This Document Contains Chapters 4 to 6 Chapter 4: The Economic Environment TRUE/FALSE 1. Global aspirants are mature global companies intent on adapting their existing product lines to capture new, emerging global middle markets. Answer: False 2. Three of the five major industrialized countries in the world that are referred to as the Group of Five include Chile, Canada, and Mexico. Answer: False 3. The main dimensions of a market can be captured by considering variables such as those relating to the population and its various characteristics, infrastructure, and social development. Answer: True 4. As the life expectancy in a market extends and new target markets become available, international marketers may be able to extend product life cycles by marketing them abroad. Answer: True 5. A household refers to only related people who live in the same housing unit. Answer: False 6. Consumption patterns remain unaffected by increased urbanization of markets. Answer: False 7. Purchasing power is a function of three distinct elements: available resources, climate, and supply. Answer: False 8. Income is most indicative of the market potential for most consumer and industrial products and services. Answer: True 9. Purchasing power parity (PPP) refers to the rate at which one country’s currency can be exchanged for another country’s currency. Answer: False 10. Per capita GDP is often used as a primary indicator for evaluating purchasing power. Answer: True 11. Engel's laws state that as a family's income rises, the percentage of the money spent on food will increase. Answer: False 12. The availability and quality of an infrastructure is critically important in evaluating marketing operations abroad. Answer: True 13. Data on the availability of commercial (marketing-related) infrastructure are often readily available. Answer: False 14. The Physical Quality of Life Index (PQLI) is a composite measure of the level of welfare in a country. Answer: True 15. The European Economic Community (EEC) was formally established by the Treaty of Rome. Answer: True 16. The free trade area defined by NAFTA is the only free trade zone in the world. Answer: False 17. Maquiladoras are landscape engineers who ensure that the free trade areas along the border of two countries are neat and clean in order to attract more companies to set up businesses in these areas. Answer: False 18. Developed countries do not benefit from the development of human and natural resources in emerging markets. Answer: False 19. Decisions regarding integrating markets must be assessed from four different perspectives: the range and impact of changes resulting from integration, development of strategies to relate to these changes, organizational changes needed to exploit these changes, and strategies to influence change in a more favorable direction. Answer: True 20. The introduction of the euro means increased coordination in pricing as compared to the relative autonomy in price setting enjoyed by country organizations in the past. Answer: True MULTIPLE CHOICE 1. ____________ are companies that traditionally provide low-priced goods for the bottom-of-the-pyramid consumers in their home markets. a. Multinational incumbents b. Local upstarts c. Global aspirants d. Domestic giants Answer: B 2. Global aspirants are: a. companies that traditionally provide low-priced goods for the bottom-of-the-pyramid consumers in their home markets. b. mature global companies intent on adapting their existing product lines to capture these new, emerging global middle markets. c. companies that have already developed products for their domestic middle markets and are now seeking to parlay their existing capabilities to serve the external global middle class. d. companies that aim to increase employment in their home country by producing goods that meet international standards. Answer: C 3. ____________ are mature global companies intent on adapting their existing product lines to capture new, emerging global middle markets. a. International giants b. Zaibatsus c. Multinational incumbents d. Global aspirants Answer: C 4. The assessment of a foreign market environment should start with: a. a monetary analysis of the host country’s currency volatility. b. the evaluation of economic variables relating to the size and nature of the market. c. a focus on providing local solutions. d. an expert analysis of the physical resources available. Answer: B 5. The Group of Five refer to: a. the leading money managers who regulate worldwide currency rates. b. money, markets, media, message, and methodology. c. the major industrialized countries of the world. d. Saudi Arabia, South Africa, South Korea, Russia, and Indonesia. Answer: C 6. Which of the following countries is part of the Group of Seven? a. Italy b. Russia c. China d. Brazil Answer: A 7. Which of the following has been key to modernizing the newly emerging democracies of both Central and Eastern Europe? a. Imported consumer goods b. Marketing know-how c. Western technology d. Hefty capital inflow Answer: D 8. The ____________ provides one of the most basic indicators of market size and is in itself indicative of the potential demand for certain staple items that have universal appeal and are generally affordable. a. size of a household b. number of dwellings in a country c. number of people in a particular market d. number of stores in a city Answer: C 9. As the life expectancy in a market extends and new target markets become available, international marketers may be able to extend their products’ life cycles by ____________. a. renaming the products b. increasing their supply in the domestic markets