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Name: Class: Date:
Chapter 09: Reaching Global Markets

True / False
1. International marketing is defined as marketing activities performed across national boundaries.

a. True
b. False
ANSWER: True
2. Two-thirds of the world's total purchasing power is outside the United States.
a. True
b. False
ANSWER: True
3. Customers who travel the globe expect to be able to buy the same product in most of the world's more than 200
countries.
a. True
b. False
ANSWER: True
4. An embargo occurs when a government suspends trade with a particular country.

a. True
b. False
ANSWER: True
5. A quota is the suspension, by a government, of trade in a particular product.

a. True
b. False
ANSWER: False
6. A positive balance of trade is considered good because it means that U.S. dollars are supporting foreign economies at
the expense of U.S. companies and workers.
a. True
b. False
ANSWER: False
7. In determining the size of the market for consumer products, the international marketer will probably be very interested
in per capita GDP figures.
a. True
b. False
ANSWER: True
8. Opportunities for international marketers are limited to industrial nations with the highest incomes.
a. True
b. False
ANSWER: False
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9. U.S. marketers may engage in bribery to compete with foreign firms.
a. True
b. False
ANSWER: False
10. The study of the cultural environment is unnecessary in the foreign market because foreign consumers will accept
anything that American marketers have to sell.
a. True
b. False
ANSWER: False
11. Customs and taboos are culture-bound and should be taken into consideration when products are marketed in a foreign
environment.
a. True
b. False
ANSWER: True
12. Cultural differences do not affect marketing negotiations and decision-making behavior.
a. True
b. False
ANSWER: False
13. When products are introduced from one nation into another, acceptance is more likely if the two cultures are different.
a. True
b. False
ANSWER: False
14. Cultural relativism is the unconscious reference to one's own cultural values, experiences, and knowledge when
traveling in other countries.
a. True
b. False
ANSWER: False
15. NAFTA eventually eliminates all tariffs on goods produced and traded between the United States, Mexico, and Brazil.
a. True
b. False
ANSWER: False
16. NAFTA simplifies country-of-origin rules, hindering Japan's use of Mexico as a staging ground for further penetration
into U.S. markets.
a. True
b. False
ANSWER: True
17. While NAFTA eliminates many tariffs immediately, the tariffs on more sensitive goods, such as glassware, footwear,

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and some fruits and vegetables, were phased out over a 15-year period.
a. True
b. False
ANSWER: True
18. The unification of Europe permits virtually free trade among the member nations of the European Union.
a. True
b. False
ANSWER: True
19. The U.S. and Japanese economies are more integrated than are the U.S. and Canadian economies.
a. True
b. False
ANSWER: False
20. GATT was based on negotiations between member countries to reduce worldwide tariffs and increase international
trade.
a. True
b. False
ANSWER: True
21. The World Trade Organization was an important outcome of the unification of Europe.
a. True
b. False
ANSWER: False
22. Domestic marketing involves marketing strategies aimed at markets within the home country.
a. True
b. False
ANSWER: True
23. Importing is the sale of products to foreign markets.

a. True
b. False
ANSWER: False
24. The job of the export agent is to bring together buyers and sellers from different countries.
a. True
b. False
ANSWER: True
25. A trading company provides a link between buyers and sellers in different countries.
a. True
b. False
ANSWER: True
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26. Under a licensing arrangement, the licensee pays commissions or royalties on sales or supplies used in manufacturing.
a. True
b. False
ANSWER: True
27. Franchising is an arrangement whereby a franchisee grants a franchisor the right to market its product, using its name,
logo, methods of operation, advertising, products, and other elements of the franchising company's business, in return for
a financial commitment and an agreement to conduct business in accordance with the franchisee's standard of operations.
a. True
b. False
ANSWER: False
28. The joint venture approach has little appeal to industries involved in extraction of natural resources.
a. True
b. False
ANSWER: False
29. A multinational enterprise is a firm that has operations or subsidiaries located in many countries.
a. True
b. False
ANSWER: True
30. It is impossible for a subsidiary to develop a local identity because it seldom employs personnel from the country
within which it operates.
a. True
b. False
ANSWER: False
31. The greatest danger in becoming involved in direct ownership in international marketing is political uncertainty.
a. True
b. False
ANSWER: True
32. A subsidiary operating in a foreign country may have important tax, tariff, and other operating advantages over a
licensing agreement or a joint venture.
a. True
b. False
ANSWER: True
33. Firms that use an international division structure are often organized domestically on the basis of functions or product
divisions, whereas the international division is organized on the basis of geography.
a. True
b. False
ANSWER: True

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34. Firms with internationally integrated structures are the least likely to engage in direct ownership activities
internationally.
a. True
b. False
ANSWER: False
35. Globalization of marketing involves developing marketing strategies as though the entire world (or major regions of
it) were a single entity.
a. True
b. False
ANSWER: True
36. Media allocation, retail outlets, and price are among the easiest marketing mix variables to standardize.
a. True
b. False
ANSWER: False
37. Brand name, product characteristics, packaging, and media allocation are among the easiest marketing mix variables
to standardize around the world.
a. True
b. False
ANSWER: False
38. ASEAN faces obstacles in becoming a unified trade bloc because of conflicts among members.
a. True
b. False
ANSWER: True
39. Despite the benefits of digital technology, it may actually be increasing the divide between skilled wealthy workers
and the rest of the labor force.
a. True
b. False
ANSWER: True
40. From a cultural perspective, countries that are members of the European Union tend to act as a single entity.
a. True
b. False
ANSWER: False
41. Today many firms are more interested in building marketing strategies around similarities that exist among countries
rather than customizing around their differences.
a. True
b. False
ANSWER: True

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42. The geographic area structure is well suited to firms with a high degree of diversification.
a. True
b. False
ANSWER: False
43. An accounting firm contracts with a local janitorial services company for janitorial services twice a week. The
accounting firm is outsourcing for its janitorial service needs.
a. True
b. False
ANSWER: True
Multiple Choice
44. Before the 1990s, most firms entered international markets

a. globally and quickly.
b. incrementally and slowly.
c. incrementally and quickly.
d. domestically and slowly.
e. regionally and quickly.
ANSWER: b
45. According to your text, ____ are small technology-based firms operating in international markets almost immediately
after their establishment and realizing as much as 70% of their sales outside the domestic home market.
a. "natural globals"
b. "multinational corporations"
c. "born globals"
d. "born multinationals"
e. "multinational enterprises"
ANSWER: c
46. The forces that affect foreign markets may differ dramatically from those affecting domestic markets. This makes a
careful ____ a critical part of a successful international marketing strategy.
a. political analysis
b. regulatory analysis
c. social audit
d. environmental analysis
e. marketing analysis
ANSWER: d
47. When Starbucks decided to expand into the international markets of India, Japan, and Argentina, management realized
that there would be significant differences in the standards of living, credit, buying power, and income distribution in
those countries. Starbucks is currently examining the ____ forces in its environmental analysis.
a. economic
b. cultural
c. ethical
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d. technological
e. legal
ANSWER: a
48. In China, the price of imported Scotch is $30 per glass as opposed to Scotch from China, which is $3. Which of the
following do you think accounts for the difference in price?
a. Exchange control
b. Balance of trade
c. Import tariff
d. Embargo
e. Export tariff
ANSWER: c
49. Which of the following is often used to raise revenue for a country and/or to protect domestic products?
a. Quota
b. Warning label
c. Embargo
d. Import tariff
e. Exchange control
ANSWER: d
50. If Tasmania levied a duty on all goods purchased from the United States and other countries outside its borders that
were brought into Tasmania, its businesses and citizens would be paying a(n)
a. embargo.
b. import tariff.
c. travelers' tax.
d. export tax.
e. foreign duty.
ANSWER: b
51. If Germany, in an attempt to bolster the sales of its own auto manufacturers, decided to limit the number of
automobiles that could be brought in from other countries, Germany would be using a(n)
a. embargo.
b. boycott.
c. exchange control.
d. import tariff.
e. quota.
ANSWER: e
52. Italy currently limits the number of Coach bags that can be imported during a one-year period, since Coach bags are
made in New York, USA. This is an example of a(an) ____
a. exchange control limit.
b. embargo.
c. quota.
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d. import tariff.
e. supply limit.
ANSWER: c
53. When a glove manufacturer in China is allowed to sell only a certain number of plastic gloves to Japan, that firm is
facing a(n)
a. tariff.
b. embargo.
c. restrictive product standard.
d. quota.
e. balance of trade restriction.
ANSWER: d
54. The United States' former prohibition against importing cigars from Cuba for resale was an example of a(n)
a. health control.
b. quota.
c. embargo.
d. exchange control.
e. import control.
ANSWER: c
55. Government restrictions on the amount of a particular country's currency that can be bought or sold are known as
a. embargoes.
b. quotas.
c. exchange controls.
d. import controls.
e. balance of trade controls.
ANSWER: c
56. ____ can force businesspeople to buy and sell foreign products through a central agency, such as a central bank.
a. Embargoes
b. Export tariffs
c. Quotas
d. Import tariffs
e. Exchange controls
ANSWER: e
57. Which of the following is used to help maintain a more favorable balance of trade by a country?
a. Limiting imports
b. Limiting exports
c. Establishing exchange controls
d. Increasing gross domestic product
e. Changing political systems

