Test Bank For Marketing 8th Edition Dhruv Grewal Michael Levy

Test Bank for Marketing, 8th Edition, Dhruv Grewal Michael Levy
Test Bank for Marketing, 8th Edition, Dhruv Grewal

Michael Levy
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Chapter 08
Test Bank
1. Firms would prefer to manufacture in a country that has a trade surplus, or a higher level of exports than imports.
TRUE
AACSB: Analytical Thinking

Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-01 Describe the components of a country market assessment.
Topic: Marketing Globalization
Feedback: Firms would prefer to manufacture in a country that has a trade surplus, or a higher level of exports than imports, because it signals a greater
opportunity to export products to more markets.
2. The greater the wealth of a country, generally, the better the opportunity a firm will have in that particular country.
TRUE

Blooms: Remember
Difficulty: 1 Easy
Topic: Global Environmental Forces
Feedback: The greater a country's wealth, the more buyers a market is likely to have who can afford to purchase a company's products.
3. The Big Mac Index is a measure of economic health in a country.

FALSE

Blooms: Understand
Difficulty: 2 Medium
Feedback: The Economist’s Big Mac Index suggests that exchange rates should adjust to equalize the cost of a basket of goods and services, wherever
it is bought around the world.
4. Colin wants information about the infrastructure in the countries his company is planning to export to, so he should gather information about the
transportation and communications capabilities in each country.
TRUE

Blooms: Remember
Difficulty: 1 Easy
Feedback: Infrastructure is defined as the basic facilities, services, and installations needed for a community or society to function, such as
transportation and communications systems, water and power lines, and public institutions such as schools, post offices, and prisons.
5. Tariffs artificially lower prices and therefore lower demand.

FALSE

Blooms: Remember
Difficulty: 1 Easy
Feedback: Tariffs artificially raise prices. This does tend to lower demand.
6. Among the various international trade agreements, the North American Free Trade Agreement represents the highest level of integration across
individual nations.
FALSE
8-1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Blooms: Understand
Topic: Trade Agreements, Monetary Unions and International Organizations
Feedback: Comprised of 28 member countries, the European Union represents the highest level of integration of any trade agreement.
7. The BRIC countries are Bolivia, Russia, Italy, and China.

FALSE

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries.
Feedback: The BRIC countries are Brazil, Russia, India, and China.
8. Even as growth in its gross domestic product has slowed, China maintains a thriving retail market, likely to reach the $8 trillion mark soon and
surpass the United States as the world’s largest.
TRUE

Blooms: Remember
Difficulty: 1 Easy
Feedback: This is correct. China maintains a thriving retail market, likely to reach the $8 trillion mark soon and surpass the United States as the world’s
largest.
9. India is one of the fastest-growing markets and has one of the youngest populations in the world.
TRUE

Blooms: Remember
Difficulty: 1 Easy
Feedback: With more than 1.2 billion people, or approximately 15 percent of the world's population, together with expanding middle and upper classes,
India is one of the world's fastest-growing markets. With a median age of 26.7 years, India has one of the youngest populations in the world.
10. Brazil is characterized by strong upper and lower classes, but the middle class has declined in recent years.
FALSE

Blooms: Remember
Difficulty: 1 Easy
Feedback: Brazil's growth has been aided by a large, literate population and the impositions of social programs that have allowed more than half of the
201 million Brazilians to enter the middle class.
11. Russia lags behind most European countries in use of the Internet.
FALSE

Blooms: Remember
Difficulty: 1 Easy
Feedback: The number of Russian Internet users, presently at 83 million, is growing at a rate of approximately 10 percent annually, and is already
Europe's largest Internet market.
8-2
12. Global expansion often begins when a firm receives an order for its product from another country.
TRUE

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-03 Identify the various market entry strategies.
Topic: Market Entry Strategies
Feedback: The receipt of an order from a foreign country is a common beginning of global expansion for firms.
13. Exporting refers to a situation where a company maintains ownership of its plants, operational facilities, and offices in a foreign country in which it
sells its products.
FALSE

Blooms: Remember
Difficulty: 1 Easy
Feedback: Exporting means producing goods in one country and selling them in another. This entry strategy requires the least financial risk but also
allows for only a limited return to the exporting firm.
14. In a joint venture, the burden of ownership, control, and profits is not shared.
FALSE

Blooms: Remember
Difficulty: 1 Easy
Feedback: A joint venture is formed when a firm entering a market pools its resources with those of a local firm. As a consequence, ownership, control,
and profits are shared. In addition to sharing financial burdens, a local partner offers the foreign entrant greater understanding of the market and access
to resources such as vendors and real estate.
15. Entering into a global franchise agreement exposes a company to higher risk than if the company had entered into direct investment in the country.
FALSE

Blooms: Remember
Difficulty: 1 Easy
Feedback: Franchising is a contractual agreement between the firm and a local firm. In a global franchising agreement, this entails lower risks and
requires less investment than if entering into direct investment in a country.
16. There is only one global product strategy: to sell a product or service similar to that sold in the home country, but include minor adaptations.
FALSE

Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-04 Highlight the similarities and differences between a domestic marketing strategy and a global marketing strategy.
Feedback: There are three potential global product strategies: to sell the same product or service in both the home country and the host country, to sell
a product or service similar to that sold in the home country but include minor adaptations, and to sell totally new products or services in the host
country.
17. An effective global pricing strategy can be easily established by setting the same prices in every market around the world.
FALSE

Blooms: Understand
8-3
Topic: Alternative Marketing Mix Strategies for Global Marketing
Feedback: Global pricing is a difficult task, due to differences in the environment in different countries. Setting the same price worldwide is rarely
feasible.
18. Glocalization refers to a global marketing strategy in which each of the four Ps is customized for each country.
FALSE

Blooms: Understand
Feedback: One of the three potential global product strategies, glocalization refers to the selling of the same product or service in both the home-country
market and the host country.
19. To maximize potential, segments and target markets can and should be defined by more than just geography.
TRUE

Blooms: Understand
Feedback: This is correct. Just as firms adjust their products and services to meet the needs of national target markets, they must alter their marketing
mix to serve the needs of global markets.
20. In parts of Europe, including Belgium, Italy, Spain, Greece, and France, sales are allowed only twice a year, in January and June or July.
TRUE

Blooms: Understand
Feedback: Many countries still have rules governing the competitive marketplace, including those that affect pricing. For example, in parts of Europe,
including Belgium, Italy, Spain, Greece, and France, sales are allowed only twice a year, in January and June or July.
21. Firms with global appeal can run global advertising campaigns and simply translate the wording in the advertisements and product labeling.
TRUE

Blooms: Understand
Feedback: Many products and services serve the same needs and wants globally with little or no adaptation in their form or message.
22. Global distribution networks that involve middlemen, exporters, importers, and different transportation systems generally lower costs and prices for
products.
FALSE

Blooms: Understand
Feedback: Global distribution networks form complex value chains that involve middlemen, exporters, importers, and different transportation systems.
These additional middlemen typically add cost and ultimately increase the final selling price of a product.
23. Sophia owns a string of boutiques in Italy. As such she is allowed to have sales only twice a year, in January and June or July.
8-4
TRUE

Blooms: Apply
Difficulty: 3 Hard
Feedback: In Belgium, Italy, Spain, Greece, and France, sales are allowed only twice a year, in January and June or July.
24. A consumer products company produces inexpensive goods in underdeveloped markets, then repackages them as cost-effective innovations for
Western buyers. This is an example of glocalization.
FALSE
AACSB: Knowledge Application

Blooms: Apply
Difficulty: 3 Hard
Feedback: In reverse innovation, companies initially develop products for niche or underdeveloped markets, and then expand them into their original or
home markets.
25. Direct investment offers the firm complete control over its operations in the foreign country.
TRUE

Blooms: Understand
Feedback: Direct investment requires a firm to maintain 100 percent ownership of its plants, operation facilities, and offices in a foreign country, often
through the formation of wholly owned subsidiaries.
26. Globalization refers to the processes by which goods, services, capital, people, information, and ideas
A. are onshored and offshored.
B. flow across national borders.
C. are integrated through IMF facilitation.
D. are similar in various markets.
E. affect corporate culture.

