Chapter 23 – International, Regional, and Global Marketing

True/False Questions

1. Purchasing power parity is the annual market value of all final goods and services made within a
country’s borders.
False (moderate)

2. Despite widespread use, GDP measures ignore potentially important economic factors, especially
for less-developed countries.
True (moderate)

3. The International Monetary Fund works to foster global monetary cooperation, secure financial
stability, facilitate international trade, promote high employment and sustainable economic growth,
and reduce poverty.
True (moderate)

4. The European Union provides technical assistance to developing countries via the International
Bank of Reconstruction and Development and the International Development Association.
False (moderate)

5. The World Trade Organization is a 153-member organization that succeeded the General
Agreement on Tariffs and Trade.
True (moderate)

6. In 1994, Canada, Mexico, and the U.S. formed NAFTA as a three-country trading area.
True (moderate)

7. ASEAN was founded in 1991 and consists of four members—Brazil, Argentina, Paraguay, and
Uruguay.
False (moderate)

8. Masculinity versus femininity is the cultural dimension that refers to the extent to which people are
anxious about the unknown and prefer explicit rules and formally structured activities versus
preferring flexible rules, guidelines, and informal activities.
False (moderate)

9. Major options for active entry into foreign markets include importing, local production and
franchising.
True (moderate)

10. Firms that set up production operations in a foreign country can choose among Greenfield,
acquisition and joint ventures.
True (moderate)

11. In a Greenfield project, a firm constructs local facilities from scratch.

True (moderate)

12. Pharmaceutical research is a good example of international market entry via franchising.
False (moderate)

13. A strong supporting argument for global branding includes heterogeneity of consumer tastes across
countries.
False (moderate)

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14. Dumping occurs when a firm exports goods to a foreign country below is home market price or
production cost.
True (moderate)

15. Transfer pricing is a special issues for international marketers as these prices are internal to the firm
taking place between one subsidiary and another.
True (moderate)

Multiple Choice Questions

16. ____________ is the annual market value of all final goods and services made within a country’s
borders.
a.) Gross National Product
b.) Gross Domestic Product (moderate)
c.) Gross National Income
d.) Purchasing Power Parity

17. Economists prefer to use _____________ as an economic measure because it better indicates living
standards in less-developed countries.
a.) Gross National Product
b.) Gross Domestic Product
c.) Gross National Income
d.) Purchasing Power Parity (moderate)

18. Which of the following organizations consists of 186 member countries that work together to foster
global monetary cooperation, secure financial stability, facilitate international trade, promote high
employment and sustainable economic growth and reduce poverty?
a.) World Bank
b.) World Trade Organization
c.) NAFTA
d.) International Monetary Fund (moderate)

19. The _____________ is owned by 188 member countries and provides financial and technical
assistance to developing countries via the International Bank for Reconstruction and Development
and the International Development Association.
a.) World Bank (moderate)
b.) World Trade Organization
c.) NAFTA
d.) International Monetary Fund

20. The _____________ is the organization which concentrates of middle income and creditworthy
poor countries.
a.) International Bank for Reconstruction (moderate)
b.) International Development Association
c.) World Trade Organization
d.) International Monetary Fund

21. Which of the following organizations succeeded the General Agreement on Tariffs and Trade?
a.) World Bank
b.) World Trade Organization (moderate)
c.) NAFTA
d.) International Monetary Fund

22. Which of the following is NOT mentioned in the text as one of the most important country
groupings?

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 a.) NAFTA
b.) World Trade Organization (moderate)
c.) European Union
d.) Mercosur

23. Which of the following regional organizations consists of 27 member countries that comprise an
economic and political union of 500 million people generating 30 percent of global world product.
This regional organization also has the world’s second longest coastline?
a.) NAFTA
b.) World Trade Organization
c.) European Union (moderate)
d.) Mercosur

24. In 1994, Canada, Mexico, and the U.S. formed __________ as a three-country trading area.
a.) NAFTA (moderate)
b.) ASEAN
c.) The European Union
d.) Mercosur

25. Founded in 1991, ____________ has four members—Brazil, Argentine, Paraguay, and Uruguay
and several associate members.
a.) NAFTA
b.) ASEAN
c.) The European Union
d.) Mercosur (moderate)

26. ____________ is a 10-member group promoting economic growth and cultural development and
has a population of 600 million. This regional organization also does not have a common external
tariff.
a.) NAFTA
b.) ASEAN (moderate)
c.) The European Union
d.) Mercosur

27. Which of the following dimensions according to Hofstede refers to the relative value placed on
competitiveness, assertiveness, ambition, and wealth accumulation versus relationships and quality
of life?
a.) Long-term versus short-term orientation
b.) Masculinity versus femininity (moderate)
c.) Small versus large power distance
d.) Strong versus weak uncertainty avoidance

28. The dimension according to Hofstede which refers to the extent to which people are anxious about
the unknown and prefer explicit rules and formally structured activities versus preferring flexible
rules, guidelines, and informal activities is called ________________.
a.) Long-term versus short-term orientation
b.) Masculinity versus femininity
c.) Small versus large power distance
d.) Strong versus weak uncertainty avoidance (moderate)

29. Firms that set up production operations in a foreign country can choose among all of the following
options EXCEPT:
a.) Greenfield
b.) acquisition
c.) Joint Venture
d.) Exporting (easy)
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30. In a(n) ___________ project, the firm constructs local facilities from scratch.
a.) Greenfield (moderate)
b.) acquisition
c.) Joint Venture
d.) Exporting

