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Indicate whether the statement is true or false.

1. Arista-Buvez Inc. manufactures a specialized fish food designed to enhance the natural colouration of tropical
fish. The product is exported to 27 countries. Arista-Buvez wants to convey similar messages to its target
market in each country and has a small promotional budget. To ensure the company fully meets the needs of all
global markets, Arista-Buvez’s most logical choice is to develop a new and unique promotional campaign for
each country.
a. True
b. False

2. To protect its local vodka industry, Russia allows foreign manufacturers to have only 1 percent of the Russian
vodka market. Russia uses quotas to control foreign competition.
a. True
b. False

3. Just as mass marketing assumes a large market made up of consumers who are alike, global marketing
assumes markets throughout the world are becoming more alike.
a. True
b. False

4. According to research done by the World Bank, countries with the least amount of business regulation foster
the strongest economies.
a. True
b. False

5. Vast differences in natural resources created international dependence and huge shifts of wealth.
a. True
b. False

6. Having a global vision means management recognizes and reacts to international marketing opportunities, is
aware of threats from foreign competitors in all markets, and effectively utilizes international distribution
networks.
a. True
b. False

7. Even if all parties to a global business transaction are fluent in a common language, other cultural norms
could interfere with the communication process.
a. True
b. False

8. While some countries have elements of both capitalism and socialism, most nations are at one political
extreme or the other.
a. True
b. False

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9. Canada is the only country that actively engages in global marketing.

a. True
b. False

10. The rules, regulations, and habits used for bricks-and-mortar stores tend to restrain and limit the success of
those retailers engaged in e-commerce.
a. True
b. False

11. The US government prohibits the importation of Havana cigars because of political differences with Cuba.
This is an example of an import quota.
a. True
b. False

12. Wave surfboards are produced in Australia and sold in both Australia and in the United States. The price set
for surfboards in the United States is below the price charged for them in Australia. This price discrimination
practice is an example of dumping.
a. True
b. False

13. A major benefit of globalization is its creation of jobs and wealth.

a. True
b. False

14. US-based Procter & Gamble and Italian-based Fater agreed to produce and market diapers for the European
market. This is an example of a joint venture.
a. True
b. False

15. The form of global organization that provides the highest potential for return on investment as well as the
highest level of risk is contract manufacturing.
a. True
b. False

16. Even though it is not actively involved in global marketing, Hennessey Enterprises, a Canadian business,
agreed to sell 2,000 of its stress-reducing products to a distribution company in Norway. This would be an
example of exporting.
a. True
b. False

17. Licensing agreements reduce the risk for manufacturers and sometimes even remove the requirement for a
manufacturer to produce its own product.
a. True
b. False

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18. The major disadvantage of licensing agreements is that international companies cannot maintain control over
their licensees.
a. True
b. False

19. The same environmental factors that operate in the domestic market also exist internationally. These factors
(culture, economic development, political and legal structure, demographics, and natural resources) should be
examined, regardless of the country.
a. True
b. False

20. Multinational companies typically begin the development of their global business with direct investment and
continue using this strategy throughout the company’s life span.
a. True
b. False

21. NAFTA is the New American Foreign Trade Amendment, which allows for balanced trade with the
European Union (EU).
a. True
b. False

22. GATT, NAFTA, and the EU are all examples of market groupings.
a. True
b. False

Indicate the answer choice that best completes the statement or answers the question.

23. Ericsson is a Swedish telecommunications firm. GCCT is a French electronics switch manufacturer. With
the use of Ericsson’s money and technology and GCCT’s knowledge of the French market, the two companies
created a new entity and beat out Northern Telecom for a $100 million contract with the French government.
What is the relationship between the two companies an example of?
a. contract manufacturing
b. exporting
c. direct investment
d. a joint venture

24. In a newspaper release, Corning Inc. announced it had received a favourable ruling from China’s Ministry of
Commerce on allegations that it was selling its fibre more cheaply in China than in other countries. What was
Corning falsely accused of?
a. dumping
b. offloading
c. boycotting
d. repatriating

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25. Many individuals experience the benefits of globalization, including lower prices and access to exotic
products; however, others are concerned with the massive expansion of companies such as Walmart. Why are
these people concerned?
a. Globalization will inevitably lead to inflation.
b. Globalization will cause living standards to increase at a slower rate.
c. Globalization causes some job loss as production shifts abroad.
d. Globalization has increased global wages.

Figure 4-6
CNS Inc. is the manufacturer of Breathe Right nasal strips, a spring-loaded adhesive device that can be stuck on
your nose to open up the nasal passages. Since their introduction, Breathe Right strips have been used by
athletes hoping to improve their performance through increased oxygen flow, snorers hoping for a sound night’s
sleep, and allergy and cold sufferers looking for relief from their stuffed noses. Because CNS is a small
company, it initially had trouble promoting its product. Then San Francisco 49er Jerry Rice started regularly
wearing one, and US sales took off. Today, Breathe Right strips are marketed in more than 40 countries in much
the same way. When CNS decided to expand globally, its size made it look for a partner. It chose 3M because
3M already had a global market distribution system and because the Breathe Right strips complemented the 3M
first-aid product line.
26. Refer to the Figure. What did 3M and CNS enter?
a. a franchise
b. a licensing agreement
c. a contract manufacturing agreement
d. a joint venture

27. Which method of entering the global marketplace would be least risky?
a. exporting
b. licensing
c. contract manufacturing
d. joint ventures

28. The British can be said to be overly polite, have a love of dogs and tea, and have a unique sense of humour.
How do marketers refer to these values collectively?
a. a country’s ethical system
b. a country’s culture
c. a country’s ethnocentricity
d. a country’s socialization

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29. When Krispy Kreme decided to expand its operation internationally, it chose to first make its doughnuts
available in Canada to minimize its risk. In accordance with the policy of risk minimization, the company sold
the rights to manufacture and sell its doughnuts to Canadians. What did Krispy Kreme use?
a. contract manufacturing
b. direct investment
c. importing
d. licensing

Figure 4-3
US wine producers only export about 14 percent of their total annual production of wine. They would like to
sell more to overseas markets, but do not want to tailor their wines to consumers’ palates. For example,
Californian wines are typically heartier and richer than the wines Europeans like to drink.
30. Refer to the Figure. US wine makers are not having much success in selling their wines in Europe due to
differences in which environment?
a. demographic
b. economic
c. cultural
d. political

31. Maybelline formulated cosmetics that were designed to complement the complexions of women with
various skin types around the world. Which of the marketing mix strategies did Maybelline use?
a. countertrading
b. product adaptation
c. global market standardization
d. product licensing

32. Sony, Panasonic, and other Japanese manufacturers that build products to customer order instead of
churning out products in anticipation of demand have decided to hire Canadian companies to produce
electronics for them. The Japanese companies will handle the marketing of the products. What are the Japanese
electronics companies using?
a. contract manufacturing
b. direct investment
c. franchising
d. direct exporting

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Figure 4-7
Boeing Company has spent more than $100 million to create a major presence in China, complete with a major
office complex, a large spare-parts facility, extra training programs for Chinese air crews, and a deal to buy
fuselage sections for the 737 from local manufacturers. Asia is the fastest-growing aircraft market in the world.
Asian carriers have been a major part of Boeing’s sales; Boeing predicts 40 percent of future air-traffic growth
will come from Asia-Pacific travel, and it wants those passengers flying on Boeing jets. So Boeing is jointly
designing and building an American-Japanese-Chinese plane, all to lock out any European, South American, or
even Asian threat to its market. To keep the fate of Asian aerospace in its hands, Boeing is steadily broadening
its contractual relationship with Japan’s three major players, Mitsubishi Heavy Industries, Kawasaki Heavy
Industries, and Fuji Heavy Industries. The Japanese “heavies” make part of the airframe of the Boeing 767 and
4 percent of Boeing’s newest plane, the 777. This strategy should ensure Boeing’s dominance in Japan.
33. Refer to the Figure. Which method of entering the Japanese market has Boeing chosen?
a. dumping
b. contract manufacturing
c. licensing
d. direct investment

34. Staropramen, the second largest brewery in the Czech Republic, began brewing beer in 1842. It has agreed
to let a Polish brewery use its brand and manufacturing techniques in return for a fee. What is Staropramen
using to expand its global marketing?
a. contract manufacturing
b. exporting
c. a joint venture
d. licensing

35. To enter the Thailand market, Toyota developed the Sohana model. This vehicle is specifically designed to
withstand the driving habits and weather conditions in Thailand. It was designed to meet the vehicular needs of
the average Thai driver. Which of the marketing mix strategies did Toyota use?
a. countertrading
b. product invention
c. global market standardization
d. product licensing

36. Alcatel-Lucent and Huawei Technologies Ltd. (headquartered in China) announced they will establish an
alliance for developing ultra-broadband access solutions for markets around the world. The new company will
combine Huawei’s market-leading broadband access solutions with Alcatel-Lucent’s voice and broadband
networking technologies to create a new product designed to be a leader in the industry in value and
performance. What is another name for this alliance?
a. contract manufacturing
b. a trade bypass
c. licensing
d. a joint venture

