This Document Contains Chapters 1 to 3 Chapter 1: Global Environmental Drivers TRUE/FALSE 1. International marketing is unable to retain the basic marketing tenets of value and exchange. Answer: False 2. It is in the domestic marketing field where one can observe most closely the role of marketing as a key agent of societal change. Answer: False 3. Only those who participate in the transactions are exposed to international marketing and subject to its changing influences. Answer: False 4. To achieve success in the art of international marketing, it is necessary to be firmly grounded in its scientific aspects. Answer: True 5. World trade has assumed an importance heretofore unknown to the global community and as a result, many countries and firms have found it highly desirable to become major participants in international marketing. Answer: True 6. International specialization and cross-sourcing have made production much more efficient. Answer: True 7. The network of global linkages that bind us all as a result of world trade were first recognized during the rebuilding of Europe after WWII. Answer: False 8. World trade has brought about a global reorientation of corporate processes. Answer: True 9. Due to ongoing global technological innovation in marketing, products are distributed at a higher cost. Answer: False 10. Global investment strategies, coupled with production and distribution sharing, increase the challenge of staying in a leadership position. Answer: True 11. The level of global investment has resulted in a decrease in international debt by governments. Answer: False 12. Currency flows and exchange rates have a greater effect on trade than government monetary policies. Answer: True 13. The level of trade is now determined by exchange rates. Answer: True 14. Trade flows outnumber currency flows by 100 to 1. Answer: False 15. Constant rapid technological change and vast advances in communication permit firms and countries to quickly emulate innovation and counteract carefully designed plans. Answer: True 16. Policymakers restrict the impact of global trade and financial flows by eliminating tariffs and quotas. Answer: False 17. Market saturation can be avoided by lengthening or rejuvenating product life cycles in other countries. Answer: True 18. Many firms do not participate in the global market because their managers believe that international marketing should only be carried out by large multinational corporations. Answer: True 19. Firms are fairly consistent in their international activities because of the similarities in their levels of experience, resources, and capabilities. Answer: False 20. The role of government in the marketplace is decreasing dramatically. Answer: False MULTIPLE CHOICE 1. Which of the following best defines international marketing? a. It is the process of planning and conducting economic forecasting in developing countries. b. It is the process of creating a subsidiary in a neighboring country. c. It consists of the activity, institutions, and processes across national borders that create, communicate, deliver, and exchange offerings that have value for stakeholders and society. d. It is the process of hiring employees from other countries to assist with advertising messages, public communication, and the building of overall awareness. Answer: C 2. Which of the following is a form of international marketing? a. Government-owned operations b. Inter-state trade c. Joint ventures d. Putting-out system Answer: C 3. Export-import trade, licensing, joint ventures, wholly owned subsidiaries, turnkey operations, and management contracts are examples of: a. global positioning systems. b. outsourcing. c. regional agreements. d. international marketing. Answer: D 4. International marketing differs from domestic marketing in that international marketing has different: a. marketing principles. b. tenets of value and exchange. c. applications, complexity, and intensity. d. social responsibilities. Answer: C 5. Which of the following is true of an international marketer? a. An international marketer faces the same macroenvironmental factors as a domestic marketer. b. An international marketer and a domestic marketer are subject to a similar set of constraints. c. An international marketer has to understand that basic marketing principles differ in different markets. d. An international marketer needs to face conflicts resulting from different laws, cultures, and societies. Answer: D 6. Which of the following is true of international marketing? a. The international marketer is faced with often inconsistent legal systems when it comes to monitoring environmental pollution. b. International marketing does not retain the basic marketing tenets of value and exchange. c. International marketing does not focus on stakeholders and society whose present positions are to be improved. d. The international marketer is subject to the same set of macroenvironmental factors as a domestic marketer. Answer: A 7. Which of the following statements is true about the role of international markets? a. Those who do not participate in the transactions are not exposed to international marketing and are not subject to its changing influences. b. International markets can become a source of needs satisfaction. c. International markets cannot influence the quality of life of individuals. d. International markets can simplify the process and eliminate complex business decisions. Answer: B 8. Which of the following new technologies has allowed consumers to supply and receive products from across the world for personal use? a. Travelogues on cable television b. The Internet c. Automated pensions and individual retirement accounts d. Newly created niche markets Answer: B 9. Which of the following is true about the importance of world trade? a. World trade has deeply affected domestic policymaking and has often resulted in the emergence of totally new threats to firms and individuals. b. The growth of domestic economies has typically outperformed global growth of trade in the past few decades. c. When firms invest on a global scale, it is difficult for entire industries to shift their locations. d. Due to the severe recession that affected much of the world’s economy in 2008 and 2009, world trade could not rebound in 2010. Answer: A 10. The trading bloc NAFTA is located in ____________. a. Asia b. Europe