Quiz 15: The Global Marketplace 

Which of the following is most likely true of a global firm? A) A global firm manufactures and markets goods wherever it can do the best job. B) A global firm typically operates from one country. C) A global firm maximizes the importance of national boundaries. D) A global firm sees the world as many different markets. E) A global firm engages in joint partnerships overseas.

The United States has occasionally placed this tax on certain imported Canadian products including steel and softwood. This action was designed to raise revenue or protect domestic firms and is referred to as a(n) . A) exchange B) fine C) quota D) excise E) tariff

A country may place a limit on the volume of imported citrus fruit that is allowed. This is an example of a(n) . A) quota B) customs duty C) excise duty D) tariff E) fine

Which of the following is an example of a nontariff trade barrier? A) a sales tax B) excise duty C) an import quota D) customs duty E) a host-country regulation

Walmart's decision to suspend its planned expansion into India's huge but fragmented retail market due to obstacles put in place by the host nation to protect its mom-and-pop retailers is an example of . A) excise duties B) quotas C) nontariff trade barriers D) tariffs E) exchange controls

Which of the following is true of the World Trade Organization (WTO)? A) It lacks the power to impose international trade sanctions. B) It mediates global trade disputes. C) It was replaced by the GATT in 1995. D) It increases tariffs and other international trade barriers. E) It restricts the maximum number of member nations to 100.

Which of the following describes the WTO? A) It reduced the influence of the WTO in agriculture. B) It lacks the capability to mediate global trade disputes. C) It increased the world's merchandise tariffs by 45 percent. D) It increased international trade barriers. E) It imposes international trade sanctions.

Which of the following is true of economic communities? A) They were formed to mediate global trade disputes. B) They tend to improve imports and hinder exports. C) They were formed to increase trade barriers between member nations. D) They require member countries to establish one currency. E) They are groups of nations organized to work toward common goals.

In 1994, the established a free trade zone among the United States, Mexico, and Canada. A) Latin American Free Trade Association B) Union of South American Nations C) European Union D) North American Free Trade Agreement E) Central American Free Trade Agreement

A country's shapes its product and service needs, income levels, and employment levels. A) political system B) legal system C) culture D) subsistence economy E) industrial structure

Which type of economy consumes most of its output and barters the rest for simple goods and services? A) subsistence economy B) industrial economy C) service economy D) developed economy E) emerging economy

Which of the following is true of industrialized nations? A) Industrialized nations are poor markets for large equipment and trucks. B) Industrialized nations do not have a growing middle class. C) These economies consume most of their output and barter the rest. D) Industrialized nations have low-, medium-, and high-income households. E) Industrialized nations consist mostly of low-income households.

Many companies including Gillette and P&G, have shifted their sights to the so-called , the vast untapped market consisting of the world's poorest consumers. A) "bottom of the economic pyramid" B) "developed economies" C) industrial economies D) "emerging economies" E) developing economies

An emerging economy is one which _. A) imports large amounts of finished textiles and automobiles B) consumes all or most of its output C) offers few market opportunities for imported goods D) exports major quantities of manufactured goods E) is experiencing rapid economic growth

Germany is an example of a(n) economy which is a major exporter of manufactured goods, services, and investment funds. A) Emerging B) Agricultural C) Industrial D) Subsistence E) Industrializing

Japan is a major exporter of manufactured goods, services, and investment funds. Japan also exports its goods to other types of economies for raw materials and semi-finished goods. This is an example of a(n) _ economy. A) emerging B) barter C) subsistence D) industrial E) agricultural

Which of the following statements is true of industrial economies? A) They have a declining middle-class population. B) They do not trade goods amongst themselves. C) They export their goods to other types of economies for raw materials. D) They depend on agriculture as the primary revenue generator. E) They consume most of their output and barter the rest for simple goods and services.

Which type of economy consists mostly of households with very low family incomes? A) post-industrial B) developed C) industrial D) emerging E) subsistence

Tariffs and duties are often used to force favourable trade behaviours from other nations.

A multinational company may face nontariff trade barriers that include biases against its bids, restrictive product standards, or excessive host-country regulations.

Industrial economies offer few market opportunities.

The two economic factors that reflect a country's attractiveness as a market are its industrial structure and import/export ratio.

In considering whether to do business in a given country, a company should consider factors such as the country's attitudes toward international buying.

Operating domestically, managers have to learn another language, deal with unstable currencies, and redesign their products to suit different customer expectations.

Barter involves the direct exchange of goods and services.

Give an account of the functions of the World Trade Organization (WTO) and the formation of the WTO from GATT.