c. attracting local customers d. marketing them abroad Answer: D 10. Age distribution and ____________ correlate heavily with the level of development of the market. a. life expectancy b. gender c. nationality d. lifestyle Answer: A 11. A ____________ includes all persons, both related and unrelated, who occupy a housing unit. a. household b. family c. unit of survival d. focus group Answer: A 12. Interpretation of demographics requires some degree of: a. consentual knowledge. b. experiential knowledge. c. intrinsic knowledge. d. vocational knowledge. Answer: B 13. Which of the following has radically changed consumption patterns over the last few decades? a. Increased urbanization b. Political dissidence c. The greening of the globe d. The emergence of educated consumers Answer: A 14. Purchasing power is a function of income, prices, savings, and ____________. a. population b. education c. credit availability d. natural resources Answer: C 15. Apart from population, which of the following is most indicative of the market potential for most consumer and industrial products and services? a. Political stability b. Education levels c. Life span d. Income Answer: D 16. ____________ show how many units of currency are needed in one country to buy the amount of goods and services that the same unit of currency will buy in another country. a. Price indexes b. Exchange rates c. Purchasing power parities d. Value added exchanges Answer: C 17. Which of the following laws states that as a family's income increases, the percentage spent on food will decrease? a. Pareto’s law b. Engel's law c. The law of diminishing returns d. Gresham’s law Answer: B 18. Market information on the percentage of households that own a particular product is known as: a. product categorization. b. product diffusion. c. market potential. d. market penetration. Answer: B 19. Which of the following is true about the international marketing environment? a. High saturation levels indicate lack of market potential in such markets. b. In high-inflation markets, the marketer should make economical products by focusing on price and not on quality. c. The setting of maximum prices for products enables a strong demand for the products, ensuring the international marketer continuous profits. d. In response to rapidly escalating prices, a government will often invoke price controls. Answer: D 20. The availability and quality of ____________ is critically important in evaluating marketing operations abroad. a. urban population b. infrastructure c. market diffusion d. education Answer: B 21. A country's use of computers, telephones, broadcast media, and print media is an indicator of: a. passive consumers. b. communication. c. distribution channel. d. transportation. Answer: B 22. The three components of the Physical Quality of Life Index are infant mortality, adult literacy and ____________. a. social responsibility b. growth stability c. adolescent sustainability d. life expectancy Answer: D 23. Which of the following is a composite measure of the level of welfare in a country? a. Consumer Price Index b. Human Development Index c. Physical Quality of Life Index d. Human Poverty Index Answer: C 24. A common market is characterized by: a. use of a common currency among members. b. harmonization of monetary policies. c. factor mobility. d. uniform taxation among member nations. Answer: C 25. Which of the following is true about forms of economic integration in regional markets? a. In a free trade area, members harmonize their monetary policies. b. A common currency is used by members in a free trade area. c. Capital mobility is not permitted in a common market. d. A customs union establishes a common trade policy with respect to nonmembers. Answer: D 26. Which of the following currencies was introduced by the European Union? a. Deutsche Mark b. Euro c. Franc d. Pound Answer: B 27. Which of the following is an example of a free trade area? a. NAFTA b. APEC c. SACU d. Group of Five Answer: A 28. ____________ began in 1994 to create the world’s largest free market. a. MERCUSOR b. ASEAN c. NAFTA d. AFTA Answer: C 29. Opposition to NAFTA has centered on issues relating to: a. illegal migration to Mexico. b. gains for Canada. c. immobility of factors of production. d. labor and environment. Answer: D 30. ____________ are Mexican plants that make goods and process food for export to the United States. a. Zaibatsus b. Chaebols c. Maquiladoras d. Sogo shoshas Answer: C 31. A(n) ____________ market refers to a country making an effort to change and improve its economy with the goal of raising its performance to that of the world’s most advanced nations. a. emerging b. equity c. developed d. saturated Answer: A 32. Which of the following is an example of an emerging market? a. China b. Germany c. Japan d. USA Answer: A 33. What is the first step an international marketer should take while making decisions regarding integrating markets? a. Envision the effect of change b. Develop a strategic plan c. Reorganize the company d. Seek ways to influence the pertinent regulatory environment Answer: A 34. After determining the effects of change, an international marketer will have to first indulge in ____________. a. lobbying b. research c. strategic planning d. reorganizing Answer: C 35. The act of international marketers seeking ways to influence the regulatory environment in which they have to operate in is known as ____________. a. lobbying b. integrating c. reorganizing d. restructuring Answer: A ESSAY 1. What is the Physical Quality of Life Index (PQLI)? What are its three components? Answer: The Physical Quality of Life Index (PQLI) is a composite measure of the level of welfare in a country. It has three components: life expectancy, infant mortality, and adult literacy rates. The three components of the PQLI are among the few social indicators available to provide a comparison of progress through time in all of the countries of the world. 