?
A) demographic
B) occupational
C) psychographic
D) behavioral
E) gender
Answer: C
20) In the study entitled "The Euroconsumer: Marketing Myth or Cultural Certainty?"
researchers identified four lifestyle groups. The group that represents mainstream
European consumers was labeled as:
A) Successful Idealists.
B) Affluent Materialists.
C) Young Professionals.
D) Trendy Teens.
E) Disaffected Survivors.
Answer: E
21) In a study entitled "The Euroconsumer: Marketing Myth or Cultural Certainty?"

researchers identified different lifestyle groups. The segment that is concentrated in high-crime,
inner-city neighborhoods were classified as:
A) Successful Idealists.
B) Affluent Materialists.
C) Disaffected Survivors.
D) Trendy Teens.
E) Comfortable Belongers.
Answer: C
22) The law of disproportionality suggests that percent of the company's menu or
profits are accounted for the 20 percent of a firm's products or customers.
A) 50
B) 60
C) 70
D) 80
E) 90
Answer: D
23) The DMBB (D'arcy Massius Benton & Bowles) agency created a psychographic profile
of the Russian market. The categories include all of the following except:
A) Kuptsy.
B) Cossacks.
C) Elites.
D) Students.
E) Business Executives.
Answer: C
24) Sony's U.S. consumer segments include all of the following except:
A) Affluent.
B) Zoomers.
C) SoHo.
D) Gen Y.
E) Fashionists.
Answer: E
25) "Usage rates" and "user status" are important criteria for which segmentation variable?
A) demographic
B) occupational
C) psychographic
D) behavioral
E) benefit
Answer: D
26) Campbell's Soup is making significant inroads into Japan's $500 million soup market as
time-pressed homemakers place a premium on convenience. This type of consumer segmentation
by Campbell's Soup is referred to as:
A) demographic.
B) occupational.
C) psychographic.
D) benefit.
E) behavioral.
Answer: D
27) According to Euromonitor International, the global market for foods that offer
health benefits is currently worth about $ billion in annual sales.
A) 300
B) 400
C) 500
D) 600
E) 700.
Answer: D
Difficulty: 1: Easy
28) Nutraceuticals are health food products which are manufactured by:
A) Kraft foods.
B) General Mills
C) Campbell's soups.
D) Nestléfoods.
E) Gerber foods.
Answer: D
29) Diageo PLC, V&S Vin & Spirit AB, and Seagram and other marketers know that Russians
consume a great deal of vodka. This type of market segmentation can be classified as:
A) demographic.
B) behavioral.
C) psychographic.
D) occupational.
E) benefit.
Answer: B
30) Several years ago, the D'arcy Massius Benton & Bowles (DMBB) agency created
psychographic profiles for several countries and regions." Which region did the survey
specifically focused on?
A) Asia
B) America
C) Europe
D) Australia
E) Far East
Answer: C
31) In response to increasing worldwide concerns about obesity, diabetes, and other food-related
health issues, some of the world's largest food companies are developing new products. Nestlé
and Groupe Danone SA have developed several health-foods which include all of the following
except:
A) Souvenaid.
B) Activa.
C) NutriChoice.
D) Nutraceuticals.
E) Medical Foods.
Answer: B
32) Procter & Gamble has identified a group of consumers in Europe who are willing to pay
premium prices for pet food that will improve the health of their pets. This is an example of
segmentation.
A) demographic
B) psychographic
C) ethnic
D) behavioral
E) benefit
Answer: E
33) Three Mexican retailers Famso, Grupo Gigante SA, and Grupo Comercial Chedraui SA
have opened stores in the United States. This is an indication of:
A) U.S. retailers were lagging behind in collecting demographic information.
B) the Mexican retailers provide better products than American stores.
C) the Hispanic American segments represent a great opportunity for marketers.
D) American businesses cannot compete with Mexican retailers.
E) the Mexican retailers would like to compete with businesses like Best Buy and Circuit City.
Answer: C
34) After convening worldwide employee conferences to study women's shaving
preferences, Schick-Wilkinson Sword introduced a shaving system for women that features a
replaceable blade cartridge.
Answer: TRUE
Difficulty: 1: Easy
35) Global market segmentation is based on the premise that companies should attempt to
identify consumers in different countries who share similar needs and desires.
Answer: TRUE
Difficulty: 1: Easy
36) Sushi, falafel, tandoori chicken or pizza is in demand in many parts of the world.
This phenomenon can be due to the pluralization of consumption and segment
simultaneity. Answer: TRUE
Difficulty: 1: Easy
37) Dove, a division of Unilever, traditionally targeted men and women with its Dove-branded
skin care products.
Answer: FALSE
Difficulty: 1: Easy
38) Global marketers must determine whether a standardized or an adapted marketing mix is
required to best serve the wants and needs of the consumers.
Answer: TRUE
39) For some consumer products such as cigarettes, soft drinks, and candy that have a
low per-unit cost, income is often a more valuable segmentation variable than is
population. Answer: FALSE
40) India has the youngest demographic profile among the world's large nations with more than
half of its population being younger than 25 and the number of young people below the age of 14
is greater than the entire U.S. population.
Answer: TRUE
41) By 2030, 30 percent of the U.S. population will be 65 years or older versus 13 percent
today. Answer: FALSE
Difficulty: 1: Easy
42) Ideally, GDP and other measures of national income converted to U.S. dollars should
be calculated on the basis of purchasing power parities or through direct comparisons of
actual prices for a given product.
Answer: TRUE
Difficulty: 1: Easy
43) Despite having comparable per capita incomes, other industrialized countries
are nevertheless quite small in terms of total annual income.
Answer: TRUE
44) Sweden's smaller population explains why IKEA, Saab, and Ericsson have looked
beyond their borders for significant growth opportunities.
Answer: TRUE
Difficulty: 1: Easy
45) Eighty percent of McDonald's restaurants are located globally in more than 20
countries. Answer: FALSE
46) Categories such as "successful idealists" and "affluent materialists" can be used to describe
age segmentation.
Answer: FALSE
47) A psychographic segmentation, "Comfortable Belongers" refers to "up-and-comers" of a

country's population.
Answer: FALSE
48) Sometimes it is preferable to market to a particular age group rather than a mind-set; in such
an instance, psychographic studies can help marketers arrive at a deeper understanding of
consumer behavior than is possible with traditional segmentation variables.
Answer: FALSE
49) For behavior segmentation, marketers use the 80/20 rule when assessing the consumers'
usage rate, which means that 20% of the company's revenues or profits are accounted for by
80% of the firm's products or customers.
Answer: FALSE
50) Pareto's Law suggests that 80% of a company's revenues or profits are accounted for by 20%
of a firm's products or customers.
Answer: TRUE
Difficulty: 1: Easy
51) When assessing potential country target markets, management should rely heavily on its
network of contacts as a primary criterion for targeting.
Answer: FALSE
52) Demographic changes can create opportunities for marketing innovation. Justify this
statement using examples.
Answer: Demographic changes can create opportunities which are unexpected or unforeseen.
For example, demographic change has been a driving force behind a renaissance of shopping
malls in the United States. The first enclosed mall opened in 1956. After over 50 years retail
experts were using terms like "dying culture" to describe American shopping malls. Although
America boasts approximately 1,500 malls, many have closed as the Internet has brought the
world's stores into American homes. Similarly in France, two entrepreneurs began rewriting the
rules of retailing years before Sam Walton founded the Walmart chain. Marcel Fournier and
Louis Defforey opened the first Carrefour ("crossroads") hypermarket in 1963. At the time,
France had a fragmented shop system that consisted of small, specialized stores with only about
5,000 square feet of floor space, such as the boulangerie and charcuterie. The shop system was
part of France's national heritage, and shoppers developed personal relationships with a shop's
proprietor. However, time-pressed, dual-parent-working families had less time to stop at several
stores for daily shopping. The same trend occurred in other countries.
53) Which of the following is true about efforts by automakers to target the Hispanic segment
in the United States?
A) Honda, Toyota, Ford, and GM all began targeting the segment years ago.
B) Honda and Toyota began targeting the segment years ago; Ford and GM launched their
efforts more recently.
C) Ford and GM began targeting the segment years ago; Honda and Toyota launched
their efforts more recently.
D) Only Ford and GM are targeting the Hispanic segment.
Answer: B
Chapter LO: 7.2: Explain the criteria that global marketers use to choose specific markets to
target.
54) Which of the following criteria should marketers use when assessing opportunity in global
target markets?
A) current size of the segment
B) anticipated growth potential
C) competition
D) compatibility with company's overall objectives
E) all of the above
Answer: E
target.
55) Global automakers are targeting the U.S. market with SUVs. All of the following SUVs
are assembled or manufactured in the listed country except:
A) Porsche in Germany.
B) Honda in Japan.
C) Volkswagen in Slovakia.
D) Kia in India.
E) Mercedes-Benz in the United States.
Answer: D
target.
56) An example of a trap that marketers can set for themselves while targeting a foreign market
is to:
A) overstate the size and short-term attractiveness of individual country markets.
B) realize that short-term profit and revenue growth objectives may be hard to achieve.
C) restrain from being persistent to enter a country market.
D) ignore shareholders' or competitors' pressure not to "miss out" on a strategic opportunity.
E) enter a market based on time-consuming rigorous market analysis.
Answer: A
target.
57) Managers must decide how well a company's product fits the country market by asking all
of the following questions except:
A) Will adaptation be required?
B) Will import restriction drive up the product price?
C) Is it advisable to source locally?
D) Will strong home currency have an adverse impact on product price?
E) Will it be possible to neglect home-country regulations?
Answer: E
target.
58) The feasibility of targeting a particular market segment can be negatively impacted by
various factors. Which of the following is not of those factors?
A) regulatory hurdles.
B) cultural barriers.
C) lack of distribution system.
D) time required to establish business.
E) surplus demand.
Answer: E
target.
59) The basis for global marketing expert David Arnold's framework for screening intercountry
comparisons include:
A) demographic data.
B) "top-down" segmentation analysis.
C) "bottom-up" segmentation analysis.
D) income level.
E) population data.
Answer: C
target.
60) Basic criteria that marketers should keep in mind while assessing opportunities in global
markets include all of the following except:
A) current size of the market segment.
B) anticipated growth potential of the market.
C) compatibility with company's overall objectives.
D) competition in the market.
E) securing first mover advantage.
Answer: E
target.
61) Companies like Coca-Cola had the first-mover advantage since they were the first company
to enter a global market. The first-mover advantages include all of the following except:
A) best chance of becoming world leader.
B) advantage in adapting to the local culture.
C) lead in advertising and promotion exposure.
D) gain business experience.
E) substantial investments in marketing.
Answer: E
target.
62) India is the world's fastest growing cell phone market with the industry expanding at a rate
of 50% annually with 5 million new subscribers added every month. This is an indication of
continued private-sector growth.
Answer: FALSE
target.
63) France has a fragmented shop system that consisted of small, specialized stores such as the
boulangerie and charcuterie; which became a part of France's national heritage.
Answer: FALSE
target.
64) One of the advantages of targeting a market segment globally is that although the segment in
a single-country market might be small, even a narrow segment can be served profitably if the
segment exists in several countries.
Answer: TRUE
target.
65) A market segment or country market characterized by weak competition may be a

segment to avoid.
Answer: FALSE
target.
66) There is a tendency to overstate the size and short-term attractiveness of individual country
markets, especially when estimates are based primarily on demographic data such as income and
population.
Answer: TRUE
target.
67) When making a decision about market entry timing, a company's management team should
understand that the first-mover always becomes the market leader.
Answer: FALSE
target.
68) Marketing model drivers are key elements or factors required for a business to take root
and grow in a particular country market environment.
Answer: TRUE
target.
69) One of the first-mover disadvantages is that a late-mover competitor may reap benefit
from the investments made in marketing and establishing in a particular country.
Answer: TRUE
target.
70) BMW's slogan "the ultimate driving machine," is an example of an attribute or benefit
which has proven successful in their positioning strategy.
Answer: TRUE
target.
71) As Emirates and other middle eastern carriers penetrate more deeply into the world's largest
aviation market, they are becoming known for very high-quality in-flight service.
Answer: TRUE
target.
72) Middle eastern airlines have encountered some opposition. United Continental, American
Airlines, and Delta have filed complaints with the US Government that the state-owned carriers
are benefiting from substantial government subsidies.
Answer: TRUE
target.
73) Late movers in global markets can never succeed even by developing innovative
business models.
Answer: FALSE
target.
74) Differentiated global marketing represents a more ambitious approach than

concentrated target marketing.
Answer: TRUE
target.
75) IKEA, the home furnishings retailer based in Sweden, wraps itself in the Swedish flag—
literally, since inside and out, their stores are decorated in the national colors of blue and
yellow. This is an example of local consumer culture positioning.
Answer: FALSE
target.
76) Due to globalization, "it is a small world after all." Also, vast scale migration of populations
due to various reasons, including opportunities, has created large segments of ethnic population.
Considering these facts, highlight the ethnic segmentation and its importance.
Answer: Due to several reasons, in many countries the population consists of ethnic groups.
For example, in the United States there are three major ethnic segments–African/Black
Americans; Asian Americans; and Hispanic Americans. In other countries there are different
combinations of ethnic population. Each segment shows great diversity and can be further
subdivided. Even those coming from one country may have differences in language, culture,
religion, and other attitudinal aspects. Their purchasing behavior is different within groups
and sub-groups. From a marketing standpoint these groups offer great opportunity. Companies
in a variety of industry sectors, primarily food and beverages, household goods, and financing
services can benefit by targeting these groups. For example, Japanese automakers have been
successful in targeting ethnic populations in different parts of the world.
target.
77) What are some of the pitfalls in assessing market potential and choosing target markets or
segments?
Answer: After segmenting a market, the next important step is to assess the attractiveness of
the identified segments. This is an important part when assessing emerging country markets as
potential targets. Several potential pitfalls in assessment should be taken into account. In
general, there is a tendency to overstate the size and short-term attractiveness of individual
country markets. This can happen if estimates are based primarily on demographic data such as
income and population. For example, the population figures in India and China can create a
bloated image. Short-term profitability may be hard due to prevailing conditions in these
emerging markets. Persistence and long-term outlook often pays off in new markets. A second
pitfall may originate from pressures placed on marketers by shareholders or competitors. The
possibility of missing out on entering a condition is in itself a stress-causing factor. Marketers
may find themselves overwhelmed at times by such pressures and the urge to react quickly.
Another factor may be the decisions made based on convenience or opinion of persons/advisors
not residing in the home country. The right representatives or distributors should be selected in
order to be successful.
target.
78) Discuss the basics of a framework for selecting target markets highlighting the
salient features of David Arnold's framework.
Answer: A framework for selecting target markets should take into account the market size of
the targeted market. The market size should then be multiplied by the competitive advantage in
that country. Multiplying the market size and competitive advantage index yields a market
potential. The next step in the analysis requires an assessment of the various market access
considerations. Finally, multiplying the market potential by the terms of access index gives the
final market potential. This framework takes into account the competitive advantage, market
potential and the terms of access. This framework should prove useful as a preliminary screening
tool for inter-country comparisons. However, it does not go far enough in terms of assessing
actual market potential. Global marketing expert David Arnold has developed a framework that
goes beyond demographic data and considers other marketing-oriented assessments of market
size and growth potential. Thus, instead of a "top-down" segmentation analysis beginning with,
for example, income or population data from a particular country, Arnold's framework is based
on a "bottom-up" analysis that begins at the product-market level. The product-market refers to a
market defined by a product category. For example, in the automotive industry that would refer
to luxury car market. Arnold's framework incorporates two core concepts: marketing model
drivers and enabling conditions. Marketing model drivers are key elements or factors required
for a business to take root and grow in a particular country market environment. The drivers may
differ depending on whether a company serves consumer or industrial markets. Enabling
conditions are structural market characteristics whose presence or absence can determine where
the marketing model can succeed. For example, in India, refrigeration is not widely available in
shops and market food stalls. This creates challenges for storing dairy products and confections.
So the enabling conditions are very important. After marketing-model drivers and enabling
conditions have been identified, the management should weigh the estimated costs associated
with entering and serving the market with potential short- and long-term revenue streams. One
way to determine the marketing model drivers and enabling conditions is to create a
product-market profile.
target.
79) Both Nestléand Cadbury determined that a liquid chocolate confection would be one way
to address the issue of India's hot weather. This is an example of:
A) differentiated target marketing.
B) standardized global marketing.
C) competitive global marketing.
D) target benefit marketing.
E) product-market decision
Answer: E
Chapter LO: 7.3: Understand how global marketers use a product-market grid to make
targeting decisions.
80) Lexus developed new diesel models as well as a gas-hybrid engine because Germans
want the option of buying vehicles with diesel engines.
Answer: TRUE
81) What important lessons did Virgin chief executive Richard Branson learn in the mid-1990s
when he launched Virgin Cola, directly targeting Coca-Cola's core market?
Answer: Starting a soft-drinks war with Coca-Cola was crazy. It was one of their highest
profile business mistakes, though it was also one of the things that raised the profile of the Virgin
name in America. By launching Virgin Cola they were having fun and reveling in bravado.
However, taking on Coke taught them two lessons: how to make a great cola with a different
taste; and how to antagonize a global business that brought in $28 billion in 2007, with profits of
$5 billion. They underestimated the power and the influence of a global brand that epitomizes the
strength and reach of American capitalism.
82) India's vehicle market can be segmented into:

A) First time car buyers
B) Generation Y drivers
C) different age group drivers
D) women drivers
E) scooter and motorcycle drivers
Answer: E
Chapter LO: 7.4: Compare and contrast the three main target market strategy options.
83) Marketing that involves creating the same marketing mix for a broad mass market of
potential buyers is referred to as:
A) differentiated target marketing.
B) standardized global marketing.
C) concentrated global marketing.
D) competitive global marketing.
E) target benefit marketing.
Answer: B
Chapter LO: 7.4: Compare and contrast the three main target market strategy
options. AACSB: Analytical thinking
84) The Swatch Group markets watches in all price ranges, from the Swatch brand at the low
end to luxury brands such as Longines, Blancpain, and Breguet. Which target market strategy
does this illustrate?
A) standardized global marketing
B) concentrated global marketing
C) differentiated global marketing
D) psychographic global marketing
Answer: C
85) Positioning refers to the act of:

A) determining what areas of the globe to target.
B) ensuring a choice retail shelf location.
C) differentiating a brand in customer's mind.
D) formulating a private label strategy.
E) formulating a companion product.
Answer: C
options. AACSB: Application of knowledge
86) Benetton uses the slogan "United Colors of Benetton" to position itself as a brand concerned
with the unity of humankind. This type of strategy is referred to as GCCP (global consumer
culture positioning).
Answer: TRUE
87) In the cosmetics industry, Unilever pursues differentiated global marketing strategies by
targeting both ends of the perfume market.
Answer: TRUE
88) Standardized global marketing is analogous to mass marketing in a single country and is
also known as differentiated target marketing.
Answer: FALSE
89) Assume that the market segment is judged to be large enough, and the strong competitors
are either absent or deemed to be vulnerable, then is it safe to enter the country?
Answer: If the market segment is judged to be large enough, and there are no strong existing or
potential competitors, one should not assume that it is safe to enter the country. There are several
other factors that can negatively impact a business. For example, significant regulatory hurdles
may be present that limit market access. The company may also encounter cultural barriers or
religious restrictions. Other marketing-specific issues can arise. For example, in India, three to
five years are required to build an effective distribution system for many consumer products.
Also, the approvals may take a considerably long period of time. Thus, apparent potential does
not guarantee success. Managers have a difficult decision in such conditions. If there are certain
prevailing conditions that require adaptation of products, then that should be taken into account.
Also, it is important to consider the question of whether targeting a particular segment is
compatible with the company's overall goals, its brand image, or established sources of
competitive advantage.
90) After evaluating identified segments, decisions have to be made whether to pursue a
particular opportunity or not. Assuming the decision is made to proceed, an appropriate targeting
strategy must be developed. Explain the basic categories of target marketing strategies and how
they can be implemented.
Answer: The three basic categories of target marketing strategies are: standardized marketing,
concentrated marketing, and differentiated marketing. Standardized global marketing is
analogous to mass marketing in a single country. It involves creating the same marketing mix for
a broad mass market of potential buyers. It is also known as undifferentiated target marketing
since it is based on the premise that a mass market exists around the world. Product adaptation is
minimized, and a strategy of intensive distribution ensures that the product is available in the
maximum number of retail outlets. The appeal of standardized global marketing is due to the
lower production costs. The concentrated target marketing involves devising a marketing mix to
reach a niche. A niche is a single segment of the global market. For example, in cosmetics,
Chanel has targeted the upscale, prestige segment of the market. Concentrated targeting is also
the strategy employed by the hidden champions of global marketing–companies unknown to
most people that have succeeded by serving a niche market that exists in many countries. These
companies define their markets narrowly and strive for global depth rather than national breadth.
The narrowing of market definition is the key principle in this strategy. The third category
differentiated global marketing, represents a more ambitious approach than concentrated target
marketing. It is also known as multi-segment targeting. It entails targeting two or more distinct
market segments with multiple marketing mix offerings. This strategy allows a company to
achieve wider market coverage. For example, in the sport utility vehicle segment, Rover has a
Range Rover at the high end of the market. A scaled down version, the Land Rover Discovery,
is offered which competes directly with the Jeep Grand Cherokee. The Freelander, its newest
vehicle, has been on sale in Europe for several years. Thus, there is a multi-pronged approach to
marketing.
91) What factors should be considered by cosmetic companies to be successful in markets in
Brazil, Russia, India, and China?
Answer: Noting that there is no "one-size-fits-all" ideal of beauty, cosmetic marketers should
consider the sensitivity to local cultural preferences. Each customer is free to have her own
aspirations. They have to offer the best quality and the best product to satisfy local customers.
Many Asian women use whitening creams to lighten and brighten their complexion. In China,
white skin is associated with wealth. Companies have to understand what beauty means to
Chinese women and what they look for. Product offerings and communications therefore have to
be adjusted accordingly. Market research is critical to understanding women's preferences in
different parts of the world. Japanese women prefer to use a compact foundation rather than a
liquid. Humid conditions in tropical countries, like India, should be taken into account. How
many times women clean their faces should be taken into account. In China, mass-market and
premium brands should be considered in order to fulfill requirements of the top and general
market. In India, the number of working women is increasing dramatically, and consumer
attitudes are shifting. Due to advances in technology and access to television, women are getting
more beauty conscious. Coloring gray hair is also an important consideration for women in India.
Thus, for each country different factors have to be considered since preferences for beauty
products vary from country to country.
92) For years, ads for Volvo automobiles stressed safety features and protection in the event of
a crash. Thus, Volvo automobiles developed a reputation based on which positioning strategy?
A) use/user
B) attribute/benefit
C) competition
D) high touch
E) quality/price
Answer: B
Chapter LO: 7.5: Describe the various positioning options available to global marketers.
93) BMW advertises its cars as the "ultimate driving machine" which is described as
positioning based on:
A) high touch.
B) use/user.
C) attribute/benefit.
D) competition.
E) quality/price.
Answer: C
94) Some of Body Shop's recent advertising has emphasized the difference between the
company's principles and those of "mainstream" cosmetics companies on such issues as animal
testing. As described here, Body Shop's ads illustrate positioning by:
A) competition.
B) niche.
C) quality/price.
D) attribute/benefit.
E) culture.
Answer: A
95) Which of the following is generally true about the marketing of high-touch products such as
fine china and crystal?
A) It relies equally on specialized information and image.
B) It relies less on image and more on specialized information.
C) It relies less on specialized information and more on image.
D) Neither image nor specialized information is relevant to the marketing of high-touch
products.
E) It relies partially on specialized information and partially on
image. Answer: C
96) Consumers shopping for high-touch products, such as fine perfume, are generally
energized by motives.
A) emotional
B) rational
C) both emotional and rational
D) neither emotional nor rational
E) high-tech
Answer: A
97) When a marketer understands that a product satisfies a buyer's rational criteria while
also evoking an emotional response, the marketer should:
A) only target consumers in high-income countries.
B) utilize a multi-tiered targeting strategy rather than a concentrated strategy.
C) commission psychographic segmentation studies to augment demographic data.
D) create advertising that reflects a bipolar, high-tech and high-touch approach.
E) follow normal targeting strategy.
Answer: C
98) Which of the following is true of advertising for the Heineken and Foster's brands in
the United States?
A) Both Heineken and Foster's utilize the GCCP strategy.
B) Both Heineken and Foster's utilize the FCCP strategy.
C) Heineken utilizes the GCCP strategy; Foster's utilizes the FCCP strategy.
D) Heineken utilizes the FCCP strategy; Foster's utilizes the GCCP strategy.
E) Heineken utilizes the LCCP strategy; Foster's utilizes the GCCP
strategy. Answer: C
99) The world's best-known cosmetics companies are setting their sights on a lucrative new
market segment: the emerging middle classes in countries such as Brazil, Russia, India, and
China. However, these companies have to understand:
A) that women's preferences for cosmetics are same in all countries.
B) that Chinese consumers are not willing to invest in beauty products.
C) what beauty means to Chinese women.
D) that working Indian women currently prefer only local brands.
E) cosmetics are preferred mostly by the top end of the market in
China. Answer: C
100) The strategy that identifies a brand as a symbol of a particular global segment is known as:
A) foreign consumer culture positioning.
B) global consumer culture positioning.
C) local consumer culture positioning.
D) global market positioning.
E) demographic market positioning.
Answer: B
101) Unilever and other consumer goods companies often engage in differentiated
target marketing, offering a full range of brands within a given product category.
Answer: TRUE
102) Implicit or explicit reference to competitors can provide the basis for an
effective positioning strategy
Answer: TRUE
103) What is psychographic segmentation, and how do marketers use it in targeting

different world markets?
Answer: Psychographic segmentation involves grouping people in terms of their attitudes,
values, and lifestyles. Respondents are carefully selected by asking questions to assess their
attitudes, values, and lifestyles. There are different companies that provide services and help in
assessing these psychographic variables. Different groups are given names based on the
attributes which describe their attitudes, values, and lifestyles. Automakers rely on this
segmentation since the purchase behavior of a considerable size of consumers is dependent on
psychographic values. A psychographic study showed that Porsche buyers could be divided into
several distinct categories. One of the categories, "Top Gun" was found to buy Porsches and
expect to be noticed. Proud Patrons and Fantasists, on the other hand, found such conspicuous
consumption as irrelevant. Thus, automakers can design autos based on the preferences of
populations grouped under each category. It is preferable to market to a mind-set rather than a
particular age group. For finding such a group, psychographic studies are important. These
analyses are expensive and require careful interpretations. SRI International, one of the market
research organizations, has developed VALS/VALS 2 analyses of consumers based on
psychographic values. A research team in Europe identified four lifestyle groups: Successful
Idealists, Affluent Materialists, Comfortable Belongers and Disaffected Survivors. The first two
groups represent the elite, while the latter two represented the mainstream European consumers.
It should be noted that the segmentation and targeting approach used by a company can vary
from country to country. Methods that can truly assess a population segment of a country should
be employed for psychographic segmentation.
104) Colgate Total toothpaste is positioned as the brand that addresses all aspects of oral health.
Such positioning is very important from a business point of view. How does positioning help in
deciding on a marketing strategy? What are the differences between using "attribute or benefit"
and "quality and price" as positioning strategy?
Answer: Positioning refers to the act of differentiating a brand in customers minds in relation to
competitors in terms of attributes and benefits that the brand does and does not offer. It is the
process of developing strategies for marketing purposes. It is frequently used in conjunction with
the segmentation variables and targeting strategies. "Attribute or benefit" strategies are used to
expose a particular product attribute, benefit, or other special feature. Aspects such as economy,
reliability, multiple uses, durability, and simplicity are very commonly used to describe the
attributes of a product or service. For example, Visa's advertising theme "It's Everywhere You
Want to Be" exposes its benefit of being useful at any place in the world. Thus, these types of
slogans, themes, or jingles very cleverly outline the benefits or attributes of a product. A similar
strategy that is used is related to "Quality and Price." This strategy can be considered in light of a
continuum from high fashion/quality and high price to good value. Swatch watches advertise
their quality, Swiss origin, as well as affordable price. This way price is always tied to the quality
and durability of the product or service.
105) What are the major differences between global, foreign, and local consumer culture
positioning? Why are these differences significant? Give examples of how companies are trying
to lure customers using these positioning strategies.
Answer: Global consumer culture positioning (GCCP) is defined as a strategy that identifies
the brand as a symbol of a particular global culture or segment. It has proven to be an effective
strategy for communicating with global teens, cosmopolitan elites, and globe-trotting laptop
warriors who consider themselves members of a transnational commerce culture. For example,
Sony's slogan "My First Sony" is positioned as the electronics brand for youngsters around the
globe with discerning parents. Benetton uses the slogan "United Colors of Benetton" to position
itself as a brand concerned with the unity of humankind. Categories of products that lend
themselves to this positioning are both associated with high levels of customer involvement and
by a shared "language" among users. High tech products such as iPod, iPhone, MP3 players,
video cameras, and all such technology-prone items fall into these categories.
Foreign consumer culture positioning (FCCP) associates the brand's users, use occasions, or
production origins with a foreign country or culture. Foster's Brewing Group's U.S. advertising
proudly uses the brand's nation of origin in all of its print ads and other promotions as being
Australian. Local consumer culture positioning (LCCP) strategy associates the brand with local
cultural meanings, reflects the local culture's norms, portrays the brand as consumed by local
people in the national culture, or depicts the product as locally produced for local consumers.
Budweiser's U.S. advertising particularly focuses on local aspects.

1
Chapter 8 Importing, Exporting, and Sourcing
1) The only marketing mix element that is applicable in export selling is:
A) price.
B) product.
C) promotion.
D) place.
E) process.
Answer: D
Chapter LO: 8.1: Compare and contrast export selling and export marketing.
2) Which of the following is not true about a personal visit to size up the market firsthand
and begin the development of an actual export-marketing program?
A) Confirm assumptions regarding market potential
B) Contradict assumptions regarding market potential
C) Gather additional data to help make decisions
D) Develop a marketing plan in cooperation with local agents
E) Arrange a face-to-face meeting and avoid going to trade shows
Answer: E
3) Export marketing requires all of the following except:

A) an understanding of the target market environment.
B) the use of marketing research.
C) identification of market potential.
D) decisions concerning product design.
E) reaching retail customers.
Answer: E
4) After the research effort has zeroed in on potential markets, marketers should:
A) work on understanding the target market environment.
B) modify methods used for marketing research.
C) identify products that can be marketed.
D) make decisions concerning product design.
E) plan a personal visit.
Answer: E
2
5) The advantages of a market visit include all of the following except:
A) confirm market potential.
B) contradict market potential.
C) gain confidence in firm's ability for exporting.
D) gather additional data to reach final decision.
E) build confidence in firm's ability for exporting.
Answer: C
6) The possible arrangements of the responsibilities for handling exports include all of the
following except:
A) as a part-time activity performed by domestic employees.
B) through an export partner affiliated with the domestic marketing structure.
C) through an export department within an international division.
D) through an export department that is independent of the domestic marketing structure.
E) through an export department of an embassy in a foreign
country. Answer: E
7) Switzerland exports 51 percent of their GDP, compared to the United States, which
exports only about 14 percent.
Answer: TRUE
Difficulty: 1: Easy
8) In his 2010 State of the Union address, U.S. President Barack Obama had vowed to double
U.S. exports by 2015; doing so would require boosting exports 25 percent
annually. Answer: FALSE
Difficulty: 1: Easy
9) In 2013, U.S. goods and services exports totaled $2.3 trillion, which comes to about 15
percent of the GDP. This means that nearly 85 percent of the goods and services produced in the
United States are consumed at home.
Answer: TRUE
Difficulty: 1: Easy
10) According to President Obama, "The more American companies export, the more they
produce. And the more they produce, the more people they hire–and that means more jobs."
Answer: TRUE
Difficulty: 1: Easy
11) The terms "export selling" and "export marketing" are

interchangeable. Answer: FALSE
Difficulty: 1: Easy
12) "Export selling" involves tailoring various elements of the marketing mix to global
market requirements.
Answer: FALSE
Difficulty: 1: Easy
13) The export marketer takes the domestic product "as is" and sells it to international
customers. Answer: FALSE
Difficulty: 1: Easy
14) After research has zeroed in on potential markets, there is no substitute for a personal visit to
size up the market firsthand and begin the development of an actual export marketing program.
Answer: TRUE
15) Research discovered that even the most experienced exporters express lack of confidence
in their knowledge about shipping arrangements, payment procedures, and regulations.
Answer: TRUE
16) In his 2010 State of the Union address, U.S. President Barack Obama vowed to double
U.S. exports by 2015. To this end, President Barack Obama created a National Export Initiative
and established the President's Export Council. What is meant by export marketing and export
selling?
Answer: Export marketing is the integrated marketing of goods and services that are destined
for customers in international markets. Export selling does not involve tailoring the product, the
price, or the promotional material to suit the requirements of global markets. The only marketing
mix that gets impacted is location or place. As companies mature in the global marketplace or as
new competitors enter the market, export marketing becomes important. Export marketing
targets the customer in the context of the total market environment. The export marketer does not
simply take the domestic product "as is" and sell it to the international customers. The product
offered in the home market is just the starting point. Based on the preferences of the international
target markets, many modifications and adaptations are necessary. Also, the export marketer sets
prices to fit the market and does not merely sell at the home-country price. There are several
charges in export such as packaging, transportation, and financing that have to be taken into
account, which in turn will have an impact on the prices charged in other markets. The price
charged in one market may be completely different than the one that is charged in another
country for the same product. The export marketing requires: (a) a thorough understanding of the
target market environment; (b) the use of marketing research; (c) the identification of market
potential; and (c) decision concerning product design, pricing, distribution and channels,
advertising, and communication.
17) Governments in Japan, Singapore, South Korea, and China have supported exports for years
which have tremendously helped their economies. Since exporting is a very important
component of a country's business strategy, many government programs are offered that support
exports. Describe ways by which governments can support exports.
Answer: Countries benefit a lot based on their facilitating of export and import business. For
example, China has attracted increased foreign investment from DaimlerChrysler,
Hewlett-Packard, GM, and other similar corporations by accommodating them to set up
production facilities that will support local sales as well as exports to world markets.
Governments commonly use four activities to support and encourage firms that engage in
exporting. These are tax incentives, subsidies, export assistance, and free trade zones. Tax
incentives treat earnings from export activities preferentially either by applying a lower rate to
earnings or by refunding taxes already paid on income associated with exporting. Also, tax
benefits are offered by governments which may include tax exemption or tax deferral on export
income, accelerated depreciation of export-related assets, and generous tax treatment of overseas
market development activities. Governments also support export performance by providing
outright subsidies. Subsidies are direct or indirect financial contributions or incentives that
benefit producers. Governments also provide assistance to exporters. Companies can avail
themselves of a great deal of governmental information concerning the location of markets and
credit risks. Assistance may also be oriented toward export promotion. Various agencies at
different levels hold trade fairs and trade missions designed to promote sales to foreign
customers. In an effort to facilitate exports, countries are designating certain areas as "free trade
zones" and particular "special economic zones." These zones are geographic entities that offer
manufacturers simplified customs procedures, operational flexibility, and a general environment
of relaxed regulations. Thus, these ways are very helpful and have helped several companies.
18) Export marketing is the integrated marketing of goods and services that are destined for
customers in international markets. What does the marketing require?
Answer: Export marketing targets the customer in the context of the total market environment.
The export marketer does not simply take the domestic product "as is" and sell it to international
customers. To the export marketer, the product offered in the home market represents a starting
point. It is then modified as needed to meet the preferences of international target markets. In
order to formulate a good exporting strategy the following points should be considered:
1. An understanding of the target market environment
2. The use of marketing research and identification of market potential
3. Decisions concerning product design, pricing, distribution channels, advertising,
and communications–the marketing mix.
The export marketer should also set prices to fit the marketing strategy and does not merely
extend home-country pricing to the target market. Charges incurred in export preparation,
transportation, and financing must be taken into account in determining prices. Finally, the
export marketer also adjusts strategies and plans for communication and distribution to fit the
market. In other words, effective communication about product features or uses to buyers in
different export markets may require creating brochures with different copy, photographs, or
artwork.
19) Research has shown that exporting is essentially a developmental process that proceeds in
different stages. Before a firm reaches stage 4, it must do which one of the following activities?
A) explore the feasibility of exporting
B) commit resources for exporting
C) receive unsolicited export orders
D) believe in attractiveness of exporting
E) build confidence in firm's ability for exporting
Answer: C
Chapter LO: 8.2: Identify the stages a company goes through, and the problems it is likely
to encounter, as it gains experience as an exporter.
20) is the most important aspect of a company's international orientation.