What are regional free trade zones? Explain the advantages and disadvantages of the European Union (EU).

What is the North American Free Trade Agreement (NAFTA)? In your answer make a reference to the updated agreement, which was ratified in 2020, renamed the CUSMA.

Differentiate between industrializing economies and industrial economies. Give a few examples of each.

Explain with examples how the political-legal environment of a country affects a global firm.

What are the factors that a company should consider when deciding which markets to enter?

The simplest way to enter a foreign market is through . A) joint ownership B) exporting C) licensing D) direct investment E) contract manufacturing

Which of the following is true of exporting? A) It involves the least change in a company's product lines. B) It involves the association of companies with host country partners. C) It is the most complex way to enter a foreign market. D) It involves a huge investment if done through independent international distributors. E) It typically requires products to be extensively modified for the foreign market.

Asiana, a fragrance manufacturer located in France, markets its products to the North American and Asian countries through independent distributors. In this case, Asiana has entered into international markets through . A) franchising B) joint venturing C) joint ownership D) direct investment E) indirect exporting

The difference between direct and indirect exporting is that indirect exporting involves _ . A) higher risks B) self-handling of exports C) greater returns D) less investment E) more product alterations

Tim Hortons has taken their iconic Canadian brand to Spain. They did so by . This is a method of entering a foreign market by associating with a host (one already established in Spain) company to produce or market products or services. A) importing B) joint venturing C) direct exporting D) indirect exporting E) direct investment

Which of the following is true about joint venturing? A) Contract manufacturing gives significant control to the domestic firm. B) Companies are required to invest in the construction of foreign-based facilities. C) Licensing is a highly complex method for entering global markets. D) A host country partner is necessary for selling or marketing products. E) Management contracting is highly risky for the domestic firm.

Which of the following is a type of joint venture? A) direct investment B) retailing C) contract manufacturing D) wholesaling E) direct exporting

Providing a host-country partner the right to use a company's manufacturing process, trademark, patent, trade secret, or other item of value is referred to as _. A) direct investment B) joint ownership C) direct exporting D) management contracting E) licensing

The Tokyo Disney Resort is owned and operated by Oriental Land Company under license from the Walt Disney Company. In this case which of the following is an advantage of licensing? A) The licensee is not required to invest money in the business. B) The licensee gains recognition without having to develop a product from scratch. C) The licensor earns profits without having to share its intellectual property with anyone. D) The licensor has more control over the licensee than it does in its own operations. E) The licensor faces no threats of competition from the licensee after the contract ends.

The Bread Company promotes its brand in new international markets by providing rights to local bakeries and bistros to use its recipes and brand name. In this case, The Bread Company's market-entry strategy is referred to as . A) joint ownership B) contract manufacturing C) licensing D) management contracting E) exporting

Which of the following is a disadvantage of licensing? A) Licensing is a complex way for a manufacturer to enter international marketing. B) The licensor potentially creates a competitor in the form of the licensee. C) It takes a lot of time for the licensee to gain production expertise and name. D) The licensing company gains entry into a foreign market at a high risk. E) The licensee is restricted from gaining knowledge about the licensor's intellectual property.

is a method of going global in which a company makes agreements with producers in the foreign market to produce its product or provide its service. A) Acquisition B) Management contracting C) Direct investment D) Exporting E) Contract manufacturing

Which of the following is most likely a drawback of contract manufacturing? A) There is decreased control over the manufacturing process. B) There are low chances of quickly starting the process. C) There is little opportunity of later forming a partnership. D) There is no possibility of buying out the local manufacturer. E) There are significant political and economic risks involved.

PharmaCom serves millions of customers across several Asian countries with the assistance of several pharmaceutical manufacturing sites in China, Japan, and Korea. This is an example of . A) contract manufacturing B) management contracting C) joint ownership D) exporting E) licensing

Under management contracting, a domestic firm . A) provides financial capital to a foreign company B) adopts management know-how from a foreign company C) manufactures the products of a foreign company D) exports management services to a foreign company E) exports its products to a foreign company

The Dance Company, a renowned dance studio in Manhattan, enters into an agreement with La Danza in Spain to operate several dance studios. La Danza will provide capital for running the dance studios and The Dance Company will contribute its world-renowned expertise about the art of dance. In this case, The Dance Company enters a foreign market through . A) joint ownership B) management contracting C) direct investment D) licensing E) contract manufacturing

Which of the following is an advantage of management contracting? A) It gives a contracting firm an option to buy shares in the managed company immediately. B) It is the simplest way to enter a foreign market. C) It involves the fewest changes in a company's product lines. D) It allows a contracting firm to set up its own operations at the beginning of the contract. E) It yields income from the beginning of the contract.