c. South America d. North America Answer: D 11. The trading bloc MERCOSUR is located in ____________. a. Europe b. Latin America c. North America d. Asia Answer: B 12. The trading bloc ASEAN is located in ____________. a. Asia b. Europe c. North America d. South America Answer: A 13. Which of the following is true of world trade? a. World trade has deeply affected domestic policymaking. b. World trade has led to an increase in the role of primary commodities in international trade. c. World trade has decreased the challenge of companies to stay in leadership position. d. World trade has resulted in the decrease of international debt by governments. Answer: A 14. World trade has forged a network of global linkages that bind us all—countries, institutions, and individuals—much more closely than ever before. These linkages were first widely recognized during the: a. worldwide oil crisis of 1970. b. Gulf War II. c. 1994 economic crisis. d. financial crisis that was triggered in 2007. Answer: A 15. As a result of the March 2011 earthquake and tsunami off the northeastern coast of Japan, the “just in time” supply chains of the ____________, semiconductor, smartphone, digital camera, and personal computer industries were immediately jeopardized around the world. a. textile b. automotive c. healthcare d. cosmetic Answer: B 16. Which of the following is true of global linkages? a. Global linkages were first widely recognized during the 1994 economic crisis. b. Global linkages led to the strengthening of the “just in time” supply chains around the world. c. Global linkages have had no impact on far-away countries that consider themselves distant and independent of any particular economic event. d. Global linkages have become more intense on an individual level. Answer: D 17. Which of the following is true regarding technological innovation? a. Technological innovation has complicated the production process. b. Technological innovation has increased demand, therefore products are distributed at a higher cost. c. Technological innovation allows for customization in order to meet diverse clients’ needs. d. Technological innovation enables greater access to raw materials around the world which in turn increases production costs. Answer: C 18. Advances in technology have: a. complicated the distribution channel thereby making distribution a lengthy process. b. allowed firms to separate their activities by content and context. c. enabled firms to operate in a marketplace rather than a market space. d. made the procurement of raw materials an expensive process. Answer: B 19. The emergence of technology has created new markets for companies. Which of the following represents an example of this new tendency? a. The construction of corner drugstores that replace gas stations b. Listing of ingredients on the side panel labels of products distributed worldwide c. Newspapers being distributed online globally d. Storage facilities rented on a monthly basis Answer: C 20. The shifts in financial flows due to global investments have resulted in: a. more complex procedures to avail foreign capital. b. more foreign-direct activities. c. decreased international debts by governments. d. increased rates of unemployment. Answer: B 21. The International Monetary Fund (IMF) was founded to: a. manage monetary policies around the world. b. help restructure impoverished economies. c. provide infrastructural and medical aid to developing countries. d. provide financial assistance to developing countries for development programs. Answer: B 22. The ____________, which was founded in 1944, has recently been assisting nations that used to be categorized as “wealthy.” a. International Monetary Fund b. World Trade Organization c. World Health Organization d. European Union Answer: A 23. Which of the following is true about global investments? a. They have brought about interdependence between nations which is stable in nature. b. They have made past trade orientations more relevant in today’s changing times. c. They have reduced the role of manufactured goods and services in the international market. d. They have made it increasingly difficult to differentiate between “rich” and “poor.” Answer: D 24. Which of the following has traditionally been a domestic issue and is now an international issue? a. Geographic boundaries of cities b. The flow of water through dam diversion tunnels c. Applications for government subsidies d. Agriculture and farm policies affecting imports and exports Answer: D 25. Independent of trade, currency flows set ____________ rates, which are the values of currencies relative to each other. a. prime lending b. interest c. discount d. exchange Answer: D 26. Which of the following is true regarding the domestic repercussions of global linkages? a. Policymakers find it easier to isolate domestic economic activity from international market events. b. Governments have gained more power to implement effective policy measures. c. Private-sector financial flows exceed the financial flows that can be marshaled by the government. d. Policymakers have more effective tools but less responsibilities to carry out. Answer: C 27. By erecting barriers, designing quotas, and implementing other import regulations, governments have attempted to: a. prevent illegal trade across borders. b. restrict the impact of global trade and financial flows. c. increase the income of the government. d. capitalize on technology and enforce worldwide standards. Answer: B 28. To regain some power to influence events, policymakers have sought to restrict the impact of global trade and financial flows by: a. minimizing barriers. b. charging tariffs. c. canceling import regulations. d. limiting quotas. Answer: B 29. Which of the following is true about closer global linkages and domestic policy makers? a. They have more effective tools to carry out their responsibilities. b. They find themselves with decreasing responsibilities. c. They find it easy to distinguish between domestic and international economic activities. d. They have imposed import regulations to restrict the impact of global trade. Answer: D 30. Measures such as quotas and import regulations have been restrained by international agreements that regulate trade restrictions, particularly through the ____________. a. World Bank b. United Nations Trade Mission c. World Trade Organization d. IMF Answer: C 31. One way to guard against market saturation of a product is to: a. lower interest rates. b. delay introduction of a new product. c. personalize the message to the customer. d. lengthen or rejuvenate product life cycles in other countries. Answer: D 32. Which of the following mistakes committed by firms leads to inefficiency, lack of consumer acceptance, and sometimes even corporate failure? a. Overbudgeting the overhead costs in international markets b. Transferring knowledge around the globe c. Lengthening product life cycles in other countries d. Believing that international customers are just like the ones the firm deals with at home Answer: D ESSAY 1. Why is international marketing important to the growth of global and domestic companies? Answer: International marketing consists of the activity, institutions, and processes across national borders that create, communicate, deliver, and exchange offerings that have value for stakeholders and society. Global linkages have made possible investment strategies and marketing alternatives that offer tremendous opportunities for companies. To benefit from the opportunities and deal with the adversities of international trade, firms need to prepare themselves and develop active responses, envision new strategies, make new plans, and change the way of doing business. The growth of global business activities offers increased opportunities. By transferring knowledge around the globe, an international firm can build and strengthen its competitive position. Firms that heavily depend on long production runs can expand their activities far beyond their domestic markets and benefit from reaching many more customers. Market saturation can be avoided by lengthening or rejuvenating product life cycles in other countries. Cooperative agreements can be formed that enable all parties to bring their major strengths to the table and emerge with better products, services, and ideas. 2. What are the domestic policy repercussions of global linkages? Answer: The effects of closer global linkages on the economics of countries have been dramatic. Policymakers have increasingly come to recognize that it is very difficult to isolate domestic economic activity from international market events. Constant rapid technological change and vast advances in communication permit firms and countries to quickly emulate innovation and counteract carefully designed plans. As a result, governments are often powerless to implement effective policy measures even when they know what to do. Policymakers therefore find themselves with increasing responsibilities yet with fewer and less effective tools to carry out these responsibilities. At the same time that more parts of a domestic economy are vulnerable to international shifts and changes, these parts are becoming less controllable. The global market imposes increasingly tight limits on national economic regulation and sovereignty. 3. What are the opportunities that international marketing provides? Answer: The growth of global business activities offers increased opportunities.Firms that heavily depend on long production runs can expand their activities far beyond their domestic markets and benefit from reaching many more customers. Market saturation can be avoided by lengthening or rejuvenating product life cycles in other countries. Production sites once were inflexible, but now plants can be shifted from one country to another, and suppliers can be found on every continent. Cooperative agreements can be formed that enable all parties to bring their major strengths to the table and emerge with better products, services, and ideas than they could produce on their own. Chapter 2: International Trade Frameworks and Policy TRUE/FALSE 1. Common coinage was developed in ancient Rome to ensure that business transactions could easily be carried out throughout the empire. Answer: True 2. The feudal system encouraged the development of an open-state economy. Answer: False 3. The Smoot-Hawley Act reduced duties to increase the volume of imports into the United States. Answer: False 4. The belief that international trade was a key to worldwide prosperity led the United States to create a “Pax Americana.” Answer: True 5. The MFN is the equal opportunity clause of international trade. Answer: True 6. In the sugar and confectionery industries, tariffs tend to decrease with the degree of processing. Answer: False 7. The WTO has ceased to exist as a separate institution and has become part of the GATT. Answer: False 8. The original goal of the International Monetary Fund (IMF) was to provide for variable exchange rates between member countries. Answer: False 9. The World Bank was initially formed in 1944 to aid countries suffering from the destruction of war. Answer: True 10. The Transatlantic Business Dialogue (TBD) is a nongovernmental organization composed of business leaders from Europe and the United States. Answer: True 11. Over the long term, the export activities of a nation are the key to the inflow of imports and therefore to the provision of choice, competition, and new insights. Answer: True 12. The availability of a large U.S. domestic market and the relative distance to foreign markets resulted in U.S. manufacturers simply not feeling a compelling need to seek business beyond national borders. Answer: True 13. One key way to reduce trade deficits is to decrease exports. Answer: False 14. The competitive pressures exerted by imports work to keep quality high and prices low. Answer: True 15. Foreign direct investments tend to be equally distributed across all industries. Answer: False 16. A restriction of foreign direct investments will result in less domestic control over industries. Answer: False 17. The United States often attempts to transfer its own trade laws abroad, resulting in bilateral conflicts. Answer: True 18. Government support in the form of export promotion assistance is appropriate if it increases market transparency. Answer: True 19. The U.S. need is for reactive, ad hoc trade responses to specific situations. Answer: False 20. In order to be successful in international trade, policymakers must be willing to trade off long-term goals to achieve short-term objectives. Answer: False MULTIPLE CHOICE 1. Which of the following measures by the Roman Empire contributed to the functioning of the international marketplace and to