Blooms: Remember
Difficulty: 1 Easy
Feedback: Goods, services, capital, people, information, and ideas can all flow across national boundaries due to globalization.
27. The components of global market assessment include all of the following except
A. ethnic analysis.
B. infrastructure and technological analysis.
C. analysis of government actions.
D. sociocultural analysis.
E. economic analysis.

Blooms: Remember
Difficulty: 1 Easy
Feedback: The four components of a global market assessment are economic analysis, sociocultural analysis, infrastructure and technological analysis,
and an analysis of government actions or inactions.
28. Chris is gathering information about the general economic environment in Nepal. In doing so, he will look for information about the general
8-5
economic environment, market size and population growth rate, and
A. culture.
B. real income.
C. airport capabilities.
D. political status.
E. religious institutions.

Blooms: Remember
Difficulty: 1 Easy
Feedback: A firm conducting an economic analysis of a country market must look at three major economic factors, using well-established metrics: the
general economic environment, the market size and population growth rate, and real income.
29. To determine the market potential for its particular product or service, a firm should use
A. GDP data.
B. unemployment data.
C. purchasing power parity data.
D. inflation data.
E. as many metrics as it can obtain.

Blooms: Understand
Feedback: The market potential for a firm depends on many variables and no one metric can offer a complete picture of the economic environment in a
country. As a result, the best approach is to use many measures in an analysis.
30. Manufacturers would prefer to produce in a country with a trade __________, because it signals a greater opportunity to export products to more
markets.
A. surplus
B. deficit
C. discrepancy
D. bonus
E. balance

Blooms: Remember
Difficulty: 1 Easy
Feedback: Firms would prefer to manufacture in a country that has a trade surplus, or a higher level of exports than imports, because it signals a greater
opportunity to export products to more markets.
31. The most common measure of market potential of an economy is a country's

A. GNI.
B. GDP.
C. PPP.
D. CPI.
E. APR.

Blooms: Remember
Difficulty: 1 Easy
Feedback: Gross domestic product (GDP), the most widely used of these metrics, is defined as the market value of the goods and services produced by
a country in a year.
32. GDP is defined as

A. the value of a country's exports minus its imports.
8-6
B. the difference between two country's exchange rates.
C. the market value of goods and services produced in a country in a year.
D. national income minus national taxes.
E. the gross purchasing power of domestic goods and services plus international income.

Blooms: Remember
Feedback: The most common way to gauge the size and market potential of an economy, and therefore the potential the country has for global
marketing, is to use standardized metrics of output. Gross domestic product (GDP), the most widely used of these metrics, is defined as the market value
of the goods and services produced by a country in a year.
33. Gross national income consists of GDP

A. minus net consumer spending.
B. plus government spending on international trade.
C. minus purchasing power parity.
D. plus the net income earned from investments abroad (minus any payments made to nonresidents who contribute to the domestic economy).
E. plus gross domestic international investment.

Blooms: Understand
Feedback: Gross national income (GNI) consists of GDP plus the net income earned from investments abroad (minus any payments made to
nonresidents who contribute to the domestic economy).
34. The Big Mac Index is a novel measure of

A. GDP.
B. purchasing power parity.
C. per capita GNI.
D. economic growth.
E. international trade surplus.

Blooms: Remember
Difficulty: 1 Easy
Feedback: The Big Mac Index compares the price of a Big Mac wherever it can be bought around the world. The lower the cost of the Big Mac, the
higher (according to this index, at least) the purchasing power of the country's currency.
35. According to purchasing power parity theory, if __________ is(are) in equilibrium, products will cost the same in each country.
A. imports and exports
B. consumer spending
C. interest rates
D. domestic products
E. exchange rates

Blooms: Remember
Difficulty: 1 Easy
Feedback: The purchasing power parity (PPP) theory holds that if exchange rates are in equilibrium, products should cost the same in each country. In
that case, the Big Mac Index (an index comparing the cost of a Big Mac wherever it is sold throughout the world) would be identical for each country.
36. Economic measures like GDP and GNI do not fully account for a country's economic health because they measure only
A. material output.
B. international trade.
C. global expectations.
8-7
D. purchasing power parity.
E. poverty potential.

Blooms: Understand
Feedback: These metrics help marketers understand the relative wealth of a particular country, though they may not give a full picture of the economic
health of a country because they are based solely on material output.
37. Today, many developed countries are experiencing __________ population growth.
A. slight
B. zero or negative
C. rapid
D. moderate
E. significant

Blooms: Remember
Difficulty: 1 Easy
Feedback: In general, developed countries are experiencing zero or negative population growth, while most less developed nations are experiencing
rapid population growth.
38. Cory is working on a global marketing assessment team looking out well into the future to help determine the most attractive market areas around
the world. He is evaluating market sizes and growth rates. Based on population growth rates in different regions, he should consider that
A. countries with high purchasing power today may not continue to show the same growth in the future.
B. the United States and Western Europe will have dramatic increases in population growth leading to overcrowding.
C. the middle class in India will continue to shrink as the rich get richer and the poor get poorer.
D. in places like India, urban population centers will become increasing unattractive and the rural areas will experience major growth in population.
E. the global population is expected to grow at staggering rates indefinitely.

Blooms: Apply
Difficulty: 3 Hard
Feedback: Today, developed countries are experiencing zero or no population growth, while most less developed nations are experiencing rapid
population growth. The countries with the highest purchasing power today may become less attractive in the future for many products and services
because of stagnated growth.
39. The shift of population from rural to urban areas in countries such as India helps global marketers by
A. decreasing pollution.
B. simplifying the supply chain needed to make goods and services available.
C. increasing the human development index.
D. decreasing competition for intellectual capital.
E. increasing nonmaterial GDP output.

Blooms: Understand
Feedback: Long supply chains, in which goods pass through many hands, are often necessary to reach rural populations in less developed countries and
therefore add to the products’ cost.
40. When considering global marketing opportunities in Bangladesh, Tom asked the question, "How will we get it there?" Tom is concerned about
__________ capabilities in Bangladesh.
A. production capacity
B. pricing
C. advertising
8-8
D. infrastructure
E. cultural

Blooms: Apply
Difficulty: 3 Hard
Feedback: Transportation—or "How will we get it there?"—is one aspect of infrastructure.
41. As part of efforts to stimulate economic development in Africa, the Gates Foundation announced that it would provide cellular phones to farmer
cooperatives. The Gates Foundation recognized that problems in __________ exist in many African markets.
A. transportation
B. communication
C. distribution
D. commerce
E. population
AACSB: Technology
Blooms: Apply
Difficulty: 3 Hard
Feedback: Communication—including telephony—is one aspect of infrastructure analysis. Communication systems are weak in some developing
nations.
42. When Ben evaluated the commercial infrastructure in Mauritius, he considered the island's
A. population control measures.
B. legal, banking, and regulatory systems.
C. retailing capabilities.
D. per capita income estimates.
E. climate and culture.

Blooms: Understand
Feedback: The commercial infrastructure consists of systems—including legal, banking, and regulatory systems—that allow markets to function.
43. Changes in tariffs and quotas are

A. business actions stimulating imports.
B. corporate strategies designed to maximize profits.
C. government actions that reduce competition from international firms.
D. efforts to stimulate choices among government agencies.
E. a means of slowing outsourcing.

Blooms: Understand
Feedback: Tariffs and quotas are among the levers governments can activate to protect domestic firms from foreign competition.
44. Tariffs protect domestic producers by

A. making imported products more expensive.
B. increasing brand recognition.
C. reducing the cost of production.
D. offering subsidies to exports.
E. avoiding regulation.

8-9
Blooms: Remember
Difficulty: 1 Easy
Feedback: A tariff, also called a duty, is a tax levied on a good imported into a country. In most cases, tariffs are intended to make imported goods more
expensive and thus less competitive with domestic products, which in turn protects domestic industries from foreign competition.
45. In most cases, countries use tariffs to reduce foreign competition, but tariffs are also used
A. to shorten supply chains.
B. as a response to perceived unfair trade practices.
C. to offer domestic discounts.
D. to stimulate consumer demand.
E. as a way to equalize quotas.