Which of the following is a drawback of management contracting? A) It requires a domestic firm to export its products to a foreign company. B) It does not provide the option of buying shares in the managed company later on. C) It yields income to the contracting firm only much later in the process. D) It prevents a company from setting up its own operations for a period of time. E) It is a high-risk method of getting into a foreign market.

ventures consist of one company collaborating with foreign investors to create a local business in which they share possession and control. For example, Kellogg was able to move strongly and quickly into emerging markets in West Africa by taking this approach. A) Direct investment B) Management contracting C) Contract manufacturing D) Joint ownership E) Licensing

Companies often form ventures to merge their complementary strengths in developing a global marketing opportunity. A) management contracting B) joint ownership C) licensing D) contract manufacturing E) direct investment

Kimlee, a food manufacturer based in China, recognizes the immense demand for noodles in the Australian market. Kimlee forms a new business venture to manufacture instant noodles and decides to share possession and control of the new business with a local food processing company. In this case, Kimlee has entered a foreign market through _ . A) direct investment B) management contracting C) licensing D) joint ownership E) contract manufacturing

Which of the following is most likely a benefit of joint ownership? A) It allows one firm to acquire complete ownership of the other firm in the venture. B) It is the simplest way for a domestic company to enter a foreign market. C) It minimizes the need to build a new manufacturing facility in the foreign market. D) It provides significant economies of scale for both the local firm and the foreign investor. E) It allows a firm to gain the financial and managerial resources that it may otherwise lack.

In addition to joint ownership ventures in China, Intel has made substantial outlays in its own manufacturing and research facilities there. This is an example of . A) direct investment B) management contracting C) licensing D) exporting E) indirect exporting

Toyota has manufacturing facilities in Cambridge and Woodstock Ontario. These are wholly-owned subsidiaries of the Japanese based company. Which of the following is an advantage of this direct investment? A) Direct investment allows a firm to keep full control over the investment. B) Direct investment involves minimal financial or time expenditures. C) Direct investment ensures that a firm is shielded from market changes. D) Direct investment protects the firm from currency devaluation. E) Direct investment involves fewer risks than joint ownership.

What is the most likely disadvantage of direct investment for an investing company? A) devalued currency risks B) minimal investment control C) excessive freight charges D) product standardization requirements E) weak relationships with local distributors

Exporting involves a company entering foreign markets by partnering with foreign companies to produce or market a product or service.

Management contracting is an unwise choice if a domestic firm can make greater profits by undertaking a whole venture.

For a fee or royalty payments, a licensee buys the right to use the company's manufacturing process, trademark, patent, trade secret, or other item of value.

Foreign-based production facilities offer many advantages to an investing company if the foreign market is small.

Management contracting is a low-risk method of getting into a foreign market.

Explain management contracting with an example. What are its advantages and disadvantages?

Explain joint ownership with an example. What are its advantages and disadvantages?

Briefly explain the three basic market entry strategies of entering a foreign market.

Chips of Joy, a leading chocolate chip cookie manufacturer, has decided to use the same marketing strategy and marketing mix worldwide for all of its brands. The only change that will be made is language translation on the various packaging. Chips of Joy is using a(n) marketing strategy. A) adapted global B) joint global C) direct global D) collective global E) standardized global

Compared to adapted global marketing, standardized global marketing . A) uses the same marketing mix worldwide B) usually results in diluted brand power over time C) relies on social media to develop customer relationships D) adjusts promotional efforts to address cultural differences in target markets E) results in additional marketing and manufacturing costs

Compared to standardized global marketing, adapted global marketing . A) uses the same marketing mix elements in all target markets B) modifies marketing strategies to meet local needs C) lowers marketing costs by using home country sales teams D) results in greater brand power E) maintains uniformity across all markets

means marketing a product in a foreign market without making any changes to the product. A) Communication extension B) Product invention C) Product adaptation D) Straight product extension E) Communication adaptation

Which of the following is a disadvantage of straight product extension? A) It involves changing the product to meet local requirements. B) It requires making changes in the manufacturing process. C) It requires planning a new promotional strategy to promote the product. D) It can be costly in the long run if products fail to satisfy consumers in specific global markets. E) It involves additional product development costs.