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ANSWER: a
58. The ____ is the difference in value between a nation's exports and its imports.
a. net trade value
b. export/import ratio
c. gross domestic product
d. balance of payments
e. balance of trade
ANSWER: e
59. The gross domestic product is

a. a measure of the profit made by all firms in a nation.
b. the average annual earnings per person in a nation.
c. a measure of the types of products produced by a nation.
d. an overall measure of a nation's economic standing.
e. a ratio of domestic products to products produced in foreign countries.
ANSWER: d
60. Which of the following countries has the highest GDP?

a. Japan.
b. the United Kingdom.
c. Brazil.
d. the United States.
e. Canada.
ANSWER: d
61. In considering the viability of potential international markets for Pepsi products, PepsiCo is advised to take into
account ____, which provides insight into market potential.
a. per capita gross domestic product
b. gross domestic product
c. the quantity of exports
d. the quantity of imports
e. total consumer income
ANSWER: a
62. Caterpillar, maker of large construction equipment in the U.S., would like to better understand factors that would
affect its ability to export its products to various countries. Which of the following forces determine how trade barriers
affect Caterpillar's marketing efforts?
a. Political and legal
b. Economic
c. Industrial and technological
d. Technological and legal
e. Economic and political
ANSWER: a
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63. Special interest groups and regulatory bodies are ____ forces that must be taken into account in international
marketing.
a. socioeconomic
b. technological
c. economic
d. social and ethical
e. political and legal
ANSWER: e
64. Select the true statement.

a. Legislation regulating marketing in many foreign countries is being eased.
b. A government's attitude toward cooperation with importers has little impact on marketing to that country.
c. Refusing to give payoffs and bribes in some foreign countries may put a marketer at a competitive
disadvantage.
d. Bribes and payoffs are considered unethical in all countries and cultures.
e. Bribes and payoffs are supported by U.S. trade policies under certain conditions.
ANSWER: c
65. The Foreign Corrupt Practices Act of 1977 makes it illegal for U.S. firms to
a. attempt to make large payments or bribes to influence policy decisions of foreign governments.
b. offer foreign businesses any type of incentive for purchasing their company's products and services.
c. change their ethical standards when dealing with foreign firms.
d. give even small tips or gifts in countries where such gifts are customary business practices.
e. introduce any type of corruption into foreign businesses that have higher ethical standards than those of the
U.S. firm.
ANSWER: a
66. If a certain country considered handshakes in business transactions to be taboo and preferred to use nodding, this
would be an example of differences in ____ forces.
a. sociocultural
b. political
c. sales
d. ethical
e. regulatory
ANSWER: a
67. When products are introduced into one nation from another, acceptance is far more likely
a. if prices are set very low.
b. when bribes are paid to local officials to aid distribution.
c. if there are similarities between the two cultures.
d. if packaging is adjusted to match local preferences.
e. when retailers are given incentives to push the products.
ANSWER: c
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68. Marketers of computer software, music CDs, and books are particularly affected by cultural differences in
a. socioeconomic status of citizens.
b. advances in technology.
c. differences in cross-cultural exchange behavior.
d. ethical codes of conduct for businesses.
e. standards regarding intellectual property.
ANSWER: e
69. Many companies choose to standardize their ____ across national boundaries to maintain a consistent and well-
integrated corporate culture.
a. technology
b. ethical behavior
c. language
d. dress code
e. products
ANSWER: b
70. ____ refers to the idea that morality varies from one culture to another and that business practices are therefore
differentially defined as right or wrong by particular cultures.
a. The self-reference criterion
b. Global ethics
c. Economic relativism
d. Cultural relativism
e. Moral relativism
ANSWER: d
71. Maquiladoras are

a. exchange controls from central banks in Latin American countries.
b. production facilities in north-central Mexican states.
c. import-export agents of the Mexican government.
d. global marketing programs established in Latin American countries.
e. freight forwarders from Mexico.
ANSWER: b
72. The agreement between the United States, Canada, and Mexico that merges these three countries into one marketplace
is called
a. EU.
b. MERCOSUR.
c. APEC.
d. NAFTA.
e. GATT.
ANSWER: d

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73. Walmart is currently expanding its stores into Canada and Mexico. This expansion is being facilitated by the
a. European Union.
b. North American Free Trade Agreement.
c. Pacific Rim Unification Act.
d. International Retail Alliance Association.
e. Latin American Free Trade Association.
ANSWER: b
74. One of the effects of NAFTA is the simplification of country-of-origin rules. This will likely hinder the international
trade activities of
a. Canada.
b. Japan.
c. Brazil.
d. Cuba.
e. Panama.
ANSWER: b
75. Which of the following is not true of NAFTA?

a. The agreement has a long adjustment phase-in time period.
b. Increased competition should lead to a more efficient market.
c. It will provide additional opportunities for the United States in long-term affiliations with other countries in
the Western Hemisphere.
d. It provides protection for intellectual property among its members.
e. Business licensing requirements have been increased.
ANSWER: e
76. Another name for the European Union is

a. the Common Market.
b. the European Market.
c. the Euro.
d. NAFTA.
e. AECO.
ANSWER: a
77. The unification of Europe through the European Union (EU)

a. produced the largest single market in the world.
b. calls for greater customization of products and attention to regulations and restrictions of European countries.
c. means that members of the EU have become more heterogeneous in their needs and wants.
d. required the countries to be segmented into many different markets.
e. permits virtually free trade among the member nations of the EU.
ANSWER: e
78. Most European countries use a common currency, the _____, except for _____, which uses its own currency.
a. euro; France
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b. euro; England
c. dollar; England
d. euro; Germany
e. euro; Austria
ANSWER: b
79. The trade alliance that includes Brazil, Argentina, Chile, and other countries is known as
a. OPEC.
b. APEC.
c. MERCOSUR.
d. NAFTA.
e. the Common Market.
ANSWER: c
80. Which of the following alliances/agreements is the United States not a part of?
a. NAFTA
b. APEC
c. GATT
d. WTO
e. MERCOSUR
ANSWER: e
81. The Southern Common Market (MERCOSUR) includes

a. countries from southern Africa.
b. both India and Indonesia.
c. Australia and New Zealand.
d. countries in South America.
e. southern China and India.
ANSWER: d
82. Many marketers claim that ____ will become the world's largest market.
a. Japan
b. the United States
c. China
d. Thailand
e. India
ANSWER: c
83. Which of the following agreements provides a forum for tariff negotiations, reducing trade restrictions, resolution of
international trade problems, and ground rules for international trade?
a. The World Trade Organization
b. The North American Free Trade Agreement
c. The Latin American Free Trade Agreement