the reduction of business uncertainty? a. The marching of its legions and warfare b. An excellent communication system c. Provision of mixed aid credits by the empire d. Development of a closed-state economy in the empire Answer: B 2. The evolution of European feudalism was due to a function of ____________. a. finance and banking b. trade and marketing c. environmental and cultural differences d. public administration and governance Answer: B 3. Which act raised duties to reduce the volume of imports into the United States, in the hopes that this would restore domestic employment? a. The Export Trading Company Act b. The Gramm-Leach-Bliley Act c. The Sarbanes-Oxley Act d. The Smoot-Hawley Act Answer: D 4. The Soviet Union, as the leader of the Eastern bloc, developed the ____________, which focused on developing strong linkages among the members of the Soviet bloc and discouraged relations with the West. a. Gulf Cooperation Council b. Transatlantic Business Dialogue c. MERCOSUR d. Council for Mutual Economic Assistance Answer: D 5. The ____________ has its origins in the GATT, to which it became the successor organization in January of 1995. a. IMF b. WTO c. World Bank d. MERCOSUR Answer: B 6. Which of the following began in 1947 as a set of rules for nondiscrimination, transparent procedures, and settlement of disputes in international trade? a. The Free Trade Area of the Americas b. The General Agreement on Tariffs and Trade c. The North American Free Trade Agreement d. The General Agreement on Trade in Services Answer: B 7. Which of the following statements about the GATT is true? a. Services and agriculture were the main areas covered by GATT. b. It began as a set of rules for settlement of disputes in domestic trade. c. It was designed to operate by consensus. d. Over time, it evolved into an institution that focused on increasing the prevailing low tariffs. Answer: C 8. The WTO is responsible for all of the following except ____________. a. GATS b. TRIPS c. TRIMS d. IMF Answer: D 9. Which of the following statements about the WTO is true? a. Provisions are made at the WTO for decisions to be made by majority vote if a consensus cannot be achieved. b. A successful WTO may well endorse the sovereignty of nations. c. The original goal of the WTO was to provide for fixed exchange rates between countries. d. Outside groups such as nongovernmental organizations believe the WTO will assist their causes. Answer: A 10. What is the core mission of the WTO? a. To provide for general difficulties in the market entry of foreign products b. To provide preferential treatment to domestic bidders over foreign bidders c. To facilitate international trade and investment d. To deal with social causes and issues such as labor laws and competition Answer: C 11. Which of the following statements about the IMF is true? a. The IMF contributed toward providing international liquidity and toward facilitating international trade. b. In light of the worldwide slowdown of economies and the financial crisis, the IMF focused on its traditional customers of the developed markets and economies. c. In order to ensure that a local stimulus would not be suffocated by global restrictions, the IMF minimized simultaneous expansions in economies. d. The original goal of the IMF ensured variable exchange rates between countries. Answer: A 12. How much funding was required from members during the creation of the International Monetary Fund? a. Twenty-five percent in gold or dollars, the rest in the members’ local currency b. Twenty-five percent in commodities, the rest in American dollars c. Twenty-five percent in dollars, the rest in members’ local currency or gold d. Twenty-five percent in gold, the rest in American dollars or the members’ local currency Answer: A 13. The International Bank for Reconstruction and Development is also known as the ____________. a. Export-Import Bank b. UNDP c. World Bank d. IMF Answer: C 14. The European Union is an example of a(n) ____________. a. economic bloc b. export consortium c. multilateral negotiation d. nontariff barrier zone Answer: A 15. Which of the following integrates the economic and political activities of nations? a. Political reforms b. Export consortia c. Economic blocs d. Born globals Answer: C 16. Which currency is most accepted worldwide? a. The euro b. The U.S. dollar c. The Japanese yen d. The British Pound Answer: B 17. What is the term used for a firm founded with a global scope in mind from the very beginning? a. Global b. Economic bloc c. Multinational d. Born global Answer: D 18. ____________ are special because they can affect currency values and the fiscal and monetary policies of governments, shape public perception of competitiveness, and determine the level of imports a country can afford. a. Protectionistic laws b. Mixed aid credits c. Exports d. Nontariffs Answer: C 19. Which of the following statements is true about foreign direct investment? a. Foreign investments may result in growing concern among policymakers about dependency on foreign owners. b. The United States is the sole foreign direct investor in the world. c. Foreign affiliates are not participants of trade. d. Foreign direct investment tends to be distributed equally across all industries. Answer: A 20. When a company expands its market by offering its products to international customers, it can produce more of its products efficiently, thus reducing the overall cost of each individual unit. This is known as ____________. a. product diversification b. product differentiation c. economies of scale d. monopolistic competition Answer: C 21. Which of the following statements is true about exports? a. Exports are important in a microeconomic sense, in terms of balancing the trade account. b. Exporting ultimately leads to a firm achieving diseconomies of scale. c. Exporting results in a firm being overly dependent on a particular market. d. Exporting makes a firm sensitive to different demand structures and cultural dimensions. Answer: D 22. Which of the following is the result of a country’s decision to impose restrictions on its foreign direct investments? a. Free access to foreign capital b. Lower interest rates c. Tightened credit markets d. Decreased domestic market share Answer: C 23. How has the U.S. Congress responded in light of persistent trade deficits, growing foreign direct investment, and the