2. Which countries are part of NAFTA? What are the characteristics of NAFTA? Answer: The North American Trade Agreement is an agreement among the United States, Mexico and Canada. Each of the member countries continue to set its own policies in relation to nonmembers, and each member is free to set any tariffs or other restrictions that it chooses on trade with countries outside the free trade area. 3. List and briefly describe the five elements of success that are required for an international marketer to take advantage of and thrive in developing markets. Answer: The five elements of success are as follows: Research: It helps learn about the needs, aspirations, and habits of targeted populations. Creating buying power: It allows consumers with no collateral to borrow money. Tailoring local solutions: Helps combine advanced technology with local insights. Improving access: It could lead to a thriving business. Shaping aspirations: It is ideally suited for products to match consumer demand. Chapter 5: The Political and Legal Environment TRUE/FALSE 1. Political and legal factors often play critical roles in international marketing activities. Answer: True 2. In making decisions about a firm’s international marketing activities, managers will need to concentrate on the legal circumstances of the host country but not the home country. Answer: False 3. The term “embargo” refers to products that are packaged in one country in a particular way, and then altered to fit the international marketplace in another country. Answer: False 4. Trade sanctions and embargoes can be used interchangeably. Answer: True 5. Economic sanctions that are imposed unilaterally by one country tend to be more effective than those imposed multilaterally by countries. Answer: False 6. One key concern with trade sanctions is the fact that governments often consider them as being free of cost. Answer: True 7. Permitting a foreign national from a controlled country to have access to a highly sensitive computer program in the United States is not considered as an export. Answer: False 8. Nuclear nonproliferation is a determinant for export control. Answer: True 9. Today’s export controls use a “strategic balance” approach affecting specific hotspots rather than the “tactical balance” approach. Answer: False 10. Voluntary restraint agreements are self-imposed restrictions aimed at avoiding punitive trade actions from the host. Answer: True 11. Boycotts place a tax on imports and raise prices. Answer: False 12. Political risk can be the result of government action, but it can also be outside the control of government. Answer: True 13. Expropriation is a term used to describe the U.S. government's investment in foreign technology with the intent to spur development of trade partners. Answer: False 14. Code law is based on tradition and depends less on written statutes than on precedent and custom. Answer: False 15. Countries with the common law system have much more rigid laws than those with the code law system. Answer: False 16. Lobbyists are well-connected individuals and firms that can provide access to policymakers and legislators. Answer: True 17. If supply chains are complex and multinational, the effects of terrorism can potentially spread across the globe from an initially local focus. Answer: True 18. Corporate governance frameworks ensure the board of directors’ accountability to the company and its shareholders. Answer: True 19. As firms become increasingly multinational, governments respond by increasing global cooperation to achieve the same principles of taxation and corporate ethics laws across nations. Answer: True 20. Bribing foreign officials in order to gain contracts is considered permissible in the United States. Answer: False MULTIPLE CHOICE 1. When products and goods enter a market in ways not desired by their manufacturers, this is known as ____________ market activities. a. black b. white c. green d. gray Answer: D 2. ____________ refer to governmental actions that distort the free flow of trade in goods, services, or ideas for decidedly adversarial and political, rather than strictly economic, purposes. a. Gray market activities b. Tariffs and barriers c. Trade sanctions and embargoes d. Expropriation and confiscation Answer: C 3. The charter of the United Nations allows for sanctions as an enforcement action by regional agencies. Which of the following is NOT an example of a regional agency? a. The Organization of American Unity b. The Organization of African Unity c. The Organization of American States d. The Arab League Answer: A 4. When the United Nations (UN) votes on economic sanctions for a country: a. it will apply only to nations who are members of the UN. b. any permanent member of the Security Council can veto the sanctions. c. the government must consider them as being free of cost. d. a new set of rules must be written for the specific infractions. Answer: B 5. ____________ are designed to deny or at least delay the acquisition of strategically important goods by adversaries. a. Antidumping laws b. Export control systems c. Voluntary restraint agreements d. Domestication activities Answer: B 6. Which of the following is an example of a dual-use item? a. Handbags b. Life jackets c. Compact cars d. Artillery Answer: B 7. Which of the following is true about export controls? a. The legal