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Chapter 21: Tapping into Global MarketsChapter 21: Tapping into Global MarketsGENERAL CONCEPT QUESTIONSMultiple Choice 1.Red Bull has gained _ of the worldwide energy drink market by skillfully connecting with global youth. a.70 percentb.80 percentc.60 percentd.50 percente.90 percentAnswer: aPage: 667Level of difficulty: Medium2.Red Bull built buzz about the product through its _.a.“buzz marketing program” b.“in program”c.“marketing program” d.“seeding program” e.“advertising campaign” Answer: dPage: 667Level of difficulty: Medium3.A global industry is defined as _.a.an industry in which the strategic positions of competitors are fundamentally affected by their overall global positionsb.an industry that operates in more than one country and captures R&D, marketing, and other financial advantages in its costs and reputation.c.an industry that operates in more than one country and has a strategic position in many countriesd.a firm that operates in more than one country and has a sales and marketing staff in those countries e.an industry that has strategic positions in many countries but is not affected by competitionAnswer: aPage: 668Level of difficulty: Medium4.A global firm is one that _.a.where the strategic positions of competitors are fundamentally affected by their overall global positions b.operates in more than one country and captures R&D, marketing, and other financial advantages in its costs and reputationc. operates in more than one country and has a sales and marketing staff in those countriesd.operates in more than one country and has a sales and marketing staff in those countries developinge.has strategic positions in many countries but is not affected by competition researchingAnswer: bPage: 668 Level of difficulty: Medium5.International trade in 2003 accounted for over _ of U.S. GDP up from 11 percent in 1970. a.one-third b.one-eighth c.one-halfd.one-quartere.18 percent Answer: dPage: 668 Level of difficulty: Easy6. Global firms plan, operate, and _ their activities on a worldwide basis.a. produceb.coordinate c.distribute d.price e.service Answer: bPage: 668Level of difficulty: Easy7.The major decisions in international marketing include which of the following steps?a.Deciding whether to go abroad.b. Deciding which markets to enter.c.Deciding how to enter the market.d.Deciding on the marketing program.e.All of the above.Answer: ePage: 669Level of difficulty: Medium8.The internationalization process has four stages. These stages are _.a.no regular export activitiesb.export via independent representatives (agents)c.establishment of one or more sales subsidiariesd.establishment of production facilities abroade.all are part of the internationalization process Answer: ePage: 670Level of difficulty: Medium9. Most firms work with an _ and enter a nearby or similar country.a.independent agent b.contractual export department c.import/export departmentd.franchiseee.management contract Answer: aPage: 670 Level of difficulty: Easy10. A “waterfall” approach to international marketing is defined as _.a.countries that are gradually entered sequentiallyb.countries in which the demand for the product is greatest is entered firstc.countries in which the demand for the product is greatest is entered lastd. countries in which the supply of raw material is greatest is entered firste.countries are entered based upon ease of entry Answer: aPage: 671Level of difficulty: Medium11.A “sprinkler” approach to international marketing is defined as _.a.countries that are entered when timing is right b.countries that are gradually entered sequentially c.countries in which the supply of raw material is greatest is entered firstd. countries in which the demand for the product is greatest is entered first e.many countries are entered simultaneously within a limited period of time Answer: ePage: 671Level of difficulty: Medium12.The developed nations and the prosperous parts of developing nations account for less than _ of the worlds population. a.10 percentb.15 percentc.20 percent d.25 percente.30 percent Answer: bPage: 671Level of difficulty: Easy13. Marketers must change their conventional marketing to sell their products to developing countries. One of the changes that marketers can make is to _.a.reduce the price of the product but increase the packaging size b.reduce the size but keep the pricing the samec.reduce the price of the product d. reduce the size and price of the packaging e. increase the price and the packaging size because these countries have never seen the product beforeAnswer: dPage: 671Level of difficulty: Medium14. Factors that influence the “attractiveness” of a country to enter include which of the following?duct, geography, income and population, political climate, and other duct, geography, income, climate, and source of incomec.population, incomes, competition, and political climated.incomes, profit potentials, competition, and climatee.incomes, families, competition, and cultural differencesAnswer: aPage: 671Level of difficulty: Medium15.Regional economic integration is defined as _.a.agreements between individual firms for the sake of commerceb.trading agreements between individual countriesc.trading agreements between individual firmsd.trading agreements between countries and firmse.trading agreements between blocs of countries Answer: ePage: 673Level of difficulty: Easy16. The European Union founded in 1957 added _ in May 2004 bringing its total membership to 25 