Marketing The Core 5th Edition Kerin Test Bank Download

Marketing The Core 5th Edition Kerin
Test Bank
Full download at link:
Test Bank: https://testbankpack.com/p/test-bank-for-marketing-the-

core-5th-edition-kerin-rudelius-and-hartley-0078028922/
Solution Manual: https://testbankpack.com/p/solution-manual-for-

marketing-the-core-5th-edition-kerin-rudelius-and-hartley-
0078028922/
CHAPTER 6: MASTER TEST BANK
UNDERSTANDING AND REACHING GLOBAL CONSUMERS AND MARKETS
Test Item Table by Major Section of the Chapter and Bloom’s Level of Learning
Bloom’s Level of Learning (LL)
Major Section Level 1 Level 2 Level 3

of the Chapter Knowledge Comprehension Application
(Knows Basic (Understands Concepts (Applies
Terms & Facts) & Principles) Principles)
Chapter Opener: 1, 2, 3, 4
Dell
(pp. 122-123)
Marketing in 10, 11, 16, 17, 18, 26, 27, 5, 6, 7, 8, 9, 12, 13, 15, 19, 14, 22, 23, 24, 25,
a Borderless 31, 32, 33, 38, 39, 40, 44, 20, 21, 30, 34, 35, 36, 37, 41, 28, 29, 47, 55, 57,
Economic World 45, 46, 48, 49, 51, 53, 56, 42, 43, 50, 52, 54, 67, 70, 71, 61, 62, 63
58, 59, 60, 64, 65, 66, 68, 72, 75, 76, 77, 78, 79, 80 227, 229
(pp. 124-130) 69, 73, 74 228, 230, 231, 232
233
A Global 81, 82, 84, 85, 91, 92, 95, 83, 97, 101, 102, 103, 104, 86, 87, 88, 89, 90,
Environmental Scan 96, 98, 99, 100, 106, 114, 111, 112, 113, 116, 117, 119, 93, 94, 105, 107,
115, 124, 125, 128, 129, 120, 121, 122, 126, 127, 130, 108, 109, 110, 118,
(pp. 130-136) 134, 136 131, 132, 135, 137 123, 133
236 234, 235, 237
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Comparing Global 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 157, 158, 165, 173,
Market-Entry 150, 151, 152, 153, 154, 149, 156, 160, 164, 168, 169, 174, 176, 182, 187,
Strategies 155, 159, 161, 162, 163, 170, 171, 172, 180, 181, 185, 188
166, 167, 175, 177, 178, 186
(pp. 136-139) 179, 183, 184 238, 239, 240, 241
Crafting a 189, 193, 194, 197, 213, 190, 195, 200, 201, 202, 203, 191, 192, 196, 198,
Worldwide 214, 215, 218, 219, 220 204, 205, 206, 207, 208, 209, 199, 216, 217, 221,
Marketing Program 210, 211, 212 222
(pp. 139-142) 242, 243, 244
Video Case 6: 223 224, 225, 226

CNS
(pp. 143-145)
NOTE: Bold numbers indicate short essay questions. Underlined numbers indicate visually enhanced questions.
2
Test Item Table by Learning Objective and Bloom’s Level of Learning
Bloom’s Level of Learning (LL)

Level 1 Level 2 Level 3
Learning Objective
Knowledge Comprehension Application
(LO) (Knows Basic (Understands (Applies
Terms & Facts) Concepts Principles)
& Principles)
LO1 Identify the major trends 10, 11, 16, 17, 18, 5, 6, 7, 8, 9, 12, 13, 14, 22, 23, 24,
that have influenced 26, 27, 31, 32, 33, 15, 19, 20, 21, 30, 25, 28, 29, 47,
world trade and global 38, 39, 40, 44, 45, 34, 35, 36, 37, 41, 55, 57, 61, 62,
marketing. 46, 48, 49, 51, 53, 42, 43, 50, 52, 54, 63
(pp. 124-130) 56, 58, 59, 60, 64, 67, 70, 71, 72, 75, 227, 229
65, 66, 68, 69, 73, 74 76, 77, 78, 79, 80
233 228, 230, 231, 232
LO2 Identify the 81, 82, 84, 85, 91, 83, 97, 101, 102, 86, 87, 88, 89,
environmental forces 92, 95, 96, 98, 99, 103, 104, 111, 112, 90, 93, 94,
that shape global 100, 106, 114, 115, 113, 116, 117, 119, 105, 107, 108,
marketing efforts. 124, 125, 128, 129, 120, 121, 122, 126, 109, 110, 118,
(pp. 130-136) 134, 136 127, 130, 131, 132, 123, 133
236 135, 137, 225
234, 235, 237
LO3 Name and describe the 138, 139, 140, 141, 1, 143, 144, 145, 157, 158, 165,
alternative approaches 142, 150, 151, 152, 146, 147, 148, 149, 173, 174, 176,
companies use to enter 153, 154, 155, 159, 156, 160, 164, 168, 182, 187, 188
global markets. 161, 162, 163, 166, 169, 170, 171, 172,
(pp. 136-139) 167, 175, 177, 178, 180, 181, 185, 186,
179, 183, 184 224, 226
238, 239, 240, 241
LO4 Explain the distinction 189, 193, 194, 197, 2, 3, 4, 190, 195, 191, 192, 196,
between standardization 213, 214, 215, 218, 200, 201, 202, 203, 198, 199, 216,
and customization when 219, 220, 223 204, 205, 206, 207, 217, 221, 222
companies craft 208, 209, 210, 211,
worldwide marketing 212
programs. 242, 243, 244
(pp. 139-142)
NOTE: Bold numbers indicate short essay questions. Underlined numbers indicate visually enhanced questions.
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
MULTIPLE CHOICE QUESTIONS
6-1 CHAPTER OPENER: DELL COMPREHENSION
Why has Dell, Inc., embarked on a global growth initiative?

a. National sales have decreased.
b. Dell was recently purchased by Lenovo, a major Chinese competitor.
c. There was too much competition in Dell’s direct marketing channel.
d. There are fewer restrictions in computer technology outside the United States.
e. Emerging economies offer significant growth potential.
Answer: e Page(s): 123 LO: 3 AACSB: Global QD: Medium

Rationale: Dell’s global initiative focuses on emerging economies in Asia, Africa, and Latin
America. Compared with mature economies in North America and Western Europe, emerging
economies offer significant growth potential, according to Michael Dell, Dell’s founder and CEO.
In what way is Dell’s expansion into the global arena a departure from its prior marketing
practices?
a. All Dell products were manufactured in the countries within which they were sold.
b. Dell sold its products to emerging markets using the telephone and Internet sales strategy that
was so successful in the United States.
c. Dell opened stores in selected retailers in India.
d. Dell sold only laptops in China whereas it sold both desktops and laptops in India due to trade
restrictions in China.
e. Dell designed and distributed the same products globally to take advantage of economies of
scale.
Answer: c Page(s): 123 LO: 4 AACSB: Global QD: Medium
Rationale: Dell’s global initiative is bold in its departure from prior product development
practices and change to its sales and distribution strategy. It is now designing products to meet
the specific needs of emerging country customers. Moreover, Dell opened stores in selected
retailers in India, among other initiatives that were different from its U.S. strategy.
Dell established its company primarily with direct telephone-and Internet-based sales. In terms of
Dell’s global expansion strategy, which of the following statements is most accurate?
a. Dell sells its computers via word of mouth, which is the most powerful method for
electronics.
b. Dell partners with each country’s largest department stores and sell its computers in the small
appliance department.
c. Dell issues its own credit card through multinational banks, making it possible for customers
who would not normally qualify for credit to do so.
-4-
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or
distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or
part.
d. Dell distributes its products through individual sales associates who reach out to customers
with a first-hand experience at their doorsteps.
e. Dell maintains the exact same U.S. strategies that brought it this far because it sees no reason
to “mess with success.”
Answer: d Page(s): 123 LO: 4 AACSB: Global QD: Medium

Rationale: In emerging economies, customers prefer to see, touch, and use a personal computer
before they buy. In response, Dell used individual sales affiliates who reached out to customers
in person and gave them a first-hand product experience at their doorstep.
Dell established its company primarily with direct telephone-and Internet-based sales. In terms of
Dell’s global expansion strategy, which of the following statements is most accurate?
a. Dell will continue to use its direct buy strategy but will require all new employees in its sales
force to be multilingual.
b. Dell will open “shop-in-a-shop” counters in selected retailers in India where customers can
reduce purchase anxiety by using the computers before they buy.
c. Dell will establish call centers in all major international cities so that customers may deal
directly with native-born speakers.
d. Dell will issue its own credit card through microfinance-oriented banks, making it possible
for customers who would not normally qualify for credit to do so.
e. Dell will maintain the exact same strategies that brought it this far because it sees no reason
to “mess with success.”
Answer: b Page(s): 123 LO: 4 AACSB: Global QD: Medium

Rationale: In emerging economies, customers prefer to see, touch, and use a personal computer
before they buy. In response, Dell will open “shop-in-a-shop” counters in selected retailers in
India where customers can reduce purchase anxiety by using the computers before they buy.
6-5 WORLD TRADE COMPREHENSION
Which of the following statements about world trade is most accurate?

a. Manufactured products and commodities account for only 40 percent of world trade.
b. Services such as telecommunications, transportation, and banking make up less than 10
percent of world trade.
c. Dollar value of world trade has more than doubled in the past decade.
d. All nations participate equally in world trade.
e. Free trade among nations is declining in favor of a protectionist atmosphere.

Rationale: All nations do not participate equally in world trade. Manufactured products account
for 75 percent of world trade, with service industries accounting for 25 percent. World trade has
more than doubled in the past decade, despite the recent recession.
6-6 TRENDS IN WORLD TRADE COMPREHENSION
-5-
part.
Four trends in the past decade have significantly influenced the landscape of global marketing.
One of them is
a. an increase in most countries’ GDPs coupled with an increased degree of consumer
ethnocentrism.
b. a significant increase in economic protectionism and a decline in free trade.
c. a more aggressive attitude toward initiating international tariffs and quota systems.
d. a decrease in most countries’ GDPs and a renewal of nationalism.
e. a decline in economic protectionism by individual countries.

Rationale: Four trends in the past decade have significantly influenced the landscape of global
marketing: (1) the decline of economic protectionism by individual countries; (2) the rise of
economic integration and free trade among nations; (3) global competition among global
companies for global customers; and (4) the emergence of networked global marketspace.
One of them is
a. the rise of economic integration and free trade among nations.
b. an increase in economic protectionism and a decline in free trade.
c. a more aggressive attitude towards initiating international tariffs and quota systems.
e. an increase in most countries’ GDPs coupled with an increased degree of consumer
ethnocentrism.
Answer: a Page(s): 124 LO: 1 AACSB: Global QD: Medium

One of them is
a. an increase in economic protectionism and a decline in free trade.
b. a more aggressive attitude towards initiating international tariffs and quota systems.
c. global competition among global companies for global customers.
ethnocentrism.

-6-
part.
One of them is
a. an increase in economic protectionism and a decline free trade.
b. a more aggressive attitude towards initiating international tariffs and quota systems.
c. a decrease in most countries’ GDPs and a renewal of nationalism.
d. the emergence of networked global marketspace.
ethnocentrism.

6-10 PROTECTIONISM KNOWLEDGE
The practice of shielding one or more sectors of a country’s economy from foreign competition
through the use of tariffs or quotas is referred to as
a. domestic imperialism.
b. protectionism.
c. blocked competition.
d. import taxation.
e. trade restriction.
Answer: b Page(s): 124 LO: 1 AACSB: Global QD: Easy

Rationale: Key term definition—protectionism.
6-11 PROTECTIONISM KNOWLEDGE
Protectionism refers to
a. the practice of purchasing products exclusively from a domestic market in order to shore up a
nation’s economy.
b. the use of tariffs, quotas, and boycotts with the express intention of putting foreign
competitors out of business.
c. the practice of shielding one or more sectors of a country’s economy from foreign
competition through the use of tariffs or quotas.
d. a form of domestic imperialism that holds that only those products manufactured within one’s
home nation are of sufficient quality to warrant purchase.
e. the practice of purchasing products exclusively from a foreign developing country in order to
develop its industries and economic infrastructure.
Answer: c Page(s): 124 LO: 1 AACSB: Global QD: Easy

Rationale: Key term definition—protectionism.
-7-
part.
6-12 PROTECTIONISM COMPREHENSION
The economic argument for protectionism is that it

a. protects a nation’s political security.
b. encourages economic reliance on foreign countries.
c. inhibits the development of domestic industries.
d. creates opportunities for the outsourcing of domestic jobs.
e. creates a more favorable environment for a global economy.

Rationale: Protectionism is the practice of shielding one or more sectors of a country’s economy
from foreign competition through the use of tariffs or quotas. The economic argument for
protectionism is that it limits the outsourcing of jobs, protects a nation’s political security,
discourages economic dependency on other countries, and encourages the development of
domestic industries.
Those in favor of protectionism argue that it

a. helps reduce tariffs and quotas.
b. encourages the development of domestic industries.
c. encourages economic reliance on foreign countries.
d. creates opportunities for the outsourcing of domestic jobs.
e. creates a more favorable environment for a global economy.

from foreign competition through the use of tariffs or quotas. The economic argument for
protectionism is that it limits the outsourcing of jobs, protects a nation’s political security,
discourages economic dependency on other countries, and encourages the development of
domestic industries.
6-14 PROTECTIONISM APPLICATION
In September 2009, the United States imposed a 35% tariff on Chinese tire imports in hopes of
sustaining U.S. jobs in tire manufacturing. This addition of tariffs is an example of
a. imposing the rule of eminent domain.
b. increasing ethnocentrism.
c. enhancing domestic imperialism.
d. increasing protectionism.
e. slowing countertrade.
Answer: d Page(s): 124 LO: 1 AACSB: Global QD: Hard

from foreign competition through the use of tariffs or quotas. By adding the tariff, the United
States is adding a protectionism measure for the U.S. tire industry.
6-15 MAKING RESPONSIBLE DECISIONS COMPREHENSION

-8-
part.
Which of the following issues raises concerns about the ethics of protectionism?
a. Competitive advantage grows out of continuous improvement.
b. Small firms succeed in foreign niche markets.
c. Tariffs have declined from an average of 40 percent to less than 5 percent.
d. Regional trade agreements provide preferential treatment for member nations.
e. Pan-European marketing strategies are possible due to greater uniformity in packaging
standards.
Answer: d Page(s): 124-125 LO: 1 AACSB: Ethics QD: Medium

Rationale: Of the statements above, the possibility of preferential treatment, alternative “d” is
most likely to suggest an ethical consideration.
6-16 TARIFFS KNOWLEDGE
Government taxes on goods or services entering a country that primarily serve to raise prices on
imports are referred to as
a. tariffs.
b. quotas.
c. WTO taxes.
d. foreign excise taxes.
e. trade subsidies.
Answer: a Page(s): 124 LO: 1 AACSB: Global QD: Easy

Rationale: Key term definition—tariffs.
Tariffs refer to
a. government payments to companies or industries that primarily serve to create competitive
advantage for domestic products.
b. government taxes on goods or services entering a country that primarily serve to raise prices
on imports.
c. a restriction placed on the amount of a product allowed to enter or leave a country.
d. a minimum requirement for the purchase between two or more nations of products or
services.
e. a refusal to purchase or exchange goods or services with another nation unless certain
financial or ideological requirements have been satisfied.