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d. The European Union Free Trade Agreement
e. The General Agreement on Tariffs and Trade
ANSWER: a
84. If a newly formed country wanted to increase its international trade and reduce worldwide tariffs, it would most likely
try to become a part of
a. NAFTA.
b. WTO.
c. MERCOSUR.
d. APEC.
e. EU.
ANSWER: b
85. The term dumping refers to the sale of

a. products sold in foreign markets that cannot be sold in the United States.
b. products sold in foreign markets at prices above those charged in the United States.
c. all discontinued U.S. products in foreign countries.
d. products sold in foreign countries at unfairly low prices.
e. products sold in foreign markets that cannot pass safety standards in the United States.
ANSWER: d
86. The World Trade Organization accomplishes all of the following except
a. educating companies about international trade rules.
b. lending money to businesses interested in developing international markets.
c. serving as a forum for trade negotiations.
d. helping settle trade disputes.
e. providing legal ground rules for international commerce.
ANSWER: b
87. At the heart of the ____ are agreements that provide legal ground rules for international commerce and trade policy.
a. United Nations
b. GATT
c. MERCOSUR
d. WTO
e. APEC
ANSWER: d
88. When a firm's products sell in foreign countries with little or no effort to obtain foreign sales, the firm is engaging in
a. international marketing.
b. global marketing.
c. limited exporting.
d. product licensing.
e. unplanned exporting.

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ANSWER: c
89. Which of the following lists the levels of involvement in global marketing from the lowest to the highest?
a. Regional marketing, multinational marketing, limited exporting, domestic marketing, globalized marketing
b. Limited exporting, domestic marketing, globalized marketing, multinational marketing, regional marketing
c. Globalized marketing, multinational marketing, regional marketing, limited exporting, domestic marketing
d. Domestic marketing, globalized marketing, regional marketing, multinational marketing, limited exporting
e. Domestic marketing, limited exporting, multinational marketing, regional marketing, globalized marketing
ANSWER: e
90. The purchase of products from a foreign source is called

a. exporting.
b. dumping.
c. importing.
d. licensing.
e. venturing.
ANSWER: c
91. When the American company Exxon purchases crude oil from Saudi Arabia, it is engaging in
a. licensing.
b. importing.
c. free trade.
d. exporting.
e. dumping.
ANSWER: b
92. Henderson Synthetics is a producer of chemical products aimed at increasing agricultural yield per acre. Henderson
Synthetics’ management believes that several of the firm's products could have sizable markets in other countries;
however, it is costly to obtain market research to confirm this. If Henderson Synthetics wanted to temporarily “try out”
these international markets with a minimal level of commitment and cost, it should use
a. contract manufacturing.
b. exporting.
c. joint ventures.
d. licensing.
e. subsidiaries.
ANSWER: b
93. The extent of Raytheon's participation in global business is selling the batteries it manufactures to companies in Spain.
In this case, Raytheon is a(n)
a. trading company.
b. importer.
c. exporter.
d. franchiser.
e. contract manufacturer.
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ANSWER: c
94. The role of export agents is to

a. bring buyers and sellers from different countries together and collect a commission for arranging sales.
b. purchase products from different companies and sell them to foreign countries.
c. help a firm to make direct investments in foreign countries.
d. contact domestic firms about the opportunities available in exporting.
e. arrange for licensing agreements between domestic and foreign firms.
ANSWER: a
95. A company not involved in manufacturing that brings together buyers and sellers in different countries is usually
referred to as a
a. franchise.
b. contract manufacturer.
c. strategic intermediary.
d. trading company.
e. joint venture.
ANSWER: d
96. A large farming cooperative that focuses on the production of fruits and vegetables uses a business that sells the
farmers' products in foreign countries and also provides consulting, insurance, legal assistance, and warehousing to the
cooperative. This business would most likely be called a(n)
a. trading company.
b. export specialist.
c. contract wholesaler.
d. licensor.
e. strategic partner.
ANSWER: a
97. A(n) ____ is an organization that links buyers and sellers in different countries but is not involved in manufacturing.
a. trading company
b. exporter
c. joint venture
d. strategic alliance
e. licensee
ANSWER: a
98. If Caterpillar wished to reach the market in Malaysia but was leery of a direct investment in the country, it might
provide a Malaysian operation with the knowledge to produce and market its products in exchange for a commission. This
type of arrangement is called
a. licensing.
b. exporting.
c. a strategic alliance.
d. a joint venture.