Blooms: Understand
Feedback: A tariff, also called a duty, is a tax levied on a good imported into a country. In most cases, tariffs are intended to make imported goods more
expensive and thus less competitive with domestic products, which in turn protects domestic industries from foreign competition. In other cases, tariffs
might be imposed to penalize another country for trade practices that the home country views as unfair.
46. A __________ limits the quantity of imported merchandise, thus minimizing competition faced by domestic products.
A. tariff
B. duty
C. trading bloc
D. trade agreement
E. quota

Blooms: Remember
Difficulty: 1 Easy
Feedback: A quota designates a minimum or maximum quantity of a product that may be brought into a country during a specified time period.
47. When the U.S. government determined the prices of solar panels imported from China were artificially low due to illegal subsidies, it imposed a
______ to help domestic firms compete.
A. comparative inflation rate
B. countertrade exchange
C. quota
D. tariff
E. currency exchange rate

Blooms: Understand
Feedback: In some cases, tariffs might be imposed to penalize another country for trade practices that the home country views as unfair. For example,
when the U.S. government determined the prices of solar panels imported from China were artificially low due to illegal subsidies, it imposed a tariff to
help domestic firms compete.
48. When the value of the dollar declines in relation to other currencies, it benefits U.S. marketers who
A. export goods to other countries.
B. import goods from other countries.
C. engage in countertrade.
D. enforce import quotas.
E. outsource labor.

Blooms: Understand
8-10
Feedback: U.S. firms exporting to other countries can sell their goods at lower relative prices when the value of the U.S. dollar drops, increasing sales
opportunities.
49. All of the following are major trade agreements affecting global marketing except
A. NAFTA.
B. EU.
C. GNI.
D. ASEAN.
E. CAFTA.

Blooms: Understand
Feedback: The GNI is the gross national income, a measure of a country's economic output. The others are trade agreements.
50. Marketers considering operations and trade with a specific country must consider whether or not the country belongs to a trading bloc. A trading
bloc is a group of countries
A. that have established a formal agreement to manage trade activities.
B. using the same currency.
C. with similar cultural shopping patterns.
D. located next to each other.
E. with similar political views.

Blooms: Understand
Feedback: A trading bloc consists of countries that have signed a cooperative trade agreement.
51. Which of these trade agreements represents the highest level of integration among participating nations?
A. NAFTA
B. EU
C. GNI
D. ASEAN
E. CAFTA

Blooms: Remember
Difficulty: 1 Easy
Feedback: The European Union (EU) represents the highest level of integration.
52. Global businesses often find it particularly difficult to understand the __________ of a country's culture.
A. symbols
B. underlying values
C. ceremonies
D. exhibited behavior
E. visible artifacts

Blooms: Understand
Feedback: While symbols, ceremonies, and behavior are visible artifacts of a culture, the underlying values (thought processes, beliefs, and
assumptions) can be more difficult to observe and understand.
8-11
53. Chris laughed at some of the cultural mistakes companies made in advertising and promotion in international trade while he was in school. Now he
was trying to determine what had gone wrong with the campaign he had planned in Latin America for his company's product, and it didn't seem quite as
amusing. He narrowed the issues to sociocultural factors. He was looking at both __________ and __________.
A. product uses; currency rates
B. language; trading blocs and social structure
C. potential tariffs; symbols
D. visible artifacts; underlying values
E. verbal communication; logistics

Blooms: Apply
Difficulty: 3 Hard
Feedback: Sociocultural factors include visible artifacts like symbols and dress; they also include underlying values that can be more difficult to
understand. Some of the other answers list one sociocultural factor (language, symbols, verbal communication) along with something that is not a
sociocultural factor.
54. Geert Hofstede's cultural dimensions concept focuses on five dimensions of __________ in a country.
A. symbols
B. underlying values
C. buying patterns
D. personality
E. visible artifacts

Blooms: Remember
Difficulty: 1 Easy
Feedback: Hofstede's cultural dimensions attempt to classify underlying cultural values along six dimensions.
55. All of the following are included in Hofstede's cultural dimensions except
A. power distance.
B. certainty assurance.
C. masculinity.
D. individualism.
E. time orientation.

Blooms: Understand
Feedback: Hofstede's six dimensions are power distance, uncertainty avoidance, individualism, masculinity, time orientation, and indulgence.
56. Marketers sometimes use Hofstede's cultural dimensions to design marketing campaigns
A. with low individualism symbolism when confronted with a time-oriented culture.
B. that use uncertainty avoidance to reduce power distance.
C. with significant power distance.
D. consistent with underlying cultural values in a country.
E. with more consistent time orientation.

Blooms: Understand
Feedback: Marketers analyze cultures using Hofstede's six dimensions to help them to design culturally appropriate marketing plans based on
underlying cultural values.
57. Culture affects

8-12
A. how consumers decide to make their purchases.
B. what consumers decide to purchase.
C. when consumers decide to make their purchases.
D. where consumers decide to make their purchases.
E. every aspect of consumers' purchase decisions.

Blooms: Understand
Feedback: Culture affects every aspect of consumer behavior: why people buy; who is in charge of buying decisions; and how, when, and where people
shop.
58. Generally, firms entering foreign markets begin with

A. less risky strategies first.
B. direct investment.
C. importing.
D. decentralized production.
E. the riskiest, but most profitable endeavor.

Blooms: Understand
Feedback: Many firms follow a progression in which they begin with less risky strategies to enter their first foreign markets and move to increasingly
risky strategies as they gain confidence in their abilities and more control over their operations,
59. When entering a foreign market, the least risky strategy is

A. franchising.
B. exporting.
C. joint venture.
D. direct investment.
E. strategic alliance.

Blooms: Remember
Difficulty: 1 Easy
Feedback: The least risky strategy is exporting because the firm does not own or establish anything in the country. The firm simply ships its products to
buyers (whether consumers or business buyers) in the foreign country.
60. Global expansion often begins with

A. franchising.
B. exporting of goods.
C. joint ventures.
E. strategic alliances.

Blooms: Remember
Difficulty: 1 Easy
Feedback: Global expansion often begins when a firm receives an order for its product or service from another country, in which case it faces little risk
because it has no investment in people, capital equipment, buildings, or infrastructure.
61. Many of the best-known American retailers, like Starbucks and McDonald's, have contractual agreements with another firm or individuals, allowing
its businesses to operate overseas. These companies expanded globally using
A. franchising.
B. exporting.
8-13
C. joint ventures.
E. strategic alliances.

Blooms: Remember
Difficulty: 1 Easy
Feedback: Franchising is a contractual agreement between two companies in which one pays for the right to use the brand and concept developed by the
other. Fast-food restaurant chains are one category in which franchising is widely used.
62. Gerald is assessing global entry strategies for his gourmet sandwich business. He does not want to take a lot of risk and he is willing to limit his
control of international stores. Gerald will most likely use a(n) __________ strategy.
A. franchising
B. exporting
C. joint venture
D. direct investment
E. strategic alliance

Blooms: Apply
Difficulty: 3 Hard
Feedback: Exporting is the lowest-risk strategy; however, for a food service business it probably makes more sense to use franchising, another relatively
low-risk global expansion strategy. Franchising is a contractual arrangement between two companies, allowing one to use a brand and concept
developed by the other.
63. Domestic firms developing a global entry strategy might consider franchising; however, the disadvantages need to be considered. All of the
following are disadvantages of franchising except
A. The franchisor has limited ability to ensure that foreign operations follow all the concepts and ideas that made the firm successful domestically.
B. The franchisee might end up becoming a competitor.
C. Franchising limits profit potential, since profits will have to be split with the franchisee.
D. Franchising is the riskiest way to enter a foreign market.
E. All of these are disadvantages a firm must consider.

Blooms: Analyze
Difficulty: 3 Hard
Feedback: Franchising is actually among the lower-risk global expansion strategies.
64. When a firm pools its resources with that of a local firm to enter a new market, they create a(n)
A. franchise.
B. export promotion.
C. joint venture.
E. strategic alliance.