A government tax on goods or services entering a country is referred to as a

a. GATT tax.
b. quota.
-9-
part.
c. tariff.
d. foreign excise tax.
e. subsidy.

6-19 TARIFFS COMPREHENSION
The U.S. Rice Millers’ Association claims that if the Japanese rice market were opened to
imports by lowering __________, lower prices would save Japanese consumers $6 billion
annually and the United States would gain a large share of the Japanese rice market.
a. boycotts
b. tariffs
c. quotas
d. sanctions
e. subsidies

Rationale: Tariffs are government taxes on goods or services entering a country that primarily
serve to raise prices on imports.
The __________ imposed on imported bananas by Western European countries cost consumers
$2 billion a year in higher prices.
a. boycotts
b. tariffs
c. quotas
d. sanctions
e. subsidies

U.S. citizens pay $5 billion more annually for shoes and Japanese citizens pay $6 billion more for
rice than the actual cost of the products because
a. both countries have suffered major financial crises due a severe trade imbalance.
b. both countries have imposed tariffs on imported goods to protect their domestic markets.
c. both countries have imposed limits on the quantity of these goods that can leave their
respective domestic markets.
d. both products are considered essentials and as a result are more heavily taxed.
e. these products were purchased at a lower price from nations that currently are under
governmental sanctions.
- 10 -
part.
6-22 TARIFFS APPLICATION
Recently, the Japanese government, under pressure from its domestic farm lobby, slapped
government taxes on mushrooms, leeks, and the reeds used in tatami mats that were being
imported from China. Japan levied
a. WTO taxes.
b. quotas.
c. tariffs.
d. excise taxes.
e. subsidies.
Answer: c Page(s): 124 LO: 1 AACSB: Global QD: Hard

If you wanted to set up a business importing amber jewelry from Latvia to the United States, you
would have to plan on paying the U.S. Customs Service roughly 20 percent of the value of the
product as a(n) __________.
a. bribe
b. tariff
c. subsidy
d. excise tax
e. quota
Answer: b Page(s): 124 LO: 1 AACSB: Global QD: Hard

Whirlpool recently asked the United States to impose __________ on washing machine imports
made by LG Electronics and Samsung Electronics to raise the price of these products. Whirlpool
accused these companies of selling below fair market value and receiving anticompetitive export
subsidies from their governments, both of which could jeopardize American jobs.
a. boycotts
b. tariffs
c. quotas
d. sanctions
e. embargoes
- 11 -
part.
President Bill Clinton attempted to protect American firms from foreign competition by placing a
government tax on Japanese automobiles imported to the United States. President Clinton’s goal
was to raise the price on Japanese imports, thereby encouraging American consumers to purchase
American-made automobiles. The tax the President threatened to impose is an example of a
__________.
a. boycott
b. tariff
c. quota
d. sanction
e. subsidy

6-26 QUOTA KNOWLEDGE
A restriction placed on the amount of a product allowed to enter or leave a country is referred to
as a
a. quota.
b. tariff.
c. GATT tax.
d. subsidy.
e. excise tax.

Rationale: Key term definition—quota.
6-27 QUOTA KNOWLEDGE
A quota refers to
a. a government tax on goods or services entering a country that primarily serves to raise prices
on imports.
b. government payments to companies or industries that serve to lower costs and provide a
competitive advantage to domestic industries.
c. a restriction placed on the amount of a product allowed to enter or leave a country.
d. a minimum requirement for the purchase of specific products or services between two
nations.
e. a refusal to purchase or exchange goods or services with another nation unless certain
financial or ideological requirements have been satisfied.

Rationale: Key term definition—quota.
- 12 -
part.
6-28 QUOTA APPLICATION
The world’s largest manufacturer of peppermint candy canes was in Albany, Georgia, until it
could no longer afford to buy the sugar needed for its operation. It moved its manufacturing
business to Mexico where there are no restrictions (as existed in the United States) on the amount
of sugar that can be brought into the nation. The movement of this U.S. business to Mexico was
caused by a(n) __________ established by the U.S. government.
a. tariff
b. trade imbalance
c. quota
d. excise tax
e. subsidy

Rationale: A quota is a restriction placed on the amount of a product allowed to enter or leave a
country. In this case, the U.S. government caused domestically grown sugar to be priced higher
than sugar on the world market due to its protectionist policies on sugar.
6-29 QUOTA APPLICATION
Russia currently has a limit on pork of 400,000 metric tons annually that can be imported by any
country. This restriction would be considered a
a. tariff.
b. trade imbalance.
c. quota.
d. excise tax.
e. subsidy.

Rationale: A quota is a restriction placed on the amount of a product allowed to enter or leave a
country. In this case, the Russian government has protectionist policies restricting the amount of
pork imports.
- 13 -
part.
Figure 6-1
6-30 WORLD TRADE COMPREHENSION
The question mark in Figure 6-1 above indicates that which of the following result from the
imposition of tariffs and quotas based on protectionist policies of a country?
a. an increase in world trade
b. a decrease in world trade
c. a limit on exports
d. a limit on imports
e. countertrade
Answer: b Page(s): 124-125 LO: 1 AACSB: Global QD: Medium

Rationale: Protectionism hinders world trade through tariff and quota policies of individual
countries. Tariffs increase prices and quotas limit supply, which ultimately leads to a decrease in
world trade. See Figure 6-1 in the textbook.
6-31 WORLD TRADE ORGANIZATION (WTO) KNOWLEDGE
An institution that sets rules governing trade between its members through a panel of trade
experts who decide on trade disputes between members and issue binding decisions is referred to
as the __________.
a. League of Nations
b. World Trade Organization (WTO)
c. Association for Commerce Equity (ACE)
d. United Nations Board of Trade (UNBT)
e. Global Better Business Bureau (BBB-G)

Rationale: Key term definition—World Trade Organization (WTO).
- 14 -
part.
The World Trade Organization (WTO) refers to

a. the world’s largest banking institution responsible for establishing and maintaining equitable
exchange rates for all member nations.
b. the world’s largest licensing institution responsible for the certification of products
distributed to a global market.
c. an institution that sets rules governing trade between its members through panels of trade
experts who decide on trade disputes between members and issue binding decisions.
d. a multinational trade organization composed of the world’s wealthiest nations whose primary
purpose is to aid in the economic growth of developing nations.
e. a multinational trade organization comprised of the world’s wealthiest nations whose primary
purpose is to promote free trade economies.

Rationale: Key term definition—World Trade Organization (WTO).
There are __________ World Trade Organization countries, including the United States, which
account for more than 97 percent of world trade.
a. 37
b. 52
c. 97
d. 113
e. 153
Answer: e Page(s): 124 LO: 1 AACSB: Global QD: Easy

Rationale: The World Trade Organization (WTO) was formed in 1995 to address a broad array
of world trade issues. Today, there were 153 WTO member countries, including the United
States, which account for more than 97 percent of world trade.
6-34 WORLD TRADE ORGANIZATION (WTO) COMPREHENSION
Which of the following statements about the World Trade Organization (WTO) is most accurate?
a. The WTO is an institution that sets rules governing trade between its members.
b. The WTO acts as an agent in trade negotiations between its members and the remainder of
the world.
c. The 183 member countries of the WTO account for approximately 55 percent of world trade.
d. The WTO uses panels of trade experts who can issue non-binding recommendations.
e. The WTO was formed by the United Nations.

Rationale: The major industrialized nations of the world formed the WTO in 1995 to address
world trade issues. The 153 WTO member countries account for more than 97 percent of world
trade. The WTO is an institution that sets rules governing trade between its members through
panels of trade experts who decide on trade disputes between members and issue binding
decisions.
- 15 -
part.
a. The World Trade organization was formed in 2008 in response to the global recession.
b. The 183 member countries of the WTO account for approximately 55 percent of world trade.
c. The WTO acts as an agent in trade negotiations between its members and the remainder of
the world.
d. The WTO uses panels of trade experts who can issue binding decisions.

trade. The WTO is an institution that sets rules governing trade between its members through
panels of trade experts who decide on trade disputes between members and issue binding
decisions.
a. The World Trade organization was formed in 2008 to response to the global recession.
b. The 153 member countries of the WTO account for more than 97 percent of world trade.
c. The WTO sets rules governing trade between member and nonmenber countries of the world.

trade. The WTO is a permanent institution that sets rules governing trade between its members
through panels of trade experts who decide on trade disputes between members and issue binding
decisions.
a. The WTO acts as an agent in trade negotiations between its members and the remainder of
the world.
b. The 153 member countries of the WTO account for less than 25 percent of world trade.
c. The WTO was formed by the major industrialized nations in 1995 to address a broad array of
trade issues.

- 16 -
part.
trade. The WTO is a permanent institution that sets rules governing trade between its members
through panels of trade experts who decide on trade disputes between members and issue binding
decisions.
6-38 EUROPEAN UNION (EU) KNOWLEDGE
The European Union (EU) in mid 2012 consisted of 27 countries with more than 500 million
consumers. The EU has eliminated most barriers to the free flow of goods, services, capital, and
labor across its borders. Which of the following countries is NOT a member of the EU?
a. Latvia
b. Greece
c. Ireland
d. Switzerland
e. England
Answer: d Page(s): 125 LO: 1 AACSB: Global QD: Easy

Rationale: Switzerland is not one of the 27 countries that belong to the EU (as of mid-2012).
See Figure 6-2 in the textbook.
The European Union is an economic and political union of __________ member countries
located primarily in Europe that have eliminated most barriers to the free flow of goods, services,
capital, and labor across their borders.
a. 17
b. 20
c. 27
d. 30
e. 37

Rationale: The European Union as of mid-2012 consisted of 27 countries that have eliminated
most barriers to the free flow of goods, services, capital, and labor across their borders.
The European Union consists of 27 member countries. This single market has more than
__________ million consumers with a combined GDP that is larger than that of the United States.
a. 100
b. 200
c. 300
d. 400
e. 500

Rationale: The European Union as of mid-2012 consisted of 27 countries with more than 500
million consumers with a combined GDP that is larger than that of the United States.
- 17 -
part.
6-41 EUROPEAN UNION (EU) COMPREHENSION
The European Union (EU) has been beneficial to electronic commerce because it is no longer
necessary to
a. use multiple languages when settling accounts for purchases made across borders.
b. continually monitor currency exchange rates.
c. trade with the former Eastern European communist countries.
d. obey international e-trade regulations.
e. use the American dollar as the economic standard.

Rationale: One benefit of the EU was the adoption of the euro, which has been a boon to the
electronic commerce in the EU by eliminating the need to continually monitor currency exchange
rates.
The EU has benefited firms in its member nations because

a. it provides a safe haven in times of world economic crises.
b. there is a common language advantage among EU consumers.
c. most companies within the EU are engaging in strategic global partnerships.
d. there is now a legally binding code of economic conduct.
e. firms do not need to market their products and services on a nation-by-nation basis.
Answer: e Page(s): 125-126 LO: 1 AACSB: Global QD: Medium

Rationale: The EU has benefited marketers because firms do not need to market their products
and services on a nation-by-nation basis. Rather, pan-European marketing strategies are possible
due to greater uniformity in product and packaging standards; fewer regulatory restrictions on
transportation, advertising, and promotion imposed by countries; and removal of most tariffs that
affect pricing practices.
Pan-European marketing strategies are possible because: (1) firms do not need to market their
products and services on a nation-by-nation basis; (2) there can be greater uniformity in product
and packaging standards; (3) most tariffs that affect pricing practices have been removed; (4)
European wide distribution from fewer locations is now feasible given open borders; and (5)
a. there is a legally binding code of economic conduct.
b. there are effective countermeasures for protectionism.
c. there are fewer regulatory restrictions on transportation, advertising, and promotion.
d. there is a common language advantage among EU consumers.
e. most companies within the EU are engaging in strategic global partnerships.
Answer: c Page(s): 125-126 LO: 1 AACSB: Global QD: Medium

Rationale: The EU has benefited marketers because firms do not need to market their products
and services on a nation-by-nation basis. Rather, pan-European marketing strategies are possible
due to greater uniformity in product and packaging standards; fewer regulatory restrictions on
transportation, advertising, and promotion imposed by countries; and removal of most tariffs that
- 18 -
part.
affect pricing practices. Also, European wide distribution from fewer locations is now feasible
given open borders.
6-44 NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA) KNOWLEDGE
The North American Free Trade Agreement was designed to encourage free trade between
a. North America, Central America, and South America.
b. the United States, Canada, and Mexico.
c. the United States and the European Union.
d. member countries originally from NATO (North Atlantic Treaty Organization).
e. North America and the Commonwealth of Independent States.

Rationale: The North American Free Trade Agreement lifted many trade barriers between
Canada, Mexico, and the United States and created a marketplace with more than 450 million
consumers.
6-45 GLOBAL COMPETITION KNOWLEDGE
When firms originate, produce, and market their products and services worldwide, it is referred to
as __________.
a. acculturation
b. global competition
c. free trade
d. global branding
e. transactional exchange

Rationale: Key term definition—global competition.
6-46 GLOBAL COMPETITION KNOWLEDGE
Global competition exists when

a. a firm produces and markets its products worldwide rather than in its own domestic market.
b. firms originate, produce, and market their products and services worldwide.
c. two firms from two different countries compete for market share in a domestic market.
d. two or more firms from different nations combine their resources to market products globally.
e. the firm from one nation dominates the market for that product in every other nation.

Rationale: Key term definition—global competition.
6-47 GLOBAL COMPETITION APPLICATION
Coca-Cola has operations in all but three nations in the world and Pepsi-Cola is now available in
more than 160 countries and territories, making the soft drink industry an example of
- 19 -
part.
a. acculturation.
b. free trade.
c. global competition.
d. global branding.
e. transactional exchange.

Rationale: Global competition exists when firms originate, produce, and market their products
and services worldwide. Pepsi-Cola, now available in more than 160 countries and territories,
accounts for a quarter of all soft drinks sold internationally. Coca-Cola is sold in every country
except Burma, North Korea, and Cuba.
6-48 GLOBAL COMPANIES KNOWLEDGE
In terms of the global marketplace, there are three primary types of companies: __________,
multinational firms, and transnational firms.
a. worldwide
b. conglomerate
c. intercontinental
d. international
e. cosmopolitan

Rationale: Three types of companies compete in the global marketplace: international firms,
In terms of the global marketplace, there are three primary types of companies: international
firms, __________ firms, and transnational firms.
a. large-scale
b. conglomerate
c. intercontinental
d. cosmopolitan
e. multinational

Rationale: Three types of companies compete in the global marketplace: international firms,
6-50 GLOBAL COMPANIES COMPREHENSION
The three types of companies that populate and compete in the global marketplace are (1)
international firms; (2) multinational firms; and (3) __________ firms.
a. multiethnic
b. transnational
c. multidomestic
d. ethnocentric
- 20 -
part.
e. meganational

Rationale: The three types of companies populate and compete in the global marketplace are: (1)
international firms; (2) multinational firms; and (3) transnational firms.
The administrative, marketing, and manufacturing operations that many international firms,
multinational firms, and transnational firms have around the world are often called
a. divisions.
b. outlets.
c. departments.
d. markets.
e. holding companies.