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e. contract manufacturing.
ANSWER: a
99. What level of commitment in international marketing may be most attractive when the political and economic stability
of a foreign country is questionable?
a. Joint ventures
b. Direct ownership
c. Exporting
d. Limited exporting
e. Licensing
ANSWER: e
100. A special form of licensing in which one company grants another company the right to market its product in
accordance with its standards in exchange for a financial commitment is called
a. a joint venture.
b. contract manufacturing.
c. direct licensing.
d. franchising.
e. a strategic alliance.
ANSWER: d
101. Tony&Guy is a global hairdressing and education business headquartered in England. It has recently opened salons
in Mongolia, adding to its numerous salons worldwide. Tony&Guy allows foreign businesspeople to use its name, logo,
methods of operation, advertising, and products. In exchange, Tony&Guy receives a financial commitment and an
agreement to conduct business in accordance with its standard of operations. Tony&Guy is engaging in
a. contract manufacturing.
b. wholesaling.
c. franchising.
d. exporting.
e. direct investment.
ANSWER: c
102. Franchising offers all the following benefits for franchisors except
a. franchise agreements require a certain standard of behavior from franchisees, which helps protect the franchise
name.
b. franchisors can retain control of their name while increasing global penetration of their products.
c. the franchisee's revenue stream is fairly consistent because franchisors pay fixed fees and royalties.
d. the franchisor's revenue stream is fairly consistent because franchisees pay fixed fees and royalties.
e. franchisors do not have to put up a large capital investment.
ANSWER: c
103. Which of the following would be a benefit to a franchisor, such as Jiffy Lube, in expanding into international
marketing?
a. There are no risks involved with allowing a foreign franchisee.
b. The franchisor does not have to put up a large capital investment.
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c. The franchisor does not have to share its name or operational procedures.
d. The franchisee only pays a set fee every month to the franchisor.
e. An equal partnership is formed between the franchisor and franchisee.
ANSWER: b
104. Which of the following describes a company hiring a foreign firm to produce a designated volume of its product to
specification?
a. Licensing
b. Contract manufacturing
c. Exporting
d. Importing
e. Direct investment
ANSWER: b
105. If The Limited Company relies on hiring a foreign textile manufacturer to produce a designated amount of clothing
for its Express, Limited, and other stores, it is using
a. exporting.
b. franchising.
c. contract manufacturing.
d. a joint venture.
e. licensing.
ANSWER: c
106. Some hospitals in the United States find that their need for radiologists to read X-rays is volatile during the evening
and early morning hours, especially between 2:00 and 6:00 a.m. This is because the number of emergency room visits
needing X-rays is usually lower than those required during daytime operating hours. There is a recent trend where
hospitals in the United States are contracting radiologists from countries such as Australia to read the electronically-
transmitted X-rays during the evening and early morning hours. This is an example of
a. outsourcing.
b. licensing.
c. franchising.
d. contract manufacturing.
e. contract sourcing.
ANSWER: a
107. A business partnership between a domestic firm and a foreign firm is known as
a. a joint venture.
b. an international partnership.
c. a multinational enterprise.
d. licensing.
e. exporting.
ANSWER: a
108. The Cooper Tire & Rubber Company has been searching for less expensive raw materials for manufacturing its
bicycle tires. Cooper has found that there are less expensive sources in the country of Indonesia, but it needs to form a
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partnership with the government of Indonesia in order to gain access to the country's rubber. What type of partnership will
need to be formed?
a. A multinational enterprise
b. A contract manufacturing arrangement
c. A strategic alliance
d. A franchise
e. A joint venture
ANSWER: e
109. Sometimes business partnerships are formed between traditional rivals competing for market share in the same
product class. These partnerships are known as
a. trading companies.
b. contract manufacturers.
c. joint ventures.
d. strategic alliances.
e. licenses.
ANSWER: d
110. Nuhitzu believes it has the technological expertise to produce communication systems that will be leaders around the
globe. Boston Electronics is widely regarded as having excellent management systems and superior marketing programs.
To utilize these strengths, the two firms might form a(n) ____ to work together on a worldwide basis.
a. licensing agreement
b. export trading company
c. joint agreement
e. multinational enterprise
ANSWER: d
111. Toshiba Electronics is very interested in taking advantage of business opportunities in India but does not have access
to India's market. Toshiba has the patent on a low-cost, quality computer system that could assist small businesses in
India. Sony Computer, Toshiba's competitor, is experienced in India's small business market but does not have a computer
comparable to Toshiba's. If Toshiba and Sony work together to utilize these strengths to seize this opportunity in India,
what type of business structure would they likely use?
a. Trading company
b. Strategic alliance
c. Licensing
d. Direct ownership
e. Exporting
ANSWER: b
112. What is the primary distinction between a joint venture and a strategic alliance in international marketing?
a. Strategic alliances are only formed between companies from well-developed countries whereas joint ventures
are between companies from economically-diverse countries.
b. A joint venture involves only two companies whereas a strategic alliance is formed between three or more
companies.
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c. A joint venture is defined in scope, while a strategic alliance is typically represented by an agreement to work
together.
d. A joint venture is formed between companies with dissimilar product offerings while a strategic alliance is
formed between companies with similar product offerings.
e. A joint venture is simply a financial investment in a foreign firm while a strategic alliance involves more than
just financial support.
ANSWER: c
113. The Ford Motor Company has entered into an alliance with Yves Saint Laurent, a maker of clothing and one of the
most successful fashion houses in the world. Yves Saint Laurent is headquartered in France. Ford will use Yves Saint
Laurent designs and color traditions in its production of luxury models of the company’s Expedition SUV and Lincoln
vehicles. The Yves Saint Laurent elements will appear in the interior and body paint color. This alliance would most likely
be classified as
a. a strategic alliance.
b. a joint venture.
c. a global direct ownership.
d. a multinational enterprise.
e. contract manufacturing.
ANSWER: a
114. Once a company makes a long-term commitment to a foreign market that has a promising political and economic
environment, which of the following options then emerges as a possibility?
a. Exporting
b. Joint venture
c. Limited exporting
d. Direct ownership
e. Licensing
ANSWER: d
115. In relation to international marketing, which of the following best describes direct ownership?
a. A company owns its own manufacturing facilities.
b. A company forms an alliance with a similar company in a foreign country.
c. Foreign companies contract with manufacturers in other countries.
d. A company owns subsidiaries or facilities in foreign countries.
e. Two companies from different nations have interests in each other's facilities.
ANSWER: d
116. IKEA, a Swedish retailer of contemporary furniture, operates several stores in various Scandinavian countries, as
well as in the United States and Canada. Which of the following describes IKEA's level of commitment to international
marketing?
a. Licensing
b. Direct ownership
c. Exporting
d. A trading company
e. A joint venture
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ANSWER: b
117. Firms that have operations or subsidiaries located in many countries are referred to as
a. multinational enterprises.
b. strategic alliances.
c. joint ventures.
d. international marketers.
e. export alliances.
ANSWER: a
118. Southern Tier Industries has operations in more than 30 foreign countries. The headquarters in Atlanta controls the
entire organization while offering subsidiaries the freedom necessary to achieve success in local markets. Southern Tier
Industries is an example of a(n)
a. strategic alliance.
b. joint venture.
c. export-driven corporation.
d. multinational enterprise.
e. trading company.
ANSWER: d
119. The Samsung Group sells several different product lines around the world through home appliance and electronics
stores. Samsung appliances and electronics have been historically made in Korea, where the company is headquartered.
Recently, Samsung has been investigating the possibility of buying land and building a production plant in Tennessee, in
the United States. Samsung is now operating as a(an) ______; however, if the plant is built in Tennessee, it will be
operating as a(an) ______.
a. exporter; strategic alliance.
b. limited exporter; national marketer.
c. limited exporter; international proprietorship.
d. exporter; multinational enterprise.
e. exporter; global franchise.
ANSWER: d
120. Japan's Sony Corporation is a prime example of a multinational enterprise. With this in mind, which of the following
would most accurately characterize Sony's operations?
a. It follows a strategy of market globalization.
b. It has operations or subsidiaries in many different countries.
c. It places most of its emphasis on profits generated in foreign countries.
d. It would not expect its foreign operations to share the same goals as the parent firm.
e. It does not concern itself with differences in markets around the world.
ANSWER: b
121. What is the greatest advantage to an organization of having a subsidiary in a foreign nation?
a. Avoidance of all U.S. laws
b. Increase in cross-cultural approaches to management that allows subsidiaries to develop their own identity
c. Increased trend toward nationalistic marketing approaches
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d. Greater amount of standardization of the marketing mix
e. Greater amount of security from government nationalization and other anticompetitive measures
ANSWER: b
122. A subsidiary in a foreign country generally operates under

a. the laws of the parent company's home country.
b. foreign management in order to develop a local identity.
c. strict management control from the home country's executives.
d. the regulations set forth by the International Trade Agreement.
e. a team of managers from the distant parent company.
ANSWER: b
123. Which of the following centralizes all of the responsibility for international operations?
a. Product division structures
b. Export department structures
c. Internationally integrated structures
d. International division structures
e. Global matrix structures
ANSWER: d
124. Northeastern University and Penn State University both offer online MBA programs that are available to students
around the world. This is an example of
a. globalization.
b. customization.
c. licensing.
d. nationalization.
e. regionalization.
ANSWER: a
125. Organizations that employ standardized products, promotion campaigns, and prices for all markets are practicing
what is known as
a. customization.
b. internationalization.
c. globalization.
d. regionalization.
e. nationalization.
ANSWER: c
126. Both Nike and Adidas standardize many of their shoe models and colors worldwide, which is an example of
_______.
a. globalization.
b. customization.
c. nationalization.
d. culturalization.
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e. internationalization.
ANSWER: a
127. Levi Strauss markets its denim jeans in many countries and develops its marketing strategy as if the world were a
single market. This approach to selling a standardized product in all countries represents which type of international
marketing?
a. Exporting
b. Accidental exporting
c. Limited exporting
d. Licensing
e. Globalization of markets
ANSWER: e
128. Globalization of markets requires developing marketing strategies as if the world were one market. Which of the
following marketing mix variables is most difficult to standardize for globalization?
a. Brand name
b. Package
c. Media allocation
d. Labels
e. Product characteristics
ANSWER: c
129. Swiss-based Nestlé has taken a global approach to marketing its chocolate products. Which of the following is most
easily standardized?
a. Product
b. Promotion
c. Distribution
d. Advertising
e. Price
ANSWER: a
130. When the makers of Red Bull, an energy drink, decided to go international with their marketing effort, a global
approach was adopted. With which of the following factors did Red Bull most likely experience difficulty as the firm
applied a global strategy for marketing?
a. Branding
b. Product characteristics
c. Packaging
d. Labeling
e. Advertising
ANSWER: e
131. Scenario 9.1

