Question 1

Multinational companies typically begin the development of their global business with direct investment and continue using this strategy throughout the company's life span.

Accepted Answer

Multinational companies often start their global expansion with less resource-intensive strategies such as exporting or licensing before moving on to more significant investments like direct investment, adapting their approach as they grow and understand the market better.

Question 2

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

Accepted Answer

The answer of Just as mass marketing assumes a large...

Question 3

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

Accepted Answer

The World Bank's research has found that countries with less business regulation tend to have stronger economies.

Question 4

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

Accepted Answer

Most nations have elements of both capitalism and socialism and can be classified as mixed economies. Very few countries are at the extreme ends of the political spectrum.

Question 5

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

Accepted Answer

This is not an example of an import quota, but rather a trade embargo. An import quota would limit the quantity of imports, whereas a trade embargo prohibits trade altogether.

Question 6

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

Accepted Answer

The form of global organization that provides the highest potential for return on investment as well as the highest level of risk is direct investment, not contract manufacturing. Direct investment involves owning and controlling foreign facilities outright, which comes with higher risks and potentially higher returns.

Question 7

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

Accepted Answer

Licensing agreements allow a manufacturer to use someone else's intellectual property to produce a product, reducing the risk of investing in the development of a new product. In some cases, a licensing agreement can completely remove the need for a manufacturer to produce its own product, as they can simply sell products created by the licensor.

Question 8

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

Accepted Answer

Exporting refers to selling goods or services to another country, and in this case, Hennessey Enterprises is selling its products to a company in Norway, which qualifies as exporting.

Question 9

Vast differences in natural resources created international dependence and huge shifts of wealth.

Accepted Answer

Countries with abundant natural resources such as oil, gas, diamonds, and gold have the potential to become very wealthy, while countries lacking these resources may struggle to develop their economies. This has led to international dependence on countries with natural resources and created huge shifts of wealth between nations.

Question 10

GATT, NAFTA, and the EU are all examples of market groupings.

Accepted Answer

GATT and NAFTA are trade agreements,and the EU is a market grouping.

Question 11

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

Accepted Answer

The answer of Why is developing a global vision important...

Question 12

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

Accepted Answer

Cultural norms and differences can affect communication even if a common language is used. Nonverbal cues, indirect communication styles, and different understandings of time and hierarchy, among other things, can all impact communication in a global business transaction.

Question 13

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

Accepted Answer

Dumping occurs when a product is sold at a lower price in a foreign market than in the domestic market. In this case, Wave surfboards are being sold at a lower price in the United States than in Australia, which is an example of price discrimination and dumping.

Question 14

The major disadvantage of licensing agreements is that international companies cannot maintain control over their licensees.

Accepted Answer

Two common ways of maintaining effective control over licensees are shipping one or more critical components from the United States or locally registering patents and trademarks to the U.S.firm.

Question 15

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

Accepted Answer

E-commerce retailers operate in a different environment than traditional brick-and-mortar stores, and therefore need to develop different strategies to succeed. The rules, regulations, and habits that work in physical stores may not be applicable or effective in the online world, and can even hinder the success of e-commerce businesses.

Question 16

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

Accepted Answer

The same environmental factors do exist internationally and should be examined when considering entering a new market, regardless of the country.

Question 17

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

Accepted Answer

NAFTA stands for North American Free Trade Agreement and it pertains to trade between the United States, Canada, and Mexico, not the European Union.

Question 18

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

Accepted Answer

Russia does indeed use quotas to limit the market share of foreign vodka manufacturers to 1 percent in order to protect its local industry.

Question 19

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

Accepted Answer

Developing a new and unique promotional campaign for each country would not be a feasible option for Arista-Buvez given their small promotional budget. It would be more efficient and effective to develop a consistent message that can be adapted to each market. This way, Arista-Buvez can ensure that its brand image is consistent across all countries while still tailoring its message to local markets.

Question 20

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

Accepted Answer

The statement correctly defines a joint venture, and the partnership between Procter & Gamble and Fater to produce and market diapers in Europe is an example of such a venture.

Quiz 4: Developing a Global Vision