A) Experience
B) Commitment
C) Dynamism
D) Confidence
Answer: B
21) According to research, exporting is essentially a developmental process starting with the
first stage when the firm exports to one or more markets on a trial basis.
Answer: FALSE
22) In the last stage of the developmental process for exporting, a firm evaluates global
market potential before screening for the "best" target markets to include in its marketing
strategy and plan.
Answer: TRUE
Chapter LO: 8.2: Identify the stages a company goes through, and the problems it is likely to
encounter, as it gains experience as an exporter.
23) Exporting is considered as essentially a developmental process. What are the stages in
which this process can be divided?
Answer: The stages can be divided as shown in the following points:
1. If the firm is unwilling to export; it will not even fill an unsolicited export order. This may
be due to perceived lack of time or to apathy or ignorance.
2. The firm fills unsolicited export orders but does not pursue unsolicited orders. Such a firm is
an export seller.
3. The firm explores the feasibility of exporting.
4. The firm exports to one or more markets on a trial basis.
5. The firm is an experienced exporter to one or more markets.
6. After this success, the firm pursues country- or region-focused marketing based on selected
criteria.
7. The firm evaluates global market potential before screening for the "best" target markets
to include in its marketing strategy and plan.
The probability that a firm will advance from one stage to the next depends on different factors.
Moving from stage 2 to stage 3 depends on management's attitude toward the attractiveness of
exporting and confidence in the firm's ability to compete internationally. However, commitment
is the most important aspect of a company's international orientation. Before a firm can reach
stage 4, it must receive and respond to unsolicited export orders. The quality and dynamism of
management are important factors that can lead to such orders. Success in stage 4 can lead a firm
to stages 5 and 6. A company that reaches stage 7 is a mature, geocentric enterprise that is
relating global resources to global opportunity. To reach this stage requires management with
vision and commitment.
24) The top ranked country among those exporting to the United States is:
A) Taiwan.
B) China.
C) Mexico.
D) India.
E) Honduras.
Answer: B
Difficulty: 1: Easy
Chapter LO: 8.3: Describe the various national policies that pertain to exports and imports.
25) Representatives of the apparel, footwear, furniture, and textile industries in many countries
are deeply concerned about the impact that increased trade with will have on these
sectors.
A) Hong Kong
B) China
C) Italy
D) India
E) Bangladesh
Answer: B
Difficulty: 1: Easy
26) The so-called "China Triangle" includes:

A) Hong Kong, Republic of China, and Singapore
B) Republic of China, Taiwan, and Hong Kong
C) Republic of China, Taiwan, and South Korea
D) Taiwan, Hong Kong, and Republic of China
E) Singapore, China, and Republic of China
Answer: B
Difficulty: 1: Easy
27) Governments commonly use activities to support and encourage firms that engage
in exporting. Such activities include all of the following except:
A) tax incentives.
B) subsidies.
C) export assistance.
D) free trade zones.
E) voting rights.
Answer: E
28) Agricultural subsidies are particularly controversial because, although they protect the
interests of farmers in some countries, they work to the detriment of farmers in countries such
as:
A) Singapore.
B) the United States.
C) India.
D) Switzerland.
E) Japan.
Answer: C
29) The Ministry of International Trade and Industry (MITI) has helped devise export
strategies for companies in:
A) Singapore.
B) South Korea.
C) Taiwan.
D) Hong Kong.
E) Japan.
Answer: E
30) The four tigers–Singapore, South Korea, Taiwan, and Hong Kong–learned from the
experience and built strong export-based economies of their own.
A) Chinese
B) Indian
C) German
D) American
E) Japanese
Answer: E
31) Which of the following was a major U.S. tax incentive for exporters that the WTO
recently ruled was an illegal subsidy?
A) NTR
B) CVD
C) FSC
D) NTB
E) HTS
Answer: C
32) The export and import process can entail red tape and bureaucratic delays. In an effort
to facilitate exports, countries are designating certain areas as:
A) import control zones.
B) special tariff zones.
C) global business zones.
D) free trade zones.
E) duty free zones.
Answer: D
33) Developed under the auspices of the Custom Cooperation Council (now the World Customs
Organization) the system which took effect is referred to as:
A) preferential tariffs.
B) harmonized tariff.
C) BTN duty.
D) specialized tariff.
E) antidumping duty.
Answer: B
34) After the aftermath of the tragedy involving fire in garment factories in Bangladesh, it
was found that the buildings were inspected by:
A) Dhaka's building-safety authority.
B) Business Social Compliance Initiative (BSCI).
C) Walmart's approved contractors.
D) Worker Rights Consortium.
E) Interfaith Center for Corporate
Responsibility. Answer: B
35) After the aftermath of the tragedy involving fire in garment factories in Bangladesh, Walmart
implemented a "zero-tolerance policy." The Workers Rights Consortium, the International Labor
Organization and other groups monitoring labor issues are stepping up pressure on companies
that participate in the global garment supply chain due to the following reasons, except:
A) retailers pay lip service to concerns about factory safety.
B) retailers continue to focus on low prices.
C) those auditing facilities are audited by BSCI's qualified engineers.
D) the buyers and consumer are willing to pay more for garments.
E) retailers do not provide funds for fire safety training.
Answer: C
36) A nontariff barrier (NTB) includes all of the following except:

A) quotas.
B) discriminatory procurement policies.
C) restrictive administrative policies.
D) restrictive technical regulations.
E) ad valorem duty.
Answer: E
37) Representatives of the apparel, footwear, and textile industries in many countries are deeply
concerned about the impact that increased trade with China will have on these sectors.
Answer: TRUE
38) The four tigers—Singapore, South Korea, Taiwan, and Hong Kong—learned from
the Japanese experience and built strong export-based economies of their own.
Answer: TRUE
39) Potential export problems include packaging, government red tape, warehousing,
advertising, and trade restrictions.
Answer: TRUE
40) Tax incentives, subsidies, export assistance, and free trade zones are common support
provided by governments to firms that engage in exporting.
Answer: TRUE
Difficulty: 1: Easy
41) The Common Agricultural Policy (CAP) determines the level of subsidies granted to farmers
in Latin America.
Answer: FALSE
42) Governmental actions at times are designed to discourage imports and block market
access. Why do governments want to curtail imports? Explain some of the barriers that are
placed to discourage imports.
Answer: In order to promote domestic industries and agriculture and restrict the inflow of
materials from unfavored nations, some governments impose certain barriers. The tariffs, which
can be regarded as the three R's of global business: rules, rate schedules, and regulations, are
imposed by countries. Duties can be imposed on goods and services, thereby making it difficult
for importers to import as well as for consumers to buy. A Harmonized Tariff System (HTS) has
been adopted by the majority of trading nations, under which importers and exporters have to
determine the correct classification number for a given product or service that will cross borders.
This classification helps in the identifying of the product and applicable tariff. A nontariff (NTB)
can also be imposed which is any measure other than a tariff that is a deterrent or obstacle to the
sale of products in a foreign market. This includes quotas, discriminatory procurement policies,
restrictive customs procedures, arbitrary monetary policies, and restrictive regulations. A quota is
a government-imposed limit or restriction on the number of units or the total value of a particular
product or product category that can be imported. In addition, discriminatory procurement
policies can take the form of government rules and administrative regulations specifying that
local vendors or suppliers receive priority consideration. Customs procedures are also considered
restrictive if they are administered in a way that makes compliance difficult and expensive.
Discriminatory exchange rate policies are imposed to distort trade in much the same way as
selective import duties and export subsidies. Finally, restrictive administrative and technical
regulations can create barriers to trade. These may take the form of antidumping regulations,
product size regulations, and safety and health regulations. Some of these regulations are
intended to keep out foreign goods; others are directed toward legitimate domestic objectives.
43) Why does the tariff system vary from country to country? Explain, giving examples of
tariffs imposed by the United States with particular emphasis on preferential tariffs. What are the
conditions under which GATT allows the use of preferential tariffs?
Answer: Tariff systems provide either a single rate of duty for each item applicable to all
countries or two or more rates, applicable to different countries or groups of countries. The
single-column tariff is the simplest type of tariff. It includes a schedule of duties in which the
rate applies to imports from all countries on the same basis. Under the two-column tariff the first
column includes "general" duties plus "special" duties indicating reduced rates determined by
tariff negotiations with other countries. Rates agreed upon by "convention" are extended to all
countries that qualify for normal trade relation (NTR). The United States have given NTR status
to some 180 countries around the world. A preferential tariff is a reduced tariff rate applied to
imports from certain countries. GATT prohibits the use of preferential tariffs, with three major
exceptions. First are historical preference arrangements such as the British Commonwealth
preferences and similar arrangements that existed before GATT. Second, preference schemes
that are part of a formal economic integration treaty, such as free trade areas or common
markets, are excluded. Third, industrial countries are permitted to grant preferential market
access to companies based in less-developed countries.
44) In 2010, dozens of Bangladeshis were killed in two separate fires in factories that made
clothing for western clients such as JCPenney and Gap. In November 2012, 112 garment workers
were killed when a fire broke out at Tazreen Fashions, a clothing manufacturer in Dhaka,
Bangladesh. What are the implications of these tragic incidences on the export by a country
dependent on exports?
Answer: Bangladesh is number 3 clothing exporter. About 80 percent of its export
earnings come from its network of more than 5,000 garment manufacturing operations.
However, the garment industry has been roiled by a series of tragedies that have highlighted
the
often-dangerous conditions facing workers. Tazreen's clients included Walmart and other
well-known global retail brands. The tragedy highlighted the Bangladesh Fire and Building
safety Agreement, a contract that increasing numbers of workers, unions, and marketers have
signed. More than 500 people, most of them women, were killed. This time, however, fire was
not the cause. Rather, the eight-storey Rana Plaza building in Dhaka collapsed. The building
housed garment factories that employed about 5,000 garment workers making clothing for world
renowned garment retailers.
In the aftermath of the tragedy, it was revealed that the building's owner was a local politician,
who had not obtained the necessary permits from Dhaka's building-safety authority. Certified
audits conducted by the Business Social Compliance Initiative, launched by the Foreign Trade
Association, an agency the represents hundreds of European retailers, were conducted. As it
turns out, however, the auditors were not engineers and had not made recommendations
regarding building safety and stability. Despite the efforts by manufacturers, such as Walmart
donating $1.6 million to provide fire-safety training to garment workers, many of the agencies
such as the Workers Rights Consortium, the International Labor Organization, and other groups
are stepping up pressure on the companies. Too often, the activists charge, Western retailers pay
lip service to concerns about factory safety. They continue to focus on low prices rather than the
welfare of workers.
45) A duty that represents a certain percentage of the value of a particular product is a(n):
A) specific duty.
B) ad valorem duty.
C) BTN duty.
D) "schedule B" duty.
E) antidumping duty.
Answer: B
Chapter LO: 8.4: Explain the structure of the Harmonized Tariff System.
46) The sale of merchandise in export markets at unfair prices is known as:
A) dumping.
B) countervailing.
C) tariff.
D) ad valorem.
E) transaction.
Answer: A
47) Which of the following types of duties would be imposed on a company

whose home-country government provides export subsidies?
A) ad valorem duty
B) countervailing duty
C) antidumping duty
D) specific duty
E) customs duty
Answer: B
48) Which of the following is described as the three R's of global business: rules, rate
schedules, and regulations?
A) quotas
B) tariffs
C) NTBs
D) NTR
E) duties
Answer: B
49) Sweden applies a system to certain categories of imported agricultural products referred
to as:
A) temporary surcharges.
B) ad valorem duty.
C) variable import levies.
D) specific duty.
E) countervailing duty.
Answer: C
50) The United States has given Normal Trade Relations (NTR) status to some 180 countries.
In actuality only four countries are excluded from this status which includes all of the following
countries except:
A) North Korea.
B) Iraq.
C) Iran.
D) Cuba.
E) Libya.
Answer: B
51) In an effort to facilitate exports, countries are designating certain areas as "free trade zones"
(FTZ) or "special economic zones" (SEZ).
Answer: TRUE
52) Tariffs can be thought of as the "three R's" of global business: rules, rigor, and regulations
of individual countries.
Answer: FALSE
53) China has imposed tariffs as high as 28% on foreign-made auto parts.
Answer: TRUE
Difficulty: 1: Easy
54) The Harmonized Tariff System (HTS) is currently the dominant system for determining the
correct classification number.
Answer: TRUE
55) The Harmonized Tariff System (HTS) has eliminated virtually all problems associated with
assigning tariff classifications to new products.
Answer: FALSE
56) According to the recent import regulations in the United States, action figures that represent
non-human creatures such as monsters or robots are categorized as toys and qualify for lower
duties than human figures that are classified as dolls.
Answer: TRUE
57) A nontariff barrier (NTB) is a hidden trade barrier that is a deterrent or obstacle to the sale
of products in a foreign market.
Answer: TRUE
58) Overall, Italy's retail sector has pursued very little international expansion; by contrast,
other European supermarket chains such as Tesco (UK), Metro (Germany), and Carrefour
(France) took local products and brands with them as they expanded around the globe.
Answer: TRUE
59) The Buy American Act of 1933, which stipulates that U.S. federal agencies must buy
articles produced in the United States unless domestically produced goods are not available, is
an example of discriminatory procurement policies.
Answer: TRUE
60) The Fly American Act is an example of a nontariff

barrier. Answer: TRUE
Difficulty: 1: Easy
61) When Honda's U.S. manufacturing subsidiaries purchase parts from Japan, customs
authorities in the United States have the right to scrutinize the transfer price to make sure it is a
fair reflection of market value.
Answer: TRUE
62) An ad valorem duty is expressed as a percentage of the value of goods.
Answer: TRUE
Difficulty: 1: Easy
63) CVDs are additional duties levied by exporting countries on imported videodiscs.
Answer: FALSE
Difficulty: 1: Easy
64) What are customs duties? How do they work in controlling imported goods?
Answer: There are two main categories of customs duties. Their calculation method is the
differentiating factor. They may be calculated either as a percentage of the value of the goods
(ad valorem duty), as a specific amount per unit (specific duty), or as a combination of both of
these methods. An ad valorem duty is expressed as a percentage of the value of goods. The
definition of customs value varies from country to country. An exporter has to determine the
duty applicable and the method used for calculations. For countries under GATT conventions the
customs value is landed cost, insurance, and freight amount at the port of importation. On the
other hand, a specific duty is expressed as a specific amount of currency per unit of weight,
volume, length, or other unit of measurement. Specific duties are usually expressed in the
currency of the importing country, but there are exceptions, particularly in countries that have
experienced sustained inflation. Both ad valorem and specific duties are occasionally set out in
the custom tariff for a given product. Compound or mixed duties provide for specific, plus ad
valorem, rates to be levied on the same articles.
65) What are the differences between antidumping and countervailing duties? Under
what conditions are these duties imposed?
Answer: Dumping essentially refers to the sale of merchandise in export markets at unfair
prices. In order to offset the impact of dumping and to penalize guilty companies, most countries
have introduced legislation providing for the imposition of antidumping duties. These duties are
levied if injury is caused to domestic producers. Such duties are normally imposed as special
additional import charges equal to the dumping margin. They are almost invariably applied to
products that are also manufactured or grown in the importing country. In the United States,
antidumping duties are assessed after the commerce department finds a foreign company guilty
of dumping and the International Trade Commission rules if the dumped products injured
American companies. Countervailing duties, on the other hand, are additional duties levied to
offset subsidies granted in the exporting country. In the United States, countervailing duty
legislation and procedures are very similar to those pertaining to dumping. The U.S. Commerce
Department and the International Trade Commission jointly administer both the countervailing
duty and antidumping laws.
66) are variously referred to as buyer for export, export commission house, or export
confirming house.
A) Export brokers
B) Export merchants
C) Foreign purchasing agents
D) Export managers
E) Manufacturer's agents
Answer: C
Chapter LO: 8.5: Describe the various organizations that participate in the export process.
67) is sometimes called a mother hen, a piggyback exporter, or an export vendor