Rationale: Text term definition—divisions or subsidiaries.
6-52 GLOBAL COMPANIES COMPREHENSION
In terms of the global marketplace, there are three primary types of companies: (1) international
firms; (2) multinational firms; and (3) transnational firms. The key factor that distinguishes one
from another is
a. the firm’s financial capacity to take risks.
b. the willingness and ability to embrace diversity and cultural differences.
c. the firm’s orientation toward and strategy for global markets and marketing.
d. the relative position of the product or service in terms of its life cycle.
e. the relative size of the firm both in financial terms and in production capacity.

Rationale: The three types of companies populate and compete in the global marketplace are: (1)
international firms; (2) multinational firms; and (3) transnational firms. A firm’s orientation and
strategy for global markets and marketing defines the type of company it is or attempts to be.
6-53 INTERNATIONAL FIRM KNOWLEDGE
A(n) __________ firm engages in trade and marketing in different countries as an extension of
the marketing strategy in its home country.
a. multidomestic
b. meganational
c. international
d. multinational
e. transnational

Rationale: Text term definition—international firm.
- 21 -
part.
6-54 INTERNATIONAL FIRM COMPREHENSION
Generally speaking, a(n) __________ firm markets its existing products and services in other
countries the same way it does in its home country.
a. meganational
b. international
c. multinational
d. transnational
e. intranational

Rationale: International firms market their existing products and services in other countries the
same way they do in their home country.
6-55 INTERNATIONAL FIRM APPLICATION
Mars, America’s second-largest candy company, began doing business in Russia in the late
1980s. The Snickers bar is one of the top selling candies in Russia and is marketed in much the
same way as it is in the United States. Mars is most likely a(n) __________ firm.
a. international
b. multidomestic
c. transnational
d. meganational
e. multinational
Answer: a Page(s): 127 LO: 1 AACSB: Global QD: Hard

Rationale: International firms engage in trade and marketing in different countries as an
extension of the marketing strategy in their home country.
6-56 MULTINATIONAL FIRM KNOWLEDGE
A firm that views the world as consisting of unique parts and markets to each part differently is
referred to as a(n)
a. meganational firm.
b. extranational firm.
c. international firm.
d. multinational firm.
e. transnational firm.

Rationale: Text term definition—multinational firm.
6-57 MULTINATIONAL FIRM APPLICATION
Unilever markets its Snuggle fabric softener differently in different parts of the world. Unilever
is a(n) __________ firm.
- 22 -
part.
a. ethnocentric
b. multinational
c. transnational
d. global
e. international

Rationale: A multinational firm views the world as consisting of unique parts and markets to
each part differently.
6-58 MULTIDOMESTIC MARKETING STRATEGY KNOWLEDGE
The strategy used by firms that have as many different product variations, brand names, and
advertising programs as countries in which they do business is referred to as a(n)
a. ethnocentric strategy.
b. multidomestic strategy.
c. transnational marketing strategy.
d. global marketing strategy.
e. multimarket strategy.

Rationale: Key term definition—multidomestic marketing strategy.
A multidomestic marketing strategy refers to

a. the strategy of transnational firms that employ the practice of standardizing marketing
activities when there are cultural similarities and adapting them when cultures differ.
b. the strategy used by firms that use the same product variations, brand names, and advertising
programs for every country in which they do business.
c. the strategy used by firms that have as many different product variations, brand names, and
advertising programs as countries in which they do business.
d. the strategy of seeking out already established firms in other nations and selling them the
rights to manufacture and distribute the firm’s products through the host nation’s established
infrastructure.
e. the strategy currently used by most U.S. domestic firms that when entering a new
international market, these firms offer only those products that require the least amount of
product adaptation or consumer education.

Rationale: Key term definition—multidomestic marketing strategy.
Companies that use a(n) __________ marketing strategy have as many different product
variations, brand names, and advertising programs as countries in which they do business.
a. ethnocentric
b. multidomestic
- 23 -
part.
c. transnational
d. global
e. international

Rationale: Firms that have as many different product variations, brand names, and advertising
programs as countries in which they do business use a multidomestic marketing strategy.
6-61 MULTIDOMESTIC MARKETING STRATEGY APPLICATION
Lever Europe, a division of Unilever, markets its Snuggle fabric softener in the United States.
But in 10 European countries, it uses seven brand names, including Kuschelweich in German,
Coccolino in Italy, and Mimosin in France. These products also have different packages,
different advertising programs, and occasionally different formulas. From this information, we
can assume that Lever Europe uses a(n) __________ marketing strategy.
a. ethnocentric
b. transnational
c. global
d. international
e. multidomestic
Answer: e Page(s): 128 LO: 1 AACSB: Global QD: Hard

Rationale: Firms that have as many different product variations, brand names, and advertising
programs as countries in which they do business use a multidomestic marketing strategy.
U.S. appliance manufacturers find that different customs about shopping must be used to
determine product design. For instance, people in Northern Europe shop only once a week, so
they need bigger refrigerators than Southern Europeans, who shop daily. Furthermore, Northern
Europeans insist that freezers should be on the top just as firmly as Southern Europeans insist that
freezers should be on the bottom. Consumers in other regions use their appliances differently and
have other different product demands. Given this information, you should conclude U.S.
appliance manufacturers would be more likely successful if they used a(n) __________ marketing
strategy.
a. global
b. multidomestic
c. transnational
d. meganational
e. international

Rationale: Companies that use a multidomestic marketing strategy have as many different
product variations as countries in which they do business.
- 24 -
part.
Disney employed a(n) __________ marketing strategy for its Disneyland Paris, particularly when
it came to the eateries in the park. These restaurants featured recipes that were revised for local
tastes, alcoholic beverages (not permitted in previous parks), and increased outdoor seating.
a. global
b. multidomestic
c. transnational
d. meganational
e. international

Rationale: Companies that use a multidomestic marketing strategy have as many different
product variations as countries in which they do business.
6-64 TRANSNATIONAL FIRM KNOWLEDGE
A(n) __________ firm views the world as one market and emphasizes cultural similarities across
countries or universal consumer needs and wants more than differences.
a. transcontinental
b. multidomestic
c. international
d. multinational
e. transnational

Rationale: Text term definition—transnational firm.
6-65 GLOBAL MARKETING STRATEGY KNOWLEDGE
The strategy transnational firms employ that standardizes marketing activities when there are
cultural similarities and adapts them when cultures differ is referred to as a(n)
a. global marketing strategy.
b. integrated marketing strategy.
c. transnational marketing strategy.
d. meganational marketing strategy.
e. international marketing strategy.

Rationale: Key term definition—global marketing strategy.
6-66 GLOBAL MARKETING STRATEGY KNOWLEDGE
A global marketing strategy refers to

a. the strategy used by multinational firms that have as many different product variations, brand
names, and advertising programs as countries in which they do business.
b. the strategy of transnational firms not to employ adaptive marketing techniques when there
are cultural differences, but to redirect their marketing resources towards customer education.
- 25 -
part.
c. the strategy of transnational firms that employ the practice of standardizing marketing
activities when there are cultural similarities and adapting them when cultures differ.
d. the global strategy of seeking out already established firms in other nations and selling them
the rights to manufacture and distribute the firm’s products through a host nation’s local
businesses.
e. the strategy currently used by most U.S. domestic firms that when entering a new
international market, these firms offer only those products that require the least amount of
product adaptation.

Rationale: Key term definition—global marketing strategy.
6-67 GLOBAL MARKETING STRATEGY COMPREHENSION
Which of the following types of firms would be most likely to use a global marketing strategy?
a. multidomestic
b. multinational
c. multicountry
d. transnational
e. transborder

Rationale: Transnational marketers employ a global marketing strategy—the practice of
standardizing marketing activities when there are cultural similarities and adapting them when
cultures differ.
6-68 GLOBAL BRAND KNOWLEDGE
A brand marketed under the same name in multiple countries with similar and centrally
coordinated marketing programs is referred to as a
a. transnational brand.
b. international brand.
c. multinational brand.
d. global brand.
e. meganational brand.

Rationale: Key term definition—global brand.
6-69 GLOBAL BRAND KNOWLEDGE
A global brand refers to

a. two or more domestic products that coincidentally share the same brand name but represent
two completely unrelated products.
b. two or more international products that coincidentally share the same brand name but
represent two completely unrelated products.
c. a brand marketed under the same name in multiple countries with similar and centrally
coordinated marketing programs.
- 26 -
part.
d. a brand that is essentially the same but that has had minor adaptations made to meet the more
specific needs of different nations.
e. a brand marketed under different names in multiple countries with similar and centrally
coordinated marketing programs.

Rationale: Key term definition—global brand.
6-70 GLOBAL BRAND COMPREHENSION
Which of the following statements regarding global brands is most accurate?

a. A global brand has dispersed marketing centers, each of which is responsible for a specific
region.
b. A global brand is marketed under the same name in multiple countries.
c. A global brand alters the product formulation or service for each geographical region.
d. A global brand delivers multiple benefits to the GDP of each country.
e. A global brand is a collaborative effort among several different transnational firms.

Rationale: A global brand is a brand marketed under the same name in multiple countries with
similar and centrally coordinated marketing programs. Global brands have the same product
formulation or service concept, deliver the same benefits to consumers, and use consistent
advertising across multiple countries and cultures. Global brands are sometimes tailored to
specific cultures or countries.
Which of the following statements about global brands is most accurate?

a. A global brand has centrally coordinated marketing programs.
b. A global brand is marketed under different names but uses identical ads for all markets.
c. A global brand alters the product formulation or service for each geographical region.
d. A global brand delivers multiple benefits based on the GDP of each country.
e. A global brand is a collaborative effort among several different national firms.

A global brand is a brand marketed under the same name in multiple countries with similar and
centrally coordinated marketing programs. However, adaptations of global brands are made
a. if required by government regulations in the host market and for no other reason.
b. only in its initial introduction into a market and only until the brand is recognized.
c. by domestic competitors causing brand confusion.
- 27 -
part.
d. only when necessary to better connect the brand to consumers in different markets.
e. when there is a serious drop in market share.

6-73 GLOBAL CONSUMERS KNOWLEDGE
Consumer groups living in many countries or regions of the world that have similar needs or seek
similar features and benefits from products or services are referred to as
a. transnational consumers.
b. meganational consumers.
c. international consumers.
d. multinational consumers.
e. global consumers.

Rationale: Key term definition—global consumers.
6-74 GLOBAL CONSUMERS KNOWLEDGE
Global consumers refer to

a. all potential consumers for any and all products or services regardless of cultural, ethnic, or
national origins.
b. customers within a nation who consider the entire world a single marketplace.
c. consumer groups living in many countries or regions of the world who have similar needs or
seek similar features and benefits from products or services.
d. consumer groups living in many countries or regions of the world that have similar needs but
seek customized features and benefits from products or services that reflect their individual
cultures.
e. multinational organizations whose products incorporate raw materials, assembly, and
distribution contributions from multiple nations before they are marketed.

Rationale: Key term definition—global consumers.
6-75 GLOBAL CONSUMERS COMPREHENSION
Around the world, middle-class, youth, and elite markets consume similar assortments of
products and services, regardless of geographic location, are referred to as
a. transnational consumers.
b. meganational consumers.
c. international consumers.
d. multinational consumers.
- 28 -
part.
e. global consumers.

Rationale: Global consumers consist of consumer groups living in many countries or regions of
the world who have similar needs or seek similar features and benefits from products or services.
Evidence suggests the presence of a global middle-income class, a youth market, and an elite
segment, each consuming or using a common assortment of products and services, regardless of
geographic location.
6-76 MARKETING MATTERS COMPREHENSION
The appreciation of fashion, music, and a desire for novelty and trendier designs and images
a. are preferences found more in American teenagers than in most other cultures around the
world.
b. actually begin at age 10, but begin to decline significantly as students enter high school.
c. ironically are found more for teenagers who cannot afford to make those purchases than for
those who can.
d. are preferences of teenagers around the world regardless of whether they live.
e. are often established early among European teens and they typically linger well into
adulthood.

Rationale: Teenagers around the world appreciate fashion and music, and desire novelty and
trendier designs and images.
Thirteen- to nineteen-year-olds in Europe, North America, South America, and the industrialized
nations of Asia
a. are more similar than different regarding their purchase behaviors.
b. are becoming more similar, but still differ significantly in terms of fashion and design.
c. are rebelling against the Americanization of fashion and culture.
d. have some very different appreciation of fashions and music.
e. are more and more influenced by Asian culture than European culture.

Rationale: The similarity among teens in Europe, North America, South America, and the
industrialized nations of Asia is greater than their differences. A global study of middle-class
teenagers’ rooms in 25 industrialized countries indicated it was difficult, if not impossible, to tell
where in the world the rooms are located.
Based on a study of 6,500 teens in 26 countries, when asked what country had the most influence
on their attitudes and purchase behavior, 54 percent of teens from the United States, 87 percent of
those from Latin America, 80 percent of the Europeans, and 80 percent of those from Asia named
a. the United States.
b. the United Kingdom.
- 29 -
part.
c. Japan.
d. France.
e. Russia.

Rationale: The study showed that the United States was the country that had the most influence
on these teens.
6-79 NETWORKED GLOBAL MARKETSPACE COMPREHENSION
Which of the following statements about the emergence of a networked global marketspace is
most accurate?
a. Marketspace creates an unfair competitive environment for emerging nations.
b. More business-to-consumer marketing is done on the Internet than business-to-business
marketing.
c. The most active participants in the networked global marketspace are companies in
developing nations.
d. All business in the networked global marketspace is conducted in English.
e. The chief advantage of the global marketspace over the traditional bricks-and-mortar stores
for customers is the ability to shop anywhere, at any time, and at a lower cost.

Rationale: The promise of a networked global marketspace is that it enables the exchange of
goods, services, and information from companies anywhere to customers anywhere at any time
and at a lower cost. This promise has become a reality for buyers and sellers in industrialized
countries that possess the telecommunications infrastructure necessary to support Internet
technology.
6-80 NETWORKED GLOBAL MARKETSPACE COMPREHENSION
The use of __________ as a tool for exchanging goods, services, and information on a global
scale is one of the trends that has affected world trade.
a. buying centers
b. Internet technology
c. language translators
d. tariff and quota policies
e. multinational marketing strategies

Rationale: The use of Internet technology as a tool for exchanging goods, services, and
information on a global scale is the fourth trend affecting world trade.
6-81 CROSS-CULTURAL ANALYSIS KNOWLEDGE
Cross-cultural analysis refers to the study of

a. the subgroups within the larger, or national, culture with unique values, ideas, and attitudes.
b. the set of values, ideas, and attitudes that are learned and shared among the consumers of a
country.
- 30 -
part.
c. similarities and differences among consumers in two or more nations or societies.
d. buying behaviors within a given nation to identify similarities and differences.
e. buying behaviors within a given nation that links a person’s actions to the cultural group with
which he or she identify most.