Veggie Delight, a leading manufacturer of frozen vegetarian burgers, has recently entered the Middle East markets. Based on its research, consumers in the Middle East prefer spicier burgers than in Canada and other countries. So the company alters the ingredients in its burgers to meet the local preferences. In this scenario, Veggie Delight is using a(n) _ strategy to market its product. A) product adaptation B) straight product extension C) undifferentiated marketing D) communication adaptation E) product invention

consists of creating something new to meet the needs of consumers in a given country. A) Product invention B) Undifferentiated marketing C) Product adaptation D) Straight product extension E) Standardized manufacturing

When adapting advertising messages, media may also need to be adapted internationally because media availability and regulations vary from country to country. This illustrates . A) straight product extension B) communication adaptation C) product adaptation D) product invention E) communication extension

To overcome this problem when selling to less-affluent consumers in developing countries, many companies make simpler or smaller versions of their products that can be sold at lower prices. Others have introduced new, more affordable brands for global markets. This is known as a(n) problem. A) price escalation B) inflation C) deflation D) demand escalation E) skimming price

In a global value delivery network, the first link, , moves company products from points of production to the borders of countries within which they are sold. A) channels between nations B) wholesalers C) channels within nations D) distribution centres E) retailers

L'Oréal, the global cosmetics firm is evidence that global standardization is an all-or-nothing proposition.

Global branding and standardization result in reduced costs from economies of scale.

The whole-channel view refers to designing international channels that take into account the entire global supply chain and marketing channel, forging an effective global value delivery network.

Straight product extension into international markets is often successful.

To overcome the problem of price escalation when selling to less-affluent consumers in developing countries, many companies make simpler or smaller versions of their products that can be sold at lower prices.

Regardless of how companies go about pricing their products, their foreign prices will most likely be higher than their domestic prices for comparable products.

Price escalation is caused by transportation costs, tariffs, importer margin, wholesaler margin, and retailer margin. As a result, foreign prices are typically lower than domestic prices for comparable products.

The Internet is forcing companies toward more standardized international pricing.

In the global value delivery network, the second link between the sellers and the final buyers moves products from points of production to the borders of countries within which they are sold.

Adapted global marketing is a global marketing approach that adjusts the marketing strategy and mix elements to each international target market.

Most of the retailing in Canada is done by small, independent retailers.

Differentiate between standardized global marketing and adapted global marketing. Describe the advantages and disadvantages of each strategy.

Differentiate between straight product extension and product adaptation. Give a few examples of each.

Explain product invention with the help of suitable examples.

Jazz is a costume jewellery manufacturing company based in Alberta, Canada. The company decides to sell its products abroad, but it faces the major problem of price escalation. What is price escalation? How can Jazz overcome this problem?

Explain the whole-channel view of the distribution process.

In managing their international marketing activities, most companies first . A) initiate foreign direct investment B) organize an export department C) create an international division D) organize an import department E) form a domestic subsidiary

It is common that a multinational company eventually creates or subsidiaries to handle all of its international activity. A) export departments B) world product groups C) international divisions D) global organizations E) geographical organizations

Lemon N' Honey is a juice manufacturing company in Canada. It exports its products to Australia, licenses to China, has a joint ownership venture in France, and owns a subsidiary in Brazil. The firm will most likely need to create a(n) _ to handle all its worldwide activities. A) domestic division B) value delivery network C) international division D) export department E) domestic market

Which of the following is true of international divisions that are structured as geographical organizations? A) Geographical organizations are usually formed to implement whole-channel supply chains. B) Geographical organizations are managed by product managers, each responsible for different product groups. C) Geographical organizations are inadequate if the firm moves into joint ventures or direct investments. D) Geographical organizations are operating units under the export department. E) Geographical organizations are managed by country managers responsible for salespeople, distributors, and licensees in their respective countries.

Which of the following is an international division organized based on different merchandise categories? A) export department B) geographical organization C) global organization D) international subsidiary E) world product group

Many organizations no longer have a clearly defined home market. Nor do they have home-office staffs. Instead, multicultural managers operate out of facilities located all around the world, bringing diverse cultural Perspectives to their brands and operations. They are truly _. A) export departments B) international subsidiaries C) world product groups D) geographical organizations E) global organizations

Which of the following is most likely true about a global organization? A) Employees are recruited exclusively from the home country. B) Worldwide policies are planned by top corporate management. C) It considers itself a national marketer that sells abroad. D) Executive training is restricted to domestic operations. E) Global operating units report to international division chiefs.

Companies that export goods to one country cannot have a subsidiary in another country because of international trade agreements.

Global companies recruit management from many countries, buy components and supplies where they cost the least, and invest where the expected returns are greatest.

Strawberry Fizz is a renowned bottled juice manufacturer in Canada. It exports its products to Mexico, has a joint venture in Hong Kong, and owns a subsidiary in South Africa. The company has organized an export department to manage its international marketing activities. Do you think it has made the right decision? Justify your answer.