tendency of some firms and industries to seek legislative redress for failures in marketplace? a. It left all trade decisions to be made by the WTO. b. It organized a ban of imported products which compete with longstanding companies. c. It provided more powers to the president to restrict trade. d. It declared “war” on countries that restricted foreign direct investments. Answer: C 24. “Voluntary” import restraints have been used mainly in areas such as textiles, automobiles, and steel, and are intended to ____________. a. help domestic companies regain their trade prominence of years past b. show good political citizenship by members c. penalize exporters of raw materials d. situate the imports as a political component as opposed to a trade embargo Answer: A 25. Meat-eats, a business entity located in Miami has recently started promoting “Buying U.S.A.,” a campaign that focuses on the purchase of meat products that are manufactured exclusively in the United States. This campaign would be projected as ____________. a. a nontariff barrier to trade b. poor public relations c. significantly helping the international global market d. increasing the levels of global competition Answer: A 26. Providing preferential treatment to domestic bidders over foreign bidders, using national standards that are not comparable to international standards, placing emphasis on design rather than performance, and providing for general difficulties in the market entry of foreign products are all examples of ____________. a. import/export quotas b. protectionistic legislation c. mixed aid credits d. nontariff barriers Answer: D 27. The Export-Import Bank of the United States gives loans known as ____________ that are composed partially of commercial interest rates and partially of highly subsidized developmental aid interest rates. a. untied aid credits b. mixed aid credits c. payday loans d. title loans Answer: B 28. When U.S. firms work together to establish export promotion development, as allowed by the Export Trading Company Act of 1982, the companies are in effect forming a(n) ____________. a. trading treaty b. trade promotion authority c. export consortia d. export diversification Answer: C 29. The disappointment with past trade negotiations is mainly the result of ____________. a. lack of funds b. low global competitiveness c. excessive competitiveness d. overblown expectations Answer: D 30. The authority to negotiate international agreements with a reasonable certainty that the negotiation outcome will not be subject to minute amendments must be given by Congress to the ____________. a. judiciary b. business leaders c. functional intermediaries d. executive branch Answer: D 31. Trade negotiations that are conducted between two nations are known as ____________. a. coalition pacts b. multilateral treaties c. bilateral negotiations d. negotiation frameworks Answer: C 32. Which of the following gave Congress the right to accept or reject trade treaties and agreements, but reduced the amendment procedures? a. Protectionistic legislation b. Trade promotion authority c. Judicial immunity d. Export consortia Answer: B 33. What must policymakers do for trade and investment negotiations between countries to be long-lasting? a. Appoint taxing authority from an outside third nonexclusive country. b. Total cost of policy measures affecting trade and investment should be ignored. c. Trade off short-term achievements for long-term goals. d. Implement profit booking in the short term. Answer: C 34. When economic coordination between trading partners continues, leading trading nations will ____________. a. propagate increased competitiveness b. exploit the dollar and devalue it in relation to the euro c. compromise the WTO charter d. lose their national sovereignty to some degree Answer: D 35. Policymakers will be sufficiently responsive in setting international trade policy objectives that increase opportunities for firms and choices for consumers when ____________. a. the voices of retailers, consumers, wholesalers, and manufacturers are heard b. all nations adopt the IMF treaty c. the WTO imposes sanctions on nonresponsive countries d. a performance plan is developed to adhere to customer feedback Answer: A ESSAY 1. How did international trade affect the rise and fall of the Roman Empire? Answer: One of the major world powers in ancient history was the Roman Empire. Its impact on thought, knowledge, and development can still be felt today. Even while expanding their territories through armed conflicts, the Romans placed primary emphasis on encouraging international business activities. The principal approaches used to implement this emphasis were the Pax Romana, or the Roman Peace, and common coinage. The Pax Romana ensured that merchants were able to travel safely on roads. The common coinage ensured that business transactions could be carried out easily throughout the empire. The immense growth of the Roman Empire occurred through the linkages of business rather than through the marching of its legions and warfare. When the outside tribes attacked the empire, the Roman empire was already substantially weakened, because former allies no longer saw any advantage in being associated with the Romans and willingly cooperated with the invaders. This indicates that international trade played a major role in world history, especially with the Roman Empire. 2. Explain the significance of the World Bank. Answer: The World Bank’s official name is the International Bank for Reconstruction and Development. It was formed in 1944 to aid countries suffering from the destruction of war. After completing this process most successfully, it has since taken on the task of aiding world development. With new nations emerging from the colonial fold of the world powers of the early twentieth century, the bank has made major efforts to assist fledgling economies to participate in a modern economic trade framework. More recently, the bank has begun to participate actively with the IMF to resolve the debt problems of the developing world and to bring a market economy to the former members of the Eastern bloc.Major debates surround the effectiveness of the bank’s expenditures. The World Bank tries now to reorient its outlook, focusing more on capacity building and the development of human capital through investments into education and health. Key performance criteria are now the sustainability of growth and development, addressing higher commodity prices, agricultural assistance in times of higher food prices, opening world trade to all countries, and greater participation of rising economic powers and developing nations in the bank’s governance. As it approaches its major challenge of reducing global poverty, the World Bank “delivers technical, financial, and other assistance to those most in need and where it can have the greatest impact and promote growth: to the poorest countries, fragile states, and the Arab World; to middle-income countries; to solving global public goods issues; and to delivering knowledge and learning services.” 