Rationale: Key term definition—cross-cultural analysis.
6-82 CROSS-CULTURAL ANALYSIS KNOWLEDGE
The study of similarities and differences among consumers in two or more nations or societies is
referred to as __________.
a. market synthesis
b. cross-cultural analysis
c. international sociographics
d. transnational anthropology
e. multicultural ethnocentrism

Rationale: Key term definition—cross-cultural analysis.
6-83 CROSS-CULTURAL ANALYSIS COMPREHENSION
For the marketer, a thorough __________ involves an understanding of and an appreciation for
the values, customs, symbols, and language of other societies.
a. market synthesis
b. international sociographic study
c. anthropological examination
d. cross-cultural analysis
e. ethnocentrism assessment

Rationale: Marketers must be sensitive to the cultural underpinnings of different societies if they
are to initiate and consummate mutually beneficial exchange relationships with global consumers.
A necessary step in this process is cross-cultural analysis, which involves the study of similarities
and differences among consumers in two or more nations or societies. A thorough cross-cultural
analysis involves an understanding of and an appreciation for the values, customs, symbols, and
language of other societies.
6-84 VALUES KNOWLEDGE
Personally or socially preferable modes of conduct or states of existence that tend to persist over
time are referred to as __________.
a. customs
b. ethics
c. values
d. culture
e. beliefs
- 31 -
part.
Rationale: Key term definition—values.
6-85 VALUES KNOWLEDGE
Values refer to
a. personally or socially held core beliefs that are consistent within a given culture.
b. the beliefs that dictate a person’s behavior, which are often derived from a religious code of
conduct.
c. personally or socially preferable modes of conduct or states of existence that tend to persist
over time.
d. the innate sense of what a person considers to be right or wrong in terms of his or her own
conduct when dealing with others.
e. those personal traits regarding honesty and integrity as well as one’s preferable modes of
conduct or states of existence that have been passed down from generation to generation.

Rationale: Key term definition—values.
6-86 VALUES APPLICATION
The reverence that Japan shows towards its elderly is an example of the nation’s __________.
a. values
b. beliefs
c. customs
d. religion
e. cultural diversity

Rationale: A country’s values are personally or socially preferable modes of conduct or states of
existence that are enduring. This would include the behavior of one generation toward another in
Japan.
Which of the following examples best demonstrates a company’s appreciation of another

country’s values?
a. American companies in Germany encourage the use of all types of credit cards.
b. In Brazil, American companies are extremely careful to keep to a strict agenda and time
schedule, even though an informal structure is preferred.
c. Bath products are advertised by portraying intimate scenes between husbands and wives in
countries where personal privacy is important.
d. McDonald’s restaurants in India serve a full line of products except for hamburgers made
from beef.
e. Vogue Italia publishing a feature with a model wearing "slave earrings" which it said were
"worn by women of color during the slave trade".
- 32 -
part.
Rationale: In terms of cultural values, Germans are not comfortable with using unnecessary
credit, many countries are more comfortable with a more personalized informal structure, and
some cultures are more considerate of personal privacy. Since 85 percent of the Indian
population considers the cow to be sacred, McDonald’s is showing consideration for the
country’s values by not selling beef.
Which of the following examples best demonstrates a company’s appreciation for another
country’s values?
a. A German company allows customers to make large purchases using lay-away (paying small
amounts until the item is paid for and delivered).
b. In Brazil, an appliance maintenance firm schedules service appointments allowing only 15
minutes of leeway for missed calls or no shows.
c. In Japan, a spa owner created special exercise classes for husbands and wives.
d. In India, a popular hamburger chain separated its dining area by color for people who wanted
to eat beef and those who did not.
e. Calvin Klein reduced the number of outdoor advertising placements showing scantily clad
models in countries with predominantly Muslim populations.

Rationale: Modesty is an important value within Muslim cultures, so Calvin Klein’s efforts are
an example of being sensitive to that value.
Almost all countries have some division of social class (upper, middle, and lower). The
determining factor for the assignment to one of these classes may differ from country to country.
For example, in the United States, the primary determining factor is occupation; in India, it is
birthright; in China, it is geographical region and education; and in Singapore, it is income.
These differences are best explained in terms of a country’s
a. cultural mores.
b. legal system.
c. customs.
d. religion.
e. values.

Rationale: A country’s values are personally or socially preferable modes of conduct or states of
existence that tend to persist over time.
McDonald’s sells its popular Maharaja Mac that consists of two all-chicken patties, special sauce,
lettuce, cheese, pickles, and onions on a sesame-seed bun in __________.
a. Russia
b. China
- 33 -
part.
c. Tanzania
d. Egypt
e. India

Rationale: McDonald’s sells its popular Maharaja Mac that consists of two all-chicken patties,
special sauce, lettuce, cheese, pickles, and onions on a sesame-seed bun in India.
6-91 CUSTOMS KNOWLEDGE
What is considered normal and expected about the way people do things in a specific country is
referred to as __________.
a. morals
b. ethics
c. values
d. customs
e. beliefs

Rationale: Key term definition—customs.
6-92 CUSTOMS KNOWLEDGE
Customs refer to
a. what is considered normal and expected about the way people do things in a specific country.
b. those actions or activities within a community that are unique or distinctly different from any
other group.
c. actions or behaviors that are repeated over time and carry a specific meaning only to a unique
group, nationality, or ethnicity.
d. traditions among a group of people, a nation, or ethnicity that affect their purchase behaviors.
e. what would be considered unusual or unexpected, and even unacceptable about the way
people do things in a specific country.

Rationale: Key term definition—customs.
6-93 CUSTOMS APPLICATION
3M Company executives were perplexed when the company’s Scotch-Brite floor-cleaning

product initially produced lukewarm sales in the Philippines. A Filipino employee explained that
consumers generally clean floors by pushing coconut shells around with their feet. 3M changed
the shape of the pad to a foot and sales soared. 3M changed its product in response to a Filipino
__________.
a. value
b. belief
c. custom
d. idiosyncrasy
e. demographic pattern
- 34 -
part.
Rationale: Customs are the norms and expectations about the way people do things in a specific
country. Since consumers in the Philippines clean floors with their feet, 3M adapted the shape of
its floor-cleaning product to the custom.
6-94 CUSTOMS APPLICATION
KFC in Japan sells tempura crispy strips. In northern England, it stresses gravy and potatoes. In
Thailand, it offers fresh rice. In Holland, instead of potatoes, KFC offers customers a potato and
onion croquette. In France, KFC sells pastries alongside its chicken. These examples illustrate
that KFC exhibits an understanding of and appreciation for the __________ of other societies.
a. demographics
b. symbols
c. customs
d. sensitivities
e. values

Rationale: Customs are what are considered normal and expected about the way people do things
(including what they eat) in a specific country. KFC serves food that suits the tastes of its target
markets in each of the countries listed.
6-95 FOREIGN CORRUPT PRACTICES ACT KNOWLEDGE
The Foreign Corrupt Practices Act

a. has different levels of punishment based upon the wealth of the host nation.
b. regulates only the behavior of U.S. businesses conducting business within the United States.
c. makes the theft of trade secrets by foreign entities a federal crime in the United States.
d. is a unilateral agreement the United States made with several developing nations.
e. makes it a crime for U.S. corporations to bribe an official of a foreign government or political
party to obtain or retain business in a foreign country.

Rationale: Key term definition—Foreign Corrupt Practices Act.
6-96 FOREIGN CORRUPT PRACTICES ACT KNOWLEDGE
A law, amended by the International Anti-Dumping and Fair Competition Act, makes it a crime
for U.S. corporations to bribe an official of a foreign government or political party to obtain or
retain business in a foreign country, is referred to as the
a. International Law for Egalitarian Ethics Act.
b. International Fair Practices Act.
c. Law of International Equity Act.
d. International Law of Ethical Business Practices Act.
e. Foreign Corrupt Practices Act.

- 35 -
part.
Rationale: Key term definition—Foreign Corrupt Practices Act.
6-97 BRIBERY COMPREHENSION
Which of the following statements about bribery is most accurate?

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

Rationale: Bribes, kickbacks, and payoffs offered to entice someone to commit an illegal or
improper act on behalf of the giver for economic gain are considered corrupt in any culture. The
prevalence of bribery in global marketing has led to an agreement among the world’s major
exporting nations to make bribery of foreign government officials a criminal offense. It is illegal
for a U.S. corporation to bribe an official of a foreign government or political party to obtain or
retain business in a foreign country.
6-98 CULTURAL SYMBOLS KNOWLEDGE
Cultural symbols refer to

a. ideas that can be protected by international copyrights.
b. ideas that cannot be expressed by words or characters.
c. things that represent values that exist solely within a nation.
d. things that represent ideas and concepts.
e. words that represent pictures or designs.

Rationale: Key term definition—cultural symbols.
Cultural symbols are things that

a. can be protected by international copyrights.
b. cannot be expressed by words or characters.
c. represent values that exist solely within a nation.
d. represent words through the use of pictures or designs.
e. represent ideas and concepts.

- 36 -
part.
The representations of ideas and concepts to which different cultures often attach different
meanings are referred to as
a. universal symbols.
b. cultural symbols.
b. symbolic concepts.
d. ideological representations.
e. cultural representations.

6-101 CULTURAL SYMBOLS COMPREHENSION
By skillfully using __________, global marketers can tie positive meanings to their products,
services, and brands to enhance their attractiveness to consumers.
a. cultural symbols
b. visual icons
c. trademarks
d. brand names
e. ethnic emblems
Answer: a Page(s): 131-132 LO: 2 AACSB: Global QD: Medium

Rationale: Cultural symbols are things that represent ideas and concepts. By cleverly using
cultural symbols, global marketers can tie positive symbolism to their products, services, and
brands to enhance their attractiveness to consumers.
Tiffany & Company knows that Japanese are superstitious about the number 4. As a result,
Tiffany sells its fine glassware and china in sets of five, not four, in Japan. Tiffany has used its
knowledge of __________ to avoid connecting its products with the number 4.
a. trademarks
b. visual icons
c. cultural symbols
d. brand names
e. ethnic emblems

Rationale: The Japanese are superstitious about the number 4, so to avoid a connection to this
cultural symbol, Tiffany sells its products in sets of five, not four.
- 37 -
part.
Parthenon Photo
The Parthenon, shown in the photo above evokes strong feelings from consumers in Greece and is
referred to as the “holy rock.” As a result, marketers must be mindful in accessing the meaning
of this __________ when developing marketing programs to reach consumers of that country.
a. cultural symbol
b. anthropomorphic code
c. back translation
d. semantic representation
e. civil analysis

Rationale: Cultural symbols are things that represent ideas and concepts in a specific culture.
Symbols and symbolism play an important role in cross-cultural analysis because different
cultures attach different meanings to things.
6-104 LANGUAGE COMPREHENSION
Even though there are hundreds of different languages and dialects, the three major languages
used in global diplomacy and commerce are
a. English, Japanese, and Chinese.
b. English, French, and Spanish.
c. Japanese, Spanish, and French.
d. Japanese, Spanish, and English.
e. Spanish, English, and Chinese.
- 38 -
part.
Rationale: English, French, and Spanish are the principal languages used in global diplomacy
and commerce. However, the best language in which to communicate with consumers is their
own.
6-105 LANGUAGE APPLICATION
Canada has two official languages, which are

a. English and Japanese.
b. English and Spanish.
c. English and French.
d. English and Italian.
e. English and German.

Rationale: Canada has two official languages—English and French.
6-106 BACK TRANSLATION KNOWLEDGE
The practice where a translated word or phrase is retranslated into the original language by a
different interpreter to catch errors is referred to as
a. locution.
b. heuristics.
c. transliteration.
d. back translation.
e. cross-cultural paraphrasing.

Rationale: Key term definition—back translation.
6-107 BACK TRANSLATION APPLICATION
If you were responsible for marketing communications at a company that manufactures office
supplies and had to provide product literature to be distributed in France, you would be wise to
use ___________, whereby you have someone to translate your literature from American English
into French, and then have someone else in France translate the French into American English.
a. back talk
b. back translation
c. double talk
d. double entendre
e. double indemnity

Rationale: Back translation is retranslating a word or phrase into the original language using a
different interpreter to catch errors. By having the literature translated into French and then back
into English, you will be sure the literature conveys the intended meaning.

- 39 -
part.
A Tokyo shopkeeper would have been wise to use __________ to verify the accuracy of the new
sign in English he purchased for his dry cleaning business. The sign read, “Drop your pants here
for best results,” which he didn’t know had another suggestive meaning to native speakers.
a. cultural symbolism
b. dialect transformation
c. semantic analysis
d. linguistic exchange
e. back translation

Rationale: Back translation is retranslating a word or phrase into the original language by a
different interpreter to catch errors.
A New York carwash owner wanted to open a carwash in Quebec, Canada. He hired a U.S.
translator to create signage for the new venture and to design some simple advertising. It was not
until the business was opened that he learned that he should have used __________. His French
signs actually said “car bath” instead of “car wash.”
a. Esperanto
b. back translation
c. semiotics
d. semantic symbolism
e. linguistic exchange

Rationale: Back translation is retranslating a word or phrase into the original language by a
different interpreter to catch errors.
Kit Kat Bar Photo
- 40 -
part.
Consider the Kit Kat bar photo above. Kit Kat bars are marketed by Nestlé worldwide. Kit Kat
is pronounced “kitto katsu” in Japanese, which roughly translates to “surely win.” Japanese teens
eat Kit Kat bars for good luck, particularly when taking crucial school exams. This positive result
might have been eliminated had the company used __________ and felt in necessary to use a
name without an additional meaning.
a. intentional transliteration
b. semantic symbolism
c. back translation
d. semantic analysis
e. linguistic exchange

Rationale: Experienced global marketers use back translation, in which a translated word or
phrase is retranslated into the original language by a different interpreter to catch errors.
Nevertheless, unintended translations can produce favorable results. Consider Kit Kat bars
marketed by Nestlé worldwide. Kit Kat is pronounced “kitto katsu” in Japanese, which roughly
translates to “I will win.” Japanese teens eat Kit Kat bars for good luck, particularly when taking
crucial school exams.
6-111 ECONOMIC CONSIDERATIONS COMPREHENSION
Since global marketing is affected by economic considerations, a scan of the global marketplace
should include which factor?
a. an analysis of cultural diversity within the country under consideration
b. regulatory constraints regarding contracts, mergers, and partnerships
c. measurement of consumer income in different countries
d. an assessment of language differences including dialect variation
e. political and ideological differences between the countries involved

Rationale: A scan of the global marketplace should include: (1) an assessment of the economic
infrastructure in these countries; (2) measurement of consumer income in different countries; and
(3) recognition of a country’s currency exchange rates.
c. an assessment of language differences including dialect variation
d. political and ideological differences between the countries involved
e. an assessment of the economic infrastructure in the involved countries

- 41 -
part.
c. an assessment of language differences including dialect variation
d. recognition of a country’s currency exchange rates
e. political and ideological differences between the countries involved

6-114 ECONOMIC INFRASTRUCTURE KNOWLEDGE
A country’s communication, transportation, financial, and distribution systems are considered to

be its
a. capital improvements.
b. fixed-asset base.
c. economic infrastructure.
d. geopolitical wealth.
e. asset wealth.

Rationale: Text term definition—economic infrastructure.
6-115 ECONOMIC INFRASTRUCTURE KNOWLEDGE
Economic infrastructure refers to

a. a nation’s military-industrial complex.
b. a country’s governmental services.
c. the people and the wealth of a nation.
d. a country’s communication, transportation, financial, and distribution systems.
e. all of a country’s natural resources, whether or not they are currently being exploited.