Blooms: Understand
65. India, like some other countries, may require entering firms to create _________ when expanding into their markets, limiting outsiders' control of
businesses.
A. franchises
8-14
B. export promotions
C. joint ventures
D. direct investments
E. strategic alliances

Blooms: Understand
66. Of the five strategies for entering new markets, direct investment creates the
A. least investment cost.
B. greatest potential risk.
C. most franchisee control.
D. best opportunity for strong strategic alliances.
E. greatest coordination of efforts of global and local partners.

Blooms: Understand
through the formation of wholly owned subsidiaries. This entry strategy requires the highest level of investment and exposes the firm to significant
risks, including the loss of its operating and/or initial investments.
67. NCD Company wants to expand into the Mexican market. It has the financial resources, wants to control business operations, and has had
considerable success marketing to Hispanics in the United States. NCD will likely use __________ to expand into the Mexican market.
A. franchising
B. exporting
C. a joint venture
D. direct investment
E. a strategic alliance

Blooms: Apply
Difficulty: 3 Hard
Feedback: Direct investment is a market entry strategy in which the firm directly owns property and equipment in the foreign market. NCD has the
resources and experience necessary for a firm contemplating direct investment; in addition, direct investment offers NCD the control of business
operations that it seeks.
68. Global segmentation, targeting, and positioning (STP) are more complicated than local STP, in part because
A. consumers may view their roles differently in different countries.
B. there are fewer franchising opportunities in global markets.
C. global consumer markets are almost totally homogeneous, making segmentation difficult.
D. most governments have rules against targeting consumers.
E. positioning almost always fails when attempted in a foreign country.

Blooms: Understand
Topic: Domestic Marketing Strategy vs. Global Marketing Strategy
Feedback: Global segmentation, targeting, and positioning (STP) are more complicated than domestic STP for several reasons. First, firms considering
a global expansion have much more difficulty understanding the cultural nuances of other countries. Second, subcultures within each country also must
be considered. Third, consumers often view products and their role as consumers differently in different countries.
8-15
69. As noted in your text, global segmenting, targeting, and positioning are more complicated than domestic segmenting and positioning because of
cultural nuances, significant subcultures within countries, and
A. currency differences.
B. antidiscrimination regulations prohibiting segmentation and targeting in developing countries.
C. differences in the way consumers see themselves and in the way they see products and services.
D. complications due to franchising issues.
E. the taxes imposed by some foreign countries on marketing activities.

Blooms: Understand
Feedback: Global segmentation, targeting, and positioning (STP) are more complicated than domestic STP for several reasons. First, firms considering
a global expansion have much more difficulty understanding the cultural nuances of other countries. Second, subcultures within each country also must
be considered. Third, consumers often view products and their role as consumers differently in different countries.
70. Cultural nuances, subcultures, and consumers' different views of their roles in different countries can make __________ complicated.
A. purchasing power parity
B. segmentation, targeting, and positioning
C. trading bloc coordination
D. exchange control planning
E. reducing trade surpluses

Blooms: Understand
Feedback: Global segmentation, targeting, and positioning (STP) are complicated because differences in country culture, politics, or the economy may
lead consumers to view their roles differently, and these differences can be hard for an entering company to understand.
71. Which of the following statements regarding global segmentation, targeting, and positioning is true?
A. Companies must continually adjust products and marketing strategies to meet the changing needs of global markets.
B. Global segmentation, targeting, and positioning activities are far less complicated than the same activities in the domestic market.
C. When developing a global STP strategy, it is best to define segments by geography alone.
D. Segmentation, targeting, and positioning activities for global markets do not differ substantially from that of domestic markets.
E. The "golden rule" for global STP activities for firms is to never alter a firm's marketing mix to serve the needs of global markets.

Blooms: Understand
Feedback: Global segmentation, targeting, and positioning (STP) activities are more complicated than domestic STP. Companies must continually
monitor economic and social trends to protect their position within the market and adjust products and marketing strategies to meet the changing needs
of global markets.
72. Which of the following are the two components of a global marketing strategy?
A. understanding foreign currency fluctuations and developing products that can be priced accordingly
B. determining which target markets to pursue and developing a marketing mix to obtain a competitive advantage
C. understanding the supply chain and distribution networks in foreign markets
D. developing culturally appropriate advertising messages and cultivating "domestic" habits among foreign consumers
E. adapting to foreign regulations and targeting as many people as possible

Blooms: Understand
Feedback: Just like any other marketing strategy, a global marketing strategy includes two components: determining the target markets to pursue and
developing a marketing mix that will sustain a competitive advantage over time.
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73. The most important consideration when a firm chooses a global product strategy should be
A. opportunities for countertrade.
B. the effectiveness of the marketing team.
C. the needs of the target market.
D. the overall cost of the strategy.
E. WTO regulations.

Blooms: Remember
Difficulty: 1 Easy
Feedback: Just as with domestic marketing, all global marketing decisions should consider the needs of the target market.
74. Tariffs, quotas, and currency exchange policies affect global

A. offshore product design.
B. pricing strategies.
C. advertising.
D. logistics.
E. promotion.

Blooms: Remember
Difficulty: 1 Easy
Feedback: These are all important issues that will impact the price consumers will pay for a product.
75. Global pricing strategies should strive to be consistent with

A. offshore distribution facilities.
B. the cost of materials.
C. positioning strategies.
D. domestic pricing.
E. trade surplus guidelines.

Blooms: Understand
Feedback: As with domestic marketing, pricing strategies for global products should be consistent with the positioning of the product.
76. Global marketers are under constant pressure to simplify distribution channels in order to
A. improve promotion efficiency.
B. reduce trade deficits.
C. afford tariffs.
D. meet trade agreement guidelines.
E. reduce costs.

Blooms: Remember
Difficulty: 1 Easy
Feedback: Global distribution networks form complex value chains that involve middlemen, exporters, importers, and different transportation systems.
These additional middlemen typically add cost and ultimately increase the final selling price of a product. As a result of these cost factors, constant
pressure exists to simplify distribution channels wherever possible.
77. Global marketers typically find distribution in developing countries is more complex because
A. they must go through many different types of distribution channels.
B. distribution is more heavily regulated in developing countries.
C. most consumers in developing countries live in densely populated cities.
D. the infrastructure is more advanced in most developing countries.
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E. consumers in developing countries have very specific preferences.

Blooms: Understand
Feedback: Distribution channels tend to be longer and more complex within global contexts than in domestic markets. For this reason, distribution
channel efficiency is a critical factor in keeping down costs in global marketing.
78. Graham had developed an extremely successful advertising and promotion campaign for a client in the United States. The client wanted to roll out
the same campaign to markets worldwide, but Graham cautioned against doing this, most likely because
A. differences in languages, customs, and culture might make the campaign meaningless and ineffective in some markets.
B. copyright and intellectual property concerns prevented him from wanting to share his good ideas outside of the U.S. market.
C. he had not applied for or received international certification that was required for working outside the United States.
D. he was unfamiliar with the code of ethics for advertising in other countries.
E. he did not have the budget for a global rollout.
AACSB: Communication
Blooms: Apply
Difficulty: 3 Hard
Feedback: When designing communication strategies for global markets, differences in languages, customs, and culture must be carefully considered.
A campaign that works well in one country might be ineffective or even offensive in another.
79. Celia's firm has developed a breakfast cereal targeted toward children. Rather than compete in the mature U.S. market, she has decided instead to
introduce the product in Europe, where she feels it will be innovative. Her advertising agency urged caution because
A. advertising regulations differ in other countries, including advertising to children.
B. print media are different in Europe, and it would be difficult to create a global campaign.
C. literacy rates are significantly lower in Europe, and print ads would be ineffective.
D. research indicates that European children do not eat breakfast as often as American children.
E. domestic advertising agencies cannot earn commissions on advertising they place overseas.

Blooms: Apply
Difficulty: 3 Hard
Feedback: Regulation of advertising—especially to children—can vary widely from one country to another. In an attempt at standardization, the EU
recently recommended common guidelines for its member countries regarding advertising to children and is currently initiating a multiphase ban on
junk food advertising.
80. Brands can be extremely valuable domestically, but challenging internationally. Companies can help overcome language difficulties in using brands
by
A. keeping the brand name the same in all languages, regardless of meanings, as long as the brand logo and symbol are displayed prominently.
B. avoiding the use of the brand name in advertising and focusing on feature and benefits.
C. translating advertising copy for the entire ad except the brand name.
D. developing brand names that have no preexisting meaning in any known language.
E. adhering to the UN Convention on Naming Rights.