Use the following to answer the questions.
Harley-Davidson Motors manufactures all of its motorcycles in the U.S. at one of four sites. With a large number of its
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bikes sold in markets all around the world, it still retains the manufacturing close to the headquarters for several reasons,
one being that its management wants to keep close watch on the quality of its products. However, for all the accessories,
apparel, and other riding gear, Harley-Davidson contracts out to other manufacturers to produce the items with the Harley
name and logo. Some of these items, particularly the apparel, are made in China. Lately, some members of the Harley
Owners' Group (HOG) have been complaining to the company about this practice, citing that "everything Harley should
be made in America."
Refer to Scenario 9.1. Harley-Davidson's practice of having manufacturers in China produce apparel items with the
Harley logo is an example of
a. contract manufacturing
b. globalization
c. direct ownership
d. joint venture
e. exporting
ANSWER: a
132.
Scenario 9.1
Refer to Scenario 9.1. One of Harley-Davidson's largest international markets is in Japan, where American brands are
highly sought after. This is an example of ____ impacting the market.
a. international forces
b. economic forces
c. domestic forces
d. cultural forces
e. environmental forces
ANSWER: d
133.
Scenario 9.1
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Refer to Scenario 9.1. If Harley-Davidson were to suddenly find its inventory building up in Japan, it might reduce
inventory by selling the bikes at below cost prices. This practice is known as
a. price skimming.
b. market penetration.
c. dumping.
d. differential pricing.
e. inventory compensation.
ANSWER: c
134.
Scenario 9.1
Refer to Scenario 9.1. At what level of involvement in international marketing is Harley-Davidson with regard to its
bikes?
a. Full-scale
b. Globalization
c. Joint venture
d. Direct ownership
e. Exporting
ANSWER: e
135. Scenario 9.2

KFC opened its first franchised restaurant outside of North America in England in 1964. Now over a billion KFC chicken
dinners are sold annually in more than 80 countries and territories around the world. KFC has established its own
processing plants in these countries to ensure the quality of its chickens and other food items. In the U.S., the menu at
KFC is usually the same in all restaurants, with only a very few additional items available in different regions. However,
when KFC first franchised into Asian countries, it added many unusual local delicacies to the menu—items such as fried
octopus and squid. Additionally, the franchised stores in Asian countries display cooked food in "plates" near windows at
the front of the store. This is a tradition for many restaurants in these countries—to offer the customer passing by a
preliminary view of their product.
Refer to Scenario 9.2. KFC's establishment of international production/processing facilities is an example of
a. direct ownership.
b. franchising.
c. strategic alliance.
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d. outsourcing.
e. a trading company.
ANSWER: a
136.
Scenario 9.2
Refer to Scenario 9.2. The practice of offering fried octopus and squid at Asian KFCs is best described as
a. a strategy of standardization.
b. a strategy of globalization.
c. a strategy of some customization.
d. competitive advantage.
e. internationalizing the franchise.
ANSWER: c
137.
Scenario 9.2
Refer to Scenario 9.2. Suppose that KFC's parent company experienced difficulty in opening its restaurants in China
unless KFC was willing to pay the government a "bribe." If KFC were to resort to paying this bribe in China saying that
"it's different doing business there," this would be an example of
a. a licensing arrangement.
b. the self-reference criterion.
c. cultural relativism.
d. balance of trade issues.
e. exchange controls.
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ANSWER: c
138.
Scenario 9.2
Refer to Scenario 9.2. Which of the following alliances will KFC most likely utilize to guide its business transactions in
Japan and China?
a. WTO
b. MERCOSUR
c. FTAA
d. NAFTA
e. APEC
ANSWER: e
139. _____________ are companies that were started with the knowledge and resources to compete in a global
marketplace. They are usually small technology companies that quickly establish themselves in international markets.
They reach a point where as much as ________% of their sales come from locations outside the United States.
a. Multinationals; 80
b. International enterprises; 60
c. Global techs; 50
d. Global tigers; 75
e. Born globals; 70
ANSWER: e
140. The international marketplace offers a new set of challenges for the marketer to navigate. There are multiple forces
that must be overcome if the firm’s marketing strategies are to be successful in international markets. For example, some
countries have import tariffs and quotas that restrict the flow of foreign products into their domestic markets. This is an
example of which of the following environmental forces present in international markets?
a. Political, Legal, and Regulatory Forces
b. Sociocultural Forces
c. Ethical and Social Responsibility Forces
d. Competitive Forces
e. Economic Forces
ANSWER: a
141. The trade agreement that links Mexico, Canada, and United States into one economic market is called which one of
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the following?
a. European Union
b. MERCOSUR
c. Central American Free Trade Agreement
d. APEC
e. NAFTA
ANSWER: e
142. Because firms have different resources and core competencies, their international marketing strategies will also be
different. Nevertheless, any firm seeking to be successful in international markets must establish the right organizational
structure for its core competencies and resources. Which of the following is a valid international organizational structure?
a. Geographic area structure
b. Non-domestic structure
c. Domicile structure
d. Sales department structure
e. Overseas operations structure
ANSWER: a
143. The ______________ of marketing suggests that firms should adopt marketing strategies as though the entire world
was one single marketplace. These firms would then market ___________ products using the same marketing mix
everywhere in the world.
a. internationalization; customized
b. globalization; customized
c. flexibility; standardized
d. globalization; standardized
e. international vision; custom
ANSWER: d
144. U.S. businesses are increasingly recognizing that international markets provide enormous opportunities for growth
and profit. ___________companies are entering international markets and quickly realizing as much as 70% of their sales
outside the domestic market within two years.
a. Joint venture
b. Born global
c. Internationally integrated
d. Export
e. Trading
ANSWER: b
145. Sociocultural forces in international markets keep marketers busy trying to understand local preferences, tastes,
customs, and idioms. The marketer’s failure to understand these forces almost certainly leads to failures in the marketing
strategies used. Which one of the following statements about the sociocultural forces in international markets is true?
a. Cultural differences do not affect marketing negotiations and decision-making behavior.
b. Buyers’ perceptions of other countries do not influence product adoption and use.
c. Cultural differences do not have significant effects on marketing activities.
d. Transferring marketing logos, trademarks, and symbols is usually an easy process when entering international
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markets.
e. Product acceptance in an international market is more likely if similarities exist between buyer and seller
cultures.
ANSWER: e
146. The North American Free Trade Agreement (NAFTA) ___________ tariffs on goods produced in and traded
between Canada, Mexico, and the United States.
a. doubled
b. tripled
c. introduced
d. eliminated
e. extended
ANSWER: d
147. A ______________ links buyers and sellers in different countries, but it has no manufacturing capability. It most
important function is ___________ to products and moving them from the domestic country to the foreign country.
a. joint venture; adding customizations
b. foreign subsidiary; taking title
c. trading company; adding value
d. foreign subsidiary; adding value
e. trading company; taking title
ANSWER: e
148. The internationally integrated structure is one type of organizational structure used by U.S. firms for their
international operations. Which of the following statements is true about internationally integrated structures?
a. There are five types of internationally integrated structures.
b. The international subsidiary is one type of internationally integrated structure.
c. The matrix structure is not a type of internationally integrated structure.
d. The product division structure is one type of internationally integrated structure.
e. The geographic area structure is not a type of internationally integrated structure.
ANSWER: d
149. Brand name, product characteristics, packaging, and labeling are some of the ______________ marketing mix
variables to standardize for international markets.
a. most difficult
b. most urgent
c. easiest
d. most expensive
e. most culturally sensitive
ANSWER: c
150. Tim Baker is an account representative from the United States for an automotive parts supplier and is
meeting with a client team in Japan. This is Tim’s first trip to Japan, and unfortunately, he wasn’t able to review
any information about “doing business in Japan” before he left the States. His first meeting with representatives
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from the prospective client’s firm is a dinner, and he is immediately surprised at the formality of the event. All
of his counterparts are dressed very formally, and no one is addressing him by his first name but is referring to
him as Mr. Baker. In addition, the members of the client team seem to be waiting on their supervisor to make
the first move, and Tim is beginning to realize that age and seniority are very important to the team members.
Tim is growing a little concerned that he may not be successful in business since he feels like a fish out of
water. Which environmental force has the sales representative encountered?
a. sociocultural
b. economic
c. technological
d. competitive
ANSWER: a
151. Toyota Motor Company recently announced plans to build a new production facility in Mexico and will be
able to take advantage of reduced production costs related to wage rates in the local area. Toyota will sell the
vehicles in Mexico and will also export the Corolla model the plant produces around the world. The finished
products costs will be based on the Mexican peso, which fluctuates but is generally considered to be weaker
than the U.S. dollar or euro. This will provide Toyota with a price advantage in the export market. This is an
example of the _______ force that affects international marketing activities.
a. economic
b. competitive
c. sociocultural
d. political, legal, and regulatory
ANSWER: a
152. Baxter Publishing sought to reduce expenditures related to the printing of books in its trade and educational
market and contracted with a printing company in China. However, the publishing company soon realized that
China has weak enforcement of intellectual property laws and that gray market books began appearing in the
marketplace, which greatly impacted Baxter's profits. The company found that they had little recourse against
the contract manufacturer and learned a very difficult lesson in international marketing. This exemplifies the
impact of _______ forces on international business.
a. ethical and social responsibility
b. competitive
c. technological
d. political, legal, and regulatory
ANSWER: a
153. Signature Cycles creates sleek and modern bicycles for commuters and cycling enthusiasts using the latest
materials such as carbon fiber frames. Signature Cycles are relatively expensive, but its urban customers
routinely pay $800 to $1,000 for the hand-crafted bicycles. The owners are considering expanding their
company’s footprint outside the United States and are considering opportunities to export its products to Canada
and Mexico. They have learned that _______ eliminated virtually all tariffs on goods produced and traded
among Canada, Mexico, and the United States.
a. NAFTA
b. EU
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c. APEC
d. ASEAN
ANSWER: a
154. Sebastian Motors is a family-owned car dealership with two locations in central France. The car dealership
markets BMWs and Mini Coopers and provides servicing. Recently, Sebastian Motors has been impacted by the
economic climate in the ________ ,which has suffered recently due to a weakening of the currency and the poor
financial conditions of several member countries including Portugal, Italy, Greece, and Spain—affectionately
known as the PIGS of the Common Market.
a. European Union
b. Northern European Commonwealth
c. Southern Hemisphere
d. United Kingdom
ANSWER: a
155. IKEA has opened stores in Beijing and Shanghai and hopes to capitalize on China’s growing consumer
economy, since the potential of China’s consumer market is so vast that it is almost impossible to measure.
IKEA and other global retailing giants operating in China are beneficiaries of the _____, which was established
in 1989 to promote open trade and economic and technical cooperation among member nations. In addition,
they are allowed to participate in a wide range of organizational activities and have become increasingly
competitive regarding global business.
a. APEC
b. EU
c. NAFTA
d. ASEAN
ANSWER: a
156. Solar Sports is excited about expanding their export opportunities to Cuba, since the United States has
renewed trade relations with Cuba, and plans to utilize a _______, which links buyers and sellers in different
countries but is not involved in manufacturing and does not own assets related to manufacturing.
a. trading company
b. contract manufacturing
c. licensing
d. outsourcing
ANSWER: a
157. The global technology company Apple received negative publicity related to allegations that its workforce
at a ________ plant in China was overworking the employees who worked as many as 15 hours a day in poor
factory conditions. Apple and other companies that participate in China’s manufacturing industry have hired
inspectors to ensure the contracted agreements are being followed and worker safety and rights are protected.
a. contract manufacturing
b. trading company's
c. licensing
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d. direct ownership
ANSWER: a
158. ____________________ involves developing and performing marketing activities across national boundaries.
a. International marketing
b. Globalized marketing
c. World marketing
d. Customized marketing
e. Regional marketing
ANSWER: a
159. ______________ was established in 1967 and promotes trade and economic integration among member nations in
Southeast Asia.
a. APEC
b. ASEAN
c. MERCOSUR
d. WTO
e. GATT
ANSWER: b
160. Scenario 9.3