Rationale: Text term definition—economic infrastructure.
6-116 ECONOMIC INFRASTRUCTURE COMPREHENSION
- 42 -
part.
Two-thirds of the commercial transactions in Russia involve non-monetary forms of payment due
to limits in formal operating procedures among financial institutions and even limits on the notion
of private property there. These would best be described as constraints in the country’s
__________.
a. capital infrastructure
b. political infrastructure
c. economic infrastructure
d. geopolitical system
e. financial exchange system

Rationale: Communications, transportation systems, financial services, as well as distribution
systems contribute to a nation’s economic infrastructure.
Although Russia now has a free economy, there are still some problems with its financial and
legal systems as they relate to __________.
a. private property.
b. product promotion.
c. paid advertising.
d. community property.
e. foreign exchange rates.

Rationale: When entering a foreign market, even the financial and legal system can cause
problems. In Russia and elsewhere, formal operating procedure among financial institutions and
the notion of private property are still limited.
6-118 ECONOMIC INFRASTRUCTURE APPLICATION
In Latvia, only one six-lane highway exists, connecting Riga with Moscow. Otherwise, the roads
are two-lane and many are made of cobblestones or bricks. This limits the speed with which
deliveries can be made and requires that delivery trucks be quite small. The road network in
Latvia is an example of problems with a country’s
a. capital improvements.
b. fixed-asset base.
c. economic infrastructure.
d. geopolitical wealth.
e. asset wealth.

Rationale: Communications, transportation systems, financial services, as well as distribution
systems contribute to a nation’s economic infrastructure.
6-119 CONSUMER INCOME COMPREHENSION
- 43 -
part.
A country’s income distribution is important because it gives a more reliable picture of a
country’s __________.
a. buying capacity
b. taxable income
c. purchasing power
d. discretionary income
e. cost of living.

Rationale: A country’s income distribution is important because it gives a more reliable picture
of a country’s purchasing power.
Generally, as the proportion of middle-income households in a country __________, the

__________ a nation’s purchasing power.
a. increases; greater
b. increases; less
c. decreases; greater
d. levels off; greater
e. There is no relationship between middle-income households and the nation’s purchasing
power.

Rationale: Generally, as the proportion of middle-income households in a country increases, the
greater a nation’s purchasing power tends to be.
Generally, as the proportion of middle-income households in a country __________, the nation’s

purchasing power increases.
a. decreases
b. increases
c. levels off
d. reaches 33 percent of the total population
e. reaches 50 percent of the total population

Generally, as the proportion of middle-income households in a country increases, the nation’s

purchasing power __________.
a. levels off
b. decreases
- 44 -
part.
c. increases
d. becomes less of an economic priority
e. becomes progressively unstable

6-123 CONSUMER INCOME APPLICATION
Foreign countries with very low per capita incomes may still be attractive markets for some
goods. To get a more reliable picture of a country’s purchasing power, a country’s __________
must also be considered.
a. total income
b. total area
c. geographical location
d. culture
e. income distribution

Rationale: A country’s income distribution is important because it gives a more reliable picture
of a country’s purchasing power. Generally, as the proportion of middle-income households in a
country increases, the greater a nation’s purchasing power tends to be.
6-124 MICROFINANCE KNOWLEDGE
The practice of offering small, collateral-free loans to individuals who otherwise would not have
access to the capital necessary to begin small businesses or other income-generating activities, is
referred to as
a. macrofinance.
b. microfinance.
c. microcapitalization.
d. macrocapitalization.
e. megafinance.
Answer: b Page(s): 134-135 LO: 2 AACSB: Global QD: Easy

Rationale: Key term definition—microfinance.
6-125 MICROFINANCE KNOWLEDGE
Microfinance refers to
a. the practice of offering small, collateral-free loans to individuals who otherwise would not
have access to the capital necessary to begin small businesses or other income-generating
activities in exchange for a percentage of future profits rather than repaying of loans.
b. the practice of offering small, collateral-free loans to individuals who otherwise would not
have access to the capital necessary to begin small businesses or other income-generating
activities.
- 45 -
part.
c. the lending of money contingent upon a daily accounting of all expenditures made and all
income generated.
d. the day-to-day expenses such as coffee for the office, flowers for anniversaries, etc. that are
considered too small or too insignificant to be itemized and instead are listed as discretionary
funds.
e. the expenditures within an individual household assigned to each individual family member
whether they personally generate income or not.
Answer: b Page(s): 134-135 LO: 2 AACSB: Global QD: Easy

Rationale: Key term definition—microfinance.
6-126 MICROFINANCE COMPREHENSION
Hindustan Lever realized it could not sell to the rural poor in India unless it found ways to
distribute its products such as soap, shampoos, and laundry detergents. Lever provided start-up
loans to women to buy stocks of products to sell to local villagers. Today, over 45,000 women
sell Lever products to 600,000 consumers in 135,000 villages in India. This is an example of
Lever’s use of
a. macrofinance.
b. macrocapitalization.
c. microfinance.
d. microcapitalization.
e. currency exchange.

Rationale: Microfinance is the practice of offering small collateral-free loans to individuals who
otherwise would not have access to the capital necessary to begin small businesses or other
income-generating activities. Lever is using microfinance in the example given.
6-127 MICROFINANCE COMPREHENSION
Hindustan Lever realized it could not sell to the rural poor in India unless it found ways to
distribute its products such as soap, shampoos, and laundry detergents. Lever provided start-up
loans to women to buy stocks of products to sell to local villagers. Today, over 45,000 poor
women sell Lever products to 600,000 consumers in 135,000 villages in India. This effort was
called __________.
a. Project Open Roads
b. Project Fresh Start
c. Project Tikva
d. Project Shakti
e. Project Helping Hand

Rationale: Hindustan Lever began the Project Shakti initiative in India as a form of
microfinance. Microfinance is the practice of offering small collateral-free loans to individuals
who otherwise would not have access to the capital necessary to begin small businesses or other
income-generating activities.
- 46 -
part.
6-128 CURRENCY EXCHANGE RATE KNOWLEDGE
The price of one country’s currency expressed in terms of another country’s currency is referred
to as the
a. balance of price.
b. currency exchange rate.
c. money conversion factor.
d. balance of payments.
e. transfer payment.

Rationale: Key term definition—currency exchange rate.
6-129 CURRENCY EXCHANGE RATE KNOWLEDGE
A currency exchange rate refers to

a. the unit equivalency of all international currency.
b. the ratio of a nation’s basic unit of currency relative to the price of silver.
c. the ratio of a nation’s basic unit of currency relative to the price of gold.
d. the price of one country’s currency expressed in terms of another country’s currency.
e. the unit of wealth (gold, oil, diamonds, etc.) upon which a nation bases its national currency.

Rationale: Key term definition—currency exchange rate.
6-130 CURRENCY EXCHANGE RATE COMPREHENSION
Fluctuations in the __________ among the world’s currencies have direct impact on the sales and
profits made by global companies.
a. production costs
b. transportation
c. reciprocity
d. exchange rates
e. economic infrastructure

Rationale: A currency exchange rate is the price of one country’s currency expressed in terms of
another country’s currency, such as the U.S. dollar expressed in Brazilian reals. Fluctuations in
exchange rates among the world’s currencies have direct impact on the sales and profits made by
global companies.
When foreign currencies can buy more U.S. dollars,

a. products are more expensive and worth less to foreign customers.
b. products are more expensive and worth more to foreign customers.
c. products are less expensive and worth more to foreign customers.
- 47 -
part.
d. economists consider it an indicator of an impending long-term economic downturn.
e. American consumers buy in large quantities and stockpile in fear of an impending economic
crisis.

Rationale: Exchange rate fluctuations affect the sales and profits made by global companies.
When foreign currencies can buy more U.S. dollars, U.S. products are less expensive for the
foreign customer.
Which of the following statements concerning currency exchange rates is most accurate?
a. Fluctuations in exchange rates among the world’s currencies are of critical importance in
global marketing.
b. Fluctuations in exchange rates among the world’s currencies occur, but multinational
companies are insulated from the affects because of direct investment.
c. Exchange rate fluctuations are relatively rare, but they usually have serious long-term
consequences.
d. Exchange rate fluctuations are almost nonexistent due in great part to the stability of the euro.
e. Exchange rate fluctuations may affect the financial sector but rarely reach the consumer.

Rationale: Fluctuations in exchange rates among the world’s currencies can affect everyone from
international tourists to global companies. For example, when the U.S. dollar is “strong” against
the euro, it takes fewer dollars to purchase goods in the EU. As a result, more U.S. tourists will
travel to Europe. This is great news for Europe’s travel industry, but bad news for European
consumers who want to buy U.S. goods, as they will have to pay more for them.
6-133 CURRENCY EXCHANGE RATE APPLICATION
Chrysler Corporation wanted to sell its Jeeps in Japan. The car was priced in U.S. dollars at
about $19,000, but when it reached the Japanese car showrooms, its price was over ¥31,000
Japanese yen, and the Japanese could not afford to buy it. Its price was set without regard for the
a. balance of price.
b. currency exchange rate.
c. reciprocity price.
d. balance of payments.
e. balance of trade.

Rationale: A currency exchange rate is the price of one country’s currency expressed in terms of
another country’s currency.
6-134 REGULATORY CLIMATE KNOWLEDGE
The political and regulatory climate for marketing in a country or region of the world means not
only identifying the current environment but also determining how
a. it conducts its macrofinancing.
- 48 -
part.
b. its citizens budget their money.
c. long a favorable or unfavorable climate will last.
d. the country’s stocks are performing on the stock exchange.
e. its population ranks in size compared to other countries.

Rationale: The political and regulatory climate for marketing in a country or region of the world
means not only identifying the current climate but also determining how long a favorable or
unfavorable climate will last.
6-135 REGULATORY CLIMATE COMPREHENSION
An assessment of a country’s or region’s political-regulatory climate includes an analysis of its

political stability and __________.
a. economic infrastructure
b. stock market performance
c. trade regulations
d. cultural diversity
e. currency exchange rates

Rationale: An assessment of a country’s or region’s political-regulatory climate includes an
analysis of its political stability and trade regulations.
6-136 POLITICAL STABILITY KNOWLEDGE
Trade among nations or regions depends on political stability. In recent times, billions of dollars
have been lost in __________ and __________ as a result of internal political strife, terrorism,
and war.
a. Russia; Poland
b. France; Spain
c. China; Japan
d. the Middle East; Africa
e. Germany; the United Kingdom

Rationale: Billions of dollars have been lost in the Middle East and Africa, which encourages
careful selection of politically stable countries and regions of the world for trade.
6-137 TRADE REGULATIONS COMPREHENSION
Japanese car safety rules effectively require all automobile replacement parts to be Japanese and
the country has about 11,000 other rules that specify how other goods are to be made and
marketed. These rules often function as __________.
a. economic infrastructure.
b. trade barriers.
c. universal codes.
d. binding requirements.
- 49 -
part.
e. “the price of doing business.”

Rationale: Countries have a variety of rules that govern business practices within their borders.
These rules often serve as trade barriers.
6-138 GLOBAL MARKET ENTRY STRATEGIES KNOWLEDGE
A firm’s profit potential and control over marketing activities __________ as it moves from
exporting to direct investment as a global market-entry strategy.
a. becomes more stable
b. increases
c. levels off
d. decreases
e. becomes more unpredictable

Rationale: A firm’s profit potential and control over marketing activities increases as it moves
from exporting to direct investment as a global market-entry strategy. But so does the firm’s
financial commitment and risk. Firms often engage in exporting, licensing, and joint ventures
before pursuing a direct investment strategy. See Figure 6-3.
Once a company has decided to enter the global marketplace, it must select a means of market
entry. Four general options exist: (1) __________; (2) licensing; (3) joint venture; and (4) direct
investment.
a. exporting
b. accreditation
c. countertrading
d. cooperative
e. franchising

Rationale: Four general options exist: (1) exporting; (2) licensing; (3) joint venture; and (4)
direct investment.
entry. Four general options exist: (1) exporting; (2) __________; (3) joint venture; and (4) direct
investment.
a. macrofinancing
b. microfinancing
c. franchising
d. licensing
e. collateral venture
- 50 -
part.
direct investment.
entry. Four general options exist: (1) exporting; (2) licensing; (3) __________; and (4) direct
investment.
a. franchising
b. cooperative
c. multiparty initiative
d. mutual investment
e. joint venture

direct investment.
entry. Four general options exist: (1) exporting; (2) licensing; (3) joint venture; and (4)
__________.
a. franchising
b. microfinancing
c. unilateral venture
d. cooperative
e. direct investment

direct investment.
6-143 GLOBAL MARKET ENTRY STRATEGIES COMPREHENSION
A firm’s profit potential and control over marketing activities increases as it moves from
exporting to direct investment as a global market-entry strategy. But so does the firm’s
a. likelihood of long-term success.
b. financial commitment and risk.
c. vulnerability to political changes and doctrines.
d. need for a more educated workforce.
e. need for a larger workforce.

Rationale: A firm’s profit potential and control over marketing activities increases as it moves
from exporting to direct investment as a global market-entry strategy. But, so does the firm’s
- 51 -
part.
financial commitment and risk. Firms often engage in exporting, licensing, and joint ventures
before pursuing a direct investment strategy. See Figure 6-3 in the textbook.
Figure 6-3
According to Figure 6-3 above, point “A” would most likely what option for entering the global
marketplace?
a. joint venture
b. licensing
c. exporting
d. direct investment
e. franchise

Rationale: From least risk to greatest risk, the options for entering the global marketplace are:
(A) exporting; (B) licensing; (C) joint venture; and (D) direct investment. See Figure 6-3 in the
textbook.
According to Figure 6-3 above, point “B” would most likely what option for entering the global
marketplace?
a. exporting
b. joint venture
c. direct investment
d. franchising
e. licensing
- 52 -
part.
textbook.
According to Figure 6-3 above, point “C” would most likely what option for entering the global
marketplace?
a. exporting
b. joint venture
d. licensing
e. franchising

textbook.
According to Figure 6-3 above, point “D” would most likely what option for entering the global
marketplace?
a. exporting
b. joint venture
d. franchising
e. licensing

textbook.
According to Figure 6-3 above, points “A” and “D” would most likely be __________ and
__________ respectively.
a. joint venture; licensing
b. licensing; exporting
c. licensing; joint venture
d. direct investment; licensing
e. exporting; direct investment
- 53 -
part.
textbook.
According to Figure 6-3 above, points “B” and “C” would most likely be __________ and
__________ respectively.
a. exporting; licensing
b. licensing; joint venture
c. joint venture; direct investment
d. exporting; direct investment
e. exporting; joint venture

textbook.
6-150 EXPORTING KNOWLEDGE
A global market-entry strategy in which a company produces goods in one country and sells them
in another country is referred to as __________.
a. exporting
b. direct investment
c. countertrade
d. licensing
e. multinational marketing

Rationale: Key term definition—exporting.
Exporting refers to a global market-entry strategy

a. in which a company will sell its products in international markets but not in its own domestic
market.
b. in which a company produces goods in one country and sells them in another country.
c. in which a company will manufacture its product in several countries at the same time using
different brand names and slight product modifications.
d. in which a company will manufacture products specifically designed for non-domestic
markets, but will sell those products to distributors who take title and resell the products to
different companies around the world.
e. whereby a product is made in one country, assembled in a second country, and ultimately
marketed to a third country.