3. Describe the significance of export promotion efforts. Answer: Many countries provide export promotion assistance to their firms. Key reasons for such assistance are the national need to earn foreign currency, the encouragement of domestic employment, and the increase in domestic economic activity. Many forms of export promotion can be seen as government distortion of trade because government support simply results in a subsidization of profitability or reduction of risk. Yet there are instances where such intervention may be justified. Government support can be appropriate if it annuls unfair foreign practices, increases market transparency and therefore contributes to the better functioning of markets, or helps overcome, in the interest of long-term national competitiveness, the short-term orientation of firms. The U.S. Department of Commerce provides companies with an array of data on foreign trade and marketing developments. Its Commercial Service provides a link with U.S. businesses in terms of information flow and market assistance. Efforts are made to coordinate the activities of diverse federal agencies. An official interagency advocacy network was created that helps U.S. companies win overseas contracts for large government purchases abroad. A variety of agencies now collaborate in order to continue to improve services to U.S. exporters.Many countries also provide substantial levels of private-sector support. A new focus has come about in the area of export financing. Policymakers have increasingly recognized that U.S. business may be placed at a disadvantage if it cannot meet the subsidized financing rates of foreign suppliers. The Export-Import Bank of the United States, charged with the mission of aggressively meeting foreign export-financing conditions, has in recent years even resorted to offering mixed aid credits. The bank has also launched a major effort to reach out to smaller-sized businesses and assist in their export success. Tax legislation that inhibited the employment of Americans by U.S. firms abroad has also been altered to be more favorable to U.S. firms. One other export-promotion development was the passage of the Export Trading Company Act of 1982. Intended to be the U.S. response to Japanese sogoshoshas, or international trading firms, this legislation permits firms to work together to form export consortia. The basic idea was to provide the foreign buyer with a one-stop shopping center in which a group of U.S. firms could offer a variety of complementary and competitive products. By exempting U.S. firms from current antitrust statutes, and by permitting banks to cooperate in the formation of these ventures through direct capital participation and the financing of trading activities, the government hoped that more firms could participate in the international marketplace. Chapter 3: The Role of Culture TRUE/FALSE 1. Culture is unidimensional consisting of a single independent element. Answer: False 2. Acculturation is the process of adjusting and adapting to a specific culture other than one’s own. Answer: True 3. Japanese culture emphasizes the individual’s development rather than the group within which the individual works. Answer: False 4. In a low-context culture, the context is as important as what is actually said. Answer: False 5. Cultural universals are manifestations of the total way of life of any group of people. Answer: True 6. Language is the mirror of culture. Answer: True 7. Companies that tend to do the best job at web globalization are those that view themselves as domestic companies with foreign customers. Answer: False 8. Religion affects the marketing of products and service delivery. Answer: True 9. Attitudes are evaluations of alternatives based on values. Answer: True 10. Understanding manners and customs is completely irrelevant in negotiations. Answer: False 11. In domestic markets, colors have more symbolic value than in international markets. Answer: False 12. Secondary reference groups include family and coworkers. Answer: False 13. Experiential knowledge is obtained from others through communication, research, and education. Answer: False 14. The United States is associated with low individualism and masculinity. Answer: False 15. Communication content depends on the product’s or policy’s relative advantage over existing alternatives. Answer: True 16. Individualism has a negative relationship with acceptance of new products. Answer: False 17. Ethnocentrism is the belief that all cultures are equally important. Answer: False 18. Sensitivity training focuses on exposing a manager to a different cultural environment for a specific time span. Answer: False 19. Field experience exposes a manager to a different cultural environment for a limited amount of time. Answer: True 20. Establishing local ties during the market-development cycle develops relationships that can counter political risk. Answer: True MULTIPLE CHOICE 1. Which of the following is true about culture? a. It pertains only to the group being analyzed and does not translate to another group. b. It has been shown that newborns have an understanding of their culture from birth and therefore it is hereditary. c. It is inherently conservative, resisting change and fostering continuity. d. It is difficult to articulate because culture has no distinguishing characteristics. Answer: C 2. The process of adjusting and adapting to a specific culture other than one’s own is termed as ____________. a. cultural imperialism b. ethnocentrism c. acculturation d. back-translation Answer: C 3. Which of the following statements about high- and low-context cultures is true? a. In high-context cultures, most of the