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37. International trade does not always involve cash. Sometimes companies accept all or part of the payment for
goods or services in the form of other goods or services. What is this known as?
a. export trading
b. underground economy
c. countertrade
d. domestic barter

38. Patch Products is an Australian company that has given permission to several Latin American companies to
manufacture and market its patented Spanish/English children’s frame tray puzzles. Because Patch uses
licensing as its global marketing strategy, which of the following did it do?
a. only paid a minimal royalty to the licensed companies
b. didn’t control how the puzzles were manufactured
c. involved itself in a global marketing strategy that gave it the greatest amount of control
d. chose a method of global marketing that created minimal risk

39. Which global trade agreement was the most ambitious ever negotiated and has reduced tariffs by one-third
worldwide?
a. Uruguay Round
b. Mercosur
c. GATT
d. NAFTA

40. The same Timex, Seiko, and Citizen wristwatches you buy in North America can be purchased around the
world. Why is there is no difference in a watch purchased in Russia, in Mexico, or in Singapore?
a. The manufacturers of these watches use an ethnocentric strategy.
b. The manufacturers of these watches use a global marketing standardization approach.
c. The manufacturers of these watches use a synergistic approach to globalization.
d. The manufacturers of these watches use a cultural marketing strategy.

Figure 4-5
A price war began in Japan in the personal computer market when Dell Inc. introduced PCs at prices 25 to 60
percent lower than rivals. Dell targeted corporate customers from its Tokyo offices by “direct sales,” the
company’s preferred name for mail order and its main avenue for PC sales in North America. Japan is the
world’s second-largest market for personal computers and had been ruled by NEC Corporation, which
maintained a strong dealer network and had traditionally sold its computers at very high prices. Dell joined IBM
and Compaq in targeting the Japanese market. Dell bet it could succeed in Japan by transplanting its North
American method of operations in which the company assembles the PC to customer specifications, loads it
with software, and delivers it to the customer. The company’s success depended on its ability to sell PCs over
the telephone. Analysts doubted this was possible in Japan because dealer networks are the key to the market,
but Dell executives believed name recognition was the main hurdle. To familiarize its target market with the
idea of buying a computer sight unseen, Dell launched a major ad campaign through direct mail and ads in
computer-related magazines and newspapers.

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41. Refer to the Figure. Dell is dedicated to entering the Japanese market. Company executives believe name
recognition is the largest marketing issue. What should be the first step in creating the international marketing
mix?
a. performing marketing research
b. selecting the method of promotion
c. creating a new product
d. setting pricing policies

42. Otis Elevators has entered into a strategic alliance with a company in France from which it gets its elevator
door systems. It has a similar agreement with a manufacturer in Japan that provides it with special motor drives.
The component parts are assembled at its plant in the United States. Otis elevators can be found in buildings all
over the world. What is Otis Elevators an example of?
a. a cultural marketer
b. a global trader
c. a multinational corporation
d. a global enterprise

43. Muslim countries are receptive to most Disney products, but they have asked Disney not to include Piglet
when it sells its Winnie the Pooh characters because, as a part of their religious beliefs, Muslims contend that
pork in any form is unclean. Which type of factor is directly affecting Disney’s global operation?
a. political structure
b. cultural
c. technological
d. competitive

44. A multinational company that makes a labour-intensive product realizes that factors such as median age,
gender, and literacy rates will determine the success of its global expansion. What is the term that identifies the
makeup of countries?
a. demographics
b. lifestyle
c. ethnicity
d. culture

45. A cooperative of egg producers believes a profitable market for eggs exists overseas where people are not as
concerned about cholesterol. What would be the least complicated and least risky method for the farmers’
cooperative to use to reach a global marketplace?
a. direct investment
b. joint venture
c. contract manufacturing
d. exporting

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46. What is the goal of the Central America Free Trade Agreement (CAFTA)?
a. to create free-trade agreements between the United States and other industrialized nations
b. to eliminate all protectionism
c. to raise prosperity levels in all industrializing nations
d. to establish a free trade agreement between the United States and certain Latin American countries

Figure 4-6
CNS Inc. is the manufacturer of Breathe Right nasal strips, a spring-loaded adhesive device that can be stuck on
your nose to open up the nasal passages. Since their introduction, Breathe Right strips have been used by
athletes hoping to improve their performance through increased oxygen flow, snorers hoping for a sound night’s
sleep, and allergy and cold sufferers looking for relief from their stuffed noses. Because CNS is a small
company, it initially had trouble promoting its product. Then San Francisco 49er Jerry Rice started regularly
wearing one, and US sales took off. Today, Breathe Right strips are marketed in more than 40 countries in much
the same way. When CNS decided to expand globally, its size made it look for a partner. It chose 3M because
3M already had a global market distribution system and because the Breathe Right strips complemented the 3M
first-aid product line.
47. Refer to the Figure. In Canada, one of the standard methods for introducing a new product is couponing, but
many countries prohibit the issuing of coupons. Which element of the global environment would this
prohibition represent?
a. cultural
b. economic
c. legal
d. demographic

48. Which method of entering the global marketplace is most risky?

a. licensing
b. direct investment
c. contract manufacturing
d. joint ventures

49. What do NAFTA and the EU have in common?

a. They are both boycotts.
b. They are both regional unifications.
c. They are both market groupings.
d. They are both free trade nations.

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50. Basketball is played nearly everywhere in the world and is an easily understood sport. The National
Basketball Association (NBA) finals reached more than 600 million televisions in 195 countries. From this
information, what should you be able to infer about the NBA?
a. It is developing international selling schemes.
b. It is implementing standard international marketing.
c. It is practising global marketing.
d. It is supplementing its foreign vision.

51. Delta Galil Industries Ltd. is a clothing manufacturer based in Israel. It is responsible for making clothing
sold under the Playtex brand, Donna Karan/DKNY brand, Hugo Boss brand, and Calvin Klein brand. What
occurs when one company manufactures clothing that is sold using another company’s brand?
a. countertrading
b. joint venturing
c. direct investing
d. contract manufacturing

52. To replace GATT, which of the following did the Uruguay Round of trade negotiations create?
a. World Trade Organization
b. European Union
c. NAFTA
d. South American Free Trade Agreement

53. What is a trade agreement that includes Argentina, Bolivia, Brazil, Chile, Columbia, Ecuador, Paraguay,
Peru, and Uruguay and has eliminated the tariffs among these trading partners?
a. NAFTA
b. Maastricht
c. Mercosur
d. GATT

54. DigiSystems Inc. manufactures personal gauges for measuring contact with potentially hazardous materials.
Its management wants to expand into international markets while also limiting the risks involved. Additionally,
DigiSystems has a limited capital base for new or expanded facilities. Which of the following options for
entering international markets should DigiSystems use?
a. direct investment
b. agent manufacturing
c. joint venture
d. licensing

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55. McDonald’s used expertise developed in Brazil’s inflationary environment to deal with the economic
environment in Russia when it exhibited similar inflationary tendencies. Which of McDonald’s strategies would
this experience have most strongly influenced?
a. pricing
b. promotion
c. distribution
d. product adaptation

56. When European demand for a certain solvent declined, Dow Chemical instructed its German plant to switch
to manufacturing a chemical that had been imported from Louisiana and Texas. How would Dow Chemical best
be described?
a. as a global enterprise
b. as a global trader
c. as a cultural marketer
d. as a multinational corporation

57. Which of the following describes a common criticism of multinational companies?

a. the transference of the wrong kind of technology to a developing nation
b. the use of western workers in the third world countries
c. paying the minimum wage in whatever country they go to
d. dumping of first world excess products on to third world countries

Figure 4-7
Boeing Company has spent more than $100 million to create a major presence in China, complete with a major
office complex, a large spare-parts facility, extra training programs for Chinese air crews, and a deal to buy
fuselage sections for the 737 from local manufacturers. Asia is the fastest-growing aircraft market in the world.
Asian carriers have been a major part of Boeing’s sales; Boeing predicts 40 percent of future air-traffic growth
will come from Asia-Pacific travel, and it wants those passengers flying on Boeing jets. So Boeing is jointly
designing and building an American-Japanese-Chinese plane, all to lock out any European, South American, or
even Asian threat to its market. To keep the fate of Asian aerospace in its hands, Boeing is steadily broadening
its contractual relationship with Japan’s three major players, Mitsubishi Heavy Industries, Kawasaki Heavy
Industries, and Fuji Heavy Industries. The Japanese “heavies” make part of the airframe of the Boeing 767 and
4 percent of Boeing’s newest plane, the 777. This strategy should ensure Boeing’s dominance in Japan.
58. Refer to the Figure. The Boeing facility in China is only one branch of this huge organization. What can
Boeing be called?
a. a domestic trader
b. a cultural trader
c. a multinational corporation
d. an export agent