basis for export controls is similar across nations. b. All export control systems make controls the rule rather than exception. c. The U.S. export control system is based on the Export Administration Act. d. Services and ideas are not covered under export controls. Answer: C 8. As required by government mandate, anyone wishing to export a product from the United States needs a(n) ____________. a. extended collective license b. quasi-contract c. voluntary export restraint agreement d. export license Answer: D 9. Which of the following is NOT a method of controlling imports? a. Confiscation b. Quota systems c. Voluntary restraint agreements d. Tariffs Answer: A 10. When firms refuse to do business with someone, often for political reasons, this is known as ____________. a. image tarnishing b. expropriation c. boycotting d. confiscation Answer: C 11. Which of the following is true about import controls? a. Nontariff barriers like voluntary restraint agreements are self-imposed restrictions and cutbacks aimed at avoiding punitive trade actions from the host. b. Import controls generally exact a small price from domestic consumers. c. The social cost of import controls benefits the economy in all situations. d. Import controls improve the productivity of an industry, provide it with a level of safety and a cushion of increased income, and lead the drive for technological advancement. Answer: A 12. Which of the following is NOT considered a political risk? a. Deflation b. Tariffs c. Expropriation of assets d. Restriction in repatriation of profits Answer: A 13. In the United States, the ____________ excludes from antitrust prosecution those firms that are cooperating to develop foreign markets. a. Gramm-Leach-Bliley Act b. Sarbanes-Oxley Act c. Webb-Pomerene Act d. Celler-Kefauver Act Answer: C 14. Events caused by factors outside the control of government include all of the following EXCEPT: a. confiscation. b. strikes. c. extortion. d. revolution. Answer: A 15. The seizure of foreign assets by a government with payment of compensation to owners is known as ____________. a. asset forfeiture b. misappropriation c. expropriation d. dissolution Answer: C 16. ____________ results in a transfer of ownership from the foreign firm to the host country without providing compensation for the firm. a. Defalcation b. Injunction c. Confiscation d. Structuring Answer: C 17. Which of the following is true about expropriation? a. Its use as a policy tool has increased significantly over time. b. It does not provide compensation to the former owners. c. It immediately transfers a certain amount of wealth and resources from foreign companies to the host country. d. It provides satisfactory settlements and thus encourages foreign firms to invest in the country. Answer: C 18. ____________ occurs when a government demands partial transfer of ownership and management responsibility and imposes regulations to ensure that a large share of the product is locally produced and a larger share of the profit is retained in the country. a. Injunction b. Defalcation c. Domestication d. Structuring Answer: C 19. Which of the following is true about domestication? a. It imposes regulations to ensure that no profits are retained by the host country. b. It results in inefficiencies due to lack of market discipline, and thus affects the international competitiveness of operations abroad. c. It results in total ownership and total management responsibility being conferred on the host country. d. It imposes regulations to ensure that all high-end products are locally produced while all low-end products are produced by the host country. Answer: B 20. Confiscation differs from domestication in that confiscation: a. does not involve transfer of ownership from the foreign firm to the host country. b. offers compensation in the form of local, nontransferable currency. c. does not provide compensation to the foreign firm. d. provides compensation on the book value of the firm. Answer: C 21. Many adverse governmental actions are a result of a host country's opposition to ____________. a. domestication b. colonial remnants c. independence d. nationalism Answer: B 22. Which of the following statements about legal differences and restraints is true? a. All countries conform to the same laws, and they are implemented similarly as well. b. Many common law countries have adopted commercial codes to govern the conduct of business. c. Countries with the common law system have much more rigid laws than those with the code law system. d. The enforcement of laws have the same effect on national and on foreign marketers. Answer: B 23. Which of the following is true about common law? a. It depends primarily on written statutes and codes. b. It is based on Roman law and is found in the majority of the nations of the world. c. Countries with the common law system have much more rigid laws than those with the code law system. d. It is based on tradition and depends on precedent and custom. Answer: D 24. Code law differs from common law in that code law: a. is based solely on tradition. b. originated in England. c. is based on a comprehensive set of written statements. d. depends on precedent and custom. Answer: C 25. Laws that prohibit below-cost sales of products are known as ____________ laws. a. antidiscrimination b. antikickback c. antidumping d. antideficiency Answer: C 26. Which of the following is true about the legal procedures preferred by businesses? a. Businesses who opt for conciliation fear discrimination in foreign countries and therefore avoid it. b. Arbitration often involves extensive delays and is very costly, and hence is