information is contained explicitly in the words. b. In low-context cultures, criticism is more subtle and is recorded formally. c. In high-context cultures, the speaker and the listener rely on a common understanding. d. In low-context cultures, context is at least as important as what is actually said. Answer: C 4. Marketers who bring about cultural change through dramatic campaigns without the adaptation to culture-specific elements can be accused of cultural ____________. a. relativism b. diffusion c. revolution d. imperialism Answer: D 5. The manifestations of the total way of life of any group of people are referred to as cultural ____________. a. universals b. imperialism c. convergences d. relativism Answer: A 6. ____________ provides the basis for transcultural similarities under shared beliefs and behavior. a. Language b. Social infrastructure c. Religion d. Education Answer: C 7. Which of the following is true about values and attitudes? a. In tradition-bound societies, attitude toward change is viewed with great suspicion. b. Attitude toward change is basically negative in industrialized countries. c. Values are the evaluation of alternatives based on attitudes. d. Cultural attitudes are typically a deterrent to foreign business practices. Answer: A 8. Which of the following types of tests help determine the potential acceptance and proper understanding of a proposed new product? a. Product tests b. Brand equity tests c. Gateway tests d. Concept tests Answer: D 9. The ideal number of participant(s) in a focus group is ____________. a. 8 to 12 b. 100 to 200 c. 1 d. 25 to 50 Answer: A 10. Which of the following is a result of technology and is directly related to the way a society organizes its economic activity? a. Cultural convergence b. Cultural assimilator c. IT education d. Material culture Answer: D 11. The basic economic infrastructure elements of a society are ____________. a. bonding, licensure, and tariff b. transportation, energy, and communication systems c. housing, health, and education systems d. government, bureaucracy, and compartmentalizing Answer: B 12. How can marketers assess the educational levels of a culture from secondary data sources? a. By using literacy rates and enrollment in higher education b. By calculating voter turnout rates by educational attainment c. By assessing the male-female sex ratio through differences in education levels d. By calculating the per capita income spent on education Answer: A 13. ____________ are groups of people who provide values and attitudes that become influential in shaping behavior. a. Cultural universals b. Focus groups c. Reference groups d. Cultural assimilators Answer: C 14. The division of a particular population into classes is termed ____________. a. cultural assimilation b. ethnocentrism c. social stratification d. acculturation Answer: C 15. Which of the following determines the roles of managers and subordinates and the way they relate to one another? a. Inequality b. Ethnocentrism c. Cultural assimilation d. Social organization Answer: D 16. Which of the following is true about the sources of cultural knowledge? a. Regional integration is an example of country-specific experiential knowledge. b. Objective information is acquired only by being involved in a culture other than one’s own. c. Experiential knowledge is obtained only from others through communication, research, and education. d. Government regulations are an example of country-specific objective information. Answer: D 17. Which of the following is an example of country-specific experiential information? a. Regional integration b. Tariff barriers c. Program appropriateness d. Government regulations Answer: C 18. Which of the following United States authorities, in addition to the normal business literature and its anecdotal information, publish specific country studies? a. The Immigration and Naturalization Service b. The Department of Commerce c. The Office of Foreign Assets Control d. The Internal Revenue Service Answer: B 19. Understanding and appreciating the nuances of different cultural traits and patterns is known as ____________ knowledge. a. predictive b. interpretive c. self-reference d. factual Answer: B 20. Which of following dimensions of culture is associated with the need for formal rules and regulations? a. Power distance b. Individualism versus collectivism c. Long-term versus short-term orientation d. Uncertainty avoidance Answer: D 21. The differences in cultural lifestyle can be accounted for by five major dimensions of culture that include individualism-collectivism, power distance, uncertainty avoidance, gender-role orientation, and ____________ orientation. a. political versus economical b. age versus educational c. physiological versus psychological d. long-term versus short-term Answer: D 22. Relatively weak resistance to new products is one of the marketing implications for countries that are ____________. a. high in power distance b. low in uncertainty avoidance c. low in individualism d. high in masculinity Answer: B 23. China, Hong Kong, and Singapore are associated with ____________. a. low power distance and high individualism b. low masculinity and high individualism c. high power distance and low uncertainty avoidance d. high masculinity and low power distance Answer: C 24. Which of the following countries is associated with small power distance, low uncertainty avoidance, high individualism, and low masculinity? a. Australia b. Sweden c. China d. Japan Answer: B 25. Which of the following countries is an innovator and an early technology adopter, has relatively weak resistance to new products, and has a strong consumer desire for novelty and variety? a. Thailand b. China c. Denmark d. Austria Answer: C 26. The unconscious allusion to one's own cultural values is known as ____________ criterion. a. high-context b. collectivist c. ethnocentric d. self-reference Answer: D 27. Which of the following is the term used to describe the belief that one's own culture is superior to others? a. Acculturation b. Ethnocentrism c. Cultural relativism d. Cultural convergence Answer: B 28. Which of the following is one way in which companies have tried to avoid the training problem inherent in being an international company? a. Hiring only well-traveled executives for overseas operations b. Standardizing all processes and products in the