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59. American catfish farmers mounted an aggressive offensive against imports of catfish from Vietnam, which
have increased by over $40 million in four years. As a result of the offensive, US consumers must pay about 50
percent more for catfish imported from Vietnam. What are most likely used to make sure that Vietnamese
catfish was selling at a price comparable to US-bred catfish?
a. tariffs
b. boycotts
c. export duties
d. countertrades

60. Leuwin & Thomason is a British manufacturer of washing machines. It wants to make its products more
readily available in the United States and Canada. The company feels it is important to retain strict quality
control over its production processes and wants its global expansion to yield a high return. Which method
should Leuwin & Thomason choose to enter the global marketplace?
a. a joint venture
b. direct investment
c. licensing
d. exporting

Figure 4-6
CNS Inc. is the manufacturer of Breathe Right nasal strips, a spring-loaded adhesive device that can be stuck on
your nose to open up the nasal passages. Since their introduction, Breathe Right strips have been used by
athletes hoping to improve their performance through increased oxygen flow, snorers hoping for a sound night’s
sleep, and allergy and cold sufferers looking for relief from their stuffed noses. Because CNS is a small
company, it initially had trouble promoting its product. Then San Francisco 49er Jerry Rice started regularly
wearing one, and US sales took off. Today, Breathe Right strips are marketed in more than 40 countries in much
the same way. When CNS decided to expand globally, its size made it look for a partner. It chose 3M because
3M already had a global market distribution system and because the Breathe Right strips complemented the 3M
first-aid product line.
61. Refer to the Figure. To market the nasal strips in countries outside North America, CNS and 3M provided
the strips to national sports teams. For example, sales in South Africa took off when the entire South African
rugby team wore the strips when they won the World Cup of rugby. This example primarily illustrates the use
of which element of the global marketing mix?
a. production
b. publicity
c. promotion
d. distribution

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62. In China, August 15 is the “Chinese Saint Valentine’s Day,” in memory of two ancient lovers who were
separated by a goddess and allowed to meet only once a year on that date. Flower and candy sales typically
increase that day as they do on February 14 in North America. This would be an important part of which
international environment for a flower wholesaler or a confectionery company?
a. cultural
b. legal
c. economic
d. technological

63. Cardiac Science, a Canadian manufacturer of defibrillators, heart-monitoring devices, and other medical
related devices, sells 85 percent of its products outside Canada. It sells basically the same product to a hospital
in London, Tokyo, Pretoria, or Sydney. It uses the same promotional tactics in all of its markets. Which of the
following is true of Cardiac Science?
a. It is not concerned about media and messages used for international promotional efforts.
b. It uses global marketing standardization.
c. It assumes cultural uniformity and lifestyle differences occur across cultural settings.
d. It desires technological receptivity from country to country.

64. A cooperative of egg producers believes a profitable market for eggs exists overseas where people are not as
concerned about cholesterol. What will the cooperative most likely use if it decides to export?
a. a commission merchant
b. a drop shipper
c. an export broker
d. an export agent

65. Disney sells the rights for an investment company to run a Disneyland theme park in Tokyo. The investment
company gains most of the profits from the enterprise while paying Disney a percentage in royalties. What is
this an example of?
a. a joint venture
b. exporting
c. direct investment
d. licensing

66. Harry Potter author, J.K. Rowling has in the past allowed toy manufacturer Mattel to use the Harry Potter
logo and character likenesses in its toy designs in return for a fee. What is this known as?
a. a joint venture
b. divestment
c. licensing
d. a principal–agent agreement

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Figure 4-6
CNS Inc. is the manufacturer of Breathe Right nasal strips, a spring-loaded adhesive device that can be stuck on
your nose to open up the nasal passages. Since their introduction, Breathe Right strips have been used by
athletes hoping to improve their performance through increased oxygen flow, snorers hoping for a sound night’s
sleep, and allergy and cold sufferers looking for relief from their stuffed noses. Because CNS is a small
company, it initially had trouble promoting its product. Then San Francisco 49er Jerry Rice started regularly
wearing one, and US sales took off. Today, Breathe Right strips are marketed in more than 40 countries in much
the same way. When CNS decided to expand globally, its size made it look for a partner. It chose 3M because
3M already had a global market distribution system and because the Breathe Right strips complemented the 3M
first-aid product line.
67. Refer to the Figure. What is 3M an example of?
a. an ethnocentric organization
b. a standard international corporation
c. a multinational corporation
d. an expatriated organization

68. The Rice Millers’ Association claims that if the Japanese government would remove the tax on imported
North American rice, Japanese consumers would save $6 billion annually. What is this tax an example of?
a. an embargo
b. a tariff
c. an import quota
d. a transfer fee

69. Which of the following is an important cultural factor that should be considered by global marketers?
a. competitive values
b. language
c. natural resources
d. technology uptake

Figure 4-5
A price war began in Japan in the personal computer market when Dell Inc. introduced PCs at prices 25 to 60
percent lower than rivals. Dell targeted corporate customers from its Tokyo offices by “direct sales,” the
company’s preferred name for mail order and its main avenue for PC sales in North America. Japan is the
world’s second-largest market for personal computers and had been ruled by NEC Corporation, which
maintained a strong dealer network and had traditionally sold its computers at very high prices. Dell joined IBM
and Compaq in targeting the Japanese market. Dell bet it could succeed in Japan by transplanting its North
American method of operations in which the company assembles the PC to customer specifications, loads it
with software, and delivers it to the customer. The company’s success depended on its ability to sell PCs over
the telephone. Analysts doubted this was possible in Japan because dealer networks are the key to the market,
but Dell executives believed name recognition was the main hurdle. To familiarize its target market with the
idea of buying a computer sight unseen, Dell launched a major ad campaign through direct mail and ads in
computer-related magazines and newspapers.

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70. Refer to the Figure. Dell believed it would have a competitive advantage in Japan due to which of the
marketing mix elements?
a. product
b. use of publicity
c. pricing strategy
d. use of direct marketing

71. Which of the following statements best describes the European Union (EU)?
a. The EU creates a single Eurozone for generic Europroducts.

b. The EU removes all internal trade barriers and standardizes regulations in European countries for
easier trade.
c. The EU can be detrimental to business as not all Europeans shop alike.

d. The EU is dominated by five major countries and many much smaller countries.

72. In 1764, the British Sugar and Currency Acts created such economic difficulty in the American colonies that
soon-to-be Americans refused to buy British goods in protest. What did this refusal mark one of the first
examples of?
a. the use of a boycott
b. the use of a quota
c. the use of a tariff
d. the use of an exchange control

73. When Britain refused to buy bananas from South America, the US government, as a means of helping its
trade partners, legislated taxes on some imported British-produced goods. These taxes included a nearly 100-
percent charge on Scottish wool products. What is another term for this charge?
a. a quota
b. an export duty
c. a licence
d. a tariff

74. To enter the Hungarian market, Ernst & Young, an international accounting company, purchased an existing
accounting firm. How did Ernst & Young enter the Hungarian market?
a. through contract marketing
b. through direct investment
c. through franchising
d. through direct exporting

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75. Monroe plans to market its shock absorbers in several different global markets. It plans to rely on extensive
advertising. Before implementing this plan, what should its advertising manager be aware of?
a. Globally, the least standardized of all advertising media is the newspaper.
b. Some cultures view a product as having less value if it has to be advertised.
c. Language barriers and translation are rarely a problem.
d. The hard-sell tactics used in North America work well around the world.

76. Rolex has decided to market its new sports watch product line using a uniform strategy. How else could
such a strategy be described?
a. a traditional marketing strategy
b. a global marketing standardization approach
c. a product extension approach
d. a culturally based marketing strategy

77. The United States is selling more domestically produced products in other countries than any other country
in the world. This means the United States is the world leader in which of the following?
a. quota making
b. exporting
c. tariff trading
d. dumping

78. A Brazilian-based office-supply distributor wishes to close a deal for advertising space in a major Argentine
newspaper. The office-supply distributor is strapped for cash but would like to run weekly quarter-page ads in
the newspaper. The newspaper needs office supplies for its employees. The Brazilian supplier knows the
Argentine economy is going through a period of inflation and the value of its money is falling. Which of the
following strategies should the Brazilian office-supply distributor implement?
a. Let the Argentine newspaper pay for its office supplies in Argentine currency over a period of years.
b. Don’t close the deal because the Argentines don’t have any way to pay.
c. Use a countertrade agreement.
d. Create a general trade agreement with the Argentine newspaper.

Figure 4-4
Nigeria has about 3,500 kilometres of railroad, but years of neglect of both the rolling stock and the right-of-
way have seriously reduced the capacity to use the system. In part as the result of the failure of the railroad
system, many of its 193,000 kilometres of roads are also barely usable.
79. Refer to the Figure. What information do you know about Nigeria?
a. Nigeria’s physical infrastructure is inadequate.
b. Nigeria’s technological development is faster than other developing nations due to need.
c. Nigeria’s government structure is shaped by political policies such as quotas and exchange controls.
d. Nigeria’s business community is advancing rapidly towards Western norms.