A) Export broker
B) Export merchant
C) Cooperative exporter
D) Export manager
E) Manufacturer's agent
Answer: C
68) Which of the following can be referred to as a "buyer for export" or an "export
commission house" and operates on behalf of a buyer from a foreign country?
A) foreign purchasing agent
B) export broker
C) export merchant
D) export management company
E) freight forwarder
Answer: A
69) Which of the following receives a fee for bringing together an exporter and a buyer
in another country?
A) foreign purchasing agent
B) export broker
C) export merchant
D) export management company
E) freight forwarder
Answer: B
70) is an independent marketing intermediary that acts as the export department for
two or more manufacturers whose product lines do not compete with each other.
A) Manufacturer's export agent
B) Export commission representative
C) Export merchant
D) Export management company
E) Cooperative exporter
Answer: D
71) are licensed specialists in traffic operations, customs clearance, and shipping
tariffs and schedules. They can be considered as the travel agents for handling export
goods.
A) Foreign purchasing agents
B) Export brokers
C) Export merchants
D) Freight forwarders
E) Cooperative exporters
Answer: D
72) Foreign purchasing agents are also referred to as jobbers.
Answer: FALSE
Difficulty: 1: Easy
73) "Piggyback exporter," "cooperative exporter," and "export vendor" are all terms used
to describe an export broker.
Answer: FALSE
Difficulty: 1: Easy
74) Export management company (EMC) is an independent marketing intermediary that acts as
the export department for two or more manufacturers (principals) whose product lines compete
with each other.
Answer: FALSE
75) The MEA can act as an export distributor or as an export commission representative.
However, the MEA does not perform the functions of an export department, and the scope
of market activities is usually limited to a few countries.
Answer: TRUE
76) What are some of the entities that an exporter should be familiar with? Describe and explain
the role played by each of these entities, separating those that have responsibilities from
exporters from those that have no responsibilities from the exporters.
Answer: Key export entities include purchasing agents, export brokers, and export merchants.
They have no responsibility from the client. Others are export management companies,
manufacturer's export representatives, export distributors, and freight forwarders. They are
assigned responsibilities by the exporter. Foreign purchasing agents operate on behalf of, and are
compensated by, an overseas customer known as a "principal." They generally seek out the
manufacturer whose price and quality match the specifications of their principal. They often
represent governments, utilities, railroads, and other large users of materials. Purchases may be
completed as domestic transactions with the purchasing agent handling all export packing and
shipping details, or the agent may rely on the manufacturers to handle the shipping
arrangements. The export broker receives a fee for bringing together the seller and the overseas
buyer. This fee is usually paid by the seller. The broker takes no title to the goods and assumes
no financial responsibility. A broker usually specializes in a specific commodity, such as grain or
cotton, and is less frequently involved in the export of manufactured goods. Export merchants
are sometimes referred to as "jobbers" and they identify market opportunities in one country or
region and make purchases in other countries to fill these needs. They typically buy unbranded
products directly from the producer or manufacturer. The export merchant then brands the goods
and performs all other marketing activities, including distribution. "Export management
company" is the term used to designate an independent marketing intermediary that acts as the
export department for two or more manufacturers whose product lines do not compete with each
other. It may act as an independent distributor, purchasing and reselling goods at an established
price or profit margin. It may also act as a commission representative taking no title or financial
risk. Manufacturer's export agent acts as an export distributor or as an export commission
representative. On the other hand, an export distributor assumes financial risk, whereas the
export commission representative assumes no financial risk. The cooperative exporter is an
export organization of a manufacturing company retained by other independent manufacturers to
sell their products to foreign markets.
Freight forwarders are licensed specialists in traffic operations, customs clearance, and shipping
tariffs and schedules. A licensed forwarder receives brokerage fees or rebates from shipping
companies for booked space.
77) The possible arrangements for handling exports include all of the following except:
A) as a part-time activity performed by domestic employees.
B) through an export partner affiliated with the domestic marketing structure that takes
possession of the goods before they leave the country.
C) as a low-cost arrangement requiring no additional personnel.
D) through an export department within an international division.
E) for multidivisional companies, each of the preceding options is
available. Answer: C
Chapter LO: 8.6: Identify home-country export organization considerations.
78) A company that assigns a sufficiently high priority to its export business will establish an
in-house organization. It then faces the question of how to organize it effectively.
Answer: TRUE
Difficulty: 1: Easy
Chapter LO: 8.6: Identify home-country export organization considerations.
79) Direct representation, as opposed to representation by independent intermediaries, for

exporting by the market country, has several advantages which do not include:
A) facilitates control and communications.
B) allows decisions concerning program development and resource allocation.
C) benefits when a product is not yet established in a market.
D) ensures marketer's interest and special efforts.
E) helps selling products directly to the consumer in the market
country. Answer: E
Chapter LO: 8.7: Identify market-country export organization considerations.
80) Direct representation identifies that the exporter is selling directly to the consumer or
customer.
Answer: FALSE
Difficulty: 1: Easy
81) An executive is undecided whether to rely on in-house or external export

specialists/intermediaries in the home country. He is leaning towards direct representation in
a market. What are the benefits of going forth with direct representation?
Answer: It is a common problem faced by many executives planning on exporting goods and
services to foreign countries. There are two specific advantages to direct representation in a
market. It allows decisions concerning program development, resource allocation, or price
changes to be implemented unilaterally. Thus, control and communication aspects are major
benefits. This is very significant when a product is not yet established in a market. It will require
special marketing efforts for which direct efforts will be necessary rather than relying on
intermediaries. Also, the marketer's investment ensures special efforts that are undertaken to
achieve sales. With indirect or independent representation, such efforts and investment may not
be that effective due to lack of incentives. It is also advantageous to get feedback and firsthand
information related to the market. This information can greatly improve export marketing
decisions concerning product, price, communications, and distribution. In essence, all
operational parameters are under control. However, it should be noted that direct representation
will depend on the size of the market. It may not be possible to have it when market size is small.
82) Which of the following offers a company the best assurance of being paid for
exported goods?
A) a letter of credit
B) a "piggyback" arrangement
C) a swap
D) an in-house export organization
E) a certified check
Answer: A
Difficulty: 1: Easy
Chapter LO: 8.8: Discuss the various payment methods that are typically used in trade
financing.
83) The international standard by which letters of credit (L/Cs) are interpreted is known as the
500.
A) UCP
B) NTR
C) FSC
D) NTB
E) HTS
Answer: A
financing.
84) Which of the following documents represents title to goods in an export transaction?
A) bill of lading
B) invoice
C) packing list
D) certificate of origin
E) insurance certificates
Answer: A
financing.
85) An irrevocable letter of credit transfers the payment obligation for an export deal from
the buyer to the buyer's:
A) in-house export organization.
B) bank.
C) freight forwarder.
D) credit union.
E) checking account.
Answer: B
financing.
86) Which set of documents generally represents the minimum documentation required to clear
a shipment through customs?
A) packing list, commercial invoice
B) bill of exchange, commercial invoice
C) certificate of origin, bill of exchange
D) packing list, insurance certificate
E) letter of credit, commercial invoice
Answer: B
financing.
87) Which of the following completely eliminates the risk of nonpayment by an importer or a
bank in an international transaction?
A) documentary credit (letter of credit)
B) documentary collection
C) cash in advance
D) sales on open account
E) draft
Answer: C
financing.
88) Which of the following correctly states the role of banks in import/export
transactions involving a letter of credit (L/C)?
A) The importer's bank is the advising and/or confirming bank; the exporter's bank is the issuing
bank.
B) The exporter's bank is the advising and/or confirming bank; the importer's bank is the issuing
bank.
C) The exporter's bank is the advising, confirming, and issuing bank.
D) The importer's bank is the advising, confirming, and issuing bank.
Answer: B
financing.
89) In which of the following forms of export financing does a bank assume a
financial obligation?
A) with an L/C but not a documentary collection
B) with a documentary collection but not an L/C
C) neither an L/C nor a documentary collection requires a bank to assume financial obligation
D) with either an L/C or a collection letter
E) with both an L/C and a documentary collection
Answer: B
financing.
90) Which of the following incorrectly states the role of banks in import/export transactions
involving a letter of credit (L/C)?
A) The exporter's bank is the advising and/or confirming bank.
B) The importer's bank is the advising and/or confirming bank.
C) The importer's bank is the advising, confirming, and issuing bank.
D) The exporter's bank is the advising, confirming, and issuing bank.
E) The importer's bank is neither advising nor confirming
bank. Answer: B
financing.
91) Which of the following arranges export financing payment methods in descending
order starting with the most secure/reliable and ending with the least secure/reliable?
A) sales on open account→cash in advance→documentary credit (L/C)→documentary
collection (draft)
B) documentary credit (L/C)→sales on open account→documentary collection (draft)→cash in
advance
C) documentary collection (draft)→documentary credit (L/C)→cash in advance→sales on
open account
D) cash in advance→documentary credit (L/C)→documentary collection (draft)→sales on
open account
Answer: D
financing.
92) Which of the following financing methods would be used by an exporter that enjoys
good relations with a buyer in a well-established market?
A) letter of credit
B) cash in advance
C) sales on open account
D) barter
E) arrival draft
Answer: C
financing.
93) Which of the following methods of financing would be used if the exporting and
importing parties had a strong, long-standing relationship?
A) documentary credit (letter of credit)
B) documentary collection
C) cash in advance
D) sales on open account
E) bank draft
Answer: D
Difficulty: 1: Easy
financing.
94) In the post-September 11 business environment in the United States, imports have
come under increased security. One of the initiatives taken in the interest of national
security is:
A) NAFTA.
B) C-TPAT.
C) WTO.
D) NTB.
E) FSC.
Answer: B
financing.
95) In an export/import transaction requiring a letter of credit (L/C), the exporter's (seller's)
bank can be known as the "advising" bank, the "confirming" bank, or both.
Answer: TRUE
financing.
96) The Customs Trade Partnership Against Terrorism (C-TPAT) recognizes that U.S. Customs
and Border Protection (CBP) is responsible for screening import cargo transactions.
Answer: TRUE
financing.
97) Duty drawback refers to refunds of duties paid on imports that are processed or
incorporated into other goods and then re-exported.
Answer: TRUE
financing.
98) The organizational decision to purchase production inputs, components, or finished
goods from domestic or foreign producers is known as the decision.
A) import/export
B) NTB
C) preferential
D) sourcing
E) security
Answer: D
Chapter LO: 8.9: Identify the factors that global marketers consider when making sourcing
decisions.
99) Which of the following refers to a system of farm subsidies in Europe?

A) CVD
B) FSC
C) CAP
D) HTS
E) NTR
Answer: C
decisions.
100) is an independent marketing intermediary that acts as the export department for
two or more manufacturers whose product lines do not compete with each other.
A) Export commission
B) Manufacturer's export agent
C) Cooperative exporter
D) Freight forwarders
E) Export Management Company
Answer: E
decisions.
101) Which of the following establishes classification numbers that must be used by importers
and exporters?
A) NTR
B) CVD
C) FSC
D) NTB
E) HTS
Answer: E
decisions.
102) Governmental actions that discourage imports and block markets include all of the
following except:
A) tariffs.
B) free trade zones
C) subsidies.
D) tax incentives.
E) duties.
Answer: B
decisions.
103) Restrictive administrative and technical regulations can create barriers to trade which may
take all of the following forms except:
A) antidumping regulations.
B) product size regulations.
C) safety and health regulations.
D) common agricultural policies.
E) safety and pollution regulations.
Answer: D
decisions.
104) In an effort to attract assembly operations, Brazil allows certain product components to
be imported at reduced tariff rates. This is an example of:
A) offsets.
B) preferential tariffs.
C) the effect of the Customs Valuation Code.
D) an EMC.
E) discriminatory procurement.
Answer: B
decisions.
105) The chief executives of Swiss Swatch Group and Japanese Canon would like to:
A) outsource all of the manufacturing units overseas in order to save money.
B) outsource a majority of the manufacturing functions overseas.
C) retain a majority, if not all, of the manufacturing in their home country.
D) establish "call centers" in developing countries in order to save labor costs.
E) outsource a full line of new products only.
Answer: C
decisions.
106) If the dollar, the yen, or the euro becomes seriously overvalued, a company with
a production capacity in other locations can achieve competitive advantage by:
A) buying different currencies before major fluctuations take place.
B) conducting transactions in different currencies of the world.
C) shifting production among different sites.
D) cutting down production and waiting until the currency rate is reasonable.
E) reducing production and labor force simultaneously.
Answer: C
decisions.
107) A number of explanations have been offered for the low level of U.S. exports relative to
other countries. All of the following can be considered as reasons for low level of exports
except:
A) limited ambition by many American business owners.
B) lack of knowledge of market opportunities abroad.
C) perceived lack of necessary resources.
D) marketing to home-country users is easier than exporting.
E) a strong U.S. dollar translates into less affordable prices in export markets.
Answer: E
decisions.
108) Officially, the EU tariffs on Chinese and Vietnamese shoe imports are known as:
A) countervailing duties.
B) antidumping duties.
C) specific duties.
D) ad valorem duties.
E) temporary surcharges.
Answer: B
Difficulty: 1: Easy
decisions.
109) The furniture industry has become one of the fastest-growing sectors of China's economy.
Furniture imports are flooding into the United States from China. This can be attributed to:
A) the quality of furniture is better than that made in Europe.
B) American tastes in décor have changed.
C) China's low labor rates translate into reasonable prices for consumers.
D) China can survive tough competition.
E) replacement parts are readily available from China.
Answer: C
decisions.
110) Outsourcing means shifting undesirable jobs or work assignments to another company to
cut costs. When the outsourced work moves to another country, the terms "global outsourcing"
or "offshoring" are used.
Answer: FALSE
decisions.
111) Volkswagen's business environment includes a significant wage differential
between Mexico and Germany.
Answer: TRUE
decisions.
112) In general, the greater the distance between the product source and the target market,
the greater the time delay for delivery and the lower the transportation cost.
Answer: FALSE
decisions.
113) For every one yen increase relative to the American dollar, Canon's operating
income declines by 6 billion yen.
Answer: TRUE
decisions.
114) Recently "Call Centers" have mushroomed in countries like India, China, and Philippines
due to the outsourcing by many Western countries. What are the benefits and disadvantages to
this method to the company that is outsourcing? What factors should be taken into account
when deciding to outsource?
Answer: Outsourcing refers to shifting production jobs or work assignments to another
company in order to cut costs. When the outsourced work moves to another country it becomes
"global outsourcing" or "offshoring." Due to intense competition in the marketplace, more and
more companies are under pressure to lower costs. One way to do this is to locate manufacturing
or consumer relation activities in China, India, Philippines, or other low-wage countries. In
theory, this situation bestows great flexibility on companies and in reality, the consumer is
unaware of the country where a product is manufactured or service is delivered. However, in the
case of call centers, consumers get in direct contact with the service provider or its representative.
Call centers also perform outbound services such as telemarketing. A variety of tasks such as
airline reservation, completing tax returns, reading medical charts, and drawing up
manufacturing blueprints are done by persons who do the job at a fraction of the cost compared
to what it will cost in the home country. The decision to use outsourcing requires careful analysis
since saving cost may not be the only factor for success of many products or services. This
requires careful consideration of management's vision, costs and conditions, customer needs,
logistics, country infrastructure, political factors, and foreign exchange rates. In formulating a
sourcing strategy, company managers and executives should also recognize the declining
importance of direct manufacturing labor as a percentage of total product cost. For example,
Compaq found that the human labor portion in manufacturing a PC is only about 15 minutes.
Thus, the cost involved in saving human labor is not as high as one would imagine and
outsourcing may not be the best choice for all products or services. Also, the company image and
customer loyalty can be adversely affected if outsourced services are not quality conscious.
decisions.