Blooms: Understand
Feedback: To avoid the potential embarrassment that language confusion can cause, firms spend millions of dollars to develop brand names that have no
preexisting meaning in any known language, such as Accenture (a management consulting firm) or Avaya (a subsidiary of Lucent Technologies,
formerly Bell Labs).
81. Which of the following is one of the global entry strategies?

A. direct investment
B. countertrade
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C. offshoring
D. infrastructure development
E. trade agreements

Blooms: Understand
Feedback: Direct investment is one of the global entry strategies.
82. When a company decides to minimize risk and enter a global market by shipping its products to buyers in other countries, this is known as
A. exporting.
B. franchising.
C. a strategic alliance.
D. a joint venture.
E. direct investment.

Blooms: Remember
Difficulty: 1 Easy
Feedback: This example refers to exporting, in which the company simply sells its products to either end consumers or a business buyer in another
country. This is the least risky global entry strategy.
83. Which of the following best describes the direct investment global entry strategy?
A. With direct investment, a firm maintains total ownership of its plants, operation facilities, and offices in a foreign country.
B. Direct investment occurs when a firm enters a new market by pooling its resources with those of a local firm to form a new company in which
ownership, control, and profits are shared.
C. Direct investment refers to depositing payroll funds in a foreign bank.
D. Direct investment designates the maximum quantity of a product that may be brought into a country during a specified time period.
E. Direct investment occurs when a producer sells its offering in a foreign market at a price less than its production cost.

Blooms: Understand
Difficulty: 1 Easy
through the formation of wholly owned subsidiaries.
84. The term trade deficit refers to

A. a country that exports more goods than it imports.
B. an indicator of the quality of life in a country.
C. a level of population growth that impacts exports.
D. the sum of all goods and services handled in a country.
E. higher levels of imports than exports.

Blooms: Remember
Difficulty: 1 Easy
Feedback: A trade deficit refers to a situation where a country imports more goods (in terms of dollar value) than it exports.
85. When shopping for a car you notice a significant price gap between domestic and imported cars, with the imported cars being much more expensive.
This could be the result of
A. a tariff.
B. a boycott.
C. overseas consolidation.
D. globalization.
E. franchising.
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Blooms: Understand
Feedback: A tariff is a tax levied on a good imported into a country, which could account for the higher price of foreign cars.
86. When entering into a franchise agreement, what term is used to refer to the firm that is granted the right to operate a business using the franchise
name and business concept?
A. franchisee
B. franchisor
C. franchise agent
D. franchise partner
E. franchised owner

Blooms: Understand
Feedback: Franchising is a contractual agreement between a firm, the franchisor, and another firm or individual, the franchisee. The franchisee can
operate a business using the name and business format developed and supported by the franchisor.
87. Which of the following statements best describes global expansion through a strategic alliance?
A. In a strategic alliance, a firm enters a new market and forms a new company with shared ownership, profits, and controls.
B. A strategic alliance is a relationship in which two firms collaborate on a business opportunity, but do not invest in each other.
C. In a strategic alliance, two firms enter into a franchise agreement.
D. In a strategic alliance, a firm in one country sends products to a firm in another country.
E. In a strategic alliance, a firm signs a trade agreement with a firm in another country.

Blooms: Remember
Difficulty: 1 Easy
Feedback: Strategic alliances refer to collaborative relationships between independent firms, though the partnering firms do not create an equity
partnership; that is, they do not invest in one another.
88. The XYZ Company is collaborating with a competitor on a globally based opportunity for mutual benefit, but the two competitors are not investing
in one another. This is an example of
A. franchising.
B. a joint venture.
C. a strategic alliance.
D. a direct investment.
E. an equity partnership.

Blooms: Apply
89. The United States imports more goods from China than it exports to China. This is known as
A. gross national income (GNI).
B. a trade surplus.
C. gross domestic product (GDP).
D. a trade deficit.
E. an import imbalance.
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Blooms: Understand
Feedback: A trade deficit means that a country imports more goods than it exports. In recent years, the United States has imported far more from China
than it has exported to China.
90. When Ford Motor Company decided to sell the Fiesta—in the same form and design—around the globe, instead of selling different versions in
different countries, this was part of Ford's global ________ strategy.
A. communication
B. pricing
C. distribution
D. exchange
E. product

Blooms: Apply
Difficulty: 3 Hard
Feedback: For the Fiesta, Ford has decided to go with the global product strategy of selling the same product in multiple countries.
91. When Cisco Systems Inc. of San Jose, California, and Tata Consultancy Services of Mumbai, India, entered into a relationship, they both continued
to develop market-ready infrastructure and network solutions for customers, but they relied on each other to provide the training and skills that one or
the other might have lacked. This relationship is best described as
A. NAFTA.
B. a strategic alliance.
C. CAFTA.
D. an international partnership.
E. a joint venture.

Blooms: Apply
Difficulty: 3 Hard
92. Ford Motor Company decided to sell the Fiesta around the globe. Which of the following would be an example of glocalization of the Fiesta?
A. The same product design and features, and the same basic promotional campaign, used in all countries.
B. Variations in the product design country by country, with the same basic promotional campaign used in all countries.
C. The same product design and features in all countries, with variations in the promotional campaigns country by country.
D. Variations in the product design and the promotional campaign country by country.
E. The same marketing mix for all of the four Ps used in all countries.

Blooms: Understand
Feedback: Glocalization refers to a global product strategy with a common product around the world but differences in the promotion strategy.
93. One Laptop Per Child is a nonprofit initiative with the goal of making extremely low-cost laptops available to children in the developing world, with
the goal of helping them learn skills needed in today's workforce. If some of the low-cost technology developed for this laptop found its way into laptops
created for U.S. consumers, this would be an example of
A. glocalization.
B. reverse innovation.
C. franchising.
D. a strategic alliance.
E. purchasing power parity.

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Blooms: Apply
Difficulty: 3 Hard
Feedback: Reverse innovation occurs when companies initially develop products for niche or under-developed markets and then expand them to their
original or home markets.
94. Despite multiple upturns and downturns in its economy, Russia's overall growth prospects appear promising, especially as a consumer market.
However, there are still multiple dilemmas for firms trying to market their goods and services. These dilemmas include all of the following Russia's
A. aging population and low both rates.
B. widespread corruption.
C. international sanctions.
D. involvement in China.
E. fluctuations in oil prices.

Blooms: Understand
Feedback: Russia faces an aging population and low birthrates. If these trends persist, Russia’s population could decline by one-third in the next half
century. Corruption is widespread, creating ethical dilemmas for firms trying to market their goods and services. Furthermore, international sanctions
on Russia, in response to its occupation of Ukraine and its involvement in the Middle East, and fluctuations in oil prices threaten the country with a
financial crisis.
95. What do the BRIC countries have in common?

A. They participate together in a trading bloc.
B. They have suffered more than most other countries in the recent recession.
C. They are Asian countries experiencing explosive population growth.
D. They are the four countries known for the highest levels of bribery in business and government.
E. They are experiencing significant levels of economic growth.

Blooms: Understand
Feedback: The BRIC countries are Brazil, Russia, India, and China. All are experiencing significant economic growth.
96. Which of the following is currently a negative factor for foreign investment in Russia?
A. The Russian population is poorly educated.
B. Russian consumers have little interest in online shopping.
C. Russia is known for corruption, creating ethical dilemmas for firms.
D. Russian consumer markets are saturated, offering few opportunities for goods from U.S. companies to sell well.
E. Few Russians have access to the Internet due to heavy regulation.

Blooms: Understand
Feedback: Corruption is widespread in Russia, creating ethical dilemmas for firms trying to market their goods and services.
97. Which of the following is currently a negative factor for foreign investment in India?
A. India's population is fairly old and aging fast.
B. India's retail environment lacks modern supply chain management facilities and systems.
C. India prevents foreign investors from entering into joint ventures.
D. India has no shopping malls or other large commercial centers.
E. India lacks a skilled workforce.