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80. Which of the following can be used to explain how Ford Motor Company benefited from investing $60
million to produce small cars in a Mexico City manufacturing plant?
a. Mercosur
b. the European Union
c. NAFTA
d. the Uruguay Round

81. A deodorant manufacturer wants to expand its marketing in Southeast Asia, but it has found research that
shows fewer than 10 percent of people in those countries use deodorant daily. Assuming this information is
true, which of the following marketing-mix strategies would the deodorant manufacturer NOT use?
a. countertrading
b. product invention
c. global market standardization
d. product adaptation

82. Since 1953, the United States has limited the amount of raw peanuts that can be imported to 1.7 million
pounds a year. This is only about 0.1 percent of all domestic edible peanut consumption in the United States.
What is this limitation an example of?
a. a natural resource barrier
b. a quota
c. a tariff
d. an exchange control

Figure 4-6
CNS Inc. is the manufacturer of Breathe Right nasal strips, a spring-loaded adhesive device that can be stuck on
your nose to open up the nasal passages. Since their introduction, Breathe Right strips have been used by
athletes hoping to improve their performance through increased oxygen flow, snorers hoping for a sound night’s
sleep, and allergy and cold sufferers looking for relief from their stuffed noses. Because CNS is a small
company, it initially had trouble promoting its product. Then San Francisco 49er Jerry Rice started regularly
wearing one, and US sales took off. Today, Breathe Right strips are marketed in more than 40 countries in much
the same way. When CNS decided to expand globally, its size made it look for a partner. It chose 3M because
3M already had a global market distribution system and because the Breathe Right strips complemented the 3M
first-aid product line.
83. Refer to the Figure. The same Breathe Right nasal strip you can buy in any pharmacy in North America can
also be purchased in 40 other countries. Which type of strategy did CNS use?
a. mass marketing
b. product invention
c. market substitution
d. global market standardization

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84. Refer to the Figure. How people value a sound night’s sleep is an example of which element of the global
environment?
a. culture
b. natural
c. socioeconomic
d. technical

85. What is the term for a global intermediary that operates primarily in agriculture and raw materials by
bringing the buyer and seller together?
a. buyer for export
b. export agent
c. license agent
d. export broker

86. When developing countries began encouraging foreign investors and imports, companies like Black &
Decker and Pillsbury were excited because they saw huge sales potential. However, in addition to total
population and factors such as distribution of people within a country and household incomes, which of the
following factors must these companies NOT overlook?
a. demographic
b. political
c. cultural
d. educational

87. An English manufacturer of cricket equipment sells directly to Universal Sports, which markets the products
in Canada. What is the English manufacturer using?
a. a strategic alliance
b. licensing
c. franchising agreements
d. exporting

88. Honda Canada produces its vehicles to standards and specifications set by Honda’s Japanese headquarters.
What is this also known as?
a. importing
b. joint venturing
c. direct investing
d. contract manufacturing

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Figure 4-5
A price war began in Japan in the personal computer market when Dell Inc. introduced PCs at prices 25 to 60
percent lower than rivals. Dell targeted corporate customers from its Tokyo offices by “direct sales,” the
company’s preferred name for mail order and its main avenue for PC sales in North America. Japan is the
world’s second-largest market for personal computers and had been ruled by NEC Corporation, which
maintained a strong dealer network and had traditionally sold its computers at very high prices. Dell joined IBM
and Compaq in targeting the Japanese market. Dell bet it could succeed in Japan by transplanting its North
American method of operations in which the company assembles the PC to customer specifications, loads it
with software, and delivers it to the customer. The company’s success depended on its ability to sell PCs over
the telephone. Analysts doubted this was possible in Japan because dealer networks are the key to the market,
but Dell executives believed name recognition was the main hurdle. To familiarize its target market with the
idea of buying a computer sight unseen, Dell launched a major ad campaign through direct mail and ads in
computer-related magazines and newspapers.
89. Refer to the Figure. Dell’s decision to market PCs by phone in Japan mirrors its marketing strategy in North
America. Which concept does this suggest Dell believes in?
a. cultural marketing
b. global marketing standardization
c. traditional marketing concepts
d. combination marketing

Figure 4-2
When IKEA, the Swedish home furnishings retailer, first entered the Japanese market, it failed. It was more
successful in its second try because it was aware of the need to adapt its furnishings to fit the smaller Japanese
homes.
90. Refer to the Figure. IKEA’s success on its second foray into Japan was based on its ability to give the
Japanese consumer what he or she needed without abandoning its product strategy. IKEA had to adopt which of
the following as a strategy?
a. product substitution
b. market differentiation
c. product adaptation
d. product invention

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Figure 4-7
Boeing Company has spent more than $100 million to create a major presence in China, complete with a major
office complex, a large spare-parts facility, extra training programs for Chinese air crews, and a deal to buy
fuselage sections for the 737 from local manufacturers. Asia is the fastest-growing aircraft market in the world.
Asian carriers have been a major part of Boeing’s sales; Boeing predicts 40 percent of future air-traffic growth
will come from Asia-Pacific travel, and it wants those passengers flying on Boeing jets. So Boeing is jointly
designing and building an American-Japanese-Chinese plane, all to lock out any European, South American, or
even Asian threat to its market. To keep the fate of Asian aerospace in its hands, Boeing is steadily broadening
its contractual relationship with Japan’s three major players, Mitsubishi Heavy Industries, Kawasaki Heavy
Industries, and Fuji Heavy Industries. The Japanese “heavies” make part of the airframe of the Boeing 767 and
4 percent of Boeing’s newest plane, the 777. This strategy should ensure Boeing’s dominance in Japan.
91. Refer to the Figure. Boeing has utilized a global vision in marketing its planes in Asia. The company
realizes different countries require different strategies but that effective global marketing is a key to success.
What is Boeing practising?
a. global marketing
b. international marketing
c. uniform marketing
d. international marketing vision

Figure 4-2
When IKEA, the Swedish home furnishings retailer, first entered the Japanese market, it failed. It was more
successful in its second try because it was aware of the need to adapt its furnishings to fit the smaller Japanese
homes.
92. Refer to the Figure. Which environment had the greatest influence on IKEA’s first failure in Japan?
a. demographic
b. economic
c. cultural
d. political

93. How can a Canadian licensor try to prevent a licensee from voiding its contract and using what it has learned
to create a competitor?
a. by using lawyers from both countries to write the licensing agreement

b. by insisting that all licensees have a published code of ethics

c. by having the licensee pay a fee for the use of the manufacturing process, trademark, patent, or other
proprietary knowledge
d. by locally registering patents and trademarks to the Canadian firm—not the licensee

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94. Big Brother, Survivor, and Wipeout are just some of the popular television shows that have been exported to
foreign markets. The formats and rules are adhered to very closely, but the television shows will vary tone,
lighting, greetings, and pace just enough to captivate local audiences. What is this an example of?
a. product adaptation
b. product divestment
c. product penetration
d. market substitution

95. Zambia is internationally recognized as the world’s second leading producer of cobalt, which is used to
make high-speed and high-temperature cutting tools and dyes. A company that wanted to manufacture tools for
shaping steel would be most attracted to which element of the Zambian environment?
a. culture
b. legal
c. economic
d. natural resources

Figure 4-7
Boeing Company has spent more than $100 million to create a major presence in China, complete with a major
office complex, a large spare-parts facility, extra training programs for Chinese air crews, and a deal to buy
fuselage sections for the 737 from local manufacturers. Asia is the fastest-growing aircraft market in the world.
Asian carriers have been a major part of Boeing’s sales; Boeing predicts 40 percent of future air-traffic growth
will come from Asia-Pacific travel, and it wants those passengers flying on Boeing jets. So Boeing is jointly
designing and building an American-Japanese-Chinese plane, all to lock out any European, South American, or
even Asian threat to its market. To keep the fate of Asian aerospace in its hands, Boeing is steadily broadening
its contractual relationship with Japan’s three major players, Mitsubishi Heavy Industries, Kawasaki Heavy
Industries, and Fuji Heavy Industries. The Japanese “heavies” make part of the airframe of the Boeing 767 and
4 percent of Boeing’s newest plane, the 777. This strategy should ensure Boeing’s dominance in Japan.
96. Refer to the Figure. The new American-Japanese-Chinese plane Boeing plans to design and build gives
partial ownership to the manufacturing partners involved in the project. What is this an example of?
a. direct investment
b. a joint venture
c. buying-for-export agreements
d. a contract manufacturing agreement

