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Chapter 06
Understanding and Reaching Global Consumers and Markets
Multiple Choice Questions
1. Why did Dell, Inc., embark on a global growth initiative?
A. U.S. sales had decreased.
B. Dell was recently purchased by Lenovo, a major Chinese competitor.
C. There was too much competition in Dell's direct-to-consumer marketing channel.
D. There were fewer restrictions in computer technology outside the United States.
E. Emerging economies offered significant growth potential.
2. 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 shop-within-a-shop counters in selected retailers in India so shoppers could

experience the products.
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.
6-1
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
3. 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 consumer
electronics.
B. Dell partners with each country's largest department stores and sells 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.
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.
4. Five 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.
6-2
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.
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.
6-3
of them is
A. an increase in economic protectionism and a decline free trade.
C. a decrease in most countries' GDPs and a renewal of nationalism.
D. the emergence of networked global marketspace.

ethnocentrism.
of them is
D. the growing prevalence of economic espionage.

ethnocentrism.
9. 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.
6-4
10. 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.
11. The 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.
12. 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.
6-5
13. Recently, 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.
14. Beginning January 1, 2005, China lifted the import quotas and lowered tariffs on automobiles. This
removal of the quotas and the lowering of tariffs is an example of
A. relaxing the rule of eminent domain.
B. reducing ethnocentrism.
D. reducing protectionism.
E. enhancing countertrade.
15. 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.
6-6
Figure 6-1
16. The question mark in Figure 6-1 above which results from the imposition of tariffs and quotas is
referred to as
B. protectionism.
D. import taxation.
6-7
17. The question mark in Figure 6-1 above leads to which of the following as a result of the imposition
of tariffs and quotas?
A. an increase world trade
B. a decrease world trade
C. a limit on exports
D. a limit on import
E. countertrade
18. Government taxes on products 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.
19. Tariffs refer to
A. government payments to companies or industries that primarily serve to create competitive