Blooms: Understand
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Feedback: India’s retail environment is still dominated by millions of small stores and lacks modern supply chain management facilities and systems.
98. Which of the following is a potential negative factor for foreign investment in China?
A. China's population is aging and is likely to continue to do so for many years.
B. China drastically restricts the goods it allows U.S. companies to export to China.
C. China's standard of living has dropped over the past 30 years.
D. China has imported fewer goods from the United States each year for the past decade.
E. Chinese consumers are not interested in purchasing products from the United States.

Blooms: Understand
Feedback: Although China’s median age is slightly younger than that of the United States currently, at 36.3 years, its population has been aging as a
result of its one-child policy, and will likely continue to do so for many years, even though the government has recently rescinded the policy and will
now allow two children per couple.
99. A company is assessing opportunities in the BRIC companies and determines that _________ is one of the youngest populations in the world and is
increasingly adopting global attitudes.
A. Russia
B. Brazil
C. India
D. Italy
E. China

Blooms: Remember
Difficulty: 1 Easy
Feedback: With a median age of 26.7 years, India has one of the youngest populations in the world. Its young inhabitants increasingly are adopting
global attitudes while living in growing urban centers and shopping at large malls.
100. Why should marketers be aware of the BRIC countries?

A. They are a microcosm of the rest of the world.
B. They represent almost half the world's population.
C. They are likely to be the source of most market growth.
D. They have had the most dramatic changes in culture and consumer buying patterns.
E. They have stable population growth, which makes them easier to study.

Blooms: Understand
Feedback: The four BRIC nations are likely to be the source of most market growth.
101. Which statement about India's population is true?

A. With a median age of 61, India has one of the oldest populations in the world.
B. India's young people mostly live in rural areas in large families.
C. India's workforce is highly skilled, particularly in technical fields.
D. India claims more than 25 percent of the world's population.
E. Most Indian citizens shop in large retail outlets.

Blooms: Understand
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Feedback: India's highly skilled workforce holds great attraction for firms that hope to expand using local talent, especially in technical fields.
102. A publishing company plans to outsource its production-related tasks to a BRIC country. They are assessing opportunities and are attracted to this
country due to its population of young, well-educated, technically-skilled workers who are fluent in English.
A. Russia
B. China
C. Brazil
D. India
E. Chile

Blooms: Analyze
Feedback: The well-educated, modern generation of India is largely fluent in English, and the highly skilled workforce holds great attraction for firms
that hope to expand using local talent, especially in technical fields.
103. Which of the following statements is true with regard to growth in global markets?
A. A country's infrastructure does not impact growth in the global market.
B. The number of Russian Internet users is decreasing at a rate of 10 percent annually.
C. Russia's population is expected to increase by one-third in the next half century.
D. Changes in technology, especially communications, have been a driving force for growth in global markets for decades.
E. Brazil does not welcome foreign investors.

Blooms: Analyze
Difficulty: 3 Hard
Feedback: Changes in technology, especially communications, have been a driving force for growth in global markets for decades. The telegraph, radio,
television, computer, and Internet have increasingly connected distant parts of the world.
104. A U.S. company is analyzing its business prospects in Brazil. Marketing executives understand which of the following statements to be true
regarding this market?
A. In Brazil, Facebook has 65 million members, making it the company's second-largest market, behind the United States.
B. Censorship issues in Brazil are highly complex.
C. Brazil is currently the world's fifth largest economy.
D. The relations between the United States and Brazil are complicated due to the fall of Brazil's economy.
E. Brazil holds the status of one of the slowest developing economies in the world.

Blooms: Analyze
Feedback: In Brazil, Facebook already has 65 million members, making the South American nation its second-largest market, behind the United States.
105. Which country is Europe's largest Internet market, with Internet users growing at a rate of 10 percent annually?
A. Great Britain
B. Spain
C. France
D. Germany
E. Russia
AACSB: Technology
Blooms: Understand
Feedback: The number of Russian Internet users, presently at 83 million, is growing at a rate of approximately 10 percent annually.
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106. A U.S. firm is analyzing its business prospects in China. Marketing executives understand which of the following to be true of this potential
market?
A. China’s leadership, which maintains communist political ideals, has not embraced market-oriented economic development, which has led to
startlingly slow gains.
B. Recent developments in China have led to dramatically decreased living standards and levels of personal freedom.
C. China's strict censorship rules present serious challenges; a post on Facebook could lead to jail time.
D. China's economy has recently seen a substantial decrease in its Global Retail Development Index (GRDI).
E. China's growth gross domestic in its gross domestic market has increased.

Blooms: Analyze
Feedback: China's strict censorship rules present serious challenges; a post on Facebook could lead to jail time.
107. Which country has embraced market-oriented economic development in spite of maintaining communist political ideals?
A. Brazil
B. Russia
C. Iran
D. China
E. Afghanistan

Blooms: Understand
Feedback: Since 1978, China's leadership, while maintaining communist political ideals, has embraced market-oriented economic development, which
has led to startlingly rapid gains.
108. Which country has a rapidly aging population due to its one-child policy?
A. Brazil
B. Russia
C. India
D. China
E. Japan

Blooms: Understand
Feedback: Although China's median age is slightly younger than that of the United States currently, at 36.3 years, the application of the one-child policy
means that China is one of the most rapidly aging countries in the world.
109. Once a firm has done an analysis of the most viable markets for its products, then it must next
A. determine the competition and develop strategies to overcome it.
B. conduct an internal assessment of its capabilities.
C. conduct an external analysis of the target market's economy, culture, and regulatory barriers.
D. develop a product to meet the needs of those markets.
E. achieve success with the product in its home market.

Blooms: Understand
Feedback: It must next conduct an internal analysis of its capabilities. This analysis includes an assessment of the firm's access to capital, the current
markets it serves, its manufacturing capacity, its proprietary assets, and the commitment of its management to the proposed strategy.
110. Mary wants to sell her products in Europe, since they are doing well in the United States. She does not have a lot of capital and is risk-averse, so she
most likely would choose to begin with
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A. opening a franchise.
B. exporting her products.
C. forming a strategic alliance with another company.
D. entering a joint venture with a local firm.
E. making a direct investment in another country.

Blooms: Apply
Difficulty: 3 Hard
Feedback: Exporting is the least financially risky global entry strategy, so Mary most likely would choose this route.
111. Franco, a former retailer, has been living in the United States for five years and wants to start a business. He does not have an existing firm or a
product, and he doesn't have a lot of capital, but since he loves McDonald's food, he decides to
A. open a McDonald's franchise.
B. directly invest in McDonald's.
C. export McDonald's products to other countries.
D. form a strategic alliance with McDonald's.
E. form a joint venture with McDonald's.

Blooms: Apply
Difficulty: 3 Hard
Feedback: McDonald's is a global franchisor. A franchising contract allows the franchisee to operate a business—a retail product or service firm or a
B2B provider—using the name and business format developed and supported by the franchisor.
112. Sydney's Emporium has 59 stores in the United States and wants to expand globally. Sydney's wants to achieve the highest possible returns, and is
not concerned about pursuing a high-risk strategy as long as it maintains complete control over its stores. The best global entry strategy for Sydney's is
most likely
A. exporting.
B. a strategic alliance.
C. a joint venture.
E. franchising.

Blooms: Apply
Difficulty: 3 Hard
Feedback: Direct investment requires a firm to maintain 100 percent ownership of its plants, operation facilities, and offices in a foreign country. This
strategy requires the highest level of investment and exposes the firm to significant risks, but has the potential for high return.
113. When Porsche filmed an advertisement in which its vehicles ran over the Great Wall of China, Chinese consumers were left more confused than
intrigued. To address or avoid such issues, one important cultural classification scheme that firms can use is Geert Hofstede’s cultural dimensions
concept. Hofstede proposes that cultures differ on all of the following dimensions except
A. collectivism.
B. individualism.
C. masculinity.
D. time orientation.
E. indulgence.