97. An Italian clothing manufacturer is considering the use of contract manufacturing so that it can expand in
Indonesia. It has found a contract manufacturer in Indonesia that appears to be able to handle the job. If the
manufacturer does use the Indonesian manufacturer, it will also need to do which of the following?
a. design a new Indonesian logo for its products
b. determine the best location to build a manufacturing facility in Indonesia
c. set up a marketing division in Indonesia
d. plan the pricing and promotional mix for the contract manufacturer to use

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98. Argentina has restrictions against “big-box” retail stores like The Home Depot. The only way these retail
operations can open a store in Argentina is if they do not sell either clothing or food. Also, at least 50 percent of
all merchandise sold in the stores must be manufactured in Argentina. Which type of environment is influencing
globalization in this example?
a. economic
b. technological
c. legal
d. cultural

99. Once marketing managers have determined a global product and promotion strategy, they can select the
remainder of the marketing mix. Why does entry into many developing nations present special pricing
problems?
a. the rate of capital accumulation exceeds the rate of population growth
b. exchange rates fluctuate
c. price discrimination
d. lack of mass purchasing power

100. Marlin manufactures washing machines. It is designing advertisements and planning the promotional mix
for marketing in Eastern Europe, South Africa, India, and Brazil. Which of the following should the advertising
manager NOT expect to cause problems?
a. media availability
b. government regulations
c. exchange control
d. cultural differences

101. The Canadian magazine industry accused US magazine publishers selling the magazines in Canada at a
lower price than in the United States. What is the name for this practice?
a. dumping
b. offloading
c. boycotting
d. repatriating

102. Which of the following is NOT created by vast differences in natural resources?
a. potential for military intervention
b. shifts in wealth between nations
c. inflation and recession
d. export opportunities for countries with no natural resources

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103. Jim Beam Distillery launched a Pan-European campaign across 28 markets from Russia to Scandinavia and
into southern Europe to reposition its bourbon. It focused on finding men in bars and featuring them in local
print ad campaigns as “real friends” of Jim Beam. Such an ambitious ad campaign could be threatened by which
of the following changes in the legal environment?
a. negative changes in how Europeans perceive alcohol
b. an inflationary period, which makes drinking expensive bourbon a luxury item
c. the enactment of a quota limiting how much Jim Beam can be imported
d. a dramatic increase in the number of alcoholics in Europe

Figure 4-4
Nigeria has about 3,500 kilometres of railroad, but years of neglect of both the rolling stock and the right-of-
way have seriously reduced the capacity to use the system. In part as the result of the failure of the railroad
system, many of its 193,000 kilometres of roads are also barely usable.
104. Refer to the Figure. What are companies hoping to do business in Nigeria most likely concerned with?
a. production
b. promotion
c. place utility
d. distribution

Figure 4-1
After the fall of communism in the Czech Republic, the government privatized the brewing industry and created
71 new small breweries. In spite of the fact that Czechs consume more beer per person than the populations of
most other nations of the world, the country still had overcapacity. The breweries were small and financially
struggling.
105. Refer to the Figure. Who could the breweries hire within the Czech Republic to serve as intermediaries and
export Czech beer to foreign markets?
a. export merchants
b. import agents
c. export agents
d. commission agents

106. Which of the following statements best describes multinational firms?

a. Multinationals typically do not change their methods of reaching their global markets if they are
successful with their initial strategy.
b.Multinationals are defined as companies heavily engaged in exporting and importing.

c. All multinationals must enter the fourth stage of globalization before they are fully internationalized.

d.Multinationals often develop their global businesses in stages.

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107. Once a firm has decided on which method to use to enter a global market and evaluated the various
external variables, it is ready to create a marketing mix. What is the first step in creating the global marketing
mix?
a. create a new product
b. select the method of promotion
c. collect and analyze market research information
d. decide whether product modification is necessary

108. Japanese consumers have experienced more than a decade of recession and deflationary pressures. What
would this condition most likely impact for Japanese consumers?
a. their purchasing power
b. their salary elasticity
c. their disposable income
d. their government benefits

109. Which of the following statements describes one of the benefits of increased globalization?
a. Millions of Canadians have filled jobs created by imports and production shifts abroad.
b. Because of world trade, Canadians have seen price reductions in certain products.
c. Because jobs are threatened by exports, employers are issuing pay-cut demands to their workers.
d. Export jobs typically pay less money than other jobs.

110. Head and Shoulders shampoo advertises its dandruff-control shampoo worldwide using the same “boy
meets girl” ad campaign, no matter where it wants to market its product. Which strategy is this an example of?
a. product and message extension
b. market substitution
c. product adaptation
d. one product, one message

111. According to an article in the Financial Times, bringing Coca-Cola to the Chinese market presented a
special challenge to the soft-drink manufacturer. This challenge most likely had to do with which element of the
marketing mix?
a. production
b. direct marketing
c. distribution
d. pricing

112. Pillsbury has developed different products for its various global markets. Which of the following
statements offers a likely reason for its use of product invention?
a. Manufacturers cannot protect product designs with patents in other nations.
b. Globalization allows for rapid delivery of new products.
c. Consumers in different countries use products differently.
d. Various cultures respond to advertising messages differently.

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113. In 1994 an agreement was signed by 148 nations designed to lower trade barriers worldwide. The
agreement reduced tariffs by one-third worldwide—a move that was expected to raise global income by $235
billion annually. By what name was this agreement known?
a. Mercosur covenant
b. CAFTA Alliance
c. Dough Round
d. Uruguay Round

Figure 4-5
A price war began in Japan in the personal computer market when Dell Inc. introduced PCs at prices 25 to 60
percent lower than rivals. Dell targeted corporate customers from its Tokyo offices by “direct sales,” the
company’s preferred name for mail order and its main avenue for PC sales in North America. Japan is the
world’s second-largest market for personal computers and had been ruled by NEC Corporation, which
maintained a strong dealer network and had traditionally sold its computers at very high prices. Dell joined IBM
and Compaq in targeting the Japanese market. Dell bet it could succeed in Japan by transplanting its North
American method of operations in which the company assembles the PC to customer specifications, loads it
with software, and delivers it to the customer. The company’s success depended on its ability to sell PCs over
the telephone. Analysts doubted this was possible in Japan because dealer networks are the key to the market,
but Dell executives believed name recognition was the main hurdle. To familiarize its target market with the
idea of buying a computer sight unseen, Dell launched a major ad campaign through direct mail and ads in
computer-related magazines and newspapers.
114. Refer to the Figure. Which method of entry has Dell chosen for the foreign market?
a. dumping
b. contract manufacturing
c. joint venture
d. direct investment

115. Mattel lost millions of dollars on its international marketing campaign for Holiday Barbie dolls because the
dolls were being sold for $24.00, and this figure was expressed in US dollars without regard for how it would
translate into foreign currencies. The dolls were too expensive for most international markets. Which of
Mattel’s strategies was faulty?
a. pricing
b. countertrading
c. diversification
d. product

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116. Which of the following statements best describes the use of the Internet in global marketing?
a. Global consumers are much more interested in buying quality than finding a bargain when they shop
on the Internet.
b. The new Internet economy is being restrained by the old bricks-and-mortar rules, regulations, and
habits.
c. Businesses are not shopping at Internet websites.

d. Buyers at Internet sites avoid trade restrictions.

117. Which of the following best describes global marketing standardization?

a. is becoming less popular with the large multinationals
b. encourages product, packaging, and advertising variations for each nation or local market
c. raises production costs
d. presumes markets throughout the world are becoming more alike

118. Honda specifically created the Acura brand for the North American market to take in to account market
differences. What strategy is Honda using?
a. product invention
b. product extension
c. market substitution
d. market adaptation

119. General Motors has just sold a new line of robots to manufacture cars to Indian auto company Tata Motors.
This purchase can be described as capital intensive. What will this mean for Tata Motors?
a. Tata Motors will have an altered fiscal strategy for overseas operations.
b. Tata Motors will spend more on equipment than on labour.
c. Tata Motors will make better use of benchmarking than other types of business.
d. Tata Motors will create employment monopolies.