advantage for domestic products.
B. government taxes on products 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 products or services with another nation unless certain
financial or ideological requirements have been satisfied.
6-8
20. 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. quotas
C. sanctions
D. tariffs
E. subsidies
21. The __________ imposed on imported bananas by European Union countries cost consumers $2
billion a year in higher prices.
A. boycotts
B. quotas
C. sanctions
D. subsidies
E. tariffs
6-9
22. 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.
23. 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. These taxes Japan levied are referred to as
A. WTO taxes.
B. quotas.
C. tariffs.
D. excise taxes.
E. subsidies.
6-10
24. 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
25. Whirlpool recently asked the United States to impose __________ on washing machine imports
made by LG Electronics and Samsung Electronics, both South Korean companies, 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. quotas
C. sanctions
D. tariffs
E. embargoes
6-11
26. 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. quota
C. tariff
D. sanction
E. subsidy
27. 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.
6-12
28. A quota refers to
A. a government tax on products 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.
D. a minimum requirement for the purchase of specific products or services between two nations.
29. The world's largest manufacturer of peppermint candy canes was located 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 (like those that existed in the United States) on
the amount of sugar that can be brought into the nation. The business moved to Mexico because
of a(n) __________ established by the U.S. government.
A. tariff
B. trade imbalance
C. excise tax
D. subsidy
E. quota
6-13
30. Russia currently has a limit on pork of 400,000 metric tons annually that can be imported from any
country. This restriction would be considered a
A. tariff.
B. trade imbalance.
C. excise tax.
D. quota.
E. subsidy.
31. 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)
6-14
32. 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.
33. There are __________ World Trade Organization countries, including the United States, which
account for more than 90 percent of world trade.
A. 37
B. 52
C. 97
D. 113
E. 159
6-15
34. Which of the following statements about the World Trade Organization (WTO) is most accurate?
A. The WTO acts as an agent in trade negotiations between its members and the remainder of the
world.
B. The 179 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 trade issues.
D. The WTO uses panels of trade experts who can issue non-binding recommendations.
E. The WTO was formed by the United Nations.
A. The World Trade Organization is a temporary institution.
C. The WTO sets rules governing trade between its members and the rest of the world.
E. The WTO was formed by the major industrialized nations of the world.
A. The World Trade Organization was formed in 2008 to response to the global recession.
B. By mid-2013, there were 159 WTO member countries, including the United States, which account
for more than 90 percent of world trade.
C. The WTO sets rules governing trade between member and nonmember countries of the world.
6-16
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 issue non-binding recommendations.
A. The World Trade Organization was formed in 2008 in response to the global recession.
B. The 12 member countries of the WTO account for approximately 55 percent of world trade.
C. The WTO acts as an agent in licensing negotiations between its members and the remainder of
the world.
D. The WTO uses panels of trade experts who can issue binding decisions.
39. The European Union (EU) in early 2015 consisted of 28 countries with more than 500 million
consumers. The EU has eliminated most barriers to the free flow of products, 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
6-17
40. The European Union is an economic and political union of __________ member countries that have
eliminated most barriers to the free flow of products, services, capital, and labor across their
borders.
A. 17
B. 20
C. 28
D. 30
E. 37
41. To eliminate the need to continually monitor currency exchange rates, 16 of the countries in the
European Union (EU) have adopted a common currency, which is called the __________.
A. pound
B. franc
C. euro
D. mark
E. dollar
42. To eliminate the need to continually monitor currency exchange rates, __________ of the countries
in the European Union (EU) have adopted a common currency called the euro.
A. 11
B. 16
C. 20
D. 28
E. 32
6-18
43. 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 among participating nations.
C. trade with the former Eastern European communist countries.
D. obey international e-trade regulations.
E. use the American dollar as the economic standard.
44. 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.
45. The EU has benefited its member nations because firms do not need to market their products and
services on a nation-by-nation basis; most tariffs that affect pricing practices have been removed,
and
A. there is a legally binding code of economic conduct.
B. there is immunity against world recessions.
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.
6-19
46. Pan-European marketing strategies are possible because
B. there are effective countermeasures for protectionism.
47. 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 and the European Union.
C. member countries originally from NATO (North Atlantic Treaty Organization).
D. the United States, Canada, and Mexico.
E. North America and the Commonwealth of Independent States.
48. CAFTA-DR, a comprehensive free trade agreement between Costa Rica, the Dominican Republic, El
Salvador, Guatemala, Honduras, Nicaragua, and __________.
A. the United States
B. Panama
C. Belize
D. Cuba
E. Mexico
6-20
49. When firms originate, produce, and market their products and services worldwide, it is referred to
as __________.
A. acculturation
B. free trade
C. global branding
D. global competition
E. transactional exchange
50. Global competition exists when
A. a firm produces and markets its products domestically rather than globally.
B. firms originate, produce, and market their products and services worldwide.
C. two firms from two different countries compete for market share in a single domestic market.
D. two or more firms from different nations combine their resources to market products in a single
domestic market.
E. the firm from one nation dominates the market for its product in every nation.
51. 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
A. global competition.
B. acculturation.
C. free trade.
D. global branding.
E. transactional exchange.
6-21
52. In terms of the global marketplace, there are three primary types of companies: __________ firms,
multinational firms, and transnational firms.
A. worldwide
B. conglomerate
C. intercontinental
D. international
E. cosmopolitan
53. 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
multinational firms, and __________ firms.
A. multiethnic
B. transnational
C. multidomestic
D. ethnocentric
E. meganational
6-22
55. 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.
multinational firms, and 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.
57. 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
6-23
58. 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
59. 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. What type of global company is Mars?
A. an international firm
B. a multidomestic firm
C. a transnational firm
D. a meganational firm
E. a multinational firm
60. 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.
6-24
61. Unilever markets its Snuggle fabric softener differently to different parts of the world. Unilever is
a(n) __________ firm.
A. ethnocentric
B. multinational
C. transnational
D. global
E. international
62. 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.
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.
6-25
63. 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
C. transnational
D. global
E. international
64. 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
6-26
65. U.S. appliance manufacturers find that different customs about shopping must be used to
determine local 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
want them on the bottom. Based on this, 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
66. 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. transnational
C. multidomestic
D. meganational
E. international
6-27
67. 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
68. 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.
6-28
69. 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.
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.
70. 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
6-29
71. A brand marketed under the same name in multiple countries with similar and centrally
coordinated marketing programs is referred to as a(n)
A. transnational brand.
B. international brand.
C. multinational brand.
D. global brand.
E. meganational brand.
72. 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.
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
6-30
73. 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 brand name for each dialect in a 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.
74. 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.
75. 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. only if required by government regulations in the host market.
B. only in its initial introduction into a market and only until the brand is recognized.
C. by domestic competitors causing brand confusion.
D. only when necessary to better connect the brand to consumers in different markets.
E. when there is a serious drop in market share.
6-31
76. 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 very different tastes in fashions and music.
E. are more influenced by Asian culture than European culture.
77. 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.
78. 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. Japan.
C. the United Kingdom.
D. France.
E. China.
6-32
79. 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.
80. 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.
6-33
81. Around the world, middle-class, youth, and elite markets that consume similar assortments of
products and services, regardless of geographic location, are referred to as
82. 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
6-34
83. 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.
84. The clandestine collection of trade secrets or proprietary information about a company's
competitors is referred to as
A. trade piracy.
B. transnational fraud.
C. economic espionage.
D. competitive duplicity.
E. transnational espionage.
85. Economic espionage is the clandestine collection of trade secrets or __________.
A. government economic information
B. industrial intelligence
C. government weapons information
D. banking lists
E. proprietary information about competitors
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86. The estimated cost of economic espionage to firms in the United States is estimated to be
A. $10 billion per year.
B. $250 billion per year.
C. $750 billion per year.
D. $900 billion per year.
E. exceeding $1 trillion per year.
87. The Economic Espionage Act
A. allows the World Court in The Hague to adjudicate trade disputes on behalf of United Nations'
members and requires the home country to impose any penalties.
B. imposes a personal fine on a convicted U.S. citizen of up to $10 million.
C. targets espionage activities that are commonplace in any industry that holds governmental
contracts.
D. makes the theft of trade secrets by foreign entities a federal crime in the U.S.
E. is well-intended in theory, but is virtually impossible to enforce.
88. The prescribed penalty for agents of foreign governments found guilty of economic espionage is
A. up to 15 years in prison and fines up to $500,000.
B. life in prison with the possibility of parole after 25 years.
C. 25 years in prison and a $10 million fine.
D. permanent expulsion from the United States.
E. 30 years in prison and fines proportional to the damage caused.
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89. The prescribed penalty for individuals found guilty of the theft of trade secrets is
A. up to 25 years in prison and fines up to $10 million.
B. life in prison with chance of parole after 25 years.
C. expulsion from the United States and/or revocation of citizenship.
D. 30 years in prison and fines to be determined by the courts.
E. up to 15 years in prison and fines up to $500,000.
90. 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.
C. the similarities and differences among consumers in two or more nations or societies.
D. the buying behaviors within a given nation to identify similarities and differences among
individuals.
E. the buying behaviors within a given nation that links a person's actions to the cultural group
with which he or she identify most.
91. 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
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92. 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
93. A thorough cross-cultural analysis involves an understanding of and an appreciation of all of the
following EXCEPT:
A. economics.
B. symbols.
C. values.
D. languages.
E. customs.
94. 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
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95. 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 personality traits regarding honesty and integrity that have been passed down from
generation to generation.
96. The reverence that Japan shows towards its elderly is an example of that nation's __________.
A. values
B. beliefs
C. customs
D. religion
E. cultural diversity
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97. Which of the following examples best demonstrates a company's appreciation of another country's
values?
A. American companies in Germany encouraging 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."
98. 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.
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99. 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. semiotics.
B. legal system.
C. ethnocentricity.
D. religion.
E. values.
100. 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
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101. 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 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.
102. 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. custom
B. value
C. demographic pattern
D. belief
E. idiosyncrasy
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103. 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 appreciation for the __________ of other societies.
A. demographics
B. symbols
C. sensitivities
D. customs
E. values
104. 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.
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105. The Foreign Corrupt Practices Act
A. 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.
B. has different levels of punishment based upon the wealth of the host nation.
C. regulates only the behavior of U.S. businesses conducting business within the United States.
D. makes the theft of trade secrets by foreign entities a federal crime in the United States.
E. is a unilateral agreement the United States made with several developing nations.
106. The law, amended by the International Anti-Dumping and Fair Competition Act, that 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.
107. 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.
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108. 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.
109. The representations of ideas and concepts to which different cultures often attach different
meanings are referred to as
A. universal symbols.
B. cultural symbols.
C. symbolic concepts.
D. ideological representations.
E. cultural representations.
110. A field of study that examines the correspondence between symbols and their role in the
assignment of meaning for people is referred to as
A. back translation.
B. symbiotics.
C. semiotics.
D. symbolic linguistics.
E. cross-cultural analysis.
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111. Semiotics refers to
A. a field of study in marketing linguistics that identifies the connotative meanings behind words in
order to create the most effective product or brand names.
B. a field of study in marketing linguistics that identifies the connotative meanings behind words in
order to create the most effective advertising messages.
C. a field of study that examines the correspondence between symbols and their role in the
assignment of meaning for people.
D. a field of linguistics that translates words into internationally recognized symbols to help
companies carry their product message across international boundaries.
E. the practice where a translated word or phrase is retranslated into the original language by a
different interpreter to catch errors.
112. A researcher studying the fact that in some nations black is a sign of mourning while in others
white is a sign of mourning would be studying
A. semiotics.
B. semantics.
C. semaphorics.
D. cultural symbolism.
E. cultural linguistics.
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113. 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
114. 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
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Parthenon Photo
115. The Parthenon, shown in the photo above, evokes strong feelings from consumers in Greece and
is referred to as the "holy rock." Coca Cola marketers did not respect that this __________, when
used in a marketing campaign by replacing the columns with Coke bottles, would arouse such an
angry response in that country.
A. cultural symbol
B. anthropomorphic code
C. back translation
D. semantic representation
E. civil analysis
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116. 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.
117. 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.
118. 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.
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119. 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
120. 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 did not know had another suggestive meaning to native speakers.
A. cultural symbolism
B. dialect transformation
C. semantic analysis
D. linguistic exchange
E. back translation
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121. 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
Kit Kat Bar Photo
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122. 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 it necessary to use a name
without an additional meaning.
A. intentional transliteration
B. semantic symbolism
C. back translation
D. semantic analysis
123. Since global marketing is affected by economic considerations, a scan of the global marketplace
should include which of the following factors?
A. an analysis of cultural diversity within the country under consideration
B. regulatory constraints regarding contracts, mergers, and partnerships
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
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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
A. recognition of a country's currency exchange rates
B. an analysis of cultural diversity within the country under consideration
C. regulatory constraints regarding contracts, mergers, and partnerships
126. A country's communications, 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.
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127. 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 communications, transportation, financial, and distribution systems.
E. all of a country's natural resources, whether or not they are currently being exploited.
128. 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
129. Although Russia now has a free economy, there are still some problems with its financial and legal
systems as well as with the notion of
A. private property.
B. product promotion.
C. paid advertising.
D. community property.
E. foreign exchange rates.
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130. In Latvia, only one six-lane highway exists, connecting Riga, its capitol, 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
C. geopolitical wealth.
D. asset wealth.
E. economic infrastructure.
131. A global marketer selling consumer products and services must also consider what the average
per capita or __________ is among a country's consumers and how the income is distributed to
determine a nation's purchasing power.
A. buying capacity
B. currency exchange risk
C. purchasing power
D. household income
E. cost of living
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132. A country's income distribution is important because it gives a more reliable picture of a country's
__________.
A. consumer tastes
B. taxable income
C. purchasing power
D. discretionary income
E. cost of living
133. 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
134. Generally, as the proportion of middle-income households in a country __________, the __________ a
nation's purchasing power.
A. increases; greater
B. increases; lesser
C. decreases; greater
D. levels off; greater
E. There is no relationship between middle-income households and a nation's purchasing power.
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135. 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
136. Generally, as the proportion of middle-income households in a country increases, the nation's
purchasing power __________.
A. levels off
B. decreases
C. increases
D. becomes less of an economic priority
E. becomes progressively unstable
137. 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.
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138. 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.
139. 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. economic infrastructure
E. exchange rates
140. When foreign currencies can buy more U.S. dollars,
A. U.S. products are more expensive to foreign customers.
B. U.S. products are more expensive to U.S. customers.
C. U.S. products are less expensive to foreign customers.
D. economists consider it an indicator of an impending long-term economic upturn.
E. American consumers will buy in large quantities and stockpile in fear of an impending economic
crisis.
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141. 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 when they occur, their effects are minimal.
D. Exchange rate fluctuations are now 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.
142. 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
C. reciprocity price.
E. balance of trade.
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143. 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.
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.
144. 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
145. 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
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146. The PRS group maintains a website that can be used to determine
A. changing demographic and psychographic data for each country in the registry.
B. a country's political risk ratings using multiple databases of country-specific information.
C. the tariffs of each country and their relative effect on product and services sales.
D. the rankings of American products relative to domestic equivalents in each country.
E. changing social trends within different segments of the economy.
147. 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 __________.
B. trade barriers
C. universal codes
D. binding requirements
E. targets for bribery
148. 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
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149. 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
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
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entry. Four general options exist: (1) exporting; (2) licensing; (3) __________; and (4) direct
investment.
A. franchising
B. joint venture
C. cooperative
D. multiparty initiative
E. mutual 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
153. 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.
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154. As a firm changes its global market-entry strategy from exporting to direct investment, all of the
following increase EXCEPT:
A. marketing control.
B. risk.
C. divestiture.
D. profit potential.
E. financial commitment.
Figure 6-3
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155. According to Figure 6-3 above, point A would most likely represent what option for entering the
global marketplace?
A. joint venture
B. licensing
C. exporting
D. direct investment
E. franchise
156. According to Figure 6-3 above, point B would most likely represent what option for entering the
global marketplace?
A. exporting
B. joint venture
C. direct investment
D. franchising
E. licensing
157. According to Figure 6-3 above, point C would most likely represent what option for entering the
global marketplace?
A. exporting
B. joint venture
D. licensing
E. franchising
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158. According to Figure 6-3 above, point D would most likely represent what option for entering the
global marketplace?
A. exporting
B. joint venture
D. franchising
E. licensing
159. According to Figure 6-3 above, points A and D would most likely represent __________ and
__________ options respectively for entering the global marketplace.
A. joint venture; licensing
B. licensing; exporting
C. licensing; joint venture
D. direct investment; licensing
E. exporting; direct investment
160. According to Figure 6-3 above, points B and C would most likely represent __________ and
__________ options respectively for entering the global marketplace.
A. exporting; licensing
B. licensing; joint venture
C. joint venture; direct investment
D. exporting; direct investment
E. exporting; joint venture
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161. 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
162. 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.
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163. 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
164. 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. selling a firm's domestically produced products in a foreign country without interference by that
government.
C. contracting with a foreign firm to manufacture products according to stated specifications.
D. avoiding the use of additional parties when a firm sells its domestically produced products in
another country.
E. selling a firm's domestically produced products in a foreign country through an intermediary.
165. When a firm sells its domestically produced products 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.
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166. Indirect exporting occurs when a firm sells its domestically produced products in a foreign country
A. in violation of a quota.
B. without paying import tariffs.
C. without paying export duties.
D. through a joint venture.
E. through an intermediary.
167. 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
168. 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
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169. 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.
170. Fran Wilson Creative Cosmetics attributes its success to a top-quality product, effective advertising,
and a novel __________ strategy.
A. joint venture
B. licensing
C. franchising
D. indirect export
171. 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
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172. 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.
173. 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
174. 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.
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175. The prominent global market-entry strategy among small- and medium-sized companies is
B. direct franchising.
C. licensing.
D. joint venture.
E. direct investment.
176. 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.
177. Licensing refers to
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.
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178. 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.
179. 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. It provides an exemption from domestic trade regulations.
D. There is an increase in potential profit compared with direct investment.
E. The licensee gains information about the dynamics of the market.
180. All of the following are advantages of licensing EXCEPT:
A. the foreign country gains employment by having the product manufactured locally.
B. the licensee gains information that allows it to start with a competitive advantage.
C. the low risk to the company granting the license.
D. the licensor's brand name can never be harmed as a result of the licensee.
E. the capital-free entry into a foreign country.
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181. 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.
182. 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
183. All of the following are disadvantages of licensing EXCEPT:
A. the licensor reduces its potential profits gained from product sales.
B. the foreign country gains employment by having the product manufactured locally.
C. the licensor forgoes control of its product.
D. should the licensee prove to be a poor choice, the name or reputation of the company may be
harmed.
E. the licensor may be creating its own competition.
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184. 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 each owner pays a fee to Tricon. Tricon is engaged
in
A. licensing.
B. direct exporting.
C. indirect exporting.
185. 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
D. foreign assembly.
E. licensing.
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186. 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.
E. direct exporting.
187. One variation of licensing is referred to as
A. direct investment.
B. joint ventures.
C. direct exporting.
D. franchising.
E. dual adaptation.
188. Yum! Brands, the restaurant division of PepsiCo, has 12,600 KFC restaurants abroad, with more
than 3,700 restaurants in China. Many of the latter are locally owned and subject to a contractual
agreement that allows the owners to operate the business under the established KFC brand name
and according to specific rules. Yum! Brands is engaged in
A. contract assembly.
B. a joint venture.
D. a partnership.
E. franchising.
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189. 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.
E. franchising.
190. 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 products abroad.
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191. 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. contract assembly.
E. dual adaptation.
192. 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
193. 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
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194. 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.
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.
195. 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. a joint venture.
C. licensing.
D. direct investment.
E. exporting.
196. 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.
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197. 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.
E. local manufacturing.
198. 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 to international sales.
A. licensing
B. local assembly
C. a joint venture
E. local manufacturing
199. Which form of entry into a foreign market requires the greatest commitment?
A. direct exporting
C. joint venture
D. licensing
E. indirect exporting
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200.One advantage of direct investment when entering a new global market is that
B. the firm entering the foreign market does not have to pay royalties to the government.
C. the company forgoes control over its product.
D. the firm gains and uses a better understanding of local market conditions.
201. One disadvantage of direct investment when entering a new global market is that
B. the firm entering the foreign market must pay royalties to the government.
D. the financial commitments involved.
E. this method is likely to provide the fewest cost savings relative to the other global market-entry
options.
202.Both Honda and Toyota have plants in the United States that use American labor. This illustrates
Honda's and Toyota's use of
B. direct investment.
C. joint venture.
D. licensing.
E. indirect exporting.
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203.Yum! Brands, the parent company of KFC, has pursued an aggressive growth strategy in China.
There are now than 3,700 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
204.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.
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205.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
206.Coca-Cola, Gillette razors, and Nike apparel and shoes are being sold in the same form in many
countries. This is an example of which type of global marketing product and promotion strategy?
A. product customization
B. product adaptation
C. product extension
D. product integration
E. product invention
207.GlaxoSmithKline plc. of Great Britain makes Breathe-Right nasal strips. It 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 and promotion strategy?
C. product adaptation
E. product integration
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208.Global companies have five strategies for matching products and their promotion efforts to global
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 and promotion strategy?
A. product extension
B. product customization
209.Frito-Lay produces and markets potato chips in Russia that have seafood flavor. This is an example
of which type of global marketing product/promotion strategy?
B. product integration
C. product invention
D. product customization
E. product extension
210. KFC in Japan altered the sweetness of its coleslaw to appeal to Japanese tastes. This is an example
of which type of global marketing product and promotion strategy?
C. product customization
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211. Global companies have five strategies for matching products and their promotion efforts to global
markets. Designing a product to serve the unmet needs of a foreign nation is which type of global
marketing product and promotion strategy?
212. 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 and promotion strategy?
213. 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 Fuel
D. Keep America Driving
E. Power to the Pistons
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214. Nescafe coffee is marketed using different coffee blends and promotional campaigns to match
consumer preferences in different countries. For example, Nescafe 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 example of which
type of global marketing product/promotion strategy?
D. dual adaptation
E. dual integration
Figure 6-4
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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
markets. According to Figure 6-4 above, B refers to which type of strategy?
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
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markets. According to Figure 6-4 above, D refers to which type of strategy?
markets. According to Figure 6-4 above, E refers to which type of strategy?
Figure 6-5
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220.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. Box A represents the
A. seller.
B. seller's international marketing headquarters.
C. channels between nations.
D. channels within the foreign nation.
E. final customer.
221. 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. 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.
C. channels within foreign nations.
D. final consumer.
E. channels between nations.
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country must travel to reach its destination in another country. Which letter in the figure would
identify intermediaries used to move the product from one country to another?
A. A
B. B
C. C
D. D
E. E
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
country must travel to reach its destination in another country. E represents the
A. seller.
D. final consumer.
E. channels within foreign nations.
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country must travel to reach its destination in another country. Channels of distribution in global
marketing are often long and complex. Box A represents the __________ and Box 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
227.When a firm sells a product in a foreign country below its domestic price or below its actual cost,
the practice is referred to as
A. loss-leader pricing.
B. surplus marketing.
C. dumping.
D. second-market pricing.
E. entrepreneurial pricing.
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228.In international trade, dumping refers to
A. illegally disposing of unusable or damaged goods to avoid paying removal fees and/or taxes.
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.
229.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
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230.The U.S. Commerce Department imposed additional duties of 31 percent to 250 percent on
imported photovoltaic products imported by Chinese solar manufacturers after ruling that they
sold them below cost. The Commerce Department took this action in response to what it saw as
__________.
A. tariff avoidance
B. countertrade
D. underbidding
E. dumping
231. 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
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232.A gray market refers to
A. the segment of products specifically designed for the need of older buyers.
B. a once active and powerful market that is rapidly becoming the bottom of the barrel.
C. a situation where products are sold through unauthorized channels of distribution.
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.
233.Another term for a gray market is
A. equivalent exporting.
B. back-channel market.
C. mature marketing.
D. parallel importing.
E. transparent market.
234.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. These Japanese tractors are being sold
A. through the gray market.
B. under the table.
C. over the counter.
D. with bypassed global channels.
E. by breaking the distribution monopoly.
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235.Before Apple's iPhone 5 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. under the counter sales.
B. over the counter sales.
C. the gray market.
D. integrated global channels.
E. breaking the distribution monopoly.
236.Mary Kay, Inc. can be classified as which type of company when marketing its products around the
world?
A. multinational firm
B. transnational firm
C. international firm
D. global marketing firm
E. multidomestic firm
237.Since 1963, Mary Kay, Inc.'s guiding principle has been based on __________.
A. the Consumer Bill of Rights
B. the Golden Rule
C. caveat emptor
D. the American Marketing Association Statement of Ethics
E. maximizing profits so long as the firm stays within the rules
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238.What global market-entry strategy did Mary Kay use when it entered India?
A. direct importing
B. licensing
D. joint venture
E. direct exporting
Short Answer Questions
239.Give at least one argument for and one argument against protectionism.
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240.Play devil's advocate. Select any American industry and argue persuasively why protectionism is
not only patriotic, it is absolutely essential for survival.
241. "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.
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242.If your primary motive was to raise prices on imports, would you use tariffs or quotas? Why would
you want to do this?
243.Describe the World Trade Organization (WTO) and its purpose.
244.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
three discussed in the textbook.
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245.Three types of companies populate and compete in the global marketplace. Identify and describe
each type.
246.Identify and describe the factors a company should consider in order to do a thorough cross-
cultural analysis. In your answer, define cross-cultural analysis.
247.Why is it a wise idea for global marketers use back translation? Provide an example to support
your answer.
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248.Global marketing is also affected by economic considerations. Identify the three steps that should
be performed when scanning the global marketplace.
249.What is meant by the term economic infrastructure and how can this affect a firm's plans to enter
a global market?
250.Define a currency exchange rate and discuss its importance to global companies.
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251. 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?
252.Explain the difference between indirect exporting and direct exporting. What are the advantages
and disadvantages of each approach?
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253.Explain the difference between joint venture and direct investment market entry strategies. What
are the advantages and disadvantages of each approach?
254.Define licensing, cite its advantages and disadvantages, and explain what franchising is.
255.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?
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256.Describe the elements in a global channel of distribution.
257.Explain the difference between dumping and parallel importing.
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Chapter 06 Understanding and Reaching Global Consumers and Markets
Answer Key
Multiple Choice Questions
1. Why did Dell, Inc., embark on a global growth initiative?