not preferred by businesses. c. Litigation results in much quicker decisions than arbitration, and hence is preferred by businesses. d. Arbitration results in much quicker decisions, and hence is more preferred by businesses. Answer: D 27. The phenomenon when buyers become uncertain about the state of their nation’s economy, leading to a sharp reduction in demand for both consumer and industrial goods is known as ____________. a. the chill effect b. functional lubrication c. domestication d. expropriation Answer: A 28. The relationships among stakeholders that determine and control the strategic direction and performance of an organization are called ____________. a. investor relations b. corporate governance c. ownership risk d. functional lubrication Answer: B 29. Which of the following is a characteristic of a market-based corporate governance regime? a. Combined management and ownership b. Dispersed ownership c. State ownership of enterprise d. Family control Answer: B 30. State ownership of enterprise, lack of transparency, and no minority influence are characteristics of a ____________ corporate governance regime. a. market-based b. bank-based c. family-based d. government affiliated Answer: D 31. Which of the following refers to a legal entitlement of exclusive rights to use an idea, piece of knowledge, or invention? a. Domestication b. Embargoes c. Intellectual property d. Functional lubrication Answer: C 32. The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS): a. includes maximum standards for copyrights, appellations of geographic origin, industrial designs, trademarks, and trade secrets. b. gives developing countries more time to implement changes related to intellectual property. c. requirements apply equally to all WTO member states except emerging countries. d. gives individuals and companies the right to own and sell property as they see fit. Answer: B 33. Which act passed in 1977 made it a crime for U.S. firms to bribe foreign officials for business purposes? a. The Organized Crime Control Act b. The Racketeer Influenced and Corrupt Organizations Act c. The Foreign Corrupt Practices Act d. The Foreign Intelligence Surveillance Act Answer: C 34. Which 2002 law protects investors by improving the accuracy and reliability of corporate disclosures, and also covers issues like corporate responsibility, financial transparency, and accounting oversight? a. The Glass-Steagall Act b. The Aldrich-Vreeland Act c. The Gramm-Leach-Bliley Act d. The Sarbanes-Oxley Act Answer: D 35. Which of the following best describes “ehrbarer Kaufmann”? a. It refers to a legal entitlement of exclusive rights to use an idea, piece of knowledge, or invention. b. It refers to governmental actions that distort the free flow of trade in goods, services, or ideas for decidedly adversarial and political, rather than strictly economic, purposes. c. It is a key legal perspective that has faith and belief as its key focus and is also a mix of societal, legal, and spiritual guidelines. d. It focuses on maintaining long-term successful international trade efforts with distant and often unfamiliar people. Answer: D ESSAY 1. Explain the different problems encountered by policymakers when trying to administer import controls. Answer: Policymakers are faced with several problems when trying to administer import controls. First, most of the time such controls exact a huge price from domestic consumers. Even though the wide distribution of the burden among many consumers may result in a less obvious burden, the social cost of these controls may be damaging to the economy and subject to severe attack by individuals. A second major problem resulting from import controls is the downstream change in import composition that results from these controls. Initially narrowly defined protectionist measures may have to snowball in order to protect one downstream industry after another. A final major problem that confronts the policymaker is that of efficiency. Import controls, which are frequently designed to provide breathing room to a domestic industry either to grow or to recapture its competitive position, often turn out not to work. Rather than improve the productivity of an industry, such controls provide it with a level of safety and a cushion of increased income yet let the drive for technological advancement fall behind. Alternatively, supply may respond to artificial stimulation and grow far beyond demand. 2. Describe political risk and the different types of political risk. Answer: Political risk is defined as the risk of loss when investing in a given country caused by changes in a country's political structure or policies, such as tax laws, tariffs, expropriation of assets, or restriction in repatriation of profits. In general, political risk is lowest in countries that have a history of stability and consistency. Political risk tends to be highest in nations that do not have this sort of history. Three major types of political risk can be encountered: ownership risk, which exposes property and life; operating risk, which refers to interference with the ongoing operations of a firm; and transfer risk, which is mainly encountered when attempts are made to shift funds between countries. 