Blooms: Analyze
Feedback: Hofstede’s cultural dimensions offer a foundation for most research into culture: power distance, uncertainty avoidance, individualism,
masculinity, time orientation, and indulgence.
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114. If you visit a Kentucky Fried Chicken restaurant in China, along with KFC's regular menu items, you will find congee, a rice porridge that can
feature pork, pickles, mushrooms, and preserved egg, on the menu. This is an example of which global product strategy?
A. sell the same products in both the home country market and the host country
B. sell only products native to the home country
C. sell a product similar to that sold in the home country, but include minor adaptations
D. sell only products native to the various global markets
E. sell totally new products or services

Blooms: Apply
Difficulty: 3 Hard
Feedback: Congee would be a totally new product.
115. According to Hofstede's cultural dimensions concept, which BRIC country posts notably high scores in the dimensions of uncertainty avoidance
and power distance?
A. Brazil
B. Russia
C. India
D. China
E. Iran

Blooms: Understand
Feedback: As a country, Russia scores high on the dimensions of uncertainty avoidance and power distance. Although Hofstede was careful to warn that
cultural dimension scores are informative only in a comparative sense, marketers clearly can use them to design strategies for the varied, promising,
BRIC growth markets.
116. Gandolph's Tires sells the same tire globally, but it uses different advertisements based on the country and culture. This is an example of
A. cultural shift.
B. glocalization.
C. ethnic sensitivity.
D. promotional flex.
E. unethical marketing practices.

Blooms: Apply
Difficulty: 3 Hard
Feedback: Glocalization refers to the the selling of the same product or service in both the home-country market and the host country.
117. Unilever discovered that people in emerging economies could not afford to buy standard sizes of toothpaste or shampoo, so Unilever started selling
single-serve packets at very low prices. Later, Unilever discovered that the same approach worked in the United States and started also selling them
there. This is an example of
A. reverse innovation.
B. glocalization.
C. ethnic sensitivity.
D. promotional flex.
E. unethical marketing practices.

Blooms: Apply
Difficulty: 3 Hard
Feedback: In reverse innovation, companies initially develop products for niche or underdeveloped markets, and then expand them into their original or
home markets.
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118. Core Publishing Company learned that when selling overseas, local fulfillment can be more cost-effective, and it also can decrease delivery time
and improve customer service. This is an example of a global _________ strategy.
A. communication
B. product
C. promotion
D. distribution
E. pricing

Blooms: Apply
Difficulty: 3 Hard
Feedback: This is a global distribution strategy as it relates to the distribution channel chosen by Core Publishing Company.
119. In China, state control of media is high, so companies are challenged to find ways to get their message to customers. This demonstrates one of the
difficulties in crafting a global ________ strategy.
A. communication
B. product
C. cultural
D. distribution
E. pricing
Blooms: Apply
Difficulty: 3 Hard
Feedback: Developing a global communication strategy is hampered by media availability in countries with state-controlled media.
120. China has three main languages, and many more dialects. This presents a particular challenge to developing a global ________ strategy.
A. communication
B. product
C. cultural
D. distribution
E. pricing
Blooms: Apply
Difficulty: 3 Hard
Feedback: Developing a global communication strategy is hampered by multiple languages spoken in a single country.
Essay Questions
121. It seems that you cannot pick up a newspaper without reading about globalization. What fundamental changes are contributing to the growth of
global markets?
Global markets are the result of several fundamental changes such as reductions or eliminations of trade barriers by country governments, the
decreasing concerns of distance and time with regard to moving products and ideas across countries, the standardization of laws across borders, and
globally integrated production processes.

Blooms: Understand
122. You have been asked to evaluate the economic potential of a new global market. What economic measures would you use? Explain each measure.
To evaluate the economic potential of a new global market, you would start with GDP and GNI. A country's GDP is a measure of the total market value
of final goods and services produced in a year. GNI is GDP plus net income earned from investments abroad and minus payments made to nonresidents
(net investment income in and out of a country). A country's income is only part of the economic picture. Purchasing power parity provides an estimate
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of the spending power of income within a country. Although an understanding of the macroeconomic environment is crucial for managers facing a
market entry decision, of equal importance is the understanding of economic metrics of market size, population growth rate, and real income.

Blooms: Analyze
Difficulty: 3 Hard
123. Assume you are advising the Nepalese government about trade policies. What options does the government have? Which would you recommend to
stimulate the domestic economy?
The trade policy choices include tariffs, quotas, and exchange controls. Quotas could be reduced on things like trekking permits for Mount Everest to
increase tourism revenues. Tariffs on certain imported goods could be used to protect domestic producers. Exchange controls could be used to reduce
the cost of Nepalese exports.

Blooms: Apply
Difficulty: 3 Hard
124. What are Geert Hofstede's six cultural dimensions concepts? What is the value of his cultural dimensions concept to global marketers?
Hofstede's six cultural dimensions include power distance, uncertainty avoidance, individualism, masculinity, time orientation, and indulgence. The
value is in understanding differences between a marketer's culture and that of a new target market. This understanding is particularly important in
selling and marketing communications decisions.

Blooms: Understand
125. What kinds of sociocultural concerns are raised in international marketing that go beyond promotion and advertising?
Understanding another country's culture is crucial to the success of any global marketing initiative. Students should be able to address several aspects of
consumer behavior. Students might also raise brand and packaging issues, concerns in business relationships, and in business organization.

Blooms: Analyze
126. You have been hired to pursue international marketing for a small manufacturing firm. The owner, who is reaching retirement age, does not like to
take on risky business ventures. Her son, though, likes to take risks; he feels it's a good way to earn a greater return. What entry strategy would the owner
want to pursue, and what entry strategy would the son want to pursue? How might you resolve the differences?
The owner would prefer exporting as the least risky, while the son would tend toward direct investment. The student should be aware that a firm could
begin at the exporting level as a sort of "test" before moving toward riskier and more profitable ventures.

Blooms: Apply
Difficulty: 3 Hard
127. Gerald is assessing global entry strategies for his gourmet sandwich business. He does not have significant capital for expansion and does not want
to take a lot of risk. He is also willing to limit his control of international stores. What are his global entry options? Given his situation and priorities,
which option is most logical? Why?
Gerald's five options are franchising, exporting, a joint venture, direct investment, or a strategic alliance. Franchising makes the most sense because he
does not have the capital for direct investment or a joint venture, he is willing to limit his control over international expansion, and exporting gourmet
sandwiches wouldn't make much sense.

Blooms: Apply
Difficulty: 3 Hard
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128. How could a marketer adapt a product to appeal to international markets? Give a specific example.
Responses will vary widely, but students should recognize the importance of local tastes and preferences while bearing in mind the importance of
economics of scale that might be realized through standardization.

Blooms: Apply
Difficulty: 3 Hard
129. There are many arguments and reasons for adapting communications strategies in international markets. What are some reasons for adopting a
single, global communications strategy?
Students should explore brand identity, cost savings in production and placement, convergence of tastes, and other areas of the marketing mix.
Blooms: Analyze
Difficulty: 3 Hard
130. You have been asked to evaluate the economic potential of Gabon as a market for your company's products. What three categories of economic
factors will you assess?
You will assess Gabon's general economic environment, the market size and population growth rate, and real income.

Blooms: Understand
131. What does purchasing power parity mean?
A frequently used metric of an overall economy is the purchasing power parity (PPP), a theory that states that if the exchange rates of two countries are
in equilibrium, a product purchased in one will cost the same in the other, if expressed in the same currency.

Blooms: Remember
Difficulty: 1 Easy
132. Why is a country's infrastructure an important consideration to global marketers?
Infrastructure is defined as the basic facilities, services, and installations needed for a community or society to function, such as transportation and
communications systems, water and power lines, and public institutions such as schools, post offices, and prisons. Countries with limited infrastructure
make marketing efforts more difficult, time-consuming, and expensive.

Blooms: Understand
133. How do tariffs affect markets?
Tariffs artificially raise the price of imported products, reducing the quantity demanded.

Blooms: Understand
134. When and why do many American firms begin their global expansion efforts by exporting?
Many American firms begin global expansion when they get an order from a customer in another country. The U.S. market has usually been big enough
that U.S. firms spend all their efforts on domestic demand. The second reason why firms begin by exporting is because it is less risky than other global
expansion alternatives.

8-30
Blooms: Understand
135. What is the difference between a strategic alliance and a joint venture?
Strategic alliances refer to collaborative relationships between independent firms, though the partnering firms do not create an equity partnership; that
is, they do not invest in one another. A joint venture is formed when a firm entering a market pools its resources with those of a local firm. As a
consequence, ownership, control, and profits are shared.