Figure 4-1
After the fall of communism in the Czech Republic, the government privatized the brewing industry and created
71 new small breweries. In spite of the fact that Czechs consume more beer per person than the populations of
most other nations of the world, the country still had overcapacity. The breweries were small and financially
struggling.
120. Refer to the Figure. What was the most logical method for the breweries to use in selling their beer in other
nations?
a. contract manufacturing
b. licensing
c. franchising agreements
d. exporting

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Figure 4-5
A price war began in Japan in the personal computer market when Dell Inc. introduced PCs at prices 25 to 60
percent lower than rivals. Dell targeted corporate customers from its Tokyo offices by “direct sales,” the
company’s preferred name for mail order and its main avenue for PC sales in North America. Japan is the
world’s second-largest market for personal computers and had been ruled by NEC Corporation, which
maintained a strong dealer network and had traditionally sold its computers at very high prices. Dell joined IBM
and Compaq in targeting the Japanese market. Dell bet it could succeed in Japan by transplanting its North
American method of operations in which the company assembles the PC to customer specifications, loads it
with software, and delivers it to the customer. The company’s success depended on its ability to sell PCs over
the telephone. Analysts doubted this was possible in Japan because dealer networks are the key to the market,
but Dell executives believed name recognition was the main hurdle. To familiarize its target market with the
idea of buying a computer sight unseen, Dell launched a major ad campaign through direct mail and ads in
computer-related magazines and newspapers.
121. Refer to the Figure. The fact that Japanese consumers do not buy through the methods typically used by
Dell is an example of how global marketing is influenced by which environmental influence?
a. legal
b. economic
c. technological
d. cultural

122. The fact that Nigeria’s inflation rate has dropped by almost 2.5 percent since the beginning of this decade
would be what type of factor for a company that wanted to do business in that country?
a. legal
b. economic
c. cultural
d. technological

123. Which of the following is an example of a product strategy that would be appropriate for a global
marketing company to implement?
a. product adaptation
b. product divestment
c. product penetration
d. market substitution

124. Folk-guitar manufacturer, Play-Guitars sells its guitars in its home country for at least $1000.00. To get a
hold of the Canadian market, Play-Guitars sold its products for $500.00. What is this known as?
a. export re-engineering
b. crossdocking
c. boycotting
d. dumping

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125. What are individuals and organizations who utilize a global vision to effectively market goods and services
across national boundaries engaged in?
a. practising international selling schemes
b. implementing standard international marketing
c. implementing global marketing standardization
d. practising global marketing

126. Shark fin soup is illegal in Canada. Furthermore any products that come from shark finning are also illegal.
This means that these products are not allowed in Canada. What has the Canadian government imposed?
a. an expropriation
b. a quota
c. a tariff
d. a boycott

127. Mitsubishi Heavy Industries and Kawasaki Heavy Industries produce McDonnell Douglas’s F-15 fighter
planes in Japan. The two Japanese companies pay McDonnell Douglas royalties for use of its manufacturing
processes and patents. What is this an example of?
a. contract manufacturing
b. strategic investment
c. joint venture
d. licensing

128. There are two components to teaching a class about using the Internet—the content that is being taught and
the context in which the content is being taught. Open-ended, participative workshops don’t work as well in
cultures such as Japan and Holland where people feel threatened by uncertain or unknown factors. Motivational
techniques that work well in individualistic cultures (like Canada) are guaranteed to alienate collective cultures
(like India). What will a company marketing international Internet classes need to use when designing the
context of its courses?
a. product empathy
b. product divestment
c. product penetration
d. product invention

129. Tim Hortons allows its franchisees to use its logo, plus its buying and negotiating prowess in return for a
fee. What is this also known as?
a. outsource contract marketing
b. international exporting
c. licensing
d. agent manufacturing

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130. With which of the following does a domestic firm assume an equity position (partial ownership) in a
foreign firm to manufacture and/or market the domestic company’s goods?
a. direct investment
b. a joint venture
c. a buying-for-export agreement
d. a contractual agreement

131. Which of the following is a law that compels a company earning foreign currency from its exports to sell it
to a central bank rather than sending the money out of the country?
a. a tariff
b. a quota
c. a fiscal prerequisite
d. an exchange control

132. Foreign sales agents-distributors who live in a foreign country and represent a domestic company in sales
situations perform the same functions as domestic manufacturers’ agents who help with financing and shipping.
What are they called?
a. export agents
b. export brokers
c. import brokers
d. buyers for export

133. An English manufacturer of cricket equipment sells directly to Universal Sports, which markets the
products in Canada. What is Universal Sports an example of?
a. a franchisee
b. a contract broker
c. an export agent
d. a contract manufacturer

134. A Canadian citizen, Daya Kaur was excited to purchase over 10,000 Fender amplifiers from the United
States. She intended to sell them to Canadian music stores. One thing she didn’t take in to account when
working out her profit margins was the tax that would be levied on the amplifiers as they entered Canada. What
is another name for these taxes?
a. licences
b. quotas
c. transfer limits
d. tariffs

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135. British Telecom is heavily engaged in trade throughout Europe and the far-east. It is able to shift resources,
goods, services, and skills across national borders. What type of organization is it?
a. international facilitator
b. global trader
c. multinational corporation
d. exporter

136. Currency markets operate under a system in which the prices of different currencies move up or down
based on the demand for and supply of each currency. What is this practice called?
a. countertrading
b. floating exchange rates
c. variable purchasing power
d. flexible monetary policies

137. Procter & Gamble’s Vidal Sassoon shampoo smells the same worldwide, but the amount of scent used
varies from country to country. This is an example of which type of marketing mix strategy?
a. product trading
b. product invention
c. product adaptation
d. product licensing

138. What is the term for an intermediary in the global market who assumes all risks and sells globally for its
own account, and who is treated by the domestic manufacturer like a domestic customer?
a. buyer for export
b. export agent
c. joint venture
d. contract manufacturer

139. Which of the following statements best describes global marketing?

a. Marketing throughout the world has become optional for businesses.
b. Often a Canadian firm’s toughest foreign competition comes from domestic companies.
c. Firms must develop a global vision to expand internationally and remain competitive at home.
d. Global marketing cannot offset weak domestic performance.

140. FedEx entered into an alliance with Chronopost Internationale, a subsidiary of the French post office.
Under this alliance, FedEx will transport French international shipments in its aircraft, and the French postal
service will deliver FedEx packages across Europe. What is this an example of?
a. contract manufacturing
b. a trade bypass
c. licensing
d. a joint venture

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141. Caterpillar Inc. is the world’s largest manufacturer of earth-moving and construction equipment. Kirovsky
is a large Russian manufacturer of the same type of products. When the two companies created Nevamash, a
new company, what were they entering?
a. an import/export partnership
b. a countertrade
c. a disintermediation agreement
d. a joint venture

142. The Czech Republic began producing pilsner beer in 1846 and is proud of its brewing heritage. To further
its global marketing strategy, Nomura Securities, a Japanese investment company, purchased the two largest
breweries in the nation. What is this an example of?
a. a joint venture
b. direct investment
c. licensing
d. contract manufacturing

143. As a global marketing strategy, which of the following requires active ownership (either a controlling
interest or large minority interest) of a foreign company or overseas manufacturing or marketing facilities?
a. market grouping
b. import brokering
c. export subsidizing
d. direct investment

144. A Canadian executive had no idea the Japanese go through a very elaborate ritual when exchanging
business cards. When he arrived at a meeting in Tokyo, he sat down and tossed some of his business cards
across the table at a group of stunned Japanese businesspeople. Due to the Canadian executive’s rudeness, the
multimillion-dollar deal failed. The executive overlooked the importance of which environmental factor?
a. culture
b. demographics
c. politics
d. subculture

145. A business thinking of expanding into global markets needs to examine its external environment. Which of
the following options is NOT part of the external environment?
a. culture
b. political structure and actions
c. marketing mix
d. demographic makeup

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146. The European Union accused South Korea of selling ships at a loss in an attempt to push its European
rivals out of the market. What was South Korea accused of?
a. dumping
b. illegal importing
c. countertrading
d. fiscal impropriety

147. US wine producers export only about 14 percent of their total annual production of wine. What does this
statement indicate about the US wine industry?
a. It is selling more wine abroad than it does at home.
b. It is an industry in the first stages of globalization.
c. US customers prefer international wines to domestic wines.
d. It is producing more wine than it can sell.

148. Which of the following statements best describes the political environment?
a. A recession is part of the political environment.

b. A country is either socialistic or capitalistic, but never both.

c. The countries with the fewest across-the-board regulations and political structures foster the strongest
economies.
d. The European Union is purely an economic arrangement and has no political impact on marketing.

149. Which of the following is true of the pricing component of the global marketing mix?
a. It’s the same in domestic and foreign markets.
b. It’s fairly simplistic due to the strength of the US dollar abroad.
c. It’s the easiest element to implement successfully.
d. It’s a complex matter due to tariffs, exchange rates, and government regulations.

150. Goodyear Tire and Rubber Company provided China with the materials and training needed to establish a
printing plant in exchange for finished labels that Goodyear attaches to its tires. What is this an example of?
a. exchange control
b. price control
c. exchange adaptation
d. countertrade

151. What are negotiations (such as GATT or NAFTA) between countries that are made to stimulate global
exchange and remove barriers?
a. trade agreements
b. joint venture agreements
c. CRM agreements
d. exchange agreements
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152. A soft-drink manufacturer that was thinking of investing in a bottling plant in the Czech Republic should
know the nation is proud of the fact it is among the world’s biggest beer drinkers. On average, Czechs consume
half a litre of beer a day for every man, woman, and child in the country. Which environment of this country
could very easily prevent the soft-drink bottling company from succeeding?
a. demographic
b. economic
c. cultural
d. political

153. The manufacturer of Marlboro cigarettes has given Japan Tobacco the legal right to use its trademarks and
patents to manufacture Marlboro cigarettes in Japan. For this right, Japan Tobacco pays a fee. To enter an
international market, what did the manufacturer of Marlboro cigarettes use?
a. licensing
b. exporting
c. contract manufacturing
d. direct investment

154. Malaysia supplied India with palm oil (from six state-owned companies) worth $121 million in exchange
for a contract awarded to the Indian Railway Construction International Company. It will lay 31.5 kilometres of
tracks in the southern Malaysian state of Johor. Which of the following will give India palm oil and Malaysia
new rail lines?
a. export trade
b. crossdock plan
c. countertrade
d. domestic barter

155. Which of the following di the North American Free Trade Agreement (NAFTA) NOT do?
a. Create the world’s largest free-trade zone.
b. Reduce economic growth in Mexico substantially.
c. Allow Canadian financial-services companies to own Mexican subsidiaries.
d. Remove many tariffs so that Mexico and Canada could trade freely.