(p. 134)
A. U.S. sales had decreased.
B. Dell was recently purchased by Lenovo, a major Chinese competitor.
C. There was too much competition in Dell's direct-to-consumer marketing channel.
D. There were fewer restrictions in computer technology outside the United States.
E. Emerging economies offered significant growth potential.
Dell's global initiative focused on emerging economies in Asia, Africa, and Latin America.
Compared with mature economies in North America and Western Europe, emerging
economies offered significant growth potential, according to Michael Dell, Dell's founder and
CEO.
AACSB: Diversity
Accessibility: Keyboard Navigation
Blooms: Understand
Learning Objective: 06-03 Name and describe the alternative approaches companies use to enter global markets.
Level of Difficulty: 2 Medium
Topic: Chapter Opener: Dell
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2. In what way is Dell's expansion into the global arena a departure from its prior marketing
(p. 134) 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 shop-within-a-shop counters in selected retailers in India so shoppers could

experience the products.
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.
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 shop-within-a-shop in selected
retailers and 60 exclusive Dell stores in India by 2013. Other initiatives included a new
advertising campaign that featured Indian entrepreneurs endorsing its products.
AACSB: Diversity
Blooms: Understand
Learning Objective: 06-04 Explain the distinction between standardization and customization when companies craft worldwide
marketing programs.
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3. Dell established its company primarily with direct telephone-and Internet-based sales. In terms
(p. 134) 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 consumer
electronics.
B. Dell partners with each country's largest department stores and sells 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.
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.
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.
AACSB: Diversity
Blooms: Understand
marketing programs.
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4. Five trends in the past decade have significantly influenced the landscape of global marketing.
(p. 136) 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.
E. a decline in economic protectionism by individual countries.
Five 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; (4) the emergence of networked global marketspace; and (5) growing
prevalence of economic espionage.
AACSB: Diversity
Blooms: Understand
Learning Objective: 06-01 Identify the major trends that have influenced world trade and global marketing.
Topic: Trends in world trades
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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.
ethnocentrism.
AACSB: Diversity
Blooms: Understand
6-108
A. an increase in economic protectionism and a decline in free trade.
C. global competition among global companies for global customers.
ethnocentrism.
AACSB: Diversity
Blooms: Understand
6-109
D. the emergence of networked global marketspace.
ethnocentrism.
AACSB: Diversity
Blooms: Understand
6-110
D. the growing prevalence of economic espionage.
ethnocentrism.
AACSB: Diversity
Blooms: Understand
6-111
9. The practice of shielding one or more sectors of a country's economy from foreign competition
(p. 136) through the use of tariffs or quotas is referred to as
B. protectionism.
D. import taxation.
Key term definition - protectionism.
AACSB: Diversity
Blooms: Remember
Level of Difficulty: 1 Easy
Topic: Protectionism
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10. Protectionism refers to
(p. 136)
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.
Key term definition - protectionism.
AACSB: Diversity
Blooms: Remember
6-113
11. The argument for protectionism is that it
(p. 136)
A. protects a nation's political security.
B. encourages economic reliance on foreign countries.
C. inhibits the development of domestic industries.
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 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.
AACSB: Diversity
Blooms: Understand
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12. Those in favor of protectionism argue that it
(p. 136)
A. helps reduce tariffs and quotas.
B. encourages the development of domestic industries.
C. encourages economic reliance on foreign countries.
foreign competition through the use of tariffs or quotas. The 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.
AACSB: Diversity
Blooms: Understand
6-115
13. Recently, the United States imposed a 35% tariff on Chinese tire imports in hopes of sustaining
(p. 136) U.S. jobs in tire manufacturing. This addition of tariffs is an example of
A. imposing the rule of eminent domain.
B. increasing ethnocentrism.
D. increasing protectionism.
E. slowing countertrade.
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.
AACSB: Knowledge Application

Blooms: Apply
Level of Difficulty: 3 Hard
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14. Beginning January 1, 2005, China lifted the import quotas and lowered tariffs on automobiles.
(p. 136) This removal of the quotas and the lowering of tariffs is an example of
A. relaxing the rule of eminent domain.
B. reducing ethnocentrism.
D. reducing protectionism.
E. enhancing countertrade.
foreign competition through the use of tariffs or quotas. By removing the quotas and lowering
tariffs, China is reducing protectionism of the automobile industry in China.

Blooms: Apply
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15. Which of the following issues raises concerns about the ethics of protectionism?
(p. 137)
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.
Of the statements above, the possibility of preferential treatment is most likely to suggest an
ethical consideration.
AACSB: Ethics
Blooms: Understand
Topic: Making responsible decisions
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Figure 6-1
16. The question mark in Figure 6-1 above which results from the imposition of tariffs and quotas is
(p. 136) referred to as
B. protectionism.
D. import taxation.
Key term definition - protectionism. 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.
AACSB: Diversity
Blooms: Remember
6-119
17. The question mark in Figure 6-1 above leads to which of the following as a result of the
(p. 136) imposition of tariffs and quotas?
A. an increase world trade
B. a decrease world trade
C. a limit on exports
D. a limit on import
E. countertrade
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.
AACSB: Diversity
Blooms: Understand
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18. Government taxes on products or services entering a country that primarily serve to raise prices
(p. 136) on imports are referred to as
A. tariffs.
B. quotas.
C. WTO taxes.
D. foreign excise taxes.
E. trade subsidies.
Key term definition - tariffs.
AACSB: Diversity
Blooms: Remember
Topic: Tariffs
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19. Tariffs refer to
(p. 136)
A. government payments to companies or industries that primarily serve to create competitive
advantage for domestic products.
B. government taxes on products or services entering a country that primarily serve to raise
prices on imports.
D. a minimum requirement for the purchase between two or more nations of products or
services.
Key term definition - tariffs.
AACSB: Diversity
Blooms: Remember
Topic: Tariffs
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20. The U.S. Rice Millers' Association claims that if the Japanese rice market were opened to
(p. 136) 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. quotas
C. sanctions
D. tariffs
E. subsidies
Tariffs are government taxes on products or services entering a country that primarily serve to
raise prices on imports.
AACSB: Diversity
Blooms: Understand
Topic: Tariffs
6-123
21. The __________ imposed on imported bananas by European Union countries cost consumers $2
(p. 136) billion a year in higher prices.
A. boycotts
B. quotas
C. sanctions
D. subsidies
E. tariffs
AACSB: Diversity
Blooms: Understand
Topic: Tariffs
6-124
22. U.S. citizens pay $5 billion more annually for shoes and Japanese citizens pay $6 billion more
(p. 136) 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.
AACSB: Diversity
Blooms: Understand
Topic: Tariffs
6-125
23. Recently, the Japanese government, under pressure from its domestic farm lobby, slapped
(p. 136) government taxes on mushrooms, leeks, and the reeds used in tatami mats that were being
imported from China. These taxes Japan levied are referred to as
A. WTO taxes.
B. quotas.
C. tariffs.
D. excise taxes.
E. subsidies.

Blooms: Apply
Topic: Tariffs
6-126
24. If you wanted to set up a business importing amber jewelry from Latvia to the United States,
(p. 136) 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

Blooms: Apply
Topic: Tariffs
6-127
25. Whirlpool recently asked the United States to impose __________ on washing machine imports
(p. 136) made by LG Electronics and Samsung Electronics, both South Korean companies, 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. quotas
C. sanctions
D. tariffs
E. embargoes

Blooms: Apply
Topic: Tariffs
6-128
26. President Bill Clinton attempted to protect American firms from foreign competition by placing
(p. 136) 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. quota
C. tariff
D. sanction
E. subsidy

Blooms: Apply
Topic: Tariffs
6-129
27. A restriction placed on the amount of a product allowed to enter or leave a country is referred
(p. 137) to as a
A. quota.
B. tariff.
C. GATT tax.
D. subsidy.
E. excise tax.
Key term definition - quota.
AACSB: Diversity
Blooms: Remember
Topic: Quota
6-130
28. A quota refers to
(p. 137)
A. a government tax on products 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.
D. a minimum requirement for the purchase of specific products or services between two
nations.
Key term definition - quota.
AACSB: Diversity
Blooms: Remember
Topic: Quota
6-131
29. The world's largest manufacturer of peppermint candy canes was located in Albany, Georgia,
(p. 137) 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 (like those that existed in the
United States) on the amount of sugar that can be brought into the nation. The business
moved to Mexico because of a(n) __________ established by the U.S. government.
A. tariff
B. trade imbalance
C. excise tax
D. subsidy
E. quota
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.

Blooms: Apply
Topic: Quota
6-132
30. Russia currently has a limit on pork of 400,000 metric tons annually that can be imported from
(p. 137) any country. This restriction would be considered a
A. tariff.
B. trade imbalance.
C. excise tax.
D. quota.
E. subsidy.
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 quota policies restricting the amount of
pork imports.

Blooms: Apply
Topic: Quota
6-133
31. An institution that sets rules governing trade between its members through a panel of trade
(p. 137) 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)
Key term definition - World Trade Organization (WTO).
AACSB: Diversity
Blooms: Remember
Topic: World Trade Organization
6-134
32. The World Trade Organization (WTO) refers to
(p. 137)
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.
Key term definition - World Trade Organization (WTO).
AACSB: Diversity
Blooms: Remember
6-135
33. There are __________ World Trade Organization countries, including the United States, which
(p. 137) account for more than 90 percent of world trade.
A. 37
B. 52
C. 97
D. 113
E. 159
The World Trade Organization (WTO) was formed in 1995 to address a broad array of world
trade issues. By mid-2013, there were 159 WTO member countries, including the United States,
which account for more than 90 percent of world trade.
AACSB: Diversity
Blooms: Remember
6-136
34. Which of the following statements about the World Trade Organization (WTO) is most
(p. 137) accurate?
A. The WTO acts as an agent in trade negotiations between its members and the remainder of
the world.
C. The WTO was formed by the major industrialized nations in 1995 to address trade issues.
The major industrialized nations of the world formed the WTO in 1995 to address world trade
issues. By mid-2013, there were 159 WTO member countries, including the United States, which
account for more than 90 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.
AACSB: Diversity
Blooms: Understand
6-137
(p. 137) accurate?
A. The World Trade Organization is a temporary institution.
C. The WTO sets rules governing trade between its members and the rest of the world.
E. The WTO was formed by the major industrialized nations of the world.
issues. The 153 WTO member countries account for more than 90 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.
AACSB: Diversity
Blooms: Understand
6-138
(p. 137) accurate?
A. The World Trade Organization was formed in 2008 to response to the global recession.
B. By mid-2013, there were 159 WTO member countries, including the United States, which
account for more than 90 percent of world trade.
C. The WTO sets rules governing trade between member and nonmember countries of the
world.
AACSB: Diversity
Blooms: Understand
6-139
(p. 137) 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 issue non-binding recommendations.
AACSB: Diversity
Blooms: Understand
6-140
(p. 137) accurate?
A. The World Trade Organization was formed in 2008 in response to the global recession.
B. The 12 member countries of the WTO account for approximately 55 percent of world trade.
C. The WTO acts as an agent in licensing negotiations between its members and the
remainder of the world.
D. The WTO uses panels of trade experts who can issue binding decisions.
AACSB: Diversity
Blooms: Understand
6-141
39. The European Union (EU) in early 2015 consisted of 28 countries with more than 500 million
(p. 138) consumers. The EU has eliminated most barriers to the free flow of products, 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
Switzerland is not one of the 28 countries in the EU (as of 2015). See Figure 6-2.
AACSB: Diversity
Blooms: Remember
Topic: European Union
6-142
40. The European Union is an economic and political union of __________ member countries that
(p. 137) have eliminated most barriers to the free flow of products, services, capital, and labor across
their borders.
A. 17
B. 20
C. 28
D. 30
E. 37
The European Union as of 2015 consisted of 28 countries that have eliminated most barriers to
the free flow of products, services, capital, and labor across their borders.
AACSB: Diversity
Blooms: Remember
6-143
41. To eliminate the need to continually monitor currency exchange rates, 16 of the countries in the
(p. 138) European Union (EU) have adopted a common currency, which is called the __________.
A. pound
B. franc
C. euro
D. mark
E. dollar
To eliminate the need to continually monitor currency exchange rates, 16 of the countries in the
European Union (EU) have adopted a common currency, which is called the euro.
AACSB: Diversity
Blooms: Remember
Topic: Euro
6-144
42. To eliminate the need to continually monitor currency exchange rates, __________ of the
(p. 138) countries in the European Union (EU) have adopted a common currency called the euro.
A. 11
B. 16
C. 20
D. 28
E. 32
To eliminate the need to continually monitor currency exchange rates, 16 of the countries in the
European Union (EU) have adopted a common currency, which is called the euro.
AACSB: Diversity
Blooms: Remember
Topic: Euro
6-145
43. The European Union (EU) has been beneficial to electronic commerce because it is no longer
(p. 138) necessary to
A. use multiple languages when settling accounts for purchases made across borders.
B. continually monitor currency exchange rates among participating nations.
C. trade with the former Eastern European communist countries.
D. obey international e-trade regulations.
E. use the American dollar as the economic standard.
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.
AACSB: Diversity
Blooms: Understand
6-146
44. The EU has benefited firms in its member nations because
(p. 138)
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.
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.
AACSB: Diversity
Blooms: Understand
6-147
45. The EU has benefited its member nations because firms do not need to market their products
(p. 138) and services on a nation-by-nation basis; most tariffs that affect pricing practices have been
removed, and
B. there is immunity against world recessions.
transportation, advertising, and promotion imposed by countries; and removal of most tariffs
that affect pricing practices.
AACSB: Diversity
Blooms: Understand
6-148
46. Pan-European marketing strategies are possible because
(p. 138)
B. there are effective countermeasures for protectionism.
transportation, advertising, and promotion; and removal of most tariffs that affect pricing
practices. Also, European wide distribution from fewer locations is now feasible given open
borders.
AACSB: Diversity
Blooms: Understand
6-149
47. The North American Free Trade Agreement was designed to encourage free trade between
(p. 138)
A. North America, Central America, and South America.
B. the United States and the European Union.
C. member countries originally from NATO (North Atlantic Treaty Organization).
D. the United States, Canada, and Mexico.
E. North America and the Commonwealth of Independent States.
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.
AACSB: Diversity
Blooms: Remember
Topic: North American Free Trade Agreement
48. CAFTA-DR, a comprehensive free trade agreement between Costa Rica, the Dominican
(p. 139) Republic, El Salvador, Guatemala, Honduras, Nicaragua, and __________.
A. the United States
B. Panama
C. Belize
D. Cuba
E. Mexico
CAFTA-DR is a comprehensive free trade agreement among Costa Rica, the Dominican
Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the U.S.
AACSB: Diversity
6-150
Blooms: Understand
Topic: CAFTA-DR
49. When firms originate, produce, and market their products and services worldwide, it is referred
(p. 169) to as __________.
A. acculturation
B. free trade
C. global branding
D. global competition
E. transactional exchange
Key term definition - global competition.
AACSB: Diversity
Blooms: Remember
Topic: Global competition
6-151
50. Global competition exists when
(p. 139)
A. a firm produces and markets its products domestically rather than globally.
B. firms originate, produce, and market their products and services worldwide.
C. two firms from two different countries compete for market share in a single domestic
market.
D. two or more firms from different nations combine their resources to market products in a
single domestic market.
E. the firm from one nation dominates the market for its product in every nation.
Key term definition - global competition.
AACSB: Diversity
Blooms: Remember
6-152
51. Coca-Cola has operations in all but three nations in the world and Pepsi-Cola is now available
(p. 139) in more than 160 countries and territories, making the soft drink industry an example of
A. global competition.
B. acculturation.
C. free trade.
D. global branding.
E. transactional exchange.
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.