31. Which of the following types of product categories best represents franchising?
a.) Crude oil production
b.) Pharmaceutical research
c.) Computer manufacturing
d.) Fast food (easy)

32. Which of the following best represent the correct stages when firms expand internationally?
a.) Limited international market to regional marketing to global marketing (moderate)
b.) Global marketing to limited international marketing to regional marketing
c.) Regional marketing to limited international marketing to global marketing
d.) Limited international marketing to global marketing to regional marketing

33. All of the following are supporting arguments for global branding EXCEPT:
a.) Cross-border travel
b.) Growth
c.) Heterogeneity of customer tastes across countries (moderate)
d.) Increased global media reach and lower costs

34. ____________ occurs when a firm exports goods to a foreign country below its home market price
or production costs.
a.) Transfer pricing
b.) Gray marketing
c.) Dumping (moderate)
d.) Price churning

35. ____________ is a special issue for international marketers as these prices are internal to the firm
and takes place between one subsidiary and another.
a.) Transfer pricing (moderate)
b.) Gray marketing
c.) Dumping
d.) Price churning

Essay Questions

36. In a short essay, discuss the characteristics of the following important regional organizations:
SAARC, European Union, NAFTA, Mercosur, and ASEAN

Answer

a. SAARC – The South Asian Association for Regional Cooperation (SAARC) has eight
member nations belonging to South Asia – India, Pakistan, Bangladesh, Nepal, Sri Lanka,
Afghanistan, Bhutan, and Maldives. The first summit was held in Bangladesh in 1985. The
organization aims to facilitate cooperation among the member states on various issues (e.g.
economic and political).
b. European Union – The EU’s 27 member countries comprise an economic and political union
of 500 million people generating 30 percent of global world product. Only six individual
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 countries have a greater territory size; the EU has the world’s second largest coastline, and
borders 21 nonmember states. People, goods, services, and capital move freely and all EU
countries apply a common external tariff. EU citizens elect the European Parliament every five
years.
c. NAFTA – In 1994, Canada, Mexico, and the U.S. formed NAFTA as a three-country trading
area. In contrast to the EU, NAFTA focuses almost exclusively on trade and investment but its
population of 450 million generates similar economic activity.
d. Mercosur – Founded in 1991, Mercosur has four members—Brazil, Argentina, Paraguay, and
Uruguay—and several associate members. Like NAFTA, Mercosur is a free-trade zone;
population exceeds 260 million.
e. ASEAN – ASEAN is a 10-member group promoting economic growth and cultural
development. Six members—Brunei, Indonesia, Malaysia, Philippines, Singapore, and
Thailand—formed AFTA, a free-trade area dedicated to reducing tariffs among members;
ASEAN’s population is 600 million; unlike the EU, AFTA does not have a common external
tariff.
(moderate)

37. In a short essay, list and discuss each of the five dimensions of Hofstede’s five-dimensional
framework.

a. Individualism versus collectivism – the extent to which people develop and display
individual personalities versus conducting themselves primarily as members of family or
religious groups.
b. Long-term versus short-term orientation – the extent to which people value attitudes and
actions that affect the future by the past or present, like stability, tradition, and reciprocity.
c. Masculinity versus femininity – the relative value placed on competitiveness,
assertiveness, ambition, and wealth accumulation—masculinity, versus relationships and
quality of life—femininity.
d. Small versus large power distance – the extent to which people accept and expect power
relations to be consultative versus based on formal hierarchies.
e. Strong versus weak uncertainty avoidance – the extent to which people are anxious about
the unknown and prefer explicit rules and formally structured activities versus preferring
flexible rules, guidelines, and informal activities.
(moderate)

38. List and discuss two passive and three active options for entering foreign markets.

a. Passive entry – the firm allows another organization to do all or most of the work and has
little control over marketing and sales efforts. Options include exporting and licensing .
- Exporting – the firm exports products but outsources most activities by simply responding
to orders arriving from abroad and/or appointing an export agent to sell products in foreign
markets.
- Licensing – the firm has an asset—like product or process technology, brand name, or
trademark—with value in foreign markets. The firm (licensor) agrees that another firm
(licensee) can use the asset; in return, the licensee typically pays minimum royalties and
earned royalties to the licensor.
b. Active entry – the firm plays a major role in marketing and sales, but great profit
potential comes with higher risk.
- Importing – products enter the foreign market as imports from the firm’s home country
and/or third countries. The firm actively markets and sells products via traveling home-
based sales representatives and/or local salespeople based in foreign branches/subsidiaries.
- Local production through acquisition, greenfield, or joint ventures.
- Franchising – a popular foreign-entry mode when the firm’s value proposition requires
local production and/or delivery.
(moderate)

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39. In a short essay, list four arguments that support global branding.

a. Cross-border travel – increased travel drives demand as consumers seek out their favorite
brands while traveling
b. Growth – the firm may be able to leverage brand equity to new geographic markets
c. Homogeneity of customer tastes across countries – global media and global product
availability shape consumer tastes for global brands.
d. Increased global media reach and lower costs – television and Internet reach multinational
audiences. The firm can achieve scale economies in advertising, perhaps by dubbing in
different languages.
(easy)

40. In a short essay, list four advantages of the geographic-region organization over the international
division.

a. Allows the firm to integrate functions across countries, within regions

b. Avoids duplication of costs
c. Offers greater ability to manage performance across several countries
d. Provides promotion opportunities for upwardly mobile executives
(easy)

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