Figure 4-3
US wine producers only export about 14 percent of their total annual production of wine. They would like to
sell more to overseas markets, but do not want to tailor their wines to consumers’ palates. For example,
Californian wines are typically heartier and richer than the wines Europeans like to drink.

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156. Refer to the Figure. Which type of strategy do US wine producers need to adopt if they hope to reach more
of the global market?
a. product substitution
b. market differentiation
c. message adaptation
d. product adaptation

157. What is the role of a domestic company that sells to an export merchant (also called a buyer for export)?
a. to guide the marketing actions of the merchant as the goods are sold in foreign countries

b. to pay all transportation, warehousing, and marketing expenses

c. to sell the product to a merchant who resells the product in the foreign country without the aid or input
of the original manufacturer
d. to broker a partnership agreement such as a joint venture

158. A Canadian citizen, Daya Kaur was excited to purchase over 30,000 Fender amplifiers from the United
States. She intended to sell them to Canadian music stores. Her excitement was cut short when Canadian
Customs informed her that she was only allowed to bring in 10,000 units. What was Canada Customs
imposing?
a. a quota
b. a tariff
c. a boycott
d. a transfer limit

Figure 4-7
Boeing Company has spent more than $100 million to create a major presence in China, complete with a major
office complex, a large spare-parts facility, extra training programs for Chinese air crews, and a deal to buy
fuselage sections for the 737 from local manufacturers. Asia is the fastest-growing aircraft market in the world.
Asian carriers have been a major part of Boeing’s sales; Boeing predicts 40 percent of future air-traffic growth
will come from Asia-Pacific travel, and it wants those passengers flying on Boeing jets. So Boeing is jointly
designing and building an American-Japanese-Chinese plane, all to lock out any European, South American, or
even Asian threat to its market. To keep the fate of Asian aerospace in its hands, Boeing is steadily broadening
its contractual relationship with Japan’s three major players, Mitsubishi Heavy Industries, Kawasaki Heavy
Industries, and Fuji Heavy Industries. The Japanese “heavies” make part of the airframe of the Boeing 767 and
4 percent of Boeing’s newest plane, the 777. This strategy should ensure Boeing’s dominance in Japan.
159. Refer to the Figure. Which method of entering the Chinese market has Boeing chosen?
a. dumping
b. contract manufacturing
c. licensing
d. direct investment

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160. Some companies find it possible to create a successful global marketing mix strategy through an altered
communication strategy. Which of the following is an example of such a strategy?
a A clothing manufacturer had to create a more durable fabric for its line of work clothes because clothing
. is worn much longer between washings in some countries outside North America,.
b A bicycle manufacturer learned the same model of bicycle, which is promoted for leisure riding in
. North America, is excellent for basic transportation in other countries.
c Goodyear developed specialized tires for Peruvian roads and weather conditions.
.
d Rubbermaid created different-sized dish drainers to meet the needs of consumers in different countries.
.

161. Which of the following has NOT been a result of petroleum shortages?
a. the creation of huge amounts of wealth for oil-producing countries such as Norway and Saudi Arabia

b. the inability of oil-producing nations to service foreign debts when prices go up

c. the capacity for some countries such as Mexico and Venezuela to borrow heavily against oil reserves
to develop more rapidly
d. inflation in oil-dependent nations and transfer of wealth to oil-producing nations

162. An important factor in the global external environment that has become more evident in the past decade is
the shortage of natural resources. Choose two different natural resources and describe how shortages of each of
these resources affect global trade.

163. Three international legal structures designed to limit trade are tariffs, quotas, and boycotts. Define and
differentiate these three structures. Give one specific example of each.

164. Global marketers must be careful when considering the demographic characteristics of different countries.
Why is total population an insufficient indicator of market potential? What other demographic factors should be
considered in addition to or instead of population?

165. Assume you are the president of a company that manufactures wooden bowls, cutting boards, and spoons.
Your company is considering marketing its kitchen items globally. List four important external environmental
factors that should be examined for each country you are considering for this global venture.

166. Briefly define licensing and joint ventures as means of engaging in global marketing. Be sure to
demonstrate both the similarities of the two processes and how they differ.

167. What is a market grouping? Describe the best-known market grouping.

168. Often it is difficult for a firm to obtain adequate global distribution. Compare and contrast the difficulties of
distributing in Japan and China.

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169. Describe the four stages of business globalization. Why do most companies stop when they reach the third
stage?

170. Briefly define exchange controls and trade agreements. Make sure that your answer demonstrates how the
two terms differ from each other.

171. Define and describe exporting. Briefly describe the two types of export intermediaries.

172. Global legal structures are designed to either encourage or limit trade. Identify five of these legal structures.
Briefly define each structure named.

173. What is the fourth stage of business globalization? Describe companies that are most likely to reach this
stage of globalization.

174. Traditionally, marketing-oriented multinational corporations have operated differently in each country,
with segmentation strategies that provided different marketing mixes. Today, there has been a trend toward
global marketing standardization. What is global marketing standardization? Can companies truly follow the
basic premise of the global marketing standardization concept?

175. Assume you are a global marketing consultant for a Canadian manufacturer of light fixtures and have been
asked to name the available options or methods of entry into the global marketplace. Name five methods of
entry in the order of high risk/high return to low risk/low return for the lighting company.

176. Why is developing a global vision important for firms in Canada?

177. The pricing component of the marketing mix presents some unique problems and challenges in global
marketing. Name and discuss three pricing considerations unique to global marketing.

178. Describe a multinational corporation (MNC). Name two MNCs you are familiar with.

179. Assume you are the promotions manager for a lingerie company. Your company has decided to market its
product line in Brazil, Mexico, Italy, France, and Japan. Your company wishes to use a global marketing
standardization strategy. In general terms, explain how your company would advertise in these different
countries.

180. Explain the following statement: “The Internet economy is being restrained by the old bricks-and-mortar
rules, regulations, and habits.”

181. Assume you are the marketing manager for a leading Canadian manufacturer of earth-moving equipment.
Your company would like to become heavily involved in global marketing (especially in India) but has some
capital limitations. Your job is to evaluate whether it should use contract manufacturing or direct investment.
Compare and contrast these two options and make a recommendation.

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Answer Key
1. False

2. True

3. False

4. True

5. True

6. True

7. True

8. False

9. False

10. True

11. False

12. True

13. True

14. True

15. False

16. True

17. True

18. False

19. True

20. False

21. False

22. False

23. d

24. a

25. c
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26. d

27. a

28. b

29. d

30. c

31. b

32. a

33. b

34. d

35. b

36. d

37. c

38. d

39. a

40. b

41. a

42. c

43. b

44. a

45. d

46. d

47. c

48. b

49. c

50. c

51. d
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52. a

53. c

54. d

55. a

56. d

57. a

58. c

59. a

60. b

61. c

62. a

63. b

64. c

65. d

66. c

67. c

68. b

69. b

70. a

71. b

72. a

73. d

74. b

75. b

76. b

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77. b

78. c

79. a

80. c

81. c

82. b

83. d

84. a

85. d

86. a

87. d

88. d

89. b

90. c

91. a

92. c

93. d

94. a

95. d

96. b

97. c

98. c

99. d

100. c

101. a

102. d
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103. c

104. d

105. a

106. d

107. c

108. a

109. b

110. d

111. c

112. c

113. d

114. d

115. a

116. b

117. d

118. a

119. b

120. d

121. d

122. b

123. a

124. d

125. d

126. d

127. d

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128. d

129. c

130. b

131. d

132. a

133. c

134. d

135. c

136. b

137. c

138. a

139. c

140. d

141. d

142. b

143. d

144. a

145. c

146. a

147. b

148. c

149. d

150. d

151. a

152. c

153. a
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154. c

155. b

156. d

157. c

158. a

159. d

160. b

161. b

162. Petroleum shortages have caused the transfer of wealth from Japan, the United States, and Western Europe
to Norway, Saudi Arabia, and the United Arab Emirates. Other countries such as Indonesia, Mexico, and
Venezuela were able to borrow heavily against oil reserves in order to develop more rapidly.