Blooms: Apply
6-153
52. In terms of the global marketplace, there are three primary types of companies: __________ firms,
(p. 140) multinational firms, and transnational firms.
A. worldwide
B. conglomerate
C. intercontinental
D. international
E. cosmopolitan
Three types of companies compete in the global marketplace: international firms, multinational
firms, and transnational firms.
AACSB: Diversity
Blooms: Remember
Topic: Global companies
6-154
53. In terms of the global marketplace, there are three primary types of companies: international
(p. 140) firms, __________ firms, and transnational firms.
A. large-scale
B. conglomerate
C. intercontinental
D. cosmopolitan
E. multinational
AACSB: Diversity
Blooms: Remember
6-155
(p. 140) firms, multinational firms, and __________ firms.
A. multiethnic
B. transnational
C. multidomestic
D. ethnocentric
E. meganational
AACSB: Diversity
Blooms: Remember
55. The administrative, marketing, and manufacturing operations that many international firms,
(p. 140) multinational firms, and transnational firms have around the world are often called
A. divisions.
B. outlets.
C. departments.
D. markets.
E. holding companies.
Text term definition - divisions or subsidiaries.
AACSB: Diversity
6-156
Blooms: Remember
(p. 140) firms, multinational firms, and 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.
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.
AACSB: Diversity
Blooms: Understand
6-157
57. A(n) __________ firm engages in trade and marketing in different countries as an extension of the
(p. 140) marketing strategy in its home country.
A. multidomestic
B. meganational
C. international
D. multinational
E. transnational
Text term definition - international firm.
AACSB: Diversity
Blooms: Remember
Topic: International firm
58. Generally speaking, a(n) __________ firm markets its existing products and services in other
(p. 140) countries the same way it does in its home country.
A. meganational
B. international
C. multinational
D. transnational
E. intranational
International firms market their existing products and services in other countries the same way
they do in their home country.
AACSB: Diversity
6-158
Blooms: Understand
59. Mars, America's second-largest candy company, began doing business in Russia in the late
(p. 140) 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. What type of global company is Mars?
A. an international firm
B. a multidomestic firm
C. a transnational firm
D. a meganational firm
E. a multinational firm
International firms engage in trade and marketing in different countries as an extension of the
marketing strategy in their home country.

Blooms: Apply
6-159
60. A firm that views the world as consisting of unique parts and markets to each part differently is
(p. 140) referred to as a(n)
A. meganational firm.
B. extranational firm.
C. international firm.
D. multinational firm.
E. transnational firm.
Text term definition - multinational firm.
AACSB: Diversity
Blooms: Remember
Topic: Multinational firm
61. Unilever markets its Snuggle fabric softener differently to different parts of the world. Unilever is
(p. 140) a(n) __________ firm.
A. ethnocentric
B. multinational
C. transnational
D. global
E. international
A multinational firm views the world as consisting of unique parts and markets to each part
differently.
6-160
Blooms: Apply
Topic: Multinational firm
62. A multidomestic marketing strategy refers to

(p. 140)
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.
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.
Key term definition - multidomestic marketing strategy.
AACSB: Diversity
Blooms: Remember
Topic: Multidomestic marketing strategy
6-161
63. Companies that use a(n) __________ marketing strategy have as many different product
(p. 140) variations, brand names, and advertising programs as countries in which they do business.
A. ethnocentric
B. multidomestic
C. transnational
D. global
E. international
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.
AACSB: Diversity
Blooms: Remember
6-162
64. Lever Europe, a division of Unilever, markets its Snuggle fabric softener in the United States. But
(p. 140) 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
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.

Blooms: Apply
6-163
65. U.S. appliance manufacturers find that different customs about shopping must be used to
(p. 140) determine local 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 want them on the bottom. Based on this, 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
Companies that use a multidomestic marketing strategy have as many different product
variations as countries in which they do business.

Blooms: Apply
6-164
66. Disney employed a(n) __________ marketing strategy for its Disneyland Paris, particularly when it
(p. 140) 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. transnational
C. multidomestic
D. meganational
E. international
Companies that use a multidomestic marketing strategy have as many different product
variations as countries in which they do business.

Blooms: Apply
6-165
67. A(n) __________ firm views the world as one market and emphasizes cultural similarities across
(p. 140) countries or universal consumer needs and wants more than differences.
A. transcontinental
B. multidomestic
C. international
D. multinational
E. transnational
Text term definition - transnational firm.
AACSB: Diversity
Blooms: Remember
Topic: Transnational firm
68. The strategy transnational firms employ that standardizes marketing activities when there are
(p. 140) 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.
Key term definition - global marketing strategy.
AACSB: Diversity
6-166
Blooms: Remember
Topic: Global marketing strategy
69. A global marketing strategy refers to

(p. 140)
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.
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.
Key term definition - global marketing strategy.
AACSB: Diversity
Blooms: Remember
6-167
70. Which of the following types of firms would be most likely to use a global marketing strategy?
(p. 140)
A. multidomestic
B. multinational
C. multicountry
D. transnational
E. transborder
Transnational marketers employ a global marketing strategy - the practice of standardizing

marketing activities when there are cultural similarities and adapting them when cultures differ.
AACSB: Diversity
Blooms: Understand
71. A brand marketed under the same name in multiple countries with similar and centrally
(p. 140) coordinated marketing programs is referred to as a(n)
A. transnational brand.
B. international brand.
C. multinational brand.
D. global brand.
E. meganational brand.
Key term definition - global brand.
AACSB: Diversity
6-168
Blooms: Remember
Topic: Global brand
72. A global brand refers to

(p. 140)
A. two or more domestic products that coincidentally share the same brand name but
B. two or more international products that coincidentally share the same brand name but
C. a brand marketed under the same name in multiple countries with similar and centrally
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
Key term definition - global brand.
AACSB: Diversity
Blooms: Remember
Topic: Global brand
6-169
73. Which of the following statements regarding global brands is most accurate?
(p. 140)
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 brand name for each dialect in a 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.
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.
AACSB: Diversity
Blooms: Understand
Topic: Global brand
6-170
74. Which of the following statements about global brands is most accurate?
(p. 140)
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.
or countries.
AACSB: Diversity
Blooms: Understand
Topic: Global brand
6-171
75. A global brand is a brand marketed under the same name in multiple countries with similar and
(p. 140) centrally coordinated marketing programs. However, adaptations of global brands are made
A. only if required by government regulations in the host market.
B. only in its initial introduction into a market and only until the brand is recognized.
C. by domestic competitors causing brand confusion.
D. only when necessary to better connect the brand to consumers in different markets.
E. when there is a serious drop in market share.
or countries only when necessary to better connect the brand to consumers in different
markets.
AACSB: Diversity
Blooms: Understand
Topic: Global brand
6-172
76. Thirteen- to nineteen-year-olds in Europe, North America, South America, and the
(p. 141) 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 very different tastes in fashions and music.
E. are more influenced by Asian culture than European culture.
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.
AACSB: Diversity
Blooms: Understand
Topic: Marketing matters
6-173
77. The appreciation of fashion, music, and a desire for novelty and trendier designs and images
(p. 141)
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.
Teenagers around the world appreciate fashion and music, and desire novelty and trendier
designs and images.
AACSB: Diversity
Blooms: Understand
6-174
78. Based on a study of 6,500 teens in 26 countries, when asked what country had the most
(p. 141) 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. Japan.
C. the United Kingdom.
D. France.
E. China.
The study showed that the United States was the country that had the most influence on these
teens.
AACSB: Diversity
Blooms: Understand
6-175
79. Consumer groups living in many countries or regions of the world that have similar needs or
(p. 140- seek similar features and benefits from products or services are referred to as
141)
Key term definition - global consumers.
AACSB: Diversity
Blooms: Remember
Topic: Global consumers
6-176
80. Global consumers refer to
(p. 140-
141)
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.
Key term definition - global consumers.
AACSB: Diversity
Blooms: Remember
6-177
81. Around the world, middle-class, youth, and elite markets that consume similar assortments of
(p. 141) products and services, regardless of geographic location, are referred to as
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.
AACSB: Diversity
Blooms: Understand
6-178
82. The use of __________ as a tool for exchanging goods, services, and information on a global
(p. 141) 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
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.
AACSB: Diversity
Blooms: Understand
Topic: Networked global marketspace
6-179
83. Which of the following statements about the emergence of a networked global marketspace is
(p. 141) 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.
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.
AACSB: Diversity
Blooms: Understand
Topic: Networked global marketspace
6-180
84. The clandestine collection of trade secrets or proprietary information about a company's
(p. 142) competitors is referred to as
A. trade piracy.
B. transnational fraud.
C. economic espionage.
D. competitive duplicity.
E. transnational espionage.
Key term definition - economic espionage.
AACSB: Diversity
Blooms: Remember
Topic: Economic espionage
85. Economic espionage is the clandestine collection of trade secrets or __________.

(p. 142)
A. government economic information
B. industrial intelligence
C. government weapons information
D. banking lists
E. proprietary information about competitors
Key term definition - economic espionage.
AACSB: Diversity
Blooms: Remember
6-181
86. The estimated cost of economic espionage to firms in the United States is estimated to be
(p. 142)
A. $10 billion per year.
B. $250 billion per year.
C. $750 billion per year.
D. $900 billion per year.
E. exceeding $1 trillion per year.
It is estimated that economic espionage costs U.S. firms $250 billion per year.
AACSB: Diversity
Blooms: Remember
6-182
87. The Economic Espionage Act
(p. 142)
A. allows the World Court in The Hague to adjudicate trade disputes on behalf of United
Nations' members and requires the home country to impose any penalties.
B. imposes a personal fine on a convicted U.S. citizen of up to $10 million.
C. targets espionage activities that are commonplace in any industry that holds governmental
contracts.
D. makes the theft of trade secrets by foreign entities a federal crime in the U.S.
E. is well-intended in theory, but is virtually impossible to enforce.
Key term definition - Economic Espionage Act (1996).
AACSB: Diversity
Blooms: Remember
Topic: Economic Espionage Act
6-183
88. The prescribed penalty for agents of foreign governments found guilty of economic espionage
(p. 142) is
A. up to 15 years in prison and fines up to $500,000.
B. life in prison with the possibility of parole after 25 years.
C. 25 years in prison and a $10 million fine.
D. permanent expulsion from the United States.
E. 30 years in prison and fines proportional to the damage caused.
The Economic Espionage Act (1996) makes the theft of trade secrets by foreign entities a federal
crime in the United States. This act prescribes prison sentences of up to 15 years and fines up to
$500,000 for individuals. Agents of foreign governments found guilty of economic espionage
face a 25-year prison sentence and a $10 million fine.
AACSB: Diversity
Blooms: Remember
6-184
89. The prescribed penalty for individuals found guilty of the theft of trade secrets is
(p. 142)
A. up to 25 years in prison and fines up to $10 million.
B. life in prison with chance of parole after 25 years.
C. expulsion from the United States and/or revocation of citizenship.
D. 30 years in prison and fines to be determined by the courts.
E. up to 15 years in prison and fines up to $500,000.
The Economic Espionage Act (1996) makes the theft of trade secrets by foreign entities a federal
crime in the United States. This act prescribes prison sentences of up to 15 years and fines up to
$500,000 for individuals. Agents of foreign governments found guilty of economic espionage
face a 25-year prison sentence and a $10 million fine.
AACSB: Diversity
Blooms: Remember
6-185
90. Cross-cultural analysis refers to the study of
(p. 143)
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.
C. the similarities and differences among consumers in two or more nations or societies.
D. the buying behaviors within a given nation to identify similarities and differences among
individuals.
E. the buying behaviors within a given nation that links a person's actions to the cultural group
with which he or she identify most.
Key term definition - cross-cultural analysis.
AACSB: Diversity
Blooms: Remember
Learning Objective: 06-02 Identify the environmental forces that shape global marketing efforts.
Topic: Cross-cultural analysis
6-186
91. The study of similarities and differences among consumers in two or more nations or societies
(p. 143) is referred to as __________.
A. market synthesis
B. cross-cultural analysis
C. international sociographics
D. transnational anthropology
E. multicultural ethnocentrism
Key term definition - cross-cultural analysis.
AACSB: Diversity
Blooms: Remember
6-187
92. For the marketer, a thorough __________ involves an understanding of and an appreciation for
(p. 143) 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
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 the values, customs, symbols, and language of
other societies.
AACSB: Diversity
Blooms: Understand
6-188
93. A thorough cross-cultural analysis involves an understanding of and an appreciation of all of
(p. 143) the following EXCEPT:
A. economics.
B. symbols.
C. values.
D. languages.
E. customs.
A thorough cross-cultural analysis involves an understanding of and an appreciation for the
values, customs, symbols, and language of other societies.
AACSB: Diversity
Blooms: Understand
94. Personally or socially preferable modes of conduct or states of existence that tend to persist
(p. 143) over time are referred to as __________.
A. customs
B. ethics
C. values
D. culture
E. beliefs
Key term definition - values.
AACSB: Diversity
6-189
Blooms: Remember
Topic: Values
95. Values refer to