countries. a.10 countriesb.5 countriesc.20 countriesd.6 countriese.4 countriesAnswer: aPage: 673Level of difficulty: Easy17.NAFTA established a free trade zone between what three countries? a.Canada, Mexico, and South Americab.Canada, Mexico, and Peruc.Mexico, South America, and the United Statesd.Canada, Mexico, and the United Statese.Canada, Mexico, and Japan Answer: dPage: 673Level of difficulty: Medium18.MERCOSUL is a free trade zone linking which of the following South American countries?a.Mexico, Japan, Brazil, and Paraguay b.Mexico, Brazil, and Paraguayc.Brazil, Argentina, and Paraguayd.Canada, Brazil, and Paraguaye.Brazil, Argentina, Paraguay, and Uruguay Answer: ePage: 673Level of difficulty: Medium19.The five modes of entry into foreign markets generally flow by increasing commitment, risk, control, and profit potential as follows _. a.indirect exporting, direct exporting, licensing, joint ventures, and direct investment b.direct investment, joint ventures, licensing, direct exporting, and indirect exporting. c.direct investment, joint ventures, and licensing d.direct investment, joint ventures, licensing, and indirect exportinge.none of the above Answer: aPage: 674Level of difficulty: Hard20. In choosing which countries to invest in, companies sometimes choose psychic proximity to their own country. Psychic proximity can best be defined as _.a.countries close to the “host” country in which the company feels comfortable with the language, laws, and culture b.countries that “mimic” the host country in terms of language and culturec.countries that the host countrys management team have visited d.countries close to the “host” country in which the company feels that they can infiltrate quickly and profitable e.countries close to the “host” country in which the company can easily transport their products Answer: aPage: 674Level of difficulty: Medium21.The normal way to get involved in an international market is through exporting. Occasional exporting is defined as _.a.when the company carries on exporting activities on the behalf of others b.when the company makes a commitment to expand into particular markets c.when the company works through independent agents d.when the company hires domestic-based agents to negotiate foreign purchasese.a passive level of involvement in which the company exports its products from time to time Answer: ePage: 674Level of difficulty: Medium22.Active exporting takes place when the company _ to expand into a particular market. a.forms a “skunk” group b.forms an export department c.hires an agent d.makes an efforte.makes a commitment Answer: ePage: 674Level of difficulty: Easy23. Domestic-based export merchants _. a.buy the manufacturers products and then sell them abroadb.buy the manufacturers products then sell them in the host country c.buy the manufacturers products then fine agents and customers in foreign countries d.seek and negotiate foreign purchases e.carry on exporting activities on behalf of several producers Answer: aPage: 674Level of difficulty: Hard24.Domestic based export agents perform a valuable service for the companies seeking to enter foreign markets. The primary function of these agents is to _.a.carry on exporting activities on behalf of several producers b.buy the manufacturers products and then sell them abroadc.buy the manufacturers products then sell them in the host country d. seek and negotiate foreign purchases and are paid a commission on those sales e. export products to foreign countries Answer: dPage: 674Level of difficulty: Medium25.Companys prefer to enter a country that ranks high on market attractiveness, low in market risks and _.a.in which it would possesses a competitive advantageb. turn a quick profitc.able to dominate its foreign competitors through superior product design and performance d.gain a dominate market share within one year of exporting e.increase its foreign market share by 50 percent in one year Answer: aPage: 674Level of difficulty: Medium26. Indirect export has two advantages for the firm. First in involves less investment for the firm and secondly it _.a.involves less paperwork b.involves less intrusion by the government c.involves less riskd.involves less people to manage the processe.involves less products and product lines Answer: cPage: 675Level of difficulty: Medium27.A company can carry on direct exporting in several ways. These include domestic- based export department or division, overseas sales branch or subsidiary, traveling export sales representatives, and _.a.foreign-based distributors or agentsb.marketing departments based in the foreign countryc. export merchants in foreign countriesd. export management companiese. none of the above Answer: aPage: 675Level of difficulty: Medium28.According to the text, Shaper Image receives more than _ of its online business form overseas customers. a.15 percentb.30 percent c.25 percent d.40 percent e.10 percent Answer: cPage: 675Level of difficulty: Hard 29. “Going abroad” using the Internet has its challenges. One of the challenges that a global marketer may run up against when using the Web are _.a.cultural restrictions b.language barriersc.pricing proceduresd.monetary exchangese.logistical limitations Answer: aPage: 675Level of difficulty: Medium30.Licensing is a simple way to become involved in international marketing. In licensing, the licensor issues a license to a foreign company to use a process, trademark, patent, or trade secret for a(n) _.a.limited period of time b.fee or royalty