Rationale: Key term definition—exporting.
- 54 -
part.
What market entry option allows a company to make the least number of changes in terms of its
product, its organization, and even its corporate goals?
a. exporting
b. licensing
c. joint venture
e. franchising

Rationale: Exporting allows a company to make the least number of changes in terms of its
product, its organization, and even its corporate goals.
6-153 INDIRECT EXPORTING KNOWLEDGE
Indirect exporting refers to

a. offering the right to a trademark, patent, trade secret, or similarly valued item of intellectual
property in return for a royalty or fee.
b. contracting with a foreign firm to manufacture products according to stated specifications.
c. avoiding the use of additional parties when a firm sells its domestically produced goods in
another country.
d. selling a firm’s domestically produced goods in a foreign country through an intermediary.
e. selling a firm’s domestically produced goods in a foreign country without interference by the
local government.

Rationale: Text term definition—indirect exporting.
When a firm sells its domestically produced goods in a foreign country through an intermediary,
it is referred to as
a. direct exporting.
b. indirect exporting.
c. licensing.
d. franchising.
e. foreign assembly.

Indirect exporting occurs when a firm sells its domestically produced goods in a foreign country
- 55 -
part.
a. in violation of a quota.
b. without paying import tariffs.
c. without paying export duties.
d. through an intermediary.
e. through a joint venture.

6-156 INDIRECT EXPORTING COMPREHENSION
What type of exporting has the least amount of commitment and risk but will probably return the
least profit?
a. direct
b. indirect
c. licensing
d. joint
e. unilateral

Rationale: Indirect exporting has the least amount of commitment and risk but will probably
return the least profit.
6-157 INDIRECT EXPORTING APPLICATION
A small Canadian winery located in British Columbia has developed a superior tasting wine. It
has no overseas contacts but wants to get its wine on the shelves in selected Asian and European
markets where growth has been substantial in the last two years. What type of exporting option
would best suit this company?
a. direct exporting
b. licensing
c. indirect exporting
d. joint venture
e. cooperative partnership

Rationale: Indirect exporting is ideal for a company that has no overseas contacts but wants to
market abroad.
6-158 INDIRECT EXPORTING APPLICATION
The U.S. motorcycle manufacturer Harley-Davidson uses intermediaries to sell its motorcycles in
numerous nations outside the United States. Harley-Davidson uses
b. licensing.
c. contract manufacturing.
d. indirect exporting.
- 56 -
part.
Rationale: Indirect exporting occurs when a firm sells its domestically produced goods in a
foreign country through an intermediary.
6-159 MARKETING MATTERS KNOWLEDGE
Fran Wilson Creative Cosmetics attributes its success to a top-quality product, effective
advertising, and a novel __________ program.
a. joint venture
b. licensing
c. franchising
d. export marketing

Rationale: Fran Wilson Creative Cosmetics does not sell to department stores. Rather, the
company sells its Moodmatcher lipstick through a network of Japanese distributors that reach
Japan’s 40,000 beauty salons—its novel export marketing program.
To avoid competing with Japanese firms through their traditional channel of distribution, Fran
Wilson Creative Cosmetics Moodmatcher lip coloring is sold in which type of retail venue?
a. grocery stores
b. flower shops
c. beauty salons
d. department stores
e. gift stores

Rationale: Fran Wilson Creative Cosmetics does not sell to department stores. Rather, the
company sells its Moodmatcher lipstick through a network of Japanese distributors that reach
Japan’s 40,000 beauty salons.
6-161 DIRECT EXPORTING KNOWLEDGE
Direct exporting refers to

a. offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual
b. contracting with a foreign firm to manufacture products according to certain specifications.
c. when a foreign country and a local firm invest together to create a local business.
d. using additional parties when a firm sells its domestically produced goods in another country.
e. when a firm sells its domestically produced goods in a foreign country without
intermediaries.
- 57 -
part.
Rationale: Text term definition—direct exporting.
6-162 DIRECT EXPORTING KNOWLEDGE
What global market-entry strategy involves slightly more risk than indirect exporting for a
company but also opens the door to increased profits?
a. direct exporting
b. licensing
c. cooperative
d. joint venture

Rationale: Direct exporting involves slightly more risk than indirect exporting for a company but
also opens the door to increased profits.
The prominent global market-entry strategy among small-and medium-sized companies is

a. exporting.
b. franchising.
c. licensing.
d. joint venture.
e. direct investment.

Rationale: Exporting is the prominent global market-entry strategy among small- and medium-
sized companies. Sixty percent of U.S. firms exporting products have fewer than 100 employees
but account for about 33 percent of total U.S. merchandise exports.
6-164 DIRECT EXPORTING COMPREHENSION
Most companies become involved in direct exporting when

a. foreign governments believe that they will benefit the most from allowing the entry of direct
exports.
b. emerging markets in foreign countries become economically viable.
c. they believe their volume of sales will be sufficiently large and easy to obtain so that they do
not require intermediaries.
d. the domestic market becomes saturated with competing products and services.
e. evolving technologies in foreign countries come online.

Rationale: Most companies become involved in direct exporting when they believe their volume
of sales will be sufficiently large and easy to obtain so that they do not require intermediaries.
6-165 DIRECT EXPORTING APPLICATION
- 58 -
part.
When a U.S. airplane manufacturer sells its airplanes to business executives in Germany without
using intermediaries, it is referred to as
c. licensing.
d. foreign manufacturing.

Rationale: Direct exporting is when a firm sells its domestically produced goods in a foreign
country without intermediaries.
6-166 LICENSING KNOWLEDGE
Licensing refers to
c. when a foreign country and a local firm invest together to create a local business.
d. having a company handle its own exports directly without intermediaries.
e. exporting through an intermediary, which often has the knowledge and means to succeed in
selling a firm’s product abroad.

Rationale: Text term definition—licensing.
6-167 LICENSING KNOWLEDGE
Offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual
property in return for a royalty or fee is referred to as
c. licensing.
d. contract manufacturing.
e. outside branding.

Rationale: Text term definition—licensing.
6-168 LICENSING COMPREHENSION
A form of low-risk and capital-free entry into international markets that includes local
manufacturing is referred to as
a. indirect exporting.
b. direct ownership.
c. joint ventures.
d. licensing.
- 59 -
part.
e. direct exporting.

Rationale: Under licensing, a company offers the right to a trademark, patent, trade secret, or
other valued item in exchange for a royalty or fee. The advantages to the company granting the
license are low risk and capital-free entry into international marketing.
Which of the following is an advantage inherent in the use of licensing?

a. The licensor retains control of its product.
b. The licensor is protected from creating a potential competitor.
c. The licensee gains information about the dynamics of the market.
d. It provides an exemption from domestic trade regulations.
e. There is an increase in potential profit compared with direct investment.

Rationale: The licensee gains information that allows it to start with a competitive advantage,
and the foreign country gains employment by having the product manufactured locally.
Which of the following is an advantage inherent in the use of licensing?

a. The foreign country prefers it to exporting because it gains local employment.
b. It provides an exemption from domestic trade regulations.
c. There is an increase in potential profit compared with direct investment.
d. The licensor retains control of its product.
e. The licensor is protected from creating a potential competitor.

Rationale: The licensee gains information that allows it to start with a competitive advantage,
and the foreign country gains employment by having the product manufactured locally.
Which of the following is a disadvantage associated with licensing?

a. The licensee pays lower wages and sells at lower prices.
b. The licensor may create its own competition.
c. The foreign government dislikes it because it does not increase local employment.
d. This is the most expensive and risky method for global expansion.
e. The firm’s brand does not get international exposure.

Rationale: The licensing firm may create its own competition, as some licensees are able to
modify the product somehow and enter the market with product and marketing knowledge gained
at the expense of the company that got them started.
- 60 -
part.
Which form of entry into a global market makes a firm the most vulnerable to harm regarding its
brand name or reputation?
a. direct exporting
b. indirect exporting
c. licensing
e. joint venture

Rationale: There are some serious drawbacks to licensing. The licensor forgoes control of its
product and reduces the potential profits. In addition, it may even be creating its own
competition. Finally, should the licensee prove to be a poor choice, the brand name or reputation
of the licensor may be harmed.
6-173 LICENSING APPLICATION
Tricon was the restaurant division of PepsiCo until it was spun off in 1997. Since then, Tricon
has opened 6,000 KFC restaurants abroad. It has 158 restaurants in Indonesia and more than 500
restaurants in China. All are locally owned and the owner pays a fee to Tricon. Tricon is
engaged in
c. licensing.

Rationale: Tricon has given the local restaurant owners the benefit of its patents, trade secrets,
etc., and the owners pay Tricon a licensing fee.
6-174 LICENSING APPLICATION
Select Service Partner (SSP) Group has operations in 30 countries involving food and beverage
establishments, often in transit hubs like airports and railway stations. SSP also operates
Starbucks locations in airports in Finland, Sweden, and Norway. SSP pays Starbucks a royalty
based on sales as well as a fee for each store. In these instances, Starbucks is engaged in
c. licensing.
Answer: c Page(s): 137-138 LO: 3 AACSB: Global QD: Hard

Rationale: Under licensing, a company offers the right to a trademark, patent, trade secret, or
other similarly valued item of intellectual property in return for a royalty or a fee. This is an
example of franchising, which is a variation of licensing.
- 61 -
part.
6-175 FRANCHISING KNOWLEDGE
A variation of licensing is referred to as

a. direct investment.
b. joint ventures.
c. direct exporting.
d. franchising.
e. dual adaptation.

Rationale: A variation of licensing is franchising. Franchising is one of the fastest growing
market-entry strategies. More than 75,000 franchises of U.S. firms are located in countries
throughout the world.
6-176 FRANCHISING APPLICATION
Yogen Früz is a successful chain of frozen yogurt shops originating in Canada. Archeology
Investments has an agreement with the Canadian firm that grants rights to its company to open
and operate Yogen Früz shops in Dubai, Oman, Qatar, Bahrain, and Kuwait. Yogen Früz is
engaged in
a. dual adaptation.
b. a joint venture.
d. indirect exporting.
e. franchising.

Rationale: Franchising is a variation of licensing.
6-177 JOINT VENTURE KNOWLEDGE
A joint venture refers to

c. when a foreign company and a local firm invest together to create a local business.
d. having a company handle its own exports directly, but using intermediaries for importing.
e. exporting through an intermediary, which often has the knowledge and means to succeed in
selling a firm’s product abroad.

Rationale: Key term definition—joint venture.
- 62 -
part.
A global market-entry strategy in which a foreign company and a local firm invest together to
create a local business in order to share ownership, control, and profits of the new company is
referred to as
a. licensing.
b. a joint venture.
d. a local assembly.
e. dual adaptation.

Rationale: Key term definition—joint venture.
PepsiCo and __________ entered into a joint venture to market Frito-Lay’s, Cheetos, Ruffles, and
Doritos in Israel.
a. The Strauss Group
b. Ericsson
c. General Mills
d. Hebrew National
e. CGCT

Rationale: The Strauss Group has a joint venture with PepsiCo to market Frito-Lay’s Cheetos,
Ruffles, Doritos, and other snacks in Israel.
6-180 JOINT VENTURE COMPREHENSION
The __________ arrangement between Ericsson, a Swedish telecommunications firm, and

CGCT, a French switch maker, enabled them together to beat out AT&T for a $100 million
French contract.
a. franchising
b. licensing
c. joint venture
e. exporting

Rationale: A joint venture between Ericsson, a Swedish telecommunications firm, and CGCT, a
French switch maker, enabled them together to beat out AT&T for a $100 million French
contract.
6-181 JOINT VENTURE COMPREHENSION
A disadvantage of a joint venture arrangement when entering a new global market is that
a. intermediaries have the potential to harm the brand.
b. the firm entering the foreign market must pay royalties to the other firm.
- 63 -
part.
c. one of the companies forgoes control over its product.
d. the two companies may disagree about policies.
e. this method is likely to provide the fewest subsidies from the host country’s government.

Rationale: The disadvantages arise when the two companies disagree about policies or courses of
action for their joint venture or when governmental bureaucracy bogs down the effort.
6-182 JOINT VENTURE APPLICATION
Starbucks and Tata Global Beverage have together formed Starbuck Coffee A Tata Alliance in
order to bring Starbucks to India. The global market-entry strategy is known as
a. franchising.
b. licensing.
c. a joint venture.
d. direct investment.
e. exporting.

Rationale: When a foreign company and a local firm invest together to create a local business, it
is called a joint venture. These two companies share the ownership, control, and profits of the
new company.
6-183 DIRECT INVESTMENT KNOWLEDGE
Direct investment in international marketing refers to

c. a national market-entry strategy that entails a foreign company and a local firm investing
together to create a local business.
d. having a company handle its own exports directly, without intermediaries.
e. a global market-entry strategy that entails a domestic firm actually investing in and owning a
foreign subsidiary or division.

Rationale: Text term definition—direct investment.
6-184 DIRECT INVESTMENT KNOWLEDGE
A global market-entry strategy that entails a domestic firm actually investing in and owning a
foreign subsidiary or division is referred to as
a. licensing.
b. local assembly.
c. a joint venture.
d. direct investment.
e. local manufacturing.
- 64 -
part.
Rationale: Text term definition—direct investment.
6-185 DIRECT INVESTMENT COMPREHENSION
When Nestlé actually owns a subsidiary or division in a foreign country, such as when it
established its own ice cream manufacturing operation in China, this global market entry strategy
is known as __________ and represents the greatest commitment a company can make.
a. licensing
b. local assembly
c. a joint venture
e. local manufacturing

Rationale: The biggest commitment a company can make when entering the global market is
direct investment, which entails a domestic firm actually investing in and owning a foreign
subsidiary or division.
6-186 DIRECT INVESTMENT COMPREHENSION
Which form of entry into a foreign market requires the greatest commitment?
a. direct exporting
b. direct investment
c. joint venture
d. licensing
e. indirect exporting

Rationale: The biggest commitment a company can make when entering the international market
is by direct investment, which entails actually investing in and owning a foreign subsidiary or
division.
6-187 DIRECT INVESTMENT APPLICATION
Both Honda and Toyota have plants in the United States that use American labor. This example
is an illustration of Honda and Toyota practicing
b. direct investment.
c. joint venture.
d. licensing.
e. indirect exporting.