Chapter 9 Global Market Entry Strategies: Licensing, Investment, and Strategic
Alliances
1) For Starbucks and other companies whose business models include a service component, it is
not recommended that they use one of the following methods for going global.
A) joint ventures
B) licensing
C) 100-percent ownership
D) exporting
E) franchising
Answer: D
Chapter LO: 9.1: Explain the advantages and disadvantages of using licensing as
a market-entry strategy.
1
2) For Walt Disney Company, the best mode for going global is by:
A) joint ventures.
B) licensing.
C) 100-percent ownership.
D) exporting.
E) franchising.
Answer: B
3) One of the advantages of licensing is:

A) licensees have limited control.
B) licensees have considerable autonomy.
C) license agreements have short life.
D) licensees can develop similar products.
E) licensees have considerable leverage.
Answer: B

Chapter 10 Brand and Product Decisions in Global Marketing
1) Generally speaking, which of the following statements is true concerning product attributes?
A) Tangible product attributes are more important than intangible ones.
B) Intangible product attributes are more important than tangible ones.
C) Both tangible and intangible product attributes are important.
D) Neither tangible nor intangible product attributes are important.
E) A product has more attributes than tangible and intangible
ones. Answer: C
Chapter LO: 10.1: Review the basic product concepts that underlie a successful global
marketing product strategy.
2) Many American car buyers perceive Korean cars as:

A) durable.
B) cheap.
C) reliable.
D) of high quality.
E) good investment.
Answer: B
2
3) An express warranty is a written guarantee that assures the buyer that he or she:
A) is getting what he or she desired.
B) will be able to get express response if any defects are found.
C) is getting what he or she has paid for.
D) will be able to contact the manufacturer whenever needed.
E) has limited time for filling out information required by the
manufacturer. Answer: C
3
4) Packaging is an important consideration for products that are shipped to markets
worldwide. Which of the following statements related to packaging is not true?
A) Nestlé's worldwide network of pa ckaging teams provide improvement suggestions on
a quarterly basis.
B) The Japanese prefer plain soft colors on their packages.
C) The Aquafresh Ultimate tube was designed to stand vertically.
D) Coca-Cola had contour bottles in both glass and plastic versions in many countries.
E) Nestléasked suppliers to find a glue to make the clicking sound louder when a tube of
Smarties brand chocolate candies are unwrapped.
Answer: B
5) Coca-Cola's distinctive contour bottle, which is sold in many countries, illustrates the
point that packaging:
A) strategies can vary by country and region.
B) helps in storing large sizes in refrigerators.
C) strategies do not change by country and region.
D) appeals only to Asian consumers.
E) helps in brand identification.
Answer: A
6) The marketers of Corona beer achieved great success in the U.S. market by:
A) retaining the bottle design originally used in Mexico.
B) hiring Hispanic movie stars as endorsers.
C) distributing Corona in returnable bottles.
D) changing the brewing recipe to conform to American palates.
E) having the label in Spanish.
Answer: A
7) Regulators in different countries have proposed various regulations for product labeling. All
of the following statements pertaining to such regulations are true except:
A) mandatory health warnings on tobacco products are required in most countries.
B) the American Automobile Labeling Act clarifies the country of origin as well as the
final assembly point.
C) in 2008, the United States enacted a country of origin labeling (COOL) law.
D) the use of terms "light" and "natural" are allowed on labels only in the United States.
E) McDonald's is posting nutrition information on all food packaging and wrappers in
selected markets.
Answer: D
8) Global marketers must understand the importance of visual aesthetics embodied in the color or
shape of a product, label, or package. Which of the following statements is not true regarding the
use of color in selected countries?
A) The yellow color on Caterpillar's earthmoving equipment is acceptable worldwide.
B) Packaging aesthetics are particularly important to the Japanese.
C) The color white is associated with death and bad luck in some Asian countries.
D) The red Marlboro color had to be changed in some Asian countries.
E) The Chinese consider the color red to be lucky.
Answer: D
9) The American Automobile Labeling Act clarifies all of the following except:
A) country of origin.
B) final assembly point.
C) the percentages of the major sources of every car and truck.
D) information about car dealer.
E) aesthetic style.
Answer: D
10) Packaging aesthetics are particularly important to the consumer.
A) Indian
B) Japanese
C) French
D) German
E) American
Answer: B
Difficulty: 1: Easy
11) Google[x], the company's semi-secret research facility, is known as the Moonshot
Laboratory. That's because staff members are working on "moonshot" projects that
represent leading-edge technology leaps.
Answer: TRUE
12) Google's myriad product development initiatives illustrate the point that products and
brands are arguably the most crucial element of a company's marketing program.
Answer: TRUE
Difficulty: 1: Easy
13) Intangible product attributes, include the status associated with product ownership,
a manufacturer's service commitment, and a brand's overall reputation or mystique
Answer: TRUE
14) An express warranty is a written guarantee that assures the buyer that he or she is getting
what he or she has paid for or that provides recourse in case a product's performance falls
short of expectations.
Answer: TRUE
Difficulty: 1: Easy
15) Coca-Cola's latest packaging innovation is Fridge Pack, a long, slender carton that holds
the equivalent of 12 cans of soda. This pack fits into the refrigerator's lower shelf and is
convenient for use by global consumers.
Answer: FALSE
Difficulty: 1: Easy
16) Nestléasked suppliers to find a type of glue to make the clicking sound louder when
consumers snap open a tube of Smarties brand chocolate candies.
Answer: TRUE
Difficulty: 1: Easy
17) In 2008, the United States enacted a country-of-origin labeling (COOL) law. The law
requires supermarkets and other food retailers to display information that identifies the country
that meat, poultry, and certain other food products come from.
Answer: TRUE
18) The term consumer packaged goods applies to a specific variety of products whose
packaging is designed to protect or contain the product during shipping, at retail locations, and
at the point of use or consumption.
Answer: FALSE
19) A product is a good, service, or idea with both tangible and intangible attributes that
collectively create value for a buyer or user.
Answer: TRUE
Difficulty: 1: Easy
20) Coca-Cola's contour bottle version helps consumers seek out the "real thing" is intended to
differentiate Coke from other soft drinks.
Answer: TRUE
21) People have local tastes based on their unique cultures and traditions–a good candy bar in
Brazil is not the same as a good candy bar in China.
Answer: TRUE
22) U.S. executives working on the importance of aesthetics learnt that in Japan "a book is
judged by its content."
Answer: FALSE
23) Why are packaging aesthetics an important consideration in global product marketing?
Answer: Global marketers must understand the importance of visual aesthetics embodied in the
color or shape of a product, label, or package. Also, aesthetic styles, such as the degree of
complexity found on a label, are perceived differently in different parts of the world. For
example, it is mentioned that German wines would be more appealing in the export market if the
labels were simplified. Aesthetic elements that are deemed appropriate, attractive, and appealing
in one's home country may not be liked or may be perceived differently in other countries.
Moreover, there are certain colors and shapes which are culturally liked or disliked in different
countries. In some cases, colors that are accepted worldwide are preferable. For example, the
yellow color of Caterpillar's corporation or the red color of Marlboro is widely accepted. In
China, red color is preferred, and white is considered as an unlucky color. Packaging aesthetics
are particularly important to the Japanese. The way a package is wrapped and presented is very
important for Japanese consumers.
24) As outlined by branding expert Kevin Keller, the benefits of strong brand equity include
all of the following except:
A) greater loyalty.
B) more vulnerability to marketing actions.
C) less vulnerability to marketing crises.
D) more inelastic consumer response to price increases.
E) more elastic consumer response to price decreases.
Answer: B
Chapter LO: 10.2: Compare and contrast local products and brands, international products
and brands, and global products and brands.
25) represents the cumulative added value of a company's investment in the marketing
of a brand over time.
A) A brand extension
B) Co-branding
C) Brand image
D) Brand equity
E) Brand loyalty
Answer: D
26) can also be thought of as an asset representing the value created by the
relationship between the brand and its customers over time.
A) Brand extensions
B) Co-branding
C) Brand image
D) Brand equity
E) Brand loyalty
Answer: D
27) Which of the following statements is not an example of local products or brands?
A) Coca-Cola developed several branded drink products for Japan.
B) Coca-Cola markets Kinely brand bottled water in India.
C) BMW uses "the ultimate driving machine" slogan in India.
D) Diageo PLC markets Gordon's Edge, a gin-based ready-to-drink beverage in the United
Kingdom.
E) Coca-Cola developed a noncarbonated, ginseng-flavored beverage for
Japan. Answer: C
28) Example of a "brand symbol" includes all of the following except:

A) date of manufacture on Coca-Cola cans.
B) the wave that appears on red Coke cans and bottle labels.
C) non-word marks such as the Nike swoosh.
D) three-pronged Mercedes star.
E) McDonald's golden arches.
Answer: A
29) Around the world, various brands of personal computers are sold with Pentium processors.
This fact is often used as a selling point, with advertising that proclaims "Intel Inside." Which
branding concept does such advertising reflect?
A) brand equity
B) co-branding
C) brand image
D) brand extension
E) tiered branding
Answer: B
30) British entrepreneur Richard Branson has built a global business empire by:
A) relying on brand extension.
B) being the first to use smart cards in major markets.
C) developing local brands.
D) avoiding consumer businesses with established leaders.
E) restricting the "Virgin" name only to
airlines. Answer: A
31) A logo can be all of the following except:

A) Word Mark
B) Non-word Mark
C) Brand symbol
D) Brand equity
E) Trade Mark
Answer: D
32) Which of the following is not in the top five of the world's most valuable brands according to
2012 rankings?
A) Sony
B) Microsoft
C) Coca-Cola
D) GE
E) Nokia
Answer: E
Chapter LO: 10.2: Compare and contrast local products and brands, international products and
brands, and global products and brands.
33) Maslow's hierarchy is applicable to global marketing because it can help explain how:
A) basic human needs can drive the development of global products.
B) "self-actualization" is the highest-order need in Japan as well as Western nations.
C) status needs in different countries can only be fulfilled with localized products.
D) "luxury badging" is irrelevant to companies marketing in Asia.
E) Asians differ from Westerners in their basic physiological
needs. Answer: A
34) Alfred Zeien, former chairman of Gillette, once noted that his company's Parker Pen
unit does not have to develop a special model for Malaysia and Singapore because shoppers
worldwide seek the same things when buying a gift that will serve the recipient as a status
symbol. This insight relates to which level of Maslow's hierarchy of needs?
A) physiological
B) safety
C) social
D) esteem
E) self-actualization
Answer: D
35) Comparing the traditional formulation of Maslow's hierarchy with the results of
current research on the consumer needs and motivation in Asia, which of the following is
correct?
A) The lowest two levels of the hierarchy are the same in the traditional and Asian versions.
B) The lowest three levels of the hierarchy are the same in the traditional and Asian versions.
C) The lowest four levels of the hierarchy are the same in the traditional and Asian versions.
D) The five levels in the traditional formulation apply equally in the West and in Asia.
E) The highest levels of the hierarchy are the same in the traditional and Asian
versions. Answer: A
36) Which of the following is not one of the levels in the Asian version of Maslow's hierarchy?
A) physiological
B) safety
C) affiliation
D) admiration
E) self-actualization
Answer: E
37) The benefits of strong brands include all of the following except:
A) greater loyalty.
B) less vulnerability to marketing actions.
C) less inelastic consumer response to price increases.
D) more elastic consumer response to price decreases.
E) larger margins.
Answer: C
38) A global product meets the wants and needs of a global market, including the Triad
which includes the following countries:
A) Brazil, Russia, and China.
B) Japan, Western Europe, and the United States.
C) China, the United States, and Europe.
D) China, India, and Brazil.
E) Japan, China, and Western Europe.
Answer: B
Difficulty: 1: Easy
39) "Intel inside" campaign promoting both the Intel Corporation and its Pentium-brand
processors in conjunction with advertising for various brands of personal computers is
an example of:
A) brand equity.
B) brand symbol.
C) co-branding.
D) brand extension.
E) brand loyalty.
Answer: C
40) When a corporate name such as Sony is combined with a product brand name such as
Walkman, the brand category is referred to as:
A) brand equity
B) brand symbol
C) tiered brand
D) co-brand
E) brand loyalty
Answer: C
41) The Sony Walkman is an example of combination or tiered branding, whereby a

corporate name is combined with the name of the product.
Answer: TRUE
Difficulty: 1: Easy
42) The "Virgin" brand is a global brand with several brand extensions.
Answer: TRUE
Difficulty: 1: Easy
43) Apple's retail stores reinforce the brand's hip, cool image.
Answer: TRUE
Difficulty: 1: Easy
44) The equity value of global megabrands such as Coca-Cola and Marlboro runs in the tens of
billions of dollars
Answer: TRUE
Difficulty: 1: Easy
45) One of the benefits of strong brand equity is more elastic consumer response to price
increases.
Answer: FALSE
46) The "wave" that appears on red Coke cans and bottle labels is an example of a brand symbol.
Answer: TRUE
Difficulty: 1: Easy
47) Robust economic growth and rising incomes mean that consumers in China, India, and
other emerging markets can buy cell phones as status symbols.
Answer: TRUE
48) According to the top brand rankings, Microsoft is the world's most valuable
brand. Answer: FALSE
Difficulty: 1: Easy
49) The decision to offer a global product into a global brand is risky. For example, in the United
Kingdom, Snickers may get confused with Knickers, the British slang for a woman's
undergarment.
Answer: TRUE
50) In the U.S., the average Buick buyer is 61 years old, which stands in marked contrast to
Volvo, whose average buyer is only 50.
Answer: TRUE
51) What are brands, and what are their functions in global marketing? How do brands
develop their image, identity, and equity? Are global product and global brands the same?
Answer: A brand is a complex bundle of images and experiences in the consumer's mind.
Brands perform two important functions. First, they represent a promise by a particular company
about a particular product and secondly, brands enable customers to better organize their
shopping experiences by helping them seek out and find a particular product. Customers
integrate all their experiences of observing, using, or consuming a product with other aspects
that they obtain from a variety of published and verbal information. Perceptions can be based on
price, after-sale service, distribution, and a variety of other experiences. The sum of these
impressions becomes a brand image which is actually a mental image of both the product as well
as the company. Brand equity represents the total value that accrues to a product as a result of a
company's cumulative investments in the marketing of the brand. Companies develop logos,
distinctive packaging, and other communication devices to provide visual representations of
their brands. A local product or local brand is one that has achieved success in a single national
market. A global product meets the wants and needs of a global market. A true global product is
offered in all world regions. A global brand has the same name and, in some instances, a similar
image and positioning throughout the world. Thus, global products and global brands are
different.
52) Coca-Cola has developed several branded drink products for sale only in Japan, including a
noncarbonated ginseng-flavored beverage. Using this as an example, outline the differences
between a local brand and a global brand, combination branding, communication-branding, and
brand extensions.
Answer: A local product or local brand is one that has achieved success in a single national
market. A global company creates local products and brands in an effort to cater to the needs
and preferences of a particular country market. The Sony Walkman is an example of
combination or tiered branding whereby a corporate name (Sony) is combined with a product
name (Walkman). By using combination branding marketers can leverage a company's
reputation while developing a distinctive brand identity for the line of products. Co-branding is a
variation of combination branding in which two or more different company or product brands
are featured prominently on product packaging or advertising. A good example would be the
"Intel Inside" campaign promoting both the Intel Corporation and its Pentium-brand processors
in conjunction with advertising for various brands of personal computers. Global companies can
also leverage strong brands by creating brand extensions. Brand names are used as an umbrella
when entering new businesses or developing new product lines that represent new categories to
the company. For example, the Virgin brand has been attached to a wide range of businesses and
products such as airline, retail stores, movie theaters, financial services, and soft drinks.
53) Describe the guidelines that can assist marketing managers in their efforts to establish global
brand leadership.
Answer: The following six guidelines are mentioned as helpful for marketing managers in their
efforts to establish global brand leadership: (1) creating a compelling value proposition for
consumers in every market entered, beginning with the home-country market; (2) before going
international, thinking about all elements related to brand such as brand identity, names, marks,
symbols and labels which have potential for globalization; (3) developing a company-wide
communication system to share and leverage knowledge and information about marketing
programs and customers in different countries; (4) developing a consistent planning process
across markets and products; (5) assigning specific responsibility for managing branding issues
to ensure that local brand managers accept global best practices; and (6) executing
brand-building strategies that leverage global strengths and respond to relevant local
differences. Difficulty: 2: Moderate
54) Marketers in Gillette's Parker Pen subsidiary focused on upscale shoppers in Malaysia
and Singapore. This is an example which coincides with the Maslow's hierarchy related to
A) self-esteem
B) physiological needs
C) security
D) self actualization
E) social needs
Answer: C
Chapter LO: 10.3: Explain how Maslow’s needs hierarchy helps global marketers understand
the benefits sought by buyers in different parts of the world.
55) Marketers in Gillette's Parker Pen subsidiary are confident that consumers in Malaysia and
Singapore shopping for an upscale gift will buy the same Parker Pen as Americans shopping
at Neiman Marcus.
Answer: TRUE
56) Some consumers flaunt their wealth by buying expensive products and brands that
others will notice. Such behavior is referred to as "luxury badging."
Answer: TRUE
57) In countries like India and Vietnam, and other emerging markets, amenities such as
refrigerators, flush toilets, and cell phones are considered status symbols.
Answer: TRUE
58) In Hellmut Schutte's modified hierarchy to explain the needs and wants of Asian
consumers, the last three levels are affiliation, admiration, and self actualization.
Answer: FALSE
59) Maslow's hierarchy of needs provide a useful framework for understanding how and why
local products and brands can be extended beyond home-country borders. How can Maslow's
needs hierarchy be used in global marketing?
Answer: The essence of marketing is finding consumer needs and fulfilling them. As an
individual fulfills needs at each level of the hierarchy, he or she progresses to the higher level. At
the most basic level of human existence, physiological and safety needs must be met. Basic
needs include that of food, clothing, shelter and other basic survival needs. However, one has to
understand that the basic human need to consume food and drink is not the same as wanting or
preferring a Big Mac or a Coke. After Coca-Cola and McDonald's were established at home,
they entered the international arena since they are fulfilling the basic needs. These needs are
deeply ingrained in the culture, and so they are different in different countries. Responding to
these differences has meant creating local products and brands that suit the tastes and preferences
of different countries. Although the first two levels in Maslow's hierarchy are similar all over the
world, the mid-level needs which include self-respect and self-esteem are different for different
consumers in other countries. Products can therefore fulfill different needs in different countries.
For example, refrigeration is not very common in India since fresh produce is purchased on a
daily basis, and most of the products are not frozen. Also, due to the intermittent supply of
electric current, it is not a very popular appliance. However, it is a status symbol. Similarly, a
flush toilet is considered as a status symbol. Thus, the upper level of hierarchy does not fit in a
similar fashion between Western cultures and other cultures.
60) Which of the following could hinder the success of products labeled "Made in Bangladesh"
or "Made in Thailand" in export markets?
A) negative country-of-origin bias
B) no possible quality/price positioning
C) low acceptance of private brands
D) lack of promotion in global markets
E) high product saturation levels in global markets
Answer: A
Chapter LO: 10.4: Outline the importance of "country of origin" as a brand element.
61) Perceptions and attitudes about a product's origins can be positive or negative. On
the positive side, "German" is synonymous with style.
Answer: FALSE
62) Many consumers consider products with labels such as "Made in Bangladesh" and "Made in
Brazil" to be of inferior quality and value.
Answer: TRUE
63) American Apparel is building a global brand on the positioning "Made in Downtown LA."
Answer: TRUE
Difficulty: 1: Easy
64) China and India take great pride in their manufacturing capabilities but, generally speaking,
consumer perception lags behind the reality.
Answer: TRUE
Difficulty: 1: Easy
65) Scotland's top export category is information