3. Briefly explain the effects of terrorism on business. Answer: Terrorism is the systematic use (or threat) of violence aimed at attaining a political goal and conveying a political message. International terrorism seeks to do this across national borders. Terrorists direct their strikes at business far more than any other target. Businesses need to be easily accessible and able to conduct transactions with many new persons every day; this introduces a level of vulnerability that is not typically encountered by government offices. Bombings are most common, followed by armed assaults, kidnapping, vandalism, and hijacking. Terrorism nevertheless creates new opportunities for firms in a few industries like construction, security, and information technology. For most companies, however, terrorism also results in reduced revenues or increased costs, and managers must prepare for this. Terrorists intend to affect supply and demand in order to shatter existing economic systems; this brings about both direct and indirect effects. The direct consequences to business are the immediate costs levied on individual firms. While harm is clear to individual firms, from a societal perspective the direct effects tend to be less consequential than the indirect ones. The indirect negative consequences of terrorism begin with macroeconomic phenomena, such as the real or perceived decline in per capita income, purchasing power, and stock market values.A further effect on enterprises may be the failures in power, communication, transport, and other infrastructure due to actual physical damage incurred at the terrorists’ hands. Indirectly, this leads to unpredictable shifts and interruption in the supply of inputs, resources, and services. Finally, international terrorism often causes tension between the countries whose citizens or property is involved; the deterioration of transnational relationships can affect foreign buyer and seller attitudes and thus the marketing activities of firms doing business abroad. Chapter 6: Consumer, Industrial, and Government Markets TRUE/FALSE 1. Globalization reflects the spread of free-market capitalism. Answer: True 2. Globalization implies that many nations are losing some autonomy as larger countries and corporations extend their political power around the world. Answer: True 3. In business-to-business markets, global customers seek to decentralize and vary the methods of purchasing of raw materials, components, and finished goods. Answer: False 4. Emerging markets are developed economies such as the United States and United Kingdom. Answer: False 5. People all over the world consistently follow Maslow’s hierarchy of needs. Answer: False 6. Norms remain the same across all countries. Answer: False 7. In nations with weak institutional guidelines, corruption is often a factor that affects the purchase behavior of organizational buyers. Answer: True 8. Demographic factors have no influence on the tendency of consumers to discriminate against foreign products. Answer: False 9. Jake, a U.S. citizen, displays consumer ethnocentrism if he purchases electronic gadgets that are manufactured in Japan. Answer: False 10. Cosmopolitans are especially attractive targets for MNEs launching new products. Answer: True 11. Industrial buyers are strongly influenced by globalization. Answer: True 12. Industrial buyers in countries with high uncertainty avoidance cultures are more willing to try new offerings from new market entrants. Answer: False 13. Most emerging market countries have attained the mass consumption stage of economic development. Answer: False 14. Inflation complicates the international buying process by distorting exchange rates and the cost of capital. Answer: True 15. The aim of competitive bidding is to avoid corruption that may accompany choosing suppliers based on personal relationships. Answer: True 16. The GPA’s main goal is to open government procurement to international competition. Answer: True 17. Global account management (GAM) ensures that customers gain economies of scale by implementing product differentiation for each of its worldwide operations. Answer: False 18. Multinational firms can overcome a negative COO by having its product distributed through a well-respected intermediary in the target market. Answer: True 19. The ultimate goal of CRM is profit maximization for the firm. Answer: False 20. If the anticipated cost is below a minimum threshold amount, the government is typically required to open the contract to a public bidding process. Answer: False MULTIPLE CHOICE 1. Which of the following is true about globalization? a. It leads to the formation of heterogeneous, individual cultures. b. It leads to increasing trade barriers between nations. c. It restricts the spread of free-market capitalism. d. It implies that many nations are losing some autonomy. Answer: D 2. ____________ are individuals or organizational buyers that exhibit similar needs and tastes worldwide. a. Change agents b. Social entrepreneurs c. Ethnocentric consumers d. Global consumers Answer: D 3. Which of the following characterizes the existence of a consumer culture? a. A large proportion of the population living under the poverty level b. Emphasis on autarky-based economies c. A perception of consumption as an undesirable activity that causes a drain on the economy d. Level and quality of consumption as an important criterion for judging other countries Answer: D 4. Which of the following strongly influences a consumer’s ability to purchase goods and services? a. Legal factors b. Political environment c. Income level d. Sociocultural factors Answer: C 5. Which of the following is true about developing markets? a. They comprise only high-income consumers. b. They represent the smallest market for an international marketer for the sale of goods and services. c. Infrastructure is typically very good in these markets. d. Firms tend to devise novel business strategies to market in these countries. Answer: D 6. Which of the following is an example of a developing market? a. Canada b. Germany