Rationale: Direct investment entails a domestic firm actually investing in and owning a foreign
subsidiary or division. Honda and Toyota are domestic firms (to Japan) that own a foreign (U.S.)
- 65 -
part.
6-188 DIRECT INVESTMENT APPLICATION
Yum! Brands, the parent company of KFC, has pursued an aggressive growth strategy in China.
There are now over 3200 restaurants in 650 Chinese cities, and KFC has a 40% market share of
the entire fast-food industry there. Yum! Brands China owns and directly manages about 90% of
its Chinese stores, so it appears that the company prefers __________ in this market.
a. licensing
b. local assembly
c. a joint venture
e. local manufacturing

Rationale: The biggest commitment a company can make when entering the global market is
direct investment, which entails a domestic firm actually investing in and owning a foreign
6-189 PRODUCT EXTENSION KNOWLEDGE
Global companies have five strategies for matching products and their promotion efforts to global
markets. The strategy of selling virtually the same product in other countries is referred to as
a. product adaptation.
b. product invention.
c. brand adaptation.
d. product extension.
e. product integration.
Answer: d Page(s): 139-140 LO: 4 AACSB: Global QD: Easy

Rationale: Text term definition—product extension. See Figure 6-4 in the textbook.
6-190 PRODUCT EXTENSION COMPREHENSION
As a general rule, __________ seems to work best when the consumer target market for the
product is alike across countries and cultures—that is, consumers share the same desires, needs,
and use for the product.
a. product adaptation
b. product extension
c. product integration
d. product invention
e. product customization

Rationale: Product extension seems to work best when the consumer target market for the
product is alike across countries and cultures. See Figure 6-4 in the textbook.
6-191 PRODUCT EXTENSION APPLICATION

- 66 -
part.
Coca-Cola, Gillette razors, and Wrigley’s gum are selling virtually the same product in many
countries. This is an example of which type of global marketing product/promotion strategy?
a. product customization
b. product adaptation
c. product extension
d. product integration
e. product invention
Answer: c Page(s): 139-140 LO: 4 AACSB: Global QD: Hard

Rationale: Coca-Cola, Gillette razors, and Wrigley’s gum are using a product extension
strategy—they are selling virtually the same product in other countries. See Figure 6-4 in the
textbook.
6-192 PRODUCT EXTENSION APPLICATION
GlaxoSmithKline plc. of Great Britain makes Breathe-Right nasal strips sells the same product in
many countries because customers all over the world will use them in the same way. This is an
example of which type of global marketing product/promotion strategy?
a. product customization
b. product extension
c. product adaptation
e. product integration
Answer: b Page(s): 139-140 LO: 4 AACSB: Global QD: Hard

Rationale: The product strategy of selling virtually the same product in other countries is a
product extension strategy. As a general rule, product extension seems to work best when the
consumer market target for the product is alike across countries and cultures—that is, consumers
share the same desires, needs, and uses for the product. See Figure 6-4 in the textbook.
6-193 PRODUCT ADAPTATION KNOWLEDGE
markets. Changing a product in some way to make it more appropriate for a country’s climate or
preferences is an example of which type of global marketing product/promotion strategy?
a. product extension
b. product customization

Rationale: Text term definition—product adaptation. See Figure 6-4 in the textbook.
6-194 PRODUCT ADAPTATION KNOWLEDGE
- 67 -
part.
Changing a product in some way to make it more appropriate for a country’s climate or
preferences is an example of which type of global marketing product/promotion strategy?

Rationale: Text term definition—product adaptation. See Figure 6-4 in the textbook.
6-195 PRODUCT ADAPTATION COMPREHENSION
Frito-Lay produces and markets potato chips in Russia that have seafood flavor. This is an
a. product integration
b. product invention
d. product customization
e. product extension

Rationale: Changing a product in some way to make it more appropriate for a country’s climate
or preferences is a product adaptation strategy. See Figure 6-4 in the textbook.
6-196 PRODUCT ADAPTATION APPLICATION
KFC in Japan altered the sweetness of its coleslaw to appeal to Japanese tastes. This is an

Rationale: Changing a product in some way to make it more appropriate for a country’s climate
or preferences is a product adaptation strategy. See Figure 6-4 in the textbook.
6-197 PRODUCT INVENTION KNOWLEDGE
markets. Designing a product to serve the unmet needs of a foreign nation is which type of global
marketing product/promotion strategy?
- 68 -
part.

Rationale: Text term definition—product invention. See Figure 6-4 in the textbook.
6-198 PRODUCT INVENTION APPLICATION
KFC has added many offerings to its menus in China to appeal to local tastes, including the
“dragon twister,” which is a chicken wrap with Peking-duck sauce. This is an example of which
type of global marketing product/promotion strategy?

Rationale: With product invention, companies invent totally new products designed to satisfy
common needs across countries. See Figure 6-4 in the textbook.
6-199 PROMOTION MESSAGE APPLICATION
Even though Exxon adapts its gasoline blends for different countries based on climate, the
promotion message is unchanged. The wording of that slogan is “__________.”
a. Put a tiger in your tank
b. Put the pedal to the metal
c. Buy American-refined fuel
d. Keep America working
e. Power in the Pistons

Rationale: Exxon’s promotional message is “Put a Tiger in Your Tank.”
6-200 DUAL ADAPTATION COMPREHENSION
Nescafé coffee is marketed using different coffee blends and promotional campaigns to match
consumer preferences in different countries. For example, Nescafé generally emphasizes the
taste, aroma, and warmth of shared moments in its advertising around the world. However, in
Thailand, Nescafé is advertised as a way to relax from the pressures of daily life. This is an
d. dual adaptation
e. dual integration

- 69 -
part.
Rationale: A dual adaptation strategy means modifying both the products and promotion
messages, which Nescafé has done in this example. See Figure 6-4 in the textbook.
Figure 6-4
6-201 PRODUCT AND PROMOTION STRATEGY COMPREHENSION
markets. According to Figure 6-4 above, “A” refers to which type of strategy?
a. product extension strategy
b. communication adaptation strategy
c. product adaptation strategy
d. dual adaptation strategy
e. product invention strategy
Answer: a Page(s): 139-140 LO: 4 AACSB: Global QD: Medium

Rationale: A product extension strategy (“A”) uses the same product and the same promotional
emphasis. See Figure 6-4 in the textbook.
markets. According to Figure 6-4 above, “B” refers to which type of strategy?
b. communication adaptation strategy
c. product adaptation strategy
d. dual adaptation strategy
e. product invention strategy

Rationale: A product adaptation strategy (“B”) uses the same promotion but an adapted product.
- 70 -
part.
markets. According to Figure 6-4 above, “C” refers to which type of strategy?
b. product adaptation strategy
c. dual adaptation strategy
d. product invention strategy
e. communication adaptation strategy
Answer: e Page(s): 139-140 LO: 4 AACSB: Global QD: Medium

Rationale: A communication adaptation strategy (“C”) uses the same product and adapts the
promotion. See Figure 6-4 in the textbook.
markets. According to Figure 6-4 above, “D” refers to which type of strategy?

Rationale: A dual adaptation strategy (“D”) adapts both the product and the promotion. See
Figure 6-4 in the textbook.
markets. According to Figure 6-4 above, “E” refers to which type of strategy?
Answer: d Page(s): 139-140 LO: 4 AACSB: Global QD: Medium

Rationale: A product invention strategy (“E”) requires the invention of an entirely new product.
- 71 -
part.
Figure 6-5
6-206 DISTRIBUTION STRATEGY COMPREHENSION
Figure 6-5 above outlines the distribution channels through which a product manufactured in one
country must travel to reach its destination in another country. “A” represents the
a. seller.
b. seller’s international marketing headquarters.
c. channels between nations.
d. channels within the foreign nation.
e. final customer.

Rationale: Figure 6-5 above outlines the distribution channels through which a product
manufactured in one country must travel to reach its destination in another country. “A”
represents the seller; its headquarters is the starting point and is responsible for the successful
distribution to the ultimate consumer. “B” is the seller’s international marketing headquarters.
“C” represents the channels between nations. “D” represents the channels within a foreign
nation. “E” represents the final or ultimate consumer.
country must travel to reach its destination in another country. “B” represents the
a. channels within foreign nations.
b. channels between nations.
c. seller’s international marketing headquarters.
d. political forces.
e. final consumer.

country must travel to reach its destination in another country. “C” represents the
a. seller.
d. channels within foreign nations.
e. final consumer.
- 72 -
part.
country must travel to reach its destination in another country. Which letter in the figure (“A,”
“B,” “C,” “D,” or “E”) would identify intermediaries used to move the product from one country
to another?
a. “A”
b. “B”
c. “C”
d. “D”
e. “E”

Rationale: “C” represents the channel between two nations, moving the product from one
country to another. Intermediaries that can handle this responsibility include resident buyers in a
foreign country, independent merchant wholesalers who buy and sell the product, or agents who
bring buyers and sellers together. See Figure 6-5 in the textbook.
country must travel to reach its destination in another country. “E” represents the
a. seller.
d. channels within foreign nations.
e. final consumer.

Figure above 6-5 outlines the distribution channels through which a product manufactured in one
country must travel to reach its destination in another country. Channels of distribution in global
- 73 -
part.
marketing are often long and complex. “A” represents the __________ and “B” identifies the
__________.
a. seller; exporter
b. seller; seller’s international marketing headquarters
c. seller international marketing headquarters; channels between nations
d. channels between nations; channels within foreign nation
e. channels within foreign nation; foreign retailer

country must travel to reach its destination in another country. Channels within a foreign nation
can be very long or surprisingly short. Which letter in the figure represents these channels?
a. “A”
b. “B”
c. “C”
d. “D”
e. “E”

Rationale: “D” represents channels within foreign nations. See Figure 6-5 in the textbook.
6-213 DUMPING KNOWLEDGE
When a firm sells a product in a foreign country below its domestic price or below its actual cost,
it is referred to as
a. loss-leader pricing.
b. surplus marketing.
c. dumping.
d. second-market pricing.
e. entrepreneurial pricing.

Rationale: Text term definition—dumping.
In international trade, dumping refers to

a. illegally disposing of unusable or damaged goods to avoid paying removal fees and/or taxes.
- 74 -
part.
b. a firm selling damaged or unsalable goods below their original production cost.
c. a firm selling quality goods at significantly lower prices for the primary purpose of reducing
inventory to make room for seasonal goods.
d. a firm selling quality goods at significantly lower prices for the primary purpose of reducing
inventory to make room for newer or more expensive models.
e. a firm selling a product in a foreign country below its domestic price or below its actual cost.

What is the term for a firm selling a product in a foreign country below its domestic price or
below its actual cost?
a. dumping
b. surplus marketing
c. second-market pricing
d. channeling
e. entrepreneurial pricing

6-216 DUMPING APPLICATION
Eastman Kodak accused Japanese rival Fuji Photo Film of selling photographic paper in the
United States for 25 percent below what it charges in Japan. In other words, Eastman Kodak
accused Fuji of __________.
a. tariff avoidance
b. countertrade
c. surplus marketing
d. dumping
e. underbidding

Rationale: A firm selling a product in a foreign country below its domestic price or below its
actual cost is often accused of dumping.
6-217 DUMPING APPLICATION
The U.S. Commerce Department imposed additional duties of 31 percent to 250 percent on
Chinese solar manufacturers of imported photovoltaic products after ruling they sold them below
cost. The Commerce Department took this action in response to what it saw as __________.
a. tariff avoidance
b. countertrade
c. surplus marketing
d. dumping
e. underbidding
- 75 -
part.
Rationale: A firm selling a product in a foreign country below its domestic price or below its
actual cost is often accused of dumping.
6-218 GRAY MARKET KNOWLEDGE
A situation where products are bought in a lower-priced country from a manufacturer’s

authorized reseller, shipped to higher-priced countries, and then sold through unauthorized
retailers below the manufacturer’s suggested retail price is referred to as __________.
a. the black market
b. a gray market
c. dumping
d. a globalized market
e. parallel exporting

Rationale: Text term definition—gray market.
A gray market refers to

a. the segment of products specifically designed for the need of older buyers.
b. a situation where products are sold through unauthorized channels of distribution.
c. a once active and powerful market that is rapidly becoming the bottom of the barrel.
d. a pricing structure that is based upon “haggling” that is considered acceptable in some
countries but not others.
e. the willingness of one party to accept “gifts” in exchange for better prices or price
allowances.

Rationale: Text term definition—gray market.
Another term for a gray market is

a. parallel exporting.
b. back-channel market.
c. mature marketing.
d. parallel importing.
e. transparent market.

Rationale: Text term definition—gray market or parallel importing.
6-221 GRAY MARKET APPLICATION
- 76 -
part.
The Japanese manufacture tractors for rice paddies. They are smaller than most U.S. tractors and
perfect for a weekend farmer who wants to tend to a small garden. The tractors are not sold in the
United States through any authorized channels, yet they are available in the U.S. at prices below
the manufacturer’s suggested retail price. What is the term for how these tractors are being sold?
a. the gray market
b. under the counter
c. over the counter
d. bypassed global channels
e. breaking the distribution monopoly

Rationale: Gray marketing is a situation where products are bought in a lower-priced country
from a manufacturer’s authorized reseller, shipped to higher-priced countries, and sold through
unauthorized channels of distribution below the manufacturer’s suggested retail price.
6-222 GRAY MARKET APPLICATION
Before Apple’s iPhone 4S was officially for sale in China, it was being sold there. These phones
were purchased in the United States and Australia, and then resold by unauthorized vendors in
China for between $1,700 and $2,000. These products are considered to be part of
a. the gray market.
b. under the counter sales.
c. over the counter sales.
d. integrated global channels.
e. breaking the distribution monopoly.

Rationale: Gray marketing is a situation where products are sold through unauthorized channels
of distribution.
6-223 VIDEO CASE 6: CNS KNOWLEDGE
In global retailing, the acronym “OTC” stands for

a. Off the Cuff.
b. Over the Counter.
c. Off-tariff Countries.
d. Outstanding Trade Countries.
e. Off-shore Trade Consortiums.

Rationale: “OTC” refers to over-the-counter medical products like aspirin or cough syrup that
customers can buy without a doctor’s prescription.
6-224 VIDEO CASE 6: CNS COMPREHENSION
- 77 -
part.
When CNS decided to enter the global market for its Breathe Right strips, there were many
contributing factors for doing so. However, according to Kevin McKenna, vice president for
international at CNS, the real key to successfully enter a specific global market is
a. selecting a country where there will be virtually no product competition.
b. having a local partner that is entrepreneurial with an ability to distribute and sell.
c. capitalizing on America’s reputation as a leader in medical product innovation.
d. having an internationally known celebrity spokesperson who transcends national boundaries.
e. having a quality product that can easily be manufactured and distributed.

Rationale: The real key to success in global marketing is having a local partner that is
entrepreneurial and has an ability to execute in terms of achieving distribution and sales.
Many changes influenced the opportunities for global sales of Breathe Right strips. One of these
is:
a. an increase in pollution resulting in a larger number of people suffering from allergies, who
would benefit from the product.
b. a heightened interest in products considered to be “quick fixes.”
c. a distrust of the formal medical community and a desire for self-healing alternatives.
d. an expansion of the pharmacist role from that of medical professional to selling and
marketing OTC products.
e. a desire to avoid invasive procedures or medications.