technology. Answer: TRUE
66) Generally speaking, which of the following product categories represents the best
potential for extension into international markets without adaptation?
A) companion products
B) food products
C) industrial products
D) intangible products
E) non-alcoholic drinks
Answer: C
Chapter LO: 10.5: List the five strategic alternatives that marketers can utilize during
the global
product planning process.
67) Dry soup mixes that have long been popular in Europe are marketed as sauces or dips in the
United States. This is an example of the strategy.
A) product-communications extension
B) product extension-communications adaptation
C) product adaptation-communications extension
D) dual adaptation
E) product invention
Answer: B
the global
68) Targeting the 300 million farmers in India who still use plows harnessed to oxen, John Deere
engineers created a line of relatively inexpensive, no-frills tractors. The Deere team then realized
that the same equipment could be marketed to hobby farmers and acreage owners in the United
States, a segment that they had previously overlooked. This is an example of strategy.
D) dual adaptation
Answer: B
the global
69) Prior to 2004, Nokia launched different cell phone products in different countries at different
times. Nokia also used different advertising images and messages in different countries. Which
approach to the world marketplace was Nokia using?
D) product-communication adaptation
Answer: D
the global
70) Before Ben & Jerry's launched their ice cream in the United Kingdom, the company
conducted extensive research to determine whether the package design was appropriate. The
research indicated that British consumers perceived the colors differently than U.S. consumers.
The package design was changed accordingly. This type of strategy can be defined as:
A) product-communications extension.
B) product extension-communications adaptation.
C) product adaptation-communications extension.
D) product-communication adaptation.
E) product invention.
Answer: B
the global
71) Campbell's has been marketing soup in Japan for more than 40 years. Early on, Japanese
consumers were not receptive to ads featuring the Campbell Kids and the "M'm M'm Good"
slogan. This compelled Campbell's to develop ads featuring a talking soup can known as "Mr.
Campbell." Campbell's also developed soup varieties for Japan with fish as the main protein
source and spices that reflect local preferences. As described here, which of the following
strategies has Campbell's used in Japan?
D) product-communication adaptation
Answer: D
Chapter LO: 10.5: List the five strategic alternatives that marketers can utilize during the
global
72) To promote its Centrino wireless chip, Intel launched a global ad campaign that
features different combinations of celebrities. These celebrities were chosen because they
are widely recognized in the key world markets. This type of strategy is referred to as:
A) product-communications extension.
B) product extension-communications adaptation.
C) product adaptation-communications extension.
D) product-communication adaptation.
E) product invention.
Answer: B
the global
73) Colgate's Total is a new toothpaste brand whose formulation, imagery, and consumer
appeal were designed from the beginning to translate across national boundaries. Which
strategy did Colgate use with Total?
D) dual adaptation
E) product innovation
Answer: E
the global
74) Hindustan Lever recently developed a hard candy flavored with natural fruit juice that it
sells profitably in India for the equivalent of 1 cent per piece. This is Hindustan Lever's first-
ever candy product. What strategy is evident here?
D) dual adaptation
Answer: E
global
75) In Chinese markets, Nike had a problem using the "Just Do It" attitude which was found
not to be appropriate. Finally, Nike decided to use Chinese athletes in their promotion. This
type of adaptation was needed due to:
A) the Chinese do not wear running shoes.
B) ingrained Chinese values which respect authority.
C) Chinese athletes use Nike shoes.
D) "Just do it" in Chinese has a negative connotation.
E) parents do not want their children to see such ads.
Answer: B
the global
76) Which of the following consumer products companies experienced a major product failure
in Europe due to inadequate test marketing?
A) Procter & Gamble
B) Colgate
C) Kao
D) Unilever
E) Seagram
Answer: D
Difficulty: 1: Easy
the global
77) A company that has developed a successful local product or brand cannot implement
an adaptation strategy.
Answer: FALSE
the global
78) The extension strategy where the product remains virtually unchanged but extending it in
markets outside the home country is known as "adaptation strategy."
Answer: FALSE
the global
79) Due to the European Commission's regulation, McDonald's can only give away soft
plastic toys with its Happy Meals in Europe.
Answer: FALSE
global
80) Microsoft's Windows 7 operating system was launched in 2009 with the user-centric global
advertising campaign keyed to the theme "I'm a PC, and Windows 7 was my idea." This is an
example of the dual-extension strategy.
Answer: TRUE
global
81) The appeal of the product extension-communication adaption strategy is its relatively low
cost of implementation.
Answer: TRUE
global
82) Before executives at Ben & Jerry's Homemade launched their ice cream in the United
Kingdom, the company conducted extensive research to determine whether the package design
effectively communicated the brand's "super premium" position. This is an example of
dual-extension strategy.
Answer: FALSE
global
83) When Kraft Foods launched Oreo brand cookies in China in 1996, they found that Oreo was
too sweet for the Chinese palate, and the price was too low. Oreo reformulated a less-sweet
chocolate-covered wafer and increased its price. This strategy is referred to as product extension
approach.
Answer: FALSE
global
84) If a label on a product states "Made in Thailand," and a similar product has a label "Made
in Germany," why do consumers consider the latter to be better than the former? What
difference does a label make in consumer perceptions?
Answer: In global marketing, consumer perceptions play a very important role. Such
perceptions contribute to what is referred to as the "country-of-origin" effect. They become part
of a brand's image and contribute to its brand equity. This is particularly true for product
categories that are most commonly consumed such as automobiles, electronics, fashion, recorded
music, food, and other products. The country of origin effect can be positive or negative. Of
course, positive ones add to the brand's image and contribute to its brand equity. For example,
Swiss watches, French wines, or Japanese cars are well known. Perceptions are hard to change,
and it takes time for perceptions to set. The manufacturing reputation of a particular country can
change over time. Korea's image has improved greatly in recent years. It is expected that some
national brands developing from Asian countries will have an impact. Sometimes one brand can
lead in forming a country of origin affect. Nokia phones, for example, have made Finland
popular, and products coming from there will have the quality impression that has been formed
by Nokia. Also, recently the "Made in Mexico" image has become popular. For some product
categories, foreign products have a substantial advantage for just being foreign. Global
marketers should utilize the opportunity to bank on the special qualities of the products which
are well known for their country of origin. If a country's manufacturers produce high-quality
products that are nonetheless perceived to be of low quality then one has to disguise the foreign
origin of the products. In any case, marketers should consider the impact that country of origin
has and act accordingly.
the global
85) What are the differences between "product-communication extension" and "product
extension-communication adaptation" as strategies?
Answer: Many companies employ product-communication extension as a strategy for pursuing
opportunities in the global market. It can be the easiest and most profitable strategy if all the
given conditions are favorable. Companies pursuing this strategy sell the same product with
virtually no adaptation, using the same advertising and promotions used domestically. For this
strategy to be successful, the message must be understandable across selected cultures. This issue
can be especially important in developing country markets. This is a favored strategy for many
companies since it saves a lot of money, time and investment. On the other hand, there are some
products which introduced outside the home market do not do very well. This may be due to the
fact that consumers' perception about quality and value may be very different than domestically.
It may be that certain adaptations will result in fulfilling a different need and meeting the demand
of a different segment of populations. In such cases, extending the product while adapting the
marketing communications program may result in market success. This strategy is referred to as
the product extension-communication adaptation strategy. This is preferred because of the low
cost involved in its implementation. Ben & Jerry's changed the packaging design to meet the
preferences of consumers in the United Kingdom.
the global
86) Explain the differences between "product adaptation-communication extension" and

"product-communication adaptation" strategies.
Answer: In the product adaptation-communication extension strategy, the global product
planning is to extend, without change, the basic home-market communication strategy or brand
name while adapting the product to local use or preference conditions. The products perform the
same function around the globe under different market conditions. For example, a new Cadillac
model is built six inches shorter for Sweden and is available with an optional diesel engine. Thus,
the function is the same but there are minor adaptations to suit the preference of the local
consumers. On the other hand, product-communication adaptation strategy is a combination of
the adaptations needed for changes in the environmental conditions and consumer preferences.
For example, marketers of home appliances found that Italian women are not interested in labor
saving conveniences since most of their time at home goes to housekeeping chores. They would
rather prefer a product which will make the house shinier than one which will save a few hours.
Thus, these two different strategies vary based on the difference in conditions when compared to
the home country.
the global
87) Laws and regulations in different countries frequently lead to obligatory design. Giving
examples, show how this can have an impact in global marketing.
Answer: It is true that laws and regulations in different countries frequently lead to obligatory
product design adaptations. Corporations have to develop or modify products to meet the
requirement. This may be seen most clearly in Europe, where one impetus for the creation of
the single market was the desire to dismantle regulatory and legal barriers that prevented
pan-European sales of standardized products. These were particularly prevalent in the areas of
technical standards and health and safety standards. In the food industry, for example, there were
200 legal and regulatory barriers to cross-border trade within the EU in 10 food categories.
Among these were prohibitions or taxes on products with certain ingredients and different
packaging and labeling laws. As these barriers are dismantled, there will be less need to
adapt product designs, and many companies will be able to create standardized "Euro-
products." Difficulty:2: Moderate
the global
88) Products that belong to the category of "game changers" are considered as
innovations.
A) new product
B) line extensions
C) continuous
D) dynamically continuous
E) discontinuous
Answer: E
Chapter LO: 10.6: Explain the new-product continuum and compare and contrast the different
types of innovation.
89) Guidelines which can assist managers in their effort to establish global brand
leadership include all of the following except:
A) create a compelling value proposition for customers.
B) before taking brand overseas, select name, marks and symbols.
C) make a process template available to all managers.
D) assign specific responsibility for managing branding issues.
E) make a process template for international consumers.
Answer: E
90) The formulation, imagery, and consumer appeal of Colgate's Total brand toothpaste were
designed to translate across national boundaries. This new global brand represents which type
of product innovation?
A) discontinuous innovation
B) dynamically continuous innovation
C) continuous innovation
D) comparative innovation
E) dynamically discontinuous innovation
Answer: C
91) When introduced in the late 1970s, the VCR created new patterns of consumer behavior. For
example, assuming the user could learn to set the timer, he or she could tape programs to watch
at a later time. DVD, a playback only video system, was introduced in the late 1990s. DVD discs
contain full-length movies with digital sound in a format that resembles conventional music
compact discs. Which of the following most accurately describes the respective degree of
newness of these two global products?
A) The VCR is a discontinuous innovation; the DVD is a dynamically continuous innovation.
B) The VCR is a dynamically continuous innovation; the DVD is a discontinuous innovation.
C) The VCR and DVD are both dynamically continuous innovations.
D) The VCR and DVD are both discontinuous innovations.
E) The VCR and DVD are both continuous innovations.
Answer: A
92) The introduction of consumer VCRs in the late 1970s initiated a revolutionized in-home
electronic entertainment. For example, assuming the user could learn to set the timer, he or she
could tape programs to watch at a later time. The VCR's popularity also gave rise to an entirely
new retailing concept, the video rental store. What type of innovation did the consumer VCR
represent?
A) a continuous innovation
B) a dynamically continuous innovation
C) a discontinuous innovation
D) a comparative innovation
Answer: C
93) The Advanced Photo System (APS) created by Kodak and its partners combines traditional
chemical photo processing with digital technology. One benefit of the system is that shutterbugs
can choose three different print sizes. The APS would best be described as a:
A) continuous innovation.
B) dynamically continuous innovation.
C) discontinuous innovation.
D) platform-based innovation.
E) new and improved innovation.
Answer: B
94) After four years of product development, Procter & Gamble recently introduced a new,
improved disposable diaper. Pampers Rash Guard diapers are designed to prevent diaper rash
and represent the first time a company has made a medical claim for its diapers. What kind of
innovation do the new diapers represent?
A) platform-based innovation
C) discontinuous innovation
D) continuous innovation
Answer: D
95) Procter & Gamble recently introduced Pampers Rash Guard. Rash Guard does not represent
a new product per se; rather, the diapers are being marketed as an alternative to regular
Pampers. What type of innovation do Pampers Rash Guard diapers represent?
D) a platform-based innovation
Answer: A
96) Motorola's failed Iridium venture was a global satellite telephone network designed to allow
users to make or receive calls anywhere on the globe using handsets that are somewhat bigger
than typical cellular phones. What type of innovation did Iridium represent?
D) a platform-based innovation
Answer: B
97) By definition, a requires a large amount of learning on the part of users and
typically creates new markets and consumption patterns.
A) continuous innovation
C) discontinuous innovation
D) platform-based innovation
E) new and improved innovation
Answer: C
98) The challenges in bringing the Smart across the Atlantic include all of the following except:
A) the euro's strength relative to dollar.
B) DaimlerChrysler merger ended.
C) Smart was under the ownership of DaimlerChrysler.
D) Smart was under the ownership of Daimler AG.
E) distribution and promotion critical to a successful U.S.
launch. Answer: C
99) The corporate development team at Virgin evaluates more than a dozen proposals each day
from outside and within the company. When assessing new-product ideas, they look for all of
the following except:
A) synergy with existing Virgin products.
B) pricing and return on investment.
C) marketing opportunities.
D) if the idea "uses or abuses" the Virgin brand.
E) aesthetic attributes of competitors products.
Answer: E
100) In the summer of 2006, it was announced that the company's Smart car would be offered
for sale in the United States. Which global company was responsible for bringing the Smart car
to market?
A) Swatch
B) Volkswagen
C) Nissan
D) Ford
E) DaimlerChrysler
Answer: E
101) What is the significance of innovation in global marketing? Describe different categories of
innovation with examples.
Answer: Innovations for new products are important for any corporation to maintain a
competitive edge. A product's newness can be assessed in the context of those who buy and use
it. An existing product can be new to a market which was not exposed to it. The product may
also be an entirely new invention or innovation. When such products are successful, they create
new markets, new consumption patterns, and new ideas for further innovations. Innovations that
result in creating new markets and new consumption patterns that literally break with the past
are categorized as "discontinuous innovations." For example, the VCR's introduction was
revolutionary and changed the way people watched and recorded movies. Likewise, computers
have also brought a revolution in many ways. Another category of innovation that may be less
disruptive or change producing is categorized as dynamically continuous innovations. Products
in this category share certain features with earlier generations while incorporating new features
that often add value to produce substantial changes. For example, Mach3 shaving systems by
Gillette are an innovative development of existing products. Finally, the third category consists
of products that can be truly defined as "new and improved." This category of innovations is
referred to as continuous innovation. Continuous innovations cause minimal disruption of
existing consumption patterns and require the least amount of learning by consumers. Examples
of this category will include newer models of computers for those who are familiar with laptops
and personal computers. These often take the form of line extensions such as new sizes, flavors,
and low-fat versions.
102) Describe the factors that should be considered in developing new products for international
markets with particular emphasis on the consequences for not adequately testing new products.
Answer: Since conditions vary in different countries, it is very important to test new products
that are designed for international markets.
There are three primary activities that managers should undertake and carry out on a routine
basis. First, they should ensure that all relevant information sources are continuously tapped for
new-product ideas. This can come from external or internal sources. Secondly, they should
carefully screen all ideas to identify potential candidates for further investigation. Finally, they
should ensure that the organization commits adequate resources for the development of potential
ideas. Once there is enough evidence that the idea has good potential, it should be examined for
the following aspects: (a) the size of the market for the product at various prices; (b) the expected
competition; (c) market possibilities through existing structures; (d) changes to be made in order
to market the product; (e) estimates of potential demand; and (f) the compatibility of the idea
with the corporations goals and objectives. Once the answers to the above questions are
promising, new products should be tested.
One should realize that new-product introduction outside the home market is subjected to
interaction with human, mechanical, or chemical elements. Incompatibility can be expected from
unimaginable sources. Therefore, it is important to test a product under actual market conditions
before proceeding with full scale introduction. Failure to assess actual use conditions can lead to
big surprises.
1
4) Licensing as a market entry mode has several disadvantages and opportunity costs,
which does not include:
A) limited market control.
B) agreement may have short life.
C) leveraging and exploiting by licensee.
D) similar product or technology development by licensee.
E) adaptations by licensee to fit local tastes.
Answer: E
Chapter LO: 9.1: Explain the advantages and disadvantages of using licensing as a
market-entry strategy.
5) represents a market entry strategy whereby one company permits a foreign

company to make use of its patents, know-how, technology, company name, or other intangible
assets in return for a royalty payment.
A) A joint venture
B) One-hundred-percent ownership
C) Licensing
D) Exporting
E) A Global strategic alliance
Answer: C
6) provides technical specifications to a subcontractor or local manufacturer, who then

oversees production.
A) A joint venture
B) Contract manufacturing
C) Licensing
D) Exporting
E) A Global strategic alliance
Answer: B
7) In order to prevent a licensor-competitor from gaining unilateral benefit, licensing
agreements should provide for:
A) contract manufacturing.
B) franchising.
C) cross licensing.
D) strategic decision making.
E) adaptation for local tastes.
Answer: C
8) The advantages of "contract manufacturing" include all of the following except:

A) access to technical specifications by subcontractors.
B) access to technical specifications by local manufacturers.
C) a licensing firm can specialize in product marketing.
D) limited commitment of financial resources.
E) considerable commitment of management
resources. Answer: E
9) Pollo Campero, a chicken restaurant chain based in Central America, is using the
following method for expanding operations in the United States:
A) joint ventures.
B) licensing.
C) exporting.
D) franchising.
E) acquisition.
Answer: D
10) Would-be franchisors ask all of the following questions except one before expanding
overseas:
A) How tough is the local competition?
B) Does the government respect trademark and copyrights?
C) Can profits be easily repatriated?
D) Can products be easily counterfeited?
E) Is commercial space available?
Answer: D
11) The specialty retailing industry, as well as the fast-food industry, favors for global
growth.
A) licensing
B) investment
C) franchising
D) joint ventures
E) strategic alliances
Answer: C
12) The agreements that allow McDonald's franchisees around the globe to use
McDonald's trademarked name and menu items represent, in essence, which form of
market entry?
A) joint ventures
B) franchising
C) 100% ownership
D) exporting
E) acquisition
Answer: B
13) McDonald's success in franchising in global markets can be attributed to several factors
which do not include:
A) a well known global brand name.
B) a business system that can be easily replicated.
C) local market knowledge.
D) cross licensing.
E) granting franchisees leeway to tailor menu offerings to suit local tastes.
Answer: D
14) Starbucks founder and Chairman Howard Schultz and his management team have used a
variety of market-entry approaches, direct ownership, licensing, and franchising–to create an
empire of more than 21,000 coffee cafés in 65 countries.
Answer: TRUE
Difficulty: 1: Easy
15) Licensing is a contractual agreement whereby one company (the licensor) makes a legally
protected asset available to another company (the licensee) in exchange for royalties, license fees,
or some other form of compensation.
Answer: TRUE
Difficulty: 1: Easy
16) Organizations as diverse as Disney, Caterpillar, and the National Basketball Association
make extensive use of licensing in overseas markets.
Answer: TRUE
Difficulty: 1: Easy
17) A licensed asset may be a brand name, company name, patent, trade secret, or
product formulation
Answer: TRUE
Difficulty: 1: Easy
18) One of the advantages of a license arrangement is that it can create export
market opportunities and open the door to a high-risk manufacturing relationship.
Answer: FALSE
Difficulty: 1: Easy
19) Generally speaking, franchising is a market-entry strategy that is typically executed

with more localization than is licensing.
Answer: FALSE
Difficulty: 1: Easy
20) Franchising is a variation of licensing strategy in which there is a contract between the parent
company franchiser and a franchisee that allows the franchisee to operate a business developed
by the franchiser in return for all rights for operations.
Answer: FALSE
21) According to the international Licensing Industry Merchandisers Association (LIMA),

the United States and Canada account for about 90 percent of licensed goods sales.
Answer: FALSE
22) Licensing agreements offer limited market control since the licensee typically does not
become involved in the licensor's marketing program.
Answer: FALSE
23) In China, regulations require foreign franchisers to directly own two or more stores for
a minimum of one year before franchising.
Answer: TRUE
24) McDonald's has learned the wisdom of leveraging local market knowledge by granting
franchisees considerable leeway to tailor restaurant interior designs and menu offerings to suit
country-specific preferences and taste.
Answer: TRUE
25) Franchising in a global market is actually a market-entry strategy that is typically executed
with less localization than is licensing.
Answer: TRUE
26) Walt Disney Company has successfully adapted licensing as a market entry mode in
different countries. What are the advantages of using licensing as entry mode?
Answer: Walt Disney Company generates nearly $15 billion in annual revenues from licensed
merchandise, thanks to the popularity of their theme parks, movies, and television shows, as well
as Mickey Mouse, Winnie the Pooh, and other popular characters which have gained familiarity
all over the world. Licensing is a contractual arrangement whereby one company (the licensor)
makes a legally protected asset available to another company (the licensee) in exchange for
royalties, license fees, or some other form of compensation. There are two key advantages
associated with licensing as a market entry mode. First of all, because the licensee is typically a
local business that will produce and market the goods or services on a local or regional basis,
companies can circumvent tariffs, quotas, or similar export barriers. Secondly, licensees are
granted considerable autonomy by the licensor to freely adapt the licensed goods to an extent to
suit the local tastes and preferences. Disney licenses trademarked cartoon characters, names, and
logos to producers of clothing, toys, and watches for sale throughout the world. This allows
Disney to create synergies based on its core theme park, motion pictures, and television
businesses. Its licensees have considerable leeway to adapt colors, materials, or other design
elements that fit with the local tastes of a particular country or region.
27) Nike provides technical specifications to a subcontractor or local manufacturer for its
products. What is this arrangement called and what are its major benefits and drawbacks?
Answer: This type of arrangement is referred to as "contract manufacturing." Nike, for
example, provides technical specifications of products to be manufactured to the subcontractor,
who then oversees production. The licensing firm can specialize in product design and marketing,
while transferring responsibility for ownership of manufacturing facilities to contractors and
subcontractors. Other advantages include limited commitment of financial and managerial
resources and quick entry into target countries. This is especially helpful when the target market
is too small to justify full- scale investment. Also, there is the possible advantage of securing
labor and resources at less cost than in the licensor's home country or manufacturing plant. One
disadvantage would be that the licensed companies may become subject to public scrutiny and
criticism for several reasons. Nike has to face this problem if workers in the contracted
companies are underpaid. Inhumane working conditions and hiring underage workers have also
been points of criticism by many governmental and private organizations. Violations of
sustainable business practices have also come under scrutiny.
28) McDonald's and other fast food restaurants have benefitted tremendously by using
franchising as a mode of entry into different countries. What are the benefits of franchising
and how does it differ from other modes of entry?
Answer: Franchising involves a contract between a parent company (franchiser) and a
franchisee that allows a franchisee to operate a business developed by the franchiser in return for
a fee and adherence to franchise-wide policies and practices. This definition is very similar to
that of licensing since franchising itself is another variation of licensing strategy. McDonald's is
a good example of the success that can be achieved through franchising. It has great appeal to
local entrepreneurs who are very anxious to learn and apply franchising, which has been found to
be very successful in the United States. The specialty retailing industry favors franchising as a
market entry mode. Many of the famous American restaurant chains have used franchising to
enter and to develop in other countries. McDonald's has a well-known global brand name and a
business system that can be easily replicated in multiple country markets. It also provides its
franchisees considerable leeway to tailor restaurant interior designs and menu offerings to suit
country-specific preferences and tastes. Franchising is a market entry strategy that is typically
executed with less localization than licensing.
29) Honda has invested $550 million in building an assembly plant in Greensburg,
Indiana; IKEA spent nearly $2 billion to open stores in Russia; and South Korea's LG
Electronics purchased a 58% stake in Zenith Electronics. All of these are examples of:
A) acquisition.
B) licensing.
C) franchising.
D) FDI.
E) exporting.
Answer: D
Chapter LO: 9.2: Compare and contrast the different forms that a company's
foreign investments can take.
30) Strictly speaking, a (n) is an entry strategy for a single target country in which the
partners share ownership of a newly created business entity.
A) acquisition
B) licensing
C) franchising
D) joint venture
E) exporting
Answer: D
31) Disadvantages of joint venturing can include all of the following except:
A) joint venture partners must share rewards as well as risks.
B) joint ventures allow partners to achieve synergy.
C) joint ventures can have the potential for conflict between partners.
D) a dynamic joint venture partner can evolve into a strong competitor.
E) a company incurs very significant costs by joint venturing.
Answer: B
32) The strategy to use joint ventures has several advantages which do not include:
A) risk sharing.
B) reduced financial risk.
C) reward sharing.
D) achieve synergy.
E) the only way to enter a country or region.
Answer: C
Chapter LO: 9.2: Compare and contrast the different forms that a company's foreign
investments can take.
33) Which of the following does not fit into the sequence of experiences Anheuser-Busch had in
Japan?
A) Anheuser-Busch first entered Japan by means of a licensing agreement with Suntory, the
smallest brewery in Japan.
B) Anheuser-Busch created a joint venture with Kirin Brewery, the market leader.
C) Anheuser-Busch dissolved the joint venture with Kirin Brewery.
D) Anheuser-Busch entered into a joint venture with Kirin Brewery.
E) Anheuser-Busch reverted to a licensing agreement with Kirin
Brewery. Answer: D
34) As a general rule, the Chinese government allows foreign companies to participate in
its market only if those companies agree to establish operations with local Chinese
enterprises. Which market entry mode would be the appropriate choice under these
circumstances?
A) acquisition
B) licensing
C) joint venture
D) exporting
E) franchising
Answer: C
35) The president of a Mexican company recently remarked, "Business in Mexico is done on a
consensus basis, very genteel and sometimes slow by U.S. standards." A few months later, the
Mexican company and its U.S. joint venture partner parted company. Judging by the president's
remark, one important reason for the "divorce" was:
A) failure of one partner to live up to the terms of the contract.
B) cultural differences.
C) the cancellation of NAFTA.
D) the U.S. government's insistence on quick negotiations.
E) the language barrier.
Answer: B
36) Toyota learned many things from its partnership with GM, however American managers
involved in the venture complained that:
A) Toyota learned many things about the U.S. supply system.
B) Toyota learned about the U.S. transport system.
C) Toyota learned about managing American workers.
D) Toyota did not apply manufacturing expertise at GM plant.
E) Toyota applied its expertise at its Camry plant.
Answer: D
37) GM executives are looking for a joint venture with AvtoVAZ, the largest carmaker in:
A) Germany.
B) Lithuania.
C) Russia.
D) Kazakhstan.
E) Turkey.
Answer: C
38) In a joint venture with Russian manufacturer AvtoVAZ, GM executives were planning to
have a stripped-down reengineered car based on its Opel model. However, the market
research revealed that a "Made-in-Russia" car would only be acceptable if:
A) it has a German name.
B) it sported a very low sticker price.
C) it has an American name.
D) it has a very high sticker price.
E) it has a Russian name.
Answer: B
39) The Russian market for imported premium vehicles is exploding as the number of
households that can afford luxury products exhibit rapid growth. The luxury cars include all of
A) Porsche.
B) Lexus.
C) BMW.
D) Rolls-Royce.
E) Infiniti.
Answer: B
40) Ford Motor Company (United States) has a 50-50 joint venture to build Ford Fiestas with:
A) Toyota (Japan).
B) Shanghai Automotive Industry (China).
C) BMW (Germany).
D) Mahindra & Mahindra (India).
E) Mazda (Japan).
Answer: D
41) Which automaker currently has a joint venture with Hindustan Motors (India)?
A) Volkswagen
B) Ford
C) GM
D) Renault
E) Mazda
Answer: C
42) Ford and Mazda have market entry and expansion in a relationship known as:
A) joint venture.
B) licensorship.
C) franchising.
D) contract manufacturing.
Answer: A
43) Which of the following currently owns a 70 percent stake in Skoda, the Czech automaker?
A) GM
B) Volkswagen
C) Ford
D) DaimlerChrysler
E) Renault
Answer: B
Difficulty: 1: Easy
44) Which automaker owns an equity stake in Japan's Nissan Motor?

A) GM
B) Volkswagen
C) Ford
D) DaimlerChrysler
E) Renault
Answer: E
Difficulty: 1: Easy
45) Tata Motors (India) acquired the following auto company:
A) Volkswagen AG (Germany).
B) Volvo (Sweden).
C) Jaguar (UK).
D) Toyota (Japan).
E) Hyundai (South Korea).
Answer: C
Difficulty: 1: Easy
46) Avon Products uses to enter developing markets.

A) franchising and licensing
B) joint venture and licensing
C) acquisition and franchising
D) licensing and franchising
E) acquisition and joint ventures
Answer: E
47) Foreign direct investment figures reflect investment flows out of the home country
as companies invest in or acquire plants, equipment, or other assets.
Answer: TRUE
48) Foreign investments may take the form of minority or majority shares in joint ventures,
minority or majority equity stake in another company, or outright acquisition.
Answer: TRUE
49) By pursuing a joint venture entry strategy, a company can limit its financial risk as well as
its exposure to political uncertainty.
Answer: FALSE
50) A joint venture with a local partner represents a more extensive form of strategy that
is similar to exporting and licensing.
Answer: FALSE
51) A joint venture with a local partner represents a more extensive form of strategy that
is similar to exporting and licensing.
Answer: FALSE
52) Anheuser-Busch created a joint venture with Kirin Brewery, the market leader.
Anheuser-Busch's 90 percent stake in the venture entitled it to market and distribute beer
produced in Los Angeles.
Answer: FALSE
53) A lesson that can be learned from Anheuser-Busch's experience in Japan is that it is better to
give control to a local partner via a licensing agreement rather than making a major investment.
Answer: TRUE
54) A dynamic joint venture partner can evolve into a strong competitor.
Answer: TRUE
15
55) The joint venture between Corning Glass and Mexican manufacturer Vitro failed primarily
due to conflicts arising from cultural differences.
Answer: TRUE
56) GM and South Korea's Daewoo Group formed a joint venture which helped Daewoo
improve its competitiveness. The venture was terminated since Daewoo prevented the import of
GM cars to Korea.
Answer: FALSE
57) In 2008, the largest merger and acquisition deal in the pharmaceutical industry,
Roche's acquisition of Genentech, is an example of an equity stake.
Answer: FALSE
58) Companies may move from licensing or joint venture strategies to ownership in order to
achieve faster expansion in a market, greater control, and/or higher profits.
Answer: TRUE
59) If government restrictions prevent 100 percent ownership by foreign companies,

the investing company will have to settle for a majority or minority equity stake.
Answer: TRUE
60) The driving force behind many business acquisitions is globalization.

Answer: TRUE
61) Japan's Fuji Photo Film Company invested hundreds of millions of dollars in the
United States after the U.S. government ruled that Fuji was guilty of dumping.
Answer: TRUE
62) Licensing, joint ventures, minority or majority equity stake, and ownership are points along a
continuum of alternative strategies for global market entry and expansion.
Answer: TRUE
63) Avon Products uses both acquisition and joint ventures to enter developing markets.
Answer: TRUE
64) Joint ventures are becoming very popular as an entry mode into foreign markets. Why is
this strategy so attractive to companies interested in entering other markets in the world?
Answer: A joint venture with a local partner represents a more extensive form of participation
in foreign markets than either exporting or licensing. A joint venture is an entry strategy for a
single target country in which the partners share ownership of a newly created business entity.
This strategy is attractive for several reasons such as the sharing of risk. Sharing of risk is a very
important advantage when a company is entering a new and unfamiliar region. Also, by pursuing
joint venture entry strategies, a company can limit its financial risks as well as exposure to
political uncertainty. A company can also use the joint venture experience to learn about a new
market environment. Joint ventures also allow partners to achieve synergy by combining
different value chain strengths. One company may be helpful in providing knowledge about local
markets and availability of resources, and the other company may have a brand name and
well-established reputation in the market. Thus, there can be a complimentary effect by linking
the attributes of both the companies. Joint venture is recommended for companies which lack
enough resources or technical know-how. Also, in cases where the governmental policies restrict
the full ownership of the companies by foreign businesses, joint venture is the only option to
enter.
17
65) Companies like Anheuser-Busch, Corning Glass, and GM have learned a lot by using joint
venture as a mode of entry into a foreign market. Some of their experiences are not very positive.
What are the disadvantages of joint venturing?
Answer: Many companies have experienced difficulties, some serious, when working with
partners under joint venture agreement. Anheuser-Busch first entered the Japanese market in
order to cross the difficult barrier by entering into a licensing agreement with Suntory, the
smallest of the brewers in Japan. Although Budweiser became popular, it had a minuscule share
of the market. Anheuser-Busch then created a joint venture with Kirin Brewery, the market
leader with a 90 percent stake in the venture. Kirin's distribution channel was very helpful, and
Anheuser-Busch was able to use some of Kirin's facilities. On the other hand, Kirin gained a lot
of knowledge about the beer market globally. The beer market did not increase substantially for
Anheuser-Busch, and the joint venture was losing money. Finally, Anheuser-Busch decided to
dissolve the joint venture and reverted to a licensing agreement with Kirin. Thus, joint venture
does not work in all circumstances and at times licensing works as well. In order for the joint
venture relationship to work well, both partners must share rewards as well as risks. The main
disadvantage associated with joint venture is that a company may incur very significant costs
associated with control and coordination issues that arise when working with partners in another
country. Another disadvantage is that of potential for conflict between partners. These often arise
out of cultural differences. Corning Glass and Vitro, Mexico's largest industrial manufacturer
had a joint venture. Mexican managers viewed the Americans as too direct and aggressive,
whereas the American managers believed Mexicans took too much time to make important
decisions. Another disadvantage is that a dynamic joint venture partner can evolve as a stronger
competitor. GM and South Korea's Daewoo had joint venture to produce cars for the Korean
market. GM developed Daewoo's competitiveness, and finally Daewoo terminated the venture
since their cars were not allowed for exportation. Thus, all the disadvantages have to be taken
into account when entering into a joint venture agreement.
66) A competitive business environment is now characterized by all of the following

characteristics except:
A) unprecedented degrees of turbulence.
B) dynamism.
C) unpredictability.
D) inadaptability.
E) environmental responsiveness.
Answer: D
Chapter LO: 9.3: Discuss the factors that contribute to the successful launch of a global
strategic partnership.
67) Which of the following is not a characteristic of global strategic partnership?
A) Participants maintain independence outside the framework of alliance.
B) Participants share benefits of the alliance.
C) Participants share control over the performance of the assigned tasks.
D) Participants make ongoing contributions in technology, products, and other areas.
E) Participants agree not to compete in areas unrelated to the alliance.
Answer: E
68) Which of the following is not a characteristic of global strategic alliances?