Lack of water will mean that many of Africa’s countries will remain importers of foodstuffs because of low
agricultural production. The United States, on the other hand, relies on Africa for precious metals, while Japan
depends on the United States for timber and logs.

163. Tariff: A tax levied on the goods entering a country. For example, Canadian softwood lumber imported into
the United States faces tariffs as high as 27 percent.

Quota: A limit on the amount of a specific product that can enter a country. Quotas are usually sought as a
means of protection from foreign competition. The United States has strict quotas on the importation of textiles,
sugar, and dairy products.

Boycott: An exclusion of all products from certain countries or companies. Governments employ boycotts to
exclude business with companies from countries with which they have a political difference. Several Arab
nations boycotted Coca-Cola because it maintained distributors in Israel.

164. Whether the population is urban or rural is a significant demographic consideration because marketers may
not have access to many rural consumers. Another important factor is the amount of income within a country. In
addition to the per capita income, the distribution of this income should be considered because often wealth is
not evenly distributed. The rise of a global middle class should also be considered. Finally, the economic
development of the nations should be considered.

165. 1. culture
2. level of economic and technological development
3. political structure
4. demographic makeup
5. natural resources

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166. Both are effective methods for a firm to move into the global market.

Licensing is a legal process whereby a licensor agrees to let another firm use its manufacturing processes,
trademarks, patents, trade secrets, or other knowledge of a proprietary nature. The licensee then agrees to pay
the licensor a royalty or fee. This method has lower risk than direct or contract manufacturing. Franchising is
one form of licensing that has grown rapidly in global markets in recent years.

Joint ventures are similar to licensing agreements, except that the domestic firm assumes an equity position
(partial ownership) in the foreign company. This is more risky but gives management a voice in company
affairs that it might not have under licensing.

167. A market grouping, or common trade alliance, occurs when several countries agree to work together to
form a common trade area that enhances trade opportunities.

One of the best-known market groupings is the European Union (EU). The goal of the EU is to remove trade
barriers among member nations to create a truly integrated market with free flow of goods, capital, and labour.
This will create a unified market of millions of consumers and, it is hoped, lead to more competitive European
industries.

168. The Japanese distribution system may be the most complicated in the world. Imported goods must travel
through many layers of intermediaries. The channels are based on historical and traditional patterns of socially
arranged trade-offs that are difficult for the government to change. In addition, retail establishments are very
different.

China’s roads are below Western standards, and airfreight is rarely available. Most products are transported by
truck and train, but determining which truckers are reliable is difficult. In the rail system, theft is a problem.

169. Multinationals often develop their global business in stages. In the first stage, companies operate in one
country and sell into another. Second-stage multinationals set up foreign subsidiaries to handle business in one
country. In the third stage they operate an entire line of business in another country. The fourth stage has
evolved primarily due to the Internet. Generally, only high-tech companies can ever reach this stage. For these
firms the executive suite is virtual.

170. Exchange controls limit global trade, while trade agreements encourage global trade.
Exchange control: A law compelling a company earning foreign exchange from its exports to sell it to a control
agency such as a central bank. A company wishing to buy goods abroad must first obtain foreign exchange from
the control agency. Generally, exchange controls limit the importation of luxuries by way of rationing money to
buy them. This type of control is prevalent in China.

Trade agreement: An agreement to stimulate global trade such as the Uruguay Round, which created the World
Trade Organization that replaced GATT. Not all government efforts are meant to stifle imports or investment by
foreign corporations. The WTO is an organization whose objective is to increase global trade by lowering tariffs
and reducing other trade barriers. Other countries (such as the United States, Canada, and Mexico with
NAFTA) have signed trade agreements to increase global trade. Mercosur is the trade agreement including
Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, and Uruguay.

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171. Exporting is selling domestically produced products in another country. It is the least complicated and least
risky alternative for entering the global market.

A company deciding to export can sell directly to foreign importers or buyers, or it may sell to independent
exporting intermediaries located in its domestic market. The most common intermediary is the export merchant,
or a buyer for export. This intermediary is treated like a domestic customer; the buyer assumes all risks and sells
globally for its own account. Export brokers operate primarily in agriculture and raw materials. Export agents
include foreign sales agent-distributors and purchasing agents of foreign customers.

172. Tariff: A tax levied on the goods entering a country.

Quota: A limit on the amount of a specific product that can enter a country.
Boycott: An exclusion of all products from certain countries or companies.
Exchange control: A law compelling a company earning foreign exchange from its exports to sell it to a control
agency such as a central bank.
Trade agreement: An agreement to stimulate international trade such as the General Agreement on Tariffs and
Trade (GATT) or the North American Free Trade Agreement (NAFTA).
Market grouping: Trade alliances such as the European Union in which several countries agree to work together
to form a common trade area that enhances trade opportunities.

173. The fourth stage has evolved primarily due to the Internet. Generally, only high-tech companies ever reach
this stage. For these firms, the executive suite is virtual. The top executives and corporate functions are in
different countries, wherever the firms can gain a competitive edge through the availability of talent, capital,
low costs, or proximity to their most important customers. Good examples of fourth-stage internationals are any
companies that supply computer tech services or other computer-related products.

174. Global marketing standardization presumes world markets are becoming more alike. Communication and
technology have made the world smaller, so people everywhere want all the things they have heard about, seen,
or experienced. Therefore, serving global markets with standardized consumer products on a large scale is an
alternative to marketing global products on a segmentation basis. Firms practising global marketing
standardization produce “globally standardized products” to be sold the same way all over the world.

True global marketing standardization is not entirely evident because marketing mix variations still exist.
However, companies are moving toward variations of global marketing in which marketing mix modifications
are kept to a minimum. While marketing mixes can be similar, variations in products, pricing, promotional
copy, and distribution types may be necessary for each country.

175. See Exhibit 4.1 (textbook page 53).

1. direct investment
2. joint venture
3. contract manufacturing
4. licensing
5. export

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176. Foreign competition is found in almost every industry. In fact, Canada has lost market share to imported
products in many industries. Canadian managers must develop a global vision not only to recognize and react to
international marketing opportunities, but also to remain competitive at home. Often a Canadian firm’s toughest
domestic competition comes from foreign companies. A global vision also enables managers to understand that
customer and distribution networks operate worldwide. Adopting a global vision can be lucrative for a
company, and in some industries a global vision is a business imperative.

177. Additional costs: Exporters must not only cover production costs but also consider transportation costs,
insurance, taxes, and tariffs.

Pricing for developing nations: Because developing nations lack mass purchasing power, prices may have to be
lowered substantially. Firms should not assume these countries will be willing to accept lower quality in
exchange for lower price.

Dumping: Some companies that overproduce items end up dumping them in the global market. These products
are sold either below cost or below their sale price in their domestic market. This can cause unfair competition.
Dumping of products by foreign producers is illegal in Canada and Europe but is not controlled in other nations.

Countertrade/barter: Pricing may not involve cash exchanges; about 30 percent of global trade involves
countertrade (barter), or the exchange of one product for another. Companies must determine the value of goods
they are trading.

178. A company that is heavily engaged in international trade is called a multinational corporation (MNC). This
type of firm moves resources, goods, services, and skills across national boundaries without regard to the
country in which the headquarters is located. Most multinational corporations are enormous. Examples include
General Motors, Hewlett-Packard, Nortel, BASF, Xerox, Dow Chemical, Procter & Gamble, Ford Motor, and
Walmart.

179. Global marketing standardization indicates the global promotions strategy should be “one product, one
message.” In this case, marketers should attempt to standardize as much of their advertisements as possible.
Advertising elements (such as a model or picture) should have universal appeal so they can appear in many
different countries. Commercials with no voiceover or dialogue will not need translation, while print ads could
share the same pictures and models and just use translated copy. Care should be taken that advertising elements
are not culturally offensive in the different countries.

180. Before addressing this, students will need to understand that bricks-and-mortar refer to traditional
distribution systems where the seller has a physical presence that is visited by the buyer. There are several
examples in the text, which show how trade regulations (Germany not allowing Lands’ End to mention its
refund policy on its website), cultural habits (Japanese do not use credit cards), and tariffs, quotas, and other
legal restrictions prevent the Internet from becoming borderless commerce.

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181. Contract manufacturing is private-label manufacturing by a foreign company. The foreign company
produces a certain volume of products to specification, with the domestic firm’s brand name affixed to the
goods. The domestic company usually handles the marketing. This method carries medium levels of risk and
return.

Direct foreign investment is complete or majority ownership of manufacturing and marketing subsidiaries in
foreign countries. This option offers the greatest potential rewards but carries the highest risk.

The Canadian manufacturer should consider contract manufacturing for two reasons: (1) the company has a
well-established brand name that would be easily recognized on the foreign goods and (2) contract
manufacturing will enable the firm to broaden its global marketing base without direct investment of limited
capital in plant and equipment.

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