(p. 143)
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 personality traits regarding honesty and integrity that have been passed down from
generation to generation.
Key term definition - values.
AACSB: Diversity
Blooms: Remember
Topic: Values
6-190
96. The reverence that Japan shows towards its elderly is an example of that nation's __________.
(p. 143)
A. values
B. beliefs
C. customs
D. religion
E. cultural diversity
A country's values are personally or socially preferable modes of conduct or states of existence
that are enduring, such as the behavior of one generation toward another in Japan.

Blooms: Apply
Topic: Values
6-191
97. Which of the following examples best demonstrates a company's appreciation of another
(p. 143) country's values?
A. American companies in Germany encouraging 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."
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.

Blooms: Apply
Topic: Values
6-192
98. Which of the following examples best demonstrates a company's appreciation for another
(p. 143) 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.
Modesty is an important value within Muslim cultures, so Calvin Klein's efforts are an example
of being sensitive to that value.

Blooms: Apply
Topic: Values
6-193
99. Almost all countries have some division of social class (upper, middle, and lower). The
(p. 143) 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. semiotics.
B. legal system.
C. ethnocentricity.
D. religion.
E. values.
A country's values are personally or socially preferable modes of conduct or states of existence
that tend to persist over time.

Blooms: Apply
Topic: Values
6-194
100. What is considered normal and expected about the way people do things in a specific country
(p. 143) is referred to as __________.
A. morals
B. ethics
C. values
D. customs
E. beliefs
Key term definition - customs.
AACSB: Diversity
Blooms: Remember
Topic: Customs
6-195
101. Customs refer to
(p. 143)
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 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.
Key term definition - customs.
AACSB: Diversity
Blooms: Remember
Topic: Customs
6-196
102. 3M Company executives were perplexed when the company's Scotch-Brite floor-cleaning
(p. 143) 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. custom
B. value
C. demographic pattern
D. belief
E. idiosyncrasy
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.

Blooms: Apply
Topic: Customs
6-197
103. KFC in Japan sells tempura crispy strips. In northern England, it stresses gravy and potatoes. In
(p. 143) 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 appreciation for the __________ of other societies.
A. demographics
B. symbols
C. sensitivities
D. customs
E. values
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 customary tastes of
its target markets in each of the countries listed.

Blooms: Apply
Topic: Customs
6-198
104. Which of the following statements about bribery is most accurate?
(p. 143)
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.
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 it globally 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.
AACSB: Diversity
Blooms: Understand
Topic: Bribery
6-199
105. The Foreign Corrupt Practices Act
(p. 143)
A. 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.
B. has different levels of punishment based upon the wealth of the host nation.
C. regulates only the behavior of U.S. businesses conducting business within the United States.
D. makes the theft of trade secrets by foreign entities a federal crime in the United States.
E. is a unilateral agreement the United States made with several developing nations.
Key term definition - Foreign Corrupt Practices Act.
AACSB: Diversity
Blooms: Remember
Topic: Foreign Corrupt Practices Act
106. The law, amended by the International Anti-Dumping and Fair Competition Act, that makes it a
(p. 143) 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.
Key term definition - Foreign Corrupt Practices Act.
AACSB: Diversity
6-200
Blooms: Remember
Topic: Foreign Corrupt Practices Act
107. Cultural symbols refer to

(p. 144)
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.
Key term definition - cultural symbols.
AACSB: Diversity
Blooms: Remember
Topic: Cultural symbols
6-201
108. Cultural symbols are things that
(p. 144)
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.
AACSB: Diversity
Blooms: Remember
109. The representations of ideas and concepts to which different cultures often attach different
(p. 144) meanings are referred to as
A. universal symbols.
B. cultural symbols.
C. symbolic concepts.
D. ideological representations.
E. cultural representations.
AACSB: Diversity
Blooms: Remember
6-202
110. A field of study that examines the correspondence between symbols and their role in the
(p. 144) assignment of meaning for people is referred to as
A. back translation.
B. symbiotics.
C. semiotics.
D. symbolic linguistics.
E. cross-cultural analysis.
Key term definition - semiotics.
AACSB: Diversity
Blooms: Remember
Topic: Semiotics
6-203
111. Semiotics refers to
(p. 144)
A. a field of study in marketing linguistics that identifies the connotative meanings behind
words in order to create the most effective product or brand names.
B. a field of study in marketing linguistics that identifies the connotative meanings behind
words in order to create the most effective advertising messages.
C. a field of study that examines the correspondence between symbols and their role in the
assignment of meaning for people.
D. a field of linguistics that translates words into internationally recognized symbols to help
companies carry their product message across international boundaries.
E. the practice where a translated word or phrase is retranslated into the original language by
a different interpreter to catch errors.
Key term definition - semiotics.
AACSB: Diversity
Blooms: Remember
Topic: Semiotics
6-204
112. A researcher studying the fact that in some nations black is a sign of mourning while in others
(p. 144) white is a sign of mourning would be studying
A. semiotics.
B. semantics.
C. semaphorics.
D. cultural symbolism.
E. cultural linguistics.
So important is the role of symbols that a field of study, called semiotics, has emerged, which
examines the correspondence between symbols and their role in the assignment of meaning
for people. The colors black and white are symbols with different meanings in different cultures.

Blooms: Apply
Topic: Semiotics
6-205
113. By skillfully using __________, global marketers can tie positive meanings to their products,
(p. 144) services, and brands to enhance their attractiveness to consumers.
A. cultural symbols
B. visual icons
C. trademarks
D. brand names
E. ethnic emblems
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.
AACSB: Diversity
Blooms: Understand
6-206
114. Tiffany & Company knows that Japanese are superstitious about the number 4. As a result,
(p. 144) 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
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.
AACSB: Diversity
Blooms: Understand
6-207
Parthenon Photo
115. The Parthenon, shown in the photo above, evokes strong feelings from consumers in Greece
(p. 144) and is referred to as the "holy rock." Coca Cola marketers did not respect that this __________,
when used in a marketing campaign by replacing the columns with Coke bottles, would arouse
such an angry response in that country.
A. cultural symbol
B. anthropomorphic code
C. back translation
D. semantic representation
E. civil analysis
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.
AACSB: Diversity
Blooms: Understand
6-208
116. Canada has two official languages, which are

(p. 144)
A. English and Japanese.
B. English and Spanish.
C. English and French.
D. English and Italian.
E. English and German.
Canada has two official languages - English and French.
AACSB: Diversity
Blooms: Remember
Topic: Language
6-209
117. Even though there are hundreds of different languages and dialects, the three major languages
(p. 144) 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.
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.
AACSB: Diversity
Blooms: Understand
Topic: Language
118. The practice where a translated word or phrase is retranslated into the original language by a
(p. 144) different interpreter to catch errors is referred to as
A. locution.
B. heuristics.
C. transliteration.
D. back translation.
E. cross-cultural paraphrasing.
Key term definition - back translation.
AACSB: Diversity
6-210
Blooms: Understand
Topic: Back translation
119. If you were responsible for marketing communications at a company that manufactures office
(p. 144) 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
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.

Blooms: Apply
6-211
120. A Tokyo shopkeeper would have been wise to use __________ to verify the accuracy of the new
(p. 144) sign in English he purchased for his dry cleaning business. The sign read, "Drop your pants here
for best results," which he did not know had another suggestive meaning to native speakers.
A. cultural symbolism
B. dialect transformation
C. semantic analysis
D. linguistic exchange
E. back translation
Back translation is retranslating a word or phrase into the original language by a different
interpreter to catch errors.

Blooms: Apply
6-212
121. A New York carwash owner wanted to open a carwash in Quebec, Canada. He hired a U.S.
(p. 144) 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
Back translation is retranslating a word or phrase into the original language by a different
interpreter to catch errors.

Blooms: Apply
Kit Kat Bar Photo
6-213
122. Consider the Kit Kat bar photo above. Kit Kat bars are marketed by Nestlé worldwide. Kit Kat is
(p. 145) 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 it necessary to use a
name without an additional meaning.
A. intentional transliteration
B. semantic symbolism
C. back translation
D. semantic analysis
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 "surely
win."

Blooms: Apply
6-214
123. Since global marketing is affected by economic considerations, a scan of the global
(p. 145) marketplace should include which of the following factors?
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
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.
AACSB: Diversity
Blooms: Understand
Topic: Economic considerations
6-215
C. measurement of consumer income in different countries

AACSB: Diversity
Blooms: Understand
6-216
A. recognition of a country's currency exchange rates
B. an analysis of cultural diversity within the country under consideration
C. regulatory constraints regarding contracts, mergers, and partnerships

AACSB: Diversity
Blooms: Understand
6-217
126. A country's communications, transportation, financial, and distribution systems are considered
(p. 145) to be its
C. economic infrastructure.
D. geopolitical wealth.
E. asset wealth.
Text term definition - economic infrastructure.
AACSB: Diversity
Blooms: Remember
Topic: Economic infrastructure
127. Economic infrastructure refers to

(p. 145)
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 communications, transportation, financial, and distribution systems.
E. all of a country's natural resources, whether or not they are currently being exploited.
Text term definition - economic infrastructure.
AACSB: Diversity
Blooms: Remember
6-218
128. Two-thirds of the commercial transactions in Russia involve non-monetary forms of payment
(p. 146) 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
Communications, transportation systems, financial services, as well as distribution systems

contribute to a nation's economic infrastructure.
AACSB: Diversity
Blooms: Understand
6-219
129. Although Russia now has a free economy, there are still some problems with its financial and
(p. 146) legal systems as well as with the notion of
A. private property.
B. product promotion.
C. paid advertising.
D. community property.
E. foreign exchange rates.
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.
AACSB: Diversity
Blooms: Understand
6-220
130. In Latvia, only one six-lane highway exists, connecting Riga, its capitol, with Moscow. Otherwise,
(p. 146) 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
C. geopolitical wealth.
D. asset wealth.
E. economic infrastructure.
Communications, transportation systems, financial services, as well as distribution systems

contribute to a nation's economic infrastructure.

Blooms: Apply
6-221
131. A global marketer selling consumer products and services must also consider what the average
(p. 146) per capita or __________ is among a country's consumers and how the income is distributed to
determine a nation's purchasing power.
A. buying capacity
B. currency exchange risk
C. purchasing power
D. household income
E. cost of living
A global marketer selling consumer products and services must also consider what the average
per capita or household income is among a country's consumers and how the income is
distributed to determine a nation's purchasing power.
AACSB: Diversity
Blooms: Understand
Topic: Consumer income
6-222
132. A country's income distribution is important because it gives a more reliable picture of a
(p. 146) country's __________.
A. consumer tastes
B. taxable income
C. purchasing power
D. discretionary income
E. cost of living
A country's income distribution is important because it gives a more reliable picture of a
country's purchasing power.
AACSB: Diversity
Blooms: Understand
6-223
133. Foreign countries with very low per capita incomes may still be attractive markets for some
(p. 146) 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
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.

Blooms: Apply
6-224
134. Generally, as the proportion of middle-income households in a country __________, the
(p. 146) __________ a nation's purchasing power.
A. increases; greater
B. increases; lesser
C. decreases; greater
D. levels off; greater
E. There is no relationship between middle-income households and a nation'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.
AACSB: Diversity
Blooms: Understand
6-225
135. Generally, as the proportion of middle-income households in a country __________, the nation's
(p. 146) 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
AACSB: Diversity
Blooms: Understand
6-226
136. Generally, as the proportion of middle-income households in a country increases, the nation's
(p. 146) purchasing power __________.
A. levels off
B. decreases
C. increases
D. becomes less of an economic priority
E. becomes progressively unstable
AACSB: Diversity
Blooms: Understand
137. The price of one country's currency expressed in terms of another country's currency is referred
(p. 147) to as the
C. money conversion factor.
E. transfer payment.
Key term definition - currency exchange rate.
AACSB: Diversity
6-227
Blooms: Remember
Topic: Currency exchange rate
138. A currency exchange rate refers to

(p. 147)
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.
Key term definition - currency exchange rate.
AACSB: Diversity
Blooms: Remember
6-228
139. Fluctuations in the __________ among the world's currencies have direct impact on the sales and
(p. 147) profits made by global companies.
A. production costs
B. transportation
C. reciprocity
D. economic infrastructure
E. exchange rates
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.
AACSB: Diversity
Blooms: Understand
6-229
140. When foreign currencies can buy more U.S. dollars,
(p. 147)
A. U.S. products are more expensive to foreign customers.
B. U.S. products are more expensive to U.S. customers.
C. U.S. products are less expensive to foreign customers.
D. economists consider it an indicator of an impending long-term economic upturn.
E. American consumers will buy in large quantities and stockpile in fear of an impending
economic crisis.
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.
AACSB: Diversity
Blooms: Understand
6-230
141. Which of the following statements concerning currency exchange rates is most accurate?
(p. 147)
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 when they occur, their effects are minimal.
D. Exchange rate fluctuations are now 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.
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.
AACSB: Diversity
Blooms: Understand
6-231
142. Chrysler Corporation wanted to sell its Jeeps in Japan. The car was priced in U.S. dollars at
(p. 147) 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
C. reciprocity price.
E. balance of trade.
A currency exchange rate is the price of one country's currency expressed in terms of another
country's currency.