Blooms: Remember
Difficulty: 1 Easy
136. What are the pros and cons of a franchising agreement for global expansion?
A franchise contract allows the franchisee to operate a retail product or service business using the name and business format developed and supported
by the franchisor. However, the firm has limited control over the market operations and must follow strict guidelines set forth by the franchisor.

Blooms: Understand
137. Once a company has decided to sell in a foreign country, it must determine the best mode of entry. List each mode of market entry and give an
example for each.
Examples may vary, but the five modes of entry should all be included: exporting, franchising, strategic alliances, joint ventures, and direct investment.

Blooms: Apply
Difficulty: 3 Hard
138. Once a company has decided to pursue a global market, it will explore the four Ps. List the potential global product strategies a firm can employ.
There are three potential global product strategies: (1) to sell the same product or service in both the home country market and the host country; (2) to
sell a product or service similar to that sold in the home country, but to include minor adaptations; and (3) to sell a totally new product or service in the
host country.

Blooms: Remember
Difficulty: 1 Easy
139. What would it mean if Oreo adopted a glocalization strategy for global sales of its cookies?
Glocalization refers to the use of a standardized product offering with localized promotional strategies in different countries. So the cookie would be the
same worldwide, but the promotional strategy would focus on different things depending on the local culture and preferences.

Blooms: Understand
Difficulty: 3 Hard
140. The text states that even among English speakers, there can be significant differences in the effectiveness of advertising campaigns. Why is this
true?
Countries have social and cultural differences. For instance, an ad that is effective in the United States might seem too tame for the UK.

Blooms: Understand
141. Explain the concept of reverse innovation by giving an example of this practice.
8-31
Reverse innovation is when companies initially develop products for niche or underdeveloped markets, and then expand them into their original or
home markets. Specific examples will vary.

Blooms: Understand
142. In what three ways are global segmentation, targeting, and positioning more complicated than domestic STP?
First, firms considering a global expansion have much more difficulty understanding the cultural nuances of other countries. Second, subcultures within
each country also must be considered. Third, consumers often view products and their role as consumers differently in different countries.

Blooms: Understand
143. What are the risks associated with global franchising?
The franchisor has limited control over the market operations in the foreign country, its potential profit is reduced because it must be split with the
franchisee, and, once the franchise is established, there is always the threat that the franchisee will break away and operate as a competitor under a
different name.

Blooms: Understand
144. How is the retail landscape in India changing?
Recent changes by the Indian government have the potential to significantly modernize the retail landscape. Foreign retailers that carry multiple brands,
like Walmart, are now allowed to own up to 51 percent of joint ventures in India. Also, retailers that carry only their own brand, like Adidas and Reebok,
can now own 100 percent of their Indian businesses.

Blooms: Understand
145. Russia has notably high uncertainty avoidance and power distance scores on Hofstede's cultural dimensions graph. What does this mean to
someone looking to market a product in that country?
Uncertainty avoidance relates to the extent to which the society relies on orderliness, consistency, structure, and formalized procedures to address
situations that arise in daily life. So a marketer might want to be sure that promotional campaigns clearly spell out the benefits of the product, or be sure
to have a theme running through all promotional materials that is consistent. A high power distance score would mean that they accept social inequality
as natural, so they would not have a problem with a product that appealed to only a certain segment of the population.

Blooms: Analyze
Difficulty: 3 Hard
146. Netflix has initiated a staged approach to going global, entering one or two international markets at a time, in an attempt to ensure that its
positioning and offers align with each market’s demands and regulations. Discuss some of the challenges the company faced with this strategy.
As Netflix's staggered approach reflects, entering the European Union is not a simple matter of one offer for everyone. Instead, each nation has its own
rules and regulations regarding streaming content, as well as its own existing competitive market. In France for example, Netflix cannot legally stream
any movie until at least three years after the movie's theatrical release. Furthermore, Netflix already sold the rights to some of its most popular original
programming, such as , to the French pay-television provider Canal Plus, so it cannot air those episodes either. In Germany, the challenge is less legal
and more competitive. Previously established services, including the Amazon-owned Lovefilm, a streaming service called Watchever, and the satellite
television service Sky Deutschland, already own much of the potential market.

Blooms: Understand
8-32
147. What are the five major trade agreements that cover two-thirds of the world's international trade?
The five major trade agreements include the European Union (EU), the North American Free Trade Agreement (NAFTA), Central America Free Trade
Agreement (CAFTA), Mercosur, and the Association of Southeast Asian Nations (ASEAN).

Blooms: Remember
Difficulty: 1 Easy
148. Describe the process of exchange control, and explain how it affects a country's ability to conduct global business.
Exchange control refers to the regulation of a country's currency exchange rate, the measure of how much one currency is worth in relation to another.
When the dollar falls, it has a twofold effect on U.S. firms' ability to conduct global business. For firms that depend on imports of finished products, raw
materials that they fabricate into other products, or services from other countries, the cost of doing business goes up dramatically. At the same time,
buyers in other countries find the costs of U.S. goods and services much lower than they were before.

Blooms: Understand
149. What is the difference between a trade deficit and a trade surplus? If a firm wants to manufacture in another country, which of these trade situations
would it prefer?
A trade deficit means that the country imports more goods than it exports. A trade surplus indicates that the country has a higher level of exports than
imports. Firms would prefer to manufacture in a country that has a trade surplus, because it signals a greater opportunity to export products to more
markets.

Blooms: Understand
150. Briefly describe the four key elements of a country's infrastructure that would concern marketers.
The elements of a country's infrastructure that marketers would focus on are:
• Transportation—a system (trains, roads, refrigeration) to transport goods throughout the various markets and to consumers in geographically
dispersed marketplaces.
• Distribution channels—channels to deliver products in a timely manner and at a reasonable cost.
• Communications system, particularly media access—sufficiently developed to allow consumers to find information about the products and services
available in the marketplace.
• Commercial infrastructure—infrastructure consisting of the legal, banking, and regulatory systems.

Blooms: Understand
Category # of Questions
AACSB: Analytical Thinking 122
AACSB: Communication 4
AACSB: Knowledge Application 23
AACSB: Technology 2
Accessibility: Keyboard Navigation 120
Blooms: Analyze 10
Blooms: Apply 28
Blooms: Remember 41
Blooms: Understand 71
Difficulty: 1 Easy 41
Difficulty: 2 Medium 76
Difficulty: 3 Hard 33
8-33
Test Bank for Marketing, 8th Edition, Dhruv Grewal Michael Levy
Learning Objective: 08-01 Describe the components of a country market assessment. 59

Learning Objective: 08-02 Understand the marketing opportunities in BRIC countries. 20
Learning Objective: 08-03 Identify the various market entry strategies. 33
38
Topic: Alternative Marketing Mix Strategies for Global Marketing 3
Topic: Domestic Marketing Strategy vs. Global Marketing Strategy 14
Topic: Global Environmental Forces 63
Topic: Market Entry Strategies 34
Topic: Marketing Globalization 28
Topic: Trade Agreements, Monetary Unions and International Organizations 8
8-34
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AACSB: Analytical Thinking

AACSB: Analytical Thinking

3. The Big Mac Index is a measure of economic health in a country.

AACSB: Analytical Thinking

AACSB: Analytical Thinking

5. Tariffs artificially lower prices and therefore lower demand.

AACSB: Analytical Thinking

7. The BRIC countries are Bolivia, Russia, Italy, and China.

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Knowledge Application

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

31. The most common measure of market potential of an economy is a country's

AACSB: Analytical Thinking

32. GDP is defined as

AACSB: Analytical Thinking

33. Gross national income consists of GDP

AACSB: Analytical Thinking

34. The Big Mac Index is a novel measure of

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Knowledge Application

AACSB: Analytical Thinking

AACSB: Knowledge Application

Feedback: Transportation—or "How will we get it there?"—is one aspect of infrastructure.

AACSB: Analytical Thinking

43. Changes in tariffs and quotas are

AACSB: Analytical Thinking

44. Tariffs protect domestic producers by

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking

AACSB: Analytical Thinking