c. Angola d. The United States of America Answer: C 7. A(n) ____________ is an internal force that orients a person’s activities toward satisfying a need or achieving a goal. a. norm b. virtue c. motive d. intuition Answer: C 8. Who proposed the hierarchy of needs theory? a. Abraham Maslow b. Douglas McGregor c. Frederick Herzberg d. David McClelland Answer: A 9. According to Maslow’s hierarchy of needs, which needs have to be fulfilled before a consumer can attempt to fulfill his safety needs? a. Love and belonging needs b. Physiological needs c. Esteem needs d. Self-actualization needs Answer: B 10. Which of the following represents the highest level in Maslow’s hierarchy of needs? a. Esteem needs b. Physiological needs c. Self-actualization needs d. Safety needs Answer: C 11. Which of the following is true about the relevance of Maslow’s hierarchy of needs to international marketing? a. Need levels remain the same worldwide with regard to economic status, technology level, and other factors. b. People all over the world consistently follow Maslow’s hierarchy of needs. c. In developing economies, people may forgo meeting some physiological needs or safety needs in order to purchase higher-level products such as cell phones and automobiles. d. In countries that are characterized by substantial poverty, the focus is on satisfying self-actualization needs. Answer: C 12. ____________ are accepted behaviors within a society or group. a. Norms b. Virtues c. Anomies d. Motives Answer: A 13. Which of the following best describes conservatism? a. It is the tendency to spend excessively on purchasing goods to enhance consumers’ social image. b. It is the tendency to prefer traditions and choices that have stood the test of time. c. It refers to a strong openness to acquiring goods from other countries. d. It is the tendency to view domestically produced goods as superior to those made in other countries. Answer: B 14. Karen loves to shop. She keeps herself updated about all the latest products introduced in the market. She loves to spend on things as she believes possessing such goods enhances her self-image. She is always envious about others’ possessions and never shares her possessions with others. Which of the following cultural norms can be associated with Karen? a. Physicalism b. Materialism c. Subjective idealism d. Conservatism Answer: B 15. Which of the following is a situational factor influencing the global consumer? a. The beliefs and attitudes based on the norms of reference groups b. The income of the consumer c. The sociocultural norms of a society d. The geographical location and climate of a place Answer: D 16. Which of the following is true about the factors that influence buyer reactions to country of origin (COO)? a. COO stereotypes remain the same irrespective of the origin of the judge and the category of the product being judged. b. Consumers’ opinions remain the same irrespective of the national origin of the firm and the location where its product is actually made. c. As the capacity of countries to perform well in specific industries improves, the COO phenomenon varies over time. d. Demographic factors have no influence on the tendency of consumers to discriminate against foreign products. Answer: C 17. ____________ is the tendency to view domestically produced goods as superior to those produced in other countries. a. Conspicuous consumption b. Consumer ethnocentrism c. Narrowcasting d. World mindedness Answer: B 18. Which of the following indicates consumer ethnocentrism? a. Serena purchases items only if they are approved by her sister. b. William buys only products that have the label “Made in U.S.A.,” as he considers it unpatriotic to buy foreign goods. c. Kevin believes that the more he spends on purchasing things, the higher is his self-image in the society. d. Stacey buys only imported products as she believes they are superior in quality. Answer: B 19. ____________ refers to a consumer’s interest in, and openness to, acquiring goods from other countries. a. World mindedness b. Conspicuous consumption c. Narrowcasting d. Consumer ethnocentrism Answer: A 20. A(n) ____________ is someone who maintains a network of links and personal contacts with those outside the immediate community and is willing to venture into other cultures. a. ethnocentric consumer b. intrapreneur c. provincial consumer d. cosmopolitan Answer: D 21. ____________ refers to demand for raw materials, parts, and other inputs that depends on demand for some other good. a. Derived demand b. Latent demand c. Effective demand d. Marginal demand Answer: A 22. Which of the following refers to the expected functioning of a product relative to the cost to buy and use it? a. Cost-plus pricing b. Premium pricing c. Cost-performance d. Inventory profit Answer: C 23. Which of the following is true about the effects of culture on the global industrial buyer? a. In organizations with flat structures, the purchasing managers employ systematic approaches, with substantial consistency and transparency. b. Industrial buyers across the world have similar attitudes toward risk. c. In low uncertainty avoidance countries, marketers must work hard to convince purchasing managers to accept proposals from new vendors. d. High uncertainty avoidance cultures are more innovative and open to new approaches. Answer: A 24. Which stage of economic development is associated with subsistence farming and the practice of consumption of outputs by producers rather than trading them? a. Transitional stage b. Traditional society c. Mass consumption d. Take-off Answer: B 25. When a country evolves beyond dependence on agriculture