Rationale: Key trends include increased availability of over-the-counter products formerly
available only by prescription; and a global push toward self-care, spurred by the increasing cost
of health and medical care. Additionally, OTC products have extended beyond the traditional
boundary of the pharmacy and into grocery and other channels, and the role of the pharmacist has
expanded from that of medical professional to one that includes selling and marketing OTC
products to consumers.
To ensure the Breathe Right brand continues to meet growth expectations, CNS uses a three-stage
approach to penetrate and develop new markets: (1) explore/test the concept; (2) establish the
product; and (3) __________.
a. manage the product
b. benchmark the product
c. analyze market trends
d. perform cross-cultural analysis
e. assess political and regulatory requirements

Rationale: CNS uses a three-stage approach to penetrate and develop new markets: (1)
explore/test the concept; (2) establish the product; and (3) manage the product.
- 78 -
part.
SHORT ESSAY QUESTIONS
Play devil’s advocate. Select any American industry and argue persuasively why protectionism is
not only patriotic, it is absolutely essential for survival.
Answer:
A quality answer will provide at least three reasons (with examples!) specific to the industry
chosen, touching on such arguments as preserving jobs, protecting a nation’s political security,
discouraging economic dependency on other countries, or encouraging domestic industry.
Page(s): 124 LO: 1 AACSB: Global QD: Hard
Give at least one argument for and one argument against protectionism.
Answer:
People who favor protectionism believe that it preserves jobs, protects a nation’s political
security, discourages economic dependency on other countries, and encourages domestic
industry. Those who oppose protectionism believe that it inhibits world trade and results in
higher domestic prices on goods and services produced by protected industries. While the
decreased supply may raise prices, the tariffs are a virtually certain way to do so.
Page(s): 124 LO: 1 AACSB: Global QD: Medium
“A signal that the world’s trading nations are committed to open markets—and will resist
protectionism—would inject confidence and energy into our markets,” says the U.S. Trade
Representative. Discuss this statement.
Answer:
This statement indicates that the U.S. Trade Representative is opposed to protectionism. He/she
believes it inhibits world trade and that it may result in higher domestic prices on goods and
services produced by protected industries. Lower prices will increase consumer buying and
increased consumer buying will increase production. Increased production will lead to more jobs,
higher profits, and increased confidence.
Page(s): 124 LO: 1 AACSB: Global QD: Hard
6-230 TARIFFS AND QUOTAS COMPREHENSION

- 79 -
part.
If your primary motive was to raise prices on imports, would you use tariffs or quotas? Why
would you want to do this?
Answer:
If your primary motive was to raise prices on imports, then your choice would be tariffs. Tariffs
are government taxes on goods or services entering a country. They help equalize price
competition between foreign and domestic goods. Quotas are restrictions placed on the amount
of a product that may enter or leave a country. See Figure 6-1 in the textbook.
6-231 WORLD TRADE ORGANIZATION COMPREHENSION
Briefly describe the World Trade Organization (WTO) and its purpose.
Answer:
The World Trade Organization (WTO) was formed in 1995 to address a broad array of world
trade issues. There are 153 WTO member countries including the United States, which account
for more than 97 percent of world trade. The WTO is a permanent institution that sets rules
governing trade between its members through panels of trade experts, who decide on trade
disputes between members and issue binding decisions. The WTO reviews more than 200
disputes annually.
6-232 RISE OF ECONOMIC INTEGRATION COMPREHENSION
In recent years, a number of countries with similar economic goals have formed transnational
trade groups or signed trade agreements for the purpose of promoting free trade. Describe the
best-known two.
Answer:
(1) The European Union (EU) in mid-2012 consists of 27 countries with more than 500 million
consumers. The EU has eliminated most barriers to the free flow of goods, services, capital, and
labor across its borders. In addition, 17 countries have adopted the euro, eliminating the need to
continually monitor the currency exchange rate. (2) The North American Free Trade Agreement
(NAFTA) lifted many trade barriers between Canada, Mexico, and the United States and created
a marketplace with more than 450 million consumers.
Page(s): 124-126 LO: 1 AACSB: Global QD: Medium
Three types of companies populate and compete in the global marketplace. Identify and describe
each type.
Answer:
- 80 -
part.
All three types of global companies employ people in different countries and many have
administrative, marketing, and manufacturing operations (often called divisions or subsidiaries)
around the world. However, a firm’s orientation toward and strategy for global markets and
marketing defines the type of company it is or attempts to be. The three are: (1) An international
firm engages in trade and marketing in different countries as an extension of the marketing
strategy in its home country. (2) A multinational firm views the world as consisting of unique
parts and markets to each part differently. (3) A transnational firm views the world as one market
and emphasizes cultural similarities across countries or universal consumer needs and wants more
than differences.
Page(s): 127-128 LO: 1 AACSB: Global QD: Easy
6-234 CROSS-CULTURAL ANALYSIS COMPREHENSION
Identify and describe the factors a company should consider in order to do a thorough cross-
cultural analysis. In your answer, be sure to define cross-cultural analysis.
Answer:
Cross-cultural analysis involves the study of similarities and differences among consumers in two
or more nations or societies. A thorough analysis should include a study of a country’s values,
customs, symbols, and language. Values are the personally or socially preferable modes of
conduct or states of existence that tend to persist over time. Customs are the norms and
expectations about the way people do things in a specific country. Cultural symbols are things
that represent ideas and concepts. It is important not to assume that all symbols have a universal
meaning. Language study should include more than a literal translation; knowledge of nuances
and idioms as well as an acknowledgment of dialects or multiple national languages is important
as well.
6-235 BACK TRANSLATION COMPREHENSION
Why is it a wise idea for global marketers use back translation? Provide an example to support
your answer.
Answer:
Back translation is where a translated word or phrase is retranslated into the original language by
a different interpreter to catch errors. This will help prevent unintended meanings from occurring
in marketing plans. Examples from the textbook of the unintended meanings of brand names are
(1) IBM’s “Solution for a Small Planet” was translated in Japanese as “Answers Make People
Smaller” and (2) Kit Kat bars, which are marketed by Nestlé worldwide. The brand name “Kit
Kat” is pronounced “kitto katsu” in Japanese, which roughly translates to “Surely win.” Japanese
teens eat Kit Kat bars for good luck, particularly when taking crucial school exam.
6-236 ECONOMIC CONSIDERATIONS KNOWLEDGE
- 81 -
part.
Global marketing is also affected by economic considerations. Identify the three steps that should
be performed when scanning the global marketplace.
Answer:
A scan of the global marketplace should include: (1) an assessment of the economic infrastructure
in different countries; (2) measurement of consumer income in different countries; and (3)
recognition of a country’s currency exchange rates.
Page(s): 133 LO: 2 AACSB: Global QD: Easy
What is meant by the term economic infrastructure and how can this affect a firm’s plans to enter
a global market?
Answer:
Economic infrastructure is a country’s communication, transportation, financial, and distribution
systems. This represents a critical consideration in a company’s determination of whether it
should try to market to a country’s consumers and organizations. You might have the best
product in the world, but if you are not able to physically reach your customer because the rains
have washed away the roads, you will not be successful. Similarly, if the financial payment
systems aren’t developed (consumers lack credit cards; pay only in cash), exchange relationships
may be more limited.
What are the market entry strategy options available to a company seeking to enter the global
marketplace? How do they relate to each other in terms of profit potential, risk, financial
commitment required, and marketing control?
Answer:
Once a company has decided to enter the global marketplace, it may select one of four strategies:
(1) exporting, which involves producing goods in one country and selling them in another
country; (2) licensing, where a company offers the right to a trademark, patent, trade secret, or
other similarly valued items of intellectual property in return for a royalty or a fee; (3) joint
venture, which involves a foreign company and a local firm investing together to create a local
business; and (4) direct investment, which entails a domestic firm actually investing in and
owning a foreign subsidiary or division. The amount of financial commitment, risk, marketing
control, and profit potential increases as the firm moves from exporting to direct investment. See
Figure 6-3 in the textbook.
- 82 -
part.
Explain the difference between indirect exporting and direct exporting. What are the advantages
and disadvantages of each approach?
Answer:
Indirect exporting is when a firm sells its domestically produced goods in a foreign country
through an intermediary. It has the least amount of commitment and risk but will probably return
the least profit. Indirect exporting is ideal for a company that has no overseas contacts but wants
to market abroad. The intermediary is often a distributor that has the marketing know-how and
resources necessary for the effort to succeed. Direct exporting is when a firm sells its
domestically produced goods in a foreign country without intermediaries. Direct exporting
involves more risk than indirect exporting for the company but also opens the door to increased
profits. Most companies become involved in direct exporting when they believe their volume of
sales will be sufficiently large and easy to obtain so that they do not require intermediaries.
Define licensing, cite its advantages and disadvantages, and explain what franchising is.
Answer:
Licensing offers the right to a company trademark, patent, trade secret, or other similarly valued
items of intellectual property in return for a royalty or a fee. The advantages to the company
granting the license are low risk and a capital-free entry into a foreign country. The licensee
gains information that allows it to start with a competitive advantage and the foreign country
gains employment by having the product manufactured locally. However, the licensor forgoes
control of its product and reduces the potential profits gained from it. The licensor may be
creating its own competition. To offset this disadvantage, many companies strive to stay
innovative so that the licensee remains dependent on them. Additionally, should the licensee
prove to be a poor choice, the name or reputation of the company may be harmed. Franchises
include soft drink, motel, retailing, fast food, and car rental operations, and a variety of business
services. A franchise is a contractual arrangement between a parent company (a franchisor) and
an individual or firm (a franchisee) that allows the franchisee to operate a certain type of business
under an established name and according to specific rules.
Explain the difference between joint venture and direct investment market entry strategies. What
are the advantages and disadvantages of each approach?
Answer:
When a foreign company and a local firm invest together to create a local business, it is called a
joint venture. These two companies share ownership, control, and profits of the new company.
The advantages are twofold: First, one company may not have the necessary financial, physical,
or managerial resources to enter a foreign market alone. Second, a government may require or
strongly encourage a joint venture before it allows a foreign company to enter its market. The
disadvantages arise when companies disagree about policies or courses of action or when
- 83 -
part.
governmental bureaucracy bogs down the effort. Direct investment entails a domestic firm
actually investing in and owning a foreign subsidiary or division. Advantages include cost
savings, better understanding of local market conditions, and fewer local restrictions.
Disadvantages include increased financial commitments and risks.
6-242 PRODUCT AND PROMOTION STRATEGIES COMPREHENSION
What are the product and promotion strategies available to a company seeking to enter the global
marketplace? How do they relate to each other in terms of the same or adapted product and
promotion?
Answer:
There are five product and promotional strategies for global marketing. (1) Sell the same home
country product using the same home country promotion in a foreign country (product extension
strategy). (2) Sell the same home country product using an adapted promotion strategy in a
foreign country (communication adaptation strategy). (3) Sell an adapted home country product
using the same home country promotion in a foreign country (product adaptation strategy). (4)
Sell an adapted home country product using an adapted home country promotion in a foreign
country (dual adaptation strategy). (5) Create a new product for the foreign market (product
invention strategy). See Figure 6-4 in the textbook.
Describe the elements in a global channel of distribution.
Answer:
Figure 6-5 outlines the channel through which a product manufactured in one country must travel
to reach its destination in another country. The first step involves the seller; its headquarters is
the starting point and is responsible for the successful distribution to the ultimate consumer. The
next step is the channel between two nations, moving the product from one country to another.
Intermediaries that can handle this responsibility include resident buyers in a foreign country,
independent merchant wholesalers who buy and sell the product, or agents who bring buyers and
sellers together. Once the product is in the foreign nation, that country’s distribution channels
take over. These channels can be very long or surprisingly short, depending on the product line.
Ultimately, the products reach the final or ultimate consumer. See Figure 6-5 in the textbook.
6-244 PRICING STRATEGY COMPREHENSION
Explain the difference between dumping and parallel importing.
Answer:
Dumping is when a firm sells a product in a foreign country below its domestic price or below its
- 84 -
part.
actual cost. Parallel importing, also known as gray marketing, is when companies price their
products very high in some countries but competitively in others. Individuals then buy products
in a lower-priced country from an authorized retailer, ship them to higher-priced countries, and
sell them below the suggested retail price through unauthorized retailers.
- 85 -
part.

Marketing The Core 5th Edition Kerin Test Bank Download

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Marketing The Core 5th Edition Kerin Test Bank Download

Uploaded by

Copyright:

Available Formats

Marketing The Core 5th Edition Kerin

Test Bank: https://testbankpack.com/p/test-bank-for-marketing-the-

Solution Manual: https://testbankpack.com/p/solution-manual-for-

Bloom’s Level of Learning (LL)

Major Section Level 1 Level 2 Level 3

Video Case 6: 223 224, 225, 226

Test Item Table by Learning Objective and Bloom’s Level of Learning

Bloom’s Level of Learning (LL)

MULTIPLE CHOICE QUESTIONS

6-1 CHAPTER OPENER: DELL COMPREHENSION

Why has Dell, Inc., embarked on a global growth initiative?

Answer: e Page(s): 123 LO: 3 AACSB: Global QD: Medium

6-2 CHAPTER OPENER: DELL COMPREHENSION

6-3 CHAPTER OPENER: DELL COMPREHENSION

Answer: d Page(s): 123 LO: 4 AACSB: Global QD: Medium

6-4 CHAPTER OPENER: DELL COMPREHENSION

Answer: b Page(s): 123 LO: 4 AACSB: Global QD: Medium

6-5 WORLD TRADE COMPREHENSION

Which of the following statements about world trade is most accurate?

Answer: c Page(s): 124 LO: 1 AACSB: Global QD: Medium

6-6 TRENDS IN WORLD TRADE COMPREHENSION

Answer: e Page(s): 124 LO: 1 AACSB: Global QD: Medium

6-7 TRENDS IN WORLD TRADE COMPREHENSION

Answer: a Page(s): 124 LO: 1 AACSB: Global QD: Medium

6-8 TRENDS IN WORLD TRADE COMPREHENSION

Answer: c Page(s): 124 LO: 1 AACSB: Global QD: Medium

Answer: d Page(s): 124 LO: 1 AACSB: Global QD: Medium

6-10 PROTECTIONISM KNOWLEDGE

Answer: b Page(s): 124 LO: 1 AACSB: Global QD: Easy

6-11 PROTECTIONISM KNOWLEDGE

Answer: c Page(s): 124 LO: 1 AACSB: Global QD: Easy

The economic argument for protectionism is that it

Answer: a Page(s): 124 LO: 1 AACSB: Global QD: Medium

6-13 PROTECTIONISM COMPREHENSION

Those in favor of protectionism argue that it

Answer: b Page(s): 124 LO: 1 AACSB: Global QD: Medium

6-14 PROTECTIONISM APPLICATION

Answer: d Page(s): 124 LO: 1 AACSB: Global QD: Hard

6-15 MAKING RESPONSIBLE DECISIONS COMPREHENSION

Answer: d Page(s): 124-125 LO: 1 AACSB: Ethics QD: Medium

6-16 TARIFFS KNOWLEDGE

Answer: a Page(s): 124 LO: 1 AACSB: Global QD: Easy

6-17 TARIFFS KNOWLEDGE

Answer: b Page(s): 124 LO: 1 AACSB: Global QD: Easy

6-18 TARIFFS KNOWLEDGE

A government tax on goods or services entering a country is referred to as a

Answer: c Page(s): 124 LO: 1 AACSB: Global QD: Easy

6-19 TARIFFS COMPREHENSION

Answer: b Page(s): 124 LO: 1 AACSB: Global QD: Medium

6-20 TARIFFS COMPREHENSION

Answer: b Page(s): 124 LO: 1 AACSB: Global QD: Medium

6-21 TARIFFS COMPREHENSION

6-22 TARIFFS APPLICATION

Answer: c Page(s): 124 LO: 1 AACSB: Global QD: Hard

6-23 TARIFFS APPLICATION

Answer: b Page(s): 124 LO: 1 AACSB: Global QD: Hard

6-24 TARIFFS APPLICATION

Answer: b Page(s): 124 LO: 1 AACSB: Global QD: Hard

6-25 TARIFFS APPLICATION

Answer: b Page(s): 124 LO: 1 AACSB: Global QD: Hard

6-26 QUOTA KNOWLEDGE

Answer: a Page(s): 124 LO: 1 AACSB: Global QD: Easy

6-27 QUOTA KNOWLEDGE