Blooms: Apply
6-232
143. The political and regulatory climate for marketing in a country or region of the world means not
(p. 148) only identifying the current environment but also determining how
A. it conducts its macrofinancing.
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.
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.
AACSB: Diversity
Blooms: Remember
Topic: Regulatory climate
6-233
144. An assessment of a country's or region's political-regulatory climate includes an analysis of its
(p. 148) political stability and __________.
B. stock market performance
C. trade regulations
D. cultural diversity
E. currency exchange rates
An assessment of a country's or region's political-regulatory climate includes an analysis of its
political stability and trade regulations.
AACSB: Diversity
Blooms: Understand
Topic: Regulatory climate
6-234
145. Trade among nations or regions depends on political stability. In recent times, billions of dollars
(p. 148) 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
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.
AACSB: Diversity
Blooms: Remember
Topic: Political stability
6-235
146. The PRS group maintains a website that can be used to determine
(p. 148)
A. changing demographic and psychographic data for each country in the registry.
B. a country's political risk ratings using multiple databases of country-specific information.
C. the tariffs of each country and their relative effect on product and services sales.
D. the rankings of American products relative to domestic equivalents in each country.
E. changing social trends within different segments of the economy.
The focus of the PRS group is on maintaining multiple databases of country-specific

information, including political risk ratings. These can be used to determine the relative
favorability of various business climates.
AACSB: Diversity
Blooms: Understand
Topic: Marketing insight
6-236
147. Japanese car safety rules effectively require all automobile replacement parts to be Japanese
(p. 180) 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 __________.
B. trade barriers
C. universal codes
D. binding requirements
E. targets for bribery
Countries have a variety of rules that govern business practices within their borders. These rules
often serve as trade barriers, including this Japanese regulations.
AACSB: Diversity
Blooms: Understand
Topic: Trade regulations
6-237
148. A firm's profit potential and control over marketing activities __________ as it moves from
(p. 148) 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
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, risk, marketing control, and profit potential. Firms often engage in exporting,
licensing, and joint ventures before pursuing a direct investment strategy. See Figure 6-3.
AACSB: Diversity
Blooms: Remember
Topic: Global market entry strategies
6-238
(p. 148) 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
Four general options exist: (1) exporting; (2) licensing; (3) joint venture; and (4) direct
investment. See Figure 6-3.
AACSB: Diversity
Blooms: Remember
6-239
(p. 148) 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
AACSB: Diversity
Blooms: Remember
6-240
(p. 148) entry. Four general options exist: (1) exporting; (2) licensing; (3) __________; and (4) direct
investment.
A. franchising
B. joint venture
C. cooperative
D. multiparty initiative
E. mutual investment
AACSB: Diversity
Blooms: Remember
6-241
(p. 148) entry. Four general options exist: (1) exporting; (2) licensing; (3) joint venture; and (4) __________.
A. franchising
B. microfinancing
C. unilateral venture
D. cooperative
AACSB: Diversity
Blooms: Remember
6-242
153. A firm's profit potential and control over marketing activities increases as it moves from
(p. 148) 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.
exporting to direct investment as a global market-entry strategy. But, so does the firm's
financial commitment, risk, marketing control, and profit potential. Firms often engage in
exporting, licensing, and joint ventures before pursuing a direct investment strategy. See Figure
6-3.
AACSB: Diversity
Blooms: Understand
6-243
154. As a firm changes its global market-entry strategy from exporting to direct investment, all of
(p. 148) the following increase EXCEPT:
A. marketing control.
B. risk.
C. divestiture.
D. profit potential.
E. financial commitment.
exporting to direct investment as a global market-entry strategy. But, so does the firm's
financial commitment, risk, marketing control, and profit potential. Firms often engage in
exporting, licensing, and joint ventures before pursuing a direct investment strategy. See Figure
6-3.
AACSB: Diversity
Blooms: Understand
6-244
Figure 6-3
155. According to Figure 6-3 above, point A would most likely represent what option for entering
(p. 149) the global marketplace?
A. joint venture
B. licensing
C. exporting
E. franchise
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.
AACSB: Diversity
Blooms: Understand
6-245
156. According to Figure 6-3 above, point B would most likely represent what option for entering
A. exporting
B. joint venture
D. franchising
E. licensing
AACSB: Diversity
Blooms: Understand
6-246
157. According to Figure 6-3 above, point C would most likely represent what option for entering
A. exporting
B. joint venture
D. licensing
E. franchising
AACSB: Diversity
Blooms: Understand
158. According to Figure 6-3 above, point D would most likely represent what option for entering
A. exporting
B. joint venture
D. franchising
E. licensing
AACSB: Diversity
6-247
Blooms: Understand
159. According to Figure 6-3 above, points A and D would most likely represent __________ and
(p. 149) __________ options respectively for entering the global marketplace.
A. joint venture; licensing
B. licensing; exporting
C. licensing; joint venture
D. direct investment; licensing
E. exporting; direct investment
AACSB: Diversity
Blooms: Understand
6-248
160. According to Figure 6-3 above, points B and C would most likely represent __________ and
(p. 149) __________ options respectively for entering the global marketplace.
A. exporting; licensing
B. licensing; joint venture
C. joint venture; direct investment
D. exporting; direct investment
E. exporting; joint venture
AACSB: Diversity
Blooms: Understand
161. A global market-entry strategy in which a company produces goods in one country and sells
(p. 148) them in another country is referred to as __________.
A. exporting
C. countertrade
D. licensing
E. multinational marketing
Key term definition - exporting.
AACSB: Diversity
6-249
Blooms: Remember
Topic: Exporting
162. Exporting refers to a global market-entry strategy

(p. 148)
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.
Key term definition - exporting.
AACSB: Diversity
Blooms: Remember
Topic: Exporting
6-250
163. What market entry option allows a company to make the least number of changes in terms of
(p. 148) its product, its organization, and even its corporate goals?
A. exporting
B. licensing
C. joint venture
E. franchising
Exporting allows a company to make the least number of changes in terms of its product, its
organization, and even its corporate goals.
AACSB: Diversity
Blooms: Remember
Topic: Exporting
6-251
164. Indirect exporting refers to
(p. 148)
A. offering the right to a trademark, patent, trade secret, or similarly valued item of intellectual
B. selling a firm's domestically produced products in a foreign country without interference by
that government.
C. contracting with a foreign firm to manufacture products according to stated specifications.
D. avoiding the use of additional parties when a firm sells its domestically produced products
in another country.
E. selling a firm's domestically produced products in a foreign country through an
intermediary.
Text term definition - indirect exporting.
AACSB: Diversity
Blooms: Remember
Topic: Indirect exporting
6-252
165. When a firm sells its domestically produced products in a foreign country through an
(p. 148) intermediary, it is referred to as
C. licensing.
D. franchising.
AACSB: Diversity
Blooms: Remember
166. Indirect exporting occurs when a firm sells its domestically produced products in a foreign
(p. 148) country
A. in violation of a quota.
B. without paying import tariffs.
C. without paying export duties.
D. through a joint venture.
E. through an intermediary.
AACSB: Diversity
6-253
Blooms: Remember
167. What type of exporting has the least amount of commitment and risk but will probably return
(p. 148- the least profit?
149)
A. direct
B. indirect
C. licensing
D. joint
E. unilateral
Indirect exporting has the least amount of commitment and risk but will probably return the
least profit.
AACSB: Diversity
Blooms: Understand
6-254
168. A small Canadian winery located in British Columbia has developed a superior tasting wine. It
(p. 149) 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
D. joint venture
E. cooperative partnership
Indirect exporting is ideal for a company that has no overseas contacts but wants to market
abroad.

Blooms: Apply
6-255
169. The U.S. motorcycle manufacturer Harley-Davidson uses intermediaries to sell its motorcycles in
(p. 149) numerous nations outside the United States. Harley-Davidson uses
B. licensing.
Indirect exporting occurs when a firm sells its domestically produced goods in a foreign country
through an intermediary.

Blooms: Apply
6-256
170. Fran Wilson Creative Cosmetics attributes its success to a top-quality product, effective
(p. 149) advertising, and a novel __________ strategy.
A. joint venture
B. licensing
C. franchising
D. indirect export
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 indirect export strategy.
AACSB: Diversity
Blooms: Remember
6-257
171. To avoid competing with Japanese firms through their traditional channel of distribution, Fran
(p. 149) 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
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.
AACSB: Diversity
Blooms: Understand
6-258
172. Direct exporting refers to
(p. 150)
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.
Text term definition - direct exporting.
AACSB: Diversity
Blooms: Remember
Topic: Direct exporting
6-259
173. What global market-entry strategy involves slightly more risk than indirect exporting for a
(p. 150) company but also opens the door to increased profits?
A. direct exporting
B. licensing
C. cooperative
D. joint venture
Direct exporting involves slightly more risk than indirect exporting for a company but also more
opportunity for profit.
AACSB: Diversity
Blooms: Remember
6-260
174. Most companies become involved in direct exporting when
(p. 150)
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.
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.
AACSB: Diversity
Blooms: Understand
6-261
175. The prominent global market-entry strategy among small- and medium-sized companies is
(p. 150)
B. direct franchising.
C. licensing.
D. joint venture.
E. direct investment.
Direct 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 500 employees
but account for about 34 percent of total U.S. merchandise exports.
AACSB: Diversity
Blooms: Remember
6-262
176. When a U.S. airplane manufacturer sells its airplanes to business executives in Germany without
(p. 150) using intermediaries, it is referred to as
C. licensing.
D. foreign manufacturing.
Direct exporting is when a firm sells its domestically produced goods in a foreign country
without intermediaries.

Blooms: Apply
6-263
177. Licensing refers to
(p. 150)
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.
Text term definition - licensing.
AACSB: Diversity
Blooms: Remember
Topic: Licensing
178. Offering the right to a trademark, patent, trade secret, or similarly valued items of intellectual
(p. 150) property in return for a royalty or fee is referred to as
C. licensing.
E. outside branding.
Text term definition - licensing.
AACSB: Diversity
6-264
Blooms: Remember
Topic: Licensing
179. Which of the following is an advantage inherent in the use of licensing?

(p. 150)
A. The licensor retains control of its product.
B. The licensor is protected from creating a potential competitor.
C. It provides an exemption from domestic trade regulations.
D. There is an increase in potential profit compared with direct investment.
E. The licensee gains information about the dynamics of the market.
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.
AACSB: Diversity
Blooms: Understand
Topic: Licensing
6-265
180. All of the following are advantages of licensing EXCEPT:
(p. 150)
A. the foreign country gains employment by having the product manufactured locally.
B. the licensee gains information that allows it to start with a competitive advantage.
C. the low risk to the company granting the license.
D. the licensor's brand name can never be harmed as a result of the licensee.
E. the capital-free entry into a foreign country.
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 licensing global market-entry
strategy are: (1) the low risk to the company granting the license; (2) the capital-free entry into a
foreign country; (3) the licensee gains information that allows it to start with a competitive
advantage; and (4) the foreign country gains employment by having the product manufactured
locally. A disadvantage is that, should the licensee prove to be a poor choice, the name or
reputation of the company may be harmed.
AACSB: Diversity
Blooms: Understand
Topic: Licensing
6-266
181. Which of the following is a disadvantage associated with licensing?
(p. 150)
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.
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.
AACSB: Diversity
Blooms: Understand
Topic: Licensing
6-267
182. Which form of entry into a global market makes a firm the most vulnerable to harm regarding
(p. 150) its brand name or reputation?
A. direct exporting
B. indirect exporting
C. licensing
E. joint venture
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.
AACSB: Diversity
Blooms: Understand
Topic: Licensing
6-268
183. All of the following are disadvantages of licensing EXCEPT:
(p. 150)
A. the licensor reduces its potential profits gained from product sales.
B. the foreign country gains employment by having the product manufactured locally.
C. the licensor forgoes control of its product.
D. should the licensee prove to be a poor choice, the name or reputation of the company may
be harmed.
E. the licensor may be creating its own competition.
There are some serious drawbacks to licensing: (1) the licensor forgoes control of its product; (2)
the licensor reduces its potential profits gained from it; (3) the licensor may be creating its own
competition: and (4) should the licensee prove to be a poor choice, the name or reputation of
the company may be harmed. One advantage is that the foreign country gains employment by
having the product manufactured locally.
AACSB: Diversity
Blooms: Understand
Topic: Licensing
6-269
184. Tricon was the restaurant division of PepsiCo until it was spun off in 1997. Since then, Tricon has
(p. 150) opened 6,000 KFC restaurants abroad. It has 158 restaurants in Indonesia and more than 500
restaurants in China. All are locally owned and each owner pays a fee to Tricon. Tricon is
engaged in
A. licensing.
B. direct exporting.
C. indirect exporting.
Tricon has given the local restaurant owners the benefit of its patents, trade secrets, etc., and
the owners pay Tricon a licensing fee.