and begins to engage in simple manufacturing of value-added goods, it is said to be in the ____________ stage of economic development. a. traditional b. take-off c. mass consumption d. transitional Answer: D 26. Which of the following is a feature of the take-off stage of economic development? a. Countries become thriving consumer and industrial economies with a substantial services sector. b. Countries are characterized by subsistence activity in which output is consumed by producers rather than traded. c. Countries emphasize the production of high-technology products and development of a strong services sector. d. Producers specialize and begin to mass produce goods that can be exchanged with trading partners worldwide. Answer: D 27. Which of the following countries is in the drive to maturity stage of economic development? a. South Korea b. Brazil c. Vietnam d. China Answer: A 28. The ____________ stage of economic development is characterized by a thriving consumer and industrial economy with a substantial services sector. a. transitional b. mass consumption c. traditional d. take-off Answer: B 29. Which of the following characteristics about the government buyer is true? a. Selling to governments can be highly adhocratic. b. Most governments have a system for opening government purchases that exceed a certain dollar value to international bids. c. Governments at the federal level are not involved in the purchase of goods and services. d. The nature of government procurement is the same worldwide. Answer: B 30. A(n) ____________ is a group of customers who share common characteristics across numerous national markets. a. primary group b. distribution channel c. T-group d. global market segment Answer: D 31. Which of the following refers to a strategy in which the offering is placed similarly in the minds of buyers across an entire region or worldwide? a. Product differentiation strategy b. Micro-segmentation strategy c. Global positioning strategy d. Niche marketing strategy Answer: C 32. Which of the following is true about global account management (GAM)? a. It sources different products and operations every time for its worldwide operations. b. It ensures the supplier speaks to the customer in one voice, reducing the possibility for miscommunication. c. It results in increasing costs and lower efficiencies. d. It results in customers dealing with a number of global account executives or teams. Answer: B 33. Which of the following strategies is employed by firms to overcome consumer ethnocentrism and the COO phenomenon? a. Offering lower quality products b. Charging lower prices c. Producing the good in a poor country where labor charges are the least d. Partnering with lesser-known companies abroad Answer: B 34. ____________ refers to collecting, storing, and analyzing customer data to develop and maintain two-way relations between the firm and key customers. a. Total quality management b. Warehousing management c. Customer relationship management d. Operations management Answer: C 35. Which of the following best describes public tendering? a. It refers to the transfer of ownership of the business from the government to the private sector. b. It refers to the tendency of the public to view domestically produced goods as superior to those produced in other countries. c. It refers to the public’s interest in, and openness to, acquiring goods from other countries. d. It refers to the purchasing of products and services on behalf of a government agency or other public entity. Answer: D ESSAY 1. Identify the characteristics for the existence of consumer culture. Answer: In each country, the existence of a consumer culture is characterized by (1) emphasis on marketing-based exchange relationships; (2) a large proportion of the population achieving an improved standard of living; (3) a perception of consumption as an acceptable, and even desirable, activity; and (4) level and quality of consumption as an important criterion for judging others. 2. What are the various factors that influence buyer reactions to country-of-origin (COO)? Answer: Buyer reactions to COO are influenced by various factors. First, COO stereotypes vary depending on the origin of the judge and on the category of the product being judged. Second, opinion varies depending on the national origin of the firm and the location where its product is actually made. Third, as the capacity of countries to perform well in specific industries improves, the COO phenomenon varies over time. Finally, the tendency of consumers to discriminate against foreign products varies by demographic factors. 3. Briefly explain the process of public tendering. Answer: Public tendering is the purchasing of products and services on behalf of a government agency or other public entity. Governments usually designate a central office to serve as a point of contact for publicizing procurement opportunities and receiving bids. Tendering involves several steps. Initially, a government desires to purchase a given product or service. If the anticipated cost is over a minimum threshold amount (for example, $200,000), the government is typically required to open the contract to a public bidding process. Next, companies (whether domestic or foreign) bid on the right to provide the product or service for a price they determine. Once all bids have been received, the government usually chooses the lowest bidder, unless the bidder is deemed incompetent or likely to provide an inferior good. Test Bank for International Marketing Michael R. Czinkota, Ilkka A. Ronkainen 9781133627517, 9788131533642
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