The United States believes China is selling its steel products in the U.S. at unfairly low prices. For many years, domestic
steelmakers have complained, saying that they cannot compete against the influx of Chinese steel entering the market.
China denies that it is engaging in such behavior. However, the United States has announced that imports of Chinese steel
products will now be more expensive—in some cases, by as much as 265.79%. American steelmakers believe this is the
only way they will be able to compete against Chinese steel imports.
Refer to Scenario 9.3. The reason Chinese steel products will be expensive is because the U.S. government is levying
__________ against them.
a. an embargo
b. quotas
c. exchange controls
d. import tariffs
e. export duties
ANSWER: d
161. Scenario 9.3

The United States believes China is selling its steel products in the U.S. at unfairly low prices. For many years, domestic
steelmakers have complained, saying that they cannot compete against the influx of Chinese steel entering the market.
China denies that it is engaging in such behavior. However, the United States has announced that imports of Chinese steel
products will now be more expensive—in some cases, by as much as 265.79%. American steelmakers believe this is the
only way they will be able to compete against Chinese steel imports.
Refer to Scenario 9.3. According to the United States, what practice are Chinese steel importers engaging in that provides
them with an unfair advantage?
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a. dumping
b. quotas
c. direct ownership
d. exchange controls
e. cultural relativism
ANSWER: a
162. The United States has the highest gross domestic product (GDP) in the world at $17 trillion. In comparison, the small
country of Luxembourg has a GDP of $60 billion. Despite its lower GDP, Luxembourg has one of the highest GDP per
capita at over $104,000. In contrast, U.S. GDP per capita is $53,000. This likely means which of the following?
a. Individuals in the United States are more likely to earn higher incomes than individual consumers in
Luxembourg.
b. The standard of living in the United States far surpasses the standard of living in Luxembourg.
c. Individual consumers in Luxembourg have higher outputs in terms of goods and services than individuals in
the United States.
d. Luxembourg has a higher market value in total output in terms of good and services than the United States.
e. Individual consumers in the United States have higher outputs in terms of goods and services than individuals
in Luxembourg.
ANSWER: c
163. Jackie is often surprised when she goes to other countries to learn that people do business so differently. For instance,
in meetings Jackie is used to getting straight to the point and addressing any relevant issues. However, she has learned that
in many countries businesspeople take the time to first make small talk and ask about the family before finally getting
down to business. To Jackie this seems to make the meetings unnecessarily long and wastes valuable time. These cultural
differences seem strange to Jackie because she is relying on her _____________.
a. ethical perspectives
b. international bias
c. cultural relativism
d. self-reference principle
e. self-reference criterion
ANSWER: e
164. Counterfeit luxury goods are a major problem in some Asian countries. Women that purchase counterfeit bags feel a
thrill when they are able to fool others into believing they own a luxury brand. However, the major reason for the
deception is that people in those cultures place high value on luxury brands. By showing off the brand, these women are
demonstrating that they can afford the best. The emphasis and value placed on status is an example of a(n)
_________________.
a. economic force
b. sociocultural force
c. political, legal, and regulatory force
d. competitive force
e. social responsibility force
ANSWER: b
165. Thailand wants to increase its trade and economic integration with Cambodia. Which trading alliance will be the
most useful in achieving this goal?
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a. APEC
b. WTO
c. ASEAN
d. GATT
e. MERCOSUR
ANSWER: c
166. The General Agreement on Tariffs and Trade was initially implemented to do which of the following?
a. Promote free trade among members by eliminating trade barriers and educating individuals, companies, and
governments about trade rules across the world
b. Provide loans to countries to build up their infrastructure and increase economic opportunities
c. Merge the United States, Canada, and Mexico into a single market
d. Reduce worldwide tariffs and increase international trade
e. Prevent the dumping of products into developing countries
ANSWER: d
167. General Motors is a multinational company. In most countries in which it operates, General Motors opens facilities
that give it total control over manufacturing and other processes. However, in China General Motors must partner with
domestic companies due to legal and regulatory constraints. In these cases, GM owns part of the company, while the
domestic firm owns the other part. In most countries, GM engages in ____________, but in China it engages in
_______________.
a. direct ownership; joint ventures
b. strategic alliances; joint ventures
c. exporting; joint ventures
d. direct ownership; joint ventures
e. exporting; strategic alliances
ANSWER: d
168. Emit Brasil International specializes in all kinds of products manufactured in Brazil. The firm assists global
companies with importing and exporting. It also provides consulting assistance and strategic help on international trade.
Emit Brasil is most likely a(n) __________.
a. export department
b. importer
c. multinational corporation
e. trading company
ANSWER: e
169. Toyota announced it was ending a partnership with Tesla. A few years earlier, Toyota had partnered with Tesla and
agreed to use its lithium-ion battery pack and motor on some of its vehicles. The hope was that the firms could use their
combined knowledge in electric vehicle technology to develop better products in this area. Eventually, Toyota began to
focus more on hydrogen cell technology, and the partnership dissolved. This partnership between the two firms was most
likely a(n) __________________.
a. franchise agreement
b. strategic alliance
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c. export department
d. joint venture
e. trading company
ANSWER: b
170. A major disadvantage of this type of international organizational structure is that employees tend to belong to two
divisions and report to two managers in different hierarchies of the firm. This structure is known as a(n) _____________.
a. global matrix
b. international division
c. export department
d. product division
e. geographic area
ANSWER: a
171. XYZ Logistics was engaging in limited transportation of agricultural products overseas. However, it recently made
the decision that it wanted to increase the exporting of products to Canada, Mexico, Argentina, Brazil, and other countries.
To do this it created a new subunit of its marketing division that would specifically focus on these activities. XYZ
Logistics has adopted a(n) __________ structure.
a. export department
b. trading company
c. international division
d. internationally integrated division
e. geographic
ANSWER: a
172. Which one of the following is likely to concentrate human resources into one unit and serve as the central point for
all information flow related to international operations?
a. internationally integrated structures
b. international division structures
c. export departments
d. product division structures
e. global matrix structures
ANSWER: b
173. The degree to which a firm is able to "think globally, act locally" impacts the success of the firm's
_________________ strategy as it goes international.
a. localization
b. customization
c. globalization
d. nationalization
e. culturalization
ANSWER: c
174. When Amway entered China, it opened up retail locations for the first time. Amway is a direct selling firm. This
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means that it sells almost exclusively through independent consultants. However, in China restrictions on direct selling
required significant modifications in how consumers obtain these products. On the other hand, Amway has been able to
sell many of its signature products to the Chinese market with little to no modification. In China, Amway was forced to
______________ the distribution variable and ___________ its product variable.
a. globalize; globalize
b. customize; globalize
c. localize; globalize
d. globalize; customize
e. internationalize; customize
ANSWER: b
Essay
175. Describe the sociocultural forces that affect international marketing strategy.
ANSWER: Cultural and social differences among nations can have significant effects on marketing activities. Because
marketing activities are primarily social in purpose, they are influenced by beliefs and values regarding family,
religion, education, health, and recreation. Local preferences, tastes, and idioms can all prove complicated for
international marketers. It can be difficult to transfer marketing symbols, trademarks, logos, and even products
to international markets, especially if these are associated with objects that have profound religious or cultural