c.exchange of information or propriety information d.exchange for access to the market placee.exchange for “their” process, trademark, patent, or secretAnswer: bPage: 676Level of difficulty: Easy31.Companies such as Marriott and Hyatt sell a variation of the licensing agreement called _ to the owners of foreign hotels to manage these businesses for them in foreign countries.a.contract manufacturingb.management contracts c.franchising d.hotel management licensing e.none of the above Answer: bPage: 676Level of difficulty: Medium32. In _, the firm hires local manufacturers to produce the product. This gives the company less control over the manufacturing process and loss of profits of the manufacturing efficiencies. a.contract manufacturing b.management contracts c.licensing d.franchising e. none of the above Answer: aPage: 676 Level of difficulty: Easy33.A company can enter a foreign market through _, which is a complete form of licensing in which the company offers a complete brand concept and operating system designed to ensure that the _ operates according to the requirements of the licensor. a.contract manufactures/licensor b.contract management/firmc. management contracts/firmd.joint venture/firm e.franchising/franchisor Answer: ePage: 676Level of difficulty: Medium34.The definition of a joint venture company is one _.a.in which foreign inventors join with local investors where they share ownerships and control b.in which two people or more own the firm jointly c.where foreign investors join with others to own the firm d.where ownership by local and distant investors in share ownership of a franchisee.where ownership is by investors of foreign firms Answer: aPage: 676Level of difficulty: Medium 35.A joint venture may be necessary or desirable for economic or political reasons. Additionally, a foreign firm might lack the _, or managerial resources to undertake the venture alone. a.resource, competency b.financial, physical c.financial, willingnessd.political, financiale.political, competency Answer: bPage: 677Level of difficulty: Medium36.In an adapted marketing mix, the producers _ the marketing program to each target market. a.reduce the importance of each element of the marketing program to adjust for cost differential between countries b.decide on which element of the marketing mix to change/country/target market prior to entering the country c.adapt the communications message to the host country d.change only one element of the marketing mix/country e.adjust Answer: ePage: 677Level of difficulty: Medium37. International companies must decide on how much to adapt their marketing strategy to local conditions. At one extreme are companies that use a globally standardized marketing mix worldwide. A standardized marketing mix includes _.a.a concentric strategy which includes the product, integrated marketing communications mix, and distribution strategyb.standardization of the product, communication, and distribution channels promising lowest costs. c.changes only to the product keeping distribution channels and marketing communications consistent across countries d.changing only the distribution channels to accommodate the host countrye.changes only to the product and communication message Answer: bPage: 677Level of difficulty: Medium38. The ultimate form of foreign involvement is direct ownership of foreign-based assembly or manufacturing facilities. One of the advantages of direct ownership can include economies of scale, creating jobs in the host country, developing deeper relations with local suppliers etcetera and the firm _.a.retains full control over its investment b.reviews global outreach projectionsc.redefines the business conceptd.reviews the successes from e-commerce e.receives no disadvantages to direct investment Answer: aPage: 677Level of difficulty: Medium39. Hofstede identifies four cultural dimensions that can differentiate countries. These are individualism versus collectivism, high versus low power distances, masculine versus feminine, and _.a.customer relationship management versus power distances b.strategic management versus marketing managementc. weak versus strong uncertainty avoidance d.total quality management versus JIT deliveries e.marketing management versus customer relationships Answer: cPage: 677Level of difficulty: Medium40.Straight extension of the product means _. roducing the product to the foreign market without any changes to the product. roducing the product to the foreign market without major changes to the product roducing the product to the foreign market with major changes to the product roducing the product to the foreign market with no major marketing programe.not introducing the product to the foreign market until changes have been made Answer: aPage: 678Level of difficulty: Medium 41.An advantage of global marketing is that it can lower marketing costs, has economies of scale in production and distribution, can produce consistency in brand image, has the ability to leverage good ideas quickly and efficiently, and _. a.is easier to adapt to foreign countriesb.allows for the same message to be used worldwidec.allows for individual countries to add their specific needs to the messaged.is easier for corporations to evaluate the marketing messagee.allows for uniformity of marketing practices Answer: ePage: 678 Level of difficulty: Hard42. Product adaptation involves _.a.altering the product to meet local conditions or preferences b.altering the product to meet minimum acceptable stan