A) Participants maintain independence outside the framework of alliance.
B) Participants share benefits as well as control.
C) Participants make ongoing contributions in technology, products, and other areas.
D) Participants focus on an individual country market.
E) Participants share benefits of the alliance.
Answer: D
69) The terminology used to describe the new forms of cooperation strategies varies widely
and the phrases used include all of the following except:
A) collaborative agreements.
B) strategic alliances.
C) global strategic partnerships.
D) strategic international alliances.
E) Greenfield operations.
Answer: E
70) GSPs (Global Strategic Partnerships) are attractive for several reasons which do not include:
A) sharing high product development costs.
B) sharing technological developments.
C) securing access to national and regional markets.
D) continuous transfer of technology between partners.
E) focus on a single national market or a specific problem.
Answer: E
71) Which of the following does not fit in with the factors that should be considered by
companies forming GSPs?
A) Partners are competitors to each other.
B) Harmony is the most important measure of success.
C) All employees and managers must understand where cooperation ends and
competitive compromise begins.
D) Learning from partners is critically important.
Answer: E
72) Having partners from another country can have advantages which include all of
A) reducing product development costs.
B) securing technology.
C) access to capital.
D) shared risks.
E) increased competition.
Answer: E
73) An attribute which does not represent true global partnership is:
A) achieving world leadership by differentiation.
B) achieving a reciprocal relationship.
C) relationship is organized vertical lines.
D) continual transfer of resources.
E) retaining national identities.
Answer: C
74) "Corporate amnesia" in global partnership is a term which refers to:

A) achieving world leadership by differentiation.
B) short-term goals with no memory on how to compete.
C) a relationship which is short lived.
D) discontinuation of a partnership due to personal chemistry.
E) losing national identity and
ideology. Answer: B
75) "Discussion and consensus must be the norms. Partners must be viewed as equals." When
applied to global strategic partnerships, this statement indicates the importance of which factor?
A) mission
B) strategy
C) governance
D) culture
E) organization
Answer: C
76) "Successful GSPs create win-win situations, where participants pursue objectives on the
basis of mutual advantage." When applied to global strategic partnerships, this statement
indicates the importance of which factor?
A) mission
B) strategy
C) governance
D) culture
E) organization
Answer: A
77) According to a 1991 report by McKinsey & Co., problems of alliances between Western
and Japanese firms were related to all of the following factors except:
A) objective levels of performance.
B) a feeling of mutual disillusionment.
C) difference in expectations.
D) balance between partners.
E) frictional loss.
Answer: A
78) The success of CFM International (the strategic partnership between GE and Snecma) can be
attributed to which of the following?
A) compatibility of the partners
B) capability of the partners
C) commitment of the partners
D) personal chemistry between executives
E) all of the above
Answer: E
79) Critics warn that employees of a company that become reliant on an outside supplier
for critical components will:
A) encourage outsourcing
B) become used to value-added components
C) lose expertise and engineering skills
D) use time for developing other skills
E) look for employment with competitors
Answer: C
80) Boeing developed the wide-bodied aircraft, the 777, with about of the work
subcontracted out to Mitsubishi, Fuji, and Kawasaki.
A) 50%
B) 25%
C) 20%
D) 60%
E) 75%
Answer: C
Difficulty: 1: Easy
81) A number of factors combine to make Russia an excellent location for an alliance which do
not include:
A) a well-educated workforce.
B) quality is important to Russian consumers.
C) abundance of supplies.
D) potential for economic growth.
E) potential for growth in service sector.
Answer: C
82) Despite commanding a 37 percent share of the global cellular handset market, Nokia
announced that it would make the source code for handset manufactured by Siemens
AG. Answer: TRUE
83) To succeed in global markets, firms can now rely exclusively on the
technological superiority or core competence that brought them past success.
Answer: FALSE
84) Sony entered into a strategic partnership with Samsung in order to produce flat-panel TV
screens due to the high product development costs.
Answer: TRUE
85) The failure of partnership between Great Britain's General Electric Company was blamed in
part due to the fact that it was run by engineers.
Answer: FALSE
86) The alliance between GE and Snecma got off with a feeble start due to the
personal chemistry between the top two executives of respective companies.
Answer: FALSE
87) Eventually, an affiliate-based strategy gives way to an export-driven strategy.

Answer: FALSE
88) Why would any firm, whether global or otherwise, seek to collaborate with another firm,
be it local or foreign?
Answer: Recent changes in the political, economic, socio-cultural, and technological
environments of the global firms have prompted the need for strategies that are more current
rather than the traditional strategies. Trade barriers are less, global markets are more accessible,
consumer needs and wants have changed, product life cycles have shortened, and new
communication technologies and trends have emerged. These factors may provide unprecedented
opportunities. However, there are strong strategic implications for the global organizations and
new challenges for the global marketer. All these converging environmental forces or changes
require different unprecedented global strategies that take into account collaborations which
were not thought of at any period of time. Today's competitive environment is described as
turbulent, dynamic, and unpredictable. Global firms are under intense pressure to respond and
adapt quickly. They have to pursue "entrepreneurial globalization" by developing unique and
flexible organizational capabilities, innovation, and updating global strategies that take care of
the demands.
89) A true global strategic partnership is unique and different. Using the example of Sony's
strategic alliance with Samsung, discuss attributes that are needed for a productive working
partnership.
Answer: A true global strategic partnership requires a mutual collaboration between partners.
There are five attributes that are described as important for this type of collaboration. (1) Two or
more companies should develop a joint long-term strategy aimed at achieving world leadership
by pursuing cost-leadership, differentiation, or a combination of the two. Samsung and Sony are
two major companies jockeying for leadership in the global television market. Flat-panel TV
market is the newest market that has a great potential. (2) The relationship should be reciprocal
with each partner bringing in specific strengths that can prove to be mutually beneficial. Also,
both sides should be able to learn from each other. Samsung is the leader in the manufacturing
technology into world-class products. They can learn from Sony how the present technology can
be advanced. (3) The partners' vision and effort are truly global, extending beyond home
countries and the home regions to the rest of the world. Sony and Samsung are both global
companies that market global brands throughout the world. (4) The relationship should be
organized along horizontal not vertical lines. Also, continual transfer of resources laterally
between partners is required, with resource pooling representing norms. Both Sony and Samsung
are in direct contact with each other and there is good sharing of resources. (5) When competing
in markets excluded from the partnership, the participants retain their national and ideological
identities. Both Sony and Samsung are well established and have sufficient key products in the
world market that they will be able to retain their national and ideological identities as well as
competitive edge.
90) What are important considerations that will result in a successful global strategic alliance
between two countries?
Answer: There are five attributes that are important while considering global strategic alliances
as illustrated by the example of Sony and Samsung. These can be listed as follows:
1. Two or more companies develop a joint long-term strategy aimed at achieving world
leadership by pursuing cost leadership, differentiation, or a combination of the two.
2. The relationship is reciprocal. Each partner possesses specific strengths that it shares with
the other; learning must take place on both sides.
3. The partners' vision and efforts are truly global, extending beyond home countries and
the home regions to the rest of the world.
4. When competing in markets excluded from the partnership, the participants retain
their national and ideological identities.
5. The relationship is organized along horizontal, not vertical, lines. Continual transfer of
resources laterally between partners is required, with technology sharing and resource pooling
representing norms.
91) Why are alliances between Western companies and Asian competitors different as well
as difficult? What are some of the concerns, and how can those concerns be addressed?
Answer: Western companies may find themselves to be at a disadvantage in GSPs with an
Asian competitor. To limit transparency, some companies involved in GSPs establish a
"collaboration section." This department is designed to serve as a gatekeeper through which
requests for access to people and information must be channeled. Unintended transfers are
therefore guarded and controlled. A study by McKinsey & Co. identified four common problem
areas that have gone wrong in alliances between Japanese and Western firms. The Japanese
partner saw itself emerging from the alliance as a leader in its business or building a new basis
for the future, whereas the Western partner sought relatively quick and risk-free financial returns.
The second area of concern related to the balance between partners. Each must contribute to the
alliance and each must depend on the other to a degree that justifies participation in the alliance.
Another common cause of problems was found to be due to friction. This mainly stemmed from
differences in management philosophy, expectations, and approaches. Lastly, the study found
that short-term goals can result in the foreign partner limiting the number of people allocated to
the joint venture. The original goals of the venture are lost as each new manager takes their turn.
There is little original corporate memory or reminder of the initial intent of the venture. These
concerns, if addressed adequately and before any formal agreement is signed, will be helpful in
taking care of later concerns, frictions and unnecessary problems.
92) Which of the following is not true of Japanese keiretsu?
A) promotes risk sharing
B) promotes long-term employment
C) ensures low prices for Japanese consumers
D) blocks foreign suppliers from the Japanese market
E) relationships are cemented by bank ownership
Answer: C
Chapter LO: 9.5: Describe the special forms of cooperative strategies found in Asia.
93) Which of the following is true about Japanese keiretsu?

A) Toyota is a vertical keiretsu, Mitsubishi is a horizontal keiretsu.
B) Toyota is a horizontal keiretsu, Mitsubishi is a vertical keiretsu.
C) Toyota and Mitsubishi are both horizontal keiretsu.
D) Toyota and Mitsubishi are both vertical keiretsu.
Answer: A
94) Another perspective on the future of cooperative strategies envisions the emergence of:
A) mergers and acquisition.
B) virtual corporations.
C) franchising.
D) joint ventures.
E) keiretsu.
Answer: B
95) Japanese keiretsu executives can legally sit on each other's boards, share information,
and coordinate prices in closed-door meetings of "presidents' councils."
Answer: TRUE
96) The South Korean government has recently abandoned the "chaebol" industry structure in
favor of the "keiretsu" structure.
Answer: FALSE
97) Prior to the economic crisis of 1997-1998, the South Korea's "chaebol" had become bloated
and heavily in debt.
Answer: TRUE
98) Japanese keiretsu is considered to be a strong cooperative strategy that will have an impact
in global marketing. Describe what it is and how it can affect U.S. businesses.
Answer: Japan's keiretsu represents a special category of cooperative strategy which is an
interbusiness alliance or enterprise group. It exists in a broad spectrum of markets, including the
capital market, primary goods markets, and component parts markets. Keiretsu relationships are
often cemented by bank ownership of large blocks of stock and by cross-ownership of stock
between a company and its buyers and nonfinancial suppliers. Also, keiretsu executives can
legally sit on each other's boards, share information, and coordinate prices. Thus, keiretsu serves
as a cartel that has the government's blessing. Although it is not a market entry strategy per se, it
played an integral part in the international success of the Japanese companies as they sought
new markets. Clyde Prestowitz provided the following example to show how keiretsu
relationships have a potential impact on U.S. businesses. In the 1980s, Nissan was in the market
for a supercomputer to use in car design. Two vendors under consideration were Cray and
Hitachi.
Cray was the worldwide leader in supercomputers, and Hitachi had no functional product to offer.
When it appeared that the purchase of a Cray computer was pending, Hitachi executives called
for solidarity since both Nissan and Hitachi were members of the same big six keiretsu. Hitachi
was pushing Nissan to show preference for Hitachi, and the United States had to put pressure on
both Nissan and the Japanese government to have the sale proceed with Cray. Because keiretsu
relationships are crossing the Pacific and directly affecting the American market, the U.S.
companies have a reason for concern. In California alone, keiretsu owns more than half of the
Japanese businesses. Other keiretsu businesses are moving into different parts of the United
States.
99) The virtual corporation will seem to be a single entity with vast capabilities but will really
be the result of numerous collaborations assembled only when needed.
Answer: TRUE
Chapter LO: 9.6: Explain the evolution of cooperative strategies in the twenty-first century.
100) Saab markets two luxury car models, both prized by drivers for their "quirkiness." About
30 percent of Saab's sales come from the USA, with most of the rest from Western Europe.
Which strategy does Saab appear to be using?
A) country concentration/market segment concentration
B) country diversification/market segment concentration
C) country concentration/market segment diversification
D) country diversification/market segment diversification
Answer: A
Chapter LO: 9.7: Use the market expansion strategies matrix to explain the strategies used
by the world's biggest global companies.
101) In a country and market concentration strategy, a company serves many markets in a
few countries.
Answer: FALSE
Difficulty: 2:
Moderate
102) Companies are faced with the decision whether to expand by seeking new markets in
existing countries or seeking new country markets for already identified and served
market segments. Faced with these situations, what are the strategies that can be followed?
Answer: There are four different dimensions that emerge in combination to produce four
different sets of strategies that are described as follows. (1) Country and market concentration,
which involves targeting a limited number of customer segments in a few countries. This is
typically a starting point for most companies and it matches with limited company resources and
market investment needs. (2) Country concentration and market diversification, in which a
company serves many markets in a few countries. Many European companies have followed this
strategy. American companies that decide to diversify in the U.S. market as opposed to going
international have also followed this strategy. (3) Country diversification and market
concentration is the classic global strategy whereby a company seeks out the world market for a
product. This strategy is desirable since it serves the world customer, and a company can
achieve a greater accumulated volume at a lower cost. It also has a competitive advantage due to
cost.
This is the strategy followed by well-managed businesses that serve a distinct need and customer
category. (4) Country and market diversification is the corporate strategy of a global,
multi-business company such as Matsushita. Thus, based on the level of involvement desired and
available resources, one of the above-mentioned strategies should be selected.
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Global Marketing, 9e, GE (Keegan)

Chapter 6 Global Information Systems and Market Research

5) An is a company's private data network, accessible only by authorized persons

9) One challenge of using CRM is:

11) CRM tools does not help companies in determining:

20) Every "touch point" provides important data about consumers.

39) Potential markets can be subdivided into:

53) A marketer of breakfast cereals might send researchers to preselected households at 6

56) In Singapore, Coca-Cola wanted to develop an advertisement program. They selected a

63) A latent market is, in essence, an undiscovered market

66) An "incipient market" is a market that will emerge if a particular economic,

74) A market researcher who uses multidimensional scaling (MDS) will:

79) "Back translation" is a technique used to ensure that currency conversion is

Global Marketing, 9e, GE (Keegan)

2) The efforts of global companies to reach low-income consumers in emerging markets

11) A global segment is referred to as "global elite," which includes:

14) The concentration of wealth in a handful of industrialized countries has significant

15) A global segment is referred to as "global teens" which includes:

17) Psychographic segmentation involves grouping people in terms of their:

21) In a study entitled "The Euroconsumer: Marketing Myth or Cultural Certainty?"

47) A psychographic segmentation, "Comfortable Belongers" refers to "up-and-comers" of a

65) A market segment or country market characterized by weak competition may be a

74) Differentiated global marketing represents a more ambitious approach than

82) India's vehicle market can be segmented into:

85) Positioning refers to the act of:

103) What is psychographic segmentation, and how do marketers use it in targeting

Global Marketing, 9e, GE (Keegan)

3) Export marketing requires all of the following except:

11) The terms "export selling" and "export marketing" are

20) is the most important aspect of a company's international orientation.

26) The so-called "China Triangle" includes:

36) A nontariff barrier (NTB) includes all of the following except:

47) Which of the following types of duties would be imposed on a company

60) The Fly American Act is an example of a nontariff

67) is sometimes called a mother hen, a piggyback exporter, or an export vendor

79) Direct representation, as opposed to representation by independent intermediaries, for

81) An executive is undecided whether to rely on in-house or external export

99) Which of the following refers to a system of farm subsidies in Europe?

Global Marketing, 9e, GE (Keegan)

3) One of the advantages of licensing is:

Global Marketing, 9e, GE (Keegan)

2) Many American car buyers perceive Korean cars as:

28) Example of a "brand symbol" includes all of the following except:

31) A logo can be all of the following except:

41) The Sony Walkman is an example of combination or tiered branding, whereby a

65) Scotland's top export category is information

86) Explain the differences between "product adaptation-communication extension" and

5) represents a market entry strategy whereby one company permits a foreign

6) provides technical specifications to a subcontractor or local manufacturer, who then

8) The advantages of "contract manufacturing" include all of the following except:

19) Generally speaking, franchising is a market-entry strategy that is typically executed

21) According to the international Licensing Industry Merchandisers Association (LIMA),

44) Which automaker owns an equity stake in Japan's Nissan Motor?

46) Avon Products uses to enter developing markets.

59) If government restrictions prevent 100 percent ownership by foreign companies,

60) The driving force behind many business acquisitions is globalization.

66) A competitive business environment is now characterized by all of the following

68) Which of the following is not a characteristic of global strategic alliances?

74) "Corporate amnesia" in global partnership is a term which refers to:

87) Eventually, an affiliate-based strategy gives way to an export-driven strategy.

93) Which of the following is true about Japanese keiretsu?

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