significance in a particular culture. Cultural differences may also affect marketing negotiations and decision-
making behavior. Buyers’ perceptions of other countries can influence product adoption and use. Multiple
research studies have found that consumer preferences for products depend on both the country of origin and
the product category of competing products. When people are unfamiliar with products from another country,
their perceptions of the country as a whole may affect their attitude toward the product and influence whether
they will buy it. If a country has a reputation for producing quality products and therefore has a positive image
in consumers’ minds, marketers of products from that country will want to make the country of origin well
known. The extent to which a product’s brand image and country of origin influence purchases is subject to
considerable variation based on national culture characteristics.
176. In what ways can a nation restrict the flow of imported goods?
ANSWER: A government’s policies toward public and private enterprise, consumers, and foreign firms influence
marketing across national boundaries. Some countries have established import barriers, such as tariffs. An
import tariff is any duty levied by a nation on goods bought outside its borders and brought into the country.
Nontariff trade restrictions include quotas and embargoes. A quota is a limit on the amount of goods an
importing country will accept for certain product categories in a specific period of time. An embargo is a
government’s suspension of trade in a particular product or with a given country. Embargoes are generally
directed at specific goods or countries and are established for political, health, or religious reasons. Exchange
controls, government restrictions on the amount of a particular currency that can be bought or sold, may also
limit international trade. They can force businesspeople to buy and sell foreign products through a central
agency, such as a central bank. Countries may limit imports to maintain a favorable balance of trade. The
balance of trade is the difference in value between a nation’s exports and its imports. When a nation exports
more products than it imports, a favorable balance of trade exists because money is flowing into the country.
177. Describe how economic and competitive forces affect international marketing strategies.
ANSWER: Global marketers need to understand the international trade system, particularly the economic stability of
individual nations, as well as trade barriers that may stifle marketing efforts. Economic differences among
nations—differences in standards of living, credit, buying power, income distribution, national resources,
exchange rates, and the like—dictate many of the adjustments firms must make in marketing internationally.
Instability is one of the guaranteed constants in the global business environment. The value of the dollar, euro,
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and yen has a major impact on the prices of products in many countries. An important economic factor in the
global business environment is currency valuation. Opportunities for international trade are not limited to
countries with the highest incomes. The countries of Brazil, Russia, India, China, and South Africa (BRICS)
have attracted attention as their economies appear to be rapidly advancing. Other nations are progressing at a
much faster rate than they were a few years ago, and these countries—especially in Latin America, Africa,
eastern Europe, and the Middle East—have great market potential. This has a major impact on international
trade.
Competition is often viewed as a staple of the global marketplace. Customers thrive on the choices offered by
competition, and firms constantly seek opportunities to outmaneuver their competition to gain customers’
loyalty. Firms typically identify their competition when they establish target markets worldwide. Each country
has unique competitive aspects—sociocultural, technological, political, legal, regulatory, and economic
forces—that are often independent of the competitors in that market. Although competitors drive competition,
nations establish the infrastructure and the rules for the types of competition that can take place.
178. What marketing and ethical problems can bribes create in international marketing transactions?
ANSWER: The use of payoffs and bribes is deeply entrenched in many governments. Because U.S. trade and corporate
policy, as well as U.S. law, prohibits direct involvement in payoffs and bribes, U.S. companies may have a
hard time competing with foreign firms that engage in these practices. Under the Foreign Corrupt Practices
Act of 1977, it is illegal for U.S. firms to attempt to make large payments or bribes to influence policy
decisions of foreign governments. Nevertheless, facilitating payments, or small payments to support the
performance of standard tasks, are often acceptable. The Foreign Corrupt Practices Act also subjects all
publicly held U.S. corporations to rigorous internal controls and record-keeping requirements for their
overseas operations. Differences in ethical standards affect marketing efforts. When marketers do business
abroad, they often perceive that other business cultures have different modes of operation. This uneasiness is
especially pronounced for marketers who have not traveled extensively or interacted much with foreigners in
business or social settings. However, many businesspeople adopt the principle of “When in Rome, do as the
Romans do.” These businesspeople adapt to the cultural practices of the country they are in and use the host
country’s cultural practices as the rationalization for sometimes straying from their own ethical values when
doing business internationally. For instance, by defending the payment of bribes or “greasing the wheels of
business” and other questionable practices in this fashion, some businesspeople are resorting to cultural
relativism—the concept that morality varies from one culture to another and that business practices are
therefore differentially defined as right or wrong by particular cultures. Because of differences in cultural and
ethical standards, many companies work both individually and collectively to establish ethics programs and
standards for international business conduct.
179. What effects are technological forces having on international marketing? What opportunities exist in the global
marketplace that marketers can exploit with regard to technology?
ANSWER: Advances in technology have made international marketing much easier. Interactive Web systems, instant
messaging, and podcast downloads, along with the traditional vehicles of voice mail, e-mail, and cell phones,
make international marketing activities more affordable and convenient. Internet use and social networking
activities have accelerated dramatically within the United States and abroad. In many developing countries
that lack the level of technological infrastructure found in the United States and Japan, marketers are
beginning to capitalize on opportunities to leapfrog existing technology. For example, cellular and wireless
phone technology is reaching many countries at a more affordable rate than traditional hard-wired telephone
systems. Consequently, opportunities for growth in the cell phone market remain strong in Southeast Asia,
Africa, and the Middle East. One opportunity created by the rapid growth in mobile devices in Kenya is
mobile payment services. London-based Vodafone has taken advantage of this market opportunity with its M-
PESA money transfer service, the most popular money transfer service in Kenya. Because banks tend to avoid
catering to lower income populations, such services are likely to grow.
180. What effect is NAFTA having on the international trade of the following countries: United States, Canada, and
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Mexico?
ANSWER: The North American Free Trade Agreement (NAFTA), implemented in 1994, effectively merged Canada,
Mexico, and the United States into one market of nearly 454 million consumers. NAFTA virtually eliminated
all tariffs on goods produced and traded among Canada, Mexico, and the United States to create a free trade
area. The estimated annual output for this trade alliance is more than $17 trillion. NAFTA makes it easier for
U.S. businesses to invest in Mexico and Canada; provides protection for intellectual property (of special
interest to high-technology and entertainment industries); expands trade by requiring equal treatment of U.S.
firms in both countries; and simplifies country-of-origin rules, hindering China and Japan’s use of Mexico as a
staging ground for further penetration into U.S. markets. Canada’s more than 35 million consumers are
relatively affluent, with a per capita GDP of $45,000. Canada is the single largest trading partner of the United
States, which in turn supports millions of U.S. jobs. NAFTA has also enabled additional trade between Canada
and Mexico. Mexico is Canada’s fifth largest export market and third largest import market. With a per capita
GDP of $18,000, Mexico’s more than 121 million consumers are less affluent than Canadian consumers.
181. Explain why the modes of entry into an international market are a major issue for managers to consider.