host country like those in the home country c. Hiring only home country employees for overseas operations d. Outsourcing its operations to a country with a cheap but skilled labor force Answer: A 29. Which of the following is true of cross-cultural training methods? a. Sensitivity training exposes a manager to a different cultural environment for a limited amount of time. b. Although the expense of placing and maintaining an expatriate is high, field experience is commonly used in training. c. Area studies programs provide factual preparation for a manager to operate in, or work with people from, a particular country. d. The cultural assimilator program has been used in particular in cases of transfers abroad where there is adequate time to prepare. Answer: C 30. Cultural ____________ is the program in which trainees must respond to scenarios of specific situations in a particular country. a. orientation b. assimilator c. universals d. convergence Answer: B 31. Which of the following should be a basic prerequisite for other types of training programs? a. Sensitivity training b. Simulation c. Area studies d. Field experience Answer: C 32. Which of the following training methods focuses on enhancing a manager’s flexibility in situations that are quite different from those at home and is based on the assumption that understanding and accepting oneself is critical to understanding a person from another culture? a. Simulation b. Sensitivity training c. Lectures d. Role plays Answer: B 33. Sensitivity training and case studies are examples of the ____________ training method. a. experiential b. analytical c. factual d. role play Answer: B 34. Which of the following refers to a training program that exposes a manager to a different cultural environment for a limited amount of time? a. Case studies b. Lectures c. Role play d. Field experience Answer: D 35. In order to expand their businesses internationally despite cultural differences, nowhere is companies’ commitment to local markets as evident as in ____________. a. corporatization b. exporting c. focusing on profits d. product offerings Answer: D ESSAY 1. Explain the role of language capability in the effective conduct of business communications and transactions in international marketing. Answer: Language capability serves four distinct roles in international marketing: 1. Language aids in information gathering and evaluation efforts. Rather than rely completely on the opinions of others, the manager is able to see and hear personally what is going on. People are far more comfortable speaking their own language, and this should be treated as an advantage. The best intelligence on a market is gathered by becoming part of the market rather than observing it from the outside. 2. Language provides access to local society. Although English may be widely spoken and may even be the official company language, speaking the local language may make a dramatic difference. 3. Language capability is increasingly important in company communications, whether within the corporate family or with channel members. 4. Language provides more than the ability to communicate. It extends beyond mechanics to the interpretation of contexts. 2. Describe the analytical approach to reduce the influence of one’s own cultural values. Give an example of how this approach can be applied to product introduction. Answer: The following analytical approach is recommended to reduce the influence of one’s own cultural values: 1. Define the problem or goal in terms of domestic cultural traits, habits, or norms. 2. Define the problem or goal in terms of foreign cultural traits, habits, or norms. Make no value judgments. 3. Isolate the self-reference criterion influence in the problem and examine it carefully to see how it complicates the problem. 4. Redefine the problem without the self-reference criterion influence and solve for the optimal goal situation. This approach can be applied to product introduction. Student answers may vary. If Kellogg Co. wants to introduce breakfast cereals into markets where consumers drink very little milk, managers must consider very carefully how to instill this new habit. The traits, habits, and norms of breakfast are quite different in the United States, France, and Brazil, and they have to be outlined before the product can be introduced. In France, Kellogg’s commercials are aimed as much at providing nutrition lessons as they are at promoting the product. In Brazil, the company advertised on a soap opera to gain entry into the market because Brazilians often emulate the characters of these television shows. 3. What are the strategies that indicate how culture and its appreciation may serve as a tool to ensure marketing success? Answer: The following rules serve as summary of how culture and its appreciation may serve as tool to secure success: Embrace local culture: Many corporate credos include a promise to be the best possible corporate citizen in every community in which they operate. Showing sensitivity to local customer shapes local acceptance and builds employee morale. More importantly, it contributes to a deeper understanding of the market and keeps the marketer from inadvertently doing something to alienate constituents. Build relationships: Each country market has its own unique set of constituents who need to be identified and nurtured. Establishing and nurturing local ties at the various stages of the market-development cycle develops relationships that can be invaluable in expansion and countering political risk. Employ locals to gain cultural knowledge: The single best way to understand a market is to grow with it by developing human resources and business partnerships. Help employees understand you: Employing locals will give a marketer a valuable asset in market development. However, these employees also need their own process of adjustment in order to be effective. Adapt products and processes to local markets: Nowhere is commitment to local markets as evident as in product offerings. The firm needs to understand the local market and accordingly manufacture its products to suit the domestic needs. Coordinate by region: The transfer of best practices is critical, especially in areas that have cultural similarities. Test Bank for International Marketing Michael R. Czinkota, Ilkka A. Ronkainen 9781133627517, 9788131533642
Download
Close
Close