Blooms: Apply
Topic: Licensing
6-270
185. Select Service Partner (SSP) Group has operations in 30 countries involving food and beverage
(p. 150) 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
D. foreign assembly.
E. licensing.
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.

Blooms: Apply
Topic: Licensing
6-271
186. A form of low-risk and capital-free entry into international markets that includes local
(p. 150) manufacturing is referred to as
A. indirect exporting.
B. direct ownership.
C. joint ventures.
D. licensing.
E. direct exporting.
The advantages to the company granting the license are low risk and a capital-free entry into a
foreign country.
AACSB: Diversity
Blooms: Understand
Topic: Licensing
6-272
187. One variation of licensing is referred to as
(p. 150)
A. direct investment.
B. joint ventures.
D. franchising.
E. dual adaptation.
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.
AACSB: Diversity
Blooms: Remember
Topic: Franchising
6-273
188. Yum! Brands, the restaurant division of PepsiCo, has 12,600 KFC restaurants abroad, with more
(p. 150) than 3,700 restaurants in China. Many of the latter are locally owned and subject to a
contractual agreement that allows the owners to operate the business under the established
KFC brand name and according to specific rules. Yum! Brands is engaged in
A. contract assembly.
B. a joint venture.
D. a partnership.
E. franchising.
Franchising is a type of licensing.

Blooms: Apply
Topic: Franchising
6-274
189. Yogen Früz is a successful chain of frozen yogurt shops originating in Canada. Archeology
(p. 150) 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.
E. franchising.
Franchising is a type of licensing.

Blooms: Apply
Topic: Franchising
6-275
190. A joint venture refers to
(p. 150)
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 products abroad.
Key term definition - joint venture.
AACSB: Diversity
Blooms: Remember
Topic: Joint venture
6-276
191. A global market-entry strategy in which a foreign company and a local firm invest together to
(p. 150) 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. contract assembly.
E. dual adaptation.
Key term definition - joint venture.
AACSB: Diversity
Blooms: Remember
6-277
192. PepsiCo and __________ entered into a joint venture to market Frito-Lay's, Cheetos, Ruffles, and
(p. 150) Doritos in Israel.
A. The Strauss Group
B. Ericsson
C. General Mills
D. Hebrew National
E. CGCT
The Strauss Group has a joint venture with PepsiCo to market Frito-Lay's Cheetos, Ruffles,
Doritos, and other snacks in Israel.
AACSB: Diversity
Blooms: Remember
6-278
193. The __________ arrangement between Ericsson, a Swedish telecommunications firm, and CGCT, a
(p. 150) 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
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.
Ericsson's money and technology combined with CGCT's knowledge of the French market
made it possible.
AACSB: Diversity
Blooms: Understand
6-279
194. A disadvantage of a joint venture arrangement when entering a new global market is that
(p. 151)
B. the firm entering the foreign market must pay royalties to the other firm.
C. one of the companies forgoes control over its product.
D. the two companies may disagree about policies.
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.
AACSB: Diversity
Blooms: Understand
6-280
195. Starbucks and Tata Global Beverage have together formed Starbuck Coffee A Tata Alliance in
(p. 150) order to bring Starbucks to India. The global market-entry strategy is known as
A. franchising.
B. a joint venture.
C. licensing.
E. exporting.
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.

Blooms: Apply
6-281
196. Direct investment in international marketing refers to
(p. 151)
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.
Key term definition - direct investment.
AACSB: Diversity
Blooms: Remember
Topic: Direct investment
6-282
197. A global market-entry strategy that entails a domestic firm actually investing in and owning a
(p. 151) foreign subsidiary or division is referred to as
A. licensing.
B. local assembly.
C. a joint venture.
E. local manufacturing.
Key term definition - direct investment.
AACSB: Diversity
Blooms: Remember
6-283
198. When Nestlé actually owns a subsidiary or division in a foreign country, such as when it
(p. 151) 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
to international sales.
A. licensing
B. local assembly
C. a joint venture
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.
AACSB: Diversity
Blooms: Understand
6-284
199. Which form of entry into a foreign market requires the greatest commitment?
(p. 151)
A. direct exporting
C. joint venture
D. licensing
E. indirect exporting
or division.
AACSB: Diversity
Blooms: Understand
6-285
200. One advantage of direct investment when entering a new global market is that
(p. 151)
B. the firm entering the foreign market does not have to pay royalties to the government.
D. the firm gains and uses a better understanding of local market conditions.
The advantages to direct investment include cost savings, better understanding of local market
conditions, and fewer local restrictions. Firms entering foreign markets using direct investment
believe that these advantages outweigh the financial commitments and risks involved.
AACSB: Diversity
Blooms: Understand
6-286
201. One disadvantage of direct investment when entering a new global market is that
(p. 151)
B. the firm entering the foreign market must pay royalties to the government.
D. the financial commitments involved.
E. this method is likely to provide the fewest cost savings relative to the other global market-
entry options.
The advantages to direct investment include cost savings, better understanding of local market
conditions, and fewer local restrictions. Firms entering foreign markets using direct investment
believe that these advantages outweigh the financial commitments and risks involved.
AACSB: Diversity
Blooms: Understand
6-287
202. Both Honda and Toyota have plants in the United States that use American labor. This
(p. 151) illustrates Honda's and Toyota's use of
B. direct investment.
C. joint venture.
D. licensing.
E. indirect exporting.
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.) subsidiary
or division.

Blooms: Apply
6-288
203. Yum! Brands, the parent company of KFC, has pursued an aggressive growth strategy in China.
(p. 151) There are now than 3,700 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
or division.

Blooms: Apply
6-289
204. Global companies have five strategies for matching products and their promotion efforts to
(p. 152) 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.
Text term definition - product extension. See Figure 6-4.
AACSB: Diversity
Blooms: Remember
marketing programs.
Topic: Product extension
6-290
205. As a general rule, __________ seems to work best when the consumer target market for the
(p. 152) product is alike across countries and cultures - that is, consumers share the same desires,
needs, and use for the product.
C. product integration
E. product customization
Product extension seems to work best when the consumer target market for the product is alike
across countries and cultures. See Figure 6-4.
AACSB: Diversity
Blooms: Understand
marketing programs.
6-291
206. Coca-Cola, Gillette razors, and Nike apparel and shoes are being sold in the same form in many
(p. 152) countries. This is an example of which type of global marketing product and promotion
strategy?
C. product extension
D. product integration
E. product invention
Coca-Cola, Gillette, and Nike are using a product extension strategy - they are selling virtually
the same product in other countries. See Figure 6-4.

Blooms: Apply
marketing programs.
6-292
207. GlaxoSmithKline plc. of Great Britain makes Breathe-Right nasal strips. It sells the same product
(p. 152) 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 and promotion strategy?
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.

Blooms: Apply
marketing programs.
6-293
(p. 152) global 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 and promotion
strategy?
Text term definition - product adaptation. See Figure 6-4.
AACSB: Diversity
Blooms: Remember
marketing programs.
Topic: Product adaptation
6-294
209. Frito-Lay produces and markets potato chips in Russia that have seafood flavor. This is an
(p. 152) example of which type of global marketing product/promotion strategy?
B. product integration
C. product invention
D. product customization
E. product extension
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.
AACSB: Diversity
Blooms: Understand
marketing programs.
6-295
210. KFC in Japan altered the sweetness of its coleslaw to appeal to Japanese tastes. This is an
(p. 152) example of which type of global marketing product and promotion strategy?
C. product customization
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.

Blooms: Apply
marketing programs.
6-296
(p. 152) global markets. Designing a product to serve the unmet needs of a foreign nation is which type
of global marketing product and promotion strategy?
Text term definition - product invention. See Figure 6-4.
AACSB: Diversity
Blooms: Remember
marketing programs.
Topic: Product invention
6-297
212. KFC has added many offerings to its menus in China to appeal to local tastes, including the
(p. 152) "Dragon Twister," which is a chicken wrap with Peking-duck sauce. This is an example of which
type of global marketing product and promotion strategy?
With product invention, companies invent totally new products designed to satisfy common
needs across countries. See Figure 6-6.

Blooms: Apply
marketing programs.
Topic: Product invention
6-298
213. Even though Exxon adapts its gasoline blends for different countries based on climate, the
(p. 152) 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 Fuel
D. Keep America Driving
E. Power to the Pistons
Exxon's promotional message is "Put a Tiger in Your Tank."
AACSB: Analytical Thinking

Blooms: Understand
marketing programs.
Topic: Promotional message
6-299
214. Nescafe coffee is marketed using different coffee blends and promotional campaigns to match
(p. 152) consumer preferences in different countries. For example, Nescafe 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
example of which type of global marketing product/promotion strategy?
D. dual adaptation
E. dual integration
A dual adaptation strategy means modifying both the products and promotion messages,
which Nescafé has done in this example. See Figure 6-4.
AACSB: Diversity
Blooms: Understand
marketing programs.
Topic: Dual adaptation
6-300
Figure 6-4
(p. 152) global markets. According to Figure 6-4 above, A refers to which type of strategy?
A product extension strategy (A) uses the same product and the same promotional emphasis.
See Figure 6-4.
AACSB: Diversity
Blooms: Understand
marketing programs.
Topic: Product and promotion strategy
6-301
(p. 152) global markets. According to Figure 6-4 above, B refers to which type of strategy?
A product adaptation strategy (B) uses the same promotion but an adapted product. See Figure
6-4.
AACSB: Diversity
Blooms: Understand
marketing programs.
6-302
(p. 152- global markets. According to Figure 6-4 above, C refers to which type of strategy?
153)
A communication adaptation strategy (C) uses the same product but adapts the promotion. See
Figure 6-4.
AACSB: Diversity
Blooms: Understand
marketing programs.
(p. 152- global markets. According to Figure 6-4 above, D refers to which type of strategy?
153)
A dual adaptation strategy (D) adapts both the product and the promotion. See Figure 6-4.
AACSB: Diversity
6-303
Blooms: Understand
marketing programs.
(p. 152) global markets. According to Figure 6-4 above, E refers to which type of strategy?
A product invention strategy (E) requires the invention of an entirely new product. See Figure 6-
4.
AACSB: Diversity
Blooms: Understand
marketing programs.
Figure 6-5
6-304
220. Figure 6-5 above outlines the distribution channels through which a product manufactured in
(p. 153) one country must travel to reach its destination in another country. Box A represents the
A. seller.
C. channels between nations.
D. channels within the foreign nation.
E. final customer.
Figure 6-5 above outlines global distribution channels. Box 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. See Figure 6-5.
AACSB: Diversity
Blooms: Understand
marketing programs.
Topic: Distribution strategy
6-305
(p. 153) one country must travel to reach its destination in another country. B represents the
A. channels within foreign nations.
D. political forces.
E. final consumer.
AACSB: Diversity
Blooms: Understand
marketing programs.
6-306
(p. 153) one country must travel to reach its destination in another country. C represents the
A. seller.
C. channels within foreign nations.
D. final consumer.
E. channels between nations.
AACSB: Diversity
Blooms: Understand
marketing programs.
6-307
(p. 153) one country must travel to reach its destination in another country. Which letter in the figure
would identify intermediaries used to move the product from one country to another?
A. A
B. B
C. C
D. D
E. E
C represents the channel between two nations, moving the product from one country to
another. Intermediaries 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.
AACSB: Diversity
Blooms: Understand
marketing programs.
6-308
(p. 153) one 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
D represents channels within foreign nations. See Figure 6-5.
AACSB: Diversity
Blooms: Understand
marketing programs.
6-309
(p. 153) one country must travel to reach its destination in another country. E represents the
A. seller.
D. final consumer.
E. channels within foreign nations.
headquarters is the starting point. 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. See Figure 6-5.
AACSB: Diversity
Blooms: Understand
marketing programs.
6-310
(p. 153) one country must travel to reach its destination in another country. Channels of distribution in
global marketing are often long and complex. Box A represents the __________ and Box 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
headquarters is the starting point. 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. See Figure 6-5.
AACSB: Diversity
Blooms: Understand
marketing programs.
6-311
227. When a firm sells a product in a foreign country below its domestic price or below its actual
(p. 154) cost, the practice is referred to as
A. loss-leader pricing.
B. surplus marketing.
C. dumping.
D. second-market pricing.
E. entrepreneurial pricing.
Key term definition - dumping.
AACSB: Diversity
Blooms: Remember
marketing programs.
Topic: Dumping
6-312
228. In international trade, dumping refers to
(p. 154)
A. illegally disposing of unusable or damaged goods to avoid paying removal fees and/or
taxes.
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.
Key term definition - dumping.
AACSB: Diversity
Blooms: Remember
marketing programs.
Topic: Dumping
6-313
229. Eastman Kodak accused Japanese rival Fuji Photo Film of selling photographic paper in the
(p. 154) United States for 25 percent below what it charges in Japan. In other words, Eastman Kodak
accused Fuji of __________.
A. tariff avoidance
B. countertrade
D. dumping
E. underbidding
A firm selling a product in a foreign country below its domestic price or below its actual cost is
often accused of dumping.

Blooms: Apply
marketing programs.
Topic: Dumping
6-314
230. The U.S. Commerce Department imposed additional duties of 31 percent to 250 percent on
(p. 154) imported photovoltaic products imported by Chinese solar manufacturers after ruling that they
sold them below cost. The Commerce Department took this action in response to what it saw
as __________.
A. tariff avoidance
B. countertrade
D. underbidding
E. dumping
A firm selling a product in a foreign country below its domestic price or below its actual cost is
often accused of dumping.