ANSWER: Marketers enter international markets and continue to engage in marketing activities at several levels of
international involvement. Traditionally, firms have adopted one of four different modes of entering an
international market; each successive “stage” represents different degrees of international involvement.
• Stage 1: No regular export activities
• Stage 2: Export via independent representatives (agents)
• Stage 3: Establishment of one or more sales subsidiaries internationally
• Stage 4: Establishment of international production/manufacturing facilities
Companies’ international involvement covers a wide spectrum, from purely domestic marketing to global
marketing. Domestic marketing involves marketing strategies aimed at markets within the home country; at
the other extreme, global marketing entails developing marketing strategies for the entire world (or at least
more than one major region of the world). Many firms with an international presence start out as small
companies serving local and regional domestic markets and expand to national markets before considering
opportunities in foreign markets (the born global firm is one exception to this internationalization process).
Limited exporting may occur even if a firm makes little or no effort to obtain foreign sales. Foreign buyers
may seek out the company and/or its products, or a distributor may discover the firm’s products and export
them. The level of commitment to international marketing is a major variable in global marketing strategies.
182. In what ways can businesses become involved in international marketing activities?
ANSWER: Businesses become involved in international marketing activities in the following ways:
a. Importing and exporting: Importing and exporting require the least amount of effort and commitment of
resources. Importing is the purchase of products from a foreign source. Exporting, the sale of products to
foreign markets, enables firms of all sizes to participate in global business.
b. Licensing and franchising: When potential markets are found across national boundaries, and when
production, technical assistance, or marketing know-how is required, licensing is an alternative to direct
investment. Franchising is a form of licensing in which a company (the franchiser) grants a franchisee the
right to market its product, using its name, logo, methods of operation, advertising, products, and other
elements associated with the franchiser’s business, in return for a financial commitment and an agreement to
conduct business in accordance with the franchiser’s standard of operations.
c. Contract manufacturing: Contract manufacturing occurs when a company hires a foreign firm to produce a
designated volume of the firm’s product (or a component of a product) to specification and the final product
carries the domestic firm’s name. Marketing may be handled by the contract manufacturer or by the
contracting company. Three specific forms of contract manufacturing have become popular in the last decade:
outsourcing, offshoring, and offshore outsourcing.
d. Joint ventures: In international marketing, a joint venture is a partnership between a domestic firm and a
foreign firm or government. Joint ventures are especially popular in industries that require large investments,
such as natural resources extraction or automobile manufacturing.
Test Bank for Marketing 2018, 19th Edition William M. Pride O. C. Ferrell
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e. Direct ownership: Once a company makes a long-term commitment to marketing in a foreign country that
has a promising market as well as a suitable political and economic environment, direct ownership of a foreign
subsidiary or division is a possibility.
f. Trading companies: Marketers sometimes employ a trading company, which links buyers and sellers in
different countries but is not involved in manufacturing and does not own assets related to manufacturing.
Trading companies buy products in one country at the lowest price consistent with quality and sell them to
buyers in another country. Trading companies reduce risk for firms that want to get involved in international
marketing. A trading company provides producers with information about products that meet quality and price
expectations in domestic and international markets. Additional services a trading company may provide
include consulting, marketing research, advertising, insurance, product research and design, legal assistance,
warehousing, and foreign exchange.
183. How do globalized marketing strategies differ from customized marketing strategies? What are the implications of
each for marketing managers?
ANSWER: Like domestic marketers, international marketers develop marketing strategies to serve specific target markets.
Traditionally, international marketing strategies have customized marketing mixes according to cultural,
regional, and national differences. There are many international issues related to product, distribution,
promotion, and price. For example, many developing countries lack the infrastructure needed for expansive
distribution networks, which can make it harder to get the product to consumers. Realizing that both
similarities and differences exist across countries is a critical first step to developing the appropriate marketing
strategy effort targeted to particular international markets. Today, many firms strive to build their marketing
strategies around similarities that exist instead of customizing around differences.
184. Describe the difficulties encountered in standardizing the marketing mix globally.
ANSWER: For many firms, globalization of marketing is the goal; it involves developing marketing strategies as though
the entire world (or its major regions) were a single entity: a globalized firm markets standardized products in
the same way everywhere. Nike and Adidas shoes, for example, are standardized worldwide. For many years,
organizations have attempted to globalize their marketing mixes as much as possible by employing
standardized products, promotion campaigns, prices, and distribution channels for all markets. The economic
and competitive payoffs for globalized marketing strategies are certainly great. Brand name, product
characteristics, packaging, and labeling are among the easiest marketing mix variables to standardize; media
allocation, retail outlets, and price may be more difficult. In the end, the degree of similarity among the
various environmental and market conditions determines the feasibility and degree of globalization. A
successful globalization strategy often depends on the extent to which a firm is able to implement the idea of
“think globally, act locally.” International marketing demands some strategic planning if a firm is to
incorporate foreign sales into its overall marketing strategy. International marketing activities often require
customized marketing mixes to achieve the firm’s goals. Globalization requires a total commitment to the
world, regions, or multinational areas as an integral part of the firm’s markets; world or regional markets
become as important as domestic ones. Regardless of the extent to which a firm chooses to globalize its
marketing strategy, extensive environmental analysis and marketing research are necessary to understand the
needs and desires of the target market(s) and successfully implement the chosen marketing strategy.
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Chapter 09: Reaching Global Markets

1. International marketing is defined as marketing activities performed across national boundaries.

4. An embargo occurs when a government suspends trade with a particular country.

5. A quota is the suspension, by a government, of trade in a particular product.

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23. Importing is the sale of products to foreign markets.

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44. Before the 1990s, most firms entered international markets

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59. The gross domestic product is

60. Which of the following countries has the highest GDP?

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64. Select the true statement.

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71. Maquiladoras are

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75. Which of the following is not true of NAFTA?

76. Another name for the European Union is

77. The unification of Europe through the European Union (EU)

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81. The Southern Common Market (MERCOSUR) includes

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85. The term dumping refers to the sale of

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90. The purchase of products from a foreign source is called

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94. The role of export agents is to

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122. A subsidiary in a foreign country generally operates under

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131. Scenario 9.1

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135. Scenario 9.2

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Chapter 09: Reaching Global Markets