Blooms: Apply
marketing programs.
Topic: Dumping
6-315
231. A situation where products are bought in a lower-priced country from a manufacturer's
(p. 154) 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
Key term definition - gray market.
AACSB: Diversity
Blooms: Remember
marketing programs.
Topic: Gray market
6-316
232. A gray market refers to
(p. 154)
A. the segment of products specifically designed for the need of older buyers.
B. a once active and powerful market that is rapidly becoming the bottom of the barrel.
C. a situation where products are sold through unauthorized channels of distribution.
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.
Key term definition - gray market.
AACSB: Diversity
Blooms: Remember
marketing programs.
Topic: Gray market
233. Another term for a gray market is

(p. 154)
A. equivalent exporting.
B. back-channel market.
C. mature marketing.
D. parallel importing.
E. transparent market.
Key term definition - gray market or parallel importing.
AACSB: Diversity
Blooms: Remember
6-317
marketing programs.
Topic: Gray market
234. The Japanese manufacture tractors for rice paddies. They are smaller than most U.S. tractors
(p. 154) 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. These Japanese tractors are being sold
A. through the gray market.
B. under the table.
C. over the counter.
D. with bypassed global channels.
E. by breaking the distribution monopoly.
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.

Blooms: Apply
marketing programs.
Topic: Gray market
6-318
235. Before Apple's iPhone 5 was officially for sale in China, it was being sold there. These phones
(p. 154) 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. under the counter sales.
B. over the counter sales.
C. the gray market.
D. integrated global channels.
E. breaking the distribution monopoly.
Gray marketing is a situation where products are sold through unauthorized channels of
distribution.

Blooms: Apply
marketing programs.
Topic: Gray market
6-319
236. Mary Kay, Inc. can be classified as which type of company when marketing its products around
(p. 156) the world?
A. multinational firm
B. transnational firm
C. international firm
D. global marketing firm
E. multidomestic firm
Mary Kay exhibits the structural characteristics of an international firm, one that engages in
trade and marketing in different countries as an extension of the marketing strategy in its home
country. Mary Kay markets its existing products and services in other countries the same way it
does in its home country - the U.S.
AACSB: Diversity
Blooms: Understand
Topic: Video case: Mary Kay
6-320
237. Since 1963, Mary Kay, Inc.'s guiding principle has been based on __________.
(p. 156)
A. the Consumer Bill of Rights
B. the Golden Rule
C. caveat emptor
D. the American Marketing Association Statement of Ethics
E. maximizing profits so long as the firm stays within the rules
Mary Kay Ash's founding principles were simple, time-tested, and remain a fundamental
company business philosophy. She adopted the Golden Rule as her guiding principle,
determining the best course of action in virtually any situation could be easily discerned by
"doing unto others as you would have them do unto you."
AACSB: Diversity
Blooms: Remember
Topic: Video case 7: Mary Kay
6-321
238. What global market-entry strategy did Mary Kay use when it entered India?
(p. 157)
A. direct importing
B. licensing
D. joint venture
E. direct exporting
Mary Kay used an exporting global market-entry strategy. Specifically, the company employed
direct-exporting since it used no intermediaries, relying instead on company-owned distribution
centers and a direct sales force.
AACSB: Diversity
Blooms: Understand
Topic: Video case 7: Mary Kay
Short Answer Questions
6-322
239. Give at least one argument for and one argument against protectionism.
(p. 136)
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.
AACSB: Diversity
Blooms: Understand
240. Play devil's advocate. Select any American industry and argue persuasively why protectionism is
(p. 136) not only patriotic, it is absolutely essential for survival.
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.

Blooms: Apply
6-323
241. "A signal that the world's trading nations are committed to open markets - and will resist
(p. 136) protectionism - would inject confidence and energy into our markets," says the U.S. Trade
Representative. Discuss this statement.
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.

Blooms: Apply
242. If your primary motive was to raise prices on imports, would you use tariffs or quotas? Why
(p. 136- would you want to do this?
137)
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.
AACSB: Diversity
Blooms: Understand
Topic: Tariffs and quotas
6-324
243. Describe the World Trade Organization (WTO) and its purpose.
(p. 137)
The World Trade Organization (WTO) was formed in 1995 to address a broad array of world
trade issues. There are 159 WTO member countries including the United States, which account
for more than 90 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.
AACSB: Diversity
Blooms: Understand
6-325
244. In recent years, a number of countries with similar economic goals have formed transnational
(p. 137- trade groups or signed trade agreements for the purpose of promoting free trade. Describe the
139)
three discussed in the textbook.
(1) The European Union (EU) 2013 consists of 28 countries with more than 500 million
consumers. The EU has eliminated most barriers to the free flow of products, services, capital,
and labor across its borders. In addition, 16 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. (3) In 2006, a comprehensive
free trade agreement among Costa Rica, the Dominican Republic, El Salvador, Guatemala,
Honduras, Nicaragua, and the U.S. extended many NAFTA benefits to Central American
countries and the Dominican Republic. Called CAFTA-DR, this agreement is viewed as a step
toward a 34-country Free Trade Area of the Americas for the Western Hemisphere.
AACSB: Diversity
Blooms: Understand
Topic: Economic integration
6-326
245. Three types of companies populate and compete in the global marketplace. Identify and
(p. 140) describe each type.
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
more than differences.
AACSB: Diversity
Blooms: Remember
6-327
246. Identify and describe the factors a company should consider in order to do a thorough cross-
(p. 143) cultural analysis. In your answer, define cross-cultural analysis.
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

are important as well.
AACSB: Diversity
Blooms: Understand
6-328
247. Why is it a wise idea for global marketers use back translation? Provide an example to support
(p. 145) your 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.
AACSB: Diversity
Blooms: Understand
248. Global marketing is also affected by economic considerations. Identify the three steps that
(p. 145) should be performed when scanning the global marketplace.
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,
AACSB: Diversity
Blooms: Understand
6-329
249. What is meant by the term economic infrastructure and how can this affect a firm's plans to
(p. 145- enter a global market?
146)
Economic infrastructure is a country's communication, transportation, financial, legal, 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.
AACSB: Diversity
Blooms: Understand
6-330
250. Define a currency exchange rate and discuss its importance to global companies.
(p. 147)
Fluctuations in exchange rates among the world's currencies are of critical importance in global
marketing. 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 Japanese yen, euros, or Swiss
francs. Failure to consider exchange rates when pricing products for global markets can have
dire consequences if a company sets the prices for its products without regard for how they
would convert into foreign currencies. This could lead to high prices, lost sales, and forgone
profits made by global companies. When foreign currencies can buy more U.S. dollars, for
example, U.S. products are less expensive for the foreign customer. Severe and protracted
fluctuations in a country's currency can affect trade as well.
AACSB: Diversity
Blooms: Understand
6-331
251. What are the market entry strategy options available to a company seeking to enter the global
(p. 148- marketplace? How do they relate to each other in terms of profit potential, risk, financial
151)
commitment required, and marketing control?
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 6-5.
AACSB: Diversity
Blooms: Understand
6-332
252. Explain the difference between indirect exporting and direct exporting. What are the
(p. 148- advantages and disadvantages of each approach?
150)
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.
AACSB: Diversity
Blooms: Understand
6-333
253. Explain the difference between joint venture and direct investment market entry strategies.
(p. 150- What are the advantages and disadvantages of each approach?
151)
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
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.
AACSB: Diversity
Blooms: Understand
6-334
254. Define licensing, cite its advantages and disadvantages, and explain what franchising is.
(p. 150)
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. Two variations of licensing, contract manufacturing and contract assembly, represent
alternative ways to produce a product within the foreign country. With contract manufacturing,
a U.S. company may contract with a foreign firm to manufacture products according to stated
specifications. The product is then sold in the foreign country or exported back to the United
States. With contract assembly, the U.S. company may contract with a foreign firm to assemble
(not manufacture) parts and components that have been shipped to that country. In both cases,
the advantage to the foreign country is the employment of its people, and the U.S. firm benefits
from the lower wage rates in the foreign country. This practice has been an economic boon to
Taiwan where 55 percent of the world's notebook computers are made. A third variation of
licensing is franchising, which is a contractual arrangement between a parent company (a
franchisor like McDonald's) and an individual or firm (a franchisee) that allows the franchisee to
operate business under an established name and according to specific rules.
AACSB: Diversity
Blooms: Understand
6-335
255. What are the product and promotion strategies available to a company seeking to enter the
(p. 152- global marketplace? How do they relate to each other in terms of the same or adapted product
153)
and promotion?
There are five global marketing product and promotional strategies. (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
a foreign market (product invention strategy). See Figure 6-4.
AACSB: Diversity
Blooms: Understand
marketing programs.
6-336
256. Describe the elements in a global channel of distribution.
(p. 153)
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
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.
AACSB: Diversity
Blooms: Understand
marketing programs.
257. Explain the difference between dumping and parallel importing.

(p. 154)
Dumping is when a firm sells a product in a foreign country below its domestic price or below
its 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.
AACSB: Diversity
Blooms: Understand
6-337
marketing programs.
Topic: Pricing strategy
6-338
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that a tree was struck in a yard near the house where we made our
first inquiry for shelter, and a man at an open window was prostrated
and had not “come to.” One of the children had run away down the
street and was brought back screaming with fright, and asking if the
thunder struck him! The shower was very severe, but passed over
rapidly, and when the golden sunset glow came on, we began to
think of making a supper from the crackers, nuts, raisins and
pineapple in our lunch box, thinking how much better that was than
standing in the “breadline” at San Francisco. But while we were still
watching the sunset, we were called to supper, and the lunch box
was forgotten. Our good lady finally told us she boarded the school
masters for thirty-five years, and “took” people, but now she was
alone she did not like to take men, having been frightened, and she
always sends them to a man a little way up the road, but does not
tell them he is the “select-man.” When they ask there, they are
offered the lock-up. “If you had been two men I should have sent you
there!” We talked until nearly dark, before taking our things upstairs.
Breakfast was served in the morning, and our hostess seemed ten
years younger, declaring we had been no trouble. When we gave her
what we usually pay at a small hotel, she accepted it reluctantly. We
promised to send her the report of our journey, and she asked if we
should come the same way next year.
It was all right that we did not stay at the Farragut, for that hard drive
would have shortened our visit in Newburyport, and dinner with a
friend at the Wolfe Tavern.
We found a large mail at Newburyport, and then looked up a way
home. Really, the only fitting terminal route to such a fine journey
was to follow the coast to Boston, and then home via Concord. At
Hamilton we found the family tomb of Gail Hamilton, and took a
snap-shot of her home.
The miles of driving along the coast, and the boulevards of the Park
Reservation through Beverly, Salem, Marblehead, Swampscott,
Lynn, Revere Beach and Winthrop, were a striking contrast to the
miles of hills. We found friends along the way, and stayed one night
close by the shore, then drove into Boston, where Nan fell into line
on Atlantic avenue as unconcerned as when in the solitude of the
mountains. We made a call or two as we passed through the city to
Cambridge, and on through Arlington and Lexington to Concord,
where we spent the last night at the Old Wright Tavern, built in 1747.
It is full of souvenirs and reminders of the Revolutionary times.
Framed illuminated inscriptions hung on the walls of the dining-room.
We began our last day very pleasantly, after leaving our cards at a
friend’s house, by calling on the Chaplain of the Concord
Reformatory, and finding in his home friends from Chicago, who
asked about the revolver, which reminded us we had not taken it
from the bottom of the bag in which it was packed before we left
home.
At noon it began to rain, and we had the first cosy rainy drive,
enjoying it as we always do. We did not regret, however, missing the
deluge which came just as Nan was hurrying in to her stall. She
knew all the afternoon where she was going, and was impatient with
every delay. We did not blame her, for she had taken a great many
steps in the seven hundred miles and more, and been equal to every
demand, traveling every day but two in the whole month. The miles
of this journey swell the number to nearly 15000, but we will not
change the title of our book, for 14000 is a multiple of the mystic
number 7, and also of the 700 miles of this Postscript.
14000
MILES
A CARRIAGE AND TWO WOMEN
BY
FRANCES S. HOWE
This book is privately printed and the edition is limited. It contains
reports of an unbroken series of annual drives through New England,
New York State and Canada. Copies will be sent on receipt of price,
$1.50, and 15 cents additional for express or postage.
Address, Leominster, Mass.
MISS F. S. HOWE,
60 Mt. Pleasant Ave., or
MISS F. C. ALLEN,
5 Park Street.
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Understanding and Reaching Global Consumers and Markets

Multiple Choice Questions

1. Why did Dell, Inc., embark on a global growth initiative?

A. U.S. sales had decreased.

B. Dell was recently purchased by Lenovo, a major Chinese competitor.

C. There was too much competition in Dell's direct-to-consumer marketing channel.

E. Emerging economies offered significant growth potential.

was so successful in the United States.

C. Dell opened shop-within-a-shop counters in selected retailers in India so shoppers could

who would not normally qualify for credit to do so.

a first-hand experience at their doorsteps.

A. an increase in most countries' GDPs coupled with an increased degree of consumer

B. a significant increase in economic protectionism and a decline in free trade.

D. a decrease in most countries' GDPs and a renewal of nationalism.

E. a decline in economic protectionism by individual countries.

A. the rise of economic integration and free trade among nations.

B. an increase in economic protectionism and a decline in free trade.

D. a decrease in most countries' GDPs and a renewal of nationalism.

E. an increase in most countries' GDPs coupled with an increased degree of consumer

A. an increase in economic protectionism and a decline in free trade.

C. global competition among global companies for global customers.

D. a decrease in most countries' GDPs and a renewal of nationalism.

E. an increase in most countries' GDPs coupled with an increased degree of consumer

A. an increase in economic protectionism and a decline free trade.

C. a decrease in most countries' GDPs and a renewal of nationalism.

D. the emergence of networked global marketspace.

E. an increase in most countries' GDPs coupled with an increased degree of consumer

A. an increase in economic protectionism and a decline free trade.

C. a decrease in most countries' GDPs and a renewal of nationalism.

D. the growing prevalence of economic espionage.

E. an increase in most countries' GDPs coupled with an increased degree of consumer

develop its industries and economic infrastructure.

11. The 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.

12. 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.

jobs in tire manufacturing. This addition of tariffs is an example of

A. imposing the rule of eminent domain.

C. enhancing domestic imperialism.

A. relaxing the rule of eminent domain.

C. enhancing domestic imperialism.

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

of tariffs and quotas?